1
Exhibit 10.28
SECOND AMENDED AND RESTATED LOAN AGREEMENT
BETWEEN
BANK OF AMERICA, N.A.
(FORMERLY NATIONSBANK, N.A., FORMERLY THE BOATMEN'S NATIONAL BANK OF ST. LOUIS)
AS "BANK"
AND
BEKINS DISTRIBUTION SERVICES CO., INC.
AS "BORROWER"
SEPTEMBER 1, 2000
2
SECOND AMENDED AND RESTATED LOAN AGREEMENT
This SECOND AMENDED AND RESTATED LOAN AGREEMENT is dated as of
September 1, 2000 and is by and between BEKINS DISTRIBUTION SERVICES CO., INC.,
a Delaware corporation formerly known as BDS Acquisition Company, Inc.
("Borrower"), and BANK OF AMERICA, N.A., a national banking association formerly
NationsBank, N.A., formerly The Boatmen's National Bank of St. Louis ("Bank").
This Agreement amends and restates, and supersedes and replaces in its entirety
the Amended and Restated Loan Agreement between Borrower and Bank dated as of
March 29, 1996 (as amended by that certain Amendment thereto dated as of
December 18, 1996, that certain Amendment No. 2 thereto dated as of March 6,
1997, and that certain Amendment No. 3 thereto dated as of January 9, 1998, the
"Original Loan Agreement"). This Agreement does not constitute an extinguishment
of the Indebtedness under the Original Loan Agreement nor does it constitute a
release or relinquishment of the priority of any or all of the Liens of Bank in
any assets (real and personal) of Borrower. All capitalized terms herein shall
have the meanings defined in the Sections where they are first used, or if not
therein defined, the meanings defined in Section 10.1.
The parties hereto mutually agree as follows:
1. THE LOANS.
1.1. REVOLVING LOAN. Subject to the terms and conditions hereof, and in
reliance upon the representations and warranties of Borrower made as of
the date hereof and contained herein, Bank hereby commits to make
advances of funds to Borrower from time to time during the period
commencing with the Closing Date and ending on the Termination Date in
an aggregate principal amount at any one time outstanding not to exceed
the Maximum Available Amount. The "Maximum Available Amount" on any
date shall be a Dollar amount equal to the lesser of One Million Five
Hundred Thousand and no/100 Dollars ($1,500,000.00) (the "Revolving
Commitment") or the Borrowing Base on such date. Borrower may use the
Revolving Commitment by borrowing, repaying and reborrowing, all in
accordance with the terms and conditions hereof. Bank shall advance
$1,500,000 of the Revolving Loan in a single advance on the Closing
Date.
1.2. OVERADVANCE TERM LOAN. Subject to the terms and conditions hereof,
and in reliance upon the representations and warranties of Borrower
contained herein, Bank hereby makes the Overadvance Term Loan to
Borrower for the purposes set forth herein, in the principal amount of
Five Million Three Hundred Thousand and no/100 Dollars ($5,300,000.00)
(the "Overadvance Term Commitment"); provided, that, the amount of the
Overadvance Term Loan shall be increased in accordance with the
provisions of Section 1.9.3.1 hereof. The Overadvance Term Loan will be
made in a single advance on the Closing Date.
1.3. TERM LOAN. On March 29, 1996, Bank made a Term Loan to Borrower in
the amount of Three Million Six Hundred Thousand and no/100 Dollars
($3,600,000.00) (the "Term Commitment"). As of the Closing Date, the
outstanding principal balance of the Term Loan is $1,035,000.
1.4. FLORIDA TERM LOAN. On December 18, 1996, Bank made the Florida
Term Loan to Borrower in the principal amount of One Million Eight
Hundred Fifty Thousand and no/100 Dollars ($1,850,000.00) (the "Florida
Term Commitment"). As of the Closing Date, the outstanding principal
balance of the Florida Term Loan is $1,416,000.
3
1.5. BORROWING UNDER REVOLVING LOAN.
1.5.1. NOTICE OF BORROWING.
1.5.1.1. REVOLVING LOAN PROCEDURE. Whenever Borrower desires
to make a Borrowing under the Revolving Loan, it shall give
Bank prior to 11:00 a.m., St. Louis time, on the same Business
Day an advance is to be made (the "Borrowing Date"), a
telephonic request for an advance in a specific amount (the
"Notice of Borrowing"). Each submission of a Notice of
Borrowing given by Borrower to Bank for a Borrowing under the
Revolving Loan shall constitute a certification that, to the
best of Borrower's knowledge, after due inquiry, there has
occurred no Default or Event of Default by Borrower under this
Agreement which is continuing unwaived, and that all required
conditions to the making of such Borrowing have been met under
Section 1.5.
1.5.1.2. DISBURSEMENT OF FUNDS. Subject to the provisions of
Section 1.5.1.1, Bank will make available the amount of any
Borrowing under the Revolving Loan requested to be made on
such date in immediately available funds at the Applicable
Lending Office.
1.6. NOTES.
1.6.1. REVOLVING NOTE. The Revolving Loan made by Bank hereunder shall
be evidenced by a master note (as may be amended, restated, or
otherwise modified from time to time, the "Revolving Note"), payable to
the order of Bank, representing the obligation of Borrower to pay the
amount of the Revolving Commitment or the aggregate unpaid principal
amount of all Borrowings under the Revolving Loan pursuant to this
Agreement, whichever is less, and all accrued interest thereon. The
Revolving Note shall be dated as of the Closing Date and shall be
payable in the principal amount of the Revolving Commitment. The
Revolving Note shall mature on the Termination Date. The Revolving Loan
may be paid, reborrowed and repaid, subject to the conditions set forth
in Section 1.5, and shall be payable in full on the Termination Date in
accordance with Section 1.8.1.3.
1.6.2. OVERADVANCE TERM NOTE. The Overadvance Term Loan made by Bank
hereunder shall be evidenced by a promissory note (as may be amended,
restated, or otherwise modified from time to time, the "Overadvance
Term Note"), payable to the order of Bank, representing the obligation
of Borrower to pay the amount of the Overadvance Term Loan and all
accrued interest thereon, dated as of the Closing Date, and shall
mature on the Termination Date.
1.6.3. TERM NOTE. The Term Loan previously made by Bank hereunder is
evidenced by that certain Amended and Restated Term Note dated as of
March 29, 1996 (as may be amended, restated, or otherwise modified from
time to time, the "Term Note"), payable to the order of Bank,
representing the obligation of Borrower to pay the amount of the Term
Loan and all accrued interest thereon, dated as of the Closing Date,
and shall mature on the Termination Date.
1.6.4. FLORIDA TERM NOTE. The Florida Term Loan previously made by Bank
hereunder is evidenced by that certain Term Note (as may be amended,
restated, or otherwise modified from time to time, the "Florida Term
Note"), payable to the order of Bank, representing the obligation of
Borrower to pay the amount of the Florida Term
2
4
Loan and all accrued interest thereon, dated as of December 18, 1996,
and shall mature on the Termination Date.
1.6.5. LOAN RECORDS. The date and amount of all disbursements and
receipts representing principal and receipts of interest by Bank with
respect to the Loans shall be recorded by Bank in the records it
maintains with respect thereto. The failure to record, or any error in
recording, any of the foregoing shall not, however, affect the
obligations of Borrower hereunder or under the Notes to repay the
outstanding principal amount of the Loans together with all interest
accruing thereon. Each such record as maintained by Bank shall
constitute prima facie evidence of the outstanding amount of its Loans.
1.7. INTEREST ON NOTES.
1.7.1. INTEREST ON REVOLVING NOTE. The Revolving Loan shall bear
interest on the unpaid principal balance outstanding thereunder from
time to time at a per annum rate equal to the Prime Rate, such rate to
change simultaneously with any change in the Prime Rate; provided,
however, that after maturity, whether by acceleration or otherwise, the
overdue principal and, to the extent permitted by law, overdue interest
at maturity in respect of the Revolving Note and all other overdue
amounts owing hereunder shall bear interest, payable on demand, at the
rate per annum otherwise in effect hereunder plus two percent (2%),
such rate to change simultaneously with any change in the Prime Rate.
Interest shall be payable monthly, in arrears, commencing on the first
day of the month following the first month during which there is any
amount outstanding under the Revolving Loan, and the first day of each
month thereafter as long as there is any unpaid principal balance under
the Revolving Note.
1.7.2. INTEREST ON OVERADVANCE TERM NOTE. The Overadvance Term Loan
shall bear interest from the Closing Date on the unpaid principal
balance outstanding thereunder from time to time at a per annum rate
equal to the Prime Rate, such rate to change simultaneously with any
change in the Prime Rate; provided, however, that the interest rate on
the Overadvance Term Loan shall automatically increase (an "Increase")
to a per annum rate equal to the Prime Rate plus two percent (2%) on
February 29, 2002 if the outstanding principal balance of the
Overadvance Term Loan is greater than or equal to $3,500,000, and will
automatically increase by an additional one-fourth of one percent
(0.25%) every three months thereafter so long as the outstanding
principal balance of the Overadvance Term Loan is greater than or equal
to $3,500,000 (not to exceed thirteen percent (13%)); and provided
further, however, that after maturity, whether by acceleration or
otherwise, the overdue principal and, to the extent permitted by law,
overdue interest at maturity in respect of the Overadvance Term Note
shall bear interest, payable on demand, at the rate per annum otherwise
in effect hereunder plus two percent (2%), such rate to change
simultaneously with any change in the Prime Rate. Notwithstanding the
foregoing, in the event the principal balance of the Overadvance Term
Loan shall be less than $3,500,000 after any Increase, the interest
rate on the Overadvance Term Loan will automatically decrease to the
Prime Rate until such time as the principal balance equals or exceeds
$3,500,000, at which time the interest rate shall increase in
accordance with provisions set forth in this Section 1.7.2. Interest
shall be payable monthly, in arrears, commencing on September 1, 2000,
and on the first day of each month thereafter, as long as there is any
unpaid balance under the Overadvance Term Note.
3
5
1.7.3. INTEREST ON TERM NOTE. The Term Loan shall continue to bear
interest on the unpaid principal balance outstanding thereunder from
time to time at a per annum rate equal to the Prime Rate, such rate to
change simultaneously with any change in the Prime Rate; provided,
however, that after maturity, whether by acceleration or otherwise, the
overdue principal and, to the extent permitted by law, overdue interest
at maturity in respect of the Term Note shall bear interest, payable on
demand, at the rate per annum otherwise in effect hereunder plus two
percent (2%), such rate to change simultaneously with any change in the
Prime Rate. Interest shall be payable monthly, in arrears, commencing
on September 1, 2000, and on the first day of each month thereafter, as
long as there is any unpaid balance under the Term Note.
1.7.4. INTEREST ON FLORIDA TERM NOTE. The Florida Term Loan shall
continue to bear interest on the unpaid principal balance outstanding
thereunder from time to time at a per annum rate equal to the Prime
Rate, such rate to change simultaneously with any change in the Prime
Rate; PROVIDED, HOWEVER, that after maturity, whether by acceleration
or otherwise, the overdue principal and, to the extent permitted by
law, overdue interest at maturity in respect of the Florida Term Note
shall bear interest, payable on demand, at the rate per annum otherwise
in effect hereunder plus two percent (2%), such rate to change
simultaneously with any change in the Prime Rate. Interest shall be
payable monthly, in arrears, commencing on September 1, 2000, and on
the first day of each month thereafter, as long as there is any unpaid
balance under the Florida Term Note.
1.8. REPAYMENTS.
1.8.1. REVOLVING NOTE.
1.8.1.1. LOCK BOX. Borrower has established a lock box
arrangement (the "Lock Box") acceptable to Bank, and the
Operating Account, each so designated, in Borrower's name with
Bank. All Account Debtors shall be directed by Borrower to
remit payments on all Accounts to the Lock Box. To secure the
payment and performance of the Loan Obligations, Borrower
hereby grants Bank a Security Interest to Bank in all of the
contents of the Lock Box and the Operating Account, including
all payments made to the Lock Box, all payments received
directly by Borrower and deposited in the Operating Account,
regardless of the form or method of payment and whether made
on the Accounts or as proceeds of other Collateral or
otherwise, and all proceeds thereof.
1.8.1.2. ACCOUNTS IN EFFECT ON CLOSING DATE. On each Business
Day items received in the Lock Box shall be deposited in the
Operating Account by Bank. Borrower shall immediately deposit
in the Operating Account all cash payments received directly
by Borrower, and all cash payments constituting proceeds of
other Collateral and all other funds it receives (other than
advances under the Loans). Borrower and its Affiliates,
employees, agents or other Persons acting for or in concert
with Borrower, shall as trustee for Bank receive any payments
respecting the Accounts or other Collateral which come into
the possession of any of them, and except as otherwise
expressly provided herein, immediately upon receipt thereof,
shall cause the same to be deposited in the Operating Account.
4
6
1.8.1.3. TERMINATION DATE. On the Termination Date, Borrower
shall repay, at the Applicable Lending Office, all remaining
amounts outstanding (whether for principal, interest, fees or
otherwise) with respect to the Revolving Loan.
1.8.1.4. METHOD AND TIME OF PAYMENT PROVISIONS CONTROLLING.
Nothing contained in this Section 1.8.1 shall modify in any
respect the provisions of Section 3.3.
1.8.2. OVERADVANCE TERM NOTE. Borrower shall repay the Overadvance Term
Loan in quarterly installments of $75,000 each, commencing on the
earlier of (i) the first day of the first calendar quarter beginning
after the Term Loan and Florida Term Loan have been repaid in full or
(ii) July 1, 2001, and continuing on the first day of each calendar
quarter thereafter, with a final installment in the amount of the
remaining outstanding principal balance and all accrued interest
thereon being due on the Termination Date, each to be paid at the
Applicable Lending Office.
