Exhibit 10.25.1
LOAN AND SECURITY AGREEMENT
by and among
TRAILER BRIDGE, INC.
as Borrower
and
CONGRESS FINANCIAL CORPORATION (FLORIDA),
as Agent
and
THE LENDERS FROM TIME TO TIME PARTY HERETO,
as Lenders
Dated: April 23, 2004
TABLE OF CONTENTS
-----------------
Page
SECTION 1. DEFINITIONS........................................1
SECTION 2. CREDIT FACILITIES.................................23
2.1 Loans. ..................................................23
2.2 Letter of Credit Accommodations............................23
2.3 Term Loans.................................................23
2.4 Commitments................................................23
SECTION 3. INTEREST AND FEES.................................23
3.1 Interest ..................................................23
3.2 Fees ..................................................23
3.3 Changes in Laws and Increased Costs of Loans...............23
SECTION 4. CONDITIONS PRECEDENT..............................23
4.1 Conditions Precedent to Initial Loans and Letter
of Credit Accommodations...................................23
4.2 Conditions Precedent to All Loans and Letter of
Credit Accommodations......................................23
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST.........23
5.1 Grant of Security Interest.................................23
5.2 Perfection of Security Interests...........................23
SECTION 6. COLLECTION AND ADMINISTRATION.....................23
6.1 Borrower Loan Account......................................23
6.2 Statements.................................................23
6.3 Collection of Accounts.....................................23
6.4 Payments...................................................23
6.5 Authorization to Make Loans................................23
6.6 Use of Proceeds............................................23
6.7 Pro Rata Treatment.........................................23
6.8 Sharing of Payments, Etc...................................23
6.9 Settlement Procedures......................................23
6.10 Obligations Several; Independent Nature of Lenders' Rights.23
SECTION 7. COLLATERAL REPORTING AND COVENANTS................23
7.1 Collateral Reporting.......................................23
7.2 Accounts Covenants.........................................23
7.3 Motor Vehicle and Cargo Container Covenants................23
7.4 Equipment and Real Property Covenants......................23
7.5 Power of Attorney..........................................23
7.6 Right to Cure..............................................23
7.7 Access to Premises.........................................23
SECTION 8. REPRESENTATIONS AND WARRANTIES....................23
8.1 Corporate Existence, Power and Authority...................23
8.2 Name; State of Organization; Chief Executive Office;
Collateral Locations.......................................23
8.3 Financial Statements; No Material Adverse Change...........23
8.4 Priority of Liens; Title to Properties.....................23
8.5 Tax Returns................................................23
8.6 Litigation.................................................23
8.7 Compliance with Other Agreements and Applicable Laws.......23
8.8 Environmental Compliance...................................23
8.9 Employee Benefits..........................................23
8.10 Bank Accounts..............................................23
8.11 Intellectual Property......................................23
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.........23
8.13 Labor Disputes.............................................23
8.14 Restrictions on Subsidiaries...............................23
8.15 Material Contracts.........................................23
8.16 Payable Practices..........................................23
8.17 Accuracy and Completeness of Information...................23
8.18 Survival of Warranties; Cumulative.........................23
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS................23
9.1 Maintenance of Existence...................................23
9.2 New Collateral Locations...................................23
9.3 Compliance with Laws, Regulations, Etc.....................23
9.4 Payment of Taxes and Claims................................23
9.5 Insurance..................................................23
9.6 Financial Statements and Other Information.................23
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc....23
9.8 Encumbrances...............................................23
9.9 Indebtedness...............................................23
9.10 Loans, Investments, Etc....................................23
9.11 Dividends and Redemptions..................................23
9.12 Transactions with Affiliates...............................23
9.13 Compliance with ERISA......................................23
9.14 End of Fiscal Years; Fiscal Quarters.......................23
9.15 Change in Business.........................................23
9.16 Limitation of Restrictions Affecting Subsidiaries..........23
9.17 EBITDA; Excess Availability................................23
9.18 Capital Expenditures.......................................23
9.19 License Agreements.........................................23
9.20 After Acquired Real Property...............................23
9.21 Subordination..............................................23
9.22 Costs and Expenses.........................................23
9.23 Further Assurances.........................................23
SECTION 10. EVENTS OF DEFAULT AND REMEDIES....................23
10.1 Events of Default..........................................23
10.2 Remedies...................................................23
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW.....................................23
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver..........................................23
11.2 Waiver of Notices..........................................23
11.3 Amendments and Waivers.....................................23
11.4 Term Loan Purchase Option..................................23
11.5 Waiver of Counterclaims....................................23
11.6 Indemnification............................................23
SECTION 12. THE AGENT.........................................23
12.1 Appointment, Powers and Immunities.........................23
12.2 Reliance by Agent..........................................23
12.3 Events of Default..........................................23
12.4 Congress in its Individual Capacity........................23
12.5 Indemnification............................................23
12.6 Non-Reliance on Agent and Other Lenders....................23
12.7 Failure to Act.............................................23
12.8 Additional Loans...........................................23
12.9 Concerning the Collateral and the Related Financing
Agreements.................................................23
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders......................................23
12.11 Collateral Matters.........................................23
12.12 Agency for Perfection......................................23
12.13 Successor Agent............................................23
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS..................23
13.1 Term. ..................................................23
13.2 Interpretative Provisions..................................23
13.3 Notices ..................................................23
13.4 Partial Invalidity.........................................23
13.5 Confidentiality............................................23
13.6 Successors.................................................23
13.7 Assignments; Participations................................23
13.8 Entire Agreement...........................................23
13.9 Counterparts, Etc..........................................23
INDEX TO
EXHIBITS AND SCHEDULES
----------------------
Exhibit A Form of Assignment and Acceptance
Exhibit B Information Certificate
Exhibit C Form of Compliance Certificate
Exhibit D Form of Priority Payables Report
Schedule 1.26 December Collateral
Schedule 1.48 Existing Lenders
Schedule 1.49 Existing Letters of Credit
Schedule 1.70 June Collateral
Schedule 1.92 Permitted Holders
Schedule 1.118 Special Term Collateral
Schedule 1.119 Specified Equipment
Schedule 9.8 Pledged Vehicles
Schedule 10.1 Minimum Consolidated Quarterly Revenues
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated April 23, 2004 is entered into
by and among Trailer Bridge, Inc., a Delaware corporation ("Borrower"), the
financial institutions from time to time parties hereto as lenders, whether by
execution of this Agreement or an Assignment and Acceptance (each individually,
a "Lender" and collectively, "Lenders") and Congress Financial Corporation
(Florida) , a Florida corporation, in its capacity as agent for Lenders (in such
capacity, "Agent").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Agent and Lenders enter into
financing arrangements with Borrower pursuant to which Lenders may make loans
and provide other financial accommodations to Borrower; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to
make such loans and provide such financial accommodations to Borrower on a pro
rata basis according to its Commitment (as defined below) on the terms and
conditions set forth herein and Agent is willing to act as agent for Lenders on
the terms and conditions set forth herein and the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the respective meanings given to them below:
1.1 "Accounts" shall mean, all present and future rights of Borrower
to payment of a monetary obligation, whether or not earned by performance, which
is not evidenced by chattel paper or an instrument, (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 secondary obligation incurred
or to be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with the card.
1.2 "Accrued Accounts" shall mean, at any time, Accounts which (a)
are accrued on the books of Borrower but not invoiced at such time and (b) are
bona fide Accounts which arise from the performance of services with respect to
a customer's cargo, which cargo is in the possession and control of Borrower and
located at Borrower's premises in Jacksonville, Florida, at such time; provided,
that, an Account shall cease to be an Accrued Account commencing on the seventh
day after such Account first became an Accrued Account.
1.3 "Affiliate" shall mean, with respect to a specified Person, any
other Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under
common control with such Person, and without limiting the generality of the
foregoing, includes (a) any Person which beneficially owns or holds ten (10%)
percent or more of any class of Voting Stock of such Person or other equity
interests in such Person,(b) any Person of which such Person beneficially owns
or holds ten (10%) percent or more of any class of Voting Stock or in which such
Person beneficially owns or holds ten (10%) percent or more of the equity
interests and (c)any director or executive officer of such Person. For the
purposes of this definition, the term "control" (including with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of Voting Stock, by agreement or
otherwise.
1.4 "Agent" shall mean Congress Financial Corporation (Florida), in
its capacity as agent on behalf of Lenders pursuant to the terms hereof and any
replacement or successor agent hereunder.
1.5 "Agent Payment Account" shall mean account no. 5000000030334 of
Agent at Wachovia Bank, National Association or such other account of Agent as
Agent may from time to time designate to Borrower as the Agent Payment Account
for purposes of this Agreement and the other Financing Agreements.
1.6 "Assignment and Acceptance" shall mean an Assignment and
Acceptance substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 13.7
hereof.
1.7 "Bareboat Charter Party Agreements" shall mean, collectively,
(a) the Bareboat Charter Party, dated February 1992, between K-Corp. and
Borrower, with respect to the barge vessel known as Jax-San ▇▇▇▇ Bridge and (b)
the Bareboat Charter Party, dated February 1992, between K-Corp. and Borrower,
with respect to the barge vessel known as San ▇▇▇▇-Jax Bridge, as each now exist
and may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.8 "Blocked Accounts" shall have the meaning set forth in Section
6.3 hereof.
1.9 "Borrowing Base" shall mean, at any time, the amount equal to:
(a) the lesser of:
(i) the amount equal to: (A) eighty-five (85%)
percent of the Eligible Accounts (other than Eligible Accounts consisting of
Accrued Accounts) plus (B) the lesser of (1) $1,000,000 and (2) seventy-five
(75%) percent of Eligible Accounts consisting of Accrued Accounts, plus (C) the
Fixed Asset Availability or
(ii) the Revolving Loan Limit;
2
minus
-----
(b) Reserves.
1.10 "Business Day" shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close under
the laws of the State of Florida or the State of North Carolina, and a day on
which Agent is open for the transaction of business.
1.11 "Capital Expenditures" shall mean, with respect to any Person,
all expenditures for any fixed or capital assets or improvements, or for
replacements, substitutions or additions thereto, which have a useful life or
more than one (1) year, including, but not limited to, the direct or indirect
acquisition of such assets by way of increased product service charges, offset
items or otherwise and shall include payments in respect of Capital Leases.
1.12 "Capital Leases" shall mean, as applied to any Person, any lease
of (or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.13 "Capital Stock" shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's capital stock or partnership, limited liability company or
other equity interests at any time outstanding, and any and all rights, warrants
or options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.14 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof; provided, that, the full faith and credit of the United
States of America is pledged in support thereof; (b) certificates of deposit or
bankers' acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$1,000,000,000; (c) commercial paper (including variable rate demand notes) with
a maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of Borrower) organized under the laws of any State of the United
States of America or the District of Columbia and rated at least A-1 by Standard
& Poor's Ratings Service, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or at
least P-1 by ▇▇▇▇▇'▇ Investors Service, Inc.; (d) repurchase obligations with a
term of not more than thirty (30) days for underlying securities of the types
described in clause (a) above entered into with any financial institution having
combined capital and surplus and undivided profits of not less than
$1,000,000,000; (e) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States of America or issued by any governmental agency thereof and
backed by the full faith and credit of the United States of America, in each
case maturing within ninety (90) days or less from the date of acquisition;
provided, that, the terms of such agreements comply with the guidelines set
forth in the Federal Financial Agreements of Depository
3
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; and (f) investments in money market funds
and mutual funds which invest substantially all of their assets in securities of
the types described in clauses (a) through (e) above.
1.15 "Change of Control" shall mean (a) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of Borrower or any Obligor to any Person or group (as such term is used
in Section 13(d)(3) of the Exchange Act); (b) the liquidation or dissolution of
Borrower or any Obligor or the adoption of a plan by the stockholders of
Borrower or any Obligor relating to the dissolution or liquidation of Borrower
or any Obligor; (c) the acquisition by any Person or group (as such term is used
in Section 13(d)(3) of the Exchange Act), except for one or more Permitted
Holders, of beneficial ownership, directly or indirectly, of a majority of the
voting power of the total outstanding Voting Stock of Borrower or any Obligor or
the Board of Directors of Borrower or any Obligor; (d) during any period of two
(2) consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of Borrower or any Obligor (together with any
new directors who have been appointed by any Permitted Holder, or whose
nomination for election by the stockholders of Borrower or any Obligor, as the
case may be, was approved by a vote of at least sixty-six and two-thirds (66
2/3%) percent of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of Borrower or any Obligor then still in office; or (e) a
change in the senior management of the Borrower.
1.16 "Charter Hire Intercreditor Agreement" shall mean the
Intercreditor Agreement, dated as of even date herewith, by and between Agent
and Kadampanattu Corp., as acknowledged by Borrower, as the same now exists and
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.17 "Closing Excess Availability" shall mean, the amount, as
determined by Agent, calculated at any date, equal to: (a) the lesser of: (i)
the Borrowing Base and (ii) the Revolving Loan Limit (in each case under (i) or
(ii) after giving effect to any Reserves other than any Reserves in respect of
Letter of Credit Accommodations), minus (b) the sum of, without duplication: (i)
the amount of all then outstanding and unpaid Obligations (but not including for
this purpose the then outstanding aggregate principal amount of the Term Loan or
any outstanding Letter of Credit Accommodations), plus (ii) the amount of all
Reserves then established in respect of Letter of Credit Accommodations, plus
(iii) the aggregate amount of all then outstanding and unpaid trade payables and
other obligations of Borrower which are outstanding more than sixty (60) days
past due as of such time (other than trade payables or other obligations being
contested or disputed by Borrower in good faith), plus (iv) the amount of checks
issued by Borrower to pay trade payables and other obligations which are more
than sixty (60) days past due as of such time (other than trade payables or
other obligations being contested or disputed by Borrower in good faith), but
not yet sent.
1.18 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with
4
all rules, regulations and interpretations thereunder or related thereto.
1.19 "Collateral" shall have the meaning set forth in Section 5
hereof.
1.20 "Collateral Access Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, from any lessor of
premises to Borrower, or any other person to whom any Collateral is consigned or
who has custody, control or possession of any such Collateral or is otherwise
the owner or operator of any premises on which any of such Collateral is
located, in favor of Agent with respect to the Collateral at such premises or
otherwise in the custody, control or possession of such lessor, consignee or
other person.
1.21 "Commitment" shall mean, at any time, as to each Lender, the
principal amount set forth below such Lender's signature on the signatures pages
hereto designated as the Commitment or on Schedule 1 to the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.7 hereof, as the same may be
adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as "Commitments".
1.22 "Congress" shall mean Congress Financial Corporation (Florida),
a Florida corporation, in its individual capacity, and its successors and
assigns.
1.23 "Consolidated Net Income" shall mean, with respect to any Person
for any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary and/or one time or unusual and non-recurring
gains or any non-cash losses) after deducting all charges which should be
deducted before arriving at the net income (loss) for such period and, without
duplication, after deducting the Provision for Taxes for such period, all as
determined in accordance with GAAP; provided, that, (a) the net income of any
Person that is not a Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid or payable to such Person or a Subsidiary of such Person; (b)
except to the extent included pursuant to the foregoing clause, the net income
of any Person accrued prior to the date it becomes a Subsidiary of such Person
or is merged into or consolidated with such Person or any of its Subsidiaries or
that Person's assets are acquired by such Person or by its Subsidiaries shall be
excluded; and (c) the net income (if positive) of any Subsidiary (other than
Borrower or an Obligor) to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary to such Person or to any
other wholly-owned Subsidiary of such Person is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to such
Subsidiary shall be excluded. For the purposes of this definition, net income
excludes any gain or non-cash loss, together with any related Provision for
Taxes for such gain or non-cash loss, realized upon the sale or other
disposition of any assets that are not sold in the ordinary course of business
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or of any Capital Stock of such Person or a Subsidiary of such
Person and any net income realized or loss incurred as a result of changes in
accounting principles or the application thereof to such Person.
5
1.24 "Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of Borrower pursuant to Sections
2.1 and 2.2 hereof.
1.25 "December Access Agreement" shall mean the Access and Consent
Agreement, dated as of even date herewith, by and between Agent and the United
States of America (as represented by MarAd), as acknowledged by Borrower, as the
same now exists and may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.26 "December Collateral" shall mean the assets of Borrower set
forth on Schedule 1.26 hereto.
1.27 "December Fleet Mortgage" shall mean the First Preferred Fleet
Mortgage, dated August 4, 1998, between Borrower, as Mortgagor, and The United
States of America (as represented by MarAd), as Mortgagee, as the same now
exists and may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.28 "December Security Agreement" shall mean the Security Agreement,
dated as of December 4, 1997, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.29 "December Trust Indenture" shall mean the Trust Indenture
Relating to United States Government Guaranteed Ship Financing Obligations,
dated December 4, 1997, between Borrower and Indenture Trustee, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.30 "December Trust Indenture Documents" shall mean, collectively,
the following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the December Trust
Indenture; (b) the December Fleet Mortgage; (c) the December Security Agreement;
and (d) all agreements, documents and instruments at any time executed and/or
delivered in connection with the December Trust Indenture, as each of the same
now exists and may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.31 "Default" shall mean an act, condition or event which with
notice or passage of time or both would constitute an Event of Default.
1.32 "Defaulting Lender" shall have the meaning set forth in Section
6.9 hereof.
1.33 "Demurrage Charges" shall mean amounts owing to Borrower in
respect of equipment usage services provided by Borrower, excluding those
routine and customary equipment usage services which are provided by Borrower to
all of its customers.
1.34 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent,
Borrower or the Obligor with a deposit account at any bank and the bank at which
such deposit account is at any time maintained
6
which provides that such bank will comply with instructions originated by Agent
directing disposition of the funds in the deposit account without further
consent by Borrower or such Obligor and has such other terms and conditions as
Agent may require.
1.35 "EBITDA" shall mean, as to any Person, with respect to any
period, an amount equal to: (a) the Consolidated Net Income of such Person and
its Subsidiaries for such period, plus (b) depreciation, amortization and other
non-cash charges (including, but not limited to, imputed interest and deferred
compensation) for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), all in accordance with GAAP, plus (c)
Interest Expense for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), plus (d) the Provision for Taxes for
such period (to the extent deducted in the computation of Consolidated Net
Income of such Person).
1.36 "Eligible Accounts" shall mean Accounts created by Borrower
which are and continue to be acceptable to Agent based on the criteria set forth
below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale
and delivery of goods by Borrower or rendition of services by Borrower in the
ordinary course of its business which transactions are completed in accordance
with the terms and provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than ninety (90) days
after the date of the original invoice for them or more than sixty (60) days
after the original due date for them;
(c) such Accounts comply with the terms and conditions
contained in Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with
respect to such Accounts is located in the United States of America (including
Puerto Rico) or Canada (provided, that, at any time promptly upon Agent's
request, Borrower shall execute and deliver, or cause to be executed and
delivered, such other agreements, documents and instruments as may be required
by Agent to perfect the security interests of Agent in those Accounts of an
account debtor with its chief executive office or principal place of business in
Canada in accordance with the applicable laws of the Province of Canada in which
such chief executive office or principal place of business is located and take
or cause to be taken such other and further actions as Agent may request to
enable Agent as secured party with respect thereto to collect such Accounts
under the applicable Federal or Provincial laws of Canada) or, at Agent's
option, if the chief executive office and principal place of business of the
account debtor with respect to such Accounts is located other than in the United
States of America (including Puerto Rico) or Canada, then if either: (i) the
account debtor has delivered to Borrower an irrevocable letter of credit issued
or confirmed by a
7
bank satisfactory to Agent and payable only in the United States of America and
in U.S. dollars, sufficient to cover such Account, in form and substance
satisfactory to Agent and if required by Agent, the original of such letter of
credit has been delivered to Agent or Agent's agent and the issuer thereof, and
Borrower has complied with the terms of Section 5.2(f) hereof with respect to
the assignment of the proceeds of such letter of credit to Agent or naming Agent
as transferee beneficiary thereunder, as Agent may specify, or (ii) such Account
is subject to credit insurance payable to Agent issued by an insurer and on
terms and in an amount acceptable to Agent, or (iii) such Account is otherwise
acceptable in all respects to Agent (subject to such lending formula with
respect thereto as Agent may determine);
(f) such Accounts do not consist of progress ▇▇▇▇▇▇▇▇ (such
that the obligation of the account debtors with respect to such Accounts is
conditioned upon Borrower's satisfactory completion of any further performance
under the agreement giving rise thereto), ▇▇▇▇ and hold invoices or retainage
invoices, except as to ▇▇▇▇ and hold invoices, if Agent shall have received an
agreement in writing from the account debtor, in form and substance satisfactory
to Agent, confirming the unconditional obligation of the account debtor to take
the goods related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and is not owed or does not claim to
be owed any amounts that may give rise to any right of setoff or recoupment
against such Accounts (but the portion of the Accounts of such account debtor in
excess of the amount at any time and from time to time owed by Borrower to such
account debtor or claimed owed by such account debtor may be deemed Eligible
Accounts);
(h) there are no facts, events or occurrences which would
impair the validity, enforceability or collectability of such Accounts or reduce
the amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid
and perfected security interest of Agent and any goods giving rise thereto are
not, and were not at the time of the sale thereof, subject to any liens except
those permitted in this Agreement that are subject to an intercreditor agreement
in form and substance satisfactory to Agent between the holder of such security
interest or lien and Agent;
(j) neither the account debtor nor any officer or employee
of the account debtor with respect to such Accounts is an officer, employee,
agent or other Affiliate of Borrower or any Obligor;
(k) the account debtors with respect to such Accounts are
not any foreign government, the United States of America, any State (including
Puerto Rico), political subdivision, department, agency or instrumentality
thereof, unless, if the account debtor is the United States of America, any
State (including Puerto Rico), political subdivision, department, agency or
instrumentality thereof, upon Agent's request, the Federal Assignment of Claims
Act of
8
1940, as amended or any similar State or local law, if applicable, has been
complied with in a manner satisfactory to Agent;
(l) there are no proceedings or actions which are threatened
or pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition (including, without limitation, any bankruptcy, dissolution,
liquidation, reorganization or similar proceeding);
(m) the aggregate amount of such Accounts owing by a single
account debtor do not constitute more than ten (10%) percent of the aggregate
amount of all otherwise Eligible Accounts (but the portion of the Accounts not
in excess of such percentage may be deemed Eligible Accounts);
(n) such Accounts are not owed by an account debtor who has
Accounts unpaid more than the ninety (90) days after the original invoice date
for them or more than sixty (60) days after the original due date for them which
constitute more than fifty (50%) percent of the total Accounts of such account
debtor;
(o) the account debtor is not located in a state requiring
the filing of a Notice of Business Activities Report or similar report in order
to Borrower to seek judicial enforcement in such State of payment of such
Account, unless Borrower has qualified to do business in such state or has filed
a Notice of Business Activities Report or equivalent report for the then current
year or such failure to file and inability to seek judicial enforcement is
capable of being remedied without any material delay or material cost;
(p) such Accounts are owed by account debtors whose total
indebtedness to Borrower does not exceed the credit limit with respect to such
account debtors as determined by Borrower from time to time, to the extent such
credit limit as to any account debtor is established consistent with the current
practices of Borrower as of the date hereof and such credit limit is acceptable
to Agent (but the portion of the Accounts not in excess of such credit limit may
be deemed Eligible Accounts);
(q) such Accounts do not consist of Demurrage Charges;
(r) the right of Borrower to receive payment in respect of
such Accounts is absolute and not contingent upon the fulfillment of any
condition whatsoever; and
(s) such Accounts are owed by account debtors deemed
creditworthy at all times by Agent in good faith.
The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from Borrower prior to the date hereof, in either case under clause (i) or (ii)
which adversely affects or
9
could reasonably be expected to adversely affect the Accounts in the good faith
determination of Agent. Any Accounts that are not Eligible Accounts shall
nevertheless be part of the Collateral.
1.37 "Eligible Equipment" shall mean Equipment owned by Borrower
consisting of Specified Equipment and included in an appraisal of Equipment
received by Agent (on behalf of Lenders) in accordance with the requirements of
Agent, which Equipment is in good order, repair, running and marketable
condition (ordinary wear and tear excepted) and in each case acceptable to Agent
in good faith based on the criteria set forth below. In general, Eligible
Equipment shall not include: (a) Equipment at premises other than those owned or
leased and controlled by Borrower, provided, that, (i) as to such locations that
are leased by Borrower, if Agent shall not have received a Collateral Access
Agreement from the owner and lessor of such location, duly authorized, executed
and delivered by such owner and lessor (or Agent shall have determined to accept
a Collateral Access Agreement that does not include all required provisions or
provisions in the form otherwise required by Agent), Agent may, at its option,
establish such Reserves in respect of amounts at any time due or to become due
to the owner and lessor thereof as Agent shall in good faith determine and (ii)
as to any such location owned and operated by a third person, if Agent shall not
have received a Collateral Access Agreement from the owner and operator with
respect to such location, duly authorized, executed and delivered by such owner
and operator (or Agent shall determine to accept a Collateral Access Agreement
that does not include all required provisions or provisions in the form
otherwise required by Agent), Agent may, at its option establish such Reserves
in respect of amounts at any time due or to become due to the owner and operator
thereof as Agent shall determine, provided, that, in addition, if required by
Agent, in order for such Equipment at any such location owned and operated by a
third person to be Eligible Equipment, Agent shall have received: (A) UCC
financing statements between the owner and operator, as consignee or bailee and
Borrower, as consignor or ▇▇▇▇▇▇, in form and substance satisfactory to Agent,
which are duly assigned to Agent and (B) a written notice to any lender to the
owner and operator of the first priority security interest in such Equipment of
Agent; (b) Equipment subject to a security interest or lien in favor of any
person other than Agent except those permitted hereunder (but not including for
the purpose of this exception (i) any purchase money security interests or liens
that may be permitted under this Agreement, (ii) any other security interests or
liens that may have priority over the security interests of Agent or (iii) any
security interest or liens that are not subject to an intercreditor agreement in
form and substance satisfactory to Agent between the holder of such security
interest or lien and Agent); (c) Equipment that is not located in the
continental United States of America or Puerto Rico; (d) Equipment that is not
subject to the first priority, valid and perfected security interest of Agent;
(e) damaged or defective Equipment or Equipment not used or usable in the
ordinary course of Borrower's business as presently conducted; (f) computer
hardware; or (g) tooling.
The criteria for Eligible Equipment set forth above may only be changed and any
new criteria for Eligible Equipment may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from Borrower prior to the date hereof, in either case under clause (i) or (ii)
which adversely affects or could reasonably be expected to adversely affect the
Equipment in the good faith determination of
10
Agent. Any Equipment which is not Eligible Equipment shall nevertheless be part
of the Collateral.
1.38 "Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor, and in each case is approved by Agent; and (d) any other commercial
bank, financial institution or "accredited investor" (as defined in Regulation D
under the Securities Act of 1933) approved by Agent, provided, that, (i) neither
Borrower nor any Obligor or any Affiliate of Borrower or any Obligor shall
qualify as an Eligible Transferee and (ii) no Person to whom any Indebtedness
which is in any way subordinated in right of payment to any other Indebtedness
of Borrower or Obligor shall qualify as an Eligible Transferee, except as Agent
may otherwise specifically agree.
1.39 "Enforcement Action" shall mean the exercise by Agent in good
faith of any of its material enforcement rights and remedies hereunder or under
the other Financing Agreements, applicable law or otherwise at any time on and
after and during the continuation of an Event of Default (including, without
limitation, the demand for the immediate payment of all of the Obligations, the
solicitation of bids from third parties to conduct the liquidation of the
Collateral, the engagement or retention of sales brokers, marketing agents,
investment bankers, accountants, appraisers, auctioneers or other third parties
for the purposes of valuing, marketing, promoting and selling the Collateral,
the commencement of any action to foreclose on the security interests or liens
of Agent in all or any material portion of the Collateral, notification of
account debtors to make payments to Agent, any action to take possession of all
or any material portion of the Collateral or commencement of any legal
proceedings or actions against or with respect to Borrowers, any Obligor or all
or any portion of the Collateral).
1.40 "Environmental Laws" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between Borrower and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws" includes (i) the
Federal Comprehensive Environmental Response, Compensation and
11
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act,
the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.41 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, wherever located, including containers, chassis', tractors,
vehicle transportation modules, machinery, data processing and computer
equipment (whether owned or licensed and including embedded software), vehicles,
tools, furniture, fixtures, all attachments, accessions and property now or
hereafter affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.
1.42 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.
1.43 "ERISA Affiliate" shall mean any person required to be
aggregated with Borrower or any of its Subsidiaries under Sections 414(b),
414(c), 414(m) or 414(o) of the Code.
1.44 "ERISA Event" shall mean (a) any "reportable event", as defined
in Section 4043(c) of ERISA or the regulations issued thereunder, with respect
to a Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which Borrower or any Obligor, or any of its or
their respective Subsidiaries is a "disqualified person" (within the meaning of
Section 4975 of the Code) or with respect to which Borrower, any Obligor or any
of its or their respective Subsidiaries could otherwise be liable; (f) a
complete or partial withdrawal by Borrower, any Obligor or any ERISA Affiliate
from a Multiemployer Plan or a cessation of operations which is treated as such
a withdrawal or notification that a Multiemployer Plan is in reorganization; (g)
the filing of a notice of intent to terminate, the treatment of a Plan amendment
as a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (i) the imposition of any liability under Title
IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due
but not delinquent under Section 4007 of ERISA, upon Borrower, any Obligor or
any ERISA Affiliate in excess of $250,000 and (j) any other event or condition
with respect to a Plan including any Plan subject to Title IV of ERISA
maintained, or contributed to, by any ERISA
12
Affiliate that could reasonably be expected to result in liability of Borrower
in excess of $250,000.
