EXHIBIT
10.6
LOAN
AGREEMENT
This
Agreement dated as of January 10, 2006, is among Bank of America, N.A.
(the
“Bank”), Radiant Logistics, Inc. (“Radiant”) and Airgroup Corporation
(“Airgroup”) (Radiant and Airgroup are sometimes referred to collectively as the
“Borrowers” and individually as the “Borrower”).
1.
DEFINITIONS
In
addition to the terms that are defined elsewhere in this Agreement, the
following terms have the meanings indicated for the purposes of this
Agreement:
1.1
“
Borrowing
Base
”
means
(a) 75% of the balance due on Acceptable Receivables if the Borrowers’ Funded
Debt to EBITDA ratio (as defined herein) is less than or equal to 3.0X
and (b)
70% of the balance due on Acceptable Receivables if the Borrowers’ Funded Debt
to EBITDA ratio is greater than 3.0X and less than 3.25X.
After
calculating the Borrowing Base as provided above, the Bank may deduct such
reserves as the Bank may establish from time to time in its reasonable
credit
judgment, including, without limitation, reserves for rent at leased locations
subject to statutory or contractual landlord’s liens, inventory shrinkage,
dilution, customs charges, warehousemen’s or bailees’ charges, liabilities to
growers of agricultural products which are entitled to lien rights under
the
federal Perishable Agricultural Commodities Act or any applicable state
law, and
the amount of estimated maximum exposure, as determined by the Bank from
time to
time, under any interest rate contracts which any Borrower enters into
with the
Bank (including interest rate swaps, caps, floors, options thereon, combinations
thereof, or similar contracts).
1.2
“
Acceptable
Receivable
”
means
an account receivable which satisfies the following requirements:
|
(a)
|
The
account has resulted from the performance of services by any
Borrower in
the ordinary course of such Borrower’s
business.
|
|
(b)
|
There
are no conditions which must be satisfied before the Borrowers
are
entitled to receive payment of the account. Accounts arising
from COD
sales, consignments or guaranteed sales are not
acceptable.
|
|
(c)
|
The
debtor upon the account does not claim any defense to payment
of the
account, whether well founded or
otherwise.
|
|
(d)
|
The
account is not the obligation of an account debtor who has asserted
or may
properly assert any counterclaims or offsets against the Borrowers
(including offsets for any “contra accounts” owed by the Borrowers to the
account debtor for goods purchased by the Borrowers or for services
performed for the Borrowers).
|
|
(e)
|
The
account represents a genuine obligation of the debtor for goods
sold to
and accepted by the debtor, or for services performed for and
accepted by
the debtor. To the extent any credit balances exist in favor
of the
debtor, such credit balances shall be deducted from the account
balance.
|
|
(f)
|
The
account balance does not include the amount of any finance or
service
charges payable by the account debtor. To the extent any finance
charges
or service charges are included, such amounts shall be deducted
from the
account balance.
|
|
(g)
|
The
Borrowers have sent an invoice to the debtor in the amount of
the
account.
|
|
(h)
|
The
Borrowers are not prohibited by the laws of the state where the
account
debtor is located from bringing an action in the courts of that
state to
enforce the debtor’s obligation to pay the account. The Borrowers have
taken all appropriate actions to ensure access to the courts
of the state
where the account debtor is located, including, where necessary,
the
filing of a Notice of Business Activities Report or other similar
filing
with the applicable state agency or the qualification by the
Borrowers as
a foreign corporation authorized to transact business in such
state.
|
|
(i)
|
The
account is owned by the Borrowers free of any title defects or
any liens
or interests of others except the security interest in favor
of the
Bank.
|
|
(j)
|
The
debtor upon the account is not any of the
following:
|
|
(i)
|
An
employee, affiliate, parent or subsidiary of any Borrower, or
an entity
which has common officers or directors with any
Borrower.
|
|
(ii)
|
The
U.S. government or any agency or department of the U.S. government
unless
the Bank agrees in writing to accept the obligation, the Borrowers
comply
with the procedures in the Federal Assignment of Claims Act of
1940 (41
U.S.C. §15) with respect to the obligation, and the underlying contract
expressly provides that neither the U.S. government nor any agency
or
department thereof shall have the right of set-off against the
Borrowers.
|
|
(iii)
|
Any
state, county, city, town or
municipality.
|
|
(iv)
|
Any
person or entity located in a foreign
country.
|
|
(k)
|
The
account is not in default. An account will be considered in default
if any
of the following occur:
|
|
(i)
|
The
account is not paid within ninety (90) days from its invoice
date;
|
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(ii)
|
The
debtor obligated upon the account suspends business, makes a
general
assignment for the benefit of creditors, or fails to pay its
debts
generally as they come due; or
|
|
(iii)
|
Any
petition is filed by or against the debtor obligated upon the
account
under any bankruptcy law or any other law or laws for the relief
of
debtors.
|
|
(l)
|
The
account is not the obligation of a debtor who is in default (as
defined
above) on 25% or more of the accounts upon which such debtor
is
obligated.
|
|
(m)
|
The
account does not arise from the sale of goods which remain in
any
Borrower’s possession or under the Borrower’s
control.
|
|
(n)
|
The
account is not evidenced by a promissory note or chattel paper,
nor is the
account debtor obligated to any Borrower under any other obligation
that
is evidenced by a promissory note.
|
|
(o)
|
The
account is otherwise acceptable to the
Bank.
|
In
addition to the foregoing limitations, the dollar amount of accounts included
as
Acceptable Receivables that are the obligations of a single debtor shall
not
exceed the concentration limit established for that debtor. To the extent
the
total of such accounts exceeds a debtor’s concentration limit, the amount of any
such excess shall be excluded. The concentration limit for each debtor
shall be
equal to 20% of the total amount of the Borrowers’ Acceptable Receivables.
1.3
“
Credit
Limit
”
means
the amount of Ten Million and 00/100 Dollars ($10,000,000.00).
1.4
“Permitted
Acquisition” means an acquisition of a company by Radiant, whether by stock
purchase, asset purchase, stock exchange, merger, consolidation or otherwise,
that meet the following conditions and requirements:
| (a) |
No
default shall have occurred and be continuing, and after giving
effect to
such acquisition, no default shall have occurred and be continuing;
|
| (b) |
The
company that is the subject and target of such proposed acquisition
(the
“Target”) is engaged in the conduct of business in the transportation
and
logistics industry materially similar to that of Radiant;
|
| (c) |
The
proposed purchase price to be paid by Radiant in connection with
such
proposed acquisition shall be consistent with the business and
acquisition
historical model of Radiant;
|
| (d) |
Internally
prepared quarterly projected financial statements (including
balance
sheet, profit and loss statement, cash flow statement and availability
report) for a period of 12 months following the proposed closing
date of
the proposed acquisition, prepared on a consolidated basis for
Radiant and
the Target (but having a separate column for the status and performance
of
the Target, and including consolidating numbers for the end of
such 12
month period) including a demonstration of continued compliance
with all
financial covenants set forth in this Agreement during such 12
month
period (“Acquisitions Projections”) shall have been provided to the Bank
and are reasonably satisfactory to the
Bank;
|
| (e) |
All
documents, instruments and agreements, and the terms and conditions
thereof, specifically including all purchase agreements, merger
agreements, documents relating to the creation of new subsidiaries
by
Radiant in connection with the proposed acquisition, documents,
certificates and other evidences showing that all approvals necessary
in
connection with such proposed acquisition as contemplated by
the parties
to the proposed acquisition and/or required by law have been
obtained and
all other documents relating to any transactions to be consummated
in
connection with such proposed acquisition (“Acquisition Documents”) shall
have been provided to and are consistent with the description
of the
transaction given to the Bank by Radiant and do not reflect any
violation
or reasonably likely violation of this Agreement or applicable
law;
|
| (f) |
The
number of Permitted Acquisitions consummated and closed by Radiant
during
each year following the date of this Agreement shall not exceed
three (3)
such Permitted Acquisitions and shall not exceed $7,500,000 aggregate
cash
purchase price financed by the incurrence of funded debt (excluding
from
such calculation in this clause (f) any stock only, no cash
transaction).
|
| (g) |
Radiant
has provided a certificate that all of the conditions set forth
herein
have been met.
|
| (h) |
Borrowers
shall, and after giving effect to the funding of such proposed
acquisition, have undrawn borrowing availability under Facility
No. 1 of
at least $2,000,000.
|
|
(j)
|
The
conditions precedent set forth in clauses (d) and (e) shall be
completed
at least twenty (20) business days prior to the date any such
proposed
Permitted Acquisition is to be consummated and
closed.
|
|
(k)
|
If
Radiant desires to include the accounts of the newly acquired
subsidiary
as Acceptable Receivables, the Bank shall first have completed
a field
audit and examination of such new subsidiary (“Acquisition Field Audit”),
the conduct of which (including the access provided to the Bank
to the
books and records, employees and locations of the Target) and
results of
which must be satisfactory to the Bank, no later than twenty
(20) business
days prior to the date on which Radiant wishes to include such
accounts as
Acceptable Receivables.
|
|
(l)
|
The
newly acquired subsidiary shall become a Borrower under this
Agreement and
shall execute and deliver a security agreement to grant the Bank
a
security interest in its personal property, including without
limitation,
accounts, equipment, furniture, fixtures, inventory and general
intangibles.
|
|
(m)
|
The
Airgroup Corporation acquisition shall be a Permitted
Acquisition.
|
2.
