EXHIBIT 99.1
ADVISED REVOLVING LINE OF CREDIT AGREEMENT
BY AND BETWEEN
AMSOUTH BANK, a bank organized under the laws of Alabama
AND
XXXXXXX XXXXXX & COMPANY, INC. a Florida corporation
CAROLINA PACIFIC DISTRIBUTORS, INC., a North Carolina corporation
CAPITOL WAREHOUSE, INC., a Kentucky corporation
SERVICE EXPRESS, INC., an Alabama corporation
DATED AS OF DECEMBER 18, 1997
ARTICLE I - DEFINITIONS...................................................1
Section 1.1. Capital Expenditures...............................1
Section 1.2. Capitalization.....................................2
Section 1.3. Current Assets.....................................2
Section 1.4. Current Liabilities................................2
Section 1.5. Debt...............................................2
Section 1.6. Event of Default...................................2
Section 1.7. Generally Accepted Accounting Principles...........2
Section 1.8. Interest Expense...................................3
Section 1.9. Liabilities........................................3
Section 1.10. LIBOR Reserve Requirement..........................3
Section 1.11. Loan Documents.....................................3
Section 1.12. Net Cash Flow. ....................................3
Section 1.13. Net Income Available for Debt Service..............3
Section 1.14. Net Income Available for Interest Payments.........3
Section 1.15. Net Worth..........................................4
Section 1.16. Permitted Contests.................................4
Section 1.17. Qualified Investments..............................4
Section 1.18. Receivables........................................4
Section 1.19. Reserve Adjusted LIBOR Rate........................5
Section 1.20. Tangible Net Worth.................................5
Section 1.21. Total Liabilities..................................5
ARTICLE II - AMOUNT AND TERMS OF LOAN.....................................6
Section 2.1. Amount.............................................6
Section 2.2. Note...............................................6
Section 2.3. Interest and Principal.............................6
Section 2.4. Increased Costs, Illegality, Etc...................6
Section 2.5. Funding Limitations................................7
ARTICLES III - SECURITY AND GUARANTY......................................8
Section 3.1. Security Interest..................................8
Section 3.2. Guaranty...........................................8
Section 3.3. Security Documents.................................8
Section 3.4. Filing and Recording...............................9
ARTICLE IV - BORROWER'S AND GUARANTOR'S REPRESENTATIONS AND
WARRANTIES.......................................................9
Section 4.1. Organization and Standing of Xxxxxxx Xxxxxx........9
Section 4.2. Organization and Standing of Carolina Pacific......9
Section 4.3. Organization and Standing of Capitol Warehouse....10
Section 4.4. Organization and Standing of Service Express......10
Section 4.5. Organization and Standing of Guarantor............10
Section 4.6. Corporate Power and Authority.....................10
Section 4.7. Valid and Binding Obligations.....................10
Section 4.8. Consent or Filing.................................11
Section 4.9. Financial Condition of the Borrower...............11
Section 4.10. Litigation. ......................................11
Section 4.11. Disclosure and No Untrue Statements. .............11
Section 4.12. Title to Collateral...............................12
Section 4.13. Payment of Taxes. ................................12
Section 4.14. Agreement or Contract Restrictions. ..............12
Section 4.15. Patents, Trademarks, Etc. ........................12
Section 4.16. Investment Company Act; Regulation................12
Section 4.17. Labor Matters. ...................................13
Section 4.18. ERISA Requirement. ...............................13
Section 4.19. Compliance With Environmental Requirements. ......13
Section 4.20. Use of Credit. ...................................14
ARTICLE V - CONDITIONS PRECEDENT.........................................14
Section 5.1. Documents and Instruments.........................14
Section 5.2. Correctness of Warranties.........................15
Section 5.3. Certificates of Resolution........................15
Section 5.4. Expenses of Lender................................15
Section 5.5. Supporting Documents. ............................15
Section 5.6. Opinion of the Borrower's Counsel. ...............16
ARTICLE VI - BORROWER'S AND GUARANTOR'S AFFIRMATIVE COVENANTS............16
Section 6.1. Corporate Existence and Qualification.............16
Section 6.2. Financial Statements..............................17
Section 6.3. Executive Officer's Certificates..................17
Section 6.4. Taxes and Claims..................................17
Section 6.5. Pay Indebtedness to Lender and Perform
Other Covenants.................................18
Section 6.6. Litigation........................................18
Section 6.7. Right of Inspection; Discussions. ................18
Section 6.8. Notices. ........................................18
Section 6.9. ERISA Benefit Plans. .............................19
Section 6.10. Insurance.........................................19
Section 6.11. Main Bank of Account..............................20
Section 6.12. Net Worth Requirement.............................20
Section 6.13. Leverage Ratio....................................20
Section 6.14. Interest Coverage Ratio...........................20
Section 6.15. Lockbox and Accounts Receivable...................20
Section 6.16. Field Audits......................................23
Section 6.17. Collateral Reporting..............................23
Section 6.18. Observance of Laws. ..............................24
Section 6.19. Subsidiaries......................................24
Section 6.20. Capitalization Ratio..............................24
ARTICLE VII - BORROWER'S NEGATIVE COVENANTS..............................24
Section 7.1. Type of Business..................................24
Section 7.2. Change in Ownership or Management.................24
Section 7.3. Acquisitions and Mergers..........................24
Section 7.4. Capital Expenditures..............................25
Section 7.5. Guaranty..........................................25
Section 7.6. Investment and Loans..............................25
Section 7.7. Disposition or Encumbrance of Receivables.........25
Section 7.8. Sale-Leasebacks...................................25
Section 7.9. Leases............................................25
Section 7.10. Liens.............................................26
Section 7.11. Take or Pay Contracts.............................26
Section 7.12. Other Special Covenants...........................27
ARTICLE VIII - EVENTS OF DEFAULT.........................................27
Section 8.1. Events............................................27
(a) Payment of Obligations to Lender. ................27
(b) Representation or Warranty. ......................27
(c) Covenants. .......................................27
(d) The Borrower's Liquidation; Dissolution;
Bankruptcy; Etc. ..............................27
(e) Order of Dissolution. ............................28
(f) Reports and Certificates. ........................28
(g) Judgments. .......................................28
(h) Liens Imposed by Law. ............................28
(i) Corporate Existence. .............................28
Section 8.2. Rights and Remedies Cumulative....................29
Section 8.3. Rights and Remedies Not Waived....................29
Section 8.4. Waiver of Default.................................29
ARTICLE IX - MISCELLANEOUS...............................................30
Section 9.1. Course of Dealing; Amendments; Waiver. ...........30
Section 9.2. Lien; Setoff By Lender............................30
Section 9.3. Liability of Lender to Third Parties..............30
Section 9.4. Waivers...........................................30
Section 9.5. Assignment and Participation......................31
Section 9.6. Funds Not Assignable..............................31
Section 9.7. Indemnity.........................................31
Section 9.8. Termination by the Borrower.......................32
Section 9.9. Arbitration. ....................................32
Section 9.10. Notices...........................................32
Section 9.11. Controlling Agreement.............................32
Section 9.12. Titles............................................32
Section 9.13. Venue and Jurisdiction. ..........................33
Section 9.14. Governing Law. ...................................33
Section 9.15. Legal or Governmental Limitations. ...............33
Section 9.16. Counterparts. ....................................33
Section 9.17. Waiver of Trial By Jury...........................33
Section 9.18. Confidentiality...................................34
Section 9.19. Total Liability of Each Co-Borrower...............34
ADVISED REVOLVING LINE OF CREDIT AGREEMENT
THIS AGREEMENT dated as of the 18th day of December, 1997, by and between
AMSOUTH BANK, a bank organized under the laws of Alabama, whose mailing address
is Post Office Xxx 000000, Xxxxxxx, Xxxxxxx 00000 (the "Lender"), and XXXXXXX
XXXXXX & COMPANY, INC., a Florida corporation, whose address is P. O. Xxx 0000,
Xxxxxxxxx, Xxxxxxx 00000-0000 ("Xxxxxxx Xxxxxx") and CAROLINA PACIFIC
DISTRIBUTORS, INC., a North Carolina corporation, whose address is 0000 Xxxxxxx
Xxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Carolina Pacific") and CAPITOL
WAREHOUSE, INC., a Kentucky corporation, whose address is 000 X. Xxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000 ("Capitol Warehouse") and SERVICE EXPRESS, INC., an
Alabama corporation, whose address is X.X. Xxx 0000, Xxxxxxxxxx, Xxxxxxx 00000
("Service Express") (Xxxxxxx Xxxxxx, Carolina Pacific, Capitol Warehouse and
Service Express are together hereinafter referred to as the "Borrower" and
individually referred to as a "Co-Borrower"; references applicable to Borrower
shall also be applicable to each Co-Borrower), and TRANSIT GROUP, INC., a
Florida corporation, whose address is Overlook III, 0000 Xxxxx Xxxxx Xxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxx 00000 (the "Guarantor").
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Lender to lend to Borrower for
the purpose of supporting working capital needs and acquisitions; and
WHEREAS, the Guarantor will derive a benefit from such loan and
therefore has agreed to guarantee the debt of Borrower to Lender and enter into
this Agreement; and
WHEREAS, subject to the continued acceptability of the collateral
referred to herein and subject to the compliance by the Borrower and Guarantor
with all of the terms and conditions hereof, the Lender is willing to make such
loan on the terms and conditions and on the security hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises, conditions,
representations and warranties hereinafter set forth and for other good and
valuable consideration, the parties hereto have mutually agreed as follows:
ARTICLE I - DEFINITIONS
Section 1.1. Capital Expenditures.
Capital Expenditures means any expenditures for fixed assets or that is
properly chargeable to capital account in accordance with generally accepted
accounting principles.
Section 1.2. Capitalization.
Capitalization means Net Worth plus Debt.
Section 1.3. Current Assets.
Current Assets means assets that, in accordance with generally accepted
accounting principles, are current assets; provided, however, that (1)
inventories shall be taken into account on the basis of cost or current market
value, whichever is lower, or, to the extent that such inventories are required
for delivery under then-existing contracts, the applicable contract price, (2)
current assets shall not include any intangible assets or any securities that
are not readily marketable, (3) securities included as current assets shall be
taken into account at the current market price thereof, and (4) current assets
shall not include any amounts due from or owed by any shareholder, partner,
member (as applicable) or affiliate of the Guarantor, the Co-Borrowers or any of
its Subsidiaries.
Section 1.4. Current Liabilities.
Current Liabilities means, as of the date of determination, all Debt
maturing on demand or within one year from, and that is not renewable at the
option of the obligor to a date later than one year after, the date as of which
such determination is made and all other items (including taxes accrued as
estimated) that, in accordance with generally accepted accounting principles,
would be included as current liabilities.
Section 1.5. Debt.
Debt of any person means (1) all indebtedness, whether or not
represented by bonds, debentures, notes or other securities, for the repayment
of borrowed money, (2) all deferred indebtedness for the payment of the purchase
price of property or assets purchased, except trade accounts payable, (3) all
capitalized lease obligations, (4) all indebtedness secured by any Lien on any
property of such person, whether or not indebtedness secured thereby has been
assumed, (5) all obligations with respect to any conditional sale contract or
title retention agreement, (6) all indebtedness and obligations arising under
acceptance facilities or in connection with surety or similar bonds, and the
outstanding amount of all letters of credit issued for the account of such
person, and (7) all obligations with respect to interest rate swap agreements.
