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EXHIBIT 10.1
REVOLVING LOAN AGREEMENT
THIS REVOLVING LOAN AGREEMENT (the "Agreement") is entered into on
this
4th day of November, 2005 among CHEMICAL
BANK SHORELINE (the "Bank"), with its
main offices at 823 Riverview Drive Benton
Harbor, Michigan 49022, EXPRESS 1,
INC., a Michigan corporation ("Borrower"),
whose address is 429 Post Road,
Buchanan, Michigan 49107 and SEGMENTZ,
INC., a Delaware corporation whose
address is 429 Post Road, Buchanan,
Michigan 49107 (the "Guarantor").
Borrower and the Guarantor have requested and, subject to the terms
and
conditions of this Agreement, the Bank has
agreed to make loans (the "Loans" or
individually a "Loan") available to
Borrower on a revolving basis up to a
maximum principal amount of $6,000,000, or
such lesser amount as is available
under the borrowing formula described
below.
In consideration of the foregoing and the terms and conditions
set
forth below, the Bank the Guarantor and
Borrower agree as follows:
DEFINITIONS
As used herein:
The term "Applicable Margin" means, for the periods described
below: (i) negative .50% per annum if the
ratio of the Guarantor's Debt to
Tangible Net Worth determined at the end of
the applicable calendar quarter
pursuant to Section 5.1 B of this Agreement
is less than or equal to 1.25 to
1.00; (ii) negative .25% per annum if the
ratio of the Guarantor's Debt to
Tangible Net Worth determined at the end of
the applicable calendar quarter
pursuant to Section 5.1 B of this Agreement
is more than 1.25 to 1.00, but less
than 1.50 to 1.00; (iii) 0% per annum if
the ratio of the Guarantor's Debt to
Tangible Net Worth determined at the end of
the applicable calendar quarter
pursuant to Section 5.1 B of this Agreement
is more than or equal to 1.50 to
1.00, but less than 1.75 to 1.00; and (iv)
.25% per annum if the ratio of the
Guarantor's Debt to Tangible Net Worth
determined at the end of the applicable
calendar quarter pursuant to Section 5.1 B
of this Agreement is more than or
equal to 1.75 to 1.00. The Applicable
Margin shall, in each case, be determined
and adjusted quarterly as of the first day
of the second month after the end of
each fiscal quarter of the Guarantor (each,
an "Interest Determination Date"),
provided, however, that if the quarterly
month end financial statements required
by this Agreement are not delivered within
fifteen business days after the date
required under this Agreement, the
Applicable Margin shall increase to the
maximum percentage amount set forth above
from the date such financial
statements were required to be delivered to
the Bank until received by the Bank.
The initial "Applicable Margin" shall be
negative .25% and shall be effective
from the date of this Agreement until the
next Interest Determination Date.
Thereafter, the Applicable Margin shall be
effective from each Interest
Determination Date until the next Interest
Determination Date (except for any
increase occurring as a result of late
delivery of financial statements). The
Bank shall determine the appropriate
Applicable Margin promptly upon receipt of
the quarter end financial information and
shall promptly notify the Borrower of
any change to it. Such determinations by
the Bank shall be conclusive absent
manifest error.
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The term "Bank Obligations" means all of the present and
future indebtedness and obligations of
Borrower and/or the Guarantor to the Bank
including, but not limited to, the
indebtedness and obligations evidenced by or
set forth in: the Loans; the Line of Credit
Note; each of the other Loan
Documents; and all "Liabilities" as defined
in the Security Agreement and the
Segmentz Security Agreement.
The term "Capital Expenditures" means, for any period, the sum
of (i) the aggregate of all expenditures
(whether paid in cash or accrued as a
liability and including expenditures for
maintenance and repairs which should,
in accordance with generally accepted
principles of accounting, consistently
applied, be capitalized on the balance
sheet of the Guarantor (on a consolidated
basis) and all obligations with respect to
Capital Leases and all capitalized
interest) by the Guarantor (on a
consolidated basis) during that period which,
in conformity with generally accepted
principles of accounting consistently
applied, are included in "additions to
property, plant or equipment" or similar
items reflected in the statement of cash
flows of the Guarantor (on a
consolidated basis) and (ii) to the extent
not covered by subclause (i) hereof,
the aggregate of all expenditures by the
Guarantor (on a consolidated basis) to
acquire by purchase or otherwise the
business, property or fixed assets of, or
stock or other evidence of beneficial
ownership of, any person, corporation or
entity.
