EXHIBIT 10.1
RESTATED AND AMENDED
LOAN AND SECURITY AGREEMENT
BY AND AMONG
CD&L, INC. (FORMERLY KNOWN AS CONSOLIDATED DELIVERY &
LOGISTICS INC.), CLAYTON/NATIONAL COURIER SYSTEMS, INC.,
CLICK MESSENGER SERVICE, INC., K.B.D. SERVICES, INC.,
OLYMPIC COURIER SYSTEMS, INC., SECURITIES COURIER
CORPORATION, AND SILVER STAR EXPRESS, INC.,
AND
BANK OF AMERICA, N.A.
DATED: AS OF FEBRUARY 10, 2006
TABLE OF CONTENTS
Page
ARTICLE I.....................................................................................................3
DEFINITIONS.............................................................................................3
1.1 INCORPORATION OF DEFINITIONS SET FORTH IN THE PREAMBLE OF THIS AGREEMENT.......................3
1.2 "ACCESSIONS"...................................................................................3
1.3 "ACCOUNTING TERMS".............................................................................3
1.4 "ACCOUNT DEBTOR"...............................................................................4
1.5 "ACCOUNTS" or "ACCOUNTS RECEIVABLE"............................................................4
1.6 "ACH TRANSACTIONS".............................................................................4
1.7 "ADVANCES".....................................................................................4
1.8 "AGREEMENT"....................................................................................5
1.9 "APPLICATION(S)"...............................................................................5
1.10 "AUTHORIZATION TO CHARGE"......................................................................5
1.11 "BANK PRODUCTS"................................................................................5
1.12 "BLOCKED ACCOUNT"..............................................................................5
1.13 "BLOCKED ACCOUNTS".............................................................................5
1.14 "BOOKS AND RECORDS"............................................................................6
1.15 "BORROWER'S AFFILIATE".........................................................................6
1.16 "BORROWING BASE CERTIFICATE"...................................................................7
1.17 "BUSINESS DAY".................................................................................7
1.18 "CAPEX-RELATED DEFINITIONS"...................................................................7
1.19 "CAPTIVE INSURANCE LETTER OF CREDIT"...........................................................7
1.20 CD&L DEFINITIONS...............................................................................8
1.21 CLAYTON DEFINITIONS............................................................................9
(a) "CLAYTON CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT"................................9
(b) "CLAYTON LOCKBOX"......................................................................10
1.22 CLICK DEFINITIONS.............................................................................10
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(a) "CLICK CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT".................................10
(b) "CLICK LOCKBOX"........................................................................11
1.23 "CERTIFICATION AS TO LIENS"...................................................................12
1.24 "CHATTEL PAPER"...............................................................................12
1.25 "COLLATERAL"..................................................................................12
1.26 "COLLATERAL LOCATIONS"........................................................................12
1.27 "COLLATERAL PROCEEDS".........................................................................12
1.28 THIS SECTION INTENTIONALLY OMITTED............................................................13
1.29 "COMMERCIAL TORT CLAIMS"......................................................................13
1.30 "CONSIGNMENTS"................................................................................13
1.31 "CONTRACT RIGHTS".............................................................................13
1.32 "DEFAULT RATE"................................................................................14
1.33 "ELIGIBLE RECEIVABLES"........................................................................14
1.34 "EQUIPMENT"...................................................................................16
1.35 "EVENT OF DEFAULT"............................................................................16
1.36 "FINANCING DOCUMENTS".........................................................................16
1.37 "GAAP"........................................................................................16
1.38 "GENERAL INTANGIBLES".........................................................................16
1.39 "GOODS".......................................................................................18
1.40 "HEDGE AGREEMENTS"............................................................................18
1.41 "INSTRUMENT"..................................................................................19
1.42 "INVENTORY"...................................................................................19
1.43 KBD DEFINITIONS...............................................................................19
(a) "KBD CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT"...................................19
1.44 "LANDLORD'S CONSENTS".........................................................................20
1.45 "LENDER'S AFFILIATE"..........................................................................20
1.46 "LENDING FORMULA".............................................................................20
1.47 "LETTER OF CREDIT OBLIGATIONS"................................................................20
1.48 "LETTER-OF-CREDIT RIGHTS".....................................................................21
1.49 "LETTERS OF CREDIT"...........................................................................21
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1.50 "LIABILITIES".................................................................................21
1.51 "LIBOR-RELATED DEFINITIONS"...................................................................23
1.52 "LIENS".......................................................................................24
1.53 "LOAN DOCUMENTS"..............................................................................24
1.54 "LOAN VALUE"..................................................................................24
1.55 "LOCKBOX".....................................................................................24
1.56 "LOCKBOX".....................................................................................24
1.57 "MATERIAL ADVERSE EFFECT".....................................................................25
1.58 OLYMPIC DEFINITIONS...........................................................................25
(a) "OLYMPIC CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT"...............................25
(b) "OLYMPIC LOCKBOX"......................................................................26
1.59 "OUTSTANDING".................................................................................26
1.60 "PRIME BASED RATE"............................................................................26
1.61 "PRIME RATE"..................................................................................26
1.62 "PROCEEDS"....................................................................................27
1.63 "RECONCILIATION CERTIFICATE"..................................................................27
1.64 "REVOLVING LOAN"..............................................................................27
1.65 "REVOLVING LOAN MATURITY DATE"................................................................27
1.66 "REVOLVING NOTE"..............................................................................27
1.67 SECURITIES DEFINITIONS........................................................................27
(a) "SECURITIES CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT"............................27
(b) "SECURITIES LOCKBOX"...................................................................28
1.68 "SELLERS".....................................................................................29
1.69 "SELLER SUBORDINATED NOTES"...................................................................29
1.70 "SENIOR SUBORDINATED DEBT"....................................................................29
1.71 "SENIOR SUBORDINATED LENDERS".................................................................29
1.72 "SENIOR SUBORDINATED LOAN AGREEMENT"..........................................................29
1.73 "SERIES A DEBENTURE HOLDERS"..................................................................29
1.74 "SERIES A DEBENTURES".........................................................................30
1.75 "SERIES A PREFERRED STOCK"....................................................................30
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1.76 "SERIES A PREFERRED STOCKHOLDERS".............................................................31
1.77 SILVER STAR DEFINITIONS.......................................................................31
(a) "SILVER STAR CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT"...........................31
(b) "SILVER STAR LOCKBOX"..................................................................33
1.78 "SUBSIDIARY"..................................................................................33
1.79 "SUPPORTING OBLIGATIONS"......................................................................34
1.80 "UCC".........................................................................................34
1.81 UCC DEFINITIONS...............................................................................34
ARTICLE II...................................................................................................34
LOANS..................................................................................................34
2.1 THE REVOLVING LOAN............................................................................34
2.2 MAXIMUM BORROWINGS UNDER THE REVOLVING LOAN...................................................37
2.3 DISBURSEMENTS UNDER THE REVOLVING LOAN........................................................37
2.4 RIGHT TO RECEIVE REVOLVING LOAN ADVANCES......................................................40
2.5 REPAYMENT OF REVOLVING LOAN ADVANCES..........................................................42
2.6 PAYMENT OF INTEREST ON THE REVOLVING LOAN.....................................................47
2.7 YIELD MAINTENANCE AND INDEMNIFICATION RELATING TO LIBOR BASED INTEREST........................55
2.8 EVIDENCE OF INDEBTEDNESS UNDER THE REVOLVING LOAN.............................................56
2.9 TERM OF THE REVOLVING LOAN AND PREPAYMENT PREMIUMS............................................58
(a) Revolving Loan Maturity Date...........................................................58
(b) Termination by LENDER..................................................................58
(c) Termination by BORROWERS...............................................................58
(d) Termination/Acceleration Charges.......................................................58
(e) LIBOR indemnification..................................................................60
(f) Effect of Termination..................................................................60
2.10 LETTERS OF CREDIT.............................................................................62
(a) Issuance...............................................................................62
(b) Evidence of Obligation to Pay Amounts Due under the Financing Documents................64
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(c) Repayment of Amounts Due under the Financing Documents; Mandatory Borrowings
to Satisfy Payment Obligations under the Financing Documents...........................65
(d) Non Liability of LENDER................................................................66
(e) Indemnification of LENDER..............................................................68
(f) Fees for the Letters of Credit.........................................................69
(g) Inconsistencies........................................................................69
2.11 LATE CHARGES..................................................................................69
2.12 AUTHORIZATION TO CHARGE AMOUNTS DUE UNDER THIS AGREEMENT......................................70
2.13 MANDATORY REPAYMENT OF ALL LIABILITIES........................................................71
2.14 APPLICATION OF PAYMENTS.......................................................................71
2.15 BORROWERS' ABSOLUTE GUARANTY OBLIGATIONS......................................................71
2.16 RIGHT TO PROCEED AGAINST THE BORROWERS........................................................74
2.17 DELAY OF RIGHTS...............................................................................74
2.18 FEES..........................................................................................75
(a) Closing Fee............................................................................75
(b) Unused Revolving Loan Facility Fee.....................................................75
(c) Collateral Management Fee..............................................................75
(d) Field Examination Fee..................................................................76
(e) Customary Account Fees.................................................................76
ARTICLE III..................................................................................................77
COLLATERAL.............................................................................................77
3.1 CROSS COLLATERALIZATION.......................................................................77
3.2 ACCESSIONS....................................................................................77
3.3 ACCOUNTS RECEIVABLE...........................................................................77
3.4 BOOKS AND RECORDS.............................................................................77
3.5 CHATTEL PAPER.................................................................................77
3.6 COMMERCIAL TORT CLAIMS........................................................................78
3.7 CONSIGNMENTS..................................................................................78
3.8 CONTRACT RIGHTS...............................................................................78
3.9 DEPOSIT ACCOUNTS..............................................................................79
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3.10 EQUIPMENT.....................................................................................79
3.11 GENERAL INTANGIBLES...........................................................................80
3.12 GOODS.........................................................................................80
3.13 INSTRUMENTS...................................................................................80
3.14 INVENTORY.....................................................................................80
3.15 ALL OTHER ASSETS..............................................................................81
3.16 PROCEEDS AND PRODUCTS.........................................................................81
ARTICLE IV...................................................................................................82
REPRESENTATIONS........................................................................................82
ARTICLE V....................................................................................................96
POSITIVE COVENANTS.....................................................................................96
5.1 Payment of Liabilities........................................................................96
5.2 Preservation of Existence and Prohibition against Dissolution, Mergers,
Acquisitions, Formation of Subsidiaries.......................................................97
5.3 Preservation of Assets........................................................................97
5.4 Payment of Taxes..............................................................................98
5.5 Cooperation and Further Assurances............................................................99
5.6 Reporting Requirements.......................................................................100
5.7 Compliance with Laws.........................................................................105
5.8 Insurance....................................................................................105
5.9 No Disposal of Collateral....................................................................108
5.10 LENDER's Power to Endorse Checks and Drafts..................................................109
5.11 Verification of Accounts Receivable..........................................................110
5.12 Field Examinations...........................................................................110
5.13 Collateral Management Fee....................................................................111
5.14 Warranties relating to Accounts Receivable...................................................111
5.15 Taxes Payable on Accounts Receivable.........................................................111
5.16 Disclosure of Certain Information............................................................111
5.17 Operating Accounts...........................................................................112
5.18 Landlord's Consents..........................................................................112
5.19 Subordination Agreements.....................................................................113
(a) Seller Subordinated Notes.............................................................113
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(b) Senior Subordinated Debt..............................................................113
5.20 Minimum Net Annual Earnings Before Extraordinary Items.......................................114
5.21 No Quarterly Loss............................................................................114
5.22 Capital Expenditures.........................................................................115
5.23 Fixed Charge Coverage........................................................................117
5.24 Minimum EBITDA...............................................................................118
5.25 Solvency.....................................................................................119
5.26 Leverage.....................................................................................120
ARTICLE VI..................................................................................................121
NEGATIVE COVENANTS....................................................................................121
6.1 Change in Location...........................................................................121
6.2 Changes in Business..........................................................................121
6.3 Liens........................................................................................122
6.4 Indebtedness.................................................................................122
6.5 Guaranties...................................................................................123
6.6 Control of Ownership.........................................................................123
6.7 Control of Management........................................................................124
6.8 Compromise of Claims.........................................................................124
6.9 Bank Accounts................................................................................124
6.10 Loans and Investments........................................................................124
6.11 Fiscal Year..................................................................................125
6.12 Amendment of Corporate Documents.............................................................125
6.13 Margin Securities............................................................................125
6.14 Transactions with Each Other and with Any Borrower's Affiliate...............................126
6.16 Series A Preferred Stock Redeemed............................................................126
6.17 Dividends and Distributions..................................................................126
ARTICLE VII.................................................................................................126
EVENTS OF DEFAULT.....................................................................................126
ARTICLE VIII................................................................................................131
REMEDIES..............................................................................................131
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ARTICLE IX..................................................................................................136
MISCELLANEOUS.........................................................................................136
9.1 COMMUNICATIONS AND NOTICES...................................................................136
9.2 LENDER MAY PAY, SATISFY, DISCHARGE OR BOND CERTAIN OF BORROWERS' OBLIGATIONS.................137
9.3 PLEDGE TO FEDERAL RESERVE....................................................................137
9.4 ASSIGNMENTS..................................................................................138
9.5 PARTICIPATIONS...............................................................................139
9.6 LENDER MAY FURNISH INFORMATION...............................................................139
9.7 PAYMENTS IN LAWFUL MONEY OF THE UNITED STATES................................................140
9.8 ANTI-USURY PROVISION.........................................................................140
9.9 SUCCESSORS AND ASSIGNS.......................................................................140
9.10 LENDER'S RIGHTS NOT IMPAIRED BY DELAY IN EXERCISING RIGHTS...................................140
9.11 LENDER'S COSTS AND EXPENSES..................................................................141
9.12 NO WAIVER OF LENDER'S RIGHT OF SET-OFF.......................................................142
9.13 GOVERNING LAW................................................................................142
9.14 FORUM FOR LITIGATION.........................................................................142
9.15 AGREEMENT MUST BE SIGNED BY LENDER...........................................................143
9.16 ENTIRE UNDERSTANDING.........................................................................143
9.17 MODIFICATIONS................................................................................143
9.18 CONTINUATION OF SECURITY INTERESTS...........................................................143
9.19 SURVIVAL OF REPRESENTATIONS..................................................................143
9.20 SEVERABILITY.................................................................................143
9.21 ACTIONS OF LENDER............................................................................144
9.22 INCONSISTENCIES..............................................................................144
9.23 CONFIRMATORY SEARCHES........................................................................144
9.24 LENDER NOT BORROWERS' AGENT..................................................................145
9.25 LOST LOAN DOCUMENTS..........................................................................146
9.26 LENDER'S USE OF NOMINEE......................................................................146
9.27 JOINT AND SEVERAL LIABILITY..................................................................146
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9.28 RESTATEMENT AND REPLACEMENT OF 2002 LOAN AGREEMENT AND 2002 LOAN DOCUMENTS...................146
9.29 COUNTERPARTS.................................................................................148
9.30 WAIVER OF JURY TRIAL.........................................................................148
EXHIBITS AND SCHEDULES......................................................................................151
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RESTATED AND AMENDED LOAN AND SECURITY AGREEMENT
This RESTATED AND AMENDED LOAN AND SECURITY AGREEMENT made and dated as
of February 10, 2006, by and among
CD&L, INC. (FORMERLY KNOWN AS CONSOLIDATED DELIVERY &
LOGISTICS INC.), a corporation organized and existing under
the laws of the State of Delaware whose registered agent and
registered address are CT Corporation System, Corporation
Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801 and whose principal place of business
is located at 80 Wesley Street, Hackensack, Bergen County, New
Jersey 07606 (hereinafter "CD&L"), and
CLAYTON/NATIONAL COURIER SYSTEMS, INC., a corporation
organized and existing under the laws of the State of Missouri
whose principal place of business is located at 3390
Enterprise Drive, Hayward, California 94545 (hereinafter
referred to as "CLAYTON"); and
CLICK MESSENGER SERVICE, INC., a corporation organized and
existing under the laws of the State of New Jersey, whose
principal place of business is located at 104 Sunfield Avenue,
Edison, Middlesex County, New Jersey 08818 (hereinafter
referred to as "CLICK"); and
K.B.D. SERVICES, INC., a corporation organized and existing
under the laws of the State of North Carolina, whose its
principal place of business is located at 760 Reedy Creek
Road, Cary, North Carolina 27512 (hereinafter "KBD"); and
OLYMPIC COURIER SYSTEMS, INC., a corporation organized and
existing under the laws of the State of New York whose
principal place of business is located at 185 Varick Street
and 68 King Street, New York, New York 10014 (hereinafter
"OLYMPIC"); and
SECURITIES COURIER CORPORATION, a corporation organized and
existing under the laws of the State of New York whose
principal place of business is located at 80 Wesley Street,
Hackensack, Bergen County, New Jersey 07606 (hereinafter
"SECURITIES"); and
SILVER STAR EXPRESS, INC., a corporation organized and
existing under the laws of the State of Florida whose
principal place of business is located at 3026 North Commerce
Parkway, Miramar, Florida 33166 (hereinafter "SILVER STAR");
(all of the foregoing being hereinafter collectively referred
to as the "BORROWERS" and individually referred to as a
"BORROWER")
and
BANK OF AMERICA, N.A. (successor by merger to Fleet Capital
Corporation), a national banking association organized and
existing under the laws of the United States, with offices at
335 Madison Avenue, 6th Floor, New York, New York 10017 (being
hereinafter referred to as "LENDER")
WITNESSES THAT:
(1) WHEREAS, the BORROWERS are desirous of jointly and severally
borrowing $20,000,000 from LENDER in the form of revolving loan advances,
letters of credit and other financial accommodations (collectively called the
"REVOLVING LOAN" in this Agreement and more fully defined in ARTICLE I below);
(2) WHEREAS, the REVOLVING LOAN consists of a revolving loan/letter of
credit facility extended by LENDER on a joint and several basis to the
BORROWERS; and
(3) WHEREAS, the BORROWERS seek to execute this Agreement so as to
establish a relationship with LENDER setting forth an understanding relating to
the conditions under which each BORROWER might obtain the benefits of such
financial accommodations from LENDER;
(4) WHEREAS, LENDER is willing to enter into this Agreement but only if
the conditions contained in this Agreement are satisfied;
2
(5) WHEREAS, each BORROWER represents that its execution of this
Agreement and its performance of the covenants and terms contained herein will
inure to its economic benefit and will be in furtherance of its organizational
purposes;
NOW THEREFORE in consideration of the premises and the covenants
contained in this Agreement and for other good and valuable consideration, each
BORROWER and LENDER do hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 INCORPORATION OF DEFINITIONS SET FORTH IN THE PREAMBLE OF THIS
AGREEMENT: In this Agreement, the terms "BORROWER", "BORROWERS", "CD&L",
"CLAYTON", "CLICK", "KBD", "LENDER", "OLYMPIC", "SECURITIES" and "SILVER STAR"
shall have the meanings given them in the Preamble and "Whereas" clauses of this
Agreement.
1.2 "ACCESSIONS" means, in addition to the definition of "ACCESSIONS"
as contained in the UCC, Goods that are physically united with other Goods in
such a manner that the identity of the original Goods is not lost.
1.3 "ACCOUNTING TERMS": Any accounting terms used in this Agreement
that are not specifically defined herein shall have the meanings customarily
given to them in accordance with GAAP as in effect on the date of this
Agreement, provided, however, that "goodwill" charges shall be considered
"extraordinary" notwithstanding contrary treatment under GAAP.
3
1.4 "ACCOUNT DEBTOR" means, in addition to the definition of "ACCOUNT
DEBTOR" as contained in the UCC, the person or persons obligated to any BORROWER
on an Account, or Contract Right, or who are represented by any BORROWER to be
so obligated.
1.5 "ACCOUNTS" or "ACCOUNTS RECEIVABLE" means, in addition to the
definition of "ACCOUNT" as contained in the UCC, all of the accounts, contract
rights of BORROWERS (including their rights as an unpaid vendor, or lienor,
including stoppage in transit, replevin and reclamation), including without
limitation any right to the payment of a monetary obligation, whether or not
earned by performance (a) for property that has been or is to be sold, leased,
licensed, assigned or otherwise disposed of, (b) for services rendered or to be
rendered, (c) for a policy of insurance issued or to be issued, (d) for a
secondary obligation incurred or to be incurred; (e) for energy provided or to
be provided; (f) for the use or hire of a vessel under a charter or other
contract; (g) arising out of the use of a credit or charge card or information
contained on or for use with the card; (h) Health-Care-Insurance Receivables and
Bondable Transition Property.
1.6 "ACH TRANSACTIONS" means any cash management or related services
including the automatic clearing house transfer of funds by the Bank for the
account of any Borrower pursuant to agreement or overdrafts.
1.7 "ADVANCES" is a collective term which means all cash advances and
extensions of monetary credit (including those reimbursable expenses of LENDER
deemed to be Advances under this Agreement and other amounts which LENDER is
authorized by this Agreement to charge against the REVOLVING LOAN) now or at any
time hereafter made by LENDER to, on behalf of or for the account of any
BORROWER whether under the REVOLVING LOAN, the Letter of Credit Obligations or
otherwise.
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1.8 "AGREEMENT" is a collective term which means all of the following:
(a) this Loan and Security Agreement; and
(b) all extensions, modifications (including without limitation
modifications increasing the amount of the REVOLVING LOAN or
any other financial accommodation or facility now or hereafter
provided hereunder), refinancings, renewals, substitutions,
replacements and/or redatings hereof.
1.9 "APPLICATION(S)" shall have the meaning given that term in SECTION
2.10(b) below.
1.10 "AUTHORIZATION TO CHARGE" has the meaning given that term in
SECTION 2.12 below.
1.11 "BANK PRODUCTS" means any one or more of the following types of
services or facilities extended to any Borrower by the Bank or any affiliate of
the Bank in reliance on the Bank's agreement to indemnify such affiliate: (a)
credit cards; (b) ACH Transactions; (c) cash management, including controlled
disbursement services; and (d) Hedge Agreements.
1.12 "BLOCKED ACCOUNT" means any one of the Blocked Accounts.
1.13 "BLOCKED ACCOUNTS" shall mean the checking/demand deposit accounts
(if more than one) which LENDER maintains in its own name at any LENDER's
Affiliate or one or more other financial institutions of LENDER's choosing and
into which are to be deposited (a) all sums from any of the Lockboxes and (b)
all Collateral Proceeds and (c) all other sums received by the BORROWERS as
payment for services rendered by them to Account Debtors and/or other third
parties and/or as payment from any sale, lease, transfer, exchange or other
disposition of any of its assets (whether tangible or intangible) and (d) all
other Proceeds of the foregoing, including any insurance or condemnation awards.
5
1.14 "BOOKS AND RECORDS" means all books and records (including such
books and records as are contained in computerized storage media), including,
without limitation, all inventory, purchasing, accounting, sales, export,
import, manufacturing, banking and shipping records, all customer and supplier
lists, files, records, literature and correspondence and all advertising,
marketing and public relations materials, drawings, engineering, manufacturing
and assembly information, operating and training manuals, quotations, bids,
trade association membership, customer credit information and pricing
information, business plans, studies and analysis and personnel records.
1.15 "BORROWER'S AFFILIATE" means any of the following:
(a) any entity that directly or indirectly owns, controls, or
holds with power to vote, ten (10%) percent or more of the
outstanding voting securities of any BORROWER, other than an
entity that holds such securities --
(1) in a fiduciary or agency capacity
without sole discretionary power to
vote such securities; or
(2) solely to secure a debt, if such
entity has not in fact exercised
such power to vote;
(b) any corporation, ten (10%) percent or more of whose
outstanding voting securities are directly or indirectly
owned, controlled, or held with power to vote, by any
BORROWER, or by an entity that directly or indirectly owns,
controls, or holds with power to vote, ten (10%) percent or
more of the outstanding voting securities of any BORROWER,
other than an entity that holds such securities--
(1) in fiduciary or agency capacity
without sole discretionary power to
vote such securities; or
(2) solely to secure a debt, if such
entity has not in fact exercised
such power to vote;
6
(c) any person whose business is operated under a lease or
operating agreement by any BORROWER, or any person
substantially all of whose property is operated under an
operating agreement with any BORROWER; or
(d) any entity that operates the business or substantially all of
the property of any BORROWER under a lease or operating
agreement.
1.16 "BORROWING BASE CERTIFICATE" means that certain certification
substantially in the form of EXHIBIT "A" attached hereto setting forth, among
other things, information relating to amounts and agings of Eligible
Receivables.
1.17 "BUSINESS DAY" shall mean a day on which LENDER is open for
business during their usual business hours and offering substantially all their
services.
1.18 "CAPEX-RELATED DEFINITIONS": The following terms shall have the
meanings given to them in the Sections referenced below:
(a) "CAPITAL EXPENDITURES" shall have the meaning given that term
in SECTION 5.22 below.
(b) "CAPITAL LEASE OBLIGATIONS" shall have the meaning given that
term in SECTION 5.22 below.
(c) "UNFUNDED CAPITAL EXPENDITURES" shall have the meaning given
that term in SECTION 5.22 below.
1.19 "CAPTIVE INSURANCE LETTER OF CREDIT" is a collective term which
means the following:
(a) that certain letter of credit or those certain letters of
credit relating to BORROWERS' captive insurance program from
time to time issued by LENDER or issued at the direction of
LENDER by any LENDER's Affiliate at the request of any
BORROWER for the benefit of beneficiaries designated by any
such BORROWER and for the account of any such BORROWER (and
the other BORROWERS as guarantors) and on terms and conditions
satisfactory to LENDER and to the beneficiary of the
applicable letter of credit.
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(b) all extensions, modifications, refinancings, renewals,
substitutions, replacements and/or redatings thereof agreed to
by LENDER.
1.20 CD&L DEFINITIONS:
(a) "CD&L CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is a
collective term which means the certification of CD&L, to
which is attached each of the following:
(1) Exhibit "A": the Certification of
CD&L's corporate secretary as to a
true, complete and correct copy of
the resolutions adopted by CD&L's
Board of Directors authorizing the
execution and delivery of this
Agreement, the borrowings hereunder,
and the execution and delivery of
the other Loan Documents to which it
is a party;
(2) Exhibit "B": the Certification of
CD&L's corporate secretary as to the
incumbency and specimen signatures
of those officers of CD&L who are to
execute this Agreement and the other
Loan Documents to which it is a
party;
(3) Exhibit "C": a true, complete and
correct copy of CD&L's Certificate
of Incorporation, as amended to
date;
(4) Exhibit "D": a true, complete and
correct copy of CD&L's By-Laws, as
amended to date;
(5) Exhibit "E": a true, complete and
correct copy of CD&L's 2004 "Good
Standing" Certificate for the state
of Delaware, its state of
incorporation, such "Good Standing"
status remaining unchanged through
the date hereof;
(6) Exhibit "F": a true, complete and
correct copy of CD&L's 2004 "Good
Standing" Certificate for the state
of New Jersey, such "Good Standing"
status remaining unchanged through
the date hereof;
(7) Exhibit "G": a true, complete and
correct copy of the Senior
Subordinated Loan Agreement; and
(8) Exhibit "H": a true, complete and
correct copy of each Seller
Subordinated Note.
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1.21 CLAYTON DEFINITIONS:
(a) "CLAYTON CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is a
collective term which means the certification of CLAYTON, to
which is attached each of the following:
(1) Exhibit "A": the Certification of
CLAYTON's corporate secretary as to
a true, complete and correct copy of
the resolutions jointly adopted by
CLAYTON's Board of Directors and
CLAYTON's sole stockholder CD&L
authorizing the execution and
delivery of this Agreement, the
borrowings hereunder, and the
execution and delivery of the other
Loan Documents to which it is a
party;
(2) Exhibit "B": the Certification of
CLAYTON's corporate secretary as to
the incumbency and specimen
signatures of those officers of
CLAYTON who are to execute this
Agreement and the other Loan
Documents to which it is a party;
(3) Exhibit "C": a true, complete and
correct copy of CLAYTON's
Certificate of Incorporation, as
amended to date;
(4) Exhibit "D": a true, complete and
correct copy of CLAYTON's By-Laws,
as amended to date;
(5) Exhibit "E": a true, complete and
correct copy of CLAYTON's 2004 "Good
Standing" Certificate for the state
of Missouri, its state of
incorporation, such "Good Standing"
status remaining unchanged through
the date hereof;
(6) Exhibit "F": a true, complete and
correct copy of CLAYTON's 2004 "Good
Standing" Certificate for the state
of California, such "Good Standing"
status remaining unchanged through
the date hereof; and
(7) Exhibit "G": a true, complete and
correct copy of CLAYTON's 2004 "Good
Standing" Certificate for the state
of Missouri, such "Good Standing"
status remaining unchanged through
the date hereof.
9
(b) "CLAYTON LOCKBOX" means the secured deposit box or boxes
(including, without limitation, the Lockbox known as the "WEST
LOCKBOX") maintained in the name of LENDER by CLAYTON at
LENDER and/or at another financial institution approved by
LENDER into which CLAYTON deposits (1) all Collateral Proceeds
and (2) all other sums received by CLAYTON as payment for
services rendered by it to Account Debtors and/or other third
parties and/or as payment from any sale, lease, transfer,
exchange or other disposition of its Equipment, Goods,
Inventory or other assets (whether tangible or intangible) and
(3) all other Proceeds of the foregoing, including any
insurance or condemnation awards.
