LOAN AND SECURITY AGREEMENT
DATED AS OF JULY 7, 2010
between
SOVEREIGN BANK,
as Lender,
and
DYNASIL CORPORATION OF AMERICA,
as Borrower
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (as amended, modified
or supplemented from time to time, this "Agreement") is made
this 7th day of July, 2010 by and between SOVEREIGN BANK, a
federal savings bank ("Lender"), with an address at ▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and DYNASIL
CORPORATION OF AMERICA, a Delaware corporation ("Borrower"),
with an organizational identification or registration number
(if applicable) and chief executive office as listed on
Schedule 1(a) attached hereto.
WITNESSETH:
WHEREAS, Borrower may, from time to time, request Loans
from Lender, and the parties wish to provide for the terms
and conditions upon which such Loans or other financial
accommodations, if made by Lender, shall be made.
NOW, THEREFORE, in consideration of any Loan (including
any Loan by renewal or extension) hereafter made to Borrower
by Lender, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged
by Borrower, the parties agree as follows:
1. DEFINITIONS; ACCOUNTING PRINCIPLES.
(a) Definitions.
"Acquisition" shall mean any transaction, or any series
of related transactions, consummated after the Closing Date,
by which the Borrower and/or any of its Subsidiaries
directly or indirectly (a) acquires any ongoing business or
all or substantially all of the assets of any firm,
partnership, joint venture, limited liability company,
corporation or division thereof, whether through purchase of
assets, merger or otherwise, (b) acquires in one transaction
or as the most recent transaction in a series of
transactions control of securities of a Person engaged in an
ongoing business representing more than fifty percent (50%)
of the ordinary voting power for the election of directors
or other governing position if the business affairs of such
Person are managed by a board of directors or other
governing body, or (c) acquires control of more than fifty
percent (50%) of the ownership interest in any partnership,
joint venture, limited liability company, business trust or
other Person that is not managed by a board of directors or
other governing body.
"Acquisition Agreement" shall mean any agreement by and
between Borrower and/or any of its Subsidiaries, as
applicable, and another Person with respect to an
Acquisition, including all exhibits, annexes and schedules
thereto, and all amendments, modifications and supplements
thereof.
"Account", "Account Debtor", "Certificated Security",
"Chattel Paper", "Commercial Tort Claims", "Control",
"Deposit Accounts", "Documents", "Electronic Chattel Paper",
"Equipment", "Fixtures", "General Intangibles", "Goods",
"Instruments", "Inventory", "Investment Property", "Letter-
of-Credit Right", "Payment Intangible", "Proceeds",
"Securities Entitlement", "Securities Intermediary",
"Supporting Obligations", "Tangible Chattel Paper" and
"Uncertificated Security" shall have the respective meanings
assigned to such terms in the Uniform Commercial Code, as
the same may be in effect in the State of New Jersey from
time to time (the "UCC").
"Affiliate" shall mean, as to any Person, (a) any
other Person (other than a Subsidiary) which, directly or
indirectly, is in control of, is controlled by, or is under
common control with, such Person or (b) any Person who is a
director, officer, shareholder, member or partner (i) of
such Person, (ii) of any Subsidiary of such Person, or (iii)
of any Person described in the preceding clause (a). For
purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (i) vote securities
having ten percent (10%) or more of the ordinary voting
power for the election of directors or managers of such
Person or (ii) direct or cause the direction of the
management and policies of such Person whether by contract
or otherwise.
"Applicable Margin" shall mean a per annum percentage
equal to 3.50%.
"Applicable Revolver Margin" shall mean a per annum
percentage equal to 2.75%.
"Assets" means, at any time, all assets of every kind
of Borrower as would be shown on a financial statement of
Borrower prepared in accordance with GAAP.
"Assignment of Rents and Leases" shall have the
meaning specified in subsection 4(g) hereto.
"Borrower" shall have the meaning specified in the
initial paragraph of this Agreement, together with its
successors and assigns.
"Business Day" shall mean (a) any day which is neither
a Saturday or Sunday nor a legal holiday on which commercial
banks are authorized or required to be closed in the
Commonwealth of Pennsylvania; (b) when such term is used to
describe a day on which a borrowing, payment, prepaying, or
repaying is to be made in respect of any LIBOR Rate Loan,
any day which is: (i) neither a Saturday or Sunday nor a
legal holiday on which commercial banks are authorized or
required to be closed in the Commonwealth of Pennsylvania
and/or New York City; and (ii) a London Banking Day; and (c)
when such term is used to describe a day on which an
interest rate determination is to be made in respect of any
LIBOR Rate Loan, any day which is a London Banking Day.
"Capital Expenditures" shall mean for any period,
collectively, for any Person, the aggregate of all
expenditures which are made during such period (whether paid
in cash or accrued as liabilities) by such Person for
property, plant or equipment and which would be reflected as
additions to property, plant or equipment on a balance sheet
of such Person prepared in accordance with GAAP; provided
that Capital Expenditures of any Person shall not include
the purchase price paid by such Person in connection with
the consummation of an Acquisition to the extent allocable
to property, plant or equipment.
"Capital Lease" shall mean any lease of property which,
in accordance with GAAP, should be capitalized on the
lessee's balance sheet.
"Capital Lease Obligation" shall mean the amount of the
liability which, according to GAAP, should be capitalized or
disclosed with respect to a Capital Lease.
"Capital Stock" shall mean, as to any Person, all
shares, interests, partnership interests, limited liability
company interests, participations, rights in or other
equivalents (however designated) of such Person's equity
(however designated) and any rights, warrants or options
exchangeable for or convertible into such shares, interests,
participations, rights or other equity.
"Casualty Loss" shall have the meaning specified in
subsection 11(e)(i).
"Change of Control" shall mean the occurrence of one or
more of the following events:
(a) any Person (or group of related Persons for
the purposes of Section 13(d) of the Securities Exchange Act
of 1934, as amended) shall become the owner, directly or
indirectly, beneficially or of record, of shares
representing more than forty percent (40%) of the voting
stock of the Borrower; or
(b) the replacement, in any two-year period, of a
majority of the members of the Board of Directors of the
Borrower from the directors who constituted the members of
the Board of Directors of the Borrower at the beginning of
such period, and such replacement shall not have been
approved by a vote of at least a majority of the Board of
Directors of the Borrower then still in office who were
either members of such Board of Directors at the beginning
of such period or whose election as a member of such Board
of Directors was previously so approved.
"Closing Date" shall mean the date on which all of the
Initial Conditions Precedent set forth in Section 16(a) are
satisfied.
"Collateral" shall mean all of the property of Borrower
described in Section 4 hereof, together with the Real
Property and all other real or personal property of any
Obligor now or hereafter pledged to Lender to secure, either
directly or indirectly, repayment of any of the Liabilities.
"Compliance Certificate" shall have the meaning
specified in subsection 8(a) hereof.
"Consolidated EBITDA" shall mean, for the Borrower and
its Subsidiaries on a consolidated basis, without
duplication, with respect to any fiscal measurement period,
the sum of (a) net income (or loss) for that period, plus
(b) the aggregate closing costs and similar costs and
expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement, plus (c) any
other non-recurring or unusual expense or loss acceptable to
Lender in its sole discretion, minus (d) any non-recurring
gain included in such net income, plus (e) Interest Expense
for that period, plus (f) the aggregate amount of federal,
state and foreign taxes on or measured by income for that
period (whether or not payable during that period), plus (g)
depreciation and amortization expense for that period, plus
(h) non-cash stock compensation expenses in an aggregate
amount not exceeding $1,000,000.00 in any fiscal year, and
in the case of items (b) - (h), only to the extent included
in determining net income for that period, in each case as
determined in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" shall mean
with respect to Borrower and its Subsidiaries on a
consolidated basis, without duplication, for any fiscal
measurement period, the ratio of: (i) Consolidated EBITDA,
to (ii) Consolidated Fixed Charges.
"Consolidated Fixed Charges" shall mean with respect to
Borrower and its Subsidiaries on a consolidated basis,
without duplication, for any fiscal measurement period, the
sum of (a) the Interest Expense for such period, plus (b)
the aggregate principal amount of scheduled payments on any
Indebtedness of Borrower or any Subsidiary (including
without limitation all Capital Lease Obligations and the
Loans) made during such period, plus (c) the sum of all cash
dividends and other cash distributions to shareholders or
other equity owners paid by Borrower during such period,
plus (d) the sum of all taxes paid in cash by Borrowers
during such period, plus (e) all Unfunded Capital
Expenditures during such period.
"Consolidated Maximum Leverage Ratio" shall mean with
respect to Borrower and its Subsidiaries on a consolidated
basis, without duplication, for any fiscal measurement
period, the ratio of (i) Consolidated Total Funded Debt to
(ii) Consolidated EBITDA.
"Consolidated Total Funded Debt" shall mean with
respect to Borrower and its Subsidiaries on a consolidated
basis, without duplication, for any fiscal measurement
period, the aggregate Indebtedness of Borrower and its
Subsidiaries for borrowed money (including without
limitation all Capital Lease Obligations, all synthetic
lease obligations, all subordinated debt, and all
unreimbursed drawings under letters of credit), or any other
monetary obligation evidenced by a note, bond, debenture or
similar instrument or agreement of Borrower, as determined
in accordance with GAAP.
"Default" shall have the meaning specified in
subsection 2(a)(iii) hereof.
"Default Rate" shall have the meaning specified in
subsection 3(a)(iii) hereof.
"Environmental Laws" shall mean all federal, state,
district, local and foreign laws, rules, regulations,
ordinances, and consent decrees relating to health, safety,
hazardous substances, pollution and environmental matters,
as now or at any time hereafter in effect, applicable to the
Real Property or any other facilities owned or operated by
Borrower or any other Obligor, including laws relating to
emissions, discharges, releases or threatened releases of
pollutants, contamination, chemicals, or hazardous, toxic or
dangerous substances, materials or wastes into the
environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface
strata) or otherwise relating to the generation,
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous
Materials.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, modified or restated from
time to time.
"Event of Default" shall have the meaning specified in
Section 14 hereof.
"Existing Accounts" shall have the meaning specified in
subsection 11(j) hereof.
"Fiscal Year" shall mean each twelve (12) month
accounting period of Borrower, which ends on September 30 of
each year.
"Foreign Subsidiary" shall mean each Subsidiary of the
Borrower that is incorporated or organized under the laws of
and conducts substantially all of its business in any
jurisdictions other than the United States or any State
thereof.
"GAAP" shall mean generally accepted accounting
principals in the United States as in effect on the Closing
Date and applied on a basis consistent with the Pre-Closing
Financials.
"Governmental Authority" shall mean any nation or
government, any federal, state or other political
subdivision thereof and any federal, state or local entity
exercising executive, legislative, judicial, regulatory or
administrative functions of government.
"Guarantee" shall mean any guarantee delivered by a
Subsidiary of Borrower or other Person to Lender with
respect to any Liability, in form and substance satisfactory
to Lender, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Guarantor Collateral" shall mean all of the property
(tangible or intangible) purported to be subject to the lien
or security interest purported to be created by any
mortgage, deed of trust, security agreement, pledge
agreement, assignment or other security document heretofore
or hereafter executed by any Guarantor as security for all
or part of any Guarantee.
"Guarantor Collateral Documents" shall mean each
Subsidiary Security Agreement, each UCC-1 Financing
Statement filed pursuant to any of the foregoing and any
other document or agreement encumbering the Guarantor
Collateral or evidencing or perfecting a security interest
therein for the benefit of Lender executed by a Guarantor,
as the same may be amended, modified or supplemented from
time to time in accordance with the terms thereof.
"Guarantor(s)" shall mean individually or collectively
any Person who executes and delivers a Guarantee to Lender,
including without limitation all Subsidiaries of Borrower
(other than any Foreign Subsidiary).
"Hazardous Materials" shall mean any hazardous, toxic
or dangerous substance, materials and wastes, including,
without limitation, hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation,
radioactive materials, biological substances,
polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include
hazardous constituents), sewage, sludge, industrial slag,
solvents and/or any other similar substances, materials, or
wastes and including any other substances, materials or
wastes that are or become regulated under any Environmental
Law (including, without limitation any that are or become
classified as hazardous or toxic under any Environmental
Law).
"Hedging Agreements" shall have the meaning ascribed to
such term in the definition of "Hedging Obligations" in this
Section 1.
"Hedging Obligations" shall mean, with respect to any
Person, any and all obligations of such Person, whether
absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements, devices or
arrangements designed to protect at least one of the parties
thereto from the fluctuations of interest rates, commodity
prices, exchange rates or forward rates applicable to such
party's assets, liabilities or exchange transactions,
including dollar-denominated or cross-currency interest rate
exchange agreements, forward currency exchange agreements,
interest rate cap or collar protection agreements, forward
rate currency or interest rate options, puts and warrants or
any similar derivative transactions ("Hedging Agreements"),
and (ii) any and all cancellations, buy-backs, reversals,
terminations or assignments of any of the foregoing.
"Indebtedness", as applied to a Person, means:
(a) all items (except items of capital stock or of surplus)
which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side
of a balance sheet of such Person as at the date as of which
Indebtedness is to be determined;
(b) to the extent not included in the foregoing, all
indebtedness, obligations, and liabilities either (i)
incurred in connection with any capitalized lease
obligations or (ii) secured by any mortgage, pledge, lien,
conditional sale or other title retention agreement or other
security interest to which any property or asset owned or
held by such Person is subject, whether or not the
indebtedness, obligations or liabilities secured thereby
shall have been assumed by such Person; and
(c) to the extent not included in the foregoing, all
indebtedness and obligations (i) relating to liabilities of
others which such Person has directly or indirectly
guaranteed, endorsed (other that for collection or deposit
in the ordinary course of business), (ii) arising from sales
of property with recourse, (iii) relating to agreements
(contingently or otherwise) to purchase or repurchase or
otherwise acquire or in respect of which such Person has
agreed to supply or advance funds (whether by way of loan,
stock purchase, capital contribution or otherwise), (iv) in
respect of any letter of credit, banker's acceptance or
surety or other bond, and (v) in respect of any bond,
indenture or instrument.
Notwithstanding the foregoing, "Indebtedness" shall not
include trade payables incurred in the ordinary course of
business for the purchase of goods or services which are not
secured by a lien and which are not more than 90 days past
the invoice due date (including, without limitation,
payables under corporate credit cards). Indebtedness shall
also not include deferred payments owed on intercompany
sales made between Borrower and its Subsidiaries pursuant to
transfer pricing terms which would be customary for arm's-
length transactions between unrelated parties.
"Indemnified Party" shall have the meaning specified in
Section 17 hereof.
"Initial Conditions Precedent" shall have the meaning
specified in subsection 16(a).
"Interest Expense" shall mean, as of any date, with
respect to any Person, for any fiscal measurement period,
the sum of (a) all cash interest, unused commitment fees,
letter of credit fees and similar fees (in each case as such
expenses are calculated according to GAAP) paid or payable
for such fiscal period by such Person (including without
limitation, the interest and fees (as applicable) payable
under this Agreement and the net amount payable in cash
under all Hedging Agreements in respect of such period (or
minus the net amount receivable under all Hedging Agreements
in respect of such period)), plus (b) the portion of rent
paid or payable (without duplication) for such fiscal period
by that Person under Capitalized Lease Obligations that
should be treated as interest in accordance with GAAP;
provided that all debt issuance costs, debt discounts or
premiums, prepayment premiums and other financing fees and
expenses incurred by Borrower and directly related to the
consummation of the transactions contemplated by this
Agreement shall be excluded from the calculation of Interest
Expense..
"Issuer Reimbursement Payment" shall have the meaning
specified in subsection 2(a)(viii).
"Lender" shall have the meaning specified in the
initial paragraph of this Agreement, together with its
successors and assigns.
"Lender Hedging Agreement" shall mean any Hedging
Agreement entered into between Borrower or any Subsidiary
and Lender.
"Letter of Credit" shall mean any standby letter of
credit issued by Lender on behalf of Borrower in accordance
with the terms and provisions of this Agreement.
"Letter of Credit Obligations" shall mean, as of any
date of determination, the sum of (i) the aggregate undrawn
face amount of all outstanding Letters of Credit, (ii) the
aggregate unreimbursed amount of all draws under a Letter of
Credit not already converted to a Loan hereunder, and (iii)
any other unreimbursed amounts advanced by Lender on behalf
of Borrower, or owed by Borrower to Lender, in connection
with any Letter of Credit which amounts have not already
been converted to a Loan hereunder.
"Liabilities" or "Liability" shall mean any and all
obligations, liabilities and indebtedness of Borrower, any
Subsidiary of Borrower or any other Obligor to Lender, or to
any parent, affiliate or subsidiary of Lender, of any and
every kind and nature (specifically including without
limitation the obligation of any such Person to reimburse
Lender for (i) any amounts advanced and/or paid by Lender on
behalf of any such Person, (ii) all Hedging Obligations, and
(ii) any amounts drawn under any letters of credit issued by
Lender for the benefit of such Person), howsoever created,
arising or evidenced and howsoever owned, held or acquired,
whether now or hereafter existing, whether now due or to
become due, whether primary, secondary, direct, indirect,
absolute, contingent or otherwise (including, without
limitation, obligations of performance), whether several,
joint or joint and several, and whether arising or existing
under written or oral agreement or by operation of law,
including without limitation all obligations, liabilities
and Indebtedness of Borrower, any Subsidiary of Borrower or
any other Obligor under this Agreement or under any Other
Agreement.
"LIBOR" shall mean a rate per annum (rounded upward, if
necessary, to the nearest 1/32 of one percent) equal to the
composite London Interbank Offered Rate which appears on the
Reuters Screen LIBOR01 Page (or any successor page) as of
11:00 a.m. London time on the date of determination (or if
not reported thereon, then as determined by Lender from
another recognized source of interbank quotation).
"LIBOR Market Index Rate" shall mean, as of any date of
determination, a rate per annum equal to (a) the sum of each
daily LIBOR for one (1) month dollar deposits over the
proceeding thirty (30) Business Days divided by (b) thirty
(30). In the event the Board of Governors of the Federal
Reserve System shall impose a Reserve Percentage with
respect to LIBOR deposits of Lender, then for any period
during which such Reserve Percentage shall apply, the LIBOR
Market Index Rate shall be equal to the amount determined
above divided by an amount equal to one (1) minus the
Reserve Percentage or, if such rate shall exceed the maximum
rate permitted by law, at such lesser rate as shall be the
maximum rate permitted by law.
"LIBOR Rate Loan" shall mean a Loan bearing interest
with reference to the LIBOR Market Index Rate.
