================================================================================
- - --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended March 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-14474
AMERTRANZ WORLDWIDE HOLDING CORP.
(Exact name of registrant as specified in its charter)
Delaware 11-3309110
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
2001 Marcus Avenue
Lake Success, New York 11042
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 326-9000
Inapplicable
(Former name, former address and former fiscal year if changed
from last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
At April 30, 1997, the number of shares outstanding of the registrant's common
stock was 5,926,504.
================================================================================
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Part I - Financial Information Page
Item 1. Financial Statements:
Consolidated Balance Sheets,
March 31, 1997 and June 30, 1996 2
Consolidated Statements of Operations
for the Three Months Ended March 31,
1997 and 1996 3
Consolidated Statement of Operations
for the Nine Months Ended March 31, 1997 4
Consolidated Statement of
Cash Flows for the Nine Months Ended
March 31, 1997 5
Notes to Unaudited Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 12
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1997 June 30, 1996
-------------- -------------
ASSETS (unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 327,026 $ 377,490
Accounts receivable, net of allowance for doubtful
accounts of $432,902 and $371,322, respectively 10,868,497 7,598,390
Prepaid expenses and other current assets 857,586 557,192
------------ ------------
Total current assets 12,053,109 8,533,072
PROPERTY AND EQUIPMENT, net 1,128,451 829,442
DEBT ISSUANCE COST, net of accumulated amortization
of $3,367,698 and $3,264,232, respectively - 103,466
OTHER ASSETS 334,817 1,373,314
GOODWILL, net of accumulated amortization of
$567,226 and $191,460, respectively 12,189,858 11,900,735
------------ ------------
Total assets $ 25,706,235 $ 22,740,029
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 6,914,077 $ 7,699,721
Accrued expenses 2,693,277 2,028,274
Note payable to bank 5,766,385 1,641,347
Note payable to affiliate 500,582 3,954,989
Current portion of long-term debt due to affiliate 3,280,607 3,150,000
Current portion of long-term debt 50,000 3,975,000
Lease obligation-current portion 15,979 21,034
------------ ------------
Total current liabilities 19,220,907 22,470,365
LONG-TERM DEBT DUE TO AFFILIATE 4,333,330 8,000,000
LONG TERM DEBT 100,000 -
LEASE OBLIGATION--LONG-TERM 7,810 18,315
------------ ------------
Total liabilities $ 23,662,047 $ 30,488,680
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock, $10 par value; 2,500,000 shares authorized,
220,000 shares issued and outstanding 2,200,000 -
Common stock, $.01 par value; 15,000,000 shares authorized,
5,926,504 and 3,626,504 shares issued and outstanding,
respectively 59,265 36,265
Paid-in capital 20,065,977 8,567,675
Accumulated deficit (20,269,804) (16,341,341)
Less: Treasury stock, 106,304 shares held at cost (11,250) (11,250)
------------ ------------
Total stockholders' equity (deficit) 2,044,188 (7,748,651)
Total liabilities and stockholders' equity (deficit) $ 25,706,235 $ 22,740,029
============ ============
</TABLE>
The accompanying notes are an integral part of this
consolidated balance sheet.
2
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Pro Forma
Three Months Three Months Three Months
Ended Ended Ended
March 31, 1997 March 31, 1996 March 31, 1996
--------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Operating revenue $18,546,423 13,492,715 15,573,287
Direct costs 13,515,324 10,079,987 11,700,465
----------- ---------- ----------
Gross profit 5,031,099 3,412,728 3,872,822
Selling, general and
administrative expenses 5,673,847 3,636,311 5,072,989
---------- ---------- ----------
Loss from operations (642,748) (223,583) (1,200,167)
Interest (expense) (307,117) (509,846) ( 629,410)
Other income (expense), net (7,170) (3,060) 9,802
---------- ---------- ----------
Loss before income taxes (957,035) (736,489) (1,819,775)
Provision for income taxes 11,817 - -
---------- ---------- ----------
Net loss $ (968,852) $( 736,489) (1,819,775)
========== ========== ==========
Net loss per share $ (0.16) $ (0.22) $ (0.33)
========== ========== ==========
Weighted average shares
outstanding 5,926,504 3,386,504 5,327,703
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this
consolidated statement.
3
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Nine Months
Ended
March 31, 1997
Operating revenue $53,266,287
Direct costs 39,807,691
Gross profit 13,458,596
Selling, general and
administrative expenses 16,361,301
Loss from operations (2,902,705)
Interest (expense) (1,089,254)
Other income, net 75,313
----------
Loss before income taxes (3,916,646)
Provision for income taxes 11,817
----------
Net loss $(3,928,463)
Net loss per share $ (0.67)
===========
Weighted average shares
outstanding $ 5,901,322
===========
The accompanying notes are an integral part of this
consolidated statement.
4
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended
<S> <C> <C>
March 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,928,463)
Bad debt expense 61,580
Depreciation and amortization 636,139
Decrease in debt issuance costs 103,466
Adjustments to reconcile net loss to net cash used in operating activities-
Increase in accounts receivable (2,528,379)
Increase in prepaid expenses and other current assets (396,901)
Decrease in other assets 32,608
Decrease in accounts payable and accrued expenses (612,152)
------------
Net cash used in operating activities (6,632,102)
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (395,668)
Acquisition of Consolidated Air Services, net of cash acquired 105,602
Net cash used in investing activities (290,066)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial public offering - net of costs 12,304,696
Issuance of common stock 23,000
Net borrowings from note payable to bank 4,125,038
Repayment of short-term debt (4,444,393)
Repayment of long-term debt (1,666,670)
Repayment of note payable to affiliate (3,454,407)
Payment of lease obligations (15,560)
-----------
Net cash provided by financing activities: 6,871,704
-----------
Net decrease in cash and cash equivalents (50,464)
CASH AND CASH EQUIVALENTS, beginning of the period 377,490
-----------
CASH AND CASH EQUIVALENTS, end of the period $ 327,026
===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for:
Interest 268,745
Income taxes 34,759
</TABLE>
The accompanying notes are an integral part of this
consolidated statement.
5
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(Unaudited)
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTMENT AND FINANCING ACTIVITIES:
<TABLE>
<S> <C>
Issuance of preferred stock as partial repayment of long-term debt $2,000,000
Issuance of preferred stock for the acquisition of Consolidated Air Services
("Consolidated") $ 200,000
Issuance of note payable to Consolidated stockholders $ 150,000
On October 10, 1996, Consolidated merged with and into Amertranz Worldwide Holding Corp. and
subsidiaries ("the Company") pursuant to the terms of a merger agreement dated as of September 30, 1996. In
conjunction with the acquisition, the resulting goodwill is as follows:
Net assets assumed $ 121,539
Purchase Price $ 786,428
----------
Goodwill $ 664,889
==========
</TABLE>
The accompanying notes are an integral part of this
consolidated statement.
6
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Notes to Unaudited Consolidated Financial Statements
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions for Form 10-Q and Regulation S-X related to
interim period financial statements and, therefore, do not include all
information and footnotes required by generally accepted accounting principles.
However, in the opinion of management, all adjustments (consisting of normal
recurring adjustments and accruals) considered necessary for a fair presentation
of the consolidated financial position of the Company and its subsidiaries at
March 31, 1997 and their consolidated results of operations and cash flows for
the quarter ended March 31, 1997 have been included. The results of operations
for the interim periods are not necessarily indicative of the results that may
be expected for the entire year. Reference should be made to the annual
financial statements, including footnotes thereto, included in the Amertranz
Worldwide Holding Corp. (the "Company") Form 10-K for the six months ended June
30, 1996.
Note 2 - Earnings Per Share
Earnings per share is computed using the weighted average number of common
shares outstanding and, where applicable, common equivalent shares issuable upon
exercise of stock options calculated under the treasury stock method. In
February, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, Earnings Per Share. SFAS No. 128
simplifies the standards for computing earnings per share previously found in
APB Opinion No. 15, Earnings Per Share and is effective for financial statements
issued for periods ending after December 15, 1997, including interim periods;
earlier adoption is not permitted. The Company does not expect the adoption of
SFAS No. 128 to have a significant impact to its reported results.
Note 3 - Acquisition
On October 10, 1996, Consolidated Air Services, Inc., an Arizona Corporation
("Consolidated Air") merged with and into the Company pursuant to the terms of
an Agreement of Merger dated as of September 30, 1996.
Summarized below are the unaudited pro forma results of operations of the
Company as though the acquisition of Consolidated Air had occurred at the
beginning of Fiscal 1997. Adjustments have been made for pro forma goodwill
amortization and interest expense related to the acquisition.
Pro forma
Operating revenue $54,809,464
Net Loss $(3,922,781)
Net Loss Per Share $ (0.66)
7
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Accounts Receivable Management and Security Agreement
On January 16, 1997, the Company entered into a three year $10 million Accounts
Receivable Management and Security Agreement ("BNY Facility") with BNY Financial
Corp. ("BNY") which replaced the existing facility with Fidelity Funding of
California, Inc. ("Fidelity"). Under the Agreement, the Company can borrow the
lesser of $10.0 million or 85% of eligible accounts receivable. The Company's
borrowings under the BNY Facility are secured by a first lien on all of the
Company's assets.
Upon the closing of BNY Facility, the Company borrowed $5,534,037. Of the amount
borrowed; $3,570,768 was used to pay down a note payable to TIA, Inc. $1,819,552
was used to retire the note payable to Fidelity and $143,717 was used to provide
the Company with additional working capital.
Note 5 - Pro Forma Consolidated Statement of Operations for the Three Months
Ended March 31, 1996
(a) Basis of Presentation
As a result of a February, 1996 assets exchange ("Combination"),
Amertranz Worldwide, Inc. and Subsidiaries and Caribbean Air Services, Inc.
became wholly-owned subsidiaries of the Company.
The accompanying unaudited pro forma statement of operations reflects
the combined results of The Freight Forwarding Business of TIA, Inc. and
Caribbean Freight System, Inc. and the Amertranz Worldwide, Inc. business as if
the Combination had been effective as of January 1, 1996. The pro forma results
are being presented in order to reflect comparable results for the three month
period. In management's opinion, all material adjustment necessary to reflect
the effects of the Combination have been made.
(b) Earnings Per Share
Earnings per share is computed using the weighted average number of
common shares outstanding adjusted for: (i) the required amount of shares of
common stock at the price per share sold by the Company in its June, 1996
initial public offering, to repay certain indebtedness of the Company; (ii) the
required amount of shares of common stock at the initial public offering price
to repay certain indebtedness incurred in the Combination; and (iii) the
dilutive effect of options granted within 12 months of the initial public
offering using the treasury stock method.
Note 6 - Subsequent Event
On April 17, 1997, the Company entered into an agreement to acquire a
domestically-based freight forwarder ("Newco"). For calendar year 1996, Newco
had sales in excess of $21 million, and a loss of $154,000. Under the terms of
the merger, the Company will issue 900,000 shares of Common Stock and pay
$400,000 to Newco's stockholders. The closing of the merger is scheduled to
occur prior to the end of May 1997, and is subject to customary due diligence
contingencies.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Form 10-Q contains certain forward-looking statements reflecting the
Company's current expectations and there can be no assurances that the Company's
actual future performance will meet such expectations. Forward-looking
statements are preceded by an asterisk (*).
Results of Operations
The Company began its existence as the holding company for the combined
operations of Amertranz Worldwide, Inc. ("Amertranz") and the freight forwarding
business of TIA, Inc. ("TIA") and Caribbean Freight System, Inc. ("CFS") on
February 8, 1996. From and after February 8, 1996, the freight forwarding
business of TIA and CFS was operated through the Company's Caribbean Air
Services subsidiary. Prior to such date, the operations of Amertranz and the
freight forwarding business of TIA and CFS were independent of each other. The
actual results for the three months ended March 31, 1996 reflect the results of
the freight forwarding business of TIA and CFS for the full three months and the
results of the Amertranz subsidiary for the period February 8, 1996 through
March 31, 1996. The Pro Forma Statement of Operations Data reflects the combined
results of the freight forwarding business of TIA and CFS and the Amertranz
subsidiary as if the February, 1996 Combination had been effective as of January
1, 1996. In Management's opinion, all material adjustments necessary to reflect
the effect of the Combination have been made. The following discussion relates
to the combined results of the Company for the three month period January 1,
1997 through March 31, 1997 and the nine month period July 1, 1996 through March
31, 1997.
Three Months ended March 31, 1997 and 1996 (ACTUAL)
Operating Revenue. Operating revenue increased to $18.5 million for the
three months ended March 31, 1997 from $13.5 million for the three months ended
March 31, 1996, a 37.5% increase. Of this 37.5% increase, 18.4% was due to the
fact that results for the Company's Amertranz subsidiary were not included for
the period January 1, 1996 through February 7, 1996, and 19.1% of this increase
is due to the Company's increased sales and growth.
Cost of Transportation. Cost of transportation was 72.9% of operating
revenue for the three months ended March 31, 1997, and 74.7% of operating
revenue for the three months ended March 31, 1996.
Gross Profit. Gross profit for the three months ended March 31, 1997
was 27.1% of operating revenue, and for the three months ended March 31, 1996
was 25.3% of operating revenue.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses was 30.6% of operating revenue for the three months
ended March 31, 1997, and 27.0% of operating revenue for the three months ended
March 31, 1996. This increase was primarily due to the inclusion of the
Amertranz subsidiary for the full three-month period of January 1, 1997 through
March 31, 1997, while the Amertranz subsidiary was only included for the period
February 8, 1996 through March 31, 1996.
Three Months ended March 31, 1997 and 1996 (PRO FORMA)
Operating Revenue. Operating revenue increased to $18.5 million for the
three months ended March 31, 1997 from $15.6 million for the three months ended
March 31, 1996, a 19.1% increase. This increase is due to the Company's
increased sales and growth.
9
<PAGE>
Cost of Transportation. Cost of transportation was 72.9% of operating
revenue for the three months ended March 31, 1997, and 75.1% of operating
revenue for the three months ended March 31, 1996.
Gross Profit. Gross profit for the three months ended March 31, 1997
was 27.1% of operating revenue, and for the three months ended March 31, 1996
was 24.9% operating revenue. The increase in the gross profit margin is the
result of the Company's efforts to maximize its utilization of transportation
providers.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to 30.6% of operating revenue for the three
months ended March 31, 1997, from 32.6% for the comparable period in 1996.
Nine Months Ended March 31, 1997
Operating Revenue. Operating revenue was $53.3 million for the period
July 1, 1996 through March 31, 1997.
Cost of Transportation. Cost of transportation was 74.7% of operating
revenue for the period.
Gross Profit. Gross profit for the period was 25.3% of operating
revenue.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the period were 30.7% of operating revenue.