1.45 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.46 "Excess Availability" shall mean, the amount, as determined by
Agent, calculated at any date, equal to: (a) the lesser of: (i) the Borrowing
Base and (ii) the Revolving Loan Limit (in each case under (i) or (ii) after
giving effect to any Reserves other than any Reserves in respect of Letter of
Credit Accommodations), minus (b) the sum of: (i) the amount of all then
outstanding and unpaid Obligations (but not including for this purpose the then
outstanding aggregate principal amount of the Term Loan or any outstanding
Letter of Credit Accommodations), plus (ii) the amount of all Reserves then
established in respect of Letter of Credit Accommodations.
1.47 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.48 "Existing Lenders" shall mean the lenders to Borrower listed on
Schedule 1.48 hereto and their respective predecessors, successors and assigns.
1.49 "Existing Letters of Credit" shall mean, collectively, the
letters of credit issued for the account of Borrower or any Obligor or for which
Borrower is otherwise liable listed on Schedule 1.49 hereto, as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.50 "Fee Letter" shall mean the letter agreement, dated of even date
herewith, by and between Borrower and Agent, setting forth certain fees payable
by Borrower to Agent for the benefit of itself and Lenders, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.51 "Financing Agreements" shall mean, collectively, this Agreement
and all notes, fee letters, guarantees, security agreements, deposit account
control agreements, investment property control agreements, intercreditor
agreements and all other agreements, documents and instruments now or at any
time hereafter executed and/or delivered by Borrower or any Obligor in
connection with this Agreement.
1.52 "Fixed Asset Availability" shall mean the amount equal to the
lesser of: (a) $8,000,000 or (b) sixty-five (65%) percent of the net orderly
liquidation value of the Eligible Equipment as set forth in the most recent
acceptable appraisal (or acceptable updates of existing appraisals) of such
Equipment received by Agent in accordance with Section 4.1 or 7.4 hereof;
provided, that, the Fixed Asset Availability shall be reduced as of the first
day of each month, commencing on June 1, 2004, by an amount equal to the initial
Fixed Asset Availability divided by seventy two (72).
13
1.53 "Fixed Asset Availability Amortization Reserve" shall mean the
amount equal to the initial Fixed Asset Availability divided by twelve (12).
1.54 "GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Sections 9.17 and 9.18 hereof, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the most recent audited financial statements
delivered to Agent prior to the date hereof.
1.55 "Governmental Authority" shall mean any nation or government,
any state, province, or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.56 "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents and/
or any other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.57 "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary course
of business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and redemption or
repurchase obligations under any Capital Stock or other equity securities issued
by such Person;
14
(f) all reimbursement obligations and other liabilities of such Person with
respect to surety bonds (whether bid, performance or otherwise), letters of
credit, banker's acceptances, drafts or similar documents or instruments issued
for such Person's account; (g) all indebtedness of such Person in respect of
indebtedness of another Person for borrowed money or indebtedness of another
Person otherwise described in this definition which is secured by any consensual
lien, security interest, collateral assignment, conditional sale, mortgage, deed
of trust, or other encumbrance on any asset of such Person, whether or not such
obligations, liabilities or indebtedness are assumed by or are a personal
liability of such Person, all as of such time; (h) all obligations, liabilities
and indebtedness of such Person (marked to market) arising under swap
agreements, cap agreements and collar agreements and other agreements or
arrangements designed to protect such person against fluctuations in interest
rates or currency or commodity values; (i) all obligations owed by such Person
under License Agreements with respect to non-refundable, advance or minimum
guarantee royalty payments; and (j) the principal and interest portions of all
rental obligations of such Person under any synthetic lease or similar off-
balance sheet financing where such transaction is considered to be borrowed
money for tax purposes but is classified as an operating lease in accordance
with GAAP.
1.58 "Indenture Trustee" shall mean State Street Bank and Trust
Company, as trustee.
1.59 "Information Certificate" shall mean the Information Certificate
of Borrower constituting Exhibit B hereto containing material information with
respect to Borrower, its businesses and assets provided by or on behalf of
Borrower to Agent in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
1.60 "Intellectual Property" shall mean Borrower's now owned and
hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
applications, copyright registrations, trademarks, trade names, trade styles,
trademark and service ▇▇▇▇ applications, and licenses and rights to use any of
the foregoing; all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to ▇▇▇ for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or the license of any trademark); customer and
other lists in whatever form maintained; trade secret rights, copyright rights,
rights in works of authorship, domain names and domain name registration;
software and contract rights relating to computer software programs, in whatever
form created or maintained.
1.61 "Interbay" shall mean Interbay Funding, LLC, a Delaware limited
liability company, and its successors and assigns.
1.62 "Interbay Access Agreement" shall mean the Access and Use
Agreement, dated as of even date herewith, by and between Agent and Interbay, as
acknowledged by Borrower, as the same now exists and may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
15
1.63 "Interbay Mortgage" shall mean the Mortgage and Security
Agreement, dated April 18, 1996, between Borrower and Interbay (as successor in
interest to Wachovia Bank, National Association), as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated and or
replaced.
1.64 "Interbay Mortgage Note" shall mean the Amended, Modified,
Restated and Renewal Real Estate Promissory Note, dated June 14, 2002, in the
principal amount of $742,000 by TBI in favor of Interbay, as the same now exists
and may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.65 "Interest Expense" shall mean, for any period, as to any Person,
as determined in accordance with GAAP, the total interest expense of such
Person, whether paid or accrued during such period (including the interest
component of Capital Leases for such period), including, without limitation,
discounts in connection with the sale of any Accounts and bank fees,
commissions, discounts and other fees and charges owed with respect to letters
of credit, banker's acceptances or similar instruments.
1.66 "Interest Rate" shall mean:
(a) Subject to clause (b) of this definition, (i) with
respect to Revolving Loans, a rate equal to one and one-half (1.50%) percent per
annum in excess of the Prime Rate and (ii) with respect to Term Loans, a rate
equal to the greater of (A) seven and one-half (7.50%) percent per annum in
excess of the Prime Rate and (B) eleven and one-half (11.50%) percent per annum.
(b) Notwithstanding anything to the contrary contained
herein, the Interest Rate shall mean the rates set forth above plus (in each
case) two (2%) percent per annum, at Agent's option, without notice (i) either
(A) for the period on and after the effective date of termination or non-renewal
hereof until such time as all Obligations are indefeasibly paid and satisfied in
full in immediately available funds or (B) for the period from and after the
date of the occurrence of any Event of Default, and for so long as such Event of
Default is continuing as determined by Agent and (ii) on the Revolving Loans at
any time outstanding in excess of the amounts available to Borrower under
Section 2 (whether or not such excess(es) arise or are made with or without
Agent's knowledge or consent and whether made before or after an Event of
Default).
1.67 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired goods, wherever located, which (a) are leased by Borrower
as lessor; (b) are held by Borrower for sale or lease or to be furnished under a
contract of service; (c) are furnished by Borrower under a contract of service;
or (d) consist of raw materials, work in process, finished goods or materials
used or consumed in its business.
1.68 "Investment Property Control Agreement" shall mean an agreement
in writing, in form and substance satisfactory to Agent, by and among Agent,
Borrower or any Obligor (as the case may be) and any securities intermediary,
commodity intermediary or other person who has custody, control or possession of
any investment property of Borrower or such Obligor acknowledging that such
securities intermediary, commodity intermediary or other person has
16
custody, control or possession of such investment property on behalf of Agent,
that it will comply with entitlement orders originated by Agent with respect to
such investment property, or other instructions of Agent, and has such other
terms and conditions as Agent may require.
1.69 "June Access Agreement" shall mean the Access and Consent
Agreement, dated as of even date herewith, by and between Agent and the United
States of America (acting through MarAd), as acknowledged by Borrower, as the
same now exists and may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.70 "June Collateral" shall mean the assets of Borrower set forth on
Schedule 1.70 hereto.
1.71 "June Fleet Mortgage" shall mean the First Preferred Fleet
Mortgage, dated January 13, 1998, between Borrower, as Mortgagor, and The United
States of America, as Mortgagee, as represented by MarAd.
1.72 "June Security Agreement" shall mean the Security Agreement,
dated as of June 23, 1997, between MarAd and Borrower, as the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.73 "June Trust Indenture" shall mean the Trust Indenture Relating
to United States Government Guaranteed Ship Financing Obligations, dated June
23, 1997, between Borrower, as Shipowner, and Indenture Trustee, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.74 "June Trust Indenture Documents" shall mean, collectively, the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the June Trust
Indenture; (b) the June Fleet Mortgage; (c) the June Security Agreement; and (d)
all agreements, documents and instruments at any time executed and/or delivered
in connection with the June Trust Indenture.
1.75 "K-Corp." shall mean Kadampauattu Corp., a Delaware corporation,
and its successors and assigns.
1.76 "K-Corp. Subordination Agreement" shall mean the Subordination
Agreement, dated as of even date herewith, by and between Agent and K-Corp., in
its capacity as Series B Holder and in its capacity as the owner of certain roll
on-roll off barge assets chartered to Borrower pursuant to the Bareboat Charter
Party Agreements, as acknowledged by Borrower, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced
1.77 "Lenders" shall mean the financial institutions who are
signatories hereto as Lenders and other persons made a party to this Agreement
as a Lender in accordance with Section 13.7 hereof, and their respective
successors and assigns; each sometimes being referred to herein individually as
a "Lender".
17
1.78 "Letter of Credit Accommodations" shall mean, collectively, the
letters of credit, merchandise purchase or other guaranties which are from time
to time either (a) issued or opened by Agent or any Lender for the account of
Borrower or any Obligor or (b) with respect to which Agent or Lenders have
agreed to indemnify the issuer or guaranteed to the issuer the performance by
Borrower or any Obligor of its obligations to such issuer; sometimes being
referred to herein individually as "Letter of Credit Accommodation".
1.79 "License Agreements" shall have the meaning set forth in Section
8.11 hereof.
1.80 "Loans" shall mean, collectively, the Revolving Loans and the
Term Loans.
1.81 "MarAd" shall mean the United States of America represented by
the Secretary of Transportation, acting by and through the Maritime
Administrator, pursuant to the provisions of Title ▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇, ▇▇▇▇, as amended.
1.82 "MarAd Security Agreement" shall mean, collectively, the June
Security Agreement and the December Security Agreement.
1.83 "Material Adverse Effect" shall mean a material adverse effect
on (a) the financial condition, business, performance or operations of Borrower;
(b) the legality, validity or enforceability of this Agreement or any of the
other Financing Agreements; (c) the legality, validity, enforceability,
perfection or priority of the security interests and liens of Agent upon the
Collateral; (d) the Collateral or its value; (e) the ability of Borrower to
repay the Obligations or of Borrower to perform its obligations under this
Agreement or any of the other Financing Agreements as and when to be performed;
or (f) the ability of Agent or any Lender to enforce the Obligations or realize
upon the Collateral or otherwise with respect to the rights and remedies of
Agent and Lenders under this Agreement or any of the other Financing Agreements.
1.84 "Material Contract" shall mean (a) any contract or other
agreement (other than the Financing Agreements), written or oral, of Borrower
involving monetary liability of or to any Person in an amount in excess of
$500,000 in any fiscal year and (b) any other contract or other agreement (other
than the Financing Agreements), whether written or oral, to which Borrower is a
party as to which the breach, nonperformance, cancellation or failure to renew
by any party thereto would have a Material Adverse Effect.
1.85 "Maximum Credit" shall mean the amount of $23,000,000.
1.86 "Mortgaged Property" shall have the meaning set forth in Section
9.8(j) hereto.
1.87 "Multiemployer Plan" shall mean a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding six (6) years contributed to by
Borrower or any ERISA Affiliate.
1.88 "Net Recovery Percentage" shall mean the fraction, expressed as
a percentage, (a) the numerator of which is the amount equal to the amount of
the recovery in respect of the
18
Inventory at such time a "net orderly liquidation value" basis as set forth in
the most recent acceptable appraisal of Inventory received by Agent in
accordance with Section 7.3, net of operating expenses, liquidation expenses and
commissions, and (b) the denominator of which is the applicable original cost of
the aggregate amount of the Inventory subject to such appraisal.
1.89 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by Borrower to Agent or any Lender and/or any
of their Affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, arising under this Agreement or any of the other Financing
Agreements, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute (including the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part
in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated, or
secured or unsecured.
1.90 "Obligor" shall mean any guarantor, endorser, acceptor, surety
or other person liable on or with respect to the Obligations or who is the owner
of any property which is security for the Obligations, other than Borrower.
1.91 "Participant" shall mean any financial institution that acquires
and holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
13.7 of this Agreement governing participations.
1.92 "Permitted Holders" shall mean the persons listed on Schedule
1.92 hereto and their respective successors and assigns.
1.93 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.94 "Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which Borrower or any Obligor sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of a
Multiemployer Plan has made contributions at any time during the immediately
preceding six (6) plan years.
1.95 "Prime Rate" shall mean the rate from time to time publicly
announced by Wachovia Bank, National Association, or its successors, as its
prime rate, whether or not such announced rate is the best rate available at
such bank.
19
1.96 "Priming Lien Reserve" shall mean, at any time, a Reserve in the
amount equal to the sum of (a) all Priority Payables and (b) all amounts
determined by Agent to be necessary to complete all in-transit cargo services of
Borrower.
1.97 "Priority Event" shall mean one or more of the following events:
(a) an Event of Default under Section 10.1(a)(i) hereof; (b) an Event of Default
under Section 10.1(g) or 10.1(h) hereof; or (c) any other Event of Default and
either (i) the acceleration of the payment of all or a material portion of the
Obligations or (ii) the taking of any Enforcement Action.
1.98 "Priority Payables" shall mean the full amount of the
liabilities of the Borrower at such time which (a) have a trust imposed to
provide for payment or a security interest, pledge, lien or charge ranking or
capable of ranking senior to or pari passu with security interests, liens or
charges securing the Obligations on any of the Collateral under law in any
jurisdiction or (b) have a right imposed to provide for payment ranking or
capable of ranking senior to or pari passu with the Obligations under law,
regulation or directive, including, but not limited to, stevedore related
liabilities incurred by Borrower, tug and barge related liabilities incurred by
Borrower, claims for unremitted and/or accelerated rents, taxes, freights,
wages, withholding taxes, employee withholdings or deductions, vacation pay,
workers' compensation obligations, government royalties or pension fund
obligations, in each case to the extent such trust, or security interest, lien
or charge has been or may be imposed.
1.99 "Pro Rata Share" shall mean:
(a) with respect to a Revolving Loan Lender's obligation to
make Revolving Loans and to acquire interests in Letter of Credit Accommodations
and receive payments of interest, fees, and principal with respect thereto, the
fraction (expressed as a percentage) the numerator of which is such Revolving
Lender's Revolving Loan Commitment and the denominator of which is the aggregate
amount of all of the Revolving Loan Commitments of the Revolving Lenders, as
adjusted from time to time in accordance with the provisions of Section 13.7
hereof; provided, that, if the Revolving Loan Commitments have been terminated,
the numerator shall be the unpaid amount of such Revolving Lender's Revolving
Loans and its interest in the Letter of Credit Accommodations and the
denominator shall be the aggregate amount of all unpaid Revolving Loans and
Letter of Credit Accommodations;
(b) with respect to a Term Loan Lender's obligation to make
a Term Loan and receive payments of interest, fees, and principal with respect
thereto, the fraction (expressed as a percentage) the numerator of which is such
Term Loan Lender's Term Loan Commitment and the denominator of which is the
aggregate amount of all of the Term Loan Commitments of the Term Loan Lenders,
as adjusted from time to time in accordance with the provisions of Section 13.7
hereof; and
(c) with respect to all other matters (including, without
limitation, the indemnification obligations arising under Section 12.5 and the
voting rights set forth in Section 11.3), the fraction (expressed as a
percentage) the numerator of which is such Lender's Commitment and the
denominator of which is the aggregate amount of all of the Commitments of
20
Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; provided, that, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's Loans and its interest
in the Letter of Credit Accommodations and the denominator shall be the
aggregate amount of all unpaid Loans and Letter of Credit Accommodations.
1.100 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial, county
or local, and whether foreign or domestic, that are paid or payable by any
Person in respect of any period in accordance with GAAP.
1.101 "Real Property" shall mean all now owned and hereafter acquired
real property of Borrower, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located.
1.102 "Receivables" shall mean all of the following now owned or
hereafter arising or acquired property of Borrower: (a) all Accounts; (b) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (c) all
payment intangibles of Borrower; (d) letters of credit, indemnities, guarantees,
security or other deposits and proceeds thereof issued payable to Borrower or
otherwise in favor of or delivered to Borrower in connection with any Account;
or (e) all other accounts, contract rights, chattel paper, instruments, notes,
general intangibles and other forms of obligations owing to Borrower, whether
from the sale and lease of goods or other property, licensing of any property
(including Intellectual Property or other general intangibles), rendition of
services or from loans or advances by Borrower or to or for the benefit of any
third person (including loans or advances to any Affiliates or Subsidiaries of
Borrower) or otherwise associated with any Accounts, Inventory or general
intangibles of Borrower (including, without limitation, choses in action, causes
of action, tax refunds, tax refund claims, any funds which may become payable to
Borrower in connection with the termination of any Plan or other employee
benefit plan and any other amounts payable to Borrower from any Plan or other
employee benefit plan, rights and claims against carriers and shippers, rights
to indemnification, business interruption insurance and proceeds thereof,
casualty or any similar types of insurance and any proceeds thereof and proceeds
of insurance covering the lives of employees on which Borrower is a
beneficiary).
1.103 "Records" shall mean all of Borrower's present and future books
of account of every kind or nature, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of Borrower with
respect to the foregoing maintained with or by any other person).
1.104 "Register" shall have the meaning set forth in Section 13.7
hereof.
21
1.105 "Required Lenders" shall mean, at any time, those Lenders whose
Pro Rata Shares aggregate sixty-six and two-thirds (66 2/3%) percent or more of
the aggregate of the Commitments of all Lenders, or if the Commitments shall
have been terminated, Lenders to whom at least sixty-six and two-thirds (66
2/3%) percent of the then outstanding Obligations are owing.
1.106 "Required Revolving Lenders" shall mean, at any time, those
Revolving Loan Lenders whose Pro Rata Shares with respect to the Revolving Loans
aggregate sixty-six and two-thirds (66 2/3%) percent or more of the aggregate of
the Revolving Loan Commitments of all Revolving Loan Lenders, or if the
Revolving Loan Commitments shall have been terminated, Revolving Loan Lenders to
whom at least sixty-six and two-thirds (66 2/3%) percent of the then outstanding
Revolving Loans are owing.
1.107 "Required Term Loan Lenders" shall mean, at any time, those Loan
Lenders whose Pro Rata Shares with respect to the Term Loans aggregate sixty-six
and two-thirds (66 2/3%) percent or more of the aggregate of the Term Loan
Commitments of all Term Loan Lenders, or if the Term Loan Commitments shall have
been terminated, Term Loan Lenders to whom at least sixty-six and two-thirds (66
2/3%) percent of the then outstanding Term Loans are owing.
1.108 "Reserves" shall mean as of any date of determination, such
amounts as Agent may from time to time establish and revise in good faith
reducing the amount of Revolving Loans and Letter of Credit Accommodations which
would otherwise be available to Borrower under the lending formula(s) provided
for herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Agent in good faith, adversely affect, or would have a reasonable
likelihood of adversely affecting, either (i) the Collateral or any other
property which is security for the Obligations, its value or the amount that
might be received by Agent from the sale or other disposition or realization
upon such Collateral, or (ii) the assets, business or prospects of Borrower or
any Obligor or (iii) the security interests and other rights of Agent or any
Lender in the Collateral (including the enforceability, perfection and priority
thereof) or (b) to reflect Agent's good faith belief that any collateral report
or financial information furnished by or on behalf of Borrower or any Obligor to
Agent is or may have been incomplete, inaccurate or misleading in any material
respect or (c) to reflect outstanding Letter of Credit Accommodations as
provided in Section 2.2 hereof or (d) to reflect the Fixed Asset Availability
Amortization Reserve or (e) to reflect the amount of Priority Payables or (f) to
reflect any Priming Lien Reserve or (g) in respect of any state of facts which
Agent determines in good faith constitutes a Default or an Event of Default.
Without limiting the generality of the foregoing, Reserves may, at Agent's
option, be established to reflect: dilution with respect to the Accounts (based
on the ratio of the aggregate amount of non-cash reductions in Accounts for any
period to the aggregate dollar amount of the sales of Borrower for such period)
as calculated by Agent for any period is or is reasonably anticipated to be
greater than five (5%) percent; or to reflect that the net orderly liquidation
value of the Equipment as set forth in the most recent acceptable appraisals
received by Agent with respect thereto has declined so that the amount of the
Fixed Asset Availability is greater than the applicable percentages for the
Eligible Equipment used in the definition of Fixed
22
Asset Availability multiplied by such appraised values; or returns, discounts,
claims, credits and allowances of any nature that are not paid pursuant to the
reduction of Accounts; or sales, excise or similar taxes included in the amount
of any Accounts reported to Agent; or a change in the turnover, age or mix of
the categories of Inventory that adversely affects the aggregate value of all
Inventory; accrued and unpaid cargo damage claims of customers; the failure of
Agent to receive the original certificate of title with Agent's lien properly
noted thereon with respect to any Specified Equipment evidenced by a certificate
of title; the obligations of Borrower in respect of Federal road use tax (and
other taxes and tariffs of a like or similar nature) or amounts due or to become
due to owners and lessors of premises where any Collateral is located, other
than for those locations where Agent has received a Collateral Access Agreement
that Agent has accepted in writing. The amount of any Reserve established by
Agent shall have a reasonable relationship to the event, condition or other
matter which is the basis for such reserve as determined by Agent in good faith.
1.109 "Revolving Lenders" shall mean, collectively, each Lender other
than Term Loan Lender.
1.110 "Revolving Loan Commitment" shall mean, at any time, as to each
Lender, the principal amount set forth below such Lender's signature on the
signatures pages hereto designated as the Revolving Loan Commitment or on
Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of Section
13.7 hereof, as the same may be adjusted from time to time in accordance with
the terms hereof; sometimes being collectively referred to herein as "Revolving
Loan Commitments".
1.111 "Revolving Loan Limit" shall mean, at any time, the amount equal
to $20,000,000.
1.112 "Revolving Loan Obligations" shall mean any and all Loans,
Letter of Credit Accommodations and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by Borrower to Agent or
any of Revolving Lenders and/or any of their Affiliates, including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, arising under this
Agreement or any of the other Financing Agreements, whether now existing or
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to Borrower under the United States Bankruptcy Code or any similar
statute (including the payment of interest and other amounts which would accrue
and become due but for the commencement of such case, whether or not such
amounts are allowed or allowable in whole or in part in such case), whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, or secured or unsecured.
1.113 "Revolving Loans" shall mean the loans now or hereafter made by
or on behalf of any Lender or by Agent for the account of any Lender on a
revolving basis pursuant to the Credit Facility (involving advances, repayments
and readvances) as set forth in Section 2.1 hereof.
23
1.114 "Series B Certificate of Designation" shall mean the Certificate
of Designations of Series B Preferred Stock of Borrower, filed with the Delaware
Secretary of State on August 12, 2002, as amended by Amendment to Certificate of
Designations of Series B Preferred Stock, filed with the Delaware Secretary of
State on September 13, 2002, and as further amended by Amendment No. 2 to
Certificate of Designations of Series B Preferred Stock, filed with the Delaware
Secretary of State on September 27, 2002.
1.115 "Series B Holder" shall mean, collectively, the holders of
shares of Series B Preferred Stock of Borrower issued pursuant to the Series B
Certificate of Designation.
1.116 "Solvent" shall mean, at any time with respect to any Person,
that at such time such Person (a) is able to pay its debts as they mature and
has (and has a reasonable basis to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business consistent
with its practices as of the date hereof, and (b) the assets and properties of
such Person at a fair valuation (and including as assets for this purpose at a
fair valuation all rights of subrogation, contribution or indemnification
arising pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
1.117 "Special Agent Advances" shall have the meaning set forth in
Section 12.11 hereof.
1.118 "Special Term Collateral" shall mean collectively, the used
trailers owned by Borrower listed on Schedule 1.118 hereto.
1.119 "Specified Equipment" shall mean the Equipment listed on
Schedule 1.119 hereto.
1.120 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the board
of directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.
1.121 "Term Loan Commitment" shall mean, at any time, as to any Term
Loan Lender, the principal amount set forth below such Lender's signature on the
signatures pages hereto designated as the Term Loan Commitment or on Schedule 1
to the Assignment and Acceptance Agreement pursuant to which such Lender became
a Lender hereunder in accordance with the provisions of Section 13.7 hereof, as
the same may be adjusted from time to time in accordance
24
with the terms hereof; sometimes being collectively referred to herein as "Term
Loan Commitments".
1.122 "Term Loan Fee Letter" shall mean the letter agreement, dated of
even date herewith, by and among Borrower, Agent and the initial Term Loan
Lender, setting forth certain fees payable by Borrower to Agent for the benefit
of Term Loan Lenders, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.123 "Term Loan Lender" shall mean Siem Acquisition and
Reorganization Fund Inc., a Cayman Islands corporation and its successors and
assigns.
1.124 "Term Loan Maturity Date" shall mean the third anniversary of
the date hereof.
1.125 "Term Loans" shall mean, collectively, the term loans made by or
on behalf of Term Loan Lenders to Borrower as provided for in Section 2.3
hereof; sometimes being referred to herein individually a "Term Loan".
1.126 "Transportation Receivables" shall mean Transportation
Receivables 1992, LLC, a Delaware limited liability company.
1.127 "Transportation Receivables Intercreditor Agreement" shall mean
the Subordination Agreement, dated as of even date herewith, by and between
Agent and Transportation Receivables, as acknowledged by Borrower, as the same
now exists and may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.128 "Transportation Receivables Loan Agreement" shall mean the Loan
and Security Agreement, dated as of May 10, 2002, between Transportation
Receivables and Borrower, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.129 "Transportation Receivables Loan Documents" shall mean,
collectively, the following (as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced): (a) the
Transportation Receivables Loan Agreement; and (b) all agreements, documents and
instruments at any time executed and/or delivered in connection with the
Transportation Receivables Loan Agreement.
1.130 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of Florida, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of Florida on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
1.131 "Value" shall mean, as determined by Agent in good faith, with
respect to Equipment, the lower of (a) cost computed on a first-in first-out
basis in accordance with GAAP or (b) market value, provided, that, for purposes
of the calculation of the Borrowing Base, (i) the
25
Value of the Equipment shall not include write-ups or write-downs in value with
respect to currency exchange rates and (ii) notwithstanding anything to the
contrary contained herein, the cost of the Equipment shall be computed in the
same manner and consistent with the most recent appraisal of the Equipment
received and accepted by Agent prior to the date hereof, if any.
1.132 "Voting Stock" shall mean with respect to any Person, (a) one
(1) or more classes of Capital Stock of such Person having general voting powers
to elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
SECTION 2. CREDIT FACILITIES.
2.1 Loans.
(a) Subject to and upon the terms and conditions contained
herein, each Revolving Lender severally (and not jointly) agrees to fund its Pro
Rata Share of Revolving Loans to Borrower from time to time in amounts requested
by Borrower up to the amount outstanding at any time equal to the lesser of: (i)
the Borrowing Base at such time or (ii) the Revolving Loan Limit.
(b) Except in Agent's discretion, with the consent of all
Lenders, or as expressly provided in Sections 12.8 and 12.11 hereof, (i) the
aggregate amount of the Loans and the Letter of Credit Accommodations
outstanding at any time shall not exceed the Maximum Credit, and (ii) the
aggregate principal amount of the Revolving Loans and Letter of Credit
Accommodations outstanding at any time to Borrower shall not exceed the lesser
of the Borrowing Base or the Revolving Loan Limit.
(c) In the event that the aggregate principal amount of the
Revolving Loans and Letter of Credit Accommodations outstanding to Borrower
exceed the Borrowing Base or the Revolving Loan Limit of Borrower, or the
aggregate amount of the outstanding Letter of Credit Accommodations exceed the
sublimit for Letter of Credit Accommodations set forth in Section 2.2(e), or the
aggregate amount of the Loans and Letter of Credit Accommodations exceed the
Maximum Credit, such event shall not limit, waive or otherwise affect any rights
of Agent or Lenders in such circumstances or on any future occasions and
Borrower shall, upon demand by Agent, which may be made at any time or from time
to time, immediately repay to Agent the entire amount of any such excess(es) for
which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to and upon the terms and conditions contained
herein, at the request of Borrower, Agent agrees, for the ratable risk of each
Revolving Lender according to its Pro Rata Share, to provide or arrange for
Letter of Credit Accommodations for the account of
26
Borrower containing terms and conditions acceptable to Agent and the issuer
thereof. Any payments made by or on behalf of Agent or any Revolving Lender to
any issuer thereof and/or related parties in connection with the Letter of
Credit Accommodations provided to or for the benefit of Borrower shall
constitute additional Revolving Loans to Borrower pursuant to this Section 2 (or
Special Agent Advances as the case may be).
