Exhibit 10.1
LOAN AND SECURITY AGREEMENT
by and among
CD&L, INC., XXXXXXX/NATIONAL COURIER SYSTEMS, INC., CLICK
MESSENGER SERVICE, INC., K.B.D. SERVICES, INC., OLYMPIC
COURIER SYSTEMS, INC., SECURITIES COURIER CORPORATION, and
SILVER STAR EXPRESS, INC.
and
SUMMIT BUSINESS CAPITAL CORP., doing business as Fleet
Capital-Business Finance Division
Dated: as of June 27, 2002
TABLE OF CONTENTS
Page
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INTRODUCTION......................................................................................................1
ARTICLE I DEFINITIONS...........................................................................................I-1
1.1 INCORPORATION OF DEFINITIONS SET FORTH IN THE PREAMBLE OF THIS AGREEMENT......................I-1
1.2 "ACCOUNTING TERMS"............................................................................I-1
1.3 "ACCOUNT DEBTOR"..............................................................................I-1
1.4 "ACCOUNTS" or "ACCOUNTS RECEIVABLE"...........................................................I-1
1.5 "ADVANCES"....................................................................................I-2
1.6 "AGREEMENT"...................................................................................I-2
1.7 "APPLICATION(S)"..............................................................................I-2
1.8 "AUTHORIZATION TO CHARGE".....................................................................I-2
1.9 "BLOCKED ACCOUNT".............................................................................I-2
1.10 "BLOCKED ACCOUNTS"............................................................................I-2
1.11 "BOOKS AND RECORDS"...........................................................................I-3
1.12 "BORROWER'S AFFILIATE"........................................................................I-3
1.13 "BORROWING BASE CERTIFICATE"..................................................................I-4
1.14 "BUSINESS DAY"................................................................................I-4
1.15 "CAPTIVE INSURANCE LETTER OF CREDIT"..........................................................I-4
1.16 CD&L DEFINITIONS..............................................................................I-5
(a) "CD&L CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT"................................I-5
1.17 XXXXXXX DEFINITIONS...........................................................................I-5
(a) "XXXXXXX CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT".............................I-5
(b) "XXXXXXX LOCKBOX"....................................................................I-6
1.18 CLICK DEFINITIONS.............................................................................I-6
(a) "CLICK CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT"...............................I-6
(b) "CLICK LOCKBOX"......................................................................I-7
1.19 "CERTIFICATION AS TO LIENS"...................................................................I-8
1.20 "CHATTEL PAPER"...............................................................................I-8
1.21 "COLLATERAL"..................................................................................I-8
1.22 "COLLATERAL LOCATIONS"........................................................................I-8
1.23 "COLLATERAL PROCEEDS".........................................................................I-8
1.24 "COLLATERAL UPDATE CERTIFICATE"...............................................................I-9
1.25 "CONTRACT RIGHTS".............................................................................I-9
1.26 "DEFAULT RATE"................................................................................I-9
1.27 "ELIGIBLE RECEIVABLES"........................................................................I-9
1.28 "EQUIPMENT"..................................................................................I-11
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1.29 "EVENT OF DEFAULT"...........................................................................I-12
1.30 "FINANCING DOCUMENTS"........................................................................I-12
1.31 "GAAP".......................................................................................I-12
1.32 "GENERAL INTANGIBLES"........................................................................I-12
1.33 "GOODS"......................................................................................I-13
1.34 "INSTRUMENT".................................................................................I-14
1.35 "INVENTORY"..................................................................................I-14
1.36 KBD DEFINITIONS..............................................................................I-14
(a) "KBD CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT"................................I-14
1.37 "LANDLORD'S CONSENTS"........................................................................I-15
1.38 "LENDER'S AFFILIATE".........................................................................I-15
1.39 "LENDING FORMULA"............................................................................I-15
1.40 "LETTER OF CREDIT OBLIGATIONS"...............................................................I-15
1.41 "LETTERS OF CREDIT"..........................................................................I-16
1.42 "LIABILITIES"................................................................................I-16
1.43 "LIBOR-RELATED DEFINITIONS"..................................................................I-18
(a) "LIBOR".............................................................................I-18
(b) "LIBOR Based Interest Period".......................................................I-18
(c) "LIBOR Based Rate"..................................................................I-18
(d) "LIBOR Option"......................................................................I-18
(e) "LIBOR Reserve Percentage"..........................................................I-18
(f) "London Banking Day"................................................................I-18
(g) "Principal Balance".................................................................I-18
(h) "Roll Over Date"....................................................................I-18
1.44 "LIENS"......................................................................................I-18
1.45 "LOAN DOCUMENTS".............................................................................I-18
1.46 "LOAN VALUE".................................................................................I-19
1.47 "LOCKBOX" ..........................................................................I-19
1.48 "LOCKBOX" ..........................................................................I-19
1.49 "MATERIAL ADVERSE EFFECT" ..........................................................I-19
1.50 OLYMPIC DEFINITIONS..........................................................................I-20
(a) "OLYMPIC CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT"............................I-20
(b) "OLYMPIC LOCKBOX"...................................................................I-20
1.51 "OTHER LOANS"................................................................................I-20
1.52 "OUTSTANDING"................................................................................I-21
1.53 "PRIME RATE".................................................................................I-21
1.54 "PROCEEDS"...................................................................................I-21
1.55 "RATE REDUCTION BENCHMARK"...................................................................I-21
1.56 "RECONCILIATION CERTIFICATE".................................................................I-21
1.57 "REVOLVING LOAN".............................................................................I-21
1.58 "REVOLVING LOAN MATURITY DATE"...............................................................I-22
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1.59 "REVOLVING NOTE".............................................................................I-22
1.60 SECURITIES DEFINITIONS.......................................................................I-22
(a) "SECURITIES CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT".........................I-22
(b) "SECURITIES LOCKBOX"................................................................I-22
1.61 "SELLERS"....................................................................................I-23
1.62 "SELLER SUBORDINATED NOTES"..................................................................I-23
1.63 "SENIOR SUBORDINATED DEBT"...................................................................I-24
1.64 "SENIOR SUBORDINATED DEBT RESERVE"...........................................................I-24
1.65 "SENIOR SUBORDINATED LENDERS"................................................................I-24
1.66 "SENIOR SUBORDINATED LOAN AGREEMENT".........................................................I-24
1.67 SILVER STAR DEFINITIONS......................................................................I-24
(a) "SILVER STAR CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT"........................I-24
(b) "SILVER STAR LOCKBOX"...............................................................I-26
1.68 "SUBSIDIARY".................................................................................I-26
1.69 "UCC"........................................................................................I-26
1.70 UCC DEFINITIONS..............................................................................I-26
ARTICLE II LOANS...............................................................................................II-1
2.1 THE REVOLVING LOAN...........................................................................II-1
2.2 MAXIMUM BORROWINGS UNDER THE REVOLVING LOAN.............................................II-3
2.3 DISBURSEMENTS UNDER THE REVOLVING LOAN.......................................................II-3
2.4 RIGHT TO RECEIVE REVOLVING LOAN ADVANCES.....................................................II-6
2.5 REPAYMENT OF REVOLVING LOAN ADVANCES.........................................................II-8
2.6 PAYMENT OF INTEREST ON THE REVOLVING LOAN...................................................II-12
2.7 YIELD MAINTENANCE AND INDEMNIFICATION RELATING TO LIBOR BASED INTEREST......................II-20
2.8 EVIDENCE OF INDEBTEDNESS UNDER THE REVOLVING LOAN...........................................II-22
(a) BORROWERS' Obligation to Repay the REVOLVING LOAN and to Guarantee Evidenced
by This Agreement..................................................................II-22
(b) "Master" Revolving Note and Definition of REVOLVING NOTE...........................II-22
(c) BORROWERS' Obligation to Repay/Guarantee Repayment of REVOLVING LOAN Evidenced
by Records of LENDER.............................................................II-23
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2.9 TERM OF THE REVOLVING LOAN AND PREPAYMENT PREMIUMS..........................................II-23
(a) Revolving Loan Maturity Date.......................................................II-23
(b) Termination by LENDER..............................................................II-24
(c) Termination by BORROWERS...........................................................II-24
(d) Termination/Acceleration Charges...................................................II-24
(e) LIBOR indemnification..............................................................II-25
(f) Effect of Termination..............................................................II-26
2.10 LETTERS OF CREDIT...........................................................................II-27
(a) Issuance...........................................................................II-27
(b) Evidence of Obligation to Pay Amounts Due under the Financing Documents............II-29
(c) Repayment of Amounts Due under the Financing Documents; Mandatory Borrowings
to Satisfy Payment Obligations under the Financing Documents.......................II-30
(d) Non-Liability of LENDER............................................................II-31
(e) Indemnification of LENDER..........................................................II-33
(f) Fees for the Letters of Credit.....................................................II-34
(g) Inconsistencies....................................................................II-34
2.11 LATE CHARGES................................................................................II-34
2.12 AUTHORIZATION TO CHARGE AMOUNTS DUE UNDER THIS AGREEMENT....................................II-34
2.13 MANDATORY REPAYMENT OF ALL LIABILITIES......................................................II-35
2.14 APPLICATION OF PAYMENTS.....................................................................II-35
2.15 OTHER LOANS.................................................................................II-35
2.16 BORROWERS' ABSOLUTE GUARANTY OBLIGATIONS....................................................II-36
2.17 RIGHT TO PROCEED AGAINST THE BORROWERS......................................................II-38
2.18 DELAY OF RIGHTS.............................................................................II-38
2.19 FEES........................................................................................II-39
(a) Closing Fee........................................................................II-39
(b) Unused Revolving Loan Facility Fee.................................................II-39
(c) Collateral Management Fee..........................................................II-40
(d) Field Examination Fee..............................................................II-40
(e) Customary Account Fees.............................................................II-41
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ARTICLE III COLLATERAL........................................................................................III-1
3.1 CROSS COLLATERALIZATION.....................................................................III-1
3.2 ACCOUNTS RECEIVABLE.........................................................................III-1
3.3 BOOKS AND RECORDS...........................................................................III-1
3.4 CHATTEL PAPER...............................................................................III-1
3.5 CONTRACT RIGHTS.............................................................................III-1
3.6 DEPOSIT ACCOUNTS............................................................................III-2
3.7 EQUIPMENT...................................................................................III-2
3.8 GENERAL INTANGIBLES.........................................................................III-3
3.9 GOODS.......................................................................................III-3
3.10 INSTRUMENTS.................................................................................III-3
3.11 INVENTORY...................................................................................III-3
3.12 ALL OTHER BUSINESS ASSETS...................................................................III-3
3.13 PROCEEDS AND PRODUCTS.......................................................................III-4
ARTICLE IV REPRESENTATIONS................................................................................... IV-1
ARTICLE V POSITIVE COVENANTS....................................................................................V-1
5.1 Payment of Liabilities........................................................................V-1
5.2 Preservation of Existence and Prohibition against Dissolution, Mergers, Acquisitions,
Formation of Subsidiaries.....................................................................V-2
5.3 Preservation of Assets........................................................................V-2
5.4 Payment of Taxes..............................................................................V-3
5.5 Cooperation and Further Assurances............................................................V-4
5.6 Reporting Requirements........................................................................V-4
5.7 Compliance with Laws.........................................................................V-10
5.8 Insurance....................................................................................V-10
5.9 No Disposal of Collateral....................................................................V-12
5.10 LENDER's Power to Endorse Checks and Drafts..................................................V-14
5.11 Verification of Accounts Receivable..........................................................V-14
5.12 Field Examinations...........................................................................V-15
5.13 Collateral Management Fee....................................................................V-15
5.14 Warranties relating to Accounts Receivable...................................................V-15
5.15 Taxes Payable on Accounts Receivable.........................................................V-15
5.16 Disclosure of Certain Information............................................................V-16
5.17 Operating Accounts...........................................................................V-16
5.18 Landlord's Consents..........................................................................V-16
5.19 Subordination Agreements.....................................................................V-17
5.20 Minimum Net Annual Earnings Before Extraordinary Items.......................................V-18
5.21 Minimum Loss for First Fiscal Quarter........................................................V-19
5.22 No Quarterly Loss except for First Fiscal Quarter............................................V-19
5.23 Capital Expenditures.........................................................................V-20
5.24 Fixed Charge Coverage........................................................................V-21
5.25 Leverage.....................................................................................V-23
5.26 Rate Reduction Benchmark.....................................................................V-24
5.27 Solvency.....................................................................................V-25
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ARTICLE VI NEGATIVE COVENANTS..................................................................................VI-1
6.1 Change in Location...........................................................................VI-1
6.2 Changes in Business..........................................................................VI-1
6.3 Liens........................................................................................VI-1
6.4 Indebtedness.................................................................................VI-2
6.5 Guaranties...................................................................................VI-2
6.6 Control of Ownership.........................................................................VI-3
6.7 Control of Management........................................................................VI-3
6.8 Compromise of Claims.........................................................................VI-3
6.9 Bank Accounts................................................................................VI-3
6.10 Loans and Investments........................................................................VI-3
6.11 Fiscal Year..................................................................................VI-4
6.12 Amendment of Corporate Documents.............................................................VI-4
6.13 Margin Securities............................................................................VI-5
6.14 Transactions with Each Other.................................................................VI-5
ARTICLE VII EVENTS OF DEFAULT............................................................................... VII-1
ARTICLE VIII REMEDIES....................................................................................... VIII-1
ARTICLE IX MISCELLANEOUS.......................................................................................IX-1
9.1 COMMUNICATIONS AND NOTICES...................................................................IX-1
9.2 LENDER MAY PAY, SATISFY, DISCHARGE OR BOND CERTAIN OF BORROWERS' OBLIGATIONS.................IX-1
9.3 PLEDGE TO FEDERAL RESERVE....................................................................IX-2
9.4 ASSIGNMENTS..................................................................................IX-2
9.5 PARTICIPATIONS...............................................................................IX-3
9.6 LENDER MAY FURNISH INFORMATION...............................................................IX-3
9.7 PAYMENTS IN LAWFUL MONEY OF THE UNITED STATES................................................IX-4
9.8 ANTI-USURY PROVISION.........................................................................IX-4
9.9 SUCCESSORS AND ASSIGNS.......................................................................IX-4
9.10 LENDER'S RIGHTS NOT IMPAIRED BY DELAY IN EXERCISING RIGHTS...................................IX-4
9.11 LENDER'S COSTS AND EXPENSES..................................................................IX-5
9.12 NO WAIVER OF LENDER'S RIGHT OF SET-OFF.......................................................IX-6
9.13 GOVERNING LAW................................................................................IX-6
9.14 FORUM FOR LITIGATION.........................................................................IX-6
9.15 AGREEMENT MUST BE SIGNED BY LENDER...........................................................IX-7
9.16 ENTIRE UNDERSTANDING.........................................................................IX-7
9.17 MODIFICATIONS................................................................................IX-7
9.18 CONTINUATION OF SECURITY INTERESTS...........................................................IX-7
9.19 SURVIVAL OF REPRESENTATIONS..................................................................IX-7
9.20 SEVERABILITY.................................................................................IX-7
9.21 ACTIONS OF LENDER............................................................................IX-8
9.22 INCONSISTENCIES..............................................................................IX-8
9.23 CONFIRMATORY SEARCHES........................................................................IX-8
9.24 LENDER NOT BORROWERS' AGENT..................................................................IX-8
9.25 LOST LOAN DOCUMENTS..........................................................................IX-9
9.26 LENDER'S USE OF NOMINEE......................................................................IX-9
9.27 JOINT AND SEVERAL LIABILITY..................................................................IX-9
9.28 COUNTERPARTS.................................................................................IX-9
9.29 WAIVER OF JURY TRIAL.........................................................................IX-9
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LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT made and dated as of June 27, 2002, by
and among
CD&L, INC. (formerly known as Consolidated Delivery & Logistics Inc.),
a corporation organized and existing under the laws of the State of
Delaware whose registered agent and registered address are The
Corporation Service Company, 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000 and whose principal place
of business is located at 00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx Xxxxxx,
Xxx Xxxxxx 00000 (hereinafter "CD&L"), and
XXXXXXX/NATIONAL COURIER SYSTEMS, INC., a corporation organized and
existing under the laws of the State of Missouri whose principal place
of business is located at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx
00000 (hereinafter referred to as "XXXXXXX"); and
CLICK MESSENGER SERVICE, INC., a corporation organized and existing
under the laws of the State of New Jersey, whose principal place of
business is located at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxx Xxxxxx,
Xxx Xxxxxx 00000 (hereinafter referred to as "CLICK"); and
K.B.D. SERVICES, INC., a corporation organized and existing under the
laws of the State of North Carolina, whose its principal place of
business is located at 000 Xxxxx Xxxxx Xxxx, Xxxx, Xxxxx Xxxxxxxx 00000
(hereinafter "KBD"); and
OLYMPIC COURIER SYSTEMS, INC., a corporation organized and existing
under the laws of the State of New York whose principal place of
business is located at 000 Xxxxxx Xxxxxx and 00 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 (hereinafter "OLYMPIC"); and
SECURITIES COURIER CORPORATION, a corporation organized and existing
under the laws of the State of New York whose principal place of
business is located at 00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx Xxxxxx, Xxx
Xxxxxx 00000 (hereinafter "SECURITIES"); and
SILVER STAR EXPRESS, INC., a corporation organized and existing under
the laws of the State of Florida whose principal place of business is
located at 0000 Xxxxx Xxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxx 00000
(hereinafter "SILVER STAR");
(all of the foregoing being hereinafter collectively referred to as the
"BORROWERS" and individually referred to as a "BORROWER")
and
SUMMIT BUSINESS CAPITAL CORP., doing business as Fleet Capital-Business
Finance Division, a corporation organized and existing under the laws
of the State of New York with offices at 000 Xxxxxx Xxxxxx, Xxxxxxxx,
Xxx Xxxxxx 00000 (being hereinafter referred to as "LENDER")
WITNESSES THAT:
(1) WHEREAS, the BORROWERS are desirous of jointly and severally
borrowing $15,000,000 from LENDER in the form of revolving loan advances,
letters of credit and other financial accommodations (collectively called the
"REVOLVING LOAN" in this Agreement and more fully defined in Article I below);
(1) WHEREAS, the REVOLVING LOAN consists of a revolving loan/letter of
credit facility extended by LENDER on a joint and several basis to the
BORROWERS; and
(2) WHEREAS, the BORROWERS seek to execute this Agreement so as to
establish a relationship with LENDER setting forth an understanding relating to
the conditions under which each BORROWER might obtain the benefits of such
financial accommodations from LENDER;
(3) WHEREAS, LENDER is willing to enter into this Agreement but only if
the conditions contained in this Agreement are satisfied;
(4) WHEREAS, each BORROWER represents that its execution of this
Agreement and its performance of the covenants and terms contained herein will
inure to its economic benefit and will be in furtherance of its organizational
purposes;
NOW THEREFORE in consideration of the premises and the covenants
contained in this Agreement and for other good and valuable consideration, each
BORROWER and LENDER do hereby agree as follows:
IN WITNESS WHEREOF, LENDER and each of the BORROWERS have caused this
Loan and Security Agreement to be executed by its respective duly authorized
representative on the date and year first above written.
ATTEST: CD&L, INC.
(formerly known as Consolidated
Delivery & Logistics Inc.)
By:
--------------------------------------
Xxxx X. Xxxxxxxxx, Corporate Secretary Xxxxxxx X. Xxxxxxx, Vice President
ATTEST: XXXXXXX/NATIONAL COURIER SYSTEMS, INC.
BY: CD&L, Inc., its sole stockholder
By:
--------------------------------------
Xxxx X. Xxxxxxxxx, Corporate Secretary Xxxxxxx X. Xxxxxxx, Vice President
ATTEST: CLICK MESSENGER SERVICE, INC.
BY: CD&L, Inc., its sole stockholder
By:
--------------------------------------
Xxxx X. Xxxxxxxxx, Corporate Secretary Xxxxxxx X. Xxxxxxx, Vice President
ATTEST: K.B.D. SERVICES, INC.
BY: Silver Star Express, Inc., its sole stockholder
By:
--------------------------------------
Xxxx X. Xxxxxxxxx, Corporate Secretary Xxxxxxx X. Xxxxxxx, Vice President
ATTEST: OLYMPIC COURIER SYSTEMS, INC.
BY: CD&L, Inc., its sole stockholder
By:
--------------------------------------
Xxxx X. Xxxxxxxxx, Corporate Secretary Xxxxxxx X. Xxxxxxx, Vice President
ATTEST: SECURITIES COURIER CORPORATION
BY: CD&L, Inc., its sole stockholder
By:
--------------------------------------
Xxxx X. Xxxxxxxxx, Corporate Secretary Xxxxxxx X. Xxxxxxx, Vice President
ATTEST: SILVER STAR EXPRESS, INC.
BY: CD&L, Inc., its sole stockholder
By:
--------------------------------------
Xxxx X. Xxxxxxxxx, Corporate Secretary Xxxxxxx X. Xxxxxxx, Vice President
SUMMIT BUSINESS CAPITAL CORP.
By:
--------------------------------------
Xxxx X. Xxxxxxxxx, Corporate Secretary Xxxxxxx X. Xxxxxxx, Vice President
Xxxxxxx X. Xxxxxx, SeniorVice President
EXHIBITS AND SCHEDULES
Exhibit "A": form of Borrowing Base Certificate [see Section 1.13]
Exhibit "B": form of Collateral Update Certificate [see Section 1.24]
Exhibit "C": form of Reconciliation Certificate [see Section 1.56]
Schedule 4.16: exceptions to and pending audits of tax returns [see
Section 4.16]
Schedule 4.17: pending litigation [see Section 4.17]
Schedule 4.22: schedule of payments due on the Seller Subordinated Notes
[see Section 4.22]
Schedule 4.23: schedule of payments due on the Senior Subordinated Debt
[see Section 4.23]
Schedule 6.4: schedule of existing indebtedness [see Section 6.4]
ARTICLE I
DEFINITIONS
1.1 INCORPORATION OF DEFINITIONS SET FORTH IN THE PREAMBLE OF THIS
AGREEMENT: In this Agreement, the terms "CD&L", "XXXXXXX", "CLICK", "KBD",
"LENDER", "OLYMPIC", "SECURITIES" and "SILVER STAR" shall have the meanings
given them in the Preamble and "Whereas" clauses of this Agreement.
1.2 "ACCOUNTING TERMS": Any accounting terms used in this Agreement
that are not specifically defined herein shall have the meanings customarily
given to them in accordance with GAAP as in effect on the date of this
Agreement, provided, however, that "goodwill" charges shall be considered
"extraordinary" notwithstanding contrary treatment under GAAP.
1.3 "ACCOUNT DEBTOR" means, in addition to the definition of "account
debtor" as contained in the UCC, the person or persons obligated to any BORROWER
on an Account, or Contract Right, or who are represented by any BORROWER to be
so obligated.
1.4 "ACCOUNTS" or "ACCOUNTS RECEIVABLE" means, in addition to the
definition of "account" as contained in the UCC, all of the accounts, Contract
Rights of the BORROWERS (including their rights as an unpaid vendor or lienor
and their rights of stoppage in transit, replevin and reclamation), instruments,
documents, chattel paper, warehouse receipts and general intangibles, whether
secured or unsecured, and whether or not specifically assigned to LENDER
hereunder, and includes a right to payment which has been earned under a
Contract Right and all Inventory returned or reclaimed from Account Debtors.
I-1
1.5 "ADVANCES" is a collective term which means all cash advances and
extensions of monetary credit (including those reimbursable expenses of LENDER
deemed to be Advances under this Agreement and other amounts which LENDER is
authorized by this Agreement to charge against the REVOLVING LOAN) now or at any
time hereafter made by LENDER to, on behalf of or for the account of any
BORROWER whether under the REVOLVING LOAN, the Letter of Credit Obligations or
otherwise.
1.6 "AGREEMENT" is a collective term which means all of the following:
(a) this Loan and Security Agreement; and
(b) all extensions, modifications (including without limitation
modifications increasing the amount of the REVOLVING LOAN),
refinancings, renewals, substitutions, replacements and/or
redatings hereof.
1.7 "APPLICATION(S)" shall have the meaning given that term in Section
2.10(b) below.
1.8 "AUTHORIZATION TO CHARGE" means each BORROWER's authorization
permitting LENDER to effect payment as of each due date of accrued monthly
interest and other amounts (including principal) due under the REVOLVING LOAN,
the Letter of Credit Obligations and this Agreement by increasing the principal
balance of the REVOLVING LOAN as though an Advance were taken by the BORROWERS
against the REVOLVING LOAN in the amount of any payment effected by LENDER.
1.9 "BLOCKED ACCOUNT" means any one of the Blocked Accounts.
I-2
1.10 "BLOCKED ACCOUNTS" shall mean the checking/demand deposit accounts
(if more than one) which LENDER maintains in its own name at any LENDER's
Affiliate (including Fleet National Bank) or one or more other financial
institutions of LENDER's choosing and into which are to be deposited (a) all
sums from any of the Lockboxes and (b) all Collateral Proceeds and (c) all other
sums received by the BORROWERS as payment for services rendered by them to
Account Debtors and/or other third parties and/or as payment from any sale,
lease, transfer, exchange or other disposition of any of its assets (whether
tangible or intangible) and (d) all other Proceeds of the foregoing, including
any insurance or condemnation awards.
1.11 "BOOKS AND RECORDS" means all books and records (including such
books and records as are contained in computerized storage media), including,
without limitation, all inventory, purchasing, accounting, sales, export,
import, manufacturing, banking and shipping records, all customer and supplier
lists, files, records, literature and correspondence and all advertising,
marketing and public relations materials, drawings, engineering, manufacturing
and assembly information, operating and training manuals, quotations, bids,
trade association membership, customer credit information and pricing
information, business plans, studies and analysis and personnel records.
1.12 "BORROWER'S AFFILIATE" means any of the following:
(a) any entity that directly or indirectly owns, controls, or
holds with power to vote, ten (10%) percent or more of the
outstanding voting securities of any BORROWER, other than an
entity that holds such securities--
(1) in a fiduciary or agency capacity without sole
discretionary power to vote such securities; or
I-3
(2) solely to secure a debt, if such entity has not in
fact exercised such power to vote;
(b) any corporation, ten (10%) percent or more of whose
outstanding voting securities are directly or indirectly
owned, controlled, or held with power to vote, by any
BORROWER, or by an entity that directly or indirectly owns,
controls, or holds with power to vote, ten (10%) percent or
more of the outstanding voting securities of any BORROWER,
other than an entity that holds such securities--
(1) in fiduciary or agency capacity without sole
discretionary power to vote such securities; or
(2) solely to secure a debt, if such entity has not in
fact exercised such power to vote;
(c) any person whose business is operated under a lease or
operating agreement by any BORROWER, or any person
substantially all of whose property is operated under an
operating agreement with any BORROWER; or
(d) any entity that operates the business or substantially all of
the property of any BORROWER under a lease or operating
agreement.
1.13 "BORROWING BASE CERTIFICATE" means that certain certification
substantially in the form of Exhibit "A" attached hereto setting forth, among
other things, information relating to amounts and agings of Eligible
Receivables.
1.14 "BUSINESS DAY"shall mean a day on which LENDER and its affiliate
Fleet National Bank are open for business during their usual business hours and
offering substantially all their services.
