Exhibit 10.47
11.26.03-1
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DATED: AS OF NOVEMBER 26, 2003
$42,500,000
by and among
THE LENDERS NAMED HEREIN,
as Lenders
and
FLEET CAPITAL CORPORATION,
as Agent and a Lender,
XXXXXXX XXXXX CAPITAL,
a division of Xxxxxxx Xxxxx Business Financial Services, Inc.,
as Documentation Agent and a Lender
and
VELOCITY EXPRESS, INC.,
And
THE OTHER BORROWERS NAMED HEREIN,
as Borrowers
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Fleet Capital
A FleetBoston Financial Company
TABLE OF CONTENTS
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SECTION 1. CREDIT FACILITY.....................................................1
1.1 Revolving Credit Loans..................................................1
SECTION 2. INTEREST, FEES AND CHARGES..........................................4
2.1 Interest................................................................4
2.2 Computation of Interest and Fees........................................5
2.3 Fee Letter..............................................................5
2.4 Letter of Credit and LC Guaranty Fees...................................5
2.5 Unused Line Fee.........................................................5
2.6 Prepayment Fee..........................................................5
2.7 Audit Fees..............................................................6
2.8 Reimbursement of Expenses...............................................6
2.9 Bank Charges............................................................7
2.10 Collateral Protection Expenses; Appraisals.............................7
2.11 Payment of Charges.....................................................7
2.12 No Deductions..........................................................7
SECTION 3. LOAN ADMINISTRATION.................................................8
3.1 Manner of Borrowing Revolving Credit Loans/LIBOR Option.................8
3.2 Payments...............................................................11
3.3 Mandatory Prepayments..................................................12
3.4 Application of Payments and Collections................................12
3.5 All Loans to Constitute One Obligation.................................13
3.6 Loan Account...........................................................13
3.7 Statements of Account..................................................13
3.8 Increased Costs........................................................13
3.9 Basis for Determining Interest Rate Inadequate.........................15
3.10 Sharing of Payments, Etc..............................................15
SECTION 4. TERM AND TERMINATION...............................................16
4.1 Term of Agreement......................................................16
4.2 Termination............................................................16
SECTION 5. SECURITY INTERESTS.................................................16
5.1 Security Interest in Collateral........................................16
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TABLE OF CONTENTS
(continued)
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5.2 Other Collateral.......................................................18
5.3 Lien Perfection; Further Assurances....................................19
5.4 Lien on Realty.........................................................19
SECTION 6. COLLATERAL ADMINISTRATION..........................................20
6.1 General................................................................20
6.2 Administration of Accounts.............................................21
6.3 Administration of Equipment............................................22
6.4 Payment of Charges.....................................................23
SECTION 7. REPRESENTATIONS AND WARRANTIES.....................................23
7.1 General Representations and Warranties.................................23
7.2 Continuous Nature of Representations and Warranties....................29
7.3 Survival of Representations and Warranties.............................30
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS................................30
8.1 Affirmative Covenants..................................................30
8.2 Negative Covenants.....................................................33
8.3 Specific Financial Covenants...........................................38
SECTION 9. CONDITIONS PRECEDENT...............................................39
9.1 Documentation..........................................................39
9.2 No Default.............................................................39
9.3 Other Loan Documents...................................................39
9.4 Availability...........................................................39
9.5 No Litigation..........................................................39
9.6 Accounts Payable.......................................................39
9.7 Subordinated Notes.....................................................39
9.8 Material Adverse Effect................................................40
9.9 Cash Equity............................................................40
9.10 Syndication...........................................................40
9.11 Vendor Contracts......................................................40
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.................40
10.1 Events of Default.....................................................40
10.2 Acceleration of the Obligations.......................................43
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TABLE OF CONTENTS
(continued)
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10.3 Other Remedies........................................................43
10.4 Set Off and Sharing of Payments.......................................45
10.5 Remedies Cumulative; No Waiver........................................45
SECTION 11. THE AGENT.........................................................46
11.1 Authorization and Action..............................................46
11.2 Agent's Reliance, Etc.................................................46
11.3 FCC and Affiliates....................................................47
11.4 Lender Credit Decision................................................47
11.5 Indemnification.......................................................48
11.6 Rights and Remedies to be Exercised by Agent Only.....................48
11.7 Agency Provisions Relating to Collateral..............................48
11.8 Agent's Right to Purchase Commitments.................................49
11.9 Right of Sale, Assignment, Participations.............................49
11.10 Amendment............................................................51
11.11 Resignation of Agent; Appointment of Successor.......................51
11.12 Audit and Examination Reports; Disclaimer by Lenders.................52
11.13 Documentation Agent..................................................52
SECTION 12. MISCELLANEOUS.....................................................53
12.1 Power of Attorney.....................................................53
12.2 Indemnity.............................................................53
12.3 Sale of Interest......................................................54
12.4 Severability..........................................................54
12.5 Successors and Assigns................................................54
12.6 Cumulative Effect; Conflict of Terms..................................54
12.7 Execution in Counterparts.............................................54
12.8 Notice................................................................54
12.9 Intentionally Omitted.................................................55
12.10 Credit Inquiries.....................................................55
12.11 Time of Essence......................................................55
12.12 Entire Agreement.....................................................55
12.13 Interpretation.......................................................55
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TABLE OF CONTENTS
(continued)
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12.14 Confidentiality......................................................56
12.15 GOVERNING LAW; CONSENT TO FORUM......................................56
12.16 WAIVERS BY BORROWERS.................................................57
12.17 Advertisement........................................................58
12.18 Reimbursement........................................................58
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made as of this 26th day of November,
2003, by and among the borrower signatories hereto (individually a "Borrower"
and collectively, "Borrowers"); the lenders who are signatories hereto
("Lenders"); FLEET CAPITAL CORPORATION ("FCC"), a Rhode Island corporation with
an office at Xxx Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, as
agent for Lenders hereunder (FCC, in such capacity, being "Agent"); and XXXXXXX
XXXXX CAPITAL, a division of Xxxxxxx Xxxxx Business Financial Services, Inc.
("Xxxxxxx Xxxxx"), as documentation agent (Xxxxxxx Xxxxx in such capacity
"Documentation Agent") Capitalized terms used in this Agreement have the
meanings assigned to them in Appendix A, General Definitions. Accounting terms
not otherwise specifically defined herein shall be construed in accordance with
GAAP consistently applied.
WHEREAS, Borrowers, Agent and the Lender signatories thereto hereto entered
into that certain Loan and Security Agreement dated January 25, 2002 (the
"Original Loan Agreement"); and
WHEREAS, Borrowers, Agent and Lenders desire to amend and restate the
Original Loan Agreement as provided herein;
NOW, THEREFORE, in consideration of the following terms and conditions, the
parties agreed as follows:
SECTION 1. CREDIT FACILITY.
Borrowers are in mutually related lines of business and each Borrower
requires financing to operate its respective business. Each Borrower by seeking
such financing on a collective basis is able to obtain more favorable terms than
it would be able to obtain if it sought financing on a stand-alone basis.
Accordingly, Borrowers collectively request Agent and Lenders to make the loans
and advances provided for herein. Subject to the terms and conditions of, and in
reliance upon the representations and warranties made in, this Agreement and the
other Loan Documents, Lenders agree to make a Total Credit Facility of up to
Forty-Two Million Five Hundred Thousand Dollars ($42,500,000) available upon
Borrowers' request therefore, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Each Lender agrees, severally and not
jointly, for so long as no Default or Event of Default exists, to make Revolving
Credit Loans to Borrowers from time to time during the period from the date
hereof to but not including the last day of the Term, as requested by VEI, on
behalf of all Borrowers, in the manner set forth in subsection 3.1.1 hereof, up
to a maximum principal amount at any time outstanding equal to the lesser of (i)
such Lender's Revolving Loan Commitment minus the product of such Lender's
Revolving Loan Percentage and the LC Amount minus the product of such Lender's
Revolving Loan Percentage and Reserves established pursuant to the immediately
following sentence, if any and (ii) (x) the product of such Lender's Revolving
Loan Percentage and (y) an amount equal to the Borrowing Base at such time minus
the LC Amount minus Reserves established pursuant to the immediately following
sentence, if any. Agent shall have the right to (and with
respect to the items referred to in clauses (vi), (vii) and (viii) below shall
unless otherwise directed by all Lenders) establish reserves in such amounts,
and with respect to such matters, as Agent shall deem necessary or appropriate
in its reasonable credit judgment, against the amount of Revolving Credit Loans
which Borrowers may otherwise request under this subsection 1.1.1, including
without limitation, with respect to (i) price adjustments, damages, unearned
discounts, returned products or other matters for which credit memoranda are
issued in the ordinary course of Borrowers' business; (ii) potential dilution
related to Accounts; (iii) other sums chargeable against Borrowers' Loan Account
as Revolving Credit Loans under any section of this Agreement; (iv) amounts
owing by a Borrower to any Person to the extent secured by a Lien (other than a
Permitted Lien) on, or trust over, any Property of a Borrower; (v) amounts owing
by any Borrower in connection with Product Obligations; (vi) an availability
reserve ("Availability Reserve") of Three Million Dollars ($3,000,000); (vii) a
reserve in an amount equal to the total unpaid portion of all payments scheduled
to be made under Borrowers' trade creditor restructuring plan within the twelve
(12) months following the Closing Date (such amount is estimated to equal
$1,100,246 as of the Closing Date); (viii) a reserve in the amount of One
Million Two Hundred Thousand Dollars ($1,200,000) to insure payment of certain
accrued liabilities previously disclosed to Lenders; and (ix) such other
specific events, conditions or contingencies as to which Agent, in its
reasonable credit judgment, determines reserves should be established from time
to time hereunder (collectively, "Reserves"). The Reserves established pursuant
to clause (vi), (vii) and (viii) above shall not be reduced or eliminated except
with the consent of all Lenders, or with respect to the Reserves established
pursuant to clauses (vii) and (viii) above by payment or reduction of the
applicable expense or Indebtedness. Notwithstanding the foregoing, Agent shall
not establish any Reserves in respect of any matters relating to any items of
Collateral that have been excluded or deducted in determining Eligible Accounts
or Eligible Government Accounts, as applicable. The Revolving Credit Loans shall
be repayable in accordance with the terms of the Revolving Notes and shall be
secured by all of the Collateral.
1.1.2 Overadvances. Insofar as Borrowers may request and Agent,
Majority Lenders or all Lenders (as provided below) may be willing in their sole
and absolute discretion to make Revolving Credit Loans to Borrowers at a time
when the unpaid balance of Revolving Credit Loans plus the sum of the LC Amount
plus the amount of LC Obligations that have not been reimbursed by Borrowers or
funded with a Revolving Credit Loan, plus Reserves, exceeds, or would exceed
with the making of any such Revolving Credit Loan, the Borrowing Base (and such
Loan or Loans being herein referred to individually as an "Overadvance" and
collectively, as "Overadvances"), Agent shall enter such Overadvances as debits
in the Loan Account. All Overadvances shall be repaid on demand, shall be
secured by the Collateral and shall bear interest as provided in this Agreement
for Revolving Credit Loans generally. Any Overadvance made pursuant to the terms
hereof shall be made by all Lenders ratably in accordance with their respective
Revolving Loan Percentages. Overadvances in the aggregate amount of Five Hundred
Thousand Dollars ($500,000) or less may, unless a Default or Event of Default
has occurred and is continuing, be made in the sole and absolute discretion of
Agent. Overadvances in an aggregate amount of more than Five Hundred Thousand
Dollars ($500,000) but less than One Million Dollars ($1,000,000) may, unless a
Default or an Event of Default has occurred and is continuing, be made in the
sole and absolute discretion of the Majority Lenders. Overadvances in an
aggregate amount of One Million Dollars ($1,000,000) or more and Overadvances to
be made after the occurrence and during the continuation of a Default or an
Event of Default shall
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require the consent of all Lenders. The foregoing notwithstanding, in no event,
unless otherwise consented to by all Lenders, (w) shall any Overadvances be
outstanding for more than sixty (60) consecutive days, (x) after all outstanding
Overadvances have been repaid, shall Agent or Lenders make any additional
Overadvances unless sixty (60) days or more have expired since the last date on
which any Overadvances were outstanding, (y) shall Overadvances be outstanding
on more than ninety (90) days within any one hundred eighty day (180) period or
(z) shall Agent make Revolving Credit Loans on behalf of Lenders under this
subsection 1.1.2 to the extent such Revolving Credit Loans would cause a
Lender's share of the Revolving Credit Loans to exceed such Lender's Revolving
Loan Commitment minus such Lender's Revolving Loan Percentage of the LC Amount.
1.1.3 Use of Proceeds. The Revolving Credit Loans shall be used solely
for the satisfaction of existing Money Borrowed of Borrowers to Bayview Capital
Partners, L.P. and Borrowers' other existing senior secured creditors and for
Borrowers' general operating capital needs in a manner consistent with the
provisions of this Agreement and all applicable laws.
1.1.4 Agent Loans. Upon the occurrence and during the continuance of
an Event of Default, Agent, in its sole discretion, may make Revolving Credit
Loans on behalf of Lenders, in an aggregate amount not to exceed One Million
Dollars ($1,000,000), if Agent, in its reasonable business judgment, deems that
such Revolving Credit Loans are necessary or desirable (i) to protect all or any
portion of the Collateral, (ii) to enhance the likelihood, or maximize the
amount of, repayment of the Loans and the other Obligations, or (iii) to pay any
other amount chargeable to Borrowers pursuant to this Agreement, including
without limitation costs, fees and expenses as described in Sections 2.8 and 2.9
(hereinafter, "Agent Loans"); provided, that in no event shall (a) the maximum
principal amount of the Revolving Credit Loans exceed the aggregate Revolving
Loan Commitments and (b) Majority Lenders (or if there are only two Lenders, any
Lender, or if there are three or more Lenders, any two Lenders so long as any
one of said two Lenders has one third or more of the Revolving Loan Commitments
(or if the Revolving Loan Commitments have been terminated, one third of the
outstanding Revolving Credit Loans)) may at any time revoke Agent's
authorization to make Agent Loans. Any such revocation must be in writing and
shall become effective prospectively upon Agent's receipt thereof. Each Lender
shall be obligated to advance its Revolving Loan Percentage of each Agent Loan.
If Agent Loans are made pursuant to the preceding sentence, then (a) the
Borrowing Base shall be deemed increased by the amount of such permitted Agent
Loans, but only for so long as Agent allows such Agent Loans to be outstanding,
and (b) all Lenders that have committed to make Revolving Credit Loans shall be
bound to make, or permit to remain outstanding, such Agent Loans based upon
their Revolving Loan Percentages in accordance with the terms of this Agreement.
1.1.5 Letters of Credit; LC Guaranties. Agent agrees, for so long as
no Default or Event of Default exists and if requested by VEI, on behalf of all
Borrowers, to (i) issue its, or cause to be issued by Bank or another Affiliate
of Agent, on the date requested by VEI, on behalf of all Borrowers, Letters of
Credit for the account of Borrowers (or any one of them) or (ii) execute LC
Guaranties by which Agent, Bank, or another Affiliate of Agent, on the date
requested by VEI, on behalf of all Borrowers, shall guaranty the payment or
performance by Borrower of its reimbursement obligations with respect to Letters
of Credit; provided that the LC Amount shall not exceed Five Million Dollars
($5,000,000) at any time; and provided further
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that Agent shall not be required to issue any Letters of Credit or LC Guaranties
if, after giving effect to the issuance of any such Letter of Credit or LC
Guaranty any Lender's Revolving Credit Loans would exceed the limit established
pursuant to the first sentence of Section 1.1.1. No Letter of Credit or LC
Guaranty may have an expiration date after the last day of the Term.
Notwithstanding anything to the contrary contained herein, Borrower, Agent and
Lenders hereby agree that all LC Obligations and all obligations of Borrower
relating thereto shall be satisfied by the prompt issuance of one or more
Revolving Credit Loans that are Base Rate Advances, which Borrowers hereby
acknowledge are requested and Lenders hereby agree to fund. In the event that
Revolving Credit Loans are not, for any reason, promptly made to satisfy all
then existing LC Obligations, each Lender hereby agrees to pay to Agent, on
demand, an amount equal to such LC Obligations multiplied by such Lender's
Revolving Loan Percentage, and until so paid, such amount shall be secured by
the Collateral and shall bear interest and be payable at the same rate and in
the same manner as Base Rate Advances. Immediately upon the issuance of a Letter
of Credit or an LC Guaranty under this Agreement, each Lender shall be deemed to
have irrevocably and unconditionally purchased and received from Agent, without
recourse or warranty, an undivided interest and participation therein equal to
such LC Obligations multiplied by such Lender's Revolving Loan Percentage.
SECTION 2. INTEREST, FEES AND CHARGES.
2.1 Interest.
2.1.1 Rates of Interest. Interest shall accrue on the principal amount
of the Base Rate Advances outstanding at the end of each day at a fluctuating
rate per annum equal to the Applicable Margin plus the Base Rate. Interest shall
accrue on the principal amount of each of the LIBOR Advances outstanding at the
end of each day at a fixed rate per annum equal to the Applicable Margin plus
the LIBOR for the applicable Interest Period. The rate of interest applicable to
Base Rate Advances shall increase or decrease by an amount equal to any increase
or decrease in the Base Rate, effective as of the opening of business on the day
that any such change in the Base Rate occurs.
2.1.2 Default Rate of Interest. At the option of Majority Lenders,
upon and after the occurrence of an Event of Default, and during the
continuation thereof, the principal amount of all Loans shall bear interest at a
rate per annum equal to two percent (2%) above the interest rate otherwise
applicable thereto (the "Default Rate").
2.1.3 Maximum Interest. Notwithstanding anything to the contrary set
forth in this Section 2.1, if at any time until payment in full of all of the
Obligations, the interest rate calculated pursuant to subsections 2.1.1 and
2.1.2 (the "Stated Rate") exceeds the highest rate of interest permissible under
any law which a court of competent jurisdiction shall, in a final determination,
deem applicable hereto (the "Maximum Lawful Rate"), then in such event and so
long as the Maximum Lawful Rate would be so exceeded, the rate of interest
payable hereunder shall be equal to the Maximum Lawful Rate; provided, however,
that if at any time thereafter the Stated Rate is less than the Maximum Lawful
Rate, Borrowers shall continue to pay interest hereunder at the Maximum Lawful
Rate until such time as the total interest received by Lenders from the making
of advances hereunder is equal to the total interest which Lenders would have
received had the Stated Rate (but for the operation of this subsection 2.1.3)
been the interest rate
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payable since the Closing Date. Thereafter, the interest rate payable hereunder
shall be the Stated Rate unless and until the Stated Rate again exceeds the
Maximum Lawful Rate, in which event this subsection 2.1.3 shall again apply. In
no event shall the total interest received by Lenders pursuant to the terms
hereof exceed the amount which Lenders could lawfully have received had the
interest due hereunder been calculated for the full term hereof at the Maximum
Lawful Rate.
2.2 Computation of Interest and Fees. Interest, Letter of Credit and LC
Guaranty fees and Unused Line Fees and collection charges hereunder shall be
calculated daily and shall be computed on the actual number of days elapsed over
a year of 360 days.
2.3 Fee Letter. Borrowers shall pay Agent certain fees and other amounts in
accordance with the terms of the fee letter between Borrowers and Agent (the
"Fee Letter").
2.4 Letter of Credit and LC Guaranty Fees. Borrowers shall pay to Agent:
(i) for standby Letters of Credit and LC Guaranties of standby Letters
of Credit, for the ratable benefit of Lenders a per annum fee equal to the
Applicable Margin then in effect for LIBOR Advances of the aggregate face amount
of such Letters of Credit and LC Guaranties outstanding from time to time during
the term of this Agreement, plus all normal and customary charges associated
with the issuance thereof, which fees and charges shall be deemed fully earned
upon issuance of each such Letter of Credit or LC Guaranty, shall be due and
payable monthly in arrears on the first Business Day of each month and shall not
be subject to rebate or proration upon the termination of this Agreement for any
reason; and
(ii) with respect to all Letters of Credit and LC Guaranties, for the
account of Agent only, a per annum fronting fee equal to one-quarter of one
percent (1/4%) of the aggregate face amount of such Letters of Credit and LC
Guaranties outstanding from time to time during the term of this Agreement,
which fronting fees shall be payable monthly in arrears on the first Business
Day of each month and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason.
2.5 Unused Line Fee. Borrowers shall pay to Agent, for the ratable benefit
of Lenders, a fee (the "Unused Line Fee") equal to three hundred seventy-five
thousandths of one percent (.375%) per annum multiplied by the average daily
amount by which the Maximum Revolving Loan Amount exceeds the sum of (i) the
outstanding principal balance of the Revolving Credit Loans plus (ii) the LC
Amount. The Unused Line Fee shall be payable monthly in arrears on the first day
of each month hereafter.
2.6 Prepayment Fee. At the effective date of termination of this Agreement
for any reason, Borrowers shall pay to Agent, for the ratable benefit of Lenders
(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 and any amounts owing pursuant to subsection 3.2.5), as liquidated
damages for the loss of the bargain and not as a penalty, an amount equal to one
percent (1%) of the Total Credit Facility if termination occurs during the first
twelve-month period of the Term (Closing Date through November 25, 2004); and
one-half of one percent (1/2%) of the Total Credit Facility if termination
occurs during the second
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12-month period of the Term (November 26, 2004 through November 25, 2005). If
termination occurs on or after November 26, 2005, no termination charge shall be
payable. Further, if this Agreement is terminated in connection with the sale of
all or substantially all of the assets or Securities of Parent or Borrowers
(either directly or indirectly through a cash-out merger), then no termination
charges shall be payable.
2.7 Audit Fees. Borrowers shall pay to Agent audit fees (whether such
audits are conducted by employees of Agent or by third parties hired by Agent)
in connection with audits of the books and records and Properties of Borrowers
and their Subsidiaries and such other matters as Agent shall deem appropriate in
its reasonable credit judgment, plus all reasonable out-of-pocket expenses
incurred by Agent in connection with such audits; provided, that so long as no
Event of Default has occurred and is continuing, Borrowers shall not be liable
for such audit fees incurred in connection with more than four (4) such audits
during any fiscal year. Such audit fees and out-of-pocket expenses shall be
payable on the first day of the month following the date of issuance by Agent of
a request for payment thereof to Borrowers. Agent may, in its discretion,
provide for the payment of such amounts by making appropriate Revolving Credit
Loans to Borrowers and charging Borrowers' Loan Account therefor. In the event
such audits are conducted by employees of Agent, such fees shall be charged in
accordance with Agent's current schedule of fees in effect from time to time (as
of the Closing Date, $850 per annum).
2.8 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, (i) Agent or any Lender incurs
legal or accounting expenses or any other costs or out-of-pocket expenses in
connection with (1) the negotiation and preparation of this Agreement or any of
the other Loan Documents, any amendment of or modification of this Agreement or
any of the other Loan Documents, or any syndication or attempted syndication of
the Obligations (including, without limitation, printing and distribution of
materials to prospective Lenders and all costs associated with bank meetings,
but excluding any closing fees paid to Lenders in connection therewith) or (2)
the administration of this Agreement or any of the other Loan Documents and the
transactions contemplated hereby and thereby; or (ii) Agent or any Lender incurs
legal or accounting expenses or any other costs or out-of-pocket expenses in
connection with (1) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, any Borrower or any other Person)
relating to the Collateral, this Agreement or any of the other Loan Documents or
Borrowers', any of its Subsidiaries' or Parent's affairs; (2) any attempt to
enforce any rights of Agent or any Lender against any Borrower or any other
Person which may be obligated to Agent or any Lender by virtue of this Agreement
or any of the other Loan Documents, including, without limitation, the Account
Debtors; or (3) any attempt to inspect, verify, protect, preserve, restore,
collect, sell, liquidate or otherwise dispose of or realize upon the Collateral;
then all such legal and accounting expenses, other costs and out of pocket
expenses of Agent or any Lender, as applicable, shall be charged to Borrowers;
provided, that Borrowers shall not be responsible for such costs and
out-of-pocket expenses to the extent incurred because of the gross negligence or
willful misconduct of Agent or any Lender. All amounts chargeable to Borrowers
under this Section 2.8 shall be Obligations secured by all of the Collateral,
shall be payable on demand to Agent or such Lender, as the case may be, and
shall bear interest from the date such demand is made until paid in full at the
rate applicable to Base Rate Advances from time to time. Borrowers shall also
reimburse Agent for expenses incurred by Agent in its administration of the
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Collateral to the extent and in the manner provided in Sections 2.9 and 2.10
hereof. The foregoing notwithstanding, the amount of the reimbursement Borrowers
are required to pay to Xxxxxxx Xxxxx Capital, a division of Xxxxxxx Xxxxx
Business Financial Services, Inc. for its legal expenses incurred in connection
with the preparation and negotiation of this Agreement, shall not exceed
$15,000.
