All references to Chemical Bank, The Chase Manhattan Bank, N.A. or The
Chase Manhattan Bank, (National Association) shall mean The Chase Manhattan
Bank, a New York State chartered bank.
SHORT FORM TERM LOAN AGREEMENT
The Chase Manhattan Bank
Loan Agreement dated _______________, 1997, among First Priority Group,
Inc., a New York Corporation (having its principal place of business) (residing
at) 00 Xxxx Xxxxxxxx Xxxx, Xxxxxxxxx, XX 00000 ("Borrower") and guarantor(s)
identified by their execution below ("Borrower" and "Guarantor(s)" collectively
referred to hereafter as "the Obligors") and Chemical Bank, a New York banking
corporation ("the Bank"). Borrower has applied to the Bank for a loan in the
principal amount of $150,000 the proceeds of which shall be used for the purpose
of purchase of office furniture and equipment ("the Loan"). The Bank has made
the Loan upon the following terms and conditions:
(1) The Note: Rate of Interest Manner of Repayment.
a. The Loan shall bear interest at a variable per annum rate as
follows: .5% above such rate of interest as is publicly announced
by its principal office from time to time by Chemical Bank as its
prime rate, but in no event higher than the maximum permitted
under applicable law;
b. Principal on the Loan shall be paid in 35 consecutive (monthly),
(quarterly) installments of $4,167 each and a final installment
in the amount of the remaining unpaid principal;
c. The time, place and mode of payments and method of computing
interest are described in the Promissory Note evidencing the Loan
made substantially in the form of Exhibit A hereof; and
d. Borrower shall have the right, upon three days written notice, to
prepay the Loan without penalty in an amount equal to an
installment (or multiple thereof) to be applied to installments
in inverse order of maturity.
(2) Representations and Warranties.
In order to induce the Bank to enter into this Agreement and to make
the Loan, each Obligor represents and warrants to the Bank that:
a. (As to each Obligor that is not an individual) it:
(i) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or
formation;
(ii) is duly qualified and in good standing in every jurisdiction
in which it presently engages in business and in which such
qualification is required;
(iii) has the power, authority and legal right to own, or lease
and enjoy undisturbed, the assets of the business and engage
in business as now conducted;
(iv) has the power, authority and legal right to enter into and
execute this Agreement, the Note, the Guaranty and any
Security Agreement, Pledge Agreement, General Loan and
Collateral Agreement or other agreements furnished in
connection with the Loan; and
(v) such Obligor has no subsidiaries or affiliates except those
listed on Exhibit B hereof and in each instance it owns all
of the outstanding stock of such subsidiaries.
Financial Statements
Accurate No Change
b. All financial statements of such Obligor previously delivered to
the Bank, whether or not in connection with this Loan, are
complete, correct, present fairly the financial condition of that
entity, reflect every liability (whether direct or contingent)
and there has been no material adverse change in the financial
condition of such Obligor since financial statements dated
3/31/96 (as to Borrower) and 3/31/96 (as to Guarantor);
Other Agreements
c. This Agreement will not violate any other indenture or other
agreement nor any law, order, rule or regulation of any
government instrumentality applicable to such Obligor or by which
its property is bound nor will it result in the creation or
imposition of any other lien, except for those being created by
any Security Agreement related hereto;
First Lien
d. Any security interests created as Collateral for the Loan
constitute valid, first and prior perfected liens in favor of the
Bank;
Litigation
e. There are no suits or proceedings pending or threatened against
such Obligor or affecting any of its properties (of which such
Obligor has any knowledge) except those disclosed and explained
by letter of counsel annexed hereto as Exhibit C; whether or not
a letter of Borrower's counsel is required for this purpose, the
Bank shall have received, on or immediately prior to the date of
this Agreement, the favorable written opinion of Borrower's
counsel addressed to the Bank confirming the accuracy of the
representations and warranties set forth in Sections 2(a), (c)
and (d) hereof;
Taxes
f. Federal Income Tax returns of such Obligor have filed audited
through 12/31/95 (as to Borrower) and 12/31/95 (as to Guarantor)
and deficiencies (if any) resulting from such examinations have
been reserved against or discharged. Additionally, such Obligor
has filed all required Federal, state and local returns,
including those for corporate franchise taxes, and has paid all
taxes or assessments due thereon;
ERISA
g. Such Obligor, if required, is in compliance in every material
respect with the applicable provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") and regulations or
published interpretations thereof and has not had a Reportable
Event occur with respect to any Plan as defined in ERISA; and
Federal Reserve Regulations
h. Such Obligor is not engaged principally in nor has as an
important activity in the business of extending credit for the
purpose of purchasing or carrying "margin stock" (as defined in
Regulation U of the Board of Governors of the Federal Reserve
System) nor will any part of the proceeds of this Loan be used,
now or ultimately, to purchase or carry such stock or extend such
credit or violate in any way Regulations G, T, U or X of such
Board of Governors.