(b) In addition to any charges, fees or expenses charged by
any bank or issuer in connection with the Letter of Credit Accommodations,
Borrower shall pay to Agent, for the benefit of Revolving Lenders, a letter of
credit fee at a rate equal to two (2%) percent per annum, on the daily
outstanding balance of the Letter of Credit Accommodations for the immediately
preceding month (or part thereof), payable in arrears as of the first day of
each succeeding month, except that Agent may, and upon the written direction of
Required Lenders shall, require Borrower to pay to Agent for the benefit of
Revolving Lenders such letter of credit fee, at a rate equal to four (4%)
percent per annum on such daily outstanding balance for: (i) the period from and
after the date of termination hereof until Agent and Lenders have received full
and final payment of all Obligations (notwithstanding entry of a judgment
against Borrower) and (ii) the period from and after the date of the occurrence
of an Event of Default for so long as such Event of Default is continuing as
determined by Agent. Such letter of credit fee shall be calculated on the basis
of a three hundred sixty (360) day year and actual days elapsed and the
obligation of Borrower to pay such fee shall survive the termination of this
Agreement.
(c) Borrower shall give Agent two (2) Business Days' prior
written notice of Borrower's request for the issuance of a Letter of Credit
Accommodation. Such notice shall be irrevocable and shall specify the original
face amount of the Letter of Credit Accommodation requested, the effective date
(which date shall be a Business Day and in no event shall be a date less than
ten (10) days prior to the end of the then current term of this Agreement) of
issuance of such requested Letter of Credit Accommodation, whether such Letter
of Credit Accommodations may be drawn in a single or in partial draws, the date
on which such requested Letter of Credit Accommodation is to expire (which date
shall be a Business Day), the purpose for which such Letter of Credit
Accommodation is to be issued, and the beneficiary of the requested Letter of
Credit Accommodation. Borrower shall attach to such notice the proposed terms of
the Letter of Credit Accommodation.
(d) In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit Accommodations shall
be available unless each of the following conditions precedent have been
satisfied in a manner satisfactory to Agent: (i) Borrower shall have delivered
to the proposed issuer of such Letter of Credit Accommodation at such times and
in such manner as such proposed issuer may require, an application, in form and
substance satisfactory to such proposed issuer and Agent, for the issuance of
the Letter of Credit Accommodation and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed Letter of
Credit Accommodation shall be satisfactory to Agent and such proposed issuer,
(ii) as of the date of issuance, no order of any court, arbitrator or other
Governmental Authority shall purport by its terms to enjoin or restrain money
center banks
27
generally from issuing letters of credit of the type and in the amount of the
proposed Letter of Credit Accommodation, and no law, rule or regulation
applicable to money center banks generally and no request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that
the proposed issuer of such Letter of Credit Accommodation refrain from, the
issuance of letters of credit generally or the issuance of such Letters of
Credit Accommodation; and (iii) the Excess Availability, prior to giving effect
to any Reserves with respect to such Letter of Credit Accommodations, on the
date of the proposed issuance of any Letter of Credit Accommodations, shall be
equal to or greater than an amount equal to one hundred (100%) percent of the
face amount thereof and all other commitments and obligations made or incurred
by Agent with respect thereto. Effective on the issuance of each Letter of
Credit Accommodation, a Reserve shall be established in the applicable amount
set forth in Section 2.2(d)(iii)(A).
(e) Except in Agent's discretion, with the consent of all
Revolving Lenders, the amount of all outstanding Letter of Credit Accommodations
and all other commitments and obligations made or incurred by Agent or any
Revolving Lender in connection therewith shall not at any time exceed
$2,000,000.
(f) Borrower shall indemnify and hold Agent and Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in connection
with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation, except for
such losses, claims, damages, liabilities, costs or expenses that are a direct
result of the gross negligence or willful misconduct of Agent or any Lender as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Borrower assumes all risks with respect to the acts or omissions
of the drawer under or beneficiary of any Letter of Credit Accommodation and for
such purposes the drawer or beneficiary shall be deemed Borrower's agent.
Borrower assumes all risks for, and agrees to pay, all foreign, Federal, State
and local taxes, duties and levies relating to any goods subject to any Letter
of Credit Accommodations or any documents, drafts or acceptances thereunder.
Borrower hereby releases and holds Agent and Lenders harmless from and against
any acts, waivers, errors, delays or omissions, whether caused by Borrower, by
any issuer or correspondent or otherwise with respect to or relating to any
Letter of Credit Accommodation, except for the gross negligence or willful
misconduct of Agent or any Lender as determined pursuant to a final, non-
appealable order of a court of competent jurisdiction. The provisions of this
Section 2.2(f) shall survive the payment of Obligations and the termination of
this Agreement.
(g) In connection with Inventory purchased pursuant to
Letter of Credit Accommodations, Borrower shall, at Agent's request, instruct
all suppliers, carriers, forwarders, customs brokers, warehouses or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver them to Agent and/or subject to
Agent's order, and if they shall come into Borrower's possession, to deliver
them, upon Agent's
28
request, to Agent in their original form. Borrower shall also, at Agent's
request, designate Agent as the consignee on all bills of lading and other
negotiable and non-negotiable documents.
(h) Borrower hereby irrevocably authorizes and directs any
issuer of a Letter of Credit Accommodation to name Borrower as the account party
therein and to deliver to Agent all instruments, documents and other writings
and property received by issuer pursuant to the Letter of Credit Accommodations
and to accept and rely upon Agent's instructions and agreements with respect to
all matters arising in connection with the Letter of Credit Accommodations or
the applications therefor. Nothing contained herein shall be deemed or construed
to grant Borrower any right or authority to pledge the credit of Agent or any
Lender in any manner. Agent and Lenders shall have no liability of any kind with
respect to any Letter of Credit Accommodation provided by an issuer other than
Agent or any Lender unless Agent has duly executed and delivered to such issuer
the application or a guarantee or indemnification in writing with respect to
such Letter of Credit Accommodation. Borrower shall be bound by any reasonable
interpretation made in good faith by Agent, or any other issuer or correspondent
under or in connection with any Letter of Credit Accommodation or any documents,
drafts or acceptances thereunder, notwithstanding that such interpretation may
be inconsistent with any instructions Borrower.
(i) So long as no Event of Default exists or has occurred
and is continuing, Borrower may (i) approve or resolve any questions of non-
compliance of documents, (ii) give any instructions as to acceptance or
rejection of any documents or goods, (iii) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, and (iv) with
Agent's consent, grant any extensions of the maturity of, time of payment for,
or time of presentation of, any drafts, acceptances, or documents, and agree to
any amendments, renewals, extensions, modifications, changes or cancellations of
any of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral.
(j) At any time an Event of Default exists or has occurred
and is continuing, Agent shall have the right and authority to, and Borrower
shall not, without the prior written consent of Agent, (i) approve or resolve
any questions of non-compliance of documents, (ii) give any instructions as to
acceptance or rejection of any documents or goods, (iii) execute any and all
applications for steamship or airway guaranties, indemnities or delivery orders,
(iv) grant any extensions of the maturity of, time of payments for, or time of
presentation of, any drafts, acceptances, or documents, and (v) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Agent may take such actions either in its own
name or in Borrower's name.
(k) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any
29
Letter of Credit Accommodation, shall be deemed to have been granted or
undertaken Borrower to Agent for the ratable benefit of Revolving Lenders. Any
duties or obligations undertaken by Agent to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement by
Agent in favor of any issuer or correspondent to the extent relating to any
Letter of Credit Accommodation, shall be deemed to have been undertaken by
Borrower to Agent for the ratable benefit of Revolving Lenders and to apply in
all respects to Borrower.
(l) Immediately upon the issuance or amendment of any Letter
of Credit Accommodation, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased and received, without recourse or
warranty, an undivided interest and participation to the extent of such
Revolving Lender's Pro Rata Share of the liability with respect to such Letter
of Credit Accommodation (including, without limitation, all Obligations with
respect thereto).
(m) Borrower is irrevocably and unconditionally obligated,
without presentment, demand or protest, to pay to Agent any amounts paid by an
issuer of a Letter of Credit Accommodation with respect to such Letter of Credit
Accommodation (whether through the borrowing of Loans in accordance with Section
2.2(a) or otherwise). In the event that Borrower fails to pay Agent on the date
of any payment under a Letter of Credit Accommodation in an amount equal to the
amount of such payment, Agent (to the extent it has actual notice thereof) shall
promptly notify each Revolving Lender of the unreimbursed amount of such payment
and each Revolving Lender agrees, upon one (1) Business Day's notice, to fund to
Agent the purchase of its participation in such Letter of Credit Accommodation
in an amount equal to its Pro Rata Share of the unpaid amount. The obligation of
each Revolving Lender to deliver to Agent an amount equal to its respective
participation pursuant to the foregoing sentence is absolute and unconditional
and such remittance shall be made notwithstanding the occurrence or continuance
of any Event of Default, the failure to satisfy any other condition set forth in
Section 4 or any other event or circumstance. If such amount is not made
available by a Revolving Lender when due, Agent shall be entitled to recover
such amount on demand from such Revolving Lender with interest thereon, for each
day from the date such amount was due until the date such amount is paid to
Agent at the interest rate then payable by Borrower in respect of Revolving
Loans as set forth in Section 3.1(a) hereof.
2.3 Term Loans.Subject to and upon the terms and conditions
contained herein, on the date hereof each Term Loan Lender agrees to make a Term
Loan to Borrower in an amount equal to such Term Lender's Pro Rata Share of
$3,000,000. The Term Loan is (a) evidenced by a Term Promissory Note in such
original principal amount duly executed and delivered by Borrower to Agent for
the benefit of Term Loan Lenders concurrently herewith; (b) to be repaid,
together with interest and other amounts, in accordance with this Agreement,
such Term Promissory Note, and the other Financing Agreements and (c) secured by
all of the Collateral. The principal amount of the Term Loan shall be repaid on
the Term Loan Maturity Date. Borrower shall not, without the prior written
consent of the Required Revolving Lenders, directly or indirectly, prepay all or
any of the Term Loans; provided, that, in the event the Required Revolving
Lenders provide their prior written consent to a prepayment of the Term Loans,
then Borrower shall be required to
30
provide Agent and Lenders with not less than five (5) Business Days prior notice
of any such prepayment and any such prepayment shall be in an amount of not less
than $250,000 or an integral multiple of $250,000 in excess thereof.
2.4 Commitments.The aggregate amount of each Lender's Pro Rata Share
of the Loans and Letter of Credit Accommodations shall not exceed the amount of
such Lender's Commitment, as the same may from time to time be amended in
accordance with the provisions hereof.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrower shall pay to Agent interest on the outstanding
principal amount of the Loans at the Interest Rate. All interest accruing
hereunder on and after the date of any Event of Default or termination or non-
renewal hereof shall be payable on demand.
(b) Interest shall be payable by Borrower to Agent, for the
account of Lenders, monthly in arrears not later than the first day of each
calendar month and shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed. The interest rate on non-contingent
Obligations shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month after any
change in such Prime Rate is announced based on the Prime Rate in effect on the
last day of the month in which any such change occurs. In no event shall charges
constituting interest payable by Borrower to Agent and Lenders exceed the
maximum amount or the rate permitted under any applicable law or regulation, and
if any such part or provision of this Agreement is in contravention of any such
law or regulation, such part or provision shall be deemed amended to conform
thereto.
3.2 Fees.
(a) Borrower shall pay to Agent, for the account of
Revolving Lenders, monthly an unused line fee at a rate equal to one-half of one
(.50%) percent per annum calculated upon the amount by which the Revolving Loan
Limit exceeds the average daily principal balance of the outstanding Revolving
Loans and Letter of Credit Accommodations during the immediately preceding month
(or part thereof) while this Agreement is in effect and for so long thereafter
as any of the Obligations are outstanding, which fee shall be payable on the
first day of each month in arrears.
(b) Borrower agrees to pay to Agent the other fees and
amounts set forth in the (i) Fee Letter in the amounts and at the times
specified therein and (ii) Term Loan Fee Letter in the amounts and at the times
specified therein.
3.3 Changes in Laws and Increased Costs of Loans. If after the date
hereof, either (a) any change in, or in the interpretation of, any law or
regulation is introduced, including, without limitation, with respect to reserve
requirements, applicable to any Lender or any banking or financial institution
from whom any Lender borrows funds or obtains credit (a "Funding Bank"),
31
or (b) a Funding Bank or any Lender complies with any future guideline or
request from any central bank or other Governmental Authority or (c) a Funding
Bank or any Lender determines that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof has or would have the effect described below, or a
Funding Bank or any Lender complies with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, and in the case of any event set forth in
this clause (c), such adoption, change or compliance has or would have the
direct or indirect effect of reducing the rate of return on any Lender's capital
as a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration the Funding Bank's or Lender's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, and the
result of any of the foregoing events described in clauses (a), (b) or (c) is or
results in an increase in the cost to any Lender of funding or maintaining the
Loans, the Letter of Credit Accommodations or its Commitment, then Borrower
shall from time to time upon demand by Agent pay to Agent additional amounts
sufficient to indemnify Lenders against such increased cost on an after-tax
basis (after taking into account applicable deductions and credits in respect of
the amount indemnified). A certificate as to the amount of such increased cost
shall be submitted to Borrower by Agent and
shall be conclusive, absent manifest error.
SECTION 4. CONDITIONS PRECEDENT.
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Agent and
Lenders making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Agent shall have received, in form and substance
satisfactory to Agent, all releases, terminations and such other documents as
Agent may request to evidence and effectuate the termination by the Existing
Lenders of their respective financing arrangements with Borrower and the
termination and release by it or them, as the case may be, of any interest in
and to any assets and properties of Borrower, duly authorized, executed and
delivered by it or each of them, including, but not limited to, (i) UCC
termination statements for all UCC financing statements previously filed by it
or any of them or their predecessors, as secured party and Borrower, as debtor;
(ii) satisfaction and removal of any notation of a lien or other encumbrance on
any certificate of title for titled goods in favor of the Existing Lenders and
(iii) satisfactions and discharges of any mortgages, deeds of trust or deeds to
secure debt by Borrower in favor of it or any of them, in form acceptable for
recording with the appropriate Governmental Authority;
(b) all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall be
satisfactory in form and substance to Agent, and Agent shall have received all
information and copies of all documents, including records of requisite
corporate action and proceedings which Agent may have requested in connection
therewith, such documents where requested by Agent or its counsel to be
certified by
32
appropriate corporate officers or Governmental Authority (and including a copy
of the certificate of incorporation of Borrower certified by the Secretary of
State (or equivalent Governmental Authority) which shall set forth the same
complete corporate name of Borrower as is set forth herein and such document as
shall set forth the organizational identification number of Borrower, if one is
issued in its jurisdiction of incorporation);
(c) no material adverse change shall have occurred in the
assets, business or prospects of Borrower since the date of Agent's latest field
examination (not including for this purpose the field review referred to in
clause (d) below) and no change or event shall have occurred which would impair
the ability of Borrower or any Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Agent
or any Lender to enforce the Obligations or realize upon the Collateral;
(d) Agent shall have completed a field review of the Records
and such other information with respect to the Collateral as Agent may require
to determine the amount of Loans available to Borrower (including, without
limitation, current perpetual equipment records and/or roll-forwards of Accounts
and Equipment through the date of closing and test counts of the Equipment in a
manner satisfactory to Agent, together with such supporting documentation as may
be necessary or appropriate, and other documents and information that will
enable Agent to accurately identify and verify the Collateral), the results of
which in each case shall be satisfactory to Agent, not more than three (3)
Business Days prior to the date hereof;
(e) Agent shall have received, in form and substance
satisfactory to Agent, all consents, waivers, acknowledgments and other
agreements from third persons which Agent may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements, including, without limitation, Collateral Access
Agreements;
(f) the Closing Excess Availability as determined by Agent,
as of the date hereof, shall be not less than $2,500,000 after giving effect to
the initial Loans made or to be made and Letter of Credit Accommodations issued
or to be issued in connection with the initial transactions hereunder;
(g) Agent shall have received, in form and substance
satisfactory to Agent, a true, complete and correct copy of a letter agreement
regarding the Bareboat Charter Party, dated February 1992, between K-Corp. and
Borrower, with respect to the barge vessel Jax-San ▇▇▇▇ Bridge, pursuant to
which K-Corp. agrees to reduce the daily rate payable by Borrower to K-Corp.
from $10,050 to $8,375 for the period from March 1, 2004 through and including
December 31, 2004;
(h) Agent shall have received, in form and substance
satisfactory to Agent, a true, complete and correct copy of a letter agreement
regarding the Bareboat Charter Party, dated February 1992, between K-Corp. and
Borrower, with respect to the barge vessel San ▇▇▇▇-Jax Bridge, pursuant to
which K-Corp. agrees to reduce the daily rate payable by Borrower to K-
33
Corp. from $10,050 to $8,375 for the period from March 1, 2004 through and
including December 31, 2004;
(i) Agent shall have received, in form and substance
satisfactory to Agent, Deposit Account Control Agreements by and among Agent,
Borrower, as the case and each bank where Borrower has a deposit account, in
each case, duly authorized, executed and delivered by such bank and Borrower, as
the case may be (or Agent shall be the bank's customer with respect to such
deposit account as Agent may specify);
(j) Agent shall have received (i) evidence, in form and
substance satisfactory to Agent, that Agent has a valid perfected first priority
security interest in all of the Collateral and (ii) the original certificate of
title for all titled goods owned by Borrower, each of which shall contain a
notation thereon that Agent is the sole secured party with respect thereto;
(k) Agent shall have received and reviewed lien, tax and
judgment search results for the jurisdiction of organization of Borrower, the
jurisdiction of the chief executive office of Borrower and all jurisdictions in
which assets of Borrower is located, which search results shall be in form and
substance satisfactory to Agent;
(l) Agent shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements,
in form and substance satisfactory to Agent, and certificates of insurance
policies and/or endorsements naming Agent as loss payee;
(m) Agent shall have received written appraisals (or updates
of existing appraisals) with respect to the Equipment, by an appraiser
acceptable to Agent, addressed to Agent and on which Agent is expressly
permitted to rely, in form, scope and methodology reasonably satisfactory to
Agent;
(n) Agent shall have received a business plan of Borrower
consisting of projected balance sheets, and related income statements and cash
flow statements, and availability forecasts, together with appropriate
supporting details and a statement of underlying assumptions, which covers a
three-year period and which is prepared on a monthly basis for the first year, a
quarterly basis thereafter and which is otherwise in form and substance
satisfactory to Agent;
(o) Agent shall have received, in form and substance
satisfactory to Agent, the December Access Agreement, duly authorized, executed
and delivered by MarAd and acknowledged by Borrower;
(p) Agent shall have received, in form and substance
satisfactory to Agent, the June Access Agreement, duly authorized, executed and
delivered by MarAd and acknowledged by Borrower;
34
(q) Agent shall have received, in form and substance
satisfactory to Agent, the Interbay Access Agreement, duly authorized, executed
and delivered by Interbay and acknowledged by Borrower;
(r) Agent shall have received, in form and substance
satisfactory to Agent, the Transportation Receivables Intercreditor Agreement,
duly authorized, executed and delivered by Transportation Receivables and
acknowledged by Borrower;
(s) Agent shall have received, in form and substance
satisfactory to Agent, the K-Corp. Subordination Agreement, duly authorized,
executed and delivered by the K-Corp. and acknowledged by Borrower;
(t) Agent shall have received a report of a financial
consultant acceptable to Agent with respect to the turnaround plan of Borrower,
which report shall be in form and substance satisfactory to Agent;
(u) Agent shall have received, in form and substance
satisfactory to Agent, such opinion letters of counsel to Borrower with respect
to the Financing Agreements and such other matters as Agent may request,
including, without limitation, the analysis of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, special maritime
counsel to Borrower, and ▇▇▇▇▇▇▇▇ ▇▇▇▇, special trucking counsel to Borrower;
and
(v) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Agent, in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
the Loans and/or providing Letter of Credit Accommodations to Borrower,
including the initial Loans and Letter of Credit Accommodations and any future
Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and
in the other Financing Agreements shall be true and correct with the same effect
as though such representations and warranties had been made on and as of the
date of the making of each such Loan or providing each such Letter of Credit
Accommodation and after giving effect thereto, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans or providing
the Letter of Credit Accommodations, or (B) the consummation of the transactions
contemplated
35
pursuant to the terms hereof or the other Financing Agreements or (ii) has or
has a reasonable likelihood of having a Material Adverse Effect; and
(c) no Default or Event of Default shall exist or have
occurred and be continuing on and as of the date of the making of such Loan or
providing each such Letter of Credit Accommodation and after giving effect
thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST.
5.1 Grant of Security Interest. To secure payment and performance of
all Obligations, Borrower hereby grants to Agent, for itself and the benefit of
Lenders, a continuing security interest in, a lien upon, and a right of set off
against, and hereby assigns to Agent, for itself and the benefit of Lenders, as
security, all personal property and interests in personal property, of Borrower,
whether now owned or hereafter acquired or existing, and wherever located
(together with all other collateral security for the Obligations at any time
granted to or held or acquired by Agent or any Lender, collectively, the
"Collateral"):
(a) all Accounts;
(b) all general intangibles, including, without limitation,
all Intellectual Property;
(c) all goods, including, without limitation, Inventory and
Equipment;
(d) all chattel paper, including, without limitation, all
tangible and electronic chattel paper;
(e) all instruments, including, without limitation, all
promissory notes;
(f) all documents;
(g) all deposit accounts;
(h) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights;
(i) all supporting obligations and all present and future
liens, security interests, rights, remedies, title and interest in, to and in
respect of Receivables and other Collateral, including (i) rights and remedies
under or relating to guaranties, contracts of suretyship, letters of credit and
credit and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
36
(j) all (i) investment property (including securities,
whether certificated or uncertificated, securities accounts, security
entitlements, commodity contracts or commodity accounts) and (ii) monies, credit
balances, deposits and other property of Borrower now or hereafter held or
received by or in transit to Agent, any Lender or its Affiliates or at any other
depository or other institution from or for the account of Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise;
(k) all commercial tort claims, including, without
limitation, those identified in the Information Certificate;
(l) to the extent not otherwise described above, all
Receivables;
(m) all Records; and
(n) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of or other involuntary conversion of any kind or
nature of any or all of the other Collateral.
5.2 Perfection of Security Interests.
(a) Borrower irrevocably and unconditionally authorizes
Agent (or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Agent or its designee as the
secured party and Borrower as debtor, as Agent may require, and including any
other information with respect to Borrower or otherwise required by part 5 of
Article 9 of the Uniform Commercial Code of such jurisdiction as Agent may
determine, together with any amendment and continuations with respect thereto,
which authorization shall apply to all financing statements filed on, prior to
or after the date hereof. Borrower hereby ratifies and approves all financing
statements naming Agent or its designee as secured party and Borrower, as debtor
with respect to the Collateral (and any amendments with respect to such
financing statements) filed by or on behalf of Agent prior to the date hereof
and ratifies and confirms the authorization of Agent to file such financing
statements (and amendments, if any). Borrower hereby authorizes Agent to adopt
on behalf of Borrower any symbol required for authenticating any electronic
filing. In the event that the description of the collateral in any financing
statement naming Agent or its designee as the secured party and Borrower as
debtor includes assets and properties of Borrower that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by Borrower to the extent of the Collateral
included in such description and it shall not render the financing statement
ineffective as to any of the Collateral or otherwise affect the financing
statement as it applies to any of the Collateral. In no event shall Borrower at
any time file, or permit or cause to be filed, any correction statement or
termination statement with respect to any financing statement (or amendment or
continuation with respect thereto) naming Agent or its designee as secured party
and Borrower as debtor.
(b) Borrower does not have any chattel paper (whether
tangible or electronic) or instruments as of the date hereof, except as set
forth in the Information Certificate. In the event
37
that Borrower shall be entitled to or shall receive any chattel paper or
instrument after the date hereof, Borrower shall promptly notify Agent thereof
in writing. Promptly upon the receipt thereof by or on behalf of Borrower
(including by any agent or representative), Borrower shall deliver, or cause to
be delivered to Agent, all tangible chattel paper and instruments that Borrower
has or may at any time acquire, accompanied by such instruments of transfer or
assignment duly executed in blank as Agent may from time to time specify, in
each case except as Agent may otherwise agree. At Agent's option, Borrower
shall, or Agent may at any time on behalf of Borrower, cause the original of any
such instrument or chattel paper to be conspicuously marked in a form and manner
acceptable to Agent with the following legend referring to chattel paper or
instruments as applicable: "This [chattel paper][instrument] is subject to the
security interest of Congress Financial Corporation (Florida) and any sale,
transfer, assignment or encumbrance of this [chattel paper][instrument] violates
the rights of such secured party."
(c) In the event that Borrower shall at any time hold or
acquire an interest in any electronic chattel paper or any "transferable record"
(as such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction), Borrower shall
promptly notify Agent thereof in writing. Promptly upon Agent's request,
Borrower shall take, or cause to be taken, such actions as Agent may request to
give Agent control of such electronic chattel paper under Section 9-105 of the
UCC and control of such transferable record under Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.
(d) Borrower does not have any deposit accounts as of the
date hereof, except as set forth in the Information Certificate. Borrower shall
not, directly or indirectly, after the date hereof open, establish or maintain
any deposit account unless each of the following conditions is satisfied: (i)
Agent shall have received not less than five (5) Business Days prior written
notice of the intention of Borrower to open or establish such account which
notice shall specify in reasonable detail and specificity acceptable to Agent
the name of the account, the owner of the account, the name and address of the
bank at which such account is to be opened or established, the individual at
such bank with whom Borrower is dealing and the purpose of the account, (ii) the
bank where such account is opened or maintained shall be acceptable to Agent,
and (iii) on or before the opening of such deposit account, Borrower or shall as
Agent may specify either (A) deliver to Agent a Deposit Account Control
Agreement with respect to such deposit account duly authorized, executed and
delivered by Borrower and the bank at which such deposit account is opened and
maintained or (B) arrange for Agent to become the customer of the bank with
respect to the deposit account on terms and conditions acceptable to Agent. The
terms of this subsection (d) shall not apply to deposit accounts specifically
and exclusively used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of Borrower's salaried employees.
(e) Borrower does not own or hold, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment
38
account, securities account, commodity account or other similar account with any
bank or other financial institution or other securities intermediary or
commodity intermediary as of the date hereof, in each case except as set forth
in the Information Certificate.
(i) In the event that Borrower shall be entitled to
or shall at any time after the date hereof hold or acquire any certificated
securities, Borrower shall promptly endorse, assign and deliver the same to
Agent, accompanied by such instruments of transfer or assignment duly executed
in blank as Agent may from time to time specify. If any securities, now or
hereafter acquired by Borrower is uncertificated and are issued to Borrower or
its nominee directly by the issuer thereof, Borrower shall immediately notify
Agent thereof and shall as Agent may specify, either (A) cause the issuer to
agree to comply with instructions from Agent as to such securities, without
further consent of Borrower or such nominee, or (B) arrange for Agent to become
the registered owner of the securities.
(ii) Borrower shall not, directly or indirectly,
after the date hereof open, establish or maintain any investment account,
securities account, commodity account or any other similar account (other than a
deposit account) with any securities intermediary or commodity intermediary
unless each of the following conditions is satisfied: (A) Agent shall have
received not less than five (5) Business Days prior written notice of the
intention of Borrower to open or establish such account which notice shall
specify in reasonable detail and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of the securities
intermediary or commodity intermediary at which such account is to be opened or
established, the individual at such intermediary with whom Borrower is dealing
and the purpose of the account, (B) the securities intermediary or commodity
intermediary (as the case may be) where such account is opened or maintained
shall be acceptable to Agent, and (C) on or before the opening of such
investment account, securities account or other similar account with a
securities intermediary or commodity intermediary, Borrower shall as Agent may
specify either (1) execute and deliver, and cause to be executed and delivered
to Agent, an Investment Property Control Agreement with respect thereto duly
authorized, executed and delivered by Borrower and such securities intermediary
or commodity intermediary or (2) arrange for Agent to become the entitlement
holder with respect to such investment property on terms and conditions
acceptable to Agent.
(f) Borrower is not the beneficiary or otherwise entitled to
any right to payment under any letter of credit, banker's acceptance or similar
instrument as of the date hereof, except as set forth in the Information
Certificate. In the event that Borrower shall be entitled to or shall receive
any right to payment under any letter of credit, banker's acceptance or any
similar instrument, whether as beneficiary thereof or otherwise after the date
hereof, Borrower shall promptly notify Agent thereof in writing. Borrower shall
immediately, as Agent may specify, either (i) deliver, or cause to be delivered
to Agent, with respect to any such letter of credit, banker's acceptance or
similar instrument, the written agreement of the issuer and any other nominated
person obligated to make any payment in respect thereof (including any
confirming or negotiating bank), in form and substance satisfactory to Agent,
consenting to the assignment of the proceeds of the letter of credit to Agent by
Borrower and agreeing to make all payments thereon directly to Agent or as Agent
may otherwise direct or (ii) cause
39
Agent to become, at Borrower's expense, the transferee beneficiary of the letter
of credit, banker's acceptance or similar instrument (as the case may be).
