EXHIBIT 10.1
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FOURTH AMENDED AND RESTATED
LOAN AGREEMENT
Dated as of July 10, 2006
By and among
ASTA FUNDING ACQUISITION I, LLC, ASTA FUNDING ACQUISITION II, LLC,
PALISADES COLLECTION, L.L.C., PALISADES
ACQUISITION I, LLC, PALISADES ACQUISITION II, LLC, PALISADES
ACQUISITION IV, LLC, AND CLIFFS
PORTFOLIO ACQUISITION I, LLC
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO
FROM TIME TO TIME,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
ISRAEL DISCOUNT BANK OF NEW YORK
as Administrative Agent, Co-Administrative Agent and Co-Lead Arranger
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL,
a Division of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial Services Inc.
as Administrative Agent, Co-Administrative Agent and Co-Lead Arranger
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1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities
1.2 Prepayments
1.3 Use of Proceeds
1.4 Interest and Applicable Margins
1.5 Cash Management Systems
1.6 Fees
1.7 Receipt of Payments
1.8 Application and Allocation of Payments
1.9 Loan Account and Accounting
1.10 Indemnity
1.11 Access
1.12 Taxes
1.13 Capital Adequacy; Increased Costs; Illegality
1.14 Single Loan
1.15 Security Interest
1.16 No Obligations Outstanding
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Revolving Loan
2.2 Further Conditions to Each Loan
3. REPRESENTATIONS AND WARRANTIES
3.1 Corporate Existence; Compliance with Law
3.2 Executive Offices, Collateral Locations, FEIN
3.3 Corporate Power, Authorization, Enforceable Obligations
3.4 Financial Statements and Projections
3.5 Material Adverse Effect
3.6 Ownership of Property; Liens
3.7 Labor Matters
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness
3.9 Government Regulation
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3.10 Margin Regulations
3.11 Taxes
3.12 ERISA
3.13 No Litigation
3.14 Brokers
3.15 Intellectual Property
3.16 Full Disclosure
3.17 Environmental Matters
3.18 Insurance
3.19 Deposit and Disbursement Accounts
3.20 Government Contracts
3.21 Customer and Trade Relations
3.22 Agreements and Other Documents
3.23 Solvency
3.24 Restrictions on or Relating to Subsidiaries
3.25 Disaster Recovery Plan
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices
4.2 Communication with Accountants
5. AFFIRMATIVE COVENANTS
5.1 Maintenance of Existence and Conduct of Business
5.2 Payment of Charges
5.3 Books and Records
5.4 Insurance; Damage to or Destruction of Collateral
5.5 Compliance with Laws
5.6 Supplemental Disclosure
5.7 Intellectual Property
5.8 Environmental Matters
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters
and Real Estate Purchases
5.10 ERISA
5.11 Servicing Agreements
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5.12 Inactive Subsidiaries
5.13 Further Assurances
6. NEGATIVE COVENANTS
6.1 Mergers, Subsidiaries, Etc
6.2 Investments; Loans and Advances
6.3 Indebtedness
6.4 Employee Loans and Affiliate Transactions
6.5 Capital Structure and Business
6.6 Guaranteed Indebtedness
6.7 Liens; Lien Release
6.8 Sale of Stock and Assets
6.9 ERISA
6.10 Financial Covenants
6.11 Hazardous Materials
6.12 Sale-Leasebacks
6.13 Cancellation of Indebtedness
6.14 Restricted Payments
6.15 Change of Corporate Name or Location; Change of Fiscal Year
6.16 No Impairment of Intercompany Transfers
6.17 No Speculative Transactions
6.18 Leases; Real Estate Purchases
6.19 Changes Relating to Subordinated Debt; Material Contracts
6.20 Credit Parties Other than Borrowers
6.21 Adverse Transactions
6.22 Disaster Recovery Plan
6.23 Limitation on Collection Fees
6.24 No Amendment to Servicing Agreements
7. TERM
7.1 Termination
7.2 Survival of Obligations Upon Termination of Financing
Arrangements
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default
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8.2 Remedies
8.3 Waivers by Credit Parties
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations
9.2 Appointment of Administrative Agent
9.3 Administrative Agent's Reliance, Etc
9.4 IDB and Affiliates
9.5 [Omitted]
9.6 Indemnification
9.7 Successor Administrative Agent
9.8 Setoff and Sharing of Payments
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions
in Concert
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement
11.2 Amendments and Waivers
11.3 Fees and Expenses
11.4 No Waiver
11.5 Remedies
11.6 Severability
11.7 Conflict of Terms
11.8 Confidentiality
11.9 GOVERNING LAW
11.10 Notices
11.11 Section Titles
11.12 Counterparts
11.13 WAIVER OF JURY TRIAL
11.14 Press Releases and Related Matters
11.15 Reinstatement
11.16 Advice of Counsel
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11.17 No Strict Construction
11.18 Administrative Agent for Service
12. CROSS-GUARANTY; SUBORDINATION
12.1 Cross-Guaranty
12.2 Waivers by Borrowers
12.3 Benefit of Guaranty
12.4 Subordination of Subrogation, Etc
12.5 Election of Remedies
12.6 Limitation
12.7 Contribution with Respect to Guaranty Obligations
12.8 Liability Cumulative
12.9 Subordination
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BASE OF APPENDICES
Annex A (Recitals) - Definitions
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Closing Checklist
Annex E (Section 4.1(a)) - Financial Statements and Projections
Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (from Annex A -
Commitments definition) - Commitments as of Closing Date
Annex L (Section 11.2(b)(ii)) - Counterpart to Fourth Amended and
Restated Loan Agreement
Schedule 1.1 - Administrative Agent's Representatives
Schedule 1.1(b) - Ratable Shares of each Borrower
FOURTH AMENDED AND RESTATED LOAN AGREEMENT
THIS FOURTH AMENDED AND RESTATED LOAN AGREEMENT (this
"Agreement") is executed and entered into as of July 11, 2006 (and shall be
effective as of the Effective Date) by and among ASTA FUNDING ACQUISITION I,
LLC, a Delaware limited liability company, ASTA FUNDING ACQUISITION II, LLC, a
Delaware limited liability company, PALISADES COLLECTION, L.L.C., a Delaware
limited liability company, PALISADES ACQUISITION I, LLC, a Delaware limited
liability company, PALISADES ACQUISITION II, LLC, a Delaware limited liability
company, PALISADES ACQUISITION IV, LLC, a Delaware limited liability company,
PALISADES ACQUISITION V, LLC, a Delaware limited liability company, PALISADES
ACQUISITION VI, LLC, a Delaware limited liability company, PALISADES ACQUISITION
VII, LLC, a Delaware limited liability company, PALISADES ACQUISITION VIII, LLC,
a Delaware limited liability company, PALISADES ACQUISITION IX, LLC, a Delaware
limited liability company, PALISADES ACQUISITION X, LLC, a Delaware limited
liability company, CLIFFS PORTFOLIO ACQUISITION I, LLC, a Delaware limited
liability company, SYLVAN ACQUISITION I, LLC, a Delaware limited liability
company, and OPTION CARD, LLC, a Colorado limited liability company (sometimes
collectively referred to herein as "Borrowers" and individually as a
"Borrower"); ASTA FUNDING, INC., a Delaware corporation, COMPUTER FINANCE, LLC,
a Delaware limited liability company, ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, LLC, a Delaware limited
liability company, ASTA COMMERCIAL, LLC, a Delaware limited liability company,
and VATIV RECOVERY SOLUTIONS, LLC, a Texas limited liability company
(collectively, "Guarantor"); ISRAEL DISCOUNT BANK OF NEW YORK, a New York
banking corporation ("IDB"), as collateral agent for itself and the lenders
signatory hereto from time to time (together with any successor collateral agent
appointed pursuant to Section 9.7, the "Collateral Agent"), as administrative
agent (together with any successor administrative agent appointed pursuant to
Section 9.7, the "Administrative Agent", and together with the Collateral Agent,
the "Agents"), and as co-lead arranger; ▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL, a Division of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial Services Inc. ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), as co-lead
arranger and as co-administrative agent; and the Lenders (as defined below).
BACKGROUND
A. Borrowers and Guarantors, along with IDB, as agent, and
certain Lenders are parties to a certain Third Amended and Restated Loan and
Security Agreement dated as of May 11, 2004 (as amended, modified, supplemented
or restated from time to time, the "Existing Loan Agreement").
B. Borrowers, Guarantors, IDB and the Lenders have agreed to
amend and restate the terms of the Existing Loan Agreement as set forth herein.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree that
the Existing Loan Agreement is amended and restated in its entirety as follows:
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1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility.
(i) Subject to the terms and conditions hereof, each Revolving
Lender agrees to make revolving credit advances (each, an "Advance" and
collectively, the "Advances") to Borrowers from time to time until the
Commitment Termination Date its Pro Rata Share of such Advances. The Pro Rata
Share of the Revolving Loan of any Revolving Lender shall not at any time exceed
its separate Revolving Loan Commitment. The obligations of each Revolving Lender
hereunder shall be several and not joint. Until the Commitment Termination Date,
Borrowers may borrow, repay and reborrow under this Section 1.1(a); provided
that the amount of any Advance to be made at any time shall not exceed Borrowing
Availability at such time. Each Advance shall be made on notice by Borrower
Representative on behalf of the applicable Borrower to one of the
representatives of Administrative Agent identified in Schedule 1.1 at the
address specified therein. Any such notice must be given no later than (1) 1:00
p.m. (New York time) on the Business Day of the proposed Advance, in the case of
a Base Rate Loan, or (2) 1:00 p.m. (New York time) on the date which is 3
Business Days prior to the proposed Advance, in the case of a LIBOR Loan. Each
such notice (a "Notice of Borrowing") must be given in writing (by telecopy or
overnight courier) substantially in the form of Exhibit 1.1(a)(i) attached to
the Disclosure Document, and shall include the information required in such
Exhibit and such other information as may be reasonably required by
Administrative Agent. If any Borrower desires to have the Advances bear interest
by reference to a LIBOR Rate, Borrower Representative must comply with Section
1.5(e).
(ii) Use of Advances to finance Portfolio purchases in excess
of $15,000,000 shall require the consent of the Administrative Agent and use of
Advances to finance Portfolio purchases in excess of $25,000,000 shall require
the consent of the Requisite Lenders. In connection with such purchases,
Borrowers shall deliver to Administrative Agent and Requisite Lenders, if
applicable, the Portfolio Proposal relating to such purchases. For purposes of
this Section 1.1(a)(ii) only, any Requisite Lenders that have not responded
within 4 Business Days of receipt of a request for their consent for the
purchase of a Portfolio in excess of $25,000,000 shall be deemed to have
consented to such purchase. Borrowers agree not to intentionally propose, modify
or structure (or permit to be structured) any Portfolio purchases from any
seller or its affiliates, whether as a single transaction or a series of
transactions that could reasonably be deemed to be part of the same transaction,
for the purpose of evading the requirements of this Section 1.1(a)(ii) to obtain
the consent of Administrative Agent or Requisite Lenders, as the case may be.
Without limiting the foregoing, any Portfolio purchase occurring within 120 days
of any other Portfolio purchase or purchases shall be deemed to be part of the
same transaction for purposes of determining whether the consent of the
Administrative Agent or Requisite Lenders is required under this Section
1.1(a)(ii). Notwithstanding anything in this Section to the contrary, a Borrower
may acquire a Rejected Portfolio having a purchase price in excess of the amount
set forth in this Section without the consent of the Administrative Agent or the
Requisite Lenders if the purchase is made with Borrowers' own cash or borrowings
that are made without including the Rejected Portfolio as an Eligible New
Portfolio in the Borrowing Base, and if the Rejected Portfolio is subject to a
security interest or Lien in favor of Collateral Agent, for the benefit of
itself, the Agents and Lenders, to secure the Obligations. Without conferring
approval rights upon Administrative Agent (except as otherwise provided in this
Section 1.1(a)(ii)), the applicable Borrower shall deliver to Administrative
Agent, upon Administrative Agent's request, such information (as is reasonably
available to the applicable Borrower) relating to the purchase of a Portfolio as
Administrative Agent may reasonably request (including any available Portfolio
Acquisition Documents) within a reasonable period of time following the
applicable Borrower's purchase of such Portfolio.
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(iii) Anything in this Agreement to the contrary
notwithstanding, at the request of Borrower Representative, Administrative Agent
may in its discretion (but shall have absolutely no obligation to) make Advances
to Borrowers in amounts that cause the outstanding balance of the aggregate
Revolving Loan to exceed the Borrowing Base (an "Overadvance"), provided that:
(A) the amount of any or all Overadvances shall not exceed an amount equal to
Three Million Dollars ($3,000,000), (B) the outstanding balance of the aggregate
Revolving Loan (after taking into consideration such Overadvance) shall not
exceed an amount equal to one hundred five percent (105%) of the Borrowing Base,
(C) the outstanding balance of the aggregate Revolving Loan shall not exceed the
Maximum Amount at any time, (D) any Overadvance must be repaid, together with
applicable interest thereon, in full to Administrative Agent, on behalf of
Lenders, within 7 calendar days of such Overadvance; and (E) not more than three
(3) Overadvances shall be made in any calendar year.
(iv) Administrative Agent shall not be required to advise
Borrowers or any Credit Party for the reason for Lenders' failure to approve any
Portfolio. Notwithstanding anything in this Section 1.1(a) to the contrary, a
Rejected Portfolio may be acquired by any Credit Party in the event that such
acquisition is made pursuant to the use of its own cash or borrowings that are
made without including the Rejected Portfolio as an Eligible New Portfolio in
the Borrowing Base, and if the Rejected Portfolio is subject to a security
interest or Lien in favor of Collateral Agent, for the benefit of itself, the
Agents and Lenders, to secure the Obligations. A Non-Credit Party Affiliate may
finance the acquisition of a Rejected Portfolio, provided, such indebtedness is
not guaranteed directly or indirectly by any Credit Party. In no event shall a
Non-Recourse Non-Credit Party Loan be guaranteed directly or indirectly by any
Credit Party. Provided that any Non-Recourse Non-Credit Party Loan shall have
been assigned and transferred to a Non-Credit Party Affiliate, Collateral Agent
will provide releases reasonably requested by any other lender with respect to
Lender's Liens in any Rejected Portfolio and the proceeds and other rights
related thereto.
(v) Except as provided in Section 1.12, Borrowers shall
execute and deliver to each Revolving Lender a note to evidence the Revolving
Loan Commitment of that Revolving Lender. Each note shall be in the principal
amount of the Revolving Loan Commitment of the applicable Revolving Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(a)(v)
attached to the Disclosure Document (each a "Revolving Note" and, collectively,
the "Revolving Notes"). Each Revolving Note shall represent the obligation of
the Borrowers to pay the amount of the applicable Revolving Lender's Revolving
Loan Commitment or, if less, such Revolving Lender's Pro Rata Share of the
aggregate unpaid principal amount of all Advances to Borrowers together with
interest thereon as prescribed in Section 1.5. The entire unpaid balance of the
aggregate Revolving Loan and all other non-contingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Commitment Termination Date.
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(b) Reliance on Notices; Appointment of Borrower
Representative. Administrative Agent shall be entitled to rely upon, and shall
be fully protected in relying upon, any Notice of Borrowing, Notice of
Conversion/Continuation or similar notice purporting to be executed by an
officer of the Borrower's Representative and believed by Administrative Agent to
be genuine. Administrative Agent may assume that each Person executing and
delivering any notice in accordance herewith who purports to be a person on the
list of authorized signatories provided from time to time by Borrower's
Representative to Administrative Agent was duly authorized, unless the
responsible individual acting thereon for Administrative Agent has actual
knowledge to the contrary. Each Borrower hereby designates Palisades as its
representative and agent on its behalf for the purposes of executing and
delivering the Agent Fee Letter and the Lenders' Fee Letter, issuing Notices of
Borrowing and Notices of Conversion/Continuation, giving instructions with
respect to the disbursement of the proceeds of the Revolving Loan, selecting
interest rate options, effecting repayment of the Revolving Loan, giving and
receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants) on behalf of any Borrower or Borrowers under the Loan Documents.
Borrower Representative hereby accepts such appointment. Administrative Agent
and each Lender may regard any notice or other communication pursuant to any
Loan Document from Borrower Representative as a notice or communication from all
Borrowers, and shall give any notice or communication required or permitted to
be given to any Borrower or Borrowers hereunder to Borrower Representative on
behalf of such Borrower or Borrowers. Each Borrower agrees that each notice,
election, representation and warranty, covenant, agreement and undertaking made
on its behalf by Borrower Representative shall be deemed for all purposes to
have been made by such Borrower and shall be binding upon and enforceable
against such Borrower to the same extent as if the same had been made directly
by such Borrower.
1.2 Prepayments.
(a) Voluntary Reductions in Revolving Loan Commitments.
Borrowers may at any time on at least 5 days' prior written notice by Borrower
Representative to Administrative Agent permanently reduce (but not terminate)
the Revolving Loan Commitment; provided that (i) any such prepayments or
reductions shall be in a minimum amount of $1,000,000 and integral multiples of
$500,000 in excess of such amount (and shall be applied to reduce the Revolving
Loan Commitments of the Lenders based on their Pro Rata Share of the reduction),
(ii) the Revolving Loan Commitment shall not be reduced to an amount less than
the amount of the Revolving Loan then outstanding, and (iii) after giving effect
to such reductions, Borrowers shall comply with Section 1.2(b)(i). In addition,
Borrowers may at any time on at least 10 days' prior written notice by Borrower
Representative to Administrative Agent terminate the Revolving Loan Commitment;
provided that upon such termination, the Revolving Loan and other Obligations
shall be immediately due and payable in full. Any voluntary reduction or
termination of the Revolving Loan Commitment must be accompanied by payment of
any LIBOR funding breakage costs in accordance with Section 1.10(b). Upon the
effective date of any such reduction or termination of the Revolving Loan
Commitment, each Borrower's right to request Advances shall simultaneously be
permanently reduced or terminated, as the case may be.
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(b) Mandatory Prepayments.
(i) If at any time the aggregate outstanding balance of the
Revolving Loan exceeds Borrowing Availability, Borrowers shall immediately repay
the aggregate outstanding Advances to the extent required to eliminate such
excess.
(ii) Immediately upon receipt by any Credit Party of proceeds
of any asset disposition (excluding proceeds of asset dispositions permitted by
Sections 6.8 (a), (d), and (e)) or any sale of Stock of any Subsidiary of any
Credit Party, Borrowers shall prepay the Revolving Loan in an amount equal to
all such cash proceeds net of (A) underwriting discounts, commissions and other
reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrowers in connection
therewith (in each case, paid to non-Affiliates), (B) sales, transfer, and
similar taxes, (C) amounts payable to holders of senior Liens (to the extent
such Liens constitute Permitted Encumbrances hereunder), if any, (D) amounts
required to be placed in escrow in connection with such transaction; provided
that such amounts and terms of escrow are customary for transactions of such
nature and are reasonably satisfactory to Administrative Agent, and provided,
further, that upon the release of any such escrowed funds such funds are applied
in accordance with this Section 1.2 and (E) amounts that Administrative Agent
reasonably determines are appropriate to meet indemnity and similar obligations,
including post-closing purchase price adjustments in connection with such
transaction, provided, that upon such obligations terminating, any such amounts
not used for such purposes shall be applied in accordance with this Section 1.2.
(iii) Subject to the provisions set forth in Section 6.5 of
this Agreement, if any Credit Party issues Stock or any debt securities, no
later than the Business Day following the date of receipt of the cash proceeds
thereof, Borrowers shall prepay the Revolving Loan in an amount equal to all
such cash proceeds, net of underwriting discounts and commissions and other
reasonable and customary transaction costs paid to non-Affiliates in connection
therewith.
(c) No Implied Consent. Nothing in this Section 1.2 shall be
construed to constitute Administrative Agent's or any Lender's consent to any
transaction that is not permitted by other provisions of this Agreement or the
other Loan Documents.
1.3 Use of Proceeds. Borrowers shall utilize the proceeds of
the Revolving Loan solely for the purchase of Portfolios, ordinary working
capital and general corporate needs, including, without limitation, the purchase
of Rejected Portfolios and to capitalize or fund a Non-Recourse Non-Credit Party
Affiliate, subject to the terms, conditions and limitations set forth in this
Agreement. The Disclosure Document contains a description of Borrowers' sources
and uses of funds as of the Closing Date, including the Revolving Loan to be
made or incurred on that date.
1.4 Interest and Applicable Margins.
(a) Borrowers shall pay interest to Administrative Agent, for
the ratable benefit of Lenders in accordance with the Revolving Loan being made
by each Lender, in arrears on each applicable Interest Payment Date, at the
following rates: the Base Rate plus the Applicable Base Rate Margin per annum
or, at the election of Borrower Representative, the applicable LIBOR Rate plus
the Applicable LIBOR Margin per annum, based on the aggregate Advances
outstanding from time to time.
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The Applicable Margins through and including the First
Adjustment Date shall be minus one percent (-1.0%) for Base Rate Loans and one
hundred seventy-five (175) basis points for LIBOR Loans. The Applicable Margins
if adjusted as described below, shall be determined in accordance with the
following table:
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APPLICABLE
IF LEVERAGE RATIO IS: BASE RATE MARGIN APPLICABLE LIBOR MARGIN
--------------------------------------------------- -------------------------------- ------------------------------
Less than 1.0 to 1.0 Minus 1% Plus 175 basis points
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Greater than or equal to 1.0 to 1.0 but less than
1.25 to 1.0 Minus 0.5% Plus 225 basis points
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Greater than or equal to 1.25 to 1.0 0% Plus 275 basis points
--------------------------------------------------- -------------------------------- ------------------------------
The Applicable Margins shall be adjusted (up or down)
prospectively on a quarterly basis as determined by Borrowers' consolidated
financial condition for the Fiscal Quarter then ended, commencing with the
delivery of Borrowers' quarterly unaudited Financial Statements to Lenders for
the Fiscal Quarter ending June 30, 2006 (the "First Adjustment Date"). All
adjustments in the Applicable Margins after the First Adjustment Date shall be
implemented quarterly on a prospective basis, commencing at least 5 days after
the date of delivery to Lenders of the quarterly unaudited or annual audited (as
applicable) Financial Statements evidencing the need for an adjustment.
Concurrently with the delivery of those Financial Statements, Borrower
Representative shall deliver to Administrative Agent and Lenders a certificate,
signed by its chief financial officer, setting forth in reasonable detail the
basis for the continuance of, or any change in, the Applicable Margins. Failure
to timely deliver such Financial Statements shall, in addition to any other
remedy provided for in this Agreement, result in an increase in the Applicable
Margins to the highest level set forth in the foregoing grid, until the fifth
day following the delivery of those Financial Statements demonstrating that such
an increase is not required. If a Default, which is not reasonably capable of
being cured, or Event of Default has occurred and is continuing at the time any
reduction in the Applicable Margins is to be implemented, that reduction shall
be deferred until the first day of the first calendar month following the date
on which such Default, which is not reasonably capable of being cured, or Event
of Default is waived or cured.
(b) If any payment on any Loan becomes due and payable on a
day other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis
and interest shall be made by Administrative Agent on the basis of a 360-day
year, in each case for the actual number of days occurring in the period for
which such interest and Fees are payable. The Base Rate is a floating rate
determined for each day. Each determination by Administrative Agent of an
interest rate and Fees hereunder shall be final, binding and conclusive on
Borrowers, absent manifest error.
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(d) So long as an Event of Default has occurred and is
continuing under Section 8.1(a), (h) or (i) or so long as any other Default,
which is not reasonably capable of being cured, or Event of Default has occurred
and is continuing and at the election of Administrative Agent (or upon the
written request of Requisite Lenders) confirmed by written notice from
Administrative Agent to Borrower Representative, the interest rates applicable
to the Revolving Loan shall be increased to Base Rate plus three percentage
points (3%) per annum ("Default Rate"), and all outstanding Obligations shall
bear interest at the Default Rate. Interest at the Default Rate shall accrue
from the initial date of such Default, which is not reasonably capable of being
cured, or Event of Default until that Default, which is not reasonably capable
of being cured, or Event of Default is cured or waived and shall be payable upon
demand.
(e) Subject to the conditions precedent set forth in Section
2.2, Borrower Representative shall have the option to (i) request that any
Advance be made as a LIBOR Loan, (ii) convert at any time all or any part of
outstanding Revolving Loan from Base Rate Loans to LIBOR Loans, (iii) convert
any LIBOR Loan to a Base Rate Loan, subject to payment of LIBOR breakage costs
in accordance with Section 1.10(b) if such conversion is made prior to the
expiration of the LIBOR Period applicable thereto, or (iv) continue all or any
portion of any Loan as a LIBOR Loan upon the expiration of the applicable LIBOR
Period and the succeeding LIBOR Period of that continued Loan shall commence on
the first day after the last day of the LIBOR Period of the Loan to be
continued. Any Revolving Loan or group of Revolving Loans having the same
proposed LIBOR Period to be made or continued as, or converted into, a LIBOR
Loan must be in a minimum amount of $1,000,000 and integral multiples of
$500,000 in excess of such amount. Any such election must be made by 1:00 p.m.
(New York time) on the 3rd Business Day prior to (1) the date of any proposed
Advance which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR
Period with respect to any LIBOR Loans to be continued as such, or (3) the date
on which Borrower Representative wishes to convert any Base Rate Loan to a LIBOR
Loan for a LIBOR Period designated by Borrower Representative in such election.
If no election is received with respect to a LIBOR Loan by 1:00 p.m. (New York
time) on the 3rd Business Day prior to the end of the LIBOR Period with respect
thereto (or if a Default, which is not reasonably capable of being cured, or an
Event of Default has occurred and is continuing or if the additional conditions
precedent set forth in Section 2.2 shall not have been satisfied), that LIBOR
Loan shall be converted to a Base Rate Loan at the end of its LIBOR Period.
Borrower Representative must make such election by notice to Administrative
Agent in writing, by telecopy or overnight courier. In the case of any
conversion or continuation, such election must be made pursuant to a written
notice (a "Notice of Conversion/Continuation") in the form of Exhibit 1.4(e)
attached to the Disclosure Document.
(f) Notwithstanding anything to the contrary set forth in this
Section 1.4, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Administrative
Agent, on behalf of Lenders, is equal to the total interest that would have been
received had the interest rate payable hereunder been (but for the operation of
this paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, interest hereunder shall be paid at the
rate(s) of interest and in the manner provided in Sections 1.4(a) through (e),
unless and until the rate of interest again exceeds the Maximum Lawful Rate, and
at that time this paragraph shall again apply. In no event shall the total
interest received by any Lender pursuant to the terms hereof exceed the amount
that such Lender could lawfully have received had the interest due hereunder
been calculated for the full term hereof at the Maximum Lawful Rate. If the
Maximum Lawful Rate is calculated pursuant to this paragraph, such interest
shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by
the number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.4(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Administrative Agent shall, to
the extent permitted by applicable law, promptly apply such excess in the order
specified in Section 1.10 and thereafter shall refund any excess to Borrowers or
as a court of competent jurisdiction may otherwise order.
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1.5 Cash Management Systems. On or prior to the Closing Date,
Borrowers will establish and will maintain until the Termination Date, the cash
management systems described in Annex C (the "Cash Management Systems").
1.6 Fees.
(a) On or prior to the Closing Date, Borrowers shall execute
and deliver to the Administrative Agent the Agent Fee Letter. Borrowers shall
pay to the Agents and ▇▇▇▇▇▇▇ ▇▇▇▇▇ the fees described therein at the times
specified for payment therein.
