CREDIT AGREEMENT by and between FitLife Brands, Inc. and Mutual of Omaha Bank Dated as of September 24, 2019 CREDIT AGREEMENT
Exhibit 10.1
by and
between
and
Mutual of Omaha Bank
Dated
as
of
September
24, 2019
THIS
CREDIT AGREEMENT (this "Agreement") dated as of September 24,
2019, is entered into by and between FitLife Brands, Inc., a Nevada
Corporation (“Borrower”) and Mutual of Omaha Bank ("Bank"). In
consideration of the premises herein contained and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound,
hereby agree as follows:
Article
I.
DEFINITIONS
AND ACCOUNTING MATTERS
Section
1.01 Certain Defined
Terms. As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms
defined):
“Accounts Receivable”
means all of Borrower’s “Accounts”, as such term
is defined in the UCC, including, without limitation, the aggregate
unpaid obligations of customers and other account debtors to
Borrower arising out of the sale or lease of goods or rendition of
services by such Borrower on an open account or deferred payment
basis.
"Accounts Receivable Debtor"
means a Person obligated to pay Borrower the amount of any Accounts
Receivable.
"Advances" means loans made
pursuant to the Revolving Line of Credit under Section 2.01.
"Affiliate" means, as to any
Person, any other Person (a) that directly or indirectly,
through one or more intermediaries, controls or is controlled by,
or is under common control with, such Person, (b) that
directly or indirectly beneficially owns or holds five percent (5%)
or more of any class of voting stock of such Person, or
(c) five percent (5%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Person in
question. The term "control" means the possession, directly or
indirectly, of the power to direct or cause direction of the
management and policies of a Person, whether through the ownership
of voting securities, by contract, or otherwise; provided, however, in no event shall Bank
be deemed an Affiliate of Borrower or any of their
Subsidiaries.
"Agreement" has the meaning
specified in the introduction hereto.
“Bank’s Office”
means Bank's address and, as appropriate, account as set forth in
Section 7.02, or
such other address or account as Bank may from time to time notify
to Borrower.
"Borrower" has the meaning
specified in the introduction hereto.
"Borrowing Base"
means:
(a) Seventy-five
percent (75%) of Eligible Accounts Receivable; plus
(b)
Fifty percent (50%) of Inventory. For purposes of this calculation,
Inventory shall be the lesser of (i) fifty percent (50%) of
Eligible Accounts Receivable or (ii) fifty percent (50%) of the
maximum amount of the Revolving Line of Credit.
"Borrowing Base Certificate"
means the certificate in the form of Exhibit A hereto, properly
completed and duly executed by any authorized officer of Borrower,
who is authorized to deliver the Borrowing Base Certificate on
behalf of Borrower.
-1-
"Business Day" means any day
other than a Saturday, Sunday, or other day on which commercial
banks are authorized to close under the Laws of Nebraska, or are in
fact closed in, the state where Bank's Office is located and, if
such day relates to any LIBOR Rate, means any such day on which
dealings in dollar deposits are conducted by and between banks in
the applicable offshore dollar interbank market.
"Closing Date" means September
24, 2019.
"Collateral" means the property
in which Liens or security interests have been granted pursuant to
the Security Agreement and any other Collateral, now or hereafter,
executed by Borrower.
"Compliance Certificate" means a
certificate, in substantially the form attached hereto as
Exhibit B, properly
completed and executed by the chief financial officer of
Borrower.
"Contractual Obligation" means,
as to any Person, any provision of any security issued by such
Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property
is bound.
"Debt Service" means the amount
of cash required to make payments on the principal and interest on
all Indebtedness of Borrower.
"Default Rate" has the meaning
specified in Section 2.04(c).
"Disposition" or "Dispose" means the sale,
transfer, license, lease or other disposition (including any sale
and leaseback transaction) of any property by any Person, including
any sale, assignment, transfer or other disposal, with or without
recourse, of any notes or accounts receivable or any rights and
claims associated therewith.
"Distribution" means any
dividend or other distribution (whether in cash, securities or
other property) with respect to any capital stock or other equity
interest of Borrower or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or
similar deposit on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such capital stock
or other equity interest or of any option, warrant or other right
to acquire any such capital stock or other equity
interest.
"EBITDA" means for any period,
the sum of the following determined in accordance with GAAP, (a)
net income plus (b)
the following to the extent deducted in calculating such net income
(without duplication): (i) interest expense, (ii) any provision for
federal, state, local and foreign income taxes payable, and (iii)
depreciation and amortization expense.
“Eligible Accounts
Receivable” means Accounts Receivable, which meet the
following requirements:
(a)
it is not
represented by a promissory note, any chattel paper or any other
instrument and is not payable on an installment basis;
(b)
it arises in the
ordinary course of Borrower’s business and is genuine and in
all respects what it purports to be;
(c)
it arises from the
providing of services by Borrower or the sale of goods by Borrower,
which goods comply with such Account Receivable Debtor’s
specifications (if any) and have been delivered to and accepted by,
such Account Receivable Debtor and Borrower has possession of
shipping and delivery receipts evidencing such
shipment;
-2-
(d)
it is evidenced by
an invoice rendered to the Account Receivable Debtor with respect
thereto which (A) is dated not earlier than the date of shipment or
delivery, (B) has payment terms not unacceptable to Bank in its
reasonable credit judgment exercised in a manner consistent with
Bank's normal credit practices; (C) which does not provide for a
payment more than ninety (90) days after the invoice date; (D) is
not unpaid on the date that is thirty (30) days after the due date
set forth in the invoice evidencing the Accounts Receivable,
provided, however, that Accounts Receivable evidenced by invoices
stating that payment is "Due Upon Receipt" shall be deemed for
purposes of determining eligibility to have a due date based on the
historical payment experience with respect to such Account
Receivable Debtor provided that the payment experience can
reasonably be determined and the payment terms are not in excess of
90 days after receipt of invoice by such Account Receivable Debtor
and (E) contains a legend in form and substance acceptable to Bank
directing the Account Receivable Debtor to pay the amount due under
the invoice directly to Bank in the event of Default by
Debtor;
(e)
it is subject to a
first priority security interest in favor of Bank and is not
subject to any assignment, claim or Lien;
(f)
it is a valid,
legally enforceable and unconditional obligation of the Accounts
Receivable Debtor with respect thereto, and is not subject to
setoff, counterclaim, credit or allowance (except any credit or
allowance which has been deducted in computing the net amount of
the applicable invoices shown in the original schedule or Borrowing
Base Certificate furnished to Bank identifying or including such
Accounts Receivable) or adjustment by the Accounts Receivable
Debtor with respect thereto, or to any claim by such Accounts
Receivable Debtor denying liability thereunder in whole or in
part;
(g)
there are not
proceedings or actions which are then threatened or pending against
the Accounts Receivable Debtor with respect thereto or to which
such Accounts Receivable Debtor is a party which are likely to
result in any material adverse change in such Accounts Receivable
Debtor’s financial condition or in its ability to pay any
Accounts Receivable in full when due;
(h)
it does not arise
out of a contract which, by its terms, forbids, restricts or makes
void or unenforceable the assignment by Borrower to Bank of the
Accounts Receivable arising with respect thereto;
(i)
the Accounts
Receivable Debtor with respect thereto is not a Subsidiary or
Affiliate of Borrower, or a director, officer, employee or agent of
Borrower or a Subsidiary or Affiliate of Borrower;
(j)
the Accounts
Receivable Debtor with respect thereto is a resident or citizen of,
and is located within, the United States of America, Jamaica,
Bahamas or Trinidad, unless the sale of goods giving rise to the
Accounts Receivable is on letter of credit, banker’s
acceptance or other credit support terms satisfactory to
Bank;
(k)
it is not an
Accounts Receivable arising from a “sale on approval”,
“sale or return” or “consignment”, or
subject to any other repurchase or return agreement;
(l)
it is not an
Accounts Receivable with respect to which possession and/or control
of the goods sold giving rise thereto is held, maintained or
retained by Borrower or any Subsidiary (or by any agent or
custodian of Borrower or any Subsidiary) for the account of or
subject to further and/or future direction from the Accounts
Receivable thereof;
(m)
it is not an
Accounts Receivable which in any way fails to meet or violates any
warranty, representation or covenant contained in this Agreement or
any Loan Document relating directly or indirectly to Accounts
Receivable;
-3-
(n)
if the Accounts
Receivable Debtor is the United States of America or any state or
local governmental entity, or any department, agency or
instrumentality thereof, Borrower has assigned its rights to
payment of such Accounts Receivable to Bank, pursuant to the
Assignment of Claims Act of 1940, as amended, or pursuant to any
similar state or local law, regulation or requirement;
(o)
it is not owing by
an Accounts Receivable Debtor with respect to which twenty-five
percent (25%) or more of the aggregate Accounts Receivable owing by
such Accounts Receivable Debtor to Borrower are not Eligible
Accounts Receivable for any reason; and
(p)
if Bank, in its
reasonable credit judgment exercised in a manner consistent with
Bank's normal credit practices, has established a credit limit for
an Accounts Receivable, the aggregate dollar amount of Accounts
Receivable due from such Accounts Receivable Debtor, including such
Accounts Receivable, does not exceed such credit
limit.