2.9 Bank Charges. Borrowers shall pay to Agent, on demand, any and all
fees, costs or expenses which Agent or any Lender pays to a bank or other
similar institution arising out of or in connection with (i) the forwarding to
any Borrower or any other Person on behalf of any Borrower, by Agent or any
Lender, of proceeds of Loans made to any Borrower pursuant to this Agreement and
(ii) the depositing for collection by Agent or any Lender of any check or item
of payment received or delivered to Agent or any Lender on account of the
Obligations.
2.10 Collateral Protection Expenses; Appraisals. All out-of-pocket expenses
incurred in protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral, and any and all excise, property, sales, and use
taxes imposed by any state, federal, or local authority on any of the Collateral
or in respect of the sale thereof shall be borne and paid by Borrowers. If
Borrowers fail to promptly pay any portion thereof when due, Agent may, at its
option, but shall not be required to, pay the same and charge Borrower therefor.
Additionally, from time to time, if Agent or any Lender determines that
obtaining appraisals is necessary in order for it to comply with applicable laws
or regulations, and at any time if a Default or an Event of Default shall have
occurred and be continuing, Agent may, and shall if any Lender is required by
applicable law or regulation to obtain any appraisal, at Borrowers' expense,
obtain appraisals from appraisers (who may be personnel of Agent), stating the
then current fair market value of all or any portion of the real or personal
Property of any Borrower or any of its Subsidiaries.
2.11 Payment of Charges. All amounts chargeable to Borrowers under this
Agreement shall be Obligations secured by all of the Collateral, shall be,
unless specifically otherwise provided, payable on demand and shall bear
interest from the date demand was made or such amount is due, as applicable,
until paid in full at the rate applicable to Base Rate Advances from time to
time.
2.12 No Deductions. Any and all payments or reimbursements made hereunder
shall be made free and clear of and without deduction for any and all taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto; excluding, however, the following: taxes imposed on the income
of Agent or any Lender or franchise taxes by the jurisdiction under the laws of
which Agent or any Lender is organized or doing business or any political
subdivision thereof and taxes imposed on its income by the jurisdiction of
Agent's or such Lender's applicable lending office or any political subdivision
thereof or franchise taxes (all such taxes, levies, imposts, deductions, charges
or withholdings and all liabilities with respect thereto excluding such taxes
imposed on net income or as a franchise tax, herein "Tax Liabilities"). If any
Borrower shall be required by law to deduct any such Tax Liabilities from or in
respect of any sum payable hereunder to Agent or any Lender, then the sum
payable hereunder shall be increased as may be necessary so that, after all
required deductions are made, Agent or such Lender receives an amount equal to
the sum it would have received had no such deductions been made.
7
SECTION 3. LOAN ADMINISTRATION.
3.1 Manner of Borrowing Revolving Credit Loans/LIBOR Option. Borrowings
under the credit facility established pursuant to Section 1 hereof shall be as
follows:
3.1.1 Loan Requests; Revolving Credit Loans. A request for a Revolving
Credit Loan shall be made, or shall be deemed to be made, in the following
manner: (a) VEI, on behalf of all Borrowers, may give Agent notice ("Notice of
Revolving Credit Loan") of its intention to borrow, in which notice VEI, on
behalf of all Borrowers, shall specify the amount of the proposed borrowing of a
Revolving Credit Loan and the proposed borrowing date, which shall be a Business
Day, no later than 11:00 a.m. (Chicago, Illinois time) on the proposed borrowing
date (or in accordance with subsection 3.1.7, 3.1.8 or 3.1.9, as applicable, in
the case of a request for a LIBOR Advance), provided, however, that no such
request may be made at a time when there exists a Default or an Event of
Default; and (b) the becoming due of any amount required to be paid under this
Agreement, or the Notes, whether as interest or for any other Obligation, shall
be deemed irrevocably to be a request for a Revolving Credit Loan on the due
date in the amount required to pay such interest or other Obligation.
3.1.2 Disbursement. Each Borrower hereby irrevocably authorizes Agent
to disburse the proceeds of each Loan requested, or deemed to be requested,
pursuant to subsection 3.1.1 as follows: (i) the proceeds of each Revolving
Credit Loan requested under subsection 3.1.1(a) shall be disbursed by Agent in
lawful money of the United States of America in immediately available funds, in
the case of the initial borrowing, in accordance with the terms of the written
disbursement letter from Borrowers, and in the case of each subsequent
borrowing, by wire transfer to such bank account as may be agreed upon by
Borrowers and Agent from time to time or elsewhere if pursuant to a written
direction from VEI, on behalf of all Borrowers; and (ii) the proceeds of each
Revolving Credit Loan deemed requested under subsection 3.1.1(b) shall be
disbursed by Agent by way of direct payment of the relevant interest or other
Obligation. If at any time any Loan is funded by Agent or Lenders in excess of
the amount requested or deemed requested by Borrowers, Borrowers agree to repay
the excess to Agent immediately upon the earlier to occur of (a) any Borrower's
discovery of the error and (b) notice thereof to Borrowers from Agent or any
Lender.
3.1.3 Payment by Lenders. Agent shall give to each Lender prompt
written notice by facsimile, telex or cable of the receipt by Agent from VEI, on
behalf of all Borrowers, of any request for a Revolving Credit Loan, no later
than 12:00 noon (Chicago, Illinois time) on the proposed borrowing date (or in
accordance with subsection 3.1.7, 3.1.8 or 3.1.9, as applicable, in the case of
a request for a LIBOR Advance). Each such notice shall specify the requested
date and amount of such Revolving Credit Loan, whether such Revolving Credit
Loan shall be a LIBOR Advance or a Base Rate Advance, and the amount of each
Lender's advance thereunder (in accordance with its applicable Revolving Loan
Percentage). Each Lender shall, not later than 1:00 p.m. (Chicago time) on such
requested date, wire to a bank designated by Agent the amount of that Lender's
Revolving Loan Percentage of the requested Revolving Credit Loan. The failure of
any Lender to make the Revolving Credit Loans to be made by it shall not release
any other Lender of its obligations hereunder to make its Revolving Credit Loan.
Neither Agent nor any other Lender shall be responsible for the failure of any
other Lender to make the Revolving Credit Loan to be made by such other Lender.
The foregoing notwithstanding, Agent,
8
in its sole discretion, may from its own funds make a Revolving Credit Loan on
behalf of any Lender. In such event, the Lender on behalf of whom Agent made the
Revolving Credit Loan shall reimburse Agent for the amount of such Revolving
Credit Loan made on its behalf, on a weekly (or more frequent, as determined by
Agent in its sole discretion) basis. On each such settlement date, Agent will
pay to each Lender the net amount owing to such Lender in connection with such
settlement, including without limitation amounts relating to Loans, fees,
interest and other amounts payable hereunder. The entire amount of interest
attributable to such Revolving Credit Loan for the period from the date on which
such Revolving Credit Loan was made by Agent on such Lender's behalf until Agent
is reimbursed by such Lender, shall be paid to Agent for its own account.
3.1.4 Authorization. Borrowers hereby irrevocably authorize Agent, in
Agent's sole discretion, to advance to Borrowers, and to charge to Borrowers'
Loan Account hereunder as a Revolving Credit Loan (which shall be a Base Rate
Advance), a sum sufficient to pay all interest accrued on the Obligations during
the immediately preceding month and to pay all fees, costs and expenses and
other Obligations at any time owed by Borrowers to Agent or any Lender
hereunder.
3.1.5 Letter of Credit and LC Guaranty Requests. A request for a
Letter of Credit or LC Guaranty shall be made in the following manner: VEI, on
behalf of all Borrowers, may give Agent and Bank (at such addresses and in such
manner as Bank advises VEI from time to time) a written notice of its request
for the issuance of a Letter of Credit or LC Guaranty, not later than 11:00 a.m.
(Chicago, Illinois time), one Business Day before the proposed issuance date
thereof, in which notice VEI, on behalf of all Borrowers, shall specify the
proposed issuer, issuance date and format and wording for the Letter of Credit
or LC Guaranty being requested (which shall be satisfactory to Agent and the
Person being asked to issue such Letter of Credit or LC Guaranty); provided,
that no such request may be made at a time when there exists a Default or Event
of Default. Such request shall be accompanied by an executed application and
reimbursement agreement in form and substance satisfactory to Agent and the
Person being asked to issue the Letter of Credit or LC Guaranty, as well as any
required resolutions.
3.1.6 Method of Making Requests. As an accommodation to Borrowers,
unless a Default or an Event of Default is then in existence, (i) Agent shall
permit telephonic or electronic requests for Revolving Credit Loans to Agent,
(ii) Agent and Bank may, in their discretion, permit electronic transmittal of
requests for Letters of Credit and LC Guaranties to them, and (iii) Agent may,
in Agent's discretion, permit electronic transmittal of instructions,
authorizations, agreements or reports to Agent. Unless VEI, on behalf of all
Borrowers, specifically directs Agent or Bank in writing not to accept or act
upon telephonic or electronic communications from Borrowers, neither Agent nor
Bank shall have any liability to Borrowers for any loss or damage suffered by
any Borrower as a result of Agent's or Bank's honoring of any requests,
execution of any instructions, authorizations or agreements or reliance on any
reports communicated to it telephonically or electronically and purporting to
have been sent to Agent or Bank by any Borrower, and neither Agent nor Bank
shall have any duty to verify the origin of any such communication or the
authority of the Person sending it. Each telephonic request for a Revolving
Credit Loan, Letter of Credit or LC Guaranty accepted by Agent and Bank, if
applicable, hereunder shall be promptly followed by a written confirmation of
such request from VEI, on behalf of all Borrowers to Agent and Bank, if
applicable.
9
3.1.7 LIBOR Advances. Provided that as of both the date of the LIBOR
Request and the first day of the Interest Period, no Default or Event of Default
exists, in the event Borrowers desire to obtain a LIBOR Advance, VEI, on behalf
of all Borrowers, shall give Agent a LIBOR Request no later than 11:00 a.m.
(Chicago, Illinois time) on the third Business Day prior to the requested
borrowing date. Each LIBOR Request shall be irrevocable and binding on
Borrowers. In no event shall Borrowers be permitted to have outstanding at any
one time LIBOR Advances with more than five (5) different Interest Periods.
3.1.8 Conversion of Base Rate Portions. Provided that as of both the
date of the LIBOR Request and the first day of the Interest Period, no Default
or Event of Default exists, Borrowers may, on any Business Day, convert any Base
Rate Advance into a LIBOR Advance. If Borrowers desire to convert a Base Rate
Advance, VEI, on behalf of all Borrowers, shall give Agent a LIBOR Request no
later then 11:00 a.m. (Chicago, Illinois time) on the third Business Day prior
to the requested conversion date. After giving effect to any conversion of Base
Rate Advances to LIBOR Advances, Borrowers shall not be permitted to have
outstanding at any one time LIBOR Advances with more than five (5) different
Interest Periods.
3.1.9 Continuation of LIBOR Portions. Provided that as of both the
date of the LIBOR Request and the first day of the Interest Period, no Default
or Event of Default exists, VEI, on behalf of all Borrowers, may, on any
Business Day, continue any LIBOR Advance into a subsequent Interest Period of
the same or a different permitted duration. If Borrowers desire to continue a
LIBOR Advance, VEI, on behalf of all Borrowers, shall give Agent a LIBOR Request
no later than 11:00 a.m. (Chicago, Illinois time) on the second Business Day
prior to the requested continuation date. After giving effect to any
continuation of LIBOR Advances, Borrowers shall not be permitted to have
outstanding at any one time LIBOR Advances with more than five (5) different
Interest Periods. If VEI, on behalf of all Borrowers, shall fail to give timely
notice of its election to continue any LIBOR Advance or portion thereof as
provided above, or if such continuation shall not be permitted, such LIBOR
Advance or portion thereof, unless such LIBOR Advance shall be repaid, shall
automatically be converted into a Base Rate Advance at the end of the Interest
Period then in effect with respect to such LIBOR Advance.
3.1.10 Inability to Make LIBOR Advances. Notwithstanding any other
provision hereof, if any applicable law, treaty, regulation or directive, or any
change therein or in the interpretation or application thereof, shall make it
unlawful for any Lender (for purposes of this subsection 3.1.10, the term
"Lender" shall include the office or branch where such Lender or any corporation
or bank then controlling such Lender makes or maintains any LIBOR Advances
hereunder) to make or maintain its LIBOR Advances, or if with respect to any
Interest Period, Agent is unable to determine the LIBOR relating thereto, or
adverse or unusual conditions in, or changes in applicable law relating to, the
London interbank market make it, in the reasonable judgment of Agent,
impracticable to fund therein any of the LIBOR Advances, or make the projected
LIBOR unreflective of the actual costs of funds therefor to any Lender, the
obligation of Agent and Lenders to make or continue LIBOR Advances or convert
Base Rate Advances to LIBOR Advances hereunder shall forthwith be suspended
during the pendency of such circumstances and Borrowers shall, if any affected
LIBOR Advances are then outstanding, promptly upon request from Agent, convert
such affected LIBOR Advances into Base Rate Advances.
10
3.2 Payments. Except where evidenced by notes or other instruments issued
or made by Borrowers to any Lender and accepted by such Lender specifically
containing payment instructions that are in conflict with this Section 3.2 (in
which case the conflicting provisions of said notes or other instruments shall
govern and control), the Obligations shall be payable as follows:
3.2.1 Principal; Revolving Credit Loans. Principal on account of
Revolving Credit Loans shall be payable by Borrowers to Agent for the ratable
benefit of Lenders immediately upon the earliest of (i) the receipt by Agent or
any Borrower of any proceeds of any of the Collateral (except as otherwise
provided herein), including without limitation pursuant to subsections 3.3.1 and
6.2.4, to the extent of said proceeds, subject to Borrowers' rights to reborrow
such amounts in compliance with subsection 1.1.1 hereof; (ii) the occurrence of
an Event of Default in consequence of which Majority Lenders elect to accelerate
the maturity and payment of the Obligations, or (iii) termination of this
Agreement pursuant to Section 4 hereof; provided, however, that, if an
Overadvance shall exist at any time, Borrowers shall, on demand, repay the
Overadvance. Each payment (including principal prepayment) by Borrowers on
account of principal of the Revolving Credit Loans shall be applied first to
Base Rate Advances and then to LIBOR Advances.
3.2.2 Interest.
(i) Base Rate Advances. Interest accrued on Base Rate Advances
shall be due and payable on the earliest of (1) the first calendar day of
each month (for the immediately preceding month), computed through the last
calendar day of the preceding month, (2) the occurrence of an Event of
Default in consequence of which Majority Lenders elect to accelerate the
maturity and payment of the Obligations or (3) termination of this
Agreement pursuant to Section 4 hereof.
(ii) LIBOR Advances. Interest accrued on each LIBOR Advances
shall be due and payable on each LIBOR Interest Payment Date and on the
earlier of (1) the occurrence of an Event of Default in consequence of
which Majority Lenders elect to accelerate the maturity and payment of the
Obligations or (2) termination of this Agreement pursuant to Section 4
hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrowers to Agent as and when
provided in Section 2 or Section 3 hereof, as applicable to Agent or Lender, as
applicable, or to any other Person designated by Agent or such Lender in
writing.
3.2.4 Other Obligations. The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrowers to Agent for ratable
distribution to Lenders, as appropriate, as applicable, as and when provided in
this Agreement, the Other Agreements or the Security Documents, or on demand,
whichever is later.
3.2.5 Prepayment of LIBOR Advances. Borrowers may prepay a LIBOR
Advance only upon three (3) Business Days' prior written notice to Agent (which
notice shall be irrevocable). In the event of (i) the payment of any principal
of any LIBOR Advances other than
11
on the last day of the Interest Period applicable thereto (including as a result
of an Event of Default), (ii) the conversion of any LIBOR Advances other than on
the last day of the Interest Period applicable thereto, or (iii) the failure to
borrow, convert, continue or prepay any LIBOR Advances on the date specified in
any notice delivered pursuant hereto, then, in any such event, Borrowers shall
compensate Lenders for the loss, cost and expense attributable to such event, as
determined by Agent in a manner consistent with its customs and practices.
3.3 Mandatory Prepayments.
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. Except as provided in subsections 6.3.2 and 8.2.9 hereof, if any
Borrower or any Subsidiary of any Borrower sells any of the Equipment or real
Property, or if any of the Collateral is lost or destroyed or taken by
condemnation, Borrowers shall, unless otherwise agreed to by Majority Lenders,
pay to Agent for the pro rata benefit of Lenders, as and when received by the
applicable Borrower or Subsidiary and as a mandatory prepayment of the Revolving
Credit Loans, a sum equal to the proceeds (including insurance payments but net
of costs and taxes incurred in connection with such sale or event) received by
such Borrower or such Subsidiary from such sale, loss, destruction or
condemnation.
3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity.
Except as limited below, if Parent or any Borrower issues any additional
Indebtedness or obtains any additional equity in a manner permitted under this
Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders, when
and as received by the applicable Borrower and as a mandatory prepayment of the
Revolving Credit Loans, a sum equal to one hundred percent (100%) of the net
proceeds to such Borrower or Parent of the issuance of such Indebtedness or
equity.
3.3.3 LIBOR Advances. If the application of any payment made in
accordance with the provisions of this Section 3.3 at a time when no Event of
Default has occurred and is continuing would result in termination of a LIBOR
Advance prior to the last day of the Interest Period for such LIBOR Advance, the
amount of such prepayment shall not be applied to such LIBOR Advance, but will,
at Borrowers' option, be held by Agent in a non-interest bearing account at a
Lender or another bank satisfactory to Agent in its discretion, which account is
in the name of Agent and from which account only Agent can make any withdrawal,
in each case to be applied as such amount would otherwise have been applied
under this Section 3.3 at the earlier to occur of (i) the last day of the
relevant Interest Period or (ii) the occurrence of a continuing Default or a
continuing Event of Default.
3.4 Application of Payments and Collections.
3.4.1 Collections. All items of payment received by Agent by 12:00
noon, Chicago, Illinois, time, on any Business Day shall be deemed received on
that Business Day. All items of payment received after 12:00 noon, Chicago,
Illinois, time, on any Business Day shall be deemed received on the following
Business Day. If as the result of collections of Accounts as authorized by
subsection 6.2.4 hereof or otherwise, a credit balance exists in the Loan
Account, such credit balance shall not accrue interest in favor of Borrowers,
but shall be disbursed to Borrowers or otherwise at VEI's, on behalf of all
Borrowers, direction in the manner set forth in
12
subsection 3.1.1, upon VEI's, on behalf of all Borrowers, request at any time,
so long as no Default or Event of Default then exists. Agent may at its option,
offset such credit balance against any of the Obligations upon and during the
continuance of an Event of Default.
3.4.2 Apportionment, Application and Reversal of Payments. Principal
and interest payments shall be apportioned ratably among Lenders (according to
the unpaid principal balance of the Loans to which such payments relate held by
each Lender). All payments shall be remitted to Agent and all such payments not
relating to principal or interest of specific Loans, or not constituting payment
of specific fees, and all proceeds of Accounts, or, except as provided in
subsection 3.3.1, other Collateral received by Agent, shall be applied, ratably,
subject to the provisions of this Agreement, first, to pay any fees,
indemnities, or expense reimbursements (other than amounts related to Product
Obligations) then due to Agent or Lenders from Borrowers; second, to pay
interest due from Borrowers in respect of all Loans, including, Agent Loans;
third, to pay or prepay principal of Agent Loans; fourth, to pay or prepay
principal of the Revolving Credit Loans (other than Agent Loans) and unpaid
reimbursement obligations in respect of Letters of Credit; fifth, to pay an
amount to Agent equal to all outstanding Letter of Credit Obligations to be held
as cash Collateral for such Obligations; sixth, to the payment of any other
Obligation (other than amounts related to Product Obligations) due to Agent or
any Lender by Borrower; and seventh, to pay any fees, indemnities or expense
reimbursements related to Product Obligations.
3.5 All Loans to Constitute One Obligation. The Loans and LC Obligations
shall constitute one general Obligation of Borrowers, and shall be secured by
Agent's Lien upon all of the Collateral.
3.6 Loan Account. Agent shall enter all Loans as debits to a loan account
(the "Loan Account") and shall also record in the Loan Account all payments made
by Borrowers on any Obligations and all proceeds of Collateral which are finally
paid to Agent, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrower.
3.7 Statements of Account. Agent will account to Borrowers monthly with a
statement of Loans, charges and payments made pursuant to this Agreement during
the immediately preceding month, and such account rendered by Agent shall be
deemed final, binding and conclusive upon Borrowers absent demonstrable error
unless Agent is notified by VEI, on behalf of all Borrowers, in writing to the
contrary within sixty (60) days of the date each accounting is received by
Borrowers. Such notice shall only be deemed an objection to those items
specifically objected to therein.
3.8 Increased Costs. If any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) adopted or implemented after the date of this Agreement and having
general applicability to all banks or finance companies within the jurisdiction
in which any Lender operates (excluding, for the avoidance of doubt, the effect
of and phasing in of capital requirements or other regulations or guidelines
passed prior to the date of this Agreement), or any interpretation or
application thereof by any governmental authority charged with the
interpretation or application thereof, or the compliance of such Lender
therewith, shall:
13
(i) (1) subject such Lender to any tax with respect to this Agreement
(other than (a) any tax based on or measured by net income or otherwise in the
nature of a net income tax, including, without limitation, any franchise tax or
any similar tax based on capital, net worth or comparable basis for measurement
and (b) any tax collected by a withholding on payments and which neither is
computed by reference to the net income of the payee nor is in the nature of an
advance collection of a tax based on or measured by the net income of the payee)
or (2) change the basis of taxation of payments to such Lender of principal,
fees, interest or any other amount payable hereunder or under any Loan Documents
(other than in respect of (a) any tax based on or measured by net income or
otherwise in the nature of a net income tax, including, without limitation, any
franchise tax or any similar tax based on capital, net worth or comparable basis
for measurement and (b) any tax collected by a withholding on payments and which
neither is computed by reference to the net income of the payee nor is in the
nature of an advance collection of a tax based on or measured by the net income
of the payee);
(ii) impose, modify or hold applicable any reserve (except any reserve
taken into account in the determination of the applicable LIBOR), special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of such Lender, including (without limitation) pursuant to Regulation D
of the Board of Governors of the Federal Reserve System; or
(iii) impose on such Lender or the London interbank market any other
condition with respect to any Loan Document;
and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing or maintaining Loans hereunder or the result of any of the
foregoing is to reduce the rate of return on such Lender's capital as a
consequence of its obligations hereunder, or the result of any of the foregoing
is to reduce the amount of any payment (whether of principal, interest or
otherwise) in respect of any of the Loans, then, in any such case, Borrowers
shall pay such Lender, upon demand and certification not later than sixty (60)
days following its receipt of notice of the imposition of such increased costs,
such additional amount as will compensate such Lender for such additional cost
or such reduction, as the case may be, to the extent such Lender has not
otherwise been compensated, with respect to a particular Loan, for such
increased cost as a result of an increase in the Base Rate or the LIBOR. An
officer of the applicable Lender shall determine the amount of such additional
cost or reduced amount using reasonable averaging and attribution methods and
shall certify the amount of such additional cost or reduced amount to Borrowers,
which certification shall include a written explanation of such additional cost
or reduction to Borrower. Such certification shall be conclusive absent manifest
error. If a Lender claims any additional cost or reduced amount pursuant to this
Section 3.8, then such Lender shall use reasonable efforts (consistent with
legal and regulatory restrictions) to designate a different lending office or to
file any certificate or document reasonably requested by Borrower if the making
of such designation or filing would avoid the need for, or reduce the amount of,
any such additional cost or reduced amount and would not, in the sole discretion
of such Lender, be otherwise disadvantageous to such Lender. In the event that
the provisions of this Section 3.8 or subsection 3.1.10 result in the effective
interest rates being charged to Borrowers being increased, on a per annum basis,
by more than one quarter percent (1/4%), Borrowers may require any such affected
Lender to sell and transfer all its interest in this Agreement, its Revolving
Credit Note and its Revolving Credit Loan Commitments to a substitute Lender
(who
14
shall be reasonably acceptable to Agent) for a price in cash equal to principal
balance of such affected Lender's outstanding Loans plus all accrued but unpaid
interest thereon plus all accrued but unpaid fees due any such affected Lender
plus any other sum due such Lender under the Loan Documents under the terms
hereof. Any such sale and transfer shall be made pursuant to the terms of
Section 11.9 hereof.
