Exhibit 2
[LOGO] NEWSTAR BUSINESS CREDIT
LOAN AND SECURITY AGREEMENT
by and between
HUNTLEIGH USA CORPORATION
as Borrower,
NEWSTAR BUSINESS CREDIT, LLC,
as Administrative Agent
and
THE LENDERS FROM TIME TO TIME PARTY HERETO
Dated as of May 25, 2011
Table of Contents
ARTICLE I DEFINITIONS......................................................1
Section 1.1. Definitions.................................................1
Section 1.2. Interpretive Provisions....................................12
ARTICLE II REVOLVING LOANS.................................................13
Section 2.1. Revolving Loans............................................13
Section 2.2. Request for Revolving Loans................................13
Section 2.3. Deemed Request for Revolving Loans.........................16
Section 2.4. Protective Advances........................................16
Section 2.5. Settlement.................................................16
ARTICLE III INTEREST, FEES, REIMBURSEMENTS..................................17
Section 3.1. Interest...................................................17
Section 3.2. Fees.......................................................17
Section 3.3. Increased Cost and Reduced Return..........................18
Section 3.4. Illegality.................................................18
Section 3.5. Compensation...............................................18
Section 3.6. Taxes......................................................18
Section 3.7. Maximum Interest; Controlling Limitation...................19
ARTICLE IV PAYMENT.........................................................20
Section 4.1. Interest...................................................20
Section 4.2. Revolving Loans............................................20
Section 4.3. Mandatory Payments on Termination Date.....................20
Section 4.4. Mandatory Prepayment in Respect of Certain Events..........21
Section 4.5. Reserved...................................................21
Section 4.6. General Payment Provisions.................................21
Section 4.7. Application................................................21
Section 4.8. Reinstatement..............................................21
Section 4.9. Account Stated.............................................22
ARTICLE V COLLATERAL......................................................22
Section 5.1. Security Interest..........................................22
Section 5.2. Perfection and Protection of Administrative Agent's
Security Interest.........................................22
Section 5.3. Collateral Proceeds Management.............................22
Section 5.4. Examinations; Inspections; Verifications...................23
Section 5.5. Appraisals.................................................23
Section 5.6. Right to Cure..............................................23
Section 5.7. Power of Attorney..........................................24
Section 5.8. Preservation of Administrative Agent's Rights..............24
Section 5.9. Letter of Credit...........................................25
ARTICLE VI CONDITIONS......................................................25
Section 6.1. Conditions Precedent to Initial Loan.......................25
Section 6.2. Conditions Precedent to all Loans..........................27
ARTICLE VII REPRESENTATIONS AND WARRANTIES..................................27
Section 7.1. Fundamental Information....................................27
Section 7.2. Prior Transactions.........................................28
Section 7.3. Subsidiaries...............................................28
Section 7.4. Authorization, Validity and Enforceability.................28
Section 7.5. Noncontravention...........................................28
Section 7.6. Financial Statements and Projections.......................28
Section 7.7. Litigation.................................................28
Section 7.8. ERISA and Employee Benefit Plans...........................28
Section 7.9. Compliance with Laws.......................................29
Section 7.10. Taxes......................................................29
Section 7.11. Location of Collateral and Books and Records...............29
Section 7.12. Accounts...................................................29
Section 7.13. Inventory..................................................29
Section 7.14. Documents, Instruments, and Chattel Paper..................29
Section 7.15. Proprietary Rights.........................................29
Section 7.16. Investment Property........................................29
Section 7.17. Reserved...................................................29
Section 7.18. Material Agreements........................................30
Section 7.19. Bank Accounts..............................................30
Section 7.20. Title to Property..........................................30
Section 7.21. Debt.......................................................30
Section 7.22. Liens......................................................30
Section 7.23. Solvency...................................................30
Section 7.24. Non-Regulated Entities.....................................30
Section 7.25. Governmental Authorization.................................30
Section 7.26. Investment Banking or Finder's Fees........................30
Section 7.27. Full Disclosure............................................30
Section 7.28. Other Obligations and Restrictions.........................30
Section 7.29. Acts of God and Labor Disputes.............................31
Section 7.30. Environmental and Other Laws...............................31
Section 7.31. Subsidiaries...............................................31
Section 7.32. Security Interests.........................................31
Section 7.33. Continuing Representations.................................31
ARTICLE VIII AFFIRMATIVE COVENANTS...........................................32
Section 8.1. Existence and Good Standing................................32
Section 8.2. Compliance with Agreements and Laws........................32
Section 8.3. Books and Records..........................................32
Section 8.4. Financial Reporting........................................32
Section 8.5. Collateral Reporting.......................................33
Section 8.6. Compliance Certificate.....................................34
Section 8.7. Notification to Administrative Agent.......................35
Section 8.8. Accounts...................................................35
ii
Section 8.9. Control of Deposit Accounts................................35
Section 8.10. Reserved...................................................35
Section 8.11. Insurance..................................................35
Section 8.12. Payment of Trade Liabilities, Taxes, Etc...................36
Section 8.13. Performance on Borrower's Behalf...........................36
Section 8.14. Evidence of Compliance.....................................36
Section 8.15. Environmental Matters; Environmental Reviews...............36
Section 8.16. Change of Name, Location, Jurisdiction of Incorporation
or Organization, or Structure; Additional Filings..........37
Section 8.17. Further Assurances.........................................37
Section 8.18. Proprietary Rights.........................................37
Section 8.19. Reserved...................................................37
ARTICLE IX NEGATIVE COVENANTS..............................................37
Section 9.1. Fundamental Changes........................................37
Section 9.2. Collateral Locations.......................................37
Section 9.3. Use of Proceeds............................................37
Section 9.4. Business...................................................38
Section 9.5. Debt.......................................................38
Section 9.6. Guaranties.................................................38
Section 9.7. Liens......................................................38
Section 9.8. Disposition of Property....................................38
Section 9.9. Sale and Leaseback.........................................38
Section 9.10. Distributions; Capital Contribution; Redemption............39
Section 9.11. Restricted Investments.....................................39
Section 9.12. Reserved...................................................39
Section 9.13. Transactions with Affiliates...............................39
Section 9.14. New Subsidiaries...........................................39
Section 9.15. Financial Covenants........................................39
Section 9.16. Fiscal Year................................................40
Section 9.17. Impairment of Security Interest............................40
Section 9.18. Limitation on Credit Extensions............................40
Section 9.19. Prohibited Contracts.......................................40
Section 9.20. IRS Form 8821..............................................40
ARTICLE X EVENT OF DEFAULT................................................41
Section 10.1. Event of Default...........................................41
ARTICLE XI RIGHTS AND REMEDIES.............................................42
Section 11.1. Obligations................................................42
Section 11.2. Collateral.................................................43
Section 11.3. Injunctive Relief..........................................43
Section 11.4. Setoff.....................................................44
ARTICLE XII TERM AND TERMINATION............................................44
Section 12.1. Term and Termination.......................................44
iii
ARTICLE XIII ADMINISTRATIVE AGENT............................................44
Section 13.1. Appointment and Authority..................................44
Section 13.2. Exculpatory Provisions.....................................44
Section 13.3. Reliance by Administrative Agent...........................45
Section 13.4. Non-Reliance on Administrative Agent and other Lenders.....45
Section 13.5. Rights as a Lender.........................................45
Section 13.6. Sharing of Set-Offs and Other Payments.....................46
Section 13.7. Investments................................................46
Section 13.8. Resignation of Administrative Agent........................46
Section 13.9. Delegation of Duties.......................................47
Section 13.10. Collateral Matters.........................................47
Section 13.11. Agency for Perfection......................................48
Section 13.12. Concerning the Collateral and Related Loan Documents.......48
ARTICLE XIV MISCELLANEOUS...................................................48
Section 14.1. Waivers & Amendments.......................................48
Section 14.2. Severability...............................................48
Section 14.3. Governing Law; Venue.......................................49
Section 14.4. Waiver of Jury Trial.......................................49
Section 14.5. Fees and Expenses..........................................49
Section 14.6. Notices....................................................50
Section 14.7. Waiver of Notices..........................................50
Section 14.8. Non-applicability of Chapter 15 of Texas Credit Code.......51
Section 14.9. Binding Effect.............................................51
Section 14.10. Indemnity of Lenders and Administrative Agent by Borrower..51
Section 14.11. Limitation of Liability....................................51
Section 14.12. Continuing Rights of Lenders in Respect of Obligations.....51
Section 14.13. Assignments................................................51
Section 14.14. Confidentiality............................................52
Section 14.15. Acceptance and Performance.................................52
Section 14.16. Schedules..................................................52
Section 14.17. Counterparts...............................................52
Section 14.18. Captions...................................................52
Section 14.19. Partial Release of Letter of Credit........................52
iv
SCHEDULES
Schedule 1.1 - Lenders' Commitments
Schedule 3.1 - Commercial Tort Claims
Schedule 7.1 - Fundamental Information
Schedule 7.3 - Subsidiaries
Schedule 7.7 - Litigation
Schedule 7.10 - Taxes
Schedule 7.11 - Location of Collateral
Schedule 7.15 - Proprietary Rights
Schedule 7.16 - Investment Property
Schedule 7.18 - Material Agreements
Schedule 7.19 - Bank Accounts
Schedule 7.20 - Disclosures in Respect of Third Party Licenses, Etc.
Schedule 7.21 - Debt
Schedule 7.22 - Liens
Schedule 7.30 - Release of Hazardous Materials
v
[LOGO] NEWSTAR BUSINESS CREDIT
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement is executed and entered into as of May
25, 2011, by and among HUNTLEIGH USA CORPORATION, a Missouri corporation
("Borrower"), the lenders from time to time party hereto (together with their
respective successors and permitted assigns, each individually, "Lender", and
collectively, "Lenders") and NEWSTAR BUSINESS CREDIT, LLC, a Delaware limited
liability company, as administrative agent (in such capacity, the
"Administrative Agent").
RECITALS
Administrative Agent, Lenders and Borrower desire to enter into certain
financing arrangements according to the terms and provisions as set forth
hereinbelow. Therefore, for value received, the receipt and sufficiency of
which is hereby acknowledged, together with the mutual benefits provided
herein, Administrative Agent, Lenders and Borrower hereby agree as follows:
ARTICLE I
DEFINITIONS
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Section 1.1. Definitions. The following definitions shall apply
throughout this Agreement:
"Account" has the meaning prescribed for such term as defined by the
UCC, which definition is incorporated herein by reference, and includes,
without limitation, a right to payment of a monetary obligation, whether or
not earned by performance, for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of, or for services
rendered or to be rendered.
"Account Debtor" means a person obligated on an Account, Chattel Paper,
or General Intangible.
"Adjusted LIBOR Rate" means, for any Loan, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) determined by
Administrative Agent to be equal to the sum of the LIBOR Rate plus the
Applicable Margin.
"Administrative Agent" has the meaning given to such term in the
preamble hereto.
"Administrative Agent's Liens" means Liens granted in favor of
Administrative Agent, for the benefit of Lenders, pursuant to this Agreement
or any of the other Loan Documents.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns, directly or indirectly, five percent (5.0%)
or more of the outstanding Equity Interest of such Person. For this purpose,
a Person shall be deemed to control another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of the other Person, whether through the
ownership of voting securities, by contract, or otherwise.
LOAN AND SECURITY AGREEMENT - Page 1
"Agreement" means this Loan and Security Agreement and all schedules,
exhibits and addenda hereto, as may be renewed, extended, amended,
supplemented, restated or otherwise modified from time to time.
"Agreement Date" means the date as of which this Agreement is dated as
specified in the preamble to this Agreement.
"Applicable Law" means, as to a Person, any law (statutory or common),
treaty, rule or regulation of a Governmental Authority or determination of a
court or binding arbitrator, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property
is subject, including, without limitation, the Fair Labor Standards Act of
1938, the Occupational Safety and Hazard Act of 1970, all applicable laws
(including programs, permits and guidance promulgated by regulatory agencies)
relating to public health or the protection or pollution of the environment,
including the Comprehensive Environmental Response Compensation and Liability
Act (42 U.S.C. ss. 9601 et seq.), the Resource Conservation and Recovery Act
(42 U.S.C. ▇▇.▇▇. 6991-6991i) and the Clean Water Act (33 U.S.C. ss. 1251
et seq.).
"Applicable Margin" means, for any day with respect to a Loan, four and
one-half percent (4.50%) per annum.
"Availability" means, as of any date of determination, an amount equal
to (a) the Borrowing Base less (b) the unpaid balance of Revolving Loans, in
each case determined as of such day.
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
ss. 101 et seq.).
"Borrower" means Huntleigh USA Corporation, a Missouri corporation, and
its successors and permitted assigns.
"Borrowing Base" means, as of any day of determination, an amount equal
to the sum of:
(a) the lesser of
(i) the sum of
(A) eighty five percent (85.0%) of the Net Amount of
Eligible Billed Accounts, plus
(B) seventy five percent (75.0%) of the Net Amount
of Eligible Unbilled Accounts, plus
(C) ninety five percent (95.0%) of the face
principal amount of the Pledged Cash Collateral, plus
(D) ninety five percent (95.0%) of the face amount
available for drawing under the Letter of Credit, or
(ii) the Revolving Credit Limit, minus
(b) the aggregate amount of reserves implemented by
Administrative Agent pursuant to Section 2.1, in each case determined
as of such day.
LOAN AND SECURITY AGREEMENT - Page 2
"Borrowing Base Certificate" means a certificate of Borrower, signed by
a Responsible Officer of Borrower, setting forth the calculation of the
Borrowing Base, including a calculation of each component thereof, all in
form, presentation and detail satisfactory to Administrative Agent in its
discretion.
"Borrowing Notice" means a request for a Revolving Loan in compliance
with Section 2.2.
"Business Day" means (a) any day that is not a Saturday, Sunday or a
day on which commercial banks in Dallas, Texas are required or permitted to
be closed and (b) with respect to any borrowing, payment or other dealings
with respect to any Loan, any day which is a Business Day described in
clause (a) preceding and which is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.
"Capital Expenditures" has the meaning prescribed for such term by GAAP.
"Capital Lease" means any lease of property by Borrower which, in
accordance with GAAP, should be reflected as a capital lease on the balance
sheet of Borrower.
"Change of Control" means any occurrence the result of which is that
(a) Parent shall no longer own, of record and beneficially, at least 100% of
the Equity Interest and voting interest of Borrower, (b) ICTS International,
N.V. shall no longer own, of record and beneficially, at least 100% of the
Equity Interest and voting interest of Parent.
"Chattel Paper" has the meaning prescribed for such term as defined by
the UCC, which definition is incorporated herein by reference, and includes,
without limitation, a record or records that evidence both a monetary
obligation and a security interest in specific goods, a security interest in
specific goods and software used in the goods, a security interest in
specific goods and license of software used in the goods, a lease of specific
goods, or a lease of specific goods and license of software used in the
goods. "Chattel Paper" includes, without limitation, electronic chattel
paper.
"Collateral" means all property specified in Section 5.1, and all other
property and interest in property of Borrower in which Borrower grants a Lien
pursuant to the Loan Documents.
"Commercial Tort Claim" has the meaning prescribed for such term as
defined by the UCC, which definition is incorporated herein by reference, and
includes, without limitation, in the case of Borrower, any tort cause of
action claimed by Borrower, including those listed on Schedule 3.1.
"Commitment" means, for each Lender, the obligation of such Lender to
make Loans to Borrower in an aggregate amount not exceeding the amount set
forth opposite such Lender's name on Schedule 1.1, as such amount may be
modified from time to time pursuant to the terms hereof; provided that no
Lender's Commitment shall ever exceed such Lender's Percentage Share.
"Compliance Certificate" a certificate meeting the requirements of
Section 8.6 and otherwise in form satisfactory to Administrative Agent.
"Control", with respect to a Deposit Account, has the meaning
prescribed with respect thereto as prescribed by the UCC, evidenced by a
control agreement in form and substance satisfactory to Administrative Agent,
among Borrower, Administrative Agent and a commercial bank satisfactory to
Administrative Agent.
"Credit Parties" means Borrower and each of its Subsidiaries.
LOAN AND SECURITY AGREEMENT - Page 3
"Debt" means, with respect to a Person, (a) all obligations for
borrowed money of such Person, (b) all obligations of such Person evidenced
by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations or liabilities of others secured by a Lien on any asset of such
Person, irrespective of whether such obligation or liability is assumed, (d)
all obligations of such Person for the deferred purchase price of assets
(other than trade debt incurred in the ordinary course of business and
repayable in accordance with customary trade practices), (e) any obligation
of such Person guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse)
any obligation of any other Person, (f) asset securitizations and synthetic
leases, (g) capitalized lease obligations, (h) all net indebtedness,
liabilities and obligations under interest rate, credit, commodity, foreign
exchange or similar transactions for the purpose of hedging Borrower's or its
Subsidiaries' exposure to fluctuations in interest or exchange rates,
currency valuations or commodity prices, and (i) all liabilities which would
under GAAP be shown on such Person's balance sheet as a liability.
"Default" means an event, condition or occurrence that, with the giving
of notice, the passage of time, or both, would constitute an Event of Default.
"Default Rate" means with respect to the Obligations, a rate per annum
equal to the sum of (i) the rate of interest applicable to such Obligations
pursuant to Section 3.1 plus (ii) two percent (2.0%), provided, that the
Default Rate shall be adjusted, from time to time, simultaneously with any
change in the applicable rate referenced in clause (i) preceding.
"Defaulting Lender" means any Lender that fails to make any advance (or
other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means the interest rate then applicable to
Revolving Loans.
"Deposit Account" has the meaning prescribed for such term as defined
by the UCC, which definition is incorporated herein by reference, and
includes, without limitation, a nonnegotiable certificate of deposit or a
demand, time, savings, passbook, or similar account maintained with a bank.
"Designated Account" means Borrower's account No. 5590083324 maintained
at Bank of America, N.A..
"Distribution" means, with respect to a Person, any dividend or other
distribution, in respect of its Equity Interests, any repayment of Debt owing
to a holder of Equity Interests or any payment on account of the purchase,
redemption or other acquisition or retirement of its Equity Interests.
"Document" has the meaning prescribed for such term as defined by the
UCC, which definition is incorporated herein by reference, and includes,
without limitation, any ▇▇▇▇ of lading, dock warrant, dock receipt, warehouse
receipt or order for the delivery of goods, or any other document which in
the regular course of business or financing is treated as adequately
evidencing that the person in possession of it is entitled to receive, hold
and dispose of the document and the goods it covers, and which purports to be
issued by or addressed to a bailee and purporting to cover goods in the
bailee's possession which are either identified or are fungible portions of
an identified mass.
"Dollars" or "$" refers to lawful money of the United States of America.
"EBITDA" means, with respect to Borrower for any period, consolidated
net earnings (or loss), minus extraordinary gains plus Interest Expense,
income taxes, and depreciation and amortization for
LOAN AND SECURITY AGREEMENT - Page 4
such period, as determined in accordance with GAAP, in each case determined
for Borrower for such period.