Accounts
Receivable which have not been paid in full within ninety (90) days
from the invoice date will be ineligible. The entire balance of any
Account Receivable of any single Accounts Receivable Debtor will be
ineligible whenever the portion of the Account Receivable which has
not been paid within ninety (90) days from the invoice date is in
excess of twenty-five percent (25%) of the total amount outstanding
on the Account.
Bank
further reserves the right, in its reasonable credit judgment
exercised in a manner consistent with Bank's normal credit
practices, from time to time hereafter upon ten (10) days prior
written notice to Borrower, to designate specific ineligible
Accounts Receivable; provided, that such designation shall be
immediately effective upon the occurrence of an Event of Default or
if an Event of Default is in existence at the time of such
designation.
"Eligible Pre-Sold Inventory"
means Inventory in transit subject to a Forward Priced Contract and
for which Borrower has provided to Bank such documents or
information as requested by Bank.
"Environmental Laws" means all
laws and regulations relating to environmental, health, safety and
land use matters applicable to any property.
"ERISA" means the Employee
Retirement Income Security Act of 1974.
"Events of Default" has the
meaning specified in Section 6.01.
"Fixed Charge Coverage Ratio"
means (a) the ratio of EBITDA plus all rental and lease expenses of
Borrower less all unfinanced capital expenditures of Borrower less
all Distributions made by Borrower less all cash taxes paid by
Borrower, to (b) Borrower's Debt Service plus all rental and lease
expenses of Borrower, as calculated by Bank.
"Forward Priced Contract" means
a contract between Borrower and any Person for the purchase of
Inventory by Borrower for which the price to be paid by Borrower
has been established and which Inventory has been contracted to be
sold by Borrower to another Person.
"GAAP" means generally accepted
accounting principles.
"Governmental Authority" means
any nation or government, any state or other political subdivision
thereof, any agency, authority, instrumentality, regulatory body,
court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to
government.
-4-
"Indebtedness" means, as to any
Person at a particular time, all of the following, (without
duplication) whether or not included as indebtedness or liabilities
in accordance with GAAP:
(a) all
obligations of such Person for borrowed money and all obligations
of such Person evidenced by bonds, debentures, notes, loan
agreements, letters of credit or other similar
instruments;
(b) all
direct or contingent obligations of such Person arising under
letters of credit (including standby and commercial),
bankers’ acceptances, bank guarantees, surety bonds and
similar instruments;
(c) all
obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the
ordinary course of business);
(d) indebtedness
(excluding prepaid interest thereon) secured by a Lien on property
owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse;
(e) capital
leases; and
For all
purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a
joint venture that is itself a corporation or limited liability
company) in which such Person is a general partner or a joint
venturer, unless such Indebtedness is expressly made non-recourse
to such Person.
"Interest Period" means with
respect to each Advance, the period commencing on the date such
Advance is established, and ending on the numerically corresponding
day in the first calendar month thereafter, except that each such
Interest Period which commences on the last Business Day of a
calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent
calendar month. Notwithstanding the foregoing, (a) each Interest
Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day, and (b) any
Interest Period which would otherwise extend beyond any Termination
Date shall end on any Termination Date.
“Inventory” means any and
all of Borrower’s goods (including, without limitation goods
in transit) wheresoever located, which are held for sale and are in
salable condition, the sale of which will give rise to an Accounts
Receivable and which are not returned to and/or repossessed and/or
stopped in transit by Borrower.
"Investment" means, as to any
Person, any direct or indirect acquisition or investment by such
Person, whether by means of (a) the purchase or other acquisition
of capital stock or other securities of another Person, (b) a loan,
advance or capital contribution to, guaranty or assumption of debt
of, or purchase or other acquisition of any other debt or equity
participation or interest in, another Person, including any
partnership or joint venture interest in such other Person, or (c)
the purchase or other acquisition (in one transaction or a series
of transactions) of assets of another Person that constitute a
business unit. For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of
such Investment.
"Laws" means, collectively, all
international, foreign, Federal, state and local statutes,
treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or
administration thereof, and all applicable administrative orders,
directed duties, requests, licenses, authorizations and permits of,
and agreements with, any Governmental Authority, in each case
whether or not having the force of law.
"LIBOR Margin" means 2.75% per
annum.
-5-
"LIBOR Rate" for any Advance and
any Interest Period therefor, means an interest rate per annum
equal at all times during such Interest Period to the quotient of
(i) the rate per annum conclusively determined by Bank for
such Interest Period at which deposits in U.S. dollars in
immediately available funds are offered, which appearing on
Bloomberg L.P. (the "Service") Page BBAM1 (Official BBA USD Dollar
LIBOR Fixings) (or any successor or substitute page of such
Service, or any successor to or substitute for such Service,
providing rate quotations comparable to those currently provided on
such page of such Service as determined by Bank from time to time
for purposes of providing quotations of interest rates applicable
to dollar deposits in an amount equal to the relevant Advance in
the London interbank market) as of 11:00 A.M. (London time) on
the first Business Day of such Interest Period, for delivery on the
first day of such Interest Period in an amount equal to the
principal amount of the Advance outstanding on the first day of
such Interest Period for a period equal to such Interest Period
divided by (ii) the remainder of one (1) minus the
applicable LIBOR Reserve Percentage.
"LIBOR Reserve Percentage"
means, with respect to each Interest Period, a percentage
(expressed as a decimal) equal to the daily average during such
Interest Period of the percentages in effect on each day of such
Interest Period, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor thereto), for determining
the maximum reserve requirements applicable to "Eurocurrency
Liabilities" pursuant to Regulation D of the Board of
Governors of the Federal Reserve System or any other then
applicable regulation of the Board of Governors which prescribes
reserve requirements applicable to "Eurocurrency Liabilities" as
presently defined in Regulation D.
"Lien" means any mortgage,
pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or
other title retention agreement, and any financing lease having
substantially the same economic effect as any of the
foregoing).
"Loan Documents" means this
Agreement, the Note, the Security Agreement, and all other
agreements, documents, instruments, and certificates of Borrower
delivered to, or in favor of, Bank under this Agreement or in
connection herewith or therewith, including, without limitation,
all agreements, documents, instruments, certificates and delivered
in connection with the extension of Advances by Bank
hereunder.
"Loan Obligations" means all
obligations, indebtedness, and liabilities of Borrower, to Bank
arising pursuant to any of the Loan Documents, whether now existing
or hereafter arising, whether direct, indirect, related, unrelated,
fixed, contingent, liquidated, unliquidated, joint, several, or
joint and several, including, without limitation, the obligation of
Borrower to repay the Advances, interest on the Advances, and all
fees, costs, and expenses (including attorneys' fees and expenses)
provided for in the Loan Documents.
“Material Adverse Effect”
means any set of circumstances or events which (i) has or could
reasonably be expected to have any material adverse effect upon the
validity or enforceability of any Loan Documents; (ii) is or could
reasonably be expected to be material and adverse to the condition
(financial or otherwise), of the business assets, operations, or
property of Borrower or (iii) materially impairs or would
reasonably be expected to materially impair the ability of Borrower
to perform the obligations under the Loan Documents.
"Maximum Rate" has the meaning
specified in Section
2.04(a).
"Non-Excluded Taxes" has the
meaning specified in Section 2.09.
"Note" means a promissory note
executed by Borrower in a form as provided by Bank.
"Obligations" means all Loan
Obligations.
-6-
"Ordinary Trade Payable Dispute"
means trade accounts payable, in an aggregate amount not in excess
of $200,000 with respect to Borrower, with respect to which
(a) there exists a bona fide dispute between Borrower
and the vendor, (b) Borrower is contesting the same in good
faith by appropriate proceedings, and (c) Borrower has
established appropriate reserves on its financial
statements.