(g) Borrower does not have any commercial tort claims as of
the date hereof, except as set forth in the Information Certificate. In the
event that Borrower shall at any time after the date hereof have any commercial
tort claims, Borrower shall promptly notify Agent thereof in writing, which
notice shall (i) set forth in reasonable detail the basis for and nature of such
commercial tort claim and (ii) include the express grant by Borrower to Agent of
a security interest in such commercial tort claim (and the proceeds thereof). In
the event that such notice does not include such grant of a security interest,
the sending thereof by Borrower to Agent shall be deemed to constitute such
grant to Agent. Upon the sending of such notice, any commercial tort claim
described therein shall constitute part of the Collateral and shall be deemed
included therein. Without limiting the authorization of Agent provided in
Section 5.2(a) hereof or otherwise arising by the execution by Borrower of this
Agreement or any of the other Financing Agreements, Agent is hereby irrevocably
authorized from time to time and at any time to file such financing statements
naming Agent or its designee as secured party and Borrower as debtor, or any
amendments to any financing statements, covering any such commercial tort claim
as Collateral. In addition, Borrower shall promptly upon Agent's request,
execute and deliver, or cause to be executed and delivered, to Agent such other
agreements, documents and instruments as Agent may require in connection with
such commercial tort claim.
(h) Borrower has no vehicles, trailers, chassis or other
goods evidenced by certificates of title as of the date hereof, except as set
forth in the Information Certificate. In the event that Borrower shall be
entitled to or shall receive any certificate of title for goods, Borrower shall
promptly notify Agent and shall deliver, or cause to be delivered, to Agent such
certificate of title which contains a notation thereon that Agent is the sole
secured party with respect thereto.
(i) Borrower does not have any goods, documents of title or
other Collateral in the custody, control or possession of a third party as of
the date hereof, except as set forth in the Information Certificate and except
for goods located in the United States (including Puerto Rico) in transit to a
location of Borrower permitted herein in the ordinary course of business of
Borrower in the possession of the carrier transporting such goods. In the event
that any goods, documents of title or other Collateral are at any time after the
date hereof in the custody, control or possession of any other person not
referred to in the Information Certificate or such carriers, Borrower shall
promptly notify Agent thereof in writing. Promptly upon Agent's request,
Borrower shall deliver to Agent a Collateral Access Agreement duly authorized,
executed and delivered by such person and Borrower.
(j) Borrower shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first priority of, and the ability of Agent to enforce, the security interest of
Agent in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the UCC or other applicable law, to the
extent, if any, that Borrower's signature thereon is required therefor, (ii)
complying with any provision of any
40
statute, regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of Agent to enforce, the security interest of Agent in
such Collateral and (iii) obtaining the consents and approvals of any
Governmental Authority or third party, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral, and
taking all actions required by any earlier versions of the UCC or by other law,
as applicable in any relevant jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION.
6.1 Borrower Loan Account. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including fees, charges, costs, expenses
and interest. All entries in the loan account(s) shall be made in accordance
with Agent's customary practices as in effect from time to time.
6.2 Statements. Agent shall render to Borrower with a copy to Term
Loan Lenders each month a statement setting forth the balance in the Borrower's
loan account(s) maintained by Agent for Borrower pursuant to the provisions of
this Agreement, including principal, interest, fees, costs and expenses. Each
such statement shall be subject to subsequent adjustment by Agent but shall,
absent manifest errors or omissions, be considered correct and deemed accepted
by Borrower and conclusively binding upon Borrower as an account stated except
to the extent that Agent receives a written notice from Borrower of any specific
exceptions of Borrower thereto within thirty (30) days after the date such
statement has been received by Borrower. Until such time as Agent shall have
rendered to Borrower a written statement as provided above, the balance in
Borrower's loan account(s) shall be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrower.
6.3 Collection of Accounts.
(a) Borrower shall establish and maintain, at their expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Agent may specify, with such banks as are acceptable to
Agent into which Borrower shall promptly deposit and direct their respective
account debtors to directly remit all payments on Receivables and all payments
constituting proceeds of Inventory or other Collateral in the identical form in
which such payments are made, whether by cash, check or other manner. Borrower
shall deliver, or cause to be delivered to Agent a Deposit Account Control
Agreement duly authorized, executed and delivered by each bank where a Blocked
Account is maintained as provided in Section 5.2 hereof or at any time and from
time to time Agent may become the bank's customer with respect to any of the
Blocked Accounts and promptly upon Agent's request, Borrower shall execute and
deliver such agreements and documents as Agent may require in connection
therewith. Borrower agrees that all payments made to such Blocked Accounts or
other funds received and collected by Agent or any Lender, whether in respect of
the Receivables, as proceeds of Inventory or other Collateral or otherwise shall
be treated as payments to Agent and Lenders in respect of the
41
Obligations and therefore shall constitute the property of Agent and Lenders to
the extent of the then outstanding Obligations.
(b) For purposes of calculating the amount of the Loans
available to Borrower, such payments will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Agent of
immediately available funds in the Agent Payment Account provided such payments
and notice thereof are received in accordance with Agent's usual and customary
practices as in effect from time to time and within sufficient time to credit
Borrower's loan account on such day, and if not, then on the next Business Day.
For the purposes of calculating interest on the Obligations, such payments or
other funds received will be applied (conditional upon final collection) to the
Obligations one (1) Business Day following the date of receipt of immediately
available funds by Agent in the Agent Payment Account provided such payments or
other funds and notice thereof are received in accordance with Agent's usual and
customary practices as in effect from time to time and within sufficient time to
credit Borrower's loan account on such day, and if not, then on the next
Business Day. In the event that at any time or from time to time there are no
Revolving Loans outstanding, Agent shall be entitled to an administrative fee in
an amount calculated based on the Interest Rate for Loans (on a per annum basis)
multiplied by the amount of the funds received in the Blocked Account for such
day as calculated by Agent in accordance with its customary practice. The
economic benefit of the timing in the application of payments (and the
administrative charge with respect thereto, if applicable) shall be for the sole
benefit of Agent.
(c) Borrower and its shareholders, directors, employees,
agents, Subsidiaries or other Affiliates shall, acting as trustee for Agent,
receive, as the property of Agent, any monies, checks, notes, drafts or any
other payment relating to and/or proceeds of Accounts or other Collateral which
come into their possession or under their control and immediately upon receipt
thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to Agent.
In no event shall the same be commingled with Borrower's own funds. Borrower
agrees to reimburse Agent on demand for any amounts owed or paid to any bank at
which a Blocked Account or any other deposit account is established or any other
bank or person involved in the transfer of funds to or from the Blocked Accounts
arising out of Agent's payments to or indemnification of such bank or person.
The obligations of Borrower to reimburse Agent for such amounts pursuant to this
Section 6.3 shall survive the termination of this Agreement.
6.4 Payments.
(a) All Obligations shall be payable to the Agent Payment
Account as provided in Section 6.3 or such other place as Agent may designate
from time to time.
(b) Unless and until the occurrence of a Priority Event,
Agent shall apply payments received or collected from Borrower or any Obligor or
for the account of Borrower or any Obligor (including the monetary proceeds of
collections or of realization upon any Collateral other than the Special Term
Collateral) as follows:
42
(i) first, to the payment in full of all costs,
expenses and other charges (but not fees) of Agent payable by Borrower under
this Agreement or any of the other Financing Agreements and all indemnities
payable by Borrower under this Agreement or any of the other Financing
Agreements then due to Agent;
(ii) second, to the payment in full of all costs,
expenses and other charges (but not fees) of Lenders payable by Borrower under
this Agreement or any of the other Financing Agreements and all indemnities
payable by Borrower under this Agreement or any of the other Financing
Agreements then due to Lenders;
(iii) third, to the payment in full of all fees
payable by Borrower under this Agreement or any of the other Financing
Agreements then due;
(iv) fourth, to the payment in full of all interest
then due in respect of the Loans and Special Agent Advances;
(v) fifth, to the payment in full of the principal
of the Special Agent Advances until paid in full;
(vi) sixth, to the payment in full of all other
Obligations in respect of the Revolving Loans;
(vii) seventh, to hold as cash collateral in respect
of the Letter of Credit Accommodations until the aggregate amount thereof equals
one hundred five (105%) percent of the aggregate undrawn amount of all then
outstanding Letter of Credit Accommodations, together with the amount of any
fees and expenses payable in connection therewith through the end of the latest
expiration date of such Letter of Credit Accommodations;
(viii) eighth, to the payment in full of the principal
of the Term Loans;
(ix) ninth, to the payment in full of any other
Obligations; and
(x) tenth, to Borrower or such other Person as may
be lawfully entitled thereto.
(c) At any time on or after a Priority Event and for so long
as the same is continuing, except as the Required Revolving Lenders may
otherwise agree, Agent shall apply payments received or collected from Borrower
or any Obligor or for the account of Borrower or any Obligor (including the
monetary proceeds of collections or of realization upon any Collateral other
than the Special Term Collateral) as follows:
(i) first, to the payment in full of the expenses
for the collection and enforcement of the Obligations arising pursuant to the
Revolving Loans and Special Agent Advances and for the protection, preservation
or sale, disposition or other realization upon the Collateral, including all
expenses, liabilities and advances incurred or made by or on behalf of
43
Agent in connection therewith (including attorneys' fees and legal expenses and
other expenses of Agent);
(ii) second, to the payment in full of all of the
Obligations (and including cash collateral for outstanding Letter of Credit
Accommodations in an amount equal to one hundred five (105%) percent of the
aggregate undrawn amount thereof, together with the amount of any fees and
expenses payable in connection therewith through the end of the latest
expiration date of such Letter of Credit Accommodations, and including any
Obligations that would accrue but for the commencement of any case with respect
to Borrower or any Obligor under the United States Bankruptcy Code, whether or
not such amounts are allowed or allowable in whole or in part in any such case),
other than the Obligations arising pursuant to the Term Loans (including
principal, interest, fees and expenses attributable thereto);
(iii) third, to the payment in full of the Obligations
arising pursuant to the Term Loans; and
(iv) fourth, to the payment in full of all other
Obligations.
(d) Unless and until the occurrence of a Priority Event,
Agent shall apply the monetary proceeds of realization upon any Special Term
Collateral as follows:
(i) first, to the payment in full of all costs,
expenses and other charges (but not fees) of Agent payable by Borrower under
this Agreement or any of the other Financing Agreements and all indemnities
payable by Borrower under this Agreement or any of the other Financing
Agreements then due to Agent;
(ii) second, to the payment in full of all costs,
expenses and other charges (but not fees) of Term Lender payable by Borrower
under this Agreement or any of the other Financing Agreements and all
indemnities payable by Borrower under this Agreement or any of the other
Financing Agreements then due to Term Lender;
(iii) third, to the payment in full of all fees
payable by Borrower to (A) Agent and thereafter (B) Term Lender under this
Agreement or any of the other Financing Agreements then due;
(iv) fourth, to the payment in full of all interest
then due in respect of the Term Loan;
(v) fifth, to the payment in full of all other
Obligations then due in respect of the Term Loans;
(vi) sixth, to the payment in full of all costs,
expenses and other charges (but not fees) of Revolving Lenders payable by
Borrower under this Agreement or any of the other Financing Agreements and all
indemnities payable by Borrower under this Agreement or any of the other
Financing Agreements then due to Revolving Lenders;
44
(vii) seventh, to the payment in full of all fees
payable by Borrower to Revolving Lenders under this Agreement or any of the
other Financing Agreements then due;
(viii) eighth, to the payment in full of all interest
then due in respect of the Revolving Loans and Special Agent Advances;
(ix) ninth, to the payment in full of the principal
of the Special Agent Advances until paid in full;
(x) tenth, to the payment in full of all other
Obligations in respect of the Revolving Loans;
(xi) eleventh, to hold as cash collateral in respect
of the Letter of Credit Accommodations until the aggregate amount thereof equals
one hundred five (105%)c percent of the aggregate undrawn amount of all then
outstanding Letter of Credit Accommodations, together with the amount of any
fees and expenses payable in connection therewith through the end of the latest
expiration date of such Letter of Credit Accommodations;
(xii) twelfth, to the payment in full of any other
Obligations; and
(xiii) thirteenth, to Borrower or such other Person as
may be lawfully entitled thereto.
(e) At any time on or after a Priority Event and for so long
as the same is continuing, except as the Term Loan Lenders may otherwise agree,
Agent shall apply the monetary proceeds of realization upon any Special Term
Collateral as follows:
(i) first, to the payment in full of the expenses
for the collection and enforcement of the Obligations arising pursuant to the
Term Loan and for the protection, preservation or sale, disposition or other
realization upon the Special Term Collateral, including all expenses,
liabilities and advances incurred or made by or on behalf of Term Loan Lender in
connection therewith (including attorneys' fees and legal expenses and other
expenses of Term Loan Lender);
(ii) second, to the payment in full of the
Obligations, other than the Obligations arising pursuant to the Revolving Loans
and Special Agent Advances (including principal, interest, fees and expenses
attributable thereto);
(iii) third, to the payment in full of the expenses
for the collection and enforcement of the Obligations arising pursuant to the
Revolving Loans and Special Agent Advances and for the protection, preservation
or sale, disposition or other realization upon the Collateral, including all
expenses, liabilities and advances incurred or made by or on behalf of Agent in
connection therewith (including attorneys' fees and legal expenses and other
expenses of Agent);
45
(iv) fourth, to the payment in full of all of the
Obligations arising pursuant to the Revolving Loans (and including cash
collateral for outstanding Letter of Credit Accommodations in an amount equal to
one hundred five (105%) percent of the aggregate undrawn amount thereof,
together with the amount of any fees and expenses payable in connection
therewith through the end of the latest expiration date of such Letter of Credit
Accommodations, and including any Obligations that would accrue but for the
commencement of any case with respect to Borrower or any Obligor under the
United States Bankruptcy Code, whether or not such amounts are allowed or
allowable in whole or in part in any such case); and
(v) fifth, to the payment in full of all other
Obligations.
(f) All references to the term "payment in full" as used
herein as to any type or category of Obligations shall mean the payment of all
of such type or category of Obligations in cash or other immediately available
funds and shall include any amount within such category, whether principal,
interest, fees, costs or expense or reimbursement for costs or expenses, charges
or indemnities, in each case that would accrue but for the commencement of any
case under the U.S. Bankruptcy Code and whether or not allowed or allowable in
any such case under the U.S. Bankruptcy Code. In the event that after the
receipt of any payment in respect of any type or category of Obligations
(whether with the proceeds of Collateral or otherwise), Agent or any Lender is
required to surrender or return such payment to any Person for any reason, the
Obligations intended to be satisfied with such payment shall be reinstated and
continue in full force and effect as if such payment had not been received.
(g) Notwithstanding anything to the contrary contained in
this Agreement to the extent Borrower uses any proceeds of the Loans or Letter
of Credit Accommodations to acquire rights in or the use of any Collateral or to
repay any Indebtedness used to acquire rights in or the use of any Collateral,
payments in respect of the Obligations shall be deemed applied first to the
Obligations arising from Loans and Letter of Credit Accommodations that were not
used for such purposes and second to the Obligations arising from Loans and
Letter of Credit Accommodations the proceeds of which were used to acquire
rights in or the use of any Collateral in the chronological order in which
Borrower acquired such rights in or the use of such Collateral.
(h) At Agent's option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of Borrower maintained
by Agent. Borrower shall make all payments to Agent and Lenders on the
Obligations free and clear of, and without deduction or withholding for or on
account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,
fees, deductions, withholding, restrictions or conditions of any kind. If after
receipt of any payment of, or proceeds of Collateral applied to the payment of,
any of the Obligations, Agent or any Lender is required to surrender or return
such payment or proceeds to any Person for any reason, then the Obligations
intended to be satisfied by such payment or proceeds shall be reinstated and
continue and this Agreement shall continue in full force and effect as if such
payment or proceeds had not been received by Agent or such Lender. Borrower
shall be liable to pay to Agent, and do hereby indemnify and hold Agent and
Lenders harmless for the amount of
46
any payments or proceeds surrendered or returned. This Section 6.4(f) shall
remain effective notwithstanding any contrary action which may be taken by
Agent or any Lender in reliance upon such payment or proceeds. This Section 6.4
shall survive the payment of the Obligations and the termination of this
Agreement.
6.5 Authorization to Make Loans. Agent and Lenders are authorized to
make the Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions received from anyone purporting to be an
officer of Borrower or other authorized person or, at the discretion of Agent,
if such Loans are necessary to satisfy any Obligations. All requests for Loans
or Letter of Credit Accommodations hereunder shall specify the date on which the
requested advance is to be made or Letter of Credit Accommodations established
(which day shall be a Business Day) and the amount of the requested Loan.
Requests received after 11:00 a.m. Miami, Florida time on any day shall be
deemed to have been made as of the opening of business on the immediately
following Business Day. All Loans and Letter of Credit Accommodations under this
Agreement shall be conclusively presumed to have been made to, and at the
request of and for the benefit of, Borrower or when deposited to the credit of
Borrower or otherwise disbursed or established in accordance with the
instructions of Borrower or in accordance with the terms and conditions of this
Agreement.
6.6 Use of Proceeds. Borrower shall use the initial proceeds of the
Loans provided by Agent to Borrower hereunder only for: (a) payments to each of
the persons listed in the disbursement direction letter furnished by Borrower to
Agent on or about the date hereof, (b) costs, expenses and fees in connection
with the preparation, negotiation, execution and delivery of this Agreement and
the other Financing Agreements. All other Loans made or Letter of Credit
Accommodations provided to or for the benefit of Borrower pursuant to the
provisions hereof shall be used by Borrower only for general operating, working
capital and other proper corporate purposes of Borrower not otherwise prohibited
by the terms hereof. None of the proceeds will be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security or for the
purposes of reducing or retiring any indebtedness which was originally incurred
to purchase or carry any margin security or for any other purpose which might
cause any of the Loans to be considered a "purpose credit" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, as
amended.
6.7 Pro Rata Treatment. Except to the extent otherwise provided in
this Agreement: (a) the making and conversion of Loans shall be made among the
Lenders based on their respective Pro Rata Shares as to the Loans, (b) each
payment on account of any Obligations to or for the account of one or more of
Revolving Lenders in respect of any Obligations due on a particular day shall be
allocated among the Revolving Lenders entitled to such payments based on their
respective Pro Rata Shares and shall be distributed accordingly and (c) each
payment on account of any Obligations to or for the account of one or more of
Term Loan Lenders in respect of any Obligations due on a particular day shall be
allocated among the Term Loan Lenders entitled to such payments based on their
respective Pro Rata Shares and shall be distributed accordingly.
47
6.8 Sharing of Payments, Etc. Borrower agrees that, in addition to
(and without limitation of) any right of setoff, banker's lien or counterclaim
Agent or any Lender may otherwise have, each Lender shall be entitled, at its
option (but subject, as among Agent and Lenders, to the provisions of Section
12.3(b) hereof), to offset balances held by it for the account of Borrower at
any of its offices, in dollars or in any other currency, against any principal
of or interest on any Loans owed to such Lender or any other amount payable to
such Lender hereunder, that is not paid when due (regardless of whether such
balances are then due to Borrower), in which case it shall promptly notify
Borrower and Agent thereof; provided, that, such Lender's failure to give such
notice shall not affect the validity thereof.
(a) If any Lender (including Agent) shall obtain from
Borrower payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then duehereunder or thereunder by Borrower to such Lender
than the percentage thereof received by any other Lender, it shall promptly pay
to Agent, for the benefit of Lenders, the amount of such excess and
simultaneously purchase from such other Lenders a participation in the Loans or
such other amounts, respectively, owing to such other Lenders (or such interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all Lenders
shall share the benefit of such excess payment (net of any expenses that may be
incurred by such Lender in obtaining or preserving such excess payment) in
accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.
(b) Borrower agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(c) Nothing contained herein shall require any Lender to
exercise any right of setoff, banker's lien, counterclaims or similar rights or
shall affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other Indebtedness or obligation
of Borrower. If, under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
48
6.9 Settlement Procedures.
(a) In order to administer the Credit Facility in an
efficient manner and to minimize the transfer of funds between Agent and
Revolving Lenders, Agent may, at its option, subject to the terms of this
Section, make available, on behalf of Revolving Lenders, the full amount of the
Revolving Loans requested or charged to Borrower's loan account(s) or otherwise
to be advanced by Revolving Lenders pursuant to the terms hereof, without
requirement of prior notice to Revolving Lenders of the proposed Revolving
Loans.
(b) With respect to all Loans made by Agent on behalf of
Lenders as provided in this Section, the amount of each Lender's Pro Rata Share
of the outstanding Loans shall be computed weekly, and shall be adjusted upward
or downward on the basis of the amount of the outstanding Loans as of 5:00 p.m.
Miami, Florida time on the Business Day immediately preceding the date of each
settlement computation; provided, that, Agent retains the absolute right at any
time or from time to time to make the above described adjustments at intervals
more frequent than weekly, but in no event more than twice in any week. Agent
shall deliver to each of the Lenders after the end of each week, or at such
lesser period or periods as Agent shall determine, a summary statement of the
amount of outstanding Loans for such period (such week or lesser period or
periods being hereinafter referred to as a "Settlement Period"). If the summary
statement is sent by Agent and received by a Lender prior to 12:00 p.m. Miami,
Florida time, then such Lender shall make the settlement transfer described in
this Section by no later than 3:00 p.m. Miami, Florida time on the same Business
Day and if received by a Lender after 12:00 p.m. Miami, Florida time, then such
Lender shall make the settlement transfer by not later than 3:00 p.m. Miami,
Florida time on the next Business Day following the date of receipt. If, as of
the end of any Settlement Period, the amount of a Lender's Pro Rata Share of the
outstanding Loans is more than such Lender's Pro Rata Share of the outstanding
Loans as of the end of the previous Settlement Period, then such Lender shall
forthwith (but in no event later than the time set forth in the preceding
sentence) transfer to Agent by wire transfer in immediately available funds the
amount of the increase. Alternatively, if the amount of a Lender's Pro Rata
Share of the outstanding Loans in any Settlement Period is less than the amount
of such Lender's Pro Rata Share of the outstanding Loans for the previous
Settlement Period, Agent shall forthwith transfer to such Lender by wire
transfer in immediately available funds the amount of the decrease. The
obligation of each of the Lenders to transfer such funds and effect such
settlement shall be irrevocable and unconditional and without recourse to or
warranty by Agent. Agent and each Lender agrees to ▇▇▇▇ its books and records at
the end of each Settlement Period to show at all times the dollar amount of its
Pro Rata Share of the outstanding Loans and Letter of Credit Accommodations.
Each Lender shall only be entitled to receive interest on its Pro Rata Share of
the Loans to the extent such Loans have been funded by such Lender. Because the
Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to
the time when Lenders will actually advance and/or be repaid such Loans,
interest with respect to Loans shall be allocated by Agent in accordance with
the amount of Loans actually advanced by and repaid to each Lender and the Agent
and shall accrue from and including the date such Loans are so advanced to but
excluding the date such Loans are either repaid by Borrower or actually settled
with the applicable Lender as described in this Section.
49
(c) To the extent that Agent has made any such amounts
available and the settlement described above shall not yet have occurred, upon
repayment of any Loans by Borrower, Agent may apply such amounts repaid directly
to any amounts made available by Agent pursuant to this Section. In lieu of
weekly or more frequent settlements, Agent may, at its option, at any time
require each Lender to provide Agent with immediately available funds
representing its Pro Rata Share of each Loan, prior to Agent's disbursement of
such Loan to Borrower. In such event, all Loans under this Agreement shall be
made by the Lenders simultaneously and proportionately to their Pro Rata Shares.
No Lender shall be responsible for any default by any other Lender in the other
Lender's obligation to make a Loan requested hereunder nor shall the Commitment
of any Lender be increased or decreased as a result of the default by any other
Lender in the other Lender's obligation to make a Loan hereunder.
(d) If Agent is not funding a particular Loan to Borrower
pursuant to Sections 6.10(a) and 6.10(b) above on any day, but is requiring each
Lender to provide Agent with immediately available funds on the date of such
Loan as provided in Section 6.10(c) above, Agent may assume that each Lender
will make available to Agent such Lender's Pro Rata Share of the Loan requested
or otherwise made on such day and Agent may, in its discretion, but shall not be
obligated to, cause a corresponding amount to be made available to or for the
benefit of Borrower on such day. If Agent makes such corresponding amount
available to Borrower and such corresponding amount is not in fact made
available to Agent by such Lender, Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to Agent at the Federal Funds Rate for each day during such period (as
published by the Federal Reserve Bank of New York or at Agent's option based on
the arithmetic mean determined by Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that
day by each of the three leading brokers of Federal funds transactions in New
York City selected by Agent) and if such amounts are not paid within three (3)
days of Agent's demand, at the highest Interest Rate provided for in Section 3.1
hereof applicable to Revolving Loans. During the period in which such Lender has
not paid such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Agent to or for the benefit of Borrower shall, for all
purposes hereof, be a Loan made by Agent for its own account. Upon any such
failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Borrower of such failure and Borrower shall pay such corresponding amount to
Agent for its own account within five (5) Business Days of Borrower's receipt of
such notice. A Lender who fails to pay Agent its Pro Rata Share of any Loans
made available by the Agent on such Lender's behalf, or any Lender who fails to
pay any other amount owing by it to Agent, is a "Defaulting Lender". Agent shall
not be obligated to transfer to a Defaulting Lender any payments received by
Agent for the Defaulting Lender's benefit, nor shall a Defaulting Lender be
entitled to the sharing of any payments hereunder (including any principal,
interest or fees). Amounts payable to a Defaulting Lender shall instead be paid
to or retained by Agent. Agent may hold and, in its discretion, relend to
Borrower the amount of all such payments received or retained by it for the
account of such Defaulting Lender. For purposes of voting or consenting to
matters with respect to this Agreement and the other Financing Agreements and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
"Lender" and such Lender's Commitment shall be deemed to be zero (0). This
Section shall remain effective with respect to a Defaulting Lender until such
default is cured. The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, or relieve or excuse
the performance by Borrower or any Obligor of their duties and obligations
hereunder.
50
(e) Nothing in this Section or elsewhere in this Agreement
or the other Financing Agreements shall be deemed to require Agent to advance
funds on behalf of any Lender or to relieve any Lender from its obligation to
fulfill its Commitment hereunder or to prejudice any rights that Borrower may
have against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.
6.10 Obligations Several; Independent Nature of Lenders' Rights. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any other kind of entity, and this sentence may not be amended or superseded
without the consent of all Lenders. The amounts payable at any time hereunder to
each Lender shall be a separate and independent debt, and subject to Section
12.3 hereof, each Lender shall be entitled to protect and enforce its rights
arising out of this Agreement and it shall not be necessary for any other Lender
to be joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS.
7.1 Collateral Reporting.
(a) Borrower shall provide Agent with the following
documents in a form satisfactory to Agent:
(i) on a regular basis as required by Agent,
schedules of sales made, credits issued and cash received;
(ii) as soon as possible after the end of each week
(but in any event within two (2) Business Days after the end thereof), on a
weekly basis or more frequently as Agent may request, a "Flash Report" which
report shall detail revenues of the Borrower and variances in Borrower's budget;
(iii) as soon as possible after the end of each month
(but in any event within ten (10) Business Days after the end thereof), on a
monthly basis or more frequently as Agent may request, (A) a report of the sum
of (1) the amount of Priority Payables of Borrower and (2) all amounts necessary
to complete all in-transit cargo services of Borrower, substantially in the form
of Exhibit D hereto, (B) equipment reports by location, category and serial
number (including identifying Equipment at locations owned and operated by third
parties or on consignment), which reports separately and conspicuously list all
cargo containers and motor
51
vehicles that have been added or deleted since the immediately preceding report
delivered to Agent pursuant to this clause (A), (C) a report of agings of
accounts receivable (together with a reconciliation to the previous month's
aging and general ledger, including a separate report of agings of Accrued
Accounts), (D) a report of credit memos and corresponding re-billed invoices,
including the dates and amounts of each such re-billed invoice, (E) a report
with respect to all contract renewals, scheduled terminations, and new contracts
for the ninety (90) day period succeeding the date of such report and (F) agings
of accounts payable (and including information indicating the amounts owing to
owners and lessors of leased premises, warehouses, processors and other third
parties from time to time in possession of any Collateral);
(iv) upon Agent's request, (A) copies of customer
statements and credit memos, remittance advices and reports, and copies of
deposit slips and bank statements, (B) copies of shipping and delivery
documents, and (C) copies of purchase orders, invoices and delivery documents
for Inventory and Equipment acquired by Borrower;
(v) such other reports as to the Collateral as Agent
shall request from time to time.
