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EXHIBIT 10.1
REVOLVING CREDIT AND SECURITY AGREEMENT
TABLE OF CONTENTS
Page
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I. DEFINITIONS........................................................ 1
1.1. General Terms........................................... 1
II. ADVANCES, PAYMENT AND INTEREST..................................... 1
2.1. The Revolving Facilities................................ 1
2.2. The Revolving A Note; The Revolving B Note; Maturity.... 2
2.3. Interest................................................ 2
2.4. Revolving Facility Disbursements; Requirement to Deliver
Borrowing Certificate................................... 3
2.5. Revolving Facility Collections; Repayment; Borrowing
Availability and Lockbox................................ 3
2.6. Promise to Pay; Manner of Payment....................... 4
2.7 Repayment of Excess Advances............................ 4
2.8. Payments to Lender...................................... 4
2.9. Grant of Security Interest; Collateral.................. 5
2.10. Collateral Administration............................... 6
2.11. Power of Attorney....................................... 7
III. FEES AND OTHER CHARGES............................................. 7
3.1. Commitment Fees......................................... 7
3.2. Unused Line Fees........................................ 7
3.3. Collateral Management Fee............................... 8
3.4. Computation of Fees; Lawful Limits...................... 8
3.5. Default Rate of Interest................................ 8
3.6. Acknowledgement of Joint and Several Liability.......... 8
IV. CONDITIONS PRECEDENT............................................... 9
4.1. Conditions to Initial Advance and Closing............... 9
4.2. Conditions to Each Advance.............................. 10
V. REPRESENTATIONS AND WARRANTIES..................................... 11
5.1. Organization and Authority.............................. 11
5.2. Loan Documents.......................................... 11
5.3. Subsidiaries, Capitalization and Ownership Interests.... 12
5.4. Properties.............................................. 12
5.5. Other Agreements........................................ 12
5.6. Litigation.............................................. 12
5.7. Hazardous Materials..................................... 13
5.8. Potential Tax Liability; Tax Returns; Governmental
Reports................................................. 13
5.9. Financial Statements and Reports........................ 13
5.10. Compliance with Law..................................... 13
5.11. Intellectual Property................................... 14
5.12. Licenses and Permits; Labor............................. 14
5.13. No Default.............................................. 14
5.14. Disclosure.............................................. 14
5.15. Existing Indebtedness; Investments, Guarantees and
Certain Contracts....................................... 14
5.16. Other Agreements........................................ 15
5.17. Insurance............................................... 15
5.18. Names; Location of Offices, Records and Collateral...... 15
5.19. Non-Subordination....................................... 15
5.20. Accounts................................................ 15
5.21. Survival................................................ 16
VI. AFFIRMATIVE COVENANTS.............................................. 16
6.1. Financial Statements, Borrowing Certificate, Financial
Reports and Other Information........................... 16
6.2. Payment of Obligations.................................. 17
6.3. Conduct of Business and Maintenance of Existence and
Assets.................................................. 18
6.4. Compliance with Legal and Other Obligations............. 18
6.5. Insurance............................................... 18
6.6. True Books.............................................. 18
6.7. Inspection; Periodic Audits............................. 19
6.8. Further Assurances; Post Closing........................ 19
6.9. Payment of Indebtedness................................. 19
6.10. Lien Searches........................................... 19
6.11. Use of Proceeds......................................... 19
6.12. Collateral Documents; Security Interest in Collateral... 19
6.13. Taxes and Other Charges................................. 20
6.14. Payroll Taxes........................................... 20
VII. NEGATIVE COVENANTS................................................. 21
7.1. Financial Covenants..................................... 21
7.2. Permitted Indebtedness.................................. 21
7.3. Permitted Liens......................................... 21
7.4. Investments; New Facilities or Collateral;
Subsidiaries............................................ 22
7.5. Dividends; Redemptions.................................. 22
7.6. Transactions with Affiliates............................ 22
7.7. Charter Documents; Fiscal Year; Name; Jurisdiction of
Organization; Dissolution; Use of Proceeds.............. 23
7.8. Truth of Statements..................................... 23
7.10. Transfer of Assets...................................... 23
VIII. EVENTS OF DEFAULT.................................................. 24
IX. RIGHTS AND REMEDIES AFTER DEFAULT.................................. 26
9.1. Rights and Remedies..................................... 26
9.2. Application of Proceeds................................. 27
9.3. Rights and Remedies not Exclusive....................... 27
X. WAIVERS AND JUDICIAL PROCEEDINGS................................... 28
10.1. Waivers................................................. 28
10.2. Delay; No Waiver of Defaults............................ 28
10.3. Jury Waiver............................................. 28
XI. EFFECTIVE DATE AND TERMINATION..................................... 28
11.1. Termination and Effective Date Thereof.................. 28
11.2. Survival................................................ 29
XII. MISCELLANEOUS...................................................... 29
12.1. Governing Law; Jurisdiction; Service of Process; Venue.. 29
12.2. Successors and Assigns; Participations; New Lenders..... 30
12.3. Application of Payments................................. 30
12.4. Indemnity............................................... 30
12.5. Notice.................................................. 31
12.6. Severability; Captions; Counterparts; Facsimile
Signatures.............................................. 31
12.7. Expenses................................................ 31
12.8. Entire Agreement........................................ 32
12.9. Lender Approvals........................................ 32
12.10. Publicity............................................... 32
12.11. Agent................................................... 32
1) Minimum EBITDAR.........................................
2) Net Leverage Ratio (Total Debt to EBITDAR)..............
3) Fixed Charge Coverage Ratio (EBITDA/Fixed Charges)......
4) Tangible Net Worth......................................
REVOLVING CREDIT AND SECURITY AGREEMENT
THIS REVOLVING CREDIT AND SECURITY AGREEMENT (the "AGREEMENT") dated as of
March 31, 2004, 2004 is entered into between WESTERN EXPRESS, INC., a Tennessee
corporation (the "BORROWER"), and CAPITALSOURCE FINANCE LLC, a Delaware limited
liability company (the "LENDER").
WHEREAS, Borrower has requested that Lender make available to Borrower
revolving credit facilities (collectively, the "REVOLVING FACILITY") in a
maximum principal amount at any time outstanding of up to Thirty Seven Million
Dollars ($37,000,000) (the "FACILITY CAP"), the proceeds of which shall be used
by Borrower for refinancing Borrower's existing obligations and indebtedness,
for the acquisition of Equipment and rolling stock and for its working capital
needs in connection with its trucking business; and
WHEREAS, Lender is willing to make the Revolving Facility available to
Borrower upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which hereby are
acknowledged, Borrower and Lender hereby agree as follows:
I. DEFINITIONS
1.1. GENERAL TERMS
For purposes of this Agreement, in addition to the definitions above and
elsewhere in this Agreement, the terms listed in Appendix A hereto shall have
the meanings given such terms in Appendix A, which is incorporated herein and
made a part hereof. All capitalized terms used which are not specifically
defined shall have meanings provided in Article 9 of the UCC in effect on the
date hereof to the extent the same are used or defined therein. Unless otherwise
specified herein or in Appendix A, any agreement or contract referred to herein
or in Appendix A shall mean such agreement as modified, amended or supplemented
from time to time. Unless otherwise specified, as used in the Loan Documents or
in any certificate, report, instrument or other document made or delivered
pursuant to any of the Loan Documents, all accounting terms not defined in
Appendix A or elsewhere in this Agreement shall have the meanings given to such
terms in and shall be interpreted in accordance with GAAP.
II. ADVANCES, PAYMENT AND INTEREST
2.1. THE REVOLVING FACILITIES
(a) THE REVOLVING A FACILITY. Subject to the provisions of this Agreement,
Lender shall make Advances to Borrower under the Revolving A Facility from time
to time during the Term, provided that, notwithstanding any other provision of
this Agreement, the aggregate amount of all Advances at any one time outstanding
under the Revolving A Facility shall not exceed either of (a) the Revolving A
Facility Cap, and (b) the Revolving A Availability. The Revolving A Facility is
a revolving credit facility, which may be drawn, repaid and redrawn, from time
to time as permitted under this Agreement. Any determination as to whether there
is Revolving A Availability for Advances shall he made by Lender in its
Permitted Discretion and is final and binding upon Borrower. Unless otherwise
permitted by Lender, each Advance under the Revolving A Facility shall be in an
amount of at least $1,000. Subject to the provisions of this Agreement, Borrower
may request Advances under the Revolving A Facility up to and including the
value, in U.S, Dollars, of the sum of (i) Eighty-Five percent (85%) of the
Billed Receivables Borrowing Base plus (ii) Seventy-Five percent (75%) of
Unbilled Receivables Borrowing Base minus, (iii) if applicable, Dilution Factors
minus (iv) if applicable, amounts reserved by Lender as may determined by Lender
from time to time in its Permitted Discretion (such calculated amount being
referred to herein as the "REVOLVING A AVAILABILITY"). Advances under the
Revolving A Facility automatically shall be made for the
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payment of interest on the Revolving A Note and other Obligations on the date
when due to the extent available and as provided for herein.
(b) THE REVOLVING B FACILITY. Subject to the provisions of this Agreement,
Lender shall make Advances to Borrower under the Revolving B Facility from time
to time during the Term, provided that, notwithstanding any other provision of
this Agreement, (i) the aggregate amount of all Advances at any one time
outstanding under the Revolving B Facility shall not exceed either the (x)
Revolving B Facility Cap or (y) Revolving B Availability, (ii) no Advances under
Revolving B Facility shall be made unless and until Revolving A Availability
less the outstanding balance on the Revolving A Facility shall equal $0 and
(iii) no Advances under the Revolving B Facility shall be made unless Borrower
has achieved Fixed Charge Coverage of not less than that specified in Annex I:
Financial Covenants as evidenced by Borrower's most recent monthly financial
statement delivered in accordance with Section 6.l(a)(ii) hereof. The Revolving
B Facility is a revolving credit facility, which may be drawn, repaid and
redrawn, from time to time as permitted under this Agreement. Unless otherwise
permitted by Lender, each Advance under the Revolving B Facility shall be in an
amount of at least $100,000. Subject to the provisions of this Agreement,
Borrower may request Advances under the Revolving B Facility up to the Revolving
B Facility Cap (such amount being referred to herein as the "REVOLVING B
AVAILABILITY"). Advances under the Revolving B Facility automatically shall be
made for the payment of interest on the Revolving B Note and other Obligations
on the date when due to the extent available and as provided for herein.
2.2. THE REVOLVING A NOTE; THE REVOLVING B NOTE; MATURITY
(a) All Advances under the Revolving A Facility shall be evidenced by the
Revolving A Note, payable to the order of Lender, duly executed and delivered by
Borrower and dated the Closing Date, evidencing the aggregate indebtedness of
Borrower to Lender resulting from Advances under the Revolving A Facility, from
time to time. Lender hereby is authorized, but is not obligated, to enter the
amount of each Revolving A Advance under the Revolving A Facility and the amount
of each payment or prepayment of principal or interest thereon in the
appropriate spaces on the reverse of or on an attachment to the Revolving A
Note. Lender will account to Borrower monthly with a statement of Revolving A
Advances under the Revolving A Revolving Facility and charges and payments made
pursuant to this Agreement, and in the absence of manifest error, such
accounting rendered by Lender shall be deemed final, binding and conclusive
unless Lender is notified by Borrower in writing to the contrary within twenty
(20) calendar days of Receipt of each accounting, which notice shall be deemed
an objection only to items specifically objected to therein.
(b) All Advances under the Revolving B Facility shall be evidenced by the
Revolving B Note, payable to the order of Lender, duly executed and delivered by
Borrower and dated the Closing Date, evidencing the aggregate indebtedness of
Borrower to Lender resulting from Advances under the Revolving B Facility, from
time to time. Lender hereby is authorized, but is not obligated, to enter the
amount of each Revolving B Advance under the Revolving B Facility and the amount
of each payment or prepayment of principal or interest thereon in the
appropriate spaces on the reverse of or on an attachment to the Revolving B
Note. Lender will account to Borrower monthly with a statement of Revolving B
Advances under the Revolving B Revolving Facility and charges and payments made
pursuant to this Agreement, and in the absence of manifest error, such
accounting rendered by Lender shall be deemed final, binding and conclusive
unless Lender is notified by Borrower in writing to the contrary within 15
calendar days of Receipt of each accounting, which notice shall be deemed an
objection only to items specifically objected to therein.
(c) All amounts outstanding under the Note and other Obligations shall be
due and payable in full, if not earlier in accordance with this Agreement, on
the earlier of (i) the occurrence of an Event of Default if required pursuant
hereto or Lender's demand upon an Event of Default, and (ii) the last day of the
Term (such earlier date being the "MATURITY DATE").
2.3. INTEREST
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(a) Interest on Revolving A Advances. Interest on outstanding Revolving A
Advances under the Revolving A Note shall be payable monthly in arrears on the
first day of each calendar month at an annual rate equal to the Prime Rate plus
one and one quarter percent (1.25%), provided, however, that, notwithstanding
any provision of any Loan Document, for the purpose of calculating interest
hereunder, the Prime Rate shall be not less than Four Percent (4.00%) with
respect to any Revolving A Advance, in each case calculated on the basis of a
360-day year and for the actual number of calendar days elapsed in each interest
calculation period. Interest accrued on each Advance under the Note shall be due
and payable on the first day of each calendar month, in accordance with the
procedures provided for in Section 2.5, and Section 2.6, commencing April 1,
2004, and continuing until the later of the expiration of the Term and the full
performance and irrevocable payment in full in cash of the Obligations and
termination of this Agreement.
(b) Interest on Revolving B Advances. Interest on outstanding Revolving B
Advances under the Revolving B Note shall be payable monthly in arrears on the
first day of each calendar month at an annual rate equal to the Prime Rate plus
seven percent (7.00%), provided, however, that, notwithstanding any provision of
any Loan Document, for the purpose of calculating interest hereunder, the Prime
Rate shall be not less than Four Percent (4.00%) with respect to any Revolving B
Advance, in each case calculated on the basis of a 360-day year and for the
actual number of calendar days elapsed in each interest calculation period.
Interest accrued on each Advance under the Note shall be due and payable on the
first day of each calendar month, in accordance with the procedures provided for
in Section 2.5 and Section 2.6, commencing April 1, 2004, and continuing until
the later of the expiration of the Term and the full performance and irrevocable
payment in full in cash of the Obligations and termination of this Agreement.
2.4. REVOLVING FACILITY DISBURSEMENTS; REQUIREMENT TO DELIVER BORROWING
CERTIFICATE
So long as no Default or Event of Default shall have occurred and be
continuing, Borrower may give Lender irrevocable written notice requesting an
Advance under the Revolving Facility by delivering to Lender not later than 1:00
p.m. (Eastern Standard Time) at least one but not more than four Business Days
before the proposed borrowing date of such requested Advance ( the "BORROWING
DATE"), a completed Borrowing Certificate and relevant supporting documentation
satisfactory to Lender, which shall (i) specify the proposed Borrowing Date of
such Advance which shall be a Business Day, (ii) specify the principal amount of
such requested Advance, (iii) specify whether such Advance is a Revolving A
Advance or a Revolving B Advance and (iv) certify the matters contained in
Section 4.2; provided, however, any request for an Advance when Revolving A
Availability minus the outstanding balance of Revolving A Advances equals $0
shall automatically be deemed a request for a Revolving B Advance (for example,
if the Revolving A Facility is fully drawn, any requested Advance will
automatically be deemed a request to draw down on the Revolving B Facility).
Each time a request for an Advance is made (and more frequently if Lender shall
so reasonably request) until the Obligations are indefeasibly paid in cash in
full and this Agreement is terminated, Borrower shall deliver to Lender a
Borrowing Certificate accompanied by a separate detailed aging and categorizing
of Borrower's accounts receivable and accounts payable and such other supporting
documentation with respect to the figures and information in the Borrowing
Certificate as Lender shall reasonably request from a credit or security
perspective or otherwise. On each Borrowing Date, Borrower irrevocably
authorizes Lender to disburse the proceeds of the requested Advance to the
appropriate Borrower's account(s) as set forth on Schedule 2.4, in all cases for
credit to the appropriate Borrower (or to such other account as to which the
appropriate Borrower shall instruct Lender) via Federal funds wire transfer no
later than 4:00 p.m. (Eastern Standard Time).
2.5. REVOLVING FACILITY COLLECTIONS; REPAYMENT; BORROWING AVAILABILITY AND
LOCKBOX
Borrower shall maintain one or more lockbox accounts (individually and
collectively, the "LOCKBOX ACCOUNT") with one or more banks acceptable to Lender
(each, a "LOCKBOX BANK"), and shall execute with each Lockbox Bank one or more
agreements acceptable to Lender (individually and collectively, the
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"LOCKBOX AGREEMENT"), and such other agreements related thereto as Lender may
require. Borrower shall ensure that all collections of their respective Accounts
and all other cash payments received by Borrower are paid and delivered directly
from Account Debtors and other Persons into the appropriate Lockbox Account. The
Lockbox Agreements shall provide that the Lockbox Banks immediately will
transfer all funds paid into the Lockbox Accounts into a depository account or
accounts maintained by Lender or an Affiliate of Lender at such bank as Lender
may communicate to Borrower from time to time (the "CONCENTRATION ACCOUNT"),
Notwithstanding and without limiting any other provision of any Loan Document,
Lender shall apply, on a daily basis, all funds transferred into the
Concentration Account pursuant to the Lockbox Agreement and this Section 2.5 in
such order and manner as determined by Lender in the following order, first to
all then unpaid fees and expenses then owing, second, to all accrued and unpaid
interest on the Advances, third, to the principal amount of the Revolving B
Advances and, fourth, to the principal amount of the Revolving A Advances. To
the extent that any Accounts are collected by Borrower or any other cash
payments received by Borrower are not sent directly to the appropriate Lockbox
Account but are received by Borrower or any of its Affiliates, such collections
and proceeds shall be held in trust for the benefit of Lender and immediately
remitted (and in any event within two (2) Business Days), in the form received,
to the appropriate Lockbox Account for immediate transfer to the Concentration
Account. All funds transferred to the Concentration Account for application to
the Obligations under the Revolving Facility shall be applied to reduce the
Obligations under the Revolving Facility, but, for purposes of calculating
interest hereunder, shall be subject to a four Business Day clearance period. If
as the result of collections of Accounts and/or any other cash payments received
by Borrower pursuant to this Section 2.5 a credit balance exists with respect to
the Concentration Account, such credit balance shall not accrue interest in
favor of a Borrower, but shall be available to Borrower upon Borrower's written
request. If applicable, at any time prior to the execution of all or any of the
Lockbox Agreements and operation of all or any of the Lockbox Accounts, Borrower
and its Affiliates shall direct all collections or proceeds it receives on
Accounts or from other Collateral to the accounts(s) and in the manner specified
by Lender in its sole discretion.