1.15 "CAPTIVE INSURANCE LETTER OF CREDIT" is a collective term which
means the following:
I-4
(a) that certain letter of credit or those certain letters of
credit relating to BORROWERS' captive insurance program from
time to time issued by LENDER or issued at the direction of
LENDER by any LENDER's Affiliate (including Fleet National
Bank) or other financial institution acceptable to LENDER at
the request of any BORROWER for the benefit of beneficiaries
designated by any such BORROWER and for the account of any
such BORROWER (and the other BORROWERS as guarantors) and on
terms and conditions satisfactory to LENDER and to the
beneficiary of the applicable letter of credit.
(b) all extensions, modifications, refinancings, renewals,
substitutions, replacements and/or redatings thereof agreed to
by LENDER.
1.16 CD&L DEFINITIONS:
(a) "CD&L CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is a
collective term which means the certification of CD&L, to
which is attached each of the following:
(1) the Certification of CD&L's corporate secretary as to
a true, complete and correct copy of the resolutions
adopted by CD&L's Board of Directors authorizing the
execution and delivery of this Agreement, the
borrowings hereunder, and the execution and delivery
of the other Loan Documents to which it is a party;
(2) the Certification of CD&L's corporate secretary as to
the incumbency and specimen signatures of those
officers of CD&L who are to execute this Agreement
and the other Loan Documents to which it is a party;
and
(3) a true, complete and correct copy of CD&L's
Certificate of Incorporation, as amended to date;
(4) a true, complete and correct copy of CD&L's By-Laws,
as amended to date;
(5) a true, complete and correct copy of CD&L's "Good
Standing" Certificate for the state of Delaware, its
state of incorporation;
(6) a true, complete and correct copy of CD&L's "Good
Standing" Certificate for the state of New Jersey;
(7) a true, complete and correct copy of each Seller
Subordinated Note; and
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(8) a true, complete and correct copy of the Senior
Subordinated Loan Agreement.
1.17 XXXXXXX DEFINITIONS:
(a) "XXXXXXX CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is a
collective term which means the certification of XXXXXXX, to
which is attached each of the following:
(1) the Certification of XXXXXXX'x corporate secretary as
to a true, complete and correct copy of the
resolutions jointly adopted by XXXXXXX'x Board of
Directors and XXXXXXX'x sole stockholder CD&L
authorizing the execution and delivery of this
Agreement, the borrowings hereunder, and the
execution and delivery of the other Loan Documents to
which it is a party;
(2) the Certification of XXXXXXX'x corporate secretary as
to the incumbency and specimen signatures of those
officers of XXXXXXX who are to execute this Agreement
and the other Loan Documents to which it is a party;
and
(3) a true, complete and correct copy of XXXXXXX'x
Certificate of Incorporation, as amended to date;
(4) a true, complete and correct copy of XXXXXXX'x
By-Laws, as amended to date;
(5) a true, complete and correct copy of XXXXXXX'x "Good
Standing" Certificate for the state of Missouri, its
state of incorporation;
(6) a true, complete and correct copy of CLAYTON's "Good
Standing" Certificate for the state of California;
and
(7) a true, complete and correct copy of XXXXXXX'x "Good
Standing" Certificate for the state of Missouri.
(b) "XXXXXXX LOCKBOX" means the secured deposit box or boxes
(including, without limitation, the Lockbox known as the "West
Lockbox") maintained in the name of LENDER by XXXXXXX at Fleet
National Bank and/or at another LENDER's Affiliate and/or at
another financial institution approved by LENDER into which
XXXXXXX deposits (1) all Collateral Proceeds and (2) all other
sums received by XXXXXXX as payment for services rendered by
it to Account Debtors and/or other third parties and/or as
payment from any sale, lease, transfer, exchange or other
disposition of its Equipment, Goods, Inventory or other assets
(whether tangible or intangible) and (3) all other Proceeds of
the foregoing, including any insurance or condemnation awards.
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1.18 CLICK DEFINITIONS:
(a) "CLICK CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is a
collective term which means the certification of CLICK, to
which is attached each of the following:
(1) the Certification of CLICK's corporate secretary as
to a true, complete and correct copy of the
resolutions jointly adopted by CLICK's Board of
Directors and CLICK's sole stockholder CD&L
authorizing the execution and delivery of this
Agreement, the borrowings hereunder, and the
execution and delivery of the other Loan Documents to
which it is a party;
(2) the Certification of CLICK's corporate secretary as
to the incumbency and specimen signatures of those
officers of CLICK who are to execute this Agreement
and the other Loan Documents to which it is a party;
and
(3) a true, complete and correct copy of CLICK's
Certificate of Incorporation, as amended to date;
(4) a true, complete and correct copy of CLICK's By-Laws,
as amended to date;
(5) a true, complete and correct copy of CLICK's "Good
Standing" Certificate for the state of New Jersey,
its state of incorporation;
(6) a true, complete and correct copy of CLICK's "Good
Standing" Certificate for the state of Connecticut;
(7) a true, complete and correct copy of CLICK's "Good
Standing" Certificate for the state of Maine;
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(8) a true, complete and correct copy of CLICK's "Good
Standing" Certificate for the state of Massachusetts;
(9) a true, complete and correct copy of CLICK's "Good
Standing" Certificate for the state of New Hampshire;
(10) a true, complete and correct copy of CLICK's "Good
Standing" Certificate for the state of New York;
(11) a true, complete and correct copy of CLICK's "Good
Standing" Certificate for the state of Pennsylvania;
and
(12) a true, complete and correct copy of CLICK's "Good
Standing" Certificate for the state of Vermont.
(b) "CLICK LOCKBOX" means the secured deposit box or boxes
(including, without limitation, the Lockbox known as the
"Northeast Lockbox") maintained in the name of LENDER by CLICK
at Fleet National Bank and/or at another LENDER's Affiliate
and/or at another financial institution approved by LENDER
into which CLICK deposits (1) all Collateral Proceeds and (2)
all other sums received by CLICK as payment for services
rendered by it to Account Debtors and/or other third parties
and/or as payment from any sale, lease, transfer, exchange or
other disposition of its Equipment, Goods, Inventory or other
assets (whether tangible or intangible) and (3) all other
Proceeds of the foregoing, including any insurance or
condemnation awards.
1.19 "CERTIFICATION AS TO LIENS" means that certification given by the
BORROWERS setting forth the existence or non-existence of UCC liens filed
against them.
1.20 "CHATTEL PAPER" means, in addition to the definition of "chattel
paper" as contained in the UCC, all writing or writings which evidence both a
money obligation and a security interest in, or a sale or lease of, specific
Equipment, Inventory or Goods. When a transaction is evidenced both by such a
security agreement or a sale or a lease and by an Instrument or series of
Instruments, the group of writings taken together constitutes Chattel Paper.
Chattel Paper shall not include any "account" as that term is defined in the
UCC.
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1.21 "COLLATERAL" means all property (including but not limited to all
Collateral set forth in Article III of this Agreement) whether real, personal or
mixed, or tangible or intangible, now or at any time hereafter given, assigned
or pledged to LENDER to secure the Liabilities by any BORROWER together with all
products and Proceeds of all the foregoing.
1.22 "COLLATERAL LOCATIONS" is a collective term which means the
locations referenced and set forth in Section 4.8 below.
1.23 "COLLATERAL PROCEEDS" is a collective term which means each of the
following:
(a) all sums received by the BORROWERS as payment on the Accounts;
and
(b) all sums received by the BORROWERS as payment for services
rendered by it to any Account Seller, any Account Debtor
and/or any other third party; and
(c) all sums received by the BORROWERS as payment from any sale,
lease, transfer, exchange or other disposition of any of the
Collateral and its other assets (whether tangible or
intangible); and
(d) all products of the foregoing; and
(e) all Proceeds (including proceeds in the form of cash,
invoices, Accounts Receivable, checks, notes, instruments for
the payment of money, remittances in kind, and the like,
together with insurance proceeds and condemnation awards) of
any of the foregoing.
1.24 "COLLATERAL UPDATE CERTIFICATE" means a certificate executed by a
representative of the BORROWERS and substantially in the form of Exhibit "B"
hereto.
1.25 "CONTRACT RIGHTS" means any right of the BORROWERS to receive
payment or performance under a contract not yet earned by payment and/or
performance and any franchise right to operate a business.
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1.26 "DEFAULT RATE" means a rate per annum equal to the lesser of (a)
400 basis points in excess of the floating Prime Rate or (b) the maximum rate
allowed by law, it being understood that at no time will per annum interest be
calculated at a rate higher than the maximum rate allowed by law.
1.27 "ELIGIBLE RECEIVABLES" means and includes such Accounts Receivable
of the BORROWERS which are and at all times shall continue to be acceptable to
LENDER in all respects. Criteria for eligibility shall be fixed and revised from
time to time, in LENDER's sole discretion and in its exclusive judgment so long
as LENDER acts in good faith and uses reasonable commercial judgment. In
general, an Account Receivable shall in no event be deemed to be eligible unless
the following criteria are met:
(a) such Account is a valid Account;
(b) such Account represents a bona fide performed transaction;
(c) the rendition of services has been completed;
(d) no rejection has occurred;
(e) such services have been finally accepted by the Account Debtor
without dispute, offset, contra-offset, defense or counter
claim and the Account Debtor has agreed to make payment in
accordance with the specified terms of the invoice without
setoff, deduction, breach of warranty or other defense,
dispute or counterclaim by the Account Debtor;
(f) the amount shown on the appropriate BORROWER's books and on
any invoice or statement delivered to LENDER is owing to such
BORROWER;
(g) no partial payment has been made unless such partial payment
is disclosed by the BORROWERS to LENDER on the BORROWERS'
records submitted to LENDER;
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(h) such Account continues to be in full conformity with the
representations and warranties made by the BORROWERS to LENDER
with respect thereto;
(i) such Account is not an Account with respect to which any
BORROWER is or may become liable to the Account Debtor for
goods sold or services rendered by the Account Debtor to any
such BORROWER;
(j) such Account is not an Account as to which any agreement has
been made under which any deductions or discount or rebate
(including volume rebates) may be claimed except regular
discounts in the usual course of business which have been
disclosed on the face of the invoice;
(k) no more than 75 days have elapsed from the due date of the
Account and no more than 90 days have elapsed from the invoice
date of the Account, provided, however, in cases where "net 10
day" terms are provided to the Account Debtor; no more than 80
days have elapsed from the due date of the Account and no more
than 90 days have elapsed from the invoice date of the
Account;
(l) LENDER is and continues to be satisfied with the credit
standing of the Account Debtor;
(m) such Account is fully collectible when due;
(n) such Account is not based on a "xxxx and hold" transaction
and/or does not arise from promotional transactions or
salesmen samples;
(o) such Account is not a guaranteed or consignment lease or sale;
(p) such Account arises from a sale to an Account Debtor whose
principal place of business or whose place of incorporation is
located within the United States;
(q) such Account does not arise from a lease or sale to the United
States government or any agency or department thereof unless
the BORROWERS, to the satisfaction of LENDER, have complied
with all statutory requirements relating to the assignment of
any contracts with or claims against the United States
government;
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(r) such Account does not arise from an intra-company lease or
sale or from a sale or lease to any BORROWER's Affiliate or a
sale or lease by one BORROWER to any other BORROWER;
(s) the Accounts Receivable owed by any single Account Debtor and
its affiliates and against which LENDER is making Advances
does not exceed 20% of all Accounts Receivable (the reference
to percentage being based on dollar amount of Accounts, and
not number of Accounts);
(t) at least 50% of the aggregate of all Receivables owed by the
Account Debtor and its affiliates is otherwise eligible for
lending purposes;
(u) such Account is not payable in a currency other than the
currency of the United States; and
(v) such Account is not otherwise in the sole discretion of LENDER
considered ineligible for lending purposes.
1.28 "EQUIPMENT" means, in addition to the definition of "equipment"
contained in the UCC, personal property, fixtures, machinery and equipment,
handling and delivery equipment, cranes and hoisting equipment, office machines
and furniture -- in all cases above, of every kind, nature and description and
whether affixed to realty or not.
1.29 "EVENT OF DEFAULT" has the meaning set forth in Article VII of
this Agreement.
1.30 "FINANCING DOCUMENTS" has the meaning given that term in Section
2.10.
1.31 "GAAP" means and refers to generally accepted accounting
principles consistently applied over the period to which they relate.
1.32 "GENERAL INTANGIBLES" means, in addition to the definition of
"General Intangibles" contained in the UCC, each of the following:
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(a) all rights of each BORROWER, including but not limited to all
rights to property, choses in action and other rights of each
BORROWER not otherwise specifically included elsewhere in this
Agreement, further including but not limited to all present
and future federal and state tax refunds, trademarks
(including, without limitation, the trademark "CD&L"), trade
names (including, without limitation, the trade name "CD&L"),
service marks (including, without limitation, the service xxxx
"CD&L"), copyrights and patents, all rights under license
agreements for the use of same, warranties, insurance proceeds
and condemnation awards; and
(b) (1) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and
reexaminations thereof; (2) all trademarks (including, without
limitation, service marks, trade dress, logos, trade names,
together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals
in connection therewith; (3) all copyrightable works, all
copyrights, and all applications, registrations, and renewals
in connection therewith; (4) all mask works and all
applications, registrations, and renewals in connection
therewith; (5) all trade secrets and confidential business
information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals,
secret processes and procedures, engineering, production,
assembly, design, installation, other technical drawings and
specifications, working notes and memos, market studies,
consultants' reports, technical and laboratory data,
competitive samples, engineering prototypes, and all similar
property of any nature, tangible or intangible); (6) all
computer software (including data and related documentation),
computer applications software, owned or licensed, whether for
general business usage (e.g., accounting, word processing,
graphics, spreadsheet analysis, etc.) or specific,
unique-to-the-business usage (e.g., order processing,
manufacturing, process control, shipping, etc.) and computer
operating, security or programming software; (7) all rights in
and to any domain names and url addresses; (8) all other
proprietary rights; and (9) all copies and tangible
embodiments thereof (in whatever form or medium);
I-13
(c) all federal, foreign, state, local and other governmental
consents, licenses, permits, franchises, approvals,
notifications, numbers and identifiers issued by governmental
authorities, grants and other authorizations required for the
operation of each BORROWER's business;
(d) all unperformed commitments or obligations owing to each
BORROWER which pertain to each such BORROWER's business;
(e) all other tangible and intangible assets (including the
telephone and facsimile numbers used in connection with each
BORROWER's business, all causes of action, rights of action
(whether in tort, contract or otherwise), contract rights and
warranty and product liability claims against third parties),
unliquidated rights and claims pursuant to warranties made by
manufacturers, suppliers or vendors, claims for refunds,
rights of off-set and credits of all kinds, which are used or
useful in or necessary to the operation of each BORROWER's
business; and
(f) all of the goodwill associated with each BORROWER's business
as a going concern.
1.33 "GOODS" means, in addition to the definition of "goods" as
contained in the UCC, all articles of tangible personal property, capable of
being sold, supplied, leased or otherwise disposed of, and shall also mean and
include all of any BORROWER's right, title and interest in and to the goods and
other property underlying or securing any of the Accounts Receivable.
1.34 "INSTRUMENT" means, in addition to the definition of "instrument"
as contained in the UCC, a negotiable instrument or a security, or any other
writing which evidences a right to the payment of money and is not itself a
security agreement or lease and is of the type which is, in the ordinary course
of business, transferred by delivery with any necessary endorsement or
assignment.
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1.35 "INVENTORY" means, in addition to the definition of "inventory" as
contained in the UCC, all Equipment, Inventory or Goods (including perishable
commodities) held by the BORROWERS for resale or lease or furnished or to be
furnished under contracts of service, and shall include all goods, materials and
supplies (including but not limited to incidentals, packaging materials and all
other items which contribute to the finished product or to the promotion or sale
thereof) used or usable in manufacturing, processing, packaging or shipping and
shall also include raw materials, goods and work in process and finished goods,
and all goods returned by or reclaimed from customers or Account Debtors of any
BORROWER.
1.36 KBD DEFINITIONS:
(a) "KBD CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is a
collective term which means the certification of KBD, to which
is attached each of the following:
(1) the Certification of KBD's corporate secretary as to
a true, complete and correct copy of the resolutions
jointly adopted by KBD's Board of Directors and KBD's
sole stockholder SILVER STAR authorizing the
execution and delivery of this Agreement, the
borrowings hereunder, and the execution and delivery
of the other Loan Documents to which it is a party;
(2) the Certification of KBD's corporate secretary as to
the incumbency and specimen signatures of those
officers of KBD who are to execute this Agreement and
the other Loan Documents to which it is a party; and
(3) a true, complete and correct copy of KBD's
Certificate of Incorporation, as amended to date;
(4) a true, complete and correct copy of KBD's By-Laws,
as amended to date; and
(5) a true, complete and correct copy of KBD's "Good
Standing" Certificate for the state of North
Carolina, its state of incorporation.
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1.37 "LANDLORD'S CONSENTS" is a collective term which means all of the
following:
(a) that certain waiver and consent or those certain waivers and
consents pursuant to which the owners of the Collateral
Locations which correspond to each BORROWER's respective
principal place of business agree to allow LENDER to come onto
such premises in order to exercise its rights against the
BORROWERS upon the occurrence of an Event of Default
hereunder; and
(b) all extensions, modifications, renewals, substitutions,
replacements and/or redatings of the foregoing.
1.38 "LENDER'S AFFILIATE" means any entity (including Fleet National
Bank and any successor thereto) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
LENDER (or any successor thereto), or any entity under the control of
FleetBoston Financial Corporation (or any successor thereto).
1.39 "LENDING FORMULA" is a collective term which shall have the
meaning give that term in Section 2.2 of this Agreement.
1.40 "LETTER OF CREDIT OBLIGATIONS" means (a) all amounts which LENDER
actually advances or is contingently liable to advance on account of any Letters
of Credit (including the Captive Insurance Letter of Credit), (b) in the event
that LENDER is not itself the issuer of any Letter of Credit, all amounts which
LENDER actually advances or is contingently liable to advance to any such issuer
on account of the Letters of Credit, (c) any acceptances created thereunder and
(d) all other sums (including fees and interest due on any amounts drawn under
any Letter of Credit from the date of any such draw until the date of
reimbursement by the BORROWERS) due to LENDER or any issuer of any Letter of
Credit under any documentation, including the Applications, due to LENDER under
any documentation, including the Applications, now or hereafter governing
LENDER's rights and obligations relating to any Letter of Credit.
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1.41 "LETTERS OF CREDIT" is a collective term which means the Captive
Insurance Letter of Credit together with those certain documentary and/or
stand-by letters of credit from time to time issued by LENDER or issued at the
direction of LENDER by any LENDER's Affiliate (including Fleet National Bank) or
other financial institution acceptable to LENDER at the request of any BORROWER
for the benefit of beneficiaries designated by any such BORROWER and for the
account of any such BORROWER (and the other BORROWERS as guarantors) and on
terms and conditions satisfactory to LENDER.
1.42 "LIABILITIES" means all of the following:
(a) principal due to LENDER on the REVOLVING LOAN (including all
Advances and re-Advances thereunder), to be paid with interest
thereon as required by this Agreement and the REVOLVING NOTE;
(b) Advances and re-Advances which are and which may be made from
time to time by LENDER to the BORROWERS not in compliance with
the Lending Formula or the "loan value" requirements of
Article II;
(c) Advances and re-Advances which are and which may be made from
time to time by LENDER or any LENDER's Affiliate to, on behalf
of or for the account of any BORROWER over and above any
monetary limitation on the REVOLVING LOAN and over and above
any other lending limitation contained in this Agreement, and
the interest thereon;
(d) all amounts which LENDER or any LENDER's Affiliate has
actually advanced or is contingently liable to advance on
account of Letters of Credit; and/or in the event that LENDER
is not itself the issuer of any Letter of Credit, all amounts
which LENDER actually advances or is contingently liable to
advance to any such issuer (including without limitation any
LENDER's Affiliate on account of the Letters of Credit;
(e) the Letter of Credit Obligations;
(f) principal and interest on any Other Loans;
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(g) any and all other advances, re-advances, borrowings and
re-borrowings made by LENDER to any BORROWER prior to, on and
after the date of this Agreement to, or on the account of, any
BORROWER;
(h) any and all interest, commissions, checking account
overdrafts, bank overdrafts, and other obligations,
liabilities and indebtedness owed by any BORROWER to LENDER or
any LENDER's Affiliate (whether direct or indirect, primary,
secondary, contingent, joint or several, and regardless of how
acquired by LENDER or any such Lender's Affiliate) which are
due or which will arise or become due in the future, no matter
how or when arising and whether under any now existing or
future agreement or instrument of whatever nature (1) between
any BORROWER and LENDER or (2) between any BORROWER and any
LENDER's Affiliate or (3) otherwise;
(i) the performance and fulfillment by each BORROWER of all the
terms, conditions, promises, covenants and provisions
contained in this Agreement, or in any now existing agreement
or future agreement or instrument of whatever nature (1)
between any BORROWER and LENDER or (2) between any BORROWER
and any LENDER's Affiliate;
(j) all claims, damages, losses, liabilities, reasonable costs or
expenses whatsoever which LENDER may incur (or which may be
claimed against LENDER by any person or entity whatsoever
including any LENDER's Affiliate by reason of or in connection
with the execution and delivery or transfer of, or payment or
failure to pay under the REVOLVING LOAN and the Letter of
Credit Obligations;
(k) the amount due upon any notes or other obligations given to,
or received by, LENDER or any LENDER's Affiliate on account of
any of the foregoing.
1.43 "LIBOR-RELATED DEFINITIONS": The following terms shall have the
meanings given to them in the Sections referenced below:
(a) "LIBOR" shall have the meaning given that term in Section
2.6(e)(1) below.
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(b) "LIBOR Based Interest Period" shall have the meaning given
that term in Section 2.6(e)(2) below.
(c) "LIBOR Based Rate" shall have the meaning given that term in
Section 2.6(c) below.
(d) "LIBOR Option" shall have the meaning given that term in
Section 2.6(a) below.
(e) "LIBOR Reserve Percentage" shall have the meaning given that
term in Section 2.6(e)(3) below.
(f) "London Banking Day" shall have the meaning given that term in
Section 2.6(e)(4) below.
(g) "Principal Balance" shall have the meaning given that term in
Section 2.6(e)(5) below.
(h) "Roll Over Date" shall have the meaning given that term in
Section 2.6(e)(6) below.
1.44 "LIENS" is a collective term which means all mortgages, liens,
judicial liens, encumbrances, security interests, charges, pledges,
hypothecations, assignments, conditional sale or other title retention
agreements, and the like, relating to any real or personal property interest of
any BORROWER, whether legal or equitable.
1.45 "LOAN DOCUMENTS" means the Agented Borrowing Agreement, this
Agreement, the Applications, the Landlord's Consents, the Letters of Credit, the
REVOLVING NOTE, UCC-1 Financing Statements, any tradename or trade xxxx
agreement that may be required by LENDER, any documents or instruments related
hereto or thereto and all extensions, modifications, refinancings, renewals,
substitutions, replacements and/or redatings of any or all of the foregoing.
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1.46 "LOAN VALUE" means eighty-five (85%) percent of the unpaid amount
of the Eligible Receivables (provided, however, that LENDER in its sole
discretion exercised in good faith and using reasonable commercial judgment may
on prior notice to fix the aforesaid "loan value" at some lesser percentage)
LESS a rolling Accounts Receivable dilution reserve (based on historical data
relating to the BORROWERS' actual collection of Outstanding Accounts) if deemed
necessary by LENDER in its sole discretion exercised in good faith and using
reasonable commercial judgment may on prior notice to the BORROWERS.
1.47 "LOCKBOX" means any of the Lockboxes
1.48 "LOCKBOX" is a collective term which means the CLICK Lockbox, the
XXXXXXX Lockbox, the OLYMPIC Lockbox, the SECURITIES Lockbox, the SILVER STAR
Lockbox, and any other secured deposit box now or hereafter maintained in the
name of LENDER by a BORROWER at Fleet National Bank and/or at another LENDER's
Affiliate and/or at another financial institution approved by LENDER into which
such BORROWER deposits all Collateral Proceeds.
1.49 "MATERIAL ADVERSE EFFECT" means the occurrence of any event or the
existence of any condition which, in the commercially reasonable opinion of
LENDER, materially and adversely changes the business, condition (financial or
otherwise), creditworthiness, operations, performance or properties of any
BORROWER or which, in the commercially reasonable opinion of LENDER, materially
impairs the ability of any BORROWER to discharge its obligations hereunder or
which materially impairs the value of the Collateral or the liens and security
interests granted to LENDER herein or which causes LENDER to deem itself
insecure.
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1.50 OLYMPIC DEFINITIONS:
(a) "OLYMPIC CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is a
collective term which means the certification of OLYMPIC, to
which is attached each of the following:
(1) the Certification of OLYMPIC's corporate secretary as
to a true, complete and correct copy of the
resolutions jointly adopted by OLYMPIC's Board of
Directors and OLYMPIC's sole stockholder CD&L
authorizing the execution and delivery of this
Agreement, the borrowings hereunder, and the
execution and delivery of the other Loan Documents to
which it is a party;
(2) the Certification of OLYMPIC's corporate secretary as
to the incumbency and specimen signatures of those
officers of OLYMPIC who are to execute this Agreement
and the other Loan Documents to which it is a party;
and
(3) a true, complete and correct copy of OLYMPIC's
Certificate of Incorporation, as amended to date;
(4) a true, complete and correct copy of OLYMPIC's
By-Laws, as amended to date; and
(5) a true, complete and correct copy of OLYMPIC's "Good
Standing" Certificate for the state of New York, its
state of incorporation.
(b) "OLYMPIC LOCKBOX" means the secured deposit box or boxes
(including, without limitation, the Lockbox known as the "NYC
Lockbox") maintained in the name of LENDER by OLYMPIC at Fleet
National Bank and/or at another LENDER's Affiliate and/or at
another financial institution approved by LENDER into which
OLYMPIC deposits (1) all Collateral Proceeds and (2) all other
sums received by OLYMPIC as payment for services rendered by
it to Account Debtors and/or other third parties and/or as
payment from any sale, lease, transfer, exchange or other
disposition of its Equipment, Goods, Inventory or other assets
(whether tangible or intangible) and (3) all other Proceeds of
the foregoing, including any insurance or condemnation awards.
I-21
1.51 "OTHER LOANS" has the meaning set forth in Section 2.15 of this
Agreement.
1.52 "OUTSTANDING" is an adjective which means "unpaid at any one
specific time", and has such meaning regardless whether the applicable
underlying obligations owed under the REVOLVING LOAN, Letter of Credit
Obligations and/or any other Liabilities are matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, joint or several,
accrued or not-yet-accrued and/or due or not-yet-due.
1.53 "PRIME RATE" means the variable rate of interest set from time to
time by Fleet National Bank (or any successor thereto) as its usual, short-term
base lending rate to its commercial borrowers. The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate being charged to
any customer. From time to time LENDER makes loans to certain customers at rates
of interest below the Prime Rate of Fleet National Bank.
1.54 "PROCEEDS" means, in addition to the definition of "proceeds"
given in the UCC, all additions, substitutions, replacements, and increments to
the Collateral, including cash and non-cash proceeds of all of the Collateral in
whatever form, including cash, negotiable instruments and other instruments for
the payment of money, chattel paper, security agreements or other documents,
insurance or condemnation awards and any Collateral purchased with Proceeds.
1.55 "RATE REDUCTION BENCHMARK" shall have the meaning given that term
in Section 5.26 below.
1.56 "RECONCILIATION CERTIFICATE" means that certain certification in
the form attached hereto as Exhibit "C" for certifications which are required to
be submitted no less frequently than monthly (unless otherwise specified
herein), setting forth, among other things, information relating to adjustments
in amounts and/or values of the Collateral.