Other Income, Net. Other income, net, includes $82,152 of interest
income on invested funds.
Liquidity and Capital Resources
On July 3, 1996, the Company completed an initial public offering ("IPO") of
2,300,000 shares of common stock and redeemable common stock purchase warrants
at an initial offering price of $6.00 per share and $0.10 per warrant. The
proceeds from the IPO, net of underwriting discounts and commissions and after
deducting expenses of the IPO, were approximately $12,300,000. Of this amount,
$4,137,000 was used to repay the outstanding principal and interest balance on
earlier bridge financings, $373,000 was used to repay the outstanding principal
and interest balance on earlier interim financing, $2,000,000 was used as
partial payment on a pre-IPO obligation to TIA and CFS ("Exchange Note"), and
approximately $700,000 was used to repay overdue trade payables. The remaining
balance of the proceeds was retained by the Company for working capital
purposes. Additionally, TIA and CFS exchanged $2,000,000 principal amount of the
Exchange Note for 200,000 shares of the Company's Class A Preferred Stock.
On January 16, 1997, the Company entered into a three year $10 million revolving
Accounts Receivable Management and Security Agreement ("BNY Facility") with BNY
Financial Corp. ("BNY") which replaced the existing facility with Fidelity
Funding of California, Inc. On April 16, 1997 the Company and BNY amended
certain of the financial covenants set forth in the BNY Facility. The interest
rate of the BNY Facility is prime plus 2%. Under the Agreement, the Company can
borrow the lesser of $10.0 million or 85% of eligible accounts receivable. The
Company's borrowings under the BNY Facility are secured by a first lien on all
of the Company's assets. As of March 31, 1997, the amount available for
borrowing under the BNY Facility was approximately $648,000.
10
<PAGE>
During the nine months ended March 31, 1997, net cash used by operating
activities was $6.6 million. Cash used in investing activities was $0.3 million,
which primarily consisted of capital expenditures. Cash provided by financing
activities was $6.9 million which primarily consisted of net proceeds from the
issuance of common stock as a result of the IPO and net borrowings under the BNY
Facility.
Capital expenditures for the nine months ended March 31, 1997 were $395,668.
*Cash needs of the Company are currently met by funds generated from operations
and the BNY Facility. The Company believes that its current financial resources
will be sufficient to finance its operations and obligations for the short term.
However, the Company's actual working capital needs for the long and short terms
will depend upon numerous factors, including the Company's operating results,
the cost of increasing the Company's sales and marketing activities, changes in
law which affect doing business in Puerto Rico, and competition, none of which
can be predicted with certainty. To the extent the Company's long term working
capital needs are not met from these sources, additional financing will be
necessary. In conjunction with the acquisition of Newco (see Note 6 to unaudited
financial statements) the Company is seeking to raise additional equity. If the
Company is unable to raise the additional equity, and the availability under the
BNY Facility is not sufficient to provide the needed capital, then the Company
may not be able to close the Newco acquisition.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No.
10.1 Accounts Receivable Management and Security Agreement, dated
January 16, 1997 by and between BNY Financial Corp., as
Lender, and Amertranz Worldwide, Inc., Caribbean Air Services,
Inc., and Consolidated Air Services, Inc., as Borrowers, and
guaranteed by Amertranz Worldwide Holding Corp. ("BNY Facility
Agreement")
10.2 Letter Amendment to BNY Facility Agreement, dated April 16,
1997 ("BNY Letter Amendment")
10.3 Shadow Warrant entered into in connection with the BNY Letter
Amendment
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
12
<PAGE>
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.
Dated: April 30, 1997 AMERTRANZ WORLDWIDE HOLDING CORP.
Registrant
/s/ Stuart Hettleman
---------------------------------------
President, Chief Executive Officer
/s/ Philip J. Dubato
---------------------------------------
Vice President, Chief Financial Officer
C68970.198
13
<PAGE>
EXHIBIT 10.1
ACCOUNTS RECEIVABLE MANAGEMENT
AND SECURITY AGREEMENT
This Accounts Receivable Management and Security Agreement is made as
of January 16, 1997 by and between BNY FINANCIAL CORPORATION ("Lender"), having
offices at 1290 Avenue of the Americas, New York, New York 10104 and Amertranz
Worldwide, Inc. ("Amertranz") having its place of business at 2001 Marcus
Avenue, Lake Success, NY 11042 Caribbean Air Services, Inc. ("Caribbean") having
its place of business at 7304 West Market Street, Greensboro, NC 27410,
Consolidated Air Services, Inc. ("Consolidated") having its principal place of
business at 15030 North Hayden Road, Suite 130, Scottsdale, AZ 85267 (each
individually a "Borrower and collectively "Borrower").
WHEREAS, the Borrower has requested that Lender make loans and advances
available to Borrower; and
WHEREAS, Lender has agreed to make such loans and advances to Borrower,
on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings and the terms and conditions contained herein, the parties hereto
agree as follows:
1. (A) General Definitions. When used in this Agreement, the following
terms shall have the following meanings:
"Advance Rates" means the Receivables Advance Rate.
"Affiliate" of any Person means (a) any Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with such Person, or (b) any Person who is a director or officer (i) of such
Person, (ii) of any Subsidiary of such Person or (iii) of any Person described
in clause (a) above. For purposes of this definition, control of a Person shall
mean the power, direct or indirect, (i) to vote 5% or more of the securities
having ordinary voting power for the election of directors of such Person, or
(ii) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Prime Rate in effect on such day and (ii) the
Federal Funds Rate in effect on such day plus 1/2 of 1%.
"Ancillary Agreements" means all agreements, instruments, and
documents including, without limitation, mortgages, pledges, powers of attorney,
consents, assignments, contracts, notices, security agreements, trust agreements
whether heretofore, concurrently, or hereafter executed by or on behalf of
Borrower or delivered to Lender, relating to this Agreement or to the
transactions contemplated by this Agreement.
"Bank" means The Bank of New York.
"Beginning Shareholder Equity" shareholder equity of Amertranz
Worldwide Holding Corp. as of December 31, 1996, on a consolidated basis, as
determined in accordance with GAAP.
"BNYFC Interest Coverage Ratio" the ratio of (a) earnings
before interest, taxes, depreciation and amortization of Amertranz Worldwide
Holding Corp. on a consolidated basis, as determined in accordance with GAAP as
in effect on the Closing Date, to (b) interest expense with respect to the
Obligations.
<PAGE>
"Borrowing Base Certificate" shall have the meaning set forth
in Section 9.
"Business Day" means any day other than a day on which
commercial banks in New York are authorized or required by law to close.
"Change of Ownership" means any merger, consolidation or sale
of substantially all of the property or assets of Borrower.
"Closing Date" means the date set forth in the first paragraph
above or such other date as may be agreed upon by the parties hereto.
"Collateral" means and includes:
(A) all Inventory;
(B) all Equipment;
(C) all General Intangibles;
(D) all Receivables;
(E) all books, records, ledgercards, files,
correspondence, computer programs, tapes, disks and related data processing
software (owned by Borrower or in which it has an interest) which at any time
evidence or contain information relating to (A), (B), (C) and (D) above or are
otherwise necessary or helpful in the collection thereof or realization
thereupon;
(F) documents of title, policies and
certificates of insurance, securities, chattel paper, other documents or
instruments evidencing or pertaining to (A), (B), (C), (D) and (E) above;
(G) all guaranties, liens on real or personal
property, leases, and other agreements and property which in any way secure or
relate to (A), (B), (C), (D), (E) and (F) above, or are acquired for the purpose
of securing and enforcing any item thereof;
(H) (i) all cash held as cash collateral to the
extent not otherwise constituting Collateral, all other cash or property at any
time on deposit with or held by Lender for the account of Borrower (whether for
safekeeping, custody, pledge, transmission or otherwise), (ii) all present or
future deposit accounts (whether time or demand or interest or non-interest
bearing) of Borrower with Lender or any other Person including those to which
any such cash may at any time and from time to time be credited, (iii) all
investments and reinvestments (however evidenced) of amounts from time to time
credited to such accounts, and (iv) all interest, dividends, distributions and
other proceeds payable on or with respect to (x) such investments and
reinvestments and (y) such accounts; and
(I) all products and proceeds of (A), (B), (C),
(D), (E), (F), (G) and (H) above (including, but not limited to, all claims to
items referred to in (A), (B), (C), (D), (E), (F), (G) and (H) above) and all
claims of Borrower against third parties (x) for (i) loss of, damage to, or
destruction of, and (ii) payments due or to become due under leases, rentals and
hires of, any or all of (A), (B), (C), (D), (E), (F), (G) and (H) above and (y)
proceeds payable under, or unearned premiums with respect to policies of
insurance in whatever form.
"Contract Rate" means an interest rate per annum equal to (i)
Alternate Base Rate plus (ii) one and one-half percent (1 1/2%) provided,
however, the Contract Rate shall not at any time be less than 6%.
- 2 -
<PAGE>
"Credit Risk" means the risk of loss resulting solely and
exclusively from a Customer's financial inability to pay at maturity with
respect to any Receivable purchased hereunder.
"Customer" means and includes the account debtor with respect
to any Receivable and/or the prospective purchaser of goods, services or both
with respect to any contract or contract right, and/or any party who enters into
or proposes to enter into any contract or other arrangement with Borrower,
pursuant to which Borrower is to deliver any personal property or perform any
services.
"Default Rate" means a rate equal to two (2%) percent per
annum in excess of the Contract Rate or the Overadvance Rate, as the case may be
whichever is in effect.
"Dispute" means any cause asserted for nonpayment of
Receivables, including, without limitation, any alleged defense, counterclaim,
offset, dispute or other claim (real or merely asserted) whether arising from or
relating to the sale of goods or rendition of services or arising from or
relating to any other transaction or occurrence.
"Eligible Receivables" means and includes each Receivable
which conforms to the following criteria: (a) shipment of the merchandise or the
rendition of services has been completed; (b) no return, rejection or
repossession of the merchandise has occurred; (c) merchandise or services shall
not have been rejected or disputed by the Customer and there shall not have been
asserted any offset, defense, counterclaim, or Dispute; (d) continues to be in
full conformity with the representations and warranties made by Borrower to
Lender with respect thereto; (e) Lender is, and continues to be, satisfied with
the credit standing of the Customer in relation to the amount of credit
extended; (f) is documented by an invoice in a form approved by Lender and shall
not be unpaid more than 90 days from invoice date nor more than 60 days from due
date; (g) less than 50% of the unpaid amount of invoices due from such Customer
remain unpaid more than 90 days from invoice date or more than 60 days past due
date; (h) is not evidenced by chattel paper or an instrument of any kind with
respect to or in payment of the Receivable unless such instrument is duly
endorsed to and in possession of Lender or represents a check in payment of a
Receivable; (i) if the Customer is located outside of the United States, the
goods which gave rise to such Receivable were shipped after receipt by Borrower
from or on behalf of the Customer of an irrevocable letter of credit, assigned
and delivered to Lender and confirmed by a financial institution acceptable to
Lender and is in form and substance acceptable to Lender, payable in the full
amount of the Receivable in United States dollars at a place of payment located
within the United States; (j) such Receivable is not subject to any lien, other
than Permitted liens; (k) does not arise out of transactions with any employee,
officer, agent, director, stockholder or Affiliate of Borrower; (l) is payable
to Borrower; (m) does not arise out of a bill and hold sale prior to shipment
and, if the Receivable arises out of a sale to any Person to which Borrower is
indebted, the amount of such indebtedness, and any anticipated indebtedness, is
deducted in determining the face amount of such Receivable; (n) is net of any
returns, discounts, claims, credits and allowances; (o) if the Receivable arises
out of contracts between Borrower and the United States, any state, or any
department, agency or instrumentality of any of them, Borrower has so notified
Lender, in writing, prior to the creation of such Receivable, and, if Lender so
requests, there has been compliance with any governmental notice or approval
requirements, including without limitation, compliance with the Federal
Assignment of Claims Act; (p) is a good and valid account representing an
undisputed bona fide indebtedness incurred by the Customer therein named, for a
fixed sum as set forth in the invoice relating thereto with respect to an
unconditional sale and delivery upon the stated terms of goods sold by Borrower,
or work, labor and/or services rendered by Borrower; and (q) is otherwise
satisfactory to Lender as determined in good faith by Lender in the reasonable
exercise of its discretion.
"Equipment" means and includes all of Borrower's now owned or
hereafter acquired equipment, machinery and goods (excluding Inventory), whether
or not constituting fixtures, including, without limitation: plant and office
equipment, tools, dies, parts, data processing equipment, furniture and trade
fixtures, trucks, trailers, loaders and other vehicles and all replacements and
substitutions therefore and all accessions thereto.
- 3 -
<PAGE>
"Event of Default" means the occurrence of any of the events
set forth in paragraph 18.
"Federal Funds Rate" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by The Bank of New York from three Federal funds brokers
of recognized standing selected by The Bank of New York.
"Formula Amount" shall have the meaning set forth in paragraph
2(d).
"GAAP" means generally accepted accounting principles,
practices and procedures in effect from time to time.
"General Intangibles" means and includes all of Borrower's now
owned or hereafter acquired general intangibles as said term is defined in the
Uniform Commercial Code in effect in the State of New York including, without
limitation, trademarks, tradenames, tradestyles, trade secrets, equipment
formulation, manufacturing procedures, quality control procedures, product
specifications, patents, patent applications, copyrights, registrations,
contract rights, choses in action, causes of action, corporate or other business
records, inventions, designs, goodwill, claims under guarantees, licenses,
franchises, tax refunds, tax refund claims, computer programs, computer data
bases, computer program flow diagrams, source codes, object codes and all other
intangible property of every kind and nature.
"Guarantor" means individually, Amertranz Worldwide Holding
Corp. and any other Person who may hereafter guarantee payment or performance of
the whole or any part of the Obligations and "Guarantors" means collectively all
such Persons.
"Guarantor Security Agreements" means collectively, the
Security Agreements which are executed by each Guarantor in favor of Lender.
"Guaranty Agreements" means collectively the Guaranties which
are executed by each Guarantor in favor of Lender.
"Hazardous Substance" means, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated byphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"Holding" means Amertranz Worldwide Holding Corp.
"Incipient Event of Default" means any act or event which,
with the giving of notice or passage of time or both, would constitute an Event
of Default.
"Inventory" means and includes all of Borrower's now owned or
hereafter acquired goods, merchandise and other personal property, wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work in process, finished goods and materials and
supplies of any kind, nature or description which are or might be used or
consumed in Borrower's business or used in selling or furnishing such goods,
merchandise and other personal property, and all documents of title or other
documents representing them.
- 4 -
<PAGE>
"Loans" means the Revolving Credit Advances and all other
extensions of credit hereunder.