1.22 CLICK DEFINITIONS:
(a) "CLICK CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is a
collective term which means the certification of CLICK, to
which is attached each of the following:
(1) Exhibit "A": the Certification of
CLICK's corporate secretary as to a
true, complete and correct copy of
the resolutions jointly adopted by
CLICK's Board of Directors and
CLICK's sole stockholder CD&L
authorizing the execution and
delivery of this Agreement, the
borrowings hereunder, and the
execution and delivery of the other
Loan Documents to which it is a
party;
(2) Exhibit "B": the Certification of
CLICK's corporate secretary as to
the incumbency and specimen
signatures of those officers of
CLICK who are to execute this
Agreement and the other Loan
Documents to which it is a party;
(3) Exhibit "C": a true, complete and
correct copy of CLICK's Certificate
of Incorporation, as amended to
date;
(4) Exhibit "D": a true, complete and
correct copy of CLICK's By-Laws, as
amended to date;
(5) Exhibit "E": a true, complete and
correct copy of CLICK's 2004 "Good
Standing" Certificate for the state
of New Jersey, its state of
incorporation, such "Good Standing"
status remaining unchanged through
the date hereof;
10
(6) Exhibit "F": a true, complete and
correct copy of CLICK's 2004 "Good
Standing" Certificate for the state
of Connecticut, such "Good Standing"
status remaining unchanged through
the date hereof;
(7) Exhibit "G": a true, complete and
correct copy of 2002 CLICK's "Good
Standing" Certificate for the state
of Maine, such "Good Standing"
status remaining unchanged through
the date hereof;
(8) Exhibit "H": a true, complete and
correct copy of CLICK's 2004 "Good
Standing" Certificate for the state
of Massachusetts (indicating failure
to file reports for 2003 and 2004
which failure BORROWERS covenant
promptly and diligently to correct);
(9) Exhibit "I": a true, complete and
correct copy of CLICK's 2004 "Good
Standing" Certificate for the state
of New Hampshire, such "Good
Standing" status remaining unchanged
through the date hereof;
(10) Exhibit "J": a true, complete and
correct copy of CLICK's 2004 "Good
Standing" Certificate for the state
of New York, such "Good Standing"
status remaining unchanged through
the date hereof;
(11) Exhibit "K": a true, complete and
correct copy of CLICK's 2004 "Good
Standing" Certificate for the state
of Pennsylvania, such "Good
Standing" status remaining unchanged
through the date hereof; and
(12) Exhibit "L": a true, complete and
correct copy of CLICK's 2004 "Good
Standing" Certificate for the state
of Vermont, such "Good Standing"
status remaining unchanged through
the date hereof.
(b) "CLICK LOCKBOX" means the secured deposit box or boxes
(including, without limitation, the Lockbox known as the
"NORTHEAST LOCKBOX") maintained in the name of LENDER by CLICK
at LENDER and/or at another LENDER's Affiliate and/or at
another financial institution approved by LENDER into which
CLICK deposits (1) all Collateral Proceeds and (2) all other
sums received by CLICK as payment for services rendered by it
to Account Debtors and/or other third parties and/or as
payment from any sale, lease, transfer, exchange or other
disposition of its Equipment, Goods, Inventory or other assets
(whether tangible or intangible) and (3) all other Proceeds of
the foregoing, including any insurance or condemnation awards.
11
1.23 "CERTIFICATION AS TO LIENS" means that certification given by the
BORROWERS setting forth the existence or non-existence of UCC liens filed
against them.
1.24 "CHATTEL PAPER" means, in addition to the definition of "CHATTEL
PAPER" as contained in the UCC, a record or records that evidence both a
monetary obligation and one or more of the following: a security interest in
specific Goods, a security interest in specific Goods and software used in the
Goods, a security interest in specific Goods and license of software used in the
Goods, a lease of specific Goods, or a lease of specific Goods and license of
software used in the Goods. Chattel Paper also includes: (i) Tangible Chattel
Paper (i.e., Chattel Paper evidenced by a record or records consisting of
information that is inscribed on a tangible medium) and (ii) Electronic Chattel
Paper (i.e., Chattel Paper evidenced by a record or records consisting of
information stored in an electronic medium).
1.25 "COLLATERAL" means all property (including but not limited to all
Collateral set forth in ARTICLE III of this Agreement) whether real, personal or
mixed, or tangible or intangible, now or at any time hereafter given, assigned
or pledged to LENDER to secure the Liabilities by any BORROWER together with all
products and Proceeds of all the foregoing.
1.26 "COLLATERAL LOCATIONS" is a collective term which means the
locations referenced and set forth in SECTION 4.8 below.
1.27 "COLLATERAL PROCEEDS" is a collective term which means each of the
following:
(a) all sums received by the BORROWERS as payment on the Accounts;
and
12
(b) all sums received by the BORROWERS as payment for services
rendered by it to any Account Debtor and/or any other third
party; and
(c) all sums received by the BORROWERS as payment from any sale,
lease, transfer, exchange or other disposition of any of the
Collateral and its other assets (whether tangible or
intangible); and
(d) all products of the foregoing; and
(e) all Proceeds (including proceeds in the form of cash,
invoices, Accounts Receivable, checks, notes, instruments for
the payment of money, remittances in kind, and the like,
together with insurance proceeds and condemnation awards) of
any of the foregoing.
1.28 THIS SECTION INTENTIONALLY OMITTED.
1.29 "COMMERCIAL TORT CLAIMS" means, in addition to the definition of
"COMMERCIAL TORT CLAIMS" as contained in the UCC, a claim arising in tort with
respect to which (a) the claimant is an organization or (b) the claimant is an
individual and the claim arose in the course of claimant's business or
profession and does not include damages arising out of personal injury to or
death of an individual.
1.30 "CONSIGNMENTS" means, in addition to the definition of
"CONSIGNMENTS" as contained in the UCC, a transaction, regardless of form, in
which Goods are delivered to a merchant for the purpose of sale and the merchant
(a) deals in Goods of that kind under a name other than that of the person
making delivery; (b) is not an auctioneer; and (c) is not generally known by its
creditors to be substantially engaged in selling the Goods of others.
1.31 "CONTRACT RIGHTS" means any right of the BORROWERS to receive
payment or performance under a contract not yet earned by payment and/or
performance and any franchise right to operate a business.
13
1.32 "DEFAULT RATE" means a rate per annum equal to the lesser of (a)
400 basis points in excess of the floating Prime Rate or (b) the maximum rate
allowed by law, it being understood that at no time will per annum interest be
calculated at a rate higher than the maximum rate allowed by law.
1.33 "ELIGIBLE RECEIVABLES" means and includes such Accounts Receivable
of the BORROWERS which are and at all times shall continue to be acceptable to
LENDER in all respects. Criteria for eligibility shall be fixed and revised from
time to time, in LENDER's sole discretion and in its exclusive judgment so long
as LENDER acts in good faith and uses reasonable commercial judgment. In
general, an Account Receivable shall in no event be deemed to be eligible unless
the following criteria are met:
(a) such Account is a valid Account;
(b) such Account represents a bona fide performed transaction;
(c) the rendition of services has been completed;
(d) no rejection has occurred;
(e) such services have been finally accepted by the Account Debtor
without dispute, offset, contra-offset, defense or counter
claim and the Account Debtor has agreed to make payment in
accordance with the specified terms of the invoice without
setoff, deduction, breach of warranty or other defense,
dispute or counterclaim by the Account Debtor;
(f) the amount shown on the appropriate BORROWER's books and on
any invoice or statement delivered to LENDER is owing to such
BORROWER;
(g) no partial payment has been made unless such partial payment
is disclosed by the BORROWERS to LENDER on the BORROWERS'
records submitted to LENDER;
14
(h) such Account continues to be in full conformity with the
representations and warranties made by the BORROWERS to LENDER
with respect thereto;
(i) such Account is not an Account with respect to which any
BORROWER is or may become liable to the Account Debtor for
goods sold or services rendered by the Account Debtor to any
such BORROWER;
(j) such Account is not an Account as to which any agreement has
been made under which any deductions or discount or rebate
(including volume rebates) may be claimed except regular
discounts in the usual course of business which have been
disclosed on the face of the invoice;
(k) no more than 75 days have elapsed from the due date of the
Account and no more than 90 days have elapsed from the invoice
date of the Account, provided, however, in cases where "net 10
day" terms are provided to the Account Debtor; no more than 80
days have elapsed from the due date of the Account and no more
than 90 days have elapsed from the invoice date of the
Account;
(l) LENDER is and continues to be satisfied with the credit
standing of the Account Debtor;
(m) such Account is fully collectible when due;
(n) such Account is not based on a "bill and hold" transaction
and/or does not arise from promotional transactions or
salesmen samples;
(o) such Account is not a guaranteed or consignment lease or sale;
(p) such Account arises from a sale to an Account Debtor whose
principal place of business or whose place of incorporation is
located within the United States;
(q) such Account does not arise from a lease or sale to the United
States government or any agency or department thereof unless
the BORROWERS, to the satisfaction of LENDER, have complied
with all statutory requirements relating to the assignment of
any contracts with or claims against the United States
government;
(r) such Account does not arise from an intra-company lease or
sale or from a sale or lease to any BORROWER's Affiliate or a
sale or lease by one BORROWER to any other BORROWER;
15
(s) the Accounts Receivable owed by any single Account Debtor and
its affiliates and against which LENDER is making Advances
does not exceed 20% of all Accounts Receivable (the reference
to percentage being based on dollar amount of Accounts, and
not number of Accounts);
(t) at least 50% of the aggregate of all Receivables owed by the
Account Debtor and its affiliates is otherwise eligible for
lending purposes;
(u) such Account is not payable in a currency other than the
currency of the United States; and
(v) such Account is not otherwise in the sole discretion of LENDER
considered ineligible for lending purposes.
1.34 "EQUIPMENT" means, in addition to the definition of "EQUIPMENT"
contained in the UCC, Goods of every kind, nature and description and whether
affixed to realty or not, other than Inventory, farm products or consumer goods.
1.35 "EVENT OF DEFAULT" has the meaning set forth in ARTICLE VII of
this Agreement.
1.36 "FINANCING DOCUMENTS" has the meaning given that term in SECTION
2.10(A)(1).
1.37 "GAAP" means and refers to generally accepted accounting
principles consistently applied over the period to which they relate.
1.38 "GENERAL INTANGIBLES" means each and all of the following:
(a) all property included within the definition of "GENERAL
INTANGIBLES" contained in the UCC;
(b) any personal property, including things in action, payment
intangibles and software but does not include Accounts,
Chattel Paper, Commercial Tort Claims, Deposit Accounts,
Documents, Goods, Instruments, Investment Property,
Letter-of-Credit Rights, Letters of Credit, money, and oil,
gas or other minerals before extraction;
16
(c) all rights of each BORROWER, including but not limited to all
rights to property, choses in action and other rights of each
BORROWER not otherwise specifically included elsewhere in this
Agreement, further including but not limited to all present
and future federal and state tax refunds, trademarks
(including, without limitation, the trademark "CD&L"), trade
names (including, without limitation, the trade name "CD&L"),
service marks (including, without limitation, the service mark
"CD&L"), copyrights and patents, all rights under license
agreements for the use of same, warranties, insurance proceeds
and condemnation awards; and
(d) (1) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and
reexaminations thereof; (2) all trademarks (including, without
limitation, service marks, trade dress, logos, trade names,
together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals
in connection therewith; (3) all copyrightable works, all
copyrights, and all applications, registrations, and renewals
in connection therewith; (4) all mask works and all
applications, registrations, and renewals in connection
therewith; (5) all trade secrets and confidential business
information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals,
secret processes and procedures, engineering, production,
assembly, design, installation, other technical drawings and
specifications, working notes and memos, market studies,
consultants' reports, technical and laboratory data,
competitive samples, engineering prototypes, and all similar
property of any nature, tangible or intangible); (6) all
computer software (including data and related documentation),
computer applications software, owned or licensed, whether for
general business usage (e.g., accounting, word processing,
graphics, spreadsheet analysis, etc.) or specific,
unique-to-the-business usage (e.g., order processing,
manufacturing, process control, shipping, etc.) and computer
operating, security or programming software; (7) all rights in
and to any domain names and url addresses; (8) all other
proprietary rights; and (9) all copies and tangible
embodiments thereof (in whatever form or medium);
17
(e) all federal, foreign, state, local and other governmental
consents, licenses, permits, franchises, approvals,
notifications, numbers and identifiers issued by governmental
authorities, grants and other authorizations required for the
operation of each BORROWER's business;
(f) all unperformed commitments or obligations owing to each
BORROWER which pertain to each such BORROWER's business;
(g) all other tangible and intangible assets (including the
telephone and facsimile numbers used in connection with each
BORROWER's business, all causes of action, rights of action
(whether in tort, contract or otherwise), contract rights and
warranty and product liability claims against third parties),
unliquidated rights and claims pursuant to warranties made by
manufacturers, suppliers or vendors, claims for refunds,
rights of off-set and credits of all kinds, which are used or
useful in or necessary to the operation of each BORROWER's
business; and
(h) all of the goodwill associated with each BORROWER's business
as a going concern.
1.39 "GOODS" means, in addition to the definition of "GOODS" as
contained in the UCC, all things that are movable when a security interest
attaches and includes all articles of tangible personal property capable of
being sold, supplied, leased or otherwise disposed of, and shall include all of
each BORROWER's right, title and interest in and to the Goods and other property
underlying or securing any of the Accounts Receivable.
1.40 "HEDGE AGREEMENTS" means, with respect to any BORROWER, any and
all transactions, agreements or documents now existing or hereafter entered
into, which provides for an interest rate, credit, commodity or equity swap,
cap, floor, collar, forward foreign exchange transaction, currency swap, cross
currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging any
Person's exposure to fluctuations in interest or exchange rates, loan, credit
exchange, security or currency valuations or commodity prices.
18
1.41 "INSTRUMENT" means, in addition to the definition of "INSTRUMENT"
as contained in the UCC, a negotiable instrument or a security, or any other
writing which evidences a right to the payment of money and is not itself a
security agreement or lease and is of the type which is, in the ordinary course
of business, transferred by delivery with any necessary endorsement or
assignment.
1.42 "INVENTORY" means, in addition to the definition of "INVENTORY" as
contained in the UCC, Goods (other than farm goods) which are (a) leased by any
BORROWER as lessor, or (b) held by any BORROWER for sale or lease or to be
furnished under contracts of service, or (c) are furnished by any BORROWER under
a contract of service, or (d) consist of raw materials, work in process,
finished Goods or materials used or consumed in a business (including materials
and supplies, incidentals, packaging materials and all other items which
contribute to the finished product or to the promotion or sale thereof) and all
Goods returned by or reclaimed from customers.
1.43 KBD DEFINITIONS:
(a) "KBD CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is a
collective term which means the certification of KBD, to which
is attached each of the following:
(1) Exhibit "A": the Certification of
KBD's corporate secretary as to a
true, complete and correct copy of
the resolutions jointly adopted by
KBD's Board of Directors and KBD's
sole stockholder SILVER STAR
authorizing the execution and
delivery of this Agreement, the
borrowings hereunder, and the
execution and delivery of the other
Loan Documents to which it is a
party;
19
(2) Exhibit "B": the Certification of
KBD's corporate secretary as to the
incumbency and specimen signatures
of those officers of KBD who are to
execute this Agreement and the other
Loan Documents to which it is a
party; and
(3) Exhibit "C": a true, complete and
correct copy of KBD's Certificate of
Incorporation, as amended to date;
(4) Exhibit "D": a true, complete and
correct copy of KBD's By-Laws, as
amended to date; and
(5) Exhibit "E": a true, complete and
correct copy of KBD's 2004 "Good
Standing" Certificate for the state
of North Carolina, its state of
incorporation, such "Good Standing"
status remaining unchanged through
the date hereof.
1.44 "LANDLORD'S CONSENTS" is a collective term which means all of the
following:
(a) that certain waiver and consent or those certain waivers and
consents pursuant to which the owners of the Collateral
Locations which correspond to each BORROWER's respective
principal place of business agree to allow LENDER to come onto
such premises in order to exercise its rights against the
BORROWERS upon the occurrence of an Event of Default
hereunder; and
(b) all extensions, modifications, renewals, substitutions,
replacements and/or redatings of the foregoing.
1.45 "LENDER'S AFFILIATE" means any entity which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, LENDER (or any successor thereto).
1.46 "LENDING FORMULA" shall have the meaning give that term in SECTION
2.2 of this Agreement.
1.47 "LETTER OF CREDIT OBLIGATIONS" means (a) all amounts which LENDER
actually advances or is contingently liable to advance on account of any Letters
of Credit (including the Captive Insurance Letter of Credit), (b) in the event
that LENDER is not itself the issuer of any Letter of Credit, all amounts which
LENDER actually advances or is contingently liable to advance to any such issuer
on account of the Letters of Credit, (c) any acceptances created thereunder and
(d) all other sums (including fees and interest due on any amounts drawn under
any Letter of Credit from the date of any such draw until the date of
reimbursement by the BORROWERS) due to LENDER or any issuer of any Letter of
Credit under any documentation, including the Applications, due to LENDER under
any documentation, including the Applications, now or hereafter governing
LENDER's rights and obligations relating to any Letter of Credit.
20
1.48 "LETTER-OF-CREDIT RIGHTS" means, in addition to the definition of
"LETTER OF CREDIT RIGHTS" as contained in the UCC, a right to payment and
performance under a Letter of Credit whether or not the beneficiary has demanded
or is at the time entitled to demand payment or performance, excluding, however,
the right of a beneficiary to demand payment or performance under a Letter of
Credit.
1.49 "LETTERS OF CREDIT" is a collective term which means the Captive
Insurance Letter of Credit together with those certain documentary and/or
stand-by letters of credit from time to time issued by LENDER or issued at the
direction of LENDER by any LENDER's Affiliate or other financial institution
acceptable to LENDER at the request of any BORROWER for the benefit of
beneficiaries designated by any such BORROWER and for the account of any such
BORROWER (and the other BORROWERS as guarantors) and on terms and conditions
satisfactory to LENDER.
1.50 "LIABILITIES" means all of the following:
(a) principal due to LENDER on the REVOLVING LOAN (including all
Advances and re-Advances thereunder), to be paid with interest
thereon as required by this Agreement and the REVOLVING NOTE;
21
(b) Advances and re-Advances which are and which may be made from
time to time by LENDER to the BORROWERS not in compliance with
the Lending Formula or the "LOAN VALUE" requirements of
ARTICLE II;
(c) Advances and re-Advances which are and which may be made from
time to time by LENDER or any LENDER's Affiliate to, on behalf
of or for the account of any BORROWER over and above any
monetary limitation on the REVOLVING LOAN and over and above
any other lending limitation contained in this Agreement, and
the interest thereon;
(d) all amounts which LENDER or any LENDER's Affiliate has
actually advanced or is contingently liable to advance on
account of Letters of Credit; and/or in the event that LENDER
is not itself the issuer of any Letter of Credit, all amounts
which LENDER actually advances or is contingently liable to
advance to any such issuer (including without limitation any
LENDER's Affiliate on account of the Letters of Credit;
(e) the Letter of Credit Obligations;
(f) any and all other advances, re-advances, borrowings and
re-borrowings made by LENDER to any BORROWER prior to, on and
after the date of this Agreement to, or on the account of, any
BORROWER;
(g) any and all interest, commissions, checking account
overdrafts, bank overdrafts, and other obligations,
liabilities and indebtedness owed by any BORROWER to LENDER or
any LENDER's Affiliate (whether direct or indirect, primary,
secondary, contingent, joint or several, and regardless of how
acquired by LENDER or any such Lender's Affiliate) which are
due or which will arise or become due in the future, no matter
how or when arising and whether under any now existing or
future agreement or instrument of whatever nature (1) between
any BORROWER and LENDER or (2) between any BORROWER and any
LENDER's Affiliate or (3) otherwise;
(h) the performance and fulfillment by each BORROWER of all the
terms, conditions, promises, covenants and provisions
contained in this Agreement, or in any now existing agreement
or future agreement or instrument of whatever nature (1)
between any BORROWER and LENDER or (2) between any BORROWER
and any LENDER's Affiliate;
22
(i) all claims, damages, losses, liabilities, reasonable costs or
expenses whatsoever which LENDER may incur (or which may be
claimed against LENDER by any person or entity whatsoever
including any LENDER's Affiliate by reason of or in connection
with the execution and delivery or transfer of, or payment or
failure to pay under the REVOLVING LOAN and the Letter of
Credit Obligations;
(j) the amount due upon any notes or other obligations given to,
or received by, LENDER or any LENDER's Affiliate on account of
any of the foregoing.
1.51 "LIBOR-RELATED DEFINITIONS": The following terms shall have the
meanings given to them in the Sections referenced below:
(a) "LIBOR" shall have the meaning given that term in SECTION
2.6(d)(1) below.
(b) "LIBOR INTEREST PERIOD" shall have the meaning given that term
in SECTION 2.6(d)(2) below.
(c) "LIBOR BASED RATE" shall have the meaning given that term in
SECTION 2.6(c) below.
(d) "LIBOR OPTION" shall have the meaning given that term in
SECTION 2.6(a) below.
(e) "LIBOR RESERVE PERCENTAGE" shall have the meaning given that
term in SECTION 2.6(d)(3) below.
(f) "LONDON BANKING DAY" shall have the meaning given that term in
SECTION 2.6(d)(4) below.
(g) "PRINCIPAL BALANCE" shall have the meaning given that term in
SECTION 2.6(d)(5) below.
(h) "ROLL OVER DATE" shall have the meaning given that term in
SECTION 2.6(d)(6) below.
23
1.52 "LIENS" is a collective term which means all mortgages, liens,
judicial liens, encumbrances, security interests, charges, pledges,
hypothecations, assignments, conditional sale or other title retention
agreements, and the like, relating to any real or personal property interest of
any BORROWER, whether legal or equitable.
1.53 "LOAN DOCUMENTS" means this Agreement, the Applications, the
Landlord's Consents, the Letters of Credit, the REVOLVING NOTE, UCC Financing
Statements, any tradename or trade mark agreement that may be required by
LENDER, any documents or instruments related hereto or thereto and all
extensions, modifications, refinancings, renewals, substitutions, replacements
and/or redatings of any or all of the foregoing.
1.54 "LOAN VALUE" means eighty-five (85%) percent of the unpaid amount
of the Eligible Receivables (provided, however, that LENDER in its sole
discretion exercised in good faith and using reasonable commercial judgment may
on prior notice to fix the aforesaid "LOAN VALUE" at some lesser percentage,
whether for one, some or all of the Eligible Receivables) LESS a Accounts
Receivable dilution reserve (based on historical data relating to the BORROWERS'
actual collection of Outstanding Accounts) if deemed necessary by LENDER in its
sole discretion exercised in good faith and using reasonable commercial judgment
may on prior notice to the BORROWERS.
1.55 "LOCKBOX" means any of the Lockboxes.
1.56 "LOCKBOX" is a collective term which means the CLICK Lockbox, the
CLAYTON Lockbox, the OLYMPIC Lockbox, the SECURITIES Lockbox, the SILVER STAR
Lockbox, and any other secured deposit box now or hereafter maintained in the
name of LENDER by a BORROWER at LENDER and/or at a LENDER's Affiliate and/or at
another financial institution approved by LENDER into which such BORROWER
deposits all Collateral Proceeds.
24
1.57 "MATERIAL ADVERSE EFFECT" means the occurrence of any event or the
existence of any condition which, in the commercially reasonable opinion of
LENDER, materially and adversely changes the business, condition (financial or
otherwise), creditworthiness, operations, performance or properties of any
BORROWER or which, in the commercially reasonable opinion of LENDER, materially
impairs the ability of any BORROWER to discharge its obligations hereunder or
which materially impairs the value of the Collateral or the liens and security
interests granted to LENDER herein or which causes LENDER to deem itself
insecure.
1.58 OLYMPIC DEFINITIONS:
(a) "OLYMPIC CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is a
collective term which means the certification of OLYMPIC, to
which is attached each of the following:
(1) Exhibit "A": the Certification of
OLYMPIC's corporate secretary as to
a true, complete and correct copy of
the resolutions jointly adopted by
OLYMPIC's Board of Directors and
OLYMPIC's sole stockholder CD&L
authorizing the execution and
delivery of this Agreement, the
borrowings hereunder, and the
execution and delivery of the other
Loan Documents to which it is a
party;
(2) Exhibit "B": the Certification of
OLYMPIC's corporate secretary as to
the incumbency and specimen
signatures of those officers of
OLYMPIC who are to execute this
Agreement and the other Loan
Documents to which it is a party;
and
(3) Exhibit "C": a true, complete and
correct copy of OLYMPIC's
Certificate of Incorporation, as
amended to date;
25
(4) Exhibit "D": a true, complete and
correct copy of OLYMPIC's By-Laws,
as amended to date; and
(5) Exhibit "E": a true, complete and
correct copy of OLYMPIC's 2004 "Good
Standing" Certificate for the state
of New York, its state of
incorporation (indicating failure to
file biennial reports which failure
BORROWERS covenant promptly and
diligently to correct).
(b) "OLYMPIC LOCKBOX" means the secured deposit box or boxes
(including, without limitation, the Lockbox known as the "NYC
LOCKBOX") maintained in the name of LENDER by OLYMPIC at
LENDER and/or at a LENDER's Affiliate and/or at another
financial institution approved by LENDER into which OLYMPIC
deposits (1) all Collateral Proceeds and (2) all other sums
received by OLYMPIC as payment for services rendered by it to
Account Debtors and/or other third parties and/or as payment
from any sale, lease, transfer, exchange or other disposition
of its Equipment, Goods, Inventory or other assets (whether
tangible or intangible) and (3) all other Proceeds of the
foregoing, including any insurance or condemnation awards.
1.59 "OUTSTANDING" is an adjective which means "unpaid at any one
specific time", and has such meaning regardless whether the applicable
underlying obligations owed under the REVOLVING LOAN, Letter of Credit
Obligations and/or any other Liabilities are matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, joint or several,
accrued or not-yet-accrued and/or due or not-yet-due.
1.60 "PRIME BASED RATE" shall have the meaning given that term in
SECTION 2.6(B)(1) below.
1.61 "PRIME RATE" means the variable rate of interest set from time to
time by LENDER as its usual, short-term base lending rate to its commercial
borrowers. The Prime Rate is a reference rate and does not necessarily represent
the lowest or best rate being charged to any customer. From time to time LENDER
makes loans to certain customers at rates of interest below the Prime Rate.
26
1.62 "PROCEEDS" means, in addition to the definition of "PROCEEDS"
given in the UCC, all additions, substitutions, replacements, and increments to
the Collateral, including cash and non-cash proceeds of all of the Collateral in
whatever form, including cash, negotiable instruments and other instruments for
the payment of money, chattel paper, security agreements or other documents,
insurance or condemnation awards and any Collateral purchased with Proceeds.
1.63 "RECONCILIATION CERTIFICATE" means that certain certification in
the form attached hereto as EXHIBIT "C" for certifications which are required to
be submitted no less frequently than monthly (unless otherwise specified
herein), setting forth, among other things, information relating to adjustments
in amounts and/or values of the Collateral.
1.64 "REVOLVING LOAN" has the meaning set forth in SECTION 2.1(B) of
this Agreement.
1.65 "REVOLVING LOAN MATURITY DATE" means SEPTEMBER 30, 2008.
1.66 "REVOLVING NOTE" has the meaning set forth in SECTION 2.8 of this
Agreement.
1.67 SECURITIES DEFINITIONS:
(a) "SECURITIES CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is
a collective term which means the certification of SECURITIES,
to which is attached each of the following:
(1) Exhibit "A": the Certification of
SECURITIES' corporate secretary as
to a true, complete and correct copy
of the resolutions jointly adopted
by SECURITIES' Board of Directors
and SECURITIES' sole stockholder
CD&L authorizing the execution and
delivery of this Agreement, the
borrowings hereunder, and the
execution and delivery of the other
Loan Documents to which it is a
party;
27
(2) Exhibit "B": the Certification of
SECURITIES' corporate secretary as
to the incumbency and specimen
signatures of those officers of
SECURITIES who are to execute this
Agreement and the other Loan
Documents to which it is a party;
(3) Exhibit "C": a true, complete and
correct copy of SECURITIES'
Certificate of Incorporation, as
amended to date;
(4) Exhibit "D": a true, complete and
correct copy of SECURITIES' By-Laws,
as amended to date;
(5) Exhibit "E": a true, complete and
correct copy of SECURITIES' 2004
"Good Standing" Certificate for the
state of New York, its state of
incorporation, such "Good Standing"
status remaining unchanged through
the date hereof;
(6) Exhibit "F": a true, complete and
correct copy of SECURITIES' 2004
"Good Standing" Certificate for the
state of New Jersey, such "Good
Standing" status remaining unchanged
through the date hereof; and
(7) Exhibit "G": a true, complete and
correct copy of SECURITIES' 2004
"Good Standing" Certificate for the
state of Pennsylvania, such "Good
Standing" status remaining unchanged
through the date hereof.
(b) "SECURITIES LOCKBOX" means the secured deposit box or boxes
(including, without limitation, the Lockbox known as the
"BANKING LOCKBOX") maintained in the name of LENDER by
SECURITIES at LENDER and/or at a LENDER's Affiliate and/or at
another financial institution approved by LENDER into which
SECURITIES deposits (1) all Collateral Proceeds and (2) all
other sums received by SECURITIES as payment for services
rendered by it to Account Debtors and/or other third parties
and/or as payment from any sale, lease, transfer, exchange or
other disposition of its Equipment, Goods, Inventory or other
assets (whether tangible or intangible) and (3) all other
Proceeds of the foregoing, including any insurance or
condemnation awards.