Section 1.6. Event of Default.
"Event of Default" means any of the events specified in Section 8.1
hereof.
Section 1.7. Generally Accepted Accounting Principles.
"Generally Accepted Accounting Principles" means those principles of
accounting set forth in Opinions of the Financial Accounting Standards Board of
the American Institute of Certified
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Public Accountants or which have other substantial authoritative support and are
applicable in the circumstances as of the date of any report required herein or
as of the date of an application of such principles as required herein.
Section 1.8. Interest Expense.
Interest Expense means interest payable on Debt during the period in
question.
Section 1.9. Liabilities.
Liabilities means all Debt and all other items (including taxes accrued
as estimated) that, in accordance with generally accepted accounting principles,
would be included in determining total liabilities as shown on the liabilities
side of a balance sheet.
Section 1.10. LIBOR Reserve Requirement.
"LIBOR Reserve Requirement" means, for any day, the rate at which
reserves (including, without limitation, any marginal, supplemental, or
emergency reserves) are required to be maintained by member banks of the Federal
Reserve System on such day against Eurocurrency liabilities, expressed as a
decimal.
Section 1.11. Loan Documents.
"Loan Documents" means and includes the Note, this Agreement, the
corporate resolution, and any and all other documents executed in connection
with this loan accommodation.
Section 1.12. Net Cash Flow.
Net Cash Flow for any period means net income (or the net deficit, if
expenses and charges exceed revenues and other proper income credits) for such
period, plus amounts that have been deducted for (1) depreciation and (2)
amortization in determining net income for such period.
Section 1.13. Net Income Available for Debt Service.
Net Income Available for Debt Service for any period means net income
(or the net deficit, if expenses and charges exceed revenues and other proper
income credits) for such period, plus amounts that have been deducted for (1)
depreciation, (2) amortization and (3) Interest Expense in determining net
income for such period.
Section 1.14. Net Income Available for Interest Payments.
Net Income Available for Interest Payments means net income (or the net
deficit, if expenses and charges exceed revenues and other proper income
credits) for such period plus amounts that
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have been deducted for (1) Interest Expense, (2) income and profit taxes, and
(3) amortization of debt discount in determining net income for such period.
Section 1.15. Net Worth.
Net Worth means the sum of the amounts set forth on the balance sheet
as shareholders' equity (including the par or stated value of all outstanding
capital stock, retained earnings, additional paid-in capital, capital surplus
and earned surplus).
Section 1.16. Permitted Contests.
Permitted Contests means litigation or administrative proceedings
pursued by Borrower in good faith regarding taxes or construction liens.
Section 1.17. Qualified Investments.
Qualified Investments means:
(1) direct obligations of, or obligations the payment of which
is guaranteed by the United States of America ("Federal Securities"),
(2) an interest in any trust or fund that invests solely in
Federal Securities,
(3) a certificate of deposit issued by, or other
interest-bearing deposit with, any bank organized under the laws of the United
States of America or any state thereof, provided that (A) such bank has capital,
surplus and undivided profits of not less that $50,000,000, (B) such deposit is
insured by the Federal Deposit Insurance Corporation, or (C) such deposit is
collaterally secured by such bank by pledging Federal Securities having a market
value (exclusive of accrued interest) not less than the face amount of such
deposit (less the amount of such deposit insured by the Federal Deposit
Insurance Corporation), and
(4) a purchase agreement with respect to Federal Securities,
provided that the Federal Securities subject to such repurchase agreement are
held by or under the control of the Co-borrowers free and clear of third-party
Liens.
Section 1.18. Receivables.
"Receivables" means and includes all present and future accounts,
commissions, contract rights, lease payment, chattel paper, instruments,
documents, tax refunds payable to Borrower, license fees and proceeds,
royalties, insurance proceeds and general intangibles and all forms of
obligations owing, together with all documents or instruments of title
representing the same and rights in any merchandise or goods which the same
represent, together with all right, title, security and guarantees, with respect
to each of the Receivables, including any right of stoppage in transit,
4
whether the same are now or hereafter owned. "Receivables" also specifically
include all rights of Borrower under any patent license agreement, technical
assistance contract, product supply contract, or similar agreement and includes
all trade names, trademarks, license agreements and all records pertaining to
the accounts, debtors, and collateral and all computer software pertaining to
the Receivables of Borrower.
Section 1.19. Reserve Adjusted LIBOR Rate.
"Reserve Adjusted LIBOR Rate" means, for any "Interest Period" (as
defined in the Note), an interest rate per annum obtained by dividing (i) the
rate quoted on the Telerate page 3750 as of 11:00 a.m. London time, on the day
that is two London banking days prior to the first day of the Interest Period,
in an amount substantially equal to the "LIBOR-Based Rate" (as defined in the
Note) and with a term substantially equal to such Interest Period, by (ii) an
amount equal to 1 minus the LIBOR Reserve Requirement for such Interest Period.
In the event the rate quoted by Telerate is discontinued or the rate otherwise
cannot be identified, the Lender shall determine the LIBOR-Based Rate on the
basis of quotes by major banks in the London interbank Eurodollar market for
dollar deposits in an amount substantially equal to and for a term substantially
equal to the Interest Period selected.
Section 1.20. Tangible Net Worth.
Tangible Net Worth means the sum of the amounts set forth on the
balance sheet as shareholders' equity (including the par or stated value of all
outstanding capital stock, retained earnings, additional paid-in capital,
capital surplus and earned surplus), less the sum of (1) any amount of any
write-up of assets, (2) goodwill, (3) patents, trademarks, copyrights, leasehold
improvements not recoverable at the expiration of a lease, and deferred charges
(including unamortized debt, discount and expense, organization expenses,
experimental and developmental expenses, but excluding prepaid expenses), (4)
any amounts at which shares of capital stock of such person appear on the asset
side of the balance sheet and (A) any amounts due from or owed by any
shareholder or affiliate.
Section 1.21. Total Liabilities.
Total Liabilities means all Debt and all other items (including taxes
accrued as estimated) that, in accordance with generally accepted accounting
principles, would be included in determining total liabilities as shown on the
liabilities side of a balance sheet.
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ARTICLE II - AMOUNT AND TERMS OF LOAN
Section 2.1. Amount.
The Lender agrees, on the terms and conditions of this Agreement, to
lend to Borrower in an aggregate principal amount not to exceed TWENTY MILLION
DOLLARS ($20,000,000.00) (hereinafter sometimes referred to as the "Loan" or
"Line of Credit").
Section 2.2. Note.
The obligation to repay the loan is evidenced by a revolving credit
note in the principal sum of TWENTY MILLION DOLLARS ($20,000,000.00) (the "Note"
or "Revolving Credit Note"). Under the Loan, the Borrower may, subject to the
terms, conditions herein set forth and subject to the approval of an officer of
Lender, borrow from Lender, at such time and in such amounts not exceeding the
total amount of TWENTY MILLION DOLLARS ($20,000,000.00).
Section 2.3. Interest and Principal.
The interest on and principal of the Note shall be paid in accordance
with the terms and conditions more particularly set forth in the Note.
Section 2.4. Increased Costs, Illegality, Etc.
(a) If either (i) the introduction of or any change in any law
or regulation or in the interpretation or administration of any law or
regulation by any court or administrative or governmental authority charged with
the interpretation or administration thereof from the date hereof or (ii) the
compliance with any guideline enacted after the date hereof or request from any
such governmental authority, including, without limitation, any central bank
(whether or not having the force of law), which is not caused by an act or
omission of Lender, including without limitation, its failure to maintain
adequate capital, (x) subjects Lender or any corporation controlling Lender to
any tax of any kind whatsoever with respect to this Agreement, or changes the
basis of taxation of payments to Lender of principal, commissions, fees,
interest, or any other amount payable hereunder (except for (A) taxes on or
measured by the overall net income of Lender or branch, office, or agency
through which Lender is acting for purposes of this Agreement or (B) changes in
the rate of such taxes); (y) imposes, modifies, or holds applicable any reserve,
special deposit, compulsory loan, or similar requirement against assets held by,
or deposits or other liabilities in or for the account of, advances or loans by,
or other credit or commitment therefor extended by, or any other acquisition of
funds by, any office of Lender which are not otherwise included in any
determination of the Reserve Adjusted LIBOR Rate or other interest payable
hereunder; or (z) imposes on Lender or the corporation controlling Lender any
other condition, and as a result there shall be any increase in the cost to
Lender of agreeing to make or making, funding, or maintaining advances by an
amount deemed by Lender to be material, then the Borrower shall from time to
time, upon demand by Lender, pay directly to Lender additional amounts
sufficient to compensate Lender for such increased
6
cost. A certificate as to the amount of such increased cost, submitted to the
Borrower by Lender, shall be conclusive and binding for all purposes, absent
manifest error.
(b) If Lender determines that compliance with any law or
regulation or with any guideline or request from any central bank or other
governmental authority subsequent to the date hereof (whether or not having the
force of law) concerning capital adequacy or otherwise has or would have the
effect of reducing the rate of return on the capital of Lender or the
corporation controlling Lender as a consequence of, or with reference to, the
facilities hereunder, by an amount deemed by Lender to be material, the Borrower
shall from time to time, upon demand by Lender, pay to Lender additional amounts
sufficient to compensate Lender or such other corporation for such reduction. A
certificate as to such amounts, submitted to the Borrower by Lender, shall be
conclusive and binding for all purposes, absent manifest error.
(c) In the event the LIBOR Reserve Requirement increases
subsequent to the date hereof, the interest rate applicable to the Note shall be
the Reserve Adjusted LIBOR Rate.
Section 2.5. Funding Limitations.
Until May 1, 1999, the maximum principal amount that may be outstanding
from time to time under the Line of Credit shall not exceed the lesser of the
following: (a) TWENTY MILLION DOLLARS ($20,000,000.00); or (b) eighty-five
percent (85%) of the Co-Borrower's eligible Receivables. After May 1, 1999, the
maximum principal amount that may be outstanding from time to time under the
Line of Credit shall not exceed the lesser of the following: (a) TWENTY MILLION
DOLLARS ($20,000,000.00); or (b) fifty percent (50%) of the Co-Borrower's
eligible accounts receivable. Eligible accounts receivable shall not include any
ineligible accounts receivable including those receivables described below. For
purposes of determining the funding limitations, each Co-Borrower's borrowing
base of eligible accounts receivable shall be determined separately and funding
eligibility will be determined separately and accounts receivable from one
Co-Borrower may not be used to calculate the borrowing base for another
Co-Borrower. The monies disbursed under the Line of Credit will be disbursed
based on such Co-Borrower's borrowing base and disbursements may be made based
on verbal or written request to Lender in Lender's sole discretion.
The Lender shall have the right, in the good faith exercise of its sole
discretion, to deem any specific accounts receivable ineligible for the purpose
of calculating the maximum principal amount that may be outstanding from time to
time under the Note, including but not limited to the following types of
Receivables: (1) invoices aged ninety (90) days or more past invoice date; (2)
accounts that have over thirty-five percent (35%) of the total balance aged
ninety (90) days or more past invoice date; (3) Receivables due from any
government agency to the extent that such Receivables exceed 15% of each
Co-Borrower's eligible accounts receivable; and (4) credit balances aged ninety
(90) days or more past invoice date; (5) accounts owed by foreign corporations
which are not fully insured under the current credit insurance policy; (6)
accounts owed by or due from affiliates, related parties, stockholders, or
employees; (7) accounts that could be subject to the right of offset, including
but not limited to contra accounts; (8) invoices issued for services rendered
prior to the actual rendering of the services (i.e., pre-billed invoices); (9)
post dated invoices; (10) any Receivables due
7
from any entity to the extent that such Receivables exceed 15% of the Borrowers'
eligible Receivables; and (11) any Receivables resulting from any transaction
not in the ordinary course of business. Lender shall have no obligation to fund
if an Event of Default exists.