"Matured Funds Rate" means the rate of interest, announced by
Lender from time to time, as the rate applicable to matured funds, such rate to
be adjusted automatically on the effective date of any change in such rate as
announced by Lender.
"Maximum Revolving Amount" means $10,000,000.00
"Net Face Amount" of Receivables means the gross face invoice
amount thereof, less returns, discounts (the calculation of which shall be
determined by Lender where optional terms are given), anticipation or any other
unilateral deductions taken by Customers, and credits and allowances to
Customers of any nature.
"Obligations" means and includes all Loans, all advances,
debts, liabilities, obligations, covenants and duties owing by Borrower to
Lender (or any corporation that directly or indirectly controls or is controlled
by or is under common control with Lender) of every kind and description
(whether or not evidenced by any note or other instrument and whether or not for
the payment of money or the performance or non-performance of any act), direct
or indirect, absolute or contingent, due or to become due, contractual or
tortious, liquidated or unliquidated, whether existing by operation of law or
otherwise now existing or hereafter arising including, without limitation, any
debt, liability or obligation owing from Borrower to others which Lender may
have obtained by assignment or otherwise and further including, without
limitation, all interest, charges or any other payments Borrower is required to
make by law or otherwise arising under or as a result of this Agreement and the
Ancillary Agreements, together with all reasonable expenses and reasonable
attorneys' fees chargeable to Borrower's account or incurred by Lender in
connection with Borrower's account whether provided for herein or in any
Ancillary Agreement.
"Overadvance Rate" means a rate equal to one-half of one
(1/2%) percent per annum in excess of the Contract Rate.
"Permitted Liens" means (i) liens of carriers, warehousemen,
mechanics and materialmen incurred in the ordinary course of business securing
sums not overdue; (ii) liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees, securing sums (a) not
overdue or (b) being diligently contested in good faith provided that adequate
reserves with respect thereto are maintained on the books of Borrower in
conformity with GAAP, (iii) liens in favor of Lender, (iv) liens for taxes (a)
not yet due or (b) being diligently contested in good faith, provided that
adequate reserves with respect thereto are maintained on the books of Borrower
in conformity with GAAP and (v) liens specified on Schedule 1(A) hereto.
"Person" means an individual, partnership, corporation, trust
or unincorporated organization, or a government or agency or political
subdivision thereof.
"Prime Rate" means the prime commercial lending rate of The
Bank of New York as publicly announced in New York, New York to be in effect
from time to time, such rate to be adjusted automatically, without notice, on
the effective date of any change in such rate. This rate of interest is
determined from time to time and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged to any particular class or category of customers.
"Receivables" means and includes all of Borrower's now owned
or hereafter acquired accounts and contract rights, instruments, insurance
proceeds, documents, chattel paper, letters of credit and Borrower's rights to
receive payment thereunder, any and all rights to the payment or receipt of
money or other forms of consideration of any kind at any time now or hereafter
owing or to be owing to Borrower,
- 5 -
<PAGE>
all proceeds thereof and all files in which Borrower has any interest whatsoever
containing information identifying or pertaining to any of Borrower's
Receivables, together with all of Borrower's rights to any merchandise which is
represented thereby, and all Borrower's right, title, security and guaranties
with respect to each Receivable, including, without limitation, all rights of
stoppage in transit, replevin and reclamation and all rights as an unpaid
vendor.
"Receivables Advance Rate" shall have the meaning set forth in
the definition of Receivables Availability.
"Receivables Availability" means the amount of Revolving
Credit Advances against Eligible Receivables Lender may from time to time during
the term of this Agreement make available to Borrower up to 85% ("Receivables
Advance Rate") of the net face amount of Borrower's Eligible Receivables.
"Reports" shall have the meaning set forth in Section 14.
"Retained Goods" shall have the meaning set forth in Section
8(h).
"Revolving Credit Advances" shall have the meaning set forth
in paragraph 2(d).
"Settlement Date" means two (2)days after the day on which the
applicable Receivable is actually collected by Lender.
"Subordinated Debt" means any debt subordinated to Lender upon
terms and conditions satisfactory to Lender in its sole discretion.
"Subsidiary" of any Person means a corporation or other entity
of whose shares of stock or other ownership interests having ordinary voting
power (other than stock or other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the directors
of such corporation, or other Persons performing similar functions for such
entity, are owned, directly or indirectly, by such Person.
"Term" means the Closing Date through the third anniversary of
the Closing Date in the year 2000, subject to acceleration upon the occurrence
of an Event of Default hereunder or other termination hereunder.
"Total Liabilities" at a particular date means all
Indebtedness of Borrower as at such date.
"Working Capital" at a particular date means the excess, if
any, of Current Assets over Current Liabilities at such date.
(B) Accounting Terms. Any accounting terms used in this
Agreement which are not specifically defined shall have the meanings customarily
given them in accordance with GAAP.
(C) Other Terms. All other terms used in this Agreement and
defined in the Uniform Commercial Code as adopted in the State of New York,
shall have the meaning given therein unless otherwise defined herein.
2. Loans.
(a) Lender shall not assume the Credit Risk on any
Receivables.
(b) Subject to the terms and conditions set forth herein and
in the Ancillary Agreements, Lender shall, make revolving credit advances (the
"Revolving Credit Advances") to Borrower from time to time during the Term
which, in the aggregate at any time outstanding, will not exceed the
- 6 -
<PAGE>
lesser of (x) the Maximum Revolving Amount or (y) an amount equal to the
Receivables Availability, less such reserves as Lender may reasonably deem
proper and necessary from time to time:
The result of the calculation under Subsection 2(b)(y) above
shall be referred to as the "Formula Amount". In this regard, Borrower agrees
that it shall submit a Borrowing Base Certificate to Lender, in form and
substance and with such frequency, as more fully described in Section 9 below,
to include such calculations, in each instance that Lender may deem necessary or
desirable in order to verify whether Borrower is in compliance with the
preceding limitations pertaining to Revolving Credit Advances.
(e) Notwithstanding the limitations set forth above or below,
Lender retains the right to lend Borrower from time to time such amounts in
excess of such limitations as Lender may determine in its sole discretion.
(f) Borrower acknowledges that the exercise of Lender's
discretionary rights hereunder may result during the term of this Agreement in
one or more increases or decreases in the Advance Rates and Borrower hereby
consents to any such increases or decreases which may limit or restrict advances
requested by Borrower.
(g) If Borrower does not pay any interest, fees, costs, or
charges to Lender when due, Borrower shall thereby be deemed to have requested,
and Lender is hereby authorized at its discretion to make and charge to
Borrower's account, a Revolving Credit Advance to Borrower as of such date in an
amount equal to such unpaid interest, fees, costs, or charges.
(h) Any sums expended by Lender due to Borrower's failure to
perform or comply with its obligations under this Agreement, including but not
limited to the payment of taxes, insurance premiums or leasehold obligations,
shall be charged to Borrower's account as a Revolving Credit Advance and added
to the Obligations.
(i) Lender will account to Borrower monthly with a statement
of all Loans and other advances, charges and payments made pursuant to this
Agreement, and such account rendered by Lender shall be deemed final, binding
and conclusive unless Lender is notified by Borrower in writing to the contrary
within thirty (30) days of the date each account was rendered specifying the
item or items to which objection is made.
(j) During the Term, Borrower may borrow, prepay and reborrow
Revolving Credit Advances, all in accordance with the terms and conditions
hereof.
(k) The aggregate balance of Revolving Credit Advances
outstanding at any time shall not exceed the Formula Amount.
3. Repayment of Loans. Borrower shall be required to (i) make a
mandatory prepayment hereunder at any time that the aggregate outstanding
principal balance of the Loans made by Lender to Borrower hereunder is in excess
of the Formula Amount in an amount equal to such excess, and (ii) repay on the
expiration of the Term (x) the then aggregate outstanding principal balance of
Revolving Credit Advances made by Lender to Borrower hereunder together with
accrued and unpaid interest, fees, and charges and (y) all other amounts owed
Lender under this Agreement and the Ancillary Agreements.
4. Procedure for Revolving Credit Advances. Each of Amertranz,
Caribbean, Logistics, and Consolidated appoint Amertranz as its agent and
attorney-in-fact to request and receive any Revolving Credit Advances under this
Agreement and to execute on behalf of each of them any and all documents,
amendments, reports, schedules, waivers and agreements pertaining to, or in
connection with, this Agreement or any of the Aucillary Agreements. Any such
Revolving Credit Advance shall be made to the account of Amertranz or Caribbean
or Consolidated, as the case may be, as requested by agent in accordance with
their requests to Amertranz in such regard. Amertranz may by written notice
request
- 7 -
<PAGE>
a borrowing of Revolving Credit Advances prior to 1:00 P.M. New York time on the
Business Day of its request to incur, on that day, a Revolving Credit Advance.
All Revolving Credit Advances shall be disbursed from whichever office or other
place Lender may designate from time to time and, together with any and all
other Obligations of Borrower to Lender, shall be charged to the Borrower's
account on Lender's books. The proceeds of each Revolving Credit Advance made by
the Lender shall be made available to the Borrower on the day so requested by
way of credit to the Borrower's operating account maintained with such bank as
Borrower designated to Lender. Any and all Obligations due and owing hereunder
may be charged to Borrower's account and shall constitute Revolving Credit
Advances.
5. Interest; Fees
(a) Interest.
(i) Except as modified by paragraph 5(a)(iii)
below, interest on Revolving Credit Advances shall be payable in arrears on the
last day of each month. Interest payments hereunder may, at Lender's option be
charged by Lender to Borrower's account. Interest charges shall be computed on
the unpaid balance of the Revolving Credit Advances for each day they are
outstanding at a rate per annum equal to with respect to Revolving Credit
Advances, the Contract Rate. In the event the aggregate amount of Revolving
Credit Advances exceeds the Formula Amount for five (5) or more days in any
month during the Term, the average daily balance of Revolving Credit Advances in
that month shall bear interest at the Overadvance Rate.
(ii) Interest shall be computed on the basis of
actual days elapsed over a 360-day year.
(iii) Upon the occurrence and during the continu-
ance of an Event of Default, interest shall be payable at the Default Rate.
(iv) Notwithstanding the foregoing, in no event
shall interest exceed the maximum rate permitted under any applicable law or
regulation, and if any provision of this Agreement or an Ancillary Agreement is
in contravention of any such law or regulation, such provision shall be deemed
amended to provide for interest at said maximum rate and any excess amount shall
either be applied, at Lender's option, to the outstanding Loans in such order as
Lender shall determine or refunded by Lender to Borrower.
(v) Borrower shall pay principal, interest and
all other amounts payable hereunder, or under any Ancillary Agreement, without
any deduction whatsoever, including, but not limited to, any deduction for any
set-off or counterclaim.
(b) Fees.
(i) Closing Fee. Upon execution of this Agree-
ment by Borrower and Lender, Borrower shall pay to Lender a closing fee in an
amount equal to fifty thousand $50,000.00 dollars.
(ii) Unused Line Fee. In the event the average
closing daily unpaid balances of all Revolving Credit Advances hereunder during
any calendar month is less than the Maximum Revolving Amount, Borrower shall pay
to Lender a fee at a rate per annum equal to one half of one percent (1/2%) on
the amount by which the Maximum Revolving Amount exceeds such average daily
unpaid balance. Such fee shall be calculated on the basis of a year of 360 days
and actual days elapsed, and shall be charged to Borrower's account on the first
day of each month with respect to the prior month.
(iii) Collateral Monitoring Fee. Upon Lender's
performance of any collateral monitoring namely any field examination,
collateral analysis or other business analysis, the need for which is to be
determined by Lender and which monitoring is undertaken by Lender or for
Lender's benefit, a
- 8 -
<PAGE>
per diem amount equal to Lender's then standard rate per person, for each person
employed to perform such monitoring together with all costs, disbursements and
expenses incurred by the Lender and the person performing such collateral
monitoring shall be charged to Borrower's account. In addition to the foregoing
Borrower during the occurence and continuance of an Event of Default shall in
addition pay Lender a monthly collateral monitoring fee of $5,000.00 per month.
(c) Increased Costs. In the event that any applicable law,
treaty or governmental regulation, or any change therein or in the
interpretation or application thereof, or compliance by Lender (for purposes of
this Section 5(c), the term "Lender" shall include Lender and any corporation or
bank controlling Lender) with any request or directive (whether or not having
the force of law) from any central bank or other financial, monetary or other
authority, shall:
(i) subject Lender to any tax of any kind what-
soever with respect to this Agreement or change the basis of taxation of
payments to Lender of principal, fees, interest or any other amount payable
hereunder or under any Ancillary Agreements (except for changes in the rate of
tax on the overall net income of Lender by the jurisdiction in which it
maintains its principal office);
(ii) impose, modify or hold applicable any
reserve, special deposit, assessment or similar requirement against assets held
by, or deposits in or for the account of, advances or loans by, or other credit
extended by, any office of Lender, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or
(iii) impose on Lender any other condition with
respect to this Agreement or any Ancillary Agreements;
and the result of any of the foregoing is to increase the cost to Lender of
making, renewing or maintaining its Loans hereunder by an amount that Lender
deems to be material or to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the Loans by an amount
that Lender deems to be material, then, in any case Borrower shall promptly pay
Lender, upon its demand, such additional amount as will compensate Lender for
such additional cost or such reduction, as the case may be. Lender shall certify
the amount of such additional cost or reduced amount to Borrower, and such
certification shall be conclusive absent manifest error.
(d) Capital Adequacy.
(i) In the event that Lender shall have deter-
mined that any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Lender (for purposes of this Section 5(d), the term "Lender" shall include
Lender and any corporation or bank controlling Lender) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on Lender's capital as a consequence of
its obligations hereunder to a level below that which Lender could have achieved
but for such adoption, change or compliance (taking into consideration Lender's
policies with respect to capital adequacy) by an amount deemed by Lender to be
material, then, from time to time, Borrower shall pay upon demand to Lender such
additional amount or amounts as will compensate Lender for such reduction. In
determining such amount or amounts, Lender may use any reasonable averaging or
attribution methods. The protection of this Section shall be available to Lender
regardless of any possible contention of invalidity or inapplicability with
respect to the applicable law, regulation or condition.
(ii) A certificate of Lender setting forth such
amount or amounts as shall be necessary to compensate Lender with respect to
Section 5(d) hereof when delivered to Borrower shall be conclusive absent
manifest error.
- 9 -
<PAGE>
(e) Matured Funds. On the last day of each month during the
Term, Lender shall credit Borrower's account with interest at the Matured Funds
Rate in effect during such month on the average daily balance during such month
of any amounts payable by Lender to Borrower hereunder which are not drawn by
Borrower on the Settlement Date.