"Organizational Documents"
means, (a) with respect to any corporation, the certificate or
articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S.
jurisdiction); (b) with respect to any limited liability company,
the certificate or articles of formation and operating agreement;
and (c) with respect to any partnership, joint venture, trust or
other form of business entity, the partnership, joint venture or
other applicable agreement of formation and any agreement,
instrument, filing or notice with respect thereto filed in
connection with its formation or organization with the applicable
Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of
formation or organization of such entity.
"Outstanding Credit" means, at
any time of determination, the sum of the aggregate amount of
Advances pursuant to the Revolving Line of Credit then
outstanding.
"Permitted Encumbrances" means
the items listed in Section 5.02(a)(i) through
(x).
"Person" means any individual,
corporation, business trust, association, company, partnership,
joint venture, Governmental Authority, or other
entity.
"Request for Advance" has the
meaning specified in Section
2.02(a)(i).
"Revolving Line of Credit" means
$2,500,000.00.
"Security Agreement" means a
security agreement, in a form as provided by Bank.
"Service" has the meaning
specified in the definition of LIBOR Rate.
"SOFR" with respect to any day
means the secured overnight financing rate published for such day
by the Federal Reserve Bank of New York, as the administrator of
the benchmark, (or a successor administrator) on the Federal
Reserve Bank of New York's Website.
"Subordinated Debt" means any
Indebtedness subordinated in form and substance acceptable to
Bank.
Subordination Agreement" means
an agreement in form and substance acceptable to Bank between Bank
and the holder of any Subordinated Debt.
"Subsidiary" of a Person means a
corporation, partnership, joint venture, limited liability company
or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the
election of directors or other governing body (other than
securities or interests having such power only by reason of the
happening of a contingency) are at the time beneficially owned, or
the management of which is otherwise controlled, directly, or
indirectly through one or more intermediaries, or both, by such
Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or
Subsidiaries of Borrower.
"Termination Date" means
September 23, 2020 or the date of the termination in whole of the
Revolving Line of Credit pursuant to Section 6.02.
-7-
Section
1.02 Accounting Matters.
All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting
principles consistently applied, except as otherwise stated herein.
To enable the ready and consistent determination of compliance by
Borrower with its obligations under this Agreement, Borrower will
not change the manner in which either the last day of its fiscal
year or the last days of the first three fiscal quarters of its
fiscal years is calculated.
Section
1.03 Construction.
Wherever herein the singular number is used, the same shall include
the plural where appropriate, and words of any gender shall include
each other gender where appropriate. The headings, captions or
arrangements used in any of the Loan Documents are, unless
specified otherwise, for convenience only and shall not be deemed
to limit, amplify or modify the terms of the Loan Documents, nor
affect the meaning thereof.
Article
II.
AMOUNTS
AND TERMS OF THE REVOLVING LINE OF CREDIT
Section
2.01 The Revolving Line
of Credit. Bank agrees, on the terms and conditions hereinafter set
forth, to extend a Revolving Line of Credit to Borrower from time
to time during the period from the Closing Date to and including
the Termination Date (this and certain other capitalized terms are
defined in Section 1.01) by making
loans to Borrower on a revolving basis from time to time
provided,
however, at no time
shall the Outstanding Credit exceed the lesser of the Borrowing
Base as reflected on the most recent Borrowing Base Certificate, or
the Revolving Line of Credit. Subject to the foregoing limitations,
and the other terms and provisions of this Agreement, Borrower may
borrow, prepay, and reborrow hereunder the amount of the Revolving
Line of Credit under this Section 2.01.
Section
2.02 Making Advances
Pursuant to the Revolving Line of Credit.
(a) Advances Pursuant to the Revolving
Line of Credit.
(i) Advances. Each Advance under
the Revolving Line of Credit shall be made, to the extent that Bank
is so obligated under Section 2.01, on notice
from Borrower (a "Request for Advance") to Bank delivered before
12:00 P.M. Central Daylight Time ("CDT") on a Business Day
prior to the date of such Advance, specifying the amount of such
Advance, and the Interest Period therefor; provided that, no
Advances shall be established while an Event of Default exists or
if the interest rate for such Advances would exceed the Maximum
Rate. Any Request for Advance received after 12:00 P.M. CDT
shall be deemed to have been received and be effective on the next
Business Day. The amount of such Advance shall, subject to the
terms and conditions of this Agreement, be made available to
Borrower as set forth in the Request for Advance by
(i) depositing the same, in same day funds, in an account of
Borrower maintained with Bank or (ii) wire transferring such
funds to the Person or Persons designated in the Request for
Advance. Each Request for Advance will be accompanied by a most
recently reviewed Borrowing Base Certificate.
(b) Requests for Advances
Irrevocable. Each Request for Advance shall be irrevocable
and binding on Borrower and Borrower shall indemnify Bank against
any loss or expense any one of them may incur as a result of any
failure to borrow any Advance after a Request for Advance
(including any failure resulting from the failure to fulfill on or
before the date specified for such Advance the applicable
conditions set forth in Article III), including,
without limitation, any loss (including loss of anticipated
profits) or expense actually incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by Bank to fund
such Advance when such Advance, as a result of such failure, is not
made on such date.
(c) Use of Proceeds. The proceeds
of the Advances shall be used by Borrower to finance its working
capital requirements.
-8-
Section
2.03 Note; Repayment of
Principal.
(a) Advances.
The Advances shall be evidenced by the Note, delivered to Bank
pursuant to Article
II, in the amount of its Revolving Line of Credit. Borrower
shall repay to Bank the aggregate unpaid principal amount of all
Advances on the Termination Date.
Section
2.04 Pricing.
(a) Advances.
Borrower shall pay interest on the unpaid principal amount of the
Advances during the period from the date of each Advance until the
date due at a fluctuating rate per annum equal to the LIBOR Rate
applicable thereto, plus the LIBOR Margin; provided, however, that in no event shall
the applicable rate exceed the maximum nonusurious interest rate,
if any, that at any time, or from time to time, may be contracted
for, taken, reserved, charged, or received under applicable state
or federal laws (the "Maximum
Rate"). In the event
that Bank shall at any time determine that the accrual of interest
on the basis of the LIBOR Rate is or has become unlawful or
infeasible by reason of the Bank's compliance with any new law,
rule, regulation, guideline or order, or any new interpretation of
any present law, rule, regulation, guideline or order, or (ii)
there ceases to be any published LIBOR Rate, then Bank shall give
telephonic notice thereof (confirmed in writing) to Borrower, in
which event any Advance bearing interest at the LIBOR Rate shall
thereupon immediately accrue interest at the SOFR.
(b) Payment
of Interest. Borrower shall pay accrued and unpaid interest
the last day of each calendar month and on the Termination
Date.
(c) Default
Interest. Upon the occurrence of an Event of Default, at the
option of Bank exercised by delivering a written notice to
Borrower, all principal and, to the extent permitted by applicable
law, interest, fees and other amounts owing hereunder, shall bear
interest, from the date of Borrower's receipt of such notice, until
the date Bank, in writing, acknowledge that such Event of Default
is waived or cured or all Obligations are paid in full, at the
Default Rate. The term "Default Rate", as used herein, means the
lesser of (i) the Maximum Rate, or (ii) the rate per
annum which shall from day-to-day be equal to five percent (5%) in
excess of the sum of the LIBOR Rate plus the LIBOR Margin. Interest
payable at the Default Rate shall be payable from time to time on
demand or, if not sooner demanded, on the last day of each calendar
month.
(d) Fees.
Borrower agrees to pay to Bank in arrears at the end of each
calendar quarter and on the Termination Date an annual fee (payable
in quarterly installments) on the unused portion of the Revolving
Line of Credit equal to 0.15 percent (as calculated on an annual
basis from the date hereof), with the unused portion of the
Revolving Line of Credit calculated as the difference between the
Revolving Line of Credit and the average daily outstanding amount
of the Advances.
Section
2.05 Mandatory
Prepayments or Collateralization; Optional
Prepayments.
(a) Borrower
shall, within five (5) days following the earlier of the delivery
of each Borrowing Base Certificate hereof or the day upon which
such Borrowing Base Certificate was due, either (i) prepay the
Advances in the amount, if any, by which the Outstanding Credit on
the date of prepayment under this Section 2.05(a) exceeds
the Borrowing Base at such time, together with accrued interest to
the date of such prepayment on the amount prepaid, or
(ii) pledge and assign to Bank additional collateral
acceptable to Bank, in Bank's sole discretion, and deliver all
documentation that Bank, in its sole discretion, may require in
connection with such pledge and assignment and the perfection of a
first-priority security interest in such additional collateral, so
that the Borrowing Base plus the value assigned by Bank, in its
sole discretion, to such additional collateral equals or exceeds
the Outstanding Credit.