ARTICLES III - SECURITY AND GUARANTY
As security for the full and timely payment of the principal and
interest under the Note and for any and all other indebtedness or liability of
the Borrower to the Lender, whether now existing or hereafter arising (all of
which indebtedness is hereby referred to as "Indebtedness"), the Borrower grants
and/or agrees to the following:
Section 3.1. Security Interest.
The Borrower hereby grants the Lender and shall cause to be granted to
the Lender a first prior and exclusive lien and security interest in and a
continuing first lien upon the following property (all of which is herein
referred to collectively as the "Collateral"):
(a) All "Receivables", as defined in Section 1.18 hereof, of Borrower;
and
(b) All proceeds, products and accessions of and to all of the
foregoing.
Section 3.2. Guaranty.
The Borrower shall cause to be duly executed and delivered to the
Lender the unlimited guaranty of the Guarantor, whereby the Guarantor guarantees
the Borrower's obligations under the Note, this Agreement and the Security
Documents as hereinafter defined. The Guarantor, by its execution of this
Agreement, agrees that any and all loans, indebtedness or other liability of the
Borrower to the Guarantor shall at all times be subordinate to the indebtedness
of the Borrower to the Lender.
Section 3.3. Security Documents.
The Borrower, in order to describe the terms and conditions under which
the Collateral will be held by the Lender, shall execute and deliver to the
Lender, in form and substance satisfactory to the Lender, any and all security
agreements, financing statements, and any other documents relating to any
security as the Lender shall require from time to time (all herein together with
the Note and this Agreement referred to collectively as the "Security
Documents"). Concurrent with the execution of the Note, the Borrower shall
deliver to the Lender executed Security Documents covering the items described
in Sections 3.1 and 3.2 in form and substance satisfactory to the Lender.
8
Section 3.4. Filing and Recording.
The Borrower shall, at its cost and expense, cause all instruments and
documents given as security pursuant to this Agreement to be duly recorded
and/or filed in all places necessary, in the opinion of the Lender, to perfect
and protect the security interest of the Lender in the property covered thereby.
The Borrower hereby authorizes the Lender to file any financing statement in
respect of any security interest created pursuant to this Agreement which may at
any time be required or which, in the opinion of the Lender, may at any time be
desirable, although the same may have been executed only by the Lender, or, at
the option of the Lender, to sign such financing statement on behalf of the
Borrower and file the same, and the Borrower hereby irrevocably designates the
Lender, its agents, representatives and designees as agents and
attorneys-in-fact for the Borrower for this purpose. In the event that any
recording or refiling thereof (or the filing of any statements of continuation
or assignment of any financing statement) is required to protect and preserve
security interest, the Borrower shall, at its cost and expense, cause the same
to be re-recorded and/or refiled at the time and in the manner requested by the
Lender.
ARTICLE IV - BORROWER'S AND GUARANTOR'S REPRESENTATIONS AND
WARRANTIES
To induce the Lender to enter into this Agreement, the Borrower and
Guarantor make the following representations and warranties which shall be
deemed to be continuous representations and warranties so long as any credit
hereunder remains available or any indebtedness of the Borrower to the Lender
remains unpaid:
Section 4.1. Organization and Standing of Xxxxxxx Xxxxxx.
Xxxxxxx Xxxxxx is a corporation duly organized and existing under the
laws of the State of Florida and is duly qualified to do business in the State
of Florida and in each jurisdiction where the failure to be so qualified would
have a material adverse effect on Borrower. To the best of Xxxxxxx Xxxxxx'x
knowledge and belief, it is in material compliance with all applicable laws and
regulations governing the conduct of its business and governing consummation of
the transactions and its principal place of business is located in the State of
Florida.
Section 4.2. Organization and Standing of Carolina Pacific.
Carolina Pacific is a corporation duly organized and existing under the
laws of the State of North Carolina and is duly qualified to do business in the
State of North Carolina and in each jurisdiction where the failure to be so
qualified would have a material adverse effect on Borrower. To the best of
Carolina Pacific's knowledge and belief, it is in material compliance with all
applicable laws and regulations governing the conduct of its business and
governing consummation of the transactions and its principal place of business
is located in the State of North Carolina.
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Section 4.3. Organization and Standing of Capitol Warehouse.
Capitol Warehouse is a corporation duly organized and existing under
the laws of the State of Kentucky and is duly qualified to do business in the
State of Kentucky and in each jurisdiction where the failure to be so qualified
would have a material adverse effect on Borrower. To the best of Capitol
Warehouse's knowledge and belief, it is in material compliance with all
applicable laws and regulations governing the conduct of its business and
governing consummation of the transactions and its principal place of business
is located in the State of Kentucky.
Section 4.4. Organization and Standing of Service Express.
Service Express is a corporation duly organized and existing under the
laws of the State of Alabama and is duly qualified to do business in the State
of Alabama and in each jurisdiction where the failure to be so qualified would
have a material adverse effect on Borrower. To the best of Service Express'
knowledge and belief, it is in material compliance with all applicable laws and
regulations governing the conduct of its business and governing consummation of
the transactions and its principal place of business is located in the State of
Alabama.
Section 4.5. Organization and Standing of Guarantor.
The Guarantor is a corporation duly organized and existing under the
laws of the State of Florida and is duly qualified to do business in each
jurisdiction in which the conduct of its business requires such qualification,
including the State of Florida. To the best of the Guarantor's knowledge and
belief, it is in compliance with all applicable laws and regulations governing
the conduct of its business and governing consummation of the transactions
contemplated hereby.
Section 4.6. Corporate Power and Authority.
The execution, delivery and performance of this Agreement and any
Security Documents by the Borrower and Guarantor are within its corporate powers
and have been duly authorized by all necessary corporate and shareholder action,
are not in contravention of law or the terms of their respective Articles of
Incorporation or By-Laws or any amendment thereto, or any indenture, agreement
or undertaking to which they are a party or by which they are bound, except such
obligations which will be fully satisfied at the initial funding hereunder.
Section 4.7. Valid and Binding Obligations.
This Agreement, the Note, the Security Documents and any other
documents required hereunder, when executed and delivered by Borrower and
Guarantor will constitute the legal, valid and binding respective obligations of
the Borrower and Guarantor, subject to applicable bankruptcy and insolvency laws
and laws affecting creditors' rights and the enforcement thereof generally.
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Section 4.8. Consent or Filing.
No consent, approval or authorization of, or registration, declaration
or filing with any court, any governmental body or authority or other person or
entity is required in connection with the valid execution, delivery or
performance of this Agreement or any document required by this Agreement or in
connection with any of the transactions contemplated thereby, except the filing
of the financing statements contemplated hereunder.
Section 4.9. Financial Condition of the Borrower.
(a) The financial statements of the Borrower, a copy of which has been
furnished to the Lender, are materially correct, complete, and fairly present
the financial condition of the Borrower as at the date of the financial
statements and fairly present the results of the operations of the Borrower for
the period covered thereby.
(b) The Borrower has no material direct or contingent liabilities,
liabilities for taxes, long-term leases, or unusual forward or long-term
commitments as of the date of the Agreement which are not disclosed by, provided
for, or reserved against in the financial statements or referred to in notes
thereto, and at such date there are no material unrealized or anticipated losses
from any unfavorable commitments of the Borrower. The financial statements
furnished to the Lender have been prepared in accordance with Generally Accepted
Accounting Principles applied on a consistent basis maintained throughout the
period involved. There has been no material adverse change in the business,
properties or condition, financial or otherwise, of the Borrower since the date
of such financial statements.
Section 4.10. Litigation.
There is no suit or proceeding at law or in equity (including
proceedings, by or before any court, arbitrator, governmental or administrative
commission, board or bureau, or other administrative agency) pending, or to the
knowledge of the Borrower or Guarantor threatened, by or against or involving
the Borrower or Guarantor or against any of its properties, or existence which,
if adversely determined, would have a material adverse effect on the property,
assets, or business or on the condition, financial or otherwise, of the
Borrower.
Section 4.11. Disclosure and No Untrue Statements.
No representation or warranty made by the Borrower in the Loan
Documents or which will be made by the Borrower from time to time pursuant to
Officer's Certificates (a) contains or will contain any material
misrepresentation or material untrue statement of fact; or (b) omits or will
omit to state any material fact necessary to make the statements therein not
misleading, unless otherwise disclosed in writing to the Lender. There is no
fact known to the Borrower or any of its executive financial officers which
materially and adversely affects the business, assets, properties, or condition,
financial or otherwise, of the Borrower.
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Section 4.12. Title to Collateral.
The Borrower has good and marketable title to, and is the holder of all
of the interests in, all of the Collateral given as security to the Lender, free
and clear of all pledges, liens, security interests or other encumbrances. The
Borrower and Guarantor will warrant and defend the Collateral against the claims
and demands of all persons.
Section 4.13. Payment of Taxes.
The Borrower has filed or caused to be filed all federal, state, and
local tax returns which are required to be filed by it and has paid or caused to
be paid all taxes as shown on said returns or on any assessment received by it,
to the extent that such taxes have become due, except as otherwise permitted by
the provisions hereof, and no controversy in respect of additional income taxes
which could have a material adverse effect on the Borrower is pending, or, to
the knowledge of the Borrower, threatened, unless adequate reserve has been made
therefor. The Borrower has set up reserves which are believed by its officers to
be adequate for the payment of all taxes for which a notice of assessment has
been received and for the payment of such taxes for the years that have not been
audited by the respective tax authorities.
Section 4.14. Agreement or Contract Restrictions.
The Borrower is not a party to, nor is it bound by, any agreement,
contract, or instrument or subject to any charter or other corporate or
partnership restriction which materially adversely affects the business,
properties, assets, operations, or financial condition of the Borrower except as
disclosed in the financial statements and notes thereto described in Section 6.2
hereof. The Borrower is not in material default in the performance, observance,
or fulfillment of any obligations, covenants, or conditions contained in any
agreement or instrument to which it is a party, which would have a material
adverse affect on Borrower performing hereunder.
Section 4.15. Patents, Trademarks, Etc.
The Borrower owns, possesses, or has the right to use all necessary
patents, patent rights, licenses, trademarks, trademark rights, trade names,
trade name rights, and copyrights to conduct its business as now conducted,
without known conflict with any patent, patent right, license, trademark,
trademark right, trade name, trade name right, or copyright of any other person
or entity.
Section 4.16. Investment Company Act; Regulation.
(a) The Borrower is not an "investment company," an "affiliated
person" of any investment company," or a company "controlled" by an "investment
company," and the Borrower is not an "investment advisor" or an "affiliated
person" of an "investment advisor" (as each of the quoted terms is defined or
used in the Investment Company Act of 1940, as amended).
(b) The Borrower is not subject to regulation under any state or local
public utilities code or
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federal, state, or local statute or regulation limiting the ability of the
Borrower to incur indebtedness for money borrowed.
Section 4.17. Labor Matters.