3.9 Basis for Determining Interest Rate Inadequate. In the event that Agent
or any Lender shall have determined that:
(i) reasonable means do not exist for ascertaining the LIBOR for any
Interest Period; or
(ii) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank market with respect to a
proposed or proposed continued LIBOR Advance, or a proposed conversion of a Base
Rate Advance into a LIBOR Advance; then
Agent or such Lender shall give Borrowers prompt written, telephonic or
electronic notice of the determination of such effect. If such notice is given,
(i) any such requested LIBOR Advance shall be made as a Base Rate Advance,
unless Borrower shall notify Agent no later than 10:00 a.m. (Chicago, Illinois
time) three (3) Business Days prior to the date of such proposed borrowing that
the request for such borrowing shall be canceled or made as an unaffected type
of LIBOR Advance, and (ii) any Base Rate Advance which was to have been
converted to an affected type of LIBOR Advance shall be continued as or
converted into a Base Rate Advance, or, if Borrowers shall notify Agent, no
later than 10:00 a.m. (Chicago, Illinois time) three (3) Business Days prior to
the proposed conversion, shall be maintained as an unaffected type of LIBOR
Advance.
3.10 Sharing of Payments, Etc. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of any Loan made by it in excess of its ratable share
of payments on account of Loans made by all Lenders, such Lender shall forthwith
purchase from each other Lender such participation in such Loan as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each other Lender; provided, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lenders the purchase price to the extent of such recovery, together with an
amount equal to such Lender's ratable share (according to the proportion of (i)
the amount of such Lender's required repayment to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
Borrowers agree that any Lender so purchasing a participation from another
Lender pursuant to this Section 3.10 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the applicable Borrower in the amount of such participation.
Notwithstanding anything to the contrary contained herein, all purchases and
repayments to be made under this Section 3.10 shall be made through Agent.
15
SECTION 4. TERM AND TERMINATION.
4.1 Term of Agreement. Subject to the right of Lenders to cease making
Loans to Borrowers during the continuance of any Default or Event of Default,
this Agreement shall be in effect for a period from the date hereof, through the
Termination Date (the "Term") unless terminated as provided in Section 4.2
hereof.
4.2 Termination.
4.2.1 Termination by Agent or Lenders. Agent, at the direction of
Majority Lenders, shall terminate this Agreement without notice upon the
occurrence and during the continuation of an Event of Default.
4.2.2 Termination by Borrower. Upon at least three (3) days' prior
written notice to Agent and Lenders, Borrowers may, at their option, terminate
this Agreement; provided, however, no such termination shall be effective until
Borrowers have paid all of the Obligations in immediately available funds and
all Letters of Credit and LC Guaranties have expired, terminated or have been
cash collateralized to Agent's satisfaction and Borrowers have complied with
Section 2.6 and subsection 3.2.5. Any notice of termination given by VEI, on
behalf of all Borrowers, shall be irrevocable unless Majority Lenders and Agent
otherwise agree in writing, and Agent and Lenders shall have no obligation to
make any Loans or issue or procure any Letters of Credit or LC Guaranties on or
after the termination date stated in such notice. Borrowers may elect to
terminate this Agreement in its entirety only. No section of this Agreement or
type of Loan available hereunder may be terminated singly.
4.2.3 Effect of Termination. All of the Obligations 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 Borrowers contained in the Loan Documents
shall survive any such termination and Agent shall retain its Liens in the
Collateral and Agent and each Lender shall retain all of its rights and remedies
under the Loan Documents until all Obligations have been discharged or paid, in
full, in immediately available funds, including, without limitation, all
Obligations under Section 2.6 and subsection 3.2.5 resulting from such
termination. Notwithstanding the foregoing or the payment in full of the
Obligations, Agent shall not be required to terminate its Liens in the
Collateral unless, with respect to any loss or damage Agent or any Lender may
incur as a result of dishonored checks or other items of payment received by
Agent or any Lender from Borrowers or any Account Debtor and applied to the
Obligations, Agent shall either: (i) have received a written agreement
reasonably satisfactory to Agent, executed by Borrowers and by any Person whose
loans or other advances to Borrowers are used in whole or in part to satisfy the
Obligations, indemnifying Agent and each Lender from any such loss or damage; or
(ii) have retained cash Collateral or other Collateral for such period of time
as Agent, in its reasonable discretion, may deem necessary to protect Agent and
Lenders from any such loss or damage.
SECTION 5. SECURITY INTERESTS.
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Agent and each Lender of the Obligations, each Borrower hereby
grants to Agent for the
16
benefit of itself and each Lender a continuing Lien upon all of each Borrower's
assets, including all of the following Property and interests in Property of
each Borrower, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located:
(i) Accounts;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with respect
thereto, including, any and all licenses, options, warranties, service
contracts, program services, test rights, maintenance rights, support rights,
improvement rights, renewal rights and indemnifications, and any substitutions,
replacements, additions or model conversions of any of the foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Equipment;
(ix) Financial Assets;
(x) Fixtures;
(xi) General Intangibles, including Payment Intangibles and Software;
(xii) Goods (including all of its Equipment, Fixtures and Inventory),
and all accessions, additions, attachments, improvements, substitutions and
replacements thereto and therefor;
(xiii) Instruments;
(xiv) Intellectual Property;
(xv) Inventory;
(xvi) Investment Property;
(xvii) money (of every jurisdiction whatsoever);
(xviii) Letter-of-Credit Rights;
(xix) Payment Intangibles;
(xx) Security Entitlements;
17
(xxi) Software;
(xxii) Supporting Obligations;
(xxiii) Uncertificated Securities; and
(xxiv) to the extent not included in the foregoing, all other personal
property of any kind or description;
together with all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of the foregoing, and all Proceeds,
products, offspring, rents, issues, profits and returns of and from any of the
foregoing; provided that to the extent that the provisions of any lease or
license of Computer Hardware and Software, Intellectual Property or any General
Intangible expressly prohibit (which prohibition is enforceable under applicable
law) any assignment thereof, or the grant of a security interest therein, Agent
will not enforce its security interest in the applicable Borrower's rights under
such lease or license (other than in respect of the Proceeds thereof) nor shall
such a security interest be deemed to exist (except to the extent applicable law
voids the prohibition or assignment of security interests) for so long as such
prohibition continues, it being understood that upon request of Agent, Borrowers
will in good faith use reasonable efforts to obtain consent for the creation of
a security interest in favor of Agent (and to Agent's enforcement of such
security interest) in Agent's rights under such lease or license; and provided
further that Agent shall not be deemed to have been granted a Lien on any
"intent to use" trademark applications to the extent a grant of a Lien therein
would void the applicable application.
5.2 Other Collateral.
5.2.1 Commercial Tort Claims. Each Borrower shall promptly notify
Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim
after the Closing Date against any third party and, upon request of Agent,
promptly enter into an amendment to this Agreement and do such other acts or
things deemed appropriate by Agent to give Agent a security interest in any such
Commercial Tort Claim. Each Borrower represents and warrants that as of the date
of this Agreement, to its knowledge, it does not possess any Commercial Tort
Claims.
5.2.2 Other Collateral. Each Borrower shall promptly notify Agent in
writing upon acquiring or otherwise obtaining any Collateral after the date
hereof consisting of Deposit Accounts, Investment Property, Letter-of-Credit
Rights or Electronic Chattel Paper and, upon the request of Agent, promptly
execute such other documents, and do such other commercially reasonable acts or
things deemed appropriate by Agent to deliver to Agent control with respect to
such Collateral; promptly notify Agent in writing upon acquiring or otherwise
obtaining any Collateral after the date hereof consisting of Documents or
Instruments and, upon the request of Agent, will promptly execute such other
documents, and do such other acts or things deemed appropriate by Agent to
deliver to Agent possession of such Documents which are negotiable and
Instruments, and, with respect to nonnegotiable Documents, to have such
nonnegotiable Documents issued in the name of Agent; and with respect to
Collateral in the possession of a
18
third party, other than Certificated Securities and Goods covered by a Document
and take all commercially reasonable steps to obtain an acknowledgement from the
third party that it is holding the Collateral for the benefit of Agent.
5.3 Lien Perfection; Further Assurances. Each Borrower shall execute such
UCC-1 financing statements as are required by the UCC and such other
instruments, assignments or documents as are necessary to perfect Agent's Lien
upon any of the Collateral and shall take such other action as may be required
to perfect or to continue the perfection of Agent's Lien upon the Collateral.
Unless prohibited by applicable law, each Borrower hereby irrevocably authorizes
Agent to execute and file any such financing statements, including, without
limitation, financing statements that indicate the Collateral (i) as all assets
of each Borrower or words of similar effect, or (ii) as being of an equal or
lesser scope, or with greater or lesser detail, than as set forth in Section
5.1, on each Borrower's behalf. Each Borrower also hereby ratifies its
authorization for Agent to have filed in any jurisdiction any like financing
statements or amendments thereto if filed prior to the date hereof. The parties
agree that a carbon or other reproduction of this Agreement shall be sufficient
as a financing statement and may be filed in any appropriate office in lieu
thereof. At Agent's request, each Borrower shall also promptly execute or cause
to be executed and shall deliver to Agent any and all documents, instruments and
agreements deemed necessary by Agent to give effect to or carry out the terms or
intent of the Loan Documents.
5.4 Lien on Realty. The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by the Mortgages upon all
real Property of any Borrower described therein. If any Borrower shall acquire
at any time or times hereafter any fee simple interest in other real Property
(other than leasehold interests in sales offices or warehouses), such Borrower
agrees promptly to execute and deliver to Agent, for its benefit and the ratable
benefit of Lenders, as additional security and Collateral for the Obligations,
deeds of trust, security deeds, mortgages or other collateral assignments
reasonably satisfactory in form and substance to Agent and its counsel (herein
collectively referred to as "New Mortgages") covering such real Property. The
Mortgages and each New Mortgage shall be duly recorded (at Borrowers' expense)
in each office where such recording is required to constitute a valid Lien on
the real Property covered thereby. In respect to any Mortgage or any New
Mortgage, the applicable Borrower shall deliver to Agent, at Borrowers' expense,
mortgagee title insurance policies issued by a title insurance company
reasonably satisfactory to Agent, which policies shall be in form and substance
reasonably satisfactory to Agent and shall insure a valid Lien in favor of Agent
for the benefit of itself and each Lender on the Property covered thereby,
subject only to Permitted Liens and those other exceptions reasonably acceptable
to Agent and its counsel. The applicable Borrower shall also deliver to Agent
such other usual and customary documents, including without limitation, ALTA
Surveys of the real Property described in the Mortgages or any New Mortgage, as
Agent and its counsel may reasonably request relating to the real Property
subject to the Mortgages or the New Mortgages. Agent and Lenders, however,
acknowledge that Borrowers shall not be required to deliver to Agent an ALTA
Survey for the Georgia Property.
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SECTION 6. COLLATERAL ADMINISTRATION.
6.1 General.
6.1.1 Location of Collateral. All Collateral, other than Inventory in
transit and motor vehicles, will at all times be kept by Borrowers and their
Subsidiaries at one or more of the business locations set forth in Exhibit 6.1.1
as updated from time to time by Borrowers providing written notice to Agent of
any new location.
6.1.2 Insurance of Collateral. Borrowers shall maintain and pay for
insurance upon all Collateral wherever located and with respect to the business
of Borrowers and each of their Subsidiaries, covering casualty, hazard, public
liability, workers' compensation and such other risks in such amounts and with
such insurance companies at least to the same extent as such insurance is in
place as of the Closing Date and as is reasonably satisfactory to Agent.
Borrowers shall deliver certified copies of such policies to Agent as promptly
as practicable, with satisfactory lender's loss payable and mortgagee
endorsements, naming Agent as a loss payee, assignee or additional insured, as
appropriate, as its interest may appear, and showing only such other loss
payees, assignees and additional insureds as are satisfactory to Agent. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 10 days' prior written notice to Agent in the event of
cancellation of the policy for nonpayment of premium and not less than 30 days'
prior written notice to Agent in the event of cancellation of the policy for any
other reason whatsoever and a clause specifying that the interest of Agent shall
not be impaired or invalidated by any act or neglect of any Borrower, any of its
Subsidiaries or the owner of the Property or by the occupation of the premises
for purposes more hazardous than are permitted by said policy. Borrowers agree
to deliver to Agent, promptly as rendered, true copies of all reports made in
any reporting forms to insurance companies. All proceeds of business
interruption insurance (if any) of Borrowers and their Subsidiaries shall be
remitted to Agent for application to the outstanding balance of the Revolving
Credit Loans. Agent acknowledges that Borrowers' insurance in force on the
Closing Date as evidenced by the certificates of insurance delivered by
Borrowers to Agent on the Closing Date is acceptable to Agent as of the Closing
Date.
Unless Borrowers provide Agent with evidence of the insurance coverage
required by this Agreement, Agent may purchase insurance at Borrowers' expense
to protect Agent's interests in the Properties of Borrowers and their
Subsidiaries. This insurance may, but need not, protect the interests of
Borrowers and their Subsidiaries. The coverage that Agent purchases might not
pay any claim that Borrowers or any Subsidiary makes or any claim that is made
against any Borrower or any such Subsidiary in connection with said Property.
Borrowers may later cancel any insurance purchased by Agent, but only after
providing Agent with evidence that Borrowers and their Subsidiaries have
obtained insurance as required by this Agreement. If Agent purchases insurance,
Borrowers will be responsible for the costs of that insurance, including
interest and any other charges Agent may impose in connection with the placement
of insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the Obligations. The costs
of the insurance may be more than the cost of insurance that Borrowers and their
Subsidiaries may be able to obtain on their own. During the 2004 insurance
policy year, Borrowers shall use its commercially reasonable best efforts to
modify the term of each of Borrowers' umbrella or excess coverage
20
insurance policies so that such terms shall be concurrent with the terms of the
corresponding primary insurance policies. To the extent Borrowers are unable to
make such policies concurrent in 2004, Borrowers shall use such commercially
reasonable efforts in each successive year to achieve such results until
successful.
6.1.3 Protection of Collateral. Neither Agent nor any Lender shall be
liable or responsible in any way for the safekeeping of any of the Collateral or
for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Agent's or any Lender's actual possession) or
for any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency, or other person whomsoever, but the
same shall be at Borrowers' sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Borrowers shall
keep accurate and complete records of their Accounts and all payments and
collections thereon and shall submit to Agent on such periodic basis as Agent
shall request a sales and collections report for the preceding period, in form
acceptable to Agent/consistent with the reports currently prepared by Borrowers
with respect to such information. Concurrently with the delivery of each
Borrowing Base Certificate described in subsection 8.1.4 or more frequently as
requested by Agent, Borrowers shall deliver to Agent, a summary aged trial
balance of Borrowers' Accounts and if requested by Agent, a detailed aged trial
balance existing as of the last day of the preceding month, specifying the
names, addresses, face values, dates of invoices and due dates for each Account
Debtor obligated on an Account so listed ("Schedule of Accounts"), and, upon
Agent's request therefor, copies of proof of delivery and the original copy of
all documents, including, without limitation, repayment histories and present
status reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Agent shall
reasonably request. If requested by Agent, Borrowers shall execute and deliver
to Agent formal written assignments of all of its Accounts weekly or daily,
which shall include all Accounts that have been created since the date of the
last assignment, together with copies of invoices or invoice registers related
thereto.
6.2.2 Discounts, Allowances, Disputes. If any Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrowers shall report such discounts, allowances or
credits, as the case may be, to Agent as part of the next required Schedule of
Accounts.
6.2.3 Account Verification. Any of Agent's officers, employees or
agents shall have the right, at any time or times hereafter, in the name of
Agent, any designee of Agent, or any Borrower, to verify the validity, amount or
any other matter relating to any Accounts by mail, telephone, electronic
communication or otherwise. Borrowers shall cooperate fully with Agent in an
effort to facilitate and promptly conclude any such verification process.
21
6.2.4 Maintenance of Dominion Account. Borrowers shall maintain a
Dominion Account or Dominion Accounts pursuant to lockbox and blocked account
arrangements reasonably acceptable to Agent with Bank. Borrowers shall issue to
Bank an irrevocable letter of instruction directing Bank to deposit all payments
or other remittances received in the lockbox and blocked accounts to the
Dominion Account. All funds deposited in any Dominion Account shall immediately
become the property of Agent, for the benefit of itself and each Lender, the
ratable benefit of Lenders, and Borrowers shall obtain the agreement by Bank in
favor of Agent to waive any recoupment, setoff rights, and any security interest
in, or against, the funds so deposited. Agent assumes no responsibility for such
lockbox and blocked account arrangements, including, without limitation, any
claim of accord and satisfaction or release with respect to deposits accepted by
any bank thereunder. Agent and Lenders acknowledge that Borrowers are not
currently in compliance with the requirements of this subsection 6.2.4 relative
to Borrowers' Canadian operations. Borrowers covenant to bring Borrowers'
Canadian operations into compliance with this subsection 6.2.4 by the date which
is 60 days after the Closing Date.
6.2.5 Collection of Accounts, Proceeds of Collateral. Each Borrower
agrees that all invoices rendered and other requests made by any Borrower for
payment in respect of Accounts shall contain a written statement directing
payment in respect of such Accounts to be paid to a lockbox established pursuant
to subsection 6.2.4. To expedite collection, each Borrower shall endeavor in the
first instance to make collection of its Accounts for Agent. All remittances
received by any Borrower on account of Accounts, together with the proceeds of
any other Collateral, shall be held as Agent's property, for its benefit and the
benefit of Lenders, by such Borrower as trustee of an express trust for Agent's
benefit and such Borrower shall immediately deposit the same in kind in the
Dominion Account. Agent retains the right at all times after the occurrence and
during the continuance of a Default or an Event of Default to notify Account
Debtors that Borrowers' Accounts have been assigned to Agent and to collect
Borrowers' Accounts directly in its own name, or in the name of Agent's agent,
and to charge the collection costs and expenses, including attorneys' fees, to
Borrowers. Agent and Lenders acknowledge that Borrowers are not currently in
compliance with the requirements of this subsection 6.2.5 relative to Borrowers'
Canadian operations. Borrowers covenant to bring Borrowers' Canadian operations
into compliance with this subsection 6.2.5 by the date which is 60 days after
the Closing Date.
6.2.6 Taxes. If an Account includes a charge for any tax payable to
any governmental taxing authority, Agent is authorized, in its sole discretion,
to pay the amount thereof to the proper taxing authority for the account of any
Borrower and to charge Borrowers therefor, except for taxes that (i) are being
actively contested in good faith and by appropriate proceedings and with respect
to which such Borrower maintains reasonable reserves on its books therefor and
(ii) would not reasonably be expected to result in any Lien other than a
Permitted Lien. In no event shall Agent or any Lender be liable for any taxes to
any governmental taxing authority that may be due by any Borrower.
6.3 Administration of Equipment.
6.3.1 Records and Schedules of Equipment. Borrowers shall keep records
of their Equipment which shall be complete and accurate in all material respects
itemizing and
22
describing the kind, type, quality, quantity and book value of its Equipment and
all dispositions made in accordance with subsection 6.3.2 hereof, and Borrowers
shall, and shall cause their Subsidiaries to, furnish Agent with a current
schedule containing the foregoing information on at least an annual basis and if
an Event of Default has occurred and is continuing, more often if requested by
Agent. Promptly after the request therefor by Agent, Borrower shall deliver to
Agent any and all evidence of ownership, if any, of any of their Equipment for
which such evidence has not theretofore been delivered.
6.3.2 Dispositions of Equipment. Borrowers shall not, and shall not
permit their Subsidiaries to, sell, lease or otherwise dispose of or transfer
any of their respective Equipment or other fixed assets or any part thereof
without the prior written consent of Majority Lenders (which shall not be
unreasonably withheld or delayed); provided, however, that the foregoing
restriction shall not apply, for so long as no Default or Event of Default
exists and is continuing, to (i) dispositions of Equipment and other fixed
assets which, in the aggregate during any consecutive twelve-month period, has
or have a fair market value or book value, whichever is less, of One Million
Dollars ($1,000,000) or less, provided that all proceeds thereof are remitted to
Agent for application to the Loans as provided in Section 3.3.1, or (ii)
replacements of Equipment or other fixed assets that is or are substantially
worn, damaged or obsolete with Equipment or other fixed assets of like kind,
function and value, provided that the replacement Equipment or other fixed
assets shall be acquired within one hundred eighty (180) days of any disposition
of the Equipment or other fixed assets that is or are to be replaced; it being
understood that the replacement Equipment or other fixed assets shall be free
and clear of Liens other than Permitted Liens that are not Purchase Money Liens.
6.4 Payment of Charges. All amounts chargeable to Borrowers under Section 6
hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the rate applicable to Base Rate Advances from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
7.1 General Representations and Warranties. To induce Agent and Lenders to
enter into this Agreement and to make advances hereunder, each Borrower
warrants, represents and covenants to Agent and each Lender that:
7.1.1 Organization and Qualification. Each Borrower and each of its
Subsidiaries is a corporation, limited partnership or limited liability company
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. Each Borrower and each of its
Subsidiaries is duly qualified and is authorized to do business and is in good
standing as a foreign corporation, limited partnership or limited liability
company, as applicable, in each state or jurisdiction listed on Exhibit 7.1.1
hereto and in all other states and jurisdictions in which the failure of any
Borrower or any of its Subsidiaries to be so qualified could reasonably be
expected to have a Material Adverse Effect.
7.1.2 Corporate Power and Authority. Each Borrower and each of its
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery
23
and performance of this Agreement and each of the other Loan Documents have been
duly authorized by all necessary corporate or other relevant action and do not
and will not (i) require any consent or approval of the shareholders partners or
members of any Borrower or any of its Subsidiaries; (ii) contravene any
Borrower's or any of its Subsidiaries' charter, articles or certificate of
incorporation, partnership agreement, by-laws, certificate of formation or
operating agreement (or other organizational documents (as the case may be));
(iii) violate, or cause any Borrower or any of its Subsidiaries to be in default
under, any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award in effect having applicability to any
Borrower or any of its Subsidiaries the violation of which could reasonably be
expected to have a Material Adverse Effect; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which any Borrower or any of its
Subsidiaries is a party or by which it or its Properties may be bound or
affected the default or breach under which could reasonably be expected to have
a Material Adverse Effect; or (v) result in, or require, the creation or
imposition of any Lien (other than Permitted Liens) upon or with respect to any
of the Properties now owned or hereafter acquired by any Borrower or any of its
Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of each Borrower enforceable against it in
accordance with its respective terms, subject, as to enforcement, to general
principles of equity and to bankruptcy, insolvency and similar laws affecting
creditors' rights generally.
7.1.4 Capital Structure. Exhibit 7.1.4 hereto states (i) the correct
name of each of the Subsidiaries of Parent, its jurisdiction of incorporation
and the percentage of its Voting Stock owned by Parent or such Subsidiary's
immediate parent, (ii) the name of each Borrower's corporate or joint venture
relationships and the nature of the relationship, (iii) the number, nature and
holder of all outstanding treasury Securities of each Subsidiary of Parent and
each Subsidiary of each Borrower and (iv) the number of authorized, issued and
treasury Securities of Parent and each Subsidiary of each Borrower. Parent or
another Subsidiary of Parent has good title to all of the Securities of each of
Parent's Subsidiaries such Person purports to own, free and clear in each case
of any Lien other than Permitted Liens. All such Securities have been duly
issued and are fully paid and non-assessable. As of the date hereof, there are
no outstanding options to purchase, or any rights or warrants to subscribe for,
or any commitments or agreements to issue or sell, or any Securities or
obligations convertible into, or any powers of attorney relating to, Securities
of any of Parent's Subsidiaries. Except as set forth in Exhibit 7.1.4, there are
no outstanding agreements or instruments binding upon any of Parent's or any of
its Subsidiaries' partners, members or shareholders, as the case may be,
relating to the ownership of such Subsidiaries' Securities.
7.1.5 Names; Organization. Neither any Borrower nor any of its
Subsidiaries has been known as or has used any legal, fictitious or trade names
except those listed on Exhibit 7.1.5 hereto. Except as set forth on Exhibit
7.1.5, neither any Borrower nor any of its Subsidiaries has been the surviving
entity of a merger or consolidation or has acquired all or substantially all of
the assets of any Person. Each Borrower and each of its Subsidiaries' state(s)
of incorporation or organization, Type of Organization and Organizational I.D.
Number is set
24
forth on Exhibit 7.1.5. The exact legal name of each Borrower and each of its
Subsidiaries is set forth on Exhibit 7.1.5.
7.1.6 Business Locations; Agent for Process. Each Borrower's and each
of its Subsidiaries' chief executive office location of books and records and
other places of business are as listed on Exhibit 6.1.1 hereto, as updated from
time to time by Borrowers in accordance with the provisions of subsection 6.1.1.
During the preceding one-year period ending on the Closing Date, neither any
Borrower nor any of its Subsidiaries has had an office, place of business or
agent for service of process other than as listed on Exhibit 6.1.1. All taxable
Collateral is, and will at all times, be kept by Borrowers and their
Subsidiaries in accordance with subsection 6.1.1. Except as shown on Exhibit
6.1.1, as of the Closing Date hereof no Inventory is stored with a bailee,
distributor, warehouseman or similar party, nor is any Inventory consigned to
any Person.