2.6. PROMISE TO PAY; MANNER OF PAYMENT
Borrower absolutely and unconditionally promises to pay principal,
interest and all other amounts payable hereunder, or under any other Loan
Document, without any right of rescission and without any deduction whatsoever,
including any deduction for any setoff, counterclaim or recoupment, and
notwithstanding any damage to, defects in or destruction of the Collateral or
any other event, including obsolescence of any property or improvements. All
payments made by Borrower (other than payments automatically paid through
Advances under the Revolving Facility as provided herein), shall be made only by
wire transfer on the date when due, without offset or counterclaim, in U.S.
Dollars, in immediately available funds to such account as may be indicated in
writing by Lender to Borrower from time to time. Any such payment received after
4:00 p.m. (Eastern Standard Time) on the date when due shall be deemed received
on the following Business Day. Whenever any payment hereunder shall be stated to
be due or shall become due and payable on a day other than a Business Day, the
due date thereof shall be extended to, and such payment shall be made on, the
next succeeding Business Day, and such extension of time in such case shall be
included in the computation of payment of any interest (at the interest rate
then in effect during such extension) and/or fees, as the case may be.
2.7. REPAYMENT OF EXCESS ADVANCES
Any balance of Advances under the Revolving Facility outstanding at
any time in excess of the lesser of the Facility Cap or the Availability shall
be immediately due and payable by Borrower without the necessity of any demand,
at the Payment Office, whether or not a Default or Event of Default has occurred
or is continuing and shall be paid in the manner specified in Section 2.6.
2.8. PAYMENTS BY LENDER
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Should any amount required to be paid under any Loan Document be unpaid,
such amount may be paid by Lender, which payment shall be deemed a request for
an Advance under the Revolving Facility as of the date such payment is due, and
Borrower irrevocably authorizes disbursement of any such funds to Lender by way
of direct payment of the relevant amount, interest or Obligations. No payment or
prepayment of any amount by Lender or any other Person shall entitle any Person
to be subrogated to the rights of Lender under any Loan Document unless and
until the Obligations have been fully performed and paid irrevocably in cash and
this Agreement has been terminated. Any sums expended by Lender as a result of
Borrower's or any Guarantor's failure to pay, perform or comply with any Loan
Document or any of the Obligations may be charged to Borrower's account as an
Advance under the Revolving Facility and added to the Obligations.
2.9. GRANT OF SECURITY INTEREST; COLLATERAL
(a) To secure the payment and performance of the Obligations, Borrower
hereby grants to Lender a continuing security interest in and Lien upon, and
pledges to Lender, all of its right, title and interest in and to the following
(collectively and each individually, the " COLLATERAL"), which security interest
is intended to be a first priority security interest:
(i) all of Borrower's tangible personal property, including
without limitation all present and future Inventory and Designated Equipment,
items of equipment which are or become Fixtures, now owned or hereafter
acquired;
(ii) all of Borrower's intangible personal property, including
without limitation all present and future Accounts, contract rights, Permits,
General Intangibles, Chattel Paper, Documents, Instruments, Deposit Accounts,
Investment Property, Letter-of-Credit Rights and Supporting Obligations, rights
to the payment of money or other forms of consideration of any kind, tax
refunds, insurance proceeds, now owned or hereafter acquired, and all intangible
and tangible personal property relating to or arising out of any of the
foregoing; and
(iii) any and all additions and accessions to any of the
foregoing, and any and all replacements, products and proceeds (including
insurance proceeds) of any of the foregoing.
(b) Notwithstanding the foregoing provisions of this Section 2.9, such
grant of a security interest shall not extend to, and the term "Collateral"
shall not include, (i) any Equipment Lender Collateral, (ii) Real Property , and
(iii) any General Intangibles of Borrower to the extent that (1) such General
Intangibles are not assignable or capable of being encumbered as a matter of law
or under the terms of any license or other agreement applicable thereto (but
solely to the extent that any such restriction shall be enforceable under
applicable law) without the consent of the licensor thereof or other applicable
party thereto, and (2) such consent has not been obtained; provided, however,
that the foregoing grant of a security interest shall extend to, and the term
"Collateral" shall include, each of the following: (x) any General Intangible
which is in the nature of an Account or a right to the payment of money or a
proceed of, or otherwise related to the enforcement or collection of, any
Account or right to the payment of money, or goods which are the subject of any
Account or right to the payment of money, (y) any and all proceeds of any
General Intangible that is otherwise excluded to the extent that the assignment,
pledge or encumbrance of such proceeds is not so restricted, and (z) upon
obtaining the consent of any such licensor or other applicable party with
respect to any such otherwise excluded General Intangible, such General
Intangible as well as any and all proceeds thereof that might theretofore have
been excluded from such grant of a security interest and from the term
"Collateral."
(c) In addition to the foregoing, to secure the payment and
performance of the Obligations, Lender shall have received a pledge of not less
than (i) 100% of the issued and outstanding shares of Borrower pursuant to the
Borrower Stock Pledge Agreement and (ii) 100% of the issued an outstanding
shares of each of Borrower's subsidiaries pursuant to the Subsidiary Stock
Pledge Agreement.
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(d) Upon (i) the execution and delivery of this Agreement, (ii) the
proper filing of the necessary financing statements recordation of the
Collateral Patent, Trademark and Copyright Assignment in the United States
Patent and Trademark Office and/or the United States Copyright Office, (iii) the
proper delivery of the necessary stock certificates, without any further action,
Lender will have a good, valid and perfected first priority Lien and security
interest in the Collateral, subject to no transfer or other restrictions or
Liens of any kind in favor of any other Person except for Permitted Liens. No
financing statement relating to any of the Collateral is on file in any public
office except those (i) on behalf of Lender, and/or (ii) in connection with
Permitted Liens.
2.10. COLLATERAL ADMINISTRATION
(a) All Collateral (except Deposit Accounts) will at all times be kept
by Borrower at the locations set forth on Schedule 5.18B hereto and shall not,
without thirty (30) calendar days prior written notice to Lender, be moved
therefrom, and in any case shall not be moved outside the continental United
States.
(b) Borrower shall keep accurate and complete records of its Accounts
and all payments and collections thereon and shall submit such records to Lender
on such periodic bases as Lender may request. In addition, if Accounts of
Borrower in an aggregate face amount in excess of $100,000 become ineligible
because they fall within one of the specified categories of ineligibility set
forth in the definition of Eligible Billed Receivables or Eligible Unbilled
Receivables, Borrower shall notify Lender of such occurrence on the first
Business Day following such occurrence and the Borrowing Base shall thereupon be
adjusted to reflect such occurrence. If requested by Lender, Borrower shall
execute and deliver to Lender formal written assignments of all of its Accounts
weekly as Lender may request, including all Accounts created since the date of
the last assignment, together with copies of claims, invoices and/or other
information related thereto. To the extent that collections from such assigned
accounts exceed the amount of the Obligations, such excess amount shall not
accrue interest in favor of Borrower, but shall be available to Borrower upon
Borrower's written request.
(c) Whether or not an Event of Default has occurred, any of Lender's
officers, employees, representatives or agents shall have the right, at any time
during normal business hours, in the name of Lender, any designee of Lender or
Borrower, to verify the validity, amount or any other matter relating to any
Accounts of Borrower. Borrower shall cooperate fully with Lender in an effort to
facilitate and promptly conclude such verification process.
(d) To expedite collection, Borrower shall endeavor in the first
instance to make collection of its Accounts for Lender. Lender shall have the
right at all times after the occurrence and during the continuance of an Event
of Default to notify Account Debtors owing Accounts to Borrower that their
Accounts have been assigned to Lender and to collect such Accounts directly in
its own name and to charge collection costs and expenses, including reasonable
attorney's fees, to Borrower.
(e) As and when determined by Lender in its Permitted Discretion,
Lender will perform the searches described in clauses (i) and (ii) below against
Borrower and Guarantors (the results of which are to be consistent with
Borrower's representations and warranties under this Agreement), all at
Borrower's expense, provided that unless an Event of Default has occurred and
during the continuance thereof, Borrower shall not pay for more than one such
search per calendar quarter: (i) UCC searches with the Secretary of State of the
jurisdiction of organization of Borrower and Guarantor and the Secretary of
State and local filing offices of each jurisdiction where Borrower and/or any
Guarantors maintain their respective executive offices, a place of business or
assets; (ii) lien searches with the United States Patent and Trademark Office
and the United States Copyright Office; and (iii) judgment, federal tax lien and
state tax lien searches, in each jurisdiction searched under clause (i) above.
(f) Borrower (1) shall provide prompt written notice to its current
bank to transfer all items, collections and remittances to the Concentration
Account, (ii) shall, upon the occurrence and during the continuance of an Event
of Default, provide prompt written notice to each Account Debtor that Lender has
been granted a lien
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and security interest in, upon and to all Accounts applicable to such Account
Debtor; (iii) shall direct each Account Debtor to make payments to the
appropriate Lockbox Account, and Borrower hereby authorizes Lender, upon any
failure to send such notices and directions within ten (10) calendar days after
the date of this Agreement (or ten (10) calendar days after the Person becomes
an Account Debtor), to send any and all similar notices and directions to such
Account Debtors, and (iv) shall do anything further that may be lawfully
required by Lender to create and perfect Lender's lien on any collateral and
effectuate the intentions of the Loan Documents. At Lender's request, Borrower
shall immediately deliver to Lender all items for which Lender must receive
possession to obtain a perfected security interest and all notes, certificates,
and documents of title, Chattel Paper, warehouse receipts, Instruments, and any
other similar instruments constituting Collateral.
2.11. POWER OF ATTORNEY
Lender is hereby irrevocably made, constituted and appointed the true
and lawful attorney for Borrower (without requiring Lender to act as such) with
full power of substitution to do the following: (i) upon and during the
continuance of an Event of Default, endorse the name of any such Person upon any
and all checks, drafts, money orders, and other instruments for the payment of
money that are payable to such Person and constitute collections on its or their
Accounts; (ii) upon and during the continuance of an Event of Default, execute
in the name of such Person any financing statements, schedules, assignments,
instruments, documents, and statements that it is or they or are obligated to
give Lender under any of the Loan Documents; (iii) upon and during the
continuance of an Event of Default, record Lender's Lien upon any motor vehicle
title certificates with respect to the Designated Equipment and file appropriate
applications with Government Authorities to have Lender's Lien noted on such
certificates of title, and (iv) do such other and further acts and deeds in the
name of such Person that Lender may deem necessary or desirable to enforce any
Account or other Collateral or to perfect Lender's security interest or lien in
any Collateral. In addition, if any such Person breaches its obligation
hereunder to direct payments of Accounts or the proceeds of any other Collateral
to the appropriate Lockbox Account, Lender, as the irrevocably made, constituted
and appointed true and lawful attorney for such Person pursuant to this
paragraph, may, by the signature or other act of any of Lender's officers or
authorized signatories (without requiring any of them to do so), direct any
federal, state or private payor or fiscal intermediary to pay proceeds of
Accounts or any other Collateral to the appropriate Lockbox Account.
III. FEES AND OTHER CHARGES
3.1. COMMITMENT FEES
On or before the Closing Date, Borrower shall pay to Lender a
nonrefundable commitment fee equal to (i) $300,000 for Lender's provision of the
Revolving A Facility and (ii) $70,000 for Lender's provision of the Revolving B
Facility.
3.2. UNUSED LINE FEES
Borrower shall pay to Lender monthly an unused line fee (the "UNUSED
LINE FEE") in an amount calculated as follows:
(a) from the Closing Date through the first anniversary of the Closing
Date, an amount equal to one half of one percent (0.50%) per annum of the
difference derived by subtracting (i) the daily average amount of the balances
under the Revolving A Facility outstanding during the preceding month from (ii)
$25,000,000;
(b) (x) from the first anniversary of the Closing Date through the
last day of the Tern or (y) in the event the daily amount advances outstanding
during the preceding month exceeds $25,000,000 during the period from the
Closing Date through the first anniversary of the Closing Date, an amount equal
to one half of one
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percent (0.50%) per annum of the difference derived by subtracting (i) the daily
average amount of the balances under the Revolving A Facility outstanding during
the preceding month, from (ii) the Revolving A Facility Cap;
(c) from the Closing Date through the end of the Term, three quarters
of one percent (0.75%) per annum of the difference derived by subtracting (i)
the daily average amount of the balances under the Revolving B Facility
outstanding during the preceding month, from (ii) the Revolving B Facility Cap;
and
(d) The Unused Line Fee shall be payable monthly in arrears on the
first clay of each successive calendar month (starting with the month in which
the Closing Date occurs).
3.3 COLLATERAL MANAGEMENT FEE
Borrower shall pay Lender as additional interest a monthly collateral
management fee (the "COLLATERAL MANAGEMENT FEE") equal to one quarter of one
percent per annum calculated on the basis of the daily average amount of the
balances under the Revolving A Facility and the Revolving B Facility outstanding
during the preceding month. The Collateral Management Fee shall be payable
monthly in arrears on the first day of each successive calendar month (starting
with the month in which the Closing Date occurs).
3.4. COMPUTATION OF FEES; LAWFUL LIMITS
All fees hereunder shall be computed on the basis of a year of 360
days and for the actual number of days elapsed in each calculation period, as
applicable. In no contingency or event whatsoever, whether by reason of
acceleration or otherwise, shall the interest and other charges paid or agreed
to be paid to Lender for the use, forbearance or detention of money hereunder
exceed the maximum rate permissible under applicable law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
If, due to any circumstance whatsoever, fulfillment of any provision hereof, at
the time performance of such provision shall be due, shall exceed any such
limit, then, the obligation to be so fulfilled shall be reduced to such lawful
limit, and, if Lender shall have received interest or any other charges of any
kind which might be deemed to be interest under applicable law in excess of the
maximum lawful rate, then such excess shall be applied first to any unpaid fees
and charges hereunder, then to unpaid principal balance owed by Borrower
hereunder, and if the then remaining excess interest is greater than the
previously unpaid principal balance, Lender shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate. The terms and provisions of this Section 3.4 shall
control to the extent any other provision of any Loan Document is inconsistent
herewith.
3.5. DEFAULT RATE OF INTEREST
Upon the occurrence and during the continuation of an Event of
Default, the Applicable Rate of interest in effect at such time with respect to
the Obligations shall be increased b y 4.0% per annum (the "DEFAULT RATE").
3.6. ACKNOWLEDGEMENT OF JOINT AND SEVERAL LIABILITY
To the extent applicable, each Borrower acknowledges that it is
jointly and severally liable for all of the Obligations under the Loan
Documents. To the extent applicable, each Borrower expressly understands, agrees
and acknowledges that (i) Borrowers are all Affiliated entities by common
ownership, (ii) each Borrower desires to have the availability of one common
credit facility instead of separate credit facilities, (iii) each Borrower has
requested that Lender extend such a common credit facility on the terns herein
provided, (iv) Lender will be lending against, and relying on a lien upon, all
of Borrowers' assets even though the proceeds of any particular loan made
hereunder may not be advanced directly to a particular Borrower, (v) each
Borrower will nonetheless benefit by the making of all such loans by Lender and
the availability of a single credit facility of a size greater than each
8
could independently warrant, and (vi) all of the representations, warranties,
covenants, obligations, conditions, agreements and other terms contained in the
Loan Documents shall be applicable to and shall be binding upon each Borrower.
