Exhibit 10.11
AMENDED AND RESTATED LOAN AGREEMENT
This AMENDED AND RESTATED LOAN AGREEMENT, dated as of March 10, 2005, is
between CAROLINA NATIONAL TRANSPORTATION INC., an Indiana corporation
("Carolina"); GULF LINE TRANSPORT INC., an Indiana corporation ("Gulf Line");
FIVE STAR TRANSPORT, INC., an Indiana corporation ("Five Star"); CAM TRANSPORT,
INC., an Indiana corporation ("Cam"); UNITY LOGISTIC SERVICES INC., an Indiana
corporation ("Unity"); ERX, INC., an Indiana corporation ("ERX"); FRIENDLY
TRANSPORT, INC., an Indiana corporation ("Friendly"); TRANSPORT LEASING, INC.,
an Arkansas corporation ("Transport Leasing"); HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation ("Harbor"); PATRIOT LOGISTICS, INC., an Indiana
corporation ("Patriot"); LIBERTY TRANSPORT, INC., an Indiana corporation
("Liberty"); and KEYSTONE LINES CORPORATION, a California corporation
("Keystone"), (Carolina, Gulf Line, Five Star, Cam, Unity, ERX, Friendly,
Transport Leasing, Harbor, Patriot, Liberty, and Keystone-Indiana are
hereinafter each referred to each as a "Borrower Entity", and collectively as
the "Borrower"); US1 INDUSTRIES, INC., an Indiana corporation ("Guarantor");
and U.S. BANK NATIONAL ASSOCIATION, a national banking association, formerly
known as FIRSTAR BANK N.A. ("Lender").
PRELIMINARY STATEMENT
The Borrower has previously entered into a Loan Agreement with Lender
dated as of April 18, 2000, and amended as of June 9, 2000, December 7, 2000,
March 1, 2001, October 15, 2001, May 1, 2002, August 1, 2002, March 21, 2003,
and October 1, 2003 (the April 18, 2000 Loan Agreement, as so amended, is the
"Existing Loan Agreement," and, as amended and restated by this agreement,
constitutes the "Loan Agreement").
Lender has agreed to amend and restate the Existing Loan Agreement to do
the following: (1) waive an event of technical default on the part of the
Borrower with respect to the financial covenants contained in Section 7.16
thereof; (2) waive an event of technical default on the part of the Borrower
with respect to the dissolution of Transport Logistics, LLC, an Arkansas limited
liability company ("Transport Logistics"), a borrower under the Existing Loan
Agreement, in contravention of Section 6.1 thereof; (3) amend said financial
covenants for future periods; (4) reflect the termination of the Equipment Loan,
the Guidance Loan and the Second Guidance Loan; and (5) provide for other
matters as set forth herein.
NOW, THEREFORE, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS AND PRELIMINARY MATTERS
1.1 Definitions.
As used in this Loan Agreement and in the other Loan Instruments, unless
otherwise expressly indicated herein or therein, the following terms shall have
the following meanings (such meanings to be applicable equally to both the
singular and plural forms of the terms defined):
Accountants: any independent certified public accounting firm selected
by Borrower and satisfactory to Lender.
Accounting Changes: as defined in Section 1.3.
Accounts: all presently existing and hereafter arising accounts
receivable and other rights to payment owing to Borrower or Guarantor for goods
sold or leased or services rendered by Borrower or Guarantor, whether or not
earned by performance, and any and all credit insurance, guaranties or security
therefor.
Advance: any advance of the Revolving Loan (including, without
limitation, the payment of any sum pursuant to a Standby Letter of Credit to the
beneficiary named therein).
Affiliate: any Person that directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with
another Person. The term "control" means having the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities or
equity interests, by contract or otherwise. For the purposes hereof any Person
which owns or controls, directly or indirectly, 10% or more of the securities or
equity interests, as applicable, whether voting or non-voting, of any other
Person shall be deemed to "control" such Person.
Bankruptcy Code: the United States Bankruptcy Code and any successor
statute thereto, and the rules and regulations issued thereunder, as in effect
from time to time.
Basic Financial Statements: as defined in subsection 6.3.3.
Borrower: means Carolina National Transportation Inc., an Indiana
corporation; Gulf Line Transport Inc., an Indiana corporation; Five Star
Transport, Inc., an Indiana corporation; Cam Transport, Inc., an Indiana
corporation; Unity Logistic Services Inc., an Indiana corporation; ERX, Inc., an
Indiana corporation; Friendly Transport, Inc., an Indiana corporation; Transport
Leasing, Inc., an Arkansas corporation; Harbor Bridge Intermodal, Inc., an
Indiana corporation; Patriot Logistics, Inc., an Indiana corporation; Liberty
Transport, Inc., an Indiana corporation; and Keystone Lines Corporation, a
California corporation, and such other entities owned or controlled by any of
the foregoing or US 1 Industries, Inc., an Indiana corporation, which elect to
be designated as a Borrower hereunder in writing and on terms satisfactory to
Lender, and to which Lender agrees in writing to extend credit hereunder and to
designate as an additional Borrower.
Borrower's Obligations: (i) any and all Indebtedness due or to become
due, whether contingent or otherwise, now existing, or hereafter arising, of
Borrower to Lender pursuant to the terms of this Loan Agreement or any other
Loan Instrument, and (ii) the performance of the covenants of Borrower contained
in the Loan Instruments, including without limitation any amendments thereof.
Business Day: any day other than a Saturday, Sunday or other day on
which banks in Chicago, Illinois are required or authorized to close.
Business Insurance: such property, casualty, liability, business
interruption and other insurance as Lender from time to time requires Borrower
and Guarantor to maintain.
Capital Expenditures: payments that are made or liabilities that are
incurred by a Person for the lease, purchase, improvement, construction or use
of any Property, the value or cost of which under GAAP is required to be
capitalized and appears on such Person's balance sheet in the category of
property, plant or equipment, without regard to the manner in which such
payments or the instruments pursuant to which they are made are characterized,
and shall include, without limitation, payments for or liabilities incurred with
respect to the installment purchase of Property and payments under Capitalized
Leases.
Capitalized Lease: any lease of Property, the obligations for the rental
of which are required to be capitalized in accordance with GAAP.
Closing: the execution and delivery of this Agreement and all ancillary
documents and instruments.
Closing Date: the date upon which the Closing occurred, March 10, 2005.
Code: the Internal Revenue Code of 1986, as amended, and any successor
statute thereto, and the rules and regulations issued thereunder, as in effect
from time to time.
Collateral: the Accounts and all existing and after-acquired Property
of Borrower and Guarantor, including without limitation all existing and after
acquired, equipment, inventory and general intangibles, and all proceeds of the
foregoing.
Compliance Certificate: a compliance certificate executed by Borrower in
the form of Exhibit 1.1(A) attached hereto.
Corporate Guaranty: the unlimited secured corporate guaranty of US 1
Industries, Inc., Borrower's parent company, in form and substance satisfactory
to Lender, wherein Guarantor shall guarantee all of Borrower's Obligations.
Default Rate: the Interest Rate, as defined herein, plus 2.0% per annum.
Default Rate Period: a period of time commencing on the date that an
Event of Default has occurred and ending on the date that such Event of Default
is cured or waived.
Dollars: lawful currency of the United States.
EBITDA: for any period, without duplication, the net income of Borrower
or Guarantor for such period:
(a) plus the sum of the following, to the extent deducted in
determining such net income for such period:
(i) losses from sales, exchanges and other dispositions of Property
not in the ordinary course of business;
(ii) interest paid or accrued on Indebtedness, including, without
limitation, interest on Capitalized Leases that is imputed in accordance
with GAAP;
(iii) depreciation and amortization of assets during such period; and
(iv) charges against net income for taxes;
(b) minus gains from sales, exchanges and other dispositions of Property
or other extraordinary gains not in the ordinary course of business.
Eligible Accounts Receivable: The total amount of the Accounts from
completed transactions after deducting (i) Accounts over 75 days past invoice
date; (ii) intercompany Accounts; (iii) foreign Accounts; (iv) Accounts to the
extent subject to customer setoffs; (v) Accounts for which the portion of the
account aged 75 days past the invoice date is in excess of 50% of the total
indebtedness owed to any of the Borrower Entities by the account debtor; (vi)
Accounts for which the account debtor is a Governmental Body, except those for
which the account debtor is the government of the United States of America, or
any department, commission, board, bureau, agency, public authority or
instrumentality thereof and with respect to which all conditions to the pledge
of and perfection of a first lien interest in such Accounts under the federal
Assignment of Claims Act codified as 41 USC 15 and 31 USC 3727, as amended, on
terms satisfactory to Lender, have been satisfied; and (vii) such other reserves
as Lender may reasonably deem appropriate.
Employee Benefit Plan: any employee benefit plan within the meaning of
Section 3(3) of ERISA which (i) is maintained for employees of Borrower or any
ERISA Affiliate or (ii) has at any time within the preceding six years been
maintained for the employees of Borrower or any current or former ERISA
Affiliate.
Environmental Laws: any and all federal, state and local laws that
relate to or impose liability or standards of conduct concerning public or
occupational health and safety or protection of the environment, as now or
hereafter in effect and as have been or hereafter may be amended or
reauthorized, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Materials Transportation Act (42 U.S.C. Section 1802 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the Clean Air Act (42
U.S.C. Section 7901 et seq.), the National Environmental Policy Act (42 U.S.C.
Section 4231, et seq.), the Refuse Act (33 U.S.C. Section 407, et se .), the
Safe Drinking Water Act (42 U.S.C. Section 300(f) et seq.), the Occupational
Safety and Health Act (29 U.S.C. Section 651 et seq.), and all rules,
regulations, codes, ordinances and guidance documents promulgated or published
thereunder, and the provisions of any licenses, permits, orders and decrees
issued pursuant to any of the foregoing.
ERISA: the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
ERISA Affiliate: any Person who is a member of a group which is under
common control with Borrower or Guarantor, who together with Borrower or
Guarantor is treated as a single employer within the meaning of Section 414(b),
(c) and (m) of the Code.
Event of Default: any of the Events of Default set forth in
Section 8. 1.
Excess Interest: as defined in subsection 2.3.3.
Existing Indebtedness: all Indebtedness for Borrowed Money owed by
Borrower, immediately prior to the Closing, other than Permitted Senior
Indebtedness and Permitted Subordinated Indebtedness permitted to exist
hereunder on the Closing Date.
Funding Date: the date of disbursement of any Advance, which shall be a
Business Day.
GAAP: generally accepted accounting principles in effect from time to
time, which shall include but shall not be limited to the official
interpretations thereof by the Financial Accounting Standards Board or any
successor thereto.
Good Funds: Dollars available in federal funds to Lender at or before
2:00 p.m., Chicago time, on a Business Day.
Governmental Body: any foreign, federal, state, municipal or other
government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
Hazardous Materials: any hazardous, toxic, dangerous or other waste,
substance or material defined as such in, regulated by or for purposes of any
Environmental Law.
Incipient Default: any event or condition which, with the giving of
notice or the lapse of time, or both, would become an Event of Default.
Indebtedness: all liabilities, obligations and reserves, contingent or
otherwise, which, in accordance with GAAP, would be reflected as a liability on
a balance sheet or would be required to be disclosed in a financial statement,
including, without duplication: (i) Indebtedness for Borrowed Money, (ii)
obligations secured by any Lien upon Property, (iii) guaranties, letters of
credit and other contingent obligations, and (iv) liabilities in respect of
unfunded vested benefits under any Pension Plan or in respect of withdrawal
liabilities incurred under ERISA by Borrower, Guarantor or any ERISA Affiliate
to any Multi-employer Plan.
Indebtedness for Borrowed Money: without duplication, all Indebtedness
(i) in respect of money borrowed, (ii) evidenced by a note, debenture or other
like written obligation to pay money (including, without limitation, all of
Borrower's Obligations and Permitted Senior Indebtedness), (iii) in respect of
rent or hire of Property under Capitalized Leases or for the deferred purchase
price of Property, (iv) in respect of obligations under conditional sales or
other title retention agreements, and (v) all guaranties of any or all of the
foregoing.
Instruments: the Loan Instruments.
Intellectual Property: collectively, all of Borrower's and Guarantor's
patents, trademarks, service marks, trade names, copyrights, franchises and all
other intellectual property rights with respect thereto.
Interest Rate: with respect to the Revolving Loan, the interest which
the Revolving Loan bears, other than during a Default Rate Period, as provided
in Section 2.3.
Inventory: all present and future inventory in which Borrower has any
interest, including, without limitation, all goods held for sale, lease or other
disposition by Borrower, or to be furnished under a contract of service, and all
of Borrower's present and future raw materials, work in process, finished goods,
goods consigned to Borrower to the extent of Borrower's interest therein as
consignee, materials and supplies of any kind, nature or description which are
or might be used in connection with the manufacture, packing, shipping,
advertising, selling or furnishing of any such goods and all documents of title
or other documents representing the same.
Landlord: a lessor under a Lease.
Landlord's Consent: a landlord's consent in form and substance
reasonably satisfactory to Lender.
Lease: any lease of real estate under which Borrower or Guarantor is, or
will be, the lessee.
Leasehold Property: any real estate which is the subject of a Lease.
Lender: Firstar Bank N.A., a national banking association, its
successors and assigns.
Lien: any mortgage, deed of trust, pledge, assignment, lien, charge,
encumbrance or security interest of any kind, or the interest of a vendor or
lessor under any conditional sale agreement, Capitalized Lease or other title
retention agreement.
Loan Agreement: this Loan Agreement and any amendments or supplements
hereto.