(3) Affirmative Covenants.
Each Corporate Obligor (that is not an individual) covenants and
agrees that, from the date hereof until the full satisfaction of the
obligations under this Agreement and the Note:
Corporate Existence and Properties
a. It shall preserve, protect, renew and keep in full force and
effect its existence, rights, licenses, permits, patents,
trademarks, trade names and franchises; comply with all laws and
regulations applicable to it; not materially alter the nature or
scope of business as presently conducted by it and preserve,
repair and maintain all property utilized in the conduct of its
business;
Insurance
b. Maintain insurance with financially sound insurers on its
properties against such risks as fire, public liability, lack of
fidelity by its employees all as is customary with companies in
similar businesses or as reasonably required by the Bank;
Financial Statements
c. Furnish to the Bank the following financial information:
(i) not later than 90 days after the end of its fiscal year its
balance sheet (or, in the case of a corporate Obligor having
subsidiaries, consolidated and consolidating balance sheets)
and statement of income and sources and uses of funds (or
consolidated, etc.) prepared in accordance with generally
accepted accounting principles consistently applied and
certified in a manner satisfactory to the Bank by
independent certified public accountants acceptable to the
Bank;
(ii) not later than 45 days after the end of each fiscal quarter
balance sheets and statements of income similar to those
above; their accuracy certified in a manner satisfactory to
the Bank by the chief financial officer; and
(iii) with each set of statements described above the certificate
of the chief financial officer that no event exists which
alone or with notice, the passage of time, or both, would
constitute an Event of Default has occurred.
Access to Premises and Records
d. Upon written request, the Bank's representatives shall be
permitted access to any or all of such Obligor's properties and
financial records, to make extracts from such records and to
discuss the business, finances and affairs with its officers;
Notices
e. It shall promptly give written notice to the Bank of:
ERISA
(i) the details of any Reportable Event as defined in ERISA
which has occurred;
Events of Default
(ii) the occurrence of any event which alone or with notice, the
passage of time or both, would constitute an Event of
Default;
Litigation
(iii) the commencement of any proceeding or litigation which, if
adversely determined, would adversely affect its financial
condition or ability to conduct business; or
Additional Guarantors
(iv) the formation of any subsidiary or affiliate of Borrower or
any corporate Obligor after the date of this Agreement.
Each individual Obligor covenants and agrees from the date hereof
until the full satisfaction of the obligations under this Agreement
and the Note:
f. To give written notice to the Bank promptly of any event referred
to in Section 3(e)(ii) or (iii); and
g. To furnish to the Bank promptly after the conclusion of each
calendar year personal financial statements of the type and in
the equivalent detail of those furnished to the Bank on or
prior to the date hereof.
*Refer to Rider attached hereto for Additional Affirmative Covenants
(4) Negative Covenants.