(b) Borrower may, by
notice to Bank, prepay the outstanding amount of the Advance in
whole or in part with accrued interest to the date of such
prepayment on the amount prepaid.
-9-
Section
2.06 Increased
Costs.
(a) If
either (i) the introduction of or any change (including,
without limitation, any change by way of imposition or increase of
reserve requirements) in or in the interpretation of any law or
regulation or (ii) the compliance by Bank with any guideline
or request from any central bank or other Governmental Authority
(whether or not having the force of law), shall result in any
increase in the cost to Bank of making, funding or maintaining any
Advance, then Borrower shall, from time to time, upon demand by
Bank, pay to Bank additional amounts sufficient to indemnify Bank
against such increased cost. A certificate as to the amount of such
increased cost, submitted to Borrower by Bank, shall, in the
absence of manifest error, be conclusive and binding for all
purposes.
(b) If either
(i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) compliance by
Bank with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law)
affects or would affect the amount of capital required or expected
to be maintained by Bank and Bank determines that the amount of
such capital, is increased by or based upon the existence of Bank's
commitment to extend credit hereunder and other commitments of this
type, then, upon demand by Bank, Borrower shall, jointly, severally
and immediately pay to Bank, from time to time as specified by
Bank, additional amounts sufficient to compensate Bank in the light
of such circumstances, to the extent that Bank reasonably
determines such increase in capital to be allocable to the
existence of Bank's commitment to extend credit hereunder. A
certificate as to such amounts, submitted to Borrower by Bank,
shall, in the absence of manifest error, be conclusive and binding
for all purposes.
Section
2.07 Changes in Law
Rendering Certain Advances Unlawful. In the event that any change
in any applicable law (including the adoption of any new applicable
law) or any change in the interpretation of any applicable law by
any judicial, governmental or other regulatory body charged with
the interpretation, implementation or administration thereof,
should make it (or in the good-faith judgment of Bank should raise
a substantial question as to whether it is) unlawful for Bank to
make, maintain or fund Advances, then (a) Bank shall promptly
notify each of the other parties hereto, and (b) the
obligation of Bank to make Advances of such type shall, upon the
effectiveness of such event, be suspended for the duration of such
unlawfulness.
Section
2.08 Payments and
Computations.
(a) Method
of Payment. Except as otherwise expressly provided herein,
all payments of principal, interest, and other amounts to be made
by Borrower under the Loan Documents shall be made to Bank for the
account of the party entitled thereto in U.S. dollars and in
immediately available funds, without set-off, deduction, or
counterclaim, not later than 3:00 P.M. CDT on the date on
which such payment shall become due (each such payment made after
such time on such due date to be deemed to have been made on the
next succeeding Business Day). Borrower shall, at the time of
making each such payment, specify to Bank the sums payable under
the Loan Documents to which such payment is to be applied and in
the event that Borrower fails to so specify or if an Event of
Default exists, Bank may apply such payment and any proceeds of any
Collateral first to the Obligations then due and payable and then
to all other outstanding Obligations in such order and manner as it
may elect in its sole discretion. Each payment received by Bank
under any Loan Document for the account of Bank shall be paid to
Bank by 3:00 P.M. CDT on the date the payment is deemed made
to Bank in immediately available funds, for the account of
Bank’s Office, if any. Borrower hereby authorizes Bank, if
and to the extent payment of any amount is not made when due under
any Loan Document, to charge from time to time against any account
of Borrower with Bank any amount so due.
(b) Payments
on a Non-Business Day. Whenever any payment under any Loan
Document shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the
computation of the payment of interest and fees, as the case may
be.
-10-
(c) Proceeds
of Collateral. All proceeds received by Bank from the sale
or other liquidation of the Collateral when an Event of Default
exists shall first be applied as payment of the accrued and unpaid
fees and expenses of Bank hereunder, including, without limitation,
under Section 7.04
and then to all other unpaid or unreimbursed Obligations (including
reasonable attorneys' fees and expenses actually incurred, to the
extent set forth in Section 7.04) owing to Bank in
its capacity as Bank only and then any remaining amount of such
proceeds shall be distributed unpaid amounts of Obligations in such
order as determined by Bank.
After
all the Obligations, other than indemnification obligations, which
survive the termination of the Revolving Line of Credit has been
paid and satisfied in full and the Revolving Line of Credit
terminated, any proceeds of Collateral shall be delivered to the
Person entitled thereto as directed by Borrower or as otherwise
determined by applicable law or applicable court
order.
(d) Computations. All computations
of interest accrued at the LIBOR Rate (but not the Maximum Rate)
hereunder and under the Note and the fees hereunder shall be made
on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) elapsed, and
all computations of interest accrued at the Maximum Rate shall be
based upon a year with 365 or 366 days, as
appropriate.
Section
2.09 Withholding Taxes.
All payments by Borrower of amounts payable under any Loan Document
shall be payable without deduction for or on account of any present
or future taxes, duties, or other charges levied or imposed by any
Governmental Authority through withholding or deduction with
respect to any such payments (but excluding any tax imposed on or
measured by the net income or profit of a Bank) (all such taxes,
duties or other charges, giving effect to the taxes excluded
pursuant to the foregoing parenthetical herein the "Non-Excluded
Taxes"). If any Non-Excluded Taxes are so levied or imposed,
Borrower shall, make additional payments in such amounts so that
every net payment of amounts payable by them under any Loan
Document, after withholding or deduction for or on account of any
Non-Excluded Taxes, will be equal to the amount provided for herein
or therein; provided that Borrower may withhold to the extent
required by law and shall have no obligation to pay such additional
amounts to Bank to the extent that such Non-Excluded Taxes
(i) are levied or imposed by reason of the failure or
inability of Bank to comply with the provisions of Section 2.10, or
(ii) are United States withholding taxes imposed (or branch
profits taxes imposed in lieu thereof) on amounts payable to Bank
at the time Bank becomes a party to the Loan Documents, except to
the extent that Bank's assignor (if any) was entitled, at the time
of assignment, to receive additional amounts from Borrower with
respect to such Non-Excluded Taxes pursuant to this Section 2.09. Borrower
shall furnish promptly to Bank for distribution to each affected
Bank, as the case may be, official receipts evidencing any such
withholding or reduction.
Section
2.10 Maximum Amount
Limitation. Anything in this Agreement or the other Loan Documents
to the contrary notwithstanding, Borrower shall not be required to
pay unearned interest on the Note or any of the Obligations, or
ever be required to pay interest on the Note or any of the
Obligations at a rate in excess of the Maximum Rate, if any. If the
effective rate of interest which would otherwise be payable under
this Agreement, the Note or any of the other Loan Documents would
exceed the Maximum Rate, if any, then the rate of interest which
would otherwise be contracted for, charged, or received under this
Agreement, the Note or any of the other Loan Documents shall be
reduced to the Maximum Rate, if any. If any unearned interest or
discount or property that is deemed to constitute interest
(including, without limitation, to the extent that any of the fees
payable by Borrower for the Obligations to Bank under this
Agreement, the Note, or any of the other Loan Documents are deemed
to constitute interest) is contracted for, charged, or received in
excess of the Maximum Rate, if any, then such interest in excess of
the Maximum Rate shall be deemed a mistake and canceled, shall not
be collected or collectible, and if paid nonetheless, shall, at the
option of the holder of such Note, be either refunded to Borrower,
or credited on the principal of such Note. It is further agreed
that, without limitation of the foregoing and to the extent
permitted by applicable law, all calculations of the rate of
interest or discount contracted for, charged or received by Bank
under its Note, or under any of the Loan Documents, that are made
for the purpose of determining whether such rate exceeds the
Maximum Rate applicable to Bank, if any, shall be made, to the
extent permitted by applicable laws (now or hereafter enacted), by
amortizing, prorating and spreading during the period of the full
terms of the Advances evidenced by the Note, and any renewals
thereof all interest at any time contracted for, charged or
received by Bank in connection therewith. This Section 2.10 shall control
every other provision of all agreements among the parties to this
Agreement pertaining to the transactions contemplated by or
contained in the Loan Documents, and the terms of this Section 2.10 shall be
deemed to be incorporated in every Loan Document and communication
related thereto.