Loan Instruments:
(i) Loan Agreement;
(ii) Revolving Loan Note;
(iii) Corporate Guaranty;
(iv) Security Instruments;
(v) Closing Certificate;
(vi) Subordination Agreements;
(vii) Personal Guaranties;
(viii) Reaffirmations of Personal Guaranties;
(ix) Corporate Guaranty;
(x) Reaffirmation of Corporate Guaranty;
(xi) Standby Letter of Credit;
(xii) Application and Agreement for Standby Letter of Credit;
(xiii) Continuing Reimbursement Agreement for Standby Letters of
Credit; and
(xiv) such other instruments and documents as Lender may
reasonably require in connection with the transactions
contemplated by this Loan Agreement;
as the same may be amended and/or restated from time to time, including without
limitation as amended by or pursuant to the Existing Loan Agreement, as amended
and restated by this Loan Agreement.
Material Adverse Effect: (i) a material adverse effect upon the
business, operations, Property, prospects, profits or financial condition of
Borrower or Guarantor or upon the validity, enforceability or priority of the
Security Interests or (ii) a material impairment of the ability of Borrower or
Guarantor or any other obligor to perform its obligations under any Loan
Instrument to which it is a party or of Lender to enforce or collect any of
Borrower's or Guarantor's Obligations.
Maximum Rate: as defined in subsection 2.3.3.
Multiemployer Plan: any multiemployer plan as defined pursuant to
Section 3(37) of ERISA to which Borrower or Guarantor or any ERISA Affiliate
makes, or accrues an obligation to make, contributions, or has made, or been
obligated to make, contributions within the preceding six years.
Net Income: shall have the meaning accorded to such term by GAAP.
Operating Agreement: any joint venture agreement, supply agreement,
requirements contracts, equipment lease, right-of-entry agreement, access
agreement, vendor agreement, distributing agreement, service agreement,
advertising contract, employment agreement, management agreement, collective
bargaining agreement or other similar agreement relating to the operation of
Borrower's or Guarantor's business.
Pay-Off Letter: a pay-off letter from each holder of the Existing
Indebtedness addressed to Lender.
PBGC: the Pension Benefit Guaranty Corporation or any Governmental Body
succeeding to the functions thereof
Pension Plan: any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Part 3 of Title I of ERISA, Title IV
of ERISA, or Section 412 of the Code and which (i) is maintained for employees
of Borrower or Guarantor or any ERISA Affiliate, or (ii) has at any time within
the preceding six years been maintained for the employees of Borrower or
Guarantor or any of its current or former ERISA Affiliates.
Permitted Liens: any of the following Liens:
(i) the Security Interests;
(ii) the Permitted Senior Indebtedness Liens;
(iii) Liens for taxes or assessments and similar charges, which either
are (A) not delinquent or (B) being contested diligently and in good faith by
appropriate proceedings, and as to which Borrower and Guarantor has set aside
reserves on its books in accordance with GAAP;
(iv) statutory Liens, such as mechanic's, material-man's, repairmen's,
warehouseman's, carrier's, landlord's, banks and related rights of set-off, or
other like Liens, incurred in good faith in the ordinary course of business,
provided that the underlying obligations relating to such Liens are paid in the
ordinary course of business, or are being contested diligently and in good faith
by appropriate proceedings and as to which Borrower and Guarantor has set aside
reserves on its books in accordance with GAAP, or the payment of which
obligations are otherwise secured in a manner satisfactory to Lender;
(v) zoning ordinances, easements, licenses, reservations, provisions,
covenants, conditions, waivers or restrictions on the use of Property and other
title exceptions, in each case, that are acceptable to Lender;
(vi) Liens in respect of judgments or awards with respect to which no
Event of Default would exist pursuant to subsection 8.1.6;
(vii) Liens to secure payment of insurance premiums (A) to be paid in
accordance with applicable laws in the ordinary course of business relating to
payment of worker's compensation, or (B) that are required for the participation
in any fund in connection with worker's compensation, unemployment insurance,
old-age pensions or other social security programs; and
(viii) the interest or title of a lessor under the stated terms of any
Lease to which a Borrower is a party.
Permitted Prior Liens: any of the following Liens:
(i) the Permitted Senior Indebtedness Liens;
(ii) the Permitted Liens described in clauses (iii), (iv) and (viii) of
the definition of Permitted Liens that are accorded priority to the Security
Interests by law; and
(iii) the Permitted Liens described in clauses (v) and (vii) of the
definition of Permitted Liens, subject to the limitations or requirements set
forth therein.
(iv) Permitted Senior Indebtedness: Indebtedness, other than Borrower's
Obligations, incurred by Borrower to purchase tangible personal property or
Indebtedness incurred by Borrower to lease tangible personal property pursuant
to Capitalized Leases, provided that (i) the aggregate amount of such
Indebtedness outstanding as of the Closing Date shall not exceed $50,000, and
(ii) prior to the Revolving Loan Maturity Date, the amount of such Indebtedness
at any one time outstanding shall not exceed $50,000 and (iii) no Event of
Default exists at the time or will be caused as a result of the incurrence of
any Indebtedness described in clause (ii).
Permitted Senior Indebtedness Liens: Liens that secure Permitted Senior
Indebtedness, provided that (i) each such Lien attaches only to the Property
purchased or leased with the proceeds of the Permitted Senior Indebtedness
incurred with respect to such Property and (ii) Lender is granted a Lien upon
such Property, subordinate only to the Lien granted to the holder of the
applicable Permitted Senior Indebtedness.
Permitted Subordinated Indebtedness: means the indebtedness of
Borrower and Guarantor to Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxxx, and August
Investment Partnership, set forth in Exhibit 5.16 hereto, which the holders
of such indebtedness have agreed to subordinate to the senior rights of
Lender, pursuant to a Subordination Agreement of even date between Lender
and the holders of such indebtedness.
Person: any individual, firm, corporation, limited liability company,
business enterprise, trust, association, joint venture, partnership,
Governmental Body or other entity, whether acting in an individual, fiduciary or
other capacity.
Personal Guarantees: the individual guarantees of Xxxxxxx Xxxxxx and
Xxxxxx Xxxxxxxx limited to $1,500,000 per guaranty.
Personal Guarantors: Xxxxxxx Xxxxxx and Xxxxxx Xxxxxxxx, both of whom
are directors, officers and principal shareholders of Guarantor and are officers
and directors of Borrower.
Prime Rate: the per annum rate of interest announced or published
publicly from time to time by Lender as its corporate base (or equivalent) rate
of interest, which rate shall change automatically without notice and
simultaneously with each change in such corporate base rate. The Prime Rate is a
reference rate and does not necessarily represent the lowest or prime rate
actually charged to any customer by Lender.
Principal Balance: the unpaid principal balance of the Revolving Loan.
Property: all types of real, personal or mixed property and all types of
tangible or intangible property.
Qualified Depository: a member bank of the Federal Reserve System having
a combined capital and surplus of at least $100,000,000.
Real Property: all interests in real estate owned by Borrower other than
the Leasehold Property.
Revolving Loan: the revolving loan made by Lender to Borrower pursuant
to Section 2.1.
Revolving Loan Commitment: $10,000,000.
Revolving Loan Maturity Date: the earlier of (i) October 1, 2005 or (ii)
the date on which Borrower's Obligations are accelerated pursuant to the Loan
Agreement.
Revolving Loan Note: the promissory note executed by Borrower payable to
the order of Lender in the amount of the Revolving Loan Commitment, dated as of
April 18, 2000, and as further amended and restated as of June 9, 2000, December
7, 2000, October 15, 2001, May 1, 2002, August 1, 2002, March 21, 2003, and
October 1, 2003.
Securities Act: the Securities Act of 1933, as amended, or any similar
Federal statute, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder, as in effect from time to time.
Security Agreement: the security agreements executed by Borrower and
Guarantor in favor of Lender.
Security Instruments: collectively, the Security Agreement and any other
document now or hereafter executed by Borrower or Guarantor which purports to
create a Lien on the Property of Borrower or Guarantor in favor of Lender.
Security Interests: the Liens in the Collateral granted to Lender
pursuant to the Security Instruments.
Solvency Certificate: a solvency certificate executed by Borrower to
Lender.
Standby Letters of Credit: standby letters of credit issued by Lender
at the request of Borrower, from time to time, in a form acceptable to Lender,
in an aggregate face amount of up to the lesser of $850,000 or the available
portion of the Revolving Loan Commitment, to be issued in favor of the
beneficiary named therein, on the terms and conditions set forth in the Loan
Agreement.
Stated Rate: as defined in subsection 2.3.3.
Subordination Agreement: means a subordination agreement of even date
between Lender and the holders of the Permitted Subordinated Indebtedness,
wherein the holders of such junior and subordinate indebtedness have agreed to
subordinate their rights and claims to the senior rights of Lender.
Tangible Net Worth: at any date, means Guarantor's net worth at such
date after subtracting therefrom the aggregate amount at such date of any
intangible assets of Borrower, including, without limitation, prepaid amounts,
goodwill, franchises, licenses, patents, trademarks, trade names, copyrights,
service marks and brand names.
Termination Event: (i) a "Reportable Event" described in Section 4043 of
ERISA and the regulations issued thereunder; or (ii) the withdrawal of Borrower,
Guarantor or any ERISA Affiliate from a Pension Plan during a plan year in which
it was a "substantial employer" as defined in Section 4001(a)(2); or (iii) the
termination of a Pension Plan, the filing of a notice of intent to terminate a
Pension Plan or the treatment of a Pension Plan amendment as a termination
Under Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate, or the appointment of a trustee with respect to, any Pension Plan by
the PBGC; or (v) any other event or condition which would constitute grounds
under Section 4042(a) of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; or (vi) the partial or complete
withdrawal of Borrower, Guarantor or any ERISA Affiliate from a Multiemployer
Plan; or (vii)the imposition of a lien pursuant to Section 412 of the Code or
Section 302 of ERISA; or (viii) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245
of ERISA; or (ix) any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.
Total Liabilities: any date means the aggregate amount of all
Indebtedness of Borrower at such date.
1.2 Time Periods.
In this Loan Agreement and the other Loan Instruments, in the
computation of periods of time from a specified date to a later specified date,
(i) the word "from" means "from and including," (ii) the words "to" and "until"
each mean "to, but excluding" and (iii) the words "through," "end of' and
"expiration" each mean "through and including." Unless otherwise specified, all
references in this Loan Agreement and the other Loan Instruments to (i) a
"month" shall be deemed to refer to a calendar month, (ii) a "quarter" shall be
deemed to refer to a calendar quarter and (iii) a "year" shall be deemed to
refer to a calendar year.
1.3 Accounting Terms and Determinations.
All accounting terms not specifically defined herein shall be construed,
all accounting determinations hereunder shall be made and all financial
statements required to be delivered pursuant hereto shall be prepared in
accordance with GAAP as in effect at the time of such interpretation,
determination or preparation, as applicable. In the event that any Accounting
Changes occur and such changes result in a change in the method of calculation
of financial covenants, standards or terms contained in this Loan Agreement,
then Borrower and Lender agree to enter into negotiations to amend such
provisions of this Loan Agreement so as to reflect such Accounting Changes with
the desired result that the criteria for evaluating the financial condition of
Borrower shall be the same after such Accounting Changes as if such Accounting
Changes had not been made. For purposes hereof, "Accounting Changes" shall mean
(i) changes in GAAP required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board (or any
successor thereto) or other appropriate authoritative body and (ii) changes in
accounting principles as approved by the Accountants.
1.4 References.
All references in this Loan Agreement to "Article," "Section,"
"subsection," "subparagraph," "clause" or "Exhibit," unless otherwise indicated,
shall be deemed to refer to an Article, Section, subsection, subparagraph,
clause or Exhibit, as applicable, of this Loan Agreement.
1.5 Lender's Discretion.
Whenever the terms "satisfactory to Lender," "determined by Lender,"
"acceptable to Lender," "Lender shall elect," "Lender shall request," "at the
option or election of Lender," or similar terms are used in the Loan
Instruments, except as otherwise specifically provided therein, such terms shall
mean satisfactory to, at the election or option of, determined by, acceptable to
or requested by Lender, in its sole and unlimited discretion.
1.6 Borrower's or Guarantor's Knowledge.
Any statements, representations or warranties that are based upon the
best knowledge of Borrower or Guarantor or an officer thereof shall be deemed to
have been made after due inquiry by Borrower, Guarantor or such officer, as
applicable, with respect to the matter in question.
1.7 Continued Effectiveness of Previously-Executed Loan Instruments.
The Borrower Entities and Guarantor hereby acknowledge that they have
previously entered into and executed Security Agreements dated as of April 18,
2000 (in the case of Carolina, Gulf Line, Five Star, and Guarantor), as of
December 7, 2000 (in the case of Cam), as of October 15, 2001 (in the case of
Unity, ERX, Friendly, and Transport Leasing), as of May 1, 2002 (in the case of
Harbor), as of March 21, 2003 (in the case of Patriot and Liberty),
(collectively, the "Existing Security Agreements"), with Lender, by which
certain assets of the Borrower and the Guarantor were pledged to secure
Borrower's Obligations (as that term is defined in the Loan Agreement). The
Borrower and the Guarantor do hereby acknowledge that Borrower's Obligations, as
that term is used in the Loan Agreement and the Existing Security Agreements,
means Borrower's Obligations under the Loan Agreement, and includes, without
limitation, the obligation to repay as and when due any and all amounts advanced
by Lender to the Borrower (including borrowers other than the existing Borrower
Entities), or any of them, together with interest thereon, as provided in the
Revolving Loan Note, and do hereby reaffirm their obligations thereunder.
1.8 Waiver of Certain Defaults.
The Existing Loan Agreement requires that Borrower not permit the ratio
of Unsubordinated Indebtedness to EBITDA to exceed 3.0 to 1 during any rolling
four (4) quarter period. During the quarter ended June 30, 2004, Borrower
allowed said ratio to exceed 3.0 to 1. The Existing Loan Agreement also
provides that Borrower may not permit any of its constituent entities to
dissolve so long as any of Borrower's Obligations and/or obligations of the
Guarantor remain outstanding. Prior to the date hereof, Transport Logistics was
dissolved. Notwithstanding the terms of the Existing Loan Agreement, Lender
hereby waives the foregoing Events of Default, without waiving its right
strictly to enforce the terms of the Loan Documents in the future.