Each Obligor that is not an individual covenants and agrees that, from
the date hereof until the full satisfaction of obligations under this
Agreement and the Note, it will not without the Bank's prior written
consent:
Indebtedness
a. Create, incur or assume any indebtedness for borrowed money other
than:
(i) that provided under this Agreement or otherwise consented to
by the Bank;
(ii) that owing on the date hereof and scheduled on Exhibit D;
and
(iii) that which is subordinated to indebtedness due the Bank on
terms satisfactory to the Bank ("Approved Subordinated
Debt").
Refer to Rider attached hereto
Liens
b. Create, incur or permit to exist against any of its properties or
assets, real or personal, tangible or intangible, now owned or
hereafter acquired, any mortgage or other lien or encumbrance,
except:
(i) deposits or pledges relating to the payment of Xxxxxxx'x
Compensation, Unemployment Insurance, old age pension or
other Social Security;
(ii) deposits or pledges relating to the performance of bids,
tenders, contracts or leases;
(iii) deposits or pledges relating to statutory obligations and
surety or appeal bonds necessary to the continuance of the
business in the ordinary course;
(iv) liens for taxes not delinquent or being contested in good
faith and by appropriate proceedings; and
(v) purchase money mortgages or other purchase money liens upon
property hereafter acquired, not exceeding in amount ______%
of the purchase price of property so encumbered, or $20,000
in the aggregate during the term of this Agreement.
Contingent Obligations
c. Assume, guarantee, endorse or otherwise become directly or
contingently liable for the obligations of any other person
except for the Guaranty in connection with this Agreement and the
endorsement of negotiable instruments for deposit or collection
in the ordinary course of business;
intentionally omitted
Asset Sale
d. Sell, transfer, lease, sell and thereafter enter into an
arrangement with the buyer to rent or lease back all or any
substantial part of its properties or assets;
Merger
e. Consolidate with or merge into any other corporation, or permit
another corporation to merge into it, or acquire all or
substantially all of the properties or assets of any other Person
("Person" is defined as natural persons, corporations, business
trust associations, companies and partnerships);
Note/Accounts Sale
f. Sell, assign, discount or otherwise dispose of any of its notes
or accounts receivable except for collection in the ordinary
course of business;
Loans
g. Make loans or advances to any other Person;
Investments
h. Purchase or make any investment in the stock, securities or
evidences of indebtedness of any other Person except:
(i) a Guarantor;
(ii) the United States Government and its agencies; and
(iii) Certificates of Deposit of domestic banks having capital
and surplus in excess of $100,000,000.
Current Ratio
i. Permit the ratio of Consolidated Current Assets to Consolidated
Current Liabilities at any time to be less than 1.0:1.0;
Debt: Worth
j. Permit the ratio of Consolidated Total Liabilities to
Consolidated Tangible Net Worth at any time to exceed 2.75:1.00
thereafter. ("Total Liabilities" is defined as all liabilities
which would properly appear on the liability side of a balance
sheet, other than capital stock, capital surplus, retained
earnings, minority interest, deferred credits, Approved
Subordinated Debt, and contingency reserves, under generally
accepted accounting principles).
* Refer to Rider attached hereto for Additional Negative Covenants
Agreement of Individual Guarantor(s)
(5) Each Individual Guarantor agrees:
a. To execute in favor of and in form satisfactory to the Bank, a
subordination of any present or future indebtedness of Borrower
to such Guarantor;
b. To execute a guaranty of payment of Borrower's obligations
hereunder to the Bank; and
c. To notify the Bank of any material adverse change in the
financial condition of Obligors as and when Guarantor shall
acquire knowledge thereof.
(6) Events of Default.
