LOAN AND SECURITY AGREEMENT
DATED AS OF DECEMBER 22, 1998
BETWEEN
GENERAL ELECTRIC CAPITAL CORPORATION
AS LENDER
AND
GULF NORTHERN TRANSPORT, INC.
AS BORROWER
U.S. TRUCKING, INC. (NEVADA)
AS CREDIT PARTY
U.S. TRUCKING, INC. (COLORADO)
AS CREDIT PARTY
MENCOR, INC.
AS CREDIT PARTY
INDEX OF EXHIBITS AND SCHEDULES
Schedule A - Definitions
Schedule B - Lender's and Borrower's Addresses for Notices
Schedule C - Letters of Credit
Schedule D - Cash Management System
Schedule E - Fees and Expenses
Schedule F - Schedule of Documents
Schedule F-1 - Schedule of Real Estate Documents
Schedule G - Financial Covenants
Disclosure Schedule (3.2) - Chief Executive Office; Corporate Names
Disclosure Schedule (3.6) - Real Estate
Disclosure Schedule (3.7) - Stock; Affiliates
Disclosure Schedule (3.10) - Taxes
Disclosure Schedule (3.12) - ERISA
Disclosure Schedule (3.13) - Litigation
Disclosure Schedule (3.14) - Intellectual Property
Disclosure Schedule (3.16) - Environmental Matters
Disclosure Schedule (3.17) - Insurance
Disclosure Schedule (5(c)) - Indebtedness
Disclosure Schedule (5(h)) - Liens
Disclosure Schedule (6.1) - Actions to Perfect Liens
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Required Reports and Other Information
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Accounts Payable Analysis
Exhibit E - Form of Daily Accounts Receivable Rollforward Analysis
Exhibit E-1 - Form of Unbilled Daily Accounts Receivable Rollforward
Analysis
Exhibit F - Form of Revolving Credit Note
Exhibit G - Form of Mortgage
Exhibit H - Form of Secretarial Certificate (Gulf Northern
Transport, Inc.)
Exhibit H-1 - Form of Secretarial Certificate (Credit Party)
Exhibit I - Form of Power of Attorney (Gulf Northern Transport, Inc.)
Exhibit I-1 - Form of Power of Attorney (Credit Party)
Exhibit J - Form of Certificate of Compliance
Exhibit K - Form of Lockbox Account Agreement
Exhibit L - Intentionally Omitted
Exhibit M - Intentionally Omitted
Exhibit N-1-A- Form of Guarantee (U.S. Trucking, Inc.(Nevada))
Exhibit N-1-B- Form of Guarantee (U.S. Trucking, Inc. (Colorado))
Exhibit N-1-C- Form of Guarantee (Mencor, Inc.)
Exhibit N-2 - Form of Joint and Several Guarantee
Exhibit N-3 - Form of Guarantee (Trust)
Exhibit O - Form of Opinion of Counsel to Borrower
Exhibit P - Intentionally Omitted
Exhibit Q - Form of Standard Payoff Confirmation Letter
Exhibit R-1 - Form of U.C.C. Schedule
Exhibit R-2 - Form of U.C.C. Schedule
Exhibit R-3 - Form of U.C.C. Schedule
Exhibit R-4 - Form of U.C.C. Schedule
Exhibit S - Form of Payment of Proceeds Letter
GE CAPITAL COMMERCIAL FINANCE
This LOAN AND SECURITY AGREEMENT is dated as of December 22, 1998, and agreed
to by and between Gulf Northern Transport, Inc., a Wisconsin corporation
("Borrower"), any other Credit Party executing this Agreement, and GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation ("Lender").
RECITALS
A. The purpose of this Agreement is to provide to Borrower revolving credit
loans (including a subfacility for letters of credit) (collectively, the
"Loans") having the following general description:
TRANSACTION SUMMARY AS OF THE DATE OF THIS AGREEMENT
REVOLVING CREDIT LOAN
Maximum Amount: $5,000,000
Term: 3 years
Revolving Credit Rate: Index Rate plus 4.5%
Letter of Credit Subfacility: $250,000
Borrowing Base: (i) 85% (less reserves established by
Lender pursuant to Section 1.13) of the
value (as determined by Lender) of
Borrower's Eligible Accounts (other
than Eligible Unbilled Accounts) and (ii)
65% (less reserves established by Lender
pursuant to Section 1.13) of the value
(as determined by Lender) of Borrower's
Eligible Unbilled Accounts subject to a
cap in an aggregate amount of $250,000;
provided that (1) Lender (without limit-
ing its rights to otherwise reduce the
foregoing percentage) shall reduce the
foregoing percentage by one percentage
point for each percentage point that the
dilution of Borrower's Accounts
(calculated as the average dilution from
the Accounts Receivable Roll Forward
Analysis over the most recent three
months) exceeds 3%, less the unreimbursed
face amount of any Letter of Credit
Obligations, and (2) Lender reserves the
right to adjust the percentage identified
in (ii) above in the event it is not
satisfied with the environmental condition
of the Wisconsin Rapids, Wisconsin real
property.
FEES
Closing Fee: $26,250
Letter of Credit Fee: 1.5%
Prepayment Fee: 3% in year one; 2% in year two; and 1% in
year three.
The Loans described generally here are established and governed by the terms
and conditions set forth below in this Agreement and the other Loan Documents,
and if there is any conflict between this general description and the express
terms and conditions below or elsewhere in the Loan Documents, such other
express terms and conditions shall control.
B. Borrower desires to obtain the Loans and other financial accommodations
from Lender and Lender is willing to provide the Loans and accommodations all
in accordance with the terms of this Agreement.
C. Capitalized terms used herein shall have the meanings assigned to them in
Schedule A and, for purposes of this Agreement and the other Loan Documents,
the rules of construction set forth in Schedule A shall govern. All
Schedules, Disclosure Schedules, Attachments, Addenda and Exhibits
(collectively, "Appendices") hereto, or expressly identified to this
Agreement, are incorporated herein by reference, and taken together with this
Agreement, constitute but a single agreement. These Recitals shall be
construed as part of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Loans. (a) Subject to the terms and conditions of this Agreement, from
the Closing Date and until the Commitment Termination Date (i) Lender agrees
(A) to make available advances (each, a "Revolving Credit Advance") and (B) to
incur Letter of Credit Obligations, in an aggregate outstanding amount not to
exceed the Borrowing Availability, and (ii) Borrower may at its request from
time to time borrow, repay and reborrow, and may cause Lender to incur Letter
of Credit Obligations, under this Section 1.1.
(b) Borrower shall request each Revolving Credit Advance by written
notice to Lender substantially in the form of Exhibit A (each a "Notice of
Revolving Credit Advance") given no later than 11:00 A.M. (New York City time)
on the Business Day of the proposed Revolving Credit Advance. Lender shall be
fully protected under this Agreement in relying upon, and shall be entitled to
rely upon, (i) any Notice of Revolving Credit Advance believed by Lender to be
genuine, and (ii) the assumption that the Persons making electronic requests
or executing and delivering a Notice of Revolving Credit Advance were duly
authorized, unless the responsible individual acting thereon for Lender shall
have actual knowledge to the contrary.
(c) The Revolving Credit Loan shall be evidenced by, and be repayable in
accordance with the terms of, the Revolving Credit Note and this Agreement.
(d) Borrower agrees that Lender, in making any Revolving Credit Advance
or incurring any other Obligation hereunder, shall be entitled to rely upon
the most recent Borrowing Base Certificate delivered to Lender by Borrower and
other information available to Lender. Borrower further agrees that Lender
shall be under no obligation to make any further Revolving Credit Advance or
incur any other Obligation if Borrower shall have failed to deliver a
Borrowing Base Certificate to Lender by the time specified in Section 4.1(b).
(e) Subject to the terms and conditions of this Agreement, including
Schedule C, Borrower shall have the right to request, and Lender agrees to
incur, the Letter of Credit Obligations for the account of Borrower in
accordance with Schedule C.
1.2 Term and Prepayment. (a) The obligation of Lender to make Revolving
Credit Advances and extend other financial accommodations shall be in effect
from the Closing Date until the Commitment Termination Date. Upon the
Commitment Termination Date Borrower shall pay to Lender in full, in cash: (i)
all outstanding Revolving Credit Advances and all accrued but unpaid interest
thereon; (ii) an amount sufficient to enable Lender to hold cash collateral as
specified in Schedule C; and (iii) all other non-contingent Obligations due to
or incurred by Lender. Upon payment of the amounts specified in the
immediately preceding sentence, Borrower's obligation to pay the Unused Line
Fee shall simultaneously terminate.
(b) If the Revolving Credit Loan shall at any time exceed the Borrowing
Availability, then Borrower shall immediately repay the Revolving Credit Loan
in the amount of such excess; any such excess balance outstanding shall
nevertheless constitute Obligations that are evidenced by the Revolving Credit
Note, secured by the Collateral and entitled to all of the benefits of the
Loan Documents.
(c) Each Borrower shall have the right, at any time upon 30 days prior
written notice to Lender to (i) terminate voluntarily each Borrower's right to
receive or benefit from, and Lender's obligation to make and to incur,
Revolving Credit Advances and Letter of Credit Obligations and (ii) prepay all
of the Obligations. The effective date of termination of the Revolving Credit
Loan specified in such notice shall be the Commitment Termination Date.
(d) If Borrower exercises its right of termination and prepayment, or if
Borrower's right to receive or benefit from, and Lender's obligation to make
Loans, are terminated for any reason prior to the Stated Expiry Date
(including as a result of the occurrence of a Default), Borrower shall pay to
Lender the applicable Prepayment Fee.
1.3 Use of Proceeds. Borrower shall use the proceeds of the Loans to
refinance on the Closing Date certain outstanding Indebtedness as provided in
Section 2.1(b) and for working capital and other general corporate purposes.
1.4 Single Loan. The Loans and all of the other Obligations of Borrower to
Lender shall constitute one general obligation of Borrower secured by all of
the Collateral.
1.5 Interest. (a) Borrower shall pay interest to Lender on the aggregate
outstanding Revolving Credit Advances at a floating rate equal to the Index
Rate plus four and five tenths percent (4.5%) per annum (the "Revolving Credit
Rate").
(b) Interest shall be payable on the outstanding Revolving Credit
Advances (i) in arrears for the preceding calendar month on the first day of
each calendar month, (ii) on the Commitment Termination Date, and (iii) if any
interest accrues or remains payable after the Commitment Termination Date,
upon demand by Lender.
(c) All computations of interest, and all calculations of the Letter of
Credit Fee, shall be made by Lender on the basis of a three hundred and sixty
(360) day year, in each case for the actual number of days occurring in the
period for which such interest or fee is payable. Each determination by Lender
of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(d) Effective upon the occurrence of any Event of Default and for so
long as any Event of Default shall be continuing, upon notice to the Borrower
(except that no notice shall be required upon the occurrence of any Event of
Default specified in Sections 7.1(e), (f), (g) or (j)(ii)) the Revolving
Credit Rate and the Letter of Credit Fee shall automatically be increased by
two percentage points (2%) per annum (such increased rate, the "Default
Rate"), and all outstanding Obligations, including unpaid interest and Letter
of Credit Fees, shall continue to accrue interest from the date of such Event
of Default at the Default Rate applicable to such Obligations. The Default
Rate with respect to the Revolving Credit Rate shall be payable upon demand by
Lender.
(e) If any interest or other payment (including Unused Line Fees, Letter
of Credit Fees and Collateral Monitoring Fees) to Lender under this Agreement
becomes due and payable on a day other than a Business Day, such payment date
shall be extended to the next succeeding Business Day and interest thereon
shall be payable at the then applicable rate during such extension.
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(f) In no event will Lender charge interest at a rate that exceeds the
highest rate of interest permissible under any law that a court of competent
jurisdiction shall, in a final determination, deem applicable.
1.6 Cash Management System. On or prior to the Closing Date and until the
Termination Date, Borrower will establish and maintain the cash management
system described in Schedule D. All payments in respect of the Collateral
shall be made to or deposited in the blocked or lockbox accounts described in
Schedule D in accordance with the terms thereof.
1.7 Fees. As compensation for Lender's costs and efforts incurred and
expended in entering into this Agreement and in consideration of Lender's
making the Loans available to Borrower, Borrower agrees to pay to Lender the
Fees set forth in Schedule E.
1.8 Receipt of Payments. Borrower shall make each payment under this
Agreement (not otherwise made pursuant to Section 1.9) without set-off or
counterclaim not later than 11:00 A.M. (New York City time) on the day when
due in lawful money of the United States of America in immediately available
funds to the Collection Account. For purposes of computing interest and Fees,
all payments shall be deemed received by Lender 2 Business Days following
receipt of good funds in the Collection Account. For purposes of determining
the Borrowing Availability, payments shall be deemed received by Lender upon
receipt of good funds in the Collection Account.
1.9 Application and Allocation of Payments. Borrower irrevocably agrees that
Lender shall have the continuing and exclusive right to apply any and all
payments against the then due and payable Obligations in such order as Lender
may deem advisable; provided, however, that Lender may charge the Revolving
Credit Loan for (i) monthly payments due and owing under the Term Loan, and
(ii) capital lease payments due and owing to CAF. Lender is authorized to,
and at its option may (without prior notice or precondition and at any time or
times), but shall not be obligated to, make or cause to be made Revolving
Credit Advances on behalf of Borrower for: (a) payment of all Fees, expenses,
indemnities, charges, costs, principal, interest, or other Obligations owing
by Borrower under this Agreement or any of the other Loan Documents, (b) the
payment, performance or satisfaction of any of Borrower's obligations with
respect to preservation of the Collateral or otherwise under this Agreement,
or (c) any premium in whole or in part required in respect of any of the
policies of insurance required by this Agreement, even if the making of any
such Revolving Credit Advance causes the outstanding balance of the Revolving
Credit Loan to exceed the Borrowing Availability, and Borrower agrees to repay
immediately, in cash, any amount by which the Revolving Credit Loan exceeds
the Borrowing Availability.
1.10 Accounting. Lender is authorized to record on its books and records the
date and amount of each Loan and each payment of principal thereof and such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Lender shall provide Borrower on a monthly basis a
statement and accounting of such recordations but any failure on the part of
the Lender to keep any such recordation (or any errors therein) or to send a
statement thereof to Borrower shall not in any manner affect the obligation of
Borrower to repay (with applicable interest) the Loans made to Borrower under
this Agreement. Except to the extent that Borrower shall, within 30 days
after such statement and accounting is sent, notify Lender in writing of any
objection Borrower may have thereto (stating with particularity the basis for
such objection), such statement and accounting shall be deemed final, binding
and conclusive upon Borrower, absent manifest error.
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1.11 Indemnity. Borrower and each other Credit Party executing this
Agreement jointly and severally agree to indemnify and hold Lender and its
Affiliates, and their respective employees, attorneys and agents (each, an
"Indemnified Person"), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses of any kind or
nature whatsoever (including attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) which
may be instituted or asserted against or incurred by any such Indemnified
Person as the result of credit having been extended, suspended or terminated
under this Agreement and the other Loan Documents or with respect to the
execution, delivery, enforcement, performance and administration of, or in any
other way arising out of or relating to, this Agreement and the other Loan
Documents or any other documents or transactions contemplated by or referred
to herein or therein and any actions or failures to act with respect to any of
the foregoing, including any and all product liabilities, Environmental
Liabilities and legal costs and expenses arising out of or incurred in
connection with disputes between or among any parties to any of the Loan
Documents (collectively, "Indemnified Liabilities"), except to the extent that
any such Indemnified Liability is finally determined by a court of competent
jurisdiction to have resulted solely from such Indemnified Person's gross
negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE
OR LIABLE TO THE BORROWER OR TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY
SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING
CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.
1.12 Taxes. All payments to Lender under any Loan Document shall be made
free and clear of, and without deduction for, any Taxes. If Borrower shall be
required by law to deduct any Taxes from any payment to Lender under any Loan
Document, then the amount payable to Lender shall be increased so that, after
making all required deductions (including deductions applicable to additional
sums payable under this Section 1.12), Lender receives an amount equal to that
which it would have received had no such deductions been made and Borrower
shall pay the full amount deducted to the relevant taxing authority, and
promptly furnish to Lender tax receipts evidencing such payment. Borrower
shall pay and indemnify Lender for the full amount of Taxes (including any
Taxes imposed by any jurisdiction on amounts payable under this Section 1.12)
paid by Lender and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted.