7.1.7 Title to Properties; Priority of Liens. Each Borrower and each
of its Subsidiaries has good, indefeasible and marketable title to and fee
simple ownership of, or valid and subsisting leasehold interests in, all of its
real Property, and good title to all of the Collateral and all of its other
Property, in each case, free and clear of all Liens except Permitted Liens. Each
Borrower and each Subsidiary of each Borrower, has paid or discharged all lawful
claims which, if unpaid, might reasonably be expected to become a Lien against
any Borrower's or any Subsidiary's Properties that is not a Permitted Lien. The
Liens granted to Agent for the benefit of itself and Lenders under Section 5
hereof are first-priority Liens, subject only to Permitted Liens.
7.1.8 Accounts. Agent may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrowers with
respect to any Account or Accounts. With respect to each of each Borrower's
Accounts, whether or not such Account is an Eligible Account or an Eligible
Government Account, unless otherwise disclosed in writing to Agent (in a
Borrowing Base Certificate or otherwise), with respect to each Account:
(i) it is genuine and in all respects what it purports to be, and
it is not evidenced by a judgment;
(ii) it arises out of a completed, bona fide sale and delivery of
goods or rendition of services by a Borrower in the ordinary course of its
business and in accordance with the terms and conditions of all purchase
orders, contracts or other documents relating thereto and forming a part of
the contract between a Borrower and the Account Debtor;
(iii) it is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a copy of
which has been furnished or is available to Agent;
(iv) there are no facts, events or occurrences which in any way
impair the validity or enforceability of any Accounts or tend to reduce the
amount payable thereunder from the face amount of the invoice and
statements delivered or made available to Agent with respect thereto;
25
(v) to the best of each Borrower's knowledge, the Account Debtor
thereunder (1) had the capacity to contract at the time any contract or
other document giving rise to the Account was executed and (2) such Account
Debtor is Solvent; and
(vi) to the best of each Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against the Account
Debtor thereunder which could reasonably be expected to result in any
material adverse change in such Account Debtor's financial condition or the
collectibility of such Account.
7.1.9 Equipment. The Equipment of each Borrower and each Subsidiary of
each Borrower is in good operating condition and repair, and all necessary
replacements of and repairs thereto shall be made so that the operating
efficiency thereof shall be maintained and preserved, reasonable wear and tear
excepted. No Borrower and no Subsidiary of any Borrower will permit any of the
Equipment to become affixed to any real Property leased to any Borrower or any
Subsidiary of any Borrower so that an interest arises therein under the real
estate laws of the applicable jurisdiction unless the landlord of such real
Property has executed a landlord waiver or leasehold mortgage in favor of and in
form reasonably acceptable to Agent, and no Borrower will permit any of the
Equipment of any Borrower or any Subsidiary of any Borrower to become an
accession to any personal Property other than Equipment that is subject to
first-priority (except for Permitted Liens) Liens in favor of Agent.
7.1.10 Financial Statements; Fiscal Year. The Consolidated balance
sheets of Parent and its Subsidiaries (including the accounts of all
subsidiaries of Parent for the respective periods during which a Subsidiary
relationship existed) as of June 30, 2003, and the related statements of income,
changes in shareholders' equity, and changes in financial position for the
periods ended on such dates, have been prepared in accordance with GAAP, and
present fairly in all material respects the financial positions of Parent and
such Persons at such dates and the results of Parent's and such Persons'
operations for such periods. As of the Closing Date, since June 30, 2003, there
has been no material adverse change in the condition, financial or otherwise, of
Parent and such other Persons, taken as a whole, as reflected in the
Consolidated balance sheet as of such date. As of the Closing Date, the fiscal
year of Parent and each of its Subsidiaries ends on the Saturday closest to June
30 of each year.
7.1.11 Full Disclosure. The financial statements referred to in
subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Borrowers to Agent, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact which any Borrower has failed to
disclose to Agent in writing which could reasonably be expected to have a
Material Adverse Effect.
7.1.12 Solvent Financial Condition. Each Borrower and each of its
Subsidiaries is now and, after giving effect to the initial Loans to be made and
the initial Letters of Credit and LC Guaranties to be issued hereunder, and
related transactions, will be Solvent.
7.1.13 Surety Obligations. Except as set forth on Exhibit 7.1.13 or as
otherwise permitted by Section 8.2.3, neither any Borrower nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract, or has issued or entered
26
into any agreement to assure payment, performance or completion of performance
of any undertaking or obligation of any Person, which is not a Borrower or a
Subsidiary of a Borrower.
7.1.14 Taxes. VEI's federal tax identification number is 00-0000000.
The federal tax identification number of each of VEI's Subsidiaries is shown on
Exhibit 7.1.14 hereto. Each Borrower and each of its Subsidiaries has filed all
federal, state and local tax returns and other reports it is required by law to
file and has paid, or made provision for the payment of, all taxes, assessments,
fees, levies and other governmental charges upon it, its income and Properties
as and when such taxes, assessments, fees, levies and charges are due and
payable, unless and to the extent any thereof are being actively contested in
good faith and by appropriate proceedings and Borrowers maintain reasonable
reserves on its books therefor. The provision for taxes on the books of
Borrowers and their Subsidiaries are adequate for all years not closed by
applicable statutes, and for the current fiscal year.
7.1.15 Brokers. Except as shown on Exhibit 7.1.15 hereto, there are no
claims for brokerage commissions, finder's fees or investment banking fees in
connection with the transactions contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses. Each Borrower and
each of its Subsidiaries owns, possesses or licenses or has the right to use all
the patents, trademarks, service marks, trade names, copyrights, licenses and
other Intellectual Property necessary for the present and planned future conduct
of its business without any known conflict with the rights of others, except for
such conflicts as could not reasonably be expected to have a Material Adverse
Effect. All such patents, trademarks, service marks, trade names, copyrights,
licenses, and other similar rights are listed on Exhibit 7.1.16 hereto. No claim
has been asserted to any Borrower or any of its Subsidiaries which is currently
pending that their use of their Intellectual Property or the conduct of their
business does or may infringe upon the Intellectual Property rights of any third
party. To the knowledge of each Borrower and except as set forth on Exhibit
7.1.16 hereto, as of the date hereof, no Person is engaging in any activity that
infringes in any material respect upon any Borrower's or any of its
Subsidiaries' material Intellectual Property. Except as set forth on Exhibit
7.1.16, each Borrower's and each of its Subsidiaries' (i) material trademarks,
service marks, and copyrights are registered with the U.S. Patent and Trademark
Office or in the U.S. Copyright Office, as applicable or effective applications
are filed and of record in the relevant filing offices and (ii) material license
agreements and similar arrangements relating to its Inventory (1) permits, and
does not restrict, the assignment by any Borrower or any of its Subsidiaries to
Agent, or any other Person designated by Agent, of all of such Borrower's or
such Subsidiary's, as applicable, rights, title and interest pertaining to such
license agreement or such similar arrangement and (2) would permit the continued
use by such Borrower or such Subsidiary, or Agent or its assignee, of such
license agreement or such similar arrangement and the right to sell Inventory
subject to such license agreement for a period of no less than 6 months after a
default or breach of such agreement or arrangement. The consummation and
performance of the transactions and actions contemplated by this Agreement and
the other Loan Document, including without limitation, the exercise by Agent of
any of its rights or remedies under Section 10, will not result in the
termination or impairment of any of any Borrower's or any of its Subsidiaries'
ownership or rights relating to its Intellectual Property, except for such
Intellectual Property rights the loss or impairment of which could not
reasonably be expected to have a Material Adverse Effect. Except as listed on
Exhibit 7.1.16
27
and except as could not reasonably be expected to have a Material Adverse
Effect, (i) neither any Borrower nor any of its Subsidiaries is in breach of, or
default under, any term of any license or sublicense with respect to any of its
Intellectual Property and (ii) to the knowledge of each Borrower, no other party
to such license or sublicense is in breach thereof or default thereunder, and
such license is valid and enforceable.
7.1.17 Governmental Consents. Each Borrower and each of its
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate its
Properties as now owned or leased by it, except where the failure to possess or
maintain such rights could not be reasonably be expected to have a Material
Adverse Effect.
7.1.18 Compliance with Laws. Each Borrower and each of its
Subsidiaries has duly complied with, and its Properties, business operations and
leaseholds are in compliance with, the provisions of all federal, state and
local laws, rules and regulations applicable to such Borrower or such
Subsidiary, as applicable, its Properties or the conduct of its business, except
for such non-compliance as could not reasonably be expected to have a Material
Adverse Effect and there have been no citations, notices or orders of
noncompliance issued to each Borrower or any of its Subsidiaries under any such
laws, rule or regulation, except where such non-compliance could not reasonably
be expected to have a Material Adverse Effect. Each Borrower and each of its
Subsidiaries has established and maintains an adequate monitoring system to
insure that it remains in compliance in all material respects with all federal,
state and local rules, laws and regulations applicable to it. No Inventory has
been produced in violation of the Fair Labor Standards Act (29 U.S.C. (S)201 et
seq.), as amended.
7.1.19 Restrictions. Neither any Borrower nor any of its Subsidiaries
is a party or subject to any contract or agreement which restricts its right or
ability to incur Indebtedness in any manner that could reasonably be expected to
have a Material Adverse Effect, other than as set forth on Exhibit 7.1.19
hereto. No agreement set forth on Exhibit 7.1.19 prohibits the execution of or
compliance with this Agreement or the other Loan Documents by such Borrower or
any of its Subsidiaries, as applicable.
7.1.20 Litigation. Except as set forth on Exhibit 7.1.20 hereto, there
are no actions, suits, proceedings or investigations pending, or to the
knowledge of any Borrower, threatened, against or affecting any Borrower or any
of its Subsidiaries, or the business, operations, Properties, prospects, profits
or condition of any Borrower or any of its Subsidiaries which, singly or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Neither any Borrower nor any of its Subsidiaries is in default with respect to
any order, writ, injunction, judgment, decree or rule of any court, governmental
authority or arbitration board or tribunal which, singly or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
7.1.21 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrowers' performance hereunder, constitute a Default or an Event of Default.
Neither any Borrower nor any of its Subsidiaries is in default in (and no event
has occurred and no condition exists which constitutes,
28
or which with the passage of time or the giving of notice or both would
constitute, a default in) the payment of any Indebtedness to any Person for
Money Borrowed, in excess of Five Hundred Thousand Dollars ($500,000).
7.1.22 Leases. Exhibit 7.1.22(a) hereto is a complete listing of all
capitalized and operating personal Property leases of each Borrower and each of
its Subsidiaries and real Property leases of each Borrower and each of its
Subsidiaries. Each Borrower and each of its Subsidiaries is in compliance with
all of the terms of each of its respective capitalized and operating leases,
except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect.
7.1.23 Pension Plans. Except as disclosed on Exhibit 7.1.23 hereto,
neither any Borrower nor any of its Subsidiaries has any Plan. Each Borrower and
each of its Subsidiaries is in compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan, except where the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect. No fact or situation that could reasonably be expected to result in a
material adverse change in the financial condition of any Borrower or any of its
Subsidiaries exists in connection with any Plan. Neither any Borrower nor any of
its Subsidiaries has any withdrawal liability in connection with a Multiemployer
Plan.
7.1.24 Trade Relations. There exists no actual or, to Borrowers'
knowledge, threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between any Borrower or any
of its Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of Borrowers and
their Subsidiaries, or with any material supplier, except in each case where the
same could not reasonably be expected to have a Material Adverse Effect, and
there exists no present condition or state of facts or circumstances which would
prevent any Borrower or any of its Subsidiaries from conducting such business
after the consummation of the transactions contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted. Agent
and Lender acknowledge that Sears Logistics Services and Cardinal Health has
given notice to Borrowers that such companies intend to terminate their business
relationships with Borrowers.
7.1.25 Labor Relations. Except as described on Exhibit 7.1.25 hereto
as of the Closing Date, neither any Borrower nor any of its Subsidiaries is a
party to any collective bargaining agreement. There are no material grievances,
disputes or controversies with any union or any other organization of any
Borrower's or any of its Subsidiaries' employees, or threats of strikes, work
stoppages or any asserted pending demands for collective bargaining by any union
or organization, except those that could not reasonably be expected to have a
Material Adverse Effect.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Borrowers' or their respective Subsidiaries' business
or operations that would render the information in any exhibit attached hereto
or to any other Loan Document either inaccurate, incomplete or misleading, so
long as (i) Majority
29
Lenders have consented to such changes, (ii) such changes are expressly
permitted or contemplated by this Agreement or (iii) such changes could not
reasonably be expected to have or evidence a Material Adverse Effect, and except
to the extent that such representations and warranties expressly relate to an
earlier date. Further, Borrowers shall be permitted to amend and update each of
the factual Exhibits (other than Exhibits 7.1.19, 8.2.3 and 8.2.5 with respect
to which no changes or amendments shall be permitted unless such changes or
amendments are consented to by Majority Lenders) attached hereto and
incorporated herein so long as any such amendment or update could not reasonably
be expected to have or to evidence a Material Adverse Effect. Borrowers
acknowledge that disclosure on an updated Exhibit shall not have the result of
curing or waiving any Event of Default. Any reference contained in this
Agreement to any Exhibit shall be deemed a reference to the latest updated
version of such Exhibit, provided that such update does not have or evidence a
Material Adverse Effect. Without limiting the generality of the foregoing, each
Loan request made or deemed made pursuant to subsection 3.1.1 hereof and each
request to Bank or Agent, any Letters of Credit or LC Guaranties, shall
constitute Borrowers' reaffirmation, as of the date of each such request, of
each representation, warranty or other statement made or furnished to Agent or
any Lender by or on behalf of Borrowers, any Subsidiary of any Borrower, or
Parent in this Agreement, any of the other Loan Documents, or any instrument,
certificate or financial statement furnished in compliance with or in reference
thereto.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrowers contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Agent
and each Lender and the parties thereto and the closing of the transactions
described therein or related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS.
8.1 Affirmative Covenants. During the Term, and thereafter for so long as
there are any Obligations outstanding, each Borrower covenants that, unless
otherwise consented to by Majority Lenders in writing, it shall:
8.1.1 Visits and Inspections. Permit (i) representatives of Agent and
any representatives as of any Lender who wish to accompany Agent's
representatives, from time to time, as often as may be reasonably requested, but
only during normal business hours, to visit and inspect the Properties of each
Borrower and each of its Subsidiaries, inspect, audit and make extracts from its
books and records, and discuss with its officers, its employees and its
independent accountants, each Borrower's and each of its Subsidiaries' business,
assets, liabilities, financial condition, business prospects and results of
operations and (ii) appraisers engaged pursuant to Section 2.10 (whether or not
personnel of Agent), from time to time, as often as may be reasonably requested,
but only during normal business hours, to visit and inspect the Properties of
Borrowers and each of their Subsidiaries, for the purpose of completing
appraisals pursuant to Section 2.10. Agent, if no Default or Event of Default
then exists, shall give Borrowers reasonable prior notice of any such inspection
or audit. Without limiting the foregoing, Borrowers will participate and will
cause their key management personnel to participate in a meeting with Agent and
Lenders periodically (but at least annually) during each year (except that
during the continuation of an Event of Default such meetings may be held more
30
frequently as requested by Agent or Majority Lenders), which meeting(s) shall be
held at such times and such places as may be reasonably requested by Agent.
8.1.2 Notices. Promptly notify Agent in writing of the occurrence of
any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading, in any material respect as of the date made or remade.
In addition, Borrowers agree to provide Agent with prompt written notice of any
change in the information disclosed in any Exhibit hereto, in each case after
giving effect to any materiality limits and Material Adverse Effect
qualifications contained herein.
8.1.3 Financial Statements. Keep, and cause each Subsidiary to keep,
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with customary accounting principles
reflecting all its financial transactions; and cause to be prepared and
furnished to Agent (with sufficient copies for all Lenders) the following (all
to be prepared in accordance with GAAP applied on a consistent basis, unless
Parent's certified public accountants concur in any change therein and such
change is disclosed to Agent and is consistent with GAAP):
(i) not later than ninety (90) days after the close of each
fiscal year of Parent, unqualified (except for a qualification for a change
in accounting principles with which the accountants concur), audited
financial statements of Parent and its Subsidiaries as of the end of such
year, on a Consolidated basis, certified by a firm of independent certified
public accountants of recognized standing selected by Parent, but
acceptable to Agent, and within a reasonable time thereafter, a copy of any
management letter issued in connection therewith;
(ii) not later than forty-five (45) days after the end of each
Fiscal Quarter hereafter, including the last Fiscal Quarter of Parent's
fiscal year, unaudited, interim financial statements of Parent and the
Subsidiaries as of the end of such Fiscal Quarter and of the portion of
Parent's fiscal year then elapsed, on a Consolidated and consolidating
(with respect to VEI only) basis, certified by the chief financial officer
(or, in his absence, the director of treasury) of Parent as prepared in
accordance with GAAP and fairly presenting, in all material respects, the
Consolidated and consolidating (with respect to VEI only) financial
position and results of operations of Parent and its Subsidiaries for such
Fiscal Quarter and period subject only to changes from audit and year-end
adjustments and except that such statements need not contain notes;
(iii) not later than thirty (30) days after the end of each
Fiscal Month hereafter, including the last Fiscal Month of Parent's fiscal
year, unaudited, interim financial statements of Parent and its
Subsidiaries as of the end of such Fiscal Month and of the portion of
Parent's fiscal year then elapsed, on a Consolidated and consolidating
(with respect to VEI only) basis, certified by the chief financial officer
(or, in his absence, the director of treasury) of Parent as prepared in
accordance with GAAP and fairly presenting, in all material respects, the
Consolidated and consolidating (with respect to VEI only) financial
position and results of operations of Parent and its Subsidiaries for
31
such Fiscal Month and period subject only to changes from audit and
year-end adjustments and except that such statements need not contain notes
(iv) together with each delivery of financial statements pursuant
to clauses (i), (ii) and (iii) of this subsection 8.1.3, a management
report (1) setting forth in comparative form the corresponding figures for
the corresponding periods of the previous fiscal year and the corresponding
figures from the most recent Projections for the current fiscal year
delivered pursuant to subsection 8.1.6 and (2) identifying the reasons for
any significant variations. The information above shall be presented in
reasonable detail and shall be certified by the chief financial officer
(or, in his absence, the director of treasury) of Parent to the effect that
such information fairly presents in all material respects the results of
operation and financial condition of Parent and its Subsidiaries as at the
dates and for the periods indicated;
(v) promptly after the sending or filing thereof, as the case may
be, copies of any proxy statements, financial statements or reports which
Parent or any Borrower has made available to its security holders and
copies of any regular, periodic and special reports or registration
statements which Parent, any Borrower or any Subsidiary of any Borrower
files with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or any national securities
exchange;
(vi) upon request of Agent, copies of any annual report to be
filed with ERISA in connection with each Plan; and
(vii) such other data and information (financial and otherwise)
as Agent or any Lender, from time to time, may reasonably request, bearing
upon or related to the Collateral or Parent's or any of Parent's
Subsidiaries' financial condition or results of operations.
Concurrently with the delivery of the financial statements described
in clauses (i) and (ii) of this subsection 8.1.3 or more frequently if
reasonably requested by Agent, Borrowers shall cause to be prepared and
furnished to Agent a Compliance Certificate ("Compliance Certificate") in the
form of Exhibit 8.1.3 hereto executed by the chief financial officer (or, in his
absence, the director of treasury) of Parent and management's discussion and
analysis of the Parent's financial condition, results of operations, business
financials, liquidity and capital resources, risks and such other matters as
Parent deems appropriate or as requested by Agent.
Within five (5) days after the earlier of the last day of each fiscal
year of Borrowers and the date Parent engaged independent certified public
accountants to audit Parent's and Borrowers' financial statements, Parent shall
deliver to such independent certified public accountants a letter from Parent
and/or Borrowers addressed to such independent certified public accountants
indicating that it is a primary intention of Parent and Borrowers in engaging
such accountants that Agent and Lenders rely upon such financial statements of
Parent, Borrowers and Borrowers' Subsidiaries.
32
8.1.4 Borrowing Base Certificates. On or before the Friday of each
week and the last day of each Fiscal Month from and after the date hereof,
Borrowers shall deliver to Agent, in form acceptable to Agent, a Borrowing Base
Certificate as of the last day of the immediately preceding week (or shorter
period or Fiscal Monthly period as is applicable), with such supporting
materials as Agent shall reasonably request. If Borrowers deem it advisable, or
Agent shall request, Borrowers shall execute and deliver to Agent Borrowing Base
Certificates more frequently than weekly.
8.1.5 Landlord, Storage and Other Agreements. Provide Agent with
copies of all agreements between any Borrower or any of its Subsidiaries and any
landlord, warehouseman, processor, distributor or consignee which owns or is the
lessee of any premises at which any Collateral may, from time to time, be kept.
With respect to any lease (other than leases for sales offices), warehousing
agreement or any processing agreement in any case entered into after the Closing
Date, Borrowers shall provide, with respect to its headquarters and/or other
facilities where its accounting systems are located, and with respect to all
other facilities, shall use all commercially reasonable efforts to provide,
Agent with landlord waivers, bailee letters or processor letters with respect to
such premises. Such landlord waivers, bailee letters or processor letters shall
be in a form supplied by Agent to Borrowers with such reasonable revisions as
are customarily accepted by Agent or by similar financial institutions in
similar financial transactions.
8.1.6 Projections. No later than thirty (30) days after the end of
each fiscal year of Borrowers, deliver to Agent Projections of Parent and
Borrowers for the forthcoming year, month by month and for the next two
subsequent fiscal years.
8.1.7 Subsidiaries. Cause each Subsidiary of any Borrower, whether now
or hereafter in existence, promptly upon Agent's request therefor, to execute
and deliver to Agent a Guaranty Agreement and a security agreement pursuant to
which such Subsidiary guaranties the payment of all Obligations and grants to
Agent a first priority Lien (subject only to Permitted Liens) on all of its
Properties of the types described in Section 5.1. Additionally, the applicable
Borrower shall execute and deliver to Agent a pledge agreement pursuant to which
the applicable Borrower grants to Agent a first priority Lien (subject only to
Permitted Liens) with respect to all of the issued and outstanding Securities of
each such Subsidiary.
8.1.8 Deposit and Brokerage Accounts. For each deposit account or
brokerage account that any Borrower at any time opens or maintains, such
Borrower shall, at Agent's request and option, pursuant to an agreement in form
and substance reasonably satisfactory to Agent, cause the depository bank or
securities intermediary, as applicable, to agree to comply at any time with
instructions from Agent to such depository bank or securities intermediary, as
applicable, directing the disposition of funds from time to time credited to
such deposit or brokerage account, without further consent of the applicable
Borrower, in each case, in a manner consistent with the "control provisions" of
Articles 8 and 9 of the UCC.
8.2 Negative Covenants. During the Term and thereafter for so long as there
are any Obligations outstanding, each of Parent and each Borrower covenants, on
a joint and several basis, that, unless otherwise consented by Majority Lenders
in writing, it shall not:
33
8.2.1 Mergers; Consolidations; Acquisitions; Structural Changes. Merge
or consolidate, or permit any Subsidiary of any Borrower to merge or
consolidate, with any Person; nor change its or any of its Subsidiaries' state
of incorporation or organization or Type of Organization or Organizational I.D.
Number; nor change its or any of its Subsidiaries' legal name; nor acquire, nor
permit any of its Subsidiaries to acquire all or any substantial part of the
Properties of any Person, except for:
(i) mergers of any Subsidiary of a Borrower into a Borrower or
another wholly-owned Subsidiary of a Borrower; and
(ii) acquisitions of assets consisting of fixed assets or real
Property that constitute Capital Expenditures permitted under subsection
8.2.8 (including those made pursuant to the proviso thereto).
8.2.2 Loans. Make, or permit any Subsidiary of any Borrower to make,
any loans or other advances of money to any Person other than (i) for salary,
travel advances, advances against commissions and other similar advances to
employees in the ordinary course of business), (ii) extensions of trade credit
in the ordinary course of business, (iii) deposits with financial institutions
permitted under this Agreement, (iv) prepaid expenses and (v) loans and advances
from one Borrower to another; provided that the aggregate amount of all such
loans and advances to an individual Borrower does not exceed one hundred percent
(100%) of the aggregate amount of such Borrower's Accounts.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to exist,
or permit any Subsidiary of any Borrower to create, incur or suffer to exist,
any Indebtedness, except:
(i) Obligations owing to Agent and Lenders;
(ii) Indebtedness, including, without limitation, BET
Subordinated, Debt existing on the date of this Agreement and listed on
Exhibit 8.2.3;
(iii) Permitted Purchase Money Indebtedness;
(iv) contingent liabilities arising out of endorsements of checks
and other negotiable instruments for deposit or collection in the ordinary
course of business;
(v) guaranties of any Indebtedness permitted hereunder;
(vi) Indebtedness in respect of Intercompany loans permitted
under subsection 8.2.2(v);
(vii) obligations to pay Rentals permitted by subsection 8.2.18;
(viii) to the extent not included above, trade payables, accruals
and accounts payable in the ordinary course of business (in each case to
the extent not overdue) not for Money Borrowed;
(ix) Replacement Subordinated Debt; and
34
(x) Indebtedness not included in paragraphs (i) through (ix)
above which does not exceed at any time, in the aggregate, the sum of Five
Hundred Thousand Dollars ($500,000).