The term "Capital Lease" means any lease of any property
(whether real, personal or mixed) by the
Guarantor (on a consolidated basis) as
lessee which, in conformity with generally
accepted principles of accounting
consistently applied, is accounted for as a
capital lease on the balance sheet
of Borrower.
The term "Collateral" means: the properties and rights
described in the Collateral Documents and
each and every mortgage, security
agreement, pledge, assignment and other
security or collateral agreement which
has been, or will hereafter be, executed by
Borrower or the Guarantor to or for
the benefit of the Bank; all items now or
hereafter deposited in any account of
Borrower or the Guarantor with the Bank and
all proceeds of such items (cash or
otherwise); and all deposit accounts of
Borrower or Guarantor now or hereafter
with the Bank.
The term "Collateral Documents" means the Security Agreement,
the Mortgage, the Segmentz Security
Agreement and any additional mortgages
security agreements or other security or
collateral documents executed by
Borrower or Guarantor to or for the benefit
of the Bank, now or in the future.
The term "Combined Eligible Accounts Receivable" means the
"Eligible Accounts Receivable" as defined
in the Security Agreement and the
Segmentz Security Agreement.
The term "Debt" means the amount of all liabilities which,
under generally accepted principles of
accounting, consistently applied, would
appear as such on the balance sheet of the
Guarantor (on a consolidated basis).
The term "Environmental Laws" means the common law and all
Federal, state, local and foreign laws or
regulations, codes, orders, decrees,
judgments or injunctions issued,
promulgated, approved or entered thereunder now
or hereafter in effect, including,
without
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limitation, the Comprehensive Environmental
Response Compensation and Liability
Act, as amended; the Resource, Conservation
and Recovery Act, as amended; the
Toxic Substances Control Act, as amended;
the Federal Water Pollution Control
Act, as amended; and the Federal Clean Air
Act, as amended, relating to
pollution or protection of the environment,
including without limitation, laws
relating to: (1) emissions, discharges,
releases or threatened releases of
pollutants, contaminants, chemicals, or
industrial, toxic or hazardous
constituents, substances or wastes,
including, without limitation, asbestos
(including asbestos fiber and friable
asbestos), polychlorinated biphenyls, urea
formaldehyde foam insulation, paint
containing lead, petroleum, (including crude
oil or any fraction thereof), or any
petroleum product (collectively referred to
as "Hazardous Materials") into the
environment (including, without limitation,
ambient air, surface water, groundwater,
land surface or sub-surface strata),
(ii) the manufacture, processing,
distribution, use, generation, treatment,
storage, disposal, transport or handling of
Hazardous Materials, and (iii)
underground storage tanks, and related
piping, and emissions, discharges,
releases or threatened releases
therefrom.
The term "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
The term "Guaranty" means the Continuing Guaranty of even date
executed by the Guarantor in favor of the
Bank.
The term "Line of Credit Note" means the $6,000,000 Commercial
Revolving Note of even date from Borrower
to the Bank.
The term "Loan Documents" means this Agreement, the Line of
Credit Note, the Collateral Documents, the
Guaranty, the Properties Guaranty and
any other documents referred to herein
which have been or are to be executed by
Borrower and/or any of the Guarantors with
or in favor of the Bank.
The term "Material," when used to modify or describe any sum,
liability, lien, indebtedness, violation of
law or regulation, or other matter
herein, means an amount (or a liability of
Borrower reasonably expected to
arise) in excess of $100,000.
The term "Maturity Date" means November 15, 2007.
The term "Mortgage" means the Mortgage of even date from
Express 1 Properties, L.L.C. to the
Bank.
The term "Mortgaged Premises" means the real property
described in the Mortgage.
The term "Permitted Liens" means:
(i) liens for taxes, assessments or governmental
charges, and liens incident to construction, which are either (a)
not
delinquent, or (b) are being contested in good faith by Borrower or
the
Guarantor by
appropriate proceeding, which will prevent foreclosure of
such liens, and against which adequate reserves have been provided
and
upon demand by the Bank, with adequate security being
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posted with the Bank; the term shall also include easements,
restrictions, minor title irregularities and similar matters which
have
no adverse effect as a practical matter upon the ownership and use
of
the affected property by Borrower or the Guarantor;
(ii) liens or deposits in connection with workers'
compensation or other insurance or to secure customs' duties,
public or
statutory obligations in lieu of surety, stay or appeal bonds, or
to
secure performance of contracts or bids (other than contracts for
the
payment of money borrowed), or deposits required by law or
governmental
regulations or by any court order, decree, judgment or rule as
condition to the transaction of business or the exercise of any
right,
privilege or license; or other liens or deposits of a like nature
made
in the ordinary course of business;
(iii) security interests or mortgages granted to the
Bank;
(iv) the security interests listed on Schedule A
attached hereto, if any;
(v) liens in favor of artisans and possessory liens
in favor of bailees; and
(vi) liens securing the purchase price for trucks and
trailers acquired by Borrower or the Guarantor after the date of
this
Agreement provided that the total aggregate unpaid amounts secured
by
such liens shall not exceed $500,000 at any one time.