In case of the happening of any of the following events ("Events of
Default"):
a. any representation or warranty made herein, in any Security
Agreement, Pledge Agreement or General Loan and Collateral
Agreement or in any other instrument, agreement or certificate
furnished in connection with any of the foregoing shall prove
false or misleading in any material respect;
b. any occurrence delineated in the Note as an Event of Default;
c. any occurrence delineated in the Security Agreement or any other
Loan Document as an Event of Default;
d. Any Obligor shall default in the due observance or performance of
any negative covenant contained in this Agreement or any Security
Agreement or any other Loan Document;
e. Any Obligor shall default in the due observance or performance of
any covenant, condition or agreement (other than those referred
to in sections (b) and (d) immediately above) contained in this
Agreement or any Security Agreement to which it is a party and
such default shall continue unremedied for 10 days after notice
from the Bank of such default demanding that it be cured;
f. A Reportable Event shall have occurred with respect to any Plan
as defined in ERISA and (i) the Bank has notified the affected
Obligor in writing that it has determined that such Reportable
Event constitutes reasonable grounds for termination of such Plan
by the Pension Benefit Guaranty Corporation or the appointment of
a trustee, to administer the Plan, by an appropriate U.S.
District Court or (ii) such termination proceedings are commenced
or such appointment occurs;
then, the Note at Bank's option (except for bankruptcy which is
automatic) shall be immediately due and payable in full, both as to
principal and interest, without presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived, anything
contained herein, in the Note, in the Security Agreement or elsewhere
to the contrary notwithstanding.
*Refer to Rider attached hereto for Additional Events of Default
(7) Miscellaneous.
Expenses
a. The Borrower will pay all out-of-pocket losses, costs and
expenses incurred by the Bank in connection with the Loan
hereunder, the enforcement of any provision of this Agreement, or
any Note or the collection of any amount due hereunder or
thereunder including but not limited to, the reasonable fees and
disbursements of counsel to the Bank incurred in the course of so
enforcing such rights.
No Waiver
b. No failure or delay by the Bank in exercising any right, power or
remedy hereunder upon a breach hereof shall constitute a waiver
of any such term, condition, covenant, agreement, right, power of
Bank from exercising any such rights, power or remedy at any
later time or times.
Additional Provisions
c. The Rider annexed hereto shall constitute an integral part of
this Short Form Term Loan Agreement.
d. The parties hereto WAIVE RIGHT TO JURY TRIAL.
Amendments
d. The Bank shall not be deemed to have waived any of the terms,
agreements, conditions and covenants hereof, except by a writing
signed by an officer of the Bank and delivered to the Borrower.
This Agreement may be amended by a supplemental Agreement setting
forth such amendment or amendments when properly executed by all
the parties to this Agreement.
GAAP
e. All accounting terms used herein shall have the meaning assigned
to them by generally accepted accounting principles, unless
otherwise defined.
Law Governing
f. This Agreement and all rights hereunder, shall be governed by the
laws of the State of New York and applicable laws of the United
States and shall be binding upon the Obligors, their heirs,
executors, administrators, successors and assigns and shall inure
to the benefit of the Bank, its successors and assigns. The
obligations and conditions of this Agreement shall continue until
all indebtedness and liability of the Obligors to the Bank
hereunder has been paid and satisfied in full.
All references to Chemical Bank, The Chase Manhattan Bank, N.A. or The Chase
Manhattan Bank, (National Association) shall mean The Chase Manhattan Bank, a
New York State chartered bank.
First Priority Group, Inc.
By: /s/
---------------------------------
Name:
Title: Co-chairman, Co-CEO
------------------------------
-------------------------------------
Guarantor
National Fleet Service, Inc.
/s/
--------------------------------------
Name:
Title:
Accepted:
CHEMICAL BANK
By:________________________________________
RIDER TO SHORT FORM TERM LOAN AGREEMENT (the "Loan Agreement") dated _________,
1997 among First Priority Group, Inc., a N.Y. corporation (the "Borrower"), the
guarantors identified by their execution below (National Fleet Service, Inc.
referred to as the "Corporate Guarantor") (the "Guarantor") (the Borrower and
the Guarantor collectively, the "Obligors") and THE CHASE MANHATTAN BANK, a New
York banking corporation (the "Bank"). Capitalized terms used herein shall have
the meaning given to them in the Loan Agreement. The Loan Agreement, as amended
hereby, shall constitute the Loan Agreement or the Agreement, as the case may
be, referred to in all loan documents.