1.13 Borrowing Base; Reserves. The Borrowing Base shall be determined by
Lender (including the eligibility of Accounts) based on the most recent
Borrowing Base Certificate delivered to Lender in accordance with Section
4.1(b) and such other information available to Lender. Without limiting any
other rights and remedies of Lender hereunder or under the other Loan
Documents, the Revolving Credit Loan shall be subject to Lender's continuing
right to withhold from Borrowing Availability reserves, and to increase and
decrease such reserves from time to time, if and to the extent that in
Lender's good faith credit judgment such reserves are necessary, including to
protect Lender's interest in the Collateral or to protect Lender against
possible non-payment of Accounts for any reason by Account Debtors or possible
non-payment of any of the Obligations or for any taxes or customs duties or in
respect of any state of facts which could constitute a Default. Lender may,
4
at its option, implement reserves by designating as ineligible a sufficient
amount of Accounts which would otherwise be Eligible Accounts, so as to reduce
the Borrowing Base by the amount of the intended reserves, including (1) a
$150,000 payment reserve payable as follows: $37,500 shall be payable on each
Monday of each month up to an aggregate of $150,000 for each month, whereupon
such reserve shall be reduced to $0, (2) a $50,000 Wisconsin tax reserve, and
(3) a $125,000 reserve for registration and licensing fees and related costs,
which reserve shall be increased by an additional amount of $20,000 per week
beginning on December 25, 1998 through and including February 20, 1999, at
which time such reserve shall be applied to the payment of such registration
and licensing fees and costs.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. Lender shall not be obligated to make
any of the Loans, or to take, fulfill, or perform any other action hereunder,
until the following conditions have been satisfied in a manner satisfactory to
Lender in its sole discretion, or waived in writing by Lender:
(a) the Loan Documents to be delivered on or before the Closing Date
shall have been duly executed and delivered by the appropriate parties, all as
set forth in the Schedule of Documents (Schedule F);
(b) Lender shall have received evidence satisfactory to it that: (i) all
of the obligations of Borrower to Transport Clearings under its financing
documentation as in effect immediately prior to the Closing Date will be
performed and paid in full from the proceeds of the initial Loans; and (ii)
all Liens upon any of the property of Borrower or any other Credit Party in
favor of Transport Clearings shall have been terminated immediately upon such
payment;
(c) Lender shall have received evidence satisfactory to it that each
Credit Party has obtained all consents and acknowledgments of all Persons and
Governmental Authorities whose consents or acknowledgments may be required
prior to the execution and delivery of this Agreement and the other Loan
Documents (or pursuant to the terms hereof or thereof) and the consummation of
the transactions contemplated hereby and thereby and that such consents or
acknowledgments remain in full force and effect;
(d) Lender shall have received evidence satisfactory to it that the
insurance policies provided for in Section 3.17 are in full force and effect,
together with appropriate evidence showing loss payable or additional insured
clauses or endorsements in favor of Lender as required under such Section;
(e) as of the Closing Date Net Borrowing Availability shall be not less
than $200,000 after giving effect to the initial Revolving Credit Advance and
Letter of Credit Obligations (on a pro forma basis, with trade payables being
paid currently, and expenses and liabilities being paid in the ordinary course
of business and without acceleration of sales);
(f) Lender shall have received an opinion of counsel to the Borrower
with respect to the Loan Documents in form and substance satisfactory to
Lender; and
(g) payment by Borrower of the Closing Fee and all other fees, costs,
and expenses payable by Borrower hereunder that have accrued as of the Closing
Date.
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2.2 Further Conditions to the Loans. Lender shall not be obligated to fund
any Loan (including the initial Loans), if, as of the date thereof:
(a) any representation or warranty by any Credit Party contained herein
or in any of the other Loan Documents shall be untrue or incorrect as of such
date, except to the extent that any such representation or warranty is
expressly stated to relate to a specific earlier date, in which case, such
representation and warranty shall be true and correct as of such earlier date;
or
(b) any event or circumstance which has had or reasonably could be
expected to have a Material Adverse Effect shall have occurred since the
Closing Date; or
(c) any Default shall have occurred and be continuing or would result
after giving effect to such Loan; or
(d) after giving effect to such Loan the Revolving Credit Loan would
exceed the Borrowing Availability; or
(e) any action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any Governmental
Authority to enjoin, restrain or prohibit, or to obtain damages in respect of,
or which is related to or arises out of, this Agreement or any other Loan
Document or the consummation of any transaction contemplated hereby or thereby
and which, in Lender's sole judgment, would make it inadvisable to consummate
any transaction contemplated by this Agreement or any other Loan Document.
The request and acceptance by Borrower of the proceeds of any Loan shall be
deemed to constitute, as of the date of such request and the date of such
acceptance, (i) a representation and warranty by Borrower that the conditions
in this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrower
of the granting and continuance of Lender's Liens pursuant to the Loan
Documents.
3. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
To induce Lender to enter into this Agreement and to make the Loans, Borrower
and each other Credit Party executing this Agreement represent and warrant to
Lender (each of which representations and warranties shall survive the
execution and delivery of this Agreement), and promise to and agree with
Lender until the Termination Date as follows:
3.1 Corporate Existence; Compliance with Law. Each Corporate Credit Party:
(a) is, as of the Closing Date, and will continue to be (i) a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) duly qualified to do business and in
good standing in each other jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified could not reasonably be expected to have
a Material Adverse Effect, and (iii) in compliance with all Requirements of
Law and Contractual Obligations, except to the extent failure to comply
therewith could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect; and (b) has and will continue to have (i)
the requisite corporate power and authority and the legal right to execute,
deliver and perform its obligations under the Loan Documents, and to own,
pledge, mortgage or otherwise encumber and operate its properties, to lease
6
the property it operates under lease, and to conduct its business as now,
heretofore or proposed to be conducted, and (ii) all licenses, permits,
franchises, rights, powers, consents or approvals from or by all Persons or
Governmental Authorities having jurisdiction over such Corporate Credit Party
which are necessary or appropriate for the conduct of its business.
3.2 Executive Offices; Corporate or Other Names; Conduct of Business. The
location of each Corporate Credit Party's chief executive office, corporate
offices, warehouses, other locations of Collateral and locations where records
with respect to Collateral are kept (including in each case the county of such
locations) are as set forth in Disclosure Schedule (3.2) and, except as set
forth in such Disclosure Schedule, such locations have not changed during the
preceding twelve months. As of the Closing Date, during the prior five years,
except as set forth in Disclosure Schedule (3.2), no Corporate Credit Party
has been known as or conducted business in any other name (including trade
names). No Corporate Credit Party shall change its (a) name, (b) chief
executive office, (c) corporate offices, (d) warehouses or other Collateral
locations, or (e) location of its records concerning the Collateral, or
acquire, lease or use any real estate after the Closing Date without such
Person, in each instance, giving thirty (30) days prior written notice thereof
to Lender and taking all actions deemed necessary or appropriate by Lender to
continuously protect and perfect Lender's Liens upon the Collateral.
3.3 Corporate Power; Authorization; Enforceable Obligations. The execution,
delivery and performance by each Credit Party of the Loan Documents to which
it is a party, and the creation of all Liens provided for herein and therein:
(a) are and will continue to be within such Credit Party's power and
authority; (b) have been and will continue to be duly authorized by all
necessary or proper action; (c) are not and will not be in violation of any
Requirement of Law or Contractual Obligation of such Credit Party (d) do not
and will not result in the creation or imposition of any Lien (other than
Permitted Encumbrances) upon any of the Collateral; and (e) do not and will
not require the consent or approval of any Governmental Authority or any other
Person, except those referred to in Section 2.1(b) (all of which will have
been duly obtained, made or complied with on or before the Closing Date and
shall be in full force and effect on such date). As of the Closing Date, each
Loan Document shall have been duly executed and delivered on behalf of each
Credit Party party thereto, and each such Loan Document upon such execution
and delivery shall be and will continue to be a legal, valid and binding
obligation of such Credit Party, enforceable against it in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency and
other similar laws affecting creditors' rights generally, and by general
principles of equity.
3.4 Financial Statements and Projections; Books and Records. (a) The
Financial Statements delivered by Borrower to Lender for its most recently
ended Fiscal Year and Fiscal Month, are true, correct and complete and reflect
fairly and accurately the financial condition of Borrower as of the date of
each such Financial Statement in accordance with GAAP. The Projections most
recently delivered by Borrower to Lender have been prepared in good faith,
with care and diligence and use assumptions that are reasonable under the
circumstances at the time such Projections were prepared and as of the date
delivered to Lender and all such assumptions are disclosed in the Projections.
(b) Borrower and each other Corporate Credit Party shall keep adequate
Books and Records with respect to the Collateral and its business activities
in which proper entries, reflecting all consolidated and consolidating
financial transactions, and payments received on any and all credits granted
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to, and all other dealings with, the Collateral, will be made in accordance
with GAAP and all Requirements of Law and on a basis consistent with the
Financial Statements.
3.5 Material Adverse Change. Between the date of Borrower's most recently
audited Financial Statements delivered to Lender and the Closing Date: (a) no
Corporate Credit Party has incurred any obligations, contingent or
non-contingent liabilities, or liabilities for Charges, long-term leases or
unusual forward or long-term commitments which are not reflected in the
Projections delivered on the Closing Date and which could, alone or in the
aggregate, reasonably be expected to have a Material Adverse Effect; (b) there
has been no material deviation from such Projections; and (c) no events have
occurred which alone or in the aggregate has had or could reasonably be
expected to have a Material Adverse Effect. No Requirement of Law or
Contractual Obligation of any Credit Party has or have had or could reasonably
be expected to have a Material Adverse Effect and no Credit Party is in
default, and to such Credit Party's knowledge no third party is in default
under or with respect to any of its Contractual Obligations, which alone or in
the aggregate has had or could reasonably be expected to have a Material
Adverse Effect.
3.6 Real Estate; Property. The real estate listed in Disclosure Schedule
(3.6) constitutes all of the real property owned, leased, or used by each
Corporate Credit Party in its business, and such Credit Party will not execute
any material agreement or contract in respect of such real estate after the
date of this Agreement without giving Lender prompt written notice thereof.
Each Corporate Credit Party holds and will continue to hold good and
marketable fee simple title to all of its owned real estate, and good and
marketable title to all of its other properties and assets, and valid and
insurable leasehold interests in all of its leases (both as lessor and lessee,
sublessee or assignee), and none of the properties and assets of any Corporate
Credit Party are or will be subject to any Liens, except Permitted
Encumbrances. With respect to each of the premises identified in Disclosure
Schedule (3.2) on or prior the Closing Date a bailee, landlord or mortgagee
agreement acceptable to Lender has been obtained.
3.7 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.7), as of the
Closing Date no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. All of the issued and outstanding Stock of each Corporate Credit
Party (including all rights to purchase, options, warrants or similar rights
or agreements pursuant to which any Corporate Credit Party may be required to
issue, sell, repurchase or redeem any of its Stock) as of the Closing Date is
owned by each of the Stockholders (and in the amounts) set forth on Disclosure
Schedule (3.7). All outstanding Indebtedness of each Corporate Credit Party
as of the Closing Date is described in Disclosure Schedule (5(c)).
3.8 Government Regulation. No Credit Party is subject to or regulated under
the Investment Company Act of 1940, the Public Utility Holding Company Act of
1935, the Federal Power Act or any other Federal or state statute, rule or
regulation that restricts or limits such Person's ability to incur
Indebtedness, pledge its assets, or to perform its obligations under the Loan
Documents. The making of the Loans, the application of the proceeds and
repayment thereof, and the consummation of the transactions contemplated by
the Loan Documents do not and will not violate any provision of any such
statute or any rule, regulation or order issued by the Securities and Exchange
Commission.
8
3.9 Margin Regulations. No Credit Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulations U or G of the Federal
Reserve Board as now and from time to time hereafter in effect (such
securities being referred to herein as "Margin Stock"). No Credit Party owns
any Margin Stock, and none of the proceeds of the Loans or other extensions of
credit under this Agreement will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of
reducing or retiring any Indebtedness which was originally incurred to
purchase or carry any Margin Stock or for any other purpose which might cause
any of the Loans or other extensions of credit under this Agreement to be
considered a "purpose credit" within the meaning of Regulation G, T, U or X of
the Federal Reserve Board. No Credit Party will take or permit to be taken
any action which might cause any Loan Document to violate any regulation of
the Federal Reserve Board.
3.10 Taxes; Charges. Except as disclosed on Disclosure Schedule (3.10) all
tax returns, reports and statements required by any Governmental Authority to
be filed by Borrower or any other Credit Party have, as of the Closing Date,
been filed and will, until the Termination Date, be filed with the appropriate
Governmental Authority and no tax Lien has been filed against any Credit Party
or any Credit Party's property. Proper and accurate amounts have been and
will be withheld by Borrower and each other Credit Party from their respective
employees for all periods in complete compliance with all Requirements of Law
and such withholdings have and will be timely paid to the appropriate
Governmental Authorities. Disclosure Schedule (3.10) sets forth as of the
Closing Date those taxable years for which any Credit Party's tax returns are
currently being audited by the IRS or any other applicable Governmental
Authority and any assessments or threatened assessments in connection with
such audit, or otherwise currently outstanding. Except as described on
Disclosure Schedule (3.10), no Credit Party has executed or filed with the IRS
or any other Governmental Authority any agreement or other document extending,
or having the effect of extending, the period for assessment or collection of
any Charges. None of the Credit Parties and their respective predecessors are
liable for any Charges: (a) under any agreement (including any tax sharing
agreements) or (b) to each Credit Party's knowledge, as a transferee. As of
the Closing Date, no Credit Party has agreed or been requested to make any
adjustment under IRC Section 481(a), by reason of a change in accounting
method or otherwise, which could reasonably be expected to have a Material
Adverse Effect.
3.11 Payment of Obligations. Each Credit Party will pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all of its Charges and other obligations of whatever nature,
except where the amount or validity thereof is currently being contested in
good faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on the books of such Credit Party and
none of the Collateral is or could reasonably be expected to become subject to
any Lien or forfeiture or loss as a result of such contest.
3.12 ERISA. (a) Disclosure Schedule (3.12) lists and separately identifies
all Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans.
Copies of all such listed Plans, together with a copy of the latest form 5500
for each such Plan, have been delivered to Lender. Each Qualified Plan has
been determined by the IRS to qualify under Section 401 of the IRC, and the
trusts created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred which would
9
cause the loss of such qualification or tax-exempt status. Each Plan is in
compliance with the applicable provisions of ERISA and the IRC , including the
filing of reports required under the IRC or ERISA. No Credit Party or ERISA
Affiliate has failed to make any contribution or pay any amount due as
required by either Section 412 of the IRC or Section 302 of ERISA or the terms
of any such Plan. No Credit Party or ERISA Affiliate has engaged in a
prohibited transaction, as defined in Section 4975 of the IRC, in connection
with any Plan, which would subject any Credit Party to a material tax on
prohibited transactions imposed by Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan with
Unfunded Pension Liabilities has been transferred outside of the "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA) of any Credit
Party or ERISA Affiliate; and (vi) no liability under any Title IV Plan has
been satisfied with the purchase of a contract from an insurance company that
is not rated AAA by the Standard & Poor's Corporation or the equivalent by
another nationally recognized rating agency.
3.13 Litigation. No Litigation is pending or, to the knowledge of any Credit
Party, threatened by or against any Credit Party or against any Credit Party's
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) which could reasonably
be expected to have a Material Adverse Effect. Except as set forth on
Disclosure Schedule (3.13), as of the Closing Date there is no Litigation
pending or threatened against any Credit Party which seeks damages in excess
of $50,000 or injunctive relief or alleges criminal misconduct of any Credit
Party. Each Credit Party shall notify Lender promptly upon learning of the
existence or commencement of any Litigation commenced or to the knowledge of
any Credit Party threatened against any Credit Party that: (x) may involve an
amount in excess of $50,000; (y) could reasonably be expected to have a
Material Adverse Effect whether or not determined adversely; or (z) regardless
of amount (i) is asserted or instituted, against any Plan, its fiduciaries or
its assets, or against any Credit Party or any ERISA Affiliate in connection
with any Plan, (ii) includes any demand for injunctive relief, (iii) alleges
criminal misconduct by any Credit Party, or (iv) alleges the violation of any
law regarding, or seeks remedies in connection with, any Environmental
Liabilities.
3.14 Intellectual Property. As of the Closing Date, all material
Intellectual Property owned or used by any Credit Party is listed, together
with application or registration numbers, where applicable, in Disclosure
Schedule (3.14). Each Credit Party owns, or is licensed to use, all
Intellectual Property necessary to conduct its business as currently conducted
except for such Intellectual Property the failure of which to own or license
could not reasonably be expected to have a Material Adverse Effect.
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3.15 Full Disclosure. No information contained in any Loan Document, the
Financial Statements or any written statement furnished by or on behalf of any
Credit Party under any Loan Document, or to induce Lender to execute the Loan
Documents, contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements contained herein or therein
not misleading in light of the circumstances under which they were made.
3.16 Hazardous Materials. Except as set forth on Disclosure Schedule (3.16),
as of the Closing Date, (a) each real property location owned, leased or
occupied by each Corporate Credit Party (the "Real Property") is maintained
free of contamination from any Hazardous Material, (b) no Corporate Credit
Party is subject to any Environmental Liabilities or, to any Credit Party's
knowledge, potential Environmental Liabilities, in excess of $50,000 in the
aggregate, (c) no notice has been received by any Corporate Credit Party
identifying it as a "potentially responsible party" or requesting information
under CERCLA or analogous state statutes, and to the knowledge of any Credit
Party, there are no facts, circumstances or conditions that may result in any
Corporate Credit Party being identified as a "potentially responsible party"
under CERCLA or analogous state statutes; and (d) each Corporate Credit Party
has provided to Lender copies of all existing environmental reports, reviews
and audits and all written information pertaining to actual or potential
Environmental Liabilities, in each case relating to any Corporate Credit
Party. Each Corporate Credit Party: (i) shall comply in all material respects
with all applicable Environmental Laws and Environmental Permits; (ii) shall
notify Lender in writing within seven days if and when it becomes aware of any
Release, on, at, in, under, above, to, from or about any of its Real Property;
and (iii) shall promptly forward to Lender a copy of any order, notice,
permit, application, or any communication or report received by it or any
other Credit Party in connection with any such Release.