I-22
1.57 "REVOLVING LOAN" has the meaning set forth in Section 2.1(b) of
this Agreement.
1.58 "REVOLVING LOAN MATURITY DATE" means June 27, 2005.
1.59 "REVOLVING NOTE" has the meaning set forth in Section 2.8 of this
Agreement.
1.60 SECURITIES DEFINITIONS:
(a) "SECURITIES CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is
a collective term which means the certification of SECURITIES,
to which is attached each of the following:
(1) the Certification of SECURITIES's corporate secretary
as to a true, complete and correct copy of the
resolutions jointly adopted by SECURITIES's Board of
Directors and SECURITIES's sole stockholder CD&L
authorizing the execution and delivery of this
Agreement, the borrowings hereunder, and the
execution and delivery of the other Loan Documents to
which it is a party;
(2) the Certification of SECURITIES's corporate secretary
as to the incumbency and specimen signatures of those
officers of SECURITIES who are to execute this
Agreement and the other Loan Documents to which it is
a party; and
(3) a true, complete and correct copy of SECURITIES's
Certificate of Incorporation, as amended to date;
(4) a true, complete and correct copy of SECURITIES's
By-Laws, as amended to date;
(5) a true, complete and correct copy of SECURITIES's
"Good Standing" Certificate for the state of New
York, its state of incorporation;
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(6) a true, complete and correct copy of SECURITIES's
"Good Standing" Certificate for the state of New
Jersey; and
(7) a true, complete and correct copy of SECURITIES's
"Good Standing" Certificate for the state of
Pennsylvania.
(b) "SECURITIES LOCKBOX" means the secured deposit box or boxes
(including, without limitation, the Lockbox known as the
"Banking Lockbox") maintained in the name of LENDER by
SECURITIES at Fleet National Bank and/or at another LENDER's
Affiliate and/or at another financial institution approved by
LENDER into which SECURITIES deposits (1) all Collateral
Proceeds and (2) all other sums received by SECURITIES as
payment for services rendered by it to Account Debtors and/or
other third parties and/or as payment from any sale, lease,
transfer, exchange or other disposition of its Equipment,
Goods, Inventory or other assets (whether tangible or
intangible) and (3) all other Proceeds of the foregoing,
including any insurance or condemnation awards.
1.61 "SELLERS" is a collective term which means each and all of the
payees of the Seller Subordinated Notes.
1.62 "SELLER SUBORDINATED NOTES" is a collective term which means each
and all of the following:
--------------------------------------------------------------------------------------------------------
Date Noteholder Original Rate 3/31/02 Balance
Note
--------------------------------------------------------------------------------------------------------
Jul 1998 Metro Courier Network, Inc. 1,750,000 11.0% 1,457,006
(Xxxxxx Xxxxxxxxxx)
--------------------------------------------------------------------------------------------------------
Aug 1998 Xxxxx X. Xxxxxxx 1,460,000 * 1,460,000
--------------------------------------------------------------------------------------------------------
Dec 1998 Xxxxx Xxxxxx 122,707 * 116,259
--------------------------------------------------------------------------------------------------------
Dec 1998 Xxxxx Xxxxxx 718,293 * 680,548
--------------------------------------------------------------------------------------------------------
Feb 1999 Trustee created under Paragraph Third 1,450,000 * 1,162,073
of the Last Will and Testament of
Xxxxxxx Gold (Xxxxxxx Xxxx)
--------------------------------------------------------------------------------------------------------
Apr 1999 Westwind Express, Inc. - 2 notes 1,200,000 * 1,441,715
(Xxxxx Xxxxxxx) 480,000
--------------------------------------------------------------------------------------------------------
Apr 1999 Metro Parcel Service, Inc. (Xxxxxx 202,734 * 162,189
Xxxxxxxxx)
--------------------------------------------------------------------------------------------------------
7,383,734 6,479,790
--------------------------------------------------------------------------------------------------------
*: the Prime Rate plus 200 basis points, with a floor of 7% and a
ceiling of 9%
I-24
1.63 "SENIOR SUBORDINATED DEBT" is a collective term which means all
debt now or hereafter owed by the BORROWERS to the Senior Subordinated Lenders.
1.64 "SENIOR SUBORDINATED DEBT RESERVE" means the reserve initially
$2,250,000 and reducing dollar-for-dollar with each permitted principal
instalment payment to be made by CD&L on the Senior Subordinated Debt after the
date hereof.
1.65 "SENIOR SUBORDINATED LENDERS" is a collective term which means
each and all of the following:
(a) Paribas Capital Funding LLC;
(b) Exeter Capital Partners IV, L.P.; and
(c) Exeter Venture Lenders L.P.
1.66 "SENIOR SUBORDINATED LOAN AGREEMENT" means that certain instrument
dated as of January 29, 1999 and entitled "Senior Subordinated Loan Agreement"
by and among CD&L (as borrower) and the Senior Subordinated Lenders, as
heretofore amended.
I-25
1.67 SILVER STAR DEFINITIONS:
(a) "SILVER STAR CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT"
is a collective term which means the certification of SILVER
STAR, to which is attached each of the following:
(1 the Certification of SILVER STAR's corporate
secretary as to a true, complete and correct copy of
the resolutions jointly adopted by SILVER STAR's
Board of Directors and SILVER STAR's sole stockholder
CD&L authorizing the execution and delivery of this
Agreement, the borrowings hereunder, and the
execution and delivery of the other Loan Documents to
which it is a party;
(2 the Certification of SILVER STAR's corporate
secretary as to the incumbency and specimen
signatures of those officers of SILVER STAR who are
to execute this Agreement and the other Loan
Documents to which it is a party; and
(3 a true, complete and correct copy of SILVER STAR's
Certificate of Incorporation, as amended to date;
(4 a true, complete and correct copy of SILVER STAR's
By-Laws, as amended to date;
(5 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of Florida,
its state of incorporation;
(6 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of
Arkansas;
(7 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of Georgia;
(8 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of Indiana;
(9 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of
Louisiana;
(10 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of
Maryland;
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(11 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of New
Jersey;
(12 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of New
York;
(13 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of North
Carolina;
(14 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of Ohio;
(15 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of
Oklahoma;
(16 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of
Pennsylvania;
(17 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of South
Carolina;
(18 a true, complete and correct copy of SILVER STAR's
"Good Standing" Certificate for the state of
Tennessee;
(19 a true, complete and correct copy of SILVER STAR's's
"Good Standing" Certificate for the state of Texas.
(b) "SILVER STAR LOCKBOX" means the secured deposit box or boxes
(including, without limitation, the Lockbox known as the
"Southeast Lockbox") maintained in the name of LENDER by
SILVER STAR at Fleet National Bank and/or at another LENDER's
Affiliate and/or at another financial institution approved by
LENDER into which SILVER STAR and its wholly owned Subsidiary
KBD deposit (1) all Collateral Proceeds and (2) all other sums
received by SILVER STAR and KBD as payment for services
rendered by them to Account Debtors and/or other third parties
and/or as payment from any sale, lease, transfer, exchange or
other disposition of their Equipment, Goods, Inventory or
other assets (whether tangible or intangible) and (3) all
other Proceeds of the foregoing, including any insurance or
condemnation awards.
I-27
1.68 "SUBSIDIARY" means any corporation or other entity more than a
majority (by number of votes) of the voting interest therein is at the time
owned or controlled by any BORROWER or a Subsidiary of any such BORROWER.
1.69 "UCC" shall mean the Uniform Commercial Code as now enacted in the
State of New Jersey, as from time to time hereafter amended.
1.70 UCC DEFINITIONS. All terms defined in Articles 1 or 9 of the UCC
shall have the meanings given therein unless otherwise defined herein.
END OF ARTICLE I
I-28
ARTICLE II
LOANS
2.1 THE REVOLVING LOAN.
(a) General: LENDER shall, from time to time hereafter and on the
basis of the various criteria set forth in this Agreement (including, without
limitation, those criteria which are evaluated by LENDER using its sole
discretion), lend, Advance, re-lend and re-Advance moneys to the BORROWERS (upon
request made by CD&L in its capacity as agent as more fully set forth below) to
be distributed to the BORROWERS under the REVOLVING LOAN to be used for working
capital and general business needs.
(b) Definition of "REVOLVING LOAN": The facility described in
subsection (a) above and in the other provisions of this Article II and all
extensions, modifications (including without limitation modifications increasing
the amount of such facility), refinancings, renewals, substitutions,
replacements and/or redatings of such facility is the "REVOLVING LOAN" described
throughout this Agreement.
(c) (1) For purposes of the Seller Subordinated Notes and for the
purposes of providing LENDER with all benefits afforded the holder of "Senior
Debt" and/or "Senior Indebtedness" as defined therein, the REVOLVING LOAN is
recognized as and intended to be a restatement, refinancing and/or replacement
of the credit facility previously provided to the BORROWERS under that Loan and
Security Agreement (as amended, modified, supplemented, extended, restated,
refinanced, replaced or refunded from time to time) originally dated as of June
14, 1997, by and between First Union Commercial Corporation (as lender) and CD&L
and its subsidiaries (as borrowers), as set forth therein.
II-1
(2) Also for purposes of the Seller Subordinated Notes and for
the purposes of providing LENDER with all benefits afforded the holder of
"Senior Debt" and/or "Senior Indebtedness" as defined therein, the REVOLVING
LOAN and all other Liabilities are recognized as and intended to be "Senior
Debt" and/or "Senior Indebtedness" as such terms are defined in the Seller
Subordinated Notes.
(3) Also for purposes of the Seller Subordinated Notes and for
the purposes of providing LENDER with all benefits afforded the holder of
"Senior Debt" and/or "Senior Indebtedness" thereunder, LENDER and its successors
and assigns are recognized as and intended to be holders of "Senior Debt" and/or
"Senior Indebtedness" under the Seller Subordinated Notes.
(d) (1) For purposes of the Senior Subordinated Loan Agreement and
for the purposes of providing LENDER with all benefits afforded the holder of
"Senior Indebtedness" as defined in such Senior Subordinated Loan Agreement, the
REVOLVING LOAN and this Agreement (and all extensions, modifications [including
without limitation modifications increasing the amount of the REVOLVING LOAN],
refinancings, renewals, substitutions, replacements and/or redatings thereof and
hereof) are recognized as and intended to be a Permitted Refinancing (as such
term is defined in the Senior Subordinated Loan Agreement).
(2) Also for purposes of the Senior Subordinated Loan Agreement
and for the purposes of providing LENDER with all benefits afforded the holder
of "Senior Indebtedness" thereunder, the REVOLVING LOAN and, to the fullest
extent possible, all the other Liabilities are recognized as and intended to be
"Senior Indebtedness" as defined in the Senior Subordinated Loan Agreement.
II-2
(3) Also for purposes of the Senior Subordinated Loan Agreement
and for the purposes of providing LENDER with all benefits afforded the holder
of "Senior Indebtedness" thereunder, LENDER and its successors and assigns are
recognized as and intended to be holders of "Senior Indebtedness" under the
Senior Subordinated Loan Agreement.
2.2 MAXIMUM BORROWINGS UNDER THE REVOLVING LOAN.
(a) The total of all Outstanding cash Advances under the REVOLVING
LOAN shall not at any one time exceed the lesser amount of the following (the
"Lending Formula"):
(1) $15,000,000 LESS the principal amount of Outstanding
Letters of Credit and also LESS the Senior
Subordinated Debt Reserve; or
(2) the total of the "loan value" of Eligible Receivables
LESS the principal amount of Outstanding Letters of
Credit and also LESS the Senior Subordinated Debt
Reserve.
(b) The "loan value" of Eligible Receivables will be determined no
less frequently than once a week after LENDER's receipt of the Borrowing Base
Certificate and the other information required to be given by the BORROWERS to
LENDER pursuant to Section 5.6 below.
2.3 DISBURSEMENTS UNDER THE REVOLVING LOAN.
(a) Requests for an Advance must be made in writing and must be
received by LENDER no later than 2 p.m. on the Business Day that receipt of the
Advance is expected, provided, however, that as it relates to an Advance bearing
interest at a LIBOR Based Rate, such request must be made at least two (2)
London Banking Days prior to the commencement of a LIBOR Based Interest Period.
II-3
(b) (1) The BORROWERS have requested that, as a convenience to each
of them, all requests for Advances, the issuance of all Letters of Credit and
the extension of any other financial accommodations to be extended to any of
them under this Agreement (including without limitation the exercise of any
LIBOR Option) shall be made by CD&L, acting in the capacity of the BORROWERS'
agent.
(2) In furtherance of the foregoing, the BORROWERS hereby
direct, and LENDER hereby agrees, that the making of Advances and the issuance
of Letters of Credit and the extension of any other financial accommodations
extended to any BORROWER under this Agreement (including without limitation the
exercise of any LIBOR Option) shall be made by CD&L, acting in its capacity as
agent as aforesaid.
(3) The BORROWERS further authorize CD&L, acting in its
capacity as agent as aforesaid, to designate any Advance received hereunder, any
Letter of Credit issued hereunder and any other financial accommodation extended
hereunder as having been made, issued or extended for the account of a
designated BORROWER.
(4) (A) If CD&L so designates any such Advance, any such Letter
of Credit and any such other financial accommodation as having been made, issued
or extended for the account of a designated BORROWER, LENDER may in addition to
debiting the joint and several REVOLVING LOAN account of all BORROWERS also
debit a specific loan account of the designated BORROWER.
II-4
(B) Notwithstanding the foregoing, it is the intent of this
Agreement that each entity named as BORROWER shall be considered individually
and collectively as a "BORROWER" hereunder regardless whether any such entity
actually receives the proceeds of the REVOLVING LOAN or any Advances made
thereunder or any financial accommodation provided hereunder or is named as an
account party under any Letter of Credit created hereunder and regardless which
entity is the source of any Collateral, it being further intended that each
entity named as BORROWER is and shall be jointly and severally liable for all
Liabilities.
(5) The authority of CD&L, acting in its capacity as agent as
aforesaid, to so request Advances or Letters of Credit or other financial
accommodations on behalf of, and to bind, the BORROWERS, shall continue unless
and until the LENDER's actual receipt of written notice from all BORROWERS as to
the termination of such authority, which notice must be signed by the respective
President of such BORROWER, and which notice must be binding on all BORROWERS
and shall be effective only as to Advances made or Letters of Credit issued or
financial accommodations extended more than sixty (60) days following the
LENDER's receipt of such notice. The BORROWERS understand that the LENDER's
receipt of any such written notice constitutes an Event of Default under the
Loan Agreement.
(c) (1) All Advances under the REVOLVING LOAN shall normally be
disbursed by crediting a joint operating account maintained in the joint and
several name of all BORROWERS at Fleet National Bank or other LENDER's Affiliate
acceptable to LENDER and by charging the BORROWERS' joint and several REVOLVING
LOAN account or accounts on LENDER's books.
II-5
(2) Advances can be made, however, by means other than as
aforesaid, including as more fully set forth above, CD&L's designation that any
Advance, any Letter of Credit and/or any other financial accommodation be made,
issued or extended for the account of a designated BORROWER.
(d) NOTHING IN THE FOREGOING IS INTENDED TO LESSEN OR IMPAIR EACH
BORROWER'S JOINT AND SEVERAL OBLIGATION AS A CO-BORROWER LIABLE FOR THE
REPAYMENT OF ALL ADVANCES MADE UNDER THE REVOLVING LOAN OR AS A JOINT AND
SEVERAL GUARANTOR (OF PAYMENT NOT COLLECTION) OF THE PAYMENT AND PERFORMANCE OF
THE LIABILITIES OF EACH OTHER BORROWER. THE FACT THAT LENDER MAY CHARGE A
REVOLVING LOAN ACCOUNT OR ACCOUNTS OF LESS THAN ALL BORROWERS IN NO WAY ALTERS
OR LESSENS THE JOINT AND SEVERAL LIABILITY OF ALL BORROWERS AS CO-BORROWERS AND
AS GUARANTORS UNDER THIS AGREEMENT FOR THE PERFORMANCE AND PAYMENT OF ALL THE
LIABILITIES.
(e) Nothing herein shall prohibit any BORROWER from transferring
and distributing any REVOLVING LOAN proceeds received by it to any other
BORROWER so long as such transfer and distribution is made in the ordinary
course of the applicable BORROWER's business.
2.4 RIGHT TO RECEIVE REVOLVING LOAN ADVANCES.
(a) Subject to the other provisions of this Section and this
Agreement and so long as (1) the total of all Advances Outstanding under the
REVOLVING LOAN do not exceed the Lending Formula and (2) each and all of the
BORROWERS are otherwise in compliance with all the terms and conditions set
forth in this Agreement, the BORROWERS may borrow and re-borrow under the
REVOLVING LOAN up to the day before the Revolving Loan Maturity Date and
repayment by the BORROWERS of Advances Outstanding under the REVOLVING LOAN
shall not affect the ability of the BORROWERS to borrow and re-borrow under this
Agreement.
II-6
(b) To the extent that by operation of any circumstance which
causes the amount of the Outstanding Advances under the REVOLVING LOAN to
violate the Lending Formula, LENDER may in its discretion make no other advances
to the BORROWERS under the REVOLVING LOAN until the BORROWERS are in compliance
with the Lending Formula. Nothing in the foregoing shall limit LENDER's right to
declare an Event of Default because of such non-compliance.
(c) (1) In addition and notwithstanding anything in this Agreement
to the contrary, the obligation of LENDER to continue making Advances under the
REVOLVING LOAN shall terminate upon the expiration of this Agreement pursuant to
its terms and shall be suspended upon the occurrence and during the continuance
of any of the following events:
(A) an Event of Default hereunder; or
(B) an event which, except for the passage of time or the
giving of notice, would be such an Event of Default.
(2) Also notwithstanding anything in this Agreement to the
contrary, upon the occurrence of any event specified in subsection (1)(A) above
or upon the occurrence of any event specified in subsection (1)(B) above which
is not cured, LENDER also has the right (so long as LENDER acts in good faith
and in the exercise of its reasonable commercial judgment and on prior notice to
the BORROWERS), in addition to all of LENDER's other rights and remedies under
this Agreement, to modify its relationship with the BORROWERS under the
REVOLVING LOAN in any manner (including, without limitation, reduction of
Advance rates, increase in interest rates and reduction in the amount available
under the REVOLVING LOAN) determined by LENDER on 10 Business Days prior notice
to the BORROWERS.
II-7
(3) Despite any such modification of LENDER's relationship with
the BORROWERS under the REVOLVING LOAN, LENDER's rights and remedies under this
Agreement shall continue to remain in full force and effect (as modified in the
case of any modification) until payment of the Liabilities in full.
2.5 REPAYMENT OF REVOLVING LOAN ADVANCES.
(a) Subject to the other provisions of this Section and this
Agreement and so long as (1) the total of all Advances Outstanding under the
REVOLVING LOAN does not exceed the Lending Formula and (2) each and all of the
BORROWERS are otherwise in compliance with all the terms and conditions set
forth in this Agreement, Advances drawn under the REVOLVING LOAN need not be
repaid until the Revolving Loan Maturity Date. On the Revolving Loan Maturity
Date, all Advances Outstanding under the REVOLVING LOAN, plus accrued interest
and all other sums due thereon, shall be due and owing, unless LENDER's
relationship with the BORROWERS under the REVOLVING LOAN is sooner terminated or
modified as provided herein.
(b) Notwithstanding the provisions of subsection (a) above, the
principal owing on the REVOLVING LOAN shall be repayable on a continuing and
continual basis as follows:
(1) Each BORROWER agrees to and shall establish and maintain,
or permit LENDER to establish and maintain as determined from time to time by
LENDER in its discretion, one or more Lockboxes and/or Blocked Accounts. Unless
otherwise agreed by LENDER in writing, the Blocked Accounts shall be maintained
only at Fleet National Bank, provided, however, that during the first 90 days of
this Agreement, Blocked Accounts may be maintained at Wachovia Bank, N.A., so
long as such accounts are maintained by said Wachovia Bank, N.A., for the
benefit of LENDER pursuant to agreements satisfactory in all respects
satisfactory to LENDER.
II-8
(2) Not in limitation of the foregoing, (A) XXXXXXX has opened
and will continue to maintain the Lockbox known as the "West Lockbox"; (B) CLICK
has opened and will continue to maintain the Lockbox known as the "Northeast
Lockbox"; (C) OLYMPIC has opened and will continue to maintain the Lockbox known
as the "NYC Lockbox"; (D) SECURITIES has opened and will continue to maintain
the Lockbox known as the "Banking Lockbox"; and (E) SILVER STAR and KBD have
opened and will continue to maintain the Lockbox known as the "Southeast
Lockbox".
(3) Each BORROWER agrees as follows:
(A) Each Lockbox is one of the Deposit Accounts described
in Article III of this Agreement.
(B) Each Blocked Account is an account owned by LENDER
and holding funds of LENDER and not funds of any
BORROWER and against which any such BORROWER has
rights only to the extent that funds in any such
account exceeds the Liabilities after this Agreement
has been terminated and such Liabilities have been
paid in full.
(C) Each Blocked Account and checking/demand deposit
operating account is one of the Deposit Accounts
described in Article III of this Agreement.
II-9
(4) (A) Each BORROWER agrees to and shall forthwith deposit or
shall cause to be deposited all Collateral Proceeds into one or more of the
aforementioned Lockboxes, Blocked Accounts and/or such other place designated by
LENDER. (B) To implement the foregoing, each BORROWER agrees to and shall direct
its Account Debtors and other third parties to remit all the Collateral Proceeds
directly to one or more Lockboxes, Blocked Accounts and/or such other place
designated by LENDER.
(5) As it relates to each Lockbox, each BORROWER hereby
authorizes LENDER to, transfer or cause the transfer of (on a daily basis or
other frequency determined by LENDER) all amounts from each aforementioned
Lockbox into one or more of the aforementioned Blocked Accounts.
(6) Each BORROWER agrees to and shall forthwith transfer,
assign, endorse, deliver and turn over to LENDER for LENDER's deposit into any
such Blocked Account and/or such other place designated by LENDER all the
Collateral Proceeds which, despite any such BORROWER's aforementioned direction
to its Account Debtors and other third parties, are received by any such
BORROWER.
(7) In no case shall any BORROWER commingle any of the
Collateral Proceeds with any other property of any person or entity not a
BORROWER, but shall keep such Collateral Proceeds held in trust for LENDER as
LENDER's exclusive property and immediately transfer, assign, endorse, deliver
and/or turn such Collateral Proceeds over to LENDER in the identical form
received (excluding endorsements necessary for collection for the benefit of
LENDER) to a Lockbox, Blocked Account and/or such other place designated by
LENDER.
II-10
(8) (A) Each BORROWER hereby authorizes LENDER to effect the
repayment of the Advances Outstanding on the REVOLVING LOAN, the payment of
interest thereon and the other Liabilities on a continuing and continual basis,
either daily or on another frequency determined by LENDER, by LENDER's transfer,
withdrawal or "sweep" of all funds on deposit in the Blocked Accounts.
(B) Funds deposited into a Blocked Account prior to 12
noon on any Business Day will normally be transferred, withdrawn or "swept" by
LENDER on the immediately following Business Day and funds deposited into a
Blocked Account at or after 12 noon on any Business Day will normally be
transferred, withdrawn or "swept" by LENDER on the second Business Day following
said deposit.
(C) LENDER will apply the funds so transferred, withdrawn
or "swept" by LENDER to the repayment of Advances Outstanding on the REVOLVING
LOAN on the applicable Business Day on which LENDER's aforesaid transfer,
withdrawal or "sweep" occurs.
(D) LENDER may apply such funds towards satisfying any of
the Liabilities of any BORROWER in any order or priority which LENDER in the
exercise of its reasonable commercial judgment deems fit.
(9) If notwithstanding the application of funds in the Blocked
Accounts as set forth above, the BORROWERS are not in compliance with the
Lending Formula at any time or by operation of any circumstance, the BORROWERS
must, immediately upon the earlier of any BORROWER's knowledge that
non-compliance exists or notice from LENDER to do so, bring the REVOLVING LOAN
into compliance with the Lending Formula. No BORROWER will be able to draw under
the REVOLVING LOAN unless all Advances Outstanding under the REVOLVING LOAN
(after giving effect to the drawing) would be in compliance with the Lending
Formula. In the event that the BORROWERS fail to so bring all balances
Outstanding under the REVOLVING LOAN into compliance with the Lending Formula,
such failure shall be an Event of Default of all BORROWERS hereunder and LENDER
shall have all rights which arise therefrom.
II-11
(c) The BORROWERS recognize that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral (other than payment via wire transfer or electronic depository check)
may not be collectible by LENDER on the date received. In consideration of
LENDER's agreement to conditionally afford the BORROWERS credit as of the
Business Day on which LENDER receives those items of payment, each BORROWER
agrees that, in computing the charges imposed under this Agreement, all items of
payment shall be deemed applied by LENDER against the Liabilities (subject to
final payment of such items) two Business Days after the applicable Business Day
on which LENDER transfers, withdraws or "sweeps" funds from the corresponding
Blocked Account. LENDER is not, however, required to give any BORROWER credit
for the amount of any item of payment which is unsatisfactory to LENDER and
LENDER may charge the BORROWERS for the amount of any item of payment which is
returned to LENDER unpaid.
(d) All payments shall be made at the LENDER location or other
office that LENDER may hereafter designate by written notice to the BORROWERS
given in accordance with this Agreement.
(e) Nothing in this Section 2.5 is intended to limit LENDER's right
under Section 2.4(c).
II-12
2.6 PAYMENT OF INTEREST ON THE REVOLVING LOAN.
(a) Advances Outstanding on the REVOLVING LOAN shall bear per annum
interest from the date of each such Advance at (1) a per annum rate (the "Prime
Based Rate" more fully defined below) based on the fluctuating Prime Rate or (2)
at the BORROWERS' option (the "LIBOR Option") to be exercised in the manner set
forth below, a per annum rate (the "LIBOR Based Rate" more fully defined below)
based on LIBOR (as defined below).
(b) (1) The Prime Based Rate shall equal the Prime Rate, floating,
plus 25 basis points, provided, however, that notwithstanding the foregoing, if
the BORROWERS comply with and maintain the Rate Reduction Benchmark set forth in
Section 5.26 below (but only during the term of such compliance) and so long as
no Event of Default has occurred, then the Prime Based Rate shall equal the
aforesaid Prime Rate, floating.
(2) Any rate of interest determined at a Prime Based Rate will
increase or decrease with each change in the Prime Rate effective as of the
effective date of each such change, as established by Fleet National Bank (or
any successor thereto), without prior notice to the BORROWERS. Any change in the
Prime Rate shall not affect or alter any other terms of this Agreement or any of
the other Loan Documents.
(c) The LIBOR Based Rate (the "LIBOR Based Rate") shall be a rate
per annum equal to 225 basis points in excess of LIBOR (as defined below) with
respect to the applicable LIBOR Based Interest Period (as also defined below).
It is understood that each determination of a LIBOR Based Rate shall be made by
LENDER in its sole and absolute discretion and shall be conclusive and binding
upon the BORROWERS, absent manifest error. Notwithstanding the foregoing, if the
BORROWERS comply with and maintain the Rate Reduction Benchmark set forth in
Section 5.26 below (but only during the term of such compliance) and so long as
no Event of Default has occurred, then the LIBOR Based Rate shall equal 200
basis points in excess of LIBOR with respect to the applicable LIBOR Based
Interest Period.