The term "Plan" means any employee benefit plan subject to
Title IV of ERISA maintained by Borrower or
the Guarantor, or any such Plan to
which Borrower or the Guarantor is required
to contribute on behalf of any of
its employees.
The term "Properties Guaranty" means the Continuing Guaranty
of even date executed by Express 1
Properties, L.L.C. in favor of the Bank.
The term "Reportable Event" means a reportable event as that
term is defined in Title IV of ERISA,
except actions of general applicability by
the Secretary of Labor under Section 110 of
ERISA.
The term "Security Agreement" means the Security Agreement of
even date from Borrower to the Bank.
The term "Segmentz Security Agreement" means the Security
Agreement of even date from the Guarantor
to the Bank.
The term "Tangible Net Worth" means, on a consolidated basis:
(i) the amount of all assets which, under
generally accepted principles of accounting, consistently
applied,
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would appear as such on the balance sheet of the Guarantor (on
a consolidated basis), but excluding (aa) intangible items
such as goodwill, treasury shares, patents, trademarks,
research and development expenses and the like; (bb) any
write-up in the book value of such assets resulting from a
re-evaluation thereof; and (cc) all receivables from and
loans, advances and similar transfers to any officers,
directors
or shareholders of Borrower or the Guarantor which
are due and owing to Borrower or the Guarantor (collectively
"Officer Receivables"); less,
(ii) the
amount of all Debt.
ARTICLE I
REVOLVING LOAN
1.1 Line of Credit: The Bank is willing to provide to Borrower a
line
of credit of up to $6,000,000 (the "Line of
Credit"). The Bank will make Loans
to Borrower under the Line of Credit from
time to time during the period from
the date of this Agreement through the
business day immediately prior to the
Maturity Date in aggregate amounts not to
exceed the dollar amounts described in
Section 1.2 below, provided that each
advance is made in compliance with all of
the terms and conditions described in
Section 1.2 below.
1.2 Line of Credit Advances: From time to time prior to the
Maturity
Date, the Bank agrees to lend and relend to
Borrower such amounts as Borrower
may request under the Line of Credit,
provided that the aggregate outstanding
principal amount of all borrowings made by
Borrower shall not at any time exceed
an amount (the "Borrowing Base") equal to
the lesser of: (a) $6,000,000; or (b)
(x) 80% of Combined Eligible Accounts
Receivable plus (y) $800,000. All advances
under the Line of Credit shall be evidenced
by the Line of Credit Note. The Line
of Credit shall bear interest and be
payable in the manner described in the Line
of Credit Note. Although the Line of Credit
Note shall be expressed to be
payable in the maximum amount of the Line
of Credit, Borrower shall be obligated
thereunder to pay only the unpaid balance
of amounts advanced to Borrower
together with interest thereon. The Bank's
books and records showing the amount
of such advances shall be prima facie
evidence of Borrower's indebtedness to the
Bank therefore. On the 10th day of each
month hereafter (and, at the request of
the Bank, prior to each disbursement of
loans by the Bank under the Line of
Credit), Borrower shall, at its expense,
furnish to the Bank a fully completed
"Collateral Base Report" certified as true
and accurate by the Chief Financial
Officer of Borrower and the Guarantor and
in a form satisfactory to the Bank,
together with such instruments, title and
lien searches, documents, opinions,
appraisals, certificates or certified
resolutions as the Bank and its counsel
shall reasonably require to assure the Bank
that at the time of each
disbursement Borrower is not in default
under this Agreement. Upon the Bank's
receipt of notice from Borrower of
Borrower's desire for advances under the Line
of Credit, the Bank shall disburse such
loans on the same business day as it
receives such notice, if such notice is
received by 3:00 p.m. or at the end of
the next business day if such notice is not
received by 3:00 p.m.; provided,
that: (i) no Event of Default has occurred
which has not been cured by Borrower
or waived in writing by the Bank; (ii) no
event has occurred, which with notice
and/or the passage of time, could become an
Event of
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Default and which has not been cured by
Borrower or waived in writing by the
Bank; and (iii) the outstanding balance of
the Line of Credit Note does not and
will not, after such advance is disbursed,
exceed the Borrowing Base. In the
event that the aggregate outstanding
advances under the Line of Credit exceed
the Borrowing Base at any time, Borrower
shall immediately make principal
reduction payments to the Bank sufficient
to reduce the outstanding balance
under the Line of Credit to less than the
amount of the Borrowing Base.