3.17 Insurance. As of the Closing Date, Disclosure Schedule (3.17) lists all
insurance of any nature maintained for current occurrences by Borrower and
each other Corporate Credit Party, as well as a summary of the terms of such
insurance. Each Corporate Credit Party shall deliver to Lender endorsements
to all of its and those of its Subsidiaries (a) "All Risk" and business
interruption insurance policies naming Lender loss payee, and (b) general
liability and other liability policies naming Lender as an additional insured.
All policies of insurance on real and personal property will contain an
endorsement, in form and substance acceptable to Lender, showing loss payable
to Lender (Form 438 BFU or equivalent) and extra expense and business
interruption endorsements. Such endorsement, or an independent instrument
furnished to Lender, will provide that the insurance companies will give
Lender at least 30 days prior written notice before any such policy or
policies of insurance shall be altered or canceled and that no act or default
of Borrower or any other Person shall affect the right of Lender to recover
under such policy or policies of insurance in case of loss or damage. Each
Corporate Credit Party shall direct all present and future insurers under its
"All Risk" policies of insurance to pay all proceeds payable thereunder
directly to Lender. If any insurance proceeds are paid by check, draft or
other instrument payable to any Credit Party and Lender jointly, Lender may
endorse such Credit Party's name thereon and do such other things as Lender
may deem advisable to reduce the same to cash. Lender reserves the right at
any time, upon review of each Credit Party's risk profile, to require
additional forms and limits of insurance to adequately protect Lender's
interests in accordance with Lender's normal practice for similarly situated
borrowers. Each Corporate Credit Party shall, on each anniversary of the
Closing Date and from time to time at Lender's request, deliver to Lender a
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report by a reputable insurance broker, satisfactory to Lender, with respect
to such Person's insurance policies.
3.18 Deposit and Disbursement Accounts. Attachment I to Schedule D lists all
banks and other financial institutions at which Borrower or any other
Corporate Credit Party, maintains deposits and/or other accounts, including
the Disbursement Account, and such Attachment correctly identifies the name,
address and telephone number of each such depository, the name in which the
account is held, a description of the purpose of the account, and the complete
account number. No Corporate Credit Party will establish any depository or
other bank account of any kind with any financial institution (other than the
accounts set forth on Attachment 1 to Schedule D) without Lender's prior
written consent.
3.19 Accounts. As of the date of each Borrowing Base Certificate delivered to
Lender, each Account listed thereon as an Eligible Account shall be an
Eligible Account. Borrower has not made, and will not make, any agreement
with any Account Debtor for any extension of time for the payment of any
Account, any compromise or settlement for less than the full amount thereof,
any release of any Account Debtor from liability therefor, or any deduction
therefrom except a discount or allowance for prompt or early payment allowed
by Borrower in the ordinary course of its business consistent with historical
practice and as previously disclosed to Lender in writing. With respect to the
Accounts pledged as collateral pursuant to any Loan Document (a) the amounts
shown on all invoices, statements and reports which may be delivered to the
Lender with respect thereto are actually and absolutely owing to the relevant
Credit Party as indicated thereon and are not in any way contingent; (b) no
payments have been or shall be made thereon except payments immediately
delivered to the applicable Bank Accounts or the Lender as required hereunder;
and (c) to Borrower's knowledge all Account Debtors have the capacity to
contract. Borrower shall notify Lender promptly of any event or circumstance
which to Borrower's knowledge would cause Lender to consider any then existing
Account as no longer constituting an Eligible Account. If a Default or an
Event of Default shall have occurred and be continuing, Borrower and each
other Credit Party shall within 5 days of Lender's request deliver all
original Chattel Paper to Lender.
3.20 Intentionally omitted]
3.21 Conduct of Business; Maintenance of Existence. Each Corporate Credit
Party (a) shall conduct its business substantially as now conducted or as
otherwise permitted hereunder and preserve all of its rights, privileges and
franchises necessary and desirable in connection therewith, and (b) shall at
all times maintain, preserve and protect all of the Collateral and such Credit
Party's other property, used or useful in the conduct of its business and keep
the same in good repair, working order and condition (taking into
consideration ordinary wear and tear) and from time to time make, or cause to
be made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices.
3.22 Further Assurances. At any time and from time to time, upon the written
request of Lender and at the sole expense of Borrower, Borrower and each other
Credit Party shall promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as Lender may
reasonably deem desirable (a) to obtain the full benefits of this Agreement
and the other Loan Documents, (b) to protect, preserve and maintain Lender's
rights in the Collateral, or any of it, and under this Agreement, or (c) to
enable Lender to exercise all or any of the rights and powers herein granted.
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3.23 Year 2000 Covenants. If not previously delivered to Lender, on or prior
to January 31, 1999, each Corporate Credit Party shall complete and deliver to
Lender a Year 2000 Assessment, and, if not previously delivered to Lender, on
or prior to February 28, 1999, each Corporate Credit Party shall complete and
deliver to Lender a Year 2000 Corrective Plan. If not previously implemented
as delivered to Lender, on or prior to March 31, 1999, each Corporate Credit
Party shall implement Year 2000 Corrective Actions. On or before April 30,
1999, each Corporate Credit Party shall complete Year 2000 Corrective Actions
and Year 2000 Implementation Testing. On or before May 31, 1999 each Corporate
Credit Party shall eliminate all Year 2000 Problems, except where the failure
to correct the same could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate.
3.24 New Accounting Software System. Borrower shall implement a new
accounting software system in form satisfactory to Lender on or prior to
January 31, 1999 and all computer applications (including those of its
suppliers, vendors and customers) that are material to its or any of its
Subsidiaries' business and operations shall on a timely basis be able to
perform properly date-sensitive functions for all dates before and after
January 1, 2000 except to the extent that a failure to do so could not
reasonably be expected to have a Material Adverse Effect or result in a
Default or Event of Default.
3.25 Real Estate Documents. Borrower shall deliver executed copies of the
documents set forth on Schedule F-1 on or before January 15, 1999, each in
form and substance satisfactory to Lender.
3.26 Projections. Within 30 days after the Closing Date, Borrower shall
deliver Projections for the next twelve months, starting January 1, 1999, in
form and substance satisfactory to the Lender.
3.27 UCC Termination Statements. Within 10 days after the Closing Date, each
of the Borrower and any other Credit Party executing this Agreement shall
deliver executed copies of UCC termination statements in respect of existing
UCC financing statements filed against the Collateral in favor of any Person
other than Lender.
3.28 Mortgage. In the event Lender is unable for any reason to obtain a
valid and perfected Lien and mortgage on the real property described in the
Mortgage, Borrower shall use its best efforts to cause such Lien and mortgage
to be granted to Lender.
4. FINANCIAL MATTERS; REPORTS
4.1 Reports and Notices. Borrower represents, agrees and promises that from
and after the Closing Date until the Termination Date, Borrower shall deliver
to Lender:
(a) (i) within 15 days following the end of each Fiscal Month, an
Inventory report, in form and substance satisfactory to Lender, and (ii) on
July 31 and January 31 of each year, a detailed Inventory report, in form
and substance satisfactory to Lender accompanied by supporting documentation
as Lender may request in respect of the immediately preceding six months;
(b) as frequently as Lender may request and in any event no later than
15 days following the end of each Fiscal Month, a Borrowing Base Certificate
in the form of Exhibit C as of the last day of the previous Fiscal Month
13
detailing ineligible Accounts and Inventory for adjustment to the Borrowing
Base, certified as true and correct by the Chief Financial Officer of Borrower
or such other officer as is acceptable to Lender;
(c) within 15 days following the end of each Fiscal Month, an Accounts
Payable Analysis in the Form of Exhibit D (together with an accounts payable
aging), an Accounts Receivable Roll Forward Analysis in the Form of Exhibit E
and an Unbilled Accounts Receivable Roll Forward Analysis in the Form of
Exhibit E-1, each certified as true and correct by the Chief Financial Officer
of Borrower or such other officer as is acceptable to Lender;
(d) within 30 days following the end of each Fiscal Month, the Financial
Statements for such Fiscal Month, which shall provide comparisons to budget
and actual results for the corresponding period during the prior Fiscal Year,
both on a monthly and year-to-date basis, and accompanied by a certification
in the form of Exhibit J by the Chief Executive Officer or Chief Financial
Officer of Borrower that such Financial Statements are complete and correct,
that there was no Default (or specifying those Defaults of which he or she was
aware), and showing in reasonable detail the calculations used in determining
compliance with the financial covenants hereunder;
(e) within 90 days following the close of each Fiscal Year, the
Financial Statements for such Fiscal Year certified without qualification by
an independent certified accounting firm acceptable to Lender, which shall
provide comparisons to actual results to the prior Fiscal Year, on an annual
basis, and shall be accompanied by (i) a statement in reasonable detail
showing the calculations used in determining compliance with the financial
covenants hereunder, (ii) a report from Borrower's accountants to the effect
that in connection with their audit examination nothing has come to their
attention to cause them to believe that a Default has occurred or specifying
those Defaults of which they are aware, and (iii) any management letter that
may be issued;
(f) not less than 30 days prior to the close of each Fiscal Year, the
Projections, which will be prepared by Borrower in good faith, with care and
diligence, and using assumptions which are reasonable under the circumstances
at the time such Projections are delivered to Lender and disclosed therein
when delivered;
(g) Within 30 days after the Closing Date, a Phase I environmental
report acceptable for commercial real estate purposes with respect to the
Wisconsin Rapids, Wisconsin real property subject to the Mortgage, and in the
event such Phase I environmental report indicates a need for an additional
environmental report, a Phase II environmental report within 10 days of such
occurrence, in each case, in form and substance satisfactory to Lender and
prepared by a firm acceptable to Lender; and
(h) all the reports and other information set forth on Exhibit B in the
time frames set forth therein.
4.2 Financial Covenants. Borrower shall not breach any of the financial
covenants set forth in Schedule G.
4.3 Other Reports and Information. Borrower shall advise Lender promptly, in
reasonable detail, of: (a) any Lien, other than Permitted Encumbrances,
attaching to or asserted against any of the Collateral or any occurrence
causing a material loss or decline in value of any Collateral and the
estimated (or actual, if available) amount of such loss or decline; (b) any
14
material change in the composition of the Collateral; and (c) the occurrence
of any Default or other event which has had or could reasonably be expected to
have a Material Adverse Effect. Borrower shall, upon request of Lender,
furnish to Lender such other reports and information in connection with the
affairs, business, financial condition, operations, prospects or management of
Borrower or any other Credit Party or the Collateral as Lender may request,
all in reasonable detail.
5. NEGATIVE COVENANTS
Borrower and each Credit Party executing this Agreement covenants and agrees
(for itself and each other Credit Party) that, without Lender's prior written
consent, from the Closing Date until the Termination Date, neither Borrower
nor any other Corporate Credit Party shall, directly or indirectly, by
operation of law or otherwise:
(a) merge with, consolidate with, acquire all or substantially all of
the assets or capital stock of, or otherwise combine with, any Person or form
any Subsidiary;
(b) except as otherwise permitted in this Section 5 below, make any
investment in, or make or accrue loans or advances of money to, any Person,
except that Borrower may hold investments comprised of notes payable, or stock
or other securities issued by Account Debtors to Borrower pursuant to
negotiated agreements with respect to settlement of such Account Debtors'
Accounts in the ordinary course of business, so long as the aggregate amount
of such Accounts so settled by Borrower in any Fiscal Quarter does not exceed
$50,000 and such notes and securities are delivered to Lender as Collateral;
(c) create, incur, assume or permit to exist any Indebtedness, except:
(i) the Obligations; (ii) Indebtedness other than the Obligations in an
aggregate outstanding amount for all such Credit Parties combined not
exceeding $100,000; (iii) deferred taxes; (iv) the Term Loan; and (v) other
Indebtedness set forth in Disclosure Schedule 5(c));
(d) enter into any lending, borrowing or other commercial transaction
with any of its employees, directors, Affiliates or any other Credit Party
(including upstreaming and downstreaming of cash and intercompany advances and
payments by a Credit Party on behalf of another Credit Party which are not
otherwise permitted hereunder) other than (1) loans or advances to employees
in the ordinary course of business in an aggregate outstanding amount not
exceeding $50,000 or (2) tractor lease agreements with Dan Pixler, Anthony
Huff or their Affiliates providing for aggregate annual payments of not more
than $140,000 per annum provided, in either (1) or (2) of this Section 5(d),
no Default or Event of Default shall have occurred and be continuing;
(e) make any changes in any of its business objectives, purposes, or
operations which could reasonably be expected to adversely affect repayment of
the Obligations or could reasonably be expected to have a Material Adverse
Effect or engage in any business other than that presently engaged in or
proposed to be engaged in the Projections delivered to Lender on the Closing
Date;
(f) amend its charter or by-laws or other organizational documents,
other than amendments to designate the terms of (1) the Series A Preferred
Stock of Borrower currently subject to a $6.0 million private offering and (2)
the Series B Preferred Stock of Borrower proposed to be issued in exchange for
10 million shares of common stock of Borrower;
15
(g) incur any Guaranteed Indebtedness except (i) by endorsement of
instruments or items of payment for deposit to the general account of such
Credit Party, and (ii) for Guaranteed Indebtedness incurred for the benefit of
Borrower if the primary obligation is permitted by this Agreement;
(h) create or permit any Lien on any of its properties or assets, except
for Permitted Encumbrances;
(i) sell, transfer, issue, convey, assign or otherwise dispose of any of
its assets or properties, including its Accounts or any shares of its Stock or
engage in any sale-leaseback, synthetic lease or similar transaction,
provided, however, that the foregoing shall not prohibit the (1) sale of
Inventory or obsolete or unnecessary Equipment in the ordinary course of its
business or (2) the sale and issuance of (a) the Series A Preferred Stock of
US Trucking, Inc. identified in Section 5.1(d) hereof, (b) the Series B
Preferred Stock of US Trucking, Inc. identified in Section 5.1(d) hereof, (c)
shares of common stock of US Trucking, Inc. to be issued to holders of such
Series A and Series B Preferred Stock of US Trucking, Inc. in connection with
their respective conversion and exchange rights, and (d) shares of common
stock of U.S. Trucking, Inc. issued pursuant to options granted under the U.S.
Trucking, Inc. 1998 Stock Option Plan and any successor plan;
(j) take any action or omit to take any action, which act or omission
would constitute a material default or an event of default pursuant to, or
noncompliance with, any of its Contractual Obligations;
(k) cancel any debt owing to it, except for cancellation of debt not
constituting Accounts for reasonable consideration and in the ordinary course
of its business consistent with historical practice; or
(l) make or permit any Restricted Payment; or
(m) make or permit payment of a brokerage or placement fee on any date
after the Closing Date if the average daily excess Borrowing Availability for
the immediately preceding 30 days or on such date after giving effect to such
payment is less than $200,000.
6. SECURITY INTEREST
6.1 Grant of Security Interest. (a) As collateral security for the prompt
and complete payment and performance of the Obligations, each of the Borrower
and any other Credit Party executing this Agreement hereby grants to the
Lender a security interest in and Lien upon all of its property and assets,
whether real or personal, tangible or intangible, and whether now owned or
hereafter acquired, or in which it now has or at any time in the future may
acquire any right, title, or interest, including all of the following property
in which it now has or at any time in the future may acquire any right, title
or interest: all Accounts; all bank and deposit accounts and all funds on
deposit therein; all cash and cash equivalents; all commodity contracts; all
investments; all Inventory and Equipment; all Goods; all Chattel Paper,
Documents and Instruments; all Books and Records; all General Intangibles
(including all Intellectual Property, Stock, contract rights, and choses in
action); and to the extent not otherwise included, all Proceeds and products
of all and any of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing, but excluding in all
events Hazardous Waste (all of the foregoing, together with any other
collateral pledged to the Lender pursuant to any other Loan Document,
collectively, the "Collateral").
16
(b) Borrower, Lender and each other Credit Party executing this
Agreement agree that this Agreement creates, and is intended to create, valid
and continuing Liens upon the Collateral in favor of Lender. Borrower and
each other Credit Party executing this Agreement represents, warrants and
promises to Lender that: (i) Borrower and each other Credit Party granting a
Lien in Collateral is the sole owner of each item of the Collateral upon which
it purports to grant a Lien pursuant to the Loan Documents, and has good and
marketable title thereto free and clear of any and all Liens or claims of
others, other than Permitted Encumbrances; (ii) the security interests granted
pursuant to this Agreement, upon completion of the filings and other actions
listed on Disclosure Schedule (6.1) (which, in the case of all filings and
other documents referred to in said Schedule, have been delivered to the
Lender in duly executed form) will constitute valid perfected security
interests in all of the Collateral in favor of the Lender as security for the
prompt and complete payment and performance of the Obligations, enforceable in
accordance with the terms hereof against any and all creditors of and
purchasers from any Credit Party (other than purchasers of Inventory in the
ordinary course of business) and such security interests are prior to all
other Liens on the Collateral in existence on the date hereof except for
Permitted Encumbrances which have priority by operation of law; and (iii) no
effective security agreement, financing statement, equivalent security or Lien
instrument or continuation statement covering all or any part of the
Collateral is or will be on file or of record in any public office, except
those relating to Permitted Encumbrances. Borrower and each other Credit Party
executing this Agreement promise to defend the right, title and interest of
Lender in and to the Collateral against the claims and demands of all Persons
whomsoever, and each shall take such actions, including (x) the prompt
delivery of all original Instruments, Chattel Paper and certificated Stock
owned by Borrower and each other Credit Party granting a Lien on Collateral to
Lender, (y) notification of Lender's interest in Collateral at Lender's
request, and (z) the institution of litigation against third parties as shall
be prudent in order to protect and preserve each Credit Party's and Lender's
respective and several interests in the Collateral. Borrower (and any other
Credit Party granting a Lien in Collateral) shall mark its Books and Records
pertaining to the Collateral to evidence the Loan Documents and the Liens
granted under the Loan Documents. All Chattel Paper shall be marked with the
following legend: "This writing and the obligations evidenced or secured
hereby are subject to the security interest of General Electric Capital
Corporation."