-11-
Section
2.11 Bank Records. All
Advances and all payments or prepayments made thereunder on account
of principal or interest may be evidenced by Bank in accordance
with its usual practice in an account or accounts evidencing such
Advances and all payments or prepayments thereunder from time to
time and the amounts of principal and interest payable and paid
from time to time thereunder; in any legal action or proceeding in
respect of the Note, the entries made in such account or accounts,
in the absence of manifest error, shall be prima facie evidence of the existence
and amounts of all Advances and all payments or prepayments made
thereunder on account of principal or interest.
Article
III.
CONDITIONS
PRECEDENT
Section
3.01 Conditions
Precedent to Initial Advance. The effectiveness of this Agreement
and obligations of Bank to make Advances are subject to the
condition precedent that Bank shall have received all the
following, in form and substance satisfactory to Bank:
(a) This
Agreement, duly executed by Borrower and Bank.
(b) The
Note, duly executed by Borrower.
(c) The
Security Agreement duly executed by Borrower.
(d) Copies
of UCC, tax and judgment lien search reports listing all financing
statements and other encumbrances which name Borrower (under its
present name and any previous name) and which are filed in the
jurisdictions in which Borrower is located, organized or maintains
collateral, together with copies of such financing statements (none
of which shall cover the collateral purported to be covered by the
Security Agreement).
(e) Evidence
that all other actions necessary or, in the opinion of Bank,
desirable to enable Bank to perfect and protect the security
interests created by the Security Agreement have been
taken.
(f) The
Organizational Documents.
(g) such
certificates of resolutions or other action, incumbency
certificates and/or other certificates of the officers of Borrower
as Bank may require evidencing the identity, authority and capacity
of each officer thereof authorized to act as an officer in
connection with this Agreement and the other Loan Documents to
which Borrower is a party;
(h) such
documents and certificates as Bank may reasonably require to
evidence that Borrower is duly organized or formed and that
Borrower is, validly existing, in good standing and qualified to
engage in business in each jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires
such qualification, except to the extent that failure to do so
could not reasonably be expected to have a Material Adverse
Effect;
(i) Evidence
that the costs and expenses (including, without limitation,
attorneys’ fees) referred to in Section 7.04(a), to the
extent incurred and invoiced, shall have been (or will be
simultaneously with the initial Advance hereunder) paid in
full.
(j) A
satisfactory review by Bank of any pending litigation relating to
Borrower.
-12-
Section
3.02 Conditions
Precedent to All Advances. The effectiveness of this Agreement, the
obligation of Bank to make each Advance shall be subject to the
further conditions precedent that on the Closing Date (with respect
to the effectiveness of this Agreement only) or on the date of such
Advance:
(a) the
following statements shall be true (and the receipt by Borrower of
the proceeds of such Advance shall be deemed to constitute a
representation and warranty by Borrower that such statements are
true on such date):
(i) The representations
and warranties contained in Section 4.01 of this
Agreement and in the Security Agreement are correct in all material
respects, except as to charges occurring after the date of this
Agreement caused by events, actions or transactions permitted under
this Agreement;
(ii) No
event has occurred and is continuing, or would result from this
Agreement, such Advance, which constitutes an Event of Default (as
defined in Section 6.01 hereof) or
would constitute an Event of Default but for the requirement that
notice be given or time elapse or both; and
(iii)
In the case of an
Advance, after giving effect thereto, the aggregate Advances do not
exceed the Borrowing Base on such date; and
(b) Bank shall have
received a completed Borrowing Base Certificate and such other
approvals, opinions or documents as Bank may reasonably
request.
(c)
Borrower shall have established an operating deposit account with
Bank and shall use Banks' ACH treasury management service with
respect to such account.
Article
IV.
REPRESENTATIONS
AND WARRANTIES
Section
4.01 Representations and
Warranties of Borrower. Borrower represents and warrants as
follows:
(a) Borrower.
Borrower is a corporation duly incorporated, validly existing and
in good standing under the laws of the jurisdiction indicated at
the beginning of this Agreement and, except as set forth on
Schedule 4.01(a),
is qualified to do business in all jurisdictions in which the
nature of its business makes such qualification necessary and where
failure to so qualify would have a Material Adverse Effect on its
financial condition or operations. Borrower has the power and
authority to execute, deliver, and perform its obligations under
the Loan Documents to which it is or may become a party. Borrower's
Subsidiaries are listed on Schedule 4.01(a).
(b) The Loan Documents. The
execution, delivery and performance by Borrower of each Loan
Document to which it is a party are within Borrower's powers, have
been duly authorized by all necessary action, do not contravene
(i) Borrower's charter or by-laws or (ii) any law or any
contractual restriction binding on or affecting Borrower, and do
not result in or require the creation of any Lien, security
interest or other charge or encumbrance (other than pursuant to the
terms thereof) upon or with respect to any of its
properties.
(c) Governmental Approvals. No
authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority or regulatory body is
required for the due execution, delivery and performance by
Borrower of any Loan Documents, except for such approvals and
consents which have been made or obtained.
-13-
(d) Enforceability. This Agreement
is, and each other Loan Document to which Borrower is a party when
delivered will be, legal, valid and binding obligations of the
applicable Borrower enforceable against Borrower in accordance with
their respective terms.
(e) Financial Condition and
Operations. The balance sheets of Borrower as of June 30,
2019, and the related statements of income and, with respect to the
period ended June 30, 2019, the related statement of cash flow of
Borrower for the fiscal period then ended, copies of which have
been furnished to Bank, fairly present in all material respects the
financial condition of Borrower as at such date and the results of
the operations of Borrower for the period ended on such dates, all
in accordance with generally accepted accounting principles
consistently applied (except for the absence of footnotes and
subject to normal year-end audit adjustments, and since June 30,
2019, there has been no material adverse change in such condition
or operations.
(f) Litigation. Except as described
on Schedule 4.01(f), there is
no pending or threatened action or proceeding affecting Borrower or
any of the other transaction contemplated hereby before any court,
governmental agency or arbitrator, which reasonably would be
expected to have a Material Adverse Effect. As of the Closing Date
there are no outstanding judgments against Borrower.
(g) Use of Proceeds of Advances,
etc. (i) No proceeds of any Advance will be used to
acquire any security in any transaction which is subject to
Sections 13 and 14 of the Securities Exchange Act of
1934; (ii) Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System); and (iii) no
proceeds of any Advance will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
(h) Liens. There is no Lien,
security interest or other charge or encumbrance, and no other type
of preferential arrangement, upon or with respect to any of the
properties or income of Borrower, which secures Indebtedness of any
Person, except for Permitted Encumbrances.
(i) Solvency. As of and from and
after the date of this Agreement, Borrower: (a) owns and will
own assets the fair saleable value of which are (i) greater
than the total amount of liabilities (including contingent
liabilities) and (ii) greater than the amount that will be
required to pay the probable liabilities of its then existing debts
as they become absolute and matured considering all financing
alternatives and potential asset sales reasonably available to it;
(b) has capital that is not unreasonably small in relation to
its business as presently conducted or any contemplated or
undertaken transaction; and (c) does not intend to incur and
does not believe that it will incur debts beyond its ability to pay
such debts as they become due.
(j) Office Locations; Fictitious Names;
Predecessor Companies; Tax I.D. Number. Borrower's chief
place of business, its chief executive office, and its jurisdiction
of organization is located at the place identified for Borrower on
Schedule 4.01(j). Within
the last four months it has not had any other chief place of
business, chief executive office, or jurisdiction of organization.
Schedule 4.01(j) also sets
forth all other places where Borrower keeps its books and records
and all other locations where Borrower has a place of business.
Borrower does not do business nor has Borrower done business during
the past five (5) years under any trade-name or fictitious
business name. There are no predecessor companies of Borrower. For
purposes of the foregoing, a "predecessor company" shall mean, with
respect to Borrower, any Person whose assets or equity interests
are acquired by Borrower or who was merged with or into Borrower
within the last four months prior to the date hereof. Borrower's
United States Federal Income Tax I.D. Number is identified on
Schedule 4.01(j).
-14-
(k) Disclosure. All factual
information furnished by or on behalf of Borrower in writing to
Bank (including, without limitation, all factual information
contained in the Loan Documents) for purposes of or in connection
with this Agreement, the other Loan Documents or any transaction
contemplated herein or therein is, and all other such factual
information hereafter furnished by or on behalf of Borrower to
Bank, will be true and accurate in all material respects on the
date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such
information not misleading in any material respect at such time in
light of the circumstances under which such information was
provided.
(l) Operation of Business. Borrower
possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, necessary to conduct
their respective businesses substantially as now conducted and as
presently proposed to be conducted except those that the failure to
so possess would not reasonably be expected to have a Material
Adverse Effect and Borrower is not in violation of any valid rights
of others with respect to any of the foregoing except violations
that could not reasonably be expected to have such a Material
Adverse Effect.