"Eligible Account" means an Account of Borrower which is acceptable to
Administrative Agent for purposes of determining the Borrowing Base and meets
all criteria for inclusion in the Borrowing Base as determined and established
by Administrative Agent from time to time in its discretion. Without limiting
the discretion of Administrative Agent to establish other criteria of
ineligibility, unless otherwise agreed by Administrative Agent, Eligible
Accounts shall not include any Account: (a) which has not been fully earned by
performance or which is not owned exclusively by Borrower, (b) which is not
subject to a first priority and perfected security interest in favor of
Administrative Agent, (c) which is (i) an Account with respect to which more
than 90 days have elapsed since the date of the original invoice or (ii) an
Account that has not been billed, with respect to which more than 21 days have
elapsed since the date on which the services relating to such Account were
performed, (d) if twenty five percent (25.0%) or more of the aggregate Dollar
amount of outstanding Accounts owed at such time by the Account Debtor thereon
is classified as ineligible under clause (c) above, (e) owed by an Account
Debtor to the extent the amount owing thereon, when added to the aggregate
amount owing on all Accounts owed by such Account Debtor, would exceed twenty
percent (20.0%) of the aggregate amount of all Eligible Accounts owed at such
time by all Account Debtors, (f) which represents a sale on a ▇▇▇▇-and-hold,
guaranteed sale, sale and return, sale on approval, consignment, or other
repurchase or return basis or a progress billing under an agreement which
requires further performance by Borrower, (g) with respect to which the
Account Debtor is an individual, (h) with respect to which any of the
following events has occurred with respect to the Account Debtor on such
Account: the filing of any petition for relief under the Bankruptcy Code or
similar insolvency laws, a general assignment for the benefit of creditors,
the appointment of a receiver or trustee, application or petition for
dissolution, the sale or transfer of all or any material part of the assets or
the cessation of the business as a going concern, (h) owed by an Account
Debtor which does not maintain its chief executive office in the United States
or is not organized under the laws of the United States or any state thereof,
(i) owed by an Account Debtor which is an Affiliate of Borrower, (j) with
respect to which either the perfection, enforceability, or validity of
Administrative Agent's Lien in such Account, or Administrative Agent's right
or ability to obtain direct payment to Administrative Agent of the proceeds of
such Account, is governed by any federal, state, or local statutory
requirements other than those of the UCC, (k) owed by an Account Debtor to
which Borrower or any of its Subsidiaries is indebted in any way, or which is
subject to any right of setoff or recoupment, or if the Account Debtor thereon
has disputed liability or made any claim with respect to any other Account due
from such Account Debtor, but in each such case only to the extent of such
indebtedness, setoff, recoupment, dispute, or claim, (l) which is evidenced by
a promissory note or other instrument or by chattel paper, (m) which arises
out of a sale not made in the ordinary course of Borrower's business, (n) with
respect to which the services giving rise to such Account have not been fully
performed by Borrower, and, if applicable, accepted by the Account Debtor, or
with respect to which the Account Debtor has revoked its acceptance of any
such services, (o) which arises out of an enforceable contract or order which,
by its terms, forbids, restricts or makes void or unenforceable the granting
of a Lien by Borrower to Administrative Agent with respect to such Account,
(p) with respect to which Administrative Agent believes that the prospect of
collection of such Account is impaired or that the Account may not be paid by
reason of the Account Debtor's financial inability to pay or (q) owed by an
Account Debtor, to the extent the amount owing thereon exceeds the credit
limit extended to such Account Debtor by Borrower. The identification of
specific exclusions from eligibility herein is not exclusive or exhaustive.
Administrative Agent reserves the right in its discretion to establish
additional or different criteria for determining Eligible Accounts, at any
time, without prior notice.
"Eligible Billed Account" means Eligible Account that has been billed
to the Account Debtor pursuant to an invoice sent by Borrower in the ordinary
course of business.
LOAN AND SECURITY AGREEMENT - Page 5
"Eligible Unbilled Account" means Eligible Account that has not yet
been billed.
"Environmental Laws" means any and all laws relating to the environment
or to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes into the environment including ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"Equipment" has the meaning prescribed for such term as defined by the
UCC, which definition is incorporated herein by reference, and includes,
without limitation, with respect to a Person, all personal property used or
useable by such Person in its business.
"Equity Interests" means, with respect to a Person, shares of capital
stock, partnership interests, membership interests in a limited liability
company, beneficial interests in a trust or other equity ownership interests
in a Person, and any warrants, options or other rights entitling the holder
thereof to purchase or acquire any such interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose employees
are treated as being employed by the same employer as the employees of
Borrower under IRC 414(b), (b) any trade or business subject to ERISA whose
employees are treated as being employed by the same employer as the employees
of Borrower under IRC 414(c), (c) solely for purposes of 302 of ERISA and
412 of the IRC, any organization subject to ERISA that is a member of an
affiliated service group of which Borrower is a member under IRC 414(m), or
(d) solely for purposes of 302 of ERISA and 412 of the IRC, any Person
subject to ERISA that is a party to an arrangement with Borrower and whose
employees are aggregated with the employees of Borrower under IRC 414(o).
"ERISA Benefit Plan" means any "employee benefit plan" (as defined in
3(3) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of
Borrower is, or at any time during the immediately preceding six (6) years
has been, an "employer" as defined in 3(5) of ERISA.
"Event of Default" has the meaning prescribed by Section 10.1.
"Fiscal Month" means a calendar month.
"Fiscal Quarter" means one of four fiscal quarters of a Fiscal Year,
each consisting of a period of three (3) consecutive Fiscal Months, with the
first of such quarters beginning on the first day of a such Fiscal Year and
the last of such quarters ending on the last day of such Fiscal Year.
"Fiscal Year" means Borrower's fiscal year for financial accounting
purposes, beginning on January 1 and ending on December 31 of such year.
"Fixed Charge Coverage Ratio" means, for Borrower as of the last day of
a Fiscal Quarter, the ratio of (a) the rolling twelve month EBITDA, to (b)
(i) unfinanced Capital Expenditures, plus (ii) taxes paid by Borrower, plus
(iii) Distributions by Borrower to holders of its Equity Interests in an
amount not exceeding the liability of each such holder for income taxes
solely attributable to Borrower's net income, plus (iv) Interest Expense,
plus principal payments made or required to be made on any and all long term
Debt, in each case determined for such Fiscal Quarter on a rolling twelve
month basis.
LOAN AND SECURITY AGREEMENT - Page 6
"GAAP" means generally accepted accounting principles as promulgated by
the American Institute of Certified Public Accountants, consistently applied,
as in effect on the Agreement Date.
"General Intangibles" has the meaning prescribed for such term as
defined by the UCC, which definition is incorporated herein by reference, and
in any event includes, without limitation, all intangible personal property
of every kind and nature (other than Accounts, Chattel Paper, Commercial Tort
Claims, Deposit Accounts, Documents, Instruments, Investment Property, Letter
of Credit Rights, Letters of Credit and money), including, without
limitation, contract rights (including without limitation, all rights of
Borrower under the Services Agreement), business records, rights and claims
against carriers and shippers, customer lists, registrations, licenses,
franchises, tax refund claims, rights to indemnification, warranty or
guaranty contract, claims for any damages arising out of or for breach or
default under or in connection with any contract, rights to exercise or
enforce remedies, powers and privileges under any contract and rights and
claims to any amounts payable under any contract of insurance, including
without limitation, business interruption, property, casualty, key employee
life or any other insurance.
"Governmental Authority" means any federal, state or local government,
any subdivision thereof, and any agency, entity, instrumentality or authority
owned or controlled thereby.
"Guaranty" means, with respect to a Person, an obligation of, or
agreement by, such Person which directly or indirectly guarantees or assures,
or in effect guarantees or assures, the payment, performance or collection of
any obligations of another Person or assures or in effect assures the holder
thereof against loss in respect thereof.
"Guarantor" means Parent, and any other person executing a Guaranty in
favor of Administrative Agent.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Indemnified Claims" means any and all claims, demands, actions, causes
of action, judgments, obligations, liabilities, losses, damages and
consequential damages, penalties, fines, costs, fees, expenses, Lender
Expenses and disbursements (including without limitation, fees and expenses
of attorneys and other professional consultants and experts in connection
with investigation or defense) of every kind, known or unknown, existing or
hereafter arising, foreseeable or unforeseeable, which may be imposed upon,
threatened or asserted against, or incurred or paid by, an Indemnified Person
at any time and from time to time, because of, resulting from, in connection
with, or arising out of any transaction, act, omission, event or circumstance
in any way connected with the Collateral, the Loan Documents (including
enforcement of Administrative Agent's or Lenders' rights thereunder or
defense of Administrative Agent's or Lenders' actions thereunder), any
Default or Event of Default or any acts or omissions taken by such
Indemnified Person in connection with this Agreement or administration of the
Loan Documents.
"Indemnified Persons" collectively means Administrative Agent, Swing
Lender, each Lender and their Affiliates, Equity Interest owners, officers,
directors, members, managers, employees, agents and representatives.
"Instrument" has the meaning prescribed for such term as defined by the
UCC, which definition is incorporated herein by reference, and includes,
without limitation, a negotiable instrument or any other writing that
evidences a right to the payment of a monetary obligation, is not itself a
security agreement or
LOAN AND SECURITY AGREEMENT - Page 7
lease, and is of a type that in the ordinary course of business is transferred
by delivery with any necessary indorsement or assignment.
"Intangible Assets" means assets that are treated as intangible
pursuant to GAAP, including, without limitation: (a) obligations owing by
officers, directors, members, managers, employees, subsidiaries, Affiliates
or any Person in which any such officer, director, member, manager, employee,
subsidiary, or Affiliate owns any interest and (b) any asset which is
intangible or lacks intrinsic or marketable value or collectibility,
including, without limitation, goodwill, noncompetition agreements, patents,
copyrights, trademarks, franchises, organization or research and development
costs.
"Interest Expense" means, for a Person for a period, total interest
expense for such Person for such period, as determined in accordance with
GAAP.
"Interest Period" means with respect to any Loan, (i) with respect to
the first Interest Period, the period commencing on the date of the initial
funding of such Loan to the last day of the calendar month immediately
following such date, and (ii) with respect to any subsequent Interest Period,
the immediately preceding calendar month, and, on the date of repayment of
the Loans in full, the Interest Period shall extend to the date of repayment.
"Inventory" has the meaning prescribed for such term as defined by the
UCC, which definition is incorporated herein by reference, and includes,
without limitation, with respect to a Person, goods (including goods
in-transit) that (a) are held or to be held by such Person for sale or lease
or to be furnished under a contract of service, (b) are leased or to be
leased by such Person as lessor or (c) consist of raw materials, work in
process, finished goods or materials used or consumed in such Person's
business.
"Investment" means any investment made, directly or indirectly in a
Person, whether by acquisition of shares of capital stock, indebtedness or
other obligations or securities or by loan, guarantee, advance, capital
contribution or otherwise and whether made in cash by the transfer of
Property or otherwise.
"Investment Property" has the meaning prescribed for such term as
defined by the UCC, which definition is incorporated herein by reference, and
includes, without limitation, a security (whether certificated or
uncertificated) security entitlement, securities account, commodity contract,
or commodity account.
"IRC" means the Internal Revenue Code of 1986, as amended and in effect
from time to time.
"Lender" and "Lenders" have the respective meanings set forth in the
preamble hereto and shall include the Swing Lender and any other Person made
a party to this Agreement in accordance with the provisions of Section 14.13.
"Lender Expenses" has the meaning prescribed by Section 14.5.
"Lender Parties" means Administrative Agent, Swing Lender and each
Lender.
"Letter of Credit" means a clean, irrevocable standby letter of credit
issued by a commercial bank acceptable to Agent, to and for the benefit of
Agent, in the face amount of $775,000, providing for a term of not less than
one year, renewable annually, the sole condition for drawing under which is
presentation of a site draft accompanied by a written statement purportedly
signed by an officer of Agent, stating
LOAN AND SECURITY AGREEMENT - Page 8
that: "This presentation is made pursuant to the certain Loan and Security
Agreement among Huntleigh USA Corporation, the beneficiary and the lenders
party thereto."
"Letter of Credit Rights" has the meaning prescribed for such term as
defined by the UCC, which definition is incorporated herein by reference, and
includes, without limitation, a right to payment or performance under a
letter of credit, whether or not the beneficiary has demanded or is at the
time entitled to demand payment or performance.
"LIBOR Rate" means the greater of (i) the rate per annum published on
each Business Day in the "Money Rates" table of The Wall Street Journal (or
such other presentation within The Wall Street Journal as may be adopted
hereafter for such information) as the one-month LIBOR rate, and (ii) 1.75%;
provided, that, if on or prior to the first day of any Interest Period for
any Loan, the Administrative Agent determines (which determination shall be
conclusive) that by reason of circumstances, adequate and reasonable means do
not exist for ascertaining the LIBOR Rate for such Interest Period, then the
LIBOR Rate shall be a rate per annum determined by the Administrative Agent
in its sole discretion.
"Lien" means any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, collateral assignment, charge, claim, or lien arising from
a security agreement, mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, conditional sale, trust
receipt, lease, consignment or bailment for security purposes or similar
agreement, or any contingent or other agreement to provide any of the
foregoing.
"Loan" means any loan or advance made by Lenders to Borrower under this
Agreement and includes Swing Loans made by Swing Lender, and "Loans" means,
collectively, all such loans and advances.
"Loan Documents" means this Agreement, each Guaranty, the Parent Pledge
Agreement, each Subordination Agreement, all documentation establishing
Administrative Agent's Lien and Control in the Pledged Cash Collateral, the
Letter of Credit, all deposit account control agreements, and any other
documents or agreements executed in connection with any of the foregoing, and
any other agreements, instruments, and documents heretofore, now or hereafter
evidencing, securing, guaranteeing or otherwise relating to the Obligations,
the Collateral or any other aspect of the transactions contemplated by this
Agreement, and in each case including any and all renewals, extensions,
modifications or amendments of any of the foregoing.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means a materially adverse change in, or
effect on, the business, assets, operations, prospects or condition,
financial or otherwise, of Borrower, or a material impairment of the ability
of Borrower or any Guarantor to perform any obligations under the Loan
Documents or a material adverse effect upon the legality, validity, binding
effect or enforceability of any Loan Document.
"Maturity Date" means May 25, 2013.
"Maximum Rate" means the greater of (a) the "monthly ceiling" as
referred to and in effect from time to time under the provisions of 303.004
of the Texas Finance Code, or (b) the maximum rate of interest permitted from
day to day by any other applicable state or federal law.
LOAN AND SECURITY AGREEMENT - Page 9
"Net Amount" means, with respect to Eligible Accounts at any time, the
gross amount of Eligible Accounts less sales, excise or similar taxes, and
less returns, discounts, claims, credits and allowances of any nature at any
time issued, owing, granted, outstanding, available or claimed.
"Net Income" means, with respect to a Person for any period, net
income, after income tax, if any, payable for such period, determined for
such Person in accordance with GAAP.
"Obligations" means all obligations and indebtedness now or hereafter
owing by Borrower under this Agreement or otherwise arising in connection
with this Agreement or any of the other Loan Documents, including, without
limitation, all loan repayment obligations, accrued interest obligations,
indemnity obligations and all obligations for payment or reimbursement for
fees, costs and expenses as provided by this Agreement or any of the other
Loan Documents, whether direct or indirect, primary or secondary, joint,
several, or joint and several, fixed or contingent, including indebtedness
and obligations, if any, which may be assigned to or acquired by any Lender
Party, and any and all renewals and extensions of the foregoing or of any
part thereof.
"Parent" means ICTS USA, Inc., a New York corporation, and its
successors.
"Parent Pledge Agreement" means a pledge and security agreement
executed by Parent and Administrative Agent, in form and substance
satisfactory to Administrative Agent, pursuant to which Parent grants to
Administrative Agent a continuing pledge, security interest and collateral
assignment in 100% of all Equity Interests and voting interests of Borrower.
"Percentage Share" means, with respect to any Lender, (a) unless
otherwise specifically set forth therein, when used in Sections 2.1, 2.2 or
3.2, in any request for Loans pursuant to Section 2.2, or when no Loans are
outstanding hereunder, the percentage set forth opposite such Lender's name
on Schedule 1.1 and (b) when used otherwise, the percentage obtained by
dividing (i) the sum of the unpaid principal balance of such Lender's Loans
at the time in question by (ii) the sum of the aggregate unpaid principal
balance of all Loans at such time.
"Permitted Liens" means (a) Administrative Agent's Liens, (b) Liens for
unpaid taxes that are not delinquent, (c) Liens, if any, described in
Schedule 7.22, (d) Liens which constitute purchase money Liens and secure
Debt permitted under clause (d) of Section 9.5, but only to the extent such
Liens attach only to the property acquired by the incurrence of such purchase
money secured Debt, (e) the interests of lessors under operating leases, (f)
statutory Liens in favor of warehousemen, landlords, carriers, mechanics,
materialmen, laborers or suppliers, incurred in the ordinary course of
business of Borrower and not in connection with the borrowing of money, and
which Liens are for sums not delinquent or (g) Liens arising from deposits
made in connection with obtaining worker's compensation or other unemployment
insurance.
"Person" means any individual, corporation, joint venture, general or
limited partnership, trust, unincorporated organization or Governmental
Authority.
"Pledged Cash Collateral" means available cash, on deposit in a
certificate of deposit or a separate Deposit Account, in the principal amount
not less than $3,500,000, issued or maintained by a commercial bank
acceptable to Administrative Agent, in which Agent has a first priority
perfected security interest and has established Control, as security for the
Obligations, pursuant to written documentation in form and substance
satisfactory to Administrative Agent.
"Proprietary Rights" means inventions, designs, blueprints, plans,
specifications, licenses, permits, patents, patent rights, copyrights, works
which are the subject matter of copyrights, trademarks,
LOAN AND SECURITY AGREEMENT - Page 10
service marks, trade names, trade styles, patent, trademark and service ▇▇▇▇
applications, trade secrets, good will and all licenses and rights related to
any of the foregoing, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions and continuations of any of the
foregoing, and all rights to ▇▇▇ for past, present and future infringement of
any of the foregoing.
"Protective Advances" has the meaning set forth in Section 2.4.
"Required Lenders" means (a) Administrative Agent and (b) Lenders whose
aggregate Percentage Shares equal or exceed fifty-one percent (51%), provided
however, at any time there are two (2) or more Lenders, Required Lenders must
include at least (2) Lenders.
"Responsible Officer" means the chief executive officer or president of
Borrower and, in addition, with respect to a Borrowing Base Certificate or a
Compliance Certificate, the chief financial officer or treasurer of Borrower.
"Restricted Investment" means, with respect to Borrower, any Investment
other than (a) the purchase of Inventory in the ordinary course of business,
(b) acquisitions (not otherwise prohibited by this Agreement) of Equipment
for use in the ordinary course of business, (c) direct obligations of the
United States of America or any agency thereof, or obligations guaranteed by
the United States of America, that mature within one year from the date of
acquisition thereof, certificates of deposit maturing within one year from
the date of acquisition, issued by a commercial bank organized under the laws
of the United States of America or any state thereof having capital and
surplus aggregating at least $100,000,000 and (d) travel and similar advances
to employees made in the ordinary course of business.
"Revolving Credit Limit" means $9,000,000.
"Revolving Loans" has the meaning set forth in Section 2.1.
"Services Agreement" has the meaning set forth in Section 6.1(f).
"Settlement" has the meaning set forth in Section 2.5(b)
"Settlement Date" has the meaning set forth in Section 2.5(b).
"Shareholder's Equity" means, as of any date, stockholder's or member's
equity as determined in accordance with GAAP or, in the case of a
partnership, a partner's partnership interest.
"Solvent" means, when used with respect to a Person at the time of
determination:
(a) the assets of such Person, at a fair valuation, are in
excess of the total amount of its debts (including contingent
liabilities); and
(b) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(c) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
LOAN AND SECURITY AGREEMENT - Page 11
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
"Subordinated Debt" means Debt that is subordinated to the Obligations
pursuant to a Subordination Agreement.
"Subordination Agreement" means, with respect to a Person, a
subordination agreement among Administrative Agent, Borrower and such Person,
pursuant to which all obligations and indebtedness now or hereafter owing by
Borrower to such Person are subordinated to the Obligations in right of
payment and claim, in form and substance satisfactory to Administrative
Agent, including, without limitation, subordination and postponement of
payments to such Person and limitation on the exercise of remedies by such
Person.
"Subsidiary" means, with respect to a Person, any other Person of which
more than ten percent (10%) of the voting Equity Interests is owned or
controlled directly or indirectly by such Person or one or more of its
Subsidiaries, or a combination thereof.
"Swing Lender" means NewStar Business Credit, LLC or any other Lender
that, at the request of Borrower and with the consent of the Administrative
Agent agrees, in such Lender's sole discretion, to become the Swing Lender
hereunder.
"Swing Loan" has the meaning specified therefor in Section 2.2(b)
hereof.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of a Lender, such taxes (including income
taxes or franchise taxes) as are imposed on or measured by such Lender's net
income in any jurisdiction (whether federal, state or local and including any
political subdivision thereof) under the laws of which such Lender is
organized or maintains a lending office.
"Termination Date" means the earlier of (a) the Maturity Date or (b)
the day on which the Obligations of Lender to make Loans hereunder have been
terminated pursuant to Section 12.1 or the Obligations first become due and
payable in full.
"Total Facility" means an amount equal to the Revolving Credit Limit.
"UCC" means the Uniform Commercial Code in effect in the State of
Texas, as amended from time to time.