FACILITY
NO. 1: LINE OF CREDIT AMOUNT AND TERMS
2.1
Line
of Credit Amount
.
|
(a)
|
During
the availability period described below, the Bank will provide
a line of
credit to the Borrowers. The amount of the line of credit (the
“Facility
No. 1 Commitment”) is equal to the lesser of (i) the Credit Limit or (ii)
the Borrowing Base.
|
|
(b)
|
This
is a revolving line of credit. During the availability period,
the
Borrowers may repay principal amounts and reborrow
them.
|
|
(c)
|
The
Borrowers agree not to permit the principal balance outstanding
to exceed
the Facility No. 1 Commitment. If the Borrowers exceed this limit,
the
Borrowers will immediately pay the excess to the Bank upon the
Bank’s
demand.
|
2.2
Availability
Period
.
The
line of credit is available between the date of this Agreement and February
1,
2008, or such earlier date as the availability may terminate as provided
in this
Agreement (the “Facility No. 1 Expiration Date”).
The
availability period for this line of credit will be considered renewed
if and
only if the Bank has sent to the Borrowers a written notice of renewal
effective
as of the Facility No. 1 Expiration Date for the line of credit (the “Renewal
Notice”). If this line of credit is renewed, it will continue to be subject to
all the terms and conditions set forth in this Agreement except as modified
by
the Renewal Notice. The Borrower specifically understands and agrees that
the
interest rate applicable to this line of credit may be increased upon renewal
and that the new interest rate will apply to the entire outstanding principal
balance of the line of credit. If this line of credit is renewed, the term
“Expiration Date” shall mean the date set forth in the Renewal Notice as the
Expiration Date and the same process for renewal will apply to any subsequent
renewal of this line of credit. A renewal fee may be charged at the Bank’s
option; provided that the Bank shall not charge a fee for any renewal occurring
before March 31, 2007. The amount of any renewal fee will be specified
in the
Renewal Notice. The Bank shall conduct an annual review to determine whether
the
Bank, in its sole discretion, shall renew this Facility No. 1.
2.3
Conditions
to Availability of Credit
.
In
addition to the items required to be delivered to the Bank under the paragraph
entitled “Financial Information” in the “Covenants” section of this Agreement,
the Borrowers will promptly deliver the following to the Bank at such times
as
may be requested by the Bank:
|
(a)
|
A
borrowing certificate, in form and detail satisfactory to the
Bank,
setting forth the Acceptable Receivables on which the requested
extension
of credit is to be based.
|
|
(b)
|
Copies
of the invoices or the record of invoices from each Borrower’s sales
journal for such Acceptable Receivables and a listing of the
names and
addresses of the debtors obligated
thereunder.
|
|
(c)
|
Copies
of the delivery receipts, purchase orders, shipping instructions,
bills of
lading and other documentation pertaining to such Acceptable
Receivables.
|
| (d) |
Copies
of the cash receipts journal pertaining to the borrowing
certificate.
|
2.4
Repayment
Terms
.
|
(a)
|
The
Borrowers will pay interest on outstanding principal beginning
February
10, 2006, for the month ending January 31, 2006, and then on
the same day
of each month thereafter until payment in full of any principal
outstanding under this facility.
|
|
(b)
|
The
Borrowers will repay in full any principal, interest or other
charges
outstanding under this facility no later than the Facility No.
1
Expiration Date. Any interest period for an optional interest
rate (as
described below) shall expire no later than the Facility No.
1 Expiration
Date.
|
2.5
Interest
Rate
.
|
(a)
|
The
interest rate is a rate per year equal to the Bank’s Prime Rate plus the
Applicable Margin as defined below.
|
|
(b)
|
The
Prime Rate is the rate of interest publicly announced from time
to time by
the Bank as its Prime Rate. The Prime Rate is set by the Bank
based on
various factors, including the Bank’s costs and desired return, general
economic conditions and other factors, and is used as a reference
point
for pricing some loans. The Bank may price loans to its customers
at,
above, or below the Prime Rate. Any change in the Prime Rate
shall take
effect at the opening of business on the day specified in the
public
announcement of a change in the Bank’s Prime
Rate.
|
2.6
Optional
Interest Rates
.
Instead
of the interest rate based on the rate stated in the paragraph entitled
“Interest Rate” above, the Borrowers may elect the optional interest rates
listed below for this Facility No. 1 during interest periods agreed to
by the
Bank and the Borrowers. The optional interest rates shall be subject to
the
terms and conditions described later in this Agreement. Any principal amount
bearing interest at an optional rate under this Agreement is referred to
as a
“Portion.” The following optional interest rates are available:
|
(a)
|
The
LIBOR Rate plus the Applicable Margin as defined
below.
|
2.7
Applicable
Margin
.
The
Applicable Margin shall be the following amounts per annum, based upon
the
Funded Debt to EBITDA Ratio (as defined in the “Covenants” section of this
Agreement), as set forth in the most recent compliance certificate (or,
if no
compliance certificate is required, the Borrowers’ most recent financial
statements) received by the Bank as required in the Covenants section;
provided,
however, that, until the Bank receives the first compliance certificate
or
financial statement, such amounts shall be those indicated for pricing
level
4
set
forth below:
|
Applicable
Margin
(in
percentage points per annum)
|
|||
|
Pricing
Level
|
Funded
Debt to EBITDA Ratio
|
Banks
Prime
|
LIBOR
|
|
1
|
≥3.00:1,
but ≤3.25:1
|
minus
-0.15
|
LIBOR
rate plus 2.25
|
|
2
|
≥2.50:1,<
3.00:1
|
minus
-0.5
|
LIBOR
rate plus 1.95
|
|
3
|
≥1.50:1,
but < 2.50:1
|
minus
-0.75
|
LIBOR
rate plus 1.75
|
|
4
|
Below
1.50:1
|
minus
-1
|
LIBOR
rate plus 1.55
|
The
Applicable Margin shall be in effect from the date the most recent compliance
certificate or financial statement is received by the Bank until the date
the
next compliance certificate or financial statement is received; provided,
however, that if the Borrowers fail to timely deliver the next compliance
certificate or financial statement, the Applicable Margin from the date
such
compliance certificate or financial statement was due until the date such
compliance certificate or financial statement is received by the Bank shall
be
the highest pricing level set forth above.
2.8
Letters
of Credit
.
|
(a)
|
During
the availability period, at the request of the Borrowers, the
Bank will
issue:
|
|
(i)
|
standby
letters of credit with a maximum maturity of three hundred sixty-five
(365) days but not to extend more than ninety (90) days beyond
the
Facility No. 1 Expiration Date. The standby letters of credit
may include
a provision providing that the maturity date will be automatically
extended each year for an additional year unless the Bank gives
written
notice to the contrary.
|
|
(b)
|
The
amount of the letters of credit outstanding at any one time (including
the
drawn and unreimbursed amounts of the letters of credit) may
not exceed
One Million and 00/100 Dollars
($1,000,000.00).
|
|
(c)
|
In
calculating the principal amount outstanding under the Facility
No. 1
Commitment for purposes of availability under Facility No. 1,
the
calculation shall include the amount of
any
letters of credit outstanding, including amounts drawn on any
letters of
credit and not yet reimbursed. In calculating the principal amount
outstanding under Facility No. 1 for purposes of determining
actual
advances and interest due, only those letters of credit drawn
and not yet
reimbursed shall be included.
|
| (d) |
The
Borrowers agree:
|
|
(i)
|
Any
sum drawn under a letter of credit may, at the option of the
Bank, be
added to the principal amount outstanding under this Agreement.
The amount
will bear interest and be due as described elsewhere in this
Agreement.
|
|
(ii)
|
If
there is a default and acceleration under this Agreement, to
immediately
prepay and make the Bank whole for any outstanding letters of
credit.
|
|
(iii)
|
The
issuance of any letter of credit and any amendment to a letter
of credit
is subject to the Bank’s written approval and must be in form and content
satisfactory to the Bank and in favor of a beneficiary acceptable
to the
Bank.
|
|
(iv)
|
To
sign the Bank’s form Application and Agreement for Commercial Letter of
Credit or Application and Agreement for Standby Letter of Credit,
as
applicable.
|
|
(v)
|
To
pay any issuance and/or other customary and standard fees that
the Bank
notifies the Borrowers will be charged for issuing and processing
letters
of credit for the Borrowers.
|
|
(vi)
|
To
allow the Bank to automatically charge its checking account for
agreed
upon applicable fees, discounts, and other
charges.
|
3.
OPTIONAL
INTEREST RATES
3.1
Optional
Rates
.