1.9 Deliveries of Borrower, Guarantor and Personal Guarantors.
Simultaneously with the execution hereof, Borrower, Guarantor and each
Personal Guarantor, as the case may be, shall deliver the following to Lender,
duly executed by the parties thereto other than Lender:
i) Reaffirmations of Personal Guaranties of Xxxxxxx Xxxxxx and Xxxxxx Xxxxxxxx,
in the forms attached hereto as Exhibits A-1 and A-2;
ii) Reaffirmation of Corporate Guaranty of Guarantor, in the form attached
hereto as Exhibit B;
iii) Acknowledgements of the holders of Subordinated Indebtedness of, 1) the
execution of this Amended and Restated Loan Agreement; 2) the continued
effectiveness of those certain Subordination Agreements by and between Lender
and, a) Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxxx, dated as of April 18, 2000, as
amended pursuant to that certain Amendment to Subordination Agreement dated as
of August 1, 2002, and b) August Investment Partnership, as amended and restated
pursuant to that certain Amended and Restated Subordination Agreement dated as
of August 1, 2002 (collectively, as so amended, the "Subordination Agreements"),
in the forms attached hereto as Exhibits C-1 and C-2;
iv) Certified resolutions for Guarantor and each Borrower Entity;
v) Evidence of good standing for Guarantor and each Borrower Entity; and
vi) Opinion letters from Borrower's counsel, Xxxxxxxx Xxxxxxx, LLP, in a form
reasonably satisfactory to Lender's counsel regarding the Borrower's and the
Guarantor's authorization, execution and delivery of this Loan Agreement, dated
as of the date hereof (excluding Keystone), and the documents referenced herein,
and the incorporation or organization, as the case may be, and the good
standing, of each Borrower and of the Guarantor as of the date hereof.
ARTICLE II
LOANS AND TERMS OF PAYMENT
2.1 Revolving Loan.
2.1.1 Amount and Disbursement.
(a) Advances of the Revolving Loan and Issuance of Standby Letters of
Credit. Upon the terms and subject to the conditions herein set forth, Lender
agrees to make Advances of the Revolving Loan to Borrower from time to time from
the Closing Date to the Revolving Loan Maturity Date in an aggregate amount
outstanding at any one time not in excess of the Revolving Loan Commitment then
in effect. Lender agrees to issue Standby Letters of Credit under the
Revolving Loan upon satisfaction of the conditions set forth in subsection
2.1.1(b) below. The issuance of a Standby Letter of Credit shall immediately
reduce the amount of the Revolving Loan Commitment available for Advances by the
face amount of that Standby Letter of Credit. A draw against a Standby Letter of
Credit shall constitute an Advance of the Revolving Loan, and any Indebtedness
with respect to a Standby Letter of Credit or the reimbursement obligations
pursuant thereto shall be evidenced by the Note and secured by the Security
Agreement and the other Loan Documents;
(b) Conditions to Issuance of a Standby Letter of Credit. As
preconditions to the issuance of a Standby Letter of Credit, Lender shall
require the following:
(i) The conditions attendant to an Advance of the Revolving Loan shall be
satisfied; and
(ii) One or more Borrower Entities shall execute and deliver Lender's
Application and Agreement for Standby Letter of Credit and Lender's Continuing
Reimbursement Agreement for Standby Letters of Credit, on the forms provided by
and acceptable to Lender, as said documents may be amended or replaced from time
to time, together with such other documentation as Lender may request in support
thereof (collectively, the "Letter of Credit Documents"), at least five (5)
Business Days prior to the proposed date of issuance of a Standby Letter of
Credit. In the event of any conflict between the terms of this Loan Agreement
and the Letter of Credit Documents, the former shall control;
(c) Payments. In determining whether to pay under a Standby Letter of
Credit, Lender shall not have any obligation to the Borrower or Guarantor other
than to confirm that any documents required to be delivered under such Standby
Letter of Credit appear to have been delivered and appear to comply on their
face with the requirements of such Standby Letter of Credit. Any action taken
or omitted by Lender under or in connection with any Standby Letter of Credit,
if taken or omitted in the absence of gross negligence and willful misconduct,
shall not impose upon Lender any liability to the Borrower or Guarantor and
shall not reduce or impair Borrower's reimbursement obligations thereunder;
(d) Term and Renewals. A Standby Letter of Credit may be issued for a
term of up to one year, and, if Lender thereafter agrees, may be renewed for
such additional periods as Lender may agree to, provided however, that the
expiration date of a Standby Letter of Credit may not extend beyond the
Revolving Loan Maturity Date;
(e) Fees. A letter of credit fee in the amount of two percent (2%) of
the face value of each Standby Letter of Credit issued hereunder shall be paid
to Lender upon the date of issuance, and upon each anniversary thereof, for so
long as that Standby Letter of Credit remains outstanding;
(f) Obligations Absolute. The Borrower's obligations to repay any
Indebtedness arising from a draw on a Standby Letter of Credit shall be shall be
absolute and unconditional, irrespective of any setoff, counterclaim or defense
to payment which any Borrower may have or have had against Lender that Lender
shall not be responsible for, and the Borrower's obligation to reimburse sums
paid under a Standby Letter of Credit shall not be affected by, among other
things, the validity or genuineness of documents or of any endorsements thereon,
even if such documents should in fact prove to be in any respect invalid or
fraudulent, or any dispute between or among any Borrower, the beneficiaries of
the Standby Letter of Credit, and/or Lender. Lender shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with a Standby Letter
of Credit. The Borrower agrees that any action taken or omitted by Lender under
or in connection with a Standby Letter of Credit and the related drafts and
documents, if done without gross negligence or willful misconduct, shall be
binding upon the Borrower and shall incur any liability to the Borrower on the
part of Lender;
(g) Actions of Lender. The Lender shall be entitled to rely, and shall
be fully protected in relying, upon a Standby Letter of Credit and any draft,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper person or persons, and upon advice and statements of legal
counsel, independent accountants and other advisors selected by the Lender;
(h) INDEMNIFICATION. THE BORROWER ENTITIES, JOINTLY AND SEVERALLY,
SHALL INDEMNIFY AND HOLD HARMLESS LENDER AND ITS DIRECTORS, OFFICERS, AGENTS AND
EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS AND DAMAGES, LOSSES LIABILITIES,
COSTS OR EXPENSES WHICH LENDER MAY INCUR (OR WHICH MAY BE CLAIMED AGAINST LENDER
BY ANY PERSON WHATSOEVER) BY REASON OF OR IN CONNECTION WITH THE ISSUANCE,
EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT OR FAILURE TO PAY UNDER A
STANDBY LETTER OF CREDIT OR ANY ACTUAL OR PROPOSED USE OF THE STANDBY LETTER OF
CREDIT, provided that the Borrowers shall not be required to indemnify Lender
for any claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, caused by, (y) the willful misconduct or gross
negligence of Lender in determining whether a request presented under a Standby
Letter of Credit complied with the terms thereof, or (z) Lender's failure to pay
under a Standby Letter of Credit after the presentation to it of a request
strictly complying with the terms and conditions thereof. Nothing in this
Section 2.1.1 is intended to limit the rights or obligations of the Borrower
under any other provision of this Loan Agreement;
(i) Excessive Borrower's Obligations. If at any time, however,
Borrower's Obligations exceed the Revolving Loan Commitment then in effect, all
of such excess nevertheless shall constitute a part of Borrower's Obligations
and shall be secured by the Security Interests. Notwithstanding the references
in this Loan Agreement and the Loan Instruments to the various Borrower Entities
as a singular Borrower, each of them acknowledges and agrees that they are and
shall remain jointly and severally liable for all of Borrower's Obligations.
2.1.2 Revolving Loan Note.
The Revolving Loan shall be evidenced by the Revolving Loan Note.
2.1.3 Reborrowing.
Subject to the conditions set forth in this Section 2.1, Borrower from
time to time may reborrow all or any portion of any Advance of the Revolving
Loan which is repaid.
2.1.4 Conditions of Advances of the Revolving Loan.
The obligation of Lender to disburse any Advance of the Revolving Loan
is subject to the satisfaction of the following conditions precedent:
(a) no Event of Default or Incipient Default shall exist or would be
created by the making of any such Advance;
(b) each such Advance shall be in a minimum amount of $1,000 and
integral multiples of $1,000 in excess of that amount;
(c) Lender shall have received, no later than 2:00 p.m., Chicago time,
on the applicable Funding Date, a Notice of Borrowing from Borrower in the form
of Exhibit 2.1.4 with respect to such Advance;
(d) on the applicable Funding Date, each of Borrower's and Guarantor's
representations and warranties set forth in the Loan Instruments shall be true
and correct in all material respects when made and at and as of the time of the
Funding Date, except to the extent that any such representations and warranties
expressly relate to an earlier date; and
(e) availability shall be limited to Lender's advance of funds not
exceeding seventy-five percent (75%) of Borrower's Eligible Accounts Receivable.
2.1.A Equipment Loan.
As of the date of this Loan Agreement, no amounts are due and owing to Lender
under the Equipment Loan. Borrower and Lender hereby agree to terminate the
Equipment Loan (as that term is defined in the Existing Loan Agreement), and
Borrower hereby acknowledges that no further borrowing shall be available
thereunder. Lender hereby agrees to cancel the Equipment Loan Note (as that
term is defined in the Existing Loan Agreement) as of the date hereof and return
it to the Borrower, and releases Guarantor and each Personal Guarantor of all
obligations under the Guaranty with respect to the Equipment Loan.
2.1.B Guidance Loan.
As of the date of this Loan Agreement, no amounts are due and owing to
Lender under the Guidance Loan (as that term is defined in the Existing Loan
Agreement). Borrower and Lender hereby agree to terminate the Guidance Loan,
and Borrower hereby acknowledges that no further borrowing shall be available
thereunder. Lender hereby agrees to cancel the Guidance Loan Note (as that term
is defined in the Existing Loan Agreement) as of the date hereof and return it
to the Borrower, and hereby releases Guarantor and each Personal Guarantor of
all obligations under the Guaranty with respect to the Guidance Loan.
2.1.C Second Guidance Loan.
As of the date of this Loan Agreement, no amounts are due and owing to
Lender under the Second Guidance Loan (as that term is defined in the Existing
Loan Agreement). Borrower and Lender hereby agree to terminate the Second
Guidance Loan, and Borrower hereby acknowledges that no further borrowing shall
be available thereunder. Lender hereby agrees to cancel the Second Guidance
Loan Note (as that term is defined in the Existing Loan Agreement) as of the
date hereof and return it to the Borrower, and releases Guarantor and each
Personal Guarantor of all obligations under the Guaranty with respect to the
Second Guidance Loan.
2.2 Use of Proceeds of the Revolving Loan.
The proceeds of the Revolving Loan shall be used for working capital and
general corporate purposes.
2.3 Interest.
2.3.1 Interest Rate. The Principal Balance of the Revolving Loan
shall bear interest from the date hereof at a rate determined as follows:
If the ratio of Unsubordinated Indebtedness to EBITDA is:
The interest rate charged effective the first day of the next quarter shall be
equal to:
> 2.51 to 1
The Prime Rate in effect from time to time
> 2.00 to 1, <= 2.51 to 1
The Prime Rate in effect from time to time, less 0.25% per annum
<= 2.00 to 1
The Prime Rate in effect from time to time, less 0.50% per annum
provided, however, that during a Default Rate Period, Borrower's Obligations
shall bear interest at the applicable Default Rate. For the purposes of this
Section 2.3.1, EBITDA shall be determined based on a rolling four (4) quarter
average.
2.3.2 Interest Computation.
Interest shall be computed on the basis of a year consisting of 360 days
and charged for the actual number of days during the period for which interest
is being charged. In computing interest, the Funding Date shall be included and
the date of payment shall be excluded.
2.3.3 Maximum Interest.
Notwithstanding any provision to the contrary contained herein or in any
other Loan Instrument, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Borrower to Lender in excess of the
maximum contract rate of interest permitted by applicable law ("Excess
Interest"). If any Excess Interest is provided for or determined by a court of
competent jurisdiction to have been provided for in this Loan Agreement or any
other Loan Instrument, then in such event (i) Borrower shall not be obligated to
pay such Excess Interest, (ii) any Excess Interest collected by Lender shall be
refunded to the payor thereof, (iii) the interest rates provided for herein
(collectively the "Stated Rate") shall be automatically reduced to the maximum
rate allowed from time to time under applicable law (the "Maximum Rate") and
this Loan Agreement and the other Loan Instruments, as applicable, shall be
deemed to have been, and shall be, modified to reflect such reduction, and (iv)
Borrower shall not have any action against Lender for any damages arising out of
the payment or collection of such Excess Interest; provided, however, that if at
any time thereafter the Stated Rate is less than the Maximum Rate, Borrower
shall, to the extent permitted by law, continue to pay interest at the Maximum
Rate until such time as the total interest received by Lender is equal to the
total interest which Lender would have received had the Stated Rate been (but
for the operation of this provision) the interest rate payable. Thereafter, the
interest rate payable shall be the Stated Rate unless and until the Stated Rate
again exceeds the Maximum Rate, in which event the provisions contained in this
subsection 2.3.3 again shall apply.