Borrower's failure to make such reductions
within 24 hours after written,
facsimile, oral or other notice is given by
the Bank to Borrower of the need for
such reductions, shall constitute an Event
of Default by Borrower under this
Agreement.
1.3 Prepayment of Line of Credit Note. The Line of Credit Note may
be
prepaid in whole or in part at the option
of Borrower at any time, without
premium or penalty. In case of prepayment
of less than all of the outstanding
principal amount of the Line of Credit
Note, the prepayment will be applied
first to accrued, but unpaid interest on
the Line of Credit Note, and then to
the principal amounts due on the Line of
Credit Note.
1.4 Cross-Defaults and Cross-Collateralization. Notwithstanding
anything to the contrary in any instrument
or other document executed by
Borrower with, or in favor of, the Bank:
(i) occurrence of an Event of Default
under this Agreement shall constitute a
default under each of the Bank
Obligations; and (ii) all of the Collateral
shall secure any and all of the Bank
Obligations.
1.5 Extension of Maturity Date. The Maturity Date may be extended
from
time to time, at the sole discretion of the
Bank, based upon its review of this
Agreement and the Borrower's financial
statements and analysis of such other
information and documents the Bank may deem
relevant. The Bank shall have no
obligation or duty to extend the Maturity
Date.
1.6 Payments. All payments, including any prepayments, by Borrower
on
account of principal, interest or fees,
shall be made without set-off or
counterclaim to the Bank at the address
specified above in lawful money of the
United States of America and in immediately
available funds. If any payment
under this Agreement or any Note becomes
due on a day other than a business day,
its maturity shall be extended to the next
succeeding business day, and with
respect to payments of principal and
interest thereon, shall be payable at the
then applicable rate during such
extension.
1.7 At any time Borrower is entitled to an advance under the Line
of
Credit, the Bank agrees to issue letters of
credit for the account of Borrower
in an amount not in excess of the maximum
advance that Borrower would then be
entitled to obtain under the Line of
Credit, provided that (a) the aggregate
maximum amount which is drawn and remains
unreimbursed under all letters of
credit plus the aggregate maximum available
amount which may be drawn under all
letters of credit which are outstanding at
any time, including without
limitation all letters of credit issued for
the account of Borrower which are
outstanding on the date of the Line of
Credit Note, shall not exceed $100,000,
(b) the issuance of any letter of credit
with an expiration date beyond the
maturity date of the Line of Credit Note
shall be entirely at the discretion of
the Bank, (c) any letter of credit shall be
a standby or commercial letter of
credit and the form of the requested letter
of credit shall be satisfactory to
the Bank, in the Bank's sole discretion,
and (d) Borrower shall have executed an
application and reimbursement agreement
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for any letter of credit in the Bank's
standard form. While any letter of credit
is outstanding, the maximum amount of
advances that may be outstanding under the
Line of Credit shall be automatically
reduced by the maximum amount available to
be drawn under any and all such letters of
credit plus the aggregate of the
amounts which have been drawn and remain
unreimbursed under all letters of
credit. Borrower shall pay the Bank a fee
for each letter of credit that is
issued, such fee to be agreed upon for each
letter of credit from time to time
by the Bank and Borrower, provided,
however, that if such agreement is not
reached, the Bank shall be under no
obligation to issue any letter of credit
hereunder. No credit shall be given for
fees paid due to early termination of
any letter of credit. Borrower shall also
pay the Bank's standard transaction
fees with respect to any transactions
occurring on account of any letter of
credit. Each fee shall be payable when the
related letter of credit is issued,
and transaction fees shall be payable upon
completion of the transaction as to
which they are charged. All fees may be
debited by the Bank to any deposit
account of Borrower carried with the Bank
without further authority and, in any
event, shall be paid by Borrower within ten
(10) days following billing.