6. Security Interest.
(a) To secure the prompt payment to Lender of the Obligations,
Borrower hereby assigns, pledges and grants to Lender a continuing security
interest in and to the Collateral, whether now owned or existing or hereafter
acquired or arising and wheresoever located (whether or not the same is subject
to Article 9 of the Uniform Commercial Code). All of the Borrower's ledger
sheets, files, records, books of account, business papers and documents relating
to the Collateral shall, until delivered to or removed by Lender, be kept by
Borrower in trust for Lender until all Obligations have been paid in full. Each
confirmatory assignment schedule or other form of assignment hereafter executed
by Borrower shall be deemed to include the foregoing grant, whether or not the
same appears therein.
(b) Lender may file one or more financing statements
disclosing Lender's security interest in the Collateral without Borrower's
signature appearing thereon or Lender may sign on Borrower's behalf as provided
in paragraph 13 hereof. The parties agree that a carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement. If
any Receivable becomes evidenced by a promissory note or any other instrument
for the payment of money, Borrower will immediately deliver such instrument to
Lender appropriately endorsed.
7. Representations Concerning the Collateral. Borrower represents and
warrants (each of which such representations and warranties shall be deemed
repeated upon the making of each request for a Revolving Credit Advance and made
as of the time of each and every Revolving Credit Advance hereunder):
(a) all the Collateral (i) is owned by Borrower free and clear
of all claims, liens, security interests and encumbrances (including without
limitation any claims of infringement) except (A) those in Lender's favor and
(B) Permitted Liens and (ii) is not subject to any agreement prohibiting the
granting of a security interest or requiring notice of or consent to the
granting of a security interest;
(b) all Receivables (i) represent complete bona fide
transactions which require no further act under any circumstances on Borrower's
part to make such Receivables payable by Customers, (ii) unless they do not
exceed $500 in any one instance or $5,000 in the aggregate to the best of
Borrower's knowledge, are not subject to any present, future or contingent
Disputes; (iii) unless they do not exceed $500 in any one instance or $5,000 in
the aggregate do not represent bill and hold sales, consignment sales,
guaranteed sales, sale or return or other similar understandings or obligations
of any Affiliate or Subsidiary of Borrower; (iv) included in any Borrowing Base
Certificate as an Eligible Receivable meets all criteria specified in the
definition of Eligible Receivables, except as may otherwise be specifically
disclosed in such Borrowing Base Certificate or as otherwise theretofore
disclosed in writing to Lender; and (v) Borrower has no knowledge of any fact or
circumstance not disclosed to Lender in the pertinent Borrowing Base Certificate
or otherwise in writing, which would impair the validity or collectibility of
any Eligible Receivable and that all documents in connection with each
Receivable are genuine.
(c) in the event any amounts due and owing from any account
debtor to Borrower on any Eligible Receivable shall become subject to any
Dispute, or to any other adjustment otherwise permitted to be made in accordance
with the terms and provisions hereof in the ordinary course of business and
prior to the occurrence of an Event of Default hereunder, Borrower agrees that
it shall, at the time of the submission of the next Borrowing Base Certificate
required to be delivered to Lender immediately following the date on which
Borrower learns thereof, provide Lender with notice thereof. Borrower further
agrees that it shall also notify Lender promptly of all returns and credits in
excess of $500 in any one instance or and which in the aggregate do not exceed
$5,000 at any time outstanding in respect
- 10 -
<PAGE>
of any Receivables included within a Borrowing Base Certificate, which notice
shall specify the Receivables affected.
8. Covenants Concerning the Collateral. During the Term, Borrower
covenants that it shall:
(a) not dispose of any of the Collateral whether by sale,
lease or otherwise except for (i) the sale of Inventory in the ordinary course
of business, and (ii) the disposition or transfer of obsolete and wornout
Equipment in the ordinary course of business during any fiscal year having an
aggregate fair market value of not more than $$250,000.00 and only to the extent
that (x) the proceeds of any such disposition are used to acquire replacement
Equipment which is subject to Lender's first priority security interest or (y)
the proceeds of which are remitted to Lender in reduction of the Obligations;
(b) not encumber, mortgage, pledge, assign or grant any
security interest in any Collateral or any of Borrower's other assets to anyone
other than Lender except Permitted Liens;
(c) place notations upon Borrower's books of account and any
financial statement prepared by Borrower to disclose Lender's security interest
in the Collateral;
(d) defend the Collateral against the claims and demands of
all parties.
(e) keep and maintain the Equipment in good operating
condition, except for ordinary wear and tear, and shall make all necessary
repairs and replacements thereof so that the value and operating efficiency
shall at all times be maintained and preserved. Borrower shall not permit any
such items, other than those which were specifically intended to be leasehold
improvements, to become a fixture to real estate or accessions to other personal
property;
(f) not extend the payment terms of any Receivable without
prompt notice thereof to Lender;
(g) perform all other steps requested by Lender to create and
maintain in Lender's favor a valid perfected first security interest in all
Collateral; and
(h) Should Lender so elect, upon the occurrence of any Event
of Default, Lender may at any time in its discretion (i) withdraw Borrower's
authority to issue credits to its Customers without Lender's prior written
consent; or (ii) litigate Disputes or settle them directly with Customers on
terms acceptable to Lender.
9. Collection and Maintenance of Collateral and Records. Lender may at
any time verify Borrower's Receivables utilizing an audit control company or any
other agent of Lender. Lender or Lender's designee may notify Customers, at any
time at Lender's sole discretion, of Lender's security interest in Receivables,
collect them directly and charge the collection costs and expenses to Borrower's
account, but, unless and until Lender does so or gives Borrower other
instructions, Borrower shall instruct all of its Customers to make payments on
account of Receivables to an account under Lender's dominion and control at such
bank as Lender may designate, as provided by the terms of Section 23. To the
extent Borrower receives any payments on account of Receivables, it shall hold
such payments for Lender's benefit in trust as Lender's trustee and immediately
deliver them to Lender in their original form with all necessary endorsements
or, as directed by Lender, deposit such payments as directed by Lender pursuant
to Section 22 hereof. Lender will credit (conditional upon final collection) all
such payments to Borrower's account on the Settlement Date. Promptly after the
creation of any Receivables, Borrower shall provide Lender with schedules
describing all Receivables created or acquired by Borrower and shall execute and
deliver confirmatory written assignments of such Receivables to Lender, but
Borrower's failure to execute and deliver such schedules or written confirmatory
assignments of such Receivables shall not affect or limit Lender's security
interest or other rights in and to the Receivables. Borrower shall furnish, at
Lender's request, copies of contracts, invoices or the equivalent, and any
original shipping and delivery receipts for
- 11 -
<PAGE>
all merchandise sold or services rendered and such other documents and
information as Lender may require. All of Borrower's invoices shall bear the
terms stated on the applicable customer order, and no change from the original
terms of such customer order shall be made without the prior written consent of
Lender. Borrower shall provide Lender on a monthly (within ten (10) days after
the end of each month), or more frequent basis, as requested by Lender, a
summary report of Borrower's current Inventory, certified as true and accurate
by Borrower's President or Chief Financial Officer, as well as an aged trial
balance of Borrower's existing accounts payable. Borrower shall provide Lender,
as requested by Lender, such other schedules, documents and/or information
regarding the Collateral as Lender may require. Without limiting the foregoing,
Borrower shall provide to Lender a borrowing base certificate at least once
daily ("Borrowing Base Certificate"), which must be in form and substance
acceptable to Lender and which Borrowing Base Certificate shall certify to
Lender, and shall contain sufficient information and calculations as Lender may
deem necessary or desirable, in order to verify any Receivables Availability,
the applicable Formula Amount and whether or not Receivables included therein
are Eligible Receivables. Without limiting the foregoing, a Borrowing Base
Certificate must be executed and delivered by Borrower to Lender at the time of
or prior to each request for Revolving Credit Advances pursuant to Section 4.
Each such Borrowing Base Certificate shall be delivered to Lender at its office
described in Section 25 below, on each relevant Business Day.
10. Inspections. At all times during normal business hours, Lender
shall have the right to (a) visit and inspect Borrower's properties and the
Collateral, (b) inspect, audit and make extracts from Borrower's relevant books
and records, including, but not limited to, management letters prepared by
independent accountants, and (c) discuss with Borrower's principal officers, and
independent accountants, Borrower's business, assets, liabilities, financial
condition, results of operations and business prospects. Borrower will deliver
to Lender any instrument necessary for Lender to obtain records from any service
bureau maintaining records for Borrower.
11. Financial Information. Borrower shall provide Lender (a) as soon as
available, but in any event within ninety (90) days after the end of each of
Borrower's fiscal years, Borrower's and Holding, consolidated and consolidating
balance sheet as at the end of such fiscal year and the related statements of
income, retained earnings and statement of cash flow for such fiscal year,
setting forth in comparative form the figures as at the end of and for the
previous fiscal year, which with respect to Holding shall have been reported on
by independent certified public accountants who shall be satisfactory to Lender
and shall be accompanied by an unqualified audit report issued by such
independent certified public accountants; (b) as soon as available, drafts of
Borrower's balance sheet as at the end of each of Borrower's fiscal years and
the related statements of income, retained earnings and statement of cash flow
for such fiscal year, which have been internally prepared by Borrower; (c) as
soon as available, but in any event within thirty (30) days after the close of
each month and quarter, the balance sheet as at the end of such month with
respect to Amertranz and Caribbean, and quarterly with respect to Consolidated
and the related statements of income, retained earnings and changes in statement
of cash flow for such month and quarter, which have been internally prepared by
Borrower. All financial statements required under (a), (b) and (c) above shall
be prepared in accordance with GAAP (except that monthly and quarterly financial
statements need not provide the footnotes customarily required by GAAP but shall
in all other regards be prepared in a manner consistent with GAAP), subject to
year end adjustments in the case of monthly and quarterly statements. Together
with the financial statements furnished pursuant to (a) above, Borrower shall
deliver a certificate of Borrower's certified public accountants addressed to
Lender stating that (i) they have caused this Agreement and the Ancillary
Agreements to be reviewed and (ii) in making the examination necessary for the
issuance of such financial statements, nothing has come to their attention to
lead them to believe that any Event of Default or Incipient Event of Default
exists and, in particular, they have no knowledge of any Event of Default or
Incipient Event of Default or, if such is not the case, specifying such Event of
Default or Incipient Event of Default and its nature, when it occurred and
whether it is continuing. At the times the financial statements are furnished
pursuant to (a), (b) and (c) above, a certificate of Borrower's President or
Chief Financial Officer shall be delivered to Lender stating that, based on an
examination sufficient to enable him to make an informed statement, no Event of
Default or Incipient Event of Default exists, or, if such is not the case,
specifying such Event of Default or Incipient Event of
- 12 -
<PAGE>
Default and its nature, when it occurred, whether it is continuing and the steps
being taken by Borrower with respect to such event. If any internally prepared
financial information, including that required under this paragraph, is
unsatisfactory in any manner to Lender, Lender may request that Borrower's
independent certified public accountants review same.
In addition to the foregoing financial statements, Borrower
shall furnish Lender no less than thirty (30) days prior to the beginning of
each fiscal year commencing with fiscal year 1998, a month by month projected
operating budget and cash flow for such fiscal year (including an income
statement for each month and a balance sheet as at the end of the last month in
each fiscal quarter), such projections to be accompanied by a certificate signed
by Borrower's President or Chief Financial Officer to the effect that such
projections have been prepared on the basis of sound financial planning practice
consistent with past budgets and financial statements and that such officer has
no reason to question the reasonableness of any material assumptions on which
such projections were prepared.
12. Additional Representations, Warranties and Covenants. Borrower
represents and warrants (each of which such representations and warranties shall
be deemed repeated upon the making of a request for a Revolving Credit Advance
and made as of the time of each Revolving Credit Advance made hereunder), and
covenants that:
(a) Caribbean is a corporation duly organized and validly
existing under the laws of the State of Delaware Consolidated is a corporation
duly organized under the State of Delaware and Amertranz is a corporation duly
organized under the State of Delaware and each is duly qualified and in good
standing in every other state or jurisdiction in which the nature of their
business requires such qualification;
(b) the execution, delivery and performance of this Agreement
and the Ancillary Agreements (i) have been duly authorized, (ii) are not in
contravention of Borrower's certificate of incorporation, by-laws or of any
indenture, agreement or undertaking to which Borrower is a party or by which
Borrower is bound and (iii) are within Borrower's corporate powers;
(c) this Agreement and the Ancillary Agreements executed and
delivered by Borrower are Borrower's legal, valid and binding obligations,
enforceable in accordance with their terms;
(d) it keeps and will continue to keep all of its books and
records concerning the Collateral at Borrowers' executive offices located at the
respective addresses set forth in the introductory paragraph of this Agreement
and will not move such books and records without giving Lender at least thirty
(30) days prior written notice;
(e) (i) the operation of Borrower's business is and will
continue to be in compliance in all material respects with all applicable
federal, state and local laws, including but not limited to all applicable
environmental laws and regulations.
(ii) Borrower will establish and maintain a
system to assure and monitor continued compliance with all applicable
environmental laws, which system shall include periodic reviews of such
compliance.
(iii) in the event the Borrower obtains, gives or
receives notice of any release or threat of release of a reportable quantity of
any Hazardous Substances on its property (any such event being hereinafter
referred to as a "Hazardous Discharge") or receives any notice of violation,
request for information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions on its property, demand
letter or complaint, order, citation, or other written notice with regard to any
Hazardous Discharge or violation of any environmental laws affecting its
property or Borrower's interest therein (any of the foregoing is referred to
herein as an "Environmental Complaint") from any Person or entity, including any
state agency responsible in whole or in part for environmental matters in
- 13 -
<PAGE>
the state in which such property is located or the United States Environmental
Protection Agency (any such person or entity hereinafter the "Authority"), then
the Borrower shall, within five (5) Business Days, give written notice of same
to the Lender detailing facts and circumstances of which the Borrower is aware
giving rise to the Hazardous Discharge or Environmental Complaint and
periodically inform Lender of the status of the matter. Such information is to
be provided to allow the Lender to protect its security interest in the
Collateral and is not intended to create nor shall it create any obligation upon
the Lender with respect thereto.