2.3.4 Increased Costs.
If, after the Closing Date, either (i) any change in or in the
interpretation of any law or regulation is introduced (other than changes in
taxation of the net income of Lender), including, without limitation, with
respect to reserve requirements applicable to Lender, (ii) Lender complies with
any future guideline or request from any central bank or other Governmental Body
proposed or promulgated after the Closing Date or (iii) Lender determines that
the adoption of any applicable law, rule or regulation (other than changes in
taxation of the net income of Lender) regarding capital adequacy or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Body, central bank or comparable agency charged with the
interpretation or administration thereof announced after the Closing Date has or
would have the effect described below, or Lender complies with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such Governmental Body, central bank or comparable agency announced after
the Closing Date and in case of any event set forth in this clause (iii), such
adoption, change or compliance has or would have the direct or indirect effect
of reducing the rate of return on any of Lender's capital as a consequence of
its obligations hereunder to a level below that which Lender could have achieved
but for such adoption, change or compliance (taking into consideration Lender's
policies with respect to capital adequacy) by an amount deemed by Lender to be
material, and any of the foregoing events described in clauses (i), (ii) or
(iii) increases the cost to Lender of (A) funding or maintaining the Revolving
Loan or the Revolving Loan Commitment, or (B) issuing, causing the issuance of
making or maintaining any Letter of Credit, or reduces the amount receivable in
respect thereof by Lender, then Borrower shall upon demand by Lender at any time
within 180 days after the date on which an officer of Lender responsible for
overseeing this Loan Agreement knows or has reason to know of its right to
additional compensation under this subsection 2.3.4, pay to Lender additional
amounts sufficient to reimburse Lender against such increase in cost or
reduction in amount receivable; provided, however, such entity shall only be
entitled to additional compensation for any such costs incurred from and after
the date that is 30 days prior to the date Borrower receive such demand. A
certificate as to the amount of such increased cost, and setting forth in
reasonable detail the calculation thereof, shall be submitted to Borrower by
Lender, and shall be conclusive absent manifest error. Lender will promptly
notify Borrower of any event of which it has knowledge that would entitle Lender
to additional compensation under this subsection 2.3.4. Lender shall not request
any additional compensation under this subsection 2.3.4 unless it is generally
making similar requests of other borrowers similarly situated, and Lender agrees
to use a reasonable basis for calculating amounts allocable to the Revolving
Loan Commitment.
2.4 Principal and Interest Payments.
2.4.1 Interest.
Interest on the Revolving Loan shall be payable monthly in arrears
on the first Business Day of each month beginning with May 1, 2000.
2.4.2 Principal.
The Principal Balance of the Revolving Loan, together with all other
sums due to Lender pursuant to the terms of the Loan Instruments, shall be due
and payable in full on the Revolving Loan Maturity Date.
2.5 Mandatory Prepayments of the Revolving Loan.
If at any time or for any reason, Borrower's Obligations exceed the
Revolving Loan Commitment or, if for any reason, Borrower's Obligations exceeds
the availability requirements set forth in Section 2.1.4(e) hereof (any such
excess being referred to herein as an "Overadvance"), Borrowers shall
immediately pay to Lender, in Good Funds, the amount of such Overadvance.
2.6 Payments after Event of Default.
All payments received by Lender during the existence of an Event of
Default shall be applied in accordance with Section 8.4.
2.7 Method of Payment.
All payments to be made pursuant to the Loan Instruments by Borrower to
Lender shall be made by (i) direct debit from Borrower's operating account; or
(ii) wire transfer of Good Funds to Lender.
ARTICLE III
SECURITY
Borrower's Obligations shall be secured by a Lien upon all of the
Collateral, which Lien at all times shall be superior and prior to all other
Liens, except Permitted Prior Liens.
ARTICLE IV
CONDITIONS TO OBLIGATIONS OF PARTIES
The obligation of the parties to this Loan Agreement shall continue to
be governed by the Existing Loan Agreement pending satisfaction or waiver of all
of the following conditions in a manner, form and substance satisfactory to
Lender:
4.1 Delivery of Documents.
The deliveries set forth in Section 1.9 hereof shall have been delivered
to Lender, each duly authorized and executed, where applicable, in form and
substance satisfactory to Lender.
4.2 Performance; No Default.
Borrower and Guarantor shall have performed and complied with all
agreements and conditions contained in the Loan Instruments to be performed by
or complied with by such Person prior through the date hereof, and no Event of
Default shall exist or result from the execution of this Loan Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower and Guarantor represent and warrant to Lender as follows:
5.1 Existence and Power.
Borrower and Guarantor are business corporations, or limited liability
companies, as the case may be, duly formed and validly existing under the laws
of the jurisdiction of their respective formation. Borrower and Guarantor are
in good standing under the laws of each other jurisdiction in which the failure
to be in good standing could have a Material Adverse Effect. Borrower and
Guarantor have all requisite power and authority to own their Property and to
carry on their business as has been conducted through the date hereof and as
proposed to be conducted by Borrower and Guarantor following the date hereof.
5.2 Authority.
Borrower and Guarantor have full power and authority to enter into,
execute, deliver and carry out the terms of the Loan Instruments and to incur
the obligations provided for therein, all of which have been duly authorized by
all proper and necessary action and, are not prohibited by the organizational
instruments of Borrower and Guarantor.
5.3 Binding Agreements.
This Loan Agreement and the other Loan Instruments, when executed and
delivered, will constitute the valid and legally binding obligations of Borrower
and Guarantor, enforceable against Borrower and Guarantor in accordance with its
respective terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting the enforcement of creditors' rights generally and
(ii) equitable principles (whether or not any action to enforce such document is
brought at law or in equity).
5.4 Business and Property of Borrower and Guarantor.
5.4.1 Business and Property.
Borrower and Guarantor (i) own all Property necessary to conduct their
business as presently conducted and as has been conducted prior to the date
hereof and (ii) have not engaged in and do not propose to engage in any business
activity other than the business in which they are presently engaged.
5.4.2 Operating Agreements.
All Operating Agreements are in full force and effect and no event has
occurred which could result in the cancellation or termination of any such
Operating Agreement or the imposition thereunder of any liability upon Borrower
or Guarantor which could have a Material Adverse Effect.
5.4.3 Facility Sites.
There is set forth in Schedule 5.4.3 the locations of Borrower's and
Guarantor's (i) chief executive office, (ii) Property and (iii) books and
records.
5.4.4 Leases.
There is set forth in Schedule 5.4.4 a list of all Leases, together with
a complete and accurate address and legal description of each parcel of
Leasehold Property subject to such Leases. Each Lease is in full force and
effect, there has been no default in the performance of any of its terms or
conditions by Borrower or Guarantor or, to the best knowledge of Borrower and
Guarantor, any other party thereto, and, to the best knowledge of Borrower and
Guarantor, no claims of default have been asserted with respect thereto.
5.4.5 Real Property.
There is set forth in Schedule 5.4.5 a complete and accurate address and
legal description of each parcel of Real Property. The present and contemplated
use of the Leasehold Property and the Real Property is in compliance with all
applicable zoning ordinances and regulations and other laws and regulations, the
violation of which could have a Material Adverse Effect.
5.4.6 Operation and Maintenance of Equipment.
No equipment owned or operated will be owned or operated by Borrower
which is necessary for the operation of its business has been used, operated or
maintained in a manner which now or hereafter could result in the cancellation
or termination of the right of Borrower to use or make use of the same or which
could be expected to result in any material liability of Borrower for damages in
connection therewith. All of the equipment and other tangible personal property
owned by Borrower upon the date hereof and necessary to the operation of
Borrower's business is, in all material respects, in good operating condition
and repair (subject to normal wear and tear) and has been used, operated and
maintained in substantial compliance with all applicable laws, rules and
regulations.
5.4.7 Existing Indebtedness.
There is set forth in Schedule 5.4.7 a complete description of the
Existing Indebtedness.
5.5 Title to Property; Liens.
Borrower has (i) good and marketable title to all of its Property,
except the portion thereof consisting of a leasehold estate and (ii) a valid
leasehold estate in each portion of its Property which consists of a leasehold
estate. All of such Property is free and clear of all Liens, except Permitted
Liens. Upon the proper filing with the appropriate Governmental Bodies of
appropriate Uniform Commercial Code financing statements, the applicable Loan
Instruments will create valid and perfected first Liens in the Collateral,
subject only to Permitted Prior Liens.
5.6 Financial Statements.
Borrower and Guarantor have delivered to Lender the financial statements
described in Schedule 5.6. To the best of Borrower's and Guarantor's knowledge,
such financial statements present fairly in all material respects the results of
their operations for the periods covered thereby and their financial condition
as of the dates indicated therein. All of such financial statements have been
prepared in conformity with GAAP consistently applied. Since the date of the
most recent financial statement, there has been no change which has had a
Material Adverse Effect.
5.7 Litigation.
There is set forth in Schedule 5.7 a description of all actions, suits,
arbitration proceedings and claims pending or, to the best knowledge of Borrower
and Guarantor, threatened against Borrower and Guarantor, at law or in equity or
before any Governmental Body on the date hereof. There are no actions, suits,
arbitration proceedings or claims pending, or to the best knowledge of Borrower
and Guarantor, threatened against Borrower and Guarantor, at law or in equity or
before any Governmental Body, including the matters set forth in such Schedule
5.7, which could reasonably be expected to have a Material Adverse Effect.
5.8 Defaults in Other Agreements; Consents; Conflicting Agreements.
Borrower and Guarantor are not in default under any agreement to which
they are a party or by which they or any of their Property is bound, the effect
of which default could reasonably be expected to have a Material Adverse
Effect. No authorization, consent, approval or other action by, and no notice
to or filing with, any Governmental Body or any other Person which has not
already been obtained, taken or filed, as applicable, is required (i) for the
due execution, delivery or performance by Borrower and Guarantor of any of the
Instruments to which Borrower and Guarantor are a party or (ii) as a condition
to the validity or enforceability of any of the Instruments to which Borrower
and Guarantor are a party or any of the transactions contemplated thereby or the
priority of the Security Interests, except for certain filings to establish and
perfect the Security Interests. No provision of any mortgage, indenture,
contract, agreement, statute, rule, regulation, judgment, decree or order
binding on Borrower or Guarantor or affecting their Property conflicts with, or
requires any consent which has not already been obtained under, or would in any
way prevent the execution, delivery or performance of the terms of any of the
Instruments or affect the validity or priority of the Security Interests. The
execution, delivery and performance of the terms of the Instruments will not
constitute a default under, or result in the creation or imposition of, or
obligation to create, any Lien upon the Property of Borrower or Guarantor
pursuant to the terms of any such mortgage, indenture, contract or agreement.
5.9 Taxes.
Borrower and Guarantor have filed all tax returns required to be filed,
and have paid, or made adequate provision for the payment of, all taxes shown to
be due and payable on such returns or in any assessments made against it, and no
tax liens have been filed and, to the best knowledge of Borrower and Guarantor,
no claims are being asserted in respect of such taxes which are required by GAAP
to be reflected in the financial statements of Borrower and Guarantor and are
not so reflected therein. The charges, accruals and reserves on the books of
Borrower and Guarantor with respect to all federal, state, local and other taxes
are considered by the management of Borrower and Guarantor to be adequate, and
Borrower or Guarantor do not know of any unpaid assessment which is or might be
due and payable by Borrower and Guarantor or creates a Lien against any of
Borrower's and Guarantor's Property, except such assessments as are being
contested in good faith and by appropriate proceedings diligently conducted, and
for which adequate reserves have been set aside in accordance with GAAP. None
of the tax returns of Borrower and Guarantor are under audit.
5.10 Compliance with Applicable Laws.
Borrower is not in default in respect of any judgment, order, writ,
injunction, decree or decision of any Governmental Body, which default could
have a Material Adverse Effect. Borrower is in compliance in all material
respects with all applicable statutes and regulations, including, without
limitation, all Environmental Laws, ERISA and all laws and regulations relating
to unfair labor practices, equal employment opportunity and employee safety, of
all Governmental Bodies. No material condemnation, eminent domain or
expropriation has been commenced or, to the best knowledge of Borrower,
threatened against the Property which Borrower owns as of the date hereof.
5.11 Patents, Trademarks, Franchises and Agreements.
There is set forth in Schedule 5.11 a complete and accurate list of all
of the Intellectual Property. Borrower owns, possesses or has the right to use
such Intellectual Property (i) which is necessary for the conduct of the
business proposed to be conducted by Borrower on and after the date hereof and
(ii) for which the failure to own, possess or have the right to use could have a
Material Adverse Effect, in each case, without any known conflict with the
rights of others and free of any Liens other than the Security Interests.
5.12 Regulatory Matters.
Borrower has duly and timely filed all reports and other filings which
are required to be filed by Borrower under any applicable law, rule or
regulation of any Governmental Body, the non-filing of which could have a
Material Adverse Effect, and is in compliance with all such laws, rules and
regulations, the noncompliance with which could have a Material Adverse Effect.
5.13 Environmental Matters.
Borrower is in compliance in all material respects with all applicable
Environmental Laws and no portion of any of the Leasehold Property or the Real
Property has been used as a landfill. There currently are not any known
Hazardous Materials generated, manufactured, released, stored, buried or
deposited over, beneath, in or on (or used in the construction and/or renovation
of) the Real Property or Leasehold Property in violation of applicable
Environmental Laws.
5.14 Application of Certain Laws and Regulations.
Borrower and Guarantor are not and no Affiliate of Borrower or Guarantor
is:
5.14.1 Investment Company Act.
An "investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
5.14.2 Holding Company.
A "holding company," or a "subsidiary company" of a "holding company,"
or an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
5.14.3 Foreign or Enemy Status.
An "enemy" or an "ally of an enemy" within the meaning of Section 2 of the
Trading with the Enemy Act, (ii) a "national" of a foreign country designated in
Executive Order No. 8389, as amended, or of any "designated enemy country" as
defined in Executive Order No. 9095, as amended, of the President of the United
States of America, in each case within the meaning of such Executive Orders, as
amended, or of any regulation issued thereunder, (iii) a "national of any
designated foreign country" within the meaning of the Foreign Assets Control
Regulations or the Cuban Assets Control Regulations of the United States of
America (Code of Federal Regulations, Title 31, Chapter V, Part 515, Subpart B,
as amended) or (iv) an alien or a representative of any alien or foreign
government within the meaning of Section 310 of Title 47 of the United States
Code.