(c) Lender shall release the lien and mortgage on the real property
described in the Mortgage on the date when (1) the average daily excess
Borrowing Availability for the immediately preceding six months is at least
$250,000 and (2) as at the end of each of the immediately preceding four
Fiscal Quarters, Borrower has maintained a Fixed Charge Coverage Ratio of not
less than 1.25:1.0.
6.2 Lender's Rights. (a) Lender may, (i) at any time in Lender's own name or
in the name of Borrower, communicate with Account Debtors, parties to
Contracts, and obligors in respect of Instruments, Chattel Paper or other
Collateral to verify to Lender's satisfaction, the existence, amount and terms
of any such Accounts, Contracts, Instruments or Chattel Paper or other
Collateral, and (ii) at any time and without prior notice to Borrower or any
other Credit Party, notify Account Debtors, parties to Contracts, and obligors
in respect of Chattel Paper, Instruments, or other Collateral that the
Collateral has been assigned to Lender and that payments shall be made
directly to Lender. Upon the request of Lender, Borrower shall so notify such
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Account Debtors, parties to Contracts, and obligors in respect of Instruments,
Chattel Paper or other Collateral. Borrower hereby constitutes Lender or
Lender's designee as Borrower's attorney with power to endorse Borrower's name
upon any notes, acceptance drafts, money orders or other evidences of payment
or Collateral.
(b) It is expressly agreed by Borrower that, notwithstanding anything
herein to the contrary, Borrower shall remain liable under each Contract,
Instrument and License to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, and Lender shall
have no obligation or liability whatsoever to any Person under any Contract,
Instrument or License (between Borrower or any other Credit Party and any
Person other than Lender) by reason of or arising out of the execution,
delivery or performance of this Agreement, and Lender shall not be required or
obligated in any manner (i) to perform or fulfill any of the obligations of
Borrower, (ii) to make any payment or inquiry, or (iii) to take any action of
any kind to collect or enforce any performance or the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times under or pursuant to any Contract, Instrument or License.
(c) Borrower and each other Credit Party shall, with respect to each
owned, leased, or controlled property or facility, during normal business
hours and upon reasonable advance notice (unless a Default shall have occurred
and be continuing, in which event no notice shall be required and Lender shall
have access at any and all times): (i) provide access to such facility or
property to Lender and any of its officers, employees and agents, as
frequently as Lender determines to be appropriate; (ii) permit Lender and any
of its officers, employees and agents to inspect, audit and make extracts from
all of Borrower's and such Credit Party's Books and Records; and (iii) permit
Lender to inspect, review, evaluate and make physical verifications and
appraisals of the Inventory and other Collateral in any manner and through any
medium that Lender considers advisable, and Borrower and such Credit Party
agree to render to Lender, at Borrower's and such Credit Party's cost and
expense, such clerical and other assistance as may be reasonably requested
with regard thereto. Borrower and each other Credit Party shall make
available to Lender and its counsel, as quickly as practicable under the
circumstances, originals or copies of all Borrower's and such Credit Party's
Books and Records and any other instruments and documents which Lender may
request. Borrower shall deliver any document or instrument reasonably
necessary for Lender, as it may from time to time request, to obtain records
from any service bureau or other Person which maintains records for Borrower
or any other Credit Party.
(d) After the occurrence and during the continuance of a Default,
Borrower, at its own expense, shall cause the certified public accountant then
engaged by Borrower to prepare and deliver to Lender at any time and from time
to time, promptly upon Lender's request, the following reports: (i) a
reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) test verifications of such Accounts as Lender may request.
Borrower, at its own expense, shall cause its certified independent public
accountants to deliver to Lender the results of any physical verifications of
all or any portion of the Inventory made or observed by such accountants when
and if such verification is conducted. Lender shall be permitted to observe
and consult with Borrower's accountants in the performance of these tasks.
6.3 Lender's Appointment as Attorney-in-fact. On the Closing Date, Borrower
and each other Credit Party executing this Agreement shall execute and deliver
a Power of Attorney in the form attached as Exhibit I. The power of attorney
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granted pursuant to the Power of Attorney and all powers granted under any
Loan Document are powers coupled with an interest and shall be irrevocable
until the Termination Date. The powers conferred on Lender under the Power of
Attorney are solely to protect Lender's interests in the Collateral and shall
not impose any duty upon it to exercise any such powers. Lender agrees and
promises that (a) it shall not exercise any power or authority granted under
the Power of Attorney unless an Event of Default has occurred and is
continuing, (b) Lender shall only exercise the powers granted under the Power
of Attorney in respect of Collateral, provided, except as otherwise required
by applicable law, Lender shall not have any duty as to any Collateral, and
Lender shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers. NONE OF LENDER OR ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO
BORROWER OR ANY OTHER CREDIT PARTY FOR ANY ACT OR FAILURE TO ACT PURSUANT TO
THE POWERS GRANTED UNDER THE POWER OF ATTORNEY OR OTHERWISE, EXCEPT FOR ITS OR
THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES. Borrower and each other Credit
Party executing this Agreement also hereby authorizes Lender to file any
financing or continuation statement without the signature of Borrower or such
Credit Party to the extent permitted by applicable law.
6.4 Grant of License to Use Intellectual Property Collateral. For the
purpose of enabling Lender to exercise its rights and remedies under the Loan
Documents, Borrower and each other Credit Party executing this Agreement
hereby grants to Lender an irrevocable, non-exclusive license (exercisable
upon the occurrence and during the continuance of an Event of Default without
payment of royalty or other compensation to Borrower or such Credit Party) to
use, transfer, license or sublicense any Intellectual Property now owned,
licensed to, or hereafter acquired by Borrower or such Credit Party, and
wherever the same may be located, and including in such license access to all
media in which any of the licensed items may be recorded or stored and to all
computer and automatic machinery software and programs used for the
compilation or printout thereof, and represents, promises and agrees that any
such license or sublicense is not and will not be in conflict with the
contractual or commercial rights of any third Person; provided, that such
license will terminate on the Termination Date.
7. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
7.1 Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default" hereunder which shall be deemed to be continuing until waived in
writing by Lender in accordance with Section 9.3:
(a) Borrower shall fail to make any payment in respect of any
Obligations when due and payable or declared due and payable; or
(b) Borrower or any other Credit Party shall fail or neglect to perform,
keep or observe any of the covenants, promises, agreements, requirements,
conditions or other terms or provisions contained in this Agreement or any of
the other Loan Documents, regardless of whether such breach involves a
covenant, promise, agreement, condition, requirement, term or provision with
respect to a Credit Party that has not signed this Agreement; or
(c) an event of default shall occur under any Contractual Obligation of
the Borrower or any other Credit Party (other than this Agreement and the
other Loan Documents), and such event of default (i) involves the failure to
make any payment (whether or not such payment is blocked), whether of
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principal, interest or otherwise, and whether due by scheduled maturity,
required prepayment, acceleration, demand or otherwise, in respect of any
Indebtedness (other than the Obligations) of such Person in an aggregate
amount exceeding the Minimum Actionable Amount, or (ii) causes (or permits any
holder of such Indebtedness or a trustee to cause) such Indebtedness, or a
portion thereof, in an aggregate amount exceeding the Minimum Actionable
Amount to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment; or
(d) any representation or warranty in this Agreement or any other Loan
Document, or in any written statement pursuant hereto or thereto, or in any
report, financial statement or certificate made or delivered to Lender by
Borrower or any other Credit Party shall be untrue or incorrect as of the date
when made, regardless of whether such breach involves a representation or
warranty with respect to a Credit Party that has not signed this Agreement; or
(e) there shall be commenced against the Borrower or any other Credit
Party any Litigation seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which remains
unstayed or undismissed for thirty (30) consecutive days; or Borrower or any
other Credit Party shall have concealed, removed or permitted to be concealed
or removed, any part of its property with intent to hinder, delay or defraud
its creditors or any of them or made or suffered a transfer of any of its
property or the incurring of an obligation which may be fraudulent under any
bankruptcy, fraudulent transfer or other similar law; or
(f) a case or proceeding shall have been commenced involuntarily against
Borrower or any other Credit Party in a court having competent jurisdiction
seeking a decree or order: (i) under the United States Bankruptcy Code or any
other applicable Federal, state or foreign bankruptcy or other similar law,
and seeking either (x) the appointment of a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) for such Person or of
any substantial part of its properties, or (y) the reorganization or winding
up or liquidation of the affairs of any such Person, and such case or
proceeding shall remain undismissed or unstayed for sixty (60) consecutive
days or such court shall enter a decree or order granting the relief sought in
such case or proceeding; or (ii) invalidating or denying any Person's right,
power, or competence to enter into or perform any of its obligations under any
Loan Document or invalidating or denying the validity or enforceability of
this Agreement or any other Loan Document or any action taken hereunder or
thereunder; or
(g) Borrower or any other Credit Party shall (i) commence any case,
proceeding or other action under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an order
for relief entered with respect to it or seeking appointment of a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official)
for it or any substantial part of its properties, (ii) make a general
assignment for the benefit of creditors, (iii) consent to or take any action
in furtherance of, or, indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in paragraphs (e) or (f) of this Section 7.1 or
clauses (i) and (ii) of this paragraph (g), or (iv) shall admit in writing its
inability to, or shall be generally unable to, pay its debts as such debts
become due; or
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(h) a final judgment or judgments for the payment of money in excess of
the Minimum Actionable Amount in the aggregate shall be rendered against
Borrower or any other Credit Party, unless the same shall be (i) fully covered
by insurance and the issuer(s) of the applicable policies shall have
acknowledged full coverage in writing within fifteen (15) days of judgment, or
(ii) vacated, stayed, bonded, paid or discharged within a period of fifteen
(15) days from the date of such judgment; or
(i) any other event shall have occurred which has had or could
reasonably be expected to have a Material Adverse Effect and Lender shall have
given Borrower notice thereof; or
(j) (i) any material provision of any Loan Document as determined by
Lender in its sole discretion shall for any reason cease to be valid, binding
and enforceable in accordance with its terms, or (ii) any Lien granted, or
intended by the Loan Documents to be granted, to Lender shall cease to be a
valid and perfected Lien having the first priority (or a lesser priority if
expressly permitted in the Loan Documents) in any of the Collateral; or
(k) a Change of Control shall have occurred with respect to any
Corporate Credit Party.
7.2 Remedies. (a) If any Default shall have occurred and be continuing, then
Lender may terminate or suspend its obligation to make further Revolving
Credit Advances and to incur additional Letter of Credit Obligations. In
addition, if any Event of Default shall have occurred and be continuing,
Lender may, without notice, take any one or more of the following actions: (i)
declare all or any portion of the Obligations to be forthwith due and payable,
including contingent liabilities with respect to Letter of Credit Obligations,
whereupon such Obligations shall become and be due and payable; (ii) require
that all Letter of Credit Obligations be fully cash collateralized pursuant to
Schedule C; or (iii) exercise any rights and remedies provided to Lender under
the Loan Documents or at law or equity, including all remedies provided under
the Code; provided, that upon the occurrence of any Event of Default specified
in Sections 7.1 (e), (f), (g) or (j) (ii), the Obligations shall become
immediately due and payable (and any obligation of Lender to make further
Loans, if not previously terminated, shall immediately be terminated) and the
Obligations shall automatically begin to accrue interest at the Default Rate,
in each case, without declaration, notice or demand by Lender.
(b) Without limiting the generality of the foregoing, Borrower and each
other Credit Party executing this Agreement expressly agrees that upon the
occurrence of any Event of Default, Lender may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, assign, give an option or options to purchase or
otherwise dispose of and deliver said Collateral (or contract to do so), or
any part thereof, in one or more parcels at public or private sale or sales,
at any exchange at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. Lender shall have
the right upon any such public sale or sales and, to the extent permitted by
law, upon any such private sale or sales, to purchase for the benefit of
Lender the whole or any part of said Collateral so sold, free of any right or
equity of redemption, which equity of redemption Borrower and each other
Credit Party executing this Agreement hereby releases. Such sales may be
adjourned, or continued from time to time with or without notice. Lender
shall have the right to conduct such sales on any Credit Party's premises or
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elsewhere and shall have the right to use any Credit Party's premises without
rent or other charge for such sales or other action with respect to the
Collateral for such time or times as Lender deems necessary or advisable.
(c) Borrower and each other Credit Party executing this Agreement
further agrees, upon the occurrence and during the continuance of an Event of
Default and at Lender's request, to assemble the Collateral and make it
available to Lender at places which Lender shall reasonably select, whether at
its premises or elsewhere. Until Lender is able to effect a sale, lease, or
other disposition of the Collateral, Lender shall have the right to complete,
assemble, use or operate the Collateral or any part thereof, to the extent
that Lender deems appropriate, for the purpose of preserving such Collateral
or its value or for any other purpose. Lender shall have no obligation to any
Credit Party to maintain or preserve the rights of any Credit Party as against
third parties with respect to any Collateral while such Collateral is in the
possession of Lender. Lender may, if it so elects, seek the appointment of a
receiver or keeper to take possession of any Collateral and to enforce any of
Lender's remedies with respect to such appointment without prior notice or
hearing. To the maximum extent permitted by applicable law, Borrower and each
other Credit Party executing this Agreement waives all claims, damages, and
demands against Lender, its Affiliates, agents, and the officers and employees
of any of them arising out of the repossession, retention or sale of any
Collateral except such as are determined in a final judgment by a court of
competent jurisdiction to have arisen solely out of the gross negligence or
willful misconduct of such Person. Borrower and each other Credit Party
executing this Agreement agrees that ten (10) days prior notice by Lender to
such Credit Party of the time and place of any public sale or of the time
after which a private sale may take place is reasonable notification of such
matters. Borrower and each other Credit Party shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which Lender is entitled.
(d) Lender's rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Lender may
have under any Loan Document or at law or in equity. Recourse to the
Collateral shall not be required. All provisions of this Agreement are
intended to be subject to all applicable mandatory provisions of law that may
be controlling and to be limited, to the extent necessary, so that they do not
render this Agreement invalid or unenforceable, in whole or in part.
7.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement and to the fullest extent permitted by applicable law, Borrower and
each other Credit Party executing this Agreement waives: (a) presentment,
demand and protest, and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all Loan Documents, the Notes or
any other notes, commercial paper, Accounts, Contracts, Documents,
Instruments, Chattel Paper and guaranties at any time held by Lender on which
such Credit Party may in any way be liable, and hereby ratifies and confirms
whatever Lender may do in this regard; (b) all rights to notice and a hearing
prior to Lender's taking possession or control of, or to Lender's replevy,
attachment or levy upon, any Collateral or any bond or security which might be
required by any court prior to allowing Lender to exercise any of its
remedies; and (c) the benefit of all valuation, appraisal and exemption laws.
Borrower and each other Credit Party executing this Agreement acknowledges
that it has been advised by counsel of its choices and decisions with respect
to this Agreement, the other Loan Documents and the transactions evidenced
hereby and thereby.
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7.4 Proceeds. The Proceeds of any sale, disposition or other realization upon
any Collateral shall be applied by Lender upon receipt, in the following order
of priorities: first, to reimburse or pay in full the actual expenses of
Lender incurred in connection with such sale, disposition or other
realization, including all other expenses, liabilities and advances incurred
or made by Lender in connection therewith; second, to the other Obligations in
such order as the Lender may deem advisable; third, to cash collateralize any
outstanding Letter of Credit Obligations pursuant to Schedule C; and finally,
after the indefeasible payment and satisfaction in full in cash of all of the
Obligations, and after the payment by Lender of any other amount required by
any provision of law, including Section 9-504(1)(c) of the Code (but only
after Lender has received what Lender considers reasonable proof of a
subordinate party's security interest), the surplus, if any, to Borrower or
its representatives or to whomsoever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may direct.
8. SUCCESSORS AND ASSIGNS
Each Loan Document shall be binding on and shall inure to the benefit of
Borrower and each other Credit Party executing such Loan Document, Lender, and
their respective successors and assigns, except as otherwise provided herein
or therein. Neither Borrower nor any other Credit Party may assign, transfer,
hypothecate, delegate or otherwise convey its rights, benefits, obligations or
duties under any Loan Document without the prior express written consent of
Lender. Any such purported assignment, transfer, hypothecation, delegation or
other conveyance by Borrower or such Credit Party without the prior express
written consent of Lender shall be void. The terms and provisions of this
Agreement and the other Loan Documents are for the purpose of defining the
relative rights and obligations of Borrower, the other Credit Parties and
Lender with respect to the transactions contemplated hereby and thereby, and
there shall be no third party beneficiaries of any of the terms and provisions
of any of the Loan Documents. Lender reserves the right at any time to create
and sell participations in the Loans and the Loan Documents and to sell,
transfer or assign any or all of its rights in the Loans and under the Loan
Documents.
9. MISCELLANEOUS
9.1 Complete Agreement; Modification of Agreement. This Agreement and the
other Loan Documents constitute the complete agreement between the parties
with respect to the subject matter hereof and thereof, supersede all prior
agreements, commitments, understandings or inducements (oral or written,
expressed or implied), and no Loan Document may be modified, altered or
amended except by a written agreement signed by Lender, and each other Credit
Party a party to such Loan Document. Borrower and each other Credit Party
executing this Agreement or any other Loan Document shall have all duties and
obligations under this Agreement and such other Loan Documents from the date
of its execution and delivery, regardless of whether the initial Loan has been
funded at that time.