"Loans" shall mean all loans and advances made by
Lender to or on behalf of any of the Borrower hereunder, and
any portion(s) thereof, including but not limited to the
Revolving Loans, the Term Loan and the Permitted Acquisition
Loans.
"London Banking Day" shall mean a day on which
commercial banks are open for international business
(including without limitation dealings in US dollar
deposits) in London, England and the Commonwealth of
Pennsylvania.
"Material Adverse Change" shall mean an event or
occurrence that would reasonably be expected to have a
Material Adverse Effect on Borrower and the Guarantors,
taken as a whole.
"Material Adverse Effect" shall mean, with respect to
any Person, a material adverse effect on the business,
property, assets, operations or condition, financial or
otherwise, of such Person or on the ability of such Person
to perform its obligations and undertakings under this
Agreement or any Other Agreement.
"Maximum Permitted Acquisition Loan Limit" shall mean,
at any time, an amount equal to Five Million Dollars
($5,000,000.00).
"Maximum Revolving Loan Limit" shall mean, at any
time, an amount equal to Three Million Dollars
($3,000,000.00).
"Mortgage(s)" shall have the meaning specified in
subsection 4(f) hereof.
"New Jersey Facility" shall mean the real property
owned in fee by Borrower located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and shown on the current
official Tax Map of the Township of Berlin as ▇▇▇ ▇, ▇▇▇▇▇
▇▇▇▇, together with the following (referred to herein,
collectively, as the "New Jersey Facility Fixtures"):
fixtures, appliances, machinery and equipment of any nature
whatsoever and other articles of personal property at any
time now or hereafter installed in or attached to or
situated in or thereon or used or intended to be used in
connection therewith, or in the operation of the buildings
and improvements, plant, business or dwelling situate
thereon, whether or not the personal property is or shall be
affixed thereto or deemed to be a fixture and all renewals
or replacements thereof or articles in substitution
therefor.
"Notes" shall mean any or all, as the context may
require, of the Revolving Note, the Term Note and the
Permitted Acquisition Term Notes executed and delivered by
Borrower to Lender hereunder (as each of the same may be
amended, modified or supplemented from time to time).
"Obligor" shall mean Borrower, any Guarantor and any
other Person who at any time becomes liable in whole or in
part, for the Liabilities or pledges any real or personal
property to secure any or all of the Liabilities.
"Other Agreements" shall mean all agreements,
instruments and documents, other than this Agreement,
including, without limitation, all powers of attorney,
consents, assignments, contracts, notices, security
agreements, leases, financing statements, Mortgages, Notes,
Assignments of Rents and Leases, Lender Hedging Agreements
and all other writings heretofore, now or from time to time
hereafter executed by or on behalf of Borrower or any other
Person and delivered to Lender or to any parent, affiliate
or subsidiary of Lender in connection with the Liabilities
or the transactions contemplated hereby, including without
limitation any agreement, instrument or other document which
creates or gives rise to any Hedging Obligation, as each of
the same may be amended, modified or supplemented from time
to time.
"PBGC" shall have the meaning specified in subsection
11(b)(iv) hereof.
"Permitted Acquisition" shall mean an Acquisition by
the Borrower or any Subsidiary that satisfies each of the
following conditions:
(i) the business or assets acquired or business
of the entity whose Capital Stock is acquired shall be
complementary, ancillary, similar or related to
Borrower's then current lines of business;
(ii) at the time of such Acquisition no Default or
Event of Default exists and no Default or Event of
Default would occur as a result thereof on either an
actual or a pro forma basis;
(iii) the Borrower and each other party to the
Acquisition shall have complied with all applicable
laws, including without limitation any applicable state
takeover law;
(iv) the Acquisition has been approved by the
board of directors of Borrower and by the board of
directors (or similar governing body) of each other
party to the Acquisition and all other corporate
(including without limitation all required board,
manager, partner, shareholder, member, or other equity
owner approvals), governmental and third-party consents
and approvals necessary in connection with the
Acquisition shall have been obtained and shall remain
in effect; all applicable waiting periods shall have
expired or been terminated or waived without any
material adverse action being taken by any authority
having jurisdiction; and no law or regulation shall be
applicable that restrains, prevents or imposes material
adverse conditions upon the Acquisition;
(v) if the Acquisition is the first Permitted
Acquisition being consummated by Borrower hereunder,
the Acquisition includes the purchase of inventory,
accounts receivable, property, plant and/or equipment
which collectively has a value equal to or greater than
fifty percent (50%) of the total consideration
(excluding any earn-out payments and the aggregate
professional fees, other closing costs and similar
costs and expenses incurred by Borrower in connection
with the consummation of such Acquisition) being paid
by Borrower to complete such Acquisition;
(vi) if the Acquisition is not the first Permitted
Acquisition being consummated by Borrower hereunder,
the total proceeds of the Permitted Acquisition Loan
utilized by Borrower to complete such Acquisition
cannot exceed one hundred fifty percent (150%) of the
collective book value of all inventory, accounts
receivable, property, plant and/or equipment being
acquired;
(vii) the Person to be acquired in the
Acquisition shall be domiciled in the United States, be
the company previously identified by the Borrower to
Lender as being a party to the "Mayflower transaction,"
or any other Person domiciled in a country which has
previously been approved by Lender in its sole
discretion;
(viii) the Person to be acquired in the
Acquisition shall have a positive pro-forma EBITDA
(after giving effect to such Acquisition) and no
material contingent liabilities (other than earn-out
obligations created or incurred in connection with the
completion of the Acquisition);
(ix) the Person to be acquired in the Acquisition
shall be subject to consolidation under FIN 46;
(x) the consideration to be paid by Borrower
and/or any Subsidiary to consummate such Acquisition
consists solely of cash and earn-outs (including
without limitation proceeds of any Permitted
Acquisition Loan made hereunder) and/or capital stock
issued by Borrower; and
(xi) Borrower shall have delivered to Lender at
least ten (10) days prior to the consummation of the
Acquisition, the following information and
documentation pertaining to the Acquisition, in each
case in form and substance satisfactory to Lender:
(A) calculations certified by the Borrower's Chief
Financial Officer indicating pro forma compliance by
the Borrower and its Subsidiaries with the covenants
contained in Section 13 subsequent to the Acquisition,
(B) historical financial statements of the Person to be
acquired for the three full fiscal years of such Person
immediately preceding the date of the consummation of
the Permitted Acquisition, (C) consolidated projections
of the Borrower and its Subsidiaries for each of the
three (3) years following the completion of the
Acquisition incorporating the results of operations of
the Person to be acquired, (D) a certificate of
Borrower's Chief Financial Officer which sets forth the
sources and uses of funds which will be required to
consummate the Acquisition, (E) a certificate of
Borrower's Chief Financial Officer, in the form of
Exhibit E attached hereto and otherwise in form and
substance satisfactory to Lender in its sole
discretion, (1) certifying that the Acquisition meets
the criteria set forth in each of clauses (i) - (x) of
this definition of "Permitted Acquisition",
(2) certifying that the Borrower and/or the applicable
Subsidiaries have conducted customary lien, litigation,
environmental and title searches with respect to the
Person to be acquired and the material assets to be
acquired in the Acquisition in all relevant
jurisdictions and with all relevant Governmental
Authorities, and attaching a summary of the results of
such searches, and (3) reaffirming the representations
and warranties contained in Section 10 of this
Agreement as of the date of consummation of the
Acquisition giving effect to such consummation, (F)
true, correct and complete copies of the Acquisition
Agreement and all other documents to be executed or
delivered pursuant thereto, and (G) such other due
diligence information and documentation as Lender shall
require.
"Permitted Acquisition Loan" shall have the meaning
specified in subsection 2(c) hereof.
"Permitted Acquisition Term Note" shall have the
meaning specified in subsection 2(c) hereof.
"Permitted Exceptions" shall mean those title
exceptions accepted by Lender in its mortgagee title
insurance policy issued by the Title Company on the Closing
Date.
"Permitted Liens" shall mean (i) statutory liens of
landlords, carriers, warehousemen, processors, mechanics,
materialmen or suppliers incurred in the ordinary course of
business and securing amounts not yet due or declared to be
due by the claimant thereunder; (ii) liens or security
interests in favor of Lender; (iii) zoning restrictions and
easements, licenses, covenants and other restrictions
affecting the use of real property that do not individually
or in the aggregate have a material adverse effect on
Borrower's ability to use such real property for its
intended purpose in connection with Borrower's business;
(iv) liens for taxes not yet due and payable or which are
being diligently contested in good faith by Borrower by
appropriate proceedings and for which appropriate reserves
have been established by Borrower; (v) existing liens
specifically set forth on Schedule 1(b) attached hereto;
(vi) liens or security interests permitted under Section 12
hereof, and/or (vii) the Permitted Exceptions or other liens
specifically permitted by Lender in writing.
"Person" shall mean any individual, sole
proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation,
limited liability company, institution, entity, party or
foreign or United States government (whether federal, state,
county, city, municipal or otherwise), including, without
limitation, any instrumentality, division, agency, body or
department thereof.
"Plan" shall have the meaning specified in subsection
11(b)(iv) hereof.
"Prime Rate" shall mean the per annum rate referred to
as the "prime rate" as published in the "Money Rates"
section of The Wall Street Journal, and any applicable
interest rate calculated hereunder with respect to the Prime
Rate shall change when, in the same direction and to the
same extent as changes occur in the "prime rate" as
published in the "Money Rates" section of The Wall Street
Journal. If The Wall Street Journal ceases to publish such
"prime rate", then Lender shall select a substitute rate
having like characteristics in Lender's judgment reasonably
exercised, including without limitation the base, reference
or other rate then designated by Lender for general
commercial loan reference purposes, it being understood that
such rate is a reference rate, not necessarily the lowest
rate, established from time to time, which serves as the
basis upon which effective interest rates are calculated for
loans making reference thereto.
"Prime Rate Loan" shall mean a Loan bearing interest
with reference to the Prime Rate.
"Pre-Funding Conditions Precedent" shall have the
meaning specified in subsection 16(b).
"Ramp-up Period" shall have the meaning specified in
subsection 13(b) hereof.
"Real Property" shall mean, collectively, any real
property currently owned by Borrower or any Guarantor as set
forth in Schedule 10(s) attached hereto.
"Reserve Percentage" shall mean the maximum aggregate
reserve requirement (including all basic, emergency,
supplemental, marginal and other reserves and taking into
account any transitional adjustments or other scheduled
changes in reserve requirements) which is imposed on member
banks of the Federal Reserve System against "Euro-currency
Liabilities" as defined in Regulation D of the Board of
Governors of the Federal Reserve System under any
regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction
with respect thereto.
"Revolving Loan" shall have the meaning specified in
subsection 2(a) hereof.
"Revolving Loan Request" has the meaning set forth in
subsection 2.(a).
"Revolving Note" shall have the meaning specified in
subsection 2(a) hereof.
"Revolving Outstandings" shall mean, at any time, the
then-outstanding aggregate principal balance of all
Revolving Loans.
"RMD Acquisition Agreement" shall mean the Asset
Purchase Agreement by and among the Borrower, RMD
Instruments Corp., RMD Instruments, LLC and others dated as
of July 1, 2008.
"Scheduled Termination Date" shall mean July 7, 2012 or
such other later date as may be agreed to in writing by
Lender.
"Subsidiary" shall mean, as to any Person, any
corporation of which more than fifty percent (50%) of the
outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such
corporation (irrespective of whether at the time stock of
any other class of such corporation shall have or might have
voting power by reason of the happening of any contingency)
is at the time, directly or indirectly, owned by such
Person, or any partnership, joint venture or limited
liability company of which more than fifty percent (50%) of
the outstanding equity interests are at the time, directly
or indirectly, owned by such Person or any partnership of
which such Person is a general partner.
"Subsidiary Security Agreement" shall mean any security
agreement delivered by a Subsidiary to Lender, in form and
substance satisfactory to Lender, as the same may be
amended, modified or supplemented in accordance with the
terms thereof.
"Taxes" shall have the meaning specified in subsection
3(d) hereof.
"Termination Date" shall mean the earlier of (a) the
Scheduled Termination Date or (b) the date on which
repayment of the Liabilities is accelerated pursuant to
Section 15 hereof.
"Term Loan" shall have the meaning specified in
subsection 2(b) hereof.
"Term Maturity Date" shall mean the earlier of (a) July
7, 2015 or (b) the date on which repayment of the
Liabilities is accelerated pursuant to Section 15 hereof.
"Term Note" shall have the meaning specified in
subsection 2(b) hereof.
"Title Company" shall mean Land Services, USA, and its
successors and assigns.
"Unfunded Capital Expenditures" shall mean for any
Person, for any fiscal measurement period, the aggregate of
all Capital Expenditures incurred by such Person during such
period less (i) the aggregate principal amount of new long-
term Indebtedness incurred during such period to fund such
Capital Expenditures, and (ii) the aggregate amount of
insurance proceeds received or expected to be received
during such period on account of any Casualty Loss and
applied during such period to the repair or replacement of
property damaged or destroyed in connection with the
Casualty Loss.
"United States Dollars" shall mean the lawful currency
of the United States of America.
"Unused Acquisition Line Commitment" shall mean, as at
any date, the difference, if any, between (i) Maximum
Permitted Acquisition Loan Limit, and (ii) the aggregate
original principal balance of all Permitted Acquisition
Loans advanced by Lender to Borrower hereunder on or before
such date.
"Unused Acquisition Line Commitment Fee" shall have the
meaning specified in subsection 3(d)(iii) hereof.
"Unused Revolver Commitment" shall mean, as at any
date, the difference, if any, between (i) Maximum Revolving
Loan Limit, and (ii) the sum of (A) the aggregate
outstanding principal balance of all Revolving Loans, and
(B) the Letter of Credit Obligations.
"Unused Revolver Commitment Fee" shall have the meaning
specified in subsection 3(d)(ii) hereof.
"Yield Maintenance Fee" shall have the meaning
specified in subsection 3(b) hereof.
(b) Accounting Principles.
(i) Any accounting terms used in this Agreement
that are not specifically defined herein shall have the
meanings customarily given to them in accordance with GAAP
as in effect on the date of this Agreement, except that
references in Section 8 to such principles shall be deemed
to refer to such principles as in effect on the date of the
financial statements delivered pursuant thereto.
(ii) Except as otherwise provided in this
Agreement, for calculation of the financial covenants set
forth in Section 13 such calculations shall give effect, on
a pro forma basis, to all Acquisitions and dispositions made
during the fiscal measurement period to which the required
compliance relates, as if such Acquisition or disposition
had been consummated on the first day of the applicable
period. Calculations performed in connection with
Acquisitions and dispositions shall be based on the results
of operations and financial position of the Borrower and its
Subsidiaries set forth on the most recent consolidated
financial statements delivered to Lender hereunder,
adjusted, in the case of an Acquisition, to give effect to
any additional Indebtedness incurred in connection therewith
and to include the results of operations and financial
position of the target during the applicable period, and in
the case of a disposition, to give effect to any repayment
of Indebtedness in connection therewith and to exclude the
results of operations and financial position for the
applicable period of the assets so disposed of.
(iii) If, at any time, GAAP changes in a
manner which will materially affect the calculations
determining compliance by Borrower with any of its covenants
in Section 13, such covenants shall continue to be
calculated in accordance with GAAP in effect prior to such
changes in GAAP.
2. LOAN FACILITIES.
(a) Revolving Line of Credit.
(i) Subject to the terms and conditions of this Agreement
and the Other Agreements, from the Closing Date through the
Termination Date, Lender shall make revolving loans and
advances in United States Dollars to Borrower (each such
Loan, and any portion thereof, a "Revolving Loan");
provided, that the sum of the aggregate unpaid principal
balance of the Revolving Loans outstanding plus the Letter
of Credit Obligations outstanding shall not at any time
exceed the Maximum Revolving Loan Limit. All Revolving
Loans made by Lender to Borrower hereunder shall be
evidenced by a single promissory note (the "Revolving Note")
of Borrower substantially in the form of Exhibit A attached
hereto. In addition to the terms and conditions set forth
in this Agreement, the Revolving Loans shall be subject to
such other terms as are provided in the Revolving Note.
Notwithstanding anything to the contrary set forth herein or
in the Revolving Note, if at any time the sum of the
Revolving Outstandings plus the Letter of Credit Obligations
then outstanding exceeds the Maximum Revolving Loan Limit,
Borrower shall immediately, and without the necessity of
demand by Lender, pay to Lender such amount as may be
necessary to eliminate such excess and Lender shall apply
such payment to the Revolving Loans in such order as Lender
shall determine in its sole discretion.
(ii) Subject to the provisions of Section 3, the Revolving
Loans may from time to time be (i) LIBOR Rate Loans,
(ii) Prime Rate Loans or (iii) a combination thereof, as
determined by the Borrower and notified to Lender in
accordance with either subsections 2(a)(iv) or 2(h).
(iii) Borrower hereby authorizes Lender, in its sole
discretion, to charge any account of Borrower maintained at
Lender for, or advance Revolving Loans (without further
request of Borrower) in order to make, any payments of
principal, interest, fees, costs or expenses required to be
made under this Agreement or the Other Agreements. The
coming due of any such payment shall be deemed to be a
request by Borrower in accordance with the procedures set
forth herein for a Revolving Loan in the amount of such
payment to be made on the date such payment is due.
Revolving Loans made by Lender hereunder in respect of such
payments may be made by Lender, in its sole discretion,
regardless of the existence of a Default or an Event of
Default, whether or not the aggregate outstanding principal
balance of the Revolving Loans, after giving effect to such
Revolving Loans to be made, exceeds the Maximum Revolving
Loan Limit and whether or not the Pre-Funding Conditions
Precedent (specifically including compliance with the
provisions of Section 8) have been satisfied. Such
Revolving Loans shall be a part of the Liabilities hereunder
secured by the Collateral as provided herein.
(iv) Subject to compliance with the terms and provisions of
this Agreement and the Other Agreements, Borrower may
request a Revolving Loan hereunder upon giving written
notice to the Lender by 11:00 a.m. (Philadelphia,
Pennsylvania time) on the day of the proposed Revolving Loan
(a "Revolving Loan Request"). Each Revolving Loan Request
shall be in form and substance satisfactory to Lender in its
sole discretion. Each Revolving Loan Request received by
Lender shall be conclusively presumed to be executed and
delivered by a duly authorized officer or employee of
Borrower. Notwithstanding the foregoing, no Revolving Loan
Request may be made at a time when there exists an Event of
Default or an event which, with the passage of time or
giving of notice, or both, will become an Event of Default
(a "Default").