5.14.4 Regulations as to Borrowing.
Subject to any statute or regulation which regulates the incurrence of
any Indebtedness for Borrowed Money, including, without limitation, statutes or
regulations relative to common or interstate carriers or to the sale of
electricity, gas, steam, water, telephone, telegraph or other public utility
services.
5.15 Margin Regulations.
None of the transactions contemplated by this Loan Agreement or any of
the other Instruments, including the use of the proceeds of the Loans, will
violate or result in a violation of Section 7 of the Securities Exchange Act of
1934, as amended, or any regulations issued pursuant thereto, including, without
limitation, Regulations G, T, U and X, and Borrower does not own or intend to
carry or purchase any "margin security" within the meaning of such Regulation U
or G.
5.16 Other Indebtedness.
Upon the execution of this Loan Agreement, there will be no Indebtedness
for Borrowed Money owed by Borrower to any Person, except (i) Borrower's
Obligations, and (ii) Permitted Senior Indebtedness and Permitted Subordinated
indebtedness permitted to exist as of the Closing Date pursuant to this Loan
Agreement. All such Permitted Subordinated Indebtedness is listed and described
in Schedule 5.16 hereto.
5.17 No Misrepresentation.
Neither this Loan Agreement nor any other Loan Instrument, certificate,
information or report furnished or to be furnished by or on behalf of Borrower
or Guarantor to Lender in connection with any of the transactions contemplated
hereby or thereby, contains or will contain a misstatement of material fact, or
omits or will omit to state a material fact required to be stated in order to
make the statements contained herein or therein, taken as a whole, not
misleading in the light of the circumstances under which such statements were
made. There is no fact, other than information known to the public generally,
known to Borrower and Guarantor after diligent inquiry, that could have a
Material Adverse Effect that has not expressly been disclosed to Lender in
writing.
5.18 Employee Benefit Plans.
5.18.1 No Other Plans.
Neither Borrower, Guarantor nor any ERISA Affiliate maintains or
contributes to, or has any obligation under, any Employee Benefit Plan other
than those identified on Schedule 5.18.1. Borrower has provided Lender accurate
and complete copies of all contracts, agreements and documents described on
Schedule 5.18.1.
5.18.2 ERISA and Code Compliance and Liability.
Borrower, Guarantor and each ERISA Affiliate are in compliance with all
applicable provisions of ERISA and the regulations and published interpretations
thereunder with respect to all Employee Benefit Plans except where failure to
comply would not result in a material liability to Borrower or Guarantor and
except for any required amendments for which the remedial amendment period as
defined in Section 401(b) of the Code has not yet expired. Each Employee Benefit
Plan that is intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and each trust
related to such plan has been determined to be exempt under Section 401(a) of
the Code. No material liability has been incurred by Borrower or Guarantor or
any ERISA Affiliate which remains unsatisfied for any taxes or penalties with
respect to any Employee Benefit Plan or any Multiemployer Plan.
5.18.3 Funding.
No Pension Plan has been terminated, nor has any accumulated funding
deficiency (as defined in Section 412 of the Code) been insured (without regard
to any waiver granted under Section 412 of the Code), nor has any funding waiver
from the Internal Revenue Service been received or requested with respect to any
Pension Plan, nor has Borrower or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required by Section 412 of
the Code, Section 302 of ERISA or the terms of any Pension Plan prior to the due
dates of such contributions under Section 412 of the Code or Section 302 of
ERISA, nor has there been any event requiring any disclosure under Section
4041(c)(3)(C), 4063(a) or 4068 of ERISA with respect to any Pension Plan.
5.18.4 Prohibited Transactions and Payments.
Neither Borrower, Guarantor nor any ERISA Affiliate has: (i) engaged in
a nonexempt "prohibited transaction" as such term is defined in Section 406 of
ERISA or Section 4975 of the Code; (ii) incurred any liability to the PBGC which
remains outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid; (iii) failed to make a required contribution
or payment to a Multiemployer Plan; or (iv) failed to make a required
installment or other required payment under Section 412 of the Code.
5.18.5 No Termination Event.
No Termination Event has occurred or is reasonably expected to occur.
5.18.6 ERISA Litigation.
No material proceeding, claim, lawsuit and/or investigation is existing
or, to the best knowledge of Borrower and Guarantor, threatened concerning or
involving any (i) employee welfare benefit plan (as defined in Section 3(l) of
ERISA) currently maintained or contributed to by Borrower or any ERISA
Affiliate, (ii) Pension Plan or (iii) Multiemployer Plan.
5.19 Employee Matters.
5.19.1 Collective Bargaining Agreements; Grievances.
Except as set forth in Schedule 5.19.1, (i) none of the employees of
Borrower is subject to any collective bargaining agreement with Borrower, (ii)
no petition for certification or union election is pending with respect to the
employees of Borrower and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of Borrower and (iii)
there are no strikes, slowdowns, work stoppages, unfair labor practice
complaints, grievances, arbitration proceedings or controversies pending or, to
the best knowledge of Borrower, threatened against Borrower by any of Borrower's
employees, other than employee grievances or controversies arising in the
ordinary course of business that could not in the aggregate be expected to have
a Material Adverse Effect.
5.19.2 Claims Relating to Employment.
Neither Borrower, Guarantor nor, to Borrower's and Guarantor's best
knowledge, any employee of Borrower or Guarantor, is subject to any employment
agreement or non-competition agreement with any former employer or any other
Person due to (i) any information which Borrower or Guarantor would be
prohibited from using under the terms of such agreement or (ii) any legal
considerations relating to unfair competition, trade secrets or proprietary
information.
5.20 Burdensome Obligations.
After giving effect to the transactions contemplated by the Instruments
(i) Borrower and Guarantor (A) will not be a party to or be bound by any
franchise, agreement, deed, lease or other instrument, or be subject to any
restriction, which is so unusual or burdensome so as to cause, in the
foreseeable future, a Material Adverse Effect and (B) does not intend to incur,
or believe that it will incur, debts beyond its ability to pay such debts as
they become due. Borrower does not presently anticipate that future
expenditures needed to meet the provisions of federal or state statutes, orders,
rules or regulations will be so burdensome so as to have a Material Adverse
Effect.
5.21 Subsidiaries.
Borrower has no subsidiaries.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until all of Borrower's and Guarantor's Obligations are paid and
performed in full Borrower and Guarantor agree that they will:
6.1 Legal Existence; Good Standing.
Maintain their existence and their good standing in the jurisdiction of
their formation and maintain their qualification to transact business in each
jurisdiction in which the failure so to qualify would have a Material Adverse
Effect.
6.2 Inspection.
Permit representatives of Lender, at any time without notice, to (i)
visit their offices, (ii) examine their books and records and Accountants'
reports relating thereto, (iii) make copies or extracts therefrom, (iv) discuss
their affairs with their employees, (v) examine and inspect their Property and
(vi) meet and discuss their affairs with the Accountants, and such Accountants,
as a condition to their retention by Borrower and Guarantor, are hereby
irrevocably authorized by Borrower and Guarantor to fully discuss and disclose
all such affairs with Lender.
6.3 Financial Statements and Other Information.
Maintain a standard system of accounting in accordance with GAAP and
furnish to Lender:
6.3.1 Monthly Statements.
As soon as available, and in any event within twenty (20) days after
the close of each month, an accounts receivable aging and borrowing base
certificate from Borrower, as of the end of such month.
6.3.2 Quarterly Statements.
As soon as is available and in any event within forty-five (45) days
after the close of each quarter:
(a) copy of the balance sheet of Borrower and Guarantor, as of the end
of such quarter;
(b) statements of operations and EBITDA of Borrower and Guarantor for
such quarter; and
(c) such other financial information for the Borrower and Guarantor as
is contained in Guarantor's 10-Q Report for such quarter or would be required in
such report in the event Guarantor is no longer required to file reports under
the Securities Exchange Act of 1934, as amended.
6.3.3 Annual Statements.
As soon as available and in any event within 90 days after the close of
Guarantor's fiscal year:
(a) the consolidated balance sheet of Guarantor and its subsidiaries as
of the end of such fiscal year and the statements of operations, cash flows,
shareholders' equity and EBITDA of Guarantor for such fiscal year
(collectively, the "Basic Financial Statements");
(b) an opinion of the Accountants which shall accompany the Basic
Financial Statements which opinion shall be unqualified as to going concern and
scope of audit, stating that (i) the examination by the Accountants in
connection with such Basic Financial Statements has been made in accordance with
generally accepted auditing standards, (ii) such Basic Financial Statements have
been prepared in conformity with GAAP and in a manner consistent with prior
periods, and (iii) such Basic Financial Statements fairly present in all
material respects the financial position and results of operations of Guarantor
and its subsidiaries; and
(c) a letter from the Accountants stating that the statements of EBITDA
were computed in accordance with the requirements of this Loan Agreement.
6.3.4 Compliance Certificate.
As soon as is available and in any event within forty-five (45) days
after the close of each quarter, a Compliance Certificate as of the end of such
quarter.
6.3.5 Accountants' Certificate.
Simultaneously with the delivery of the certified Basic Financial
statements required by subsection 6.3.3, copies of a certificate of the
Accountants stating that (i) they have checked the computations delivered by
Guarantor in compliance with subsection 6.3.3, and (ii) in making the
examination necessary for their audit of the Basic Financial Statements for such
year, nothing came to their attention of a financial or accounting nature that
caused them to believe that (A) Guarantor was not in compliance with the terms,
covenants, provisions or conditions of any of the Loan Instruments, or (B) there
shall have occurred any condition or event which would constitute an Event of
Default, or, if so, specifying in such certificate all such instances of non
compliance and the nature and status thereof.
6.3.6 Audit Reports.
Promptly upon receipt thereof, a copy of each report, other than the
reports referred to in subsection 6.3.3, including any so-called "Management
Letter" or similar report, submitted to Borrower or Guarantor by the Accountants
in connection with any annual, interim or special audit made by the Accountants
of the books of Borrower or Guarantor.
6.3.7 Notice of Defaults; Loss.
Prompt written notice if: (i) any Indebtedness of Borrower or Guarantor
is declared or shall become due and payable prior to its declared or stated
maturity, or called and not paid when due, (ii) an event has occurred that
enables the holder of any note, or other evidence of such Indebtedness,
certificate or security evidencing any such Indebtedness of Borrower or
Guarantor to declare such Indebtedness due and payable prior to its stated
maturity, (iii) there shall occur and be continuing an Event of Default,
accompanied by a statement setting forth what action Borrower or Guarantor
proposes to take in respect thereof, or (iv) any event shall occur which has a
Material Adverse Effect, including the amount or the estimated amount of any
loss or adverse effect.
6.3.8 Notice of Suits; Adverse Events.
Prompt written notice of: (i) any citation, summons, subpoena, order to
show cause or other order naming Borrower or Guarantor a party to any proceeding
before any Governmental Body which might reasonably be expected to have a
Material Adverse Effect, including with such notice a copy of such citation,
summons, subpoena, order to show cause or other order, (ii) any lapse or other
termination of any license, permit, franchise, agreement or other authorization
issued to Borrower or Guarantor by any Governmental Body or any other Person
that is material to the operation of the business of Borrower or Guarantor,
(iii) any refusal by any Governmental Body or any other Person to renew or
extend any such license, permit, franchise, agreement or other authorization and
(iv) any dispute between Borrower or Guarantor and any Governmental Body or any
other Person, which lapse, termination, refusal or dispute referred to in
clauses (ii) and (iii) above or in this clause (iv) could have a Material
Adverse Effect.
6.3.9 Reports to Members, Creditors and Governmental Bodies.
(a) Promptly upon becoming available, copies of all regular and periodic
reports sent by Borrower or Guarantor to any of its creditors, and all
registration statements and prospectuses filed by Guarantor with any securities
exchange or with the Securities and Exchange Commission or any Governmental Body
succeeding to any of its functions, and of all statements generally made
available by Borrower or Guarantor concerning material developments in the
business of Borrower or Guarantor.
(b) Promptly upon becoming available, copies of any periodic or special
reports filed by Borrower or Guarantor with any Governmental Body or Person, if
such reports indicate any material change in the business, operations, affairs
or condition of Borrower or Guarantor, or if copies thereof are requested by
Lender, and copies of any material notices and other communications from any
Governmental Body or Person which specifically relate to Borrower or Guarantor.
6.3.10 ERISA Notices and Requests.
(a) With reasonable promptness, and in any event within 30 days after
occurrence of any of the following, notice and/or copies of: (i) the
establishment of any new Employee Benefit Plan, Pension Plan or
Multiemployer Plan; (ii) the commencement of contributions to any
Employee Benefit Plan, Pension Plan or Multiemployer Plan to which
Borrower or any of its ERISA Affiliates was not previously contributing
Or any increase in the benefits of any existing Employee Benefit Plan,
Pension Plan or Multiemployer Plan; (iii) each funding waiver request
filed with respect to any Employee Benefit Plan and all communications
received or sent by Borrower or any ERISA Affiliate with respect to
such request; and (iv) the failure of Borrower or any of its ERISA
Affiliates to make a required installment or payment under Section 302
of ERISA or Section 412 of the Code by the due date.
(b) Promptly and in any event within 10 days of becoming aware
of the occurrence of or forthcoming occurrence of any (i) Termination
Event or (ii) "prohibited transaction," as such term is defined in Section
406 of ERISA or Section 4975 of the Code, in connection with any Pension
Plan or any trust created thereunder, a notice specifying the nature thereof,
what action Borrower or Guarantor has taken, is taking or proposes to take
with respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto.