IV. CONDITIONS PRECEDENT
4.1. CONDITIONS TO INITIAL ADVANCE AND CLOSING
The obligations of Lender to consummate the transactions contemplated
herein and to make the initial Advance under the Revolving Facility (the
"INITIAL ADVANCE") are subject to the satisfaction, in the sole judgment of
Lender, of the following:
(a) (i) Borrower shall have delivered to Lender (A) the Loan Documents
to which it is a party, each duly executed by an authorized officer of Borrower
and the other parties thereto, (B) a Borrowing Certificate for the Initial
Advance a rider the R evolving Facility executed by an authorized officer of
Borrower, and (ii) each Guarantor shall have delivered to Lender the Loan
Documents to which such Guarantor is a party, each duly executed and delivered
by such Guarantor or an authorized officer of such Guarantor, as applicable, and
the other parties thereto;
(b) all in form and substance satisfactory to Lender in its sole
discretion, Lender shall have received (i) a report of Uniform Commercial Code
financing statement, tax and judgment lien searches performed with respect to
Borrower and Guarantor in each jurisdiction determined by Lender in its sole
discretion, and such report shall show no Liens on the Collateral (other than
Permitted Liens), (ii) each document (including, without limitation, any Uniform
Commercial Code financing statement) required by any Loan Document or under law
or requested by Lender to be filed, registered or recorded to create in favor of
Lender, a perfected first priority security interest upon the Collateral, and
(iii) evidence of each such filing, registration or recordation and of the
payment by Borrower of any necessary fee, tax or expense relating thereto;
(c) Lender shall have received (i) the Charter and Good Standing
Documents, all in form and substance acceptable to Lender, (ii) a certificate of
the corporate secretary or assistant secretary of Borrower and Guarantor dated
the Closing Date, as to the incumbency and signature of the Persons executing
the Loan Documents, in form and substance acceptable to Lender, and (iii) the
written legal opinion of counsel for Borrower and Guarantors, in form and
substance satisfactory to Lender and its counsel;
(d) Lender shall have received a certificate of the chief financial
officer (or, in the absence of a chief financial officer, the chief executive
officer) of Borrower and Guarantor, in form and substance satisfactory to Lender
(each, a "SOLVENCY CERTIFICATE"), certifying (i) the solvency of such Person
after giving effect to the transactions and the Indebtedness contemplated by the
Loan Documents, and (ii) as to such Person's financial resources and ability to
meet its obligations and liabilities as they become due, to the effect that as
of the Closing Date and the Borrowing Date for the Initial Advance and after
giving effect to such transactions and Indebtedness: (A) the assets of such
Person, at a Fair Valuation, exceed the total liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of such Person, and (B) no
unreasonably small capital base with which to engage in its anticipated business
exists with respect to such Person;
(e) Lender shall have completed examinations, the results of which
shall be satisfactory in form and substance to Lender, of the Collateral, the
financial statements and the books, records, business, obligations, financial
condition and operational state of Borrower and Guarantor, and each such Person
shall have demonstrated to Lender's satisfaction that (i) its operations comply,
in all respects deemed material by Lender, in its sole judgment, with all
applicable federal, state, foreign and local laws, statutes and regulations,
(ii) its operations are not the subject of any governmental investigation,
evaluation or any remedial action which could result in any
9
expenditure or liability deemed material by Lender, in its sole judgment, and
(iii) it has no liability (whether contingent or otherwise) that is deemed
material by Lender, in its sole judgment;
(f) Lender shall have received all fees, charges and expenses payable
to Lender on or prior to the Closing Date pursuant to the Loan Documents;
(g) all in form and substance satisfactory to Lender in its sole
discretion, Lender shall have received such consents, approvals and agreements,
including, without limitation, any applicable Landlord Waivers and Consents with
respect to any and all leases set forth on Schedule 5.4 (but only to the extent
any books and records relating to Collateral are stored at any such location),
from such third parties as Lender and its counsel shall determine are necessary
or desirable with respect to (i) the Loan Documents and/or the transactions
contemplated thereby, and/or (ii) claims against Borrower or Guarantor or the
Collateral;
(h) Borrower shall be in compliance with Section 6.5, and Lender shall
have received original certificates of all insurance policies of Borrower
confirming that they are in effect and that the premiums due and owing with
respect thereto have been paid in full and naming Lender as loss payee or
additional insured, as appropriate;
(i) all corporate and other proceedings, documents, instruments and
other legal matters in connection with the transactions contemplated by the Loan
Documents (including, but not limited to, those relating to corporate and
capital structures of Borrower) shall be satisfactory to Lender;
(j) Lender shall have received, in form and substance satisfactory to
Lender, (i) evidence of the repayment in full and termination of Citibank, N.A.
Indebtedness and all related documents, agreements and instruments and of all
Liens, security interests and Uniform Commercial Code financing statements
relating thereto, and (ii) release and termination of any and all Liens,
security interest and/or Uniform Commercial Code financing statements in, on,
against or with respect to any of the Collateral (other than Permitted Liens);
(k) Borrower shall have executed and filed IRS Form 8821 with the
appropriate office of the Internal Revenue Service;
(1) Lender shall have received such other documents, certificates,
information or legal opinions as Lender may reasonably request, all in form and
substance reasonably satisfactory to Lender.
4.2. CONDITIONS TO EACH ADVANCE
The obligations of Lender to make any Advance (including, without
limitation, the Initial Advance) are subject to the satisfaction, in the sole
judgment of Lender, of the following additional conditions precedent:
(a) Borrower shall have delivered to Lender a Borrowing Certificate
for the Advance executed by an authorized officer of Borrower, which shall
constitute a representation and warranty by Borrower as of the Borrowing Date of
such Advance that the conditions contained in this Section 4.2 have been
satisfied; provided, however, that any determination as to whether to fund
Advances or extensions of credit shall be made by Lender in its Permitted
Discretion;
(b) each of the representations and warranties made by Borrower in or
pursuant to this Agreement shall be accurate, before and after giving effect to
such Advance, and no Default or Event of Default shall have occurred or be
continuing or would exist after giving effect to the Advance under the Revolving
Facility on such date;
10
(c) immediately after giving effect to the requested Advance, the
aggregate outstanding principal amount of (i) Revolving A Advances under the
Revolving A Facility shall not exceed either the Revolving A Availability or the
Revolving A Facility Cap and (ii) Revolving B Advances under the Revolving B
Facility shall not exceed either the Revolving B Availability or the Revolving B
Facility Cap;
(d) except as disclosed in the historical financial statements, there
shall be no liabilities or obligations with respect to Borrower of any nature
whatsoever which, either individually or in the aggregate, would reasonably be
likely to have a Material Adverse Effect; and
(e) Lender shall have received all fees, charges and expenses payable
to Lender on or prior to such date pursuant to the Loan Documents.
V. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as of the date hereof, the Closing Date,
and each Borrowing Date as follows:
5.1. ORGANIZATION AND AUTHORITY
Borrower is a corporation duly organized, validly existing and in good
standing under the laws of its state of formation. Borrower (i) has all
requisite corporate or entity power and authority to own its properties and
assets and to carry on its business as now being conducted and as contemplated
in the Loan Documents, (ii) is duly qualified to do business in every
jurisdiction in which failure so to qualify would reasonably be likely to have a
Material Adverse Effect, and (iii) has all requisite power and authority (A) to
execute, deliver and perform the Loan Documents to which it is a party, (B) to
borrow hereunder, (C) to consummate the transactions contemplated under the Loan
Documents, and (D) to grant the Liens with regard to the Collateral pursuant to
the Security Documents to which it is a party, No Borrower is an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended, or is controlled by such an "investment company."
5.2. LOAN DOCUMENTS
The execution, delivery and performance by Borrower of the Loan
Documents to which it is a party, and the consummation of the transactions
contemplated thereby, (i) have been duly authorized by all requisite action of
each such Person and have been duly executed and delivered by or on behalf of
each such Person; (ii) do not violate any provisions of (A) applicable law,
statute, rule, regulation, ordinance or tariff, (B) any order of any
Governmental Authority binding on any such Person or any of their respective
properties, or (C) the certificate of incorporation or bylaws (or any other
equivalent governing agreement or document) of any such Person, or any agreement
between any such Person and its respective stockholders, members, partners or
equity owners or among any such stockholders, members, partners or equity
owners; (iii) are not in conflict with, and do not result in a breach or default
of or constitute an event of default, or an event, fact, condition or
circumstance which, with notice or passage of time, or both, would constitute or
result in a conflict, breach, default or event of default under, any indenture,
agreement or other instrument to which any such Person is a party, or by which
the properties or assets of such Person are bound; (iv) except as set forth
therein, will not result in the creation or imposition of any Lien of any nature
upon any of the properties or assets of any such Person, and (v) except as set
forth on Schedule 5.2, do not require the consent, approval or authorization of,
or filing, registration or qualification with, any Governmental Authority or any
other Person. When executed and delivered, each of the Loan Documents to which
Borrower is a party will constitute the legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terns, subject to
the effect of any applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at law or in
equity).
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5.3 SUBSIDIARIES, CAPITALIZATION AND OWNERSHIP INTERESTS
Except as listed on Schedule 5.3, Borrower has no Subsidiaries.
Schedule 5.3 states the authorized and issued capitalization of Borrower, the
number and class of equity securities and/or ownership, voting or partnership
interests issued and outstanding of Borrower and the record and beneficial
owners thereof (including options, warrants and other rights to acquire any of
the foregoing). The ownership or partnership interests of Borrower that is a
limited partnership or a limited liability company are not certificated, the
documents relating to such interests do not expressly state that the interests
are governed by Article 8 of the Uniform Commercial Code, and the interests are
not held in a securities account. The outstanding equity securities and/or
ownership, voting or partnership interests of Borrower have been duly authorized
and validly issued and are fully paid and nonassessable, and each Person listed
on Schedule 5.3 owns beneficially and of record all the equity securities and/or
ownership, voting or partnership interests it is listed as owning free and clear
of any Liens other than Liens created by the Security Documents. Schedule 5.3
also lists the directors, members, managers and/or partners of Borrower. Except
as listed on Schedule 5.3, Borrower does not own an interest in, participate in
or engage in any joint venture, partnership or similar arrangements with any
Person.
5.4. PROPERTIES
Borrower (i) is the sole owner and has good, valid and marketable
title to, or a valid leasehold interest in, all of its properties and assets,
including the Collateral, whether personal or real, subject to no transfer
restrictions or Liens of any kind except for Permitted Liens, and (ii) is in
compliance in all material respects with each lease to which it is a party or
otherwise bound. Schedule 5.4 lists all real properties (and their locations)
owned or leased by or to, and all other assets or property that are leased or
licensed by, Borrower and all leases (including leases of leased real property)
covering or with respect to such properties and assets. Borrower enjoys peaceful
and undisturbed possession under all such leases and such leases are all the
leases necessary for the operation of such properties and assets, are valid and
subsisting and arc in full force and effect.
5.5 OTHER AGREEMENTS
Except as otherwise set forth in Schedule 5.5, Borrower is not (i) a
party to any judgment, order or decree or any agreement, document or instrument,
or subject to any restriction, which would affect its ability to execute and
deliver, or perform under, any Loan Document or to pay the Obligations, (ii) in
default in the performance, observance or fulfillment of any obligation,
covenant or condition contained in any agreement, document or instrument to
which it is a party or to which any of its properties or assets are subject,
which default, if not remedied within any applicable grace or cure period would
reasonably be likely to have a Material Adverse Effect, nor is there any event,
fact, condition or circumstance which, with notice or passage of time or both,
would constitute or result in a conflict, breach, default or event of default
under, any of the foregoing which, if not remedied within any applicable grace
or cure period would reasonably be likely to have a Material Adverse Effect; or
(iii) a party or subject to any agreement, document or instrument with respect
to, or obligation to pay any, management or service fee with respect to, the
ownership, operation, leasing or performance of its business.
5.6. LITIGATION
Except as otherwise set forth on Schedule 5.6, there is no action,
suit, proceeding or investigation pending or, to their knowledge, threatened
against Borrower that (i) questions or could prevent the validity of any of the
Loan Documents or the right of Borrower to enter into any Loan Document or to
consummate the transactions contemplated thereby, (ii) would reasonably be
likely to be or have, either individually or in the aggregate, any Material
Adverse Change or Material Adverse Effect, or (iii) would reasonably be likely
to result in any Change of Control or other change in the current ownership,
control or management of Borrower. Borrower is not aware that there is any basis
for the foregoing. Borrower is not a party or subject to any order, writ,
injunction, judgment or decree of any Governmental Authority. There is no
action, suit, proceeding or investigation initiated by Borrower
12
currently pending which when taken together with all such other pending actions,
suits, proceedings or investigations could reasonably be expected to have a
Material Adverse Effect, Borrower has no existing accrued and/or unpaid
Indebtedness to any Governmental Authority or any other governmental payor.
5.7. HAZARDOUS MATERIALS
Borrower is in compliance in all material respects with all applicable
Environmental Laws. Borrower has not been notified of any action, suit,
proceeding or investigation (i) relating in any way to compliance by or
liability of Borrower under any Environmental Laws, (ii) which otherwise deals
with any Hazardous Substance or any Environmental Law, or (iii) which seeks to
suspend, revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Hazardous Substance.
5.8. POTENTIAL TAX LIABILITY; TAX RETURNS; GOVERNMENTAL REPORTS
(a) Except as disclosed in Schedule 5.8, Borrower (i) has not received
any oral or written communication from the Internal Revenue Service with respect
to any investigation or assessment relating to the Borrower directly, or
relating to any consolidated tax return which was filed on behalf of Borrower,
(ii) is not aware of any year which remains open pending tax examination or
audit by the IRS, and (iii) is not aware of any information that could give rise
to an IRS tax liability or assessment.
(b) Borrower (i) has filed all federal, state, foreign (if applicable)
and local tax returns and other reports which are required by law to be filed by
Borrower, and (ii) has paid all taxes, assessments, fees and other governmental
charges, including, without limitation, payroll and other employment related
taxes, in each case that are due and payable, except only for items that
Borrower is currently contesting in good faith with adequate reserves under
GAAP, which contested items are described on Schedule 5.8.
5.9 FINANCIAL STATEMENTS AND REPORTS
All financial statements and financial information relating to
Borrower that have been or may hereafter be delivered to Lender by Borrower are
accurate and complete and have been prepared in accordance with GAAP
consistently applied with prior periods. Borrower has no material obligations or
liabilities of any kind not disclosed in such financial information or
statements, and since the date of the most recent financial statements submitted
to Lender, there has not occurred any Material Adverse Change, Material Adverse
Effect to Borrower's knowledge, any other event or condition that would
reasonably be likely to have a Material Adverse Effect,
5.10. COMPLIANCE WITH LAW
Borrower (i) is in compliance with all laws, statutes, rules,
regulations, ordinances and tariffs of any Governmental Authority applicable to
Borrower and/or Borrower's business, assets or operations, including, without
limitation, ERISA, and (ii) is not in violation of any order of any Governmental
Authority or other board or tribunal, except where noncompliance or violation
could not reasonably be expected to have a Material Adverse Effect. There is no
event, fact, condition or circumstance which, with notice or passage of time, or
both, would constitute or result in any noncompliance with, or any violation of,
any of the foregoing, in each case except where noncompliance or violation could
not reasonably be expected to have a Material Adverse Effect. Borrower has not
received any notice that Borrower is not in compliance in any respect with any
of the requirements of any of the foregoing. Borrower has (a) not engaged in any
Prohibited Transactions as defined in Section 406 of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder, (b) not failed to meet any applicable minimum funding
requirements under Section 302 of ERISA in respect of its plans and no funding
requirements have been postponed or delayed, (c) no knowledge of any amounts due
but unpaid to the Pension Benefit Guaranty Corporation, or of any event or
occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any of the
13
employee benefit plans, (d) no fiduciary responsibility under ERISA for
investments with respect to any plan existing for the benefit of Persons other
than its employees or former employees, or (e) not withdrawn, completely or
partially, from any multi-employer pension plans so as to incur liability under
the MultiEmployer Pension Plan Amendments of 1980. With respect to Borrower,
there exists no event described in Section 4043 of ERISA, excluding Subsections
4043(b)(2) and 4043(b)(3) thereof, for which the thirty (30) day notice period
contained in 12 C.F.R. Section 2615.3 has not been waived.
5.11. INTELLECTUAL PROPERTY
Except as set forth on Schedule 5.11, Borrower does not own, license
or utilize, and is not a party to, any patents, patent applications, trademarks,
trademark applications, service marks, registered copyrights, copyright
applications, copyrights, trade names, trade secrets, software or licenses
(collectively, the "INTELLECTUAL PROPERTY").
5.12. LICENSES AND PERMITS; LABOR
Borrower is in compliance with and has all Permits and Intellectual
Property necessary or required by applicable law or Governmental Authority for
the operation of its businesses. All of the foregoing are in full force and
effect and not in known conflict with the rights of others. Borrower is not (i)
in breach of or default under the provisions of any of the foregoing, nor is
there any event, fact, condition or circumstance which, with notice or passage
of time or both, would constitute or result in a conflict, breach, default or
event of default under, any of the foregoing which, if not remedied within any
applicable grace or cure period would reasonably be likely to have a Material
Adverse Effect, (ii) a party to or subject to any agreement, instrument or
restriction that is so unusual or burdensome that it might have a Material
Adverse Effect, and/or (iii) and has not been, involved in any labor dispute,
strike, walkout or union organization which would reasonably be likely to have a
Material Adverse Effect.
5.13. NO DEFAULT
There does not exist any Default or Event of Default or any event,
fact, condition or circumstance which, with the giving of notice or passage of
time or both, would constitute or result in a Default or Event of Default.
5.14. DISCLOSURE
No Loan Document nor any other agreement, document, certificate, or
statement furnished to Lender by or on behalf of Borrower in connection with the
transactions contemplated by the Loan Documents, nor any representation or
warranty made by Borrower in any Loan Document, contains any untrue statement of
material fact or omits to state any fact necessary to make the statements
therein not materially misleading. There is no fact known to Borrower which has
not been disclosed to Lender in writing which would reasonably be likely to have
a Material Adverse Effect.