(b) On or prior to the Closing Date, Borrowers shall execute
and deliver to the Administrative Agent the Lenders' Fee Letter. Borrowers shall
pay to the Lenders the fees described therein at the times specified for payment
therein.
1.7 Receipt of Payments. Borrowers shall make each payment
under this Agreement not later than 3:00 p.m. (New York time) on the day when
due in immediately available funds in Dollars to the Collection Account. For
purposes of computing interest and Fees and determining Borrowing Availability
as of any date, all payments shall be deemed received on the Business Day on
which immediately available funds therefor are received in the Collection
Account prior to 3:00 p.m. New York time. Payments received after 3:00 p.m. New
York time on any Business Day or on a day that is not a Business Day shall be
deemed to have been received on the following Business Day.
1.8 Application and Allocation of Payments.
(a) So long as no Default, which is not reasonably capable of
being cured, or Event of Default has occurred and is continuing, (i) payments
consisting of proceeds of Accounts received in the ordinary course of business
shall be applied to the Revolving Loan; (ii) voluntary prepayments shall be
applied as determined by Borrower Representative, subject to the applicable
provisions of Section 1.2(a); and (iii) mandatory prepayments shall be applied
as set forth in Section 1.2(b). All payments shall be applied ratably to the
portion thereof held by each Lender as determined by its Pro Rata Share. Subject
to this Section 1.8, as to any other payment, and as to all payments made when a
Default, which is not reasonably capable of being cured, or Event of Default has
occurred and is continuing or following the Commitment Termination Date, each
Borrower hereby irrevocably waives the right to direct the application of any
and all payments received from or on behalf of such Borrower, and each Borrower
hereby irrevocably agrees that Administrative Agent shall have the continuing
exclusive right to apply any and all such payments against the Obligations of
Borrowers as Administrative Agent may deem advisable notwithstanding any
previous entry by Administrative Agent in the Loan Account or any other books
and records. Subject to this Section 1.8, in the absence of a specific
determination by Administrative Agent with respect thereto, payments shall be
applied to amounts then due and payable in the following order: (1) to Fees and
Agents' expenses reimbursable hereunder; (2) to interest on the Revolving Loan,
ratably in proportion to the interest accrued as to each Revolving Loan; (3) to
principal payments on the Revolving Loan; and (4) to all other Obligations,
including expenses of Lenders to the extent reimbursable under Section 11.3.
9
(b) Administrative Agent is authorized to, and at its sole
election may, charge to the Revolving Loan balance on behalf of each Borrower
and cause to be paid all Fees, expenses, Charges, costs (including insurance
premiums in accordance with Section 5.4(a)) and interest, owing by Borrowers
under this Agreement or any of the other Loan Documents if and to the extent
Borrowers fail to pay promptly any such amounts as and when due, even if the
amount of such charges would exceed Borrowing Availability at such time or would
cause the aggregate balance of the Revolving Loan to exceed the Borrowing Base
after giving effect to such charges. At Administrative Agent's option and to the
extent permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder.
1.9 Loan Account and Accounting. Administrative Agent shall
maintain loan accounts (the "Loan Account") on its books to record: all
Advances, all payments made by Borrowers, and all other debits and credits as
provided in this Agreement with respect to the Revolving Loan or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Administrative Agent's customary accounting practices as in effect from time to
time. Subject to the Borrowers' right to object in accordance with the terms and
conditions set forth below, the balance in the Loan Account, as recorded on
Administrative Agent's most recent printout or other written statement (which
printout or statement shall be delivered to Borrower Representative upon its
reasonable request), shall, absent manifest error, be presumptive evidence of
the amounts due and owing to Administrative Agent and Lenders by each Borrower;
provided that any failure to so record or any error in so recording shall not
limit or otherwise affect any Borrower's duty to pay the Obligations.
Administrative Agent shall render to Borrower Representative a monthly
accounting of transactions with respect to the Revolving Loan setting forth the
balance of the Loan Account as to each Borrower for the immediately preceding
month. Unless Borrower Representative notifies Administrative Agent in writing
of any objection to any such accounting (specifically describing the basis for
such objection), within 30 days after the date thereof, each and every such
accounting shall (absent manifest error) be deemed final, binding and conclusive
on Borrowers in all respects as to all matters reflected therein. Only those
items expressly objected to in such notice shall be deemed to be disputed by
Borrowers. Notwithstanding any provision herein contained to the contrary, any
Lender may elect (which election may be revoked) to dispense with the issuance
of Notes to that Lender and may rely on the Loan Account as evidence of the
amount of Obligations from time to time owing to it.
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1.10 Indemnity.
(a) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify and hold harmless each of the Agents, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other costs of investigation or defense, including those
incurred upon any appeal) that may be instituted or asserted against or incurred
by any such Indemnified Person as the result of credit having been extended,
suspended or terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including any and all Environmental Liabilities,
and any and all reasonable legal costs and expenses arising out of or incurred
in connection with disputes between or among any parties to any of the Loan
Documents (collectively, "Indemnified Liabilities"); provided, that no such
Credit Party shall be liable for any indemnification to an Indemnified Person to
the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results from (i) that Indemnified Person's gross negligence
or willful misconduct (as finally determined by a court of competent
jurisdiction), or (ii) the failure of such Indemnified Person to act in a
commercially reasonable manner (as finally determined by a court of competent
jurisdiction) such that such Indemnified Person's action is determined by a
court of competent jurisdiction to be egregious, unconscionable and beyond the
standards of experienced commercial lenders in similar circumstances. NO
INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN
DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR
ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR
AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER,
EXCEPT TO THE EXTENT OF SUCH INDEMNIFIED PERSON'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
(b) To induce Lenders to provide the LIBOR Rate option on the
terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part
prior to the last day of any applicable LIBOR Period (whether that repayment is
made pursuant to any provision of this Agreement or any other Loan Document or
occurs as a result of acceleration, by operation of law or otherwise); (ii) any
Borrower shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) any Borrower shall refuse to accept any
borrowing of, or shall request a termination of, any borrowing of, conversion
into or continuation of, LIBOR Loans after Borrower Representative has given
notice requesting the same in accordance herewith; or (iv) any Borrower shall
fail to make any prepayment of a LIBOR Loan after Borrower Representative has
given a notice thereof in accordance herewith, then Borrowers shall jointly and
severally indemnify and hold harmless each Lender from and against all losses,
costs and expenses resulting from or arising from any of the foregoing. Such
indemnification shall include any loss (including loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower Representative with its
written calculation of all amounts payable pursuant to this Section 1.10(b), and
such calculation shall be binding on the parties hereto unless Borrower
Representative shall object in writing within 10 Business Days of receipt
thereof, specifying the basis for such objection in detail.
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1.11 Access. Each Credit Party that is a party hereto shall,
during normal business hours, from time to time upon three Business Days' prior
notice as frequently as the Agents reasonably determine to be appropriate: (a)
provide Agents and any of their officers, employees and agents access to its
properties, facilities, advisors and employees (including officers) of each
Credit Party and to the Collateral, (b) permit Agents, and any of their
officers, employees and agents, to inspect, examine and make extracts from any
Credit Party's books and records, and (c) permit Agents, and their officers,
employees and agent, (including third party appraisers selected by Agents) to
appraise, inspect, review, evaluate and make test verifications and counts of
the Accounts, Inventory and other Collateral of any Credit Party.
Notwithstanding other provisions of this Agreement to the contrary, Borrowers
shall pay all costs and expenses incurred or paid by Agents in conducting no
more than two (2) field examinations per year, as described in more detail in
the Agent Fee Letter; provided, however, that after the occurrence of a Default,
which is not reasonably capable of being cured, or Event of Default, there shall
be no such limitation on Borrowers' payment obligations, and Borrowers shall pay
all costs and expenses (described in the Agent Fee Letter) incurred by Agents in
conducting any and all field examinations made by Agents. Notwithstanding the
preceding limitation on Borrowers' payment obligations, nothing in this Section
shall limit or impair the rights of Agents to conduct such number of field
examinations as Agents may determine. If a Default, which is not reasonably
capable of being cured, or Event of Default has occurred and is continuing, or
if access is necessary to preserve or protect the Collateral as reasonably
determined by Agents, each such Credit Party shall provide such access to Agents
and to each Lender at all times and without advance notice. Furthermore, so long
as any Event of Default has occurred and is continuing, Borrowers shall provide
Agents and each Lender with access to their servicers. Each Credit Party shall
make available to Agents and their counsel, as quickly as is reasonably possible
under the circumstances, originals or copies of all books and records that
Agents may reasonably request. Each Credit Party shall deliver any document or
instrument necessary for Agents, as they may from time to time reasonably
request, to obtain records from any service bureau or other Person that
maintains records for such Credit Party, and shall maintain duplicate records or
supporting documentation on traditional or electronic media, including, at such
Credit Party's option, computer tapes and discs owned by such Credit Party. Such
duplicate records shall be kept at an owned location or a location with respect
to which Administrative Agent has received a satisfactory landlord waiver.
Administrative Agent will give Borrowers at least three Business Days' prior
notice (written or oral) of regularly scheduled field exams. Representatives of
other Lenders may accompany Agents' representatives on regularly scheduled field
exams at no charge to Borrowers. Notwithstanding the foregoing, Agents and
Lenders will use commercially reasonable efforts to conduct all activities
described in this Section in a manner that does not interfere in any material
respect with the business operations of any Credit Party or any servicer.
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1.12 Taxes.
(a) Any and all payments by each Borrower hereunder (including
any payments made pursuant to Section 12) or under the Notes shall be made, in
accordance with this Section 1.12 and subject to Section 1.12(d), free and clear
of and without deduction for any and all present or future Taxes. If any
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder (including any sum payable pursuant to Section 12) or
under the Notes, (i) subject to Section 1.12(d), the sum payable shall be
increased as much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 1.12) Agents or Lenders, as applicable, receive an amount equal to
the sum they would have received had no such deductions been made, (ii) such
Borrower shall make such deductions, and (iii) such Borrower shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law. Promptly upon written request, but not later than 30 days after
the date of any payment of Taxes, Borrower Representative shall furnish to
Administrative Agent the original or a certified copy of a receipt evidencing
payment thereof.
(b) Subject to Section 1.12(d), each Credit Party that is a
signatory hereto shall jointly and severally indemnify and, within 15 days of
demand therefor, pay Agents and each Lender for the full amount of Taxes
(including any Taxes imposed by any jurisdiction on amounts payable under this
Section 1.12) paid by Agents or such Lender, as appropriate, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower Representative and Administrative Agent two copies of a properly
completed and executed IRS Form W-8ECI or Form W-8BEN or other applicable form,
certificate or document prescribed by the IRS or the United States certifying as
to such Foreign Lender's entitlement to such exemption (a "Certificate of
Exemption"). Any Person organized under the laws of a jurisdiction outside the
United States (a "Foreign Person") that seeks to become a Lender under this
Agreement including any Foreign Person who seeks to become an assignee or
participant pursuant to Section 9.1 shall provide a Certificate of Exemption to
Borrower Representative and Administrative Agent prior to becoming a Lender
hereunder. No Foreign Person may become a Lender hereunder if such Person fails
to deliver a Certificate of Exemption in advance of becoming a Lender. Each
Foreign Lender shall promptly deliver further copies of any forms or
certificates required to be delivered pursuant to this Section 1.12(c) if the
most recently delivered form or certification expires or becomes obsolete and
after the occurrence of any event requiring a change in the most recently
delivered form. Notwithstanding any other provision of this Section 1.12(c), a
Foreign Lender shall not be required to deliver any form pursuant to this
Section 1.12(c) that such Foreign Lender is not legally able to deliver.
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(d) Neither the Borrowers nor the Credit Parties shall be
required to pay any additional amounts to any Lender pursuant to Section
1.12(a)(i), or to indemnify any Lender pursuant to Section 1.12(b), in respect
of United States withholding taxes to the extent imposed as a result of (i) the
failure of such Lender to deliver to Borrower Representative and Administrative
Agent a Certificate of Exemption pursuant to Section 1.12(c), (ii) such
Certificate of Exemption not establishing a complete exemption from United
States withholding taxes or the information or certifications made therein by
the Lender being untrue or inaccurate on the date delivered in any material
respect, (iii) the Lender designating a successor lending office which has the
effect of causing the Borrowers or the Credit Parties to become obligated to
make a payment pursuant to Section 1.12(a)(i) or Section 1.12(b) in excess of
its payment obligation immediately prior to such designation, or (iv) such
Lender being treated as a "conduit entity" within the meaning of U.S. Treasury
Regulations Section 1.881-3 or any successor provision; provided, however, that
Borrowers and the Credit Parties shall be required to pay additional amounts to
any Lender pursuant to Section 1.12(a)(i), or to indemnify any Lender pursuant
to Section 1.12(b), in respect of United States withholding taxes if (x) any
such failure to deliver a Certificate of Exemption or the failure of such
Certificate of Exemption to establish a complete exemption from United States
withholding taxes or inaccuracy or untruth contain therein resulted from a
change in any applicable statute, treaty, regulation or other applicable law or
any interpretation of any of the foregoing occurring after the date hereof,
which change rendered such Lender no longer legally entitled to deliver such
Certificate of Exemption or otherwise ineligible for a complete exemption from
United States withholding taxes or render the information or certifications made
in such Certificate of Exemption untrue or inaccurate in any material respect,
(y) the re-designation of the Lender's lending office was made at the request of
a Borrower or (z) the obligation to pay any additional amounts to any such
Lender pursuant to Section 1.12(a)(i), or to indemnify any such Lender pursuant
to Section 1.12(d), is with respect to an assignee Lender that becomes an
assignee Lender pursuant to Section 9.1 as a result of an assignment made at the
request of a Borrower.
(e) If, solely as a result of an event described in subsection
(x) of Section 1.12(d), (i) a Lender is unable to provide to Borrower
Representative a Certificate of Exemption or such Certificate of Exemption is
unable to establish a complete exemption from United States withholding taxes or
(ii) the Borrowers become liable to make to pay additional amounts to a Lender
pursuant to Section 1.12(a)(i), or to indemnify a Lender pursuant to Section
1.12(b), Borrowers may exercise the remedies available to it under Section
1.13(d).
(f) If any Agent or any Lender receives a refund in respect of
any Taxes as to which it has been paid additional amounts by a Borrower pursuant
to Section 1.12(a) or indemnified by a Borrower or Credit Party pursuant to
Section 1.12(b), such Agent or such Lender shall promptly notify Borrower
Representative of such refund and shall, within 30 days, remit to Borrower
Representative an amount as such Agent or such Lender reasonably determines to
be the proportion of the refunded amount as will leave it, after such
remittance, in no better or worse position than it would have been if the Taxes
had not be imposed and the corresponding additional amounts or indemnification
payment not been made, provided that Borrower Representative, upon the request
of such Lender or such Agent, agrees to return such refund and any amounts which
after such return, will leave such Lender in no better or worse position than it
would have been had Borrower not be required to return such refund to such
Lender or such Agent in the event such Lender or such Agent is required to repay
such refund.
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1.13 Capital Adequacy; Increased Costs; Illegality.
(a) If any Lender shall have reasonably determined that any
law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrowers
shall from time to time upon demand by such Lender (with a copy of such demand
to Administrative Agent) pay to Administrative Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A reasonably detailed certificate as to the amount of that reduction
and showing the basis of the computation thereof submitted by such Lender to
Borrower Representative and to Administrative Agent shall, absent manifest
error, be final, conclusive and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in
any law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to Administrative Agent), pay to Administrative Agent for the
account of such Lender additional amounts sufficient to compensate such Lender
for such increased cost. A certificate as to the amount of such increased cost,
submitted to Borrower Representative and to Administrative Agent by such Lender,
shall be conclusive and binding on Borrowers for all purposes, absent manifest
error. Each Lender agrees that, as promptly as practicable after it becomes
aware of any circumstances referred to in Section 1.13(a) above or in this
Section 1.13(b), which would result in any such increased cost, the affected
Lender shall, to the extent not inconsistent with such Lender's internal
policies of general application, use reasonable commercial efforts to minimize
costs and expenses incurred by it and payable to it by Borrowers pursuant to
Section 1.13(a) and (b).
(c) Notwithstanding anything to the contrary contained herein,
if the introduction of or any change in any law or regulation (or any change in
the interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Revolving Loan or the income obtained
therefrom, on notice thereof and demand therefor by such Lender to Borrower
Representative through Administrative Agent, (i) the obligation of such Lender
to agree to make or to make or to continue to fund or maintain LIBOR Loans shall
terminate and (ii) each Borrower shall forthwith prepay in full all outstanding
LIBOR Loans owing by such Borrower to such Lender, together with interest
accrued thereon, unless Borrower Representative on behalf of such Borrower,
within 5 Business Days after the delivery of such notice and demand, converts
all LIBOR Loans into Base Rate Loans.
15
(d) Within 15 days after receipt by Borrower Representative of
written notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Sections 1.12(a), 1.13(a)
or 1.13(b), Borrower Representative may, at its option, notify Administrative
Agent and such Affected Lender of its intention to replace the Affected Lender.
So long as no Default, which is not reasonably capable of being cured, or Event
of Default has occurred and is continuing, Borrower Representative, with the
consent of Administrative Agent, may obtain, at Borrowers' expense, a
replacement Lender ("Replacement Lender") for the Affected Lender, which
Replacement Lender must be reasonably satisfactory to Administrative Agent. If
Borrowers obtain a Replacement Lender within 90 days following notice of their
intention to do so, the Affected Lender must sell and assign its Revolving Loan
and Commitments to such Replacement Lender for an amount equal to the principal
balance of the Revolving Loan held by the Affected Lender and all accrued
interest and Fees with respect thereto through the date of such sale; provided,
that Borrowers shall have reimbursed such Affected Lender for the additional
amounts or increased costs that it is entitled to receive under this Agreement
through the date of such sale and assignment. Notwithstanding the foregoing,
Borrowers shall not have the right to obtain a Replacement Lender if the
Affected Lender rescinds its demand for increased costs or additional amounts
within 15 days following its receipt of Borrowers' notice of intention to
replace such Affected Lender. Furthermore, if Borrowers give a notice of
intention to replace and do not so replace such Affected Lender within 90 days
thereafter, Borrowers' rights under this Section 1.13(d) shall terminate as to
such costs or additional amounts demanded by such Affected Lender and Borrowers
shall promptly pay all increased costs or additional amounts demanded by such
Affected Lender pursuant to Sections 1.12(a), 1.13(a) and 1.13(b).
1.14 Single Loan. The Revolving Loan to each Borrower and all
of the other Obligations of each Borrower arising under this Agreement and the
other Loan Documents shall constitute one general obligation of that Borrower
secured, until the Termination Date, by all of the Collateral.
1.15 Security Interest.
(a) Security Interest. Credit Parties, as more fully set forth
in the Collateral Documents, have granted to the Collateral Agent for the
benefit of itself, the Agents and the Lenders a first priority lien on the
Collateral to secure the Obligations, subject to Permitted Encumbrances. Credit
Parties acknowledge and agree that the security interest granted to the
Collateral Agent for the benefit of itself, the Agents and the Lenders pursuant
to the Collateral Documents is and continues to be a first lien upon and
security interest in the Collateral.
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(b) Proceeds of Collateral. Upon the exercise of any rights
and remedies by the Agents under the Loan Documents (including, the exercise of
rights and remedies with respect to the Collateral) all proceeds of the
Collateral shall be applied in the order and manner described in Section 1.8.
Agents shall provide Borrowers with a reasonably detailed list of any expenses
and costs for which Agents seek reimbursement and payment from Borrowers at the
time Agents request payment.
(c) Benefit. The provisions of this Section 1.15 and the
rights and benefits hereof shall inure solely to the benefit of the Agents, the
Lenders and their respective successors and permitted assigns and no other
Person (including the Credit Parties) shall have or be entitled to assert rights
or benefits under this Section 1.15.
1.16 No Outstanding Obligations. Provided no Obligations
remain outstanding under the Revolving Loan and the Loan Documents, upon request
of Borrowers, Administrative Agent shall make available to Borrowers any
Collections, Proceeds and other funds received by Administrative Agent in
connection with any Accounts for such uses that do not violate the terms of this
Agreement and, until so used, shall be deposited into the Blocked Account or
invested in Cash Equivalent Investments, which Cash Equivalent Investments shall
be pledged to Administrative Agent and perfected in a manner reasonably
acceptable to Administrative Agent.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Revolving Loan. No Lender shall
be obligated to make any Revolving Loan on the Closing Date, or to take,
fulfill, or perform any other action hereunder, until the following conditions
have been satisfied or provided for in a manner reasonably satisfactory to
Administrative Agent, or waived in writing by Administrative Agent and Lenders:
(a) Agreement; Loan Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrowers, each other
Credit Party, Administrative Agent and Lenders; and Administrative Agent shall
have received such documents, instruments, agreements and legal opinions as
Administrative Agent shall reasonably request in connection with the
transactions contemplated by this Agreement and the other Loan Documents,
including all those listed in the Closing Checklist attached hereto as Annex D,
each in form and substance reasonably satisfactory to Administrative Agent.
(b) Approvals. Administrative Agent shall have received (i)
satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons including all requisite Governmental
Authorities, to the execution, delivery and performance of this Agreement and
the other Loan Documents and the consummation of the Related Transactions or
(ii) an officer's or manager's certificate in form and substance reasonably
satisfactory to Administrative Agent affirming that no such consents or
approvals are required.
(c) Payment of Fees. Borrowers shall have executed and
delivered to Administrative Agent the Agent Fee Letter and the Lenders' Fee
Letter and shall have paid the Fees required to be paid on the Closing Date in
the respective amounts specified in Section 1.6 (including the Fees specified in
the Agent Fee Letter and the Fees specified in the Lenders' Fee Letter), and
shall have reimbursed Administrative Agent for all attorneys' fees and
reasonable costs and expenses of closing presented as of the Closing Date.
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(d) Approval of the Disclosure Document. Borrowers and each of
the other Credit Parties shall have prepared, executed and delivered to
Administrative Agent the Disclosure Document and Administrative Agent shall have
approved the disclosures contained therein.
(e) Capital Structure; Other Indebtedness. The capital
structure of each Credit Party and the terms and conditions of all Indebtedness
of each Credit Party shall be acceptable to Administrative Agent in its sole
discretion.
(f) Due Diligence. Administrative Agent shall have completed
its business and legal due diligence and background checks on individuals as it
deems appropriate, with results of all reasonably satisfactory to Administrative
Agent.
(g) Letter of Direction to Servicing Agents. The applicable
Credit Parties who are parties to any servicing agreement with any Servicing
Agents shall have executed and delivered to Administrative Agent a letter of
direction to its Servicing Agents: (aa) notifying such Servicing Agents of the
Liens of the Agents and Lenders in and to the Collateral and the grant of a lien
and security interest by such Credit Party to Collateral Agent in the servicing
agreement with Servicing Agent, and (bb) instructing such Servicing Agents to
make all payments owing to the applicable Credit Party directly to
Administrative Agent upon receipt by Servicing Agent of written demand to do so,
all in form and substance reasonably acceptable to Administrative Agent.
Administrative Agent shall hold such letters in Administrative Agent's
possession and only release them in connection with the exercise of its remedies
after the occurrence of a Default, which is not reasonably capable of being
cured, or Event of Default.
(h) Servicing Agreements. The Credit Parties shall have
delivered to Administrative Agent true and complete fully-executed copies of all
servicing agreements entered into by or between any Credit Party and any
Servicing Agent, other than agreements with Servicing Agents who remit
Collections to any Credit Party that, on average, total less than $50,000 in any
Fiscal Quarter.
(i) Insurance Certificates. The Credit Parties shall have
delivered to Administrative Agent such certificates of insurance as
Administrative Agent shall reasonably require in form and content acceptable to
Administrative Agent evidencing the insurance coverages required by the terms of
this Agreement to be maintained by the Credit Parties, including, without
limitation, "All Risk" and business interruption insurance and general liability
and other liability policies.
(j) Consummation of Related Transactions. Administrative Agent
shall have received fully executed copies of the Related Transactions Documents,
each of which shall be in form and substance reasonably satisfactory to
Administrative Agent and its counsel.
2.2 Further Conditions to Each Loan. No Lender shall be
obligated to fund any Advance, convert or continue any Loan as a LIBOR Loan, if,
as of the date thereof:
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(a) any representation or warranty by any Credit Party
contained herein or in any other Loan Document is (subject to any materiality or
other qualifiers contained in such representation or warranty) untrue or
incorrect as of such date, except to the extent that such representation or
warranty expressly relates to an earlier date and except for changes therein
expressly permitted or expressly contemplated by this Agreement (including to
the extent a supplement to a disclosure contained in the Disclosure Document is
to be supplied to Administrative Agent when and as required under the Loan
Documents and Requisite Lenders under Section 5.6(a)), and Administrative Agent
or Requisite Lenders have determined not to make such Advance or convert or
continue any Loan as LIBOR Loan as a result of the fact that such warranty or
representation is untrue or incorrect;
(b) any event or circumstance having a Material Adverse Effect
has occurred and is continuing since the date hereof as reasonably determined by
the Requisite Lenders, and Requisite Lenders have determined not to make such
Advance or convert or continue any Loan as a LIBOR Loan as a result of the fact
that such event or circumstance has occurred;
(c) any Default, which is not reasonably capable of being
cured, or Event of Default has occurred and is continuing or would result after
giving effect to any Advance and Administrative Agent or Requisite Lenders shall
have determined not to make any Advance or convert or continue any Loan as a
LIBOR Loan as a result of that Default, which is not reasonably capable of being
cured, or Event of Default; or
(d) after giving effect to any Advance, the outstanding
principal amount of the aggregate Revolving Loan would exceed Borrowing
Availability.
The request and acceptance by any Borrower of the proceeds of any Advance or the
conversion or continuation of any Loan into, or as, a LIBOR Loan shall be deemed
to constitute, as of the date thereof, (i) a representation and warranty by
Borrowers that the conditions in this Section 2.2 have been satisfied and (ii) a
reaffirmation by Borrowers of the cross-guaranty provisions set forth in Section
12 and of the granting and continuance of Administrative Agent's Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Revolving Loan, the Credit Parties
executing this Agreement, jointly and severally, make the following
representations and warranties to Administrative Agent and each Lender with
respect to all Credit Parties, each and all of which shall survive the execution
and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit
Party (a) is a corporation or limited liability company duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation or organization set forth in the Disclosure Document; (b) is duly
qualified to conduct business and is in good standing in each other jurisdiction
where its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would not
reasonably be expected to result in exposure to losses, damages or liabilities
in excess of $500,000; (c) has the requisite corporate or limited liability
company power and authority and the legal right to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it operates
under lease and to conduct its business as now, heretofore and proposed to be
conducted; (d) subject to specific representations regarding Environmental Laws,
has all material licenses, permits, consents or approvals from or by, and has
made all material filings with, and has given all material notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (e) is in compliance with its charter and
bylaws or operating agreement, as applicable; and (f) to the best of each Credit
Party's actual knowledge, is in compliance with and has all licenses required
under all laws applicable consumer credit and collection laws, except where the
failure to be in compliance or have such licenses could not be reasonably
expected to have a Material Adverse Effect; and (g) subject to specific
representations set forth herein regarding ERISA, Environmental Laws, tax and
other laws, is in compliance with all applicable provisions of law, except where
the failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
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3.2 Executive Offices, Collateral Locations, FEIN. As of the
Closing Date, the current location of each Credit Party's chief executive office
and premises at which any Collateral is located are set forth in the Disclosure
Document, and none of such locations has changed within the 12 months preceding
the Closing Date. In addition, the Disclosure Document lists the federal
employer identification number of each Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations.
