SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 24, 1999
Date of report (date of earliest event reported)
UNITED SHIPPING & TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Charter)
UTAH 000-28452 87-0355929
(State or Other (Commission File Number) (IRS Employer
Jurisdiction Identification No.)
of Incorporation)
9850 51st Avenue, North, Suite 110, Minneapolis, Minnesota 55442
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(Address of Principal Executive Offices)
(612) 941-4080
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 24, 1999, United Shipping & Technology, Inc. (the
"Company"), acquired Corporate Express Delivery Systems, Inc. ("CEDS") from CEX
Holdings, Inc. ("CEX") pursuant to a merger of CEDS with the Company's
wholly-owned subsidiary, United Shipping & Technology Acquisition Corp.,
("Acquisition Corp.") a recently incorporated Delaware corporation. With the
acquisition of CEDS, the Company believes that it has become the leader in
nationwide customized delivery solutions for same-day, time-critical shipping
and distribution in the United States. The Company provides an array of same-day
ground and air delivery services, including scheduled delivery, on-demand
delivery, distribution services and air courier services, from a network of
approximately 230 locations in 83 of the top 100 metropolitan areas in the
United States. The Company's operations are supported by a fleet of
approximately 9,800 vehicles, including 4,700 Company-leased and owned vehicles
and 5,100 vehicles utilized by independent contractors. The Company has
approximately 10,000 employees. UST Delivery Systems, Inc. ("Delivery Systems")
has offices in Australia, Canada, France, Hong Kong and the United Kingdom, to
facilitate its same-day international air delivery business.
The purchase price of the acquisition was approximately $60.6 million,
consisting of $43.0 million in cash provided by institutional debt financing,
and the remainder in a combination of short and long-term notes issued to CEX.
CEDS was the surviving corporation in the merger, and changed its name to UST
Delivery Systems. Delivery Systems, which remains a wholly-owned subsidiary of
the Company, is incorporated in Delaware.
The Company obtained the following financing for the acquisition of
CEDS:
The Company's primary source of financing was through a credit
agreement (the "Credit Agreement") with General Electric Capital Corporation
("GE"). Pursuant to the Credit Agreement, Delivery Systems issued to GE a
revolving note in the amount of $55,000,000 (the "Revolving Note") which
includes a swing line note in the amount of $5,000,000 (the "Swing Line Note").
The Revolving Note and Swing Line Note are secured by, among other things,
Delivery Systems' receivables.
The Company and Delivery Systems also entered into a note and warrant
purchase agreement (the "Bayview Agreement") with Bayview Capital Partners LP
("Bayview"). Pursuant to the Bayview Agreement, Delivery Systems and the Company
issued to Bayview a $5,000,000 senior subordinated note. As additional
consideration for providing the funding, the Company granted to Bayview a
ten-year common stock purchase warrant (the "Warrant"). Pursuant to the terms of
the Warrant, Bayview has the right to purchase up to 1,366,220 shares of the
Company's $.004 par value per share common stock (the "Common Stock") at an
exercise price equal to $3.3125 per share.
Pursuant to a Merger Agreement between CEX, CEDS, the Company and
Acquisition Corp., Delivery Systems issued a long-term subordinated promissory
note in the amount of $6,519,000, a short-term subordinated promissory note in
the amount of $7,500,000 and a convertible subordinated promissory note (the
"Convertible Note") in the amount of $3,600,000 to CEX. Pursuant to such
Convertible Note, CEX has the right to purchase, by exchanging all or any
portion of the principal balance of the Convertible
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Note, shares of the Company's Common Stock at an exchange rate of $4.59 per
share. The maximum number of shares of Common Stock that the Company would be
required to issue to CEX in connection with the Convertible Note would be
784,314 shares. The Convertible Note is subordinate to the obligations of the
Company and Delivery Systems owing to both GE and Bayview.
Pursuant to the terms of the Convertible Note and the Warrant, the
Company may be required to issue up to a maximum of 2,150,534 shares of Common
Stock, which amount will not be in excess of 20% of the Company's current
outstanding shares of Common Stock.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
The financial statements required by this Item will be filed
by amendment not later than sixty (60) days after the date
that this initial report on Form 8-K must be filed.
(b) Pro forma financial information.
The pro forma financial information required by this Item will
be filed by amendment not later than sixty (60) days after the
date that this initial report on Form 8-K must be filed.
(c) Exhibits.
Exhibit No. Description
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2.1 Merger Agreement by and among CEX Holdings, Inc.,
Corporate Express Delivery Systems, Inc., United
Shipping & Technology, Inc. and United Shipping &
Technology Acquisition Corp., dated as of September
8, 1999.
2.2 Amendment No. 1 to Merger Agreement by and among CEX
Holdings, Inc., Corporate Express Delivery Systems,
Inc., United Shipping & Technology, Inc. and United
Shipping & Technology Acquisition Corp., dated as of
September 22, 1999.
10.1 Long-Term Subordinated Promissory Note by and among
UST Delivery Systems, Inc. and CEX Holdings, Inc.,
dated September 24, 1999.
10.2 Short-Term Subordinated Promissory Note by and among
UST Delivery Systems, Inc. and CEX Holdings, Inc.,
dated September 24, 1999.
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10.3 Convertible Subordinated Promissory Note by and among
UST Delivery Systems, Inc. and CEX Holdings, Inc.,
dated September 24, 1999.
10.4 Exchange Agreement by and among United Shipping &
Technology, Inc., UST Delivery Systems, Inc. and CEX
Holdings, Inc., dated as of September 24, 1999.
10.5 Credit Agreement by and among UST Delivery Systems,
Inc. and General Electric Capital Corporation, dated
as of September 24, 1999.
10.6 Revolving Note by and among UST Delivery Systems,
Inc. and General Electric Capital Corporation, dated
September 24, 1999.
10.7 Swing Line Note by and among UST Delivery Systems,
Inc. and General Electric Corporation, dated
September 24, 1999.
10.8 Note and Warrant Purchase Agreement by and among
United Shipping & Technology, Inc., UST Delivery
Systems, Inc. and Bayview Capital Partners LP, dated
as of September 24, 1999.
10.9 Senior Subordinated Note by and among United Shipping
& Technology, Inc., UST Delivery Systems, Inc. and
Bayview Capital Partners LP, dated September 24,
1999.
10.10 Warrant to Purchase Common Stock of United Shipping &
Technology, Inc. issued to Bayview Capital Partners
LP, dated September 24, 1999.
10.11 Intercreditor and Subordination Agreement by and
among Bayview Capital Partners LP, UST Delivery
Systems, Inc., United Shipping & Technology, Inc. and
General Electric Capital Corporation, dated as of
September 24, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: October 8, 1999 By: /s/ Kenneth D. Zigrino
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Name: Kenneth D. Zigrino
Title: Vice President - Administration,
General Counsel and Secretary
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INDEX TO EXHIBITS
EXHIBIT NUMBER
2.1 Merger Agreement by and among CEX Holdings, Inc., Corporate
Express Delivery Systems, Inc., United Shipping & Technology, Inc.
and United Shipping & Technology Acquisition Corp., dated as of
September 8, 1999.
2.2 Amendment No. 1 to Merger Agreement by and among CEX Holdings,
Inc., Corporate Express Delivery Systems, Inc., United Shipping &
Technology, Inc. and United Shipping & Technology Acquisition
Corp., dated as of September 22, 1999.
10.1 Long-Term Subordinated Promissory Note by and among UST Delivery
Systems, Inc. and CEX Holdings, Inc., dated September 24, 1999.
10.2 Short-Term Subordinated Promissory Note by and among UST Delivery
Systems, Inc. and CEX Holdings, Inc., dated September 24, 1999.
10.3 Convertible Subordinated Promissory Note by and among UST Delivery
Systems, Inc. and CEX Holdings, Inc., dated September 24, 1999.
10.4 Exchange Agreement by and among United Shipping & Technology,
Inc., UST Delivery Systems, Inc. and CEX Holdings, Inc., dated as
of September 24, 1999.
10.5 Credit Agreement by and among UST Delivery Systems, Inc. and
General Electric Capital Corporation, dated as of September 24,
1999.
10.6 Revolving Note by and among UST Delivery Systems, Inc. and General
Electric Capital Corporation, dated September 24, 1999.
10.7 Swing Line Note by and among UST Delivery Systems, Inc. and
General Electric Corporation, dated September 24, 1999.
10.8 Note and Warrant Purchase Agreement by and among United Shipping &
Technology, Inc., UST Delivery Systems, Inc. and Bayview Capital
Partners LP, dated as of September 24, 1999.
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10.9 Senior Subordinated Note by and among United Shipping &
Technology, Inc., UST Delivery Systems, Inc. and Bayview Capital
Partners LP, dated September 24, 1999.
10.10 Warrant to Purchase Common Stock of United Shipping & Technology,
Inc. issued to Bayview Capital Partners LP, dated September 24,
1999.
10.11 Intercreditor and Subordination Agreement by and among Bayview
Capital Partners LP, UST Delivery Systems, Inc., United Shipping &
Technology, Inc. and General Electric Capital Corporation, dated
as of September 24, 1999.
Exhibit 2.1
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MERGER AGREEMENT
BY AND AMONG
CEX HOLDINGS, INC.,
CORPORATE EXPRESS DELIVERY SYSTEMS, INC.,
UNITED SHIPPING & TECHNOLOGY, INC.
AND
UNITED SHIPPING & TECHNOLOGY ACQUISITION CORP.
DATED AS OF SEPTEMBER 8, 1999
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TABLE OF CONTENTS
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PAGE NO.
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ARTICLE I
DEFINITIONS AND OTHER MATTERS
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Section 1.1 Definitions..........................................................................1
ARTICLE II
THE TRANSACTION
Section 2.1 The Merger...........................................................................8
Section 2.2 Adjustment of the Merger Consideration...............................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Buyer's Representations and Warranties..............................................11
Section 3.2 CEX's Representations and Warranties................................................15
ARTICLE IV
COVENANTS AND AGREEMENTS
Section 4.1 Covenants and Agreements of Buyer...................................................22
Section 4.2 Covenants and Agreements of CEX and the Company.....................................24
Section 4.3 Continuing Joint Covenants and Agreements...........................................25
Section 4.4 Exclusivity.........................................................................28
ARTICLE V
CONDITIONS PRECEDENT TO THE CLOSING
Section 5.1 Conditions Precedent to Buyer's Obligations.........................................29
Section 5.2 Conditions Precedent to CEX's and the Company's Obligations.........................30
ARTICLE VI
THE CLOSING
Section 6.1 The Closing Date....................................................................31
Section 6.2 Deliveries at the Closing...........................................................31
Section 6.3 Simultaneous Closing................................................................33
ARTICLE VII
POST-CLOSING AGREEMENTS AND OTHER MATTERS
Section 7.1 Post-Closing Agreements.............................................................33
Section 7.2 Inspection of Records...............................................................34
Section 7.3 Mutual Assistance...................................................................34
Section 7.4 Further Assurances..................................................................34
Section 7.5 Exchange Act and Other Filings......................................................34
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<TABLE>
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Section 7.6 Insurance...........................................................................34
Section 7.7 Administration of Accounts..........................................................35
Section 7.8 Notice Obligations of Buyer.........................................................35
Section 7.9 Future Delivery Services............................................................35
ARTICLE VIII
TERMINATION
Section 8.1 Termination.........................................................................35
Section 8.2 Effect of Termination...............................................................36
Section 8.3 Break-up Fee........................................................................36
ARTICLE IX
INDEMNIFICATION
Section 9.1 Survival of Representations and Warranties..........................................37
Section 9.2 Indemnification by CEX..............................................................37
Section 9.3 Indemnification by Buyer and the Company............................................38
Section 9.4 Procedure for Third Party Claims....................................................38
Section 9.5 General Provisions Relating to Remedies and Indemnification.........................40
Section 9.6 Exclusive Nature....................................................................41
ARTICLE X
MISCELLANEOUS
Section 10.1 Company Name........................................................................41
Section 10.2 Exclusivity of Representations and Warranties; Relationship Between the Parties.....42
Section 10.3 Tax Matters.........................................................................43
Section 10.4 Entire Agreement....................................................................43
Section 10.5 Amendments..........................................................................43
Section 10.6 Severability........................................................................44
Section 10.7 Counterparts........................................................................44
Section 10.8 No Waiver...........................................................................44
Section 10.9 Assignment..........................................................................44
Section 10.10 Fees, Costs and Expenses............................................................44
Section 10.11 Third Party Beneficiaries...........................................................44
Section 10.12 Interpretation of Schedules.........................................................44
Section 10.13 Construction........................................................................45
Section 10.14 Consent to Jurisdiction and Related Matters.........................................45
Section 10.15 Waiver of Jury Trial................................................................46
Section 10.16 Notices.............................................................................46
Section 10.17 Governing Law.......................................................................48
</TABLE>
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EXHIBITS
Exhibit A Noncompete Agreement
Exhibit B Tax Sharing and Indemnification Agreement
Exhibit C Transition Services Agreement
Exhibit D Short-Term Note
Exhibit E Long-Term Note
Exhibit F Convertible Note
Exhibit G Beginning Balance Sheet
Exhibit H Guaranty
Exhibit I Security Agreement (Subsidiaries)
Exhibit J Security Agreement (CEDS)
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SCHEDULES
Schedule 3.2.5 Required Consents
Schedule 3.2.6 Regulatory Approvals
Schedule 3.2.7 Subsidiaries of the Company
Schedule 3.2.10A Financial Statements
Schedule 3.2.10B Exceptions to Financial Statements
Schedule 3.2.11A Real Property
Schedule 3.2.11B Personal Property
Schedule 3.2.12 Intellectual Property
Schedule 3.2.13A Material Contracts
Schedule 3.2.13B Certain Contracts
Schedule 3.2.14 Labor Matters
Schedule 3.2.15 Pending Litigation
Schedule 3.2.16 Environmental Compliance
Schedule 3.2.17 Absence of Changes or Events
Schedule 3.2.18 Compliance with Laws
Schedule 3.2.20 Insurance Policies
Schedule 3.2.21 Employee Benefit Plans
Schedule 4.2.2 Ordinary Course of Business
Schedule 4.2.3 Continuing Contracts
Schedule 4.3.4 Guarantees
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MERGER AGREEMENT
This Merger Agreement (this "Agreement") is made and entered into as
of September 8, 1999, by and among CEX Holdings, Inc., a Colorado corporation
("CEX"), Corporate Express Delivery Systems, Inc., a Delaware corporation (the
"Company"), United Shipping & Technology, Inc., a Utah corporation ("Buyer") and
United Shipping & Technology Acquisition Corp., a Delaware corporation ("Merger
Sub"). CEX, the Company, Buyer and Merger Sub are sometimes individually
referred to herein as a "party" and sometimes collectively as the "parties".
WITNESSETH
WHEREAS, CEX owns all of the issued and outstanding common stock,
par value $.001 per share, of the Company (the "Company Shares"), which
represent 100% of the issued and outstanding shares of the capital stock of the
Company;
WHEREAS, the Company owns all of the issued and outstanding common
stock of those Subsidiaries identified on Schedule 3.2.7;
WHEREAS, Corporate Express, Inc., a Colorado corporation ("CEI"), is
the parent company of CEX;
WHEREAS, Buyer desires to acquire the Company and its Subsidiaries
from CEX in a merger transaction pursuant to which Merger Sub will merge with
and into the Company and the Company will be the surviving corporation; and
WHEREAS, in accordance with the terms and provisions of the Tax
Sharing and Indemnification Agreement (as defined herein), Buyer and CEX will
each file elections under Section 338(h)(10) of the Internal Revenue Code for
the Company and its Subsidiaries;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, CEX and Buyer hereby
agree as follows:
ARTICLE I
DEFINITIONS AND OTHER MATTERS
SECTION 1.1 DEFINITIONS. In this Agreement, the following terms
shall have the following meanings:
"Affiliate" of any Person means any other Person which Controls, is
Controlled by, or is under common Control with such Person.
"Agreement" means this Agreement, the Annexes, Schedules, Exhibits
and other attachments hereto, and all amendments and supplements to any of the
foregoing, made in
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accordance with Section 10.4 or, in the case of Schedules, made in accordance
with Section 5.1.1 or Section 5.2.1, as the case may be.
"Ancillary Agreements" shall mean the Tax Sharing and
Indemnification Agreement, the Noncompete Agreement, the Exchange Agreement, the
Transition Services Agreement, the Registration Rights Agreement, the Parent
Guaranty, the Subsidiary Guaranty, the Security Agreement and the Promissory
Notes.
"Audited Financial Statements" shall have the meaning set forth in
Section 3.2.10.
"Bayview" means Bayview Capital Partners LP.
"Beginning Balance Sheet" shall have the meaning set forth in
Section 2.2.1.
"Buyer" shall have the meaning set forth in the preamble.
"Buyer's Bring Down Certificate" shall have the meaning set forth in
Section 5.2.1.
"Buyer's Common Stock" shall have the meaning set forth in Section
3.1.12(a)(i).
"Buyer Indemnified Parties" shall have the meaning set forth in
Section 9.2.
"Buyer SEC Reports" shall mean the reports and statements which
Buyer has filed, or is required to file, with the Securities and Exchange
Commission pursuant to the Exchange Act.
"Cash Reconciliation Report" shall have the meaning set forth in
Section 2.2.3.
"CEI" shall have the meaning set forth in the Recitals.
"CEI Plan" shall have the meaning set forth in Section 3.2.21(a).
"CEX's Bring Down Certificate" shall have the meaning set forth in
Section 5.1.1.
"CEX Indemnified Parties" shall have the meaning set forth in
Section 9.3.
"Closing" shall have the meaning set forth in Section 6.1.
"Closing Date" shall have the meaning set forth in Section 6.1.
"COBRA" shall have the meaning set forth in Section 3.2.21(f).
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations issued thereunder.
"Commission" shall have the meaning set forth in Section 3.1.11.
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"Commitment Letters" shall have the meaning set forth in Section
3.1.8.
"Company" shall, prior to the Merger, have the meaning set forth in
the preamble and, following the merger, shall mean the Surviving Corporation;
provided, however, that references to the Company in Section 3.2 shall mean and
include only Corporate Express Delivery Systems, Inc. prior to the Merger.
"Company Disclosure Schedule" shall mean the Disclosure Schedule
delivered by CEX in connection herewith, as amended or supplemented from time to
time.
"Company Plan" shall have the meaning set forth in Section
3.2.21(a).
"Company Properties" means all properties, sites and facilities
currently owned or operated by the Company or any of its Subsidiaries and all
properties, sites and facilities which were owned or operated at any previous
time by the Company or any of its Subsidiaries and for which a Governmental
Authority or any other Person seeks to hold the Company or any of its
Subsidiaries responsible or liable in whole or in part.
"Company Shares" shall have the meaning set forth in the preamble.
"Confidentiality Agreement" shall have the meaning set forth in
Section 4.1.1.
"Continuing Affiliates" shall mean CEI and each of its Affiliates
other than the Company and the Subsidiaries of the Company.
"Control" shall mean the direct or indirect power affirmatively to
direct the management and policies of a Person, whether through the ownership of
voting securities, by agreement or otherwise. "Controls," "Controlled" and
"Controlling" shall have corresponding meanings.
"Convertible Note" shall have the meaning set forth in Section
2.1.7(d).
"Data Room" means the room maintained by the Company at its offices
in Houston, Texas containing certain documents and materials relating to the
Company to which Buyer has been provided access.
"Delaware Law" shall mean the General Corporation Law of Delaware.
"DOT" shall have the meaning set forth in Section 3.1.7.
"Effective Date" shall have the meaning set forth in Section 2.2.1.
"Effective Time" has the meaning set forth in Section 2.1.3.
"Encumbrance" means any lien, security interest, mortgage or
encumbrance, other than a Permitted Encumbrance.
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"Environmental Claim" means any claim asserted by a Person or entity
alleging potential Liability (including, without limitation, a potential
Liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from the presence, or release into the
environment, of any Hazardous Substance at any property owned or operated by the
Company or any of its Subsidiaries.
"Environmental Laws" means any federal, state, local and foreign
statutes, laws (including without limitation, common law), judicial decisions,
regulations, ordinances, rules, judgments, orders, codes, injunctions, permits,
governmental agreements or governmental restrictions relating to human health
and safety, the environment or to pollutants, contaminants, wastes, or
chemicals.
"Equipment Leases" shall have the meaning set forth in Section
4.3.4(b).
"Equipment Lease Obligations" shall have the meaning set forth in
Section 4.3.4(b).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and all regulations and rules issued thereunder.
"ERISA Affiliate" shall have the meaning set forth in Section
3.2.21(d).
"Estimated Effective Date Balance Sheet" shall have the meaning set
forth in Section 2.2.1.
"Exchange Agreement" shall mean an agreement between Buyer and CEX
specifying (i) the terms and conditions pursuant to which CEX may exchange the
Convertible Note for Buyer's Common Stock at the initial rate of $4.59 per
share, and (ii) the antidilution protection and other rights that CEX shall have
with respect to such exchange. The Exchange Agreement will be in form mutually
acceptable to Buyer and CEX and will include exchange and antidilution
provisions mutually acceptable to Buyer and CEX; provided, however, that CEX
agrees that it will review in good faith the antidilution provisions agreed to
between Buyer and Bayview and will to the extent such provisions are acceptable
to CEX agree to such provisions in their Exchange Agreement.
"Final Adjustment Amount" shall have the meaning set forth in
Section 2.2.2.
"Final Effective Date Balance Sheet" shall have the meaning set
forth in Section 2.2.2.
"Foreign Plan" shall have the meaning set forth in Section
3.2.21(a).
"GE" shall mean GE Capital Corporation or an affiliate thereof.
"Governmental Authority" means any federal, state, local, foreign or
multinational (including the European Community) court, tribunal, legislative,
administrative or regulatory authority or agency, with competent jurisdiction.
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"Guarantees" shall have the meaning set forth in Section 4.3.4(a).
"Guaranty" shall mean the agreement substantially in the form
attached hereto as Exhibit H to be executed and delivered by Buyer and the
Company's Subsidiaries as required under Section 6.2.1(g).
"Hazardous Substance" means any substance that is listed, classified
or regulated pursuant to any Environmental Law, including any petroleum product
or by-product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"ICC" shall have the meaning set forth in Section 3.1.7.
"Intercreditor Agreements" shall have the meaning set forth in
Section 2.1.7.
"Internal Financial Statements" shall have the meaning set forth in
Section 3.2.10.
"Knowledge," "known," "belief," "believe" or variances thereof
(whether or not capitalized) shall mean, except as otherwise stated herein, when
applied to CEX or any of its Affiliates, the actual knowledge (without duty of
inquiry) of those representatives of CEI, CEX or the Company listed on Annex
A-1, and when used with respect to Buyer or any of its Affiliates shall mean the
actual knowledge (without duty of inquiry) of the representatives of Buyer
listed on Annex A-2.
"Laws" shall mean any law, statute, code, treaty, rule, directive,
plan, regulation, promulgation, decree, ruling, injunction or order of any
Governmental Authority, or any common law principle, doctrine or judgment
relating thereto or interpreting the application thereof.
"Liability" means any liability, obligation, loss or contingency,
whether known or unknown, asserted or unasserted, absolute or conditional,
accrued or unaccrued, liquidated or unliquidated, and whether due or to become
due, regardless of when asserted or arising.
"Long-Term Note" shall have the meaning set forth in Section
2.1.7(c).
"Losses" shall have the meaning set forth in Section 9.2.
"Material Adverse Effect" with respect to any Person means an event,
condition or circumstance that is, as of the date hereof or as of the Closing
Date, materially adverse to the business, operations, assets, or financial
condition of such Person and its Subsidiaries (or in the case of any Subsidiary
of the Company, the Company and its Subsidiaries), taken as a whole.
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"Material Contracts" shall have the meaning set forth in Section
3.2.13.
"Merger" shall mean the meaning set forth in Section 2.1.1.
"Merger Consideration" shall have the meaning set forth in Section
2.1.7.
"Merger Sub" shall have the meaning set forth in the preamble.
"Names" shall have the meaning set forth in Section 10.1.
"New Plan" shall have the meaning set forth in Section 4.1.3(a).
"Noncompete Agreement" shall mean the agreement substantially in the
form attached hereto as Exhibit A to be executed and delivered by CEI and CEX as
of the Closing.
"Permits" shall mean all licenses, permits, waivers and other
governmental authorizations including fuel permits, operating authorities
(including any necessary DOT or ICC operating authorities), state operating
licenses or registrations and other interstate or intrastate regulatory licenses
or authorizations.
"Permitted Encumbrances" means (a) such of the following as to which
no enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced or, if commenced, as to which any such proceedings are being
contested in good faith or for which adequate reserves are set aside on the
books and records of the Company: (i) liens for taxes, assessments and
governmental charges not yet due and payable; (ii) encumbrances in the nature of
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business; (iii) pledges or
deposits to secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations; (b) survey exceptions,
easement agreements and other encumbrances on or exceptions to title to real
property that (i) do not result from the incurrence of any indebtedness and (ii)
do not materially affect the value or the use of such property for its present
purposes; and (c) zoning restrictions and other limitations imposed by any
authority having jurisdiction over real property.
"Person" means any individual, partnership, limited liability
company, firm, corporation, association, trust, unincorporated organization,
Governmental Authority or other entity.
"Personal Property" shall have the meaning set forth in Section
3.2.11(b).
"Plan Obligations" shall have the meaning set forth in Section
4.3.4(a).
"Plans" shall have the meaning set forth in Section 3.2.21(a).
"Proceeding" shall have the meaning set forth in Section 4.3.4(c).
"Promissory Notes" shall mean the Short-Term Note, the Long-Term
Note and the Convertible Note.
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"Real Property" shall have the meaning set forth in Section
3.2.11(a).
"Redemption Notices" shall have the meaning set forth in Section
3.1.14.
"Registration Rights Agreement" shall mean the agreement to be
executed and delivered by the parties substantially in the form of the
registration rights agreement to be entered into between Buyer and Bayview, or
other subordinated lender loaning funds to Buyer or the Company in connection
with the Merger, and in form reasonably satisfactory to CEX.
"Representatives" of any Person shall mean its officers, directors,
employees, shareholders, partners, members, agents, advisors and representatives
and the heirs, executors, successors or assigns of the foregoing.
"Required Consents" shall have the meaning set forth in Section
3.2.5.
"Security Agreements" shall mean those agreements substantially in
the forms attached as Exhibit I and Exhibit J to be executed and delivered by
the parties hereto or their Affiliates as of the Closing.
"Settlement Date" shall mean, for purposes of Section 2.2, (i) in
the event Buyer timely delivers a written notice of objections pursuant to
Section 2.2.5, (x) in the case of an adjustment pursuant to Section 2.2.2, the
date on which CEX and Buyer, or the Expert to whom the matter is submitted, as
the case may be, resolve(s) any disagreement with respect to the Final Effective
Date Balance Sheet or (y) in the case of an adjustment pursuant to Section
2.2.3, the date on which CEX and Buyer, or the Expert to whom the matter is
submitted, as the case may be, resolve(s) any disagreement with respect to the
Cash Reconciliation Report, or (ii) in the event Buyer does not deliver a
written notice of objections pursuant to Section 2.2.5, the last day on which
Buyer could timely deliver such notice to CEX.
"Shareholder's Equity" shall have the meaning set forth in Section
2.2.1.
"Short-Term Note" shall have the meaning set forth in Section
2.1.7(b).
"Subsidiary" of any Person shall mean any corporation or other
Person, whether incorporated or unincorporated, of which at least a majority of
the securities or interests having by the terms thereof ordinary voting power to
elect at least a majority of the board of directors or other similar governing
body of such corporation or other Person is directly or indirectly owned or
Controlled by such Person or by any one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries. Notwithstanding anything in this
Agreement to the contrary, (i) no Person that is not Controlled by another
Person shall be deemed to be a Subsidiary of such other Person, and (ii) the
Trucking Subsidiaries shall not be deemed to be Subsidiaries or former
Subsidiaries of the Company, but shall instead be deemed to be Continuing
Affiliates.
"Surviving Corporation" shall have the meaning set forth in Section
2.1.1.
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"Tax Sharing and Indemnification Agreement" shall mean the agreement
substantially in the form attached hereto as Exhibit B to be executed and
delivered by the parties hereto as of the Closing.
"Transaction Representations" shall have the meaning set forth in
Section 9.1.
"Transition Services Agreement" shall mean the agreement
substantially in the form attached hereto as Exhibit C to be executed and
delivered by the parties hereto as of the Closing.
"Trucking Claims" shall mean the Liabilities of the Trucking
Subsidiaries for workers compensation and auto liability claims arising prior to
the Effective Date which have been assumed by the Company
"Trucking Subsidiaries" shall mean Corporate Express Delivery
Systems-Expedited, Inc., Corporate Express Delivery Leasing-Expedited, Inc., Red
Arrow Corporation, R.A.C., Inc., Red Arrow Spotting Service, Inc., Red Arrow
Warehousing, Inc., Red Arrow Trucking Co., and Rush Trucking, Inc. and Corporate
Express Delivery Systems-Southeast, Inc., but in the case of the latter, only to
the extent of the business activities of the former entities of General
Transport Services, Inc. and Cross Town Cartage, Inc.
"Warrants" shall have the meaning set forth in Section 3.1.4.
ARTICLE II
THE TRANSACTION
SECTION 2.1 THE MERGER.
Section 2.1.1 Subject to the terms and conditions of this Agreement,
Merger Sub will be merged with and into the Company (the "Merger") at the
Effective Time, whereupon the separate existence of Merger Sub shall cease and
the Company shall be the surviving corporation in the Merger (the "Surviving
Corporation").
Section 2.1.2 At the Closing, (i) the Company and Merger Sub will
file with the Secretary of State of the State of Delaware a certificate of
merger in form mutually acceptable to the parties, (ii) the parties will make
all other filings or recordings required by Delaware Law in connection with the
Merger, and (iii) Buyer will cause the Surviving Corporation to pay to CEX the
Merger Consideration
Section 2.1.3 The Merger shall become effective at the time (the
"Effective Time") that the certificate of merger is duly filed with the
Secretary of State of the State of Delaware. The Merger shall have the effect
set forth under Delaware Law. From and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises, and
be subject to all of the restrictions, disabilities and duties of the Company
and Merger Subsidiary, all as provided under Delaware Law.
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Section 2.1.4 The certificate of incorporation of Merger Sub in
effect at and as of the Effective Time shall be the certificate of incorporation
of the Surviving Corporation until amended in accordance with applicable law,
except that, in the certificate of merger, the name of the Surviving Corporation
shall be changed to "UST Delivery Systems, Inc."
Section 2.1.5 The Bylaws of Merger Sub in effect at and as of the
Effective Time shall be the Bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 2.1.6 From and after the Effective Time, until successors
are duly elected or appointed and qualified in accordance with applicable law,
(a) the directors of Merger Sub at the Effective time shall be the directors of
the Surviving Corporation, and (b) the officers of the Company at the Effective
Time shall be the officers of the Surviving Corporation.
Section 2.1.7 At and as of the Effective Time, the Company Shares
shall be converted into the right to receive an aggregate amount equal to
$62,500,000 (the "Merger Consideration") which amount, subject to adjustment
pursuant to Section 2.2, Buyer shall cause the Surviving Corporation to pay to
CEX at Closing as follows:
(a) by payment to CEX of $43,000,000 in cash or immediately
available funds;
(b) by the execution and delivery to CEX of a promissory note of the
Surviving Corporation in the principal amount of $7,500,000 in the form attached
hereto as Exhibit D (the "Short-Term Note");
(c) by the execution and delivery to CEX of a promissory note of the
Surviving Corporation in the principal amount of $7,700,000, subject to
adjustment as set forth in Section 2.2.1, in the form attached hereto as Exhibit
E (the "Long-Term Note"); and
(d) by the execution and delivery to CEX of a promissory note of the
Surviving Corporation in the principal amount of $4,300,000 in the form attached
hereto as Exhibit F (the "Convertible Note").
The Promissory Notes shall be subordinate to the debt obligations of the Company
owing to GE and Bayview as set forth more completely in one or more
Intercreditor Agreements, dated as of the Closing Date, among GE, Bayview and
CEX (the "Intercreditor Agreements").
Section 2.1.8 At and as of the Effective Time, each share of common
stock of Merger Sub shall be converted into one share of common stock of the
Surviving Corporation.
SECTION 2.2 ADJUSTMENT OF THE MERGER CONSIDERATION.
Section 2.2.1 On the Closing Date the Merger Consideration shall be
increased or decreased on a dollar-for-dollar basis by an amount equal to the
increase or decrease, as the case may be, in the Company's Shareholder's Equity
on August 28, 1999 (the "Effective Date"), as compared to the Company's
Shareholder's Equity as calculated from the Company's balance
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sheet as of July 3, 1999 (the "Beginning Balance Sheet"), a copy of which
(together with the subject calculation) is attached hereto as Exhibit G.
"Shareholder's Equity" shall mean, at any point in time, subject to Section
2.2.4 below, the total value of the Company's assets as reflected on its balance
sheet for that date less the total amount of the Company's liabilities as
reflected on its balance sheet for such date. For purposes of the Closing Date
adjustment to the Merger Consideration, the parties shall use an estimated
Effective Date balance sheet (the "Estimated Effective Date Balance Sheet"),
which shall be prepared by CEX in a manner consistent with the preparation of
the Beginning Balance Sheet. Any adjustment required by this Section 2.2.1 shall
be made by increasing or decreasing, as the case may be, the principal amount of
the Long-Term Note.
Section 2.2.2 Within 10 business days after the Closing Date, CEX
shall prepare and deliver to Buyer the final Effective Date balance sheet (the
"Final Effective Date Balance Sheet"). The Merger Consideration, as adjusted and
paid on the Closing Date, shall be increased or decreased on a dollar-for-dollar
basis by the amount by which the Shareholder's Equity on the Final Effective
Date Balance Sheet is greater than or less than the Shareholder's Equity on the
Estimated Effective Date Balance Sheet (the "Final Adjustment Amount"). Any
adjustment required by the calculation of the Final Adjustment Amount shall be
made by increasing or decreasing, as the case may be, the principal amount of
the Long-Term Note by amending the Long-Term Note (with any such amendment being
effective as of the Closing Date) as appropriate within three business days
following the Settlement Date.
Section 2.2.3 Following the Effective Date and until the Closing
Date, or, if requested by Buyer, until a date no later than five business days
following the Closing Date, CEX will continue its established cash management
practices with respect to the Company, including "sweeping" cash from the
Company's accounts on a daily basis and advancing cash to the Company's payroll
and disbursement accounts as needed to cover checks presented for payment. Not
later than ten business days following the Closing, CEX shall present Buyer with
a report indicating CEX's daily cash receipts from and disbursements to the
Company subsequent to the Effective Date (the "Cash Reconciliation Report"). The
net amount of all such receipts or disbursements as the case may be, for such
period, shall decrease or increase, respectively, the Merger Consideration and
shall, within three business days following the Settlement Date, be paid in cash
or immediately available funds by Buyer or the Company to CEX, in the case of an
increase in the Merger Consideration attributable to net cash disbursements, or
to the Company by CEX, in the case of any decrease in the Merger Consideration
attributable to net cash receipts.
Section 2.2.4 The Beginning Balance Sheet, the Estimated Effective
Date Balance Sheet and the Final Effective Date Balance Sheet shall be prepared
in accordance with generally accepted accounting principles consistently applied
to each of the three balance sheets, subject to the following parameters: (i)
all inter-company debt owed to or by the Company and its Subsidiaries, on the
one hand, and CEI and its Continuing Affiliates, on the other hand, shall be
excluded as a liability from the determination of Shareholder's Equity and such
debt will be forgiven or otherwise eliminated as of the Effective Date; (ii)
consistent with the Section 338(h)(10) election required under the Tax Sharing
and Indemnification Agreement, deferred income tax assets and liabilities and
any income tax payables or receivables will be retained by CEX and thus not
included on the balance sheets; (iii) as to those liabilities which are
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accrued on both the Beginning Balance Sheet and the Final Effective Date Balance
Sheet which involve estimates of future liability including, without limitation,
workers compensation, auto liability and litigation, no change in the amount of
such accruals shall be made based on changes in estimates or methodology; and
(iv) all assets and liabilities of the Trucking Subsidiaries, other than the
Trucking Claims, have been and shall be excluded from the balance sheets.
Section 2.2.5 Buyer shall, within 15 business days of its receipt of
(i) the Final Effective Date Balance Sheet, and (ii) the Cash Reconciliation
Report, deliver written objections thereto to CEX, failing which the Final
Effective Date Balance Sheet and the Cash Reconciliation Report shall be deemed
to have been agreed upon as delivered by CEX. If Buyer and CEX fail to reach
agreement on Buyer's written objections within 15 business days from the date of
Buyer's written notice of objections with respect to one or both of such items,
PricewaterhouseCoopers, LLP, the independent auditors of CEX, and Buyer's
independent auditors shall jointly select a third independent auditor of
recognized national standing (the "Expert") to resolve the disagreement. The
determination by such Expert shall be final and binding on the parties, and the
Long-Term Note shall be amended as required by such determination (pursuant to
Section 2.2.2). Buyer and CEX shall use their best efforts to cause such Expert
to make its determination within 15 business days of its engagement. The fees
and expenses of the Expert shall be borne equally by Buyer and the Company, on
the one hand and CEX, on the other hand.
Section 2.2.6 If an amendment of the Long-Term Note is required
pursuant to the provisions of Section 2.2.2, the Company shall, and Buyer shall
cause the Company to, issue within three business days of the Settlement Date,
in replacement of the then existing Long-Term Note, a replacement note of like
tenor, but reflecting the revised principal amount thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer hereby
represents and warrants to CEX as follows, which representations and warranties
are, as of the date hereof, and will be, as of the Closing Date, true and
correct:
Section 3.1.1 Due Organization. Buyer and Merger Sub are
corporations duly incorporated, validly existing and in good standing, under the
laws of their jurisdiction of incorporation.
Section 3.1.2 Due Authorization. Buyer and Merger Sub have the full
corporate power and authority to enter into and perform this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Ancillary
Agreements by Buyer and Merger Sub, the consummation of transactions
contemplated hereby and thereby, and the performance by Buyer and Merger Sub of
all of their respective obligations under this Agreement and the Ancillary
Agreements have been duly authorized and approved by Buyer and Merger Sub. This
Agreement has been, and at Closing the Ancillary Agreements will be, duly
executed and delivered by a duly authorized officer of Buyer and Merger Sub to
the extent each is a party thereto.
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Section 3.1.3 Enforceability. This Agreement constitutes, and the
Ancillary Agreements will constitute, the legal, valid and binding obligation of
Buyer and Merger Sub, enforceable against Buyer and Merger Sub in accordance
with its respective terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, moratorium, fraudulent transfer or other
similar laws affecting creditors' rights generally or by principles governing
the availability of equitable remedies.
Section 3.1.4 No Conflict. Neither the execution and delivery of
this Agreement or the Ancillary Agreements by Buyer or Merger Sub, nor the
consummation by Buyer or Merger Sub of the transactions contemplated hereby or
thereby, will violate, conflict with or result in a breach of any of the terms,
conditions or provisions of (a) Buyer's or Merger Sub's certificate of
incorporation, as amended, by-laws, as amended, or other organizational
instruments, (b) any Law applicable to Buyer or any of its Subsidiaries or any
of their respective properties or assets, or (c) any order, writ, injunction,
judgment or decree of any Governmental Authority or any arbitration award
applicable to Buyer or its Subsidiaries or any of their respective properties or
assets, except in the case of clauses (b) and (c) above, for such violations
conflicts or breaches that in the aggregate, would not have a Material Adverse
Effect on Buyer or to interfere with Buyer's or Merger Sub's ability to
consummate this Agreement, the Ancillary Agreements or the transactions
contemplated hereby or thereby.
Section 3.1.5 No Contract Conflict. Neither the execution and
delivery of this Agreement or the Ancillary Agreements by Buyer or Merger Sub,
nor the consummation by Buyer or Merger Sub of the transactions contemplated
hereby or thereby will conflict with, or result in a breach or give rise to a
default or violation on the part of Buyer or any of its Subsidiaries under any
obligation, lease, license, agreement, contract, plan, or other arrangement,
which would be reasonably likely to have a Material Adverse Effect on Buyer or
to interfere with Buyer's or Merger Sub's ability to consummate this Agreement,
the Ancillary Agreements or the transactions contemplated hereby or thereby.
Section 3.1.6 No Litigation Conflict. There is no action, suit or
proceeding pending or, to Buyer's knowledge, threatened against or affecting
Buyer or any of its Subsidiaries or any of their respective properties or
assets, at law or in equity, or before any Governmental Authority, which would
be reasonably likely to have a Material Adverse Effect on Buyer or to interfere
with Buyer's or Merger Sub's ability to consummate this Agreement, the Ancillary
Agreements or the transactions contemplated hereby or thereby.
Section 3.1.7 Approvals. Except for (i) any required filings with
the Interstate Commerce Commission (the "ICC") or the Department of
Transportation (the "DOT"), and (ii) any required filings with or approvals from
public service commissions or public utility commissions, no notice, filing,
authorization, approval, order or consent of any Governmental Authority or any
third party is required to be given, filed or obtained by Buyer or any of its
Subsidiaries from any Governmental Authority or any third party in connection
with the execution, delivery and performance by Buyer or Merger Sub of this
Agreement, the Ancillary Agreements or the transactions contemplated hereby or
thereby.
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Section 3.1.8 Buyer's Financial Capacity. Buyer has, and will have
at all times prior to Closing, available to it adequate funds or written
financing commitment letters, copies of which commitment letters have been
provided to CEX (the "Commitment Letters") in place, (i) to consummate the
transactions contemplated hereby and by the Ancillary Agreements and to perform
its obligations hereunder and thereunder and (ii) to fund the post-Closing
operations of the Company and its Subsidiaries. No bankruptcy proceedings are
pending or contemplated by or threatened against Buyer or any of its
Subsidiaries. Buyer is not insolvent and the execution of this Agreement, and
the consummation of the transactions contemplated hereunder and under the
Commitment Letters, will not render Buyer or the Company and its Subsidiaries
insolvent or unable to pay their respective debts as they mature.
Section 3.1.9 Access to Information. Buyer has had an opportunity to
discuss the business, condition, management and financial affairs of the Company
and its Subsidiaries with its management, and the opportunity to review in
detail the properties, operations, liabilities, obligations, books, accounts,
records, contracts and documents of the Company and its Subsidiaries; provided,
however, that no investigation by Buyer shall impair the ability of Buyer to
rely on the representations and warranties of CEX.
Section 3.1.10 No Commissions. Except for Persons whose fees and
expenses will solely be the obligation of Buyer, Buyer has not retained any
broker, investment banker or other Person entitled to any commission or similar
compensation in connection with this Agreement or the transactions contemplated
by this Agreement.
Section 3.1.11 SEC Reports and Financial Statements. Since June 30,
1998, Buyer has filed all forms, reports and other documents required to be
filed by Buyer with the Securities and Exchange Commission (the "Commission").
As of their respective dates, the Buyer SEC Reports complied as to form in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder applicable to
such Buyer SEC Reports and, except to the extent that information contained in
any Buyer SEC Report has been revised or superseded by a later Buyer SEC Report
filed and publicly available prior to the date of this Agreement, none of the
Buyer SEC Reports contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading on the dates that they were filed. The financial
statements of Buyer included in the Buyer SEC Reports complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto, were prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by the Commission or as otherwise indicated
in the notes thereto) and presented fairly in all material respects the
consolidated financial position of the Buyer and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
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Section 3.1.12 Capitalization.
(a) At August 25, 1999:
(i) Buyer's authorized capital stock consisted of (A)
75,000,000 shares of Buyer's common stock, $.004 par value ("Buyer's
Common Stock"), of which 10,758,149 shares were issued and
outstanding, and (B) 25,000,000 authorized shares of preferred
stock, none of which are issued and outstanding.
(ii) There were outstanding stock options, warrants,
rights or subscriptions to purchase an aggregate of 5,186,055 shares
of Buyer's Common Stock.
(b) As of the date hereof, other than as referred to in Section
3.1.12(a)(i) above and other than shares of Buyer's Common Stock issued in
connection with the exercise of stock options or warrants after August 25, 1999,
there are no outstanding shares of capital stock or other voting securities of
Buyer.
(c) As of the date hereof, except (i) for options issued since
August 25, 1999 with an exercise price per share equal to the fair market value
of Buyer's Common Stock on the grant date, (ii) for options referred to in
Section 3.1.12(a)(ii) above, and (iii) the warrants to be issued to Bayview on
the Closing Date, there are no outstanding options, warrants, rights or
subscriptions to purchase Buyer's Common Stock or other securities of Buyer
convertible into or exchangeable for shares of Buyer's Common Stock.
Section 3.1.13 No Contingencies to Closing. Buyer represents and
warrants that (i) there are no contingencies to Buyer's ability to close the
Merger, other than those set forth in the Commitment Letters, (ii) Buyer has
delivered to CEX and its Representatives, and will from time to time delivery,
promptly after receipt thereof by Buyer or its Representatives, copies of all
commitment letters, information requests, documents (both drafts and final) and
all written correspondence related thereto, (iii) Buyer has completed all
required due diligence in connection with its evaluation of the Merger;
provided, however, that the foregoing shall not prevent Buyer from conducting
such additional investigations as may be required to verify the accuracy of
CEX's representations and warranties set forth herein; and provided further that
such additional investigations shall not modify or impair the rights of the
parties under Sections 8.1.4 and 8.3, (iv) Buyer has obtained, based on the
results of such due diligence, the approval of its board of directors to
consummate the Merger, (v) no filing will be required under the HSR Act with
respect to the Merger, and (vi) there are no consents required by Buyer which,
if not obtained, would prevent Buyer from consummating the Merger.
Section 3.1.14 Warrants. Buyer has outstanding warrants (the
"Warrants") to acquire 2,227,749 shares of Buyer's Common Stock, which warrants
(i) are exercisable at a price of $1.75 per share of Buyer's Common Stock, and
(ii) are subject to a mandatory redemption provision whereby Buyer has the
right, upon thirty days' written notice to the Warrant holders, to purchase the
Warrants if the Warrants remain unexercised at the expiration of such 30-day
period. Any conditions precedent to Buyer's exercise of its mandatory redemption
rights under the Warrants have been satisfied and Buyer's board of directors has
approved the delivery of any
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required redemption notices (the "Redemption Notices") to the Warrant holders
immediately upon the public announcement of the Merger.
SECTION 3.2 CEX'S REPRESENTATIONS AND WARRANTIES. CEX hereby
represents and warrants to Buyer as follows, which representations and
warranties are, as of the date hereof, and will be, as of the Closing Date, true
and correct, except as set forth on the Company Disclosure Schedule:
Section 3.2.1 Due Organization. CEX and the Company are corporations
duly incorporated, validly existing and in good standing, under the laws of
their jurisdiction of incorporation. Each of the Subsidiaries of the Company is
a corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, except for those Subsidiaries
identified as inactive on Schedule 3.2.7. The Company and each of its
Subsidiaries is qualified to do business in each jurisdiction in which the
nature of its business or the ownership of its properties requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect on the Company.
Section 3.2.2 Due Authorization. Subject to Section 5.2.5, each of
CEX and the Company has the full corporate power and authority to enter into and
perform this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. Subject to Section 5.2.5, the
execution and delivery of this Agreement and the Ancillary Agreements by CEX and
the Company, and the performance by CEX and the Company of all of their
obligations under this Agreement and the Ancillary Agreements have been duly
authorized and approved by CEX and the Company. This Agreement has been, and at
Closing the Ancillary Agreements will be, duly executed and delivered by duly
authorized officers of CEX and the Company, as the case may be.
Section 3.2.3 Enforceability. This Agreement constitutes, and the
Ancillary Agreements will constitute, the legal, valid and binding obligation of
CEX and the Company enforceable against them in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
reorganization, moratorium, fraudulent transfer or other similar laws affecting
creditors' rights generally or by principles governing the availability of
equitable remedies.
Section 3.2.4 No Conflict. Neither the execution and delivery of
this Agreement or the Ancillary Agreements by CEX and the Company, nor the
performance by CEX and the Company of their respective obligations hereunder or
thereunder, will violate, conflict with or result in a breach of any of the
terms, conditions or provisions of (a) CEX's, the Company's or any of the
Company's Subsidiary's Certificate of Incorporation or Articles of
Incorporation, as the case may be, as amended, by-laws, as amended, or other
organizational documents, (b) any Law applicable to CEX, the Company or any of
its Subsidiaries or any of their respective properties or assets, or (c) any
order, writ, injunction, judgment or decree of any Governmental Authority or any
arbitration award applicable to CEX, the Company or any of its Subsidiaries or
any of their respective properties or assets, except in the case of clauses (b)
and (c) above, for such violations, conflicts or breaches that, in the aggregate
would not have a Material Adverse
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Effect on the Company or interfere with CEX's or the Company's ability to
consummate this Agreement, the Ancillary Agreements or the transactions
contemplated hereby or thereby.
Section 3.2.5 No Contract Conflict. Subject to obtaining the
consents set forth on Schedule 3.2.5 (the "Required Consents"), neither the
execution and delivery of this Agreement or the Ancillary Agreements by CEX and
the Company, the performance by CEX and the Company of its respective
obligations hereunder or thereunder, nor the consummation of the transactions
contemplated hereby or thereby will conflict with, result in a breach of, or
constitute a default under any obligation, lease, license, agreement, contract
or plan, except for such conflicts, breaches and defaults that would not have a
Material Adverse Effect on the Company or materially interfere with CEX's, the
Company's or any of its Subsidiaries' ability to consummate this Agreement, the
Ancillary Agreements or the transactions contemplated hereby or thereby.
Section 3.2.6 Approvals. Except for (i) any required filings with or
approvals from the ICC or the DOT, (ii) any required filings with or approvals
from public service commissions or public utility commissions, and (iii) those
notices, filings, authorizations, approvals, orders or consents set forth on
Schedule 3.2.6, no material notice, filing, authorization, approval, order or
consent of any Governmental Authority is required to be given, filed or obtained
by CEX, the Company or any of its Subsidiaries from any Governmental Authority
in connection with the execution, delivery and performance by CEX or the Company
of this Agreement, the Ancillary Agreements or the transactions contemplated
hereby or thereby.
Section 3.2.7 Title to Stock.
(a) CEX has good and valid title to the Company Shares, free and
clear of any Encumbrance, and has the right, power, authority and capacity to
sell and transfer the Company Shares to Buyer in the manner provided herein,
free and clear of any Encumbrance. At the Closing, Buyer will receive good and
valid title to the Company Shares, free and clear of any Encumbrance (other than
Encumbrances arising from acts or omissions of Buyer). The Company Shares are
not subject to any voting trust or voting agreement, nor is any proxy in effect
with respect to any of the Company Shares. The Company Shares represent all of
the issued and outstanding shares of capital stock of the Company of any class.
(b) The Subsidiaries of the Company are identified on Schedule
3.2.7, which also sets forth the jurisdiction of incorporation of each
Subsidiary and the percentage of each Subsidiary's outstanding capital stock or
other equity interest owned by the Company or by another Subsidiary of the
Company, in each case identifying the stock or equity owners. With respect to
the shares of capital stock issued by the Subsidiaries of the Company, the
Company owns beneficially and of record all of such shares of stock, free and
clear of any Encumbrance. Except for the Subsidiaries of the Company identified
on Schedule 3.2.7, the Company has no equity interest in any corporation,
partnership, limited liability company or other entity.
Section 3.2.8 Capitalization. The authorized capital stock of the
Company consists of 3,000 shares of common stock, par value $.001 per share, of
which one share has been issued and is outstanding. All of the issued and
outstanding shares of common stock of the Company
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and each of its Subsidiaries have been duly authorized and validly issued, and
are fully paid and nonassessable and are not subject to any preemptive rights.
None of CEX, the Company or any of its Subsidiaries is a party to any
outstanding subscriptions, contracts to purchase or issue capital stock or other
securities, conversion privileges, options, warrants or rights of any kind, with
respect to the purchase, sale or voting of the capital stock of the Company or
any of its Subsidiaries.
Section 3.2.9 Articles of Incorporation, Bylaws. The Articles of
Incorporation and By-Laws of the Company and its Subsidiaries, as amended, which
have been made available to Buyer for its inspection are complete and correct,
have not been amended further and are in full force and effect.
Section 3.2.10 Financial Statements. Attached as Schedule 3.2.10A
are the audited combined financial statements of the Company and its
Subsidiaries, and the related combined statements of operations, cash flows and
stockholders' equity of the Company as of and for the periods ended January 30,
1999, January 30, 1998 and March 1, 1997 (the "Audited Financial Statements"),
and an internal statement of operations and balance sheet for the six-month
period ended July 31, 1999 (the "Internal Financial Statements"). The Audited
Financial Statements and, except as set forth on Schedule 3.2.10B, the Internal
Financial Statements present fairly in all material respects the assets,
liabilities, and results of operations of the Company and its Subsidiaries in
accordance with generally accepted accounting principles.
Section 3.2.11 Property.
(a) Schedule 3.2.11A lists all material real property interests
owned or leased by the Company or any of its Subsidiaries as of the date hereof
(the "Real Property"). True and complete copies of all real property leases, as
amended to date, have been delivered or made available to Buyer. The Company or
one of its Subsidiaries has such title or leasehold interest to the Real
Property as is necessary to permit the operation of such properties,
substantially in the manner such properties are operated by the Company and its
Subsidiaries as of the date hereof, free and clear of any and all Encumbrances,
except for any such failures and Encumbrances that would not reasonably be
expected to have a Material Adverse Effect on the Company. CEX does not have
Knowledge of any actual or proposed condemnation, requisition or taking by any
public authority of any portion of the Real Property.
(b) Except as set forth on Schedule 3.2.11B, the Company and each of
its Subsidiaries has good and valid title to all equipment, machinery, motor
vehicles, furniture, fixtures, computer hardware and other tangible personal
property (collectively, "Personal Property") owned by it (including, without
limitation, the assets referred to in the Financial Statements) and a good and
valid leasehold interest in all Personal Property leased by it, in each case
free and clear of any and all Encumbrances.
Section 3.2.12 Intellectual Property. Schedule 3.2.12 lists all
material patents, trademarks, service marks, trade names, copyrights and
applications therefor owned by or registered in the name of the Company or any
of its Subsidiaries as of the date hereof. Except as set forth on Schedule
3.2.12, to CEX's Knowledge, none of the Company or any of its
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Subsidiaries is infringing, in any material respect, on any valid patent right,
trademark, service mark, trade name or copyright of others, nor to CEX's
Knowledge, are any such material valid rights owned by the Company or any of its
Subsidiaries being infringed upon by any other party in any material respect, in
any case, except for any of the foregoing that would not reasonably be expected
to have a Material Adverse Effect on the Company.
Section 3.2.13 Material Contracts.
(a) True and correct copies of all material written contracts (the
"Material Contracts") to which the Company or its Subsidiaries is a party or by
which their assets will be bound after the Closing were made available to Buyer
in the Data Room or through the due diligence process. Except as otherwise set
forth in Schedule 3.2.13A, to CEX's Knowledge, the Material Contracts are in
full force and effect, are valid, binding and enforceable against the parties
thereto, subject to equitable remedies and to bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium or similar laws affecting
creditor's rights generally. No default by the Company or any of its
Subsidiaries or, to CEX's Knowledge, by the other contracting parties has
occurred thereunder which would reasonably be expected to have a Material
Adverse Effect on the Company. To CEX's Knowledge, no event, occurrence or
condition exists which, with the lapse of time, or the giving of notice or both,
would become a default by the Company, any of its Subsidiaries or by the other
contracting parties thereunder, which would reasonably be expected to have a
Material Adverse Effect on the Company.
(b) Except as set forth on Schedule 3.2.13B, neither the Company nor
any of its Subsidiaries is a party to or bound by any contract:
(i) prohibiting or limiting the ability of the Company
or any of its Subsidiaries to (A) engage in any line of business, or
(B) compete with any Person; or
(ii) to CEX's Knowledge, obligating the Company or any
of its Subsidiaries to pay any Person any money (other than
retention and sale incentive bonuses to employees of the Company or
its Subsidiaries listed on Schedule 3.2.13B) as a result of the
execution and delivery of this Agreement or the consummation of the
transaction contemplated hereby.
Section 3.2.14 Labor Matters. Neither the Company nor any of the
Subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement with a labor union or labor organization. Except as
set forth in Schedule 3.2.14, there is no unfair labor practice or labor
arbitration proceeding pending or, to CEX's Knowledge, threatened against the
Company or the Subsidiaries relating to their business. To CEX's Knowledge,
there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of the Company or any of its Subsidiaries.
Section 3.2.15 Litigation. Except as set forth in Schedule 3.2.15,
(i) there are no actions, suits, audits or proceedings pending or, to CEX's
Knowledge, threatened, against the Company or any of its Subsidiaries which
would reasonably be expected to result in a Material Adverse Effect on the
Company, and (ii) there are no outstanding judicial or administrative
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orders or decrees to which the Company or any of its Subsidiaries is subject,
other than those applicable generally to the industry in which the Company and
its Subsidiaries operate.
Section 3.2.16 Environmental Compliance. Except as described on
Schedule 3.2.16, to the Knowledge of CEX:
(a) The Company and each of its Subsidiaries is in compliance with
all applicable Environmental Laws, except for violations or failures to comply
which would not reasonably be expected to result in a Material Adverse Effect on
the Company. None of CEX, with respect to the Company and its Subsidiaries, or
the Company or any of its Subsidiaries has received any written notice of
violation, cessation order, notice of fine or penalty, notice of proposed
assessment or other written notice from any Governmental Authority that CEX,
with respect to the Company and its Subsidiaries, or the Company or any of its
Subsidiaries, is not in compliance with any Environmental Laws or Permits and
which relate to any matters or conditions that are not, or have not been,
resolved as of the date hereof except for such matters or conditions which, if
not resolved as of the date hereof, would not reasonably expected to result in a
Material Adverse Effect on the Company.
(b) There have been no releases of Hazardous Substances by any of
the Company or any of its Subsidiaries on, in, under or over the Company
Properties, except (i) in accordance with a valid Permit or (ii) for such
releases that would not reasonably be expected to result in a Material Adverse
Effect on the Company.
(c) None of the Company Properties is used to produce, manufacture,
process, generate, store, use, handle, recycle, treat, dispose of, manage, ship
or transport Hazardous Substances, other than as customary in the normal course
of operations of the type conducted or previously conducted on such real
property and except for any such activities that would not reasonably be
expected to have a Material Adverse Effect on the Company.
(d) None of the Company or any of its Subsidiaries has received
notice from any Governmental Authority that it is a "potentially responsible
party" under Section 107 of CERCLA for any matter or matters that has not been
or will not be resolved as of the Closing Date which, if not resolved as such
date, would reasonably be expected to result in a Material Adverse Effect on the
Company.
(e) There is no Environmental Claim pending or, to CEX's Knowledge,
threatened against the Company or any of its Subsidiaries or against any Person
or entity whose liability for such Environmental Claim has been contractually
retained or assumed by the Company or any of its Subsidiaries, except for
Environmental Claims that, in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company. To CEX's Knowledge, there are no
past or present actions, activities, circumstances, conditions, events or
incidents, that would reasonably be expected to form the basis of any
Environmental Claim against the Company or any of its Subsidiaries or against
any Person or entity whose liability for such Environmental Claim has been
contractually retained or assumed by the Company or any of its Subsidiaries,
except for Environmental Claims that would not reasonably be expected to have a
Material Adverse Effect on the Company.
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Section 3.2.17 Absence of Changes or Events. Except as may be set
forth in Schedule 3.2.17, since July 3, 1999, none of the Company or any of its
Subsidiaries has:
(a) declared, set aside, or paid any dividend or distribution to its
stockholders in respect of their shares of capital stock, other than any of the
foregoing declared, set aside or paid by any of the Company's Subsidiaries to
the Company;
(b) except in the ordinary course of business, incurred or committed
to incur (i) any single capital expenditures in an amount in excess of $50,000
or (ii) aggregate capital expenditures in an amount in excess of $100,000;
(c) made any change in its authorized or actual capitalization;
(d) except in the ordinary course of business or in connection with
the settlement of intercompany transactions, sold or transferred any assets or
properties for consideration with a value in excess of $50,000 individually or
$100,000 in the aggregate;
(e) suffered any damage, destruction or casualty loss not covered in
all material respects by insurance which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on the Company;
(f) increased the salary or severance or termination pay payable to
any employee or increased any benefit plan obligations, other than (A) raises
and compensation adjustments in the ordinary course of business, and (B)
increases for which the Buyer, the Company or any of its Subsidiaries will not
be responsible;
(g) amended its Certificate of Incorporation or By-Laws or taken any
action in contemplation of an amendment to such Certificate of Incorporation or
By-Laws or in contemplation of its liquidation of dissolution; or
(h) entered into an agreement to do any of the foregoing.
Section 3.2.18 Compliance with Laws. To the Knowledge of CEX, except
as provided on Schedule 3.2.18 hereto, the Company and its Subsidiaries are in
compliance with all Laws of all Governmental Authorities applicable to its
business, operations and assets, except for such failures to comply that would
not reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.2.19 Licenses, Permits, Approvals. The Company or one or
more of its Subsidiaries possess all Permits which are required in order to
operate its businesses as currently operated, other than those which the failure
to possess would not reasonably be expected to have a Material Adverse Effect on
the Company.
Section 3.2.20 Insurance. To CEX's Knowledge, Schedule 3.2.20 lists
all policies of fire, liability, or other material forms of third party
insurance issued in the name of the Company
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or any of its Subsidiaries. Buyer acknowledges that such insurance policies will
not be available to the Company and its Subsidiaries after the Closing.
Section 3.2.21 Employee Benefit Plans. To CEX's Knowledge and except
as set forth on Schedule 3.2.21:
(a) Schedule 3.2.21 lists all employee benefit plans (as defined in
Section 3(3) of ERISA) and all deferred compensation, bonus, incentive
compensation, equity-based, severance and fringe benefit plans, arrangements or
agreements, in effect as of the date hereof, with respect to which
contributions, premiums or other payments are made or required to be made by the
Company or any of its Subsidiaries with respect to any current or former
employees of the Company or any of its Subsidiaries (the "Plans"). Schedule
3.2.21 identifies each Plan as either (i) a Plan maintained by the Company or
one of its Subsidiaries ("Company Plan") or (ii) a Plan maintained by CEI or any
of its ERISA Affiliates (other than the Company or any of its Subsidiaries), but
under which the Company or any of its Subsidiaries is a participating employer
("CEI Plan"). The employees of the Company in Australia, Canada, and the United
Kingdom participate in government sponsored, mandated and administered plans
pursuant to the laws of their applicable jurisdiction (each a "Foreign Plan").
(b) With respect to the Plans, such Plans are in compliance, in all
material respects, with applicable Laws, except where non-compliance would not
reasonably be expected to have a Material Adverse Effect on the Company.
(c) Each Company Plan, which is intended to be "qualified" within
the meaning of Section 401(a) of the Code, has received a favorable
determination letter from the Internal Revenue Service. Each Foreign Plan that
is required to be qualified or registered with any governmental authority as a
condition to the receipt of favorable tax treatment under the laws of a foreign
country or otherwise, has been so qualified or registered, and nothing has
occurred that would allow the qualification or registration to be revoked with
respect to any Foreign Plan, except for revocations that would not reasonably be
expected to have a Material Adverse Effect on the Company.
(d) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by the Company or any of its Affiliates with
respect to any ongoing, frozen or terminated "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). No Plan is a single-employer plan within the meaning of
Section 4001(a)(15) of ERISA. Further, to CEX's Knowledge, no defined benefit is
provided under any Foreign Plan.
(e) No withdrawal liability under Subtitle E of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its Affiliates
with respect to any "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (regardless of whether based on contributions of an ERISA
Affiliate). No Plan is a multiemployer plan within the meaning of Section
4001(a)(3).
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(f) No action, suit or proceeding with respect to the administration
of any Company Plan (other than routine claims for benefits) is pending or
threatened that would reasonably be expected to have a Material Adverse Effect
on the Company. Each Company Plan that is a "group health plan" (as defined in
Section 607(1) of ERISA and Section 5000(b)(1) of the Code), has complied with
the requirements of Part 6 of Subtitle B of Title I of ERISA and of Section
4980B of the Code ("COBRA"), except where non-compliance would not reasonably be
expected to have a Material Adverse Effect on the Company.
(g) No "prohibited transaction" has occurred with respect to any
Plan, and no breach of fiduciary duty has occurred with respect to any Plan
which may have a Material Adverse Effect on the Company.
(h) No Plan which provides life insurance or medical benefits
provides such benefits to former employees except as required by COBRA.
(i) No Plan contains any provision (including any provision in any
summary plan description or other document) that would prohibit the Company from
amending or terminating such Plan (or discontinuing its status as a
participating employer under such Plan), or contains any provision that would
require an additional contribution or the payment of additional compensation or
other consideration as a condition to termination of the Plan, or otherwise
impose any liability on the Company as a result of termination of the Plan,
except for benefits accrued prior to termination or except as otherwise required
under ERISA or the Code.
(j) All contributions (including all employer contributions and
employee pay reduction contributions) which are due have been paid to each Plan.
Further, the Company and each of its Subsidiaries have at all times satisfied
all contribution obligations to all applicable government sponsored pension,
health or welfare programs in all foreign countries in which it has operations
(e.g., the Canada Pension Plan).
Section 3.2.22 No Commissions. Except for Deutsche Banc Alex. Brown
Incorporated, whose fees and expenses are the obligation of CEX, and for other
Persons whose fees and expenses will solely be the obligation of CEX, none of
CEX or the Company has retained any broker, investment banker or other Person
entitled to any commission or similar compensation in connection with this
Agreement or the transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS AND AGREEMENTS
SECTION 4.1 COVENANTS AND AGREEMENTS OF BUYER. Buyer further
covenants and agrees that:
Section 4.1.1 Confidentiality. The provisions of the Confidentiality
Agreement, dated as of March 30, 1999, between Buyer and CEX (the
"Confidentiality Agreement") shall survive the execution and delivery of this
Agreement and shall apply to any information regarding the
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Company or any of its Subsidiaries disclosed to or obtained by Buyer, any of its
Affiliates or any of their respective businesses or operations.
Section 4.1.2 Covenants in Connection With the Merger. Without
limiting the obligations of any party pursuant to the Confidentiality Agreement,
in the event that the contemplated transactions under this Agreement are not
consummated for any reason, Buyer will promptly, upon the request of CEX or the
Company, deliver to CEX a certification that all such confidential information
disclosed to or obtained by Buyer, its Affiliates or their respective
Representatives has been destroyed or returned to CEX. After the Closing, except
as otherwise provided herein, Buyer shall be free to disclose any Evaluation
Material (as defined in the Confidentiality Agreement) to the extent such
Evaluation Material relates exclusively to the Company and its Subsidiaries.
Section 4.1.3 Employee Benefit Matters.
(a) Prior to the Closing and effective no later than the Closing,
CEX shall spin off that part of the CEI 401(k) Retirement Plan which holds the
accounts of the current and former employees of the Company and its Subsidiaries
(and their beneficiaries) and shall cause the Company to sponsor such spun-off
plan (the "New Plan"). After the Closing, Buyer agrees to sponsor the New Plan
or to cause the Company to continue to sponsor the New Plan for a period of at
least six months. Buyer may, in its sole discretion and subject to applicable
law, merge the New Plan into another 401(k) plan maintained by the Buyer or an
Affiliate, and, to the extent permitted by applicable law, such 401(k) plan will
be considered to be comparable to the New Plan (even if such plan provides
different contribution rates or investment options than the New Plan). CEX shall
not enter into any contract with any service provider with respect to the New
Plan that cannot be terminated at will without penalty to the Company. Further,
CEX shall not cause any investment option to be made available under the New
Plan that includes any provision for a back-end load, surrender charge or other
termination penalty in the event such investment option is discontinued under
the New Plan.
(b) Buyer shall, or shall cause the Company to, make available to
current employees of the Company and its Subsidiaries immediately prior to the
Closing (and their beneficiaries) coverage under welfare benefit plans which, in
the aggregate, is comparable to the coverage being received by such employees
under welfare benefit plans immediately prior to Closing. With respect to such
employees (and their beneficiaries), Buyer shall, or shall cause the Company to,
waive any pre-existing conditions or limitations and eligibility waiting periods
under any group health plans of Buyer, or Company, and, for the plan year in
which the Closing occurs, shall give each such employee credit toward applicable
deductibles and annual out-of-pocket limits for expenses incurred during such
plan year prior to the Closing. With respect to any employee (or beneficiary)
who loses coverage under the group health plan maintained by CEI as a result of
the transaction contemplated in this Agreement, CEI shall provide, or shall
cause to be provided, continuation coverage under COBRA for each electing
employee (or beneficiary). Without limiting the generality of the foregoing,
effective as of the Closing, Buyer and the Company shall be responsible and
liable for providing the appropriate COBRA notices to the current employees of
the Company and its Subsidiaries (and their beneficiaries) who experience a
"qualifying event" on or after the Closing and for providing (or continuing to
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provide) coverage required under COBRA with respect to employees (whether
current or former) of the Company and its Subsidiaries (and their beneficiaries)
who experience a "qualifying event" before, on or after the Closing.
Section 4.1.4 Other Obligations of Buyer. After the Effective Date,
Buyer shall be responsible for (i) any necessary restructuring costs, (ii) any
severance costs due the Company's employees as of and after the Effective Date
(except for payments to be made by CEX pursuant to Section 4.2.3(c)), (iii) all
health insurance claims of the Company's employees as of and after the Effective
Date, whether or not claims have been filed as of the Effective Date, and (iv)
any and all operating costs and other obligations of the Company, including,
without limitation, any and all payroll, insurance (worker's compensation, auto
liability, etc.) and lease obligations of the Company. Any such items paid by
CEX shall be for the account of Buyer.
SECTION 4.2 COVENANTS AND AGREEMENTS OF CEX AND THE COMPANY. CEX and
the Company further covenant and agree that until the Closing:
Section 4.2.1 Access to Information. The Company shall afford Buyer
access, during normal business hours and upon reasonable notice, to all of the
books, records, agreements and management of the Company for purposes consistent
with the provisions and intent of this Agreement; provided, however, that any
such investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the business of the Company or of CEX, and
provided further CEX shall allow Buyer and its representatives full access.