8.2.4 Affiliate Transactions. Enter into, or be a party to, or permit
any Subsidiary of any Borrower to enter into or be a party to, any transaction
with any Affiliate of any Borrower or Parent or any holder of any Securities of
Parent, any Borrower or any Subsidiary of any Borrower, including, without
limitation, any management, consulting or similar fees, except (i) in the
ordinary course of and pursuant to the reasonable requirements of any Borrower's
or such Subsidiary's business and upon fair and reasonable terms which are fully
disclosed to Agent and are no less favorable to the applicable Borrower than
would be obtainable in a comparable arm's length transaction with a Person not
an Affiliate or stockholder of a Borrower or such Subsidiary; (ii) as otherwise
permitted under this Agreement; and (iii) that so long as no Default or Event of
Default has occurred and is continuing or would be caused by any such payment,
Borrowers may pay transaction fees to MCG Global in connection with acquisitions
by Borrowers or any one of them which acquisitions have been consented to by
Majority Lenders which transaction fee(s) shall be in such reasonable amount(s)
as consented to by Majority Lenders. Further, Agent and Lenders acknowledge and
agree that Borrowers may pay compensation to Xxxxxxx Xxxxx, or his designees,
for Xx. Xxxxx'x services as Parent's and VEI's chief executive officer.
8.2.5 Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of any Borrower to create or suffer to exist, any Lien upon any of
its Property, income or profits, whether now owned or hereafter acquired,
except:
(i) Liens at any time granted in favor of Agent for its benefit
and the ratable benefit of Lenders;
(ii) Liens for taxes, assessments or governmental charges
(excluding any Lien imposed pursuant to any of the provisions of ERISA) not
yet due, or being contested in the manner described in subsection 7.1.14
hereto, but only, with respect to contested Liens, if in Agent's judgment
such Lien could not reasonably be expected to adversely affect Agent's
rights or the priority of Agent's Lien on any Collateral having a fair
market value in excess of Two Hundred Fifty Thousand Dollars ($250,000);
(iii) Liens arising in the ordinary course of any Borrower's or
any of its Subsidiaries' business by operation of law or regulation, but
only if payment in respect of any such Lien is not at the time required and
such Liens do not, in the aggregate, materially detract from the value of
the Property of such Borrower or Subsidiary or materially impair the use
thereof in the operation of such Borrower's or Subsidiary's business;
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) such other Liens as appear on Exhibit 8.2.5 hereto;
35
(vi) Liens incurred or deposits made in the ordinary course of
business in connection with (1) worker's compensation, social security,
unemployment insurance and other like laws or (2) sales contracts, leases,
statutory obligations, work in progress advances and other similar
obligations not incurred in connection with the borrowing of money or the
payment of the deferred purchase price of property;
(vii) reservations, covenants, zoning and other land use
regulations, title exceptions or encumbrances granted in the ordinary
course of business, affecting real Property owned or leased by any Borrower
or one of its Subsidiaries; provided that such exceptions do not in the
aggregate materially interfere with the use of such Property in the
ordinary course of any Borrower's or such Subsidiary's business;
(viii) judgment Liens that do not give rise to an Event of
Default under subsection 10.1.15;
(ix) Liens subordinate pursuant to the Intercreditor Agreement to
the Liens of Agent, for its benefit and the ratable benefit of Lenders,
securing the BET Subordinated Debt; and
(x) such other Liens as Majority Lenders hereafter approve in
writing.
8.2.6 Payments and Amendments of Certain Debt.
(i) Except as permitted by the BET Subordination Agreement, make
or permit any Subsidiary of any Borrower to make any payment of any part or
all of any Subordinated Debt or take any other action or omit to take any
other action in respect of any Subordinated Debt, except in accordance with
the subordination agreement relative thereto or the subordination
provisions thereof or in connection with the refinancing of the BET
Subordinated Debt with Replacement Subordinated Debt; or
(ii) amend or modify any agreement, instrument or document
evidencing or relating to any Subordinated Debt.
8.2.7 Distributions. Declare or make, or permit any Subsidiary of any
Borrower to declare or make, any Distributions, except for:
(i) Distributions by any Subsidiary of a Borrower to such
Borrower;
(ii) Distributions paid solely in Securities of any Borrower or
any of its Subsidiaries;
(iii) Distributions by a Borrower in amounts necessary to permit
such Parent to repurchase Securities of Parent from employees of such
Borrower or Parent or any of such Borrower's Subsidiaries upon the
termination of their employment, so long as no Default or Event of Default
exists at the time of or would be caused by the making of such
Distributions and the aggregate cash amount of such Distributions, measured
at the time when made, does not exceed Five Hundred Thousand Dollars
($500,000) in any fiscal year of Parent;
36
(iv) So long as no Default or Event of Default exists at the time
of or would be caused by the making of such Distributions, Distributions by
VEI or its Subsidiaries in an amount sufficient to permit Parent to pay
Consolidated tax liabilities of Parent, Borrowers and Borrowers'
Subsidiaries relating to the business of Borrowers and Borrowers'
Subsidiaries, so long as Parent applies the amount of such Distributions
for such purpose; and
(v) Distributions by Borrowers or their Subsidiaries to the
extent necessary to permit Parent to pay, without duplication, executive
and officer salaries related to the business of Borrowers and their
Subsidiaries, not to exceed Two Million Four Hundred Thousand Dollars
($2,400,000) in any fiscal year of Borrowers, so long as Parent applies the
amount of such Distributions for such purpose.
8.2.8 Capital Expenditures. Make Capital Expenditures (including,
without limitation, by way of capitalized leases but excluding Capital
Expenditures financed by Permitted Purchase Money Indebtedness) which, in the
aggregate, as to Borrowers and all of their Subsidiaries, exceed, in any fiscal
year of Parent and Borrowers, the amount set forth opposite such fiscal year in
the following schedule:
Fiscal Year Ending Permitted Capital Expenditure
------------------ -----------------------------
Saturday nearest June 30, 2004 $2,750,000
Saturday nearest June 30, 2005 $3,000,000
Saturday nearest June 30, 2006 $3,250,000
Saturday nearest June 30, 2007 $3,250,000
provided that Capital Expenditures incurred in connection with the replacement
of Equipment as provided in subsection 6.3.2(ii) shall not be included for the
purpose of determining permitted Capital Expenditures under this subsection
8.2.8 to the extent that such Capital Expenditure was funded from the proceeds
of any sale or other disposition of obsolete or redundant Equipment.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of any
of, or permit any Subsidiary or any Borrower to sell, lease or otherwise dispose
of any of, its Properties, including any disposition of Property as part of a
sale and leaseback transaction, to or in favor of any Person, except for:
(i) sales of Inventory in the ordinary course of business;
(ii) transfers of Property to a Borrower by a Subsidiary of a
Borrowers;
(iii) dispositions of Property that is substantially worn,
damaged, uneconomic or obsolete (subject to subsection 6.3.2 hereof);
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(iv) dispositions of investments described in paragraphs (iv),
(v), (vi) and (vii) of the definition of the term "Restricted Investments";
and
(v) other dispositions expressly authorized by this Agreement.
8.2.10 Securities of Subsidiaries. Permit any of its Subsidiaries to
issue any additional Securities except director's qualifying Securities.
8.2.11 Xxxx-and-Hold Sales, Etc. Make, or permit any Subsidiary of any
Borrower to make, a sale to any customer on a xxxx-and-hold, guaranteed sale,
sale and return, sale on approval, repurchase or return or consignment basis, or
any sale on a repurchase or return basis.
8.2.12 Restricted Investment. Make or have, or permit any Subsidiary
of any Borrower to make or have, any Restricted Investment.
8.2.13 Subsidiaries and Joint Ventures. Create, acquire or otherwise
suffer to exist, or permit any Subsidiary of any Borrower to create, acquire or
otherwise suffer to exist any Subsidiary or joint venture not in existence on
the date hereof.
8.2.14 Tax Consolidation. File of consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary of a
Borrower or Parent.
8.2.15 Organizational Documents. Agree to, or suffer to occur, any
amendment, supplement or addition to its or any of its Subsidiaries' charter,
articles or certificate of incorporation, certificate of formation, limited
partnership agreement, bylaws, limited liability agreement, operating agreement
or other organizational documents (as the case may be), except for amendments,
supplements or additions to Parent's Certificate of Incorporation or by-laws to
enable Parent to issue additional equity so long as any such amendment,
supplement or addition could not reasonably be expected to have a Material
Adverse Effect.
8.2.16 Fiscal Year End. Change, or permit any Subsidiary of any
Borrower to change its fiscal year end.
8.2.17 Negative Pledges. Enter into any agreement limiting the ability
of any Borrower or any of its Subsidiaries to voluntarily create Liens upon any
of its Property other than Property securing Permitted Purchase Money
Indebtedness.
8.2.18 Leases. Become, or permit any of its Subsidiaries to become, a
lessee or a guarantor of a lessee under any operating lease (other than a lease
under which any Borrower or any of its Subsidiaries is lessor) of Property if
the aggregate Rentals payable or guaranteed during any current or future period
of twelve (12) consecutive months under the lease in question and all other
leases under which Borrowers or any of their Subsidiaries is then lessee would
exceed Twenty-Eight Million Dollars ($28,000,000). The term "Rentals" means, as
of the date of determination, all payments which the lessee is required to make
by the terms of any lease.
8.3 Specific Financial Covenants. During the Term and thereafter for so
long as there are any Obligations outstanding, Borrowers covenant that they,
unless otherwise waived by
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Majority Lenders in writing, shall comply with each of the financial covenants
set forth on Exhibit 8.3 hereto. If GAAP changes from the basis used in
preparing the audited financial statements delivered to Agent by Borrowers on or
before the Closing Date, Borrowers will provide Agent with certificates
demonstrating compliance with such financial covenants and will include, at the
election of Borrowers or upon the request of Agent, calculations setting forth
the adjustments necessary to demonstrate how Borrowers are also in compliance
with such financial covenants based upon GAAP as in effect on the Closing Date.
SECTION 9. CONDITIONS PRECEDENT.
Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Agent or any
Lender under the other sections of this Agreement, no Lender shall be required
to make any Loan nor shall Agent be required to issue or procure any Letter of
Credit or LC Guaranty, unless and until each of the following conditions has
been and continues to be satisfied:
9.1 Documentation. Agent shall have received, in form and substance
satisfactory to Agent and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments, opinions and certificates as Agent and its counsel shall require in
connection therewith from time to time, all in form and substance satisfactory
to Agent and its counsel.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set forth in the
other Loan Documents shall have been satisfied.
9.4 Availability. As of the Closing Date, Agent shall have determined that
immediately after Lenders have made the initial Loans and issued the initial
Letters of Credit and LC Guaranties contemplated hereby, and paid all closing
costs incurred in connection with the transactions contemplated hereby, pro
forma Availability as of the end of business on November 25, 2003 shall not be
less than Three Million Six Hundred Thousand Dollars ($3,600,000).
9.5 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
9.6 Accounts Payable. As of the Closing Date, Agent and Majority Lenders
shall have determined to their satisfaction that Borrowers' trade accounts
payable and other accrued expenses are current (not more than 45 days past due)
or as otherwise provided for under Borrowers' trade debt restructuring plan,
which plan has been submitted to and approved by Agent and Lenders.
9.7 Subordinated Notes. Agent and Majority Lenders shall have received
evidence satisfactory to it that Borrowers shall have received either directly
or indirectly through a cash
39
capital contribution by Parent at least Six Million Dollars ($6,000,000) from
the sale of the BET Subordinated Notes. The terms and conditions of the BET
Subordinated Debt Documents and the BET Subordination Agreement and any
amendments thereto shall be acceptable to Agent and each Lender.
9.8 Material Adverse Effect. Since June 30, 2003, there has not been any
material adverse change in the business, assets, financial condition, income or
prospects of Borrowers and their Subsidiaries, taken as a whole, and no event or
condition exists which would be reasonably likely to result in any Material
Adverse Effect.
9.9 Cash Equity. Agent shall have received evidence satisfactory to it that
Borrowers either directly or indirectly through a capital contribution by Parent
shall have received an equity investment in Borrowers of at least Eighteen
Million Eight Hundred Sixteen Thousand Six Hundred Fifty-Two and 50/100 Dollars
($18,816,652.50) and at least Eighteen Million Forty-Six Thousand Six Hundred
Fifty-Two and 50/100 Dollars ($18,046,652.50) of such equity investment shall
have been made in cash.
9.10 Syndication. Lenders with Revolving Loan Commitments in an aggregate
amount of Forty-Two Million Five Hundred Thousand Dollars ($42,500,000) shall
have executed this Agreement.
9.11 Vendor Contracts. Majority Lenders shall be satisfied with the results
of the legal review of the contracts between the Borrowers (or any one of them)
and Borrowers' ten largest customers (as determined by the trailing twelve
months' revenues generated by such customers).
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Obligations. Borrowers shall fail to pay any of the
Obligations hereunder or under any Note on the due date thereof (whether due at
stated maturity, on demand, upon acceleration or otherwise).
10.1.2 Misrepresentations. Any representation, warranty or other
statement made or furnished to Agent or any Lender by or on behalf of any
Borrower, any Subsidiary of any Borrower or Parent in this Agreement, any of the
other Loan Documents or any instrument, certificate or financial statement
furnished in compliance with or in reference thereto proves to have been false
or misleading in any material respect when made, furnished or reaffirmed
pursuant to Section 7.2 hereof.
10.1.3 Breach of Specific Covenants. Borrowers shall fail or neglect
to perform, keep or observe any covenant contained in Section or subsection 5.2,
5.3, 6.1.2, 6.2.4, 6.2.5, 8.1.1, 8.1.2, 8.1.4, 8.1.8, 8.2 or 8.3 hereof on the
date that Borrowers are required to perform, keep or observe such covenant or
shall fail or neglect to perform, keep or observe any covenant contained in
Section 8.1.3 or 8.1.6 hereof within 5 days (10 days with respect to
40
Section 8.1.6) following the date on which Borrowers are required to perform,
keep or observe such covenant.
10.1.4 Breach of Other Covenants. Borrowers shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 10.1 hereof) and
the breach of such other covenant is not cured to Agent's satisfaction within 30
days after the sooner to occur of VEI's (on behalf of all Borrowers) receipt of
notice of such breach from Agent or the date on which such failure or neglect
first becomes known to any officer of Parent or any Borrower.
10.1.5 Default Under Security Documents or Other Agreements. Any event
of default shall occur under, or any Borrower, any of its Subsidiaries or Parent
shall default in the performance or observance of any term, covenant, condition
or agreement contained in, any of the Security Documents or the Other Agreements
and such default shall continue beyond any applicable grace period.
10.1.6 Other Defaults. There shall occur any default or event of
default on the part of any Borrower, any Subsidiary of any Borrower or Parent
under any agreement, document or instrument to which any Borrower, such
Subsidiary of any Borrower or Parent is a party or by which such Borrower, such
Subsidiary of such Borrower or Parent or any of its Property is bound,
evidencing or relating to any Indebtedness (other than the Obligations) with an
outstanding principal balance in excess of Five Hundred Thousand Dollars
($500,000), if the payment or maturity of such Indebtedness is or could be
accelerated in consequence of such event of default or demand for payment of
such Indebtedness is made or could be made in accordance with the terms thereof.
10.1.7 Uninsured Losses. Any material loss, theft, damage or
destruction of any portion of the Collateral having a fair market value of Two
Hundred Fifty Thousand Dollars ($250,000), in the aggregate, if not fully
covered (subject to such deductibles and self-insurance retentions as Agent
shall have permitted) by insurance.
10.1.8 Insolvency and Related Proceedings. Any Borrower, any
Subsidiary of any Borrower or Parent shall cease to be Solvent or shall suffer
the appointment of a receiver, trustee, custodian or similar fiduciary, or shall
make an assignment for the benefit of creditors, or any petition for an order
for relief shall be filed by or against any Borrower, any Subsidiary of any
Borrower or Parent under U.S. federal bankruptcy laws (if against any Borrower,
any Subsidiary of any Borrower or Parent the continuation of such proceeding for
more than 30 days), or any Borrower, any Subsidiary of any Borrower or Parent
shall make any offer of settlement, extension or composition to their respective
unsecured creditors generally.
10.1.9 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of Borrower, any Subsidiary of
any Borrower or Parent for a period which materially adversely affects such
Borrower's, such Subsidiary's or Parent's, in each case taken as a whole,
capacity to continue its business on a profitable basis; or any Borrower, any
Subsidiary of any Borrower or Parent shall suffer the loss or revocation of any
material license or permit now held or hereafter acquired by any Borrower, any
Subsidiary of any Borrower or Parent which is necessary to the continued or
lawful operation of its business and
41
such loss or revocation has or evidences a Material Adverse Effect; or any
Borrower, any Subsidiary of any Borrower or Parent shall be enjoined, restrained
or in any way prevented by court, governmental or administrative order from
conducting all or any material part of its business affairs and such injunction
or restraint has or evidences a Material Adverse Effect; or any material lease
or agreement pursuant to which any Borrower, any Subsidiary of any Borrower or
Parent leases, uses or occupies any Property shall be canceled or terminated
prior to the expiration of its stated term, except any such lease or agreement
the cancellation or termination of which could not reasonably be expected to
have a Material Adverse Effect; or any material portion of the Collateral shall
be taken through condemnation or the value of such Property shall be impaired
through condemnation and such condemnation has or evidences a Material Adverse
Effect.
10.1.10 Change of Ownership. There shall occur a Change in Control.
10.1.11 ERISA. A Reportable Event shall occur which, in Agent's
determination, constitutes grounds for the termination by the Pension Benefit
Guaranty Corporation of any Plan or for the appointment by the appropriate
United States district court of a trustee for any Plan, or any Plan shall be
terminated or any such trustee shall be requested or appointed, or if any
Borrower, any Subsidiary of any Borrower or Parent is in "default" (as defined
in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting from such Borrower's, such Subsidiary's or Parent's complete or
partial withdrawal from such Plan and any such event could reasonably be
expected to have a Material Adverse Effect.
10.1.12 Challenge to Agreement. Any Borrower, any Subsidiary of any
Borrower or Parent, or any Affiliate of any of them, shall challenge or contest
in any action, suit or proceeding the validity or enforceability of this
Agreement or any of the other Loan Documents, the legality or enforceability of
any of the Obligations or the perfection or priority of any Lien granted to
Agent.
10.1.13 Repudiation of or Default Under Guaranty Agreement. Parent
shall revoke or attempt to revoke the Guaranty Agreement signed by Parent, or
shall repudiate Parent's liability thereunder or shall be in default under the
terms thereof.
10.1.14 Criminal Forfeiture. Any Borrower, any Subsidiary of any
Borrower or Parent shall be criminally indicted or convicted under any law that
could lead to a forfeiture of any Property of any Borrower, any Subsidiary of
any Borrower or Parent.
10.1.15 Judgments. Any money judgments, writ of attachment or similar
process (collectively, "Judgments") are issued or rendered against any Borrower,
any Subsidiary of Borrower or Parent, or any of their respective Property (i) in
the case of money judgments, in an aggregate amount of Five Hundred Thousand
Dollars ($500,000) or more for all such judgments, attachments or processes in
the aggregate, in each case in excess of any applicable insurance with respect
to which the insurer has admitted liability or with respect to which a Reserve
has been established on the Closing Date, and (ii) in the case of non-monetary
Judgments, such Judgment or Judgments (in the aggregate) could reasonably be
expected to have
42
a Material Adverse Effect, in each case which Judgment is not stayed, released
or discharged within thirty (30) days.
10.1.16 TH Xxx Letters of Credit. So long as the TH Xxx Letters of
Credit have not been terminated as provide herein, the TH Xxx Letters of Credit
shall fail to be renewed or extended at least thirty (30) days prior to their
expiration; provided that so long as no Default or Event of Default has occurred
and is continuing, the amount of TH Xxx Letters of Credit shall be reduced, on a
dollar for dollar basis, for each dollar received by Borrowers after the Closing
Date, in cash, as an equity contribution, either directly or indirectly through
a cash contribution by Parent and any renewal or extension of the TH Xxx Letters
of Credit shall be in an amount equal to such reduced amount. In addition, at
any time occurring after the later of December 19, 2003 or the date on which the
amount of the TH Xxx Letters of Credit have been reduced to $1,100,000 by reason
of cash contributions to the equity of Borrowers as provided in the previous
sentence, the TH Xxx Letters of Credit shall be further reduced to $0, if as of
any date, each of the following conditions has been satisfied: (x) average
Availability, computed as of November 28, 2003 and each Friday thereafter until
the Friday occurring immediately prior to the test date in question (or the test
date if the test date is a Friday) equals or exceeds $5,250,000, (y) pro forma
Availability, computed as of the most recent Friday on the assumption that the
TH Xxx Letters of Credit have been reduced to $0, equals or exceeds $5,000,000
and (z) no Default or Event of Default has occurred and is continuing. When the
amount of the TH Xxx Letters of Credit has been reduced to $0 either through
reductions as provided in the previous two sentences or by draws thereon, the TH
Xxx Letters of Credit shall be terminated. Parent and Borrowers shall take all
necessary or appropriate actions to effect any such reduction or the termination
of the TH Xxx Letters of Credit in full upon the reduction of the amount of the
TH Xxx Letters of Credit to $0 and upon such termination, unless retained by the
issuer thereof upon a full draw, to cause the return of the TH Xxx Letters of
Credit to TH Xxx.
10.2 Acceleration of the Obligations. Upon or at any time after the
occurrence and during the continuance of an Event of Default, (i) the Revolving
Loan Commitments shall, at the option of Majority Lenders be terminated and/or
(ii) Majority Lenders may declare all or any portion of the Obligations at once
due and payable without presentment, demand protest or further notice by Agent
or any Lender, and Borrowers shall forthwith pay to Agent, the full amount of
such Obligations, provided, that upon the occurrence of an Event of Default
specified in subsection 10.1.8 hereof, the Revolving Loan Commitments shall
automatically be terminated and all of the Obligations shall become
automatically due and payable, in each case without declaration, notice or
demand by Agent or any Lender.
10.3 Other Remedies. Upon the occurrence and during the continuance of an
Event of Default, Agent shall have and may exercise from time to time the
following other rights and remedies:
10.3.1 All of the rights and remedies of a secured party under the UCC
or under other applicable law, and all other legal and equitable rights to which
Agent or Lenders may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
43
10.3.2 The right to take immediate possession of the Collateral, and
to (i) require Borrowers and each of their Subsidiaries to assemble the
Collateral, at Borrowers' expense, and make it available to Agent at a place
designated by Agent which is reasonably convenient to both parties, and (ii)
enter any premises where any of the Collateral shall be located and to keep and
store the Collateral on said premises until sold (and if said premises be the
Property of any Borrower, such Borrower or any Subsidiary of any Borrower agrees
not to charge, or permit any of its Subsidiaries to charge, Agent for storage
thereof).
10.3.3 The right to sell or otherwise dispose of all or any Collateral
in its then condition, or after any further manufacturing or processing thereof,
at public or private sale or sales, with such notice as may be required by law,
in lots or in bulk, for cash or on credit, all as Agent, in its sole discretion,
may deem advisable. Agent may, at Agent's option, disclaim any and all
warranties regarding the Collateral in connection with any such sale. Each
Borrower agrees that ten (10) days' written notice to Borrowers or any of their
Subsidiaries of any public or private sale or other disposition of Collateral
shall be reasonable notice thereof, and such sale shall be at such locations as
Agent may designate in said notice. Agent shall have the right to conduct such
sales on any Borrower's or any Subsidiary's of any Borrower premises, without
charge therefor, and such sales may be adjourned from time to time in accordance
with applicable law. Agent shall have the right to sell, lease or otherwise
dispose of the Collateral, or any part thereof, for cash, credit or any
combination thereof, and Agent, on behalf of Lenders, may purchase all or any
part of the Collateral at public or, if permitted by law, private sale and, in
lieu of actual payment of such purchase price, may set off the amount of such
price against the Obligations. The proceeds realized from the sale of any
Collateral may be applied, after allowing two (2) Business Days for collection,
first to the costs, expenses and attorneys' fees incurred by Agent in collecting
the Obligations, in enforcing the rights of Agent and Lenders under the Loan
Documents and in collecting, retaking, completing, protecting, removing,
storing, advertising for sale, selling and delivering any Collateral; second to
the interest due upon any of the Obligations; and third, to the principal of the
Obligations. If any deficiency shall arise, each Borrower and Parent shall
remain jointly and severally liable to Agent and Lenders therefor.
10.3.4 Agent is hereby granted a license or other right to use,
without charge, each Borrower's and each Subsidiary's of 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 completing advertising for sale and selling any
Collateral and any Borrower's or any Subsidiary's of any Borrower rights under
all licenses and all franchise agreements shall inure to Agent's benefit.