Each
optional interest rate is a rate per year. Interest will be paid on February
10,
2006, and then on the same day of each month thereafter until payment in
full of
any principal outstanding under this Agreement. No Portion will be converted
to
a different interest rate during the applicable interest period. Upon the
occurrence of an event of default under this Agreement, the Bank may terminate
the availability of optional interest rates for interest periods commencing
after the default occurs. At the end of each interest period, the interest
rate
will revert to the rate stated in the paragraph(s) entitled “Interest Rate”
above, unless the Borrowers have designated another optional interest rate
for
the Portion.
3.2
LIBOR
Rate
.
The
election of LIBOR Rates shall be subject to the following terms and
requirements:
|
(a)
|
The
interest period during which the LIBOR Rate will be in effect
will be one
month. The first day of the interest period must be a day other
than a
Saturday or a Sunday on which banks are open for business in
New York and
London and dealing in offshore dollars (a “LIBOR Banking Day”). The last
day of the interest period and the actual number of days during
the
interest period will be determined by the Bank using the practices
of the
London inter-bank market.
|
|
(b)
|
Each
LIBOR Rate portion will be for an amount not less than One Hundred
Thousand and 00/100 Dollars
($100,000.00).
|
|
(c)
|
The
“LIBOR Rate” means the interest rate determined by the following formula.
(All amounts in the calculation will be determined by the Bank
as of the
first day of the interest period.)
|
LIBOR
Rate =
London
Inter-Bank Offered Rate
(1.00
-
Reserve Percentage)
Where,
|
(i)
|
“London
Inter-Bank Offered Rate” means for any applicable interest period, the
rate per annum equal to the British Bankers Association LIBOR
Rate (“BBA
LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as selected by the Bank from
time to
time) at approximately 11:00 a.m. London time two (2) London
Banking Days
before the commencement of the interest period for U.S. Dollar
deposits
(for delivery on the first day of such interest period) with
a term
equivalent to such interest period. If such rate is not available
at such
time for any reason then the rate for that interest period will
be
determined by such alternate method as reasonably selected by
the Bank. A
“London Banking Day” is a day on which banks in London are open for
business and dealing in offshore
dollars.
|
|
(ii)
|
“Reserve
Percentage” means the total of the maximum reserve percentages for
determining the reserves to be maintained by member banks of
the Federal
Reserve System for Eurocurrency Liabilities, as defined in Federal
Reserve
Board Regulation D, rounded upward to the nearest 1/100 of one
percent.
The percentage will be expressed as a decimal, and will include,
but not
be limited to, marginal, emergency, supplemental, special, and
other
reserve percentages.
|
|
(d)
|
The
Borrowers shall irrevocably request a LIBOR Rate Portion no later
than
12:00 noon Pacific
time
on the LIBOR Banking Day preceding the day on which the London
Inter-Bank
Offered Rate will be set, as specified above. For example, if
there are no
intervening holidays or weekend days in any of the relevant locations,
the
request must be made at least three days before the LIBOR Rate
takes
effect.
|
|
(e)
|
The
Bank will have no obligation to accept an election for a LIBOR
Rate
Portion if any of the following described events has occurred
and is
continuing:
|
|
(i)
|
Dollar
deposits in the principal amount, and for periods equal to the
interest
period, of a LIBOR Rate Portion are not available in the London
inter-bank
market; or
|
| (ii) |
The
LIBOR Rate does not accurately reflect the cost of a LIBOR Rate
Portion.
|
|
(f)
|
Each
prepayment of a LIBOR Rate Portion, whether voluntary, by reason
of
acceleration or otherwise, will be accompanied by the amount
of accrued
interest on the amount prepaid and a prepayment fee as described
below. A
“prepayment” is a payment of an amount on a date earlier than the
scheduled payment date for such amount as required by this
Agreement.
|
|
(g)
|
The
prepayment fee will be the sum of fees calculated separately
for each
Prepaid Installment, as follows:
|
|
(i)
|
The
Bank will first determine the amount of interest which would
have accrued
each month for the Prepaid Installment had it remained outstanding
until
the applicable Original Payment Date, using the interest rate
applicable
to the Prepaid Installment under this
Agreement.
|
|
(ii)
|
The
Bank will then subtract from each monthly interest amount determined
in
(i), above, the amount of interest which would accrue for that
Prepaid
Installment if it were reinvested from the date of prepayment
through the
Original Payment Date, using the Treasury
Rate.
|
|
(iii)
|
If
(i) minus (ii) for the Prepaid Installment is greater than zero,
the Bank
will discount the monthly differences to the date of prepayment
by the
Treasury Rate. The Bank will then add together all of the discounted
monthly differences for the Prepaid
Installment.
|
|
(h)
|
The
following definitions will apply to the calculation of the prepayment
fee:
|
|
(i)
|
“Original
Payment Dates” mean the dates on which the prepaid principal would have
been paid if there had been no prepayment. If any of the principal
would
have been paid later than the end of the fixed rate interest
period in
effect at the time of prepayment, then the Original Payment Date
for that
amount will be the last day of the interest
period.
|
|
(ii)
|
“Prepaid
Installment” means the amount of the prepaid principal which would have
been paid on a single Original Payment
Date.
|
|
(iii)
|
“Treasury
Rate” means the interest rate yield for U.S. Government Treasury
Securities which the Bank determines could be obtained by reinvesting
a
specified Prepaid Installment in such securities from the date
of
prepayment through the Original Payment Date. The Bank may adjust
the
Treasury Rate to reflect the compounding, accrual basis, or other
costs of
the prepaid amount. Each of the rates is the Bank’s estimate only and the
Bank is under no obligation to actually reinvest any prepayment.
The rates
will be based on information from either the Telerate or Reuters
information services,
The
Wall Street Journal
,
or other information sources the Bank deems
appropriate..
|
4.
COLLATERAL
4.1
Personal
Property
.
The
personal property listed below now owned or owned in the future by the
parties
listed below will secure the Borrowers’ obligations to the Bank under this
Agreement. The collateral is further defined in security agreement(s) executed
by the owners of the collateral. In addition, all personal property collateral
owned by any of the Borrowers securing this Agreement shall also secure
all
other present and future obligations of any of the Borrowers to the Bank
(excluding any consumer credit covered by the federal Truth in Lending
law,
unless the Borrowers have otherwise agreed in writing or received written
notice
thereof). All personal property collateral securing any other present or
future
obligations of any of the Borrowers to the Bank shall also secure this
Agreement.
|
(a)
|
Equipment,
Furniture and Fixtures owned by each
Borrower.
|
|
(b)
|
Inventory
owned by each Borrower.
|
|
(c)
|
Receivables
owned by each Borrower.
|
| (d) |
Patents,
trademarks and other general intangibles owned by each
Borrower.
|
5.
FEES
AND
EXPENSES
5.1
Fees
.
|
(a)
|
Loan
Fee
.
The Borrowers agree to pay a loan fee in the amount of Fifty
Thousand and
00/100 Dollars ($50,000.00). Twenty-Five Thousand and 00/100
Dollars
($25,000) of this fee is due upon execution of the commitment
letter and
Twenty-Five Thousand and 00/100 Dollars ($25,000) of this fee
is due on
the date of this Agreement.
|
|
(b)
|
Unused
Commitment Fee
.
The Borrowers agree to pay a fee on any difference between the
Facility
No. 1 Commitment and the amount of credit they actually use,
determined by
the average of the daily amount of credit outstanding during
the specified
period. The fee will be calculated at 0.1% per year. The calculation
of
credit outstanding shall include the undrawn amount of letters
of credit.
|
This
fee
is due on April 30, 2006, for the quarter ending March 31, 2006, and on
the last
day of the monthfollowing each quarter’s end until the expiration of the
availability period (e.g., April 30, July 31, October 31 and January
31).
|
(c)
|
Late
Fee
.
To the extent permitted by law, the Borrowers agree to pay a
late fee in
an amount not to exceed four percent (4%) of any payment that
is more than
fifteen (15) days late. The imposition and payment of a late
fee shall not
constitute a waiver of the Bank’s rights with respect to the
default.
|
5.2
Expenses
.
The
Borrowers agree to immediately repay the Bank for expenses that include,
but are
not limited to, filing, recording and search fees, appraisal fees, title
report
fees, and documentation fees.
5.3
Reimbursement
Costs
.
| (a) |
The
Borrowers agree to reimburse the Bank for any expenses it incurs
in the
preparation of this Agreement and any agreement or instrument
required by
this Agreement. Expenses include, but are not limited to, reasonable
attorneys’ fees, including any allocated costs of the Bank’s in-house
counsel to the extent permitted by applicable
law.
|
|
(b)
|
The
Borrowers agree to reimburse the Bank for the cost of periodic
field
examinations of the Borrowers’ books, records and collateral, and
appraisals of the collateral, at such intervals as the Bank may
reasonably
require. The actions described in this paragraph may be performed
by
employees of the Bank or by independent appraisers. Unless the
Borrowers
are in default, field examinations will be conducted no more
frequently
than annually.
|
6.