Section 4.2.2 Ordinary Course of Business. Except as otherwise
contemplated by this Agreement, as necessary to effect the transactions
contemplated by this Agreement or as set forth on Schedule 4.2.2, the Company
shall not enter into any material transaction outside of its ordinary course of
business without the consent of Buyer, including (i) the sale, issuance or
transfer of any of its capital stock, (ii) the borrowing from third parties of
money, (iii) the entering into or amending of compensation arrangements with any
employees, directors or officers of the Company, other than raises or
compensation adjustments in the ordinary course of business, (iv) the
acquisition or accrual of capital assets having an individual cost in excess of
$25,000, or an aggregate cost in excess of $100,000 or incur any liability in
excess of $50,000, (v) the merger or consolidation with any Person, or (vi)
entering into communications regarding this transaction with customers,
employees or vendors of the Company. Except as contemplated herein, the Company
shall use efforts consistent with the ordinary course of business to preserve
substantially intact its business, operations, assets and present relationships
with its customers, suppliers and employees.
Section 4.2.3 Intercompany Accounts; Cash Accounts; Other Matters.
(a) All intercompany accounts providing for the payment of any
amounts between the Company and its Subsidiaries, on the one hand, and CEX and
the Continuing Affiliates, on the other hand, shall as of the Effective Date be
settled by way of (i) offset to the intercompany account, or (ii) dividend to
the extent of retained earnings and then a return of capital if the amount is a
receivable on the Company's or applicable Subsidiary's books, or as an increase
of paid-in capital if the amount is a payable on the Company's or applicable
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Subsidiary's books as of the Closing Date, with no cash payments being made.
Intercompany indebtedness attributable after the Effective Date to cash receipts
from the Company by CEX and cash disbursements by CEX to the Company shall be
settled in the manner provided in Section 2.2.3.
(b) Except as otherwise expressly contemplated by this Agreement and
the agreements executed and delivered in connection herewith or as set forth on
Schedule 4.2.3, all agreements, arrangements and understandings between the
Company, its wholly owned Subsidiaries, on one hand, and CEX and the Continuing
Affiliates, on the other hand, whether or not in writing, shall automatically be
terminated and of no further force and effect, as of the Closing Date
(notwithstanding any contrary provision therein), and no Person shall have any
rights or claims under or in connection with any of the foregoing, including as
a result of any actions or inactions or alleged actions or inactions prior to
the Closing Date.
(c) CEX shall continue to fund CEX-approved operating and
restructuring costs for the Company through the Effective Date and shall pay all
retention and sale incentive bonuses to the Company's employees when due under
the CEX instituted retention and sale incentive plans (including, without
limitation, the plans listed on Schedule 3.2.13B) and all such payments shall be
for the account of CEX.
SECTION 4.3 CONTINUING JOINT COVENANTS AND AGREEMENTS.
Section 4.3.1 Consents of Others. Each party shall use its
reasonable efforts prior to the Closing to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated hereby, and to cooperate with the other in connection
with the foregoing, to obtain all authorizations, consents and permits required
of them to permit them to consummate the transactions contemplated by this
Agreement; provided that as to consents, CEX's and the Company's obligations
shall be limited to the Required Consents. Neither CEX, the Company nor Buyer
shall be required to file any lawsuit or take other legal action as against any
third party, make any amendment thereof or waive any rights thereunder, or pay
any amount, agree to any restriction or assume any obligation in connection
therewith and CEX, the Company and Buyer shall have no liability from any
failure to obtain any consent with respect to any Required Consents.
Section 4.3.2 Financing. Buyer shall take all steps necessary to
obtain the financing necessary to consummate the Closing and the transactions
contemplated hereby in accordance with the terms of this Agreement. Buyer agrees
that it shall (i) immediately upon the public announcement of the Merger, issue
a mandatory redemption notice for 100% of the Warrants, and shall cause 100% of
the cash proceeds received by the Buyer from the exercise of the Warrants to be
applied to the mandatory prepayment of the Short-Term Note (which amount shall
be applied first to the payment of accrued interest, with the balance applied in
reduction of principal), and (ii) immediately following the Closing, Buyer shall
use its reasonable best efforts to promptly obtain the credit facility
previously offered to Buyer by GE of up to $10 million secured by a first lien
on the property, plant and equipment of the Company and its Subsidiaries and, as
soon as possible, draw on such facility in an amount sufficient to prepay the
remaining
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outstanding balance due on the Short-Term Note. In the event that GE fails or
refuses to make such credit facility available, Buyer shall use its reasonable
best efforts to obtain similar financing from another asset-based lender in
order to prepay the Short-Term Note.
Section 4.3.3 Publicity. During the period prior to the Closing, the
parties shall consult in advance of all public announcements in respect of the
subject matter of this Agreement and, except as required by Law or regulations
of the SEC or any securities exchange, Buyer shall not issue any announcement of
or concerning the transactions contemplated by this Agreement without the prior
written consent of CEX. Except for such announcements and except as required by
Law or regulation of the SEC or any securities exchange, Buyer shall not
disclose the existence or terms of the transactions contemplated hereby without
the prior written consent of CEX.
Section 4.3.4 Guarantees.
(a) Replacement of Guarantees. Prior to the Closing, Buyer shall
cooperate with CEX, and at the request of CEX shall use its reasonable best
efforts, in order to cause itself, the Company or one or more of their
respective Affiliates to be substituted in all respects for CEX or any
Continuing Affiliate, effective as of the Closing, in respect of all Liabilities
and other obligations of CEX and any Continuing Affiliate under any guarantees,
equipment leases, indemnities, letters of credit, letters of comfort, surety
bonds, bid bonds, performance bonds and other obligations obtained or issued by
CEX or any of the Continuing Affiliates, or by which CEX or any of its
Continuing Affiliates is bound, for the benefit of the Company or any of its
Subsidiaries, including but not limited to the guarantees, equipment leases,
indemnities, letters of credit, letters of comfort, surety bonds, bid bonds,
performance bonds and other obligations set forth in Schedule 4.3.4
(collectively, the "Guarantees"), and to cause CEX and its Continuing Affiliates
to be fully released and discharged with respect thereto. Buyer shall not,
however, be required to obtain the release of the letters of credit and surety
bonds pertaining to the consolidated worker's compensation or auto liability
insurance programs administered by CEI for the joint benefit of the Company and
the domestic Continuing Affiliates (the portion of such letters of credit or
surety bonds attributable to workers compensation and auto liability of the
Company and its Subsidiaries is hereinafter referred to as the "Plan
Obligations"). CEX shall keep the Plan Obligations in place to the extent
required by the administrators of such plans; provided, however, that if any one
or more of the Plan Obligations is not released upon the stated maturity
thereof, Buyer shall pay (on or before the renewal date) the cost associated
with the renewal of such Plan Obligations. If some or all of the Guarantees have
not been replaced with guarantees of Buyer in a manner satisfactory to CEX at
the Closing, Buyer shall (i) continue to use reasonable best efforts
post-Closing to replace such Guarantees (other than the Plan Obligations) and to
cause CEX and the Continuing Affiliates to be fully released and discharged from
such Guarantees (other than the Plan Obligations), (ii) to the extent such
Guarantee is an Equipment Lease (as defined below) take such action as is set
forth in clause (b) below, and (iii) indemnify CEX and its Continuing Affiliate
with respect to such Guarantees pursuant to Section 4.3.4(c) below.
Post-Closing, Buyer and CEX shall continue to use all reasonable efforts to
obtain the release of CEX and its Continuing Affiliates from the Guarantees
(other than the Plan Obligations) as soon as possible, but in no event shall
such Guarantees be allowed to remain outstanding beyond one year from the date
of Closing. Notwithstanding the foregoing provisions
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of this Section 4.3.4(a), Buyer will not contact any party to any Guarantee or
any underlying obligation without the prior consent of CEX, such consent not to
be unreasonably withheld. Notwithstanding the foregoing, neither Buyer nor the
Company or any of its Subsidiaries shall have any obligation to secure
replacement Guarantees or Plan Obligations with respect to any portion of the
expiring Plan Obligations that relate to post-Closing assets or Liabilities of
CEX or the Continuing Affiliates.
(b) Treatment of Equipment Leases. In the event that Buyer is not
able to effect the substitution of Buyer, the Company or any of their respective
Affiliates for CEX or any of the Continuing Affiliates, and the full release and
discharge of CEX and its Continuing Affiliates, with respect to some or all of
the equipment leases listed in Schedule 4.3.4 (the "Equipment Leases"), as of
the Closing, Buyer and the Company shall assume and be jointly and severally
liable for all obligations and other Liabilities under any Equipment Lease which
relates to any property leased for the benefit of the Company and its
Subsidiaries (the "Equipment Lease Obligations") and shall make the lease
payments related to such Equipment Lease Obligations in the ordinary course of
business and shall be liable for all liabilities and obligations related
thereto, unless and until the Company's payments are rejected by the applicable
Lessor, in which case Buyer and the Company agree to provide CEX with
immediately available funds at least two business days prior to the date any
Equipment Lease Obligation payment (including Equipment Lease Obligations
relating to payments due upon termination of any Equipment Lease, payments
arising in connection with restoration or disposition of any equipment subject
to any Equipment Lease, or payments arising in respect of any other obligation
pursuant to any Equipment Lease) is due under any Equipment Lease so that CEX
can make payments to the respective obligees thereof. In lieu of the foregoing
Buyer may elect to have CEX acquire such equipment from the lessor on behalf of
the Company and Buyer and the Company hereby agree to provide CEX with
immediately available funds in the full amount of the purchase price for such
equipment at least two business days prior to CEX's purchase of such equipment.
CEX and its Continuing Affiliates shall pay and perform all of their obligations
under the Equipment Leases other than the Equipment Lease Obligations. Without
limiting the foregoing, CEX and the Continuing Affiliates shall have no
obligation to pay or perform any Equipment Lease Obligation under any Equipment
Lease, and shall have no Liability to Buyer or the Company for any such failure
to pay or perform any such obligation, unless CEX shall have timely received
funds in accordance with this Section 4.3.4(b) sufficient to make such payment
or satisfy such obligation. Buyer shall, and shall cause the Company and its
Subsidiaries to, provide CEX with information regarding any material
communications with any obligee under any Equipment Lease, including any
communications relating to the condition or disposition of any equipment and the
obligations of any party upon termination of any Equipment Lease, and shall
permit CEX to participate in any dealings or negotiations pertaining to any of
the foregoing. Buyer agrees that CEX or its Continuing Affiliate that is a party
to any such Equipment Lease shall have all of the enforcement rights under such
agreement against Buyer for Buyer's non-performance under such agreement that
the third party to such agreement has against CEX or its Continuing Affiliate in
the event of non-performance under such agreement.
(c) Indemnification After Closing. Buyer and the Company shall
jointly and severally indemnify and defend CEX and the Continuing Affiliates for
and hold CEX and the Continuing Affiliates harmless from and against, and pay
and reimburse CEX and the
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Continuing Affiliates for, any and all Liabilities of CEX or Continuing
Affiliates, as the case may be, in respect of any Plan Obligation or any
Guarantee (including, without limitation, any Equipment Lease Obligation
obtained or issued by CEX or any Continuing Affiliates, or by which CEX or any
Continuing Affiliate is bound, on behalf of the Company or any of its
Subsidiaries), including any of the foregoing (i) arising out of or relating to
a payment by, or any other Liability of, CEX or any of the Continuing Affiliates
under any such Guarantee, including any draw made by any beneficiary of any
letter of credit or surety bond after the Closing Date or (ii) any action, suit,
claim, investigation or proceeding, whether involving a court of law,
administrative body, Governmental Authority, arbitrator, or alternative dispute
resolution mechanism ("Proceeding") arising out of or relating to any such
Guarantee. Any payment required to be made by Buyer and the Company under this
Section 4.3.4(c) shall be made within ten (10) business days of Buyer's receipt
of written notice from CEX or any Continuing Affiliate describing in reasonable
detail the amount then due. Amounts shall accrue interest at the default rate
under the Long-Term Note from the date of payment by CEX or any Continuing
Affiliate until the date of repayment.
(d) Refund of Premiums. All funds in respect of premiums that are
refunded by the issuer of any letter of credit, surety bond or other instrument
constituting one or more of the Guarantees on account of the replacement by
Buyer of such letter of credit, surety bond or other instrument as provided by
this Section 4.3.4 shall be for the account of CEX and the Continuing
Affiliates. In accordance with Section 7.7, Buyer shall pay over or cause the
Company and its Subsidiaries to pay over to CEX any such refunds received by the
Company or any of its Subsidiaries after the Closing promptly upon receipt of
such refunds by the Company or such Subsidiary.
(e) Third Party Beneficiaries. CEX and its Continuing Affiliates are
intended third party beneficiaries of this Section 4.3.4 and shall have the
right to enforce the benefits intended to be conferred upon each of them under
this Section 4.3.4 as though they were parties to this Agreement.
(f) No Amendment of Guarantees. Without limiting the foregoing,
after the Closing, Buyer will not, and will not permit the Company or any of
their respective Affiliates to, renew, extend, amend or supplement any loan,
contract, lease or other obligation that is covered by one or more Guarantees
without (i) providing CEX with evidence satisfactory to CEX that CEX's and its
Continuing Affiliates' Guarantees have been fully released and discharged or
(ii) obtaining the prior written consent of CEX which may or may not be given in
CEX's sole discretion.
SECTION 4.4 EXCLUSIVITY. From the date hereof through the date this
Agreement is terminated in accordance with Article VIII, neither CEX nor any of
its Affiliates or Representatives, will solicit, encourage or discuss with, or
supply any non-public information to, or enter into any agreement with any party
other than Buyer in connection with any transaction involving (i) any merger or
other business combination involving the Company, (ii) the acquisition of the
Company or a material equity interest in or a material portion of the assets of
the Company, or (iii) the dissolution, liquidation or spin-off of the Company.
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ARTICLE V
CONDITIONS PRECEDENT TO THE CLOSING
SECTION 5.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The
obligations of Buyer to consummate the transactions contemplated hereby are
subject to the fulfillment of all of the following conditions on or prior to the
Closing Date (unless waived in writing in the sole discretion of Buyer):
Section 5.1.1 Accuracy of Warranties and Performance of Covenants.
The representations and warranties of CEX contained herein shall be accurate (i)
in the case of those representations and warranties of CEX which are qualified
by materiality thresholds, in all respects as if made on and as of the Closing
Date, and (ii) in the case of those representations and warranties of CEX which
are not qualified by materiality thresholds, in all material respects as if made
on and as of the Closing Date, except in each case for inaccuracies which are
attributable to matters arising in the ordinary course of business after the
date hereof. Except in the case of the Transaction Representations made by CEX,
the preceding condition shall be deemed to be satisfied unless any Losses
reasonably anticipated to be caused by any inaccuracies, as determined pursuant
to the preceding sentence, of the representations and warranties of CEX,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company. CEX shall have performed all of its
obligations and complied in all material respects with each and all of the
covenants and agreements required to be performed or complied with on or prior
to the Closing Date. CEX shall have delivered an Officer's Certificate
confirming the matters in each of the foregoing sentences ("CEX's Bring Down
Certificate"); provided, however, that such certificate may disclose any facts
or circumstances which would cause any representations and warranties to be
breached or inaccurate, in which case Buyer shall be entitled to elect not to
consummate the transactions contemplated hereby as a result of any breach of any
representation or warranty set forth therein if, and only if, Buyer is entitled
to so elect pursuant to the first three sentences of this Section 5.1.1. If
Buyer, nevertheless, decides to consummate the transactions contemplated hereby,
the breach or inaccuracy of the representations and warranties described in
CEX's Bring Down Certificate shall be deemed cured and may not be relied upon by
Buyer to avoid any of its obligations hereunder, impose any liabilities or
obligations upon CEX or any Continuing Affiliate or otherwise recover from CEX
or any Continuing Affiliate with respect thereto and the Company Disclosure
Schedule shall be automatically deemed amended as of the date hereof and as of
the Closing Date to include any matters set forth on CEX's Bring Down
Certificate. If Buyer decides not to consummate the transactions contemplated
hereby, as a result of any breach of any representation or warranty pursuant to
the first three sentences of this Section 5.1.1, this Agreement and the proposed
transactions contemplated hereunder shall terminate, and each party hereto shall
thereafter have no obligation or liability hereunder (other than pursuant to
Sections 8.2 and 8.3). Buyer's sole and exclusive remedy, in law or in equity,
for any claim related to or arising out of a failure of a condition or breach,
whether in contract, tort or otherwise, shall be to refuse to complete the
Closing under, and to terminate, this Agreement.
Section 5.1.2 Approvals, Absence of Litigation. No suit or
proceeding shall have been commenced by any Governmental Authority to restrain,
enjoin or hinder, or to seek material damages on account of the consummation of
the transactions herein contemplated.
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Section 5.1.3 Buyer's Receipt of the Closing Documents. Buyer shall
have received from CEX the Closing documents referred to in Section 6.2.2.
Section 5.1.4 Intercreditor Agreement. CEX, GE and Bayview shall
have entered into Intercreditor Agreements reasonably acceptable to the parties
providing for, among other things, the subordination of the Promissory Notes,
the relative priority of the liens securing the indebtedness of the Company and
other intercreditor matters.
SECTION 5.2 CONDITIONS PRECEDENT TO CEX'S AND THE COMPANY'S
OBLIGATIONS. The obligations of CEX and the Company to consummate the
transactions contemplated hereby are subject to fulfillment of all of the
following conditions on or prior to the Closing Date (unless waived in writing
in the sole discretion of CEX):
Section 5.2.1 Accuracy of Warranties and Performance of Covenants.
The representations and warranties of Buyer contained herein shall be accurate
in all material respects as if made on and as of the Closing Date. Buyer shall
have performed in all material respects all of its obligations and complied in
all material respects with each and all of the covenants and agreements required
to be performed or complied with on or prior to the Closing. Buyer shall have
delivered an Officer's Certificate confirming the matters in each of the
foregoing sentences (the "Buyer's Bring Down Certificate"); provided, however,
that such certificate may disclose any facts or circumstances which would cause
any representations and warranties to be breached or inaccurate, in which case
CEX shall be entitled to elect not to consummate the transactions contemplated
hereby as a result of any breach of any representation or warranty set forth
therein if, and only if, CEX is entitled to so elect pursuant to the first two
sentences of this Section 5.2.1. If CEX, nevertheless, decides to consummate the
transactions contemplated hereby, the breach or inaccuracy of the
representations and warranties described in Buyer's Bring Down Certificate shall
be deemed cured and may not be relied upon by CEX to avoid any of its
obligations hereunder, impose any liabilities or obligations upon Buyer or the
Company or otherwise recover from Buyer or the Company with respect thereto and
Buyer's Schedules to this Agreement shall be automatically deemed amended as of
the date hereof and as of the Closing Date to include any matters set forth on
Buyer's Bring Down Certificate. If CEX decides not to consummate the
transactions contemplated hereby, as a result of any breach of any
representation or warranty pursuant to the first two sentences of this Section
5.2.1, this Agreement and the proposed transactions contemplated hereunder shall
terminate, and each party hereto shall thereafter have no obligation or
liability hereunder (other than pursuant to Sections 8.2 and 8.3). CEX's sole
and exclusive remedy, in law or in equity, for any claim related to or arising
out of a failure of a condition or breach, whether in contract, tort or
otherwise, shall be to refuse to complete the Closing under, and to terminate,
this Agreement.
Section 5.2.2 Approvals, Absence of Litigation. No suit or
proceeding shall have been commenced by any Governmental Authority to restrain,
enjoin or hinder, or to seek material damages on account of, the consummation of
the transactions herein contemplated.
Section 5.2.3 CEX's Receipt of the Closing Documents. CEX shall have
received from Buyer the Closing documents referred to in Section 6.2.1.
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Section 5.2.4 CEX's Receipt of Specified Consents. The Required
Consents shall have been obtained and shall be in full force and effect.
Section 5.2.5 Board Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the board of directors of CEX.
Section 5.2.6 Insurance Coverage. CEX shall have received from Buyer
proof of fire, liability or other forms of insurance for the Company and its
Subsidiaries and the business that, in the reasonable judgment of CEX, is
sufficient for the business of the Company and its Subsidiaries, effective as of
the Closing Date.
ARTICLE VI
THE CLOSING
SECTION 6.1 THE CLOSING DATE. Subject to the terms of this
Agreement, consummation of the transactions contemplated by this Agreement (the
"Closing") shall take place on September 9, 1999, or if the conditions to
Closing shall not have been satisfied on such date, as promptly as practicable
following the satisfaction or waiver thereof, but in no event later than
September 15, 1999. As used herein, the "Closing Date" shall refer to the date
of the actual Closing. The Closing shall be consummated at the offices of Faegre
& Benson LLP at 2200 Norwest Center, 90 South Seventh Street, Minneapolis,
Minnesota 55402-3901, or such other place as the parties hereto shall mutually
agree.
SECTION 6.2 DELIVERIES AT THE CLOSING.
Section 6.2.1 Buyer's Execution and Delivery of Documents and
Payment. Buyer shall deliver, or execute and deliver, or cause to be executed
and delivered, to CEX all of the following:
(a) A certificate of valid existence and good standing of Buyer
issued not earlier than 30 days prior to the Closing;
(b) The certificate of merger required pursuant to Section 2.1.3
hereof;
(c) Buyer's Bring Down Certificate;
(d) A certificate certifying to CEX the incumbency of Buyer's
officers and bearing the authentic signatures of all such officers who have
executed this Agreement or any other agreement executed and delivered in
connection herewith;
(e) Payment to CEX of the amount provided in Section 2.1.7(a), by
wire transfer of immediately available funds to a bank account designated by
CEX;
(f) The Promissory Notes, duly executed by the Company;
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(g) The Guaranty, duly executed by Buyer and by the Subsidiaries of
the Company;
(h) The Security Agreements duly executed by the Company and its
Subsidiaries, as appropriate;
(i) The Registration Rights Agreement, duly executed by the Buyer;
(j) A receipt, duly executed by Buyer, acknowledging receipt of the
certificates representing the Company Shares and establishing the time of the
Closing;
(k) The Tax Sharing and Indemnification Agreement, duly executed by
Buyer;
(l) The Transition Services Agreement, duly executed by Buyer;
(m) The Exchange Agreement, duly executed by Buyer;
(n) The written opinions of Faegre & Benson LLP, counsel to Buyer,
and Buyer's general counsel, in form reasonably acceptable to CEX;
(o) A certificate of the Chief Financial Officer of Buyer certifying
to CEX that (i) the obligations of Buyer and the Company under Sections 4.3.4(b)
and 4.3.4(c) will not conflict with or violate the terms and provisions of, or
cause a default (either with notice or the lapse of time or both) under, any
credit agreement or other agreement binding on Buyer or the Company, and (ii) as
of the Closing Date (and without regard to any insurance maintained by CEX or
its continuing Affiliates), the assets and activities of the Company and its
Subsidiaries will be insured against all liabilities, claims and risks in
coverage and amounts for which it is customary for companies similarly situated
to be insured against; and
(p) Without limitation by specific enumeration of the foregoing, all
other documents and instruments reasonably required or requested by CEX to
consummate the transactions contemplated hereby.
Section 6.2.2 CEX's Execution and Delivery of Documents and
Certificates. CEX shall deliver or execute and deliver, as the case may be, or
cause to be delivered or executed and delivered to Buyer all of the following:
(a) Certificates of valid existence and good standing of CEX, the
Company and Subsidiaries (except for Subsidiaries identified as inactive on
Schedule 3.2.7) issued not earlier than 30 days prior to the Closing;
(b) The certificate of merger required pursuant to Section 2.1.3
hereof;
(c) CEX's Bring Down Certificate;
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(d) A certificate certifying to Buyer the incumbency of CEX's
officers and bearing the authentic signatures of all such officers who have
executed this Agreement or any other agreement executed and delivered in
connection herewith;
(e) The resignations of all of the directors and officers of the
Company and its Subsidiaries, to the extent requested by Buyer;
(f) The Company's and, to the extent available, each of its
Subsidiary's by-laws, minute books, leases and other contracts held by CEI,
stock record books, all similar corporate records and all the seals of the
Company and each of its Subsidiaries, if any, unless in the possession of the
Company;
(g) One or more certificates duly endorsed by CEX and in proper form
for transfer to Buyer, or accompanied by duly executed stock powers, evidencing
all of the Company Shares;
(h) A receipt, duly executed by CEX, acknowledging receipt of
payment for the Company Shares;
(i) The Tax Sharing and Indemnification Agreement, duly executed by
CEX;
(j) The Transition Services Agreement, duly executed by CEX;
(k) The Noncompete Agreement, duly executed by CEX;
(l) The Security Agreements, duly executed by CEX;
(m) The Registration Rights Agreement, duly executed by CEX;
(n) The written opinions of Davis, Graham & Stubbs LLP, counsel to
CEX, and CEX's general counsel, in forms reasonably acceptable to Buyer; and
(o) Without limitation by specific enumeration of the foregoing, all
other documents and instruments reasonably required or requested by Buyer to
consummate the transactions contemplated hereby.
SECTION 6.3 SIMULTANEOUS CLOSING. All actions taken at the Closing
are to be part of a simultaneous transaction, and no action is to be considered
completed until all actions necessary to be completed at the Closing have been
completed.
ARTICLE VII
POST-CLOSING AGREEMENTS AND OTHER MATTERS
SECTION 7.1 POST-CLOSING AGREEMENTS. From and after the Closing, the
parties shall have the respective rights and obligations which are set forth in
the remainder of this Article.
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SECTION 7.2 INSPECTION OF RECORDS. The Company shall maintain and
make its books and records available for inspection by the other parties, or by
their duly authorized representatives, for reasonable business purposes at all
reasonable times during normal business hours, for a period equal to any
statutorily determined record retention period (but in no event less than eight
(8) years after the Closing) with respect to all matters related to the period
prior to the Closing. As used in this Section, the right of inspection includes
the right to make extracts or copies at the expense of the party requesting such
extracts or copies.
SECTION 7.3 MUTUAL ASSISTANCE. The parties shall cooperate with each
other, and make available the reasonable assistance of their employees to each
other at reasonable out-of pocket cost (including reasonable allocated costs of
in-house counsel and other personnel), with respect to the defense or
prosecution of any claims or litigation made or commenced by or against third
parties subsequent to the Closing, including insurance and other cost recovery
claims, rights, causes of action and chooses in action.
SECTION 7.4 FURTHER ASSURANCES. The parties shall execute such
further documents, and perform such further acts, as may be necessary to effect
the transactions contemplated hereby, on the terms herein contained and
otherwise to comply with the terms of this Agreement; provided, that, except as
contemplated by this Agreement, no party shall be required to waive any right or
incur any obligation in connection therewith.
SECTION 7.5 EXCHANGE ACT AND OTHER FILINGS. Subject to applicable
law, in order to assist the parties in the preparation of all documents and
reports required to be filed by CEX or the Continuing Affiliates or the Buyer
under the Securities Act of 1933, as amended, or the Exchange Act of 1934, as
amended (i) with respect to any period ending on or prior to the Closing Date or
(ii) any period that would include but not end on the Closing Date, CEX and its
Continuing Affiliates and Buyer (as appropriate) shall, or shall cause the
Company and its Subsidiaries to, prepare and provide to CEX or Buyer (as the
case may be), at the requesting party's cost and expense, within the time frames
required by CEX or Buyer in accordance with such party's past practices, such
information and data as CEX or Buyer may reasonably request (including access to
books, records and personnel) in order for the operations of the Company and its
Subsidiaries to be properly reported in such filings.
SECTION 7.6 INSURANCE. The parties hereto acknowledge and agree
that, except as set forth in this Section 7.6 and except with respect to workers
compensation insurance provided by monopolistic state funds in the name of the
Company, its Subsidiaries or any predecessor entities, no insurance policy
maintained by CEX and its Affiliates (including the Company and its
Subsidiaries) shall be available to or cover the Company or any of its
Subsidiaries or their respective assets, properties, operations and liabilities
after the Closing Date, all benefits and coverage under each such insurance
policy shall terminate on the Closing Date and none of the Company or any of its
Affiliates will seek any recoveries thereunder attributable to any acts, events
or omissions occurring after the Closing Date. As of the Closing Date, Buyer
shall be responsible for obtaining and maintaining any and all insurance
policies and coverages in respect of the Company and its Subsidiaries and their
respective assets, properties, operations and liabilities.
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SECTION 7.7 ADMINISTRATION OF ACCOUNTS.
Section 7.7.1 In Trust for Buyer. All payments and reimbursements by
any third party after the Closing Date in the name of or to CEX or any of the
Continuing Affiliates to which the Company or any of its Subsidiaries is
entitled in accordance with the provisions of this Agreement and the
transactions contemplated hereby shall be held by CEX or such Affiliate in trust
for the benefit of the Company and, within five (5) business days of receipt by
CEX or such Affiliate of any such payment or reimbursement, CEX or such
Affiliate shall pay over to the Company the amount of such payment or
reimbursement without right of set off or counterclaim.
Section 7.7.2 In Trust for CEX. All payments and reimbursements by
any third party after the Closing Date in the name of or to the Company or any
of its Affiliates to which CEX or any of the Continuing Affiliates is entitled
in accordance with the provisions of this Agreement and the transactions
contemplated hereby shall be held by the Company or such Affiliate in trust for
the benefit of CEX and, within five (5) business days of receipt by the Company
or such Affiliate of any such payment or reimbursement, Buyer or such Affiliate
shall pay over to CEX or such Affiliate the amount of such payment or
reimbursement without right of set off or counterclaim.
SECTION 7.8 NOTICE OBLIGATIONS OF BUYER. Contemporaneously with the
Closing, Buyer shall take such actions as shall be necessary or appropriate to
cause each officer or director removed by CEX or who resigned contemporaneously
with the Closing to be replaced by an officer or director elected by Buyer. As
soon as practicable following the Closing (but in any event not later than
forty-five (45) days following the Closing), Buyer shall take such actions and
file such documents as shall be necessary or appropriate for the purpose of
giving notice to all Governmental Authorities of the names of each officer,
director and shareholder of the Company and its Subsidiaries (including each
officer and director elected by Buyer as provided herein) and such other
information with respect to the transactions contemplated by this Agreement as
shall be necessary or appropriate.
SECTION 7.9 FUTURE DELIVERY SERVICES. Until the later of (i) three
years following the Closing Date, or (ii) the date upon which the Promissory
Notes have either been paid in full or converted into Buyer's Common Stock,
Buyer agrees that it will, and will cause the Company and its other affiliates
to provide CEX and its Continuing Affiliates, at CEX's request, with pricing and
terms for services no less favorable than those offered to any other customer of
Buyer or the Company, as the case may be, for similar services.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated prior to
the Closing as follows:
Section 8.1.1 Mutual Consent. Upon the mutual written consent of CEX
and Buyer.
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Section 8.1.2 Litigation. By CEX or Buyer if an injunction or other
order shall have been issued by a Governmental Authority, which restrains or
otherwise makes unlawful the consummation of the transactions contemplated by
this Agreement and such injunction or other order shall have become final and
non-appealable; provided however that no party shall be entitled to terminate
this Agreement in reliance on this Section 8.1.2 if such injunction or order
shall have resulted from a breach by such party of this Agreement.
Section 8.1.3 Conditions to Buyer's Obligations Not Met. By Buyer if
any of the conditions provided in Section 5.1 shall not have been satisfied,
complied with or performed, in any material respect, on or before September 15,
1999, or if CEX's Bring Down Certificate reflects such a failure at the time of
delivery, and Buyer has not waived such failure of satisfaction, noncompliance
or nonperformance; provided however that Buyer shall not be entitled to
terminate this Agreement in reliance on this Section 8.1.3 if such failure of
such conditions to be satisfied, complied with or performed shall have resulted
from a breach of this Agreement by Buyer.
Section 8.1.4 Conditions to CEX's and the Company's Obligations Not
Met. By CEX, if any of the conditions provided in Section 5.2 shall not have
been satisfied, complied with or performed, in any material respect, on or
before September 15, 1999, or if Buyer's Bring Down Certificate reflects such a
failure at the time of delivery, and CEX has not waived, in writing, such
failure of satisfaction, noncompliance or nonperformance; provided however that
CEX shall not be entitled to terminate this Agreement in reliance on this
Section 8.1.4 if such failure of such conditions to be satisfied, complied with
or performed shall have resulted from a breach of this Agreement by CEX or the
Company.
Section 8.1.5 Failure of Adequate Financing. By CEX, in the event
that at any time the representations and warranties set forth in Section 3.1.8
shall fail to be true and correct or if CEX receives information that reasonably
causes it to believe that any of the representations or warranties in Section
3.1.8 will fail to be true and correct as of the Closing.
Section 8.1.6 Failure of CEX Board Approval. By Buyer, in the event
that the Merger has not been approved by the board of directors of CEX on or
before September 9, 1999.
SECTION 8.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement, this Agreement and the proposed transactions contemplated
hereunder shall terminate and, except as provided in the following sentence and
in Section 8.3, each party hereto shall have no further obligation or liability
hereunder, except that the provisions of Section 4.1.1, shall survive such
termination. Except as provided in Sections 5.1.1 and 5.2.1, nothing in this
Section 8.2 shall relieve any party from any liability for any breach of any
covenant or agreement contained in this Agreement or from any breach by Buyer of
the representation and warranty set forth in Section 3.1.8.
SECTION 8.3 BREAK-UP FEE. If (i) Buyer fails or is unable to close
the Merger on or before September 15, 1999, and (ii) this Agreement is
terminated by CEX pursuant to Section 8.1.4, then Buyer shall pay to CEX within
10 days of such termination an amount equal to $500,000. If (x) GE and Bayview
have removed or otherwise determined as set forth in a
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written notice by GE or Bayview, as the case may be, to CEX that all
contingencies or conditions to Closing the Merger contained in the Commitment
Letters have been satisfied, except for execution of satisfactory documentation
as contemplated by the Commitment Letters, (y) Buyer and Merger Sub have
performed all material conditions to Closing (including having finalized all
loan documentation and having satisfied all of the conditions of GE and Bayview
other than execution of the final loan agreements and related documentation) and
are otherwise prepared and able to close and CEX nevertheless fails or is unable
to close the Merger, and (z) this Agreement is terminated by Buyer pursuant to
Section 8.1.3 (and is not terminable pursuant to any other provision hereof),
then CEX shall pay to Buyer within 10 days of such termination an amount equal
to $1,500,000.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in Sections 3.1.1, 3.1.2, 3.1.3, 3.1.4,
3.1.6, 3.1.7, 3.1.8, 3.1.10, 3.1.14, 3.2.1, 3.2.2, 3.2.3, 3.2.4, 3.2.6, 3.2.7,
3.2.8, 3.2.9 and 3.2.22 of this Agreement (the "Transaction Representations")
shall survive the Closing for a period of twelve (12) months after the Closing
Date. All other representations and warranties contained herein shall not
survive (and therefore shall not be covered by the provisions of this Article
IX) the Closing Date.
SECTION 9.2 INDEMNIFICATION BY CEX. Subject to the remaining
provisions of Article IX and this Agreement, from and after the Closing, CEX
shall indemnify and hold harmless Buyer, the Company and its Subsidiaries and
their respective directors, officers, employees and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Buyer Indemnified Parties") from and against any and all damages, liabilities,
losses, obligations, suits, demands, penalties, charges, costs and expenses
(including reasonable attorneys' fees and expenses and court costs incurred in
the investigation, defense or settlement or any of the foregoing in connection
with any third party proceeding relating thereto to the extent hereafter
provided) (collectively, "Losses") incurred in connection with, arising out of,
or resulting from (a) the breach or inaccuracy of any representations or
warranties made by CEX in Sections 3.2.1, 3.2.2, 3.2.3, 3.2.4, 3.2.6, 3.2.7,
3.2.8, 3.2.9 and 3.2.22, (b) any failure by CEX or its Continuing Affiliates to
comply, in whole or in part, with the covenants or agreements made by CEX in
this Agreement, (c) any obligations under the Tax Sharing and Indemnification
Agreement to the extent provided therein, (d) any current, former or future
businesses, assets, liabilities, operations, other activities or employees
(whether current or former) of CEX or any of its Continuing Affiliates
(including, without limitation, the Trucking Subsidiaries), whether arising
prior to, at or after the Closing or to any of the discontinued operations of
CEX or any of its Continuing Affiliates (including the Trucking Subsidiaries),
other than Losses related to the Trucking Claims and (e) except as provided in
Section 4.3.4, any guaranty or other obligation of, or any pledge, security
interest, mortgage or other lien on the property, assets or capital stock of,
the Company or any of its Subsidiaries securing or guaranteeing any indebtedness
or other obligation of CEX or any Continuing Affiliate under any loan agreement
or credit facility, including, without limitation, all such guaranties,
obligations, pledges, security interests, mortgages and other liens in respect
of that Credit Agreement, dated as of April 17, 1998, among CEI, CEX, various
banks, The First National Bank of Chicago, as Syndication Agent, The Bank
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of New York, as Co-Documentation Agent, DLJ Capital Funding, Inc., as
Co-Documentation Agent and Bankers Trust Company as Administrative Agent. The
parties hereby acknowledge and agree that CEX shall have no obligation to
indemnify Buyer or the Buyer Indemnified Parties for (i) the Trucking Claims, or
(ii) any of the following lawsuits involving the Company in which CEI is or was
a named party: Ashabranner, Brimo, Van Epps, Addvensky, and General Messenger;
and (iii) the Chicago area audit that is currently being conducted by the
Internal Revenue Service. Without limiting the foregoing and unless otherwise
agreed by the parties, in the event any Buyer Indemnified Party is a named
defendant in any proceeding that is the subject of the indemnification
obligations of this Section 9.2, CEX shall use its reasonable best efforts to
have such Buyer Indemnified Party promptly removed as a party to such
litigation.
SECTION 9.3 INDEMNIFICATION BY BUYER AND THE COMPANY. Subject to the
remaining provisions of Article IX and this Agreement, Buyer and the Company
shall jointly and severally indemnify and hold harmless CEX, any Continuing
Affiliate and each of their respective directors, officers, employees and
agents, and each of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the "CEX Indemnified Parties") from and against any and
all Losses incurred in connection with, arising out of, resulting from (a)
current, former or future businesses, assets, liabilities, operations, other
activities or employees (whether current or former) of the Company or any of its
Subsidiaries, whether arising prior to, at or after the Closing, including any
of the foregoing relating to any Liability reflected on the Financial Statements
(or the notes thereto) or to any of the discontinued operations of the Company
or any of its current or former Subsidiaries, (b) from and against any Losses to
the extent arising from the breach or inaccuracy of any representations or
warranties in Sections 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.6, 3.1.7, 3.1.8, 3.1.10
and 3.1.14 or any failure to comply, in whole or in part, with the covenants or
agreements made by Buyer in this Agreement, (c) from and against any Losses
arising out of or resulting from any financing activities undertaken by Buyer or
any of its Affiliates in connection with the transactions contemplated hereby,
and (d) from and against any Losses incurred by any CEX Indemnified Party in
connection with any of the Plan Obligations. The parties hereby agree that the
obligation of Buyer and the Company under this Section 9.3 shall include any
claim for Losses asserted against the CEX Indemnified Parties, as an acquiror,
owner or operator, either derivatively or directly, by way of CEX, its
Affiliates', and their respective Representatives' previous ownership or
acquisition of or control over the Company or any of its Subsidiaries, or their
participation in the operations, acquisitions or activities of the Company or
any of its Subsidiaries. Without limiting the foregoing and unless otherwise
agreed by the parties, in the event any CEX Indemnified Party is a named
defendant in any proceeding that is the subject of the indemnification
obligations of this Section 9.3, Buyer and the Company shall use their
reasonable best efforts to have such CEX Indemnified Party promptly removed as a
party to such litigation.
SECTION 9.4 PROCEDURE FOR THIRD PARTY CLAIMS.
Section 9.4.1 In order for a Person (the "indemnified party") to be
entitled to any indemnification pursuant to this Article IX in respect of,
arising out of or involving a claim or demand made by any Person against the
indemnified party (a "Third Party Claim"), such indemnified party must notify
the indemnifying party in writing of (and in reasonable detail regarding) the
Third Party Claim promptly, and in any event within 10 business days, after
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receipt by such indemnified party of notice of the Third Party Claim; provided,
however, that failure to give such notification shall not affect the
indemnification otherwise provided under this Agreement except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure (except that the indemnifying party shall not be liable for any expenses
incurred prior to the day on which the indemnified party gives such notice) and
except, in the case of a breach of the Transaction Representations, to the
extent the notice is not delivered timely pursuant to Section 9.1. Thereafter,
the indemnified party shall deliver to the indemnifying party promptly, and in
any event within five (5) business days, after the indemnified party's receipt
thereof, copies of all notices and documents (including court papers) received
by the indemnified party relating to the Third Party Claim.
Section 9.4.2 If a Third Party Claim is made against an indemnified
party, the indemnifying party shall be entitled to participate in the defense
thereof and, if it so chooses, to assume and control the defense thereof with
counsel selected by the indemnifying party. Other than as provided in Section
9.2, (a) if the indemnifying party elects to assume the defense of a Third Party
Claim, the indemnifying party shall not be liable to the indemnified party for
legal expenses subsequently incurred by the indemnified party in connection with
the defense thereof, and (b) if the indemnifying party assumes such defense, the
indemnified party shall have the right to participate in the defense thereof and
to employ at its own expense counsel not reasonably objected to by the
indemnifying party separate from the counsel employed by the indemnifying party,
it being understood that the indemnifying party shall control such defense and
shall be empowered to make any settlement with respect to such Third Party
Claim, subject to the remaining terms of this Section 9.4.2. The indemnifying
party shall be liable for the reasonable fees and expenses of counsel employed
by the indemnified party for any period during which the indemnifying party has
not assumed the defense thereof (other than the period prior to the day on which
the indemnified party gives notice of the Third Party Claim as provided above).
If the indemnifying party chooses to defend or prosecute any Third Party Claim,
all the parties hereto shall cooperate and shall cause their Affiliates to
cooperate in the defense or prosecution thereof. Such cooperation shall include
the retention and (upon the indemnifying party's request) the provision to the
indemnifying party of records and information that are reasonably relevant to
such Third Party Claim, and making employees available on any basis reasonably
requested by the indemnifying party to provide additional information and
explanation of any material provided hereunder or otherwise relating to the
Third Party Claim. Whether or not the indemnifying party assumes the defense of
a Third Party Claim, the indemnified party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the indemnifying party's prior written consent. If the indemnifying party
assumes the defense of a Third Party Claim, the indemnified party shall agree to
any settlement, compromise or discharge of such Third Party Claim that the
indemnifying party may recommend if such settlement, compromise or discharge
would only result in the entry of a monetary judgment for which the indemnified
party is fully indemnified hereunder.
Section 9.4.3 In the event any indemnified party should have an
indemnification claim against any indemnifying party under this Agreement that
does not involve a Third Party Claim being asserted against or sought to be
collected from such indemnified party, the indemnified party shall deliver
notice of such claim specifying with particularity the facts underlying such
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claim with reasonable promptness to the indemnifying party. The failure by any
indemnified party so to notify the indemnifying party shall not relieve the
indemnifying party from liability that it may have to such indemnified party,
except to the extent that the indemnifying party has been actually prejudiced by
such failure and except, in the case of a breach of the Transaction
Representations, to the extent the notice is not delivered timely pursuant to
Section 9.1. If the indemnifying party disputes its liability with respect to
such claim, the indemnifying party and the indemnified party shall proceed in
good faith to negotiate a resolution of such dispute and, if not resolved
through negotiations, such dispute shall be resolved by litigation in an
appropriate court of competent jurisdiction.
Section 9.4.4 Notwithstanding anything to the contrary in the
foregoing, CEX, at its own expense except as otherwise provided above, shall be
entitled to participate in the defense of any litigation matters in which CEX
and/or CEI is named as a party and shall be consulted on any settlement
discussions with respect thereto.
SECTION 9.5 GENERAL PROVISIONS RELATING TO REMEDIES AND
INDEMNIFICATION.
Section 9.5.1 An indemnifying party shall have no obligation to
indemnify an indemnified party or otherwise have liability to an indemnified
party for consequential damages, special damages, punitive damages, incidental
damages, indirect damages, lost profits or similar items (and the indemnified
party shall not recover for such amounts).
Section 9.5.2 Buyer's Losses shall be reduced by any available
federal and state income tax deductions or other benefits which are available to
Buyer or any of its Affiliates in connection with the Losses, after giving
effect to any tax detriment to Buyer arising from the receipt of the
indemnification payment with respect to such Losses. If any Loss is covered by
insurance or subject to other third party recoveries (collectively, "Third Party
Rights"), Buyer shall use its best efforts (and Buyer shall cause the Company
and its Subsidiaries to use their respective best efforts) to recover the amount
of coverage or claim from the insurer or such third party, which recovery (after
deduction of costs of collection) shall reduce Losses hereunder. Buyer agrees to
assign (and to cause the Company and its Subsidiaries to assign) all Third Party
Rights to CEX and to appoint CEX as its limited agent and attorney-in-fact for
seeking such recovery to the extent Buyer fails to recover, does not timely
proceed with recovery actions, or obtains excess recovery with respect thereto,
and to cooperate with CEX in the collection thereof. Buyer shall cause the
Company to maintain in effect, for so long as the indemnification obligations of
CEX are effective hereunder, insurance policies of the Company insuring against
risks and liabilities to substantially the same extent and in substantially the
same amount as the insurance policies of the Company which are in effect as of
the date of this Agreement.
Section 9.5.3 CEX's Losses shall be reduced by any available federal
and state income tax deductions or other benefits which are available to CEX or
any of its Continuing Affiliates in connection with the Losses, after giving
effect to any tax detriment to CEX or its Continuing Affiliates arising from the
receipt of the indemnification payment with respect to such Losses. If any Loss
is covered by insurance or subject to other third party recoveries, CEX shall
use its best efforts(and CEX shall cause its Continuing Affiliates to use their
respective best efforts) to recover the amount of coverage or claim from the
insurer or such third party, which recovery
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(after deduction of costs of collection) shall reduce Losses hereunder. CEX
agrees to assign (and to cause its Continuing Affiliates to assign) all Third
Party Rights to Buyer and to appoint Buyer as its limited agent and
attorney-in-fact for seeking such recovery to the extent CEX fails to recover,
does not timely proceed with recovery actions, or obtains excess recovery with
respect thereto, and to cooperate with Buyer in the collection thereof. CEX
shall, or shall cause its Continuing Affiliates to, maintain in effect, for so
long as the indemnification obligations of Buyer are effective hereunder,
insurance policies insuring against risks and liabilities to substantially the
same extent and in substantially the same amount as the insurance policies of
the Company which are in effect as of the date of this Agreement.
Section 9.5.4 To the extent that CEX or Buyer discharges any claim
for indemnification hereunder, it shall be subrogated to all related rights of
the other party against third parties except as otherwise provided herein.
Section 9.5.5 No party shall have any right to offset against any
payments to be made by it pursuant to this Agreement or otherwise; provided,
however, that so long as the Promissory Notes remain outstanding any amounts
owed by CEX to the Buyer Indemnified Parties under this Article IX may, at CEX's
option, be applied first to reduce the principal balance of the Promissory
Notes, in the following order: (i) Long-Term Note, (ii) Convertible Note, and
(iii) Short-Term Note.
SECTION 9.6 EXCLUSIVE NATURE. The indemnification provisions of
Article IX shall be the sole and exclusive remedy by any party and its
respective Representatives against the other party following the Closing for any
breaches or alleged breaches of any representation, warranty or other provision
of this Agreement or otherwise with respect to the former, current or future
business and operations of the Company and its Subsidiaries, any and all claims
relating to this Agreement and the transactions contemplated hereby, except for
any right that may exist to seek redress for common law fraud. Such remedies are
intended to be noncumulative with respect to, and shall preclude the assertion
by any party of, any other remedies which would otherwise have been available in
common law or by statute, except for any right that may exist to seek redress
for common law fraud. Nothing in this Section 9.6 shall be construed to limit in
any way the rights and benefits of or the remedies available to any party to
this Agreement under any other instrument or agreement to which such Person is a
party.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 COMPANY NAME. Each of Buyer and the Company
acknowledges that, from and after the Closing Date, CEX and the Continuing
Affiliates shall have the absolute and exclusive proprietary right to all names,
marks, trade names, trademarks and identifications using either or both
"Corporate Express Delivery Systems" and all variations and derivatives thereof
and logos relating thereto or any similar name or variant, version or derivative
thereof (collectively, the "Names") by themselves or in combination with any
other Name, and that none of the rights thereto or goodwill represented thereby
or pertaining thereto are being transferred hereby or in connection herewith;
provided, however, that, the Company and its Subsidiaries are hereby granted a
non-exclusive license to use the Names for a period expiring one year from the
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Closing Date; and provided further that Buyer and the Company will not be
required to remove the name Corporate Express Delivery Systems that is
permanently affixed to motor vehicles or buildings that are owned by the Company
or its Subsidiaries as of the date hereof for a 3 year period from the Closing
Date. Except as contemplated by the proviso in the foregoing sentence, (i) each
of Buyer and the Company agrees that from and after the Closing Date it will
not, nor will it permit any of its Affiliates to, use any name, phrase or logo
incorporating any of the Names as its corporate or business name or in or on any
of its literature, sales materials or products or otherwise in connection with
the sale of any products or services or otherwise, and (ii) each of Buyer and
the Company shall, and shall cause its Affiliates to, cease to use any such
literature and sales materials, delete or cover (as by stickering) any such
name, phrase or logo from any of its or its Subsidiaries' respective assets or
properties (whether tangible or intangible, real or personal), and take such
other actions as may be necessary or advisable to clearly and prominently
indicate that none of Buyer, the Company or any of their Affiliates is
affiliated with CEX or any of the Continuing Affiliates.
SECTION 10.2 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES;
RELATIONSHIP BETWEEN THE PARTIES.
Section 10.2.1 Exclusivity of Representations and Warranties.
Notwithstanding anything in this Agreement to the contrary, it is the explicit
intent and understanding of the parties hereto that none of the parties nor any
of their respective Representatives is making any representation or warranty
whatsoever, oral or written, express or implied, other than those set forth in
this Agreement and the Tax Sharing and Indemnification Agreement and that none
of the parties is relying on any statement, representation or warranty, oral or
written, express or implied, made by any other party or such other party's
Representatives except for the representations and warranties expressly set
forth in such Agreements. EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS
AGREEMENT, THE PARTIES EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY OR REPRESENTATION
AS TO TITLE, OWNERSHIP, USE, POSSESSION, QUANTITY, CONDITION, LIABILITIES,
OPERATION, DESIGN, CAPACITY, FUTURE RESULTS, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, SUITABILITY OR OTHERWISE AS TO ANY OF THE ASSETS OR
LIABILITIES OF THE COMPANY OR ANY OF ITS SUBSIDIARIES AND, EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD THAT BUYER TAKES THE
ASSETS AND LIABILITIES OF THE COMPANY AND ITS SUBSIDIARIES "AS IS" AND "WHERE
IS."
Section 10.2.2 Forecasts, Projections, Etc. Without limiting the
generality of, and in furtherance of, Section 10.2.1, Buyer acknowledges that
none of CEX or any of its Affiliates makes any representations or warranties to
Buyer regarding any forecasts, projections, estimates, business plans or budgets
(whether contained or referred to in any written materials or verbal information
that has been or shall hereafter be provided or made available to Buyer or any
of its Representatives) and there are not and shall not be deemed to be
representations or warranties of CEX or any of its Affiliates in respect of
future revenues, expenses or expenditures, future results of operations (or any
component thereof), future cash flows or future financial condition (or any
component thereof) of the Company or any of its Subsidiaries.
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Section 10.2.3 Relationship Between the Parties. The parties hereto
agree that this is an arm's length transaction in which the parties'
undertakings and obligations are limited to the performance of their obligations
under this Agreement. Buyer acknowledges that it is a sophisticated investor,
that it has undertaken, and that CEX has given Buyer such opportunities as it
has requested to undertake, a full investigation of the business and operations
of the Company and its Subsidiaries (including their assets, liabilities,
contracts, permits, licenses, premises, properties, facilities, books and
records), and that it has a contractual relationship with CEX based solely on
the terms of this Agreement, and that there is no special relationship of trust
or reliance between Buyer and CEX. Buyer acknowledges that it and its
Representatives are satisfied with (i) the access to the books and records,
facilities, equipment, contracts and other properties and assets of the business
and operations of the Company and its Subsidiaries that it and its
Representatives have been provided and (ii) the opportunity to meet with the
officers and employees of CEX and its Subsidiaries to discuss the business and
operations of the Company and its Subsidiaries that it and its Representatives
have been provided. Buyer further acknowledges that, except as set forth in this
Agreement, none of CEX, its Affiliates, their respective Representatives or any
other Person has made any representation or warranty, expressed or implied, as
to the completeness of any information regarding the business and operations of
the Company and its Subsidiaries furnished or made available to Buyer and its
Representatives. Except as specifically set forth in the representations and
warranties set forth in Section 3.2 hereof, none of CEX, its Affiliates, their
respective Representatives or any other Person shall have or be subject to any
liability to Buyer or any other Person resulting from the distribution to Buyer
or any other Person, or Buyer's or any other Person's use, whether prior to, on
or after the date hereof, of, any such information, including the Confidential
Descriptive Memorandum prepared by the Company and BT Alex.Brown, and any
information, documents or material made available in any "data rooms" or formal
or informal management presentations or in any other form in expectation of the
transactions contemplated hereby.
SECTION 10.3 TAX MATTERS. The parties' sole and exclusive
representations, warranties, covenants, agreements or other obligations
(including indemnities or any obligations) arising pursuant to this Agreement,
by Law or otherwise with respect to tax matters (interpreted it its broadest
sense) and any other subject matters referred to in the Tax Sharing and
Indemnification Agreement shall be as set forth therein. No other
representation, warranty, covenant, agreement or obligation (including
indemnities or any obligations) arising pursuant to this Agreement, by Law or
otherwise by CEX, any of its Continuing Affiliates, the Company, Buyer or any of
their respective Representatives shall be deemed to apply to such matters.
SECTION 10.4 ENTIRE AGREEMENT. This Agreement, the Ancillary
Agreements and the Confidentiality Agreement and the agreements expressly
provided for herein and therein constitute the entire agreement between the
parties and supersede any and all other prior or contemporaneous understandings,
negotiations or agreements between the parties relating to the transactions
contemplated hereby, and shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives.
SECTION 10.5 AMENDMENTS. Any amendment, supplement, variation,
alteration or modification to this Agreement must be made in writing and duly
executed by an authorized representative or agent of each of the parties hereto.
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SECTION 10.6 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any other jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction Each party hereby waives
the benefit of any Law which renders any provision hereof prohibited or
unenforceable in any respect.
SECTION 10.7 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall be deemed to constitute one and the same instrument.
SECTION 10.8 NO WAIVER. The failure in any one or more instances of
a party to insist upon performance of any of the terms, covenants or conditions
of this Agreement, to exercise any right or privilege in this Agreement
conferred, or to waive any breach of any of the terms, covenants or conditions
of this Agreement, shall not be construed as a subsequent waiver of any such
terms, covenants, conditions, rights or privileges, but the same shall continue
and remain in full force and effect as if no such forbearance or waiver had
occurred. No waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party.
SECTION 10.9 ASSIGNMENT. This Agreement and all the rights and
obligations granted hereby shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, it being expressly agreed
that this Agreement shall not be assigned nor shall any rights or obligations
arising hereunder be transferred by one party without the prior written consent
of the other party.
SECTION 10.10 FEES, COSTS AND EXPENSES. Except as otherwise provided
herein, each party shall be responsible for its own fees, costs and expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby. Buyer shall pay all transfer taxes with respect to the sale
of the shares of the Company and the consummation of the transaction.
SECTION 10.11 THIRD PARTY BENEFICIARIES. Except for the Persons
entitled to indemnification pursuant to Section 4.3.6, Article VIII, or Article
IX or under the Tax Sharing and Indemnification Agreement (who shall be third
party beneficiaries), nothing in this Agreement is intended to create, nor shall
anything in the Agreement be deemed to create or have created, any third party
beneficiary rights; provided, however, that, without the prior written consent
of CEX, Buyer may upon 5 days written notice to CEX, assign its rights (but not
its obligations) hereunder to any financial institution that is providing
financing to Buyer or any of its Affiliates in connection with the transactions
contemplated hereby.
SECTION 10.12 INTERPRETATION OF SCHEDULES. It is understood and
agreed that neither the specification of any dollar amount in the
representations and warranties contained in this Agreement nor the inclusion of
any specific item in the Company Disclosure Schedule is intended to imply that
such amounts or any higher or lower amount, or the items so included or other
items, are or are not material or otherwise required to be disclosed, and
neither party shall use the fact of the setting of such amounts or the fact of
the inclusion of any such item in the
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Company Disclosure Schedule in any dispute or controversy between the parties as
to whether any obligation, item or matter is or is not material. CEX has
included items in the Company Disclosure Schedule hereto only in order to
provide certain information regarding the Company and its Subsidiaries to Buyer
and inclusion of any item in any Company Disclosure Schedule should not be
deemed an admission as to the existence of any liability or obligation, the
validity or accuracy of any claim or as to the absence of any defense or
counterclaim with respect thereto. The exceptions, modifications, descriptions
and disclosures in the Company Disclosure Schedule attached hereto are made for
all relevant purposes of this Agreement and are exceptions to the
representations and warranties set forth in this Agreement or in any agreement
or instrument delivered pursuant to or in connection with this Agreement,
whether or not explicit reference is made to the Company Disclosure Schedule to
the extent applicable thereto. Disclosure of the information contained in one
section or part of the Company Disclosure Schedule shall be deemed as proper
disclosure for all sections or parts of such Schedule. Matters reflected on the
Company Disclosure Schedule delivered hereunder are not necessarily limited to
matters required by this Agreement to be reflected in such Company Disclosure
Schedule. Any such additional matters are set forth for informational purposes
and do not necessarily include other matters of a similar nature.
SECTION 10.13 CONSTRUCTION. Words importing the singular shall
include the plural and vice versa, and words importing a gender shall include
other genders. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine or neuter form. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." The headings contained in this Agreement are inserted for
convenience only and shall not constitute a part hereof or affect any
interpretation hereof. All references herein to Articles, Sections (other than
references to Sections of the Code or any other statute) and subsections shall
be deemed to be references to Articles, Sections and subsections of this
Agreement unless the context shall otherwise require. References in this
Agreement to any Article shall include all Sections, subsections, paragraphs in
such Article; references in this Agreement to any Section shall include all
subsections and paragraphs in such Section; and references in this Agreement to
any subsection shall include all paragraphs in such subsection. The exhibits and
attachments to the Schedules form an integral part of the Schedules and are
incorporated by reference for all purposes as if set forth fully therein. Unless
the context shall otherwise require or provide, any reference to any agreement
or other instrument or statute, regulation or other Law is to such agreement,
instrument, statute, regulation or other Law as amended and supplemented from
time to time (and, in the case of a statute, regulation or other Law, to any
successor provision); provided, however, that no representation or warranty
herein shall be deemed to have been breached because of the adoption of any new
statute, regulation or other Law, any amendment of or change in any statute,
regulation or other Law or any change in interpretation of any statute,
regulation or other Law, in any event, issued or otherwise occurring subsequent
to the date hereof. This Agreement shall be construed in accordance with its
fair meaning and shall not be construed strictly against either party, without
regard to which party drafted this Agreement.
SECTION 10.14 CONSENT TO JURISDICTION AND RELATED MATTERS.
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(a) Jurisdiction. Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the jurisdiction of any
Colorado State court or Federal court sitting in the State of Colorado and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby or for
recognition or enforcement of any judgment relating thereto, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
Colorado State court or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment of in any other manner provided by law.
(b) Venue. Each of the parties hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby in any Colorado State or Federal court.
Each of the parties hereto hereby irrevocably and unconditionally waives, to the
fullest extent permitted by law, the defense of any inconvenient forum to the
maintenance of such action or proceeding in any such court.
SECTION 10.15 WAIVER OF JURY TRIAL.
(a) EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(b) EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (1) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE WAIVERS SET FORTH IN CLAUSE (A) OF THIS SECTION 10.15, (2) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (3) IT MAKES
SUCH WAIVERS VOLUNTARILY, AND (4) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN SUCH
SECTION.
SECTION 10.16 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered, five (5) business days after mailing when mailed by
certified mail, return receipt requested, or one (1) business day after sending
via Federal Express or similar overnight courier service, or when receipt is
confirmed when sent by facsimile. Such notices or other communications shall be
sent to the following addresses, unless other addresses are subsequently
specified in writing:
46
<PAGE>
Buyer (and the Company after the Closing):
United Shipping & Technology, Inc.
9850 51st Avenue North
Plymouth, Minnesota 55442
Attention: Timothy G. Becker
Facsimile No.: (612) 941-6440
Telephone No.: (612) 941-4080
With a copy to:
Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-3901
Attention: Daniel J. Amen
Facsimile No.: (612) 336-3026
Telephone No.: (612) 336-3000
CEX (and the Company prior to the Closing):
c/o Corporate Express, Inc.
1 Environmental Way
Broomfield, Colorado 80021
Attention: Richard L. Millett, Jr.
Facsimile No.: (303) 664-3823
Telephone No.: (303) 664-3901
With a copy to:
Davis, Graham & Stubbs LLP
4410 Arapahoe Avenue, Suite 200
Boulder, Colorado 80303
Attention: Christopher L. Richardson
Facsimile No.: (303) 544-5997
Telephone No.: (303) 544-4466
47
<PAGE>
SECTION 10.17 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONTROLLED AS TO ITS VALIDITY, ENFORCEMENT, INTERPRETATION, CONSTRUCTION, EFFECT
AND IN ALL OTHER RESPECTS BY THE LAWS OF THE STATE OF COLORADO (WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THEREOF) APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THAT STATE.
(SIGNATURES FOLLOW ON NEXT PAGE)
* * * *
48
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
CEX HOLDINGS, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
CORPORATE EXPRESS
DELIVERY SYSTEMS, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
UNITED SHIPPING & TECHNOLOGY, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
UNITED SHIPPING & TECHNOLOGY
ACQUISITION CORP.
By:_____________________________________
Name:___________________________________
Title:__________________________________
49
<PAGE>
ANNEX A-1
Gary Jacobs
Mark Hoffman
Rick Millett
Bob King
Jeff Guerke
A-1
<PAGE>
ANNEX A-2
Tim Becker
Wade Wilson
Jenny Skinner
Peter Lytle
A-2
EXHIBIT 2.2
AMENDMENT NO. 1 TO
MERGER AGREEMENT
This Amendment No. 1 (this "Amendment") is made and entered into as of
September 22, 1999, by and among CEX Holdings, Inc., a Colorado corporation
("CEX"), Corporate Express Delivery Systems, Inc., a Delaware corporation (the
"Company"), United Shipping & Technology, Inc., a Utah corporation ("Buyer"),
and United Shipping & Technology Acquisition Corp., a Delaware corporation
("Merger Sub"), for the purpose of amending certain of the terms and provisions
of that Merger Agreement, dated as of September 8, 1999, by and among CEX, the
Company, Buyer and Merger Sub (the "Merger Agreement"). Capitalized terms used,
but not defined, herein shall have the meaning ascribed to them in the Merger
Agreement.
1. Section 2.1.4 of the Merger Agreement shall be amended and restated
in its entirety as follows:
The certificate of incorporation of the Surviving Corporation shall be
amended and restated to read as set forth in Exhibit K attached hereto
and the name of the Surviving Corporation shall be changed to "UST
Delivery Systems, Inc."
2. Section 2.1.7(c) of the Merger Agreement shall be amended and
restated in its entirety as follows:
by the execution and delivery to CEX of a promissory note of the
Surviving Corporation in the principal amount of $8,400,000, subject to
adjustment as set forth in Section 2.2.1, in form substantially similar
to that attached hereto as Exhibit E (the "Long-Term Note"); and
3. Section 2.1.7(d) of the Merger Agreement shall be amended and
restated in its entirety as follows:
by the execution and delivery to CEX of a promissory note of the
Surviving Corporation in the principal amount of $3,600,000 in form
substantially similar to that attached hereto as Exhibit F (the
"Convertible Note").
4. Except as amended herein, the Merger Agreement remains the same and,
to such extent, is hereby ratified and confirmed.
XXXXX
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first above written.
CEX HOLDINGS, INC.
By:_______________________________________________
Richard L. Millett, Jr., Vice President
CORPORATE EXPRESS
DELIVERY SYSTEMS, INC.
By:_______________________________________________
Richard L. Millett, Jr., Vice President
UNITED SHIPPING & TECHNOLOGY, INC.
By:_______________________________________________
Timothy G. Becker, Treasurer and CFO
UNITED SHIPPING & TECHNOLOGY
ACQUISITION CORP.
By:_______________________________________________
Timothy G. Becker, Treasurer and CFO
2
Exhibit 10.1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
LONG-TERM SUBORDINATED PROMISSORY NOTE
$6,519,000 September 24, 1999
FOR VALUE RECEIVED, the undersigned, UST DELIVERY SYSTEMS, INC., a
Delaware corporation formerly known as Corporate Express Delivery Systems, Inc.
(the "Borrower"), hereby promises to pay to the order of CEX HOLDINGS, INC., a
Colorado corporation ("CEX;" and together with its transferees and assigns, the
"Holder"), the principal sum of SIX MILLION FIVE HUNDRED NINETEEN THOUSAND
DOLLARS ($6,519,000) on September 24, 2004 (the "Maturity Date"), with interest
thereon from time to time as provided herein.
1. Merger Agreement. This Long-Term Subordinated Promissory Note
(this "Note") is being issued by the Borrower pursuant to, and represents a
portion of the merger consideration under, that certain Merger Agreement (as
amended, the "Merger Agreement"), dated as of September 8, 1999, by and among
CEX, Corporate Express Delivery Systems, Inc., a Delaware corporation, United
Shipping & Technology, Inc., a Utah corporation ("UST"), and United Shipping &
Technology Acquisition Corp., a Delaware corporation. This Note together with
all other promissory notes issued under the Merger Agreement and all promissory
notes issued pursuant to Section 12 hereof are hereinafter referred to as the
"Promissory Notes." The Promissory Notes are secured by security interests
granted pursuant to (i) that Security Agreement, dated of even date herewith, by
and between the Borrower and CEX (the "CEDS Security Agreement"), and (ii) that
Security Agreement, dated of even date herewith, by and among each subsidiary of
the Borrower listed on Exhibit A attached hereto and CEX (the "Subsidiary
Security Agreement").
2. Interest.
(a) Base Interest. The Borrower promises to pay interest on the
principal amount of this Note at the rate of 12% per annum (the "Interest
Rate"). The Borrower shall pay accrued interest quarterly on the 24th day of
December, March, June and September of each year or, if any such date shall not
be a business day, on the next succeeding business day to occur after such date
(each date upon which interest shall be so payable, an "Interest Payment Date"),
beginning on December 24, 1999. Interest on this Note shall be paid by wire
transfer of immediately available funds to an account at a bank designated in
writing by the Holder. In the absence of any such written
<PAGE>
designation, any such interest payment shall be deemed made on the date a check
in the applicable amount payable to the order of Holder is received by the
Holder at 1 Environmental Way, Broomfield, Colorado 80021 or such other address
as the Holder shall request in writing. Interest on this Note shall accrue from
and including the date of issuance through and until repayment of the principal
and payment of all accrued interest in full. Interest shall accrue and be
computed on the basis of a 365-day (or 366 day, as the case may be) year for the
actual number of days elapsed.
(b) Default Rate of Interest. Notwithstanding the foregoing
provisions of this Section 2, but subject to applicable law, any overdue
principal of and overdue interest on this Note shall bear interest, payable on
demand in immediately available funds, for each day from the date payment
thereof was due to the date of actual payment, at a rate equal to the rate of
interest otherwise in effect pursuant to the first sentence of this Section 2(a)
plus 5% per annum, and, upon and during the occurrence of an Event of Default
(as hereinafter defined), this Note shall bear interest, from the date of the
occurrence of such Event of Default until such Event of Default is cured or
waived, payable on demand in immediately available funds, at a rate equal to the
rate of interest otherwise in effect pursuant to the first sentence of this
Section 2(a) plus 5% per annum. Subject to applicable law, any interest that
shall accrue on overdue interest on this Note as provided in the preceding
sentence and shall not have been paid in full on or before the next Interest
Payment Date to occur after the Interest Payment Date on which the overdue
interest became due and payable shall itself be deemed to be overdue interest on
this Note to which the preceding sentence shall apply.
(c) No Usurious Interest. In the event that any interest rate
provided for herein shall be determined to be unlawful, such interest rate shall
be computed at the highest rate permitted by applicable law. Any payment by the
Borrower of any interest amount in excess of that permitted by law shall be
considered a mistake, with the excess being applied to the principal of this
Note without prepayment premium or penalty; if no such principal amount is
outstanding, such excess shall be returned to the Borrower.
3. Prepayment.
(a) Optional Prepayment. The Borrower, at its option, may, at any
time, prepay all or any portion of the principal amount of this Note at any
time, by paying to the Holder such portion of the outstanding principal amount
together with interest accrued and unpaid thereon to the date fixed for such
prepayment; provided, however, each prepayment of less than the full outstanding
balance of the principal amount of this Note shall be in an aggregate principal
amount of $500,000 or integral multiples of $100,000 in excess thereof. All
optional prepayments under this Section 3 shall include payment of accrued
interest on the principal amount of this Note so prepaid and shall be applied
first to all costs and expenses payable under this Note, then to payment of
default interest, if any, then to payment of the base interest and thereafter to
principal.