There are no strikes or other labor disputes against the Borrower or
Guarantor pending or, to the Borrower's or Guarantor's knowledge, threatened. To
the knowledge of Borrower, hours worked by and payment made to employees of the
Borrower have not been in violation of the Fair Labor Standards Act or any other
applicable law dealing with such matters. All material payments due from the
Borrower on account of employee health and welfare insurance have been paid or
accrued as a liability on its books.
Section 4.18. ERISA Requirement.
Except as previously disclosed to Lender in writing, the Borrower does
not have in force any written or oral bonus plan, stock option plan, employee
welfare, pension or profit sharing plan, or any other employee benefit
arrangement or understanding. In addition, the Borrower and any predecessor of
the Borrower is not now or was not formerly during the five year period
immediately preceding the effective date of this Agreement a participating
employer in any multi employer or "multiple employer" plans within the meaning
of Sections 4001 (1)(a)(3), 4063, and 4064 of ERISA. Each employee benefit plan
subject to the requirements of ERISA complies in all material respects with all
of the requirements of ERISA and those plans which are subject to being
"qualified" under Sections 401 (a) and 501 (a) of the Internal Revenue Code of
1986, as amended from time to time, have since their adoption been "qualified"
and have received favorable determination letters from the Internal Revenue
Service so holding. There is no matter known to Borrower which would adversely
affect the qualified tax exempt status of any such trust or plan, and except as
previously disclosed to the Lender, there are no deficiencies or liabilities for
any such plan or trust. No employee benefit plan sponsored by the Borrower has
engaged in a nonexempt "prohibited transaction" as defined in ERISA.
Section 4.19. Compliance With Environmental Requirements.
The Borrower warrants and represents to the Lender that to the best of
Borrower's knowledge, the real property owned by Borrower is now and at all
times hereafter will continue to be in full compliance with all federal, state
and local environmental laws and regulations as they now exist or are hereafter
enacted and/or amended, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, and the Hazardous and Solid Waste Amendments of 1984, as amended. The
Borrower shall indemnify and hold the Lender harmless from and against any and
all damages, penalties, fines, claims, liens, suits, liabilities, costs
(including cleanup costs), judgments and expenses (including attorneys',
consultants' or experts' fees and expenses) of every kind and nature suffered by
or asserted against the Lender as a direct or indirect result of any warranty or
representation made by the Borrower in this paragraph being false or untrue
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in any material respect or any requirement under any law, regulation or
ordinance, whether local, state or federal, which requires the elimination or
removal of any hazardous materials, substances, wastes or other environmentally
regulated substances. The Borrower's obligations hereunder shall not be limited
to any extent by the term of the indebtedness secured hereby, and, as to any act
or occurrence prior to payment in full and satisfaction of the indebtedness
which gives rise to liability hereunder, shall continue, survive and remain in
full force and effect notwithstanding payment in full and satisfaction of the
indebtedness.
Section 4.20. Use of Credit.
The Loan shall be used exclusively for the purpose of supporting
working capital needs and acquisitions. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying "margin
stock" (within the meaning of Regulation U, Regulation X or Regulation G of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any advance hereunder will be used to purchase or carry any "margin stock,"
to extend credit to others for the purpose of purchasing or carrying any "margin
stock," or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of Regulation U, Regulation X, or Regulation
G. Neither the Borrower nor any person acting on behalf of the Borrower has
taken or will take any action which might cause the Note or any other Loan
Documents, including this Agreement, to violate Regulation U, Regulation X, or
Regulation G or any other regulation of the Board of Governors of the Federal
Reserve system or violate Section 8 of the Securities Exchange Act of 1934 or
any rule or regulation thereunder, in each case as now in effect as the same may
hereinafter be in effect. The Borrower owns no "margin stock" except for that
described in the financial statements referred to in Section 6.2 hereof and, as
of the date hereof, the aggregate value of all "margin stock" owned by the
Borrower does not exceed twenty-five percent (25%) of the value of all of the
Borrower's assets. In connection with the Loan, the Borrower will upon request
of the Lender deliver to the Lender a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in said Regulation.
ARTICLE V - CONDITIONS PRECEDENT
The effectiveness of this Agreement and the obligations of the Lender
to consummate any of the transactions contemplated hereby shall be subject to
the satisfaction of the following conditions precedent, at or prior to the time
of the funding of the loan or any part thereof:
Section 5.1. Documents and Instruments.
The Lender shall have received all the instruments, documents and
property contemplated to be delivered by the Borrower hereunder, and the same
shall be in full force and effect.
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Section 5.2. Correctness of Warranties.
All representations and warranties contained herein or otherwise made
to the Lender in connection herewith shall be true and correct.
Section 5.3. Certificates of Resolution.
The Board of Directors of the Borrower and Guarantor and, if
shareholder approval is deemed necessary by any party, the shareholders of the
Borrower and Guarantor, shall have passed specific resolutions authorizing the
execution and delivery of all documents and the taking of all actions called for
by this Agreement, and the Borrower and Guarantor shall have furnished to the
Lender copies of such resolutions, certified by its Secretary.
Section 5.4. Expenses of Lender.
The Borrower promises to reimburse the Lender promptly for all
reasonable out-of-pocket expenses of every nature which the Lender may incur in
connection with this Agreement and the Note, the making of any loans provided
for herein or the collection of the Borrower's indebtedness, including, but not
limited to, any filing fees and documentary stamps. Such expenses shall be paid
at closing or in a reasonable time thereafter upon receipt of written invoices.
The Borrower shall also pay reasonable postclosing expenses incurred by the
Lender on behalf of the Borrower, including, but not limited to, preparation of
documents to terminate the loan and release the security therefor. Furthermore,
the Borrower shall be liable for post-closing collection expenses, including,
but not limited to, the collection of obligations of the Borrower hereunder,
including reasonable attorneys' fees, including appellate proceedings,
post-judgment proceedings and bankruptcy proceedings. In the event the Borrower
fails to pay such expenses within a reasonable time, the Lender may either (a)
disburse to itself under the terms of the Note any sums payable to Lender and
such disbursement shall be considered with like effect as if same had been made
to Borrower, or (b) pay such expenses on the Borrower's behalf and charge the
Borrower's account.
Section 5.5. Supporting Documents.
On or prior to the closing date, the Lender shall have received the
following documents satisfactory in form and substance to the Lender and counsel
for the Lender and, as requested by the Lender, certified by appropriate
corporate or governmental authorities:
(a) a certificate of good standing of each Borrower certified
by the Secretary of State, or other appropriate governmental authority, of the
state of incorporation;
(b) a copy of the articles of incorporation of each Borrower
certified by an appropriate officer of the Borrower that the copy is complete
and that the articles of incorporation have not been amended, annulled,
rescinded, or revoked;
15
(c) a copy of the bylaws of each Borrower in effect on the
date of this Agreement, accompanied by a certificate from an appropriate officer
of the Borrower that the copy is true and complete, and that the bylaws have not
been amended, annulled, rescinded, or revoked since the date of the bylaws or
the last amendment reflected in the copy, if any;
(d) a copy of resolutions of the Board of Directors of the
Borrower authorizing the execution, delivery, and performance of the Loan
Documents and the borrowing thereunder, and specifying the officer or officers
of the Borrower authorized to execute the Loan Documents, accompanied by a
certificate from an appropriate officer that the resolutions are true and
complete, were duly adopted at a duly called meeting in which a quorum was
present and acting throughout, or were duly adopted by written action, and have
not been amended, annulled, rescinded, or revoked in any respect and remain in
full force and effect on the date of the certificate;
(e) an incumbency certificate containing the names and titles
of all duly elected officers and directors of the Borrower as of the date of
this Agreement, accompanied by a certificate from an appropriate officer that
the information is true and complete;
(f) such additional supporting documents as the Lender may
request.
Section 5.6. Opinion of the Borrower's Counsel.
On or prior to the closing date, and to the extent required by the
Lender at the time of any borrowing hereunder, the Lender shall have received
the favorable opinion of counsel for Borrower indicating that the execution,
delivery and performance of this Agreement by the Borrower are within its
corporate powers and authorized, in form and substance satisfactory to the
Lender.
ARTICLE VI - BORROWER'S AND GUARANTOR'S AFFIRMATIVE COVENANTS
The Borrower and Guarantor, jointly and severally, covenant and agree
that until the Note, together with interest and all other indebtedness to the
Lender under the terms of this Agreement, is paid in full, unless specifically
waived by the Lender in writing:
Section 6.1. Corporate Existence and Qualification.
The Borrower and Guarantor will do, or cause to be done, all things
necessary to preserve, renew and keep in full force and effect its corporate
existence, its material rights, licenses and permits and comply in all material
respects with all laws applicable to it, operate its business in a proper and
reasonable businesslike manner and substantially as presently operated or
proposed to be operated; and at all times maintain, preserve and protect all
franchises and trade names and preserve all property used or useful in the
conduct of its business, and keep the same in good repair, working order and
condition, and from time to time make, or cause to be made, all needful and
proper repairs, renewals, replacements, betterments and improvements thereto,
all as reasonably
16
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
Section 6.2. Financial Statements.
Borrower and Guarantor will each keep their books of account in
accordance with generally accepted accounting practices applied on a consistent
basis and will furnish to Lender the following:
(a) Monthly financial statements of each Co-Borrower and Guarantor and
subsidiaries including, at a minimum, a balance sheet, an income and expense
statement and a year-to-date financial statement presenting individual as well
as consolidating and consolidated financial information on each Co-Borrower and
Guarantor and its subsidiaries, submitted within forty-five (45) days of the end
of each month prepared by and certified as such by the chief financial officer
of the applicable Co-Borrower and Guarantor stating "the undersigned hereby
certifies that the attached financial information is true and correct" in all
material respects, subject to audit adjustments; and containing information
required by Lender, including monthly accounts receivable agings for each
Co-Borrower aged by invoice date as of the end of each month, accounts payable
agings for each Co-Borrower as of the end of each month, daily updated accounts
receivable balances for each Co-Borrower and customer address listings as Lender
may request from time to time; and
(b) Annual financial statements of each Co-Borrower and Guarantor
including, at a minimum, a balance sheet and an income and expense statement
presenting individual as well as consolidating and consolidated financial
information on the Borrower and Guarantor and its subsidiaries, submitted within
ninety (90) days from the end of each fiscal year end, prepared by and certified
as such by an independent certified public accountant acceptable to Lender which
may be satisfied by delivery of Guarantor's Annual Report on Form 10-K as filed
with the Securities and Exchange Commission.
The Borrower and Guarantor also, with reasonable promptness, shall furnish to
the Lender such other data as the Lender may reasonably request.
Section 6.3. Executive Officer's Certificates.
The financial statements of Borrower, called for by Section 6.2(a) and
(b), shall be accompanied by a certificate of one of the principal executive
officers of Guarantor stating that there exists no Event of Default as defined
in this Agreement and no event which, with the giving of notice or passage of
time, or both, would constitute such an Event of Default, or, if this is not the
case, that one or more specified events of default or above-specified events
have occurred.
Section 6.4. Taxes and Claims.
The Borrower and Guarantor shall properly pay and discharge: all taxes,
17
assessments and governmental charges upon or against any of them or their assets
prior to the date on which penalties attach thereto, unless and to the extent
that such taxes are being diligently contested in good faith and by appropriate
proceedings and appropriate reserves therefor have been established.
Section 6.5. Pay Indebtedness to Lender and Perform Other Covenants.
