EXHIBIT 10.45
CREDIT AGREEMENT
Dated effective as of November 9, 2004
by and between
ONESOURCE TECHNOLOGIES, INC.,
as Borrower,
and
COMERICA BANK,
as Lender
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS.............................................1
SECTION 2 REVOLVING CREDIT FACILITY - FACILITY A.................13
2.1 Revolving Line of Credit Commitment........................13
2.2 Facility A Note............................................14
2.3 Interest Payable...........................................14
2.4 Origination Fee............................................14
2.5 Repayment Terms............................................14
2.6 Procedure for Obtaining Facility A Advance.................15
2.7 Prepayments................................................15
2.8 Collateral Audits..........................................15
2.9 Reserve....................................................16
SECTION 3 TERM LOAN - FACILITY B.................................16
3.1 Term Loan..................................................16
3.2 Facility B Note............................................16
3.3 Interest Payable...........................................16
3.4 Origination Fee............................................17
3.5 Repayment Terms............................................17
3.6 Optional Prepayments.......................................18
3.7 Excess Cash Flow Payment...................................18
SECTION 4 COMMON PROVISIONS......................................18
4.1 Default Interest...........................................18
4.2 Interest and Fee Computations..............................18
4.3 Method of Payment..........................................18
4.4 Payment Due Dates..........................................18
4.5 Late Charge................................................19
4.6 Late Advance Requests......................................19
4.7 Loan Accounts..............................................19
SECTION 5 COLLATERAL.............................................19
5.1 Collateral.................................................19
SECTION 6 CONDITIONS PRECEDENT...................................19
6.1 Initial Advance............................................19
6.2 Subsequent Advances........................................21
6.3 Facility A Advances........................................22
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TABLE OF CONTENTS (Continued)
Page
SECTION 7 REPRESENTATIONS AND WARRANTIES.........................22
7.1 Organization; Qualification; Affiliates of Borrower........23
7.2 Authorization and Enforceability...........................23
7.3 Absence of Conflicts.......................................23
7.4 Solvency...................................................23
7.5 Taxes......................................................24
7.6 Absence of Litigation......................................24
7.7 Accuracy of Information....................................24
7.8 Ownership of Property......................................24
7.9 Lien Priority..............................................24
7.10 Governmental Approvals.....................................24
7.11 Compliance with Law........................................24
7.12 Permits; Franchises........................................25
7.13 Federal Reserve Regulations................................25
7.14 Other Obligations..........................................25
7.15 ERISA......................................................25
7.16 Financial Information......................................25
7.17 Leases.....................................................26
7.18 Capital Stock of Borrower..................................26
7.19 Offices....................................................26
7.20 Investment Company Act.....................................26
7.21 Foreign Entity.............................................26
7.22 Covenants In Other Documents...............................26
SECTION 8 AFFIRMATIVE COVENANTS..................................26
8.1 Company Existence; Properties; Other Requirements..........27
8.2 Maintenance................................................27
8.3 Property Insurance.........................................27
8.4 Collateral Audits; Financial Reports.......................27
8.5 Use of Proceeds............................................29
8.6 Perfection of Liens........................................29
8.7 Notices to Lender..........................................29
8.8 Notices or Filings.........................................29
8.9 Other Agreements...........................................30
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TABLE OF CONTENTS (Continued)
Page
8.10 Taxes, Charges and Liens...................................30
8.11 Operations.................................................30
8.12 ERISA Plans................................................30
8.13 Debt Service Coverage Ratio................................30
8.14 Leverage Ratio.............................................30
8.15 Quick Ratio................................................31
8.16 Net Worth..................................................31
8.17 Banking Relationships......................................31
8.18 Real Property..............................................31
8.19 Intellectual Property......................................31
8.20 Additional Assurances......................................32
8.21 Recovery of Additional Costs...............................32
8.22 Books and Records..........................................32
8.23 Net Proceeds of Sales......................................32
8.24 Creation of Subsidiaries...................................32
8.25 Title......................................................32
8.26 Appraisal..................................................32
8.27 Additional Notices to Lender...............................33
8.28 Termination Statements and Releases. .....................33
SECTION 9 NEGATIVE COVENANTS.....................................33
9.1 Sale of Assets; Consolidation; Equity; Merger..............33
9.2 Loans, Acquisitions and Guaranties.........................33
9.3 Other Indebtedness.........................................33
9.4 Change in Ownership Control................................34
9.5 Other Liens................................................34
9.6 Distributions..............................................34
9.7 Compliance with ERISA......................................34
9.8 Change of Fiscal Year......................................34
9.9 Change Name, Office or Place of Business...................34
9.10 Change or Suspension of Business...........................34
9.11 Changes to or New Leases...................................34
9.12 Compensation...............................................35
9.13 Payment on or Modification of Subordinated Debt............35
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TABLE OF CONTENTS (Continued)
Page
9.14 ▇▇▇▇ ▇▇▇▇ Obligations......................................35
SECTION 10 DEFAULT AND REMEDIES...................................35
10.1 Events of Default..........................................35
10.2 Remedies Upon Event of Default.............................37
SECTION 11 ENVIRONMENTAL..........................................38
11.1 Indemnity Regarding Hazardous Substances...................38
11.2 Indemnity Regarding Construction and Other Risks...........38
11.3 Defense of Indemnified Parties.............................39
11.4 Representation and Warranty Regarding Hazardous Substances.39
11.5 Compliance Regarding Hazardous Substances..................39
11.6 Notices Regarding Hazardous Substances.....................39
11.7 Site Visits, Observations and Testing......................39
SECTION 12 MISCELLANEOUS..........................................40
12.1 Renewals and Extensions....................................40
12.2 Right of Setoff............................................40
12.3 GAAP.......................................................40
12.4 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial...40
12.5 Indemnification............................................41
12.6 Counterparts...............................................41
12.7 Entire Agreement...........................................41
12.8 Amendments.................................................41
12.9 Conflicts; Inconsistency...................................41
12.10 Additional Sums............................................41
12.11 Savings Clause.............................................42
12.12 Section Headings...........................................42
12.13 Exchange of Information....................................42
12.14 Consent to Sale or Transfer of Loan or Loan Participations.42
12.15 Payment of Expenses........................................43
12.16 Costs of Collection........................................43
12.17 Bankruptcy.................................................43
12.18 Notices....................................................44
12.19 Severability...............................................44
12.20 No Transfer by Borrower....................................44
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TABLE OF CONTENTS (Continued)
Page
12.21 Binding Nature.............................................44
12.22 Survival...................................................44
12.23 Time of Essence............................................44
12.24 Waiver.....................................................45
12.25 Construction...............................................45
Exhibit A Form of Borrowing Base Certificate................................A-1
Exhibit B Form of Compliance Certificate....................................B-1
Exhibit C-1 Existing Debt...................................................1-1
Exhibit C-2 Existing Debt to be Repaid with the Proceeds of the Loans.......2-1
Exhibit D Form of Landlord Consent..........................................D-1
Exhibit E Description of Leases.............................................E-1
Exhibit F Form of Advance Notice............................................F-1
Exhibit G Trademarks/names, Copyrights and Patents and Logo.................G-1
Exhibit H Form of Facility A Note...........................................H-1
Exhibit I Form of Facility B Note...........................................I-1
Exhibit J Subsidiaries and Affiliates.......................................J-1
Exhibit K Litigation K-1
Exhibit L Defaults under Material Obligations...............................L-1
Exhibit M Proxies, Warrants, Options, Rights and Shareholder Agreements.....M-1
Exhibit N Chief Executive Office and Other Facilities.......................N-1
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") is made and entered into effective
as of November 9, 2004 (the "Effective Date"), by and between ONESOURCE
TECHNOLOGIES, INC., a Delaware corporation, as borrower ("Borrower") and
COMERICA BANK, as lender ("Lender").
FACTUAL BACKGROUND
A. Borrower has requested Lender to make available to Borrower (i) a
revolving line of credit in the amount not to exceed $1,500,000, and (ii) a
single draw amortizing term loan in the amount not to exceed $1,750,000.
Borrower intends to use the proceeds of a portion of such revolving line of
credit and the term loan to pay certain indebtedness and other obligations of
Borrower, as set forth on Exhibit C-2 hereto, and to finance Borrower's working
capital.
B. Lender has agreed to make available such revolving line of credit and
the term loan upon and subject to the terms and conditions of this Credit
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, Borrower and Lender agree as follows:
SECTION 1
DEFINITIONS
As used in this Agreement, the following terms have the following meanings:
1.1 "Additional Sums" shall have the meaning assigned to it in Section
12.10.
1.2 "Advance" shall mean a disbursement of funds under Facility A, Facility
B or otherwise pursuant to this Agreement.
1.3 "Affiliate" shall mean any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if the first Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the second
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise.
1.4 "Agreement" shall mean this Credit Agreement, as amended, supplemented
or modified from time to time, together with all exhibits and schedules attached
to this Agreement from time to time.
1.5 "Borrower" shall have the meaning assigned to it in the Preamble to
this Agreement, and shall include each Subsidiary of Borrower that becomes a
"Borrower" after the Effective Date pursuant to Section 8.24.
1.6 "Borrowing Base Certificate" shall mean a certificate in the form
attached hereto as Exhibit A.
1.7 "Business Day" shall mean a day other than a Saturday, Sunday or other
day on which banking corporations in Phoenix, Arizona are authorized or required
by law to close.
1.8 "Capital Expenditures" shall mean, for any specified period, the sum of
all expenditures capitalized for financial statement purposes in accordance with
GAAP (whether payable in cash or other property or accrued as a liability).
1.9 "Capital Lease" shall mean any lease of any Property by Borrower that
has been or will be classified and accounted for as a capital lease on the
balance sheet of Borrower in accordance with GAAP.
1.10 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
1.11 "Collateral Reserve" shall mean $850,000.
1.12 "Compliance Certificate" shall mean a certificate in the form of
Exhibit B attached hereto, signed by the Chief Executive Officer or the Chief
Financial Officer of Borrower, and certifying that Borrower is, as of the date
of the Compliance Certificate, in compliance with all of the covenants stated in
Section 8 and Section 9.
1.13 "CPA" shall have the meaning ascribed thereto in Section 8.4(d).
1.14 "Debt Service Coverage Ratio" shall mean the numerical ratio, as of
the date of determination, of (i) EBITDA for the four calendar quarters
immediately preceding the measurement, less federal and state income taxes to
the extent added to the aggregate Net Income of Borrower in calculating such
EBITDA, less cash Capital Expenditures for such period to (ii) the sum of (i)
Interest Expense of Total Debt for the four calendar quarters immediately
preceding the measurement, plus (ii) the current maturities on Borrower's
long-term Indebtedness, all as determined in accordance with GAAP.
1.15 "Default" shall mean an event that with the giving of notice or the
passage of time or both would constitute an Event of Default.
1.16 "EBITDA" shall mean, for any specified period, as determined in
accordance with GAAP: (a) the Net Income of Borrower; plus (b) the sum of the
following to the extent deducted in the determination of the Net Income of
Borrower: (i) federal and state income taxes (assumed to be 40% of aggregate Net
Income if none is reserved for such specified period in the financial statements
provided to Lender pursuant to Section 8.4), (ii) interest expense, less any
interest income, and (iii) amortization and depreciation, including amortization
of goodwill and other intangible assets.
1.17 "Effective Date" shall have the meaning assigned to it in the Preamble
to this Agreement.
1.18 "Eligible Domestic Accounts Receivable" shall mean an account owed to
Borrower that meets the following requirements when such account first comes
into existence, and continues to meet such requirements until such account is
collected in full:
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(a) the account arose from a bona fide sale of goods delivered or shipped
and/or the provision of services to a purchaser located and has its corporate
headquarters in the United States or a purchaser that is a subsidiary, formed
under the laws of the United States, with a parent entity that was formed under
the laws of a jurisdiction outside of the United States and that is publicly
traded in the United States and that has over $500 million in assets residing in
the United States, for which Borrower has genuine invoices, shipping documents
or receipts;
(b) the account is due and payable not more than 90 days after the date of
the related invoice;
(c) the account is owned by Borrower free and clear of all Liens, other
than Liens held by Lender;
(d) the account is enforceable for the amount showing as owing in such
invoice, shipping documents or receipt, and the transaction out of which the
account arose complies with all applicable laws and regulations;
(e) the account is not subject to any setoff, credit allowance or
adjustment;
(f) the account debtor has not returned the goods or disputed liability for
the goods and/or services;
(g) Borrower has no knowledge of any circumstance that might impair the
account debtor's credit standing;
(h) the account debtor is not (i) a Subsidiary or an Affiliate of Borrower;
(ii) a Person who is a shareholder, director, officer or employee of Borrower;
(iii) a Governmental Authority; (iv) a "debtor" or similar party under or in any
proceeding under the United States Bankruptcy Code or any other law providing
for creditor relief; or (v) an assignor for the benefit of creditors;
(i) the account is assignable to Lender and, if evidenced by any
instrument, has been endorsed and delivered to Lender in an manner satisfactory
to Lender in its sole discretion;
(j) the account is not conditioned on the approval of the account debtor or
subject to any repurchase obligation on the part of Borrower or any return right
or privilege of the account debtor;
(k) the account does not arise out of a bonded contract;
(l) the account has not been referred to any third party for collection;
(m) the account is not owed by an account debtor that is obligated on any
account owed to Borrower, any portion of which has been past due for longer than
90 days from the earlier of (i) delivery or shipment of the goods, (ii)
performance of the service, or (iii) the date of the related invoice; and
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(n) the account debtor is not a party that has supplied or provided any
goods, inventory, materials or services to Borrower, or the account debtor's
accounts receivable with Borrower are less than account debtor's accounts
payable to Borrower, provided that only the excess amount of the account
debtor's accounts payable to Borrower over the account debtor's accounts
receivable with Borrower, shall be an Eligible Domestic Accounts Receivable.
Any Eligible Domestic Accounts Receivable that fails to meet any of the above
requirements shall immediately and without any action by Lender cease to be an
Eligible Domestic Accounts Receivable.
Notwithstanding the above provisions to the contrary, except for Eligible
Domestic Accounts Receivable with Kroger Co. and its Affiliates and
Subsidiaries, at any given time, Eligible Domestic Accounts Receivable shall not
include that portion of the accounts of a given Person and its Affiliates and
Subsidiaries that together exceeds 25% of the aggregate Eligible Domestic
Accounts Receivable. Eligible Domestic Accounts Receivable shall not include
that portion of the accounts of Kroger Co. and its Affiliates and Subsidiaries
that together exceeds 40% of the aggregate Eligible Domestic Accounts
Receivable. Such portion of the accounts of a given Person and its Affiliates
and Subsidiaries that equals 25% of the aggregate Eligible Domestic Accounts
Receivable, and in the case of accounts of Kroger Co. and its Affiliates and
Subsidiaries, such portion of their accounts that equals 40% of the aggregate
Eligible Domestic Accounts Receivable, shall be Eligible Domestic Accounts
Receivable. Borrower, however, may from time to time request Lender to allow the
portion of the accounts of a Person specified in such request and such specified
Person's Affiliates and Subsidiaries that together exceeds the 25% Eligible
Domestic Accounts Receivable limitation stated above to qualify as Eligible
Domestic Accounts Receivable. Within a reasonable time after Lender's receipt of
a request from Borrower, Lender shall, in Lender's sole and absolute discretion,
determine whether to allow the specified Person's accounts that exceed such
limit to qualify as Eligible Domestic Accounts Receivable and, if so, the extent
to which such accounts may qualify as Eligible Domestic Accounts Receivable.