(b) Mandatory Prepayment. If (i) the Borrower has paid and
discharged the Short-Term Note (as defined in the Merger Agreement), and (ii)
the lien in favor of the Holder on the Fixed Assets (as defined in the
Intercreditor Agreement) has not previously been released by the Holder pursuant
to Section 7.2 of the CEDS Security Agreement or the Subsidiary Security
Agreement, as the case may be, the Borrower will make a mandatory prepayment of
the
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<PAGE>
principal amount of this Note, together with accrued interest thereon, to
the full extent of any proceeds of a sale or other disposition of the Fixed
Assets, except for proceeds from sales or other dispositions of worn-out or
obsolete Fixed Assets which, individually or in the aggregate, do not exceed
$100,000 in any twelve month period.
4. Amendment. No amendments or modifications of this Note shall be
effective unless made in writing and executed by the Borrower and the Holder.
5. Defaults and Remedies.
(a) Events of Default. An "Event of Default" shall occur if:
(i) the Borrower shall default in the payment of the principal of
this Note, when and as the same shall become due and payable, whether at
maturity or at a date fixed for prepayment or by acceleration or
otherwise, and such default shall remain uncured for a period of five
days; or
(ii) the Borrower shall default in the payment of any installment of
interest on this Note, when and as the same shall become due and payable,
whether at an Interest Payment Date or at a date fixed for prepayment or
by acceleration or otherwise, and such default shall remain uncured for a
period of five days; or
(iii) an event of default shall have occurred under any one or more
of the Promissory Notes (other than this Note), in accordance with the
terms and provisions of such Promissory Notes; or
(iv) any event or condition shall occur that results in the
acceleration of the maturity of any indebtedness of the Borrower or any
subsidiary of the Borrower (each a "Subsidiary" and collectively the
"Subsidiaries") in the principal amount aggregating $2,000,000 or more; or
(v) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (a)
relief in respect of the Borrower or any Subsidiary thereof, or of a
substantial part of its property or assets, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal
or state bankruptcy, insolvency, receivership or similar law, (b) the
appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any Subsidiary, or for a
substantial part of its property or assets, or (c) the winding up or
liquidation of the Borrower or any Subsidiary thereof; and such proceeding
or petition shall continue undismissed for 60 days, or an order or decree
approving or ordering any of the foregoing shall be entered; or
(vi) the Borrower or any Subsidiary thereof shall (a) voluntarily
commence any proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency,
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<PAGE>
receivership or similar law, (b) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or the filing
of any petition described in paragraph (v) of this Section 5(a), (c) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any of
its Subsidiaries, or for a substantial part of their property or assets,
(d) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (e) make a general assignment for the
benefit of creditors, (f) become unable, admit in writing its inability or
fail generally to pay its debts as they become due, (g) suspend the
operation of its business, or (h) take any action for the purpose of
effecting any of the foregoing; or
(vii) one or more judgments for the payment of money in an aggregate
amount in excess of $300,000 (to the extent not covered by insurance)
shall be rendered against the Borrower or any Subsidiary thereof and the
same shall remain undischarged for a period of 30 days during which
execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to levy upon assets or properties of the
Borrower or any Subsidiary thereof to enforce any such judgment.
(b) Acceleration. If an Event of Default occurs under Section
5(a)(v) or (vi), then the outstanding principal of and all accrued interest on
this Note shall automatically become immediately due and payable. If any other
Event of Default occurs and is continuing, the Holder, by written notice to the
Borrower, may declare the outstanding principal of and all accrued interest on
this Note immediately due and payable. Upon such declaration, such principal and
interest shall become immediately due and payable.
6. Enforcement.
(a) Upon the occurrence of any one or more Events of Default, the
Holder of this Note may proceed to protect and enforce its rights hereunder by
suit in equity, action at law or by other appropriate proceeding.
(b) In case of any default under this Note, the Borrower will pay to
the Holder such amounts as shall be sufficient to cover the costs and expenses
(including, without limitation, attorney's fees and expenses) of such Holder due
to, or incurred as a consequence of, such default.
7. Remedies Cumulative; Not Waived. No remedy herein conferred upon
the Holder is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise. No course of dealing between the Borrower and the Holder or any
delay on the part of the Holder in exercising any rights hereunder shall operate
as a waiver of any right.
8. Waiver of Presentment. The Borrower expressly and specifically,
(i) waives grace, presentment for payment, demand for payment, notice of intent
to accelerate and notice of acceleration, notice of dishonor, protest and notice
of protest, notice of nonpayment, and any and all
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<PAGE>
other notices, the filing of suit and diligence in collecting this Note, (ii)
agrees to any substitution, subordination, exchange or release of any security
held for the payment of this Note and release of any party primarily or
secondarily liable hereon, and (iii) agrees to any extension or postponement of
time of payment of this Note and to any other indulgence with respect hereto
without notice thereof.
9. Subordination. ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS
SUBORDINATED TO OTHER INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED IN,
AND IS OTHERWISE SUBJECT TO THE TERMS OF, THE INTERCREDITOR AND SUBORDINATION
AGREEMENT, DATED SEPTEMBER 24, 1999 (THE "INTERCREDITOR AGREEMENT"), AS THE SAME
MAY BE AMENDED, MODIFIED OR OTHERWISE SUPPLEMENTED FROM TIME TO TIME, BY AND
AMONG UST DELIVERY SYSTEMS, INC., AS BORROWER, GENERAL ELECTRIC CAPITAL
CORPORATION, AS AGENT FOR ITSELF AND THE SENIOR SECURED LENDERS, EACH SUBSIDIARY
OF BORROWER LISTED ON EXHIBIT A THERETO, BAYVIEW CAPITAL PARTNERS LP, AND THE
HOLDERS FROM TIME TO TIME OF THE OBLIGATIONS ARISING UNDER THIS NOTE.
10. Offset. The obligations of the Borrower under this Note are
subject to certain rights of offset in the manner as set forth in Section 9.5.5
of the Merger Agreement.
11. Transfer. This Note may be transferred or assigned, in whole or
in part, by the Holder at any time. The term "Holder" as used herein shall
include any transferee or assignee of this Note. In the event any Holder (the
"Transferor") shall transfer this Note to any other person (the "Transferee"),
the Transferor and Transferee shall provide written notice to the Borrower of
such transfer, including the notice address of the Transferee and the address to
which future interest payments should be sent pursuant to Section 2(a). Prior to
the receipt of such notice, the Borrower shall be entitled to treat the
Transferor as the owner of this Note for all purposes, including the payment of
principal and interest.
12. Replacement of Note. On receipt by the Borrower of an affidavit
of an authorized representative of the Holder stating the circumstances of the
loss, theft, destruction or mutilation of this Note (and in the case of any such
mutilation, on surrender and cancellation of such Note), the Borrower, at its
expense, will promptly execute and deliver, in lieu thereof, a new Note of like
tenor. If required by the Borrower, such Holder must provide indemnity
sufficient in the reasonable judgment of the Borrower to protect the Borrower
from any loss which it may suffer if a lost, stolen or destroyed Note is
replaced.
13. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note made by or on behalf of the
Borrower shall bind its successors and assigns whether so expressed or not.
14. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when personally
delivered, five (5) business days after mailing when mailed by certified mail,
return receipt requested, or one (1) business day after sending via Federal
Express or similar overnight courier service, or when receipt is confirmed when
sent by
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<PAGE>
facsimile. Such notices or other communications shall be sent to the following
addresses, unless other addresses are subsequently specified in writing:
If to Borrower:
c/o United Shipping & Technology, Inc.
9850 51st Avenue North
Plymouth, Minnesota 55442
Attention: Timothy G. Becker
Facsimile No.: (612) 941-6440
Telephone No.: (612) 941-4080
If to CEX:
c/o Corporate Express, Inc.
1 Environmental Way
Broomfield, Colorado 80021
Attention: Richard L. Millett, Jr.
Facsimile No.: (303) 664-3823
Telephone No.: (303) 664-3901
15. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
16. Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
17. Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
UST DELIVERY SYSTEMS, INC.
By:_____________________________________
Timothy G. Becker, Treasurer and CFO
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<PAGE>
EXHIBIT A
LIST OF SUBSIDIARIES
CORPORATE EXPRESS DELIVERY SYSTEMS - INTERMOUNTAIN, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - MID-ATLANTIC, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - MID-WEST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - NEW ENGLAND, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - NORTHEAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - SOUTHEAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - SOUTHWEST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - WEST COAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - INTERMOUNTAIN, INC.
CORPORATE EXPRESS DELIVERY LEASING - MID-ATLANTIC, INC.
CORPORATE EXPRESS DELIVERY LEASING - MID-WEST, INC.
CORPORATE EXPRESS DELIVERY LEASING - NEW ENGLAND, INC.
CORPORATE EXPRESS DELIVERY LEASING - NORTHEAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - SOUTHEAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - SOUTHWEST, INC.
CORPORATE EXPRESS DELIVERY LEASING - WEST COAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - AIR DIVISION, INC.
AIR COURIER DISPATCH OF NEW JERSEY, INC.
MIDNITE EXPRESS INTERNATIONAL COURIER, INC.
TRICOR AMERICA, INC.
NEW DELAWARE DELIVERY, INC.
CORPORATE EXPRESS DELIVERY ADMINISTRATION, INC.
AMERICAN DELIVERY SYSTEM, INC.
CORPORATE EXPRESS DISTRIBUTION SERVICES, INC.
SUNBELT COURIER, INC.
-7-
Exhibit 10.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
SHORT-TERM SUBORDINATED PROMISSORY NOTE
$7,500,000 September 24, 1999
FOR VALUE RECEIVED, the undersigned, UST DELIVERY SYSTEMS, INC., a
Delaware corporation formerly known as Corporate Express Delivery Systems, Inc.
(the "Borrower"), hereby promises to pay to the order of CEX HOLDINGS, INC., a
Colorado corporation ("CEX;" and together with its transferees and assigns, the
"Holder"), the principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS
($7,500,000) on September 24, 2000 (the "Maturity Date"), with interest thereon
from time to time as provided herein.
1. Merger Agreement. This Short-Term Subordinated Promissory Note
(this "Note") is being issued by the Borrower pursuant to, and represents a
portion of the merger consideration under, that certain Merger Agreement (as
amended, the "Merger Agreement"), dated as of September 8, 1999, by and among
CEX, Corporate Express Delivery Systems, Inc., a Delaware corporation, United
Shipping & Technology, Inc., a Utah corporation ("UST"), and United Shipping &
Technology Acquisition Corp., a Delaware corporation. This Note together with
all other promissory notes issued under the Merger Agreement and all promissory
notes issued pursuant to Section 12 hereof are hereinafter referred to as the
"Promissory Notes."
2. Interest.
(a) Base Interest. The Borrower promises to pay interest on the
principal amount of this Note at the rate of 9% per annum (the "Interest Rate").
The Borrower shall pay accrued interest quarterly on the 24th day of December,
March, June and September of each year or, if any such date shall not be a
business day, on the next succeeding business day to occur after such date (each
date upon which interest shall be so payable, an "Interest Payment Date"),
beginning on December 24, 1999. Interest on this Note shall be paid by wire
transfer of immediately available funds to an account at a bank designated in
writing by the Holder. In the absence of any such written designation, any such
interest payment shall be deemed made on the date a check in the applicable
amount payable to the order of Holder is received by the Holder at 1
Environmental Way, Broomfield, Colorado 80021 or such other address as the
Holder shall request in writing. Interest on this Note shall accrue from and
including the date of issuance through and until repayment of the
<PAGE>
principal and payment of all accrued interest in full. Interest shall accrue and
be computed on the basis of a 365-day (or 366 day, as the case may be) year for
the actual number of days elapsed.
(b) Default Rate of Interest. Notwithstanding the foregoing
provisions of this Section 2, but subject to applicable law, any overdue
principal of and overdue interest on this Note shall bear interest, payable on
demand in immediately available funds, for each day from the date payment
thereof was due to the date of actual payment, at a rate equal to the rate of
interest otherwise in effect pursuant to the first sentence of this Section 2(a)
plus 5% per annum, and, upon and during the occurrence of an Event of Default
(as hereinafter defined), this Note shall bear interest, from the date of the
occurrence of such Event of Default until such Event of Default is cured or
waived, payable on demand in immediately available funds, at a rate equal to the
rate of interest otherwise in effect pursuant to the first sentence of this
Section 2(a) plus 5% per annum. Subject to applicable law, any interest that
shall accrue on overdue interest on this Note as provided in the preceding
sentence and shall not have been paid in full on or before the next Interest
Payment Date to occur after the Interest Payment Date on which the overdue
interest became due and payable shall itself be deemed to be overdue interest on
this Note to which the preceding sentence shall apply.
(c) No Usurious Interest. In the event that any interest rate
provided for herein shall be determined to be unlawful, such interest rate shall
be computed at the highest rate permitted by applicable law. Any payment by the
Borrower of any interest amount in excess of that permitted by law shall be
considered a mistake, with the excess being applied to the principal of this
Note without prepayment premium or penalty; if no such principal amount is
outstanding, such excess shall be returned to the Borrower.
3. Prepayment.
(a) Optional Prepayment. The Borrower, at its option, may, at any
time, prepay all or any portion of the principal amount of this Note at any
time, by paying to the Holder such portion of the outstanding principal amount
together with interest accrued and unpaid thereon to the date fixed for such
prepayment; provided, however, each prepayment of less than the full outstanding
balance of the principal amount of this Note shall be in an aggregate principal
amount of $500,000 or integral multiples of $100,000 in excess thereof. All
optional prepayments under this Section 3 shall include payment of accrued
interest on the principal amount of this Note so prepaid and shall be applied
first to all costs and expenses payable under this Note, then to payment of
default interest, if any, then to payment of the base interest and thereafter to
principal.
(b) Mandatory Prepayment. The Borrower will make a mandatory
prepayment of the principal represented hereby together with accrued interest
thereon:
(i) upon the exercise of those outstanding warrants to purchase
2,227,749 shares of the common stock, $0.004 par value per share of UST,
which warrants (i) are exercisable at a price of $1.75 per share of common
stock, and (ii) are subject to a mandatory redemption provision whereby
UST has the right, upon thirty days' written notice to the holders of such
warrants, to purchase the warrants if the warrants remain unexercised at
the expiration of such 30-day period. The Borrower shall pay to the Holder
an amount equivalent to 100% of the cash
2
<PAGE>
proceeds received by UST from the exercise of the warrants by wire
transfer of immediately available funds within three business days of the
consummation of such warrant exercise;
(ii) to the full extent of any proceeds of debt financing undertaken
by the Borrower or any of its Subsidiaries after the date hereof which is
secured by a first lien on the Fixed Assets (as defined in the
Intercreditor Agreement); and
(iii) to the full extent of any proceeds of a sale or other
disposition of the Fixed Assets, except for proceeds from sales or other
dispositions of worn-out or obsolete Fixed Assets which, individually or
in the aggregate, do not exceed $100,000 in any twelve month period.
All mandatory prepayments under this Section 3 shall include payment of accrued
interest on the principal amount of this Note so prepaid and shall be applied
first to all costs, expenses and indemnities payable under the Purchase
Agreement, then to payment of default interest, if any, then to payment of the
basic interest and thereafter to principal.
4. Amendment. No amendments or modifications of this Note shall be
effective unless made in writing and executed by the Borrower and the Holder.
5. Defaults and Remedies.
(a) Events of Default. An "Event of Default" shall occur if:
(i) the Borrower shall default in the payment of the principal of
this Note, when and as the same shall become due and payable, whether at
maturity or at a date fixed for prepayment or by acceleration or
otherwise, and such default shall remain uncured for a period of five
days; or
(ii) the Borrower shall default in the payment of any installment of
interest on this Note, when and as the same shall become due and payable,
whether at an Interest Payment Date or at a date fixed for prepayment or
by acceleration or on demand or otherwise, and such default shall remain
uncured for a period of five days; or
(iii) an event of default shall have occurred under any one or more
of the Promissory Notes (other than this Note), in accordance with the
terms and provisions of such Promissory Notes; or
(iv) any event or condition shall occur that results in the
acceleration of the maturity of any indebtedness of the Borrower or any
subsidiary of the Borrower (each a "Subsidiary" and collectively the
"Subsidiaries") in the principal amount aggregating $2,000,000 or more; or
(v) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (a)
relief in respect of
3
<PAGE>
the Borrower or any Subsidiary thereof, or of a substantial part of its
property or assets, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law, (b) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower or any Subsidiary thereof, or for a substantial
part of its property or assets, or (c) the winding up or liquidation of
the Borrower or any Subsidiary thereof; and such proceeding or petition
shall continue undismissed for 60 days, or an order or decree approving or
ordering any of the foregoing shall be entered; or
(vi) the Borrower or any Subsidiary thereof shall (a) voluntarily
commence any proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or similar
law, (b) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described
in paragraph (v) of this Section 5(a), (c) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any of its Subsidiaries, or for a
substantial part of their property or assets, (d) file an answer admitting
the material allegations of a petition filed against it in any such
proceeding, (e) make a general assignment for the benefit of creditors,
(f) become unable, admit in writing its inability or fail generally to pay
its debts as they become due, (g) suspend the operation of its business,
or (h) take any action for the purpose of effecting any of the foregoing;
or
(vii) one or more judgments for the payment of money in an aggregate
amount in excess of $300,000 (to the extent not covered by insurance)
shall be rendered against the Borrower or any Subsidiary thereof and the
same shall remain undischarged for a period of 30 days during which
execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to levy upon assets or properties of the
Borrower or any Subsidiary thereof to enforce any such judgment.
(b) Acceleration. If an Event of Default occurs under Section
5(a)(v) or (vi), then the outstanding principal of and all accrued interest on
this Note shall automatically become immediately due and payable. If any other
Event of Default occurs and is continuing, the Holder, by written notice to the
Borrower, may declare the outstanding principal of and all accrued interest on
this Note immediately due and payable. Upon such declaration, such principal and
interest shall become immediately due and payable.
6. Enforcement.
(a) Upon the occurrence of any one or more Events of Default, the
Holder of this Note may proceed to protect and enforce its rights hereunder by
suit in equity, action at law or by other appropriate proceeding.
(b) In case of any default under this Note, the Borrower will pay to
the Holder such amounts as shall be sufficient to cover the costs and expenses
(including, without limitation, attorney's fees and expenses) of such Holder due
to, or incurred as a consequence of, such default.
4
<PAGE>
7. Remedies Cumulative; Not Waived. No remedy herein conferred upon
the Holder is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise. No course of dealing between the Borrower and the Holder or any
delay on the part of the Holder in exercising any rights hereunder shall operate
as a waiver of any right.
8. Waiver of Presentment. The Borrower expressly and specifically,
(i) waives grace, presentment for payment, demand for payment, notice of intent
to accelerate and notice of acceleration, notice of dishonor, protest and notice
of protest, notice of nonpayment, and any and all other notices, the filing of
suit and diligence in collecting this Note, (ii) agrees to any substitution,
subordination, exchange or release of any security held for the payment of this
Note and release of any party primarily or secondarily liable hereon, and (iii)
agrees to any extension or postponement of time of payment of this Note and to
any other indulgence with respect hereto without notice thereof.
9. Subordination. ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS
SUBORDINATED TO OTHER INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED IN,
AND IS OTHERWISE SUBJECT TO THE TERMS OF, THE INTERCREDITOR AND SUBORDINATION
AGREEMENT, DATED SEPTEMBER 24, 1999 (THE "INTERCREDITOR AGREEMENT"), AS THE SAME
MAY BE AMENDED, MODIFIED OR OTHERWISE SUPPLEMENTED FROM TIME TO TIME, BY AND
AMONG UST DELIVERY SYSTEMS, INC., AS BORROWER, GENERAL ELECTRIC CAPITAL
CORPORATION, AS AGENT FOR ITSELF AND THE SENIOR SECURED LENDERS, EACH SUBSIDIARY
OF BORROWER LISTED ON EXHIBIT A THERETO, BAYVIEW CAPITAL PARTNERS LP, AND THE
HOLDERS FROM TIME TO TIME OF THE OBLIGATIONS ARISING UNDER THIS NOTE.
10. Offset. The obligations of the Borrower under this Note are
subject to certain rights of offset in the manner as set forth in Section 9.5.5
of the Merger Agreement.
11. Transfer. This Note may be transferred or assigned, in whole or
in part, by the Holder at any time. The term "Holder" as used herein shall
include any transferee or assignee of this Note. In the event any Holder (the
"Transferor") shall transfer this Note to any other person (the "Transferee"),
the Transferor and Transferee shall provide written notice to the Borrower of
such transfer, including the notice address of the Transferee and the address to
which future interest payments should be sent pursuant to Section 2(a). Prior to
the receipt of such notice, the Borrower shall be entitled to treat the
Transferor as the owner of this Note for all purposes, including the payment of
principal and interest.
12. Replacement of Note. On receipt by the Borrower of an affidavit
of an authorized representative of the Holder stating the circumstances of the
loss, theft, destruction or mutilation of this Note (and in the case of any such
mutilation, on surrender and cancellation of such Note), the Borrower, at its
expense, will promptly execute and deliver, in lieu thereof, a new Note of like
tenor. If required by the Borrower, such Holder must provide indemnity
sufficient in the
5
<PAGE>
reasonable judgment of the Borrower to protect the Borrower from any loss which
it may suffer if a lost, stolen or destroyed Note is replaced.
13. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note made by or on behalf of the
Borrower shall bind its successors and assigns whether so expressed or not.
14. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when personally
delivered, five (5) business days after mailing when mailed by certified mail,
return receipt requested, or one (1) business day after sending via Federal
Express or similar overnight courier service, or when receipt is confirmed when
sent by facsimile. Such notices or other communications shall be sent to the
following addresses, unless other addresses are subsequently specified in
writing:
If to Borrower:
c/o United Shipping & Technology, Inc.
9850 51st Avenue North
Plymouth, Minnesota 55442
Attention: Timothy G. Becker
Facsimile No.: (612) 941-6440
Telephone No.: (612) 941-4080
If to CEX:
c/o Corporate Express, Inc.
1 Environmental Way
Broomfield, Colorado 80021
Attention: Richard L. Millett, Jr.
Facsimile No.: (303) 664-3823
Telephone No.: (303) 664-3901
15. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
16. Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
6
<PAGE>
17. Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
UST DELIVERY SYSTEMS, INC.
By:_____________________________________
Timothy G. Becker, Treasurer and CFO
7
<PAGE>
EXHIBIT A
LIST OF SUBSIDIARIES
CORPORATE EXPRESS DELIVERY SYSTEMS - INTERMOUNTAIN, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - MID-ATLANTIC, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - MID-WEST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - NEW ENGLAND, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - NORTHEAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - SOUTHEAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - SOUTHWEST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - WEST COAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - INTERMOUNTAIN, INC.
CORPORATE EXPRESS DELIVERY LEASING - MID-ATLANTIC, INC.
CORPORATE EXPRESS DELIVERY LEASING - MID-WEST, INC.
CORPORATE EXPRESS DELIVERY LEASING - NEW ENGLAND, INC.
CORPORATE EXPRESS DELIVERY LEASING - NORTHEAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - SOUTHEAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - SOUTHWEST, INC.
CORPORATE EXPRESS DELIVERY LEASING - WEST COAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - AIR DIVISION, INC.
AIR COURIER DISPATCH OF NEW JERSEY, INC.
MIDNITE EXPRESS INTERNATIONAL COURIER, INC.
TRICOR AMERICA, INC.
NEW DELAWARE DELIVERY, INC.
CORPORATE EXPRESS DELIVERY ADMINISTRATION, INC.
AMERICAN DELIVERY SYSTEM, INC.
CORPORATE EXPRESS DISTRIBUTION SERVICES, INC.
SUNBELT COURIER, INC.
8
Exhibit 10.3
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
$3,600,000 September 24, 1999
FOR VALUE RECEIVED, the undersigned, UST DELIVERY SYSTEMS, INC., a
Delaware corporation formerly known as Corporate Express Delivery Systems, Inc.
(the "Borrower"), hereby promises to pay to the order of CEX HOLDINGS, INC., a
Colorado corporation ("CEX"; and together with its transferees and assigns, the
"Holder"), the principal sum of THREE MILLION SIX HUNDRED THOUSAND DOLLARS
($3,600,000) on September 24, 2004 (the "Maturity Date"), with interest thereon
from time to time as provided herein.
1. Merger Agreement. This Convertible Subordinated Promissory Note
(this "Note") is being issued by the Borrower pursuant to, and represents a
portion of the merger consideration under, that certain Merger Agreement (as
amended, the "Merger Agreement"), dated as of September 8, 1999, by and among
CEX, Corporate Express Delivery Systems, Inc., a Delaware corporation, United
Shipping & Technology, Inc., a Delaware corporation ("UST"), and United Shipping
& Technology Acquisition Corp., a Delaware corporation. This Note together with
all other promissory notes issued under the Merger Agreement and all promissory
notes issued pursuant to Section 12 hereof or thereof are hereinafter referred
to as the "Promissory Notes." The Promissory Notes are secured by security
interests granted pursuant to (i) that Security Agreement, dated of even date
herewith, by and between the Borrower and CEX (the "CEDS Security Agreement"),
and (ii) that Security Agreement, dated of even date herewith, by and among each
subsidiary of the Borrower listed on Exhibit A attached hereto and CEX (the
"Subsidiary Security Agreement").
2. Interest.
(a) Base Interest. The Borrower promises to pay interest on the
principal amount of this Note at the rate of 6% per annum (the "Interest Rate").
The Borrower shall pay accrued interest quarterly on the 24th day of December,
March, June and September of each year or, if any such date shall not be a
business day, on the next succeeding business day to occur after such date (each
date upon which interest shall be so payable, an "Interest Payment Date"),
beginning on December 24, 1999. Interest on this Note shall be paid by wire
transfer of immediately available funds to an account at a bank designated in
writing by the Holder. In the absence of any such written
<PAGE>
designation, any such interest payment shall be deemed made on the date a check
in the applicable amount payable to the order of Holder is received by the
Holder at 1 Environmental Way, Broomfield, Colorado 80021 or such other address
as the Holder shall request in writing. Interest on this Note shall accrue from
and including the date of issuance through and until repayment of the principal
and payment of all accrued interest in full. Interest shall accrue and be
computed on the basis of a 365-day (or 366 day, as the case may be) year for the
actual number of days elapsed.
(b) Default Rate of Interest. Notwithstanding the foregoing
provisions of this Section 2, but subject to applicable law, any overdue
principal of and overdue interest on this Note shall bear interest, payable on
demand in immediately available funds, for each day from the date payment
thereof was due to the date of actual payment, at a rate equal to the rate of
interest otherwise in effect pursuant to the first sentence of this Section 2(a)
plus 5% per annum, and, upon and during the occurrence of an Event of Default
(as hereinafter defined), this Note shall bear interest, from the date of the
occurrence of such Event of Default until such Event of Default is cured or
waived, payable on demand in immediately available funds, at a rate equal to the
rate of interest otherwise in effect pursuant to the first sentence of this
Section 2(a) plus 5% per annum. Subject to applicable law, any interest that
shall accrue on overdue interest on this Note as provided in the preceding
sentence and shall not have been paid in full on or before the next Interest
Payment Date to occur after the Interest Payment Date on which the overdue
interest became due and payable shall itself be deemed to be overdue interest on
this Note to which the preceding sentence shall apply.
(c) No Usurious Interest. In the event that any interest rate
provided for herein shall be determined to be unlawful, such interest rate shall
be computed at the highest rate permitted by applicable law. Any payment by the
Borrower of any interest amount in excess of that permitted by law shall be
considered a mistake, with the excess being applied to the principal of this
Note without prepayment premium or penalty; if no such principal amount is
outstanding, such excess shall be returned to the Borrower.
3. Prepayment.
(a) Optional Prepayment. Upon notice given to the Holder as provided
in Section 3(b), the Borrower, at its option, may, at any time, prepay all or
any portion of the principal amount of this Note at any time, by paying to the
Holder such portion of the outstanding principal amount together with interest
accrued and unpaid thereon to the date fixed for such prepayment, and reasonable
out-of-pocket costs and expenses (including, without limitation, reasonable
fees, charges and disbursements of counsel), if any, associated with such
prepayment; provided, however, each prepayment of less than the full outstanding
balance of the principal amount of this Note shall be in an aggregate principal
amount of $500,000 or integral multiples of $100,000 in excess thereof.
(b) Mandatory Prepayment. If (i) the Borrower has paid and
discharged the Short-Term Note and the Long-Term Note (both as defined in the
Merger Agreement), and (ii) the lien in favor of the Holder on the Fixed Assets
(as defined in the Intercreditor Agreement) has not previously been released by
the Holder pursuant to Section 7.2 of the CEDS Security Agreement or the
Subsidiary Security Agreement, as the case may be, the
-2-
<PAGE>
Borrower will make a mandatory prepayment of the principal amount of this Note,
together with accrued interest thereon, to the full extent of any proceeds of a
sale or other disposition of the Fixed Assets, except for proceeds from sales or
other dispositions of worn-out or obsolete Fixed Assets which, individually or
in the aggregate, do not exceed $100,000 in any twelve month period.
(c) Notice of Prepayment. In connection with any optional prepayment
pursuant to Section 3(a) hereof, the Borrower shall give written notice of
prepayment of this Note, or any portion thereof, pursuant to this Section 3 not
less than 30 nor more than 60 days prior to the date fixed for such prepayment.
In connection with any mandatory prepayment pursuant to Section 3(b) hereof, the
Borrower shall give written notice of prepayment of this Note, or any portion
thereof, pursuant to this Section 3 not less than 5 nor more than 10 days prior
to the date fixed for such prepayment. Any notice of prepayment pursuant to this
Section 3 shall be given in the manner specified in Section 15. Upon notice of
prepayment pursuant to this Section 3 being given by the Borrower, the Borrower
covenants and agrees that it will prepay, on the date therein fixed for
prepayment, this Note or the portion hereof so called for prepayment, together
with interest accrued and unpaid thereon to the date fixed for such prepayment,
and the costs and expenses referred to in Section 3(a).
(d) Accrued Interest on Prepayment. All prepayments under this
Section 3 shall include payment of accrued interest on the principal amount of
this Note so prepaid and shall be applied first to all costs and expenses
payable under this Note, then to payment of default interest, if any, then to
payment of the base interest and thereafter to principal.
(e) Exchange Rights. At any time prior to the Holder's receipt of
any prepayment described herein, the Holder shall have the right to exercise its
exchange rights specified in Section 13 hereof and exchange such prepayment
amount (or any other amount outstanding) into shares of UST's common stock.
4. Amendment. No amendments or modifications of this Note shall be
effective unless made in writing and executed by the Borrower and the Holder.
5. Defaults and Remedies.
(a) Events of Default. An "Event of Default" shall occur if:
(i) the Borrower shall default in the payment of the principal of
this Note, when and as the same shall become due and payable, whether at
maturity or at a date fixed for prepayment or by acceleration or
otherwise, and such default shall remain uncured for a period of five
days; or
(ii) the Borrower shall default in the payment of any installment of
interest on this Note, when and as the same shall become due and payable,
whether at an Interest Payment Date or at a date fixed for prepayment or
by acceleration or otherwise, and such default shall remain uncured for a
period of five days; or
-3-
<PAGE>
(iii) an event of default shall have occurred under any one or more
of the Promissory Notes (other than this Note), in accordance with the
terms and provisions of such Promissory Notes; or
(iv) any event or condition shall occur that results in the
acceleration of the maturity of any indebtedness of the Borrower or any
subsidiary of the Borrower (each a "Subsidiary" and collectively the
"Subsidiaries") in the principal amount aggregating $2,000,000 or more; or
(v) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (a)
relief in respect of the Borrower or any Subsidiary thereof, or of a
substantial part of its property or assets, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal
or state bankruptcy, insolvency, receivership or similar law, (b) the
appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any Subsidiary, or for a
substantial part of its property or assets, or (c) the winding up or
liquidation of the Borrower or any Subsidiary thereof; and such proceeding
or petition shall continue undismissed for 60 days, or an order or decree
approving or ordering any of the foregoing shall be entered; or
(vi) the Borrower or any Subsidiary thereof shall (a) voluntarily
commence any proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or similar
law, (b) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described
in paragraph (v) of this Section 5(a), (c) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any of its Subsidiaries, or for a
substantial part of their property or assets, (d) file an answer admitting
the material allegations of a petition filed against it in any such
proceeding, (e) make a general assignment for the benefit of creditors,
(f) become unable, admit in writing its inability or fail generally to pay
its debts as they become due, (g) suspend the operation of its business,
or (h) take any action for the purpose of effecting any of the foregoing;
or
(vii) one or more judgments for the payment of money in an aggregate
amount in excess of $300,000 (to the extent not covered by insurance)
shall be rendered against the Borrower or any Subsidiary thereof and the
same shall remain undischarged for a period of 30 days during which
execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to levy upon assets or properties of the
Borrower or any Subsidiary thereof to enforce any such judgment.
(b) Acceleration. If an Event of Default occurs under Section
5(a)(v) or (vi), then the outstanding principal of and all accrued interest on
this Note shall automatically become immediately due and payable. If any other
Event of Default occurs and is continuing, the Holder, by written notice to the
Borrower, may declare the outstanding principal of and all accrued interest on
this Note immediately due and payable. Upon such declaration, such principal and
interest shall become immediately due and payable.
-4-
<PAGE>
6. Enforcement.
(a) Upon the occurrence of any one or more Events of Default, the
Holder of this Note may proceed to protect and enforce its rights hereunder by
suit in equity, action at law or by other appropriate proceeding.
(b) In case of any default under this Note, the Borrower will pay to
the Holder such amounts as shall be sufficient to cover the costs and expenses
(including, without limitation, attorney's fees and expenses) of such Holder due
to, or incurred as a consequence of, such default.
7. Remedies Cumulative; Not Waived. No remedy herein conferred upon
the Holder is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise. No course of dealing between the Borrower and the Holder or any
delay on the part of the Holder in exercising any rights hereunder shall operate
as a waiver of any right.
8. Waiver of Presentment. The Borrower expressly and specifically,
(i) waives grace, presentment for payment, demand for payment, notice of intent
to accelerate and notice of acceleration, notice of dishonor, protest and notice
of protest, notice of nonpayment, and any and all other notices, the filing of
suit and diligence in collecting this Note, (ii) agrees to any substitution,
subordination, exchange or release of any security held for the payment of this
Note and release of any party primarily or secondarily liable hereon, and (iii)
agrees to any extension or postponement of time of payment of this Note and to
any other indulgence with respect hereto without notice thereof.
9. Subordination. ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS
SUBORDINATED TO OTHER INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED IN,
AND IS OTHERWISE SUBJECT TO THE TERMS OF, THE INTERCREDITOR AND SUBORDINATION
AGREEMENT, DATED SEPTEMBER 24, 1999 (THE "INTERCREDITOR AGREEMENT"), AS THE SAME
MAY BE AMENDED, MODIFIED OR OTHERWISE SUPPLEMENTED FROM TIME TO TIME, BY AND
AMONG UST DELIVERY SYSTEMS, INC., AS BORROWER, GENERAL ELECTRIC CAPITAL
CORPORATION, AS AGENT FOR ITSELF AND THE SENIOR SECURED LENDERS, EACH SUBSIDIARY
OF BORROWER LISTED ON EXHIBIT A THERETO, BAYVIEW CAPITAL PARTNERS LP, AND THE
HOLDERS FROM TIME TO TIME OF THE OBLIGATIONS ARISING UNDER THIS NOTE.
10. Offset. The obligations of the Borrower under this Note are
subject to certain rights of offset in the manner as set forth in Section 9.5.5
of the Merger Agreement.
11. Transfer. This Note may be transferred or assigned, in whole or
in part, by the Holder at any time. The term "Holder" as used herein shall
include any transferee or assignee of this Note. In the event any Holder (the
"Transferor") shall transfer this Note to any other person
-5-
<PAGE>
(the "Transferee"), the Transferor and Transferee shall provide written notice
to the Borrower of such transfer, including the notice address of the Transferee
and the address to which future interest payments should be sent pursuant to
Section 2(a). Prior to the receipt of such notice, the Borrower shall be
entitled to treat the Transferor as the owner of this Note for all purposes,
including the payment of principal and interest.
12. Replacement of Note. On receipt by the Borrower of an affidavit
of an authorized representative of the Holder stating the circumstances of the
loss, theft, destruction or mutilation of this Note (and in the case of any such
mutilation, on surrender and cancellation of such Note), the Borrower, at its
expense, will promptly execute and deliver, in lieu thereof, a new Note of like
tenor. If required by the Borrower, such Holder must provide indemnity
sufficient in the reasonable judgment of the Borrower to protect the Borrower
from any loss which it may suffer if a lost, stolen or destroyed Note is
replaced.
13. Exchange Rights. This Note is exchangeable into shares of common
stock of UST in accordance with the terms and provisions of that certain
Exchange Agreement, dated of even date herewith, by and between UST and CEX.
14. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note made by or on behalf of the
Borrower shall bind its successors and assigns whether so expressed or not.
15. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when personally
delivered, five (5) business days after mailing when mailed by certified mail,
return receipt requested, or one (1) business day after sending via Federal
Express or similar overnight courier service, or when receipt is confirmed when
sent by facsimile. Such notices or other communications shall be sent to the
following addresses, unless other addresses are subsequently specified in
writing:
If to Borrower:
c/o United Shipping & Technology, Inc.
9850 51st Avenue North
Plymouth, Minnesota 55442
Attention: Timothy G. Becker
Facsimile No.: (612) 941-6440
Telephone No.: (612) 941-4080
-6-
<PAGE>
If to CEX:
c/o Corporate Express, Inc.
1 Environmental Way
Broomfield, Colorado 80021
Attention: Richard L. Millett, Jr.
Facsimile No.: (303) 664-3823
Telephone No.: (303) 664-3901
16. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
17. Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
18. Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
UST DELIVERY SYSTEMS, INC.
By:_____________________________________
Timothy G. Becker, Treasurer and CFO
-7-
<PAGE>
EXHIBIT A
LIST OF SUBSIDIARIES
CORPORATE EXPRESS DELIVERY SYSTEMS - INTERMOUNTAIN, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - MID-ATLANTIC, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - MID-WEST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - NEW ENGLAND, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - NORTHEAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - SOUTHEAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - SOUTHWEST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - WEST COAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - INTERMOUNTAIN, INC.
CORPORATE EXPRESS DELIVERY LEASING - MID-ATLANTIC, INC.
CORPORATE EXPRESS DELIVERY LEASING - MID-WEST, INC.
CORPORATE EXPRESS DELIVERY LEASING - NEW ENGLAND, INC.
CORPORATE EXPRESS DELIVERY LEASING - NORTHEAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - SOUTHEAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - SOUTHWEST, INC.
CORPORATE EXPRESS DELIVERY LEASING - WEST COAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - AIR DIVISION, INC.
AIR COURIER DISPATCH OF NEW JERSEY, INC.
MIDNITE EXPRESS INTERNATIONAL COURIER, INC.
TRICOR AMERICA, INC.
NEW DELAWARE DELIVERY, INC.
CORPORATE EXPRESS DELIVERY ADMINISTRATION, INC.
AMERICAN DELIVERY SYSTEM, INC.
CORPORATE EXPRESS DISTRIBUTION SERVICES, INC.
SUNBELT COURIER, INC.
-8-
Exhibit 10.4
THIS AGREEMENT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (1) REGISTRATION IN
COMPLIANCE WITH SUCH ACT AND SUCH STATE LAWS OR (2) AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS
NOT REQUIRED.
EXCHANGE AGREEMENT
This Exchange Agreement (this "Agreement") is made and entered into
as of September 24, 1999, by and among United Shipping & Technology, Inc., a
Utah corporation (the "Company"), UST Delivery Systems, Inc., a Delaware
corporation (the "Surviving Corporation"), and CEX Holdings, Inc., a Colorado
corporation ("CEX;" together with its successors and assigns, "Holder").
Capitalized terms used, but not defined, herein shall have the meaning ascribed
to them in the Merger Agreement (as defined below).
RECITALS
WHEREAS, CEX, Corporate Express Delivery Systems, Inc. ("CEDS"), the
Company and United Shipping & Technology Acquisition Corp. (as amended, "Merger
Sub") have entered into that Merger Agreement, dated as of September 8, 1999
(the "Merger Agreement"), pursuant to which (i) Merger Sub will merge with and
into CEDS and CEDS will be the surviving corporation, and (ii) CEDS will changes
its name to "UST Delivery Systems, Inc."; and
WHEREAS, a portion of the Merger Consideration is payable by the
issuance to CEX of a convertible subordinated promissory note of the Surviving
Corporation in the principal amount of $3,600,000 (the "Convertible Note"); and
WHEREAS, the Merger Agreement provides that the Convertible Note
shall be convertible into the Common Stock of the Company pursuant to an
Exchange Agreement to be entered into between the Company and CEX;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
AGREEMENTS
1. Exchange Rights. At any time on or after the date hereof and
until the date that the Convertible Note is paid in full, at Holder's election
and upon the terms and conditions set forth herein, Holder shall have the right
to purchase, by exchanging all or any portion of the principal balance of the
Convertible Note for shares of the Company's common stock, $.004 par value per
<PAGE>
share ("Common Stock"), at an exchange price of $4.59 per share, subject to
adjustment as provided below (the "Exchange Price"). The shares of Common Stock
to be issued to Holder shall be determined by dividing the portion of the
outstanding principal balance of the Convertible Note for which Holder has
exercised its rights hereunder by the Exercise Price. If there is any accrued
but unpaid interest on the principal balance of the Convertible Note exchanged
hereby, then the Company shall, or shall cause the Surviving Corporation to, pay
such interest on the Exchange Date (as defined below). The rights contemplated
by this Section 1 are herein referred to as the "Exchange Rights" and any Common
Stock issued pursuant to the exercise of the Exercise Rights is referred to as
the "Exchange Stock."
2. Exercise. The Exchange Rights may be exercised by Holder by (a)
providing written notice of exercise to the Company on or before the intended
date of exercise, which notice shall specify the principal balance to be
exchanged, and (b) surrendering the Convertible Note (properly endorsed if
required) at the principal office of the Company.
3. Issuance of Shares. The Company agrees that the shares of Common
Stock purchased hereby shall be issued to Holder as of the close of business on
the date on which the Convertible Note is surrendered in payment for such shares
as provided in Section 2 above (the "Exchange Date"). Certificates for the
shares of stock so purchased will be delivered to Holder within a reasonable
time, not exceeding 10 days after the Exchange Date, and, unless the entire
outstanding principal balance of the Convertible Note has been exchanged in
conjunction with such exercise of Exchange Rights (or has previously been paid
by the Surviving Corporation), the Surviving Corporation shall, and the Company
shall cause the Surviving Corporation to, issue to Holder a new Convertible
Note, of like tenor and terms, for the remaining principal balance due Holder
after such exchange. No fractional shares of Common Stock are to be issued upon
the exercise of the Exercise Rights, but the Company shall pay a cash adjustment
in respect of any fraction of a share which would otherwise be issuable in an
amount equal to the same fraction of the market price per share of Common Stock
on the day of exercise as determined in good faith by the Board of Directors of
the Company.
4. Covenants of Company. The Company covenants and agrees that all
shares which may be issued upon the exercise of the Exchange Rights will, upon
such issuance, be duly authorized and issued, fully paid, nonassessable and free
from all taxes, liens and charges with respect to the issue thereof, and without
limiting the generality of the foregoing, the Company covenants and agrees that
it will from time to time take all such action as may be required to assure that
the par value per share (if any) of the Common Stock is at all times equal to or
less than the then effective purchase price per share of the Common Stock
issuable pursuant to this Agreement. The Company further covenants and agrees
that during the period within which the Exchange Rights may be exercised, the
Company will at all times have authorized, and reserved for the purpose of issue
or transfer upon exercise of the rights evidenced by this Agreement, a
sufficient number of shares of its Common Stock to provide for the exercise of
the Exchange Rights.
2
<PAGE>
5. Anti-dilution Adjustments. The above provisions are subject to
the following:
(a) In order to prevent dilution of the Exchange Rights, the
Exchange Price shall be subject to adjustments as set forth in this Section 5 if
any of the events listed below occur prior to the exchange, or payment in full,
of the entire principal balance of the Convertible Note. Promptly following an
adjustment event, and in any event prior to the expiration of 30 days from the
date thereof or the delivery by the Surviving Corporation of any notice of
optional prepayment under the Convertible Note, whichever occurs first, the
Company will give written notice of each adjustment, by overnight courier
addressed to Holder at the address provided herein, which notice will state the
Exchange Price resulting from such adjustment and will set forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.
(b) In case the Company shall (i) pay a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii) subdivide
or reclassify its outstanding Common Stock into a greater number of shares, or
(iii) combine or reclassify its outstanding Common Stock into a smaller number
of shares, the Exchange Price in effect immediately prior to such event shall be
adjusted so that any portion of the Convertible Note thereafter surrendered for
exchange shall be entitled to receive the number of shares of Common Stock which
it would have owned or have been entitled to receive after the happening of such
event had such portion of the Convertible Note been exchanged immediately prior
to the happening of such event. An adjustment made pursuant to this paragraph
shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective on the effective date in the
case of subdivision, combination or reclassification. If any dividend or
distribution is not paid or made after the record date thereof, the Exchange
Price then in effect shall be appropriately readjusted.
(c) If the Company shall issue (or, pursuant to Section 5(c)(iii)
below, shall be deemed to have issued) any Common Stock other than Excluded
Stock for a consideration per share less than the Current Market Price (as
defined below) on the date the Company fixes the purchase price for such Common
Stock (excluding stock dividends, subdivisions, split-ups, combinations or
recapitalizations which are addressed by Sections 5(b) or (d)), the Exchange
Price in effect immediately after each such issuance shall be reduced,
concurrently with such issuance, to a price (calculated to the nearest cent)
determined by multiplying the applicable Exchange Price immediately prior to
such issuance by a fraction, the numerator of which shall be the sum of the
number of shares of Common Stock and Common Stock Equivalents (as defined below)
outstanding immediately prior to such issuance plus the number of shares of
Common Stock which the aggregate consideration received by the Company for such
issuance would purchase at such Current Market Price per share, and the
denominator of which shall be the number of shares of Common Stock and Common
Stock Equivalents outstanding immediately after such issuance. "Current Market
Price" means, with respect to shares of Common Stock, on any date, the average
of the daily closing price per share of Common Stock for the twenty consecutive
trading days immediately preceding such date as reported by the National
Association of Securities Dealers, Inc. ("NASDAQ") or a similar service if
NASDAQ is no longer reporting such information or if the Company is no longer
listed by NASDAQ.
3
<PAGE>
For the purposes of any adjustment of the Exchange Price pursuant to
this Section 5(c), the following provisions shall be applicable:
(i) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor after
deducting any discounts or commissions paid or incurred by the Company in
connection with the issuance and sale thereof.
(ii) In the case of the issuance of Common Stock for a consideration
in whole or in part other than cash, the consideration other than cash
shall be deemed to be the fair value thereof as determined in good faith
by the Board of Directors of the Company.
(iii) In the case of the issuance of (A) options to purchase or
rights to subscribe for Common Stock, (B) securities, by their terms,
convertible into or exchangeable for Common Stock, or (C) options to
purchase or rights to subscribe for securities, by their terms,
convertible into or exchangeable for Common Stock:
(1) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at
the time such options or rights were issued and for a consideration
equal to the consideration (determined in the manner provided in
subdivisions (i) and (ii) above of this Section 5(c)), if any,
received by the Company upon the issuance of such options or rights
plus the minimum purchase price provided in such options or rights
for the Common Stock covered thereby;
(2) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities, or upon the exercise of
options to purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or exchange
thereof, shall be deemed to have been issued at the time such
securities were issued or such options or rights were issued and for
a consideration equal to the consideration received by the Company
for any such securities and related options or rights (excluding any
cash received on account of accrued interest or accrued dividends),
plus the additional minimum consideration, if any, to be received by
the Company upon the conversion or exchange of such securities or
the exercise of any related options or rights (the consideration in
each case to be determined in the manner provided in subdivisions
(i) and (ii) above of this Section 5(c));
(3) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options or rights or
conversion of or exchange for such convertible or exchangeable
securities, or on any change in the minimum purchase price of such
options, rights or securities, other than a change resulting from
the antidilution provisions of such options, rights or securities,
the Exchange Price shall forthwith be readjusted to such Exchange
Price as would have been obtained had the adjustment made upon (a)
the issuance of such options, rights or securities not exercised,
converted or
4
<PAGE>
exchanged prior to such change or (b) the options or rights related
to such securities not converted or exchanged prior to such change,
as the case may be, been made upon the basis of such change; and
(4) on the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or
exchangeable securities, the Exchange Price shall forthwith be
readjusted to such Exchange Price as would have been obtained had
the adjustment made upon the issuance of such options, rights,
convertible or exchangeable securities or options or rights related
to such convertible or exchangeable securities, as the case may be,
been made upon the basis of the issuance of only the number of
shares of Common Stock actually issued upon the exercise of such
options or rights, upon the conversion or exchange of such
convertible or exchangeable securities or upon the exercise of the
options or rights related to such convertible or exchangeable
securities, as the case may be.
For purposes of this Section 5:
(i) "Excluded Stock" shall mean shares of Common Stock issued upon
the exercise of (i) the Company's outstanding stock options, warrants,
rights or subscriptions to purchase an aggregate shares of Common Stock,
which provide the holders thereof with the right to acquire 5,186,055
shares of Common Stock, (ii) the warrant to acquire 1,357,188 shares of
Common Stock to be issued to Bayview Capital Partner L.P. on the date
here, and (iii) up to 1,125,250 options to acquire shares of Common Stock
issued to officers, directors, employees and consultants of the Company
and its subsidiaries in accordance with the Company's 1995 Stock Option
Plan or 1996 Director Stock Option Plan, each in effect on the date
hereof.
(ii) "Common Stock Equivalents" shall mean all options, warrants,
convertible securities, securities and other rights (including the
Exchange Rights) to acquire Common Stock (without regard to whether such
options, warrants, convertible securities, securities and other rights are
then exchangeable, exercisable or convertible in full, in part or at all).
(d) In the event that any capital reorganization or reclassification
of the capital stock of the Company, or the consolidation or merger of the
Company with another corporation, or the sale of all or substantially all of the
Company's assets to another corporation is effected in such a way that the
Company's common stockholders will be entitled to receive stock, securities or
assets with respect to or in exchange for their Common Stock (an "Exchange
Event"), then, from and after such Exchange Event, the Exercise Rights will be
exercisable, upon the terms and conditions specified in this Agreement and in
lieu of the shares of Common Stock otherwise purchasable and receivable upon the
exercise of the Exchange Rights, for an amount of such stock, securities or
assets to which a holder of the number of shares of Common Stock purchasable
upon exercise of the Exercise Rights at the time of such Exchange Event would
have been entitled to receive upon such Exchange Event. Appropriate provisions
will be made with respect to the rights and interests of Holder to ensure that
the provisions of this Agreement (including without limitation the provisions
5
<PAGE>
to adjust the Exchange Price and the number of shares purchasable upon the
exercise of this Agreement) will be applicable, as nearly as may be, in relation
to any such stock, securities or assets deliverable upon the exercise of this
Agreement after an Exchange Event. The Company will not effect any Exchange
Event unless, prior to the consummation thereof, the successor or purchasing
corporation (if other than the Company) with respect to such Exchange Event,
assumes by written instrument executed and delivered to the holder at the
address of such holder as shown on the books of the Company, the obligation to
deliver to Holder such stock, securities or assets as, in accordance with the
foregoing provisions, Holder may be entitled to purchase.
6. [Intentionally Omitted].
7. Registration Rights.
(a) Incidental Registration. Each time the Company proposes to file
any registration statement under the Securities Act of 1933 (the "Securities
Act") in connection with the proposed offer and sale of Common Stock (other than
a registration statement on a form that does not permit the inclusion of shares
by its security holders) (a "Registration Statement"), it will notify Holder
and, if applicable, any other holder of Exchange Stock at least thirty (30) days
prior to such filing and will include in the Registration Statement (to the
extent permitted by applicable regulation), all or any portion of the Exchange
Stock to the extent requested by Holder or any such holder. Notwithstanding the
foregoing, the number of shares of Exchange Stock proposed to be registered on
behalf of Holder or any holder will be reduced pro rata with any other selling
shareholder (other than the Company) upon the good faith request of the managing
underwriter of such offering. If the Registration Statement has not become
effective within 6 months following the date notice is given to Holder, the
Company must again notify Holder and each holder of Exchange Stock in the manner
provided above.
(b) Demand Registration. The holders of fifty percent (50%) or more
of the Exchange Stock purchased or purchasable upon exercise of the Exchange
Rights (excluding any Exchange Stock that has previously been sold pursuant to a
Registration Statement) may request the registration of the Exchange Stock. Upon
receipt of such request, the Company will mail (by certified or registered mail,
return receipt requested) to Holder and each holder of any Exchange Stock, at
their last known post office address, written notice of such request, and each
holder will have 20 days from the date of deposit of such notice in the U.S.
mail to notify the Company in writing whether such holder wishes to include
their Exchange Stock in such registration. The Company will promptly use its
best efforts to register under the Securities Act all Exchange Stock which the
holders request in writing to be registered, and in a manner corresponding to
the methods of distribution described in such holders' request. The holders may
exercise the demand registration rights described in this Section 7(b) (i) only
twice, and (ii) only if the Company is entitled to use Form S-3 for secondary
offerings (or any successor form to Form S-3) to register the Exchange Stock
unless the Company fails to meet the requirements for the use of Form S-3 as a
result of any act or omission that is reasonably within the control of the
Company.
6
<PAGE>
(c) Expenses. All expenses of any registrations referred to in this
Section 7, except the fees of legal counsel to such holders and any underwriting
commissions or discounts, and transfer taxes applicable to the Exchange Stock,
will be borne by the Company.
(d) Miscellaneous. The Company will furnish to each holder for whom
a Registration Statement has been filed a reasonable number of copies of any
prospectus included in such filing and will amend or supplement the same as
required during the period of required use thereof. The Company will maintain
the effectiveness of any Registration Statement filed by the Company, whether or
not at the request of the holders, until all the Exchange Stock registered under
such Registration Statement are sold pursuant thereto or six calendar months,
whichever is shorter. In the case of the filing of any Registration Statement,
and to the extent permissible under the Securities Act and controlling precedent
thereunder, the Company and the holders of Exchange Stock covered by such
Registration Statement will provide cross indemnification agreements to each
other in customary scope covering the accuracy and completeness of the
information furnished by each. The holders of the Exchange Stock being so
registered agree to cooperate with the Company in the preparation and filing of
any such Registration Statement, and in the furnishing of information concerning
the holder for inclusion therein, or in any efforts by the Company to establish
that the proposed sale is exempt under the Act as to any proposed distribution.
8. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when personally
delivered, five business days after mailing when mailed by certified mail,
return receipt requested, or one business day after sending via Federal Express
or similar overnight courier service, or when receipt is confirmed when sent by
facsimile. Such notices or other communications shall be sent to the following
addresses, unless other addresses are subsequently specified in writing:
If to the Company or the Surviving Corporation:
United Shipping & Technology, Inc.
9850 51st Avenue North
Plymouth, Minnesota 55442
Attention: Timothy G. Becker
Facsimile No.: (612) 941-6440
Telephone No.: (612) 941-4080
7
<PAGE>
If to CEX:
c/o Corporate Express, Inc.
1 Environmental Way
Broomfield, Colorado 80021
Attention: Richard L. Millett, Jr.
Facsimile No.: (303) 664-3823
Telephone No.: (303) 664-3901
If to any Holder other than CEX:
The address specified by such Holder
9. Governing Law. This Agreement will be construed and enforced in
accordance with the substantive laws of the State of Colorado without giving
effect to its conflict of laws principles.
10. Amendments. Any amendment, supplement, variation, alteration or
modification to this Agreement must be made in writing and duly executed by an
authorized representative or agent of each of the parties hereto.
11. Assignment. This Agreement and all the rights and obligations
granted hereby shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns, it being expressly agreed that the
Exchange Rights shall not be assigned by Holder except in connection with an
assignment of all or a portion of the Convertible Note.
12. Entire Agreement. This Agreement, together with the Merger
Agreement and the Ancillary Agreements (as defined in the Merger Agreement),
constitutes the entire agreement between the parties and supersede any and all
other prior or contemporaneous understandings, negotiations or agreements
between the parties relating to the transactions contemplated hereby or the
subject matter of this Agreement, and shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
13. No Waiver. The failure in any one or more instances of a party
to insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or to
waive any breach of any of the terms, covenants or conditions of this Agreement,
shall not be construed as a subsequent waiver of any such terms, covenants,
conditions, rights or privileges, but the same shall continue and remain in full
force and effect as if no such forbearance or waiver had occurred. No waiver
shall be effective unless it is in writing and signed by an authorized
representative of the waiving party.
14. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any other jurisdiction shall not invalidate or render
unenforceable such provision
8
<PAGE>
in any other jurisdiction. To the extent permitted by applicable law, each party
hereby waives the benefit of any law which renders any provision hereof
prohibited or unenforceable in any respect.
15. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, and all such counterparts shall
be deemed to constitute one and the same instrument.
* * * * *
9
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
signed by its duly authorized officer and dated as of the date first above
written.
COMPANY:
United Shipping & Technology, Inc.
By:_____________________________________
Timothy G. Becker, Treasurer and CFO
SURVIVING CORPORATION:
UST Delivery Systems, Inc.
By:_____________________________________
Timothy G. Becker, Treasurer and CFO
CEX:
CEX Holdings, Inc.
By:_____________________________________
Richard L. Millett, Jr., Vice President
10
Exhibit 10.5
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
Dated as of September 24, 1999
among
UST DELIVERY SYSTEMS, INC.,
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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1. AMOUNT AND TERMS OF CREDIT.........................................................2
1.1. Credit Facilities......................................................2
1.2. Prepayments............................................................5
1.3. Use of Proceeds........................................................7
1.4. Interest and Applicable Margins........................................7
1.5. Eligible Accounts......................................................9
1.6. Cash Management Systems...............................................11
1.7. Fees..................................................................11
1.8. Receipt of Payments...................................................12
1.9. Application and Allocation of Payments................................12
1.10. Loan Account and Accounting...........................................13
1.11. Indemnity.............................................................14
1.12. Access................................................................15
1.13. Taxes.................................................................16
1.14. Capital Adequacy; Increased Costs; Illegality.........................16
1.15. Single Loan...........................................................18
2. CONDITIONS PRECEDENT..............................................................18
2.1. Conditions to the Initial Loans.......................................18
2.2. Further Conditions to Each Loan.......................................20
3. REPRESENTATIONS AND WARRANTIES....................................................21
3.1. Corporate Existence; Compliance with Law..............................21
3.2. Executive Offices; FEIN...............................................21
3.3. Corporate Power, Authorization, Enforceable Obligations...............21
3.4. Financial Statements and Projections..................................22
3.5. Material Adverse Effect...............................................23
3.6. Ownership of Property; Liens..........................................23
3.7. Labor Matters.........................................................24
3.8. Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness..........................................................25
3.9. Government Regulation.................................................25
3.10. Margin Regulations....................................................25
3.11. Taxes.................................................................26
3.12. ERISA.................................................................26
3.13. No Litigation.........................................................27
3.14. Brokers...............................................................27
3.15. Intellectual Property.................................................27
3.16. Full Disclosure.......................................................28
</TABLE>
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<TABLE>
<S> <C> <C>
3.17. Environmental Matters.................................................28
3.18. Insurance.............................................................29
3.19. Deposit and Disbursement Accounts.....................................29
3.20. Government Contracts..................................................29
3.21. Customer and Trade Relations..........................................29
3.22. Agreements and Other Documents........................................30
3.23. Solvency..............................................................30
3.24. Year 2000 Representations.............................................30
3.25. Merger Agreement......................................................30
3.26. Subordinated Debt.....................................................31
4. FINANCIAL STATEMENTS AND INFORMATION..............................................31
4.1. Reports and Notices...................................................31
4.2. Communication with Accountants........................................32
5. AFFIRMATIVE COVENANTS.............................................................32
5.1. Maintenance of Existence and Conduct of Business......................32
5.2. Payment of Obligations................................................32
5.3. Books and Records.....................................................33
5.4. Insurance; Damage to or Destruction of Collateral.....................33
5.5. Compliance with Laws..................................................35
5.6. Supplemental Disclosure...............................................35
5.7. Intellectual Property.................................................36
5.8. Environmental Matters.................................................36
5.9. Landlords' Agreements, Mortgagee Agreements and Bailee Letters........37
5.10. Further Assurances....................................................37
5.11. Computer Systems......................................................37
6. NEGATIVE COVENANTS................................................................37
6.1. Mergers, Subsidiaries, Etc............................................37
6.2. Investments; Loans and Advances.......................................38
6.3. Indebtedness..........................................................38
6.4. Employee Loans and Affiliate Transactions.............................39
6.5. Capital Structure and Business........................................39
6.6. Guaranteed Indebtedness...............................................40
6.7. Liens.................................................................40
6.8. Sale of Stock and Assets..............................................40
6.9. ERISA.................................................................41
6.10. Financial Covenants...................................................41
6.11. Hazardous Materials...................................................41
6.12. Sale-Leasebacks.......................................................41
6.13. Cancellation of Indebtedness..........................................42
6.14. Restricted Payments...................................................42
</TABLE>
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<TABLE>
<S> <C> <C>
6.15. Change of Corporate Name or Location; Change of Fiscal Year...........42
6.16. No Impairment of Intercompany Transfers...............................42
6.17. No Speculative Transactions...........................................43
6.18. Leases................................................................43
6.19. Changes Relating to Subordinated Debt.................................43
6.20. Iver Note.............................................................43
7. TERM..............................................................................44
7.1. Termination...........................................................44
7.2. Survival of Obligations Upon Termination of Financing Arrangements....44
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES............................................44
8.1. Events of Default.....................................................44
8.2. Remedies..............................................................47
8.3. Waivers by Credit Parties.............................................47
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT...............................48
9.1. Assignment and Participations.........................................48
9.2. Appointment of Agent..................................................50
9.3. Agent's Reliance, Etc.................................................50
9.4. GE Capital and Affiliates.............................................51
9.5. Lender Credit Decision................................................51
9.6. Indemnification.......................................................52
9.7. Successor Agent.......................................................52
9.8. Setoff and Sharing of Payments........................................53
9.9. Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert...............................................................54
10. SUCCESSORS AND ASSIGNS............................................................56
10.1. Successors and Assigns................................................56
11. MISCELLANEOUS.....................................................................57
11.1. Complete Agreement; Modification of Agreement.........................57
11.2. Amendments and Waivers................................................57
11.3. Fees and Expenses.....................................................59
11.4. No Waiver.............................................................60
11.5. Remedies..............................................................61
11.6. Severability..........................................................61
11.7. Conflict of Terms.....................................................61
11.8. Confidentiality.......................................................61
11.9. GOVERNING LAW.........................................................62
11.10. Notices...............................................................63
11.11. Section Titles........................................................63
11.12. Counterparts..........................................................63
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
11.13. WAIVER OF JURY TRIAL..................................................63
11.14. Press Releases........................................................64
11.15. Reinstatement.........................................................64
11.16. Advice of Counsel.....................................................65
11.17. No Strict Construction................................................65
11.18. Payment of Certain Subordinated Note..................................65
</TABLE>
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<PAGE>
INDEX OF APPENDICES
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b)(ii) - Form of Swing Line Note
Exhibit 1.4(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Responsible Individual
Schedule 1.3 - Sources and Uses; Funds Flow Memorandum
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Pro Forma
Schedule 3.4(C) - Projections
Schedule 3.5 - Material Adverse Effect
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Annex A (Recitals) - Definitions
Annex B (Section 1.6) - Cash Management System
Annex C (Section 2.1(a)) - Schedule of Additional Closing Documents
Annex D (Section 4.1(a)) - Financial Statements and Projections - Reporting
Annex E (Section 4.1(b)) - Collateral Reports
Annex F (Section 6.10) - Financial Covenants
Annex G (Section 9.9(a)) - Lenders' Wire Transfer Information
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<PAGE>
Annex H (Section 11.10) - Notice Addresses
Annex I (from Annex A-
Commitments definition) - Commitments as of Closing Date
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<PAGE>
CREDIT AGREEMENT, dated as of September 24, 1999 among UST Delivery
Systems, Inc., a Delaware corporation formerly known as Corporate Express
Delivery Systems, Inc. ("Borrower"); the other Credit Parties signatory hereto;
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (in its individual
capacity, "GE Capital"), for itself, as Lender, and as Agent for Lenders, and
the other Lenders signatory hereto from time to time.
RECITALS
WHEREAS, Borrower desires that Lenders extend a revolving credit
facility to Borrower of up to Fifty-Five Million Dollars ($55,000,000) in the
aggregate for the purpose of funding a portion of the Merger and refinancing
certain indebtedness of Borrower and to provide (a) working capital financing
for Borrower, and (b) funds for other general corporate purposes of Borrower;
and for these purposes, Lenders are willing to make certain loans and other
extensions of credit to Borrower of up to such amount upon the terms and
conditions set forth herein; and
WHEREAS, Borrower desires to secure all of its obligations under the
Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon all of its existing and after-acquired
personal and real property; and
WHEREAS, United Shipping & Technology, Inc., a Utah corporation
("Holdings") is willing to guaranty all of the obligations of Borrower to
Lenders under the Loan Documents and to pledge to Agent, for the benefit of
Agent and Lenders, all of the capital stock of Borrower to secure such guaranty;
and
WHEREAS, certain Subsidiaries of Borrower are willing to guaranty
all of the obligations of Borrower to Lenders under the Loan Documents, which
guaranty is to be secured by existing and after-acquired personal and real
property of such Subsidiaries; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A. All Annexes, Disclosure Schedules,
Exhibits and other attachments (collectively, "Appendices") hereto, or expressly
identified to this Agreement, are incorporated herein by reference, and taken
together, shall constitute but a single agreement. These Recitals shall be
construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
<PAGE>
1. AMOUNT AND TERMS OF CREDIT
1.1. Credit Facilities.
(a) Revolving Credit Facility.
(i) Subject to the terms and conditions hereof, each Revolving
Lender agrees to make available from time to time until the Commitment
Termination Date its Pro Rata Share of advances (each, a "Revolving Credit
Advance"). The Pro Rata Share of the Revolving Loan of any Revolving
Lender shall not at any time exceed its separate Revolving Loan
Commitment. The obligations of each Revolving Lender hereunder shall be
several and not joint. The aggregate amount of Revolving Credit Advances
outstanding shall not exceed at any time the lesser of (A) the Maximum
Amount and (B) the Borrowing Base, in each case less the sum of the Swing
Line Loan outstanding at such time ("Borrowing Availability"). Until the
Commitment Termination Date, Borrower may from time to time borrow, repay
and reborrow under this Section 1.1(a). Each Revolving Credit Advance
shall be made on notice by Borrower to the representative of Agent
identified on Schedule 1.1 at the address specified thereon. Those notices
must be given no later than (1) 11:00 a.m. (Chicago time) on the Business
Day of the proposed Revolving Credit Advance, in the case of an Index Rate
Loan, or (2) 11:00 a.m. (Chicago time) on the date which is three (3)
Business Days prior to the proposed Revolving Credit Advance, in the case
of a LIBOR Loan. Each such notice (a "Notice of Revolving Credit Advance")
must be given in writing (by telecopy or overnight courier) substantially
in the form of Exhibit 1.1(a)(i), and shall include the information
required in such Exhibit and such other information as may be required by
Agent. If Borrower desires to have the Revolving Credit Advances bear
interest by reference to a LIBOR Rate, it must comply with Section 1.4(e).
(ii) Borrower shall execute and deliver to each Revolving Lender a
note to evidence the Revolving Loan Commitment of that Revolving Lender.
Each note shall be in the principal amount of the Revolving Loan
Commitment of the applicable Revolving Lender, dated the Closing Date and
substantially in the form of Exhibit 1.1(a)(ii) (each a "Revolving Note"
and, collectively, the "Revolving Notes"). Each Revolving Note shall
represent the obligation of Borrower to pay the amount of each Revolving
Lender's Revolving Loan Commitment or, if less, the applicable Revolving
Lender's Pro Rata Share of the aggregate unpaid principal amount of all
Revolving Credit Advances to Borrower together with interest thereon as
prescribed in Section 1.4. The entire unpaid balance of the Revolving Loan
and all other non-contingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment
Termination Date.
(iii) At the request of Borrower, in its discretion Agent may (but
shall have absolutely no obligation to), make Revolving Credit Advances to
Borrower on behalf
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<PAGE>
of Revolving Lenders in amounts which cause the outstanding balance of the
aggregate Revolving Loan to exceed the Borrowing Base (less the Swing Line
Loan) (any such excess Revolving Credit Advances are herein referred to
collectively as "Overadvances"), and no such event or occurrence shall
cause or constitute a waiver by Agent or Lenders of any Default or Event
of Default that may result therefrom or of Agent's, the Swing Line
Lender's or Revolving Lenders' right to refuse to make any further
Overadvances, Swing Line Advances or Revolving Credit Advances, as the
case may be, at any time that an Overadvance exists or would result
therefrom. In addition, Overadvances may be made even if the conditions to
lending set forth in Section 2 have not been met. All Overadvances shall
constitute Index Rate Loans, shall bear interest at the Default Rate and
shall be payable on demand. Except as otherwise provided in Section
1.9(b), the authority of Agent to make Overadvances is limited to an
aggregate amount not to exceed $1,000,000 at any time, shall not cause the
Revolving Loan to exceed the Maximum Amount, and may be revoked
prospectively by a written notice to Agent signed by Revolving Lenders
holding fifty percent (50%) or more of the Revolving Loan Commitments.
(b) Swing Line Facility.
(i) Agent shall notify the Swing Line Lender upon Agent's receipt of
any Notice of Revolving Credit Advance. Subject to the terms and
conditions hereof, the Swing Line Lender may, in its discretion, make
available from time to time until the Commitment Termination Date advances
(each, a "Swing Line Advance") in accordance with any such notice. The
aggregate amount of Swing Line Advances outstanding shall not exceed the
lesser of (A) the Swing Line Commitment and (B) the lesser of the Maximum
Amount and (except for Overadvances) the Borrowing Base, in each case,
less the outstanding balance of the Revolving Loan at such time ("Swing
Line Availability"). Until the Commitment Termination Date, Borrower may
from time to time borrow, repay and reborrow under this Section 1.1(b).