The execution, delivery and performance by each Credit Party of the Loan
Documents to which it is a party and the creation of all Liens provided for
therein: (a) are within such Person's power; (b) have been duly authorized by
all necessary corporate or limited liability company action; (c) do not
contravene any provision of such Person's charter, bylaws or operating agreement
as applicable; (d) do not violate any law or regulation, or any order or decree
of any court or Governmental Authority applicable to such Person; (e) do not
conflict with or result in the breach or termination of, constitute a default
under or accelerate or permit the acceleration of any performance required by,
any indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Administrative Agent,
on behalf of itself and Lenders, pursuant to the Loan Documents; and (g) do not
require the consent or approval of any Governmental Authority or any other
Person, except those referred to in Section 2.1(c), all of which will have been
duly obtained, made or complied with prior to the Closing Date. Each of the Loan
Documents shall be duly executed and delivered by each Credit Party that is a
party thereto and each such Loan Document shall constitute a legal, valid and
binding obligation of such Credit Party enforceable against it in accordance
with its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating or
affecting creditors' rights (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealings.
3.4 Financial Statements. All Financial Statements have been
prepared in accordance with GAAP consistently applied throughout the periods
covered (except as disclosed therein and except, with respect to unaudited
Financial Statements, for normal year-end audit adjustments) and present fairly
in all material respects the financial position of the Persons covered thereby
as at the dates thereof and the results of their operations and cash flows for
the periods then ended. The following Financial Statements have been delivered
on the date hereof:
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(a) The audited consolidated balance sheets at September 30,
2004 and September 30, 2005 and the related statements of income and cash flows
and consolidating schedules of Asta Funding and its Subsidiaries for the Fiscal
Years then ended, certified by ▇▇▇▇▇▇, LLP.
(b) The unaudited balance sheet(s) at March 31, 2006 and the
related statement(s) of income of Asta Funding and its Subsidiaries, for the
Fiscal Period then ended, as prepared by Asta Funding on behalf of the Credit
Parties.
3.5 Material Adverse Effect. Between September 30, 2005 and
the Closing Date: (a) no Credit Party has incurred any obligations, contingent
or non-contingent liabilities, liabilities for Charges, long-term leases or
unusual forward or long-term commitments that are outstanding as of the Closing
Date and that, alone or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, (b) no contract, lease or other agreement or instrument
has been entered into by any Credit Party or has become binding upon any Credit
Party's assets and no law or regulation applicable to any Credit Party has been
adopted that has had or could reasonably be expected to have a Material Adverse
Effect, and (c) no Credit Party is in default and to the best of Borrowers'
knowledge no third party is in default under any material contract, lease or
other agreement or instrument, that alone or in the aggregate could reasonably
be expected to have a Material Adverse Effect. Between September 30, 2005 and
the Closing Date no event has occurred, that alone or together with other
events, could reasonably be expected to have a Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing Date, the
real estate ("Real Estate") listed in the Disclosure Document constitutes all of
the real property owned, leased or subleased, or used by any Credit Party as
warehouse, storage or office space or where assets may otherwise be located, and
identifies any such real property leased from an Affiliate of any Credit Party.
No Credit Party owns any Real Estate, and all leased Real Estate of any Credit
Parties is described on the Disclosure Document. The Disclosure Document further
describes any Real Estate with respect to which any Credit Party is a lessor,
sublessor or assignor as of the Closing Date. Each Credit Party also has good
and marketable title to, or valid leasehold interests in, all of its material
personal property and assets. As of the Closing Date, none of the properties and
assets of any Credit Party are subject to any Liens other than Permitted
Encumbrances, and there are no facts, circumstances or conditions known to any
Credit Party that may result in any Liens (including Liens arising under
Environmental Laws) other than Permitted Encumbrances. The Disclosure Document
also describes any purchase options, rights of first refusal or other similar
contractual rights pertaining to any Real Estate. As of the Closing Date, no
portion of any Credit Party's Real Estate has suffered any material damage by
fire or other casualty loss that has not heretofore been repaired and restored
in all material respects to its pre-casualty condition or otherwise remedied. As
of the Closing Date, all material permits required to have been issued or
appropriate to enable the Real Estate to be lawfully occupied and used for all
of the purposes for which it is currently occupied and used have been lawfully
issued and are in full force and effect, except where the failure to have any
permit will not have a Material Adverse Effect.
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3.7 Labor Matters. All of the Credit Parties' employees are
leased from ▇▇▇▇▇ Staff Services, a professional employment organization. As of
the Closing Date (a) no strikes or other material labor disputes against any
Credit Party are pending or, to any Credit Party's knowledge, threatened; (b)
hours worked by and payment made to employees of each Credit Party comply in all
material respects with the Fair Labor Standards Act and each other federal,
state, local or foreign law applicable to such matters; (c) all payments due
from any Credit Party for employee health and welfare insurance have been paid
or accrued as a liability on the books of such Credit Party; (d) except as set
forth in the Disclosure Document, no Credit Party is a party to or bound by any
collective bargaining agreement, management agreement, consulting agreement,
employment agreement, bonus, restricted stock, stock option, or stock
appreciation plan or agreement or any similar plan, agreement or arrangement
(and true and complete copies of any agreements described on the Disclosure
Document have been delivered to Administrative Agent); (e) there is no
organizing activity involving any Credit Party pending or, to any Credit Party's
knowledge, threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in the Disclosure Document, there are
no material complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock
and Indebtedness. Except as set forth in the Disclosure Document, as of the
Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. All of the issued and outstanding Stock of each Credit Party is owned by
each of the Stockholders and in the amounts set forth in the Disclosure
Document. Except as set forth in the Disclosure Document, there are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries. All outstanding Indebtedness and
Guaranteed Indebtedness of each Credit Party as of the Closing Date (except for
the Obligations) is described in Section 6.3 (including the Disclosure
Document).
3.9 Government Regulation. No Credit Party is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940. No Credit Party is subject to regulation under any federal
or state statute that restricts or limits its ability to incur Indebtedness or
to perform its obligations hereunder. The making of the Revolving Loan by
Lenders to Borrowers, the application of the proceeds thereof and repayment
thereof and the consummation of the Related Transactions will not violate any
provision of any such statute or any rule, regulation or order issued by the
Securities and Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will
it engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" as such terms are defined in Regulation U of the Federal Reserve Board as
now and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Revolving Loan or other extensions of credit under this
Agreement will be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock, for the purpose of reducing or retiring any
Indebtedness that was originally incurred to purchase or carry any Margin Stock
or for any other purpose that might cause any of the Revolving Loan or other
extensions of credit under this Agreement to be considered a "purpose credit"
within the meaning of Regulations T, U or X of the Federal Reserve Board. No
Credit Party will take or permit to be taken any action that might cause any
Loan Document to violate any regulation of the Federal Reserve Board.
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3.11 Taxes. All tax returns, reports and statements, including
information returns, required by any Governmental Authority ("Tax Returns") to
be filed by any Credit Party have been filed with the appropriate Governmental
Authority except Tax Returns relating to state and local taxes which do not
exceed $100,000 in the aggregate; but, even then, only if the failure to do so
would not result in material fines, interests, penalties or other Charges; all
such Tax Returns are true, correct and complete in all material respects; and
all Charges have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof (or any such
fine, penalty, interest, late charge or loss has been paid), excluding Charges
or other amounts being contested in accordance with Section 5.2(b). There are no
Liens for Charges (other than for current Charges not yet due and payable) upon
the assets of any Credit Party. No adjustment relating to such Tax Returns has
been proposed formally (whether verbally or in writing) or informally (in
writing) by any Governmental Authority and, to the knowledge of each Credit
Party, no basis exists for any such adjustment. Proper and accurate amounts have
been withheld by each Credit Party from its respective employees, independent
contractors, creditors, members, partners and other third parties for all
periods in compliance in all material respects with all applicable federal,
state, local and foreign laws and such withholdings have been timely paid to the
respective Governmental Authorities. The Disclosure Document sets forth as of
the Closing Date those taxable years for which any Credit Party's Tax Returns
are currently being audited by the IRS or any other applicable Governmental
Authority, and any assessments or to the knowledge of any Credit Party, any
threatened assessments in connection with such audit, or otherwise currently
outstanding. Except as described in the Disclosure Document, no Credit Party has
executed or filed with the IRS or any other Governmental Authority any agreement
or other document extending, or having the effect of extending, the period for
assessment or collection of any Charges. None of the Credit Parties nor their
respective predecessors are liable to any Governmental Authority for any
Charges: (a) under any agreement (including any tax sharing agreements) or (b)
to each Credit Party's knowledge, as a transferee. As of the Closing Date, no
Credit Party has agreed or been requested to make any adjustment under IRC
Section 481(a), by reason of a change in accounting method or otherwise, which
would have a Material Adverse Effect.
3.12 ERISA.
(a) The Disclosure Document lists (i) all ERISA Affiliates,
(ii) all material Plans and separately identifies each such Plan as a Title IV
Plan, ESOP or other Pension Plan or as a Welfare Plan, including Retiree Welfare
Plans and (iii) each Multiemployer Plan. Copies of all such listed Plans (other
than Multiemployer Plans), together with a copy of the latest IRS/DOL
5500-series form for each such Plan, have been delivered or made available to
Administrative Agent. Except as disclosed on Schedule 3.12(a), each Qualified
Plan has been determined by the IRS to qualify under Section 401 of the IRC, the
trusts created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred that would
reasonably be expected to cause the loss of such qualification or tax-exempt
status. Each Plan is in material compliance with its provisions and the
applicable provisions of ERISA and the IRC, including the timely filing of all
reports required under the IRC or ERISA, including the statement required by 29
CFR Section 2520.104-23. Neither any Credit Party nor ERISA Affiliate has failed
to make any contribution or pay any amount due as required by either Section 412
of the IRC or Section 302 of ERISA. Neither any Credit Party nor ERISA Affiliate
has engaged in a "prohibited transaction," as defined in Section 406 of ERISA
and Section 4975 of the IRC, in connection with any Plan, that would subject any
Credit Party to a material tax on prohibited transactions imposed by Section
502(i) of ERISA or Section 4975 of the IRC.
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(b) Except as set forth in the Disclosure Document: (i) no
Title IV Plan has any Unfunded Pension Liability, no assets of any Credit Party
or ERISA Affiliate are subject to any Lien under Section 412 of the IRC or
Section 302 or 4068 of ERISA, and no event has occurred that could reasonably be
expected to result in the imposition of such Lien; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan of any
Credit Party or ERISA Affiliate has been terminated, whether or not in a
"standard termination" as that term is used in Section 4041(b)(1) of ERISA, nor
has any Title IV Plan of any Credit Party or any ERISA Affiliate (determined at
any time within the last five years) with Unfunded Pension Liabilities been
transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate (determined at such
time) with respect to which termination or transfer a Credit Party has a
material unsatisfied liability; (vi) except in the case of any ESOP, Stock of
all Credit Parties and their ERISA Affiliates makes up, in the aggregate, no
more than 10% of fair market value of the assets of any Plan measured on the
basis of fair market value as of the latest valuation date of any Plan; and
(vii) no liability under any Title IV Plan has been satisfied with the purchase
of a contract from an insurance company that is not rated AAA by the Standard &
Poor's Corporation or an equivalent rating by another nationally recognized
rating agency.
3.13 No Litigation. No action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of any Credit
Party, threatened against any Credit Party, before any Governmental Authority or
before any arbitrator or panel of arbitrators (collectively, "Litigation"), (a)
that challenges any Credit Party's right or power to enter into or perform any
of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) that would reasonably be expected to be determined adversely to any
Credit Party and that, if so determined, would reasonably be expected to have a
Material Adverse Effect. Except as set forth on the Disclosure Document, as of
the Closing Date there is no Litigation pending or, to any Credit Party's
knowledge, threatened, that seeks damages in excess of $250,000 with respect to
claims for which the applicable Credit Party has no right of indemnification
from the originator or seller of that Account, or that seeks damages in excess
of $1,000,000 with respect to claims for which the applicable Credit Party has a
right of indemnification from the originator or seller of that Account, or
injunctive relief against, or alleges criminal misconduct of, any Credit Party.
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3.14 Brokers. No broker or finder brought about the obtaining,
making or closing of the Revolving Loan or the Related Transactions, and no
Credit Party or Affiliate thereof has any obligation to any Person in respect of
any finder's or brokerage fees in connection therewith.
3.15 Intellectual Property. As of the Closing Date, each
Credit Party owns or has rights to use all Intellectual Property necessary to
continue to conduct its business as now or heretofore conducted by it or
proposed to be conducted by it. Each Trademark, Copyright and Patent registered
with or that is the subject of an application with the United States Patent and
Trademark Office, or its foreign equivalents, or the United States Copyright
Office or its foreign equivalents, as applicable, and each License is listed,
together with application or registration numbers, as applicable, in the
Disclosure Document. Except as set forth in the Disclosure Document, each Credit
Party, jointly and severally, represents and warrants that all Patents,
Trademarks and Copyrights which are necessary or material to the operations of
such Credit Party have been registered with the United States Patent and
Trademark Office or its foreign equivalents or the United States Copyright
Office or its foreign equivalents, as applicable. Each Credit Party conducts its
business and affairs without infringement of or interference with any
Intellectual Property of any other Person in any material respect. Except as set
forth in the Disclosure Document, no Credit Party is aware of any infringement
claim by any other Person with respect to any Intellectual Property.
3.16 Full Disclosure. No information contained in this
Agreement, any of the other Loan Documents, Financial Statements or Collateral
Reports or other written reports from time to time delivered hereunder and no
written statement furnished by or on behalf of any Credit Party to
Administrative Agent or any Lender pursuant to the terms of this Agreement
contains or will contain when delivered or furnished any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading in light of the
circumstances under which they were made. The Liens granted to Administrative
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents
will at all times be fully perfected first priority Liens in and to the
Collateral described therein, subject, as to priority, only to Permitted
Encumbrances. The projections included in such information are or will be based
on assumptions and estimates developed by management of the Credit Parties in
good faith and considered by the preparer to be reasonable as of the date such
projections are prepared and are delivered to Administrative Agent and/or
Lenders.
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3.17 Environmental Matters.
(a) Except as set forth in the Disclosure Document, as of the
Closing Date: (i) the Real Estate is free of contamination from any Hazardous
Material except for such contamination that would not result in material
Environmental Liabilities; (ii) no Credit Party has caused or suffered to occur
any Release of Hazardous Materials on, at, in, under, above, to, from or about
any of its Real Estate; (iii) the Credit Parties are and have been in compliance
with all Environmental Laws, except for such noncompliance that would not result
in material Environmental Liabilities; (iv) the Credit Parties have obtained,
and are in compliance with, all Environmental Permits required by Environmental
Laws for the operations of their respective businesses as presently conducted or
as proposed to be conducted, except where the failure to so obtain or comply
with such Environmental Permits would not result in material Environmental
Liabilities, and all such Environmental Permits are valid, uncontested and in
good standing; (v) no Credit Party is involved in operations or knows of any
facts, circumstances or conditions, including any Releases of Hazardous
Materials, that are likely to result in any material Environmental Liabilities;
and no Credit Party has permitted any current or former tenant or occupant of
the Real Estate to engage in any such operations; (vi) there is no Litigation
arising under or related to any Environmental Laws, Environmental Permits or
Hazardous Material that seeks damages, penalties, fines, costs or expenses in
excess of $200,000 or injunctive relief against, or that alleges criminal
misconduct by, any Credit Party; and (vii) no notice has been received by any
Credit Party identifying it as a "potentially responsible party" or requesting
information under CERCLA or analogous state statutes, and to the knowledge of
the Credit Parties, there are no facts, circumstances or conditions that may
result in any Credit Party being identified as a "potentially responsible party"
under CERCLA or analogous state statutes.
(b) The Credit Parties have provided to Administrative Agent
copies of all existing environmental reports, reviews and audits and all written
information pertaining to actual or potential Environmental Liabilities
performed at the request of any Credit Party or otherwise received by any Credit
Party, in each case relating to any Credit Party.
(c) Each Credit Party hereby acknowledges and agrees that
Administrative Agent (i) is not now, and has not ever been, in control of any of
the Real Estate or any Credit Party's affairs, and (ii) is not authorized by the
Loan Documents or otherwise to influence any Credit Party's conduct with respect
to the ownership, operation or management of any of its Real Estate or
compliance with Environmental Laws or Environmental Permits.
3.18 Insurance. The Disclosure Document lists all insurance
policies of any nature maintained, as of the Closing Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy.
3.19 Deposit and Disbursement Accounts. The Disclosure
Document lists all banks and other financial institutions at which any Credit
Party maintains deposit or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.
3.20 Government Contracts. Except as set forth in the
Disclosure Document, as of the Closing Date, no Credit Party is a party to any
contract or agreement with any Governmental Authority and no Credit Party's
Accounts are subject to the Federal Assignment of Claims Act (31 U.S.C. Section
3727) or any similar state or local law.
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3.21 Customer and Trade Relations. As of the Closing Date,
there exists no actual or, to the knowledge of any Credit Party, threatened
termination or cancellation of, or any material adverse modification or change
in: the business relationship of any Credit Party with any customer or group of
customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of such Credit Party; or the business
relationship of any Credit Party with any supplier material to its operations.
3.22 Agreements and Other Documents.
(a) As of the Closing Date, each Credit Party has provided to
Administrative Agent or its counsel, on behalf of Lenders, accurate and complete
copies (or summaries) of all of the following agreements or documents to which
it is subject and each of which is listed in the Disclosure Document: servicing
agreements not terminable by such Credit Party within 60 days following written
notice issued by such Credit Party involving the collections of Accounts and
other Collateral and/or the receipt of any Payments or Collections during the
previous Fiscal Quarter of an amount equal to the Servicing Threshold (as
determined on an aggregate basis for all Credit Parties); leases of Equipment
having a remaining term of one year or longer and requiring aggregate rental and
other payments in excess of $500,000 per annum; licenses and permits held by the
Credit Parties, the absence of which could reasonably be expected to have a
Material Adverse Effect; instruments and documents evidencing any Indebtedness
or Guaranteed Indebtedness of such Credit Party (other than as to the
Obligations) and any Lien granted by such Credit Party with respect thereto; and
instruments and agreements evidencing the issuance of any equity securities,
warrants, rights or options to purchase equity securities of such Credit Party.
(b) Except as disclosed in the Disclosure Document, as of the
Closing Date, no significant servicer (or group of related servicers which in
the aggregate is significant) of the Credit Parties, taken as a whole, has given
them notice or, to the knowledge of the Credit Parties, has taken any other
action which has given any Credit Party any reason to believe that such servicer
(or group of related servicers) will materially reduce the amount of its
services to the Borrowers or materially adversely change the price or terms of
such services. For such purposes, a servicer (or group of related servicers)
shall be deemed "significant" if Collections of such servicer (or group of
related servicers) meet or exceed the Servicing Threshold during the past Fiscal
Quarter.
(c) Except as disclosed in the Disclosure Document, as of the
Closing Date, no significant servicer, supplier or vendor (or group of related
servicers, suppliers or vendors which in the aggregate is significant) of the
Credit Parties, taken as a whole, has given them notice or, to the knowledge of
the Credit Parties, has taken any other action which has given any Credit Party
any reason to believe that such servicer, supplier or vendor (or group of
related servicers, suppliers or vendors) will cease to supply or materially
restrict the amount supplied or materially adversely change its services, price
or terms to any Credit Party of any services, products or services. For such
purposes, a servicer, supplier or vendor (or group of related servicers,
suppliers or vendors) shall be deemed "significant" if Collections of such
servicer, supplier or vendor (or group of related servicers, suppliers or
vendors) meet or exceed the Servicing Threshold during the past Fiscal Quarter.
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(d) The Disclosure Document reasonably identifies, as of the
Closing Date, all Servicing Agents involved in the collection of any Payments,
Accounts and Portfolios, except for any Servicing Agent whose collection of
Payments, Accounts and Portfolios, in the aggregate for all Credit Parties,
during any Fiscal Quarter, did not exceed $50,000, or whose collection of
Payments, Accounts and Portfolios are not reasonably expected by Borrowers to
exceed $50,000 during any Fiscal Quarter (hereinafter called a "Diminimus
Servicing Agent"); provided, however that the collection of Payments, Accounts
and Portfolios, in the aggregate for all Diminimus Servicing Agents, during any
Fiscal Quarter, shall not exceed $375,000.
3.23 Solvency. Both before and after giving effect to (a) the
Revolving Loan to be made or incurred on the Closing Date or such other date as
the Revolving Loan requested hereunder are made or incurred, (b) the
disbursement of the proceeds of the Revolving Loan pursuant to the instructions
of Borrower Representative; (c) the consummation of the other Related
Transactions; and (d) the payment and accrual of all transaction costs in
connection with the foregoing, each Borrower is and will be Solvent.
3.24 Restrictions on or Relating to Subsidiaries. There does
not exist any encumbrance or restriction on the ability of (a) any Borrower or
any Subsidiary of any Borrower to pay dividends or make any other distributions
on its Stock or any other interest or participation in its profits owned by any
Borrower or any Subsidiary of any Borrower, or to pay any Indebtedness owed to
any Borrower or any Subsidiary of any Borrower, (b) any Borrower or any
Subsidiary of any Borrower to make loans or advances to any Borrower or any
Subsidiary of any Borrower or (c) any Borrower or any Subsidiary of any Borrower
to transfer any of its properties or assets to any Borrower or any Subsidiary of
any Borrower, except for such encumbrances or restrictions existing under or by
reason of (i) applicable law, or (ii) the Loan Documents.
3.25 Disaster Recovery Plan. A brief description of the
Disaster Recovery Plan is set forth in the definition of Disaster Recovery Plan
in Annex A attached hereto. The Borrowers represent and warrant that the
Disaster Recovery Plan is sufficient to protect the Borrowers in the event of a
disaster. To the extent applicable, the Borrowers hereby collaterally assign to
the Administrative Agent, for the benefit of the Lenders, all of the Borrowers'
right, title and interest in the Disaster Recovery Plan and all agreements
related thereto. The Disaster Recovery Plan shall not be amended, changed,
modified or altered in any material respect without the prior written consent of
Administrative Agent, which consent shall not be unreasonably withheld or
delayed. Administrative Agent and its designees shall have a reasonable right of
access to all Critical Information generated by the business operations of the
Credit Parties, including the Critical Information stored at the New Jersey and
Pennsylvania physical facilities, and to the key employee(s) of the Credit
Parties who may be responsible for maintaining, storing and safeguarding the
Critical Information.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Each Credit Party executing this Agreement hereby agrees
that from and after the Closing Date and until the Termination Date, it shall
deliver to Administrative Agent or to Administrative Agent and Lenders, as
required, the Financial Statements, notices and other information at the times,
to the Persons and in the manner set forth in Annex E.
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(b) Each Credit Party executing this Agreement hereby agrees
that, from and after the Closing Date and until the Termination Date, it shall
deliver to Administrative Agent or to Administrative Agent and Lenders, as
required, the various Collateral Reports (including Borrowing Base Certificate
in the form of Exhibit 4.1(b) attached to the Disclosure Document) at the times,
to the Persons and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party
executing this Agreement authorizes (a) Administrative Agent, with consent of
Borrower Representative, and (b) so long as an Event of Default has occurred and
is continuing, Administrative Agent and each Lender, to communicate directly
with its independent certified public accountants, including ▇▇▇▇▇▇, LLP, and
authorizes and, at Administrative Agent's request, shall request those
accountants to disclose and make available to Administrative Agent and each
Lender any and all Financial Statements and other supporting financial
documents, schedules and information relating to any Credit Party (including
copies of any issued management letters) with respect to the business, financial
condition and other affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof and until the
Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Each
Credit Party (other than Inactive Subsidiaries) shall: do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and its rights and franchises; continue to conduct its business
substantially as now conducted or as otherwise permitted hereunder; at all times
maintain, preserve and protect all of its assets and properties useful in the
conduct of its business, and keep the same in good repair, working order and
condition in all material respects (taking into consideration ordinary wear and
tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices; and except as permitted by Section 6.15, transact business
only in such corporate and trade names as are set forth in the Disclosure
Document.
5.2 Payment of Charges.
(a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it
(other than Charges that it does not have knowledge of and which do not exceed
$250,000 in the aggregate), including (i) Charges imposed upon it, its income
and profits, or any of its property (real, personal or mixed) and all Charges
with respect to tax, social security and unemployment withholding with respect
to its employees, (ii) lawful claims for labor, materials, supplies and services
or otherwise, and (iii) all storage or rental charges payable to warehousemen or
bailees, in each case, before any thereof shall become past due.
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(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges, Taxes or claims
described in Section 5.2(a); provided, that (i) adequate reserves with respect
to such contest are maintained on the books of such Credit Party, in accordance
with GAAP; (ii) no Lien shall be imposed to secure payment of such Charges
(other than payments to warehousemen and/or bailees) that is superior to any of
the Liens securing the Obligations and such contest is maintained and prosecuted
continuously and with diligence and operates to suspend collection or
enforcement of such Charges; (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest; and (iv) such Credit Party shall
promptly pay or discharge such contested Charges, Taxes or claims and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Administrative Agent evidence reasonably acceptable to Administrative Agent
of such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Credit Party or the conditions set forth in this
Section 5.2(b) are no longer met.
5.3 Books and Records. Each Credit Party shall keep adequate
books and records with respect to its business activities in which proper
entries, reflecting all financial transactions, are made in accordance with GAAP
and on a basis consistent with the Financial Statements described in or attached
to the Disclosure Document.
5.4 Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense,
maintain the policies of insurance described on the Disclosure Document as in
effect on the date hereof or otherwise in form and amounts and with insurers
reasonably acceptable to Administrative Agent. Copies of all such policies of
insurance shall be delivered to Administrative Agent within 30 days of the
Closing Date. Such policies of insurance (or the loss payable and additional
insured endorsements delivered to Administrative Agent) shall contain provisions
pursuant to which the insurer agrees to provide 30 days prior written notice to
Administrative Agent in the event of any non-renewal, cancellation or amendment
of any such insurance policy. If any Credit Party at any time or times hereafter
shall fail to obtain or maintain any of the policies of insurance required
above, or to pay all premiums relating thereto, Administrative Agent may at any
time or times thereafter that such insurance is not in effect obtain and
maintain such policies of insurance and pay such premiums. Administrative Agent
shall have no obligation to obtain insurance for any Credit Party or pay any
premiums therefor. By doing so, Administrative Agent shall not be deemed to have
waived any Default, which is not reasonably capable of being cured, or Event of
Default arising from any Credit Party's failure to maintain such insurance or
pay any premiums therefor. All sums so disbursed, including reasonable
attorneys' fees, court costs and other charges related thereto, shall be payable
on demand by Borrowers to Administrative Agent and shall be additional
Obligations hereunder secured by the Collateral.