Section 1.2. Interpretive Provisions. Unless expressly provided
otherwise, any term which is defined by the UCC, wherever used in this
Agreement, shall have the same meaning as is prescribed by the UCC. The
meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms. The words "hereof," "herein," "hereunder" and
similar words refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless the context indicates otherwise,
references to "Section," "Subsection," "clause" "Schedule" and "Exhibit" are
references to this Agreement. The term "documents" (if not capitalized as a
defined term) includes any and all instruments, documents, agreements,
certificates, indentures, notices and other writings, however evidenced. The
term "including" is not limiting and means "including without limitation."
Unless the context requires otherwise, in the computation of periods of time
from a specified date to a later specified date, the word "from" means "from
and including," the words "to" and "until" each mean "to but excluding" and
the word "through" means "to and including." The term, "discretion," when used
in reference to a Person,
LOAN AND SECURITY AGREEMENT - Page 12
means the sole and absolute discretion of such Person, honestly determined by
such Person under the circumstances. Unless otherwise expressly provided
herein, references to agreements (including this Agreement) and other
contractual documents shall be deemed to include all subsequent amendments,
restatements and other modifications thereto, and references to any statute or
regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
the statute or regulation. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement. This Agreement and the other Loan Documents are the result of
negotiations among the parties, have been reviewed by counsel to each party
and are the products of all parties, and in consideration thereof, it is
agreed that they shall not be construed against either party solely because of
such party's involvement in their preparation. Unless otherwise specified, any
reference to time shall be deemed to mean Central Standard Time or Central
Daylight Time, as applicable, as in effect in Dallas County, Texas.
ARTICLE II
REVOLVING LOANS
---------------
Section 2.1. Revolving Loans. Subject to the terms and provisions of
this Agreement, Lenders agree to make Revolving Loans to Borrower from time to
time during the period from the date of this Agreement to the Termination Date
in an amount not exceeding such Lender's Percentage Share. The aggregate
unpaid principal amount of Revolving Loans outstanding, as of any time of
determination, shall not at any time exceed the lesser of (a) the Borrowing
Base or (b) the Revolving Credit Limit, in each case as of such time of
determination. Borrower may borrow and repay Revolving Loans from time to
time, subject to the terms of this Agreement. Administrative Agent shall have
the continuing right to establish and maintain any additional reserves for
purposes of calculating the Borrowing Base in such amounts and at such times
and with respect to such matters and for such purposes as Administrative Agent
deems appropriate, without prior notice to Borrower, including reserves with
respect to collection performance, slow moving or obsolete Inventory,
contingencies, amounts Borrower is or may be required to pay (such as taxes,
freight and shipping charges, insurance premiums, amounts owing to landlords,
warehousemen, carriers, mechanics, materialmen, laborers or suppliers, or ad
valorem, excise, sales, or other taxes) or any other matter in Administrative
Agent's discretion. Any such reserves are solely for purposes of calculating
the Borrowing Base and do not constitute or represent cash funds.
Section 2.2. Request for Revolving Loans.
(a) Borrower shall request each Revolving Loan by delivering to
Administrative Agent a written notice, signed by a Responsible Officer of
Borrower, in form satisfactory to Administrative Agent, accompanied by a
Borrowing Base Certificate complying with Section 8.5 and reflecting
sufficient Availability. Unless otherwise agreed by Administrative Agent, each
request for a Revolving Loan shall be irrevocable and, in order to be
effective, must be received by Administrative Agent prior to 10:00 a.m. two
(2) Business Days prior to the requested funding date, specifying (i) the
amount of the requested Revolving Loan, and (ii) the requested funding date,
which shall be a Business Day.
(b) Making of Swing Loans. In the case of a request for a
Revolving Loan and so long as either (i) the aggregate amount of Swing Loans
made since the last Settlement Date, minus the amount of Collections or
payments applied to Swing Loans since the last Settlement Date, plus the
amount of the requested Revolving Loans does not exceed $9,000,000, or (ii)
Swing Lender, in its sole discretion, shall agree to make a Swing Loan
notwithstanding the foregoing limitation, Swing Lender shall make Revolving
Loans in the amount of such borrowing (any such advance made solely by Swing
Lender pursuant to this Section 2.2(b) being referred to as a "Swing Loan" and
such advances being referred to collectively as "Swing Loans") on the
requested funding date applicable thereto by transferring
LOAN AND SECURITY AGREEMENT - Page 13
immediately available funds to the Designated Account; provided, however, upon
the request from Borrower, the Swing Lender may advance a Swing Loan to the
Borrower on the same day as the request therefor is made so long as such
request is received by Swing Lender prior to 10:00 a.m. Each Swing Loan shall
be deemed to be a Revolving Loan hereunder and shall be subject to all the
terms and conditions applicable to other advances of Revolving Loans, except
that all payments on any Swing Loan shall be payable to Swing Lender solely
for its own account. Subject to the provisions of Section 2.2(c)(ii), Swing
Lender shall not make and shall not be obligated to make any Swing Loan if
Swing Lender reasonably believes that (i) one or more of the applicable
conditions precedent set forth herein will not be satisfied on the requested
funding date, or (ii) the requested borrowing would exceed the Availability on
such funding date. Swing Lender shall not otherwise be required to determine
whether the applicable conditions precedent set forth herein have been
satisfied on the funding date applicable thereto prior to making any Swing
Loan. The Swing Loans shall be secured by the Administrative Agent's Liens,
constitute Obligations hereunder, and bear interest at the rate applicable
from time to time to Revolving Loans.
(c) Making of Loans:
(i) In the event that Swing Lender is not obligated to
make a Swing Loan, then promptly after receipt of a request for a
borrowing pursuant to Section 2.2(a), and in any event not later
than 1:00 p.m. on the Business Day such borrowing request was
received by Administrative Agent, Administrative Agent shall
notify Lenders, by telecopy, telephone, or other similar form of
transmission, of the requested borrowing. Each Lender shall make
the amount of such Lender's Percentage Share of the requested
borrowing available to Administrative Agent in immediately
available funds, to an account designated by Administrative Agent,
not later than 10:00 a.m. on the funding date applicable thereto.
After Administrative Agent's receipt of the proceeds thereof,
Administrative Agent shall make the proceeds thereof available to
Borrower on the applicable funding date by transferring
immediately available funds equal to such proceeds received by
Administrative Agent to the Designated Account; provided, however,
that, subject to the provisions of Section 2.2(c)(ii),
Administrative Agent shall not request any Lender to make, and no
Lender shall have the obligation to make, any advance if (1) one
or more of the applicable conditions precedent set forth in
Article VI will not be satisfied on the requested funding date for
the applicable borrowing unless such condition has been waived, or
(2) the requested borrowing would exceed the Availability on such
funding date.
(ii) Unless Administrative Agent receives notice from a
Lender prior to 9:00 a.m. on the date of a borrowing, that such
Lender will not make available as and when required hereunder to
Administrative Agent for the account of Borrower the amount of
that Lender's Percentage Share of the borrowing, Administrative
Agent may assume that each Lender has made or will make such
amount available to Administrative Agent in immediately available
funds on the respective funding date and Administrative Agent may
(but shall not be so required), in reliance upon such assumption,
make available to Borrower on such date a corresponding amount. If
any Lender shall not have made its full amount available to
Administrative Agent in immediately available funds and if
Administrative Agent in such circumstances has made available to
Borrower such amount, that Lender shall on the Business Day
following such funding date make such amount available to
Administrative Agent, together with interest at the Defaulting
Lender Rate for each day during such period. A notice submitted by
Administrative Agent to any Lender with respect to amounts owing
under this subsection shall be conclusive, absent manifest error.
If such amount is so made available, such payment to
LOAN AND SECURITY AGREEMENT - Page 14
Administrative Agent shall constitute such Lender's advance on the
date of Borrowing for all purposes of this Agreement. If such
amount is not made available to Administrative Agent on the
Business Day following the funding date, Administrative Agent will
notify Borrower of such failure to fund and, to the extent
Administrative Agent made such amount available to Borrower as
provided by the first sentence of this Section 2.2(c)(ii), upon
demand by Administrative Agent, Borrower shall pay such amount to
Administrative Agent for Administrative Agent's account, together
with interest thereon for each day elapsed since the date of such
borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Revolving Loans composing such
borrowing. The failure of any Lender to make any advance on any
funding date shall not relieve any other Lender of any obligation
hereunder to make an advance on such funding date, but no Lender
shall be responsible for the failure of any other Lender to make
the advance to be made by such other Lender on any funding date.
(iii) Administrative Agent shall not be obligated to
transfer to a Defaulting Lender any payments made by Borrower to
Administrative Agent for the Defaulting Lender's benefit, and, in
the absence of such transfer to the Defaulting Lender,
Administrative Agent shall transfer any such payments to each
other non-Defaulting Lender Party ratably in accordance with their
Commitments (but only to the extent that such Defaulting Lender's
advance was funded by the other Lender Parties) or, if so directed
by Borrower and if no Default or Event of Default has occurred and
is continuing (and to the extent such Defaulting Lender's advance
was not funded by the Lender Parties), retain same to be
re-advanced to Borrower as if such Defaulting Lender had made
advances to Borrower. Subject to the foregoing, Administrative
Agent may hold and, in its permitted discretion, re-lend to
Borrower for the account of such Defaulting Lender the amount of
all such payments received and retained by Administrative Agent
for the account of such Defaulting Lender. Solely for the purposes
of voting or consenting to matters with respect to the Loan
Documents, such Defaulting Lender shall be deemed not to be a
"Lender" and such Lender's Commitment shall be deemed to be zero.
This Section shall remain effective with respect to such Lender
until (x) the Obligations under this Agreement shall have been
declared or shall have become immediately due and payable, (y) the
non-Defaulting Lenders, Administrative Agent, and Borrower shall
have waived such Defaulting Lender's default in writing, or (z)
the Defaulting Lender makes its Percentage Share of the applicable
advance and pays to Administrative Agent all amounts owing by
Defaulting Lender in respect thereof. The operation of this
Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, to relieve or excuse the performance by
such Defaulting Lender or any other Lender of its duties and
obligations hereunder, or to relieve or excuse the performance by
Borrower of its duties and obligations hereunder to Administrative
Agent or to the Lenders other than such Defaulting Lender. Any
such failure to fund by any Defaulting Lender shall constitute a
material breach by such Defaulting Lender of this Agreement and
shall entitle Borrower at its option, upon written notice to
Administrative Agent, to arrange for a substitute Lender to assume
the Commitment of such Defaulting Lender, such substitute Lender
to be reasonably acceptable to Administrative Agent. In connection
with the arrangement of such a substitute Lender, the Defaulting
Lender shall have no right to refuse to be replaced hereunder.
(d) Unless otherwise requested by Borrower and agreed by
Administrative Agent, the proceeds of the Revolving Loan, when funded, shall
be disbursed by Administrative Agent to the Designated Account.
LOAN AND SECURITY AGREEMENT - Page 15
Section 2.3. Deemed Request for Revolving Loans. Borrower irrevocably
authorizes the Administrative Agent, on behalf of each Lender, at its election
and without necessity for request by Borrower, to make a Revolving Loan to
Borrower in an amount equal to any amount chargeable to or required to be paid
by Borrower pursuant to the terms of this Agreement and the other Loan
Documents, including, without limitation, payments of principal, interest,
fees and reimbursable expenses, and apply the proceeds thereof in payment of
such Obligations. Any such Revolving Loans shall be secured by the Collateral
and shall be included in the Obligations.
Section 2.4. Protective Advances. Administrative Agent is authorized to
request, from time to time in its discretion (but without any obligation to do
so), that Lenders make Revolving Loans to Borrower which Administrative Agent
deems necessary or appropriate to preserve or protect the Collateral, or any
portion thereof. All such Revolving Loans shall be secured by the Collateral
and shall be included in the Obligations.
Section 2.5. Settlement.
(a) It is agreed that each Lender's funded portion of the
advances is intended by the Lenders to equal, at all times, such Lender's
Percentage Share of the outstanding advances. Such agreement notwithstanding,
Administrative Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of Borrower) that in order to
facilitate the administration of this Agreement and the other Loan Documents,
settlement among the Lenders as to the Revolving Loans and the Swing Loans
shall take place on a periodic basis in accordance with the following
provisions:
(b) Administrative Agent shall request settlement ("Settlement")
with the Lenders on a weekly basis, or on a more frequent basis if so
determined by Administrative Agent on behalf of Swing Lender, with respect to
the outstanding Swing Loans, as to each by notifying the Lenders by telecopy,
telephone, or other similar form of transmission, of such requested
Settlement, no later than 2:00 p.m. on the Business Day immediately prior to
the date of such requested Settlement (the date of such requested Settlement
being the "Settlement Date"). Such notice of a Settlement Date shall include a
summary statement of the amount of outstanding advances and Swing Loans for
the period since the prior Settlement Date. Subject to the terms and
conditions contained herein: (y) if a Lender's balance of the advances
(including Swing Loans) exceeds such Lender's Percentage Share of the Advances
(including Swing Loans) as of a Settlement Date, then Administrative Agent
shall, by no later than 12:00 p.m. on the Settlement Date, transfer in
immediately available funds to a deposit account of such Lender (as such
Lender may designate), an amount such that each such Lender shall, upon
receipt of such amount, have as of the Settlement Date, its Percentage Share
of the advances (including Swing Loans), and (z) if a Lender's balance of the
advances (including Swing Loans) is less than such Lender's Percentage Share
of the advances (including Swing Loans) as of a Settlement Date, such Lender
shall no later than 12:00 p.m. on the Settlement Date transfer in immediately
available funds to the account designated by the Administrative Agent, an
amount such that each such Lender shall, upon transfer of such amount, have as
of the Settlement Date, its Percentage Share of the Advances (including Swing
Loans). Such amounts made available to Administrative Agent under clause (z)
of the immediately preceding sentence shall be applied against the amounts of
the applicable Swing Loans and, together with the portion of such Swing Loans
representing Swing Lender's Percentage Share thereof, shall constitute
advances of such Lenders. If any such amount is not made available to
Administrative Agent by any Lender on the Settlement Date applicable thereto
to the extent required by the terms hereof, Administrative Agent shall be
entitled to recover for its account such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate.
(c) In determining whether a Lender's balance of the advances
and Swing Loans is less than, equal to, or greater than such Lender's
Percentage Share as of a Settlement Date,
LOAN AND SECURITY AGREEMENT - Page 16
Administrative Agent shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good funds by
Administrative Agent with respect to principal, interest, fees payable by
Borrower and allocable to the Lenders hereunder, and proceeds of Collateral.
(d) Between Settlement Dates, Administrative Agent, to the
extent Swing Loans are outstanding, may pay over to Administrative Agent or
Swing Lender, as applicable, any collections or payments received by
Administrative Agent, that in accordance with the terms of this Agreement
would be applied to the reduction of the Swing Loans.
ARTICLE III
INTEREST, FEES, REIMBURSEMENTS
------------------------------
Section 3.1. Interest.
(a) Except as otherwise provided herein, all outstanding
Obligations shall bear interest at a per annum rate equal to the lesser of (1)
the Adjusted LIBOR Rate and (2) the Maximum Rate.
(b) At any time when any Default or Event of Default has
occurred and is continuing, upon written notice by Administrative Agent to
Borrower, effective as of any date on or after the occurrence of such Default
or Event of Default and continuing for so long as any such Default or Event of
Default is continuing, as may be specified in such notice, all Obligations
shall bear interest at a rate per annum equal to the Default Rate applicable
thereto.
(c) Subject to Section 3.7, interest shall be computed on the
basis of a year of 360 days and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365 day year).
Section 3.2. Fees. Subject to the terms of this Agreement:
(a) Commitment Fee. Borrower agrees to pay to the Administrative
Agent for the account of each Lender on the Agreement Date, a commitment fee,
which amount shall be earned and payable on the Agreement Date in an amount
equal to one percent (1.0%) multiplied by each such Lender's Percentage Share
of the Total Facility.
(b) Unused Line Fee. Borrower agrees to pay to Administrative
Agent for the account of each Lender an unused line fee determined on a daily
basis, payable on the first day of each month and on the Termination Date, in
an amount equal to one half percent (0.50%) per annum multiplied by such
Lender's Percentage Share of the amount by which the Revolving Credit Limit
exceeded the sum of the average daily outstanding amount of Revolving Loans
during the immediately preceding calendar month, or shorter period if
calculated on the Termination Date. Such fee shall be computed on the basis of
a 360-day year for the actual number of days elapsed. All payments on the
Loans received by Administrative Agent shall be deemed to be credited to the
Revolving Loans immediately upon receipt for purposes of calculating the
amount payable pursuant to this Section 3.2(b).
(c) Collateral Monitoring Fee. Borrower shall pay to
Administrative Agent, for the account of Administrative Agent, a monthly
collateral monitoring fee in the amount of $2,000 for each calendar month, or
portion thereof, during the term of this Agreement. The collateral monitoring
fee for each calendar month shall be due and payable in arrears on the first
day of each calendar month and on the Termination Date, and shall be prorated
for any partial calendar month.
LOAN AND SECURITY AGREEMENT - Page 17
(d) Success Fee. Borrower agrees to pay to the Administrative
Agent a success fee, which amount shall be earned on the Agreement Date, in an
amount equal to $300,000. Such fee shall be payable (i) in equal monthly
payments of $12,500 each beginning on the first day of each calendar month
beginning June, 2011 and continuing through the calendar month preceding the
Termination Date and (ii) one final payment in the aggregate unpaid amount
thereof, which shall be due on the Termination Date.
All amounts contracted for, paid or received pursuant to this Section 3.2 are
expressly subject to
Section 3.7.
Section 3.3. Increased Cost and Reduced Return. If, after the date
hereof, the adoption or change of any Applicable Law, or the interpretation or
administration thereof by any Governmental Authority or compliance by
Administrative Agent or Lenders with any directive of any such Governmental
Authority shall (i) subject Lenders to any tax, duty or other charge with
respect to any Loan or Lenders' obligation to make Loans, or change the basis
of taxation of any amounts payable to Administrative Agent or Lenders under
this Agreement in respect of any Loans (other than taxes imposed on the
overall net income of Administrative Agent or Lenders), (ii) impose or modify
any reserve, special deposit, assessment or similar requirement relating to
any assets, liabilities or commitments of Administrative Agent or Lenders or
(iii) impose on Administrative Agent or Lenders any condition affecting this
Agreement or any extensions of credit or commitments hereunder, and the result
of any of the foregoing is to increase the cost to Lenders of making or
maintaining, any Loans or to reduce any amount received or receivable by
Lenders under this Agreement with respect to any Loans, then Borrower shall
pay to Administrative Agent and/or Lenders on demand such amount or amounts as
will compensate Administrative Agent and/or Lenders for such increased cost or
reduction.
Section 3.4. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for Lenders, Swing Lender or
their applicable lending office to make, maintain or fund Loans hereunder,
then Administrative Agent shall promptly notify Borrower thereof and Lenders'
and Swing Lender's obligation to make Loans, shall be suspended until such
time as Lenders and Swing Lender may again make, maintain and fund Loans.
Section 3.5. Compensation. Upon the request of Administrative Agent,
Borrower shall pay to Administrative Agent, for the account of each Lender,
such amount or amounts as shall be sufficient (in the reasonable opinion of
Administrative Agent) to compensate Lenders for any loss, cost, or expense
incurred by it as a result of any payment, or prepayment of a Loan for any
reason (including acceleration of the Loans pursuant to Section 11.1) on a
date other than the last day of the Interest Period for such Loan or any
failure by Borrower for any reason (including Lenders' refusal of a request
for a Loan by reason of the failure of a condition precedent required by this
Agreement) to borrow or prepay a Loan on the date designated for such
borrowing or prepayment specified in the relevant Borrowing Notice under this
Agreement.
Section 3.6. Taxes.
(a) Any and all payments by Borrower to Administrative Agent and
Lenders hereunder or under any other Loan Document shall be made free and
clear of, and without deduction for, any and all present or future taxes,
duties, levies, imposts, deductions, charges, or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on Administrative
Agent or each Lender's income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which Administrative Agent or Lenders (or their
applicable lending office) is organized or any political subdivision thereof
(all such non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as "Taxes"). If
Borrower shall be required by law to deduct any Taxes from or in
LOAN AND SECURITY AGREEMENT - Page 18
respect of any sum payable under this Agreement or any other Loan Document to
Administrative Agent or Lenders, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this ) Administrative Agent or
Lenders, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Borrower shall make such
deductions, (iii) Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with Applicable Law, and
(iv) Borrower shall furnish to Administrative Agent and Lenders the original
or a certified copy of a receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this
Agreement or any other Loan Document or from the execution or delivery of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) Borrower agrees to indemnify, defend and hold harmless
Administrative Agent and Lenders for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed or asserted
by any jurisdiction on amounts payable under this ) paid by Administrative
Agent or Lenders and any liability (including penalties, interest, and
expenses) arising therefrom or with respect thereto.