Lender shall give Borrower written notice of Lender's determination setting
forth the revised limit to be applicable to such specified Person and its
Affiliates and Subsidiaries, and such determination shall become effective upon
the date of such notice.
1.19 "Eligible Domestic Inventory" shall mean the inventory of goods of
Borrower that are:
(a) from time to time determined by Lender, acting in a commercially
reasonable manner, to be eligible for inclusion in the Facility A Borrowing
Base;
(b) owned by Borrower free and clear of all Liens other than Liens
held by Lender and the Liens described in clauses (a), (b), (c) and (d) of
the definition of Permitted Liens; and
(c) reflected on the financial statements of Borrower as inventory in
accordance with GAAP.
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Eligible Domestic Inventory shall not include any inventory that is located
outside of the United States or that is in transit from Borrower to a purchaser;
any item that is held by Borrower as consignee; any item that is shown on the
balance sheet of Borrower as "LIFO Reserve" or the equivalent; work-in-progress;
supplies and packaging; any item that is determined by Lender in its sole
discretion to be obsolete; any item that is subject to a Lien described in
clause (e) or (f) of the definition of Permitted Liens; or any item not insured
with Lender designated as loss payee or otherwise not insured in a manner
acceptable to Lender acting in a commercially reasonable manner.
Inventory of Borrower, which is at any time Eligible Domestic Inventory, but
which subsequently fails to meet any of the foregoing requirements, shall
thereafter cease to be Eligible Domestic Inventory.
1.20 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as supplemented and amended from time to time.
1.21 "Event of Default" shall have the meaning assigned to it in Section
10.1.
1.22 "Excess Cash Flow" shall mean as to a specified calendar quarter, the
amount by which EBITDA, minus federal and state income taxes to the extent added
to the aggregate Net Income of Borrower in calculating such EBITDA, exceeds the
sum of (a) Interest Expense of Total Debt for the specified calendar quarter,
plus (b) the regularly scheduled principal payments paid in reduction of the
long-term debt of Borrower, and any prepayments of principal paid to Lender, for
the specified calendar quarter, including such payments payable under this
Agreement and any notes junior in priority to the Notes, plus (iii) Capital
Expenditures that are not accrued as a liability for the specified calendar
quarter (excluding any proceeds from sales of assets previously capitalized),
all as determined in accordance with GAAP.
1.23 "Existing Debt" shall mean all amounts and other obligations owed by
Borrower as set forth in Exhibit C-1 hereto. Exhibit C-2 sets forth that portion
of the Existing Debt that will be repaid with the proceeds of the Loans. 1.24
"Facility A" shall have the meaning assigned to it in Section 2.1(a), as the
same may be amended, supplemented or modified from time to time.
1.25 "Facility A Accrued Amount" shall have the meaning assigned to it in
Section 2.5(c).
1.26 "Facility A Advance" shall mean an Advance under Facility A.
1.27 "Facility A Billed Amount" shall have the meaning assigned to it in
Section 2.5(c).
1.28 "Facility A Borrowing Base" shall have the meaning set forth in
Section 2.1(a) and Section 2.1(b).
1.29 "Facility A Borrowing Date" shall have the meaning assigned to it in
Section 2.6.
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1.30 "Facility A Commitment" shall mean the obligations of Lender to make
Facility A available to Borrower pursuant to Section 2.1 in the amount referred
to therein.
1.31 "Facility A Commitment Period" shall mean the period from and
including the Effective Date to and including the Facility A Maturity Date.
1.32 "Facility A Due Date" shall have the meaning assigned to it in Section
2.5(c).
1.33 "Facility A Maturity Date" shall mean the first Business Day next
preceding the second anniversary of the Effective Date, or such earlier date on
which all amounts under Facility A first become due and payable as provided
herein.
1.34 "Facility A Maximum Available Commitment" shall mean, at any specified
time, the amount, if any, by which the Facility A Borrowing Base exceeds the
unpaid principal balance outstanding at such time under Facility A.
1.35 "Facility A Maximum Principal Amount" shall mean $1,500,000.
1.36 "Facility A Note" shall mean the Revolving Credit Promissory Note -
Facility A, of even date herewith, in the Facility A Maximum Principal Amount,
executed by Borrower in favor of Lender to evidence Facility A, as the same may
be amended, supplemented or modified from time to time, together with all
exhibits and schedules attached thereto from time to time, and as further
described in Section 2.2.
1.37 "Facility B" shall have the meaning assigned to it in Section 3.1(a),
as the same may be amended, supplemented or modified from time to time.
1.38 "Facility B Accrued Amount" shall have the meaning assigned to it in
Section 3.5(c).
1.39 "Facility B Advance" shall mean an Advance under Facility B.
1.40 "Facility B Billed Amount" shall have the meaning assigned to it in
Section 3.5(c).
1.41 "Facility B Borrowing Date" shall have the meaning set forth in
Section 3.1(b).
1.42 "Facility B Commitment" shall mean the obligations of Lender to make
Facility B available to Borrower pursuant to Section 3.1 in the amount referred
to herein.
1.43 "Facility B Commitment Period" shall mean the period from and
including the Effective Date to and including a date 30 days after the Effective
Date.
1.44 "Facility B Due Date" shall have the meaning assigned to it in Section
3.5(c).
1.45 "Facility B Maturity Date" shall mean the first Business Day preceding
the fourth anniversary of the Effective Date, or such earlier date on which all
amounts due under Facility B first become due and payable as provided herein.
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1.46 "Facility B Maximum Principal Amount" shall mean $1,750,000.
1.47 "Facility B Note" shall mean the Term Loan Note - Facility B, of even
date herewith, in the amount of the Facility B Maximum Principal Amount,
executed by Borrower in favor of Lender to evidence Facility B, as the same may
be from time to time amended, supplemented or modified, together with all
exhibits and schedules from time-to-time attached thereto, as further described
in Section 3.2.
1.48 "Funded Senior Debt" shall mean, at any specified time, the aggregate
outstanding principal balance of and any accrued and unpaid interest on (a) all
funds advanced by Lender to or for the benefit of Borrower and (b) any
Indebtedness of Borrower issued on a parity basis as the funds advanced by
Lender.
1.49 "Funded Total Debt" shall mean, at any specified time, the aggregate
outstanding principal balance of and any accrued and unpaid interest on all
Indebtedness of Borrower, including: (a) the Funded Senior Debt and (b) the
Indebtedness evidenced by the subordinated notes junior in priority to the
Notes, if any, and any security agreements or other documents relating thereto.
1.50 "GAAP" shall mean those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods so as to
properly reflect the financial condition, and the results of operations and
changes in financial position, of Borrower.
1.51 "Government Authority" shall mean any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administration functions of or pertaining
to government, and any corporation or other entity owned or controlled (through
stock or capital ownership or otherwise) by any of the foregoing.
1.52 "Hazardous Substance" means any substance, material, vapor or waste
which is or becomes designated, classified or regulated as being "toxic" or
hazardous" or a "pollutant," or which is or becomes similarly designated,
classified or regulated, under any federal, state or local law, regulation or
ordinance, or any derivative or mixture of such substance, material or vapor, or
any petroleum products, including crude oil and any product derived directly or
indirectly from, or any fraction or distillate of, crude oil.
1.53 "Indebtedness" shall mean, at any specified time: (a) the aggregate
indebtedness for borrowed money and for the deferred purchase price of property
or services in respect of which any Borrower is liable, contingently or
otherwise, as obligor or otherwise and any commitment by which any Borrower
assures a creditor against loss, including contingent reimbursement obligations
with respect to letters of credit; (b) the aggregate indebtedness guaranteed in
any manner by any Borrower, including guaranties in the form of an agreement to
repurchase or reimburse; (c) all obligations under Capital Leases in
7
respect of which obligations any Borrower is liable, contingently or otherwise,
as obligor, guarantor or otherwise, or in respect of which obligations Borrower
assures a creditor against loss; (d) all unfunded obligations of Borrower to any
"multiemployer plan" as such term is defined under ERISA; (e) all liabilities
secured by any Lien on any Property owned by Borrower even though such Borrower
has not assumed or otherwise become liable for the payment thereof; and (f) all
other liabilities or obligations of Borrower which, in accordance with GAAP, are
properly shown as a liability of any Borrower on the balance sheet of any
Borrower.
1.54 "Indemnified Costs" mean all actual or threatened liabilities, claims,
actions, causes of action, judgments, orders, damages (including foreseeable and
unforeseeable consequential damages), costs, expenses, fines, penalties and
losses (including sums paid in settlement of claims and all consultant, expert
and legal fees and expenses of counsel to Lender), including those incurred in
connection with any investigation of site conditions (at, above or below the
surface) or any clean-up, remedial, removal or restoration work, or any
resulting damages, harm or injuries to the Person or property of any third
parties or to any natural resources.
1.55 "Indemnified Parties" means and includes Lender, its respective
Subsidiaries and Affiliates, assignees of any interest of Lender in the Loan
Documents or the Related Documents, owners of participation or other interests
in the Loan Documents or the Related Documents, and the officers, directors,
employees, attorneys and agents of each of them.
1.56 "Interest Expense of Total Debt" shall mean, for any specified period,
the aggregate gross interest expense (including interest expense attributable to
Capital Leases) of Borrower payable on the Funded Total Debt, as determined in
accordance with GAAP.
1.57 "Inventory Appraisal Report" shall mean a report, in form and
substance satisfactory to Lender in Lender's sole and absolute discretion, that
is signed by an appraiser who is experienced in the appraisal of inventory,
selected by Borrower and approved by Lender in its sole and absolute discretion,
and which certifies as to the value of Borrower's Eligible Domestic Inventory as
of the date of the inventory appraisal.
1.58 "Landlord(s)" shall mean the landlord(s) under the Leases.
1.59 "Landlord Consents" shall collectively mean, if applicable, the
landlord consents (each in a form substantially similar to Exhibit D hereto and
acceptable to Lender in its sole and absolute discretion) executed by the
Landlords in favor of Lender, as the same may from time to time be amended,
supplemented or modified, together with all exhibits and schedules from time to
time attached thereto, pursuant to which each Landlord, among other things,
waives any landlord's lien, whether statutory or otherwise, and other claims in
and to any of the collateral for the Obligations and agrees to such other
covenants as are reasonably requested by Lender.
1.60 "Leases" shall collectively mean the leases described on Exhibit E
attached hereto (as Exhibit E may be updated from time to time), as such leases
may from time to time be amended, supplemented or modified, and any other rental
agreements or leases hereafter executed by Borrower for the lease or rental of
real property or space, together with all exhibits and schedules from time to
time attached thereto.
8
1.61 "Lender" shall have the meaning assigned thereto in the Preamble to
this Agreement.
1.62 "Leverage Ratio" shall mean the numerical ratio, as of the date of
determination, of (i) Funded Senior Debt to (ii) EBITDA for the four calendar
quarters immediately preceding the measurement.
1.63 "Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, charge, lien (statutory or other),
security interest, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement), any financing lease having
substantially the same economic effect as any of the foregoing (including the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement), or the filing of any financing
statement under the UCC or comparable law of any jurisdiction.
1.64 "Loans" shall collectively mean all amounts advanced or to be advanced
under Facility A and Facility B.
1.65 "Loan Documents" shall mean this Agreement, all Borrowing Base
Certificates, the Notes, the Security Agreement, any documents evidencing the
assignment to Lender of any accounts receivable of which the United States of
America or any department or instrumentality thereof is the account debtor, and
all notes, mortgages, deeds of trust, security agreements, assignments,
financing statements, certificates and other documents whether now or hereafter
existing, executed by Borrower in connection with the Obligations or by which
Borrower is bound.
1.66 "Loan Participants" shall have the meaning set forth in Section
12.14(b).
1.67 "Loan Transferee" shall have the meaning set forth in Section
12.14(a).
1.68 "Net Income" shall mean for any period the net income of Borrower for
such period in accordance with GAAP.
1.69 "Net Loss" shall mean, for a specified period of time, the net loss of
Borrower for such period in accordance with GAAP.
1.70 "Net Worth" shall mean, as of the date of determination, the total
shareholders' equity (including capital stock, additional paid in capital and
retained earnings after deducting treasury stock) which would appear on a
balance sheet of Borrower prepared as of such date in accordance with GAAP
consistently applied.
1.71 "Notes" shall mean the Facility A Note, the Facility B Note and any
note or notes required by Lender to be executed by any Borrower in connection
with the Obligations, and any other note or notes issued in substitution,
replacement or renewal of, or that amend or supersede any of the foregoing
notes.
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1.72 "Obligations" shall mean all amounts to be paid or satisfied and all
covenants and obligations to be performed or fulfilled by Borrower pursuant to
the Loan Documents and all other amounts, covenants and obligations that
Borrower hereafter agrees to pay, perform or fulfill for Lender's benefit, as
the same may be amended, supplemented or modified from time to time.
1.73 "OneSource" shall mean OneSource Technologies, Inc., a Delaware
corporation, prior to its merger with Target.
1.74 "Origination Fees" shall mean the fees owed to Lender by Borrower
pursuant to Section 2.4 and Section 3.4.
1.75 "PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, and any entity succeeding to any or
all of its functions.
1.76 "Permitted Liens" shall mean:
(a) Liens for taxes, assessments or other governmental charges, and
carriers', warehousemen's, repairmen's, mechanics', materialmen's and other like
Liens, which are either not delinquent or are being contested in good faith by
appropriate proceedings, and against which Borrower has provided, and is
maintaining, adequate reserves in accordance with GAAP;
(b) easements, restrictions, minor title irregularities and similar
matters which have no material adverse effect upon the ownership and use of the
affected property;
(c) Liens or deposits in connection with workers compensation,
unemployment, social security or other insurance or benefits, 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 as a
condition to the transaction of business, or other Liens or deposits of a like
nature made in the ordinary course of business;
(d) Liens or security interests held by Lender;
(e) Liens created by Capital Leases permitted by Section 9.3, so long
as (i) the Indebtedness secured by all such Liens, together with the
Indebtedness described in clause (f) below, does not exceed $100,000 in the
aggregate for Borrower at any given time; (ii) the Liens created by such Capital
Leases attach solely to the assets being leased or acquired by Borrower pursuant
to such Capital Leases and secure only the capitalized amount; and (iii) the
Indebtedness secured by any such Lien does not exceed 100% of the capitalized
amount;
(f) purchase money liens or security interests permitted by Section
9.3 and granted to suppliers in the ordinary course of business for purposes of
purchasing any personal property, so long as (i) the Indebtedness secured by all
such liens and security interests, together with the indebtedness described in
clause (e) above, does not exceed $100,000 in the aggregate for Borrower at any
given time; (ii) such purchase money liens or security interests arise pursuant
to bona fide sales at prices consistent with the prevailing market price for
such
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property; (iii) the Liens created by such transactions attach solely to the
property being acquired by Borrower and secure only the balance of the purchase
price of such property; and (iv) the Indebtedness secured by any such Lien does
not exceed 100% of the price of the property that is acquired; and
(g) Liens related to Existing Debt described in Exhibit C-2 (except
any tax Lien of the Internal Revenue Service relating to the tax liability
described in Exhibit C-1 and Exhibit C-2), provided such Liens are terminated or
released within ten days after the Effective Date.