(b) If Borrower's records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, Borrower hereby irrevocably authorizes such service, contractor, shipper
or agent to deliver such records, reports, and related documents to Agent and to
follow Agent's instructions with respect to further services at any time that an
Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Borrower shall notify Agent promptly of: (i) any
material delay in Borrower's performance of any of its material obligations to
any account debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any account debtor, or any material disputes with account
debtors, or any settlement, adjustment or compromise thereof, (ii) all material
adverse information relating to the financial condition of any account debtor
and (iii) any event or circumstance which, to the best of Borrower's knowledge,
would cause Agent to consider any then existing Accounts as no longer
constituting Eligible Accounts. No credit, discount, allowance or extension or
agreement for any of the foregoing shall be granted to any account debtor
without Agent's consent, except in the ordinary course of Borrower's business in
accordance with practices and policies previously disclosed in writing to Agent
and except as set forth in the schedules delivered to Agent pursuant to Section
7.1(a) above. So long as no Event of Default exists or has occurred and is
continuing, Borrower shall settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor. At any time an Event of Default
exists or has occurred and is continuing, Agent shall, at its option, have the
exclusive right to settle, adjust or compromise any claim, offset, counterclaim
or dispute with account debtors or grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on
any invoice delivered to Agent or schedule thereof delivered to Agent shall be
true and complete, (ii) no
52
payments shall be made thereon except payments immediately delivered to Agent
pursuant to the terms of this Agreement, (iii) no credit, discount, allowance or
extension or agreement for any of the foregoing shall be granted to any account
debtor except as reported to Agent in accordance with this Agreement and except
for credits, discounts, allowances or extensions made or given in the ordinary
course of Borrower's business in accordance with practices and policies
previously disclosed to Agent, (iv) there shall be no setoffs, deductions,
contras, defenses, counterclaims or disputes existing or asserted with respect
thereto except as reported to Agent in accordance with the terms of this
Agreement, (v) none of the transactions giving rise thereto will violate any
applicable foreign, Federal, State or local laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.
(c) Agent shall have the right at any time or times, in
Agent's name or in the name of a nominee of Agent, to verify the validity,
amount or any other matter relating to any Receivables or other Collateral, by
mail, telephone, facsimile transmission or otherwise.
7.3 Motor Vehicle and Cargo Container Covenants. With respect to
Equipment consisting of motor vehicles and cargo containers (and including
Eligible Equipment): (a) Borrower shall at all times maintain equipment records
reasonably satisfactory to Agent, keeping correct and accurate records itemizing
and describing the kind, type, quality and quantity of such Equipment,
Borrower's cost therefor and daily withdrawals therefrom and additions thereto;
(b) Borrower shall conduct a physical count of such Equipment at least once each
year but at any time or times as Agent may request on or after an Event of
Default, and promptly following such physical inventory shall supply Agent with
a report in the form and with such specificity as may be satisfactory to Agent
concerning such physical count; (c) Borrower shall not remove any such Equipment
from the locations set forth or permitted herein, without the prior written
consent of Agent, except (i) to the extent necessary to have such Equipment
repaired or maintained in the ordinary course of business, (ii) to move such
Equipment directly from one location set forth or permitted herein to another
such location and (iii) for the movement of such Equipment used by Borrower in
the ordinary course of its business; (d) upon Agent's request, Borrower shall,
at its expense, no more than two (2) times in any twelve (12) month period, but
at any time or times as Agent may request on or after an Event of Default,
deliver or cause to be delivered to Agent written appraisals as to such
Equipment in form, scope and methodology acceptable to Agent and by an appraiser
acceptable to Agent, addressed to Agent and Lenders and upon which Agent and
Lenders are expressly permitted to rely; (e) Borrower shall produce, use, store
and maintain such Equipment with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with
applicable laws (including the requirements of the Federal Fair Labor Standards
Act of 1938, as amended and all rules, regulations and orders related thereto);
(f) none of such Equipment or other Collateral constitutes farm products or the
proceeds thereof; (g) Borrower assumes all responsibility and liability arising
from or relating to the production, use, sale or other disposition of such
Equipment; (h) Borrower shall keep such Equipment in good order, repair, running
and marketable condition (ordinary wear and tear excepted); (i) Borrower shall
not, without prior written notice to Agent or the specific identification of
such goods in a report with respect thereto provided by Borrower to Agent
53
pursuant to Section 7.1(a) hereof, acquire or accept any goods on consignment or
approval; (j) Borrower shall use such Equipment with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
conformity with all applicable laws; (k) such Equipment is and shall be used in
Borrower's business and not for personal, family, household or farming use; and
(l) such Equipment is now and shall remain personal property and Borrower shall
not permit any of such Equipment to be or become a part of or affixed to real
property.
7.4 Equipment and Real Property Covenants. With respect to the
Equipment (other than Equipment consisting of motor vehicles and cargo
containers) and Eligible Equipment and Real Property: (a) upon Agent's request,
Borrower shall, at their expense, no more than two (2) times in any twelve (12)
month period, but at any time or times as Agent may request on or after an Event
of Default, deliver or cause to be delivered to Agent written appraisals as to
such Equipment and/or the Real Property in form, scope and methodology
acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent
and upon which Agent is expressly permitted to rely; (b) Borrower shall keep
such Equipment in good order, repair, running and marketable condition (ordinary
wear and tear excepted); (c) Borrower shall use such Equipment and Real Property
with all reasonable care and caution and in accordance with applicable standards
of any insurance and in conformity with all applicable laws; (d) such Equipment
is and shall be used in the business of Borrower and not for personal, family,
household or farming use; (e) Borrower shall not remove any such Equipment from
the locations set forth or permitted herein, except (i) to the extent necessary
to have any such Equipment repaired or maintained in the ordinary course of its
business and (ii) to move any such Equipment directly from one location set
forth or permitted herein to another such location; (f) such Equipment is now
and shall remain personal property and Borrower shall not permit any of such
Equipment to be or become a part of or affixed to real property; and (g)
Borrower assumes all responsibility and liability arising from the use of such
Equipment and the Real Property.
7.5 Power of Attorney. Borrower hereby irrevocably designates and
appoints Agent (and all persons designated by Agent) as Borrower's true and
lawful attorney-in-fact, and authorizes Agent, in Borrower's, or Agent's name,
to: (a) at any time an Event of Default exists or has occurred and is continuing
(i) demand payment on Receivables or other Collateral, (ii) enforce payment of
Receivables by legal proceedings or otherwise, (iii) exercise all of Borrower's
rights and remedies to collect any Receivable or other Collateral, (iv) sell or
assign any Receivable upon such terms, for such amount and at such time or times
as the Agent deems advisable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign
Borrower's name on any proof of claim in bankruptcy or other similar document
against an account debtor or other obligor in respect of any Receivables or
other Collateral, (viii) notify the post office authorities to change the
address for delivery of remittances from account debtors or other obligors in
respect of Receivables or other proceeds of Collateral to an address designated
by Agent, and open and dispose of all mail addressed to Borrower and handle and
store all mail relating to the Collateral; and (ix) do all acts and things which
are necessary, in Agent's determination, to fulfill Borrower's obligations under
this Agreement and the other Financing Agreements and (b) at any time to (i)
take control in any manner of any item of payment in respect of Receivables or
constituting Collateral or otherwise received in or for
54
deposit in the Blocked Accounts or otherwise received by Agent or any Lender,
(ii) have access to any lockbox or postal box into which remittances from
account debtors or other obligors in respect of Receivables or other proceeds of
Collateral are sent or received, (iii) endorse Borrower's name upon any items of
payment in respect of Receivables or constituting Collateral or otherwise
received by Agent and any Lender and deposit the same in Agent's account for
application to the Obligations, (iv) endorse Borrower's name upon any chattel
paper, document, instrument, invoice, or similar document or agreement relating
to any Receivable or any goods pertaining thereto or any other Collateral,
including any warehouse or other receipts, or bills of lading and other
negotiable or non-negotiable documents, (v) clear Inventory the purchase of
which was financed with Letter of Credit Accommodations through U.S. Customs or
foreign export control authorities in Borrower's name, Agent's name or the name
of Agent's designee, and to sign and deliver to customs officials powers of
attorney in Borrower's o name for such purpose, and to complete in Borrower's or
Agent's name, any order, sale or transaction, obtain the necessary documents in
connection therewith and collect the proceeds thereof, (vi) execute and deliver
in Borrower's name, Agent's name or the name of Agent's designee, to any
Department of Motor Vehicles or other Governmental Authority powers of attorney
in Borrower's name, and to complete in Borrower's or Agent's name, any
application or other document or instrument required, in each case, in order to
have the lien and security interest of Agent with respect to any titled goods
noted on any certificate of title with respect to such titled goods, and (vii)
sign Borrower's name on any verification of Receivables and notices thereof to
account debtors or any secondary obligors or other obligors in respect thereof.
Borrower hereby releases Agent and Lenders and their respective officers,
employees and designees from any liabilities arising from any act or acts under
this power of attorney and in furtherance thereof, whether of omission or
commission, except as a result of Agent's or any Lender's own gross negligence
or willful misconduct as determined pursuant to a final non-appealable order of
a court of competent jurisdiction.
7.6 Right to Cure. Agent may, at its option, upon notice to
Borrower, (a) cure any default by Borrower under any material agreement with a
third party that affects the Collateral, its value or the ability of Agent to
collect, sell or otherwise dispose of the Collateral or the rights and remedies
of Agent or any Lender therein or the ability of Borrower or any Obligor to
perform its obligations hereunder or under any of the other Financing
Agreements, (b) pay or bond on appeal any judgment entered against Borrower, (c)
discharge taxes, liens, security interests or other encumbrances at any time
levied on or existing with respect to the Collateral and (d) pay any amount,
incur any expense or perform any act which, in Agent's judgment, is necessary or
appropriate to preserve, protect, insure or maintain the Collateral and the
rights of Agent and Lenders with respect thereto. Agent may add any amounts so
expended to the Obligations and charge Borrower's account therefor, such amounts
to be repayable by Borrower on demand. Agent and Lenders shall be under no
obligation to effect such cure, payment or bonding and shall not, by doing so,
be deemed to have assumed any obligation or liability of Borrower or any
Obligor. Any payment made or other action taken by Agent or any Lender under
this Section shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed accordingly.
55
7.7 Access to Premises. From time to time as requested by Agent, at
the cost and expense of Borrower, (a) Agent or its designee shall have complete
access to all of Borrower premises during normal business hours and after notice
to, or at any time and without notice to Borrower if an Event of Default exists
or has occurred and is continuing, for the purposes of inspecting, verifying and
auditing the Collateral and all of Borrower's books and records, including the
Records, and (b) Borrower shall promptly furnish to Agent such copies of such
books and records or extracts therefrom as Agent may request, and (c) Agent or
any Lender or Agent's designee may use during normal business hours such of
Borrower's personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists or has occurred
and is continuing for the collection of Receivables and realization of other
Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES.
Borrower hereby represents and warrants to Agent and Lenders the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which are a continuing condition of the making of
Loans and providing Letter of Credit Accommodations to Borrower:
8.1 Corporate Existence, Power and Authority. Borrower is a
corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on Borrower's financial condition,
results of operation or business or the rights of Agent in or to any of the
Collateral. The execution, delivery and performance of this Agreement, the other
Financing Agreements and the transactions contemplated hereunder and thereunder
(a) are all within Borrower's corporate powers, (b) have been duly authorized,
(c) are not in contravention of law or the terms of Borrower's certificate of
incorporation, by-laws, or other organizational documentation, or any indenture,
agreement or undertaking to which Borrower is a party or by which Borrower or
its property are bound and (d) will not result in the creation or imposition of,
or require or give rise to any obligation to grant, any lien, security interest,
charge or other encumbrance upon any property of Borrower. This Agreement and
the other Financing Agreements to which Borrower is a party constitute legal,
valid and binding obligations of Borrower enforceable in accordance with their
respective terms.
8.2 Name; State of Organization; Chief Executive Office; Collateral
Locations.
(a) The exact legal name of Borrower is as set forth on the
signature page of this Agreement and in the Information Certificate. Borrower
has not, during the past five years, been known by or used any other corporate
or fictitious name or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
property or assets out of the ordinary course of business, except as set forth
in the Information Certificate.
56
(b) Borrower is an organization of the type and organized in
the jurisdiction set forth in the Information Certificate. The Information
Certificate accurately sets forth the organizational identification number of
Borrower or accurately states that Borrower has none and accurately sets forth
the federal employer identification number of Borrower.
(c) The chief executive office and mailing address of
Borrower and Borrower's Records concerning Accounts are located only at the
address identified as such in Schedule 8.2 to the Information Certificate and
its only other places of business and the only other locations of Collateral, if
any, are the addresses set forth in Schedule 8.2 to the Information Certificate,
subject to the rights of Borrower to establish new locations in accordance with
Section 9.2 below. The Information Certificate correctly identifies any of such
locations which are not owned by Borrower and sets forth the owners and/or
operators thereof.
8.3 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrower which have been or may hereafter be delivered by
Borrower to Agent and Lenders have been prepared in accordance with GAAP (except
as to any interim financial statements, to the extent such statements are
subject to normal year-end adjustments and do not include any notes) and fairly
present in all material respects the financial condition and the results of
operation of Borrower as at the dates and for the periods set forth therein.
Except as disclosed in any interim financial statements furnished by Borrower to
Agent prior to the date of this Agreement, there has been no act, condition or
event which has had or is reasonably likely to have a Material Adverse Effect
since the date of the most recent audited financial statements of Borrower
furnished by Borrower to Agent prior to the date of this Agreement.
8.4 Priority of Liens; Title to Properties. The security interests
and liens granted to Agent under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral subject only to the liens indicated on
Schedule 8.4 to the Information Certificate and the other liens permitted under
Section 9.8 hereof. Borrower has good and marketable fee simple title to or
valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificate or permitted under Section 9.8
hereof. Schedules 8.4A to the Information Certificate lists all vehicles,
trailers, chassis and other titled goods of Borrower as of the date hereof,
together with the make, model and serial number thereof and the state and number
of the certificate of title (if any) with respect thereto.
8.5 Tax Returns. Borrower has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required to be
filed by it. All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Borrower has paid or caused to
be paid all taxes due and payable or claimed due and payable in any assessment
received by it, except taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower
and with respect to which adequate reserves have been set aside on its books.
Adequate provision has been made for the payment of
57
all accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.
8.6 Litigation. Except as set forth on Schedule 8.6 to the
Information Certificate, (a) there is no investigation by any Governmental
Authority pending, or to the best of Borrower's knowledge threatened, against or
affecting Borrower, its or their assets or business and (b) there is no action,
suit, proceeding or claim by any Person pending, or to the best of Borrower's
knowledge threatened, against Borrower or its or their assets or goodwill, or
against or affecting any transactions contemplated by this Agreement, in each
case, which if adversely determined against Borrower has or could reasonably be
expected to have a Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws.
(a) Borrower is not in default in any respect under, or in
violation in any respect of the terms of, any material agreement, contract,
instrument, lease or other commitment to which it is a party or by which it or
any of its assets are bound. Borrower is in compliance with the requirements of
all applicable laws, rules, regulations and orders of any Governmental Authority
relating to their respective businesses, including, without limitation, those
set forth in or promulgated pursuant to the Occupational Safety and Health Act
of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA,
the Code, as amended, and the rules and regulations thereunder, and all
Environmental Laws.
(b) Borrower has obtained all material permits, licenses,
approvals, consents, certificates, orders or authorizations of any Governmental
Authority required for the lawful conduct of its business (the "Permits"). All
of the Permits are valid and subsisting and in full force and effect. There are
no actions, claims or proceedings pending or to the best of Borrower's
knowledge, threatened that seek the revocation, cancellation, suspension or
modification of any of the Permits.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrower and any Subsidiary of Borrower have not generated, used,
stored, treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on or off its premises (whether or not owned by it) in any
manner which at any time violates in any material respect any applicable
Environmental Law or Permit, and the operations of Borrower and any Subsidiary
of Borrower complies in all material respects with all Environmental Laws and
all Permits.
(b) Except as set forth on Schedule 8.8 to the Information
Certificate, there has been no investigation by any Governmental Authority or
any proceeding, complaint, order, directive, claim, citation or notice by any
Governmental Authority or any other person nor is any pending or to the best of
Borrower's knowledge threatened, with respect to any non-compliance with or
violation of the requirements of any Environmental Law by Borrower and any
Subsidiary of Borrower or the release, spill or discharge, threatened or actual,
of any Hazardous Material or the generation, use, storage, treatment,
transportation, manufacture, handling, production or
58
disposal of any Hazardous Materials or any other environmental, health or safety
matter, which adversely affects or could reasonably be expected to adversely
affect in any material respect Borrower or its or their business, operations or
assets or any properties at which Borrower has transported, stored or disposed
of any Hazardous Materials.
(c) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrower and its Subsidiaries have no material liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.
(d) Borrower and its Subsidiaries have all Permits required
to be obtained or filed in connection with the operations of Borrower under any
Environmental Law and all of such licenses, certificates, approvals or similar
authorizations and other Permits are valid and in full force and effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other Federal or State law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service and
to the best of Borrower's knowledge, nothing has occurred which would cause the
loss of such qualification. Borrower and its ERISA Affiliates have made all
required contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending, or to the best of Borrower's
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) the current value of each Plan's assets (determined in
accordance with the assumptions used for funding such Plan pursuant to Section
412 of the Code) are not less than such Plan's liabilities under Section
4001(a)(16) of ERISA; (iii) Borrower and its ERISA Affiliates, have not incurred
and do not reasonably expect to incur, any liability under Title IV of ERISA
with respect to any Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) Borrower and its ERISA Affiliates, have not
incurred and do not reasonably expect to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) Borrower and its ERISA Affiliates, have not engaged
in a transaction that would be subject to Section 4069 or 4212(c) of ERISA.
59
8.10 Bank Accounts. All of the deposit accounts, investment accounts
or other accounts in the name of or used by Borrower maintained at any bank or
other financial institution are set forth on Schedule 8.10 to the Information
Certificate, subject to the right of Borrower to establish new accounts in
accordance with Section 5.2 hereof.
8.11 Intellectual Property. Borrower owns or licenses or otherwise
has the right to use all Intellectual Property necessary for the operation of
its business as presently conducted or proposed to be conducted. As of the date
hereof, Borrower does not have any Intellectual Property registered, or subject
to pending applications, in the United States Patent and Trademark Office or any
similar office or agency in the United States, any State (including Puerto Rico)
thereof, any political subdivision thereof or in any other country, other than
those described in Schedule 8.11 to the Information Certificate and has not
granted any licenses with respect thereto other than as set forth in Schedule
8.11 to the Information Certificate. No event has occurred which permits or
would permit after notice or passage of time or both, the revocation, suspension
or termination of such rights. To the best of Borrower's knowledge, no slogan or
other advertising device, product, process, method, substance or other
Intellectual Property or goods bearing or using any Intellectual Property
presently contemplated to be sold by or employed by Borrower infringes any
patent, trademark, servicemark, tradename, copyright, license or other
Intellectual Property owned by any other Person presently and no claim or
litigation is pending or threatened against or affecting Borrower contesting its
right to sell or use any such Intellectual Property. Schedule 8.11 to the
Information Certificate sets forth all of the agreements or other arrangements
of Borrower pursuant to which Borrower has a license or other right to use any
trademarks, logos, designs, representations or other Intellectual Property owned
by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of Borrower as in effect on
the date hereof (collectively, together with such agreements or other
arrangements as may be entered into by Borrower after the date hereof,
collectively, the "License Agreements" and individually, a "License Agreement").
No trademark, servicemark, copyright or other Intellectual Property at any time
used by Borrower which is owned by another person, or owned by Borrower subject
to any security interest, lien, collateral assignment, pledge or other
encumbrance in favor of any person other than Agent, is affixed to any Eligible
Inventory, except (a) to the extent permitted under the term of the license
agreements listed on Schedule 8.11 to the Information Certificate and (b) to the
extent the sale of Inventory to which such Intellectual Property is affixed is
permitted to be sold by Borrower under applicable law (including the United
States Copyright Act of 1976).
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.
(a) Borrower does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership except as set forth in Schedule 8.12 to the Information Certificate.
(b) Borrower is the record and beneficial owner of all of
the issued and outstanding shares of Capital Stock of each of the Subsidiaries
listed on Schedule 8.12 to the Information Certificate as being owned by
Borrower and there are no proxies, irrevocable or
60
otherwise, with respect to such shares and no equity securities of any of the
Subsidiaries are or may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any kind or nature and
there are no contracts, commitments, understandings or arrangements by which any
Subsidiary is or may become bound to issue additional shares of it Capital Stock
or securities convertible into or exchangeable for such shares.
(c) The issued and outstanding shares of Capital Stock of
Borrower are directly and beneficially owned and held by the persons indicated
in the Information Certificate, and in each case all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except as disclosed in
writing to Agent prior to the date hereof.
(d) Borrower is Solvent and will continue to be Solvent
after the creation of the Obligations, the security interests of Agent and the
other transaction contemplated hereunder.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 to the Information
Certificate is a list (including dates of termination) of all collective
bargaining or similar agreements between or applicable to Borrower and any
union, labor organization or other bargaining agent in respect of the employees
of Borrower on the date hereof.
(b) There is (i) no significant unfair labor practice
complaint pending against Borrower or, to the best of Borrower's knowledge,
threatened against it, before the National Labor Relations Board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
Borrower or, to best of Borrower's knowledge, threatened against it, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against
Borrower or, to the best of Borrower's knowledge, threatened against Borrower.
8.14 Restrictions on Subsidiaries. Except for restrictions contained
in this Agreement or any other agreement with respect to Indebtedness of
Borrower permitted hereunder as in effect on the date hereof, there are no
contractual or consensual restrictions on Borrower or any of its Subsidiaries
which prohibit or otherwise restrict (a) the transfer of cash or other assets
(i) between Borrower and any of its Subsidiaries or (ii) between any
Subsidiaries of Borrower or (b) the ability of Borrower or any of its
Subsidiaries to incur Indebtedness or grant security interests to Agent or any
Lender in the Collateral.
8.15 Material Contracts. Schedule 8.15 to the Information Certificate
sets forth all Material Contracts to which Borrower is a party or is bound as of
the date hereof. Borrower has delivered true, correct and complete copies of
such Material Contracts to Agent on or before the date hereof. Borrower is not
in breach or in default in any material respect of or under any Material
Contract and has not received any notice of the intention of any other party
thereto to terminate any Material Contract.
61
8.16 Payable Practices. Borrower has not made any material change in
the historical accounts payable practices from those in effect immediately prior
to the date hereof.
8.17 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrower in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including all information on the
Information Certificate is true and correct in all material respects on the date
as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a Material Adverse Affect, which has not been fully and accurately
disclosed to Agent in writing prior to the date hereof.
8.18 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Agent and Lenders on the date of each additional
borrowing or other credit accommodation hereunder and shall be conclusively
presumed to have been relied on by Agent and Lenders regardless of any
investigation made or information possessed by Agent or any Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which Borrower shall now or
hereafter give, or cause to be given, to Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS.
9.1 Maintenance of Existence.
(a) Borrower shall at all times preserve, renew and keep in
full force and effect its corporate existence and rights and franchises with
respect thereto and maintain in full force and effect all licenses, trademarks,
tradenames, approvals, authorizations, leases, contracts and Permits necessary
to carry on the business as presently or proposed to be conducted.
(b) Borrower shall not change its name unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
thirty (30) days prior written notice from Borrower of such proposed change in
its corporate name, which notice shall accurately set forth the new name; and
(ii) Agent shall have received a copy of the amendment to the Certificate of
Incorporation of Borrower providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation or organization of
Borrower as soon as it is available.
(c) Borrower shall not change its chief executive office or
its mailing address or organizational identification number (or if it does not
have one, shall not acquire one) unless Agent shall have received not less than
thirty (30) days' prior written notice from Borrower of such proposed change,
which notice shall set forth such information with respect thereto as Agent may
require and Agent shall have received such agreements as Agent may reasonably
require in connection therewith. Borrower shall not change its type of
organization, jurisdiction of organization or other legal structure.
62
9.2 New Collateral Locations. Borrower may only open any new
location within the continental United States provided Borrower (a) gives Agent
thirty (30) days prior written notice of the intended opening of any such new
location and (b) executes and delivers, or causes to be executed and delivered,
to Agent such agreements, documents, and instruments as Agent may deem
reasonably necessary or desirable to protect its interests in the Collateral at
such location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Borrower shall, and shall cause any Subsidiary to, at
all times, comply in all material respects with all laws, rules, regulations,
licenses, approvals, orders and other Permits applicable to it and duly observe
all requirements of any foreign, Federal, State or local Governmental Authority.
(b) Borrower shall give written notice to Agent immediately
upon Borrower's receipt of any notice of, or Borrower's otherwise obtaining
knowledge of, (i) the occurrence of any event involving the release, spill or
discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by Borrower or (B) the release, spill or discharge, threatened
or actual, of any Hazardous Material other than in the ordinary course of
business and other than as permitted under any applicable Environmental Law.
Copies of all environmental surveys, audits, assessments, feasibility studies
and results of remedial investigations shall be promptly furnished, or caused to
be furnished, by Borrower to Agent. Borrower shall take prompt action to respond
to any material non-compliance with any of the Environmental Laws and shall
regularly report to Agent on such response.
(c) Without limiting the generality of the foregoing,
whenever Agent reasonably determines that there is non-compliance, or any
condition which requires any action by or on behalf of Borrower in order to
avoid any non-compliance, with any Environmental Law, Borrower shall, at Agent's
request and Borrower's expense: (i) cause an independent environmental engineer
reasonably acceptable to Agent to conduct such tests of the site where non-
compliance or alleged non-compliance with such Environmental Laws has occurred
as to such non-compliance and prepare and deliver to Agent a report as to such
non-compliance setting forth the results of such tests, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or Borrower's response
thereto or the estimated costs thereof, shall change in any material respect.
(d) Borrower shall indemnify and hold harmless Agent and
Lenders and their respective directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including reasonable
attorneys' fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of Borrower and the
63
preparation and implementation of any closure, remedial or other required plans.
All representations, warranties, covenants and indemnifications in this Section
9.3 shall survive the payment of the Obligations and the termination of this
Agreement.
9.4 Payment of Taxes and Claims. Borrower shall, and shall cause any
Subsidiary to, duly pay and discharge all taxes, assessments, contributions and
governmental charges upon or against it or its properties or assets, except for
taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower or such Subsidiary, as
the case may be, and with respect to which adequate reserves have been set aside
on its books. Borrower shall be liable for any tax or penalties imposed on Agent
or any Lender as a result of the financing arrangements provided for herein and
Borrower agrees to indemnify and hold Agent harmless with respect to the
foregoing, and to repay to Agent, for the benefit of Lenders, on demand the
amount thereof, and until paid by Borrower such amount shall be added and deemed
part of the Loans, provided, that, nothing contained herein shall be construed
to require Borrower to pay any income or franchise taxes attributable to the
income of Lenders from any amounts charged or paid hereunder to Lenders. The
foregoing indemnity shall survive the payment of the Obligations and the
termination of this Agreement.
9.5 Insurance. Borrower shall, and shall cause any Subsidiary to, at
all times, maintain with financially sound and reputable insurers insurance with
respect to the Collateral against loss or damage and all other insurance of the
kinds and in the amounts customarily insured against or carried by corporations
of established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be reasonably satisfactory
to Agent as to form, amount and insurer. Borrower shall furnish certificates,
policies or endorsements to Agent as Agent shall reasonably require as proof of
such insurance, and, if Borrower fails to do so, Agent is authorized, but not
required, to obtain such insurance at the expense of Borrower. All policies
shall provide for at least thirty (30) days prior written notice to Agent of any
cancellation or reduction of coverage and that Agent may act as attorney for
Borrower in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Borrower shall cause Agent to be named as a loss payee and an
additional insured (but without any liability for any premiums) under such
insurance policies and Borrower shall obtain non-contributory lender's loss
payable endorsements to all insurance policies in form and substance
satisfactory to Agent. Such lender's loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Agent as its interests
may appear and further specify that Agent and Lenders shall be paid regardless
of any act or omission by Borrower or any of its or their Affiliates. Without
limiting any other rights of Agent or Lenders, any insurance proceeds received
by Agent at any time may be applied to payment of the Obligations, whether or
not then due, in any order and in such manner as Agent may determine. Upon
application of such proceeds to the Revolving Loans, Revolving Loans may be
available subject and pursuant to the terms hereof to be used for the costs of
repair or replacement of the Collateral lost or damages resulting in the payment
of such insurance proceeds.
64
9.6 Financial Statements and Other Information.
(a) Borrower shall, and shall cause any Subsidiary to, keep
proper books and records in which true and complete entries shall be made of all
dealings or transactions of or in relation to the Collateral and the business of
Borrower and its Subsidiaries in accordance with GAAP. Borrower shall promptly
furnish to Agent and Lenders all such financial and other information as Agent
shall reasonably request relating to the Collateral and the assets, business and
operations of Borrower, and Borrower shall notify the auditors and accountants
of Borrower that Agent is authorized to obtain such information directly from
them. Without limiting the foregoing, Borrower shall furnish or cause to be
furnished to Agent, the following: (i) within thirty (30) days after the end of
each fiscal month, monthly unaudited consolidated financial statements, and
unaudited consolidating financial statements (including in each case balance
sheets, statements of income and loss, statements of cash flow, and statements
of shareholders' equity), all in reasonable detail, fairly presenting in all
material respects the financial position and the results of the operations of
Borrower and its Subsidiaries as of the end of and through such fiscal month,
certified to be correct by the chief financial officer of Borrower, subject to
normal year-end adjustments and no footnotes and accompanied by a compliance
certificate substantially in the form of Exhibit C hereto, along with a schedule
in a form satisfactory to Agent of the calculations used in determining, as of
the end of such month, whether Borrower is in compliance with the covenants set
forth in Sections 9.17 and 9.18 of this Agreement for such month and (ii) within
ninety (90) days after the end of each fiscal year, audited consolidated
financial statements and unaudited consolidating financial statements of
Borrower and its Subsidiaries (including in each case balance sheets, statements
of income and loss, statements of cash flow, and statements of shareholders'
equity), and the accompanying notes thereto, all in reasonable detail, fairly
presenting in all material respects the financial position and the results of
the operations of Borrower and its Subsidiaries as of the end of and for such
fiscal year, together with the unqualified opinion of independent certified
public accountants with respect to the audited consolidated financial
statements, which accountants shall be an independent accounting firm selected
by Borrower and acceptable to Agent, that such audited consolidated financial
statements have been prepared in accordance with GAAP, and present fairly in all
material respects the results of operations and financial condition of Borrower
and its Subsidiaries as of the end of and for the fiscal year then ended.