(m) Investment Company Act.
Borrower is not required to be registered as an "investment
company" within the meaning of the Investment Company Act of 1940,
as amended.
(n) Environmental Compliance.
Borrower, except as set forth in Schedule 4.01(n), is in
material compliance with all applicable Environmental
Laws.
(o) No Default. Borrower is not in
default under or with respect to any Contractual Obligation that
could either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. No Event of Default has
occurred and is continuing or would result from the consummation of
the transactions contemplated by this Agreement or any other Loan
Document.
(p) Ownership of Property; Liens.
Borrower has good record and marketable title in fee simple to, or
valid leasehold interests in, all real and personal property and
intellectual property necessary or used in the ordinary conduct of
its business, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The property of Borrower is subject to no
Liens, other than Liens permitted by Section 5.02(a).
(q) Absence of Undisclosed
Liabilities. Except as stated or adequately reserved against
in the financial statements of Borrower, or incurred as a result of
or arising out of the transactions contemplated under the Loan
Documents, Borrower has no liability or obligation of any nature,
whether accrued, absolute, contingent or otherwise, asserted or
unasserted, known or unknown, that has had or would reasonably be
expected to have a Material Adverse Effect.
(r) Taxes. Borrower has filed all
Federal, state and other material tax returns and reports required
to be filed, and have paid all Federal, state and other material
taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise
due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with GAAP. There
is no proposed tax assessment against Borrower or any Subsidiary
that would, if made, have a Material Adverse Effect.
-15-
Article
V.
COVENANTS
OF BORROWER
Section
5.01 Affirmative
Covenants. So long as any Obligations remain unpaid or Bank shall
have any commitment hereunder, Borrower will, unless Bank shall
otherwise consent in writing:
(a) Compliance
with Laws, etc. Comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to
include, without limitation, (i) all employee benefit and
Environmental Laws, and (ii) paying before the same become
delinquent all taxes, assessments and governmental charges imposed
upon it or upon its property except to the extent contested in good
faith.
(b) Visitation Rights; Field
Examination. At any reasonable time and from time to time
and at least once by July 1 of every year, permit Bank or any
agents or representatives thereof (such agents or representatives
may or may not, at the sole discretion of Bank and may or may not,
at the sole discretion of Bank, include employees of Bank) to
examine and make copies of and abstracts from the records, books
and accounts of, and visit the properties of, and conduct
unannounced field examinations and collateral inspections at least
annually at the expense of Borrower and to discuss the affairs,
finances and accounts of Borrower with any of their respective
officers or directors; provided, however, Borrower shall pay for
the cost of one (1) field examination per year, and all visits and
inspections upon and during the occurrence of an Event of Default
shall be at the expense of Borrower. In addition to the foregoing,
at any reasonable time and from time to time, Borrower also shall
permit Bank or any agents or representatives thereof, at the
expense of Bank, to examine and make copies of and abstracts from
the records and books of account of, and visit the properties of,
Borrower, and to discuss the affairs, finances and accounts of
Borrower with any of their respective officers or
directors.
(c) Reporting Requirements. Furnish
to Bank:
(i) as soon as
available and in any event within one hundred fifty (150) days
after the end of each fiscal year of Borrower, a copy of the
audited financial statements (including balance sheet, statements
of income and cash flows, all accompanying notes thereto and any
management letter) for such year for Borrower, certified, without
qualification, by independent public accountants acceptable to
Bank;
(ii) as
soon as available and in any event within 45 days after the end of
each quarter, a copy of financial statements of Borrower, for the
period commencing at the end of the previous fiscal year and ending
with the end of such quarter, signed by the chief financial officer
of Borrower;
(iii) with
the submission of the financial statements required under
Section 5.01(c)(i) and
(ii), a Compliance Certificate which (A) states that no
Event of Default, and no event or condition that but for the
passage of time, the giving of notice or both would constitute an
Event of Default, has occurred or is in existence and
(B) certifies to Bank Borrower's compliance with, each of the
covenants set forth in the Compliance Certificate;
(iv) as
soon as available and in any event within thirty (30) days after
the end of each month (or at such other times or with such greater
frequency as is requested by Bank), a duly completed Borrowing Base
Certificate, setting forth the Borrowing Base as of the last day of
such month calculated, together with an aging of accounts
receivable and accounts payable, inventory reports and all
documents deemed necessary by Bank;
(v) promptly upon
Bank's request therefor, copies of all reports and notices which
Borrower or any of its Subsidiaries files under ERISA with the
Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which Borrower or
any Subsidiary receives from such Corporation;
-16-
(vi) promptly,
upon the occurrence of an Event of Default or an event or condition
that but for the passage of time or the giving of notice or both
would constitute an Event of Default, notice of such Event of
Default or event;
(vii) promptly
after the receipt thereof, a copy of any management letters or
written reports submitted to Borrower by its independent certified
public accountants with respect to the business, financial
condition or operation of Borrower; and
(viii) such
other information respecting the condition or operations, financial
or otherwise, of Borrower or any of its respective Subsidiaries as
Bank may from time to time reasonably request.
(d) Insurance.
Maintain insurance with financially sound and reputable insurance
companies in such amounts and covering such risks as are usually
carried by entities engaged in similar businesses and owning
similar properties in the same general areas in which Borrower
operate, provided that in any event Borrower will maintain and
cause each of its Subsidiaries to maintain workers' compensation
insurance, business interruption insurance, property insurance and
commercial general liability insurance reasonably satisfactory to
Bank. Each insurance policy covering Collateral shall be in
compliance with the requirements of the Security
Agreement.
(e) Keeping
Books and Records. Maintain and cause each of its
Subsidiaries to, maintain proper books of record and account in
which full, true, and correct entries in conformity with generally
accepted accounting principles shall be made of all dealings and
transactions in relation to its business and
activities.
(f) Fixed
Charge Coverage Ratio. Maintain a Fixed Charge Coverage
Ratio of not less than 1.25 to 1 as tested quarterly on a trailing
twelve-month basis, starting December 31, 2019.
Section
..02 Negative Covenants.
So long as any Obligations remain unpaid or Bank shall have any
commitment hereunder, Borrower will not, without the written
consent of Bank:
(a) Liens.
Create, incur, assume or suffer to exist, any Lien upon any of its
property, whether now owned or hereafter acquired, other than the
following:
(i) Liens
in favor of Bank;
(ii) Liens
existing on the date hereof and listed on Schedule 5.02(a) hereto and any
renewals or extensions or refinancings or refundings thereof,
provided that the
property covered thereby is not increased and any renewal or
extension or refinancings or refundings of the obligations secured
or benefited thereby is permitted hereunder;
(iii) Liens
(a) for taxes not yet due and payable, or (b) which are being
contested in good faith and by appropriate proceedings diligently
conducted and if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with
GAAP;
(iv) carriers’,
warehousemen’s, mechanics’, materialmen’s,
repairmen’s or other like Liens: (a) arising in the ordinary
course of business which are not overdue for a period of more than
30 days, or (b) which are being contested in good faith and by
appropriate proceedings diligently conducted and if adequate
reserves with respect thereto are maintained on the books of the
applicable Person in accordance with GAAP;
-17-
(v) pledges
or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other
social security legislation, other than any Lien imposed by
ERISA;
(vi) deposits
to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety bonds
(other than bonds related to judgments or litigation), performance
bonds and other obligations of a like nature incurred in the
ordinary course of business;
(vii) easements,
rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially
detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of
the applicable Person;
(viii) Liens
securing judgments for the payment of money not constituting an
Event of Default under Section 6.01(h) or securing
appeal or other surety bonds relating to such
judgments;
(ix) Liens
securing Indebtedness permitted under Section 5.02(c); provided that
(a) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness and (b) the Indebtedness
secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property being acquired on the date of
acquisition; and
(x) Liens
existing on assets of other Persons at the time of acquisition of
such other Persons or of such assets by Borrower or a
Subsidiary.
(b) Investments. Make any
Investments, except:
(i) Investments
held by Borrower in the form of cash equivalents or short-term
marketable debt securities;
(ii) Investments
consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade
credit in the ordinary course of business, and Investments received
in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in
order to prevent or limit loss;
(iii) Other
Investments not to exceed in the aggregate $100,000; provided,
however, that the Bank may approve any Investment exceeding
$100,000; and
(iv) Those
Investments, if any, described on Schedule 5.02(b).