Each Swing Line Advance shall be made pursuant to a Notice of Revolving
Credit advance delivered by Borrower to Agent in accordance with Section
1.1(a). Those notices must be given no later than 11:00 a.m. (Chicago
time) on the Business Day of the proposed Swing Line Advance.
Notwithstanding any other provision of this Agreement or the other Loan
Documents, the Swing Line Loan shall constitute an Index Rate Loan.
Borrower shall repay the aggregate outstanding principal amount of the
Swing Line Loan upon demand therefor by Agent.
(ii) Borrower shall execute and deliver to the Swing Line Lender a
promissory note to evidence the Swing Line Commitment. Such note shall be
in the principal amount of the Swing Line Commitment of the Swing Line
Lender, dated the Closing Date and substantially in the form of Exhibit
1.1(b)(ii) (the "Swing Line Note"). The Swing Line Note shall represent
the obligation of Borrower to pay the amount of the Swing Line Commitment
or, if less, the aggregate unpaid principal
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<PAGE>
amount of all Swing Line Advances made to Borrower together with interest
thereon as prescribed in Section 1.4. The entire unpaid balance of the
Swing Line Loan and all other non-contingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Commitment Termination Date if not sooner paid in full.
(iii) Refunding of Swing Line Loans. The Swing Line Lender, at any
time and from time to time in its sole and absolute discretion but no less
frequently than once weekly may on behalf of Borrower (and Borrower hereby
irrevocably authorizes the Swing Line Lender to so act on its behalf)
request each Revolving Lender (including the Swing Line Lender) to make a
Revolving Credit Advance to Borrower (which shall be an Index Rate Loan)
in an amount equal to such Revolving Lender's Pro Rata Share of the
principal amount of the Swing Line Loan (the "Refunded Swing Line Loan")
outstanding on the date such notice is given. Unless any of the events
described in Sections 8.1(h) or 8.1(i) shall have occurred (in which event
the procedures of Section 1.1(b)(iv) shall apply) and regardless of
whether the conditions precedent set forth in this Agreement to the making
of a Revolving Credit Advance are then satisfied, each Revolving Lender
shall disburse directly to Agent, its Pro Rata Share of a Revolving Credit
Advance on behalf of the Swing Line Lender, prior to 2:00 p.m. (Chicago
time), in immediately available funds on the Business Day next succeeding
the date such notice is given. The proceeds of such Revolving Credit
Advances shall be immediately paid to the Swing Line Lender and applied to
repay the Refunded Swing Line Loan.
(iv) Participation in Swing Line Loans. If, prior to refunding a
Swing Line Loan with a Revolving Credit Advance pursuant to Section
1.1(b)(iii), one of the events described in Sections 8.1(h) or 8.1(i)
shall have occurred, then, subject to the provisions of Section 1.1(b)(v)
below, each Revolving Lender will, on the date such Revolving Credit
Advance was to have been made for the benefit of Borrower, purchase from
the Swing Line Lender an undivided participation interest in the Swing
Line Loan in an amount equal to its Pro Rata Share of such Swing Line
Loan. Upon request, each Revolving Lender will promptly transfer to the
Swing Line Lender, in immediately available funds, the amount of its
participation.
(v) Revolving Lenders' Obligations Unconditional. Each Revolving
Lender's obligation to make Revolving Credit Advances in accordance with
Section 1.1(b)(iii) and to purchase participating interests in accordance
with Section 1.1(b)(iv) shall be absolute and unconditional and shall not
be affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Revolving Lender may have
against the Swing Line Lender, Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of any Default or Event of
Default; (C) any inability of Borrower to satisfy the conditions precedent
to borrowing set forth in this Agreement on the date
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<PAGE>
upon which such participating interest is to be purchased or (D) any other
circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing. If any Revolving Lender does not make available to Agent
or the Swing Line Lender, as applicable, the amount required pursuant to
Section 1.1(b)(iii) or 1.1(b)(iv), as the case may be, the Swing Line
Lender shall be entitled to recover such amount on demand from such
Revolving Lender, together with interest thereon for each day from the
date of non-payment until such amount is paid in full at the Federal Funds
Rate for the first two (2) Business Days and at the Index Rate thereafter.
(c) Reliance on Notices. Agent shall be entitled to rely upon, and
shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Conversion/Continuation or similar notice believed by Agent
to be genuine. Agent may assume that each Person executing and delivering such a
notice was duly authorized, unless the responsible individual acting thereon for
Agent has actual knowledge to the contrary.
1.2. Prepayments.
(a) Voluntary Termination. Borrower may at any time on at least ten
(10) days' prior written notice to Agent terminate the Revolving Loan
Commitment; provided that upon such termination, all Loans and other Obligations
shall be immediately due and payable in full. Any such voluntary prepayment and
any such termination of the Revolving Loan Commitment must be accompanied by the
payment of the fee required by Section 1.7(c), if any, plus the payment of any
LIBOR funding breakage costs in accordance with Section 1.11(b). Upon any such
prepayment and termination of the Revolving Loan Commitment, Borrower's right to
request Revolving Credit Advances or request Swing Line Advances, shall
simultaneously be terminated.
(b) Mandatory Prepayments.
(i) If at any time the outstanding balance of the Revolving Loan
exceeds the lesser of (A) the Maximum Amount and (B) the Borrowing Base,
less, in each case, the outstanding Swing Line Loan at such time, Borrower
shall immediately repay the aggregate outstanding Revolving Credit
Advances to the extent required to eliminate such excess. Notwithstanding
the foregoing, any Overadvance made pursuant to Section 1.1(a)(iii) shall
be repaid only on demand.
(ii) Subject to Seller's right to receive proceeds of any sale of
Borrower's and its Subsidiaries' fixed assets as described in the
Subordinated Notes, immediately upon receipt by any Credit Party (other
than Holdings) of proceeds of any asset disposition (including
condemnation proceeds), but excluding proceeds of asset dispositions
permitted by Section 6.8(a) or any sale of Stock of any Subsidiary of any
Credit Party, Borrower shall prepay the Loans in an amount equal to all
such proceeds, net of (A) commissions and other reasonable and customary
transaction costs, fees and expenses properly attributable to such
transaction and payable by
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<PAGE>
Borrower in connection therewith (in each case, paid to non-Affiliates),
(B) transfer taxes, (C) amounts payable to holders of senior Liens (to the
extent such Liens constitute Permitted Encumbrances hereunder), if any,
and (D) an appropriate reserve for income taxes in accordance with GAAP in
connection therewith; provided, that (a) the Credit Parties shall be
permitted to sell up to an aggregate of $250,000 of capital equipment
without making mandatory prepayments as described in this Section
1.2(b)(ii) so long as the applicable Credit Party reinvests the proceeds
of any such sale in substantially similar capital equipment of
substantially equal value within thirty (30) days of such sale, and (b)
the Credit Parties shall be permitted to apply proceeds of asset
dispositions to repay purchase money Indebtedness permitted and described
in Section 6.7(c) of this Agreement. Any such prepayment shall be applied
in accordance with clause (c) below.
(iii) If Holdings or Borrower issues Stock no later than the
Business Day following the date of receipt of the proceeds thereof
(excluding Stock issued pursuant to the exercise of the Warrant call or
pursuant to options issued under an employee stock option plan) or
Borrower issues any debt securities, Borrower shall prepay the Loans in an
amount equal to fifty percent (50%) of such proceeds, net of underwriting
discounts and commissions and other reasonable costs paid to
non-Affiliates in connection therewith. Any such prepayment shall be
applied in accordance with clause (b) below.
(c) Application of Certain Mandatory Prepayments. Any prepayments
made by Borrower pursuant to clauses (b)(ii) and (b)(iii) above shall be applied
as follows: first, to Fees and reimbursable expenses of Agent then due and
payable pursuant to any of the Loan Documents; second, to interest then due and
payable on the Swing Line Loan; third, to the principal balance of the Swing
Line Loan until the same shall have been repaid in full; fourth, to interest
then due and payable on the Revolving Credit Advances; and fifth, to the
outstanding principal balance of Revolving Credit Advances until the same shall
have been paid in full. Neither the Revolving Loan Commitment nor the Swing Line
Commitment shall be permanently reduced by the amount of any such prepayments.
(d) Application of Prepayments from Insurance Proceeds. Prepayments
from insurance proceeds in accordance with Section 5.4(c) shall be applied as
follows: insurance proceeds from casualties or losses shall be applied first to
the Swing Line Loans and second to the Revolving Credit Advances. Neither the
Revolving Loan Commitment nor the Swing Line Loan Commitment shall be
permanently reduced by the amount of any such prepayments.
(e) Nothing in this Section 1.2 shall be construed to constitute
Agent's or any Lender's consent to any transaction referred to in clauses
(b)(ii) and (b)(iii) above which is not permitted by other provisions of this
Agreement or the other Loan Documents.
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<PAGE>
1.3. Use of Proceeds.
Borrower shall utilize the proceeds of the Revolving Loan and the
Swing Line Loan solely for Merger and the Refinancing (and to pay any related
transaction expenses), and for the financing of Borrower's ordinary working
capital and general corporate needs (but excluding in any event the making of
any Restricted Payment not specifically permitted by Section 6.14). Disclosure
Schedule (1.3) contains a description of Borrower's sources and uses of funds as
of the Closing Date, including Loans to be made on that date, and a funds flow
memorandum detailing how funds from each source are to be transferred to
particular uses.
1.4. Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the ratable benefit of
Lenders in accordance with the various Loans being made by each Lender, in
arrears on each applicable Interest Payment Date, at the following rates: (i)
with respect to the Revolving Credit Advances, the Index Rate plus the
Applicable Revolver Index Margin per annum or, at the election of Borrower, the
applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum, based
on the aggregate Revolving Credit Advances outstanding from time to time; and
(ii) with respect to the Swing Line Loan, the Index Rate plus the Applicable
Revolver Index Margin per annum.
The Applicable Revolver Index Margin and Applicable Revolver LIBOR
Margin will be six tenths of one percent (0.60%) and three percent (3.00%) per
annum, respectively.
(b) If any payment on any Loan becomes due and payable on a day
other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a three hundred and sixty (360)
day year, in each case for the actual number of days occurring in the period for
which such interest and Fees are payable. The Index Rate shall be determined
each day based upon the Index Rate as in effect each day. Each determination by
Agent of an interest rate and Fees hereunder shall be conclusive, absent
manifest error.
(d) So long as an Event of Default shall have occurred and be
continuing under Section 8.1(a), (h) or (i), or so long as any other Default or
Event of Default shall have occurred and be continuing and at the election of
Agent (or upon the written request of Requisite Lenders) confirmed by written
notice from Agent to Borrower, the interest rates applicable to the Loans shall
be increased by two percent (2%) per annum above the rates of interest otherwise
applicable hereunder ("Default Rate"), and all outstanding Obligations
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<PAGE>
shall bear interest at the Default Rate applicable to such Obligations. Interest
at the Default Rate shall accrue from the initial date of such Default or Event
of Default until that Default or Event of Default is cured or waived and shall
be payable upon demand.
(e) So long as no Default or Event of Default shall have occurred
and be continuing, and subject to the additional conditions precedent set forth
in Section 2.2, Borrower shall have the option to (i) request that any Revolving
Credit Advances be made as a LIBOR Loan, (ii) convert at any time all or any
part of outstanding Loans (other than the Swing Line Loan) from Index Rate Loans
to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to
payment of LIBOR breakage costs in accordance with Section 1.11(b) if such
conversion is made prior to the expiration of the LIBOR Period applicable
thereto, or (iv) continue all or any portion of any Loan (other than the Swing
Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period
and the succeeding LIBOR Period of that continued Loan shall commence on the
last day of the LIBOR Period of the Loan to be continued. Any Loan to be made or
continued as, or converted into, a LIBOR Loan must be in a minimum amount of
$5,000,000 and integral multiples of $500,000 in excess of such amount. Any such
election must be made by 11:00 a.m. (Chicago time) on the third (3rd) Business
Day prior to (1) the date of any proposed Advance which is to bear interest at
the LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans
to be continued as such, or (3) the date on which Borrower wishes to convert any
Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower in
such election. If no election is received with respect to a LIBOR Loan by 11:00
a.m. (Chicago time) on the third (3rd) Business Day prior to the end of the
LIBOR Period with respect thereto (or if a Default or an Event of Default shall
have occurred and be continuing or the additional conditions precedent set forth
in Section 2.2 shall not have been satisfied), that LIBOR Loan shall be
converted to an Index Rate Loan at the end of its LIBOR Period. Borrower must
make such election by notice to Agent in writing, by telecopy or overnight
courier. In the case of any conversion or continuation, such election must be
made pursuant to a written notice (a "Notice of Conversion/Continuation") in the
form of Exhibit 1.4(e). No Loan may be made as or converted into a LIBOR Loan
until fifteen (15) days after the Closing Date.
(f) Notwithstanding anything to the contrary set forth in this
Section 1.4, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest which would have been received had
the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, interest hereunder shall be paid at the
rate(s) of
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interest and in the manner provided in Sections 1.4(a) through (e) above, unless
and until the rate of interest again exceeds the Maximum Lawful Rate, and at
that time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount which such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.4(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.9 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.
1.5. Eligible Accounts.
Based on the most recent Borrowing Base Certificate delivered by
Borrower to Agent and on other information available to Agent, Agent shall in
its reasonable credit judgment and in good faith determine which Accounts of
Borrower and Borrowing Base Subsidiaries shall be "Eligible Accounts" for
purposes of this Agreement. In determining whether a particular Account
constitutes an Eligible Account, Agent shall not include any such Account to
which any of the exclusionary criteria set forth below applies. Agent reserves
the right, at any time and from time to time after the Closing Date, to adjust
any such criteria, to establish new criteria and to adjust advance rates with
respect to Eligible Accounts, in its reasonable credit judgment, subject to the
approval of Supermajority Revolving Lenders in the case of adjustments, new
criteria or changes in advance rates which have the effect of making more credit
available. Eligible Accounts shall not include any Account of Borrower or any
Borrowing Base Subsidiary:
(a) which does not arise from the sale of goods or the performance
of services by Borrower or a Borrowing Base Subsidiary in the ordinary course of
its business;
(b) (i) upon which Borrower's or a Borrowing Base Subsidiary's right
to receive payment is not absolute or is contingent upon the fulfillment of any
condition whatsoever or (ii) as to which Borrower or a Borrowing Base Subsidiary
is not able to bring suit or otherwise enforce its remedies against the Account
Debtor through judicial process, or (iii) if the Account represents a progress
billing consisting of an invoice for goods sold or used or services rendered
pursuant to a contract under which the Account Debtor's obligation to pay that
invoice is subject to Borrower's or a Borrowing Base Subsidiary's completion of
further performance under such contract or is subject to the equitable lien of a
surety bond issuer;
(c) to the extent that any defense, counterclaim, setoff or dispute
is asserted as to such Account;
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(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, acceptable to Agent in form
and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by Borrower or a Borrowing Base Subsidiary
or (ii) is subject to any right, claim, security interest or other interest of
any other Person, other than Liens in favor of Agent, on behalf of itself and
Lenders and subordinated Liens in favor of Bayview;
(g) that arises from a sale to any director, officer, other employee
or Affiliate of any Credit Party, or to any entity which has any common officer
or director with any Credit Party;
(h) that is the obligation of an Account Debtor that is the United
States government or a political subdivision thereof, or any state or
municipality or department, agency or instrumentality thereof unless Agent, in
its sole discretion, has agreed to the contrary in writing and Borrower or the
applicable Borrowing Base Subsidiary, if necessary or desirable, has complied
with the Federal Assignment of Claims Act of 1940, and any amendments thereto,
or any applicable state statute or municipal ordinance of similar purpose and
effect with respect to such obligation;
(i) that is the obligation of an Account Debtor located in a foreign
country other than Canada (excluding the provinces of Quebec, Newfoundland, Nova
Scotia and Prince Edward Island) unless payment thereof is assured by a letter
of credit assigned and delivered to Agent, satisfactory to Agent as to form,
amount and issuer;
(j) to the extent Borrower, a Borrowing Base Subsidiary or any
Subsidiary thereof is liable for goods sold or services rendered by the
applicable Account Debtor to Borrower, a Borrowing Base Subsidiary or any
Subsidiary thereof but only to the extent of the potential offset;
(k) that arises with respect to goods which are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) it is not paid within the earlier of sixty (60) days following
its due date or ninety (90) days following its original invoice date;
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(ii) if any Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors or fails
to pay its debts generally as they come due; or
(iii) if any petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other federal,
state or foreign (including any provincial) receivership, insolvency
relief or other law or laws for the relief of debtors;
(m) which is the obligation of an Account Debtor if fifty percent
(50%) or more of the dollar amount of all Accounts owing by that Account Debtor
are ineligible under the other criteria set forth in this Section 1.5;
(n) as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties pertaining
to Accounts set forth in this Agreement or the Security Agreement is untrue;
(p) to the extent such Account is evidenced by a judgment,
Instrument or Chattel Paper;
(q) to the extent that such Account, together with all other
Accounts owing to such Account Debtor and its Affiliates as of any date of
determination exceed ten percent (10%) of all Eligible Accounts;
(r) which is payable in any currency other than Dollars; or
(s) which is unacceptable to Agent in its reasonable credit judgment
and in good faith.
1.6. Cash Management Systems.
On or prior to the Closing Date, Borrower will establish and will
maintain until the Termination Date, the cash management systems described on
Annex B (the "Cash Management Systems").
1.7. Fees.
(a) Borrower shall pay to GE Capital, individually, the Fees
specified in that certain fee letter dated as of August 23, 1999 between
Holdings and GE Capital (the "GE Capital Fee Letter"), at the times specified
for payment therein.
(b) As additional compensation for the Revolving Lenders, Borrower
agrees to pay to Agent, for the ratable benefit of such Lenders, in arrears, on
the first
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Business Day of each month prior to the Commitment Termination Date and on the
Commitment Termination Date, a fee for Borrower's non-use of available funds in
an amount equal to three eighths of one percent (0.375%) per annum (calculated
on the basis of a 360 day year for actual days elapsed) of the difference
between (x) the Maximum Amount (as it may be reduced from time to time) and (y)
the average for the period of the daily closing balances of the Revolving Loan
and the Swing Line Loan outstanding during the period for which the such fee is
due.
(c) If Borrower prepays the Revolving Loan and terminates the
Revolving Loan Commitment, whether voluntarily or involuntarily and whether
before or after acceleration of the Obligations, Borrower shall pay to Agent,
for the benefit of Lenders, as liquidated damages and compensation for the costs
of being prepared to make funds available hereunder an amount determined by
multiplying the Applicable Percentage (as defined below) by the amount of the
Revolving Loan Commitment. As used herein, the term "Applicable Percentage"
shall mean (x) three percent (3.0%), in the case of a prepayment on or prior to
the first anniversary of the Closing Date, (y) two percent (2.0%), in the case
of a prepayment after the first anniversary of the Closing Date but on or prior
to the third anniversary of the Closing Date, and (z) one percent (1.0%), in the
case of a prepayment after the third anniversary of the Closing Date but prior
to the fifth anniversary of the Closing Date.
1.8. Receipt of Payments.
Borrower shall make each payment under this Agreement not later than
1:00 p.m. (Chicago time) on the day when due in immediately available funds in
Dollars to the Collection Account. For purposes of computing interest and Fees
and determining Borrowing Availability or Net Borrowing Availability as of any
date, all payments shall be deemed received on the day of receipt of immediately
available funds therefor in the Collection Account prior to 1:00 p.m., Chicago
time. Payments received after 1:00 p.m., Chicago time on any Business Day shall
be deemed to have been received on the following Business Day. For purposes of
computing interest, all payments shall be deemed received (a) on the first
Business Day after the date of receipt of immediately available funds therefor
in the Collection Account, if received prior to 1:00 p.m., Chicago time, and (b)
on the second Business Day after the day of receipt of immediately available
funds therefor in the Collection Account, if received after 1:00 p.m., Chicago
time.
1.9. Application and Allocation of Payments.
(a) So long as no Default or Event of Default shall have occurred
and be continuing, payments consisting of proceeds of Accounts received in the
ordinary course of business and all prepayments shall be applied to the Swing
Line Loan and the Revolving Loan (as further described in Section 1.2). All
payments and prepayments shall be applied ratably to the portion of the Loans
held by each Lender as determined by its Pro Rata Share. As to each other
payment, and as to all payments made when a Default or Event or Default
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shall have occurred and be continuing or following the Commitment Termination
Date, Borrower hereby irrevocably waives the right to direct the application of
any and all payments received from or on behalf of Borrower, and Borrower hereby
irrevocably agrees that Agent shall have the continuing exclusive right to apply
any and all such payments against the Obligations as Agent may deem advisable
notwithstanding any previous entry by Agent in the Loan Account or any other
books and records. In the absence of a specific determination by Agent with
respect thereto, payments shall be applied to amounts then due and payable in
the following order: (1) to Fees and Agent's expenses reimbursable hereunder;
(2) to interest on the Swing Line Loan; (3) to principal payments on the Swing
Line Loan; (4) to interest on the Revolving Loan; (5) to principal payments on
the Revolving Loan ratably to the principal balance of the Revolving Loan; and
(6) to all other Obligations including expenses of Lenders to the extent
reimbursable under Section 11.3.
(b) Agent is authorized to, and at its sole election may, charge to
the Revolving Loan balance on behalf of Borrower and cause to be paid all Fees,
expenses, Charges, costs (including insurance premiums in accordance with
Section 5.4(a)) and interest and principal, other than principal of the
Revolving Loan, owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to promptly pay any such amounts
as and when due, even if such charges would cause the aggregate balance of the
Revolving Loan and the Swing Line Loan to exceed Borrowing Availability. At
Agent's option and to the extent permitted by law, any charges so made shall
constitute part of the Revolving Loan hereunder.
1.10. Loan Account and Accounting.
Agent shall maintain a loan account (the "Loan Account") on its
books to record: all Advances, all payments made by Borrower, and all other
debits and credits as provided in this Agreement with respect to the Loans or
any other Obligations. All entries in the Loan Account shall be made in
accordance with Agent's customary accounting practices as in effect from time to
time. The balance in the Loan Account, as recorded on Agent's most recent
printout or other written statement, shall, absent manifest error, be
presumptive evidence of the amounts due and owing to Agent and Lenders by
Borrower; provided that any failure to so record or any error in so recording
shall not limit or otherwise affect Borrower's duty to pay the Obligations.
Agent shall render to Borrower a monthly accounting of transactions with respect
to the Loans setting forth the balance of the Loan Account. Unless Borrower
notifies Agent in writing of any objection to any such accounting (specifically
describing the basis for such objection), within thirty (30) days after the date
thereof, each and every such accounting shall, absent manifest error, be deemed
final, binding and conclusive upon Borrower in all respects as to all matters
reflected therein. Only those items expressly objected to in such notice shall
be deemed to be disputed by Borrower. Notwithstanding any provision herein
contained to the contrary, any Lender may elect (which election may be revoked)
to dispense with the issuance of
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Notes to that Lender and may rely on the Loan Account as evidence of the amount
of Obligations from time to time owing to it.
1.11. Indemnity.
(a) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and hold harmless each of Agent, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other costs of investigation or defense, including those
incurred upon any appeal) which may be instituted or asserted against or
incurred by any such Indemnified Person as the result of credit having been
extended, suspended or terminated under this Agreement and the other Loan
Documents and the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and thereunder and any
actions or failures to act in connection therewith, including any and all
Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, "Indemnified Liabilities"); provided, that no such
Credit Party shall be liable for any indemnification to an Indemnified Person to
the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results from that Indemnified Person's gross negligence or
willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY
OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR
TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION
CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or is the
result of acceleration, by operation of law or otherwise); (ii) Borrower shall
default in payment when due of the principal amount of or interest on any LIBOR
Loan; (iii) Borrower shall default in making any borrowing of, conversion into
or continuation of LIBOR Loans after Borrower has given notice requesting the
same in accordance herewith; or (iv) Borrower shall fail to make any prepayment
of a LIBOR Loan after Borrower has given a notice thereof in accordance
herewith, Borrower shall indemnify and hold harmless each Lender from and
against all losses, costs and expenses resulting from or arising from any of the
foregoing. Such indemnification shall include any loss (including loss of
margin) or expense arising from the reemployment of funds obtained by it or from
fees payable to terminate deposits from which such funds were
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obtained. For the purpose of calculating amounts payable to a Lender under this
subsection, each Lender shall be deemed to have actually funded its relevant
LIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate
in an amount equal to the amount of that LIBOR Loan and having a maturity
comparable to the relevant LIBOR Period; provided, however, that each Lender may
fund each of its LIBOR Loans in any manner it sees fit, and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
this subsection. This covenant shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder. As
promptly as practicable under the circumstances, each Lender shall provide
Borrower with its written calculation of all amounts payable pursuant to this
Section 1.11(b), and such calculation shall be binding on the parties hereto
unless Borrower shall object in writing within ten (10) Business Days of receipt
thereof, specifying the basis for such objection in detail.
1.12. Access.
Each Credit Party which is a party hereto shall, during normal
business hours, from time to time upon one (1) Business Day's prior notice as
frequently as Agent determines to be appropriate: (a) provide Agent and any of
its officers, employees and agents access to its properties, facilities,
advisors and employees (including officers) of each Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and agents, to
inspect, audit and make extracts from any Credit Party's books and records, and
(c) permit Agent, and its officers, employees and agents, to inspect, review,
evaluate and make test verifications and counts of the Accounts, Inventory and
other Collateral of any Credit Party; it being understood that until such time
as the Credit Parties' accounts receivable system has been converted to the
PeopleSoft system previously described to Agent (the "PeopleSoft System"), Agent
intends to visit certain facilities of the Credit Parties on a monthly basis. If
a Default or Event of Default shall have occurred and be continuing or if access
is necessary to preserve or protect the Collateral as determined by the Agent,
each such Credit Party shall provide such access to Agent and to each Lender at
all times and without advance notice. Furthermore, so long as any Event of
Default shall have occurred and be continuing, Borrower shall provide Agent and
each Lender with access to its suppliers and customers. Each Credit Party shall
make available to Agent and its counsel, as quickly as is possible under the
circumstances, originals or copies of all books and records which Agent may
request. Each Credit Party shall deliver any document or instrument necessary
for Agent, as it may from time to time request, to obtain records from any
service bureau or other Person which maintains records for such Credit Party,
and shall maintain duplicate records or supporting documentation on media,
including computer tapes and discs owned by such Credit Party. Agent will give
Lenders at least five (5) Business Days' prior written notice of regularly
scheduled audits. Representatives of other Lenders may accompany Agent's
representatives on regularly scheduled audits at no charge to Borrower.
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1.13. Taxes.
(a) Any and all payments by Borrower hereunder or under the Notes
shall be made, in accordance with this Section 1.13, free and clear of and
without deduction for any and all present or future Taxes. If Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Notes, (i) the sum payable shall be increased as much as
shall be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 1.13) Agent
or Lenders, as applicable, receive an amount equal to the sum they would have
received had no such deductions been made, (ii) Borrower shall make such
deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within
thirty (30) days after the date of any payment of Taxes, Borrower shall furnish
to Agent the original or a certified copy of a receipt evidencing payment
thereof.
(b) Each Credit Party that is a signatory hereto shall indemnify
and, within ten (10) days of demand therefor, pay Agent and each Lender for the
full amount of Taxes (including any Taxes imposed by any jurisdiction on amounts
payable under this Section 1.13) paid by Agent or such Lender, as appropriate,
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes were correctly or legally
asserted.
(c) Each Lender organized under the laws of a jurisdiction outside
the United States (a "Foreign Lender") as to which payments to be made under
this Agreement or under the Notes are exempt from United States withholding tax
under an applicable statute or tax treaty shall provide to Borrower and Agent a
properly completed and executed IRS Form 4224 or Form 1001 or other applicable
form, certificate or document prescribed by the IRS or the United States
certifying as to such Foreign Lender's entitlement to such exemption (a
"Certificate of Exemption"). Any foreign Person that seeks to become a Lender
under this Agreement shall provide a Certificate of Exemption to Borrower and
Agent prior to becoming a Lender hereunder. No foreign Person may become a
Lender hereunder if such Person is unable to deliver a Certificate of Exemption.
1.14. Capital Adequacy; Increased Costs; Illegality.
(a) If any Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrower
shall from time to time upon demand by such
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Lender (with a copy of such demand to Agent) pay to Agent, for the account of
such Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of that reduction and showing the
basis of the computation thereof submitted by such Lender to Borrower and to
Agent shall, absent manifest error, be final, conclusive and binding for all
purposes.
(b) If, due to either (i) the introduction of or any change in any
law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower and
to Agent by such Lender, shall be conclusive and binding on Borrower for all
purposes, absent manifest error. Each Lender agrees that, as promptly as
practicable after it becomes aware of any circumstances referred to above which
would result in any such increased cost, the affected Lender shall, to the
extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrower pursuant to this Section 1.14(b).
(c) Notwithstanding anything to the contrary contained herein, if
the introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower through Agent,
(i) the obligation of such Lender to agree to make or to make or to continue to
fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing to such Lender, together with
interest accrued thereon, unless Borrower, within five (5) Business Days after
the delivery of such notice and demand, converts all such Loans into a Loan
bearing interest based on the Index Rate.
(d) Replacement of Lender in Respect of Increased Costs. Within
fifteen (15) days after receipt by Borrower of written notice and demand from
any Lender (an "Affected Lender") for payment of additional amounts or increased
costs as provided in Section 1.13(a), 1.14(a) or 1.14(b), Borrower may, at its
option, notify Agent and such Affected Lender of its intention to replace the
Affected Lender. So long as no Default or Event of Default shall have occurred
and be continuing, Borrower, with the consent of Agent, may obtain, at
Borrower's expense, a replacement Lender ("Replacement Lender") for
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the Affected Lender, which Replacement Lender must be satisfactory to Agent. If
Borrower obtains a Replacement Lender within ninety (90) days following notice
of its intention to do so, the Affected Lender must sell and assign its Loans
and Commitments to such Replacement Lender for an amount equal to the principal
balance of all Loans held by the Affected Lender and all accrued interest and
Fees with respect thereto through the date of such sale, provided that Borrower
shall have reimbursed such Affected Lender for the additional amounts or
increased costs that it is entitled to receive under this Agreement through the
date of such sale and assignment.
Notwithstanding the foregoing, Borrower shall not have the right to obtain a
Replacement Lender if the Affected Lender rescinds its demand for increased
costs or additional amounts within fifteen (15) days following its receipt of
Borrower's notice of intention to replace such Affected Lender. Furthermore, if
Borrower gives a notice of intention to replace and does not so replace such
Affected Lender within ninety (90) days thereafter, Borrower's rights under this
Section 1.14(d) shall terminate and Borrower shall promptly pay all increased
costs or additional amounts demanded by such Affected Lender pursuant to
Sections 1.13(a), 1.14(a) and 1.14(b).
1.15. Single Loan.
All Loans to Borrower and all of the other Obligations of Borrower
arising under this Agreement and the other Loan Documents shall constitute one
general obligation of Borrower secured, until the Termination Date, by all of
its Collateral.
2. CONDITIONS PRECEDENT
2.1. Conditions to the Initial Loans.
No Lender shall be obligated to make any Loan on the Closing Date,
or to take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner satisfactory to
Agent, or waived in writing by Agent and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrower, any other
Credit Parties signatory hereto, Agent and Lenders; and Agent shall have
received such documents, instruments, agreements and legal opinions as Agent
shall reasonably request in connection with the transactions contemplated by
this Agreement and the other Loan Documents, including all those listed in the
Closing Checklist attached hereto as Annex C, each in form and substance
satisfactory to Agent.
(b) Repayment of Prior Lender Obligations; Satisfaction of
Outstanding L/Cs. (i) Agent shall have received a fully executed original of a
pay-off letter satisfactory to Agent confirming that all of the Prior Lender
Obligations will be repaid in full from the
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initial Revolving Credit Advance and all Liens upon any of the property of
Borrower or any of its Subsidiaries in favor of Prior Lender shall be terminated
by Prior Lender immediately upon such payment; and (ii) all letters of credit
issued or guaranteed by Prior Lender shall have been cash collateralized or
supported by a guaranty of Agent as mutually agreed upon by Agent, Borrower and
Prior Lender.
(c) Approvals. Agent shall have received (i) satisfactory evidence
that the Credit Parties have obtained all required consents and approvals of all
Persons, including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents and all
Required Consents (as defined in the Merger Agreement) with respect to the
consummation of the Related Transactions (unless waived by the applicable Credit
Parties) or (ii) an officer's certificate in form and substance satisfactory to
Agent affirming that no such consents or approvals are required.
(d) Opening Availability. The Eligible Accounts of Borrower and the
Borrowing Base Subsidiaries supporting the initial Revolving Credit Advance and
the amount of the Reserves to be established on the Closing Date shall be
sufficient in value, as determined by Agent, to provide Borrower with Net
Borrowing Availability, after giving effect to the initial Revolving Credit
Advance and the consummation of the Related Transactions (on a pro forma basis,
with trade payables being paid currently, and expenses and liabilities being
paid in the ordinary course of business and without acceleration of sales), but
excluding the Reserve established in connection with dilution, of at least
$14,000,000.
(e) Payment of Fees. Borrower shall have paid the Fees required to
be paid on the Closing Date in the respective amounts specified in Section 1.7
(including the Fees specified in the GE Capital Fee Letter), and shall have
reimbursed Agent for all fees, costs and expenses of closing presented as of the
Closing Date.
(f) Due Diligence; Capital Structure; Other Indebtedness. Agent and
Lenders shall have completed all business and legal due diligence and the
results thereof shall be satisfactory to Agent and Lenders. The capital
structure of each Credit Party (other than Holdings) and the terms and
conditions of all Indebtedness of each Credit Party (other than Holdings) shall
be acceptable to Agent in its sole discretion. The aggregate principal amount of
Indebtedness of the Credit Parties (other than Holdings) as of the Closing Date
(after giving effect to the funding of the initial Loans hereunder) shall not
exceed $63,500,000.
(g) Consummation of Related Transactions. Agent shall have received
fully executed copies of the Merger Agreement and each of the other Related
Transactions Documents, each of which shall be in form and substance
satisfactory to Agent and its counsel. Without limiting the discretion of Agent
and its counsel to determine whether the Merger Agreement and other Related
Transactions Documents are satisfactory, the aggregate cash consideration paid
under the Merger Agreement shall not exceed $43,000,000 and the aggregate fees
and costs incurred by Credit Parties in connection with the Related
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Transactions (including the fees and expenses of Agent and Lenders) shall not
exceed $2,000,000. The Merger and the other Related Transactions shall have been
consummated in accordance with the terms of the Merger Agreement and the other
Related Transactions Documents.
(h) Agent shall have received evidence satisfactory to it that at
least $24,500,000 of Subordinated Debt and/or equity (subject, in the case of
Subordinated Debt owing to Sellers, to adjustment pursuant to the Merger
Agreement), on terms and conditions, and pursuant to documentation, satisfactory
to Agent, has been loaned and/or contributed to Borrower.
2.2. Further Conditions to Each Loan.
Except as otherwise expressly provided herein, no Lender shall be
obligated to fund any Loan or convert or continue any Loan as a LIBOR Loan, if,
as of the date thereof:
(a) Any representation or warranty by any Credit Party contained
herein or in any of the other Loan Documents shall be untrue or incorrect in any
material respect as of such date, except to the extent that such representation
or warranty expressly relates to an earlier date and except for changes therein
expressly permitted or expressly contemplated by this Agreement; or
(b) Any event or circumstance having a Material Adverse Effect shall
have occurred since the date hereof and be continuing as determined by the
Requisite Lenders; or
(c) (i) Any Event of Default shall have occurred and be continuing
or would result after giving effect to any Loan, or (ii) a Default shall have
occurred and be continuing or would result after giving effect to any Loan, and
Agent or Requisite Lenders shall have determined not to make any Loan so long as
that Default is continuing; or
(d) After giving effect to any Advance, the outstanding principal
amount of the Revolving Loan would exceed the lesser of the Borrowing Base and
the Maximum Amount, less, in each case, the then outstanding principal amount of
the Swing Line Loan; or
(e) After giving effect to any Swing Line Advance, the outstanding
principal amount of the Swing Line Loan would exceed Swing Line Availability.
The request and acceptance by Borrower of the proceeds of any Loan or the
conversion or continuation of any Loan into, or as, a LIBOR Loan, as the case
may be, shall be deemed to constitute, as of the date of such request or
acceptance, (i) a representation and warranty by Borrower that the conditions in
this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrower of the
granting and continuance of Agent's Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.
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3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans, the Credit Parties executing
this Agreement, jointly and severally, make the following representations and
warranties to Agent and each Lender with respect to all Credit Parties (after
giving effect to the Merger), each and all of which shall survive the execution
and delivery of this Agreement.
3.1. Corporate Existence; Compliance with Law.
Each Credit Party (a) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; (b) is duly qualified to conduct business and is in good standing
in each other jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification, except where the failure to
be so qualified would not result in a Material Adverse Effect; (c) has the
requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease and to conduct its business as now, heretofore and
proposed to be conducted; (d) subject to specific representations regarding
Environmental Laws, has all licenses, permits, consents or approvals from or by,
and has made all filings with, and has given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct, except where the failure to possess or obtain any such
license, permit, consent or approval, or to make any such filing, would not
result in a Material Adverse Effect; (e) is in compliance with its charter and
by-laws; and (f) subject to specific representations set forth herein regarding
ERISA, Environmental Laws, tax and other laws, is in compliance with all
applicable provisions of law, except where the failure to comply, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect; provided, that as applicable to the Foreign Subsidiaries, any failure to
comply with the foregoing representations shall not be deemed to be a breach of
this Section 3.1 unless such noncompliance could reasonably be expected to cause
a Material Adverse Effect.
3.2. Executive Offices; FEIN.
As of the Closing Date, the current location of each Credit Party's
(other than Holdings and the Foreign Subsidiaries) chief executive office and
principal place of business is set forth in Disclosure Schedule (3.2), and none
of such locations have changed within the six (6) months preceding the Closing
Date. In addition, Disclosure Schedule (3.2) lists the federal employer
identification number of each Credit Party (other than Holdings and the Foreign
Subsidiaries).
3.3. Corporate Power, Authorization, Enforceable Obligations.
The execution, delivery and performance by each Credit Party of the
Loan Documents to which it is a party and the creation of all Liens provided for
therein: (a) are
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within such Person's corporate power; (b) have been duly authorized by all
necessary or proper corporate and shareholder action; (c) do not contravene any
provision of such Person's charter or bylaws; (d) do not violate any law or
regulation, or any order or decree of any court or Governmental Authority; (e)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which such Person is a party or by which such Person or any of its
property is bound, except for any conflict or breach which does not cause a
Material Adverse Effect; (f) do not result in the creation or imposition of any
Lien upon any of the property of such Person other than those in favor of Agent,
on behalf of itself and Lenders, pursuant to the Loan Documents; and (g) do not
require the consent or approval of any Governmental Authority or any other
Person, except those referred to in Section 2.1(c), all of which will have been
duly obtained, made or complied with prior to the Closing Date. On or prior to
the Closing Date, each of the Loan Documents shall have been duly executed and
delivered by each Credit Party thereto and each such Loan Document shall then
constitute a legal, valid and binding obligation of such Credit Party
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
moratorium, fraudulent transfer or other similar laws affecting creditors'
rights generally or by principles governing the availability of equitable
remedies.
3.4. Financial Statements and Projections.
Except for the Projections, all Financial Statements concerning
Borrower and its Subsidiaries which are referenced below have been prepared in
accordance with GAAP consistently applied throughout the periods covered (except
as disclosed therein and except, with respect to unaudited Financial Statements,
for the absence of footnotes and normal year-end audit adjustments) and present
fairly in all material respects the financial position of the Persons covered
thereby as at the dates thereof and the results of their operations and cash
flows for the periods then ended.
(a) The following Financial Statements attached hereto as Disclosure
Schedule (3.4(A)) have been delivered on the date hereof:
(i) The unaudited balance sheet(s) at August 28, 1999 and the
related statement(s) of income of Borrower and its Subsidiaries for the
seven (7) months then ended.
(ii) The audited combined financial statements for the year ended
January 30, 1999, eleven (11) months ended January 31, 1998 and year ended
March 1, 1997 with respect to the courier operations of Borrower.
(b) Pro Forma. The Pro Forma delivered on the date hereof and
attached hereto as Disclosure Schedule (3.4(B)) was prepared by Borrower giving
pro forma effect to the Related Transactions, was based on the unaudited
consolidated and consolidating balance
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sheets of Borrower and its Subsidiaries dated August 28, 1999, and was prepared
in accordance with GAAP, with only such adjustments thereto as would be required
in accordance with GAAP.
(c) Projections. The Projections delivered on or prior to the date
hereof and attached hereto as Disclosure Schedule (3.4(C)) have been prepared by
Borrower in light of the past operations of its businesses, but including future
payments of known contingent liabilities reflected on the Fair Salable Balance
Sheet, and reflect projections for the three (3) year period beginning on July
1, 1999 on a month by month basis for the first year and on a year by year basis
thereafter. The Projections are based upon estimates and assumptions stated
therein, all of which Borrower believes to be reasonable and fair in light of
current conditions and current facts known to Borrower and, as of the Closing
Date, reflect Borrower's good faith and reasonable estimates of the future
financial performance of Borrower and of the other information projected therein
for the period set forth therein; provided, however, that no Credit Party makes
any representation or warranty with respect to the achievability of any such
future results.
3.5. Material Adverse Effect.
Except as described on Disclosure Schedule 3.5, between January 31,
1999 and the Closing Date, (a) no Credit Party (other than Holdings) has
incurred any obligations, contingent or non-contingent liabilities, liabilities
for Charges, long-term leases or unusual forward or long-term commitments which
are not reflected in the Pro Forma and which, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, (b) no contract, lease
or other agreement or instrument has been entered into by any Credit Party
(other than Holdings) or has become binding upon any Credit Party's (other than
Holdings) assets and no law or regulation applicable to any Credit Party (other
than Holdings) has been adopted which, in either case, has had or could
reasonably be expected to have a Material Adverse Effect, (c) no Credit Party is
in default and to the best of Borrower's knowledge no third party is in default
under any material contract, lease or other agreement or instrument, which alone
or in the aggregate could reasonably be expected to have a Material Adverse
Effect, and (d) no shareholder suit arising out of the Merger or the Related
Transactions has been initiated against Holdings. Between January 31, 1999 and
the Closing Date no event has occurred, which alone or together with other
events, could reasonably be expected to have a Material Adverse Effect.
3.6. Ownership of Property; Liens.
As of the Closing Date, the real estate ("Real Estate") listed on
Disclosure Schedule (3.6) constitutes all of the real property owned, leased,
subleased, or used by any Credit Party. Each Credit Party owns good and
marketable fee simple title to all of its owned real estate, and valid leasehold
interests in all of its leased Real Estate, all as described on Disclosure
Schedule (3.6), and copies of all such leases or a summary of
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terms thereof satisfactory to Agent which have been requested by Agent have been
delivered to Agent. Disclosure Schedule (3.6) further describes any Real Estate
with respect to which any Credit Party is a lessor, sublessor or assignor as of
the Closing Date. Each Credit Party also has good and marketable title to, or
valid leasehold interests in, all of its personal properties and assets. As of
the Closing Date, none of the properties and assets of any Credit Party are
subject to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar agreements, bills of sale
and other documents, and has duly effected all recordings, filings and other
actions necessary to establish, protect and perfect such Credit Party's right,
title and interest in and to all such Real Estate and other properties and
assets. Disclosure Schedule (3.6) also describes any purchase options, rights of
first refusal or other similar contractual rights pertaining to any Real Estate.
As of the Closing Date, no portion of any Credit Party's Real Estate has
suffered any material damage by fire or other casualty loss which has not
heretofore been repaired and restored in all material respects to its original
condition or otherwise remedied. As of the Closing Date, all material permits
required to have been issued or appropriate to enable the Real Estate to be
lawfully occupied and used for all of the purposes for which they are currently
occupied and used have been lawfully issued and are in full force and effect.
3.7. Labor Matters.
As of the Closing Date (a) no strikes or other material labor
disputes against any Credit Party are pending or, to any Credit Party's
knowledge, threatened; (b) hours worked by and payment made to employees of each
Credit Party comply with the Fair Labor Standards Act and each other federal,
state, local or foreign law applicable to such matter, except to the extent that
any such noncompliance would not have a Material Adverse Effect; (c) all
payments due from any Credit Party for employee health and welfare insurance
have been paid or accrued as a liability on the books of such Credit Party; (d)
except as set forth in Disclosure Schedule (3.7), no Credit Party is a party to
or bound by any collective bargaining agreement, management agreement,
consulting agreement or any material employment agreement (and true and complete
copies of any agreements described on Disclosure Schedule (3.7) have been
delivered to Agent); (e) there is no organizing activity involving any Credit
Party pending or, to any Credit Party's knowledge, threatened by any labor union
or group of employees; (f) there are no representation proceedings pending or,
to any Credit Party's knowledge, threatened with the National Labor Relations
Board, and no labor organization or group of employees of any Credit Party has
made a pending demand for recognition; and (g) except as set forth in Disclosure
Schedule (3.7) and except for those which would not cause a Material Adverse
Effect, there are no complaints or charges against any Credit Party pending or,
to the knowledge of any Credit Party, threatened to be filed with any
Governmental Authority or
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arbitrator based on, arising out of, in connection with, or otherwise relating
to the employment or termination of employment by any Credit Party of any
individual.
3.8. Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness.
Except as set forth in Disclosure Schedule (3.8), no Credit Party
(other than Holdings) has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other Person. All
of the issued and outstanding Stock of each Credit Party (other than Holdings)
is owned by each of the stockholders and in the amounts set forth on Disclosure
Schedule (3.8). Disclosure Schedule (3.8) lists each stockholder which owns at
least ten percent (10%) of the issued and outstanding Stock (on a fully diluted
basis) of Holdings (the "10% Holdings Owners"). Except as set forth in
Disclosure Schedule (3.8), there are no outstanding rights to purchase, options,
warrants or similar rights or agreements pursuant to which any Credit Party
(other than Holdings) may be required to issue, sell, repurchase or redeem any
of its Stock or other equity securities or any Stock or other equity securities
of its Subsidiaries. All outstanding Indebtedness of each Credit Party (other
than Holdings) as of the Closing Date is described in Section 6.3 (including
Disclosure Schedule (6.3)).
3.9. Government Regulation.
No Credit Party is an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940 as amended. No
Credit Party is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, or any other federal or state statute that
restricts or limits its ability to incur Indebtedness or to perform its
obligations hereunder. The making of the Loans by Lenders to Borrower, the
application of the proceeds thereof and repayment thereof and the consummation
of the Related Transactions will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and Exchange
Commission.
3.10. Margin Regulations.
No Credit Party is engaged, nor will it engage, principally or as
one of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin security" as such terms are
defined in Regulation U or G of the Federal Reserve Board as now and from time
to time hereafter in effect (such securities being referred to herein as "Margin
Stock"). No Credit Party owns any Margin Stock, and none of the proceeds of the
Loans or other extensions of credit under this Agreement will be used, directly
or indirectly, for the purpose of purchasing or carrying any Margin Stock, for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry any Margin Stock or for any other purpose which
might cause any of the Loans or other extensions of credit under this Agreement
to be considered a "purpose
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credit" within the meaning of Regulation G, T, U or X of the Federal Reserve
Board. No Credit Party will take or permit to be taken any action which might
cause any Loan Document to violate any regulation of the Federal Reserve Board.
3.11. Taxes.
All tax returns, reports and statements, including information
returns, required by any Governmental Authority to be filed by any Credit Party
have been filed with the appropriate Governmental Authority and all Charges have
been paid prior to the date on which any fine, penalty, interest or late charge
may be added thereto for nonpayment thereof (or any such fine, penalty,
interest, late charge or loss has been paid), excluding Charges or other amounts
being contested in accordance with Section 5.2(b). Proper and accurate amounts
have been withheld by each Credit Party from its respective employees for all
periods in full and complete compliance with all applicable federal, state,
local and foreign law and such withholdings have been timely paid to the
respective Governmental Authorities. Disclosure Schedule (3.11) sets forth as of
the Closing Date those taxable years for which any Credit Party's tax returns
are currently being audited by the IRS or any other applicable Governmental
Authority and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as described on Disclosure
Schedule (3.11), no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
Except as described on Disclosure Schedule (3.11), none of the Credit Parties
and their respective predecessors are liable for any Charges: (a) under any
agreement (including any tax sharing agreements) or (b) to each Credit Party's
knowledge, as a transferee. As of the Closing Date, no Credit Party has agreed
or been requested to make any adjustment under IRC Section 481(a), by reason of
a change in accounting method or otherwise, which would have a Material Adverse
Effect.
3.12. ERISA.
(a) Disclosure Schedule (3.12) lists and separately identifies all
Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans. Copies of
all such listed Plans, together with a copy of the latest form 5500 for each
such Plan, have been delivered to Agent. Except with respect to Multiemployer
Plans, each Qualified Plan has been determined by the IRS to qualify under
Section 401 of the IRC, and the trusts created thereunder have been determined
to be exempt from tax under the provisions of Section 501 of the IRC, and
nothing has occurred which would cause the loss of such qualification or tax
exempt status. Each Plan is in compliance with the applicable provisions of
ERISA and the IRC, including the filing of reports required under the IRC or
ERISA, except where the failure to comply would not cause a Material Adverse
Effect. No Credit Party or ERISA Affiliate has failed to make any contribution
or pay any amount due as required by either Section 412 of the IRC or Section
302 of ERISA or the terms of any such Plan. No Credit Party or ERISA Affiliate
has engaged in a prohibited transaction, as defined in Section 4975
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of the IRC, in connection with any Plan, which would subject any Credit Party to
a material tax on prohibited transactions imposed by Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title
IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five (5) years no Title IV Plan with
Unfunded Pension Liabilities has been transferred outside of the "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party
or ERISA Affiliate; and (vi) no liability under any Title IV Plan has been
satisfied with the purchase of a contract from an insurance company that is not
rated AAA by the Standard & Poor's Corporation or the equivalent by another
nationally recognized rating agency.
3.13. No Litigation.
Except as set forth in Disclosure Schedule (3.13), no action, claim,
lawsuit, demand, investigation or proceeding is now pending or, to the knowledge
of any Credit Party, threatened against any Credit Party, before any
Governmental Authority or before any arbitrator or panel of arbitrators
(collectively, "Litigation"), (a) which challenges any Credit Party's right or
power to enter into or perform any of its obligations under the Loan Documents
to which it is a party, or the validity or enforceability of any Loan Document
or any action taken thereunder, or (b) which has a reasonable risk of being
determined adversely to any Credit Party and which, if so determined, could
reasonably be expected to have a Material Adverse Effect. Except as set forth on
Disclosure Schedule (3.13), as of the Closing Date there is no Litigation
pending or threatened which seeks damages in excess of $500,000 or injunctive
relief or alleges criminal misconduct of any Credit Party.
3.14. Brokers.
No broker or finder acting on behalf of any Credit Party brought
about the obtaining, making or closing of the Loans or the Related Transactions,
and no Credit Party has any obligation to any Person in respect of any finder's
or brokerage fees in connection therewith.
3.15. Intellectual Property.
As of the Closing Date, each Credit Party owns or has rights to use
all Intellectual Property necessary to continue to conduct its business as now
or heretofore conducted by it or proposed to be conducted by it, and each
registered Patent, Trademark,
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Copyright and License is listed, together with application or registration
numbers, as applicable, in Disclosure Schedule (3.15) hereto. Each Credit Party
conducts its business and affairs without infringement of or interference which
would cause a Material Adverse Effect with any Intellectual Property of any
other Person.
3.16. Full Disclosure.
No information contained in this Agreement, any of the other Loan
Documents, any Projections, Financial Statements or Collateral Reports or other
reports from time to time delivered hereunder or any written statement furnished
by or on behalf of any Credit Party to Agent or any Lender pursuant to the terms
of this Agreement contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made. The Liens granted to Agent, on behalf
of itself and Lenders, pursuant to the Collateral Documents will at all times be
fully perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances with respect to the
Collateral other than Accounts.
3.17. Environmental Matters.
(a) Except as set forth in Disclosure Schedule (3.17), as of the
Closing Date: (i) the Real Estate is free of contamination from any Hazardous
Material except for such contamination that would not adversely impact the value
or marketability of such Real Estate and which would not result in Environmental
Liabilities which could reasonably be expected to exceed $250,000; (ii) no
Credit Party has caused or suffered to occur any Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate which would
cause a Material Adverse Effect; (iii) the Credit Parties are and have been in
compliance with all Environmental Laws, except for such noncompliance which
would not result in Environmental Liabilities which could reasonably be expected
to exceed $250,000; (iv) the Credit Parties have obtained, and are in compliance
with, all Environmental Permits required by Environmental Laws for the
operations of their respective businesses as presently conducted or as proposed
to be conducted, except where the failure to so obtain or comply with such
Environmental Permits would not result in Environmental Liabilities which could
reasonably be expected to exceed $250,000, and all such Environmental Permits
are valid, uncontested and in good standing; (v) no Credit Party is involved in
operations or knows of any facts, circumstances or conditions, including any
Releases of Hazardous Materials, that are likely to result in any Environmental
Liabilities of such Credit Party which could reasonably be expected to exceed
$250,000, and no Credit Party has permitted any current or former tenant or
occupant of the Real Estate to engage in any such operations; (vi) there is no
Litigation arising under or related to any Environmental Laws, Environmental
Permits or Hazardous Material which seeks damages, penalties, fines, costs or
expenses in excess of $250,000 or injunctive relief, or which alleges criminal
misconduct by any Credit Party; (vii) no notice has been received by any Credit
Party identifying it as a "potentially responsible party" or requesting
information under CERCLA or analogous state statutes, and to the knowledge of
the Credit Parties, there are no facts, circumstances or conditions that may
result in any Credit Party being identified as a "potentially
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responsible party" under CERCLA or analogous state statutes; and (viii) the
Credit Parties have provided to Agent copies of all existing environmental
reports, reviews and audits and all written information pertaining to actual or
potential Environmental Liabilities, in each case relating to any Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that Agent (i)
is not now, and has not ever been, in control of any of the Real Estate or any
Credit Party's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to influence any Credit Party's
conduct with respect to the ownership, operation or management of any of its
Real Estate or compliance with Environmental Laws or Environmental Permits.
3.18. Insurance.
Disclosure Schedule (3.18) lists all insurance policies maintained,
as of the Closing Date, for current occurrences by each Credit Party, as well as
a summary of the terms of each such policy.
3.19. Deposit and Disbursement Accounts.
Disclosure Schedule (3.19) lists all banks and other financial
institutions at which any Credit Party maintains deposits and/or other accounts
as of the Closing Date, including any Disbursement Accounts, and such Schedule
correctly identifies, to the best of such Credit Party's knowledge, the name,
address and telephone number of each depository, the name in which the account
is held, a description of the purpose of the account, and the complete account
number.
3.20. Government Contracts.
Except as set forth in Disclosure Schedule (3.20), as of the Closing
Date, no Credit Party is a party to any contract or agreement with any
Governmental Authority and no Credit Party's Accounts are subject to the Federal
Assignment of Claims Act, as amended (31 U.S.C. Section 3727) or any similar
state or local law.
3.21. Customer and Trade Relations.
As of the Closing Date, there exists no actual or, to the knowledge
of any Credit Party, threatened termination or cancellation of, or any material
adverse modification or change in, the business relationship of any Credit Party
with any customer or group of customers whose purchases during the preceding
twelve (12) months caused them to be ranked among the ten largest customers of
such Credit Party; or the business relationship of any Credit Party with any
supplier material to its operations.
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3.22. Agreements and Other Documents.
As of the Closing Date, each Credit Party has provided to Agent or
its counsel, on behalf of Lenders, accurate and complete copies (or summaries)
of all of the following agreements or documents to which any it is subject and
each of which are listed on Disclosure Schedule (3.22): supply agreements and
purchase agreements not terminable by such Credit Party within sixty (60) days
following written notice issued by such Credit Party and involving transactions
in excess of $1,000,000 per annum; any lease of Equipment having a remaining
term of one (1) year or longer and requiring aggregate rental and other payments
in excess of $500,000 per annum; licenses and permits held by the Credit
Parties, the absence of which could be reasonably likely to have a Material
Adverse Effect; instruments or documents evidencing Indebtedness of such Credit
Party and any security interest granted by such Credit Party with respect
thereto; and instruments and agreements evidencing the issuance of any equity
securities, warrants, rights or options to purchase equity securities of such
Credit Party.
3.23. Solvency.
Both before and after giving effect to (a) the Loans to be made on
the Closing Date or such other date as Loans requested hereunder are made, (b)
the disbursement of the proceeds of such Loans pursuant to the instructions of
Borrower, (c) the Merger, the Refinancing and the consummation of the other
Related Transactions and (d) the payment and accrual of all transaction costs in
connection with the foregoing, each Credit Party is Solvent.
3.24. Year 2000 Representations.
Each Credit Party has completed a Year 2000 Assessment and a Year
2000 Corrective Plan, copies of which have been delivered to Agent; each Credit
Party has completed all Year 2000 Corrective Actions and completed Year 2000
Implementation Testing. Each Credit Party has eliminated all Year 2000 Problems,
except where the failure to correct the same could not reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate.
3.25. Merger Agreement.
As of the Closing Date, Borrower has delivered to Agent a complete
and correct copy of the Merger Agreement (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents
delivered pursuant thereto or in connection therewith). No Credit Party and no
other Person party thereto is in default in the performance or compliance with
any provisions thereof. The Merger Agreement complies with, and the Merger has
been consummated in accordance with, all applicable laws. The Merger Agreement
is in full force and effect as of the Closing Date, has not been terminated,
rescinded or withdrawn. All requisite approvals by Governmental
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Authorities having jurisdiction over Seller, any Credit Party and other Persons
referenced therein, with respect to the transactions contemplated by the Merger
Agreement, have been obtained or will be obtained in accordance with the Merger
Agreement as soon as is reasonably practicable, and no such approvals impose any
conditions to the consummation of the transactions contemplated by the Merger
Agreement or to the conduct by any Credit Party of its business thereafter. To
the best of each Credit Party's knowledge, none of the Seller's representations
or warranties in the Merger Agreement contain any untrue statement of a material
fact or omit any fact necessary to make the statements therein not misleading.
Each of the representations and warranties given by Holdings, and to the best of
Holdings' and Borrower's knowledge, the other Credit Parties signatory to the
Merger Agreement, each applicable Credit Party in the Merger Agreement is true
and correct in all material respects. Notwithstanding anything contained in the
Merger Agreement to the contrary, such representations and warranties of the
Credit Parties are incorporated into this Agreement by this Section 3.25 and
shall, solely for purposes of this Agreement and the benefit of Agent and
Lenders, survive the consummation of the Merger.
3.26. Subordinated Debt.
As of the Closing Date, Borrower has delivered to Agent a complete
and correct copy of the Subordinated Notes (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents
delivered pursuant thereto or in connection therewith). Borrower has the
corporate power and authority to incur the Indebtedness evidenced by the
Subordinated Notes. The subordination provisions of the Subordinated Notes are
enforceable against the holders of the Subordinated Notes by Agent and Lenders.
All Obligations, including the Obligations to pay principal of and interest on
the Loans, constitute senior Indebtedness entitled to the benefits of the
subordination provisions contained in the Subordinated Notes. The principal of
and interest on the Notes and all other Obligations will constitute "senior
debt" as that or any similar term is or may be used in any other instrument
evidencing or applicable to any other Subordinated Debt. Borrower acknowledges
that Agent and each Lender are entering into this Agreement and are extending
the Commitments in reliance upon the subordination provisions of the
Subordinated Notes and this Section 3.26.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1. Reports and Notices.
(a) Each Credit Party executing this Agreement hereby agrees that
from and after the Closing Date and until the Termination Date, Borrower shall
deliver to Agent and/or Lenders, as required, the Financial Statements, notices,
Projections and other information at the times, to the Persons and in the manner
set forth in Annex D.
(b) Each Credit Party executing this Agreement hereby agrees that
from and after the Closing Date and until the Termination Date, Borrower shall
deliver to Agent
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and/or Lenders, as required, the various Collateral Reports (including Borrowing
Base Certificates in the form of Exhibit 4.1(b)) at the times, to the Persons
and in the manner set forth in Annex E.
4.2. Communication with Accountants.
Each Credit Party executing this Agreement authorizes Agent and, so
long as a Default or Event of Default shall have occurred and be continuing,
each Lender, to communicate directly with its independent certified public
accountants including Ernst & Young, and authorizes and shall instruct those
accountants and advisors to disclose and make available to Agent and each Lender
any and all Financial Statements and other supporting financial documents,
schedules and information relating to any Credit Party (including copies of any
issued management letters) with respect to the business, financial condition and
other affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally
agrees as to all Credit Parties that from and after the date hereof and until
the Termination Date:
5.1. Maintenance of Existence and Conduct of Business.
Each Credit Party shall do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence and its
rights and franchises; continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder; at all times maintain, preserve
and protect all of its assets and properties used or useful in the conduct of
its business, and keep the same in good repair, working order and condition in
all material respects (taking into consideration ordinary wear and tear) and
from time to time make, or cause to be made, all necessary or appropriate
repairs, replacements and improvements thereto consistent with industry
practices; and transact business only in such corporate and trade names as are
set forth in Disclosure Schedule (5.1), except for name changes required by the
Merger Agreement upon sixty (60) days' prior written notice to Agent.
5.2. Payment of Obligations.
(a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (A) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, and (B)
lawful claims for labor, materials, supplies and services or otherwise, before
any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges or claims described in
Section 5.2(a);
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provided, that (i) adequate reserves with respect to such contest are maintained
on the books of such Credit Party, in accordance with GAAP, (ii) no Lien shall
be imposed to secure payment of such Charges that is superior to any of the
Liens securing payment of the Obligations and such contest is maintained and
prosecuted continuously and with diligence and operates to suspend collection or
enforcement of such Charges, (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest, (iv) such Credit Party shall
promptly pay or discharge such contested Charges or claims and all additional
charges, interest, penalties and expenses, if any, and shall deliver to Agent
evidence acceptable to Agent of such compliance, payment or discharge, if such
contest is terminated or discontinued adversely to such Credit Party or the
conditions set forth in this Section 5.2(b) are no longer met, and (v) Agent has
not advised Borrower in writing that Agent reasonably believes that nonpayment
or nondischarge thereof could have or result in a Material Adverse Effect.
5.3. Books and Records.
Each Credit Party shall keep adequate books and records with respect
to its business activities in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financial Statements attached as Disclosure Schedule (3.4(A)).
5.4. Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense,
maintain the policies of insurance described on Disclosure Schedule (3.18) as in
effect on the date hereof or otherwise in form and amounts and with insurers
acceptable to Agent. If any Credit Party at any time or times hereafter shall
fail to obtain or maintain any of the policies of insurance required above or to
pay all premiums relating thereto, Agent may at any time or times thereafter
obtain and maintain such policies of insurance and pay such premiums and take
any other action with respect thereto which Agent deems advisable. Agent shall
have no obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default or
Event of Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
attorneys' fees, court costs and other charges related thereto, shall be payable
on demand by Borrower to Agent and shall be additional Obligations hereunder
secured by the Collateral.
(b) Agent reserves the right at any time upon any material change in
any Credit Party's risk profile (including any change in the product mix
maintained by any Credit Party or any laws affecting the potential liability of
such Credit Party) to require additional forms and limits of insurance to, in
Agent's opinion, adequately protect both Agent's and Lender's interests in all
or any portion of the Collateral and to ensure that each Credit Party is
protected by insurance in amounts and with coverage customary for its industry.
If requested
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by Agent, each Credit Party shall deliver to Agent from time to time a report of
a reputable insurance broker, satisfactory to Agent, with respect to its
insurance policies.
(c) Each Credit Party (other than Holdings) shall deliver to Agent,
in form and substance satisfactory to Agent, endorsements to (i) all "All Risk"
and business interruption insurance naming Agent, on behalf of itself and
Lenders, as loss payee as their interests may appear, and (ii) all general
liability and other liability policies naming Agent, on behalf of itself and
Lenders, as additional insured. Each Credit Party (other than Holdings)
irrevocably makes, constitutes and appoints Agent (and all officers, employees
or agents designated by Agent), so long as any Default or Event of Default shall
have occurred and be continuing or the anticipated insurance proceeds exceed
$250,000, as each Credit Party's (other than Holdings) true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" policies of insurance, endorsing the name of each Credit Party
(other than Holdings) on any check or other item of payment for the proceeds of
such "All Risk" policies of insurance and for making all determinations and
decisions with respect to such "All Risk" policies of insurance. Agent shall
have no duty to exercise any rights or powers granted to it pursuant to the
foregoing power of attorney. Borrower shall promptly notify Agent of any loss,
damage, or destruction to the Collateral in the amount of $250,000 or more,
whether or not covered by insurance. After deducting from such proceeds the
expenses, if any, incurred by Agent in the collection or handling thereof, Agent
may, at its option, apply such proceeds to the reduction of the Obligations in
accordance with Section 1.3(d), provided that in the case of insurance proceeds
pertaining to any Credit Party (other than Holdings) other than Borrower, such
insurance proceeds shall be applied to the Loans owing by Borrower (subject to
Seller's rights to insurance proceeds with respect to the fixed assets of
Borrower and its Subsidiaries as more fully described in the Merger Agreement),
or permit or require each Credit Party (other than Holdings) to use such money,
or any part thereof, to replace, repair, restore or rebuild the Collateral in a
diligent and expeditious manner with materials and workmanship of substantially
the same quality as existed before the loss, damage or destruction.
Notwithstanding the foregoing, if the casualty giving rise to such insurance
proceeds would not reasonably be expected to have a Material Adverse Effect and
such insurance proceeds do not exceed $250,000 in the aggregate, Agent shall
permit the applicable Credit Party to replace, restore, repair or rebuild the
property; provided that if such Credit Party has not completed or entered into
binding agreements to complete such replacement, restoration, repair or
rebuilding within one hundred eighty (180) days of such casualty, Agent may
apply such insurance proceeds to the Obligations in accordance with Section
1.3(d); provided further that in the case of insurance proceeds pertaining to
any Credit Party other than Borrower, such insurance proceeds shall be applied
to the Loans owing by Borrower. All insurance proceeds which are to be made
available to Borrower to replace, repair, restore or rebuild the Collateral
shall be applied by Agent to reduce the outstanding principal balance of the
Revolving Loan (which application shall not result in a permanent reduction of
the Revolving Loan Commitment) and upon such application, Agent shall establish
a Reserve against the Borrowing Base in an amount equal to the amount of such
proceeds so applied (subject to Seller's rights to insurance proceeds
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with respect to the fixed assets of Borrower and its Subsidiaries as more fully
described in the Merger Agreement). All insurance proceeds made available to any
Credit Party that is not a Borrower to replace, repair, restore or rebuild
Collateral shall be deposited in a cash collateral account. Thereafter, such
funds shall be made available to such Credit Party to provide funds to replace,
repair, restore or rebuild the Collateral as follows: (i) Borrower shall request
a Revolving Credit Advance or release from the cash collateral account be made
to such Credit Party in the amount requested to be released; (ii) so long as the
conditions set forth in Section 2.2 have been met, Revolving Lenders shall make
such Revolving Credit Advance or Agent shall release funds from the cash
collateral account; and (iii) in the case of insurance proceeds applied against
the Revolving Loan, the Reserve established with respect to such insurance
proceeds shall be reduced by the amount of such Revolving Credit Advance. To the
extent not used to replace, repair, restore or rebuild the Collateral, such
insurance proceeds shall be applied in accordance with Section 1.2(c); provided
that in the case of insurance proceeds pertaining to any Credit Party (other
than Holdings) other than Borrower, such insurance proceeds shall be applied to
the Loans owing by Borrower.
(d) Within one hundred eighty (180) days from the Closing Date,
Borrower shall obtain and collaterally assign to Agent, for the benefit of Agent
and Lenders, key man life insurance polices of at least $1,000,0000 each,
insuring the lives of each of Borrower's chairman, president, chief executive
officer and chief financial officer.
5.5. Compliance with Laws.
Each Credit Party shall comply with all federal, state, local and
foreign laws and regulations applicable to it, including those relating to ERISA
and labor matters and Environmental Laws and Environmental Permits, except to
the extent that the failure to comply, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
5.6. Supplemental Disclosure.
From time to time as may be requested by Agent (which request will
not be made more frequently than once each year absent the occurrence and
continuance of a Default or an Event of Default), the Credit Parties shall
supplement each Disclosure Schedule hereto, or any representation herein or in
any other Loan Document, with respect to any matter hereafter arising which, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in such Disclosure Schedule or as an exception to such
representation or which is necessary to correct any information in such
Disclosure Schedule or representation which has been rendered inaccurate thereby
(and, in the case of any supplements to any Disclosure Schedule, such Disclosure
Schedule shall be appropriately marked to show the changes made therein);
provided that (a) no such supplement to any such Disclosure Schedule or
representation shall be or be deemed a waiver of any Default or Event of Default
resulting from the matters disclosed therein,
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except as consented to by Agent and Requisite Lenders in writing; and (b) no
supplement shall be required as to representations and warranties that relate
solely to the Closing Date.
5.7. Intellectual Property.
Each Credit Party will conduct its business and affairs without
infringement of or interference with any Intellectual Property of any other
Person in any material respect.