(v) Revolving Loans may be borrowed, repaid and reborrowed
prior to the Termination Date in accordance with, and
subject to, the terms of this Agreement.
(vi) Borrower hereby irrevocably authorizes Lender to
disburse the proceeds of each Revolving Loan requested by
Borrower, or deemed to be requested by Borrower, in lawful
money of the United States of America in immediately
available funds to such bank account of Borrower at Lender
as may be agreed upon by Borrower and Lender from time to
time.
(vii) Lender is hereby authorized (but not required) to
record the date and amount of each payment or prepayment of
principal of the Revolving Loans made to Borrower, each
continuation thereof, and each conversion of all or a
portion thereof to another type of interest rate in the
books and records of Lender, and any such recordation shall
constitute prima facie evidence of the accuracy of the
information so recorded. The failure of Lender to make any
such recordation or notation in its books and records (or
any error in such recordation or notation) shall not affect
the obligations of Borrower hereunder or under the Revolving
Note.
(viii) Subject to the terms and conditions of this
Agreement and the Other Agreements, at any time prior to the
Termination Date, Lender shall, from time to time cause to
be issued, upon Borrower's request, Letters of Credit
denominated in United States Dollars for the account of
Borrower; provided, that the aggregate undrawn face amount
of all such Letters of Credit issued pursuant to the
provisions of this subsection 2(a)(viii) shall at no time
exceed the lesser of (A) One Million Dollars ($1,000,000.00)
or (B) an amount equal to the Maximum Revolving Loan Limit
minus the sum of (1) the Revolving Outstandings and (2) the
Letter of Credit Obligations. Payments made by Lender to
any Person on account of any such Letter of Credit
(specifically including payments by Lender for any drawings
honored with respect to any Letter of Credit ("Issuer
Reimbursement Payments")) shall constitute Revolving Loans
hereunder and Borrower agrees that each such payment made by
Lender (specifically including any Issuer Reimbursement
Payment) shall constitute a request by Borrower for a
Revolving Loan to reimburse Lender for such payment. Such
Revolving Loans may be made by Lender regardless of the
existence of any Event of Default and whether or not the
aggregate outstanding principal balance of the Revolving
Loans after giving effect to such Revolving Loans, exceeds
any of the limitations or sublimitations set forth in this
Agreement (provided that if an Event of Default does exist
or the aggregate outstanding principal balance of the
Revolving Loans would exceed such limit(s), Lender may, in
its sole discretion, decline to make such a Revolving Loan
with respect to any then outstanding Issuer Reimbursement
Payment and Borrower shall immediately reimburse Lender in
full, upon demand, the amount of such Issuer Reimbursement
Payment plus interest on the unpaid balance thereof at the
Default Rate). Any Revolving Loan made by Lender pursuant
to this subsection shall be a part of the Liabilities
hereunder secured by the Collateral as set forth herein.
(ix) Borrower shall make requests for any Letter of Credit
to be issued for the account of Borrower under subsection
2(a)(viii) above, in writing, delivered to Lender at least
seven (7) Business Days prior to the date such Letter of
Credit is to be issued. Each such request shall specify the
date such Letter of Credit is to be issued, the expiration
date of the Letter of Credit (which shall not be later than
the earlier of (A) the Scheduled Termination Date or (B) the
one (1) year anniversary of the date of issuance of the
Letter of Credit), the amount thereof, the name and address
of the beneficiary thereof and a description of the
transaction to be supported thereby. Any such notice shall
be accompanied by the form of Letter of Credit requested and
any application or reimbursement agreement required by
Lender. If any term of such application or reimbursement
agreement is inconsistent with this Agreement, then the
provisions of this Agreement shall control to the extent of
such inconsistency.
(x) Borrower shall be obligated to reimburse Lender for any
payments made in respect of any Letter of Credit or any
drawing thereunder, which obligation shall be unconditional
and irrevocable and shall be paid regardless of: (A) any
lack of validity or enforceability of any Letter of Credit,
(B) any amendment or waiver of or consent or departure from
all or any provisions of any Letter of Credit, this
Agreement or any Other Agreement, (C) the existence of any
claim, set off, defense or other right which Borrower or any
other Person may have against any beneficiary of any Letter
of Credit, Lender or any other Person, (D) any draft or
other document presented under any Letter of Credit proving
to be forged, fraudulent, invalid, or insufficient in any
respect or any statement therein being untrue or inaccurate
in any respect, (E) any payment under any Letter of Credit
against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit, and (F)
any other act or omission to act or delay of any kind of the
Lender or any other Person or any other event or
circumstance that might otherwise constitute a legal or
equitable discharge of Borrower's obligations hereunder. It
is understood and agreed by Borrower that, with respect to
any Letter of Credit, Lender may accept documents that
appear on their face to be in order without further
investigation or inquiry, regardless of any notice or
information to the contrary.
(b) Term Loan.
(i) Subject to the terms and conditions of this Agreement
and the Other Agreements Lender shall make a loan in United
States Dollars to Borrower (a "Term Loan"), at a single time
on the date hereof, in the principal amount of Nine Million
Dollars ($9,000,000.00). The Term Loan made by Lender to
Borrower hereunder shall be evidenced by a single promissory
note (the "Term Note") of Borrower substantially in the form
of Exhibit B attached hereto. At the execution hereof, the
proceeds of the Term Loan shall be used by Borrower (i)
first to repay in full all amounts of principal and interest
then outstanding under certain loan documents between
Borrower and Susquehanna Bank, ▇▇▇▇▇▇▇▇ Trust and/or RMD
Instruments, LLC, whereupon said loan documents shall then
be cancelled, and (ii) the balance of the proceeds of the
Term Loan, if any, shall be used by Borrower for long-term
working capital. The Term Loan shall mature on the Term
Maturity Date, bear interest at fixed rate equal to five and
fifty-eight one-hundredths percent (5.58%) per annum and be
payable as to principal and interest in accordance with the
terms of this Agreement and the Term Note.
(ii) Lender is hereby authorized (but not required) to
record the date and amount of each payment or prepayment of
principal of the Term Loan in Lender's books and records,
and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded.
The failure of Lender to make any such recordation or
notation in its books and records (or any error in such
recordation or notation) shall not affect the obligations of
Borrower hereunder or under the Term Note.
(c) Standby Permitted Acquisition Facility.
(i) Subject to the terms and conditions of this Agreement
and the Other Agreements, from the Closing Date through the
Termination Date, Lender shall make certain loans and
advances in United States Dollars to Borrower (each such
Loan, and any portion thereof, a "Permitted Acquisition
Loan"); provided, that (A) Lender shall have no obligation
to advance any Permitted Acquisition Loan to Borrower
hereunder unless the proposed Acquisition satisfies all of
the requirements set forth herein for a Permitted
Acquisition (as determined by Lender in its reasonable
discretion), (B) no Permitted Acquisition Loan made
hereunder shall be in an initial principal amount of less
than One Million Dollars ($1,000,000.00) (or the remaining
unutilized portion of the Maximum Permitted Acquisition Loan
Limit, if less), and (C) at no time may the aggregate
principal amount of all Permitted Acquisition Loans made
hereunder exceed the Maximum Permitted Acquisition Loan
Limit.
(ii) Notwithstanding anything to the contrary set forth
herein, Borrower acknowledges that this Permitted
Acquisition facility is a non-revolving facility and
payments made by Borrower with respect to outstanding
Permitted Acquisition Loans shall not restore availability
for additional Permitted Acquisition Loans under this
facility. Lender's commitment to make any Permitted
Acquisition Loans hereunder shall terminate when the
aggregate initial principal amount of all Permitted
Acquisition Loans equals the Maximum Permitted Acquisition
Loan Limit or on the Termination Date, whichever occurs
first.
(iii) Each Permitted Acquisition Loan made by Lender to
Borrower hereunder shall be evidenced by a promissory note
(a "Permitted Acquisition Term Note") of Borrower
substantially in the form of Exhibit C attached hereto, and
otherwise subject to such other terms as are provided in the
applicable Permitted Acquisition Term Note. Notwithstanding
anything to the contrary set forth herein or in any
Permitted Acquisition Term Note, if at any time the
aggregate initial principal amount of all Permitted
Acquisition Loans equals or exceeds the Maximum Permitted
Acquisition Loan Limit, Borrower shall immediately, and
without the necessity of demand by Lender, pay to Lender
such amount as may be necessary to eliminate such excess and
Lender shall apply such payment to the Permitted Acquisition
Loans in such order as Lender shall determine in its sole
discretion.
(iv) Subject to compliance with the terms and provisions of
this Agreement and the Other Agreements, Borrower may
request a Permitted Acquisition Loan hereunder upon giving
written notice to the Lender by 11:00 a.m. (Philadelphia,
Pennsylvania time) not less than thirty (30) days prior to
the date of the proposed Permitted Acquisition Loan. Each
request for a Permitted Acquisition Loan (a "Permitted
Acquisition Loan Request") shall be in a form acceptable to
Lender in its sole discretion and accompanied by the
following information and documentation pertaining to the
Acquisition, in each case in form and substance satisfactory
to Lender:
(A) calculations certified by the Borrower's
Chief Financial Officer indicating pro forma
compliance by the Borrower and its Subsidiaries
with the covenants contained in Section 13
subsequent to the Acquisition and based on the
most recent financial statements delivered to
Lender pursuant to this Agreement;
(B) historical financial statements of the
Person to be acquired for the three (3) full
fiscal years of such Person immediately preceding
the date of the consummation of the Permitted
Acquisition;
(C) consolidated projections of the Borrower
and its Subsidiaries, by fiscal quarter,
incorporating the results of operations of the
Person to be acquired;
(D) a certificate of Borrower's Chief
Financial Officer which sets forth the sources and
uses of funds which will be required to consummate
the Acquisition;
(E) a certificate of Borrower's Chief
Financial Officer (1) certifying that the
Acquisition qualifies as a Permitted Acquisition,
(2) certifying that Borrower and/or the applicable
Subsidiaries have conducted customary lien,
litigation, environmental and title searches with
respect to the Person to be acquired and the
material assets to be acquired in the Acquisition
in all relevant jurisdictions and with all
relevant Governmental Authorities, and attaching a
summary of the results of such searches, and
(3) reaffirming the representations and warranties
contained in Section 10 of this Agreement as of
the date of consummation of the Acquisition giving
effect to such consummation; and
(F) such other due diligence information and
documentation as Lender shall require.
Each Permitted Acquisition Loan Request received by Lender
shall be conclusively presumed to be executed and delivered
by a duly authorized officer or employee of Borrower.
Notwithstanding the foregoing, no Permitted Acquisition Loan
Request may be made, or Permitted Acquisition Loan advanced,
(x) at a time when there exists a Default or an Event of
Default or when a Default or an Event of Default would occur
after giving effect thereto, and (y) until Lender has
received true, correct and complete copies of the executed
Acquisition Agreement related thereto and all other
documents to be executed or delivered pursuant to such
Acquisition Agreement which evidence the consummation of the
related Permitted Acquisition.
(v) Borrower shall cause any Subsidiary acquired or
established by Borrower after the date of this Agreement in
connection with the consummation of a Permitted Acquisition
to become a Guarantor hereunder and in connection therewith
to execute a Guarantee and such Other Agreements as shall be
deemed to be necessary or appropriate by Lender in its sole
discretion, and deliver such Guarantee and Other Agreements
to Lender.
(vi) Borrower hereby irrevocably authorizes Lender to
disburse the proceeds of each Permitted Acquisition Loan
requested by Borrower, or deemed to be requested by
Borrower, in lawful money of the United States of America in
immediately available funds to such bank account of Borrower
at Lender as may be agreed upon by Borrower and Lender from
time to time.
(vii) Lender is hereby authorized (but not required) to
record the date and amount of each payment or prepayment of
principal of each Permitted Acquisition Loan made to
Borrower in the books and records of Lender, and any such
recordation shall constitute prima facie evidence of the
accuracy of the information so recorded. The failure of
Lender to make any such recordation or notation in its books
and records (or any error in such recordation or notation)
shall not affect the obligations of Borrower hereunder or
under a Permitted Acquisition Term Note.
(d) Repayment of Loans.
(i) Revolving Loans. The principal owing with respect to
the Revolving Loans shall be repaid on the Termination Date,
subject to the earlier mandatory repayment of overadvances
as set forth in subsection 2(a), earlier acceleration upon
the occurrence and during the continuance of an Event of
Default as provided in Section 15, and the repayment of
proceeds of Collateral or termination of the Loans as set
forth in subsection 2(f). In any event, all principal plus
accrued interest outstanding on the Revolving Loans shall be
due and payable on the Termination Date.
(ii) Term Loan. The principal owing with respect to the
Term Loan shall be repaid in fifty-nine (59) equal
consecutive monthly installments of principal, in the amount
of $107,142.85 each, on the first day of each calendar
month, commencing on August 1, 2010, with a sixtieth (60th)
final balloon payment of all outstanding principal being due
and payable on the Term Maturity Date; provided, that any
remaining outstanding principal balance of the Term Loan
shall be subject to earlier acceleration upon the occurrence
and during the continuance of an Event of Default as
provided in Section 15 and the mandatory repayment of
proceeds of Collateral or termination of the Loans as set
forth in subsection 2(f). In any event, all principal plus
accrued interest outstanding on the Term Loan shall be due
and payable on the Term Maturity Date.
(iii) Permitted Acquisition Loan. The principal owing
with respect to each Permitted Acquisition Loan shall be
payable in equal consecutive monthly installments, based
upon a seven (7) year straight-line amortization, on the
first day of each calendar month, commencing on the first
day of the first full calendar month following the date on
which such Permitted Acquisition Loan is made by Lender to
Borrower hereunder, with a final balloon payment of all
outstanding principal being due and payable on the Term
Maturity Date; provided, that any remaining outstanding
principal balance of a Permitted Acquisition Loan shall be
subject to earlier mandatory repayment of overadvances as
set forth in subsection 2(c), earlier acceleration upon the
occurrence and during the continuance of an Event of Default
as provided in Section 15, and the mandatory repayment of
proceeds of Collateral or termination of the Loans as set
forth in subsection 2(f). In any event, all principal plus
accrued interest outstanding on each Permitted Acquisition
Loan shall be due and payable on the Term Maturity Date.
(iv) Late Charges. If any regularly scheduled principal
payment due under a Note is fifteen (15) days or more late,
Borrower will be charged a late fee in an amount equal to
five percent (5.00%) of the unpaid portion of the regularly
scheduled payment or $25.00, whichever is greater. If
Lender demands payment of any Loan in accordance with the
terms of this Agreement or any Note and Borrower does not
pay the Loan in full within fifteen (15) days after Lender's
demand, Borrower will be charged a late fee in an amount
equal to five percent (5.00%) of the unpaid principal plus
accrued interest or $25.00, whichever is greater.
Late fees assessed by Lender are immediately payable by
Borrower upon receipt of notice thereof from Lender.
(e) Payment Dates as Business Days. If any principal
payment due date specified in this Section 2 for a Loan is
not a Business Day, then such payment shall be made on the
next succeeding Business Day and such extension of time
shall be included in the computation of the amount of
interest due hereunder.
(f) Mandatory Repayment. Upon receipt of the proceeds of
the sale or other disposition of any Collateral, or if any
Collateral is damaged, destroyed or taken by condemnation in
whole or in part, the proceeds thereof (whether insurance or
otherwise) shall be paid by Borrower to Lender immediately
upon receipt thereof by Borrower as a mandatory prepayment
of the Loans (except for proceeds of the sale of Inventory
in the ordinary course of business), in such order as shall
be determined by Lender in its sole discretion, such payment
to be applied against the remaining installments of
principal in the inverse order of their maturities.
Notwithstanding the foregoing, (i) net cash proceeds of any
sale or other disposition of Collateral (other than
Inventory) in an aggregate amount not to exceed $50,000 in
any transaction or $100,000 in any fiscal year shall not be
subject to prepayment under this subsection 2(f) and (ii)
the net cash proceeds of any Collateral that is damaged,
destroyed or taken by condemnation, in whole or in part,
that are applied to the repair or restoration of Borrower's
property pursuant to Section 11(e) shall not be subject to
prepayment under this subsection 2(f).
(g) Telephonic Requests. As an accommodation to Borrower,
Lender may in its sole discretion and without establishing
a course of dealing or conduct, permit telephone requests
for Loans and electronic transmittal of instructions,
authorizations, agreements or reports to Lender by Borrower.
Unless Borrower specifically directs Lender in writing not
to accept or act upon telephonic or electronic
communications from Borrower, Lender shall have no liability
to Borrower for any loss or damage suffered by Borrower as a
result of Lender's honoring of any requests, execution of
any instructions, authorizations or agreements or reliance
on any reports communicated to it telephonically or
electronically and purporting to have been sent to Lender by
Borrower and Lender shall have no duty to verify the origin
of any such communication or the authority of the Person
sending it.
(h) Conversion Elections. Borrower may elect to convert all
or any portion of a Revolving Loan that is a Prime Rate Loan
into a LIBOR Rate Loan, so long as no Default or Event of
Default has occurred and is then continuing, by delivering a
conversion notice to Lender on or before 11:00 a.m.,
Philadelphia, Pennsylvania time, on the Business Day on
which such conversion is to take effect. Borrower may elect
to convert all or any portion of a Revolving Loan that is a
LIBOR Rate Loan into a Prime Rate Loan by delivering a
conversion notice to Lender on or before 11:00 a.m.,
Philadelphia, Pennsylvania time, on the Business Day on
which such conversion is to take effect.
3. INTEREST, FEES AND CHARGES; PREPAYMENT.
(a) Interest.
(i) Subject to the terms and conditions set forth below,
interest shall accrue on the principal amount of the Loans
hereunder at the rate or rates set forth below as selected
by Borrower as follows:
(A) Each Revolving Loan that is a LIBOR Rate Loan shall
accrue interest in arrears at a rate per annum equal to the
sum of the LIBOR Market Index Rate plus the Applicable
Revolver Margin. The Lender shall give prompt notice to
Borrower of the LIBOR Market Index Rate as determined in
accordance herewith, which determination shall be conclusive
absent manifest error. Each other Revolving Loan shall
accrue interest in arrears at a rate per annum equal to the
Prime Rate. Accrued interest on each Revolving Loan shall
be payable in arrears on the first day of each calendar
month, commencing on August 1, 2010. In any event, all
accrued interest outstanding on the Revolving Loans shall be
due and payable on the Termination Date.