5.15. EXISTING INDEBTEDNESS; INVESTMENTS, GUARANTEES AND CERTAIN CONTRACTS
Except as contemplated by the Loan Documents or as otherwise set forth
on Schedule 5.15A, Borrower (i) has no outstanding indebtedness, (ii) is not
subject or party to any mortgage, note, indenture, indemnity or guarantee of,
with respect to or evidencing any Indebtedness of any other Person, or (iii)
does not own or hold any equity or long-term debt investments in, and does not
have any outstanding advances to or any outstanding guarantees for the
obligations of, or any outstanding borrowings from, any Person. Borrower has
performed all material obligations required to be performed by Borrower pursuant
to or in connection with any items listed on Schedule 5.15A and there has
occurred no breach, default or event of default under any document
14
evidencing any such items or any fact, circumstance, condition or event which,
with the giving of notice or passage of time or both, would constitute or result
in a breach, default or event of default thereunder. Schedule 5.15B sets forth
all Indebtedness with a maturity date during the Term of the Loan, and
identifies such maturity date.
5.16. OTHER AGREEMENTS
Except as set forth on Schedule 5.16, (i) there are no existing or
proposed agreements, arrangements, understandings or transactions between
Borrower and any of Borrower's officers, members, managers, directors,
stockholders, partners, other interest holders, employees or Affiliates or any
members of their respective immediate families, and (ii) none of the foregoing
Persons are directly or indirectly, indebted to or have any direct or indirect
ownership, partnership or voting interest in, to Borrower's knowledge, any
Affiliate of Borrower or any Person that competes with Borrower (except that any
such Persons may own stock in (but not exceeding two (2%) percent of the
outstanding capital stock of) any publicly traded company that may compete with
Borrower.
5.17. INSURANCE
Borrower has in full force and effect such insurance policies as are
customary in its industry and as may be required pursuant to Section 6.5 hereof.
All such insurance policies are listed and described on Schedule 5.17.
5.18. NAMES; LOCATION OF OFFICES, RECORDS AND COLLATERAL
During the preceding five years, Borrower has not conducted business
under or used any name (whether corporate, partnership or assumed) other than as
shown on Schedule 5.18A. Borrower is the sole owner of all of its names listed
on Schedule 5.18A, and any and all business done and invoices issued in such
names are Borrower's sales, business and invoices. Each trade name of Borrower
represents a division or trading style of Borrower. Borrower maintains its
places of business and chief executive offices only at the locations set forth
on Schedule 5.18B, and all Accounts of Borrower arise, originate and are
located, and all of the Collateral and all books and records in connection
therewith or in any way relating thereto or evidencing the Collateral are
located and shall only be located, in and at such locations. All of the
Collateral is located only in the continental United States.
5.19. NON-SUBORDINATION
The Obligations are not subordinated in any way to any other
obligations of Borrower or to the rights of any other Person.
5.20. ACCOUNTS
In determining which Accounts are Eligible Receivables, Lender may
rely on all statements and representations made by Borrower with respect to any
Account. Unless otherwise indicated in writing to Lender, (i) each Account of
Borrower is genuine and in all respects what it purports to be and is not
evidenced by a judgment, (ii) each Account of Borrower arises out of a
completed, bona fide sale and delivery of goods or rendering of services by
Borrower in the ordinary course of business and in accordance with the terms and
conditions of all purchase orders, contracts, certifications, participations and
other documents relating thereto or forming a part of the contract between
Borrower and the Account Debtor, (iii) each Account of Borrower is for a
liquidated amount maturing as stated in a claim or invoice covering such sale of
goods or rendering of services, a copy of which has been furnished or is
available to Lender, (iv) each Account of Borrower together with Lender's
security interest therein, is not and will not be in the future (by voluntary
act or omission by Borrower), subject to any offset, lien, deduction, defense,
dispute, counterclaim or other adverse condition, is absolutely owing to
Borrower and is not
15
contingent in any respect or for any reason (other than offsets, deductions,
defenses, disputes or counterclaims arising in the ordinary course of business),
(v) there are no facts, events or occurrences which in any way impair the
validity or enforceability of any Account of Borrower or tend to reduce the
amount payable thereunder from the face amount of the claim or invoice and
statements delivered to Lender with respect thereto, (vi) (A) the Account Debtor
under each Account of Borrower had the capacity to contract at the time any
contract or other document giving rise thereto was executed and (B) each such
Account Debtor is solvent, (vii) there are no proceedings or actions which are
threatened or pending against any Account Debtor under any Account of Borrower
which might result in any Material Adverse Change in such Account Debtor's
financial condition or the collectability thereof, (viii) each Account of
Borrower has been billed and forwarded to the Account Debtor for payment in
accordance with applicable laws and is in compliance and conformance with any
requisite procedures, requirements and regulations governing payment by such
Account Debtor with respect to such Account, and, (ix) Borrower has obtained and
currently has all Permits necessary in the generation of each Account of
Borrower.
5.21. SURVIVAL
Borrower makes the representations and warranties contained herein
with the knowledge and intention that Lender is relying and will rely thereon.
All such representations and warranties will survive the execution and delivery
of this Agreement and the making of the Advances under the Revolving Facility.
VI. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until full performance and
satisfaction, and indefeasible payment in full in cash, of all the Obligations
and termination of this Agreement:
6.1. FINANCIAL STATEMENTS, BORROWING CERTIFICATE, FINANCIAL REPORTS AND
OTHER INFORMATION
(a) Financial Reports. In addition to providing the Borrowing
Certificate in accordance with Section 2.4, Borrower shall furnish to Lender (i)
as soon as available and in any event within one hundred twenty (120) calendar
days after the end of each fiscal year of Borrower, audited annual consolidated
and consolidating financial statements of Borrower, including the notes thereto,
consisting of a consolidated and consolidating balance sheet at the end of such
completed fiscal year and the related consolidated and consolidating statements
of income, retained earnings, cash flows and owners' equity for such completed
fiscal year, which financial statements shall be prepared and certified without
qualification by an independent certified public accounting firm satisfactory to
Lender and accompanied by related management letters, if available, and (ii) as
soon as available and in any event within thirty (30) calendar days after the
end of each calendar month, unaudited consolidated and consolidating financial
statements of Borrower consisting of a balance sheet and statements of income,
retained earnings, cash flows and owners' equity as of the end of the
immediately preceding calendar month. All such financial statements shall be
prepared in accordance with GAAP consistently applied with prior periods. With
each such financial statement, Borrower shall also deliver a certificate of its
chief financial officer stating that (A) such person has reviewed the relevant
terms of the Loan Documents and the condition of Borrower, (B) no Default or
Event of Default has occurred or is continuing, or, if any of the foregoing has
occurred or is continuing, specifying the nature and status and period of
existence thereof and the steps taken or proposed to be taken with respect
thereto, and (C) Borrower is in compliance with all financial covenants attached
as Annex I hereto. Such certificate shall be accompanied by the calculations
necessary to show compliance with the financial covenants in a form satisfactory
to Lender.
(b) Other Materials. Borrower shall furnish to Lender as soon as
available, and in any event within ten (10) calendar days after the preparation
or issuance thereof or at such other time as set forth below: (i) copies of such
financial statements (other than those required to be delivered pursuant to
Section 6.1(a)) prepared by, for or on behalf of Borrower and any other notes,
reports and other materials related thereto, including, without limitation, any
pro forma financial statements, (ii) copies of material licenses and permits
required by any
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applicable federal, state, foreign or local law, statute ordinance or regulation
or Governmental Authority for the operation of its business, (iii) within
fifteen (15) calendar days after the end of each calendar month for such month,
a sales and collection report and accounts receivable and accounts payable aging
schedule, including a report of sales, credits issued and collections received,
all such reports showing a reconciliation to the amounts reported in the monthly
financial statements, (iv) promptly upon receipt thereof, copies of any reports
submitted to Borrower by its independent accountants in connection with any
interim audit of the books of such Person or any of its Affiliates and copies of
each management control letter provided by such independent accountants, (v)
within fifteen (15) calendar days after the end of each calendar month for such
month, an updated Schedule 1 detailing any purchases or sales of Designated
Equipment during such month, and (vi) such additional information, documents,
statements, reports and other materials as Lender may reasonably request from a
credit or security perspective or otherwise from time to time.
(c) Notices. Borrower shall promptly, and in any event within seven
(7) calendar days after Borrower or any authorized officer of Borrower obtains
knowledge thereof, notify Lender in writing of (i) any pending or threatened
litigation, suit, investigation, arbitration, dispute resolution proceeding or
administrative proceeding brought or initiated by Borrower or otherwise
affecting or involving or relating to Borrower or any of its property or assets
to the extent (A) the amount in controversy exceeds $250,000 (provided that for
any litigation relating ▇ ▇ ▇ ▇ individual motor vehicle accident, to the extent
the amount in controversy exceeds $1,000,000), or (B) to the extent any of the
foregoing seeks injunctive or declarative relief, (ii) any Default or Event of
Default, which notice shall specify the nature and status thereof, the period of
existence thereof and what action is proposed to be taken with respect thereto,
(iii) any other development, event, fact, circumstance or condition that would
reasonably be likely to have a Material Adverse Effect, in each case describing
the nature and status thereof and the action proposed to be taken with respect
thereto, (iv) any notice received by Borrower from any payor of a claim, suit or
other action such payor has, claims or has filed against Borrower, (v) any
matter(s) affecting the value, enforceability or collectability of any of the
Collateral, including, without limitation, claims or disputes in the amount of
$100,000 or more, singly or in the aggregate, in existence at any one time, (vi)
any notice given by Borrower to any other lender of Borrower, which notice to
Lender shall be accompanied by a copy of the applicable notice given to the
other Lender, (vii) receipt of any notice or request from any Governmental
Authority or governmental payor regarding any liability or claim of liability,
(viii) any Account becoming evidenced or secured by an Instrument or Chattel
Paper, and/or (ix) receipt of any notice from any Account Debtor under a
material contract notifying Borrower of a material breach under or termination
of such contract.
(d) Consents. Borrower shall obtain and deliver from time to time all
required consents, approvals and agreements from such third parties as Lender
shall determine are necessary or desirable in its Permitted Discretion, each of
which must be satisfactory to Lender in its Permitted Discretion, with respect
to (i) the Loan Documents and the transactions contemplated thereby, (ii) claims
against Borrower or the Collateral, and/or (iii) any agreements, consents,
documents or instruments to which Borrower is a party or by which any properties
or assets of Borrower or any of the Collateral is or are bound or subject,
including, without limitation, Landlord Waivers and Consents with respect to
leases.
(e) Operating Budget. Borrower shall furnish to Lender for each fiscal
year of Borrower not less than thirty (30) calendar days prior to the
commencement of such fiscal year, consolidated and consolidating month by month
projected operating budgets, annual projections, profit and loss statements,
balance sheets and cash flow reports of and for Borrower for such upcoming
fiscal year (including an income statement for each month and a balance sheet as
at the end of the last month in each fiscal quarter), in each case prepared in
accordance with GAAP consistently applied with prior periods.
6.2. PAYMENT OF OBLIGATIONS
Borrower shall make full and timely indefeasible payment in cash of
the principal of and interest on the Loans, Advances and all other Obligations.
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6.3. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS
Borrower shall (i) conduct its business in accordance with good
business practices customary to the industry, (ii) engage principally in the
same or similar lines of business substantially as heretofore conducted, (iii)
collect its Accounts in the ordinary course of business, (iv) maintain all of
its material properties, assets and equipment used or useful in its business in
good repair, working order and condition (normal wear and tear excepted and
except as may be disposed of in the ordinary course of business and in
accordance with the terms of the Loan Documents and otherwise as determined by
Borrower using commercially reasonable business judgment), (v) from time to time
to make all necessary or desirable repairs, renewals and replacements thereof,
as determined by Borrower using commercially reasonable business judgment, (vi)
maintain and keep in full force and effect its existence and all material
Permits and qualifications to do business and good standing in each jurisdiction
in which the ownership or lease of property or the nature of its business makes
such Permits or qualification necessary and in which failure to maintain such
Permits or qualification could reasonably he likely to have a Material Adverse
Effect; and (vii) remain in good standing and maintain operations in all
jurisdictions in which currently located.
6.4 COMPLIANCE WITH LEGAL AND OTHER OBLIGATIONS
Borrower shall (i) comply with all laws, statutes, rules, regulations,
ordinances and tariff's of all Governmental Authorities applicable to it or its
business, assets or operations; (ii) pay all taxes, assessments, fees,
governmental charges, claims for labor, supplies, rent and all other obligations
or liabilities of any kind, except liabilities being contested in good faith and
against which adequate reserves have been established in accordance with GAAP,
(iii) perform in accordance with its terms each contract, agreement or other
arrangement to which it is a party or by which it or any of the Collateral is
bound, except where the failure to comply, pay or perform could not reasonably
he expected to have a Material Adverse Effect, and (iv) maintain and comply with
all Permits necessary to conduct its business and comply with any new or
additional requirements that may be imposed on it or its business.
6.5. INSURANCE
Borrower shall (i) keep all of its insurable properties and assets
including without limitation Inventory (other than goods being hauled for its
customers) that is in transit (whether by vessel, air or land) adequately
insured in all material respects against losses, damages and hazards as are
customarily insured against by businesses engaging in similar activities or
owning similar assets or properties and at least the minimum amount required by
applicable law (and with respect to Inventory that is in transit, maintain
insurance covering the same for its full replacement cost under all risk marine
insurance policies endorsed to cover all risks required by Lender and with such
amounts of coverage and deductibles as Lender determines, in its Permitted
Discretion, issued by such insurance carriers as are acceptable to Lender),
including, without limitation, professional liability insurance, as applicable;
and maintain general public liability insurance at all times against liability
on account of damage to persons and property having such 1imits, deductibles,
exclusions and co-insurance and other provisions as are customary for a business
engaged in activities similar to those of Borrower; and (ii) maintain insurance
under all applicable workers' compensation laws; all of the foregoing insurance
policies to (A) be satisfactory in form and substance to Lender, (B) name Lender
as loss payee and additional insured thereunder and (C) expressly provide that
they cannot be altered, amended, modified or canceled without thirty (30)
Business Days prior written notice to Lender and that they inure to the benefit
of Lender notwithstanding any action or omission or negligence of or by Borrower
or any insured thereunder.
6.6. TRUE BOOKS
Borrower shall (i) keep true, complete and accurate books of record
and account in accordance with commercially reasonable business practices in
which true and correct entries are made of all of its and their
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dealings and transactions in all material respects; and (ii) set up and maintain
on its books such reserves as may be required by GAAP with respect to doubtful
accounts and all taxes, assessments, charges, levies and claims and with respect
to its business, and include such reserves in its quarterly as well as year end
financial statements.
6.7. INSPECTION; PERIODIC AUDITS
Borrower shall permit the representatives of Lender, at the expense of
Borrower, from lime to time during normal business hours upon reasonable notice,
to (a) visit and inspect any of its offices or properties or any other place
where Collateral is located to inspect the Collateral and/or to examine or audit
all of its books of account, records, reports and other papers, (b) make copies
and extracts therefrom, and (b) discuss its business, operations, prospects,
properties, assets, liabilities, condition and/or Accounts with its officers and
independent public accountants (and by this provision such officers and
accountants are authorized to discuss the foregoing), provided, however, (i) so
long as no Default or Event of Default has occurred and is continuing, Lender
shall only be permitted to visit the offices and properties of Borrower, at the
Borrower's expense no more than three (3) times during any calendar year, (ii)
so long as no Event of Default has occurred and is continuing, the maximum
aggregate amount charged to Borrower for such inspections during any calendar
year shall not exceed the sum of $35,000 plus out-of-pocket expenses and (iii)
that no such notice shall be required to do any of the foregoing if a Default or
Event of Default has occurred and is continuing.
6.8. FURTHER ASSURANCES; POST CLOSING
At Borrower's cost and expense, Borrower shall (i) take such further
actions, obtain such consents and approvals and duly execute and deliver such
further agreements, assignments, instructions or documents as Lender may request
with respect to the purposes, terms and conditions of the Loan Documents and the
consummation of the transactions contemplated thereby, and (ii) without limiting
and notwithstanding any other provision of any Loan Document, execute and
deliver, or cause to be executed and delivered, such agreements and documents,
and take or cause to be taken such actions, and otherwise perform, observe and
comply with such obligations, as are set forth on Schedule 6.8.
6.9. PAYMENT OF INDEBTEDNESS
Except as otherwise prescribed in the Loan Documents, Borrower shall
pay, discharge or otherwise satisfy at or before maturity (subject to applicable
grace periods and, in the case of trade payables, to ordinary course payment
practices) all of its material obligations and liabilities, except when the
amount or validity thereof is being contested in good faith by appropriate
proceedings and such reserves as Lender may deem proper and necessary in its
sole discretion shall have been made.
6.10. LIEN SEARCHES
If Liens other than Permitted Liens exist, Borrower immediately shall
take, execute and deliver all actions, documents and instruments necessary to
release and terminate such Liens.
6.11. USE OF PROCEEDS
Borrower shall use the proceeds from the Revolving Facility only for
the purposes set forth in the first "WHEREAS" clause of this Agreement.
6.12. COLLATERAL DOCUMENTS; SECURITY INTEREST IN COLLATERAL
Borrower shall (i) execute, obtain, deliver, file, register and/or
record any and all financing statements, continuation statements, stock powers,
instruments and other documents, or cause the execution, filing,
19
registration, recording or delivery of any and all of the foregoing, that are
necessary or required under law or otherwise or reasonably requested by Lender
to be executed, filed, registered, obtained, delivered or recorded to create,
maintain, perfect, preserve, validate or otherwise protect the pledge of the
Collateral to Lender and Lender's perfected first priority Lien on the
Collateral (and Borrower irrevocably grants Lender the right, at Lender's
option, to file any or all of the foregoing), and (ii) defend the Collateral and
Lender's perfected first priority Lien thereon against all claims and demands of
all Persons at any time claiming the same or any interest therein adverse to
Lender, and pay all reasonable costs and expenses (including, without
limitation, in-house documentation and diligence fees and legal expenses and
reasonable attorneys' fees and expenses) in connection with such defense, which
may at Lender's discretion be added to the Obligations.