DISBURSEMENTS,
PAYMENTS AND COSTS
6.1
Disbursements
and Payments
.
|
(a)
|
Each
payment by the Borrowers will be made in U.S. Dollars and immediately
available funds by direct debit to a deposit account as specified
below
or, for payments not required to be made by direct debit, by
mail to the
address shown on the Borrowers’ statement or at one of the Bank’s banking
centers in the United States.
|
|
(b)
|
Each
disbursement by the Bank and each payment by the Borrowers will
be
evidenced by records kept by the Bank. In addition, the Bank
may, at its
discretion, require the Borrowers to sign one or more promissory
notes.
|
6.2
Requests
for Credit; Equal Access by all Borrowers
.
If
there is more than one Borrower, any Borrower (or a person or persons authorized
by any one of the Borrowers), acting alone, can borrow up to the full amount
of
credit provided under this Agreement. Each Borrower will be liable for
all
extensions of credit made under this Agreement to any other
Borrower.
6.3
Telephone
and Telefax Authorization
.
|
(a)
|
The
Bank may honor telephone or telefax instructions for advances
or
repayments or for the designation of optional interest rates
and telefax
requests for the issuance of letters of credit given, or purported
to be
given, by any one of the individuals authorized to sign loan
agreements on
behalf of any of the Borrowers, or any other individual designated
by any
one of such authorized signers.
|
|
(b)
|
Advances
will be deposited in and repayments will be withdrawn from account
number
____________ owned by Radiant or such other of the Borrowers’ accounts
with the Bank as designated in writing by the Borrowers.
|
|
(c)
|
The
Borrowers will indemnify and hold the Bank harmless from all
liability,
loss, and costs in connection with any act resulting from telephone
or
telefax instructions the Bank reasonably believes are made
by any
individual authorized by the Borrowers to give such instructions.
This
paragraph will survive this Agreement’s termination, and will benefit the
Bank and its officers, employees, and
agents.
|
6.4
Direct
Debit (Pre-Billing)
.
|
(a)
|
The
Borrowers agree that the Bank will debit deposit account number
____________ owned by Radiant or such other of the Borrowers’ accounts
with the Bank as designated in writing by the Borrowers (the
“Designated
Account”) on the date each payment of principal and interest and any
fees
from the Borrowers become due (the “Due
Date”).
|
|
(b)
|
Prior
to each Due Date, the Bank will mail to the Borrowers a statement
of the
amounts that will be due on that Due Date (the “Billed Amount”). The bill
will be mailed a specified number of calendar days prior to the
Due Date,
which number of days will be mutually agreed from time to time
by the Bank
and the Borrowers. The calculations in the bill will be made
on the
assumption that no new extensions of credit or payments will
be made
between the date of the billing statement and the Due Date, and
that there
will be no changes in the applicable interest
rate.
|
|
(c)
|
The
Bank will debit the Designated Account for the Billed Amount,
regardless
of the actual amount due on that date (the “Accrued Amount”). If the
Billed Amount debited to the Designated Account differs from
the Accrued
Amount, the discrepancy will be treated as
follows:
|
|
(i)
|
If
the Billed Amount is less than the Accrued Amount, the Billed
Amount for
the following Due Date will be increased by the amount of the
discrepancy.
The Borrowers will not be in default by reason of any such
discrepancy.
|
|
(ii)
|
If
the Billed Amount is more than the Accrued Amount, the Billed
Amount for
the following Due Date will be decreased by the amount of the
discrepancy.
|
Regardless
of any such discrepancy, interest will continue to accrue based on the
actual
amount of principal outstanding without compounding. The Bank will not
pay the
Borrowers interest on any overpayment.
|
(d)
|
The
Borrowers will maintain sufficient funds in the Designated Account
to
cover each debit. If there are insufficient funds in the Designated
Account on the date the Bank enters any debit authorized by this
Agreement, the Bank may reverse the
debit.
|
|
(e)
|
The
Borrowers may terminate this direct debit arrangement at any
time by
sending written notice to the Bank at the address specified at
the end of
this Agreement.
|
6.5
Banking
Days
.
Unless
otherwise provided in this Agreement, a banking day is a day other than
a
Saturday, Sunday or other day on which commercial banks are authorized
to close,
or are in fact closed, in the state where the Bank’s lending office is located,
and, if such day relates to amounts bearing interest at an offshore rate
(if
any), means any such day on which dealings in dollar deposits are conducted
among banks in the offshore dollar interbank market. All payments and
disbursements which would be due on a day that is not a banking day will
be due
on the next banking day. All payments received on a day that is not a banking
day will be applied to the credit on the next banking day.
6.6
Interest
Calculation
.
Except
as otherwise stated in this Agreement, all interest and fees, if any, will
be
computed on the basis of a 360-day year and the actual number of days elapsed.
This results in more interest or a higher fee than if a 365-day year is
used.
Installments of principal that are not paid when due under this Agreement
shall
continue to bear interest until paid.
6.7
Default
Rate
.
Upon
the occurrence of any default or after maturity or after judgment has been
rendered on any obligation under this Agreement, all amounts outstanding
under
this Agreement, including any interest, fees, or costs which are not paid
when
due, will at the option of the Bank bear interest at a rate which is 6.0
percentage point(s) higher than the rate of interest otherwise provided
under
this Agreement. This may result in compounding of interest. This will not
constitute a waiver of any default.
6.8
Overdrafts
.
At the
Bank’s sole option in each instance, the Bank may do one of the
following:
|
(a)
|
The
Bank may make advances under this Agreement to prevent or cover
an
overdraft on any account of any Borrower with the Bank. Each
such advance
will accrue interest from the date of the advance or the date
on which the
account is overdrawn, whichever occurs first, at the interest
rate
described in this Agreement. The Bank may make such advances
even if the
advances may cause any credit limit under this Agreement to be
exceeded.
|
|
(b)
|
The
Bank may reduce the amount of credit otherwise available under
this
Agreement by the amount of any overdraft on any account of any
Borrower
with the Bank.
|
This
paragraph shall not be deemed to authorize the Borrowers to create overdrafts
on
any of the Borrowers’ accounts with the Bank.
6.9
Payments
in Kind
.
If the
Bank requires delivery in kind of the proceeds of collection of the Borrowers’
accounts receivable, such proceeds shall be credited to interest, principal,
and
other sums owed to the Bank under this Agreement in the order and proportion
determined by the Bank in its sole discretion. All such credits will be
conditioned upon collection and any returned items may, at the Bank’s option, be
charged to the Borrowers.
7.
CONDITIONS
Before
the Bank is required to extend any credit to the Borrowers under this Agreement,
it must receive any documents and other items it may reasonably require,
in form
and content acceptable to the Bank, including any items specifically listed
below.
7.1
Authorizations
.
If any
Borrower or any guarantor is anything other than a natural person, evidence
that
the execution, delivery and performance by such Borrower and/or such guarantor
of this Agreement and any instrument or agreement required under this Agreement
have been duly authorized.
7.2
Governing
Documents
.
If
required by the Bank, a copy of the Borrowers’ organizational
documents.
7.3
Security
Agreements
.
Signed
original security agreements covering the personal property collateral
described
in the Section entitled “Collateral”.
7.4
Perfection
and Evidence of Priority
.
Evidence that the security interests and liens in favor of the Bank are
valid,
enforceable, properly perfected in a manner acceptable to the Bank and
prior to
all others’ rights and interests, except those the Bank consents to in writing.
All title documents for motor vehicles which are part of the collateral
must
show the Bank’s interest.
7.5
Payment
of Fees
.
Payment
of all fees and other amounts due and owing to the Bank, including without
limitation payment of all accrued and unpaid expenses incurred by the Bank
as
required by the paragraph entitled “Reimbursement Costs.”
7.6
Good
Standing
.
Certificates of good standing for each Borrower as applicable from its
state of
formation and from any other state in which such Borrower is required to
qualify
to conduct its business.
7.7
Landlord
Agreement
.
For any
personal property collateral located at 1223 and 1227 120
th
Avenue
NE, Bellevue, Washington 98005, an agreement for the removal of the collateral,
signed by the owner of the real property and the holder of any mortgage
or deed
of trust on the real property; provided that Borrowers shall have until
February
29 to deliver such agreements.
7.8
Insurance
.
Evidence of insurance coverage, as required in the “Covenants” section of this
Agreement.
8.
REPRESENTATIONS
AND WARRANTIES
When
the
Borrowers sign this Agreement, and until the Bank is repaid in full, the
Borrowers make the following representations and warranties. Each request
for an
extension of credit constitutes a renewal of these representations and
warranties as of the date of the request:
8.1
Formation
.
If any
Borrower is anything other than a natural person, it is duly formed and
existing
under the laws of the state or other jurisdiction where organized.
8.2
Authorization
.
This
Agreement, and any instrument or agreement required hereunder, are within
each
Borrower’s powers, have been duly authorized, and do not conflict with any of
its organizational papers.
8.3
Enforceable
Agreement
.