9.2 Expenses. Borrower agrees to pay or reimburse Lender for all costs and
expenses incurred in connection with: (a) the preparation, negotiation,
execution, delivery, performance and enforcement of the Loan Documents and the
preservation of any rights thereunder; (b) collection (including the fees and
expenses of all special counsel, advisors, consultants (including
environmental and management consultants) and auditors retained in connection
therewith), including deficiency collections; (c) the forwarding to Borrower
or any other Person on behalf of Borrower by Lender of the proceeds of any
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Loan (including a wire transfer fee of $15 per wire transfer); (d) any
amendment, extension, modification or waiver of, or consent with respect to
any Loan Document or advice in connection with the administration of the Loans
or the rights thereunder; (e) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by or between any combination of
Lender, Borrower or any other Person or Persons), and an appeal or review
thereof, in any way relating to the Collateral, any Loan Document, or any
action taken or any other agreements to be executed or delivered in connection
therewith, whether as a party, witness or otherwise; and (f) any effort (i) to
monitor the Loans, (ii) to evaluate, observe or assess Borrower or any other
Credit Party or the affairs of such Person, and (iii) to verify, protect,
evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of
the Collateral including the following with respect to all of the foregoing
provisions of this Section 9.2: the fees, costs and expenses of attorneys,
accountants, environmental advisors, appraisers, investment bankers,
management and other consultants, and paralegals; court costs and expenses;
photocopying and duplicating expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram
charges; secretarial overtime charges; and expenses for travel, lodging and
food paid or incurred in connection therewith.
9.3 No Waiver. Neither Lender's failure, at any time or times, to require
strict performance by Borrower or any other Credit Party of any provision of
any Loan Document, nor Lender's failure to exercise, nor any delay in
exercising, any right, power or privilege hereunder, (a) shall waive, affect
or diminish any right of Lender thereafter to demand strict compliance and
performance therewith, or (b) shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or future exercise thereof or the exercise of any other right, power or
privilege. Any suspension or waiver of a Default or other provision under the
Loan Documents shall not suspend, waive or affect any other Default under any
Loan Document, whether the same is prior or subsequent thereto and whether of
the same or of a different type, and shall not be construed as a bar to any
right or remedy which Lender would otherwise have had on any future occasion.
None of the undertakings, indemnities, agreements, warranties, covenants and
representations of Borrower or any other Credit Party to Lender contained in
any Loan Document and no Default by Borrower or any other Credit Party under
any Loan Document shall be deemed to have been suspended or waived by Lender,
unless such waiver or suspension is by an instrument in writing signed by an
officer or other authorized employee of Lender and directed to Borrower
specifying such suspension or waiver (and then such waiver shall be effective
only to the extent therein expressly set forth), and Lender shall not, by any
act (other than execution of a formal written waiver), delay, omission or
otherwise, be deemed to have waived any of its rights or remedies hereunder.
9.4 Severability. Wherever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of any Loan Document shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of such Loan Document. Except
as otherwise expressly provided for in the Loan Documents, no termination or
cancellation (regardless of cause or procedure) of any financing arrangement
under the Loan Documents shall in any way affect or impair the Obligations,
duties, covenants, representations and warranties, indemnities, and
liabilities of Borrower or any other Credit Party or the rights of Lender
relating to any unpaid Obligation, (due or not due, liquidated, contingent or
unliquidated), or any transaction or event occurring prior to such
24
termination, or any transaction or event, the performance of which is not
required until after the Commitment Termination Date, all of which shall not
terminate or expire, but rather shall survive such termination or cancellation
and shall continue in full force and effect until the Termination Date;
provided, that all indemnity obligations of the Credit Parties under the Loan
Documents shall survive the Termination Date.
9.5 Conflict of Terms. Except as otherwise provided in any Loan Document by
specific reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or inconsistent
with, any provision in any other Loan Document, the provision contained in
this Agreement shall govern and control.
9.6 Authorized Signature. Until Lender shall be notified in writing by
Borrower or any other Credit Party to the contrary, the signature upon any
document or instrument delivered pursuant hereto and believed by Lender or any
of Lender's officers, agents, or employees to be that of an officer of
Borrower or such other Credit Party listed in the Secretarial Certificate in
the form of Exhibit H shall bind Borrower and such other Credit Party and be
deemed to be the act of Borrower or such other Credit Party affixed pursuant
to and in accordance with resolutions duly adopted by Borrower's or such other
Credit Party's Board of Directors, and Lender shall be entitled to assume the
authority of each signature and authority of the person whose signature it is
or appears to be unless the person acting in reliance of such signature shall
have actual knowledge of the fact that such signature is false or the person
whose signature or purported signature is presented is without authority.
9.7 Notices. Except as otherwise provided herein, whenever any notice,
demand, request, consent, approval, declaration or other communication shall
or may be given to or served upon any party by any other party, or whenever
any party desires to give or serve upon any other party any communication with
respect to this Agreement, each such notice, demand, request, consent,
approval, declaration or other communication shall be in writing and shall be
deemed to have been validly served, given or delivered (a) upon the earlier of
actual receipt and three (3) days after deposit in the United States Mail,
registered or certified mail, return receipt requested, with proper postage
prepaid, (b) upon transmission, when sent by telecopy or other similar
facsimile transmission (with such telecopy or facsimile promptly confirmed by
delivery of a copy by personal delivery or United States Mail as otherwise
provided in this Section 9.7), (c) one (1) Business Day after deposit with a
reputable overnight courier with all charges prepaid or (d) when
hand-delivered, all of which shall be addressed to the party to be notified
and sent to the address or facsimile number indicated in Schedule B or to such
other address (or facsimile number) as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to any Person (other than Borrower or
Lender) designated in Schedule B to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
9.8 Section Titles. The Section titles and Table of Contents contained in
any Loan Document are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of the agreement between the parties
hereto.
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9.9 Counterparts. Any Loan Document may be executed in any number of separate
counterparts by any one or more of the parties thereto, and all of said
counterparts taken together shall constitute one and the same instrument.
9.10 Time of the Essence. Time is of the essence for performance of the
Obligations under the Loan Documents.
9.11 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS ARISING UNDER
THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF New York APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF
REGARDING CONFLICTS OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.
9.12 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. (A) BORROWER AND EACH
OTHER CREDIT PARTY EXECUTING THIS AGREEMENT HEREBY CONSENT AND AGREE THAT THE
STATE OR FEDERAL COURTS LOCATED IN New York SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND SUCH CREDIT
PARTY AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT LENDER, BORROWER AND SUCH CREDIT
PARTY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF New York; AND FURTHER PROVIDED, THAT NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE
OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER.
BORROWER AND EACH OTHER CREDIT PARTY EXECUTING THIS AGREEMENT EXPRESSLY SUBMIT
AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND BORROWER AND SUCH CREDIT PARTY HEREBY WAIVE ANY OBJECTION
WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS. BORROWER AND EACH OTHER CREDIT PARTY EXECUTING THIS
AGREEMENT HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO BORROWER OR SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN
SCHEDULE B OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF BORROWER'S OR SUCH CREDIT PARTY'S ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.
(B) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION,
THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT,
OR OTHERWISE BETWEEN LENDER, BORROWER AND ANY CREDIT PARTY ARISING OUT OF,
CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED
THERETO.
26
9.13 Press Releases. Each Credit Party executing this Agreement agrees that
neither it nor its Affiliates will in the future issue any press release or
other public disclosure using the name of GE Capital or its affiliates or
referring to this Agreement or the other Loan Documents without at least two
(2) Business Days' prior notice to GE Capital and without the prior written
consent of GE Capital unless (and only to the extent that) such Credit Party
or Affiliate is required to do so under law and then, in any event, such
Credit Party or Affiliate will consult with GE Capital before issuing such
press release or other public disclosure, provided that no such prior
consultation shall be required with respect to any such press release or
public disclosure made pursuant to the rules promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934 or the
Securities Act of 1933.
Each Credit Party consents to the publication by Lender of a tombstone or
similar advertising material relating to the financing transactions
contemplated by this Agreement.
9.14 Reinstatement. This Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment of all or any part of
the Obligations is rescinded or must otherwise be returned or restored by the
Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or any other Credit Party, or otherwise, all as
though such payments had not been made.
IN WITNESS WHEREOF, this Loan and Security Agreement has been duly executed as
of the date first written above.
GULF NORTHERN TRANSPORT, INC.
By:/s/ Danny Pixler
Name: Danny Pixler
Title: Chief Executive Officer
U.S. TRUCKING, INC. (NEVADA)
By:/s/ Danny Pixler
Name: Danny Pixler
Title: President
U.S. TRUCKING, INC. (COLORADO)
By:/s/ Danny Pixler
Name: Danny Pixler
Title: President and CEO
MENCOR, INC.
By:/s/ Danny Pixler
Name: Danny Pixler
Title: President
27
GENERAL ELECTRIC CAPITAL CORPORATION
By:/s/ James DeSantis
Name: James DeSantis
Title: Duly Authorized Signatory
28
SCHEDULE A - DEFINITIONS
Capitalized terms used in this Agreement and the other Loan Documents shall
have (unless otherwise provided elsewhere in this Agreement or in the other
Loan Documents) the following respective meanings:
"Account Debtor" shall mean any Person who is or may become obligated with
respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the Code, now
owned or hereafter acquired by any Person, including: (i) all accounts
receivable, other receivables, book debts and other forms of obligations
(other than forms of obligations evidenced by Chattel Paper, Documents or
Instruments), whether arising out of goods sold or services rendered or from
any other transaction (including any such obligations which may be
characterized as an account or contract right under the Code); (ii) all of
such Person's rights in, to and under all purchase orders or receipts for
goods or services; (iii) all of such Person's rights to any goods represented
by any of the foregoing (including unpaid sellers' rights of rescission,
replevin, reclamation and stoppage in transit and rights to returned,
reclaimed or repossessed goods); (iv) all moneys due or to become due to such
Person under all purchase orders and contracts for the sale of goods or the
performance of services or both by such Person or in connection with any other
transaction (whether or not yet earned by performance on the part of such
Person), including the right to receive the proceeds of said purchase orders
and contracts; and (v) all collateral security and guarantees of any kind
given by any other Person with respect to any of the foregoing.
"Accounts Payable Analysis" shall mean a certificate in the form of Exhibit D
"Accounts Receivable Roll Forward Analysis" shall mean a certificate in the
form of Exhibit E.
"Affiliate" shall mean, with respect to any Person: (i) each other Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the Stock
having ordinary voting power for the election of directors of such Person;
(ii) each other Person that controls, is controlled by or is under common
control with such Person or any Affiliate of such Person; or (iii) each of
such Person's officers, directors, joint venturers and partners. For the
purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" shall mean this Agreement including all Appendices attached or
otherwise identified thereto, restatements and modifications and supplements
thereto, and any appendices, exhibits or schedules to any of the foregoing,
and shall refer to this Agreement as the same may be in effect at the time
such reference becomes operative; provided, that except as specifically set
forth in this Agreement, any reference to the Disclosure Schedules to this
Agreement shall be deemed a reference to the Disclosure Schedules as in effect
on the Closing Date or in a written amendment thereto executed by Borrower and
Lender.
"Appendices" shall have the meaning assigned to it in the Recitals of this
Agreement.
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"Bank Account Agreements" shall mean the Lockbox Account Agreements.
"Books and Records" shall mean all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual and pro
forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral.
"Borrower" shall mean the Person identified as such in the preamble of this
Agreement.
"Borrowing Availability" shall mean, at any time, the lesser of (i) the
Maximum Amount or (ii) the Borrowing Base, in each case less reserves
established by Lender from time to time.
"Borrowing Base" shall mean at any time an amount equal to the sum at such
time of: (i) eighty five percent (85%) (less reserves established by Lender
pursuant to Section 1.13) of the value (as determined by Lender) of Borrower's
Eligible Accounts (other than Eligible Unbilled Accounts) and (ii) 65% (less
reserves established by Lender pursuant to Section 1.13) of the value (as
determined by Lender) of Borrower's Eligible Unbilled Accounts subject to an
aggregate amount equal to $250,000; provided that (1) Lender (without limiting
its rights to otherwise reduce the foregoing percentage) shall reduce the
foregoing percentage by one percentage point for each percentage point that
the dilution of Borrower's Accounts (calculated as the average dilution from
the Accounts Receivable Roll Forward Analysis over the most recent three
months exceeds 3%, less the unreimbursed face amount of any Letter of Credit
Obligations, and (2) Lender reserves the right to adjust the percentage
identified in (ii) above in the event it determines that it is not satisfied
with the environmental condition of the Wisconsin Rapids, Wisconsin, real
property.
"Borrowing Base Certificate" shall mean a certificate in the form of Exhibit
C.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day on
which banks are required or permitted to be closed in the State of New York.
"CAF" shall mean Commercial Asset Funding, a division of General Electric
Capital Corporation.
"Capital Expenditures" shall mean all payments or accruals (including Capital
Lease Obligations) for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise would be
disclosed as such in a note to such balance sheet, other than, in the case of
Borrower, any such lease under which Borrower is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with
GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease or otherwise be disclosed in a note to such balance sheet.
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"Cash Collateral Account" shall have the meaning assigned to it in Schedule
C.
"Change of Control" shall mean, with respect to any Person on or after the
Closing Date (i) that any Person or "group" shall increase its "beneficial
ownership" (as such terms are defined under Section 13d-3 of and Regulation
13D under the Securities Exchange Act of 1934) either directly or indirectly,
by more than ten percent (10%) of the outstanding shares of Stock of such
Person having the right to vote for the election of directors of such Person
under ordinary circumstances, (ii) that any change in the composition of its
stockholders as of the Closing Date shall occur which would result in any
stockholder or group acquiring 49.9% or more of any class of Stock of such
Person, or (iii) that any Person (or group of Persons acting in concert)
shall otherwise acquire the power to direct the management or affairs of such
Person by obtaining proxies, entering into voting agreements or trusts,
acquiring securities or otherwise.
"Charges" shall mean all Federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to PBGC at the time
due and payable), levies, assessments, charges, liens, and all additional
charges, interest, penalties, expenses, claims or encumbrances upon or
relating to (i) the Collateral, (ii) the Obligations, (iii) the employees,
payroll, income or gross receipts of any Credit Party, (iv) the ownership or
use of any assets by any Credit Party, or (v) any other aspect of any Credit
Party's business.
"Chattel Paper" shall mean all "chattel paper," as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever located.
"Closing Date" shall mean the Business Day on which the conditions precedent
set forth in Section 2 have been satisfied or specifically waived in writing
by Lender, and the initial Loan has been made.
"Closing Fee" shall have the meaning assigned to it in Schedule E.
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, that in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Lender's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions of
this Agreement relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
"Collateral" shall have the meaning assigned to it in Section 6.1.
"Collection Account" shall mean that certain account of Lender, account number
50-232-854 in the name of GECC CAF Depository at Bankers Trust Company, 1
Bankers Trust Plaza, New York, New York, ABA number 021-001-033.
"Commitment Termination Date" shall mean the earliest of (i) the Stated Expiry
Date, (ii) the date Lender's obligation to advance funds is terminated
pursuant to Section 7.2, and (iii) the date of indefeasible prepayment in full
by Borrower of the Obligations in accordance with the provisions of Section
1.2(c).
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"Contracts" shall mean all the contracts, undertakings, or agreements (other
than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Person may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Account.
"Contractual Obligation" shall mean as to any Person, any provision of any
security issued by such Person or of any agreement, instrument, or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Copyright License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting the right to use any Copyright or
Copyright registration.
"Copyrights" shall mean all of the following now owned or hereafter acquired
by any Person: (i) all copyrights in any original work of authorship fixed
in any tangible medium of expression, now known or later developed, all
registrations and applications for registration of any such copyrights in the
United States or any other country, including registrations, recordings and
applications, and supplemental registrations, recordings, and applications in
the United States Copyright Office; and (ii) all Proceeds of the foregoing,
including license royalties and proceeds of infringement suits, the right to
sue for past, present and future infringements, all rights corresponding
thereto throughout the world and all renewals and extensions thereof.
"Corporate Credit Party" shall mean any Credit Party that is a corporation.
"Credit Party" shall mean Borrower, and each other Person (other than Lender)
that is or may become a party to this Agreement or any other Loan Document.
"Default" shall mean any Event of Default or any event which, with the passage
of time or notice or both, would, unless cured or waived, become an Event of
Default.
"Default Rate" shall have the meaning assigned to it in Section 1.5(d).
"Documents" shall mean all "documents," as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including all
bills of lading, dock warrants, dock receipts, warehouse receipts, and other
documents of title, whether negotiable or non-negotiable.