(b) Each Credit Party shall deliver to Administrative Agent,
in form and substance reasonably satisfactory to Administrative Agent,
endorsements to (i) all "All Risk" and business interruption insurance naming
Administrative Agent, on behalf of itself and Lenders, as loss payee, and (ii)
all general liability and other liability policies naming Administrative Agent,
on behalf of itself and Lenders, as additional insured. Each Credit Party
irrevocably makes, constitutes and appoints Administrative Agent (and all
officers, employees or agents designated by Administrative Agent), so long as
any Default, which is not reasonably capable of being cured, or Event of Default
has occurred and is continuing, as such Credit Party's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" policies of insurance, endorsing the name of such Credit Party
on any check or other item of payment for the proceeds of such "All Risk"
policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance. Administrative Agent shall
have no duty to exercise any rights or powers granted to it pursuant to the
foregoing power-of-attorney. Borrower Representative shall promptly notify
Administrative Agent of any loss, damage, or destruction to the Collateral in
the amount of $300,000 or more, whether or not covered by insurance or
reimbursable under condemnation provisions. After deducting from such proceeds
the expenses, if any, incurred by Administrative Agent in the collection or
handling thereof, Administrative Agent may, at its option, either (i) apply such
insurance or condemnation proceeds to the reduction of the Obligations in
accordance with Section 1.3(d) or (ii) permit the Credit Parties to replace,
restore, repair or rebuild the property on terms acceptable to Administrative
Agent in its sole discretion; provided that in the case of insurance or
condemnation proceeds pertaining to any Credit Party that is not a Borrower, (i)
such insurance or condemnation proceeds shall be applied ratably to all of the
Revolving Loan owing by each Borrower, or (ii) permit or require the applicable
Credit Party to use such money, or any part thereof, to replace, repair, restore
or rebuild the Collateral in a diligent and expeditious manner with materials
and workmanship of substantially the same quality as existed before the loss,
damage or destruction.
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5.5 Compliance with Laws. Each Credit Party shall comply with
all federal, state, local and foreign laws and regulations applicable to it,
including those relating to consumer credit, collection laws, licensing
requirements, ERISA and labor matters and Environmental Laws and Environmental
Permits, except to the extent that the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
5.6 Supplemental Disclosure. From time to time as may be
reasonably requested by Administrative Agent (which request will not be made
more frequently than once each year absent the occurrence and continuance of a
Default, which is not reasonably capable of being cured, or an Event of
Default), the Credit Parties shall supplement each disclosure contained in the
Disclosure Document, or any representation herein or in any other Loan Document,
with respect to any matter hereafter arising that, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in the Disclosure Document or as an exception to such representation
or that is necessary to correct any information in the Disclosure Document or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to the Disclosure Document, such Disclosure Document shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to the Disclosure Document or representation shall amend,
supplement or otherwise modify the term "Disclosure Document" as used herein or
any representation with respect thereto, or be or be deemed a waiver of any
Default or Event of Default resulting from the matters disclosed therein, except
as consented to by Administrative Agent and Requisite Lenders in writing, which
consent will not be unreasonably withheld or delayed, (b) no supplement shall be
required or permitted as to representations and warranties that relate solely to
the Closing Date and (c) the requirement to supplement the Disclosure Document
hereto shall be subject to any materiality and other qualifiers set forth in any
representation and warranty.
5.7 Intellectual Property. Each Credit Party will continue to
own or have rights to use all Intellectual Property necessary to continue to
conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and shall conduct its business and affairs without knowingly
infringing or interfering with any Intellectual Property of any other Person in
any material respect.
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5.8 Environmental Matters. Each Credit Party shall and shall
cause each Person within its control to: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions that are appropriate or
necessary to maintain the value and marketability of the Real Estate or to
otherwise comply with Environmental Laws and Environmental Permits pertaining to
the presence, generation, treatment, storage, use, disposal, transportation or
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of its Real Estate; (c) notify Administrative Agent promptly after such
Credit Party becomes aware of any violation of Environmental Laws or
Environmental Permits or any Release on, at, in, under, above, to, from or about
any Real Estate that could reasonably be expected to result in any material
Environmental Liabilities; and (d) promptly forward to Administrative Agent a
copy of any order, notice, request for information or any communication or
report received by such Credit Party in connection with any such violation or
Release or any other matter relating to any Environmental Laws or Environmental
Permits that could reasonably be expected to result in material Environmental
Liabilities, in each case whether or not the Environmental Protection Agency or
any Governmental Authority has taken or threatened any action in connection with
any such violation, Release or other matter. If Administrative Agent at any time
has a reasonable basis to believe that there may be a violation of any
Environmental Laws or Environmental Permits by any Credit Party or any
Environmental Liability arising thereunder, or a Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate, that, in
each case, could reasonably be expected to have a Material Adverse Effect, then
each Credit Party shall, upon Administrative Agent's written request (i) cause
the performance of such environmental audits including subsurface sampling of
soil and groundwater, and preparation of such environmental reports, at
Borrowers' expense, as Administrative Agent may from time to time reasonably
request, which shall be conducted by reputable environmental consulting firms
reasonably acceptable to Administrative Agent and shall be in form and substance
reasonably acceptable to Administrative Agent, and (ii) permit Administrative
Agent or its representatives to have access to all Real Estate for the purpose
of conducting such environmental audits and testing as Administrative Agent
deems appropriate, including subsurface sampling of soil and groundwater.
Borrowers shall reimburse Administrative Agent for the costs of such audit and
tests and the same will constitute a part of the Obligations secured hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee
Letters and Real Estate Purchases. Each Credit Party shall obtain a landlord's
agreement or bailee letter, as applicable, from the lessor of each leased or
rented real property, mortgagee of owned real property or bailee with respect to
any warehouse facility or other location where Collateral (or evidence of
Collateral) having a value of $250,000 or more is stored or located as of the
Closing Date, which agreement or letter shall contain a waiver or subordination
of all Liens or claims that the landlord, mortgagee or bailee may assert against
the Collateral at that location, and shall expressly permit the Agents or their
designees to enter upon the premises for purposes of inspecting, monitoring,
examining, removing and rendering inoperable any such Collateral, and shall
otherwise be reasonably satisfactory in form and substance to Administrative
Agent. Each Credit Party shall notify Administrative Agent in writing of any
warehouse facility or other location where Collateral (or evidence of
Collateral) having a value of less than $250,000 is stored or located as of the
Closing Date. Each Credit Party shall timely and fully pay and perform its
obligations under all leases and other agreements with respect to each leased or
rented location or public warehouse where any Collateral is or may be located.
To the extent otherwise permitted hereunder, if any Credit Party proposes to
acquire a fee ownership interest in Real Estate after the Closing Date, it shall
first provide to Collateral Agent a mortgage or deed of trust granting
Collateral Agent, for the benefit of Lenders, a first priority Lien on such Real
Estate, subject to Permitted Encumbrances, together with environmental audits,
mortgage title insurance commitment, real property survey, local counsel
opinion(s), and, if required by Administrative Agent, supplemental casualty
insurance and flood insurance, and such other documents, instruments or
agreements reasonably requested by Administrative Agent, in each case, in form
and substance reasonably satisfactory to Administrative Agent.
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5.10 ERISA. With respect to each Plan, each Credit Party shall
comply in all material respects with the applicable provisions of ERISA and the
IRC, except to the extent such failure to comply, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
The Credit Parties shall furnish to the Administrative Agent written notice
within 30 Business Days after any Credit Party knows or has reason to know of:
(a) a plan amendment that materially increases the benefits of any existing
Plan, the establishment of any new Plan providing material additional benefits,
or the commencement of material contributions to any Multiemployer Plan; or (b)
an ERISA Event or any event, whether an ERISA Event or not, that could
reasonably be expected to result in the imposition of a Lien against a Credit
Party or an ERISA Affiliate under Code Section 412 or ERISA Section 302 or 4068,
together with a statement of an officer setting forth the details of such Event
and action which the Credit Parties propose to take with respect thereto. Upon
Administrative Agent's written request, each Credit Party shall furnish to the
Administrative Agent, within 30 Business Days after the filing thereof with the
Department of Labor, IRS or PBGC, copies of each annual report (From 5500
series) filed for each Plan and the most recent actuarial report for each Title
IV Plan.
5.11 Servicing Agreements.
(a) Borrowers and the other Credit Parties shall deliver
irrevocable written instructions (the "Written Instructions") to any and all
Servicing Agents or other Persons (including any collection agent, agency or
attorney, but excluding account debtors of Consumer Loans) having responsibility
for Payments or Collections of Accounts and other Collateral and who transfer,
send, make payments or disburse any Payments, Collections or Proceeds or other
funds, sums or amounts (which Payments, Collections, Proceeds, other funds, sums
and amounts will be net of any collection costs and other fees permitted to be
deducted by the express terms of the servicing agreement that corresponds to
such Payments, Collections, Proceeds and other funds) to any Credit Party by
wire transfer of cash credit (whether on a regular or infrequent basis) to make
all payments owing to Credit Parties by wire transfer of cash credit directly
into a Blocked Account established and maintained by a Credit Party with
Administrative Agent. A copy of the Written Instructions shall be delivered to
Administrative Agent within a reasonable period of time after such Written
Instructions are given. Borrowers and the other Credit Parties shall provide
such Servicing Agents and other Persons with information relative to such
Blocked Account as is sufficient to permit such Servicing Agents and other
Persons to comply with the Written Instructions. None of the Credit Parties
shall amend, modify or terminate any of the Written Instructions without the
prior written consent of Administrative Agent.
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(b) Each Borrower shall and shall cause its Affiliates,
officers, employees, agents (other than third party Servicing Agents), directors
or other Persons acting for or in concert with such Borrower (each a "Related
Person") to (i) hold in trust for Administrative Agent, for the benefit of
itself and Lenders, all checks, cash and other items of payment received by such
Borrower or any such Related Person, and (ii) within 2 Business Days after
receipt by such Borrower or any such Related Person (or in the event such
deposit is not practicable due to an Act of God, terrorism or other city-wide
catastrophe, the next day on which businesses generally are open) of any checks,
cash or other items of payment, deposit the same into a Blocked Account of such
Borrower or other blocked account with a Blocked Account Third-Party Bank (as
that term is defined in Annex C). Each Borrower and each Related Person thereof
acknowledges and agrees that all cash, checks or other items of payment
constituting proceeds of Collateral are part of the Collateral. All proceeds of
the sale or other disposition of any Collateral, shall be deposited directly
into the applicable Blocked Accounts or other blocked account with a Blocked
Account Third-Party Bank.
(c) Any and all servicing agreements entered into from and
after the Closing Date (and any modification of any servicing agreement in
effect as of the Closing Date) for the administration and/or collection of
Payments made by an Account Debtor with respect to Accounts and other Collateral
(a "New Servicing Agreement"), shall require the Servicing Agents and other
Persons (including any collection agent, agency or attorney) to pay Collections
(net of any collection costs and other fees permitted to be deducted from
Collections by the express terms of the corresponding New Servicing Agreement)
to the Credit Parties (or their designees) no later than 15 days after the last
day of each calendar month. Contemporaneously with the execution and delivery of
any New Servicing Agreement, the applicable Credit Party shall deliver to the
Servicing Agent under such New Servicing Agreement Written Instructions directed
to the Servicing Agent duly acknowledged by the Servicing Agent. Within a
reasonable period of time of entering into a new Servicing Agreement, the Credit
Party shall deliver to Administrative Agent a copy of the Written Instructions
duly executed by the corresponding Servicing Agent.
(d) Borrowers and the other Credit Parties shall cause any
Servicing Agent and other Person (including any collection agent, agency or
attorney) involved in the collection of Accounts and other Collateral and/or the
receipt of any Payments or Collections as of the Closing Date whose Collections
(net of any collection costs and other fees permitted to be deducted from
Collections by the express terms of the corresponding servicing agreement) in
the aggregate for all Credit Parties during the past Fiscal Quarter meet or
exceed the Servicing Threshold to deposit, transfer, and disburse all Payments,
Collections and other sums and amounts directly into a Blocked Account
established and maintained by a Credit Party with Administrative Agent promptly
after receipt thereof by Servicing Agent or other Person, but in no event later
than the date that is fifteen (15) calendar days after receipt thereof.
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(e) Without limiting any provision, agreement, appointment or
power of attorney granted in any of the Collateral Documents, the Credit Parties
hereby irrevocably constitutes and appoints Administrative Agent with full power
of substitution, as Credit Parties' true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Credit Parties and in
the name of Credit Parties or in its own name, from time to time in
Administrative Agent's discretion, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which may be necessary
or desirable to notify and instruct all Servicing Agents and other Persons
(including any collection agent, agency or attorney) involved in the collections
of Accounts and other Collateral and/or the receipt of any Payments or
Collections to deposit, transfer, and disburse all Payments, Collections and
other sums and amounts directly into an account established and maintained by
Administrative Agent promptly after receipt thereof by Servicing Agent or other
Person, but in no event later than the date that is fifteen (15) calendar days
after receipt thereof. Administrative Agent agrees to exercise such
power-of-attorney only upon the occurrence and during the continuance of a
Default which is not reasonably capable of being cured, or an Event of Default.
Administrative Agent shall have no duty to exercise any rights or powers granted
to it pursuant to the foregoing power-of-attorney.
(f) Borrowers and the other Credit Parties shall deliver to
Administrative Agent true and correct fully-executed copies of any servicing
agreement or agreements by or between any Credit Party and any Servicing Agent,
pursuant to which such Servicing Agent is responsible for or involved in the
collections of Accounts and other Collateral and/or the receipt of any Payments
or Collections (net of any collection costs and other fees permitted to be
deducted from Collections by the express terms of the corresponding servicing
agreement) in the aggregate for all Credit Parties during any Fiscal Quarter
that meet or exceed the Servicing Threshold. At Administrative Agent's request,
upon the occurrence of a Default, which is not reasonably capable of being
cured, or an Event of Default, the applicable Credit Party shall give
irrevocable written instructions to such Servicing Agent to make all payments
owing to the Credit Party under the servicing agreement directly to
Administrative Agent upon receipt of written demand to do so, and shall assign
to Administrative Agent, as collateral, all of such Credit Party's right, title
and interest in and to such servicing agreements.
(g) Within 30 days of any acquisition of any Portfolio having
a purchase price greater than $5,000,000 by any Credit Party, such acquiring
Credit Party shall provide Administrative Agent with evidence (including a ▇▇▇▇
of sale or assignment, if any) of such Credit Party's acquisition and ownership
of such Portfolio, free and clear of all Liens, except Permitted Encumbrances.
At any time (and from time to time) from and after the Closing Date, any Credit
Party owning any Portfolio having a purchase price greater than $5,000,000
shall, upon request of Administrative Agent, provide Administrative Agent with
evidence of such Credit Party's acquisition and ownership of such Portfolio,
free and clear of all Liens, except Permitted Encumbrances.
(h) Borrowers shall notify Administrative Agent in writing
promptly after any Servicing Agent or other Person (including any collection
agent, agency or attorney) under any servicing agreement with any Credit Party,
including, without limitation, the Servicing Agent under the Unifund Master
Servicing Agreement, is entitled (or claims to be entitled) to receive payment,
fees, premiums or other compensation (however characterized) in excess of 51% of
the Collections obtained by such Servicing Agent or other Person relating to any
Portfolio under any servicing agreement.
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(i) In the event a deposit account control agreement or other
similar document is entered into by a Servicing Agent for the benefit of any
Credit Party with respect to any deposit account into which any Payments,
Collections or other Collateral will be deposited, the applicable Credit Party
shall cause Collateral Agent to be added (as co-beneficiary with such Credit
Party) to such deposit account control agreement or other similar document in a
manner reasonably acceptable to Administrative Agent. In the event the
applicable Credit Party is unable to add Collateral Agent as a co-beneficiary,
after using such Credit Party's best efforts to do so, the applicable Credit
Party shall make arrangements to protect and preserve Collateral Agent's Liens
and security interests in the Collateral, including, without limitation, such
Credit Party's right, title and interest under such deposit account control
agreement in a manner reasonably acceptable to Collateral Agent.
(j) With respect to each set of Written Instructions given to
a Servicing Agent whose Collections (net of any collection costs and other fees
permitted to be deducted from Collections by the express terms of the servicing
agreement that corresponds to such Servicing Agent) in the aggregate for all
Credit Parties during any Fiscal Quarter meet or exceed the Servicing Threshold,
the Credit Parties shall use best efforts (including, without limitation,
commencement of appropriate legal action) to enforce the terms of such Written
Instructions, including, without limitation, such Servicing Agent's duties to
make all payments owing to Credit Parties by wire transfer of cash credit
directly into a Blocked Account established and maintained by a Credit Party
with Administrative Agent and to deposit, transfer, and disburse all Payments,
Collections (net of any collection costs and other fees permitted to be deducted
from Collections by the express terms of the corresponding servicing agreement)
and other sums and amounts directly into a Blocked Account established and
maintained by a Credit Party with Administrative Agent promptly after receipt
thereof by Servicing Agent.
(k) The Credit Parties shall, on a Fiscal Quarter basis,
notify Administrative Agent in writing of any changes to the information
contained on the Disclosure Document that identifies the Servicing Agents
involved in the collection of any Payments, Accounts and Portfolios.
5.12 Inactive Subsidiaries. None of the Inactive Subsidiaries
will perform or conduct or attempt to perform or conduct any business activities
whatsoever, other than the collection or liquidation of currently owned assets,
the proceeds of which such Inactive Subsidiary shall promptly deliver to
Administrative Agent.
5.13 Further Assurances. Each Credit Party executing this
Agreement agrees that it shall and shall cause each other Credit Party to, at
such Credit Party's expense and upon request of Administrative Agent, duly
execute and deliver, or cause to be duly executed and delivered, to
Administrative Agent such further instruments and do and cause to be done such
further acts as may be necessary or proper in the reasonable opinion of
Administrative Agent to carry out more effectively the provisions and purposes
of this Agreement or any other Loan Document.
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6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof until the
Termination Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly
or indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, except that the Borrowers may form Non-Credit Party Affiliates, and
Palisades and Asta Funding may form Subsidiaries that will become Credit
Parties, and Palisades and Asta Funding may form Subsidiaries for acquisitions
or investments made to the extent permitted by this Section 6, or (b) merge
with, consolidate with, acquire all or substantially all of the assets or Stock
of, or otherwise combine with or acquire, any Person, or all or substantially
all of the assets constituting the business of a division, branch or other unit
of operation of any Person, except that (i) any Borrower may merge with another
Borrower, provided that prior written notice of such merger shall be given to
Administrative Agent and further provided that Borrower Representative shall be
the survivor of any such merger to which it is a party, (ii) and any Inactive
Subsidiary may merge into a Credit Party, provided that such Credit Party shall
be the survivor of any such merger, (iii) any Borrower may acquire all or
substantially all of the assets of another Credit Party, and (iv) any Borrower
may form a wholly-owned Subsidiary to effectuate a change in its capital
structure as permitted under and in accordance with Section 6.5.
6.2 Investments; Revolving Loan and Advances. Except as
otherwise expressly permitted by this Section 6, no Credit Party shall make or
permit to exist any investment in, or make, accrue or permit to exist loans or
advances of money to, any Person, through the direct or indirect lending of
money, holding of securities or otherwise, except that: (a) Borrowers may hold
investments comprised of notes payable or other evidences of indebtedness, (b)
in addition to intercompany loans and advances permitted under Section 6.3,
Borrowers may make investments in Non-Credit Party Affiliates that are otherwise
permitted hereunder, (c) sales of Accounts on deferred payment terms in the
ordinary course of business that could not reasonably be expected to have a
Material Adverse Effect and, to the extent applicable, in compliance with
Section 6.8 hereof, (d) investments in consumer financial services companies of
up to $2,000,000 each (but in no event more than $10,000,000 in the aggregate
for all Credit Parties during the term of the Revolving Loan), (e) $2,000,000 in
the aggregate at any time outstanding for all Credit Parties during the term of
the Revolving Loan of other loans or credits, (f) investments in, or
acquisitions of, consumer financial services companies funded by stock of ASTA
Funding in accordance with the terms and provisions of Section 6.5 hereof, (g)
investments of proceeds from the issuance or sale of stock, warrants or other
securities pursuant to Section 6.5 in Cash Equivalent Investments and pledged to
Administrative Agent as additional Collateral until used in accordance with
Section 6.5, which pledge shall be perfected in a manner reasonably acceptable
to Administrative Agent.
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6.3 Indebtedness.
(a) No Credit Party shall create, incur, assume or permit to
exist any Indebtedness (including Subordinated Debt), except (without
duplication) (i) Indebtedness secured by purchase money security interests and
Capital Leases permitted in Section 6.7(c), (ii) the Revolving Loan and the
other Obligations, (iii) unfunded pension fund and other employee benefit plan
obligations and liabilities to the extent they are permitted to remain unfunded
under applicable law, (iv) existing Indebtedness described in the Disclosure
Document and refinancings thereof or amendments or modifications thereto that do
not have the effect of increasing the principal amount thereof or changing the
amortization thereof (other than to extend the same) and that are otherwise on
terms and conditions no less favorable to any Credit Party, Administrative Agent
or any Lender, as determined by Administrative Agent, than the terms of the
Indebtedness being refinanced, amended or modified, (v) Indebtedness
specifically permitted under Sections 6.6 and, 6.17; (vi) Indebtedness
consisting of intercompany loans and advances made by any Credit Party to any
other Credit Party; provided, that: (A) each Credit Party shall have executed
and delivered to each other Credit Party, on the Closing Date, a demand note
(collectively, the "Intercompany Notes") to evidence any such intercompany
Indebtedness owing at any time by such Credit Party to such other Credit Party,
which Intercompany Notes shall be in form and substance reasonably satisfactory
to Administrative Agent and shall be pledged to Administrative Agent and the
originals of which shall be delivered to Administrative Agent pursuant to the
applicable Pledge Agreement or Security Agreement as additional collateral
security for the Obligations; (B) each Credit Party shall record all
intercompany transactions on its books and records in accordance with past
practice; (C) the obligations of each Credit Party under any such Intercompany
Notes shall be subordinated to the Obligations of such Credit Party hereunder as
set forth in Section 12.9 of this Agreement; and (D) at the time any such
intercompany loan or advance is made by any Credit Party to any other Credit
Party and after giving effect thereto, each such Credit Party shall be Solvent;
and (E) no Default, which is not reasonably capable of being cured, or Event of
Default would occur and be continuing after giving effect to any such proposed
intercompany loan; (vii) interest rate cap, swap or collar agreements, or
similar agreements or arrangements to provide protection against fluctuations in
interest rates or foreign currencies, on terms and in form reasonably acceptable
to Administrative Agent; (viii) the obligations of each Credit Party for the
deferred portion of the purchase price of a Portfolio; (ix) Subordinated Debt,
provided that (A) no Default, which is not reasonably capable of being cured, or
Event of Default would occur and be continuing after giving effect to any such
proposed Subordinated Debt, and (B) the Credit Parties shall have obtained the
prior written consent of Administrative Agent and the Requisite Lenders with
respect to such Subordinated Debt, which consent shall not be unreasonably
withheld or delayed; and (x) an amount not to exceed $3,750,000 in the aggregate
at any time outstanding for all Credit Parties during the term of the Revolving
Loan in unsecured Indebtedness owing to non-Affiliates.
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any material Indebtedness or in respect of
any Indebtedness, the result of which could reasonably be expected to have a
Material Adverse Effect, other than (i) the Obligations; (ii) Indebtedness
secured by a Permitted Encumbrance if the asset securing such Indebtedness has
been sold or otherwise disposed of in accordance with Sections 6.8(b) or (c);
(iii) Indebtedness permitted by Section 6.3(a)(iv) upon any refinancing thereof
in accordance with Section 6.3(a)(iv); and (iv) as otherwise permitted in
Section 6.14.
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6.4 Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this Section 6
with respect to Affiliates, no Credit Party shall enter into or be a party to
any transaction with any other Credit Party or any Affiliate thereof except in
the ordinary course of and pursuant to the reasonable requirements of such
Credit Party's business and upon fair and reasonable terms that are no less
favorable to such Credit Party than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate of such Credit Party. In
addition, if any such transaction or series of related transactions (other than
the transactions permitted under Section 6.4(b) below) involves payments in
excess of $750,000 in the aggregate, the terms of these transactions must be
disclosed in advance to Administrative Agent and Lenders. All such transactions
existing as of the date hereof are described in the Disclosure Document.
(b) In the event any Advance relates to a Portfolio to be
acquired by an Affiliate, irrespective of the Portfolio Acquisition Cost of such
Portfolio, prior to Lenders making such Advance, such Affiliate shall execute
and deliver Administrative Agent's form of joinder agreement relative to this
Agreement and the Collateral Documents, Affiliate Guaranty, Affiliate Security
Agreement, Affiliate Confirmation, UCC-1 Financing Statements and all such other
documents as Administrative Agent shall reasonably request, pursuant to which
such Affiliate shall become a Credit Party hereunder, including, evidence of the
good standing of such Affiliate and UCC Searches, all in form acceptable to
Lender.
(c) No Credit Party shall enter into any lending or borrowing
transaction with any employees or consultants of any Credit Party, except loans
to its respective employees and consultants in the ordinary course of business
up to a maximum, in the aggregate for all employees and consultants, at any one
time of $750,000.
6.5 Capital Structure and Business. No Credit Party shall (a)
make any changes in any of its business objectives, purposes or operations that
could reasonably be expected to materially adversely affect the repayment of the
Revolving Loan or any of the other Obligations or could reasonably be expected
to have or result in a Material Adverse Effect, (b) make any change in its
capital structure as described in the Disclosure Document, including the
issuance or sale of any shares of Stock, warrants or other securities
convertible into Stock or any revision of the terms of its outstanding Stock.
39
Notwithstanding the foregoing, and provided that no Default,
which is not reasonably capable of being cured, or Event of Default has occurred
and is continuing, a Credit Party may, upon prior written notice thereof to
Administrative Agent, issue or sell shares of Stock of such Credit Party,
warrants or other securities convertible into Stock of such Credit Party,
provided that the proceeds from the issuance or sale of such Stock, warrants or
other securities shall be applied to reduce the Revolving Loan or used by such
Credit Party only for the following additional purposes and subject to the
following additional requirements and conditions: (x) the proceeds from the
issuance or sale of such Stock, warrants or other securities may be used by such
Credit Party to acquire Eligible New Portfolios or Rejected Portfolios as to
which the Administrative Agent, on behalf of the Lenders has a first priority,
perfected Lien on the Accounts comprising such acquired Eligible New Portfolio
or Rejected Portfolio, as the case may be, subject only to Permitted
Encumbrances; or (y) the proceeds from the issuance or sale of such Stock,
warrants or other securities may be used by such Credit Party (subject to the
further limitations and prohibitions set forth in Section 6.1 hereof) to acquire
the assets of one or more existing consumer financial services businesses so
long as: (i) no more than Twenty Million Dollars ($20,000,000), taken as a
whole, in the aggregate for all Credit Parties for all issuances or sales of
Stock, warrants or other securities during the term of the Revolving Loan is
used to acquire the assets of existing consumer financial services businesses,
and (ii) no more than forty percent (40%) of the proceeds from all issuances or
sales of Stock, warrants or other securities, taken as a whole, in the aggregate
for all Credit Parties during the term of the Revolving Loan is used to acquire
the assets of existing consumer financial services businesses, and (iii) such
acquisitions are limited solely to the assets of one or more existing consumer
financial services businesses and no Credit Party acquires any Stock of any
Person, and (iv) Borrowers shall have notified Administrative Agent in writing
in each instance of any such acquisition on the earlier of: (aa) three (3) days
of the date on which any Credit Party executes any agreement, pursuant to which
such Credit Party agrees to such acquisition, and (bb) fifteen (15) calendar
days prior to such acquisition, and (v) prior to such Credit Party's acquisition
of the assets of any such business, Borrowers shall have provided Administrative
Agent with a written statement to Administrative Agent and Lenders (certified to
be true, correct and complete in all respects by Borrower Representative's Chief
Financial Officer or President) that no Default or Event of Default has occurred
under the Revolving Loan or any of the Loan Documents and that no Default or
Event of Default is anticipated, projected or contemplated to occur as a result
of such Credit Party's acquisition of the assets of any such business. Until the
proceeds from the issuance or sale of stock, warrants or other securities
pursuant to this Section 6.5 are used in accordance with this Section 6.5, the
applicable Credit Party may invest such proceeds in Cash Equivalent Investments
which are pledged to Administrative Agent as additional Collateral and perfected
in a manner reasonably acceptable to Administrative Agent.