This
Agreement is a legal, valid and binding agreement of each Borrower, enforceable
against each Borrower in accordance with its terms, and any instrument
or
agreement required hereunder, when executed and delivered, will be similarly
legal, valid, binding and enforceable.
8.4
Good
Standing
.
In each
state in which each Borrower does business, it is properly licensed, in
good
standing, and, where required, in compliance with fictitious name
statutes.
8.5
No
Conflicts
.
This
Agreement does not conflict with any law, agreement, or obligation by which
any
Borrower is bound.
8.6
Financial
Information
.
All
financial and other information that has been or will be supplied to the
Bank is
sufficiently complete to give the Bank accurate knowledge of the Borrowers’ (and
any guarantor’s) financial condition, including all material contingent
liabilities. Since the date of the most recent financial statement provided
to
the Bank, there has been no material adverse change in the business condition
(financial or otherwise), operations, properties or prospects of any Borrower
(or any guarantor). If any Borrower is comprised of the trustees of a trust,
the
foregoing representations shall also pertain to the trustor(s) of the
trust.
8.7
Lawsuits
.
There
is no lawsuit, tax claim or other dispute pending or threatened against
any
Borrower which, if lost, would impair such Borrower’s financial condition or
ability to repay the loan, except as have been disclosed in writing to
the
Bank.
8.8
Collateral
.
All
collateral required in this Agreement is owned by the grantor of the security
interest free of any title defects or any liens or interests of others,
except
those which have been approved by the Bank in writing.
8.9
Permits,
Franchises
.
Each
Borrower possesses all permits, memberships, franchises, contracts and
licenses
required and all trademark rights, trade name rights, patent rights, copyrights
and fictitious name rights necessary to enable it to conduct the business
in
which it is now engaged.
8.10
Other
Obligations
.
No
Borrower is in default on any obligation for borrowed money, any purchase
money
obligation or any other material lease, commitment, contract, instrument
or
obligation, except as have been disclosed in writing to the Bank.
8.11
Tax
Matters
.
No
Borrower has any knowledge of any pending assessments or adjustments of
its
income tax for any year and all taxes due have been paid, except as have
been
disclosed in writing to the Bank.
8.12
No
Event of Default
.
There
is no event which is, or with notice or lapse of time or both would be,
a
default under this Agreement.
8.13
Insurance
.
Each
Borrower has obtained, and maintained in effect, the insurance coverage
required
in the “Covenants” section of this Agreement.
9.
COVENANTS
The
Borrowers agree, so long as credit is available under this Agreement and
until
the Bank is repaid in full:
9.1
Use
of
Proceeds
.
|
(a)
|
To
use the proceeds of Facility No. 1 only for Working Capital and
provide
senior debt to partially finance the acquisition of
Airgroup.
|
9.2
Financial
Information
.
To
provide the following financial information and statements in form and
content
acceptable to the Bank, and such additional information as requested by
the Bank
from time to time:
|
(a)
|
Within
one hundred fifty (150) days of the fiscal year end, the annual
financial
statements of the Borrowers. These financial statements must
be audited
(with an opinion satisfactory to the Bank) by a Certified Public
Accountant acceptable to the Bank. The statements shall be prepared
on a
consolidated and consolidating basis.
|
|
(b)
|
Within
forty-five (45) days of the period’s end (including the last period in
each fiscal year), quarterly financial statements of the Borrowers,
certified and dated by an authorized financial officer. These
financial
statements may be company-prepared. The statements shall be prepared
on a
consolidated and consolidating basis.
|
|
(c)
|
Within
one hundred fifty (150) days of the end of each fiscal year and
within
forty-five (45) days of the end of each quarter, a compliance
certificate
of each Borrower signed by an authorized financial officer, and
setting
forth (i) the information and computations (in sufficient detail)
to
establish that each Borrower is in compliance with all financial
covenants
at the end of the period covered by the financial statements
then being
furnished and (ii) whether there existed as of the date of such
financial
statements and whether there exists as of the date of the certificate,
any
default under this Agreement and, if any such default exists,
specifying
the nature thereof and the action the Borrowers are taking and
propose to
take with respect thereto.
|
|
(d)
|
A
borrowing certificate setting forth the amount of Acceptable
Receivables
as of the last day of each month within twenty (20) days after
month end
and, upon the Bank’s request, copies of the invoices or the record of
invoices from each Borrower’s sales journal for such Acceptable
Receivables, copies of the delivery receipts, purchase orders,
shipping
instructions, bills of lading and other documentation pertaining
to such
Acceptable Receivables, and copies of the cash receipts journal
pertaining
to the borrowing certificate.
|
|
(e)
|
A
detailed aging of the Borrowers’ receivables by invoice or a summary aging
by account debtor, as specified by the Bank, within twenty (20)
days after
the end of each month.
|
|
(f)
|
If
requested by the Bank, a summary aging by vendor of accounts
payable
within twenty (20) days after the end of each
month.
|
|
(g)
|
If
the Bank requires the Borrowers to deliver the proceeds of accounts
receivable to the Bank upon collection by the Borrowers, a schedule
of the
amounts so collected and delivered to the
Bank.
|
|
(h)
|
Within
one hundred fifty (150) days of the end of each fiscal year,
the
Borrowers’ forecasted budget of profit and loss, balance sheet and
statement of cash flows for the following fiscal year.
|
|
(i)
|
Promptly
upon the Bank’s request, such other books, records, statements, lists of
property and accounts, budgets, forecasts or reports as to the
Borrowers
and as to each guarantor of the Borrowers’ obligations to the Bank as the
Bank may request.
|
| (j) |
Annual
Exam of Borrower’s books and
records
|
9.3
Profitability
.
Not to
incur on a consolidated basis, a net loss before taxes, amortization of
acquired
intangibles and extraordinary items in any two consecutive quarterly accounting
periods.
9.4
Funded
Debt to EBITDA Ratio
.
To
maintain on a consolidated basis a ratio of Funded Debt to EBITDA not exceeding
3.25:1.0.
‘‘Funded
Debt’’ means all outstanding liabilities for borrowed money and other
interest-bearing liabilities, including current and long term debt, less
the
non-current portion of Subordinated Liabilities.
‘‘EBITDA’’
means net income, less income or plus loss from discontinued operations
and
extraordinary items, plus income taxes, plus interest expense, plus
depreciation, depletion, and amortization. plus Equity Credits and other
non-cash charges plus the “Add-On Amount” specified below. The Add-On Amount for
the quarter ended 3/31/06 shall be $1,087,500, for the quarter ended 6/30/2006
shall be $725,000 and for the quarter ended 9/30/2006 shall be $362,500.
This
ratio will be calculated at the end of each reporting period for which
the Bank
requires financial statements, using the results of the twelve-month period
ending with that reporting period. The Add-On Amount shall not be cumulative
in
calculating results for the twelve-month period.
“Equity
Credits” means with respect to any measurement period the expenses incurred in
the ordinary course of business paid through the issuance of common stock
(or
options to purchase stock) in Radiant.
9.5
Basic
Fixed Charge Coverage Ratio
.
To
maintain on a consolidated basis a Basic Fixed Charge Coverage Ratio of
at least
1.1:1.0.
‘‘Basic
Fixed Charge Coverage Ratio’’ means the ratio of (a) the sum of EBITDA plus
lease expense and rent expense, minus income tax, minus dividends, withdrawals,
and other distributions, to (b) the sum of interest expense, lease expense,
rent
expense, the current portion of long term debt and the current portion
of
capitalized lease obligations.
This
ratio will be calculated at the end of each reporting period for which
the Bank
requires financial statements, using the results of the twelve-month period
ending with that reporting period. The Add-On Amount shall not be cumulative
in
calculating results for the twelve-month period. The current portion of
long-term liabilities will be measured as of the last day of the calculation
period. Amounts outstanding under Facility No. 1 shall not be considered
current
obligations.
9.6
Other
Debts.
Not to
have outstanding or incur any direct or contingent liabilities or lease
obligations (other than those to the Bank), or become liable for the liabilities
of others, without the Bank’s written consent. This does not
prohibit:
(a)
Acquiring
goods, supplies, or merchandise on normal trade credit.
(b)
Endorsing
negotiable instruments received in the usual course of business.
(c)
Obtaining
surety bonds in the usual course of business.
(d)
Liabilities,
lines of credit and leases in existence on the date of this Agreement disclosed
in writing to the Bank.
(f)
Additional
debts and lease obligations for business purposes which, together with
the debts
permitted under subparagraph(s) ___, above, do not exceed a total principal
amount of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00)
outstanding at any one time.
9.7
Other
Liens
.
Not to
create, assume, or allow any security interest or lien (including judicial
liens) on property any Borrower now or later owns, except:
(a)
Liens
and
security interests in favor of the Bank.
(b)
Liens
for
taxes not yet due.
(c)
Liens
outstanding on the date of this Agreement disclosed in writing to the
Bank.
|
9.8
|
Maintenance
of Assets
.
|
(a)
Not
to sell,
assign, lease, transfer or otherwise dispose of any part of any Borrower’s
business or any Borrower’s assets except in the ordinary course of
business.