"Eligible Accounts" shall mean as at the date of determination, all Accounts
of the Borrower except any Account:
(a) that does not arise from the sale of goods or the performance of
services by Borrower in the ordinary course of Borrower's business;
(b) upon which (i) Borrower's right to receive payment is not absolute
or is contingent upon the fulfillment of any condition whatsoever or (ii)
Borrower is not able to bring suit or otherwise enforce its remedies against
the Account Debtor through judicial process;
(c) against which any defense, counterclaim or setoff, whether
well-founded or otherwise, is asserted or which is a "contra" Account;
A-4
(d) that is not a true and correct statement of a bona fide indebtedness
incurred in the amount of the Account for merchandise sold or services
performed and accepted by the Account Debtor obligated upon such Account;
(e) with respect to which an invoice, acceptable to Lender in form and
substance, has not been sent;
(f) that is not owned by Borrower or is subject to any right, claim, or
interest of another Person, other than the Lien in favor of Lender;
(g) that arises from a sale to or performance of services for an
employee, Affiliate, Subsidiary or Stockholder of Borrower or any other Credit
Party, or an entity which has common officers or directors with Borrower or
any other Credit Party;
(h) that is the obligation of an Account Debtor that is the Federal
government or a political subdivision thereof, unless Lender has agreed to the
contrary in writing and Borrower has complied with the Federal Assignment of
Claims Act of 1940 with respect to such obligation;
(i) that is the obligation of an Account Debtor located in a foreign
country unless such Account is supported by a letter of credit or credit
insurance acceptable to Lender;
(j) that is the obligation of an Account Debtor to whom Borrower is or
may become liable for goods sold or services rendered by the Account Debtor to
Borrower, to the extent of Borrower's liability to such Account Debtor;
(k) that arises with respect to goods which are delivered on a
cash-on-delivery basis or placed on consignment, guaranteed sale or other
terms by reason of which the payment by the Account Debtor may be conditional;
(l) that is an obligation for which the total unpaid Accounts of the
Account Debtor exceed 20% of the aggregate of all Accounts, to the extent of
such excess;
(m) that is not paid within 90 days from its invoice date or that are
Accounts of an Account Debtor if 50% or more of the Accounts owing from such
Account Debtor remain unpaid within such time periods;
(n) is an obligation of an Account Debtor that has suspended business,
made a general assignment for the benefit of creditors, is unable to pay its
debts as they become due or as to which a petition has been filed (voluntary
or involuntary) under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors;
(o) that arises from any bill-and-hold or other sale of goods which
remain in Borrower's possession or under Borrower's control;
(p) as to which Lender's interest therein is not a first priority
perfected security interest;
(q) to the extent that such Account exceeds any credit limit established
by Lender in Lender's sole discretion;
(r) as to which any of Borrower's representations or warranties
pertaining to Accounts are untrue;
A-5
(s) that represents interest payments or service charges owing to
Borrower; or
(t) that is not otherwise acceptable in the sole discretion of Lender,
provided, that Lender shall have the right to create and adjust eligibility
standards and related reserves from time to time in its good faith credit
judgment.
"Eligible Unbilled Accounts" shall mean Eligible Accounts which have not been
billed by Borrower and appear on the Unbilled Daily Accounts Receivable
Rollforward Analysis (identified by individual shipping trucking number);
provided, however, no such Eligible Unbilled Accounts shall appear on such
report in excess of 30 days.
"Environmental Laws" shall mean all Federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any applicable judicial or
administrative interpretation thereof relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental
Laws include the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (42 U.S.C. Section 9601 et seq.) ("CERCLA"); the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.); the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et
seq.); the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.) ("RCRA"); the Toxic Substance Control Act (15 U.S.C. Section 2601 et
seq.); the Clean Air Act (42 U.S.C. Section 740 et seq.); the Federal Water
Pollution Control Act (33 U.S.C. Section _1251 et seq.); the Occupational
Safety and Health Act (29 U.S.C. Section 651 et seq.) ("OSHA"); and the Safe
Drinking Water Act (42 U.S.C. Section 300(f) et seq.), and any and all
regulations promulgated thereunder, and all analogous state and local
counterparts or equivalents and any transfer of ownership notification or
approval statutes.
"Environmental Liabilities" shall mean all liabilities, obligations,
responsibilities, remedial actions, removal costs, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common law
(including any thereof arising under any Environmental Law, permit, order or
agreement with any Governmental Authority) and which relate to any health or
safety condition regulated under any Environmental Law, Environmental Permits
or in connection with any Release, threatened Release, or the presence of a
Hazardous Material.
"Environmental Permits" shall mean all permits, licenses, authorizations,
certificates, approvals, registrations or other written documents required by
any Governmental Authority under any Environmental Law.
"Equipment" shall mean all "equipment" as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including any
and all machinery, apparatus, equipment, fittings, furniture, fixtures, motor
vehicles and other tangible personal property (other than Inventory) of every
A-6
kind and description which may be now or hereafter used in such Person's
operations or which are owned by such Person or in which such Person may have
an interest, and all parts, accessories and accessions thereto and
substitutions and replacements therefor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any trade or
business (whether or not incorporated) which together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c),
(m) or (o) of the IRC.
"ERISA Event" shall mean with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to
a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate
from a Title IV Plan subject to Section 4063 of ERISA during a plan year in
which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (e) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure
by any Credit Party or ERISA Affiliate to make when due required contributions
to a Multiemployer Plan or Title IV Plan unless such failure is cured within
30 days; (g) any other event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Title IV Plan or Multiemployer
Plan or for the imposition of liability under Section 4069 or 4212(c) of
ERISA; (h) the termination of a Multiemployer Plan under Section 4041A of
ERISA or the reorganization or insolvency of a Multiemployer Plan under
Section 4241 of ERISA; or (i) the loss of a Qualified Plan's qualification or
tax exempt status.
"ESOP" shall mean a Plan which is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section 7.1.
"Fees" shall mean the fees due to Lender as set forth in Schedule E.
"Financial Statements" shall mean the consolidated and consolidating income
statement, balance sheet and statement of cash flows of Borrower and its
Subsidiaries, internally prepared for each Fiscal Month, and audited for each
Fiscal Year, prepared in accordance with GAAP.
"Fiscal Month" shall mean any of the monthly accounting periods of Borrower.
"Fiscal Quarter" shall mean any of the quarterly accounting periods of
Borrower.
"Fiscal Year" shall mean the 12 month period of Borrower ending December 31 of
each year. Subsequent changes of the fiscal year of Borrower shall not change
the term "Fiscal Year" unless Lender shall consent in writing to such change.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time, consistently applied.
A-7
"GE Capital" shall mean General Electric Capital Corporation, a New York
corporation, and its successors and assigns.
"General Intangibles" shall mean all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Person, including
all right, title and interest which such Person may now or hereafter have in
or under any Contract, Intellectual Property, interests in partnerships, joint
ventures and other business associations, permits, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials,
Books and Records, Goodwill (including the Goodwill associated with any
Intellectual Property), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss, and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key-person, and business interruption insurance, and all
unearned premiums), uncertificated securities, choses in action, deposit
accounts, rights to receive tax refunds and other payments and rights of
indemnification.
"Goods" shall mean all "goods," as such term is defined in the Code, now owned
or hereafter acquired by any Person, wherever located, including movables,
fixtures, equipment, inventory, or other tangible personal property.
"Goodwill" shall mean all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of such
Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, including any obligation or arrangement of such guaranteeing Person
(whether or not contingent): (i) to purchase or repurchase any such primary
obligation; (ii) to advance or supply funds (a) for the purchase or payment
of any such primary obligation or (b) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor; (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation; or (iv) to
indemnify the owner of such primary obligation against loss in respect
thereof.
"Guarantor" shall mean each Person which executes a guaranty or a support, put
or other similar agreement in favor of Lender in connection with the
transactions contemplated by this Agreement.
"Guaranty" shall mean any agreement to perform all or any portion of the
Obligations on behalf of Borrower or any other Credit Party, in favor of, and
in form and substance satisfactory to, Lender, together with all amendments,
modifications and supplements thereto, and shall refer to such Guaranty as the
same may be in effect at the time such reference becomes operative.
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"Hazardous Material" shall mean any substance, material or waste which is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined
as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste ," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Hazardous Waste" shall have the meaning ascribed to such term in the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et. seq.).
"Indebtedness" of any Person shall mean: (i) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property or services
(including reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured, but
not including obligations to trade creditors incurred in the ordinary course
of business and not more than 45 days past due); (ii) all obligations
evidenced by notes, bonds, debentures or similar instruments; (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property);
(iv) all Capital Lease Obligations; (v) all Guaranteed Indebtedness; (vi)
all Indebtedness referred to in clauses (i), (ii), (iii), (iv) or (v) above
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contract rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of such
Indebtedness; (vii) the Obligations; and (viii) all liabilities under Title
IV of ERISA.
"Indemnified Liabilities" shall have the meaning assigned to it in Section
1.11.
"Indemnified Person" shall have the meaning assigned to it in Section 1.11.
"Index Rate" shall mean the latest rate for 30-day dealer placed commercial
paper (which for purposes hereof shall mean high grade unsecured notes sold
through dealers by major corporations in multiples of $1,000) which normally
is published in the "Money Rates" section of The Wall Street Journal (or if
such rate ceases to be so published, as quoted from such other generally
available and recognizable source as Lender may select). The Index Rate shall
be determined (i) on the first Business Day immediately prior to the Closing
Date and (ii) thereafter, on the last Business Day of each calendar month for
calculation of interest for the following month.
"Instruments" shall mean all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever located,
including all certificated securities and all notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents, Copyrights,
Trademarks, trade secrets and customer lists.
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"Inventory" shall mean all "inventory," as such term is defined in the Code,
now or hereafter owned or acquired by any Person, wherever located, including
all inventory, merchandise, goods and other personal property which are held
by or on behalf of such Person for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work
in process or materials used or consumed or to be used or consumed in such
Person's business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including other supplies.
"IRC" shall mean the Internal Revenue Code of 1986, and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor thereto.
"Lender" shall mean GE Capital and, if at any time GE Capital shall decide
to assign or syndicate all or any of the Obligations, such term shall include
such assignee or such other members of the syndicate.
"Letters of Credit" shall mean any and all commercial or standby letters of
credit issued at the request and for the account of Borrower for which Lender
has incurred Letter of Credit Obligations.
"Letter of Credit Fee" shall have the meaning assigned to it in Schedule E.
"Letter of Credit Obligations" shall mean all outstanding obligations incurred
by Lender, whether direct or indirect, contingent or otherwise, due or not
due, in connection with the issuance or guarantee, by Lender or another, of
Letters of Credit, all as further set forth in Schedule C. The amount of
such Letter of Credit Obligations at any time shall equal the maximum amount
which may be payable by Lender thereupon or pursuant thereto at such time and
shall include all duty, freight, taxes, costs, insurance and any other charges
and expenses in connection therewith.
"License" shall mean any Copyright License, Patent License, Trademark License
or other license of rights or interests now held or hereafter acquired by any
Person.
"Lien" shall mean any mortgage, security deed or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, security title, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing,
and the filing of, or agreement to give, any financing statement perfecting a
security interest under the Code or comparable law of any jurisdiction).
"Litigation" shall mean any claim, lawsuit, litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority.
"Loan Documents" shall mean this Agreement, the Notes, the Financial
Statements, each Guaranty, the Power of Attorney, the Bank Account Agreements,
and the other documents and instruments listed in Schedule F, and all
security agreements, mortgages and all other documents, instruments,
certificates, and notices at any time delivered by any Person (other than
Lender) in connection with any of the foregoing.
"Loans" shall mean the Revolving Credit Loan including the Letter of Credit
Obligations.
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"Lock Box Account" shall have the meaning assigned to it in Schedule D.
"Lock Box Account Agreement" shall have the meaning assigned to it in Schedule
D.
"Material Adverse Effect" shall mean: (i) a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
Borrower or any other Credit Party or the industry within which Borrower or
any other Credit Party operates, (b) Borrower's or any other Credit Party's
ability to pay or perform the Obligations under the Loan Documents to which
such Credit Party is a party in accordance with the terms thereof, (c) the
Collateral or Lender's Liens on the Collateral or the priority of any such
Lien, or (d) Lender's rights and remedies under this Agreement and the other
Loan Documents; or (ii) the incurrence by Borrower or any other Credit Party
of any liability (other than Indebtedness permitted by Section 5(c)),
contingent or liquidated, which has an actual or estimated incurrence of
liability, or dollar exposure or loss, greater than Minimum Actionable Amount
to Borrower or any other Credit Party.
"Maximum Amount" shall mean the maximum amount of credit to be provided by
Lender to or for the benefit of Borrower for aggregate Revolving Credit
Advances and Letter of Credit Obligations outstanding at any time, without
regard to the Borrowing Base or reserves, which amount, for purposes of this
Agreement, is $5,000,000.
"Minimum Actionable Amount" shall mean $50,000.
"Mortgage" shall mean a second lien mortgage in favor of Lender substantially
in the form of Exhibit G.
"Multiemployer Plan" shall mean a "multiemployer plan," as defined in Section
4001(a) (3) of ERISA, to which Borrower, any other Credit Party or any ERISA
Affiliate is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of
them.
"Net Borrowing Availability" shall mean at any time the Borrowing Availability
less the Revolving Credit Loan.
"Notes" shall mean the Revolving Credit Note.
"Notice of Revolving Credit Advance" shall have the meaning assigned to it in
Section 1.1(b).
"Obligations" shall mean all loans, advances, debts, expense reimbursement,
fees, liabilities, and obligations for the performance of covenants, tasks or
duties or for payment of monetary amounts (whether or not such performance is
then required or contingent, or amounts are liquidated or determinable) owing
by Borrower and any other Credit Party to Lender, of any kind or nature,
present or future, whether or not evidenced by any note, agreement or other
instrument, whether arising under any of the Loan Documents or under any other
agreement between Borrower, such Credit Party and Lender, and all covenants
and duties regarding such amounts. This term includes all principal, interest
(including interest accruing at the then applicable rate provided in this
Agreement after the maturity of the Loans and interest accruing at the then
applicable rate provided in this Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
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proceeding, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), Fees, Charges, expenses, attorneys' fees and
any other sum chargeable to Borrower under any of the Loan Documents, and all
principal and interest due in respect of the Loans and all obligations and
liabilities of any Guarantor under any Guaranty.
"Patent License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right with respect to any
invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Person now holds or
hereafter acquires any interest: (i) all letters patent of the United States
or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State or Territory thereof, or any other country; and (ii) all
reissues, continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permitted Encumbrances" shall mean the following encumbrances: (i) Liens for
taxes or assessments or other governmental Charges or levies, either not yet
due and payable or to the extent that nonpayment thereof is permitted by the
terms of Section 3.11; (ii) pledges or deposits securing obligations under
worker's compensation, unemployment insurance, social security or public
liability laws or similar legislation; (iii) pledges or deposits securing
bids, tenders, contracts (other than contracts for the payment of money) or
leases to which any Credit Party is a party as lessee made in the ordinary
course of business; (iv) deposits securing public or statutory obligations of
any Credit Party; (v) inchoate and unperfected workers', mechanics', or
similar liens arising in the ordinary course of business so long as such Liens
attach only to Equipment, fixtures or real estate; (vi) carriers',
warehousemans', suppliers' or other similar possessory liens arising in the
ordinary course of business and securing indebtedness not yet due and payable
in an outstanding aggregate amount not in excess of $25,000 at any time so
long as such Liens attach only to Inventory; (vii) deposits of money
securing, or in lieu of, surety, appeal or customs bonds in proceedings to
which any Credit Party is a party; (viii) zoning restrictions, easements,
licenses, or other restrictions on the use of real property or other minor
irregularities in title (including leasehold title) thereto, so long as the
same do not materially impair the use, value, or marketability of such real
estate; (ix) Purchase Money Liens securing Purchase Money Indebtedness (or
rent) to the extent permitted under Section 5(c)(ii); (x) Liens in existence
on the Closing Date as disclosed on Disclosure Schedule 5(h) provided that no
such Lien is spread to cover additional property after the Closing Date and
the amount of Indebtedness secured thereby is not increased.; and (xi) Liens
in favor of Lender securing the Obligations.
"Person" shall mean any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public
benefit corporation, entity or government (whether Federal, state, county,
city, municipal or otherwise, including any instrumentality, division, agency,
body or department thereof), and shall include such Person's successors and
assigns.
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"Plan" shall mean, with respect to Borrower or any other Credit Party, at any
time, an employee benefit plan, as defined in Section 3(3) of ERISA, which
Borrower or any other Credit Party maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were employed
by any of them.
"Prepayment Fee" shall mean the prepayment fee specified in Schedule E.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and, in
any event, shall include: (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Borrower or any other Credit Party
from time to time with respect to any Collateral; (ii) any and all payments
(in any form whatsoever) made or due and payable to Borrower or any other
Credit Party from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any Collateral by any
governmental body, authority, bureau or agency (or any person acting under
color of governmental authority); (iii) any claim of Borrower or any other
Credit Party against third parties (a) for past, present or future
infringement of any Intellectual Property or (b) for past, present or future
infringement or dilution of any Trademark or Trademark License or for injury
to the goodwill associated with any Trademark, Trademark registration or
Trademark licensed under any Trademark License; (iv) any recoveries by
Borrower or any other Credit Party against third parties with respect to any
litigation or dispute concerning any Collateral; and (v) any and all other
amounts from time to time paid or payable under or in connection with any
Collateral, upon disposition or otherwise.
"Projections" shall mean as of any date the consolidated and consolidating
balance sheet, statements of income and cash flow for Borrower and its
Subsidiaries (including forecasted Capital Expenditures and Net Borrowing
Availability) (i) by month for the next Fiscal Year, and (ii) by year for the
following three Fiscal Years, in each case prepared in a manner consistent
with GAAP and accompanied by senior management's discussion and analysis of
such plan.