1.8.3. TERM NOTE. Borrower shall repay the Term Loan in three (3)
consecutive principal payments as follows: a principal payment of
$117,000 is due and payable on October 1, 2000, a principal payment of
$117,000 is due and payable on January 1, 2001, and a payment in the
amount of the remaining outstanding principal balance of the Term Loan,
and all accrued interest thereon, is due and payable in full on April
1, 2001.
1.8.4. FLORIDA TERM NOTE. Borrower shall repay the Florida Term Loan in
three (3) consecutive principal payments as follows: a principal
payment of $31,000 is due and payable on October 1, 2000, a principal
payment of $31,000 is due and payable on January 1, 2001, and a payment
in the amount of the remaining outstanding principal balance of the
Florida Term Loan, and all accrued interest thereon, is due and payable
in full on April 1, 2001.
1.9. PREPAYMENTS.
1.9.1. VOLUNTARY PREPAYMENTS.
1.9.1.1. OVERADVANCE TERM NOTE, TERM NOTE, FLORIDA TERM NOTE,
REVOLVING NOTE. Borrower may prepay the Overadvance Term Note,
the Term Note, the Florida Term Note, or the Revolving Note in
whole at any time or in part from time to time upon one (1)
Business Day's prior written notice to Bank, without penalty
or premium, provided that each prepayment (other than
prepayments as a result of a sweep from the funds in the Lock
Box) is in an amount of One Hundred Thousand and no/100
Dollars ($100,000.00) or a whole multiple thereof.
1.9.2. MANDATORY PREPAYMENTS.
1.9.2.1. PREPAYMENTS FROM THE DISPOSITION OF PROPERTY. After
receipt by Borrower of any Property Sale Proceeds, Borrower
shall pay to Bank an amount equal to the amount of such
Property Sale Proceeds. The term "Property Sale Proceeds"
shall mean all proceeds from the sale of any of Borrower's
property less selling expenses, other than proceeds from the
sale of Borrower's Inventory and the Kissimmee Leasehold.
Borrower need not make such prepayment, however, unless
Borrower's aggregate Property Sale Proceeds during the term of
this Agreement exceeds $75,000.
5
7
1.9.2.2. PREPAYMENTS FROM THE ISSUANCE OF EQUITY SECURITIES.
Without limiting any prohibition on the issuance of equity
securities by Borrower contained herein, all proceeds from the
issuance by Borrower of any equity securities (whether or not
the issuance of such equity securities are permitted
hereunder) less selling expenses shall be promptly paid to
Bank at the time of each such sale.
1.9.2.3. PREPAYMENTS FROM EXCESS CASH FLOW. Within 120 days of
the end of each fiscal year of Borrower (beginning with the
fiscal year of Borrower in which the Term Loan and the Florida
Term Loan are repaid in full), so long as the Overadvance Term
Loan has a balance greater than zero, Borrower shall pay to
Bank an aggregate amount equal to twenty-five percent (25%) of
the amount by which Borrower's Operating Cash Flow for such
fiscal year exceeds $300,000.
1.9.2.4. APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS.
On the 120th day after receipt by Borrower of any cash
proceeds of insurance or condemnation or any like proceeds
with respect to loss or damage to or taking of the Collateral
in accordance with the provisions of any of the Loan Documents
or otherwise, Borrower shall pay to Bank and Bank shall apply
as set forth in Section 1.9.3 an amount equal to (i) the
amount of such proceeds, less (ii) such amounts (in no event
amounts greater than the amount in clause (i)) as have been
expended by Borrower for purposes of rebuilding, repairing or
replacing the property giving rise to the insurance or
condemnation proceeds during the 120-day period from the date
of Borrower's receipt of such proceeds to the date of such
mandatory prepayment. To the extent that any agreement
regarding application of proceeds in the event of the
condemnation or insured destruction or loss of any of the
Collateral is inconsistent with the provisions of this
Section, the terms of this Section will govern.
1.9.3. APPLICATION OF PREPAYMENTS. Each prepayment made under Section
1.9.1 and 1.9.2 shall be applied to the principal installments
of the Term Note in the inverse order of their maturities, so
that (unless the Term Loan is reduced to zero) partial
prepayments shall not change the due dates of any installment
of principal or interest or change the amount of any
installment of principal (except the final payment). If
application to the Term Loan of any prepayment required under
this Section reduces the Term Loan to zero, the remaining
amount of such prepayment shall be applied to the principal
installments of the Florida Term Note in the inverse order of
their maturities, so that (unless the Florida Term Loan is
reduced to zero) partial prepayments shall not change the due
dates of any installment of principal or interest or change
the amount of any installment of principal (except the final
payment). If application to the Florida Term Loan of any
prepayment required under this Section reduces the Florida
Term Loan to zero, the remaining amount of such prepayment
shall be applied to the principal installments of the
Overadvance Term Note in the inverse order of their
maturities, so that (unless the Overadvance Term Loan is
reduced to zero) partial prepayments shall not change the due
dates of any installment of principal or interest or change
the amount of any installment of principal (except the final
payment). If application to the Overadvance Term Loan of any
prepayment required under this Section reduces the Overadvance
Term Loan to zero, the remaining amount of such prepayment
shall be applied
6
8
to reduce the Revolving Loan and the Revolving Commitment
shall be automatically and permanently reduced by an
equivalent amount.
1.9.3.1. PREPAYMENTS RESULTING FROM SALE OF KISSIMMEE
LEASEHOLD. After receipt by Borrower of any Kissimmee
Leasehold Property Sale Proceeds, Borrower shall pay to Bank
an amount equal to the amount of such Kissimmee Leasehold
Property Sale Proceeds. The term "Kissimmee Leasehold Property
Sale Proceeds" shall mean all proceeds from the sale of the
Kissimmee Leasehold, less selling expenses. The Kissimmee
Leasehold Property Sale Proceeds shall be applied to the
principal installments of the Florida Term Note in the inverse
order of their maturities, so that (unless the Florida Term
Loan is reduced to zero) partial prepayments shall not change
the due dates of any installment of principal or interest or
change the amount of any installment of principal (except the
final payment). If application to the Florida Term Loan of any
prepayment required under this Section reduces the Florida
Term Loan to zero, the remaining amount of such prepayment
shall be applied to the principal installments of the Term
Note in the inverse order of their maturities, so that (unless
the Term Loan is reduced to zero) partial prepayments shall
not change the due dates of any installment of principal or
interest or change the amount of any installment of principal
(except the final payment). If application to the Term Loan of
any prepayment required under this Section reduces the Term
Loan to zero, the remaining amount of such prepayment shall be
applied to the principal installments of the Overadvance Term
Note in the inverse order of their maturities, so that (unless
the Overadvance Term Loan is reduced to zero) partial
prepayments shall not change the due dates of any installment
of principal or interest or change the amount of any
installment of principal (except the final payment). If
application to the Overadvance Term Loan of any prepayment
required under this Section reduces the Overadvance Term Loan
to zero, the remaining amount of such prepayment shall be
applied to reduce the Revolving Loan and the Revolving
Commitment shall be automatically and permanently reduced by
an equivalent amount. Notwithstanding anything to the contrary
in this Agreement, in the event the Kissimmee Leasehold Sale
Proceeds are not sufficient to satisfy in full the Florida
Term Loan and Term Loan (the "Deficiency"), such Deficiency
shall automatically be added to the principal amount of the
Overadvance Term Loan, subject only to the execution and
delivery of an Amended and Restated Overadvance Term Note by
the Borrower.
1.9.4. MANDATORY PREPAYMENTS OF REVOLVING NOTE.
1.9.4.1. PREPAYMENTS UPON VOLUNTARY REDUCTION OF REVOLVING
COMMITMENT. On the date of any reduction of the Revolving
Commitment under Section 3.1, Borrower shall prepay the
Revolving Loan to the extent that the aggregate unpaid
principal amount of the Revolving Loan exceeds the aggregate
amount of the Revolving Commitment as so reduced.
1.9.4.2. EXCESS BORROWINGS. Borrower shall not permit or allow
the aggregate unpaid amount of the Revolving Loan at any time
to exceed the Maximum Available Amount, and Borrower shall
repay the Revolving Loan by an amount equal to and to the
extent of any such excess, immediately upon obtaining notice
or knowledge thereof.
7
9
2. GENERAL PROVISIONS CONCERNING INTEREST.
2.1. GENERAL INTEREST PROVISION.
2.1.1. TIME OF ACCRUAL. Interest on each Loan shall accrue
from and including the date of each advance on such Loan to
but excluding the date of any repayment thereof.
2.1.2. COMPUTATION. Interest on each Loan shall be computed on
the basis of a year deemed to consist of 360 days and paid for
the actual number of days elapsed. Any change in the interest
rate on any Loan or any portion thereof resulting from a
change in the Prime Rate shall be effective for the entire day
on which such change in the Prime Rate shall become effective.
2.2. USURY. It is the intention of the parties to comply with all
applicable usury laws. Accordingly, it is agreed that notwithstanding
any provisions to the contrary in the Loan Documents, in no event shall
the Loan Documents require the payment or permit the collection of
interest in excess of the maximum amount permitted by such laws. If any
such excess interest is contracted for, charged or received under the
Loan Documents, or in the event the maturity of the Indebtedness
evidenced by such Loan Documents is accelerated in whole or in part, or
in the event that all or a part of the principal or interest of the
Notes shall be prepaid, so that under any such circumstances the amount
of interest contracted for, charged or received shall exceed the
maximum amount of interest permitted by the applicable usury laws, then
in any such event (i) the provisions of this Section shall govern or
control; (ii) neither Borrower nor any Person now or hereafter liable
for repayment of such Indebtedness shall be obligated to pay the amount
of such interest not permitted by the applicable usury laws; (iii) any
such excess which may have been collected shall be refunded to Borrower
or such other Person; and (iv) the effective rate of interest for the
Notes shall be deemed automatically reduced to the maximum lawful rate
allowed under applicable usury laws.
3. GENERAL PROVISIONS CONCERNING COMMITMENTS AND LOANS.
3.1. CANCELLATION AND REDUCTION OF REVOLVING COMMITMENT. Borrower shall
have the right, upon at least five (5) Business Days' prior written
notice to Bank, at any time, to cancel or from time to time reduce the
Revolving Commitment; provided, however, that if the amount of such
reduction shall cause the Revolving Commitment to be less than the
aggregate principal amount outstanding under the Revolving Loan on the
date of such reduction, then such reduction shall not occur until the
amount of such excess is repaid under Section 1.9.4.2. Any such
reduction of the Revolving Commitment shall (i) be in the amount of One
Hundred Thousand Dollars ($100,000) or any whole multiple thereof; and
(ii) reduce permanently the amount of the Revolving Commitment then in
effect.
3.2. REPAYMENT OR PREPAYMENT OF TERM COMMITMENT, FLORIDA TERM
COMMITMENT, OR OVERADVANCE TERM Commitment. Any prepayment or repayment
of the Term Loan, Florida Term Loan, or Overadvance Term Loan may not
be reborrowed and shall permanently and automatically reduce the Term
Commitment, Florida Term Commitment, or Overadvance Term Commitment by
an amount equal to such prepayment or repayment.
3.3. METHOD AND TIME OF PAYMENT. All payments received by Bank shall be
applied against the Loan Obligations on the Business Day received,
provided, however, for purposes of interest calculation under this
Agreement, (A) cash and wire-transfers of immediately available funds
received by Bank shall be applied against the Loan Obligations on the
Business Day received and (B) checks, instruments and other items of
payment (other than cash and wire-transfers of
8
10
immediately available funds) shall be deemed to have been applied
against the Loan Obligations on the second Business Day after receipt
thereof by Bank. All other payments to be made by Borrower hereunder or
under any of the other Loan Documents shall be made to Bank in Dollars
and in immediately available funds, at the Applicable Lending Office
not later than 1:00 p.m., St. Louis time, on the date on which such
payment shall become due; and funds received after that hour shall be
deemed to have been received by Bank on the next succeeding Business
Day. If any principal of or interest on any Note or any other amount
payable hereunder falls due on a date which is not a Business Day, then
such due date shall be extended to the next succeeding Business Day,
and interest on such principal shall be payable in respect of such
extension. Borrower authorizes and directs Bank to charge any account,
including but not limited to the Operating Account, maintained by it
with Bank or cause an advance to be made under the Revolving Loan, to
the extent that funds are available in such account or accounts or
under such Revolving Loan, in order to cause timely payment to be made
to Bank of principal and interest on the Notes and any other amounts
payable by it to Bank hereunder or under any of the other Loan
Documents.
3.4. EFFECT OF TELEPHONIC NOTICE. Bank shall not incur any liability to
Borrower in acting upon any telephonic notice referred to herein which
Bank believes in good faith to have been given by a duly authorized
officer or other Person authorized to borrow on behalf of Borrower, and
upon the funding of any Borrowing by Bank in accordance with this
Agreement pursuant to any such telephonic notice, Borrower shall be
deemed to have obtained the proceeds of Borrowings hereunder and shall
be liable hereunder and under the Notes with respect to such
Borrowings.