The Borrower shall: (a) make full and timely payments of the principal
of and interest on the Note and all other indebtedness of the Borrower to the
Lender, whether now existing or hereafter arising; and (b) duly comply with all
the terms and covenants contained in each of the instruments and documents given
to the Lender pursuant to this Agreement or of the times and places and in the
manner set forth herein.
Section 6.6. Litigation.
The Borrower and Guarantor will promptly notify the Lender upon the
commencement of any action, suit, claim, counterclaim or proceeding against or
known investigation of the Borrower (except when the alleged liability is fully
covered by insurance): (a) the result of which could materially adversely affect
the business of the Borrower; or (b) which questions the validity of this
Agreement or any other document executed in connection herewith or any action
taken or to be taken pursuant to any of the foregoing.
Section 6.7. Right of Inspection; Discussions.
The Borrower will permit any person designated by the Lender, at the
Borrower's expense, to visit and inspect any of the property, books, records,
papers, and financial reports of the Borrower, including the making of any
copies thereof and abstracts therefrom, and to discuss its affairs, finances,
and accounts with its principal officers, all at such reasonable times and as
often as the Lender may reasonably request. The Borrower will also permit the
Lender, or its designated representative, to audit its financial and business
records. Without limiting the foregoing in any way, the Borrower also agrees to
allow the Lender and/or certified public accountants satisfactory to the Lender
to review the Borrower's financial statements, books, and records.
Section 6.8. Notices.
The Borrower will promptly give notice to the Lender of:
(a) the occurrence of any default or Event of Default (or
event which would constitute a default or Event of Default but for the
requirement that notice be given or time elapse or both) hereunder in which case
such notice shall specify the nature thereof, the period of existence thereof,
and the action that the Borrower proposes to take with respect thereto;
18
(b) the occurrence of any material casualty to any property of
the Borrower or any other force majeure (including, without limitation, any
strike or other labor disturbance) materially affecting the operation or value
of the Borrower (specifying whether or not such casualty or force majeure is
covered by insurance); and
(c) the commencement or any material change in the nature or
status of any material litigation, dispute, investigation, of proceeding that
may involve a claim for damages, injunctive relief, enforcement, or other relief
pending, being instituted, or threatened by, against or involving the Borrower,
or any attachment, levy, execution, or other process being instituted by or
against any assets of the Borrower, or any other adverse change which might
materially impair the conduct of the Borrower's business or might materially
affect financially or otherwise its business, operations, assets, properties,
prospects, or condition.
Section 6.9. ERISA Benefit Plans.
The Borrower will comply with all requirements of ERISA applicable to
it and will not materially increase its liabilities under or violate the terms
of any present or future benefit plans maintained by it without the prior
approval of the Lender. The Borrower will furnish to the Lender as soon as
possible and in any event within 10 days after the Borrower or a duly appointed
administrator of a plan (as defined in ERISA) knows or has reason to know that
any reportable event, funding deficiency, or prohibited transaction (as defined
in ERISA) with respect to any plan has occurred, a statement of the chief
financial officer of the Borrower describing in reasonable detail such
reportable event, funding deficiency, or prohibited transaction and any action
which Borrower proposes to take with respect thereof, together with a copy of
the notice of such event given to the Pension Benefit Guaranty Corporation or
the Internal Revenue Service or a statement that said notice will be filed with
the annual report of the United States Department of Labor with respect to such
plan if such filing has been authorized.
Section 6.10. Insurance.
(a) The Borrower shall at all times maintain hazard, public liability
insurance and Workers Compensation policies insuring against all claims for
personal or bodily injury, death or property damage occurring upon, in or about
any property of the Borrower in amounts not less than $2,000,000.00 (with a
maximum deductible of $1,000.00) for injury or damage to any one person and
$2,000,000.00 (with a maximum deductible of $1,000.00) for injury or damage from
any one accident and $100,000.00 for property damage. Such insurance coverage
shall be in form and with existing carriers at current levels.
(b) The Borrower shall furnish to Lender evidence that such insurance
is in effect, upon request, at no cost to Lender, including, but not limited to,
such originals or copies as the Lender may request of policies, certificates of
insurance, riders and endorsements relating to such insurance and proof of
premium payments. The Lender shall be under no duty to examine such certificates
or to advise the Borrower in case the insurance is not in compliance herewith.
All such policies shall
19
name Lender as an additional insured.
(c) The Borrower shall maintain existing credit insurance with existing
carrier at the current level of $5,000,000 and shall provide at closing a binder
from the existing carrier committing to issue credit insurance for Borrower at
the level of $10,000,000 effective January 1, 1998. Thereafter and throughout
the term of this Loan, Borrower will maintain such insurance with the Lender
being named as Loss Payee for such insurance and shall furnish to Lender
evidence of same and deliver said policy to Lender on or before January 15,
1998.
Section 6.11. Main Bank of Account.
During the term of this Agreement and so long as the Borrower is
obligated to the Lender under the Note, AMSOUTH BANK, a bank organized under the
laws of Alabama, shall be the primary bank of account for the Borrower and
Guarantor other than Capitol Warehouse and Carolina Pacific. Failure of the
Borrower or Guarantor to comply with this provision shall constitute a default
under the terms of this Agreement, entitling the Lender to all remedies of
default hereunder.
Section 6.12. Net Worth Requirement.
The Guarantor shall maintain a Net Worth of not less than TWENTY-FOUR
MILLION DOLLARS ($24,000,000.00) by the end of the 1998 fiscal year. The
Tangible Net Worth must not be less than a negative ($11,000,000) at the end of
the 1998 fiscal year end and a negative ($11,000,000) plus 25% of the net income
at the end of the 1999 fiscal year and all subsequent years and at all times
thereafter.
Section 6.13. Leverage Ratio.
The Guarantor shall not permit its ratio of Total Debt to Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA) to be greater
than 3.50:1.0 for the 1998 fiscal year end and 3.0:1.0 at all times thereafter.
Section 6.14. Interest Coverage Ratio.
The Guarantor shall not permit its ratio of Earnings Before Interest,
Taxes and Amortization to Interest Expense for the 1998 fiscal year end to be
less than 1.50:1.0 and less than 2.0:1.0 for the fiscal year end 1999 and at all
times thereafter.
Section 6.15. Lockbox and Accounts Receivable.
The Borrower shall utilize Lender's lockbox service located at Xxxx
Xxxxxx Xxx 000000, Xxxxxxx, Xxxxxxx 00000-0000, or such other place as the
Lender may designate in writing, in the collection of its accounts receivable
and may be charged a reasonable fee. Lockbox remittances, and collection
inadvertently remitted directly to the Borrower, and all other cash collections
including
20
but not limited to collections from governmental agencies will be deposited into
a bank-owned collection account, where they will be held for one business day
prior to being used to paydown the Line of Credit. Should transfer from
collection account to paydown Line of Credit create an uncollected funds
position in collection account, interest charges for the uncollected funds will
be charged to account analysis. In no case, will bank incur loss on transfer of
funds from collection account to Line of Credit. All proceeds from Collateral
including collections of Receivables shall be applied directly to reduce
outstanding indebtedness on the Line of Credit.
(a) At any time, and from time to time, upon Lender's written request,
at the Borrower's expense, Borrower will promptly execute and deliver such
further agreements and documents and take such further action as Lender shall
reasonably deem necessary or desirable in obtaining the full benefits of this
Agreement and of the rights and powers herein granted.
(b) If any of Borrower's Receivables shall arise out of contracts with
the United States of America or any state thereof or any political subdivision,
department, agency or instrumentality of such federal or state government,
Borrower will, if requested by Lender, in addition to the requirements and
conditions set forth above, execute any instruments and take any action required
by Lender in order that all monies due or to become due under such contracts
shall be assigned to Lender and notice thereof given to such federal government
under the Federal Assignment of Claims Act, or in the case of a state statute or
local ordinance analogous to said Claims Act, to such state government, or the
appropriate political subdivision, and Lender is hereby expressly authorized as
Borrower's agent to execute any such instruments and to take any such action.
(c) Lender shall have the right to endorse Borrower's name on any and
all checks, drafts, or other forms of payment received whenever necessary to
collect the same, and Borrower will confirm Lender's title thereto by executing
such instruments as Lender may from time to time require. At Lender's request,
Borrower shall give notice of Lender's security interest in Receivables to
Borrower's debtors in such form and at such times as Lender may require, and
Lender may give such notice to Borrower's debtors at any time or times and
collect the Receivables in Lender's name. In the event that any expenses are
incurred by Lender in collecting Receivables, including the cost of maintaining
any lockbox and any reasonable legal fees, such shall be an obligation of
Borrower's as is herein defined.
(d) Borrower agrees to repay and remain liable for the repayment of all
loans and advances made to or for the Borrower's account and for all other
obligations. It is expressly agreed that any credits given as herein provided
shall be conditioned upon final payment to Lender in cash or solvent credits of
the item giving rise thereto and regarding any item that is not so paid, the
amount of any credit given shall be reversed, whether or not the item is
returned.
(e) As of the close of each calendar month, Lender shall render to
Borrower an accounting to Borrower as to the amount which Lender shall have
advanced to Borrower and as to the amount received for Borrower's account, and
each account rendered shall be deemed acceptable to and binding upon us unless
Borrower submits to Lender in writing notice of any exception thereto
21
within ninety (90) days after the date thereof.
(f) Borrower will not issue or grant any discount, credit or allowance
as to Borrower's Receivables other than that which is usual and normal in the
course of business unless such is shown on Borrower's invoice and reported to
Lender as a deduction from the Receivables against which Lender shall make an
advance.
(g) Borrower shall immediately advise Lender of any disputes or claims
as to the Receivables which Borrower believes to be substantial, and adjust them
promptly at Borrower's expense.
(h) Upon the happening of any Event of Default as hereinabove provided,
then and in any such events, Lender shall have the following rights, in addition
to Lender's rights and remedies under this Agreement and at law all of which
shall be exercised in a commercially reasonable manner: (i) Lender shall have
the right to incur reasonable attorneys' fees and legal expenses and any other
necessary expenditures in the taking of possession, sale and/or preservation of
the Collateral, which Borrower does hereby agree to pay, together with interest
thereon from the date of such expenditures; (ii) Lender shall then and at all
times thereafter have the right, without notice to Borrower, to collect,
litigate, extend the time of payment of, compromise, settle for cash, credit or
otherwise, and upon any terms or conditions, all or any part of the Receivables
and thereby discharge and/or release the debtor and all others who may be liable
for the payment of such Receivables or any part thereof; (iii) Lender may sell
the Collateral, including Receivables or any in which Lender may then have a
security interest, in bulk or in separate lots, at either public or private
sale, without advertisement which is hereby waived, and upon sending notice to
Borrower ten (10) days prior to such sale or other disposition, at such prices
and upon such terms and conditions as Lender may determine and Lender is hereby
authorized to be a bidder and purchaser at any such public sale and/or sales.
(i) Borrower shall be entitled to credit only for the actual amount of
the cash received by Lender as a result of its exercise of such rights, less all
Lender's costs and expenses including collection and legal expenses, storage,
processing, transportation and sale. If there be a surplus remaining after
applying the net proceeds of any such collection of Receivables and/or sales of
the Collateral to Borrower's obligations, Lender shall remit such surplus to
Borrower and if there be a deficiency, Borrower shall remain liable to Lender
therefor. The rights herein granted to Lender shall be in addition to and not in
lieu of all other rights to which Lender is entitled under this Agreement or any
supplement or amendment hereto, or at law; and resort to security shall not be
required at any time.