I. ADDITIONAL AFFIRMATIVE COVENANTS
Taxes: (3)h. It shall promptly (i) pay all indebtedness and
obligations as and when due and payable and (ii) pay
and discharge all taxes, assessments and
governmental charges which, if unpaid, might become
a lien or charge upon any of its properties.
II. ADDITIONAL NEGATIVE COVENANTS
Indebtedness: (4)a. (iv) indebtedness owing to the Bank; and
(v) trade payables incurred in the ordinary course
of business.
Liens: (4)b. (vi) liens granted in favor of the Bank; and
(vii) liens existing on the date hereof and
scheduled satisfactory to the Bank on Exhibit C,
such liens not be renewed or rescheduled.
Asset Sale: (4)d. Sell, transfer, lease, or otherwise dispose of its
assets, except in the normal course of business, or
sell and thereafter enter into an arrangement with
the buyer to rent or lease back all or any
substantial part of its properties or assets.
Investments: (4)h. (iv) money market funds with assets of
$2,500,000,000 or more.
Net Loss: (4)m. Permit the Borrower and its subsidiaries, on a
consolidated basis, to incur a net loss for any
fiscal year.
Debt Service
Coverage Ratio: (4)n. Permit the Consolidated Debt Service Coverage Ratio
of the Borrower and its subsidiaries to be less than
1.25 to 1.00 at any time.
"Consolidated Debt Service Coverage Ratio" shall be
defined as the ratio of (i) net income (excluding
extraordinary gains and including extraordinary
losses) plus depreciation, plus amortization of
intangibles, plus interest expense, minus unfunded
capital expenditures minus cash dividends,
distributions and withdrawals to (ii) interest
expense plus the current portion of long term
indebtedness of the Borrower and its subsidiaries.
All categories of the Consolidated Debt Service
Coverage Ratio shall be measured over the prior four
(4) fiscal quarters with the exception of the
current portion of long term indebtedness which
shall be measured over the future four (4) fiscal
quarters and all such categories shall be measured
on a consolidated basis incorporating the Borrower
and its subsidiaries."
Fiscal Year End: (4)o. Change its fiscal year end from 12/31.
Transactions with
Affiliates: (4)p. Enter into any transaction, including, without
limitation, the purchase, sale or exchange of any
property or the rendering of any service with any
affiliate, except in the ordinary course of business
and so long as such transactions are not less
favorable to the Borrower or any Corporate Guarantor
than would be obtained in a comparable arm's length
transaction with a person that is not an affiliate.
III. ADDITIONAL EVENTS OF DEFAULT
(6)g. Default with respect to any indebtedness for
borrowed money or capitalized leases (other than the
Note) of the Borrower or any other Obligor or
default with respect to the performance of any other
obligation of the Borrower or any other Obligor
incurred in connection with any indebtedness for
borrowed money or capitalized leases if the effect
of such default is to accelerate the maturity of
such indebtedness or capitalized lease, or to permit
the holder thereof to cause such indebtedness or
capitalized leases to become due prior to its stated
maturity (with or without the passage of time,
giving of notice, or both), or any such indebtedness
or capitalized leases shall not be paid when due
(Cross Default);
(6)h. Xxxxx Xxxxxx and Xxxxxxx Xxxxxxx and Xxxxxxx
Xxxxxxxxxx and Xxxxxxx Xxxxxxxxxx shall cease to own
in the aggregate at least 20% of the outstanding
voting stock of the Borrower at any time;
(6)i. Xxxxx Xxxxxx or Xxxxxxx Xxxxxxx shall cease to
manage or operate or be actively involved in the day
to day operations of the Borrower; or
(6)j. Any Guaranty of any Guarantor or Security Agreement
shall cease to be in full force and effect or shall
be declared to be null and void or the validity or
enforceability thereof shall be contested by any
Guarantor or pledgor or such party shall deny that
it has any further liability to the Bank with
respect thereto;
(6)k. The Borrower or any Guarantor shall (i) apply for or
consent to the appointment of a receiver, trustee or
liquidator of its or of all of its property, (ii)