4. COLLATERAL AND SECURITY.
4.1. SECURITY. As security for the Loan Obligations, Borrower has
previously delivered or caused to be delivered to Bank (i) the Amended
and Restated Security Agreement (as has been or may be further amended,
restated, or otherwise modified from time to time, the "Security
Agreement") granting Bank a first priority security interest in the
Personal Property Collateral subject only to applicable Permitted
Liens; (ii) the Trademark Collateral Assignment and Security Agreement
(as may be amended, restated, or otherwise modified from time to time,
the "Trademark Assignment") granting Bank a first priority collateral
assignment of all trademarks of Borrower; (iii) the Assignment of
Accounts Agreement between Borrower and Bank (together, as may be
amended, restated, or otherwise modified from time to time, the
"Account Assignment"); (iv) the Leasehold Mortgage, Security Agreement,
and Fixture Filing, granting Bank a first priority lien on Kissimmee
Leasehold (as it may be amended, restated, extended, renewed, replaced
or otherwise modified from time to time, the "Mortgage"); and (v) any
other documents evidencing or granting a Lien or security interest in
the property of Borrower to Bank which may from time to time be
executed and delivered by Borrower to Bank pursuant to this Agreement.
As further security for the Loan Obligations, as of the Closing Date
Borrower will cause Hotelworks.com, Inc. (formerly known as Hospitality
Worldwide Services, Inc.) ("Hotelworks") to execute and deliver to Bank
a Stock Pledge Agreement by and between Bank and Hotelworks (as may be
amended, restated, or otherwise modified from time to time, the "Stock
Pledge Agreement") pledging 100% of the outstanding shares of Borrower
as security for the Loan Obligations. As further security for any and
all Loan Obligations of Borrower to Bank, if, at any time after the
date of this Agreement, Borrower has any Subsidiaries permitted by this
Agreement, Borrower shall notify Bank thereof and shall immediately
upon Bank's request, deliver such security documents covering such of
the assets of such Subsidiaries as may be requested by Bank; all such
documents delivered to Bank shall be deemed to be Security
9
11
Documents hereunder and all property covered by such documents shall be
deemed Collateral hereunder.
4.2. BANK'S RIGHTS UPON MATURITY. After maturity of any one or more of
the Notes, by acceleration or otherwise, Bank may sell or otherwise
dispose of the Collateral as provided in Section 9.3.
4.3. APPOINTMENT OF BANK AS BORROWER'S ATTORNEY-IN-FACT. Following the
occurrence and during the continuance of an Event of Default, until
such Event of Default has been cured or waived in writing, Borrower
hereby agrees to designate, make, constitute and appoint Bank (and all
Persons designated by Bank) as Borrower's true and lawful agent and
attorney-in-fact (which appointment shall for all purposes be deemed to
be coupled with an interest), and authorizes Bank, in Borrower's or
Bank's name, to: (i) demand payment of Accounts; (ii) enforce payment
of Accounts by legal proceedings or otherwise; (iii) exercise all of
Borrower's rights and remedies with respect to proceedings brought to
collect an Account; (iv) sell or assign any Account upon such terms,
for such amount and at such time or times as Bank deems advisable; (v)
settle, adjust, compromise, extend or renew an Account; (vi) discharge
and release any Account; (vii) prepare, file and sign Borrower's name
on any proof of claim in bankruptcy or other similar documents against
an Account Debtor; (viii) endorse Borrower's name on any verification
of Accounts and notices thereof to Account Debtors; and (ix) do all
acts and things which are necessary, in Bank's sole discretion, to
fulfill the Loan Obligations. (x) take control in any manner of any
item of payment or proceeds of any Account; (xi) have access to any
lock box into which proceeds of any Account are deposited; (xii)
endorse Borrower's name upon any items of payment or proceeds thereof
and deposit the same in Operating Account on account of the Loan
Obligations; (xiii) endorse Borrower's name upon any chattel paper,
document, instrument, invoice, or similar document or agreement
relating to any Account or any goods pertaining thereto; (xiv) execute
in Borrower's name and on Borrower's behalf any financing statements or
amendments thereto; and (xv) after giving notice to Borrower of Bank's
intent to do so, communicate with Borrower's independent certified
public accountants.
4.4. CROSS-COLLATERALIZATION. Borrower expressly agrees that all
Collateral secures the repayment of all Loan Obligations. Any property
of Borrower in which Bank has a Lien to secure the repayment of any of
the Loan Obligations are deemed to secure the repayment of each of the
other Loan Obligations, whether or not the Loan Documents giving rise
to such Lien so provides and whether or not such Loan Document was
executed before, simultaneously with, or after the incurrence of such
Loan Obligation. At the request of Bank, Borrower agrees to execute and
deliver to Bank, or cause to be executed and delivered to Bank, such
documents and agreements (including without limitation amendments to
existing Loan Documents), and shall take or cause to be taken such
actions as Bank deems reasonably necessary to carry out the intent of
this Section.
5. CONDITIONS OF LENDING.
5.1. CONDITIONS TO OVERADVANCE TERM LOAN AND INITIAL BORROWING. As
conditions precedent to Bank's obligation to make the Overadvance Term
Loan and to fund the Revolving Loan on the Closing Date, Borrower shall
comply with the following:
5.1.1. CERTAIN DOCUMENTS. Borrower shall furnish or cause to
be furnished to Bank the following, all in form and substance
satisfactory to Bank:
5.1.1.1. SECOND AMENDED AND RESTATED LOAN AGREEMENT.
This Agreement, duly executed by Borrower.
10
12
5.1.1.2. NEW NOTES. The Revolving Note and the
Overadvance Term Note, duly executed by Borrower.
5.1.1.3. STOCK PLEDGE AGREEMENT. The Stock Pledge
Agreement, duly executed by Hotelworks, together with
original stock certificates representing all of the
issued and outstanding capital stock of Borrower
owned by Hotelworks and stock powers executed in
blank.
5.1.1.4. GOOD STANDING CERTIFICATES. Certificates of
good standing of Borrower in its states of
incorporation and qualification, issued by the
Secretary of State of such states.
5.1.1.5. SECRETARY'S CERTIFICATE. A Certificate of
the Secretary or Assistant Secretary of Borrower
certifying (i) the copies of Borrower's articles or
certificate of incorporation and bylaws furnished to
Bank as accurate, complete and containing all
amendments thereto as of the date of this Agreement,
(ii) the resolutions adopted by the Board of
Directors of Borrower authorizing the execution,
delivery and performance of the Loan Documents, and
the making of the Overadvance Term Loan and the
initial Borrowing under the Revolving Loan and the
Borrowings by Borrower under this Agreement, and
(iii) the names, titles, incumbency and true
signatures of the corporate officers who are
authorized to sign the Loan Documents.
5.1.1.6. CONSENTS; LICENSES; APPROVALS. Copies of all
consents, licenses and approvals, if any, obtained by
Borrower in connection with the execution, delivery,
performance, validity and enforceability of the Loan
Documents; and all such consents, licenses and
approvals received by Bank pursuant to this Section
shall be in full force and effect.
5.1.1.7. UCC FINANCING STATEMENTS. UCC financing
statements, duly executed by Hotelworks which
identify the stock being pledged by Hotelworks to
Bank pursuant to the Stock Pledge Agreement.
5.1.1.8. LEGAL OPINION. An opinion of Borrower's
counsel, duly executed by Borrower's counsel.
5.1.1.9. NOTICE OF BORROWING. A Notice of Borrowing
as required by Section 1.5.1.
5.1.1.10. OTHER. Such other certificates, approvals,
opinions or documents as Bank or its counsel may
reasonably request.
5.1.2. OTHER MATTERS.
5.1.2.1. FINANCIAL STATEMENTS. Borrower shall have
delivered the Initial Financial Statements.
5.1.2.2. NO DEFAULT. No Default or Event of Default
will occur as a result of the Overadvance Term Loan
or the initial Borrowing under the Revolving Loan or
the application of the proceeds thereof.
11
13
5.1.2.3. REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in the Loan
Documents shall be true and correct.
5.1.2.4. MATERIAL ADVERSE CHANGE. There shall not
have been any material adverse change in Borrower's
business, operations, revenues, financial condition
or property since the date of the most recent
Financial Statements delivered to Bank before the
Closing Date, except as disclosed on the Disclosure
Schedule.
5.1.2.5. NO LEGAL RESTRAINTS. There shall be (i) no
litigation, investigation or other proceeding, by or
before any court, arbitrator or governmental
authority, with respect to any of the Loan Documents
or any of the transactions contemplated thereby,
pending or threatened against Borrower or any of its
property, excluding any litigation, investigation or
other proceeding initiated by Bank, and (ii) no
injunction, writ, temporary restraining order or any
order of any nature issued by any court or other
governmental authority which purports to restrain or
enjoin the making of the Term Loan, the making of any
Borrowing or the consummation of any other
transaction contemplated by any of the Loan
Documents.
5.1.2.6. ADDITIONAL MATTERS. All other documents and
matters in connection with the transactions
contemplated by the Loan Documents shall be in form
and substance reasonably satisfactory to Bank.
5.2. CONDITIONS TO SUBSEQUENT BORROWINGS. The obligation of Bank to make any
subsequent advances under the Revolving Loan shall be subject to the prior or
concurrent fulfillment of each of the following additional conditions precedent,
all in a manner reasonably satisfactory to Bank:
5.2.1. DEFAULT. No Default or Event of Default shall have occurred and
be continuing which has not been cured or waived or will occur as a
result of the Borrowing or the application of the proceeds thereof.
5.2.2. NO LEGAL RESTRAINTS. There shall be (i) no litigation,
investigation or other proceeding, by or before any court, arbitrator
or governmental authority, with respect to any of the Loan Documents or
any of the transactions contemplated thereby, pending or threatened
against Borrower or any of its property and (ii) no injunction, writ,
temporary restraining order or any order of any nature issued by any
court or other governmental authority which purports to restrain or
enjoin the making of the Loans or any Borrowing or the consummation of
any other transaction contemplated by the Loan Documents.
6. REPRESENTATIONS AND WARRANTIES.
Except as otherwise set forth in the Disclosure Schedule (the
"Disclosure Schedule") executed by Borrower and Bank of even date herewith,
Borrower represents and warrants to Bank as follows:
6.1. BORROWER ORGANIZATION AND EXISTENCE. Borrower is a corporation
duly organized and existing in good standing under the laws of the
state of its incorporation; is duly qualified to do business and is in
good standing in every state where the nature or extent of its business
or properties require it to be qualified to do business as a foreign
corporation and where the failure to be so qualified would have a
Material Adverse Effect; and has the corporate power and authority to
own its properties and carry on its business as now being conducted.
12
14
6.2. CORPORATE AUTHORIZATION. Borrower is duly authorized to execute,
deliver, and perform its obligations under each of the Loan Documents
to which Borrower is a party, and Borrower is duly authorized to borrow
hereunder; each of the Loan Documents have been properly authorized by
all requisite corporate action of Borrower and its shareholders.
6.3. DUE EXECUTION. Each of the Loan Documents to which Borrower is a
party has been duly executed and delivered on behalf of Borrower.
6.4. CONSENTS; PERMITS; LICENSES. To the knowledge of Borrower, no
consent of any other Person and no consent, permit, license, approval
or authorization of, or registration, declaration or filing with or
notice to, any governmental authority is required in connection with
the execution, delivery or performance by Borrower, or the validity or
enforceability against Borrower, of any of the Loan Documents.
6.5. LEGAL RESTRAINT. To the knowledge of Borrower, neither the Loan
Documents nor the performance by Borrower of its obligations thereunder
(a) violates any provision of any law, rule or regulation or of any
order, judgment, award or decree of any court, arbitrator or
governmental authority to which Borrower is subject, the articles or
certificate of incorporation or bylaws of Borrower, or any security
issued by Borrower or any Material Agreement, or (b) results in the
creation or imposition of any Lien upon which or with respect to
Borrower's properties, except as contemplated by this Agreement.
6.6. ENFORCEABILITY OF LOAN OBLIGATIONS. Each of the Loan Documents to
which Borrower is a party constitutes the legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with
its terms, except to the extent that the enforceability thereof against
Borrower may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditors'
rights generally or by equitable principles of general application
(whether considered in an action at law or in equity).
6.7. LITIGATION AND PROCEEDINGS. Except as disclosed on Schedule 6.8,
there is no pending or, to the best of Borrower's knowledge, threatened
action, suit, investigation or proceeding affecting Borrower before any
court, arbitrator, or governmental authority (including but not limited
to the DOL (ERISA) or the EPA) which, if adversely determined, would
have a Material Adverse Effect. Borrower is not in default under any
applicable statute, rule, order, decree or regulation of any court,
arbitrator or governmental authority having jurisdiction over Borrower
where such default would result in a Material Adverse Effect or would
materially and adversely affect the ability of Borrower to perform the
Loan Obligations.
6.8. OTHER NAMES. During the past five years, Borrower has not used any
corporate or fictitious name other than "Professional Installers,"
"Professional Installers, Inc.," "Bekins Installers," "BDS Logistics,"
"BDS," "Bekins Distribution Services," "BDS Professional Installers,
Inc.," "BDS Acquisition Company, Inc.," and the name for Borrower at
the beginning of this Agreement, which is the same as the name shown on
Borrower's certificate or articles of incorporation through the date of
filing of the last amendment thereto. Borrower is not affiliated in any
way, and has never been affiliated in any way with, nor have any of
Borrower's assets been owned by, "Professional Installers Inc." or
"Professional Installers, Inc." located at 1178 Dunston Drive, St.
Louis, Missouri, or located at 11710 Administration Drive, St. Louis,
Missouri, or with any entity called B.D.& S, Inc., or with any
affiliate or subsidiary of any of the foregoing.
6.9. FINANCIAL STATEMENTS. All Financial Statements furnished to Bank
by Borrower pursuant to Section 7.6.1 and 7.6.3, are complete and
correct in all material respects, have been prepared in accordance with
GAAP (except that interim statements are subject to year-end
13
15
adjustments and do not have footnotes), and fairly present in all
material respects the financial condition and results of the operations
of Borrower as of the dates and for the periods stated therein.