(b) Borrower shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $100,000 or which if
adversely determined would result in any material adverse change in Borrower's
business, properties, assets, goodwill or condition, financial or otherwise,
(ii) any Material Contract being terminated or amended or any new Material
Contract entered into (in which event Borrower shall provide Agent with a copy
of such Material Contract), (iii) any order, judgment or decree in excess of
$100,000 shall have been entered against Borrower any of its properties or
assets, (iv) any notification of a material violation of laws or regulations
received by Borrower, (v) any ERISA Event, and (vi) the occurrence of any
Default or Event of Default.
(c) Borrower shall promptly after the sending or filing
thereof furnish or cause to be furnished to Agent copies of all reports which
Borrower sends to its stockholders generally and copies of all reports and
registration statements which Borrower files with the Securities and
65
Exchange Commission, any national securities exchange or the National
Association of Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to Agent
such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower, as Agent may, from time to time,
reasonably request. Agent is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrower to any court or other Governmental Authority, or to any Lender or
Participant or prospective Lender or Participant, or any Affiliate of any Lender
or Participant. Borrower hereby irrevocably authorizes and directs all
accountants or auditors to deliver to Agent, at Borrower's expense, copies of
the financial statements of Borrower and any reports or management letters
prepared by such accountants or auditors on behalf of Borrower and to disclose
to Agent and Lenders such information as they may have regarding the business of
Borrower. Any documents, schedules, invoices or other papers delivered to Agent
or any Lender may be destroyed or otherwise disposed of by Agent or such Lender
one (1) year after the same are delivered to Agent or such Lender, except as
otherwise designated by party to Agent or such Lender in writing.
(e) Without limiting the rights of Agent under any provision
of this Agreement, as soon as available, but in any event not later than fifteen
(15) Business Days after the end of each fiscal quarter, Borrower shall deliver
to Agent, in form and substance satisfactory to Agent, certified by the chief
financial officer of Borrower (in his capacity as such and not individually) on
behalf of Borrower as true and correct, a statement confirming that all tariffs,
road use taxes, other taxes payable by Borrower and all license and permit fees
accrued or payable in the immediately preceding fiscal quarter have been paid in
full.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
Borrower shall not, and shall not permit any Subsidiary to, directly or
indirectly.
(a) merge into or with or consolidate with any other Person
or permit any other Person to merge into or with or consolidate with it;
(b) sell, issue, assign, lease, license, transfer, abandon
or otherwise dispose of any Capital Stock or Indebtedness to any other Person or
any of its assets to any other Person, except for
(i) sales of Inventory in the ordinary course of
business,
(ii) the sale or other disposition of Equipment
(including worn-out or obsolete Equipment or Equipment no longer used or useful
in the business of Borrower) so long as such sales or other dispositions do not
involve Equipment having an aggregate fair market value in excess of $100,000
for all such Equipment disposed of in any fiscal year of Borrower or as Agent
may otherwise agree, and
(iii) the issuance and sale by Borrower of Capital
Stock of Borrower after the date hereof; provided, that, (A) Agent shall have
received not less than ten (10) Business
66
Days' prior written notice of such issuance and sale by Borrower, which notice
shall specify the parties to whom such shares are to be sold, the terms of such
sale, the total amount which it is anticipated will be realized from the
issuance and sale of such stock and the net cash proceeds which it is
anticipated will be received by Borrower from such sale, (B) Borrower shall not
be required to pay any cash dividends or repurchase or redeem such Capital Stock
or make any other payments in respect thereof, except as otherwise permitted in
Section 9.11 hereof, (C) the terms of such Capital Stock, and the terms and
conditions of the purchase and sale thereof, shall not include any terms that
include any limitation on the right of Borrower to request or receive Loans or
Letter of Credit Accommodations or the right of Borrower to amend or modify any
of the terms and conditions of this Agreement or any of the other Financing
Agreements or otherwise in any way relate to or affect the arrangements of
Borrower with Agent and Lenders or are more restrictive or burdensome to
Borrower than the terms of any Capital Stock in effect on the date hereof, (D)
except as Agent may otherwise agree in writing, all of the proceeds of the sale
and issuance of such Capital Stock shall be paid to Agent for application to the
Obligations in such order and manner as Agent may determine or at Agent's
option, to be held as cash collateral for the Obligations and (E) as of the date
of such issuance and sale and after giving effect thereto, no Default or Event
of Default shall exist or have occurred,
(iv) the issuance of Capital Stock of Borrower
consisting of common stock pursuant to an employee stock option or grant or
similar equity plan or 401(k) plans of Borrower for the benefit of its
employees, directors and consultants, provided, that, in no event shall Borrower
be required to issue, or shall Borrower issue, Capital Stock pursuant to such
stock plans or 401(k) plans which would result in a Change of Control or other
Event of Default,
(c) wind up, liquidate or dissolve;
(d) agree to do any of the foregoing.
9.8 Encumbrances. Borrower shall not, and shall not permit any
Subsidiary to, create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
any of its assets or properties, including the Collateral, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any security interest or lien with respect to any such assets
or properties, except:
(a) the security interests and liens of Agent for itself and
the benefit of Lenders;
(b) liens securing the payment of taxes, assessments or
other governmental charges or levies either not yet overdue or the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to Borrower or Subsidiary, as the case may be and with
respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than liens
securing the payment of taxes) arising in the ordinary course of Borrower's or
such Subsidiary's business to the extent: (i) such liens secure Indebtedness
which is not overdue or (ii) such liens secure Indebtedness relating
67
to claims or liabilities which are fully insured and being defended at the sole
cost and expense and at the sole risk of the insurer or being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower or
such Subsidiary, in each case prior to the commencement of foreclosure or other
similar proceedings and with respect to which adequate reserves have been set
aside on its books;
(d) zoning restrictions, easements, licenses, covenants and
other restrictions affecting the use of Real Property which do not interfere in
any material respect with the use of such Real Property or ordinary conduct of
the business of Borrower or such Subsidiary as presently conducted thereon or
materially impair the value of the Real Property which may be subject thereto;
(e) purchase money security interests in Equipment
(including Capital Leases) and purchase money mortgages on Real Property to
secure Indebtedness permitted under Section 9.9(b) hereof;
(f) pledges and deposits of cash by Borrower after the date
hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of Borrower as of the date hereof;
(g) pledges and deposits of cash by Borrower after the date
hereof to secure the performance of tenders, bids, leases, trade contracts
(other than for the repayment of Indebtedness), statutory obligations and other
similar obligations in each case in the ordinary course of business consistent
with the current practices of Borrower as of the date hereof; provided, that, in
connection with any performance bonds issued by a surety or other person, the
issuer of such bond shall have waived in writing any rights in or to, or other
interest in, any of the Collateral in an agreement, in form and substance
satisfactory to Agent;
(h) liens arising from (i) operating leases and the
precautionary UCC financing statement filings in respect thereof and (ii)
equipment or other materials which are not owned by Borrower located on the
premises of Borrower (but not in connection with, or as part of, the financing
thereof) from time to time in the ordinary course of business and consistent
with current practices of Borrower and the precautionary UCC financing statement
filings in respect thereof;
(i) judgments and other similar liens arising in connection
with court proceedings that do not constitute an Event of Default, provided,
that, (i) such liens are being contested in good faith and by appropriate
proceedings diligently pursued, (ii) adequate reserves or other appropriate
provision, if any, as are required by GAAP have been made therefor, (iii) a stay
of enforcement of any such liens is in effect and (iv) Agent may establish a
Reserve with respect thereto;
(j) liens and security interests of Interbay on the Real
Property and fixtures related thereto of Borrower located at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 3226 (the "Mortgaged Property") to secure the
Indebtedness of Borrower to Interbay permitted under
68
Section 9.9(g) hereof; provided, that, such liens and security interests shall
be subject to the terms of the Interbay Access Agreement;
(k) liens and security interests of Transportation
Receivables on the Mortgaged Property and the motor vehicles listed on Schedule
9.8 hereto to secure the Indebtedness of Borrower to Transportation Receivables
permitted under Section 9.9(f) hereof; provided, that, such liens and security
interests shall be subject to the terms of the Transportation Receivables
Intercreditor Agreement;
(l) liens and security interests of MarAd on the December
Collateral to secure the Indebtedness of Borrower to MarAd permitted under
Section 9.9(e) hereof; provided, that, such liens and security interests shall
be subject to the terms of the December Access Agreement;
(m) liens and security interests of MarAd on the June
Collateral to secure the Indebtedness of Borrower to MarAd permitted under
Section 9.9(d) hereof; provided, that, such liens and security interests shall
be subject to the terms of the June Access Agreement; and
(n) the security interests and liens set forth on Schedule
8.4 to the Information Certificate which is not otherwise expressly permitted
under this Section 9.8.
9.9 Indebtedness. Borrower shall not, and shall not permit any
Subsidiary to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse,
or otherwise become responsible for (directly or indirectly), the Indebtedness,
performance, obligations or dividends of any other Person, except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases)
arising after the date hereof to the extent secured by purchase money security
interests in Equipment (including Capital Leases) and purchase money mortgages
on Real Property not to exceed $100,000 in the aggregate at any time outstanding
so long as such security interests and mortgages do not apply to any property of
Borrower or any Subsidiary other than the Equipment or Real Property so
acquired, and the Indebtedness secured thereby does not exceed the cost of the
Equipment or Real Property so acquired, as the case may be;
(c) unsecured Indebtedness of Borrower arising after the
date hereof to any third person, provided, that, each of the following
conditions is satisfied as determined by Agent: (i) such Indebtedness shall be
on terms and conditions acceptable to Agent and shall be subject and subordinate
in right of payment to the right of Agent and Lenders to receive the prior
indefeasible payment and satisfaction in full payment of all of the Obligations
pursuant to the terms of an intercreditor agreement between Agent and such third
party, in form and substance satisfactory to Agent, (ii) Agent shall have
received not less than ten (10) days prior written notice of the intention of
Borrower to incur such Indebtedness, which notice shall set forth in reasonable
detail satisfactory to Agent the amount of such Indebtedness, the person or
persons to whom such Indebtedness will be owed, the interest rate, the schedule
of repayments and maturity date with
69
respect thereto and such other information as Agent may request with respect
thereto, (iii) Agent shall have received true, correct and complete copies of
all agreements, documents and instruments evidencing or otherwise related to
such Indebtedness, (iv) except as Agent may otherwise agree in writing, all of
the proceeds of the loans or other accommodations giving rise to such
Indebtedness shall be paid to Agent for application to the Obligations in such
order and manner as Agent may determine or at Agent's option, to be held as cash
collateral for the Obligations, (v) in no event shall the aggregate amount of
such Indebtedness incurred during the term of this Agreement exceed $250,000,
(vi) as of the date of incurring such Indebtedness and after giving effect
thereto, no Default or Event of Default shall exist or have occurred, (vii)
Borrower shall not, directly or indirectly, (A) amend, modify, alter or change
the terms of such Indebtedness or any agreement, document or instrument related
thereto, except, that, Borrower may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof so as to extend the maturity thereof,
or defer the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness (other than pursuant to payments thereof), or
to reduce the interest rate or any fees in connection therewith, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness (except
pursuant to regularly scheduled payments permitted herein), or set aside or
otherwise deposit or invest any sums for such purpose, and (viii) Borrower shall
furnish to Agent all notices or demands in connection with such Indebtedness
either received by Borrower or on its behalf promptly after the receipt thereof,
or sent by Borrower or on its behalf concurrently with the sending thereof, as
the case may be;
(d) The Indebtedness of Borrower evidenced by or arising
under the June Trust Indenture Documents (as each are in effect on the date
hereof), provided, that, each of the following conditions is satisfied as
determined by Agent:
(i) the aggregate principal amount of such
Indebtedness shall not exceed $8,816,827 less the aggregate amount of all
repayments, repurchases or redemptions, whether optional or mandatory, in
respect thereof,
(ii) Agent shall have received true, correct and
complete copies of all agreements, documents, and instruments evidencing or
otherwise related to such Indebtedness, each as duly authorized, executed and
delivered by the parties thereto,
(iii) Borrower shall not, directly or indirectly, (A)
amend, modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto, except, that, Borrower may, after prior
written notice to Agent, amend, modify, alter or change the terms thereof so as
to extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness (except pursuant to regularly scheduled payments
permitted herein), or set aside or otherwise deposit or invest any sums for such
purpose, and
70
(iv) Borrower shall furnish to Agent all demands or notices in
connection with such Indebtedness either received by Borrower promptly after the
receipt thereof, or sent by Borrower or on its behalf concurrently with the
sending thereof, as the case may be;
(e) The Indebtedness of Borrower evidenced by or arising
under the December Trust Indenture Documents (as each are in effect on the date
hereof), provided, that, each of the following conditions is satisfied as
determined by Agent:
(i) the aggregate principal amount of such
Indebtedness shall not exceed $14,524,722 less the aggregate amount of all
repayments, repurchases or redemptions, whether optional or mandatory, in
respect thereof,
(ii) Agent shall have received true, correct and
complete copies of all agreements, documents, and instruments evidencing or
otherwise related to such Indebtedness, each as duly authorized, executed and
delivered by the parties thereto,
(iii) Borrower shall not, directly or indirectly, (A)
amend, modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto, except, that, Borrower may, after prior
written notice to Agent, amend, modify, alter or change the terms thereof so as
to extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness (except pursuant to regularly scheduled payments
permitted herein), or set aside or otherwise deposit or invest any sums for such
purpose, and
(iv) Borrower shall furnish to Agent all demands or
notices in connection with such Indebtedness either received by Borrower
promptly after the receipt thereof, or sent by Borrower or on its behalf
concurrently with the sending thereof, as the case may be;
(f) the Indebtedness of Borrower to Transportation
Receivables as evidenced by the Transportation Receivables Loan Agreement (as in
effect on the date hereof); provided, that, each of the following conditions is
satisfied as determined by Agent:
(i) the aggregate principal amount of such
Indebtedness shall not exceed $5,000,000 less the aggregate amount of all
repayments, repurchases or redemptions, whether optional or mandatory, in
respect thereof,
(ii) Agent shall have received true, correct and
complete copies of all agreements, documents, and instruments evidencing or
otherwise related to such Indebtedness, each as duly authorized, executed and
delivered by the parties thereto,
(iii) such Indebtedness shall be subject to the
Transportation Receivables Intercreditor Agreement, in form and substance
satisfactory to Agent, duly authorized, executed and delivered by the parties
thereto,
71
(iv) Borrower shall not make any payments with
respect to such Indebtedness except for payments expressly permitted by the
terms of Section 2.2 of the Transportation Receivables Intercreditor Agreement;
(v) Borrower shall not, directly or indirectly, (A)
amend, modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto, except, that, Borrower may, after prior
written notice to Agent, amend, modify, alter or change the terms thereof so as
to extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness (except pursuant to regularly scheduled payments
permitted herein), or set aside or otherwise deposit or invest any sums for such
purpose, and
(vi) Borrower shall furnish to Agent all demands or
notices in connection with such Indebtedness either received by Borrower
promptly after the receipt thereof, or sent by Borrower or on its behalf
concurrently with the sending thereof, as the case may be;
(g) the Indebtedness of Borrower to Interbay as evidenced by
the Interbay Mortgage Note (as in effect on the date hereof); provided, that,
each of the following conditions is satisfied as determined by Agent:
(i) the aggregate principal amount of such
Indebtedness shall not exceed $624,548 less the aggregate amount of all
repayments, repurchases or redemptions, whether optional or mandatory, in
respect thereof,
(ii) Agent shall have received true, correct and
complete copies of all agreements, documents, and instruments evidencing or
otherwise related to such Indebtedness, each as duly authorized, executed and
delivered by the parties thereto,
(iii) Borrower shall not, directly or indirectly, (A)
amend, modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto, except, that, Borrower may, after prior
written notice to Agent, amend, modify, alter or change the terms thereof so as
to extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness (except pursuant to regularly scheduled payments
permitted herein), or set aside or otherwise deposit or invest any sums for such
purpose, and
(iv) Borrower shall furnish to Agent all demands or
notices in connection with such Indebtedness either received by Borrower
promptly after the receipt thereof, or sent by Borrower or on its behalf
concurrently with the sending thereof, as the case may be;
72
(h) Indebtedness of Borrower under interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements,
interest rate exchange agreements or similar contractual arrangements intended
to protect such Person against fluctuations in interest rates and currency swap
agreements, forward currency purchase agreements or similar contractual
arrangements intended to protect such Person against fluctuations in currency
exchange rates; provided, that, (i) such arrangements are with banks or other
financial institutions that have combined capital and surplus and undivided
profits of not less than $250,000,000 and are not for speculative purposes and
(ii) such Indebtedness shall be unsecured;
(i) the Indebtedness set forth on Schedule 9.9 to the
Information Certificate which is not otherwise expressly permitted under this
Section 9.9; provided, that, (i) Borrower may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise to such
Indebtedness as in effect on the date hereof, (ii) Borrower shall not, directly
or indirectly, (A) amend, modify, alter or change the terms of such Indebtedness
or any agreement, document or instrument related thereto as in effect on the
date hereof except, that, Borrower may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof, or defer the timing of any payments in respect thereof, or to forgive
or cancel any portion of such Indebtedness (other than pursuant to payments
thereof), or to reduce the interest rate or any fees in connection therewith, or
(B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or
set aside or otherwise deposit or invest any sums for such purpose, and (iii)
Borrower shall furnish to Agent all notices or demands in connection with such
Indebtedness either received by Borrower or on its behalf, promptly after the
receipt thereof, or sent by Borrower or on its behalf, concurrently with the
sending thereof, as the case may be.
9.10 Loans, Investments, Etc. Borrower shall not, and shall not
permit any Subsidiary to, directly or indirectly, make any loans or advance
money or property to any person, or invest in (by capital contribution, dividend
or otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all
or a substantial part of the assets or property of any person, or form or
acquire any Subsidiaries, or agree to do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit
in the ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that,
(i) no Revolving Loans are then outstanding and (ii) the terms and conditions of
Section 5.2 hereof shall have been satisfied with respect to the deposit
account, investment account or other account in which such cash or Cash
Equivalents are held;
(c) the existing equity investments of Borrower as of the
date hereof in its Subsidiaries, provided, that, Borrower shall not have any
further obligations or liabilities to make any capital contributions or other
additional investments or other payments to or in or for the benefit of any of
such Subsidiaries;
73
(d) loans and advances by Borrower to employees of Borrower
not to exceed the principal amount of $50,000 in the aggregate at any time
outstanding for: (i) reasonably and necessary work-related travel or other
ordinary business expenses to be incurred by such employee in connection with
their work for Borrower and (ii) reasonable and necessary relocation expenses of
such employees (including home mortgage financing for relocated employees);
(e) stock or obligations issued to Borrower by any Person
(or the representative of such Person) in respect of Indebtedness of such Person
owing to Borrower in connection with the insolvency, bankruptcy, receivership or
reorganization of such Person or a composition or readjustment of the debts of
such Person; provided, that, the original of any such stock or instrument
evidencing such obligations shall be promptly delivered to Agent, upon Agent's
request, together with such stock power, assignment or endorsement by Borrower
as Agent may request;
(f) obligations of account debtors to Borrower arising from
Accounts which are past due evidenced by a promissory note made by such account
debtor payable to Borrower; provided, that, promptly upon the receipt of the
original of any such promissory note by Borrower, such promissory note shall be
endorsed to the order of Agent by Borrower and promptly delivered to Agent as so
endorsed;
(g) the loans and advances set forth on Schedule 9.10 to the
Information Certificate; provided, that, as to such loans and advances, (i)
Borrower shall not, directly or indirectly, amend, modify, alter or change the
terms of such loans and advances or any agreement, document or instrument
related thereto and (ii) Borrower shall furnish to Agent all notices or demands
in connection with such loans and advances either received by Borrower or on its
behalf, promptly after the receipt thereof, or sent by Borrower or on its
behalf, concurrently with the sending thereof, as the case may be.
9.11 Dividends and Redemptions. Borrower shall not, directly or
indirectly, declare or pay any dividends on account of any shares of class of
any Capital Stock of Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, except that:
(a) Borrower may declare and pay such dividends or redeem,
retire, defease, purchase or otherwise acquire any shares of any class of
Capital Stock for consideration in the form of shares of common stock (so long
as after giving effect thereto no Change of Control or other Default or Event of
Default shall exist or occur);
(b) Borrower may repurchase Capital Stock consisting of
common stock held by employees pursuant to any employee stock ownership plan
thereof upon the termination, retirement or death of any such employee in
accordance with the provisions of such plan,
74
provided, that, as to any such repurchase, each of the following conditions is
satisfied: (i) as of the date of the payment for such repurchase and after
giving effect thereto, no Default or Event of Default shall exist or have
occurred and be continuing, (ii) such repurchase shall be paid with funds
legally available therefor, (iii) such repurchase shall not violate any law or
regulation or the terms of any indenture, agreement or undertaking to which
Borrower is a party or by which Borrower or its or their property are bound, and
(iv) the aggregate amount of all payments for such repurchases in any calendar
year shall not exceed $50,000.
9.12 Transactions with Affiliates. Borrower shall not, directly or
indirectly:
(a) purchase, acquire or lease any property from, or sell,
transfer or lease any property to, any officer, director or other Affiliate of
Borrower, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's business (as the case may be) and upon fair and
reasonable terms no less favorable to Borrower than Borrower would obtain in a
comparable arm's length transaction with an unaffiliated person; or
(b) make any payments (whether by dividend, loan or
otherwise) of management, consulting or other fees for management or similar
services, or of any Indebtedness owing to any officer, employee, shareholder,
director or any other Affiliate of Borrower, except reasonable compensation to
officers, employees and directors for services rendered to Borrower in the
ordinary course of business.
9.13 Compliance with ERISA. Borrower shall, and shall cause each of
its ERISA Affiliates, to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal and
State law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) not terminate any of such Plans so as
to incur any material liability to the Pension Benefit Guaranty Corporation;
(d) not allow or suffer to exist any prohibited transaction involving any of
such Plans or any trust created thereunder which would subject Borrower or such
ERISA Affiliate to a material tax or penalty or other liability on prohibited
transactions imposed under Section 4975 of the Code or ERISA; (e) make all
required contributions to any Plan which it is obligated to pay under Section
302 of ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow
or suffer to exist any accumulated funding deficiency, whether or not waived,
with respect to any such Plan; or (g) allow or suffer to exist any occurrence of
a reportable event or any other event or condition which presents a material
risk of termination by the Pension Benefit Guaranty Corporation of any such Plan
that is a single employer plan, which termination could result in any material
liability to the Pension Benefit Guaranty Corporation.
9.14 End of Fiscal Years; Fiscal Quarters. Borrower shall, for
financial reporting purposes, cause its, and each of its Subsidiaries' (a)
fiscal years to end on December 31 of each year and (b) fiscal quarters to end
on March 31, June 30, September 30, and December 31 of each year.
75
9.15 Change in Business. Borrower shall not engage in any business
other than the business of Borrower on the date hereof and any business
reasonably related, ancillary or complimentary to the business in which Borrower
is engaged on the date hereof.
9.16 Limitation of Restrictions Affecting Subsidiaries. Borrower
shall not, directly, or indirectly, create or otherwise cause or suffer to exist
any encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of Borrower to (a) pay dividends or make other distributions or pay
any Indebtedness owed to Borrower or any Subsidiary of Borrower; (b) make loans
or advances to Borrower or any Subsidiary of Borrower, (c) transfer any of its
properties or assets to Borrower or any Subsidiary of Borrower; or (d) create,
incur, assume or suffer to exist any lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, other than encumbrances and
restrictions arising under (i) applicable law, (ii) this Agreement, (iii)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of Borrower or any Subsidiary of Borrower, (iv) customary
restrictions on dispositions of real property interests found in reciprocal
easement agreements of Borrower or any Subsidiary of Borrower, (v) any agreement
relating to permitted Indebtedness incurred by a Subsidiary of Borrower prior to
the date on which such Subsidiary was acquired by Borrower and outstanding on
such acquisition date, and (vi) the extension or continuation of contractual
obligations in existence on the date hereof; provided, that, any such
encumbrances or restrictions contained in such extension or continuation are no
less favorable to Agent and Lenders than those encumbrances and restrictions
under or pursuant to the contractual obligations so extended or continued.
9.17 EBITDA; Excess Availability.
(a) Borrower shall not, for any period set forth below,
permit its EBITDA to be less than the amount set forth below opposite such
period:
Test Period Minimum EBITDA
----------- --------------
1/1/04 - 4/30/04 $ 2,127,000
1/1/04 - 5/30/04 $ 3,081,000
1/1/04 - 6/30/04 $ 3,873,000
1/1/04 - 7/31/04 $ 4,514,000
1/1/04 - 8/31/04 $ 5,398,000
1/1/04 - 9/30/04 $ 6,386,000
1/1/04 - 10/31/04 $ 7,919,000
1/1/04 - 11/30/04 $ 8,896,000
1/1/04 - 12/31/04 $ 9,503,000
2/1/04 - 1/31/05 $ 9,772,000
3/1/04 - 2/28/05 $ 9,934,000
4/1/04 - 3/31/05 $ 10,000,000
5/1/04 - 4/30/05 $ 10,000,000
6/1/04 - 5/30/05 $ 10,000,000
7/1/04 - 6/30/05 $ 10,000,000
76
Test Period Minimum EBITDA
----------- --------------
8/1/04 - 7/31/05 $ 10,000,000
9/1/04 - 8/31/05 $ 10,000,000
10/1/04 - 9/30/05 $ 10,000,000
11/1/04 - 10/31/05 $ 10,000,000
12/1/04 - 11/30/05 $ 10,000,000
1/1/05 - 12/31/05 $ 10,000,000
2/1/05 - 1/31/06 $ 10,000,000
3/1/05 - 2/28/06 $ 10,000,000
4/1/05 - 3/31/06 $ 10,000,000
5/1/05 - 4/30/06 $ 10,000,000
6/1/05 - 5/30/06 $ 10,000,000
7/1/05 - 6/30/06 $ 10,000,000
8/1/05 - 7/31/06 $ 10,000,000
9/1/05 - 8/31/06 $ 10,000,000
10/1/05 - 9/30/06 $ 10,000,000
11/1/05 - 10/31/06 $ 10,000,000
12/1/05 - 11/30/06 $ 10,000,000
1/1/06 - 12/31/06 $ 10,000,000
2/1/06 - 1/31/07 $ 10,000,000
3/1/06 - 2/28/07 $ 10,000,000
4/1/06 - 3/31/07 $ 10,000,000
5/1/06 - 4/30/07 $ 10,000,000
(b) Borrower shall not permit Excess Availability to be less
than $2,000,000 any time.
9.18 Capital Expenditures.
Borrower shall not, directly or indirectly, make or commit to make,
whether through purchase, capital leases or otherwise, Capital Expenditures in
an amount in excess of $500,000 during any fiscal year.
9.19 License Agreements.
(a) Borrower shall (i) promptly and faithfully observe and
perform all of the material terms, covenants, conditions and provisions of the
material License Agreements to which it is a party to be observed and performed
by it, at the times set forth therein, if any, (ii) not do, permit, suffer or
refrain from doing anything that could reasonably be expected to result in a
default under or breach of any of the terms of any material License Agreement,
(iii) not cancel, surrender, modify, amend, waive or release any material
License Agreement in any material respect or any term, provision or right of the
licensee thereunder in any material respect, or consent to or permit to occur
any of the foregoing; except, that, subject to Section 9.19(b) below, Borrower
may cancel, surrender or release any material License Agreement in the ordinary
course
77
of the business of Borrower; provided, that, Borrower (as the case may be) shall
give Agent not less than thirty (30) days prior written notice of its intention
to so cancel, surrender and release any such material License Agreement, (iv)
give Agent prompt written notice of any material License Agreement entered into
by Borrower after the date hereof, together with a true, correct and complete
copy thereof and such other information with respect thereto as Agent may
request, (v) give Agent prompt written notice of any material breach of any
obligation, or any default, by any party under any material License Agreement,
and deliver to Agent (promptly upon the receipt thereof by Borrower in the case
of a notice to Borrower and concurrently with the sending thereof in the case of
a notice from Borrower ) a copy of each notice of default and every other notice
and other communication received or delivered by Borrower in connection with any
material License Agreement which relates to the right of Borrower to continue to
use the property subject to such License Agreement, and (vi) furnish to Agent,
promptly upon the request of Agent, such information and evidence as Agent may
reasonably require from time to time concerning the observance, performance and
compliance by Borrower or the other party or parties thereto with the material
terms, covenants or provisions of any material License Agreement.