(iv) Borrower shall respond promptly to any
Hazardous Discharge or Environmental Complaint and take all necessary action in
order to safeguard the health of any Person and to avoid subjecting the
Collateral to any lien, charge, claim or encumbrance. If Borrower shall fail to
respond promptly to any Hazardous Discharge or Environmental Complaint or
Borrower shall fail to comply with any of the requirements of any environmental
laws, the Lender may, but without the obligation to do so, for the sole purpose
of protecting the Lender's interest in Collateral: (A) give such notices or (B)
enter onto Borrower's property (or authorize third parties to enter onto such
property) and take such actions as the Lender (or such third parties as directed
by the Lender) deem reasonably necessary or advisable, to clean up, remove,
mitigate or otherwise deal with any such Hazardous Discharge or Environmental
Complaint. All reasonable costs and expenses incurred by the Lender (or such
third parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Revolving Credit Advances shall be paid upon demand by the
Borrower, and until paid shall be added to and become a part of the Obligations
secured by the Liens created by the terms of this Agreement or any other
agreement between Lender and Borrower.
(v) Borrower shall defend and indemnify the
Lender and hold the Lender harmless from and against all loss, liability, damage
and expense, claims, costs, fines and penalties, including attorney's fees,
suffered or incurred by the Lender under or on account of any environmental
laws, including, without limitation, the assertion of any lien thereunder, with
respect to any Hazardous Discharge, the presence of any hazardous substances
affecting Borrower's property, whether or not the same originates or emerges
from Borrower's property or any contiguous real estate, including any loss of
value of the Collateral as a result of the foregoing except to the extent such
loss, liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of the Lender. The Borrower's obligations
under this paragraph 12(e) shall arise upon the discovery of the presence of any
Hazardous Substances on the Borrower's property, whether or not any federal,
state, or local environmental agency has taken or threatened any action in
connection with the presence of any hazardous substances. The Borrower's
obligation and the indemnifications hereunder shall survive the termination of
this Agreement.
(vi) For purposes of paragraph 12(e) all
references to Borrower's property shall be deemed to include all of Borrower's
right, title and interest in and to all owned and/or leased premises;
(f) based upon the Employee Retirement Income Security Act of
1974 ("ERISA"), and the regulations and published interpretations thereunder:
(i) Borrower has not engaged in any Prohibited Transactions as defined in
paragraph 406 of ERISA and paragraph 4975 of the Internal Revenue Code, as
amended; (ii) Borrower has met all applicable minimum funding requirements under
paragraph 302 of ERISA in respect of its plans; (iii) Borrower has no knowledge
of any event or occurrence which would cause the Pension Benefit Guaranty
Corporation to institute proceedings under Title IV of ERISA to terminate any
employee benefit plan(s); (iv) Borrower has no fiduciary responsibility for
investments with respect to any plan existing for the benefit of persons other
than Borrower's employees; and (v) Borrower has not withdrawn, completely or
partially, from any multiemployer pension plan so as to incur liability under
the Multiemployer Pension Plan Amendments Act of 1980;
- 14 -
<PAGE>
(g) it is solvent, able to pay its debts as they mature, has
capital sufficient to carry on its business and all businesses in which it is
about to engage and the fair saleable value of its assets (calculated on a going
concern basis) is in excess of the amount of its liabilities;
(h) there is no pending or threatened litigation, actions or
proceeding which involve the possibility of materially and adversely affecting
the Borrower's business, assets, operations, condition or prospects, financial
or otherwise, or the Collateral or the ability of Borrower to perform this
Agreement;
(i) all balance sheets and income statements which have been
delivered to Lender fairly, accurately and properly state Borrower's financial
condition on a basis consistent with that of previous financial statements and
except as otherwise disclosed to Lender in writing prior to the date hereof with
respect to operating losses during the fiscal quarter ending December 31, 1996,
there has been no material adverse change in Borrower's financial condition as
reflected in such statements since the date thereof and such statements do not
fail to disclose any fact or facts which might materially and adversely affect
Borrower's financial condition;
(j) (x) it possesses all of the licenses, patents, copyrights,
trademarks, tradenames and permits necessary to conduct its business, (y) there
has been no assertion or claim of violation or infringement with respect thereof
and (z) all such licenses, patents, copyrights, trademarks, tradenames and
permits are listed on Schedule 12(j);
(k) it will pay or discharge when due all taxes, assessments
and governmental charges or levies imposed upon it;
(l) it will promptly inform Lender in writing of: (i) the
commencement of all proceedings and investigations by or before and/or the
receipt of any notices from, any governmental or nongovernmental body and all
actions and proceedings in any court or before any arbitrator against or in any
way concerning any of Borrower's properties, assets or business, which might
singly or in the aggregate, have a materially adverse effect on Borrower; (ii)
any amendment of Borrower's certificate of incorporation or by-laws; (iii) any
change in Borrower's business, assets, liabilities, condition (financial or
otherwise), results of operations or business prospects which has had or might
have a materially adverse effect on Borrower; (iv) any Event of Default or
Incipient Event of Default; (v) any default or any event which with the passage
of time or giving of notice or both would constitute a default under any
agreement for the payment of money to which Borrower is a party or by which
Borrower or any of Borrower's properties may be bound which would have a
material adverse effect on Borrower's business, operations, property or
condition (financial or otherwise) or the Collateral; (vi) any change in the
location of Borrower's executive offices; (vii) any change in the location of
Borrower's Inventory or Equipment which in the aggregate have a value in excess
of $20,000.00 from the locations listed on Schedule 12(l) attached hereto,
(viii) any change in Borrower's corporate name; (ix) any material delay in
Borrower's performance of any of its obligations to any Customer and of any
assertion of any material claims, offsets, counterclaims or Disputes by any
Customer and of any allowances, credits and/or other monies granted by it to any
Customer; (x) furnish to and inform Lender of all material adverse information
relating to the financial condition of any account debtor; and (xi) any material
return of goods;
(m) it will not without the express prior written consent of
Lender (i) create, incur, assume or suffer to exist any indebtedness (exclusive
of trade debt) whether secured or unsecured other than Borrower's indebtedness
to Lender and as set forth on Schedule 12(m) attached hereto and made a part
hereof; (ii) declare, pay or make any dividend or distribution on any shares of
the common stock or preferred stock of Borrower or apply any of its funds,
property or assets to the purchase, redemption or other retirement of any common
or preferred stock of Borrower; (iii) directly or indirectly, prepay any
indebtedness (other than to Lender), or repurchase, redeem, retire or otherwise
acquire any indebtedness of Borrower; (iv) makes advances, loans or extensions
of credit to any Person; (v) become either directly or contingently liable upon
the obligations of any Person by assumption, endorsement or guaranty thereof or
otherwise; (vi) enter into any merger, consolidation or other reorganization
with or into any other Person
- 15 -
<PAGE>
or acquire all or a portion of the assets or stock of any Person or permit any
other Person to consolidate with or merge with it; (vii) form any Subsidiary or
enter into any partnership, joint venture or similar arrangement; (viii)
materially change the nature of the business in which it is presently engaged;
(ix) change its fiscal year or make any changes in accounting treatment and
reporting practices without prior written notice to Lender except as required by
GAAP or in the tax reporting treatment or except as required by law; (x) enter
into any transaction with any Affiliate, except in ordinary course on arms
length terms; or (xi) bill Receivables under any name except the present name of
the Borrower; (xii) sell, transfer or lease or otherwise dispose of any of its
properties or assets, except in the ordinary course of its business;
(n) it shall not permit consolidated net worth of Amertranz
Worldwide Holding Corp., determined in accordance with GAAP as in effect on the
Closing Date, as of the end of any fiscal quarter to be less than Beginning
Shareholder's Equity ("BSE") plus the amount set forth below (in thousands) for
each respective measurement date:
<TABLE>
<CAPTION>
Quarter Ended 1997 1998 1999 2000
BSE Plus BSE Plus BSE Plus BSE Plus
<S> <C> <C> <C> <C>
March (100) 300 700 1,100
June 0 400 800 -
September 100 500 900 -
December 200 600 1,000 -
</TABLE>
(o) it shall not permit the consolidated net profit of
Amertranz Worldwide Holding Corp., determined in accordance with GAAP as in
effect on the Closing Date, as of the end of any fiscal quarter to be less than
$100,000 except that for the fiscal quarter ending March 31, 1997 Borrower may
show a loss of no more than $100,000.00.
(p) it shall not permit the BNYFC Interest Coverage Ratio, as
of the end of each fiscal quarter of Amertranz Worldwide Holding Corp. for the
preceding four fiscal quarters, to be less than 1.15:1; provided, however, that
the BNYFC Interest Coverage Ratio shall first be measured as of June 30, 1997
for the preceding fiscal quarter only; and provided, further, that the BNYFC
Interest Coverage Ratio shall be measured as of September 30, 1997 for the
preceding two fiscal quarters and as of December 31, 1997 for the preceding
three fiscal quarters.
(q) the Borrower's level of (i) unrestricted cash, plus (ii)
the Formula Amount less Revolving Credit Advances, shall at all times be equal
to no less then fifty percent (50%) of the Borrower's net revolving availability
at the end of each month, as reflected on Schedule 12(q) hereto through December
31, 1997, and thereafter as reflected on the Borrower's operative cash flow for
each year as shown by the Borrower in the annual projections submitted by
Borrower to Lender.
(r) it will not make capital expenditures in any fiscal year
in an amount in excess of $500,000.
(s) none of the proceeds of the Loans hereunder will be used
directly or indirectly to "purchase" or "carry" "margin stock" or to repay
indebtedness incurred to "purchase" or "carry" "margin stock" within the
respective meanings of each of the quoted terms under Regulation G of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect; and
(t) it will bear the full risk of loss from any loss of any
nature whatsoever with respect to the Collateral. At its own cost and expense in
amounts and with carriers acceptable to Lender, it shall (i) keep all its
insurable properties and properties in which it has an interest insured against
the hazards of fire, flood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary
in the case of companies engaged in businesses similar to Borrower's including,
without limitation, business interruption insurance; (ii) maintain a bond in
such amounts as is customary in the case of companies engaged in businesses
similar to Borrower's insuring
- 16 -
<PAGE>
against larceny, embezzlement or other criminal misappropriation of insured's
officers and employees who may either singly or jointly with others at any time
have access to the assets or funds of Borrower either directly or through
authority to draw upon such funds or to direct generally the disposition of such
assets; (iii) maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others; (iv) maintain all
such workmen's compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which Borrower is engaged in business; (v)
furnish Lender with (x) copies of all policies and evidence of the maintenance
of such policies at least thirty (30) days before any expiration date, and (y)
appropriate loss payable endorsements in form and substance satisfactory to
Lender, naming Lender as loss payee and providing that as to Lender the
insurance coverage shall not be impaired or invalidated by any act or neglect of
Borrower and the insurer will provide Lender with at least thirty (30) days
notice prior to cancellation. Borrower shall instruct the insurance carriers
that in the event of any loss thereunder, the carriers shall make payment for
such loss to Lender and not to Borrower and Lender jointly. If any insurance
losses are paid by check, draft or other instrument payable to Borrower and
Lender jointly, Lender may endorse Borrower's name thereon and do such other
things as Lender may deem advisable to reduce the same to cash. Lender is hereby
authorized to adjust and compromise claims. All loss recoveries received by
Lender upon any such insurance may be applied to the Obligations, in such order
as Lender in its sole discretion shall determine. Any surplus shall be paid by
Lender to Borrower or applied as may be otherwise required by law. Any
deficiency thereon shall be paid by Borrower to Lender, on demand.
(u) it shall not purchase or acquire obligations or stock of,
or any other interest in, or make any investment in any entity, without the
express written consent of Lender, except (A) obligations issued or guaranteed
by the United States of America or any agency thereof, (B) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (C) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(x) such bank has a combined capital and surplus of at least $500,000,000, or
(y) its debt obligations, or those of a holding company of which it is a
subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency and (D) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
Agency thereof, and (E) Eurodollar time deposits with financial institutions
with a published rating of not less than A-1 or P-1 (or the equivalent rating).
13. Power of Attorney. Borrower hereby appoints Lender or any other
Person whom Lender may designate as Borrower's attorney, with power to: (i)
endorse Borrower's name on any checks, notes, acceptances, money orders, drafts
or other forms of payment or security that may come into Lender's possession;
(ii) sign Borrower's name on any invoice or bill of lading relating to any
Receivables, drafts against Customers, schedules and assignments of Receivables,
notices of assignment, financing statements and other public records,
verifications of account and notices to or from Customers; (iii) verify the
validity, amount or any other matter relating to any Receivable by mail,
telephone, telegraph or otherwise with Customers; (iv) execute customs
declarations and such other documents as may be required to clear Inventory
through Customs; (v) do all things necessary to carry out this Agreement, any
Ancillary Agreement and all related documents; and (vi) on or after the
occurrence and continuation of an Event of Default, notify the post office
authorities to change the address for delivery of Borrower's mail to an address
designated by Lender, and to receive, open and dispose of all mail addressed to
Borrower. Borrower hereby ratifies and approves all acts of the attorney.
Neither Lender nor the attorney will be liable for any acts or omissions or for
any error of judgment or mistake of fact or law except those arising from their
actual willful misconduct. This power, being coupled with an interest, is
irrevocable so long as any Receivable which is assigned to Lender or in which
Lender has a security interest remains unpaid and until the Obligations have
been fully satisfied.
14. Expenses. Borrower shall pay all of Lender's out-of-pocket costs
and expenses, including without limitation reasonable fees and disbursements of
counsel retained or employed by Lender and appraisers, in connection with the
preparation, execution and delivery of this Agreement and the Ancillary
- 17 -
<PAGE>
Agreements, and in connection with the prosecution or defense of any action,
contest, dispute, suit or proceeding concerning any matter in any way arising
out of, related to or connected with this Agreement or any Ancillary Agreement.
Borrower shall also pay all of Lender's out-of-pocket costs and expenses,
including without limitation reasonable fees and disbursements of counsel
retained or employed by Lender, in connection with (a) the preparation,
execution and delivery of any waiver, any amendment thereto or consent proposed
or executed in connection with the transactions contemplated by this Agreement
or the Ancillary Agreements, (b) Lender's obtaining performance of the
Obligations under this Agreement and any Ancillary Agreements, including, but
not limited to, the enforcement or defense of Lender's security interests,
assignments of rights and liens hereunder as valid perfected security interests,
(c) any attempt to inspect, verify, protect, collect, sell, liquidate or
otherwise dispose of any Collateral, and (d) any consultations in connection
with any of the foregoing. Borrower shall also pay Lender's then standard price
for furnishing Borrower or its designees copies of any statements, records,
files or other data (collectively, "Reports") requested by Borrower or its
designees, other than reports of the kind furnished to Borrower and Lender's
other borrowers on a regular, periodic basis in the ordinary course of Lender's
business. Borrower shall also pay Lender's customary bank charges, including,
without limitation, all wire transfer fees incurred by Lender, for all bank
services performed or caused to be performed by Lender for Borrower at
Borrower's request. All such costs and expenses together with all filing,
recording and search fees, taxes and interest payable by Borrower to Lender
shall be payable on demand and shall be secured by the Collateral. If any tax
(other than taxes on Lender's general income, or gross receipt taxes) by any
governmental authority is or may be imposed on or as a result of any transaction
between Borrower and Lender which Lender is or may be required to withhold or
pay, Borrower agrees to indemnify and hold Lender harmless in respect of such
taxes, and Borrower will repay to Lender the amount of any such taxes which
shall be charged to Borrower's account; and until Borrower shall furnish Lender
with indemnity therefor (or supply Lender with evidence satisfactory to it that
due provision for the payment thereof has been made), Lender may hold without
interest any balance standing to Borrower's credit and Lender shall retain its
security interests in any and all Collateral. Borrower hereby acknowledges that
Lender shall not be liable in any manner whatsoever for any selling expenses,
orders, purchases or contracts of any kind resulting from any transaction
between Borrower and any other Person and Borrower hereby indemnifies and holds
Lender harmless with respect thereto, which indemnity shall survive termination
of this Agreement.