"Purchase Money Indebtedness" shall mean (i) any Indebtedness incurred for
the payment of all or any part of the purchase price of any fixed asset, (ii)
any Indebtedness incurred for the sole purpose of financing or refinancing all
or any part of the purchase price of any fixed asset, and (iii) any renewals,
extensions or refinancings thereof (but not any increases in the principal
amounts thereof outstanding at that time).
"Purchase Money Lien" shall mean any Lien upon any fixed assets which secures
the Purchase Money Indebtedness related thereto but only if such Lien shall at
all times be confined solely to the asset the purchase price of which was
financed or refinanced through the incurrence of the Purchase Money
Indebtedness secured by such Lien and only if such Lien secures only such
Purchase Money Indebtedness.
"Qualified Plan" shall mean a Plan which is intended to be tax-qualified under
Section 401(a) of the IRC.
"Real Property" shall have the meaning assigned to it in Section 3.16.
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"Release" shall mean, as to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials in the indoor or outdoor environment by
such Person, including the movement of Hazardous Materials through or in the
air, soil, surface water, ground water or property.
"Requirement of Law" shall mean as to any Person, the Certificate or Articles
of Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"Restricted Payment" shall mean: (i) the declaration or payment of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets on or in respect of
Borrower's or any other Credit Party's Stock; (ii) any payment on account of
the purchase, redemption, defeasance or other retirement of Borrower's or any
other Credit Party's Stock or Indebtedness or any other payment or
distribution made in respect of any thereof, either directly or indirectly;
other than (a) that arising under this Agreement or (b) interest and
principal, when due without acceleration or modification of the amortization
as in effect on the Closing Date, under Indebtedness described in Disclosure
Schedule (5(c)) or otherwise permitted under Section 5(c)(ii); or (iii) any
payment, loan, contribution, or other transfer of funds or other property to
any Stockholder of such Person which is not expressly and specifically
permitted in this Agreement; provided, that no payment to Lender shall
constitute a Restricted Payment.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a "welfare
plan" as defined in Section 3(2) of ERISA, that provides for continuing
coverage or benefits for any participant or any beneficiary of a participant
after such participant's termination of employment, other than continuation
coverage provided pursuant to Section 4980B of the IRC and at the sole expense
of the participant or the beneficiary of the participant.
"Revolving Credit Advance" shall have the meaning assigned to it in Section
1.1(a).
"Revolving Credit Loan" shall mean at any time the sum of (i) the aggregate
amount of Revolving Credit Advances then outstanding, plus (ii) the total
Letter of Credit Obligations incurred by Lender and outstanding at such time,
plus (iii) the amount of accrued but unpaid interest thereon and Letter of
Credit Fees with respect thereto.
"Revolving Credit Note" shall mean the promissory note of Borrower dated the
Closing Date, substantially in the form of Exhibit F.
"Revolving Credit Rate" shall have the meaning assigned to it in Section
1.5(a).
"Schedule of Documents" shall mean the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Loan Documents and the transactions
contemplated thereunder, substantially in the form of Schedule F or Schedule
F-1, respectively.
"Stated Expiry Date" shall mean December 22, 2001.
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"Stock" shall mean all certificated and uncertificated shares, options,
warrants, general or limited partnership interests, participation or other
equivalents (regardless of how designated) of or in a corporation,
partnership, limited liability company or equivalent entity whether voting or
nonvoting, including common stock, preferred stock, or any other "equity
security" (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934).
"Stockholder" shall mean each holder of Stock of Borrower or any other Credit
Party.
"Subsidiary" shall mean, with respect to any Person, (i) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (ii) any partnership or limited liability
company in which such Person or one or more Subsidiaries of such Person has an
equity interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% or of which any such Person is a
general partner or may exercise the powers of a general partner.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes
imposed on or measured by the net income of Lender.
"Termination Date" shall mean the date on which the Revolving Credit Loan and
any other Obligations under this Agreement are indefeasibly paid in full, in
cash (other than amounts in respect of Letter of Credit Obligations if any,
then outstanding, provided that Borrower shall have funded such amounts in
cash in full into the Cash Collateral Account), and Borrower shall have no
further right to borrow any moneys or obtain other credit extensions or
financial accommodations under this Agreement.
"Term Loan" shall mean the term loan made by CAF to Borrower on the Closing
Date.
"Third Party Interactives" shall mean all Persons with whom any Corporate
Credit Party exchanges data electronically in the ordinary course of business,
including, without limitation, customers, suppliers, third-party vendors,
subcontractors, processors-converters, shippers and warehousemen.
"Title IV Plan" shall mean an "employee pension benefit plan," as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan), which is covered by
Title IV of ERISA, and which Borrower, any other Credit Party or any ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Trademark License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right to use any Trademark or
Trademark registration.
A-15
"Trademarks" shall mean all of the following now owned or hereafter acquired
by any Person: (i) all trademarks, trade names, corporate names, business
names, trade styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and
all applications in connection therewith, including all registrations,
recordings and applications in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State or
Territory thereof, or any other country or any political subdivision thereof,
and (ii) all reissues, extensions or renewals thereof.
"Transaction Summary" shall mean the Transaction Summary set forth in the
Recitals to this Agreement.
"Transport Clearings" shall mean Transport Clearings, LLC.
"Unbilled Accounts Receivable Roll Forward Analysis" shall mean a certificate
in the form of Exhibit E-1.
"Unfunded Pension Liability" shall mean, at any time, the aggregate amount, if
any, of the sum of (i) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets
of such Title IV Plan allocable to such benefits in accordance with Title IV
of ERISA, all determined as of the most recent valuation date for such Title
IV Plan determined on the basis of a shutdown of the employees thereunder and
using the actuarial assumptions in effect for funding purposes under such
Title IV Plan, and (ii) for a period of five (5) years following a
transaction which could be covered by Section 4069 of ERISA, the liabilities
(whether or not accrued) that could be avoided by Borrower, any other Credit
Party or any ERISA Affiliate as a result of such transaction.
"Year 2000 Assessment" shall mean a comprehensive written assessment of the
nature and extent of each Corporate Credit Party's Year 2000 Problems and Year
2000 Date-Sensitive Systems/Components, including, without limitation, Year
2000 Problems regarding data exchanges with Third Party Interactives.
"Year 2000 Corrective Actions" shall mean, as to each Corporate Credit Party,
all actions necessary to eliminate such Person's Year 2000 Problems,
including, without limitation, computer code enhancements and revisions,
upgrades and replacements of Year 2000 Date-Sensitive Systems/Components, and
coordination of such enhancements, revisions, upgrades and replacements with
Third Party Interactives.
"Year 2000 Corrective Plan" shall mean, with respect to each Corporate Credit
Party, a comprehensive plan to eliminate all of its Year 2000 Problems on or
before May 31, 1999, including without limitation (i) computer code
enhancements or revisions, (ii) upgrades or replacements of Year 2000
Date-Sensitive Systems/Components, (iii) test and validation procedures, (iv)
an implementation time line and budget and (v) designation of specific
employees who will be responsible for planning, coordinating and implementing
each phase or subpart of the Year 2000 Corrective Plan.
"Year 2000 Date-Sensitive System/Component" shall mean, as to any Person, any
system software, network software, applications software, data base, computer
file, embedded microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs
calendar-related data accurately; such systems and components shall include,
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without limitation, mainframe computers, file server/client systems, computer
workstations, routers, hubs, other network-related hardware, and other
computer-related software, firmware or hardware and information processing and
delivery systems of any kind and telecommunications systems and other
communications processors, security systems, alarms, elevators and HVAC
systems.
"Year 2000 Implementation Testing" shall mean, as to each Corporate Credit
Party, (i) the performance of test and validation procedures regarding Year
2000 Corrective Actions on a unit basis and on a system-wide basis; (ii) the
performance of test and validation procedures regarding data exchanges among
the Corporate Credit Parties' Year 2000 Date-Sensitive Systems/Components and
data exchanges with Third Party Interactives, and (iii) the design and
implementation of additional Corrective Actions, the need for which has been
demonstrated by test and validation procedures.
"Year 2000 Problems" shall mean, with respect to each Corporate Credit Party,
limitations on the capacity or readiness of any such Corporate Credit Party's
Year 2000 Date-Sensitive Systems/Components to accurately accept, create,
manipulate, sort, sequence, calculate, compare or output calendar date
information with respect to calendar year 1999 or any subsequent calendar year
beginning on or after January 1, 2000 (including leap year computations),
including, without limitation, exchanges of information among Year 2000
Date-Sensitive Systems/Components of the Corporate Credit Parties and
exchanges of information among the Corporate Credit Parties and Year 2000
Date-Sensitive Systems/Components of Third Party Interactives and
functionality of peripheral interfaces, firmware and embedded microchips.
Any accounting term used in this Agreement or the other Loan Documents shall
have, unless otherwise specifically provided therein, the meaning customarily
given such term in accordance with GAAP, and all financial computations
thereunder shall be computed, unless otherwise specifically provided therein,
in accordance with GAAP consistently applied; provided, that all financial
covenants and calculations in the Loan Documents shall be made in accordance
with GAAP as in effect on the Closing Date unless Borrower and Lender shall
otherwise specifically agree in writing. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no
way be construed to limit the foregoing. All other undefined terms contained
in this Agreement or the other Loan Documents shall, unless the context
indicates otherwise, have the meanings provided for by the Code. The words
"herein," "hereof" and "hereunder" or other words of similar import refer to
this Agreement as a whole, including the exhibits and schedules thereto, as
the same may from time to time be amended, modified or supplemented, and not
to any particular section, subsection or clause contained in this Agreement.
For purposes of this Agreement and the other Loan Documents, the following
additional rules of construction shall apply, unless specifically indicated to
the contrary: (a) wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the singular and
the plural, and pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, the feminine and the neuter; (b) the term "or" is
not exclusive; (c) the term "including" (or any form thereof) shall not be
limiting or exclusive; (d) all references to statutes and related regulations
shall include any amendments of same and any successor statutes and
regulations; (e) all references in this Agreement or in the Schedules to this
Agreement to sections, schedules, disclosure schedules, exhibits, and
attachments shall refer to the corresponding sections, schedules, disclosure
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schedules, exhibits, and attachments of or to this Agreement; and (f) all
references to any instruments or agreements, including references to any of
the Loan Documents, shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof.
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SCHEDULE B
LENDER'S AND BORROWER'S ADDRESS FOR NOTICES
Lender's Address:
Name: General Electric Capital Corporation
Address: 40 Old Ridgebury Road
Danbury, CT 06810
Attn: Gulf Northern Transport, Inc. Account Manager
Telephone: 203-796-5500
Facsimile: 203-796-5536
Borrower's Address:
Name: Gulf Northern Transport, Inc.
Address: 3125 Ashley Phosphate Road
N. Charleston, SC 29418
Attn: Dan Pixler, Chief Executive Officer
Telephone: 843-767-9197
Facsimile: 843-767-9198
B-1
SCHEDULE C
LETTERS OF CREDIT
1. Lender agrees, subject to the terms and conditions hereinafter set forth,
to incur Letter of Credit Obligations in respect of the issuance of Letters of
Credit issued on terms acceptable to Lender and supporting obligations of
Borrower incurred in the ordinary course of Borrower's business, in order to
support the payment of Borrower's inventory purchase obligations, insurance
premiums, or utility or other operating expenses and obligations, as Borrower
shall request by written notice to Lender that is received by Lender not less
than five Business Days prior to the requested date of issuance of any such
Letter of Credit; provided, that: (a) that the aggregate amount of all Letter
of Credit Obligations at any one time outstanding (whether or not then due and
payable) shall not exceed $250,000; (b) no Letter of Credit shall have an
expiry date which is later than the Stated Expiry Date or one year following
the date of issuance thereof; and (c) Lender shall be under no obligation to
incur any Letter of Credit Obligation if after giving effect to the incurrence
of such Letter of Credit Obligation, the Net Borrowing Availability would be
less than zero. The maximum amount payable in respect of each Letter of
Credit requested by Borrower will be guaranteed by Lender in favor of the
issuing bank under terms of a separate agreement between Lender and the
issuing bank. Borrower will enter into an application and agreement for such
Letter of Credit with the issuing bank selected by Lender. The bank that
issues any Letter of Credit pursuant to this Agreement shall be determined by
Lender in its sole discretion.
2. The notice to be provided to Lender requesting that Lender incur Letter of
Credit Obligations shall be in the form of a Letter of Credit application in
the form customarily employed by the issuing bank, together with a written
request by Borrower and the bank that Lender approve Borrower's application.
Upon receipt of such notice Lender shall establish a reserve against the
Borrowing Availability in the amount of 100% of the face amount of the Letter
of Credit Obligation to be incurred. Approval by Lender in the written form
agreed upon between Lender and the issuing bank (a) will authorize the bank
to issue the requested Letter of Credit, and (b) will conclusively establish
the existence of the Letter of Credit Obligation as of the date of such
approval.
3. In the event that Lender shall make any payment on or pursuant to any
Letter of Credit Obligation, Borrower shall be unconditionally obligated to
reimburse Lender therefor, and such payment shall then be deemed to constitute
a Revolving Credit Advance. For purposes of computing interest under Section
1.5, a Revolving Credit Advance made in satisfaction of a Letter of Credit
Obligation shall be deemed to have been made as of the date on which the
issuer or endorser makes the related payment under the underlying Letter of
Credit.
4. In the event that any Letter of Credit Obligations, whether or not then
due or payable, shall for any reason be outstanding on the Commitment
Termination Date, Borrower will either (a) cause the underlying Letter of
Credit to be returned and canceled and each corresponding Letter of Credit
Obligation to be terminated, or (b) pay to Lender, in immediately available
funds, an amount equal to 105% of the maximum amount then available to be
drawn under all Letters of Credit not so returned and canceled to be held by
Lender as cash collateral in an account under the exclusive dominion and
control of Lender (the "Cash Collateral Account").
C-1
5. In the event that Lender shall incur any Letter of Credit Obligations,
Borrower agrees to pay the Letter of Credit Fee to Lender as compensation to
Lender for incurring such Letter of Credit Obligations. In addition, Borrower
shall reimburse Lender for all fees and charges paid by Lender on account of
any such Letters of Credit or Letter of Credit Obligations to the issuing
bank.
6. Borrower's Obligations to Lender with respect to any Letter of Credit or
Letter of Credit Obligation shall be evidenced by Lender's records and shall
be absolute, unconditional and irrevocable and shall not be affected, modified
or impaired by (a) any lack of validity or enforceability of the transactions
contemplated by or related to such Letter of Credit or Letter of Credit
Obligation; (b) any amendment or waiver of or consent to depart from all or
any of the terms of the transactions contemplated by or related to such Letter
of Credit or Letter of Credit Obligation; (c) the existence of any claim,
set-off, defense or other right which Borrower or any other Credit Party may
have against Lender, the issuer or beneficiary of such Letter of Credit, or
any other Person, whether in connection with this Agreement, any other Loan
Document or such Letter of Credit or the transactions contemplated thereby or
any unrelated transactions; or (d) the fact that any draft, affidavit, letter,
certificate, invoice, bill of lading or other document presented under or
delivered in connection with such Letter of Credit or any other Letter of
Credit proves to have been forged, fraudulent, invalid or insufficient in any
respect or any statement therein proves to have been untrue or incorrect in
any respect.
7. In addition to any other indemnity obligations which Borrower may have to
Lender under this Agreement and without limiting such other indemnification
provisions, Borrower hereby agrees to indemnify Lender from and to hold Lender
harmless against any and all claims, liabilities, losses, costs and expenses
(including, attorneys' fees and expenses) which Lender may (other than as a
result of its own gross negligence or willful misconduct) incur or be subject
to as a consequence, directly or indirectly, of (a) the issuance of or payment
of or failure to pay under any Letter of Credit or Letter of Credit Obligation
or (b) any suit, investigation or proceeding as to which Lender is or may
become a party as a consequence, directly or indirectly, of the issuance of
any Letter of Credit, the incurring of any Letter of Credit Obligation or any
payment of or failure to pay under any Letter of Credit or Letter of Credit
Obligation. The obligations of Borrower under this paragraph shall survive
any termination of this Agreement and the payment in full of the Obligations.
8. Borrower hereby assumes all risks of the acts, omissions or misuse of each
Letter of Credit by the beneficiary or issuer thereof and, in connection
therewith, Lender shall not be responsible (a) for the validity, sufficiency,
genuineness or legal effect of any document submitted in connection with any
drawing under any Letter of Credit even if it should in fact prove in any
respect to be invalid, insufficient, inaccurate, untrue, fraudulent or forged;
(b) for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or any
rights or benefits thereunder or any proceeds thereof, in whole or in part,
even if it should prove to be invalid or ineffective for any reason; (c) for
the failure of any issuer or beneficiary of any Letter of Credit to comply
fully with the terms thereof, including the conditions required in order to
effect or pay a drawing thereunder; (d) for any errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
telecopy, telex or otherwise; (e) for any loss or delay in the transmission or
otherwise of any document or draft required in order to make a drawing under
any Letter of Credit; or (f) for any consequences arising from causes beyond
the direct control of Lender.
C-2
SCHEDULE D - CASH MANAGEMENT
Borrower agrees to establish, and to maintain, until the Termination Date, the
cash management system described below:
1. No Corporate Credit Party: (i) shall (nor shall it permit any of its
Subsidiaries to) open or maintain any deposit, checking, operating or other
bank account, or similar money handling account, with any bank or other
financial institution except for those accounts identified in Attachment I
hereto (to include a petty cash account not to exceed $5,000 during any Fiscal
Month, and a payroll account not to exceed an amount equal to one regular
payroll at any time); and (ii) shall close or permit to be closed any of the
accounts listed in Attachment I hereto, in each case without Lender's prior
written consent, and then only after such Credit Party has implemented
agreements with such bank or financial institution and Lender acceptable to
Lender.