(d) Within five days after the date of any payment of Taxes or
Other Taxes, Borrower shall furnish to Administrative Agent the original or a
certified copy of a receipt evidencing such payment.
(e) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Agreement shall survive the termination of the Commitments and the
payment in full of the Loans.
Section 3.7. Maximum Interest; Controlling Limitation.
(a) If the rate of interest on the Obligations, absent the
limitations set forth in this Section 3.7, would have exceeded the Maximum
Rate, then the actual rate of interest shall be the Maximum Rate, and, if in
the future, the interest rate would otherwise be less than the Maximum Rate,
then the interest rate shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which would
have been paid if the same had not been limited by the Maximum Rate. In the
event that, upon payment in full of the Obligations, the total amount of
interest paid or accrued under the terms of this Agreement is less than the
total amount of interest which would, but for this Section 3.7, have been paid
or accrued if the interest rate otherwise provided by this Agreement had at
all times been in effect, then Borrower shall, to the extent permitted by
Applicable Law, pay to Administrative Agent an amount equal to the (a) the
lesser of (i) the amount of interest which would have been paid or accrued if
the Maximum Rate had, at all times, been in effect and (ii) the amount of
interest which would have been paid or accrued had the interest rate otherwise
set forth in this Agreement, at all times, been in effect, less (b) the amount
of interest actually paid or accrued under this Agreement.
(b) Administrative Agent, Lenders and Borrower each
acknowledges, agrees, and declares that it is its intention to expressly
comply with all Applicable Law in respect of limitations on the amount or rate
of interest that can legally be contracted for, charged or received under or
in connection with the Loan Documents. Notwithstanding anything to the
contrary contained in any Loan Document (even if any such provision expressly
declares that it controls all other provisions of the Loan
LOAN AND SECURITY AGREEMENT - Page 19
Documents), in no contingency or event whatsoever shall the amount of interest
(including the aggregate of all charges, fees, benefits, or other compensation
which constitutes interest under any Applicable Law) under the Loan Documents
paid by Borrower, received by Administrative Agent, Lenders or Swing Lender
agreed to be paid by Borrower, or requested or demanded to be paid by
Administrative Agent, Lenders or the Swing Lender, exceed the Maximum Rate,
and all provisions of the Loan Documents in respect of the contracting for,
charging, or receiving compensation for the use, forbearance, or detention of
money shall be limited as provided by this Section 3.7. In the event any such
interest is paid to Administrative Agent, Lenders or the Swing Lender by
Borrower in an amount or at a rate which would exceed the Maximum Rate,
Administrative Agent, Lenders or the Swing Lender, then, notwithstanding any
entry on Administrative Agent, Lenders' or the Swing Lender's books otherwise,
such excess shall conclusively be deemed to be automatically applied to any
unpaid amount of the Obligations other than interest, in inverse order of
maturity, or if the amount of such excess exceeds said unpaid amount, such
excess shall be refunded to Borrower. All interest paid, or agreed to be paid,
by Borrower, or taken, reserved, or received by Administrative Agent, Lenders
or the Swing Lender shall be amortized, prorated, spread, and allocated in
respect of the Obligations throughout the full term of this Agreement.
Notwithstanding any provision contained in any of the Loan Documents, or in
any other related documents executed pursuant hereto, neither Administrative
Agent, Lenders nor the Swing Lender shall ever be entitled to charge, receive,
take, reserve, collect, or apply as interest any amount which, together with
all other interest under the Loan Documents would result in a rate of interest
under the Loan Documents in excess of the Maximum Rate and, in the event
Administrative Agent, Lenders or the Swing Lender ever charges, receives,
takes, reserves, collects, or applies any amount in respect of Borrower that
otherwise would, together with all other interest under the Loan Documents, be
in excess of the Maximum Rate, such amount shall automatically be deemed to be
applied in reduction of the unpaid principal balance of the Obligations other
than interest and, if the principal balance thereof is paid in full, any
remaining excess shall forthwith be refunded to Borrower. Borrower,
Administrative Agent, Lenders and the Swing Lender shall, to the maximum
extent permitted under any Applicable Law, (i) characterize any non-principal
payment as a standby fee, commitment fee, prepayment charge, delinquency
charge, expense, or reimbursement for a third-party expense rather than as
interest and (ii) exclude prepayments, acceleration, and the effect thereof.
Nothing in any Loan Document shall be construed or so operate as to require or
obligate Borrower to pay any interest, fees, costs, or charges greater than is
permitted by any Applicable Law. Subject to the foregoing, Borrower hereby
agrees that the actual effective rate of interest from time to time existing
under the Loan Documents, including all amounts agreed to by Borrower pursuant
to and in accordance with the Loan Documents which may be deemed to be
interest under any Applicable Law, shall be deemed to be a rate which is
agreed to and stipulated by Borrower and Lenders in accordance with Applicable
Law.
ARTICLE IV
PAYMENT
-------
Section 4.1. Interest. Accrued interest on the Loans shall be due and
payable in arrears on the last day of each Interest Period and on the
Termination Date.
Section 4.2. Revolving Loans. Borrower may prepay Revolving Loans at any
time, provided, that with respect to any Loans prepaid prior to the expiration
date of the Interest Period applicable thereto, Borrower shall concurrently
pay to Administrative Agent, for the account of Lenders, the amounts required
by Section 3.5. Borrower promises to pay to Administrative Agent, for the
account of Lenders, on demand, the amount, if any, at any time, by which the
unpaid balance of the Revolving Loans exceeds the Availability at such time.
Section 4.3. Mandatory Payments on Termination Date. All Obligations are
due and payable in full on the Termination Date. On the Termination Date:
LOAN AND SECURITY AGREEMENT - Page 20
(a) Borrower shall pay to Administrative Agent, for the account
of Swing Lender, in full the outstanding principal balance of the Swing Loans
plus all unpaid accrued interest thereon;
(b) Borrower shall pay to Administrative Agent, for the account
of each Lender, in full the outstanding principal balance of the Revolving
Loans plus all unpaid accrued interest thereon;
(c) Borrower shall pay to Administrative Agent, for the account
of each Lender, all amounts, if any, required by Section 3.5 with respect to
any Loans paid prior to the expiration date of the Interest Period applicable
thereto; and
(d) Borrower shall pay all unpaid costs and expenses and all
other Obligations payable under the Loan Documents.
Section 4.4. Mandatory Prepayment in Respect of Certain Events. All
proceeds or other cash payments received by Borrower in respect of a
Distribution to Borrower or in respect of the sale, lease or other disposition
by Borrower of any asset, other than the sale of Inventory in the ordinary
course of business, shall be promptly paid to Administrative Agent, for the
account of Lenders, for application to the Obligations in such manner as the
Administrative Agent may determine in its discretion.
Section 4.5. Reserved.
Section 4.6. General Payment Provisions. All payments to be made by
Borrower under the Loan Documents shall be made without set-off, recoupment,
or counterclaim. Except as otherwise expressly provided herein, all payments
by Borrower shall be made in Dollars and in immediately available funds to
Administrative Agent, for the account of Lenders, at its address set forth in
Section 14.6, no later than 2:00 p.m. on the date specified herein. Any
payment received by Administrative Agent later than 2:00 p.m. shall be deemed
to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue. Whenever any payment is due on a day
other than a Business Day, such payment shall be due on the following Business
Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.
Section 4.7. Application. All payments not relating to amounts due on
Loans or specific fees, and all proceeds of Accounts or other Collateral
received and applied by Administrative Agent pursuant to Section 5.3, shall be
applied, subject to the provisions of this Agreement, first, to pay to
Administrative Agent and/or Lenders any Lender Expenses then due; second, to
interest due and payable in respect of any outstanding Swing Loans; third, to
interest due and payable in respect of the remaining Obligations; fourth, to
pay or prepay principal of the Loans (including the Swing Loans), in such
manner and order as Administrative Agent determines in its discretion; and
fifth, to the payment of any other Obligations, in such manner and order as
Administrative Agent determines in its discretion. Administrative Agent shall
have the continuing right to apply and reverse and reapply any application,
subject to the terms of this Agreement.
Section 4.8. Reinstatement. If after receipt and application of any
payment or proceeds any such application is invalidated, set aside, determined
to be void or voidable for any reason, then the Obligations or part thereof
intended to be satisfied by such application shall be revived and continued
and this Agreement shall continue in full force as if such payment or proceeds
had not been received by Administrative Agent and the Borrower shall be liable
to pay to Administrative Agent, for the account of Lenders, and Borrower
hereby does indemnify Lenders and Administrative Agent and defend and hold
Lenders and Administrative Agent harmless in, an amount equal to the amount of
such application. The provisions of this Section 4.8 shall survive the
termination of this Agreement.
LOAN AND SECURITY AGREEMENT - Page 21
Section 4.9. Account Stated. Administrative Agent will provide to
Borrower a monthly statement of Loans, payments, and other transactions
pursuant to this Agreement. Such statement shall be deemed correct, accurate,
and binding on Borrower and an account stated, subject to reversals and
reapplications made as provided in Section 4.8 and corrections of errors
discovered by Administrative Agent, unless Borrower notifies Administrative
Agent in writing to the contrary within thirty (30) days after such statement
is rendered. In the event a timely written notice of objections is given by
Borrower, only the items to which exception is expressly made will be
considered to be disputed.
ARTICLE V
COLLATERAL
----------
Section 5.1. Security Interest. As security for the payment and
performance of the Obligations, Borrower hereby grants to Administrative
Agent, for the benefit of the Lender Parties, a continuing security interest,
lien and collateral assignment in all of Borrower's right, title and interest
in and to all of the following, in each case both now owned and hereafter
acquired: all Accounts, Inventory, Equipment, General Intangibles, Chattel
Paper, Letter of Credit Rights, Proprietary Rights, Instruments, Documents and
documents of title, Investment Property, Deposit Accounts, the Pledged Cash
Collateral, Commercial Tort Claims, money, cash, cash equivalents, securities
and other personal property of any kind at any time held directly or
indirectly by Borrower or any affiliate of Borrower, all books and records,
whether in tangible or intangible form, all other assets, if any, and all
accessions to, substitutions for and replacements, products and proceeds of
any of the foregoing. Administrative Agent's Liens shall continue in full
force and effect in all Collateral until all Obligations have been
indefeasibly and fully paid and all commitments of the Lenders under this
Agreement have been terminated.
Section 5.2. Perfection and Protection of Administrative Agent's
Security Interest. Administrative Agent's Liens at all times shall be and
remain first, prior and senior to any other interests in the Collateral,
except as may be expressly agreed otherwise by Administrative Agent in
writing. Borrower shall take all action requested by Administrative Agent at
any time to perfect, maintain, protect and enforce Administrative Agent's
Liens and to ensure that Administrative Agent's Liens at all times are first,
prior and senior to any other interests in the Collateral, except as may be
expressly agreed otherwise by Administrative Agent in writing. Without
limiting the foregoing, unless Administrative Agent agrees otherwise in
writing, Borrower will deliver to Administrative Agent the originals of all
Instruments, Documents and Chattel Paper, duly endorsed or assigned to
Administrative Agent without restriction, and all certificates of title
covering any portion of the Collateral for which certificates of title have
been issued, together with executed applications for corrected certificates of
title and other such documentation as may be requested by Administrative
Agent. If at any time any Collateral is located on any leased premises not
owned by Borrower, then Borrower shall, at the request of Administrative
Agent, obtain written landlord lien waivers or subordinations with respect to
such Collateral, in form and substance satisfactory to Administrative Agent.
If any Collateral is at any time in the possession or control of any
warehouseman, bailee, processor or any other Person other than Borrower, then
Borrower shall notify Administrative Agent thereof and shall, at the request
of Administrative Agent, notify such Person (in form and substance
satisfactory to Administrative Agent) of Administrative Agent's Liens in such
Collateral and instruct such Person to hold all such Collateral for the
benefit of Administrative Agent subject to Administrative Agent's
instructions.
Section 5.3. Collateral Proceeds Management. All collections and
proceeds of Collateral shall be subject to an express trust for the benefit of
Administrative Agent, for the benefit of the Lender Parties, and shall be
delivered to Administrative Agent for application to the Obligations as
follows:
(a) Borrower shall establish a lock-box service for collections
of Accounts at Bank of America, N.A., or other financial institution
acceptable to Administrative Agent, and subject to a
LOAN AND SECURITY AGREEMENT - Page 22
collection account agreement by such bank, establishing Control in favor of
Administrative Agent and providing, among other things, that (i) all items of
payment received in such lock-box are received by such bank for the Lender
Parties, (ii) such bank has no rights of setoff or recoupment or any other
claim against such items (other than for payment of its service fees and other
charges directly related to the administration of such lock-box), and (iii)
such bank will immediately deposit all such collections to an account of
Administrative Agent, for the benefit of the Lender Parties. Borrower shall
instruct all Account Debtors in writing to cause, and otherwise take
reasonable steps to cause, all payments to be delivered directly to the
address established for such lock-box service.
(b) Borrower will not use, dispose, withhold or otherwise
exercise dominion over any proceeds of Collateral. If Borrower at any time
receives any proceeds of Collateral, it shall receive such proceeds as
Administrative Agent's trustee and shall immediately deliver such proceeds to
Administrative Agent, for the benefit of the Lenders, in their original form
duly endorsed in blank or to the order of Administrative Agent.
(c) All payments received by Administrative Agent pursuant to
Section 5.3(a) or Section 5.3(b) shall be credited to the Obligations
(conditional upon final collection) after allowing two (2) Business Days for
collection, provided, that such payments shall be deemed to be credited to the
Obligations immediately upon receipt for purposes of determining Availability
and calculating the unused line fee pursuant to Section 3.2(b).
Section 5.4. Examinations; Inspections; Verifications. Administrative
Agent shall have the right at any time without hindrance or delay to conduct
field examinations to inspect the Collateral and to inspect, audit and copy
Borrower's books and records relating to the Collateral or Borrower's
business. Administrative Agent is authorized to discuss Borrower's affairs
with any Person, including without limitation employees of Borrower, as
Administrative Agent may deem necessary in relation to the Collateral,
Borrower's business or financial condition or Administrative Agent's or
Lenders' rights under the Loan Documents. Borrower agrees to pay
Administrative Agent's customary fees and disbursements relating to such field
examinations and the preparation of reports thereof (provided, that for so
long as no Default or Event of Default has occurred, Borrower's obligation to
pay such fees and disbursements is limited to not more than once per Fiscal
Quarter). Administrative Agent shall have full access to all records available
to Borrower from any credit reporting service, bureau or similar service and
shall have the right to examine and make copies of any such records.
Administrative Agent may exhibit a copy of this Agreement to such service and
such service shall be entitled to rely on the provisions hereof in providing
access to Administrative Agent as provided herein. If requested by
Administrative Agent, Borrower will deliver to Administrative Agent any
authorization or consent necessary for Administrative Agent to obtain records
from any such service.
Section 5.5. Appraisals. At any time when a Default or Event of Default
exists, and also at such other times not more frequently than once per Fiscal
Quarter as Administrative Agent requests, Borrower shall, at its expense,
provide Administrative Agent with appraisals, or updates of appraisals, of any
Collateral, prepared by an appraiser acceptable to Administrative Agent and on
a basis satisfactory to the Administrative Agent.
Section 5.6. Right to Cure. Administrative Agent may pay any amount or
do any act required of Borrower hereunder or under any other Loan Document in
order to preserve, protect, maintain or enforce the Collateral or
Administrative Agent's Liens, and which Borrower fails to pay or do, including
payment of any judgment lien, insurance premium, charge, landlord's or
bailee's claim on or with respect to the Collateral. All payments that
Administrative Agent makes under this Section 5.6 and all costs, fees and
expenses that Administrative Agent pays or incurs in connection therewith
shall be paid or reimbursed to Administrative Agent on demand. Any action
taken by Administrative Agent under this
LOAN AND SECURITY AGREEMENT - Page 23
Section 5.6 shall not waive any Default or Event of Default or any rights of
Administrative Agent or Lenders with respect thereto.
Section 5.7. Power of Attorney. Borrower hereby irrevocably appoints
Administrative Agent as Borrower's agent and attorney-in-fact to take any
action necessary to preserve and protect the Collateral and Administrative
Agent's interests under the Loan Documents or to sign and file any document
necessary to perfect Administrative Agent's Liens. Without limiting the
foregoing:
(a) Administrative Agent shall have the right at any time to take
any of the following actions, in its own name or in the name of Borrower,
whether or not an Event of Default is in existence: (i) make written or verbal
requests for verification of the validity, amount or any other matter relating
to any Collateral from any Person, (ii) endorse Borrower's name on checks,
instruments or other evidences of payment on Collateral, (iii) sign and file,
in Borrower's name or in Administrative Agent's name as secured party, any
proof of claim or other document in any bankruptcy proceedings of any Account
Debtor or obligor on Collateral, (iv) access, copy or utilize any information
related to the Collateral, recorded or contained in any computer or data
processing equipment or system maintained by Borrower in respect of the
Collateral and (v) open mail addressed to Borrower and take possession of
checks or other proceeds of Collateral for application in accordance with this
Agreement.
(b) Administrative Agent shall have the right at any time to
take any of the following actions, in its own name or in the name of Borrower,
at any time when any Event of Default is in existence: (i) notify any or all
Persons which Administrative Agent believes may be Account Debtors or obligors
on Collateral to make payment directly to Administrative Agent, for the
benefit of the Lenders, for the account of Borrower, (ii) redirect the deposit
and disposition of collections and proceeds of Collateral; provided, that such
proceeds shall be applied to the Obligations as provided by this Agreement,
(iii) settle, adjust, compromise or discharge Accounts or extend time of
payment upon such terms as Administrative Agent may determine, (iv) notify
post office authorities, in the name of Borrower or in the name of
Administrative Agent, as secured party, to change the address for delivery of
Borrower's mail to an address designated by Administrative Agent, (v) sign
Borrower's name on any invoice, ▇▇▇▇ of lading, warehouse receipt or other
document of title relating to any Collateral and (vi) clear Inventory through
customs in Borrower's name, in Administrative Agent's name as secured party or
in the name of Administrative Agent's designee, and to sign and deliver to
customs officials powers of attorney in Borrower's name for such purpose.
The powers granted under this Section 5.7 are coupled with an interest and
are irrevocable until all Obligations have been indefeasibly paid in full and
all commitments of Lenders under this Agreement have been terminated. Costs,
fees and expenses incurred by Administrative Agent in connection with any of
such actions by Administrative Agent, including attorneys' fees and
out-of-pocket expenses, shall be reimbursed to Administrative Agent on demand.
Section 5.8. Preservation of Administrative Agent's Rights. To the
extent allowed by law, neither Administrative Agent, Lenders, their Affiliates
nor any of their officers, directors, members, managers, employees or agents
shall be liable or responsible in any way for the safekeeping of any
Collateral or for any act or failure to act with respect to the Collateral, or
for any loss or damage thereto or any diminution in the value thereof, or for
any act by any other Person. In the case of any instruments and chattel paper
included within the Collateral, Administrative Agent shall have no duty or
obligation to preserve rights against prior parties. The Obligations shall not
be affected by any failure of Administrative Agent or Lenders to take any
steps to perfect its security interests or to collect or realize upon the
Collateral, nor shall loss of or damage to the Collateral release Borrower
from any of the Obligations.
LOAN AND SECURITY AGREEMENT - Page 24
Section 5.9. Letter of Credit. As additional credit support for the
Obligations, Borrower agrees to cause the Letter of Credit to be issued and
delivered to Agent on the Agreement Date.