15. Assignment. Lender may assign any or all of the Obligations
together with any or all of the security therefor and any transferee shall
succeed to all of Lender's rights with respect thereto provided that such
transferee accepts Lenders duties hereunder if Lender in such assignment divests
itself of such duties. Upon such transfer, Lender shall be released from all
responsibility for the Collateral to the extent same is assigned to any
transferee. Lender may from time to time sell or otherwise grant participations
in any of the Obligations and the holder of any such participation shall,
subject to the terms of any agreement between Lender and such holder, be
entitled to the same benefits as Lender with respect to any security for the
Obligations in which such holder is a participant. Borrower agrees that each
such holder may exercise any and all rights of banker's lien, set-off and
counterclaim with respect to its participation in the Obligations as fully as
though Borrower were directly indebted to such holder in the amount of such
participation. Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of Lender,
and no such assignment or transfer of any such obligation shall relieve Borrower
thereof unless Lender shall have consented to such release in a writing
specifically referring to the obligation from which Borrower is to be released.
16. Waivers. Borrower waives presentment and protest of any instrument
and notice thereof, notice of default and all other notices to which Borrower
might otherwise be entitled.
17. Term of Agreement. This Agreement shall continue in full force and
effect until the expiration of the Term. The Term shall be automatically
extended for successive periods of one (1) year each unless either party shall
have provided the other with a written notice of termination, at least ninety
(90) days prior to the expiration of the initial Term or any renewal Term. The
Borrower may terminate this Agreement at any time upon sixty (60) days' prior
written notice ("Termination Date") upon payment in
- 18 -
<PAGE>
full of the Obligations provided, that, if such termination takes place more
than 90 days prior to the end of the initial Term or any renewal Term, Borrower
pays an early termination fee in an amount equal to the the Required Percentage
of the Maximum Revolving Advance Amount. For the purposes hereof, Required
Percentage shall mean (a) 2% from the Closing Date to the first anniversary
thereof, 1 1/2% from the first anniversary of the Closing Date to the second
anniversary thereof, and 1% from the second anniversary of the Closing Date to
the third anniversary thereof or during any renewal term thereafter
18. Events of Default. The occurrence of any of the following shall
constitute an Event of Default:
(a) failure to make payment of any of the Obligations when
required hereunder;
(b) failure to pay any taxes when due unless such taxes are
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves have been provided on Borrower's books which failure is
not cured within 10 days of its occurrence;
(c) failure to perform under and/or committing any breach of
this Agreement or any Ancillary Agreement or any other agreement between
Borrower and Lender which if not described in any other paragraphs of this
Section 18 and which if subject to cure is not cured with 10 days of its
occurrence;
(d) occurrence of a default which failure is not cured within
10 days of its occurrence under any agreement to which Borrower is a party with
third parties which has a material adverse affect upon Borrower's business,
operations, property or condition (financial or otherwise) including all leases
for any premises where Inventory or Equipment is located;
(e) any representation, warranty or statement made by Borrower
hereunder, in any Ancillary Agreement, any certificate, statement or document
delivered pursuant to the terms hereof, or in connection with the transactions
contemplated by this Agreement should at any time be false or misleading in any
material respect and which if subject to cure, and as to which Lender has not
relied to its detriment, is not cured with 10 days of the delivery of any such
certificate, statement or document to Lender;
(f) an attachment or levy is made upon any of Borrower's
assets having an aggregate value in excess of $10,000, or a judgment is rendered
against Borrower or any of Borrower's property involving a liability of more
than $10,000, which shall not have been vacated, discharged, stayed or bonded
pending appeal within thirty (30) days from the entry thereof;
(g) any change in Borrower's condition or affairs (financial
or otherwise) which in Lender's opinion impairs the Collateral or the ability of
Borrower to perform its Obligations;
(h) any lien created hereunder or under any Ancillary
Agreement for any reason ceases to be or is not a valid and perfected lien
having a first priority interest;
(i) if Borrower shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;
(j) Borrower shall admit in writing its inability, or be
generally unable to pay its debts as they become due or cease operations of its
present business;
- 19 -
<PAGE>
(k) any Affiliate or any Subsidiary or any Guarantor shall (i)
apply for or consent to the appointment of, or the taking possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business, (iii) make a general assignment for the benefit of creditors, (iv)
commence a voluntary case under the federal bankruptcy laws (as now or hereafter
in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws,
(viii) take any action for the purpose of effecting any of the foregoing;
(l) Borrower directly or indirectly sells, assigns, transfers,
conveys, or suffers or permits to occur any sale, assignment, transfer or
conveyance of any assets of Borrower or any interest therein, except as
permitted herein;
(m) Borrower fails to operate in the ordinary course of
business which failure is not cured within 10 days of its occurrence;
(n) Lender shall in good faith deem itself insecure or unsafe
or shall fear diminution in value, removal or waste of the Collateral;
(o) a default by Borrower which failure is not cured within 10
days of its occurrence in the payment, when due, of any
principal of or interest
on any indebtedness for money borrowed in excess of $100,000.00;
(p) if any Guarantor attempts to terminate, challenges the
validity of, or its liability under any Guaranty Agreement or Guarantor Security
Agreement;
(q) should any Guarantor default in its obligations under any
Guaranty Agreement or any Guarantor Security Agreement or if any proceeding
shall be brought to challenge the validity, binding effect of any Guaranty
Agreement or any Guarantor Security Agreement, or should any Guarantor breach
any representation, warranty or covenant contained in any Guaranty Agreement or
any Guarantor Security Agreement or should any Guaranty Agreement or Guarantor
Security Agreement cease to be a valid, binding and enforceable obligation; or
(r) any Change of Ownership.
19. Remedies. (a) Upon the occurrence of an Event of Default pursuant
to paragraph 18 (i) herein, all Obligations shall be immediately due and payable
and this Agreement shall be deemed terminated; upon the occurrence and
continuation of any other of the Events of Default, Lender shall have the right
to demand repayment in full of all Obligations, whether or not otherwise due
and/or to terminate this Agreement without advance notice. Until all Obligations
have been fully satisfied, Lender shall retain its security interest in all
Collateral. Lender shall have, in addition to all other rights provided herein,
the rights and remedies of a secured party under the Uniform Commercial Code,
and under other applicable law, all other legal and equitable rights to which
Lender may be entitled, including without limitation, the right to take
immediate possession of the Collateral, to require Borrower to assemble the
Collateral, at Borrower's expense, and to make it available to Lender at a place
designated by Lender which is reasonably convenient to both parties and to enter
any of the premises of Borrower or wherever the Collateral shall be located,
with or without force or process of law, and to keep and store the same on said
premises until sold (and if said premises be the property of Borrower, Borrower
agrees not to charge Lender for storage thereof for a period up to at least
sixty (60) days after sale or disposition of said Collateral). Further, Lender
may, at any time or times after default by Borrower, sell and deliver all
Collateral held by or for Lender at public or private sale for cash, upon credit
or otherwise, at such prices and upon such terms as Lender, in Lender's sole
discretion, deems advisable or Lender may otherwise recover upon the Collateral
in any commercially reasonable manner as Lender, in its sole discretion,
- 20 -
<PAGE>
deems advisable. Except as to that part of the Collateral which is perishable or
threatens to decline speedily in nature or is of a type customarily sold on a
recognized market, the requirement of reasonable notice shall be met if such
notice is mailed postage prepaid to Borrower at Borrower's address as shown in
Lender's records, at least ten (10) days before the time of the event of which
notice is being given. Lender may be the purchaser at any sale, if it is public.
In connection with the exercise of the foregoing remedies, Lender is granted
permission to use all of Borrower's trademarks, tradenames, tradestyles,
patents, patent applications, licenses, franchises and other proprietary rights
which are used in connection with (a) Inventory for the purpose of disposing of
such Inventory and (b) Equipment for the purpose of completing the manufacture
of unfinished goods. The proceeds of sale shall be applied first to all costs
and expenses of sale, including attorneys' fees, and second to the payment (in
whatever order Lender elects) of all Obligations. Lender will return any excess
to Borrower and Borrower shall remain liable to Lender for any deficiency.
20. Waiver; Cumulative Remedies. Failure by Lender to exercise any
right, remedy or option under this Agreement or any supplement hereto or any
other agreement between Borrower and Lender or delay by Lender in exercising the
same, will not operate as a waiver; no waiver by Lender will be effective unless
it is in writing and then only to the extent specifically stated. Lender's
rights and remedies under this Agreement will be cumulative and not exclusive of
any other right or remedy which Lender may have.
21. Application of Payments. Borrower irrevocably waives the right to
direct the application of any and all payments at any time or times hereafter
received by Lender from or on Borrower's behalf and Borrower hereby irrevocably
agrees that Lender shall have the continuing exclusive right to apply and
reapply any and all payments received at any time or times hereafter against
Borrower's Obligations hereunder in such manner as Lender may deem advisable
notwithstanding any entry by Lender upon any of Lender's books and records.
22. Depository Accounts. Any payment received by Borrower on account of
any Collateral shall be held by Borrower in trust for Lender and Borrower shall
promptly deliver same in kind to Lender or deposit all such payments into a cash
collateral account at such bank as Lender may designate for application to
payment of the Obligations. Borrower shall also execute such further documents
as Lender may deem necessary to establish such an account and all funds
deposited in such account shall immediately be deemed Lender's property.
23. Lock Box Accounts. Borrower shall, at Lender's request, instruct
all of its Customers to make such payments on account of Receivables to an
account under Lender's dominion and control at such bank as Lender may
designate. Borrower shall also execute such further documents as Lender may deem
necessary to establish such an account and all funds deposited in such account
shall immediately be deemed Lender's property.
24. Revival. Borrower further agrees that to the extent Borrower makes
a payment or payments to Lender, which payment or payments or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
then, to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made.
25. Notices. Any notice or request hereunder may be given to Borrower
or Lender at the respective addresses set forth below or as may hereafter be
specified in a notice designated as a change of address under this paragraph.
Any notice or request hereunder shall be given by registered or certified mail,
return receipt requested, or by overnight mail or by telecopy (confirmed by
mail). Notices and requests shall be, in the case of those by mail or overnight
mail, deemed to have been given when deposited in the mail or with the overnight
mail carrier, and, in the case of a telecopy, when confirmed.
- 21 -
<PAGE>
Notices shall be provided as follows:
If to the Lender: BNY Financial Corporation
1290 Avenue of the Americas
New York, New York 10104
Attention: Frank Imperato, V.P.
Telephone: 212-408-7026
Telecopy: 212-408-7162
If to the Borrower: Amertranz Worldwide, Inc.
2001 Marcus Avenue
Suite W288
Lake Success, NY 11042
Attention: Stuart Hettleman
Telephone: 516-326-9000
Telecopy: 516-326-2248
With a copy to: Hilel Tendler, Esq.
Gordon, Feinblatt, Rothman,
Hoffberger & Hollander, LLC
233 E. Redwood Street
Baltimore, MD 21202
Telephone: 410-576-4071
Telecopy: 410-576-4246
26. Governing Law and Waiver of Jury Trial. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. LENDER SHALL HAVE THE RIGHTS AND REMEDIES OF A SECURED PARTY UNDER
APPLICABLE LAW INCLUDING, BUT NOT LIMITED TO, THE UNIFORM COMMERCIAL CODE OF NEW
YORK. BORROWER AGREES THAT ALL ACTIONS AND PROCEEDINGS RELATING DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR ANY OTHER OBLIGATIONS
SHALL BE LITIGATED IN THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK OR, AT LENDER'S OPTION, IN ANY OTHER COURTS LOCATED IN NEW YORK STATE OR
ELSEWHERE AS LENDER MAY SELECT AND THAT SUCH COURTS ARE CONVENIENT FORUMS AND
BORROWER SUBMITS TO THE PERSONAL JURISDICTION OF SUCH COURTS. BORROWER WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS THAT SERVICE OF PROCESS UPON BORROWER
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED
TO BORROWER AT BORROWER'S ADDRESS APPEARING ON LENDER'S RECORDS, AND SERVICE SO
MADE SHALL BE DEEMED COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO
MAILED. BOTH PARTIES HERETO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BETWEEN BORROWER AND LENDER AND BORROWER WAIVES THE RIGHT TO ASSERT
IN ANY ACTION OR PROCEEDING INSTITUTED BY LENDER WITH REGARD TO THIS AGREEMENT
OR ANY OF THE OBLIGATIONS ANY OFFSETS OR COUNTERCLAIMS WHICH IT MAY HAVE.
27. Limitation of Liability. Borrower acknowledges and understands that
in order to assure repayment of the Obligations hereunder Lender may be required
to exercise any and all of Lender's rights and remedies hereunder and agrees
that neither Lender nor any of Lender's agents shall be liable for acts taken or
omissions made in connection herewith or therewith except for actual bad faith.
28. Entire Understanding. This Agreement and the Ancillary Agreements
contain the entire understanding between Borrower and Lender and any promises,
representations, warranties or guarantees not herein contained shall have no
force and effect unless in writing, signed by the Borrower's and Lender's
respective officers. Neither this Agreement, the Ancillary Agreements, nor any
portion or provisions thereof may be changed, modified, amended, waived,
supplemented, discharged, cancelled or
- 22 -
<PAGE>
terminated orally or by any course of dealing, or in any manner other than by an
agreement in writing, signed by the party to be charged.
29. Modification. This Agreement and the Ancillary Agreements
constitute the complete agreement between the parties with respect to the
subject matter hereof and thereof and may not be modified, altered or amended
except by an agreement in writing signed by the parties hereto and thereto.
30. Severability. Wherever possible each provision of this Agreement or
the Ancillary Agreements shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement or the
Ancillary Agreements 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
thereof.
31. Captions. All captions are and shall be without substantive meaning
or content of any kind whatsoever.