28
1.68 "SELLERS" is a collective term which means each and all of the
payees of the Seller Subordinated Notes.
1.69 "SELLER SUBORDINATED NOTES" is a collective term which means each
and all of the following:
-------------- --------------------------------------- ---------------- ------------ -------------------
ORIGINAL
DATE NOTEHOLDER NOTE RATE 12/31/05 BALANCE
-------------- --------------------------------------- ---------------- ------------ -------------------
Aug 1998 David L. Chesney 1,460,000 7% $789,819
-------------- --------------------------------------- ---------------- ------------ -------------------
Dec 1998 Randy Cooper 122,707 * $37,003
-------------- --------------------------------------- ---------------- ------------ -------------------
Dec 1998 Terry Bozzay 718,293 * $292,838
-------------- --------------------------------------- ---------------- ------------ -------------------
Apr 1999 Westwind Express, Inc. - 2 notes 1,200,000 7% $666,415
(Steve Keihner) 480,000 (combined)
-------------- --------------------------------------- ---------------- ------------ -------------------
Apr 1999 Metro Parcel Service, Inc. (Nathan 202,734 7% $50,829
Spaulding)
-------------- --------------------------------------- ---------------- ------------ -------------------
4,183,734 $1,836,904
-------------- --------------------------------------- ---------------- ------------ -------------------
*: the Prime Rate plus 200 basis points, with a floor of 7% and a ceiling of 9%
1.70 "SENIOR SUBORDINATED DEBT" means the Series A Debentures owed by
the BORROWERS to the Senior Subordinated Lenders.
1.71 "SENIOR SUBORDINATED LENDERS" means the Series A Debenture
Holders.
1.72 "SENIOR SUBORDINATED LOAN AGREEMENT" means that certain instrument
dated as of April 14, 2004, and entitled "Amended and Restated Senior
Subordinated Loan Agreement".
1.73 "SERIES A DEBENTURE HOLDERS" is a collective term which means each
and all of the following:
29
(a) Albert W. Van Ness, Jr.;
(b) William T. Brannan;
(c) Michael Brooks;
(d) Russell J. Reardon;
(e) Mark T. Carlesimo;
(f) Peter Young;
(g) J. Daniel Ayer;
(h) Jack McCorkell;
(i) Dominick Simone;
(j) Vincent P. Brana;
(k) Martin Galinsky;
(l) Curtis Hight;
(m) Ralph Bahna; and
(n) Matthew Morahan.
1.74 "SERIES A DEBENTURES" means those certain convertible notes in the
total face amount of $4,000,000 and dated as of April 14, 2004, and called
"Series A Convertible Notes" in the Senior Subordinated Loan Agreement and held
by the Series A Debenture Holders, with interest thereon at 9% per annum through
April 13, 2006, 10.5% per annum from April 14, 2006 through April 13, 2008, and
12% thereafter and subordinated to the repayment of the Liabilities pursuant to
Section 9 of the Senior Subordinated Loan Agreement.
1.75 "SERIES A PREFERRED STOCK" is a collective term which means that
certain $4,000,000 in Convertible Redeemable Preferred Stock of CDL with a
liquidation preference of $4,000,000 and called "Preferred Stock" in the Senior
Subordinated Loan Agreement and held by the Series A Preferred Stockholders.
30
1.76 "SERIES A PREFERRED STOCKHOLDERS" is a collective term which means
each and all of the following: (a) BNP Paribas SA (f/k/a Paribas Capital Funding
LLC); (b) Exeter Capital Partners IV, L.P.; and (c) Exeter Venture Lenders L.P.
1.77 SILVER STAR DEFINITIONS:
(a) "SILVER STAR CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT"
is a collective term which means the certification of SILVER
STAR, to which is attached each of the following:
(1) Exhibit "E": the Certification of
SILVER STAR's corporate secretary as
to a true, complete and correct copy
of the resolutions jointly adopted
by SILVER STAR's Board of Directors
and SILVER STAR's sole stockholder
CD&L authorizing the execution and
delivery of this Agreement, the
borrowings hereunder, and the
execution and delivery of the other
Loan Documents to which it is a
party;
(2) Exhibit "B": the Certification of
SILVER STAR's corporate secretary as
to the incumbency and specimen
signatures of those officers of
SILVER STAR who are to execute this
Agreement and the other Loan
Documents to which it is a party;
(3) Exhibit "C": a true, complete and
correct copy of SILVER STAR's
Certificate of Incorporation, as
amended to date;
(4) Exhibit "D": a true, complete and
correct copy of SILVER STAR's
By-Laws, as amended to date;
(5) Exhibit "E": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of Arkansas, (indicating
failure to pay franchsie taxes for
2004, which failure BORROWERS
covenant promptly and diligently to
correct);
31
(6) Exhibit "F": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of Florida, its state of
incorporation, such "Good Standing"
status remaining unchanged through
the date hereof;
(7) Exhibit "G": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of Georgia, such "Good
Standing" status remaining unchanged
through the date hereof;
(8) Exhibit "H": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of Indiana, such "Good
Standing" status remaining unchanged
through the date hereof;
(9) Exhibit "I": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of Louisiana, such "Good
Standing" status remaining unchanged
through the date hereof;
(10) Exhibit "J": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of Maryland, such "Good
Standing" status remaining unchanged
through the date hereof;
(11) Exhibit "K": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of New Jersey, such "Good
Standing" status remaining unchanged
through the date hereof;
(12) Exhibit "L": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of New York, such "Good
Standing" status remaining unchanged
through the date hereof;
(13) Exhibit "M": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of North Carolina, such "Good
Standing" status remaining unchanged
through the date hereof;
(14) Exhibit "N": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of Ohio, such "Good Standing"
status remaining unchanged through
the date hereof;
32
(15) Exhibit "O": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of Oklahoma (indicating SILVER
STAR's suspension in 2003 which
suspension BORROWERS covenant
promptly and diligently to correct);
(16) Exhibit "P": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of Pennsylvania, such "Good
Standing" status remaining unchanged
through the date hereof;
(17) Exhibit "Q": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of South Carolina, such "Good
Standing" status remaining unchanged
through the date hereof;
(18) Exhibit "R": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of Tennessee, such "Good
Standing" status remaining unchanged
through the date hereof; and
(19) Exhibit "S": a true, complete and
correct copy of SILVER STAR's 2004
"Good Standing" Certificate for the
state of Texas, such "Good Standing"
status remaining unchanged through
the date hereof.
(b) "SILVER STAR LOCKBOX" means the secured deposit box or boxes
(including, without limitation, the Lockbox known as the
"SOUTHEAST LOCKBOX") maintained in the name of LENDER by
SILVER STAR at LENDER and/or at a LENDER's Affiliate and/or at
another financial institution approved by LENDER into which
SILVER STAR and its wholly owned Subsidiary KBD deposit (1)
all Collateral Proceeds and (2) all other sums received by
SILVER STAR and KBD as payment for services rendered by them
to Account Debtors and/or other third parties and/or as
payment from any sale, lease, transfer, exchange or other
disposition of their Equipment, Goods, Inventory or other
assets (whether tangible or intangible) and (3) all other
Proceeds of the foregoing, including any insurance or
condemnation awards.
1.78 "SUBSIDIARY" means any corporation or other entity more than a
majority (by number of votes) of the voting interest therein is at the time
owned or controlled by any BORROWER or a Subsidiary of any such BORROWER.
33
1.79 "SUPPORTING OBLIGATIONS" means, in addition to the definition of
SUPPORTING OBLIGATIONS as contained in the UCC, a Letter-of-Credit Right or
secondary obligation that supports the payment or performance of an Account,
Chattel Paper, Document, General Intangible, Instrument or Investment Property.
1.80 "UCC" shall mean the Uniform Commercial Code as now enacted in the
State of New Jersey, as from time to time hereafter amended. 1.81 UCC
DEFINITIONS. All terms defined in Articles 1 or 9 of the UCC shall have the
meanings given therein unless otherwise defined herein.
ARTICLE II
LOANS
2.1 THE REVOLVING LOAN.
(a) GENERAL: LENDER shall, from time to time hereafter and on
the basis of the various criteria set forth in this Agreement (including,
without limitation, those criteria which are evaluated by LENDER using its sole
discretion), lend, Advance, re-lend and re-Advance moneys to the BORROWERS (upon
request made by CD&L in its capacity as agent as more fully set forth below) to
be distributed to the BORROWERS under the REVOLVING LOAN to be used for working
capital and general business needs.
(b) DEFINITION OF "REVOLVING LOAN": The facility described in
subsection (a) above and in the other provisions of this ARTICLE II and all
extensions, modifications (including without limitation modifications increasing
the amount of such facility), refinancings, renewals, substitutions,
replacements and/or redatings of such facility is the "REVOLVING LOAN" described
throughout this Agreement.
34
(c) (1) FOR PURPOSES OF THE SELLER SUBORDINATED NOTES AND FOR
THE PURPOSES OF PROVIDING LENDER WITH ALL BENEFITS AFFORDED THE HOLDER OF
"SENIOR DEBT" AND/OR "SENIOR INDEBTEDNESS" AS DEFINED THEREIN, THE REVOLVING
LOAN IS RECOGNIZED AS AND INTENDED TO BE A RESTATEMENT, REFINANCING AND/OR
REPLACEMENT OF THE CREDIT FACILITY PREVIOUSLY PROVIDED TO THE BORROWERS UNDER
THAT LOAN AND SECURITY AGREEMENT (AS AMENDED, MODIFIED, SUPPLEMENTED, EXTENDED,
RESTATED, REFINANCED, REPLACED OR REFUNDED FROM TIME TO TIME) ORIGINALLY DATED
AS OF JUNE 14, 1997, BY AND BETWEEN FIRST UNION COMMERCIAL CORPORATION (AS
LENDER) AND CD&L AND ITS SUBSIDIARIES (AS BORROWERS), AS SET FORTH THEREIN.
(2) Also for purposes of the Seller Subordinated Notes and for
the purposes of providing LENDER with all benefits afforded the holder of
"Senior Debt" and/or "Senior Indebtedness" as defined therein, the REVOLVING
LOAN and all other Liabilities are recognized as and intended to be "Senior
Debt" and/or "Senior Indebtedness" as such terms are defined in the Seller
Subordinated Notes.
(3) Also for purposes of the Seller Subordinated Notes and for
the purposes of providing LENDER with all benefits afforded the holder of
"Senior Debt" and/or "Senior Indebtedness" thereunder, LENDER and its successors
and assigns are recognized as and intended to be holders of "Senior Debt" and/or
"Senior Indebtedness" under the Seller Subordinated Notes.
(d) (1) FOR PURPOSES OF THE SENIOR SUBORDINATED LOAN AGREEMENT
AND FOR THE PURPOSES OF PROVIDING LENDER WITH ALL BENEFITS AFFORDED THE HOLDER
OF "SENIOR DEBT" AND "SENIOR INDEBTEDNESS" THEREUNDER, THE REVOLVING LOAN AND,
TO THE FULLEST EXTENT POSSIBLE, ALL THE OTHER LIABILITIES ARE RECOGNIZED AS AND
INTENDED TO BE "SENIOR DEBT" AND "SENIOR INDEBTEDNESS" AS DEFINED IN THE SENIOR
SUBORDINATED LOAN AGREEMENT.
35
(2) ALSO FOR PURPOSES OF THE SENIOR SUBORDINATED LOAN
AGREEMENT AND FOR THE PURPOSES OF PROVIDING LENDER WITH ALL BENEFITS AFFORDED
THE HOLDER OF "SENIOR DEBT" AND "SENIOR INDEBTEDNESS" THEREUNDER, LENDER AND ITS
SUCCESSORS AND ASSIGNS ARE RECOGNIZED AS AND INTENDED TO BE THE "BANK" AND THE
HOLDERS OF "SENIOR DEBT" AND "SENIOR INDEBTEDNESS" UNDER THE SENIOR SUBORDINATED
LOAN AGREEMENT.
(3) ALSO FOR PURPOSES OF THE SENIOR SUBORDINATED LOAN
AGREEMENT AND FOR THE PURPOSES OF PROVIDING LENDER WITH ALL BENEFITS AFFORDED
THE HOLDER OF "SENIOR DEBT" AND "SENIOR INDEBTEDNESS" THEREUNDER, THIS AGREEMENT
(AND ALL EXTENSIONS, MODIFICATIONS [INCLUDING WITHOUT LIMITATION MODIFICATIONS
INCREASING THE AMOUNT OF THE REVOLVING LOAN], REFINANCINGS, RENEWALS,
SUBSTITUTIONS, REPLACEMENTS AND/OR REDATINGS HEREOF AND THEREOF) ARE RECOGNIZED
AS AND INTENDED TO BE BOTH THE "CREDIT AGREEMENT" (AS SUCH TERM IS DEFINED IN
THE SENIOR SUBORDINATED LOAN AGREEMENT) AND A "PERMITTED REFINANCING" (AS SUCH
TERM IS DEFINED IN THE SENIOR SUBORDINATED LOAN AGREEMENT), THIS AGREEMENT BEING
AN AMENDMENT, RESTATEMENT, EXTENSION, REPLACEMENT, SUPPLEMENT, RESTRUCTURE,
MODIFICATION, REFINANCE AND/OR INCREASE IN AMOUNT OF THE SPECIFIC "CREDIT
AGREEMENT" DEFINED IN THE SENIOR SUBORDINATED LOAN AGREEMENT.
36
2.2 MAXIMUM BORROWINGS UNDER THE REVOLVING LOAN.
(a) The total of all Outstanding cash Advances under the
REVOLVING LOAN shall not at any one time exceed the lesser amount of the
following (the "LENDING FORMULA"):
(1) $20,000,000 LESS the principal amount of Outstanding Letters
of Credit LESS a reserve in an amount determined by LENDER in
its discretion for LENDER's exposure for Bank Products used by
any BORROWER (but such reserve shall be instituted only if
BORROWERS' Fixed Charge Coverage [as defined in SECTION 5.23
hereof] for their most recent fiscal quarter is less than 1.1
to 1.0); or
(2) the total of the "LOAN VALUE" of Eligible Receivables LESS the
principal amount of Outstanding Letters of Credit LESS a
reserve in an amount determined by LENDER in its discretion
for LENDER's exposure for Bank Products used by any BORROWER
(but such reserve shall be instituted only if BORROWERS' Fixed
Charge Coverage [as defined in SECTION 5.23 hereof] for their
most recent fiscal quarter is less than 1.1 to 1.0).
(b) The "LOAN VALUE" of Eligible Receivables will be
determined no less frequently than once a week after LENDER's receipt of the
Borrowing Base Certificate and the other information required to be given by the
BORROWERS to LENDER pursuant to SECTION 5.6 below.
2.3 DISBURSEMENTS UNDER THE REVOLVING LOAN.
(a) Requests for an Advance must be made in writing and must
be received by LENDER no later than 2 p.m. on the Business Day that receipt of
the Advance is expected, provided, however, that as it relates to an Advance
bearing interest at a LIBOR Based Rate, such request must be made at least three
(3) London Banking Days prior to the commencement of a LIBOR Interest Period.
37
(b) (1) The BORROWERS have requested that, as a convenience to
each of them, all requests for Advances, the issuance of all Letters of Credit
and the extension of any other financial accommodations to be extended to any of
them under this Agreement (including without limitation the exercise of any
LIBOR Option) shall be made by CD&L, acting in the capacity of the BORROWERS'
agent.
(2) In furtherance of the foregoing, the BORROWERS hereby
direct, and LENDER hereby agrees, that the making of Advances and the issuance
of Letters of Credit and the extension of any other financial accommodations
extended to any BORROWER under this Agreement (including without limitation the
exercise of any LIBOR Option) shall be made by CD&L, acting in its capacity as
agent as aforesaid.
(3) The BORROWERS further authorize CD&L, acting in its
capacity as agent as aforesaid, to designate any Advance received hereunder, any
Letter of Credit issued hereunder and any other financial accommodation extended
hereunder as having been made, issued or extended for the account of a
designated BORROWER.
(4) (A) If CD&L so designates any such Advance, any such
Letter of Credit and any such other financial accommodation as having been made,
issued or extended for the account of a designated BORROWER, LENDER may in
addition to debiting the joint and several REVOLVING LOAN account of all
BORROWERS also debit a specific loan account of the designated BORROWER.
(B) Notwithstanding the foregoing, it is the intent of this
Agreement that each entity named as "BORROWER" in this Agreement shall be
considered individually and collectively as a "BORROWER" hereunder regardless
whether any such entity actually receives the proceeds of the REVOLVING LOAN or
any Advances made thereunder or any financial accommodation provided hereunder
or is named as an account party under any Letter of Credit created hereunder and
regardless which entity is the source of any Collateral, it being further
intended that each entity named as "BORROWER" is and shall be jointly and
severally liable for all Liabilities.
38
(5) The authority of CD&L, acting in its capacity as agent as
aforesaid, to so request Advances or Letters of Credit or other financial
accommodations on behalf of, and to bind, the BORROWERS, shall continue unless
and until the LENDER's actual receipt of written notice from all BORROWERS as to
the termination of such authority, which notice must be signed by the respective
President of such BORROWER, and which notice must be binding on all BORROWERS
and shall be effective only as to Advances made or Letters of Credit issued or
financial accommodations extended more than sixty (60) days following the
LENDER's receipt of such notice. The BORROWERS understand that the LENDER's
receipt of any such written notice constitutes an Event of Default under the
Loan Agreement.
(c) (1) All Advances under the REVOLVING LOAN shall normally
be disbursed by crediting a joint operating account maintained in the joint and
several name of all BORROWERS at LENDER (or its successor) or a LENDER's
Affiliate acceptable to LENDER and by charging the BORROWERS' joint and several
REVOLVING LOAN account or accounts on LENDER's books.
(2) Advances can be made, however, by means other than as
aforesaid, including as more fully set forth above, CD&L's designation that any
Advance, any Letter of Credit and/or any other financial accommodation be made,
issued or extended for the account of a designated BORROWER.
39
(d) NOTHING IN THE FOREGOING IS INTENDED TO LESSEN OR IMPAIR
EACH BORROWER'S JOINT AND SEVERAL OBLIGATION AS A CO-BORROWER LIABLE FOR THE
REPAYMENT OF ALL ADVANCES MADE UNDER THE REVOLVING LOAN OR AS A JOINT AND
SEVERAL GUARANTOR (OF PAYMENT NOT COLLECTION) OF THE PAYMENT AND PERFORMANCE OF
THE LIABILITIES OF EACH OTHER BORROWER. THE FACT THAT LENDER MAY CHARGE A
REVOLVING LOAN ACCOUNT OR ACCOUNTS OF LESS THAN ALL BORROWERS IN NO WAY ALTERS
OR LESSENS THE JOINT AND SEVERAL LIABILITY OF ALL BORROWERS AS CO-BORROWERS AND
AS GUARANTORS UNDER THIS AGREEMENT FOR THE PERFORMANCE AND PAYMENT OF ALL THE
LIABILITIES.
(e) Nothing herein shall prohibit any BORROWER from
transferring and distributing any REVOLVING LOAN proceeds received by it to any
other BORROWER so long as such transfer and distribution is made in the ordinary
course of the applicable BORROWER's business.
2.4 RIGHT TO RECEIVE REVOLVING LOAN ADVANCES.
(a) Subject to the other provisions of this Section and this
Agreement and so long as (1) the total of all Advances Outstanding under the
REVOLVING LOAN do not exceed the Lending Formula and (2) each and all of the
BORROWERS are otherwise in compliance with all the terms and conditions set
forth in this Agreement, the BORROWERS may borrow and re-borrow under the
REVOLVING LOAN up to the day before the Revolving Loan Maturity Date and
repayment by the BORROWERS of Advances Outstanding under the REVOLVING LOAN
shall not affect the ability of the BORROWERS to borrow and re-borrow under this
Agreement.
40
(b) To the extent that by operation of any circumstance which
causes the amount of the Outstanding Advances under the REVOLVING LOAN to
violate the Lending Formula, LENDER may in its discretion make no other advances
to the BORROWERS under the REVOLVING LOAN until the BORROWERS are in compliance
with the Lending Formula. Nothing in the foregoing shall limit LENDER's right to
declare an Event of Default because of such non-compliance.
(c) (1) In addition and notwithstanding anything in this
Agreement to the contrary, the obligation of LENDER to continue making Advances
under the REVOLVING LOAN shall terminate upon the expiration of this Agreement
pursuant to its terms and shall be suspended upon the occurrence and during the
continuance of any of the following events:
(A) an Event of Default hereunder; or
(B) an event which, except for the passage of time
or the giving of notice, would be such an
Event of Default.
(2) Also notwithstanding anything in this Agreement to the
contrary, upon the occurrence of any event specified in subsection (1)(A) above
or upon the occurrence of any event specified in subsection (1)(B) above which
is not cured, LENDER also has the right (so long as LENDER acts in good faith
and in the exercise of its reasonable commercial judgment and on prior notice to
the BORROWERS), in addition to all of LENDER's other rights and remedies under
this Agreement, to modify its relationship with the BORROWERS under the
REVOLVING LOAN in any manner (including, without limitation, reduction of
Advance rates, increase in interest rates and reduction in the amount available
under the REVOLVING LOAN) determined by LENDER on 10 Business Days prior notice
to the BORROWERS.
41
(3) Despite any such modification of LENDER's relationship
with the BORROWERS under the REVOLVING LOAN, LENDER's rights and remedies under
this Agreement shall continue to remain in full force and effect (as modified in
the case of any modification) until payment of the Liabilities in full.
2.5 REPAYMENT OF REVOLVING LOAN ADVANCES.
(a) Subject to the other provisions of this Section and this
Agreement and so long as (1) the total of all Advances Outstanding under the
REVOLVING LOAN does not exceed the Lending Formula and (2) each and all of the
BORROWERS are otherwise in compliance with all the terms and conditions set
forth in this Agreement, Advances drawn under the REVOLVING LOAN need not be
repaid until the Revolving Loan Maturity Date. On the Revolving Loan Maturity
Date, all Advances Outstanding under the REVOLVING LOAN, plus accrued interest
and all other sums due thereon, shall be due and owing, unless LENDER's
relationship with the BORROWERS under the REVOLVING LOAN is sooner terminated or
modified as provided herein.
(b) Notwithstanding the provisions of subsection (a) above,
the principal owing on the REVOLVING LOAN shall be repayable on a continuing and
continual basis as follows:
(1) Each BORROWER agrees to and shall establish and maintain,
or permit LENDER to establish and maintain as determined from time to time by
LENDER in its discretion, one or more Lockboxes and/or Blocked Accounts. Unless
otherwise agreed by LENDER in writing, the Blocked Accounts shall be maintained
only at LENDER (or any successor thereto).
42
(2) Not in limitation of the foregoing, (A) CLAYTON has opened
and will continue to maintain the Lockbox known as the "WEST LOCKBOX"; (B) CLICK
has opened and will continue to maintain the Lockbox known as the "NORTHEAST
LOCKBOX"; (C) OLYMPIC has opened and will continue to maintain the Lockbox known
as the "NYC LOCKBOX"; (D) SECURITIES has opened and will continue to maintain
the Lockbox known as the "BANKING LOCKBOX"; and (E) SILVER STAR and KBD have
opened and will continue to maintain the Lockbox known as the "SOUTHEAST
LOCKBOX".
(3) Each BORROWER agrees as follows:
(A) Each Lockbox is one of the Deposit Accounts described
in ARTICLE III of this Agreement.
(B) Each Blocked Account is an account owned by LENDER
and holding funds of LENDER and not funds of any
BORROWER and against which any such BORROWER has
rights only to the extent that funds in any such
account exceeds the Liabilities after this Agreement
has been terminated and such Liabilities have been
paid in full.
(C) Each Blocked Account and checking/demand deposit
operating account is one of the Deposit Accounts
described in ARTICLE III of this Agreement.
(4) (A) Each BORROWER agrees to and shall forthwith deposit or
shall cause to be deposited all Collateral Proceeds into one or more of the
aforementioned Lockboxes, Blocked Accounts and/or such other place designated by
LENDER.
43
(B) To implement the foregoing, each BORROWER agrees to and
shall direct its Account Debtors and other third parties to remit all the
Collateral Proceeds directly to one or more Lockboxes, Blocked Accounts and/or
such other place designated by LENDER.
(5) As it relates to each Lockbox, each BORROWER hereby
authorizes LENDER to, transfer or cause the transfer of (on a daily basis or
other frequency determined by LENDER) all amounts from each aforementioned
Lockbox into one or more of the aforementioned Blocked Accounts.
(6) Each BORROWER agrees to and shall forthwith transfer,
assign, endorse, deliver and turn over to LENDER for LENDER's deposit into any
such Blocked Account and/or such other place designated by LENDER all the
Collateral Proceeds which, despite any such BORROWER's aforementioned direction
to its Account Debtors and other third parties, are received by any such
BORROWER.
(7) In no case shall any BORROWER commingle any of the
Collateral Proceeds with any other property of any person or entity not a
BORROWER, but shall keep such Collateral Proceeds held in trust for LENDER as
LENDER's exclusive property and immediately transfer, assign, endorse, deliver
and/or turn such Collateral Proceeds over to LENDER in the identical form
received (excluding endorsements necessary for collection for the benefit of
LENDER) to a Lockbox, Blocked Account and/or such other place designated by
LENDER.
(8) (A) Each BORROWER hereby authorizes LENDER to effect the
repayment of the Advances Outstanding on the REVOLVING LOAN, the payment of
interest thereon and the other Liabilities on a continuing and continual basis,
either daily or on another frequency determined by LENDER, by LENDER's transfer,
withdrawal or "sweep" of all funds on deposit in the Blocked Accounts.
44
(B) Funds deposited into a Blocked Account prior to 12 noon on
any Business Day will normally be transferred, withdrawn or "swept" by LENDER on
the immediately following Business Day and funds deposited into a Blocked
Account at or after 12 noon on any Business Day will normally be transferred,
withdrawn or "swept" by LENDER on the second Business Day following said
deposit.
(C) LENDER will apply the funds so transferred, withdrawn or
"swept" by LENDER to the repayment of Advances Outstanding on the REVOLVING LOAN
on the applicable Business Day on which LENDER's aforesaid transfer, withdrawal
or "sweep" occurs.
(D) LENDER may apply such funds towards satisfying any of the
Liabilities of any BORROWER in any order or priority which LENDER in the
exercise of its reasonable commercial judgment deems fit.
(9) If notwithstanding the application of funds in the Blocked
Accounts as set forth above, the BORROWERS are not in compliance with the
Lending Formula at any time or by operation of any circumstance, the BORROWERS
must, immediately upon the earlier of any BORROWER's knowledge that
non-compliance exists or notice from LENDER to do so, bring the REVOLVING LOAN
into compliance with the Lending Formula. No BORROWER will be able to draw under
the REVOLVING LOAN unless all Advances Outstanding under the REVOLVING LOAN
(after giving effect to the drawing) would be in compliance with the Lending
Formula. In the event that the BORROWERS fail to so bring all balances
Outstanding under the REVOLVING LOAN into compliance with the Lending Formula,
such failure shall be an Event of Default of all BORROWERS hereunder and LENDER
shall have all rights which arise therefrom.
45
(c) The BORROWERS recognize that the amounts evidenced by
checks, notes, drafts or any other items of payment relating to and/or proceeds
of Collateral (other than payment via wire transfer or electronic depository
check) may not be collectible by LENDER on the date received. In consideration
of LENDER's agreement to conditionally afford the BORROWERS credit as of the
Business Day on which LENDER receives those items of payment, each BORROWER
agrees that, in computing the charges imposed under this Agreement, all items of
payment shall be deemed applied by LENDER against the Liabilities (subject to
final payment of such items) TWO BUSINESS DAYS after the applicable Business Day
on which LENDER transfers, withdraws or "sweeps" funds from the corresponding
Blocked Account. LENDER is not, however, required to give any BORROWER credit
for the amount of any item of payment which is unsatisfactory to LENDER and
LENDER may charge the BORROWERS for the amount of any item of payment which is
returned to LENDER unpaid.
(d) All payments shall be made at the LENDER location or other
office that LENDER may hereafter designate by written notice to the BORROWERS
given in accordance with this Agreement.
(e) Nothing in this SECTION 2.5 is intended to limit LENDER's
right under SECTION 2.4(C).
46
2.6 PAYMENT OF INTEREST ON THE REVOLVING LOAN.
(a) Advances Outstanding on the REVOLVING LOAN shall bear per
annum interest from the date of each such Advance at (1) a per annum rate (the
"PRIME BASED RATE" more fully defined below) based on the fluctuating Prime Rate
or (2) at the BORROWERS' option (the "LIBOR OPTION") to be exercised in the
manner set forth below, a per annum rate (the "LIBOR BASED RATE" more fully
defined below) based on LIBOR (as defined below).
(b) (1) The Prime Based Rate (the "PRIME BASED RATE") shall
equal THE PRIME RATE, FLOATING. (2) Any rate of interest determined at a Prime
Based Rate will increase or decrease with each change in the Prime Rate
effective as of the effective date of each such change, as established by LENDER
(or any successor thereto), without prior notice to the BORROWERS. Any change in
the Prime Rate shall not affect or alter any other terms of this Agreement or
any of the other Loan Documents.