6.10. NO CHANGE IN CONDITION. There has been no material adverse change
in the business, operations, property or financial condition of
Borrower since the date of the most recent Financial Statements of
Borrower furnished to Bank hereunder.
6.11. NO DEFAULT. After this Agreement has become effective, Borrower
is not in default in any material respect in the payment or performance
of any obligations for monies borrowed or under any Material Agreement.
6.12. COMPLIANCE WITH LAWS. Borrower is in compliance, in all material
respects, with all laws, rules and regulations applicable to it, the
violation of which could reasonably be expected to have a Material
Adverse Effect.
6.13. INVESTMENT. Borrower has no Investment in another Person except
Permitted Investments or Investments reflected in the most recent
Financial Statements delivered to Bank.
6.14. INDEBTEDNESS. Borrower has no Indebtedness except existing
Permitted Indebtedness or Indebtedness reflected in the most recent
Financial Statements delivered to Bank.
6.15. LEASES. Borrower has no interest under any leases real property
leases that have lease terms of more than one year and require annual
payments in amounts of more than $100,000, other than (i) the lease for
the Kissimmee Leasehold, (ii) the lease between Borrower and Lowrie
Brown Investment Co. in Orlando, Florida, and (iii) lease contracts
described in the Disclosure Schedule.
6.16. OUTSTANDING GUARANTIES. Borrower has no guaranties of
Indebtedness outstanding.
6.17. TAX LIABILITIES; GOVERNMENTAL CHARGES. No tax Liens have been
filed and, to the knowledge of Borrower, no material claims are being
asserted with respect to any such taxes, assessments, fees or other
governmental charges.
6.18. TITLE TO PROPERTY; STATE OF COLLATERAL. Except for Permitted
Liens, Borrower has good and indefeasible title to all personal
property purported to be owned by it and reflected in its Financial
Statements furnished to Bank. The Collateral is subject to no Lien
except the existing Permitted Liens. Each tangible item of Personal
Property Collateral that is material to the business of Borrower is,
except for normal wear and tear, in good operating condition and repair
and is suitable for the use to which it is customarily put by its
owner.
6.19. INTELLECTUAL PROPERTY RIGHTS. (i) Borrower owns all right, title
and interest in, under and to the Intellectual Property, subject to no
licenses or any interest therein or other agreements relating thereto;
(ii) no Intellectual Property or grant of license by or to Borrower is
subject to any pending or, to the best of Borrower's knowledge,
threatened challenge; and (iii) there are no claims or demands of any
Person pertaining to, or any proceedings which are pending or, to the
best of Borrower's knowledge, threatened, which challenge Borrower's
rights in respect of any proprietary or confidential information or
trade secrets that are material to the conduct of Borrower's business.
6.20. CHIEF PLACE OF BUSINESS; LOCATIONS OF COLLATERAL. As of the date
hereof, the chief executive office and the principal places of business
of Borrower are located at the places listed
14
16
and so identified on Exhibit 6.20. As of the date hereof, the books and
records of Borrower, and all of the Borrower's chattel paper and all
records of Accounts, are located at the places listed and so identified
on Exhibit 6.20. As of the date hereof, all of the Collateral (except
for Inventory which is in transit, or job-site equipment which has been
expensed by Borrower on Borrower's books) is located at the places
listed and so identified on Exhibit 6.20. There is no office or place
of business at which Borrower conducts business except those identified
as its chief executive office, its principal places of business, and
the places where its books and records pertaining to Accounts and
chattel paper are kept as so identified on Exhibit 6.20.
6.21. NEGATIVE PLEDGES. Borrower is not a party to or bound by any
agreement, indenture, or other instrument which prohibits the creation,
incurrence or sufferance to exist of any Lien upon or other conveyance
of the Collateral, except as permitted under this Agreement.
6.22. MARGIN STOCK. Borrower is not engaged and will not engage,
principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" "margin
stock" (within the meaning of Regulation U issued by the Board), and no
part of the proceeds of any Loan hereunder will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
6.23. INVESTMENT COMPANY ACT, ETC. Borrower is not an "investment
company" registered or required to be registered under the Investment
Company Act of 1940, as amended, or, a company "controlled" (within the
meaning of such Investment Company Act) by such an "investment
company". Borrower is not subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or to any other federal or state statute or
regulation limiting its ability to incur Indebtedness for money
borrowed.
6.24. NO SUBSIDIARIES. Borrower has no Subsidiaries.
6.25. LOCK BOXES. Borrower has no lock box other than those allowed or
required hereunder.
6.26. SHAREHOLDER NOTIFICATION. Hotelworks has been notified that
Borrower is executing this Agreement and the other Loan Documents and
that Borrower is entering into the transactions contemplated by this
Agreement and the other Loan Documents.
6.27. OWNERSHIP OF SHARES. Hotelworks owns 100% of the issued and
outstanding capital stock of Borrower. There are no outstanding
warrants, options, subscriptions or other contractual arrangements for
the purchase of any other shares of stock or any securities convertible
into shares of stock of Borrower other than Warrants which Borrower is
permitted to issue hereunder.
7. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any of the Commitments
remain in effect or any Loan Obligation is owing to Bank by Borrower, Borrower
shall do, or cause to be done, the following (and, if, at any time after the
date of this Agreement, Borrower has any Subsidiaries permitted by this
Agreement, Borrower shall cause each of its Subsidiaries to do with respect to
that Subsidiary all of the following as though the Subsidiary were the
Borrower):
7.1. USE OF PROCEEDS. The proceeds of the Overadvance Term Loan and the
Revolving Loans shall be used to pay a dividend to Hotelworks and to
satisfy intercompany indebtedness owed to Hotelworks in the amount of
$6,800,000 as of September 1, 2000, and to the extent of any excess, to
provide working capital and for payment of expenses incurred in
connection with this transaction.
15
17
7.2. CORPORATE EXISTENCE. Borrower shall maintain in good standing its
corporate existence and its right to transact business in those states
in which it is now or hereafter doing business to the extent that the
failure to do so would have a Material Adverse Effect.
7.3. MAINTENANCE OF PROPERTY AND LEASES. Borrower shall maintain all
buildings, equipment, machinery, fixtures and other property necessary
for the operation of its business in a manner consistent with
Borrower's usual past practices; Borrower shall maintain all leases of
real or personal property in good standing, free of any defaults
thereunder which could reasonably be expected to have a Material
Adverse Effect; and Borrower shall obtain and maintain all licenses,
permits and registrations which are material and necessary to the
conduct of its operations.
7.4. INSURANCE. Borrower shall at all times keep insured or cause to be
kept insured all property owned by it and all of the Collateral of a
character usually insured by others carrying on businesses similar to
that of Borrower in such manner and to such extent as such properties
are usually insured. Borrower shall at all times carry insurance
against liability on account of damage to persons or property
(including product liability insurance and insurance required under all
applicable workmen's compensation laws) and covering all other
liabilities common to Borrower's business, in such manner and to such
extent as such coverage is usually carried by others conducting
businesses similar to that of Borrower. All policies of liability
insurance maintained hereunder shall name Bank as an additional
insured; all fire and casualty policies of insurance maintained
hereunder shall reflect Bank's interest therein as mortgagee. All
policies of insurance maintained hereunder shall contain a clause
providing that such policies may not be canceled without thirty (30)
days prior written notice to Bank (provided, however, that Borrower may
cancel its insurance in effect as of the date hereof without thirty
(30) days prior written notice to Bank so long as Borrower
simultaneously establishes comparable insurance coverage which meets
the requirements of this Section). Borrower shall upon request of Bank
at any time furnish updated certificates (in the form required as a
condition to Bank's lending hereunder) for such insurance to Bank.
7.5. COMPLIANCE WITH LAWS. Borrower shall so conduct its operations as
to be in compliance in all material respects with all laws and
government rules and regulations applicable to Borrower, including
those relating to environmental, pension benefits, employment, and
health and safety protection, the violation of which could reasonably
be expected to have a Material Adverse Effect; and within five (5) days
of Borrower's receipt of written notice of any such violation, Borrower
shall provide Bank with notice thereof.
7.6. FINANCIAL INFORMATION. Borrower shall maintain, for itself and any
Subsidiary of Borrower, a system of accounting established and
administered in accordance with GAAP, and shall furnish to Bank:
7.6.1. Within one hundred twenty (120) days after the close of
each fiscal year of Borrower, commencing with fiscal year
2000, Financial Statements for Borrower audited by an
accounting firm reasonably acceptable to Bank (Bank agrees
that BDO Seidman is acceptable).
7.6.2. Within 45 days after the close of each fiscal year of
Borrower, a budget and financial projections for the
succeeding fiscal year.
7.6.3. Within thirty (30) days after the close of each
calendar month in each fiscal year of Borrower, unaudited
Financial Statements for Borrower, in each case certified as
accurate, subject to normal year-end adjustments, by a
Responsible Officer of Borrower.
16
18
7.6.4. Not later than 15 Business Days after the end of each
calendar month, Borrower shall deliver to Bank, duly completed
and signed by a Responsible Officer, a borrowing base
certificate (the "Borrowing Base Certificate") in
substantially the form of Exhibit 7.6.4. The Borrowing Base
Certificate shall be updated monthly with respect to Accounts.
Borrower shall also deliver, not later than 15 Business Days
after the end of such calendar month, an aged trial balance of
Accounts (by invoice date) indicating which Accounts have not
been paid for periods of up to 30, 60, 90 and more than 90
days from the date of invoice. Borrower shall provide such
additional information as Bank may reasonably require with
respect to determination of the Borrowing Base.
7.7. OTHER INFORMATION. Borrower shall promptly deliver written notice to Bank
of: (i) any change in Borrower's name, (ii) any change of Borrower's principal
place of business or chief executive office in any State in which it conducts
its business, (iii) any additional State(s) in which Borrower is required to
qualify to do business, not otherwise disclosed in this Agreement as of the
Execution Date, and (iv) any additional trade names or styles under which
Borrower will create Accounts, or to which instruments in payment of Accounts
may be made payable, not otherwise disclosed in the Disclosure Schedule attached
hereto.
7.8. RECORDKEEPING; RIGHTS OF INSPECTION.
7.8.1. ACCOUNT RECORDS. Borrower shall at all times hereafter maintain
a record of Accounts at its principal place of business, keeping
records that are correct and accurate in all material respects
itemizing and describing the names and addresses of Account Debtors,
relevant invoice numbers, shipping dates and due dates, collection
histories, and Accounts agings, all of which records shall be available
for inspection and making copies or abstracts thereof during Borrower's
usual business hours upon the prior written request of any of Bank's
authorized officers, employees or agents, and as long as such
inspection does not interfere in any material respect with the normal
business operations of Borrower. Borrower shall cooperate with Bank and
its authorized agents during such inspection of the Accounts and the
records with respect thereto.
7.8.2. RECORDS IN GENERAL; AUDITS. In addition to and not as a
limitation of the foregoing, Borrower shall (i) keep proper books of
record and account in which full, true and correct entries, in
conformity with GAAP, are made of all dealings and transactions in
relation to its property, businesses and activities; (ii) when
circumstances deem it reasonable to conduct such review, permit Persons
authorized by Bank to visit and inspect its property, to inspect its
books of record and account and to make photocopies and abstracts
thereof, to review its accounts and to discuss the affairs, finances
and accounts of Borrower with its officers and independent public
accountants, during normal business hours and upon prior written notice
to Borrower; and (iii) permit Bank, upon prior written notice to
Borrower and during Borrower's usual business hours, to perform audits
of such books and records of account and pay all costs of such audits,
including Bank's actual out-of-pocket expenses for each audit;
provided, however, that with respect to performing audits while there
is no Default or Event of Default which is continuing, (a) the
aggregate amount of such costs and expenses shall not exceed the
aggregate amount of $5,000 for any fiscal year of Borrower, (b) there
shall be no more than two audits conducted in any one fiscal year of
Borrower, and (c) such audits shall not interfere in any material
respect with the normal business operations of Borrower.
17
19
7.9. MAINTENANCE OF LIENS OF SECURITY DOCUMENTS.
7.9.1. PRESERVATION AND PERFECTION OF LIENS. Borrower shall promptly,
upon the reasonable request of Bank and at Borrower's expense, execute,
acknowledge and deliver, or cause the execution, acknowledgment and
delivery of, and thereafter register, file or record in an appropriate
governmental office, any document or instrument supplemental to or
confirmatory of the Security Documents or otherwise reasonably
necessary or desirable for the creation, preservation and/or perfection
of the Liens purported to be created by the Security Documents and to
fully consummate the transactions contemplated by the Loan Documents or
to adequately secure the Loans.
7.9.2. COMPLIANCE WITH TERMS OF SECURITY DOCUMENTS. Borrower shall
faithfully observe and comply with all of the material terms,
conditions and covenants contained in the Security Documents.
7.9.3. FURTHER ASSURANCES. Borrower shall execute and deliver, or cause
to be executed and delivered, to Bank such documents and agreements,
and shall take or cause to be taken such actions, as Bank may from time
to time reasonably request to carry out the terms and conditions of
this Agreement and the other Loan Documents.
8. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any of the Commitments
remain in effect or any Loan Obligation is owing to Bank by Borrower, Borrower
will not, directly or indirectly, without the prior written permission of Bank
(and, if at any time after the date of this Agreement Borrower has any
Subsidiaries permitted by this Agreement, the same shall apply to Borrower and
its Subsidiaries collectively as if they, when taken together, constituted the
Borrower):
8.1. LIENS. Create, incur, assume or allow to exist any Lien upon all
or any part of its property, real or personal, now owned or hereafter
acquired, except the following (the "Permitted Liens"):
8.1.1. Liens for taxes, assessments or governmental charges
that (a) are not delinquent or being contested in good faith
and by appropriate proceedings and for which adequate reserves
in accordance with GAAP are maintained on Borrower's books, or
(b) for which the amount in controversy does not exceed
$25,000.
8.1.2. Liens arising out of deposits in connection with
workmen's compensation, unemployment insurance, old age
pensions, or other social security or retirement benefits
legislation.
8.1.3. Deposits or pledges to secure bids, tenders, contracts
(other than contracts for the payment of money), leases,
statutory obligations, surety and appeal bonds, and other
obligations of like nature arising in the ordinary course of
business.
8.1.4. Liens imposed by law, such as mechanics', workmen's,
materialmen's, landlords', carriers', or other like Liens
arising in the ordinary course of business which secure
payment of obligations which are being contested in good faith
by appropriate proceedings and for which adequate reserves in
accordance with GAAP are maintained on Borrower's books,
provided, that, the requirement to contest such Liens shall
not apply to Liens that have been in existence for fewer than
60 days.
18
20
8.1.5. Liens existing on the Closing Date described in the
Disclosure Schedule.
8.1.6. Purchase money security interests or Liens securing
leases that are treated as capital lease obligations on the
Borrower's Financial Statements of $100,000 or less in
connection with any one purchase or capital lease by Borrower,
provided, that, the aggregate amount at any one time shall not
exceed $350,000.
8.1.7. Encumbrances in the nature of zoning, restrictions,
easements and restrictions of record on the use of real
property, which in each case do not materially detract from
the value of the encumbered property.
8.1.8. Landlords' and lessors' liens on rented premises and
restrictions on transfers or assignments of leases.
8.1.9. Liens granted to Bank under the terms of the Loan
Documents.
8.2. PLEDGES AND GUARANTIES. Except to the extent the same would
constitute a Permitted Lien or Permitted Indebtedness, pledge, assign,
or encumber any of its notes, accounts receivable or inventories, nor
discount or sell any of its notes or accounts receivable, nor become
liable as guarantor, surety, or endorser for or on any Indebtedness,
contract, or undertaking of any Person.
8.3. DISPOSITION OF ASSETS. Sell or otherwise transfer all or a
substantial part of its real estate, buildings, machinery, furniture,
equipment, Intellectual Property, or other property now owned or
hereafter acquired, except that Borrower may sell assets (including but
not limited to the Kissimmee Leasehold) provided Borrower makes a
prepayment, if required, of the Property Sale Proceeds and the
Kissimmee Leasehold Sales Proceeds, as the case may be, as required by
Section 1.9.2.1.
8.4. MERGER; LOANS AND INVESTMENTS. Merge or consolidate, unless
Borrower is the surviving entity, or acquire a substantial interest in
any company or business, or make any Investment in or advances to any
Person other than the Permitted Investments.
8.5. INDEBTEDNESS. Create, incur, assume or allow to exist any other
Indebtedness of any kind or description, borrow money, or otherwise
become indebted, except the following (the "Permitted Indebtedness"):
8.5.1. To trade creditors in the normal course of business.
8.5.2. To Bank.
8.5.3. Indebtedness secured by Permitted Liens.
8.5.4. Indebtedness existing as of the date hereof (and
renewals, financings, replacements or extensions of such
Indebtedness).
8.5.5. Intercompany Indebtedness for amounts allocated to
Borrower by its parent for taxes, insurance, audit expenses
and other similar obligations to the extent reasonably
necessary for consolidated tax planning and working capital
management.
8.5.6. Indebtedness arising from judgments that do not cause
an Event of Default.
8.6. DIVIDENDS; FEES. Make, at any time, any payment with respect to
its stock (preferred or common), including any cash dividend or
acquisition or redemption of any outstanding stock or
19
21
retirement or prepayment of any securities before their regularly
scheduled maturity dates, or make, at any time, any loan, advance,
distribution, or other payment (including without limitation management
fees) to a shareholder for any reason, other than dividends to
Borrower's parent to satisfy Permitted Indebtedness under Section
8.5.5.
8.7. ISSUANCE OF SECURITIES. Issue any capital stock, create any new
class of stock, or issue any other securities (including options or
warrants) except (i) the Warrants, provided the Warrants, upon
exercise, will not represent more than 20% of the outstanding capital
stock of Borrower, and the Warrants are issued only to management of
Borrower, and (ii) Borrower may issue securities provided Borrower
makes a prepayment as required by Section 1.9. Additionally, capital
stock can be issued in connection with the exercise of the Warrants so
long as such issued stock is pledged to Bank by the holders thereof
pursuant to documents in form and substance satisfactory to Bank and
the certificates representing such issued stock are delivered to Bank
along with stock powers duly executed in blank.
8.8. TRANSACTIONS WITH AFFILIATES. Enter into or be a party to any
transaction or arrangement, including without limitation, the purchase,
sale or exchange of property of any kind or the rendering of any
service, with any Affiliate, other than in the ordinary course of
business and pursuant to the reasonable requirements of Borrower's
business and on fair and reasonable terms substantially as favorable to
Borrower as those which it could obtain in a comparable arm's-length
transaction with a non-Affiliate; provided, that, this section shall
not apply to payment terms extended to Affiliates for services provided
by Borrower.
8.9. BAILMENT; WAREHOUSING; CONSIGNMENT. Store any Inventory with a
bailee, warehouseman, consignee or similar third party without Bank's
prior written consent and unless Bank shall have received warehouse
receipts or bailee letters satisfactory to Bank prior to the
commencement of such storage; provided, however, that Borrower shall
not be required to obtain Bank's prior written consent or provide Bank
with warehouse receipts or bailee letters with respect to Inventory
which consists of furnishings and similar property received by Borrower
as payment in-kind with an aggregate value not exceeding $100,000.
8.10. SUBSIDIARIES. Acquire, create or have any Subsidiaries other than
those listed on the Disclosure Schedule or included in Permitted
Investments.
8.11. PROTECTION OF COLLATERAL. Allow Borrower's rights in the
Collateral to be affected by attachment, levy, garnishment, or other
judicial process remaining unpaid, unstayed on appeal, undischarged,
unbonded or undismissed for more than thirty (30) days and Borrower
will defend the Collateral from and against the claims and demands of
all Persons, whenever made.
8.12. LOCK BOXES. Maintain any lock box or depository accounts other
than those allowed or required under this Agreement.
8.13. FISCAL YEAR. Change its fiscal year from a fiscal year ending on
the last day of December.
9. EVENTS OF DEFAULT.
9.1. EVENTS OF DEFAULT. Any one or more of the following shall
constitute an event of default (an "Event of Default") under this
Agreement:
20
22
9.1.1. PAYMENT. Nonpayment of any of the Loan Obligations or
any fee or other amount payable hereunder which is not paid
within five days of the date when due and payable, whether at
maturity or otherwise.
9.1.2. REPRESENTATIONS OR WARRANTIES. Any representation or
warranty made by Borrower in any of the Loan Documents is
discovered at any time to have been false in any material
respect as of the date hereof.
9.1.3. COVENANTS OR AGREEMENTS. Breach by Borrower (other than
a breach which constitutes an Event of Default under Sections
9.1.1 or 9.1.2) of any terms, covenants, or provisions of this
Agreement or any of the other Loan Documents which is not
remedied or waived within thirty (30) days after the
occurrence of such breach.
9.1.4. ACCELERATION OF OTHER INDEBTEDNESS. Any obligation of
Borrower (other than Borrower's obligations hereunder) for the
payment of borrowed money in excess of $100,000 is declared to
be due and payable or required to be prepaid (other than by a
regularly scheduled prepayment) prior to the expressed
maturity thereof, and such obligation remains unpaid for five
days.
9.1.5. SECURITY DOCUMENTS. Other than as a result of any
action or omission by Bank, any Security Document ceases to be
in full force and effect or any Lien on any of the Collateral
purported to be created by any Security Document ceases to be
or is not a valid and perfected first priority Lien to the
extent contemplated hereby or thereby.
9.1.6. BANKRUPTCY; INSOLVENCY; ETC. Borrower (i) fails to pay,
or admits in writing its inability to pay, its debts as they
become due, or otherwise becomes insolvent (however
evidenced); (ii) makes an assignment for the benefit of
creditors; (iii) files a petition in bankruptcy, is
adjudicated insolvent or bankrupt, petitions or applies to any
tribunal for any receiver or any trustee of Borrower or any
substantial part of its property; (iv) commences any
proceeding relating to Borrower under any reorganization,
arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter
in effect; (v) if there is commenced against Borrower any such
proceeding which remains undismissed for a period of sixty
(60) days, or Borrower by any act indicates its consent to,
approval of, or acquiescence in any such proceeding or the
appointment of any receiver of or any trustee for Borrower or
of any substantial part of its property, or allows any such
receivership or trusteeship to continue undischarged for a
period of sixty (60) days; or (vi) Borrower shall take any
corporate action to authorize any of the foregoing.
9.1.7. JUDGMENTS; ATTACHMENT; ETC. Any one or more judgments
or orders against Borrower or any attachment or other levy
against the property of Borrower with respect to a claim or
claims, involving in the aggregate a liability (not paid or
fully covered by insurance, less the amount of commercially
reasonable deductibles) in excess of $100,000, remains unpaid,
unstayed on appeal, undischarged, unbonded, or undismissed for
a period of sixty (60) days.
9.1.8. LIQUIDATION OR DISSOLUTION OF BORROWER. Borrower is
liquidated or dissolved.
9.1.9. DISPOSAL OF COLLATERAL. Borrower disposes of any of the
Collateral in a manner other than contemplated elsewhere in
this Agreement.
21
23
9.1.10. LOSS OF COLLATERAL. Uninsured loss, theft, damage or
destruction to or of any of the Collateral (other than
Accounts) which would have a Material Adverse Effect.
9.1.11. DELIVERY OF FINANCIAL STATEMENTS AND REPORTS. Breach
by Borrower of any of the requirements of Section 7.6 with
respect to delivery of Financial Statements and Borrowing Base
Certificates, which breach is not remedied or waived within
five (5) Business Days.
9.1.12. SEIZURE OF ASSETS. All or a substantial part of the
property of Borrower is nationalized, expropriated or
condemned, seized or otherwise appropriated, or custody or
control of such property of Borrower shall be assumed by any
governmental authority or any court of competent jurisdiction
at the instance of any governmental authority, except where
contested in good faith by proper proceedings diligently
pursued where a stay of enforcement is in effect.
9.1.13. STOCK PLEDGE AGREEMENT. A change occurs in the
ownership structure of Borrower which would cause Hotelworks
or the holders of the Warrants, upon liquidation of Borrower,
to be entitled to receive less than 100% of the net assets of
Borrower, after satisfaction of claims of creditors under
applicable law; provided, however, that no Event of Default
will result from such a change in ownership structure which
occurs as part of a transaction which results in the payment
in full of all of the Loan Obligations of Borrower immediately
upon consummation thereof.
9.2. CROSS-DEFAULT; CROSS-COLLATERALIZATION.
9.2.1. CROSS-DEFAULT. It is agreed by Borrower that any Event
of Default under this Agreement will constitute an event of
default under all of the Loan Documents and all other
agreements and evidences of Indebtedness under any of the
other Loan Obligations, whether or not such is an event of
default specified therein.
9.2.2. CROSS-COLLATERALIZATION. Borrower agrees that upon any
Event of Default, the proceeds of any property or Collateral
of Borrower in the possession of Bank or in which Bank has a
security interest, whether or not such property or Collateral
is held as security for the Indebtedness under the Loan
Documents or any of the other Loan Obligations, and any funds
of Borrower on deposit with Bank, may be applied by Bank, at
its discretion, to the Indebtedness outstanding under any of
the Loan Obligations, at such times and in such order as Bank
may from time to time deem appropriate.
9.3. RIGHTS AND REMEDIES IN THE EVENT OF DEFAULT. Upon any Event of
Default, and at any time thereafter, unless and until such Event of
Default has been waived in writing, Bank may:
9.3.1. TERMINATION OF COMMITMENTS. Upon an Event of Default
described in Section 9.1.6, the Commitments shall be deemed
canceled. Upon any other Event of Default, and at any time
thereafter, Bank may cancel the Commitments. Such cancellation
may be without demand or notice of any kind, which Borrower
expressly waives.
9.3.2. ACCELERATION. Declare all of the Indebtedness
outstanding under the Loan Documents immediately due and
payable without demand or notice of any kind, the same being
hereby expressly waived by Borrower and such Indebtedness
shall thereupon be and become immediately due and payable.
22
24
9.3.3. SECURED PARTY RIGHTS. Exercise any or all of the rights
of Bank under the applicable Security Documents and, in the
case of Personal Property Collateral to which the UCC applies,
Bank's rights as a secured party upon default by a debtor.
9.3.4. SALE OR OTHER DISPOSAL OF COLLATERAL. Sell or otherwise
dispose of the Collateral at public or private sale in a
commercially reasonable manner (which sale Bank may postpone
from time to time by announcement at the time and place of
sale stated in the notice of sale or by announcement at any
adjourned sale without being required to give a new notice of
sale) as Bank deems advisable, for cash or credit (provided,
however, that Bank may become the purchaser at any such sale
if permissible under applicable law and Bank may, in lieu of
actual payment of the purchase price, offset the amount
thereof against obligations owing to Bank) and Borrower agrees
that Bank has no obligation to preserve rights to the
Collateral against prior parties or to marshal any Collateral
for the benefit of any Person. Bank may apply the net proceeds
of such sale or other disposition, after deducting all costs
and expenses for custody, preservation and collection, sale
and delivery, to the payment of the Notes or of any or all
other Indebtedness of Borrower to Bank, returning the residue
to Borrower on demand.