5.8. Environmental Matters.
Each Credit Party shall and shall cause each Person within its
control to: (a) conduct its operations and keep and maintain its Real Estate in
compliance with all Environmental Laws and Environmental Permits other than
noncompliance which could not reasonably be expected to have a Material Adverse
Effect; (b) implement any and all investigation, remediation, removal and
response actions which are appropriate or necessary to maintain the value and
marketability of the Real Estate or to otherwise comply with Environmental Laws
and Environmental Permits pertaining to the presence, generation, treatment,
storage, use, disposal, transportation or Release of any Hazardous Material on,
at, in, under, above, to, from or about any of its Real Estate; (c) notify Agent
promptly after such Credit Party becomes aware of any violation of Environmental
Laws or Environmental Permits or any Release on, at, in, under, above, to, from
or about any Real Estate which is reasonably likely to result in Environmental
Liabilities in excess of $100,000; and (d) promptly forward to Agent a copy of
any order, notice, request for information or any communication or report
received by such Credit Party in connection with any such violation or Release
or any other matter relating to any Environmental Laws or Environmental Permits
that could reasonably be expected to result in Environmental Liabilities in
excess of $100,000, in each case whether or not the Environmental Protection
Agency or any Governmental Authority has taken or threatened any action in
connection with any such violation, Release or other matter. If Agent at any
time has a reasonable basis to believe that there may be a violation of any
Environmental Laws or Environmental Permits by any Credit Party or any
Environmental Liability arising thereunder, or a Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate, which, in
each case, could reasonably be expected to have a Material Adverse Effect, then
each Credit Party shall, upon Agent's written request (i) cause the performance
of such environmental audits including subsurface sampling of soil and
groundwater, and preparation of such environmental reports, at Borrower's
expense, as Agent may from time to time reasonably request, which shall be
conducted by reputable environmental consulting firms reasonably acceptable to
Agent and shall be in form and substance acceptable to Agent, and (ii) permit
Agent or its representatives to have access to all Real Estate for the purpose
of conducting such environmental audits and testing as Agent deems appropriate,
including subsurface sampling of soil and groundwater. Borrower shall reimburse
Agent for the costs of such audits and tests and the same will constitute a part
of the Obligations secured hereunder.
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5.9. Landlords' Agreements, Mortgagee Agreements and Bailee Letters.
If requested by Agent, each Credit Party shall obtain a landlord's
agreement, mortgagee agreement or bailee letter, as applicable, from the lessor
of each leased property or mortgagee of owned property where the books and
records of any Credit Party are located, which agreement or letter shall contain
a waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Collateral at that location, and shall otherwise
be satisfactory in form and substance to Agent. Each Credit Party shall timely
and fully pay and perform its obligations under all leases and other agreements
with respect to each leased location or public warehouse where any Collateral is
or may be located.
5.10. Further Assurances.
Each Credit Party executing this Agreement agrees that it shall and
shall cause each other Credit Party to, at such Credit Party's expense and upon
request of Agent, duly execute and deliver, or cause to be duly executed and
delivered, to Agent such further instruments and do and cause to be done such
further acts as may be necessary or proper in the reasonable opinion of Agent to
carry out more effectively the provisions and purposes of this Agreement or any
other Loan Document.
5.11. Computer Systems.
Each Credit Party shall cause the PeopleSoft System to be
implemented no later than January 31, 1999, and, in conjunction therewith, the
Credit Parties will eliminate the practice of accruing revenues for outside
contractors within sixty (60) days from the date hereof.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally
agrees as to all Credit Parties that, without the prior written consent of Agent
and the Requisite Lenders, from and after the date hereof until the Termination
Date.
6.1. Mergers, Subsidiaries, Etc.
(a) No Credit Party (other than Holdings) shall directly or
indirectly, by operation of law or otherwise, form or acquire any Subsidiary,
and (b) no Credit Party shall merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or otherwise combine with
or acquire, any Person; provided, that any Subsidiary may merge with or into any
other Subsidiary or with and into Borrower (so long as Borrower is the surviving
corporation of any such merger).
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6.2. Investments; Loans and Advances.
Except as otherwise expressly permitted by this Section 6, no Credit
Party (other than Holdings) shall make or permit to exist any investment in, or
make, accrue or permit to exist loans or advances of money to, any Person,
through the direct or indirect lending of money, holding of securities or
otherwise, except that (a) Borrower may hold investments comprised of notes
payable, or stock or other securities issued by Account Debtors to Borrower
pursuant to negotiated agreements with respect to settlement of such Account
Debtor's Accounts in the ordinary course of business, so long as the aggregate
amount of such Accounts so settled by Borrower does not exceed $100,000; (b)
each Credit Party may maintain its existing investments in its Subsidiaries as
of the Closing Date; and (c) so long as no Default or Event of Default shall
have occurred and be continuing and there is no outstanding Revolving Loan
balance, Borrower may make investments up to $100,000 in the aggregate, subject
to Control Letters in favor of Agent for the benefit of Lenders or otherwise
subject to a perfected security interest in favor of Agent for the benefit of
Lenders, in (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof maturing within
one (1) year from the date of acquisition thereof, (ii) commercial paper
maturing no more than one (1) year from the date of creation thereof and
currently having the highest rating obtainable from either Standard & Poor's
Ratings Group or Moody's Investors Service, Inc., (iii) certificates of deposit,
maturing no more than one (1) year from the date of creation thereof, issued by
commercial banks incorporated under the laws of the United States of America,
each having combined capital, surplus and undivided profits of not less than
$300,000,000 and having a senior unsecured rating of "A" or better by a
nationally recognized rating agency (an "A Rated Bank"), (iv) time deposits,
maturing no more than thirty (30) days from the date of creation thereof with A
Rated Banks and (v) mutual funds that invest solely in one or more of the
investments described in clauses (i) through (iv) above.
6.3. Indebtedness.
(a) No Credit Party (other than Holdings) shall create, incur,
assume or permit to exist any Indebtedness, except (without duplication) (i)
Indebtedness secured by purchase money security interests and Capitalized Leases
permitted in clause (c) of Section 6.7, (ii) the Loans and the other
Obligations, (iii) unfunded pension fund and other employee benefit plan
obligations and liabilities to the extent they are permitted to remain unfunded
under applicable law, (iv) existing Indebtedness described in Disclosure
Schedule (6.3) and refinancings thereof or amendments or modifications thereof
which do not have the effect of increasing the principal amount thereof or
changing the amortization thereof (other than to extend the same) and which are
otherwise on terms and conditions no less favorable to any Credit Party, Agent
or any Lender, as determined by Agent, than the terms of the Indebtedness being
refinanced, amended or modified, and (v) Indebtedness
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consisting of intercompany loans and advances made by Borrower to any other
Credit Party that is both a Guarantor and a Subsidiary of Borrower or by any
such Guarantor to Borrower.
(b) No Credit Party (other than Holdings) shall, directly or
indirectly, voluntarily purchase, redeem, defease or prepay any principal of,
premium, if any, interest or other amount payable in respect of any
Indebtedness, other than (i) the Obligations, (ii) Indebtedness secured by a
Permitted Encumbrance if the asset securing such Indebtedness has been sold or
otherwise disposed of in accordance with Sections 6.8(b) or (c), (iii) other
Indebtedness (excluding Subordinated Debt) not in excess of $100,000, and (iv)
the Short Term Subordinated Note in accordance with Section 11.8 hereof or the
Convertible Subordinated Note in accordance with the Exchange Agreement and
Section 13 of the Convertible Subordinated Note (each to the extent permitted by
the Subordinated Notes).
6.4. Employee Loans and Affiliate Transactions.
(a) No Credit Party shall enter into or be a party to any
transaction with any other Credit Party or any Affiliate thereof except in the
ordinary course of and pursuant to the reasonable requirements of such Credit
Party's business and upon fair and reasonable terms that are no less favorable
to such Credit Party than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate of such Credit Party. In addition, if
any such transaction or series of related transactions involves payments in
excess of $250,000 in the aggregate, the terms of these transactions must be
disclosed in advance to Agent and Lenders. All such transactions existing as of
the date hereof are described on Disclosure Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to their
respective employees on an arm's-length basis in the ordinary course of business
consistent with past practices for travel expenses, relocation costs and similar
purposes up to a maximum of $25,000 to any employee and up to a maximum of
$100,000 in the aggregate at any one time outstanding provided, that Credit
Parties shall be permitted to lend up to an aggregate of $750,000 at any time
outstanding (consistent with past practice) to employees to permit such
employees to repair damaged vehicles owned by such employees and used by such
employees in connection with their employment at the applicable Credit Party.
6.5. Capital Structure and Business.
No Credit Party shall (a) make any material changes in any of its
business objectives, purposes or operations which could reasonably be expected
to adversely affect the repayment of the Loans or any of the other Obligations
or could reasonably be expected to have or result in a Material Adverse Effect,
(b) make any change in its capital structure as described on Disclosure Schedule
(3.8), including the issuance of any shares of Stock, warrants or other
securities convertible into Stock or any revision of the terms of its
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outstanding Stock (provided, that this clause (b) shall not apply to changes to
the capital structure of Holdings, including, without limitation, options issued
to employees pursuant to stock option plans), or (c) amend its charter or bylaws
in a manner which would adversely affect Agent or Lenders or such Credit Party's
duty or ability to repay the Obligations. No Credit Party (other than Holdings)
shall engage in any business other than the businesses currently engaged in by
it or businesses reasonably related thereto, and Holdings shall not engage in
any business other than the business currently engaged in by it or businesses
reasonably related thereto if Holdings' engaging in such other business could be
reasonably expected to cause a Material Adverse Effect.
6.6. Guaranteed Indebtedness.
No Credit Party (other than Holdings) shall create, incur, assume or
permit to exist any Guaranteed Indebtedness except (a) by endorsement of
instruments or items of payment for deposit to the general account of any Credit
Party, (b) for Guaranteed Indebtedness incurred for the benefit of any other
Credit Party if the primary obligation is expressly permitted by this Agreement,
and (c) the Seller Guaranty.
6.7. Liens.
No Credit Party (other than Holdings) shall create, incur, assume or
permit to exist any Lien on or with respect to its Accounts or any of its other
properties or assets (whether now owned or hereafter acquired) except for (a)
Permitted Encumbrances; (b) Liens in existence on the date hereof and summarized
on Disclosure Schedule (6.7); and (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course of business,
involving the incurrence of an aggregate amount of purchase money Indebtedness
and Capital Lease Obligations of not more than $500,000 outstanding at any one
time for all such Liens (provided that such Liens attach only to the assets
subject to such purchase money debt and such Indebtedness is incurred within
twenty (20) days following such purchase and does not exceed one hundred percent
(100%) of the purchase price of the subject assets). In addition, no Credit
Party (other than Holdings) shall become a party to any agreement, note,
indenture or instrument, or take any other action, which would prohibit the
creation of a Lien on any of its properties or other assets in favor of Agent,
on behalf of itself and Lenders, as additional collateral for the Obligations,
except operating leases, Capital Leases or Licenses which prohibit Liens upon
the assets that are subject thereto.
6.8. Sale of Stock and Assets.
No Credit Party (i) (other than Holdings) shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets
(whether in a public or a private offering or otherwise) or any of their
Accounts, other than (a) the sale of Inventory in the
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ordinary course of business, and (b) the sale, transfer, conveyance or other
disposition by a Credit Party of Equipment, Fixtures or Real Estate that are
obsolete or no longer used or useful in such Credit Party's business and having
a value not exceeding $100,000 in any single transaction or $250,000 in the
aggregate in any Fiscal Year and (c) other Equipment and Fixtures having a value
not exceeding $100,000 in any single transaction or $250,000 in the aggregate in
any Fiscal Year, and (ii) shall sell, transfer, convey or otherwise dispose of
the capital stock of any of its Subsidiaries. With respect to any disposition of
assets or other properties permitted pursuant to clause (b) and clause (c)
above, Agent agrees on reasonable prior written notice to release its Lien on
such assets or other properties in order to permit the applicable Credit Party
to effect such disposition and shall execute and deliver to Borrower, at
Borrower's expense, appropriate UCC-3 termination statements and other releases
as reasonably requested by Borrower.
6.9. ERISA.
No Credit Party shall, or shall cause or permit any ERISA Affiliate
to, cause or permit to occur an event which could result in the imposition of a
Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or cause or
permit to occur an ERISA Event to the extent such ERISA Event could reasonably
be expected to have a Material Adverse Effect.
6.10. Financial Covenants.
Borrower shall not breach or fail to comply with any of the
Financial Covenants (the "Financial Covenants") set forth in Annex F.
6.11. Hazardous Materials.
No Credit Party shall cause or permit a Release of any Hazardous
Material on, at, in, under, above, to, from or about any of the Real Estate
where such Release would (a) violate in any respect, or form the basis for any
Environmental Liabilities under, any Environmental Laws or Environmental Permits
or (b) otherwise adversely impact the value or marketability of any of the Real
Estate or any of the Collateral, other (in the case of clauses (a) and (b)
above) than such violations or Environmental Liabilities which could not
reasonably be expected to have a Material Adverse Effect.
6.12. Sale-Leasebacks.
No Credit Party (other than Holdings) shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
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6.13. Cancellation of Indebtedness.
No Credit Party (other than Holdings) shall cancel any claim or debt
owing to it, except for reasonable consideration negotiated on an arm's-length
basis and in the ordinary course of its business consistent with past practices.
6.14. Restricted Payments.
No Credit Party (other than Holdings) shall make any Restricted
Payment, except (a) dividends and distributions by Subsidiaries of Borrower paid
to Borrower, (b) employee loans permitted under Section 6.4(b) above, (c)
scheduled payments of interest with respect to the Subordinated Debt, but only
as permitted in the Subordinated Notes, (d) payments, in whole or in part, of
the Short Term Subordinated Note, the Convertible Subordinated Note and the Long
Term Subordinated Note in accordance with Section 11.18, (e) payment, in whole
or in part, of the Convertible Subordinated Note in accordance with the Exchange
Agreement and Section 13 of the Convertible Subordinated Note, and (f)
redemption of the Warrants, each as permitted by the Subordinated Notes.
6.15. Change of Corporate Name or Location; Change of Fiscal Year.
No Credit Party (other than Holdings) shall (a) change its corporate
name (except for any change required pursuant to the Merger Agreement and upon
sixty (60) days' prior written notice to Agent), or (b) change its chief
executive office, principal place of business, corporate offices or warehouses
or locations at which Collateral is held or stored, or the location of its
records concerning the Collateral, in any case without at least thirty (30)
days' prior written notice to Agent and after Agent's written acknowledgment
that any reasonable action requested by Agent in connection therewith, including
to continue the perfection of any Liens in favor of Agent, on behalf of Lenders,
in any Collateral, has been completed or taken, and provided that any such new
location shall be in the continental United States. Without limiting the
foregoing, no Credit Party (other than Holdings) shall change its name, identity
or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Section 9-402(7) of the Code or any other then applicable
provision of the Code except upon prior written notice to Agent and Lenders and
after Agent's written acknowledgment that any reasonable action requested by
Agent in connection therewith, including to continue the perfection of any Liens
in favor of Agent, on behalf of Lenders, in any Collateral, has been completed
or taken. No Credit Party (other than Holdings) shall change its Fiscal Year.
6.16. No Impairment of Intercompany Transfers.
No Credit Party shall directly or indirectly enter into or become
bound by any agreement, instrument, indenture or other obligation (other than
this Agreement and the other Loan Documents) which could directly or indirectly
restrict, prohibit or require
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the consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by a Subsidiary
of Borrower to Borrower.
6.17. No Speculative Transactions.
No Credit Party shall engage in any transaction involving commodity
options, futures contracts or similar transactions, except solely to hedge
against fluctuations in the prices of commodities owned or purchased by it and
the values of foreign currencies receivable or payable by it and interest swaps,
caps or collars.
6.18. Leases.
No Credit Party (other than Holdings) shall enter into any operating
lease for Equipment or Real Estate, if the aggregate of all such operating lease
payments payable in any year for Borrower and its Subsidiaries on a consolidated
basis would exceed $500,000.
6.19. Changes Relating to Subordinated Debt.
No Credit Party shall change or amend the terms of any Subordinated
Debt (or any indenture or agreement in connection therewith) if the effect of
such amendment is to: (a) increase the interest rate on such Subordinated Debt;
(b) change the dates upon which payments of principal or interest are due on
such Subordinated Debt other than to extend such dates; (c) change any default
or event of default other than to delete or make less restrictive any default
provision therein, or add any covenant with respect to such Subordinated Debt;
(d) change the redemption or prepayment provisions of such Subordinated Debt
other than to extend the dates therefor or to reduce the premiums payable in
connection therewith; (e) except as permitted in the Subordinated Notes, grant
any security or collateral to secure payment of such Subordinated Debt; or (f)
change or amend any other term if such change or amendment would materially
increase the obligations of the obligor or confer additional material rights to
the holder of such Subordinated Debt in a manner adverse to any Credit Party,
Agent or any Lender.
6.20. Iver Note.
Borrower shall not, without the prior written consent of Requisite
Lenders, make any (a) repayment of the Iver Note, or (b) payments to Corporate
Express, Inc. ("CEI") (or any of its successors) with respect to reimbursement
obligations owing by Borrower under that certain Letter Agreement dated
September 8, 1999 by and among Seller, CEI and Holdings.
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7. TERM
7.1. Termination.
The financing arrangements contemplated hereby shall be in effect
until the Commitment Termination Date, and the Loans and all other Obligations
shall be automatically due and payable in full on such date.
7.2. Survival of Obligations Upon Termination of Financing
Arrangements.
Except as otherwise expressly provided for in the Loan Documents, no
termination or cancellation (regardless of cause or procedure) of any financing
arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of Agent
and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided however,
that in all events the provisions of Section 11, the payment obligations under
Sections 1.13 and 1.14, and the indemnities contained in the Loan Documents
shall survive the Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1. Events of Default.
The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an "Event of Default"
hereunder:
(a) Borrower (i) fails to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within ten (10) days following Agent's demand for such reimbursement or payment
of expenses.
(b) Any Credit Party shall fail or neglect to perform, keep or
observe any of the provisions of Sections 1.3, 1.6, 5.4 or 6, or any of the
provisions set forth in Annexes B or F, respectively.
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(c) Borrower shall fail or neglect to perform, keep or observe any
of the provisions of Section 4 or any provisions set forth in Annexes D or E,
respectively, and the same shall remain unremedied for five (5) days or more.
(d) Any Credit Party shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for thirty (30) days
or more.
(e) A default or breach shall occur under any other agreement,
document or instrument to which any Credit Party is a party which is not cured
within any applicable grace period, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness (other than
the Obligations) of any Credit Party in excess of $500,000 in the aggregate, or
(ii) causes, or permits any holder of such Indebtedness or a trustee to cause,
Indebtedness or a portion thereof in excess of $500,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, regardless of whether such default is waived, or such right is
exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any respect, or any representation or warranty herein or
in any Loan Document or in any written statement, report, financial statement or
certificate (other than a Borrowing Base Certificate) made or delivered to Agent
or any Lender by any Credit Party is untrue or incorrect in any material respect
as of the date when made or deemed made.
(g) Assets of any Credit Party with a fair market value of $250,000
or more shall be attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for thirty (30) days or more.
(h) A case or proceeding shall have been commenced against any
Credit Party seeking a decree or order in respect of any Credit Party (i) under
Title 11 of the United States Code, as now constituted or hereafter amended or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for any Credit Party or of any substantial
part of any such Person's assets, or (iii) ordering the winding-up or
liquidation of the affairs of any Credit Party, and such case or proceeding
shall remain undismissed or unstayed for sixty (60) days or more or such court
shall enter a decree or order granting the relief sought in such case or
proceeding.
(i) Any Credit Party (i) shall file a petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) shall fail to contest in a timely and appropriate manner or shall consent
to the institution of proceedings thereunder or to the
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filing of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of any Credit Party or of any substantial part of any such Person's
assets, (iii) shall make an assignment for the benefit of creditors, or (iv)
shall take any corporate action in furtherance of any of the foregoing, or (v)
shall admit in writing its inability to, or shall be generally unable to, pay
its debts as such debts become due.
(j) A final judgment or judgments for the payment of money in excess
of $250,000 in the aggregate at any time outstanding shall be rendered against
any Credit Party and the same shall not, within forty-five (45) days after the
entry thereof, have been discharged or execution thereof stayed or bonded
pending appeal, or shall not have been discharged prior to the expiration of any
such stay.
(k) Any material provision of any Loan Document shall for any reason
cease to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any security interest created under any Loan Document shall cease to be a
valid and perfected first priority security interest or Lien (except as
otherwise permitted herein or therein) in any of the Collateral purported to be
covered thereby.
(l) Any Change of Control shall occur.
(m) Any event shall occur, whether or not insured or insurable, as a
result of which revenue-producing activities cease or are substantially
curtailed at any facility of Borrower generating more than ten percent (10%) of
Borrower's revenues for the Fiscal Year preceding such event and such cessation
or curtailment continues for more than thirty (30) days.
(n) Any default or breach by Borrower shall occur and be continuing
beyond any applicable grace periods under any of the following agreements or any
of the following agreements shall be terminated for any reason: (i) that certain
Senior Subordinated Note dated the date hereof issued by Borrower in favor of
Bayview, (ii) that certain Note and Warrant Purchase Agreement dated the date
hereof by and among Holdings, Borrower, Bayview and the other "Loan Parties"
signatory thereto, (iii) that certain $7,500,000 Short-Term Subordinated
Promissory Note dated the date hereof issued by Borrower in favor of Seller,
(iv) that certain $6,519,000 Long-Term Subordinated Promissory Note dated the
date hereof issued by Borrower in favor of Seller, (v) that certain $3,600,000
Convertible Subordinated Promissory Note issued by Borrower in favor of Seller,
and (vi) that certain 6% Convertible Subordinated Note due 2000, dated December
7, 1995, by Borrower in favor of J. Iver & Company in the original principal
amount of $2,190,000 (the "Iver Note"); provided, that in the event that
Borrower breaches the Iver Note solely as a result of
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Section 6.20 of this Agreement, such breach shall not constitute an Event of
Default under this Section 8.1(n).
8.2. Remedies.
(a) If any Event of Default shall have occurred and be continuing,
or if a Default shall have occurred and be continuing and Agent or Requisite
Lenders shall have determined not to make any Advances so long as that specific
Default is continuing, Agent may (and at the written request of the Requisite
Lenders shall), without notice, suspend the Revolving Loan facility with respect
to further Advances whereupon any further Advances shall be made or extended in
Agent's sole discretion (or in the sole discretion of the Requisite Lenders, if
such suspension occurred at their direction) so long as such Default or Event of
Default is continuing. If any Default or Event of Default shall have occurred
and be continuing, Agent may (and at the written request of Requisite Lenders
shall), without notice except as otherwise expressly provided herein, increase
the rate of interest applicable to the Loans to the Default Rate.
(b) If any Event of Default shall have occurred and be continuing,
Agent may (and at the written request of the Requisite Lenders shall), without
notice, (i) terminate the Revolving Loan facility with respect to further
Advances; (ii) declare all or any portion of the Obligations, including all or
any portion of any Loan to be forthwith due and payable, all without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrower and each other Credit Party; and (iii) exercise any
rights and remedies provided to Agent under the Loan Documents and/or at law or
equity, including all remedies provided under the Code; provided, however, that
upon the occurrence of an Event of Default specified in Sections 8.1(g), (h) or
(i), the Revolving Loan facility shall be immediately terminated and all of the
Obligations, including the Revolving Loan, shall become immediately due and
payable without declaration, notice or demand by any Person.
8.3. Waivers by Credit Parties.
Except as otherwise provided for in this Agreement or by applicable
law, each Credit Party waives: (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which any Credit Party may in any way be liable, and hereby ratifies and
confirms whatever Agent may do in this regard, (b) all rights to notice and a
hearing prior to Agent's taking possession or control of, or to Agent's replevy,
attachment or levy upon, the Collateral or any bond or security which might be
required by any court prior to allowing Agent to exercise any of its remedies,
and (c) the benefit of all valuation, appraisal, marshaling and exemption laws.
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9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1. Assignment and Participations.
(a) The Credit Parties signatory hereto consent to any Lender's
assignment of, and/or sale of participations in, at any time or times, the Loan
Documents, Loans and any Commitment or of any portion thereof or interest
therein, including any Lender's rights, title, interests, remedies, powers or
duties thereunder, whether evidenced by a writing or not. Any assignment by a
Lender shall (i) require the consent of Agent (which shall not be unreasonably
withheld or delayed) and the execution of an assignment agreement (an
"Assignment Agreement" substantially in the form attached hereto as Exhibit
9.1(a) and otherwise in form and substance satisfactory to, and acknowledged by,
Agent; (ii) be conditioned on such assignee Lender representing to the assigning
Lender and Agent that it is purchasing the applicable Loans to be assigned to it
for its own account, for investment purposes and not with a view to the
distribution thereof; (iii) if a partial assignment, be in an amount at least
equal to $5,000,000 and, after giving effect to any such partial assignment, the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000; and (iv) include a payment to Agent of an assignment fee of $3,500.
In the case of an assignment by a Lender under this Section 9.1, the assignee
shall have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were a Lender hereunder. The assigning Lender
shall be relieved of its obligations hereunder with respect to its Commitments
or assigned portion thereof from and after the date of such assignment. Borrower
hereby acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a "Lender". In all instances, each Lender's liability to make Loans
hereunder shall be several and not joint and shall be limited to such Lender's
Pro Rata Share of the applicable Commitment. In the event Agent or any Lender
assigns or otherwise transfers all or any part of the Obligations, Agent or any
such Lender shall so notify Borrower and Borrower shall, upon the request of
Agent or such Lender, execute new Notes in exchange for the Notes, if any, being
assigned. Notwithstanding the foregoing provisions of this Section 9.1(a), any
Lender may at any time pledge the Obligations held by it and such Lender's
rights under this Agreement and the other Loan Documents to a Federal Reserve
Bank, and any lender that is an investment fund may assign the Obligations held
by it and such Lender's rights under this Agreement and the other Loan Documents
to another investment fund managed by the same investment advisor; provided,
however, that no such pledge to a Federal Reserve Bank shall release such Lender
from such Lender's obligations hereunder or under any other Loan Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount
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of, or interest rate or Fees payable with respect to, any Loan in which such
holder participates, (ii) any extension of the scheduled amortization of the
principal amount of any Loan in which such holder participates or the final
maturity date thereof, and (iii) any release of all or substantially all of the
Collateral (other than in accordance with the terms of this Agreement, the
Collateral Documents or the other Loan Documents). Solely for purposes of
Sections 1.11, 1.13, 1.14 and 9.8, Borrower acknowledges and agrees that a
participation shall give rise to a direct obligation of Borrower to the
participant and the participant shall be considered to be a "Lender". Except as
set forth in the preceding sentence neither Borrower nor any other Credit Party
shall have any obligation or duty to any participant. Neither Agent nor any
Lender (other than the Lender selling a participation) shall have any duty to
any participant and may continue to deal solely with the Lender selling a
participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no Lender
shall, as between Borrower and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist any
Lender permitted to sell assignments or participations under this Section 9.1 as
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and
the preparation of informational materials for, and the participation of
management in meetings with, potential assignees or participants. Each Credit
Party executing this Agreement shall certify the correctness, completeness and
accuracy of all descriptions of the Credit Parties and their affairs contained
in any selling materials provided by it and all other information provided by it
and included in such materials, except that any Projections delivered by
Borrower shall only be certified by Borrower as having been prepared by Borrower
in compliance with the representations contained in Section 3.4(c).
(e) A Lender may furnish any information concerning Credit Parties
in the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants). Each Lender shall obtain
from assignees or participants (and prospective assignees and participants)
confidentiality covenants substantially equivalent to those contained in Section
11.8.
(f) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.14(a),
increased costs under Section 1.15(b), an inability to fund LIBOR Loans under
Section 1.14(c), or withholding taxes in accordance with Section 1.13(a).
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9.2. Appointment of Agent.
GE Capital is hereby appointed to act on behalf of all Lenders as
Agent under this Agreement and the other Loan Documents. The provisions of this
Section 9.2 are solely for the benefit of Agent and Lenders and no Credit Party
nor any other Person shall have any rights as a third party beneficiary of any
of the provisions hereof. In performing its functions and duties under this
Agreement and the other Loan Documents, Agent shall act solely as an agent of
Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for any Credit
Party or any other Person. Agent shall have no duties or responsibilities except
for those expressly set forth in this Agreement and the other Loan Documents.
The duties of Agent shall be mechanical and administrative in nature and Agent
shall not have, or be deemed to have, by reason of this Agreement, any other
Loan Document or otherwise a fiduciary relationship in respect of any Lender.
Neither Agent nor any of its Affiliates nor any of their respective officers,
directors, employees, agents or representatives shall be liable to any Lender
for any action taken or omitted to be taken by it hereunder or under any other
Loan Document, or in connection herewith or therewith, except for damages caused
by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders,
Supermajority Revolving Lenders or all affected Lenders with respect to any act
or action (including failure to act) in connection with this Agreement or any
other Loan Document, then Agent shall be entitled to refrain from such act or
taking such action unless and until Agent shall have received instructions from
Requisite Lenders, Supermajority Revolving Lenders, or all affected Lenders, as
the case may be, and Agent shall not incur liability to any Person by reason of
so refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders, Supermajority Revolving Lenders or all affected Lenders,
as applicable.
9.3. Agent's Reliance, Etc.
Neither Agent nor any of its Affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement or
the other Loan Documents, except for damages caused by its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, Agent: (a) may treat the payee of any Note as the holder thereof
until Agent receives written notice of the assignment or transfer
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thereof signed by such payee and in form satisfactory to Agent; (b) may consult
with legal counsel, independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
in or in connection with this Agreement or the other Loan Documents; (d) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of any Credit Party or to inspect the Collateral
(including the books and records) of any Credit Party; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto; and (f) shall incur no liability under or in respect of this Agreement
or the other Loan Documents by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopy, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
9.4. GE Capital and Affiliates.
With respect to its Commitments hereunder, GE Capital shall have the
same rights and powers under this Agreement and the other Loan Documents as any
other Lender and may exercise the same as though it were not Agent; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include GE
Capital in its individual capacity. GE Capital and its Affiliates may lend money
to, invest in, and generally engage in any kind of business with, any Credit
Party, any of their Affiliates and any Person who may do business with or own
securities of any Credit Party or any such Affiliate, all as if GE Capital were
not Agent and without any duty to account therefor to Lenders. GE Capital and
its Affiliates may accept fees and other consideration from any Credit Party for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders. Each Lender acknowledges the potential conflict
of interest between GE Capital as a Lender holding disproportionate interests in
the Loans and GE Capital as Agent.
9.5. Lender Credit Decision.
Each Lender acknowledges that it has, independently and without
reliance upon Agent or any other Lender and based on the Financial Statements
referred to in Section 3.4(a) and such other documents and information as it has
deemed appropriate, made its own credit and financial analysis of the Credit
Parties and its own decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement. Each Lender acknowledges the potential
conflict of interest of each other Lender as a result of Lenders holding
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disproportionate interests in the Loans, and expressly consents to, and waives
any claim based upon, such conflict of interest.
9.6. Indemnification.
Lenders agree to indemnify Agent (to the extent not reimbursed by
Credit Parties and without limiting the obligations of Borrower hereunder),
ratably according to their respective Pro Rata Shares, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against Agent in any way relating to
or arising out of this Agreement or any other Loan Document or any action taken
or omitted by Agent in connection therewith; provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's gross negligence or willful misconduct. Without limiting
the foregoing, each Lender agrees to reimburse Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including counsel fees)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other Loan Document,
to the extent that Agent is not reimbursed for such expenses by Credit Parties.
9.7. Successor Agent.
Agent may resign at any time by giving not less than thirty (30)
days' prior written notice thereof to Lenders and Borrower. Upon any such
resignation, the Requisite Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Requisite
Lenders and shall have accepted such appointment within thirty (30) days after
the resigning Agent's giving notice of resignation, then the resigning Agent
may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender,
if a Lender is willing to accept such appointment, or otherwise shall be a
commercial bank or financial institution or a subsidiary of a commercial bank or
financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State thereof
and has a combined capital and surplus of at least $300,000,000. If no successor
Agent has been appointed pursuant to the foregoing, by the 30th day after the
date such notice of resignation was given by the resigning Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Agent as provided above. Any successor
Agent appointed by Requisite Lenders hereunder shall be subject to the approval
of Borrower, such approval not to be unreasonably withheld or delayed; provided
that such approval shall not be required if a Default or an Event of Default
shall have occurred and be continuing. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall succeed to and
become vested with all the rights, powers, privileges
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and duties of the resigning Agent. Upon the earlier of the acceptance of any
appointment as Agent hereunder by a successor Agent or the effective date of the
resigning Agent's resignation, the resigning Agent shall be discharged from its
duties and obligations under this Agreement and the other Loan Documents, except
that any indemnity rights or other rights in favor of such resigning Agent shall
continue. After any resigning Agent's resignation hereunder, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement and the other Loan
Documents.
9.8. Setoff and Sharing of Payments.
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default, each Lender and each holder of
any Note is hereby authorized at any time or from time to time, without notice
to any Credit Party or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
balances held by it at any of its offices for the account of Borrower or any
Guarantor (regardless of whether such balances are then due to Borrower or any
Guarantor) and any other properties or assets any time held or owing by that
Lender or that holder to or for the credit or for the account of Borrower or any
Guarantor against and on account of any of the Obligations which are not paid
when due. Any Lender or holder of any Note exercising a right to set off or
otherwise receiving any payment on account of the Obligations in excess of its
Pro Rata Share thereof shall purchase for cash (and the other Lenders or holders
shall sell) such participations in each such other Lender's or holder's Pro Rata
Share of the Obligations as would be necessary to cause such Lender to share the
amount so set off or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares. Each Lender's obligation under
this Section 9.8 shall be in addition to and not limitation of its obligations
to purchase a participation in an amount equal to its Pro Rata Share of the
Swing Line Loans under Section 1.1. Borrower and each Guarantor agrees, to the
fullest extent permitted by law, that (a) any Lender or holder may exercise its
right to set off with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amount so set off to other
Lenders and holders and (b) any Lender or holders so purchasing a participation
in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the
set-off amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of set-off, the purchase of participations
by that Lender shall be rescinded and the purchase price restored without
interest.
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9.9. Advances; Payments; Non-Funding Lenders; Information; Actions
in Concert.
(a) Advances; Payments.
(i) Revolving Lenders shall refund or participate in the Swing Line
Loan in accordance with clauses (iii) and (iv) of Section 1.1(b). If the
Swing Line Lender declines to make a Swing Line Loan or if Swing Line
Availability is zero, Agent shall notify Revolving Lenders, promptly after
receipt of a Notice of Revolving Advance and in any event prior to 12:00
p.m. (Chicago time) on the date such Notice of Revolving Advance is
received, by telecopy, telephone or other similar form of transmission.
Each Revolving Lender shall make the amount of such Lender's Pro Rata
Share of such Revolving Credit Advance available to Agent in same day
funds by wire transfer to Agent's account as set forth in Annex G not
later than 2:00 p.m. (Chicago time) on the requested funding date, in the
case of an Index Rate Loan and not later than 10:00 a.m. (Chicago time) on
the requested funding date in the case of a LIBOR Loan. After receipt of
such wire transfers (or, in the Agent's sole discretion, before receipt of
such wire transfers), subject to the terms hereof, Agent shall make the
requested Revolving Credit Advance to Borrower. All payments by each
Revolving Lender shall be made without setoff, counterclaim or deduction
of any kind.
(ii) On the second (2nd) Business Day of each calendar week or more
frequently as aggregate cumulative payments in excess of $2,000,000 are
received with respect to the Loans (other than the Swing Line Loan) (each,
a "Settlement Date"), Agent will advise each Lender by telephone, or
telecopy of the amount of such Lender's Pro Rata Share of principal,
interest and Fees paid for the benefit of Lenders with respect to each
applicable Loan. Provided that such Lender has funded all payments and
Advances required to be made by it and purchased all participations
required to be purchased by it under this Agreement and the other Loan
Documents as of such Settlement Date, Agent will pay to each Lender such
Lender's Pro Rata Share of principal, interest and Fees paid by Borrower
since the previous Settlement Date for the benefit of that Lender on the
Loans held by it. To the extent that any Lender (a "Non-Funding Lender")
has failed to fund all such payments and Advances or failed to fund the
purchase of all such participations, Agent shall be entitled to set off
the funding shortfall against that Non-Funding Lender's Pro Rata Share of
all payments received from Borrower. Such payments shall be made by wire
transfer to such Lender's account (as specified by such Lender in Annex G
or the applicable Assignment Agreement) not later than 1:00 p.m. (Chicago
time) on the next Business Day following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume that
each Revolving Lender will make its Pro Rata Share of each Revolving Credit
Advance available to Agent on each funding date. If such Pro Rata Share is not,
in fact, paid to Agent by such
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Revolving Lender when due, Agent will be entitled to recover such amount on
demand from such Revolving Lender without set-off, counterclaim or deduction of
any kind. If any Revolving Lender fails to pay the amount of its Pro Rata Share
forthwith upon Agent's demand, Agent shall promptly notify Borrower and Borrower
shall immediately repay such amount to Agent. Nothing in this Section 9.9(b) or
elsewhere in this Agreement or the other Loan Documents shall be deemed to
require Agent to advance funds on behalf of any Revolving Lender or to relieve
any Revolving Lender from its obligation to fulfill its Commitments hereunder or
to prejudice any rights that Borrower may have against any Revolving Lender as a
result of any default by such Revolving Lender hereunder. To the extent that
Agent advances funds to Borrower on behalf of any Revolving Lender and is not
reimbursed therefor on the same Business Day as such Advance is made, Agent
shall be entitled to retain for its account all interest accrued on such Advance
until reimbursed by the applicable Revolving Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received
by Agent from Borrower and such related payment is not received by Agent,
then Agent will be entitled to recover such amount from such Lender on
demand without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any
other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other
Loan Document, Agent will not be required to distribute any portion
thereof to any Lender. In addition, each Lender will repay to Agent on
demand any portion of such amount that Agent has distributed to such
Lender, together with interest at such rate, if any, as Agent is required
to pay to Borrower or such other Person, without set-off, counterclaim or
deduction of any kind.
(iii) Non-Funding Lenders. The failure of any Non-Funding Lender to
make any Revolving Credit Advance or any payment required by it hereunder,
or to purchase any participation in any Swing Line Loan to be made or
purchased by it on the date specified therefor shall not relieve any other
Revolving Lender (each such other Revolving Lender, an "Other Lender") of
its obligations to make such Advance or purchase such participation on
such date, but neither any Other Lender nor Agent shall be responsible for
the failure of any Non-Funding Lender to make an Advance or to purchase a
participation required hereunder. Notwithstanding anything set forth
herein to the contrary, a Non-Funding Lender shall not have any voting or
consent rights under or with respect to any Loan Document or constitute a
"Lender" or a "Revolving Lender" (or be included in the calculation of
"Requisite Lenders" or
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"Supermajority Revolving Lenders" hereunder) for any voting or consent
rights under or with respect to any Loan Document.
(iv) Dissemination of Information. Agent will use reasonable efforts
to provide Lenders with any notice of Default or Event of Default received
by Agent from, or delivered by Agent to, any Credit Party, with notice of
any Event of Default of which Agent has actually become aware and with
notice of any action taken by Agent following any Event of Default;
provided, however, that Agent shall not be liable to any Lender for any
failure to do so, except to the extent that such failure is attributable
to Agent's gross negligence or willful misconduct. Lenders acknowledge
that Borrower is required to provide Financial Statements and Collateral
Reports to Lenders in accordance with Annexes D and E hereto and agree
that Agent shall have no duty to provide the same to Lenders.
(v) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no
Lender shall take any action to protect or enforce its rights arising out
of this Agreement or the Notes (including exercising any rights of
set-off) without first obtaining the prior written consent of Agent and
Requisite Lenders, it being the intent of Lenders that any such action to
protect or enforce rights under this Agreement and the Notes shall be
taken in concert and at the direction or with the consent of Agent.
10. SUCCESSORS AND ASSIGNS
10.1. Successors and Assigns.
This Agreement and the other Loan Documents shall be binding on and
shall inure to the benefit of each Credit Party, Agent, Lenders and their
respective successors and assigns (including, in the case of any Credit Party, a
debtor-in-possession on behalf of such Credit Party), except as otherwise
provided herein or therein. No Credit Party may assign, transfer, hypothecate or
otherwise convey its rights, benefits, obligations or duties hereunder or under
any of the other Loan Documents without the prior express written consent of
Agent and Lenders. Any such purported assignment, transfer, hypothecation or
other conveyance by any Credit Party without the prior express written consent
of Agent and Lenders shall be void. The terms and provisions of this Agreement
are for the purpose of defining the relative rights and obligations of each
Credit Party, Agent and Lenders with respect to the transactions contemplated
hereby and no Person shall be a third party beneficiary of any of the terms and
provisions of this Agreement or any of the other Loan Documents.
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11. MISCELLANEOUS
11.1. Complete Agreement; Modification of Agreement.
The Loan Documents constitute the complete agreement between the
parties with respect to the subject matter thereof and may not be modified,
altered or amended except as set forth in Section 11.2 below. Any letter of
interest, commitment letter and/or fee letter (other than the GE Capital Fee
Letter) between any Credit Party and Agent or any Lender or any of their
respective affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.
11.2. Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement or any of the Notes, or any consent to any departure by any Credit
Party therefrom, shall in any event be effective unless the same shall be in
writing and signed by Agent and Borrower, and by Requisite Lenders,
Supermajority Revolving Lenders or all affected Lenders, as applicable. Except
as set forth in clauses (b) and (c) below, all such amendments, modifications,
terminations or waivers requiring the consent of any Lenders shall require the
written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement which increases the percentage
advance rates set forth in the definition of the Borrowing Base, or which makes
less restrictive the nondiscretionary criteria for exclusion from Eligible
Accounts set forth in Section 1.5, shall be effective unless the same shall be
in writing and signed by Agent, Supermajority Revolving Lenders and Borrower. No
amendment, modification, termination or waiver of or consent with respect to any
provision of this Agreement which waives compliance with the conditions
precedent set forth in Section 2.2 to the making of any Loan shall be effective
unless the same shall be in writing and signed by Agent, Requisite Lenders and
Borrower. Notwithstanding anything contained in this Agreement to the contrary,
no waiver or consent with respect to any Default (if in connection therewith
Agent or Requisite Lenders, as the case may be, have exercised its or their
right to suspend the making of Advances pursuant to Section 8.2(a)) or any Event
of Default shall be effective for purposes of the conditions precedent to the
making of Loans set forth in Section 2.2 unless the same shall be in writing and
signed by Agent, Requisite Lenders and Borrower.
(c) No amendment, modification, termination or waiver shall, unless
in writing and signed by Agent and each Lender directly affected thereby, do any
of the following: (i) increase the principal amount of any Lender's Commitment
(which action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan of
any affected Lender; (iii) extend any scheduled
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payment date or final maturity date of the principal amount of any Loan of any
affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of
interest or Fees as to any affected Lender; (v) release any Guaranty or, except
as otherwise permitted herein or in the other Loan Documents, release, or permit
any Credit Party to sell or otherwise dispose of, any Collateral with a value
exceeding $5,000,000 in the aggregate (which action shall be deemed to directly
affect all Lenders); (vi) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be required for
Lenders or any of them to take any action hereunder; and (vii) amend or waive
this Section 11.2 or the definitions of the terms "Requisite Lenders" or
"Supermajority Revolving Lenders" insofar as such definitions affect the
substance of this Section 11.2. Furthermore, no amendment, modification,
termination or waiver affecting the rights or duties of Agent under this
Agreement or any other Loan Document shall be effective unless in writing and
signed by Agent, in addition to Lenders required hereinabove to take such
action. Each amendment, modification, termination or waiver shall be effective
only in the specific instance and for the specific purpose for which it was
given. No amendment, modification, termination or waiver shall be required for
Agent to take additional Collateral pursuant to any Loan Document. No amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the holder of that Note. No notice
to or demand on any Credit Party in any case shall entitle such Credit Party or
any other Credit Party to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 11.2 shall be binding upon each holder
of the Notes at the time outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment, modification,
waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the consent of
Requisite Lenders is obtained, but the consent of other Lenders whose
consent is required is not obtained (any such Lender whose consent is not
obtained as described this clause (i) and in clauses (ii), (iii) and (iv)
below being referred to as a "Non-Consenting Lender"), or
(ii) requiring the consent of Supermajority Revolving Lenders, the
consent of Requisite Lenders is obtained, but the consent of Supermajority
Revolving Lenders is not obtained, or
(iii) requiring the consent of Requisite Lenders, the consent of
Revolving Lenders holding fifty-one percent (51%) or more of the aggregate
Revolving Loan Commitments is obtained, but the consent of Requisite
Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower's request
Agent, or a Person acceptable to Agent, shall have the right with Agent's
consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lenders,
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and such Non-Consenting Lenders agree that they shall, upon Agent's request,
sell and assign to Agent or such Person, all of the Commitments of such
Non-Consenting Lender for an amount equal to the principal balance of all Loans
held by the Non-Consenting Lender and all accrued interest and Fees with respect
thereto through the date of sale, such purchase and sale to be consummated
pursuant to an executed Assignment Agreement.
(e) Upon indefeasible payment in full in cash and performance of all
of the Obligations (other than indemnification Obligations under Section 1.11),
termination of the Commitments and a release of all claims against Agent and
Lenders, and so long as no suits, actions proceedings, or claims are pending or
threatened against any Indemnified Person asserting any damages, losses or
liabilities that are Indemnified Liabilities, Agent shall deliver to Borrower
termination statements, mortgage releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.
11.3. Fees and Expenses.
Borrower shall reimburse Agent for all out-of-pocket expenses
incurred in connection with the preparation of the Loan Documents (including the
reasonable fees and expenses of all of its special loan counsel, advisors,
consultants and auditors retained in connection with the Loan Documents and the
Related Transactions and advice in connection therewith). Borrower shall
reimburse Agent (and, with respect to clauses (c), (d) and (e) below, all
Lenders) for all fees, costs and expenses, including the reasonable fees, costs
and expenses of counsel or other advisors (including environmental and
management consultants and appraisers) for advice, assistance, or other
representation in connection with:
(a) the forwarding to Borrower or any other Person on behalf of
Borrower by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or Related Transactions Documents or
advice in connection with the administration of the Loans made pursuant hereto
or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrower or any other Person) in any
way relating to the Collateral, any of the Loan Documents or any other agreement
to be executed or delivered in connection therewith or herewith, whether as
party, witness, or otherwise, including any litigation, contest, dispute, suit,
case, proceeding or action, and any appeal or review thereof, in connection with
a case commenced by or against Borrower or any other Person that may be
obligated to Agent by virtue of the Loan Documents; including any such
litigation, contest, dispute, suit, proceeding or action arising in connection
with any work-out or restructuring of the Loans during the pendency of one or
more Events of Default; provided
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that in the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(d) any attempt to enforce any remedies of Agent or any Lender
against any or all of the Credit Parties or any other Person that may be
obligated to Agent or any Lender by virtue of any of the Loan Documents;
including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Loans during the pendency of one or more Events
of Default; provided that in the case of reimbursement of counsel for Lenders
other than Agent, such reimbursement shall be limited to one counsel for all
such Lenders;
(e) any work-out or restructuring of the Loans during the pendency
of one or more Events of Default;
(f) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all attorneys' and other
professional and service providers' fees arising from such services, including
those in connection with any appellate proceedings; and all expenses, costs,
charges and other fees incurred by such counsel and others in any way or respect
arising in connection with or relating to any of the events or actions described
in this Section 11.3 shall be payable, on demand, by Borrower to Agent. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: fees, costs and expenses of accountants, environmental advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses; photocopying and duplication expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express charges;
telegram or telecopy charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal or other advisory services.
11.4. No Waiver.
Agent's or any Lender's failure, at any time or times, to require
strict performance by the Credit Parties of any provision of this Agreement and
any of the other Loan Documents shall not waive, affect or diminish any right of
Agent or such Lender thereafter to demand strict compliance and performance
therewith. Any suspension or waiver of an Event of Default shall not suspend,
waive or affect any other Event of Default whether the same is prior or
subsequent thereto and whether the same or of a different type. Subject to the
provisions of Section 11.2, none of the undertakings, agreements, warranties,
covenants and representations of any Credit Party contained in this Agreement or
any of the other Loan Documents and no Default or Event of Default by any Credit
Party shall be deemed to have been suspended or waived by Agent or any Lender,
unless
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such waiver or suspension is by an instrument in writing signed by an officer of
or other authorized employee of Agent and the applicable required Lenders and
directed to Borrower specifying such suspension or waiver.
11.5. Remedies.
Agent's and Lenders' rights and remedies under this Agreement shall
be cumulative and nonexclusive of any other rights and remedies which Agent or
any Lender may have under any other agreement, including the other Loan
Documents, by operation of law or otherwise. Recourse to the Collateral shall
not be required.
11.6. Severability.
Wherever possible, each provision of this Agreement and the other
Loan Documents shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.7. Conflict of Terms.
Except as otherwise provided in this Agreement or any of the other
Loan Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
11.8. Confidentiality.
Agent and each Lender agree to use commercially reasonable efforts
(equivalent to the efforts Agent or such Lender applies to maintain the
confidentiality of its own confidential information) to maintain as confidential
all confidential information provided to them by the Credit Parties and
designated as confidential for a period of two (2) years following receipt
thereof, except that Agent and each Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender in evaluating, approving,
structuring or administering the Loans and the Commitments; (b) to any bona fide
assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 11.8 (and any such bona fide
assignee or participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (a)
above); (c) as required or requested by any Governmental Authority or reasonably
believed by Agent or such Lender to be compelled by any court decree, subpoena
or legal or administrative order or process; (d) as, on the advise of Agent's or
such Lender's counsel, required by law; (e) in connection
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with the exercise of any right or remedy under the Loan Documents or in
connection with any Litigation to which Agent or such Lender is a party; or (f)
which ceases to be confidential through no fault of Agent or such Lender.
11.9. GOVERNING LAW.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS,
IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND AGREES
THAT THE STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY, CITY OF CHICAGO,
ILLINOIS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS PERTAINING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT
AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF COOK COUNTY, CITY OF
CHICAGO, ILLINOIS AND, PROVIDED, FURTHER NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
CREDIT PARTY HEREBY WAIVES ANY OBJECTION WHICH SUCH CREDIT PARTY MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET
FORTH IN ANNEX H OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH
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CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID.
11.10. Notices.
Except as otherwise provided herein, whenever it is provided herein
that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt and three (3) Business Days
after deposit in the United States Mail, registered or certified mail, return
receipt requested, with proper postage prepaid, (b) upon transmission, when sent
by telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.10), (c) one (1)
Business Day after deposit with a reputable overnight courier with all charges
prepaid or (d) when delivered, if hand delivered by messenger, all of which
shall be addressed to the party to be notified and sent to the address or
facsimile number indicated on Annex H or to such other address (or facsimile
number) as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower or Agent) designated on Annex H to receive copies
shall in no way adversely affect the effectiveness of such notice, demand,
request, consent, approval, declaration or other communication.
11.11. Section Titles.
The Section titles and Table of Contents contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
11.12. Counterparts.
This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one
agreement.
11.13. WAIVER OF JURY TRIAL.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO
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APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED THERETO.
11.14. Press Releases.
Each Credit Party executing this Agreement agrees that neither it
nor its Affiliates will in the future issue any press releases or other public
disclosure using the name of GE Capital or its affiliates or referring to this
Agreement, the other Loan Documents or the Related Transactions Documents
without at least two (2) Business Days' prior notice to GE Capital and without
the prior written consent of GE Capital unless (and only to the extent that)
such Credit Party or Affiliate is required to do so under law (including without
limitation rules and regulations promulgated under the Securities Exchange Act
of 1934, as amended, and rules of any organized securities exchange) and then,
in any event, such Credit Party or Affiliate will consult with GE Capital before
issuing such press release or other public disclosure. Each Credit Party
consents to the publication by Agent or any Lender of a tombstone or similar
advertising material relating to the financing transactions contemplated by this
Agreement. Agent or such Lender shall provide a draft of any such tombstone or
similar advertising material to each Credit Party for review and comment prior
to the publication thereof. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements with Borrower's consent which shall not be unreasonably
withheld or delayed.
11.15. Reinstatement.
This Agreement shall remain in full force and effect and continue to
be effective should any petition be filed by or against Borrower for liquidation
or reorganization, should Borrower become insolvent or make an assignment for
the benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of Borrower's assets, and shall
continue to be effective or to be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
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rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
11.16. Advice of Counsel.
Each of the parties represents to each other party hereto that it
has discussed this Agreement and, specifically, the provisions of Sections 11.9
and 11.13, with its counsel.
11.17. No Strict Construction.
The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
11.18. Payment of Certain Subordinated Note.
Notwithstanding anything in this Agreement to the contrary, no
Credit Party shall be prohibited from paying, in whole or in part, the Short
Term Subordinated Note from the proceeds received by Holdings from the exercise
of the Warrants or from the proceeds of any refinancing of any Indebtedness of
Borrower or any of its Subsidiaries that is secured by first priority security
interest in or lien on the fixed assets of Borrower or any of its Subsidiaries,
and no Credit Party shall be prohibited from paying, in whole or in part, the
Short Term Subordinated Note, the Long Term Subordinated Note or the Convertible
Note with proceeds resulting from the sale of the fixed assets of Borrower and
its Subsidiaries, all in accordance with and as permitted in the Subordinated
Notes.
-65-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
UST DELIVERY SYSTEMS, INC.
By__________________________________________________________
Title_______________________________________________________
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By__________________________________________________________
Title_______________________________________________________
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<PAGE>
The following Persons are signatories to this Agreement in their
capacity as Credit Parties and not as Borrowers.
UNITED SHIPPING & TECHNOLOGY, INC.
By__________________________________________________________
Title_______________________________________________________
CORPORATE EXPRESS DELIVERY SYSTEMS -
INTERMOUNTAIN, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - MID-ATLANTIC,
INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - MID-WEST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - NEW ENGLAND,
INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - NORTHEAST,
INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - SOUTHEAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - SOUTHWEST,
INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - WEST COAST,
INC.
CORPORATE EXPRESS DELIVERY LEASING -
INTERMOUNTAIN, INC.
CORPORATE EXPRESS DELIVERY LEASING - MID-ATLANTIC,
INC.
CORPORATE EXPRESS DELIVERY LEASING - MID-WEST, INC.
CORPORATE EXPRESS DELIVERY LEASING - NEW ENGLAND,
INC.
CORPORATE EXPRESS DELIVERY LEASING - NORTHEAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - SOUTHEAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - SOUTHWEST, INC.
CORPORATE EXPRESS DELIVERY LEASING - WEST COAST,
INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - AIR DIVISION,
INC.
AIR COURIER DISPATCH OF NEW JERSEY, INC.
MIDNITE EXPRESS INTERNATIONAL COURIER, INC.
TRICOR AMERICA, INC.
NEW DELAWARE DELIVERY, INC.
CORPORATE EXPRESS DELIVERY ADMINISTRATION, INC.
AMERICAN DELIVERY SYSTEM, INC.
CORPORATE EXPRESS DISTRIBUTION SERVICES, INC.
SUNBELT COURIER, INC.
Each By_____________________________________________________
Title_______________________________________________________
-67-
<PAGE>
A-27
ANNEX A (RECITALS)
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all section references in the following definitions shall refer to
Sections of the Agreement:
"Account Debtor" shall mean any Person who may become obligated to
any Credit Party (other than Holdings) under, with respect to, or on account of,
an Account.
"Accounts" shall mean all "accounts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party (other than Holdings)
and, in any event, including (a) all accounts receivable, other receivables,
book debts and other forms of obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter
received or acquired by or belonging or owing to any Credit Party (other than
Holdings), whether arising out of goods sold or services rendered by it or from
any other transaction (including any such obligations which may be characterized
as an account or contract right under the Code), (b) all of each Credit Party's
(other than Holdings) rights in, to and under all purchase orders or receipts
now owned or hereafter acquired by it for goods or services, (c) all of each
Credit Party's (other than Holdings) rights to any goods represented by any of
the foregoing (including unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods), (d) all monies due or to become due to any Credit Party
(other than Holdings), under all purchase orders and contracts for the sale of
goods or the performance of services or both by such Credit Party or in
connection with any other transaction (whether or not yet earned by performance
on the part of such Credit Party) now or hereafter in existence, including the
right to receive the proceeds of said purchase orders and contracts, and (e) all
collateral security and guarantees of any kind, now or hereafter in existence,
given by any Person with respect to any of the foregoing.
"Advance" shall mean any Revolving Credit Advance or Swing Line
Advance, as the context may require.
"Affiliate" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the Stock
having ordinary voting power in the election of directors of such Persons, (b)
each Person that controls, is controlled by or is under common control with such
Person, and (c) each of such Person's officers, directors, joint venturers and
partners. For the purposes of this definition, "control" of a Person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of
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<PAGE>
its management or policies, whether through the ownership of voting securities,
by contract or otherwise; provided, however, that the term "Affiliate" shall
specifically exclude Agent and each Lender.
"Agent" shall mean GE Capital or its successor appointed pursuant to
Section 9.7.
"Agreement" shall mean the Credit Agreement by and among Borrower,
the other Credit Parties named therein, GE Capital, as Agent and Lender and the
other Lenders signatory from time to time to the Agreement.
"Appendices" shall have the meaning assigned to it in the recitals
to the Agreement.
"Applicable Margins" means collectively the Applicable Revolver
Index Margin and the Applicable Revolver LIBOR Margin.
"Applicable Revolver Index Margin" shall mean the per annum interest
rate margin from time to time in effect and payable in addition to the Index
Rate applicable to the Revolving Loan, as determined by reference to Section
1.4(a) of the Agreement.
"Applicable Revolver LIBOR Margin" shall mean the per annum interest
rate from time to time in effect and payable in addition to the LIBOR Rate
applicable to the Revolving Loan, as determined by reference to Section 1.4(a)
of the Agreement.
"Assignment Agreement" shall have the meaning assigned to it in
Section 9.1(a).
"Bayview" shall mean Bayview Capital Partners LP.
"Borrower" shall have the meaning assigned thereto in the recitals
to the Agreement.
"Borrower Accounts" shall have the meaning assigned to it in Annex
B.
"Borrower Pledge Agreement" shall mean the Pledge Agreement of even
date herewith executed by Borrower in favor of Agent, on behalf of itself and
Lenders, pledging all Stock of its wholly-owned Subsidiaries, and all
Intercompany Notes owing to or held by it.
"Borrowing Availability" shall have the meaning assigned to it in
Section 1.1(a)(i).
"Borrowing Base" shall mean, as of any date of determination by
Agent, from time to time, an amount equal to up to eighty-five percent (85%) of
the book value of
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<PAGE>
Borrower's and each Borrowing Base Subsidiary's Eligible Accounts, less any
Reserves established by Agent at such time.
"Borrowing Base Certificate" shall mean a certificate to be executed
and delivered from time to time by Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Borrowing Base Subsidiaries" shall mean each of Corporate Express
Delivery Systems - Intermountain, Inc., Corporate Express Delivery Systems -
Mid-Atlantic, Inc., Corporate Express Delivery Systems - Mid-West, Inc.,
Corporate Express Delivery Systems - New England, Inc., Corporate Express
Delivery Systems - Northeast, Inc., Corporate Express Delivery Systems -
Southeast, Inc., Corporate Express Delivery Systems - Southwest, Inc., Corporate
Express Delivery Systems - Dispatch of New Jersey, Inc. and Tricor America, Inc.
"Business Day" shall mean any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State of
Illinois or New York and in reference to LIBOR Loans shall mean any such day
that is also a LIBOR Business Day.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one (1) year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Cash Management Systems" shall have the meaning assigned to it in
Section 1.6.
"Change of Control" means any of the following: (a) any person or
group of persons (within the meaning of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended) of twenty percent (20%) or more (on a fully
diluted basis) of the issued and outstanding shares of capital Stock of Holdings
having the right to vote for the election of
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<PAGE>
directors of Holdings under ordinary circumstances (provided, that it shall not
constitute a Change of Control for any 10% Holdings Owner to acquire capital
Stock of Holdings such that it has beneficial ownership of less than thirty
percent (30%) on a fully diluted basis of the issued and outstanding Stock of
Holdings); (b) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the board of
directors of Holdings (together with any new directors whose election by the
board of directors of Holdings or whose nomination for election by the
stockholders of Holdings was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose elections or nomination for election was previously so
approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office; (c) Holdings shall cease to own and
control all of the economic and voting rights associated with all of the
outstanding capital Stock of Borrower; (d) Borrower shall cease to own and
control all of the economic and voting rights associated with all of the
outstanding capital Stock of any of its Subsidiaries; or (e) either Burton W.
Merical or Timothy G. Becker shall cease to hold his current position at
Holdings or Borrower (provided, that it shall not constitute a Change of Control
for Burton Merical or Timothy Becker to be replaced (a) upon sixty (60) days'
prior written notice to Agent with a replacement officer reasonably satisfactory
to Agent or (b) within thirty (30) days after either (but not both) of such
individuals shall cease to hold his current position for any reason so long as a
replacement officer reasonably satisfactory to Agent has been hired within such
thirty (30) day period).
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" shall mean any "chattel paper," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party (other
than Holdings), wherever located.
"Closing Date" shall mean September 24, 1999.
"Closing Checklist" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex C.
"Code" shall mean the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of Illinois; provided,
however, in the event that, by reason of mandatory provisions of law, any or all
of the attachment, perfection or priority of Agent's or any Lender's security
interest in any Collateral is
A-4
<PAGE>
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of Illinois, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.
"Collateral" shall mean the property covered by the Security
Agreement, the Mortgages and the other Collateral Documents and any other
property, real or personal, tangible or intangible, now existing or hereafter
acquired, that may at any time be or become subject to a security interest or
Lien in favor of Agent, on behalf of itself and Lenders, to secure the
Obligations.
"Collateral Documents" shall mean the Security Agreement, the Pledge
Agreements, the Guaranties, the Mortgages, the Trademark Security Agreements and
all similar agreements entered into guaranteeing payment of, or granting a Lien
upon property as security for payment of, the Obligations.
"Collateral Reports" shall mean the reports with respect to the
Collateral referred to in Annex E.
"Collection Account" shall mean that certain account of Agent,
account number 502-328-54 in the name of Agent at Bankers Trust Company in New
York, New York or such other account as Agent shall specify.
"Commitment Termination Date" shall mean the earliest of (a)
September 23, 2004, (b) the date of termination of Lenders' obligations to make
Advances or permit existing Loans to remain outstanding pursuant to Section
8.2(b), and (c) the date of indefeasible prepayment in full by Borrower of the
Loans, and the permanent reduction of the Revolving Loan Commitment and the
Swing Line Commitment to zero dollars.
"Commitments" shall mean (a) as to any Lender, such Lender's
Revolving Loan Commitment (including without duplication the Swing Line Lender's
Swing Line Commitment as a subset of its Revolving Loan Commitment) as set forth
on Annex I to the Agreement or in the most recent Assignment Agreement executed
by such Lender and (b) as to all Lenders, the aggregate of all Lenders'
Revolving Loan Commitments (including without duplication the Swing Line
Lender's Swing Line Commitment as a subset of its Revolving Loan Commitment),
which aggregate commitment shall be $55,000,000 on the Closing Date, as to each
of clauses (a) and (b), as such Commitments may be reduced or adjusted from time
to time in accordance with the Agreement.
"Compliance Certificate" shall have the meaning assigned to it in
Annex D.
"Concentration Account" shall have the meaning assigned to it in
Annex B.
A-5
<PAGE>
"Contracts" shall mean all "contracts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party (other than
Holdings), in any event, including all contracts, undertakings, or agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in or
under which any Credit Party (other than Holdings) may now or hereafter have any
right, title or interest, including any agreement relating to the terms of
payment or the terms of performance of any Account.
"Control Letter" means a letter agreement between Agent and (i) the
issuer of uncertificated securities with respect to uncertificated securities in
the name of any Credit Party, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit
Party, (iii) a futures commission merchant or clearing house with respect to
commodity accounts and commodity contracts held by any Credit Party, whereby,
among other things, the issuer, securities intermediary or futures commission
merchant disclaims any security interest in the applicable financial assets,
acknowledges the Lien of Agent, on behalf of itself and Lenders, on such
financial assets, and agrees to follow the instructions or entitlement orders of
Agent without further consent by the affected Credit Party.
"Convertible Subordinated Note" shall mean that certain Subordinated
Note dated the date hereof in the principal amount of $3,600,000 issued by
Borrower in favor of Seller.
"Copyright License" shall mean any and all rights now owned or
hereafter acquired by any Credit Party (other than Holdings) under any written
agreement granting any right to use any Copyright or Copyright registration.
"Copyright Security Agreements" shall mean the Copyright Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party (other than Holdings).
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Credit Party (other than Holdings): (a) all copyrights and
general intangibles of like nature (whether registered or unregistered), now
owned or existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"Credit Parties" shall mean Holdings, Borrower, and each of
Borrower's Subsidiaries.
A-6
<PAGE>
"Current Assets" shall mean, with respect to any Person, all current
assets of such Person as of any date of determination calculated in accordance
with GAAP, but excluding cash, cash equivalents and debts due from Affiliates.
"Current Liabilities" shall mean, with respect to any Person, all
liabilities which should, in accordance with GAAP, be classified as current
liabilities, and in any event shall include all Indebtedness payable on demand
or within one (1) year from any date of determination without any option on the
part of the obligor to extend or renew beyond such year, all accruals for
federal or other taxes based on or measured by income and payable within such
year, and the current portion of long-term debt required to be paid within one
(1) year, but excluding, in the case of Borrower, the aggregate outstanding
principal balances of the Revolving Loan and the Swing Line Loan.
"Default" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" shall have the meaning assigned to it in Section
1.4(d).
"Disbursement Accounts" shall have the meaning assigned to it on
Annex B.
"Disclosure Schedules" shall mean the Schedules prepared by Borrower
and denominated as Disclosure Schedules 1.3 through 6.7 in the Index to the
Agreement.
"Documents" shall mean any "documents," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" shall mean lawful currency of the United States of
America.
"EBITDA" shall mean, with respect to any Person for any fiscal
period, an amount equal to (a) consolidated net income of such Person for such
period, minus (b) the sum of (i) income tax credits, (ii) interest income, (iii)
gain from extraordinary items for such period, (iv) any aggregate net gain (but
not any aggregate net loss) during such period arising from the sale, exchange
or other disposition of capital assets by such Person (including any fixed
assets, whether tangible or intangible, all inventory sold in conjunction with
the disposition of fixed assets and all securities), and (v) any other non-cash
gains which have been added in determining consolidated net income, in each case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication, plus
(c) the sum of (i) any provision for income taxes, (ii) Interest Expense, (iii)
loss from extraordinary items for such period, (iv) the amount of non-cash
charges (including depreciation and amortization) for such period, (v) amortized
debt discount for such period, and (vi) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, in each case to the extent included in
the calculation of consolidated net income of such Person for such period in
accordance with
A-7
<PAGE>
GAAP, but without duplication. For purposes of this definition, the following
items shall be excluded in determining consolidated net income of a Person: (1)
the income (or deficit) of any other Person accrued prior to the date it became
a Subsidiary of, or was merged or consolidated into, such Person or any of such
Person's Subsidiaries; (2) the income (or deficit) of any other Person (other
than a Subsidiary) in which such Person has an ownership interest, except to the
extent any such income has actually been received by such Person in the form of
cash dividends or distributions; (3) the undistributed earnings of any
Subsidiary of such Person to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (4) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period; (5) any write-up of any asset; (6) any net
gain from the collection of the proceeds of life insurance policies; (7) any net
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of such Person, (8) in the case of a successor
to such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets, and (9) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over the
cost to such Person of the investment in such Subsidiary.
"Eligible Accounts" shall have the meaning assigned to it in Section
1.6 of the Agreement.
"Environmental Laws" shall mean all applicable federal, state, local
and foreign laws, statutes, ordinances, codes, rules, standards and regulations,
now or hereafter in effect, and in each case as amended or supplemented from
time to time, and any applicable judicial or administrative interpretation
thereof, including any applicable judicial or administrative order, consent
decree, order or judgment, imposing liability or standards of conduct for or
relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
ss.ss. 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. ss.ss. 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. ss.ss. 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. ss.ss. 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. ss.ss. 2601 et seq.); the Clean Air Act (42 U.S.C. ss.ss.
7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C. ss.ss. 1251 et
seq.); the Occupational Safety and Health Act (29 U.S.C. ss.ss. 651 et seq.);
and the Safe Drinking Water Act (42 U.S.C. ss.ss. 300(f) et seq.), each as from
time to time amended, and any and all regulations promulgated thereunder, and
all analogous state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes.
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"Environmental Liabilities" shall mean, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" shall mean all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"Equipment" shall mean all "equipment," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located
and, in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment with software and peripheral equipment (other than software
constituting part of the Accounts), and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers,
trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other
equipment of every kind and nature, trade fixtures and fixtures not forming a
part of real property, all whether now owned or hereafter acquired, and wherever
situated, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time, and
any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any
trade or business (whether or not incorporated) which, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Credit Party or any
ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial
A-9
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employer, as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial
withdrawal of any Credit Party or any ERISA Affiliate from any Multiemployer
Plan; (d) the filing of a notice of intent to terminate a Title IV Plan or the
treatment of a plan amendment as a termination under Section 4041 of ERISA; (e)
the institution of proceedings to terminate a Title IV Plan or Multiemployer
Plan by the PBGC; (f) the failure by any Credit Party or ERISA Affiliate to make
when due required contributions to a Multiemployer Plan or Title IV Plan unless
such failure is cured within thirty (30) days; (g) any other event or condition
which might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Title IV Plan or Multiemployer Plan or for the imposition of liability under
Section 4069 or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan
under Section 4041A of ERISA or the reorganization or insolvency of a
Multiemployer Plan under Section 4241 of ERISA; (i) the loss of a Qualified
Plan's qualification or tax exempt status; or (j) the termination of a Plan
described in Section 4064 of ERISA.
"ESOP" shall mean a Plan which is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to it in Section
8.1.
"Exchange Agreement" shall mean that certain Exchange Agreement
dated the date hereof executed by Holdings for the benefit of Seller.
"Federal Funds Rate" shall mean, for any day, a floating rate equal
to the weighted average of the rates on overnight federal funds transactions
among members of the Federal Reserve System, as determined by Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto.
"Fees" shall mean any and all fees payable to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.
"Financial Statements" shall mean the consolidated and consolidating
income statements, statements of cash flows and balance sheets of Borrower
delivered in accordance with Section 3.4 of the Agreement and Annex D to the
Agreement.