(c) The LIBOR Based Rate (the "LIBOR BASED RATE") shall be a
rate per annum equal to 200 BASIS POINTS IN EXCESS OF LIBOR (as defined below)
with respect to the applicable LIBOR Interest Period (as also defined below),
provided, however, if BORROWERS' Leverage, determined on a trailing 12 months
basis in accordance with the formula set forth in SECTION 5.26 below, is greater
than 3.0 to 1.0, the LIBOR Based Rate shall be a rate per annum equal to 300
BASIS POINTS IN EXCESS OF LIBOR (as defined below) with respect to the
applicable LIBOR Based Interest Period (as also defined below). Nothing in the
foregoing is intended to prohibit LENDER from declaring an Event of Default or
imposing the Default Rate if BORROWERS' aforesaid Leverage is greater than 3.0
to 1.0. It is understood that each determination of a LIBOR Based Rate shall be
made by LENDER in its sole and absolute discretion and shall be conclusive and
binding upon the BORROWERS, absent manifest error.
47
(d) For purposes of the determination of any LIBOR Based Rate,
the following terms shall have the following meanings:
(1) (A) "LIBOR" means, as applicable to any LIBOR Interest
Period, the rate per annum (rounded upward, if
necessary, to the nearest 1/32 of one percent) as
determined on the basis of the offered rates for
deposits in U.S. dollars, for a period of time
comparable to such LIBOR Interest Period which appears
on the Telerate page 3750 as of 11:00 a.m. London time
on the day that is three London Banking Days preceding
the first day of such LIBOR Interest period; provided,
however, if the rate described above does not appear on
the Telerate System on any applicable interest
determination date, then LIBOR shall be the rate
(rounded upwards as described above, if necessary) for
deposits in dollars for a period substantially equal to
the interest period on the Reuters Page "LIBO" (or such
other page as may replace the LIBO Page on that service
for the purpose of displaying such rates), as of 11:00
a.m. (London Time), on the day that is three London
Banking Days prior to the beginning of such interest
period.
(B) If both the Telerate and Reuters system are
unavailable, then the rate for that date will be
determined on the basis of the offered rates for
deposits in U.S. dollars for a period of time comparable
to such LIBOR Interest Period which are offered by four
major banks (as selected by LENDER) in the London
interbank market at approximately 11:00 a.m. London
time, on the day that is three London Banking Days
preceding the first day of such LIBOR Interest Period.
The principal London office of each of the four major
London banks will be requested to provide a quotation of
its U.S. dollar deposit offered rate. If at least two
such quotations are provided, the rate for that date
will be the arithmetic mean of the quotations. If fewer
than two quotations are provided as requested, the rate
for that date will be determined on the basis of the
rates quoted for loans in U.S. dollars to leading
European banks for a period of time comparable to such
LIBOR Interest Period offered by major banks in New York
City at approximately 11:00 a.m. New York City time, on
the day that is three London Banking Days preceding the
first day of such LIBOR Interest Period. In the event
that LENDER is unable to obtain any such quotation as
provided above, it will be deemed that LIBOR pursuant to
a LIBOR Interest Period cannot be determined.
48
(C) In the event that the Board of Governors of the
Federal Reserve System shall impose a LIBOR Reserve
Percentage with respect to LIBOR deposits of LENDER then
for any period during which such LIBOR Reserve
Percentage shall apply, LIBOR shall be equal to the
amount determined above divided by an amount equal to 1
minus the LIBOR Reserve Percentage.
(2) "LIBOR INTEREST PERIOD" shall mean the period commencing on
the date so specified in the BORROWERS' notice to LENDER of
any election to exercise the LIBOR Option and ending on the
date specified in such notice, which ending date (i) shall be
either 30 days, 60 days or 90 days after the commencement of
the LIBOR Interest Period, and (ii) shall in no event extend
beyond the termination date or any extended termination date
of the REVOLVING LOAN. No LIBOR Interest Period shall commence
other than on a Business Day. If any LIBOR Interest Period
shall end on a day which is not a Business Day, such LIBOR
Interest Period shall be extended to the next succeeding
Business Day.
(3) "LIBOR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in
New York City with deposits exceeding one billion dollars in
respect of Eurocurrency liabilities (as defined in Regulation
D of the Board of Governors of the Federal Reserve System) (or
in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on loans
covered by a LIBOR Based Rate is determined or any category of
extensions of credit or other assets which includes loans by a
non-United States office of LENDER to United States
residents). The LIBOR Based Rate shall be adjusted
automatically on and as of the effective date of any change in
the LIBOR Reserve Percentage.
49
(4) "LONDON BANKING DAY" shall mean a day which is not a Saturday,
Sunday or day on which banks in London are required or
permitted to close.
(5) "PRINCIPAL BALANCE" means, at any time, the portion or
portions of the Outstanding principal amount of the REVOLVING
LOAN on which the BORROWERS have elected to have interest
determined or to be determined, as applicable, at a LIBOR
Based Rate and includes all amounts that are to be borrowed at
a LIBOR Based Rate, whether or not the applicable BORROWER
actually borrows such amounts.
(6) "ROLL OVER DATE" shall mean the day immediately following the
last day of a LIBOR Interest Period.
(e) Any BORROWER wishing to exercise the LIBOR Option shall,
acting only through CD&L as its designated agent, give LENDER written or telex
or facsimile notice (receipt of which must be confirmed by LENDER) of any
election to exercise such LIBOR Option at least three (3)London Banking Days
prior to the commencement of a LIBOR Interest Period, which notice shall specify
(1) the Principal Balance with respect to which such BORROWER is making such
election, and (2) in conformity with the definition of "LIBOR INTEREST PERIOD"
50
set forth above, the date upon which such LIBOR Interest Period is to commence
and (3) its duration. LENDER shall, as soon as practical prior to or on the date
of the commencement of the LIBOR Interest Period, determine and quote to the
applicable BORROWER (through its agent CD&L) a LIBOR Based Rate with respect to
the Principal Balance specified in such notice, and notify such BORROWER
(through its agent CD&L) of the date and time by which such BORROWER must accept
the quoted LIBOR Based Rate. If such BORROWER, acting only through CD&L as its
designated agent, rejects the quoted LIBOR Based Rate, or if such BORROWER,
acting through its agent as aforesaid, does not inform LENDER of its acceptance
of the quoted LIBOR Based Rate by the date and time specified by LENDER, time
being of the essence, the Prime Based Rate shall apply or shall continue to
apply to the Principal Balance. If such BORROWER, acting through its agent as
aforesaid, accepts the quoted LIBOR Based Rate by the date and time specified by
LENDER, the quoted LIBOR Based Rate shall be applicable to the Principal Balance
during the LIBOR Interest Period specified by such BORROWER in such notice. A
quoted LIBOR Based Rate may be accepted by a BORROWER, acting only through its
agent as aforesaid, either orally or in writing, provided that any such oral
acceptance shall be immediately confirmed by the applicable BORROWER (through
its agent as aforesaid) in writing or by telex or by facsimile (receipt of which
must be confirmed by LENDER). The interest rate applicable to the Principal
Balance, with respect to which a BORROWER has so accepted a quoted LIBOR Based
Rate, shall revert from the LIBOR Based Rate applicable thereto to the Prime
Based Rate as of the Roll Over Date applicable thereto. LENDER shall be under no
duty or obligation to notify any BORROWER (whether through its agent or
otherwise) that the interest rate on the Principal Balance is about to revert
from a LIBOR Based Rate to the Prime Based Rate.
51
(f) The LIBOR Option may only be exercised by a BORROWER if
the Principal Balance as to which such BORROWER is making its election would
bear interest at the Prime Based Rate on the date of commencement of the
applicable LIBOR Interest Period, but for the exercise of such BORROWER of the
LIBOR Option, and only if the following conditions are met:
(1) No Event of Default has occurred and is continuing.
(2) The LIBOR Interest Period must commence on a London Banking
Day.
(3) The LIBOR Interest Period shall extend 30 days, 60 days or 90
days after the commencement of the LIBOR Interest Period.
(4) The LIBOR Interest Period shall in no event extend beyond the
Revolving Loan Maturity Date or any extension of the Revolving
Loan Maturity Date.
(5) If any LIBOR Interest Period shall end on a day which is not a
London Banking Day, such LIBOR Interest Period shall be
extended to the next succeeding London Banking Day.
(6) The LIBOR Option must be exercised for a minimum of $1,000,000
and integral multiples of $100,000 thereafter.
(7) The exercise of the LIBOR Option will not result in more than
3 separate LIBOR rate subcontracts in the collective aggregate
being in existence between the BORROWERS and LENDER at any one
time.
(g) In the event, and on each occasion, that on or before the
date upon which a LIBOR Interest Period is to commence, LENDER shall have in its
sole discretion made a determination (which determination shall be conclusive
and binding upon the BORROWERS) that LENDER is unable to quote a LIBOR Based
Rate for any reason whatsoever, LENDER shall so notify the BORROWERS and the
Principal Balance with respect to which any BORROWER has exercised the LIBOR
Option, shall bear interest or continue to bear interest, as applicable, at the
Prime Based Rate.
52
(h) In all events, interest shall be payable monthly on an
accrued basis on the first day of each and every calendar month, commencing on
the first day of the first month following the date hereof, and shall be
calculated on the basis of a year consisting of 360 days and paid for actual
days elapsed.
(i) (1) On and after the occurrence of an Event of Default
hereunder or after the Revolving Loan Maturity Date, the BORROWERS' right to
select pricing options shall cease and all Outstanding Advances shall, unless
otherwise agreed by LENDER, bear interest at the Default Rate.
(2) In addition, interest on the REVOLVING LOAN will be
calculated at the Default Rate upon the occurrence of any of the following:
(A) on and after the occurrence and during the continuance of an
Event of Default;
(B) prior to LENDER's declaration of an Event of Default, in the
event any BORROWER does not supply or cause to be delivered to
LENDER any information required by this Agreement or any of
the Loan Documents by its due date and the defaulting BORROWER
fails to provide such information within 10 Business Days
after receipt of written notice from LENDER that such
information is due.
(3) It is nonetheless understood that LENDER's acceptance of
payment at the Default Rate does not otherwise prevent LENDER from otherwise
declaring an Event of Default as a result of any BORROWER's failure to perform
or observe any of the foregoing.
53
(j) All agreements between the BORROWERS and LENDER are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to LENDER for the use or
the forbearance of the indebtedness evidenced hereby exceed the maximum
permissible under applicable law. As used herein, the term "applicable law"
shall mean the law in effect as of the date hereof provided, however, that in
the event there is a change in the law which results in a higher permissible
rate of interest, then the REVOLVING LOAN shall be governed by such new law as
of its effective date. In this regard, it is expressly agreed that it is the
intent of the BORROWERS and LENDER in the execution, delivery and acceptance of
this Agreement to contract in strict compliance with the laws of the State of
New Jersey from time to time in effect. If, under or from any circumstances
whatsoever, fulfillment of any provision hereof or of any of the Loan Documents
at the time of performance of such provision shall be due, shall involve
transcending the limit of such validity prescribed by applicable law, then the
obligation to be fulfilled shall automatically be reduced to the limits of such
validity, and if under or from circumstances whatsoever LENDER should ever
receive as interest an amount which would exceed the highest lawful rate, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. This
provision shall control every other provision of all agreements between the
BORROWERS and LENDER.
54
2.7 YIELD MAINTENANCE AND INDEMNIFICATION RELATING TO LIBOR BASED
INTEREST:
(a) (1) The BORROWERS hereby jointly and severally agree to
indemnify LENDER against any loss or expense which LENDER may sustain or incur
as a consequence of (A) any failure by any BORROWER to borrow all or any portion
of any Principal Balance or (B) the receipt or recovery by LENDER of all or any
part of any Principal Balance prior to the maturity thereof whether by voluntary
or involuntary prepayment, acceleration or otherwise.
(2) Without limiting the effect of the foregoing, the amount
to be paid by the BORROWERS to LENDER in order to indemnify LENDER for any loss
occasioned by any of the events described in the preceding provisions of this
Section, and as liquidated damages therefor, shall be equal to the following
amount:
The current rate for United States Treasury securities (Bills
on a discounted basis shall be converted to a bond equivalent)
with a maturity closest to the maturity date of the LIBOR
Interest Period chosen pursuant to the LIBOR Option and as to
which the prepayment is made shall be subtracted from the
"cost of funds" component of the LIBOR Based Rate in effect at
the time of the prepayment. If the result is zero or a
negative number, there shall be no yield maintenance fee. If
the result is a positive number, then the resulting percentage
shall be multiplied by the amount of the Principal Balance
being prepaid. The resulting amount shall be divided by 360
and multiplied by the number of days remaining in the term of
the LIBOR Interest Period chosen pursuant to the LIBOR Option
as to which the prepayment is made. Said amount shall be
reduced to present value calculated by using the number of
days remaining in the designated term and using the above
referenced United States Treasury security rate and the number
of days remaining in the term of the LIBOR Interest Period
chosen pursuant to the LIBOR Option as to which the prepayment
is made. The resulting amount shall be the yield maintenance
fee due to LENDER upon any prepayment of any Principal
Balance. Such yield maintenance fee shall be paid, if due
under the formula set forth above, upon the receipt or
recovery by LENDER of all or any part of any Principal Balance
prior to the maturity thereof whether by voluntary or
involuntary prepayment, acceleration or otherwise.
55
(3) A certificate as to any additional amounts payable
pursuant to this Section setting forth the basis and method of determining such
amounts shall be conclusive, absent manifest error, as to the determination by
LENDER set forth therein if made reasonably and in good faith. The BORROWERS
shall pay any amounts so certified to it by LENDER within 10 days of receipt of
any such certificate. For purposes of this Section, all references to "LENDER"
shall be deemed to include any participant in the REVOLVING LOAN.
(4) The indemnities provided for herein shall survive payment
in full of the principal amount of the REVOLVING LOAN and the interest due
hereon.
2.8 EVIDENCE OF INDEBTEDNESS UNDER THE REVOLVING LOAN.
(a) Each BORROWER's joint and several obligation, whether as a
borrower of proceeds of the REVOLVING LOAN or as a guarantor of the obligations
of the other BORROWERS to repay proceeds of the REVOLVING LOAN which it
received, shall be evidenced by this Agreement.
(b) "MASTER" REVOLVING PROMISSORY NOTE AND DEFINITION OF
REVOLVING NOTE. (1) In addition, each BORROWER's joint and several obligation as
a co-BORROWER of proceeds of the REVOLVING LOAN shall be evidenced by that
certain "master" revolving promissory note executed by all BORROWERS (in their
capacities as co-BORROWERS) and made payable to the order of LENDER.
(2) The foregoing "master" revolving promissory note, together
with all extensions, modifications (including without limitation modifications
increasing or decreasing the amount thereof), refinancings, renewals,
substitutions, replacements and/or redatings thereof, together with the
foregoing records of LENDER are collectively referred to as the "REVOLVING NOTE"
in this Agreement.
56
(c) BORROWERS' OBLIGATION TO REPAY/GUARANTEE REPAYMENT OF
REVOLVING LOAN EVIDENCED BY RECORDS OF LENDER.
(1) In addition to each BORROWER's obligations being evidenced
by both this Agreement and the REVOLVING NOTE, the amount due on the REVOLVING
LOAN, all advances made by LENDER under the REVOLVING LOAN and all interest and
other amounts due under the REVOLVING LOAN and this Agreement and all payments
made on account of principal and/or interest and/or such other amounts may be
entered by LENDER on its records. The aggregate unpaid principal and/or interest
and/or other amounts entered and shown on LENDER's records shall further
evidence the principal and/or interest and/or other amounts owing and unpaid on
the REVOLVING LOAN and this Agreement.
(2) LENDER may provide on a monthly basis a statement of the
aforementioned records. If the BORROWERS fail to object to any such statement
within ninety (90) days after it is received by the BORROWERS, it shall be
deemed to be an account stated and binding upon the BORROWERS. Notwithstanding
the foregoing, LENDER's failure to enter the date and amount of any advance on
such records shall not, however, limit or otherwise affect the joint and several
obligation of the BORROWERS under this Agreement to repay the principal amount
of the Advances and re-Advances made by LENDER to the BORROWERS under this
Agreement together with all interest accruing thereon.
57
2.9 TERM OF THE REVOLVING LOAN AND PREPAYMENT PREMIUMS.
(a) REVOLVING LOAN MATURITY DATE: The REVOLVING LOAN shall
continue in full force and effect until the Revolving Loan Maturity Date unless
LENDER's relationship with the BORROWERS under the REVOLVING LOAN is sooner
terminated or modified as provided herein.
(b) TERMINATION BY LENDER. LENDER may terminate this Agreement
without notice upon or after the occurrence of an Event of Default or as
otherwise allowed by this Agreement.
(c) TERMINATION BY BORROWERS. The BORROWERS may, at their
option and upon at least twenty (20) Business Days prior written notice to
LENDER, terminate this Agreement; provided, however, no such termination shall
be effective until the BORROWERS have indefeasibly paid all of the Liabilities
in immediate available funds. Any notice of termination given by a BORROWER
shall be irrevocable unless LENDER otherwise agrees in writing, and LENDER shall
have no obligation to make any Advances or other financial accommodations on or
after the termination date stated in such notice. The BORROWERS can elect to
terminate this Agreement in its entirety only. No section of this Agreement or
type of loan or financial accommodation available to any one BORROWER hereunder
may be terminated singly.
(d) TERMINATION/ACCELERATION CHARGES. At the effective date of
the termination of this Agreement whether by LENDER or by the BORROWERS for any
reason prior to the Revolving Loan Maturity Date or upon the acceleration or
permanent prepayment of the amounts due hereunder for any reason prior to the
Revolving Loan Maturity Date, the BORROWERS shall pay to LENDER (in addition to
the then outstanding principal, accrued interest and other charges owing under
the terms of this Agreement and any of the other Loan Documents) as liquidated
damages for the loss of the bargain and not as a penalty, the following, as
applicable:
58
(1) If prepayment/acceleration occurs during the period
commencing on the date hereof and ending on December 31, 2006, the BORROWERS
shall pay a premium to $400,000, unless the BORROWERS and LENDER have in writing
prior to such prepayment/acceleration agreed to a permanent reduction in the
maximum possible amount of the REVOLVING LOAN facility (now $20,000,000), then
2% of the maximum possible amount of the REVOLVING LOAN facility as so
permanently reduced - provided, however, that no premium shall be paid (x) if
payment is effected by a refinancing of the REVOLVING LOAN with LENDER or any
LENDER's Affiliate or (y) if the REVOLVING LOAN is accelerated by LENDER because
of an Event of Default arising from a violation of SECTION 6.6 (Control of
Ownership) occurring prior to September 30, 2006 or (z) if the REVOLVING LOAN is
terminated and prepaid in full by BORROWERS because there occurs an event which
would be an Event of Default arising from a violation of SECTION 6.6 (Control of
Ownership), whether or not LENDER declares such event to be an Event of Default
hereunder.
(2) If prepayment/acceleration is made during the period
commencing on January 1, 2007 and ending on December 31, 2007, the BORROWERS
shall pay a premium equal to $200,000, unless the BORROWERS and LENDER have in
writing prior to such prepayment/acceleration agreed to a permanent reduction in
the maximum possible amount of the REVOLVING LOAN facility (now $20,000,000),
then 1% of the maximum possible amount of the REVOLVING LOAN facility as so
permanently reduced - provided, however, that no premium shall be paid if
payment is effected by a refinancing of the REVOLVING LOAN with LENDER or any
LENDER's Affiliate.
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(3) If prepayment/acceleration is made during the period
commencing on January 1, 2008 and ending September 30, 2008, the BORROWERS shall
pay a premium equal to $100,000, unless the BORROWERS and LENDER have in writing
prior to such prepayment/acceleration agreed to a permanent reduction in the
maximum possible amount of the REVOLVING LOAN facility (now $20,000,000), then
one-half of 1% of the maximum possible amount of the REVOLVING LOAN facility as
so permanently reduced - provided, however, that no premium shall be paid if
payment is effected by a refinancing of the REVOLVING LOAN with LENDER or any
LENDER's Affiliate.
(e) LIBOR INDEMNIFICATION. In addition to the prepayment
premiums set forth above, in the event that interest on any portion or portions
of the REVOLVING LOAN is being determined at a LIBOR Based Rate, such portion or
portions may be prepaid at any time but such prepayment must be made for the
entirety of the portion for which LENDER has entered into contracts relating to
LIBOR pricing. Partial prepayments of any such portion or portions are not
allowed. In the event of any such prepayment, the indemnification and yield
maintenance provisions set forth in SECTION 2.7 above shall apply.
(f) EFFECT OF TERMINATION.
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(1) All of the Liabilities shall be immediately due and
payable upon the termination date stated in any notice of termination of this
Agreement. All undertakings, agreements, covenants, warranties and
representations of the BORROWERS contained in the Loan Documents shall survive
any such termination and LENDER shall retain its security interest and liens in
the Collateral and all of its rights and remedies under the Loan Documents
notwithstanding such termination until the BORROWERS have indefeasibly paid the
Liabilities to LENDER in full, in immediately available funds, together with the
applicable termination charge, if any. Notwithstanding the payment in full of
the Liabilities, LENDER shall not be required to terminate its security
interests and liens in the Collateral unless, with respect to any loss or damage
LENDER may incur as a result of dishonored checks or other items of payment
received by LENDER from the BORROWERS or any Account Debtor and applied to the
Liabilities, LENDER shall, at its option, (i) have received a written agreement,
executed by the BORROWERS and by any person whose loans or other Advances to the
BORROWERS are used in whole or in part to satisfy the Liabilities, indemnifying
LENDER from any such loss or damage; or (ii) have retained any monetary reserves
or security interest and liens on the Collateral for such period of time as
LENDER, in its reasonable discretion, may deem necessary to protect LENDER from
any such loss or damage.
(2) Despite any termination of the relationship between LENDER
and the BORROWERS under the REVOLVING LOAN, regardless whether such termination
has been made by LENDER or the BORROWERS, LENDER shall continue to have all of
the rights and remedies provided to LENDER under this Agreement (including,
without limitation, LENDER's rights as a secured party) until such time that all
of the Liabilities are indefeasibly paid in full.
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2.10 LETTERS OF CREDIT.
(a) ISSUANCE.
(1) Subject to the terms and conditions of this Agreement,
LENDER will issue or cause to be issued the Captive Insurance Letter of Credit
and in addition, from time to time and in its sole discretion and at the request
of and for the account of such requesting BORROWER, issue or create or cause to
be issued or created (whether through a LENDER's Affiliate or otherwise) other
Letters of Credit for the benefit of beneficiaries designated by such requesting
BORROWER. The Letters of Credit (including the Captive Insurance Letter of
Credit) and the various documents related thereto are herein collectively called
"FINANCING DOCUMENTS". Notwithstanding the foregoing, no documentary Letters of
Credit will be issued and no acceptances will be created under this Agreement
and no BORROWER shall have the right to have any such documentary Letter of
Credit issued or any such acceptance for its account hereunder.
(2) Unless otherwise agreed by LENDER in writing, LENDER will
not issue or create or cause to be issued and created any Financing Document if
the issuance thereof will result in more than $8,500,000 being outstanding in
Letters of Credit in the aggregate at any one time.
(3) Unless otherwise agreed by LENDER in writing, all shipping
documents must be consigned to LENDER.
(4) Each Financing Document shall provide that drafts drawn
thereunder (not including drafts drawn under the Captive Insurance Letter of
Credit which shall be determined in accordance with the terms of the Captive
Insurance Letter of Credit) must be presented to LENDER or the issuer/obligor
thereof on or prior to 180 days after the issuance thereof (unless otherwise
agreed by LENDER but in no event later than the Revolving Loan Maturity Date),
and, in the case of the Letters of Credit, that any acceptances created
thereunder shall mature not later than 180 days after the creation thereof
(unless otherwise agreed by LENDER but in no event later than the Revolving Loan
Maturity Date).
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(5) A BORROWER seeking the issuance of a Letter of Credit must
give notice to LENDER of a request for the issuance of any Financing Document
not less than 10 Business Days prior to the proposed issuance date (which
prescribed time period may be waived at the option of LENDER in the exercise of
its sole discretion). Each such notice shall specify: (A) the requested date of
such issuance (which shall be a Business Day); (B) the maximum amount of such
Financing Document; (C) the expiration date of such Financing Document; (D) the
purpose of such Financing Document; (E) the name and address of the beneficiary
of such Financing Document; and (F) the required documents under any such
Financing Document.
(6) Notwithstanding the foregoing, LENDER shall not be under
any obligation to issue or create or cause to be issued and created any
Financing Document if at the time of such issuance any order, judgment or decree
of any governmental authority or arbitrator shall purport by its terms to enjoin
or restrain LENDER or the issuer/obligor thereof from issuing such Financing
Document or any requirement of law applicable to LENDER or the issuer/obligor
thereof or any request or directive (whether or not having the force of law)
from any governmental authority with jurisdiction over LENDER or any such
issuer/obligor thereof shall prohibit, or request that LENDER or any such
issuer/obligor thereof refrain from, the issuance of Letters of Credit,
generally or any such Financing Documents in particular, or shall impose upon
LENDER or any such issuer/obligor thereof with respect to any Financing Document
any requirement (for which LENDER or any such issuer/obligor thereof is not
otherwise compensated) not in effect on the date hereof, or any unreimbursed
loss, cost or expense which was not applicable, in effect or known to LENDER or
any such issuer/obligor thereof as of the date hereof and which LENDER or any
such issuer/obligor thereof in good faith deems material to it.
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(b) EVIDENCE OF OBLIGATION TO PAY AMOUNTS DUE UNDER THE
FINANCING DOCUMENTS:
(1) LENDER's rights and the BORROWERS' obligations with regard
to each Financing Document shall be determined and governed by this Agreement as
supplemented by any present or future application for any such Financing
Document executed by the applicable BORROWER (if any such application was in
fact executed by such BORROWER) or, if no such application was executed by such
BORROWER, then by the standard form of Financing Document application in use by
the applicable issuer/obligor thereof at the time LENDER issued or caused to be
issued any such Financing Document. The foregoing shall apply whether or not the
BORROWER for whose account the Letter of Credit is being issued actually
executed any such application. Each such application executed by any such
BORROWER and each such standard form of application is hereinafter called an
"Application" and collectively are called the "Applications".
(2) (A) In addition, payments made by LENDER against any
Letter of Credit Obligations, repayments of such drawings made by or on behalf
of the BORROWER for whose account the Letter of Credit is being issued and all
other amounts due or paid on account of any Letter of Credit Obligations, shall
be entered by LENDER on its records. The aggregate unpaid amounts shown on the
aforementioned records of LENDER shall evidence the principal, interest and
other amounts owed by such BORROWER on account of the Letter of Credit
Obligations. LENDER's failure to enter any such amount on such records shall
not, however, limit or otherwise affect the joint and several obligations of the
BORROWERS under this Agreement to pay to LENDER all amounts owing on account of
the Letter of Credit Obligations.
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(B) LENDER shall provide on a monthly basis a statement of the
aforementioned records. If the BORROWERS fail to object to any such statement
within sixty (60) days after it is received by the BORROWERS, it shall be deemed
to be an account stated and binding upon the BORROWERS. Notwithstanding the
foregoing, LENDER's failure to enter the date and amount of any advance on such
records shall not, however, limit or otherwise affect the joint and several
obligation of the BORROWERS under this Agreement to pay to LENDER all amounts
owing on account of the Letter of Credit Obligations.
(c) REPAYMENT OF AMOUNTS DUE UNDER THE FINANCING DOCUMENTS;
MANDATORY BORROWINGS TO SATISFY PAYMENT OBLIGATIONS UNDER THE FINANCING
DOCUMENTS:
(1) The BORROWER for whose account any Letter of Credit has
been issued (a) shall immediately reimburse LENDER for drafts drawn under any
Financing Document and all other Letter of Credit Obligations in immediately
available funds or (b) shall otherwise reimburse LENDER on such terms as may be
set forth in any applicable Application. For purposes of this Agreement, LENDER
will be deemed to have the same rights as any issuer/obligor under any such
applicable Application.
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(2) By its execution of this Agreement, each BORROWER hereby
authorizes LENDER to effect payment of the amount necessary for repayment of the
applicable draft and all other Letter of Credit Obligations pursuant to the
Authorization to Charge. The fact that only one BORROWER's loan account may be
charged on LENDER's books in no way alters or lessens the joint and several
payment liability of all the BORROWERS.
(3) Notwithstanding the foregoing, in the event that LENDER in
its sole discretion elects not to effect payment as aforesaid, any funds
advanced by LENDER in payment of any Financing Document shall be due and payable
immediately and shall bear interest until paid in full at the rate provided in
this Agreement if "LOAN VALUE" exists or at the Default Rate if no such "LOAN
VALUE" exists, such interest to be payable on demand. Interest shall be computed
on the basis of a year consisting of 360 days and paid for actual days elapsed.