(B) Each Permitted Acquisition Loan shall accrue interest
in arrears at a rate per annum equal to the sum of the LIBOR
Market Index Rate plus the Applicable Margin and such
interest shall be payable in arrears on the first day of
each calendar month, commencing with the first day of the
first full calendar month following the date on which such
Permitted Acquisition Loan is made by Lender to Borrower
hereunder. In any event, all accrued interest outstanding on
each Permitted Acquisition Loan shall be due and payable on
the Term Maturity Date. The Lender shall give prompt notice
to Borrower of the LIBOR Market Index Rate as determined in
accordance herewith, which determination shall be conclusive
absent manifest error.
(C) The Term Loan shall accrue interest in arrears at a
fixed rate per annum equal to five and fifty-eight one-
hundredths percent (5.58%) and such interest shall be
payable in arrears on the first day of each calendar month,
commencing on August 1, 2010. In any event, all accrued
interest outstanding on the Term Loan shall be due and
payable on the Term Maturity Date.
(ii) Upon the occurrence of an Event of Default, Borrower's
right to select pricing options for the Revolving Loans
shall cease and the unpaid principal balance of all Loans
shall, at the option of Lender, bear interest at a rate
which is five percent (5%) in excess of the interest rate
which would otherwise be in effect hereunder (the "Default
Rate"). Borrower acknowledges and agrees that the Default
Rate is reasonable in light of the increased risk of
collection of the sums due under the Loans after the
occurrence and during the continuance of an Event of Default
and the costs and expenses of Lender related thereto.
(iii) All interest on all Loans shall be calculated on
the basis of a 360 day year for the actual number of days
elapsed.
(iv) To the extent not already provided for herein, any
final payment of the entire principal balance outstanding
with respect to a Loan shall be accompanied by payment in
United States Dollars of all the outstanding accrued and
unpaid interest with respect to such Loan.
(b) Prepayment. Loans may be prepaid upon the terms and
conditions set forth herein. For Loans in connection with
which Borrower has or may incur Hedging Obligations, the
related Lender Hedging Agreement shall terminate upon
prepayment of the associated Loan (subject to the provisions
related to early termination that are contained in such
Lender Hedging Agreement) unless Lender, in its sole
discretion agrees in writing to continue the Lender Hedging
Agreement in full force and effect to its stated maturity,
and additional obligations may be associated with
prepayment, in accordance with the terms and conditions of
the applicable Lender Hedging Agreements. Each prepayment
of the principal amount of a Loan shall be accompanied by
the payment of all charges outstanding on such Loan and of
all accrued interest on the principal repaid to the date of
payment. Borrower acknowledges that prepayment or
acceleration of the Term Loan may result in Lender incurring
additional costs, expenses and/or liabilities and that it is
extremely difficult and impractical to ascertain the extent
of such costs, expenses and/or liabilities. Therefore, all
full or partial prepayments of the Term Loan (including
without limitation upon acceleration of such Loan) shall be
accompanied by, and Borrower hereby promises to pay on each
date the Term Loan is prepaid or the date all sums payable
under the Term Loan become due and payable by acceleration,
in addition to all other sums then owing, an amount (the
"Yield Maintenance Fee") computed as follows: The current
rate for United States Treasury securities (bills on a
discounted basis shall be converted to a bond equivalent)
with a maturity date closest to the scheduled payment date
for the amounts being prepaid shall be subtracted from the
"cost of funds" component of the interest rate in effect
hereunder for the Term Loan at the time of prepayment. If
the result is zero or a negative number, there shall be no
Yield Maintenance Fee. If the result is a positive number,
then the resulting percentage shall be multiplied by the
amount of the principal balance being prepaid. The
resulting amount shall be divided by 360 and multiplied by
the number of days remaining in the term as to which the
prepayment is being made. Said amount shall be reduced to
present value, calculated by using the number of days
remaining in the term as to which the prepayment is being
made and using the above-referenced United States Treasury
security rate and the number of days remaining in the term
as to which the prepayment is being made. The resulting
amount shall be the Yield Maintenance Fee due to Lender upon
prepayment of the Term Loan (if any). Borrower acknowledges
that the Yield Maintenance Fee is bargained-for
consideration and not a penalty. All prepayments of any
Loan shall be applied first to fees and expenses then due
hereunder, second to any Hedging Obligations owed by
Borrower with respect to such Loan, third to interest on the
unpaid principal balance accrued to the date of prepayment,
and last to the principal balance of the Loan which is being
prepaid
(c) Other Provisions.
(i) LIBOR Market Index Rate Lending Unlawful. If Lender
shall determine (which determination shall, upon notice
thereof to Borrower, be conclusive and binding on Borrower)
that the introduction of, or any change in or in the
interpretation of, any law, rule, regulation or guideline
(whether or not having the force of law) makes it unlawful,
or any central bank or other Governmental Authority asserts
that it is unlawful, for Lender to make, continue or
maintain any LIBOR Rate Loan, or to convert any Loan into a
LIBOR Rate Loan, the obligations of Lender to make,
continue, maintain or convert into any such LIBOR Rate Loan
shall, upon such determination, forthwith be suspended until
Lender shall notify Borrower that the circumstances causing
such suspension no longer exist, and all LIBOR Rate Loans of
such type shall automatically convert into Prime Rate Loans
at such time.
(ii) Substitute Rate. If Lender shall have determined that:
(a) one (1) month U.S. dollar deposits in the relevant
amount are not available to Lender in the London interbank
market;
(b) by reason of circumstances affecting Lender in the
London interbank market, adequate means do not exist for
ascertaining the LIBOR Market Index Rate applicable
hereunder to LIBOR Rate Loans; or
(c) LIBOR Market Index Rate no longer adequately reflects
Lender's cost of funding Loans;
then, upon notice from Lender to Borrower, the obligations
of Lender under this Agreement to make or continue any Loans
as LIBOR Market Index Rate Loans shall forthwith be
suspended until Lender shall notify Borrower that the
circumstances causing such suspension no longer exist and
all such affected Loans shall bear an annual interest rate
equal to the Prime Rate.
(iii) Indemnities. In addition to any Yield Maintenance
Fee otherwise payable hereunder, Borrower agree to reimburse
Lender (without duplication) for any increase in the cost to
Lender, or reduction in the amount of any sum receivable by
Lender, in respect, or as a result of:
(A) any Loans not being made as LIBOR Rate Loans in
accordance with the request therefor submitted by Borrower
hereunder;
(B) any Loans not being converted into LIBOR Rate Loans in
accordance with the conversion notice therefor; or
(C) any costs associated with marking to market any Hedging
Obligations that (in the reasonable determination of Lender)
are required to be terminated as a result of any conversion,
repayment or prepayment of the principal amount of any Loan
on a date other than the maturity date therefor, whether
pursuant to any required repayment or prepayment terms of
this Agreement or otherwise.
Lender shall promptly notify Borrower in writing of the
occurrence of any such event, such notice to state, in
reasonable detail, the reasons therefor and the additional
amount required fully to compensate Lender for such
increased cost or reduced amount. Such additional amounts
shall be payable by Borrower to Lender within five (5) days
of its receipt of such notice, and such notice shall, in the
absence of manifest error, be conclusive and binding on
Borrower.
(iv) Increased Costs. If on or after the date hereof the
adoption of any applicable law, rule or regulation or
guideline (whether or not having the force of law), or any
change therein, or any change in the interpretation or
administration thereof by any Governmental Authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by
Lender with any request or directive (whether or not having
the force of law) of any such authority, central bank or
comparable agency:
(A) shall subject Lender to any tax, duty or other charge
with respect to any Loan or its obligation to make Loans
hereunder, or shall change the basis of taxation of payments
to Lender of the principal of or interest on any Loan or any
other amounts due under this Agreement (except for the
introduction of, or change in the rate of, tax on the
overall net income of Lender or franchise taxes, imposed by
the jurisdiction (or any political subdivision or taxing
authority thereof) under the laws of which Lender is
organized or in which Lender's principal executive office is
located); or
(B) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System of the United
States) against assets of, deposits with or for the account
of, or credit extended by, Lender or shall impose on Lender
or on the London interbank market any other condition
affecting the Loans or Lender's obligation to make Loans
hereunder;
(C) and the result of any of the foregoing is to increase
the cost to Lender of making or maintaining any Loan, or to
reduce the amount of any sum received or receivable by
Lender under this Agreement with respect thereto, by an
amount deemed by Lender to be material, then, within fifteen
(15) days after demand by Lender, Borrower shall pay to
Lender such additional amount or amounts as will compensate
Lender for such increased cost or reduction.
(d) Fees And Charges.
(i) Upfront Fee. On the Closing Date, Borrower shall pay
to Lender a non-refundable upfront fee (the "Upfront Fee")
for the Loan facilities established hereunder, in United
States Dollars, in the amount of $42,500.00.
(ii) Unused Revolver Commitment Fee. Borrower shall pay to
the Lender an unused commitment fee (the "Unused Revolver
Commitment Fee") on the daily average amount of the Unused
Revolver Commitment, for the period from the date hereof to
and including the Termination Date, in an amount equal to
the Unused Revolver Commitment multiplied by a rate per
annum equal of 0.25%. The accrued Unused Revolver
Commitment Fee shall be payable quarterly in arrears, and on
the Termination Date.
(iii) Unused Acquisition Line Commitment Fee. Borrower
shall pay to the Lender an unused commitment fee (the
"Unused Acquisition Line Commitment Fee") on the daily
average amount of the Unused Acquisition Line Commitment,
for the period from the date hereof to and including the
Termination Date, in an amount equal to the Unused
Acquisition Line Commitment multiplied by a rate per annum
equal of 0.25%. The accrued Unused Acquisition Line
Commitment Fee shall be payable quarterly in arrears, and on
the Termination Date.
(iv) Letter of Credit Fees. Borrower shall pay to Lender a
non-refundable fronting fee with respect to each Letter of
Credit, equal to the Applicable Revolver Margin multiplied
by the aggregate amount available to be drawn under the
Letter of Credit, at the time of issuance of such Letter of
Credit. In addition, Borrower shall pay to Lender the
customary issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of
Lender relating to letters of credit as from time to time in
effect. Such customary fees and standard costs and charges
are due and payable upon demand and are nonrefundable.
(v) Costs and Expenses. Borrower shall reimburse Lender
for all reasonable out of pocket costs and expenses,
including, without limitation, legal expenses (which may
include, without limitation, the allocable cost of Lender's
internal legal counsel) and reasonable attorneys' fees,
incurred by Lender in connection with the (i) analysis, due
diligence, documentation and, consummation of this
transaction and the Loans and any other transactions between
Borrower and Lender, including, without limitation, fees and
expenses for Uniform Commercial Code and other public record
searches and filings, overnight courier or other express or
messenger delivery, field examination costs, appraisal costs
and environmental audit or review costs; (ii) amendments,
waivers or consents with respect to this Agreement and any
of the Other Agreements; (iii) protection, preservation,
defense or enforcement of any rights of Lender in or to the
Collateral or otherwise under this Agreement or any of the
Other Agreements; (iv) collection of any Liabilities; and
(v) non-overhead administration of this Agreement (primarily
expected, if necessary, to include any of the foregoing plus
periodic consultation or analysis with counsel concerning
its rights under this Agreement and the Other Agreements).
Borrower shall also pay all normal service charges with
respect to all accounts maintained by Borrower with Lender
and any additional services requested by Borrower from
Lender. All such costs, expenses and charges shall
constitute Liabilities hereunder, shall be payable by
Borrower to Lender on demand, and, until paid, shall bear
interest at the highest rate then applicable to Loans
hereunder.
(vi) Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in of, any law or regulation,
directive, guideline, decision or request (whether or not
having the force of law) of any court, central bank,
regulator or other Governmental Authority affects or would
affect the amount of capital required or expected to be
maintained by Lender, or person controlling Lender, and
Lender determines (in its sole and absolute discretion) that
the rate of return on its or such controlling person's
capital as a consequence of its commitments or the Loans
made by Lender hereunder is reduced to a level below that
which Lender or such controlling person could have achieved
but for the occurrence of any such circumstance, then, in
any such case upon notice from time to time by Lender to
Borrower, Borrower shall immediately pay directly to Lender
additional amounts sufficient to compensate Lender or such
controlling person for such reduction in rate of return. A
statement of Lender as to any such additional amount or
amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be
conclusive and binding on Borrower. In determining such
amount, Lender may use any method of averaging and
attribution that it (in its sole and absolute discretion)
shall deem applicable.
(vii) Taxes. All payments by Borrower of principal of,
and interest on, the Loans and all other amounts payable
hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings
or other charges of any nature whatsoever imposed by any
taxing authority, but excluding franchise taxes and taxes
imposed on or measured by Lender's net income or receipts
(such non-excluded items being called "Taxes"). In the
event that any withholding or deduction from any payment to
be made by Borrower hereunder is required in respect of any
Taxes pursuant to any applicable law, rule or regulation,
then Borrower will
(A) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(B) promptly forward to Lender an official receipt or other
documentation satisfactory to Lender evidencing such payment
to such authority; and
(C) pay to Lender such additional amount or amounts as is
necessary to ensure that the net amount actually received by
Lender will equal the full amount Lender would have received
had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against Lender
with respect to any payment received by Lender hereunder,
Lender may pay such Taxes and Borrower will promptly pay
such additional amount (including any penalties, interest or
expenses) as is necessary in order that the net amount
received by Lender after the payment of such Taxes
(including any Taxes on such additional amount) shall equal
the amount Lender would have received had such Taxes not
been asserted.
If Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to Lender the
required receipts or other required documentary evidence,
Borrower shall indemnify Lender for any incremental Taxes,
interest or penalties that may become payable by Lender as a
result of any such failure.
(e) Maximum Interest. It is the intent of the parties that
the rate of interest and other charges to Borrower under
this Agreement shall be lawful; therefore, if for any reason
the interest or other charges payable under this Agreement
are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which Lender may lawfully
charge Borrower, then the obligation to pay interest and
other charges shall automatically be reduced to such limit
and, if any amount in excess of such limit shall have been
paid, then such amount shall be immediately and
automatically applied to reduce the unpaid principal balance
of any Loans then outstanding hereunder as of the date on
which such excess payment was made), in such order as shall
be determined by Lender in its sole discretion, such payment
to be applied against the remaining installments of
principal in the inverse order of their maturities. If the
amount to be so applied as a reduction of the unpaid
principal balance of the Loans exceeds the unpaid principal
balance of the Loans at such time, the amount of such excess
shall be refunded by Lender to Borrower.
(f) Automatic Payments. Borrower hereby authorizes Lender
to automatically deduct from any deposit account of Borrower
maintained with or at Lender, or any entity under the
control of Lender, any amount owed by Borrower to Lender
hereunder or under any Other Agreement, including without
limitation all payments of interest, principal, and other
sums due from time to time under this Agreement or the Other
Agreements; Lender will promptly thereafter notify Borrower
of the amount so charged. If the funds in the account are
insufficient to cover any payment due, Lender will not be
obligated to advance funds to Borrower to cover the payment.
The failure of Lender so to charge any account or to give
any such notice shall not affect the obligation of Borrower
to pay any and all sums due to Lender under this Agreement
or any Other Agreement when due.
(g) Payment Dates as Business Days. If any payment due
date specified in this Section 3 for any amount owed by
Borrower to Lender is not a Business Day, then such payment
shall be made on the next succeeding Business Day.
4. COLLATERAL.
(a) Grant of Security Interest to Lender. As security for
the payment of all Loans now or in the future made by Lender
to Borrower hereunder and for the payment or other
satisfaction of all other Liabilities, Borrower hereby
assigns to Lender and grants to Lender a continuing, valid
and, enforceable first priority (subject to Permitted Liens)
and only (other than Permitted Liens) lien, charge and
security interest in all assets and property of any kind of
Borrower, including without limitation, all of the following
property, whether tangible or intangible and whether now or
hereafter owned, existing, acquired, created or arising and
wherever now or hereafter located: (a) all Accounts and all
Goods whose sale, lease or other disposition by Borrower has
given rise to Accounts and have been returned to, or
repossessed or stopped in transit by, Borrower; (b) all
Chattel Paper, Instruments, Documents and General
Intangibles (including, without limitation, all patents,
patent applications, trademarks, trademark applications,
trade names, trade secrets, goodwill, copyrights, copyright
applications, registrations, licenses, software, franchises,
customer lists, tax refund claims, claims against carriers
and shippers, guarantee claims, contracts rights, payment
intangibles, security interests, security deposits and
rights to indemnification); (c) all Inventory; (d) all Goods
(other than Inventory), including, without limitation, all
Equipment and Fixtures; (e) all Investment Property; (f) all
Deposit Accounts, bank accounts, deposits and cash; (g) all
Letter-of-Credit Rights; (h) all Commercial Tort Claims
listed on Schedule 4(a) hereto; (i) all Payment Intangibles;
(j) all Supporting Obligations; (k) any other property of
Borrower now or hereafter in the possession, custody or
control of Lender or any agent or any parent, affiliate or
subsidiary of Lender or any participant with Lender in the
Loans, for any purpose (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise); (l)
all additions and accessions to, substitutions for, and
replacements, products and Proceeds of the foregoing
property, including, without limitation, proceeds of all
insurance policies insuring the foregoing property; and (m)
all of Borrower's books and records relating to any of the
foregoing and/or to Borrower's business. Lender may transfer
Collateral into its name or that of its nominee and may
receive income and any other distributions thereon and hold
the same as collateral for the Liabilities, or apply the
same to any defaulted Liability whether or not a Default or
an Event of Default has occurred.
(b) Other Security. As security for the payment of all
Loans now or in the future made by Lender to Borrower
hereunder and for the payment or other satisfaction of all
other Liabilities, each Guarantor shall assign to Lender and
grant to Lender a continuing, valid and, enforceable first
priority (subject to Permitted Liens) and only (other than
Permitted Liens) lien, charge and security interest in all
of such Guarantor's assets and property of any kind pursuant
to the terms and provisions of a Subsidiary Security
Agreement. In addition, Lender, in its sole discretion,
without waiving or releasing (i) any obligation, liability
or duty of Borrower or any Guarantor under this Agreement or
the Other Agreements or (ii) any Event of Default, may at
any time or times hereafter, but shall not be obligated to,
pay, acquire or accept an assignment of any security
interest, lien, encumbrance or claim asserted by any Person
in, upon or against the Collateral. All sums paid by Lender
in respect thereof and all costs, fees and expenses
including, without limitation, reasonable attorney fees, all
court costs and all other charges relating thereto incurred
by Lender shall constitute Liabilities, payable by Borrower
to Lender on demand and, until paid, shall bear interest at
the highest rate then applicable to Loans hereunder.