9.3.5. USE OF INTELLECTUAL PROPERTIES. Use, without charge or
liability to Bank therefor, any of Borrower's Intellectual
Property, labels, licenses, certificates of authority,
advertising materials, or any of Borrower's other properties
or interests in properties of similar nature in advertising
for sale, selling or otherwise realizing upon any of the
Collateral securing the obligations of Borrower to Bank.
9.3.6. MISCELLANEOUS. Bank may exercise any other rights and
remedies available to Bank under the Loan Documents or
otherwise available to Bank at law or in equity.
9.3.7. APPLICATION OF FUNDS. Any funds received by Bank with
respect to the Loan Obligations after any acceleration,
including but not limited to proceeds of Collateral, shall be
applied, at Bank's discretion, as follows: (i) first, to
reimburse Bank for any amounts due to Bank under Sections
10.11, 10.12 and 10.16; (ii) second, to the payment of accrued
and unpaid fees due hereunder and all other amounts due
hereunder (other than the Loans and interest accrued thereon);
(iii) third, to the payment of interest accrued on the Loans;
(iv) fourth, to the payment of the Loans, in such order as
Bank determines in its absolute discretion; and (v) fifth, to
the payment of the other Loan Obligations. Any remaining
amounts shall be paid to Borrower or such other Persons as
shall be legally entitled thereto.
9.4. BORROWER'S OBLIGATIONS. Upon the occurrence of an Event of
Default, Borrower shall, if Bank so requests, assemble the Collateral
and make it available to Bank at a place or places to be designated by
Bank, reasonably convenient to Borrower, and Borrower shall upon demand
by Bank assign to Bank all of Borrower's right, title and interest in
and to all Intellectual Property of Borrower.
9.5. NOTICE TO ACCOUNT DEBTORS. Bank may, without prior notice to
Borrower, in its sole discretion, at any time or times from and after
the occurrence of an Event of Default and during the continuance
thereof, unless and until such Event of Default has been waived in
writing by Bank, notify any or all Account Debtors that the Accounts
have been assigned to Bank and that Bank has a security interest
therein, and Bank may direct or Borrower, at Bank's request, shall
direct, any or all Account Debtors to make all payments upon the
Accounts directly to Bank. Bank shall furnish Borrower with a copy of
any such notice issued by Bank.
23
25
9.6. WAIVER. On the occurrence and during the continuance of an Event
of Default, unless and until such Event of Default has been waived in
writing by Bank, Borrower waives and releases any and all claims and
causes of action which it may now or ever have against Bank as a result
of any commercially reasonable possession, repossession, collection or
sale by Bank of the Collateral, notwithstanding the effect of such
possession, repossession, collection or sale upon Borrower's business;
all rights of redemption from any such sale; and the benefit of all
valuation, appraisal and exemption laws. If Bank seeks to take
possession of any of the Collateral by replevin or other court process,
Borrower hereby irrevocably waives any bonds, surety and security
relating thereto required by any statute, court rule or otherwise as an
incident to such possession and any demand for possession of the
Collateral prior to the commencement of any suit or action to recover
possession thereof.
9.7. NOTICE. Any notice of a sale, lease, or other disposition of the
Collateral or any other intended action required to be given by Bank,
if delivered or mailed at least ten (10) business days prior to such
proposed action, shall be effective and constitute reasonable and fair
notice to Borrower of any such action under the UCC and for all other
purposes.
9.8. ENTRY UPON PREMISES AND ACCESS TO INFORMATION. Upon the
acceleration of any of the obligations of Borrower hereunder, Bank
shall have the right to (i) enter upon the premises of Borrower where
the Collateral is located (or is believed to be located) without any
obligation to pay rent to Borrower, or any other place or places where
the Collateral is believed to be located and kept, (ii) render the
Collateral usable or saleable, (iii) remove the Collateral therefrom to
the premises of Bank or any agent of Bank for such time as Bank may
desire in order effectively to collect or liquidate the Collateral;
(iv) take possession of, and make copies and abstracts of, Borrower's
original books and records, obtain access to Borrower's data processing
equipment, computer hardware and software relating to the Collateral
and use all of the foregoing and the information contained therein in
any manner Bank deems appropriate; and (v) notify postal authorities to
change the address for delivery of Borrower's mail to an address
designed by Bank and to receive, open and dispose of all mail addressed
to Borrower.
9.9. RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Event of Default, unless and until such Event of Default has
been waived in writing by Bank, Bank is hereby authorized at any time
and from time to time, without notice to Borrower (any such notice
being expressly waived by Borrower), to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at
any time held, any other Indebtedness at any time owing by Bank to or
for the credit or the account of Borrower, and any monies in an amount
equal to the face amount of any instrument then deposited in or
credited to the Lock Box or the Operating Account against any and all
of the Loan Obligations, irrespective of whether or not Bank shall have
made any demand under this Agreement or the Notes and although such
Loan Obligations may be unmatured. The rights of Bank under this
Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which Bank may otherwise
have.
10. MISCELLANEOUS.
10.1. DEFINED TERMS. All capitalized terms used in this Agreement shall
have the meanings defined in the Sections where they are first used, or
if not therein defined, the following meanings (such meanings to be
equally applicable to both the singular and the plural forms of the
terms defined):
"Account Assignment" shall have the meaning given it in Section 4.1.
24
26
"Accounts" shall mean the rights of Borrower to payment for goods sold
or leased or for services rendered.
"Account Debtor" shall mean the obligor on any Account.
"Affiliate" of Borrower shall mean (a) any Person who is a director,
officer or stockholder of Borrower; or (b) any Person which, directly or
indirectly, is in control of, is controlled by or is under common control with,
Borrower; or (c) any officer, director or stockholder of any Person described in
clause (b) above. For purposes hereof, control of a Person shall mean the power,
direct or indirect, (i) to vote twenty percent (20%) or more of the securities
having ordinary voting power for the election of directors of such Person; or
(ii) to direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise and either alone or in conjunction with
others.
"Agreement" shall mean this Amended and Restated Loan Agreement,
including all schedules and Exhibits hereto, as the same may be further amended,
restated, or otherwise modified from time to time; the terms "herein", "hereof",
"hereunder" and like terms shall be taken as referring to this Agreement in its
entirety and shall not be limited to any particular Section or provision
thereof; and Section, schedule and Exhibit references herein are to this
Agreement unless otherwise specified.
"Applicable Lending Office" shall mean the office of Bank at the
address specified by Bank from time to time.
"Bank" shall have the meaning given it in the introductory paragraph to
this Agreement.
"Board" shall mean the Board of Governors of the Federal Reserve System
and any successor thereto or to the functions thereof.
"Borrower" shall have the meaning given it in the introductory
paragraph to this Agreement.
"Borrowing" shall mean a borrowing under the Revolving Loan.
"Borrowing Base" shall mean at any date 85% of the total outstanding
principal balance of the Eligible Accounts of Borrower at such date.
"Borrowing Base Certificate" shall have the meaning given it in Section
7.6.
"Borrowing Date" shall have the meaning given it in Section 1.5.1.1.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks are authorized or required to close under the laws
of the United States of America and/or the State of Missouri.
"Claims Act" shall mean the Assignment of Claims Act of 1940, as
amended from time to time.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all of the Personal Property Collateral, all of
Borrower's interest in real property (whether owned or leased) and any
improvements thereon (including without limitation the Kissimmee Leasehold), and
all proceeds thereof.
25
27
"Commitments" shall mean, collectively, the Revolving Commitment, the
Term Commitment, the Florida Term Commitment, and the Overadvance Term
Commitment.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with Borrower within the meaning of
Section 414(b) or (c) of the Code.
"DOL" shall mean the United States Department of Labor.
"Default" shall mean any of the events specified in Section 9 without
giving effect to any requirement for the giving of notice, for the lapse of
time, or both, or for the happening of any other condition, event or act.
"Disclosure Schedule" shall have the meaning given it in Section 6.
"Dollars" and the sign "$" shall mean lawful money of the United States
of America.
"Eligible Accounts" shall mean all Accounts of Borrower other than the
following: (i) Accounts which remain unpaid as of 90 days (120 days with respect
to Accounts of Wyndham International) after the original date of the applicable
invoice; (ii) all Accounts owing by a single Account Debtor, including a
currently scheduled Account, if 50% or more of the balance owing by such Account
Debtor is ineligible by reason the criteria set forth in clause (i) above; (iii)
Accounts with respect to which the Account Debtor is the United States of
America or any department, agency or instrumentality thereof unless filings in
accordance with the Claims Act have been completed and filed in a manner
satisfactory to Bank; (iv) Accounts with respect to which the Account Debtor is
not a resident of the United States unless the Borrower has obtained for the
benefit of Borrower a letter of credit or other similar instrument securing such
Account Debtor's payment on such Accounts; (v) Accounts arising with respect to
which the goods giving rise thereto have been rejected as unsatisfactory by the
Account Debtor or arising with respect to which the services giving rise thereto
have been rejected as unsatisfactory by the Account Debtor, but only to the
extent of the value of the rejected goods; (vi) Accounts which are accrued but
not invoiced; (vii) Accounts with respect to which Bank does not have a first
priority, valid, fully perfected security interest; (viii) Accounts with respect
to which the Account Debtor is the subject of bankruptcy or a similar insolvency
proceeding or has made an assignment for the benefit of creditors or whose
assets have been conveyed to a receiver or trustee; (ix) Accounts with respect
to which the Account Debtor's obligation to pay the Account is conditional upon
the Account Debtor's approval or is otherwise subject to any repurchase
obligation or return right, as with sales made on a bill-and-hold, guarantied
sale, sale-and-return, sale on approval (except with respect to Accounts in
connection with which Account Debtors are entitled to return Inventory solely on
the basis of the quality of such Inventory) or consignment basis; and (x)
Accounts owing by any supplier to Borrower and subject to offset against trade
accounts payable owing to such Account Debtor to the extent of such offset.
"EPA" shall mean the United States Environmental Protection Agency.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Event of Default" shall mean any of the events specified in Section 9,
PROVIDED that any requirement for the giving of notice, the lapse of time, or
both, or for the happening of any further condition, event or act has been
satisfied.
"Financial Statements" shall mean financial statements of Borrower
prepared in accordance with GAAP, and containing balance sheets, statements of
income and retained earnings and statements of cash flows as at the close of the
relevant period. Financial Statements for the fiscal year commencing 2000
26
28
shall contain an audit report by independent certified public accountants
selected by Borrower and reasonably acceptable to Bank (BDO Seidman being
acceptable to Bank). Financial Statements for a month in a fiscal year shall be
certified by a Responsible Officer and shall include statements of income and
retained earnings and statements of cash flows for the period from the beginning
of such fiscal year to the end of such month, in each case setting forth in
comparative form the figures for the corresponding month in the budget furnished
pursuant to Section 7.6.2. From and after the time Borrower has any Subsidiaries
permitted hereunder, all financial statements of Borrower shall be prepared on a
consolidated and consolidating basis, taking into account all Subsidiaries of
Borrower.
"Florida Term Commitment" shall have the meaning given it in Section
1.4.
"Florida Term Loan" shall mean that certain term loan to Borrower
described in Section 1.4 (as the same may be renewed, extended, amended,
rearranged, restructured, refinanced, restated, replaced or otherwise modified
from time to time).
"Florida Term Note" shall have the meaning given it in Section 1.6.4.
"GAAP" shall mean those generally accepted accounting principles set
forth in Statements of the Financial Accounting Standards Board and in Opinions
of the Accounting Principles Board of the American Institute of Certified Public
Accountants or which have other substantial authoritative support in the United
States of America and are applicable in the circumstances, as applied on a
consistent basis. "Consistent basis" shall, however, mean not only that the
accounting principles observed in the current period are comparable in all
material respects to those applied in the preceding period, but that, in the
case of Financial Statements furnished to Bank, the methods of calculation,
aggregation, and presentation of the balance sheet, statements of income and
retained earnings, and statements of cash flows shall be substantially the same
as those used for the Initial Financial Statements.
"Hazardous Waste" shall mean any hazardous, radioactive, toxic, solid,
special waste or substance or constituent thereof, or any other such substance
(as defined under any applicable law or regulation).
"Hotelworks" shall have the meaning given it in Section 4.1.
"Indebtedness" of a Person, at a particular date, shall mean such
Person's (i) obligations for borrowed money; (ii) obligations representing the
deferred purchase price of property or services, including, without limitation,
bank acceptances payable and loans and/or advances from a factor; (iii) the face
amount of all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder; (iv) all obligations secured
by any Lien on any property or asset owned by such Person, even though such
Person has not assumed or become liable for the payment thereof; (iv) any
material lease obligation which has been, or which should be, in accordance with
GAAP, capitalized; and (v) obligations, or obligations of a Commonly Controlled
Entity, to a Multiemployer Plan, but excluding trade and other accounts payable
arising in the ordinary course of business in accordance with customary trade
terms which are being disputed in good faith by such Person and for which
adequate reserves are being provided on the books of such Person in accordance
with GAAP.
"Initial Financial Statements" shall mean the prior three year's
unaudited Financial Statements and the unaudited Financial Statements for the
most recent month end.
"Intellectual Property" shall mean all letters patent, patent
applications, inventions upon which patent applications have not yet been filed,
trade names, trademarks, trademark registrations and applications, service
marks, service mark registrations and applications, copyrights and copyright
registrations and applications, both domestic and foreign, owned, possessed or
used by Borrower.