(d) NON-LIABILITY OF LENDER: The BORROWERS assume all risks of
the acts or omissions of any beneficiary or transferee of any Financing Document
with respect to its use thereof. Neither LENDER nor any LENDER's Affiliate nor
any of officers or directors of LENDER nor any LENDER's Affiliate shall be
liable or responsible for any of the following:
(1) the use that may be made of any Financing Document or any acts
or omissions of any beneficiary or transferee in connection
therewith;
(2) the validity, sufficiency or genuineness of documents, or of
any endorsement thereon, even if such documents should prove
to be in any or all respects invalid, insufficient, fraudulent
or forged;
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(3) payment by LENDER or any LENDER's Affiliate against
presentation of documents that do not comply with the terms of
the Financing Document issued or created by LENDER or caused
to be issued or created by LENDER or any LENDER's Affiliate
except that the BORROWER for whose account the Letter of
Credit is being issued shall have a claim against LENDER, and
LENDER shall be liable to such BORROWER, to the extent of any
direct, but not consequential, damages suffered by such
BORROWER that such BORROWER proves were caused solely by (A)
LENDER's willful misconduct or negligence in determining
whether documents presented under any Letter of Credit comply
with the terms of such Letter of Credit or (B) LENDER's
willful failure to make lawful payment under a Letter of
Credit after the presentation to it of a draft and documents
and/or certificates strictly complying with the terms and
conditions thereof;
(4) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they are in cipher;
(5) errors in interpretation of technical terms provided by the
BORROWERS;
(6) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; and
(7) any consequence arising from causes beyond the control of
LENDER, including, without limitation, any government acts.
None of the above shall affect, impair, or prevent the vesting
of any of LENDER's rights or powers hereunder, including rights of subrogation.
In furtherance and not in limitation of the foregoing, LENDER may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary
unless (A) the BORROWERS provide sufficient prior written notice to LENDER as to
why any Letter of Credit otherwise appearing on its face to be in order should
not be paid and (B) the BORROWERS establish and maintain with LENDER a cash
escrow in an amount equal to the unpaid amount of the applicable Letter of
Credit together with sufficient funds necessary to satisfy the estimated
indemnification obligations set forth in subsection (e) below.
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To the extent not inconsistent herewith, the Uniform Customs and
Practice for Documentary Credits as most recently published by the International
Chamber of Commerce shall be deemed a part of this Section as if incorporated
herein in all respects and shall apply to the Letters of Credit.
(e) INDEMNIFICATION OF LENDER: In addition to amounts payable
as elsewhere provided in this Agreement, without duplication, each BORROWER
agrees to indemnify and save harmless LENDER and each issuer/obligor of any
Financing Document from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable attorneys'
fees and allocated costs of internal counsel) which LENDER or any such
issuer/obligor may incur or be subject to as a consequence, direct or indirect,
of the issuance of any Financing Document or any action or proceeding relating
to a court order, injunction, or other process or decree restraining or seeking
to restrain LENDER or any such issuer/obligor from paying any amount under any
Financing Document or the failure of LENDER or any such issuer/obligor to honor
a drawing under any Financing Document issued or created by LENDER or caused to
be issued or created by LENDER as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
governmental authority, except that LENDER shall not be entitled to
indemnification for matters caused solely by its gross negligence or willful
misconduct. Without modifying the foregoing, and anything contained herein to
the contrary notwithstanding, the BORROWER for whose account the Letter of
Credit has been issued shall cause each Financing Document issued for its
account to be canceled and returned to LENDER or the applicable issuer/obligor
on or before its expiration date.
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(f) FEES FOR THE LETTERS OF CREDIT: For the issuance, payment
and/or amendment of the Letters of Credit, the BORROWERS will pay all customary
and applicable charges of LENDER or the applicable issuer/obligor thereof for
each Letter of Credit issued, together with a 175 BASIS POINTS PER ANNUM FEE
(PRO-RATED MONTHLY) of the average amount of the Letters of Credit outstanding
during each calendar month (or part thereof in cases where less than a full
calendar month is involved), payable monthly in arrears.
(g) INCONSISTENCIES: In the event that any term or condition
set forth in any Application shall be inconsistent with the terms and conditions
of this Agreement, such inconsistency shall be resolved by an interpretation
which expands LENDER's rights rather than limits LENDER's rights.
2.11 LATE CHARGES:
(a) Any payment of interest due on any of the Liabilities
received more than 10 days after the payment's due date, if accepted by LENDER,
will be subject to a late charge of 5% of the total interest installment due.
(b) Nothing in the foregoing is intended to mean that LENDER
will accept any payment after the payment's due date.
(c) Nothing in the foregoing is intended to mean that LENDER's
acceptance of any payment more than 10 days after the payment's due date, other
than acceptance of payment of all applicable sums outstanding, is a cure of any
default.
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2.12 AUTHORIZATION TO CHARGE AMOUNTS DUE UNDER THIS AGREEMENT.
(a) Each BORROWER hereby authorizes LENDER to charge and effect payment as of
each due date of all interest and other amounts (including principal) due under
the REVOLVING LOAN and this Agreement by increasing the principal balance of the
REVOLVING LOAN as though an Advance were taken by BORROWERS against the
REVOLVING LOAN in the amount of any payment effected by LENDER.
(b) Each BORROWER hereby authorizes LENDER to charge and
effect payment as of each due date of all interest and other amounts (including
principal) due under the Letter of Credit Obligations by increasing the
principal balance of the REVOLVING LOAN as though an Advance were taken by
BORROWERS thereunder in the amount of any payment effected by LENDER.
(c) In the alternative, each BORROWER hereby gives (1)
authorization to LENDER to charge and effect payment of all monthly interest and
other amounts (including principal) due under the REVOLVING LOAN, the Letter of
Credit Obligations and this Agreement by charge as of each due date against
funds in an account specially maintained by any BORROWER at LENDER or any
LENDER's Affiliate and designated by such BORROWER for this purpose and (2) the
further authorization, in the event that there are insufficient funds in such
account on any applicable payment due date, to effect any such aforesaid payment
by charging such interest and any other amounts (including principal) against
funds in any other account maintained by any BORROWER at LENDER or any LENDER's
Affiliate as of each due date.
(d) The foregoing authorizations are collectively defined as
the "AUTHORIZATION TO CHARGE".
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(e) Each such authorization is a power coupled with an
interest and is irrevocable.
(f) The fact that only one BORROWER's loan account may be
charged on LENDER's books in no way alters or lessens the joint and several
payment liability of all the BORROWERS.
2.13 MANDATORY REPAYMENT OF ALL LIABILITIES. If any BORROWER terminates
its REVOLVING LOAN relationship with LENDER, then, at LENDER's option, this
Agreement may be terminated and, also at LENDER's option, all of the remaining
Liabilities are subject to acceleration in full. If LENDER terminates its
REVOLVING LOAN relationship with any BORROWER, then, at LENDER's option, this
Agreement may be terminated and, also at the option of LENDER, all of the
remaining Liabilities of all BORROWERS are subject to acceleration in full. The
rights set forth in this Section are in addition to all rights of LENDER to
terminate the REVOLVING LOAN and accelerate the payment of all Liabilities upon
the occurrence of an Event of Default.
2.14 APPLICATION OF PAYMENTS. LENDER may apply all payments and other
sums of money received by it from or on account of any BORROWER towards
satisfying any of the Liabilities of such BORROWER or any other BORROWER in any
order or priority which LENDER in the exercise of its reasonable commercial
judgment deems fit.
2.15 BORROWERS' ABSOLUTE GUARANTY OBLIGATIONS.
(a) As it relates to the Liabilities owed by each BORROWER,
each of the other BORROWERS hereby unconditionally and irrevocably guarantees to
LENDER as a primary obligor and not as a mere surety each of those Liabilities.
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(b) The foregoing obligations of each BORROWER under this
Agreement (whether as a direct borrower of funds under this Agreement or as a
co-BORROWER under the REVOLVING LOAN or as a guarantor obligated to repay funds
borrowed from LENDER by the other BORROWERS) and all other obligations (whether
monetary or non-monetary) of each BORROWER under this Agreement shall be joint
and several, absolute, unconditional and irrevocable.
(c) All the obligations of each BORROWER set forth in this
Section shall remain in full force and effect until all of the Liabilities shall
have been paid in full and shall be performed strictly in accordance with the
terms of this Agreement, under all circumstances whatsoever.
(d) None of the aforesaid obligations of any BORROWER shall be
affected, modified or impaired upon the happening from time to time of any
event, including without limitation any of the following circumstances:
(1) LENDER's compromise, settlement, release, change,
modification, amendment (whether material or otherwise) or
termination of any or all of the obligations, duties,
covenants or agreements of any other BORROWER or other party
under any of the Loan Documents;
(2) LENDER's waiver of the payment, performance or observance of
any of the obligations, conditions, covenants or agreements
contained in the Loan Documents;
(3) LENDER's extension, renewal or modification of any of the Loan
Documents or the extension, renewal, modification or waiver of
the performance of any obligation thereunder;
(4) LENDER's extension of the time for payment of (A) the
principal of, and premium, if any, and interest on the
REVOLVING LOAN or any of the other Liabilities or (B) the
performance of any other obligations, covenants or agreements
of any person or entity under or arising out of the Loan
Documents;
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(5) LENDER's taking or not taking any of the actions referred to
in the Loan Documents;
(6) LENDER's release (whether with or without consideration),
impairment, failure to perfect a security interest in,
exchange, surrender, substitution or modification of any
Collateral;
(7) any failure, omission or delay on the part of LENDER to
enforce, assert or exercise any right, power or remedy
conferred on it in the Loan Documents or any other action or
acts on the part of LENDER;
(8) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets,
marshaling of assets and liabilities, receivership,
insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition with
creditors or readjustment or, other similar proceedings which
affect any other BORROWER or any of the assets of any of them,
or any allegation or invalidity or contest of the validity of
any of the Loan Documents in any proceeding;
(9) LENDER's release (whether with or without consideration) or
discharge of any other BORROWER from the performance or
observance of any obligation, covenant or agreement contained
in this Agreement or in any guaranty of the Liabilities;
(10) the default or failure of any other BORROWER fully to perform
any of the obligations set forth in the Loan Documents;
(11) any lack of validity or enforceability of any of the Loan
Documents as they may relate to any other BORROWER;
(12) LENDER's inability to recover payment from any person or
entity under the Loan Documents; or
(13) LENDER's amendment or waiver of or any consent to departure
from all or any of the Loan Documents.
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2.16 RIGHT TO PROCEED AGAINST THE BORROWERS. Upon the occurrence of an
Event of Default, LENDER may proceed directly against any, some or all of the
BORROWERS. As it relates to each BORROWER's obligations to pay and be
responsible as a primary obligor for the Liabilities of any other BORROWER, THIS
IS, IN ADDITION TO BEING A PRIMARY OBLIGATION OF EACH BORROWER, A GUARANTY OF
PAYMENT AND NOT A GUARANTY OF COLLECTION, and upon the occurrence of an Event of
Default, this Agreement may be enforced directly against any, some or all
BORROWERS (1) without first proceeding against any other BORROWER or (2) without
first proceeding against any guarantor of the Liabilities (whether or not such
guarantor is also a BORROWER and whether or not such guarantor is named in this
Agreement) or (3) without first proceeding against any Collateral or (4) without
first proceeding against or exhausting any other remedies which LENDER may have
or (5) without first resorting to any other security held by LENDER, regardless
of by whomsoever given.
2.17 DELAY OF RIGHTS.
(a) No BORROWER shall be subrogated, in whole or in part, to
the rights of any person (including any other BORROWER) in the Loan Documents
and no BORROWER shall have rights against any other BORROWER until all of the
Liabilities are first indefeasibly paid in full.
(b) Each BORROWER is jointly and severally liable for the
payment of all Liabilities and, in furtherance of the foregoing, each BORROWER
waives its right of contribution and/or indemnification from each other BORROWER
until all of the Liabilities are first indefeasibly paid in full.
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2.18 FEES.
(a) CLOSING FEE: The BORROWERS shall on the date hereof pay
LENDER a one-time Closing Fee of $10,000. (b) UNUSED REVOLVING LOAN FACILITY
FEE. (1) In the event that average daily usage (including Outstanding Letters of
Credit) under the REVOLVING LOAN during any calendar month or part thereof falls
below $20,000,000, an unused facility fee will be charged on the short fall on a
pro-rated basis determined at a rate equal to 25 BASIS POINTS PER ANNUM
provided, however, if BORROWERS' Leverage, determined on a trailing 12 months
basis in accordance with the formula set forth in SECTION 5.26 below, is greater
than 3.0 to 1.0, the aforesaid unused facility fee will be charged on the short
fall on a pro-rated basis determined at a rate equal to 50 BASIS POINTS PER
ANNUM. Nothing in the foregoing is intended to prohibit LENDER from declaring an
Event of Default or imposing the Default Rate if BORROWERS' aforesaid Leverage
is greater than 3.0 to 1.0.
(2) On the first day of the calendar month immediately
following the end of the preceding calendar month, the BORROWERS will be
responsible for the payment of the unused facility fee, if any, then due. By its
execution of this Agreement, each BORROWER hereby authorizes LENDER to effect
payment of such fee pursuant to the Authorization to Charge. The fact that only
one BORROWER's loan account may be charged on LENDER's books in no way alters or
lessens the joint and several payment liability of all the BORROWERS.
(c) COLLATERAL MANAGEMENT FEE: To compensate LENDER for its
expenses in monitoring, reviewing and analyzing the BORROWERS' records,
financial statements and the Collateral and as more fully set forth in ARTICLE
V, the BORROWERS shall pay LENDER a Collateral Management Fee of $1,000 each
month payable in advance on the first day of each month commencing the first day
of the first month after this Agreement is dated and on the first day of each
and every calendar month thereafter. By its execution of this Agreement, each
BORROWER hereby authorizes LENDER to effect payment of such fee pursuant to the
Authorization to Charge. The fact that only one BORROWER's loan account may be
charged on LENDER's books in no way alters or lessens the joint and several
payment liability of all the BORROWERS.
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(d) FIELD EXAMINATION FEE: As more fully set forth in ARTICLE
V, the BORROWERS will reimburse LENDER for its periodic field examinations. This
reimbursement shall be limited to $850 PER DAY PER EXAMINER, PLUS LENDER'S
OUT-OF-POCKET EXPENSES, up to a maximum of $37,500 per year. If an Event of
Default has occurred and not been cured, however, there shall be no limit on
LENDER's right to reimbursement of reasonable expenses actually incurred. By its
execution of this Agreement, each BORROWER hereby authorizes LENDER to effect
payment of such fee pursuant to the Authorization to Charge. The fact that only
one BORROWER's loan account may be charged on LENDER's books in no way alters or
lessens the joint and several payment liability of all the BORROWERS.
(e) CUSTOMARY ACCOUNT FEES: The BORROWERS shall be responsible
for all customary service charges associated with any accounts maintained by any
BORROWER at any LENDER's Affiliate as well as all customary charges associated
with any services provided by LENDER to any BORROWER relating to this Agreement.
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ARTICLE III
COLLATERAL
3.1 CROSS COLLATERALIZATION. Each BORROWER agrees that the payment and
performance of all Liabilities shall be secured by each and all of the
following:
(a) all Collateral hereinafter set forth in this ARTICLE III;
(b) all Collateral hereafter given by any BORROWER to LENDER;
and
(c) all products and Proceeds of the foregoing.
3.2 ACCESSIONS. To secure payment and performance of all Liabilities,
each BORROWER hereby creates in favor of LENDER and hereby grants to LENDER a
first security interest in all Accessions, as defined herein, presently owned by
each such BORROWER or hereafter existing, created or acquired by it.
3.3 ACCOUNTS RECEIVABLE. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a first security interest in all Accounts, as
defined herein, presently owned by the BORROWERS or hereafter existing, created
or acquired by them.
3.4 BOOKS AND RECORDS. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a first security interest in all of the
BORROWERS' Books and Records, as defined herein, whether presently owned by the
BORROWERS or hereafter acquired by them.
3.5 CHATTEL PAPER. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a first security interest in all of the
BORROWERS' Chattel Paper, as defined herein, whether presently owned by the
BORROWERS or hereafter acquired by them, and whether now or hereafter left in
the possession of LENDER for any purpose.
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3.6 COMMERCIAL TORT CLAIMS. To secure payment and performance of all
Liabilities, each BORROWER hereby creates in favor of LENDER and hereby grants
to LENDER a first security interest in all of each BORROWER's Commercial Tort
Claims, as defined herein, presently owned by any BORROWER or hereafter acquired
by it.
3.7 CONSIGNMENTS. To secure payment and performance of all Liabilities,
each BORROWER hereby creates in favor of LENDER and hereby grants to LENDER a
first security interest in all of each such BORROWER's Consignments, as defined
herein, presently owned by any BORROWER or hereafter acquired by it, including
without limitation, (a) each BORROWER's rights to the underlying Goods in any
Consignment where Goods of such BORROWER are delivered to a merchant for the
purpose of sale and the merchant (1) deals in Goods of that kind under a name
other than that of such BORROWER; (2) is not an auctioneer; and (3) is not
generally known by its creditors to be substantially engaged in selling the
Goods of others and (b) each BORROWER's rights to the underlying Goods in any
Consignment where Goods of a third party are delivered to a BORROWER for the
purpose of sale.
3.8 CONTRACT RIGHTS. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a first security interest in all Contract
Rights, as defined herein, presently owned by the BORROWERS or hereafter
acquired by them.
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3.9 DEPOSIT ACCOUNTS. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER, hereby assign to LENDER and hereby grant to LENDER a pledge and first
security interest in each and all of the following:
(a) the balance of all Deposit Accounts (as defined in the UCC),
now or hereafter existing, of each BORROWER with LENDER or any
LENDER's Affiliate, or in transit to any of them; and
(b) all money, instruments, securities, documents, credits,
claims, and other property of each BORROWER, now or hereafter
or for any purpose (including safe-keeping or pledge or
security for any of the Liabilities) in the possession,
custody, safekeeping or control of LENDER or any LENDER's
Affiliate, or in transit to any of them; and
(c) any sum now or hereafter owed by LENDER or any LENDER's
Affiliat in any capacity to any BORROWER whether due or not;
and
(d) all additions, substitutions, replacements, and increments to
the foregoing property, as well as proceeds of all of the
foregoing property in whatever form, including cash,
negotiable instruments and other instruments for the payment
of money.
3.10 EQUIPMENT. To secure payment and performance of all Liabilities,
the BORROWERS hereby jointly and severally create in favor of LENDER and hereby
grant to LENDER a first security interest in all of the BORROWERS' Equipment, as
defined herein, except Equipment which is subject to the financing liens set
forth on the Certification as to Liens or whose acquisition is permitted as a
Capital Expenditure under ARTICLE V of this Agreement, whether such Equipment is
presently owned by the BORROWERS or hereafter acquired by them, and wherever
located.
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3.11 GENERAL INTANGIBLES. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a first security interest in all General
Intangibles, as defined herein, whether presently owned by the BORROWERS or
hereafter acquired by them.
3.12 GOODS. To secure payment and performance of all Liabilities, the
BORROWERS hereby jointly and severally create in favor of LENDER and hereby
grant to LENDER a first security interest in all Goods, as defined herein,
whether presently owned by the BORROWERS or hereafter acquired by them.
3.13 INSTRUMENTS. To secure payment and performance of all Liabilities,
the BORROWERS hereby jointly and severally create in favor of LENDER and hereby
grant to LENDER a first security interest in all of the Instruments, as defined
herein, of the BORROWERS, whether presently owned by the BORROWERS or hereafter
acquired by them, and whether now or hereafter left in the possession of LENDER
for any purpose, including (without limitation) collection.
3.14 INVENTORY. To secure payment and performance of all Liabilities,
the BORROWERS hereby jointly and severally create in favor of LENDER and hereby
grant to LENDER a first security interest in all of Inventory, as defined
herein, of the BORROWERS, whether presently owned by the BORROWERS or hereafter
acquired by them, and wherever located.
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3.15 ALL OTHER ASSETS.
(a) To secure payment and performance of all Liabilities, the
BORROWERS hereby jointly and severally create in favor of LENDER and hereby
grant to LENDER a first security interest in all of their other assets, whether
presently owned by the BORROWERS or hereafter acquired by them, including
without limitation the following categories of assets as defined in the UCC:
Inventory, Equipment (and any Accessions thereto), Instruments (including
promissory notes), Documents, Accounts (including Health-Care-Insurance
Receivables), Chattel Paper (whether tangible or electronic), Deposit Accounts,
Letter-of-Credit Rights (whether or not the letter of credit is evidenced by a
writing), Commercial Tort Claims, Securities and all other Investment Property,
General Intangibles (including payment intangibles and software), Supporting
Obligations, and any and all proceeds of any thereof, wherever located, whether
now owned or hereafter acquired.
(b) If BORROWER shall at any time acquire a Commercial Tort
Claim, BORROWER shall immediately notify LENDER in a writing signed by BORROWER
of the brief details thereof and grant to LENDER in such writing a security
interest therein and in the proceeds thereof, with such writing to be in form
and substance reasonably satisfactory to LENDER.
3.16 PROCEEDS AND PRODUCTS. To secure payment and performance of all
Liabilities, the BORROWERS hereby jointly and severally create in favor of
LENDER and hereby grant to LENDER a security interest in all products and
Proceeds of the Collateral.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce LENDER to enter into this Agreement and to
perform its obligations hereunder, each BORROWER jointly and severally makes the
following representations and warranties to LENDER as of the date of this
Agreement, each and all of which shall survive the execution and delivery of
this Agreement for the duration of the term or renewed term or terms of, this
Agreement:
4.1 REPRESENTATIONS AND WARRANTIES RELATING TO CD&L:
(a) CD&L is a corporation organized and existing under
the laws of the State of Delaware.
(b) CD&L's principal place of business is located at 80
Wesley Street, Hackensack, Bergen County, New Jersey
07606.
(c) CD&L is in good standing under the laws of the state
of its formation.
(d) CD&L is qualified to do business in New Jersey and
in every other jurisdiction where the nature of its
business or the law of the applicable jurisdiction
requires it to be so qualified.
(e) CD&L's correct legal name is "CD&L, INC." and was
formerly known as "CONSOLIDATED DELIVERY & LOGISTICS
INC."
(f) (1) CD&L uses the trade name and trade mark "CD&L".
(2) CD&L owns no trade marks or patents.
(g) CD&L is not engaged in any business activity other
than as a holding company and business directly
related thereto.
(h) CD&L has the following Subsidiaries:
(1) CLAYTON;
(2) CLICK;
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(3) OLYMPIC;
(4) SECURITIES;
(5) SILVER STAR;
(6) CD&L Freight, Inc., a corporation of
the state of New York and an
inactive, non-operating entity; and
(7) Liberty Transfer Corp., a
corporation of the state of New
Jersey and an inactive,
non-operating entity.
(i) The stock ownership of CD&L is publicly held.
(j) The Collateral given by CD&L is or will be located
only at 80 Wesley Street, Hackensack, Bergen County,
New Jersey 07606.
4.2 REPRESENTATIONS AND WARRANTIES RELATING TO CLAYTON:
(a) CLAYTON is a corporation organized and existing
under the laws of the State of Missouri.
(b) CLAYTON's principal place of business is located at
3390 Enterprise Drive, Hayward, California 94545.
(c) CLAYTON is in good standing under the laws of the
state of its formation.
(d) CLAYTON is qualified to do business in California
and Washington and in every other jurisdiction where
the nature of its business or the law of the
applicable jurisdiction requires it to be so
qualified.
(e) CLAYTON's correct legal name is "CLAYTON/NATIONAL
COURIER SYSTEMS, INC."
(f) (1) CLAYTON neither has nor uses any trade names.
(2) CLAYTON owns no trade marks or patents.
(g) CLAYTON is not engaged in any business activity
other than courier and delivery services and
business directly related thereto.
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(h) CLAYTON has no Subsidiaries.
(i) The sole stockholder of CLAYTON is CD&L.
(j) The Collateral given by CLAYTON is or will be
located only at 3390 Enterprise Drive, Hayward,
California 94545.
4.3 REPRESENTATIONS AND WARRANTIES RELATING TO CLICK:
(a) CLICK is a corporation organized and existing under
the laws of the State of New Jersey.
(b) CLICK's principal place of business is located at
104 Sunfield Avenue, Edison, Middlesex County, New
Jersey 08818.
(c) CLICK is in good standing under the laws of the
state of its formation.
(d) CLICK is qualified to do business in Connecticut,
Maine, Massachusetts, New Hampshire, New York,
Pennsylvania and Vermont and in every other
jurisdiction where the nature of its business or the
law of the applicable jurisdiction requires it to be
so qualified.
(e) CLICK's correct legal name is "CLICK MESSENGER
SERVICE, INC."
(f) (1) CLICK neither has nor uses any trade names.
(2) CLICK owns no trade marks or patents.
(g) CLICK is not engaged in any business activity other
than courier and delivery services and business
directly related thereto.
(h) CLICK has no Subsidiaries.
(i) The sole stockholder of CLICK is CD&L.
(j) The Collateral given by CLICK is or will be located
only at 104 Sunfield Avenue, Edison, Middlesex
County, New Jersey 08818.
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4.4 REPRESENTATIONS AND WARRANTIES RELATING TO KBD:
(a) KBD is a corporation organized and existing under
the laws of the State of North Carolina.
(b) KBD's principal place of business is located at 760
Reedy Creek Road, Cary, North Carolina 27512.
(c) KBD is in good standing under the laws of the state
of its formation.
(d) KBD is qualified to do business in every
jurisdiction where the nature of its business or the
law of the applicable jurisdiction requires it to be
so qualified.
(e) KBD's correct legal name is "K.B.D. SERVICES, INC."
(f) (1) KBD neither has nor uses any trade names.
(2) KBD owns no trade marks or patents.
(g) KBD is not engaged in any business activity other
than courier and delivery services and business
directly related thereto.
(h) KBD has no Subsidiaries.
(i) The sole stockholder of KBD is SILVER STAR.
(j) The Collateral given by KBD is or will be located
only at 760 Reedy Creek Road, Cary, North Carolina
27512.
4.5 REPRESENTATIONS AND WARRANTIES RELATING TO OLYMPIC:
(a) OLYMPIC is a corporation organized and existing
under the laws of the State of New York.
(b) OLYMPIC's principal place of business is located at
185 Varick Street and 68 King Street, New York, New
York 10014.
(c) OLYMPIC is in good standing under the laws of the
state of its formation.
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(d) OLYMPIC is qualified to do business in every
jurisdiction where the nature of its business or the
law of the applicable jurisdiction requires it to be
so qualified.
(e) OLYMPIC's correct legal name is "OLYMPIC COURIER
SYSTEMS, INC."
(f) (1) OLYMPIC neither has nor uses any trade names.
(2) OLYMPIC owns no trade marks or patents.
(g) OLYMPIC is not engaged in any business activity
other than courier and delivery services and
business directly related thereto.
(h) OLYMPIC has no Subsidiaries.
(i) The sole stockholder of OLYMPIC is CD&L.
(j) The Collateral given by OLYMPIC is or will be
located only at 185 Varick Street and 68 King
Street, New York, New York 10014.
4.6 REPRESENTATIONS AND WARRANTIES RELATING TO SECURITIES:
(a) SECURITIES is a corporation organized and existing
under the laws of the State of New York.
(b) SECURITIES' principal place of business is located
at 80 Wesley Street, Hackensack, Bergen County, New
Jersey 07606.
(c) SECURITIES is in good standing under the laws of the
state of its formation.
(d) SECURITIES is qualified to do business in New Jersey
and Pennsylvania and in every other jurisdiction
every jurisdiction where the nature of its business
or the law of the applicable jurisdiction requires
it to be so qualified.
(e) SECURITIES' correct legal name is "SECURITIES
COURIER CORPORATION".
(f) (1) SECURITIES neither has nor uses any trade names.
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(2) SECURITIES owns no trade marks or patents.
(g) SECURITIES is not engaged in any business activity
other than courier and delivery services and
business directly related thereto.
(h) SECURITIES has no Subsidiaries.
(i) The sole stockholder of SECURITIES is CD&L.
(j) The Collateral given by SECURITIES is or will be
located only at 80 Wesley Street, Hackensack, Bergen
County, New Jersey 07606.
4.7 REPRESENTATIONS AND WARRANTIES RELATING TO SILVER STAR:
(a) SILVER STAR is a corporation organized and existing
under the laws of the State of Florida.
(b) SILVER STAR's principal place of business is located
at 3026 North Commerce Parkway, Miramar, Florida
33166.
(c) SILVER STAR is in good standing under the laws of
the state of its formation.
(d) SILVER STAR is qualified to do business in Arkansas,
Georgia, Indiana, Louisiana, Maryland, New Jersey,
New York, North Carolina, Ohio, Oklahoma,
Pennsylvania, South Carolina, Tennessee and Texas
and in every other jurisdiction every jurisdiction
where the nature of its business or the law of the
applicable jurisdiction requires it to be so
qualified.
(e) SILVER STAR's correct legal name is "SILVER STAR
EXPRESS, INC."
(f) (1) SILVER STAR neither has nor uses any trade
names.
(2) SILVER STAR owns no trade marks or patents.
(g) SILVER STAR is not engaged in any business activity
other than courier and delivery services and
business directly related thereto.
(h) SILVER STAR has one Subsidiary, namely KBD.
(i) The sole stockholder of SILVER STAR is CD&L.
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(j) The Collateral given by SILVER STAR is or will be
located only at 3026 North Commerce Parkway,
Miramar, Florida 33166.
4.8 (a) The Collateral given by each BORROWER is or will be located, as
applicable, only at the locations set forth in SECTION 4.1 through and including
SECTION 4.7 above.
(b) Each BORROWER may from time to time add to the locations
set forth above or change the locations set forth above but only on at least 30
days prior written notice to LENDER and only so long as the applicable BORROWER
executes any additional or supplement Uniform Commercial Code financing
statements which LENDER considers necessary to continue the perfection of its
security interests.