(c) Indebtedness. Create, incur,
assume or suffer to exist any Indebtedness, except:
(i) Indebtedness
under the Loan Documents;
(ii) Indebtedness
outstanding on the date hereof and listed on Schedule 5.02(c) hereto and any
refinancings, refundings, renewals or extensions thereof; provided
that the amount of such Indebtedness is not increased at the time
of such refinancing, refunding, renewal or extension except by an
amount equal to a reasonable premium or other reasonable amount
paid, and fees and expenses reasonably incurred, in connection with
such refinancing and by an amount equal to any existing commitments
unutilized thereunder;
-18-
(iii) Indebtedness
in respect to capital leases and purchase money obligations for
fixed assets; provided, however, that the aggregate amount of all
such Indebtedness at any one time outstanding shall not exceed
$100,000;
(iv) Indebtedness
secured by Liens permitted under Section 5.02(a) (provided that
the amount of such Indebtedness does not exceed the value of the
property or interests subject to such Liens);
(v) Indebtedness
payable to trade creditors incurred in the ordinary course of
business;
(vi) endorsement
of items for deposit or collection of checks or other commercial
paper required in the ordinary course of business; and
(vii) Subordinated
Debt that shall not exceed $100,000.
(d) Fundamental Changes. Merge,
dissolve, liquidate, consolidate with or into, another Person, or
Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any
Person.
(e) Corporate Changes.
(i) Change
its jurisdiction of organization and/or organization and/or
organizational identification number (if any), change its
corporate name; or
(ii) Without
thirty (30) days prior written notice to Bank:
(a) change
its chief executive office, principal place of business, corporate
offices or warehouses or locations at which Collateral is held or
stored, or the location of its records concerning the
Collateral;
(b) engage
in any material line of business substantially different from those
lines of business conducted by Borrower and its Subsidiaries on the
date hereof; and
(c) change
its fiscal year.
(f) Dispositions. Make any
Disposition or enter into any agreement to make any Disposition,
except:
(i) Dispositions
of obsolete or worn out property, whether now owned or hereafter
acquired, in the ordinary course of business;
(ii) Dispositions
(a) of inventory in the ordinary course of business and (b) in the
nature of payments for property or services used or acquired by
Borrower as otherwise not prohibited hereunder;
(iii) Dispositions
of equipment to the extent that (a) such property is exchanged for
credit against the purchase price of similar replacement property,
or (b) the proceeds of such Disposition are reasonably promptly
applied to the purchase price of such replacement property; and
provided,
however, that any
Disposition pursuant to this section shall be for fair market
value.
-19-
(g) Transactions with Affiliates.
Enter into any transaction of any kind with any Affiliate of
Borrower, whether or not in the ordinary course of business, other
than on fair and reasonable terms substantially as favorable to
Borrower or such Affiliate as would be obtainable by Borrower or
such Affiliate at the time in a comparable arm’s length
transaction with a Person other than an Affiliate.
(h) Margin Regulations. Use the
proceeds of the Advances, whether directly or indirectly, and
whether immediately, incidentally or ultimately, to purchase or
carry margin stock (within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System of the United States) or
to extend credit to others for the purpose of purchasing or
carrying margin stock or to refund indebtedness originally incurred
for such purpose.
(i) Distributions. Upon and during
the occurrence of any Event of Default, declare or pay any
Distribution, or permit to purchase or otherwise acquire for value
any stock or interest of Borrower, provided, however, Borrower may
declare and pay Distributions payable in common stock or preferred
stock.
(j) Subsidiary. Form any Subsidiary
or Affiliate of any Person, except for the Subsidiaries of Borrower
listed on Schedule
4.01(a).
EVENTS
OF DEFAULT AND REMEDIES
Section
6.01 Events of Default.
Each of the following events shall be an "Event of
Default":
(a) Borrower
shall fail to pay any principal amount payable hereunder or under
the other Loan Documents when due; or
(b) Borrower shall fail
to pay any other amount payable hereunder, including interest, or
under the other Loan Documents within three (3) days following the
due date therefor; or
(c) Any representation
or warranty made by Borrower (or any of its partners or officers)
under or in connection with any Loan Document shall prove to have
been incorrect in any material respect when made and as a result
would have a Material Adverse Effect; or
(d) Borrower shall fail
to deliver the financial statements, Compliance Certificate or
Borrowing Base Certificate under Section 5.01(c) within 5
days of the date due; or
(e)
Borrower shall fail
to perform or observe any term, covenant or agreement contained in
any Loan Document (other than those listed in clauses (a)
through (e) of
this Section 6.01) on its part
to be performed or observed (other than the covenants to pay the
Obligations) and any such failure shall remain unremedied for ten
(10) days after written notice thereof shall have been given
to Borrower by Bank, provided, however, that no Event of Default
shall be deemed to exist if, within said ten (10) day period,
Borrower has commenced appropriate action to remedy such failure
and shall diligently and continuously pursue such action until such
cure is completed, unless such cure is or cannot be completed
within thirty (30) days after written notice shall have been given;
or
(f)
Borrower shall fail
to pay any Indebtedness (either in any individual case or in the
aggregate) (excluding Indebtedness evidenced by the Note and
excluding Ordinary Trade Payable Disputes), or any interest or
premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure
shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such indebtedness; or
any other default under any agreement or instrument relating to any
such indebtedness, or any other event, shall occur and shall
continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such default or
event is to accelerate, or to permit the acceleration of, the
maturity of such indebtedness (excluding Ordinary Trade Payable
Disputes); or any such indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity
thereof (excluding Ordinary Trade Payable Disputes);
or
-20-
(g)
Borrower shall
generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against Borrower seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or for any
substantial part of its property, and, in the case of any such
proceeding instituted against it (but not instituted by it) either
such proceeding shall remain undismissed or unstayed for a period
of 60 days or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief
against it or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of its
property) shall occur; or Borrower shall take any corporate action
to authorize any of the actions set forth above in this
subsection (g),
provided, however, that the commencement by or against Borrower of
any of the foregoing proceedings shall not cause an Event of
Default so long as: (i) such proceeding does not result in the
dissolution of Borrower; and (ii) Bank is provided with a
substitute guaranty or collateral for the guaranty from such
individual that is acceptable to Bank acting in good faith within
thirty (30) days from the commencement of such proceeding;
or
(h)
Any one or more
judgment(s) or order(s) for the payment of money in excess of
$100,000 in excess of valid insurance coverage therefor, in the
aggregate shall be rendered against Borrower and either
(i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be
any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(i)
Any material
provision of any Loan Document shall for any reason cease to be
valid and binding on Borrower or Borrower shall so state in
writing; or
(j)
The Security
Agreement shall for any reason, except to the extent permitted by
the terms thereof, cease to create a valid security interest in any
of the property purported to be covered thereby; or
Section
6.02 Remedies. Upon the
occurrence of an Event of Default, Bank:
(a) may,
by notice to Borrower, declare the obligation of Bank to make
Advances to be terminated or suspended, whereupon the same shall
forthwith terminate or suspend;
(b) may, by notice to
Borrower, declare the Note, all interest thereon and all other
amounts payable under this Agreement to be forthwith due and
payable, whereupon the Note, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment,
notice of intent to accelerate or notice of acceleration, demand,
protest or further notice of any kind, all of which are hereby
expressly waived by Borrower; provided, however, that in the event of
an actual or deemed entry of an order for relief with respect to
any of Borrower or any of its Subsidiaries under the Federal
Bankruptcy Code, (x) the obligation of Bank to make Advances
shall automatically be terminated and (y) the Note, all such
interest and all such amounts shall automatically become due and
payable, without presentment, demand, protest or any notice of any
kind, all of which are hereby expressly waived by
Borrower;
(c) may exercise all
other rights and remedies afforded to Bank under the Loan Documents
or by applicable law or equity.
-21-
Article
VII.
MISCELLANEOUS
Section
7.01 Amendments, etc. No
amendment or waiver of any provision of any Loan Document to which
Borrower is a party, nor any consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be
agreed or consented to by Bank and Borrower, and each such waiver
or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section
7.02 Notices, etc. All
notices and other communications provided for under any Loan
Document shall be in writing (including telegraphic, telex or cable
communication) and mailed, telegraphed, telexed, cabled or
delivered, if to Borrower, at its address at ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇ ▇▇▇▇▇; and if to Bank, at its address or addresses, at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇; as to each party, at such
other address as shall be designated by such party in a written
notice to the other party. All such notices and communications
shall, when mailed, telegraphed, telexed or cabled, be effective
when deposited in the mails, delivered to the telegraph company,
confirmed by telex answerback or delivered to the cable company,
respectively, except that notices to Bank pursuant to the
provisions of Article I shall not be
effective until received by Bank.