Notwithstanding anything set forth herein to the contrary, a
Credit Party may change its capital structure from a corporation to a limited
liability company or from a limited liability company to a corporation provided
that (i) Administrative Agent shall have consented to such transaction, (ii) the
Credit Parties have executed any documentation and taken any steps reasonably
requested by Administrative Agent, including, any documentation required by
Administrative Agent to ensure Collateral Agent, for the benefit of the Agents
and Lenders, has a first priority lien on the Stock and assets of such Credit
Party after giving effect to any such change and (iii) Administrative Agent
shall have on or prior to such change received consolidated and consolidating
income statements, statements of cash flows and balance sheets of the Borrowers
which shall provide all required information both before and after giving effect
to such change and otherwise in form and substance satisfactory to
Administrative Agent to ensure that such change does not affect any of the
obligations of the Credit Parties under any Loan Document or any rights of
Agents or Lenders with respect to the Credit Parties. No Credit Party shall
engage in any business other than the businesses currently engaged in by it or
businesses reasonably related thereto.
6.6 Guaranteed Indebtedness. No Credit Party shall create,
incur, assume or permit to exist any Guaranteed Indebtedness except (a) by
endorsement of instruments or items of payment for deposit to the general
account of any Credit Party, and (b) for Guaranteed Indebtedness incurred for
the benefit of any other Credit Party if the primary obligation is expressly
permitted by this Agreement.
40
6.7 Liens; Lien Release. No Credit Party shall create, incur,
assume or permit to exist any Lien on or with respect to its Portfolios,
Accounts or any of its other properties or assets (whether now owned or
hereafter acquired) except for (a) Permitted Encumbrances; (b) Liens in
existence on the date hereof and summarized on the Disclosure Document securing
the Indebtedness described on the Disclosure Document and permitted
refinancings, extensions and renewals thereof, including extensions or renewals
of any such Liens; provided that the principal amount of the Indebtedness so
secured is not increased and the Lien does not attach to any other property; (c)
Liens created after the date hereof by conditional sale or other title retention
agreements (including Capital Leases) or in connection with purchase money
Indebtedness with respect to Equipment and Fixtures and other capital assets
acquired by any Credit Party in the ordinary course of business, involving the
incurrence of an aggregate amount of purchase money Indebtedness and Capital
Lease Obligations of not more than $2,000,000 outstanding at any one time for
all such Liens (provided that such Liens attach only to the assets subject to
such purchase money debt and such Indebtedness is incurred within 20 days
following such purchase and does not exceed 100% of the purchase price of the
subject assets), (d) Liens securing Indebtedness permitted under Section
6.3(a)(i) as provided for therein, (e) Liens arising from precautionary UCC-1
financing statements with respect to Equipment or Real Estate which is the
subject of an operating lease, (f) Liens against the assets of Non-Credit Party
Affiliates to secure loans in connection with the acquisition of Portfolios by
Non-Credit Party Affiliates which have been declined by the Lenders. In
addition, no Credit Party shall become a party to any agreement, note, indenture
or instrument, or take any other action, that would prohibit the creation of a
Lien on any of its properties or other assets in favor of Collateral Agent, on
behalf of itself and Lenders, as additional collateral for the Obligations,
except operating leases, Capital Leases or Licenses which prohibit Liens upon
the assets that are subject thereto, and (g) claims and other Liens of attorneys
and servicers in the ordinary course of business relating to Portfolios and
Accounts (and the Proceeds thereof) that they are collecting or servicing.
In connection with any disposition of Accounts, and subject to
the terms of this paragraph, Administrative Agent, on behalf of Collateral Agent
and the Lenders, hereby authorizes Borrower or its designees to file a partial
release of those (and only those) Liens and security interests of Collateral
Agent that are necessary to permit the applicable Credit Party to effect such
disposition in the ordinary course of business and in accordance with this
Agreement, which authorization shall become effective upon, and only upon,
satisfaction and performance of all of the following additional conditions
precedent: (i) at the time of such disposition and after giving effect thereto,
no Default, which is not reasonably capable of being cured, has occurred, and no
Event of Default shall have occurred and is continuing, (ii) the Net Sales
Proceeds generated from such disposition (whether in a single transaction or a
series of transactions that could reasonably be deemed to be part of the same
transaction) shall not exceed an amount equal to $7,500,000, (iii) the
applicable Credit Party proposing to dispose of such portion of a Portfolio
shall have notified Administrative Agent in writing of such proposed disposition
contemporaneously with such Credit Party's disposition, which notification shall
be in form and content reasonably acceptable to Administrative Agent, (iv)
Administrative Agent shall be entitled to immediately make appropriate
adjustments to the Collateral, the Borrowing Base and Borrowing Availability
based on the effect of such disposition, (v) the partial release of Collateral
Agent's Liens and security interests shall relate solely and exclusively to the
Accounts that are the subject of such disposition, and (vi) all cash proceeds
from the disposition of such portion of a Portfolio shall be deposited directly
into a Blocked Account established and maintained by Administrative Agent, net
of (A) commissions and other reasonable and customary transaction costs, fees
and expenses properly attributable to such transaction and payable by such
Credit Party in connection therewith (in each case, paid to non-Affiliates), and
(B) sales, transfer, and similar taxes payable by such Credit Party in
connection therewith.
41
In connection with any disposition of Accounts in which the
Net Sales Proceeds generated from the disposition of such Accounts, whether in a
single transaction or a series of transactions that could reasonably be deemed
to be part of the same transaction, exceeds an amount equal to $7,500,000,
Administrative Agent, on behalf of Collateral Agent and the Lenders shall (in a
separate writing made by Administrative Agent at the time of each such
disposition) either authorize Borrowers and the applicable Credit Parties (and
their designees) to file such partial releases of Collateral Agent's Liens and
security interests or confirm in writing Collateral Agent's partial release of
its Liens and security interests, as requested by the applicable Credit Party,
as are necessary to permit the applicable Credit Party to effect such
disposition, provided that: (i) at the time of such disposition and after giving
effect thereto, no Default, which is not reasonably capable of being cured, has
occurred, and no Event of Default has occurred and is continuing, (ii) the
applicable Credit Party proposing to dispose of such Portfolio shall have
notified Administrative Agent in writing of such proposed disposition at least
two (2) Business Days prior to the scheduled disposition of such Accounts and
shall have delivered to Collateral Agent the form of partial release to be filed
in connection with such disposition, (iii) Borrowers shall have provided
Administrative Agent with a proforma statement showing the effect of such
disposition on the Collateral, the Borrowing Base and Borrowing Availability,
(iv) Administrative Agent shall be entitled to immediately make appropriate
adjustments to the Collateral, the Borrowing Base and Borrowing Availability
based on the effect of such disposition, (v) the partial release of Collateral
Agent's Liens and security interests shall relate solely and exclusively to the
Accounts that are the subject of such disposition, and (vi) all cash proceeds
from the disposition of such Portfolio or portion thereof shall be deposited
directly into a Blocked Account established and maintained by Administrative
Agent, net of (A) commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction and payable
by such Credit Party in connection therewith (in each case, paid to non
Affiliates), and (B) sales, transfer, and similar taxes payable by such Credit
Party in connection therewith.
The Credit Parties shall have the right to transfer or dispose
of Accounts in which one or more Credit Parties agree to extend credit to such
Credit Party's purchaser or transferee for the acquisition of such Accounts,
provided such credit is secured by such Accounts and such Credit Party is given
a promissory note or Chattel Paper to evidence all or a portion of the sales
proceeds (hereinafter individually called a "Disposition on Credit" or
collectively, "Dispositions on Credit"), provided that the following conditions
precedent are satisfied and performed: (a) the outstanding obligations owed to
one or more Credit Parties under all Dispositions on Credit (whether or not
evidenced by such promissory notes, Chattel Paper or other similar instruments),
in the aggregate for all Credit Parties at any given time, shall not exceed an
amount equal to $20,000,000 and (b) no Default, which is not reasonably capable
of being cured, or Event of Default has occurred and is continuing.
42
In the event of any disposition of any Accounts, pursuant to
which the applicable Credit Party proposing to dispose of such Accounts is given
a promissory note, Chattel Paper or similar instrument to evidence all or a
portion of the sales proceeds, the applicable Credit Party disposing of such
Accounts shall perform the following: (A) in the case of a promissory note, (i)
the original promissory note or similar instrument delivered in connection with
such disposition shall be assigned and endorsed (on the face of such promissory
note in a conspicuous manner) to the order of Administrative Agent, as agent for
the Lenders, together with the following written indication: "This promissory
note has been assigned as collateral to ISRAEL DISCOUNT BANK OF NEW YORK, a New
York banking corporation, as Collateral Agent," (ii) at the reasonable request
of Collateral Agent, the original promissory note shall be delivered to
Collateral Agent, (iii) the applicable Credit Party shall be granted a
first-priority Lien and security interest in the Accounts which is the subject
of such disposition (and such security interest shall be perfected by filing a
UCC-1 Financing Statement in the appropriate office), (iv) the Lien and security
interest granted in favor of such applicable Credit Party in connection with the
disposition of such Accounts (together with the UCC-1 Financing Statement)
shall, if requested by Collateral Agent, be assigned to Collateral Agent for the
benefit of the Agents and Lenders in a manner reasonably acceptable to
Collateral Agent, and (v) the applicable Credit Party shall give written
instructions to the maker of such promissory note (with a copy thereof to
Collateral Agent) to make all payments under such promissory note to the Blocked
Account established and maintained by such Credit Party with Administrative
Agent; and (B) in the case of any tangible Chattel Paper, (i) such Credit Party
shall place or cause to be placed on the face of each individual item of
tangible Chattel Paper, in a conspicuous manner, the following written
indication or legend: "This document has been assigned as collateral to ISRAEL
DISCOUNT BANK OF NEW YORK, a New York banking corporation, as Collateral Agent,
and is subject to a lien and security interest granted in favor of Collateral
Agent," (ii) the applicable Credit Party shall be granted a first-priority Lien
and security interest in the Accounts which is the subject of such disposition
(and such security interest shall be perfected by filing a UCC-1 Financing
Statement in the appropriate office) and the Lien and security interest granted
in favor of such applicable Credit Party in connection with such Chattel Paper
(along with the UCC-1 Financing Statement) shall, if requested by Collateral
Agent, be assigned to Collateral Agent for the benefit of the Agents and Lenders
in a manner reasonably acceptable to Collateral Agent, (iii) the applicable
Credit Party shall give written instructions to the obligor under such item of
Chattel Paper (with a copy thereof to Collateral Agent) to make all payments
under such Chattel Paper to the Blocked Account established and maintained by
such Credit Party with Administrative Agent, and (iv) if reasonably requested by
Administrative Agent, such tangible Chattel Paper shall be delivered to
Administrative Agent; and (C) in the case of electronic Chattel Paper, (i) such
Credit Party shall indicate or cause to be indicated on each individual
electronic or intangible item constituting Chattel Paper, in a conspicuous
manner, the following electronic indication or legend: "This entry, information
and material and the rights arising thereunder have been assigned as collateral
to ISRAEL DISCOUNT BANK OF NEW YORK, a New York banking corporation, as
Collateral Agent, and is subject to a lien and security interest granted in
favor of Collateral Agent" (ii) the applicable Credit Party shall be granted a
first-priority Lien and security interest in the Accounts which is the subject
of such disposition (and such security interest shall be perfected by filing a
UCC-1 Financing Statement in the appropriate office) and the Lien and security
interest granted in favor of such applicable Credit Party in connection with
such Chattel Paper (along with the UCC-1 Financing Statement) shall, if
requested by Collateral Agent, be assigned to Collateral Agent for the benefit
of the Agents and Lenders in a manner reasonably acceptable to Collateral Agent,
(iii) the applicable Credit Party shall give written instructions to the obligor
under such item of Chattel Paper (with a copy thereof to Collateral Agent) to
make all payments under such Chattel Paper to the Blocked Account established
and maintained by such Credit Party with Administrative Agent, and (iv) if
reasonably requested by Collateral Agent, the applicable Credit Parties shall
enter into such agreements (in form reasonably acceptable to Collateral Agent),
such that Collateral Agent shall have control of the electronic Chattel Paper.
The applicable Credit Party agrees not to change any payment instructions given
to the maker of any promissory note or the obligor under any Chattel Paper,
without the prior written consent of Administrative Agent, which consent shall
not be unreasonably withheld.
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6.8 Sale of Stock and Assets. No Credit Party shall sell,
transfer, convey, lease, assign or otherwise dispose of any of its properties or
other assets, including the Stock of any of its Subsidiaries (whether in a
public or a private offering or otherwise) or any of its Accounts, other than
(a) the sale of Portfolios and Accounts in the ordinary course of business in
accordance with the terms of this Agreement, (b) the sale, transfer, conveyance
or other disposition by a Credit Party of Equipment, Fixtures or Real Estate
that are obsolete or no longer used or useful in such Credit Party's business
and having an appraised value not exceeding $500,000 in any single transaction
or $1,000,000 in the aggregate in any Fiscal Year, (c) the sale, transfer,
conveyance or other disposition by a Credit Party of other Equipment and
Fixtures having a value not exceeding $500,000 in any single transaction or
$2,000,000 in the aggregate in any Fiscal Year, (d) the lease, sublease or
license of real property, provided that such real property is not necessary for
the operations of Borrowers' business, at the time thereof and after giving
effect thereto, no Default, which is not reasonably capable of being cured, or
Event of Default has occurred and is continuing, and (e) the transfer of assets
permitted under subsection (iii) of Section 6.1. With respect to any disposition
of assets or other properties permitted pursuant to Sections 6.8(b), (c) and (e)
above, subject to Section 1.2(b), Administrative Agent agrees on reasonable
prior written notice to release its Lien on such assets or other properties in
order to permit the applicable Credit Party to effect such disposition and shall
execute and deliver to Borrowers, at Borrowers' expense, appropriate UCC-3
termination statements or authorizations to file appropriate UCC-3 termination
statements and other releases as reasonably requested by Borrowers.
6.9 ERISA. No Credit Party shall, or shall cause or permit any
ERISA Affiliate to, cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrowers shall not breach or fail
to comply with any of the Financial Covenants.
6.11 Hazardous Materials. No Credit Party shall cause or
permit a Release of any Hazardous Material on, at, in, under, above, to, from or
about any of the Real Estate where such Release would (a) violate in any
material respect, or form the basis for any material Environmental Liabilities
under, any Environmental Laws or Environmental Permits or (b) otherwise
adversely impact the value or marketability of any of the Real Estate or any of
the Collateral, other than such violations or Environmental Liabilities that
could not reasonably be expected to have a Material Adverse Effect.
44
6.12 Sale-Leasebacks. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
6.13 Cancellation of Indebtedness. No Credit Party shall
cancel any claim or debt owing to it, except (a) with respect to Accounts in the
ordinary course of the Credit Party's business, (b) for debt owing by employees
or consultants permitted under Section 6.4(b) which is cancelled and treated as
compensation expense and (c) for reasonable consideration negotiated on an arm's
length basis and in the ordinary course of its business consistent with past
practices.
6.14 Restricted Payments. No Credit Party shall make any
Restricted Payment, except (a) payments of principal and interest on
intercompany loans and advances between Borrowers to the extent permitted by
Sections 6.2 and 6.3, (b) so long as there is no unwaived or uncured Default,
which is not reasonably capable of being cured, or Event of Default, the Credit
Parties shall be permitted to pay dividends, and upon the occurrence of a
Default, which is not reasonably capable of being cured, or an Event of Default,
only dividends and distributions by Subsidiaries of any Borrower paid to such
Borrower, and (c) employee or consultant loans permitted under Section 6.4.
6.15 Change of Corporate Name or Location; Change of Fiscal
Year. Except as expressly permitted under Section 6.5, no Credit Party shall (a)
change its name as it appears in official filings in the state of its
incorporation or other organization (b) change its chief executive office,
principal place of business, corporate offices or warehouses or locations at
which Collateral is held or stored, or the location of its records concerning
the Collateral, (c) change the type of entity that it is, (d) change its
organization identification number, if any, issued by its state of incorporation
or other organization, or (e) change its state of incorporation or organization,
in each case without at least 14 days prior written notice to Administrative
Agent and after Administrative Agent's written acknowledgment that any
reasonable action requested by Administrative Agent in connection therewith,
including to continue the perfection of any Liens in favor of Administrative
Agent, on behalf of Lenders, in any Collateral, has been completed or taken, and
provided that any such new location shall be in the continental United States.
No Credit Party shall change its Fiscal Year without Administrative Agent's
prior written consent, which consent will not be unreasonably withheld.
6.16 No Impairment of Intercompany Transfers. No Credit Party
shall directly or indirectly enter into or become bound by any agreement,
instrument, indenture or other obligation (other than this Agreement and the
other Loan Documents) that directly or indirectly restricts, prohibits or
requires the consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by a Subsidiary
of any Borrower to any Borrower or between Borrowers.
6.17 No Speculative Transactions. No Credit Party may engage
in any material transaction involving interest swaps, caps or collars, subject
to the Administrative Agent's prior written consent.
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6.18 Leases; Real Estate Purchases. No Credit Party shall
enter into or be a party to any operating lease for Equipment or Real Estate, if
the aggregate of all such operating lease payments payable in any year for all
Credit Parties on a consolidated basis would exceed $3,000,000. No Credit Party
shall purchase a fee simple ownership interest in Real Estate unless (i)
Administrative Agent receives 10 days prior written notice of such purchase,
(ii) at its request, Administrative Agent shall have received a mortgage or
other similar instrument on such Real Estate, in form and substance satisfactory
to Administrative Agent, and (iii) the purchase of any Real Estate shall be on
terms reasonably satisfactory to Administrative Agent.
6.19 Changes Relating to Subordinated Debt; Material
Contracts. No Credit Party shall change or amend the terms of any Subordinated
Debt (or any indenture or agreement in connection therewith) if the effect of
such amendment is to: (i) increase the interest rate on, or fees in respect of,
such Subordinated Debt; (ii) change the dates upon which payments of principal
or interest are due on such Subordinated Debt other than to extend such dates;
(iii) change any covenant, default or event of default other than to delete or
make less restrictive any covenant, default or event of default provision
therein, or add any covenant, default or event of default with respect to such
Subordinated Debt; (iv) change the redemption or prepayment provisions of such
Subordinated Debt other than to extend the dates therefor or to reduce the
premiums payable in connection therewith; (v) grant any security or collateral
to secure payment of such Subordinated Debt; (vi) change any subordination or
intercreditor provisions of such Subordinated Debt; (vii) change any provisions
providing that payments of interest, principal or other obligations in respect
of such Subordinated Debt may not be made in cash or must be paid in a form
other than cash; or (viii) change or amend any other term if such change or
amendment would materially increase the obligations of the Credit Party
thereunder or confer additional material rights on the holder of such
Subordinated Debt in a manner adverse to any Credit Party, Administrative Agent
or any Lender.
6.20 Credit Parties Other than Borrowers. From and after the
Closing Date, none of the Credit Parties other than Borrowers shall engage in
any trade or business, or own any assets (other than Stock of their
Subsidiaries) or incur any Indebtedness or Guaranteed Indebtedness (other than
the Obligations), except that Asta Funding may acquire tangible assets in its
own name for use and operation by its Subsidiaries, and may acquire Portfolios
in its own name for purposes of promptly transferring and assigning such
Portfolios to a Borrower or other Credit Party. Notwithstanding the foregoing,
nothing herein shall limit any Credit Party from engaging in activities
incidental to (a) the maintenance of its corporate existence in compliance with
applicable law, and (b) legal, tax and accounting matters in connection with any
of the foregoing activities.
6.21 Adverse Transactions. No Credit Party shall enter into or
be a party to, or permit any of its Subsidiaries to enter into or be a party to,
any transaction the performance of which in the future does or could reasonably
be expected to result in a breach of any covenant contained herein or giving
rise to a Default, which is not reasonably capable of being cured, or Event of
Default.
6.22 Disaster Recovery Plan. The Borrowers agree that they
will not make any amendments, modifications or other changes to the Disaster
Recovery Plan or any agreements related thereto without the prior written
consent of the Administrative Agent, which consent will not be unreasonably
withheld or delayed.
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6.23 Limitation on Collection Fees. No Credit Party shall
enter into any agreement to pay (and no Credit Party shall pay or permit to be
paid) any sums or amounts to any Servicing Agent or other Person (including any
collection agent, agency or attorney) as collection fees, collection charges,
contingent fees, premiums, compensation for services rendered or excess fees
(however characterized) in excess of an amount equal to fifty-one percent (51%)
of the Collections obtained by such Servicing Agent or other Person relating to
Portfolios, except after prior written notice to Administrative Agent.
6.24 No Amendment to Servicing Agreements. No Credit Party
shall amend, change, modify or alter (or permit to be amended, changed, modified
or altered) any agreement, including any servicing agreement, relating to the
collection or receipt of Payments, Collections or Proceeds of any Accounts of
any of the Credit Parties in any material respect in which the Collections (net
of any collection costs and other fees permitted to be deducted from Collections
by the express terms of the corresponding servicing agreement) in the aggregate
for all Credit Parties during any Fiscal Quarter meet or exceed the Servicing
Threshold, except if that Credit Party promptly provides a copy thereof to
Administrative Agent and the Lenders.
7. TERM
7.1 Termination. The financing arrangements contemplated
hereby shall be in effect until the Commitment Termination Date, and the
Revolving Loan and all other Obligations shall be automatically due and payable
in full on such date.
7.2 Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of
Administrative Agent and Lenders relating to any unpaid portion of the Revolving
Loan or any other Obligations, due or not due, liquidated, contingent or
unliquidated, or any transaction or event occurring prior to such termination,
or any transaction or event, the performance of which is required after the
Commitment Termination Date. Except as otherwise expressly provided herein or in
any other Loan Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of
Administrative Agent and each Lender, all as contained in the Loan Documents,
shall not terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination
Date; provided, that the provisions of Section 11, the payment obligations under
Sections 1.12 and 1.13, and the indemnities contained in the Loan Documents
shall survive the Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of
the following events (regardless of the reason therefor) shall constitute an
"Event of Default" hereunder:
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(a) Any Borrower (i) fails to make any payment of principal
of, or interest on, or Fees owing in respect of, the Revolving Loan or any of
the other Obligations when due and payable, or (ii) fails to pay or reimburse
Administrative Agent or Lenders for any expense reimbursable hereunder or under
any other Loan Document within 10 days following Administrative Agent's demand
for such reimbursement or payment of expenses.
(b) Any Credit Party fails or neglects to perform, keep or
observe any of the provisions of Sections 1.3, 1.5, 5.4(a) or 6, or any of the
provisions set forth in Annexes C or G, respectively, and the same shall remain
unremedied for 5 days or more, without any duty on the part of Administrative
Agent or Lenders to give notice to Borrowers of such failure or neglect.
(c) Any Borrower fails or neglects to perform, keep or observe
any of the provisions of Section 4 or any provisions set forth in Annexes E or
F, respectively, and the same shall remain unremedied for 10 days or more after
written notice of such failure or neglect.
(d) Any Credit Party fails or neglects to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other
subsection of this Section 8.1) and the same shall remain unremedied for 5 days
or more after written notice of such failure or neglect; provided, however, that
with respect to the provisions of Section 5.2(a), unless such failure or neglect
to perform could reasonably be expected to result in a Material Adverse Effect,
the Credit Parties shall in any event have 3 Business Days, commencing on the
date a Senior Executive or other Person with managerial responsibility has
knowledge of such failure or neglect, within which to cure or remedy such
failure or neglect.
(e) A default or breach occurs under any other agreement,
document or instrument to which any Credit Party is a party that is not cured
within any applicable grace period therefor, and such default or breach (i)
involves the failure to make any payment when due in respect of any Indebtedness
or Guaranteed Indebtedness (other than the Obligations) of any Credit Party in
excess of $2,000,000 in the aggregate (including (x) undrawn committed or
available amounts and (y) amounts owing to all creditors under any combined or
syndicated credit arrangements), or (ii) causes, or permits any holder of such
Indebtedness or Guaranteed Indebtedness or a trustee to cause, Indebtedness or
Guaranteed Indebtedness or a portion thereof in excess of $200,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, or cash collateral in respect thereof to be
demanded, in each case, regardless of whether such default is waived, or such
right is exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base
Certificate is untrue or incorrect in any respect, or any representation or
warranty herein or in any Loan Document is untrue or incorrect in any material
respect or any representation or warranty in any written statement, report,
financial statement or certificate (other than a Borrowing Base Certificate)
made or delivered to Administrative Agent or any Lender by any Credit Party is
untrue or incorrect in any material respect as of the date when made or deemed
made.
(g) Assets of any Credit Party, the aggregate fair market
value of which is $500,000 or more for all Credit Parties, are attached, seized,
levied upon or subjected to a writ or distress warrant, or come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors of any Credit Party and such condition continues for 30 days or more
(unless in the case of any attachment with respect to which the applicable
creditor does not have and no person for the benefit of such creditor has or
obtains physical possession of any assets of any Credit Party, and such claim is
being contested in good faith by such Credit Party or is fully bonded).
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(h) A case or proceeding is commenced against any Credit Party
seeking a decree or order in respect of such Credit Party (i) under the
Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for such Credit Party or for any
substantial part of any such Credit Party's assets, or (iii) ordering the
winding-up or liquidation of the affairs of such Credit Party, and such case or
proceeding shall remain undismissed or unstayed for 30 days or more or a decree
or order granting the relief sought in such case or proceeding shall be entered
by a court of competent jurisdiction.
(i) Any Credit Party (i) files a petition seeking relief under
the Bankruptcy Code, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) consents to or fails to contest in a
timely and appropriate manner the institution of proceedings thereunder or the
filing of any such petition or the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) for such Credit Party or for any substantial part of any such Credit
Party's assets, (iii) makes an assignment for the benefit of creditors, (iv)
takes any action in furtherance of any of the foregoing; or (v) admits in
writing its inability to, or is generally unable to, pay its debts as such debts
become due.
(j) A final judgment or judgments for the payment of an amount
in excess of $1,000,000 in the aggregate at any time is or are outstanding
against one or more of the Credit Parties and the same are not, within 30 days
after the entry thereof, discharged or execution thereof stayed or bonded
pending appeal, or such judgments are not discharged prior to the expiration of
any such stay; provided however, in the event such judgment relates to Accounts
for which such Credit Party has a right of indemnification from the originator
or seller of that Account, then a final judgment or judgments for the payment of
an amount in excess of $2,000,000 in the aggregate at any time is or are
outstanding against one or more of the Credit Parties and the same are not,
within 30 days after the entry thereof, discharged or execution thereof stayed
or bonded pending appeal, or such judgments are not discharged prior to the
expiration of any such stay, provided such judgment relates to Accounts for
which such Credit Party is fully indemnified by the originator or seller of that
Account.
(k) Any material provision of any Loan Document for any reason
ceases to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any Lien on any material assets created under any Loan Document ceases to be
a valid and perfected first priority Lien (except as otherwise permitted herein
or therein) in any of the Collateral purported to be covered thereby.
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(l) Any Change of Control occurs.