1.77 "Person" shall mean an individual, partnership, limited liability
company, corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Government Authority or other entity of whatever
nature.
1.78 "Plan" shall mean any savings, profit sharing, retirement, deferred
compensation contract or other plan maintained for employees of a Borrower and
covered by Title IV of ERISA.
1.79 "Prime Rate" shall mean the annual rate of interest from time to time
announced by Lender as the fluctuating "prime" or equivalent rate of interest of
Lender. Any increase or decrease in the Prime Rate shall be effective on the day
the Prime Rate reflecting such increase or decrease is announced or published,
as the case may be. Borrower acknowledges that the Prime Rate may not represent
the most favorable interest rate from time to time offered by Lender to
borrowers of Lender, that the Prime Rate may increase or decrease daily during
the time this Agreement is in effect, and that the amount by which the Prime
Rate may increase or decrease is not limited as to increases or decreases that
may occur on any day while amounts owing on the Loans remain outstanding.
1.80 "Property" shall mean any interest of Borrower in any kind of property
or asset, whether real, personal or mixed, or tangible or intangible, including
without limitation all contracts and agreements to which Borrower is a party,
Eligible Domestic Inventory, Eligible Domestic Accounts Receivable and
Trademarks/names, Copyrights and Patents.
1.81 "Quick Ratio" shall mean the numerical ratio, as of the date of
determination, of (a) the total current assets of Borrower less inventory of
Borrower to (b) the total current liabilities (including, but not limited to the
outstanding principal indebtedness under Facility A) of Borrower, as determined
in accordance with GAAP.
1.82 "Related Documents" shall collectively mean the Subordination and
Intercreditor Agreements, the Landlord Consents, and all notes, mortgage, deeds
of trust, security agreements, assignments, financing statements and other
documents, whether now or hereinafter existing, executed by a Person other than
the Borrower in connection with the Obligations.
1.83 "Request for a Facility A Advance" shall mean a request for an Advance
made in accordance with the requirements of Section 2.6 hereof, which shall be
in the form attached as Exhibit F.
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1.84 "Security Agreement" shall mean the Security Agreement, of even date
herewith, between Borrower and Lender, as the same may from time to time be
amended, supplemented or modified, together with all exhibits and schedules from
time to time attached thereto, which secures, among other things, the
Obligations.
1.85 "Subordinated Notes" shall mean (i) the Promissory Note, dated as of
November 9, 2004, in the stated principal amount of $255,000, executed by
Borrower and delivered to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; (ii) the Promissory Note, dated as
of November 9, 2004, in the stated principal amount of $255,000 executed by
Borrower and delivered to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; (iii) the Promissory Note, dated as
of November 9, 2004, in the stated principal amount of $245,000 executed by
Borrower and delivered to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; (iv) the Promissory Note, dated as
of November 9, 2004, in the stated principal amount of $245,000 executed by
Borrower and delivered to ▇▇▇ ▇. ▇▇▇▇▇▇▇▇; and (v) any other promissory note
executed by Borrower and evidencing Indebtedness of Borrower to any Person other
than Lender except as approved by Lender in Lender's sole and absolute
discretion, all as the same may be amended, supplemented or modified from time
to time, together with all exhibits and schedules attached thereto.
1.86 "Subordination and Intercreditor Agreements" shall mean (i) the
Subordination and Intercreditor Agreement, dated as of November 9, 2004 and
executed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Lender; (ii) the Subordination and
Intercreditor Agreement, dated as of November 9, 2004 and executed by ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and Lender; (iii) the Subordination and Intercreditor Agreement, dated
as of November 9, 2004 and executed by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Lender; (iv) the
Subordination and Intercreditor Agreement, dated as of November 9, 2004 and
executed by ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Lender; and (v) any other Subordination and
Intercreditor Agreement executed by Lender and the holder(s) of Indebtedness of
Borrower (other than the Obligations), including the holder(s) of any
Subordinated Note hereafter created, in form and substance acceptable to Lender
in its sole and absolute discretion, and consented to by Borrower, as the same
may be amended, supplemented or modified from time to time, together with all
exhibits and schedules attached thereto.
1.87 "Subsidiary" shall mean, as to any Person,
(a) a corporation whose shares of stock having ordinary voting power
(other than stock having such power only by reason of the happening of a
contingency that has not occurred) to elect a majority of the board of directors
or other managers of such corporation are at the time owned, or the management
of which is otherwise controlled, directly or indirectly through one or more
intermediaries or both, by such Person.
(b) a limited liability company, the majority of the membership
interests of which are at the time held, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries or both,
by such Person.
(c) a partnership, which is controlled, directly or indirectly through
one or more intermediaries or both by such Person.
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(d) a limited partnership, the general partner of which is at the
time, or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries or both, by such Person.
1.88 "Target" shall mean First Financial Computer Services, Inc., an
Arkansas corporation.
1.89 "Trademarks/names, Copyrights and Patents" shall mean all logos,
insignia, trademarks and trade names, copyrights and patents or applications
therefor now or hereafter utilized for or in connection with the business of
Borrower, all of which are listed (and a copy of any logo is included) on
Exhibit G.
1.90 "UCC" shall mean the Uniform Commercial Code as the same may from time
to time be in effect in the State of Arizona.
Except as otherwise herein specifically provided, each accounting term used
herein shall have the meaning given to the accounting term under GAAP, all other
terms contained in this Agreement (and which are not otherwise specifically
defined herein) shall have the meanings provided in the UCC to the extent the
same are used or defined therein. Unless the context otherwise requires, the
words "hereof," "herein," and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, the word "include(s)" means "include(s),
without limitation," and the word "including" means "including, without
limitation". All references to dollar amounts shall mean amounts in lawful money
of the United States of America.
SECTION 2
REVOLVING CREDIT FACILITY - FACILITY A
2.1 Revolving Line of Credit Commitment.
(a) Subject to the terms and conditions of this Agreement, Lender
agrees to make a revolving line of credit facility ("Facility A") available to
Borrower during the Facility A Commitment Period in an aggregate principal
amount at any one time outstanding not to exceed the borrowing base amount set
forth herein (the "Facility A Borrowing Base"). During the Facility A Commitment
Period, so long as no Default or Event of Default has occurred or if all Events
of Default have been expressly waived in writing by Lender, Borrower may borrow
and repay the amounts owing under Facility A in whole or in part, and reborrow,
all in accordance with the terms and conditions hereof. Amounts drawn on
Facility A shall be used by Borrower to pay debt service, to fund a reserve
account pursuant to Section 2.9 and to pay for working capital.
(b) As of any date, the Facility A Borrowing Base shall be the lesser
of: (i) the Facility A Maximum Principal Amount less the Collateral Reserve; or
(ii) the sum of (1) 80% of the aggregate amount of Eligible Domestic Accounts
Receivable, plus (2) the lesser of (x) 25% of the aggregate amount of Eligible
Domestic Inventory or (y) $800,000, less (3) the Collateral Reserve. As of any
date, the Facility A Borrowing Base is subject to the approval of Lender, and
Lender may at the expense of Borrower, conduct an audit of Borrower to determine
the Facility A Borrowing Base.
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2.2 Facility A Note. Borrower shall, as a condition to the Facility A
Advances, execute and deliver to Lender the Facility A Note in the form attached
hereto as Exhibit H and in the principal amount of the Facility A Maximum
Principal Amount.
2.3 Interest Payable. Subject to the provisions of Section 4.1, Borrower
shall pay interest on the unpaid principal amount from time to time outstanding
under Facility A, in arrears, at a rate equal to the Prime Rate plus 1.00%. For
the avoidance of doubt, the interest to be paid pursuant to this Section 2.3
shall float as the Prime Rate changes.
2.4 Origination Fee. Upon the execution of this Agreement by Borrower and
Lender and on each subsequent date that is the anniversary of the date of this
Agreement, Borrower shall pay to Lender, with respect to Facility A, an
origination fee of 0.50% of the Facility A Maximum Principal Amount. The
origination fee shall be due and payable regardless of whether Borrower requests
a Facility A Advance.
2.5 Repayment Terms.
(a) Borrower shall pay all accrued, but unpaid, interest on the unpaid
principal amount from time to time outstanding under Facility A, on the 10th day
of each month until the principal and all other amounts outstanding under
Facility A have been paid in full and the Facility A Commitment has been
terminated.
(b) Borrower shall repay in full all outstanding and unpaid principal,
interest and other charges outstanding under Facility A no later than the
Facility A Maturity Date.
(c) On or about the last day of each calendar month, Lender shall mail
to Borrower a statement of the estimated amount (the "Facility A Billed Amount")
that will be due under Facility A on the 10th day of the immediately succeeding
month (the "Facility A Due Date") for the interest payable for such calendar
month. The calculation of the Facility A Billed Amount shall be made on the
assumption that no new extensions of credit or payments will be made between the
date of the statement and the applicable Facility A Due Date, and that there
will be no changes in the applicable interest rate. The Facility A Billed Amount
shall be due, regardless of the actual amount of interest accrued. If the
Facility A Billed Amount differs from the amount actually owing on the Facility
A Due Date based on the interest rates actually in effect and the actual
principal balances outstanding (the "Facility A Accrued Amount"), the difference
will be treated as follows:
(i) If the Facility A Billed Amount is less than the Facility A
Accrued Amount, the Facility A Billed Amount for the following Facility A Due
Date shall be increased by the amount of the difference. Borrower shall not be
in Default solely by reason of any such difference; or
(ii) If the Facility A Billed Amount is more than the Facility A
Accrued Amount, the Facility A Billed Amount for the following Facility A Due
Date shall be decreased by the amount of the difference.
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Regardless of any such difference, interest shall continue to accrue on Facility
A based on the actual amount of principal outstanding, without compounding.
Lender shall not be obligated to pay Borrower interest on any overpayment.
(d) Unless otherwise provided in this Agreement or required by
applicable law, payments received by Lender with respect to Facility A shall be
applied first to the Additional Sums or other costs or charges provided for
herein, next to the accrued and unpaid interest with respect to Facility A, and
then the remainder to the principal amount outstanding under Facility A.
2.6 Procedure for Obtaining Facility A Advance. As a condition to each
Facility A Advance (except for a Facility A Advance pursuant to Section 2.9),
Borrower shall submit to Lender a written request therefor (a "Request for a
Facility A Advance"). A Request for a Facility A Advance shall specify a
Business Day during the Facility A Commitment Period on which such Advance is to
be made (a "Facility A Borrowing Date") and the amount of the Advance requested.
A Facility A Advance may be requested in any principal amount of the lesser of
(a) the Facility A Maximum Available Commitment, or (b) $50,000 or more up to
the Facility A Maximum Available Commitment. A Request for a Facility A Advance
shall be made not later than one Business Day prior to the corresponding
Facility A Borrowing Date; provided, however, that Lender waives such notice
requirements with respect to the initial Facility A Advance requested by
Borrower and to be made on or about the Effective Date.
2.7 Prepayments.
(a) Optional Prepayments. Provided that all matured interest and other
charges accrued to the date of prepayment are also paid in full, Borrower may,
at the option of Borrower, at any time and from time to time, prepay the
principal amount of Facility A, in whole or in part, without any prepayment
premium or penalty. Notwithstanding any partial prepayment of principal under
Facility A, there shall be no change in the due date of or the amount of any
scheduled payment with respect to Facility A unless Lender, in its sole and
absolute discretion, agrees in writing to such change.
(b) Mandatory Prepayment. At any time that the aggregate principal
amount outstanding under Facility A exceeds the Facility A Borrowing Base,
Borrower shall immediately prepay the amount by which such aggregate principal
amount outstanding exceeds such borrowing base, together with interest accrued
on the amount of the prepayment.
2.8 Collateral Audits. Lender shall have the right, at Borrower's cost and
expense, to audit the collateral described in Section 5.1 and securing, among
other Loans, Facility A Advances on a semi-annual basis starting from the
Effective Date. If such collateral is not acceptable to Lender, in the sole and
absolute discretion of Lender acting commercially reasonable, Lender shall not
be obligated to make any subsequent Facility A Advances to Borrower. As long as
no Event of Default has occurred and is continuing, Borrower shall not be
obligated to pay more than $6,000 for an audit and no more than $12,000 each
12-month period for collateral audits performed pursuant to this Section 2.8.
15
2.9 Reserve. On the date that Lender disburses and loans the initial
Advance to Borrower, Borrower shall be deemed to have received a Facility A
Advance from Lender in the amount of $48,624, and Lender shall deposit and fund
such Facility A Advance to a reserve account held by Lender. Such amount shall
be held in such reserve account until Borrower shall have provided Lender, to
the satisfaction of Lender, with evidence that the tax liability of Borrower
described in Exhibit C-1 plus any additional interest and penalties thereon have
been paid and satisfied in full and any tax Lien of the Internal Revenue Service
securing such tax liabilities has been released, at which time Lender shall
remit such funds to Borrower. In addition to the rights and remedies provided in
this Agreement and the other Loan Documents, Lender shall have all rights and
remedies regarding the funds in the reserve account as are provided for under
any applicable law. Without limiting the foregoing, upon and at all times after
the occurrence and during the continuance of any Event of Default, Lender in its
sole and absolute discretion may use the funds in the reserve account for any
purpose, including, but not limited to, any combination of the following: (i)
payment of any of the Obligations, in such order as Lender may determine in its
sole and absolute discretion; provided, however, that such application of funds
shall not cure or be deemed to cure any Default; (ii) reimbursement of Lender
for any losses or expenses suffered or incurred as a result of such Event of
Default; (iii) payment for the obligation for which such funds were reserved;
and (iv) application of the funds in the reserves in connection with the
exercise of any and all rights and remedies available to Lender at law or in
equity or under this Agreement or pursuant to any other Loan Document.
SECTION 3
TERM LOAN - FACILITY B
3.1 Term Loan.
(a) Subject to the terms and conditions of this Agreement, Lender
agrees to extend a term loan ("Facility B") to Borrower in the Facility B
Maximum Principal Amount. Amounts paid or repaid under Facility B may not be
reborrowed. Amounts drawn on Facility B shall be used by Borrower solely to pay
debt service and extinguish Existing Debt.
(b) A request for a Facility B Advance shall specify a Business Day
during the Facility B Commitment Period on which such Facility B Advance is to
be made (a "Facility B Borrowing Date"), the amount of the Facility B Advance
requested and a detailed description, in a form and substance acceptable to
Lender in its sole discretion, of the projected uses of such funds to be
advanced. The request for a Facility B Advance shall be made one Business Day
prior to the corresponding Facility B Borrowing Date; provided, however, that
Lender waives such notice requirement if the Facility B Advance is to be made on
the Effective Date.
3.2 Facility B Note. Borrower shall execute and deliver to Lender on the
Effective Date the Facility B Note, substantially in the form attached hereto as
Exhibit I to evidence such Facility B.
3.3 Interest Payable. Subject to the provisions of Section 4.1, Borrower
shall pay interest on the unpaid principal amount from time to time outstanding
under Facility B, in arrears, at a rate per annum equal to the Prime Rate plus
2.00%. For the avoidance of doubt, the interest to be paid pursuant to this
Section 3.3 shall float as the Prime Rate changes.
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3.4 Origination Fee. Upon the execution of this Agreement by Borrower and
Lender, Borrower shall pay to Lender, with respect to Facility B, an origination
fee of 1.00% of the Facility B Maximum Principal Amount. The origination fee
shall be due and payable regardless of whether Borrower requests the Facility B
Advance.