admit in writing its inability to pay debts as they
mature, (iii) make a general assignment for the
benefit of creditors, (iv) be adjudicated bankrupt
or insolvent, (v) adopt a resolution for its
liquidation, (vi) file a voluntary petition in
bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors or
take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or
liquidation law or other statute analogous in
purpose or effect, or an answer admitting the
material
allegations of a petition filed against it in any
proceeding under any such law or if action shall be
taken by it for the purpose of effecting any of the
foregoing or (vii) be the subject of an involuntary
proceeding with respect to any of the foregoing,
which continues undismissed for 60 days or an order,
judgment or decree approving same continues unstayed
and in effect for 60 days; or
(6)l. Final judgment or judgments for the payment of money
in excess of an aggregate of $50,000 shall be
rendered against the Borrower or any Guarantor and
the same shall be uninsured against (by a licensed
insurance company), and remain undischarged and
unbonded for a period in excess of 60 days;
IV. MISCELLANEOUS/ADDITIONAL PROVISIONS
Miscellaneous: (a) The Borrower and each of the Guarantors covenant and
agree that, from the date hereof until the full satisfaction of the obligations
hereunder and under the Note: It shall comply with the requirements of all
Federal, state and local laws, ordinances, rules, regulations or policies
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of hazardous materials, provide to the Bank all
documentation in connection with such compliance that the Bank may reasonably
request, and defend, indemnify, and hold harmless the Bank, its employees,
agents, officers, and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs, or expenses of
whatever kind or nature, known or unknown, contingent or otherwise, arising out
of, or in any way related to, (i) the presence, disposal, release, or threatened
release of any hazardous materials on any property at any time owned or occupied
by the Borrower, its subsidiaries or any of the Guarantors; (ii) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of or related to such hazardous materials; (iii) any lawsuit brought or
threatened, settlement reached, or governmental order relating to such hazardous
materials, and/or (iv) any violation of laws, orders, regulations, requirements,
or demands of government authorities, or any policies or requirements of the
Bank, which are based upon or in any way related to such hazardous materials
including, without limitation, attorney and consultant fees, investigation and
laboratory fees, court costs, and litigation expenses. (b) The Borrower and each
of the Guarantors represent and warrant that, as of the date hereof, each is in
full compliance with all of the above described laws, ordinances, rules,
regulations and policies.
Notices: Notices, consents and other communications provided for herein
shall be in writing and may be either mailed or delivered (which shall include
telex or facsimile communication). Any notice shall be conclusively deemed to
have been received by a party hereto and to be effective on the day on which
delivered (either by hand or by telex, telecopier or other telegraphic
communications equipment, with receipt confirmed) to such party at its address
set forth below (or at such other address as such party shall specify to the
other parties hereto in writing) or, if sent by registered mail, on the fifth
business day after the day on which mailed, addressed to such party at such
address: (i) if to the Borrower or the Corporate Guarantor, at 00 Xxxx Xxxxxxxx
Xxxx, Xxxxxxxxx, XX 00000, (iii) if to the Bank, at The Chase Manhattan Bank, 50
Xxxxxxx Xxxxxxxxx Boulevard, Uniondale, N.Y. 11553, Attention: Xxxxxxx Xxxxxx
Account Officer.
First Priority Group, Inc.
By:/s/Xxxxx Xxxxxx
---------------------------
Name: Xxxxx Xxxxxx
Title: Co-Chairman, Co-CEO
EXIBIT B
SUBSIDIARIES AND AFFILIATES
NATIONAL FLEET SERVICE, INC.
EXIBIT C
LITIGATION
NONE.
EXIBIT D
INDEBTEDNESS
CHASE MANHATTAN BANK
CREDIT LINE $1 MILLION
EXIBIT E
LIENS
CHASE MANHATTAN BANK