(m) Any default or breach by any Credit Party or any other
guarantor, grantor or pledgor in the observance or performance of any covenant
or agreement contained or incorporated by reference in any Collateral Document
and such default shall continue beyond the grace period, if any, provided in
such Collateral Document.
8.2 Remedies.
(a) If any Default, which is not reasonably capable of being
cured, or Event of Default has occurred and is continuing, Administrative Agent
may (and at the written request of the Requisite Lenders shall), without notice,
suspend the Revolving Loan facility with respect to additional Advances,
whereupon any additional Advances shall be made or incurred in the sole
discretion of the Requisite Lenders so long as such Default, which is not
reasonably capable of being cured, or Event of Default is continuing. If any
Default, which is not reasonably capable of being cured, or Event of Default has
occurred and is continuing, Administrative Agent may (and at the written request
of Requisite Lenders shall), without notice except as otherwise expressly
provided herein, increase the rate of interest applicable to the Revolving Loan
to the Default Rate.
(b) If any Event of Default has occurred and is continuing,
Administrative Agent and Collateral Agent (as applicable) may, and at the
written request of the Requisite Lenders, shall, without notice: (i) terminate
the Revolving Loan facility with respect to further Advances; (ii) declare all
or any portion of the Obligations, including all or any portion of any Revolving
Loan to be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are expressly waived by Borrowers and
each other Credit Party; or (iii) exercise any rights and remedies provided to
Administrative Agent or Collateral Agent (as applicable) under the Loan
Documents or at law or equity, including all remedies provided under the Code;
provided, that upon the occurrence of an Event of Default specified in Sections
8.1(h) or (i), the Revolving Loan facility shall be immediately terminated and
all of the Obligations, including the aggregate Revolving Loan, shall become
immediately due and payable without declaration, notice or demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided
for in this Agreement or by applicable law, each Credit Party waives (including
for purposes of Section 12), to the extent permitted by law: (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agents on which any Credit Party may in any way
be liable, and hereby ratifies and confirms whatever Agents may do in this
regard, (b) all rights to notice and a hearing prior to Agents' taking
possession or control of, or to Agents' replevin, attachment or levy upon, the
Collateral or any bond or security that might be required by any court prior to
allowing Agents to exercise any of their remedies, and (c) the benefit of all
valuation, appraisal, marshaling and exemption laws.
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9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations.
(a) Subject to the terms of this Section 9.1, any Lender may
make an assignment to a Qualified Assignee of, or sell participations in, at any
time or times, the Loan Documents, Revolving Loan and any Commitment or any
portion thereof or interest therein, including any Lender's rights, title,
interests, remedies, powers or duties thereunder. Any assignment by a Lender
shall: (i) require the consent of Administrative Agent (which consent shall not
be unreasonably withheld or delayed with respect to a Qualified Assignee) and
the execution of an assignment agreement (an "Assignment Agreement")
substantially in the form attached hereto as Exhibit 9.1(a) attached to the
Disclosure Document and otherwise in form and substance reasonably satisfactory
to, and acknowledged by, Administrative Agent; (ii) be conditioned on such
assignee Lender representing to the assigning Lender and Administrative Agent
that it is purchasing the applicable Revolving Loan to be assigned to it for its
own account, for investment purposes and not with a view to the distribution
thereof; (iii) after giving effect to any such partial assignment, the assignee
Lender shall have Commitments in an amount at least equal to $5,000,000 and the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000, except that the limitations contained in this Section 9.1(a)(iii)
shall not apply to any assigning Lender having Commitments of less than
$10,000,000, so long as such assigning Lender, in connection with such
assignment, shall have assigned all, and not less than all, of such assigning
Lender's Commitments; (iv) with respect to any assignment of the Revolving Loan
Commitment or the Revolving Loan, be for a ratable portion of the assigning
Lender's interest in the Revolving Loan Commitment and the Revolving Loan; (v)
include a payment to Administrative Agent of an assignment fee of $3,500 by
either assignee Lender or assignor Lender; (vi) so long as no Event of Default
has occurred and is continuing, require the consent of Borrower Representative,
which shall not be unreasonably withheld or delayed; provided that no such
consent shall be required for an assignment to a Qualified Assignee and (vii)
unless such an assignment is to an Affiliate of such Lender, Lender shall give
notice to the other Lenders of any intent to assign. Such Lenders shall be
permitted to purchase such assignment on terms agreed to by assignor Lender and
assignee Lender. If more than one Lender wishes to purchase the Revolving Loan
or Commitments from the assigning Lender, such assignments to Lenders will be
allocated on a pro-rata basis. In the case of an assignment by a Lender under
this Section 9.1, the assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations as all other Lenders hereunder. The
assigning Lender shall be relieved of its obligations hereunder with respect to
its Commitments or assigned portion thereof from and after the date of such
assignment. Each Borrower hereby acknowledges and agrees that any assignment
shall give rise to a direct obligation of Borrowers to the assignee and that the
assignee shall be considered to be a "Lender". In all instances, each Lender's
liability to make the Revolving Loan hereunder shall be several and not joint
and shall be limited to such Lender's Pro Rata Share of the applicable
Commitment. In the event Administrative Agent or any Lender assigns or otherwise
transfers all or any part of the Obligations, Administrative Agent or any such
Lender shall so notify Borrowers and Borrowers shall, upon the request of
Administrative Agent or such Lender, execute new Notes in exchange for the
Notes, if any, being assigned. Notwithstanding the foregoing provisions of this
Section 9.1(a), any Lender may at any time pledge the Obligations held by it and
such Lender's rights under this Agreement and the other Loan Documents to a
Federal Reserve Bank, and any Lender that is an investment fund may assign the
Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to another investment fund managed by the same investment
advisor; provided, that no such pledge to a Federal Reserve Bank shall release
such Lender from such Lender's obligations hereunder or under any other Loan
Document. The Administrative Agent shall maintain at its address referred to in
Section 11.10 a copy of each Assignment Agreement delivered to and accepted by
it and a register of the recordation of the names and addresses of the Lenders
and the Commitments, and principal amounts thereunder owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrowers, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by any Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
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(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrowers hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Sections 1.10,
1.12, 1.13 and 9.8, each Borrower acknowledges and agrees that a participation
shall give rise to a direct obligation of Borrowers to the participant and the
participant shall be considered to be a "Lender". Except as set forth in the
preceding sentence no Borrower or Credit Party shall have any obligation or duty
to any participant. Neither Administrative Agent nor any Lender (other than the
Lender selling a participation) shall have any duty to any participant and may
continue to deal solely with the Lender selling a participation as if no such
sale had occurred.
(c) Except as expressly provided in this Section 9.1, no
Lender shall, as between Borrowers and that Lender, or Administrative Agent and
that Lender, be relieved of any of its obligations hereunder as a result of any
sale, assignment, transfer or negotiation of, or granting of participation in,
all or any part of the Revolving Loan, the Notes or other Obligations owed to
such Lender.
(d) Each Credit Party executing this Agreement shall assist
any Lender permitted to sell assignments or participations under this Section
9.1 as reasonably required to enable the assigning or selling Lender to effect
any such assignment or participation, including the execution and delivery of
any and all agreements, notes and other documents and instruments as shall be
requested and, if requested by Administrative Agent, the preparation of
informational materials for, and the participation of management in meetings
with, potential assignees or participants. Each Credit Party executing this
Agreement shall certify the correctness, completeness and accuracy of all
descriptions of the Credit Parties and their respective affairs contained in any
selling materials provided by them and all other information provided by them
and included in such materials.
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(e) Any Lender may furnish any information concerning Credit
Parties in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants); provided that
such Lender shall obtain from assignees or participants confidentiality
covenants substantially equivalent to those contained in Section 11.8.
(f) So long as no Event of Default has occurred and is
continuing, no Lender shall assign or sell participations in any portion of its
Revolving Loan or Commitments to a potential Lender or participant, if, as of
the date of the proposed assignment or sale, the assignee Lender or participant
would be subject to capital adequacy or similar requirements under Section
1.13(a), increased costs under Section 1.13(b), an inability to fund LIBOR Loans
under Section 1.13(c), or withholding taxes in accordance with Section 1.12(a).
9.2 Appointment of Agents.
(a) Each Lender hereby appoints IDB to act on behalf of all
Lenders as (i) Administrative Agent under this Agreement and the other Loan
Documents and (ii) as Collateral Agent under this Agreement and the other Loan
Documents. In furtherance of the foregoing, each Lender hereby appoints the
Collateral Agent to act as the agent of such Lender for purposes of acquiring,
holding and enforcing any and all Liens on Collateral granted by any of the
Credit Parties to secure any of the Obligations, together with such powers and
discretion as are reasonably incidental thereto.
(b) The provisions of this Section 9.2 are solely for the
benefit of the Agents, and Lenders and no Credit Party nor any other Person
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement and the
other Loan Documents, the Agents shall act solely as agents of Lenders and do
not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Credit Party or any other
Person. The Agents shall have no duties or responsibilities except for those
expressly set forth in this Agreement and the other Loan Documents. The duties
of the Agents shall be mechanical and administrative in nature and the Agents
shall not have, or be deemed to have, by reason of this Agreement, any other
Loan Document or otherwise a fiduciary relationship in respect of any Lender.
Except as expressly set forth in this Agreement and the other Loan Documents,
the Agents shall not have any duty to disclose, and shall not be liable for
failure to disclose, any information relating to any Credit Party or any of
their respective Subsidiaries or any Account Debtor that is communicated to or
obtained by IDB or any of its Affiliates in any capacity. Neither of the Agents
nor any of their Affiliates nor any of their respective officers, directors,
employees, agents or representatives shall be liable to any Lender for any
action taken or omitted to be taken by it hereunder or under any other Loan
Document, or in connection herewith or therewith, except for damages caused by
its or their own gross negligence or willful misconduct.
(c) If an Agent shall request instructions from Requisite
Lenders or all affected Lenders with respect to any act or action (including
failure to act) in connection with this Agreement or any other Loan Document,
then such Agent shall be entitled to refrain from such act or taking such action
unless and until it shall have received instructions from Requisite Lenders or
all affected Lenders, as the case may be, and such Agent shall not incur
liability to any Person by reason of so refraining. The Agents shall be fully
justified in failing or refusing to take any action hereunder or under any other
Loan Document (i) if such action would, in the opinion of the Agents, be
contrary to law or the terms of this Agreement or any other Loan Document, (ii)
if such action would, in the opinion of the Agents, expose them to Environmental
Liabilities or (iii) if the Agents shall not first be indemnified to its
satisfaction against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. Without limiting
the foregoing, no Lender shall have any right of action whatsoever against an
Agent as a result of such Agent acting or refraining from acting hereunder or
under any other Loan Document in accordance with the instructions of Requisite
Lenders or all affected Lenders, as applicable.
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9.3 Agent's Reliance, Etc. Neither of the Agents nor any of
their Affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement or the other Loan Documents,
except for damages caused by its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Agents: (a)
may treat the payee of any Note as the holder thereof until Administrative Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form reasonably satisfactory to Administrative Agent; (b) may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 Agents and Affiliates. With respect to its Commitments
hereunder, the Agents shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not an Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include IDB in its individual capacity. IDB and
its Affiliates may lend money to, invest in, and generally engage in any kind of
business with, any Credit Party, any of their Affiliates and any Person who may
do business with or own securities of any Credit Party or any such Affiliate,
all as if IDB were not an Agent and without any duty to account therefor to
Lenders. IDB and its Affiliates may accept fees and other consideration from any
Credit Party for services in connection with this Agreement or otherwise without
having to account for the same to Lenders. Each Lender acknowledges the
potential conflict of interest between IDB as a Lender holding disproportionate
interests in the Revolving Loan and IDB as an Agent. None of the Lenders
identified on the facing page or signature pages of this Agreement as a
"syndication agent", "documentation agent", "co-administrative agent" or
"arranger", if any, shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such. Without limiting the foregoing, none of the Lenders so
identified as a "syndication agent", "documentation agent", "co-administrative
agent" or "arranger", if any, shall have or be deemed to have any fiduciary
relationship with any Lender. Each Lender acknowledges that it has not relied,
and will not rely, on any of the Lenders so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
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9.5 Intentionally Omitted.
9.6 Indemnification. Lenders agree to indemnify each Agent (to
the extent not reimbursed by Credit Parties and without limiting the obligations
of Borrowers hereunder), ratably according to their respective Pro Rata Shares,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the Agents in any way relating to or arising out of this Agreement or
any other Loan Document or any action taken or omitted to be taken by
Administrative Agent in connection therewith; provided, that no Lender shall be
liable to an Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent's gross negligence or willful misconduct. Without
limiting the foregoing, each Lender agrees to reimburse the Agents promptly upon
demand for its ratable share of any out-of-pocket expenses (including reasonable
counsel fees) incurred by the Agents in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and each
other Loan Document, to the extent that the Agents are not reimbursed for such
expenses by Credit Parties.
9.7 Successor Agents. Any Agent may resign at any time by
giving not less than 30 days' prior written notice thereof to Lenders and
Borrower Representative. Upon any such resignation, the Requisite Lenders shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Requisite Lenders and shall have accepted such
appointment within 30 days after the resigning Agent's giving notice of
resignation, then the resigning Agent may, on behalf of Lenders, appoint a
successor Agent, which shall be a Lender, if a Lender is willing to accept such
appointment, or otherwise shall be a commercial bank, commercial finance company
or financial institution or a subsidiary of a commercial bank, commercial
finance company or financial institution if such commercial bank, commercial
finance company or financial institution is organized under the laws of the
United States of America or of any State thereof and has a combined capital and
surplus of at least $300,000,000. If no successor Agent has been appointed
pursuant to the foregoing, within 30 days after the date such notice of
resignation was given by the resigning Agent, such resignation shall become
effective and the Requisite Lenders shall thereafter perform all the duties of
Agent hereunder until such time, if any, as the Requisite Lenders appoint a
successor Agent as provided above. Any successor Agent appointed by Requisite
Lenders hereunder shall be subject to the approval of Borrower Representative,
such approval not to be unreasonably withheld or delayed; provided that such
approval shall not be required if a Default, which is not reasonably capable of
being cured, or an Event of Default has occurred and is continuing. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent. Upon the earlier of the acceptance
of any appointment as Agent hereunder by a successor Agent or the effective date
of the resigning Agent's resignation, the resigning Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents, except that any indemnity rights or other rights in favor of such
resigning Agent shall continue. After any resigning Agent's resignation
hereunder, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as Agent under
this Agreement and the other Loan Documents.
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9.8 Setoff and Sharing of Payments. In addition to any rights
now or hereafter granted under applicable law and not by way of limitation of
any such rights, upon the occurrence and during the continuance of any Event of
Default and subject to Section 9.9(f), each Lender is hereby authorized at any
time or from time to time, without notice to any Credit Party or to any other
Person, any such notice being hereby expressly waived, to offset and to
appropriate and to apply any and all balances held by it at any of its offices
for the account of any Borrower or Guarantor (regardless of whether such
balances are then due to such Borrower or Guarantor) and any other properties or
assets at any time held or owing by that Lender or that holder to or for the
credit or for the account of any Borrower or Guarantor against and on account of
any of the Obligations that are not paid when due. Subject to the application of
any amounts received as a result of this Section 9.8 in accordance with Section
1.15(b), any Lender exercising a right of setoff or otherwise receiving any
payment on account of the Obligations in excess of its Pro Rata Share thereof
shall purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares (other than offset rights exercised by any
Lender with respect to Sections 1.10, 1.12 or 1.13). Each Credit Party that is a
Borrower or Guarantor agrees, to the fullest extent permitted by law, that (a)
any Lender may exercise its right to offset with respect to amounts in excess of
its Pro Rata Share of the Obligations and may sell participations in such
amounts so offset to other Lenders and holders and (b) any Lender so purchasing
a participation in the Revolving Loan made or other Obligations held by other
Lenders or holders may exercise all rights of offset, bankers' lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender or holder were a direct holder of the Revolving Loan and the other
Obligations in the amount of such participation. Notwithstanding the foregoing,
if all or any portion of the offset amount or payment otherwise received is
thereafter recovered from the Lender that has exercised the right of offset, the
purchase of participations by that Lender shall be rescinded and the purchase
price restored together with interest at such rate, if any, as such Lender is
required to pay to any Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.
9.9 Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert.
(a) Advances; Payments.
(i) Administrative Agent shall notify Revolving
Lenders, promptly after receipt of a Notice of Borrower and in any event prior
to 2:00 p.m. (New York time) on the date such notice is received, by telecopy,
telephone or other similar form of transmission. Each Revolving Lender shall
make the amount of such Lender's Pro Rata Share of such Revolving Credit Advance
available to Administrative Agent in same day funds by wire transfer to
Administrative Agent's account as set forth in Annex H not later than 3:00 p.m.
(New York time) on the requested funding date, in the case of a Base Rate Loan,
and not later than 1:00 p.m. (New York time) on the requested funding date, in
the case of a LIBOR Loan. After receipt of such wire transfers (or, in the
Administrative Agent's sole discretion, before receipt of such wire transfers),
subject to the terms hereof, Administrative Agent shall make the requested
Revolving Credit Advance to the Borrower designated by Borrower Representative
in the Notice of Borrowing. All payments by each Revolving Lender shall be made
without setoff, counterclaim or deduction of any kind. In the event
Administrative Agent makes any Advance (in accordance with Section 2.2 hereof)
available to Borrowers after 1:00 p.m. (New York time) on the requested funding
date, on behalf of any Lender who is unable to make the amount of such Lender's
Pro Rata Share of such Advance available to Administrative Agent in a timely
manner in accordance with this Agreement, then the Lender or Lenders on whose
behalf Administrative Agent makes such Advance shall repay the amount of such
Advance to Administrative Agent (prior to any other repayment or reimbursement
obligations arising under this Agreement) in full no later than the next
Business Day on the terms set forth in this Agreement, regardless of the
occurrence of any subsequent Default or Event of Default, and in such event
Administrative Agent shall be entitled to retain for its account all interest
accrued on such Advance until reimbursed by the applicable Revolving Lender.
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(ii) On the 2nd Business Day of each calendar week or
more frequently at Administrative Agent's election (each, a "Settlement Date"),
Administrative Agent shall advise each Lender by telephone, or telecopy of the
amount of such Lender's Pro Rata Share of principal, interest and Fees paid for
the benefit of Lenders with respect to each applicable Loan. Provided that each
Lender has funded all payments or Advances required to be made by it and has
purchased all participations required to be purchased by it under this Agreement
and the other Loan Documents as of such Settlement Date, Administrative Agent
shall pay to each Lender such Lender's Pro Rata Share of principal, interest and
Fees paid by Borrowers since the previous Settlement Date for the benefit of
such Lender on the Revolving Loan held by it (promptly upon receipt by
Administrative Agent of such Borrowers' payments), except that with respect to a
LIBOR Loan, such principal and interest shall be paid on the last day of the
relevant LIBOR Period. To the extent that any Lender (a "Non-Funding Lender")
has failed to fund all such payments and Advances or failed to fund the purchase
of all such participations, Administrative Agent shall be entitled to set off
the funding shortfall against that Non-Funding Lender's Pro Rata Share of all
payments received from Borrowers. Such payments shall be made by wire transfer
to such Lender's account (as specified by such Lender in Annex H or the
applicable Assignment Agreement) not later than 2:00 p.m. (New York time) on the
next Business Day following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Administrative
Agent may assume that each Revolving Lender will make its Pro Rata Share of each
Revolving Credit Advance available to Administrative Agent on each funding date.
If such Pro Rata Share is not, in fact, paid to Administrative Agent by such
Revolving Lender when due, Administrative Agent will be entitled to recover such
amount on demand from such Revolving Lender without setoff, counterclaim or
deduction of any kind. If any Revolving Lender fails to pay the amount of its
Pro Rata Share forthwith upon Administrative Agent's demand, Administrative
Agent shall promptly notify Borrower Representative and Borrowers shall
immediately repay such amount to Administrative Agent. Nothing in this Section
9.9(b) or elsewhere in this Agreement or the other Loan Documents shall be
deemed to require Administrative Agent to advance funds on behalf of any
Revolving Lender or to relieve any Revolving Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Borrowers may
have against any Revolving Lender as a result of any default by such Revolving
Lender hereunder. To the extent that Administrative Agent advances funds to any
Borrower on behalf of any Revolving Lender and is not reimbursed therefor on the
same Business Day as such Advance is made, Administrative Agent shall be
entitled to retain for its account all interest accrued on such Advance until
reimbursed by the applicable Revolving Lender.
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(c) Return of Payments.
(i) If Administrative Agent pays an amount to a
Lender under this Agreement in the belief or expectation that a related payment
has been or will be received by Administrative Agent from Borrowers and such
related payment is not received by Administrative Agent, then Administrative
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.
(ii) If Administrative Agent determines at any time
that any amount received by Administrative Agent under this Agreement must be
returned to any Borrower or paid to any other Person pursuant to any insolvency
law or otherwise, then, notwithstanding any other term or condition of this
Agreement or any other Loan Document, Administrative Agent will not be required
to distribute any portion thereof to any Lender. In addition, each Lender will
repay to Administrative Agent on demand any portion of such amount that
Administrative Agent has distributed to such Lender, together with interest at
such rate, if any, as Administrative Agent is required to pay to any Borrower or
such other Person, without setoff, counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender
to make any Revolving Credit Advance or any payment required by it hereunder on
the date specified therefor shall not relieve any other Lender (each such other
Revolving Lender, an "Other Lender") of its obligations to make such Advance or
purchase such participation on such date, but neither any Other Lender nor
Administrative Agent shall be responsible for the failure of any Non-Funding
Lender to make an Advance, purchase a participation or make any other payment
required hereunder. Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a "Lender" or a "Revolving Lender"
(or be included in the calculation of "Requisite Lenders" hereunder) for any
voting or consent rights under or with respect to any Loan Document. At Borrower
Representative's request, Administrative Agent or a Person reasonably acceptable
to Administrative Agent shall have the right with Administrative Agent's consent
and in Administrative Agent's sole discretion (but shall have no obligation) to
purchase from any Non-Funding Lender, and each Non-Funding Lender agrees that it
shall, at Administrative Agent's request, sell and assign to Administrative
Agent or such Person, all of the Commitments of that Non-Funding Lender for an
amount equal to the principal balance of the Revolving Loan held by such
Non-Funding Lender and all accrued interest and fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.
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(e) Dissemination of Information. Administrative Agent shall
provide Lenders with any notice of Default or Event of Default received by
Administrative Agent from, or delivered by Administrative Agent to, any Credit
Party, with notice of any Event of Default of which Administrative Agent has
actually become aware and with notice of any action taken by Administrative
Agent following any Event of Default. Lenders acknowledge that Borrowers are
required to provide Financial Statements and Collateral Reports to Lenders in
accordance with Annexes E and F hereto and agree that Administrative Agent shall
have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of setoff) without
first obtaining the prior written consent of Administrative Agent and Requisite
Lenders (except as otherwise provided below), it being the intent of Lenders
that any such action to protect or enforce rights under this Agreement and the
Notes shall be taken in concert and at the direction or with the consent of
Administrative Agent or Requisite Lenders, as applicable, in accordance with the
terms hereof; provided, however, that each Lender may, upon 15 Business Days'
prior written demand on Administrative Agent and Administrative Agent's failure
or refusal to commence to take commercially reasonable enforcement actions
within such 15-day period, commence an action against any Borrower or any
Guarantor and obtain a judgment against any such Person, but in no event shall
any Lender take any action to execute on such judgment or to enforce such
judgment in any manner, whether against any Borrower, any Guarantor or any
Collateral, without the prior written consent of Administrative Agent.
(g) Notice of Field Exams. Administrative Agent will give
Lenders at least 2 days' prior written notice of regularly scheduled field exams
of Borrowers' books, records and Accounts.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agents, Lenders and their respective successors and assigns (including,
in the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Administrative Agent and Lenders. Any such
purported assignment, transfer, hypothecation or other conveyance by any Credit
Party without the prior express written consent of Administrative Agent and
Lenders shall be void. The terms and provisions of this Agreement are for the
purpose of defining the relative rights and obligations of each Credit Party,
Agents and Lenders with respect to the transactions contemplated hereby and no
Person shall be a third party beneficiary of any of the terms and provisions of
this Agreement or any of the other Loan Documents.
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11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in Section 11.2. Any letter of interest, commitment letter or fee
letter (other than the Agent Fee Letter and Lenders' Fee Letters) or
confidentiality agreement, if any, between any Credit Party and Administrative
Agent or any Lender or any of their respective Affiliates, predating this
Agreement and relating to a financing of substantially similar form, purpose or
effect shall be superseded by this Agreement.
11.2 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by
Administrative Agent, no amendment, modification, termination or waiver of any
provision of this Agreement or any other Loan Document, or any consent to any
departure by any Credit Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by Administrative Agent and Borrowers,
and by Requisite Lenders or all affected Lenders, as applicable. Except as set
forth in subsection (b) below, all such amendments, modifications, terminations
or waivers requiring the consent of any Lenders shall only require the written
consent of Requisite Lenders, Administrative Agent and Borrowers.
(b) (i) No modification, amendment or waiver of any provision
of this Agreement, the other Loan Documents or any other documents executed in
connection herewith or therewith and no consent by the Lenders or the
Administrative Agent to any departure therefrom by Borrowers or Guarantors shall
be effective unless such modification, amendment, waiver or consent shall be in
writing and signed by the Administrative Agent and all Requisite Lenders, and,
in the case of a modification or amendment other than those described in
subsection (z) of this Section 11.2(b)(i), by a duly authorized officer of the
Borrower Representative, and the same shall then be effective only for the
period and on the conditions and for the specific instances and purposes
specified in such writing; provided, however, that (x) no provision hereof which
expressly requires the consent, approval or waiver by all Lenders may be
amended, modified or waived except by all Lenders; (y) none of the following may
be amended, modified or waived except with the written consent of all Lenders
and the Administrative Agent: (i) the definition of "Collateral," (ii) the
definitions of "Revolving Loan Commitment", "Applicable Advance Rate" and
"Borrowing Base" as set forth herein, provided, however, that the foregoing
shall not limit the discretion of the Administrative Agent to the extent set
forth in this Agreement or in the definition of "Borrowing Base," (iii) the
definitions of "Commitment Termination Date", "Requisite Lenders", "Borrowing
Availability", "Loan Value of Eligible Existing Portfolio", "Loan Value of
Eligible New Portfolio", "Eligible Existing Portfolio" and "Eligible New
Portfolio," (iv) the provisions of this Section 11.2(b)(i), and (v) any
provision governing or providing for (A) the rate of interest payable on the
Advances, (B) mandatory prepayments of principal thereof, (C) fees or other
amounts payable to any of the Lenders or (D) the due date for payment of any
principal, interest or fees hereunder; and (z) none of the following shall
require the consent, authorization or approval of Borrowers: amendment or
modification of any agreement to which Borrowers are not a party. None of the
provisions governing or providing for fees or other amounts payable to the
Administrative Agent may be amended, modified or waived except with the written
consent of the Administrative Agent. No notice to or demand on Borrowers in any
case shall entitle Borrowers to any other or further notice or demand in similar
or other circumstances. No failure or delay by the Administrative Agent to
exercise any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege preclude the
exercise of any other right, power or privilege.