6.13. TAXES AND OTHER CHARGES
(a) All payments and reimbursements to Lender made under any Loan
Document shall be free and clear of and without deduction for all taxes, levies,
imposts, deductions, assessments, charges or withholdings, and all liabilities
with respect thereto of any nature whatsoever, excluding taxes to the extent
imposed on or measured by Lender's net income and any franchise, value added
tax, use or similar tax (in each case, imposed in lieu of net income taxes)
imposed on Lender. If Borrower shall be required by law to deduct any such
amounts from or in respect of any sum payable under any Loan Document to Lender,
then the sum payable to Lender shall be increased as may be necessary so that,
after making all required deductions, Lender receives an amount equal to the sum
it would have received had no such deductions been made. Notwithstanding any
other provision of any Loan Document, if at any time after the Closing (i) any
change in any existing law, regulation, treaty or directive or in the
interpretation or application thereof, (ii) any new law, regulation, treaty or
directive enacted or any interpretation or application thereof, or (iii)
compliance by Lender with any request or directive (whether or not having the
force of law) from any Governmental Authority: (A) subjects Lender to any tax,
levy, impost, deduction, assessment, charge or withholding of any kind
whatsoever with respect to any Loan Document, or changes the basis of taxation
of payments to Lender of any amount payable thereunder (except for net income
taxes, or franchise taxes imposed in lieu of net income taxes, imposed generally
by federal, state or local taxing authorities with respect to interest or
commitment fees or other fees payable hereunder or changes in the rate of tax on
the overall net income of Lender), or (B) imposes on Lender any other condition
or increased cost in connection with the transactions contemplated thereby or
participations therein; and the result of any of the foregoing is to increase
the cost to Lender of making or continuing any Loan hereunder or to reduce any
amount receivable hereunder, then, in any such case, Borrower shall promptly pay
to Lender any additional amounts necessary to compensate Lender, on an after-tax
basis, for such additional cost or reduced amount as determined by Lender. If
Lender becomes entitled to claim any additional amounts pursuant to this Section
6.13 it shall promptly notify Borrower of the event by reason of which Lender
has become so entitled, and each such notice of additional amounts payable
pursuant to this Section 6.13 submitted by Lender to Borrower shall, absent
manifest error, be final, conclusive and binding for all purposes.
(b) Borrower shall promptly, and in any event within five (5) Business
Days after Borrower or any authorized officer of Borrower obtains knowledge
thereof, notify Lender in writing of any oral or written communication from the
Internal Revenue Service or otherwise with respect to any (i) tax
investigations, relating to the Borrower directly, or relating to any
consolidated tax return which was filed on behalf of Borrower, (ii) notices of
tax assessment or possible tax assessment, (iii) years that are designated open
pending tax examination or audit, and (iv) information that could give rise to
an IRS tax liability or assessment.
6.14. PAYROLL TAXES
Without limiting or being limited by any other provision of any Loan
Document, Borrower at all times shall retain and use a Person acceptable to
Lender, which acceptance shall not be unreasonably withheld, to process, manage
and pay its payroll taxes and shall cause to he delivered to Lender within ten
(10) calendar days
20
after the end of each calendar month a report of its payroll taxes for the
immediately preceding calendar month and evidence of payment thereof.
VII. NEGATIVE COVENANTS
Borrower covenants and agrees that, until full performance and
satisfaction, and indefeasible payment in full in cash, of all of the
Obligations and termination of this Agreement:
7.1. FINANCIAL COVENANTS
Borrower shall not violate the financial covenants set forth on Annex
I to this Agreement, which is incorporated herein and made a part hereof.
7.2. PERMITTED INDEBTEDNESS
Borrower shall not create, incur, assume or suffer to exist any
Indebtedness, except the following (collectively, "PERMITTED INDEBTEDNESS"): (i)
Indebtedness under the Loan Documents, (ii) Indebtedness under the ▇▇▇▇▇▇ Note
as in effect on the Closing Date, (iii) any Indebtedness set forth on Schedule
7.2, (iv) Capitalized Lease Obligations (or other Indebtedness in favor of
Equipment Lenders) and future obligations under operating leases incurred after
the Closing Date and Indebtedness incurred pursuant to purchase money Liens
permitted by Section 7.3(v), provided that the aggregate amount of such
Capitalized Lease Obligations, Indebtedness to Equipment Lenders and future
obligations under operating leases and purchase money indebtedness outstanding
at any time shall not exceed 590,000,000, (v) Indebtedness in connection with
advances made by a stockholder in order to cure any default of the financial
covenants set forth on Annex I; provided, however, that such Indebtedness shall
he on an unsecured basis, subordinated in right of repayment and remedies to all
of the Obligations and to all of Lender's rights pursuant to a subordination
agreement in form and substance satisfactory to Lender; and (vi) accounts
payable to trade creditors and current operating expenses (other than for
borrowed money) which are not aged more than 120 calendar days from the billing
date or more than 30 days from the due date, in each case incurred in the
ordinary course of business and paid within such time period, unless the same
are being contested in good faith and by appropriate and lawful proceedings and
such reserves, if any, with respect thereto as are required by GAAP and deemed
adequate by Borrower's independent accountants shall have been reserved.
Borrower shall not make prepayments on any existing or future Indebtedness to
any Person other than to Lender or to the extent specifically permitted by this
Agreement or any subsequent agreement between Borrower and Lender. In no event
may Borrower make any payments in respect of the ▇▇▇▇▇▇ Note or any Indebtedness
set forth on Schedule 7.2 if at the time of such payment or after giving effect
thereto there shall exist a Default or Event of Default.
7.3. PERMITTED LIENS
Borrower shall not create, incur, assume or suffer to exist any Lien
upon, in or against, or pledge of, any of the Collateral or any of its
properties or assets or any of its shares, securities or other equity or
ownership or partnership interests, whether now owned or hereafter acquired,
except the following (collectively, "PERMITTED LIENS"): (i) Liens under the Loan
Documents or otherwise arising in favor of Lender, (ii) Liens imposed by law for
taxes (other than payroll taxes), assessments or charges of any Governmental
Authority for claims not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained by such Person in accordance with
GAAP to the satisfaction of Lender in its sole discretion, (iii) (A) statutory
Liens of landlords (provided that any such landlord has executed a Landlord
Waiver and Consent in form and substance satisfactory to Lender) and of
carriers, warehousemen, mechanics, materialmen, and (B) other Liens imposed by
law or that arise by operation of law in the ordinary course of business from
the date of creation thereof, in each case only for amounts not yet due or which
are being contested in good faith by appropriate proceedings and with respect to
which adequate reserves or other appropriate provisions are being maintained by
such Person in accordance with GAAP to the satisfaction of Lender in its sole
21
discretion, (iv) Liens (A) incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations, or (B) arising as a result of progress payments
under government contracts, (v) purchase money Liens (A) securing Indebtedness
permitted under Section 7.2(iii), or (B) in connection with the purchase by such
Person of equipment in the normal course of business, provided that such
payables shall not exceed any limits on Indebtedness provided for herein and
shall otherwise be Permitted Indebtedness hereunder,; (vi) Liens in favor of an
Equipment Lender and (vii) Liens disclosed on Schedule 7.3.
7.4. INVESTMENTS; NEW FACILITIES OR COLLATERAL; SUBSIDIARIES
Borrower, directly or indirectly, shall not (i) purchase, own, hold,
invest in or otherwise acquire obligations or stock or securities of, or any
other interest in, or all or substantially all of the assets of, any Person or
any joint venture with Lender's prior written consent which consent shall not be
unreasonably withheld, or (ii) make or permit to exist any loans, advances or
guarantees to or for the benefit of any Person or assume, guarantee, endorse,
contingently agree to purchase or otherwise become liable for or upon or incur
any obligation of any Person (other than those created by the Loan Documents and
Permitted Indebtedness and other than (A) trade credit extended in the ordinary
course of business, (B) advances for business travel and similar temporary
advances made in the ordinary course of business to officers, directors and
employees, and (C) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business).
Borrower, directly or indirectly, shall not purchase, own, operate, hold, invest
in or otherwise acquire any facility, property or assets or any Collateral
(other than rolling stock) that is not located at the locations set forth on
Schedule 5.18B unless Borrower shall provide to Lender at least thirty (30)
Business Days prior written notice, Borrower shall have no Subsidiaries other
than those Subsidiaries, if any, existing at Closing and set forth in Schedule
5.3.
7.5. DIVIDENDS; REDEMPTIONS
Borrower shall not (i) declare, pay or make any dividend or
Distribution on any shares of capital stock or other securities or interests
(other than dividends or Distributions payable in its stock, or split-ups or
reclassifications of its stock), (ii) apply any of its funds, property or assets
to the acquisition, redemption or other retirement of any capital stock or other
securities or interests or of any options to purchase or acquire any of the
foregoing (provided, however, that Borrower may redeem its capital stock from
terminated employees pursuant to, but only to the extent required under, the
terms of the related employment agreements as long as no Default or Event of
Default has occurred and is continuing or would be caused by or result
therefrom), (iii) otherwise make any payments or Distributions to any
stockholder, member, partner or other equity owner in such Person's capacity as
such, or (iv) make any payment of any management or service fee, provided that,
Borrower shall not make or suffer to exist any such payment described in (i)
through (iii) above if a Default of Event of Default has occurred and is
continuing or would result therefrom.
7.6. TRANSACTIONS WITH AFFILIATES
Borrower shall not enter into or consummate any transaction of any
kind with any of its Affiliates or any Guarantor or any of their respective
Affiliates other than: (i) salary, bonus, employee stock option and other
compensation and employment arrangements with directors or officers in the
ordinary course of business, provided, that no payment of any bonus shall be
permitted if a Default or Event of Default has occurred and remains in effect or
would be caused by or result from such payment, (ii) Distributions and dividends
permitted pursuant to Section 7,4, (iii) transactions with Lender or any
Affiliate of Lender, and (iv) payments permitted under and pursuant to written
agreements entered into by and between Borrower and one or more of its
Affiliates that both (A) reflect and constitute transactions on overall terms at
least as favorable to Borrower as would be the case in an arm's-length
transaction between unrelated parties of equal bargaining power, and (B) are
subject to such terms and conditions as
22
determined by Lender in its sole discretion; provided, that notwithstanding the
foregoing Borrower shall not (Y) enter into or consummate any transaction or
agreement pursuant to which it becomes a party to any mortgage, note, indenture
or guarantee evidencing any Indebtedness of any of its Affiliates or otherwise
to become responsible or liable, as a guarantor, surety or otherwise, pursuant
to agreement for any Indebtedness of any such Affiliate, or (Z) make any payment
to any of its Affiliates in excess of $25,000 without the prior written consent
of Lender, which consent shall not be unreasonably withheld.
7.7. CHARTER DOCUMENTS; FISCAL YEAR; NAME; JURISDICTION OF ORGANIZATION;
DISSOLUTION; USE OF PROCEEDS
Borrower shall not (i) amend, modify, restate or change its
certificate of incorporation or formation or bylaws or similar charter documents
in a manner that would be adverse to Lender, (ii) change its fiscal year unless
Borrower demonstrates to Lender's satisfaction compliance with the covenants
contained herein for both the fiscal year in effect prior to any change and the
new fiscal year period by delivery to Lender of appropriate interim and annual
pro forma, historical and current compliance certificates for such periods and
such other information as Lender may reasonably request, (iii) without at least
20 days prior written notice to Lender, change its name or change its
jurisdiction of organization; (iv) a mend, alter or suspend or terminate or make
provisional in any material way, any Permit without the prior written consent of
Lender, which consent shall not be unreasonably withheld, (v) wind up, liquidate
or dissolve (voluntarily or involuntarily) or commence or suffer any proceedings
seeking or that would result in any of the foregoing, or (vi) use any proceeds
of any Advance for "purchasing" or "carrying" "margin stock" as defined in
Regulations U, T or X of the Board of Governors of the Federal Reserve System.
7.8. TRUTH OF STATEMENTS
Borrower shall not furnish to Lender any certificate or other document
that contains any untrue statement of a material fact or that omits to state a
material fact necessary to make it not misleading in light of the circumstances
under which it was furnished.
7.9. IRS FORM 8821
Borrower shall not alter, amend, restate, or otherwise modify, or
withdraw, terminate or re-file the TRS Form 8821 required to be filed pursuant
to the Conditions Precedent in Section 4.1 hereof.
7.10. TRANSFER OF ASSETS
Notwithstanding any other provision of this Agreement or any other
Loan Document, Borrower shall not sell, lease, transfer, assign or otherwise
dispose of any interest in any properties or assets (other than obsolete
equipment or excess equipment no longer needed in the conduct of the business in
the ordinary course of business), or agree to do any of the foregoing at any
future time, except that:
(a) Borrower may lease (as lessee) real or personal property or
surrender all or a portion of a lease of the same, in each case in the ordinary
course of business (so long as such lease does not create or result in and is
not otherwise a Capitalized Lease Obligation prohibited under this Agreement),
provided that a Landlord Waiver and Consent and such other consents as are
required by Lender are signed and delivered to Lender with respect to any lease
of real or other property, as applicable;
(b) Borrower may license or sublicense Intellectual Property or
customer lists from third parties in the ordinary course of business, provided,
that such licenses or sublicenses shall not interfere with the business or other
operations of Borrower and that Borrower's rights, title and/or interest in or
to such Intellectual
23
Property and customer lists and interests therein are pledged to Lender as
further security for the Obligations and included as part of the Collateral;
(c) Borrower may consummate such other sales or dispositions of
property or assets (including any sale or transfer or disposition of all or any
part of its assets and thereupon and within one year thereafter rent or lease
the assets so sold or transferred) only to the extent prior written notice has
been given to Lender and to the extent Lender has given its prior written
consent thereto, such consent not to be unreasonably withheld, subject in each
case to such conditions as may be set forth in such consent; and
(d) Borrower may sell Designated Equipment.
7.11. NEGATIVE PLEDGE
Borrower shall not pledge or ▇▇▇▇▇ ▇ ▇▇▇▇ on any real property which
it owns at any time to any Person other than (i) to Lender and (ii) Liens
existing on the Closing Date, including to the extent indebtedness secured by
such Liens are refinanced but only if the outstanding principal balance of such
indebtedness is not materially increased.