32. Counterparts. This Agreement may be executed in one or more
counterparts, each of which taken together shall constitute one and the same
instrument.
33. Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
- 23 -
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
AMERTRANZ WORLDWIDE, INC.
ATTEST:
/s/ By: /s/
- - ----------------------------- -----------------------------
SECRETARY Title:
CARIBBEAN AIR SERVICES, INC.
/s/ By: /s/
- - ----------------------------- -----------------------------
SECRETARY Title:
CONSOLIDATED AIR SERVICES, INC.
/s/ By: /s/
- - ----------------------------- -----------------------------
SECRETARY Title:
BNY FINANCIAL CORPORATION
/s/ By: /s/
- - ----------------------------- -----------------------------
SECRETARY Title:
- 24 -
<PAGE>
SCHEDULES
Schedule 1(A) - Permitted Liens
Schedule 12(j) - Licenses, Patents, Trademarks and Copyrights
Schedule 12(l) - Inventory Locations
Schedule 12(m) - Permitted Indebtedness
- 25 -
<PAGE>
EXHIBIT 10.2
April 16, 1997
Amertranz Worldwide, Inc.
Caribbean Air Services, Inc.
Consolidated Air Services, Inc.
2001 Marcus Avenue
Lake Success, New York 11042
Ladies/Gentlemen:
Reference is made to the Accounts Receivable Management and Security
Agreement between us bearing the effective date of January 14, 1997 (the
"Agreement"). All capitalized terms not otherwise defined herein shall have such
meanings as ascribed to them under the Agreement.
It is hereby agreed that the Agreement shall be amended in the
following manner:
1. Paragraph 12(n) is hereby amended in its entirety to now state as
follows:
(n) "it shall not permit consolidated net worth of
Amertranz Worldwide Holding Corp., determined in
accordance with GAAP, at the end of any fiscal
quarter to be less than the amount set forth below
(in thousands) for each respective measurement date:
Quarter Ended 1997 1998 1999 2000
March 1,500 1,900 2,300 2,700
June 1,600 2,000 2,400
September 1,700 2,100 2,500
December 1,800 2,200 2,600 "
2. Paragraph 12(o) is hereby amended in its entirety to now state as
follows:
(o) "it shall not permit the consolidated net profit
(loss) of Amertranz Worldwide Holding Corp.,
determined in accordance with GAAP to fall below the
amount set forth below (in thousands) for each
respective measurement date:
Quarter Ended 1997 1998 1999 2000
March (1,200) (700) 100 100
June (1,000) (500) 100
September ( 750) (200) 100
December 0 100 100 "
3. The text of Paragraph 12(p) is hereby deleted and shall be
intentionally left blank.
4. Paragraph 12(q) is hereby amended by deleting the dollar amount of
"$1,781,000" as the Borrower's net revolving availability for the
month of March 1997 as set forth in Schedule 12(q) of the Agreement
and by inserting in its place and stead the dollar amount of
"$1,200,000".
5. Section 5(b)(iii) of the Agreement shall be amended by deleting the
text of the last sentence appearing therein and inserting in its
place and stead the following sentence the text of which shall
state:
"in addition to the foregoing the Borrower shall in
addition pay to Lender a monthly Collateral
Monitoring Fee of $5,000.00 per month through
September 30, 1997 and provided there does not exist
an Event of Default or Incipient Event of Default on
such date Borrower shall thereafter pay $2,000 per
month, through the Term of this Agreement and through
any renewal Term (if however, there exists
<PAGE>
an Event of Default or Incipient Event of Default on
September 30, 1997 the Collateral Monitoring Fee
shall not be reduced and shall continue at $5,000 per
month through the end of the Term and any renewal
Term) and in the event of any termination of the
Agreement, prior to the end of the Term or renewal
Term pursuant to Section 17 of the Agreement or
otherwise, the then remaining monthly payments
through the balance of the Term or renewal Term (as
the case may be) shall be payable in full."
6. The definition of "Contract Rate" appearing on page 3 of the
Agreement shall be amended by deleting the words and numerals "one
and one-half percent (1 1/2%)" appearing on the end of the second
and beginning of the third line of said definition and inserting in
their place and stead the words and numerals "two percent (2%)".
It is further agreed between us that this letter is expressly
conditioned upon Amertranz Worldwide Holding Corp. raising an additional
$2,000,000 in capital (after expenses), on terms acceptable to us, within 60
business day of the execution of this letter, and if such capital is not raised
by Amertranz Worldwide Holding Corp on such terms then in such event this letter
Agreement and the Shadow Warrant executed by Amertranz Worldwide Holding Corp.
in our favor of even date herewith shall each be void ab initio.
Provided that the financial information you have delivered to us with
respect to your operations are accurate, we agree to waive as an Event of
Default your failure to achieve the performance requirements of the financial
covenants set forth in Sections 12(n), (o), (p), and (q) of the Agreement
through March 31, 1997. The waiver provided in this paragraph is expressly
limited to the sections of the Agreement specifically referred to in the
preceding sentence and only for the period stated, and should not be construed
as a waiver of any other provisions of the Agreement nor of those sections
stated for any other time period.
In consideration of the resetting of the financial covenants provided
in paragraphs 1 through 4 above, you agree to pay to us a covenant amendment fee
of $15,000 and in consideration of the limited waiver set forth in the preceding
paragraph, you agree to pay us a fee of $15,000 (the payment of which fees shall
be effectuated by our charging your loan account with us). In addition to the
above fees and in consideration of the benefits derived from the accommodations
provided hereunder Amertranz Worldwide Holding Corp. ("Holding") agrees to enter
into the Shadow Warrant Agreement in our favor delivered to you with this letter
(and the amendments of paragraphs herein numbered 1 through 4 and the limited
waiver set forth in the preceding paragraph are expressly conditioned upon the
immediate delivery to us of such Shadow Warrant Agreement executed by Holding).
These fees and Shadow Warrant shall be in addition to any other fees, charges,
or expenses payable by you to us under the Agreement.
Except as hereby specifically modified or amended all of the
terms and conditions set forth in the Agreement shall continue to remain in full
force and effect in accordance with their original terms.
If the foregoing correctly sets forth the Agreement between us, please
execute a copy of this letter in the space provided below and return a fully
executed copy to our offices.
Very truly yours,
BNY FINANCIAL CORPORATION
By: /s/
------------------------------
Title:
READ & AGREED TO:
Amertranz Worldwide, Inc.
By: /s/
-------------------------------
Title:
Caribbean Air Services, Inc.
By: /s/
-------------------------------
Title:
- 2 -
<PAGE>
Consolidated Air Services, Inc.
By: /s/
-------------------------------
Title:
- 3 -
<PAGE>
EXHIBIT 10.3
S H A D O W W A R R A N T
AGREEMENT dated as of April 16, 1997 between Amertranz
Worldwide Holding Corp. , a Delaware corporation (the "Company"), and BNY
FINANCIAL CORPORATION, a New York corporation ("BNYFC").
WHEREAS, BNYFC had made and has been asked to continue to make
financial accommodations to those subsidiaries of the Company financed by BNYFC
under the Loan Agreement (herein after defined); and
WHEREAS, in order to induce BNYFC to continue to extend
financial accommodations to those subsidiaries of the Company financed by BNYFC
under the Loan Agreement the Company proposes to issue to BNYFC this Shadow
Warrant;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article I, whenever used in this
Agreement, shall have the respective meanings hereinafter specified. Capitalized
terms not otherwise defined herein have the meanings ascribed to such terms in
the Loan and Security Agreement.
"Adjusted Market Value" means, as of any day, a dollar amount
that is equal to (a) the Current Market Price of the Common Stock multiplied by
the number of shares of the Common Stock outstanding on that day plus (b) the
aggregate liquidation preference of all outstanding shares of Preferred Stock
plus (c) the Warrant Value.
"Adjusted Book Value" means, as of any day, a dollar amount
that is equal to (a) the value of the total assets shown on the Balance Sheet
plus (b) the Warrant Value minus (c) the value of the total liabilities shown on
the Balance Sheet.
"Applicable Percentage" means a percentage which is equal to
one-quarter of one percent (1/4%) or such other increased percentage as may at
the time be applicable under Section 3.1(c).
"Balance Sheet" means the consolidated balance sheet of the
Company and its Subsidiaries as of the end of the most recent [month] [quarter]
ending prior to the date of the calculation in question.
"Board of Directors" means the Board of Directors of the
Company.
"Capital Stock" means the Common Stock of the Company or any
class of capital stock of the Company now or hereafter authorized, having the
right to share in distributions either of earnings or assets of the Company.
"Closing Date" means the date of this Agreement.
"Common Stock" means the common stock of the Company, $0.01
par value per share, and any shares of Capital Stock issued in exchange for or
distributed with respect to the Common Stock.
"Company" means Amertranz Worldwide Holding Corp., a Delaware
corporation, and any successor corporation.
"Contingent Payment" means, as of any day, a dollar amount
equal to the Equity Value as of such day multiplied by the Applicable Percentage
as of such day which in no event shall exceed $300,000.
"Current Market Price" means the average of the daily closing
sales prices of the Common Stock on all domestic exchanges on which the Common
Stock may at the time be listed, or, if there shall have been no sales on any
such exchange on any day, the average of the reported bid prices on all such
exchanges at the end of such day, or, if on any day the Common Stock shall not
be so listed, the average
<PAGE>
of the representative bid prices quoted in the NASDAQ System as of 3:30 P.M.,
New York time, or if on any day the Common Stock shall not be quoted in the
NASDAQ System, the average of the high and low bid prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case averaged
over a period of 15 consecutive business days (or such other period as shall be
specified herein) immediately prior to, but not including, the date as of which
"Current Market Price" is being determined; provided that if the Common Stock is
listed on any domestic exchange the term "business days" as used in this
sentence shall mean business days on which such exchange is open for trading. If
during the period referred to above the Common Stock is not listed on any
domestic exchange or quoted in the NASDAQ System or the domestic
over-the-counter market, the "Current Market Price" shall be deemed to be the
fair value thereof as determined by any investment bank of recognized standing
selected by mutual agreement of the Company and the Holder as of the date which
is within 15 days of the date as of which the determination is to be made (in
determining the fair value thereof, the firm of independent public accountants
may consider, among other factors, stock market valuations and price to earnings
ratios of comparable companies in similar industries).
"Default Rate" means the Default Rate as defined in the Loan
and Security Agreement.
"Determination Date" means, with respect to any distribution
to holders of Capital Stock, the record date for determining the holders of
Capital Stock entitled to receive such distribution, and, with respect to any
sale to any Person or distribution to Persons other than holders of Capital
Stock, the date of such sale or distribution.
"Equity Value" means, as of any day, the greater of the
Adjusted Market Value as of such day and the Adjusted Book Value as of such day.
"Event of Default" means (a) the failure by the Company to
comply with any covenant contained herein in any material respect which is not
cured within ten (10) days and (b) but only so long as the Loan and Security
Agreement is in effect, an Event of Default (as such term is defined in the Loan
and Security Agreement).
"Exercise Period" means the period commencing on April 1,
1998, and terminating on the later of (i) the termination of the Accounts
Receivable Management and Security Agreement between BNYFC and Company's
subsidiaries Amertranz Worldwide, Inc., Caribbean Air Services, Inc. and
Consolidated Air Services, Inc., or (ii) 3 years from the date hereof..
"Exercise Right" means the right to receive payment of the
Contingent Payment from the Company and the exercise of which gives rise to the
obligation of the Company to pay the Contingent Payment to Holder as provided in
Article 2.
"Fair Value" means, as applied to any security, property,
assets, business or entity, the fair value thereof as determined by an opinion
of an independent investment banking firm or firms of national reputation in
accordance with the following procedure: In the case of any event which gives
rise to a requirement to determine "Fair Value" pursuant to the provisions
hereof, the Company shall be responsible for initiating the process by which
Fair Value shall be determined as promptly as practicable following such event,
and if the procedures contemplated in connection with obtaining such opinion
have not been complied with fully, then any such determination of Fair Value for
any purpose of this Agreement shall be deemed to be preliminary and subject to
adjustment pending full compliance with such procedures. The Company and the
Holder shall each retain a separate independent investment banking firm (which
firm, in either case, may be the independent investment banking firm regularly
retained by the Company or the Holder); provided, however, that the Holder may,
at its option, elect to rely on the firm retained by the Company in lieu of
retaining its own firm. Such firm (or firms) shall determine the fair value of
the security, property, assets business or entity, as the case may be, in
question and deliver their (or its) opinion in writing to the Company and to the
Holder. If such firms cannot jointly make such determination (or in the event
that the Holder has elected to rely upon the firm retained by the Company and
disagrees with the determination made by such firm), then, unless otherwise
directed by agreement of the Company and the Holder, such firm (or firms), in
their (or its) sole discretion, shall choose another independent investment
banking firm which firm shall make such determination and render such an
opinion. If the Shadow Warrant has been divided, any determination, decision or
choice to be made by the Holder in the procedure for determining Fair Value
shall be made by agreement among the Holders of Shadow Warrants, entitling them
to at least two-thirds of the Contingent Payment. The fees and expenses of all
investment banking firms incurred in determining Fair Value shall be borne by
the Company. Notwithstanding the foregoing, if a security is actively traded on
a public market Fair Value means, with reference to that security, the Current
Market Price thereof as of any date of determination.
- 2 -
<PAGE>
"Holder" means (a) BNY Financial Corporation, and (b) each
assignee of a Holder (including a Holder which is such by virtue of this clause
(b)).
"Loan and Security Agreement" means the Accounts Receivable
Management and Security Agreement dated as of January 14, 1997, between BNYFC
and the Company's subsidiaries Amertranz Worldwide, Inc., Caribbean Air
Services, Inc. and Consolidated Air Services, Inc., as the same may be amended
from time to time.
"New York Time" shall mean, with respect to any determination
of the time for performance hereunder, the time of day determined by the local
time in New York, New York.
"Notice Event" means any of the following events: (a) any
Restricted Payment, (b) any merger, consolidation, recapitalization or capital
reorganization of the Company, (c) any partial or complete liquidation of the
Company, (d) any sale or disposition of all or substantially all of the assets
of the Company, (e) any public offering by the Company of all or part of any
class of Capital Stock pursuant to an effective registration statement under the
Securities Act, (f) any tender offer by a Person for more than 50% of any
outstanding class of securities issued by the Company (a "Tender Offer"), (g)
any sale or other disposition by the Company or holder(s) of Capital Stock of
shares of Capital Stock constituting (on a cumulative basis) more than 50% of
the number of shares of Capital Stock then outstanding, (h) any continuing Event
of Default.
"Notice Event Notice" has the meaning set forth in Section
2.3.
"Notice of Exercise" means a notice of Exercise substantially
in the form attached hereto as Exhibit A.