(j) Borrower hereby constitutes any person whom Lender may designate as
Borrower's attorney-in-fact with power to send request for verification of
account to any debtor of Borrower and, (a) to receive, open and dispose of all
mail addressed to Borrower; (b) to endorse Borrower's name on any notes
acceptances, checks, drafts, money orders or other evidences of payment or
collateral that may come into Lender's possession; (c) in the event of default
by Borrower hereunder to sign
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Borrower's name on any invoices relating to any Receivables, or drafts against
debtors, assignments and verifications of accounts and notices to debtors; and
(d) in the event of default by Borrower hereunder to do all other acts and
things necessary to carry out this Agreement. All acts of such attorney-in-fact
or designee shall not be liable for any acts of commission or omission nor for
any error of judgment or mistake of fact or law other than gross negligence or
willful misconduct. This power, being coupled with an interest, is irrevocable
while any obligation shall remain unpaid.
(k) Borrower hereby irrevocably authorizes and directs any and all
accountants at any time acting for Borrower to give Lender any information it
may from time to time request concerning the financial affairs of Borrower and
to furnish Lender with copies of any and all statements, documents, records,
paper, etc. in their possession pertaining thereto. Borrower will maintain at
its own cost and expense complete records with respect to the Receivables,
including but not limited to records of payment received and all credits granted
with respect thereto, all adjustments thereof, and all other dealings affecting
any of the Receivables. Borrower agrees that Lender has a separate security
interest in all of the books and records pertaining to the Collateral and
Borrower does hereby assign the same to Lender. Following an Event of Default,
Borrower will deliver any such books and records to Lender or its representative
at any time upon Lender's demand at Borrower's cost. During any periodic audits,
Lender may inspect and make extracts from all of Borrower's books and records
upon its premises.
(l) Borrower further agrees from time to time at Lender's request to
deliver to Lender any or all original or other documents which form any part of
the Receivables including but not limited to all original contracts, orders,
invoices, bills of lading, and shipping receipts and Lender shall succeed to all
rights, remedies, securities and liens which Borrower may have with respect to
the Receivables, including guaranties of Receivables or other contracts of
suretyship with respect thereto, and Borrower shall deliver to Lender separate
written instruments confirming Lender's security interest in (or assignments of)
any of the same.
Section 6.16. Field Audits.
Borrower agrees to quarterly asset based examinations of the Borrower's
books, records and operations, at Borrower's expense, by the Lender or a
representative of the Lender and reserves the right to require a satisfactory
field examination prior to funding (other than the initial funding hereunder).
The Lender also may conduct periodic verifications of accounts receivable
balances by both written and telephone communication methods.
Section 6.17. Collateral Reporting.
The Borrower shall provide the Lender with the following: (1) an
updated accounts receivable balance submitted on a daily basis in form and
substance acceptable to Lender; (2) an accounts receivable aging each month aged
by invoice date, as of the end of each month within ten (10) days after the end
of the month; (3) a customer address list the Lender will from time to time
require; and (4) an accounts payable aging each month, as of the end of each
month within twenty
23
(20) days after the end of the month; and (5) any other information that the
Lender may from time to time require.
Section 6.18. Observance of Laws.
The Borrower will conform to and duly observe in all material respects
all laws, regulations, and other valid requirements of any governmental
authority with respect to the conduct of its business, including but not limited
to, applicable ERISA, environmental and transportation laws.
Section 6.19. Subsidiaries.
The Borrower and Guarantor shall cause each of its subsidiaries to
observe and perform each covenant and agreement. All computations required in
connection with such financial covenants shall be made for the Guarantor and its
subsidiaries on a combined or consolidated basis, after elimination of
intercompany items.
Section 6.20. Capitalization Ratio.
The Guarantor and its subsidiaries on a consolidated basis shall not
permit its ratio of Debt to Capitalization to exceed 65.0%.
ARTICLE VII - BORROWER'S NEGATIVE COVENANTS
Borrower covenants and agrees from the date hereof and until payment in
full of the principal of and interest on the Note, and all other indebtedness to
the Lender under this Agreement, unless the Lender shall otherwise consent in
writing, which will not be unreasonably withheld or delayed, it will not, either
directly or indirectly:
Section 7.1. Type of Business.
Engage in any business not authorized by Borrower's Articles of
Incorporation or by applicable law.
Section 7.2. Change in Ownership or Management.
The Guarantor shall not, either directly or indirectly, permit any
change in its Senior management or in the management of its business, without
the prior written consent of the Lender.
Section 7.3. Acquisitions and Mergers.
The Borrower shall not merge or consolidate or transfer substantially
all of their assets (other than in a reorganization or other transaction in
which no change in control occurs and such organizations remain in the
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transportation business) without the prior written approval of the Lender.
Section 7.4. Capital Expenditures.
The Guarantor and its subsidiaries may not make Capital Expenditures,
excluding expenditures for rolling stock, in an aggregate amount per fiscal year
in excess of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00), without the prior
written consent of the Lender.
Section 7.5. Guaranty.
The Guarantor and its subsidiaries will not guarantee or otherwise in
any way become responsible for obligations of any other person or entity,
whether by agreement to purchase the indebtedness of any other person, or
agreement for the furnishing to funds to any other person through the purchase
of goods, supply of services (or by way of stock purchase, contribution, advance
or loan) for the purpose of paying or discharging the indebtedness of any other
person, or otherwise, except those approved in writing by Lender.
Section 7.6. Investment and Loans.
The Borrower and Guarantor will not, directly or indirectly, acquire,
purchase or otherwise make any investment in or make any loans to acquire any
interest whatsoever in, any other person in an amount in excess of $1,000,000 in
cash per acquisition or an aggregate amount of $5,000,000 in cash; except (1)
Qualified Investments, or (2) the stock of any existing subsidiaries disclosed
to the Lender in writing in the Loan application, or (3) acquisitions solely for
stock of the Guarantor, or (4) upon obtaining written consent of Lender,
provided in each case that all such organizations are in the transportation
business.
Section 7.7. Disposition or Encumbrance of Receivables.
The Borrower will not sell, assign or discount, or grant or permit any
lien on any of its accounts or notes receivables, other than the discount of
such notes in the ordinary course of the Borrower's business.
Section 7.8. Sale-Leasebacks.
Other than rolling stock, the Borrower will not sell or transfer any
property and lease it back for the same use, provided however, Borrower shall
not have off balance sheet transactions exceeding ONE MILLION DOLLARS
($1,000,000.00) in the aggregate each year.
Section 7.9. Leases.
The Borrower will not enter into any future lease (other than
capitalized leases that are otherwise permitted under this commitment or leases
for rolling stock), as lessee, if such lease (a) has an unexpired term
(including renewals at the option of the lessee) of more than seven years, (b)
25
provides for aggregate rental payments during any fiscal year in excess of
$100,000, or (c) if the rental payments thereunder, together with all other such
leases, would provide for aggregate rental payments during any fiscal year in
excess of $500,000, without prior written approval of the Lender.
Section 7.10. Liens.
The Borrower will not permit any lien on any of its properties or
assets, whether now owned or hereafter acquired, other than any liens mutually
agreed upon prior to closing or outside the normal course of business and those
listed below:
(a) liens in favor of Lender;
(b) existing liens identified in the Co-Borrower's application
for this Loan, including any liens relating to the restructuring of existing
fixed asset and/or vehicle financing with another financial institution;
(c) deposits under workmen's compensation, unemployment
insurance and Social Security laws;
(d) liens imposed by law, such as carriers', warehousemen's or
mechanics' and materialmen's liens, incurred in good faith in the ordinary
course of business and that are not delinquent or that are subject to Permitted
Contests;
(e) any lien arising out of any litigation, legal proceeding
or judgement that is subject to a Permitted Contest, and any pledges or deposits
to secure, or in lieu of, any surety, stay or appeal bond with respect to any
such litigation, legal proceeding or judgement;
(f) liens for taxes, assessments or other governmental charges
or levies that are not delinquent or that are subject to Permitted Contests;
(g) liens created after the Loan closing to secure the
acquisition cost of vehicles and fixed assets for use in the ordinary course of
business, provided that (1) any such lien is confined to the fixed assets so
acquired; and (2) the indebtedness secured by such lien does not exceed the
purchase price or fair market value, whichever is less, of the fixed assets so
acquired at the time of their acquisition; and
(h) liens created by loans to shareholders secured by the
shareholders restricted stock, so long as each Co-Borrower and Guarantor are in
compliance with all financial covenants.
Section 7.11. Take or Pay Contracts.
The Borrower will not enter into any take or pay contract.
26
Section 7.12. Other Special Covenants.
The Borrower and Guarantor will not allow any modifications involving
the inclusion of Receivables of additional subsidiaries to be made to eligible
receivables in the event additional acquisitions are made, without the prior
written approval of Lender.
ARTICLE VIII - EVENTS OF DEFAULT
Section 8.1. Events.
In the event:
(a) Payment of Obligations to Lender.
The Borrower or Guarantor fails to make payment of any
principal, interest, or other amount due on any indebtedness owed the Lender
hereunder within ten (10) days of the due date thereof without further notice or
demand, or fails to make any other payment to the Lender as contemplated
hereunder either by the terms hereof or otherwise; or
(b) Representation or Warranty.
Any representation or warranty made or deemed made by the
Borrower or Guarantor herein or in any writing furnished in connection with or
pursuant to the loan application and loan commitment for the Loan or in
connection with or pursuant to any certificate delivered under the Loan
Documents shall be false in any material adverse respect on the date when made
or when deemed made; or
(c) Covenants.
The Borrower or Guarantor defaults in the performance or
observance of or breaches any agreement, covenant, term, or condition binding on
it contained in the Loan Documents for a period of thirty (30) days after
written demand (provided no written demand shall be required for breach of
Borrower's obligations to notify Lender of events of defaults set forth herein
which require Borrower to notify Lender of same); or
(d) The Borrower's Liquidation; Dissolution; Bankruptcy; Etc.
Any liquidation or dissolution of the Borrower or Guarantor,
suspension of the business of the Borrower, or the filing or commencement by the
Borrower of a voluntary petition, case, proceeding, or other action seeking
reorganization, arrangement, readjustment of its debts, or any other relief
under any existing or future law of any jurisdiction, domestic or foreign, state
or federal, relating to bankruptcy, insolvency, reorganization or relief of
debtors, or any other action
27
of the Borrower indicating its consent to, approval of, or acquiescence in, any
such petition, case, proceeding, or other action seeking to have an order for
relief entered with respect to it or its debts; the application by the Borrower
for, or the appointment, by consent or acquiescence of, a receiver, trustee,
custodian, or other similar official for the Borrower or for all or a
substantial part of its property; the making by the Borrower of an assignment
for the benefit of creditors; or the inability of the Borrower or the admission
by the Borrower in writing of its inability to pay its debts as they mature; or
(e) Order of Dissolution.
Any order is entered in any proceedings against the Borrower
or Guarantor decreeing the dissolution or split-up of the Borrower or Guarantor,
and such order remains in effect for more than sixty (60) days; or
(f) Reports and Certificates.
Any report, certificate or financial statement delivered to
the Lender by the Borrower is at any time false or misleading in any material
adverse respect; or
(g) Judgments.