"Fiscal Month" shall mean any of the monthly accounting periods of
Borrower.
"Fiscal Quarter" shall mean any of the quarterly accounting periods
of Borrower, ending on the last day of September, December, March and June of
each year.
"Fiscal Year" shall mean any of the annual accounting periods of
Borrower ending on June 30 of each year.
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"Fixed Charges" shall mean, with respect to any Person for any
fiscal period, (a) the aggregate of all Interest Expense paid or accrued during
such period, plus (b) scheduled payments of principal with respect to
Indebtedness during such period, plus (c) Capital Expenditures during such
period.
"Fixed Charge Coverage Ratio" shall mean, with respect to any Person
for any fiscal period, the ratio of EBITDA to Fixed Charges. In computing Fixed
Charges for any fiscal period, interest and principal payments that are due
within one week after the end of that fiscal period, without duplication, shall
be deemed to have been paid on the last day of that fiscal period.
"Fixtures" shall mean any "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party.
"Foreign Subsidiaries" shall mean Midnite Express International
(Australia) Pty., Midnite Express International Couriers Limited, 3152740
Canada, Inc., Corporate Express Delivery Systems - Canada Ltd., USDS Canada Ltd.
"Funded Debt" shall mean, with respect to any Person, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and which by its terms matures more than one
(1) year from, or is directly or indirectly renewable or extendible at such
Person's option under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more than one (1) year from
the date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one (1) year at the option of the debtor, and
also including, in the case of Borrower, the Obligations and, without
duplication, Guaranteed Indebtedness consisting of guaranties of Funded Debt of
other Persons.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, consistently applied, as such term is further defined
in Annex F to the Agreement.
"GE Capital Fee Letter" shall mean that certain letter, dated as of
August 23, 1999, between GE Capital and Borrower with respect to certain Fees to
be paid from time to time by Borrower to GE Capital.
"General Intangibles" shall mean any "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, and, in any event, including all right, title and interest which such
Credit Party may now or hereafter have in or under any Contract, all customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
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information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner, including any obligation or arrangement of such Person
(a) to purchase or repurchase any such primary obligation, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof. The amount of any Guaranteed Indebtedness at any time
shall be deemed to be an amount equal to the lesser at such time of (x) the
stated or determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is made and (y) the maximum amount for which such Person
may be liable pursuant to the terms of the instrument embodying such Guaranteed
Indebtedness; or, if not stated or determinable, the maximum reasonably
anticipated liability (assuming full performance) in respect thereof.
"Guaranties" shall mean, collectively, the Holdings Guaranty, each
Subsidiary Guaranty and any other guaranty executed by any Guarantor in favor of
Agent and Lenders in respect of the Obligations.
"Guarantors" shall mean Holdings, each Subsidiary of Borrower (other
than Foreign Subsidiaries), and each other Person, if any, which executes a
guarantee or other
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similar agreement in favor of Agent in connection with the transactions
contemplated by the Agreement and the other Loan Documents.
"Hazardous Material" shall mean any substance, material or waste
which is regulated by or forms the basis of liability now or hereafter under,
any Environmental Laws, including any material or substance which is (a) defined
as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Holdings" shall have the meaning ascribed thereto in the recitals
to the Agreement.
"Holdings Guaranty" shall mean the guaranty of even date herewith
executed by Holdings in favor of Agent and Lenders.
"Holdings Pledge Agreement" shall mean the Pledge Agreement of even
date herewith executed by Holdings in favor of Agent, on behalf of itself and
Lenders, pledging all Stock of Borrower.
"Indebtedness" of any Person shall mean without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations and the present value (discounted
at the Index Rate as in effect on the Closing Date) of future rental payments
under all synthetic leases, (f) all obligations of such Person under commodity
purchase or option agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (g) all obligations of such Person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from fluctuations in currency values
or interest rates, in each case whether contingent or matured, (h) all
Indebtedness referred to above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property or other assets (including accounts and
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contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness, and (i) the Obligations.
"Indemnified Liabilities" shall have the meaning assigned to it in
Section 1.12.
"Index Rate" shall mean, for any day, a floating rate equal to the
higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans at large U.S. money center
commercial banks" (or, if The Wall Street Journal ceases quoting a base rate of
the type described, the highest per annum rate of interest published by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus fifty (50) basis points per annum. Each change
in any interest rate provided for in the Agreement based upon the Index Rate
shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" shall mean a Loan or portion thereof bearing
interest by reference to the Index Rate.
"Instruments" shall mean any "instrument," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, wherever
located, and, in any event, including all certificated securities, all
certificates of deposit, and all notes and other, without limitation, evidences
of indebtedness, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents,
Copyrights, Trademarks, trade secrets and customer lists.
"Interest Coverage Ratio" shall mean, with respect to any Person for
any period, the ratio of EBITDA to Interest Expense.
"Interest Expense" shall mean, with respect to any Person for any
fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, in any event, interest expense with respect to any Funded Debt of
such Person and interest expense for the relevant period that has been
capitalized on the balance sheet of such Person.
"Interest Payment Date" means (a) as to any Index Rate Loan, the
first Business Day of each month to occur while such Loan is outstanding, (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period; and provided
that, in addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an "Interest Payment Date"
with respect to any interest which is then accrued under the Agreement.
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"Inventory" shall mean any "inventory," as such term is defined in
the Code, now or hereafter owned or acquired by any Credit Party, wherever
located, and in any event including inventory, merchandise, goods and other
personal property which are held by or on behalf of any Credit Party for sale or
lease or are furnished or are to be furnished under a contract of service, or
which constitute raw materials, work in process or materials used or consumed or
to be used or consumed in such Credit Party's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies.
"Investment Property" shall have the meaning ascribed thereto in
Section 9-115 of the Code in those jurisdictions in which such definition has
been adopted and shall include (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of such Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts held by any Credit
Party; (iv) all commodity contracts held by any Credit Party; and (v) all
commodity accounts held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Lenders" shall mean GE Capital, the other Lenders named on the
signature page of the Agreement, and, if any such Lender shall decide to assign
all or any portion of the Obligations, such term shall include such assignee.
"LIBOR Business Day" shall mean a Business Day on which banks in the
city of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" shall mean a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Period" shall mean, with respect to any LIBOR Loan, each
period commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one (1), two (2) or three (3) months thereafter, as
selected by Borrower's irrevocable notice to Agent as set forth in Section
1.4(e); provided that the foregoing provision relating to LIBOR Periods is
subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not a
LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be
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to carry such LIBOR Period into another calendar month in which event such
LIBOR Period shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two (2) LIBOR Business Days prior to
such date;
(c) any LIBOR Period pertaining to a LIBOR Loan that begins on the
last LIBOR Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of
such LIBOR Period) shall end on the last LIBOR Business Day of a calendar
month;
(d) Borrower shall select LIBOR Periods so as not to require a
payment or prepayment of any LIBOR Loan during a LIBOR Period for such
Loan; and
(e) Borrower shall select LIBOR Periods so that there shall be no
more than three (3) separate LIBOR Loans in existence at any one time.
"LIBOR Rate" shall mean for each LIBOR Period, a rate of interest
determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period which appears on Telerate Page 3750 as of 11:00
a.m., London time, on the second full LIBOR Business Day next preceding
the first day of each LIBOR Period (unless such date is not a Business
Day, in which event the next succeeding Business Day will be used);
divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of the
Board of Governors of the Federal Reserve system or other governmental
authority having jurisdiction with respect thereto, as now and from time
to time in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board) which are
required to be maintained by a member bank of the Federal Reserve System.
If such interest rates shall cease to be available from Telerate
News Service, the LIBOR Rate shall be determined from such financial
reporting service or other information as shall be mutually acceptable to
Agent and Borrower.
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"License" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Litigation" shall have the meaning assigned to it in Section 3.13.
"Loan Account" shall have the meaning assigned to it in Section
1.12.
"Loan Documents" shall mean the Agreement, the Notes, the Collateral
Documents and all other agreements, instruments, documents and certificates
identified in the Closing Checklist executed and delivered to, or in favor of,
Agent and/or Lenders and including all other pledges, powers of attorney,
consents, assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated hereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to
such Agreement as the same may be in effect at any and all times such reference
becomes operative.
"Loans" shall mean the Revolving Loan and the Swing Line Loan.
"Long Term Subordinated Note" shall mean that certain Subordinated
Note dated the date hereof in the principal amount of $6,519,000 issued in favor
of Seller.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the business, assets, operations, prospects or financial condition of
Holdings, Borrower and the Borrowing Base Subsidiaries (taken as a whole), (b)
Borrower's ability to pay any of the Loans or any of the other Obligations in
accordance with the terms of the Agreement, (c) the Collateral or Agent's Liens,
on behalf of itself and Lenders, on the Collateral or the priority of such
Liens, or (d) Agent's or any Lender's rights and remedies under the Agreement
and the other Loan Documents. Without limiting the foregoing, any event or
occurrence adverse to one or more Credit Parties which results or could
reasonably be expected to result in costs and/or liabilities in excess of ten
percent (10%) of Borrowing Availability as of any date of determination shall be
deemed to have had Material Adverse Effect.
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"Maximum Amount" shall mean, at any particular time, an amount equal
to the Revolving Loan Commitment of all Lenders.
"Merger" shall mean the acquisition by Holdings of all of the stock
of Borrower through the merger of United Shipping & Technology Acquisition Corp.
("Acquisition Corp.") with and into Borrower.
"Merger Agreement" shall mean that certain Merger Agreement dated
September 8, 1999 by and among Holdings, Borrower, Seller and Acquisition Corp.
"Mortgaged Properties" shall have the meaning assigned to it in
Annex C.
"Mortgages" shall mean each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral assignments of leases
or other real estate security documents delivered by any Credit Party to Agent
with respect to the Mortgaged Properties, all in form and substance satisfactory
to Agent.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make, has made or been obligated to make, contributions
on behalf of participants who are or were employed by any of them.
"Net Borrowing Availability" shall mean as of any date of
determination, the lesser of (i) the Maximum Amount and (ii) the Borrowing Base,
in each case less the sum of the Revolving Loan and Swing Line Loan then
outstanding.
"Non-Funding Lender" shall have the meaning assigned to it in
Section 9.9(a)(ii).
"Notes" shall mean the Revolving Notes and the Swing Line Note,
collectively.
"Notice of Conversion/Continuation" shall have the meaning assigned
to it in Section 1.5(e).
"Notice of Revolving Credit Advance" shall have the meaning assigned
to it in Section 1.1(a).
"Obligations" shall mean all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest
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(including all interest which accrues after the commencement of any case or
proceeding in bankruptcy after the insolvency of, or for the reorganization of
any Credit Party, whether or not allowed in such proceeding), Fees, Charges,
expenses, attorneys' fees and any other sum chargeable to any Credit Party under
the Agreement or any of the other Loan Documents.
"Overadvance" shall have the meaning assigned to it in Section
1.1(a)(iii).
"Patent Security Agreements" shall mean the Patent Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party (other than Holdings).
"Patent License" shall mean rights under any written agreement now
owned or hereafter acquired by any Credit Party (other than Holdings) granting
any right with respect to any invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Credit Party
now holds or hereafter acquires any interest: (a) all letters patent of the
United States or any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State or Territory thereof, or any other country, and (b) all
reissues, continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Encumbrances" shall mean the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges not yet due and
payable; (b) pledges or deposits of money securing statutory obligations under
workmen's compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under ERISA); (c) pledges
or deposits of money securing bids, tenders, contracts (other than contracts for
the payment of money) or leases to which any Credit Party (other than Holdings)
is a party as lessee made in the ordinary course of business; (d) inchoate and
unperfected workers', mechanics' or similar liens arising in the ordinary course
of business, so long as such Liens attach only to Equipment, Fixtures and/or
Real Estate; (e) carriers', warehousemen's, suppliers' or other similar
possessory liens arising in the ordinary course of business and securing
liabilities in an outstanding aggregate amount not in excess of $100,000 at any
time, so long as such Liens attach only to Inventory; (f) deposits securing, or
in lieu of, surety, appeal or customs bonds in proceedings to which any Credit
Party is a party; (g) any attachment or judgment lien not constituting an Event
of Default under Section 8.1(j); (h) zoning restrictions, easements, licenses,
or other restrictions on the use of any Real Estate or other minor
irregularities in title (including leasehold title) thereto, so long as the same
do not materially impair the
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use, value, or marketability of such Real Estate; (i) presently existing or
hereinafter created Liens in favor of Agent, on behalf of Lenders; and (j) Liens
expressly permitted under clauses (b) and (c) of Section 6.7 of the Agreement.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" shall mean, at any time, an employee benefit plan, as defined
in Section 3(3) of ERISA, which any Credit Party maintains, contributes to or
has an obligation to contribute to on behalf of participants who are or were
employed by any Credit Party.
"Pledge Agreements" shall mean the Borrower Pledge Agreement, the
Holdings Pledge Agreement, the Subsidiary Pledge Agreements and any other pledge
agreement entered into after the Closing Date by any Credit Party (as required
by the Agreement or any other Loan Document).
"Prior Lender" shall mean Bankers Trust and the other lenders party
to that certain agreement pursuant to which such entities have been extending
credit to Corporate Express, Inc. (the "Prior Lender Loan Agreement").
"Prior Lender Obligations" shall mean all obligations of any Credit
Party under the Prior Lender Loan Agreement.
"Proceeds" shall mean "proceeds," as such term is defined in the
Code and, in any event, shall include (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party (other than
Holdings) from time to time with respect to any of the Collateral, (b) any and
all payments (in any form whatsoever) made or due and payable to any Credit
Party from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting under color of governmental
authority), (c) any claim of any Credit Party (other than Holdings) against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party (other than Holdings) against third parties with
respect to any litigation or dispute concerning any of the Collateral, and (e)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral, upon disposition or otherwise.
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"Pro Forma" means the unaudited consolidated and consolidating
balance sheet of Borrower and its Subsidiaries as of August 31, 1999 after
giving pro forma effect to the Related Transactions.
"Projections" means Borrower's forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all (with respect to all
Projections delivered to Agent after the date hereof), prepared on a Subsidiary
by Subsidiary or division by division basis, if applicable, and otherwise
consistent with the historical Financial Statements of Borrower, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" shall mean with respect to all matters relating to
any Lender (a) with respect to the Revolving Loan (including the Swing Line Loan
as a subset of the Swing Lien Lender's Revolving Loan), the percentage obtained
by dividing (i) the Revolving Loan Commitment (including the Swing Line
Commitment as a subset of the Swing Line Lender's Revolving Loan Commitment), by
(ii) the aggregate Revolving Loan Commitments, (b) with respect to all Loans,
the percentage obtained by dividing (i) the aggregate Commitments of that Lender
by (ii) the aggregate Commitments of all Lenders, and (c) with respect to all
Loans on and after the Commitment Termination Date, the percentage obtained by
dividing (i) the aggregate outstanding principal balance of the Loans held by
that Lender, by (ii) the outstanding principal balance of the Loans held by all
Lenders.
"Public Offering" shall mean a firm underwritten public offering of
common stock registered on form S-1, S-2 or S-3 under the Securities Act of
1933, as amended, by a nationally recognized investment banking firm and after
giving effect to which the issuer shall be qualified for listing on the NASDAQ
National Market, the American Stock Exchange or the New York Stock Exchange.
"Qualified Plan" shall mean a Plan which is intended to be
tax-qualified under Section 401(a) of the IRC.
"Real Estate" shall have the meaning assigned to it in Section 3.6.
"Refinancing" shall mean the repayment in full by Borrower of the
Prior Lender Obligations on the Closing Date.
"Refunded Swing Line Loan" shall have the meaning assigned to it in
Section 1.1(b)(iii).
"Related Transactions" means each borrowing under the Revolving Loan
on the Closing Date, the Merger, the Refinancing, the issuance of the
Subordinated Notes, the payment of all fees, costs and expenses associated with
all of the foregoing and the execution and delivery of all of the Related
Transactions Documents.
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"Related Transactions Documents" shall mean the Loan Documents, the
Merger Agreement and the Subordinated Notes.
"Release" shall mean any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
"Requisite Lenders" shall mean (a) Lenders having more than
sixty-six and two-thirds percent (66 2/3%) of the Commitments of all Lenders, or
(b) if the Commitments have been terminated, more than sixty-six and two-thirds
percent (66 2/3%) of the aggregate outstanding amount of the Loans.
"Reserves" shall mean, with respect to the Borrowing Base of
Borrower, (a) reserves established pursuant to Section 5.4(c), and (b) such
other reserves against Eligible Accounts or Borrowing Availability of Borrower
which Agent may, in its reasonable credit judgment, establish from time to time.
Without limiting the generality of the foregoing, Reserves established to ensure
the payment of accrued Interest Expenses or Indebtedness shall be deemed to be a
reasonable exercise of Agent's credit judgment.
"Restricted Payment" shall mean (a) the declaration or payment of
any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other retirement of a Person's Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Person now or hereafter outstanding; (e)
any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such
Person's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Person other than payment of compensation in the ordinary
course to stockholders who are employees of such Person; and (g) any payment of
management fees (or other fees of a similar nature) by such Person to any
Stockholder of such Person or their Affiliates.
"Retiree Welfare Plan" shall mean, at any time, a Plan that is a
"welfare plan" as defined in Section 3(2) of ERISA, that provides for continuing
coverage or benefits for any participant or any beneficiary of a participant
after such participant's termination of employment, other than continuation
coverage provided pursuant to
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Section 4980B of the IRC and at the sole expense of the participant or the
beneficiary of the participant.
"Revolving Credit Advance" shall have the meaning assigned to it in
Section 1.1(a)(i).
"Revolving Lenders" shall mean, as of any date of determination,
Lenders having a Revolving Loan Commitment.
"Revolving Loan" shall mean, at any time the aggregate amount of
Revolving Credit Advances outstanding to Borrower.
"Revolving Loan Commitment" shall mean (a) as to any Revolving
Lender, the aggregate commitment of such Revolving Lender to make Revolving
Credit Advances (including without duplication Swing Line Advances as a subset
of the Swing Line Lender's Revolving Loan Commitment) as set forth on Annex I to
the Agreement or in the most recent Assignment Agreement executed by such
Revolving Lender and (b) as to all Revolving Lenders, the aggregate commitment
of all Revolving Lenders to make Revolving Credit Advances (including without
duplication Swing Line Advances as a subset of the Swing Line Lender's Revolving
Loan Commitment), which aggregate commitment shall be $55,000,000.
"Revolving Note" shall have the meaning assigned to it in Section
1.1(a)(ii).
"Security Agreement" shall mean the Security Agreement of even date
herewith entered into among Agent, on behalf of itself and Lenders, and each
Credit Party (other than Holdings) that is a signatory thereto.
"Seller" shall mean CEX Holdings, Inc., a Colorado corporation.
"Seller Guaranty" shall mean each Guaranty Agreement of even date
herewith executed by Holdings and each Subsidiary of Borrower (other than
Foreign Subsidiaries) in favor of Seller.
"Short Term Subordinated Note" shall mean that certain Subordinated
Note dated the date hereof in the principal amount of $7,500,000 issued by
Borrower in favor of Seller.
"Solvent" shall mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property on a going concern
basis of such Person is greater than the total amount of liabilities, including
contingent liabilities, of such Person; (b) the present fair salable value of
the assets of such Person on a going concern basis is not less than the amount
that will be required to pay the probably liability of such Person on its debts
as they become absolute and matured; (c) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as
A-23
<PAGE>
such debts and liabilities mature; and (d) such Person is not engaged in a
business or transaction, and is not about to engage in a business or
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities (such as litigation,
guarantees and pension plan liabilities) at any time shall be computed as the
amount which, in light of all the facts and circumstances existing at the time,
represents the amount which can be reasonably be expected to become an actual or
matured liability.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
"Subordinated Debt" shall mean the Indebtedness of Borrower
evidenced by the Subordinated Notes and any other Indebtedness of any Credit
Party subordinated to the Obligations in a manner and form satisfactory to Agent
and Lenders in their sole discretion, as to right and time of payment and as to
any other rights and remedies thereunder.
"Subordinated Notes" shall mean (a) that certain Subordinated Note
dated the date hereof in the principal amount of $5,000,000 issued by Borrower
in favor of Bayview, (b) those certain Subordinated Notes dated the date hereof
in the principal amounts of $7,500,000, $3,600,000 and $6,519,000, respectively,
issued by Borrower in favor of Seller, and (c) those certain Intercreditor and
Subordination Agreements, each dated the date hereof, by and between Agent,
Borrower and each of Seller and Bayview.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding Stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time, Stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such Stock
whether by proxy, agreement, operation of law or otherwise, and (b) any
partnership or limited liability company in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than fifty
percent (50%) or of which any such Person is a general partner or may exercise
the powers of a general partner.
A-24
<PAGE>
"Subsidiary Guaranty" shall mean the Subsidiary Guaranty of even
date herewith executed by each Subsidiary (other than Foreign Subsidiaries) of
Borrower in favor of Agent, on behalf of itself and Lenders.
"Subsidiary Pledge Agreements" shall mean each Pledge Agreement of
even date herewith executed by a Subsidiary of Borrower in favor of Agent, on
behalf of itself and Lenders, pledging all Stock of its Subsidiaries.
"Supermajority Revolving Lenders" shall mean (a) Lenders having
eighty percent (80%) or more of the Revolving Loan Commitments of all Lenders,
or (b) if the Revolving Loan Commitments have been terminated, eighty percent
(80%) or more of the aggregate outstanding amount of the Revolving Loan (with
the Swing Line Loan being attributed to the Lender making such Loan).
"Swing Line Advance" has the meaning assigned to it in Section
1.1(b)(i).
"Swing Line Availability" has the meaning assigned to it in Section
1.1(b)(i).
"Swing Line Commitment" shall mean, as to the Swing Line Lender, the
commitment of the Swing Line Lender to make Swing Line Loans as set forth on
Annex I to the Agreement, which commitment constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" shall mean GE Capital.
"Swing Line Loan" shall mean at any time, the aggregate amount of
Swing Line Advances outstanding to Borrower.
"Swing Line Note" has the meaning assigned to it in Section
1.1(b)(ii).
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender.
"Termination Date" shall mean the date on which the Loans have been
indefeasibly repaid in full and all other Obligations under the Agreement and
the other Loan Documents have been completely discharged, and Borrower shall not
have any further right to borrow any monies under the Agreement.
"Third Party Interactives" shall mean all Persons with whom any
Credit Party exchanges data electronically in the ordinary course of business,
including, without limitation, customers, suppliers, third-party vendors,
subcontractors, processors-converters, shippers and warehousemen.
A-25
<PAGE>
"Title IV Plan" shall mean an employee pension benefit plan, as
defined in Section 3 (2) of ERISA (other than a Multiemployer Plan), which is
covered by Title IV of ERISA, and which any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Trademark Security Agreements" shall mean the Trademark Security
Agreements made in favor of Agent, on behalf of Lenders, by each applicable
Credit Party (other than Holdings).
"Trademark License" shall mean rights under any written agreement
now owned or hereafter acquired by any Credit Party (other than Holdings)
granting any right to use any Trademark.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Credit Party (other than Holdings): (a) all trademarks, trade
names, corporate names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), now owned or existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"Unfunded Pension Liability" shall mean, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of five (5) years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
"Warrants" shall mean those certain warrants issued prior to the
date hereof by Holdings with respect to its Series A Convertible Preferred
Stock.
"Year 2000 Assessment" shall mean a comprehensive written assessment
of the nature and extent of each Credit Party's Year 2000 Problems and Year 2000
Date Sensitive Systems/Components, including, without limitation, Year 2000
Problems regarding data exchanges with Third Party Interactives.
A-26
<PAGE>
"Year 2000 Corrective Actions" shall mean, as to each Credit Party,
all actions necessary to eliminate such Person's Year 2000 Problems, including,
without limitation, computer code enhancements and revisions, upgrades and
replacements of Year 2000 Date Sensitive Systems/Components, and coordination of
such enhancements, revisions, upgrades and replacements with Third Party
Interactives.
"Year 2000 Corrective Plan" shall mean, with respect to each Credit
Party, a comprehensive plan to eliminate all of its Year 2000 Problems on or
before September 30, 1999, including without limitation (i) computer code
enhancements or revisions, (ii) upgrades or replacements of Year 2000 Date
Sensitive Systems/Components, (iii) test and validation procedures, (iv) an
implementation time line and budget and (v) designation of specific employees
who will be responsible for planning, coordinating and implementing each phase
or subpart of the Year 2000 Corrective Plan.
"Year 2000 Date Sensitive System/Component" shall mean, as to any
Person, any system software, network software, applications software, data base,
computer file, embedded microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs calendar related
data accurately; such systems and components shall include, without limitation,
mainframe computers, file server/client systems, computer workstations, routers,
hubs, other network related hardware, and other computer related software,
firmware or hardware and information processing and delivery systems of any kind
and telecommunications systems and other communications processors, security
systems, alarms, elevators and HVAC systems.
"Year 2000 Implementation Testing" shall mean, as to each Credit
Party, (i) the performance of test and validation procedures regarding Year 2000
Corrective Actions on a unit basis and on a systemwide basis; (ii) the
performance of test and validation procedures regarding data exchanges among the
Credit Parties' Year 2000 Date Sensitive Systems/Components and data exchanges
with Third Party Interactives, and (iii) the design and implementation of
additional Corrective Actions, the need for which has been demonstrated by test
and validation procedures.
"Year 2000 Problems" shall mean, with respect to each Credit Party,
limitations on the capacity or readiness of any such Credit Party's Year 2000
Date Sensitive Systems/Components to accurately accept, create, manipulate,
sort, sequence, calculate, compare or output calendar date information with
respect to calendar year 1999 or any subsequent calendar year beginning on or
after January 1, 2000 (including leap year computations), including, without
limitation, exchanges of information among Year 2000 Date Sensitive
Systems/Components of the Credit Parties and exchanges of information among the
Credit Parties and Year 2000 Date Sensitive Systems/Components of Third Party
Interactives and functionality of peripheral interfaces, firmware and embedded
microchips.
A-27
<PAGE>
All other undefined terms contained in any of the Loan Documents
shall, unless the context indicates otherwise, have the meanings provided for by
the Code as in effect in the State of Illinois to the extent the same are used
or defined therein. Unless otherwise specified, references in the Agreement or
any of the Appendices to a Section, subsection or clause refer to such Section,
subsection or clause as contained in the Agreement. The words "herein," "hereof"
and "hereunder" and other words of similar import refer to the Agreement as a
whole, including all Annexes, Exhibits and Schedules, as the same may from time
to time be amended, restated, modified or supplemented, and not to any
particular section, subsection or clause contained in the Agreement or any such
Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated
in either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to Persons include their respective successors and assigns (to the
extent and only to the extent permitted by the Loan Documents) or, in the case
of governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of the same and any successor statutes and regulations. Whenever
any provision in any Loan Document refers to the knowledge (or an analogous
phrase) of any Credit Party, such words are intended to signify that such Credit
Party has actual knowledge or awareness of a particular fact or circumstance or
that such Credit Party, if it had exercised reasonable diligence, would have
known or been aware of such fact or circumstance.
A-28
Exhibit 10.6
REVOLVING NOTE
Chicago, Illinois
$55,000,000 September 24, 1999
FOR VALUE RECEIVED, the undersigned, UST DELIVERY SYSTEMS, INC., a
Delaware corporation formerly known as Corporate Express Delivery Systems, Inc.
("Borrower"), HEREBY PROMISES TO PAY to the order of GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("Lender"), at the offices of Lender at its
address at 10 South LaSalle Street, Suite 2800, Chicago, Illinois 60603, or at
such other place as Agent (as hereinafter defined) may designate from time to
time in writing, in lawful money of the United States of America and in
immediately available funds, the amount of FIFTY-FIVE MILLION AND NO/100 DOLLARS
($55,000,000) or, if less, the aggregate unpaid amount of all Revolving Credit
Advances under the Credit Agreement (as hereinafter defined). All capitalized
terms used but not otherwise defined herein have the meanings given to them in
the Credit Agreement or in Annex A thereto.
This Revolving Note is issued pursuant to that certain Credit
Agreement dated as of the date hereof by and among Borrower, General Electric
Capital Corporation, as a Lender and as agent ("Agent") for the Lenders, the
Credit Parties signatory thereto and the other Persons signatory thereto from
time to time as Lenders (including all annexes, exhibits or schedules thereto,
and as from time to time amended, restated, supplemented or otherwise modified,
the "Credit Agreement"), and is entitled to the benefit and security of the
Credit Agreement, the Security Agreement and all of the other Loan Documents
referred to therein. Reference is hereby made to the Credit Agreement for a
statement of all of the terms and conditions under which the Loans evidenced
hereby are made and are to be repaid.
The principal amount of the indebtedness evidenced hereby shall be
payable in the amounts and on the dates specified in the Credit Agreement, the
terms of which are hereby incorporated herein by reference. Interest thereon
shall be paid until such principal amount is paid in full at such interest rates
and at such times, and pursuant to such calculations, as are specified in the
Credit Agreement.
If any payment on this Revolving Note becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day (except as otherwise provided in the Credit
Agreement) and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.
Upon and after the occurrence of any Event of Default, this
Revolving Note may, in accordance with the Credit Agreement, and without demand,
notice or legal process of any kind, be declared, and immediately shall become,
due and payable.
<PAGE>
Demand, presentment, protest and notice of nonpayment and protest
are hereby waived by Borrower.
THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE.
UST DELIVERY SYSTEMS, INC.
By______________________________________
Title___________________________________
-2-
Exhibit 10.7
SWING LINE NOTE
Chicago, Illinois
$5,000,000 September 24, 1999
FOR VALUE RECEIVED, the undersigned, UST DELIVERY SYSTEMS, INC., a
Delaware corporation formerly known as Corporate Express Delivery Systems, Inc.
("Borrower"), HEREBY PROMISES TO PAY to the order of GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("Agent"), at its address at 10 South
LaSalle Street, Suite 2800, Chicago, Illinois 60603, or at such other place as
Agent may designate from time to time in writing, in lawful money of the United
States of America and in immediately available funds, the amount of Five Million
Dollars ($5,000,000) or, if less, the aggregate unpaid amount of all Swing Line
Advances under the Credit Agreement (as hereinafter defined). All capitalized
terms used but not otherwise defined herein have the meanings given to them in
the Credit Agreement or in Annex A thereto.
This Swing Line Note is issued pursuant to that certain Credit
Agreement dated as of the date hereof by and among Borrower, Agent, the Credit
Parties signatory thereto and the Persons signatory thereto from time to time as
Lenders (including all annexes, exhibits or schedules thereto and as from time
to time amended, restated, supplemented or otherwise modified, the "Credit
Agreement"), and is entitled to the benefit and security of the Credit
Agreement, the Security Agreement and all of the other Loan Documents referred
to therein. Reference is hereby made to the Credit Agreement for a statement of
all of the terms and conditions under which the Loans evidenced hereby are made
and are to be repaid.
The principal amount of the indebtedness evidenced hereby shall be
payable in the amounts and on the dates specified in the Credit Agreement, the
terms of which are hereby incorporated herein by reference. Interest thereon
shall be paid until such principal amount is paid in full at such interest rates
and at such times, and pursuant to such calculations, as are specified in the
Credit Agreement.
If any payment on this Swing Line Note becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day (except as otherwise provided in the Credit
Agreement) and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.
Upon and after the occurrence of any Event of Default, this Swing
Line Note may, in accordance with the Credit Agreement, and without demand,
notice or legal process of any kind, be declared, and immediately shall become,
due and payable.
<PAGE>
Demand, presentment, protest and notice of nonpayment and protest
are hereby waived by Borrower.
THIS SWING LINE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN THAT STATE.
UST DELIVERY SYSTEMS, INC.
By______________________________________
Title___________________________________
-2-
Exhibit 10.8
NOTE AND WARRANT PURCHASE AGREEMENT
by and among
UNITED SHIPPING & TECHNOLOGY, INC.,
UST DELIVERY SYSTEMS, INC.
(f/k/a CORPORATE EXPRESS DELIVERY SYSTEMS, INC.),
THE OTHER LOAN PARTIES SIGNATORY HERETO
and
BAYVIEW CAPITAL PARTNERS LP
Dated as of September 24, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS 1
1.01 Certain Definitions 1
ARTICLE 2 PURCHASE AND SALE OF SECURITIES 6
2.01 Purchase and Sale 6
2.02 The Closing 7
2.03 Use of Proceeds 7
2.04 Closing Fee 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES 7
3.01 Organization, Standing and Qualification of the Loan Parties 7
3.02 Subsidiaries and Investments 7
3.03 Execution, Delivery and Performance of Agreement; Authority 8
3.04 Financial Statements 8
3.05 Warrant and Warrant Securities 9
3.06 Capitalization 9
3.07 No Material Adverse Change 10
3.08 Litigation 10
3.09 Compliance with Laws and Other Instruments 10
3.10 Title to and Liens on Properties 10
3.11 Solvency 11
3.12 Permits and Licenses 11
3.13 Taxes 11
3.14 Intellectual Property Rights 11
3.15 Margin Securities 12
3.16 Not an Investment Company 12
3.17 Securities Laws 12
3.18 Environmental Protection 13
3.19 Product Liability 13
3.20 Insurance 13
3.21 Employment or Severance Agreements 13
3.22 Software and Information Systems 14
3.23 Disclosure 14
3.24 Acquisition Documents 14
3.25 Contracts 14
3.26 Use of Proceeds; Restrictions under the SBIA 15
3.27 Small Business Concern 15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 16
i
<PAGE>
4.01 Partnership Existence and Power 16
4.02 Authorization 16
4.03 Litigation 16
4.04 Investment Intent 16
ARTICLE 5 CLOSING CONDITIONS 17
5.01 Representations and Warranties True 17
5.02 Compliance with Agreement 17
5.03 No Event of Default 17
5.04 Documents Required for the Closing 17
5.05 Proceedings Satisfactory 19
ARTICLE 6 AFFIRMATIVE COVENANTS OF THE COMPANY AND CEDS 19
6.01 Payment of Notes 19
6.02 Reporting 19
6.03 Books and Records; Inspection and Examination 21
6.04 Compliance with Laws 22
6.05 Maintenance of Properties 23
6.06 Insurance 23
6.07 Payment of Taxes and Claims 23
6.08 Maintenance of Corporate Existence 23
6.09 Financial Covenants 24
6.10 Board of Directors 29
6.11 Replacement of Certificates 29
6.12 Retirement Plans 29
6.13 Filing of Reports 30
6.14 [Intentionally Omitted] 30
6.15 SBIA Information 30
6.16 SBIA Compliance 30
6.17 Environmental Matters 31
6.18 Other Agreements 31
6.19 Certificates of Incorporation 32
ARTICLE 7 NEGATIVE COVENANTS OF THE COMPANY AND CEDS 32
7.01 Liens 32
7.02 Fixed Indebtedness 33
7.03 Guaranties 34
7.04 Investments and Loans 34
7.05 Dividends; Distributions 35
7.06 Sale of Assets 35
7.07 Consolidation and Merger; Acquisitions 35
7.08 Sale and Leaseback 35
ii
<PAGE>
7.09 [Intentionally Omitted] 35
7.10 Restrictions on Nature of Business 35
7.11 Accounting 36
7.12 [Intentionally Omitted] 36
7.13 [Intentionally Omitted] 36
7.14 Conflicts of Interest 36
7.15 Transactions with Affiliates 36
7.16 Modification of Senior Credit Agreement 36
7.17 Inconsistent Agreements 36
7.18 Rental Obligations 36
7.19 Modification of Seller Notes 37
7.20 Certificates of Incorporation 37
ARTICLE 8 INDEMNIFICATION 37
8.01 Indemnification by the Company 37
8.02 Indemnification by the Purchaser 37
8.03 Notice 37
8.04 Defense 38
ARTICLE 9 EVENTS OF DEFAULT 38
9.01 Events of Default 38
9.02 Remedies 40
ARTICLE 10 MISCELLANEOUS 41
10.01 Survival of Representations and Warranties 41
10.02 Expenses 41
10.03 Governing Law 41
10.04 Notices 41
10.05 Entire Agreement 42
10.06 Amendments; Consents; Waivers 42
10.07 Severability of Invalid Provision 43
10.08 Successors and Assigns 43
10.09 Rules of Construction 43
10.10 Counterparts 43
10.11 Cumulative Remedies 43
10.12 Press Releases 43
10.13 Time is of the Essence 43
10.14 Consent to Jurisdiction; Jury Waiver 44
iii
<PAGE>
EXHIBITS AND SCHEDULES
Exhibit A - Form of Note
Exhibit B - Form of Warrant
Exhibit C - Form of Security Agreement
Exhibit D - Form of Guaranty
Exhibit E - Form of Opinion of the Company's Legal Counsel
Exhibit F - Compliance Certificate
Disclosure Schedule
iv
<PAGE>
NOTE AND WARRANT PURCHASE AGREEMENT
This Agreement (the "Agreement") is made as of September 24, 1999 by
and between UNITED SHIPPING & TECHNOLOGY, INC., a Utah corporation (the
"Company"), UST DELIVERY SYSTEMS, INC., a Delaware corporation f/k/a Corporate
Express Delivery Systems, Inc. ("CEDS"), THE OTHER LOAN PARTIES SIGNATORY HERETO
and BAYVIEW CAPITAL PARTNERS LP, a Delaware limited partnership ("Bayview" or
the "Purchaser").
BACKGROUND
A. The Company and CEDS have entered into that certain Merger
Agreement dated as of September 8, 1999 by and among CEX Holdings, Inc., CEDS,
the Company, and United Shipping & Technology Acquisition Corp. (the
"Acquisition Agreement") pursuant to which CEDS has become a wholly-owned
subsidiary of the Company.
B. CEDS, as a wholly-owned subsidiary of the Company, will benefit
from the transactions described in this Agreement.
C. The Purchaser is willing to provide certain funds through a
senior subordinated loan which, along with funds provided by the Senior Lender
and Seller (as each such term is defined below), will be used to carry out the
transactions contemplated by the Acquisition Agreement.
D. The Company will issue the Warrant (as defined below) to the
Purchaser as additional consideration for providing the subordinated loan to the
Company and CEDS.
E. The Company, CEDS, and the Purchaser wish to specify in this
Agreement the terms on which the Company and CEDS will sell and the Purchaser
will purchase the Note (as defined below) and the Warrant and the terms which
are applicable to the shares of the Company's capital stock that are issuable
upon exercise of the Warrant.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth below, the parties agree as follows:
ARTICLE 1 DEFINITIONS
1.01 Certain Definitions. As used herein, the following terms have
the meanings indicated:
<PAGE>
"Acquisition" means the Merger (as defined in the Acquisition
Agreement).
"Acquisition Documents" means the Acquisition Agreement, together
with all other agreements and instruments delivered pursuant to the Acquisition
Agreement.
"Affiliate" means (i) any Person which directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Company, (ii) any Person of which five percent (5%) or
more of the equity interest is held beneficially or of record by the Company or
a Subsidiary, or (iii) a spouse of any shareholder of the Company or any
business of which such spouse is a director, officer, employee or equity holder.
Control for purposes of this definition means the possession, directly or
indirectly, of the power to influence the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Ancillary Agreements" means all the agreements and instruments
executed and delivered by the Loan Parties to the Purchaser at the Closing,
including without limitation the Note, the Warrant, the Security Agreements, and
the Guaranties.
"Balance Sheet Date" has the meaning set forth in Section 3.04.
"CEDS" means UST Delivery Systems, Inc., a Delaware corporation
f/k/a Corporate Express Delivery Systems, Inc., a wholly-owned subsidiary of the
Company and a co-obligor under the Note.
"Change of Control" means any of the following: (a) any Person or
group of Persons (within the meaning of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) acquires beneficial ownership (withing the meaning
of Rule 13d-3 promulgated by the Commission under the Exchange Act) of twenty
percent (20%) or more (on a fully diluted basis) of the issued and outstanding
shares of capital stock of the Company having the right to vote for the election
of directors of the Company under ordinary circumstances, excluding any such
Person or group of Persons who holds, as of the Closing Date, such beneficial
ownership of ten percent (10%) or more (on a fully diluted basis) of the issued
and outstanding shares of capital stock of the Company having the right to vote
for the election of directors of the Company under ordinary circumstances; (b)
during any period of twelve (12) consecutive calendar months, individuals who at
the beginning of such period constituted the board of directors of the Company
(together with any new directors whose election by the board of directors of the
Company or whose nomination for election by the stockholders of the Company was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose elections or
nomination for election was previously so approved) cease for any reason other
than death or disability to constitute a majority of the directors then in
office; (c) the Company ceases to own and control all of the economic and voting
rights associated with all the outstanding capital stock of CEDS; (d) CEDS
ceases to own and control all of the economic and voting rights associated with
all of the outstanding capital
2
<PAGE>
stock of any of its Subsidiaries; or (e) any Person or group of Persons (within
the meaning of the Exchange Act) who holds, as of the Closing Date, beneficial
ownership (withing the meaning of Rule 13d-3 promulgated by the Commission under
the Exchange Act) of ten percent (10%) or more (on a fully diluted basis) of the
issued and outstanding shares of capital stock of the Company having the right
to vote for the election of directors of the Company under ordinary
circumstances acquires such beneficial ownership of thirty percent (30%) or more
(on a fully diluted basis) of the issued and outstanding shares of capital stock
of the Company having the right to vote for the election of directors of the
Company under ordinary circumstances.
"Closing" and "Closing Date" have the meanings set forth in Section
2.01.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations adopted pursuant thereto.
"Commission" means the U.S. Securities and Exchange Commission.
"Common Stock" means the common stock, $.004 par value per share, of
the Company authorized by its Articles of Incorporation, any additional Common
Stock which may be authorized in the future by the Company, and any stock into
which such Common Stock may be converted.
"Company" means United Shipping & Technology, Inc., a Utah
corporation.
"Disclosure Schedule" means the disclosure schedule prepared by the
Company and CEDS attached to this Agreement which sets forth the exceptions to
the representations and warranties contained in Article 3 and certain other
information called for by the Agreement.
"Environmental Laws" has the meaning set forth in Section 3.18.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations adopted pursuant thereto.
"Event of Default" has the meaning set forth in Section 9.01.
"Financial Statements" has the meaning set forth in Section 3.04.
"Fixed Indebtedness" means, without duplication (i) all indebtedness
for borrowed money, (ii) all indebtedness secured by any mortgage, pledge,
security interest or lien existing on property owned subject to such mortgage,
pledge, security interest or lien whether or not the indebtedness secured
thereby shall have been assumed, (iii) all amounts representing the
capitalization of rentals in accordance with GAAP and (iv) all guarantees,
endorsements and
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other contingent obligations with respect to liabilities of a type described in
any of clauses (i) through (iii) above.
"GAAP" means United States generally accepted accounting principles
consistently applied with prior periods.
"Guaranties" means the Guaranties made and given by the Guarantors
to and for the benefit of the Purchaser, substantially in the form attached as
Exhibit D.
"Guarantors" means, individually and collectively, Corporate Express
Delivery Systems - Intermountain, Inc., Corporate Express Delivery Systems -
Mid-Atlantic, Inc., Corporate Express Delivery Systems - Mid-West, Inc.,
Corporate Express Delivery Systems - New England, Inc., Corporate Express
Delivery Systems - Northeast, Inc., Corporate Express Delivery Systems -
Southeast, Inc., Corporate Express Delivery Systems - Southwest, Inc., Corporate
Express Delivery Systems - West Coast, Inc., Corporate Express Delivery Leasing
- - Intermountain, Inc., Corporate Express Delivery Leasing - Mid-Atlantic, Inc.,
Corporate Express Delivery Leasing - Mid-West, Inc., Corporate Express Delivery
Leasing - New England, Inc., Corporate Express Delivery Leasing Northeast, Inc.,
Corporate Express Delivery Leasing - Southeast, Inc., Corporate Express Delivery
Leasing - Southwest, Inc., Corporate Express Delivery Leasing - West Coast,
Inc., Corporate Express Delivery Systems - Air Division, Inc., Air Courier
Dispatch of New Jersey, Inc., Midnite Express International Courier, Inc.,
Tricor America, Inc., New Delaware Delivery, Inc., Corporate Express Delivery
Administration, Inc., American Delivery System, Inc., Corporate Express
Distribution Services, Inc., Sunbelt Courier, Inc.
"Hazardous Materials" means (a) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act of 1976, as amended from time to
time, and regulations promulgated thereunder; (b) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended from time to time, and regulations promulgated
thereunder, (c) any substance, the presence of which on any property now or
hereafter owned, acquired or operated by any Loan Party or any Subsidiary is
prohibited by any Environmental Law; and (d) any other substance which any
Environmental Law requires special handling in its collection, storage,
treatment or disposal.
"Hazardous Materials Contamination" means the contamination (whether
presently existing or occurring after the date of this Agreement) by Hazardous
Materials of any property owned, operated or controlled by any Loan Party or any
Subsidiary or for which any Loan Party or any Subsidiary has responsibility,
including, without limitation, improvements, facilities, soil, ground water, air
or other elements on, or of, any property now or hereafter owned, acquired or
operated by any Loan Party or any Subsidiary, and any other contamination by
Hazardous Materials for which any Loan Party or any Subsidiary is, or is claimed
to be, responsible.
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"Indebtedness" means, without duplication, (i) all Fixed
Indebtedness, and (ii) all items not otherwise included in Fixed Indebtedness
which, in accordance with GAAP, would be included on the liability side of a
balance sheet as of the date such Indebtedness is to be determined, excluding
capital stock, surplus, capital and earned surplus.
"Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service mark rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright rights, trade
dress, business and product names, logos, slogans, trade secrets, industrial
models, designs, methodologies, computer programs (including all source codes)
and related documentation, technical information, manufacturing, engineering and
technical drawings, know-how and all pending applications for and registrations
of patents, trademarks, service marks and copyrights.
"Intercreditor Agreement" means those certain Intercreditor
Agreements among the Company, CEDS, the Purchaser, the Senior Lender and the
Seller dated the date hereof.
"Interim Period Financial Statements" has the meaning set forth in
Section 3.04.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, restriction on transfer or encumbrance of any kind in
respect of such asset.
"Loan Party" means each of the Company, CEDS, and each Guarantor.
"Material Adverse Effect" means, with respect to any Person, any
effect or series of effects that, in the aggregate, have a material adverse
effect on (a) the business, properties, financial condition, operations, or
performance of such Person and its subsidiaries or affiliates, taken as a whole,
or (b) the ability of such Person to perform its obligations under this
Agreement or the Ancillary Agreements.
"Note" means the Senior Subordinated Note in the aggregate principal
amount of Five Million Dollars ($5,000,000), substantially in the form attached
as Exhibit A, to be issued by the Company and CEDS to the Purchaser.
"Obligations" means all liabilities and obligations of the Loan
Parties created under or existing pursuant to this Agreement and each of the
Ancillary Agreements.
"Permitted Liens" has the meaning set forth in Section 7.01.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
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"Plan" means an employee benefit plan or other plan maintained for
employees of the Company and governed by Title IV of ERISA.
"Reportable Event" has the meaning assigned to that term in Title IV
of ERISA.
"SBA" means the U.S. Small Business Administration.
"SBIA" means the Small Business Investment Act of 1958, as amended,
and the regulations adopted pursuant thereto.
"SBIC" means a small business investment company licensed under the
SBIA.
"Securities" means, collectively, the Warrant and the Note.
"Securities Act" means the Securities Act of 1933, as amended, and
the regulations adopted pursuant thereto.
"Security Agreements" means the Security Agreements made and given
by CEDS and the Guarantors to and for the benefit of the Purchaser,
substantially in the form attached as Exhibit C.
"Seller Notes" means (a) that certain Long-Term Subordinated
Promissory Note in the aggregate principal amount of $8,400,000, (b) that
certain Short-Term Subordinated Promissory Note in the aggregate principal
amount of $7,500,000, and (c) that certain Convertible Subordinated Promissory
Note in the aggregate principal amount of $3,600,000, each issued as of the date
hereof by CEDS to the Seller.
"Seller" means CEX Holdings, Inc., a Colorado corporation.
"Senior Credit Agreement" means the Credit Agreement among the Loan
Parties and the Senior Lender dated the date hereof.
"Senior Indebtedness" means all indebtedness of CEDS to the Senior
Lender and all other Lenders (as defined in the Senior Credit Agreement)
provided for under the Senior Credit Agreement.
"Senior Lender" means General Electric Capital Corporation, a New
York corporation.
"Subsidiary" means any corporation of which an aggregate of 50% or
more of the outstanding voting stock is at any time directly or indirectly owned
by the Company or CEDS,
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by one or more of their Subsidiaries, or by the Company or CEDS and one or more
of their Subsidiaries.
"Warrant" means the warrant to be issued by the Company to the
Purchaser to purchase 1,366,220 of shares of Common Stock, substantially in the
form attached as Exhibit B.
"Warrant Securities" means the Common Stock or other securities
issued upon exercise of the Warrants.
ARTICLE 2 PURCHASE AND SALE OF SECURITIES
2.01 Purchase and Sale. Subject to the terms and conditions of this
Agreement, the Company and CEDS hereby agree to sell to the Purchaser, and the
Purchaser hereby agrees to purchase from the Company and CEDS at the closing
contemplated by this Agreement (the "Closing"), the Note, and the Company hereby
agrees to issue to the Purchaser and the Purchaser agrees to purchase from the
Company, the Warrant, for an aggregate purchase price of $5,000,000 (the
"Purchase Price").
2.02 The Closing. The Closing will occur at the offices of Faegre &
Benson LLP in Minneapolis, Minnesota on September 24, 1999 ( the "Closing Date")
or such later date as all of the conditions precedent stated in Article 5 have
been satisfied. At the Closing, the Purchaser will deliver to the Company and
CEDS payment of the Purchase Price by wire transfer to an account designated by
the Company and CEDS in writing.
2.03 Use of Proceeds. The Company and CEDS will apply the proceeds
of the sale of the Securities first to the payment of the fees and expenses
associated with the transactions contemplated under this Agreement. The Company
and CEDS will use the proceeds of the sale of the Securities only in accordance
with Section 3.26 and Section 6.16.
2.04 Closing Fee. At the Closing the Company and CEDS will pay
Bayview Capital Management LLC a closing fee of $100,000.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
Each Loan Party jointly and severally represents and warrants to the
Purchaser as of the Closing Date, except as expressly indicated on the
Disclosure Schedule which exceptions are deemed to be representations and
warranties as if made within this Article 3, as follows:
3.01 Organization, Standing and Qualification of the Loan Parties .
Each Loan Party is a corporation duly organized, validly existing and in good
standing under the laws of the state of
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its incorporation. Each Loan Party has all requisite corporate power and
authority to carry on its business as now being conducted and proposed to be
conducted and to own, lease or operate its properties as and in the places where
such business is now conducted or proposed to be conducted and such properties
are now owned, leased or operated. Each Loan Party is duly qualified and in good
standing as a foreign corporation authorized to carry on its business in the
states where the nature of the activities conducted or proposed to be conducted
by such Loan Party, or the character of the properties owned, leased or operated
by such Loan Party require such qualification except where the failure to be so
qualified would not have a Material Adverse Effect on such Loan Party.
3.02 Subsidiaries and Investments. Except as contemplated by the
Acquisition or as set forth on the Disclosure Schedule, no Loan Party has any
Subsidiary or investment, equity or ownership interest (whether controlling or
not) of any kind in any other Person. No Loan Party is engaged in any joint
venture or partnership with any other Person.
3.03 Execution, Delivery and Performance of Agreement; Authority.
(a) The execution, delivery and performance of this Agreement and
the Ancillary Agreements (to which they are a party) by the Loan Parties have
been duly authorized by all necessary corporate action on the part of each Loan
Party's Board of Directors and stockholders and do not conflict with, result in
a default, right to accelerate, or loss of rights under, or result in the
creation of any Lien pursuant to, any provision of the Articles or Certificate
of Incorporation or Bylaws of any Loan Party, or any agreement, law, rule or
regulation, or any order, judgment or decree to which any Loan Party is a party
or by which any Loan Party, or their respective properties are bound or affected
(except for any Lien created under this Agreement or the Ancillary Agreements).
No consent is required to be obtained or made by any Loan Party in connection
with the execution and delivery by the Loan Parties of this Agreement or the
Ancillary Agreements.
(b) Each Loan Party has full power and authority to enter into this
Agreement and the Ancillary Agreements and to carry out the transactions
contemplated hereby. This Agreement has been duly executed and delivered on
behalf of the Loan Parties, as applicable, and constitutes, and the Ancillary
Agreements when executed and delivered will constitute, valid and binding
obligations of the Loan Parties enforceable in accordance with their respective
terms, except to the extent that enforcement may be limited by applicable
bankruptcy, reorganization, moratorium or similar laws of general applicability
affecting the enforcement of creditors' rights and subject to general equitable
principles which may limit the right to obtain equitable remedies.
3.04 Financial Statements.
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(a) The Company and CEDS have delivered to the Purchaser the
following financial statements (collectively, the "Financial Statements"): (a)
the Company's unaudited balance sheet as of June 30, 1999 (the "Balance Sheet
Date") and related statements of income for the twelve (12) month period then
ended which are attached as part of the Disclosure Schedule (the "Company
Interim Period Financial Statements"); (b) CEDS' unaudited balance sheet as of
July 3, 1999, and related statements of income for the five (5) month period
then ended which are attached as part of the Disclosure Schedule (the "CEDS
Interim Period Financial Statements", and collectively with the Company Interim
Period Financial Statements, the "Interim Period Financial Statements"); (c) the
Company's audited financial statements for the fiscal years ended June 30, 1998
and June 30, 1997; and (d) CEDS' audited financial statements for the fiscal
year ended January 31, 1999, the eleven (11) month period ended January 31,
1998, and the fiscal year ended March 1, 1997. All of the Financial Statements
have been prepared from the books and records of the Company and CEDS in
accordance with GAAP and fairly present in all material respects the financial
condition of the Company and CEDS as of their respective dates and the results
of operations for the periods covered thereby. The income statements included in
the Financial Statements do not contain any material items of special or
nonrecurring income or any other material income not earned in the ordinary
course of business except as expressly specified therein, and the Financial
Statements include all material adjustments, which consist only of normal
recurring accruals, necessary for such fair presentation, subject in the case of
the Interim Period Financial Statements to normal year-end adjustments.
(b) Attached to the Disclosure Schedule is a forecasted pro forma
consolidated and consolidating balance sheet (the "Pro Forma Balance Sheet") of
the Company and its Subsidiaries as of August 28, 1999, giving effect to the
transactions contemplated by this Agreement, the Acquisition Agreement, and the
Senior Credit Agreement. The Pro Forma Balance Sheet fairly presents, in all
material respects, a reasonable forecast on a pro forma basis of the financial
condition of the Company and its Subsidiaries at the date thereof and giving
effect to such transactions.
3.05 Warrant and Warrant Securities. The Warrant, when issued and
paid for pursuant to the terms of this Agreement, will be validly issued, fully
paid and nonassessable. The Warrant Securities have been reserved for issuance
and, when issued upon exercise of the Warrant, will be validly issued, fully
paid and nonassessable. The Warrant and the Warrant Securities will be issued by
the Company to the Purchaser in a transaction exempt from registration and
qualification under applicable federal and state securities laws.
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3.06 Capitalization.
(a) As of the date of this Agreement, the authorized capitalization
of the Company consists of 75,000,000 shares of Common Stock, of which
10,941,848 shares are issued and outstanding and 25,000,000 shares of preferred
stock, $.004 par value, of which no shares are issued and outstanding. All such
outstanding shares are validly issued, fully paid and nonassessable.
(b) Except for the Warrant or as set forth on the Disclosure
Schedule, there are no rights, options or warrants of any kind outstanding to
purchase or acquire Common Stock or any other ownership interest in the Company,
nor are there other securities, obligations, agreements or rights of any kind
outstanding which are exercisable for, convertible into or exchangeable for any
Common Stock or any other ownership interests in the Company or under the terms
of which the parties thereto have the right to purchase or acquire Common Stock
or any other ownership interests in the Company. The issuance by the Company of
the Warrant and the Warrant Securities is not subject to any preemptive or
similar right of any Person pursuant to statute, contract or understanding.
(c) Except as provided in this Agreement or the Warrant, neither the
Company nor any of its Subsidiaries is subject to any obligation to repurchase
or otherwise acquire or retire any shares of capital stock. There are no
commitments of the Company to distribute to holders of any class of its capital
stock any evidences of indebtedness or assets, or to pay any dividend or make
any other distribution in respect thereof.
(d) Except as provided in this Agreement or the Warrant, no Person
has a contractual right to demand or other right to cause the Company to file
any registration statement under the Securities Act relating to any securities
for the Company or any right to participate in any offering of the Company's
securities. There are no agreements between or among the Company's shareholders
or buy-sell agreements of any kind affecting the Company's securities.
3.07 No Material Adverse Change. Since the Balance Sheet Date there
has been no event or occurrence which has had or is reasonably likely to have a
Material Adverse Effect on any Loan Party.
3.08 Litigation. Except as described on the Disclosure Schedule,
there is no claim, legal action, suit, arbitration, governmental investigation
or other legal or administrative proceeding, nor any order, decree or judgment,
pending or threatened against (i) any Loan Party, (ii) any Loan Party's
officers, directors or employees for acts or omissions relating to such Loan
Party, (iii) any Loan Party's properties, assets or business, or (iv) the
transactions contemplated by this Agreement, which, with respect to clauses
(i)-(iii), has a reasonable risk of being determined adversely to any such
party, properties, assets or business and which, if so
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determined, could reasonably be expected to have a Material Adverse Effect on
any Loan Party, and the Company and CEDS have no knowledge of any basis for any
of the foregoing.
3.09 Compliance with Laws and Other Instruments. Each Loan Party is
in compliance, and has complied with all existing laws, rules, regulations,
ordinances, orders, judgments and decrees applicable to its business, properties
or operations except where the failure to so comply would not have a Material
Adverse Effect. Neither the ownership nor use of any Loan Party's properties nor
the conduct or currently proposed conduct of its business (i) conflicts with the
rights of any other Person or (ii) violates or (with or without the giving of
notice or the passage of time, or both) will violate, conflict with, or result
in a default, right to accelerate, or loss of rights under, any provision of the
Articles or Certificate of Incorporation or the Bylaws of such Loan Party, or
any Lien, lease, license, agreement, understanding, law, ordinance, rule,
regulation, zoning regulation, order, judgment or decree to which such Loan
Party is a party or by which it or its assets may be bound or affected except as
could not reasonably be expected to have a Material Adverse Effect.
3.10 Title to and Liens on Properties.
(a) The Disclosure Schedule contains a description of the real
property owned by each Loan Party and the real property leased by each Loan
Party (as lessee or lessor).
(b) Each Loan Party has good and marketable title (which is of
record as to any real estate) to all the properties and assets which its owns or
purports to own, including without limitation those properties and assets
reflected in the Interim Period Financial Statements as of the Balance Sheet
Date, except to the extent they have been sold or disposed of in the ordinary
course of business subsequent to the Balance Sheet Date. None of the properties
and assets are subject to any Lien, restriction, lease, license, easement,
liability or adverse claim of any nature whatsoever, direct or indirect, whether
accrued, absolute, contingent or otherwise, except: (i) those imperfections of
title and encumbrances, if any, which (A) are not substantial in character,
amount, or extent and do not so materially detract from the value of the
properties subject thereto so as to render them unmarketable, (B) do not
interfere with either the present and continued use of such property or the
conduct of normal operations, and (C) have arisen only in the ordinary course of
business; and (ii) Permitted Liens.
3.11 Solvency. After giving effect to the transactions contemplated
by this Agreement and the Ancillary Agreements each Loan Party will be solvent.
For purposes of this Section, "solvent" means, with respect to any Person on any
date of determination, that on such date (a) the fair market value of the assets
of such Person on a going concern basis is in excess of the total amount of its
liabilities (including, without limitation, contingent liabilities); (b) the
present fair saleable value of the assets of such Person is greater than its
probable liability on its existing debts as such debts become absolute and
matured; (c) such Person is able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as they
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mature; and (d) such Person has capital sufficient to carry on its business as
presently conducted and as proposed to be conducted.
3.12 Permits and Licenses. Except as set forth on the Disclosure
Schedule, each Loan Party has all federal, state and local licenses and permits
required to be maintained in connection with and material to the operation of
its business, and all such licenses and permits are valid and fully effective in
all material respects.
3.13 Taxes. Except as set forth on the Disclosure Schedule, each
Loan Party has timely filed with the appropriate federal, state, local and
foreign taxing authorities all tax returns required to be filed by or with
respect to it on or before the Closing Date, and such tax returns are true,
correct and complete in all material respects. Each Loan Party has timely paid
all taxes that have become due pursuant to such tax returns and all other taxes
and assessments levied upon such Loan Party, or its properties, assets, income
or franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent. No issue has been raised by any
federal, state, local or foreign taxing authority which could reasonably be
expected to result in a proposed deficiency for any Loan Party for any period
except for those not reasonably likely to cause a Material Adverse Effect on any
Loan Party. There is no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect on any Loan Party.
3.14 Intellectual Property Rights.
(a) The Disclosure Schedule lists (i) the federal registration
number and the date of registration of registered patents and trademarks and of
other registered marks, trade names, brand names or other trade rights currently
used by each Loan Party in the conduct of its business, (ii) all of the
copyrights and all applications for any of the items referred to in clause (i)
above, and (iii) all other material marks, trade names, brand names or other
trade rights currently used by each Loan Party in the conduct of its business
and whether such use is or will be pursuant to license, sub-license, agreement
or permission. The Company and CEDS have delivered to the Purchaser complete and
accurate copies of each material agreement, registration and other document
relating to the Intellectual Property set forth on the Disclosure Schedule.
(b) Each Loan Party owns or possesses adequate and enforceable
licenses or other rights to use (i) all Intellectual Property rights listed on
the Disclosure Schedule and (ii) all other patents, trademarks, service marks,
brand names and trade names, all applications for any of the foregoing, all
other trade secrets, designs, plans, specifications and other rights of every
kind related to all Intellectual Property used in, possessed by or necessary for
the conduct of such Loan Party's business. Entry into this Agreement and
consummation of the transactions contemplated hereby will not impair any Loan
Party's ownership or use of such Intellectual Property.
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(c) Except as set forth in the Disclosure Schedule, no Person has a
right to receive a royalty or similar payment in respect of any item of
Intellectual Property pursuant to any contractual arrangements entered into by
any Loan Party. No Loan Party has granted any license, sub-license or other
similar agreement relating in whole or in part to any Intellectual Property. No
Loan Party has received any notice that its or any third party's use of any item
of Intellectual Property is interfering with, infringing upon or otherwise
violating the rights of any Loan Party, or any third party in or to such
Intellectual Property, and no proceedings have been instituted against or
notices received by any Loan Party alleging that the use or proposed use of any
item of Intellectual Property by any Loan Party or any third party infringes
upon or otherwise violates any rights of any Loan Party or a third party in or
to such Intellectual Property, and, to the knowledge of each Loan Party, there
is no basis for such claim or proceeding. To the knowledge of each Loan Party,
no third party is interfering with, infringing upon, or otherwise violating the
rights of any Loan Party in any Intellectual Property.
3.15 Margin Securities. No Loan Party is engaged in the business of
extending credit for the purpose of buying or carrying margin securities, and no
part of the proceeds realized from the sale of the Securities will be used to
buy or carry any margin securities or be used in a manner inconsistent with the
provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System.
3.16 Not an Investment Company. No Loan Party is an "investment
company," or a company "controlled" by an "investment company," as such terms
are defined in the Investment Company Act of 1940, as amended.
3.17 Securities Laws. No Loan Party nor any Person authorized or
employed by any Loan Party as agent, broker, dealer or otherwise, has offered or
will offer the Securities for sale to, or solicited any offers to buy any of the
Securities from, any Persons other than the Purchaser, and no Loan Party nor any
Person acting on any Loan Party's behalf has taken or will take any action which
might subject the offering, issuance or sale of the Securities to registration
under the Securities Act or violate the provisions of any securities or blue sky
law of any applicable jurisdiction.
3.18 Environmental Protection. Except as set forth in the
Disclosure Schedule, each Loan Party has obtained all material permits, licenses
and other authorizations which are required under federal, state and local laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, hazardous or toxic materials or wastes into ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
("Environmental Law"). Except as set forth in the Disclosure Schedule, each Loan
Party is in material compliance with all terms and conditions of such required
permits, licenses and authorizations and are also in material compliance with
all other limitations,
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restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any Environmental Law or contained in any
plan, order, decree, judgment or notice from any governmental authority. Except
as set forth in the Disclosure Schedule, no Loan Party is aware of, nor has
received notice from any governmental authority of, any events, conditions,
circumstances, activities, practices, incidents, actions or plans which
interfere with or prevent continued compliance or which give rise to any
liability under any Environmental Law.
3.19 Product Liability. No Loan Party has committed any act, and
there has been no omission, which could reasonably be expected to result in, and
there has been no occurrence that could reasonably be expected to give rise to,
any liability in connection with, arising out of, resulting from or incident to
any personal injury or property damage or adverse health effect or claim of any
personal injury or property damage or adverse health effect by a third party
arising out of the ownership, use, possession or physical contact with any
product manufactured, sold, leased or delivered or any services rendered by any
Loan Party, except for any such liability that could not reasonably be expected
to result in a Material Adverse Effect on any Loan Party.
3.20 Insurance. Set forth on the Disclosure Schedule is a complete
and accurate list of all primary, excess and umbrella policies, bonds and other
forms of insurance currently owned or held by or on behalf of and/or providing
insurance coverage to each Loan Party, its assets and properties, or any of its
directors, officers, salespersons, agents or employees. Each Loan Party has been
and is insured by financially sound and reputable insurers with respect to its
properties and the conduct of its business in such amounts and against such
risks as is sufficient for their business and compliance with law. All policies
of insurance are currently in full force and effect and no notice of
cancellation or termination has been received by any Loan Party with respect to
any such policies. All premiums due and payable on such policies have been paid.
3.21 Employment or Severance Agreements. Except for those listed on
the Disclosure Schedule, no Loan Party is a party to or bound by (i) any
collective bargaining agreement, (ii) any material agreement providing for a
term of employment or for any severance payment to any executive officer of any
Loan Party, or (iii) any material agreement providing any deferred compensation,
bonus or profit sharing payment to any executive officer of any Loan Party.
3.22 Software and Information Systems. The software and information
systems (including all management information and accounting systems) currently
used by each Loan Party are functioning properly and are adequate for such Loan
Party's business as currently conducted. Except as set forth in the Disclosure
Schedule, the software and information systems currently used by the Loan
Parties will not suffer any loss of functionality and will not have a Material
Adverse Effect due to the change in the date to the year 2000.
3.23 Disclosure. No representation or warranty by any Loan Party in
this Agreement or any of the Ancillary Agreements, nor any statement, document
or certificate furnished or
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required to be furnished under the terms of this Agreement by the Loan Parties,
or their representatives to the Purchaser or the Purchaser's representatives in
connection with this Agreement or any of the Ancillary Agreements, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact necessary to make the facts stated therein not
misleading.
3.24 Acquisition Documents. The Company and CEDS have provided to
the Purchaser a true, complete and correct copy of the Acquisition Documents.
The Acquisition Documents have not been amended, supplemented or modified, and
they constitute the complete agreement among the parties thereto in respect of
the matters and transactions contemplated therein. The Acquisition Agreement and
the Acquisition Documents are the legal, valid and binding obligations of the
Company and CEDS, enforceable in accordance with their terms (except to the
extent that enforcement may be limited by applicable bankruptcy, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of
creditors' rights and subject to general equitable principles which may limit
the right to obtain equitable remedies), and there are no oral agreements or
understandings or other agreements modifying or waiving any of the provisions
thereof. The representations and warranties of the Company, CEDS and each of the
other parties thereto contained in the Acquisition Agreement are true and
correct in all material respects and may be relied upon by the Purchaser. All
conditions precedent to the closing provided for in the Acquisition Agreement or
the Acquisition Documents have been satisfied or waived as of the Closing Date.
3.25 Contracts.
(a) The Disclosure Schedule contains a true and complete list of
each of the following written or oral contracts, agreements or other
arrangements to which each Loan Party or any Subsidiary is a party or by which
any of their assets and properties is bound (and, to the extent oral, accurately
describes the terms of such contracts, agreements and arrangements) (the
"Scheduled Contracts"):
(i) all loan agreements, indentures, debentures, notes or
letters of credit relating to the borrowing of money or mortgaging, pledging or
otherwise placing a Lien on any material asset or material group of assets of
any Loan Party or any Subsidiary, other than the Senior Credit Agreement and the
Seller Notes;
(ii) all guarantees of any material obligation;
(iii) all material leases or agreements under which any Loan
Party or any Subsidiary is lessee or lessor of, or holds, or operates, any
property, real or personal, except for any lease under which the aggregate
annual rental payments do not exceed $250,000;
15
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(iv) all commitments, contracts, sales contracts, purchase
orders or groups of related agreements with the same party or any group of
affiliated parties which require or may in the future require payment of
aggregate consideration to or by any Loan Party or any Subsidiary in excess of
$1,000,000 and cannot be terminated within sixty (60) days after giving notice
of termination without resulting in any cost or penalty to any Loan Party or any
Subsidiary; and
(v) all contracts or commitments that in any way materially
restrict any Loan Party or any Subsidiary from carrying on its business anywhere
in the world; and
(b) Each Scheduled Contract is in full force and effect and
constitutes a legal, valid and binding agreement, enforceable in accordance with
its terms, of each party thereto. Each Loan Party and each Subsidiary has
performed all of its material obligations under, and is not in violation or
breach of or default in any material respect under, any Scheduled Contract. To
the knowledge of the Company and CEDS, the other parties to any such contract,
agreement or arrangement are not in violation or breach of or default under any
Scheduled Contract. To the knowledge of the Loan Parties, none of the employees,
officers, or directors of any Loan Party or any Subsidiary is a party to any
oral or written contract or agreement prohibiting any of them from engaging in
such Loan Party's or Subsidiary's business as now operated.
(c) The Company and CEDS have provided to the Purchaser a true and
correct copy of each written Scheduled Contract, and a written description of
each oral Scheduled Contract.