(c) With reasonable promptness but in any event within 10 days after the
occurrence of any of the following, copies of: (i) any favorable or unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of an Employee Benefit Plan under Section 401 (a) of the Code;
(ii) all notices received by Borrower or any ERISA Affiliate of the PBGC's
intent to terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan; (iii) each Schedule B (Actuarial Information) to
the annual report (Form 5500 Series) filed by Borrower or any ERISA Affiliate
with the Internal Revenue Service with respect to each Pension Plan; and (iv)
all notices received by Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA; and written notice within two Business Days
of Borrower's or any ERISA Affiliate's filing of or intention to file a notice
of intent to terminate any Pension Plan under a distress termination within the
meaning of Section 4041(c) of ERISA.
6.3.11 Other Information.
(a) Immediate notice of any change in the location of any Property of
Borrower or Guarantor which is material to or necessary for the continued
operation of Borrower's business, any change in the name of Borrower, any sale
or purchase of Property outside the regular course of business of Borrower, any
change in the residence of any Personal Guarantor and any change in the business
or financial affairs of Borrower, which change could have a Material Adverse
Effect.
(b) Promptly upon request therefor, such other information and reports
relating to the past, present or future financial condition, operations, plans
and projections of Borrower as Lender reasonably may request from time to time.
6.4 Reports to Governmental Bodies and Other Persons.
Timely file all material reports, applications, documents, instruments
and information required to be filed pursuant to all rules and regulations of
any Governmental Body or other Person having jurisdiction over the operation of
the business of Borrower or Guarantor, including, but not limited to, such of
the Loan Instruments as are required to be filed with any such Governmental
Body or other Person pursuant to applicable rules and regulations promulgated
by such Governmental Body or other Person.
6.5 Maintenance of Licenses and Other Agreements.
Maintain in full force and effect at all times, and apply in a timely
manner for renewal of, all licenses, trademarks, trade names and agreements
necessary for the operation of their business, the loss of any of which could
have a Material Adverse Effect.
6.6 Insurance.
6.6.1 Maintenance of Insurance.
Maintain in full force and effect Business Insurance as may be required
by law or by the Loan Instruments and as may be customarily maintained by a
similarly situated business, all of which shall be written by insurers and in
amounts and forms satisfactory to Lender. Lender shall be named as an additional
insured on each policy of liability insurance. Each policy of casualty insurance
shall contain a standard "Lender loss payable" endorsement in favor of Lender.
6.6.2 Claims and Proceeds.
Borrower and Guarantor hereby direct all insurers under all policies of
Business Insurance to pay all proceeds payable thereunder directly to Lender and
Borrower and Guarantor hereby authorize Lender to collect all such proceeds.
Borrower and Guarantor irrevocably appoint Lender (and all officers, employees
of Lender), as Borrower's and Guarantor's true and lawful attorney and agent in
fact for the purpose of and with power to make, settle and adjust claims under
such policies of insurance, endorse the name of Borrower on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance, and to make all determinations and decisions with respect to such
policies of insurance. Borrower and Guarantor acknowledge that such appointment
as attorney and agent in fact is a power, coupled with an interest, and
therefore is irrevocable. Borrower and Guarantor shall promptly notify Lender of
any loss, damage, destruction or other casualty to the Collateral. The insurance
proceeds received on account of any loss, damage, destruction or other casualty
at the option of Lender may be (i) applied to the payment of Borrower's
Obligations in the following order of priority: (A) first, to the payment of any
and all sums which then are due and payable pursuant to the terms of the Loan
Instruments, other than the Principal Balance and interest accrued thereon, (B)
next, to accrued and unpaid interest on the Principal Balance, and (C) then, to
the Principal Balance, or (ii) held by Lender and applied to pay for the cost of
repair or replacement of the Property which was the subject of such loss,
damage, destruction or other casualty, in which event such proceeds shall be
made available in the manner and under such conditions as Lender reasonably may
require. In the event such proceeds are to be applied to the repair or
replacement of Property, the Property shall be repaired or replaced so as to be
of at least equal value and substantially the same character as prior to such
loss, damage, destruction or other casualty.
6.7 Future Leases.
Deliver to Lender, concurrently with the execution by Borrower or
Guarantor, as lessee, of any lease pertaining to real property, (i) an executed
copy thereof, and (ii) a Landlord's Consent from the lessor under such lease.
6.8 Environmental Matters.
At all times comply with, and be responsible for, its obligations under
all Environmental Laws applicable to the Real Property and Leasehold Property
and any other Property owned by Borrower or Guarantor or used by Borrower in the
operation of Borrower's business. At its sole cost and expense, Borrower shall
(i) comply in all respects with (A) any notice of any violation or
administrative or judicial complaint or order having been filed against Borrower
or Guarantor, any portion of any Real Property or Leasehold Property or any
other Property owned by Borrower or Guarantor or used by Borrower or Guarantor
in the operation of its business alleging violations of any law, ordinance
and/or regulation requiring Borrower or Guarantor to take any action in
connection with the release, transportation and/or clean-up of any Hazardous
Materials, and (B) any notice from any Governmental Body or any other Person
alleging that Borrower or Guarantor is or may be liable for costs associated
with a response or clean-up of any Hazardous Materials or any damages resulting
from such release or transportation, or (ii) diligently contest in good faith by
appropriate proceedings any demands set forth in such notices, provided (A)
reserves in an amount reasonably satisfactory to Lender to pay the costs
associated with complying with any such notice are established by Borrower or
Guarantor and (B) no Lien would or will attach to the Property which is the
subject of any such notice as a result of any compliance by Borrower or
Guarantor which is delayed during any such contest. Promptly upon receipt of any
notice described in the foregoing clause (i), Borrower or Guarantor shall
deliver to Lender a copy thereof. At the request of Lender, Borrower or
Guarantor shall deliver to Lender an environmental audit with respect to any
real estate acquired or leased by Borrower or Guarantor.
6.9 Compliance with Laws.
Comply with all federal, state and local laws, ordinances, requirements
and regulations and all judgments, orders, injunctions and decrees applicable to
Borrower or Guarantor and their operations, the failure to comply with which
would reasonably be expected to have a Material Adverse Effect.
6.10 Taxes and Claims.
Pay and discharge all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits, or upon any Property
belonging to it, prior to the date on which penalties attach thereto, and all
lawful claims which, if unpaid, might become a Lien (other than a Permitted
Lien) upon the Property of Borrower or Guarantor, provided that Borrower and
Guarantor shall not be required by this Section 6.10 to pay any such amount if
the same is being contested diligently and in good faith by appropriate
proceedings and as to which Borrower and Guarantor has set aside reserves on its
books reasonably satisfactory to Lender.
6.11 Maintenance of Properties.
Maintain all of its Properties necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted.
6.12 Governmental Approvals.
Upon the exercise by Lender of any power, right or privilege pursuant to
the provisions of any of the Loan Instruments requiring any consent, approval or
authorization of any Governmental Body, promptly execute and cause the execution
of all applications, certificates, instruments and other documents that Lender
may be required to obtain for such consent, approval or authorization.
6.13 Payment of Indebtedness.
Except as to matters being contested in good faith and by appropriate
proceedings, promptly pay when due, or in conformance with customary trade
terms, all of its Indebtedness.
6.14 Maintenance of Accounts.
Continue to maintain its primary disbursement account and all of its
collection accounts (including all such accounts for its affiliates) with Lender
under Lender's customary terms and conditions. Borrower shall not be required
to maintain a compensating balance in its disbursement accounts other than
balances sufficient to cover disbursement activities and to pay service charges.
ARTICLE VII
NEGATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full,
Borrower and Guarantor shall not:
7.1 Borrowing.
Create, incur, assume or suffer to exist any liability for Indebtedness
for Borrowed Money except (i) Borrower's Obligations; (ii) Permitted Senior
Indebtedness; and (iii) Permitted Subordinated Indebtedness.
7.2 Liens.
Create, incur, assume or suffer to exist any Lien upon any of its
Property, including Guarantor's capital stock ownership of Borrower, whether now
owned or hereafter acquired, except Permitted Liens.
7.3 Merger and Acquisition.
Except for the proposed migratory merger of Keystone into an Indiana
corporation, with the latter as survivor (and further provided that Lender has
received (a) thirty (30) days' advance written notice of same, (b) copies of the
forms of all documents which it may reasonably request, e.g., Agreement and Plan
of Merger and Articles of Incorporation/Merger, no later than fifteen (15) days
prior to the consummation of such merger, (c) a security agreement executed by
the entity which will survive the merger, substantially in the form of security
agreement then existing between Lender and the other Borrower Entities with
respect to Borrower's Obligations, no later than ten (10) days prior to the
consummation of such merger, and (d) certified copies of all filed and/or
executed merger documents which it may deem sufficient, in its reasonable
judgment, to protects its rights with respect to this Agreement and the
transactions contemplated hereby, promptly upon consummation of such merger),
consolidate with or merge with or into any Person, or acquire directly or
indirectly all or substantially all of the capital stock, equity interests or
Property of any Person.
7.4 Contingent Liabilities.
Assume, guarantee, endorse, contingently agree to purchase, become
liable in respect of any letter of credit, or otherwise become liable upon the
obligation of any Person, except for liabilities arising from the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business.
7.5 Dividends and Distributions.
Except as may be required by Carolina's organic documents, make any
dividends, distributions or other expenditures with respect to Borrower's or
Guarantor's capital stock ownership interests or apply any of its Property to
the purchase, redemption or other retirement of, or set apart any sum for the
payment of, or make any other distribution by reduction of capital or otherwise
in respect of, any of the Borrower's or Guarantor's capital stock ownership
interests.
7.6 Capital Expenditures.
In any year, make or incur, any Capital Expenditures, other than Capital
Expenditures not in excess of the sum of $150,000.
7.7 Payments of Indebtedness for Borrowed Money
Make any voluntary or optional prepayment of any Indebtedness for
Borrowed Money other than Borrower's Obligations and other than interest
payments due to the holders of the Permitted Subordinated Indebtedness. Such
interest payments with respect to the Permitted Subordinated Indebtedness may
only be made upon regular terms and conditions and only so long as no Event of
Default exists or has been declared.
7.8 Investments, Loans.
At any time purchase or otherwise acquire, hold or invest in the capital
stock of, or any other interest in, any Person, or make any loan or advance to,
or enter into any arrangement for the purpose of providing funds or credit to,
or make any other investment, whether by way of capital contribution or
otherwise, in or with any Person, including, without limitation, any Affiliate,
except (i) investments in direct obligations of, or instruments unconditionally
guaranteed by, the United States of America or in certificates of deposit issued
by a Qualified Depository, (ii) investments in commercial or finance paper
which, at the time of investment, is rated "A" or better by Xxxxx'x Investors
Service, Inc., or Standard & Poor's Corporation, respectively, or at the
equivalent rate by any of their respective successors, (iii) any interests in
any money market account maintained, at the time of investment, with a Qualified
Depository, the investments of which, at the time of investment, are restricted
to the types specified in clause (i) above. All investments permitted pursuant
to clauses (i), (ii) and (iii) of this Section 7.8 shall have a maturity date
not exceeding one year.
7.9 Fundamental Business Changes.
Materially change the nature of its business.
7.10 Facility Sites.
Change the locations of its chief executive office or other Property
used in the operation of its business unless (i) Lender shall have received at
least 30 days' prior written notice thereof, (ii) Lender shall have received
satisfactory evidence that such change could not reasonably be expected to have
a Material Adverse Effect and (iii) Borrower and Guarantor shall have executed
and delivered to Lender any documents Lender reasonably may require in order to
maintain the validity and priority of the Security Interests.
7.11 Sale or Transfer of Assets.
Sell, lease, assign, transfer or otherwise dispose of any Property
(other than in the ordinary course of business) including, but not limited to
Guarantor's stock ownership interests in Borrower, except for the sale or
disposition of (A) Property which is not material to or necessary for the
continued operation of its business and (B) obsolete or unusable items of
equipment which promptly are replaced with new items of equipment of like
function and comparable value to the unusable items of equipment when the same
were new or not obsolete or unusable, provided such replacement items of
equipment shall become subject to the Security Interests. This Section 7.11
shall not apply to the proposed conversion of Carolina to an Indiana limited
liability company or to the reincorporation of Keystone as an Indiana
corporation, provided in both cases that Lender has been notified in advance of
such transactions, and has been provided with certified copies of all documents
related thereto which it may deem sufficient, in its reasonable judgment, to
protects its rights with respect to this Agreement and the transactions
contemplated hereby.
7.12 Amendment of Certain Agreements.
Amend, modify or waive any term or provision of its articles of
organization, the Leases or any of the Instruments. This Section 7.12 shall not
apply to the proposed conversion of Carolina to an Indiana limited liability
company or the reincorporation of Keystone as an Indiana corporation, provided
in both cases that Lender has been notified in advance of such transactions, and
has been provided with certified copies of all documents related thereto which
it may deem sufficient, in its reasonable judgment, to protects its rights with
respect to this Agreement and the transactions contemplated hereby.
7.13 Acquisition of Additional Properties.
Acquire any additional Property except such Property as is necessary to
or useful in the operation of its business, provided such acquisitions shall be
subject to the conditions and limitations set forth in this Loan Agreement.
7.14 Transactions with Affiliates.
Sell, lease, assign, transfer or otherwise dispose of any Property to
any of its Affiliates, lease Property, render or receive services or purchase
assets from any such Affiliate, or otherwise enter into any contractual
relationship with any such Affiliate, except in the ordinary course of business
on terms no less favorable to Borrower or Guarantor than would be obtainable on
an arm's-length basis by Borrower or Guarantor from a Person who is not an
Affiliate of Borrower or Guarantor. This Section 7.14 shall not apply to
the proposed conversion of Carolina to an Indiana limited liability company or
the reincorporation of Keystone as an Indiana corporation, provided in both
cases that Lender has been notified in advance of such transactions, and has
been provided with certified copies of all documents related thereto which it
may deem sufficient, in its reasonable judgment, to protects its rights with
respect to this Agreement and the transactions contemplated hereby.