II-13
(d) (1) The determination whether the BORROWERS have met and
complied with the Rate Reduction Benchmark for purposes of obtaining an interest
rate reduction will be made quarterly and determined by reference to the
quarterly and annual financial statements which the BORROWERS are required to
submit and will be made by LENDER within 30 business days after LENDER's receipt
of all necessary financial statements and other information from the BORROWERS.
If the BORROWERS meet and comply with the Rate Reduction Benchmark, the interest
rate reduction will be effective on the first day of the quarter subsequent to
LENDER's receipt of the BORROWERS' financial statements evidencing that the
BORROWERS have complied with the Rate Reduction Benchmark.
(2) In the event that the BORROWERS qualify for the
aforementioned interest rate reduction, the BORROWERS must continue to satisfy
the Rate Reduction Benchmark at all times or the interest rate reduction will be
withdrawn and the higher rate reinstated.
(3) The determination whether the BORROWERS remain in
compliance with the Rate Reduction Benchmark for purposes of continuing the
interest rate reduction will be made quarterly and annually by reference to the
quarterly and annual financial statements which the BORROWERS are required to
submit and such determination will be effective on the first day of the quarter
subsequent to LENDER's receipt of the BORROWERS' financial statements evidencing
that the BORROWERS no longer comply with the Rate Reduction Benchmark, provided,
however, that nothing in the foregoing shall prevent LENDER from discontinuing
the interest rate reduction prior to LENDER's receipt of any of the
aforementioned financial statements in the event LENDER obtains actual knowledge
that the BORROWERS are not in compliance with the Rate Reduction Benchmark.
II-14
(4) In the event that the BORROWERS lose their entitlement to
an interest rate reduction as aforesaid, the BORROWERS will not be entitled to
again seek to qualify for an interest rate reduction until LENDER's receipt of
the BORROWERS' next quarterly financial statements.
(e) For purposes of the determination of any LIBOR Based Rate, the
following terms shall have the following meanings:
(1)(A) "LIBOR" means, as applicable to any LIBOR Based
Interest Period, the rate per annum (rounded upward,
if necessary, to the nearest 1/32 of one percent) as
determined on the basis of the offered rates for
deposits in U.S. dollars, for a period of time
comparable to such LIBOR Based Interest Period which
appears on the Telerate page 3750 as of 11:00 a.m.
London time on the day that is two London Banking
Days preceding the first day of such LIBOR Based
Interest period; provided, however, if the rate
described above does not appear on the Telerate
System on any applicable interest determination date,
then LIBOR shall be the rate (rounded upwards as
described above, if necessary) for deposits in
dollars for a period substantially equal to the
interest period on the Reuters Page "LIBO" (or such
other page as may replace the LIBO Page on that
service for the purpose of displaying such rates), as
of 11:00 a.m. (London Time), on the day that is two
London Banking Days prior to the beginning of such
interest period.
II-15
(B) If both the Telerate and Reuters system are
unavailable, then the rate for that date will be
determined on the basis of the offered rates for
deposits in U.S. dollars for a period of time
comparable to such LIBOR Based Interest Period which
are offered by four major banks (as selected by
LENDER) in the London interbank market at
approximately 11:00 a.m. London time, on the day that
is two London Banking Days preceding the first day of
such LIBOR Based Interest Period. The principal
London office of each of the four major London banks
will be requested to provide a quotation of its U.S.
dollar deposit offered rate. If at least two such
quotations are provided, the rate for that date will
be the arithmetic mean of the quotations. If fewer
than two quotations are provided as requested, the
rate for that date will be determined on the basis of
the rates quoted for loans in U.S. dollars to leading
European banks for a period of time comparable to
such LIBOR Based Interest Period offered by major
banks in New York City at approximately 11:00 a.m.
New York City time, on the day that is two London
Banking Days preceding the first day of such LIBOR
Based Interest Period. In the event that LENDER is
unable to obtain any such quotation as provided
above, it will be deemed that LIBOR pursuant to a
LIBOR Based Interest Period cannot be determined.
(C) In the event that the Board of Governors of the
Federal Reserve System shall impose a LIBOR Reserve
Percentage with respect to LIBOR deposits of LENDER
then for any period during which such LIBOR Reserve
Percentage shall apply, LIBOR shall be equal to the
amount determined above divided by an amount equal to
1 minus the LIBOR Reserve Percentage.
(2) "LIBOR Based Interest Period" shall mean the period
commencing on the date so specified in the BORROWERS'
notice to LENDER of any election to exercise the
LIBOR Option and ending on the date specified in such
notice, which ending date (i) shall be either 30
days, 60 days or 90 days after the commencement of
the LIBOR Based Interest Period, and (ii) shall in no
event extend beyond the termination date or any
extended termination date of the REVOLVING LOAN. No
LIBOR Based Interest Period shall commence other than
on a Business Day. If any LIBOR Based Interest Period
shall end on a day which is not a Business Day, such
LIBOR Based Interest Period shall be extended to the
next succeeding Business Day.
II-16
(3) "LIBOR Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in
effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve
requirement for a member bank of the Federal Reserve
System in New York City with deposits exceeding one
billion dollars in respect of Eurocurrency
liabilities (as defined in Regulation D of the Board
of Governors of the Federal Reserve System) (or in
respect of any other category of liabilities which
includes deposits by reference to which the interest
rate on loans covered by a LIBOR Based Rate is
determined or any category of extensions of credit or
other assets which includes loans by a non-United
States office of LENDER to United States residents).
The LIBOR Based Rate shall be adjusted automatically
on and as of the effective date of any change in the
LIBOR Reserve Percentage.
(4) "London Banking Day" shall mean a day which is not a
Saturday, Sunday or day on which banks in London are
required or permitted to close.
(5) "Principal Balance" means, at any time, the portion
or portions of the Outstanding principal amount of
the REVOLVING LOAN on which the BORROWERS have
elected to have interest determined or to be
determined, as applicable, at a LIBOR Based Rate and
includes all amounts that are to be borrowed at a
LIBOR Based Rate, whether or not the applicable
BORROWER actually borrows such amounts.
(6) "Roll Over Date" shall mean the day immediately
following the last day of a LIBOR Based Interest
Period.
II-17
(f) Any BORROWER wishing to exercise the LIBOR Option shall, acting
only through CD&L as its designated agent, give LENDER written or telex or
facsimile notice (receipt of which must be confirmed by LENDER) of any election
to exercise such LIBOR Option at least two (2) London Banking Days prior to the
commencement of a LIBOR Based Interest Period, which notice shall specify (1)
the Principal Balance with respect to which such BORROWER is making such
election, and (2) in conformity with the definition of "LIBOR Based Interest
Period" set forth above, the date upon which such LIBOR Based Interest Period is
to commence and (3) its duration. LENDER shall, as soon as practical prior to or
on the date of the commencement of the LIBOR Based Interest Period, determine
and quote to the applicable BORROWER (through its agent CD&L) a LIBOR Based Rate
with respect to the Principal Balance specified in such notice, and notify such
BORROWER (through its agent CD&L) of the date and time by which such BORROWER
must accept the quoted LIBOR Based Rate. If such BORROWER, acting only through
CD&L as its designated agent, rejects the quoted LIBOR Based Rate, or if such
BORROWER, acting through its agent as aforesaid, does not inform LENDER of its
acceptance of the quoted LIBOR Based Rate by the date and time specified by
LENDER, time being of the essence, the Prime Based Rate shall apply or shall
continue to apply to the Principal Balance. If such BORROWER, acting through its
agent as aforesaid, accepts the quoted LIBOR Based Rate by the date and time
specified by LENDER, the quoted LIBOR Based Rate shall be applicable to the
Principal Balance during the LIBOR Based Interest Period specified by such
BORROWER in such notice. A quoted LIBOR Based Rate may be accepted by a
BORROWER, acting only through its agent as aforesaid, either orally or in
writing, provided that any such oral acceptance shall be immediately confirmed
by the applicable BORROWER (through its agent as aforesaid) in writing or by
telex or by facsimile (receipt of which must be confirmed by LENDER). The
interest rate applicable to the Principal Balance, with respect to which a
BORROWER has so accepted a quoted LIBOR Based Rate, shall revert from the LIBOR
Based Rate applicable thereto to the Prime Based Rate as of the Roll Over Date
applicable thereto. LENDER shall be under no duty or obligation to notify any
BORROWER (whether through its agent or otherwise) that the interest rate on the
Principal Balance is about to revert from a LIBOR Based Rate to the Prime Based
Rate.
(g) The LIBOR Option may only be exercised by a BORROWER if the
Principal Balance as to which such BORROWER is making its election would bear
interest at the Prime Based Rate on the date of commencement of the applicable
LIBOR Based Interest Period, but for the exercise of such BORROWER of the LIBOR
Option, and only if the following conditions are met:
II-18
(1) No Event of Default has occurred and is continuing.
(2) The LIBOR Based Interest Period must commence on a London
Banking Day.
(3) The LIBOR Based Interest Period shall extend either 30 days,
60 days or 90 days after the commencement of the LIBOR Based
Interest Period.
(4) The LIBOR Based Interest Period shall in no event extend
beyond the Revolving Loan Maturity Date or any extension of
the Revolving Loan Maturity Date.
(5) If any LIBOR Based Interest Period shall end on a day which is
not a London Banking Day, such LIBOR Based Interest Period
shall be extended to the next succeeding London Banking Day.
(6) The LIBOR Option must be exercised for a minimum of $1,000,000
and integral multiples of $100,000 thereafter.
(7) The exercise of the LIBOR Option will not result in more than
3 separate LIBOR rate subcontracts in the collective aggregate
being in existence between the BORROWERS and LENDER at any one
time.
(h) In the event, and on each occasion, that on or before the date
upon which a LIBOR Based Interest Period is to commence, LENDER shall have in
its sole discretion made a determination (which determination shall be
conclusive and binding upon the BORROWERS) that LENDER is unable to quote a
LIBOR Based Rate for any reason whatsoever, LENDER shall so notify the BORROWERS
and the Principal Balance with respect to which any BORROWER has exercised the
LIBOR Option, shall bear interest or continue to bear interest, as applicable,
at the Prime Based Rate.
II-19
(i) In all events, interest shall be payable monthly on an accrued
basis on the first day of each and every calendar month, commencing on the first
day of the first month following the date hereof, and shall be calculated on the
basis of a year consisting of 360 days and paid for actual days elapsed.
(j) (1) On and after the occurrence of an Event of Default
hereunder or after the Revolving Loan Maturity Date, the BORROWERS' right to
select pricing options shall cease and all Outstanding Advances shall, unless
otherwise agreed by LENDER, bear interest at the Default Rate.
(2) In addition, interest on the REVOLVING LOAN will be
calculated at the Default Rate upon the occurrence of any of the following:
(A) on and after the occurrence and during the
continuance of an Event of Default;
(B) prior to LENDER's declaration of an Event of Default,
in the event any BORROWER does not supply or cause to
be delivered to LENDER any information required by
this Agreement or any of the Loan Documents by its
due date and the defaulting BORROWER fails to provide
such information within 10 Business Days after
receipt of written notice from LENDER that such
information is due.
(3) It is nonetheless understood that LENDER's acceptance of
payment at the Default Rate does not otherwise prevent LENDER from otherwise
declaring an Event of Default as a result of any BORROWER's failure to perform
or observe any of the foregoing.
II-20
(k) All agreements between the BORROWERS and LENDER are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to LENDER for the use or
the forbearance of the indebtedness evidenced hereby exceed the maximum
permissible under applicable law. As used herein, the term "applicable law"
shall mean the law in effect as of the date hereof provided, however, that in
the event there is a change in the law which results in a higher permissible
rate of interest, then the REVOLVING LOAN shall be governed by such new law as
of its effective date. In this regard, it is expressly agreed that it is the
intent of the BORROWERS and LENDER in the execution, delivery and acceptance of
this Agreement to contract in strict compliance with the laws of the State of
New Jersey from time to time in effect. If, under or from any circumstances
whatsoever, fulfillment of any provision hereof or of any of the Loan Documents
at the time of performance of such provision shall be due, shall involve
transcending the limit of such validity prescribed by applicable law, then the
obligation to be fulfilled shall automatically be reduced to the limits of such
validity, and if under or from circumstances whatsoever LENDER should ever
receive as interest an amount which would exceed the highest lawful rate, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. This
provision shall control every other provision of all agreements between the
BORROWERS and LENDER.
2.7 YIELD MAINTENANCE AND INDEMNIFICATION RELATING TO LIBOR BASED
INTEREST:
(a) (1) The BORROWERS hereby jointly and severally agree to
indemnify LENDER against any loss or expense which LENDER may sustain or incur
as a consequence of (A) any failure by any BORROWER to borrow all or any portion
of any Principal Balance or (B) the receipt or recovery by LENDER of all or any
part of any Principal Balance prior to the maturity thereof whether by voluntary
or involuntary prepayment, acceleration or otherwise.
II-21
(2) Without limiting the effect of the foregoing, the amount to
be paid by the BORROWERS to LENDER in order to indemnify LENDER for any loss
occasioned by any of the events described in the preceding provisions of this
Section, and as liquidated damages therefor, shall be equal to the following
amount:
The current rate for United States Treasury securities (Bills
on a discounted basis shall be converted to a bond equivalent)
with a maturity closest to the maturity date of the LIBOR
Based Interest Period chosen pursuant to the LIBOR Option and
as to which the prepayment is made shall be subtracted from
the "cost of funds" component of the LIBOR Based Rate in
effect at the time of the prepayment. If the result is zero or
a negative number, there shall be no yield maintenance fee. If
the result is a positive number, then the resulting percentage
shall be multiplied by the amount of the Principal Balance
being prepaid. The resulting amount shall be divided by 360
and multiplied by the number of days remaining in the term of
the LIBOR Based Interest Period chosen pursuant to the LIBOR
Option as to which the prepayment is made. Said amount shall
be reduced to present value calculated by using the number of
days remaining in the designated term and using the above
referenced United States Treasury security rate and the number
of days remaining in the term of the LIBOR Based Interest
Period chosen pursuant to the LIBOR Option as to which the
prepayment is made. The resulting amount shall be the yield
maintenance fee due to LENDER upon any prepayment of any
Principal Balance. Such yield maintenance fee shall be paid,
if due under the formula set forth above, upon the receipt or
recovery by LENDER of all or any part of any Principal Balance
prior to the maturity thereof whether by voluntary or
involuntary prepayment, acceleration or otherwise.
II-22
(3) A certificate as to any additional amounts payable pursuant
to this Section setting forth the basis and method of determining such amounts
shall be conclusive, absent manifest error, as to the determination by LENDER
set forth therein if made reasonably and in good faith. The BORROWERS shall pay
any amounts so certified to it by LENDER within 10 days of receipt of any such
certificate. For purposes of this Section, all references to "LENDER" shall be
deemed to include any participant in the REVOLVING LOAN.
(4) The indemnities provided for herein shall survive payment
in full of the principal amount of the REVOLVING LOAN and the interest due
hereon.
2.8 EVIDENCE OF INDEBTEDNESS UNDER THE REVOLVING LOAN.
(a) BORROWERS' Obligation to Repay the REVOLVING LOAN and to
Guarantee Evidenced by This Agreement. Each BORROWER's joint and several
obligation, whether as a borrower of proceeds of the REVOLVING LOAN or as a
guarantor of the obligations of the other BORROWERS to repay proceeds of the
REVOLVING LOAN which it received, shall be evidenced by this Agreement.
II-23
(b) "Master" Revolving Note and Definition of REVOLVING NOTE.
(1) In addition, each BORROWER's joint and several obligation
as a co-BORROWER of proceeds of the REVOLVING LOAN shall be evidenced by that
certain "master" promissory note executed by all BORROWERS (in their capacities
as co-BORROWERS) and made payable to the order of LENDER.
(2) The foregoing"master" Revolving Note, together with all
extensions, modifications (including without limitation modifications increasing
or decreasing the amount thereof), refinancings, renewals, substitutions,
replacements and/or redatings thereof, together with the foregoing records of
LENDER are collectively referred to as the "REVOLVING NOTE" in this Agreement.
(c) BORROWERS' Obligation to Repay/Guarantee Repayment of REVOLVING
LOAN Evidenced by Records of LENDER.
(1) In addition to each BORROWER's obligations being evidenced
by both this Agreement and the Revolving Note, the amount due on the REVOLVING
LOAN, all advances made by LENDER under the REVOLVING LOAN and all interest and
other amounts due under the REVOLVING LOAN and this Agreement and all payments
made on account of principal and/or interest and/or such other amounts may be
entered by LENDER on its records. The aggregate unpaid principal and/or interest
and/or other amounts entered and shown on LENDER's records shall further
evidence the principal and/or interest and/or other amounts owing and unpaid on
the REVOLVING LOAN and this Agreement.
II-24
(2) LENDER may provide on a monthly basis a statement of the
aforementioned records. If the BORROWERS fail to object to any such statement
within ninety (90) days after it is received by the BORROWERS, it shall be
deemed to be an account stated and binding upon the BORROWERS. Notwithstanding
the foregoing, LENDER's failure to enter the date and amount of any advance on
such records shall not, however, limit or otherwise affect the joint and several
obligation of the BORROWERS under this Agreement to repay the principal amount
of the Advances and re-Advances made by LENDER to the BORROWERS under this
Agreement together with all interest accruing thereon.
2.9 TERM OF THE REVOLVING LOAN AND PREPAYMENT PREMIUMS.
(a) Revolving Loan Maturity Date: The REVOLVING LOAN shall continue
in full force and effect until the Revolving Loan Maturity Date unless LENDER's
relationship with the BORROWERS under the REVOLVING LOAN is sooner terminated or
modified as provided herein.
(b) Termination by LENDER. LENDER may terminate this Agreement
without notice upon or after the occurrence of an Event of Default or as
otherwise allowed by this Agreement.
(c) Termination by BORROWERS. The BORROWERS may, at their option
and upon at least twenty (20) Business Days prior written notice to LENDER,
terminate this Agreement; provided, however, no such termination shall be
effective until the BORROWERS have indefeasibly paid all of the Liabilities in
immediate available funds. Any notice of termination given by a BORROWER shall
be irrevocable unless LENDER otherwise agrees in writing, and LENDER shall have
no obligation to make any Advances or other financial accommodations on or after
the termination date stated in such notice. The BORROWERS can elect to terminate
this Agreement in its entirety only. No section of this Agreement or type of
loan or financial accommodation available to any one BORROWER hereunder may be
terminated singly.
II-25
(d) Termination/Acceleration Charges. At the effective date of the
termination of this Agreement whether by LENDER or by the BORROWERS for any
reason prior to the Revolving Loan Maturity Date or upon the acceleration or
permanent prepayment of the amounts due hereunder for any reason prior to the
Revolving Loan Maturity Date, the BORROWERS shall pay to LENDER (in addition to
the then outstanding principal, accrued interest and other charges owing under
the terms of this Agreement and any of the other Loan Documents) as liquidated
damages for the loss of the bargain and not as a penalty, the following, as
applicable:
(1) If prepayment/acceleration occurs during the period
commencing on the date hereof and ending on the first anniversary of the date
hereof, the BORROWERS shall pay a premium to $300,000, i.e., 2% of the face
amount of the REVOLVING LOAN facility, unless the BORROWERS and LENDER have in
writing prior to such prepayment/acceleration agreed to a permanent reduction in
the maximum possible amount of the REVOLVING LOAN facility (now $15,000,000),
then 2% of the face amount of the REVOLVING LOAN facility as so permanently
reduced.
(2) If prepayment/acceleration is made during the period
commencing on the day immediately following the first anniversary of the date
hereof and ending on the second anniversary of the date hereof, the BORROWERS
shall pay a premium equal to $150,000, i.e., 1% of the face amount of the
REVOLVING LOAN facility, unless the BORROWERS and LENDER have in writing prior
to such prepayment/acceleration agreed to a permanent reduction in the maximum
possible amount of the REVOLVING LOAN facility (now $15,000,000), then 1% of the
face amount of the REVOLVING LOAN facility as so permanently reduced.
II-26
(3) If prepayment/acceleration is made during the period
commencing on the day immediately following the second anniversary of the date
hereof and ending on the third anniversary of the date hereof, the BORROWERS
shall pay a premium equal to $75,000, i.e., 1/2 of 1% of the face amount of the
REVOLVING LOAN facility, unless the BORROWERS and LENDER have in writing prior
to such prepayment/acceleration agreed to a permanent reduction in the maximum
possible amount of the REVOLVING LOAN facility (now $15,000,000), then 1/2 of 1%
of the face amount of the REVOLVING LOAN facility as so permanently reduced.
(e) LIBOR indemnification. In addition to the prepayment premiums set
forth above, in the event that interest on any portion or portions of the
REVOLVING LOAN is being determined at a LIBOR Based Rate, such portion or
portions may be prepaid at any time but such prepayment must be made for the
entirety of the portion for which LENDER has entered into contracts relating to
LIBOR pricing. Partial prepayments of any such portion or portions are not
allowed. In the event of any such prepayment, the indemnification and yield
maintenance provisions set forth in Section 2.7 above shall apply.
(f) Effect of Termination.
(1) All of the Liabilities shall be immediately due and payable
upon the termination date stated in any notice of termination of this Agreement.
All undertakings, agreements, covenants, warranties and representations of the
BORROWERS contained in the Loan Documents shall survive any such termination and
LENDER shall retain its security interest and liens in the Collateral and all of
its rights and remedies under the Loan Documents notwithstanding such
termination until the BORROWERS have indefeasibly paid the Liabilities to LENDER
in full, in immediately available funds, together with the applicable
termination charge, if any. Notwithstanding the payment in full of the
Liabilities, LENDER shall not be required to terminate its security interests
and liens in the Collateral unless, with respect to any loss or damage LENDER
may incur as a result of dishonored checks or other items of payment received by
LENDER from the BORROWERS or any Account Debtor and applied to the Liabilities,
LENDER shall, at its option, (i) have received a written agreement, executed by
the BORROWERS and by any person whose loans or other Advances to the BORROWERS
are used in whole or in part to satisfy the Liabilities, indemnifying LENDER
from any such loss or damage; or (ii) have retained any monetary reserves or
security interest and liens on the Collateral for such period of time as LENDER,
in its reasonable discretion, may deem necessary to protect LENDER from any such
loss or damage.
II-27
(2) Despite any termination of the relationship between LENDER
and the BORROWERS under the REVOLVING LOAN, regardless whether such termination
has been made by LENDER or the BORROWERS, LENDER shall continue to have all of
the rights and remedies provided to LENDER under this Agreement (including,
without limitation, LENDER's rights as a secured party) until such time that all
of the Liabilities are indefeasibly paid in full.
2.10 LETTERS OF CREDIT.
(a) Issuance.
(1) Subject to the terms and conditions of this Agreement,
LENDER will issue or cause to be issued the Captive Insurance Letter of Credit
and in addition, from time to time and in its sole discretion and at the request
of and for the account of such requesting BORROWER, issue or create or cause to
be issued or created (whether through a LENDER's Affiliate or otherwise) other
Letters of Credit for the benefit of beneficiaries designated by such requesting
BORROWER. The Letters of Credit (including the Captive Insurance Letter of
Credit) and the various documents related thereto are herein collectively called
"Financing Documents".
II-28
(2) Unless otherwise agreed by LENDER in writing, LENDER will
not issue or create or cause to be issued and created any Financing Document if
the issuance thereof will result in more than $8,500,000 being outstanding in
Letters of Credit in the aggregate at any one time.
(3) Unless otherwise agreed by LENDER in writing, all shipping
documents must be consigned to LENDER.
(4) Each Financing Document shall provide that drafts drawn
thereunder must be presented to LENDER or the issuer/obligor thereof on or prior
to 180 days after the issuance thereof (unless otherwise agreed by LENDER but in
no event later than the Revolving Loan Maturity Date), and, in the case of the
Letters of Credit, that any acceptances created thereunder shall mature not
later than 180 days after the creation thereof (unless otherwise agreed by
LENDER but in no event later than the Revolving Loan Maturity Date).
(5) A BORROWER seeking the issuance of a Letter of Credit must
give notice to LENDER of a request for the issuance of any Financing Document
not less than 10 Business Days prior to the proposed issuance date (which
prescribed time period may be waived at the option of LENDER in the exercise of
its sole discretion). Each such notice shall specify: (A) the requested date of
such issuance (which shall be a Business Day); (B) the maximum amount of such
Financing Document; (C) the expiration date of such Financing Document; (D) the
purpose of such Financing Document; (E) the name and address of the beneficiary
of such Financing Document; and (F) the required documents under any such
Financing Document.
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(6) Notwithstanding the foregoing, LENDER shall not be under
any obligation to issue or create or cause to be issued and created any
Financing Document if at the time of such issuance any order, judgment or decree
of any governmental authority or arbitrator shall purport by its terms to enjoin
or restrain LENDER or the issuer/obligor thereof from issuing such Financing
Document or any requirement of law applicable to LENDER or the issuer/obligor
thereof or any request or directive (whether or not having the force of law)
from any governmental authority with jurisdiction over LENDER or any such
issuer/obligor thereof shall prohibit, or request that LENDER or any such
issuer/obligor thereof refrain from, the issuance of Letters of Credit,
generally or any such Financing Documents in particular, or shall impose upon
LENDER or any such issuer/obligor thereof with respect to any Financing Document
any requirement (for which LENDER or any such issuer/obligor thereof is not
otherwise compensated) not in effect on the date hereof, or any unreimbursed
loss, cost or expense which was not applicable, in effect or known to LENDER or
any such issuer/obligor thereof as of the date hereof and which LENDER or any
such issuer/obligor thereof in good xxxxx xxxxx material to it.
(b) Evidence of Obligation to Pay Amounts Due under the Financing
Documents:
(1) LENDER's rights and the BORROWERS' obligations with regard
to each Financing Document shall be determined and governed by this Agreement as
supplemented by any present or future application for any such Financing
Document executed by the applicable BORROWER (if any such application was in
fact executed by such BORROWER) or, if no such application was executed by such
BORROWER, then by the standard form of Financing Document application in use by
the applicable issuer/obligor thereof at the time LENDER issued or caused to be
issued any such Financing Document. The foregoing shall apply whether or not the
BORROWER for whose account the Letter of Credit is being issued actually
executed any such application. Each such application executed by any such
BORROWER and each such standard form of application is hereinafter called an
"Application" and collectively are called the "Applications".
II-30
(2) (A) In addition, payments made by LENDER against any Letter
of Credit Obligations, repayments of such drawings made by or on behalf of the
BORROWER for whose account the Letter of Credit is being issued and all other
amounts due or paid on account of any Letter of Credit Obligations, shall be
entered by LENDER on its records. The aggregate unpaid amounts shown on the
aforementioned records of LENDER shall evidence the principal, interest and
other amounts owed by such BORROWER on account of the Letter of Credit
Obligations. LENDER's failure to enter any such amount on such records shall
not, however, limit or otherwise affect the joint and several obligations of the
BORROWERS under this Agreement to pay to LENDER all amounts owing on account of
the Letter of Credit Obligations.
(B) LENDER shall provide on a monthly basis a statement of
the aforementioned records. If the BORROWERS fail to object to any such
statement within sixty (60) days after it is received by the BORROWERS, it shall
be deemed to be an account stated and binding upon the BORROWERS.
Notwithstanding the foregoing, LENDER's failure to enter the date and amount of
any advance on such records shall not, however, limit or otherwise affect the
joint and several obligation of the BORROWERS under this Agreement to pay to
LENDER all amounts owing on account of the Letter of Credit Obligations.