3.26 Use of Proceeds; Restrictions under the SBIA. The Company and
CEDS will use the proceeds from the sale of the Securities to fund the
consideration and expenses payable in connection with the Acquisition and for
general working capital purposes. No portion of the proceeds from the sale of
the Securities (a) will be used to provide capital to an SBIC, (b) will be used
outside the United States (except (i) to acquire materials and industrial
property rights abroad for a domestic operation or (ii) as may be transferred to
a controlled foreign subsidiary, so long as at least 51% of the assets and
activities of the Loan Parties and their Subsidiaries will remain within the
United States), or (c) will be used for any purpose "contrary to the public
interest (including but not limited to activities which are in violation of law)
or inconsistent with free competitive enterprise", within the meaning of 13 CFR
ss.107.720. No Loan Party's primary business activity involves, directly or
indirectly, providing funds to others, purchasing or discounting debt
obligations, factoring or long-term leasing of equipment with no provision for
maintenance or repair, and no Loan Party is classified under Major Group 65
(Real Estate) of the Standard Industrial Classification Manual prepared by the
Office of Management and Budget.
3.27 Small Business Concern. The Company is a "small business
concern" within the meaning of the SBIA. The information set forth in SBA Forms
480, 652 and Section A of Form 1031 regarding the Company is accurate and
complete. Copies of such forms will be completed
16
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and executed by the Company. The Company does not presently engage in, and will
not engage in, any activities, and will not use directly or indirectly the
proceeds from the sale of the Securities for any purposes for which an SBIC is
prohibited from providing funds by the SBIA.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company and CEDS that:
4.01 Partnership Existence and Power. The Purchaser is duly
organized, validly existing and in good standing as a limited partnership under
the laws of the State of Delaware and has full power and authority to execute
and deliver this Agreement and the Ancillary Agreements to which it is a party
and to purchase the Securities as provided in this Agreement.
4.02 Authorization. All proceedings or partnership action required
to be taken by the Purchaser relating to its execution and performance of this
Agreement have been taken at or prior to the Closing.
4.03 Litigation. There is no legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding, nor any
order, decree or judgment in progress, pending or in effect, or to the knowledge
of the Purchaser threatened, against or relating to the Purchaser, in connection
with or relating to the transactions contemplated by this Agreement and the
Ancillary Agreements to which it is a party, and the Purchaser has no knowledge
of any basis for the same.
4.04 Investment Intent. The Purchaser is an "accredited investor",
as defined under Rule 501(a) of Regulation D of the Securities Act. The
Securities are being purchased for the Purchaser's own account and not with a
view to, or for resale in connection with, any distribution or public offering
within the meaning of the Securities Act. The Purchaser understands that the
Securities have not been registered under the Securities Act by reason of their
contemplated issuance in transactions exempt from the registration and
prospectus delivery requirements of the Securities Act pursuant to Section 4(2)
thereof, and that the reliance of the Company, CEDS, and others upon this
exemption is predicated in part upon this representation and warranty by the
Purchaser.
ARTICLE 5 CLOSING CONDITIONS
The Purchaser's obligations to purchase and pay for the Securities
are subject to the following conditions, any of which may be waived in whole or
in part by the Purchaser in writing:
17
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5.01 Representations and Warranties True. The representations and
warranties of the Loan Parties in this Agreement are true and correct in all
material respects on and as of the Closing Date.
5.02 Compliance with Agreement. The Loan Parties have performed and
complied with in all material respects all agreements and conditions required by
this Agreement to be performed and complied with by them prior to or as of the
Closing Date.
5.03 No Event of Default. At the time of Closing no condition or
event exists or has occurred which would constitute an Event of Default or
which, after notice or lapse of time or both, would constitute an Event of
Default.
5.04 Documents Required for the Closing. The Loan Parties have
delivered to the Purchaser the following, duly executed as appropriate:
(a) this Note Purchase Agreement;
(b) the Note;
(c) the Warrant;
(d) the Security Agreements;
(e) the Guaranties;
(f) the Intercreditor Agreement;
(g) a certificate dated as of the Closing Date, signed by an officer
of the Company and an officer of CEDS certifying that the conditions specified
in Sections 5.01 through 5.03 are true and correct;
(h) a certificate dated as of the Closing Date from each of the
Company and CEDS, signed by the Secretary of such company and in form and
substance satisfactory to the Purchaser and its counsel, (i) certifying that
resolutions have been duly adopted by such company's Board of Directors (and to
the extent necessary, its shareholders) authorizing the execution of this
Agreement and the Ancillary Agreements, the issuance of the Securities, and all
of the other transactions to be consummated pursuant hereto, (ii) certifying as
to the names of the members of its Board of Directors and the names and
incumbency of its officers who are empowered to execute the foregoing documents
for and on behalf of such company, (iii) certifying the authenticity of attached
copies of the charter documents and Bylaws of such company, and (iv) certifying
the continued good standing of such company in its State of incorporation, as
evidenced by a reasonably current Certificate of Good Standing;
18
<PAGE>
(i) a favorable opinion of the Company's and CEDS's legal counsel as
to matters and in form reasonably acceptable to the Purchaser;
(j) UCC-1 financing statements;
(k) a solvency certificate, in form reasonably acceptable to the
Purchaser;
(l) current searches from the offices of the Secretaries of State of
those states in which any Loan Parties conduct operations, showing that no
federal or state tax liens have been filed and remain in effect against any Loan
Party and that no financing statements have been filed and remain in effect
against any Loan Party other than financing statements set forth on the
Disclosure Schedule with respect to Section 3.10 above;
(m) all environmental reports and documents regarding the Loan
Parties which are requested by the Purchaser;
(n) documents, in form reasonably acceptable to the Purchaser,
evidencing the obtaining of all necessary releases, consents or approvals
requested by the Purchaser for the transactions contemplated by this Agreement;
(o) receipt by the Purchaser and by the Purchaser's counsel (as the
case may be) of payment of the fee referred to in Section 2.03 and the expenses
referred to in Section 10.02;
(p) a copy, certified by the Company and CEDS as true and correct,
of the executed Acquisition Documents;
(q) a copy, certified by the Company and CEDS as true and correct,
of the Senior Credit Agreement and the closing documents related thereto;
(r) three year pro forma projections for the Company and its
Subsidiaries with the first year of such projections being on a monthly basis;
(s) all SBA forms necessary for the transaction, including without
limitation, the Size Status Declaration on SBA Form 480 and the Assurance of
Compliance for Nondiscrimination on SBA Form 652, executed by the Company and
CEDS; and
(t) such other documents, certificates, instruments or opinions as
the Purchaser or their legal counsel may reasonably request, in form reasonably
satisfactory to the Purchaser.
19
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5.05 Proceedings Satisfactory. All proceedings to be taken in
connection with the transactions contemplated by this Agreement and all
documents incident to such transaction are satisfactory in form and substance to
the Purchaser and its counsel.
ARTICLE 6 AFFIRMATIVE COVENANTS OF THE COMPANY AND CEDS
The Company and CEDS covenant and agree that from and after the
Closing, so long as the Note or the Warrant remain outstanding, unless the
Purchaser otherwise consents in writing:
6.01 Payment of Notes. The Company and CEDS will pay the principal
of and interest on the Note at the time and place and in the manner specified in
the Note.
6.02 Reporting. The Company will furnish to the Purchaser:
(a) as soon as available, and in any event within ninety (90) days
after the end of each fiscal year of the Company, a copy of the annual audit
report of the Company and its Subsidiaries, which report is certified by an
independent certified public accountant who is selected by the Company and is
acceptable to the Purchaser, without qualification as to scope of audit or
opinion (except for the fiscal year ending June 30, 1999). Such annual report
will include a balance sheet of the Company and its Subsidiaries as of the end
of such fiscal year and the related statements of income, retained earnings and
cash flows of the Company and its Subsidiaries for the fiscal year then ended,
all in reasonable detail and all prepared in accordance with GAAP, together with
(i) a report signed by such accountants stating that in making the
investigations necessary for their opinion they obtained no knowledge, except as
specifically stated, of any Event of Default and all relevant facts in
reasonable detail to evidence, and the computations as to, whether or not the
Company is in compliance with the requirements set forth in Section 6.09; (ii)
any management letters from such accountants; (iii) a Compliance Certificate of
the chief executive officer and chief financial officer of the Company in
substantially the form of Exhibit F stating that such financial statements have
been prepared in accordance with GAAP and whether or not any of them has
knowledge of the occurrence of any Event of Default hereunder and, if so,
stating in reasonable detail the facts with respect thereto;
(b) within thirty (30) days after the end of each month, a balance
sheet, statement of income and statement of cash flows of the Company and its
Subsidiaries as of the end of and for such month and for the period
year-to-date, each prepared in accordance with GAAP except for the statement of
cash flows;
(c) within thirty (30) days after the end of each month, comparisons
of actual results with the budget for such month and for the period
year-to-date, and management's discussion of such variances, all in such detail
as the Purchaser may reasonably request;
20
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(d) within forty-five (45) days after the end of each fiscal
quarter, a balance sheet, statement of income and statement of cash flows of the
Company and its Subsidiaries as of the end of such fiscal quarter and for the
period year-to-date, each prepared in accordance with GAAP, and a Compliance
Certificate signed by the Company's chief financial officer as to whether or not
he or she has any knowledge of the occurrence of any Event of Default and, if
so, stating in reasonable detail the facts with respect thereto and the
computations as to whether the Company is in compliance with the requirements of
Section 6.09;
(e) prior to the beginning of each fiscal year of the Company, an
annual plan for such year, which includes major operating goals and milestones,
monthly profit and loss projections, cash flow statements and monthly capital
and operating expense budgets, itemized in such detail as the Board of Directors
may reasonably request. Each annual plan will be modified as often as is
necessary in the judgment of the Board of Directors to reflect changes required
as a result of operating results and other events that occur, or may be
reasonably expected to occur, during the year covered by the annual plan, and
copies of each such modification will be provided to the Purchaser;
(f) to the extent not already delivered to the Purchaser, promptly
upon their distribution, copies of all financial statements, reports and proxy
statements which the Company delivers to its stockholders;
(g) promptly after the sending or filing thereof, copies of all
regular and periodic financial reports which the Company or its Subsidiaries
files with the Commission or any national securities exchange;
(h) immediately after the Company or CEDS receives notice of the
commencement or threatened commencement of any suit, legal or equitable, or of
any administrative, arbitration or other proceeding against the Company, CEDS,
their Subsidiaries, or their business, assets or properties, in each case
reasonably likely to have a Material Adverse Effect on the Company and its
Subsidiaries on a consolidated basis, written notice of the nature and extent of
such suit or proceeding;
(i) as promptly as practicable, but in any event not later than five
(5) days after an officer of the Company or CEDS obtains knowledge thereof,
notice of the occurrence of:
(i) any adverse development in any litigation, arbitration or
governmental investigation or proceeding previously disclosed by the
Company or CEDS to the Purchaser in each case reasonably likely to have a
Material Adverse Effect on the Company and its Subsidiaries on a
consolidated basis;
(ii) any event which constitutes an Event of Default; or
21
<PAGE>
(iii) any condition or event regarding the business, properties,
condition or prospects (financial or otherwise) of the Company or CEDS
which has or may reasonably be expected to have a Material Adverse Effect;
together with a detailed statement by a responsible officer of the Company of
the steps being taken by the Company or CEDS to cure the effect of such
occurrence or event;
(j) as soon as possible and in any event within thirty (30) days
after the Company or CEDS knows or has reason to know that any Reportable Event
with respect to any Plan of the Company or its Subsidiaries has occurred, the
statement of the chief financial officer of the Company setting forth details as
to such Reportable Event and the action which the Company proposes to take with
respect thereto, together with a copy of the notice of such Reportable Event to
the Pension Benefit Guaranty Corporation;
(k) promptly with the sending or filing thereof, copies of all
reports and documents that the Company or CEDS sends or provides to any of its
material creditors, whether upon such creditors' request or otherwise, and
copies of all reports, audits and work papers, prepared by or for its creditors,
or their designees, whether during the course of a periodic audit or otherwise,
which examine the loans, collateral, controls, policies or procedures of the
Company or CEDS;
(l) immediately upon the receipt thereof from any creditor, copies
of any notices of default or other correspondence or information pertaining to
any alleged or actual default or noncompliance with any material ($500,000 or
more) credit facility maintained by the Company, CEDS, or any Subsidiary with
any creditor other than the Purchaser;
(m) upon the request of the Purchaser, as soon as available with
respect to each fiscal year of the Company ending after the Closing Date, a true
and correct copy of its consolidated federal income tax returns as filed and all
schedules thereto;
(n) prior written notice, as far in advance as reasonably practical
and not less than as required by the Company's Bylaws, of each meeting of the
Company's Board of Directors and copies of the minutes of all meetings of, and
written minutes of action taken by, the Board of Directors or the shareholders
of the Company, promptly after each such meeting or action is taken; and
(o) such other documents and information concerning the Company
which is reasonably requested by the Purchaser from time to time.
6.03 Books and Records; Inspection and Examination.
(a) The Company and CEDS will keep, and will cause each Subsidiary
to keep, accurate books of record and account for itself in which true and
complete entries will be
22
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made in accordance with GAAP and, upon request of the Purchaser, will give any
representative of the Purchaser access to, and permit such representative to
examine, audit, copy or make extracts from, any and all books, records and
documents in the Company's, CEDS' or any Subsidiary's possession, to inspect the
Company's, CEDS' or any Subsidiary's properties and to discuss the Company's,
CEDS' or any Subsidiary's affairs, finances and accounts with their principal
officers or independent accountants, all at such times during normal business
hours and as often as the Purchaser may reasonably request. The Company and CEDS
agree to reimburse the Purchaser for the reasonable fees and charges incurred in
connection with any such inspection or audit, including costs of personnel time
and out-of-pocket expenses, which is conducted after an Event of Default has
occurred and is continuing.
(b) Any information or document obtained by the Purchaser in any
examination, audit, inspection or discussion pursuant to this Section 6.03 will
be used by the Purchaser only for those purposes the Purchaser believes to be
appropriate to protect its interests under this Agreement and the Ancillary
Agreements or in obtaining payment of amounts owed pursuant to the Note,
provided that the foregoing shall not limit the Purchaser's use of such
information or document (i) if such information or document has become generally
available to the public through no fault of the Purchaser, (ii) if use of such
information or document is required or appropriate in any report, statement or
testimony submitted to any municipal, state or federal regulatory body having or
claiming to have jurisdiction over the Purchaser, (iii) if use of such
information or document may be required or appropriate in response to any
summons or subpoena or in connection with any litigation (provided that the
Purchaser provides advance written notice to the Company of such subpoena), (iv)
if such information or document is disclosed or given to the Purchaser in good
faith by a third party who had independent rights to such information or
document, (v) if such information or document is obsolete, (vi) if use of such
information or document is believed by the Purchaser to be appropriate in order
to comply with any law, order, regulation or ruling applicable to the Purchaser,
or (vii) if such information or document is disclosed or given to a prospective
transferee in connection with any contemplated transfer of any of the
Securities; provided, further, that in the case of proposed disclosures pursuant
to clauses (ii), (iii) or (vi) above the Purchaser will endeavor to give the
Company prior notice before complying with such request or order so as to give
the Company an opportunity to appear and contest the disclosure of such
information or document.
6.04 Compliance with Laws. The Company and CEDS will comply, and
will cause each Subsidiary to comply, with all applicable statutes, rules,
regulations, orders and restrictions of the United States of America, foreign
countries, states and municipalities and of any governmental department,
commission, board, regulatory authority, bureau, agency, and instrumentality of
the foregoing, and of any court, arbitrator or grand jury, in respect of the
conduct of its business and the ownership of its properties, except such as are
being contested in good faith or where the failure to so comply would not
reasonably be expected to have a Material Adverse Effect.
23
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6.05 Maintenance of Properties. The Company and CEDS will keep and
maintain, and cause each Subsidiary to keep and maintain, its properties in good
repair, working order and condition, ordinary wear and tear excepted, and from
time to time make, or cause to be made, all reasonable repairs and renewals and
replacements which in the opinion of the Company and CEDS are necessary and
proper so that the business carried on in connection therewith may be properly
and advantageously conducted at all times. The Company and CEDS will maintain,
and cause each Subsidiary to maintain, or cause to be maintained back-up copies
of all valuable papers and software.
6.06 Insurance. The Company and CEDS will obtain insurance, for
itself and each Subsidiary, against loss or damage of the kinds customarily
insured against by corporations similarly situated, with reputable insurers, in
such amounts, with such deductibles and by such methods as shall be adequate,
and in any event in amounts not less than amounts generally maintained by other
companies engaged in similar businesses. Further, the Company and CEDS will
promptly provide to the Purchaser copies of all material notices of termination,
cancellation, or reduction in coverage received from or sent to any of its
insurers together with copies of all material correspondence related to such
insurance.
6.07 Payment of Taxes and Claims. The Company and CEDS will, and
will cause each Subsidiary to, duly pay and discharge, as the same become due
and payable, all taxes, assessments and governmental and other charges, levies
or claims levied or imposed, which are, or which if unpaid might become, a Lien
upon the properties, assets, earnings or business of the Company, CEDS or any
Subsidiary; provided, however, that nothing contained in this Section will
require the Company, CEDS or any Subsidiary to pay and discharge, or cause to be
paid and discharged, any such tax, assessment, charge, levy or claim so long as
the Company in good faith contests the validity thereof and sets aside on its
books adequate reserves with respect thereto. In the event the Company, CEDS or
any Subsidiary fails to satisfy its obligations under this Section, the
Purchaser may but is not obligated to satisfy such obligations in whole or in
part and any payments made and reasonable expenses incurred in doing so will
constitute, to the extent satisfied by the Purchaser, an obligation by the
Company and CEDS immediately due and payable to the Purchaser and such
obligation will be immediately paid by the Company and CEDS with interest at a
rate of fourteen percent (14%) per annum.
6.08 Maintenance of Corporate Existence.
(a) The Company and CEDS will, and will cause each Subsidiary to, at
all times do or cause to be done all things necessary to maintain, preserve and
renew its corporate charter and existence and its rights, patents and
franchises, and comply with all material laws applicable thereto; provided,
however, that nothing contained in this Section will (i) require the Company,
CEDS, or any Subsidiary to maintain, preserve or renew any right, patent or
franchise not necessary or desirable in the conduct of the business of the
Company, CEDS or such Subsidiary, (ii) prevent the termination of the corporate
existence of any Subsidiary if the Board
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of Directors of the Company reasonably believes in good faith that such
termination is not disadvantageous to the Purchaser, or (iii) require the
Company , CEDS or any Subsidiary to comply with any law so long as the validity
or applicability thereof will be contested in good faith by appropriate
proceedings.
(b) The Company and CEDS will at all times maintain their corporate
offices at the addresses specified in Section 10.04 hereof to which notices,
presentations and demands to or upon the Company in respect of the Note may be
given or made; provided, however, that the Company or CEDS may change the
location of its corporate headquarters upon not less than thirty (30) days prior
written notice to the Purchaser.
6.09 Financial Covenants.
(a) Maximum Capital Expenditures. The Company and its Subsidiaries
on a consolidated basis will not make any Capital Expenditures during the
following periods that exceed in the aggregate the amounts set forth opposite
each such period:
--------------------------------------------------------------------
Maximum Capital
Period Expenditures per Period
------------------------------------------ -------------------------
Closing Date through June 30, 2000 $5,500,000
------------------------------------------ -------------------------
July 1, 2000 through June 30, 2001 $15,000,000
------------------------------------------ -------------------------
July 1, 2001 through June 30, 2002 $20,000,000
------------------------------------------ -------------------------
July 1, 2002 through June 30, 2003 $20,000,000
------------------------------------------ -------------------------
July 1, 2003 through June 30, 2004 and $20,000,000
each Fiscal Year thereafter
--------------------------------------------------------------------
(b) Minimum Fixed Charge Coverage Ratio. The Company and its
Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Quarter set forth below, a Fixed Charge Coverage Ratio for the 12-month period
then ended (or with respect to the Fiscal Quarters ending on or before June 30,
2000, the period commencing on September 24, 1999 and ending on the last day of
such Fiscal Quarter) of not less than the following:
--------------------------------------------------------------------
Minimum Fixed Charge
Period Coverage Ratio
--------------------------------------------- ----------------------
Fiscal Quarter ending March 31, 2000 0.35
--------------------------------------------- ----------------------
Fiscal Quarter ending June 30, 2000 1.0
--------------------------------------------- ----------------------
Fiscal Quarter ending September 30, 2000 0.8
--------------------------------------------- ----------------------
Fiscal Quarter ending December 31, 2000 0.7
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--------------------------------------------- ----------------------
Fiscal Quarter ending March 31, 2001 0.7
--------------------------------------------- ----------------------
Fiscal Quarter ending June 30, 2001 0.7
--------------------------------------------- ----------------------
Fiscal Quarter ending September 30, 2001 1.2
--------------------------------------------- ----------------------
Fiscal Quarter ending December 31, 2001 1.3
--------------------------------------------- ----------------------
Fiscal Quarter ending March 31, 2002 1.4
--------------------------------------------- ----------------------
Fiscal Quarter ending June 30, 2002 and 1.5
each Fiscal Quarter ending thereafter
--------------------------------------------------------------------
(c) Minimum EBITDA. The Company and its Subsidiaries on a
consolidated basis shall have, at the end of each Fiscal Quarter set forth
below, EBITDA for the 12-month period then ended (or with respect to the Fiscal
Quarters ending on or before June 30, 2000, the period commencing on September
24, 1999 and ending on the last day of such Fiscal Quarter) of not less than the
following:
--------------------------------------------------------------------
Period Minimum EBITDA
--------------------------------------------- ----------------------
Fiscal Quarter ending December 31, 1999 ($2,100,000)
--------------------------------------------- ----------------------
Fiscal Quarter ending March 31, 2000 $2,000,000
--------------------------------------------- ----------------------
Fiscal Quarter ending June 30, 2000 $9,000,000
--------------------------------------------- ----------------------
Fiscal Quarter ending September 30, 2000 $15,000,000
--------------------------------------------- ----------------------
Fiscal Quarter ending December 31, 2000 $16,000,000
--------------------------------------------- ----------------------
Fiscal Quarter ending March 31, 2001 $17,000,000
--------------------------------------------- ----------------------
Fiscal Quarter ending June 30, 2001 $18,000,000
--------------------------------------------- ----------------------
Fiscal Quarter ending September 30, 2001 $22,000,000
--------------------------------------------- ----------------------
Fiscal Quarter ending December 31, 2001 $22,000,000
and each Fiscal Quarter ending thereafter
--------------------------------------------------------------------
(d) The following terms used in this Section 6.09 shall be defined
as follows:
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one (1) year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance
26
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with GAAP, would be required to be classified and accounted for as a capital
lease on a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"EBITDA" shall mean, with respect to any Person for any fiscal
period, an amount equal to (a) consolidated net income of such Person for such
period, minus (b) the sum of (i) income tax credits, (ii) interest income, (iii)
gain from extraordinary items for such period, (iv) any aggregate net gain (but
not any aggregate net loss) during such period arising from the sale, exchange
or other disposition of capital assets by such Person (including any fixed
assets, whether tangible or intangible, all inventory sold in conjunction with
the disposition of fixed assets and all securities), and (v) any other non-cash
gains which have been added in determining consolidated net income, in each case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication, plus
(c) the sum of (i) any provision for income taxes, (ii) Interest Expense, (iii)
loss from extraordinary items for such period, (iv) the amount of non-cash
charges (including depreciation and amortization) for such period, (v) amortized
debt discount for such period, and (vi) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, in each case to the extent included in
the calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication. For purposes of this definition,
the following items shall be excluded in determining consolidated net income of
a Person: (1) the income (or deficit) of any other Person accrued prior to the
date it became a Subsidiary of, or was merged or consolidated into, such Person
or any of such Person's Subsidiaries; (2) the income (or deficit) of any other
Person (other than a Subsidiary) in which such Person has an ownership interest,
except to the extent any such income has actually been received by such Person
in the form of cash dividends or distributions; (3) the undistributed earnings
of any Subsidiary of such Person to the extent that the declaration or payment
of dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (4) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period; (5) any write-up of any asset; (6) any net
gain from the collection of the proceeds of life insurance policies; (7) any net
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of such Person, (8) in the case of a successor
to such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets, and (9) any deferred credit representing the excess of equity in any
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Subsidiary of such Person at the date of acquisition of such Subsidiary over the
cost to such Person of the investment in such Subsidiary.
"Fiscal Quarter" shall mean any of the quarterly accounting periods
of the Company, ending on September 30, December 31, March 31 and June 30 of
each year.
"Fixed Charges" shall mean, with respect to any Person for any
fiscal period, (a) the aggregate of all Interest Expense paid or accrued during
such period, plus (b) scheduled payments of principal with respect to
Indebtedness during such period, plus (c) Capital Expenditures during such
period.
"Fixed Charge Coverage Ratio" shall mean, with respect to any Person
for any fiscal period, the ratio of EBITDA to Fixed Charges. In computing Fixed
Charges for any fiscal period, interest and principal payments that are due
within one week after the end of that fiscal period, without duplication, shall
be deemed to have been paid on the last day of that fiscal period.
"Funded Debt" shall mean, with respect to any Person, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and which by its terms matures more than one
(1) year from, or is directly or indirectly renewable or extendible at such
Person's option under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more than one (1) year from
the date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one (1) year at the option of the debtor, and
also including, in the case of the Company, the Obligations and, without
duplication, Guaranteed Indebtedness consisting of guaranties of Funded Debt of
other Persons.
"Indebtedness" of any Person shall mean without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations and the present value (discounted
at the Index Rate as in effect on the Closing Date) of future rental payments
under all synthetic leases, (f) all obligations of such Person under commodity
purchase or option agreements or other commodity price
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hedging arrangements, in each case whether contingent or matured, (g) all
obligations of such Person under any foreign exchange contract, currency swap
agreement, interest rate swap, cap or collar agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether
contingent or matured, (h) all Indebtedness referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations.
"Index Rate" shall mean, for any day, a floating rate equal to the
higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans at large U.S. money center
commercial banks" (or, if The Wall Street Journal ceases quoting a base rate of
the type described, the highest per annum rate of interest published by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus fifty (50) basis points per annum.
"Interest Expense" shall mean, with respect to any Person for any
fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, in any event, interest expense with respect to any Funded Debt of
such Person and interest expense for the relevant period that has been
capitalized on the balance sheet of such Person.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, partnership or equivalent entity whether voting or nonvoting,
including common stock, preferred stock or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
(e) Unless otherwise specifically provided herein, any accounting
term used in this Agreement shall have the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed in accordance with GAAP consistently applied. That certain items or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. If any "Accounting Changes"
(as defined below) occur and such changes result in a change in the calculation
of the financial covenants, standards or terms used in this Agreement or any
other Ancillary Agreement, then the Company and the Purchaser agree to enter
into negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Company's and its
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Subsidiaries' financial condition shall be the same after such Accounting
Changes as if such Accounting Changes had not been made. "Accounting Changes"
means (a) changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants (or successor
thereto or any agency with similar functions), (b) changes in accounting
principles concurred in by the Company's certified public accountants; (c)
purchase accounting adjustments under A.P.B. 16 and/or 17 and EITF 88-16, and
the application of the accounting principles set forth in FASB 109, including
the establishment of reserves pursuant thereto and any subsequent reversal (in
whole or in part) of such reserves; and (d) the reversal of any reserves
established as a result of purchase accounting adjustments. All such adjustments
resulting from expenditures made subsequent to the Closing Date (including
capitalization of costs and expenses or payment of pre-Closing Date liabilities)
shall be treated as expenses in the period the expenditures are made and
deducted as part of the calculation of EBITDA in such period. If the Company and
the Purchaser agree upon the required amendments, then after appropriate
amendments have been executed and the underlying Accounting Change with respect
thereto has been implemented, any reference to GAAP contained in this Agreement
or in any Ancillary Agreement shall, only to the extent of such Accounting
Change, refer to GAAP, consistently applied after giving effect to the
implementation of such Accounting Change. If the Company and the Purchaser
cannot agree upon the required amendments within thirty (30) days following the
date of implementation of any Accounting Change, then all financial statements
delivered and all calculations of financial covenants and other standards and
terms in accordance with this Agreement and the Ancillary Agreements shall be
prepared, delivered and made without regard to the underlying Accounting Change.
6.10 Board of Directors. The Purchaser will have the right to
designate one nominee for election as a director to the Company's Board of
Directors, which shall be comprised of no more than ten (10) directors. The
Company agrees to nominate any Person designated by the Purchaser to serve as a
member of the Board of Directors. In addition, the Purchaser has the right to
designate from time to time an observer to attend all meetings of the Company's
Board of Directors. The Company agrees to hold meetings of the Board of
Directors at least once each quarter where the Board of Directors will, at a
minimum, review historical financial results and consider other agenda items as
the members of the Board of Directors deem appropriate. If elected, the
Purchaser's designee on the Company's Board of Directors shall receive the same
compensation as the Company's other outside directors, and, in addition, the
Company agrees to pay for the reasonable expenses of the Purchaser's designee in
attending Board and Committee meetings.
6.11 Replacement of Certificates. Upon delivery of an affidavit in
a form reasonably satisfactory to the Company from the Purchaser as to the loss,
theft, destruction or mutilation of the Note or the Warrant, and upon receipt of
an indemnity reasonably satisfactory to the Company from the Purchaser, or in
the case of mutilation, upon surrender of the mutilated Note
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or Warrant, the Company and CEDS will make and deliver a new Note or Warrant of
like tenor in lieu of such Note or Warrant.
6.12 Retirement Plans. The Company and CEDS will cause each
retirement plan in which any employees of the Company, CEDS, or any Subsidiary
participate that is subject to the provisions of ERISA, and the documents and
instruments governing each such plan, to be conformed to, when necessary, and to
be administered in a manner consistent with, those provisions of ERISA which
may, from time to time, become effective and operative with respect to such
plans. If requested by the Purchaser in writing from time to time, the Company
and CEDS will furnish to the Purchaser a copy of any annual report with respect
to each such plan that the Company, CEDS, or any Subsidiary files with the
Secretary of Labor pursuant to ERISA. At such time as such insurance is
available at rates deemed commercially reasonable by the Company or CEDS, the
Company and CEDS will maintain insurance against the contingent liability
against the net worth of the Company and CEDS imposed in respect of each such
plan by the provisions of ERISA.
6.13 Filing of Reports. The Company will make timely filing of such
reports as are required to be filed by it with the Commission so that Rule 144
under the Securities Act or any successor provision thereto will be available to
the security holders of the Company who are otherwise able to take advantage of
the provisions of such rule.
6.14 [Intentionally Omitted].
6.15 SBIA Information. The Company and CEDS will:
(a) as soon as reasonably practical, but in any event within twenty
(20) days after the request of the Purchaser, furnish to the Purchaser all
information necessary in order for the Purchaser to prepare and file SBA Form
468 and other information requested or required by any governmental authority
asserting jurisdiction over the Purchaser;
(b) as soon as reasonably practical after the written request of the
Purchaser, confirm the use of the proceeds as described in Section 3.26 above;
and
(c) with reasonable promptness, provide such information as from
time to time the Purchaser may request to enable the Purchaser to comply with
the SBIA.
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6.16 SBIA Compliance.
(a) So long as the Purchaser is an SBIC (i) without the prior
written consent of the Purchaser, neither the Company nor CEDS will use the
proceeds from the sale of the Securities for any purpose other than as set forth
in Section 3.26 above, (ii) neither the Company nor CEDS will use the proceeds
from the sale of the Securities for any prohibited purposes outlined in the
second sentence of Section 3.26, (iii) neither the Company nor CEDS will change
its business activity in any manner which, by reason of such change in business
activity, would cause the Company or CEDS to fall within a different SIC Code
and thereby render it ineligible as a "small business concern" under the SBIA,
and (iv) the Company and CEDS will at all times comply with the
non-discrimination requirements of 13 CFR Parts 112, 113 and 117.
(b) The Company and CEDS will at all times permit the Purchaser and,
if necessary, a representative of the SBA, access to its records and the Company
and CEDS will provide such information as the Purchaser may request in order to
verify compliance with this Section 6.16 including, without limitation, an
officer's certificate indicating such compliance.
6.17 Environmental Matters.
(a) The Company and CEDS will give notice to the Purchaser
immediately upon acquiring knowledge of the presence of any Hazardous Materials
or any Hazardous Materials Contamination on any property owned, operated or
controlled by the Company, CEDS, or any Subsidiary or for which the Company,
CEDS, or any Subsidiary is, or is claimed to be, responsible (provided that such
notice shall not be required for Hazardous Materials placed or stored on such
property in accordance with Environmental Laws in the ordinary course of
business), with a full description thereof.
(b) The Company and CEDS will, and will cause each Subsidiary to,
promptly comply with any Environmental Law requiring the removal, treatment or
disposal of Hazardous Materials or Hazardous Material Contamination and, upon
request, provide the Purchaser with satisfactory evidence of such compliance.
(c) The Company and CEDS will provide the Purchaser, within thirty
(30) days after a demand by the Purchaser, with a bond, letter of credit or
similar financial assurance evidencing to the Purchaser's satisfaction that the
necessary funds are available to pay the cost of removing, treating, and
disposing of such Hazardous Materials or Hazardous Materials Contamination and
discharging any Lien which may be established as a result thereof on any
property owned, operated or controlled by the Company, CEDS, or any Subsidiary
or for which the Company, CEDS, or any Subsidiary is, or is claimed to be
responsible.
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(d) The Company and CEDS will jointly and severally defend,
indemnify and hold harmless the Purchaser and its directors, officers,
employees, partners and agents from any and all third party claims which may now
or in the future (whether before or after the termination of this Agreement) be
asserted as a result of the presence of any Hazardous Materials or any Hazardous
Materials Contamination on any property owned, operated or controlled by the
Company, CEDS, or any Subsidiary for which the Company, CEDS, or any Subsidiary
is, or is claimed to be, responsible. The Company and CEDS acknowledge and agree
that this indemnification obligation will survive the termination of this
Agreement and the payment and performance of all Obligations.
6.18 Other Agreements. The Company and CEDS will, and will cause
each Subsidiary to, faithfully observe, perform and discharge in all material
respects all of their respective covenants, agreements, conditions and
obligations under any and all material agreements, whether now existing or
hereafter created or arising, to which it is a party or under which it has any
obligation (other than those covenants, agreements, conditions, or obligations
subject to a bona fide dispute).
6.19 Certificates of Incorporation. The Company and CEDS will, and
will cause each Subsidiary to, amend the Certificate of Incorporation of each
and every Loan Party that contains the provision permitted by Section 102(b)(2)
of the Delaware General Corporation Law (the "DCGL") to remove such provision
from each such Certificate of Incorporation within sixty (60) days of the
Closing Date.
ARTICLE 7 NEGATIVE COVENANTS OF THE COMPANY AND CEDS
The Company and CEDS covenant and agree that from and after the
Closing, so long as the Note or the Warrant remain outstanding, unless the
Purchaser otherwise consents in writing:
7.01 Liens. The Company and CEDS will not, and will not permit any
Subsidiary to, create, incur, assume or suffer to exist any Liens on any of its
assets now owned or hereafter acquired, or assign or otherwise convey any right
to receive income or give its consent to the subordination of any right or claim
of the Company, CEDS, or any Subsidiary to any right or claim of any other
Person; excluding, however, the following ("Permitted Liens"):
(a) Liens for taxes or assessments or other governmental charges to
the extent not required to be paid by Section 6.07;
(b) Materialmen's, merchants', carriers', workmen's, repairmen's, or
other like liens arising in the ordinary course of business to the extent not
required to be paid by Section 6.07;
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(c) Pledges or deposits to secure obligations under worker's
compensation laws, unemployment insurance and social security laws, or to secure
the performance of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases or to secure statutory obligations or surety or appeal
bonds, or to secure indemnity, performance or other similar bonds, in each case
arising in the ordinary course of business;
(d) Zoning restrictions, easements, licensees' restrictions on the
use of real property or minor irregularities in title thereto, which do not
materially impair the use of such property in the operation of the business or
the value of such property for the purpose of such business;
(e) Subject to Section 7.02, purchase money mortgages, liens, or
security interests (which term for purposes of this subsection includes
conditional sale agreements or other title retention agreements and leases in
the nature of title retention agreements) upon or in property acquired after the
date hereof, or mortgages, liens or security interests existing in such property
at the time of acquisition thereof, provided that (unless the Purchaser
otherwise consents in writing):
(i) no such mortgage, lien or security interest extends or will
extend to or cover any property of the Company, CEDS or any Subsidiary,
other than the property then being acquired and fixed improvements then or
thereafter erected thereon; and
(ii) the aggregate principal amount of Fixed Indebtedness secured by
mortgages, liens and security interests described in this subsection (e)
at the time of acquisition of the property subject thereto does not exceed
the lesser of (A) 100% of the cost of such property or (B) the then fair
market value of such property as reasonably determined in good faith by
the Board of Directors of the Company, CEDS, or such Subsidiary;
(f) Liens granted to the Purchaser under this Agreement and the
Ancillary Agreements;
(g) Liens granted to the Senior Lender under the Senior Credit
Agreement to secure the Senior Indebtedness;
(h) Liens granted to the Seller under the Acquisition Documents; and
(i) Liens arising out of a judgment against the Company, CEDS, or
any Subsidiary for the payment of money not exceeding $250,000 in the aggregate
with respect to which an appeal is being prosecuted and a stay of execution
pending such appeal has been secured.
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7.02 Fixed Indebtedness. The Company and CEDS will not, and will
not permit any Subsidiary to, incur, create, assume or permit to exist any Fixed
Indebtedness, except:
(a) Fixed Indebtedness evidenced by the Notes;
(b) the Senior Indebtedness in the amount not exceeding that amount
available under the Senior Credit Agreement as of the Closing Date;
(c) Fixed Indebtedness evidenced by the Seller Notes in the amount
not exceeding that existing on the Closing Date;
(d) Fixed Indebtedness incurred by CEDS to refinance the Short-Term
Subordinated Promissory Note issued to the Seller in the amount contemplated
therein;
(e) Fixed Indebtedness secured in the manner permitted by Section
7.01(e) above;
(f) Unfunded pension fund and other employee benefit plan
obligations and liabilities to the extent they are permitted to remain unfunded
under applicable law;
(g) Fixed Indebtedness consisting of intercompany loans and advances
made by CEDS to any other Loan Party that is both a Guarantor and a Subsidiary
of CEDS or by any Guarantor to CEDS;
(h) Fixed Indebtedness, other than that permitted under Sections
7.02(a)-(g) above, not to exceed $500,000 in aggregate; and
(i) Fixed Indebtedness existing as of the Closing Date and reflected
on the Interim Period Financial Statements or Section 3.25 of the Disclosure
Schedule.
7.03 Guaranties. Notwithstanding anything to the contrary in
Section 7.02, except for the Guaranties, the guaranty of the Seller Notes by the
Company entered into in accordance with the Acquisition Agreement, and the
guaranties of the Senior Indebtedness as contemplated by the Senior Credit
Agreement, the Company and CEDS will not, and will not permit any Subsidiary to,
assume, guarantee, endorse or otherwise become directly or contingently liable
in connection with any obligations of any Person, except endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business.
7.04 Investments and Loans. The Company and CEDS will not, and will
not permit any Subsidiary to, purchase or hold beneficially any stock or other
securities or evidences of indebtedness of, make or permit to exist any loans or
advances to, or make any investment or acquire any interest whatsoever in, any
other Person, except:
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(a) (i) investments in direct obligations of the United States of
America or any agency or instrumentality thereof whose obligations constitute
full faith and credit obligations of the United States of America having a
maturity of one year or less, (ii) commercial paper having a maturity of one
year or less issued by U.S. corporations rated "A-1" by Standard & Poors
Corporation or "P-1" by Moody's Investors Service, (iii) certificates of deposit
or bankers' acceptances having a maturity of one year or less issued by members
of the Federal Reserve System having combined capital, surplus, and undivided
profits in excess of $300,000,000 and having a senior unsecured rating of "A" or
better by a nationally recognized rating agency (an "A Rated Bank"), (iv) time
deposits, maturing no more than thirty (30) days from the date of creation
thereof with A Rated Banks, and (v) mutual funds that invest solely in one or
more of the investments described in clauses (i) through (iv) above;
(b) advances in the ordinary course of business in the form of
commercially reasonable security deposits;
(c) expense advances to officers and employees in the ordinary
course of business in accordance with the Company's policy;
(d) each Loan Party's existing investment in its Subsidiaries as of
the Closing Date or any Fixed Indebtedness permitted under Section 7.02(g)
above; or
(e) with respect to CEDS only, notes payable, stock or other
securities issued by an account debtor to CEDS pursuant to negotiated agreements
with respect to settlement of such account debtor's accounts in the ordinary
course of business, so long as the aggregate amount of such accounts so settled
does not exceed $100,000.
7.05 Dividends; Distributions. Except for redeeming those
outstanding warrants of the Company described in the Acquisition Agreement as
contemplated by Section 4.3.2 of the Acquisition Agreement, the Company will not
declare or pay any dividends on any class of its stock or make any payment on
account of the purchase, redemption or other retirement of any shares of such
stock or make any distribution in respect thereof, either directly or
indirectly; provided, however, that the foregoing prohibition will not prevent
the Company from satisfying its obligations under this Agreement and the
Ancillary Agreements.
7.06 Sale of Assets. The Company and CEDS will not, and will not
permit any Subsidiary to, sell, lease, assign, transfer or otherwise dispose of
(whether in one transaction or in a series of transactions) all or a substantial
part of its assets to any Person; provided, however, that the restrictions
contained in this Section 7.06 will not apply to or prevent (i) the sale of
inventory in the ordinary course of business, (ii) the sale of assets or
properties which are obsolete or no longer used or useful in such Loan Party's
business, or (iii) the sale of assets or properties having a value of not more
than $100,000 in any single transaction or $500,000 in the
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aggregate in any fiscal year of the Company. For purposes of this Section 7.06,
"substantial part" means a material amount of the assets of the Company, CEDS,
and their Subsidiaries taken as a whole.
7.07 Consolidation and Merger; Acquisitions. The Company and CEDS
will not, and will not permit any Subsidiary to, consolidate with or merge into
any entity or permit any entity to merge into it, or acquire (whether or not in
a transaction analogous in purpose or effect to a consolidation or merger) all
or substantially all of the assets or securities of another Person; provided,
that any Loan Party may merge with or into any other Loan Party (including the
Company or CEDS) so long as the Company and CEDS remain in existence after such
merger.
7.08 Sale and Leaseback. The Company and CEDS will not, and will
not permit any Subsidiary to, enter into any arrangement, directly or
indirectly, with any entity whereby it will sell or transfer any real or
personal property, whether now owned or hereafter acquired, and then or
thereafter rent or lease as lessee such property or any part thereof or any
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred.
7.09 [Intentionally Omitted].
7.10 Restrictions on Nature of Business. The Company, CEDS, and
their Subsidiaries, viewed as a consolidated entity, will not engage, directly
or indirectly, in any line of business materially different from or unrelated to
that engaged in prior to the Closing.
7.11 Accounting. The Company and CEDS will not, and will not permit
any Subsidiary to, adopt, permit or consent to any material change in accounting
principles other than as required by GAAP, except as permitted by GAAP and
expressly concurred with by certified public accountants selected by the Company
and acceptable to the Purchaser and, in the event of any material change in
accounting principles, the Company will, at the Purchaser's request, provide the
financial statements required by Section 6.02 hereof on a comparative basis
showing the financial condition and the results of operations of the Company
under both the prior accounting principle and the accounting principle as
changed, and the Company will comply with the financial covenants of Section
6.09 hereof under the prior principles. The Company will not adopt, permit or
consent to any change in its fiscal year or file a consolidated tax return with
any other unrelated Person.
7.12 [Intentionally Omitted].
7.13 [Intentionally Omitted].
7.14 Conflicts of Interest. The Company and CEDS will, and will
cause each Subsidiary to, conduct its business in such a manner that no officer
or director will have any
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direct or indirect material equity interest in any entity which does business
with the Company, CEDS or any Subsidiary or in any property, asset or right
which is used by the Company, CEDS or any Subsidiary in the conduct of its
business, except for transactions upon fair and reasonable terms no less
favorable to the Company, CEDS, or such Subsidiary than would arise in a
comparable arm's length transaction with a third party.
7.15 Transactions with Affiliates. The Company and CEDS will not,
and will not permit any Subsidiary to, enter into or continue in effect any
transaction with any Affiliate or an officer or employee thereof except
transactions upon fair and reasonable terms no less favorable to the Company,
CEDS, or such Subsidiary than would arise in a comparable arm's length
transaction with a Person not an Affiliate.
7.16 Modification of Senior Credit Agreement. The Company and CEDS
will not, and will not permit any Subsidiary to, amend the Senior Credit
Agreement other than in accordance with the Intercreditor Agreement.
7.17 Inconsistent Agreements. The Company and CEDS will not, and
will not permit any Subsidiary to, enter into any agreement containing any
provision which would be materially violated or breached by this Agreement or by
the performance by the Company or CEDS of its obligations hereunder or under any
document executed pursuant hereto.
7.18 Rental Obligations. The Company and CEDS will not, and will
not permit any Subsidiary to, be or become liable for rentals under any leases
of real or personal property (other than leases (a) having a term of one year or
less which are not, according to their terms, extendible or renewable at the
lessee's option or (b) which constitute capitalized lease obligations) where the
total rents payable by the Company, CEDS, and their Subsidiaries in accordance
with such leases exceeds $500,000 on an annualized basis.
7.19 Modification of Seller Notes. The Company and CEDS will not,
and will not permit any Subsidiary to amend any Seller Note to (a) increase the
interest rate on such Seller Note, (b) change the dates upon which payments of
principal or interest are due on such Seller Note other than to extend such
dates, (c) change any default or event of default other than to delete or make
less restrictive any default provision therein, or add any covenant with respect
to such Seller Note, (d) change the redemption or prepayment provisions of such
Seller Note other than to extend the dates therefor or to reduce the premiums
payable in connection therewith, (e) except as permitted in this Agreement or
the Ancillary Agreements, grant any security or collateral to secure payment of
such Seller Note, or (f) change any other term if such change materially
increases the obligations of any Loan Party or confers additional material
rights to the holder of such Seller Note that are materially adverse,
individually or in the aggregate, to the Purchaser or any Loan Party.
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7.20 Certificates of Incorporation. The Company and CEDS will not,
and will not permit any Subsidiary to, include within the Certificate of
Incorporation of any Loan Party the provision permitted by Section 102(b)(2) of
the DCGL.
ARTICLE 8 INDEMNIFICATION
8.01 Indemnification by the Company. The Company and CEDS, jointly
and severally, agree to defend, indemnify and hold harmless the Purchaser and
its directors, officers, employees, partners and agents from and against any and
all claims, causes of action, losses, costs, damages, deficiencies or expenses,
including reasonable attorneys' fees (collectively "Damages") sustained by the
Purchaser arising from or related to any and all misrepresentations or breach of
a representation, warranty or covenant of the Loan Parties set forth in this
Agreement, any of the Ancillary Agreements, or any certificate, financial
statement, document, instrument or other material furnished to the Purchaser as
required by this Agreement.
8.02 Indemnification by the Purchaser. The Purchaser agrees to
defend, indemnify and hold harmless the Company and CEDS from and against any
and all Damages sustained by the Company or CEDS arising from or related to any
and all misrepresentations or breach of a representation, warranty or covenant
of the Purchaser set forth in Article 4 of this Agreement.
8.03 Notice. Each party agrees to give the other prompt written
notice of any event or assertion of which it has knowledge concerning any
Damages or other obligation and as to which it may request indemnification
hereunder. A failure to give timely notice or to provide copies of documents or
to furnish relevant data in connection with any third party claim by a party who
suffers Damages will not constitute a defense (in part or in whole) to any claim
for indemnification by such party, except and only to the extent that such
failure shall result in material prejudice to the indemnifying party.
8.04 Defense. A party obligated to provide indemnification under
this Article 8 will be entitled to participate in any investigation of any
claim, action or proceeding involving any third party and, upon written notice
to the indemnified party, assume the investigation and defense of such claim,
action, or proceeding with counsel of its choice at its expense, provided that
such counsel is reasonably acceptable to the indemnified party.
ARTICLE 9 EVENTS OF DEFAULT
9.01 Events of Default. An "Event of Default" means any of the
following:
(a) Failure to pay principal owed under the Note when due; or
39
<PAGE>
(b) Failure to pay any interest, fees or expenses or other amounts
due under the Note, this Agreement or any of the Ancillary Agreements, when due
and such failure continues for five (5) days with respect to interest or ten
(10) days with respect to fees, expenses or such other amounts; or
(c) Default by the Company, CEDS, or any Subsidiary in the
performance or observance of any respective covenant, condition, undertaking or
agreement applicable to such party contained in this Agreement or any of the
Ancillary Agreements (other than a default of a type specifically dealt with
elsewhere in this Section 9.01) and the continuance of such default for a period
of twenty (20) days after the Company, CEDS, or any Subsidiary has knowledge of
the occurrence thereof; or
(d) Any warranty, representation or other statement by or on behalf
of the Company, CEDS, or any Subsidiary contained in this Agreement or any of
the Ancillary Agreements, or in any instrument furnished in compliance with or
in reference hereto or thereto, is false or misleading and would not reasonably
be expected to have a Material Adverse Effect on such party; or
(e) Any event of default occurs under the Senior Credit Agreement if
the effect of such event of default is to cause such Senior Indebtedness to
become due prior to its stated maturity; or
(f) The Company, CEDS, or any Subsidiary: (i) files a petition
seeking relief for itself under the United States Bankruptcy Code, as now
constituted or hereafter amended, or files an answer consenting to, admitting
the material allegations of, or otherwise not controverting, or fails timely to
controvert a petition filed against it seeking relief under the United States
Bankruptcy Code, as now constituted or hereafter amended; or (ii) files such a
petition or answer with respect to relief under the provisions of any other now
existing or future applicable bankruptcy, insolvency or similar law of the
United States of America or any state thereof providing for the reorganization,
winding-up or liquidation of corporations or an arrangement, composition,
extension or adjustment with creditors; or
(g) An order for relief is entered against the Company, CEDS, or any
Subsidiary under the United States Bankruptcy Code, as now constituted or
hereafter amended, which order is not stayed; or upon the entry of an order,
judgment or decree by operation of law or by any court having jurisdiction in
the premises which is not stayed, adjudging it bankrupt or insolvent under, or
ordering relief against it under, or approving a properly filed petition seeking
relief against it under the provisions of any other now existing or future
applicable bankruptcy, insolvency or other similar law of the United States or
any state thereof providing for the reorganization, winding-up or liquidation of
corporations or any arrangement, composition, extension or adjustment with
creditors, or appointing a receiver, liquidator, assignee, sequestrator, trustee
or custodian of the Company, CEDS, any Subsidiary, or any substantial part
40
<PAGE>
of its property, or ordering the reorganization, winding-up or liquidation of
its affairs, or upon the expiration of sixty (60) days after the filing of any
involuntary petition against the Company, CEDS, or any Subsidiary seeking any of
the relief specified in Sections 9.01(g) and (h) hereof without the petition
being dismissed prior to that time; or
(h) The Company, CEDS, or any Subsidiary: (i) makes a general
assignment for the benefit of creditors; (ii) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, sequestrator, trustee or
custodian of all or a substantial part of its property; (iii) admits its
insolvency or inability to pay its debts generally as such debts become due;
(iv) fails generally to pay its debts as such debts become due; or (v) takes any
action in furtherance of its dissolution or liquidation; or
(i) Default by the Company, CEDS, or any Subsidiary under any
covenant, provision or condition contained in any material ($500,000 or more)
bond, debenture, note or other evidence of Indebtedness for borrowed money
(other than the Note and the Senior Indebtedness) or under any indenture or
other instrument under which any such evidence of Indebtedness has been issued
or by which it is governed and the expiration of the applicable period of grace,
if any, specified in such evidence of Indebtedness, indenture or other
instrument; provided, however, that if such default under such evidence of
Indebtedness, indenture or other instrument shall be timely cured, or waived by
the holder of such Indebtedness, in each case as may be permitted by such
evidence of Indebtedness, indenture or other instrument, then the Event of
Default hereunder by reason of such default will be deemed likewise to have been
thereupon cured or waived; or
(j) A judgment for the payment of money in excess of $250,000 is
rendered against the Company, CEDS, or any Subsidiary and continues unsatisfied
for a period of thirty (30) days without a stay of execution; or
(k) Any Reportable Event, which the Purchaser determines in good
faith is likely to result in the termination of any Plan or for the appointment
by the appropriate United States District Court of a trustee to administer any
Plan, occurs and continues thirty (30) days after written notice to such effect
has been given to the Company by the Purchaser; or any Plan is terminated, or a
trustee is appointed by an appropriate United States District Court to
administer any Plan, or the Pension Benefit Guaranty Corporation institutes
proceedings to terminate any Plan or to appoint a trustee to administer any
Plan; or
(l) Any audit report referred to in Section 6.02 contains a
qualification as to scope or continuance as a going concern (except for the
fiscal year ending on June 30, 1999); or
(m) Any Change of Control occurs.
9.02 Remedies.
41
<PAGE>
(a) Upon the occurrence of any Event of Default, the holder or
holders of at least a two-thirds of the unpaid principal amount of the Note at
the time outstanding will be entitled to:
(i) declare all indebtedness evidenced by the Note to be immediately
due and payable, and upon such acceleration the Note will thereupon become
forthwith due and payable without any presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived;
(ii) apply any and all amounts owed to the Company or CEDS by the
Purchaser or by the holder of the Note to the payment of the Note;
(iii) exercise and enforce their rights and remedies under this
Agreement or any of the Ancillary Agreements; and
(iv) proceed to protect and enforce their rights under applicable
law;
provided, that if a petition is filed by or against the Company, CEDS, or any
Subsidiary under the United States Bankruptcy Code, the entire unpaid principal
amount of the Note then outstanding, all interest accrued and unpaid thereon,
and all other amounts payable under this Agreement will be immediately due and
payable without presentment, demand, protest or notice of any kind.
(b) No course of dealing on the part of the Purchaser or any delay
or failure on the part of the Purchaser to exercise any right will operate as a
waiver of such right or otherwise prejudice the Purchaser's rights, powers and
remedies.
(c) The Company and CEDS will pay to the Purchaser such additional
amounts as are sufficient to cover the costs and expenses, including without
limitation, reasonable attorneys' fees, incurred by the Purchaser in collecting
any sums due on account of the Note or otherwise in enforcing its rights under
this Agreement or the Ancillary Agreements.
ARTICLE 10 MISCELLANEOUS
10.01 Survival of Representations and Warranties. The
representations, warranties, covenants and agreements set forth in this
Agreement (including the Disclosure Schedule), the Ancillary Agreements, or any
writing delivered by or on behalf of a party to this Agreement to another party
to this Agreement in connection with this Agreement, will survive the Closing
Date and the consummation of the transactions contemplated hereby and will not
be affected by any examination or knowledge, or the acceptance of any
certificate or opinion.
42
<PAGE>
10.02 Expenses.
(a) At the Closing, the Company and CEDS will pay the reasonable
legal, accounting, environmental, travel and other out-of-pocket expenses of the
Purchaser relating to the Company, CEDS, this Agreement, and the Ancillary
Agreements.
(b) The Company and CEDS will pay all reasonable out-of-pocket
expenses incurred by the Purchaser after the Closing in connection with
monitoring the Company and CEDS, and the administration or enforcement of this
Agreement, the Ancillary Agreements or any of the instruments and documents
delivered and to be delivered hereunder or thereunder, including all reasonable
fees and out-of-pocket expenses of legal counsel retained by the Purchaser with
respect thereto. The Company and CEDS will also promptly reimburse the Purchaser
for all costs and expenses, as they are incurred, associated with any amendment,
waiver, extension or restructuring of the loans or agreements or covenants
contemplated herein.
10.03 Governing Law. This Agreement and the Ancillary Agreements
will be construed and enforced in accordance with the substantive laws of the
State of Minnesota without giving effect to its conflict of laws principles.
10.04 Notices. All notices, consents, requests, instructions,
approvals and other communications herein required will be validly given, made
or served if in writing and delivered personally, sent by certified mail
(postage prepaid), facsimile transmission, or by a nationally recognized
overnight delivery service, addressed as follows (or such other address as is
furnished in writing by either party to the other parties):
(a) If to Bayview:
Bayview Capital Partners LP
Attn: Cary Musech and Peter W. Kooman
Suite 230
641 East Lake Street
Wayzata, Minnesota 55391
Fax: 612-476-7820
with a copy to:
Lindquist & Vennum P.L.L.P.
Attn: Robert E. Tunheim, Esq.
4200 IDS Center
Minneapolis, Minnesota 55402
Fax: 612-371-3207
43
<PAGE>
(b) If to the Company or CEDS, addressed to the Company at:
United Shipping & Technology, Inc.
Attn: Timothy G. Becker
9850 51st Avenue North
Suite 110
Plymouth, Minnesota 55442
Fax: 612-941-6440
with a copy to:
Faegre & Benson LLP
Attn: Daniel J. Amen, Esq.
2200 Norwest Center
90 South Seventh Street
Fax: 612-336-3026
10.05 Entire Agreement. This Agreement and the Ancillary
Agreements, including the other documents referred to herein, contain the entire
understanding of the parties hereto with respect to the subject matter contained
herein. There are no restrictions, promises, warranties, covenants, or
undertakings, other than those expressly provided for herein. This Agreement and
the Ancillary Agreements supersede all prior agreements and undertakings between
the parties with respect to such subject matter.
10.06 Amendments; Consents; Waivers. The holder or holders of at
least two-thirds of the unpaid principal amount of the Note at the time
outstanding may by written agreement with the Company and CEDS amend this
Agreement, and any consent, notice, request, demand or waiver required or
permitted to be given by the Purchaser or the holders of the Note by any
provision hereof will be sufficient and binding on all holders of the Note if
given in writing by the holder or holders of at least two-thirds of the unpaid
principal amount of the Note at the time outstanding except that, without the
written consent of the holder or holders of all the Notes at the time
outstanding, no amendment to this Agreement will extend the maturity of any
Note, or alter the rate of interest or any premium payable with respect to any
Note, or affect the amount or timing of any required prepayments, or reduce the
proportion of the principal amount of the Note required with respect to any
consent. No waiver of any term or condition of this Agreement, in any one or
more instances, will constitute a waiver of the same term or condition of this
Agreement on any future occasion.
10.07 Severability of Invalid Provision. If any one or more
covenants or agreements provided in this Agreement should be contrary to law,
then such covenant(s) or agreement(s) will be null and void and will in no way
affect the validity of the other provisions of this Agreement, which will
otherwise be fully effective and enforceable.
44
<PAGE>
10.08 Successors and Assigns. This Agreement and the various
instruments and agreements delivered in connection with the consummation of this
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, including one or more future
holders of the Notes; provided, however, that neither the Company nor CEDS may
assign any of their obligations hereunder without the prior written consent of
the Purchaser.
10.09 Rules of Construction. Section headings contained in this
Agreement are inserted only as a matter of convenience and in no way define,
limit, extend or describe the scope of this Agreement or the intent of any of
the provisions hereof. This Agreement and the Ancillary Agreements have been
negotiated on behalf of the parties with the advice of legal counsel and no
general rule of contract construction requiring an agreement to be more
stringently construed against the drafter or proponent of any particular
provision will be applied in the construction or interpretation of this
Agreement or the Ancillary Agreements.
10.10 Counterparts. This Agreement may be executed in one or more
counterparts, and will become effective when one or more counterparts have been
signed by each of the parties.
10.11 Cumulative Remedies. The rights, remedies, powers and
privileges provided in this Agreement are cumulative and not exclusive and will
be in addition to any and all other rights, remedies, powers and privileges
granted by law, rule, regulation or instrument.
10.12 Press Releases. The Company and CEDS agree not to issue any
press release or make any general public announcement or statement with respect
to the execution of this Agreement or the transactions hereunder unless the
same, including the content thereof, are approved by the Purchaser.
10.13 Time is of the Essence. Time is of the essence as to the
payment and performance of all obligations and agreements of the Company and
CEDS hereunder.
10.14 Consent to Jurisdiction; Jury Waiver. AT THE OPTION OF THE
PURCHASER, THIS AGREEMENT, THE NOTE AND THE ANCILLARY AGREEMENTS MAY BE ENFORCED
IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY; AND
THE COMPANY AND CEDS CONSENT TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND
WAIVE ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE
COMPANY OR CEDS COMMENCE ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY
TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP
CREATED BY THIS AGREEMENT OR THE ANCILLARY AGREEMENTS, OR ALLEGING ANY BREACH OF
THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS, THE PURCHASER AT ITS OPTION
IS
45
<PAGE>
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
DESCRIBED ABOVE, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE. THE COMPANY AND CEDS HEREBY
WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION BASED ON OR PERTAINING TO THIS
AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS.
* * * * *
46
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the day and year first above written.
UNITED SHIPPING & TECHNOLOGY, INC.
By: ______________________________
Name:
Title:
UST DELIVERY SYSTEMS, INC.
By: ______________________________
Name:
Title:
BAYVIEW CAPITAL PARTNERS LP
By: Bayview Capital Management LLC
Its: General Partner
By: ______________________________
Name:
Title:
1
<PAGE>
CORPORATE EXPRESS DELIVERY SYSTEMS - INTERMOUNTAIN, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - MID-ATLANTIC, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - MID-WEST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - NEW ENGLAND, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - NORTHEAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - SOUTHEAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - SOUTHWEST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - WEST COAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - INTERMOUNTAIN, INC.
CORPORATE EXPRESS DELIVERY LEASING - MID-ATLANTIC, INC.
CORPORATE EXPRESS DELIVERY LEASING - MID-WEST, INC.
CORPORATE EXPRESS DELIVERY LEASING - NEW ENGLAND, INC.
CORPORATE EXPRESS DELIVERY LEASING - NORTHEAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - SOUTHEAST, INC.
CORPORATE EXPRESS DELIVERY LEASING - SOUTHWEST, INC.
CORPORATE EXPRESS DELIVERY LEASING - WEST COAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - AIR DIVISION, INC.
AIR COURIER DISPATCH OF NEW JERSEY, INC.
MIDNITE EXPRESS INTERNATIONAL COURIER, INC.
TRICOR AMERICA, INC.
NEW DELAWARE DELIVERY, INC.
CORPORATE EXPRESS DELIVERY ADMINISTRATION, INC.
AMERICAN DELIVERY SYSTEM, INC.
CORPORATE EXPRESS DISTRIBUTION SERVICES, INC.
SUNBELT COURIER, INC.
Each By: ____________________________________
Name:
Title:
2
Exhibit 10.9
ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED TO OTHER INDEBTEDNESS
PURSUANT TO, AND TO THE EXTENT PROVIDED IN, AND IS OTHERWISE SUBJECT TO THE
TERMS OF, THE INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED SEPTEMBER 24,
1999 (THE "SUBORDINATION AGREEMENT"), AS THE SAME MAY BE AMENDED, MODIFIED OR
OTHERWISE SUPPLEMENTED FROM TIME TO TIME, BY AND AMONG UST DELIVERY SYSTEMS,
INC. AND UNITED SHIPPING & TECHNOLOGY, INC., AS CO-BORROWERS, EACH SUBSIDIARY OF
THE CO-BORROWERS LISTED ON EXHIBIT A THERETO, GENERAL ELECTRIC CAPITAL
CORPORATION, AS AGENT, AND THE HOLDERS FROM TIME TO TIME OF THE OBLIGATIONS
ARISING UNDER THE SUBORDINATED LOAN AGREEMENT REFERRED TO IN THE SUBORDINATION
AGREEMENT, INCLUDING, WITHOUT LIMITATION, THIS NOTE.
SENIOR SUBORDINATED NOTE
$5,000,000 September 24, 1999
Minneapolis, Minnesota
FOR VALUE RECEIVED, United Shipping & Technology, Inc., a Utah
corporation ("UST"), and UST Delivery Systems, Inc., a Delaware corporation
f/k/a Corporate Express Delivery Systems, Inc. ("CEDS", together with UST, the
"Debtors"), hereby jointly and severally promise to pay to the order of Bayview
Capital Partners LP, a Delaware limited partnership, or its assigns (the
"Holder"), the principal sum of Five Million Dollars ($5,000,000), together with
interest, in the manner provided herein. This Note was issued pursuant to a Note
and Warrant Purchase Agreement dated as of September 24, 1999 (the "Agreement")
between the Debtors and the Holder (or its predecessor in interest). This Note
and is subject to, and the Holder is entitled to, the benefits of the Agreement.
Except as to those terms otherwise defined in this Note, all capitalized terms
used in this Note have the meanings provided in the Agreement.
1. Repayment of Principal. All outstanding principal, if not
previously paid, will be due and payable on September 30, 2004 (the "Stated
Maturity Date").
2. Interest. Interest will accrue on all outstanding unpaid amounts
evidenced by this Note at an interest rate of twelve percent (12.0%) per annum;
provided that from and after the date of any Event of Default (as defined in the
Agreement) and until such Event of Default is remedied to the satisfaction of
the Holder all such amounts will bear interest at fourteen percent (14.0%) per
annum; and provided further, that in no event will the applicable interest rate
exceed the highest rate permitted by applicable law. All interest will be
computed on the basis of a 360-day year containing 12 months, counting the
actual number of days in each month, and will compound quarterly. Accrued
interest will be paid quarterly on the last day of each March, June, September,
and December, commencing on December 31, 1999 and continuing thereafter until
all principal amounts outstanding under this Note have been repaid, and on the
Stated Maturity Date.
<PAGE>
3. Payments of Principal and Interest. All payments with respect to
this Note will be made by wire transfer, in immediately available funds, to such
account as the Holder may specify in writing, without any presentation of this
Note. Each such payment will be applied first to the payment of accrued and
unpaid interest and then to principal. Whenever any payment to be made under
this Note is due on a Saturday, Sunday or holiday for banks under the laws of
the State of Minnesota, such payment may be made on the next succeeding bank
business day, and such extension of time will in such case be included in the
computation of the amount of interest due.
4. Subordination. This Note is subject to Intercreditor and
Subordination Agreement, dated September 24, 1999 (the "Subordination
Agreement"), as the same may be amended, modified or otherwise supplemented from
time to time, by and among UST Delivery Systems, Inc. and United Shipping &
Technology, Inc., as Co-Borrowers, each subsidiary of the Co-Borrowers listed on
Exhibit A thereto, General Electric Capital Corporation, as Agent, and the
holders from time to time of the obligations arising under the subordinated loan
agreement referred to in the Subordination Agreement.
5. Events of Default. Upon the occurrence of any Event of Default
(as defined in the Agreement), the Holder will have the rights provided in the
Agreement.
6. Optional Prepayments. The indebtedness evidenced by this Note may
be prepaid, in whole or in part, if the prepayment will not give rise (either of
itself or with the giving of notice or passage of time or both) to an Event of
Default under the Agreement or a default or event of default under any other
agreement to which any of the Debtors is a party or by which they are bound. Any
prepayment made prior to the Stated Maturity Date must be accompanied by payment
of a premium based on the amount of the prepayment, as follows:
Date of Prepayment Premium
------------------ -------
On or before September 24, 2000 5.0%
After September 24, 2000 and on or before September 24, 2001 4.0%
After September 24, 2001 and on or before September 24, 2002 3.0%
After September 24, 2002 and on or before September 24, 2003 2.0%
After September 24, 2003 and on or before September 24, 2004 1.0%
After September 24, 2004 None
7. Mandatory Prepayments. In the event either Debtor closes a
transaction consented to by the Holder involving a sale of all or substantially
all of such Debtor's assets or a merger, consolidation or recapitalization of
such Debtor, then all outstanding principal and
<PAGE>
accrued interest will become due and payable in cash at such closing. Any
prepayment made under this Section 7 must be accompanied by payment of a premium
determined in accordance with Section 6 above.
8. General.
8.1 The indebtedness evidenced by this Note is secured as provided
in the Security Agreements (as defined in the Agreement).
8.2 Payment of principal or interest on this Note may only be made
to or upon order of the registered Holder. This Note is transferrable only to
another accredited or institutional investor or to any general or limited
partner of the Holder, by surrender of the Note to the Debtors, duly endorsed or
accompanied by a written instrument of transfer executed by the registered
Holder. Upon surrender of this Note for transfer as provided above, the Debtors
will issue a new Note to, and register such new Note in the name of, the
transferee and such new Note must contain the same legend as provided in this
Note.
8.3 The Debtors hereby:
(a) waive diligence, presentment, demand for payment, notice of
dishonor, notice of non-payment, protest, notice of protest, and any and all
other demands in connection with the delivery, acceptance, performance, default
or enforcement of this Note;
(b) waive the benefit of any statute of limitations to the maximum
extent permitted by law with respect to any action to enforce this Note and any
other action related to this Note;
(c) agree that the Holder will have the right, without notice, to
grant any extension of time for payment of any indebtedness evidenced by this
Note or any other indulgence or forbearance whatsoever;
(d) agree that no failure on the part of the Holder to exercise any
power, right or privilege hereunder, or to insist upon prompt compliance with
the terms of this Note, will constitute a waiver of that power, right or
privilege; and
(e) agree that the acceptance at any time by the Holder of any past
due amounts will not be deemed to be a waiver of the requirement to make prompt
payment when due of any other amounts then or hereafter due and payable.
8.4 Upon delivery of an affidavit in a form reasonably satisfactory
to the Debtors from the Holder as to the loss, theft, destruction or mutilation
of this Note, and upon receipt of an indemnity reasonably satisfactory to the
Debtors from the Holder, or in the case of
<PAGE>
mutilation hereof, upon surrender of the mutilated Note, the Debtors will make
and deliver a new Note of like tenor in lieu of this Note.
8.5 This Note is governed in all respects by the internal laws of
the State of Minnesota without regard to the conflicts of laws principles of any
jurisdiction.
8.6 In the event that the Debtors fail to pay any amount due under
this Note, the Debtors shall pay all of the Holder's out-of-pocket collection
costs, including without limitation, reasonable attorneys' fees and legal costs,
whether or not any suit or enforcement proceeding is commenced.