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(ii) At the written request of Borrower Representative, and
upon approval by Administrative Agent (which approval may be withheld in the
sole and absolute discretion of Administrative Agent), from time to time
subsequent to the date hereof, additional Lenders may become parties to this
Agreement and to the other Loan Documents as additional Lenders (each, an
"Additional Lender") in order to increase the total Revolving Loan Commitment as
contemplated within the definition thereof, by executing a counterpart of this
Agreement substantially in the form of Annex L attached hereto. Administrative
Agent shall notify the Lenders of Administrative Agent's intention to add
Additional Lenders to this Agreement and the other Loan Documents. Each Lender
shall have a reasonable period of time after notice by Administrative Agent to
notify Administrative Agent of such Lender's desire and commitment to increase
its Revolving Loan Commitment, as may be increased from time to time in
accordance with this Section. In the event a Lender determines not to increase
its Revolving Loan Commitment, Administrative Agent shall be free to solicit
third-party Additional Lenders. Additional Lender shall execute and deliver to
Administrative Agent such additional agreements, confirmations and documents as
Administrative Agent may require in order to effectuate the addition of such
Additional Lender and to confirm Additional Lender's duties, obligations and
liabilities under this Agreement and the other Loan Documents. One or more
Additional Lenders may become parties to this Agreement and to the other Loan
Documents from time to time without the approval or consent of any of the
Lenders, and each Lender hereby waives any right to approve adding one or more
Additional Lenders. Upon delivery of any such counterpart to Administrative
Agent, each Additional Lender shall be a Lender and shall be as fully a party
hereto as if such Additional Lender were an original signatory hereto. Each
Borrower hereby acknowledges and agrees that any addition of any Additional
Lender to this Agreement shall give rise to a direct obligation of Borrowers to
such Additional Lender and that the Additional Lender shall be considered to be
a "Lender" and shall be entitled to all of the rights, remedies, as applicable,
benefits and privileges afforded all other Lenders hereunder. Each Borrower and
other Credit Party shall execute and deliver to Administrative Agent and Lenders
such agreements and documentation relative to the adding of such Additional
Lender and increase in the aggregate Revolving Loan Commitment as Administrative
Agent may reasonably require, including, without limitation, a Revolving Note
for each Additional Lender in the amount of such Additional Lender's Revolving
Loan Commitment, such amendments or additions to the other Loan Documents,
including the Collateral Documents, as Administrative Agent may reasonably
require to reflect the addition of the Additional Lender and the increase in the
aggregate Revolving Loan Commitment, and such other documents as Administrative
Agent may require to confirm all Credit Parties' duties and obligations under
this Section 11.2(b)(ii). Each Borrower and other Credit Party expressly agrees
that its obligations arising hereunder shall not be modified, affected or
diminished by the addition of any Additional Lender hereunder nor by any
election of Administrative Agent not to permit any Person to become an
Additional Lender hereunder. Upon the effective date of any increase in the
total Revolving Loan Commitments of all of the Lenders as a result of adding
Additional Lenders, each Lender's Pro Rata Share shall be adjusted to reflect
such Lender's Revolving Loan Commitment relative to the aggregate Revolving Loan
Commitment of all Lenders. Notwithstanding the foregoing, no increase in the
Maximum Amount or in any Revolving Loan Commitment shall be effective until such
time as there are no outstanding LIBOR Loans and in connection with any increase
in the Maximum Amount or any Revolving Loan Commitment, Borrowers' duties under
Section 1.10(b) of this Agreement shall apply.
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(c) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders,
the consent of Requisite Lenders is obtained, but the consent of other Lenders
whose consent is required is not obtained (any such Lender whose consent is not
obtained as described in this clause (i) and in clause (ii) below being referred
to as a "Non-Consenting Lender"),
(ii) requiring the consent of Requisite Lenders, but
the consent of Requisite Lenders is not obtained,
then, so long as IDB is not a Non-Consenting Lender, at Borrower
Representative's request, Administrative Agent or a Person reasonably acceptable
to Administrative Agent shall have the right with Administrative Agent's consent
and in Administrative Agent's sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Administrative Agent's request, sell and assign to
Administrative Agent or such Person, all of the Commitments of such
Non-Consenting Lenders for an amount equal to the principal balance of the
Revolving Loan held by the Non-Consenting Lenders and all accrued interest and
Fees with respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement.
(d) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations), termination of the
Commitments and a release of all claims against Administrative Agent and
Lenders, and so long as no suits, actions, proceedings or claims are pending or
threatened against any Indemnified Person asserting any damages, losses or
liabilities that are Indemnified Liabilities, Administrative Agent shall deliver
to Credit Parties termination statements, mortgage releases and other documents
necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations including without limitation documents reasonably
requested by any Credit Party to terminate or release its rights under any
blocked account agreement, control account or agreements with, or direction
letters to, Servicing Agents.
11.3 Fees and Expenses. Borrowers shall reimburse the Agents
(and, with respect to subsections (c) and (d) and (e) below, all Lenders) for
all reasonable out-of-pocket fees, costs and expenses, including the reasonable
fees, costs and expenses of counsel, consultants, field examiners or other
advisors (including environmental and management consultants and appraisers),
incurred in connection with the negotiation and preparation of the Loan
Documents and incurred in connection with:
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(a) the forwarding to Borrowers or any other Person on behalf
of Borrowers by Administrative Agent of the proceeds of any Loan (including a
wire transfer fee, per wire transfer, at Administrative Agent's then prevailing
wire transfer fee rate);
(b) any amendment, modification or waiver of, consent with
respect to, or termination of, any of the Loan Documents or Related Transactions
Documents or advice in connection with the syndication and administration of the
Revolving Loan made pursuant hereto or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by any Agent, any Lender, any Borrower or any other
Person and whether as a party, witness or otherwise) in any way relating to the
Collateral, any of the Loan Documents or any other agreement to be executed or
delivered in connection herewith or therewith, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against any or all of the
Borrowers or any other Person that may be obligated to the Agents or the Lenders
by virtue of the Loan Documents; including any such litigation, contest,
dispute, suit, proceeding or action arising in connection with any work-out or
restructuring of the Revolving Loan during the pendency of one or more Events of
Default; provided that no Person shall be entitled to reimbursement under this
subsection (c) in respect of any litigation, contest, dispute, suit, proceeding
or action to the extent any of the foregoing results from such Person's gross
negligence or willful misconduct (as finally determined by a court of competent
jurisdiction);
(d) any attempt to enforce any remedies of the Agents or
Lenders against any or all of the Credit Parties or any other Person that may be
obligated to any Agent or any Lender by virtue of any of the Loan Documents,
including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Revolving Loan during the pendency of one or
more Events of Default;
(e) any workout or restructuring of the Revolving Loan during
the pendency of one or more Events of Default; and
(f) subject to the provisions and terms contained in Section
1.11 hereof relative to the payment of costs incurred in conducting field
examinations, efforts to (i) monitor the Revolving Loan or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral, provided
that the costs relating to activities undertaken pursuant to the preceding items
(i), (ii) and (iii) shall not exceed an amount equal to $25,000 in any Fiscal
Year, except in the event of a Default, which is not reasonably capable of being
cured, or Event of Default, in which event the costs relating to activities
undertaken pursuant to the preceding items (i), (ii) and (iii) shall not be
limited in any manner;
including, as to each of subsections (a) through (f) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of
which shall be payable, on demand, by Borrowers to such Agent or such Lender.
Without limiting the generality of the foregoing, such expenses, costs, charges
and fees may include: fees, costs and expenses of accountants, environmental
advisors, appraisers, investment bankers, management and other consultants and
paralegals; court costs and expenses; photocopying and duplication expenses;
court reporter fees, costs and expenses; long distance telephone charges; air
express charges; telegram or telecopy charges; secretarial overtime charges; and
expenses for travel, lodging and food paid or incurred in connection with the
performance of such legal or other advisory services.
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11.4 No Waiver. Any Agent's or any Lender's failure, at any
time or times, to require strict performance by the Credit Parties of any
provision of this Agreement or any other Loan Document shall not waive, affect
or diminish any right of such Agent or such Lender thereafter to demand strict
compliance and performance herewith or therewith. Any suspension or waiver of an
Event of Default shall not suspend, waive or affect any other Event of Default
whether the same is prior or subsequent thereto and whether the same or of a
different type. Subject to the provisions of Section 11.2, none of the
undertakings, agreements, warranties, covenants and representations of any
Credit Party contained in this Agreement or any of the other Loan Documents and
no Default or Event of Default by any Credit Party shall be deemed to have been
suspended or waived by any Agent or any Lender, unless such waiver or suspension
is by an instrument in writing signed by an officer of or other authorized
employee of such Agent and the Requisite Lenders, and directed to Borrowers
specifying such suspension or waiver.
11.5 Remedies. Agents' and Lenders' rights and remedies under
this Agreement shall be cumulative and nonexclusive of any other rights and
remedies that any Agent or any Lender may have under any other agreement,
including the other Loan Documents, by operation of law or otherwise. Recourse
to the Collateral shall not be required.
11.6 Severability. Wherever possible, each provision of this
Agreement and the other Loan Documents shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement or any other Loan Document shall 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 the remaining provisions of this Agreement or such other Loan Document.
11.7 Conflict of Terms. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement conflicts with any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
11.8 Confidentiality. Administrative Agent, Collateral Agent
and each Lender agree to use commercially reasonable efforts (equivalent to the
efforts Administrative Agent, Collateral Agent or such Lender applies to
maintaining the confidentiality of its own confidential information) to maintain
as confidential all confidential information provided to them by the Credit
Parties for a period of 2 years following receipt thereof, except that
Administrative Agent, Collateral Agent and any Lender may disclose such
information on a confidential "need to know" basis (a) to Persons employed or
engaged by Administrative Agent, Collateral Agent or such Lender; (b) to any
bona fide assignee or participant or potential assignee or participant that has
agreed to comply with the covenant contained in this Section 11.8 (and any such
bona fide assignee or participant or potential assignee or participant may
disclose such information to Persons employed or engaged by it as described in
subsection (a) above); (c) as required or requested by any Governmental
Authority or reasonably believed by Administrative Agent, Collateral Agent or
such Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of Administrative
Agent's, Collateral Agent's or such Lender's counsel, is required by law; (e) in
connection with the exercise of any right or remedy under the Loan Documents or
in connection with any Litigation to which Administrative Agent, Collateral
Agent or such Lender is a party; (f) that ceases to be confidential through no
fault of Administrative Agent, Collateral Agent or any Lender; or (g) to Persons
that are approved in writing by Borrower Representative.
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Notwithstanding anything to the contrary set forth herein or
in any other agreement to which the parties hereto are parties or by which they
are bound, the obligations of confidentiality contained herein and therein, as
they relate to the transactions contemplated by the Agreement and the other loan
documents (the "Transaction"), shall not apply to the federal tax structure or
federal tax treatment of the Transaction, and each party hereto (and any
employee, representative, agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the federal tax structure and federal
tax treatment of the Transaction. The preceding sentence is intended to cause
the Transaction to be treated as not having been offered under conditions of
confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor
provision) of the Treasury Regulations promulgated under Section 6011 of the
Internal Revenue Code of 1986, as amended, and shall be construed in a manner
consistent with such purpose. In addition, each party hereto acknowledges that
it has no proprietary or exclusive rights to the federal tax structure of the
Transaction or any federal tax matter or federal tax idea related to the
Transaction.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN THE CITY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENTS AND
LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS; PROVIDED, THAT AGENTS, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF AGENTS. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET
FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR 5
DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.
65
11.10 Notices. Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other parties, or whenever any of the parties desires to
give or serve upon any other parties any communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be deemed to have been validly
served, given or delivered: (a) upon the earlier of actual receipt and 5 days
after deposit in the United States Mail, registered or certified mail, return
receipt requested, with proper postage prepaid; (b) upon transmission, when sent
by telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.10); (c) 1 Business
Day after deposit with a reputable overnight courier with all charges prepaid or
(d) when delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address or facsimile
number indicated in Annex I or to such other address (or facsimile number) as
may be substituted by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to any Person
(other than Borrower Representative or Administrative Agent) designated in Annex
I to receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
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11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENTS, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases and Related Matters. Each Credit Party
executing this Agreement agrees that neither it nor its Affiliates will in the
future issue any press releases or other public disclosure (i) using the name of
IDB or its affiliates or, (ii) other than standard disclosures associated with
its financial reporting or other similar, ordinary course of business
disclosures, referring to this Agreement, the other Loan Documents or the
Related Transactions Documents without at least 2 Business Days' prior notice to
IDB and without obtaining IDB's prior written consent unless (and only to the
extent that) such Credit Party or Affiliate is required to do so under law and
then, in any event, such Credit Party or Affiliate will consult with IDB before
issuing such press release or other public disclosure. Each Credit Party
consents to the publication by Administrative Agent or any Lender of a tombstone
or similar advertising material relating to the financing transactions
contemplated by this Agreement. Administrative Agent reserves the right to
provide to industry trade organizations information necessary and customary for
inclusion in league table measurements.
11.15 Reinstatement. This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Borrower for liquidation or reorganization, should any Borrower
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Borrower's assets, and shall continue to be effective or
to be reinstated, as the case may be, if at any time payment and performance of
the Obligations, or any part thereof, is, pursuant to applicable law, rescinded
or reduced in amount, or must otherwise be restored or returned by any obligee
of the Obligations, whether as a "voidable preference," "fraudulent conveyance,"
or otherwise, all as though such payment or performance had not been made. In
the event that any payment, or any part thereof, is rescinded, reduced, restored
or returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to
each other party hereto that it has discussed this Agreement and, specifically,
the provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
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11.18 Administrative Agent for Service. Each Credit Party
hereby appoints, and Borrower Representative hereby accepts the appointment of,
Borrower Representative, located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ as the agent for service of process for such Credit Party solely in
connection with the Loan Documents. Such appointment shall not be terminated by
Borrower Representative or any Credit Party without the prior written consent of
Administrative Agent.
12. CROSS-GUARANTY; SUBORDINATION
12.1 Cross-Guaranty. Each Borrower hereby agrees that such
Borrower is jointly and severally liable for, and hereby absolutely and
unconditionally guarantees to Agents and Lenders and their respective successors
and assigns, the full and prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of, all Obligations owed or hereafter
owing to Agents and Lenders by each other Borrower. Each Borrower agrees that
its guaranty obligation hereunder is a continuing guaranty of payment and
performance and not of collection, that its obligations under this Section 12
shall not be discharged until payment and performance, in full, of the
Obligations has occurred, and that its obligations under this Section 12 shall
be absolute and unconditional, irrespective of, and unaffected by,
(a) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in, this Agreement, any other Loan Document
or any other agreement, document or instrument to which any Borrower is or may
become a party;
(b) the absence of any action to enforce this Agreement
(including this Section 12) or any other Loan Document or the waiver or consent
by Agents and Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to
perfect its Lien against, any security for the Obligations or any action, or the
absence of any action, by Agents and Lenders in respect thereof (including the
release of any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
12.2 Waivers by Borrowers. Each Borrower expressly waives all
rights it may have now or in the future under any statute, or at common law, or
at law or in equity, or otherwise, to compel Agents or Lenders to marshal assets
or to proceed in respect of the Obligations guaranteed hereunder against any
other Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed among each Borrower, Agents and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 12 and such waivers, Agents and Lenders would
decline to enter into this Agreement.
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12.3 Benefit of Guaranty. Each Borrower agrees that the
provisions of this Section 12 are for the benefit of Agents and Lenders and
their respective successors, transferees, endorsees and assigns, and nothing
herein contained shall impair, as between any other Borrower and Agents or
Lenders, the obligations of such other Borrower under the Loan Documents.
12.4 Subordination of Subrogation, Etc. Notwithstanding
anything to the contrary in this Agreement or in any other Loan Document, and
except as set forth in Section 12.7, each Borrower hereby expressly and
irrevocably subordinates to payment of the Obligations any and all rights at law
or in equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off and any and all defenses available to a surety,
guarantor or accommodation co-obligor until the Obligations are indefeasibly
paid in full in cash. Each Borrower acknowledges and agrees that this
subordination is intended to benefit Agents and Lenders and shall not limit or
otherwise affect such Borrower's liability hereunder or the enforceability of
this Section 12, and that Agents, Lenders and their respective successors and
assigns are intended third party beneficiaries of the waivers and agreements set
forth in this Section 12.4.
12.5 Election of Remedies. If Agents or any Lender may, under
applicable law, proceed to realize its benefits under any of the Loan Documents
giving Agents or such Lender a Lien upon any Collateral, whether owned by any
Borrower or by any other Person, either by judicial foreclosure or by
non-judicial sale or enforcement, Agents or any Lender may, at its sole option,
determine which of its remedies or rights it may pursue without affecting any of
its rights and remedies under this Section 12. If, in the exercise of any of its
rights and remedies, Agents or any Lender shall forfeit any of its rights or
remedies, including its right to enter a deficiency judgment against any
Borrower or any other Person, whether because of any applicable laws pertaining
to "election of remedies" or the like, each Borrower hereby consents to such
action by Agents or such Lender and waives any claim based upon such action,
even if such action by Agents or such Lender shall result in a full or partial
loss of any rights of subrogation that each Borrower might otherwise have had
but for such action by Agents or such Lender. Any election of remedies that
results in the denial or impairment of the right of Agents or any Lender to seek
a deficiency judgment against any Borrower shall not impair any other Borrower's
obligation to pay the full amount of the Obligations. In the event Agents or any
Lender shall bid at any foreclosure or trustee's sale or at any private sale
permitted by law or the Loan Documents, Agents or such Lender may bid all or
less than the amount of the Obligations and the amount of such bid need not be
paid by Agents or such Lender but shall be credited against the Obligations
owing to it. The amount of the successful bid at any such sale, whether Agents,
Lender or any other party is the successful bidder, shall be conclusively deemed
to be the fair market value of the Collateral and the difference between such
bid amount and the remaining balance of the Obligations shall be conclusively
deemed to be the amount of the Obligations guaranteed under this Section 12,
notwithstanding that any present or future law or court decision or ruling may
have the effect of reducing the amount of any deficiency claim to which Agents
or any Lender might otherwise be entitled but for such bidding at any such sale.
69
12.6 Limitation. Notwithstanding any provision herein
contained to the contrary, each Borrower's liability under this Section 12
(which liability is in any event in addition to amounts for which such Borrower
is primarily liable under Section 1) shall be limited to an amount not to exceed
as of any date of determination the amount that could be claimed by
Administrative Agent and Lenders from such Borrower under this Section 12
without rendering such claim void or voidable under Section 548 of Chapter 11 of
the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
Act, Uniform Fraudulent Conveyance Act or similar statute or common law after
taking into account, among other things, such Borrower's right of contribution
and indemnification from each other Borrower under Section 12.7.
12.7 Contribution with Respect to Guaranty Obligations.
(a) To the extent that any Borrower shall make a payment under
this Section 12 of all or any of the Obligations (other than the Revolving Loan
made to that Borrower for which it is primarily liable) (a "Guarantor Payment")
that, taking into account all other Guarantor Payments then previously or
concurrently made by any other Borrower, exceeds the amount that such Borrower
would otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payment in the same proportion that such Borrower's
"Allocable Amount" (as defined below) (as determined immediately prior to such
Guarantor Payment) bore to the aggregate Allocable Amounts of each of the
Borrowers as determined immediately prior to the making of such Guarantor
Payment, then, following indefeasible payment in full in cash of the Obligations
and termination of the Commitments, such Borrower shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each other
Borrower for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of
any Borrower shall be equal to the maximum amount of the claim that could then
be recovered from such Borrower under this Section 12 without rendering such
claim void or voidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
(c) This Section 12.7 is intended only to define the relative
rights of Borrowers and nothing set forth in this Section 12.7 is intended to or
shall impair the obligations of Borrowers, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Agreement, including Section 12.1. Nothing contained in this
Section 12.7 shall limit the liability of any Borrower to pay the Revolving Loan
made directly or indirectly to that Borrower and accrued interest, Fees and
expenses with respect thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Borrower to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other
Credit Parties under this Section 12.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.
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12.8 Liability Cumulative. The liability of Borrowers under
this Section 12 is in addition to and shall be cumulative with all liabilities
of each Borrower to Administrative Agent and Lenders under this Agreement and
the other Loan Documents to which such Borrower is a party or in respect of any
Obligations or obligation of the other Borrower, without any limitation as to
amount, unless the instrument or agreement evidencing or creating such other
liability specifically provides to the contrary.
12.9 Subordination.
(a) Each Credit Party executing this Agreement covenants and
agrees that the payment of all indebtedness, principal, interest (including
interest which accrues after the commencement of any case or proceeding in
bankruptcy, or for the reorganization of any Credit Party), fees, charges,
expenses, attorneys' fees and any other sum, obligation or liability owing by
any other Credit Party to such Credit Party, including any intercompany trade
payables or royalty or licensing fees (collectively, the "Intercompany
Obligations"), is subordinated, to the extent and in the manner provided in this
Section 12.9, to the prior payment in full of all Obligations (herein, the
"Senior Obligations") and that the subordination is for the benefit of the
Agents and Lenders, and Agents may enforce such provisions directly, provided
that regularly scheduled payments under Intercompany Obligations may be made so
long as no Default, which is not reasonably capable of being cured, or Event of
Default has occurred and is continuing.
(b) Each Credit Party executing this Agreement hereby (i)
authorizes Administrative Agent to demand specific performance of the terms of
this Section 12.9, whether or not any other Credit Party shall have complied
with any of the provisions hereof applicable to it, at any time when such Credit
Party shall have failed to comply with any provisions of this Section 12.9 which
are applicable to it and (ii) irrevocably waives any defense based on the
adequacy of a remedy at law, which might be asserted as a bar to such remedy of
specific performance.
(c) Upon any distribution of assets of any Credit Party in any
dissolution, winding up, liquidation or reorganization (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise):
(i) The Agents and Lenders shall first be entitled to
receive payment in full in cash of the Senior Obligations before any Credit
Party is entitled to receive any payment on account of the Intercompany
Obligations.
(ii) Any payment or distribution of assets of any
Credit Party of any kind or character, whether in cash, property or securities,
to which any other Credit Party would be entitled except for the provisions of
this Section 12.9(c), shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution directly to the Administrative Agent,
to the extent necessary to make payment in full of all Senior Obligations
remaining unpaid after giving effect to any concurrent payment or distribution
or provisions therefor to the Agents and Lenders.
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(iii) In the event that notwithstanding the foregoing
provisions of this Section 12.9(c), any payment or distribution of assets of any
Credit Party of any kind or character, whether in cash, property or securities,
shall be received by any other Credit Party on account of the Intercompany
Obligations before all Senior Obligations are paid in full, such payment or
distribution shall be received and held in trust for and shall be paid over to
the Administrative Agent for application to the payment of the Senior
Obligations until all of the Senior Obligations shall have been paid in full,
after giving effect to any concurrent payment or distribution or provision
therefor to the Agents and Lenders.
(d) No right of the Agents and Lenders or any other present or
future holders of any Senior Obligations to enforce the subordination provisions
herein shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of any Credit Party or by any act or failure to act,
in good faith, by any such holder, or by any noncompliance by any Credit Party
with the terms hereof, regardless of any knowledge thereof which any such holder
may have or be otherwise charged with.
[Signature Pages to Follow]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
BORROWERS: ASTA FUNDING ACQUISITION I, LLC
ASTA FUNDING ACQUISITION II, LLC
PALISADES COLLECTION, L.L.C.
CLIFFS PORTFOLIO ACQUISITION I, LLC
PALISADES ACQUISITION I, LLC
PALISADES ACQUISITION II, LLC
PALISADES ACQUISITION IV, LLC
PALISADES ACQUISITION V, LLC
PALISADES ACQUISITION VI, LLC
PALISADES ACQUISITION VII, LLC
PALISADES ACQUISITION VIII, LLC
PALISADES ACQUISITION IX, LLC
PALISADES ACQUISITION X, LLC
SYLVAN ACQUISITION I, LLC
OPTION CARD, LLC
By: /s/▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Manager
GUARANTORS: ASTA FUNDING, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
COMPUTER FINANCE, LLC
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, LLC
ASTA COMMERCIAL, LLC
VATIV RECOVERY SOLUTIONS, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Manager
AGENTS: ISRAEL DISCOUNT BANK OF NEW YORK,
AS ADMINISTRATIVE AGENT, COLLATERAL
AGENT AND CO-LEAD ARRANGER
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: Vice President
--------------------------------
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: Senior Vice President
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ BUSINESS FINANCIAL
SERVICES INC., AS CO-ADMINISTRATIVE
AGENT AND CO-LEAD ARRANGER
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
--------------------------------
LENDERS: ISRAEL DISCOUNT BANK OF NEW YORK,
AS LENDER
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: Vice President
--------------------------------
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: Senior Vice President
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ BUSINESS FINANCIAL
SERVICES INC., AS LENDER
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Print Title: Vice President
---------------------------
▇▇▇▇▇▇ ▇.▇., AS LENDER
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Print Title: Vice President
---------------------------
BANK LEUMI USA, AS LENDER
By: /s/ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Print Title: Vice President
---------------------------
THE BERKSHIRE BANK, AS LENDER
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Print Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Print Title: Vice President
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JPMORGAN CHASE BANK, N.A., AS LENDER
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Print Title: Vice President
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NORTH FORK BANK, AS LENDER
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Print Title: Sr. Vice President
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ANNEX A (RECITALS)
TO
FOURTH AMENDED AND RESTATED
LOAN AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings, and all references to Sections, Exhibits, Schedules or
Annexes in the following definitions shall refer to Sections, Exhibits,
Schedules or Annexes of or to the Agreement:
"Account Debtor" means any Person who may become obligated to
any Credit Party under, with respect to, or on account of, an Account, Chattel
Paper, Instruments or General Intangibles (including a payment intangible).
"Accounting Changes" has the meaning ascribed thereto in Annex
G.
"Accounts" means all "accounts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, including (a) all
accounts receivable, other receivables, book debts, consumer accounts and other
forms of obligations (including any such obligations that may be characterized
as an account or contract right under the Code), (b) all of each Credit Party's
rights in, to and under all services, (c) all rights to payment due to any
Credit Party for property sold, leased, licensed, assigned or otherwise disposed
of, for a policy of insurance issued or to be issued, for a secondary obligation
incurred or to be incurred, for energy provided or to be provided, for the use
or hire of a vessel under a charter or other contract, arising out of the use of
a credit card or charge card, or for services rendered or to be rendered by such
Credit Party or in connection with any other transaction (whether or not yet
earned by performance on the part of such Credit Party), (d) all health care
insurance receivables and (e) all collateral security of any kind, given by any
Account Debtor or any other Person with respect to any of the foregoing. The
term Accounts shall also include forms of obligations evidenced by Chattel Paper
or Instruments and Accounts relating to Auto Loans and Consumer Loans.
"Administrative Agent" means IDB in its capacity as
Administrative Agent for Lenders or its successor appointed pursuant to Section
9.7.
"Advance" or "Advances" has the meaning ascribed to it in
Section 1.1(a).
"Affected Lender" has the meaning ascribed to it in Section
1.13(d).
"Affiliate" means, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 10% or more of the Stock having ordinary
voting power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers (except with respect to
the joint venturer, EMCC, Inc., and any other joint venture approved by
Administrative Agent, which approval shall not be unreasonably withheld) and
partners (d) in the case of Borrowers, the immediate family members, spouses and
lineal descendants of individuals who are Affiliates of any Borrower, and (e) an
entity that is wholly owned by Asta Funding and is engaged in the business of
acquiring and/or managing Portfolios and executes and delivers to Lender an
Affiliate Guaranty, an Affiliate Security Agreement and an Affiliate
Confirmation. For the purposes of this definition, "control" of a Person shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise; provided, however, that the term
"Affiliate" shall specifically exclude Administrative Agent and each Lender.