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(c) Repayment of Amounts Due under the Financing Documents;
Mandatory Borrowings to Satisfy Payment Obligations under the Financing
Documents:
(1) The BORROWER for whose account any Letter of Credit has
been issued (a) shall immediately reimburse LENDER for drafts drawn under any
Financing Document and all other Letter of Credit Obligations in immediately
available funds or (b) shall otherwise reimburse LENDER on such terms as may be
set forth in any applicable Application. For purposes of this Agreement, LENDER
will be deemed to have the same rights as any issuer/obligor under any such
applicable Application.
(2) By its execution of this Agreement, each BORROWER hereby
authorizes LENDER to effect payment of the amount necessary for repayment of the
applicable draft and all other Letter of Credit Obligations pursuant to the
Authorization to Charge. The fact that only one BORROWER's loan account may be
charged on LENDER's books in no way alters or lessens the joint and several
payment liability of all the BORROWERS.
(3) Notwithstanding the foregoing, in the event that LENDER in
its sole discretion elects not to effect payment as aforesaid, any funds
advanced by LENDER in payment of any Financing Document shall be due and payable
immediately and shall bear interest until paid in full at the rate provided in
this Agreement if "loan value" exists or at the Default Rate if no such "loan
value" exists, such interest to be payable on demand. Interest shall be computed
on the basis of a year consisting of 360 days and paid for actual days elapsed.
(d) Non-Liability of LENDER: The BORROWERS assume all risks of the acts
or omissions of any beneficiary or transferee of any Financing Document with
respect to its use thereof. Neither LENDER nor any LENDER's Affiliate nor any of
officers or directors of LENDER nor any LENDER's Affiliate shall be liable or
responsible for any of the following:
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(1) the use that may be made of any Financing Document or
any acts or omissions of any beneficiary or
transferee in connection therewith;
(2) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if
such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged;
(3) payment by LENDER or any LENDER's Affiliate against
presentation of documents that do not comply with the
terms of the Financing Document issued or created by
LENDER or caused to be issued or created by LENDER or
any LENDER's Affiliate except that the BORROWER for
whose account the Letter of Credit is being issued
shall have a claim against LENDER, and LENDER shall
be liable to such BORROWER, to the extent of any
direct, but not consequential, damages suffered by
such BORROWER that such BORROWER proves were caused
solely by (A) LENDER's willful misconduct or
negligence in determining whether documents presented
under any Letter of Credit comply with the terms of
such Letter of Credit or (B) LENDER's willful failure
to make lawful payment under a Letter of Credit after
the presentation to it of a draft and documents
and/or certificates strictly complying with the terms
and conditions thereof;
II-33
(4) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not
they are in cipher;
(5) errors in interpretation of technical terms provided
by the BORROWERS;
(6) any loss or delay in the transmission or otherwise of
any document required in order to make a drawing
under any such Letter of Credit or of the proceeds
thereof; and
(7) any consequence arising from causes beyond the
control of LENDER, including, without limitation, any
government acts. None of the above shall affect,
impair, or prevent the vesting of any of LENDER's
rights or powers hereunder, including rights of
subrogation. In furtherance and not in limitation of
the foregoing, LENDER may accept documents that
appear on their face to be in order, without
responsibility for further investigation, regardless
of any notice or information to the contrary unless
(A) the BORROWERS provide sufficient prior written
notice to LENDER as to why any Letter of Credit
otherwise appearing on its face to be in order should
not be paid and (B) the BORROWERS establish and
maintain with LENDER a cash escrow in an amount equal
to the unpaid amount of the applicable Letter of
Credit together with sufficient funds necessary to
satisfy the estimated indemnification obligations set
forth in subsection (e) below.
II-34
Unless otherwise agreed as part of the issuance of any particular Letter of
Credit, the Uniform Customs and Practice for Documentary Credits as most
recently published by the International Chamber of Commerce shall be deemed a
part of this Section as if incorporated herein in all respects and shall apply
to the Letters of Credit.
(e) Indemnification of LENDER: In addition to amounts payable as
elsewhere provided in this Agreement, without duplication, each BORROWER agrees
to indemnify and save harmless LENDER and each issuer/obligor of any Financing
Document from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys' fees and
allocated costs of internal counsel) which LENDER or any such issuer/obligor may
incur or be subject to as a consequence, direct or indirect, of the issuance of
any Financing Document or any action or proceeding relating to a court order,
injunction, or other process or decree restraining or seeking to restrain LENDER
or any such issuer/obligor from paying any amount under any Financing Document
or the failure of LENDER or any such issuer/obligor to honor a drawing under any
Financing Document issued or created by LENDER or caused to be issued or created
by LENDER as a result of any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto government or governmental authority,
except that LENDER shall not be entitled to indemnification for matters caused
solely by its gross negligence or willful misconduct. Without modifying the
foregoing, and anything contained herein to the contrary notwithstanding, the
BORROWER for whose account the Letter of Credit has been issued shall cause each
Financing Document issued for its account to be canceled and returned to LENDER
or the applicable issuer/obligor on or before its expiration date.
II-35
(f) Fees for the Letters of Credit: For the issuance, payment
and/or amendment of the Letters of Credit, the BORROWERS will pay all customary
and applicable charges of LENDER or the applicable issuer/obligor thereof for
each Letter of Credit issued, together with a 175 basis points per annum fee
(pro-rated monthly) of the average amount of the Letters of Credit outstanding
during each calendar month (or part thereof in cases where less than a full
calendar month is involved), payable monthly in arrears.
(g) Inconsistencies: In the event that any term or condition set
forth in any Application shall be inconsistent with the terms and conditions of
this Agreement, such inconsistency shall be resolved by an interpretation which
expands LENDER's rights rather than limits LENDER's rights.
2.11 LATE CHARGES:
(a) Any payment of interest due on any of the Liabilities received
more than 10 days after the payment's due date, if accepted by LENDER, will be
subject to a late charge of 5% of the total interest installment due.
(b) Nothing in the foregoing is intended to mean that LENDER will
accept any payment after the payment's due date.
(c) Nothing in the foregoing is intended to mean that LENDER's
acceptance of any payment more than 10 days after the payment's due date, other
than acceptance of payment of all applicable sums outstanding, is a cure of any
default.
II-36
2.12 AUTHORIZATION TO CHARGE AMOUNTS DUE UNDER THIS AGREEMENT. Each
BORROWER hereby gives LENDER the Authorization to Charge. Such authorization is
a power coupled with an interest and is irrevocable. The fact that only one
BORROWER's loan account may be charged on LENDER's books in no way alters or
lessens the joint and several payment liability of all the BORROWERS.
2.13 MANDATORY REPAYMENT OF ALL LIABILITIES. If any BORROWER terminates
its REVOLVING LOAN relationship with LENDER, then, at LENDER's option, this
Agreement may be terminated and, also at LENDER's option, all of the remaining
Liabilities are subject to acceleration in full. If LENDER terminates its
REVOLVING LOAN relationship with any BORROWER, then, at LENDER's option, this
Agreement may be terminated and, also at the option of LENDER, all of the
remaining Liabilities of all BORROWERS are subject to acceleration in full. The
rights set forth in this Section are in addition to all rights of LENDER to
terminate the REVOLVING LOAN and accelerate the payment of all Liabilities upon
the occurrence of an Event of Default.
2.14 APPLICATION OF PAYMENTS. LENDER may apply all payments and other
sums of money received by it from or on account of any BORROWER towards
satisfying any of the Liabilities of such BORROWER or any other BORROWER in any
order or priority which LENDER in the exercise of its reasonable commercial
judgment deems fit.
2.15 OTHER LOANS.
(a) Notwithstanding the other provisions of this Article II, LENDER may
make Other Loans (as defined in subparagraph (b) below) to any BORROWER.
II-37
(b) In the event (1) that advances are made from time to time by
LENDER to any, some or all BORROWERS not in compliance with the Lending Formula
or the "loan value" requirements of this Article II or (2) that advances are
made from time to time by LENDER to any, some or all BORROWERS over and above
any advance rate or other monetary limitation on the REVOLVING LOAN or over and
above any other limitation set forth in this Agreement or (3) that any, some or
all BORROWERS should directly or indirectly become indebted to LENDER for
obligations other than those arising under this Agreement, then in such cases,
such advances or such indebtedness shall be considered "Other Loans" and shall
be covered by the terms of this Agreement, including but not limited to those
provisions affording LENDER a security interest in the Collateral so as to
secure payment of all such Other Loans.
2.16 BORROWERS' ABSOLUTE GUARANTY OBLIGATIONS.
(a) As it relates to the Liabilities owed by each BORROWER, each of
the other BORROWERS hereby unconditionally and irrevocably guarantees to LENDER
as a primary obligor and not as a mere surety each of those Liabilities.
(b) The foregoing obligations of each BORROWER under this Agreement
(whether as a direct borrower of funds under this Agreement or as a co-BORROWER
under the REVOLVING LOAN or as a guarantor obligated to repay funds borrowed
from LENDER by the other BORROWERS) and all other obligations (whether monetary
or non-monetary) of each BORROWER under this Agreement shall be joint and
several, absolute, unconditional and irrevocable.
(c) All the obligations of each BORROWER set forth in this Section
shall remain in full force and effect until all of the Liabilities shall have
been paid in full and shall be performed strictly in accordance with the terms
of this Agreement, under all circumstances whatsoever.
II-38
(d) None of the aforesaid obligations of any BORROWER shall be
affected, modified or impaired upon the happening from time to time of any
event, including without limitation any of the following circumstances:
(1 LENDER's compromise, settlement, release, change,
modification, amendment (whether material or
otherwise) or termination of any or all of the
obligations, duties, covenants or agreements of any
other BORROWER or other party under any of the Loan
Documents;
(2 LENDER's waiver of the payment, performance or
observance of any of the obligations, conditions,
covenants or agreements contained in the Loan
Documents;
(3 LENDER's extension, renewal or modification of any of
the Loan Documents or the extension, renewal,
modification or waiver of the performance of any
obligation thereunder;
(4 LENDER's extension of the time for payment of (A) the
principal of, and premium, if any, and interest on
the REVOLVING LOAN, any Other Loans, or any of the
other Liabilities or (B) the performance of any other
obligations, covenants or agreements of any person or
entity under or arising out of the Loan Documents;
(5 LENDER's taking or not taking any of the actions
referred to in the Loan Documents;
(6 LENDER's release (whether with or without
consideration), impairment, failure to perfect a
security interest in, exchange, surrender,
substitution or modification of any Collateral;
(7 any failure, omission or delay on the part of LENDER
to enforce, assert or exercise any right, power or
remedy conferred on it in the Loan Documents or any
other action or acts on the part of LENDER;
II-39
(8 the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or
substantially all the assets, marshaling of assets
and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition with
creditors or readjustment or, other similar
proceedings which affect any other BORROWER or any of
the assets of any of them, or any allegation or
invalidity or contest of the validity of any of the
Loan Documents in any proceeding;
(9 LENDER's release (whether with or without
consideration) or discharge of any other BORROWER
from the performance or observance of any obligation,
covenant or agreement contained in this Agreement or
in any guaranty of the Liabilities;
(10 the default or failure of any other BORROWER fully to
perform any of the obligations set forth in the Loan
Documents;
(11 any lack of validity or enforceability of any of the
Loan Documents as they may relate to any other
BORROWER;
(12 LENDER's inability to recover payment from any person
or entity under the Loan Documents; or
(13 LENDER's amendment or waiver of or any consent to
departure from all or any of the Loan Documents.
2.17 RIGHT TO PROCEED AGAINST THE BORROWERS. Upon the occurrence of an
Event of Default, LENDER may proceed directly against any, some or all of the
BORROWERS. As it relates to each BORROWER's obligations to pay and be
responsible as a primary obligor for the Liabilities of any other BORROWER, THIS
IS, IN ADDITION TO BEING A PRIMARY OBLIGATION OF EACH BORROWER, A GUARANTY OF
PAYMENT AND NOT A GUARANTY OF COLLECTION, and upon the occurrence of an Event of
Default, this Agreement may be enforced directly against any, some or all
BORROWERS (1) without first proceeding against any other BORROWER or (2) without
first proceeding against any guarantor of the Liabilities (whether or not such
guarantor is also a BORROWER and whether or not such guarantor is named in this
Agreement) or (3) without first proceeding against any Collateral or (4) without
first proceeding against or exhausting any other remedies which LENDER may have
or (5) without first resorting to any other security held by LENDER, regardless
of by whomsoever given.
II-40
2.18 DELAY OF RIGHTS.
(a) No BORROWER shall be subrogated, in whole or in part, to the
rights of any person (including any other BORROWER) in the Loan Documents and no
BORROWER shall have rights against any other BORROWER until all of the
Liabilities are first indefeasibly paid in full.
(b) Each BORROWER is jointly and severally liable for the payment
of all Liabilities and, in furtherance of the foregoing, each BORROWER waives
its right of contribution and/or indemnification from each other BORROWER until
all of the Liabilities are first indefeasibly paid in full.
2.19 FEES.
(a) Closing Fee:
(1 The BORROWERS shall pay LENDER a one-time Closing Fee
of $100,000. The aforementioned Closing Fee shall be
considered earned at closing and, subject to
acceleration as set forth below, shall be paid to
LENDER as follows:
(A the non-refundable sum of $33,333.34 paid
prior to the date hereof;
(B the sum of $33,333.33 payable on the date
hereof; and
(C the sum of $33,333.33 to be paid 180 days
from the date hereof.
II-41
(2 If this Agreement is terminated or the payments due
hereunder accelerated for any reason prior to the
full payment of such $100,000, the balance owing will
be due on the date of such termination or
acceleration.
(b) Unused Revolving Loan Facility Fee. In the event that average
daily usage (including Outstanding Letters of Credit) under the REVOLVING LOAN
during any calendar month or part thereof falls below $15,000,000, an unused
facility fee will be charged on the short fall on a pro-rated basis determined
at a rate equal to 50 basis points per annum. On the first day of the calendar
month immediately following the end of the preceding calendar month, the
BORROWERS will be responsible for the payment of the unused facility fee, if
any, then due. By its execution of this Agreement, each BORROWER hereby
authorizes LENDER to effect payment of such fee pursuant to the Authorization to
Charge. The fact that only one BORROWER's loan account may be charged on
LENDER's books in no way alters or lessens the joint and several payment
liability of all the BORROWERS.
(c) Collateral Management Fee: To compensate LENDER for its
expenses in monitoring, reviewing and analyzing the BORROWERS' records,
financial statements and the Collateral and as more fully set forth in Article
V, the BORROWERS shall pay LENDER a Collateral Management Fee of $1,000 each
month payable in arrears on the last day of each month commencing the last day
of the month in which this Agreement is dated and on the last day of each and
every calendar month thereafter. By its execution of this Agreement, each
BORROWER hereby authorizes LENDER to effect payment of such fee pursuant to the
Authorization to Charge. The fact that only one BORROWER's loan account may be
charged on LENDER's books in no way alters or lessens the joint and several
payment liability of all the BORROWERS.
II-42
(d) Field Examination Fee: As more fully set forth in Article V,
the BORROWERS will reimburse LENDER for its periodic field examinations. This
reimbursement shall be limited to $750 per day per examiner, plus LENDER's
out-of-pocket expenses, up to a maximum of $30,000 per year. If an Event of
Default has occurred and not been cured, however, there shall be no limit on
LENDER's right to reimbursement of reasonable expenses actually incurred. By its
execution of this Agreement, each BORROWER hereby authorizes LENDER to effect
payment of such fee pursuant to the Authorization to Charge. The fact that only
one BORROWER's loan account may be charged on LENDER's books in no way alters or
lessens the joint and several payment liability of all the BORROWERS.
(e) Customary Account Fees: The BORROWERS shall be responsible for
all customary service charges associated with any accounts maintained by any
BORROWER at any LENDER's Affiliate as well as all customary charges associated
with any services provided by LENDER to any BORROWER relating to this Agreement.
END OF ARTICLE II
II-43
ARTICLE III
COLLATERAL
3.1 CROSS COLLATERALIZATION. Each BORROWER agrees that the payment and
performance of all Liabilities shall be secured by each and all of the
following:
(a) all Collateral hereinafter set forth in this Article III;
(b) all Collateral hereafter given by any BORROWER to LENDER; and
(c) all products and Proceeds of the foregoing.
3.2 ACCOUNTS RECEIVABLE. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a first security interest in all Accounts, as
defined herein, presently owned by the BORROWERS or hereafter existing, created
or acquired by them.
3.3 BOOKS AND RECORDS. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a first security interest in all of the
BORROWERS' Books and Records, as defined herein, whether presently owned by the
BORROWERS or hereafter acquired by them.
3.4 CHATTEL PAPER. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a first security interest in all of the
BORROWERS' Chattel Paper, as defined herein, whether presently owned by the
BORROWERS or hereafter acquired by them, and whether now or hereafter left in
the possession of LENDER for any purpose.
3.5 CONTRACT RIGHTS. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a first security interest in all Contract
Rights, as defined herein, presently owned by the BORROWERS or hereafter
acquired by them.
III-1
3.6 DEPOSIT ACCOUNTS. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER, hereby assign to LENDER and hereby grant to LENDER a pledge and first
security interest in each and all of the following:
(a) the balance of every demand or deposit account, now or
hereafter existing, of each BORROWER with LENDER or any LENDER's Affiliate
(including Fleet National Bank) or any entity under the control of FleetBoston
Financial Corporation (or any successor thereto), or in transit to any of them;
and
(b) all money, instruments, securities, documents, credits, claims,
and other property of each BORROWER, now or hereafter or for any purpose
(including safe-keeping or pledge or security for any of the Liabilities) in the
possession, custody, safekeeping or control of LENDER or any LENDER's Affiliate
(including Fleet National Bank) or any entity under the control of FleetBoston
Financial Corporation (or any successor thereto) or in transit to any of them;
and
(c) any sum now or hereafter owed by LENDER or any LENDER's
Affiliate (including Fleet National Bank) or any entity under the control of
FleetBoston Financial Corporation (or any successor thereto) in any capacity to
any BORROWER whether due or not; and
(d) all additions, substitutions, replacements, and increments to
the foregoing property, as well as proceeds of all of the foregoing property in
whatever form, including cash, negotiable instruments and other instruments for
the payment of money.
3.7 EQUIPMENT. To secure payment and performance of all Liabilities,
the BORROWERS hereby jointly and severally create in favor of LENDER and hereby
grant to LENDER a first security interest in all of the BORROWERS' Equipment, as
defined herein, except Equipment which is subject to the financing liens set
forth on the Certification as to Liens or whose acquisition is permitted as a
Capital Expenditure under Article V of this Agreement, whether such Equipment is
presently owned by the BORROWERS or hereafter acquired by them, and wherever
located.
III-2
3.8 GENERAL INTANGIBLES. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a first security interest in all General
Intangibles, as defined herein, whether presently owned by the BORROWERS or
hereafter acquired by them.
3.9 GOODS. To secure payment and performance of all Liabilities, the
BORROWERS hereby jointly and severally create in favor of LENDER and hereby
grant to LENDER a first security interest in all Goods, as defined herein,
whether presently owned by the BORROWERS or hereafter acquired by them.
3.10 INSTRUMENTS. To secure payment and performance of all Liabilities,
the BORROWERS hereby jointly and severally create in favor of LENDER and hereby
grant to LENDER a first security interest in all of the Instruments, as defined
herein, of the BORROWERS, whether presently owned by the BORROWERS or hereafter
acquired by them, and whether now or hereafter left in the possession of LENDER
for any purpose, including (without limitation) collection.
3.11 INVENTORY. To secure payment and performance of all Liabilities,
the BORROWERS hereby jointly and severally create in favor of LENDER and hereby
grant to LENDER a first security interest in all of Inventory, as defined
herein, of the BORROWERS, whether presently owned by the BORROWERS or hereafter
acquired by them, and wherever located.
III-3
3.12 ALL OTHER BUSINESS ASSETS. To secure payment and performance of
all Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a first security interest in all of their
other business assets, whether presently owned by the BORROWERS or hereafter
acquired by them.
3.13 PROCEEDS AND PRODUCTS. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a security interest in all products and
Proceeds of the Collateral.
END OF ARTICLE III
III-4
ARTICLE IV
REPRESENTATIONS
In order to induce LENDER to enter into this Agreement and to perform
its obligations hereunder, each BORROWER jointly and severally makes the
following representations to LENDER as of the date of this Agreement, each and
all of which shall survive the execution and delivery of this Agreement for the
duration of the term or renewed term or terms of, this Agreement:
4.1 REPRESENTATIONS AND WARRANTIES RELATING TO CD&L:
(a) CD&L is a corporation organized and existing under
the laws of the State of Delaware.
(b) CD&L's principal place of business is located at 00
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx Xxxxxx, Xxx Xxxxxx
00000.
(c) CD&L is in good standing under the laws of the state
of its formation.
(d) CD&L is qualified to do business in New Jersey and in
every other jurisdiction where the nature of its
business or the law of the applicable jurisdiction
requires it to be so qualified.
(e) CD&L's correct legal name is "CD&L, INC." but prior
to the date hereof was known as "Consolidated
Delivery & Logistics Inc."
(f)(1) CD&L uses the trade name and trade xxxx "CD&L".
(2) CD&L owns no trade marks or patents.
(g) CD&L is not engaged in any business activity other
than as a holding company and business directly
related thereto.
(h) CD&L has the following Subsidiaries:
(1) XXXXXXX;
(2) CLICK;
(3) OLYMPIC;
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(4) SECURITIES;
(5) SILVER STAR;
(6) CD&L Freight, Inc. (prior to April 9, 2001, known as
"Sureway Air Traffic Corporation"), a corporation of
the state of New York and an inactive, non-operating
entity; and
(7) Liberty Transfer Corp., a corporation of the state of
New Jersey and an inactive, non-operating entity.
(i) The stock ownership of CD&L is publicly held.
(j) The Collateral given by CD&L is or will be located
only at 00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx Xxxxxx,
Xxx Xxxxxx 00000.
4.2 REPRESENTATIONS AND WARRANTIES RELATING TO XXXXXXX:
(a) XXXXXXX is a corporation organized and existing under
the laws of the State of Missouri.
(b) XXXXXXX'x principal place of business is located at
0000 Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000.
(c) XXXXXXX is in good standing under the laws of the
state of its formation.
(d) XXXXXXX is qualified to do business in California and
Washington and in every other jurisdiction where the
nature of its business or the law of the applicable
jurisdiction requires it to be so qualified.
(e) XXXXXXX'x correct legal name is "XXXXXXX/NATIONAL
COURIER SYSTEMS, INC."
(f)(1) XXXXXXX neither has nor uses any trade names.
(2) XXXXXXX owns no trade marks or patents.
(g) XXXXXXX is not engaged in any business activity other
than courier and delivery services and business
directly related thereto.
(h) XXXXXXX has no Subsidiaries.
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(i) The sole stockholder of XXXXXXX is CD&L.
(j) The Collateral given by XXXXXXX is or will be located
only at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx
00000.
4.3 REPRESENTATIONS AND WARRANTIES RELATING TO CLICK:
(a) CLICK is a corporation organized and existing under
the laws of the State of New Jersey.
(b) CLICK's principal place of business is located at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxx Xxxxxx, Xxx Xxxxxx
00000.
(c) CLICK is in good standing under the laws of the state
of its formation.
(d) CLICK is qualified to do business in Connecticut,
Maine, Massachusetts, New Hampshire, New York,
Pennsylvania and Vermont and in every other
jurisdiction where the nature of its business or the
law of the applicable jurisdiction requires it to be
so qualified.
(e) CLICK's correct legal name is "CLICK MESSENGER
SERVICE, INC."
(f) (1) CLICK neither has nor uses any trade names.
(2) CLICK owns no trade marks or patents.
(g) CLICK is not engaged in any business activity other
than courier and delivery services and business
directly related thereto.
(h) CLICK has no Subsidiaries.
(i) The sole stockholder of CLICK is CD&L.
(j) The Collateral given by CLICK is or will be located
only at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000.
4.4 REPRESENTATIONS AND WARRANTIES RELATING TO KBD:
(a) KBD is a corporation organized and existing under the
laws of the State of North Carolina.
(b) KBD's principal place of business is located at 000
Xxxxx Xxxxx Xxxx, Xxxx, Xxxxx Xxxxxxxx 00000.
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(c) KBD is in good standing under the laws of the state
of its formation.
(d) KBD is qualified to do business in every jurisdiction
where the nature of its business or the law of the
applicable jurisdiction requires it to be so
qualified.
(e) KBD's correct legal name is "K.B.D. SERVICES, INC."
(f)(1) KBD neither has nor uses any trade names.
(2) KBD owns no trade marks or patents.
(g) KBD is not engaged in any business activity other
than courier and delivery services and business
directly related thereto.
(h) KBD has no Subsidiaries.
(i) The sole stockholder of KBD is SILVER STAR.
(j) The Collateral given by KBD is or will be located
only at 000 Xxxxx Xxxxx Xxxx, Xxxx, Xxxxx Xxxxxxxx
00000.
4.5 REPRESENTATIONS AND WARRANTIES RELATING TO OLYMPIC:
(a) OLYMPIC is a corporation organized and existing under
the laws of the State of New York.
(b) OLYMPIC's principal place of business is located at
000 Xxxxxx Xxxxxx and 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000.
(c) OLYMPIC is in good standing under the laws of the
state of its formation.
(d) OLYMPIC is qualified to do business in every
jurisdiction where the nature of its business or the
law of the applicable jurisdiction requires it to be
so qualified.
(e) OLYMPIC's correct legal name is "OLYMPIC COURIER
SYSTEMS, INC."
(f)(1) OLYMPIC neither has nor uses any trade names.
(2) OLYMPIC owns no trade marks or patents.
(g) OLYMPIC is not engaged in any business activity other
than courier and delivery services and business
directly related thereto.
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(h) OLYMPIC has no Subsidiaries.
(i) The sole stockholder of OLYMPIC is CD&L.
(j) The Collateral given by OLYMPIC is or will be located
only at 000 Xxxxxx Xxxxxx and 00 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
4.6 REPRESENTATIONS AND WARRANTIES RELATING TO SECURITIES:
(a) SECURITIES is a corporation organized and existing
under the laws of the State of New York.
(b) SECURITIES's principal place of business is located
at 00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx Xxxxxx, Xxx
Xxxxxx 00000.
(c) SECURITIES is in good standing under the laws of the
state of its formation.
(d) SECURITIES is qualified to do business in New Jersey
and Pennsylvania and in every other jurisdiction
every jurisdiction where the nature of its business
or the law of the applicable jurisdiction requires it
to be so qualified.
(e) SECURITIES's correct legal name is "SECURITIES
COURIER CORPORATION".
(f)(1) SECURITIES neither has nor uses any trade names.
(2) SECURITIES owns no trade marks or patents.
(g) SECURITIES is not engaged in any business activity
other than courier and delivery services and business
directly related thereto.
(h) SECURITIES has no Subsidiaries.
(i) The sole stockholder of SECURITIES is CD&L.
(j) The Collateral given by SECURITIES is or will be
located only at 00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000.
4.7 REPRESENTATIONS AND WARRANTIES RELATING TO SILVER STAR:
(a) SILVER STAR is a corporation organized and existing
under the laws of the State of Florida.
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(b) SILVER STAR's principal place of business is located
at 0000 Xxxxx Xxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxx
00000.
(c) SILVER STAR is in good standing under the laws of the
state of its formation.
(d) SILVER STAR is qualified to do business in Arkansas,
Georgia, Indiana, Louisiana, Maryland, New Jersey,
New York, North Carolina, Ohio, Oklahoma,
Pennsylvania, South Carolina, Tennessee and Texas and
in every other jurisdiction every jurisdiction where
the nature of its business or the law of the
applicable jurisdiction requires it to be so
qualified.