VIII. EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an
"Event of Default:"
(a) Borrower shall fail to pay any amount on the Obligations or
provided for in any Loan Document when due (whether on any payment date, at
maturity, by reason of acceleration, by notice of intention to prepay, by
required prepayment or otherwise);
(b) any representation, statement or warranty made or deemed made by
Borrower or any Guarantor in any Loan Document or in any other certificate,
document, report or opinion delivered in conjunction with any Loan Document to
which it is a party, shall not be true and correct in all material respects or
shall have been false or misleading in any material respect on the date when
made or deemed to have been made (except to the extent already qualified by
materiality, in which case it shall be true and correct in all respects and
shall not be false or misleading in any respect);
(c) Borrower or any Guarantor or other party thereto other than Lender
shall be in violation, breach or default of, or shall fail to perform, observe
or comply with any covenant, obligation or agreement set forth in, any Loan
Document and such violation, breach, default or failure shall not be cured
within the applicable period set forth in the applicable Loan Document; provided
that, with respect to the affirmative covenants set forth in Article VI (other
than Sections 6.1(c), 6.2, 6.3, 6.5, 6.8, 6.9 and 6.11 for which there shall be
no cure period), there shall be a twenty (20) calendar day cure period
commencing from the earlier of (i) Receipt by such Person of written notice of
such breach, default, violation or failure, and (ii) the time at which such
Person or any authorized officer thereof knew or became aware, or should have
known or been aware, of such failure, violation, breach or default, but no
Advances will be made during the cure period;
(d) (i) any of the Loan Documents ceases to be in full force and
effect, or (ii) any Lien created thereunder ceases to constitute a valid
perfected first priority Lien on the Collateral in accordance with the terns
thereof, or Lender ceases to have a valid perfected first priority security
interest in any of the Collateral or any securities pledged to Lender pursuant
to the Security Documents;
(e) one or more tax assessments, judgments or decrees is rendered
against Borrower or Guarantor in an amount in excess of $100,000 individually or
$250,000 in the aggregate (excluding judgments to the extent covered by
insurance), which is/are not satisfied, stayed, vacated or discharged of record
within thirty
24
(30) calendar clays of being rendered but no Advances will be made before the
judgment is stayed, vacated or discharged;
(f) (i) any default occurs, which is not cured or waived, (x) in the
payment of any amount with respect to any Indebtedness (other than the
Obligations) of Borrower or Guarantor in excess of $250,000 individually or in
the aggregate, (y) in the performance, observance or fulfillment of any
provision contained in any agreement, contract, document or instrument to which
Borrower or Guarantor is a party or to which any of their properties or assets
are subject or bound under or pursuant to which any Indebtedness was issued,
created, assumed, guaranteed or secured and such default continues for more than
any applicable grace period or permits the holder of any Indebtedness to
accelerate the maturity thereof, or (z) in the performance, observance or
fulfillment of any provision contained in any agreement, contract, document or
instrument between Borrower or Guarantor and Lender or any Affiliate of Lender
(other than the Loan Documents), or (ii) any Indebtedness of Borrower or
Guarantor is declared to be due and payable or is required to be prepaid (other
than by a regularly scheduled payment) prior to the stated maturity thereof, or
any obligation of such Person for the payment of Indebtedness (other than the
Obligations) is not paid when due or within any applicable grace period, or any
such obligation becomes or is declared to be due and payable before the
expressed maturity thereof, or there occurs an event which, with the giving of
notice or lapse of time, or both, would cause any such obligation to become, or
allow any such obligation to be declared to be, due and payable;
(g) Borrower or Guarantor shall (i) be unable to pay its debts
generally as they become due, (ii) have total liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) that exceed its assets, at
a Fair Valuation, (iii) have an unreasonably small capital base with which to
engage in its anticipated business, (iv) file a petition under any insolvency
statute, (v) make a general assignment for the benefit of its creditors, (vi)
commence a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its property,
or (vii) file a petition seeking reorganization or liquidation or similar relief
under any Debtor Relief Law or any other applicable law or statute;
(h) a court of competent jurisdiction s hall (A) enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of Borrower or Guarantor or the whole or any substantial part of any
such Person's properties, which shall continue unstayed and in effect for a
period of thirty (30) calendar days, (B) shall approve a petition filed against
Borrower or Guarantor seeking reorganization, liquidation or similar relief
under the any Debtor Relief Law or any other applicable law or statute, which is
not dismissed within thirty (30) calendar days or, (C) under the provisions of
any Debtor Relief Law or other applicable law or statute, assume custody or
control of Borrower or Guarantor or of the whole or any substantial part of any
such Person's properties, which is not irrevocably relinquished within thirty
(30) calendar days, or (ii) there is commenced against Borrower or Guarantor any
proceeding or petition seeking reorganization, liquidation or similar relief
under any Debtor Relief Law or any other applicable law or statute and either
(A) any such proceeding or petition is not unconditionally dismissed within
thirty (30) calendar days after the date of commencement, or (B) Borrower or
Guarantor takes any action to indicate its approval of or consent to any such
proceeding or petition, but no Advances will be made before any such order,
judgment or decree described above is stayed, vacated or discharged, any such
petition described above is dismissed, or any such custody or control described
above is relinquished;
(i) (i) any Change of Control occurs or any agreement or commitment to
cause or that may result in any such Change of Control is entered into, (ii) any
Material Adverse Effect, or Material Adverse Change occurs or is reasonably
expected to occur, or (iii) Borrower or Guarantor ceases a material portion of
its business operations as currently conducted;
(j) Lender receives any indication or evidence that Borrower or
Guarantor may have directly or indirectly been engaged in any type of activity
which, in Lender's judgment, might result in forfeiture of any property to any
Governmental Authority which shall have continued unremedied for a period of ten
(10) calendar days after written notice from Lender (but no Advances will be
made before any such activity ceases);
25
(k) an Event of Default occurs under any other Loan Document;
(1) uninsured damage to, or loss, theft or destruction of, any portion
of the Collateral (excluding Accounts) occurs that exceeds $1,500,000 in the
aggregate;
(m) Borrower or Guarantor or any of their respective directors or
senior officers is criminally indicted or convicted under any law that could
lead to a forfeiture of any Collateral;
(n) the issuance of any process for levy, attachment or garnishment or
execution upon or prior to any judgment against Borrower or Guarantor or any of
their property or assets in each case which is not vacated, bonded (but only to
the extent the issuance of such band stays all related judgment enforcement
proceedings), satisfied, stayed, dismissed or discharged within thirty (30)
calendar days of being issued or executed; or
(o) Borrower or Guarantor does, or enters into or becomes a party to
any agreement or commitment to do, or cause to be done, any of the things
described in this Article VIII or otherwise prohibited by any Loan Document
(subject to any cure periods set forth therein);
then, and in any such event, notwithstanding any other provision of any Loan
Document, Lender may, without notice or demand, do any of the following: (i)
terminate its obligations to make Advances hereunder, whereupon the same shall
immediately terminate and (ii) declare all or any of the Notes, all interest
thereon and all other Obligations to be due and payable immediately (except in
the case of an Event of Default under Section 8(d), (g), (h) or (i)(iii), in
which event all of the foregoing shall automatically and without further act by
Lender be due and payable, provided that, with respect to nonmaterial breaches
or violations that constitute Events of Default under clause (ii) of
Section 8(d), there shall be a seven (7) Business Day cure period (but no
Advances will be made during any such cure period) commencing from the earlier
of (A) Receipt by the applicable person of written notice of such breach or
violation or of any event, fact or circumstance constituting or resulting in any
of the foregoing, and (B) the time at which such Person or any authorized
officer thereoff knew or became aware, or should have known or been aware, of
such breach or violation and resulting Event of Default or of any event, fact or
circumstance constituting or resulting in any of the foregoing), in each case
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by Borrower.
IX. RIGHTS AND REMEDIES AFTER DEFAULT
9.1. RIGHTS AND REMEDIES
(a) In addition to the acceleration provisions set forth in Article
VIII above, upon the occurrence and continuation of an Event of Default, Lender
shall have the right to exercise any and all rights, options and remedies
provided for in the Loan Documents, under the UCC or at law or in equity, in
each case acting in a commercially reasonable manner, including, without
limitation, the right to (i) apply any property of Borrower held by Lender to
reduce the Obligations, (ii) foreclose the Liens created under the Security
Documents, (iii) realize upon, take possession of and/or sell any Collateral or
securities pledged with or without judicial process, (iv) exercise all rights
and powers with respect to the Collateral as Borrower, as applicable, might
exercise, (v) collect and send notices regarding the Collateral, with or without
judicial process, (vi) by its own means or with judicial assistance, enter any
premises at which Collateral and/or pledged securities are located, or render
any of the foregoing unusable or dispose of the Collateral and/or pledged
securities on such premises without any liability for rent, storage, utilities,
or other sums, and no Borrower shall resist or interfere with such action, (vii)
at Borrower's expense, require that all or any part of the Collateral be
assembled and made available to Lender at any place designated by Lender, (viii)
reduce or otherwise change the Facility Cap, and/or (ix) relinquish or abandon
any Collateral or securities pledged or any Lien thereon. Notwithstanding any
provision of any Loan Document, Lender,
26
in its sole discretion, shall have the right, at any time that Borrower fails to
do so, and from time to time, without prior notice, to: (i) obtain insurance
covering any of the Collateral to the extent required hereunder; (ii) pay for
the performance of any of Obligations; (iii) discharge taxes or Liens on any of
the Collateral that are in violation of any Loan document unless Borrower is in
good faith with due diligence by appropriate proceedings contesting those items;
and (iv) pay for the maintenance and preservation of the Collateral. Such
expenses and advances shall be added to the Obligations until reimbursed to
Lender and shall be secured by the Collateral, and such payments by Lender shall
not be construed as a waiver by Lender of any Event of Default or any other
rights or remedies of Lender.
(b) Borrower agrees that notice received by it at least ten (10)
calendar days before the time of any intended public sale, or the time after
which any private sale or other disposition of Collateral is to be made, shall
be deemed to be reasonable notice of such sale or other disposition. If
permitted by applicable law, any perishable Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Lender without prior notice to Borrower. At any sale or
disposition of Collateral or securities pledged, Lender may (to the extent
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by Borrower which right is hereby waived and released.
Borrower covenants and agrees not to, and not to permit or cause any of its
Subsidiaries to, interfere with or impose any obstacle to Lender's exercise of
its rights and remedies with respect to the Collateral. Lender, in dealing with
or disposing of the Collateral or any part thereof, shall not be required to
give priority or preference to any item of Collateral or otherwise to marshal
assets or to take possession or sell any Collateral with judicial process.
9.2 APPLICATION OF PROCEEDS
In addition to any other rights, options and remedies Lender has under
the Loan Documents, the UCC, at law or in equity, all dividends, interest,
rents, issues, profits, fees, revenues, income and other proceeds collected or
received from collecting, holding, managing, renting, selling, or otherwise
disposing of all or any part of the Collateral or any proceeds thereof upon
exercise of its remedies hereunder shall be applied in the following order of
priority: (i) first, to the payment of all costs and expenses of such
collection, storage, lease, holding, operation, management, sale, disposition or
delivery and of conducting Borrower's business and of maintenance, repairs,
replacements, alterations, additions and improvements of or to the Collateral,
and to the payment of all sums which Lender may be required or may elect to pay,
if any, for taxes, assessments, insurance and other charges upon the Collateral
or any part thereof, and all other payments that Lender may be required or
authorized to make under any provision of this Agreement (including, without
limitation, in each such case, in-house documentation and diligence fees and
legal expenses, search, audit, recording, professional and filing fees and
expenses and reasonable attorneys' fees and all expenses, liabilities and
advances made or incurred in connection therewith); (ii) second, to the payment
of all Obligations as provided herein; (iii) third, to the satisfaction of
Indebtedness secured by any subordinate security interest of record in the
Collateral if written notification of demand therefor is received before
distribution of the proceeds is completed, provided, that, if requested by
Lender, the holder of a subordinate security interest shall furnish reasonable
proof of its interest, and unless it does so, Lender need not address its
claims; and (iv) fourth, to the payment of any surplus then remaining to
Borrower, unless otherwise provided by law or directed by a court of competent
jurisdiction, provided that Borrower shall be liable for any deficiency if such
proceeds are insufficient to satisfy the Obligations or any of the other items
referred to in this section.
9.3. RIGHTS AND REMEDIES NOT EXCLUSIVE
Lender shall have the right in its sole discretion to determine which
rights, Liens and/or remedies Lender may at any time pursue, relinquish,
subordinate or modify, and such determination will not in any way modify or
affect any of Lender's rights, Liens or remedies under any Loan Document,
applicable law or equity. The enumeration of any rights and remedies in any Loan
Document is not intended to be exhaustive, and all rights and remedies of Lender
described in any Loan Document are cumulative and are not alternative to or
exclusive of any
27
other rights or remedies which Lender otherwise may have. The partial or
complete exercise of any right or remedy shall not preclude any other further
exercise of such or any other right or remedy.
X. WAIVERS AND JUDICIAL PROCEEDINGS
10.1. WAIVERS
Except as expressly provided for herein, Borrower hereby waives
setoff, counterclaim, demand, presentment, protest, all defenses with respect to
any and all instruments and all notices and demands of any description, as a
defense to any demand under any Loan Document. Borrower hereby waives any and
all defenses and counterclaims, other than compulsory counterclaims, it may have
or could interpose in any action or procedure brought by Lender to obtain an
order of court recognizing the assignment of, or Lien of Lender in and to, any
Collateral. With respect to any action hereunder, Lender conclusively may rely
upon, and shall incur no liability to Borrower in acting upon, any request or
other communication that Lender reasonably believes to have been given or made
by a person authorized on Borrower's behalf, whether or not such person is
listed on the incumbency certificate delivered pursuant to Section 4.1 hereof.
In each such case, Borrower hereby waives the right to dispute Lender's action
based upon such request or other communication, absent manifest error.
10.2. DELAY; NO WAIVER OF DEFAULTS
No course of action or dealing, renewal, release or extension of any
provision of any Loan Document, or single or partial exercise of any such
provision, or delay, failure or omission on Lender's part in enforcing any such
provision shall affect the liability of Borrower or Guarantor or operate as a
waiver of such provision or affect the liability of Borrower or Guarantor or
preclude any other or further exercise of such provision. No waiver by any party
to any Loan Document of any one or more defaults by any other party in the
performance of any of the provisions of any Loan Document shall operate or be
construed as a waiver of any future default, whether off a like or different
nature, and each such waiver shall be limited solely to the express terms and
provisions of such waiver. Notwithstanding any other provision of any Loan
Document, by completing the Closing under this Agreement and/or by making
Advances, Lender does not waive any breach of any representation or warranty
under any Loan Document, and all of Lender's claims and rights resulting from
any such breach or misrepresentation are specifically reserved.
10.3. JURY WAIVER
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN DOCUMENTS
OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH
RESPECT TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL, COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF
THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
XI. EFFECTIVE DATE AND TERMINATION
11.1. TERMINATION AND EFFECTIVE DATE THEREOF
(a) Subject to Lender's right to terminate and cease making Advances
upon or after any Event of Default, this Agreement shall continue in full force
and effect until the full performance and indefeasible
28
payment in cash of all Obligations, unless terminated sooner as provided in this
Section 11.1. Borrower may terminate this Agreement at any time upon not less
than ninety (90) calendar days' prior written notice to Lender and upon full
performance and indefeasible payment in full in cash of all Obligations on or
prior to such 90th calendar day after Receipt by Lender of such written notice.
All of the Obligations shall be immediately due and payable upon any such
termination on the termination date stated in any notice of termination (the
"TERMINATION DATE"); provided that, notwithstanding any other provision of any
Loan Document, the Termination Date shall be effective no earlier than the first
Business Day of the month following the expiration of the ninety (90) calendar
days' prior written notice period. The Termination Date may be extended once for
a period of one year at the option of Borrower provided that (i) Borrower has
given Lender written notice of such renewal at least sixty (60) days prior to
the expiration of the Termination Date and (ii) there does not then exist a
Default or Event of Default. Upon any such extension of the Termination Date,
Borrower shall pay Lender an extension fee in an amount equal to the product of
(x) the Facility Cap times (y) one third of one percent. Notwithstanding any
other provision of any Loan Document, no termination of this Agreement shall
affect Lender's rights or any of the Obligations existing as of the effective
date of such termination, and the provisions of the Loan Documents shall
continue to be fully operative until the Obligations have been fully performed
and indefeasibly paid in cash in full. The Liens granted to Lender under the
Security Documents and the financing statements filed pursuant thereto and the
rights and powers of Lender shall continue in full force and effect
notwithstanding the fact that Borrower's borrowings hereunder may from time to
time be in a zero or credit position until all of the Obligations have been
fully performed and indefeasibly paid in full in cash.
(b) If (i) Borrower terminates the Revolving A Facility under this
Section 11.1, (ii) Borrower voluntarily or involuntarily repays the Obligations
(other than reductions to zero of the outstanding balance of the Revolving
Facility resulting from the ordinary course operation of the provisions of
Section 2.5), whether by virtue of Lender's exercising its right of set off or
otherwise; (iii) the Obligations are accelerated by Lender (each of the events
described in (i), (ii) and (iii) above being hereinafter referred to as, a
"REVOLVER TERMINATION"), then at the effective date of any such Revolver
Termination, Borrower shall pay Lender (in addition to the then outstanding
principal, accrued interest and other Obligations relating to the Revolving
Facility pursuant to the terms of this Agreement and any other Loan Document),
to compensate Lender for the loss of bargain and not as a penalty, an amount
equal to the applicable Minimum Revolver Termination Fee. Borrower shall have no
right to terminate the Revolving A Facility without first terminating the
Revolving B Facility.
(c) In the event of a Revolver Termination, Lender agrees to provide
Borrower a payoff letter with respect to payoff of the outstanding balance of
Obligations within five (5) Business Days after receipt by Lender of a written
request thereof from Borrower.
11.2. SURVIVAL
All obligations, covenants, agreements, representations, warranties,
waivers and indemnities made by Borrower in any Loan Document shall survive the
execution and delivery of the Loan Documents, the Closing, the making of the
Advances and any termination of this Agreement until all Obligations are fully
performed and indefeasibly paid in full in cash. The obligations and provisions
of Sections 3.4, 3.5, 10.1, 10.3, 11.1, 11.2, 12.4, 12.7 and 12.10 shall survive
termination of the Loan Documents and any payment, in full or in part, of the
Obligations.
XII. MISCELLANEOUS
12.1. GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS; VENUE
The Loan Documents shall be governed by and construed in accordance
with the internal laws of the State of Maryland without giving effect to its
choice of law provisions. Any judicial proceeding against Borrower with respect
to the Obligations, any Loan Document or any related agreement may be brought in
any
29
federal or state court of competent jurisdiction located in the State of
Maryland. By execution and delivery of each Loan Document to which it is a
party, Borrower (i) accepts the non-exclusive jurisdiction of the aforesaid
courts and irrevocably agrees to be bound by any judgment rendered thereby, (ii)
waives personal service of process, (iii) agrees that service of process upon it
may be made by certified or registered mail, return receipt requested, pursuant
to Section 12.5 hereof, (iv) waives any objection to jurisdiction and venue of
any action instituted hereunder and agrees not to assert any defense based on
lack of jurisdiction, venue or convenience, and (v) agrees that this loan was
made in Maryland, that Lender has accepted in Maryland Loan Documents executed
by Borrower and has disbursed Advances under the Loan Documents in Maryland.
Nothing shall affect the right of Lender to serve process in any manner
permitted by law or shall 1imit the right of Lender to bring proceedings against
Borrower in the courts of any other jurisdiction having jurisdiction. Any
judicial proceedings against Lender involving, directly or indirectly, the
Obligations, any Loan Document or any related agreement shall be brought only in
a federal or state court located in the State of Maryland. All parties
acknowledge that they participated in the negotiation and drafting of this
Agreement and that, accordingly, no party shall move or petition a court
construing this Agreement to construe it more stringently against one party than
against any other.
12.2. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS
The Loan Documents shall inure to the benefit of Lender, Transferees
and all future holders of any Note, the Obligations and/or any of the
Collateral, and each of their respective successors and assigns. Each Loan
Document shall be binding upon the Persons' other than Lender that are parties
thereto and their respective successors and assigns, and no such Person may
assign, delegate or transfer any Loan Document or any of its rights or
obligations thereunder without the prior written consent of Lender. No rights
are intended to be created under any Loan Document for the benefit of any third
party donee, creditor or incidental beneficiary of Borrower or Guarantor.