"Opinion of Counsel" means an opinion of counsel experienced
in Securities Act matters reasonably acceptable to the Company chosen by a
Holder, which counsel may be counsel to such Holder.
"Preferred Stock" means all classes of Capital Stock, other
than Common Stock.
"Restricted Payment" means any payment with respect to or on
account of any of the Company's Capital Securities, including any dividend
(other than dividends on the Company's classes of preferred stock, per value
$10.00 per share or other distribution on, any payment of interest on or
principal of, and any payment on account of any purchase, redemption,
retirement, exchange, defeasance or conversion of, or on account of any claim
relating to or arising out of the offer, sale or purchase of, any such Capital
Securities. For the purposes of this definition, a "payment" shall include the
transfer of any asset or the incurrence of any Indebtedness or other liability
(the amount of any such payment to be the Fair Value of such asset or the amount
of such obligation, respectively); and "Capital Security" means (a) any share of
Capital Stock of the Company or (b) any security convertible into, or any
option, warrant or other right to acquire, any share of such Capital Stock.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor Federal statute, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, all as the same shall
be in effect from time to time.
"Shadow Warrant" means the rights and benefits that a Holder
is entitled to under this Agreement.
"Stock" means the Capital Stock and any preferred stock issued
by the Company.
"Warrant Value" means, as of any day, a dollar amount that is
equal to the aggregate principal amount of all debt outstanding as of such day
that is convertible into or exchangeable for Common Stock and the aggregate
liquidation value of all other securities outstanding as of such day that are
convertible into or exchangeable for Common Stock plus the aggregate exercise
prices of all options, warrants and the like to purchase Capital Stock
outstanding as of such day.
Whenever used in this Agreement, any noun or pronoun shall be
deemed to include both the singular and plural and to cover all genders, and the
words "herein", "hereof", and "hereunder" and words of similar import shall
refer to this Agreement as a whole, including any amendments hereto. Except as
otherwise defined herein, accounting terms used herein shall have the meanings
assigned to them by, and any calculations or adjustments made pursuant to the
terms hereof shall be made in accordance with, generally accepted accounting
principles as in effect on the date hereof.
- 3 -
<PAGE>
ARTICLE II
EXERCISE OF SHADOW WARRANT
2.1 In General. On the terms and subject to the conditions of
this ARTICLE II, the Holder shall have the right, at its option, to exercise its
rights under this Agreement at any time during the Exercise Period. Upon such
exercise, the Holder shall be entitled to receive from the Company the
Contingent Payment as hereinafter provided.
2.2 Exercise During Exercise Period. The Exercise Right may be
exercised once by the Holder at any time during the Exercise Period, provided
that an exercise of the Exercise Right that is revoked as contemplated by
Section 2.4 shall not constitute, for this purpose, an exercise of the Exercise
Right. If Holder does not exercise this Warrant during the Exercise Period then
in such event on the day following the end of the Exercise Period the Company
shall pay to Holder the sum of $150,000.00.
2.3 Notice in Connection With a Notice Event. At least 20 days
(but in the case of a Tender Offer fifteen (15) days) prior to the earlier of
(a) the effective date of any Notice Event and (b) any record date of the
holders of Capital Stock for purposes of approving or participating in any such
Notice Event, the Company shall give the Holder notice thereof (a "Notice Event
Notice") setting forth all material information known to the Company relating to
the proposed Notice Event.
2.4 Manner of Exercise. To exercise its Exercise Right the
Holder shall deliver to the Company (a) Notice of Exercise in the form of
Exhibit A hereto duly executed by the Holder. Upon receipt of the required
delivery, the Company shall, as promptly as practicable, begin the process of
determining the Contingent Payment to be made. Such determination shall be
completed within fifteen (15) days of receipt of the required deliveries. Upon
determination of such Contingent Payment in accordance with the terms of this
Agreement, the Company shall as promptly as practicable, and in any event within
three (3) days after such determination, notify the Holder in writing of the
amount of such Contingent Payment (or portion thereof). Upon receipt of such
notice, Holder may for a period of thirty (30) days after receipt thereof revoke
the Notice of Exercise. If Holder does not revoke the Notice of Exercise, the
Company shall, as promptly as practicable, and in any event within three (3)
days after the expiration of the period during which Holder may revoke the
Notice of Exercise, cause to be paid to Holder such Contingent Payment. Such
payment shall, at the option of the Holder, be made by wire transfer of funds to
an account in a bank located in the United States designated by Holder for such
purpose or by certified or official bank check payable to the order of the
Holder and drawn on a member of the New York Clearing House.
2.5 Effectiveness of Exercise. Unless otherwise requested by
the Holder thereof, the Exercise Right shall be deemed to have been exercised
and the Contingent Payment shall be determined as of the close of business on
the date the Notice of Exercise is received by the Company.
2.6 Adjustment for Subsequent Notice Events. If within one
hundred eighty (180) days after Holder exercises its Exercise Right, a Notice
Event occurs which is within the control of the Company and/or any of its
officers or directors and Holder had not received written notice of such pending
Notice Event at least ten (10) Business Days prior to the exercise of its
Exercise Right, then the Company shall have the Contingent Payment determined as
a result of such subsequent Notice Event. If such amount is greater than the
amount which Holder received upon the exercise of the Exercise Right, the
Company shall, within two (2) Business Days pay the amount of such excess to the
Holder. If such amount is lower than the amount which Holder received upon the
exercise of the Exercise Right, Holder shall not be obligated to pay any amount
to the Company.
ARTICLE III
ANTI-DILUTION PROVISIONS AND
PARTICIPATION IN CORPORATE DISTRIBUTIONS
3.1 (a) The Company shall not make any sale or distribution of
any capital stock or assets or take any other corporate action of any kind or
nature which individually or in the aggregate when taken as a whole would in any
material manner adversely affect the rights of the Holder under any provisions
of this Agreement, and which would not fairly protect the rights of the Holder
to receive the Contingent Payment (or portion thereof) in accordance with the
provisions and intent of this Agreement. The Company shall take all necessary
actions and make all necessary adjustments in the application of the provisions
of this Agreement in accordance with such essential intent and principles of
this Agreement
- 4 -
<PAGE>
so as to protect such rights of the Holder hereunder, and so as to preserve the
Applicable Percentage and the rights of the Holder to maintain without dilution
the value of the Contingent Payment.
(b) Upon the occurrence of any event which under the
provisions of Section 3.1(c) below requires an adjustment of the Applicable
Percentage, the Company shall promptly thereafter cause to be filed with it and
delivered to the Holder a certificate of a firm of independent public
accountants of recognized standing selected by the Board of Directors (who may
be the regular accountants of the Company) setting forth in reasonable detail
the adjustment, the reason therefor, the method of calculation of the
adjustment, and the facts upon which the calculations are based. The Holder may
contest such determination by the procedures set forth in Section 4.3 herein.
(c) Notwithstanding anything which may be contained in this
Agreement to the contrary, if prior to the exercise of the Exercise Right
provided that an exercise of the Exercise Right that is revoked as contemplated
by Section 2.4 shall not constitute, for this purpose, an exercise of the
Exercise Right, the Company shall have made any Restricted Payment whether in
cash, securities or other property, any stock dividends, stock splits or
dividend of options or warrants to purchase Capital Stock, the original
Applicable Percentage of one-quarter of one percent (1/4%) on the date of this
Agreement shall be increased immediately after such Restricted Payment to a
percentage which is equal to one-quarter of one percent (1/4%) multiplied by a
fraction, the numerator of which is the Equity Value determined immediately
before such Restricted Payment and the denominator of which is the Equity Value
determined immediately before such Restricted Payment minus the aggregate dollar
amount of such Restricted Payment, with the "dollar amount" of any payment that
is made other than in cash being reasonably determined by an independent
investment banking firm selected by mutual agreement of the Company and the
Holder, provided that in no event shall the Applicable Percentage exceed 25%.
ARTICLE IV
FINANCIAL AND BUSINESS INFORMATION
4.1 Information. At all times while this Agreement is in force
and effect the Company shall deliver to Holder such financial and other
information as required under the Loan and Security Agreement, whether or not
the Loan and Security Agreement is then in effect.
4.2 Reports. The Company shall also send to the Holder
promptly upon their becoming available, one copy of each report, notice or proxy
statement sent by the Company to its stockholders generally and of each regular
or periodic report or registration statement, prospectus or written
communication (other than transmittal letters) filed by the Company with the
Securities and Exchange Commission or any securities exchange on which shares of
Capital Stock are listed.
4.3 Disputes. Holder shall have the right to object to any
certificates, financial statements or other information delivered pursuant to
Section 3.1(b) or Section 4.1 that are used in connection with the determination
of the Applicable Percentage or Contingent Payment, and, unless such objection
is resolved by agreement of the Company and the Holder, the Company and Holder
shall each have the right to submit the disputed matters to separate firms of
independent accountants of recognized national standing for a joint resolution
of the objection of such Holder (which firm of independent accountants may, in
either case, be the firm of accountants regularly retained by the Company or
Holder). If such Firms cannot jointly resolve the objection of Holder, then,
unless otherwise directed by Agreement of the Company and the Holders, such
firms shall in their sole discretion choose another firm of independent
certified public accountants of recognized national standing not the regular
auditor of Holder, the Company or their Affiliates, which firm shall resolve
such objection. In either case, the determinations so made shall be conclusive
under or through any of them, and any adjustment of the number or value of the
Applicable Percentage or Contingent Payment resulting from such determination
shall be made. The cost of any such determination shall be borne by the Company.
4.4 Interest and Extension of Exercise Period. Interest shall
be payable at the rate payable on loans under the Loan and Security Agreement
or, during an Event of Default, the Default Rate on any further amount payable
pursuant to an adjustment made under this Agreement. Whenever any dispute shall
exist under any provision of this Agreement, the Exercise Period shall be
automatically extended for a period of time equal to the period of time which it
takes to resolve such dispute,
- 5 -
<PAGE>
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Holder that, as
of the Closing Date: the authorized capitalization of the Company is as set
forth on Schedule A; the number of shares of Common Stock issued and outstanding
are shown on schedule "A" annexed hereto, and no shares of the Company's Common
Stock are held in its treasury except as shown on said Schedule "A"; all
unissued shares of Common Stock reserved for any purpose; and all rights,
including without limitation, options, warrants or other convertible or
exchangeable securities entitling the holder thereof to acquire shares of Stock
are set forth on Schedule A; all the outstanding shares of the Company's Common
Stock have been validly issued without violation of any preemptive or similar
rights and are fully paid and nonassessable.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE HOLDER
6.1 The Holder is acquiring this Shadow Warrant for its own
account for the purpose of investment and not with a view to distribution or
resale thereof.
6.2 Holder has the requisite knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of the Shadow Warrant and has evaluated such risks.
ARTICLE VII
MISCELLANEOUS
7.1 Nonwaiver. No course of dealing or any delay or failure to
exercise any right, power or remedy hereunder on the part of the Holder shall
operate as a waiver of or otherwise prejudice Holder rights, powers or remedies.
7.2 Holder Not a Stockholder. Nothing contained in this
Agreement shall be construed as conferring upon the Holder the right to purchase
any shares of Capital Stock of the Company, the right to vote or to consent or
to receive notice as stockholders in respect of the meetings of stockholders or
the election of Directors of the Company or any other matter, or any rights
whatsoever as a stockholder of the Company.
7.3 Notices. Any notice, demand or delivery to be made
pursuant to the provisions of this Agreement shall be given to the attention of
Holder in the manner and at the address specified in, or determined in
accordance with, Section 25 of the Loan and Security Agreement, whether or not
then in effect. Each Holder of a Shadow Warrant and the Company may designate a
different address by notice to the other pursuant to this Section 7.3.
7.4 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Company and the
Holder.
7.5 Modification and Severability. If, in any action before
any court or agency legally empowered to enforce any provision contained herein,
any provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Agreement, but the Agreement, as applicable, shall be
construed as if such unenforceable provision had never been contained herein.
7.6 Integration. This Agreement replaces all prior agreements,
supersedes all prior negotiations and constitutes the entire agreement of the
parties with respect to the transactions contemplated herein.
7.7 Amendment. Except as otherwise provided herein, this
Agreement may not be modified or amended except by written Agreement of the
Company and the Holder.
- 6 -
<PAGE>
7.8 Headings. The headings of the Articles and Sections of
this Agreement are for the convenience of reference only and shall not, for any
purpose, be deemed a part of this Agreement.
7.9 Governing Law. This agreement shall be governed by the
laws of the State of New York. THE PARTIES HERETO HEREBY WAIVE ANY RIGHTS THEY
MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY JUDICIAL PROCEEDINGS HEREUNDER.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
AMERTRANZ WORLDWIDE HOLDING, CORP.
By: /s/
---------------------------------
Title:
BNY FINANCIAL CORPORATION
By: /s/
---------------------------------
Title:
- 7 -
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE FORM
The undersigned hereby exercises its Exercise Rights under the
Shadow Warrant dated as of ____________________ (the "Shadow Warrant Agreement")
between AMERTRANZ WORLDWIDE HOLDING, CORP., a ___________________ Corporation
(the "Company"), and BNY FINANCIAL CORPORATION, a New York corporation, and
requests that the Contingent Payment (as defined in the Shadow Warrant
Agreement) be delivered to the undersigned in the manner and form specified
below:
Dated: _______________, ____
By:
---------------------------------
Signature of Holder
- 8 -
<PAGE>
SCHEDULE A
Authorized Capitalization of the Company
I. Preferred Stock $10.00 par value per share
Authorized - 2,500,000 shares
Issued and Outstanding - 220,000 shares
II. Common Stock $0.01 par value per share
Authorized - 15,000,000 shares
Issued and Outstanding - 5,926,504 shares
- 9 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements as of and for the period ended March 31, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001009480
<NAME> AMERTRANZ WORLDWIDE HOLDING CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 327
<SECURITIES> 0
<RECEIVABLES> 11,301
<ALLOWANCES> 433
<INVENTORY> 0
<CURRENT-ASSETS> 12,053
<PP&E> 1,845
<DEPRECIATION> 717
<TOTAL-ASSETS> 25,706
<CURRENT-LIABILITIES> 19,221
<BONDS> 0
0
2,200
<COMMON> 59
<OTHER-SE> (215)
<TOTAL-LIABILITY-AND-EQUITY> 25,706
<SALES> 53,266
<TOTAL-REVENUES> 53,266
<CGS> 39,808
<TOTAL-COSTS> 39,808
<OTHER-EXPENSES> 16,361
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,089
<INCOME-PRETAX> (3,928)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,928)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,928)
<EPS-PRIMARY> (0.67)
<EPS-DILUTED> 0
</TABLE>