27
29
"Inventory" shall mean goods owned by Borrower for sale, lease or
resale or furnished or to be furnished under contracts for services, and raw
materials, goods in process, materials, component parts and supplies used or
consumed, or held by Borrower for use or consumption, in Borrower's business, as
now or hereafter conducted, together with the products and cash and noncash
proceeds thereof.
"Investment" shall mean, as to any Person, (a) a loan or advance of
money or property to such Person, other than advances for travel expenses in the
ordinary course of Borrower's business, (b) stock or other equity interest in
such Person, (c) a debt instrument made or guarantied by such Person, whether or
not convertible to stock or other equity interest in such Person, or (d) any
other interest in or rights with respect to such Person which include, in whole
or in part, a right to share, with or without conditions or restrictions, some
or all of the revenues or net income of such Person.
"Kissimmee Leasehold" shall mean all of Borrower's right, title and
interest in and to the leasehold of real property located at 800-870 Hoagland
Boulevard, Kissimmee, Osceola County, Florida, and all improvements thereon.
"Legal Fees" shall mean all legal fees and expenses incurred by Bank
plus out-of-pocket costs in connection with the preparation, negotiation and
execution of documents necessary or appropriate to consummate the transactions
contemplated by this Agreement.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance (including, without limitation, any
easement, right-of-way, zoning or similar restriction or title defect), lien
(statutory or other) or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC or comparable
law of any jurisdiction).
"Loan Documents" shall mean this Agreement, the Notes, Security
Documents and all other agreements, certificates, documents, instruments and
other writings executed in connection herewith and all amendments thereto, as
the same may be amended, restated, replaced or otherwise modified from time to
time.
"Loan Obligations" shall mean all Indebtedness including, without
limitation, the Revolving Loan, the Overadvance Term Loan, the Term Loan, and
the Florida Term Loan (whether principal, interest, fees or otherwise),
obligations and liabilities of Borrower to Bank, as the same may be renewed,
extended, modified, rearranged, restructured, refinanced or replaced (including,
without limitation, modifications to interest rates or other payment terms of
such indebtedness), (including but not limited to those under this Agreement and
the other Loan Documents and under any Rate Agreement in the event Borrower
chooses to purchase interest rate protection from Bank), whether now existing or
hereafter created, absolute or contingent, direct or indirect, joint or several,
secured or unsecured, due or not due, contractual or tortious, liquidated or
unliquidated, arising by operation of law or otherwise, or acquired by Bank
outright, conditionally or as collateral security from another, including but
not limited to the obligation of Borrower to repay future advances by Bank,
whether or not made pursuant to commitment and whether or not presently
contemplated by Borrower and Bank, and the obligation to repay advances by Bank
under any letters of credit issued for Borrower's account and all costs of
collection thereof, including but not limited to reasonable attorneys' fees and
attorneys' expenses (whether or not there is litigation), court costs and all
costs in connection with any proceedings under the United States Bankruptcy Code
pertaining thereto.
"Loans" shall mean the Revolving Loan, the Overadvance Term Loan, the
Term Loan, and the Florida Term Loan, collectively; and "Loan" shall mean any of
such Loans, individually.
28
30
"Lock Box" shall have the meaning given it in Section 1.8.1.1.
"Material Adverse Effect" shall mean with respect to any event or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration or governmental investigation or proceeding), a
materially adverse effect on the business, operations, revenues, financial
condition or property of Borrower or the ability or Borrower to perform any of
the Loan Obligations.
"Material Agreement" shall mean, as to any Person, any contract to
which such Person is a party or by which such Person is bound which, if violated
or breached, would have a Material Adverse Effect on such Person.
"Maximum Available Amount" shall have the meaning given it in Section
1.1.
"Mortgage" shall have the meaning given it in Section 4.1.
"Multiemployer Plan" shall mean a Pension Benefit Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Net Income" shall mean, for any period of calculation, "net income" as
determined in accordance with GAAP.
"Notes" shall mean the Revolving Note, the Overadvance Term Note, the
Term Note, and the Florida Term Note, collectively; and "Note" shall mean any of
such Notes, individually, as any of them may be amended, restated, extended,
renewed, replaced, or otherwise modified from time to time.
"Notice of Borrowing" shall have the meaning given it in Section 1.5.1.
"Operating Account" shall mean that certain internal depository account
#101409997935 at Bank.
"Operating Cash Flow" shall mean, for any period of calculation, an
amount, calculated in accordance with GAAP, equal to Net Income plus
depreciation and amortization, minus capital expenditures, and minus principal
payments on the Florida Term Note, Term Note and Overadvance Term Note.
"Original Loan Agreement" shall have the meaning given it in the
Preamble to this Agreement.
"Overadvance Term Commitment" shall mean the agreement of Bank to make
the Overadvance Term Loan to Borrower in the amount provided in Section 1.2, as
such amount may be reduced as provided in this Agreement.
"Overadvance Term Loan" shall mean that certain term loan to Borrower
described in Section 1.2 (as the same may be renewed, extended, amended,
rearranged, restructured, refinanced, restated, replaced or otherwise modified
from time to time).
"Overadvance Term Note" shall have the meaning given it in Section
1.6.2.
"Pension Benefit Plan" shall mean any pension or profit-sharing plan
which is covered by Title I of ERISA and all other benefit plans and in respect
of which the Borrower or a Commonly Controlled Entity is an "employer" as
defined in Section 3(5) of ERISA.
"Permitted Indebtedness" shall have the meaning given it in Section
8.5.
29
31
"Permitted Investments" shall mean Investments which mature in one year
or less in (i) interest-bearing United States government obligations; (ii)
certificates of deposit issued by or time deposits with any commercial bank
organized and existing under the laws of the United States or any state thereof
having capital and surplus of not less than $500,000,000.00; (iii) prime
commercial paper rated AAA by Standard and Poor's or Prime P-1 by Moody's
Investor Service, Inc.; (iv) agreements involving the sale and guarantied
repurchase of United States government securities, (v) cash, (vi) accounts
receivable in the ordinary course of business, (vii) loans or advances to
officers, directors or employees in the ordinary course of business for
reasonable business expenses, (viii) investments in capital expenditures, and
(ix) joint venture arrangements.
"Permitted Liens" shall have the meaning given it in Section 8.1.
"Person" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or any
other entity or a government or any agency or political subdivision thereof.
"Personal Property Collateral" shall have mean all of the machinery,
equipment, accounts receivable, inventory, chattel paper, Intellectual Property,
general intangibles and all other personal property of Borrower, whether now
owned or hereafter acquired, and all proceeds thereof.
"Prime Rate" shall mean the per annum interest rate so designated from
time to time as the Prime Rate by Bank. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate charged to any customer
of Bank.
"Property Sale Proceeds" shall have the meaning given it in Section
1.9.2.1.
"Rate Agreement" shall mean any ISDA Master Agreement between Borrower
and any counterparty, all schedules, amendments and supplements thereto, all
replacements thereof, all documents and confirming evidence now or hereafter
exchanged between Borrower and the counterparty confirming the transactions
governed by such agreement, and all guaranties, security and pledge agreements
and other credit support documents given by or on behalf of the counterparty to
secure its obligations thereunder.
"Responsible Officer" shall mean the president, chief financial officer
or controller of Borrower.
"Revolving Commitment" shall mean the agreement of Bank to make
advances of funds under the Revolving Loan to Borrower in the amount provided in
Section 1.1, as such amount may be reduced as provided in this Agreement.
"Revolving Loan" shall mean that certain revolving loan to Borrower
described in Section 1.1 (as the same may be renewed, extended, amended,
rearranged, restructured, refinanced, restated, replaced or otherwise modified
from time to time).
"Revolving Note" shall have the meaning given it in Section 1.6.1.
"Security Agreement" shall have the meaning given it in Section 4.1.
"Security Documents" shall mean, collectively, the Security Agreement,
the Stock Pledge Agreement, the Mortgage, the Trademark Assignment, the Account
Assignment, financing statements, and all additional security agreements,
mortgages, assignments or similar instruments which may be executed and
delivered to Bank pursuant hereto, as such documents may be amended, restated,
or otherwise modified from time to time.
30
32
"Stock Pledge Agreement" shall have the meaning given it in Section
4.1.
"Subsidiary" shall mean, as to any Person, a corporation with respect
to which fifty percent (50%) or more of the outstanding shares of stock of each
class having ordinary voting power (other than stock having such power only by
reason of the happening of a contingency) is at the time owned by such Person or
by one or more Subsidiaries of such Person.
"Term Commitment" shall mean the agreement of Bank to make the Term
Loan to Borrower in the amount provided in Section 1.2, as such amount may be
reduced as provided in this Agreement.
"Term Loan" shall mean that certain term loan to Borrower described in
Section 1.2 (as the same may be renewed, extended, amended, rearranged,
restructured, refinanced, restated, replaced or otherwise modified from time to
time).
"Term Note" shall have the meaning given it in Section 1.6.3.
"Termination Date" shall mean April 1, 2001 with respect to the Term
Loan (and the Term Note), April 1, 2001 with respect to the Florida Term Loan
(and the Florida Term Note), September 1, 2003 with respect to the Revolving
Loan (and the Revolving Note), and September 1, 2003 with respect to the
Overadvance Term Loan (and the Overadvance Term Note).
"Trademark Assignment" shall have the meaning given it in Section 4.1.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of Missouri or such other similar statute as in effect from
time to time in Missouri or any other appropriate jurisdiction.
"United States of America" shall mean, when used in a geographical
sense, all the States of the United States of America and the District of
Columbia.
"Warrant" shall mean any stock options or warrants issued by Borrower
to management of Borrower.
"Welfare Benefit Plan" shall mean any plan described by Section 3(1) of
ERISA.
10.2. TERMS DEFINED BY REFERENCE. As used in this Agreement and in any
certificate, report or other document made or delivered pursuant
hereto, unless the context otherwise requires, accounting terms not
otherwise defined or only partly defined herein (to the extent not
defined) shall be construed, calculations hereunder shall be made and
financial data required hereunder shall be prepared, both as to
classification of items and as to amounts, in accordance with GAAP.
10.3. RIGHT TO CURE. Bank may from time to time, in its reasonable
discretion, for Borrower's account and at Borrower's expense, pay any
amount or do any act required of Borrower hereunder or requested by
Bank to preserve, protect, maintain or enforce the Loan Obligations,
the Collateral or Bank's Liens thereon, and which Borrower fails to pay
or do, including, without limitation, payment of any judgment against
Borrower, insurance premium, taxes or assessments, warehouse charge,
finishing or processing charge, landlord's claim, and any other Lien
upon or with respect to the Collateral. All payments that Bank makes
pursuant to this Section and all out-of-pocket costs and expenses that
Bank pays or incurs in connection with any action taken by it hereunder
shall be a part of the Loan Obligations, the repayment of which shall
be secured by the Collateral. Any payment made or other action taken by
Bank pursuant to this Section shall be
31
33
without prejudice to any right to assert an Event of Default hereunder
and to pursue Bank's other rights and remedies with respect thereto.
10.4. NOTICES. All notices, consents, requests and demands to or upon
the respective parties hereto shall be in writing, and shall be deemed
to have been given or made when delivered in person to those Persons
listed on the signature pages hereof or when received, if sent by
certified or registered United States mail, postage prepaid, return
receipt requested, or, in the case of telegraphic notice, or the
overnight courier services, when delivered to the telegraph company or
overnight courier service, or in the case of telex or telecopy notice,
when sent, verification received, in each case addressed as set forth
on the signature pages hereof, or such other address as either party
may designate by notice to the other in accordance with the terms of
this paragraph.
10.5. AMENDMENTS AND WAIVERS; NON-EXCLUSIVE RIGHTS. No amendment,
modification or waiver of any provision of this Agreement, or any of
the other Loan Documents, nor consent to any departure by Borrower
herefrom or therefrom, shall be effective unless the same shall be in
writing signed by an authorized officer of Bank and Borrower (except
that waivers need only be signed by an authorized officer of Bank), and
then only in the specific instance and for the purpose for which given.
No notice to or demand on Borrower in any case shall entitle Borrower
to any other or further notice or demand in similar or other
circumstances. No failure on the part of Bank to exercise, and no delay
in exercising, any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise by Bank of
any right hereunder preclude any other or further exercise thereof, or
the exercise of any other right.
10.6. RIGHTS NOT EXCLUSIVE. Each and every right granted to Bank
hereunder or under any document delivered hereunder or in connection
with this Agreement or allowed to it at law or in equity shall be
deemed cumulative and may be exercised from time to time.
10.7. INJUNCTIVE RELIEF. Borrower recognizes that if Borrower fails to
perform, observe or discharge any of its obligations under the Loan
Documents, no remedy at law will provide adequate relief to Bank;
therefore, Borrower agrees that Bank shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of
proving actual damages.
10.8. SURVIVAL OF AGREEMENTS. All agreements, representations and
warranties made herein and in the other Loan Documents, and in any
certificates delivered pursuant hereto shall survive the execution and
delivery of this Agreement, the execution and delivery of the Notes and
the making of the Loans. All agreements, obligations and liabilities of
Borrower under this Agreement concerning the payment of money to Bank,
other than the obligation to pay principal of and interest on the
Loans, shall survive the repayment in full of the Loans and the Notes
and the termination of this Agreement.
10.9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and all future holders of
the Notes and their respective successors and assigns, except that
Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Bank.