(c) Possessory Collateral. Immediately upon Borrower's
receipt of any portion of the Collateral evidenced by an
agreement, Instrument or Document, including, without
limitation, any Tangible Chattel Paper and any Investment
Property consisting of certificated securities, Borrower
shall deliver the original thereof to Lender together with
an appropriate endorsement or other specific evidence of
assignment thereof to Lender (in form and substance
acceptable to Lender). If an endorsement or assignment of
any such items shall not be made for any reason, Lender is
hereby irrevocably authorized, as Borrower's attorney and
agent-in-fact, to endorse or assign the same on Borrower's
behalf.
(d) Electronic Chattel Paper. To the extent that Borrower
obtains or maintains any Electronic Chattel Paper, Borrower
shall create, store and assign the record or records
comprising the Electronic Chattel Paper in such a manner
that (i) a single authoritative copy of the record or
records exists which is unique, identifiable and except as
otherwise provided in clauses (iv), (v) and (vi) below,
unalterable, (ii) the authoritative copy identifies Lender
as the assignee of the record or records, (iii) the
authoritative copy is communicated to and maintained by the
Lender or its designated custodian, (iv) copies or revisions
that add or change an identified assignee of the
authoritative copy can only be made with the participation
of Lender, (v) each copy of the authoritative copy and any
copy of a copy is readily identifiable as a copy that is not
the authoritative copy, and (vi) any revision of the
authoritative copy is readily identifiable as an authorized
or unauthorized revision.
(e) Commercial Tort Claims; Letter-of-Credit Rights.
Borrower represents and warrants to Lender that it does not
have any pending Commercial Tort Claims or Letter-of-Credit
Rights except as shown on Schedule 4(a) attached hereto.
Borrower shall be deemed to restate this representation and
warranty at the time of each Loan as if this representation
and warranty had been set forth in full in Section 10
hereof.
(f) Mortgages. As additional security for all Liabilities,
the record owner of each Real Property shall execute and
deliver to Lender a Mortgage and Security Agreement on such
Real Property, excluding the New Jersey Facility, and all
fixtures, equipment, machinery, tools, appliances, fittings,
and building materials of any kind appurtenant thereto
(each, excluding the New Jersey Facility, a "Mortgage" and
collectively, the "Mortgages"), which Mortgages shall be in
such form and with such terms and conditions as required by
Lender. The terms of the Mortgages shall be considered a
part of this Agreement as though fully set forth herein, and
the terms of this Agreement shall be considered part of the
Mortgages as though fully set forth therein.
(g) Rights Under Leases. As additional security for all
Liabilities, the record owner of each Real Property,
excluding the New Jersey Facility, shall assign to Lender
for the benefit of Lender all of such Person's rights as
lessor under any and all leases with respect to such Real
Property (collectively, the "Assignments of Rents and
Leases").
(h) Lien Documents. On the Closing Date and at such times
thereafter as Lender deems necessary or desirable, Borrower
shall execute and deliver, or cause to be executed and
delivered, to Lender any agreements, documents and
instruments required by Lender to evidence, perfect or
protect Lender's liens and security interests in the
Collateral. In addition to the foregoing, Borrower shall do
anything further that may be lawfully required by Lender to
effectuate the intentions and objects of this Agreement,
including, but not limited to, the execution and delivery of
additional agreements, documents and instruments.
5. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY
INTERESTS THEREIN.
Borrower hereby authorizes Lender to file UCC-1
financing statements against Borrower covering the
Collateral (and describing such collateral, if Lender shall
so choose in its absolute discretion, as "All Assets" of
Borrower) in such jurisdictions as Lender shall deem
necessary, prudent or desirable to perfect and protect the
liens and security interests granted to Lender hereunder,
with or without the signature of Borrower. Borrower shall,
at Lender's request, at any time and from time to time,
authenticate, execute and deliver to Lender such financing
statements, documents and other agreements and instruments
(and pay the cost of filing or recording the same in all
public offices deemed necessary, prudent or desirable by
Lender) and do such other acts and things or cause third
parties to do such other acts and things as Lender may deem
necessary, prudent or desirable in its reasonable discretion
in order to establish and maintain a valid, attached and
perfected security interest in the Collateral in favor of
Lender (free and clear of all other liens, claims,
encumbrances and rights of third parties whatsoever, whether
voluntarily or involuntarily created, except Permitted
Liens) to secure payment of the Liabilities, including
without limitation providing a landlord's waiver reasonably
acceptable to Lender for any location not owned by Borrower
where any assets of Borrower are located, and in order to
facilitate the collection of the Collateral; provided,
however, Borrower shall be required to use only reasonable
commercial efforts to obtain such a landlord's waiver and
shall not be required to seek such a landlord's waiver at
any location at which Collateral with a value of less than
$50,000 in the aggregate is located. Borrower irrevocably
hereby makes, constitutes and appoints Lender (and all
Persons designated by Lender for that purpose) as Borrower's
true and lawful attorney and agent-in-fact to execute and
file such financing statements, documents and other
agreements and instruments and do such other acts and things
as may be necessary to preserve and perfect Lender's
security interest in the Collateral. Borrower further agree
that a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement
shall be sufficient as a financing statement. Borrower
further ratifies and confirms the prior filing by Lender of
any and all financing statements (and any appropriate
amendments or continuations thereof) which identify Borrower
as debtor, Lender as secured party and any or all Collateral
as collateral.
6. POSSESSION OF COLLATERAL AND RELATED MATTERS.
Until an Event of Default has occurred, Borrower shall
have the right, except as otherwise provided in this
Agreement, in the ordinary course of Borrower's business
consistent with past practices, to (a) sell, lease or
furnish under contracts of service any of Borrower's
Inventory normally held by Borrower for any such purpose;
and (b) use and consume any raw materials, work in process
or other materials normally held by Borrower for such
purpose; provided, however, that a sale in the ordinary
course of business shall not include any transfer or sale in
satisfaction, partial or complete, of a debt owed by
Borrower.
7. COLLECTIONS.
(a) All checks, drafts, instruments and other items of
payment representing proceeds of Collateral shall be
endorsed by Borrower to Lender, and, if that endorsement of
any such item shall not be made for any reason, Lender is
hereby irrevocably authorized to endorse the same on
Borrower's behalf. For the purpose of this Section 7,
Borrower irrevocably hereby makes, constitutes and appoints
Lender (and all Persons designated by Lender for that
purpose) as Borrower's true and lawful attorney and agent-in-
fact (i) to endorse Borrower's name upon said items of
payment and/or proceeds of Collateral and upon any Chattel
Paper, Document, Instrument, invoice or similar document or
agreement relating to any Account of Borrower or Goods
pertaining thereto; (ii) to take control in any manner of
any item of payment or Proceeds
thereof; and (iii) to have access to any lock box or postal
box into which any of Borrower's mail is deposited, and open
and process all mail addressed to Borrower and deposited
therein.
(b) Lender may, at any time and from time to time after the
occurrence and during the continuance of an Event of
Default, whether before or after notification to any Account
Debtor and whether before or after the maturity of any of
the Liabilities, (i) enforce collection of any of Borrower's
Accounts or other amounts owed to Borrower by suit or
otherwise; (ii) exercise all of Borrower's rights and
remedies with respect to proceedings brought to collect any
Accounts or other amounts owed to Borrower; (iii) surrender,
release or exchange all or any part of any Accounts or other
amounts owed to Borrower, or compromise or extend or renew
for any period (whether or not longer than the original
period) any indebtedness thereunder; (iv) sell or assign any
Account of Borrower or other amount owed to Borrower upon
such terms, for such amount and at such time or times as
Lender deems advisable; (v) prepare, file and sign
Borrower's name on any proof of claim in bankruptcy or other
similar document against any Account Debtor or other Person
obligated to Borrower; and (vi) do all other acts and things
which are necessary, in Lender's sole discretion, to fulfill
Borrower's obligations under this Agreement and to allow
Lender to collect the Accounts or other amounts owed to
Borrower. In addition to any other provision hereof, Lender
may at any time, whether before or after the occurrence of
an Event of Default, at Borrower's expense, notify any
parties obligated on any of the Accounts to make payment
directly to Lender of any amounts due or to become due
thereunder.
(c) Proceeds of any Collateral shall be applied in whole or
in part against the Liabilities, in such order as Lender
shall determine in its sole discretion, on the day of
receipt, subject to actual collection.
8. FINANCIAL REPORTS AND SCHEDULES.
(a) Financial Statements. Borrower shall deliver to Lender
the following financial information, all of which shall be
prepared in accordance with generally accepted accounting
principles consistently applied, and shall be accompanied by
a compliance certificate ("Compliance Certificate") in the
form of Exhibit D hereto, which Compliance Certificate shall
include a calculation of all financial covenants contained
in this Agreement: (i) no later than forty-five (45) days
(or in the event that a request for an extension of the
required filing date of the Form 10-Q of Borrower with the
SEC has been timely filed, the last day of such requested
extension period, but in no event later than fifty-five (55)
days) after the end of each calendar quarter, copies of
internally prepared financial statements for Borrower,
prepared in accordance with GAAP, including, without
limitation, balance sheets and statements of income,
retained earnings and cash flow all on a consolidated basis
certified by the Chief Financial Officer of Borrower; (ii)
no later than ninety (90) days (or in the event that a
request for an extension of the required filing date for the
Form 10-K of Borrower with the SEC has been timely filed,
the last day of such requested extension period, but in no
event later than one hundred-five (105) days) after the end
of each Fiscal Year, audited annual financial statements for
Borrower prepared in accordance with GAAP, including without
limitation, balance sheets and statements of income,
retained earnings and cash flows all on a consolidated
basis, with an unqualified opinion by independent certified
public accountants selected by Borrower and reasonably
satisfactory to Lender, which financial statements shall be
accompanied by copies of any management letters sent to
Borrower by such accountants; and (iii) no later than ninety
(90) days after the end of each Fiscal Year, projections, in
form and substance satisfactory to Lender in its sole
discretion, for the immediately following Fiscal Year, which
projections shall include the assumptions used therein
together with appropriate supporting details as reasonably
requested by Lender.
(b) Public Information. Promptly upon their becoming
available, and in all events within ten (10) days of any
such filing, copies of any: (i) correspondence or notices
received by Borrower or any Guarantor from any federal,
state or local Governmental Authority that regulates the
operations of Borrower or such Guarantor, relating to an
actual or threatened change or development that would be
materially adverse to Borrower or such Guarantor; (ii)
registration statements and any amendments and supplements
thereto, and any regular and periodic reports or proxy
statements, if any, filed by Borrower or any Guarantor with
any securities exchange or with the Securities and Exchange
Commission or any Governmental Authority succeeding to any
or all of the functions of the said Commission; and (iii)
letters of comment or correspondence sent to Borrower or any
Guarantor by any such securities exchange or such Commission
in relation to Borrower, any Guarantor or any of their
respective assets or operations.
(c) Other Information. Promptly following request therefor
by Lender, such other business or financial data, reports,
appraisals and projections regarding Borrower or any
Guarantor as Lender may reasonably request.
9. TERMINATION.
THIS AGREEMENT SHALL BE IN EFFECT FROM THE CLOSING DATE
UNTIL THE INDEFEASIBLE REPAYMENT IN FULL TO LENDER BY
BORROWER OF THE OUTSTANDING BALANCE OF ALL OF THE LOANS AND
ALL OTHER AMOUNTS OWED BY BORROWER HEREUNDER. If the due
date of the Liabilities is accelerated pursuant to Section
15 hereof then (i) Lender shall not make any additional
Loans on or after the date identified as the date on which
the Liabilities are to be repaid; and (ii) this Agreement
shall terminate on the date thereafter that the Liabilities
(other than unasserted contingent obligations) are
indefeasibly paid in full. At such time as Borrower has
repaid all of the Liabilities and this Agreement has
terminated, Borrower shall deliver to Lender a release, in
form and substance satisfactory to Lender, of all
obligations and liabilities of Lender and its officers,
directors, employees, agents, parents, subsidiaries and
affiliates to Borrower, and if Borrower is obtaining new
financing from another lender, Borrower shall deliver such
new lender's indemnification of Lender, in form and
substance satisfactory to Lender, for checks which Lender
has credited to Borrower's accounts, but which subsequently
are dishonored for any reason or for automatic clearinghouse
or wire transfers not yet posted to Borrower's account.
10. REPRESENTATIONS AND WARRANTIES.
Borrower hereby represents and warrants to Lender,
which representations and warranties (whether appearing in
this Section 10) or elsewhere) shall be true at the time of
Borrower's execution hereof and on the Closing Date, shall
remain true until the repayment in full and satisfaction of
all the Liabilities and termination of this Agreement, and
shall be remade by Borrower at the time each Loan is made
pursuant to this Agreement (provided that any
representation or warranty made as of a specific date shall
be true, shall remain true and shall be remade as of such
date):
(a) Financial Statements and Other Information. The
financial statements and other information delivered or to
be delivered by Borrower to Lender at or prior to the
Closing Date accurately reflect the financial condition of
Borrower and Guarantors, and there has been no material
adverse change in the financial condition, the operations or
any other status of Borrower or Guarantors since March 31,
2010. All written information now or heretofore furnished
by Borrower to Lender is true and correct as of the date
with respect to which such information was furnished.
(b) Locations. The office where Borrower keeps its books,
records and accounts (or copies thereof) concerning the
Collateral, Borrower's chief executive office and all of
Borrower's other places of business and locations of
Collateral and post office boxes and locations of bank
accounts are set forth in Schedule 10(b) attached hereto and
at other locations within the continental United States of
which Lender has been advised by Borrower in writing in
accordance with subsection 11(b)(i) hereof. The Collateral
is kept only at the addresses set forth on Schedule 10(b),
and at other locations within the continental United States
of which Lender has been advised by Borrower in writing in
accordance with subsection 11(b)(i) hereof.
(c) Loans by Borrower. As of the date of this Agreement,
neither Borrower (nor any of its Subsidiaries) nor any
Guarantor has made any loans or advances to any Affiliate or
other Person, except for those loans or advances outstanding
on the date hereof as shown on Schedule 10(c) attached
hereto.
(d) Liens. Borrower is the lawful owner of all Collateral
now purportedly owned or hereafter purportedly acquired by
Borrower, free from all liens, claims, security interests
and encumbrances whatsoever, whether voluntarily or
involuntarily created and whether or not perfected, other
than the Permitted Liens.
(e) Organization, Authority and No Conflict.
(i) Borrower is duly organized, validly existing
and in good standing in its jurisdiction of organization and
has an organizational identification number and chief
executive office as indicated on Schedule 1(a) hereto.
Borrower is duly qualified and in good standing in all
states where the nature and extent of the business
transacted by it or the ownership of its assets makes such
qualification necessary, except where the failure to be so
qualified and in good standing would not reasonably be
expected to have a Material Adverse Effect on Borrower.
Borrower has the right and power and is duly authorized and
empowered to enter into, execute and deliver this Agreement
and each Other Agreement to which it is a party and to
perform its obligations hereunder and thereunder. Borrower's
execution, delivery and performance of this Agreement and
the Other Agreements does not conflict with the provisions
of the organizational documents of Borrower, any statute,
regulation, ordinance or rule of law, or any agreement,
contract or other document which may now or hereafter be
binding on Borrower, and Borrower's execution, delivery and
performance of this Agreement and the Other Agreements shall
not result in the imposition of any lien or other
encumbrance upon any of Borrower's or any Guarantor's
property under any existing indenture, mortgage, deed of
trust, loan or credit agreement or other agreement or
instrument by which Borrower or any Guarantor or any of
property or Borrower or any Guarantor may be bound or
affected.
(ii) Each Guarantor is duly organized, validly
existing and in good standing in its jurisdiction of
organization and has an organizational identification number
and chief executive office as indicated on Schedule 1(a)
hereto. Each Guarantor is duly qualified and in good
standing in all states where the nature and extent of the
business transacted by it or the ownership of its assets
makes such qualification necessary, except where the failure
to be so qualified and in good standing would not reasonably
be expected to have a Material Adverse Effect on such
Guarantor. Each Guarantor has the right and power and is
duly authorized and empowered to enter into, execute and
deliver each Other Agreement to which it is a party and to
perform its obligations thereunder. Each Guarantor's
execution, delivery and performance of each Other Agreement
to which it is a party does not conflict with the provisions
of its organizational documents, any statute, regulation,
ordinance or rule of law, or any agreement, contract or
other document which may now or hereafter be binding on it.
Each Guarantor's execution, delivery and performance of each
Other Agreement to which it is a party shall not result in
the imposition of any lien or other encumbrance upon any of
Borrower's or any Guarantors property under any existing
indenture, mortgage, deed of trust, loan or credit agreement
or other agreement or instrument by which Borrower or any
Guarantor or any property of Borrower or any Guarantor may
be bound or affected.
(f) Litigation. Except as shown on Schedule 10(f) attached
hereto, there are no actions or proceedings which are
pending or threatened in writing against Borrower (or any of
its Subsidiaries) or any Guarantor and Borrower shall,
promptly upon becoming aware of any such pending or
threatened action or proceeding, give written notice thereof
to Lender.
(g) Compliance with Laws and Maintenance of Permits.
Borrower and each Guarantor have obtained all governmental
consents, franchises, certificates, licenses,
authorizations, approvals and permits, the lack of which
would be reasonably likely to have a Material Adverse
Effect. Borrower (and each Guarantor) is in compliance in
all material respects with all applicable federal, state,
local and foreign statutes, orders, regulations, rules and
ordinances (including, without limitation, Environmental
Laws and statutes, orders, regulations, rules and ordinances
relating to taxes, employer and employee contributions and
similar items, securities, ERISA or employee health and
safety) the failure to comply with which would be reasonably
likely to have a Material Adverse Effect.
(h) Affiliate Transactions; Subsidiaries. Except as set
forth on Schedule 10(h) attached hereto, neither Borrower
nor any Guarantor is conducting, permitting or suffering to
be conducted, transaction with any Affiliate other than
transactions with Affiliates for the purchase or sale of
services in the ordinary course of business consistent with
past practices pursuant to terms that are no less favorable
to Borrower or the Guarantor, as applicable, than the terms
upon which such transfers or transactions would have been
made had they been made to or with a Person that is not an
Affiliate. Schedule 10(h) lists all of the current
Subsidiaries of Borrower.
(i) Names and Trade Names. Borrower's corporate name has
always been as set forth on the first page of this Agreement
and Borrower has not used any trade names, assumed names,
fictitious names or division names in the operation of its
business, except in each case as set forth on Schedule 10(i)
hereto or other names of which Lender has been advised by
Borrower in writing in accordance with subsection 11(b)(i)
hereof.