(b)
Not
to sell,
assign, lease, transfer or otherwise dispose of any assets for less than
fair
market value, or enter into any agreement to do so.
(c)
Not
to enter
into any sale and leaseback agreement covering any of its fixed
assets.
(d)
To
maintain
and preserve all material rights, privileges, and franchises the Borrowers
now
have.
(e)
To
make any
repairs, renewals, or replacements to keep the Borrowers’ properties in good
working condition.
9.9
Investments
.
Not to
have any existing, or make any new, investments in any individual or entity,
or
make any capital contributions or other transfers of assets to any individual
or
entity, except for:
|
(a)
|
Existing
investments disclosed to the Bank in
writing.
|
|
(b)
|
Investments
in the Borrowers’ current subsidiaries and subsidiaries, assets or
operations acquired as Permitted
Acquisitions.
|
|
(c)
|
Investments
in any of the following:
|
|
(i)
|
certificates
of deposit;
|
|
(ii)
|
U.S.
treasury bills and other obligations of the federal
government;
|
|
(iii)
|
readily
marketable securities (including commercial paper, but excluding
restricted stock and stock subject to the provisions of Rule
144 of the
Securities and Exchange
Commission).
|
9.10
Loans
.
Not to
make any loans, advances or other extensions of credit to any individual
or
entity, except for:
|
(a)
|
Existing
extensions of credit disclosed to the Bank in
writing.
|
|
(b)
|
Extensions
of credit to the Borrowers’ current subsidiaries and subsidiaries acquired
as Permitted Acquisitions.
|
|
(c)
|
Extensions
of credit in the nature of accounts receivable or notes receivable
arising
from the sale or lease of goods or services in the ordinary course
of
business to non-affiliated
entities.
|
9.11
Change
of Management
.
Not to
make any substantial change in the present executive or management personnel
of
the Borrowers.
9.12
Change
of Ownership
.
Not to
cause, permit, or suffer any change in capital ownership such that there
is a
change of more than twenty-five percent (25%) in the direct or indirect
capital
ownership of any Borrower that is a subsidiary of Radiant.
|
9.13
|
Additional
Negative Covenants
.
Not to, without the Bank’s written consent and except as or incident to a
Permitted Acquisition:
|
| (a) |
Enter
into any consolidation, merger, or other combination, or become
a partner
in a partnership, a member of a joint venture, or a member of
a limited
liability company.
|
(b)
Acquire
or
purchase a business or its assets other than a Permitted
Acquisition.
(c)
Engage
in any
business activities substantially different from each Borrower’s present
business.
(d)
Liquidate
or
dissolve any Borrower’s business.
(e)
Voluntarily
suspend any Borrower’s business for more than two (2) days in any thirty (30)
day period.
9.14
Notices
to Bank
.
To
promptly notify the Bank in writing of:
|
(a)
|
Any
lawsuit over One Hundred Thousand and 00/100 Dollars ($100,000.00)
against
any Borrower (or any guarantor or, if any Borrower is comprised
of the
trustees of a trust, any trustor).
|
|
(b)
|
Any
substantial dispute between any governmental authority and any
Borrower
(or any guarantor or, if any Borrower is comprised of the trustees
of a
trust, any trustor).
|
|
(c)
|
Any
event of default under this Agreement, or any event which, with
notice or
lapse of time or both, would constitute an event of
default.
|
|
(d)
|
Any
material adverse change in any Borrower’s (or any guarantor’s, or, if any
Borrower is comprised of the trustees of a trust, any trustor’s) business
condition (financial or otherwise), operations, properties or
prospects,
or ability to repay the credit.
|
|
(e)
|
Any
change in any Borrower’s name, legal structure, place of business, or
chief executive office if such Borrower has more than one place
of
business.
|
|
(f)
|
Any
actual contingent liabilities of any Borrower (or any guarantor
or, if any
Borrower is comprised of the trustees of a trust, any trustor),
and any
such contingent liabilities which are reasonably foreseeable,
where such
liabilities are in excess of Two Hundred Fifty Thousand and 00/100
Dollars
($250,000.00) in the aggregate.
|
9.15
Insurance
.
|
(a)
|
General
Business Insurance
.
To maintain insurance satisfactory to the Bank as to amount,
nature and
carrier covering property damage (including loss of use and occupancy)
to
any of the Borrowers’ properties, business interruption insurance, public
liability insurance including coverage for contractual liability,
product
liability and workers’ compensation, and any other insurance which is
usual for the Borrowers’ business. Each policy shall provide for at least
30 days prior notice to the Bank of any cancellation
thereof.
|
|
(b)
|
Insurance
Covering Collateral
.
To maintain all risk property damage insurance policies covering
the
tangible property comprising the collateral. Each insurance policy
must be
for the full value of the collateral. The insurance must be issued
by an
insurance company acceptable to the Bank and must include a lender’s loss
payable endorsement in favor of the Bank in a form acceptable
to the
Bank.
|
|
(c)
|
Evidence
of Insurance
.
Upon the request of the Bank, to deliver to the Bank a copy of
each
insurance policy, or, if permitted by the Bank, a certificate
of insurance
listing all insurance in force.
|
9.16
Compliance
with Laws
.
To
comply with the laws (including any fictitious or trade name statute),
regulations, and orders of any government body with authority over any
Borrower’s business. The Bank shall have no obligation to make any advance to
any Borrower’s except in compliance with all applicable laws and regulations and
any Borrower’s shall fully cooperate with the Bank in complying with all such
applicable laws and regulations.
9.17
ERISA
Plans
.
Promptly during each year, to pay and cause any subsidiaries to pay
contributions adequate to meet at least the minimum funding standards under
ERISA with respect to each and every Plan; file each annual report required
to
be filed pursuant to ERISA in connection with each Plan for each year;
and
notify the Bank within ten (10) days of the occurrence of any Reportable
Event
that might constitute grounds for termination of any capital Plan by the
Pension
Benefit Guaranty Corporation or for the appointment by the appropriate
United
States District Court of a trustee to administer any Plan. “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to
time.
Capitalized terms in this paragraph shall have the meanings defined within
ERISA.
9.18
Books
and Records
.
To
maintain adequate books and records.
9.19
Audits
.
To
allow the Bank and its agents to inspect each Borrower’s properties and examine,
audit, and make copies of books and records at any reasonable time. If
any of
the Borrowers’ properties, books or records are in the possession of a third
party, the Borrowers authorize that third party to permit the Bank or its
agents
to have access to perform inspections or audits and to respond to the Bank’s
requests for information concerning such properties, books and
records.
9.20
Perfection
of Liens
.
To help
the Bank perfect and protect its security interests and liens, and reimburse
it
for related costs it incurs to protect its security interests and
liens.
9.21
Cooperation
.
To take
any action reasonably requested by the Bank to carry out the intent of
this
Agreement.
10.
DEFAULT
AND REMEDIES
If
any of
the following events of default occurs, the Bank may do one or more of
the
following: declare the Borrowers in default, stop making any additional
credit
available to the Borrowers, and require the Borrowers to repay their entire
debt
immediately and without prior notice. If an event which, with notice or
the
passage of time, will constitute an event of default has occurred and is
continuing, the Bank has no obligation to make advances or extend additional
credit under this Agreement. In addition, if any event of default occurs,
the
Bank shall have all rights, powers and remedies available under any instruments
and agreements required by or executed in connection with this Agreement,
as
well as all rights and remedies available at law or in equity. If an event
of
default occurs under the paragraph entitled “Bankruptcy,” below, with respect to
any Borrower, then the entire debt outstanding under this Agreement will
automatically be due immediately.
10.1
Failure
to Pay
.
The
Borrowers fail to make a payment under this Agreement within five (5) days
after
the date when due.
10.2
Other
Bank Agreements
.
Any
default occurs under any other agreement any Borrower (or any Obligor)
or any of
the Borrowers’ related entities or affiliates has with the Bank or any affiliate
of the Bank. For purposes of this Agreement, “Obligor” shall mean any guarantor,
any party pledging collateral to the Bank, or, if any Borrower is comprised
of
the trustees of a trust, any trustor. If, in the Bank’s opinion, the breach is
capable of being remedied, the breach will not be considered and event
of
default under this Agreement for a period of fifteen (15) days after the
date on
which the Bank gives written notice of the breach to the Borrowers.
10.3
Cross-default
.
Any
default occurs under any agreement in connection with any credit any Borrower
(or any Obligor) or any of the Borrowers’ related entities or affiliates has
obtained from anyone else or which any Borrower (or any Obligor) or any
of the
Borrowers’ related entities or affiliates has guaranteed if the default is not
cured within fifteen (15) days.
10.4
False
Information
.
Any
Borrower or any Obligor has given the Bank false or misleading information
or
representations.
10.5
Bankruptcy
.
Any
Borrower, any Obligor, or any general partner of any Borrower or of any
Obligor
files a bankruptcy petition, a bankruptcy petition is filed against any
of the
foregoing parties and such petition is not dismissed within 90 days, or
any
Borrower, any Obligor, or any general partner of any Borrower or of any
Obligor
makes a general assignment for the benefit of creditors.