7.15 Compliance with ERISA.
(i) Permit the occurrence of any Termination Event which would result in
a liability to Borrower or any ERISA Affiliate in excess of $50,000;
(ii) Permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such Pension Plans
allocable to such benefit liabilities by more than $50,000;
(iii) Permit any accumulated funding deficiency in excess of $50,000 (as
defined in Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived;
(iv) Fail to make any contribution or payment to any Multiemployer Plan
which Borrower or any ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining thereto
which results in or is likely to result in a liability in excess of $50,000;
(v) Engage, or permit any ERISA Affiliate to engage, in any "prohibited
transaction" as such term is defined in Section 406 of ERISA or Section 4975 of
the Code for which a civil penalty pursuant to Section 502(i) of ERISA or a tax
pursuant to Section 4975 of the Code in excess of $50,000 is imposed;
(vi) Permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee Benefit Plan
which establishment or amendment could result in liability to Borrower or any
ERISA Affiliate or increase the obligation of Borrower or any ERISA Affiliate to
a Multiemployer Plan which liability or increase, individually or together with
all similar liabilities and increases, is material to Borrower or any ERISA
Affiliate; or
(vii) Fail, or permit any ERISA Affiliate to fail, to establish,
maintain and operate each Employee Benefit Plan in compliance in all material
respects with ERISA, the Code and all other applicable laws and regulations and
interpretations thereof.
7.16 Maximum Unsubordinated Debt to EBITDA Ratio.
Permit the ratio of Unsubordinated Indebtedness to EBITDA to exceed (i)
3.5 to 1 during the period ending September 30, 2004, (ii) 3.25 to 1 during the
period ending December 31, 2004, or (iii) 3.0 to 1 during any subsequent
period. For the purposes of this Section 7.16, EBITDA shall be determined
based on a rolling four (4) quarter basis.
7.17 Minimum Tangible Net Worth.
Fail to maintain Tangible Net Worth of at least $1,000,000.
7.18 Minimum Permitted Subordinated Indebtedness.
Fail to maintain Permitted Subordinated Indebtedness of at least
$3,850,000.
7.19 Minimum Tangible Net Worth Plus Permitted Subordinated
Indebtedness.
Fail to maintain Tangible Net Worth plus Permitted Subordinated
Indebtedness of at least $2,750,000.
7.20 Minimum Debt Service Ratio.
Fail to maintain a minimum debt service ratio for Guarantor and its
subsidiaries (on a consolidated basis) of 1.25:1 based on a rolling four (4)
quarter average, to be calculated as follows: (1) the sum of: (i) Net Income
before taxes, (ii) depreciation and amortization expense, (iii) interest
expense, and (iv) rent and lease expense, less (v) taxes, distributions, and
cash dividends paid, divided by (2) the sum of: (i) current maturity of long
term debt, (ii) interest expense, and (iii) rent and lease expense. For the
purposes of testing the minimum debt service ratio, "interest expense" in the
denominator shall be defined as interest expense of Unsubordinated Indebtedness
plus interest paid on Permitted Subordinated Indebtedness. For the purposes of
testing the minimum debt service ratio, "rent and lease expense" shall mean all
amounts payable to any landlords and lessors by any Borrower Entity for the use
of any real or personal property.
7.21 Testing of Financial Covenants.
All of the financial covenants set forth in paragraphs 7.16 through 7.20
shall be fully satisfied by Guarantor and Borrower on a quarterly reporting
basis.
ARTICLE VIII
DEFAULT AND REMEDIES
8.1 Events of Default.
The occurrence of any of the following shall constitute an "Event of
Default" under the Loan Instruments:
8.1.1 Default in Payment.
If Borrower shall fail to pay all or any portion of Borrower's
Obligations when the same become due and payable.
8.1.2 Breach of Covenants.
(a) If Borrower or Guarantor shall fail to observe or perform any
covenant or agreement made by Borrower contained in Section 6.1, 6.2, 6.6, or in
Article VII;
(b) If Borrower or Guarantor shall fail to observe or perform any
covenant or agreement contained in Section 6.3, and such failure shall continue
for 10 days after the occurrence of such Event of Default; or
(c) If Borrower or Guarantor shall fail to observe or perform any
covenant or agreement (other than those referred to in subparagraph (a) or (b)
above or specifically addressed elsewhere in this Section 8.1) in any of the
Loan Instruments, and such failure shall continue for a period of 30 days after
the occurrence of such Event of Default.
8.1.3 Breach of Warranty.
If any representation or warranty made by or on behalf of Borrower or
Guarantor in or pursuant to any of the Loan Instruments or in any instrument or
document furnished in compliance with the Loan Instruments shall prove to be
false or misleading in any material respect.
8.1.4 Default Under Other Indebtedness for Borrowed Money
If (i) Borrower or Guarantor at any time shall in default (as principal
or guarantor or other surety) in the payment of any principal of or premium or
interest on any Indebtedness for Borrowed Money (other than Borrower's
Obligations or the Permitted Subordinated Indebtedness) beyond the grace period,
if any, applicable thereto.
8.1.5 Bankruptcy.
(a) If Borrower, Guarantor or any Personal Guarantor shall (i) generally
not be paying its debts as they become due, (ii) file, or consent, by answer or
otherwise, to the filing against it of a petition for relief or reorganization
or arrangement or any other petition in bankruptcy or insolvency under the laws
of any jurisdiction, (iii) make an assignment for the benefit of creditors, (iv)
consent to the appointment of a custodian, receiver, trustee or other officer
with similar powers for it or for any substantial part of its Property, or (v)
be adjudicated insolvent.
(b) If any Governmental Body of competent jurisdiction shall enter an
order appointing, without consent of Borrower or Guarantor, a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its Property, or if an order for relief
shall be entered in any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of Borrower
or Guarantor or if any petition for any such relief shall be filed against it
and such petition shall not be dismissed or stayed within 60 days.
8.1.6 Judgments.
If there shall exist final judgments or awards against Borrower which
shall have been outstanding for a period of 30 days or more from the date of the
entry thereof and shall not have been discharged in full or stayed pending
appeal, if the aggregate amount of all such judgments and awards not covered by
insurance exceeds $10,000.
8.1.7 Impairment of Licenses; Other Agreements.
If (i) any Governmental Body shall revoke, terminate, suspend or
adversely modify any license of Borrower, the adverse modification or non-
continuation of which could have a Material Adverse Effect, or (ii) there shall
exist any violation or default in the performance of, or a material failure to
comply with, any agreement, or condition or term of any license, which
violation, default or failure has a Material Adverse Effect, or (iii) any
agreement which is necessary to the operation of the business of Borrower shall
be revoked or terminated and not replaced by a substitute reasonably acceptable
to Lender within 30 days after the date of such revocation or termination, and
such revocation or termination and non-replacement could have a Material Adverse
Effect.
8.1.8 Collateral.
If any material portion of the Collateral shall be seized or taken by a
Governmental Body or Person, or Borrower or Guarantor shall fail to maintain or
cause to be maintained the Security Interests and priority of the Loan
Instruments as against any Person, or the title and rights of Borrower or
Guarantor to any material portion of the Collateral shall have become the
subject matter of litigation which could reasonably be expected to result in
impairment or loss of the security provided by the Loan Instruments.
8.1.9 Plans.
If an event or condition specified in subsection 6.3.10 hereof shall
occur or exist with respect to any Pension Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, any Borrower or any ERISA Affiliate shall incur, or in the opinion
of Lender be reasonably likely to incur, a liability to a Pension Plan or
Multiemployer Plan or the PBGC (or any of them) which, in the reasonable
judgment of Lender, would have a Material Adverse Effect.
8.1.10 Change in Control.
If, absent consent of the Lender, at least 20% of the Guarantor's common
stock is not owned, directly or indirectly, by the Personal Guarantors or if
either of the Personal Guarantors dies or resigns from his positions as officer
and director of Borrower and Guarantor.
8.1.11 Material Adverse Effect.
If, in Lender's reasonable opinion, the occurrence and continuance of
any event or condition, financial or otherwise, could reasonably be likely to
have a Material Adverse Effect.
8.2 Acceleration of Borrower's Obligations.
Upon the occurrence of:
(a) any Event of Default described in clauses (ii), (iii), (iv) and (v)
of subsection 8.1.5(a) or in 8.1.5(b), the Revolving Loan Commitment shall
automatically terminate and all of Borrower's Obligations at that time
outstanding automatically shall mature and become due; and
(b) any other Event of Default, Lender, at any time, at its option,
without further notice or demand, may declare all of Borrower's Obligations due
and payable, whereupon the Revolving Loan Commitment shall automatically
terminate and all of Borrower's Obligations immediately shall mature and become
due and payable, all without presentment, demand, protest or notice (other than
notice of the declaration referred to in clause (b) above), all of which hereby
are waived.
8.3 Remedies on Default.
If Borrower's Obligations have been accelerated pursuant to Section 8.2,
Lender may:
8.3.1 Enforcement of Security Interests.
Enforce its rights and remedies under the Loan Instruments in accordance
with their respective terms; and/or
8.3.2 Other Remedies.
Enforce any of the rights or remedies accorded to Lender at equity or
law, by virtue of statute or otherwise.
8.4 Application of Funds.
Any funds received by Lender pursuant to the exercise of any rights
accorded to Lender pursuant to, or by the operation of any of the terms of, any
of the Loan Instruments, including, without limitation, insurance proceeds,
condemnation proceeds or proceeds from the sale of Collateral, shall be applied
to Borrower's Obligations in the following order of priority:
8.4.1 Expenses.
First to the payment of (i) all fees and expenses actually incurred,
including, without limitation, court costs, fees of appraisers, title charges,
costs of maintaining and preserving the Collateral, costs of sale, and all other
costs incurred by Lender in exercising any rights accorded to such Persons
pursuant to the Loan Instruments or by applicable law, including, without
limitation, reasonable attorney's fees, and (ii) all Liens superior to the Liens
of Lender except such superior Liens subject to which any sale of the Collateral
may have been made.
8.4.2 Borrower's Obligations.
Next, to Lender, in such order as Lender may determine, to repay the
Borrower's Obligation.
8.4.3 Surplus.
Any surplus, to the Person or Persons entitled thereto.
8.5 Performance of Borrower's Obligations.
If Borrower or Guarantor fails to (i) maintain in force and pay for any
insurance policy or bond which Borrower or Guarantor is required to provide
pursuant to any of the Loan Instruments, (ii) keep the Collateral free from all
Liens except for Permitted Liens, (iii) pay when due all taxes, levies and
assessments on or in respect of the Collateral, except as otherwise permitted
pursuant to the terms hereof, (iv) make all payments and perform all acts on the
part of Borrower or Guarantor to be paid or performed in the manner required by
the terms hereof and by the terms of the other Loan Instruments with respect to
any of the Collateral, including, without limitation, all expenses of
protecting, storing, warehousing, insuring, handling and maintaining the
Collateral, (v) keep fully and perform promptly any other of the obligations of
Borrower or Guarantor hereunder or under any of the other Loan Instruments, and
(vi) keep fully and perform promptly the obligations of Borrower with respect to
any issue of Indebtedness for Borrowed Money secured by a Permitted Prior Lien,
then Lender may (but shall not be required to) procure and pay for such
insurance policy or bond, place such Collateral in good repair and operating
condition, pay, contest or settle such Liens or taxes or any judgments based
thereon or otherwise make good any other aforesaid failure of Borrower or
Guarantor. Borrower shall reimburse Lender immediately upon demand for all sums
paid or advanced on behalf of Borrower for any such purpose, together with costs
and expenses (including reasonable attorney's fees) paid or incurred by Lender
in connection therewith and interest on all sums advanced from the date of
advancement until repaid to Lender shall be calculated at the Default Rate. All
such sums advanced by Lender, with interest thereon, immediately upon
advancement thereof, shall be deemed to be part of Borrower's Obligations.
ARTICLE IX
EXPENSES AND INDEMNITY
9.1 Attorney's Fees and Other Fees and Expenses.
Borrower agrees to pay to Lender on demand all expenses incurred by
Lender in connection with the preparation of this Loan Agreement and
contemplated hereby (including, without limitation, any appraisal fees,
environmental audit fees and title and recording charges) and in connection with
any amendments, modifications or waivers (whether or not the same become
effective) under or in respect of any of the Loan Instruments, including,
without limitation:
9.1.1 Fees and Expenses for Preparation of Loan Instruments.
All expenses, disbursements (including, without limitation, charges for
required mortgagee's title insurance, lien searches, reproduction of documents,
long distance telephone calls and overnight express carriers) and reasonable
attorney's fees, actually incurred of special counsel and other counsel retained
by Lender in connection with (i) the preparation and negotiation of the Loan
Instruments or any amendments, modifications or waivers hereto or thereto and
(ii) the administration of the Revolving Loan.
9.1.2 Fees and Expenses in Enforcement of Rights or Defense of Loan
Instruments.
Any expenses or other costs, including reasonable attorney's fees
actually incurred by Lender, in connection with the enforcement or collection
against Borrower of any provision of any of the Loan Instruments, and in
connection with or arising out of any litigation, investigation or proceeding
instituted by any Governmental Body or any other Person with respect to any of
the Loan Instruments, whether or not suit is instituted, including, but not
limited to, such costs or expenses arising from the enforcement or collection
against Borrower or Guarantor of any provision of any of the Loan Instruments,
in any workout or restructuring or in any state or federal bankruptcy or
reorganization proceeding.