(c) The locations set forth in subsection (a) above and any
permitted under subsection (b) above collectively are the "COLLATERAL LOCATIONS"
described in this Agreement.
4.9 Each BORROWER has the organizational power to execute and deliver
this Agreement, the Revolving Note and the other Loan Documents to which it is a
signatory, and to perform and observe the terms and provisions hereof and
thereof, and, as applicable, its Board of Directors and (in all cases other than
that of CD&L) its stockholders have duly authorized and approved the terms
described herein and the taking of any and all action contemplated herein.
4.10 ALL OF THE BORROWERS ARE OPERATED AS PART OF ONE CONSOLIDATED
BUSINESS ENTITY AND ARE DIRECTLY DEPENDENT UPON EACH OTHER FOR AND IN CONNECTION
WITH THEIR RESPECTIVE BUSINESS ACTIVITIES AND THEIR RESPECTIVE FINANCIAL
RESOURCES. EACH BORROWER WILL RECEIVE A DIRECT ECONOMIC AND FINANCIAL BENEFIT
FROM THE LIABILITIES INCURRED UNDER THIS AGREEMENT BY EACH AND ALL OF THE
BORROWERS, AND THE INCURRENCE OF SUCH LIABILITIES IS IN THE BEST INTERESTS OF
EACH BORROWER.
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4.11 No consent or approval of any trustee or holder of any
indebtedness or obligation of any BORROWER is necessary in connection with the
execution and delivery of this Agreement, the Revolving Note and the other Loan
Documents to which it is a signatory, or any transaction contemplated hereby or
thereby.
4.12 No consent, permission, authorization, order or license of any
governmental authority is necessary in connection with the execution and
delivery of this Agreement, the Revolving Note and the other Loan Documents to
which any BORROWER is a signatory, or any transaction contemplated hereby or
thereby.
4.13 There is no provision of any indenture or agreement, written or
oral, to which any BORROWER is a party or under which it is obligated which
would be contravened by the execution and delivery of this Agreement, the
Revolving Note and the other Loan Documents to which it is a signatory, or by
the performance of any provision, condition, covenant or other term hereof or
thereof.
4.14 There is no statute, rule or regulation, or any judgment, decree
or order of any court or agency binding on any BORROWER which would be
contravened by the execution and delivery of this Agreement, the Revolving Note
or any of the other Loan Documents required hereunder, or by the performance of
any provision, condition, covenant or other term hereof or thereof.
4.15 On the date of this Agreement, each BORROWER has good and
marketable title to all of its properties and assets, real, personal and mixed,
and none of said properties or assets is subject to any mortgage, pledge, lien,
security interest, encumbrance, charge or title retention or other security
agreement or arrangement of any character whatsoever except for the lien of
LENDER and except as set forth on the Certifications as to Liens.
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4.16 (a) Each BORROWER has timely filed all returns and information and
other reports required of it under all Federal, State, local and foreign tax
laws to which it is subject and is not subject to any pending audits.
(b) All such returns and reports are true, correct and
complete in all material respects.
(c) There are not now in effect any extensions of time in
which to assess additional taxes against any BORROWER.
(d) Each BORROWER has paid or made adequate provision for the
full payment of all fees, taxes, interest and penalties which have been incurred
or are due and payable by it or which have been asserted or proposed to be
asserted against it.
(e) The liability for taxes shown on the most current
financial statements of each BORROWER submitted to LENDER is sufficient for the
payment of all Federal, State, local and foreign taxes attributable or with
respect to all periods, or portions thereof, prior to the date of such financial
statements remaining unpaid as of such date and any interest thereon to such
date.
4.17 No action or proceeding is now pending, or to the knowledge of any
BORROWER is threatened, against any BORROWER at law, in equity or otherwise,
before any court, board, commission, agency or instrumentality of any federal,
state or local government or of any agency or subdivision thereof, or before any
arbitrator or panel of arbitrators other than claims covered by insurance which
would have a Material Adverse Effect on any BORROWER, including litigation which
seeks monetary damages in excess of $100,000 which is not covered by insurance.
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4.18 No event has occurred and is continuing which would constitute an
Event of Default or which, upon a lapse of time and notice, if applicable, would
become such an Event of Default and no borrowing by any BORROWER under this
Agreement constitutes an event of default under any agreement to which any
BORROWER is a party.
4.19 All financial statements of the BORROWERS and all written
information and other written data furnished by the BORROWERS to LENDER are
complete and correct in all material respects, and such financial statements
have been prepared in accordance with GAAP and fairly represent the financial
condition of the applicable BORROWER as of such date. Since such date there has
been no material change in any BORROWER's financial condition sufficient to
impair its ability to repay all of the Liabilities. No BORROWER has any
contingent obligations, liabilities for taxes or other outstanding financial
obligations which are material in the aggregate, except as disclosed in such
statements, information and data or otherwise in this Agreement.
4.20 Each BORROWER hereby irrevocably authorizes and directs all
outside accountants and outside auditors employed by it at any time during the
term of this Agreement to exhibit and deliver to LENDER copies of any of its
financial statements in their possession, and to disclose to LENDER upon
LENDER's reasonable request any information they may have concerning its
financial status and business operations.
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4.21 (a) No BORROWER and no employee benefit plan maintained by any
BORROWER is in violation of any of the provisions of the Employee Retirement
Income Security Act of 1974, 29 U.S.C. ss.1001 et seq., as from time to time
amended ("ERISA") or any regulations issued thereunder by the United States
Treasury Department, the Department of Labor and the Pension Benefit Guaranty
Corporation, and no prohibited transaction (within the meaning of Title I of
ERISA or the Internal Revenue Code of 1986, as amended (the "CODE")) has
occurred and is continuing with respect to any such plan, in each instance where
such violation or prohibited transaction or any liabilities resulting directly
or indirectly therefrom individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect on any BORROWER. For purposes of this
Agreement, the term "EMPLOYEE BENEFIT PLAN" shall have the meaning given that
term in Section 3(3) of ERISA.
(b) With respect to each "EMPLOYEE BENEFIT PLAN" within the
meaning of Section 3(3) of ERISA maintained by any BORROWER (herein called the
"BENEFIT PLANS" or individually the "BENEFIT PLAN") and any trusts created
thereunder:
(1) all reports, forms and other information required to be
filed with any government agency or to be distributed or made available to any
Benefit Plan participant or beneficiary of any Benefit Plan have been filed,
distributed or made available;
(2) all Benefit Plans have been amended to the extent
currently required by the applicable provisions of ERISA and the Code;
(3) each BORROWER has made all contributions required to be
made with respect to each Benefit Plan;
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(4) with respect to each group health plan maintained by any
BORROWER, the requirements of Sections 601 through 608 of ERISA have been
complied with;
(5) no Benefit Plan and no trust thereunder has been
terminated;
(6) there has been no "REPORTABLE EVENT", as defined in
Section 4043 of ERISA, or any "ACCUMULATED FUNDING DEFICIENCY";
(7) no BORROWER has incurred any liability to the Pension
Benefit Guaranty Corporation.
(c) No BORROWER and no any officer, director or other employee
of any BORROWER, and no "PARTY IN INTEREST" or "DISQUALIFIED PERSON", as such
terms are defined in Section 3 of ERISA and Section 4975 of the Code, has, with
respect to any Benefit Plan, engaged in or been a party to any "PROHIBITED
TRANSACTION," as such term is defined in Section 4975 of the Code or Section 406
of ERISA, in connection with which any BORROWER or any officer, director or
other employee of any BORROWER, or any Benefit Plan, could reasonably be
expected to, directly or indirectly, be subject to either a penalty, assessed
pursuant to Section 502(i) of ERISA, or a tax imposed by Section 4975 of the
Code.
4.22 SELLER SUBORDINATED NOTES.
(a) The BORROWERS represent and warrant that CD&L is obligated
to the Sellers in the amounts set forth in the definition of Seller Subordinated
Notes.
(b) SCHEDULE 4.22 accurately sets forth the schedules payment
obligations of the BORROWERS to the Sellers on the Seller Subordinated Notes.
(c) The BORROWERS represent and warrant as follows:
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(1) All amounts owed by the BORROWERS to the Sellers on the
Seller Subordinated Notes are subordinated to LENDER's prior right to
indefeasible payment in full of the Liabilities.
(2) The REVOLVING LOAN and all other Liabilities are "Senior
Debt" and/or "Senior Indebtedness" as such terms are defined in the Seller
Subordinated Notes.
(3) LENDER and its successors and assigns are holders of
"Senior Debt" and/or "Senior Indebtedness" under the Seller Subordinated Notes.
(d) So long as no Event of Default has occurred the BORROWERS
will be allowed to make the scheduled installment payments to the Sellers on the
Seller Subordinated Notes (and the interest thereon) over the term of this
Agreement. No payments in advance or prepayments of such debt will be allowed.
On and after the occurrence of an Event of Default, all scheduled payments will
be frozen and blocked and no payment of any such sums shall be made until such
time this Agreement has been terminated and all the Liabilities have been
indefeasibly paid in full.
4.23 SENIOR SUBORDINATED DEBT.
(a) The BORROWERS represent and warrant that CD&L is obligated
to the Senior Subordinated Lenders in the amount of $4,000,000 as evidenced by
the Series A Debentures with interest thereon at 9% per annum through April 13,
2006, 10.5% per annum from April 14, 2006 through April 13, 2008, and 12% per
annum thereafter.
(b) So long as no Event of Default has occurred CD&L will be
allowed to pay interest only due to the Senior Subordinated Lenders over the
term of this Agreement. No principal may be repaid on the Senior Subordinated
Debt. No interest payments in advance or prepayments of the principal
constituting the Senior Subordinated Debt are or will be allowed. The
subordination provisions in the Senior Subordinated Loan Agreement, as in
existence on the date hereof, govern blockage rights.
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(c) All amounts owed by the BORROWERS to Senior Subordinated
Lenders with respect to the Senior Subordinated Debt are subordinated to
LENDER's prior right to indefeasible payment in full of the Liabilities as and
to the extent provided in the Senior Subordinated Loan Agreement, as in
existence on the date hereof.
(d) No other amounts may be borrowed by the BORROWERS from the
Senior Subordinated Lenders without the prior written consent of LENDER.
(e) The BORROWERS represent and warrant as follows:
(1) This Agreement is the "Credit Agreement" for purposes of
and as defined in the Senior Subordinated Notes and the Senior Subordinated Loan
Agreement.
(2) The REVOLVING LOAN and the Letter of Credit Obligations
are "Senior Debt" and "Senior Indebtedness" for purposes of and as defined in
the Senior Subordinated Notes and the Senior Subordinated Loan Agreement.
(3) LENDER and its successors and assigns are the "Bank" and
the holders of "Senior Debt" and "Senior Indebtedness" for purposes of and as
defined in the Senior Subordinated Notes and the Senior Subordinated Loan
Agreement.
4.24 REDEMPTION, PAYMENT AND RETIREMENT OF SERIES B DEBENTURES.
BORROWERS represent and warrant that those certain convertible notes in the
total face amount of $4,000,000 and dated as of April 14, 2004, and called
"Series B Convertible Notes" and held by BNP Paribas SA (f/k/a Paribas Capital
Funding LLC), Exeter Capital Partners IV, L.P., and Exeter Venture Lenders L.P.,
have been redeemed, paid in full and permanently retired and no longer exist.
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ARTICLE V
POSITIVE COVENANTS
Each BORROWER jointly and severally covenants and agrees that
until the full and final payment of the Liabilities, unless LENDER waives
compliance in writing:
5.1 PAYMENT OF LIABILITIES.
(a) CD&L will repay the REVOLVING LOAN in accordance with the
terms of the REVOLVING NOTE and this Agreement.
(b) CLAYTON will repay the REVOLVING LOAN in accordance with
the terms of the REVOLVING NOTE and this Agreement.
(c) CLICK will repay the REVOLVING LOAN in accordance with the
terms of the REVOLVING NOTE and this Agreement.
(d) KBD will repay the REVOLVING LOAN in accordance with the
terms of the REVOLVING NOTE and this Agreement.
(e) OLYMPIC will repay the REVOLVING LOAN in accordance with
the terms of the REVOLVING NOTE and this Agreement.
(f) SECURITIES will repay the REVOLVING LOAN in accordance
with the terms of the REVOLVING NOTE and this Agreement.
(g) SILVER STAR will repay the REVOLVING LOAN in accordance
with the terms of the REVOLVING NOTE and this Agreement.
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(h) Each BORROWER will pay immediately on demand the Letter of
Credit Obligations (including all obligations arising under the Captive
Insurance Letter of Credit).
(i) Each BORROWER will repay all other Liabilities in
accordance with the terms thereof and the note and/or notes and/or ledgers
evidencing the same.
(j) EACH BORROWER WILL BE RESPONSIBLE, AS A CO-BORROWER, FOR
THE REPAYMENT IN ACCORDANCE WITH THE PAYMENT TERMS OF THIS AGREEMENT AND THE
REVOLVING NOTE OF ALL ADVANCES MADE BY LENDER UNDER THE REVOLVING LOAN.
(k) EACH BORROWER WILL BE RESPONSIBLE, AS GUARANTOR, FOR ALL
OF THE LIABILITIES OF THE OTHER BORROWERS IN ACCORDANCE WITH THE BORROWERS'
COVENANTS OF GUARANTY SET FORTH IN THIS AGREEMENT.
5.2 PRESERVATION OF EXISTENCE AND PROHIBITION AGAINST DISSOLUTION,
MERGERS, ACQUISITIONS, FORMATION OF SUBSIDIARIES. Each BORROWER will (a)
preserve and maintain its existence, (b) maintain all of its rights, privileges
and franchises necessary or desirable in the normal conduct of its business, (c)
conduct its business in an orderly and regular manner, (d) not dissolve or
otherwise dispose of all or a substantial part of its assets and (e) not
consolidate with or merge into another entity or permit one or more other
entities to consolidate with or merge into it (whether or not the affected
BORROWER or any Subsidiary of such BORROWER is the surviving entity), (f) not
acquire all or substantially all of the assets or any of the capital stock or
ownership interests of any corporation or other entity and (g) not form or
create or acquire any Subsidiary.
5.3 PRESERVATION OF ASSETS. Each BORROWER will maintain, preserve and
keep its properties and assets or cause the same to be maintained, preserved and
kept, in good repair, working order and condition excepting reasonable wear and
tear; make or cause to be made all necessary and proper repairs, replacements
and renewals thereto as shall from time to time be necessary; and make or cause
to be made all necessary and proper substitutions, additions, modifications and
improvements as may be necessary to preserve (a) the value of its properties and
assets, (b) their usefulness to such BORROWER and (c) their fitness for their
intended purposes.
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5.4 PAYMENT OF TAXES.
(a) (1) Each BORROWER will pay as they become due, all taxes
(or will provide adequate reserves therefor), assessments, levies and other
governmental charges, by whatever name called, that may at any time be lawfully
assessed or levied against or with respect to any BORROWER the Collateral or any
other property acquired by any BORROWER in substitution for, as a renewal or
replacement of, or modification, improvement or addition to the Collateral
(including, but not by way of limitation, any tax, assessment or other
governmental charge which, if not paid, will become a lien or charge upon the
Collateral).
(2) Each BORROWER will also pay all utilities and other
charges incurred in the operation, maintenance, use and upkeep of the Collateral
or any part thereof.
(b) (1) If any lien shall be claimed which in LENDER's opinion
might possibly create a valid obligation having priority over the rights granted
to it herein, LENDER may, on 3 Business Days prior notice, pay such taxes,
assessments, charges or claims, and the amount thereof together with interest at
the Default Rate (if not so paid after the aforesaid 3 Business Days notice)
shall until paid be added to the Liabilities.
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(2) By its execution of this Agreement, each BORROWER
authorizes LENDER to reimburse itself for any of its expenses associated with
the above pursuant to the Authorization to Charge.
5.5 COOPERATION AND FURTHER ASSURANCES.
(a) The BORROWERS jointly and severally covenant and warrant
that, at any time or from time to time when in the reasonable opinion of LENDER
or its counsel it shall be necessary or desirable, they will perform or cause to
be performed any and all reasonable steps requested by LENDER to create and
maintain in LENDER's favor a valid lien on or security interest in or pledge of
the Collateral (with the priority required by this Agreement), including,
without limitation, the execution, delivery, filing and recording of financing
statements and continuation statements, supplemental security agreements, notes
and any other documents necessary, in the opinion of LENDER, for perfecting the
liens and security interest granted to LENDER hereunder, correcting any
inadequate or incorrect description of the Collateral or carrying out the
intention of or facilitating the performance of any term, covenant or condition
of this Agreement. In the event any BORROWER fails to abide by this Section or
in the event that LENDER in its sole discretion believes time is of the essence,
LENDER may execute all of the above instruments on behalf of the defaulting
BORROWER.
(b) Not in limitation of the foregoing, each BORROWER hereby
authorizes LENDER at any time or from time to time when in the reasonable
opinion of LENDER or its counsel it shall be necessary or desirable, to execute
and file/record any UCC-1 Financing Statement or UCC-3 Financing Statement or
similar instrument as may reasonably be required for perfecting the liens and
security interests granted to LENDER hereunder.
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5.6 REPORTING REQUIREMENTS.
(a) Each BORROWER shall maintain books and records in such
detail, form and scope as LENDER shall reasonably require.
(b) In addition, each BORROWER shall supply to LENDER on forms
supplied by LENDER or otherwise acceptable to LENDER, the information set forth
in the subsections below together with such other information (including,
without limitation, updated address listings of Account Debtors) as LENDER may
request on a frequency requested by LENDER.
(c) WEEKLY COLLATERAL REPORTING: Not in limitation of the
foregoing or of the right of LENDER to request other information, each BORROWER
shall submit on a weekly basis all of the information contained in the Borrowing
Base Certificate, such certificate to be submitted no later than Friday with the
information reported as at the immediately preceding Sunday. In addition, but
only upon request of LENDER, the BORROWERS may be required to supply the
following information to the extent not specifically provided for in the
Borrowing Base Certificate:
(1) sales with dated copies of the invoices or sales
registers therefor (including credit memo data),
which shall indicate the names and addresses of
Account Debtors;
(2) all cash collections (including collections in the
form of checks);
(3) cash receipts register; and
(4) immediately upon their occurrences, reports and
records of merchandise returns or disputes,
discounts, advertising allowances, contraoffsets or
any other offsets, volume discounts, rebate
arrangements, sales of samples, "bill and hold"
transactions, and any other factor which would
dilute the value or reduce the amount of any Account
Receivable.
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(d) MONTHLY COLLATERAL REPORTING: Also not in limitation of
the foregoing or of the right of LENDER to request other information, each
BORROWER shall submit on a monthly basis the information contained in
theReconciliation Certificate no later than 20 days after the end of each
calendar month together with the following information to the extent not
specifically provided for in the Reconciliation Certificate:
(1) aging schedules of Accounts Receivable (by division)
together with monthly calculation of ineligible
Receivables, together with, if requested, records
showing the individual invoices owing by each
Account Debtor;
(2) an aging summary for each Account Debtor;
(3) aging schedules of accounts payable; and
(4) monthly statement of new business added and business
lost where such business on a per customer basis
exceeds or is expected to exceed $500,000 in annual
revenue.
(e) QUARTERLY FINANCIAL STATEMENTS: Also not in limitation of
the foregoing or of the right of LENDER to request other information, the
BORROWERS shall deliver to LENDER as soon as available and in any event within
45 days after the end of each of the BORROWERS' first, second and third fiscal
quarters, each of the following:
(1) its quarterly report on Form 10-Q or, if the
BORROWERS are no longer required to file reports
with the Securities and Exchange Commission, their
balance sheet (consolidated and consolidating with
each other) as of the end of each such fiscal
quarter and year-to-date and their statements of
operations (consolidated and consolidating with each
other) for such periods, all in reasonable detail
and in each case duly prepared in accordance with
GAAP on a review basis by independent certified
public accountants of recognized standing acceptable
to LENDER, substantially in the same form (except
for notes to the financial statements), all in
reasonable detail and all being correct and complete
in all material respects subject only to year end
adjustments; together with
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(2) a certificate signed by the President or principal
financial officer of each BORROWER to the effect
that such officer does not have any knowledge that
an Event of Default (or an event which, with notice
or the lapse of time or both, would constitute an
Event of Default) exists or, if an Event of Default
(or such other event) does exist, a statement as to
the nature thereof and the actions proposed to be
taken with respect thereto;
(3) a certificate signed by the President or principal
financial officer of each BORROWER to the effect
that all warranties and representations made by such
BORROWER to LENDER in this Agreement or in
connection with the transactions to which this
Agreement relates remain true, correct and complete
and, in the case of the covenants (including the
financial covenants set forth in ARTICLE V and/or
ARTICLE VI) and warranties, that the same have not
been breached or violated, or if any such warranty
or representation is no longer true, correct or
complete or any such covenant or warranty has been
breached or violated, specifying the nature thereof
and stating what action is proposed with respect
thereto;
(4) a certificate signed by the President or principal
financial officer of each BORROWER showing
calculations pertaining to compliance at and as of
the end of each such fiscal quarter with each
financial covenant requirement of ARTICLE V and/or
ARTICLE VI which is tested quarterly.
(f) ANNUAL FINANCIAL STATEMENTS: Not in limitation of the
foregoing or of the right of LENDER to request other information, the BORROWERS
shall, so long as any of the Liabilities remains outstanding (unless LENDER
otherwise consents in writing), deliver to LENDER as soon as available and in
any event within 120 days after the end of each of their fiscal years, each of
the following:
(1) its annual report on Form 10-K or, if the BORROWERS
are no longer required to file reports with the
Securities and Exchange Commission, their annual
audit report for such year (consolidated and
consolidating with each other), including therein
their balance sheet as of the end of such fiscal
year and their statements of operations, cash flows
and changes in stockholders' equity (consolidated
and consolidating with each other) for such fiscal
year, setting forth in comparative form the
corresponding figures for the preceding fiscal year,
prepared in accordance with GAAP, all in reasonable
detail and in each case duly certified, without
exception, by independent certified public
accountants of recognized standing acceptable to
LENDER, together with each of the following:
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(2) a copy of the management letter, if any, issued by
such accounting firm;
(3) a certificate signed by the President or principal
financial officer of each BORROWER to the effect
that such officer does not have any knowledge that
an Event of Default (or an event which, with notice
or the lapse of time or both, would constitute an
Event of Default) exists or, if an Event of Default
(or such other event) does exist, a statement as to
the nature thereof and the actions proposed to be
taken with respect thereto;
(4) a certificate signed by the President or principal
financial officer of each BORROWER to the effect
that all warranties and representations made by such
BORROWER to LENDER in this Agreement or in
connection with the transactions to which this
Agreement relates remain true, correct and complete,
and, in the case of the covenants (including the
financial covenants set forth in ARTICLE V and/or
ARTICLE VI) and warranties, that the same have not
been breached or violated, or if any such warranty
or representation is no longer true, correct or
complete or any such covenant or warranty has been
breached or violated, specifying the nature thereof
and stating what action is proposed with respect
thereto;
(5) a certificate signed by the President or principal
financial officer of each BORROWER showing
calculations pertaining to compliance at and as of
the end of each such fiscal year with each financial
covenant of ARTICLE V and/or ARTICLE VI which is
tested annually.
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(g) ANNUAL PROJECTIONS: Not in limitation of the foregoing or
of the right of LENDER to request other information, the BORROWERS shall, so
long as any of the Liabilities remains outstanding (unless LENDER otherwise
consents in writing), deliver to LENDER as soon as available and in any event at
least 30 days prior to the start of each of their fiscal years, annual
projections for the upcoming fiscal year, on a quarterly basis, and including
balance sheet, profit and loss and cash flow and in form acceptable to LENDER.
(h) NOTICE OF DEFAULT: As soon as possible and in any event
within three days after he becomes aware of the occurrence of each Event of
Default (or each event which, with the giving of notice or lapse of time or
both, would constitute an Event of Default), the written statement of the chief
financial officer of the affected BORROWER setting forth details of such Event
of Default (or such other event) and the action which such BORROWER proposes to
take with respect thereto.
(i) NOTICE OF ADVERSE CONDITION: As soon as possible, the
written statement of the chief financial officer of each BORROWER setting forth
details of any action, event or condition of any nature of which each such
BORROWER is aware, which may reasonably be expected to have a Material Adverse
Effect and the action which the affected BORROWER proposes to take with respect
thereto.
(j) NOTICE OF LITIGATION: Each BORROWER will provide LENDER
with a schedule of all litigation pending against it at the same time that each
such BORROWER submits its annual financial statements to LENDER. In addition,
each BORROWER will notify LENDER in writing within a reasonable time (which
shall in no event exceed ten Business Days after the applicable BORROWER's
knowledge) of the commencement of any litigation against it which, if determined
adversely to it, would result in its dissolution or liquidation, prevent or
materially impair it from conducting its business substantially as now
conducted, prevent or materially impair such BORROWER from repaying the
REVOLVING LOAN and the other Liabilities or prevent or materially impair such
BORROWER from otherwise faithfully performing its obligations under this
Agreement or result in a Material Adverse Effect.
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5.7 COMPLIANCE WITH LAWS. Each BORROWER will at all times comply with,
or cause to be complied with, all laws, statutes, rules, regulations, orders and
directions of any governmental authority having jurisdiction over it and its
business.
5.8 INSURANCE.
(a) Each BORROWER shall maintain insurance coverage as
follows:
(1) CASUALTY INSURANCE: At each BORROWER's expense, an
original policy or policies of insurance issued by an insurer or insurers
satisfactory to LENDER insuring each BORROWER's Inventory, machinery, Equipment,
fixtures and personal property against such perils and on such terms as LENDER
may reasonably request and otherwise satisfactory in form and substance to
LENDER. Without limiting the generality of the foregoing, said insurance shall
in no event be less than that amount necessary to prevent the BORROWERS and
LENDER from being deemed co-insurers under applicable law (and in no event less
than the appraised value of the Collateral) and shall insure against the hazards
of fire, extended coverage, vandalism, malicious mischief and sprinkler leakage
and shall name LENDER as mortgagee and loss payee, as its interests may appear.
Such policy shall contain a 30 day notice of cancellation and non-renewal
provision.
(2) LIABILITY INSURANCE: At each BORROWER's expense, an
original policy or policies of liability insurance issued by BORROWERS' captive
insurance company as currently in effect. Such policy shall name LENDER as an
additional insured, as its interests may appear, and shall contain a 30 day
notice of cancellation and non-renewal provision.
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(b) Certificates evidencing the coverage afforded under the
BORROWERS' policies of insurance and, if requested, copies of all policies are
to be delivered to LENDER.
(c) If any BORROWER fails to take the action called for
herein, LENDER may, in its discretion obtain insurance covering LENDER's
interest in the Collateral and the amount of the premium for said insurance,
together with interest thereon at the Default Rate, shall until paid be added to
the Liabilities and the repayment thereof shall be secured by the Collateral.
(d) All rights to insurance proceeds are hereby assigned to
LENDER to the extent of the unpaid Liabilities.
(e) Unless otherwise agreed in writing, LENDER shall have the
sole right, in its own name or in the appropriate BORROWER's name on and after
the occurrence and during the continuance of an Event of Default hereunder, to
file claims under any insurance policies, to receive and give acquittance for
any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies.
(f) On and after the occurrence and during the continuance of
an Event of Default hereunder, the BORROWERS shall have no claim against
insurance proceeds until all of the Liabilities are paid in full. LENDER shall
not be responsible for any failure to collect any insurance proceeds, regardless
of the cause of such failure. Nothing herein shall in any way affect the
liability of any person responsible for the payment of the balance of the
Liabilities.
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(g) In the event the Collateral or any part thereof shall be
damaged or destroyed, the BORROWERS at their election may (but only until the
occurrence and during the continuance of an Event of Default hereunder) do any
of the following: (1) apply the insurance proceeds or any part thereof to the
payment of the Liabilities, whether the indebtedness be matured or not, (2) use
the same or any part thereof to fulfill any of the covenants contained herein or
in the other Loan Documents as LENDER may determine or (3) use the same or any
part thereof to replace or restore the Collateral to a condition satisfactory to
LENDER In the event the Collateral or any part thereof shall be damaged or
destroyed on and after the occurrence and during the continuance of an Event of
Default hereunder, LENDER, at its election, may (1) apply the insurance proceeds
or any part thereof to the payment of the Liabilities, whether the indebtedness
be matured or not, (2) use the same or any part thereof to fulfill any of the
covenants contained herein or in the other Loan Documents as LENDER may
determine, (3) use the same or any part thereof to replace or restore the
Collateral to a condition satisfactory to LENDER, or (4) release the same to any
BORROWER.
(h) Each BORROWER agrees that in the event that the Collateral
or any part thereof shall be damaged or partially or totally destroyed there
shall be no abatement or reduction in the amounts payable hereunder and each
such BORROWER shall continue to be obligated to make such payments.
(i) Any monies released by LENDER to any BORROWER or paid or
applied on the cost of restoration, repair or alteration shall in no event be
deemed a payment on any of the Liabilities.
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(j) Anything to the contrary herein contained notwithstanding,
any proceeds paid over to LENDER and not used for repair, restoration or
replacement shall be applied to pay accrued interest and any other sums then due
and owing to LENDER, and only any excess shall be paid over to the BORROWERS.
5.9 NO DISPOSAL OF COLLATERAL.
(a) Each BORROWER will safeguard, protect and hold all
Collateral for LENDER's account and make no disposition thereof except in the
regular course of business as hereinafter provided in this Section.