Nothing contained in any Loan Document shall be construed as a delegation to
Lender of any other Person's duty of performance. BORROWER ACKNOWLEDGES AND
AGREES THAT LENDER AT ANY TIME AND FROM TIME TO TIME MAY (I) DIVIDE AND RESTATE
ANY NOTE, AND/OR (II) SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN OR
TRANSFER ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER ANY LOAN DOCUMENT,
NOTE, THE OBLIGATIONS AND/OR THE COLLATERAL TO OTHER PERSONS (EACH SUCH
TRANSFEREE, ASSIGNEE OR PURCHASER, A "TRANSFEREE"). Each Transferee shall have
all of the rights and benefits with respect to the Obligations, Notes,
Collateral and/or Loan Documents held by it as fully as if the original holder
thereof, and either Lender or any Transferee may be designated as the sole agent
to manage the transactions and obligations contemplated therein, provided that,
notwithstanding anything to the contrary in any Loan Document, Borrower shall
not be obligated to pay under this Agreement to any Transferee any sum in excess
of the sum which Borrower would have been obligated to pay to Lender had such
participation not been effected. Notwithstanding any other provision of any Loan
Document, Lender may disclose to any Transferee all information, reports,
financial statements, certificates and documents obtained under any provision of
any Loan Document.
12.3 APPLICATION OF PAYMENTS
To the extent that any payment made or received with respect to the
Obligations is subsequently invalidated, determined to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian o r any other Person under any Debtor Relief
Law, common law or equitable cause or any other law, then the Obligations
intended to be satisfied by such payment shall be revived and shall continue as
if such payment had not been received by Lender. Any payments with respect to
the Obligations received shall be credited and applied in such manner and order
as Lender shall decide in its Permitted Discretion.
12.4. INDEMNITY
Borrower shall indemnify Lender, its Affiliates and its and their
respective managers, members, officers, employees, Affiliates, agents,
representatives, successors, assigns, accountants and attorneys (collectively,
30
the "INDEMNIFIED PERSONS") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (including, without
limitation, reasonable fees and disbursements of counsel and in- house
documentation and diligence fees and legal expenses) which may be imposed on,
incurred by or asserted against any Indemnified Person with respect to or
arising out of, or in any litigation, proceeding or investigation instituted or
conducted by any Person with respect to any aspect of, or any transaction
contemplated by or referred to in, or any matter related to, any Loan Document
or any agreement, document or transaction contemplated thereby, whether or not
such Indemnified Person is a party thereto, except to the extent that any of the
foregoing arises out of the gross negligence or willful misconduct of such
Indemnified Person. If any Indemnified Person uses in-house counsel for any
purpose for which Borrower is responsible to pay or indemnify, Borrower
expressly agrees that its indemnification obligations include reasonable charges
for such work no greater than 75% of the fees that would otherwise be charged by
outside legal counsel selected by such Indemnified Person in its sole discretion
for the work performed. Lender agrees to give Borrower reasonable notice of any
event of which Lender becomes aware far which indemnification may be required
under this Section 12.4, and Lender may elect (but is not obligated) to direct
the defense thereof, provided that the selection of counsel shall be subject to
Borrower's consent, which consent shall not be unreasonably withheld or delayed.
Any Indemnified Person may, in its reasonable discretion, take such actions as
it deems necessary and appropriate to investigate, defend or settle any event or
take other remedial or corrective actions with respect thereto as may be
necessary for the protection of such Indemnified Person or the Collateral.
Notwithstanding the foregoing, if any insurer agrees to undertake the defense of
an event (an "INSURED EVENT"), Lender agrees not to exercise its right to select
counsel to defend the event if that would cause Borrower's insurer to deny
coverage; provided, however, that Lender reserves the right to retain counsel to
represent any Indemnified Person with respect to an Insured Event at its sole
cost and expense. To the extent that Lender obtains recovery from a third party
other than an Indemnified Person of any of the amounts that Borrower has paid to
Lender pursuant to the indemnity set forth in this Section 12.4, then Lender
shall promptly pay to Borrower the amount of such recovery.
12.5. NOTICE
Any notice or request under any Loan Document shall be given to any
party to this Agreement at such party's address set forth beneath its signature
on the signature page to this Agreement, or at such other address as such party
may hereafter specify in a notice given in the manner required under this
Section 12.5. Any notice or request hereunder shall be given only by, and shall
be deemed to have been received upon (each, a "RECEIPT"): (i) registered or
certified mail, return receipt requested, on the date on which received as
indicated in such return receipt, (ii) delivery by a nationally recognized
overnight courier, one (1) Business Day after deposit with such courier, or
(iii) facsimile transmission, in each case upon telephone or further electronic
communication from the recipient acknowledging receipt (whether automatic or
manual from recipient), as applicable.
12.6. SEVERABILITY; CAPTIONS; COUNTERPARTS; FACSIMILE SIGNATURES
If any provision of any Loan Document is adjudicated to be invalid
under applicable laws or regulations, such provision shall be inapplicable to
the extent of such invalidity without affecting the validity or enforceability
of the remainder of the Loan Documents which shall be given effect so far as
possible. The captions in the Loan Documents are intended for convenience and
reference only and shall not affect the meaning or interpretation of the Loan
Documents. The Loan Documents may be executed in one or more counterparts (which
taken together, as applicable, shall constitute one and the same instrument) and
by facsimile transmission, which facsimile signatures shall be considered
original executed counterparts. Each party to this Agreement agrees that it will
be bound by its own facsimile signature and that it accepts the facsimile
signature of each other party.
12.7. EXPENSES
Upon the Closing Date, Borrower shall pay all costs and expenses
incurred by Lender and/or its Affiliates, including, without limitation,
documentation and diligence fees and expenses, all search, audit, appraisal,
31
recording, professional and filing fees and expenses and all other out-of-pocket
charges and expenses (including, without limitation, UCC and judgment and tax
lien searches and UCC filings and fees for post-Closing UCC and judgment and tax
lien searches and wire transfer fees and audit expenses), and reasonable
attorneys' fees and expenses, (i) in any effort to enforce, protect or collect
payment of any Obligation or to enforce any Loan Document or any related
agreement, document or instrument, (ii) in connection with entering into,
negotiating, preparing, reviewing and executing the Loan Documents and/or any
related agreements, documents or instruments, (iii) arising in any way out of
administration of the Obligations, (iv) in connection with instituting,
maintaining, preserving, enforcing and/or foreclosing on Lender's Liens in any
of the Collateral or securities pledged under the Loan Documents, whether
through judicial proceedings or otherwise, (v) in defending or prosecuting any
actions, claims or proceedings arising out of or relating to Lender's
transactions with Borrower, (vi) in seeking, obtaining or receiving any advice
with respect to its rights and obligations under any Loan Document and any
related agreement, document or instrument, and/or (vii) in connection with any
modification, restatement, supplement, amendment, waiver or extension of any
Loan Document and/or any related agreement, document or instrument. A11 of the
foregoing shall be charged to Borrower's account and shall be part of the
Obligations. If Lender or any of its Affiliates uses in-house counsel for any
purpose under any Loan Document for which Borrower is responsible to pay or
indemnify, Borrower expressly agrees that its Obligations include reasonable
charges for such work no greater than 75% of the fees that would otherwise be
charged by outside legal counsel selected by Lender or such Affiliate in its
sole discretion for the work performed. Without limiting the foregoing, Borrower
shall pay all taxes (other than taxes based upon or measured by Lender's income
or revenues or any personal property tax), if any, in connection with the
issuance of any Note and the filing and/or recording of any documents and/or
financing statements.
12.8. ENTIRE AGREEMENT
This Agreement and the other Loan Documents to which Borrower is a
party constitute the entire agreement between Borrower and Lender with respect
to the subject matter hereof and thereof, and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof or thereof. Any
promises, representations, warranties o r guarantees not herein contained and
hereinafter made shall have no force and effect unless in writing signed by
Borrower and Lender. No provision of this Agreement may be changed, modified,
amended, restated, waived, supplemented, discharged, canceled or terminated
orally or by any course of dealing or in any other manner other than by an
agreement in writing signed by Lender and Borrower. Each party hereto
acknowledges that it has been advised by counsel in connection with the
negotiation and execution of this Agreement and is not relying upon oral
representations or statements inconsistent with the terms and provisions hereof.
12.9. LENDER APPROVALS
Unless expressly provided herein to the contrary, any approval,
consent, waiver or satisfaction of Lender with respect to any matter that is
subject of any Loan Document may be granted or withheld by Lender in its
Permitted Discretion, such approval, consent or waiver not to be unreasonably
withheld.
12.1.0. PUBLICITY
Borrower hereby agrees that Lender or any Affiliate of Lender may (i)
disclose a general description of transactions arising under the Loan Documents
for advertising, marketing or other similar purposes and (ii) use Borrower's or
any Guarantor's name, logo or other indicia germane to such party in connection
with such advertising, marketing or other similar purposes.
12.11. AGENT
32
Lender and its successors and assigns hereby (i) designate and appoint
CapitalSource Finance LLC, a Delaware limited liability company, and its
successors and assigns ("CAPITALSOURCE"), to act as agent for Lender and its
successors and assigns under this Agreement and all other Loan Documents, (ii)
irrevocably authorize CapitalSource to take all actions on its behalf under the
provision of this Loan Agreement and all other Loan Documents, and (iii) to
exercise all such powers and rights, and to perform all such duties and
obligations hereunder and thereunder. CapitalSource, on behalf of Lender, shall
hold all Collateral, payments of principal and interest, fees, charges and
collections received pursuant to this Agreement and all other Loan Documents.
Borrower acknowledges that Lender and its successors and assigns transfer and
assign to CapitalSource the right to act as Lender's agent to enforce all rights
and perform all obligations of Lender contained herein and in all of the other
Loan Documents. Borrower shall within ten (10) Business Days after Lender's
reasonable request, take such further actions, obtain such consents and
approvals and duly execute and deliver such further agreements, amendments,
assignments, instructions or documents as Lender may request to evidence the
appointment and designation of CapitalSource as agent for Lender and other
financial institutions from time to time party hereto and to the other Loan
Documents.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
33
IN WITNESS WHEREOF, each of the parties has duly executed this Revolving
Credit and Security Agreement as of the date first written above.
WESTERN EXPRESS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Its: President
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
CAPITALSOURCE FINANCE LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
Its: Senior Counsel
Address for Notices:
CapitalSource Finance LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Healthcare Finance Group,
Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
34
APPENDIX A
DEFINITIONS
"Accounts" shall mean all "accounts" (as defined in the UCC) of
Borrower (or, if referring to another Person, of such other Person), including
without limitation, accounts, accounts receivables, monies due or to become due
and obligations in any form (whether arising in connection with contracts,
contract rights, Instruments, General Intangibles or Chattel Paper), in each
case whether arising out of goods sold or services rendered or from any other
transaction and whether or not earned by performance, now or hereafter in
existence, and all documents of title or other documents representing any of the
foregoing, and all collateral security and guaranties of any kind, now or
hereafter in existence, given by any Person with respect to any of the
foregoing.
"Account Debtor" shall mean any Person who is obligated under an
Account.
"Advance" shall mean a borrowing under the Revolving Facility. Any
amounts paid by Lender on behalf of Borrower or any Guarantor under any Loan
Document shall initially be a Revolving A Advance for purposes of the Agreement
so long as there is Revolving A Availability and, if Revolving A Availability
shall equal $0, shall be a Revolving B Advance for purposes of the Agreement.
"Affiliate" shall mean, as to any Person, any other Person (a) that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person, (b) who is a
director or officer (i) of such Person, (ii) of any Subsidiary of Such Person,
or (iii) of any Person described in clause (a) above with respect to such
Person, or (c) which, directly or indirectly through one or more intermediaries,
is the beneficial or record owner (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended, as the same is in effect on the date hereof)
of five percent (5%) or more of any class of the outstanding voting stock,
securities or other equity or ownership interests of such Person. For purposes
of this definition, the term "control" (and the correlative terms, "controlled
by" and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies, whether through ownership of securities or other interests, by
contract or otherwise. "Affiliate" shall include any Subsidiary.
"Applicable Rate" shall mean the interest rates applicable from time
to time to Advances under the Agreement.
"Availability" shall mean the sum of Revolving A Availability plus
Revolving B Availability.
"Borrowing Base" shall mean, collectively, the Billed Receivables
Borrowing Base plus the Unbilled Receivables Borrowing Base.
"Billed Receivables Borrowing Base" shall mean, as of any date of
determination, the net collectible U.S. Dollar value of Eligible Billed
Receivables, as determined with reference to the most recent Borrowing
Certificate and otherwise in accordance with this Agreement; provided, however,
that if as of such date the most recent Borrowing Certificate is of a date more
than four Business Days before or after such date, the Borrowing Base shall be
determined by Lender in its Permitted Discretion.
"Borrower Stock Pledge Agreement" shall mean that certain Borrower
Stock Pledge Agreement by and among ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and
Lender executed in connection herewith.
Appendix A-1
35
"Borrowing Certificate" shall mean a Borrowing Certificate
substantially in the form of Exhibit A.
"Borrowing Date" shall have the meaning given such term in Section
2.4.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which the Federal Reserve or Lender is closed.
"Capital Expenditures" shall mean, for any Test Period, the sum
(without duplication) of all expenditures (whether paid in cash or accrued as
liabilities) during the Test Period that are or should be treated as capital
expenditures under GAAP.
"Capital Lease" shall mean, as to any Person, a lease of any interest
in any kind of property or asset by that Person as lessee that is, should be or
should have been recorded as a "capital lease" in accordance with GAAP.
"Capitalized Lease Obligations" shall mean all obligations of any
Person under Capital Leases, in each case, taken at the amount thereof accounted
for as a liability in accordance with GAAP.
"Change of Control" shall mean, with respect to Borrower or Guarantor,
the occurrence of any of the following: (i) a merger, consolidation,
reorganization, recapitalization or share or interest exchange, sale or transfer
or any other transaction or series of transactions in which its stockholders,
managers, partners or interest holders immediately prior to such transaction or
series of transactions receive, in exchange for the stock or interests owned by
them, cash, property or securities of the resulting or surviving entity or any
Affiliate thereof, and, as a result thereof, Persons who, individually or in the
aggregate, were holders 50% or more of its voting stock, securities or equity,
partnership or ownership interests immediately prior to such transaction or
series of transactions hold less than 50% of the voting stock, securities or
other equity, partnership or ownership interests of the resulting or surviving
entity or such Affiliate thereof, calculated on a fully diluted basis, (ii) a
direct or indirect sale, transfer or other conveyance or disposition, in any
single transaction or series of transactions, of all or substantially all of its
assets, (iii) the initial public offering of its securities, or (iv) any "change
in/of control" or "sale" or "disposition" or similar event as defined in any
document governing indebtedness of such Person which gives the holder of such
indebtedness the right to accelerate or otherwise require payment of such
indebtedness prior to the maturity date thereof.
"Charter and Good Standing Documents" shall mean, for Borrower and
Guarantor (i) a copy of the certificate of incorporation or formation (or other
charter document) certified as of a date satisfactory to Lender before the
Closing Date by the applicable Governmental Authority of the jurisdiction of
incorporation or organization of Borrower and Guarantor, (ii) a copy of the
bylaws or similar organizational documents certified as of a date satisfactory
to Lender before the Closing Date by the corporate secretary or assistant
secretary of Borrower and Guarantor, (iii) an original certificate of good
standing as of a date acceptable to Lender issued by the applicable Governmental
Authority of the jurisdiction of incorporation or organization of Borrower and
Guarantor and of every other jurisdiction in which Borrower has an office or
conducts business or is otherwise required to be in good standing, and (iv)
copies of the resolutions of the Board of Directors or managers (or other
applicable governing body) and, if required, stockholders, members or other
equity owners authorizing the execution, delivery and performance of the Loan
Documents to which Borrower and Guarantor is a party, certified by an authorized
officer of such Person as of the Closing Date.
Appendix A-2
36
"Closing" shall mean the satisfaction, or written waiver by Lender, of
all of the conditions precedent set forth in the Agreement required to be
satisfied prior to the consummation of the transactions contemplated hereby.
"Closing Date" shall mean the date of this Agreement.
"Collateral" shall have the meaning given such term in Section 2.9.
"Collateral Management Team" shall have the meaning given such term in
Section 3.3.
"Collateral Patent, Trademark and Copyright Assignment" shall mean any
patent, trademark, or copyright assignment or acknowledgement executed by and
between Borrower and Lender, as such may be modified, amended or supplemented
from time to time.
"Concentration Account" shall have the meaning given such term in
Section 2.5.
"Debtor Relief Law" shall mean, collectively, the Bankruptcy Code of
the United States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally, as amended from time to
time.
"Default" shall mean any event, fact, circumstance or condition that,
with the giving of applicable notice or passage of time or both, would
constitute or be or result in an Event of Default.
"Designated Equipment" shall mean, as to Borrower (a) all vehicles,
tractors, trailers, trailing Equipment and trucks wherever located, described on
Schedule 1 attached hereto and incorporated herein and in any amendments or
additions to such Schedule 1 as provided in Section 6.1(b)(v) hereof, (b) any
other Equipment not constituting Equipment Lender Collateral; and (c) all
additions, attachments, accessories, improvements, parts, repairs and
appurtenances thereto, and all substitutions and replacements thereof.
"Dilution Factors" shall mean adjustments to the Availability based
upon Borrower's actual recent collection history in a manner consistent with
Lender's underwriting practices and procedures, including without limitation
Lender's review and analysis of Borrower's historical returns, rebates,
discounts, credits and allowances.
"Distribution" shall mean any fee, payment, bonus or other
remuneration of any kind, and any repayment of or debt service on loans or other
indebtedness.