ARTICLE II
CONDITIONS OF BORROWING
Notwithstanding any other terms of this Agreement, the Bank shall
not
be required to make any Loan to Borrower
under this Agreement unless the
following conditions are met:
2.1 Representations True. The representations and warranties of
Borrower and the Guarantor contained in
this Agreement are true as of the date
of each Loan or advance under this
Agreement with the same effect as though such
representations and warranties had been
made by Borrower and the Guarantor at
such time.
2.2 No Default. No Event of Default under this Agreement exists nor
any
event which, upon the lapse of time or
service of notice, or both, would
constitute an Event of Default under this
Agreement.
2.3 Counsel Opinion. Simultaneously with the execution of this
Agreement, the Bank shall have received
from Borrower's and the Guarantor's
counsel a satisfactory legal opinion as to:
(a) the due authorization, execution
and delivery by Borrower and the Guarantor
of this Agreement and the other Loan
Documents; (b) the due authorization,
validity and binding effect of the Loans
contemplated by this Agreement and of the
Loan Documents to be executed and
delivered by Borrower and the Guarantor;
(c) Borrower's and the Guarantor's due
incorporation, existence and qualification
as a domestic and foreign corporation
in each jurisdiction where such
qualification is required, whether by virtue of
Borrower's or the Guarantor's performance
of services or ownership or leasing of
property located in the jurisdiction or
otherwise; and (d) such other matters as
the Bank and its counsel shall determine.
Borrower and the Guarantor shall also
execute and/or deliver to the Bank or its
counsel all documents the Bank may
request concerning Borrower's and the
Guarantor's corporate status and the
authorization of the transactions
contemplated herein.
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2.4 Collateral. Borrower, the Guarantor and Express 1
Properties,
L.L.C. shall have granted to the Bank a
first priority perfected lien and
security interest in the Collateral to
secure the Bank Obligations in accordance
with the terms of the Collateral
Documents.
2.5 Guarantys. The Guarantor and Express 1 Properties, L.L.C.
shall
have guaranteed payment and performance of
the Bank Obligations in accordance
with the terms of the Guaranty and the
Properties Guaranty.
2.6 Additional Collateral Documents. Borrower shall have executed
and
delivered to the Bank such additional
collateral documents (including, but not
limited to, financing statements) as the
Bank may request to evidence the Bank's
liens in all of the Collateral.
2.7 Title Insurance. Simultaneously with the execution of this
Agreement and the delivery of the Mortgage,
the Bank shall have received from
Borrower an American Land Title Association
Policy, with only such exceptions as
are acceptable to the Bank, insuring title
to the Mortgaged Premises with such
terms as shall be reasonably satisfactory
to the Bank and with the amount of
insurance protecting the Mortgage to be
reasonably satisfactory to the Bank. The
title insurance company shall also be one
reasonably acceptable to the Bank.
2.8 Survey. The Bank shall have received a survey from a surveyor
or
engineer licensed in the State of Michigan
covering the Mortgaged Premises and
showing no encroachments and otherwise in
form reasonably satisfactory to the
Bank.
2.9 Documents Satisfactory. All proceedings taken in connection
with
the transactions contemplated by this
Agreement and all instruments,
authorizations and other related documents,
shall be satisfactory in form and
substance to the Bank and its counsel and
the Bank shall have received copies of
all documents as it may reasonably
require.
2.10 Out-of-Pocket Costs. Prior to or simultaneously with the
execution
of this Agreement, and in addition to any
other payments due the Bank under this
Agreement, Borrower and the Guarantor shall
have paid to the Bank all of the
Bank's out-of-pocket costs (including, but
not limited to, reasonable attorneys'
fees and title insurance, survey and
appraisal costs), arising in connection
with the preparation, negotiation,
execution, delivery, closing and post-closing
matters under this Agreement, the Loans
contemplated under this Agreement and
documents provided for or to be delivered
in connection with this Agreement.
2.11 Fees and Charges. In addition to the interest under the Line
of
Credit Note, the Bank shall receive the
following fees from Borrower: $2,500 on
or before September 1, 2006 (which is in
addition to any fees paid on or before
the date of this Agreement); plus $2,500 on
September 1 of each year thereafter.
2.12 Use of Proceeds. The proceeds of each Loan shall be used
exclusively by Borrower for working capital
purposes, provided that the proceeds
of not to exceed $500,000 in aggregate
Loans outstanding at any one time may be
loaned by Borrower to the Guarantor.