(b) Borrower will either exercise any option to renew or
extend the term of each material License Agreement to which it is a party in
such manner as will cause the term of such material License Agreement to be
effectively renewed or extended for the period provided by such option and give
prompt written notice thereof to Agent or give Agent prior written notice that
Borrower does not intend to renew or extend the term of any such material
License Agreement or that the term thereof shall otherwise be expiring, not less
than sixty (60) days prior to the date of any such non-renewal or expiration. In
the event of the failure of Borrower to extend or renew any material License
Agreement to which it is a party, Agent shall have, and is hereby granted, the
irrevocable right and authority, at its option, to renew or extend the term of
such material License Agreement, whether in its own name and behalf, or in the
name and behalf of a designee or nominee of Agent or in the name and behalf of
Borrower, as Agent shall determine at any time that an Event of Default shall
exist or have occurred and be continuing. Agent may, but shall not be required
to, perform any or all of such obligations of Borrower under any of the License
Agreements, including, but not limited to, the payment of any or all sums due
from Borrower thereunder. Any sums so paid by Agent shall constitute part of the
Obligations.
9.20 After Acquired Real Property. If Borrower hereafter acquires any
Real Property or fixtures, then if such Real Property or fixtures at any
location (or series of adjacent, contiguous or related locations, and regardless
of the number of parcels) has a fair market value in an amount equal to or
greater than $250,000 (or if a Default or Event of Default exists, then
regardless of the fair market value of such assets), without limiting any other
rights of Agent or any Lender, or duties or obligations of Borrower, promptly
upon Agent's request, Borrower shall execute and deliver to Agent a mortgage,
deed of trust or deed to secure debt, as Agent may determine, in form and
substance satisfactory to Agent, granting to Agent a first and only lien and
mortgage on and security interest in such Real Property or fixtures (except as
Borrower would otherwise be permitted to incur hereunder or as otherwise
consented to in writing by Agent) and such other agreements, documents and
instruments as Agent may require in connection therewith.
78
9.21 Subordination. Borrower shall cause all indebtedness and other
obligations now or hereafter owed by it to any of its Affiliates, to be
subordinated in right of payment to the Obligations pursuant to a subordination
agreement, in form and substance satisfactory to Agent, duly authorized,
executed and delivered by Borrower and each such Affiliate.
9.22 Costs and Expenses. Borrower shall pay to Agent or, as the case
may be, to any Lender, on demand all costs, expenses, filing fees and taxes paid
or payable in connection with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense of
the Obligations, Agent's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance premiums, appraisal fees and
search fees, costs and expenses of remitting loan proceeds, collecting checks
and other items of payment, and establishing and maintaining the Blocked
Accounts, together with Agent's customary charges and fees with respect thereto;
(c) charges, fees or expenses charged by any bank or issuer in connection with
the Letter of Credit Accommodations; (d) costs and expenses of preserving and
protecting the Collateral; (e) costs and expenses paid or incurred in connection
with obtaining payment of the Obligations, enforcing the security interests and
liens of Agent, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Agent or any
Lender arising out of the transactions contemplated hereby and thereby
(including preparations for and consultations concerning any such matters); (f)
all out-of-pocket expenses and costs upon presentation of invoices by Agent,
heretofore and from time to time hereafter incurred by Agent during the course
of periodic field examinations of the Collateral and Borrower 's operations,
plus a per diem charge at the then standard rate for Agent's field examiners in
the field and office (which rate as of the date hereof is of $800 per person per
day); and (g) the fees and disbursements of counsel (including legal assistants)
to Agent or any Lender in connection with any of the foregoing.
9.23 Further Assurances. At the request of Agent at any time and from
time to time, Borrower shall, at its expense, duly execute and deliver, or cause
to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. Agent may
at any time and from time to time request a certificate from an officer of
Borrower representing that all conditions precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are satisfied. In the
event of such request by Agent, Agent and Lenders may, at Agent's option, cease
to make any further Loans or provide any further Letter of Credit Accommodations
until Agent has received such certificate and, in addition, Agent has determined
that such conditions are satisfied.
79
SECTION 10. EVENTS OF DEFAULT AND REMEDIES.
10.1 Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Borrower fails to pay any of the Obligations when
due or (ii) Borrower fails to perform any of the covenants contained in Sections
9.3, 9.4, 9.13, 9.14, 9.15, and 9.16 of this Agreement and such failure shall
continue for ten (10) days; provided, that, such ten (10) day period shall not
apply in the case of: (A) any failure to observe any such covenant which is not
capable of being cured at all or within such ten (10) day period or which has
been the subject of a prior failure within a six (6) month period or (B) an
intentional breach by Borrower of any such covenant or (iii) Borrower fails to
perform any of the terms, covenants, conditions or provisions contained in this
Agreement or any of the other Financing Agreements other than those described in
Sections 10.1(a)(i) and 10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made
by Borrower to Agent in this Agreement, the other Financing Agreements or any
other written agreement, schedule, confirmatory assignment or otherwise shall
when made or deemed made be false or misleading in any material respect;
(c) any Obligor revokes or terminates, or purports to revoke
or terminate, or fails to perform any of the terms, covenants, conditions or
provisions of any guarantee, endorsement or other agreement of such party in
favor of Agent or any Lender;
(d) any judgment for the payment of money is rendered
against Borrower or any Obligor in excess of $250,000 in any one case or in
excess of $500,000 in the aggregate (to the extent not covered by insurance
where the insurer has assumed responsibility in writing for such judgment) and
shall remain undischarged or unvacated for a period in excess of thirty (30)
days or execution shall at any time not be effectively stayed, or any judgment
other than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against Borrower or any Obligor or any of the Collateral
having a value in excess of $250,000;
(e) any Obligor (being a natural person or a general partner
of an Obligor which is a partnership) dies or Borrower or any Obligor, which is
a partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;
(f) Borrower or any Obligor makes an assignment for the
benefit of creditors, makes or sends notice of a bulk transfer or calls a
meeting of its creditors or principal creditors in connection with a moratorium
or adjustment of the Indebtedness due to them;
(g) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter
80
in effect (whether at law or in equity) is filed against Borrower or any Obligor
or all or any part of its properties and such petition or application is not
dismissed within thirty (30) days after the date of its filing or Borrower or
any Obligor shall file any answer admitting or not contesting such petition or
application or indicates its consent to, acquiescence in or approval of, any
such action or proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by Borrower or any Obligor or for all or any part of its
property;
(i) any default in respect of any Indebtedness of Borrower
or any Obligor (other than Indebtedness owing to Agent and Lenders hereunder),
in any case in an amount in excess of $250,000, which default continues for more
than the applicable cure period, if any, with respect thereto and/or is not
waived in writing by the other parties thereto, or any default by Borrower or
any Obligor under any Material Contract (which, for the avoidance of doubt,
shall include the Bareboat Charter Party Agreements and the Transportation
Receivables Loan Documents), which default continues for more than the
applicable cure period, if any, with respect thereto and/or is not waived in
writing by the other parties thereto;
(j) any material provision hereof or of any of the other
Financing Agreements shall for any reason cease to be valid, binding and
enforceable with respect to any party hereto or thereto (other than Agent) in
accordance with its terms, or any such party shall challenge the enforceability
hereof or thereof, or shall assert in writing, or take any action or fail to
take any action based on the assertion that any provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Financing Agreements shall cease to
be a valid and perfected first priority security interest in any of the
Collateral purported to be subject thereto (except as otherwise permitted herein
or therein);
(k) an ERISA Event shall occur which results in or could
reasonably be expected to result in liability of Borrower in an aggregate amount
in excess of $250,000;
(l) any Change of Control;
(m) the indictment by any Governmental Authority, or as
Agent may reasonably and in good faith determine, the threatened indictment by
any Governmental Authority of Borrower or any Obligor of which Borrower, such
Obligor or Agent receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith
determination of Agent, under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against Borrower or any
Obligor, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of (i) any of the Collateral having a
value in excess of $250,000 or (ii) any other property of Borrower which is
necessary or material to the conduct of its business;
81
(n) any event shall occur as a result of which (i) the
revenues of Borrower in any fiscal quarter are less than the amount for such
fiscal quarter set forth on Schedule 10.1 hereto, (ii) contingent liabilities
are incurred by Borrower in excess of $250,000 which would be required to be
reflected in the footnotes to a balance sheet prepared in accordance with GAAP,
(iii) operations are suspended or terminated for thirty (30) days or more at any
facility of Borrower, (iv) any law, regulation, order, judgment or decree of any
Governmental Authority shall exist, or any action, suit, investigation,
litigation or proceeding shall be pending or threatened in writing in any court
or before any arbitrator or Governmental Authority that could reasonably be
expected to result in the loss of the ability to conduct any portion of the
business that accounted for more than ten (10%) of the revenues of Borrower in
the immediately preceding fiscal year, or (viii) the loss, suspension,
revocation or failure to renew any Permit now held or hereafter acquired by
Borrower required in connection with the conduct by Borrower of its business as
conducted on the date hereof; or; or
(o) there shall be an event of default under any of the
other Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred
and is continuing, Agent and Lenders shall have all rights and remedies provided
in this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by Borrower or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent's discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower or any Obligor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times, proceed directly against Borrower or any Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the generality of the foregoing, at any
time an Event of Default exists or has occurred and is continuing, Agent may, at
its option and shall upon the direction of the Required Lenders, (i) upon notice
to Borrower, accelerate the payment of all Obligations and demand immediate
payment thereof to Agent for itself and the benefit of Lenders (provided, that,
upon the occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h), all Obligations shall automatically become immediately due and
payable), and (ii) terminate the Commitments and this Agreement (provided, that,
upon the occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h), the Commitments and any other obligation of the Agent or a Lender
hereunder shall automatically terminate).
(c) Notwithstanding anything to the contrary contained
herein, except as the Required Term Loan Lenders may otherwise agree, Agent
shall demand payment of the
82
Obligations and commence and pursue such Enforcement Actions reasonably
requested by Required Term Loan Lenders within ninety (90) days after the date
of the receipt by Agent of written notice from Required Term Loan Lenders
requesting that Agent demand payment of the Obligations and commence Enforcement
Actions and notifying Agent of an Event of Default described in Sections
10.1(a)(i), 10.1(g) or 10.1(h); provided, that, in each case, (i) such Event of
Default has not been waived or cured and is otherwise continuing, (ii) in the
good faith determination of Agent, taking the Enforcement Action specified is
permitted under the terms of this Agreement and any applicable law, including,
but not limited to, any bankruptcy or insolvency laws, (iii) the taking the
Enforcement Action specified shall not result in any liability of Agent or
Lenders to Borrower, any Obligor or any other person, (iv) Agent shall be
entitled to all of the benefits of Section 12 hereof and any other applicable
provisions of the Financing Agreements, (v) Agent shall not be required to take
an Enforcement Action so long as within the ninety (90) day period provided
above, Agent shall, at its option, either (x) appoint a Term Loan Lender as an
agent of Agent for purposes of exercising the rights of Agent to take an
Enforcement Action, subject to the terms hereof or (y) resign as Agent and a
Term Loan Lender shall automatically be deemed to be the successor Agent
hereunder for purposes hereof, except with respect to the provisions of Section
2 hereof and in connection with all matters relating to the determination of the
Borrowing Base and each of its components (including Eligible Accounts, Eligible
Equipment, Reserves and receiving reports in respect of Collateral and
conducting field examinations with respect to the Collateral and similar
matters).
(d) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Agent may, in its discretion
and upon the direction of the Required Lenders, Agent shall (i) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (ii) require Borrower or any Obligor, at Borrower's
expense, to assemble and make available to Agent any part or all of the
Collateral at any place and time designated by Agent, (iii) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (iv)
remove any or all of the Collateral from any premises on or in which the same
may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (v) sell, lease, transfer, assign,
deliver or otherwise dispose of any and all Collateral (including entering into
contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Agent or elsewhere) at such prices or terms as
Agent may deem reasonable, for cash, upon credit or for future delivery, with
the Agent having the right to purchase the whole or any part of the Collateral
at any such public sale, all of the foregoing being free from any right or
equity of redemption of Borrower or any Obligor, which right or equity of
redemption is hereby expressly waived and released by Borrower and any Obligor
and/or (vi) terminate this Agreement. If any of the Collateral is sold or leased
by Agent upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally collected by
Agent. If notice of disposition of Collateral is required by law, ten (10) days
prior notice by Agent to Borrower designating the time and place of any public
sale or the time after which any private sale or other intended disposition of
Collateral is to be made, shall be
83
deemed to be reasonable notice thereof and Borrower and Obligors waive any other
notice. In the event Agent institutes an action to recover any Collateral or
seeks recovery of any Collateral by way of prejudgment remedy, Borrower and each
Obligor waives the posting of any bond which might otherwise be required. At any
time an Event of Default exists or has occurred and is continuing, upon Agent's
request, Borrower will either, as Agent shall specify, furnish cash collateral
to the issuer to be used to secure and fund Agent's reimbursement obligations to
the issuer in connection with any Letter of Credit Accommodations or furnish
cash collateral to Agent for the Letter of Credit Accommodations. Such cash
collateral shall be in the amount equal to one hundred ten (110%) percent of the
amount of the Letter of Credit Accommodations plus the amount of any fees and
expenses payable in connection therewith through the end of the latest
expiration date of such Letter of Credit Accommodations.
(e) At any time or times that an Event of Default exists or
has occurred and is continuing, Agent may, in its discretion, and upon the
direction of the Required Revolving Lenders, Agent shall enforce the rights of
Borrower or any Obligor against any account debtor, secondary obligor or other
obligor in respect of any of the Accounts or other Receivables. Without limiting
the generality of the foregoing, Agent may, in its discretion, and upon the
direction of the Required Lenders, Agent shall, at such time or times (i) notify
any or all account debtors, secondary obligors or other obligors in respect
thereof that the Receivables have been assigned to Agent and that Agent has a
security interest therein and Agent may direct any or all account debtors,
secondary obligors and other obligors to make payment of Receivables directly to
Agent, (ii) extend the time of payment of, compromise, settle or adjust for
cash, credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Receivables or other obligations included in the
Collateral and thereby discharge or release the account debtor or any secondary
obligors or other obligors in respect thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any Receivables or such
other obligations, but without any duty to do so, and Agent and Lenders shall
not be liable for any failure to collect or enforce the payment thereof nor for
the negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests and the interests of Lenders. At any time that an Event of
Default exists or has occurred and is continuing, at Agent's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Agent and are payable directly
and only to Agent and Borrower shall deliver to Agent such originals of
documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Agent may require. In the event any
account debtor returns Inventory when an Event of Default exists or has occurred
and is continuing, Borrower shall, upon Agent's request, hold the returned
Inventory in trust for Agent, segregate all returned Inventory from all of its
other property, dispose of the returned Inventory solely according to Agent's
instructions, and not issue any credits, discounts or allowances with respect
thereto without Agent's prior written consent.
(f) To the extent that applicable law imposes duties on
Agent or any Lender to exercise remedies in a commercially reasonable manner
(which duties cannot be waived under such law), Borrower acknowledges and agrees
that it is not commercially unreasonable for Agent or any Lender (i) to fail to
incur expenses reasonably deemed significant by Agent or any Lender
84
to prepare Collateral for disposition or otherwise to complete raw material or
work in process into finished goods or other finished products for disposition,
(ii) to fail to obtain third party consents for access to Collateral to be
disposed of, or to obtain or, if not required by other law, to fail to obtain
consents of any Governmental Authority or other third party for the collection
or disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors, secondary obligors or
other persons obligated on Collateral or to remove liens or encumbrances on or
any adverse claims against Collateral, (iv) to exercise collection remedies
against account debtors and other persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other persons, whether or not in the same business as Borrower, for
expressions of interest in acquiring all or any portion of the Collateral, (vii)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (viii) to
dispose of Collateral by utilizing Internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets, (ix) to
dispose of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, (xi) to purchase insurance or credit enhancements to
insure Agent or Lenders against risks of loss, collection or disposition of
Collateral or to provide to Agent or Lenders a guaranteed return from the
collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Borrower acknowledges that the purpose
of this Section is to provide non-exhaustive indications of what actions or
omissions by Agent or any Lender would not be commercially unreasonable in the
exercise by Agent or any Lender of remedies against the Collateral and that
other actions or omissions by Agent or any Lender shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section. Without limitation of the foregoing, nothing contained in this Section
shall be construed to grant any rights to Borrower or to impose any duties on
Agent or Lenders that would not have been granted or imposed by this Agreement
or by applicable law in the absence of this Section.
(g) For the purpose of enabling Agent to exercise the rights
and remedies hereunder, Borrower hereby grants to Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable at any time an
Event of Default shall exist or have occurred and for so long as the same is
continuing) without payment of royalty or other compensation to Borrower, to
use, assign, license or sublicense any of the trademarks, service-marks, trade
names, business names, trade styles, designs, logos and other source of business
identifiers and other Intellectual Property and general intangibles now owned or
hereafter acquired by Borrower, wherever the same maybe located, including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer programs used for the compilation
or printout thereof.
(h) At any time an Event of Default exists or has occurred
and is continuing, Agent may apply the cash proceeds of Collateral actually
received by Agent from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part
85
and in accordance with the terms hereof, whether or not then due or may hold
such proceeds as cash collateral for the Obligations. Borrower and Obligors
shall remain liable to Agent and Lenders for the payment of any deficiency with
interest at the highest rate provided for herein and all costs and expenses of
collection or enforcement, including attorneys' fees and expenses.
(i) Without limiting the foregoing, upon the occurrence of a
Default or an Event of Default, (i) Agent and Lenders may, at Agent's option,
and upon the occurrence of an Event of Default, at the direction of the Required
Revolving Lenders, Agent and Lenders shall, without notice, (A) cease making
Loans or arranging for Letter of Credit Accommodations or reduce the lending
formulas or amounts of Revolving Loans and Letter of Credit Accommodations
available to Borrower and/or (B) terminate any provision of this Agreement
providing for any future Revolving Loans or Letter of Credit Accommodations to
be made by Agent and Lenders to Borrower, and (ii) Agent may, at its option,
establish such Reserves as Agent determines without limitation or restriction,
notwithstanding anything to the contrary provided herein.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW.
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements (except as otherwise provided
therein) and any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of the State of Florida but excluding any principles of conflicts
of law or other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of Florida.
(b) Borrower, Agent and Lenders irrevocably consent and
submit to the non-exclusive jurisdiction of the Circuit Court of Dade County,
Florida and the United States District Court for the Southern District of
Florida, whichever Agent may elect, and waive any objection based on venue or
forum non conveniens with respect to any action instituted therein arising under
this Agreement or any of the other Financing Agreements or in any way connected
with or related or incidental to the dealings of the parties hereto in respect
of this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Agent and Lenders shall have the right to bring any
action or proceeding against Borrower or any Obligor or its or their property in
the courts of any other jurisdiction which Agent deems necessary or appropriate
in order to realize on the Collateral or to otherwise enforce its rights against
Borrower or any Obligor or its or their property).
(c) Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed five
86
(5) days after the same shall have been so deposited in the U.S. mails, or, at
Agent's option, by service upon Borrower in any other manner provided under the
rules of any such courts. Within thirty (30) days after such service, Borrower
shall appear in answer to such process, failing which Borrower shall be deemed
in default and judgment may be entered by Agent against Borrower for the amount
of the claim and other relief requested.
(d) BORROWER, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER,
AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT BORROWER, AGENT OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to
Borrower or any Obligor (whether in tort, contract, equity or otherwise) for
losses suffered by Borrower in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
Agent and such Lender, that the losses were the result of acts or omissions
constituting gross negligence or willful misconduct. In any such litigation,
Agent and Lenders shall be entitled to the benefit of the rebuttable presumption
that it acted in good faith and with the exercise of ordinary care in the
performance by it of the terms of this Agreement. Borrower: (i) certifies that
neither Agent, any Lender nor any representative, agent or attorney acting for
or on behalf of Agent or any Lender has represented, expressly or otherwise,
that Agent and Lenders would not, in the event of litigation, seek to enforce
any of the waivers provided for in this Agreement or any of the other Financing
Agreements and (ii) acknowledges that in entering into this Agreement and the
other Financing Agreements, Agent and Lenders are relying upon, among other
things, the waivers and certifications set forth in this Section 11.1 and
elsewhere herein and therein.
11.2 Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and chattel paper, included in or evidencing any of
the Obligations or the Collateral, and any and all other demands and notices of
any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Borrower which Agent or any Lender may elect to give shall
entitle Borrower to any other or further notice or demand in the same, similar
or other circumstances.
87
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing Agreement
nor any terms hereof or thereof may be amended, waived, discharged or terminated
unless such amendment, waiver, discharge or termination is in writing signed by
Agent and the Required Lenders or at Agent's option, by Agent with the
authorization of the Required Lenders, and as to amendments to any of the
Financing Agreements (other than with respect to any provision of Section 12
hereof), by Borrower; except, that,
(i) no such amendment, waiver, discharge or
termination shall:
(A) reduce the interest rate or any fees or
extend the time of payment of principal, interest or any fees or reduce the
principal amount of any Loan or Letter of Credit Accommodations, in each case
without the consent of each Lender directly affected thereby,
(B) increase the Commitment of any Lender
over the amount thereof then in effect or provided hereunder, in each case
without the consent of the Lender directly affected thereby,
(C) release any Collateral (except as
expressly provided hereunder or under any of the other Financing Agreements or
applicable law and except as permitted under Section 12.11(b) hereof), without
the consent of Agent and all of Lenders,
(D) (1) reduce any percentage specified in
the definition of Required Lenders, without the consent of Agent and all of
Lenders, (2) reduce any percentage specified in the definition of Required
Revolving Lenders, without the consent of agent and all of the Revolving Lenders
or (3) reduce any percentage specified in the definition of Required Term Loan
Lenders, without the consent of Agent and all of the Term Loan Lenders,
(E) consent to the assignment or transfer by
Borrower or any Obligor of any of their rights and obligations under this
Agreement, without the consent of Agent and all of Lenders,
(F) amend, modify or waive any terms of this
Section 11.3 hereof, without the consent of Agent and all of Lenders,
(G) amend Section 2.1(b) hereof or amend the
Financing Agreements to increase the advance rates constituting part of the
Borrowing Base without the consent of Agent and all Lenders or increase the
sublimits with respect to Revolving Loans based on Eligible Equipment or for
Letter of Credit Accommodations, without the consent of Agent and all Revolving
Lenders, or
(H) amend, modify or waive the terms of
Section 6.4 and 6.7 hereof:
88
(ii) any amendment, waiver, discharge or termination
with respect to the following shall require the consent of Agent and the
Required Term Loan Lenders:
(A) the terms of Sections 2.3, 9.8, 9.9,
9.10, 9.11, 9.21, 10.2(c), 12.1, 12.5, 12.8 or 12.11; or
(B) the definitions of "Maximum Credit",
"Revolving Loan Limit", "Term Loans" and "Term Loan Lender", "Term Loan Maturity
Date".
(b) Agent and Lenders shall not, by any act, delay, omission
or otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and signed
as provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in
Section 11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required are
obtained, if any, then Congress shall have the right, but not the obligation, at
any time thereafter, and upon the exercise by Congress of such right, such Non-
Consenting Lender shall have the obligation, to sell, assign and transfer to
Congress or such Eligible Transferee as Congress may specify, the Commitment of
such Non-Consenting Lender and all rights and interests of such Non-Consenting
Lender pursuant thereto. Congress shall provide the Non-Consenting Lender with
prior written notice of its intent to exercise its right under this Section,
which notice shall specify on date on which such purchase and sale shall occur.
Such purchase and sale shall be pursuant to the terms of an Assignment and
Acceptance (whether or not executed by the Non-Consenting Lender), except that
on the date of such purchase and sale, Congress, or such Eligible Transferee
specified by Congress, shall pay to the Non-Consenting Lender the amount equal
to: (i) the principal balance of the Loans held by the Non-Consenting Lender
outstanding as of the close of business on the business day immediately
preceding the effective date of such purchase and sale, plus (ii) amounts
accrued and unpaid in respect of interest and fees payable to the Non-Consenting
Lender to the effective date of the purchase (but in no event shall the Non-
Consenting Lender be deemed entitled to any early termination fee). Such
purchase and sale shall be effective on the date of the payment of such amount
to Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall
terminate on such date.
(d) The consent of Agent shall be required for any
amendment, waiver or consent affecting the rights or duties of Agent hereunder
or under any of the other Financing Agreements, in addition to the consent of
the Lenders otherwise required by this Section and the exercise by Agent of any
of its rights hereunder with respect to Reserves or Eligible Accounts or
89
Eligible Inventory shall not be deemed an amendment to the advance rates
provided for in this Section 11.3.
11.4 Term Loan Purchase Option. (a) Upon (i) the occurrence and
during the continuance of an Event of Default, or (ii)receipt by Term Loan
Lender of a Special Amendment Notice (as hereinafter defined) Term Loan Lender
shall have the option at any time upon five (5) Business Days' prior written
notice to Agent (the notice exercising such option being hereinafter referred to
as a "Purchase Notice") to purchase all of the Revolving Loan Obligations from
Revolving Lenders. Such Purchase Notice from Term Loan Lender to Agent shall be
irrevocable.
(b) On the date specified by the Term Loan Lender in such
Purchase Notice (which shall not be less than five (5) Business Days, nor more
than ten (10) Business Days, after the receipt by Agent of the Purchase Notice
from Term Loan Lender, Revolving Lenders shall sell to Term Loan Lender, and
Term Loan Lender shall purchase from Revolving Lenders, the Revolving Loan
Obligations; provided, that, Agent and Revolving Lenders shall retain all rights
to be indemnified or held harmless by Borrower and Obligors in accordance with
the terms of the Financing Agreements. For purposes of this Section 11.4, a
"Special Amendment Notice" shall be in a written notice by Agent to Term Loan
Lender of any amendment to Section 5.1, 9.7 or 9.15 hereof. Promptly following
the execution and delivery of any amendment with respect to Section 5.1, 9.7 or
9.15 hereof, Agent agrees to deliver to Term Loan Lender a Special Amendment
Notice.
(c) Upon the date of such purchase and sale, Term Loan
Lender shall (i) pay to Agent, for the benefit of Revolving Lenders, as the
purchase price therefor the full amount of all the Revolving Loan Obligations
then outstanding and unpaid (including principal, interest, fees and expenses,
attorneys' fees and legal expenses and any early termination fee payable
pursuant to Section 13.1(c) of the Revolving Loan Agreement), (ii) furnish cash
collateral to Agent in such amounts as Agent determines is reasonably necessary
to secure Agent and Revolving Lenders in connection with any issued and
outstanding letters of credit provided by Revolving Lenders (or letters of
credit that Revolving Lenders have arranged to be provided by third parties
pursuant to the financing arrangements of Revolving Lenders with Borrower or any
Obligor) to Borrower or any Obligor (but not in any event in an amount greater
than 105% of the aggregate undrawn face amount of such letters of credit), (iii)
agree to reimburse Revolving Lenders for any loss, cost, damage or expense
(including attorneys' fees and legal expenses) in connection with any
commissions, fees, costs or expenses related to any issued and outstanding
letters of credit as described above and any checks or other payments
provisionally credited to the Revolving Loan Obligations, and/or as to which
Revolving Lenders have not yet received final payment, (iv) agree to reimburse
Agent and Revolving Lenders in respect of indemnification obligations of
Borrower under the Financing Agreements, and (v) pay to Agent the early
termination fee payable pursuant to Section 13.1(c) of the Revolving Loan
Agreement. Such purchase price and cash collateral shall be remitted by wire
transfer in federal funds to the Agent Payment Account. Interest shall be
calculated to but excluding the Business Day on which such purchase and sale
shall occur if the amounts so paid by Term Loan Lender to the Agent Payment
Account are received in the
90
Agent Payment Account prior to 12:00 noon, Miami, Florida time and interest
shall be calculated to and including such business day if the amounts so paid by
Term Loan Lender to the bank account designated by Agent are received in such
bank account later than 12:00 noon., Miami, Florida time.
(d) Such purchase shall be expressly made without
representation or warranty of any kind by Agent or Revolving Lenders as to the
Revolving Loan Obligation or otherwise and without recourse to Agent and
Revolving Lenders
(e) Agent agrees that it will give Term Loan Lender five (5)
Business Days prior written notice of its intention to commence the exercise of
any enforcement right or remedy against the Collateral. In the event that during
such five (5) Business Day period, Term Loan Lender shall send to Agent the
Purchase Notice, Agent shall not commence any foreclosure or other action to
sell or otherwise realize upon the Collateral, provided, that, the purchase and
sale with respect to the Revolving Loan Obligations provided for herein shall
have closed within five (5) Business Days thereafter and Revolving Lenders shall
have received payment in full of the Revolving Loan Obligations as provided for
herein within such five (5) Business Day period.