10.6
Receivers
.
A
receiver or similar official is appointed for a substantial portion of
any
Borrower’s or any Obligor’s business, or the business is terminated, or, if any
Obligor is anything other than a natural person, such Obligor is liquidated
or
dissolved.
10.7
Lien
Priority
.
The
Bank fails to have an enforceable first lien (except for any prior liens
to
which the Bank has consented in writing) on or security interest in any
property
given as security for this Agreement (or any guaranty).
10.8
Judgments
.
Any
judgments or arbitration awards are entered against any Borrower or any
Obligor,
or any Borrower or any Obligor enters into any settlement agreements with
respect to any litigation or arbitration, in an aggregate amount of Two
Hundred
Fifty Thousand and 00/100 Dollars ($250,000.00) or more in excess of any
insurance coverage.
10.9
Death
.
If any
Borrower or any Obligor is a natural person, such Borrower or such Obligor
dies
or becomes legally incompetent; if any Borrower or any Obligor is a trust,
a
trustor dies or becomes legally incompetent; if any Borrower or any Obligor
is a
partnership, any general partner dies or becomes legally
incompetent.
10.10
Material
Adverse Change
.
A
material adverse change occurs, or is reasonably likely to occur, in any
Borrower’s (or any Obligor’s) business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the credit; or
the Bank
determines that it is insecure for any other reason.
10.11
Government
Action
.
Any
government authority takes action that the Bank believes materially adversely
affects any Borrower’s or any Obligor’s financial condition or ability to
repay.
10.12
Default
under Related Documents
.
Any
default occurs under any guaranty, subordination agreement, security agreement,
deed of trust, mortgage, or other document required by or delivered in
connection with this Agreement or any such document is no longer in effect,
or
any guarantor purports to revoke or disavow the guaranty.
10.13
ERISA
Plans
.
Any one
or more of the following events occurs with respect to a Plan of any Borrower
subject to Title IV of ERISA, provided such event or events could reasonably
be
expected, in the judgment of the Bank, to subject any Borrower to any tax,
penalty or liability (or any combination of the foregoing) which, in the
aggregate, could have a material adverse effect on the financial condition
of
such Borrower:
|
(a)
|
A
reportable event shall occur under Section 4043(c) of ERISA with
respect
to a Plan.
|
|
(b)
|
Any
Plan termination (or commencement of proceedings to terminate
a Plan) or
the full or partial withdrawal from a Plan by any Borrower or
any ERISA
Affiliate.
|
10.14
Other
Breach Under Agreement
.
A
default occurs under any other term or condition of this Agreement not
specifically referred to in this Article. This includes any failure or
anticipated failure by any Borrower (or any other party named in the Covenants
section) to comply with the financial covenants set forth in this Agreement,
whether such failure is evidenced by financial statements delivered to
the Bank
or is otherwise known to the Borrowers or the Bank. If, in the Bank’s opinion,
the breach is capable of being remedied, the breach will not be considered
an
event of default under this Agreement for a period of fifteen (15) days
after
the date on which the Bank gives written notice of the breach to the Borrowers.
11.
ENFORCING
THIS AGREEMENT; MISCELLANEOUS
11.1
GAAP
.
Except
as otherwise stated in this Agreement, all financial information provided
to the
Bank and all financial covenants will be made under generally accepted
accounting principles, consistently applied.
11.2
Washington
Law
.
This
Agreement is governed by Washington state law.
11.3
Successors
and Assigns
.
This
Agreement is binding on the Borrowers’ and the Bank’s successors and assignees.
The Borrowers agree that they may not assign this Agreement without the
Bank’s
prior consent. The Bank may sell participations in or assign this loan,
and may
exchange information about the Borrowers (including, without limitation,
any
information regarding any hazardous substances) with actual or potential
participants or assignees. If a participation is sold or the loan is assigned,
the purchaser will have the right of set-off against the Borrowers.
11.4
Arbitration
and Waiver of Jury Trial
|
(a)
|
This
paragraph concerns the resolution of any controversies or claims
between
the parties, whether arising in contract, tort or by statute,
including
but not limited to controversies or claims that arise out of
or relate to:
(i) this agreement (including any renewals, extensions or modifications);
or (ii) any document related to this agreement (collectively
a “Claim”).
For the purposes of this arbitration provision only, the term
“parties”
shall include any parent corporation, subsidiary or affiliate
of the Bank
involved in the servicing, management or administration of any
obligation
described or evidenced by this
agreement.
|
|
(b)
|
At
the request of any party to this agreement, any Claim shall be
resolved by
binding arbitration in accordance with the Federal Arbitration
Act (Title
9, U.S. Code) (the “Act”). The Act will apply even though this agreement
provides that it is governed by the law of a specified state.
The
arbitration will take place on an individual basis without resort
to any
form of class action.
|
|
(c)
|
Arbitration
proceedings will be determined in accordance with the Act, the
then-current rules and procedures for the arbitration of financial
services disputes of the American Arbitration Association or
any successor
thereof (“AAA”), and the terms of this paragraph. In the event of any
inconsistency, the terms of this paragraph shall control. If
AAA is
unwilling or unable to (i) serve as the provider of arbitration
or (ii)
enforce any provision of this arbitration clause, any party to
this
agreement may substitute another arbitration organization with
similar
procedures to serve as the provider of
arbitration.
|
|
(d)
|
The
arbitration shall be administered by AAA and conducted, unless
otherwise
required by law, in any U.S. state where real or tangible personal
property collateral for this credit is located or if there is
no such
collateral, in the state specified in the governing law section
of this
agreement. All Claims shall be determined by one arbitrator;
however, if
Claims exceed Five Million Dollars ($5,000,000), upon the request
of any
party, the Claims shall be decided by three arbitrators. All
arbitration
hearings shall commence within ninety (90) days of the demand
for
arbitration and close within ninety (90) days of commencement
and the
award of the arbitrator(s) shall be issued within thirty (30)
days of the
close of the hearing. However, the arbitrator(s), upon a showing
of good
cause, may extend the commencement of the hearing for up to an
additional
sixty (60) days. The arbitrator(s) shall provide a concise written
statement of reasons for the award. The arbitration award may
be submitted
to any court having jurisdiction to be confirmed, judgment entered
and
enforced.
|
|
(e)
|
The
arbitrator(s) will give effect to statutes of limitation in determining
any Claim and may dismiss the arbitration on the basis that the
Claim is
barred. For purposes of the application of the statute of limitations,
the
service on AAA under applicable AAA rules of a notice of Claim
is the
equivalent of the filing of a lawsuit. Any dispute concerning
this
arbitration provision or whether a Claim is arbitrable shall
be determined
by the arbitrator(s). The arbitrator(s) shall have the power
to award
legal fees pursuant to the terms of this
agreement.
|
|
(f)
|
This
paragraph does not limit the right of any party to: (i) exercise
self-help
remedies, such as but not limited to, setoff; (ii) initiate judicial
or
non-judicial foreclosure against any real or personal property
collateral;
(iii) exercise any judicial or power of sale rights, or (iv)
act in a
court of law to obtain an interim remedy, such as but not limited
to,
injunctive relief, writ of possession or appointment of a receiver,
or
additional or supplementary
remedies.
|
|
(g)
|
The
filing of a court action is not intended to constitute a waiver
of the
right of any party, including the suing party, thereafter to
require
submittal of the Claim to
arbitration.
|
|
(h)
|
By
agreeing to binding arbitration, the parties irrevocably and
voluntarily
waive any right they may have to a trial by jury in respect of
any Claim.
Furthermore, without intending in any way to limit this agreement
to
arbitrate, to the extent any Claim is not arbitrated, the parties
irrevocably and voluntarily waive any right they may have to
a trial by
jury in respect of such Claim. This provision is a material inducement
for
the parties entering into this
agreement.
|
11.5
Severability;
Waivers
.
If any
part of this Agreement is not enforceable, the rest of the Agreement may
be
enforced. The Bank retains all rights, even if it makes a loan after default.
If
the Bank waives a default, it may enforce a later default. Any consent
or waiver
under this Agreement must be in writing.
11.6
Attorneys’
Fees
.
The
Borrowers shall reimburse the Bank for any reasonable costs and attorneys’ fees
incurred by the Bank in connection with the enforcement or preservation
of any
rights or remedies under this Agreement and any other documents executed
in
connection with this Agreement, and in connection with any amendment, waiver,
“workout” or restructuring under this Agreement. In the event of a lawsuit or
arbitration proceeding, the prevailing party is entitled to recover costs
and
reasonable attorneys’ fees incurred in connection with the lawsuit or
arbitration proceeding, as determined by the court or arbitrator. In the
event
that any case is commenced by or against the Borrowers under the Bankruptcy
Code
(Title 11, United States Code) or any similar or successor statute, the
Bank is
entitled to recover costs and reasonable attorneys’ fees incurred by the Bank
related to the preservation, protection, or enforcement of any rights of
the
Bank in such a case. As used in this paragraph, “attorneys’ fees” includes the
allocated costs of the Bank’s in-house counsel.