"Eligible Billed Receivables" shall mean each Account (other than
Eligible Unbilled Receivables) arising in the ordinary course of Borrower's
business from the sale of goods or rendering of services which Lender, in its
sole discretion, deems an Eligible Billed Receivable unless:
(a) It is not subject to a valid perfected first priority security
interest in favor of Lender, subject to no other Lien;
(b) it is not evidenced by an invoice, contract, statement or other
documentary evidence customarily used in the trucking industry (including fax
confirmation, authorization sheets and bills of lading); provided, that Lender
in its Permitted Discretion may from time to time include as Accounts that are
not evidenced by an invoice, statement or other documentary evidence
satisfactory to
Appendix A-3
37
Lender as Eligible Billed Receivables and determine the advance rate, Dilution
Factors and reserves applicable to Advances made on any such Accounts;
(c) it or any portion thereof (in which case only such portion shall
not be an Eligible Billed Receivable) is payable by a beneficiary, recipient or
subscriber individually and not directly by an Account Debtor other than a
servicing or payment agent authorized to make payment on behalf of such Account
Debtor;
(d) that portion of Accounts arising out of services rendered or a
sale made to, or out of any other transaction between Borrower or any of its
Subsidiaries and, one or more Affiliates of Borrower or any of its Subsidiaries;
(e) it remains unpaid for longer than the earlier of (i) 90 calendar
days after the original invoice date, and (ii) 150 calendar days after the
applicable services were rendered;
(f) with respect to all Accounts owed by any particular Account
Debtor, if more than 50% of the aggregate balance of all such Accounts owing
from such Account Debtor remain unpaid for longer than the earlier of (i) 90
calendar days after the original invoice date, and (ii) 150 calendar days after
the applicable services were rendered;
(g) with respect to all Accounts owed by any particular Account
Debtor, 40% or more of all such Accounts are not deemed Eligible Billed
Receivables for any reason hereunder;
(h) with respect to all Accounts owed by any particular Account
Debtor, if such Accounts exceed 20% of the net collectible dollar value of all
Eligible Billed Receivables at any one time (Lender will approve a larger
percentage in its Permitted Discretion upon the request of Borrower);
(i) any covenant, agreement, representation or warranty contained in
any Loan Document with respect to such Account has been breached and remains
uncured;
(j) the Account Debtor for such Account has commenced a voluntary case
under any Debtor Relief Law or has made an assignment for the benefit of
creditors, or a decree or order for relief has been entered by a court having
jurisdiction in respect of such Account Debtor in an involuntary case under any
Debtor Relief Law, or any other petition or application for relief under any
Debtor Relief Law has been filed against such Account Debtor, or such Account
Debtor has failed, suspended business, ceased to be solvent, called a meeting of
its creditors, or has consented to or suffered a receiver, trustee, liquidator
or custodian to be appointed for it or for all or a significant portion of its
assets or affairs, or Borrower, in the ordinary course of business, should have
known of any of the foregoing;
(k) it arises from the sale of property or services rendered to one or
more Account Debtors outside the continental United States (unless the payor
with respect to such Account is located within the continental United States) or
that have their principal place of business or chief executive offices outside
the continental United States;
(l) it represents the sale of goods or rendering of services to an
Account Debtor on a ▇▇▇▇-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment or any other repurchase or return basis or is evidenced by
Chattel Paper or an Instrument of any kind or has been reduced to judgment;
(m) the applicable Account Debtor for such Account is any Governmental
Authority, unless rights to payment of such Account have been assigned to Lender
pursuant to the Assignment of
Appendix A-4
38
Claims Act of 1940, as amended (31 U.S.C. Section 3727, et seq. and 41 U.S.C.
Section 15, et seq.), or otherwise only if all applicable statutes or
regulations respecting the assignment of Government Accounts have been complied
with;
(n) to the extent it is subject to any offset, credit (including any
resource or other income credit or offset) deduction, defense, discount,
chargeback, freight claim, allowance, adjustment, dispute or counterclaim, or is
contingent in any respect or for any reason;
(o) there is any agreement with an Account Debtor for any deduction
from such Account, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each invoice related thereto,
such that only the discounted amount of such Account after giving effect to such
discounts and allowances shall be considered an Eligible Billed Receivable;
(p) any return, rejection or repossession of goods or services related
to it has occurred;
(q) it is not payable to Borrower;
(r) Borrower has agreed to accept or has accepted any non-cash payment
for such Account;
(s) with respect to any Account arising from the sale of goods, the
goods have not been shipped to the Account Debtor or its designee; or
(t) with respect to any Account arising from the performance of
services, the services have not been actually performed of the services were
undertaken in violation of any law.
"Eligible Receivables" shall mean Eligible Billed Receivables and
Eligible Unbilled Receivables.
"Eligible Unbilled Receivables" shall mean each Account meeting the
criteria of Eligible Billed Receivables, except:
(i) clause (b) shall not apply; and
(ii) clause (e) shall be restated as follows: "remains unbilled for
longer than thirty days following the date on which the services were rendered"
"Environmental Laws" shall mean, collectively and each individually,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Superfund Amendment and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Clean Air
Act, the Clean Water Act, any other "Superfund" or "Superlien" law and all other
federal, state and local and foreign environmental, land use, zoning, health,
chemical use, safety and sanitation laws, statutes, ordinances and codes
relating to the protection of the environment and/or governing the use, storage,
treatment, generation, transportation, processing, handling, production or
disposal of Hazardous Substances, in each case, as amended, and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and
directives of Governmental Authorities with respect thereto.
Appendix A-5
39
"Equipment Lender" shall mean, individually and collectively, each
lender, bank or financial institution which provides financing to Borrower
secured by Borrower's truck, tractors and trailers.
"Equipment Lender Collateral" shall mean any of Borrower's trucks,
tractors and trailers subject to a perfected security interest in favor of an
Equipment Lender pursuant to the Equipment Lender Documentation.
"Equipment Lender Documentation" shall mean, individually and
collectively, any agreements, notes, instruments or documents evidencing any
Indebtedness of Borrower to an Equipment Lender.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"Event of Default" shall mean the occurrence of any event set forth in
Article VIII.
"Facility Cap" shall have the meaning given the term in the Recitals
of this Agreement.
"Fair Valuation" shall mean the determination of the value of the
consolidated assets of a Person on the basis of the amount which may be realized
by a willing seller within a reasonable time through collection or sale of such
assets at market value on a going concern basis to an interested buyer who is
willing to purchase under ordinary selling conditions in an arm's length
transaction.
"▇▇▇▇▇▇ Note" shall mean that certain $1,500,000 Promissory Note dated
November 5, 2002 made by Borrower to the order of J-Mar Trucking, Inc., which
note is, as of the Closing Date, held by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Teaching Center.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time as applied by nationally
recognized accounting firms.
"Government Account" shall be defined to mean all Accounts arising out
of or with respect to any Government Contract.
"Government Contract" shall be defined to mean all contracts with the
United States Government or with any agency thereof, and all amendments thereto.
"Governmental Authority" shall mean any federal, state, municipal,
national, local or other governmental department, court, commission, board,
bureau, agency or instrumentality or political subdivision thereof, or any
entity or officer exercising executive, legislative or judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, a foreign sovereign entity or country or jurisdiction or the District
of Columbia.
"Guarantor" shall mean, collectively and each individually, (i)
Western Properties, (ii) Air One, Inc. and (iii) all other guarantors of the
Obligations or any part thereof.
"Guaranty" shall mean, collectively and each individually, all
guarantees executed by any Guarantors.
Appendix A-6
40
"Hazardous Substances" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in or subject to any applicable Environmental Law.
"Indebtedness" of any Person shall mean, without duplication, (a) all
items which, in accordance with GAAP, would be included in determining total
liabilities as shown on the liability side of the balance sheet of such Person
as of the date as of which Indebtedness is to be determined, including any lease
which, in accordance with GAAP would constitute Indebtedness, (b) all
indebtedness secured by any mortgage, pledge, security, Lien or conditional sale
or other title retention agreement to which any property or asset owned or held
by such Person is subject, whether or not the indebtedness secured thereby shall
have been assumed, (c) all indebtedness of others which such Person has directly
or indirectly guaranteed, endorsed (otherwise than for collection or deposit in
the ordinary course of business), discounted or sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock, equity or other ownership interest purchase, capital
contribution or otherwise) or otherwise to become directly or indirectly liable.
"Indemnified Person" shall have the meaning given such term in Section
12.4.
"Initial Advance" shall have the meaning given such term in Section
4.1.
"Insured Event" shall have the meaning given such term in Section
12.4.
"Inventory" shall mean all "inventory" (as defined in the UCC) of
Borrower (or, if referring to another Person, of such other Person), now owned
or hereafter acquired, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Landlord Waiver and Consent" shall mean a waiver/consent in form and
substance satisfactory to Lender from the owner/lessor of any premises not owned
by Borrower at which any of the Collateral is now or hereafter located for the
purpose of providing Lender access to such Collateral, in each case as such may
be modified, amended or supplemented from time to time.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, restriction, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement or any lease in the nature thereof), or any other arrangement pursuant
to which title to the property is retained by or vested in some other Person for
security purposes.
"Loan" or "Loans" shall mean, individually and collectively, all
Advances under the Revolving Facility.
"Loan Documents" shall mean, collectively and each individually, the
Agreement, the Notes, the Security Documents, the Guaranties, the Stock Pledge
Agreements, the Lockbox Agreements, the Uniform Commercial Code Financing
Statements, the Landlord Waiver and Consents, the Borrowing Certificates, and
all other agreements, documents, instruments and certificates heretofore or
hereafter executed or delivered to Lender in connection with any of the
foregoing or the Loans, as the same may be amended, modified or supplemented
from time to time.
"Lockbox Accounts" shall have the meaning given such term in Section
2.5.
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41
"Lockbox Agreement" shall have the meaning given such term in Section
2.5.
"Lockbox Bank" shall have the meaning given such term in Section 2.5.
"Material Adverse Effect" or "Material Adverse Change" shall mean any
event, condition or circumstance or set of events, conditions or circumstances
or any change(s) which (i) has, had or would reasonably be likely to have any
material adverse effect upon or change in the validity or enforceability of any
Loan Document, (ii) has been or would reasonably be likely to be material and
adverse to the value of any of the Collateral, to the priority of the Lender's
security interest in the Collateral, or to the business, operations, prospects,
properties, assets, liabilities or condition of Borrower and/or Guarantors,
either individually or taken as a whole, or (iii) has materially impaired or
would reasonably be likely to materially impair the ability of Borrower or
Guarantor to pay any portion of the Obligations or to otherwise perform the
Obligations or to consummate the transactions under the Loan Documents executed
by such Person.
"Maturity Date" shall have the meaning assigned to such term in
Section 2.2(c).
"Minimum Revolver Termination Fee" shall mean (for the time period
indicated) the amount equal to (i) two percent (2%) of the Revolving A Facility
Cap and the Revolving B Facility Cap, if the date of notice of such termination
by Borrower is after the Closing Date but before the first anniversary of the
Closing Date; and (ii) one percent (1%) of the Revolving A Facility Cap and the
Revolving B Facility Cap, if the date of notice of such termination by Borrower
is on or after the first anniversary of the Closing Date.
"Negative Pledge Agreement" shall mean those certain Negative Pledge
Agreements in recordable form and otherwise in form and substance satisfactory
to Lender, with respect to (i) Western Properties' real property located at
Nashville, Tennessee and (ii) Borrower's property located in Birmingham,
Alabama.
"Note" shall mean, collectively and each individually, the Revolving A
Note(s) and the Revolving B Note(s).
"Obligations" shall mean all present and future obligations,
Indebtedness and liabilities of Borrower and/or Guarantors to Lender at any time
and from time to time of every kind, nature and description, direct or indirect,
secured or unsecured, joint and several, absolute or contingent, due or to
become due, matured or unmatured, now existing or hereafter arising, contractual
or tortious, liquidated or unliquidated, under any of the Loan Documents or
otherwise relating to the Notes and/or Loans, including, without limitation, all
applicable fees, charges and expenses and/or all amounts paid or advanced by
Lender on behalf of or for the benefit of Borrower and/or Guarantor for any
reason at any time, including in each case obligations of performance as well as
obligations of payment and interest that accrue after the commencement of any
proceeding under any Debtor Relief Law by or against any such Person.
"Payment Office" shall mean initially the address set forth beneath
Lender's name on the signature page of the Agreement, and thereafter, such other
office of Lender, if any, which it may designate by notice to Borrower to be the
Payment Office.
"Permit" shall mean collectively all licenses, leases, powers,
permits, franchises, certificates, authorizations, approvals, certificates of
need, provider numbers and other rights.
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42
"Permitted Discretion" shall mean a determination or judgment made by
Lender in good faith in the exercise of reasonable (from the perspective of a
secured lender) business judgment.
"Permitted Indebtedness" shall have the meaning given such term in
Section 7.2.
"Permitted Liens" shall have the meaning given such term in Section
7.3.
"Person" shall mean an individual, a partnership, a corporation, a
limited liability company, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture, a Governmental Authority or any
other entity of whatever nature.
"Prime Rate" shall mean a fluctuating interest rate per annum equal at
all times to the rate of interest announced publicly from time to time by
Citibank, N.A. as its base rate; provided, that such rate is not necessarily the
best rate offered to its customers, and, should Lender be unable to determine
such rate, such other indication of the prevailing prime rate of interest as may
reasonably be chosen by Lender; provided, that each change in the fluctuating
interest rate shall take effect simultaneously with the corresponding change in
the Prime Rate.
"Receipt" shall have the meaning given such term in Section 12.5.
"Revolver Termination" shall have the meaning given such term in
Section 11. 1(b).
"Revolving A Advance" shall mean a borrowing under the Revolving A
Facility.
"Revolving A Availability" shall have the meaning given such term in
Section 2.1(a).
"Revolving A Facility Cap" shall mean $30,000,000.
"Revolving A Note" shall mean, collectively and each individually, the
promissory note(s) payable to the order of Lender executed by Borrower
evidencing the Revolving A Facility, as the same may be modified, amended or
supplemented from time to time.
"Revolving B Advance" shall mean a borrowing under the Revolving B
Facility.
"Revolving B Availability" shall have the meaning given such term in
Section 2.1(b).
"Revolving B Facility Cap" shall mean $7,000,000.
"Revolving B Note" shall mean, collectively and each individually, the
promissory note(s) payable to the order of Lender executed by Borrower
evidencing the Revolving B Facility, as the same may be modified, amended or
supplemented from time to time.
"Security Documents" shall mean the Notes, this Agreement, Guaranties,
Stock Pledge Agreements, Collateral Patent, Trademark, and Copyright Assignment,
Lockbox Agreements, Uniform Commercial Code Financing Statements and all other
documents or instruments necessary to create or perfect the Liens in the
Collateral, as such may be modified, amended or supplemented from time to time.
"Solvency Certificate" shall have the meaning given such term in
Section 4.1(d).
"Stock Pledge Agreement" shall mean, collectively and each
individually, (i) the Borrower Stock
Appendix A-9
43
Pledge Agreement, (ii) the Subsidiary Stock Pledge Agreement, and (iii) if
applicable, all stock pledge agreements executed by and between Lender and any
Guarantors, in each case as such may be modified, amended or supplemented from
time to time.
"Subsidiary" shall mean, (i) as to Borrower, any Person in which more
than 50% of all equity, membership, partnership or other ownership interests is
owned directly or indirectly by Borrower or one or more of its Subsidiaries, and
(ii) as to any other Person, any Person in which more than 50% of all equity,
membership, partnership or other ownership interests is owned directly or
indirectly by such Person or by one or more of such Person's Subsidiaries.
"Subsidiary Stock Pledge Agreement" shall mean that certain Subsidiary
Stock Pledge Agreement by and between Borrower and Lender executed in connection
herewith.
"Term" shall mean the period commencing on the date set forth on the
first page hereof and ending on the date that is three (3) years after the
Closing Date.
"Termination Date" shall have the meaning given such term in Section
11.1.
"Transaction" shall have the meaning given such term in Section 6.13.
"Transferee" shall have the meaning given such term in Section 12.2.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of Maryland from time to time.
"Unbilled Receivables Borrowing Base" shall mean, as of any date of
determination, the net collectible U.S. Dollar value of Eligible Unbilled
Receivables, as determined with reference to the most recent Borrowing
Certificate and otherwise in accordance with this Agreement; provided, however,
that if as of such date the most recent Borrowing Certificate is of a date more
than four Business Days before or after such date, the Borrowing Base shall be
determined by Lender in its Permitted Discretion.
"Unused Line Fee" shall have the meaning given such term in Section
3.2.
Appendix A-10
44
SCHEDULES
Schedule 1 Designated Equipment
Schedule 2.4 -- Borrower's Account(s)
Schedule 5.2 -- Required Consents
Schedule 5.3 -- Capitalization, Organization Chart (including all
subsidiaries, authorized/issued capitalization, owners,
directors, officers and managers) and Joint Ventures
Schedule 5.4 -- Liens; Real and Personal Property Owned or Leased; Leases
Schedule 5.5 -- Defaults
Schedule 5.6 Litigation
Schedule 5.8 -- Taxes
Schedule 5.11 -- Intellectual Property
Schedule 5.15A -- Existing Indebtedness
Schedule 5.15B -- Indebtedness Maturing During Team
Schedule 5.16 -- Other Agreements
Schedule 5.17 -- Insurance
Schedule 5.18A -- Corporate Names
Schedule 5.18B -- Places of Business
Schedule 6.8 -- Further Assurances/Post Closing
Schedule 7.2 -- Permitted Indebtedness
Schedule 7.3 -- Permitted Liens
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