11.5 Waiver of Counterclaims.Borrower waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.6 Indemnification. Borrower shall indemnify and hold Agent and
each Lender, and its officers, directors, agents, employees, advisors and
counsel and their respective Affiliates (each such person being an
"Indemnitee"), harmless from and against any and all losses, claims, damages,
liabilities, costs or expenses (including attorneys' fees and expenses) imposed
on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel except that Borrower shall not have any obligation under this Section
11.5 to indemnify an Indemnitee with respect to a matter covered hereby
resulting from the gross negligence or willful misconduct of such Indemnitee as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction (but without limiting the obligations of Borrower as to any other
Indemnitee). To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it violates any
law or public policy, Borrower shall pay the maximum portion which it is
permitted to pay under applicable law to Agent and Lenders in satisfaction of
indemnified matters under this Section. To the extent permitted by applicable
law, Borrower shall not assert, and Borrower hereby waives any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any of the other
91
Financing Agreements or any undertaking or transaction contemplated hereby. All
amounts due under this Section shall be payable upon demand. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
SECTION 12. THE AGENT.
12.1 Appointment, Powers and Immunities. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and under
the other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent (a)
shall promptly apply any amounts received from or on behalf of Borrower, or as
proceeds of any Collateral, in accordance with Section 6.4 hereof, (b) shall
promptly following the request of any Lender, deliver to such Lender copies of
any report, notice, request or other document in any form received from Borrower
or any Obligor pursuant to any Financing Agreement, (c) shall promptly notify
Lenders if Agent becomes aware of the non-payment of any principal, interest or
fee payable to any Lender under any Financing Agreement, (d) shall otherwise
have no duties or responsibilities except those expressly set forth in this
Agreement and in the other Financing Agreements, and shall not by reason of this
Agreement or any other Financing Agreement be a trustee or fiduciary for any
Lender; (e) shall not be responsible to Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any of the other
Financing Agreements, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Financing Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Financing Agreement
or any other document referred to or provided for herein or therein or for any
failure by Borrower or any Obligor or any other Person to perform any of its
obligations hereunder or thereunder; and (f) shall not be responsible to Lenders
for any action taken or omitted to be taken by it hereunder or under any other
Financing Agreement or under any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
Agent may deem and treat the payee of any note as the holder thereof for all
purposes hereof unless and until the assignment thereof pursuant to an agreement
(if and to the extent permitted herein) in form and substance satisfactory to
Agent shall have been delivered to and acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders or
all of Lenders as is required in such circumstance, and such
92
instructions of such Agents and any action taken or failure to act pursuant
thereto shall be binding on all Lenders.
12.3 Events of Default. (a) Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default or an Event of Default or
other failure of a condition precedent to the Loans and Letter of Credit
Accommodations hereunder, unless and until Agent has received written notice
from a Lender, or a Borrower specifying such Event of Default or any unfulfilled
condition precedent, and stating that such notice is a "Notice of Default or
Failure of Condition". In the event that Agent receives such a Notice of Default
or Failure of Condition, Agent shall give prompt notice thereof to the Lenders.
Agent shall (subject to Section 12.7) take such action with respect to any such
Event of Default or failure of condition precedent as shall be directed by the
Required Lenders to the extent provided for herein; provided, that, unless and
until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to or by reason of such Event of Default or failure of condition precedent, as
it shall deem advisable in the best interest of Lenders. Without limiting the
foregoing, and notwithstanding the existence or occurrence and continuance of an
Event of Default or any other failure to satisfy any of the conditions precedent
set forth in Section 4 of this Agreement to the contrary, unless and until
otherwise directed by the Required Lenders, Agent may, but shall have no
obligation to, continue to make Loans and issue or cause to be issued Letter of
Credit Accommodations for the ratable account and risk of Lenders from time to
time if Agent believes making such Loans or issuing or causing to be issued such
Letter of Credit Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no
Lender may assert or exercise any enforcement right or remedy in respect of the
Loans, Letter of Credit Accommodations or other Obligations, as against Borrower
or any Obligor or any of the Collateral or other property of Borrower or any
Obligor.
12.4 Congress in its Individual Capacity. With respect to its
Commitment and the Loans made and Letter of Credit Accommodations issued or
caused to be issued by it (and any successor acting as Agent), so long as
Congress shall be a Lender hereunder, it shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include Congress in its individual capacity as Lender
hereunder. Congress (and any successor acting as Agent) and its Affiliates may
(without having to account therefor to any Lender) lend money to, make
investments in and generally engage in any kind of business with Borrower (and
any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and
Congress and its Affiliates may accept fees and other consideration from
Borrower or any Obligor and any of its Subsidiaries and Affiliates for services
in connection with this Agreement or otherwise without having to account for the
same to Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrower hereunder and without limiting any obligations of
Borrower hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever
93
that may be imposed on, incurred by or asserted against Agent (including by any
Lender) arising out of or by reason of any investigation in or in any way
relating to or arising out of this Agreement or any other Financing Agreement or
any other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including the costs and expenses
that Agent is obligated to pay hereunder) or the enforcement of any of the terms
hereof or thereof or of any such other documents, provided, that, no Lender
shall be liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on Agent or other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of Borrower and Obligors and has made its own decision to enter
into this Agreement and that it will, independently and without reliance upon
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Financing Agreements. Agent shall not be required to keep itself informed
as to the performance or observance by Borrower or any Obligor of any term or
provision of this Agreement or any of the other Financing Agreements or any
other document referred to or provided for herein or therein or to inspect the
properties or books of Borrower or any Obligor. Agent will use reasonable
efforts to provide Lenders with any information received by Agent from Borrower
or any Obligor which is required to be provided to Lenders or which is deemed to
be requested by Lenders hereunder and with a copy of any Notice of Default or
Failure of Condition received by Agent from Borrower or any Lender; provided,
that, Agent shall not be liable to any Lender for any failure to do so, except
to the extent that such failure is attributable to Agent's own gross negligence
or willful misconduct as determined by a final non-appealable judgment of a
court of competent jurisdiction. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Agent or deemed requested by
Lenders hereunder, Agent shall not have any duty or responsibility to provide
any Lender with any other credit or other information concerning the affairs,
financial condition or business of Borrower or any Obligor that may come into
the possession of Agent.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
12.8 Additional Loans. Agent shall not make any Revolving Loans or
provide any Letter of Credit Accommodations to Borrower on behalf of Revolving
Lenders intentionally and with actual knowledge that such Revolving Loans or
Letter of Credit Accommodations would cause the aggregate amount of the total
outstanding Revolving Loans and Letter of Credit Accommodations to Borrower to
exceed the Borrowing Base, without the prior consent of all
94
Revolving Lenders, except, that, Agent may make such additional Revolving Loans
or provide such additional Letter of Credit Accommodations on behalf of
Revolving Lenders, intentionally and with actual knowledge that such Revolving
Loans or Letter of Credit Accommodations will cause the total outstanding
Revolving Loans and Letter of Credit Accommodations to Borrower to exceed the
Borrowing Base, as Agent may deem necessary or advisable in its discretion,
provided, that: (a) the total principal amount of the additional Revolving Loans
or additional Letter of Credit Accommodations to Borrower which Agent may make
or provide after obtaining such actual knowledge that the aggregate principal
amount of the Revolving Loans equal or exceed the Borrowing Base, plus the
Special Agent Advances pursuant to Section 12.11(a)(ii) then outstanding, shall
not exceed the aggregate amount equal to ten (10%) percent of the Revolving Loan
Limit and shall not cause the total principal amount of the Loan and Letter of
Credit Accommodation to exceed the Maximum Credit and (b) no such additional
Revolving Loans or Letter of Credit Accommodations shall be outstanding more
than ninety (90) days after the date such additional Revolving Loan or Letter of
Credit Accommodation is made or issued (as the case may be), except as the
Required Revolving Lenders may otherwise agree. Each Revolving Lender shall be
obligated to pay Agent the amount of its Pro Rata Share of any such additional
Revolving Loans or Letter of Credit Accommodations.
12.9 Concerning the Collateral and the Related Financing Agreements.
Each Lender authorizes and directs Agent to enter into this Agreement and the
other Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders or Required Revolving Lenders or Required Term Loan Lenders in
accordance with the terms of this Agreement or the other Financing Agreements
and the exercise by Agent or Required Lenders or Required Revolving Lenders or
Required Term Loan Lenders of their respective powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report and report with respect to the Borrowing Base prepared or
received by Agent (each field audit or examination report and report with
respect to the Borrowing Base being referred to herein as a "Report" and
collectively, "Reports"), appraisals with respect to the Collateral and
financial statements with respect to Parent and its Subsidiaries received by
Agent;
(b) expressly agrees and acknowledges that Agent (i) does
not make any representation or warranty as to the accuracy of any Report,
appraisal or financial statement or (ii) shall not be liable for any information
contained in any Report, appraisal or financial statement;
(c) expressly agrees and acknowledges that the Reports are
not comprehensive audits or examinations, that Agent or any other party
performing any audit or examination will inspect only specific information
regarding Borrower and any Obligor and will rely significantly
95
upon Borrowers' and Guarantors' books and records, as well as on representations
of Borrower's and such Obligor's personnel; and
(d) agrees to keep all Reports confidential and strictly for
its internal use in accordance with the terms of Section 13.5 hereof, and not to
distribute or use any Report in any other manner.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any time
on or after an Event of Default and for so long as the same is continuing or
upon any other failure of a condition precedent to the Loans and Letter of
Credit Accommodations hereunder, make such disbursements and advances ("Special
Agent Advances") which Agent, in its sole discretion, deems necessary or
desirable either (i) to preserve or protect the Collateral or any portion
thereof or (ii) to enhance the likelihood or maximize the amount of repayment by
Borrower of the Loans and other Obligations, provided, that, the aggregate
principal amount of the Special Agent Advances pursuant to this clause (ii),
plus the then outstanding principal amount of the additional Loans and Letter of
Credit Accommodations which Agent may make or provide as set forth in Section
12.8 hereof, shall not exceed the aggregate amount equal to ten (10%) percent of
the Maximum Credit or (iii) to pay any other amount chargeable to Borrower or
Obligor pursuant to the terms of this Agreement or any of the other Financing
Agreements consisting of (A) costs, fees and expenses and (B) payments to any
issuer of Letter of Credit Accommodations. Special Agent Advances shall be
repayable on demand and together with all interest thereon shall constitute
Obligations secured by the Collateral. Special Agent Advances shall not
constitute Loans but shall otherwise constitute Obligations hereunder. Interest
on Special Agent Advances shall be payable at the Interest Rate then applicable
to Revolving Loans and shall be payable on demand. Agent shall notify each
Lender and Borrower in writing of each such Special Agent Advance, which notice
shall include a description of the purpose of such Special Agent Advance.
Without limitation of its obligations pursuant to Section 6.10, each Lender
agrees that it shall make available to Agent, upon Agent's demand, in
immediately available funds, the amount equal to such Lender's Pro Rata Share of
each such Special Agent Advance. If such funds are not made available to Agent
by such Lender, then such Lender shall be deemed a Defaulting Lender and Agent
shall be entitled to recover such funds, on demand from such Lender together
with interest thereon for each day from the date such payment was due until the
date such amount is paid to Agent at the Federal Funds Rate for each day during
such period (as published by the Federal Reserve Bank of New York or at Agent's
option based on the arithmetic mean determined by Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of the three leading brokers of Federal
funds transactions in New York City selected by Agent) and if such amounts are
not paid within three (3) days of Agent's demand, at the highest Interest Rate
provided for in Section 3.1 hereof applicable to Revolving Loans.
(b) Lenders hereby irrevocably authorize Agent, at its
option and in its discretion to release any security interest in, mortgage or
lien upon, any of the Collateral (i) upon
96
termination of the Commitments and payment and satisfaction of all of the
Obligations and delivery of cash collateral to the extent required under Section
13.1 below, or (ii) constituting property being sold or disposed of if Borrower
certifies to Agent that the sale or disposition is made in compliance with
Section 9.7 hereof (and Agent may rely conclusively on any such certificate,
without further inquiry), or (iii) constituting property in which Borrower or
any Obligor did not own an interest at the time the security interest, mortgage
or lien was granted or at any time thereafter, or (iv) having a value in the
aggregate in any twelve (12) month period of less than $500,000 or (v) if
required or permitted under the terms of any of the other Financing Agreements,
including any intercreditor agreement, or (vi) if approved, authorized or
ratified in writing by all of Lenders. Except as provided above, Agent will not
release any security interest in, mortgage or lien upon, any of the Collateral
without the prior written authorization of all of Lenders. Upon request by Agent
at any time, Lenders will promptly confirm in writing Agent's authority to
release particular types or items of Collateral pursuant to this Section.
(c) Without any manner limiting Agent's authority to act
without any specific or further authorization or consent by the Required
Lenders, each Lender agrees to confirm in writing, upon request by Agent, the
authority to release Collateral conferred upon Agent under this Section. Agent
shall (and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of the security interest,
mortgage or liens granted to Agent upon any Collateral to the extent set forth
above; provided, that, (i) Agent shall not be required to execute any such
document on terms which, in Agent's opinion, would expose Agent to liability or
create any obligations or entail any consequence other than the release of such
security interest, mortgage or liens without recourse or warranty and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any security interest, mortgage or lien upon (or obligations of Borrower or any
Obligor in respect of) the Collateral retained by Borrower or such Obligor.
(d) Agent shall have no obligation whatsoever to any Lender
or any other Person to investigate, confirm or assure that the Collateral exists
or is owned by Borrower or any Obligor or is cared for, protected or insured or
has been encumbered, or that any particular items of Collateral meet the
eligibility criteria applicable in respect of the Loans or Letter of Credit
Accommodations hereunder, or whether any particular reserves are appropriate, or
that the liens and security interests granted to Agent pursuant hereto or any of
the Financing Agreements or otherwise have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent in this Agreement
or in any of the other Financing Agreements, it being understood and agreed that
in respect of the Collateral, or any act, omission or event related thereto,
subject to the other terms and conditions contained herein, Agent may act in any
manner it may deem appropriate, in its discretion, given Agent's own interest in
the Collateral as a Lender and that Agent shall have no duty or liability
whatsoever to any other Lender.
97
12.12 Agency for Perfection. Each Lender hereby appoints Agent and
each other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent in assets which, in
accordance with Article 9 of the UCC can be perfected only by possession (or
where the security interest of a secured party with possession has priority over
the security interest of another secured party) and Agent and each Lender hereby
acknowledges that it holds possession of any such Collateral for the benefit of
Agent as secured party. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
12.13 Successor Agent. (a) Agent may resign as Agent upon thirty (30)
days' notice to Lenders and Borrower. If Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with Lenders and
Borrower, a successor agent from among Lenders. Upon the acceptance by the
Lender so selected of its appointment as successor agent hereunder, such
successor agent shall succeed to all of the rights, powers and duties of the
retiring Agent and the term "Agent" as used herein and in the other Financing
Agreements shall mean such successor agent and the retiring Agent's appointment,
powers and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 12 shall inure to
its benefit as to any actions taken or omitted by it while it was Agent under
this Agreement. If no successor agent has accepted appointment as Agent by the
date which is thirty (30) days after the date of a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nonetheless thereupon become
effective and Lenders shall perform all of the duties of Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above.
(b) In the event that all Obligations other than in respect
of the Term Loans are fully and finally paid and satisfied and no Revolving
Lender has any commitment to provide Revolving Loans or other financial
accommodation under the Financing Agreements, Agent may, and at the request of
Term Loan Lenders shall, appoint a Term Loan Lender as successor hereunder;
provided, that, Term Loan Lenders shall have provided to Agent an indemnity with
respect to claims and liabilities arising after a Term Loan Lender becomes the
Agent, in form and substance satisfactory to Agent.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS.
13.1 Term.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof (the "Maturity Date"), unless sooner terminated pursuant to
the terms hereof. Borrower may terminate this Agreement at any time upon ten
(10) days prior written notice to Agent (which notice shall be irrevocable) and
Agent may, at its option, and shall at the direction of Required Lenders,
terminate this Agreement at any time on or after an Event of Default. Upon the
Maturity Date or any other effective date of
98
termination of the Financing Agreements, Borrower shall pay to Agent all
outstanding and unpaid Obligations and shall furnish cash collateral to Agent
(or at Agent's option, a letter of credit issued for the account of Borrower and
at Borrower's expense, in form and substance satisfactory to Agent, by an issuer
acceptable to Agent and payable to Agent as beneficiary) in such amounts as
Agent determines are reasonably necessary to secure Agent and Lenders from loss,
cost, damage or expense, including attorneys' fees and expenses, in connection
with any contingent Obligations, including issued and outstanding Letter of
Credit Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received final
and indefeasible payment. The amount of such cash collateral (or letter of
credit, as Agent may determine) as to any Letter of Credit Accommodations shall
be in the amount equal to one hundred five (105%) percent of the amount of the
Letter of Credit Accommodations plus the amount of any fees and expenses payable
in connection therewith through the end of the latest expiration date of such
Letter of Credit Accommodations. Such payments in respect of the Obligations and
cash collateral shall be remitted by wire transfer in Federal funds to the Agent
Payment Account or such other bank account of Agent, as Agent may, in its
discretion, designate in writing to Borrower for such purpose. Interest shall be
due until and including the next Business Day, if the amounts so paid by
Borrower to the Agent Payment Account or other bank account designated by Agent
are received in such bank account later than 12:00 noon, Miami, Florida time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower or any Obligor of its respective
duties, obligations and covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid, and Agent's continuing security interest in the Collateral and the rights
and remedies of Agent and Lenders hereunder, under the other Financing
Agreements and applicable law, shall remain in effect until all such Obligations
have been fully and finally discharged and paid. Accordingly, Borrower waives
any rights it may have under the UCC to demand the filing of termination
statements with respect to the Collateral and Agent shall not be required to
send such termination statements to Borrower, or to file them with any filing
office, unless and until this Agreement shall have been terminated in accordance
with its terms and all Obligations paid and satisfied in full in immediately
available funds.
(c) If for any reason this Agreement is terminated prior to
the Maturity Date, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Agent's and each Lender's lost profits as a result
thereof, Borrower agrees to pay to Agent, for the benefit of Revolving Lenders,
upon the effective date of such termination, an early termination fee in the
amount equal to
Amount Period
------ ------
(i) two (2%) percent of From the date hereof to and
Maximum Credit excluding the first anniversary of
the date hereof
99
Amount Period
------ ------
(ii) one (1%) percent of From and after the first
Maximum Credit anniversary of the date hereof to
and excluding the second
anniversary of the date hereof
(iii) one-half of one (.50%) From and after the second
percent of Maximum Credit anniversary of the date hereof
to and excluding the third
anniversary of the date hereof or
if the term of this Agreement is
extended, at any time prior to the
end of the then current term.
Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Revolving Lenders as a result of such early termination
and Borrower agrees that it is reasonable under the circumstances currently
existing. In addition, Agent and Lenders shall be entitled to such early
termination fee upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h) hereof, even if Agent and Revolving Lenders do not
exercise the right to terminate this Agreement, but elect, at their option, to
provide financing to Borrower permit the use of cash collateral under the United
States Bankruptcy Code. The early termination fee provided for in this Section
13.1 shall be deemed included in the Obligations.
(d) Notwithstanding anything to the contrary contained in
Section 13.1(c) above, in the event of the termination of this Agreement by
Borrower and the full and final repayment of all of the Obligations and the
receipt by Agent of cash collateral all as provided in Section 13.1(a) above on
or after the first anniversary of the date hereof, if such repayments are made
with the proceeds of initial loans and advances to Borrower pursuant to a
revolving credit facility provided by Wachovia Bank, National Association or its
Affiliates (or for which Wachovia Bank. National Association or one of its
Affiliates is acting as agent) to Borrower to replace the financing arrangements
provided for herein, Borrower shall not be required to pay the early termination
fee provided for in Section 13.1(c) above.
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1,
Article 8 or Article 9 of the UCC shall have the meanings given therein unless
otherwise defined in this Agreement.
(b) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to Borrower, any Obligor, Agent and
Lenders pursuant to the definitions set forth in the recitals hereto, or to any
other person herein, shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any
100
particular provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(e) The word "including" when used in this Agreement shall
mean "including, without limitation".
(f) An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with Section 11.3
or is cured in a manner satisfactory to Agent, if such Event of Default is
capable of being cured as determined by Agent.
(g) All references to the term "good faith" used herein when
applicable to Agent or any Lender shall mean, notwithstanding anything to the
contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned. Borrower shall have the burden of proving any lack of
good faith on the part of Agent or any Lender alleged by Borrower at any time.
(h) Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Borrower most recently
received by Agent prior to the date hereof. Notwithstanding anything to the
contrary contained in GAAP or any interpretations or other pronouncements by the
Financial Accounting Standards Board or otherwise, the term "unqualified
opinion" as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is not only unqualified but also does not
include any explanation, supplemental comment or other comment concerning the
ability of the applicable person to continue as a going concern or the scope of
the audit.
(i) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including", the
words "to" and "until" each mean "to but excluding" and the word "through" means
"to and including".
(j) Unless otherwise expressly provided herein, (i)
references herein to any agreement, document or instrument shall be deemed to
include all subsequent amendments, modifications, supplements, extensions,
renewals, restatements or replacements with respect thereto, but only to the
extent the same are not prohibited by the terms hereof or of any other Financing
Agreement, and (ii) references to any statute or regulation are to be construed
as including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(l) This Agreement and other Financing Agreements may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations,
101
tests and measurements are cumulative and shall each be performed in accordance
with their terms.
(m) This Agreement and the other Financing Agreements are
the result of negotiations among and have been reviewed by counsel to Agent and
the other parties, and are the products of all parties. Accordingly, this
Agreement and the other Financing Agreements shall not be construed against
Agent or Lenders merely because of Agent's or any Lender's involvement in their
preparation.
13.3 Notices.
All notices, requests and demands hereunder shall be in writing and
deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing. All notices, requests and demands upon the parties
are to be given to the following addresses (or to such other address as any
party may designate by notice in accordance with this Section):
If to Borrower: Trailer Bridge, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: Trailer Bridge, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
If to Agent: Congress Financial Corporation (Florida)
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Portfolio Manager - Trailer Bridge
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
13.4 Partial Invalidity. If any provision of this Agreement is held
to be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole,
102
but this Agreement shall be construed as though it did not contain the
particular provision held to be invalid or unenforceable and the rights and
obligations of the parties shall be construed and enforced only to such extent
as shall be permitted by applicable law.
13.5 Confidentiality.
(a) Agent and each Lender shall use all reasonable efforts
to keep confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by Borrower pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information is
furnished by Borrower to Agent or such Lender, provided, that, nothing contained
herein shall limit the disclosure of any such information: (i) to the extent
required by statute, rule, regulation, subpoena or court order, (ii) to bank
examiners and other regulators, auditors and/or accountants, in connection with
any litigation to which Agent or such Lender is a party, (iii) to any Lender or
Participant (or prospective Lender or Participant) or to any Affiliate of any
Lender so long as such Lender or Participant (or prospective Lender or
Participant) or Affiliate shall have been instructed to treat such information
as confidential in accordance with this Section 13.5, or (iv) to counsel for
Agent or any Lender or Participant (or prospective Lender or Participant).
(b) In the event that Agent or any Lender receives a request
or demand to disclose any confidential information pursuant to any subpoena or
court order, Agent or such Lender, as the case may be, agrees (i) to the extent
permitted by applicable law or if permitted by applicable law, to the extent
Agent or such Lender determines in good faith that it will not create any risk
of liability to Agent or such Lender, Agent or such Lender will promptly notify
Borrower of such request so that Borrower may seek a protective order or other
appropriate relief or remedy and (ii) if disclosure of such information is
required, disclose such information and, subject to reimbursement by Borrower of
Agent's or such Lender's expenses, cooperate with Borrower in the reasonable
efforts to obtain an order or other reliable assurance that confidential
treatment will be accorded to such portion of the disclosed information which
Borrower so designates, to the extent permitted by applicable law or if
permitted by applicable law, to the extent Agent or such Lender determines in
good faith that it will not create any risk of liability to Agent or such
Lender.
(c) In no event shall this Section 13.5 or any other
provision of this Agreement, any of the other Financing Agreements or applicable
law be deemed: (i) to apply to or restrict disclosure of information that has
been or is made public by Borrower, any Obligor or any third party or otherwise
becomes generally available to the public other than as a result of a disclosure
in violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Agent or any Lender (or any Affiliate of any Lender)
on a non-confidential basis from a person other than Borrower, (iii) to require
Agent or any Lender to return any materials furnished by Borrower to Agent or a
Lender or prevent Agent or a Lender from responding to routine informational
requests in accordance with the Code of Ethics for the Exchange of Credit
Information promulgated by The ▇▇▇▇▇▇ ▇▇▇▇▇▇ Associates or other applicable
industry standards relating to the exchange of credit information. The
obligations of Agent and Lenders under this
103
Section 13.5 shall supersede and replace the obligations of Agent and Lenders
under any confidentiality letter signed prior to the date hereof.
13.6 Successors. This Agreement, the other Financing Agreements and
any other document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by Agent, Lenders, Borrower, and their
respective successors and assigns, except that Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. Any such purported assignment without such express prior
written consent shall be void. No Lender may assign its rights and obligations
under this Agreement without the prior written consent of Agent, except as
provided in Section 13.7 below. The terms and provisions of this Agreement and
the other Financing Agreements are for the purpose of defining the relative
rights and obligations of Borrower, Agent and Lenders with respect to the
transactions contemplated hereby and there shall be no third party beneficiaries
of any of the terms and provisions of this Agreement or any of the other
Financing Agreements.
13.7 Assignments; Participations.
(a) Each Lender may, with the prior written consent of
Agent, assign all or, if less than all, a portion equal to at least $5,000,000
in the aggregate for the assigning Lender, of such rights and obligations under
this Agreement to one or more Eligible Transferees (but not including for this
purpose any assignments in the form of a participation), each of which assignees
shall become a party to this Agreement as a Lender by execution of an Assignment
and Acceptance; provided, that, such transfer or assignment will not be
effective until: (i) it is recorded by Agent on the Register and (ii) Agent
shall have received for its sole account payment of a processing fee from the
assigning Lender or the assignee in the amount of $5,000.
(b) Agent shall maintain a register of the names and
addresses of Lenders, their Commitments and the principal amount of their Loans
(the "Register"). Agent shall also maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and shall modify the Register to give
effect to each Assignment and Acceptance. The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and Borrower,
Obligors, Agent and Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by Borrower and any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(c) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
(i) the assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Accommodations) of a Lender hereunder and thereunder and (ii)
the assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement.
104
(d) By execution and delivery of an Assignment and
Acceptance, the assignor and assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Financing Agreements furnished pursuant hereto, (ii) the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower, any Obligor or any of their
Subsidiaries or the performance or observance by Borrower or any Obligor of any
of the Obligations; (iii) such assignee confirms that it has received a copy of
this Agreement and the other Financing Agreements, together with such other
documents and information it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance, (iv) such
assignee will, independently and without reliance upon the assigning Lender,
Agent and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Financing Agreements, (v) such
assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Financing
Agreements as are delegated to Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto, and (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Financing
Agreements are required to be performed by it as a Lender. Agent and Lenders may
furnish any information concerning Borrower or any Obligor in the possession of
Agent or any Lender from time to time to assignees and Participants.
(e) Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Financing Agreements (including, without
limitation, all or a portion of its Commitments and the Loans owing to it and
its participation in the Letter of Credit Accommodations, without the consent of
Agent or the other Lenders); provided, that, (i) such Lender's obligations under
this Agreement (including, without limitation, its Commitment hereunder) and the
other Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrower, the other Lenders and Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Financing Agreements, (iii) the
Participant shall not have any rights under this Agreement or any of the other
Financing Agreements (the Participant's rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the Participant relating thereto) and all amounts payable by
Borrower or any Obligor hereunder shall be determined as if such Lender had not
sold such participation.
(f) Nothing in this Agreement shall prevent or prohibit any
Lender from pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lenders from such Federal Reserve Bank,
105
(g) Borrower shall assist Agent or any Lender permitted to
sell assignments or participations under this Section 13.7 in whatever manner
reasonably necessary in order to enable or effect any such assignment or
participation, including (but not limited to) the execution and delivery of any
and all agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals or other
documents for, and the participation of relevant management in meetings and
conference calls with, potential Lenders or Participants. Borrower shall certify
the correctness, completeness and accuracy, in all material respects, of all
descriptions of Borrower and its affairs provided, prepared or reviewed by
Borrower that are contained in any selling materials and all other information
provided by it and included in such materials.
13.8 Entire Agreement.This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
13.9 Counterparts, Etc.This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
106
IN WITNESS WHEREOF, Agent, Lenders and Borrower have caused these
presents to be duly executed as of the day and year first above written.
BORROWER
--------
TRAILER BRIDGE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Title: President
AGENT
-----
CONGRESS FINANCIAL CORPORATION (FLORIDA)
as Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Title: First Vice President
LENDERS
-------
CONGRESS FINANCIAL CORPORATION
(FLORIDA)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Title: First Vice President
Commitment: $20,000,000
Revolving Loan Commitment: $20,000,000
Term Loan Commitment: $0
[SIGNATURES CONTINUE ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
SIEM ACQUISITION AND REORGANIZATION FUND
INC.
By: /s/ Eystein Eriksrud
-------------------------------------
Title:__________________________________
Commitment: $3,000,000
Revolving Loan Commitment: $0
Term Loan Commitment: $3,000,000