Section
7.03 No Waiver;
Remedies. No failure on the part of Bank to exercise, and no delay
in exercising, any right under any Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right. The remedies
provided in the Loan Documents are cumulative and not exclusive of
any remedies provided by law.
Section
7.04 Costs, Expenses and
Taxes. Borrower agrees to pay on demand all reasonable
out-of-pocket costs and expenses actually incurred in connection
with the preparation, execution, delivery, filing, recording and
administration of the Loan Documents and the other documents to be
delivered under the Loan Documents, including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for Bank
(who may be in-house counsel), actually incurred and local counsel
who may be retained by said counsel, with respect thereto and with
respect to advising Bank as to its respective rights and
responsibilities under the Loan Documents, and all costs and
expenses (including reasonable counsel fees and expenses actually
incurred) for Bank in connection with the enforcement of the Loan
Documents and the other documents to be delivered under the Loan
Documents, including, without limitation, in the context of any
bankruptcy proceedings (but with respect to Bank, only to the
extent that such costs and expenses incurred are not duplicative of
those incurred by Bank). In addition, Borrower agrees, to pay on
demand the expenses described in Section 5.01(b). In
addition, Borrower shall pay any and all stamp and other taxes and
fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of the Loan Documents and
the other documents to be delivered under the Loan Documents, and
agrees to save Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in paying
or omission to pay such taxes and fees.
Section
7.05 Right of Set-off.
Bank is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by Bank
to or for the credit or the account of Borrower against any and all
of the Loan Obligations, irrespective of whether or not Bank shall
have made any demand under such Loan Document and although
deposits, indebtedness or such obligations may be unmatured or
contingent. Bank, as the case may be, agrees promptly to notify
Borrower after any such set-off and application, provided that the
failure to give such notice shall not affect the validity of such
set-off and application. The rights of Bank under this Section 7.05 are in addition to
other rights and remedies (including, without limitation, other
rights of set-off) which Bank may have.
Section
7.06 Severability of
Provisions. Any provision of this Agreement or of any other Loan
Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the
remaining provisions hereof or thereof or affecting the validity or
unenforceability of such provision in any other
jurisdiction.
-22-
Section
7.07 Binding Effect;
Successors and Assigns; Participations.
(a) This
Agreement shall be binding upon and inure to the benefit of
Borrower and Bank and their respective successors and assigns,
except that Borrower shall not have the right to assign or
otherwise transfer its rights hereunder or any interest herein
without the prior written consent of Bank.
(b) Bank shall have the
right at any time, without the consent of Borrower or any other
party, to assign, negotiate, hypothecate, or otherwise transfer all
or any portion of its rights in this Agreement or in its Revolving
Line of Credit, Note, participation obligations and interests,
rights and security under this Agreement and any of the other Loan
Documents to either one or more of its Affiliates which is a
commercial banking or financial institution or Bank, and in the
event of the exercise of such right shall promptly notify Borrower
thereof. Furthermore, Bank shall have the right at any time, to
assign all or any portion of its rights in this Agreement or in any
of its Revolving Line of Credit, Advances, Note, participation
obligations and interests, rights and security under this Agreement
and any of the other Loan Documents to any other commercial,
banking or financial institution. Borrower hereby acknowledges and
agrees that any assignment or other or arrangement described in
this Section 7.07
will give rise to a direct obligation of Borrower to each assignee
or additional commercial banking or financial institution, as the
case may be, and such party shall be considered a Bank and rely on,
and possess all rights under, all opinions, certificates or other
instruments delivered under or in connection with this Agreement or
any other Loan Document. Borrower shall accord full recognition to
any such assignment or other arrangement, and all rights and
remedies of Bank in connection with the interest so assigned shall
be as fully enforceable by such assignee or additional commercial,
banking or financial institution, as they were (a) by the
assignor or Bank thereof before such assignment or (b) in the
case of an additional commercial, banking or financial institution
becoming a Bank under the circumstances described above in this
Section 7.07, by a
Bank that was a party to this Agreement on the date
hereof.
(c) Bank shall have the
right at any time, without the consent of Borrower or any other
Person, to sell participations in all or any portion of its rights
in this Agreement or its Revolving Line of Credit, Advances, Note,
participation obligations and interests, rights and security under
this Agreement and any of the other Loan Documents to any other
party; provided,
however, that (i)
Bank's obligations under the Loan Documents (including, without
limitation, its Revolving Line of Credit) shall remain unchanged,
(ii) Bank shall remain solely responsible to Borrower for the
performance of such obligations, (iii) Bank shall remain the
holder of its Note and owner of its participation for all purposes
of any Loan Document, (iv) Borrower shall continue to deal
solely and directly with Bank in connection with Bank's rights and
obligations under the Loan Documents, and (v) Bank shall not sell a
participation that conveys to the participant the right to vote or
give or withhold consents under any Loan Document, other than the
right to vote upon or consent to (A) any increase of the
Revolving Line of Credit subject to such participation,
(B) any reduction of the principal amount of, or interest to
be paid on, the Advances or other Loan Obligations of Bank subject
to such participation, (C) any reduction of any commitment
fee, or other amount payable to Bank under any Loan Document,
(D) any postponement of any date for the payment of any amount
payable in respect of the Advances subject to such participation or
other Loan Obligations of Bank, or (E) the release of any
Collateral or the release of Borrower from liability arising under
the Loan Documents.
(d) In connection with
any such proposed assignment, negotiation, hypothecation, granting
of a participation or other transfer or arrangement, Bank, may
disclose to the proposed assignee, participant or other transferee
or institution any information that Borrower is required to deliver
to Bank pursuant to this Agreement or the other Loan Documents, and
Borrower agrees to cooperate fully with Bank, as the case may be,
in providing any such information to any proposed assignee,
participant or other transferee or institution.
-23-
Section
7.08 Consent to
Jurisdiction.
(a) Borrower
hereby irrevocably submits to the jurisdiction of any State or
Federal court sitting in Omaha, Nebraska, in any action or
proceeding arising out of or relating to this Agreement or any of
the other Loan Documents to which it is a party, and Borrower
hereby irrevocably agrees that all claims in respect of such action
or proceeding may be heard and determined in such Nebraska State
court or in such Federal court. Borrower hereby irrevocably waives,
to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding.
Borrower irrevocably consents to the service of copies of the
summons and complaint and any other process which may be served in
any such action or proceeding by the mailing of copies of such
process to Borrower at its address specified in Section 7.02. Borrower agrees
that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
(b) Nothing in this
Section 7.08 shall
affect the right of Bank to serve legal process in any other manner
permitted by law or affect the right of Bank to bring any action or
proceeding against Borrower or its property in the courts of other
jurisdictions.
Section
7.09 Governing Law. THIS
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEBRASKA.
Section
7.10 Execution in
Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute
but one and the same agreement.
Section
7.11 WAIVER OF JURY
TRIAL. BORROWER AND BANK HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENT TO WHICH IT IS A PARTY OR ANY
INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.
Section
7.12 ENTIRE AGREEMENT.
THIS AGREEMENT, THE NOTE, AND THE OTHER LOAN DOCUMENTS REFERRED TO
HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED
OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES THERETO.
Section
7.13 Survival. All
covenants, agreements, representations and warranties made by
Borrower in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have
been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any
Advances, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that Bank may have had
notice or knowledge of any Event of Default or incorrect
representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as
any Obligations are outstanding and unpaid and so long as the
Revolving Line of Credit has not expired or terminated. The expense
reimbursement, additional cost, capital adequacy and
indemnification provisions of this Agreement shall survive and
remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the
Obligations, and the Revolving Line of Credit or the termination of
this Agreement or any provision hereof.
Section
7.14 Borrowing Base. Bank shall have
the right, in sole discretion, to adjust any values or amounts set
forth in the Borrowing Base and such adjusted values or amounts
will be the values or amounts for the determination of the
Borrowing Base. No item shall be included in the Borrowing Base if
such item is subject to any Lien, claim or security interest (other
than the security interest granted to Bank).
[Remainder
of Page Intentionally Blank]
-24-
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized,
as of the date first above written.
|
|
FITLIFE BRANDS, INC., a Nevada
corporation
________________________________________
Dayton ▇. ▇▇▇▇,
CEO
________________________________________
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, CFO
MUTUAL
OF OMAHA BANK
By:
_____________________________________
Name:___________________________________
|
|
|
|
-25-