10.3.5 Agent may, at its option, require Borrowers to deposit with
Agent funds equal to the LC Amount and, if Borrowers fail to promptly make such
deposit, Agent may advance such amount as a Revolving Credit Loan (whether or
not an Overadvance is created thereby). Each such Revolving Credit Loan shall be
secured by all of the Collateral and shall constitute a Base Rate Advance. Any
such deposit or advance shall be held by Agent as a reserve to fund future
payments on such LC Guaranties and future drawings against such Letters of
Credit. At such time as all LC Guaranties have been paid or terminated and all
Letters of Credit have been drawn upon or expired, any amounts remaining in such
reserve shall be applied against any outstanding Obligations, or, if all
Obligations have been indefeasibly paid in full, returned to Borrowers.
44
10.3.6 Upon the occurrence and during the continuance of an Event of
Default, any Lender holding more than one-third of the Revolving Loan
Commitments (or if the Revolving Loan Commitments have been terminated,
one-third of the outstanding Revolving Credit Loans) may direct Agent to make
partial or complete draws upon the TH Xxx Letters of Credit, so long as such TH
Xxx Letters of Credit have not been terminated as provided in Section 10.1.16
and only to the extent of the amount to which the TH Xxx Letters of Credit have
been reduced in accordance with Section 10.1.16.
10.4 Set Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender is hereby
authorized by each Borrower at any time or from time to time, with prior written
consent of Agent and with reasonably prompt subsequent notice to any Borrower
(any prior or contemporaneous notice to any or all Borrowers being hereby
expressly waived) to set off and to appropriate and to apply any and all (i)
balances held by such Lender at any of its offices for the account of any
Borrower or any of its Subsidiaries (regardless of whether such balances are
then due to any Borrower or its Subsidiaries), and (ii) other property at any
time held or owing by such Lender to or for the credit or for the account of any
Borrower or any of its Subsidiaries, against and on account of any of the
Obligations. Any Lender exercising a right to set off shall, to the extent the
amount of any such set off exceeds its Revolving Credit Percentage of the amount
set off, purchase for cash (and the other Lenders shall sell) interests in each
such other Lender's pro rata share of the Obligations as would be necessary to
cause such Lender to share such excess with each other Lender in accordance with
their respective Revolving Loan Percentages. Each Borrower agrees, to the
fullest extent permitted by law, that any Lender may exercise its right to set
off with respect to amounts in excess of its pro rata share of the Obligations
and upon doing so shall deliver such excess to Agent for the benefit of all
Lenders in accordance with the Revolving Credit Percentages.
10.5 Remedies Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrowers
contained in this Agreement and the other Loan Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule or in any Guaranty Agreement given to Agent or Lenders or contained in
any other agreement between Agent and/or Lenders, and any Borrower, heretofore,
concurrently, or hereafter entered into, shall be deemed cumulative to and not
in derogation or substitution of any of the terms, covenants, conditions, or
agreements of Borrowers herein contained. The failure or delay of Agent or
Lenders to require strict performance by Borrowers of any provision of this
Agreement or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other documents or
security or Collateral shall not operate as a waiver of such performance, Liens,
rights, powers and remedies, but all such requirements, Liens, rights, powers,
and remedies shall continue in full force and effect until all Loans and all
other Obligations owing or to become owing from Borrowers to Agent and/or
Lenders shall have been fully satisfied. None of the undertakings, agreements,
warranties, covenants and representations of Borrowers contained in this
Agreement or any of the other Loan Documents and no Default or Event of Default
by Borrowers under this Agreement or any other Loan Documents shall be deemed to
have been suspended or waived by Agent or Lenders, unless such suspension or
waiver is by an instrument
45
in writing specifying such suspension or waiver and is signed by a duly
authorized representative of Agent, Lenders or Majority Lenders (as applicable)
and directed to Borrowers.
SECTION 11. THE AGENT
11.1 Authorization and Action. Each Lender hereby appoints and authorizes
Agent to take such action on its behalf and to exercise such powers under this
Agreement, and the other Loan Documents as are delegated to Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto. Each Lender hereby acknowledges that Agent shall not have by reason of
this Agreement assumed a fiduciary relationship in respect of any Lender. In
performing its functions and duties under this Agreement, Agent shall act solely
as agent of Lenders and shall not assume, or be deemed to have assumed, any
obligation toward, or relationship of agency or trust with or for, Borrowers. As
to any matters not expressly provided for by this Agreement and the other Loan
Documents (including, without limitation, enforcement or collection of the
Notes, Agent may, but shall not be required to, exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
Majority Lenders, whenever such instruction shall be requested by Agent or
required hereunder, or a greater or lesser number of Lenders if so required
hereunder, and such instructions shall be binding upon all Lenders; provided
that Agent shall be fully justified in failing or refusing to take any action
which exposes Agent to any liability or which is contrary to this Agreement or
the other Loan Documents or applicable law, unless Agent is indemnified to its
satisfaction by Lenders against any and all liability and expense which it may
incur by reason of taking or continuing to take any such action. If Agent seeks
the consent or approval of Majority Lenders (or a greater or lesser number of
Lenders as required in this Agreement), with respect to any action hereunder,
Agent shall send notice thereof to each Lender and shall notify each Lender at
any time that Majority Lenders (or such greater or lesser number of Lenders)
have instructed Agent to act or refrain from acting pursuant hereto.
11.2 Agent's Reliance, Etc. Neither Agent, any Affiliate of Agent, nor any
of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, Agent: (i) may treat each Lender party as the holder of
Obligations until Agent receives written notice of the assignment or transfer of
such Lender's portion of the Obligations signed by such Lender and in form
reasonably satisfactory to Agent; (ii) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranties or representations to any Lender and shall not be responsible to
any Lender for any recitals, statements, warranties or representations made in
or in connection with this Agreement or any other Loan Documents; (iv) shall not
have any duty beyond Agent's customary practices in respect of loans in which
Agent is the only lender, to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or the
other Loan Documents on the part of any Borrower or any Subsidiary of any
Borrower, to inspect the property (including the books and records) of any
Borrower or any Subsidiary of any Borrower or to monitor the financial condition
of Borrowers or any Subsidiary of any Borrower
46
or to ascertain the existence or possible existence or continuation of any
Default or Event of Default; (v) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (vi) shall not be liable to any
Lender for any action taken, or inaction, by Agent upon the instructions of
Majority Lenders pursuant to Section 11.1 hereof or refraining to take any
action pending such instructions; (vii) shall not be liable for any
apportionment or distributions of payments made by it in good faith pursuant to
Section 3 hereof; (viii) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate, message or other instrument or writing (which may be by telephone,
facsimile, telegram, cable or telex) believed in good faith by it to be genuine
and signed or sent by the proper party or parties; and (ix) may assume that no
Event of Default has occurred and is continuing, unless Agent has actual
knowledge of the Event of Default, has received notice from any Borrower or
Parent's and Borrowers' independent certified public accountants stating the
nature of the Event of Default, or has received notice from a Lender stating the
nature of the Event of Default and that such Lender considers the Event of
Default to have occurred and to be continuing. In the event any apportionment or
distribution described in clause (vii) above is determined to have been made in
error, the sole recourse of any Person to whom payment was due but not made
shall be to recover from the recipients of such payments any payment in excess
of the amount to which they are determined to have been entitled.
11.3 FCC and Affiliates. With respect to its commitment hereunder to make
Revolving Credit Loans and to issue or procure Letters of Credit and LC
Guaranties, FCC shall have the same rights and powers under this Agreement and
the other Loan Documents as any other Lender and may exercise the same as though
it were not Agent; and the terms "Lender", "Lenders" or "Majority Lenders"
shall, unless otherwise expressly indicated, include FCC in its individual
capacity as a Lender. FCC and its Affiliates may lend money to, and generally
engage in any kind of business with, Parent, Borrowers, any of their
Subsidiaries and any Person who may do business with or own Securities of any
Borrower or any such Subsidiary, all as if FCC were not Agent and without any
duty to account therefor to any other Lender.
11.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the financial statements referred to herein and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement. Agent shall not have any duty or responsibility, either
initially or on an ongoing basis, to provide any Lender with any credit or other
similar information regarding Borrowers. The obligations of Lenders under this
Section 11.4 shall survive the payment in full of all Obligations and the
termination of this Agreement. If after payment and distribution of any amount
by Agent to Lenders, any Lender or any other Person, including, any Borrower,
Parent, any creditor of any Borrower, a liquidator, administrator or trustee in
bankruptcy, recovers from Agent any amount found to have been wrongfully paid to
Agent or disbursed by Agent to Lenders, then Lenders, in accordance with their
respective Aggregate Percentages, shall reimburse Agent for all such amounts.
47
11.5 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Borrowers) in accordance with their respective Aggregate
Percentages, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against Agent in any way relating to or arising out of this Agreement
or any other Loan Document or any action taken or omitted by Agent under this
Agreement; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share, as set forth above,
of any out-of-pocket expenses (including attorneys' fees) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiation, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that Agent is not reimbursed for such expenses by Borrowers. The
obligations of Lenders under this Section 11.5 shall survive the payment in full
of all Obligations and the termination of this Agreement. If after payment and
distribution of any amount by Agent to Lenders, any Lender or any other Person,
including Borrowers, any creditor of any Borrower, a liquidator, administrator
or trustee in bankruptcy, recovers from Agent any amount found to have been
wrongfully paid to Agent or disbursed by Agent to Lenders, then Lenders, in
accordance with their respective Aggregate Percentages, shall reimburse Agent
for all such amounts.
11.6 Rights and Remedies to be Exercised by Agent Only. Each Lender agrees
that, except as set forth in Section 10.4, no Lender shall have any right
individually (i) to realize upon the security created by this Agreement or any
other Loan Document, (ii) to enforce any provision of this Agreement or any
other Loan Document, or (iii) to make demand under this Agreement or any other
Loan Document.
11.7 Agency Provisions Relating to Collateral. Each Lender authorizes and
ratifies Agent's entry into this Agreement and the Security Documents for the
benefit of Lenders. Each Lender agrees that any action taken by Agent with
respect to the Collateral in accordance with the provisions of this Agreement or
the Security Documents, and the exercise by Agent of the powers set forth herein
or therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all Lenders. Agent is hereby
authorized on behalf of all Lenders, without the necessity of any notice to or
further consent from any Lender, to take any action with respect to any
Collateral or the Loan Documents which may be necessary to perfect and maintain
perfected Agent's Liens upon the Collateral, for its benefit and the ratable
benefit of Lenders. Lenders hereby irrevocably authorize Agent, at its option
and in its discretion, to release any Lien granted to or held by Agent upon any
Collateral: (i) upon termination of the Agreement and payment and satisfaction
of all Obligations; or (ii) constituting property being sold or disposed of if
VEI, on behalf of all Borrowers, certifies to Agent that the sale or disposition
is made in compliance with subsection 8.2.9 hereof (and Agent may rely
conclusively on any such certificate, without further inquiry); or (iii)
constituting Property in which no Borrower owned any interest at the time the
Lien was granted or any other time thereafter; or (iv) in connection with any
foreclosure sale or other disposition of Collateral after the occurrence and
during the continuation of an Event of Default or (v) if approved, authorized or
ratified in writing by Agent at the direction of all Lenders. Upon request by
Agent at any
48
time, Lenders will confirm in writing Agent's authority to release particular
types or items of Collateral pursuant hereto. Agent shall have no obligation
whatsoever to any Lender or to any other Person to assure that the Collateral
exists or is owned by any Borrower or is cared for, protected or insured or has
been encumbered or that the Liens granted to Agent herein or pursuant to the
Security Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of its rights,
authorities and powers granted or available to Agent in this Section 11.7 or in
any of the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, Agent may act in any
manner it may deem appropriate, in its sole discretion, but consistent with the
provisions of this Agreement, including given Agent's own interest in the
Collateral as a Lender and that Agent shall have no duty or liability whatsoever
to any Lender.
11.8 Agent's Right to Purchase Commitments. Agent shall have the right, but
shall not be obligated, at any time upon written notice to any Lender and with
the consent of such Lender, which may be granted or withheld in such Lender's
sole discretion, to purchase for Agent's own account all of such Lender's
interests in this Agreement, the other Loan Documents and the Obligations, for
the face amount of the outstanding Obligations owed to such Lender, including
without limitation all accrued and unpaid interest and fees.
11.9 Right of Sale, Assignment, Participations. Each Borrower hereby
consents to any Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement and any of the
other Loan Documents, or of any portion hereof or thereof, including, without
limitation, such Lender's rights, title, interests, remedies, powers, and duties
hereunder or thereunder subject to the terms and conditions set forth below:
11.9.1 Sales, Assignments. Each Lender hereby agrees that, with
respect to any sale or assignment other than sales or assignments by a Lender to
an Affiliate of such Lender (i) no such sale or assignment shall be for an
amount of less than One Million Dollars ($1,000,000), (ii) each such sale or
assignment shall be made on terms and conditions which are customary in the
industry at the time of the transaction, (iii) Agent and, in the absence of a
continuing Default or continuing Event of Default, Borrowers, must consent, such
consent not to be unreasonably withheld, to each such assignment to a Person
that is not an original signatory to this Agreement, (iv) the assigning Lender
shall pay to Agent a processing and recordation fee of $3,500 and any
out-of-pocket attorneys' fees and expenses incurred by Agent in connection with
any such sale or assignment and (v) Agent, the assigning Lender and the assignee
Lender shall each have executed and delivered an Assignment and Acceptance
Agreement. After such sale or assignment has been consummated (x) the assignee
Lender thereupon shall become a "Lender" for all purposes of this Agreement and
(y) the assigning Lender shall have no further liability for funding the portion
of Revolving Loan Commitments assumed by such other Lender.
11.9.2 Participations. Any Lender may grant participations in its
extensions of credit hereunder to any other Lender or other lending institution
(a "Participant"), provided that (i) no such participation shall be for an
amount of less than Five Million Dollars ($5,000,000), (ii) no Participant shall
thereby acquire any direct rights under this Agreement, (iii) no
49
Participant shall be granted any right to consent to any amendment, except to
the extent any of the same pertain to (1) reducing the aggregate principal
amount of, or interest rate on, or fees applicable to, any Loan or (2) extending
the final stated maturity of any Loan or the stated maturity of any portion of
any payment of principal of, or interest or fees applicable to, any of the
Loans; provided, that the rights described in this subclause (2) shall not be
deemed to include the right to consent to any amendment with respect to or which
has the effect of requiring or waiving any mandatory prepayment of any portion
of any Loan or any amendment or waiver of any Default or Event of Default, (iv)
no sale of a participation in extensions of credit shall in any manner relieve
the originating Lender of its obligations hereunder, (v) the originating Lender
shall remain solely responsible for the performance of such obligations, (vi)
Borrowers and Agent shall continue to deal solely and directly with the
originating Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (vii) in no event
shall any financial institution purchasing the participation grant a
participation in its participation interest in the Loans without the prior
written consent of Agent, and, in the absence of a Default or an Event of
Default, Borrowers, which consents shall not unreasonably be withheld and (viii)
all amounts payable by Borrower hereunder shall be determined as if the
originating Lender had not sold any such participation.
11.9.3 Certain Agreements of Borrowers. Each Borrower agrees that (i)
it will use its commercially reasonable best efforts to assist and cooperate
with each Lender in any manner reasonably requested by such Lender to effect the
sale of participation in or assignments of any of the Loan Documents or any
portion thereof or interest therein, including, without limitation, assisting in
the preparation of appropriate disclosure documents and making members of
management available at reasonable times to meet with and answer questions of
potential assignees and Participants; and (ii) subject to the provisions of
Section 12.14 hereof, such Lender may disclose credit information regarding
Borrowers to any potential Participant or assignee.
11.9.4 Non U.S. Resident Transferees. If, pursuant to this Section
11.9, any interest in this Agreement or any Loans is transferred to any
transferee which is organized under the laws of any jurisdiction other than the
United States or any state thereof, the transferor Lender shall cause such
transferee (other than any Participant), and may cause any Participant,
concurrently with and as a condition precedent to the effectiveness of such
transfer, to (i) represent to the transferor Lender (for the benefit of the
transferor Lender, Agent, and Borrowers) that under applicable law and treaties
no taxes will be required to be withheld by Agent, Borrowers or the transferor
Lender with respect to any payments to be made to such transferee in respect of
the interest so transferred, (ii) furnish to the transferor Lender, Agent and
Borrowers either United States Internal Revenue Service Form W-8BEN or United
States Internal Revenue Service Form W-8ECI (wherein such transferee claims
entitlement to complete exemption from United States federal withholding tax on
all interest payments hereunder), and (iii) agree (for the benefit of the
transferor Lender, Agent and Borrower) to provide the transferor Lender, Agent
and Borrowers a new Form W-8BEN or Form W-8ECI upon the obsolescence of any
previously delivered form and comparable statements in accordance with
applicable United States laws and regulations and amendments duly executed and
completed by such transferee, and to comply from time to time with all
applicable United States laws and regulations with regard to such withholding
tax exemption.
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11.10 Amendment. No amendment or waiver of any provision of this Agreement
or any other Loan Document (including without limitation any Note), nor consent
to any departure by Borrowers therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Majority Lenders and Borrowers,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, that no amendment,
waiver or consent shall be effective, unless (i) in writing and signed by each
Lender, do any of the following: (1) increase or decrease the aggregate
Revolving Loan Commitments, or any Lender's Revolving Loan Commitment, (2)
reduce the principal of, or interest on, any amount (including fees) payable
hereunder or under any Note, other than those payable only to FCC in its
capacity as Agent, which may be reduced by FCC unilaterally, (3) increase or
decrease any interest rate payable hereunder, (4) postpone any date fixed for
any payment of principal of, or interest on, any amounts payable hereunder
(including fees) or under any Note, other than those payable only to FCC in its
capacity as Agent, which may be postponed by FCC unilaterally, (5) increase any
advance percentage contained in the definition of the term Borrowing Base or
make less restrictive any of the categories contained in the definitions of
Eligible Account or Eligible Government Accounts, (6) reduce the number of
Lenders that shall be required for Lenders or any of them to take any action
hereunder, (7) release or discharge any Person liable for the performance of any
obligations of Borrowers hereunder or under any of the Loan Documents (other
than in connection with a disposition of a Subsidiary of VEI consented to by
Majority Lenders), (8) amend any provision of this Agreement that requires the
consent of all Lenders or consent to or waive any breach thereof, (9) amend the
definition of the term "Majority Lenders", (10) amend this Section 11.10 or (11)
release any portion of the Collateral with an aggregate value of One Million
Dollars ($1,000,000) or more or release any Eligible Account or any Eligible
Government Receivable, unless otherwise permitted pursuant to Section 11.7
hereof; or (ii) in writing and signed by Agent in addition to the Lenders
required above to affect the rights or duties of Agent under this Agreement, any
Note or any other Loan Document. If a fee is to be paid by Borrower in
connection with any waiver or amendment hereunder, the agreement evidencing such
amendment or waiver may, at the discretion of Agent (but shall not be required
to), provide that only Lenders executing such agreement by a specified date may
share in such fee (and in such case, such fee shall be divided among the
applicable Lenders on a pro rata basis without including the interests of any
Lenders who have not timely executed such agreement).
11.11 Resignation of Agent; Appointment of Successor. Agent may resign as
Agent by giving not less than thirty (30) days' prior written notice to Lenders
and Borrowers. If Agent shall resign under this Agreement, then, (i) subject to
the consent of Borrowers (which consent shall not be unreasonably withheld and
which consent shall not be required during any period in which a Default or an
Event of Default exists), Majority Lenders shall appoint from among Lenders a
successor agent for Lenders or (ii) if a successor agent shall not be so
appointed and approved within the thirty (30) day period following Agent's
notice to Lenders and Borrowers of its resignation, then Agent shall appoint a
successor agent who shall serve as Agent until such time as Majority Lenders
appoint a successor agent, subject to Borrowers' consent as set forth above.
Upon its appointment, such successor agent shall succeed to the rights, powers
and duties of Agent and the term "Agent" shall mean such successor effective
upon its appointment, and the former Agent's rights, powers and duties as Agent
shall be terminated without any other or further act or deed on the part of such
former Agent or any of the parties to this Agreement. After the resignation of
any Agent hereunder, the provisions of this Section 11 shall inure to the
51
benefit of such former Agent and such former Agent shall not by reason of such
resignation be deemed to be released from liability for any actions taken or not
taken by it while it was an Agent under this Agreement.
11.12 Audit and Examination Reports; Disclaimer by Lenders. By signing this
Agreement, each Lender:
(i) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each audit or examination
report (each a "Report" and collectively, "Reports") prepared by or on
behalf of Agent;
(ii) expressly agrees and acknowledges that Agent (i) does not
make any representation or warranty as to the accuracy of any Report, and
(ii) shall not be liable for any information contained in any Report;
(iii) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing
any audit or examination will inspect only specific information regarding
Borrowers and will rely significantly upon Borrowers' books and records, as
well as on representations of Borrowers' personnel;
(iv) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner, in accordance with the provisions of Section
12.14; and
(v) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any
such other Lender preparing a Report harmless from any action (other than
acts constituting gross negligence or willful misconduct) the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw
from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's
purchase of, a loan or loans of Borrowers; and (ii) to pay and protect, and
indemnify, defend and hold Agent and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings,
damages, costs, expenses and other amounts (including attorney's fees and
expenses) incurred by Agent and any such other Lender preparing a Report as
the direct or indirect result of any third parties who might obtain all or
part of any Report through the indemnifying Lender, other than claims,
actions, proceedings, damages, costs, expenses and other amounts resulting
from Agent's or such other Lender's gross negligence or willful misconduct.
11.13 Documentation Agent. The Documentation Agent identified in the
introductory paragraph of this Agreement, in its capacity as such, shall have no
rights, powers, duties or responsibilities and no rights, powers, duties or
responsibilities shall be read into this Agreement or any other Loan Document or
otherwise exist on behalf of or against such entity, in its capacity as such. If
the Documentation Agent resigns, as such agent, no successor documentation agent
shall be appointed.
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SECTION 12. MISCELLANEOUS.
12.1 Power of Attorney. Each Borrower hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as such
Borrower's true and lawful attorney (and agent-in-fact), solely with respect to
the matters set forth in this Section 12.1, and Agent, or Agent's agent, may,
without notice to such Borrower and in such Borrower's or Agent's name, but at
the cost and expense of Borrowers:
12.1.1 At such time or times as Agent or said agent, in its sole
discretion, may determine, endorse such Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Agent or under Agent's
control.
12.1.2 At such time or times upon or after the occurrence and during
the continuance of an Event of Default (provided that the occurrence of an Event
of Default shall not be required with respect to clauses (iv), (vi), (viii) and
(ix) below), as Agent or its agent in its sole discretion may determine: (i)
demand payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of any
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Agent
deems advisable, and at Agent's option, with all warranties regarding the
Collateral disclaimed; (iv) take control, in any manner, of any item of payment
or proceeds relating to any Collateral; (v) prepare, file and sign any
Borrower's name to a proof of claim in bankruptcy or similar document against
any Account Debtor or to any notice of lien, assignment or satisfaction of lien
or similar document in connection with any of the Collateral; (vi) receive, open
and dispose of all mail addressed to any Borrower and notify postal authorities
to change the address for delivery thereof to such address as Agent may
designate; (vii) endorse the name of any Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Agent on account of the Obligations; (viii) endorse the name of any
Borrower upon any chattel paper, document, instrument, invoice, freight xxxx,
xxxx of lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use any Borrower's stationery and sign
the name of any Borrower to verifications of the Accounts and notices thereof to
Account Debtors; (x) use the information recorded on or contained in any data
processing equipment and Computer Hardware and Software relating to the
Accounts, Inventory, Equipment and any other Collateral; (xi) make and adjust
claims under policies of insurance; and (xii) do all other acts and things
necessary, in Agent's determination, to fulfill any Borrower's obligations under
this Agreement.
The power of attorney granted hereby shall constitute a power coupled
with an interest and shall be irrevocable.
12.2 Indemnity. Each Borrower hereby agrees to indemnify Agent and each
Lender (and each of their Affiliates) and hold Agent and each Lender (and each
of their Affiliates) harmless from and against any liability, loss, damage,
suit, action or proceeding ever suffered or incurred by any such Person
(including reasonable attorneys fees and legal expenses) as the
53
result of any Borrower's failure to observe, perform or discharge any Borrower's
duties hereunder, except to the extent resulting from such Person's gross
negligence on willful misconduct. In addition, each Borrower shall defend Agent
and each Lender (and each of their Affiliates) against and save it harmless from
all claims of any Person with respect to the Collateral (except those resulting
from the gross negligence or intentional misconduct of any such Person). Without
limiting the generality of the foregoing, these indemnities shall extend to any
claims asserted against Agent or any Lender (and each of their Affiliates) by
any Person under any Environmental Laws by reason of any Borrower's or any other
Person's failure to comply with laws applicable to solid or hazardous waste
materials or other toxic substances. Notwithstanding any contrary provision in
this Agreement, the obligation of Borrowers under this Section 12.2 shall
survive the payment in full of the Obligations and the termination of this
Agreement.