11.7
Joint
and Several Liability
.
This
paragraph shall apply if two or more Borrowers sign this agreement:
|
(a)
|
Each
Borrower agrees that it is jointly and severally liable to the
Bank for
the payment of all obligations arising under this Agreement,
and that such
liability is independent of the obligations of the other Borrower(s).
Each
obligation, promise, covenant, representation and warranty in
this
Agreement shall be deemed to have been made by, and be binding
upon, each
Borrower, unless this Agreement expressly provides otherwise.
The Bank may
bring an action against any Borrower, whether an action is brought
against
the other Borrower(s).
|
|
(b)
|
Each
Borrower agrees that any release which may be given by the Bank
to the
other Borrower(s) or any guarantor will not release such Borrower
from its
obligations under this Agreement.
|
|
(c)
|
Each
Borrower waives any right to assert against the Bank any defense,
setoff,
counterclaim, or claims which such Borrower may have against
the other
Borrower(s) or any other party liable to the Bank for the obligations
of
the Borrowers under this Agreement.
|
|
(d)
|
Each
Borrower waives any defense by reason of any other Borrower’s or any other
person’s defense, disability, or release from liability. The Bank can
exercise its rights against each Borrower even if any other Borrower
or
any other person no longer is liable because of a statute of
limitations
or for other reasons.
|
|
(e)
|
Each
Borrower agrees that it is solely responsible for keeping itself
informed
as to the financial condition of the other Borrower(s) and of
all
circumstances which bear upon the risk of nonpayment. Each Borrower
waives
any right it may have to require the Bank to disclose to such
Borrower any
information which the Bank may now or hereafter acquire concerning
the
financial condition of the other
Borrower(s).
|
|
(f)
|
Each
Borrower waives all rights to notices of default or nonperformance
by any
other Borrower under this Agreement. Each Borrower further waives
all
rights to notices of the existence or the creation of new indebtedness
by
any other Borrower and all rights to any other notices to any
party liable
on any of the credit extended under this
Agreement.
|
|
(g)
|
The
Borrowers represent and warrant to the Bank that each will derive
benefit,
directly and indirectly, from the collective administration and
availability of credit under this Agreement. The Borrowers agree
that the
Bank will not be required to inquire as to the disposition by
any Borrower
of funds disbursed in accordance with the terms of this
Agreement.
|
|
(h)
|
Until
all obligations of the Borrowers to the Bank under this Agreement
have
been paid in full and any commitments of the Bank or facilities
provided
by the Bank under this Agreement have been terminated, each Borrower
(a)
waives any right of subrogation, reimbursement, indemnification
and
contribution (contractual, statutory or otherwise), including
without
limitation, any claim or right of subrogation under the Bankruptcy
Code
(Title 11, United States Code) or any successor statute, which
such
Borrower may now or hereafter have against any other Borrower
with respect
to the indebtedness incurred under this Agreement; (b) waives
any right to
enforce any remedy which the Bank now has or may hereafter have
against
any other Borrower, and waives any benefit of, and any right
to
participate in, any security now or hereafter held by the
Bank.
|
|
(i)
|
Each
Borrower waives any right to require the Bank to proceed against
any other
Borrower or any other person; proceed against or exhaust any
security; or
pursue any other remedy. Further, each Borrower consents to the
taking of,
or failure to take, any action which might in any manner or to
any extent
vary the risks of the Borrowers under this Agreement or which,
but for
this provision, might operate as a discharge of the
Borrowers.
|
11.8
One
Agreement
.
This
Agreement and any related security or other agreements required by this
Agreement, collectively:
|
(a)
|
represent
the sum of the understandings and agreements between the Bank
and the
Borrowers concerning this credit;
|
|
(b)
|
replace
any prior oral or written agreements between the Bank and the
Borrowers
concerning this credit; and
|
|
(c)
|
are
intended by the Bank and the Borrowers as the final, complete
and
exclusive statement of the terms agreed to by
them.
|
In
the
event of any conflict between this Agreement and any other agreements required
by this Agreement, this Agreement will prevail. Any reference in any related
document to a “promissory note” or a “note” executed by the Borrowers and dated
as of the date of this Agreement shall be deemed to refer to this Agreement,
as
now in effect or as hereafter amended, renewed, or restated.
ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
11.9
Disposition
of Schedules and Reports
.
The
Bank will not be obligated to return any schedules, invoices, statements,
budgets, forecasts, reports or other papers delivered by the Borrowers.
The Bank
will destroy or otherwise dispose of such materials at such time as the
Bank, in
its discretion, deems appropriate.
11.10
Intentionally
Omitted.
11.11
Verification
of Receivables
.
The
Bank may at any time, either orally or in writing, request confirmation
from any
debtor of the current amount and status of the accounts receivable upon
which
such debtor is obligated.
11.12
Waiver
of Confidentiality
.
The
Borrowers authorize the Bank to discuss the Borrowers’ financial affairs and
business operations with any accountants, auditors, business consultants,
or
other professional advisors employed by the Borrowers, and authorize such
parties to disclose to the Bank such financial and business information
or
reports (including management letters) concerning the Borrowers as the
Bank may
request.
11.13
Indemnification
.
The
Borrowers will indemnify and hold the Bank harmless from any loss, liability,
damages, judgments, and costs of any kind relating to or arising directly
or
indirectly out of (a) this Agreement or any document required hereunder,
(b) any
credit extended or committed by the Bank to the Borrowers hereunder, (c)
any
claim, whether well-founded or otherwise, that there has been a failure
to
comply with any law regulating the Borrowers’ sales or leases to or performance
of services for debtors obligated upon the Borrowers’ accounts receivable and
disclosures in connection therewith, and (d) any litigation or proceeding
related to or arising out of this Agreement, any such document, any such
credit,
or any such claim. This indemnity includes but is not limited to attorneys’ fees
(including the allocated cost of in-house counsel). This indemnity extends
to
the Bank, its parent, subsidiaries and all of their directors, officers,
employees, agents, successors, attorneys, and assigns. This indemnity will
survive repayment of the Borrowers’ obligations to the Bank. All sums due to the
Bank hereunder shall be obligations of the Borrowers, due and payable
immediately without demand. This indemnity shall not include any loss,
liability, damages, judgment or cost determined by court of competent
jurisdiction to have resulted from the Bank’s gross negligence or willful
misconduct.
11.14
Notices
.
Unless
otherwise provided in this Agreement or in another agreement between the
Bank
and the Borrowers, all notices required under this Agreement shall be personally
delivered or sent by first class mail, postage prepaid, or by overnight
courier,
to the addresses on the signature page of this Agreement, or sent by facsimile
to the fax numbers listed on the signature page, or to such other addresses
as
the Bank and the Borrowers may specify from time to time in writing. Notices
and
other communications
shall
be
effective (i) if mailed, upon the earlier of receipt or five (5) days after
deposit in the U.S. mail, first class, postage prepaid, (ii) if telecopied,
when
transmitted, or (iii) if hand-delivered, by courier or otherwise (including
telegram, lettergram or mailgram), when delivered
.
11.15
Headings
.
Article
and paragraph headings are for reference only and shall not affect the
interpretation or meaning of any provisions of this Agreement.
11.16
Counterparts
.
This
Agreement may be executed in as many counterparts as necessary or convenient,
and by the different parties on separate counterparts each of which, when
so
executed, shall be deemed an original but all such counterparts shall constitute
but one and the same agreement.
11.17
Borrowing
Agent
.
Each
Borrower hereby irrevocably designates and appoints Radiant to be its attorney
and agent-in-fact with respect to all matters under and pertaining to this
Agreement, including without limitation, in connection with advance and
interest
rate requests and designation procedures set forth in this Agreement, and
in
connection with all procedures regarding the giving of notice to the Borrowers,
or any one or more of them set forth in this Agreement and to borrower,
request
advances, sign and endorse notes, and execute and deliver all instruments,
documents, writings and further assurances now or hereafter required hereunder,
on behalf of each such Borrower in connection with this Agreement or any
related
document, and hereby authorizes the Bank to pay over or credit all proceeds
of
any advances hereunder in accordance with the requests and instructions
of
Radiant, including without limitation, instructions to pay such proceeds
to
Radiant or an account maintained or controlled by Radiant. The Bank may
rely on
all communications and instructions of any kind received from Radiant as
though
such communication or instruction had been received from each
Borrower.
This
Agreement is executed as of the date stated at the top of the first
page.
| Borrowers: | Bank: | |||
| Radiant Logistics, Inc. | Bank of America, N.A. | |||
| By: | /s/ Bohn H. Crain | By: | /s/ | |
|
|
|
|||
| Bohn H. Crain, CEO & CFO | Authorized Signer | |||
| Airgroup Corporations | ||||
| By: | /s/ Bohn H. Crain | |||
|
|
||||
| Bohn H. Crain, CEO | ||||
-20-