(j) Equipment. Borrower has good and indefeasible and
merchantable title to and ownership of all Equipment
(subject to Permitted Liens). No Equipment is a Fixture to
real estate or an accession to other personal property
unless such personal property is subject to a first priority
lien in favor of Lender.
(k) Enforceability. This Agreement and the Other
Agreements to which Borrower is a party are the legal, valid
and binding obligations of Borrower and are enforceable
against Borrower in accordance with their respective terms.
Each Other Agreement to which a Guarantor is a party is the
legal, valid and binding obligation of such Guarantor and is
enforceable against such Guarantor in accordance with its
terms.
(l) Solvency. Borrower and Guarantors, taken as a whole,
are, after giving effect to the transactions contemplated
hereby, solvent, able to pay their respective debts as they
become due, have capital sufficient to carry on their
respective business, now own property having a value both at
fair valuation and at present fair saleable value greater
than the amount required to pay their debts, and will not be
rendered insolvent by the execution and delivery of this
Agreement or any of the Other Agreements or by completion of
the transactions contemplated hereunder or thereunder.
(m) Indebtedness. Except as set forth on Schedule 10(m)
attached hereto, Borrower is not obligated (directly or
indirectly) for any Indebtedness other than the Loans, the
other Liabilities and/or other Indebtedness incurred in
compliance with the terms of this Agreement and of which
Lender has been advised by Borrower in writing in accordance
with subsection 11(b)(i) hereof..
(n) Margin Securities and Use of Proceeds. Borrower does
not own any margin securities, and none of the proceeds of
the Loans hereunder shall be used for the purpose of
purchasing or carrying any margin securities or for the
purpose of reducing or retiring any indebtedness which was
originally incurred to purchase any margin securities or for
any other purpose not permitted by Regulation U of the Board
of Governors of the Federal Reserve System as in effect from
time to time.
(o) Capital Structure. Schedule 10(o) attached hereto sets
forth, as of the date hereof, as to Borrower and each
Guarantor the number of issued and outstanding shares of
each class of capital stock or the total membership
interests (as applicable) of such Person. Schedule 10(o)
hereto also sets forth in graphic format a true and complete
corporate organizational structure chart for Borrower and
each Guarantor as of the date hereof.
(p) No Defaults. Each material contract, lease and
commitment to which Borrower or any Guarantor is a party or
by which it is bound is valid, binding and enforceable upon
Borrower or such Guarantor, as applicable, and each of the
other parties thereto in accordance with their respective
terms. Neither Borrower nor any Guarantor is in default
under any material contract, lease or commitment to which it
is a party or by which it is bound, nor does Borrower
know of any dispute regarding any such contract, lease or
commitment which would be reasonably likely to have a
Material Adverse Effect.
(q) Employee Matters. There are no controversies pending
or threatened in writing between Borrower or any Guarantor
and any of their respective employees, agents or independent
contractors other than employee grievances arising in the
ordinary course of business which would not, in the
aggregate, have a Material Adverse Effect, and Borrower and
each Guarantor is in compliance with all federal and state
laws respecting employment and employment terms, conditions
and practices except for such non-compliance which would not
be reasonably likely to have a Material Adverse Effect.
(r) Intellectual Property. Borrower and each Guarantor
possesses adequate licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark
applications, tradestyles and trade names to continue to
conduct all of their business as heretofore conducted by
them. Schedule 10(r) hereto lists, as of the date hereof,
(i) each copyright (and each application therefor), (ii)
each trademark or service ▇▇▇▇ (and each application
therefor), and (iii) each patent (and each application
therefor) owned and/or filed by Borrower or any Guarantor,
listing in each case the registration or application number
and date of each such item of intellectual property and the
owner thereof.
(s) Real Property; Environmental Matters. Schedule 10(s)
hereto lists all real property currently owned by Borrower
or any Guarantor, and the owner(s) of record of each such
real property. Except as set forth on Schedule 10(s)
attached hereto, no Borrower (nor any Guarantor) has
generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on
or off its premises (whether or not such premises all of
which were owned or leased by it) in any manner which at any
time violates any Environmental Law or any license, permit,
certificate, approval or similar authorization thereunder
and, to the best of the Borrower's knowledge, the operations
of Borrower (and each Guarantor) complies in all material
respects with all Environmental Laws and all licenses,
permits, certificates, approvals and similar authorizations
thereunder. Except as set forth on Schedule 10(s) hereto,
there has been no investigation, proceeding, complaint,
order, directive, claim, citation or notice by any
Governmental Authority or any other Person, nor is any
pending or to the best of Borrower's knowledge threatened
with respect to any non-compliance with or violation of the
requirements of any Environmental Law by Borrower (or any
Guarantor) or the release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which affects
Borrower (or any Guarantor) or its business, operations or
assets or any properties at which Borrower (or any
Guarantor) has transported, stored or disposed of any
Hazardous Materials. Neither Borrower nor any Guarantor has
any material liability (contingent or otherwise) in
connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials.
(t) ERISA Matters. Borrower (and each Guarantor) has paid
and discharged all obligations and liabilities due and
arising under ERISA of a character which, if unpaid or
unperformed, would reasonably be expected to result in the
imposition of a lien against any of its properties or
assets.
(u) Compliance with Laws. Borrower (and each Guarantor) is
in compliance in all material respects with all federal,
state and local laws, rules and regulations applicable to
its properties, operations, business, and finances,
including, without limitation, any federal or state laws
relating to liquor (including 18 U.S.C. SS 3617, et seq.) or
narcotics (including 21 U.S.C. SS 801, et seq.) and/or any
commercial crimes; all Environmental Laws; and ERISA, if
applicable. Neither Borrower nor any Guarantor is a
Sanctioned Person or has any of its assets in a Sanctioned
Country or does business in or with, or derives any of its
operating income from investments in or transactions with,
Sanctioned Persons or Sanctioned Countries in violation of
economic sanctions administered by OFAC. The proceeds from
the Loan will not be used to fund any operations in, finance
any investments or activities in, or make any payments to, a
Sanctioned Person or a Sanctioned Country. "OFAC" means the
U.S. Department of the Treasury's Office of Foreign Assets
Control. "Sanctioned Country" means a country subject to a
sanctions program identified on the list maintained by OFAC
and available at
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l, or as otherwise published from time to time. "Sanctioned
Person" means (i) a person named on the list of Specially
Designated Nationals or Blocked Persons maintained by OFAC
available at
▇▇▇▇://▇▇▇.▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇▇▇/▇▇▇▇/▇▇▇▇▇▇▇▇/▇▇▇▇▇
..shtml, or as otherwise published from time to time, or (ii)
(A) an agency of the government of a Sanctioned Country, (B)
an organization controlled by a Sanctioned Country, or (C) a
person resident in a Sanctioned Country to the extent
subject to a sanctions program administered by OFAC.
(v) Disclosure. No representation or warranty made by
Borrower in this Agreement, the Other Agreements, or in any
financial statement, report, certificate or any other
document furnished in connection herewith or therewith
contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements
herein or therein not misleading. There is no fact known to
Borrower or which reasonably should be known to Borrower
which Borrower has not disclosed to Lender in writing with
respect to the transactions contemplated by this Agreement
which could reasonably be expected to have a Material
Adverse Effect on Borrower or any Guarantor.
(w) Representations, Warranties and Covenants with Respect
to the Real Property.
(i) The record owner of each Real Property, as set forth on
Schedule 10(s) has, and at all times will have, good and
marketable title to such Real Property, and the Mortgage(s),
when executed and delivered, will be a valid first lien on
the Real Property, excluding the New Jersey Facility,
subject only to Permitted Exceptions.
(ii) Borrower agrees that it will execute and deliver, or
cause to be executed and delivered, any further mortgages or
any other documents or instruments necessary, in the
reasonable opinion of Lender, to achieve and maintain at all
times a first and valid lien on the Real Property and the
personal property covered by the Mortgages, subject only to
Permitted Exceptions.
(iii) Borrower agrees to pay all reasonable charges
incident to examination of the title of the Real Property,
surveys, recording fees and for all searches which may be
required by Lender to assure that the Mortgages are and
continue to be a first lien as herein provided, and if not
so paid, Lender may in its discretion, pay the same and
treat the amount of such payment as a Revolving Loan.
(iv) Borrower agrees to pay, or cause to be paid, any tax,
assessment, or other charge or lien upon the Real Property,
existing at any time, on or before its due date and to
furnish satisfactory proof of such payment to Lender within
thirty (30) days after such payment is due.
11. AFFIRMATIVE COVENANTS.
Until payment and satisfaction in full of all
Liabilities and termination of this Agreement, unless
Borrower obtain Lender's prior written consent waiving or
modifying any covenants hereunder in any specific instance,
Borrower covenants and agrees with respect to itself and
each of its Subsidiaries, as follows:
(a) Maintenance of Records. Borrower shall at all times
keep accurate and complete books, records and accounts with
respect to all of Borrower's business activities, in
accordance with sound accounting practices and generally
accepted accounting principles consistently applied, and
shall keep such books, records and accounts, and any copies
thereof, only at the addresses indicated for such purpose on
Schedule 10(b).
(b) Notices. Borrower shall:
(i) Locations. Promptly (but in no event less than ten
(10) Business Days prior to the occurrence thereof) notify
Lender of the proposed opening of any new place of business
or new location of Collateral, the closing of any existing
place of business or location of Collateral (so long as
Collateral with an aggregate value in excess of $50,000 is
located there), any change of in the location of Borrower's
books, records and accounts (or copies thereof), the opening
or closing of any post office box, the opening or closing of
any bank account or, if any of the Collateral consists of
Goods of a type normally used in more than one state, the
use of any such Goods in any state other than a state in
which Borrower has previously advised Lender that such Goods
will be used.
(ii) Litigation and Proceedings. Promptly upon becoming
aware thereof, notify Lender (A) of any actions or
proceedings which are pending or threatened against Borrower
or any Guarantor (1) in which the amount of damages or other
recovery sought exceeds or could reasonably be expected to
exceed $200,000.00, or (2) which might have a Material
Adverse Effect, and of any Commercial Tort Claims of
Borrower which may arise, which notice, in the case of
clause (A) would be deemed a modification of Schedule 10(f)
hereto to add such litigation and in the case of clause (B)
would be deemed a modification of Schedule 4(a) to add such
Commercial Tort Claim.
(iii) Names and Trade Names. Notify Lender within ten
(10) days of the change of the name of Borrower (or any of
Guarantor) or the use of any trade name, assumed name,
fictitious name or division name not previously disclosed to
Lender in writing.
(iv) ERISA Matters. Promptly notify Lender of (x) the
occurrence of any "reportable event" (as defined in ERISA)
which might result in the termination by the Pension Benefit
Guaranty Corporation (the "PBGC") of any employee benefit
plan subject to Title IV of ERISA ("Plan") covering any
officers or employees of Borrower (or any Guarantor), any
benefits of which are, or are required to be, guaranteed by
the PBGC, (y) receipt of any notice from the PBGC of its
intention to seek termination of any Plan or appointment of
a trustee therefor or (z) its intention to terminate or
withdraw from any Plan.
(v) Environmental Matters. Immediately notify Lender upon
becoming aware of any investigation, proceeding, complaint,
order, directive, claim, citation or notice with respect to
any non-compliance with or violation of the requirements of
any Environmental Law by Borrower (or any Guarantor) or the
generation, use, storage, treatment, transportation,
manufacture handling, production or disposal of any
Hazardous Materials or any other environmental, health or
safety matter which affects Borrower (or any Guarantor) or
its business operations or assets or any properties at which
Borrower (or any Guarantor) has transported, stored or
disposed of any Hazardous Materials.
(vi) Intellectual Property Matters. On each Compliance
Certificate, notify Lender of the registration (whether or
not Lender previously had notice of the filing of an
application for registration thereof) or acquisition by
Borrower or any Guarantor of any patent, trademark or
copyright, or the filing of any application for the
registration of any patent, trademark or copyright by
Borrower or Guarantor during the fiscal period to which the
Compliance Certificate pertains, which notice would be
deemed a modification of Schedule 10(r) hereto to add such
information Schedule 10(r).
(vii) Default; Material Adverse Change. Promptly advise
Lender of the occurrence of any Material Adverse Effect on
Borrower or any Guarantor or the occurrence of any Default
or Event of Default hereunder.
All of the foregoing notices shall be provided by
Borrower to Lender in writing.
(c) Compliance with Laws and Maintenance of Permits.
Borrower (and each Guarantor) shall maintain all
governmental consents, franchises, certificates, licenses,
authorizations, approvals and permits, the lack of which
would be reasonably expected to have a Material Adverse
Effect and Borrower (and each Guarantor) shall remain in
compliance with all applicable federal, state, local and
foreign statutes, orders, regulations, rules and ordinances
(including, without limitation, Environmental Laws and
statutes, orders, regulations, rules and ordinances relating
to taxes, employer and employee contributions and similar
items, securities, ERISA or employee health and safety), the
failure with which to comply would reasonably be expected to
have a Material Adverse Effect. Following any determination
by Lender that there is non-compliance, or any condition
which requires any action by or on behalf of Borrower (or
any Guarantor) in order to avoid non-compliance, with any
Environmental Law, Lender may, at Borrower's expense, cause
an independent environmental engineer acceptable to Lender
to conduct such tests of the relevant site(s) as are
appropriate and prepare and deliver a report setting forth
the results of such tests, a proposed plan for remediation
and an estimate of the costs thereof.
(d) Inspection and Audits. Borrower shall permit Lender,
or any Persons designated by it, to call during normal
business hours and upon prior written notice prior to the
occurrence of an Event of Default and at any time and with
no prior notice required at any time after the occurrence of
an Event of Default, at Borrower's and/or any Guarantor's
places of business, and, without hindrance or delay, to
examine or inspect the Collateral and to examine, inspect,
audit, check and make extracts from the books, records,
journals, orders, receipts and any correspondence and other
data relating to the business of Borrower and/or any
Guarantor, the Collateral or any transactions between the
parties hereto, and shall have the right to make such
verification concerning Borrower's and/or any Guarantor's
business as Lender may consider reasonable under the
circumstances. Borrower shall furnish to Lender such
information relevant to Lender's rights under this Agreement
as Lender shall at any time and from time to time request.
Following the occurrence of an Event of Default, Lender,
through its officers, employees or agents shall have the
right, at any time and from time to time, in the name of
Lender, Borrower, any Guarantor or otherwise, to verify the
validity, amount or any other matter relating to any
Borrower's or Guarantor's Accounts, by mail, telephone,
telegraph or otherwise. Borrower authorizes Lender to
discuss the affairs, finances and business of Borrower (and
any Guarantor) with any officers, employees or directors of
Borrower or any Guarantor, and to discuss the financial
condition of Borrower (and any Guarantor) with Borrower's
independent public accountants. Any such discussions with
the accountants shall be without liability to Lender or to
Borrower's independent public accountants. Borrower shall
pay to Lender, upon demand, all fees reasonably incurred by
Lender in connection with any field audit or inspection of
Borrower or any Guarantor, their respective businesses
and/or the Collateral, plus all reasonable out-of-pocket
costs and expenses incurred by Lender and each auditor
(including without limitation, air fare, meals and lodging)
in the conduct of such an audit; provided, however, that
prior to the occurrence of an Event of Default Borrower and
the Guarantors shall be liable to pay for only one (1) such
field audit or inspection in any twelve (12) month period).
(e) Insurance. Borrower shall:
(i) Keep the Collateral properly housed and insured for the
full insurable value thereof (less deductibles) against loss
or damage by fire, theft, explosion, sprinklers, collision
(in the case of motor vehicles) and such other risks as are
customarily insured against by Persons engaged in businesses
similar to that of Borrower, with such companies, in such
amounts, with such deductibles, and under policies in such
form and substance as shall be reasonably satisfactory to
Lender. Certificates of insurance have been delivered to
Lender as of the Closing Date, together with evidence of
payment of all premiums therefor, and shall contain an
endorsement, in form and substance reasonably acceptable to
Lender, showing Lender as lender loss payee under such
insurance policies. Such endorsement, or an independent
instrument furnished to Lender, shall provide that the
insurance company shall give Lender at least thirty (30)
days written notice before any such policy of insurance is
altered or canceled and that no act, whether willful or
negligent, or default of Borrower or any other Person shall
affect the right of Lender to recover under such policy of
insurance in case of loss or damage. In addition, Borrower
shall cause to be executed and delivered to Lender an
assignment of proceeds of its business interruption
insurance policies and of its receivables insurance
policies, if any; provided however, that the insurance
proceeds arising from any loss shall be covered by any such
assigned policy shall be paid by Lender to Borrower, so long
as (i) no Default or Event of Default has occurred, (ii) the
total proceeds received is $100,000.00 or less, and (iii)
Borrower commits in writing to replace or repair any damaged
Collateral with such insurance proceeds within one hundred
eighty (180) days of the Borrower's receipt of said
proceeds. Borrower hereby directs all insurers under all
policies of insurance to pay all proceeds payable thereunder
directly to Lender. Upon receipt of any such insurance
proceeds (x) in excess of $100,000.00, Lender may, in its
sole discretion, either (i) apply such insurance proceeds to
the repayment of the Liabilities in such order as Lender may
in its sole discretion determine or (ii) with respect to any
insurance proceeds paid as a result of the loss of damage to
or destruction of theft of or condemnation or confiscation
of any tangible Collateral (a "Casualty Loss"), release such
insurance proceeds to Borrower to be used in the repair or
replacement of the Collateral that was the subject of the
Casualty Loss (and Borrower covenants that it shall use,
within one hundred eighty (180) days of the Borrower's
receipt of said proceeds, any such insurance proceeds
released to it solely for such purposes), and (y) equal to
or less than $100,000.00 paid as a result of a Casualty
Loss, release such insurance proceeds to Borrower to be used
in the repair or replacement of the Collateral that was the
subject of the Casualty Loss (and Borrower covenants that it
shall use, within one hundred eighty (180) days of the
Borrower's receipt of said proceeds, any such insurance
proceeds released to it solely for such purposes); provided,
however, in the event an Event of Default has occurred and
is continuing, Lender may apply any such insurance proceeds
to the repayment of the Liabilities in such order as Lender
may in its sole discretion determine. Borrower irrevocably
makes, constitutes and appoints Lender (and all officers,
employees or agents designated by Lender) as Borrower's true
and lawful attorney (and agent-in-fact) for the purpose of
making, settling and adjusting claims under such policies of
insurance, endorsing the name of Borrower on any check,
draft, instrument or other item of payment for the proceeds
of such policies of insurance and making all determinations
and decisions with respect to such policies of insurance.