12.3 Sale of Interest. No Borrower may sell, assign or transfer any
interest in this Agreement, any of the other Loan Documents, or any of the
Obligations, or any portion thereof, including, without limitation, any such
Borrower's rights, title, interests, remedies, powers, and duties hereunder or
thereunder.
12.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
12.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of each Borrower, Agent and each Lender permitted under
Section 11.9 hereof.
12.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in any of the other
Loan Documents by specific reference to the applicable provision of this
Agreement, if any provision contained in this Agreement is in direct conflict
with, or inconsistent with, any provision in any of the other Loan Documents,
the provision contained in this Agreement shall govern and control.
12.7 Execution in 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 and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
12.8 Notice. Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or received immediately when delivered against receipt, three (3)
Business Days after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:
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(A) If to Agent: Fleet Capital Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Loan Administration Manager
Facsimile No.: 312.332.6537
With a copy to: Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. XxXxxxx
Facsimile No.: 312.609.5005
(B) If to Borrowers: c/o Velocity Express Corporation
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx Ties and Xxx Xxxxxxxxxx
Facsimile No.: 612.492.2499
(C) If to any Lender, as its address indicated on the signature pages
hereof or in a notice to borrower of an assignment of a Note,
or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
request or demand to or upon Agent or a Lender pursuant to subsections 3.1.1 or
4.2.2 hereof shall not be effective until received by Agent or Lender.
12.9 Intentionally Omitted.
12.10 Credit Inquiries. Each Borrower hereby authorizes and permits Agent
and each Lender to respond to usual and customary credit inquiries from third
parties concerning Borrowers or any of their Subsidiaries or Parent.
12.11 Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
12.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
12.13 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.
55
12.14 Confidentiality. Agent and each Lender shall hold all nonpublic
information obtained pursuant to the requirements of this Agreement in
accordance with Agent's and such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices and in any event may make disclosure reasonably required by a
prospective participant or assignee in connection with the contemplated
participation or assignment or as required or requested by any governmental
authority or representative thereof or pursuant to legal process and shall
require any such participant or assignee to agree to comply with this Section
12.14.
Notwithstanding the foregoing, any Taxpayer (and each employee,
representative or other agent of such Taxpayer) may disclose to any and all
Persons, without limitation of any kind, the tax treatment and tax structure (in
each case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated herein and all materials of any kind (including
opinions or other tax analyses) that are provided to such Taxpayer relating to
such tax treatment and tax structure; provided that, with respect to any
document or similar item that contains information concerning the tax treatment
or tax structure of the transactions contemplated hereby as well as other
information, this authorization shall only apply to such portions of the
document or similar item that relate to the tax treatment or tax structure of
the transactions contemplated hereby.
12.15 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN CHICAGO,
ILLINOIS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS; PROVIDED, HOWEVER, THAT IF ANY OF THE
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF
SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE
OF AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF ILLINOIS. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT
OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER, AGENT OR ANY
LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE CIRCUIT COURT OF XXXX
COUNTY, ILLINOIS, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY BORROWER,
ON THE ONE HAND, AND AGENT OR ANY LENDER, ON THE OTHER HAND, PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH BORROWER HEREBY WAIVES ANY
OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE
56
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH BORROWER
AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF SUCH BORROWER'S ACTUAL RECEIPT THEREOF OR
THREE (3)DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING
IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF AGENT OR ANY
LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO
PRECLUDE THE ENFORCEMENT BY AGENT OR ANY LENDER OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
12.16 WAIVERS BY BORROWERS. EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH AGENT AND EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE
LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY,
RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL
PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND
GUARANTIES AT ANY TIME HELD BY AGENT OR ANY LENDER ON WHICH SUCH BORROWER MAY IN
ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER AGENT OR ANY LENDER
MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE
COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING AGENT TO EXERCISE ANY OF AGENT'S OR LENDERS' REMEDIES; (iv) THE BENEFIT
OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (v) NOTICE OF ACCEPTANCE
HEREOF; AND (vi) EXCEPT AS PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN,
OR IN ADDITION TO, ACTUAL DAMAGES. EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND EACH LENDER'S ENTERING INTO
THIS AGREEMENT AND THAT AGENT AND EACH LENDER IS RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH BORROWERS. EACH BORROWER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND
HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
57
12.17 Advertisement. Each Borrower hereby authorize Agent or any Lender to
publish the name of Velocity Express, Inc. and the amount of the credit facility
provided hereunder in any "tombstone" or comparable advertisement which Agent
elects to publish.
12.18 Reimbursement. The undertaking by Borrowers to repay the Obligations
and each representation, warranty or covenant of each Borrower are and shall be
joint and several. To the extent that any Borrower shall be required to pay a
portion of the Obligations which shall exceed the amount of loans, advances or
other extensions of credit received by such Borrower and all interest, costs,
fees and expenses attributable to such loans, advances or other extensions of
credit, then such Borrower shall be reimbursed by the other Borrowers for the
amount of such excess. This Section 12.18 is intended only to define the
relative rights of Borrowers, and nothing set forth in Section 12.18 is intended
or shall impair the obligations of each Borrower, jointly and severally, to pay
to Agent and Lenders the Obligations as and when the same shall become due and
payable in accordance with the terms hereof. Each Borrower acknowledges and
agrees that any reimbursement right it may have against any other Borrower is
subordinate to the payment and discharge of the Obligations in full. No Borrower
shall exercise any rights which it may have acquired pursuant to this Section
12.18 nor shall such Borrower seek any reimbursement from any other Borrower
unless and until all of the Obligations shall have been paid to Agent and
Lenders and discharged, in full, and if any payment shall be made to any such
Borrower on account of such reimbursement rights at any time when the
Obligations shall not have been paid and discharged, in full each and every
amount so paid shall forthwith be paid to Agent and Lenders to be credited and
applied against the Obligations, whether matured or unmatured. Notwithstanding
anything to the contrary set forth in this Section 12.18 or any other provisions
of this Agreement, it is the intent of the parties hereto that the liability
incurred by each Borrower in respect of the Obligations of the other Borrowers
(and any Lien granted by each Borrower to secure such Obligations), not
constitute a fraudulent conveyance or fraudulent transfer under the provisions
of any applicable law of any state or other governmental unit ("Fraudulent
Conveyance"). Consequently, each Borrower, Agent and each Lender hereby agree
that if a court of competent jurisdiction determines that the incurrence of
liability by any Borrower in respect of the Obligations of any other Borrower
(or any Liens granted by such Borrower to secure such Obligations) would, but
for the application of this sentence, constitute a Fraudulent Conveyance, such
liability (and such Liens) shall be valid and enforceable only to the maximum
extent that would not cause the same to constitute a Fraudulent Conveyance, and
this Agreement and the other Loan Documents shall automatically be deemed to
have been amended accordingly, nunc pro tunc.
(Signature Page Follows)
58
IN WITNESS WHEREOF, this Agreement has been duly executed in Chicago,
Illinois, on the day and year specified at the beginning of this Agreement.
BORROWERS:
VELOCITY EXPRESS, INC.
VXP LEASING MID-WEST, INC.
VXP MID-WEST, INC.
VELOCITY EXPRESS LEASING INTERMOUNTAIN, INC.
VELOCITY EXPRESS LEASING MID-ATLANTIC, INC.
VELOCITY EXPRESS LEASING MID-WEST, INC.
VELOCITY EXPRESS LEASING NEW ENGLAND, INC.
VELOCITY EXPRESS LEASING NORTHEAST, INC.
VELOCITY EXPRESS LEASING SOUTHEAST, INC.
VELOCITY EXPRESS LEASING SOUTHWEST, INC.
VELOCITY EXPRESS LEASING WEST COAST, INC.
VELOCITY EXPRESS INTERMOUNTAIN, INC.
VELOCITY EXPRESS MID-ATLANTIC, INC.
VELOCITY EXPRESS MID-WEST, INC.
VELOCITY EXPRESS NEW ENGLAND, INC.
VELOCITY EXPRESS NORTHEAST, INC.
VELOCITY EXPRESS SOUTHEAST, INC.
VELOCITY EXPRESS SOUTHWEST, INC.
VELOCITY EXPRESS WEST COAST, INC.
POS II, INC.
VELOCITY EXPRESS ADMINISTRATION, INC.
NEW DELAWARE DELIVERY, INC.
CORPORATE EXPRESS DISTRIBUTION SERVICES,
INC.
Each By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
CONSENTED AND AGREED TO THIS DAY OF
------
NOVEMBER 2003
VELOCITY EXPRESS CORPORATION, as a Guarantor
and as a Party hereto
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Accepted in Chicago, Illinois:
FLEET CAPITAL CORPORATION
("Agent" and "Lender")
By:
-----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address:
Xxx Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Loan Administration Manager
Telecopier No.: 312.332.6537
Revolving Loan Commitment: $22,500,000
MERRILLLYNCH CAPITAL, a division of Xxxxxxx
Xxxxx Business Financial Services, Inc.
("Lender")
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address:
000 Xxxxx XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Legal Department
Telecopier No.: 312.499.3245
Revolving Loan Commitment: $20,000,000
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of November 26, 2003,
by and among the lenders signatory hereto ("Lenders"), Fleet Capital Corporation
("FCC") as agent for such Lenders (FCC, in such capacity, "Agent") and the
borrower signatories hereto (each individually a "Borrower" and collectively,
"Borrowers"), (a) the terms Account, Certificated Security, Chattel Paper,
Commercial Tort Claims, Deposit Account, Document, Equipment, Financial Asset,
Fixture, General Intangibles, Goods, Health Care Receivables, Instruments,
Inventory, Investment Property, Letter of Credit Rights, Payment Intangibles,
Proceeds, Security, Security Entitlement, Software Supporting Obligations,
Tangible Chattel Paper and Uncertificated Security have the respective meanings
assigned thereto under the UCC; (b) all terms reflecting Collateral having the
meanings assigned thereto under the UCC shall be deemed to mean such Property,
whether now owned or hereafter created or acquired by Borrower or in which
Borrower now has or hereafter acquires any interest; (c) capitalized terms which
are not otherwise defined have the respective meanings assigned thereto in said
Loan and Security Agreement; and (d) the following terms shall have the
following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):
Account Debtor -- any Person who is or may become obligated under or on
account of any Account, Contract Right, Chattel Paper or General Intangible.
Affiliate -- a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, a Person; (ii) which beneficially owns or holds 5%
or more of the total voting power of all classes of the Voting Stock of a
Person; or (iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by a Person or a Subsidiary of a Person.
Agent - as defined in the first paragraph of the Agreement and any
successor in that capacity appointed pursuant to Section 11.11 of the Agreement.
Agent Loans - as defined in subsection 1.1.4 of the Agreement.
Aggregate Percentage - with respect to each Lender, the percentage equal to
the quotient of (i) such Lender's Revolving Loan Commitment divided by (ii) the
aggregate of all Revolving Loan Commitments.
Agreement -- the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits thereto and this Appendix A.
ALTA Survey -- a survey prepared in accordance with the standards adopted
by the American Land Title Association and the American Congress on Surveying
and Mapping in 1997, known as the "Minimum Standard Detail Requirements of Land
Title Surveys". The ALTA Survey shall be in sufficient form to satisfy the
requirements of Chicago Title Insurance Company to provide extended coverage
over standard or general exceptions relating to matters
A-1
of survey and shall also show the location of all plottable easements,
utilities, and covenants of record, dimensions of all improvements,
encroachments from any adjoining property, and certify as to the location of any
flood plain area affecting the subject real estate. The ALTA Survey shall
contain the following certification: "To [name of applicable Borrower], Fleet
Capital Corporation, as Agent, and Xxxxxxx Title Insurance Company. This is to
certify that this map of plat and the survey on which it is based were made in
accordance with the "Minimum Standard Detail Requirements for Land Title
Surveys" jointly established and adopted by ALTA and ACSM in 1997 (signed (SEAL)
License No. ". In respect to surveys of real Property located outside
----------
of the United States, ALTA Survey shall mean a survey which meets applicable
nationally established standards equivalent to those listed above for real
Property located in the United States.
Applicable Margin -- the percentages set forth below with respect to the
Base Rate Advances, the LIBOR Advances, Letter of Credit and LC Guaranty fees,
which percentages shall be set on the Closing Date and adjusted yearly
thereafter by reference to the Interest Coverage Ratio for the twelve Fiscal
Month period ended nearest to each December 31 within the Term hereof,
commencing December 27, 2003, as evidenced by financial statements for such
fiscal period delivered to Agent pursuant to subsection 8.1.3(iii) in accordance
with the following:
Letter of Credit
LIBOR Base Rate and LC Guaranty
Interest Coverage Ratio Advances Advances Fees
----------------------------- -------- --------- ----------------
<= 2.50 to 1 3.25% 1.50% 3.25%
> 2.50 to 1, but <= 3.00 to 1 3.00% 1.25% 3.00%
> 3.00 to 1 2.75% 1.00% 2.75%
Each change in Applicable Margin shall be effective as of the first day of
the Fiscal Month of Borrowers following the month in which the applicable
monthly Consolidated financial statements of Parent and Borrowers are delivered
to Agent pursuant to subsection 8.1.3(iii).
From the Closing Date until the first adjustment date as provided above,
the Applicable Margin shall be three percent (3%) (LIBOR Advances), one and
twenty-five hundredths percent (1.25%) (Base Rate Advances), and three percent
(3%) Letter of Credit and LC Guaranty fees. At any time when Borrowers have
failed to deliver to Agent Borrowers' Consolidated financial statements in
compliance with subsection 8.1.3(iii) for the Fiscal Month ending nearest to
December 31 and such failure has not been cured to Agent's reasonable
satisfaction, the Applicable Margin shall be the highest percentages set forth
in the above schedule.
Assignment and Acceptance Agreement - an assignment and acceptance
agreement in form and content reasonably acceptable to Agent pursuant to which a
Lender assigns to another Lender all or any portion of any of such Lender's
Revolving Loan Commitment or Term Loan Commitment, as permitted pursuant to the
terms of this Agreement.
A-2
Availability -- the amount of additional money which Borrowers are entitled
to borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving Credit
Loans then outstanding (including any amounts which Agent or any Lender may have
paid for the account of Borrowers pursuant to any of the Loan Documents and
which have not been reimbursed by Borrower), the LC Amount and any Reserves is
subtracted from the Borrowing Base. If the amount outstanding is equal to or
greater than the Borrowing Base, Availability is zero (0).
Availability Reserve - as defined in subsection 1.1.1 of the Agreement.
Bank -- Fleet National Bank.
Base Rate -- the rate of interest announced or quoted by Bank from time to
time as its prime rate for commercial loans, whether or not such rate is the
lowest rate charged by Bank to its most preferred borrowers; and, if such prime
rate for commercial loans is discontinued by Bank as a standard, a comparable
reference rate designated by Bank as a substitute therefor shall be the Base
Rate.
Base Rate Advances or Base Rate Portions-- any Loan bearing interest
computed by reference to the Base Rate.
BET -- BET Associates, L.P., a Delaware Limited Partnership.
BET Documents -- (a) that certain Subordinated Note dated on or about
November 26, 2003 in the principal amount of $6,000,000 in favor of BET; (b)
that certain Note Purchase Agreement dated as of November 26, 2003 by and among
VEI, Parent, the other loan parties signatory thereto and BET; (c) that certain
Intercreditor and Subordination Agreement (the "BET Subordination Agreement")
dated on or about November 26, 2003 by and between Agent and BET and (d) any and
all guarantees, security agreements, pledge agreements and the like executed in
connection with or to secure the payment of the Subordinated Note referred to in
clause (a) above or see Note Purchase Agreement referred to in clause (b) above.
BET Subordinated Debt -- Money Borrowed evidenced by or outstanding under
the BET Documents.
BET Subordination Agreement - as defined in clause (b) of the definition of
BET Documents.
Borrowing Base -- as at any date of determination thereof, an amount equal
to the lesser of:
(i) the Maximum Revolving Loan Amount at such date; or
(ii) an amount equal to:
(a) eighty-five percent (85%) of the net amount of Eligible
Accounts outstanding at such date; and
A-3
PLUS
(b) the least of (x) eighty-five percent (85%) of the net amount
of Eligible Government Accounts outstanding as of such date, (y)
eighty-five percent (85%) of the Government Receivable Amount in
effect as of such date and (z) Eight Hundred Fifty Thousand Dollars
($850,000).
PLUS
(c) one hundred percent (100%) of the undrawn face amount of the
TH Xxx Letters of Credit outstanding as of such date.
The limitations set forth in the immediately preceding sentence and each of
the advance rates set forth above may be adjusted downward by Agent, as Agent
shall deem necessary or appropriate in its reasonable credit judgment. For
purposes hereof, the net amount of Eligible Accounts and Government Eligible
Accounts at any time shall be the face amount of such Eligible Accounts and
Government Eligible Accounts less any and all returns, rebates, discounts (which
may, at Agent's option, be calculated on shortest terms), credits, allowances or
excise taxes of any nature at any time issued, owing, claimed by Account
Debtors, granted, outstanding or payable in connection with such Accounts at
such time.
Borrowing Base Certificate -- a certificate by a responsible officer of
VEI, substantially in the form of Exhibit 8.1.4 (or another form acceptable to
Agent) setting forth the calculation of the Borrowing Base, including a
calculation of each component thereof, all in such detail as shall be reasonably
satisfactory to Agent. All calculations of the Borrowing Base in connection with
the preparation of any Borrowing Base Certificate shall originally be made by
VEI and certified to Agent; provided, that Agent shall have the right to review
and adjust, in the exercise of its reasonable credit judgment, any such
calculation after giving notice thereof to Borrowers, (1) to reflect its
reasonable estimate of declines in value of any of the Collateral described
therein, and (2) to the extent that such calculation is not in accordance with
this Agreement.
Business Day -- any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of Wisconsin or the State of Illinois
or is a day on which banking institutions located in either of such states are
closed.
Capital Expenditures -- 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, including the
total principal portion of Capitalized Lease Obligations.
Capitalized Lease Obligation -- any Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
Change of Control - means any of the following: (a) any Person or group of
Persons (within the meaning of the Securities Exchange Act of 1934, as amended)
shall, after the Closing Date, have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended)
A-4
of twenty percent (20%) or more (on a fully diluted basis) of the issued and
outstanding Securities of Parent having the right to vote for the election of
directors of Parent under ordinary circumstances (provided, that it shall not
constitute a Change of Control for any holder of Parent's Securities owning ten
percent (10%) or more of the outstanding Securities of Parent as of the Closing
Date to acquire Securities of Parent such that it has beneficial ownership of
less than thirty percent (30%) on a fully diluted basis of the issued and
outstanding Securities of Parent); (b) during any period of twelve consecutive
calendar months, individuals who at the beginning of such period constituted the
board of directors of Parent or whose nomination for election by the
stockholders of Parent was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose elections or nomination for election was previously so
approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office; (c) Parent shall cease to own and
control all of the economic and voting rights associated with all of the
outstanding Securities of VEI; (d) VEI shall cease to own and control all of the
economic and voting rights associated with all of the outstanding Securities of
any of its Subsidiaries; (e) Xxxxxxx Xxxxx shall cease to hold his position at
Parent or VEI (provided, that it shall not constitute a Change of Control for
Xxxxxxx Xxxxx to be replaced upon sixty (60) days' prior written notice to Agent
with a replacement officer reasonably satisfactory to Parent's Board of
Directors); (f) any Existing Owner shall fail to own at least eighty percent
(80%) of the Securities of Parent owned by such Existing Owner as of the Closing
Date; or (g) any "Change of Control," "Change in Control" or terms of similar
import occurs under the BET Documents.
Closing Date -- the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied or waived and the initial Loan is made
or the initial Letter of Credit or LC Guaranty is issued under the Agreement.
Collateral -- all of the Property and interests in Property described in
Section 5 of the Agreement, and all other Property and interests in Property
that now or hereafter secure the payment and performance of any of the
Obligations.
Compliance Certificate - as defined in subsection 8.1.3 of the Agreement.
Computer Hardware and Software -- all of any Borrower's rights (including
rights as licensee and lessee) with respect to (i) computer and other electronic
data processing hardware, including all integrated computer systems, central
processing units, memory units, display terminals, printers, computer elements,
card readers, tape drives, hard and soft disk drives, cables, electrical supply
hardware, generators, power equalizers, accessories, peripheral devices and
other related computer hardware; (ii) all Software and all software programs
designed for use on the computers and electronic data processing hardware
described in clause (i) above, including all operating system software,
utilities and application programs in any form (source code and object code in
magnetic tape, disk or hard copy format or any other listings whatsoever); (iii)
any firmware associated with any of the foregoing; and (iv) any documentation
for hardware, Software and firmware described in clauses (i), (ii) and (iii)
above, including flow charts, logic diagrams, manuals, specifications, training
materials, charts and pseudo codes.
Consolidated -- the consolidation in accordance with GAAP of the accounts
or other items as to which such term applies.
A-5
Contract Right -- any right of any Borrower to payment under a contract for
the sale or lease of goods or the rendering of services, which right is at the
time not yet earned by performance.
Cross Age Percentage - twenty-five percent (25%).
Current Assets - at any date means the amount at which all of the current
assets of a Person would be properly classified as current assets shown on a
balance sheet at such date in accordance with GAAP.
Default -- an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate -- as defined in subsection 2.1.2 of the Agreement.
Derivative Obligations - every obligation of a Person under any forward
contract, futures contract, exchange contract, swap, option or other financing
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreement), the value of which is dependent upon interest rates,
currency exchange rates, commodities or other indices.
Distribution - in respect of any Person means and includes: (i) the payment
of any dividends or other distributions on Securities (except distributions in
such Securities or in Securities of a different class or type) and (ii) the
redemption or acquisition of Securities of such Person, as the case may be,
unless made contemporaneously from the net proceeds of the sale of Securities.
Dominion Account -- a special bank account or accounts of Agent established
by any Borrower pursuant to Section 6.2.4 of the Agreement at banks selected by
such Borrower, but acceptable to Agent in its reasonable discretion, and over
which Agent shall have sole and exclusive access and control for withdrawal
purposes or with respect to such bank accounts located in Canada, over which
Agent, after notifying the applicable bank, shall have sole and exclusive access
and control for withdrawal purposes.
EBITDA -- as defined in Exhibit 8.3.
Eligible Account -- an Account arising in the ordinary course of any
business of any Borrower or Velocity Canada from the sale of goods or rendition
of services which Agent, in its reasonable credit judgment, deems to be an
Eligible Account. No Account shall be an Eligible Account if:
(i) it arises out of a sale made or services rendered by a Borrower or
Velocity Canada to a Subsidiary or an Affiliate of a Borrower or to a Person
controlled by an Affiliate of a Borrower or Velocity Canada; or
(ii) it is unpaid for more than sixty (60) days after the original due
date shown on the invoice; or
A-6
(iii) it is due or unpaid more than ninety (90) days after the
original invoice date; or
(iv) the Cross Age Percentage or more of the Accounts from the Account
Debtor are not deemed Eligible Accounts hereunder; or
(v) the total unpaid Accounts of the Account Debtor exceed 10% of the
net amount of all Eligible Accounts, but only to the extent of such excess; or
(vi) any covenant, representation or warranty contained in the
agreement with respect to such Account has been breached; or
(vii) the Account Debtor is also a creditor or supplier of any
Borrower or any Subsidiary of any Borrower, or the Account Debtor has disputed
liability with respect to such Account, or the Account Debtor has made any claim
with respect to any other Account due from such Account Debtor to such Borrower
or such Subsidiary, or the Account otherwise is or may become subject to any
right of setoff by the Account Debtor provided, that any such Account shall be
eligible to the extent such amount thereof exceeds such contract, dispute, claim
setoff or similar right; or
(viii) the Account Debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or a decree or order for relief has
been entered by a court having jurisdiction in the premises in respect of the
Account Debtor in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other application for
relief under the federal bankruptcy laws as now constituted or hereafter amended
has been filed against the Account Debtor, or if the Account Debtor has failed,
suspended business, ceased to be Solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or for all or
a significant portion of its assets or affairs; or
(ix) it arises from a sale made or services rendered to an Account
Debtor outside the United States, unless the sale is either (1) to an Account
Debtor located in Ontario or any other province of Canada in which the Personal
Property Security Act has been adopted in substantially the same form as
currently in effect in Ontario or (2) on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its reasonable credit
judgment; or
(x) it arises from a sale to the Account Debtor on a xxxx-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment, or any other
repurchase or return basis; or it is subject to a reserve established by a
Borrower or Velocity Canada for potential returns or refunds, to the extent of
such reserve; or
(xi) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless the applicable Borrower or
Velocity Canada assigns its right to payment of such Account to Agent, in a
manner satisfactory to Agent, in its reasonable credit judgment, so as to comply
with the Assignment of Claims Act of 1940 (31 U.S.C.(S)203 et seq., as amended);
or
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(xii) it is not at all times subject to Agent's duly perfected, first
priority security interest or is subject to a Lien that is not a Permitted Lien;
or
(xiii) the goods giving rise to such Account have not been delivered
to and accepted by the Account Debtor or the services giving rise to such
Account have not been performed by Borrowers or Velocity Canada and accepted by
the Account Debtor or the Account otherwise does not represent a final sale; or
(xiv) the Account is evidenced by chattel paper or an instrument of
any kind, or has been reduced to judgment; or
(xv) any Borrower or a Subsidiary of any Borrower has made any
agreement with the Account Debtor for any extension, compromise, settlement or
modification of the Account or deduction therefrom, except for discounts or
allowances which are made in the ordinary course of business for prompt payment
and which discounts or allowances are reflected in the calculation of the face
value of each invoice related to such Account; or
(xvi) any Borrower or Velocity Canada has made an agreement with the
Account Debtor to extend the time of payment thereof; or
(xvii) it represents service charges, late fees or similar charges; or
(xviii) twenty percent (20%) of the aggregate amount of all Accounts
with respect to which Staples, Inc. is the Account Debtor shall not be Eligible
Accounts unless the underlying customer agreement or similar contract between
Staples, Inc. and Borrowers contains language waiving consequential and/or
incidental damages; or
(xix) it is not otherwise acceptable to Agent in its reasonable credit
judgment.