3.5 Repayment Terms.
(a) Borrower shall pay all accrued, but unpaid, interest on the unpaid
principal amount from time to time outstanding under Facility B on the 10th day
of each month until the Facility B Maturity Date, and Borrower shall pay on each
such date an installment of principal in an amount equal to $36,458.
(b) The entire principal balance outstanding under Facility B,
together with all accrued interest and other amounts payable pursuant to
Facility B, if not sooner paid as provided in the Loan Documents, shall be due
and payable on the Facility B Maturity Date.
(c) On or about the last day of each calendar month, Lender shall mail
to Borrower a statement of the estimated amount (the "Facility B Billed Amount")
that will be due under Facility B on the 10th day of the immediately succeeding
month (the "Facility B Due Date") for the interest and any principal payable as
described in Section 3.5(a). The calculation of the Facility B Billed Amount
shall be made on the assumption that no new extensions of credit or payments
will be made between the date of the statement and the applicable Facility B Due
Date and that there will be no changes in the applicable interest rate. The
Facility B Billed Amount will be due, regardless of the actual amount of
interest accrued. If the Facility B Billed Amount differs from the amount
actually owing on the Facility B Due Date based on the interest rates actually
in effect and the actual principal balances outstanding (the "Facility B Accrued
Amount"), the difference will be treated as follows:
(i) If the Facility B Billed Amount is less than the Facility B
Accrued Amount, the Facility B Billed Amount for the following
Facility B Due Date shall be increased by the amount of the
difference. Borrower shall not be in Default solely by reason of any
such difference; or
(ii) If the Facility B Billed Amount is more than the Facility B
Accrued Amount, the Facility B Billed Amount for the following
Facility B Due Date shall be decreased by the amount of the
difference.
Regardless of any such difference, interest shall continue to accrue on Facility
B based on the actual amount of principal outstanding, without compounding.
Lender shall not be obligated to pay Borrower interest on any overpayment.
(d) Unless otherwise provided in this Agreement or required by
applicable law, payments received by Lender with respect to Facility B shall be
applied, first to the Additional Sums or other costs or charges provided for
herein, next to accrued and unpaid interest with respect to Facility B, and then
the remainder to the principal amount outstanding under Facility B.
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3.6 Optional Prepayments. Provided that all matured interest and other
charges accrued to the date of prepayment are also paid in full, Borrower may,
at the option of Borrower, at any time and from time to time, prepay the
principal amount of Facility B, in whole or in part, without any prepayment
premium or penalty. Notwithstanding any partial prepayment of the Facility B
Maximum Principal Amount, there shall be no change in the due date of or the
amount of any scheduled payment with respect to Facility B unless Lender, in its
sole discretion, agrees in writing to such change. Unless otherwise provided in
this Agreement or required by applicable law, all amounts prepaid against the
Facility B Maximum Principal Amount shall be applied, first to the Additional
Sums or other costs or charges provided for herein, next to accrued and unpaid
interest on the Facility B Maximum Principal Amount, and then, at the option of
Lender, the remainder to the installments of the Facility B Maximum Principal
Amount in inverse order of maturity.
3.7 Excess Cash Flow Payment. Commencing on March 31, 2005 and on the end
of each calendar quarter thereafter, if there is any unpaid balance on the
Facility B Maximum Principal Amount, Borrower shall pay to Lender on the 10th
day of the month following such date of determination, in addition to the
regularly scheduled principal payments on the Facility B Maximum Principal
Amount to be made by Borrower under Section 3.5(a), 50% of the Excess Cash Flow
accrued or realized during the calendar quarter. Each such payment shall be
applied by Lender first to the installments of the Facility B Maximum Principal
Amount in inverse order of maturity, next to the Additional Sums or other costs
or charges provided for herein, and then to accrued and unpaid interest on the
Facility B Maximum Principal Amount.
SECTION 4
COMMON PROVISIONS
4.1 Default Interest. Notwithstanding any provision to the contrary herein,
after the occurrence of an Event of Default (unless expressly waived in writing
by Lender), the aggregate principal amount outstanding under each of the Loans
shall bear interest, payable on demand, at a per annum rate equal to the
applicable rates stated in Section 2.3 or Section 3.3 plus 5.00%. Neither the
requirement nor any payment of such additional interest shall constitute a
waiver of any Event of Default.
4.2 Interest and Fee Computations. Except as otherwise expressly stated in
this Agreement, all interest and fees with respect to each of the Loans shall be
computed on the basis of a 360-day year and the actual number of days elapsed.
4.3 Method of Payment. Payments by Borrower under this Agreement shall be
made to Lender, at such location and to such accounts as designated by Lender
from time to time, and shall be made in immediately available funds, or such
other type of funds as may be acceptable to Lender in its sole and absolute
discretion.
4.4 Payment Due Dates. All payments under this Agreement that become due on
a day other than a Business Day shall be due on the next Business Day. All
payments under this Agreement received by Lender on a day other than a Business
Day shall be applied on the next Business Day.
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4.5 Late Charge. If Borrower fails to make any payment under this Agreement
after the date the same first becomes due and payable, Borrower shall pay to
Lender, in addition to all other charges, a late charge equal to 5.00% of the
amount of such overdue payment.
4.6 Late Advance Requests. Any request for an Advance received by Lender
after 12:00 p.m. (Phoenix, Arizona time) on any Business Day shall be treated as
having been received by Lender on the next succeeding Business Day.
4.7 Loan Accounts. Lender shall maintain on the books of Lender a separate
record of account for each of the Loans in which Lender shall make entries for
each Advance and such other debits and credits as shall be appropriate for each
such facility. Lender shall provide Borrower with periodic statements of the
account of Borrower under each such facility, which statements shall be deemed
to be correct and conclusively binding on Borrower, unless Borrower notifies
Lender to the contrary within 30 days after Borrower receives such statements to
Borrower. Failure by Lender to make such notations or notifications to Borrower
shall not affect the Borrower's liability with respect to the Obligations.
SECTION 5
COLLATERAL
5.1 Collateral. The Obligations shall be secured by a perfected
first-priority security interest in all of the assets of Borrower, including,
but not limited to, all Property, machinery and equipment, inventory, accounts,
trademarks, trade names, cash and cash equivalents and other general intangibles
and other assets of Borrower, whether now owned or hereafter acquired, as
further described in the Security Agreement.
SECTION 6
CONDITIONS PRECEDENT
6.1 Initial Advance. In addition to the terms and conditions otherwise
contained herein, the obligations of Lender to make the initial Advances for
each of Facility A and Facility B are conditioned on each of the following
having been satisfied in a manner acceptable to Lender, in Lender's sole and
absolute discretion:
(a) The Loan Documents and the Related Documents in form and substance
approved by Lender shall have been duly authorized and executed by Borrower and
any other parties thereto and delivered by Borrower to Lender.
(b) The Subordination and Intercreditor Agreements required by Lender
shall have duly authorized and executed by the respective subordinating
creditors and Lender and consented to by the Borrower.
(c) Lender shall have received a true and correct copy of each of the
Subordinated Notes required by Lender to be in effect as of the date of such
Advance, and all security agreements and other instruments securing such
Subordinated Notes, each bearing the legend required by the related
Subordination and Intercreditor Agreement, and the Lender shall have approved
the terms and conditions thereof.
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(d) Lender shall have received evidence satisfactory to Lender that
the representations and warranties of Borrower in the Loan Documents are true
and accurate and not misleading.
(e) All financing statements required by Lender shall have been duly
authorized and executed by Borrower and delivered to Lender and filed in the
appropriate governmental offices, including, but not limited to, financing
statements relating to the property described in the Security Agreement executed
by Borrower and filed in the Office of the Secretary of State of the State of
Delaware.
(f) The Landlord Consents with respect to the Leases existing as of
the date of such Advance shall have been duly authorized, executed and delivered
by Landlords to Lender in form and substance acceptable to Lender in its sole
and absolute discretion.
(g) Lender shall have received all fees, costs and expenses specified
in the Loan Documents as are then due and payable by Borrower to Lender,
including the applicable Origination Fees, the attorneys' fees and costs
incurred by Lender in connection with the preparation of the Loan Documents, and
all other costs incurred by Lender, including, but not limited to, any appraisal
fees, audit fees, environmental fees and filing, recording and search fees.
(h) Lender shall have received all terminations of financing
statements, partial releases of financing statements, mortgage releases, deed of
trust releases, pay-off letters and/or agreements and other documents required
by Lender to ensure that there are no Liens affecting the collateral for the
Obligations, other than the Permitted Liens.
(i) Lender shall have received evidence that the insurance coverage
required under the Loan Documents is in full force and effect, that Lender is
named as a loss payee or beneficiary thereunder, and that such insurance
includes a provision requiring the insurer to provide Lender at least 30 days'
prior written notice of the cancellation, expiration, termination or any change
in the coverage afforded thereby.
(j) Lender shall have received a certificate of the secretary or other
authorized officer of the Borrower in the form and substance approved by Lender,
of even date herewith, as to: (i) the incumbency and signature of the officer of
Borrower executing the Loan Documents; (ii) the adoption and continued effect of
the authorizing actions of Borrower attached thereto, authorizing the execution,
delivery and performance of the Loan Documents; and (iii) the accuracy of the
copies of the Amended and Restated Certificate of Incorporation and By-laws of
Borrower attached thereto.
(k) Lender, at its option and for its sole benefit, shall have
conducted an audit of the Property, books, records and operations of Borrower,
and Lender shall be satisfied as to their condition. Lender, at its option and
for its sole benefit, shall have received an initial appraisal of the Property
of Borrower, and Lender shall be satisfied as to such appraisal.
(l) Lender shall have received a Borrowing Base Certificate signed by
Borrower, and such reports and other certificates as Lender may require in order
to satisfy itself
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as to the financial condition of Borrower and the lack of environmental or other
contingent liabilities of Borrower.
(m) Lender shall have received certificates of good standing for
Borrower from the appropriate Government Authorities of the state of
organization of Borrower.
(n) Borrower shall have obtained and delivered to Lender all approvals
required (if any) for Borrower to enter into the Loan Documents.
(o) Lender shall have received true and correct copies of all
Trademarks/names, Copyrights and Patents filed with the United States Patent and
Trademark Office.
(p) No Default or Event of Default shall then exist, nor shall any
Default or Event of Default arise as a result of the initial Advances.
(q) Lender shall have received a certificate, in a form and substance
acceptable to Lender in its sole and absolute discretion, from Borrower setting
forth the Existing Debt, including the per diem amounts of such Existing Debt.
(r) Lender shall have received the favorable written opinion of
counsel to Borrower in form and substance satisfactory to Lender and its
counsel.
(s) Lender shall have received copies of all merger documents relating
to the mergers of OneSource and the Target, OneSource and OneSource
Technologies, Inc., an Arizona corporation, and OneSource and CartridgeCare,
Inc., an Arizona corporation, and shall have received evidence that all filings
regarding such merger have been initiated.
(t) Lender shall have received all other items that Lender reasonably
requires.
6.2 Subsequent Advances. In addition to the terms and conditions otherwise
contained herein, the obligation of Lender to make each Facility A Advance after
the initial Advance made pursuant to Section 6.1 is conditioned on each of the
following conditions having been satisfied in a manner acceptable to Lender, in
Lender's sole and absolute discretion, on and as of the date of such Advance:
(a) Lender shall have received evidence satisfactory to Lender that
the representations and warranties of Borrower in the Loan Documents are true
and accurate and not misleading.
(b) The Subordination and Intercreditor Agreements required by Lender
shall have duly authorized and executed by the respective subordinating
creditors and Lender and consented to by the Borrower.
(c) Lender shall have received a true and correct copy of each of the
Subordinated Notes required by Lender to be in effect as of the date of such
Advance, and all security agreements and other instruments securing such
Subordinated Notes, each bearing the
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legend required by the related Subordination and Intercreditor Agreement, and
the Lender shall have approved the terms and conditions thereof.
(d) The Loan Documents shall be in full force and effect, and the
Liens and security interests granted to Lender thereby shall be perfected and in
full force and effect with the priorities described therein.
(e) If applicable, the Landlord Consents with respect to the Leases
existing as of the date of such Advance shall have been duly authorized,
executed and delivered by Landlords to Lender in form and substance acceptable
to Lender in its sole and absolute discretion
(f) Lender shall have received all fees, costs and expenses specified
in the Loan Documents as are then due and payable by Borrower to Lender.
(g) Lender shall have received evidence that the insurance required
under the Loan Documents is in full force and effect, that Lender is named as a
loss payee thereunder, and that each of such insurance polices includes a
provision requiring the insurer to provide Lender at least 30 days' prior
written notice of the cancellation, expiration, termination or any change in the
coverage afforded thereby.
(h) No Default or Event of Default shall exist.
(i) All proceedings to be taken in connection with such Advance and
all documents incident thereto shall be satisfactory in form and substance to
Lender.
(j) Lender shall have received a Compliance Certificate dated not more
than 5 days prior to the Advance.
6.3 Facility A Advances. In addition to the applicable conditions stated in
Section 6.1 and Section 6.2, the obligation of Lender to make each Facility A
Advance is conditioned on each of the following having been satisfied in a
manner acceptable to Lender, in Lender's sole and absolute discretion, on and as
of the date of such Advance:
(a) Lender shall have received from Borrower a Request for the
Facility A Advance, together with the related Borrowing Base Certificate.
(b) The principal amount outstanding under Facility A, together with
the amount of such Advance, shall not exceed the Facility A Borrowing Base.
(c) Borrower shall have paid for all costs and expenses relating to
Lender's most recent semi-annual audit of the collateral described in Section
5.1, and the collateral securing Facility A shall be acceptable to Lender in its
sole and absolute discretion acting commercially reasonable.
SECTION 7
REPRESENTATIONS AND WARRANTIES
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To induce Lender to make the Loans as herein provided, and until all of the
Obligations are repaid and performed in full, Borrower represents and warrants
to Lender, and by each request for an Advance shall be deemed to represent and
warrant that:
7.1 Organization; Qualification; Affiliates of Borrower. Borrower is a
corporation that is duly organized, validly existing and in good standing under
the laws of the state in which Borrower is incorporated and has the full power
and authority to execute the Loan Documents. Borrower has all necessary
licenses, permits and franchises to borrow hereunder and to grant the Liens
provided for in the Loan Documents and to own its assets and conduct its
business as presently conducted. Borrower is duly licensed or qualified and in
good standing to do business, or shall be duly licensed or qualified and in good
standing to do business within 30 days of the Effective Date, in all
jurisdictions, except the State of Arizona, where failure to qualify would have
an adverse effect upon Borrower, and Borrower has no liabilities as a result of
any failure to qualify to do business as a foreign corporation in any
jurisdiction. Borrower has commenced as of the Effective Date all action
required of it to become duly licensed or qualified and in good standing to do
business in the State of Arizona. Borrower has no Subsidiaries or Affiliates,
other than as described on Exhibit J attached hereto. Where required, Borrower
is in compliance with all fictitious name statutes.