ARTICLE VI
CONDITIONS
----------
Section 6.1. Conditions Precedent to Initial Loan. The obligation of
Lenders to make the initial extension of credit under this Agreement is
subject to the fulfillment, to Administrative Agent's satisfaction, of each of
the following conditions precedent:
(a) Administrative Agent shall have received each of the
following, in each case in form and substance satisfactory to Administrative
Agent:
(i) A copy of the organizational documents of Borrower
and all amendments thereto, accompanied by the certificate of the
appropriate Governmental Authority of Borrower's jurisdiction of
organization bearing a current date acceptable to Administrative
Agent, to the effect that such copy is correct and complete and
that Borrower is duly organized and validly existing in such
jurisdiction;
(ii) Certification by the appropriate Governmental
Authority, bearing a current date acceptable to Administrative
Agent, to the effect that Borrower is in good standing and
qualified to transact business in Borrower's jurisdiction of
organization and in each other jurisdiction where Borrower
transacts business;
(iii) a copy of the bylaws or similar governing document of
Borrower and all amendments thereto, (B) certification of the
name, signature and incumbency of all officers of Borrower who are
authorized to execute any Loan Document or request Loans on behalf
of Borrower and (C) a copy of authorizing resolutions approving
this Agreement and the other Loan Documents to be executed and
delivered by Borrower, authorizing the transactions contemplated
thereby, and authorizing and directing a named officer or officers
of Borrower to sign and deliver all Loan Documents to be executed
by Borrower, duly adopted by Borrower's board of directors or
similar governing body of Borrower, all accompanied by a
certificate from a Responsible Officer of Borrower dated as of the
Agreement Date to the effect that each such item is true and
complete and in full force and effect as of the Agreement Date;
(iv) This Agreement, duly executed by Borrower;
(v) Evidence of insurance in compliance with the
requirements of this Agreement;
(vi) All third-party waivers, subordinations and consents
as may be required by Administrative Agent with respect to any
Collateral located on premises not owned by Borrower;
(vii) A Subordination Agreement with respect to any Debt
proposed by Borrower as Subordinated Debt and a copy of the
instrument evidencing any such debt;
(viii) A Guaranty of payment of the Obligations, executed by
Parent;
(ix) The Parent Pledge Agreement;
LOAN AND SECURITY AGREEMENT - Page 25
(x) If requested by Administrative Agent, a security
agreement in respect of Proprietary Rights;
(xi) Evidence satisfactory to Administrative Agent that
Availability, after giving effect to the initial Revolving Loans,
paying all fees and Lender Expenses required to be paid by this
Agreement (and with all taxes paid and trade indebtedness reduced
to within 30 days of terms), will be in an amount equal to or
greater than $1,000,000;
(xii) UCC-3 termination statements, partial releases or
such other releases as may be required by Administrative Agent
with respect to the Collateral;
(xiii) Copies of Borrower's unaudited financial statements
for the Fiscal Year ending December 31, 2010;
(xiv) Copies of Borrower's unaudited financial statements
for the period ending March 31, 2011;
(xv) Financial statements of each Guarantor, certified by
it as being true, correct and complete;
(xvi) An opinion of counsel for Borrower and each
Guarantor, respectively, in form and substance satisfactory to
Administrative Agent;
(xvii) A request for Revolving Loan and Borrowing Base
Certificate as required by Section 8.5(a) duly executed by a
Responsible Officer;
(xviii) the Letter of Credit;
(xix) A copy of IRS Form 8821, listing Administrative
Agent as "Appointee" and otherwise completed in a manner
satisfactory to Administrative Agent, signed by Borrower and filed
with the appropriate office of the Internal Revenue Service; and
(xx) A closing certificate, certifying to the satisfaction
of conditions precedent specified by this Section 6.1, duly
executed by a Responsible Officer;
(b) Borrower shall have established cash proceeds management and
Control of all Deposit Accounts in which proceeds of Accounts will be
deposited, pursuant to Section 5.3, and confirmed that Borrower's reporting
systems are acceptable to Administrative Agent;
(c) Administrative Agent shall have filed all financing statements
as required to perfect Administrative Agent's Liens in all Collateral with
respect to which perfection can be achieved by filing a financing statement,
and shall have received evidence or other confirmation of such filing,
satisfactory to Administrative Agent;
(d) Administrative Agent shall have Control of the Pledged Cash
Collateral;
(e) Administrative Agent shall have received satisfactory
reference checks with respect to Borrower's senior management;
(f) (i) Borrower shall have established arrangements with G2
Secure Staff, LLC, or a wholly owned Subsidiary thereof, providing for the
outsourcing of Borrower's general and administrative functions, pursuant to a
written agreement in form and substance satisfactory to Administrative Agent
LOAN AND SECURITY AGREEMENT - Page 26
(the "Services Agreement"), a copy of which shall have been delivered to
Administrative Agent and (ii) Agent shall have established arrangements for
the provision of services to Agent, as secured party, in connection with the
Services Agreement, pursuant to a written agreement in form and substance
satisfactory to Administrative Agent;
(g) Administrative Agent shall have completed confirmation of
Borrower's Accounts, and the results of such confirmation shall be
satisfactory to Administrative Agent;
(h) Borrower shall have paid all Lender Expenses; and
(i) All legal and business matters in connection with the
transaction contemplated by this Agreement shall be satisfactory to
Administrative Agent.
Section 6.2. Conditions Precedent to all Loans. In addition to the
conditions precedent specified by Section 6.1, the obligation of Lender to
make any Loan shall be subject to the following conditions precedent:
(a) All representations and warranties in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the date of such Loan, as though such representations and warranties are
made on and as of such date (except to the extent any such representations and
warranties relate solely to an earlier date);
(b) No Default or Event of Default shall have occurred and be
continuing on the date of such Loan, and no Default or Event of Default will
occur after giving effect to such Loan;
(c) The funding of such Loan shall not be prohibited by any
Applicable Law;
(d) Borrower shall have satisfied all applicable requirements
for requesting such Loan; and
(e) Administrative Agent shall be satisfied in its discretion
that no Material Adverse Effect shall have occurred or will occur after giving
effect to such Loan.
Any request for a Loan pending at a time when any condition precedent
specified by Section 6.1 or Section 6.2 is not satisfied may be declined by
Administrative Agent without prior notice.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Lender Parties to enter into this Agreement and
make Loans, Borrower makes each of the following representations and
warranties to the Lender Parties as being true, complete and correct in all
material respects.
Section 7.1. Fundamental Information. Schedule 7.1 sets forth, for each
of Borrower and its Subsidiaries and other Affiliates, respectively (a) its
legal name, (b) its federal tax identification number, (c) its jurisdiction of
organization, (d) its address of its chief executive office, (e) jurisdictions
in which qualification is necessary in order for it to own or lease its
property and conduct its business, (f) the relationship to Borrower of each of
such Subsidiaries and other Affiliates, and (g) a true and complete listing of
each class of Borrower's and each such Subsidiary's and Affiliate's Equity
Interests, all of which are validly issued, outstanding, fully paid and
non-assessable, and owned beneficially and of record by the Person identified
therein. Borrower is a registered organization, as defined by the UCC, duly
organized and validly existing and in good standing under the laws of its
jurisdiction of organization, and
LOAN AND SECURITY AGREEMENT - Page 27
is qualified to do business and is in good standing as a foreign organization
in each jurisdiction in which qualification is necessary in order for it to
own or lease its property and conduct its business and has all requisite power
and authority to conduct its business and to own its property.
Section 7.2. Prior Transactions. Borrower has not, during the past five
(5) years, (a) changed its name or used any fictitious name, (b) been a party
to any merger or organizational change or (c) acquired any of its property
outside of the ordinary course of business.
Section 7.3. Subsidiaries. Borrower has no Subsidiaries except as shown
in Schedule 7.3.
Section 7.4. Authorization, Validity and Enforceability. Borrower has
the corporate power and authority to execute, deliver and perform this
Agreement and the other Loan Documents to which it is a party, to incur the
Obligations, and to grant the Administrative Agent's Liens. Borrower has taken
all necessary action to properly authorize its execution, delivery and
performance of the Loan Documents to which it is a party. This Agreement and
the other Loan Documents to which Borrower is a party have been duly executed
and delivered by Borrower, and constitute the legal, valid and binding
obligations of Borrower, enforceable against it in accordance with their
respective terms.
Section 7.5. Noncontravention. Borrower's execution, delivery, and
performance of this Agreement and the other Loan Documents to which it is a
party do not and will not conflict with, or constitute a violation of or
breach or default under (a) Borrower's organizational documents, (b) any
agreement or instrument to which Borrower is a party or which is otherwise
binding upon Borrower or (c) any Applicable Law applicable to Borrower or any
of its Subsidiaries.
Section 7.6. Financial Statements and Projections. Borrower has
delivered to Administrative Agent its unaudited balance sheet and related
statements of income, retained earnings, cash flows and changes in
stockholders' equity for Borrower and its consolidated Subsidiaries as of
December 31, 2010 and for the Fiscal Year then ended. Borrower has also
delivered to Administrative Agent the unaudited balance sheet and related
statements of income and cash flows for Borrower and its consolidated
Subsidiaries as of April 30, 2011. All such financial statements have been
prepared in accordance with GAAP and present accurately and fairly the
financial position of Borrower and its consolidated Subsidiaries as at the
dates thereof and their results of operations for the specified periods. No
Material Adverse Effect has occurred since the dates of such financial
statements, respectively.
Section 7.7. Litigation. Except as set forth on Schedule 7.7, there is
no pending or, to the best of Borrower's knowledge, threatened, action, suit,
proceeding or claim by any Person, or to the best of Borrower's knowledge,
investigation by any Governmental Authority, or any basis for any of the
foregoing, which could cause a Material Adverse Effect.
Section 7.8. ERISA and Employee Benefit Plans. Except for those that
could not cause a Material Adverse Effect, (x) each ERISA Benefit Plan is in
compliance with applicable provisions of ERISA, the IRC and other Applicable
Law and (y) there are no existing or pending (or to the knowledge of Borrower,
threatened) claims (other than routine claims for benefits in the normal
course), sanctions, actions, lawsuits or other proceedings or investigations
involving any ERISA Benefit Plan to which Borrower incurs or otherwise has or
could have a material obligation or any material liability. No ERISA Affiliate
is required to contribute to, or has any other absolute or contingent
liability in respect of, any "multiemployer plan" as defined in Section 4001
of ERISA. No "accumulated funding deficiency" (as defined in Section 412(a) of
the IRC) exists with respect to any ERISA Benefit Plan, whether or not waived
by the Secretary of the Treasury or his delegate, and the current value of
each ERISA Benefit
LOAN AND SECURITY AGREEMENT - Page 28
Plan's benefits does not exceed the current value of such ERISA Benefit Plan's
assets available for the payment of such benefits.
Section 7.9. Compliance with Laws. Each of Borrower and its Subsidiaries
each are in compliance, in all material respects, with Applicable Law.
Section 7.10. Taxes. Except as disclosed in Schedule 7.10, Borrower and
its Subsidiaries have filed all federal and other tax returns and reports
required to be filed, and have paid all federal and other taxes, assessments,
fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable unless any such unpaid
taxes, assessments fees or other charges would constitute a Permitted Lien.
Section 7.11. Location of Collateral and Books and Records. Schedule
7.11 is a complete list of the location of the Collateral and of Borrower's
books and records. Borrower is the owner of each location, except as
identified in Schedule 7.11. If any such location is not owned by Borrower,
Schedule 7.11 includes the name and mailing address of the owner thereof.
Section 7.12. Accounts. Each Account represents a bona fide sale or
lease and delivery of goods by Borrower, or rendition of services by Borrower
in the ordinary course of Borrower's business. Each Account is for a
liquidated amount payable by the Account Debtor thereon on the terms set forth
in the invoice therefor and in the schedule of Accounts delivered to
Administrative Agent, without any offset, deduction, defense or counterclaim
except those known to Borrower and disclosed to Administrative Agent in
writing. No payment has been received, and no credit, discount or extension or
agreement has been granted, on any Account except as reported to
Administrative Agent in writing. Each copy of an invoice delivered to
Administrative Agent by Borrower is a genuine copy of the original invoice
sent to the Account Debtor named therein. All goods described in any invoice
representing a sale of goods have been delivered to the Account Debtor named
therein and all services of Borrower described in each invoice representing
services have been performed.
Section 7.13. Inventory. No negotiable documents have been issued in
respect of any Inventory.
Section 7.14. Documents, Instruments, and Chattel Paper. All Documents,
Instruments and Chattel Paper, and all signatures and endorsements thereon,
are complete, valid and genuine.
Section 7.15. Proprietary Rights. Schedule 7.15 sets forth a correct and
complete list of all Proprietary Rights owned by Borrower. None of such
Proprietary Rights is subject to any licensing agreement or similar
arrangement except as set forth on Schedule 7.15. To Borrower's knowledge,
none of such Proprietary Rights infringes on or conflicts with any other
Person's property, and no other Person's property infringes on or conflicts
with such Proprietary Rights. The Proprietary Rights described on Schedule
7.15 and all other Propriety Rights in which Borrower has an interest
constitute all of the property necessary to the current and anticipated future
conduct of Borrower's business.
Section 7.16. Investment Property. Schedule 7.16 sets forth a correct
and complete list of all Investment Property owned by Borrower. Borrower is
the legal and beneficial owner of such Investment Property and has not sold,
granted any option with respect to, assigned or transferred, or otherwise
disposed of any of its rights or interest therein.
Section 7.17. Reserved.
LOAN AND SECURITY AGREEMENT - Page 29
Section 7.18. Material Agreements. Schedule 7.18 sets forth all material
agreements to which Borrower or any of its Subsidiaries is a party or is
otherwise bound.
Section 7.19. Bank Accounts. Schedule 7.19 contains a complete list of
all Deposit Accounts, securities accounts and commodity accounts maintained by
Borrower.
Section 7.20. Title to Property. Borrower has good, valid, marketable
and exclusive title to all of its property, free of all Liens except Permitted
Liens. Except as disclosed on Schedule 7.20, Borrower possesses all licenses,
permits, franchises, patents, copyrights, trademarks and trade names, and
other intellectual property (or otherwise possesses the right to use such
intellectual property without violation of the rights of any other Person)
which are necessary to carry out its business as presently conducted and as
presently proposed to be conducted hereafter, and Borrower is not in violation
in any material respect of the terms under which it possesses such
intellectual property or the right to use such intellectual property.
Administrative Agent's Liens are not subject or junior to any other Lien.
Section 7.21. Debt. After giving effect to the making of the initial
Loans, Borrower and its Subsidiaries have no Debt except (a) the Obligations,
(b) Debt described on Schedule 7.21 and (c) trade payables and other
contractual obligations arising in the ordinary course of business.
Section 7.22. Liens. There are no Liens on any property of Borrower
other than Liens, if any, described on Schedule 7.22.
Section 7.23. Solvency. Borrower is Solvent prior to and after giving
effect to the making of the initial Loans and all subsequent Loans.
Section 7.24. Non-Regulated Entities. Neither Borrower nor any Affiliate
of Borrower is an "Investment Company" within the meaning of the Investment
Company Act of 1940. Borrower is not subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or law, or any other federal or
state statute or regulation limiting its ability to incur indebtedness.
Section 7.25. Governmental Authorization. No approval, consent,
exemption, authorization or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, Borrower or any
of its Subsidiaries of this Agreement or any other Loan Document.
Section 7.26. Investment Banking or Finder's Fees. Neither Borrower nor
any of its Subsidiaries has agreed to pay or is otherwise obligated to pay or
reimburse any Person with respect to any investment banking or similar or
related fee, underwriter's fee, finder's fee or broker's fee in connection
with this Agreement, except as has been disclosed to Administrative Agent
prior to the Agreement Date.
Section 7.27. Full Disclosure. None of the representations or warranties
made by Borrower in the Loan Documents and none of the statements contained in
any Schedule or any report, statement or certificate furnished to
Administrative Agent by or on behalf of Borrower in connection with the Loan
Documents contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
Section 7.28. Other Obligations and Restrictions. Borrower does not have
any outstanding liabilities of any kind (including contingent obligations, tax
assessments, or long-term commitments) of a
LOAN AND SECURITY AGREEMENT - Page 30
nature and type required to be set forth as a liability on a balance sheet in
accordance with GAAP which are, in the aggregate, material to Borrower or
material with respect to Borrower's consolidated financial condition that are
not reflected on the financial statements delivered pursuant to Section 8.4 or
in the notes thereto or that were not incurred since March 31, 2011 in the
ordinary course of business. Borrower is not subject to or restricted by any
franchise, contract, deed, charter restriction, or other instrument or
restriction which could cause a Material Adverse Effect.
Section 7.29. Acts of God and Labor Disputes. Neither the business nor
the properties of Borrower has been affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (whether or not
covered by insurance), which could cause a Material Adverse Effect.
Section 7.30. Environmental and Other Laws. (a) Except as individually
or in the aggregate could not result in a Material Adverse Effect, Borrower is
conducting its business in material compliance with all Applicable Laws,
including Environmental Laws, and is in compliance with all licenses and
permits required under any such laws; (b) to the knowledge of Borrower, none
of the operations or properties of Borrower is the subject of federal, state
or local investigation evaluating whether any material remedial action is
needed to respond to a release of any Hazardous Materials into the environment
or to the improper storage or disposal (including storage or disposal at
offsite locations) of any Hazardous Materials, except as set forth on Schedule
7.30; (c) Borrower has not (and to the knowledge of Borrower, no other Person
has) filed any notice under any Applicable Law indicating that Borrower is
responsible for the improper release into the environment, or the improper
storage or disposal, of any material amount of any Hazardous Materials or that
any Hazardous Materials have been improperly released, or are improperly
stored or disposed of, upon any property of Borrower; (d) Borrower has not
transported or arranged for the transportation of any Hazardous Material to
any location which is (i) listed on the National Priorities List under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, listed for possible inclusion on such National Priorities List by
the Environmental Protection Agency in its Comprehensive Environmental
Response, Compensation and Liability Information System List, or listed on any
similar state list or (ii) the subject of federal, state or local enforcement
actions or other investigations which may lead to claims against Borrower for
clean-up costs, remedial work, damages to natural resources or for personal
injury claims (whether under Environmental Laws or otherwise); and (e)
Borrower has no known material contingent liability under any Environmental
Laws or in connection with the release into the environment, or the storage or
disposal, of any Hazardous Materials.
Section 7.31. Subsidiaries. None of Borrower's Subsidiaries own any
material assets.
Section 7.32. Security Interests.
(a) Administrative Agent, for the benefit of the Lenders, has a
valid and perfected first priority security interest in the Collateral,
subject only to Permitted Liens, and
(b) no further or subsequent filing, recording, registration,
other public notice or other action is necessary or desirable to perfect or
otherwise continue, preserve or protect Administrative Agent's security
interest in the Collateral except (i) for continuation statements described in
UCC ss.9.515(d), (ii) for filings required to be filed in the event of a
change in the name, identity, or structure of such Credit Party, or (iii) in
the event any financing statement filed by Administrative Agent, for the
benefit of the Lenders, relating hereto otherwise becomes inaccurate or
incomplete.
Section 7.33. Continuing Representations. Each request for a Loan, and
acceptance by Borrower of the proceeds of any Loan, shall constitute a
representation and warranty by Borrower, as of
LOAN AND SECURITY AGREEMENT - Page 31
the date of each such request and acceptance, and after giving effect thereto
that all such representations and warranties in this Agreement are true,
complete and correct in all material respects, as of each such date, as though
separately made and stated on and as of each such date (except to the extent
that any such representations and warranties expressly relate solely to an
earlier date, in which case such representations and warranties shall be true,
complete and correct in all material respects as of such earlier date). All
representations and warranties under this Agreement shall survive the
execution and delivery of this Agreement.
ARTICLE VIII
AFFIRMATIVE COVENANTS
---------------------
Until termination of this Agreement and the indefeasible payment and
performance in full of the Obligations, Borrower agrees as follows:
Section 8.1. Existence and Good Standing. Borrower and its Subsidiaries
each shall maintain its existence and its qualification and good standing in
all jurisdictions in which the failure to maintain such qualification or good
standing could reasonably be expected to have a Material Adverse Effect.
Section 8.2. Compliance with Agreements and Laws. Borrower will perform
all obligations it is required to perform under the terms of each indenture,
mortgage, deed of trust, security agreement, lease, franchise, agreement,
contract or other instrument or obligation to which it is a party or by which
it or any of its properties is bound, except where failure to do so could not
have a Material Adverse Effect. Borrower will conduct its business and affairs
in compliance with all Applicable Laws applicable thereto, except where the
failure to do so would not have a Material Adverse Effect. Borrower will cause
all licenses and permits necessary for the conduct of its business and the
ownership and operation of its property used and property reasonably expected
to be used in the conduct of its business to be at all times maintained in
good standing and in full force and effect, except where failure to do so
could not have a Material Adverse Effect.