The rendition of a final uninsured judgment against the
Borrower for the payment of damages or money in excess of Five Hundred Thousand
Dollars ($500,000.00) if the same is not discharged, bonded off or transferred
to other security or if a writ of execution or similar process is issued with
respect thereto and is not stayed within the time allowed by law for filing
notice of appeal of the final judgment; or
(h) Liens Imposed by Law.
The violation of any law or any act or omission by the
Borrower that results in the imposition of a lien by operation of law on any of
its property, if the lien is not discharged, bonded off or transferred to other
security within sixty (60) days after it has attached and if the lien relates to
a claim for the payment of damages or money in excess of Five Hundred Thousand
Dollars ($500,000.00); or
(i) Corporate Existence.
Any act or omission (formal or informal) of the Borrower or
Guarantor or its officers, directors, shareholders, or partners leading to, or
resulting in, the termination, invalidation (partial or total), revocation,
suspension, interruption, or unenforceability of its existence, or the transfer
or disposition (whether by sale, lease, or otherwise) to any person of all or a
substantial part of its property.
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THEN:
In any of the above mentioned events, any holder of the Note executed
pursuant hereto with notice to Borrower may, at such holder's option, declare
the said Note to be fully due and payable and the same shall thereupon all
immediately become due and payable in their aggregate amounts and Lender, in
addition to any other remedy permitted by law, may, at its option, proceed to
protect and enforce its rights by an action at law or in equity or by any other
appropriate proceedings, whether for the specific performance of any covenant or
agreement contained in this Agreement, or in aid of the exercise of any power
granted in this Agreement, or proceed to enforce the payment of the Note or to
enforce any other legal, or equitable rights of Lender, including but not
limited to, the rights of Lender pursuant to the Florida Statutes and other
applicable law. The events of default and remedies after default set forth in
this Section 8.1 are intended to be in addition to the provisions in the Note
under the captions "Events of Default" and "Remedies After Default".
Section 8.2. Rights and Remedies Cumulative.
No right or remedy herein conferred upon the Lender is intended to be
exclusive of any other right or remedy contained herein, in the Note, Loan
Documents or in any instrument or document delivered in connection with or
pursuant to this Agreement, and every such right or remedy shall be cumulative
and shall be in addition to every other such right or remedy contained herein
and therein or now or hereafter existing at law or in equity or by statute or
otherwise.
Section 8.3. Rights and Remedies Not Waived.
No course of dealing between the Borrower and the Lender or any failure
or delay on the part of the Lender in exercising any rights or remedies
hereunder shall operate as a waiver of any rights or remedies of the Lender and
no single or partial exercise of any rights or remedies hereunder shall operate
as a waiver or preclude the exercise of any other rights or remedies hereunder.
Section 8.4. Waiver of Default.
The Lender at any time may waive any default or any Event of Default
which shall have occurred and any of its consequences, in which case the parties
hereto shall be restored to their former positions and rights and obligations
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon, and no such waiver shall
be effective unless it is in a written document executed by a duly authorized
officer and then only to the extent specifically recited therein.
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ARTICLE IX - MISCELLANEOUS
Section 9.1. Course of Dealing; Amendments; Waiver.
No course of dealing between the parties hereto shall be effective to
amend, modify, or change any provision of this Agreement or any other Loan
Document. No amendment or waiver of any provision of this Agreement or any other
Loan Document, nor consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by Lender,
unless otherwise specifically provided, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 9.2. Lien; Setoff By Lender.
The Borrower hereby grants to the Lender a continuing lien for all
indebtedness and other liabilities of the Borrower to the Lender upon any and
all moneys, securities, and other property of the Borrower and the proceeds
thereof, now or hereafter held or received by or in transit to, the Lender from
or for the Borrower, whether for safekeeping, custody, pledge, transmission,
collection or otherwise, and also upon any and all deposits (general or special)
and credits of the Borrower with, and any and all claims of the Borrower against
the Lender at any time existing. Upon the occurrence of any Event of Default,
the Lender is hereby authorized at any time and from time to time, without
notice to the Borrower, to setoff, appropriate, and apply any or all items
hereinabove referred to against all indebtedness and other liabilities of the
Borrower to the Lender, whether under this Agreement or otherwise, and whether
now existing or hereafter arising.
Section 9.3. Liability of Lender to Third Parties.
The Lender shall in no event be responsible or liable to any person
other than the Borrower and Guarantor for its disbursement of or failure to
disburse the funds or any part thereof, and others shall not have any claim or
right against the Lender under this Agreement or the Lender's administration
thereof.
Section 9.4. Waivers.
Except as provided herein, the Borrower waives presentment, demand,
protest, notice of default, nonpayment, partial payments and all other notices
and formalities relating to this Agreement other than notices specifically
required hereunder. The Borrower consents to and waives notice of the granting
of indulgences or extensions of time of payment, the taking or releasing of
security, the addition or release of persons primarily or secondarily liable on
or with respect to liabilities of the Borrower to the Lender, all in such manner
and at such time or times as the Lender may deem advisable. No act or omission
of the Lender shall in any way impair or affect any of the indebtedness or
liabilities of the Borrower to the Lender or rights of the Lender in any
security. No delay by the Lender to exercise any right, power or remedy
hereunder or under any security agreement, and no indulgence given to the
Borrower in case of any default, shall impair any such
30
right, power or remedy or be construed as having created a course of dealing or
performance contrary to the specific provisions of this Agreement or as a waiver
of any default by the Borrower or any acquiescence therein or as a violation of
any of the terms or provisions of this Agreement. The Lender shall have the
right at all times to enforce the provisions of this Agreement and all other
documents executed in connection herewith in strict accordance with their terms,
notwithstanding any course of dealing or performance by the Lender in refraining
from so doing at any time and notwithstanding any custom in the banking trade.
No course of dealing between the Borrower and the Lender shall operate as a
waiver of any of the Lender's rights.
Section 9.5. Assignment and Participation.
This Loan may not be assigned by the Co-Borrowers without the Lender's
prior written consent. At any time, the Lender may grant one or more
participations of 49% or less in this Loan to participants of its choice. Any
such participant may exercise rights of setoff and banker's lien against the
Co-Borrower with respect to its participation as if it had made a direct loan to
the Co-Borrower. The Lender may divulge to any such participant any information
the Lender may obtain with respect to the Co-Borrower, the Guarantor or any
Collateral in connection with this Loan. Notwithstanding the foregoing, Lender
may sell any or all of the Loan if said Loan is in default.
Section 9.6. Funds Not Assignable.
The proceeds of the loan shall not be assigned by the Borrower nor
subject to the process of any court upon legal action by or against the Borrower
or by or against anyone claiming under or through Borrower, and for the purpose
of this Agreement, the funds shall remain and be considered the money and
property of the Lender until the Borrower is entitled to have them disbursed as
provided herein. Nothing herein contained shall be considered as in anyway
modifying, or subordinating the obligations previously given or to be given by
the Borrower as security for the loan and such obligations shall be and remain
in full force and effect, this Agreement being intended only as additional
security for the loan and to insure its use for the purposes intended by the
Lender and Borrower.
Section 9.7. Indemnity.
The Borrower agrees to indemnify and hold the Lender harmless from and
against all damages, claims, actions, causes of action, losses, costs, expenses,
liability, penalties and interest (including attorney's fees and expenses)
directly or indirectly resulting from, occurring in connection with or arising
out of (a) any inaccurate representation or warranty made by or on behalf of
Borrower to Lender in connection with this Loan; (b) any breach by the Borrower
of any of its obligations under this Loan or the Loan Documents; or (c) this
Loan and the transactions contemplated by this Loan. This Section 9.7 shall
survive the execution and delivery of the Loan Documents, the closing of this
Loan and the payment of this Loan in full.
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Section 9.8. Termination by the Borrower.
The Borrower may terminate this Agreement in its entirety by giving at
least ten (10) days prior notice of its intention so to do and by payment in
full of all obligations hereunder outstanding on the date specified for
termination.
Section 9.9. Arbitration.
Any controversy, claim, dispute or disagreement arising out of this
commitment or the Loan will be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Judgement
on any award rendered by the arbitrator(s) in any such arbitration may be
entered in any court having jurisdiction thereof. The Co-Borrowers and the
Lender specifically acknowledge and agree that this commitment involves a
"transaction involving commerce" under the Federal Arbitration Act. Any
arbitration shall take place in Orlando, Florida at the Lender's election.
Section 9.10. Notices.
Any written notice, demand or request that is required to be made in
any of the Loan Documents shall be served in person, or by registered or
certified mail, return receipt requested, or by express mail or similar carrier
service, addressed to the party to be served at the address set forth in the
first paragraph hereof. The addresses stated herein may be changed as to the
applicable party by providing the other party with notice of such address change
in the manner provided in this paragraph. In the event that written notice,
demand or request is made as provided in this paragraph, then in the event that
such notice is returned to the sender by the United States postal system or the
courier service because of insufficient address or because the party has moved
or otherwise, other than for insufficient postage or payment to the courier,
such writing shall be deemed to have been received by the party to whom it was
addressed on the date that such writing was initially placed in the United
States postal system or deposited with the courier service with the postage or
cost thereof prepaid in full by the sender.
Section 9.11. Controlling Agreement.
In the event any provision of this Agreement is inconsistent with any
provision of any other document, whether heretofore executed, required or
executed pursuant to this Agreement or otherwise, the provisions of this
Agreement shall be controlling.
Section 9.12. Titles.
Titles to the sections of this Agreement are solely for the convenience
of the parties hereto and are not an aid in the interpretation of this Agreement
or any part thereof.
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Section 9.13. Venue and Jurisdiction.
In any litigation in connection with or to enforce this Agreement or
any of the other Loan Documents, the Borrower irrevocably consents to and
confers personal jurisdiction on the courts of the State of Florida located in
Orange County or the United States courts located within the Middle District of
the State of Florida, expressly waives any objections as to venue in any of such
courts, and agrees that service of process may be made on the Borrower by
mailing a copy of the summons and complaint by registered or certified mail,
return receipt requested, to the address set forth herein below the name of the
Borrower on the signature page hereto (or otherwise expressly provided in
writing). Nothing contained herein shall, however, prevent the Lender from
bringing any action or exercising any rights within any other court in Florida
or from obtaining personal jurisdiction by any other means available by
applicable law.
Section 9.14. Governing Law.
The validity, interpretation, and enforcement of this Agreement, of the
rights and obligations of the parties hereto, and of the other documents
delivered in connection herewith shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Florida, excluding
those laws relating to the resolution of conflicts between laws of different
jurisdictions.
Section 9.15. Legal or Governmental Limitations.
Anything contained in this Agreement to the contrary notwithstanding,
the Lender shall not be obligated to extend credit or make any loans to the
Borrower in an amount in violation of any limitations or prohibitions provided
by any applicable statute or regulation.
Section 9.16. Counterparts.
This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument.
Section 9.17. Waiver of Trial By Jury.
The Borrower, the Guarantor and the Lender knowingly, voluntarily and
intentionally waive the right any of them may have to a trial by jury in respect
of any litigation based hereon, or arising out of, under or in connection with
the Loan Documents and any agreement contemplated to be executed in conjunction
therewith, or any course of conduct, course of dealing, statements (whether
verbal or written) or actions of any party. This provision is a material
inducement for the Lender entering into the loan evidenced by the Loan
Documents.
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Section 9.18. Confidentiality.