7.2 Authorization and Enforceability. The making, execution, delivery and
performance of the Loan Documents and the Related Documents to be executed by
Borrower, have each been duly authorized by all necessary corporate action. The
Loan Documents and the Related Documents, when executed and delivered by
Borrower, will be the legal, valid and binding obligations of Borrower,
enforceable against such Borrower in accordance with their respective terms
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter in effect
relating to creditor's rights, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
7.3 Absence of Conflicts. The making, execution and performance of the Loan
Documents and the Related Documents, and compliance with their respective terms,
do not violate or constitute a default under any presently existing provision of
law or the Certificate of Incorporation or Bylaws or similar corporate documents
of Borrower or any agreement, instrument or obligation to which Borrower or any
of its Affiliates is a party or by which Borrower or any of its Affiliates is
bound, or any law, statute, governmental regulation, court decree, or order
applicable to any Borrower or any of its Affiliates, the violation of which as
to any of the foregoing would materially and adversely affect the properties,
business or financial condition of Borrower and its Subsidiaries, taken as a
whole.
7.4 Solvency. After giving effect to the transactions contemplated by this
Agreement, (a) the assets of Borrower, at fair valuation, will exceed the
liabilities, including contingent liabilities, of Borrower; (b) Borrower is not
engaged in a business or transaction for which its assets are unreasonably
small; and (c) Borrower is able to pay its debts as they mature or otherwise
become due and payable.
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7.5 Taxes. Except as set forth on Exhibits C-1 and C-2, Borrower has filed
all federal, state, foreign and local tax returns that were required to be
filed, except those returns for which the due date has been validly extended.
Except as set forth on Exhibits C-1 and C-2, Borrower has paid or made
provisions for the payment of all taxes, assessments and other governmental
charges owed (including state and federal payroll taxes), and no tax
deficiencies have been proposed or assessed against Borrower. Except as set
forth on Exhibits C-1 and C-2, there are no pending or, to the knowledge of
Borrower, threatened tax controversies or disputes relating to Borrower.
7.6 Absence of Litigation. Borrower is not a party to nor, to the knowledge
of Borrower, is there any threat of any litigation or administrative proceeding
against Borrower that individually or in the aggregate could reasonably be
expected to materially and adversely affect the properties, business or
financial condition of Borrower and its Subsidiaries, taken as a whole, except
for litigation described on Exhibit K.
7.7 Accuracy of Information. All information, certificates and statements
given by Borrower in, or pursuant to, the Loan Documents and the Related
Documents were accurate, true and complete in all material respects when given,
continue to be accurate, true and complete in all material respects as of the
Effective Date, and do not contain any untrue statement or omission of a fact
necessary to make the statements therein not misleading. There is no fact or
circumstance known to Borrower which adversely affects in any material respect,
or which in the future may adversely affect in any material respect, the
business, property, operations or condition, financial or otherwise, of Borrower
and its Subsidiaries, taken as a whole, which has not been set forth in the Loan
Documents or Related Documents.
7.8 Ownership of Property. Borrower owns and has good and marketable title
in the legal name of Borrower to the Property owned by it free and clear of any
Liens, other than Permitted Liens. All buildings and equipment, whether leased
to or owned by Borrower, are in good condition, repair (ordinary wear and tear
excepted) and working order and, to the knowledge of Borrower, conform in all
material respects to all applicable laws, ordinances and regulations. Borrower
has taken and will take all action reasonably necessary to maintain the interest
of Borrower in and to any property that is leased by Borrower to third parties,
including the filing of financing statements in the appropriate offices when
required.
7.9 Lien Priority. Borrower has not entered into any security agreement or
otherwise granted a Lien to, or permitted a Lien to be held by, any Person that
would be prior or in any way superior to the Liens in favor of Lender created by
the Loan Documents, except for Liens described in clause (e) and clause (f) of
the definition of Permitted Liens.
7.10 Governmental Approvals. No consent, approval, authorization or other
action by, or filing with, any federal, state or local Government Authority is
required in connection with or as a condition to the execution, delivery and
performance by Borrower of the Loan Documents and the Related Documents.
7.11 Compliance with Law. Borrower is in compliance in all material
respects with all laws, rules, regulations, orders, judgments, writs and decrees
applicable to Borrower, the
24
violation of which would materially and adversely affect the properties,
business or financial condition of Borrower and its Subsidiaries, taken as a
whole.
7.12 Permits; Franchises. Borrower possesses all permits, franchises,
memberships, contracts and licenses required and all trademark rights, trade
name rights, patent rights, fictitious name rights and all other intellectual
property rights necessary to enable Borrower to conduct the business in which
Borrower is now engaged without conflict with the rights of others. At such time
as Borrower acquires any additional federal registration to any intellectual
property, Borrower will immediately notify Lender of such acquisition, and
Borrower shall cause the security interest of Lender to be perfected in such
rights. To the best of Borrower's knowledge, Borrower owns and has the
irrevocable right to use the non-registered intellectual property listed in
Exhibit G under the subtitle "Non-registered Intellectual Property". To the best
of Borrower's knowledge, other than the Trademarks/names, Copyrights and Patents
listed in Exhibit G and the non-registered intellectual property listed in
Exhibit G, Borrower currently does not own any trademark, trade name, patent
rights or other intellectual property, and no such ownership is required in
order to enable Borrower to conduct the business in which the Borrower is now
engaged.
7.13 Federal Reserve Regulations. Borrower will not, directly or
indirectly, use the proceeds of any of the Loans to purchase or carry any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System (12 C.F.R. 221, as amended), or otherwise take or
permit any action which would involve a violation of any regulation of the Board
of Governors of the Federal Reserve System.
7.14 Other Obligations. Except as set forth in Exhibit L, Borrower has not
received any notice claiming any, and Borrower has no knowledge that it is in,
default under any material obligation for borrowed money, any material purchase
money obligation or any other material lease, commitment, contract, instrument
or obligation.
7.15 ERISA. Borrower is in compliance in all respects with the applicable
provisions of ERISA and the regulations and published interpretations thereunder
and: (a) no "prohibited transaction" as defined in Section 406 of ERISA or
Section 4975 of the Code has occurred with respect to any Plan; (b) no action
has been taken by any Person that would cause the Internal Revenue Service to
assert a disqualification of any Plan under Section 401(a) of the Code; (c)
there has not been any "reportable event" as defined in Section 4043 of ERISA
with respect to any Plan; (d) no "accumulated funding deficiency," as defined in
Section 302 of ERISA (whether or not waived) has occurred with respect to any
Plan; (e) no action by Borrower to withdraw from any Plan has been taken and no
notice of intent to terminate a Plan has been filed under Section 4041 of ERISA;
and (f) no proceeding has been commenced with respect to a Plan under Section
4042 of ERISA, and no event has occurred or condition exists which might
constitute grounds for the commencement of such a proceeding.
7.16 Financial Information. The financial statements and information that
have been or will be supplied to Lender by or on behalf of Borrower are, and as
to future statements, will be, accurate and complete in all material respects,
and present fairly the financial position of the subjects thereof as of the end
of such periods and the results of the operation and cash flows of Borrower for
such periods then ended in conformity with GAAP, except as set forth in the
notes
25
thereto. There has been no material adverse change in the financial condition or
assets of Borrower subsequent to the date of the most recent financial
statements supplied to Lender. All financial and other information to be
supplied to Lender by or on behalf of Borrower will be in form and content as
required by Lender and in compliance with all governmental regulations that
apply.
7.17 Leases. Exhibit E accurately identifies all of the real property
leases (including any amendments or modifications thereof and any side
agreements, letter agreements or supplemental agreements with respect thereto)
to which Borrower is a party, or to which its leased properties are subject,
including the title of the lease (and any amendment, modification, side
agreement, letter agreement or supplemental agreement), the name of the
landlord, the date of the lease (and any amendment, modification, side
agreement, letter agreement or supplemental agreement), the expiration date of
the lease and the address and location of the real property. Borrower has
delivered to Lender true, accurate and complete copies of all such leases (and
any such amendments, modifications, side agreements, letter agreements and
supplemental agreements).
7.18 Capital Stock of Borrower. All outstanding shares of capital stock of
Borrower have been duly authorized and issued as required by law and are fully
paid and non-assessable, and the issuance and sale thereof have been made in
compliance with, in all respects, applicable federal and state securities laws.
To the knowledge of Borrower, there are no outstanding proxies with respect to
shares of capital stock or other securities of Borrower except as described in
Exhibit M. There are no outstanding warrants, options or other rights issued or
granted by Borrower or any shareholder agreements with respect to shares of
capital stock or other securities of Borrower except as described on Exhibit M.
7.19 Offices. The address of each office or facility of Borrower is listed
on Exhibit N attached hereto. The books and records of Borrower and all records
pertaining to Eligible Domestic Accounts Receivable and Eligible Domestic
Inventory are located at the office location for such Borrower listed on Exhibit
N.
7.20 Investment Company Act. Borrower is not an "investment company" or a
company "controlled by an investment company" within the meaning of the
Investment Company Act of 1940, as amended.
7.21 Foreign Entity. Borrower is not a "foreign corporation," "foreign
trust," "foreign estate," or other "foreign person," as those terms are defined
in the Code and related income tax regulations.
7.22 Covenants In Other Documents. Except for Existing Debt that will be
repaid with the proceeds from the Loans, none of the documents executed in
connection with any other Indebtedness of Borrower other than the Obligations
contains covenants governing financial performance or financial ratios or
contains restrictions on Capital Expenditures or the right of Borrower to incur
additional Indebtedness or ▇▇▇▇▇ ▇ ▇▇▇▇.
SECTION 8
AFFIRMATIVE COVENANTS
26
Except with the written consent of Lender, from and after the Effective
Date and until all of the liabilities and obligations of Borrower to Lender
pursuant to the Loan Documents are repaid and performed in full, Borrower shall:
8.1 Company Existence; Properties; Other Requirements. (a) Maintain the
existence of Borrower as a corporation in good standing; (b) comply in all
respects with all applicable laws, regulations, ordinances and orders of any
Government Authority with authority over the business of Borrower, the violation
of which would materially and adversely affect the properties, business or
financial condition of Borrower and its Subsidiaries, taken as a whole; (c)
conduct the business of Borrower substantially as now conducted and proposed to
be conducted; and (d) maintain and preserve substantially all rights, licenses,
privileges, and franchises Borrower now has so as not to materially and
adversely affect the ability of Borrower to perform the obligations of Borrower
under the Loan Documents. Borrower shall be duly licensed or qualified and in
good standing to do business within 30 days of the Effective Date in all
jurisdictions, except the State of Arizona, where failure to qualify would have
an adverse effect upon Borrower. Borrower shall be duly licensed or qualified
and in good standing to do business within 60 days of the Effective Date in the
State of Arizona. As soon as available, Borrower shall provide evidence to
Lender that all publication requirements for the mergers listed in Section
6.1(s) have commenced.
8.2 Maintenance. Maintain, preserve and keep the Property in good repair,
working order and condition and from time to time make all necessary repairs,
renewals, replacements and additions thereto so that at all times the overall
efficiency thereof shall be preserved and maintained.
8.3 Property Insurance. Maintain all risk property damage insurance,
business interruption insurance, comprehensive liability insurance (including
coverage for contractual liability, product liability and workers compensation),
any other insurance that is usual for the business of Borrower and such other
insurance as Lender may from time to time reasonably require. The insurance
obtained in connection with this Section 8.3 shall: (a) be in an amount
reasonably acceptable to Lender; (b) be in a form reasonably acceptable to
Lender; (c) be issued by an insurance company reasonably acceptable to Lender;
and (d) include a lender loss payable endorsement reasonably acceptable to
Lender. In the case of any risk property damage insurance maintained by
Borrower, the amount of the insurance will be the full replacement cost of the
insured Property. Borrower will, upon request of Lender, deliver to Lender a
copy of each insurance policy, or if permitted by Lender, a certificate setting
forth in summary form the nature and extent of the insurance maintained pursuant
to this Section 8.3. In addition, Borrower shall, upon request by Lender, have
an independent appraiser satisfactory to Lender determine, as applicable, the
cash value or replacement cost of the insured Property. The cost of such
appraisals shall be paid by Borrower.
8.4 Collateral Audits; Financial Reports. Maintain a system of accounting
in accordance with GAAP, and permit Lender and the representatives of Lender to
visit and audit, inspect or examine the Property, books, accounts and records of
Borrower upon reasonable notice and during normal business hours and to make
copies and memoranda of the books, accounts and records of Borrower and furnish
to Lender and the duly authorized representatives of Lender such information
respecting the business, financial condition, assets and liabilities
27
(whether absolute or contingent) of Borrower, as Lender may reasonably request.
If any of the foregoing are in the possession of a third party, Borrower hereby
authorize each such third party to grant Lender and the agents or consultants of
Lender access thereto to perform such inspections and to respond to the requests
of Lender for information concerning the foregoing.
Borrower, without any request from Lender, will furnish each of the following to
Lender:
(a) As soon as available and in any event within 45 days after the end
of each of the first three fiscal quarters, a copy of the unaudited financial
statements of Borrower for the preceding quarter, including the balance sheet
and statement of profit and loss of Borrower for such quarter, with supporting
schedules, in form and content reasonably acceptable to Lender and all prepared
and certified on behalf of Borrower by the chief financial officer of Borrower
or an authorized officer thereof acceptable to Lender.
(b) As soon as available, and in any event within 15 days after the
end of each calendar month, (i) a Borrowing Base Certificate (consolidated and
consolidating) effective as of the last day of such calendar month, and (ii) if
not contained in the Borrowing Base Certificate, a certificate setting forth a
detailed accounts receivable aging reconciled to such general ledger, a detailed
accounts payable aging reconciled to such general ledger, the amount of any bank
overdraft, the amount of checks issued but not sent and an inventory outlining
both inventory composition and activity, all for such calendar month and
certified as true and accurate on behalf of Borrower by the chief financial
officer of Borrower or an authorized officer thereof acceptable to Lender.
(c) As soon as available, and in any event within 45 days after the
end of each of the first three fiscal quarters and 90 days after the close of
each fiscal year, a Compliance Certificate, which shall set forth (i) a
computation in reasonable detail of the Excess Cash Flow for such quarter; (ii)
that no Default or Event of Default exists hereunder as of the date of such
certificate, or if such a Default or Event of Default exists, a specification of
the nature thereof; and (iii) a computation in reasonable detail of the
calculation of the financial covenants and ratios set forth in Section 8.13,
Section 8.14, Section 8.15 and Section 8.16.
(d) As soon as available, and in any event within 90 days after the
close of each fiscal year of Borrower, a copy of the audited consolidated and
consolidating financial statements of Borrower for such fiscal year and for the
immediately preceding fiscal year, including balance sheet, statement of profit
and loss and statement of cash flow for such fiscal year and for the previous
fiscal year, all as prepared by independent certified public accountants
selected by Borrower and satisfactory to Lender in its sole and absolute
discretion (the "CPA"), together with any letters or reports to the management
of Borrower by the CPA, which report shall be accompanied by the unqualified
opinion of the CPA to the effect that the statements present fairly, in all
respects, the financial position of Borrower as of the end of such fiscal year
and the results of the operations of Borrower and the cash flows of Borrower for
the fiscal year then ended in conformity with GAAP, except as set forth in the
notes thereto.
(e) As soon as available, and in any event within 90 days after the
end of each fiscal year of Borrower, pro forma financial projections for
Borrower for the next fiscal year, including income statements, balance sheets
and cash flow statements for the next fiscal year,
28
certified by Borrower to be based on information then available and believed by
Borrower to be a reasonable projection of Borrower's financial performance for
the period covered.