Section 8.3. Books and Records. Borrower shall maintain at all times
correct and complete books and records in which complete, correct and timely
entries are made of its transactions in accordance with GAAP applied
consistently with the audited financial statements required to be delivered
pursuant to Section 8.4.
Section 8.4. Financial Reporting. Borrower shall promptly furnish to
Administrative Agent all such financial information with respect to Parent,
Borrower and its Subsidiaries as Administrative Agent may reasonably request.
Without limiting the foregoing, Borrower will furnish to Administrative Agent
the following:
(a) (i) on or before June 3, 2011, with respect to December 31,
2010 and (ii) as soon as available, but in any event not later than one
hundred twenty (120) days after the end of each Fiscal Year thereafter,
consolidated audited and consolidating audited balance sheets, and statements
of income and expense, cash flow and of stockholders' equity for each of (A)
Parent and (B) Borrower and its Subsidiaries, for such Fiscal Year, and the
accompanying notes thereto, prepared in accordance with GAAP, in reasonable
detail and fairly presenting the financial position and results of operations
of Parent, and Borrower and its consolidated Subsidiaries, respectively, as of
the date thereof and for the Fiscal Year then ended. Such statements shall be
examined in accordance with generally accepted auditing standards by
independent certified public accountants selected by Parent and Borrower, as
applicable, and reasonably satisfactory to Administrative Agent, whose report
thereon shall not be qualified in any respect. Borrower hereby authorizes
Administrative Agent to communicate directly with its certified public
accountants and, by this provision, authorizes such accountants to disclose to
Administrative Agent any and all financial statements and other supporting
financial documents and
LOAN AND SECURITY AGREEMENT - Page 32
schedules relating to Borrower and to discuss directly with Administrative
Agent the finances and affairs of Borrower.
(b) As soon as available, but in any event not later than thirty
(30) days after the end of each Fiscal Month, consolidated and consolidating
unaudited balance sheets of (i) Parent and (ii) Borrower and its consolidated
Subsidiaries, as of the end of such Fiscal Month, and consolidated and
consolidating unaudited statements of income and expense and cash flow for
Parent, and Borrower and its consolidated Subsidiaries, respectively, for such
Fiscal Month and for the period from the beginning of the Fiscal Year to the
end of such Fiscal Month, all in reasonable detail, fairly presenting the
financial position and results of operations of Parent, and Borrower and its
consolidated Subsidiaries, respectively, as of the date thereof and for such
Fiscal Months, and prepared in accordance with GAAP applied consistently with
the audited financial statements required by Section 8.4(a). Borrower shall
certify by a certificate signed by a Responsible Officer that all such
statements have been prepared in accordance with GAAP and present fairly,
subject to normal year-end adjustments, the financial position of Parent and
Borrower, respectively, as of the dates thereof and its results of operations
for the Fiscal Months then ended.
(c) No sooner than sixty (60) days and not less than thirty (30)
days prior to the beginning of each Fiscal Year, annual forecasts (to include
forecasted consolidated and consolidating balance sheets, statements of income
and expenses and statements of cash flow) for Borrower and its Subsidiaries as
of the end of and for each Fiscal Month of such Fiscal Year.
(d) As soon as available, but in any event not later than
fifteen (15) days after Borrower's receipt thereof, a copy of all management
reports and management letters prepared for Parent or Borrower by any
independent certified public accountants of Parent or Borrower.
(e) Promptly after filing, a copy of each tax return filed by
Borrower and each Guarantor.
(f) Such additional information as Administrative Agent may from
time to time reasonably request regarding the financial and business affairs
of Borrower or any of its Subsidiaries.
Section 8.5. Collateral Reporting. Borrower shall timely provide the
following to Administrative Agent:
(a) At least once during each calendar week, at the time of each
request for a Revolving Loan and at any other time requested by Administrative
Agent, a Borrowing Base Certificate including (i) a detailed calculation of
the Borrowing Base; (ii) a certification of Eligible Accounts, and (ii) all
supporting documents and information (including, without limitation, sales
journals, credit memos, cash receipts journals, reconciliation of changes from
the most recent certificate delivered to Administrative Agent);
(b) Monthly, not later than the fifteenth (15th)] day of each
Fiscal Month:
(i) a schedule of Accounts and a schedule of payments on
Accounts, as of the last day of the preceding Fiscal Month;
(ii) a reconciliation to the Borrowing Base as calculated
in the most recent Borrowing Base Certificate delivered to
Administrative Agent, in the form prescribed by Administrative
Agent;
LOAN AND SECURITY AGREEMENT - Page 33
(iii) an aging of Borrower's Accounts as of the last day of
the preceding Fiscal Month, showing (A)(i) Accounts aged 30 days
or less from date of invoice, (ii) Accounts aged over 30 days, but
less than 61 days, from date of invoice, (iii) Accounts aged over
60 days, but less than 91 days, from date of invoice, (iv)
Accounts aged over 90 days, but less than 120 days, from date of
invoice, and (v) Accounts aged 120 days or more from date of
invoice and (B) a listing of the name and complete address of each
Account Debtor and such other information as Administrative Agent
may request and (C) a reconciliation to the previous calendar
month's aging of Borrower's Accounts and to Borrower's general
ledger;
(iv) an aging of Borrower's accounts payable as of the last day
of the preceding Fiscal Month;
(v) upon request, copies of invoices in connection with the
Borrower's Accounts, customer statements, credit memos, remittance
advices and reports, deposit slips, shipping and delivery
documents in connection with the Borrower's Accounts and for
Inventory and Equipment acquired by the Borrower, purchase orders
and invoices; and
(vi) at Administrative Agent's request, copies of invoices and
supporting delivery or service records, copies of credit memos or
other advices of credit or reductions against amounts previously
billed, shipping and delivery documents, purchase orders and such
other copies or reports in respect of any Collateral as
Administrative Agent may request from time to time.
Each Borrowing Base Certificate, schedule, reconciliation, aging, copy or
report delivered to Administrative Agent shall bear a signed statement by a
Responsible Officer of Borrower certifying the accuracy and completeness of
all information included therein. The execution and delivery of a Borrowing
Base Certificate shall in each instance constitute a representation and
warranty by Borrower to Administrative Agent and Lenders that no Account
included therein is excluded from inclusion in the Borrowing Base by clauses
(a) through (q) of the definition of "Eligible Accounts." In the event any
request for a Revolving Loan, or a Borrowing Base Certificate or other
information required by this Section 8.5 is delivered to Administrative Agent
by Borrower electronically or otherwise without signature, such request, or
such Borrowing Base Certificate or other information shall, upon such
delivery, be deemed to be signed and certified on behalf of Borrower by a
Responsible Officer and constitute a representation to Administrative Agent
and Lenders as to the authenticity thereof. Administrative Agent shall have
the right to review and adjust any such calculation of the Borrowing Base to
reflect exclusions from Eligible Accounts, reserves pursuant to Section 2.1,
declines in value of Collateral or such other matters as are necessary to
determine the Borrowing Base. Administrative Agent shall have the continuing
right to establish and adjust reserves in determining or re-determining the
Borrowing Base, pursuant to Section 2.1.
Section 8.6. Compliance Certificate. With each of the financial
statements delivered pursuant to Section 8.4(a) and Section 8.4(b),
respectively, Borrower shall deliver to Administrative Agent a certificate
signed by a Responsible Officer (i) setting forth in reasonable detail the
calculations required to establish that Borrower was in compliance with the
covenants set forth in Section 9.15 during the period covered in such
financial statements and as of the end thereof and (ii) stating that, except
as explained in reasonable detail in such certificate (A) all of the
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents are correct and complete in all material respects as at
the date of such certificate as if made at such time, except for those that
are solely effective as of a particular date, which shall be correct and
complete in all material respects as of such particular date, (B) on the
LOAN AND SECURITY AGREEMENT - Page 34
date of such certificate, Borrower is in compliance in all material respects
with all of its respective covenants and agreements in this Agreement and the
other Loan Documents, (C) no Default or Event of Default then exists or
existed during the period covered by such financial statements and (E)
Borrower does not reasonably expect that any Default or Event of Default will
occur. If such certificate discloses that a representation or warranty is not
correct or complete, or that a covenant has not been complied with, or that a
Default or Event of Default existed or exists or is reasonably expected to
occur, such certificate shall set forth what action Borrower has taken or
proposes to take with respect thereto.
Section 8.7. Notification to Administrative Agent. Borrower shall notify
Administrative Agent in writing immediately (a) after becoming aware of any
Default or Event of Default, or if Borrower reasonably expects that any
Default or Event of Default will occur, (b) after becoming aware of any event
or circumstance, including without limitation any pending or threatened
action, suit or claim by any Person, any pending or threatened investigation
by a Governmental Authority or any violation of any Applicable Law, that would
be treated as a contingent liability of Borrower under GAAP and is in an
amount in excess of $100,000 or which could have or cause a Material Adverse
Effect, (c) immediately if its board of directors or other governing board or
committee authorizes the filing by Borrower of a petition in bankruptcy, (d)
the acceleration of the maturity of any Debt owed by Borrower or of any
default by Borrower under any indenture, mortgage, agreement, contract or
other instrument to which Borrower is a party or by which any of its
properties is bound and is in an amount in excess of $100,000, and (e) any
claim of $100,000 or more, any notice of potential liability under any
Environmental Laws which might exceed such amount, or any other material
adverse claim asserted against Borrower or with respect to Borrower's
properties. Each notice given shall describe the subject matter thereof in
reasonable detail and specify the action that Borrower or any of its
Subsidiaries, as applicable, has taken or proposes to take with respect
thereto.
Section 8.8. Accounts. If Borrower becomes aware of any matter adversely
affecting the collectibility of any Account involving an amount greater than
$100,000 including information regarding the Account Debtor's
creditworthiness, Borrower will promptly so advise Administrative Agent.
Borrower will promptly notify Administrative Agent of all disputes and claims
in excess of $100,000 with respect to any Account Debtor. No discount, credit
or allowance shall be granted to any such Account Debtor without
Administrative Agent's prior written consent. On request by Administrative
Agent, Borrower shall deliver to Administrative Agent a copy of each credit
memorandum issued by Borrower.
Section 8.9. Control of Deposit Accounts. Except as provided by Section
6.1(b) and Section 6.1(d), not later than 90 days after the Agreement Date,
Borrower shall cause Administrative Agent to have Control of all of its
Deposit Accounts other than any Deposit Account utilized solely for funding
payroll and related withholding taxes.
Section 8.10 Reserved.
Section 8.11. Insurance. Borrower shall keep and maintain adequate
insurance with respect to its business and all Collateral, written by insurers
acceptable to Administrative Agent. Such insurance shall be with respect to
loss, damages, and liability of amounts acceptable to Administrative Agent and
shall include, at a minimum, business interruption, workers compensation,
general premises liability, fire, theft, casualty and all risk. Borrower will
make timely payment of all premiums required to maintain such insurance in
force. Borrower shall cause Administrative Agent to be an additional insured
and loss payee under all policies of insurance covering any of the Collateral,
to the extent of Administrative Agent's interest, in form satisfactory to
Administrative Agent. All insurance proceeds paid to Administrative Agent
shall be applied in reduction of the Obligations unless otherwise agreed by
LOAN AND SECURITY AGREEMENT - Page 35
Administrative Agent. Borrower shall deliver copies of each insurance policy
to Administrative Agent upon request.
Section 8.12. Payment of Trade Liabilities, Taxes, Etc. Borrower will
(a) timely file all required tax returns including any extensions; (b) timely
pay all taxes, assessments, and other governmental charges or levies imposed
upon it or upon its income, profits or property before the same become
delinquent; (c) within ninety (90) days past the original invoice billing date
after same becomes due, pay all material liabilities owed by it on ordinary
trade terms to vendors, suppliers and other Persons providing goods and
services used by it in the ordinary course of its business; (d) pay and
discharge when due all other material liabilities now or hereafter owed by it,
other than royalty payments suspended in the ordinary course of business; and
(e) maintain appropriate accruals and reserves for all of the foregoing in
accordance with GAAP. Borrower may, however, delay paying or discharging any
of the foregoing so long as it is in good faith contesting the validity
thereof by appropriate proceedings, if necessary, and has set aside on its
books adequate reserves therefore if required by GAAP.
Section 8.13. Performance on Borrower's Behalf. If Borrower fails to pay
any taxes, insurance premiums, expenses, attorneys' fees or other amounts it
is required to pay under any Loan Document, payment may be made by
Administrative Agent as a Protective Advance. Borrower shall immediately
reimburse Administrative Agent for any such payments and each amount paid by
Administrative Agent shall constitute an Obligation owed hereunder which is
due and payable on the date such amount is paid by Administrative Agent.
Section 8.14. Evidence of Compliance. Borrower will furnish to
Administrative Agent at Borrower's expense all evidence which Administrative
Agent may from time to time reasonably request in writing as to the accuracy
and validity of or compliance with all representations, warranties and
covenants made by Borrower in the Loan Documents, the satisfaction of all
conditions contained therein, and all other matters pertaining thereto.
Section 8.15. Environmental Matters; Environmental Reviews.
(a) Borrower and each of its Subsidiaries will comply in all
material respects with all Environmental Laws now or hereafter applicable to
such Person, as well as all contractual obligations and agreements with
respect to environmental remediation or other environmental matters, and shall
obtain, at or prior to the time required by applicable Environmental Laws, all
environmental, health and safety permits, licenses and other authorizations
necessary for its operations and will maintain such authorizations in full
force and effect, except for those which if not obtained could not have a
Material Adverse Effect. Neither Borrower nor any of its Subsidiaries will do
anything or permit anything to be done which will subject any of its
properties to any remedial obligations under, or result in noncompliance with
applicable permits and licenses issued under, any applicable Environmental
Laws, assuming disclosure to the applicable governmental authorities of all
relevant facts, conditions and circumstances.
(b) Borrower will promptly furnish to Administrative Agent all
written notices of violation, orders, claims, citations, complaints, penalty
assessments, suits or other proceedings received by Borrower or any of its
Subsidiaries, or of which Borrower otherwise has notice, pending or threatened
against any such Person by any governmental authority with respect to any
alleged violation of or non-compliance with any Environmental Laws or any
permits, licenses or authorizations in connection with such Person's ownership
or use of its properties or the operation of its business.
(c) Borrower will promptly furnish to Administrative Agent all
requests for information, notices of claim, demand letters, and other
notifications, received by Borrower in connection
LOAN AND SECURITY AGREEMENT - Page 36
with Borrower's or its Subsidiaries' ownership or use of its properties or the
conduct of its business, relating to potential responsibility with respect to
any investigation or clean-up of Hazardous Material at any location.
Section 8.16. Change of Name, Location, Jurisdiction of Incorporation or
Organization, or Structure; Additional Filings. Borrower recognizes that
financing statements pertaining to the Collateral have been filed where
Borrower is incorporated. Without limitation of any other covenant herein,
Borrower will not cause or permit any change to be made in its name, identity
or corporate structure, or any change to be made to a jurisdiction other than
as expressly provided herein with respect to (i) the location of any
Collateral, (ii) the location of any records concerning any Collateral, (iii)
the location of Borrower's chief executive office or principal place of
business or (iv) the jurisdiction of incorporation or organization of
Borrower, unless Borrower shall have first notified Administrative Agent of
such change at least forty-five (45) days prior to the effective date of such
change, taken all action requested by Administrative Agent for the purpose of
further confirming and protecting Administrative Agent's security interests
and rights under the Loan Documents and the perfection and priority thereof,
and if requested by Administrative Agent, provided to Administrative Agent a
legal opinion to its satisfaction in respect of the perfection or priority
thereof and such other matters as Administrative Agent may require. In any
notice furnished pursuant to this subsection, Borrower will expressly state
that the notice is required by this Agreement and contains facts that may
require additional filings of financing statements or other notices for the
purposes of continuing perfection of Administrative Agent's security interest
in the Collateral.
Section 8.17. Further Assurances. Borrower shall execute and deliver, or
cause to be executed and delivered, to Administrative Agent such documents and
agreements, and shall take or cause to be taken such actions, as
Administrative Agent may, from time to time, reasonably request to carry out
the terms and conditions of this Agreement and the other Loan Documents.
Section 8.18. Proprietary Rights. Borrower shall provide Administrative
Agent with an updated Schedule 7.15 at such time as the Borrower acquires any
new trademarks, copyrights or patents or begins the application process
therefor.
Section 8.19. Reserved.
ARTICLE IX
NEGATIVE COVENANTS
------------------
Section 9.1. Fundamental Changes. Neither Borrower nor any of its
Subsidiaries shall enter into any transaction of merger, reorganization or
consolidation, wind-up, liquidate or dissolve. Borrower will not change its
name, jurisdiction of organization, organizational type or location of its
chief executive office unless it gives the Administrative Agent at least
forty-five (45) days prior written notice thereof and executes all documents
that Administrative Agent reasonably requests in connection therewith.
Section 9.2. Collateral Locations. Borrower will not maintain any
Collateral at any location other than those locations listed on Schedule 7.11
unless it gives the Administrative Agent at least thirty (30) days prior
written notice thereof and delivers or causes to be delivered to
Administrative Agent all documents that Administrative Agent reasonably
requests in connection therewith, including without limitation, in the case of
any leased location, an access and waiver agreement, signed by the owner of
such location, in form and substance satisfactory to Administrative Agent.
Section 9.3. Use of Proceeds. Borrower will not use any proceeds of any
Loan, directly or indirectly, for any purpose other than (a) on the Agreement
Date, (i) to pay the Taxes listed on
LOAN AND SECURITY AGREEMENT - Page 37
Schedule 7.10 (which shall be paid at Borrower's direction directly to the
taxing authority to whom such Taxes are owed, (ii) to pay transactional fees,
costs and expenses incurred in connection with the Loan Documents and (iii) to
refinance or pay off indebtedness for money borrowed incurred prior to the
Agreement Date, and (b) on the Agreement Date and thereafter, for working
capital in the ordinary course of Borrower's business. Borrower will not use
any proceeds of any Loan, directly or indirectly, to purchase or carry margin
stock, repay or otherwise refinance indebtedness incurred to purchase or carry
Margin Stock or to extend credit for the purpose of purchasing or carrying any
Margin Stock.
Section 9.4. Business. Borrower and its Subsidiaries (i) will not
engage, directly or indirectly, in any line of business other than the
businesses in which Borrower and its Subsidiaries, respectively, are engaged
on the Agreement Date, and (ii) will not make any expenditure or commitment or
incur any obligation or enter into or engage in any transaction except in the
ordinary course of business.
Section 9.5. Debt. Neither Borrower nor any of its Subsidiaries shall
incur or maintain any Debt, other than (a) the Obligations, (b) trade payables
and contractual obligations to suppliers and customers arising in the ordinary
course of business, (c) Debt described on Schedule 7.21, (d) purchase money
secured Debt incurred to purchase Equipment, provided, that the aggregate
amount of such Debt outstanding does not exceed $50,000 annually, and (e) Debt
evidencing a refunding, renewal, or extension of Debt described in clause (d)
preceding, provided, that (i) the principal amount thereof is not increased at
the time of such renewal, refinancing, refunding, or extension, (ii) no
Guarantor that is not an obligor or guarantor of such Debt as of the Agreement
Date shall become an obligor or guarantor thereof and (iii) the terms of such
refunding, renewal, or extension are no less favorable to Borrower than the
original Debt.
Section 9.6. Guaranties. Neither Borrower nor any of its Subsidiaries
shall make, issue or be or become liable on any Guaranty, except in favor of
Administrative Agent.
Section 9.7. Liens. Neither Borrower nor any of its Subsidiaries shall
create, incur, assume, or permit to exist any Lien on any property now owned
or hereafter acquired by any of them, except Permitted Liens. Borrower will
not enter into or become subject to any agreement whereby Borrower is
prohibited from, or would otherwise be in default as a result of, creating,
assuming, incurring, or suffering to exist, directly or indirectly, any Lien
on any of its assets in favor of Administrative Agent or Lenders.
Section 9.8. Disposition of Property. Neither Borrower nor any of its
Subsidiaries will transfer, sell, assign, lease, license or otherwise dispose
of any of its property, or agree to do any of the foregoing, except the (a)
use of money or cash equivalents, not constituting proceeds of Collateral, in
the ordinary course of business and in a manner that is not prohibited by this
Agreement, (b) sale of Inventory in the ordinary course of business and (c)
sale or other disposition of Equipment in the ordinary course of business that
is obsolete or no longer useable by Borrower in its business, provided, that
(i) if such sale or disposition is made without replacement of such Equipment,
or such Equipment is replaced by Equipment leased by Borrower, then Borrower
shall deliver to Administrative Agent, for the account of Lenders, all net
proceeds of any such sale or disposition for application to the Obligations or
(ii) if such sale or disposition is made in connection with the purchase by
Borrower of replacement Equipment, then Borrower shall use the proceeds of
such sale or disposition to purchase such replacement Equipment and shall
deliver to Administrative Agent written evidence of the use of such proceeds
for such purchase.