9.2 Indemnity.
Borrower and Guarantor agree to indemnify and save Lender harmless of
and from the following:
9.2.1 Brokerage Fees.
The fees, if any, of brokers and finders engaged by Borrower or
Guarantor.
9.2.2 General.
Any loss, cost, liability, damage or expense (including reasonable
attorneys' fees and expenses) incurred by Lender in investigating, preparing
for, defending against, providing evidence, producing documents or taking other
action in respect of any commenced or threatened litigation, administrative
proceeding, suit instituted by any Person or investigation under any law,
including any federal securities law, the Bankruptcy Code, any relevant state
corporate statute or any other securities law, bankruptcy law or law affecting
creditors generally of any jurisdiction, or any regulation pertaining to any of
the foregoing, or at common law or otherwise, relating, directly or indirectly,
to the transactions contemplated by or referred to in, or any other matter
related to, the Loan Instruments, whether or not Lender is a party to such
litigation, proceeding or suit, or is subject to such investigation, except to
the extent of any gross negligence or willful misconduct of Lender.
9.2.3 Operation of Collateral; Joint Venturers.
Any loss, cost, liability, damage or expense (including reasonable
attorneys' fees and expenses) incurred in connection with the ownership,
operation or maintenance of the Collateral, the construction of Lender and
Borrower as having the relationship of joint venturers or partners or the
determination that Lender has acted as agent for Borrower.
9.2.4 Environmental Indemnity.
Any and all claims, losses, damages, response costs, clean-up costs and
expenses suffered and/or incurred at any time by Lender arising out of or in any
way relating to the existence at any time of any Hazardous Materials in, on,
under, at transported to or from, or used in the construction and/or renovation
of, any of the Real Property or Leasehold Property, or otherwise with respect to
any Environmental Law, and/or the failure of any obligor to perform its
obligations and covenants hereunder with respect to environmental matters,
including, but not limited to: (i) claims of any Persons for damages, penalties,
response costs, clean-up costs, injunctive or other relief, (ii) costs of
removal and restoration, including fees of attorneys and experts, and costs of
reporting the existence of Hazardous Materials to any Governmental Body, and
(iii) any expenses or obligations, including attorney's fees and expert witness
fees, incurred at, before and after any trial or other proceeding before any
Governmental Body or appeal therefrom whether or not taxable as costs,
including, without limitation, witness fees, deposition costs, copying and
telephone charges and other expenses, all of which shall be paid by Borrower to
Lender when incurred by Lender.
ARTICLE X
MISCELLANEOUS
10.1 Notices.
All notices and communications under this Loan Agreement shall be in
writing and shall be (i) delivered in person, (ii) sent by telecopy, or (iii)
mailed, postage prepaid, either by registered or certified mail, return
receipt requested, or by overnight express carrier, addressed in each case
as follows:
To Lender:
U.S. Bank National Association
000 Xxxxx XxXxxxx Xx., Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Senior Vice President
Telecopy: (000) 000-0000
Copy to:
Xxxxx & Ratner
000 X. XxXxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000-0000
Attn: Xxxxxxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
To Borrower and Guarantor:
US 1 Industries, Inc.
0000 Xxxxxx Xxxxxx
Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx and Xxxxxx Xxxxxxxx
Copy to:
Xxxxxxxx Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx XX
Xxxxxxx, XX 00000
Attn: Brink Xxxxxxxxx, Esq.
Telephone No.: (000) 000-0000
or to any other address or telecopy number, as to any of the parties hereto, as
such party shall designate in a written notice to the other parties hereto. All
notices sent pursuant to the terms of this Section 11. 1 shall be deemed
received (i) if personally delivered, then on the Business Day of delivery, (ii)
if sent by telecopy before 2:00 p.m. Chicago time, on the day sent if a Business
Day or if such day is not a Business Day or if sent after 2:00 p.m. Chicago
time, then on the next Business Day, (iii) if sent by overnight, express
carrier, on the next Business Day immediately following the day sent, or (iv) if
sent by registered or certified mail, on the earlier of the fifth Business Day
following the day sent or when actually received. Any notice by telecopy shall
be followed by delivery on the next Business Day by overnight, express carrier
or by hand.
10.2 Survival of Loan Agreement; Indemnities.
All covenants, agreements, representations and warranties made in this
Loan Agreement and in the certificates delivered pursuant hereto shall continue
in full force and effect so long as any of Borrower's Obligations remain
outstanding, unperformed or unpaid. Notwithstanding the repayment of all amounts
due under the Loan Instruments, the cancellation of the Revolving Note and the
release and/or cancellation of any and all of the Loan Instruments or the
foreclosure of any Liens on the Collateral, the obligations of Borrower and
Guarantor to indemnify Lender with respect to the expenses, damages, losses,
costs and liabilities described in Section 9.2 shall survive until all
applicable statute of limitations periods with respect to actions which may be
brought against Lender has run.
10.3 Further Assurance.
From time to time, Borrower and Guarantor shall execute and deliver to
Lender such additional documents as Lender reasonably may require to carry out
the purposes of the Loan Instruments and to protect Lender's rights thereunder,
and not take any action inconsistent with the purposes of the Loan Instruments.
10.4 Taxes and Fees.
Should any tax (other than taxes based upon the net income of Lender),
recording or filing fees become payable in respect of any of the Loan
Instruments, or any amendment, modification or supplement thereof, Borrower
agrees to pay the same on demand, together with any interest or penalties
thereon attributable to any delay by Borrower in meeting Lender's demand, and
agrees to hold Lender harmless with respect thereto.
10.5 Severability.
In the event that any provision of this Loan Agreement is deemed to be
invalid by reason of the operation of any law or by reason of the interpretation
placed thereon by any court or any other Governmental Body, as applicable, the
validity, legality and enforceability of the remaining terms and provisions of
this Loan Agreement shall not in any way be affected or impaired thereby, all of
which shall remain in fall force and effect, and the affected term or provision
shall be modified to the minimum extent permitted by law so as to achieve most
fully the intention of this Loan Agreement.
10.6 Waiver.
No delay on the part of Lender in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, and no single or partial
exercise of any right, power or privilege hereunder shall preclude other or
further exercise thereof, or be deemed to establish a custom or course of
dealing or performance between the parties hereto, or preclude the exercise of
any other right, power or privilege.
10.7 Modification of Loan Instruments.
No modification or waiver of any provision of any of the Loan
Instruments shall be effective unless the same shall be in writing and signed by
Lender. Any such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on Borrower
or Guarantor in any case shall entitle Borrower or Guarantor to any other or
further notice or demand in the same, similar or other circumstances.
10.8 Captions.
The headings in this Loan Agreement are for purposes of reference only
and shall not limit or otherwise affect the meaning hereof.
10.9 Successors and Assigns.
This Loan Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto; provided that Borrower may not assign any of its rights or delegate any
of its duties hereunder to any other Person.
10.10 Remedies Cumulative.
All rights and remedies of Lender pursuant to this Loan Agreement, any
other Loan Instruments or otherwise, shall be cumulative and non-exclusive, and
may be exercised singularly or concurrently. Lender shall not be required to
prosecute collection, enforcement or other remedies against any Person before
proceeding against Borrower or Guarantor to enforce or resort to any security,
liens, collateral or other rights of Lender. One or more successive actions may
be brought against Borrower and/or any other Person, either in the same action
or in separate actions, as often as Lender deems advisable, until all of
Borrower's Obligations are paid and performed in full.
10.11 Entire Agreement; Conflict.
This Loan Agreement and the other Loan Instruments executed prior or
pursuant hereto constitute the entire agreement among the parties hereto with
respect to the transactions contemplated hereby or thereby and supersede any
prior agreements, whether written or oral, relating to the subject matter hereof
In the event of a conflict between the terms and conditions set forth herein and
the terms and conditions set forth in any other Loan Instrument, the terms and
conditions set forth herein shall govern.
10.12 Applicable Law.
The Loan Instruments shall be construed in accordance with and governed
by the laws and decisions of the State of Illinois, without regard to the
conflict of laws principles thereof. For purposes of this Section 10.12, the
Loan Instruments shall be deemed to be performed and made in the State of
Illinois.
10.13 JURISDICTION AND VENUE.
BORROWER AND GUARANTOR HEREBY AGREE THAT ALL ACTIONS OR PROCEEDINGS
INITIATED BY BORROWER AND GUARANTOR AND ARISING DIRECTLY OR INDIRECTLY OUT OF
THE LOAN INSTRUMENTS SHALL BE LITIGATED IN EITHER THE CIRCUIT COURT OF XXXX
COUNTY, ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS, OR IF LENDER INITIATES SUCH ACTION, IN ADDITION TO THE
FOREGOING COURTS, ANY COURT IN WHICH LENDER SHALL INITIATE OR TO WHICH LENDER
SHALL REMOVE SUCH ACTION, TO THE EXTENT SUCH COURT HAS JURISDICTION. BORROWER
AND GUARANTOR HEREBY EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY LENDER IN OR REMOVED BY
LENDER TO ANY OF SUCH COURTS, AND HEREBY AGREE THAT PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN MAY BE SERVED
IN THE MANNER PROVIDED FOR NOTICES HEREIN, AND AGREE THAT SERVICE OF SUCH
SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS TO WHICH NOTICES ARE TO
BE SENT PURSUANT TO SECTION 10.1. BORROWER AND GUARANTOR WAIVE ANY CLAIM THAT
EITHER THE CIRCUIT COURT OF XXXX COUNTY, ILLINOIS OR THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF ILLINOIS IS AN INCONVENIENT FORUM OR AN
IMPROPER FORUM BASED ON LACK OF VENUE. TO THE EXTENT PROVIDED BY LAW, SHOULD
BORROWER AFTER BEING SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS,
COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY
LAW AFTER THE MAILING THEREOF, BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER
ND/OR JUDGMENT MAY BE ENTERED BY THE COURT AGAINST BORROWER AS DEMANDED OR
PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE CHOICE
OF FORUM FOR BORROWER AND GUARANTOR SET FORTH IN THIS SECTION 10.13 SHALL NOT BE
DEEMED TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN ANY
OTHER FORUM OR THE TAKING BY LENDER OF ANY ACTION TO ENFORCE THE SAME IN ANY
OTHER APPROPRIATE JURISDICTION, AND BORROWER AND GUARANTOR HEREBY WAIVE THE
RIGHT TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.
10.14 WAIVER OF RIGHT TO JURY TRIAL.
LENDER, BORROWER AND GUARANTOR ACKNOWLEDGE AND AGREE THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE LOAN INSTRUMENTS OR WITH RESPECT TO
THE TRANSACTIONS CONTEMPLATED THEREBY WOULD BE BASED UPON DIFFICULT AND COMPLEX
ISSUES AND, THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT ARISING OUT OF ANY
SUCH CONTROVERSY WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE
SITTING WITHOUT A JURY.
10.15 Time of Essence.
Time is of the essence for the performance by Borrower of the
obligations set forth in this Loan Agreement and the other Loan Instruments.
10.16 Estoppel Certificate.
Within 15 days after Lender requests Borrower and Guarantor to do so,
Borrower and Guarantor will execute and deliver to Lender a statement certifying
(i) that this Loan Agreement is in full force and effect and has not been
modified except as described in such statement, (ii) the date to which interest
and principal on the Note has been paid, (iii) the Principal Balance, (iv)
whether or not to its knowledge an Incipient Default or Event of Default
has occurred and is continuing, and, if so, specifying in reasonable detail
each such Incipient Default or Event of Default of which it has knowledge, (v)
whether to its knowledge it has any defense, set off or counterclaim to the
payment of the Note in accordance with its terms, and, if so, specifying each
defense, set off or counterclaim of which it has knowledge in reasonable detail
(including where applicable the amount thereof), and (vi) as to any other matter
reasonably requested by Lender.
10.17 Consequential Damages.
Neither Lender nor any attorney of Lender shall be liable to Borrower
for consequential damages arising from any breach of contract, tort or other
wrong relating to the establishment, administration or collection of the
Borrower's Obligations.
10.18 Counterparts.
This Loan Agreement may be executed by the parties hereto in several
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute one and the same agreement.
10.19 No Fiduciary Relationship.
No provision in this Loan Agreement or in any other Loan Instrument, and
no course of dealing among the parties hereto, shall be deemed to create any
fiduciary duty by Lender to Borrower or Guarantor.
10.20 Notice of Breach by Lender.
Borrower and Guarantor agree to give Lender written notice of (i) any
action or inaction by Lender or any attorney of Lender in connection with the
Loan Instruments that may be actionable against Lender or any attorney or Lender
or (ii) any defense to the payment of Borrower's Obligations for any reason,
including, but not limited to, commission of a tort or violation of any
contractual duty implied by law. Borrower and Guarantor agree that unless such
notice is fully given as promptly as possible (but in any event within 30 days)
after Borrower or Guarantor has knowledge, or with the exercise of reasonable
diligence should have had knowledge, of any such action, inaction or defense,
Borrower and Guarantor shall not assert, and shall be deemed to have waived, any
claim or defense arising therefrom.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, this Loan Agreement has been executed and delivered by each
of the parties hereto by a duly authorized officer of each such party on the
date first set forth above.
CAROLINA NATIONAL TRANSPORTATION INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
GULF LINE TRANSPORT INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FIVE STAR TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
CAM TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
UNITY LOGISTIC SERVICES INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
ERX, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
FRIENDLY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
TRANSPORT LEASING, INC.,
an Arkansas corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
HARBOR BRIDGE INTERMODAL, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
PATRIOT LOGISTICS, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
LIBERTY TRANSPORT, INC.,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
KEYSTONE LINES CORPORATION,
an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
US 1 INDUSTRIES, INC., an Indiana corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
U.S. BANK NATIONAL ASSOCIATION,
a national banking association
By: _____________________________
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President