(e) SILVER STAR's correct legal name is "SILVER STAR
EXPRESS, INC."
(f)(1) SILVER STAR neither has nor uses any trade names.
(2) SILVER STAR owns no trade marks or patents.
(g) SILVER STAR is not engaged in any business activity
other than courier and delivery services and business
directly related thereto.
(h) SILVER STAR has one Subsidiary, namely KBD.
(i) The sole stockholder of SILVER STAR is CD&L.
(j) The Collateral given by SILVER STAR is or will be
located only at 0000 Xxxxx Xxxxxxxx Xxxxxxx, Xxxxxxx,
Xxxxxxx 00000.
4.8 (a) The Collateral given by each BORROWER is or will be located, as
applicable, only at the locations set forth in Section 4.1 through and including
Section 4.7 above.
(b) Each BORROWER may from time to time add to the locations set
forth above or change the locations set forth above but only on at least 30 days
prior written notice to LENDER and only so long as the applicable BORROWER
executes any additional or supplement Uniform Commercial Code financing
statements which LENDER considers necessary to continue the perfection of its
security interests.
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(c) The locations set forth in subsection (a) above and any
permitted under subsection (b) above collectively are the "Collateral Locations"
described in this Agreement.
4.9 Each BORROWER has the organizational power to execute and deliver
this Agreement, the Revolving Note and the other Loan Documents to which it is a
signatory, and to perform and observe the terms and provisions hereof and
thereof, and, as applicable, its Board of Directors and (in all cases other than
that of CD&L) its stockholders have duly authorized and approved the terms
described herein and the taking of any and all action contemplated herein.
4.10 All of the BORROWERS are operated as part of one consolidated
business entity and are directly dependent upon each other for and in connection
with their respective business activities and their respective financial
resources. Each BORROWER will receive a direct economic and financial benefit
from the Liabilities incurred under this Agreement by each and all of the
BORROWERS, and the incurrence of such Liabilities is in the best interests of
each BORROWER.
4.11 No consent or approval of any trustee or holder of any
indebtedness or obligation of any BORROWER is necessary in connection with the
execution and delivery of this Agreement, the Revolving Note and the other Loan
Documents to which it is a signatory, or any transaction contemplated hereby or
thereby.
4.12 No consent, permission, authorization, order or license of any
governmental authority is necessary in connection with the execution and
delivery of this Agreement, the Revolving Note and the other Loan Documents to
which any BORROWER is a signatory, or any transaction contemplated hereby or
thereby.
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4.13 There is no provision of any indenture or agreement, written or
oral, to which any BORROWER is a party or under which it is obligated which
would be contravened by the execution and delivery of this Agreement, the
Revolving Note and the other Loan Documents to which it is a signatory, or by
the performance of any provision, condition, covenant or other term hereof or
thereof.
4.14 There is no statute, rule or regulation, or any judgment, decree
or order of any court or agency binding on any BORROWER which would be
contravened by the execution and delivery of this Agreement, the Revolving Note
or any of the other Loan Documents required hereunder, or by the performance of
any provision, condition, covenant or other term hereof or thereof.
4.15 On the date of this Agreement, each BORROWER has good and
marketable title to all of its properties and assets, real, personal and mixed,
and none of said properties or assets is subject to any mortgage, pledge, lien,
security interest, encumbrance, charge or title retention or other security
agreement or arrangement of any character whatsoever except for the lien of
LENDER and except as set forth on the Certifications as to Liens.
4.16 (a) Except as set forth on Schedule 4.16 attached hereto, each
BORROWER has timely filed all returns and information and other reports required
of it under all Federal, State, local and foreign tax laws to which it is
subject and is not subject to any pending audits except as may be shown on said
Schedule 4.16.
(b) All such returns and reports are true, correct and complete in
all material respects.
(c) There are not now in effect any extensions of time in which to
assess additional taxes against any BORROWER.
IV-8
(d) Each BORROWER has paid or made adequate provision for the full
payment of all fees, taxes, interest and penalties which have been incurred or
are due and payable by it or which have been asserted or proposed to be asserted
against it.
(e) The liability for taxes shown on the most current financial
statements of each BORROWER submitted to LENDER is sufficient for the payment of
all Federal, State, local and foreign taxes attributable or with respect to all
periods, or portions thereof, prior to the date of such financial statements
remaining unpaid as of such date and any interest thereon to such date.
4.17 Except as set forth on Schedule 4.17 attached hereto, no action or
proceeding is now pending, or to the knowledge of any BORROWER is threatened,
against any BORROWER at law, in equity or otherwise, before any court, board,
commission, agency or instrumentality of any federal, state or local government
or of any agency or subdivision thereof, or before any arbitrator or panel of
arbitrators other than claims covered by insurance which would have a Material
Adverse Effect on any BORROWER, including litigation which seeks monetary
damages in excess of $50,000 which is not covered by insurance.
4.18 No event has occurred and is continuing which would constitute an
Event of Default or which, upon a lapse of time and notice, if applicable, would
become such an Event of Default and no borrowing by any BORROWER under this
Agreement constitutes an event of default under any agreement to which any
BORROWER is a party.
IV-9
4.19 All financial statements of the BORROWERS and all written
information and other written data furnished by the BORROWERS to LENDER are
complete and correct in all material respects, and such financial statements
have been prepared in accordance with GAAP and fairly represent the financial
condition of the applicable BORROWER as of such date. Since such date there has
been no material change in any BORROWER's financial condition sufficient to
impair its ability to repay all of the Liabilities. No BORROWER has any
contingent obligations, liabilities for taxes or other outstanding financial
obligations which are material in the aggregate, except as disclosed in such
statements, information and data or otherwise in this Agreement.
4.20 Each BORROWER hereby irrevocably authorizes and directs all
outside accountants and outside auditors employed by it at any time during the
term of this Agreement to exhibit and deliver to LENDER copies of any of its
financial statements in their possession, and to disclose to LENDER upon
LENDER's reasonable request any information they may have concerning its
financial status and business operations.
4.21 (a) No BORROWER and no employee benefit plan maintained by any
BORROWER is in violation of any of the provisions of the Employee Retirement
Income Security Act of 1974, 29 U.S.C. ss.1001 et seq., as from time to time
amended ("ERISA") or any regulations issued thereunder by the United States
Treasury Department, the Department of Labor and the Pension Benefit Guaranty
Corporation, and no prohibited transaction (within the meaning of Title I of
ERISA or the Internal Revenue Code of 1986, as amended (the "Code")) has
occurred and is continuing with respect to any such plan, in each instance where
such violation or prohibited transaction or any liabilities resulting directly
or indirectly therefrom individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect on any BORROWER. For purposes of this
Agreement, the term "employee benefit plan" shall have the meaning given that
term in Section 3(3) of ERISA.
(b) With respect to each "employee benefit plan" within the meaning
of Section 3(3) of ERISA maintained by any BORROWER (herein called the "Benefit
Plans" or individually the "Benefit Plan") and any trusts created thereunder:
IV-10
(1) all reports, forms and other information required to be
filed with any government agency or to be distributed or made available to any
Benefit Plan participant or beneficiary of any Benefit Plan have been filed,
distributed or made available;
(2) all Benefit Plans have been amended to the extent currently
required by the applicable provisions of ERISA and the Code;
(3) each BORROWER has made all contributions required to be
made with respect to each Benefit Plan;
(4) with respect to each group health plan maintained by any
BORROWER, the requirements of Sections 601 through 608 of ERISA have been
complied with;
(5) no Benefit Plan and no trust thereunder has been
terminated;
(6) there has been no "reportable event", as defined in Section
4043 of ERISA, or any "accumulated funding deficiency";
(7) no BORROWER has incurred any liability to the Pension
Benefit Guaranty Corporation.
(c) No BORROWER and no any officer, director or other employee of
any BORROWER, and no "party in interest" or "disqualified person", as such terms
are defined in Section 3 of ERISA and Section 4975 of the Code, has, with
respect to any Benefit Plan, engaged in or been a party to any "prohibited
transaction," as such term is defined in Section 4975 of the Code or Section 406
of ERISA, in connection with which any BORROWER or any officer, director or
other employee of any BORROWER, or any Benefit Plan, could reasonably be
expected to, directly or indirectly, be subject to either a penalty, assessed
pursuant to Section 502(i) of ERISA, or a tax imposed by Section 4975 of the
Code.
IV-11
4.22 Seller Subordinated Notes.
(a) The BORROWERS represent and warrant that CD&L is obligated to
the Sellers in the amounts set forth in the definition of Seller Subordinated
Notes.
(b) Schedule 4.22 accurately sets forth the schedules payment
obligations of the BORROWERS to the Sellers on the Seller Subordinated Notes.
(c) The BORROWERS represent and warrant as follows:
(1) all amounts owed by the BORROWERS to the Sellers on the
Seller Subordinated Notes are subordinated to LENDER's prior right to
indefeasible payment in full of the Liabilities;
(2) the REVOLVING LOAN and all other Liabilities are "Senior
Debt" and/or "Senior Indebtedness" as such terms are defined in the Seller
Subordinated Notes; and
(3) LENDER and its successors and assigns are holders of
"Senior Debt" and/or "Senior Indebtedness" under the Seller Subordinated Notes.
(d) So long as no Event of Default has occurred the BORROWERS will
be allowed to make the scheduled installment payments to the Sellers on the
Seller Subordinated Notes (and the interest thereon) over the term of this
Agreement. No payments in advance or prepayments of such debt will be allowed.
On and after the occurrence of an Event of Default, all scheduled payments will
be frozen and blocked and no payment of any such sums shall be made until such
time this Agreement has been terminated and all the Liabilities have been
indefeasibly paid in full.
4.23 Senior Subordinated Debt.
IV-12
(a) The BORROWERS represent and warrant that, prior to giving
effect to the payments described in subsection (b) below, CD&L is obligated to
the Senior Subordinated Lenders in the amount of $13,250,000 with interest
thereon at 12% per annum.
(b) The BORROWERS further represent and warrant that as part of
their current debt restructuring, CD&L will prepay $3,500,000 of such
$13,250,000 debt in accordance with the following schedule:
(1) the sum of $1,250,000 will be paid on or after the
date hereof with possible use of proceeds from the
REVOLVING LOAN; and
(2) no more than $2,250,000 (with interest) will be paid
over the term of this Agreement in accordance with
Schedule 4.23 attached hereto with possible use of
proceeds from the REVOLVING LOAN.
(c) The BORROWERS understand and agree that the amount of the
scheduled payments of $2,250,000 has been and will continue to be reserved from
borrowing availability until paid, as set forth in the Lending Formula. The
payment of these scheduled principal reductions will be removed from the
definition of fixed charges as that term is used in Article V to calculate Fixed
Charge Coverage for covenant purposes.
(d) So long as no Event of Default has occurred CD&L will be
allowed to make the scheduled installment payments of the $2,250,000 (and the
interest thereon) due to the Senior Subordinated Lenders over the term of this
Agreement. No payments in advance or prepayments of such debt will be allowed.
The subordination provisions in the Senior Subordinated Loan Agreement, as in
existence on the date hereof, govern blockage rights.
IV-13
(e) All amounts owed by the BORROWERS to Senior Subordinated
Lenders with respect to the Senior Subordinated Debt shall be subordinated to
LENDER's prior right to indefeasible payment in full of the Liabilities as, and
to the extent provided in the Senior Subordinated Loan Agreement, as in
existence on the date hereof.
(f) No other amounts may be borrowed by the BORROWERS from the
Senior Subordinated Lenders without the prior written consent of LENDER.
(g) The BORROWERS represent and warrant as follows:
(1) This Agreement is the "Credit Agreement" for purposes of
and as defined in the Senior Subordinated Notes and the Senior Subordinated Loan
Agreement.
(2) The REVOLVING LOAN and the Letter of Credit Obligations are
"Senior Indebtedness" for purposes of and as defined in the Senior Subordinated
Notes and the Senior Subordinated Loan Agreement.
(3) LENDER and its successors and assigns are holders of
"Senior Indebtedness" for purposes of and as defined in the Senior Subordinated
Notes and the Senior Subordinated Loan Agreement.
END OF ARTICLE IV
IV-14
ARTICLE V
POSITIVE COVENANTS
Each BORROWER jointly and severally covenants and agrees that until the
full and final payment of the Liabilities, unless LENDER waives compliance in
writing:
5.1 Payment of Liabilities.
(a) CD&L will repay the REVOLVING LOAN in accordance with the terms
of the REVOLVING NOTE and this Agreement.
(b) XXXXXXX will repay the REVOLVING LOAN in accordance with the
terms of the REVOLVING NOTE and this Agreement.
(c) CLICK will repay the REVOLVING LOAN in accordance with the
terms of the REVOLVING NOTE and this Agreement.
(d) KBD will repay the REVOLVING LOAN in accordance with the terms
of the REVOLVING NOTE and this Agreement.
(e) OLYMPIC will repay the REVOLVING LOAN in accordance with the
terms of the REVOLVING NOTE and this Agreement.
(f) SECURITIES will repay the REVOLVING LOAN in accordance with the
terms of the REVOLVING NOTE and this Agreement.
(g) SILVER STAR will repay the REVOLVING LOAN in accordance with
the terms of the REVOLVING NOTE and this Agreement.
(h) Each BORROWER will pay immediately on demand the Letter of
Credit Obligations (including all obligations arising under the Captive
Insurance Letter of Credit).
(i) Each BORROWER will repay all other Liabilities (including any
Other Loans) in accordance with the terms thereof and the note and/or notes
and/or ledgers evidencing the same.
(j) Each BORROWER will be responsible, as a co-BORROWER, for the
repayment in accordance with the payment terms of this Agreement and the
REVOLVING NOTE of all Advances made by LENDER under the REVOLVING LOAN.
V-1
(k) Each BORROWER will be responsible, as guarantor, for all of the
Liabilities of the other BORROWERS in accordance with the BORROWERS' covenants
of guaranty set forth in this Agreement.
5.2 Preservation of Existence and Prohibition against Dissolution,
Mergers, Acquisitions, Formation of Subsidiaries. Each BORROWER will (a)
preserve and maintain its existence, (b) maintain all of its rights, privileges
and franchises necessary or desirable in the normal conduct of its business, (c)
conduct its business in an orderly and regular manner, (d) not dissolve or
otherwise dispose of all or a substantial part of its assets and (e) not
consolidate with or merge into another entity or permit one or more other
entities to consolidate with or merge into it (whether or not the affected
BORROWER or any Subsidiary of such BORROWER is the surviving entity), (f) not
acquire all or substantially all of the assets or any of the capital stock or
ownership interests of any corporation or other entity and (g) not form or
create or acquire any Subsidiary.
5.3 Preservation of Assets. Each BORROWER will maintain, preserve and
keep its properties and assets or cause the same to be maintained, preserved and
kept, in good repair, working order and condition excepting reasonable wear and
tear; make or cause to be made all necessary and proper repairs, replacements
and renewals thereto as shall from time to time be necessary; and make or cause
to be made all necessary and proper substitutions, additions, modifications and
improvements as may be necessary to preserve (a) the value of its properties and
assets, (b) their usefulness to such BORROWER and (c) their fitness for their
intended purposes.
5.4 Payment of Taxes.
V-2
(a) (1) Each BORROWER will pay as they become due, all taxes (or
will provide adequate reserves therefor), assessments, levies and other
governmental charges, by whatever name called, that may at any time be lawfully
assessed or levied against or with respect to any BORROWER the Collateral or any
other property acquired by any BORROWER in substitution for, as a renewal or
replacement of, or modification, improvement or addition to the Collateral
(including, but not by way of limitation, any tax, assessment or other
governmental charge which, if not paid, will become a lien or charge upon the
Collateral).
(2) Each BORROWER will also pay all utilities and other charges
incurred in the operation, maintenance, use and upkeep of the Collateral or any
part thereof.
(b) (1) If any lien shall be claimed which in LENDER's opinion
might possibly create a valid obligation having priority over the rights granted
to it herein, LENDER may, on 3 Business Days prior notice, pay such taxes,
assessments, charges or claims, and the amount thereof together with interest at
the Default Rate (if not so paid after the aforesaid 3 Business Days notice)
shall until paid be added to the Liabilities.
(2) By its execution of this Agreement, each BORROWER
authorizes LENDER to reimburse itself for any of its expenses associated with
the above pursuant to the Authorization to Charge.
V-3
5.5 Cooperation and Further Assurances.
(a) The BORROWERS jointly and severally covenant and warrant that,
at any time or from time to time when in the reasonable opinion of LENDER or its
counsel it shall be necessary or desirable, they will perform or cause to be
performed any and all reasonable steps requested by LENDER to create and
maintain in LENDER's favor a valid lien on or security interest in or pledge of
the Collateral (with the priority required by this Agreement), including,
without limitation, the execution, delivery, filing and recording of financing
statements and continuation statements, supplemental security agreements, notes
and any other documents necessary, in the opinion of LENDER, for perfecting the
liens and security interest granted to LENDER hereunder, correcting any
inadequate or incorrect description of the Collateral or carrying out the
intention of or facilitating the performance of any term, covenant or condition
of this Agreement. In the event any BORROWER fails to abide by this Section or
in the event that LENDER in its sole discretion believes time is of the essence,
LENDER may execute all of the above instruments on behalf of the defaulting
BORROWER.
(b) Not in limitation of the foregoing, each BORROWER hereby
authorizes LENDER at any time or from time to time when in the reasonable
opinion of LENDER or its counsel it shall be necessary or desirable, to execute
and file/record any UCC-1 Financing Statement or UCC-3 Financing Statement or
similar instrument as may reasonably be required for perfecting the liens and
security interests granted to LENDER hereunder.
5.6 Reporting Requirements.
(a) Each BORROWER shall maintain books and records in such detail,
form and scope as LENDER shall reasonably require.
V-4
(b) In addition, each BORROWER shall supply to LENDER on forms
supplied by LENDER or otherwise acceptable to LENDER, the information set forth
in the subsections below together with such other information (including,
without limitation, updated address listings of Account Debtors) as LENDER may
request on a frequency requested by LENDER.
(c) Collateral Reporting Supporting Each Advance: Not in limitation
of the foregoing or of the right of LENDER to request other information, each
BORROWER shall submit at the time of each request for an advance under the
REVOLVING LOAN but in no event less frequently than weekly the information
contained in the Borrowing Base Certificate, such certificate to be submitted no
later than Friday and such information to include each of the following as at
the immediately preceding Sunday to the extent not specifically provided for in
the Borrowing Base Certificate:
(1) sales with dated copies of the invoices or sales
registers therefor (including credit memo data),
which shall indicate the names and addresses of
Account Debtors;
(2) all cash collections (including collections in the
form of checks);
(3) cash receipts register; and
(4) immediately upon their occurrences, reports and
records of merchandise returns or disputes,
discounts, advertising allowances, contraoffsets or
any other offsets, volume discounts, rebate
arrangements, sales of samples, "xxxx and hold"
transactions, and any other factor which would dilute
the value or reduce the amount of any Account
Receivable.
V-5
(d) Monthly Collateral Reporting: Also not in limitation of the
foregoing or of the right of LENDER to request other information, each BORROWER
shall submit on a monthly basis the information contained in the Collateral
Update Certificate and the Reconciliation Certificate no later than 20 days
after the end of each calendar month together with the following information to
the extent not specifically provided for in the Collateral Update Certificate
and the Reconciliation Certificate:
(1) aging schedules of Accounts Receivable (by division)
together with monthly calculation of ineligible
Receivables, together with, if requested, records
showing the individual invoices owing by each Account
Debtor;
(2) an aging summary for each Account Debtor;
(3) aging schedules of accounts payable; and
(4) monthly statement of new business added and business
lost where such business on a per customer basis
exceeds or is expected to exceed $500,000 in annual
revenue.
(e) Quarterly Financial Statements: Also not in limitation of the
foregoing or of the right of LENDER to request other information, the BORROWERS
shall deliver to LENDER as soon as available and in any event within 50 days
after the end of each of the BORROWERS' first, second and third fiscal quarters,
each of the following:
(1) its quarterly report on Form 10-Q or, if the
BORROWERS are no longer required to file reports with
the Securities and Exchange Commission, their balance
sheet (consolidated and consolidating with each
other) as of the end of each such fiscal quarter and
year-to-date and their statements of operations
(consolidated and consolidating with each other) for
such periods, all in reasonable detail and in each
case duly prepared in accordance with GAAP on a
review basis by independent certified public
accountants of recognized standing acceptable to
LENDER, substantially in the same form (except for
notes to the financial statements), all in reasonable
detail and all being correct and complete in all
material respects subject only to year end
adjustments; together with
V-6
(2) a certificate signed by the President or principal
financial officer of each BORROWER to the effect that
such officer does not have any knowledge that an
Event of Default (or an event which, with notice or
the lapse of time or both, would constitute an Event
of Default) exists or, if an Event of Default (or
such other event) does exist, a statement as to the
nature thereof and the actions proposed to be taken
with respect thereto;
(3) a certificate signed by the President or principal
financial officer of each BORROWER to the effect that
all warranties and representations made by such
BORROWER to LENDER in this Agreement or in connection
with the transactions to which this Agreement relates
remain true, correct and complete and, in the case of
the covenants (including the financial covenants set
forth in Article V and/or Article VI) and warranties,
that the same have not been breached or violated, or
if any such warranty or representation is no longer
true, correct or complete or any such covenant or
warranty has been breached or violated, specifying
the nature thereof and stating what action is
proposed with respect thereto;
(4) a certificate signed by the President or principal
financial officer of each BORROWER showing
calculations pertaining to compliance at and as of
the end of each such fiscal quarter with each
financial covenant requirement of Article V and/or
Article VI which is tested quarterly.
(f) Annual Financial Statements: Not in limitation of the foregoing
or of the right of LENDER to request other information, the BORROWERS shall, so
long as any of the Liabilities remains outstanding (unless LENDER otherwise
consents in writing), deliver to LENDER as soon as available and in any event
within 120 days after the end of each of their fiscal years, each of the
following:
(1) its annual report on Form 10-K or, if the BORROWERS
are no longer required to file reports with the
Securities and Exchange Commission, their annual
audit report for such year (consolidated and
consolidating with each other), including therein
their balance sheet as of the end of such fiscal year
and their statements of operations, cash flows and
changes in stockholders' equity (consolidated and
consolidating with each other) for such fiscal year,
setting forth in comparative form the corresponding
figures for the preceding fiscal year, prepared in
accordance with GAAP, all in reasonable detail and in
each case duly certified, without exception, by
independent certified public accountants of
recognized standing acceptable to LENDER, together
with each of the following:
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(2) a copy of the management letter, if any, issued by
such accounting firm;
(3) a certificate signed by the President or principal
financial officer of each BORROWER to the effect that
such officer does not have any knowledge that an
Event of Default (or an event which, with notice or
the lapse of time or both, would constitute an Event
of Default) exists or, if an Event of Default (or
such other event) does exist, a statement as to the
nature thereof and the actions proposed to be taken
with respect thereto;
(4) a certificate signed by the President or principal
financial officer of each BORROWER to the effect that
all warranties and representations made by such
BORROWER to LENDER in this Agreement or in connection
with the transactions to which this Agreement relates
remain true, correct and complete, and, in the case
of the covenants (including the financial covenants
set forth in Article V and/or Article VI) and
warranties, that the same have not been breached or
violated, or if any such warranty or representation
is no longer true, correct or complete or any such
covenant or warranty has been breached or violated,
specifying the nature thereof and stating what action
is proposed with respect thereto;
(5) a certificate signed by the President or principal
financial officer of each BORROWER showing
calculations pertaining to compliance at and as of
the end of each such fiscal year with each financial
covenant of Article V and/or Article VI which is
tested annually.
V-8
(g) Annual Projections: Not in limitation of the foregoing or of
the right of LENDER to request other information, the BORROWERS shall, so long
as any of the Liabilities remains outstanding (unless LENDER otherwise consents
in writing), deliver to LENDER as soon as available and in any event at least 30
days prior to the start of each of their fiscal years, annual projections for
the upcoming fiscal year, on a monthly basis, and including balance sheet,
profit and loss and cash flow and in form acceptable to LENDER.
(h) Notice of Default: As soon as possible and in any event within
three days after he becomes aware of the occurrence of each Event of Default (or
each event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default), the written statement of the chief financial
officer of the affected BORROWER setting forth details of such Event of Default
(or such other event) and the action which such BORROWER proposes to take with
respect thereto.
(i) Notice of Adverse Condition: As soon as possible, the written
statement of the chief financial officer of each BORROWER setting forth details
of any action, event or condition of any nature of which each such BORROWER is
aware, which may reasonably be expected to have a Material Adverse Effect and
the action which the affected BORROWER proposes to take with respect thereto.
(j) Notice of Litigation: Each BORROWER will provide LENDER with a
schedule of all litigation pending against it at the same time that each such
BORROWER submits its annual financial statements to LENDER. In addition, each
BORROWER will notify LENDER in writing within a reasonable time (which shall in
no event exceed ten Business Days after the applicable BORROWER's knowledge) of
the commencement of any litigation against it which, if determined adversely to
it, would result in its dissolution or liquidation, prevent or materially impair
it from conducting its business substantially as now conducted, prevent or
materially impair such BORROWER from repaying the REVOLVING LOAN, any Other
Loans and the other Liabilities or prevent or materially impair such BORROWER
from otherwise faithfully performing its obligations under this Agreement or
result in a Material Adverse Effect.
V-9
5.7 Compliance with Laws. Each BORROWER will at all times comply with,
or cause to be complied with, all laws, statutes, rules, regulations, orders and
directions of any governmental authority having jurisdiction over it and its
business.
5.8 Insurance.
(a) Each BORROWER shall maintain insurance coverage as follows:
(1) Casualty Insurance: At each BORROWER's expense, an original
policy or policies of insurance issued by an insurer or insurers satisfactory to
LENDER insuring each BORROWER's Inventory, machinery, Equipment, fixtures and
personal property against such perils and on such terms as LENDER may reasonably
request and otherwise satisfactory in form and substance to LENDER. Without
limiting the generality of the foregoing, said insurance shall in no event be
less than that amount necessary to prevent the BORROWERS and LENDER from being
deemed co-insurers under applicable law (and in no event less than the appraised
value of the Collateral) and shall insure against the hazards of fire, extended
coverage, vandalism, malicious mischief and sprinkler leakage and shall name
LENDER as mortgagee and loss payee, as its interests may appear. Such policy
shall contain a 30 day notice of cancellation and non-renewal provision.
(2) Liability Insurance: At each BORROWER's expense, an
original policy or policies of liability insurance issued by BORROWERS' captive
insurance company as currently in effect. Such policy shall name LENDER as an
additional insured, as its interests may appear, and shall contain a 30 day
notice of cancellation and non-renewal provision.
V-10
(b) Certificates evidencing the coverage afforded under the
BORROWERS' policies of insurance and, if requested, copies of all policies are
to be delivered to LENDER.
(c) If any BORROWER fails to take the action called for herein,
LENDER may, in its discretion obtain insurance covering LENDER's interest in the
Collateral and the amount of the premium for said insurance, together with
interest thereon at the Default Rate, shall until paid be added to the
Liabilities and the repayment thereof shall be secured by the Collateral.
(d) All rights to insurance proceeds are hereby assigned to LENDER
to the extent of the unpaid Liabilities.
(e) Unless otherwise agreed in writing, LENDER shall have the sole
right, in its own name or in the appropriate BORROWER's name on and after the
occurrence and during the continuance of an Event of Default hereunder, to file
claims under any insurance policies, to receive and give acquittance for any
payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies.