Section 9.9. Sale and Leaseback. Neither Borrower nor any of its
Subsidiaries shall directly or indirectly enter into any arrangement with any
Person providing for Borrower or such Subsidiary to lease or rent property
that Borrower or such Subsidiary has sold or will sell or otherwise transfer
to such Person.
LOAN AND SECURITY AGREEMENT - Page 38
Section 9.10. Distributions; Capital Contribution; Redemption. No Credit
Party shall directly or indirectly declare or make, or incur any liability to
make, any Distribution, except (i) Distributions to Borrower by its
Subsidiaries, and (ii) Distributions by Borrower to holders of its Equity
Interests not exceeding the liability of each such holder for income taxes
solely attributable to Borrower's net income. No Credit Party will, directly
or indirectly, make any capital contribution of any nature to or purchase,
redeem, acquire or retire any share of the capital stock of or partnership or
limited liability company interests in any Credit party (whether such
interests are now or hereafter issued, outstanding or created), or cause or
permit any reduction or retirement of the capital stock of any Credit Party
while any Loan or commitment hereunder is outstanding.
Section 9.11. Restricted Investments. Neither Borrower nor any of its
Subsidiaries shall make any Restricted Investment.
Section 9.12. Reserved.
Section 9.13. Transactions with Affiliates. Borrower will not engage in
any transaction with any Affiliate except in the ordinary course of business
and in amounts and upon terms no less favorable to Borrower than would be
obtained in a comparable arm's-length transaction with a Person who is not an
Affiliate.
Section 9.14. New Subsidiaries. Borrower shall not organize, create or
acquire any Subsidiary.
Section 9.15. Financial Covenants.
(a) The Fixed Charge Coverage Ratio for Borrower (i) as of the
last day of any Fiscal Month of Borrower on or prior to April 30, 2012,
calculated for the period beginning on March 31, 2011 and continuing through
such test date, and (ii) as of the last day of any Fiscal Month of Borrower
after April 30, 2012, calculated for the 12 completed Fiscal Months ending on
such date of determination, shall not be less than the amount specified with
respect to such month, as follows:
Period Ending Fixed Charge Coverage Ratio
------------- ---------------------------
May 31, 2011 - 0.52
June 30, 2011 - 0.60
July 31, 2011 - 0.86
August 31, 2011 - 0.51
September 30, 2011 0.00
October 31, 2011 0.33
November 30, 2011 0.67
December 31, 2011 0.93
January 31, 2012 0.83
February 28, 2012 0.94
March 31, 2012 1.02
April 30, 2012 1.10
May 31, 2012 1.15
June 30, 2012 1.30
July 31, 2012 and thereafter 1.43
(b) EBITDA for Borrower (i) as of the last day of any Fiscal Month
of Borrower on or prior to April 30, 2012, calculated for the period beginning
on March 31, 2011 and continuing through such test date, and (ii) as of the
last day of any Fiscal Month of Borrower after April 30, 2012, calculated
LOAN AND SECURITY AGREEMENT - Page 39
for the 12 completed Fiscal Months ending on such date of determination, shall
not be less than the amount specified with respect to such month, as follows:
Period Ending Minimum EBITDA
------------- --------------
May 31, 2011 - $ 25,000
June 30, 2011 - $ 150,000
July 31, 2011 - $ 275,000
August 31, 2011 - $ 185,000
September 30, 2011 $ 0
October 31, 2011 $ 150,000
November 30, 2011 $ 335,000
December 31, 2011 $ 500,000
January 31, 2012 $ 625,000
February 28, 2012 $ 735,000
March 31, 2012 $ 840,000
April 30, 2012 $ 940,000
May 30, 2012 $ 950,000
June 30, 2011 $1,050,000
July 31, 2012 and thereafter $1,200,000
Section 9.16. Fiscal Year. Borrower will not change its Fiscal Year used
for financial reporting.
Section 9.17. Impairment of Security Interest. Borrower will not take or
fail to take any action which would in any manner impair the value or
enforceability of Lender's security interest in any Collateral. Further,
Borrower will not adjust, settle, compromise, amend or modify any of its
rights in the Collateral (other than in the ordinary course of business).
Section 9.18. Limitation on Credit Extensions. Borrower will not extend
credit, make advances or make loans other than (a) customary trade and
ordinary course extensions of credit and loans to customers buying goods,
suppliers and services in the ordinary course of business, (b) receivables
owing to Borrower created or acquired in the ordinary course of business, in
each case, which extensions of credit, receivables and loans shall not be for
longer periods than in the ordinary course of business and payable on
customary trade terms of Borrower and (c) transactions permitted by Section
9.11.
Section 9.19. Prohibited Contracts. Except as expressly provided for in
the Loan Documents, neither Borrower nor any of its Subsidiaries will,
directly or indirectly, enter into, create, or otherwise allow to exist any
contract or other consensual restriction on the ability of any Subsidiary of
Borrower to: (a) pay dividends or make other distributions to Borrower, (b) to
redeem equity interests held in it by Borrower, (c) to repay loans and other
indebtedness owing by it to Borrower, or (d) to transfer any of its assets to
Borrower. Borrower will not amend or permit any amendment to any contract or
lease which releases, qualifies, limits, makes contingent or otherwise
detrimentally affects the rights and benefits of Lender under or acquired
pursuant to any Loan Document.
Section 9.20. IRS Form 8821. Borrower shall not alter, amend, restate,
withdraw, terminate, re-file or otherwise modify the IRS Form 8821 filed by
Borrower pursuant to Section 6.1(a)(xix).
LOAN AND SECURITY AGREEMENT - Page 40
ARTICLE X
EVENT OF DEFAULT
----------------
Section 10.1. Event of Default. Each of the following shall constitute
an Event of Default under this Agreement:
(a) any failure by Borrower to timely pay any of the Obligations
when due;
(b) any representation or warranty made or deemed made by
Borrower in this Agreement or by Borrower or any of its Subsidiaries in any
Loan Documents, any financial statement, or any information furnished by
Borrower or such Subsidiary to Lenders or Administrative Agent shall be untrue
in any material respect as of the date on which made, deemed made or
furnished;
(c) any noncompliance or breach of any requirements contained
in:
(i) Sections 8.1 through 8.3, Sections 8.5 through 8.7,
Sections 8.9, 8.11, 8.12, and 8.16, Section 9.1, or Sections 9.3
through 9.15;
(ii) Section 8.4, Sections 8.8, 8.17 and 8.18 Section 9.2,
or Section 9.16 and any such failure continues for a period of
five (5) days; or
(iii) any provision of the Loan Documents other than those
listed in clauses (i) and (ii) preceding of this Section 10.1(c),
and such failure continues for a period of twenty five (25) days
after the earlier of Borrower's actual knowledge thereof or
written or verbal notice thereof by Administrative Agent to
Borrower;
(d) Borrower or any of its Subsidiaries shall (i) file a
voluntary petition in bankruptcy or otherwise commence any action or
proceeding seeking reorganization, arrangement or readjustment of its debts,
or consent to or acquiesce in any such petition, action or proceeding; (ii)
apply for or acquiesce in the appointment of a receiver, assignee, liquidator,
custodian, trustee or similar officer for it or for all or any part of its
property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;
(e) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking relief under the Bankruptcy Code or
seeking any reorganization, arrangement, consolidation or readjustment of the
debts of Borrower or any of its Subsidiaries under any other bankruptcy or
insolvency law;
(f) a receiver, assignee, liquidator, custodian, trustee or
similar officer shall be appointed for Borrower or any of its Subsidiaries or
for all or any part of its property or a warrant of attachment, execution or
similar process shall be issued against any part of the property of Borrower
or any of its Subsidiaries;
(g) Borrower or any of its Subsidiaries shall file a certificate
of dissolution or shall be liquidated, dissolved or wound-up or shall commence
or have commenced against it any action or proceeding for dissolution,
winding-up or liquidation, or shall take any action in furtherance thereof;
(h) default shall occur with respect to any Debt for borrowed
money (other than the Obligations) of the Borrower or any of its Subsidiaries
in an outstanding principal amount which exceeds $75,000 and such default
shall continue for more than the period of grace, if any, therein with respect
thereto, if the effect thereof (with or without the giving of notice or
further lapse of time or both) is to
LOAN AND SECURITY AGREEMENT - Page 41
accelerate, or to permit the holder of any such Debt to accelerate, the
maturity of any such Debt, or any such Debt shall be declared due and payable
or be required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof;
(i) one or more judgments, orders, decrees or arbitration awards
is entered against Borrower or any of its Subsidiaries involving in the
aggregate liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) of $50,000 or
more;
(j) the filing or commencement of any attachment, sequestration,
garnishment, execution or other Lien or action against or with respect to any
Collateral;
(k) any Loan Document ceases to be in full force and effect or
any Lien with respect to any material portion of the Collateral intended to be
secured thereby ceases to be, or is not, valid, perfected (for any reason
other than the failure of Administrative Agent to file a financing statement
or continuation thereof to maintain perfection) and prior to all other Liens
(other than Permitted Liens that are expressly allowed to be prior pursuant to
the Loan Documents) or is terminated, revoked or declared void, or any Loan
Document shall terminate (other than in accordance with its terms with the
written consent of Administrative Agent) or become void or unenforceable, or
the validity or enforceability of any Loan Document shall be contested by
Borrower or any Guarantor or any Affiliate of Borrower or any Guarantor or,
without limiting the foregoing, the Letter of Credit, is contested or
terminated (or any notice of termination thereof is sent to Administrative
Agent) by the issuer thereof;
(l) Administrative Agent at any time believes, in accordance
with the standards prescribed by the UCC, that the prospect for payment or
performance of the Obligations is impaired;
(m) the occurrence of any event or circumstance which
Administrative Agent believes in its discretion has resulted or may result in
a Material Adverse Effect; or
(n) a Change of Control occurs.
ARTICLE XI
RIGHTS AND REMEDIES
-------------------
Section 11.1. Obligations.
(a) Upon the occurrence of any Event of Default described in
Sections 10.1(d), 10.1(e), 10.1(f) or 10.1(g), this Agreement shall
automatically and immediately terminate and all Obligations shall
automatically become immediately due and payable without notice or demand of
any kind.
(b) If a Default or an Event of Default exists, Administrative
Agent may do any one or more of the following at any time or times and in any
order, without notice to or demand on Borrower: (i) reduce the Revolving
Credit Limit, or the advance rates used in computing the Borrowing Base, and
(ii) restrict the amount of or refuse to make Loans.
(c) If an Event of Default exists, Administrative Agent may do
any one or more of the following, in addition to the actions described in
clause (a) and clause (b) preceding, as applicable, at any time or times and
in any order, without notice to or demand on Borrower: (i) terminate the
Agreement, (ii) declare any or all Obligations to be immediately due and
payable and (iii) pursue its other rights and remedies under the Loan
Documents or otherwise under applicable law.
LOAN AND SECURITY AGREEMENT - Page 42
(d) Administrative Agent may present the Letter of Credit for
payment and apply the proceeds thereof to the Obligations, at any time in its
sole discretion, whether or not a Default or Event of Default has occurred and
remains in existence.
Section 11.2. Collateral. If an Event of Default has occurred and is
continuing, Administrative Agent shall have, in addition to all other rights
of Administrative Agent, the rights and remedies of a secured party under the
UCC. At any time when an Event of Default is in existence: (i) Administrative
Agent may notify Account Debtors to make payment directly to Administrative
Agent, for the account of Lenders, or to such address as Administrative Agent
may specify, and enforce, settle or adjust Accounts, General Intangibles or
Chattel Paper with Account Debtors or obligors thereon for amounts and upon
terms which Administrative Agent considers appropriate, and in such case,
Administrative Agent will credit the Obligations with only the net amounts
received by Administrative Agent in payment thereof after deducting all Lender
Expenses incurred or expended in connection therewith; (ii) Administrative
Agent may cause the Pledged Cash Collateral to be applied to the Obligations,
without prior notice; (iii) Administrative Agent may take possession of the
Collateral and keep it on Borrower's premises or remove all or any part of it
to another location selected by Administrative Agent; (iv) on request by
Administrative Agent, Borrower will, at Borrower's cost, assemble the
Collateral and make it available to Administrative Agent at a place reasonably
convenient to Administrative Agent; and (v) Administrative Agent may sell or
otherwise dispose of any Collateral at public or private sales, for cash, upon
credit or otherwise, at such prices and upon such terms as Administrative
Agent deems appropriate. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Administrative Agent will give Borrower reasonable notice of the time
and place of any public sale thereof or of the time after which any private
sale or any other intended disposition thereof is to be made. For this
purpose, it is agreed that at least five (5) days notice of the time of sale
or other intended disposition of the Collateral delivered in accordance with
Section 14.6 shall be deemed to be reasonable notice in conformity with the
UCC. Administrative Agent may adjourn or otherwise reschedule any public sale
by announcement at the time and place specified in the notice of such public
sale, and such sale may be made at the time and place as so announced without
necessity of further notice. Administrative Agent shall not be obligated to
sell or dispose of any Collateral, notwithstanding any prior notice of
intended disposition. If any Collateral is sold on terms other than payment in
full at the time of sale, no credit shall be given in reduction of the
Obligations until Administrative Agent receives payment in cash, and if any
such buyer defaults in payment, Administrative Agent may resell the Collateral
without further notice to Borrower. In the event Administrative Agent seeks to
take possession of all or any portion of the Collateral by judicial process,
Borrower waives the posting of any bond, surety or security with respect
thereto which might otherwise be required. Borrower agrees that Administrative
Agent has no obligation to preserve rights to the Collateral or marshal any
Collateral for the benefit of any Person. Administrative Agent is hereby
granted a license or other right to use, without charge, Borrower's labels,
patents, copyrights, name, trade secrets, trade names, trademarks in
completing production of, advertising or selling any Collateral, and
Borrower's rights under all licenses shall inure to Administrative Agent's
benefit for such purpose. The proceeds of any sale or disposition of
Collateral shall be applied first to all expenses of sale, including
reasonable attorneys' fees, and then to the Obligations. Borrower shall remain
liable for any deficiency.
Section 11.3. Injunctive Relief. All cash proceeds of Collateral from
time to time existing, including without limitation collections and payments
of Accounts, whether consisting of cash, checks or other similar items, at all
times shall be subject to an express trust for the benefit of Administrative
Agent. All such proceeds shall be subject to Administrative Agent's Liens.
Except as may be specifically allowed otherwise by this Agreement, Borrower is
expressly prohibited from using, spending, retaining or otherwise exercising
any dominion over such proceeds. Borrower acknowledges and agrees that an
action for damages against Borrower for any breach of such prohibitions shall
not be an adequate remedy at law. In the event of any such breach, Borrower
agrees to the fullest extent allowed by law that
LOAN AND SECURITY AGREEMENT - Page 43
Administrative Agent shall be entitled to injunctive relief to restrain such
breach and require compliance with the requirements of this Agreement.
Section 11.4. Setoff. Borrower irrevocably authorizes Administrative
Agent and/or Lenders to charge any account of Borrower maintained with
Administrative Agent or Lenders with such amount as may be necessary from time
to time to pay any Obligations when due. Borrower agrees that Administrative
Agent and Lenders shall have a contractual right to setoff any and all
deposits or other sums at any time credited by or due from Administrative
Agent or Lenders to Borrower against any part of the Obligations.
ARTICLE XII
TERM AND TERMINATION
--------------------
Section 12.1. Term and Termination. Administrative Agent may terminate
this Agreement without notice at any time on or after the continuation of an
Event of Default. Upon the effective date of termination of this Agreement for
any reason, Lenders' obligation to make Loans shall automatically terminate
and all Obligations shall become immediately due and payable in full.
Notwithstanding the termination of this Agreement, until all Obligations are
indefeasibly paid in cash and performed in full, Borrower shall remain bound
by the terms of this Agreement and Administrative Agent and Lenders shall
retain all rights and remedies under the Loan Documents.
ARTICLE XIII
ADMINISTRATIVE AGENT
--------------------
Section 13.1. Appointment and Authority. Each Lender hereby irrevocably
appoints NewStar Business Credit, LLC to act on its behalf as Administrative
Agent hereunder and under the other Loan Documents and authorizes
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article XIII are solely for the benefit of
Administrative Agent and the Lenders, and the Borrower shall not have rights
as a third party beneficiary of any of such provisions.
Section 13.2. Exculpatory Provisions. Administrative Agent shall not
have any duties or obligations except those expressly set forth herein and in
the other Loan Documents. Without limiting the generality of the foregoing,
Administrative Agent:
(a) shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default or an Event of Default has occurred
and is continuing;
(b) shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that
Administrative Agent is required to exercise as directed in writing by the
Required Lenders; provided that Administrative Agent shall not be required to
take any action that, in its opinion or the opinion of its counsel, may expose
Administrative Agent to liability or that is contrary to any Loan Document or
applicable law; and
(c) shall not, except as expressly set forth herein and in the
other Loan Documents, have any duty to disclose, and shall not be liable for
the failure to disclose, any information relating to Borrower or any of its
Affiliates that is communicated to or obtained by the Person serving as
Administrative Agent or any of its Affiliates in any capacity.
LOAN AND SECURITY AGREEMENT - Page 44
Administrative Agent shall not be liable for any action taken or not
taken by it (i) with the consent or at the request of Required Lenders (or as
Administrative Agent shall believe in good faith shall be necessary) or (ii)
in the absence of its own gross negligence or willful misconduct.
Administrative Agent shall be deemed not to have knowledge of any Default or
Event of Default unless and until notice describing such Default or Event of
Default is given to Administrative Agent by Borrower or Required Lenders.
Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made
in or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions
set forth herein or therein or the occurrence of any Default or Event of
Default, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Loan Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Article VI or
elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to Administrative Agent.
Section 13.3. Reliance by Administrative Agent. Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including any electronic message, Internet or
intranet website posting or other distribution) believed by it to be genuine
and to have been signed, sent or otherwise authenticated by the proper Person.
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to have been made by the proper Person, and shall
not incur any liability for relying thereon. In determining compliance with
any condition hereunder to the making of a Loan that by its terms must be
fulfilled to the satisfaction of the Lenders, Administrative Agent may presume
that such condition is satisfactory to all Lenders (i) if such condition is
satisfactory to Required Lenders, or (ii) unless Administrative Agent shall
have received notice to the contrary from such Lender prior to the making of
such Loan. Administrative Agent may consult with legal counsel (who may be
counsel for Borrower), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.
Section 13.4. Non-Reliance on Administrative Agent and other Lenders.
Each Lender acknowledges that it has, independently and without reliance upon
Administrative Agent or any other Lender or any of their Affiliates and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon
Administrative Agent or any other Lender or any of their Affiliates and based
on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.
Section 13.5. Rights as a Lender. The Person serving as Administrative
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not
Administrative Agent and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated or unless the context otherwise requires,
include the Person serving as Administrative Agent hereunder in its individual
capacity. Such Person and its Affiliates may accept deposits from, lend money
to, act as the financial advisor or in any other advisory capacity for and
generally engage in any kind of business with Borrower or any Subsidiary or
other Affiliate thereof as if such Person were not Administrative Agent
hereunder and without any duty to account therefor to the Lenders.
LOAN AND SECURITY AGREEMENT - Page 45
Section 13.6. Sharing of Set-Offs and Other Payments. Each Lender Party
agrees that if it shall, whether through the exercise of rights under the Loan
Documents or rights of banker's lien, set off, or counterclaim against
Borrower or otherwise, obtain payment of a portion of the aggregate
Obligations owed to it, taking into account all distributions made by
Administrative Agent under Section 4.7, causes such Lender Party to have
received more than it would have received had such payment been received by
Administrative Agent and distributed pursuant to Section 4.7, then (a) it
shall be deemed to have simultaneously purchased and shall be obligated to
purchase interests in the Obligations as necessary to cause all Lender Parties
to share all payments as provided for in Section 4.7, and (b) such other
adjustments shall be made from time to time as shall be equitable to ensure
that Administrative Agent and all Lender Parties share all payments of
Obligations as provided in Section 4.7; provided, however, that nothing herein
contained shall in any way affect the right of any Lender Party to obtain
payment (whether by exercise of rights of banker's lien, set-off or
counterclaim or otherwise) of indebtedness other than the Obligations.