2.13 Waiver of Conditions. The Bank may, in its sole discretion,
waive
any conditions to any Loan or advance
contained in this Article II, but no such
waiver shall be implied or
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otherwise found to exist, unless it is in
writing and executed by an authorized
officer of the Bank.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to accept the Line of Credit Note and
to
make Loans as provided in this Agreement,
each of Borrower and the Guarantor
represents and warrants to the Bank, upon
which warranties and representations
the Bank has and will rely, as follows:
3.1 Corporate Existence and Power. (a) Borrower is a corporation
duly
organized, validly existing and in good
standing under the laws of the State of
Michigan and the Guarantor is a corporation
duly organized, validly existing and
in good standing under the laws of the
State of Delaware, (b) each of Borrower
and the Guarantor has the corporate power
and authority to own its properties
and assets and to carry out its businesses
as now being conducted and is
qualified to do business in every
jurisdiction wherein the failure to qualify
would have a material adverse effect on it,
(c) each of Borrower and the
Guarantor has the corporate power and
authority to execute and perform this
Agreement, to borrow money in accordance
with its terms, to execute and deliver
the Loan Documents and other documents
contemplated hereby, to grant to the Bank
mortgages and security interests in the
Collateral as hereby contemplated and to
do any and all other things required of it
hereunder, and (d) this Agreement and
the other documents contemplated hereby,
when executed on behalf of each of
Borrower and the Guarantor by its duly
authorized officers, will be valid and
binding obligations of Borrower or the
Guarantor, as applicable, legally
enforceable in accordance with their terms,
except as enforceability may be
limited by bankruptcy laws, insolvency
laws, or other laws affecting creditor's
rights generally. The Bank and the
Guarantor acknowledge that the Guarantor has
failed to pay certain franchise taxes in
Delaware which failure may make certain
of the representations of the Guarantor in
this section 3.1 untrue. On or before
December 31, 2005, the Guarantor shall pay
all franchise and other taxes due the
state of Delaware and shall be validly
existing and in good standing in
Delaware. The Bank hereby waives any Event
of Default under this Agreement
arising from the Guarantor's failure to pay
such taxes and to be validly
existing and in good standing in Delaware
prior to December 31, 2005.
3.2 Authorization, Approvals, Etc. The execution, delivery and
performance of this Agreement, the
borrowings hereunder and the execution and
delivery of the Loan Documents and other
documents contemplated hereby by
Borrower and the Guarantor (a) have been
duly authorized by the requisite
corporate action, (b) do not require
registration with or consent or approval
of, or other action by any Federal, State
or other governmental authority or
regulatory body, (c) will not violate any
provision of law, any order of any
court or other agency of government, the
Articles of Incorporation or Bylaws of
Borrower or the Guarantor, any provision of
any indenture, agreement or other
instrument to which Borrower or the
Guarantor is a party, or by which either of
them or any of their properties or assets
are bound, (d) will not be in conflict
with, result in a breach of or constitute
(with or without due notice and/or
passage of time) a default under any such
indenture, agreement or other
instrument, and (e) will not result in the
creation or imposition of any lien,
charge or encumbrance of any nature
whatsoever upon any
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of the properties or assets of Borrower or
the Guarantor other than in favor of
the Bank and as contemplated hereby.
3.3 Financial Statements. The balance sheet of the Guarantor (on
a
consolidated basis) and the statements of
profit and loss and surplus of the
Guarantor (on a consolidated basis)
previously furnished to the Bank are
correct, complete and fairly represent the
financial condition of the Guarantor
(on a consolidated basis) as of the
relevant dates and the results of its
operations for the fiscal periods ended on
such dates, and disclose all known
material liabilities of the Guarantor (on a
consolidated basis). Since the
latest of such dates, there has been no
material adverse change in the property
or business operations of the Guarantor (on
a consolidated basis).
3.4 Liens. each of Borrower and the Guarantor has good and
marketable
title to all of its assets free and clear
of all liens except Permitted Liens.
3.5 Taxes. Except as described in section 3.1 above or
expressly
disclosed in the financial statements
referred to in Section 3.3 above, neither
Borrower nor the Guarantor has any
outstanding unpaid tax liabilities (except
for taxes which are currently accruing from
its current operations and ownership
of property, and which are not delinquent),
and no tax deficiencies have been
proposed or assessed against Borrower or
the Guarantor. There have been no
audits of Borrower's or the Guarantor's
federal, state or local tax returns,
which have resulted in or are likely to
result in the assessment of any material
tax liability against Borrower or the
Guarantor and all taxe