(f) On and after the occurrence and during the continuance of an
Event of Default hereunder, the BORROWERS shall have no claim against insurance
proceeds until all of the Liabilities are paid in full. LENDER shall not be
responsible for any failure to collect any insurance proceeds, regardless of the
cause of such failure. Nothing herein shall in any way affect the liability of
any person responsible for the payment of the balance of the Liabilities.
V-11
(g) In the event the Collateral or any part thereof shall be
damaged or destroyed, the BORROWERS at their election may (but only until the
occurrence and during the continuance of an Event of Default hereunder) do any
of the following: (1) apply the insurance proceeds or any part thereof to the
payment of the Liabilities, whether the indebtedness be matured or not, (2) use
the same or any part thereof to fulfill any of the covenants contained herein or
in the other Loan Documents as LENDER may determine or (3) use the same or any
part thereof to replace or restore the Collateral to a condition satisfactory to
LENDER In the event the Collateral or any part thereof shall be damaged or
destroyed on and after the occurrence and during the continuance of an Event of
Default hereunder, LENDER, at its election, may (1) apply the insurance proceeds
or any part thereof to the payment of the Liabilities, whether the indebtedness
be matured or not, (2) use the same or any part thereof to fulfill any of the
covenants contained herein or in the other Loan Documents as LENDER may
determine, (3) use the same or any part thereof to replace or restore the
Collateral to a condition satisfactory to LENDER, or (4) release the same to any
BORROWER.
(h) Each BORROWER agrees that in the event that the Collateral or
any part thereof shall be damaged or partially or totally destroyed there shall
be no abatement or reduction in the amounts payable hereunder and each such
BORROWER shall continue to be obligated to make such payments.
(i) Any monies released by LENDER to any BORROWER or paid or
applied on the cost of restoration, repair or alteration shall in no event be
deemed a payment on any of the Liabilities.
(j) Anything to the contrary herein contained notwithstanding, any
proceeds paid over to LENDER and not used for repair, restoration or replacement
shall be applied to pay accrued interest and any other sums then due and owing
to LENDER, and only any excess shall be paid over to the BORROWERS.
V-12
5.9 No Disposal of Collateral.
(a) Each BORROWER will safeguard, protect and hold all Collateral
for LENDER's account and make no disposition thereof except in the regular
course of business as hereinafter provided in this Section.
(b) Until LENDER shall have given written notice to the contrary,
any Collateral which may from time to time remain in possession or control of
any BORROWER or any third party may be sold and shipped to customers in the
ordinary course of business, on open account and on terms not exceeding the
terms currently extended. On and after the occurrence of an Event of Default,
LENDER shall have the right to withdraw this permission at any time on
reasonable notice, in which event no further disposition shall be made of the
Collateral without LENDER's written approval.
(c) Upon the sale, exchange, or other disposition of the
Collateral, the security interests and liens created and provided for herein
shall without break in continuity and without further formality or act continue
in and attach to the instruments for the payment of money, Accounts Receivable,
Contract Rights, documents of title, shipping documents, Chattel Paper and all
other cash and non-cash proceeds of such sale, exchange or disposition,
including Collateral returned or rejected by customers or repossessed by LENDER.
As to any such sale, exchange or disposition, LENDER shall have all of the
rights of an unpaid seller, including stoppage in transit, replevin and
reclamation.
V-13
(d) Each BORROWER shall forthwith and immediately transfer, assign,
endorse, deliver and turn over to, and/or deposit with LENDER, or shall cause to
be forthwith and immediately transferred, assigned, endorsed, delivered and
turned over to, and/or deposited with LENDER, in accordance with the
requirements of Section 2.5(b) above and in the identical form received
(excluding endorsements necessary for collection for the benefit of LENDER) all
Collateral Proceeds which each such BORROWER receives from any sale, lease,
transfer, exchange or other disposition of any of its assets (whether tangible
or intangible) and from services rendered to Account Debtors and other third
parties. Until so transferred, assigned, endorsed, delivered and turned over
and/or deposited with LENDER or to a Lockbox, Blocked Account and/or such other
place designated by LENDER, no BORROWER shall commingle any of the Collateral
Proceeds with any other property of any such BORROWER or any other person or
entity, but shall keep such Collateral Proceeds segregated, held in trust for
LENDER as LENDER's exclusive property.
5.10 LENDER's Power to Endorse Checks and Drafts. For purposes of
implementing this Agreement and also for purposes of paying and satisfying the
Liabilities, each BORROWER hereby designates LENDER or LENDER's representative
as its attorney-in-fact with power to endorse its name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral that may come into LENDER's possession. Each BORROWER also designates
LENDER or LENDER's representative as its attorney-in-fact to sign each such
BORROWER's name on any invoice or xxxx of lading relating to any of the Accounts
Receivable, drafts against Account Debtors, and assignments and verifications of
Accounts Receivable to any Account Debtor and to do all other acts and things
necessary to carry out this Agreement. All acts of said attorney or designee are
hereby ratified and approved. This power is coupled with an interest and is
irrevocable while any of the Liabilities remains unpaid.
5.11 Verification of Accounts Receivable.
V-14
(a) LENDER shall have the right and will perform verifications from
Account Debtors as to the amount and validity of any Account Receivable.
(b) The BORROWERS shall give LENDER notice of any verifications
prepared or conducted by the BORROWERS or their accountants and copies of such
verifications shall be supplied to LENDER upon LENDER's request.
5.12 Field Examinations.
(a) LENDER shall have full access during normal business hours on
reasonable prior notice to, and the right, through its officers, agents,
attorneys or accountants and at the BORROWERS' expense (to the extent provided
in subsection (b) and subsection (c) below) to: examine, check, inspect and make
abstracts and copies from the BORROWERS' books, accounts, orders, records,
audits, correspondence, and all other papers; confirm and verify all Accounts
Receivable and the other Collateral; enter upon each BORROWER's premises during
business hours and from time to time, for the purpose of examining the
BORROWERS' records concerning the Collateral and for inspecting the Collateral
and any and all records.
(b) BORROWERS will reimburse LENDER for all examination fees
incurred by LENDER pursuant to the exercise of its rights under this Section in
the amount and in the manner set forth in Section 2.19.
5.13 Collateral Management Fee.
(a) In order to compensate LENDER for its expenses in monitoring,
reviewing and analyzing the BORROWERS' records, financial statements and
Collateral, the BORROWERS will pay LENDER a Collateral Management Fee in the
amount and in the manner set forth in Section 2.19.
V-15
5.14 Warranties relating to Accounts Receivable. Except as may
otherwise be specifically provided as to a particular Account, invoice or other
writing, each BORROWER warrants that as to each Account against which LENDER has
made or is making an Advance that each such Account is an Eligible Receivable.
5.15 Taxes Payable on Accounts Receivable. If any of the Accounts
Receivable includes a charge for any tax payable to any governmental tax
authority, LENDER is hereby authorized in LENDER's reasonable discretion, to pay
the amount thereof to the proper taxing authority for the BORROWERS' account and
to charge the BORROWERS therefor. The BORROWERS shall notify LENDER if any
Accounts Receivable include any tax due to any such taxing authority, and in the
absence of notice to LENDER, LENDER shall have the right to retain the full
proceeds of such Accounts Receivable, and shall not be liable for any taxes that
may be due from any BORROWER by reason of the sale and delivery creating such
Accounts Receivable.
5.16 Disclosure of Certain Information. Each BORROWER hereby
irrevocably authorizes and directs all accountants and auditors employed by it
at any time during the term of this Agreement to exhibit and deliver to LENDER
copies of any of its financial statements, trial balances or other accounting
records of any sort in their possession, and to disclose to LENDER any
information they may have concerning its financial status and business
operations.
5.17 Operating Accounts. Each BORROWER will maintain its primary
operating account(s) at a LENDER's Affiliate, it being understood and agreed
that all such accounts are agreed to be Deposit Accounts for purposes of
providing security to LENDER under this Agreement.
V-16
5.18 Landlord's Consents. Each BORROWER will obtain the Landlord's
Consents for the Collateral Locations which correspond to the applicable
BORROWER's principal place of business and any others which LENDER using its
reasonable commercial judgment deems necessary or desirable, provided, however,
that in the event that despite any such BORROWER's best efforts such BORROWER is
unable to deliver to LENDER any Landlord's Consent required hereunder, LENDER
will forbear from requiring such Landlord's Consent upon the condition that the
applicable BORROWER shall, upon request from LENDER, provide proof to LENDER
that all applicable rent payments have been made, it being understood that it
shall be an Event of Default hereunder if any such BORROWER fails to make
provide such proof to LENDER within 30 days of LENDER's request therefor and it
being further understood that any such BORROWER's failure to provide LENDER with
proof of its rent payment within the time period set forth above will be
sufficient evidence that an Event of Default has occurred hereunder and that
during such 30 day period LENDER may reserve from the BORROWERS' availability to
borrow under the REVOLVING LOAN the amount of rental which became due and owing
from the date of the last proof submission by the applicable BORROWER.
5.19 Subordination Agreements.
(a) Seller Subordinated Notes:
(1) As it relates to the Seller Subordinated Notes, the
BORROWERS hereby incorporate as a covenant the repayment warranties made by them
in Section 4.22 above.
(2) The BORROWERS further covenant that all amounts owed by the
BORROWERS to the Sellers on the Seller Subordinated Notes are and shall remain
subordinated to LENDER's prior right to indefeasible payment in full of the
Liabilities and except as expressly allowed by Section 4.22 above, no payment of
any such sums shall be made until such time that this Agreement has been
terminated and the Liabilities have been indefeasibly paid in full.
V-17
(3) The BORROWERS further covenant that they will promptly
notify LENDER in writing if any BORROWER receives any notice from any holder of
any Seller Subordinated Note notifying any such BORROWER of a default
thereunder.
(b) Senior Subordinated Debt:
(1) As it relates to the Senior Subordinated Debt, the
BORROWERS hereby incorporate as a covenant the repayment warranties made by them
in Section 4.23 above.
(2) The BORROWERS further covenant that all amounts owed by the
BORROWERS to the Senior Subordinated Lenders on the Senior Subordinated Debt are
and shall remain subordinated to LENDER's prior right to indefeasible payment in
full of the Liabilities and except as expressly allowed by Section 4.23 above,
no payment of any such sums shall be made until such time that this Agreement
has been terminated and the Liabilities have been indefeasibly paid in full.
(3) The BORROWERS further covenant that they will promptly
notify LENDER in writing if any BORROWER receives any notice from any holder of
any Senior Subordinated Debt notifying any such BORROWER of a default
thereunder.
5.20 Minimum Net Annual Earnings Before Extraordinary Items.
(a) As at the end of each of the BORROWERS' fiscal years, the
BORROWERS shall have consolidated minimum net income before extraordinary items
(including as an extraordinary item goodwill impairment charges) of at least
$1.00.
V-18
(b) This covenant shall be tested as at the end of each of
BORROWERS' fiscal years by reference to the BORROWERS' annual financial
statements required to be submitted pursuant to this Agreement for each
applicable fiscal year and by using GAAP with the exception of "goodwill
impairment" charges which are not considered extraordinary items under GAAP.
(c) Although compliance with this Section will be tested annually
as aforesaid, nothing in the foregoing shall prevent LENDER from determining
that this covenant has been violated prior to LENDER's receipt of any of the
aforementioned financial statements in the event LENDER obtains actual knowledge
that the BORROWERS are not in compliance with this covenant.
5.21 Minimum Loss for First Fiscal Quarter.
(a) As at the end of each first fiscal quarter for each of the
BORROWERS' fiscal years (commencing with the fiscal quarter ending March 31,
2002), the BORROWERS shall have consolidated minimum net income before
extraordinary items (including as an extraordinary item any goodwill impairment
charges notwithstanding the fact that such charges are technically not
considered "extraordinary" under GAAP) of no less than (-$100,000).
(b) This covenant shall be tested as at the end of the first fiscal
quarter of each of BORROWERS' fiscal years (commencing with the fiscal quarter
ending March 31, 2002), by reference to the BORROWERS' quarterly financial
statements required to be submitted pursuant to this Agreement for each such
fiscal quarter and by using GAAP with the exception of "goodwill impairment"
charges which are not considered extraordinary items under GAAP.
(c) Although compliance with this Section will be tested quarterly
as aforesaid, nothing in the foregoing shall prevent LENDER from determining
that this covenant has been violated prior to LENDER's receipt of any of the
aforementioned financial statements in the event LENDER obtains actual knowledge
that the BORROWERS are not in compliance with this covenant.
V-19
5.22 No Quarterly Loss except for First Fiscal Quarter.
(a) As at the end of each second, third and fourth fiscal quarter
for each of BORROWERS' fiscal years (commencing with the fiscal quarter ending
June 30, 2002), the BORROWERS shall have consolidated minimum year-to-date net
income before extraordinary items (including therein goodwill impairment
charges) of at least $1.00.
(b) This covenant shall be tested as at the end of each second,
third and fourth fiscal quarter for each of BORROWERS' fiscal years (commencing
with the fiscal quarter ending June 30, 2002) by reference to the BORROWERS'
quarterly financial statements required to be submitted pursuant to this
Agreement for each such fiscal quarter and by using GAAP with the exception of
"goodwill impairment" charges which are not considered extraordinary items under
GAAP.
(c) Although compliance with this Section will be tested quarterly
as aforesaid, nothing in the foregoing shall prevent LENDER from determining
that this covenant has been violated prior to LENDER's receipt of any of the
aforementioned financial statements in the event LENDER obtains actual knowledge
that the BORROWERS are not in compliance with this covenant.
V-20
5.23 Capital Expenditures.
(a) The BORROWERS shall not on a collective aggregate basis incur
Capital Expenditures in an amount exceeding $1,000,000 in any fiscal year during
the term of this Agreement, commencing with the fiscal year ending December 31,
2002.
(b) For purposes of this covenant, the following terms have the
following meanings:
(1) "Capital Expenditures" means the aggregate expenditures
made or liabilities incurred for the acquisition of any fixed assets or
improvements, replacements, substitutions or additions thereto which have a
useful life of more than one year (other than short-term, low risk liquid
investments), including the direct or indirect acquisition of such assets by way
of increased product or service charges, offset items or otherwise and the
principal portion of payments with respect to Capitalized Lease Obligations - in
all the foregoing cases, computed in accordance with GAAP.
(2) "Capitalized Lease Obligation" means an obligation to pay
rent or other amounts under any lease of (or other arrangement conveying the
right to use) real and/or personal property which obligation is required to be
classified and accounted for as a capital lease on a balance sheet prepared in
accordance with GAAP, and for purposes hereof the amount of such obligation
shall be the capitalized amount thereof determined in accordance with GAAP.
(c) This covenant shall be tested annually by reference to the
BORROWERS' financial statements required to be submitted under this Agreement
for each fiscal year (commencing with the fiscal year ending December 31, 2002)
and by using GAAP.
(d) Although compliance with this Section will be tested annually
as aforesaid, nothing in the foregoing shall prevent LENDER from determining
that this covenant has been violated prior to LENDER's receipt of any of the
aforementioned financial statements in the event LENDER obtains actual knowledge
that the BORROWERS are not in compliance with this covenant.
V-21
5.24 Fixed Charge Coverage.
(a) The BORROWERS must maintain their consolidated "Fixed Charge
Coverage" at the following levels:
(1) The BORROWERS must maintain their consolidated "Fixed
Charge Coverage" at a ratio equal to or greater than
.9 to 1.0 as at the end of their first fiscal quarter
for 2002.
(2) The BORROWERS must maintain their consolidated "Fixed
Charge Coverage" at a ratio equal to or greater than
.95 to 1.0 as at the end of their second fiscal
quarter for 2002.
(3) The BORROWERS must maintain their consolidated "Fixed
Charge Coverage" at a ratio equal to or greater than
.9 to 1.0 as at the end of their third fiscal quarter
for 2002.
(4) The BORROWERS must maintain their consolidated "Fixed
Charge Coverage" at a ratio equal to or greater than
1.0 to 1.0 as at the end of their fourth fiscal
quarter for 2002 and as at the end of each fiscal
quarter thereafter.
(b) (1) For purposes of this covenant, "Fixed Charge Coverage"
means the following ratio:
BORROWERS' consolidated earnings before interest, taxes,
depreciation and amortization
LESS BORROWERS' consolidated "Unfunded Capital Expenditures"
LESS BORROWERS' consolidated cash payment of income tax liabilities
LESS cash distributions to CD&L's stockholders
-divided by--
all consolidated interest expense PLUS the current
maturities of consolidated long term debt as reported
in BORROWERS' annual financial statements
for their fiscal year immediately preceding the applicable test period
V-22
PLUS current maturities of Capital Lease Obligations as reported in
BORROWERS' annual financial statements for its fiscal year immediately
preceding the applicable test period
LESS all payments made to the Senior Subordination Lenders for which a
reserve against "loan value" had been established
(2) For purposes of this covenant, "Unfunded Capital
Expenditures" means the BORROWERS' consolidated Capital Expenditures minus any
loans and/or leases incurred in financing any such Capital Expenditures.
(3) For purposes of this covenant, "Capital Expenditures" and
"Capitalized Lease Obligation" shall have the meaning given those terms in
Section 5.23 above.
(c) This covenant shall be tested quarterly and annually, using a
rolling 12 month basis, by reference to the BORROWERS' quarterly and annual
financial statements required to be submitted under this Agreement and by using
GAAP.
(d) Although compliance with this Section will be tested quarterly
and annually as aforesaid, nothing in the foregoing shall prevent LENDER from
determining that this covenant has been violated prior to LENDER's receipt of
any of the aforementioned financial statements in the event LENDER obtains
actual knowledge that the BORROWERS are not in compliance with this covenant.
5.25 Leverage.
(a) (1) Effective June 30, 2002 and at all times thereafter (except
for the fiscal quarters ending March 31, 2004 and June 30, 2004), the BORROWERS
shall maintain the at no more than 2.0 to 1.0 the ratio of (A) their
consolidated "Unsubordinated Liabilities" to (B) their consolidated and
"Effective Tangible Net Worth".
V-23
(2) As at March 31, 2004 and as at June 30, 2004, the BORROWERS
shall maintain the aforesaid ratio at no more than 2.25 to 1.0.
(b) (1) For purposes of this covenant, "Unsubordinated Liabilities"
shall include all liabilities (including without limitation trade payables) on
the BORROWERS' balance sheet excluding only that debt whose payment has been
subordinated to the payment of the Liabilities.
(2) For purposes of this covenant, "Effective Tangible Net
Worth" means the BORROWERS' consolidated equity reduced by intangible assets and
increased by debt whose payment has been subordinated to the payment of the
Liabilities.
(c) This covenant shall be tested quarterly and annually, by
reference to BORROWERS' consolidated financial statements required to be
submitted under this Agreement for each fiscal quarter and each fiscal year and
by using GAAP.
(d) Although compliance with this Section will be tested quarterly
and annually as aforesaid, nothing in the foregoing shall prevent LENDER from
determining that this covenant has been violated prior to LENDER's receipt of
any of the aforementioned financial statements in the event LENDER obtains
actual knowledge that the BORROWERS are not in compliance with this covenant.
5.26 Rate Reduction Benchmark.
(a) (1) LENDERS agree that the BORROWERS shall be entitled to the
reduced rate of interest set forth in Section 2.6 above in the event that the
BORROWERS achieve and maintain certain performance benchmarks relating to the
BORROWERS' "Fixed Charge Coverage" (as defined in this Article V), such
performance benchmark being referred to the "Rate Reduction Benchmark" in this
Agreement.
V-24
(2) For purposes of determining the BORROWERS' "Fixed Charge
Coverage" for purposes of the Rate Reduction Benchmark, such "Fixed Charge
Coverage" shall be determined in accordance with the definition set forth in the
"Fixed Charge Coverage" covenant of this Article V.
(b) In order for the BORROWERS to meet Rate Reduction Benchmark,
the BORROWERS' Fixed Charge Coverage must, as at the end of the BORROWERS'
applicable fiscal quarter for the 12 months ending such fiscal quarter, be
greater than 1.1 to 1.0.
(c) The determination whether the BORROWERS have satisfied the Rate
Reduction Benchmark for purposes of obtaining the interest rate reduction
allowed by Section 2.6 above will be made as set forth in said Section 2.6.
(d) The determination whether the BORROWERS remain in compliance
with the Rate Reduction Benchmark for purposes of continuing the interest rate
reduction allowed by Section 2.6 above will be made as set forth in Section 2.6.
5.27 Solvency. The fair value of the business and assets of the
BORROWERS on a consolidated basis (including, without limitation, contingent,
unmatured and unliquidated claims arising out of all rights of indemnity,
contribution, reimbursement or any similar right, or any claim of subrogation,
as such claims may arise or mature, that each BORROWER may have against any
other BORROWER) will be in excess of the amount that will be required to pay its
liabilities (including, without limitation, contingent, subordinated, unmatured
and unliquidated liabilities on existing debts, as such liabilities may become
absolute and matured), in each case after giving effect to the transactions
contemplated by this Agreement and the use of proceeds therefrom. After giving
effect to the transactions contemplated by this Agreement and the use of
proceeds of therefrom, BORROWERS will not be engaged in any business or
transaction, or about to engage in any business or transaction, for which any
such BORROWER has an unreasonably small capital (within the meaning of the
Uniform Fraudulent Transact Act, as adopted in the State of New Jersey and
Section 548 of the Federal Bankruptcy Code). No BORROWER has any intent to:
V-25
(a) hinder, delay or defraud any entity to which it is, or will
become, on or after the date hereof, indebted, or
(b) to incur debts that would be beyond its ability to pay as they
mature.
END OF ARTICLE V
V-26
ARTICLE VI
NEGATIVE COVENANTS
Each BORROWER jointly and severally covenants and agrees, that until
the full and final payment of the Liabilities, unless LENDER waives compliance
in writing:
6.1 Change in Location: No BORROWER will change its principal place of
business or (b) change the names currently used by it for billing or other
business purposes or (c) change or add to the Collateral Locations unless in
each case above (1) the applicable BORROWER shall have given LENDER 30 days
written notice of such change and (2) LENDER shall have received such
instruments or documents (including without limitation any additional or
supplement Uniform Commercial Code financing statements) as LENDER may
reasonably request so that such change will not impair or negatively affect the
security interests granted to LENDER hereunder.
6.2 Changes in Business: No BORROWER will (a) make any material change
in its business or in the nature of its operation, or (b) liquidate or dissolve
itself (or suffer any liquidation or dissolution) or (c) convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, assets or business
except sales of Inventory or other Collateral in the ordinary course of business
and for a fair consideration or (d) dispose of any shares of stock or any
indebtedness, whether now owned or hereafter acquired or (e) discount, sell,
pledge, hypothecate or otherwise dispose of Accounts Receivable.
6.3 Liens: Except as specifically set forth on Schedule 6.3 to this
Agreement or as disclosed in the Certifications as to Liens, no BORROWER will
suffer to exist any Lien on any of the Collateral, it being understood and
agreed that notwithstanding the foregoing or any other provision of this
Agreement to the contrary, no Lien (other than the Lien of LENDER) is allowed
against Accounts Receivable.
VI-1
6.4 Indebtedness: No BORROWER will create, incur, permit to exist or
have outstanding any indebtedness, except:
(a) indebtedness of any such BORROWER to LENDER under this
Agreement;
(b) indebtedness owed by CD&L to the Seller Subordinated Lenders;
or
(c) indebtedness owed by CD&L to the Senior Subordinated Lenders;
(d) accrued taxes, assessments and governmental charges not yet due
and payable, non-interest bearing accounts payable and accrued liabilities, and
non-interest bearing deferred liabilities other than for borrowed money (e.g.,
deferred compensation and deferred taxes), in each case incurred and continuing
in the ordinary course of business; or
(e) the indebtedness of the BORROWERS set forth on Schedule 6.4
attached hereto; and
(f) indebtedness of any BORROWER owed to any other BORROWER and the
transfers of funds among the BORROWERS so long as such debt and such transfers
are incurred in the ordinary course of business.
6.5 Guaranties:
(a) No BORROWER will assume, endorse, be or become liable for, or
guarantee, the obligations of any person or entity, except for (1) obligations
owed by any BORROWER to LENDER and (2) obligations owed by any BORROWER and
permitted by Section 6.4 above and (3) the endorsement of negotiable instruments
for deposit or collection in the ordinary course of business and (4) obligations
of third parties which are owed to LENDER.
(b) For the purposes hereof, the term "guarantee" shall include any
agreement, whether such agreement is on a contingency or otherwise, to purchase,
repurchase or otherwise acquire indebtedness of any other person or entity, or
to purchase, sell or lease, as lessee or lessor, property or services, in any
such case primarily for the purpose of enabling another person to make payment
of any indebtedness, or to make any payment (whether as an advance, capital
contribution, purchase of an equity interest or otherwise) to assure a minimum
equity, asset base, working capital or other balance sheet or financial
condition, in connection with the indebtedness of another person or entity, or
to supply funds to or in any manner invest in another person or entity in
connection with the indebtedness of such person or entity.
VI-2
6.6 Control of Ownership: Other than CD&L, no BORROWER will permit any
change in its ownership interests or in the ownership interests of its
stockholders from those set forth in Article IV.
6.7 Control of Management. No BORROWER will permit anyone other than
(a) Xxxxxx X. XxxXxxx, Xx., or Xxxxxxx Xxxxxxx, and (b) at least one of Xxxxxxx
Xxxxxxx, Xxxxxxx Xxxxxx or Xxxx Xxxxxxxxx or a substitute or substitutes
acceptable to LENDER to have active management control of such BORROWER.
6.8 Compromise of Claims: No BORROWER will compromise, settle or adjust
any uninsured claims which are part of or which affect the Collateral involving
more than $100,000 in the aggregate.
6.9 Bank Accounts: No BORROWER will establish any deposit or bank
account with any financial institution other than with a LENDER's Affiliate
unless such account is approved in writing by LENDER.
VI-3
6.10 Loans and Investments:
(a) No BORROWER will make loans or advances or make or suffer to
exist, any investment in any person or entity, including, without limitation,
any loans to or investments in any shareholder, director, officer or employee of
any BORROWER or any BORROWER's Affiliate or any of its Subsidiaries, except
investments in:
(1) obligations issued or guaranteed by the
United States of America;
(2) certificates of deposit, bankers acceptances
and other "money market instruments issued
by any bank or trust company organized under
the laws of the United States of America or
any State thereof and having capital and
surplus in an aggregate amount of not less
than $100,000,000;
(3) open market commercial paper bearing the
highest credit rating issued by Standard &
Poor's Corporation or by another nationally
recognized credit rating agency; and
(4) repurchase agreements entered into with any
bank or trust company organized under the
laws of the United States of America or any
State thereof and having capital and surplus
in an aggregate amount of not less than
$100,000,000 relating to United States of
America government obligations;
in each case maturing or being due or payable in full not more than 180 days
after any such BORROWER's acquisition thereof.
(b) Notwithstanding the foregoing provisions of subsection (a)
above, each BORROWER will be allowed to invest on an ongoing basis in profit
sharing or other retirement-type plans maintained by such BORROWER in accordance
with the requirements of ERISA.
VI-4
6.11 Fiscal Year: No BORROWER will change its fiscal year without the
prior written consent of LENDER, which consent shall not be unreasonably
withheld.