(b) Until LENDER shall have given written notice to the
contrary, any Collateral which may from time to time remain in possession or
control of any BORROWER or any third party may be sold and shipped to customers
in the ordinary course of business, on open account and on terms not exceeding
the terms currently extended. On and after the occurrence of an Event of
Default, LENDER shall have the right to withdraw this permission at any time on
reasonable notice, in which event no further disposition shall be made of the
Collateral without LENDER's written approval.
(c) Upon the sale, exchange, or other disposition of the
Collateral, the security interests and liens created and provided for herein
shall without break in continuity and without further formality or act continue
in and attach to the instruments for the payment of money, Accounts Receivable,
Contract Rights, documents of title, shipping documents, Chattel Paper and all
other cash and non-cash proceeds of such sale, exchange or disposition,
including Collateral returned or rejected by customers or repossessed by LENDER.
As to any such sale, exchange or disposition, LENDER shall have all of the
rights of an unpaid seller, including stoppage in transit, replevin and
reclamation.
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(d) Each BORROWER shall forthwith and immediately transfer,
assign, endorse, deliver and turn over to, and/or deposit with LENDER, or shall
cause to be forthwith and immediately transferred, assigned, endorsed, delivered
and turned over to, and/or deposited with LENDER, in accordance with the
requirements of SECTION 2.5(B) above and in the identical form received
(excluding endorsements necessary for collection for the benefit of LENDER) all
Collateral Proceeds which each such BORROWER receives from any sale, lease,
transfer, exchange or other disposition of any of its assets (whether tangible
or intangible) and from services rendered to Account Debtors and other third
parties. Until so transferred, assigned, endorsed, delivered and turned over
and/or deposited with LENDER or to a Lockbox, Blocked Account and/or such other
place designated by LENDER, no BORROWER shall commingle any of the Collateral
Proceeds with any other property of any such BORROWER or any other person or
entity, but shall keep such Collateral Proceeds segregated, held in trust for
LENDER as LENDER's exclusive property.
5.10 LENDER'S POWER TO ENDORSE CHECKS AND DRAFTS. For purposes of
implementing this Agreement and also for purposes of paying and satisfying the
Liabilities, each BORROWER hereby designates LENDER or LENDER's representative
as its attorney-in-fact with power to endorse its name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral that may come into LENDER's possession. Each BORROWER also designates
LENDER or LENDER's representative as its attorney-in-fact to sign each such
BORROWER's name on any invoice or bill of lading relating to any of the Accounts
Receivable, drafts against Account Debtors, and assignments and verifications of
Accounts Receivable to any Account Debtor and to do all other acts and things
necessary to carry out this Agreement. All acts of said attorney or designee are
hereby ratified and approved. This power is coupled with an interest and is
irrevocable while any of the Liabilities remains unpaid.
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5.11 VERIFICATION OF ACCOUNTS RECEIVABLE.
(a) LENDER shall have the right and will perform verifications
from Account Debtors as to the amount and validity of any Account Receivable.
(b) The BORROWERS shall give LENDER notice of any verifications prepared or
conducted by the BORROWERS or their accountants and copies of such verifications
shall be supplied to LENDER upon LENDER's request.
5.12 FIELD EXAMINATIONS.
(a) LENDER shall have full access during normal business hours
on reasonable prior notice to, and the right, through its officers, agents,
attorneys or accountants and at the BORROWERS' expense (to the extent provided
in subsection (b) below) to: examine, check, inspect and make abstracts and
copies from the BORROWERS' books, accounts, orders, records, audits,
correspondence, and all other papers; confirm and verify all Accounts Receivable
and the other Collateral; enter upon each BORROWER's premises during business
hours and from time to time, for the purpose of examining the BORROWERS' records
concerning the Collateral and for inspecting the Collateral and any and all
records.
(b) BORROWERS will reimburse LENDER for all examination fees
incurred by LENDER pursuant to the exercise of its rights under this Section in
the amount set forth in SECTION 2.18 and each BORROWER hereby authorizes LENDER
to effect payment of such fees pursuant to the Authorization to Charge.
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5.13 COLLATERAL MANAGEMENT FEE.
(a) In order to compensate LENDER for its expenses in
monitoring, reviewing and analyzing the BORROWERS' records, financial statements
and Collateral, the BORROWERS will pay LENDER a Collateral Management Fee in the
amount set forth in SECTION 2.18 and each BORROWER hereby authorizes LENDER to
effect payment of such fee pursuant to the Authorization to Charge.
5.14 WARRANTIES RELATING TO ACCOUNTS RECEIVABLE. Except as may
otherwise be specifically provided as to a particular Account, invoice or other
writing, each BORROWER warrants that as to each Account against which LENDER has
made or is making an Advance that each such Account is an Eligible Receivable.
5.15 TAXES PAYABLE ON ACCOUNTS RECEIVABLE. If any of the Accounts
Receivable includes a charge for any tax payable to any governmental tax
authority, LENDER is hereby authorized in LENDER's reasonable discretion, to pay
the amount thereof to the proper taxing authority for the BORROWERS' account and
to charge the BORROWERS therefor. The BORROWERS shall notify LENDER if any
Accounts Receivable include any tax due to any such taxing authority, and in the
absence of notice to LENDER, LENDER shall have the right to retain the full
proceeds of such Accounts Receivable, and shall not be liable for any taxes that
may be due from any BORROWER by reason of the sale and delivery creating such
Accounts Receivable.
5.16 DISCLOSURE OF CERTAIN INFORMATION. Each BORROWER hereby
irrevocably authorizes and directs all accountants and auditors employed by it
at any time during the term of this Agreement to exhibit and deliver to LENDER
copies of any of its financial statements, trial balances or other accounting
records of any sort in their possession, and to disclose to LENDER any
information they may have concerning its financial status and business
operations.
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5.17 OPERATING ACCOUNTS. Each BORROWER will maintain its primary
operating account(s) at a LENDER's Affiliate, it being understood and agreed
that all such accounts are agreed to be Deposit Accounts for purposes of
providing security to LENDER under this Agreement.
5.18 LANDLORD'S CONSENTS. Each BORROWER will obtain the Landlord's
Consents for the Collateral Locations which correspond to the applicable
BORROWER's principal place of business and any others which LENDER using its
reasonable commercial judgment deems necessary or desirable, provided, however,
that in the event that despite any such BORROWER's best efforts such BORROWER is
unable to deliver to LENDER any Landlord's Consent required hereunder, LENDER
will forbear from requiring such Landlord's Consent upon the condition that the
applicable BORROWER shall, upon request from LENDER, provide proof to LENDER
that all applicable rent payments have been made, it being understood that it
shall be an Event of Default hereunder if any such BORROWER fails to make
provide such proof to LENDER within 30 days of LENDER's request therefor and it
being further understood that any such BORROWER's failure to provide LENDER with
proof of its rent payment within the time period set forth above will be
sufficient evidence that an Event of Default has occurred hereunder and that
during such 30 day period LENDER may reserve from the BORROWERS' availability to
borrow under the REVOLVING LOAN the amount of rental which became due and owing
from the date of the last proof submission by the applicable BORROWER.
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5.19 SUBORDINATION AGREEMENTS.
(a) SELLER SUBORDINATED NOTES:
(1) As it relates to the Seller Subordinated Notes, the
BORROWERS hereby incorporate as a covenant the repayment warranties made by them
in SECTION 4.22 above.
(2) The BORROWERS further covenant that all amounts owed by
the BORROWERS to the Sellers on the Seller Subordinated Notes are and shall
remain subordinated to LENDER's prior right to indefeasible payment in full of
the Liabilities and except as expressly allowed by SECTION 4.22 above, no
payment of any such sums shall be made until such time that this Agreement has
been terminated and the Liabilities have been indefeasibly paid in full.
(3) The BORROWERS further covenant that they will promptly
notify LENDER in writing if any BORROWER receives any notice from any holder of
any Seller Subordinated Note notifying any such BORROWER of a default
thereunder.
(b) SENIOR SUBORDINATED DEBT:
(1) As it relates to the Senior Subordinated Debt, the
BORROWERS hereby incorporate as a covenant the repayment warranties made by them
in SECTION 4.23 above.
(2) The BORROWERS further covenant that all amounts owed by
the BORROWERS to the Senior Subordinated Lenders on the Senior Subordinated Debt
are and shall remain subordinated to LENDER's prior right to indefeasible
payment in full of the Liabilities and except as expressly allowed by SECTION
4.23 above, no payment of any such sums shall be made until such time that this
Agreement has been terminated and the Liabilities have been indefeasibly paid in
full.
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(3) The BORROWERS further covenant that they will promptly
notify LENDER in writing if any BORROWER receives any notice from any holder of
any Senior Subordinated Debt notifying any such BORROWER of a default
thereunder.
5.20 MINIMUM NET ANNUAL EARNINGS BEFORE EXTRAORDINARY ITEMS.
(a) As at the end of each of the BORROWERS' fiscal years, the
BORROWERS shall have consolidated minimum net income before extraordinary items
(including as an extraordinary item goodwill impairment charges) of at least
$1.00.
(b) This covenant shall be tested as at the end of each of
BORROWERS' fiscal years by reference to the BORROWERS' annual financial
statements required to be submitted pursuant to this Agreement for each
applicable fiscal year and by using GAAP with the exception of "goodwill
impairment" charges which are not considered extraordinary items under GAAP.
(c) Although compliance with this Section will be tested
annually as aforesaid, nothing in the foregoing shall prevent LENDER from
determining that this covenant has been violated prior to LENDER's receipt of
any of the aforementioned financial statements in the event LENDER obtains
actual knowledge that the BORROWERS are not in compliance with this covenant.
5.21 NO QUARTERLY LOSS.
(a) As at the end of each fiscal quarter for each of
BORROWERS' fiscal years (commencing with the third fiscal quarter ending
September 30, 2005), the BORROWERS shall have consolidated minimum year-to-date
net income before extraordinary items (including therein goodwill impairment
charges) of at least $1.00.
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(b) This covenant shall be tested as at the end of each fiscal
quarter for each of BORROWERS' fiscal years (commencing with the third fiscal
quarter ending September 30, 2005) by reference to the BORROWERS' quarterly
financial statements required to be submitted pursuant to this Agreement for
each such fiscal quarter and by using GAAP with the exception of "goodwill
impairment" charges which are not considered extraordinary items under GAAP.
(c) Although compliance with this Section will be tested
quarterly as aforesaid, nothing in the foregoing shall prevent LENDER from
determining that this covenant has been violated prior to LENDER's receipt of
any of the aforementioned financial statements in the event LENDER obtains
actual knowledge that the BORROWERS are not in compliance with this covenant.
5.22 CAPITAL EXPENDITURES.
(a) The BORROWERS shall not on a collective aggregate basis
have (1) Unfunded Capital Expenditures in an amount exceeding $2,500,000 in
their fiscal year ending December 31, 2005 or (2) Unfunded Capital Expenditures
in an amount exceeding $2,000,000 in any fiscal year thereafter (i.e., the
fiscal year ending December 31, 2006).
(b) For purposes of this covenant, the following terms have
the following meanings:
(1) "CAPITAL EXPENDITURES" means the aggregate expenditures
made or liabilities incurred for the acquisition of any fixed assets or
improvements, replacements, substitutions or additions thereto which have a
useful life of more than one year (other than short-term, low risk liquid
investments), including the direct or indirect acquisition of such assets by way
of increased product or service charges, offset items or otherwise and the
principal portion of payments with respect to Capitalized Lease Obligations - in
all the foregoing cases, computed in accordance with GAAP.
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(2) "CAPITALIZED LEASE OBLIGATION" means an obligation to pay
rent or other amounts under any lease of (or other arrangement conveying the
right to use) real and/or personal property which obligation is required to be
classified and accounted for as a capital lease on a balance sheet prepared in
accordance with GAAP, and for purposes hereof the amount of such obligation
shall be the capitalized amount thereof determined in accordance with GAAP.
(3) "UNFUNDED CAPITAL EXPENDITURES" means the BORROWERS'
consolidated Capital Expenditures minus any loans (not including any Advances
taken under the REVOLVING LOAN and used for the acquisition of any Capital
Expenditure) and/or Capitalized Lease Obligations incurred in financing any such
Capital Expenditures.
(c) This covenant shall be tested annually by reference to the
BORROWERS' financial statements required to be submitted under this Agreement
for each fiscal year (commencing with the fiscal year ending December 31, 2005)
and by using GAAP.
(d) Although compliance with this Section will be tested
annually as aforesaid, nothing in the foregoing shall prevent LENDER from
determining that this covenant has been violated prior to LENDER's receipt of
any of the aforementioned financial statements in the event LENDER obtains
actual knowledge that the BORROWERS are not in compliance with this covenant.
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5.23 FIXED CHARGE COVERAGE.
(a) The BORROWERS must maintain their consolidated "Fixed
Charge Coverage" at a ratio equal to or greater than 1.1 TO 1.0 as at their
fiscal quarter ending September 30, 2005 and as at the end of each fiscal
quarter thereafter.
(b) (1) For purposes of this covenant, "FIXED CHARGE COVERAGE"
means the following ratio:
BORROWERS' consolidated earnings before interest,taxes, depreciation and
amortization and before extraordinary or non-cash, non-operating
income or expenses (including, but not limited to,
the writedown of goodwill)
LESS BORROWERS' consolidated "Unfunded Capital
Expenditures" LESS BORROWERS' consolidated cash payment
of income tax liabilities
LESS cash distributions to CD&L's stockholders
-- divided by--
all consolidated interest expense PLUS all maturities of
consolidated long term debt which came due and were payable in the ordinary
course during the applicable test period (unless those maturing
obligations were not paid in cash during the period by virtue of
having been renegotiated prior to the due date) PLUS all maturities of
Capital Lease Obligations which came due and were payable in the ordinary
course during the applicable test period LESS all payments
made to the Senior Subordinated Lenders
(2) For purposes of this covenant, "CAPITALIZED LEASE
OBLIGATIONS" and "UNFUNDED CAPITAL EXPENDITURES" shall have the meaning given
those terms in SECTION 5.22 above.
(c) This covenant shall be tested quarterly, commencing with
the fiscal quarter ending SEPTEMBER 30, 2005, and annually, USING A TRAILING 12
MONTH BASIS, by reference to the BORROWERS' quarterly and annual financial
statements required to be submitted under this Agreement and by using GAAP.
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(d) Although compliance with this Section will be tested
quarterly and annually as aforesaid, nothing in the foregoing shall prevent
LENDER from determining that this covenant has been violated prior to LENDER's
receipt of any of the aforementioned financial statements in the event LENDER
obtains actual knowledge that the BORROWERS are not in compliance with this
covenant.
5.24 MINIMUM EBITDA.
(a) BORROWERS' EBITDA shall be no less than the following:
(1) As at the end of the first fiscal quarter for each
of BORROWERS' fiscal years (commencing with the
first fiscal quarter ending March 31, 2006), the
BORROWERS' EBITDA shall be at least $500,000.
(2) As at the end of the second fiscal quarter for each
of BORROWERS' fiscal years (commencing with the
second fiscal quarter ending June 30, 2006), the
BORROWERS' EBITDA, on a year-to-date basis, shall be
at least $1,000,000.
(3) As at the end of the third fiscal quarter for each
of BORROWERS' fiscal years (commencing with the
third fiscal quarter ending September 30, 2005), the
BORROWERS' EBITDA, on a year-to-date basis, shall be
at least $1,500,000.
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(4) As at the end of the fourth fiscal quarter for each
of BORROWERS' fiscal years (commencing with the
fourth fiscal quarter ending December 31, 2005), the
BORROWERS' EBITDA, on a year-to-date basis and on
all test dates thereafter, shall be at least
$2,000,000.
(b) For purposes of this covenant, BORROWERS' EBITDA means
BORROWERS' consolidated earnings before interest, taxes, depreciation and
amortization and before extraordinary or non-cash, non-operating income or
expenses (including, but not limited to, the writedown of goodwill.
(c) This covenant shall be tested quarterly, by reference to
BORROWERS' consolidated financial statements required to be submitted under this
Agreement for each fiscal quarter and each fiscal year and by using GAAP.
(d) Although compliance with this Section will be tested
quarterly as aforesaid, nothing in the foregoing shall prevent LENDER from
determining that this covenant has been violated prior to LENDER's receipt of
any of the aforementioned financial statements in the event LENDER obtains
actual knowledge that the BORROWERS are not in compliance with this covenant.
5.25 SOLVENCY. The fair value of the business and assets of the
BORROWERS on a consolidated basis (including, without limitation, contingent,
unmatured and unliquidated claims arising out of all rights of indemnity,
contribution, reimbursement or any similar right, or any claim of subrogation,
as such claims may arise or mature, that each BORROWER may have against any
other BORROWER) will be in excess of the amount that will be required to pay its
liabilities (including, without limitation, contingent, subordinated, unmatured
and unliquidated liabilities on existing debts, as such liabilities may become
absolute and matured), in each case after giving effect to the transactions
contemplated by this Agreement and the use of proceeds therefrom. After giving
effect to the transactions contemplated by this Agreement and the use of
proceeds of therefrom, BORROWERS will not be engaged in any business or
transaction, or about to engage in any business or transaction, for which any
such BORROWER has an unreasonably small capital (within the meaning of the
Uniform Fraudulent Transact Act, as adopted in the State of New Jersey and
Section 548 of the Federal Bankruptcy Code). No BORROWER has any intent to:
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(a) hinder, delay or defraud any entity to which it is, or
will become, on or after the date hereof, indebted, or
(b) to incur debts that would be beyond its ability to pay as
they mature.
5.26 LEVERAGE.
(a) BORROWERS' Leverage is defined as the ratio of (1)
BORROWERS' consolidated "UNSUBORDINATED LIABILITIES" to (2) BORROWERS'
consolidated "EFFECTIVE TANGIBLE NET WORTH".
(b) (1) For purposes of this covenant, "UNSUBORDINATED
LIABILITIES" shall include all liabilities (including without limitation trade
payables) on the BORROWERS' balance sheet excluding only that debt whose payment
has been subordinated to the payment of the Liabilities.
(2) For purposes of this covenant, "EFFECTIVE TANGIBLE NET
WORTH" means the BORROWERS' consolidated equity reduced by intangible assets and
increased by debt whose payment has been subordinated to the payment of the
Liabilities.
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(c) The calculation of BORROWERS' Leverage for purposes of the
interest rate pricing under SECTION 2.6 above will be made quarterly (on a
trailing 12 months basis) and determined by reference to the annual and
quarterly-to-date financial statements which BORROWERS are required to submit
under this Agreement and by using GAAP. Any adjustments in interest rate pricing
conditioned upon BORROWERS' Leverage will be effective as at the date that the
aforesaid financial statements are required to be submitted under this
Agreement.
ARTICLE VI
NEGATIVE COVENANTS
Each BORROWER jointly and severally covenants and agrees, that
until the full and final payment of the Liabilities, unless LENDER waives
compliance in writing:
6.1 CHANGE IN LOCATION: No BORROWER will change its principal place of
business or (b) change the names currently used by it for billing or other
business purposes or (c) change or add to the Collateral Locations unless in
each case above (1) the applicable BORROWER shall have given LENDER 30 days
written notice of such change and (2) LENDER shall have received such
instruments or documents as LENDER may reasonably request so that such change
will not impair or negatively affect the security interests granted to LENDER
hereunder.
6.2 CHANGES IN BUSINESS: No BORROWER will (a) make any material change
in its business or in the nature of its operation, or (b) liquidate or dissolve
itself (or suffer any liquidation or dissolution) or (c) convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, assets or business
except in the ordinary course of business and for a fair consideration or (d)
dispose of any shares of its stock or any indebtedness held by it, whether now
owned or hereafter acquired or (e) discount, sell, pledge, hypothecate or
otherwise dispose of Accounts Receivable.
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6.3 LIENS: Except as disclosed in the Certifications as to Liens, no
BORROWER will suffer to exist any Lien on any of the Collateral, it being
understood and agreed that notwithstanding the foregoing or any other provision
of this Agreement to the contrary, no Lien (other than the Lien of LENDER) is
allowed against Accounts Receivable.
6.4 INDEBTEDNESS: No BORROWER will create, incur, permit to exist or
have outstanding any indebtedness, except:
(a) indebtedness of any such BORROWER to LENDER under
this Agreement;
(b) indebtedness owed by CD&L to the Seller Subordinated
Lenders;
(c) indebtedness owed by CD&L to the Senior Subordinated
Lenders;
(d) accrued taxes, assessments and governmental charges
not yet due and payable, non-interest bearing
accounts payable and accrued liabilities, and
non-interest bearing deferred liabilities other than
for borrowed money (e.g., deferred compensation and
deferred taxes), in each case incurred and
continuing in the ordinary course of business;
(e) debt in an amount not to exceed $2,500,000 in the
cumulative aggregate which is created by the
BORROWERS' financing of insurance premiums;
(f) the indebtedness of the BORROWERS set forth in the
Certifications as to Liens; and
(g) indebtedness of any BORROWER owed to any other
BORROWER and the transfers of funds among the
BORROWERS so long as such debt and such transfers
are incurred in the ordinary course of business.
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6.5 GUARANTIES:
(a) No BORROWER will assume, endorse, be or become liable for,
or guarantee, the obligations of any person or entity, except for (1)
obligations owed by any BORROWER to LENDER and (2) obligations owed by any
BORROWER and permitted by SECTION 6.4 above and (3) the endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business and (4) obligations of third parties which are owed to LENDER.
(b) For the purposes hereof, the term "GUARANTEE" shall
include any agreement, whether such agreement is on a contingency or otherwise,
to purchase, repurchase or otherwise acquire indebtedness of any other person or
entity, or to purchase, sell or lease, as lessee or lessor, property or
services, in any such case primarily for the purpose of enabling another person
to make payment of any indebtedness, or to make any payment (whether as an
advance, capital contribution, purchase of an equity interest or otherwise) to
assure a minimum equity, asset base, working capital or other balance sheet or
financial condition, in connection with the indebtedness of another person or
entity, or to supply funds to or in any manner invest in another person or
entity in connection with the indebtedness of such person or entity.
6.6 CONTROL OF OWNERSHIP:
(a) No BORROWER owned by CD&L or owned by a Subsidiary of CD&L
will permit any change in its ownership interests or in the ownership interests
of its stockholders from those set forth in ARTICLE IV.
(b) Controlling ownership of CD&L shall not change from CD&L's
controlling ownership as now constituted.
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6.7 CONTROL OF MANAGEMENT. No BORROWER will permit anyone other than
(a) ALBERT W. VANNESS, JR., OR WILLIAM BRANNAN, AND (B) AT LEAST ONE OF RUSSELL
REARDON, MICHAEL BROOKS or MARK CARLESIMO or a substitute or substitutes
acceptable to LENDER to have active management control of such BORROWER.
6.8 COMPROMISE OF CLAIMS: No BORROWER will compromise, settle or adjust
any uninsured claims which are part of or which affect the Collateral involving
more than $150,000 in the aggregate or which would cause the BOROWERS to be in
violation of the Lending Formula.
6.9 BANK ACCOUNTS: No BORROWER will establish any deposit or bank
account with any financial institution other than with a LENDER's Affiliate
unless such account is approved in writing by LENDER.
6.10 LOANS AND INVESTMENTS:
(a) No BORROWER will make loans or advances or make or suffer
to exist, any investment in any person or entity, including, without limitation,
any loans to or investments in any shareholder, director, officer or employee of
any BORROWER or any BORROWER's Affiliate or any of its Subsidiaries, except
investments in:
(1) obligations issued or guaranteed by the United
States of America;
(2) certificates of deposit, bankers acceptances and
other "money market instruments issued by any bank
or trust company organized under the laws of the
United States of America or any State thereof and
having capital and surplus in an aggregate amount of
not less than $100,000,000;
(3) open market commercial paper bearing the highest
credit rating issued by Standard & Poor's
Corporation or by another nationally recognized
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credit rating agency; and
(4) repurchase agreements entered into with any bank or
trust company organized under the laws of the United
States of America or any State thereof and having
capital and surplus in an aggregate amount of not
less than $100,000,000 relating to United States of
America government obligations;
in each case maturing or being due or payable in full not more than 180 days
after any such BORROWER's acquisition thereof.
(b) Notwithstanding the foregoing provisions of subsection (a)
above, each BORROWER will be allowed to invest on an ongoing basis in profit
sharing or other retirement-type plans maintained by such BORROWER in accordance
with the requirements of ERISA.
6.11 FISCAL YEAR: No BORROWER will change its fiscal year without the
prior written consent of LENDER, which consent shall not be unreasonably
withheld.
6.12 AMENDMENT OF CORPORATE DOCUMENTS: No BORROWER will modify, amend,
supplement or terminate, or agree to modify, amend, supplement or terminate, its
organizational or governing documents (including any certificate of
incorporation or by-laws or certificate of formation or operating agreement) in
any manner which would violate this Agreement or otherwise materially and
adversely affect LENDER.
6.13 MARGIN SECURITIES: No BORROWER is engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any margin stock within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System, as amended. No part of the
proceeds of the REVOLVING LOAN will be used, directly or indirectly, for a
purpose which violates any law, rule or regulation of any governmental agency or
body, including without limitation the provisions of Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System, as amended. The BORROWERS
represent that the proceeds of the REVOLVING LOAN provided for herein shall be
used in the following manner: to refinance existing debts, to support working
capital requirements and other general corporate purposes. No proceeds of the
REVOLVING LOAN or other financial accommodations provided to the BORROWERS
hereunder shall be used to purchase or carry any margin stock (within the
meaning of Regulation U issued by the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose of purchasing or carrying
any margin stock.
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6.14 TRANSACTIONS WITH EACH OTHER AND WITH ANY BORROWER'S AFFILIATE. No
transaction by any BORROWER with any other BORROWER or with any BORROWER's
Affiliate or any Subsidiary of any BORROWER or any party related to any BORROWER
through common management or ownership will give rise to any Eligible
Receivable.
6.15 SERIES A PREFERRED STOCK REDEEMED. No Series A Preferred Stock
which is redeemed may be re-issued and must remain permanently retired.
6.16 DIVIDENDS AND DISTRIBUTIONS. BORROWERS shall not pay any cash
dividends, make any capital distribution in cash or other property or return of
capital or take any action which would have an effect equivalent to any of the
foregoing.
ARTICLE VII
EVENTS OF DEFAULT
Regardless of the terms of any of the other Loan Documents,
the occurrence of any of the following events shall be deemed an event of
default (an "EVENT OF DEFAULT") hereunder:
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7.1 (a) CD&L shall fail to pay on its due date any principal or
interest due on the REVOLVING LOAN;
(b) CLAYTON shall fail to pay on its due date any principal or
interest due on the REVOLVING LOAN;
(c) CLICK shall fail to pay on its due date any principal or
interest due on the REVOLVING LOAN;
(d) KBD shall fail to pay on its due date any principal or
interest due on the REVOLVING LOAN;
(e) OLYMPIC shall fail to pay on its due date any principal or
interest due on the REVOLVING LOAN;
(f) SECURITIES shall fail to pay on its due date any principal
or interest due on the REVOLVING LOAN;
(g) SILVER STAR shall fail to pay on its due date any
principal or interest due on the REVOLVING LOAN;
(h) any BORROWER in its capacity as a co-BORROWER shall fail
to pay on its due date any principal or interest due in accordance with the
provisions of the REVOLVING NOTE or the REVOLVING LOAN;
(i) any BORROWER shall fail to pay immediately after demand
any Letter of Credit Obligations;
(j) any BORROWER in its capacity as a joint and several
guarantor shall fail to pay on its due date any principal or interest due in
accordance with the provisions of the REVOLVING NOTE or the REVOLVING LOAN;
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(k) any BORROWER (whether in its capacity as a co-BORROWER or
as a guarantor) shall fail to pay on its due date any other payment due under
this Agreement or any of the other Loan Documents;
7.2 any BORROWER shall fail on and as at the date set for the testing
of compliance to comply with any financial covenant or ratio, including without
limitation the financial covenants and ratios set forth in ARTICLE V or ARTICLE
VI of this Agreement;
7.3 any representation or warranty herein or in the REVOLVING NOTE or
any of the other Loan Documents or in connection with any transaction
contemplated hereby or thereby shall prove to have been false or misleading in
any material respect when made, or if of a continuing nature, becomes materially
false;
7.4 LENDER shall fail to have a legal, valid and binding first lien on
any of the Collateral, except for those liens, if any, which may be set forth in
the Certifications as to Liens relating to liens against Equipment (expressly
excluding and not allowing, however, any liens against the BORROWERS' assets
consisting of Accounts);
7.5 (a) any consensual lien or encumbrance or any security interest,
perfected or otherwise, other than the security interests specifically provided
for or permitted hereunder, shall be created in the Collateral;
(b) any non-consensual lien, including but not limited to any
judgment against any BORROWER, becomes an encumbrance against the Collateral and
the affected BORROWER does not remove or discharge such lien within 15 days
after receipt of written notice to do so;
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7.6 any BORROWER shall admit in writing an inability to pay debts as
they come due or shall file any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law, or any other law or
laws for the relief of, or relating to, debtors;
7.7 an involuntary petition shall be filed under any bankruptcy or
insolvency statute against any BORROWER and such petition is not discharged or
stayed within 60 days from the date of the filing of the petition;
7.8 a receiver or trustee shall be appointed to take possession of the
properties of any BORROWER;
7.9 any BORROWER ceases its operations;
7.10 (a) any default shall occur under any other loan agreement
involving either the borrowing of money or the advance of credit from LENDER to
which any BORROWER may be a party as borrower or guarantor;
(b) any BORROWER makes any principal payment or any prohibited
interest payment to any Senior Subordinated Lender under the Senior Subordinated
Loan Agreement or any default shall occur under the Senior Subordinated Loan
Agreement or any document related thereto;
(c) any BORROWER makes any prohibited payment to any Seller
under the Seller Subordinated Notes or any default shall occur under any of the
Seller Subordinated Notes;
(d) any default shall occur under any other loan agreement
involving either the borrowing of money or the advance of credit to which any
BORROWER may be a party as borrower or guarantor;
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7.11 any BORROWER shall materially breach, violate or default under,
any term, condition, provision, representation or warranty contained in this
Agreement not specifically referred to in this ARTICLE VII and the affected
BORROWER does not cure such breach, violation or default within 15 days after
receipt of written notice to do so;
7.12 any breach, violation or default shall occur under any of the
non-payment terms, conditions, representations, warranties or covenants
contained in the REVOLVING NOTE or any of the other Loan Documents and the
affected BORROWER does not cure such breach, violation or default within 15 days
after receipt of written notice to do so;
7.13 any of the Loan Documents (or any provision thereof) is claimed by
any BORROWER to be invalid or unenforceable;
7.14 any BORROWER shall fail, within 15 Business Days after request to
do so, to obtain and deliver to LENDER any mortgage, financing statement,
subordination agreement or any other documentation required to be signed or
obtained as part of this Agreement or shall have failed, within 15 Business Days
after request to do so, to take any reasonable action requested by LENDER to
perfect or protect the security interests provided for herein;
7.15 (a) there occurs any change in the ownership interests of any
BORROWER (other than CD&L) from those set forth in ARTICLE IV or as allowed by
SECTION 6.6 of this Agreement;
(b) there occurs any change in the ownership interest of CD&L
which is prohibited by SECTION 6.6 of this Agreement.