(ii) Maintain, at their expense, such public liability, and
third party property damage insurance as is customary for
Persons engaged in businesses similar to that of Borrower
with such companies and in such amounts, with such
deductibles and under policies in such form as shall be
satisfactory to Lender and certificates of insurance as to
such policies have been delivered to Lender as of the
Closing Date, together with evidence of payment of all
premiums therefor; each such policy shall contain an
endorsement showing Lender as additional insured thereunder
and providing that the insurance company shall give Lender
at least thirty (30) days written notice before any such
policy shall be altered or canceled.
(iii) Maintain, at its expense, such insurance coverage
as required under the Mortgage(s).
If Borrower at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance
required above or to pay any premium relating thereto, then
Lender, without waiving or releasing any obligation or
default by Borrower hereunder, may (but shall be under no
obligation to) obtain and maintain such policies of
insurance and pay such premiums and take such other actions
with respect thereto as Lender deems advisable. Such
insurance, if obtained by Lender, may, but need not, protect
Borrower's interests or pay any claim made by or against
Borrower with respect to the Collateral. Such insurance may
be more expensive than the cost of insurance Borrower may be
able to obtain on its own and may be cancelled only upon
Borrower providing evidence that it has obtained the
insurance as required above. All sums disbursed by Lender
in connection with any such actions, including, without
limitation, court costs, expenses, other charges relating
thereto and reasonable attorneys' fees, shall constitute
Loans hereunder, shall be payable on demand by Borrower to
Lender and, until paid, shall bear interest at the highest
rate then applicable to Loans hereunder. Borrower shall not
make or permit to be made changes to the terms and
conditions (including the amounts) of its insurance policies
from those delivered to Lender prior to the Closing Date
without the prior written consent of Lender, which consent
shall not be unreasonably withheld, unless such changes
would not adversely affect Lender's rights under any such
policy or the coverage afforded any of the Collateral
covered thereby.
(f) Collateral. Borrower shall keep the Collateral in good
condition, repair and order (ordinary wear and tear
excepted) and shall make all necessary repairs to the
Equipment and replacements thereof so that the operating
efficiency and the value thereof shall at all times be
preserved and maintained.
(g) Use of Proceeds. All monies and other property
obtained by Borrower from Lender pursuant to this Agreement
as proceeds of: (i) the Revolving Loans shall be used solely
for general corporate purposes of the Borrower, (ii) the
Term Loan shall be used solely to refinance certain existing
Indebtedness owed by Borrower, as set forth on Schedule
11(g) attached hereto and, after payment in full of such
Indebtedness, for general corporate purposes, and (iii) the
Permitted Acquisition Loans shall be used solely to fund
costs and expenses incurred by Borrower in connection with
the consummation of a Permitted Acquisition.
(h) Taxes. Borrower shall file all required tax returns
for and pay all of the taxes owing by Borrower (and any
Guarantor) when due, including, without limitation, taxes
imposed by foreign, federal, state or municipal agencies,
and shall cause any liens for taxes to be promptly released;
provided, that Borrower shall have the right to contest the
payment of such taxes in good faith by appropriate
proceedings so long as (i) the amount so contested is shown
on the financial statements of Borrower; (ii) the contesting
of any such payment does not give rise to a lien for taxes;
(iii) if Lender in the exercise of its sole discretion shall
require, Borrower keep on deposit with Lender (such deposit
to be held without interest) an amount of money which, in
the sole judgment of Lender, is sufficient to pay such taxes
and any interest or penalties that may accrue thereon; and
(iv) if Borrower fails to prosecute such contest with
reasonable diligence, Lender may apply the money so
deposited in payment of such taxes. If Borrower fails to
pay any such taxes and in the absence of any such contest by
Borrower, Lender may (but shall be under no obligation to)
advance and pay any sums required to pay any such taxes
and/or to secure the release of any lien therefor, and any
sums so advanced by Lender shall constitute Loans hereunder,
shall be payable by Borrower to Lender on demand, and, until
paid, shall bear interest at the highest rate then
applicable to Loans hereunder.
(i) Intellectual Property. Borrower shall maintain
adequate licenses, patents, patent applications, copyrights,
service marks, trademarks, trademark applications,
tradestyles and trade names to continue its business as
heretofore conducted by it or as hereafter conducted by it.
(j) Checking and Deposit Accounts. Borrower shall maintain
its primary cash management relationship, including without
limitation its primary deposit and checking accounts, with
Lender. Normal charges shall be assessed on all accounts
maintained by Borrower with Lender.
12. NEGATIVE COVENANTS.
Until payment and satisfaction in full of all
Liabilities and termination of this Agreement, unless
Borrower obtains Lender's prior written consent waiving or
modifying any of Borrower's covenants hereunder in any
specific instance, Borrower agrees, for itself and each
Guarantor, as follows:
(a) Guaranties. Neither Borrower nor any Guarantor shall
assume, guarantee or endorse, or otherwise become liable in
connection with, the obligations of any Person, except by
endorsement of instruments for deposit or collection or
similar transactions in the ordinary course of business.
(b) Indebtedness. Neither Borrower nor any Guarantor shall
create, incur, assume or become obligated (directly or
indirectly), for any loans or other Indebtedness for
borrowed money other than the Loans, except that Borrower
and the Guarantors, in the aggregate, may: (i) maintain the
present indebtedness listed on Schedule 10(m) hereto; (ii)
incur unsecured indebtedness to trade creditors in the
ordinary course of business on standard terms; (iii) incur
purchase money Indebtedness and Capital Lease Obligations,
provided that the amount of such purchase money Indebtedness
and Capital Lease Obligations shall not exceed, at any time,
$1,000,000.00, in the aggregate, and (iv) the Indebtedness
represented by the promissory note referred to in subsection
12(d)(v) hereof.
(c) Liens. Neither Borrower nor any Guarantor shall grant
or permit to exist (voluntarily or involuntarily) any lien,
claim, security interest or other encumbrance whatsoever on
any of its assets, other than Permitted Liens. For purposes
hereof, liens securing purchase money Indebtedness permitted
to be incurred by Borrower or a Guarantor pursuant to
subsection 12(b) hereof shall be deemed to be a "Permitted
Lien". Borrower shall not enter into nor permit any
Guarantor to enter into any agreement which prohibits or
limits the ability of Borrower or such Guarantor to create,
incur, assume or suffer to exist any lien, claim, security
interest or other encumbrance whatsoever upon any of its
property or revenues, whether now owned or hereafter
acquired.
(d) New Jersey Facility. Without limiting the effect of
any of the other negative covenants contained herein, with
respect to the New Jersey Facility, Borrower shall not grant
a mortgage, lien or security interest in, nor lease nor
transfer any of its interest in the New Jersey Facility
without the consent of Lender, which consent shall not to be
unreasonably withheld, conditioned or delayed, except for
New Jersey Facility Fixtures, which may be sold, replaced or
otherwise transferred in the normal course of Borrower's
business.
(e) Mergers, Sales, Acquisitions, Subsidiaries and Other
Transactions Outside the Ordinary Course of Business.
Neither Borrower nor any Guarantor shall (i) enter into any
merger, consolidation, division, liquidation or dissolution;
(ii) change the jurisdiction of its organization or enter
into any transaction which has the effect of changing its
jurisdiction of organization; (iii) sell, lease or otherwise
dispose of any of its assets other than sales of Inventory
in the ordinary course of business and sales or disposals of
obsolete or worn-out Equipment in the ordinary course of
business; (iv) consummate any Acquisition (other than an
Acquisition which satisfies all of the requirements set
forth herein for a Permitted Acquisition (as determined by
Lender in its reasonable discretion) and pursuant to which
any entity formed or acquired by Borrower or any Guarantor
to consummate such Acquisition (other than a Foreign
Subsidiary) executes and delivers a Guarantee to Lender, and
thereby becomes a Guarantor hereunder, and a Subsidiary
Security Agreement) or, if a Foreign Subsidiary, the
Borrower shall cause to be pledged to Lender (on terms and
conditions satisfactory to Lender in its sole discretion) to
secure the Liabilities at least sixty-five percent (65%) of
the outstanding voting equity interests of such Foreign
Subsidiary or provide such other collateral to Lender as
shall be deemed to be acceptable to Lender in its sole
discretion; or (v) enter into any other transaction outside
the ordinary course of its business, including, without
limitation, any purchase, redemption or retirement of any
shares of any class of its stock or any other equity
interest (other than, so long as no Default or Event of
Default has occurred and is then continuing, or will be
triggered thereby, Borrower shall be permitted to (A)
repurchase up to one million shares of its common stock at a
price of $2.00 per share during the period between July 1,
2010 and June 30, 2012, or issue a promissory note in lieu
of such repurchase until such repurchase is consummated, as
required pursuant to the terms and provisions of the RMD
Acquisition Agreement), and (B) repurchase or redeem all or
any of Borrower's Series C Preferred Stock, $.001 par
value), or any issuance of any shares of, or warrants or
other rights to receive or purchase any shares of, any class
of its stock or any other equity interest (other than
pursuant to an employee equity compensation plan maintained
by Borrower). Neither Borrower nor any Guarantor shall form
any Subsidiary (other than in connection with a Permitted
Acquisition or unless such Subsidiary becomes a Guarantor
and executes and delivers to Lender a Subsidiary Security
Agreement) or enter into any joint ventures or partnerships
with any other Person.
(f) Dividends and Distributions. Borrower shall not, at
any time a Default or Event of Default has occurred and is
continuing, or would result therefrom, declare, make or pay
any dividend or other distribution (whether in cash or in
kind) on any class of its stock.
(g) Investments; Loans.
(i) Neither Borrower nor any Guarantor shall purchase or
otherwise acquire, or contract to purchase or otherwise
acquire, or invest in the obligations or stock (or other
equivalent equity interests) of any Person (except for those
purchases permitted pursuant to subsection 12(d)(iv)
hereof).
(ii) Neither Borrower nor any Guarantor shall lend or
otherwise advance funds to any Person, except for (A)
advances made to employees, officers and directors for
travel and other expenses arising in the ordinary course of
its business, and (b) so long as no Default or Event of
Default has occurred and is continuing, or would result
therefrom, loans and advances made by Borrower to a
Guarantor.
(h) Fundamental Changes; Line of Business. Neither
Borrower nor any Guarantor shall amend its organizational
documents or change its Fiscal Year or enter into a new line
of business materially different from its current business.
(i) Equipment. Neither Borrower nor any Guarantor shall
(i) permit any Equipment to become a Fixture to real
property, or (ii) permit any Equipment to become an
accession to any other personal property unless such
personal property is subject to a first priority lien in
favor of Lender.
(j) Compliance with Federal Reserve Board Regulations.
Borrower shall not (i) use any of the proceeds of the Loans,
directly or indirectly, for the purposes of purchasing or
carrying any "margin security" within the meaning of
Regulations U of the Board of Governors of the Federal
Reserve System (12 C.F.R. 221), (ii) use any of the proceeds
of the Loans, directly or indirectly, for the purpose of
purchasing, carrying or trading in any securities under such
circumstances as to involve in a violation of Regulation X
of such Board (12 C.F.R. 224), or (iii) take or permit to be
taken any other action which would result in the Loans or
the consummation of any of the other transactions
contemplated hereby being violative of such regulations or
any other regulation of such Board.
13. FINANCIAL COVENANTS.
Borrower shall maintain and keep in full force and
effect each of the financial covenants set forth below:
(a) Consolidated Maximum Leverage Ratio. Borrower shall
maintain at all times a Consolidated Maximum Leverage Ratio
which is equal to or less than 3.00 to 1.00. Borrower's
compliance with this covenant shall be tested on a rolling
four (4) quarters basis as of the last day of each quarter
of each Fiscal Year of Borrower; provided, however, for the
purposes of determining the Consolidated Maximum Leverage
Ratio at any time during the Ramp-up Period, the denominator
of such ratio (for the avoidance of doubt, such denominator
includes all items set forth in clause (ii) of the
definition of "Consolidated Maximum Leverage Ratio") shall
be determined as follows: (i) at September 30, 2010, on the
basis of the fiscal quarter then ended, times 4; (ii) at
December 31, 2010, on the basis of the six (6) months then
ended, times 2; and (iii) at March 31, 2011, on the basis of
the nine months then ended, times 4/3. Borrower and Lender
hereby agree that, for purposes of calculating Consolidated
Maximum Leverage Ratio hereunder during the Ramp-up Period,
the following procedures shall apply: (x) the amounts set
forth in clauses (b), (c) and (d) of the definition of
"Consolidated EBITDA" shall not be annualized for any
period, and (y) the aggregate professional fees, other
closing costs and similar costs and expenses incurred by
Borrower in connection with the consummation of any
Permitted Acquisition included in the calculation of
Consolidated EBITDA for any period shall not be annualized.
(b) Consolidated Fixed Charge Coverage Ratio. Borrower
shall maintain at all times a Consolidated Fixed Charge
Coverage Ratio of not less than 1.20 to 1.00. Compliance
with this covenant shall be tested on a rolling four (4)
quarters basis as of the last day of each quarter of each
Fiscal Year of Borrower; provided, however, for the purposes
of determining the Consolidated Fixed Charge Ratio at any
time prior to June 30, 2011 (the "Ramp-up Period"), the
numerator (for the avoidance of doubt, such numerator
includes all items set forth in clause (i) of the definition
of "Consolidated Fixed Charge Coverage Ratio") and the
denominator of such ratio (for the avoidance of doubt, such
denominator includes all items set forth in clause (ii) of
the definition of "Consolidated Fixed Charge Coverage
Ratio") shall be determined as follows: (i) at September 30,
2010, on the basis of the fiscal quarter then ended, times
4; (ii) at December 31, 2010, on the basis of the six (6)
months then ended, times 2; and (iii) at March 31, 2011, on
the basis of the nine months then ended, times 4/3. Borrower
and Lender hereby agree that, for purposes of calculating
Consolidated Fixed Charge Ratio hereunder during the Ramp-up
Period, the following procedures shall apply: (x) the
amounts set forth in clauses (b), (c) and (d) of the
definition of "Consolidated EBITDA" shall not be annualized
for any period, (y) the aggregate professional fees, other
closing costs and similar costs and expenses incurred by
Borrower in connection with the consummation of any
Permitted Acquisition included in the calculation of
Consolidated EBITDA for any period shall not be annualized,
and (z) the amount set forth in clause (e) of the definition
of "Consolidated Fixed Charges" shall be annualized but such
annualized amount shall be capped at a maximum of
$1,500,000.00 for any period.
(c) Unfunded Capital Expenditures. During the Ramp-up
Period, Borrower shall not incur Unfunded Capital
Expenditures in excess of $1,500,000.00 in the aggregate.
14. EVENT OF DEFAULT.
The occurrence of any one or more of the following
events shall constitute an "Event of Default" hereunder:
(a) Payment. The failure of Borrower to pay when due
(whether on a scheduled due date, at stated maturity, by
acceleration or otherwise on demand) any of the Liabilities,
including without limitation any payments of principal or
interest on any of the Loans.
(b) Breach of Articles 12 and 13 of this Agreement. The
failure of Borrower to perform, keep or observe any of the
covenants, conditions, promises, agreements or obligations
of Borrower under Articles 12 or 13 of this Agreement.
(c) Breach of this Agreement and the Other Agreements. The
failure of Borrower to perform, keep or observe any of the
covenants, conditions, promises, agreements or obligations
of Borrower under this Agreement or any of the Other
Agreements (other than those covenants, conditions,
promises, agreements or obligations of Borrower described in
subsections 14(a) or 14(b) above), and such failure
continues for a period of fifteen (15) days.
(d) Breaches of Other Obligations. The failure of Borrower
to perform, keep or observe any of the covenants,
conditions, promises, agreements or obligations of Borrower
under any other agreement with any Person if such failure is
reasonably likely to result in a liability owed or incurred
by Borrower in excess of $100,000.00 in the aggregate.
(e) Breach of Representations and Warranties. The making
or furnishing by Borrower to Lender of any representation,
warranty, certificate, schedule, report or other
communication within or in connection with this Agreement or
the Other Agreements or in connection with any other
agreement between Borrower and Lender, which is untrue or
misleading in any material respect when made.
(f) Loss of Collateral. The occurrence of any uninsured
damage to, loss, theft, destruction, condemnation or
confiscation of any Collateral having a value in excess of
$100,000.00 in the aggregate.
(g) Levy, Seizure or Attachment. The making or attempt by
any Person to make or the issuance of any levy, seizure or
attachment upon any of the tangible Collateral or any
garnishment, forfeiture, seizure or confiscation of any
Account or Accounts or Deposit Account or Deposit Accounts.
(h) Bankruptcy or Appointment of Receiver. Borrower or any
Guarantor shall (i) apply for, consent to or suffer the
appointment of or the taking of possession by, a receiver,
custodian, trustee, liquidator, or similar fiduciary of
itself or any part of the Collateral, (ii) make a general
assignment for the benefit of creditors, or composition or
arrangement with its creditors generally, (iii) commence a
voluntary case under any state or federal bankruptcy law or
equivalent foreign bankruptcy or insolvency laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or
insolvent, or have a receiver, trustee or custodian
appointed over it, (v) file a petition seeking to take
advantage of any other law providing for the relief of
debtors, (vi) acquiesce to, or fail to have dismissed within
thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws or equivalent
foreign bankruptcy or insolvency laws (provided that, during
the pending of any such thirty (30) day period, Lender shall
have no obligation hereunder to make any Revolving Loans or
Permitted Acquisition Loans or to make or continue any LIBOR
Rate Loans) or (viii) to take any action to effect any of
the foregoing.
(i) Insolvency; Ceasing Business. Borrower or any
Guarantor shall admit in writing its inability to be
generally unable or be alleged by its creditors to be
generally unable to pay its debts as and where due, or
Borrower or any Guarantor shall cease the operation of any
substantial portion of their business.
(j) Judgment. The entry of any judgment or order against
Borrower or any Guarantor (individually or in the
aggregate), in excess of $100,000.00, which is not
satisfied, dismissed or discharged within thirty (30) days
after such entry.
(k) Criminal Proceedings. The institution in any court of
a criminal proceeding against Borrower or any Guarantor, or
the indictment of Borrower or any Guarantor for any crime,
which could be reasonably expected to have a Material
Adverse Effect on such Person.
(l) Change of Control. The occurrence of any Change of
Control.
(m) Other Material Event. The occurrence of any event not
otherwise specified in this Section 14 that could be
reasonably expected to result in a liability owed or
incurred by Borrower in excess of $100,000.00 in the
aggregate.
(n) Cross Default. The occurrence of any default,
violation or breach of representation or warranty set forth
in any other Indebtedness in excess of $100,000.00 (other
than the Liabilities described in Section 14(a) above).