Borrower expressly consents to the foregoing arrangements and agrees that any
holder of any such interest or other participation in the Obligations, whether
or not acquired pursuant to the foregoing arrangements, may to the fullest
extent permitted by law exercise any and all rights of banker's lien, set-off,
or counterclaim as fully as if such holder were a holder of the Obligations in
the amount of such interest or other participation. If all or any part of any
funds transferred pursuant to this section is thereafter recovered from the
seller under this section which received the same, the purchase provided for
in this section shall be deemed to have been rescinded to the extent of such
recovery, together with interest, if any, if interest is required pursuant to
the order of a tribunal order to be paid on account of the possession of such
funds prior to such recovery.
Section 13.7. Investments. Whenever Administrative Agent in good faith
determines that it is uncertain about how to distribute to Lender Parties any
funds which it has received, or whenever Administrative Agent in good faith
determines that there is any dispute among Lender Parties about how such funds
should be distributed, Administrative Agent may choose to defer distribution
of the funds which are the subject of such uncertainty or dispute. If
Administrative Agent in good faith believes that the uncertainty or dispute
will not be promptly resolved, or if Administrative Agent is otherwise
required to invest funds pending distribution to Lender Parties,
Administrative Agent shall invest such funds pending distribution; all
interest on any such investment shall be distributed upon the distribution of
such investment and in the same proportion and to the same Persons as such
investment. All moneys received by Administrative Agent for distribution to
Lender Parties (other than to the Person who is Administrative Agent in its
separate capacity as a Lender Party) shall be held by Administrative Agent
pending such distribution solely as Administrative Agent for such Lender
Parties, and Administrative Agent shall have no equitable title to any portion
thereof.
Section 13.8. Resignation of Administrative Agent. Administrative Agent
may at any time give notice of its resignation to the Lenders and Borrower.
Upon receipt of any such notice of resignation, the Lenders shall have the
right to appoint a successor. If no such successor shall have been so
appointed by the Lenders and shall have accepted such appointment within 30
days after the retiring Administrative Agent gives notice of its resignation,
then the retiring Administrative Agent may on behalf of the Lenders appoint a
successor Administrative Agent provided that if Administrative Agent shall
notify Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any Collateral held by Administrative
Agent on behalf of the Lenders under any of the Loan Documents, the retiring
Administrative Agent shall continue to hold such Collateral until such time as
a successor Administrative Agent is appointed) and (2) all payments,
communications and determinations provided to be made by, to or through
Administrative Agent shall instead be made by or to each Lender directly,
until such time as the Lenders appoint a successor Administrative Agent as
provided for above in this paragraph. Upon the acceptance of a successor's
LOAN AND SECURITY AGREEMENT - Page 46
appointment as Administrative Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Administrative Agent, and the retiring Administrative
Agent shall be discharged from all of its duties and obligations hereunder or
under the other Loan Documents (if not already discharged therefrom as
provided above in this paragraph). The fees payable by Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between Borrower and such successor. After the
retiring Administrative Agent's resignation hereunder and under the other Loan
Documents, the provisions of this Article and Sections 14.5 and 14.10 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Affiliates in respect of any actions taken or
omitted to be taken by any of them while the retiring Administrative Agent was
acting as Administrative Agent.
Section 13.9. Delegation of Duties. Administrative Agent may perform any
and all of its duties and exercise its rights and powers hereunder or under
any other Loan Document by or through any one or more sub-agents appointed by
Administrative Agent. Administrative Agent and any such sub-agent may perform
any and all of its duties and exercise its rights and powers by or through
their respective Affiliates. The exculpatory provisions of this Article shall
apply to any such sub-agent and to the Affiliates of Administrative Agent and
any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein
as well as activities as Administrative Agent.
Section 13.10. Collateral Matters.
(a) The Lenders hereby irrevocably authorize Administrative
Agent, at its option and in its sole discretion, to release any Lien on any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower of all Obligations, (ii) constituting
property being sold or disposed of if a release is required or desirable in
connection therewith and if Borrower certifies to Administrative Agent that
the sale or disposition is permitted under this Agreement or the other Loan
Documents (and Administrative Agent may rely conclusively on any such
certificate, without further inquiry), (iii) constituting property in which
Borrower or its Subsidiaries owned no interest at the time the Administrative
Agent's Lien was granted nor at any time thereafter, or (iv) constituting
property leased to Borrower or its Subsidiaries under a lease that has expired
or is terminated in a transaction permitted under this Agreement. Except as
provided above, Administrative Agent will not execute and deliver a release of
any Lien on any Collateral without the prior written authorization of (y) if
the release is of all or substantially all of the Collateral, all of the
Lenders, or (z) otherwise, the Required Lenders. Upon request by
Administrative Agent or Borrower at any time, the Lenders will confirm in
writing Administrative Agent's authority to release any such Liens on
particular types or items of Collateral pursuant to this Section 13.10;
provided, however, that (1) Administrative Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Administrative Agent's opinion, would expose Administrative Agent to liability
or create any obligation or entail any consequence other than the release of
such Lien without recourse, representation, or warranty, and (2) such release
shall not in any manner discharge, affect, or impair the Obligations or any
Liens (other than those expressly being released) upon (or obligations of
Borrower in respect of) all interests retained by Borrower, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(b) Administrative Agent shall have no obligation whatsoever to
any of the Lenders to assure that the Collateral exists or is owned by
Borrower or its Subsidiaries or is cared for, protected, or insured or has
been encumbered, or that the Administrative Agent's Liens have been properly
or sufficiently or lawfully created, perfected, protected, or enforced or are
entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Administrative Agent
LOAN AND SECURITY AGREEMENT - Page 47
pursuant to any of the Loan Documents, it being understood and agreed that in
respect of the Collateral, or any act, omission, or event related thereto,
subject to the terms and conditions contained herein, Administrative Agent may
act in any manner it may deem appropriate, in its sole discretion given
Administrative Agent's own interest in the Collateral in its capacity as one
of the Lenders and that Administrative Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing, except as
otherwise provided herein.
Section 13.11. Agency for Perfection. Administrative Agent hereby
appoints each other Lender as its agent (and each Lender hereby accepts such
appointment) for the purpose of perfecting the Administrative Agent's Liens in
assets which, in accordance with Article 8 or Article 9, as applicable, of the
UCC can be perfected by possession or control. Should any Lender obtain
possession or control of any such Collateral, such Lender shall notify
Administrative Agent thereof, and, promptly upon Administrative Agent's
request therefor shall deliver possession or control of such Collateral to
Administrative Agent or in accordance with Administrative Agent's
instructions.
Section 13.12. Concerning the Collateral and Related Loan Documents.
Each Lender Party authorizes and directs Administrative Agent to enter into
this Agreement and the other Loan Documents. Each Lender Party agrees that any
action taken by Administrative Agent in accordance with the terms of this
Agreement or the other Loan Documents relating to the Collateral and the
exercise by Administrative Agent of its powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall
be binding upon all of the Lenders.
ARTICLE XIV
MISCELLANEOUS
-------------
Section 14.1. Waivers & Amendments. No waiver or amendment of any
provision of any Loan Document and no consent to any departure therefrom shall
be effective unless it is in writing and signed as provided below in this
section, and then such waiver, amendment or consent shall be effective only in
the specific instances and for the purposes for which given and to the extent
specified in such writing. No waiver, consent, release, modification or
amendment of or supplement to this Agreement or the other Loan Documents shall
be valid or effective against any party hereto unless the same is in writing
and signed by (i) if such party is a Borrower, by such Borrower, (ii) if such
party is Administrative Agent, by Administrative Agent and (iii) if such party
is a Lender, by such Lender or by Administrative Agent on behalf of Lenders
with the written consent of Required Lenders; provided, however, that with
respect to any Lender that is an Affiliate of Administrative Agent and for
which Administrative Agent acts as servicer, the Administrative Agent may act
on such Lender's behalf. Notwithstanding the foregoing or anything to the
contrary herein, Administrative Agent shall not, without the prior consent of
each individual Lender, execute and deliver on behalf of such Lender any
waiver or amendment which would: (1) increase the maximum amount which such
Lender is committed hereunder to lend, (2) reduce any principal, interest or
fees payable to such Lender hereunder, (3) extend the Maturity Date or
postpone any date fixed for any payment of any such fees, principal or
interest, (4) amend the definition herein of "Required Lenders" or otherwise
change the aggregate amount of Percentage Shares which is required for
Administrative Agent, Lenders or any of them to take any particular action
under the Loan Documents, (5) release any Borrower from its obligation to pay
such Lender's Obligations, (6) release all or substantially all of the
Collateral, except for such releases relating to sales or dispositions of
property permitted by the Loan Documents, or (7) amend this Section 14.1.
Section 14.2. Severability. The illegality or unenforceability of any
provision of any Loan Document shall not in any way affect or impair the
legality or enforceability of the remaining provisions thereof.
LOAN AND SECURITY AGREEMENT - Page 48
Section 14.3. Governing Law; Venue.
(a) This Agreement and the other Loan Documents shall be
governed and construed in accordance with the laws of the State of Texas
without regard to its conflicts of law principles.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
TEXAS, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF BORROWER,
ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF BORROWER, ADMINISTRATIVE AGENT AND EACH
LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO VENUE ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION.
NOTWITHSTANDING THE FOREGOING, ADMINISTRATIVE AGENT AND EACH LENDER SHALL EACH
HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION AS ADMINISTRATIVE AGENT OR
LENDERS, AS THE CASE MAY BE, DEEMS NECESSARY OR APPROPRIATE IN ORDER TO
EXERCISE REMEDIES WITH RESPECT TO THE COLLATERAL.
Section 14.4. Waiver of Jury Trial. Borrower, Administrative Agent and
Lenders each irrevocably waives its respective right to a trial by jury of any
claim or cause of action based upon or arising out of or related to this
Agreement, the other Loan Documents, or the transactions contemplated hereby
or thereby, in any action, proceeding or other litigation of any kind brought
by either against the other, whether with respect to contract claims, tort
claims, or otherwise. Borrower, Administrative Agent and Lenders each agrees
that any such claim or cause of action shall be tried by a court without a
jury. Without limiting the foregoing, the parties further agree that their
respective right to a trial by jury is waived by operation of this section as
to any action, counterclaim or other proceeding which seeks, in whole or in
part, to challenge the validity or enforceability of this Agreement or the
other Loan Documents or any provision hereof or thereof. This waiver shall
apply to any subsequent amendments, renewals, supplements or modifications to
this Agreement and the other Loan Documents, whether or not specifically set
forth therein.
Section 14.5. Fees and Expenses. Borrower agrees to pay to
Administrative Agent and Lenders, on demand, all costs, fees and expenses that
Administrative Agent or Lenders, as the case may be, pays or incurs in
connection with the negotiation, preparation, consummation, administration,
enforcement, perfection and termination of this Agreement or any of the other
Loan Documents, including: (a) reasonable attorneys fees and costs for
preparation, negotiation and closing of the Loan Documents and any amendment,
supplement, waiver, consent or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby, (b) ongoing
administration of the Loan Documents, including without limitation, reasonable
attorneys fees and costs incurred in consultation with attorneys, (c) costs
and expenses of lien and title searches, (d) taxes, fees and other charges for
filing financing statements and other actions to perfect, protect and continue
Administrative Agent's Liens, (e) sums paid or incurred to pay any amount or
take any action required of Borrower under the Loan Documents that Borrower
fails to pay or take, (f) costs of appraisals, inspections and verifications
of the Collateral, including travel, lodging, and meals for inspections of the
Collateral and Borrower's operations by Administrative Agent, (g) costs and
expenses of disbursing Loans and administering cash management of Collateral
proceeds, including collection accounts and lock-boxes, (h) costs and expenses
of preserving and protecting the Collateral, (i) costs, fees and expenses,
including reasonable attorneys fees and costs, paid or incurred to enforce
Administrative Agent's Liens, sell or dispose of the Collateral, and obtain
payment of the Obligations and (j) costs and expenses, including reasonable
attorneys fees and
LOAN AND SECURITY AGREEMENT - Page 49
costs, paid or incurred to defend any claims made or threatened against
Administrative Agent or Lenders arising out of the transactions contemplated
by the Loan Documents (all such costs, expenses and fees described in this
Section 14.5, the "Lender Expenses"). The foregoing shall not limit any other
provisions of the Loan Documents regarding costs and expenses to be paid by
Borrower.
Section 14.6. Notices. Except as otherwise expressly provided in any
Loan Document, all notices, demands and requests that any party is required to
give to any other party shall be in writing and shall become effective (a)
upon personal delivery, (b) three (3) days after it shall have been mailed by
United States mail, first class, certified or registered, with postage
prepaid, or (c) when properly transmitted by telecopy, in each case addressed
to the party to be notified as follows:
If to Administrative Agent:
NewStar Business Credit, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Portfolio Manager, URGENT
with a copy (which shall not constitute notice) to:
HUNTON & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to a Lender: To the address set forth below such Lender's name
on Schedule 1.1 hereto
If to Borrower:
Huntleigh USA Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
or to such other address as each party may designate for itself by like
notice.
Section 14.7. Waiver of Notices. Unless otherwise expressly provided in
any Loan Document, Borrower hereby waives presentment and notice of demand or
dishonor and protest, notice of intent to accelerate the Obligations and
notice of acceleration of the Obligations, as well as any and all other
notices to which it might otherwise be entitled. No notice to or demand on
Borrower which
LOAN AND SECURITY AGREEMENT - Page 50
Administrative Agent or Lenders may elect to give shall entitle Borrower to
any or further notice or demand in the same, similar or other circumstances.
Section 14.8. Non-applicability of Chapter 15 of Texas Credit Code.
Chapter 15 of the Texas Credit Code shall not be applicable to this Agreement
or the Loans.
Section 14.9. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of Borrower, Administrative Agent and Lenders and their
respective representatives, successors, and assigns, provided, that no
interest herein may be assigned, and no obligation may be delegated, by
Borrower without prior written consent of Administrative Agent. The rights and
benefits of Administrative Agent and Lenders under the Loan Documents shall
inure to any Person acquiring any interest in the Obligations, unless
otherwise agreed by Administrative Agent, Lenders and any such Person.
Section 14.10. Indemnity of Lenders and Administrative Agent by
Borrower. Borrower agrees to defend, indemnify and hold each Indemnified
Person harmless from and against any and all Indemnified Claims, provided,
that Borrower shall have no obligation hereunder to any Indemnified Person
with respect to Indemnified Liabilities resulting solely and directly from the
willful misconduct or gross negligence of such Indemnified Person. The
agreements in this shall survive any termination of this Agreement or payment
of all other Obligations.
Section 14.11. Limitation of Liability. No claim may be made by Borrower
against Administrative Agent and/or Lenders or any of their Affiliates,
directors, officers, members, managers, employees or agents for any special,
indirect, consequential, exemplary or punitive damages in respect of any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or any other Loan
Document, or any act, omission or event occurring in connection therewith, and
Borrower hereby waives, releases and agrees not to ▇▇▇ upon any claim for such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
Section 14.12. Continuing Rights of Lenders in Respect of Obligations.
In the event any amount from time to time applied in reduction of the
Obligations is subsequently set aside, avoided, declared invalid or recovered
by Borrower or any trustee or in bankruptcy, or in the event any Lender is
otherwise required to refund or repay any such amount pursuant to any
applicable law, then the Obligations shall automatically be deemed to be
revived and increased to the extent of such amount and the same shall continue
to be secured by the Collateral as if such amount had not been so applied.
Section 14.13. Assignments.
(a) Lenders may at any time sell, assign, grant participations
in, delegate or otherwise transfer to any other Person (an "Assignee") all or
part of the rights and duties of a Lender under this Agreement and the other
Loan Documents. To the extent indicated in any document, instrument or
agreement so selling, assigning, granting participations in, or otherwise
transferring to an Assignee such rights and/or duties, (i) the Assignee shall
acquire all of such Lender's rights under the Agreement and the other Loan
documents and (ii) the Assignee shall be deemed to be the "Lender" under this
Agreement and the other Loan Documents with the authority to exercise such
rights in the capacity of Lender. Borrower hereby authorizes each Lender to
disseminate any information it has pertaining to the Obligations, including
without limitation, complete and current credit information on the Borrower,
each Guarantor and any of their principals to any Assignee or prospective
Assignee. Borrower hereby acknowledges and agrees that any assignment will
give rise to a direct obligation of Borrower to the Assignee and that the
Assignee shall be considered to be a Lender hereunder. The Lenders may at any
time (a) pledge the Obligations held by it or create a security interest in
all or any portion of its rights
LOAN AND SECURITY AGREEMENT - Page 51
under this Agreement or the other Loan Documents in favor of any Person;
provided, however, that (i) no such pledge or grant of security interest to
any Person shall release a Lender from its obligations hereunder or under any
other Loan Document and (ii) the acquisition of title to the Lender's
Obligations pursuant to any foreclosure or other exercise of remedies by such
Person shall be subject to the provisions of this Agreement and the other Loan
Documents in all respects.
(b) Except as otherwise provided herein, a Lender shall, as
between Borrower and such Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of a participation in, all or any part of the Loans or other
Obligations owed to such Lender. Such Lender may furnish any information
concerning Borrower from time to time to Assignees and participants and to any
Affiliate of such Lender or its parent company.
Section 14.14. Confidentiality. Borrower agrees, and agrees to cause
each of its Affiliates, (i) not to transmit or disclose any provision of any
Loan Document to any Person (other than to Borrower's advisors and officers on
a need-to-know basis, or as required by Applicable Law) without Administrative
Agent's prior written consent, (ii) to inform all Persons of the confidential
nature of the Loan Documents and to direct them not to disclose the same to
any other Person and to require each of them to be bound by these provisions.
Borrower agrees to submit to Administrative Agent and Administrative Agent
reserves the right to review and approve all materials that Borrower or any of
its Affiliates prepares that contain any Lender Party's name or describe or
refer to any Loan Document, any of the terms thereof or any of the
transactions contemplated thereby. Borrower shall not, and shall not permit
any of its Affiliates to, use any Lender Party's name (or the name of any of
their Affiliates) in connection with any of its business operations, including
without limitation, advertising, marketing or press releases or such other
similar purposes, without such Lender Party's prior written consent (except as
required by applicable law). Nothing contained in any Loan Document is
intended to permit or authorize Borrower or any of its Affiliates to contract
on behalf of any Lender Party.
Section 14.15. Acceptance and Performance. This Agreement shall become
effective only upon acceptance by Lenders and by Administrative Agent at its
office in Dallas, Dallas County, Texas. The Obligations are payable at
Administrative Agent's offices in Dallas, Dallas County, Texas.
Section 14.16. Schedules. All Schedules referenced herein and attached
hereto are incorporated in this Agreement and made a part hereof for all
purposes.
Section 14.17. Counterparts. This Agreement may be executed in any
number of counterparts, and signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document. A telecopy of
any such executed counterpart signature page shall be deemed valid as an
original.
Section 14.18. Captions. The captions contained in this Agreement are
for convenience of reference only, are without substantive meaning and may not
be construed to modify, enlarge or restrict any provision of this Agreement.
Section 14.19. Partial Release of Letter of Credit. Agent agrees to
surrender or otherwise terminate the Letter of Credit upon Borrower's written
request at any time following (and conditioned upon) satisfaction of each of
the following conditions: (a) timely completion of the "Migration Plan" and
occurrence of the "Commencement Date", as each such term is defined by the
Services Agreement, (b) delivery of Borrower's financial statements required
by Section 8.4(b) for the Fiscal Month ending August 31, 2011, and the
accompanying Compliance Certificate required by Section 8.6, therein
demonstrating compliance by Borrower with the requirements of Section 9.15 and
(c) no Default or Event of Default has occurred.
LOAN AND SECURITY AGREEMENT - Page 52
This Agreement and the other Loan Documents represent the final agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
Remainder of page blank
Signatures follow
LOAN AND SECURITY AGREEMENT - Page 53
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the Agreement Date.
HUNTLEIGH USA CORPORATION, as Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇, President
NEWSTAR BUSINESS CREDIT, LLC, as
Administrative Agent, Swing Lender and as
a Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President
LOAN AND SECURITY AGREEMENT - Page 54