Lender acknowledges that Guarantor is a Reporting Company under the
Exchange Act of 1934, as amended, and agrees to keep confidential and not to use
in any manner other than in connection with this Agreement, any nonpublic
information obtained by the Lender in connection herewith.
Section 9.19. Total Liability of Each Co-Borrower.
Notwithstanding anything to the contrary in the Loan Documents, the
total liability of each Co-Borrower under the Loan Documents shall not exceed
the amount disbursed to or on behalf of such Co-Borrower together with interest
costs and attorney fees. Nothing contained in this paragraph shall limit the
liability of the Guarantor pursuant to the Guaranty.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
Signed, sealed and delivered AMSOUTH BANK, a bank organized under
in the presence of: the laws of Alabama
By: /s/ Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx,
Vice President
"Lender"
XXXXXXX XXXXXX & COMPANY, INC.,
a Florida corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx,
Chairman of the Board
CAROLINA PACIFIC DISTRIBUTORS, INC.,
a North Carolina corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx,
Chairman of the Board
34
CAPITOL WAREHOUSE, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx,
Chairman of the Board
SERVICE EXPRESS, INC.,
an Alabama corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx,
Chairman of the Board
"Borrower"
TRANSIT GROUP, INC.,
a Florida corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx,
President and Chief Executive Officer
"Guarantor"
STATE OF GEORGIA
COUNTY OF ________________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Xxxxxxx Xxxxxxxx as Vice President of AmSouth Bank, a bank
organized under the laws of Alabama, on behalf of the bank. He is personally
known to me or has produced _______________________________ as identification.
------------------------------------
Notary Public
My Commission Expires:
35
STATE OF GEORGIA
COUNTY OF ________________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Xxxxxx X. Xxxxxx, as Chairman of the Board of Xxxxxxx Xxxxxx
& Company, Inc., a Florida corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Xxxxxx X. Xxxxxx, as Chairman of the Board of Carolina
Pacific Distributors, Inc., a North Carolina corporation, on behalf of the
corporation. He is personally known to me or has produced
_______________________________ as identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Xxxxxx X. Xxxxxx, as Chairman of the Board of Capitol
Warehouse, Inc., a Kentucky corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
36
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Xxxxxx X. Xxxxxx, as Chairman of the Board of Service
Express, Inc., an Alabama corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
December, 1997, by Xxxxxx X. Xxxxxx, as President and Chief Executive Officer of
Transit Group, Inc., a Florida corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
37
AMENDMENT TO ADVISED REVOLVING LINE OF CREDIT AGREEMENT
THIS AGREEMENT dated as of the 14th day of January, 1998, by and
between AMSOUTH BANK, a bank organized under the laws of Alabama, whose mailing
address is Post Office Xxx 000000, Xxxxxxx, Xxxxxxx 00000 (the "Lender"), and
XXXXXXX XXXXXX & COMPANY, INC., a Florida corporation, whose address is P. O.
Xxx 0000, Xxxxxxxxx, Xxxxxxx 00000-0000 ("Xxxxxxx Xxxxxx") and CAROLINA PACIFIC
DISTRIBUTORS, INC., a North Carolina corporation, whose address is 0000 Xxxxxxx
Xxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Carolina Pacific") and CAPITOL
WAREHOUSE, INC., a Kentucky corporation, whose address is 000 X. Xxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000 ("Capitol Warehouse") and SERVICE EXPRESS, INC., an
Alabama corporation, whose address is X.X. Xxx 0000, Xxxxxxxxxx, Xxxxxxx 00000
("Service Express") (Xxxxxxx Xxxxxx, Carolina Pacific, Capitol Warehouse and
Service Express are together hereinafter referred to as the "Borrower" and
individually referred to as a "Co-Borrower"; references applicable to Borrower
shall also be applicable to each Co-Borrower), and TRANSIT GROUP, INC., a
Florida corporation, whose address is Overlook III, 0000 Xxxxx Xxxxx Xxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxx 00000 (the "Guarantor").
W I T N E S S E T H:
WHEREAS, the Lender, the Borrower and Guarantor entered into an Advised
Revolving Line of Credit Agreement dated as of December 18, 1997 (the "Loan
Agreement"), which Loan Agreement provides that the Borrower may borrow from
Lender and repay and reborrow a principal amount not to exceed TWENTY MILLION
DOLLARS ($20,000,000.00); and
WHEREAS, the Lender, the Borrower and the Guarantor desire to modify
the terms and conditions of the Loan Agreement in the manner hereinafter set
forth to permit other subsidiaries of Transit Group, Inc. to join in the Loan
Agreement from time to time and be bound by its terms; and
WHEREAS, the loan arrangement made pursuant to the Loan Agreement is
evidenced by a Revolving Credit Note in the principal sum of TWENTY MILLION
DOLLARS ($20,000,000.00) (the "Note") as may be amended or restated from time to
time; and
WHEREAS, the Guarantor hereby confirms its guaranty of payment of the
indebtedness of Borrower to Lender in accordance with the guaranty executed by
Guarantor.
NOW, THEREFORE, in consideration of the mutual promises, conditions,
representations and warranties hereinafter set forth and for other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto have mutually agreed as follows:
1
1. The definitions of "Borrower" and "Co-Borrower" are hereby amended
and are restated in their entireties as follows:
XXXXXXX XXXXXX & COMPANY, INC., a Florida corporation
("Xxxxxxx Xxxxxx"), and CAROLINA PACIFIC DISTRIBUTORS, INC., a
North Carolina corporation ("Carolina Pacific"), and CAPITOL
WAREHOUSE, INC., a Kentucky corporation ("Capitol Warehouse"),
SERVICE EXPRESS, INC., an Alabama corporation ("Service
Express"), RAINBOW TRUCKING SERVICES, INC., an Indiana
corporation ("Rainbow Trucking") and any and all other
subsidiaries of Transit Group, Inc., a Florida corporation
(together herein referred to as the "Subsidiaries"or
individually as the "Subsidiary") which subsequently enter
into a Joinder to Advised Revolving Line of Credit Agreement
and Joinder to Security Agreement (Xxxxxxx Xxxxxx, Carolina
Pacific, Capitol Warehouse, Service Express, Rainbow Trucking
and Subsidiaries are together hereinafter referred to as the
"Borrower" and individually referred to as a "Co-Borrower";
references applicable to Borrower shall also be applicable to
each Co-Borrower).
2. Section 8.1 Events, subparagraph (i), of the Advised Revolving Line
of Credit Agreement is hereby amended and restated in its entirety as follows:
"(i) Corporate Existence.
Any act or omission (formal or informal) of the Borrower or
Guarantor or its officers, directors, shareholders, or partners leading to, or
resulting in, the termination, invalidation (partial or total), revocation,
suspension, interruption, or unenforceability of its existence, or the transfer
or disposition (whether by sale, lease, or otherwise) to any person of all or a
substantial part of its property; or"
3. The Advised Revolving Line of Credit Agreement is hereby amended by
adding Section 8.1 Events subparagraph (j) in its entirety as follows:
"(j) Execution of Guaranty; Opinion of Counsel.
The Board of Directors of the Guarantor fails to pass a
resolution authorizing the execution by Guarantor of a Continuing and
Unconditional Guaranty in the form attached hereto as Exhibit "A" (the "New
Guaranty") which shall replace and supersede the Continuing and Unconditional
Guaranty dated as of December 18, 1997, and deliver the New Guaranty duly
executed by Guarantor and a certified copy of such resolution to Lender on or
before March 15, 1998, accompanied by a favorable opinion of counsel for
Guarantor indicating that the corporate resolution has been properly executed by
the Guarantor and the execution and delivery of such corporate resolution are
within its corporate powers and authorized, in form and substance satisfactory
to the Lender."
2
4. Subsidiaries may join in this credit accommodation by:
a. executing and delivering to Lender with the consent
of Lender the Joinder to Advised Revolving Line of
Credit Agreement and Joinder to Security Agreement in
the form attached hereto as Exhibit "B"; and
b. executing and delivering to Lender an Allonge in the
form attached hereto as Exhibit "C" whereas the
Subsidiary becomes a Maker on the Note; and
c. executing and delivering to Lender a UCC-1 Financing
Statement perfecting the pledge of the Subsidiary's
Collateral as security for the Note; and
d. executing and delivering to Lender a tax indemnity
agreement, out-of-state closing affidavit, corporate
borrowing resolution, certification certificate and
other documents or affidavits as may be required by
Lender; and
e. delivering to Lender an opinion of Subsidiary's
counsel in form and content satisfactory to Lender.
5. Nothing herein invalidates or shall impair or release any covenant,
condition, agreement or stipulation in the Loan Agreement, and the same, except
as herein modified, shall continue in full force and effect and the Borrower
further covenants and agrees to perform and comply with each and every of the
covenants, agreements, conditions and stipulations of the Loan Agreement which
are not inconsistent herewith.
6. The Guarantor joins in the execution of this Amendment to Advised
Revolving Line of Credit Agreement ("Amendment") to specifically consent to the
terms and conditions hereof and to reconfirm its guaranty of Borrower's
obligations under the Loan Agreement and Note.
7. Except as herein amended, the Loan Agreement is confirmed in its
entirety.
8. In the case of conflict between the provisions of the Loan
Agreement, on the one hand, and this Amendment, on the other hand, the
provisions of this Amendment shall prevail.
9. This Amendment may be executed in any number of counterparts and by
the parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same Amendment.
3
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
Signed, sealed and delivered AMSOUTH BANK, a bank organized under
in the presence of: the laws of Alabama
By: /s/ Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx,
Vice President
"Lender"
XXXXXXX XXXXXX & COMPANY, INC.,
a Florida corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx,
Chairman of the Board
CAROLINA PACIFIC DISTRIBUTORS, INC.,
a North Carolina corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx,
Chairman of the Board
CAPITOL WAREHOUSE, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx,
Chairman of the Board
4
SERVICE EXPRESS, INC.,
an Alabama corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx,
Chairman of the Board
"Borrower"
TRANSIT GROUP, INC.,
a Florida corporation
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx,
President and Chief Executive Officer
"Guarantor"
STATE OF GEORGIA
COUNTY OF ________________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by Xxxxxxx Xxxxxxxx as Vice President of AmSouth Bank, a bank
organized under the laws of Alabama, on behalf of the bank. He is personally
known to me or has produced _______________________________ as identification.
------------------------------------
Notary Public
My Commission Expires:
5
STATE OF GEORGIA
COUNTY OF ________________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by Xxxxxx X. Xxxxxx, as Chairman of the Board of Xxxxxxx Xxxxxx &
Company, Inc., a Florida corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by Xxxxxx X. Xxxxxx, as Chairman of the Board of Carolina Pacific
Distributors, Inc., a North Carolina corporation, on behalf of the corporation.
He is personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by Xxxxxx X. Xxxxxx, as Chairman of the Board of Capitol
Warehouse, Inc., a Kentucky corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
6
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by Xxxxxx X. Xxxxxx, as Chairman of the Board of Service Express,
Inc., an Alabama corporation, on behalf of the corporation. He is personally
known to me or has produced _______________________________ as identification.
------------------------------------
Notary Public
My Commission Expires:
STATE OF GEORGIA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of
January, 1998, by Xxxxxx X. Xxxxxx, as President and Chief Executive Officer of
Transit Group, Inc., a Florida corporation, on behalf of the corporation. He is
personally known to me or has produced _______________________________ as
identification.
------------------------------------
Notary Public
My Commission Expires:
7