Eligible Government Accounts - Accounts where the Account Debtor is the
United States of America or any department, agency or instrumentality thereof
which would be an Eligible Account but for the failure of such Account to
satisfy clause (xi) of the definition of Eligible Account.
Environmental Laws -- all federal, state and local laws, rules,
regulations, ordinances, orders and consent decrees relating to health, safety
and environmental matters.
ERISA -- the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute and all rules and regulations from time to time
promulgated thereunder.
Event of Default -- as defined in Section 10.1 of the Agreement.
Existing Owners -- collectively, TH Xxx Xxxxxx Ventures, L.P., TH Xxx
Xxxxxx Parallel Ventures, L.P., THLi Coinvestment Partners, LLC and Blue Star I,
LLC.
Fee Letter - as defined in Section 2.3 of the Agreement.
Fiscal Month - any of the monthly accounting periods of VEI.
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Fiscal Quarter - any of the quarterly accounting periods of VEI ending on
the last day of March, June, September and December of each year.
Fixed Charge Coverage Ratio - with respect to any period of determination,
the ratio of (i) Parent's and Borrowers' Consolidated EBITDA for such period
minus the sum of (x) any cash income taxes included in the determination of
Parent's and Borrowers' Consolidated net earnings (or loss) for such period plus
(y) non-financed Capital Expenditures made within such period to (ii) Fixed
Charges for such period.
Fixed Charges - for any period of determination, the sum of (i) scheduled
principal payments of Money Borrowed (including the principal portion of
scheduled payments of Capital Lease Obligations) to be made within such period,
plus (ii) Interest Expense included in the determination of Parent's and
Borrowers' Consolidated net earnings (or loss) for such period.
GAAP -- generally accepted accounting principles in the United States of
America in effect from time to time.
Georgia Property - as defined in the definition of Mortgages.
Government Receivable Amount - One Million Dollars ($1,000,000); provided,
however, that if (i) at the end of any Fiscal Month within the Term, Borrowers'
sales to the United States of America or any department, agency or
instrumentality thereof (collectively, the "US Government") equal or exceed Ten
Million Dollars ($10,000,000) for the twelve Fiscal Month Period then ended and
(ii) the Interest Coverage Ratio for the most recently ended Fiscal Quarter is
2.0 to 1 or greater, then the Government Receivable Amount shall be increased to
One Million Five Hundred Thousand Dollars ($1,500,000); and provided, further,
that if (i) at the end of any Fiscal Month during the Term, Borrowers' sales to
the US Government equal or exceed Thirteen Million Dollars ($13,000,000) for the
twelve Fiscal Month Period then ended and (ii) the Interest Coverage Ratio for
the most recently ended Fiscal Quarter equals or exceeds 2.50 to 1, then the
Government Receivable Amount shall be increased to Two Million Dollars
($2,000,000).
Guaranty Agreement -- the Continuing Guaranty Agreement which was executed
on or about the Original Closing Date by Parent in form and substance
satisfactory to Agent.
Indebtedness -- as applied to a Person means, without duplication
(i) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet
of such Person as at the date as of which Indebtedness is to be determined,
including, without limitation, Capitalized Lease Obligations,
(ii) all obligations of other Persons which such Person has
guaranteed,
(iii) all reimbursement obligations in connection with letters of
credit or letter of credit guaranties issued for the account of such Person (net
of cash collateral held therefor),
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(iv) Derivative Obligations (determined on a net termination
value/xxxx to market); and
(v) in the case of Borrowers (without duplication), the Obligations.
The foregoing notwithstanding, Indebtedness shall not include debt relating to
the issuance by Parent or VEI of its Series I Convertible Preferred Stock.
Intellectual Property -- all of each Borrower's past, present and future:
trade secrets, know-how and other proprietary information; trademarks, internet
domain names, service marks, trade dress, trade names, business names, designs,
logos, slogans (and all translations, adaptations, derivations and combinations
of the foregoing) indicia and other source and/or business identifiers, and the
goodwill of the business relating thereto and all registrations or applications
for registrations which have heretofore been or may hereafter be issued thereon
throughout the world; copyrights (including copyrights for computer programs)
and copyright registrations or applications for registrations which have
heretofore been or may hereafter be issued throughout the world and all tangible
property embodying the copyrights, unpatented inventions (whether or not
patentable); patent applications and patents; industrial design applications and
registered industrial designs; license agreements related to any of the
foregoing and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing; the right
to xxx for all past, present and future infringements of any of the foregoing;
all other intellectual property; and all common law and other rights throughout
the world in and to all of the foregoing.
Interest Coverage Ratio - as defined in Exhibit 8.3.
Interest Expense -- as defined in Exhibit 8.3.
Interest Period -- as applicable to any LIBOR Advance, a period commencing
on the date a LIBOR Advance is made, and ending on the date which is one (1)
month, two (2) months, three (3) months, or six (6) months later, as may then be
requested by VEI, on behalf of each Borrower; provided that (i) any Interest
Period which would otherwise end on a day which is not a Business Day shall end
in the next preceding or succeeding Business Day as is Agent's custom in the
market to which such LIBOR Advance relates; (ii) there remains a minimum of one
(1) month, two (2) months, three (3) months or six (6) months (depending upon
which Interest Period Borrower selects) in the Original Term; and (iii) all
Interest Periods of the same duration which commence on the same date shall end
on the same date.
IRC -- the Internal Revenue Code of 1986, as amended from time to time.
LC Amount -- at any time, the aggregate undrawn face amount of all Letters
of Credit and LC Guaranties then outstanding.
LC Guaranty -- any guaranty pursuant to which Agent or any Affiliate of
Agent shall guaranty the payment or performance by Borrower of its reimbursement
obligation under any letter of credit.
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LC Obligations -- any Obligations that arise from any draw against any
Letter of Credit or against any other letter of credit supported by an LC
Guaranty.
Legal Requirement -- any requirement imposed upon any Lender by any law of
the United States of America or the United Kingdom or by any regulation, order,
interpretation, ruling or official directive (whether or not having the force of
law) of the Federal Reserve Board, the Bank of England or any other board,
central bank or governmental or administrative agency, institution or authority
of the United States of America, the United Kingdom or any political subdivision
of either thereof.
Letter of Credit -- any standby letter of credit issued by Agent or any
Affiliate of Agent for the account of any Borrower.
LIBOR -- as applicable to any LIBOR Advance, the rate per annum (rounded
upward, if necessary, to the nearest 1/8 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 Interest Period for such LIBOR Advance which appears on the
Telerate page 3750 as of 11:00 a.m. (London time) on the day that is two (2)
London Banking Days preceding the first day of such Interest Period; provided,
however, if the rate described above does not appear on the Telerate System on
any applicable interest determination date, the LIBOR shall be the rate (rounded
upwards as described above, if necessary) for deposits in U.S. 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
(2) London Banking Days prior to the first day of such Interest Period. If both
the Telerate and Reuters systems 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 Interest Period which are
offered by four (4) major banks in the London interbank market at approximately
11:00 a.m. (London time), on the day that is two (2) London Banking Days
preceding the first day of such Interest Period as selected by Agent. The
principal London office of each of the major London banks so selected will be
requested to provide a quotation of its U.S. dollar deposit offered rate. If at
least two (2) 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 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 (2) London
Banking Days preceding the first day of such Interest Period. In the event that
Agent is unable to obtain any such quotation as provided above, it will be
determined that LIBOR pursuant to a LIBOR Advance cannot be determined. In the
event that the Board of Governors of the Federal Reserve System shall impose a
Reserve Percentage with respect to LIBOR deposits of Bank then for any period
during which such Reserve Percentage shall apply, LIBOR shall be equal to the
amount determined above divided by an amount equal to 1 minus the Reserve
Percentage.
LIBOR Advance or LIBOR Portion -- any Loan bearing interest computed by
reference to the LIBOR.
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LIBOR Interest Payment Date - the first day of each calendar month during
and immediately following the applicable Interest Period.
LIBOR Option - the option granted pursuant to Section 3.1 of the Agreement
to have the interest on all or any portion of the principal amount of the
Revolving Credit Loans based on LIBOR.
LIBOR Request - a notice in writing (or by telephone confirmed
electronically or by telecopy or other facsimile transmission on the same day as
the telephone request) from VEI, on behalf of all Borrowers, to Agent requesting
that interest on a Revolving Credit Loan be based on the LIBOR, specifying: (i)
the first day of the Interest Period (which shall be a Business Day); (ii) the
length of the Interest Period; (iii) whether the LIBOR Advance is a new Loan, a
conversion of a Base Rate Advance, or a continuation of a LIBOR Advance, and
(iv) the dollar amount of the LIBOR Advance, which shall be in an amount not
less than One Million Dollars ($1,000,000) and shall be an integral multiple of
One Hundred Thousand Dollars ($100,000).
Lien -- any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on common law, statute or contract. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, a Borrower shall be deemed
to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
Loan Account -- the loan account established on the books of Agent pursuant
to Section 3.6 of the Agreement.
Loan Documents -- the Agreement, the Other Agreements and the Security
Documents.
Loans -- all loans and advances of any kind made by Agent, any Lender or
any Affiliate of Agent or any Lender pursuant to the Agreement.
London Banking Day -- any date on which commercial banks are open for
business in London, England.
Majority Lenders -- as of any date, Lenders holding sixty-six and
two-thirds percent (66-2/3%) of the Revolving Loan Commitments determined on a
combined basis and following the termination of the Revolving Loan Commitments,
Lenders holding sixty-six and two-thirds percent (66-2/3%) or more of the
outstanding Loans, LC Amounts and LC Obligations not yet reimbursed by Borrowers
or funded with a Revolving Credit Loan; provided, that (i) in each case, if
there are two or more Lenders with outstanding Loans, LC Amounts, unfunded and
unreimbursed LC Obligations or Revolving Loan Commitments, at least two Lenders
shall be required to constitute Majority Lenders; and (ii) prior to termination
of the Revolving Loan Commitments, if any Lender breaches its obligation to fund
any requested Revolving Credit Loan, for so long as such breach exists, its
voting rights hereunder shall be calculated with
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reference to its outstanding Loans, LC Amounts and unfunded and unreimbursed LC
Obligations, rather than its Revolving Loan Commitment.
Material Adverse Effect -- (i) a material adverse effect on the business,
condition (financial or otherwise), operation, performance or properties of
Borrowers or any of their Subsidiaries, taken as a whole, (ii) a material
adverse effect on the rights and remedies of Agent or Lenders under the Loan
Documents, (iii) the material impairment of the ability of Borrowers or any of
their Subsidiaries to perform their obligations hereunder or under any Loan
Document, or (iv) a material adverse effect on the value of the Collateral or
Agent's or Lenders' rights in Collateral which in the aggregate has a fair
market value in excess of Five Hundred Thousand Dollars ($500,000).
Maximum Revolving Loan Amount -- Forty-Two Million Five Hundred Thousand
Dollars ($42,500,000); provided however, that Borrowers may reduce the Maximum
Revolving Loan Amount by written notice to Agent. Any such reduction (i) shall
be in a minimum amount of Two Million Dollars ($2,000,000), (ii) shall be an
integral amount of One Million Dollars ($1,000,000) and (iii) shall not exceed
an aggregate amount of Five Million Dollars ($5,000,000) in any one calendar
year or Ten Million Dollars ($10,000,000) during the Original Term. Once the
Maximum Revolving Loan Amount has been reduced it may not be subsequently
increased.
Money Borrowed -- means (i) Indebtedness arising from the lending of money
by any Person to any Borrower or any of its Subsidiaries; (ii) Indebtedness,
whether or not in any such case arising from the lending by any Person of money
to any Borrower or any of its Subsidiaries, (A) which is represented by notes
payable or drafts accepted that evidence extensions of credit, (B) which
constitutes obligations evidenced by bonds, debentures, notes or similar
instruments, or (C) upon which interest charges are customarily paid (other than
accounts payable) or that was issued or assumed as full or partial payment for
Property; (iii) Indebtedness that constitutes a Capitalized Lease Obligation;
(iv) reimbursement obligations with respect to letters of credit or guaranties
of letters of credit and (v) Indebtedness of any Borrower or any of its
Subsidiaries under any guaranty of obligations that would constitute
Indebtedness for Money Borrowed under clauses (i) through (iii) hereof, if owed
directly by any Borrower or any of its Subsidiaries.
Mortgage -- the security deed to be executed by a Borrower on or about the
Original Closing Date in favor of Agent, for its benefit and the ratable benefit
of Lenders, and by which such Borrower shall grant and convey to Agent, as
security for the Obligations, a Lien upon the real Property of such Borrower
located at 0000 Xxxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxx (the "Georgia Property").
Multiemployer Plan -- has the meaning set forth in Section 4001(a)(3) of
ERISA.
New Mortgages -- as defined in Subsection 5.4 of the Agreement.
Notes -- collectively, the Revolving Credit Notes.
Notice of Revolving Credit Loan -- as defined in subsection 3.1.1 of the
Agreement.
Obligations - all Loans, all LC Obligations and all other advances, debts,
liabilities, obligations, covenants and duties, together with all interest, fees
and other charges thereon,
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owing, arising, due or payable from any Borrower to Agent, for its own benefit,
from any Borrower to Agent for the benefit of any Lender, from any Borrower to
any Lender or from any Borrower to Bank or any other Affiliate of Agent, of any
kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether arising under the Agreement or any of the
other Loan Documents or otherwise, whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising and however acquired, including
without limitation any Product Obligations owing to Agent, any Lender, Bank or
any Affiliate of Bank or Agent.
Organizational I.D. Number -- with respect to any Person, the
organizational identification number assigned (if any) to such Person by the
applicable governmental unit or agency of the jurisdiction of organization of
such Person.
Original Closing Date -- the "Closing Date" as defined in the Original Loan
Agreement.
Other Agreements -- any and all agreements, instruments and documents
(other than the Agreement and the Security Documents), heretofore, now or
hereafter executed by any Borrower, any Subsidiary of any Borrower, Parent or
any other third party and delivered to Agent or any Lender in respect of the
transactions contemplated by the Agreement.
Overadvance -- as defined in subsection 1.1.2 of the Agreement.
Parent - Velocity Express Corporation, a Delaware corporation.
Parent Security Agreement - the Security Agreement executed by Parent on or
about the Closing Date in favor of Agent for the benefit of itself and Lenders,
as such Security Agreement has been and will be amended form time to time.
Participant -- as defined in subsection 11.9.2 of the Agreement.
Patent Security Agreement -- a Patent and License Security Agreement
executed or to be by an applicable Borrower after the Original Closing Date in
favor of Agent for the benefit of itself and Lenders, if any such Borrower
obtains a patent, as such Patent and License Security Agreement has been or will
be amended from time to time.
Permitted Liens -- any Lien of a kind specified in subsection 8.2.5 of the
Agreement.
Permitted Purchase Money Indebtedness -- (i) Purchase Money Indebtedness of
any Borrower or any Subsidiary of any Borrower incurred after the date hereof
which is secured by a Purchase Money Lien and the principal amount of which,
when aggregated with the principal amount of all other such Indebtedness and
Capitalized Lease Obligations of Borrowers and their Subsidiaries at the time
outstanding, does not exceed Two Hundred Fifty Thousand Dollars ($250,000) and
(ii) Purchase Money Indebtedness of any Borrower or any Subsidiary of any
Borrower which is secured by a Purchase Money Lien on the proprietary customer
management computer system referred to below and which was prior to the Closing
Date incurred in connection with the development for Borrowers of a proprietary
customer management computer system. For the purposes of this definition, the
principal amount of any
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Purchase Money Indebtedness consisting of capitalized leases (as opposed to
operating leases) shall be computed as a Capitalized Lease Obligation.
Person -- an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Plan -- an employee benefit plan now or hereafter maintained for employees
of Borrower or any of their Subsidiaries that is covered by Title IV of ERISA.
Pledge Agreement - the Stock Pledge Agreement executed by Parent on or
about the Original Closing Date in favor of Agent for the benefit of itself and
Lenders, as such Stock Pledge Agreement has been and will be amended from time
to time.
Pledge Agreement (Subsidiaries) - the Stock Pledge Agreement executed by
VEI on or about the Original Closing Date in favor of Agent for the benefit of
itself and Lenders, as such Stock Pledge has been and will be amended from time
to time.
Product Obligations - every obligation of any Borrower under and in respect
of any one or more of the following types of services or facilities extended to
any such Borrower by Bank or Agent, or any Affiliate of Bank or Agent: (i)
credit cards; (ii) cash management or related services including the automatic
clearing house transfer of funds for the account of Borrower pursuant to
agreement or overdraft; (iii) cash management, including controlled disbursement
services; and (iv) Derivative Obligations.
Projections -- Parent's and Borrowers' forecasted Consolidated and
consolidating (a) balance sheets, (b) profit and loss statements, (c) cash flow
statements, and (d) capitalization statements, all prepared on a consistent
basis with Parent's and Borrowers' and their Subsidiaries' historical financial
statements, together with appropriate supporting details and a statement of
underlying assumptions.
Property -- any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Purchase Money Indebtedness -- means and includes (i) Indebtedness (other
than the Obligations) for the payment of all or any part of the purchase price
of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred
at the time of or within thirty (30) days prior to or after the acquisition of
any fixed assets for the purpose of financing all or any part of the purchase
price thereof, and (iii) any renewals, extensions or refinancings thereof, but
not any increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien -- a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien.
Rentals -- as defined in subsection 8.2.18 of the Agreement.
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Replacement Subordinated Debt - Subordinated Debt incurred by Borrowers
and/or Parent for the purpose of refinancing the BET Subordinated Debt; provided
that the terms and conditions of such Subordinated Debt (including, without
limitation, principal amount, interest rates, covenants, principal amortizations
and maturity date and subordination provisions) are reasonably acceptable to
Majority Lenders.
Reportable Event -- any of the events set forth in Section 4043(c) of
ERISA.
Reserve Percentage -- the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves) which is imposed on member
banks of the Federal Reserve System against "Euro-currency Liabilities" as
defined in Regulation D.
Reserves - as defined in subsection 1.1.1 of the Agreement.
Restricted Investment -- any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following:
(i) investments by any Borrower, to the extent existing on the Closing
Date, in one or more Subsidiaries of such Borrower;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and services in
the ordinary course of business of a Borrower or any of its Subsidiaries;
(iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the United States of
America, provided that such obligations mature within one year from the date of
acquisition thereof;
(v) investments in certificates of deposit maturing within one year
from the date of acquisition and fully insured by the Federal Deposit Insurance
Corporation;
(vi) investments in commercial paper given the highest rating by a
national credit rating agency and maturing not more than 270 days from the date
of creation thereof;
(vii) investments in money market, mutual or similar funds having
assets in excess of $100,000,000 and the investments of which are limited to
investment grade securities;
(viii) intercompany loans permitted under subsection 8.2.2(v) of the
Agreement; and
(ix) investments otherwise expressly permitted pursuant to the
Agreement.
Revolving Credit Loan -- a Loan made by any Lender as provided in Section
1.1 of the Agreement.
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Revolving Loan Commitment - with respect to any Lender, the amount of such
Lender's Revolving Loan Commitment pursuant to subsection 1.1.1 of the
Agreement, as set forth below such Lender's name on the signature page hereof or
any Assignment and Acceptance Agreement executed by such Lender.
Revolving Loan Percentage - with respect to each Lender, the percentage
equal to the quotient of such Lender's Revolving Loan Commitment divided by the
aggregate of all Revolving Loan Commitments.
Revolving Note -- the Secured Promissory Note Credit Notes to be executed
by Borrowers on or about the Closing Date in favor of each Lender to evidence
Revolving Credit Loans, which shall be in the form of Exhibit 1.1.1 to the
Agreement, together with any replacement or successor therefor.
Security(ies) - all shares of stock, partnership interests, membership
interests, membership units or other ownership interests in any other Person and
all warrants, options or other rights to acquire the same.
Security Documents -- the Guaranty Agreement, the Mortgage, any New
Mortgage, the Patent Security Agreement, the Pledge Agreement, the Pledge
Agreement (Subsidiaries), the Parent Security Agreement, the Trademark Security
Agreement and all other instruments and agreements (including, without
limitation, any guaranty, personal property security agreement or other
agreement executed by any Canadian Subsidiary of any Borrower) now or at any
time hereafter securing the whole or any part of the Obligations.
Solvent -- as to any Person, that such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
Subordinated Debt -- shall mean the BET Subordinated Debt and any other
Indebtedness of any Borrower or any Subsidiary of any Borrower subordinated to
the Obligations in a manner and form satisfactory to Agent and Lenders in their
sole discretion, as to right and time of payment and as to any other rights and
remedies thereunder.
Subsidiary -- any Person of which another Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting Stock
at the time of determination.
Tax Liabilities -- as defined in Section 2.12 of the Agreement.
Taxpayer -- as described in Section 7701(a)(1) of the IRC.
Term -- as defined in Section 4.1 of the Agreement.
Termination Date - shall mean December 31, 2006.
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TH Xxx Letters of Credit - those certain letters of credit caused to be
issued by Comerica Bank-Texas in the face amount of Seven Million One Hundred
Thousand Dollars ($7,100,000), the beneficiary of which is Agent, for the
ratable benefit of Lenders.
Total Credit Facility -- Forty-Two Million Five Hundred Thousand Dollars
($42,500,000).
Trademark Security Agreement -- the Trademark and License Security
Agreement executed by an applicable Borrower on or after the Original Closing
Date in favor of Agent for the benefit of itself and Lenders, as such Trademark
and License Agreement has been or will be amended from time to time.
Type of Organization -- with respect to any Person, the kind or type of
entity by which such Person is organized, such as a corporation or limited
liability company.
UCC -- the Uniform Commercial Code as in effect in the State of Illinois on
the date of this Agreement, as it may be amended or otherwise modified.
Unused Line Fee - as defined in Section 2.5 of the Agreement.
VEI - Velocity Express, Inc., a Delaware corporation.
Velocity Canada - Velocity Express Canada, Ltd., a Canadian Federal
corporation.
Voting Stock. Securities of any class or classes of a corporation, limited
partnership or limited liability company or any other entity the holders of
which are ordinarily, in the absence of contingencies, entitled to vote with
respect to the election of corporate directors (or Persons performing similar
functions).
Other Terms. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the UCC to the extent the
same are used or defined therein.
Certain Matters of Construction. The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
A-18
LIST OF EXHIBITS
Exhibit 1.1.1 Form of Revolving Credit Note
Exhibit 6.1.1 Borrowers' and each Subsidiary's Business Locations
Exhibit 7.1.1 Jurisdictions in Which Each Borrower and Each Subsidiary is
Authorized to do Business
Exhibit 7.1.4 Capital Structure of Parent and each of its Subsidiaries
Exhibit 7.1.5 Names; Organization
Exhibit 7.1.13 Surety Obligations
Exhibit 7.1.14 Tax Identification Numbers of Subsidiaries
Exhibit 7.1.15 Brokers
Exhibit 7.1.16 Patents, Trademarks, Copyrights and Licenses
Exhibit 7.1.19 Contracts Restricting Right to Incur Debt
Exhibit 7.1.20 Litigation
Exhibit 7.1.22(a) Capitalized Leases and Operating Leases
Exhibit 7.1.23 Pension Plans
Exhibit 7.1.25 Labor Contracts
Exhibit 8.1.3 Compliance Certificate
Exhibit 8.2.3 Existing Indebtedness
Exhibit 8.2.5 Permitted Liens
Exhibit 8.3 Financial Covenants
8.3-1