10.10. PARTICIPATIONS. Bank may, at any time, grant up to one
participation to one bank or other financial institution in 50% or more
of the Loan or other financial accommodation extended by Bank pursuant
to this Agreement. For this purpose, Bank may disclose to a potential
or actual participant all or any information supplied to Bank by or on
behalf of Borrower. Borrower hereby grants to each participant the
right to set off any balances maintained by Borrower in deposit
accounts with such participant against any participation it has
purchased from Bank;
32
34
provided, however, that all amounts received by any such participant
(through the exercise of the right of setoff or otherwise) and applied
to its participation shall be deemed to have been received by Bank.
10.11. PAYMENT OF EXPENSES AND TAXES. Borrower agrees to pay or
reimburse Bank for all of its reasonable costs and out-of-pocket
expenses (including Legal Fees) incurred in connection with the
enforcement or preservation of any of its rights under the Loan
Documents and any such other documents and instruments, including,
without limitation, reasonable attorneys' fees and court costs.
Borrower also agrees to pay, and to save Bank harmless from and against
any and all recording and filing fees and taxes, expenses for title
surveys, title insurance and redatings thereof and any and all
liabilities with respect to, or resulting from any delay in paying
stamp, mortgage and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery
of, or consummation of any of the transactions contemplated by, or any
amendment or modification of, or any waiver or consent under or in
respect of, the Loan Documents. The agreements in this Section shall
survive the repayment in full of the Loans and the Notes and the
termination of this Agreement. Notwithstanding the foregoing, the Bank
shall bear all Legal Fees incurred as a result of the execution and
delivery of the Loan Documents on the Closing Date.
10.12. PAYMENT OF LEGAL FEES. If at any time or times hereafter Bank
shall deem it reasonably necessary to employ counsel (i) to represent
Bank in any litigation, contest, dispute, suit or proceeding or to
commence, defend, petition, intervene or take any other action in or
with respect to any of the same (whether instituted by Bank, Borrower
or any other Person) in any way relating to any of the Collateral
securing the obligations of any of the parties under the Loan
Documents; (ii) to enforce any security interest of Bank in any of the
Collateral securing the obligations of any of the parties under the
Loan Documents upon the occurrence and continuation of an Event of
Default; (iii) to enforce any right of Bank against Borrower or against
any other Person that may be obligated to Bank by virtue of the Loan
Documents; (iv) to amend, release or otherwise modify the Loan
Documents, or any of them, then in the event of any of the foregoing,
all reasonable attorneys' fees arising from such services and all
actual expenses, costs and charges in any respect arising in connection
with the Loan Documents or relating thereto shall constitute a part of
the obligations owing by Borrower to Bank, be payable on demand and
shall be secured by the Collateral securing the obligations of the
parties under the Loan Documents. The agreements in this Section shall
survive the repayment in full of the Loans and the Notes and the
termination of this Agreement.
10.13. SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition, unenforceability or nonauthorization without invalidating
the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction
unless the ineffectiveness of such provision would result in such a
material change as to cause completion of the transactions contemplated
hereby to be unreasonable.
10.14. CHANGE IN ACCOUNTING PRINCIPLES. If Borrower shall, at the end
of its fiscal year and with the concurrence of its independent
certified public accountants, hereafter change the method of valuing
the Inventory of Borrower or if any other changes in accounting
principles from those used in the preparation of the Financial
Statements are hereafter occasioned by promulgation of rules,
regulations, pronouncements or opinions by or are otherwise required by
the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or successors thereto or bodies with
similar functions), and any of such changes result in a change in the
method of calculation of, or affect the results of such calculation of,
any of the financial
33
35
covenants, standards or terms found in Section 10.1 or elsewhere
herein, then the parties hereto agree to enter into and diligently
pursue negotiations in order to amend such financial covenants,
standards or terms so as to equitably reflect such changes, with the
desired result that the criteria for evaluating the financial condition
and results of operations of Borrower shall be the same after such
changes as if such changes had not been made.
10.15. INDEPENDENCE OF COVENANTS. All covenants of Borrower hereunder
shall be given independent effect so that, if a particular action or
condition is prohibited by any of such covenants, the fact that it
would be permitted by an exception to, or be otherwise within the
limitations of, another covenant shall not avoid the occurrence of a
Default or Event of Default if such action is taken or condition
exists.
10.16. INDEMNITY. Borrower irrevocably and unconditionally agrees to
pay, indemnify and hold harmless Bank from and against, and promptly to
reimburse Bank for, any and all claims, damages, liabilities, losses,
costs and expenses (including, without limitations, reasonable
attorneys' fees and disbursements and amounts paid in settlement)
incurred, paid or sustained by Bank in connection with, arising out of,
based upon or otherwise involving or resulting from any threatened (in
writing), pending or completed action, suit, investigation or other
proceeding by, against or otherwise involving Bank and in any way
dealing with, relating to or otherwise involving this Agreement, any of
the other Loan Documents, or any transaction contemplated hereby or
thereby; provided, however, that Borrower shall have no obligation to
indemnify Bank hereunder with respect to liability arising from the
gross negligence or willful misconduct of Bank.
10.17. OTHER SECURITY AND GUARANTIES. Bank may, without notice or
demand and without affecting Borrower's obligations hereunder, from
time to time: (a) take from any Person and hold collateral (other than
the Collateral) for the payment of all or any part of the Loan
Obligations and exchange, enforce and release such collateral or any
part thereof; and (b) accept and hold any endorsement or guaranty of
payment of all or any part of the Loan Obligations and release or
substitute any such endorser or guarantor, or any Person who has given
any Lien in any other collateral as security for the payment of all or
any part of the Loan Obligations, or any other Person in any way
obligated to pay all or any part of the Loan Obligations.
10.18. COUNTERPARTS. This Agreement may be executed by the parties
hereto on any number of separate counterparts, and all such
counterparts taken together shall constitute one and the same
instrument.
10.19. GOVERNING LAW; NO THIRD PARTY RIGHTS. This Agreement, the other
Loan Documents and the Notes and the rights and obligations of the
parties hereunder and thereunder shall be governed by and construed and
interpreted in accordance with the laws of the State of Missouri
applicable to contracts made and to be performed wholly within such
State, without regard to any choice or conflict of laws rules. This
Agreement is solely for the benefit of the parties hereto and their
respective successors and assigns, and no other Person shall have any
right, benefit, priority or interest under, or because of the existence
of, this Agreement.
10.20. CHOICE OF FORUM. SUBJECT ONLY TO THE EXCEPTION IN THE NEXT
SENTENCE, BORROWER AND BANK HEREBY AGREE TO THE EXCLUSIVE JURISDICTION
OF THE FEDERAL COURT OF THE EASTERN DISTRICT OF MISSOURI AND THE STATE
COURTS OF MISSOURI LOCATED IN ST. LOUIS COUNTY, MISSOURI, AND WAIVE ANY
OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY
ACTION INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE
RELATIONSHIP BETWEEN BANK AND
34
36
BORROWER OR THE CONDUCT OF EITHER PARTY IN CONNECTION WITH THIS
AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED
ABOVE. NOTWITHSTANDING THE FOREGOING: (1) BANK SHALL HAVE THE RIGHT TO
BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN ANY
COURTS OF ANY OTHER JURISDICTION BANK DEEMS NECESSARY OR APPROPRIATE IN
ORDER TO REALIZE ON THE COLLATERAL, REAL ESTATE OR OTHER SECURITY FOR
THE LOAN OBLIGATIONS, AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES
THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING
SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE
JURISDICTIONS.
10.21. SERVICE OF PROCESS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT AND CONSENT THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO BORROWER OR BANK (AS APPLICABLE) AT ITS ADDRESS SET FORTH
IN THIS AGREEMENT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF
BANK OR BORROWER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW.
10.22. CAPTIONS. Section captions and the Table of Contents preceding
this Agreement are for convenience only and shall not affect the
interpretation or construction of this Agreement or the Notes.
10.23. INCORPORATION BY REFERENCE. All of the terms of the other Loan
Documents are incorporated in and made a part of this Agreement by this
reference.
10.24. STATUTORY NOTICE--ORAL AGREEMENTS. The following notice is given
pursuant to Section 432.045 of the Missouri Revised Statutes; nothing
contained in such notice shall be deemed to limit or modify the terms
of the Loan Documents: ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO
PROTECT YOU (BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR
DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE
CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.
10.25. STATUTORY NOTICE--INSURANCE. The following notice is given
pursuant to Section 427.120 of the Missouri Revised Statutes; nothing
contained in such notice shall be deemed to limit or modify the terms
of the Loan Documents: UNLESS YOU PROVIDE EVIDENCE OF THE INSURANCE
COVERAGE REQUIRED BY YOUR AGREEMENT WITH US, WE MAY PURCHASE INSURANCE
AT YOUR EXPENSE TO PROTECT OUR INTERESTS IN YOUR COLLATERAL. THIS
INSURANCE MAY, BUT NEED NOT, PROTECT YOUR INTERESTS. THE COVERAGE THAT
WE PURCHASE MAY NOT PAY ANY CLAIM THAT YOU MAKE OR ANY CLAIM THAT IS
MADE AGAINST YOU IN CONNECTION WITH THE COLLATERAL. YOU MAY LATER
CANCEL ANY INSURANCE PURCHASED BY US, BUT ONLY AFTER PROVIDING EVIDENCE
THAT YOU HAVE OBTAINED INSURANCE AS REQUIRED BY OUR AGREEMENT. IF WE
PURCHASE INSURANCE FOR THE COLLATERAL, YOU WILL BE RESPONSIBLE FOR THE
COSTS OF THAT INSURANCE, INCLUDING THE INSURANCE PREMIUM, INTEREST AND
35
37
ANY OTHER CHARGES WE MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE
INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION
OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO YOUR TOTAL
OUTSTANDING BALANCE OR OBLIGATION. THE COSTS OF THE INSURANCE MAY BE
MORE THAN THE COST OF INSURANCE YOU MAY BE ABLE TO OBTAIN ON YOUR OWN.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
36
38
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
BEKINS DISTRIBUTION SERVICES CO., INC.
By: /s/ Daniel P. Kelly
------------------------
Daniel P. Kelly
President
Address: 9362 Dielman Industrial Drive
St. Louis, Missouri 63132-2213
Attn: President
Telecopy No.: (314) 817-0070
with a copy to:
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, FL 33131
Attn: Gary Epstein, Esq.
Telecopy No.: (305) 579-0717
BANK OF AMERICA, N.A.
By: /s/ Gary K. Peterson
------------------------
Gary K. Peterson
Senior Vice President
Address: 100 North Broadway
St. Louis, Missouri 63102
Attention: Mr. Gary K. Peterson
Telecopy No.: (314) 466-6583
with a copy to:
Lewis, Rice & Fingersh, L.C.
500 North Broadway
Suite 2000
St. Louis, Missouri 63101
Attn: Joseph J. Trad, Esq.
Telecopy No.: (314) 241-6056
37
39
LIST OF EXHIBITS TO LOAN AGREEMENT
EXHIBIT # EXHIBIT NAME
- --------- ------------
6.15 Lease Contracts
6.20 Chief Executive Offices, etc.
7.6.4 Borrowing Base Certificate
38
40
EXHIBIT 6.15
LEASE CONTRACTS
Lessor:
West Manor Corporation
Address:
9362 Dielman Industrial Drive
St. Louis, MO 63132
Term:
Seven Years and six months commencing on July 1, 1999 and ending on December 31,
2006
Lessor:
Lowrie Brown Investment Co.
Address:
2001 Directors Row
Orlando, FL 32809
Term:
Three Years and one month beginning February 1, 2000 and ending February 28,
2003
Lessor:
Russell Road Distribution Center Joint Venture
Address:
4155 Russell Road, Ste. H
Las Vegas, NV
Term:
Five Years beginning on November 1, 1996 and ending October 31, 2001
41
EXHIBIT 6.20
CHIEF EXECUTIVE OFFICES, ETC.
9362 Dielman Industrial Drive
St. Louis, Missouri 63132-2213
840 Hoagland Boulevard
Building B
Kissimmee, FL 34741
4155 Russell Road
Las Vegas, NV
800-870 N. Hoagland Boulevard
Kissimmee, FL 34741
i
42
EXHIBIT 7.6.4
BORROWING BASE CERTIFICATE
BORROWING BASE CERTIFICATE OF
BEKINS DISTRIBUTION SERVICES CO., INC.
Date: _______________
Bank of America, N.A.
100 North Broadway
St. Louis, Missouri 63102
Attn: Mr. Gary K. Peterson
1. Accounts Receivable of Borrower
as of the month ending ________ _______
(A)
2. Ineligible Accounts _______
(B)
3. Eligible Accounts (A minus B) _______
(C)
4. Borrowing Base (Line C x 85%) _______
(D)
5. Maximum Available Amount
Lesser of Line D or $1,500,000 _______
(E)
For the purpose of inducing Bank of America, N.A. ("Bank") to make loans or
advances to Bekins Distribution Services Co., Inc., ("Borrower") pursuant to the
terms of that certain Second Amended and Restated Loan Agreement between Bank
and Borrower dated September 1, 2000 (as amended, modified, restated or replaced
from time to time, the "Loan Agreement"; all capitalized terms herein not
otherwise defined shall have the meaning given them in the Loan Agreement) and
the Loan Documents, the undersigned hereby certifies on behalf of Borrower to
Bank that: (a) the foregoing Borrowing Base Certificate is true and correct in
all material respects, consistent with the books and records of Borrower; and
(b) as of the date hereof, no event has occurred and is continuing or would
result from the making of any requested loans under the Loan Agreement which
constitutes a Default or Event of Default thereunder.
BEKINS DISTRIBUTION SERVICES CO., INC.
By:
-------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
i