(f) As soon as available, and in any event within 60 days after the
Effective Date, a copy of the consolidated financial statements for OneSource
and the Target pursuant to the rules and regulations of the Securities and
Exchange Commission, together with a copy of the report of the Borrower's
independent accountants regarding the same.
(g) As soon as available, and in any event within 60 days after the
Effective Date, a copy of the Inventory Appraisal Report and a Borrowing Base
Certificate reflecting the Eligible Domestic Inventory amount from the Inventory
Appraisal Report.
(h) Such other financial information that Lender may reasonably
request regarding the financial condition of Borrower.
All of the information referred to in this Section 8.4 shall be in a form
reasonably satisfactory to Lender, complete and correct in all material respects
and shall be prepared in reasonable detail and in accordance with GAAP.
8.5 Use of Proceeds. Use all proceeds of the Loans in the manner required
by the Loan Documents including, but not limited to, paying and satisfying in
full the Existing Debt listed on Schedule C-2.
8.6 Perfection of Liens. Perfect and protect the priority of the Liens of
Lender and reimburse Lender for related costs that Lender incurs to perfect and
protect the priority of the Liens of Lender.
8.7 Notices to Lender. Promptly notify Lender in writing of any of the
following: (a) any failure to comply with any Loan Document or any Related
Document; (b) the existence of any Lien against the Property of Borrower, other
than a Permitted Lien; (c) any material adverse change in the financial
condition or operations, as applicable, of Borrower; (d) any change in the name,
legal structure, place of business, residence or chief executive office, as
applicable, of Borrower; (e) any acquisition or purchase of a business or its
assets by Borrower; (f) any acquisition or purchase of any interest in real
property (whether fee or leasehold) by Borrower; (g) any threatened or pending
litigation, governmental proceeding or labor dispute against Borrower which
could have a material adverse affect on Borrower; (h) any notice received by
Borrower with respect to any unpaid taxes, or other governmental assessments or
charges; (i) the occurrence of any Default or Event of Default; (j) any
cancellation or modification of a contract that would materially adversely
affect the financial condition or operations of Borrower and its Subsidiaries,
taken as a whole, and (k) the issuance of additional securities, the
reclassification of any authorized or issued and outstanding stock, or the
redemption of any of its stock by Borrower.
8.8 Notices or Filings. Promptly provide Lender with a copy of any notices
or filings made by Borrower with, or received by Borrower from, any Government
Authority (including the Securities and Exchange Commission or any other
regulatory agency). Borrower shall file its Form 8-K with the Securities and
Exchange Commission within 60 days of the Effective Date.
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8.9 Other Agreements. Perform all obligations and comply with all terms and
conditions of all other material agreements, whether now or hereafter existing,
between Borrower and any other Person, and notify Lender immediately in writing
of any default or event of default in connection with any other such material
agreement, which could materially and adversely affect the properties, business
or financial condition of Borrower.
8.10 Taxes, Charges and Liens. Pay and discharge when due all Indebtedness
and obligations of Borrower, including all assessments, taxes, governmental
charges, levies and Liens, of every kind and nature, imposed upon Borrower or
the Property or income or profits of Borrower, prior to the date on which
penalties would attach, and all lawful claims that, if unpaid, might become a
Lien or charge upon any of the Property or income or profits of Borrower;
provided, however, Borrower will not be required to pay and discharge any such
assessment, tax, charge, ▇▇▇▇, ▇▇▇▇ or claim so long as: (a) the legality of the
same shall be contested in good faith by appropriate proceedings; (b) Borrower
shall have established on the books of Borrower adequate reserves with respect
to such contested assessment, tax, charge, levy, Lien, or claim in accordance
with GAAP; and (c) Lender has not made a determination that the Property is in
danger of foreclosure or loss as a result of such non-payment or failure to
discharge. Borrower, upon demand of Lender, will furnish to Lender evidence of
payment of the assessments, taxes, charges, levies, Liens and claims and will
authorize the appropriate governmental official to deliver to Lender at any time
a written statement of any assessments, taxes, charges, levies, Liens and claims
against the Property or income or profits of Borrower.
8.11 Operations. Conduct the business affairs of Borrower in a reasonable
and prudent manner and in compliance in all material respects with all
applicable federal, state and municipal laws, ordinances, rules and regulations
respecting the Property or the businesses and operations of Borrower, including
the Americans with Disabilities Act and all minimum funding standards and other
requirements of ERISA and other laws applicable to any Plan of Borrower.
8.12 ERISA Plans. Give prompt written notice to Lender of any of the
following: (a) the occurrence of any reportable event under Section 4043(b) of
ERISA for which the PBGC requires a 30 day notice; (b) any action by Borrower to
terminate or withdraw from a Plan or the filing of any notice of intent to
terminate under Section 4041 of ERISA; (c) any notice of noncompliance made or
received under Section 4041(b) of ERISA with respect to a Plan; or (d) the
commencement of any proceeding under Section 4042 of ERISA with respect to a
Plan of Borrower.
8.13 Debt Service Coverage Ratio. Maintain a Debt Service Coverage Ratio of
not greater than 1.30 to 1.00, measured as of the end of each calendar quarter
from the Effective Date until the Loans and any other Obligations of Borrower to
Lender under this Agreement or the other Loan Documents are fully paid and
satisfied. For any calculation of such Debt Service Coverage Ratio that measures
calendar quarters prior to the Effective Date, such calculation shall include
the consolidated accounts of the Target and OneSource for such period.
8.14 Leverage Ratio. Maintain a Leverage Ratio of not greater than 1.50 to
1.00, measured as of the end of each calendar quarter from the Effective Date
until the Loans and any other Obligations of Borrower to Lender under this
Agreement or the other Loan Documents are fully paid and satisfied. For any
calculation of such Leverage Ratio that measures calendar
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quarters prior to the Effective Date, such calculation shall include the
consolidated accounts of the Target and OneSource for such period.
8.15 Quick Ratio. Maintain a Quick Ratio of not less than 0.40 to 1.00,
measured as of the end of each calendar quarter from the Effective Date until
the Loans and any other Obligations of Borrower to Lender under this Agreement
or the other Loan Documents are fully paid and satisfied. For any calculation of
such Quick Ratio that measures calendar quarters prior to the Effective Date,
such calculation shall include the consolidated accounts of the Target and
OneSource for such period.
8.16 Net Worth. After the Effective Date until the end of the first
calendar quarter after the Effective Date, maintain a minimum Net Worth of not
less than (i) the greater of (a) $300,000 or (b) the actual Net Worth calculated
pursuant to the amounts contained in the pro forma balance sheet contained in
the Borrower's Form 8-K filed with the Securities and Exchange Commission
pursuant to Section 8.8 and delivered to the Lender pursuant to Section 8.4(g),
less (ii) $100,000. Thereafter, for each subsequent calendar quarter measured as
of the end of each such calendar quarter, Borrower shall maintain, during the
relevant calendar quarter, a minimum Net Worth of not less than the Net Worth
determined as of the end of the previous calendar quarter increased by (a)
Borrower's Net Income (with no reduction for losses) for such previous calendar
quarter less (b) federal and state income taxes payable with respect to the Net
Income for such previous calendar quarter.
8.17 Banking Relationships. Maintain the primary banking relationships of
Borrower, and any Subsidiary, (including all operating, deposit, payroll and
other cash accounts other than ▇▇▇▇▇ cash accounts) with Lender.
8.18 Real Property. Contemporaneously with the acquisition of any fee
interest in real property, provide Lender with an executed and recordable deed
of trust or mortgage related to such real property and in favor of Lender, in
form and substance satisfactory to Lender in its sole and absolute discretion.
Prior to the acquisition of any leasehold interest in real property (or any
substitute leasehold interest), Borrower shall obtain Lender's written consent
thereto, which consent Lender may withhold or condition in its sole and absolute
discretion. Prior to the acquisition of such leasehold interest, Borrower shall
provide Lender, if Lender so requests, with (i) an executed deed of trust with
respect to such leasehold interest, and (ii) a Landlord Consent executed by the
landlord of the subject real property. Borrower will promptly update the
information on the attached Exhibit E if the information changes (including the
entering into any renewal, extension or replacement of existing Leases and any
additional Leases by any Borrower).
8.19 Intellectual Property. Within 30 days after the Effective Date, take
all action necessary to preserve and perfect the Lien of Lender in the
Trademarks/names, Copyrights and Patents and any other intellectual property of
Borrower. The actions of Borrower shall include appropriate filings with the
United States Patent and Trademark Office. At such time as any Borrower acquires
any additional federal registrations to Trademarks/names, Copyrights and
Patents, Borrower will immediately notify Lender of such acquisition, and
Borrower shall cooperate with Lender to perfect the security interest of Lender
in such rights.
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8.20 Additional Assurances. Take any action reasonably requested by Lender to
carry out the intent of the Loan Documents and the Related Documents, including
the execution and delivery to Lender of all notes, mortgages, deeds of trust,
security agreements, financing statements, amendments to financing statements,
instruments, documents and other agreements as Lender may reasonably request to
evidence and secure the Loans and to perfect and protect all security interests
and Liens of Lender.
8.21 Recovery of Additional Costs. If the imposition of or any change in
any law, rule, regulation or guideline, or the interpretation or application of
any thereof by any court or administrative or Government Authority (including
any request or policy not having the force of law) shall impose, modify or make
applicable any taxes (except U.S. federal, state or local income or franchise
taxes imposed on Lender), reserve requirements, capital adequacy requirements or
other obligations which would: (a) increase the cost to Lender for extending or
maintaining the credit facilities to which the Loan Documents and the Related
Documents relate; (b) reduce the amounts payable to Lender under the Loan
Documents and the Related Documents; or (c) reduce the rate of return on the
capital of Lender as a consequence of the obligations of Lender with respect to
the credit facilities to which the Loan Documents and the Related Documents
relate; then, Borrower shall pay Lender such additional amounts as will
compensate Lender therefor, within 5 days after written demand by Lender for
such payment, which demand shall be accompanied by an explanation of such
imposition or charge and a calculation in reasonable detail of the additional
amounts payable by Borrower, which explanation and calculations shall be
conclusive in the absence of manifest error.
8.22 Books and Records. Cause Borrower's books and records to be maintained
at such Borrower's office address listed on Exhibit N attached hereto. Borrower
shall maintain its offices at the address stated in Exhibit N attached hereto or
such other place as Lender may consent in writing.
8.23 Net Proceeds of Sales. Cause 100% of all proceeds (net of escrow fees
and other closing costs reasonably acceptable to Lender, accrued taxes and
attorney's fees) from any sale or transfer of Borrower's fixed assets, including
real estate, to be used to prepay the Loans in a manner as determined by Lender
in its sole and absolute discretion.
8.24 Creation of Subsidiaries. (i) Deliver to Lender at least 10 days'
prior written notice of Borrower's creation, establishment or acquisition of any
Subsidiary, and (ii) upon Lender's request, promptly and diligently (and in any
event within such reasonable time as may be required by Lender) take all actions
necessary or required by Lender to cause such Subsidiary to become obligated to
pay and perform the Obligations jointly and severally with Borrower.
8.25 Title. Borrower shall maintain good and marketable fee simple title to
the Property, free and clear of all claims, liens, encumbrances, charges and
other exceptions to title, except the Permitted Liens. Lender shall have a valid
first lien upon and security interest in such Property, pursuant to the UCC-1
financing statements.
8.26 Appraisal. Borrower shall cooperate with any appraiser making an
appraisal of Borrower's Property on behalf of Lender. Borrower shall deliver the
Inventory Appraisal Report to Lender within 60 days of the Effective Date and
Borrower shall pay the cost of such appraisal.
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8.27 Additional Notices to Lender. Borrower shall give Lender 45 days'
prior written notice of any change: (i) in the location of any of the facilities
of Borrower described in Section 8.22; (ii) in the location of the collateral
securing Borrower's obligations to Lender pursuant to this Agreement, the other
Loan Documents and the Related Documents, including, without limitation, the
books and records of Borrower; or (iii) of the names under which it does
business.
8.28 Termination Statements and Releases. Within ten (10) days after the
Effective Date, Borrower shall cause all Liens and security interests related to
Existing Debt to be released and shall submit to Lender copies of all
instruments as are necessary to release any and all such Liens and security
interests in the Collateral.
SECTION 9
NEGATIVE COVENANTS
Except with the written consent of Lender, from and after the Effective
Date and until all of the liabilities and obligations of Borrower to Lender
pursuant to the Loan Documents are repaid and performed in full, Borrower shall
not directly or indirectly:
9.1 Sale of Assets; Consolidation; Equity; Merger. (a) Sell, transfer,
lease, otherwise dispose of, mortgage, assign, pledge, grant a security interest
in, or otherwise encumber any of the Property, other than in ordinary course of
Borrower's business or by Permitted Liens; provided, however, that as long as
Borrower receives reasonably equivalent value in return Borrower is permitted to
(i) sell, transfer, lease or otherwise dispose of assets that are obsolete and
worn out or which are no longer necessary for the operation of the business of
Borrower; (b) enter into any agreement, directly or indirectly, to sell or
transfer any property, real or personal, used in the business of Borrower, and
thereafter lease such property or other property which Borrower intends to use
for substantially the same purposes; (c) cease operations, liquidate or
dissolve; (d) consolidate, merge, joint venture or combine with or into any
other Person or acquire or enter into any agreement to acquire any business or
its assets.
9.2 Loans, Acquisitions and Guaranties. (a) Without Lender's prior written
consent, which consent may be withheld in Lender's sole and absolute discretion,
loan, invest in or advance money or assets to any other Person or purchase or
acquire any interest in, or assets of, any other Person other than a Subsidiary
or Borrower; or (b) incur any obligation as surety or guarantor except for such
surety obligations incurred in the ordinary course of operations of Borrower'
businesses in amounts not to exceed in the aggregate at any one time of
$100,000.
9.3 Other Indebtedness. Incur, create, assume, guarantee or otherwise
become primarily or secondarily liable for, or absolutely or contingently liable
for, or permit to exist, any Indebtedness without the prior written consent of
Lender, other than (a) Indebtedness to Lender; (b) the Indebtedness evidenced by
the Subordinated Notes; (c) any Capital Leases incurred by Borrower in the
ordinary course of business in connection with the lease of inventory or
equipment which, together with the Indebtedness described in clauses (d) through
(e) of this Section 9.3, does not exceed $100,000 in the aggregate for Borrower
at any given time; (d) any purchase money indebtedness of Borrower incurred by
Borrower in the ordinary course of business in connection with the purchase of
inventory or equipment which, together with the
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Indebtedness described in clause (c) and clause (e) of this Section 9.3, does
not exceed $100,000 in the aggregate for Borrower at any given time; and (e)
normal, unsecured trade payables incurred by Borrower in the ordinary course of
business which, together with the Indebtedness described in clauses (c) through
(d) of this Section 9.3, does not exceed $100,000 in the aggregate for Borrower
at any given time.
9.4 Change in Ownership Control. Issue any additional securities not
outstanding on the Effective Date or make or enter into or permit any
transaction, including any redemption or classification of stock or any other
reorganization of Borrower, that could effectively transfer the power to (i)
elect or remove members of Borrower's board of directors, or (ii) otherwise
control or direct the policies and procedures of Borrower.
9.5 Other Liens. Create or permit to be created or allow to exist any Lien
on any Property now owned or hereafter acquired by Borrower, except Permitted
Liens.