(o) Mortgage Priority. If the Mortgages shall not create
and continue to be through all of the Advances a valid first
lien on the Real Property, excepting only Permitted
Exceptions.
(p) Unenforceability of Documents. Any material provision
of this Agreement or any Other Agreement shall at any time
for any reason be declared null and void, or the validity or
enforceability of this Agreement or any Other Agreement
shall at any time be contested by Borrower or any other
Obligor in writing, or a proceeding shall be commenced by
Borrower or any other Obligor, or by any Governmental
Authority or other Person having jurisdiction over Borrower
or any other Obligor, seeking to establish the invalidity or
unenforceability thereof, or Borrower or any other Obligor
shall deny in writing that it has any liability or
obligation
purported to be created under this Agreement or any Other
Agreement or this Agreement or any Other Agreement shall
cease to be in full force and effect.
15. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence of an Event of Default described in
subsections 14(h) or (i) hereof, all of the Liabilities
shall immediately and automatically become due and payable,
and this Agreement shall terminate, and Lender shall have no
further obligation to make Loans hereunder, without notice
of any kind or the necessity of any affirmative action on
the part of Lender. Upon the occurrence of any other Event
of Default, all Liabilities may, at the option of Lender,
and without demand, notice or legal process of any kind, be
declared, and immediately shall become, due and payable.
After the occurrence and during the continuance of any Event
of Default, Lender shall have no obligation to make any
further Loans and any Loans made or continued during such
time shall be made at the sole and absolute discretion of
the Lender, without establishing a course of conduct or
obligating Lender to make or continue any additional Loans
during such time as an Event of Default shall continue to
exist.
(b) Upon the occurrence of an Event of Default, Lender may
exercise from time to time any rights and remedies available
to it under the Uniform Commercial Code and any other
applicable law in addition to, and not in lieu of, any
rights and remedies expressly granted in this Agreement or
in any of the Other Agreements and all of Lender's rights
and remedies shall be cumulative and non-exclusive to the
extent permitted by law. In particular, but not by way of
limitation of the foregoing, Lender may, without notice,
demand or legal process of any kind, take possession of any
or all of the Collateral (in addition to Collateral of which
it already has possession), wherever it may be found, and
for that purpose may pursue the same wherever it may be
found, and may enter onto any premises of Borrower or any
Guarantor where any of the Collateral may be, and search
for, take possession of, remove, keep and store any of the
Collateral until the same shall be sold or otherwise
disposed of, and Lender shall have the right to store the
same at any premises of Borrower or any Guarantor without
cost to Lender. At Lender's request, Borrower shall, at
Borrower's expense, assemble the Collateral and make it
available to Lender at one or more places to be designated
by Lender and reasonably convenient to Lender and Borrower.
Borrower recognizes that if Borrower fails to perform,
observe or discharge any of its Liabilities under this
Agreement or the Other Agreements, no remedy at law will
provide adequate relief to Lender, and agrees that Lender
shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving
actual damages. Any notification of intended disposition of
any of the Collateral required by law will be deemed to be a
reasonable authenticated notification of disposition if
given at least ten (10) days prior to such disposition and
such notice shall (i) describe Lender and Borrower, (ii)
describe the Collateral that is the subject of the intended
disposition, (iii) state the method of the intended
disposition, (iv) state that Borrower is entitled to an
accounting of the Liabilities and state the charge, if any,
for an accounting, and (v) state the time and place of any
public disposition or the time after which any private sale
is to be made. Lender may disclaim any warranties that
might arise in connection with the sale, lease or other
disposition of the Collateral and has no obligation to
provide any warranties at such time. Any Proceeds of any
disposition by Lender of any of the Collateral may be
applied by Lender to the payment of expenses in connection
with the Collateral, including, without limitation, legal
expenses and reasonable attorneys' fees, and any balance of
such Proceeds may be applied by Lender toward the payment of
such of the Liabilities, and in such order of application,
as Lender may from time to time elect.
(c) In connection with its rights and remedies, Lender is
hereby granted a license or other right to use and/or
sublicense, upon and after the occurrence and during the
continuance of an Event of Default, without charge,
Borrower's and/or any Guarantor's patents, copyrights,
rights of use of any name, trade secrets, tradenames,
trademarks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral and
Borrower's and/or any Guarantor's rights under all license
agreements pertaining to any of the Collateral shall inure
to Lender's benefit.
(d) In addition to all other rights and remedies available
to Lender herein, in the Mortgages, at law or in equity,
upon the occurrence of an Event of Default, Lender shall
have the following additional remedies with respect to the
Real Property:
(A) Lender may enter into possession of the Real Property
and perform any and all work and labor necessary to complete
improvements thereon; all sums so expended by Lender to be
deemed advanced to the Borrower and secured by the
Mortgages.
(B) Lender may institute and maintain
foreclosure proceedings in accordance with the
Mortgages and applicable laws.
(C) Lender may institute proceedings to
collect any balance due without instituting
foreclosure proceedings.
16. CONDITIONS PRECEDENT.
(a) Initial Conditions Precedent. The Closing Date shall
be deemed to have occurred upon the satisfaction of the
following conditions precedent (the "Initial Conditions
Precedent"):
(i) Lender shall have received each of the agreements,
opinions, reports, approvals, consents, certificates and
other documents set forth on the closing document list
attached hereto as Schedule 16(a) (the "Closing Documents"),
each of which documents shall be satisfactory in both form
and substance to Lender and Lender's counsel, which such
Closing Documents shall include, without limitation, legal
opinions from counsel for Borrower and the Guarantors
opining as to such matters that may be required by Lender
and its counsel, including certain matters as to the
validity and enforceability of Lender's security interests
in the Collateral.
(ii) Since March 31, 2010, no Material Adverse Change shall
have occurred and no action or proceeding shall be pending,
or to the knowledge of Borrower, threatened against the
Borrower, any Guarantor or any of their respective assets
that might have a Material Adverse Effect with respect to
Borrower or any Guarantor.
(iii) Lender shall have received payment in full of all
fees and expenses payable to it by Borrower or any other
Person in connection herewith, on or before disbursement of
the initial Loans hereunder.
(iv) The Collateral shall be free of all liens and
encumbrances, other than Permitted Liens, and Borrower shall
have obtained any lien release documents or instruments
required by Lender with respect to any such lien on the
assets of Borrower or any Guarantor (other than a Permitted
Lien).
(v) The Borrower and each Guarantor shall have executed and
delivered to Lender all such other documents, instruments
and agreements which Lender determines are reasonably
necessary to consummate the transactions contemplated
hereby.
(b) Pre-Funding Conditions Precedent. The obligation of
Lender to fund any Loan or to issue any Letter of Credit
hereunder is subject to the satisfaction or waiver of the
following conditions precedent "Pre-Funding Conditions
Precedent" on or before the date such Loan is requested to
be made or Letter of Credit is to be issued:
(i) With respect to the initial request for a Loan or the
issuance of a Letter of Credit hereunder, the Initial
Conditions Precedent shall have been satisfied;
(ii) Borrower shall have complied with all of the provisions
of Section 2; and
(iii) No Default or Event of Default shall then be
outstanding.
17. SCOPE OF LIABILITY.
(a) Notwithstanding any provisions of this Agreement to the
contrary, it is intended that the Liabilities and the liens
and security interests granted by Borrower and each
Guarantor to secure the Liabilities, not constitute a
"Fraudulent Conveyance" (as defined below). Consequently,
Lender and Borrower agree that if the Liabilities, or any
liens or security interests granted by Borrower or any
Guarantor securing the Liabilities would, but for the
application of this sentence, constitute a Fraudulent
Conveyance, the Liabilities and the liens and security
interests securing such Liabilities shall be valid and
enforceable only to the maximum extent that would not cause
such Liabilities or such lien or security interest to
constitute a Fraudulent Conveyance, and the Liabilities
under this Agreement shall automatically be deemed to have
been amended accordingly. For purposes hereof, "Fraudulent
Conveyance" means a fraudulent conveyance under Section 548
of Chapter 11 of Title II of the United States Code (11
U.S.C. SS 101, et seq.), as amended (the "Bankruptcy Code")
or a fraudulent conveyance or fraudulent transfer under the
applicable provisions of any fraudulent conveyance or
fraudulent transfer law or similar law of any state, nation
or other governmental unit, as in effect from time to time.
(b) Borrower hereby agrees that, except as hereinafter
provided, its obligations hereunder shall be unconditional,
irrespective of (i) the absence of any attempt to collect
the Liabilities from Borrower or any Guarantor or other
action to enforce the same; (ii) the waiver or consent by
Lender with respect to any provision of any instrument
evidencing the Liabilities, or any part thereof, or any
other agreement heretofore, now or hereafter executed by
Borrower and delivered to Lender; (iii) failure by Lender to
take any steps to perfect and maintain its security interest
in, or to preserve its rights to, any security or collateral
for the Liabilities; (iv) the institution of any proceeding
under the Bankruptcy Code, or any similar proceeding, by or
against Borrower or Lender's election in any such proceeding
of the application of Section 1111(b)(2) of the Bankruptcy
Code; (v) any borrowing or grant of a security interest by
Borrower as debtor-in-possession, under Section 364 of the
Bankruptcy Code; (vi) the disallowance, under Section 502 of
the Bankruptcy Code, of all or any portion of Lender's
claim(s) for repayment of any of the Liabilities; or (vii)
any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor.
(c) Borrower agree to defend (with counsel reasonably
satisfactory to Lender), protect, indemnify and hold
harmless Lender, each affiliate or subsidiary of Lender, and
each of their respective officers, directors, employees,
attorneys and agents (each an "Indemnified Party") from and
against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature
(including, without limitation, the disbursements and the
reasonable fees of counsel for each Indemnified Party in
connection with any investigative, administrative or
judicial proceeding, whether or not the Indemnified Party
shall be designated a party thereto), which may be imposed
on, incurred by, or asserted against, any Indemnified Party
(whether direct, indirect or consequential and whether based
on any foreign, federal, state or local laws or regulations,
including, without limitation, securities laws and
regulations, Environmental Laws and commercial laws and
regulations, under common law or in equity, or based on
contract or otherwise) in any manner relating to or arising
out of this Agreement or any Other Agreement, or any act,
event or transaction related or attendant thereto, the
making or issuance and the management of the Loans or the
use or intended use of the proceeds of the Loans; provided,
however, that Borrower shall not have any obligation
hereunder to any Indemnified Party with respect to matters
caused by or resulting from the willful misconduct or gross
negligence of such Indemnified Party. To the extent that the
undertaking to indemnify set forth in the preceding sentence
may be unenforceable because it is violative of any law or
public policy, Borrower shall satisfy such undertaking to
the maximum extent permitted by applicable law. Any
liability, obligation, loss, damage, penalty, cost or
expense covered by this indemnity shall be paid to each
Indemnified Party on demand, and, failing prompt payment,
shall, together with interest thereon at the highest rate
then applicable to Loans hereunder from the date incurred by
each Indemnified Party until paid by Borrower, be added to
the Liabilities and be secured by the Collateral. The
provisions of this Section 17 shall survive the satisfaction
and payment of the Liabilities and the termination of this
Agreement.
18. NOTICES.
All written notices and other written communications
with respect to this Agreement shall be sent by overnight
mail, by facsimile or delivered in person, and in the case
of Lender shall be sent to it addressed as follows:
Sovereign Bank, ▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Vice President,
with a copy to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇, Esquire, and in the case of Borrower shall be sent to
it at its chief executive office set forth on Schedule 1(a)
hereto or as otherwise directed by Borrower in writing, with
a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Dodge LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. All
notices shall be deemed received upon actual receipt thereof
or refusal of delivery.
19. ANTI-TERRORISM.
To help fight the funding of terrorism and money
laundering activities, Federal law requires all financial
institutions to obtain, verify, and record information that
identifies each person who opens an account. For purposes
of this section, account shall be understood to include loan
accounts.
20. CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION.
This Agreement and the Other Agreements are submitted
by Borrower to Lender for Lender's acceptance or rejection
at Lender's principal place of business as an offer by
Borrower to borrow monies from Lender now and from time to
time hereafter, and shall not be binding upon Lender or
become effective until accepted by Lender, in writing, at
said place of business. If so accepted by Lender, this
Agreement and the Other Agreements shall be deemed to have
been made at said place of business. THIS AGREEMENT AND THE
OTHER AGREEMENTS SHALL BE GOVERNED AND CONTROLLED BY THE
INTERNAL LAWS OF THE STATE OF NEW JERSEY AS TO
INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT,
AND IN ALL OTHER RESPECTS, INCLUDING, WITHOUT LIMITATION,
THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, BUT
EXCLUDING PERFECTION OF THE SECURITY INTERESTS IN COLLATERAL
LOCATED OUTSIDE OF THE STATE OF NEW JERSEY, WHICH SHALL BE
GOVERNED AND CONTROLLED BY THE LAWS OF THE RELEVANT
JURISDICTION IN WHICH SUCH COLLATERAL IS LOCATED. If any
provision of this Agreement shall be held to be prohibited
by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such
provision or remaining provisions of this Agreement.
To induce Lender to accept this Agreement, Borrower
irrevocably agree that, subject to Lender's sole and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY,
MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS
AGREEMENT, THE OTHER AGREEMENTS OR THE COLLATERAL SHALL BE
LITIGATED IN COURTS HAVING SITUS WITHIN THE STATE OF NEW
JERSEY. BORROWER HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS LOCATED
WITHIN SAID JURISDICTION. Borrower hereby waives personal
service of any and all process upon it and consents that all
such service of process may be made by intentionally
recognized overnight courier or hand delivery directed to
Borrower at its notice address as provided for in Section 18
and service so made shall be deemed completed (i) in the
case of service made by overnight courier, one (1) Business
Day after the same shall have been delivered to such
overnight courier and (ii) in the case of hand delivery to
Borrower, on the date so delivered. BORROWER HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY
LITIGATION BROUGHT AGAINST BORROWER BY LENDER IN ACCORDANCE
WITH THIS SECTION.
21. MODIFICATION AND BENEFIT OF AGREEMENT.
This Agreement and the Other Agreements may not be
modified, altered or amended except by an agreement in
writing signed by Borrower or such other person who is a
party to such Other Agreement and Lender. Borrower may not
sell, assign or transfer this Agreement, or the Other
Agreements or any portion thereof, including, without
limitation, Borrower's rights, titles, interest, remedies,
powers or duties hereunder and thereunder. Borrower hereby
consents to Lender's sale, assignment, transfer or other
disposition, at any time and from time to time hereafter, of
this Agreement, or the Other Agreements, or of any portion
thereof, or participations therein, including, without
limitation, Lender's rights, titles, interest, remedies,
powers and/or duties and agrees that it shall execute and
deliver such documents as Lender may request in connection
with any such sale, assignment, transfer or other
disposition. Without limitation, Lender may at any time
pledge, endorse, assign or transfer all or any portion of
its rights under this Agreement or any Other Agreement,
including any portion of any Note, to any of the twelve (12)
Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. Section 341. No such pledge
or enforcement thereof shall release Lender from its
obligations under this Agreement or any Other Agreement.
22. HEADINGS OF SUBDIVISIONS.
The headings of subdivisions in this Agreement are for
convenience of reference only, and shall not govern the
interpretation of any of the provisions of this Agreement.
23. POWER OF ATTORNEY.
Borrower acknowledges and agrees that its appointment
of Lender as its attorney and agent-in-fact for the purposes
specified in this Agreement is an appointment coupled with
an interest and shall be irrevocable until all of the
Liabilities are satisfied and paid in full and this
Agreement is terminated.
24. COUNTERPARTS.
This Agreement and any amendments, waivers, consents or
supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts,
each of which, when so executed and delivered, shall be
deemed an original, but all of which counterparts together
shall constitute but one agreement.
25. WAIVER OF JURY TRIAL; OTHER WAIVERS.
(a) BORROWER AND LENDER EACH HEREBY WAIVES ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING WHICH PERTAINS
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE NOTES, ANY OF
THE OTHER AGREEMENTS, THE LIABILITIES, THE COLLATERAL, ANY
ALLEGED TORTIOUS CONDUCT BY BORROWER OR LENDER OR WHICH, IN
ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO
THE RELATIONSHIP BETWEEN BORROWER AND LENDER. IN NO EVENT
SHALL LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR
CONSEQUENTIAL DAMAGES.
(b) Borrower hereby waives demand, presentment, protest and
notice of nonpayment, and further waives the benefit of all
valuation, appraisal and exemption laws.
(c) Borrower hereby grants to Lender a lien, security
interest and a right of setoff as security for all of the
Liabilities, whether now existing or hereafter arising, upon
and against all deposits, credits, collateral and property
now or hereafter in the possession, custody, safekeeping, or
control of Lender or any entity under the control of Lender,
or in transit to any of them. At any time, without demand
or notice, Lender may setoff the same or any part thereof
and apply the same to any Liability even though unmatured
and regardless of the adequacy of any other collateral
securing the Liabilities. ANY AND ALL RIGHTS TO REQUIRE
LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURES THE LIABILITIES, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Lender shall
not be required to marshal any present or future security
for, or guarantees of, the obligations or to resort to any
such security or guarantee in any particular order and
Borrower waives, to the fullest extent that it lawfully can,
(i) any right it may have to require Lender to pursue any
particular remedy before proceeding against it, and (ii) any
right to the benefit of, or to direct the application of the
proceeds of any collateral, including without limitation the
Collateral, until the Liabilities are paid in full.
(d) Lender's failure, at any time or times hereafter, to
require strict performance by Borrower of any provision of
this Agreement or any of the Other Agreements shall not
waive, affect or diminish any right of Lender thereafter to
demand strict compliance and performance therewith. Any
suspension or waiver by Lender of an Event of Default under
this Agreement or any default under any of the Other
Agreements shall not suspend, waive or affect any other
Event of Default under this Agreement or any other default
under any of the Other Agreements, whether the same is prior
or subsequent thereto and whether of the same or of a
different kind or character. No delay on the part of Lender
in the exercise of any right or remedy under this Agreement
or any Other Agreement shall preclude other or further
exercise thereof or the exercise of any right or remedy.
None of the undertakings, agreements, warranties, covenants
and representations of Borrower contained in this Agreement
or any of the Other Agreements and no Event of Default under
this Agreement or default under any of the Other Agreements
shall be deemed to have been suspended or waived by Lender
unless such suspension or waiver is in writing, signed by a
duly authorized officer of Lender and directed to Borrower
specifying such suspension or waiver.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first written above.
LENDER: SOVEREIGN BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
BORROWER: DYNASIL CORPORATION OF AMERICA
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial
Officer