8.7 AT THE OPTION OF THE HOLDER, THIS NOTE, THE AGREEMENT AND THE
ANCILLARY AGREEMENTS REFERRED TO IN THE AGREEMENT MAY BE ENFORCED IN ANY FEDERAL
COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY; AND THE DEBTORS
CONSENT TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVE ANY ARGUMENT
THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE DEBTORS COMMENCE
ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE, THE
AGREEMENT OR THE ANCILLARY AGREEMENTS, OR ALLEGING ANY BREACH OF THIS NOTE, THE
AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS, THE HOLDER AT ITS OPTION IS
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
DESCRIBED ABOVE, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
8.8 THE DEBTORS HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION BASED ON OR PERTAINING TO THIS NOTE, THE AGREEMENT OR ANY OF THE
ANCILLARY AGREEMENTS.
* * * * *
<PAGE>
IN WITNESS WHEREOF, each Debtor has caused this Note to be signed by
a duly authorized officer and dated as of the date first above written.
UNITED SHIPPING & TECHNOLOGY, INC.
By:_________________________________
Name:
Title:
UST DELIVERY SYSTEMS, INC.
By:________________________________
Name:
Title:
Exhibit 10.10
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (1) REGISTRATION IN COMPLIANCE WITH
SUCH ACT AND SUCH STATE LAWS OR (2) AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED.
ANY PAYMENT REQUIRED UNDER SECTIONS 9 OR 10 OF THIS WARRANT IS SUBORDINATED TO
OTHER INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED IN, AND IS OTHERWISE
SUBJECT TO THE TERMS OF, THE INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED
SEPTEMBER 24, 1999 (THE "SUBORDINATION AGREEMENT"), AS THE SAME MAY BE AMENDED,
MODIFIED OR OTHERWISE SUPPLEMENTED FROM TIME TO TIME, BY AND AMONG UST DELIVERY
SYSTEMS, INC. AND UNITED SHIPPING & TECHNOLOGY, INC., AS CO-BORROWERS, EACH
SUBSIDIARY OF THE CO-BORROWERS LISTED ON EXHIBIT A THERETO, GENERAL ELECTRIC
CAPITAL CORPORATION, AS AGENT, AND THE HOLDERS FROM TIME TO TIME OF THE
OBLIGATIONS ARISING UNDER THE SUBORDINATED LOAN AGREEMENT REFERRED TO IN THE
SUBORDINATION AGREEMENT, INCLUDING, WITHOUT LIMITATION, THIS WARRANT.
WARRANT
TO PURCHASE COMMON STOCK OF
UNITED SHIPPING & TECHNOLOGY, INC.
SEPTEMBER 24, 1999
United Shipping & Technology, Inc., a Utah corporation (the
"Company"), does hereby certify and agree that Bayview Capital Partners LP, a
Delaware limited partnership or its successors and assigns ("Bayview" or
"Holder") are hereby entitled to purchase from the Company 1,366,220 shares of
the Company's Common Stock (the "Exercise Quantity"), all upon the terms and
provisions and subject to adjustment as provided in the Note and Warrant
Purchase Agreement between the Company, Bayview and UST Delivery Services, Inc.,
dated the date hereof (the "Purchase Agreement") and this Warrant (the
"Warrant"). The exercise price of the Common Stock for which this Warrant is
exercisable shall be $3.3125 per share, subject to adjustment as provided below
(the "Exercise Price"). Capitalized terms used and not otherwise defined in this
Warrant shall have the meanings respectively assigned to them in the Purchase
Agreement.
This Warrant is subject to the following provisions, terms and
conditions:
1. Term of Warrant. The term of this Warrant commences as of the
date hereof and expires at 5:00 P.M., Minneapolis time, on September 24, 2009
(the "Expiration Date").
2. Exercise. This Warrant may be exercised by the record holder of
this Warrant at any time on or after the date hereof, and thereafter during the
term of this Warrant, in whole or in part from time to time, by (a) providing
written notice of exercise to the Company on or before the intended date of
exercise, (b) surrendering the Warrant (properly endorsed if required) at the
<PAGE>
principal office of the Company, and (c) paying an amount equal to the Exercise
Price multiplied by the number of shares of Common Stock being purchased. At the
option of the Holder, payment of the Exercise Price may be made either by (x)
check payable to the order of the Company, (y) surrender of stock certificates
then held representing, or deduction from the number of shares issuable upon
exercise of this Warrant, that number of shares which has an aggregate current
market price on the date of exercise equal to the aggregate Exercise Price for
all shares to be purchased pursuant to this Warrant, or (z) any combination of
the foregoing methods. Upon the proper exercise of this Warrant, the Company
will issue and deliver (or cause to be delivered) to the Holder, stock
certificates for that number of shares of Common Stock purchased. In the event
of a partial exercise of this Warrant, the Company will issue and deliver to the
Holder a new Warrant at the same time such stock certificates are delivered,
which new Warrant will entitle the Holder to purchase the balance of the shares
not purchased in that partial exercise and will otherwise be upon the same terms
and provisions as this Warrant. Notwithstanding anything to the contrary in this
Section 2, with respect to partial exercises of this Warrant, the Holder agrees
that such partial exercises will not be for less than 100,000 shares of Common
Stock; provided that such requirement will be adjusted in accordance with any
adjustments to the Exercise Quantity under this Warrant.
3. Issuance of Shares. The Company agrees that the shares of Common
Stock purchased hereby will and are deemed to be issued to the Holder as of the
close of business on the date on which this Warrant is surrendered and payment
is made for such shares as provided in Section 2 above. Certificates for the
shares of stock so purchased will be delivered to the Holder within a reasonable
time, not exceeding thirty (30) days after the rights represented by this
Warrant have been exercised, and, unless this Warrant has expired, a new Warrant
representing the number of shares, if any, with respect to which this Warrant
has not been exercised will also be delivered to the Holder within such time.
4. Covenants of Company.
(a) The Company covenants and agrees that all shares which may be
issued upon the exercise of this Warrant will, upon such issuance, be duly
authorized and issued, fully paid, nonassessable and free from all taxes, liens
and charges with respect to the issue thereof, and without limiting the
generality of the foregoing, the Company covenants and agrees that it will from
time to time take all such action as may be required to assure that the par
value per share (if any) of the Common Stock is at all times equal to or less
than the then effective purchase price per share of the Common Stock issuable
pursuant to this Warrant. The Company further covenants and agrees that during
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized, and reserved for the purpose of
issue or transfer upon exercise of the subscription rights evidenced by this
Warrant, a sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant.
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<PAGE>
(b) The Company covenants and agrees that it will not declare, make
or pay any cash dividend or other cash distribution, with respect to the Common
Stock except that cash dividends will be permitted so long as such dividends are
not prohibited by any contractual obligation of the Company.
5. Anti-dilution Adjustments. The above provisions are subject to
the following:
(a) Upon any adjustment of the Exercise Price as provided in this
Section 5, the Exercise Quantity shall be adjusted such that at the Exercise
Price resulting from such adjustment, the new Exercise Quantity shall be
obtained by multiplying the former Exercise Quantity by a fraction (i) the
numerator of which shall be the Exercise Price in effect immediately prior to
such adjustment and (ii) the denominator of which shall be the Exercise Price
resulting from such adjustment. Further, the Company will give written notice of
each adjustment, by first class mail, postage prepaid, addressed to the Holder
at the address shown on the books of the Company, which notice will state the
Exercise Price and Exercise Quantity resulting from such adjustment and will set
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based.
(b) In case the Company at any time hereafter subdivides or combines
the outstanding shares of Common Stock or declares a dividend payable in shares
of Common Stock, the Exercise Price in effect immediately prior to the
subdivision, combination or record date for such dividend payable in Common
Stock will be proportionately increased (in the case of a combination) or
decreased (in the case of a subdivision or dividend payable in Common Stock),
and the Exercise Quantity will be adjusted in accordance with Section 5(a)
above.
(c) If the Company shall issue (or, pursuant to Section 5(c)(iii)
below, shall be deemed to have issued) any Common Stock other than Excluded
Stock (as defined below) for a consideration per share less than the Market
Value (as defined in Section 9(d) below) on the date the Company fixes the
purchase price for such Common Stock (excluding stock dividends, subdivisions,
split-ups, combinations or recapitalizations which are addressed by Sections
5(b) or (e)), the Exercise Price in effect immediately after each such issuance
shall be reduced, concurrently with such issuance, to a price (calculated to the
nearest cent) determined by multiplying the applicable Exercise Price
immediately prior to such issuance by a fraction, the numerator of which shall
be the sum of the number of shares of Common Stock and Common Stock Equivalents
(as defined in Section 6 below) outstanding immediately prior to such issuance
plus the number of shares of Common Stock which the aggregate consideration
received by the Company for such issuance would purchase at such Market Value
per share, and the denominator of which shall be the number of shares of Common
Stock and Common Stock Equivalents outstanding immediately after such issuance.
For the purposes of any adjustment of the Exercise Price pursuant to
this Section 5(c), the following provisions shall be applicable:
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(i) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor after
deducting any discounts or commissions paid or incurred by the Company in
connection with the issuance and sale thereof.
(ii) In the case of the issuance of Common Stock for a consideration
in whole or in part other than cash, the consideration other than cash
shall be deemed to be the fair value thereof as determined in good faith
by the Board of Directors.
(iii) In the case of the issuance of (A) options to purchase or
rights to subscribe for Common Stock, (B) securities, by their terms,
convertible into or exchangeable for Common Stock, (C) options to purchase
or rights to subscribe for securities, by their terms, convertible into or
exchangeable for Common Stock, or (D) stock appreciation rights, phantom
stock or similar stock based compensation (the "Units") issuable to Wade
Wilson or Jenny Skinner pursuant to paragraph 3 of those certain letter
agreements dated September 23, 1999 or any definitive agreement related
thereto:
(1) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at
the time such options or rights were issued and for a consideration
equal to the consideration (determined in the manner provided in
subdivisions (i) and (ii) above of this Section 5(c)), if any,
received by the Company upon the issuance of such options or rights
plus the minimum purchase price provided in such options or rights
for the Common Stock covered thereby;
(2) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities or the Units, or upon the
exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or
exchange thereof, shall be deemed to have been issued at the time
such securities or Units were issued or such options or rights were
issued and for a consideration equal to the consideration received
by the Company for any such securities and related options or rights
(excluding any cash received on account of accrued interest or
accrued dividends), plus the additional minimum consideration, if
any, to be received by the Company upon the conversion or exchange
of such securities or the exercise of any related options or rights
(the consideration in each case to be determined in the manner
provided in subdivisions (i) and (ii) above of this Section 5(c));
(3) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options or rights or
conversion of or exchange for such convertible or exchangeable
securities, or on any change in the minimum purchase
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price of such options, rights or securities, other than a change
resulting from the antidilution provisions of such options, rights
or securities, the Exercise Price shall forthwith be readjusted to
such Exercise Price as would have been obtained had the adjustment
made upon (a) the issuance of such options, rights or securities not
exercised, converted or exchanged prior to such change or (b) the
options or rights related to such securities not converted or
exchanged prior to such change, as the case may be, been made upon
the basis of such change;
(4) other than any expiration or termination of the Units, on
the expiration of any such options or rights, the termination of any
such rights to convert or exchange or the expiration of any options
or rights related to such convertible or exchangeable securities,
the Exercise Price shall forthwith be readjusted to such Exercise
Price as would have been obtained had the adjustment made upon the
issuance of such options, rights, convertible or exchangeable
securities or options or rights related to such convertible or
exchangeable securities, as the case may be, been made upon the
basis of the issuance of only the number of shares of Common Stock
actually issued upon the exercise of such options or rights, upon
the conversion or exchange of such convertible or exchangeable
securities or upon the exercise of the options or rights related to
such convertible or exchangeable securities, as the case may be; and
(5) for purposes of the issuance of the Units under Section
5(c)(iii), the Market Value on the date of issuance shall be deemed
to be $3.3125 per share and the consideration received, and to be
received upon any conversion or exchange of the Units, by the
Company shall be deemed to be zero.
(iv) "Excluded Stock" shall mean (A) all shares of Common Stock
issued upon the exercise or conversion of currently issued and outstanding
Common Stock Equivalents in accordance with their terms, or (B) all shares
of Common Stock or Common Stock Equivalents issued pursuant to the
Company's 1995 Stock Option Plan or 1996 Director Stock Option Plan at a
price not less than the Fair Market Value (as such term is defined in such
plans as in effect on the date hereof) at the date of grant; provided,
however, the Units shall not be Excluded Stock.
(d) No fractional shares of Common Stock are to be issued upon the
exercise of the Warrant, but the Company shall pay a cash adjustment in respect
of any fraction of a share which would otherwise be issuable in an amount equal
to the same fraction of the market price per share of Common Stock on the day of
exercise as determined in good faith by the Company.
(e) In the event that any capital reorganization or reclassification
of the capital stock of the Company, or the consolidation or merger of the
Company with another corporation, or the sale of all or substantially all of the
Company's assets to another corporation is effected in such a way that the
Company's common stockholders will be entitled to receive stock, securities
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or assets with respect to or in exchange for their Common Stock (an "Exchange
Event"), then, from and after such Exchange Event, the Warrant will be
exercisable, upon the terms and conditions specified in this Warrant, for an
amount of such stock, securities or assets to which a holder of the number of
shares of Common Stock purchaseable upon exercise of the Warrant at the time of
such Exchange Event would have been entitled to receive upon such Exchange
Event. Appropriate provisions will be made with respect to the rights and
interests of the Holder to ensure that the provisions of this Warrant (including
without limitation the provisions to adjust the Exercise Price and the number of
shares purchasable upon the exercise of this Warrant) will be applicable, as
nearly as may be, in relation to any such stock, securities or assets
deliverable upon the exercise of this Warrant after an Exchange Event. The
Company will not effect any Exchange Event unless, prior to the consummation
thereof, the successor or purchasing corporation (if other than the Company)
with respect to such Exchange Event, assumes by written instrument executed and
delivered to the Holder at the address of such Holder as shown on the books of
the Company, the obligation to deliver to such Holder such stock, securities or
assets as, in accordance with the foregoing provisions, such Holder may be
entitled to purchase.
6. Preemptive Rights. In the event that at any time after the date
hereof the Company proposes to issue Common Stock or Common Stock Equivalents
(as defined below), the Company will give written notice to the Holders of this
Warrant and any Common Stock issued upon exercise of this Warrant, describing
such proposal at least thirty (30) days in advance of such issuance. Each such
Holder will then have the right, exercisable by written notice given to the
Company no later than twenty (20) days after receipt of the Company's notice, to
purchase its pro rata share (assuming the conversion of all Common Stock
Equivalents to Common Stock except for options issued pursuant to the Company's
1995 Stock Option Plan or 1996 Director Stock Option Plan) of the Common Stock
or Common Stock Equivalents proposed to be issued by the Company on the same
price and terms as are proposed by the Company. "Common Stock Equivalents" means
all options, warrants (including this Warrant), convertible securities,
securities, and other rights to acquire from the Company shares of Common Stock
(without regard to whether such options, warrants, convertible securities,
securities and other rights are then exchangeable, exercisable or convertible in
full, in part or at all). The rights granted under this Section 6 do not apply
to issuances of Common Stock or Common Stock Equivalents (a) in a public
offering pursuant to a registration statement under the Securities Act, or (b)
pursuant to the Company's 1995 Stock Option Plan or 1996 Director Stock Option
Plan in an aggregate amount not exceeding 1,125,250 shares, or (c) the exercise
or conversion of currently issued and outstanding Common Stock Equivalents in
accordance with their terms.
7. No Voting Rights. This Warrant, as such, does not entitle the
Holder to any voting rights or other rights as a stockholder of the Company.
8. Transfer of Warrant or Shares. The Holder acknowledges that it
has obtained this Warrant for investment and not with the intention of making
any resale or distribution. The Holder further acknowledges (a) that neither
this Warrant nor any of the shares of Common
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Stock obtainable under it have been registered under the Securities Act of 1933
(the "Securities Act") or any state securities statutes, and (b) that neither
this Warrant nor any shares of Common Stock obtainable under it may be
transferred without such registration or an opinion of legal counsel reasonably
acceptable to the Company that such transfer may be made without registration.
Subject to the foregoing, the Company agrees that this Warrant is transferable
in whole or in part.
9. Put Rights of the Holders.
(a) Put of the Warrant Stock. At any time and from time to time
after the earlier to occur of (i) the fifth anniversary of the date hereof, (ii)
any Sale Transaction (as defined below), (iii) any Event of Default under the
Purchase Agreement other than an Event of Default under Section 9.01(c) of the
Purchase Agreement, or (iv) any Event of Default under Section 9.01(c) of the
Purchase Agreement that results in the acceleration of the indebtedness
evidenced by the Note, any Holder of the Warrant or any Holder of shares of
Common Stock issued pursuant to this Warrant (the "Warrant Stock"), will have
the right to sell all or any portion of its Warrant or Warrant Stock to the
Company, and the Company will be obligated to purchase such Warrant or Warrant
Stock, subject to the following terms and conditions (the "Put Right"):
(i) The Holder will give the Company thirty (30) days written
notice, in the form of Exhibit A (the "Notice of Put"), of the Holder's
intention to exercise the Put Right. The date of the Notice of Put, or
such later date as specified in the Notice of Put, is the "Put Date." The
Company agrees to give all Holders of the Warrant or Warrant Stock not
less than sixty (60) days prior written notice of any proposed Sale
Transaction.
(ii) Within twenty (20) business days after the Put Date, the
Company will give all other Holders of the Warrant or Warrant Stock, if
any, written notice of the Company's receipt of a Notice of Put. This
notice must specify (A) the amount of the Warrant or Warrant Stock covered
by the Notice of Put, (B) the Put Repurchase Date (as defined below), (C)
the Put Exercise Price (as defined below), and (D) the location to which
the Warrant or Warrant Stock must be presented and surrendered for
repurchase. Such other Holders of Warrant or Warrant Stock will then have
the right, to be exercised by providing the Company a written Notice of
Put within five (5) business days after receipt of the Company's notice,
to require the Company to repurchase all or any portion of such Holders'
Warrant or Warrant Stock on the Put Repurchase Date and on the same terms
as the Holder who first gave the Notice of Put under Section 9(a)(i).
(iii) The Company will fix a date for the repurchase of the Warrant
Stock, which date must be between ninety (90) and one hundred (100) days
after the Put Date (the "Put Repurchase Date"), or such shorter period as
may be reasonably practicable under the circumstances.
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(iv) On the Put Repurchase Date, the Company will deliver payment,
in same-day funds, to each Holder issuing a Notice of Put in an amount
equal to the aggregate Put Exercise Price (as defined below) applicable to
such Holder's Warrant or Warrant Stock to be repurchased.
(b) Remaining Warrants and Warrant Stock. In the event of a partial
exercise of a Put Right, the remaining Warrants and Warrant Stock will continue
to enjoy the same benefits provided herein as they enjoyed immediately preceding
such exercise of the Put Right.
(c) Survival. The obligations of the Company under this Section 9
will survive the exercise of the Warrant. The Put Right will terminate with
respect to the Warrant and any Warrant Stock upon the Expiration Date. In
addition, upon the transfer of any Warrant Stock by Bayview, other than
transfers to any general or limited partner or other affiliate of Bayview, the
Put Right will terminate with respect to such transferred Warrant Stock.
(d) Definitions. The following terms have the meanings indicated
below for purposes of Sections 9 and 10:
(i) "Sale Transaction" means a single transaction or series of
transactions resulting in (A) a sale, exchange, issuance, or other
disposition of fifty percent (50%) or more of the ownership of the Company
by or through the Company and/or its shareholders (other than a
recapitalization of the Company resulting in no change in ownership), (B)
any sale, transfer, or other disposition by the Company of assets with a
fair market value equal to or greater than fifty percent (50%) of the
aggregate fair market value of all assets of the Company immediately prior
to such sale, transfer, or other disposition (other than sales of
inventory in the ordinary course of business); provided that, for purposes
of this definition, such transaction or series of transactions include,
without limitation, a merger, consolidation, joint venture, tender offer,
exchange offer, equity investment in the Company, or other similar
transaction.
(ii) "Put Exercise Price" means (A) the Fair Value of the Common
Stock determined as of the Put Date, divided by (B) the number of shares
of Common Stock outstanding as of the Put Date, provided, however, that
with respect to the Warrant, prior to its exercise, the Put Exercise Price
will be reduced by the Exercise Price in effect on the Put Date.
(iii) "Fair Value" means the fair value of the Common Stock as
mutually agreed to by the Holder and the Company, or, if they do not agree
to such value within twenty (20) days of the Put Date, the greater of (A)
the Market Value, or (B) the Adjusted EBITDA Value.
(iv) "Market Value" means the fair value of the Common Stock
determined by an independent professional appraiser mutually selected by
the Holder and the Company. In the event that the Holder and the Company
are unable to mutually select an
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appraiser within twenty (20) days of the Put Date, then the Holder and the
Company will each select an independent professional appraiser who will
jointly select a third independent professional appraiser to conduct the
appraisal. Each such appraiser must be selected within thirty (30) days of
the Put Date, and, if either the Holder or the Company fails to select an
appraiser within such time period, then the appraiser selected by the
other party will determine the Market Value. In no event will any
appraiser apply any discounts for illiquidity, lack of control or other
similar factors in determining the Market Value. All costs associated with
the appraisal will be borne equally by the Company and the Holder.
Notwithstanding the foregoing, if the Company's Common Stock is listed and
trading on a national securities exchange or on the Nasdaq National Market
System, Market Value means, on a per share basis, the average closing sale
price per share of the Common Stock for the twenty (20) trading days
immediately preceding any date of determination.
(v) "Adjusted EBITDA Value" means the sum of (A) the EBITDA of the
Company for the twelve months preceding the Put Date times 6.0, plus (B)
the cash and cash equivalents of the Company as of the Put Date, minus (C)
the indebtedness for borrowed money of the Company as of the Put Date, all
as determined in accordance with GAAP.
(vi) "EBITDA" means, for any specified period, the net income of the
Company plus (A) deductions for interest expense, income taxes,
depreciation and amortization, minus (B) extraordinary income and gains
(losses) on sales of assets, all as determined in accordance with GAAP.
10. Call Rights of the Company.
(a) Call Right. At any time and from time to time after the sixth
anniversary of the date hereof, the Company will have the right, exercisable
upon not less than thirty (30) days prior written notice to the Holder, to
repurchase the Warrant or the Warrant Stock for cash at a per share purchase
price equal to the Put Exercise Price as determined under Section 9 above (the
"Call Right"). The Call Right will terminate at the same time and to the extent
of any termination of the Put Right under Section 9(c) above.
(b) Sale Transaction Subsequent to Call. In the event that a Sale
Transaction occurs, or an agreement or plan to effect a Sale Transaction is
entered into, within six (6) months of the date on which the Warrant or Warrant
Stock are repurchased pursuant to the Call Right, the Company agrees to pay the
Holder the excess, if any, of (i) the amount the Holder would have received if
the Holder's Warrant or Warrant Stock remained outstanding through the date of
the Sale Transaction less (ii) the amount actually received by the Holder in
connection with the purchase of the Holder's Warrant or Warrant Stock pursuant
to the Call Right.
11. Registration Rights.
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(a) Incidental Registration. Each time the Company proposes to file
any registration statement under the Securities Act in connection with the
proposed offer and sale of Common Stock (other than a registration statement on
a form that does not permit the inclusion of shares by its security holders) (a
"Registration Statement"), it will notify all the Holders of this Warrant or any
Warrant Stock at least thirty (30) days prior to such filing and will include in
the Registration Statement (to the extent permitted by applicable regulation),
all or any portion of the Warrant Stock to the extent requested by any Holder.
Notwithstanding the foregoing, the number of shares of Warrant Stock proposed to
be registered on behalf of the Holders will be reduced pro rata with any other
selling shareholder (other than the Company and CEX Holdings, Inc.) upon the
good faith request of the managing underwriter of such offering. If the
Registration Statement has not become effective within six (6) months following
the date notice is given to the Holders, the Company must again notify the
Holders in the manner provided above.
(b) Demand Registration. The Holders of fifty percent (50%) or more
of the Warrant Stock purchased or purchasable upon exercise of the Warrant
(excluding any Warrant Stock that has previously been sold pursuant to a
Registration Statement) may request the registration of the Warrant Stock. Upon
receipt of such request, the Company will mail (by certified or registered mail,
return receipt requested) to each Holder of this Warrant or any Warrant Stock,
at their last known post office address, written notice of such request, and
each Holder will have twenty (20) days from the date of deposit of such notice
in the U.S. Mail to notify the Company in writing whether such Holder wishes to
include their Warrant Stock in such registration. The Company will promptly use
its best efforts to register under the Securities Act all Warrant Stock which
the Holders request in writing to be registered, and in a manner corresponding
to the methods of distribution described in such Holders' request. The Holders
may exercise the demand registration rights described in this Section 11(b) only
twice. In addition, the Holders may only exercise the demand registration rights
described in this Section 11(b) if the Company is entitled to use Form S-3 (or
any successor form to Form S-3) to register the Warrant Stock unless the Company
fails to meet any requirement for the use of Form S-3 as a result of any act or
omission that is reasonably within the control of the Company.
(c) Expenses. All expenses of any registrations referred to in this
Section 11, except the fees of legal counsel to such Holders and any
underwriting commissions or discounts, and transfer taxes applicable to the
Warrant Stock, will be borne by the Company.
(d) Miscellaneous. The Company will furnish to each Holder for whom
a Registration Statement has been filed a reasonable number of copies of any
prospectus included in such filing and will amend or supplement the same as
required during the period of required use thereof. The Company will maintain
the effectiveness of any Registration Statement filed by the Company, whether or
not at the request of the Holders, until all the Warrant Stock registered under
such Registration Statement are sold pursuant thereto or six (6) calendar
months, whichever is shorter. In the case of the filing of any Registration
Statement, and to the extent
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permissible under the Act and controlling precedent thereunder, the Company and
the Holders of Warrant Stock covered by such Registration Statement will provide
cross indemnification agreements to each other in customary scope covering the
accuracy and completeness of the information furnished by each. Holders of
Warrant Stock being so registered agree to cooperate with the Company in the
preparation and filing of any such Registration Statement, and in the furnishing
of information concerning the Holder for inclusion therein, or in any efforts by
the Company to establish that the proposed sale is exempt under the Act as to
any proposed distribution.
12. Governing Law. This Warrant will be construed and enforced in
accordance with the substantive laws of the State of Minnesota without giving
effect to its conflict of laws principles.
13. Consent to Jurisdiction; Jury Waiver. AT THE OPTION OF THE
HOLDER, THIS WARRANT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN HENNEPIN COUNTY; AND THE COMPANY CONSENTS TO THE JURISDICTION
AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS
NOT CONVENIENT. IN THE EVENT THE COMPANY COMMENCES ANY ACTION IN ANOTHER
JURISDICTION OR VENUE ARISING OUT OF OR RELATING TO THIS WARRANT, THE HOLDER, AT
ITS OPTION, IS ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS
AND VENUES DESCRIBED ABOVE, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER
APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE. THE COMPANY
HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION BASED ON OR PERTAINING
TO THIS WARRANT.
* * * * *
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer and dated as of the date first above written.
UNITED SHIPPING & TECHNOLOGY, INC.
By: ___________________________________
Name:
Title:
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Exhibit A
NOTICE OF PUT
United Shipping & Technology, Inc.
Attention: President
9850 51st Avenue North, Suite 110
Plymouth, MN 55442
This Notice of Put is given pursuant to Section 9(a) of the Warrant
dated as of ________ ___, 1999 (the "Warrant") issued to Bayview Capital
Partners LP ("Bayview"). Unless otherwise defined herein, terms used herein
shall have the meanings assigned to them in the Warrant.
The undersigned Holder of the Warrant or Warrant Stock hereby elects
to exercise its right to put its Warrant to the extent of __________ shares of
the current Exercise Quantity and/or to the extent of _________ shares of
Warrant Stock as set forth below:
1. The total Put Exercise Price applicable to all of
Holder's Warrant or Warrant Stock is $______________,
which has been calculated as set forth on the attached
schedule.
2. The amount to be paid to the Holder for the Warrant and
Warrant Stock covered by this Notice of Put is
$__________ (the "Put Payment").
3. The Warrant and Warrant Stock covered by this Notice of
Put is enclosed herewith.
4. The Put Date with respect to the Warrant and Warrant
Stock covered by this Notice of Put is ________________.
Please deposit the amount of the Put Payment to the account of the
Holder at _________________________, Account No. ______________ by no sooner
than ninety (90) and no later than one hundred (100) calendar days from the Put
Date.
To the extent this put is exercised with respect to less than all of
the Warrant, the undersigned Holder requests that a new Warrant of like tenor
(exercisable for the balance of the shares of Common Stock underlying this
Warrant) be issued and delivered to the undersigned Holder at the address on the
warrant register of the Company.
Dated:___________________ __________________________________________
(Name of Registered Holder - Please Print)
<PAGE>
By__________________________________
(Signature of Registered Holder or
of Duly Authorized Signatory)
Title________________________________
Exhibit 10.11
INTERCREDITOR AND SUBORDINATION AGREEMENT
INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of September 24,
1999, by and among BAYVIEW CAPITAL PARTNERS LP ("Subordinated Lender;
collectively, together with any other holders from time to time of the
Subordinated Obligations, the "Subordinated Lenders"), UST DELIVERY SYSTEMS,
INC., a Delaware corporation formerly known as Corporate Express Delivery
Systems, Inc., UNITED SHIPPING & TECHNOLOGY, INC., a Utah corporation
(collectively, together with their successors and assigns, the "Borrower"), each
Subsidiary of Borrower listed on Exhibit A hereto (each, together with its
successors and assigns, a "Subsidiary"), and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (together with its successors and assigns,
the "Agent"), as agent for itself and the other Lenders (as defined in the
Senior Loan Agreement (defined below; the Agent and the Lenders are sometimes
collectively referred to herein as the "Senior Lenders"). Borrower and the
Subsidiaries are collectively referred to herein as the "Companies" and
individually as a "Company."
The parties hereto hereby agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, terms defined in the Senior
Loan Agreement and used herein shall have the meanings given to them in the
Senior Loan Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Intercreditor and Subordination Agreement, as the
same may be amended, supplemented or otherwise modified from time to time.
"Blockage Notice": a written notice from Agent to the Subordinated
Lenders that (a) a Non-Payment Event of Default has occurred and is
continuing or (b) an Event of Default would occur if a scheduled interest
or principal payment were made under the Subordinated Notes in accordance
with the terms thereof.
"Blockage Period": any period commencing on the date a Blockage
Notice is given and ending on the earlier to occur of: (a) the date when
(1) the Event of Default that was the basis for such notice has been cured
or waived, notice of which shall be promptly forwarded to Subordinated
Lenders, or (2) the conditions shall have ceased to exist which would
cause an Event of Default to occur if a scheduled interest or principal
payment were made under the Subordinated Notes in accordance with the
terms thereof, notice of which shall be promptly forwarded to Subordinated
Lenders; and (b) 180 days after the date such Blockage Notice is given.
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"Collateral": the collective reference to any and all property from
time to time subject to security interests to secure payment or
performance of the Senior Obligations or the Subordinated Obligations.
"Insolvency Event": (a) Any Company commencing any case, proceeding
or other action (1) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it
or its debts, or (2) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or any Company making a general assignment
for the benefit of its creditors; or (b) there being commenced against any
Company any case, proceeding or other action of a nature referred to in
clause (a) above which (1) results in the entry of an order for relief or
any such adjudication or appointment or (2) remains undismissed,
undischarged or unbonded for a period of 60 days; or (c) there being
commenced against any Company any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (d) any Company taking any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (a), (b) or (c) above.
"Non-Payment Event of Default": any event (other than a Payment
Event of Default) the occurrence of which entitles Agent to accelerate the
maturity of any of the Senior Obligations.
"Payment Event of Default": any default in the payment of the Senior
Obligations (whether upon maturity, mandatory prepayment, acceleration or
otherwise) beyond any applicable grace period with respect thereto.
"Senior Guaranty": collectively, the Master Guaranty of even date
herewith executed by the Subsidiaries and the Guaranty of even date
herewith executed by United Shipping & Technology, Inc. ("Parent").
"Senior Loan Agreement": the Credit Agreement dated as of the date
hereof, among the Borrower, Agent and the Lenders from time to time party
thereto, the other Credit Parties signatory thereto, as the same may be
amended, modified or supplemented from time to time, including, without
limitation, amendments, modifications, supplements and restatements
thereof giving effect to increases, renewals, extensions, refundings,
deferrals,
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restructurings, replacements or refinancings of, or additions to, the
arrangements provided in such Loan Agreement (whether provided by the
original Agent and Lenders or a successor Agent and other Lenders).
"Senior Loans": the loans made by Agent and the other Lenders to the
Borrower pursuant to the Senior Loan Agreement.
"Senior Loan Documents": the collective reference to the Senior Loan
Agreement, the Senior Notes, the Senior Guaranty, the Senior Security
Documents and all other documents that from time to time evidence the
Senior Obligations or secure payment or performance thereof.
"Senior Notes": the promissory notes of the Borrower outstanding
from time to time under the Senior Loan Agreement.
"Senior Obligations": the collective reference to the unpaid
principal of and interest on the Senior Notes and all other obligations
and liabilities of the Companies to Agent and the other Lenders of
whatever kind or nature (including, without limitation, interest accruing
at the then applicable rate provided in the Senior Loan Agreement after
the maturity of the Senior Loans and interest accruing at the then
applicable rate provided in the Senior Loan Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, whether arising under,
out of, or in connection with, the Senior Loan Agreement, the Senior
Notes, the Senior Guaranty, this Agreement, the other Senior Loan
Documents or any other document made, delivered or given by any Company,
in each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to Agent and/or
the other Lenders that are required to be paid by any Company pursuant to
the terms of the Senior Loan Agreement or this Agreement or any other
Senior Loan Document); provided, that the term "Senior Obligations" shall
not include the principal amount of any obligations of Companies to Agent
and the other Lenders in excess of $60,500,000 (except for any portion of
such excess attributable to the capitalization of any interest in respect
of the Senior Loans or the amounts advanced by Agent or Lenders for the
account of Borrower to satisfy any Company's obligations to Agent and
Lenders for interest, fees and charges pursuant to the Senior Loan
Documents or to preserve and protect the Collateral).
"Senior Security Documents": the collective reference to all
documents and instruments, now existing or hereafter arising, which create
or purport to
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create a security interest in property to secure payment or performance of
the Senior Obligations.
"Subordinated Event of Default": an Event of Default under the
Subordinated Loan Agreement.
"Subordinated Guaranty": each of those Guaranties executed by the
Subsidiaries in favor Subordinated Lenders.
"Subordinated Loan Agreement": the Note and Warrant Purchase
Agreement dated as of the date hereof among the Borrower, the Subordinated
Lenders, Parent and the other "Loan Parties" signatory thereto, as the
same may be amended, modified or otherwise supplemented from time to time.
"Subordinated Loan Documents: the collective reference to the
Subordinated Loan Agreement, the Subordinated Notes, the Subordinated
Guaranty, the Subordinated Security Documents, the Subordinated Warrant
and any other documents or instruments that from time to time evidence the
Subordinated Obligations or secure or support payment or performance
thereof.
"Subordinated Loans": the loans made by the Subordinated Lenders
pursuant to the Subordinated Loan Agreement.
"Subordinated Notes": the promissory notes of the Borrower
outstanding from time to time pursuant to the Subordinated Loan Agreement.
"Subordinated Obligations": the collective reference to the unpaid
principal and interest on the Subordinated Notes and all other obligations
and liabilities of the Companies and Parent to the Subordinated Lenders
(including, without limitation, interest accruing at the then applicable
rate provided in the Subordinated Notes after the maturity of the
Subordinated Loans and interest accruing at the then applicable rate
provided in the Subordinated Notes after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, which may arise under, out of, or
in connection with, the Subordinated Loan Agreement, the Subordinated
Notes, this Agreement, or any other Subordinated Loan Document, in each
case whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Subordinated
Lenders that are required to be paid by any Company pursuant to the terms
of the Subordinated Loan Agreement or this Agreement or any other
Subordinated Loan Document).
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"Subordinated Security Documents": the collective reference to (a)
the documents listed on Schedule 1, as the same may be amended, modified
or otherwise supplemented from time to time with the prior written consent
of the Agent and (b) any other documents executed by any Company with the
prior written consent of the Agent that from time to time secure payment
or performance of the Subordinated Obligations.
"Subordinated Warrant": the Warrant issued to Subordinated Lender
dated the date hereof executed by Parent with respect to common stock of
Parent.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Subordination.
(a) Each of the Companies and each of the Subordinated Lenders
agrees, for itself and each future holder of the Subordinated Obligations, that
the Subordinated Obligations are expressly "subordinate and junior in right of
payment" (as that phrase is defined in paragraph 2(b)) to all Senior
Obligations.
(b) "Subordinate and junior in right of payment" means that except
as set forth in Section 4 below, (1) no part of the Subordinated Obligations
shall have any claim to the assets of any Company on a parity with or prior to
the claim of the Senior Obligations; and (2) unless and until the Senior
Obligations have been paid in full and the obligation of Agent and Lenders to
extend credit to Borrower under the Senior Loan Documents shall have been
irrevocably terminated, without the express prior written consent of Agent (A)
no Subordinated Lender will take, demand or receive from any Company, and no
Company will make, give or permit, directly or indirectly, by set-off,
redemption, purchase or in any other manner, any payment of (of whatever kind or
nature, whether in cash, property, securities or otherwise) or security for the
whole or any part of the Subordinated Obligations, including, without
limitation, any letter of credit or similar credit support facility to support
payment of the Subordinated Obligations; provided, however, that at any time,
except during a Blockage Period or when a Payment Event of Default has occurred
and is continuing, the Borrower may make, and the Subordinated Lenders may
receive, (i) after September 30, 2004, regularly scheduled payments on account
of principal, and (ii) regularly scheduled quarterly payments on account of
interest on the Subordinated Notes in accordance with the terms thereof, and (B)
no Subordinated Lender will accelerate for any reason the scheduled maturities
of any amount owing under the Subordinated Notes; provided, however, that upon
the occurrence of any event or proceeding contemplated under clause (a) of the
definition of
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Insolvency Event the Subordinated Lenders may accelerate the scheduled
maturities of the Subordinated Notes.
(c) Upon the termination of any Blockage Period or if any Payment
Event of Default has been cured or waived or shall have ceased to exist, the
Subordinated Lenders' right to receive payments as provided in clause 2(b)(2)(A)
shall be reinstated, and the Borrower may resume making such payments to the
Subordinated Lenders (including any payments that were deferred as a result
thereof).
(d) The expressions "prior payment in full," "payment in full,"
"paid in full" and any other similar terms or phrases when used herein with
respect to the Senior Obligations shall mean the payment in full, in immediately
available funds, of all of the Senior Obligations.
(e) There shall not be Blockage Periods in effect for more than 180
days in any 360 day period.
3. Additional Provisions Concerning Subordination.
(a) The Subordinated Lenders and the Companies agree that upon the
occurrence of any Insolvency Event:
(1) all Senior Obligations shall be paid in full before any payment
or distribution of whatever kind or nature is made with respect to the
Subordinated Obligations; and
(2) any payment or distribution of assets of any Company, whether in
cash, property or securities, to which any Subordinated Lender would be
entitled except for the provisions hereof, shall be paid or delivered by
such Company, or any receiver, trustee in bankruptcy, liquidating trustee,
disbursing agent or other Person making such payment or distribution,
directly to Agent, for the benefit of itself and Lenders, to the extent
necessary to pay in full all Senior Obligations, before any payment or
distribution of any kind or nature shall be made to any Subordinated
Lender.
(b) Upon the occurrence of any Insolvency Event:
(1) each Subordinated Lender irrevocably authorizes and empowers
Agent (A) to demand, sue for, collect and receive every payment or
distribution on account of the Subordinated Obligations payable or
deliverable in connection with such event or proceeding and give
acquittance therefor, and (B) in the event Subordinated Lenders fail to do
so in a timely manner, to file claims and proofs of claim in any statutory
or non-statutory proceeding, in its own name as Agent, or in the name of
the Subordinated Lenders or otherwise, as Agent may deem necessary for the
enforcement of the provisions of this Agreement; provided, however, that
the
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foregoing authorization and empowerment imposes no obligation on Agent to
take any such action;
(2) each Subordinated Lender shall take such action, duly and
promptly, as Agent may reasonably request from time to time (A) to collect
the Subordinated Obligations for the account of Agent and (B) to file
appropriate proofs of claim in respect of the Subordinated Obligations;
and
(3) each Subordinated Lender shall execute and deliver such powers
of attorney, assignments or proofs of claim or other instruments as Agent
may reasonably request to enable Agent to enforce any and all claims in
respect of the Subordinated Obligations and to collect and receive any and
all payments and distributions which may be payable or deliverable at any
time upon or in respect of the Subordinated Obligations.
(c) If any payment or distribution, whether consisting of money,
property or securities, shall be collected or received by any Subordinated
Lender in respect of the Subordinated Obligations, except payments permitted to
be made at the time of payment as provided in paragraph 2(b), such Subordinated
Lender forthwith shall deliver the same to Agent, for the benefit of itself and
Lenders, in the form received, duly indorsed to Agent, if required, to be
applied to the payment or prepayment of the Senior Obligations until the Senior
Obligations are paid in full. Until so delivered, such payment or distribution
shall be held in trust by such Subordinated Lender as the property of Agent,
segregated from other funds and property held by such Subordinated Lender.
(d) To the extent that the Agent receives any payments pursuant to
paragraphs 3(b)(1), (2) or (3) on account of the Subordinated Obligations or
from the Subordinated Lenders, and to the extent such payments on account of the
Subordinated Obligations or the payment made to the Subordinated Lenders
resulting in such payment to the Agent are subsequently avoided, invalidated,
determined to be fraudulent or preferential, set aside or otherwise avoided, and
required to be paid by Subordinated Lenders to a trustee, receiver, or any other
party under any bankruptcy law, state or federal law, common law or equitable
cause, and are in fact so paid by Subordinated Lenders, then Agent will
forthwith return to the Subordinated Lenders the amount so paid by the
Subordinated Lenders.
4. Rights in Collateral; Exercise of Rights Under Subordinated Loan
Documents.
(a) Notwithstanding anything to the contrary contained in the Senior
Loan Agreement, any Senior Security Document, any other Senior Loan Document or
any Subordinated Security Document or other Subordinated Loan Document and
irrespective of:
(1) the time, order or method of attachment or perfection of the
security interests created by any Senior Security Document or any
Subordinated Security Document,
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(2) the time or order of filing or recording of financing statements
or other documents filed or recorded to perfect security interests in any
Collateral,
(3) anything contained in any filing or agreement to which any
Senior Lender or any Subordinated Lender now or hereafter may be a party;
and
(4) the rules for determining perfection or priority under the
Uniform Commercial Code or any other law governing the relative priorities
of secured creditors,
any security interest in any Collateral pursuant to any Senior Security Document
has and shall have priority, to the extent of any unpaid Senior Obligations,
over any security interest in such Collateral pursuant to any Subordinated
Security Document.
(b) So long as the Senior Obligations have not been paid in full and
any Senior Security Document remains in effect, whether or not any Insolvency
Event has occurred,
(1) Subordinated Lenders will not (A) exercise or seek to exercise
any rights or exercise any remedies with respect to any Collateral or
under the Subordinated Loan Documents or (B) institute any action or
proceeding with respect to such rights or remedies, including, without
limitation, any action of foreclosure or (C) contest, protest or object to
any foreclosure proceeding, postpetition financing, use of cash collateral
or action brought by Senior Lenders or any other exercise by Senior
Lenders of any rights and remedies under any Senior Loan Documents;
provided, that Subordinated Lenders may ask, demand, sue and accelerate
the indebtedness evidenced by the Subordinated Note one hundred eighty
(180) days after written notice from Subordinated Lenders to Agent that a
Subordinated Event of Default exists, but Subordinated Lenders agree and
understand that: (a) Subordinated Lenders may not enforce or exercise any
rights with respect to any liens on and security interests in the
Collateral, except that subject to all of Senior Lenders' rights under
this Agreement (including, without limitation Senior Lenders' prior right
to all proceeds derived from the sale or other disposition of the
Collateral), in the event that Agent has instituted and is then
maintaining any proceeding or action to foreclose Agent's liens and
security interests, Subordinated Lenders may foreclose Subordinated
Lenders' liens and security interests in such proceeding initiated by
Agent so long as Subordinated Lenders do not in any event notify account
debtors of Borrower or interfere with or impede such action or proceeding
of Agent; (b) Senior Lenders shall have the right (but not the obligation)
during such one hundred eighty (180) day period to cure any Subordinated
Event of Default; and (c) until all of the Senior Obligations shall have
been paid in full, any payments proceeds resulting from the exercise of
any enforcement or collection action received by the Subordinated Lenders
or other holders of the Subordinated Obligations shall be subject to the
terms of this Agreement and shall be paid or delivered to Senior Lenders
as provided in this Agreement.
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(2) Senior Lenders shall have the exclusive right to enforce rights
and exercise remedies with respect to the Collateral and Senior Lenders
shall not be required to marshal any Collateral.
(3) No Subordinated Lender shall have a lien or security interest in
any Collateral other than as set forth in the Subordinated Loan Documents
as in effect on the date hereof.
(c) In exercising rights and remedies with respect to the
Collateral, Agent may enforce the provisions of the Senior Security Documents
and exercise remedies thereunder and under any other Senior Loan Documents, all
in such order and in such manner as it may determine in the exercise of its sole
business judgment. Such exercise and enforcement shall include, without
limitation, the rights to sell or otherwise dispose of Collateral, to incur
expenses in connection with such sale or disposition and to exercise all the
rights and remedies of a secured lender under the Uniform Commercial Code of any
applicable jurisdiction.
(d) When all Senior Obligations have been paid in full and Lenders'
obligations to extend credit under any Senior Loan Document have been
irrevocably terminated, Subordinated Lenders shall have the right to enforce the
provisions of the Senior Security Documents, to the extent subrogated to the
Senior Lenders' position, and to enforce the Subordinated Security Documents and
exercise remedies thereunder.
(e) Any money, property or securities realized upon the sale,
disposition or other realization by Senior Lenders upon all or any part of the
Collateral, shall be applied by Senior Lenders in the following order:
(1) First, to the payment in full of all costs and expenses
(including, without limitation, attorneys' fees and disbursements) paid or
incurred by Senior Lenders in connection with such realization on the
Collateral or the protection of their rights and interests therein;
(2) Second, to the payment in full of all Senior Obligations in such
order as Agent may elect in its sole discretion;
(3) Third, to the payment in full of all Subordinated Obligations
then due and which are secured by such Collateral; and
(4) Fourth, to pay to the Companies, or their representatives or as
a court of competent jurisdiction may direct, any surplus then remaining.
(f) Agent's rights with respect to the Collateral include the right
to release any or all of the Collateral from the Lien of any Senior Security
Document or, so long as any such sale is an arm's-length transaction, such sale
is conducted in a commercially reasonable manner, and upon providing concurrent
notice to Subordinated Lenders, Subordinated Security Document in connection
with the sale of such Collateral, notwithstanding that the
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net proceeds of any such sale may not be used to permanently prepay any Senior
Obligations or Subordinated Obligations; provided, that Agent's right to release
the Lien of any Subordinated Security Document shall not apply to any accounts
receivable arising after the consummation of any such sale (provided, further,
that this proviso shall not prohibit Agent from releasing any Lien of a
Subordinated Security Document at any time after such sale with respect to
accounts receivable in existence at the time of any future sale of Collateral by
Agent). If Agent shall reasonably determine, in connection with any arm's-length
sale of Collateral, that the release of the Lien of any Subordinated Security
Document on such Collateral in connection with such sale is necessary or
advisable, Subordinated Lenders shall execute such release documents and
instruments and shall take such further actions as Agent shall request.
Subordinated Lenders hereby irrevocably constitute and appoint Agent and any
officer of Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Subordinated Lenders and in the name of Subordinated Lenders or in
Agent's own name, from time to time in Agent's discretion, for the purpose of
carrying out the terms of this paragraph, to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
advisable to accomplish the purposes of this paragraph, including, without
limitation, any financing statements, endorsements, assignments or other
instruments of transfer or release. Subordinated Lenders hereby ratify all that
said attorneys shall lawfully do or reasonably cause to be done pursuant to the
power of attorney granted in this paragraph.
5. Subrogation. Subject to the payment in full (whether by the
Companies or the Subordinated Lenders) of the Senior Obligations, Subordinated
Lenders shall be subrogated to the rights of Senior Lenders to receive payments
or distributions of assets of the Companies in respect of the Senior Obligations
until the Senior Obligations shall be paid in full. For the purposes of such
subrogation, payments or distributions to Senior Lenders, of any money, property
or securities to which Subordinated Lenders would be entitled except for the
provisions of this Agreement shall be deemed, as between the Companies and their
creditors other than Senior Lenders and Subordinated Lenders, to be a payment by
the Companies to or on account of Subordinated Obligations, it being understood
that the provisions of this Agreement are, and are intended solely, for the
purpose of defining the relative rights of Subordinated Lenders, on the one
hand, and Senior Lenders, on the other hand.
6. Consent of Subordinated Lenders.
(a) Each Subordinated Lender consents that, without the necessity of
any reservation of rights against any Subordinated Lender, and without notice to
or further assent by any Subordinated Lender:
(1) any demand for payment of any Senior Obligations made by Agent
or any Lender may be rescinded in whole or in part by Agent or such
Lender, and any Senior Obligation may be continued, and the Senior
Obligations, or the liability of any Company or any guarantor or any other
party upon or for any part
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thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, or any obligation or liability of any Company
or any other party under the Senior Loan Agreement or any other agreement,
may, from time to time, in whole or in part, be renewed, extended,
modified, accelerated, compromised, waived, surrendered, or released by
Agent and Lenders; and
(2) the Senior Loan Agreement, the Senior Notes, the Senior Guaranty
and any other Senior Loan Document may be amended, modified, supplemented
or terminated, in whole or in part, as Agent and Lenders may deem
advisable from time to time, and any collateral security at any time held
by Agent and Lenders for the payment of any of the Senior Obligations may
be sold, exchanged, waived, surrendered or released,
in each case all without notice to or further assent by any Subordinated Lender,
which will remain bound under this Agreement, and all without impairing,
abridging, releasing or affecting the subordination provided for herein.
(b) Each Subordinated Lender waives any and all notice of the
creation, renewal, extension or accrual of any of the Senior Obligations and
notice of or proof of reliance by Agent and Lenders upon this Agreement. The
Senior Obligations, and any of them, shall be deemed conclusively to have been
created, contracted or incurred in reliance upon this Agreement, and all
dealings among the Companies, and Agent and Lenders shall be deemed to have been
consummated in reliance upon this Agreement. Each Subordinated Lender
acknowledges and agrees that Agent and Lenders have relied upon the
subordination provided for herein in entering into the Senior Loan Agreement and
in making funds available to the Borrower thereunder. Each Subordinated Lender
waives notice of or proof of reliance on this Agreement and protest, demand for
payment and notice of default.
7. Negative Covenants of the Subordinated Lenders. So long as any of
the Senior Obligations shall remain outstanding or the obligation of Agent or
any Lender to extend credit to Borrower remains in effect, no Subordinated
Lender shall, without the prior written consent of Agent:
(a) sell, assign, or otherwise transfer, in whole or in part, the
Subordinated Obligations or any interest therein to any other Person (a
"Transferee") or create, incur or suffer to exist any security interest, lien,
charge or other encumbrance whatsoever upon the Subordinated Obligations in
favor of any Transferee unless (1) such action is made expressly subject to this
Agreement and (2) the Transferee expressly acknowledges to Agent, by a writing
in form and substance satisfactory to Agent, the subordination provided for
herein and agrees to be bound by all of the terms hereof;
(b) permit any of the Subordinated Loan Documents to be amended,
modified or otherwise supplemented so as to modify the financial terms thereof
(including, without limitation, the amount of principal, rate of interest,
dividends, fees and prepayment premiums, if any), shorten the maturity thereof,
add or change any covenants in a manner
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materially more restrictive to any Company, or effect any other modification to
the Subordinated Loan Documents which would be materially adverse to Senior
Lender; or
(c) commence, or join with any creditors other than Agent in
commencing any case or proceeding referred to in the definition of Insolvency
Event;
8. Senior Obligations Unconditional. All rights and interests of
Agent and Lenders hereunder, and all agreements and obligations of the
Subordinated Lenders and the Companies hereunder, shall remain in full force and
effect irrespective of:
(a) any lack of validity or enforceability of any Senior Security
Documents or any other Senior Loan Documents;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Senior Obligations, or any amendment or waiver
or other modification, whether by course of conduct or otherwise, of the terms
of the Senior Loan Agreement or any other Senior Loan Document;
(c) any exchange, release or non-perfection of any security interest
in any Collateral, or any release, amendment, waiver or other modification,
whether in writing or by course of conduct or otherwise, of all or any of the
Senior Obligations or any guarantee thereof; or
(d) any other circumstances which otherwise might constitute a
defense available to, or a discharge of, any Company in respect of the Senior
Obligations, or of either any Subordinated Lender or any Company in respect of
this Agreement.
9. Representations and Warranties. Each Subordinated Lender
represents and warrants to Agent that:
(a) its Subordinated Notes (1) have been issued to it for good and
valuable consideration, (2) are owned by the such Subordinated Lender free and
clear of any security interests, liens, charges or encumbrances whatsoever
arising from, through or under such Subordinated Lender, other than the interest
of Agent under this Agreement, (3) are payable solely and exclusively to such
Subordinated Lender and to no other Person and are payable without deduction for
any defense, offset or counterclaim, and (4) constitute the only evidence of the
obligations evidenced thereby;
(b) such Subordinated Lender has the corporate power and authority
and the legal right to execute and deliver and to perform its obligations under
this Agreement and has taken all necessary corporate action to authorize its
execution, delivery and performance of this Agreement;
(c) this Agreement constitutes a legal, valid and binding obligation
of such Subordinated Lender;
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(d) the execution, delivery and performance of this Agreement will
not violate any provision of any Requirement of Law or Contractual Obligation of
such Subordinated Lender and will not result in the creation or imposition of
any Lien on any of the properties or revenues of such Subordinated Lender
pursuant to any Requirement of Law affecting or any Contractual Obligation of
such Subordinated Lender, except the interest of Agent under this Agreement;
(e) except for any required filings with the Small Business
Administration, no consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or Governmental Authority and no consent of any
other Person (including, without limitation, any stockholder or creditor of such
Subordinated Lender), is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement; and
(f) no Subordinated Lender has any liens or security interests in
any Collateral other than as set forth in the Subordinated Loan Documents as in
effect on the date hereof.
10. No Representation by Agent or Subordinated Lender.
(a) Neither Agent nor any Lender has made any representations or
warranties, express, or implied, nor does Agent or any Lender assume any
liability to any Subordinated Lender with respect to: (a) the financial or other
condition of obligors under any instruments of guarantee with respect to the
Senior Obligations, (b) the enforceability, validity, value or collectibility of
the Senior Obligations or the Subordinated Obligations, any collateral therefor,
or any guarantee or security which may have been granted in connection with any
of the Senior Obligations or the Subordinated Obligations or (c) any Company's
title or right to transfer any collateral or security.
(b) No Subordinated Lender has made any representations or
warranties, express, or implied, nor does any Subordinated Lender assume any
liability to any Senior Lender with respect to: (a) the financial or other
condition of obligors under any instruments of guarantee with respect to the
Subordinated Obligations, (b) the enforceability, validity, value or
collectibility of the Senior Obligations or the Subordinated Obligations, any
collateral therefor, or any guarantee or security which may have been granted in
connection with any of the Senior Obligations or the Subordinated Obligations or
(c) any Company's title or right to transfer any collateral or security.
11. Waiver of Claims. To the maximum extent permitted by law, each
Subordinated Lender waives any claim it might have against Agent and each Lender
with respect to, or arising out of, any action or failure to act or any error of
judgment, negligence, or mistake or oversight whatsoever on the part of Agent or
any Lender, or its directors, officers, employees or agents with respect to any
exercise of rights or remedies under the Senior Loan Documents or any
transaction relating to the Collateral. Neither Agent nor any Lender, nor any of
their directors, officers, employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay in doing
so or shall be
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under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Company or any Subordinated Lender or any other Person or to take
any other action whatsoever with regard to the Collateral or any part thereof.
12. Provisions Applicable After Bankruptcy: No Turnover.
(a) The provisions of this Agreement shall continue in full force
and effect notwithstanding the occurrence of any Insolvency Event.
(b) Subordinated Lenders agree that (A) if any Company desires to
use cash collateral under Section 363 of the Bankruptcy Code and Agent consents
to such use, Subordinated Lenders will also consent to such use without
asserting any objection of any kind (including an objection on the grounds of
failure to provide adequate protection for Subordinated Lenders' junior lien on
such Collateral), and (B) if any Company desires to obtain credit from any
Senior Lender under Section 364 of the Bankruptcy Code to be secured by the
Collateral, Subordinated Lenders will consent to such credit without asserting
any objection of any kind (including an objection on the grounds of failure to
provide adequate protection for Subordinated Lenders' junior lien on such
Collateral). Subordinated Lenders (both in their capacity as Subordinated
Lenders and in their capacities as parties which may be obligated to any Company
or any of a Company's Affiliates with respect to contracts which are part of
Agent's Collateral) agrees not to initiate or prosecute or encourage any other
Person to initiate or prosecute any claim, action or other proceeding (i)
challenging the enforceability of Agent's claim (ii) challenging the
enforceability of any liens or security interests in assets securing the Senior
Obligations or (iii) asserting any claims which any Company may hold with
respect to Senior Lenders.
13. Further Assurances. The Subordinated Lenders and the Companies,
at their own expense and at any time from time to time, upon the written request
of Agent will promptly and duly execute and deliver such further instruments and
documents and take such further actions as Agent reasonably may request for the
purposes of obtaining or preserving the full benefits of this Agreement and of
the rights and powers herein granted.
14. Expenses.
(a) The Companies will, jointly and severally, pay or reimburse
Agent and Subordinated Lenders, upon demand, for all its costs and expenses in
connection with the enforcement or preservation of any rights under this
Agreement, including, without limitation, fees and disbursements of counsel to
Agent and Subordinated Lenders.
(b) The Companies will, jointly and severally, pay, indemnify, and
hold Agent, each Lender and Subordinated Lenders harmless from and against any
and all other liabilities, obligations, losses, damages, penalties, actions
(whether sounding in contract, tort or on any other ground), judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of, or
in any other way arising out of or relating to this Agreement or any
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action taken or omitted to be taken by any Agent, any Lender or Subordinated
Lenders with respect to any of the foregoing.
15. Provisions Define Relative Rights. This Agreement is intended
solely for the purpose of defining the relative rights of Agent and Lenders on
the one hand and the Subordinated Lenders on the other, and no other Person
shall have any right, benefit or other interest under this Agreement.
16. Legend.
(a) Each Subordinated Lender and each Company will cause each of the
Subordinated Notes and the Subordinated Guaranty to bear upon its face the
following legend:
ALL INDEBTEDNESS EVIDENCED BY THIS NOTE [OR GUARANTY] IS
SUBORDINATED TO OTHER INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED
IN, AND IS OTHERWISE SUBJECT TO THE TERMS OF, THE INTERCREDITOR AND
SUBORDINATION AGREEMENT, DATED SEPTEMBER __, 1999 (THE "SUBORDINATION
AGREEMENT"), AS THE SAME MAY BE AMENDED, MODIFIED OR OTHERWISE
SUPPLEMENTED FROM TIME TO TIME, BY AND AMONG UST DELIVERY SYSTEMS, INC.,
AS BORROWER, EACH SUBSIDIARY OF BORROWER LISTED ON EXHIBIT A THERETO,
GENERAL ELECTRIC CAPITAL CORPORATION, AS AGENT, AND THE HOLDERS FROM TIME
TO TIME OF THE OBLIGATIONS ARISING UNDER THE SUBORDINATED LOAN AGREEMENT
REFERRED TO IN THE SUBORDINATION AGREEMENT, INCLUDING, WITHOUT LIMITATION,
THIS NOTE [OR GUARANTY].
(b) Each Subordinated Lender and each Company will cause each
Subordinated Security Document to include the following legend:
THIS AGREEMENT IS SUBJECT TO THE TERMS AND CONDITIONS OF THE
INTERCREDITOR AND SUBORDINATION AGREEMENT, DATED SEPTEMBER __, 1999 (THE
"SUBORDINATION AGREEMENT") AS THE SAME MAY BE AMENDED, MODIFIED OR
OTHERWISE SUPPLEMENTED FROM TIME TO TIME, BY AND AMONG UST DELIVERY
SYSTEMS, Inc., AS BORROWER, EACH SUBSIDIARY OF BORROWER LISTED ON EXHIBIT
A THERETO, GENERAL ELECTRIC CAPITAL CORPORATION, AS AGENT, AND THE HOLDERS
FROM TIME TO TIME OF THE OBLIGATIONS ARISING UNDER THE SUBORDINATED LOAN
AGREEMENT REFERRED TO IN THE SUBORDINATION AGREEMENT.
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<PAGE>
17. Powers Coupled With An Interest. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until the Senior Obligations are paid in full and the obligation of
Agent and Lenders to extend credit under the Senior Loan Documents is
irrevocably terminated.
18. Notices. All notices, requests and demands to or upon Agent or
any Company or any Subordinated Lender to be effective shall be in writing (or
by telex, fax or similar electronic transfer confirmed in writing) and shall be
deemed to have been duly given or made (1) when delivered by hand or (2) if
given by mail, when deposited in the mails by certified mail, return receipt
requested, or (3) if by telex, fax or similar electronic transfer, when sent and
receipt has been confirmed, addressed as follows:
If to Agent:
General Electric Capital Corporation
10 South LaSalle Street, Suite 2800
Chicago, Illinois 60603
Facsimile: 312-419-5957
Attention: Corporate Express Delivery Systems, Inc.
Account Manager
If to any Company:
______________________
______________________
______________________
Facsimile: __________
Attention: ____________________
If to any Subordinated Lender, at its address or transmission number for notices
set forth under its signature below.
Agent, any Company and any Subordinated Lender may change their
respective addresses and transmission numbers for notices by notice in the
manner provided in this Section.
19. Counterparts. This Agreement may be executed by one or more of
the parties on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the counterparts of this Agreement signed by all the parties shall be lodged
with Agent.
20. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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<PAGE>
21. Integration. This Agreement represents the agreement of Agent
and the Subordinated Lenders with respect to the subject matter hereof and there
are no promises or representations by Agent or any Subordinated Lender relative
to the subject matter hereof not reflected herein.
22. Amendments in Writing; No Waiver: Cumulative Remedies.
(a) None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by Agent, each Company and each Subordinated Lender; provided, that any
provision of this Agreement may be waived by Agent in a letter or agreement
executed by Agent or by telex or facsimile transmission from Agent.
(b) No failure to exercise, nor any delay in exercising, on the part
of Agent, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
23. Section Headings. The section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
24. Successors and Assigns.
(a) This Agreement shall be binding upon the successors, heirs,
administrators, executors and assigns of the Companies, the Subordinated Lenders
and Agent and shall inure to the benefit of Agent and Subordinated Lenders and
their successors and assigns.
(b) Upon a successor Agent becoming Agent under the Senior Loan
Agreement, such successor Agent automatically shall become Agent hereunder with
all the rights and powers of Agent hereunder without the need for any further
action on the part of any party.
25. Invalidated Payments. To the extent that Agent or any Lender
receives payments on, or proceeds of Collateral for, the Senior Obligations
which are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to any Company, a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law, or
equitable cause, then to the extent of such payment or proceeds received, the
Senior Obligations, or part thereof, intended to be satisfied shall be revived
and continue in full force and effect as if such payments or proceeds had not
been received by Agent.
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<PAGE>
26. Specific Performance. Agent is hereby authorized to demand
specific performance of this Agreement at any time when any Subordinated Lender
shall have failed to comply with any of the provisions of this Agreement
applicable to such Subordinated Lender, whether or not each Company shall have
complied with any of the provisions hereof applicable to such Company, and the
Subordinated Lenders hereby irrevocably waive any defense based on the adequacy
of a remedy at law which might be asserted as a bar to such remedy of specific
performance.
27. GOVERNING LAW: CONSENT TO JURISDICTION AND VENUE. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT
AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF Illinois APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. EACH OF THE COMPANIES, THE SUBORDINATED LENDERS AND
AGENT HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN
Illinois SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES AMONG THE COMPANIES, THE SUBORDINATED LENDERS AND AGENT PERTAINING TO
THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE SENIOR LOAN DOCUMENTS, PROVIDED, THAT THE PARTIES HERETO ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF Illinois AND, PROVIDED, FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL
BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE SENIOR OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF AGENT. EACH OF THE COMPANIES AND THE SUBORDINATED LENDERS
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND EACH OF THE COMPANIES AND THE SUBORDINATED
LENDERS HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH OF THE
COMPANIES AND THE SUBORDINATED LENDERS HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINTS AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO IT AT THE ADDRESS SET FORTH IN THE
SENIOR LOAN AGREEMENT OR BENEATH ITS SIGNATURE LINE BELOW, AS THE CASE MAY BE,
AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ANY
COMPANY'S OR ANY
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<PAGE>
SUBORDINATED LENDERS' ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID.
28. MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE SENIOR LOAN
DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent
By:_______________________________________________
Name:_____________________________________________
Title: Duly Authorized Signatory
UST DELIVERY SYSTEMS, INC.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
UNITED SHIPPING & TECHNOLOGY, INC.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
BAYVIEW CAPITAL PARTNERS LP
By BAYVIEW CAPITAL MANAGEMENT
LLC, its general partner
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Address:
Bayview Capital Partners LP
Attn: Cary Musech and Peter Kooman
641 East Lake Street
Suite 230
Wayzata, Minnesota 55391
Fax: (612) 476-7820
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
CORPORATE EXPRESS DELIVERY SYSTEMS -
INTERMOUNTAIN, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - MID-
ATLANTIC, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - MID-WEST,
INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - NEW
ENGLAND, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS -
NORTHEAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS -
SOUTHEAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS -
SOUTHWEST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - WEST
COAST, INC.
CORPORATE EXPRESS DELIVERY LEASING -
INTERMOUNTAIN, INC.
CORPORATE EXPRESS DELIVERY LEASING - MID-
ATLANTIC, INC.
CORPORATE EXPRESS DELIVERY LEASING - MID-WEST,
INC.
CORPORATE EXPRESS DELIVERY LEASING - NEW
ENGLAND, INC.
CORPORATE EXPRESS DELIVERY LEASING -
NORTHEAST, INC.
CORPORATE EXPRESS DELIVERY LEASING -
SOUTHEAST, INC.
CORPORATE EXPRESS DELIVERY LEASING -
SOUTHWEST, INC.
CORPORATE EXPRESS DELIVERY LEASING - WEST
COAST, INC.
CORPORATE EXPRESS DELIVERY SYSTEMS - AIR
DIVISION, INC.
AIR COURIER DISPATCH OF NEW JERSEY, INC.
MIDNITE EXPRESS INTERNATIONAL COURIER, INC.
TRICOR AMERICA, INC.
NEW DELAWARE DELIVERY, INC.
CORPORATE EXPRESS DELIVERY ADMINISTRATION,
INC.
AMERICAN DELIVERY SYSTEM, INC.
CORPORATE EXPRESS DISTRIBUTION SERVICES, INC.
SUNBELT COURIER, INC.
Each By:__________________________________________
Name:_____________________________________________
Title:____________________________________________
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EXHIBIT A
SUBSIDIARIES
1. CORPORATE EXPRESS DELIVERY SYSTEMS - INTERMOUNTAIN, INC.
2. CORPORATE EXPRESS DELIVERY SYSTEMS - MID-ATLANTIC, INC.
3. CORPORATE EXPRESS DELIVERY SYSTEMS - MID-WEST, INC.
4. CORPORATE EXPRESS DELIVERY SYSTEMS - NEW ENGLAND, INC.
5. CORPORATE EXPRESS DELIVERY SYSTEMS - NORTHEAST, INC.
6. CORPORATE EXPRESS DELIVERY SYSTEMS - SOUTHEAST, INC.
7. CORPORATE EXPRESS DELIVERY SYSTEMS - SOUTHWEST, INC.
8. CORPORATE EXPRESS DELIVERY SYSTEMS - WEST COAST, INC.
9. CORPORATE EXPRESS DELIVERY LEASING - INTERMOUNTAIN, INC.
10. CORPORATE EXPRESS DELIVERY LEASING - MID-ATLANTIC, INC.
11. CORPORATE EXPRESS DELIVERY LEASING - MID-WEST, INC.
12. CORPORATE EXPRESS DELIVERY LEASING - NEW ENGLAND, INC.
13. CORPORATE EXPRESS DELIVERY LEASING - NORTHEAST, INC.
14. CORPORATE EXPRESS DELIVERY LEASING - SOUTHEAST, INC.
15. CORPORATE EXPRESS DELIVERY LEASING - SOUTHWEST, INC.
16. CORPORATE EXPRESS DELIVERY LEASING - WEST COAST, INC.
17. CORPORATE EXPRESS DELIVERY SYSTEMS - AIR DIVISION, INC.
18. AIR COURIER DISPATCH OF NEW JERSEY, INC.
19. MIDNITE EXPRESS INTERNATIONAL COURIER, INC.
20. TRICOR AMERICA, INC.
21. NEW DELAWARE DELIVERY, INC.
22. CORPORATE EXPRESS DELIVERY ADMINISTRATION, INC.
23. AMERICAN DELIVERY SYSTEM, INC.
24. CORPORATE EXPRESS DISTRIBUTION SERVICES, INC.
25. SUNBELT COURIER, INC.
<PAGE>
SCHEDULE 1
SUBORDINATED SECURITY DOCUMENTS
1. Each Security Agreement dated the date hereof executed by Borrower
or any Subsidiary of Borrower in favor of Subordinated Lenders.