9.6 Distributions. Until the Loans and all Obligations have been paid,
performed and satisfied in full, pay any dividend (other than a stock split
effected by way of a non-cash stock dividend), make any capital contributions to
any Person, other than a Subsidiary, pay any management or guaranty fees, except
for any fees paid by Borrower to Partner Resource Management, LLC pursuant to
the Professional Services Agreement, dated as of October 1, 2004, by and between
Partners Resource Management, LLC and Borrower (provided that such agreement
shall not be amended without the prior written consent of Lender, which consent
shall not be unreasonably withheld or delayed), or permit any distributions of
any kind (other than distributions of stock).
9.7 Compliance with ERISA. (a) Terminate any Plan so as to result in any
liability to PBGC; (b) engage in any "prohibited transaction" (as defined in
Section 4975 of the Code) involving any Plan which would result in a liability
for an excise tax or civil penalty in connection therewith; or (c) incur or
suffer to exist any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, involving any condition, which presents a risk
of incurring a liability to PBGC by reason of termination of any such Plan. 9.8
Change of Fiscal Year. Change its fiscal year.
9.9 Change Name, Office or Place of Business. Change the name, chief
executive office or the place of business of Borrower.
9.10 Change or Suspension of Business. Change the nature of the business
conducted by Borrower as of the Effective Date, or voluntarily suspend (other
than for not to exceed 10 consecutive Business Days in the ordinary course of
business for taking or replenishing inventory, retooling or installing equipment
or permitting employees to take regularly scheduled vacations) the business of
Borrower for more than 5 consecutive Business Days in any fiscal year, unless a
longer suspension is reasonable as the result of any fire, flood or other act of
God, act of public enemy, riot, act of terrorism, war, insurrection or
governmental regulation of the sale or transportation of materials, supplies or
labor.
9.11 Changes to or New Leases. Agree to amend any Lease or enter into a new
Lease without the prior written consent of Lender.
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9.12 Compensation. From and after the occurrence of an Event of Default
increase the amount of any compensation payable to the management of Borrower
above the amount payable immediately prior to the occurrence of the Event of
Default.
9.13 Payment on or Modification of Subordinated Debt. Not make or
accelerate any payment under any Subordinated Note except as expressly permitted
by the terms of the applicable Subordination and Intercreditor Agreement, or
amend or modify any provision of any Subordinated Note; provided that prior to
the date that is the anniversary of the Effective Date, if there is any amount
outstanding under Facility B, (a) no payment of principal under any Subordinated
Note may be made and (b) regularly scheduled monthly payments of interest under
any Subordinated Note may only be made so long as no Default or Event of Default
has occurred. If there is any amount outstanding under Facility B, payments of
principal under any Subordinated Note may be made in accordance with the
applicable Subordination and Intercreditor Agreement after the date that is the
anniversary date of the Effective Date only if no Default or Event of Default
has occurred and is continuing or will occur as a result of such payment.
9.14 ▇▇▇▇ ▇▇▇▇ Obligations. Until the Loans and all Obligations have been
paid, performed and satisfied in full, make any payment or accrue any interest
on any Indebtedness existing as of the Effective Date and owed to the
individual, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, listed in that certain Order to Cease and Desist,
Order of Restitution, Order for Administrative Penalties and Consent to Same,
dated February 26, 2003, or any of his Affiliates. Borrower shall immediately
provide written notice to Lender upon any payment on the Indebtedness described
in the previous sentence.
SECTION 10
DEFAULT AND REMEDIES
10.1 Events of Default. Each of the following shall constitute an "Event of
Default":
(a) Payment Default. The failure of Borrower to make any payment of
principal, interest or other amount due under any of the Loan Documents or
Related Documents within 15 days of the date due.
(b) Insurance and Good Standing. The failure of Borrower to comply
with any obligation or covenant contained herein to maintain insurance and such
failure is not cured within 30 days of such failure, or the failure of Borrower
remain in good standing under the laws of the state in which Borrower is
incorporated.
(c) Other Defaults. Other than the Events of Default listed in any
subparagraph other than this Section 10.1(c), the failure of Borrower to comply
with any term, obligation, covenant or condition contained in the Loan Documents
or the Related Documents, or the failure of Borrower to comply with any other
term, obligation, covenant or condition contained in any other agreement between
Lender (or an Affiliate of Lender) and Borrower, if such failure is not cured
within the applicable cure period, if any, or within 15 days after such failure,
whichever is less.
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(d) False Statement. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower under the Loan Documents or the
Related Documents or in any financial statement delivered to Lender pursuant to
the Loan Documents or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished.
(e) Defective Collateralization. Any Loan Document or Related Document
ceases to be in full force and effect at any time and for any reason, including
the failure of any applicable Loan Document or Related Document to create a
valid and perfected first-priority security interest or Lien as contemplated
therein, except for Liens described in clause (e) or clause (f) of the
definition of Permitted Liens.
(f) Voluntary Bankruptcy and Insolvency. Borrower becomes insolvent,
or makes a transfer in fraud of creditors, or makes an assignment for the
benefit of creditors, or admits in writing its inability to pay its debts as
they become due, or dissolves or terminates its existence as a going business.
(g) Involuntary Bankruptcy. The appointment of a receiver for any part
of the property of Borrower, or the commencement of any proceeding under any
bankruptcy or insolvency laws against Borrower and such proceeding is not
terminated within 90 days of its commencement.
(h) Creditor Proceedings. Commencement of foreclosure, whether by
judicial proceeding, self-help, repossession or any other method, by any
creditor of Borrower other than Lender against any collateral securing the
Loans, and such foreclosure proceeding is not terminated within 30 days of its
commencement, unless Borrower is contesting such action in good faith and has
provided Lender a bond or other security of such amount and subject to such
conditions as are reasonably satisfactory to Lender. This includes a
garnishment, attachment or levy on or of any of any deposit accounts of Borrower
that are maintained with Lender.
(i) Government Action. Any Government Authority takes action that
Lender reasonably believes will materially adversely affect the financial
condition or ability of Borrower to repay the Loans, if not cured by Borrower to
the satisfaction of Lender within 15 days after delivery by Lender to Borrower
of written notice of such action.
(j) Judgments. A final judgment or arbitration award shall be entered
against Borrower, or Borrower enters into any settlement agreement with respect
to any litigation or arbitration, which, when added to other final judgments or
arbitration awards against Borrower, or settlement agreements with respect to
any litigation or arbitration, exceed at any one time the aggregate amount of
$100,000, except with respect to final judgments only after the expiration of
any appeal rights provided that Borrower is in good faith contesting the final
judgment and has posted any requisite appeal bond to prevent any foreclosure,
seizure or attachment of such Borrower's assets.
(k) Adverse Change. A material adverse change as determined by Lender
occurs in the financial condition of Borrower (including, but not limited to, a
material adverse change as determined by the Lender in the financial condition
of Borrower based on consolidated
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pro forma financial statements of Target and OneSource submitted to Lender) or
the prospects or ability of Borrower to repay the Loans or otherwise perform the
obligations of Borrower under the Loan Documents, and such material adverse
change is not cured to the satisfaction of Lender within 15 days after delivery
by Lender to Borrower of written notice of such material adverse change.
(l) Cross-Default. Any default or event of default that creates or
involves any obligation of Borrower in excess of $100,000 that occurs under any
agreement, lease, commitment, contract or instrument executed by Borrower or by
which it is bound and subject to any applicable notice or cure periods provided
therein.
(m) Other Loan Document Events of Default. An Event of Default occurs
under and as defined in the respective Loan Documents or Related Documents other
than this Agreement.
(n) Deficient Inventory. The amount of Eligible Domestic Inventory (i)
reported in the applicable Borrowing Base Certificate submitted to Lender
pursuant to Section 8.4(g), (ii) as determined by Lender from the Form 8-K of
Borrower submitted to Lender pursuant to Section 8.4(f) or (iii) reported in the
Inventory Appraisal Report submitted to Lender pursuant to Section 8.4(g) is
below $3,500,000.
(o) Payment on ▇▇▇▇ Note. Borrower breaches its covenant contained in
Section 9.14 hereof.
10.2 Remedies Upon Event of Default.
(a) Upon the occurrence of an Event of Default (unless expressly
waived in writing by Lender), then, at the option of Lender, without
presentment, notice, notice of dishonor, demand, protest or action of any kind
by Lender, all of which are hereby waived, except as specifically provided
herein: (i) the Facility A Commitment and the obligation of Lender to make
Facility A Advances, and the Facility B Commitment and the obligation of Lender
to fund the Facility B Advance shall all immediately terminate; and (ii) the
entire amount of the Obligations shall become immediately due and payable. In
the case of an Event of Default of the type described in Section 10.1(f) and
Section 10.1(g), such acceleration shall be automatic and not optional.
(b) Upon the occurrence of an Event of Default, Lender may apply any
or all payments received hereunder towards any or all of the Obligations in such
order as Lender in its sole and absolute discretion deems appropriate.
(c) In the event of a continuing Default, Lender will be entitled to
receive and Borrower shall remit to Lender 100% of any equity contributions
received by Borrower after such Default until such Default is cured or waived in
writing by Lender.
(d) No remedy herein conferred upon Lender is intended to be exclusive
of any other remedy and each and every such remedy shall be cumulative and may
be exercised singularly or concurrently and shall be in addition to every other
remedy given hereunder, under the Loan Documents or now or hereafter existing at
law or in equity or by statute or otherwise.
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SECTION 11
ENVIRONMENTAL
11.1 Indemnity Regarding Hazardous Substances. Borrower hereby indemnifies
and holds the Indemnified Parties harmless for, from and against any and all
Indemnified Costs incurred by Indemnified Parties and directly or indirectly
arising out of or resulting from any Hazardous Substance being present or
released in, on or around any part of any real property that is now or hereafter
owned or occupied by Borrower, or in the soil, groundwater or soil vapor on or
under the real property, including:
(a) Any claim for such Indemnified Costs asserted by any federal,
state or local Government Authority, including the United States Environmental
Protection Agency and any other state or local Government Authority, and
including any claim that any Indemnified Party is liable for any such
Indemnified Costs as an "owner" or "operator" of the real property under any law
relating to Hazardous Substances;
(b) Any such Indemnified Costs claimed against any Indemnified Party
by any Person other than a Government Authority, including any Person who may
purchase or lease all or any portion of the real property from Borrower, from
any Indemnified Party, or from any other purchaser or lessee; any Person who may
at any time have any interest in all or any portion of such real property; any
Person who may at any time be responsible for any clean-up costs or other
Indemnified Costs relating to the real property; and any Person claiming to have
been injured in any way as a result of exposure to any Hazardous Substance;
(c) Any such Indemnified Costs which any Indemnified Party reasonably
believes at any time must be incurred to comply with any law, judgment, order,
regulation or regulatory directive relating to Hazardous Substances, or which
any Indemnified Party reasonably believes at any time must be incurred to
protect the real property or any Indemnified Party from any liability or loss;
and
(d) Any such Indemnified Costs resulting from currently existing
conditions in, on or around the real property, whether known or unknown by
Borrower or the Indemnified Parties at the time this Agreement is executed, and
any such Indemnified Costs resulting from the activities of Borrower, the
lessors/landlords or tenants of Borrower, or any other Person in, on or around
the real property.
11.2 Indemnity Regarding Construction and Other Risks. Borrower hereby
indemnifies and holds the Indemnified Parties harmless for, from and against any
and all Indemnified Costs directly or indirectly arising out of or resulting
from construction of any improvements on the real property, including any
defective workmanship or materials; or any failure to satisfy any requirements
of any laws, regulations, ordinances, governmental policies or standards,
reports, subdivision maps or development agreements that apply or pertain to the
real property; or breach of any representation or warranty made or given by
Borrower to any of the Indemnified Parties or to any prospective or actual buyer
or lessee of all or any portion of the real property; or any claim or cause of
action of any kind by any party that any Indemnified Party is liable for any act
or omission of Borrower or any other Person in connection with the possession,
sublease, operation or development of the real property.
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11.3 Defense of Indemnified Parties. Upon demand by any Indemnified Party,
Borrower shall defend any investigation, action or proceeding involving any
Indemnified Costs which is brought or commenced against any Indemnified Party,
whether alone or together with Borrower or any other Person, all at the
indemnitor's own cost and by counsel reasonably satisfactory to the Indemnified
Party. If (a) an Indemnified Party is advised in an opinion of counsel that
there may be legal defenses available to it that are different from or in
addition to those available to Borrower and Borrower fails to raise such legal
defenses, or (b) Borrower shall, after receiving notice of Borrower's
indemnification obligation and within a period of time necessary to preserve any
and all defenses to any claim asserted, fails to assume the defense or to employ
counsel for that purpose reasonably satisfactory to the Indemnified Party, then
the Indemnified Party shall have the right to conduct its own defense and
Borrower shall be responsible for the reasonable counsel fees, costs and
expenses of the Indemnified Party in conducting its defenses.
11.4 Representation and Warranty Regarding Hazardous Substances. Borrower
represents and warrants to Lender that, based upon Borrower's knowledge after
reasonable inquiry, no Hazardous Substance has been disposed of or released at
the real property in which Borrower holds an interest or conducts its business,
except as to use, generation, manufacture, storage, treatment, disposal or
release of Hazardous Substances that are: (a) generally recognized to be
appropriate to the normal business uses of Borrower; and (b) in compliance with
applicable local, state and federal laws, rules and regulations.
11.5 Compliance Regarding Hazardous Substances. Borrower has complied, and
shall comply and cause all tenants and any other Persons who may come upon the
real property to comply, with all laws, regulations and ordinances governing or
applicable to Hazardous Substances, including those requiring disclosures to
prospective and actual purchasers of an interest in all or any portion of the
real property.
11.6 Notices Regarding Hazardous Substances. Borrower shall promptly notify
Lender if Borrower knows, suspects or believes there may be any Hazardous
Substance in the vicinity of the real property and reasonably likely to affect
the real property, at the real property, or in the soil, groundwater or soil
vapor on or under its real property, or that Borrower or the real property may
be subject to any threatened or pending investigation by any Government
Authority under any law, regulation or ordinance pertaining to any Hazardous
Substance; provided, however, that no such notice is required if the Hazardous
Substance is: (a) generally recognized to be appropriate to the normal business
uses of Borrower; and (b) in compliance with applicable local, state and federal
laws, rules and regulations.
11.7 Site Visits, Observations and Testing. The Indemnified Parties and
their agents and representatives shall have the right during regular business
hours with reasonable prior written notice to Borrower, to enter and visit its
real property for the purposes of observing the real property, taking and
removing soil or groundwater samples, and conducting tests on any part of the
real property. The Indemnified Parties shall have no duty, however, to visit or
observe the real property or to conduct tests, and no site visit, observation or
testing by any Indemnified Party shall impose any liability on any Indemnified
Party. In no event shall any site visit, observation or testing by any
Indemnified Party be a representation that Hazardous Substances are or are not
present in, on or under the real property, or that there has been or shall be
39
compliance with any law, regulation or ordinance pertaining to Hazardous
Substances or any other applicable governmental law. Neither Borrower, nor any
other party, is entitled to rely on any site visit, observation or testing by
any Indemnified Party. The Indemnified Parties owe no duty of care to protect
Borrower or any other party against, or to inform Borrower or any other party
of, any Hazardous Substances or any other adverse condition affecting the real
property. The Indemnified Party shall make reasonable efforts to avoid
interfering with the use of the real property by Borrower in exercising any
rights provided in this Section 11.7.