6.12 Amendment of Corporate Documents: No BORROWER will modify, amend,
supplement or terminate, or agree to modify, amend, supplement or terminate, its
organizational or governing documents (including any certificate of
incorporation or by-laws or certificate of formation or operating agreement) in
any manner which would violate this Agreement or otherwise materially and
adversely affect LENDER.
6.13 Margin Securities: No BORROWER is engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any margin stock within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System, as amended. No part of the
proceeds of the REVOLVING LOAN will be used, directly or indirectly, for a
purpose which violates any law, rule or regulation of any governmental agency or
body, including without limitation the provisions of Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System, as amended. The BORROWERS
represent that the proceeds of the REVOLVING LOAN provided for herein shall be
used in the following manner: to refinance existing debts, to support working
capital requirements and other general corporate purposes. No proceeds of the
REVOLVING LOAN or other financial accommodations provided to the BORROWERS
hereunder shall be used to purchase or carry any margin stock (within the
meaning of Regulation U issued by the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose of purchasing or carrying
any margin stock.
VI-5
6.14 Transactions with Each Other and with Any Borrower's Affiliate. No
transaction by any BORROWER with any other BORROWER or with any BORROWER's
Affiliate or any Subsidiary of any BORROWER or any party related to any BORROWER
through common management or ownership will give rise to any Eligible
Receivable.
END OF ARTICLE VI
VI-6
ARTICLE VII
EVENTS OF DEFAULT
Regardless of the terms of any of the other Loan Documents, the
occurrence of any of the following events shall be deemed an event of default
(an "Event of Default") hereunder:
7.1 (a) CD&L shall fail to pay on its due date any principal or
interest due on the REVOLVING LOAN;
(b) XXXXXXX shall fail to pay on its due date any principal or
interest due on the REVOLVING LOAN;
(c) CLICK shall fail to pay on its due date any principal or
interest due on the REVOLVING LOAN;
(d) KBD shall fail to pay on its due date any principal or interest
due on the REVOLVING LOAN;
(e) OLYMPIC shall fail to pay on its due date any principal or
interest due on the REVOLVING LOAN;
(f) SECURITIES shall fail to pay on its due date any principal or
interest due on the REVOLVING LOAN;
(g) SILVER STAR shall fail to pay on its due date any principal or
interest due on the REVOLVING LOAN;
(h) any BORROWER in its capacity as a co-BORROWER shall fail to pay
on its due date any principal or interest due in accordance with the provisions
of the REVOLVING NOTE or the REVOLVING LOAN;
VII-1
(i) any BORROWER shall fail to pay immediately after demand any
Letter of Credit Obligations;
(j) any BORROWER in its capacity as a joint and several guarantor
shall fail to pay on its due date any principal or interest due in accordance
with the provisions of the REVOLVING NOTE or the REVOLVING LOAN;
(k) any BORROWER (whether in its capacity as a co-BORROWER or as a
guarantor) shall fail to pay on its due date any other payment due under this
Agreement or any of the other Loan Documents;
7.2 any BORROWER shall fail on and as at the date set for the testing
of compliance to comply with any financial covenant or ratio, including without
limitation the financial covenants and ratios set forth in Article V or Article
VI of this Agreement;
7.3 any representation or warranty herein or in the REVOLVING NOTE or
any of the other Loan Documents or in connection with any transaction
contemplated hereby or thereby shall prove to have been false or misleading in
any material respect when made;
7.4 LENDER shall fail to have a legal, valid and binding first lien on
any of the Collateral, except for those liens, if any, which may be set forth in
the Certifications as to Liens relating to liens against Equipment (expressly
excluding and not allowing, however, any liens against the BORROWERS' assets
consisting of Accounts);
7.5 (a) any consensual lien or encumbrance or any security interest,
perfected or otherwise, other than the security interests specifically provided
for or permitted hereunder, shall be created in the Collateral;
VII-2
(b) any non-consensual lien, including but not limited to any
judgment against any BORROWER, becomes an encumbrance against the Collateral and
the affected BORROWER does not remove or discharge such lien within 15 days
after receipt of written notice to do so;
7.6 any BORROWER shall admit in writing an inability to pay debts as
they come due or shall file any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law, or any other law or
laws for the relief of, or relating to, debtors;
7.7 an involuntary petition shall be filed under any bankruptcy or
insolvency statute against any BORROWER and such petition is not discharged or
stayed within 60 days from the date of the filing of the petition;
7.8 a receiver or trustee shall be appointed to take possession of the
properties of any BORROWER;
7.9 any BORROWER ceases its operations;
7.10 (a) any default shall occur under any other loan agreement
involving either the borrowing of money or the advance of credit from LENDER to
which any BORROWER may be a party as borrower or guarantor;
(b) any default shall occur under the Senior Subordinated Loan
Agreement or any document related thereto;
(c) any default shall occur under any of the Seller Subordinated
Notes;
(d) any default shall occur under any other loan agreement
involving either the borrowing of money or the advance of credit to which any
BORROWER may be a party as borrower or guarantor;
VII-3
7.11 any BORROWER shall materially breach, violate or default under,
any term, condition, provision, representation or warranty contained in this
Agreement not specifically referred to in this Article VII and the affected
BORROWER does not cure such breach, violation or default within 15 days after
receipt of written notice to do so;
7.12 any breach, violation or default shall occur under any of the
non-payment terms, conditions, representations, warranties or covenants
contained in the REVOLVING NOTE or any of the other Loan Documents and the
affected BORROWER does not cure such breach, violation or default within 15 days
after receipt of written notice to do so;
7.13 any of the Loan Documents (or any provision thereof) is claimed by
any BORROWER to be invalid or unenforceable;
7.14 any BORROWER shall fail, within 15 Business Days after request to
do so, to obtain and deliver to LENDER any mortgage, financing statement,
subordination agreement or any other documentation required to be signed or
obtained as part of this Agreement or shall have failed, within 15 Business Days
after request to do so, to take any reasonable action requested by LENDER to
perfect or protect the security interests provided for herein;
7.15 there occurs any change in the ownership interests of any BORROWER
(other than CD&L) from those set forth in Article IV; 7.16 there occurs any
change in the management of the BORROWERS other than as allowed in Article VI;
7.17 (a) any BORROWER disclaims liability or seeks to terminate
liability under the guaranty provisions set forth in Article II of this
Agreement;
VII-4
(b) any BORROWER breaches, violates or defaults under any covenant,
condition or warranty contained in the aforesaid guaranty provisions set forth
in Article II of this Agreement and the affected BORROWER does not cure such
breach, violation or default within 15 days after receipt of written notice to
do so;
7.18 any BORROWER obtains any loan (other than the REVOLVING LOAN)
secured by Accounts Receivable; 7.19 any BORROWER obtains any loan (other than
the REVOLVING LOAN) secured by Equipment other than those
expressly permitted hereunder;
7.20 if the BORROWERS are not in compliance with the Lending Formula
and the BORROWERS fail to come into compliance with such Lending Formula within
the earlier of the BORROWERS' knowledge that non-compliance exists or receipt of
written notice from LENDER to do so; or
7.21 there occurs any Material Adverse Effect on any BORROWER.
END OF ARTICLE VII
VII-5
ARTICLE VIII
REMEDIES
8.1 Whenever an Event of Default has occurred, LENDER may do any or all
of the following at the same time or at different times:
(a) LENDER may declare immediately due and payable the unpaid
principal amount of each and all of the following, together with all accrued
interest and all other lawful and proper charges thereon, all such amounts shall
become immediately due and payable with interest thereafter at the Default Rate,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by each BORROWER:
(1) the REVOLVING NOTE; and
(2) the REVOLVING LOAN.
(b) LENDER may declare the entire principal face amount of the
Letters of Credit or the amount for which LENDER may be liable thereunder and
all the other Letter of Credit Obligations, together with all accrued interest
and all other lawful and proper charges thereon, immediately due and payable,
whereupon all such sums shall become immediately due and payable with interest
thereafter at the Default Rate, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by each BORROWER.
For purposes of this Section, LENDER shall be entitled to declare immediately
due all sums which LENDER is itself obligated to advance under the Letters of
Credit and the other Letter of Credit Obligations, or any such sums which LENDER
is obligated to advance to any issuer of any such Letter of Credit whether or
not such sums have yet been advanced or funded by LENDER. Upon such declaration,
all such sums shall become immediately due and payable.
VIII-1
(c) LENDER may declare the entire principal amount of any Other
Loans, or the unpaid balance thereof, together with all accrued interest and all
other lawful and proper charges thereon, immediately due and payable whereupon
all such amounts shall become immediately due and payable with interest
thereafter at the Default Rate, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by each BORROWER.
(d) LENDER may declare all other loans, sums and Liabilities owed
to LENDER under this Agreement or any other agreement or loan between LENDER and
any BORROWER, together with all accrued interest and all other lawful and proper
charges thereon, to be forthwith due and payable, whereupon all such sums shall
forthwith become immediately due and payable with interest thereafter at the
Default Rate, without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by each BORROWER.
(e) To the extent it has not already done so, LENDER may proceed
with or without judicial process to take immediate possession of any Collateral
(including without limitation the Pledged Property) or any part thereof not
already in the possession of LENDER and wherever the same may be found. The
BORROWERS agree to pay all costs and expenses of LENDER in the collection of the
Liabilities and enforcement of the rights hereunder, including, without
limitation, LENDER's reasonable attorney's fees. Each BORROWER agrees that upon
receipt of notice of LENDER's intention to take possession of all or any part of
said Collateral, each such BORROWER will do everything reasonably necessary to
make same available to LENDER.
(f) To the extent it has not already done so, LENDER may transfer
any and all Collateral into its name or that of its nominee and may receive the
income and any distributions thereon and hold the same as Collateral for the
Liabilities, or apply the same to any defaulted one of the Liabilities.
VIII-2
(g) LENDER may assign, transfer and deliver at any time or from
time to time the whole or any portion of the Collateral or any rights or
interests therein in accordance with the Uniform Commercial Code, and without
limiting the scope of LENDER's rights thereunder, sell such Collateral at a
public or private sale, or in any other manner, at such price or prices as
LENDER may deem best, and either for cash or credit, or for future delivery, at
the option of LENDER, in bulk or in parcels and with or without having such
Collateral at the sale or other disposition. LENDER shall have the right to be
the purchaser at any public sale. Any notification of a sale or other
disposition of the Collateral or of any other action by LENDER required to be
given by LENDER to any BORROWER will be sufficient if given not less than ten
(10) days prior to the day on which such sale or other disposition will be made
and in the manner set forth in Section 9.1; such notification shall be deemed
reasonable notice. In the event of a sale of such Collateral, or any other
disposition thereof, LENDER shall apply all proceeds first to all costs and
expenses of disposition, including attorneys' fees, and then to the Liabilities
of the BORROWERS to LENDER.
(h) (1) LENDER may immediately, and without notice or other action,
set-off and apply against the Liabilities (A) any and all deposits and all other
items described in Section 3.6 hereof and/or (B) any sum owed by LENDER in any
capacity to any BORROWER whether due or not. ANY AND ALL RIGHTS TO REQUIRE
LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE REVOLVING LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO THE FOREGOING, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED. LENDER may do the foregoing even though some or all of the Liabilities
may be unmatured and regardless of the adequacy of any other Collateral securing
the Liabilities. LENDER shall be deemed to have exercised such right of set-off
and to have made a charge against any such sum immediately upon the occurrence
of such Event of Default, even though the actual book entries may be made at
some time subsequent thereto.
VIII-3
(2) Upon the expiration of LENDER's obligations under the
Letters of Credit, the BORROWERS will be entitled to a refund of those sums so
set-off, less the expenses of the LENDER otherwise provided for in this
Agreement, if such sums have not drawn against the Letters of Credit.
(i) LENDER may send notice of assignment and/or notice of LENDER's
security interest to any and all Account Debtors or any third party holding or
otherwise concerned with any of the Collateral, and thereafter, LENDER shall
have the sole right to collect the Accounts Receivable and/or take possession of
the Collateral. Any and all of LENDER's reasonable collection expenses,
including but not limited to stationery and postage, telephone and telegraph,
secretarial and clerical expenses and the salaries of any collection agencies or
attorneys utilized, shall be charged to the BORROWERS' account and added to the
Liabilities. By its execution of this Agreement, each BORROWER hereby authorizes
LENDER to effect payment of such expenses pursuant to the Authorization To
Charge.
(j) Without notice to or consent from any BORROWER, LENDER may xxx
upon or otherwise collect, extend the time of payment of, or compromise or
settle for cash, credit or otherwise, upon any terms, any of the Accounts
Receivable or any securities, instruments, insurance or Collateral applicable
thereto and/or release the Account Debtor thereon. LENDER is authorized and
empowered to accept the return of any Collateral represented by any of the
Accounts Receivable, without notice to or consent by any BORROWER all without
discharging or in any way affecting any BORROWER's liability hereunder. LENDER
does not, by anything herein or in any assignment or otherwise, assume any
obligations of any BORROWER under any Account, contract or agreement assigned to
LENDER, and LENDER shall not be responsible in any way for the performance by
any BORROWER of any of the terms and conditions thereof.
VIII-4
(k) LENDER may notify the Post Office authorities to change the
address for delivery of mail addressed to any BORROWER to such address as LENDER
may designate.
(l) LENDER may add to the Liabilities LENDER's reasonable expenses
to obtain or enforce payment of any Liabilities hereunder and the enforcement or
liquidation of any debt hereunder shall include reasonable attorneys' fees, plus
other legal expenses incurred by LENDER.
8.2 LENDER is hereby further granted a license or other right to use,
without charge, each BORROWER's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral, and each BORROWER's rights under all
licenses and franchise agreements are to inure to LENDER's benefit.
8.3 Each BORROWER shall remain jointly and severally liable for any
deficiency resulting from a sale, lease, foreclosure or other disposal of the
Collateral and shall pay any such deficiency forthwith on demand, together with
per annum interest at the Default Rate.
8.4 The rights of LENDER under this Article are in addition to all
other remedies, statutory and otherwise, which are available to it under law or
otherwise or under the terms of any of the other Loan Documents.
VIII-5
END OF ARTICLE VIII
VIII-6
ARTICLE IX
MISCELLANEOUS
9.1 COMMUNICATIONS AND NOTICES:
(a) Any communications between the parties hereto or notices
provided herein to be given may be given by mailing the same, certified mail,
return receipt requested, postage prepaid or by hand delivery or by an overnight
delivery service, to LENDER at Third Floor, 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxx
Xxxxxx 00000, Attn: "Current Account Officer for CD&L, Inc." and to each
BORROWER at its principal place of business as given for each BORROWER in this
Agreement (IT BEING UNDERSTOOD AND AGREED, HOWEVER, THAT NOTWITHSTANDING THE
FOREGOING, ANY NOTICE SENT TO CD&L SHALL BE DEEMED TO BE NOTICE SENT AND DULY
GIVEN TO ALL THE BORROWERS) or to such other addresses as the affected party may
in writing hereafter indicate by notice given in conformity with this Section.
(b) Notices sent by certified mail shall be deemed received when
accepted. Notices sent by hand delivery shall be deemed received when delivered
to the address and/or person designated in this Section. Notices sent by
overnight delivery service shall be deemed received upon delivery.
9.2 LENDER MAY PAY, SATISFY, DISCHARGE OR BOND CERTAIN OF BORROWERS'
OBLIGATIONS: In the event that any BORROWER shall default in the performance of
any of the provisions of this Agreement or in the event that any BORROWER shall
fail to pay any tax, assessment, government charge or levy, except as the same
are being contested in good faith by appropriate proceedings, or shall fail to
discharge any lien, encumbrance or security interest prohibited hereby, or shall
fail to comply with any other obligation of any BORROWER to LENDER, LENDER may
but shall not be required to, pay, satisfy, discharge or bond the same for the
account of each BORROWER and all moneys so paid out shall be an obligation of
all BORROWERS hereunder repayable on demand, together with per annum interest at
the Default Rate until paid.
IX-1
9.3 PLEDGE TO FEDERAL RESERVE: LENDER may at any time pledge all or any
portion of its rights under the Loan Documents including any portion of the
REVOLVING NOTE to any of the twelve (12) Federal Reserve Banks organized under
Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or
enforcement thereof shall release LENDER from its obligations under any of the
Loan Documents.
9.4 ASSIGNMENTS: LENDER shall have the unrestricted right, at LENDER's
expense, at any time or from time to time, on prior notice to the BORROWERS but
without the need for any BORROWER's consent, to assign all or any portion of its
rights and obligations hereunder to one or more banks or other financial
institutions (each, an "Assignee"), and each BORROWER agrees that it shall
execute, or cause to be executed, such documents, including without limitation,
amendments to this Agreement and to any other documents, instruments and
agreements executed in connection herewith as LENDER shall deem necessary to
effect the foregoing. In addition, at the request of LENDER and any such
Assignee, the applicable BORROWER shall issue one or more new promissory notes,
as applicable, to any such Assignee and, if LENDER has retained any of its
rights and obligations hereunder following such assignment, to LENDER, which new
promissory notes shall be issued in replacement of, but not in discharge of, the
liability evidenced by the promissory note held by LENDER prior to such
assignment and shall reflect the amount of the respective commitments and loans
held by such Assignee and LENDER after giving effect to such assignment. Upon
the execution and delivery of appropriate assignment documentation, amendments
and any other documentation required by LENDER in connection with such
assignment, and the payment by Assignee of the purchase price agreed to by
LENDER, and such Assignee, such Assignee shall be a party to this Agreement and
shall have all of the rights and obligations of LENDER hereunder (and under any
and all other guaranties, documents, instruments and agreements executed in
connection herewith) to the extent that such rights and obligations have been
assigned by LENDER pursuant to the assignment documentation between LENDER and
such Assignee, and LENDER shall be released from its obligations hereunder and
thereunder to a corresponding extent. Nothing in the foregoing shall increase
any financial obligation of any BORROWER hereunder.
IX-2
9.5 PARTICIPATIONS: LENDER shall have the unrestricted right at any
time and from time to time, and on prior notice to the BORROWERS but without the
need for the consent of any BORROWER, to grant to one or more banks or other
financial institutions (each, a "Participant") participating interests in
LENDER's obligation to lend hereunder and/or any or all of the loans held by
LENDER hereunder. In the event of any such grant by LENDER of a participating
interest to a Participant, whether or not upon notice to the BORROWERS, LENDER
shall remain responsible for the performance of its obligations hereunder and
the BORROWERS shall continue to deal solely and directly with LENDER in
connection with LENDER's rights and obligations hereunder. Nothing in the
foregoing shall increase any financial obligation of any BORROWER hereunder.
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9.6 LENDER MAY FURNISH INFORMATION: LENDER may on prior notice to the
BORROWERS but without the need for the consent of any BORROWER furnish any
information concerning any BORROWER in its possession from time to time to
prospective Assignees and Participants, provided that LENDER shall require any
such prospective Assignee or Participant to agree in writing to maintain the
confidentiality of such information to the same extent that LENDER is obligated
to maintain such confidentiality.
9.7 PAYMENTS IN LAWFUL MONEY OF THE UNITED STATES: All payments shall
be in lawful money of the United States in immediately available funds unless
otherwise provided in this Agreement.
9.8 ANTI-USURY PROVISION: The anti-usury provisions of Article II are
reiterated and incorporated herein by reference.
9.9 SUCCESSORS AND ASSIGNS: This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that no BORROWER shall assign this Agreement or any of its
rights, duties or obligations hereunder without the prior written consent of
LENDER.
9.10 LENDER'S RIGHTS NOT IMPAIRED BY DELAY IN EXERCISING RIGHTS: No
delay or omission to exercise any right, power or remedy accruing to LENDER upon
any breach or default (whether such breach or default is now or hereafter
occurring) of any BORROWER under this Agreement, the REVOLVING NOTE or any of
the other Loan Documents shall (a) impair any such right, power or remedy of
LENDER, (b) be construed to be a waiver of any such breach or default, or an
acquiescence therein, or (c) be construed to be a waiver of or an acquiescence
in any similar breach or default thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of LENDER of any breach
or default under this Agreement, the REVOLVING NOTE or any of the other Loan
Documents, or any waiver on the part of LENDER of any provision or condition of
this Agreement, the REVOLVING NOTE or any of the other Loan Documents must be in
writing and shall be effective only to the extent in such writing specifically
set forth. All remedies, either under this Agreement or note or other instrument
or agreement required hereunder, or by law or otherwise afforded to LENDER,
shall be cumulative and not alternative.
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9.11 LENDER'S COSTS AND EXPENSES:
(a) The BORROWERS will pay the fees and out-of-pocket expenses
incurred by LENDER in connection with (1) the preparation of this Agreement and
other related documents, whether or not the transactions hereby contemplated
shall be consummated, (2) the making of the REVOLVING LOAN hereunder and (3) the
determination and/or enforcement of the rights of LENDER in connection with such
documents or with the REVOLVING LOAN and the REVOLVING NOTE. Such out-of-pocket
expenses include but are not limited to, charges for the examination of title,
inspections and drawings of paper, recording and filing fees, and all reasonable
attorneys' fees, including the fees and disbursements of LENDER's counsel.
(b) Whenever LENDER determines that it is necessary for an attorney
to provide advice to LENDER regarding any of LENDER's rights and remedies
arising out of actions or inactions of any BORROWER under this Agreement or
whenever any attorney is used to collect any obligation or to determine,
preserve or enforce any right of LENDER against any BORROWER or against the
Collateral under this Agreement, the REVOLVING NOTE or any of the other Loan
Documents, whether by suit or other means, each BORROWER agrees to pay the
reasonable attorney's fees (based on the value of time expended and the
presentation of a detailed invoice therefor) and other costs and expenses
incurred by LENDER. Each BORROWER also agrees to pay LENDER's attorneys a
reasonable fee and costs and expenses for enforcing against third parties any
other rights of LENDER pertaining hereto including LENDER's defending against
any claim pertaining to the Collateral.
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(c) Unless paid by the BORROWERS within 30 days after request for
payment is made of the BORROWERS, all of the expenses set forth in subsections
(a) and (b) above, shall bear interest at the same rate as the rate of interest
payable on the REVOLVING LOAN unless some other Event of Default has occurred
and is continuing in which case interest shall be calculated at the Default
Rate, and all such amounts shall be added to any one or all of the Liabilities
at LENDER's sole discretion, and shall be secured by the Collateral.
(d) By its execution of this Agreement, each BORROWER authorizes
LENDER to reimburse itself for any of its expenses associated with the above
pursuant to the Authorization to Charge. The fact that only one BORROWER's loan
account may be charged on LENDER's books in no way alters or lessens the joint
and several liability of all BORROWERS under this Agreement.
9.12 NO WAIVER OF LENDER'S RIGHT OF SET-OFF: Nothing in this Agreement
shall be deemed any waiver or prohibition of LENDER's right of set-off.
9.13 GOVERNING LAW: This Agreement, the REVOLVING NOTE and each of the
other Loan Documents shall be governed by, and construed under, the laws of the
State of New Jersey.
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9.14 FORUM FOR LITIGATION: Each BORROWER agrees that, in addition to
any other available forum, any suit, action or proceeding against it arising
under or growing out of, or relating to this Agreement or any note or other
instrument or agreement required hereunder, or any other instrument executed by
any BORROWER for the benefit of LENDER may be instituted in any Federal court or
any State court in the States of New Jersey or in any other court having
jurisdiction, and each BORROWER hereby waives any objection which it might have
now or hereafter to the laying of the venue of any such suit, action or
proceeding, and irrevocably submits to the jurisdiction of any such court in any
suit, action or proceeding and waives any claim or defense of inconvenient
forum.
9.15 AGREEMENT MUST BE SIGNED BY LENDER: This Agreement shall not be
effective unless signed by an officer of LENDER.
9.16 ENTIRE UNDERSTANDING: This Agreement contains the entire
understanding of the parties and any promises or representations not herein
contained shall have no force and effect, unless in writing, duly signed by the
party to be charged.
9.17 MODIFICATIONS: Neither this Agreement nor any portion or provision
hereof may be changed, modified, amended, waived, supplemented, discharged,
canceled or terminated orally or by any course of dealing, or in any manner
other than by an agreement in writing, signed by the party to be charged.
9.18 CONTINUATION OF SECURITY INTERESTS: The security interests, liens,
and rights granted to LENDER hereunder shall continue in full force and effect
notwithstanding the fact that any BORROWER's account may, from time to time, be
temporarily in a credit position.
IX-7
9.19 SURVIVAL OF REPRESENTATIONS: All representations, warranties,
covenants, waivers and agreements contained herein shall survive execution
hereof, unless otherwise provided.
9.20 SEVERABILITY: If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
9.21 ACTIONS OF LENDER: Any requirement in this Agreement that LENDER
shall act reasonably or shall show materiality shall be interpreted as requiring
LENDER to act in good faith using its reasonable commercial judgment.
9.22 INCONSISTENCIES: In the event of any inconsistency between this
agreement and any other documents affording LENDER rights and remedies such
inconsistency shall be resolved by an interpretation which expands LENDER's
rights rather than limits LENDER's rights.
9.23 CONFIRMATORY SEARCHES: The BORROWERS understand that LENDER will
order confirmatory searches after the date of this Agreement in order to verify
that LENDER's UCC-1 financing statements have been filed and that LENDER has the
lien priorities against the Collateral as required by this Agreement. The
BORROWERS agree to pay all of LENDER's expenses, including reasonable attorneys'
fees, incurred in procuring and reviewing such searches. By its execution of
this Agreement, each BORROWER authorizes LENDER to reimburse itself for any of
its expenses associated with the above pursuant to the Authorization to Charge.
The fact that only one BORROWER's loan account may be charged on LENDER's books
in no way alters or lessens the joint and several liability of all BORROWERS
under this Agreement.
IX-8
9.24 LENDER NOT BORROWERS' AGENT: Nothing herein contained shall be
construed to constitute LENDER as any BORROWER's agent for any purpose
whatsoever and LENDER shall not be responsible or liable for (a) any acts of
omission or commission of any BORROWER, (b) any error of judgment of any
BORROWER, (c) any mistake of fact of any BORROWER, (d) any shortage,
discrepancy, impairment, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof
or (e) any error or omission or delay of any kind occurring in the settlement,
collection or payment of any of the Accounts Receivable or any instrument
received in payment thereof or for any damage resulting therefrom.
9.25 LOST LOAN DOCUMENTS: Upon receipt of an affidavit of an officer of
LENDER as to the loss, theft, destruction or mutilation of the REVOLVING NOTE or
any other security document which is not of public record, the BORROWERS will
issue, in lieu thereof, a replacement REVOLVING NOTE or other security document
in the same principal amount thereof and otherwise of like tenor. LENDER will
indemnify BORROWERS in the event that such replacement REVOLVING NOTE or any
other security document is issued and the REVOLVING NOTE or any other security
document being replaced was not in fact lost, stolen, destroyed or mutilated but
was instead transferred by LENDER to a third party making claim hereunder.
9.26 LENDER'S USE OF NOMINEE: LENDER may transfer any and all
Collateral into its name or that of its nominee and may receive the income and
any distributions thereon and hold the same as Collateral for the Liabilities,
or apply the same to any defaulted one of the Liabilities, whether or not a
default or an Event of Default has occurred.
IX-9
9.27 JOINT AND SEVERAL LIABILITY: ALL OBLIGATIONS OF EACH BORROWER
UNDER THIS AGREEMENT ARE JOINT AND SEVERAL WITH THE OBLIGATIONS OF THE OTHER
BORROWERS.
9.28 COUNTERPARTS: This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.29 WAIVER OF JURY TRIAL: THE BORROWERS AND LENDER MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT AND ANY OF THE LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS AGREEMENT.
END OF ARTICLE IX
IX-10