2. Commencing on the Closing Date and until the Termination Date, each
Corporate Credit Party shall cause to be deposited directly all cash, checks,
notes, drafts or other similar items relating to or constituting proceeds of
or payments made in respect of any and all Collateral into lock boxes or lock
box accounts in such Credit Party's or Lender's name (collectively, the "Lock
Box Accounts") set forth in paragraph 1 of Attachment I hereto.
3. On or before the Closing Date, each bank at which the Lock Box Accounts
are held shall have entered into tri-party lock box agreements (the "Lock Box
Account Agreements") with Lender and the applicable Credit Party, in form and
substance acceptable to Lender. Each such Lock Box Account Agreement shall
provide, among other things, that (a) such bank executing such agreement has
no rights of setoff or recoupment or any other claim against such Lock Box
Account, other than for payment of its service fees and other charges directly
related to the administration of such account, and (b) such bank agrees to
sweep on a daily basis all amounts in the Lock Box Account to the Collection
Account.
4. On the Closing Date, (a) the lock box and blocked account arrangements
shall immediately become operative at the banks at which the Lock Box Accounts
are maintained, and (b) amounts outstanding under the Revolving Credit Loan
(for purposes of the Borrowing Availability) shall be reduced through daily
sweeps, by wire transfer, of the Lock Box Accounts into the Collection
Account. Borrower acknowledges that it shall have no right to gain access to
any of the moneys in the Lock Box Accounts until after the Termination Date.
5. Borrower may maintain, in its name, accounts (the "Disbursement Accounts")
at a bank or banks acceptable to Lender into which Lender shall, from time to
time, deposit proceeds of Revolving Credit Advances made pursuant to Section
1.1 for use solely in accordance with the provisions of Section 1.3. All of
the Disbursement Accounts as of the Closing Date are listed in paragraph 2 of
Attachment I hereto.
6. Upon the request of Lender, each Corporate Credit Party shall forward to
Lender, on a daily basis, evidence of the deposit of all items of payment
received by such Credit Party into the Lock Box Accounts and copies of all
such checks and other items, together with a statement showing the application
of those items relating to payments on Accounts to outstanding Accounts and a
collection report with regard thereto in form and substance satisfactory to
Lender.
D-1
ATTACHMENT 1 TO SCHEDULE D
1. LOCK BOX ACCOUNTS
Bankers Trust Company
New York, New York
Gulf Northern Transport, Inc.
Acct. No. 00381851
2. MAIN OPERATING ACCOUNT
Wood County National Bank
Wisconsin Rapids, WI
Gulf Northern Transport, Inc. - Operating Account
Acct. No. 01129-615
OPERATING ACCOUNT FOR AGENTS PROGRAM
Wachovia Bank
Charleston, S.C.
Gulf Northern Transport, Inc. - Agents Program
Acct. No. 100669845
OPERATING ACCOUNT FOR BROKERAGE
Nations Bank
Charleston, S.C.
Mencor, Inc.
Acct. No. 0729776911
PAYROLL ACCOUNT
Nations Bank
Charleston, S.C.
Gulf Northern Transport, Inc. - Logistics Management Account
Acct. No. 759166093
SPECIAL USE ACCOUNT
Nations Bank
Charleston, S.C.
Gulf Northern Transport, Inc. - Permit and Tags Account
Acct. No. 0729483337
SCHEDULE E - FEES
1. LETTER OF CREDIT FEE: For each day for which Lender maintains Letter of
Credit Obligations outstanding, an amount equal to the amount of the Letter of
Credit Obligations outstanding on such day, multiplied by 1.5%, the product of
which is then divided by 360. The Letter of Credit Fee incurred for each month
is payable at the same time each payment of the Unused Line Fee is due.
Notwithstanding the foregoing, any unpaid Letter of Credit Fee is immediately
due and payable on the Commitment Termination Date.
2. CLOSING FEE: A non-refundable closing fee of $26,250, payable at closing
(the "Closing Fee").
3. PREPAYMENT FEE:
For the Revolving Credit Loan, an amount equal to the Maximum Amount
multiplied by:
3% if Lender's obligation to make further Revolving Credit Advances or
incur additional Letter of Credit Obligations is terminated (voluntarily by
Borrower, upon Default or otherwise) on or after the Closing Date and on or
before the first anniversary of the Closing Date, payable on the Commitment
Termination Date;
2% if Lender's obligation to make further Revolving Credit Advances or
incur additional Letter of Credit Obligations is terminated (voluntarily by
Borrower, upon Default or otherwise) after the first anniversary of the
Closing Date and on or before the second anniversary of the Closing Date,
payable on the Commitment Termination Date; or
1% if Lender's obligation to make further Revolving Credit Advances or
incur additional Letter of Credit Obligations is terminated (voluntarily by
Borrower, upon Default or otherwise) after the second anniversary of the
Closing Date and on or before the third anniversary of the Closing Date,
payable on the Commitment Termination Date.
Borrower acknowledges and agrees that (i) it would be difficult or
impractical to calculate Lender's actual damages from early termination of
Lender's obligation to make further Revolving Credit Advances and incur
additional Letter of Credit Obligations for any reason pursuant to Section
1.2(c) or Section 7.2, (ii) the Prepayment Fees provided above are intended
to be fair and reasonable approximations of such damages, and (iii) the
Prepayment Fees are not intended to be penalties.
4. AUDIT FEES: Borrower will reimburse Lender at the rate of $600 per person
per day, not to exceed $1,200 in the aggregate per day, plus out-of-pocket
expenses, for the audit reviews, field examinations and collateral
examinations conducted by Lender.
5. UNUSED LINE FEE: None
SCHEDULE F
SCHEDULE OF DOCUMENTS
1. Loan and Security Agreement
2. Revolving Credit Note
3. Mortgage
4. Title Insurance Policy
5. Lockbox Agreement
6. Survey of Wisconsin Rapids, Wisconsin Property
7. Financial Statements
8. Powers of Attorney
9. The Guarantees
SCHEDULE F-1
SCHEDULE OF REAL ESTATE DOCUMENTS
Each of the following will be required in form satisfactory to Lender with
respect to the property located at 810 25th Avenue North, Wisconsin Rapids,
Wisconsin 54495 (the "Premises")
(1) Title Insurance Policy with requested Lender's endorsements in the
amount of $5,000,000 based on Pro Forma
Policy to be approved
(2) ALTA/ACSM Urban Survey
(3) All leases for Premises
(4) Subordination Nondisturbance and Attornment Agreement for each lease
(5) Estoppel Agreement for each lease
(6) Complete Phase I and if necessary Phase II Environmental Reports
(7) Certificate of Occupancy
(8) Zoning Letter
(9) Engineering Report
SCHEDULE G
FINANCIAL COVENANTS
1. Fixed Charge Coverage Ratio. Borrower shall maintain a Fixed Charge
Coverage Ratio of not less than 1:1 for each Fiscal Quarter commencing with
the Fiscal Quarter ending March 31, 1999.
As used in this Agreement (including this Schedule G covenant), the following
terms shall have the following meanings:
"EBITDA" shall mean, for any period, the Net Income (Loss) of Borrower and its
Subsidiaries on a consolidated basis for such period, plus interest expense,
tax expense, amortization expense, depreciation expense and extraordinary
losses and minus extraordinary gains, in each case, of Borrower and its
Subsidiaries on a consolidated basis for such period determined in accordance
with GAAP to the extent included in the determination of such Net Income
(Loss).
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of the
following for Borrower and its Subsidiaries on a consolidated basis determined
in accordance with GAAP: (a) EBITDA for such period less Capital Expenditures
for such period which are not financed through the incurrence of any
Indebtedness (excluding the Revolving Credit Loan) to (b) the sum of (i)
interest expense paid or accrued in respect of any Indebtedness during such
period, plus (ii) taxes to the extent accrued or otherwise payable with
respect to such period plus (iii) regularly scheduled payments of principal
paid or that were required to be paid on Funded Debt (excluding the Revolving
Credit Loan) during such period.
"Funded Debt" shall mean, for any Person, all of such Person's Indebtedness
which by the terms of the agreement governing or instrument evidencing such
Indebtedness matures more than one year from, or is directly or indirectly
renewable or extendible at the option of such Person under a revolving credit
or similar agreement obligating the lender or lenders to extend credit over a
period of more than one year from, the date of creation thereof, including
current maturities of long-term debt, revolving credit, and short-term debt
extendible beyond one year at the option of such Person.
"Net Income (Loss)" shall mean with respect to any Person and for any period,
the aggregate net income (or loss) after taxes of such Person for such period,
determined in accordance with GAAP.
2. Capital Expenditures. Borrower and its Subsidiaries on a consolidated
basis shall not make aggregate Capital Expenditures (other than Capital
Expenditures financed through the incurrence of Indebtedness (excluding the
Revolving Credit Loan))in any Fiscal Year in excess of $100,000.
3. Minimum Net Worth. Borrower shall maintain, as at the end of each Fiscal
Quarter set forth below, Net Worth of Borrower and its Subsidiaries on a
consolidated basis for each such Fiscal Quarter of not less than the amount of
such Fiscal Quarter set forth below:
Fiscal Quarter Ending: Minimum Net Worth:
March 31, 1999 $3,400,000
and thereafter
For purposes of this covenant in Schedule G the following term shall have the
meaning set forth below:
"Net Worth" shall mean, with respect to any Person, at any date, the total
assets minus the total liabilities, in each case, of such Person at such date
determined in accordance with GAAP, less any adjustments resulting from any
sale-leaseback transaction approved in advance by Lender.
DISCLOSURE SCHEDULE (3.2)
CHIEF EXECUTIVE OFFICE & CORPORATE NAMES
Chief Executive Office County/State
Name: Gulf Northern Transport, Inc.
Address: 3125 Ashley Phosphate Road Charleston/SC
Suite 128
N. Charleston, SC 29418
Name: U.S. Trucking, Inc.
(Colorado and Nevada)
Address: 3125 Ashley Phosphate Road Charleston/SC
Suite 128
N. Charleston, SC 29418
Name: Mencor, Inc.
Address: 3125 Ashley Phosphate Road Charleston/SC
Suite 128
N. Charleston, SC 29418
DISCLOSURE SCHEDULE (3.6)
REAL ESTATE
Company owns no real estate.
All terminal locations are leased.
DISCLOSURE SCHEDULE (3.7)
STOCK & AFFILIATES
U.S. Trucking, Inc. (Colorado) FEIN 68-0133692 owns 100% of U.S. Trucking,
Inc. (Nevada) FEIN 91-1786609 which owns 100% of Mencor, Inc., FEIN 71-0755210
and Gulf Northern Transport, Inc., FEIN 39-1721438.
DISCLOSURE SCHEDULE (3.10)
TAXES
Wisconsin Department of Revenue Withholding Tax = $50,000
DISCLOSURE SCHEDULE (3.12)
ERISA
401K Plan - Employee Contribution only
Nationwide - Plan Holder
Wm. Michels Ltd. - Administrator
DISCLOSURE SCHEDULE (3.13)
LITIGATION
Pending lawsuit against Gulf Northern Transport, Inc. ("Gulf Northern")
filed by Fidelity Business Alliance in the Chancery Court for the Thirteenth
Judicial District, Shelby County Tennessee and against a host of other
entities. Complaint alleged United Acquisition II Corp. ("UACQ") guaranteed
certain obligations of Box "G" Ranch Inc. to Fidelity. UACQ had an agreement,
never consummated, to buy Box G, and in connection therewith was to guarantee
Box G's accounts with Fidelity (after it became a wholly-owned subsidiary).
Box G defaulted and Fidelity sued UACQ, among others, for payment. After the
Box G transaction failed to close, UACQ reached an agreement to buy Gulf
Northern. Gulf Northern was sued under the theory that a corporate subsidiary
is liable for its parent's obligations. The sale of Gulf Northern to UACQ was
eventually rescinded (to the extent it may have ever been consummated).
UACQ went through a Chapter 11 bankruptcy proceeding last year and the
case against t hem was settled for a nominal amount. There has been no
activity in this action in over a year. We believe the claims for relief are
meritless, due to the fact that the guarantee is unenforceable and due to the
corporate wall between UACQ and Gulf Northern.
DISCLOSURE SCHEDULE (3.14)
INTELLECTUAL PROPERTY
None.
DISCLOSURE SCHEDULE (3.16)
ENVIRONMENTAL MATTERS
None.
DISCLOSURE SCHEDULE (3.17)
INSURANCE
U.S. Trucking, Inc. has auto liability coverage with Legion Insurance Company
at 1,000,000 per occurrence limit. There is a rent-a-captive in place with
Mutual Indemnity and the program is 100% reinsured and capitalized.
The cargo insurance is with Intercargo with limits of $250,000 per occurrence
with a $1,000 deductible.
The physical damage insurance is with Adriatic Insurance Company with a $1,000
deductible.
U.S. Trucking, Inc. has a package policy with St. Paul Insurance Company for
contents, general liability, crime coverage and building coverage.
U.S. Trucking, Inc.'s insurance agents are:
Transportation Underwriters American Financial
10602 Timberwood Circle 100 Wall Street
Suite #9 New York, New York 10005
Louisville, KY 40203 Rep: Dennis O'Conner
Rep: David Huff
DISCLOSURE SCHEDULE (5(c))
INDEBTEDNESS
1. Wicks-FMW $2,510,200.00
2. Kenworth-Trac 1,165,743.00
3. GECC-Tilden 1,684,758.41
4. GECC-Jay & Jay 428,042.83
5. Associates 500,475.95
6. Associates 515,004.04
7. Navistar 329,898.10
8. ITC-Acceptance 397,928.23
DISCLOSURE SCHEDULE (5(h))
LIENS
Wisconsin Department of Revenue - Withholding Tax of $50,000
Gulf Northern Transport, Inc.:
SECURED PARTY: JURISDICTION TYPE: COLLATERAL/OTHER
Associates Leasing Inc Sec. of State of Wisconsin Finance Specified Vehicles
Associates Leasing Inc Sec. of State of Wisconsin Finance Specified Vehicles
Transport Clearings LLC Sec. of State of Wisconsin Amend All present and future
accounts
ITT Commercial Finance
Corp. Sec. of State of Wisconsin Finance Specified Equipment
including Proceeds and
Product
GFC Leasing Div. of Sec. of State of Wisconsin Finance Leased Business
Gordon Flesch Co. Inc. Machinery/Equip.
Including Proc.
Monarch Capital Sec. of State of Wisconsin Finance All equipment pledged
Corporation to Debtor pursuant to
Financing Agreement
Transport Clearings, Woods County, Wisconsin Finance All present and future
LLC accounts
Bridgestone/Firestone Woods County, Wisconsin Judgement $13,992.82
Inc.
William Orr Woods County, Wisconsin Judgement $2231.96
William Orr Woods County, Wisconsin Judgement $1702.59
Bill Willey Woods County, Wisconsin Judgement $17,286.77
Anthem Health&Life Ins. Woods County, Wisconsin Judgement $21,731.90
Co.
Harold La Chapelle Woods County, Wisconsin Judgement $3625.00
Newport Communications Woods County, Wisconsin Judgement $1405.50
Div. of HIC Corporation
Comdata Network Inc. Woods County, Wisconsin Judgement $1070.82
State of WI Woods County, Wisconsin Judgement $1791.53
Martinovich Trucking Woods County, Wisconsin Judgement $1923.54
Koch Refining Company Woods County, Wisconsin Judgement $7702.75
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $11,635.56
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $4325.80
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $4299.57
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $4275.08
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $4248.86
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $4220.89
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $4194.63
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $4056.00
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $3882.35
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $3841.02
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $4427.34
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $3483.29
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $4797.33
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $5358.23
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $2693.34
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $2276.68
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $3718.75
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $2522.20
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $3160.38
WI Dept. of Tax Revenue Woods County, Wisconsin Tax Warrant $2683.03
Transport Clearings, Charleston County, South Finance All present and future
LLC Carolina accounts
Transport Clearings, Sec. of State of South Finance All present and future
LLC Carolina accounts
Transport Clearings, Sec. of State of South Finance All present and future
LLC Carolina accounts
AT&T Corp. Charleston County, South Judgement $7000.00
Carolina
Inland Detroit Charleston County, South Judgement $4282.47
Carolina
Diesel-Allison, Inc
Unity Mutual Insurance Charleston County, South a Judgement $7000.00
Co. Carolina
Transport Clearings, Sec. of State of Florida Finance All present and future
LLC accounts
Mencor, Inc.:
SECURED PARTY: JURISDICTION TYPE: COLLATERAL/OTHER
Transport Clearings, Sec. of State of S. Finance All present and future
LLC Carolina accounts
Transport Clearings, Charleston County, South Finance All present and future
LLC Carolina accounts
CountyClerk Sec. of State of South Tax $1242.97
Carolina
DISCLOSURE SCHEDULE (6.1)
ACTIONS TO PERFECT LIENS
UCC Filings:
Gulf Northern Transport, Inc. - Secretary of State of South
Carolina and Charleston County
Mencor, Inc. - Secretary of State of South Carolina and Charleston
County
U.S. Trucking (Nevada and Colorado)- Secretary of State of South
Carolina and Charleston County, Secretary of State of Kentucky and
Jefferson County
Mortgage Recordings:
Wisconsin real property located at 810 25th Avenue North, Wisconsin
Rapids, Wisconsin 54495