SECTION 12
MISCELLANEOUS
12.1 Renewals and Extensions. Borrower understands and agrees that Lender
has made no commitment to extend or renew Facility A subsequent to the Facility
A Maturity Date, or to extend or renew Facility B beyond the Facility B Maturity
Date. Any extension or renewal of the Loans shall at all times be subject to the
sole and absolute discretion of Lender.
12.2 Right of Setoff. In addition to all Liens upon, and rights of setoff
against, the monies, securities or other property of Borrower given to Lender by
law, Lender shall have a Lien and a right of setoff against, and Borrower hereby
grants to Lender a security interest in, all monies, securities and other
property of Borrower now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit including any
account or deposit held jointly by Borrower with any other Person (including any
other Borrower), or for safekeeping or otherwise, except to the extent
specifically prohibited by law. Every such Lien, right of setoff and security
interest may be exercised only after the occurrence of a Default or an Event of
Default (unless expressly waived in writing by Lender), but without any
additional demand upon or notice to Borrower. No Lien, right of setoff or
security interest shall be deemed to have been waived by any act or conduct on
the part of Lender, by any neglect to exercise such right of setoff or to
enforce such Lien or security interest, or by any delay in so doing.
12.3 GAAP. Except as otherwise stated in this Agreement, all financial
statements and information provided to Lender and all financial covenants shall
be made under GAAP.
12.4 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial. This
Agreement shall be governed by and construed and enforced in accordance with the
substantive laws (other than conflict laws) of the State of Arizona, except to
the extent Lender has greater rights or remedies under Federal law, in which
case such choice of Arizona law shall not be deemed to deprive Lender of any
such rights and remedies as may be available under Federal law. Each party
consents to the personal jurisdiction and venue of the state courts located in
Maricopa County, Arizona in connection with any controversy related to this
Agreement, waives any argument that venue in any such forum is not convenient
and agrees that, at the option of Lender, any litigation initiated by any of
them in connection with this Agreement may be venued in the Superior Court of
Maricopa County, Arizona. EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO REQUIRE A TRIAL BY JURY IN ANY
COURT ACTION PERTAINING TO THE OBLIGATIONS, THE LOAN DOCUMENTS OR THE RELATED
DOCUMENTS, AND AGREES THAT ANY SUCH ACTIONS OR PROCEEDING SHALL BE TRIED BEFORE
A COURT AND NOT BEFORE A JURY.
40
12.5 Indemnification. Except to the extent arising as the sole result of
the gross negligence or willful or intentional misconduct of the Indemnified
Parties (as determined by a final, non-appealable judgment of a court of
competent jurisdiction), Borrower agrees to indemnify, protect, defend,
reimburse and hold harmless the Indemnified Parties for, from and against any
and all actual or threatened liabilities, claims, actions, causes of actions,
judgments, orders, damages (including foreseeable and unforeseeable
consequential damages), costs, expenses, fines, penalties and losses (including
sums paid in settlement of claims and all consultant, expert and legal fees and
expenses of counsel to the Indemnified Parties) arising out of or resulting from
any: (a) breach of any representation or warranty made or given by Borrower to
any of the Indemnified Parties or to any prospective or actual buyer of all or
any portion of the collateral for the Loans or any breach of any covenant of
Borrower under any of the Loan Documents or Related Documents; or (b) any claim
or cause of action of any kind by any party that any of the Indemnified Parties
are liable for any act or omission of Borrower or any other Person in connection
with the collateral securing the Loans.
12.6 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but such counterparts shall together
constitute but one and the same agreement. Signatures may be given by facsimile
or other electronic transmission, and such signatures shall be fully binding on
the party sending the same.
12.7 Entire Agreement. The Loan Documents, the Related Documents and the
exhibits attached thereto contain the entire agreement and understanding of the
parties with respect to the subject matter hereof, supersede all other prior
understandings, oral or written, with respect to the subject matter hereof, and
are intended by Lender and Borrower as the final, complete and exclusive
statement of the terms agreed to by them.
12.8 Amendments. No amendment, modification, change, waiver, release or
discharge hereof and hereunder shall be effective unless evidenced by an
instrument in writing and signed by the party against whom enforcement is
sought.
12.9 Conflicts; Inconsistency. In the event of any conflict or
inconsistency between the terms and provisions of this Agreement and the terms
and provisions of any of the other Loan Documents or the Related Documents, the
terms and provisions of this Agreement shall control to the extent necessary to
resolve such conflict or inconsistency.
12.10 Additional Sums. All fees, charges, goods, things in action or any
other sums or things of value, other than the interest resulting from the
interest rate charged with respect to the Loans paid or payable by Borrower
(collectively, the "Additional Sums"), whether pursuant to the Loan Documents,
the Related Documents or any other document or instrument in any way pertaining
to this lending transaction, or otherwise with respect to this lending
transaction, that, under the laws of the State of Arizona, may be deemed to be
interest with respect to this lending transaction, for the purpose of any laws
of the State of Arizona that may limit the maximum amount of interest to be
charged with respect to this lending transaction, shall be payable by Borrower
as, and shall be deemed to be, additional interest, and for such purposes only,
the
41
agreed upon and "contracted for rate of interest" of this lending transaction
shall be deemed to be increased by the rate of interest resulting from the
Additional Sums.
12.11 Savings Clause. Borrower understands and believes that this lending
transaction complies with the usury laws of the State of Arizona; however, if
any interest or other charges in connection with this lending transaction are
ever determined to exceed the maximum amount permitted by law, then Borrower
agrees that: (a) the amount of interest or charges payable pursuant to this
lending transaction shall be reduced to the maximum amount permitted by law; and
(b) any excess amount previously collected from Borrower in connection with this
lending transaction that exceeded the maximum amount permitted by law, will be
credited against the principal balance then outstanding hereunder. If the
outstanding principal balance hereunder has been paid in full, the excess amount
paid will be refunded to Borrower.
12.12 Section Headings. The section headings set forth in this Agreement
are for convenience only and shall not have substantive meaning hereunder or be
deemed part of this Agreement.
12.13 Exchange of Information. Borrower agrees that Lender may exchange
financial information about Borrower, its Affiliate or Subsidiaries, if any,
with: (a) any other lender participating in the Loans; (b) the accountants and
attorneys of Lender or any other lender participating in the Loans; (c) any
Government Authority or regulatory agencies; and (d) any other Person, as
required by applicable law.
12.14 Consent to Sale or Transfer of Loan or Loan Participations.
(a) Sale or Transfer of Loans. Borrower agrees and consents to the
sale or transfer by Lender (whether now or later) of all of Lender's rights,
title and interest in the Loan Documents and Related Documents to any other
Person(s) (such Person(s), hereinafter referred to as the "Loan Transferee(s)").
Lender shall exercise reasonable efforts to provide Borrower written notice of
any such sale or transfer, however, failure of Lender to deliver such
notification shall not create any liability or obligation on Lender or
constitute any defense by Borrower to the exercise by Lender of any rights or
remedies under the Loan Documents and the Related Documents. Lender may provide,
without any limitation whatsoever, to the Loan Transferee(s) any information or
knowledge Lender may have about Borrower or any other matter relating to the
Loan Documents and the Related Documents, and Borrower hereby waives any rights
to privacy Borrower may have with respect to such matters. Borrower agrees that,
from and after any such sale or transfer, the Loan Transferee(s) shall be
considered as the absolute owner(s) of the Loan Documents and the Related
Documents and the lender under this Agreement, and shall have all the rights
granted to Lender under this Agreement and may enforce the Obligations
irrespective of any failure or insolvency of Lender.
(b) Sale or Transfer of Loan Participations. Borrower consents and
agrees to the sale or transfer by Lender (whether now or later) of one or more
participation interests in the Loan Documents and the Related Documents to any
other Person(s) (such Person(s) being hereinafter referred to as the "Loan
Participant(s)"). Lender shall exercise reasonable efforts to provide written
notice to Borrower of any such sale or transfer, however, failure of Lender to
deliver such notification shall not create any liability or obligation on Lender
or constitute any
42
defense by Borrower to the exercise by Lender of any rights or remedies under
the Loan Documents and the Related Documents. Lender may provide, without any
limitation whatsoever, to the Loan Participant(s) any information or knowledge
Lender may have about Borrower, its Affiliates and Subsidiaries, if any, or any
other matter relating to the Loan Documents and the Related Documents, and
Borrower hereby waives any rights to privacy Borrower may have with respect to
such matters. Borrower hereby additionally waives any and all notices of sale of
participation interests in the Loan Documents and the Related Documents to the
Loan Participant(s), as well as all notices of any repurchase of such
participation interests. Lender agrees that any sale or transfer of a
participation interest in the Loan Documents and the Related Documents shall be
such that Lender remains the lender under this Agreement with the exclusive
power and authority to enforce the provisions hereof and otherwise deal with
Borrower.
12.15 Payment of Expenses. Borrower agrees to pay all fees, costs and
expenses incurred by Lender in connection with the Loan Documents and the
Related Documents, including the attorneys' fees and costs incurred by Lender in
connection with the preparation of the Loan Documents and the Related Documents,
and all other fees of Lender, including the costs of conducting audits,
inspections or examinations of the collateral for the Loans, appraisal fees,
environmental fees, premiums for title insurance policies and endorsements, and
filing, recording and search fees. Whenever Borrower is obligated to pay or
reimburse Lender for any attorneys' fees, those fees shall include the allocated
costs for services of in-house counsel. Borrower shall not be obligated to pay
an amount in excess of $75,000 for the fees, costs and expenses, including
attorney's fees and costs, incurred in connection with the preparation of the
Loan Documents and the Related Documents to be delivered on the Effective Date.
Such limitation on fees, costs and expenses shall not include fees, costs and
expenses incurred by Lender in connection with the Loan Documents and Related
Documents after the Effective Date.
12.16 Costs of Collection. Borrower agrees to pay all costs of collection,
including attorneys' fees, whether or not suit is filed, and all costs of suit
and preparation for suit (whether at trial or appellate level), in the event any
payment of principal, interest or other amount under the Loan Documents or the
Related Documents is not paid when due, or in case it becomes necessary to
protect the collateral which is security for the Loans, or to exercise any other
right or remedy hereunder or in the Loan Documents or the Related Documents, or
in the event Lender is made party to any litigation because of the existence of
the Obligations, or if at any time Lender should incur any attorneys' fees in
any proceeding under any federal bankruptcy law (or any similar state or federal
law) in connection with the Obligations. In the event of any court proceeding,
attorneys' fees shall be set by the court and not by the jury and shall be
included in any judgment obtained by Lender.
12.17 Bankruptcy. In the event of the commencement of a bankruptcy case by
or against Borrower or involving any of the collateral under the Loan Documents
or the Related Documents, Lender, to the extent not already provided for herein,
shall be entitled to recover, and Borrower shall be obligated to pay, the
attorneys' fees and costs of Lender incurred in connection with: (a) any
determination of the applicability of the bankruptcy laws to the terms of the
Loan Documents or the Related Documents or the rights of Lender thereunder; (b)
any attempt by Lender to enforce or preserve its rights under the bankruptcy
laws, or to prevent Borrower or any other person from seeking to deny Lender its
rights thereunder; (c) any effort by
43
Lender to protect, preserve, or enforce its rights against the collateral under
the Loan Documents and the Related Documents, or seeking authority to modify the
automatic stay of 11 U.S.C. ss. 362 or otherwise seeking to engage in such
protection, preservation or enforcement; or (d) any civil proceeding(s) arising
under the bankruptcy laws, or arising in or related to a case under the
bankruptcy laws.
12.18 Notices. Any notice or other communication with respect to this
Agreement shall: (a) be in writing; (b) be effective on the day of hand-delivery
thereof to the party to whom directed, one Business Day following the day of
deposit thereof with delivery charges prepaid, with a national overnight
delivery service, or three Business Days following the day of deposit thereof
with postage prepaid, with the United States Postal Service, by regular first
class, certified or registered mail; (c) if directed to Lender, be addressed to
Lender at the office of Lender set forth below the signature of Lender, or to
such other address as Lender shall have specified to Borrower by like notice,
with a copy to Comerica Bank, ▇▇▇▇▇▇ Dodge Towers, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇, Vice President, and to Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: K. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.; and
(d) if directed to Borrower, be addressed to Borrower at the address for
Borrower set forth below the signatures of Borrower, or to such other address as
Borrower shall have specified to Lender by like notice, with a copy to ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
12.19 Severability. If any provision of the Loan Documents or the Related
Documents is invalid or unenforceable, the other provisions of the Loan
Documents and the Related Documents shall remain in full force and effect and
shall be liberally construed in favor of Lender in order to effectuate the other
provisions of the Loan Documents and the Related Documents.
12.20 No Transfer by Borrower. Borrower shall not transfer or assign any of
the rights or obligations of Borrower under the Loan Documents or the Related
Documents without the prior written consent of Lender, which may be given or
withheld by Lender in its sole and absolute discretion.
12.21 Binding Nature. Subject to the restrictions in Section 12.20, the
provisions of the Loan Documents and the Related Documents shall be binding upon
Borrower and the successors and assigns of Borrower, and shall inure to the
benefit of Lender and the successors and assigns of Lender.
12.22 Survival. All indemnities, warranties, representations and covenants
made by Borrower in the Loan Documents and the Related Documents shall be
considered to have been relied upon by Lender and will survive the making and
repayment of the Obligations, delivery to Lender of the Loan Documents and the
Related Documents and the termination of each of the Loans, regardless of any
investigation made by Lender or on behalf of Lender.
12.23 Time of Essence. Time is of the essence of the Loan Documents and the
Related Documents and each and every provision of the Loan Documents and the
Related Documents.
44
12.24 Waiver. Lender shall not be deemed to have waived any rights under
the Loan Documents and the Related Documents unless such waiver is given in
writing and signed by Lender. No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or any other right.
A waiver by Lender of a provision of the Loan Documents or the Related Documents
shall not prejudice or constitute a waiver of the right of Lender otherwise to
demand strict compliance with that provision or any other provision of the Loan
Documents and the Related Documents. Lender retains all rights even if Lender
makes any Advance after a Default. No prior waiver by Lender, nor any course of
dealing between Lender and Borrower, shall constitute a waiver of any of the
rights of Lender or of any obligations of Borrower as to any future incident or
circumstance. Whenever the consent of Lender is required under the Loan
Documents or the Related Documents, the granting of such consent by Lender in
any instance shall not constitute continuing consent in subsequent instances
where such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender. Lender may renew, extend or modify
the Loan Documents and the Related Documents or release any party or guarantor
or collateral under the Loan Documents or the Related Documents; impair, fail to
realize upon or perfect the security interest of Lender in the collateral under
the Loan Documents and the Related Documents; and take any other action deemed
necessary by Lender without the consent of or notice to anyone and without
releasing any such party from liability.
12.25 Construction. The Loan Documents and the Related Documents shall be
construed as a whole, in accordance with their fair meaning, and without regard
to or taking in to account any presumption or other rule of law requiring
construction against the party preparing the Loan Documents and the Related
Documents.
[SIGNATURE PAGE ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ONESOURCE TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Title: CEO
-------------------------
Address of Borrower:
▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
N-1
COMERICA BANK
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
Address of Lender:
Comerica Bank
▇▇▇▇▇▇ Dodge Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
N-2