7.16 there occurs any change in the management of the BORROWERS other
than as allowed by SECTION 6.7 of this Agreement;
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7.17 (a) any BORROWER disclaims liability or seeks to terminate
liability under the guaranty provisions set forth in ARTICLE II of this
Agreement;
(b) any BORROWER breaches, violates or defaults under any
covenant, condition or warranty contained in the aforesaid guaranty provisions
set forth in ARTICLE II of this Agreement and the affected BORROWER does not
cure such breach, violation or default within 15 days after receipt of written
notice to do so;
7.18 any BORROWER obtains any loan (other than the REVOLVING LOAN)
secured by Accounts Receivable;
7.19 any BORROWER obtains any loan (other than the REVOLVING LOAN)
other than those expressly permitted hereunder;
7.20 if the BORROWERS are not in compliance with the Lending Formula
and the BORROWERS fail to come into compliance with such Lending Formula within
the earlier of the BORROWERS' knowledge that non-compliance exists or receipt of
written notice from LENDER to do so; or
7.21 there occurs any Material Adverse Effect on any BORROWER.
ARTICLE VIII
REMEDIES
8.1 Whenever an Event of Default has occurred, LENDER may do any or all
of the following at the same time or at different times:
(a) LENDER may declare immediately due and payable the unpaid
principal amount of each and all of the following, together with all accrued
interest and all other lawful and proper charges thereon, all such amounts shall
become immediately due and payable with interest thereafter at the Default Rate,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by each BORROWER:
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(1) the REVOLVING NOTE; and
(2) the REVOLVING LOAN.
(b) LENDER may declare the entire principal face amount of the
Letters of Credit or the amount for which LENDER may be liable thereunder and
all the other Letter of Credit Obligations, together with all accrued interest
and all other lawful and proper charges thereon, immediately due and payable,
whereupon all such sums shall become immediately due and payable with interest
thereafter at the Default Rate, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by each BORROWER.
For purposes of this Section, LENDER shall be entitled to declare immediately
due all sums which LENDER is itself obligated to advance under the Letters of
Credit and the other Letter of Credit Obligations, or any such sums which LENDER
is obligated to advance to any issuer of any such Letter of Credit whether or
not such sums have yet been advanced or funded by LENDER. Upon such declaration,
all such sums shall become immediately due and payable.
(c) LENDER may declare all other loans, sums and Liabilities
owed to LENDER under this Agreement or any other agreement or loan between
LENDER and any BORROWER, together with all accrued interest and all other lawful
and proper charges thereon, to be forthwith due and payable, whereupon all such
sums shall forthwith become immediately due and payable with interest thereafter
at the Default Rate, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by each BORROWER.
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(d) To the extent it has not already done so, LENDER may
proceed with or without judicial process to take immediate possession of any
Collateral (including without limitation the Pledged Property) or any part
thereof not already in the possession of LENDER and wherever the same may be
found. The BORROWERS agree to pay all costs and expenses of LENDER in the
collection of the Liabilities and enforcement of the rights hereunder,
including, without limitation, LENDER's reasonable attorney's fees. Each
BORROWER agrees that upon receipt of notice of LENDER's intention to take
possession of all or any part of said Collateral, each such BORROWER will do
everything reasonably necessary to make same available to LENDER.
(e) To the extent it has not already done so, LENDER may
transfer any and all Collateral into its name or that of its nominee and may
receive the income and any distributions thereon and hold the same as Collateral
for the Liabilities, or apply the same to any defaulted one of the Liabilities.
(f) LENDER may assign, transfer and deliver at any time or
from time to time the whole or any portion of the Collateral or any rights or
interests therein in accordance with the Uniform Commercial Code, and without
limiting the scope of LENDER's rights thereunder, sell such Collateral at a
public or private sale, or in any other manner, at such price or prices as
LENDER may deem best, and either for cash or credit, or for future delivery, at
the option of LENDER, in bulk or in parcels and with or without having such
Collateral at the sale or other disposition. LENDER shall have the right to be
the purchaser at any public sale. Any notification of a sale or other
disposition of the Collateral or of any other action by LENDER required to be
given by LENDER to any BORROWER will be sufficient if given not less than ten
(10) days prior to the day on which such sale or other disposition will be made
and in the manner set forth in SECTION 9.1; such notification shall be deemed
reasonable notice. In the event of a sale of such Collateral, or any other
disposition thereof, LENDER shall apply all proceeds first to all costs and
expenses of disposition, including attorneys' fees, and then to the Liabilities
of the BORROWERS to LENDER.
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(g) (1) LENDER may immediately, and without notice or other
action, set-off and apply against the Liabilities (A) any and all deposits and
all other items described in SECTION 3.9 hereof and/or (B) any sum owed by
LENDER in any capacity to any BORROWER whether due or not. ANY AND ALL RIGHTS TO
REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE REVOLVING LOAN, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO THE FOREGOING, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED. LENDER may do the foregoing even though some or all of the
Liabilities may be unmatured and regardless of the adequacy of any other
Collateral securing the Liabilities. LENDER shall be deemed to have exercised
such right of set-off and to have made a charge against any such sum immediately
upon the occurrence of such Event of Default, even though the actual book
entries may be made at some time subsequent thereto.
(2) Upon the expiration of LENDER's obligations under the
Letters of Credit, the BORROWERS will be entitled to a refund of those sums so
set-off, less the expenses of the LENDER otherwise provided for in this
Agreement, if such sums have not drawn against the Letters of Credit.
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(h) LENDER may send notice of assignment and/or notice of
LENDER's security interest to any and all Account Debtors or any third party
holding or otherwise concerned with any of the Collateral, and thereafter,
LENDER shall have the sole right to collect the Accounts Receivable and/or take
possession of the Collateral. Any and all of LENDER's reasonable collection
expenses, including but not limited to stationery and postage, telephone and
telegraph, secretarial and clerical expenses and the salaries of any collection
agencies or attorneys utilized, shall be charged to the BORROWERS' account and
added to the Liabilities. By its execution of this Agreement, each BORROWER
hereby authorizes LENDER to effect payment of such expenses pursuant to the
Authorization To Charge.
(i) Without notice to or consent from any BORROWER, LENDER may
sue upon or otherwise collect, extend the time of payment of, or compromise or
settle for cash, credit or otherwise, upon any terms, any of the Accounts
Receivable or any securities, instruments, insurance or Collateral applicable
thereto and/or release the Account Debtor thereon. LENDER is authorized and
empowered to accept the return of any Collateral represented by any of the
Accounts Receivable, without notice to or consent by any BORROWER all without
discharging or in any way affecting any BORROWER's liability hereunder. LENDER
does not, by anything herein or in any assignment or otherwise, assume any
obligations of any BORROWER under any Account, contract or agreement assigned to
LENDER, and LENDER shall not be responsible in any way for the performance by
any BORROWER of any of the terms and conditions thereof.
(j) LENDER may notify the Post Office authorities to change
the address for delivery of mail addressed to any BORROWER to such address as
LENDER may designate.
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(k) LENDER may add to the Liabilities LENDER's reasonable
expenses to obtain or enforce payment of any Liabilities hereunder and the
enforcement or liquidation of any debt hereunder shall include reasonable
attorneys' fees, plus other legal expenses incurred by LENDER.
8.2 LENDER is hereby further granted a license or other right to use,
without charge, each BORROWER's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral, and each BORROWER's rights under all
licenses and franchise agreements are to inure to LENDER's benefit.
8.3 Each BORROWER shall remain jointly and severally liable for any
deficiency resulting from a sale, lease, foreclosure or other disposal of the
Collateral and shall pay any such deficiency forthwith on demand, together with
per annum interest at the Default Rate.
8.4 The rights of LENDER under this Article are in addition to all
other remedies, statutory and otherwise, which are available to it under law or
otherwise or under the terms of any of the other Loan Documents.
ARTICLE IX
MISCELLANEOUS
9.1 COMMUNICATIONS AND NOTICES:
(a) Any communications between the parties hereto or notices
provided herein to be given may be given by mailing the same, certified mail,
return receipt requested, postage prepaid or by hand delivery or by an overnight
delivery service, to LENDER at 335 Madison Avenue, 6th Floor, New York, New York
10017, Attn: "Current Account Officer for CD&L, Inc." and to each BORROWER at
its principal place of business as given for each BORROWER in this Agreement (IT
BEING UNDERSTOOD AND AGREED, HOWEVER, THAT NOTWITHSTANDING THE FOREGOING, ANY
NOTICE SENT TO CD&L SHALL BE DEEMED TO BE NOTICE SENT AND DULY GIVEN TO ALL THE
BORROWERS) or to such other addresses as the affected party may in writing
hereafter indicate by notice given in conformity with this Section.
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(b) Notices sent by certified mail shall be deemed received
when accepted. Notices sent by hand delivery shall be deemed received when
delivered to the address and/or person designated in this Section. Notices sent
by overnight delivery service shall be deemed received upon delivery.
9.2 LENDER MAY PAY, SATISFY, DISCHARGE OR BOND CERTAIN OF BORROWERS'
OBLIGATIONS: In the event that any BORROWER shall default in the performance of
any of the provisions of this Agreement or in the event that any BORROWER shall
fail to pay any tax, assessment, government charge or levy, except as the same
are being contested in good faith by appropriate proceedings, or shall fail to
discharge any lien, encumbrance or security interest prohibited hereby, or shall
fail to comply with any other obligation of any BORROWER to LENDER, LENDER may
but shall not be required to, pay, satisfy, discharge or bond the same for the
account of each BORROWER and all moneys so paid out shall be an obligation of
all BORROWERS hereunder repayable on demand, together with per annum interest at
the Default Rate until paid.
9.3 PLEDGE TO FEDERAL RESERVE: LENDER may at any time pledge all or any
portion of its rights under the Loan Documents including any portion of the
REVOLVING NOTE to any of the twelve (12) Federal Reserve Banks organized under
Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or
enforcement thereof shall release LENDER from its obligations under any of the
Loan Documents.
137
9.4 ASSIGNMENTS: LENDER shall have the unrestricted right, at LENDER's
expense, at any time or from time to time, on prior notice to the BORROWERS but
without the need for any BORROWER's consent, to assign all or any portion of its
rights and obligations hereunder to one or more banks or other financial
institutions (each, an "ASSIGNEE"), and each BORROWER agrees that it shall
execute, or cause to be executed, such documents, including without limitation,
amendments to this Agreement and to any other documents, instruments and
agreements executed in connection herewith as LENDER shall deem necessary to
effect the foregoing. In addition, at the request of LENDER and any such
Assignee, the applicable BORROWER shall issue one or more new promissory notes,
as applicable, to any such Assignee and, if LENDER has retained any of its
rights and obligations hereunder following such assignment, to LENDER, which new
promissory notes shall be issued in replacement of, but not in discharge of, the
liability evidenced by the promissory note held by LENDER prior to such
assignment and shall reflect the amount of the respective commitments and loans
held by such Assignee and LENDER after giving effect to such assignment. Upon
the execution and delivery of appropriate assignment documentation, amendments
and any other documentation required by LENDER in connection with such
assignment, and the payment by Assignee of the purchase price agreed to by
LENDER, and such Assignee, such Assignee shall be a party to this Agreement and
shall have all of the rights and obligations of LENDER hereunder (and under any
and all other guaranties, documents, instruments and agreements executed in
connection herewith) to the extent that such rights and obligations have been
assigned by LENDER pursuant to the assignment documentation between LENDER and
such Assignee, and LENDER shall be released from its obligations hereunder and
thereunder to a corresponding extent. Nothing in the foregoing shall increase
any financial obligation of any BORROWER hereunder.
138
9.5 PARTICIPATIONS: LENDER shall have the unrestricted right at any
time and from time to time, and on prior notice to the BORROWERS but without the
need for the consent of any BORROWER, to grant to one or more banks or other
financial institutions (each, a "PARTICIPANT") participating interests in
LENDER's obligation to lend hereunder and/or any or all of the loans held by
LENDER hereunder. In the event of any such grant by LENDER of a participating
interest to a Participant, whether or not upon notice to the BORROWERS, LENDER
shall remain responsible for the performance of its obligations hereunder and
the BORROWERS shall continue to deal solely and directly with LENDER in
connection with LENDER's rights and obligations hereunder. Nothing in the
foregoing shall increase any financial obligation of any BORROWER hereunder.
9.6 LENDER MAY FURNISH INFORMATION: LENDER may on prior notice to the
BORROWERS but without the need for the consent of any BORROWER furnish
any information concerning any BORROWER in its possession from time to time to
prospective Assignees and Participants, provided that LENDER shall require any
such prospective Assignee or Participant to agree in writing to maintain the
confidentiality of such information to the same extent that LENDER is obligated
to maintain such confidentiality.
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9.7 PAYMENTS IN LAWFUL MONEY OF THE UNITED STATES: All payments shall
be in lawful money of the United States in immediately available funds unless
otherwise provided in this Agreement.
9.8 ANTI-USURY PROVISION: The anti-usury provisions of Article II are
reiterated and incorporated herein by reference.
9.9 SUCCESSORS AND ASSIGNS: This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that no BORROWER shall assign this Agreement or any of its
rights, duties or obligations hereunder without the prior written consent of
LENDER.
9.10 LENDER'S RIGHTS NOT IMPAIRED BY DELAY IN EXERCISING RIGHTS: No
delay or omission to exercise any right, power or remedy accruing to LENDER upon
any breach or default (whether such breach or default is now or hereafter
occurring) of any BORROWER under this Agreement, the REVOLVING NOTE or any of
the other Loan Documents shall (a) impair any such right, power or remedy of
LENDER, (b) be construed to be a waiver of any such breach or default, or an
acquiescence therein, or (c) be construed to be a waiver of or an acquiescence
in any similar breach or default thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of LENDER of any breach
or default under this Agreement, the REVOLVING NOTE or any of the other Loan
Documents, or any waiver on the part of LENDER of any provision or condition of
this Agreement, the REVOLVING NOTE or any of the other Loan Documents must be in
writing and shall be effective only to the extent in such writing specifically
set forth. All remedies, either under this Agreement or note or other instrument
or agreement required hereunder, or by law or otherwise afforded to LENDER,
shall be cumulative and not alternative.
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9.11 LENDER'S COSTS AND EXPENSES:
(a) The BORROWERS will pay the fees and out-of-pocket expenses
incurred by LENDER in connection with (1) the preparation of this Agreement and
other related documents, whether or not the transactions hereby contemplated
shall be consummated, (2) the making of the REVOLVING LOAN hereunder and (3) the
determination and/or enforcement of the rights of LENDER in connection with such
documents or with the REVOLVING LOAN and the REVOLVING NOTE. Such out-of-pocket
expenses include but are not limited to, charges for the examination of title,
inspections and drawings of paper, recording and filing fees, and all reasonable
attorneys' fees, including the fees and disbursements of LENDER's counsel.
(b) Whenever LENDER determines that it is necessary for an
attorney to provide advice to LENDER regarding any of LENDER's rights and
remedies arising out of actions or inactions of any BORROWER under this
Agreement or whenever any attorney is used to collect any obligation or to
determine, preserve or enforce any right of LENDER against any BORROWER or
against the Collateral under this Agreement, the REVOLVING NOTE or any of the
other Loan Documents, whether by suit or other means, each BORROWER agrees to
pay the reasonable attorney's fees (based on the value of time expended and the
presentation of a detailed invoice therefor) and other costs and expenses
incurred by LENDER. Each BORROWER also agrees to pay LENDER's attorneys a
reasonable fee and costs and expenses for enforcing against third parties any
other rights of LENDER pertaining hereto including LENDER's defending against
any claim pertaining to the Collateral.
141
(c) Unless paid by the BORROWERS within 30 days after request
for payment is made of the BORROWERS, all of the expenses set forth in
subsections (a) and (b) above, shall bear interest at the same rate as the rate
of interest payable on the REVOLVING LOAN unless some other Event of Default has
occurred and is continuing in which case interest shall be calculated at the
Default Rate, and all such amounts shall be added to any one or all of the
Liabilities at LENDER's sole discretion, and shall be secured by the Collateral.
(d) By its execution of this Agreement, each BORROWER
authorizes LENDER to reimburse itself for any of its expenses associated with
the above pursuant to the Authorization to Charge. The fact that only one
BORROWER's loan account may be charged on LENDER's books in no way alters or
lessens the joint and several liability of all BORROWERS under this Agreement.
9.12 NO WAIVER OF LENDER'S RIGHT OF SET-OFF: Nothing in this Agreement
shall be deemed any waiver or prohibition of LENDER's right of set-off.
9.13 GOVERNING LAW: This Agreement, the REVOLVING NOTE and each of the
other Loan Documents shall be governed by, and construed under, the laws of the
State of New Jersey.
9.14 FORUM FOR LITIGATION: Each BORROWER agrees that, in addition to
any other available forum, any suit, action or proceeding against it arising
under or growing out of, or relating to this Agreement or any note or other
instrument or agreement required hereunder, or any other instrument executed by
any BORROWER for the benefit of LENDER may be instituted in any Federal court or
any State court in the States of New Jersey or in any other court having
jurisdiction, and each BORROWER hereby waives any objection which it might have
now or hereafter to the laying of the venue of any such suit, action or
proceeding, and irrevocably submits to the jurisdiction of any such court in any
suit, action or proceeding and waives any claim or defense of inconvenient
forum.
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9.15 AGREEMENT MUST BE SIGNED BY LENDER: This Agreement shall not be
effective unless signed by an officer of LENDER.
9.16 ENTIRE UNDERSTANDING: This Agreement contains the entire
understanding of the parties and any promises or representations not herein
contained shall have no force and effect, unless in writing, duly signed by the
party to be charged.
9.17 MODIFICATIONS: Neither this Agreement nor any portion or provision
hereof may be changed, modified, amended, waived, supplemented, discharged,
canceled or terminated orally or by any course of dealing, or in any manner
other than by an agreement in writing, signed by the party to be charged.
9.18 CONTINUATION OF SECURITY INTERESTS: The security interests, liens,
and rights granted to LENDER hereunder shall continue in full force and effect
notwithstanding the fact that any BORROWER's account may, from time to time, be
temporarily in a credit position.
9.19 SURVIVAL OF REPRESENTATIONS: All representations, warranties,
covenants, waivers and agreements contained herein shall survive execution
hereof, unless otherwise provided.
9.20 SEVERABILITY: If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
143
9.21 ACTIONS OF LENDER: Any requirement in this Agreement that LENDER
shall act reasonably or shall show materiality shall be interpreted as requiring
LENDER to act in good faith using its reasonable commercial judgment.
9.22 INCONSISTENCIES: In the event of any inconsistency between this
agreement and any other documents affording LENDER rights and remedies such
inconsistency shall be resolved by an interpretation which expands LENDER's
rights rather than limits LENDER's rights.
9.23 CONFIRMATORY SEARCHES:
(a) The BORROWERS understand that LENDER will order the
following confirmatory searches after the date of this Agreement:
(1) "good standing" certificates against each BORROWER
in its state of incorporation and in each state in
which it has represented that it is authorized to do
business; and
(2) UCC searches against each BORROWER in its state of
incorporation.
(b) The results of such searches must show that each BORROWER
is in good standing in each location searched and that LENDER's UCC-1 financing
statements have been filed and that LENDER has the lien priorities against the
Collateral as required by this Agreement.
(c) In the event that any such search shows that any BORROWER
is not in good standing in any location searched, the applicable BORROWER must
do all things necessary to come into "good standing" in such location within 45
days from the date of LENDER's notice to do so and the failure to do so will be
an Event of Default under this Agreement.
144
(d) In the event that any such search shows that LENDER does
not have the lien priorities against the Collateral as required by this
Agreement, the applicable BORROWER must promptly do all things necessary for
LENDER to have the lien priorities against the Collateral as required by this
Agreement and the failure to do so will be an Event of Default under this
Agreement.
(e) The BORROWERS agree to pay all of LENDER's expenses,
including reasonable attorneys' fees, incurred in procuring and reviewing such
searches. By its execution of this Agreement, each BORROWER authorizes LENDER to
reimburse itself for any of its expenses associated with the above pursuant to
the Authorization to Charge. The fact that only one BORROWER's loan account may
be charged on LENDER's books in no way alters or lessens the joint and several
liability of all BORROWERS under this Agreement.
9.24 LENDER NOT BORROWERS' AGENT: Nothing herein contained shall be
construed to constitute LENDER as any BORROWER's agent for any purpose
whatsoever and LENDER shall not be responsible or liable for (a) any acts of
omission or commission of any BORROWER, (b) any error of judgment of any
BORROWER, (c) any mistake of fact of any BORROWER, (d) any shortage,
discrepancy, impairment, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof
or (e) any error or omission or delay of any kind occurring in the settlement,
collection or payment of any of the Accounts Receivable or any instrument
received in payment thereof or for any damage resulting therefrom.
145
9.25 LOST LOAN DOCUMENTS: Upon receipt of an affidavit of an officer of
LENDER as to the loss, theft, destruction or mutilation of the REVOLVING NOTE or
any other security document which is not of public record, the BORROWERS will
issue, in lieu thereof, a replacement REVOLVING NOTE or other security document
in the same principal amount thereof and otherwise of like tenor. LENDER will
indemnify BORROWERS in the event that such replacement REVOLVING NOTE or any
other security document is issued and the REVOLVING NOTE or any other security
document being replaced was not in fact lost, stolen, destroyed or mutilated but
was instead transferred by LENDER to a third party making claim hereunder.
9.26 LENDER'S USE OF NOMINEE: LENDER may transfer any and all
Collateral into its name or that of its nominee and may receive the income and
any distributions thereon and hold the same as Collateral for the Liabilities,
or apply the same to any defaulted one of the Liabilities, whether or not a
default or an Event of Default has occurred.
9.27 JOINT AND SEVERAL LIABILITY: ALL OBLIGATIONS OF EACH BORROWER
UNDER THIS AGREEMENT ARE JOINT AND SEVERAL WITH THE OBLIGATIONS OF THE OTHER
BORROWERS.
9.28 RESTATEMENT AND REPLACEMENT OF 2002 LOAN AGREEMENT AND 2002 LOAN
DOCUMENTS.
(a) This Agreement, the Revolving Note and the other Loan
Documents are intended to restate and amend BORROWERS' obligations under (1)
that certain June 27, 2002 Loan and Security Agreement dated June 27, 2002 (as
from time to time amended, the "2002 LOAN AGREEMENT") among BORROWERS and
LENDER's predecessor in interest SUMMIT BUSINESS CAPITAL CORP., doing business
as Fleet Capital-Business Finance Division Loan Agreement (later known as Fleet
Capital Corporation, LENDER having succeeded to said Fleet Capital Corporation
by merger) and (2) any "Loan Documents" defined therein - the aforesaid 2002
Loan Agreement and the "Loan Documents" defined therein being hereinafter
collectively called the "2002 LOAN DOCUMENTS".
146
(b) This Agreement, the Revolving Note and the other Loan
Documents are intended to substitute for and replace in their entirety the 2002
Loan Documents, provided, however, that notwithstanding the foregoing, it is
intended that LENDER shall at all times be considered the "Bank" and the holder
of "Senior Debt" and "Senior Indebtedness" under the Senior Subordinated Loan
Agreement as set forth in SECTION 2.1(D) above and SECTION 4.23 above and
nothing in this Section shall be construed so as to diminish or lessen any right
afforded to LENDER as the aforesaid "Bank" and the aforesaid holder of "Senior
Debt" and "Senior Indebtedness".
(c) BORROWERS agree that the following amounts are due on the
2002 Loan Agreement as of the opening of business on February 10, 2006 (plus
accrued interest from February 1, 2006):
Principal: $6,182,426.16;
(d) BORROWERS must confirm and, by their acceptance and
execution of a copy of this letter, do confirm that as of the opening of
business on January 25, 2006, the following letter of credit was outstanding
under the 2002 Loan Agreement:
Fleet National Bank Irrevocable
Standby Letter of Credit #5S1333508
$4,581,813.00 (US Dollars) (unpaid amount)
Beneficiary: UBS Cayman Islands Ltd.
147
(e) All Advances made directly by LENDER to BORROWERS under
the 2002 Loan Documents and outstanding and owed by BORROWERS on the date hereof
under the 2002 Loan Documents shall be and hereby are restated and recast,
without more, as an Advance under the Revolving Loan.
(f) (1) BORROWERS acknowledge and agree that BORROWERS'
aforesaid obligations under the 2002 Loan Documents are not subject to any
defenses, recoupments, set-offs or counterclaims of any kind whatsoever. To the
extent that any such defense, recoupment, set-off or counterclaim exists, it is
hereby expressly waived by BORROWERS.
(2) BORROWERS also agree that there exist no claims or charges
against any actions or inactions of LENDER in extending any financial
accommodations under the 2002 Loan Documents or in making disbursements under
thereunder or in otherwise administering the 2002 Loan Documents or any of the
other documents referred to therein.
9.29 COUNTERPARTS: This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.30 WAIVER OF JURY TRIAL: BORROWERS AND LENDER MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT AND ANY OF THE LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT
FOR LENDER TO ENTER INTO THIS AGREEMENT.
148
THIS IS THE LAST PAGE OF THIS DOCUMENT.
THIS NEXT PAGE IS THE SIGNATURE PAGE
149
IN WITNESS WHEREOF, LENDER and each BORROWER have caused this Loan and Security
Agreement to be executed by its respective duly authorized representative on the
date first above written.
ATTEST: CD&L, INC.
By:
- -------------------------------------------- -----------------------------------------------------
Mark T. Carlesimo, Corporate Secretary Russell J. Reardon, Vice President
ATTEST: CLAYTON/NATIONAL COURIER SYSTEMS, INC.
BY: CD&L, Inc., its sole stockholder
By:
- -------------------------------------------- --------------------------------------------
Mark T. Carlesimo, Corporate Secretary Russell J. Reardon, Vice President
ATTEST: CLICK MESSENGER SERVICE, INC.
BY: CD&L, Inc., its sole stockholder
By:
- -------------------------------------------- --------------------------------------------
Mark T. Carlesimo, Corporate Secretary Russell J. Reardon, Vice President
ATTEST: K.B.D. SERVICES, INC.
BY: Silver Star Express, Inc., its sole stockholder
By:
- -------------------------------------------- ----------------------------------------------------
Mark T. Carlesimo, Corporate Secretary Russell J. Reardon, Vice President
ATTEST: OLYMPIC COURIER SYSTEMS, INC.
BY: CD&L, Inc., its sole stockholder
By:
- -------------------------------------------- --------------------------------------------
Mark T. Carlesimo, Corporate Secretary Russell J. Reardon, Vice President
ATTEST: SECURITIES COURIER CORPORATION
BY: CD&L, Inc., its sole stockholder
By:
- -------------------------------------------- --------------------------------------------
Mark T. Carlesimo, Corporate Secretary Russell J. Reardon, Vice President
ATTEST: SILVER STAR EXPRESS, INC.
BY: CD&L, Inc., its sole stockholder
By:
- -------------------------------------------- --------------------------------------------
Mark T. Carlesimo, Corporate Secretary Russell J. Reardon, Vice President
BANK OF AMERICA, N.A. (SUCCESSOR TO FLEET CAPITAL
CORPORATION)
By:
--------------------------------------------
Edmundo Kahn, Vice President
150
EXHIBITS AND SCHEDULES
EXHIBIT "A": form of Borrowing Base Certificate [see SECTION 1.16]
EXHIBIT "B": form of Reconciliation Certificate [see SECTION 1.63]
SCHEDULE 4.22: schedule of payments due on the Seller Subordinated Notes
[see SECTION 4.22]
151