A-1
"Affiliate Confirmation" means the agreement executed by each
Affiliate in form of Exhibit C annexed to the Disclosure Document.
"Affiliate Guaranty" means a guaranty, in form acceptable to
Administrative Agent at the time of execution, executed by an Affiliate of all
of the Obligations.
"Affiliate Security Agreement" means a security agreement, in
form acceptable to Administrative Agent at the time of execution, executed by an
Affiliate granting to Collateral Agent a security interest in and lien on its
Collateral.
"Agent Fee Letter" means that certain letter dated as of the
date hereof, between Agents, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Borrower Representative with
respect to certain Fees to be paid from time to time by Borrowers to Agents and
▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Agents" means, collectively and individually, the
Administrative Agent and the Collateral Agent.
"Aging Report" means an aged summary report and a non-aged
listing report for each Portfolio, each in detail reasonably satisfactory to
Lender with respect to the outstanding Portfolios as of the last day of each
month, and setting forth the name of each Portfolio, the original amount and
date of each Portfolio and aggregate Payments with respect to each Portfolio.
"Agreement" means this Fourth Amended and Restated Loan
Agreement by and among Borrowers, the other Credit Parties party hereto, IDB, as
Administrative Agent and Lender, and the other Lenders from time to time party
thereto, as the same may be amended, supplemented, restated or otherwise
modified from time to time.
"Allocable Amount" has the meaning ascribed to it in Section
12.7(a).
"Appendices" has the meaning ascribed to it in the recitals to
the Agreement.
"Applicable Advance Rate" means, as of any date of
determination by Agent from time to time, as to each Eligible New Portfolio
acquired by a Borrower:
(a) during the first three months such Eligible New Portfolio
is owned by that Borrower, 75%; and
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(b) during the fourth through twenty-fourth months such
Eligible New Portfolio is owned by that Borrower, 75% less (i) 3.57%
per month four through and including month twenty-three and (ii) 3.60%
for month twenty-four.
"Applicable Base Rate Margin" means the per annum interest
rate margin from time to time in effect and payable in addition to the Base Rate
applicable to the Revolving Loan, as determined by reference to Section 1.4(a).
"Applicable LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Revolving Loan, as determined by reference to Section 1.4(a).
"Applicable Margins" means collectively the Applicable Base
Rate Margin and the Applicable LIBOR Margin.
"Assignment Agreement" has the meaning ascribed to it in
Section 9.1(a).
"Asta Funding" means Asta Funding, Inc.
"Auto Contract" means any agreement or contract or other
evidence of debt executed by an Account Debtor in connection with an Auto Loan
and any amendments thereto.
"Auto Loan" means all automobile loans or leases presently and
hereafter owned by Borrowers, set forth in a written report or in computer
discs, from time to time, delivered to Administrative Agent, which computer
discs shall be in the current format or any other format acceptable to
Administrative Agent, together with each Auto Contract, chattel paper,
instrument, document, general intangible, guarantee and all collateral security
held with respect to such loans.
"Average Collections" shall mean the average monthly amount of
the actual Collections (net of any collection costs and other fees permitted to
be deducted from Collections by the express terms of the servicing agreement
that corresponds to such Collections) with respect to an Eligible Portfolio in
the three (3) full calendar months immediately preceding the date of computation
or determination. Average Collections shall exclude Proceeds from the sale of
Portfolios.
"Bankruptcy Code" means the provisions of Title 11 of the
United States Code, 11 U.S.C. ss.ss.101 et seq.
"Base Rate" means, for any day, a floating rate equal to the
rate established from time to time by IDB its "Prime Rate". Each change in any
interest rate provided for in the Agreement based upon the Base Rate shall take
effect at the time of such change in the Base Rate.
"Base Rate Loan" means a Revolving Loan or portion thereof
bearing interest by reference to the Base Rate.
A-3
"Blocked Accounts" has the meaning ascribed to it in Annex C.
"Books and Records" means all records, in any format
whatsoever and the computer software, programs and access codes, relating to
each Consumer Loan and the Collateral.
"Borrower Representative" means Palisades in its capacity as
Borrower Representative pursuant to the provisions of Section 1.1(b).
"Borrowers" and "Borrower" have the respective meanings
ascribed thereto in the preamble to the Agreement.
"Borrowing Availability" means as of any date of determination
as to all Borrowers, the lesser of (i) the Maximum Amount and (ii) the Borrowing
Base, in each case, less the Revolving Loan then outstanding.
"Borrowing Base" means, as of any date of determination by
Agent from time to time, an amount equal to the sum at such time of:
(a) the Applicable Advance Rate times the Loan Value of
Eligible New Portfolios, plus
(b) the lesser of:
(i) the sum of the Loan Value of Eligible Existing
Portfolios, or
(ii) $20,000,000;
in each case, less any Reserves established by Administrative Agent at such
time; and provided, that, at no time shall Advances against (1) Telecom
Receivables exceed thirty-five percent (35%) of the sum of (a) and (b) of this
definition at the date of determination, (2) any receivables or receivable
classes relating to payments by consumers for computers and furniture exceed
twenty percent (20%) of the sum of (a) and (b) of this definition, or (3) any
other receivables or receivables class not specifically permitted under this
Agreement exceed twenty percent (20%) of the sum of (a) and (b) of this
definition.
"Borrowing Base Certificate" means a certificate to be
executed and delivered from time to time by Borrower Representative with respect
to the Borrowing Base in the form attached to the Disclosure Document as Exhibit
4.1(b)- 2.
"Business Day" means any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State of
New York and in reference to LIBOR Loans shall mean any such day that is also a
LIBOR Business Day.
"Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto that have a useful life of
more than one year and that are required to be capitalized under GAAP.
A-4
"Capital Lease" means, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, would be required to be classified and accounted for as
a capital lease on a balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Cash Collateral Account" has the meaning ascribed to it Annex
B.
"Cash Flow Leverage Ratio" means, with respect to Borrowers,
on a consolidated basis, the ratio of (a) Funded Debt, to (b) Free Cash Flow for
the twelve months ending on that date of determination.
"Cash Equivalent Investments" means investments deposited with
a Lender which can easily, readily and quickly be converted into cash, including
Treasury bills (T-bills), money market funds, short-term certificates of
deposit, U.S. Government Securities, and savings accounts.
"Cash Management Systems" has the meaning ascribed to it in
Section 1.5.
"Certificate of Exemption" has the meaning ascribed to it in
Section 1.12(c).
"Change of Control" means any event, transaction or occurrence
as a result of which (a) Asta Funding ceases to own and control all of the
economic and voting rights associated with all of the outstanding capital Stock
of the Borrowers, except Cliffs, (b) Palisades ceases to own and control all of
the economic and voting rights associated with all of the outstanding capital
Stock of Cliffs, (c) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the board of
directors of Asta Funding (together with any new directors whose election by the
board of directors of Asta Funding or whose nomination for election by the
Stockholders of Asta Funding was approved by a vote of the majority of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office, (d) ▇▇▇▇ ▇▇▇▇▇ shall no longer be
acting as the president, chief executive officer or manager of the Borrowers
having substantially the same duties and responsibilities as on the Closing
Date, unless the Borrowers shall have within a reasonable period of time not to
exceed 180 days obtained a successor of at least comparable background,
experience and ability who is reasonably acceptable to the Requisite Lenders, or
(e) any two of the Senior Executives shall no longer be members of the
Borrowers' senior management having substantially the same duties and
responsibilities as on the Closing Date, unless the Borrowers shall have within
a reasonable period of time not to exceed 180 days obtained successors of at
least comparable background, experience and ability who are reasonably
acceptable to the Requisite Lenders. For the purposes of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
A-5
"Charges" means all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is
defined in the Code, including electronic chattel paper, now owned or hereafter
acquired by any Credit Party.
"Cliffs" means Cliffs Portfolio Acquisition I, LLC.
"Closing Checklist" means the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex D.
"Closing Date" means July 10, 2006.
"Code" means the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; provided, that
to the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Articles or Divisions 1
and 9 shall govern; provided further, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Administrative Agent's or any Lender's
Lien on any Collateral is governed by the Uniform Commercial Code as enacted and
in effect in a jurisdiction other than the State of New York, the term "Code"
shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions.
"Collateral" means the property covered by the Security
Agreement and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Collateral Agent, for the benefit of the Agents and Lenders, to secure the
Obligations.
"Collateral Agent" means IDB in its capacity as Collateral
Agent for Lenders or its successor appointed pursuant to Section 9.7.
"Collateral Documents" means the Security Agreement, the
Pledge Agreements, the Guaranties, and all similar agreements entered into
guaranteeing payment of, or granting a Lien upon property as security for
payment of, the Obligations.
A-6
"Collateral Reports" means the reports with respect to the
Collateral referred to in Annex F.
"Collection Account" means that certain account of
Administrative Agent, account number ▇▇-▇▇▇▇-▇ in the name of Administrative
Agent at Administrative Agent in New York, New York ABA No. ▇▇▇▇▇▇▇▇▇, or such
other account as may be specified in writing by Administrative Agent as the
"Collection Account".
"Collection Report" means a report in detail satisfactory to
Administrative Agent as to all Collections received during each month and the
Account or Consumer Loan to which it applies.
"Collections" mean all Payments actually received and
collected by or on behalf of the Borrowers, any Credit Party or any Servicing
Agent with respect to any Consumer Loan, which is included in the Collateral and
is remitted to the Administrative Agent as provided in this Agreement.
"Collections Multiple Value" means the Average Collections for
an Eligible Existing Portfolio, multiplied by six (6).
"Commitment Termination Date" means the earliest of (a) July
10, 2009, (b) the date of termination of Lenders' obligations to make Advances
or permit the existing Revolving Loan to remain outstanding pursuant to Section
8.2(b), and (c) the date of indefeasible prepayment in full by Borrowers of the
Revolving Loan, and the permanent reduction of all Commitments to zero dollars
($0).
"Commitments" means (a) as to any Lender, the aggregate of
such Lender's Revolving Loan Commitment as set forth on Annex J to the Agreement
or in the most recent Assignment Agreement executed by such Lender and (b) as to
all Lenders, the aggregate of all Lenders' Revolving Loan Commitments, as to
each of clauses (a) and (b), as such Commitments may be reduced, amortized or
adjusted from time to time in accordance with the Agreement.
"Compliance Certificate" has the meaning ascribed to it in
Annex E.
"Concentration Accounts" has the meaning ascribed to it in
Annex C.
"Consumer Loans" means all Credit Card Receivables, Auto
Loans, Telecom Receivables and any other type of consumer loan acceptable to
Administrative Agent now or hereafter owned or held by the Borrowers.
"Contracts" means all "contracts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
A-7
"Copyright License" means any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
"Copyrights" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all copyrights (whether registered
or unregistered), all registrations and recordings thereof, and all applications
in connection therewith, including all registrations, recordings and
applications in the United States Copyright Office or in any similar office or
agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof, and (b) all reissues, extensions
or renewals thereof.
"Credit Card Receivables" means each of the performing and
non-performing credit card receivables and/or loans presently and hereafter
owned by Borrowers, as fully set forth in a computer disc delivered to
Administrative Agent, which shall be in a format acceptable to the
Administrative Agent, whether such is deemed to consist of accounts or general
intangibles under the Code, together with any chattel paper, instrument,
document, general intangible, guarantee and other collateral security held by
Borrowers with respect to such receivables and/or loans, together with the
proceeds thereof.
"Credit Party Pledge Agreement" means the Pledge Agreement
dated on or about May 11, 2004 executed by each of the Credit Parties, except
Non-Credit Party Affiliates, in favor of Administrative Agent, on behalf of
itself and Lenders, pledging all Stock of its Subsidiaries, if any, and all
Intercompany Notes owing to or held by it.
"Credit Parties" means each Guarantor, each Borrower, and each
of their respective Subsidiaries, except Non-Credit Party Affiliates.
"Default" means any event that, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section
1.4(d).
"Deposit Accounts" means all "deposit accounts" as such term
is defined in the Code, now or hereafter held in the name of any Credit Party.
"Disaster Recovery Plan" means the plan, pursuant to which all
records, books, accounts, entries, and other information (financial and
otherwise) regarding the business activities and operations of the Credit
Parties, including, without limitation, past and up-to-date information
regarding the Collateral, the Accounts, the Portfolios, the Payments, and the
Collections (collectively, the "Critical Information"), is maintained in
electronic format at the physical facilities of Credit Parties located in the
States of New Jersey and Pennsylvania. All Critical Information generated by the
business operations of the Credit Parties at the New Jersey physical facility is
saved and backed up on a daily basis for safeguarding and safekeeping at the New
Jersey physical facility, and all Critical Information generated by the business
operations of the Credit Parties at the Pennsylvania physical facility is saved
and backed up on a daily basis for safeguarding and safekeeping at the
Pennsylvania physical facility. All Critical Information generated by the
business operations of the Credit Parties at the New Jersey physical facility
(including all Critical Information stored at such physical facility) is saved
and backed up on a daily basis for safeguarding and safekeeping at the
Pennsylvania physical facility, and all Critical Information generated by the
business operations of the Credit Parties at the Pennsylvania physical facility
(including all Critical Information stored at such physical facility) is saved
and backed up on a daily basis for safeguarding and safekeeping at the New
Jersey physical facility. All Critical Information generated by the business
operations of the Credit Parties at the New Jersey and Pennsylvania physical
facilities and all Critical Information saved or backed up at the New Jersey and
Pennsylvania physical facilities (including all Critical Information stored at
such physical facilities) is copied in electronic format in duplicate, and one
copy is stored at the New Jersey facility in a fire-proof safe and the other is
removed on a daily basis from such physical facilities and kept at a safe
location, which location may include the residence of a key employee of the
Credit Parties.
A-8
"Disbursement Accounts" has the meaning ascribed to it in
Annex C.
"Disclosure Document" means the document dated as of the date
hereof by Borrowers and all other Credit Parties signatory to the Agreement with
respect to certain disclosures made to Administrative Agent and Lenders in the
Agreement, as may be modified from time to time as provided in the Agreement.
All disclosures, representations and warranties contained in the Disclosure
Document shall be acceptable to Administrative Agent.
"Documents" means all "documents," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of
America.
"EBITDA" means, with respect to any Person for any fiscal
period, without duplication, net income minus extraordinary gains plus interest,
depreciation, amortization, income taxes, accrued stock option compensation
expense and extraordinary losses.
"Effective Date" means the date on which the Agreement shall
become effective, which shall be the date on which (i) Borrowers and Guarantors,
along with the Agents, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Lenders shall have executed and
delivered the Agreement and the other Loan Documents, and (ii) all of the
conditions precedent to the effectiveness of the Agreement, including, without
limitation, the conditions precedent set forth in Section 2 of the Agreement,
and the conditions set forth in Annex C attached to the Agreement, shall have
been satisfied and performed in a manner reasonably acceptable to Administrative
Agent and Lenders.
"Eligible Existing Portfolio" shall mean an Existing Portfolio
as to which (i) the Administrative Agent, on behalf of the Lenders has a first
priority, perfected lien on the Accounts comprising the Portfolio and there are
no recorded or unrecorded Liens against the Accounts for the benefit of any
party other than the Administrative Agent, and (ii) the Borrower's rights to
Collections or sales proceeds generated by the Portfolio are not limited by the
contract rights of a third party, other than Liens pursuant to servicing and
collection agreements entered into in the ordinary course of business in
accordance with the terms, conditions and provisions of the Agreement.
A-9
"Eligible New Portfolio" shall mean a New Portfolio as to
which (i) the Administrative Agent, on behalf of the Lenders has a first
priority, perfected lien on the Accounts comprising the Portfolio and there are
no recorded or unrecorded Liens against the Accounts for the benefit of any
party other than the Administrative Agent, and (ii) the Borrower's rights to
Collections or sales proceeds generated by the Portfolio are not limited by the
contract rights of a third party, other than Liens pursuant to servicing and
collection agreements entered into in the ordinary course of business in
accordance with the terms, conditions and provisions of the Agreement,
including, without limitation, the provisions of Section 6.23 of the Agreement.
"Eligible Portfolios" means collectively and individually,
Eligible Existing Portfolios and Eligible New Portfolios.
"Environmental Laws" means all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, and regulations in
effect, and any applicable judicial or administrative interpretation thereof,
including any applicable judicial or administrative order, consent decree, order
or judgment, imposing liability or standards of conduct for or relating to the
regulation and protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. ▇▇.▇▇. 9601 et seq.)
("CERCLA"); the Hazardous Materials Transportation Authorization Act of 1994 (49
U.S.C. ▇▇.▇▇. 5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide
Act (7 U.S.C. ▇▇.▇▇. 136 et seq.); the Solid Waste Disposal Act (42 U.S.C.
▇▇.▇▇. 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. ▇▇.▇▇. 2601 et
seq.); the Clean Air Act (42 U.S.C. ▇▇.▇▇. 7401 et seq.); the Federal Water
Pollution Control Act (33 U.S.C. ▇▇.▇▇. 1251 et seq.); the Occupational Safety
and Health Act (29 U.S.C. ▇▇.▇▇. 651 et seq.); and the Safe Drinking Water Act
(42 U.S.C. ▇▇.▇▇. 300(f) et seq.), and any and all regulations promulgated
thereunder, and all analogous state, local and foreign counterparts or
equivalents and any transfer of ownership notification or approval statutes.
"Environmental Liabilities" means, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" means all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
A-10
"Equipment" means all "equipment," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located
and, in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Credit Party, any
trade or business (whether or not incorporated) that, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any
ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition that could reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245
of ERISA; or (i) the revocation or threatened revocation of a Qualified Plan's
qualification or tax exempt status; or (j) the termination of a Plan described
in Section 4064 of ERISA; but in each such case, only if and to the extent it
could be reasonably be expected to result (directly or indirectly, individually
or in the aggregate) in a Material Adverse Effect.
"ESOP" means a Plan that is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"Event of Default" has the meaning ascribed to it in Section
8.1.
"Existing Debt" has the meaning ascribed to it in the recitals
to the Agreement.
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"Existing Portfolio" shall mean a Portfolio that a Borrower
has owned for more than twenty four (24) months as to which such Borrower has
all right, title and interest in the Accounts comprising the Portfolio.
"Fair Labor Standards Act" means the Fair Labor Standards Act,
29 U.S.C. ss.201 et seq.
"Federal Funds Rate" means, for any day, a floating rate equal
to the weighted average of the rates on overnight Federal funds transactions
among members of the Federal Reserve System, as determined by Administrative
Agent in its sole discretion, which determination shall be final, binding and
conclusive (absent manifest error).
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
"Fees" means any and all fees payable to Administrative Agent
or any Lender pursuant to the Agreement or any of the other Loan Documents.
"Financial Covenants" means the financial covenants set forth
in Annex G.
"Financial Statements" means the consolidated (together with
consolidating worksheets) income statements, statements of cash flows and
balance sheets of Asta Funding delivered in accordance with Section 3.4 and
Annex E.
"First Adjustment Date" has the meaning assigned to it in
Section 1.4(a).
"Fiscal Month" means any of the monthly accounting periods of
Borrowers.
"Fiscal Quarter" means any of the quarterly accounting periods
of Borrowers, ending on March 31, June 30, September 30 and December 31 of each
year.
"Fiscal Year" means any of the annual accounting periods of
Borrowers ending on September 30 of each year, subject to any change in the
Fiscal Year permitted under the Agreement.
"Fixed Charges" means, with respect to any Person for any
fiscal period, the sum of interest, scheduled payments of principal (if any),
capital expenditures, cash taxes and dividends.
"Fixed Charge Coverage Ratio" means, with respect to any
Person for any fiscal period, the ratio of EBITDA to Fixed Charges.
"Fixtures" means all "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party.
"Foreign Lender" has the meaning ascribed to it in Section
1.12(c).
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"Foreign Person" has the meaning ascribed to it in Section
1.12(c).
"Free Cash Flow" means as of any date of determination the sum
of (a) the amount of all Collections reported as principal collected on Accounts
acquired for liquidation (as reported in the most recent statement of cash flow
in the financial statements delivered to Administrative Agent and Lenders, but
excluding Collections of Accounts relating to Non-Recourse Debt), plus (b) net
income (but excluding net income of all Non-Credit Party Affiliates), less (c)
dividends paid, less (d) Capital Expenditures.
"Funded Debt" means, with respect to any Person, without
duplication, all Indebtedness for borrowed money evidenced by notes, bonds,
debentures, or similar evidences of Indebtedness, and specifically including
Capital Lease Obligations, current maturities of long-term debt, revolving
credit and short-term debt, and also including, in the case of Borrowers, the
Obligations and, without duplication, Guaranteed Indebtedness consisting of
guaranties of Funded Debt of other Persons. The term Funded Debt shall not
include Non-Recourse Debt.
"GAAP" means generally accepted accounting principles in the
United States of America consistently applied, as such term is further defined
in Annex G to the Agreement.
"General Intangibles" means all "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
including, without limitation, Non-Recourse Investments, licenses, permits,
copyrights, trade secrets, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark or Trademark License), all
rights and claims in or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life, key man and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit, checking and other bank accounts, rights to receive
tax refunds and other payments, rights to receive dividends, distributions,
cash, Instruments and other property in respect of or in exchange for pledged
Stock and Investment Property, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.
"Goods" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
A-13
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" means as to any Person, any
obligation of such Person guaranteeing, providing comfort or otherwise
supporting any Indebtedness, lease, dividend, or other obligation ("primary
obligation") of any other Person (the "primary obligor") in any manner,
including any obligation or arrangement of such Person to (a) purchase or
repurchase any such primary obligation, (b) advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c)
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, (d) protect the beneficiary of such
arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof. The amount of any Guaranteed Indebtedness at
any time shall be deemed to be an amount equal to the lesser at such time of (x)
the stated or determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is incurred and (y) the maximum stated or
determinable amount for which such Person may be liable pursuant to the terms of
the instrument embodying such Guaranteed Indebtedness, or, if not stated or
determinable, the maximum reasonably anticipated liability (assuming full
performance) in respect thereof.
"Guaranty" means the guaranty dated on or about May 11, 2004,
as amended from time to time, executed by Asta Funding and each Subsidiary of a
Borrower in favor of Administrative Agent and Lenders.
"Guaranties" means the Guaranty and any other guaranty
executed by any Guarantor in favor of Administrative Agent and Lenders in
respect of the Obligations.
"Guarantors" means each Guarantor described in the preamble to
this Agreement, each Subsidiary of any Borrower that is not a Borrower, and each
other Person, if any, that executes a guaranty or other similar agreement in
favor of Administrative Agent, for itself and the ratable benefit of Lenders, in
connection with the transactions contemplated by the Agreement and the other
Loan Documents.
"Guarantor Payment" has the meaning ascribed to it in Section
12.7(a).
"Hazardous Material" means any substance, material or waste
that is regulated by, or forms the basis of liability now or hereafter under,
any Environmental Laws, including any material or substance that is (a) defined
as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, or (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
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"IDB" means Israel Discount Bank of New York, a New York
banking corporation.
"Inactive Subsidiaries" means Asta Auto Receivables Company,
E.R. Receivables Corp., LLC, RAC Acceptance Corp., LLC, Asta Funding Acquisition
III, LLC, ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, LLC, Topps Promotion, LLC, and Asta Commercial, LLC.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property payment for which is deferred 6 months or
more, but excluding obligations to trade creditors incurred in the ordinary
course of business that are unsecured and not overdue by more than 6 months
unless being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers' acceptances and surety
bonds, whether or not matured, (c) all obligations evidenced by notes, bonds,
debentures or similar instruments, (d) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations and the present
value (discounted at the Base Rate as in effect on the Closing Date) of future
rental payments under all synthetic leases, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, and (i) the
Obligations.
"Indemnified Liabilities" has the meaning ascribed to it in
Section 1.10.
"Indemnified Person" has the meaning ascribed to in Section
1.10.
"Instruments" means all "instruments," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, wherever
located, and, in any event, including all certificated securities, all
certificates of deposit, and all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"Intercompany Notes" has the meaning ascribed to it in Section
6.3.
"Intercompany Obligations" has the meaning ascribed to it in
Section 12.9(a).
A-15
"Interest Expense" means, with respect to any Person for any
fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, interest expense with respect to any Funded Debt of such Person and
interest expense for the relevant period that has been capitalized on the
balance sheet of such Person.
"Interest Payment Date" means (a) as to any Base Rate Loan,
the first Business Day of each month to occur while such Loan is outstanding,
and (b) as to any LIBOR Loan, the last day of the applicable LIBOR Period;
provided that, in the case of a LIBOR Loan having a six (6) month Interest
Period, also on the three (3) month anniversary of the first day of such
Interest Period, and provided further that, in addition to the foregoing, each
of (x) the date upon which all of the Commitments have been terminated and the
Revolving Loan have been paid in full and (y) the Commitment Termination Date
shall be deemed to be an "Interest Payment Date" with respect to any interest
that has then accrued under the Agreement.
"Inventory" means all "inventory," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and in any event including inventory, merchandise, goods and other personal
property that are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service, or that
constitute raw materials, work in process, finished goods, returned goods, or
materials or supplies of any kind, nature or description used or consumed or to
be used or consumed in such Credit Party's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
all supplies and embedded software.
"Investment Property" means all "investment property" as such
term is defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.
"IRC" means the Internal Revenue Code of 1986 and all
regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"Lenders" means IDB, the other Lenders named on the signature
pages of the Agreement, and, if any such Lender shall decide to assign all or
any portion of the Obligations, such term shall include any assignee of such
Lender.
"Lenders' Fee Letter" means that certain letter dated as of
the date hereof, between Administrative Agent, for itself and as Administrative
Agent for the Lenders, and Borrower Representative with respect to certain Fees
to be paid from time to time by Borrowers to Lenders.
A-16
"Leverage Ratio" means, with respect to Asta Funding, on a
consolidated basis, the ratio of (a) Total Liabilities, to (b) Tangible Net
Worth on the date of determination.
"LIBOR Business Day" means a Business Day on which banks in
the City of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" means a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each
period commencing on a LIBOR Business Day selected by Borrower Representative
pursuant to the Agreement and ending one, two, three or six months thereafter,
as selected by Borrower Representative's irrevocable notice to Administrative
Agent as set forth in Section 1.5(e); provided, that the foregoing provision
relating to LIBOR Periods is subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is
not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) no LIBOR Period may extend beyond the Commitment
Termination Date;
(c) any LIBOR Period that begins on the last LIBOR Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last LIBOR Business Day of a calendar month;
(d) Borrower Representative shall select LIBOR Periods so as
not to require a payment or prepayment of any LIBOR Loan during a LIBOR
Period for such Loan; and
(e) Borrower Representative shall select LIBOR Periods so that
there shall be no more than 5 separate LIBOR Loans in existence at any
one time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest
determined by Administrative Agent equal to:
(a) the offered rate for deposits in United States Dollars for
the applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m.
(London time), on the second full LIBOR Business Day next preceding the first
day of such LIBOR Period (unless such date is not a Business Day, in which event
the next succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is 2 LIBOR Business Days prior to the
beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Federal Reserve Board or other
Governmental Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board that are
required to be maintained by a member bank of the Federal Reserve System.
A-17
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such financial
reporting service or other information as shall be mutually acceptable to
Administrative Agent and Borrower Representative with notice to the Lenders.
"License" means any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"Lien" means any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 3.13.
"Loan" means any Revolving Loan.
"Loan Account" has the meaning ascribed to it in Section 1.9.
"Loan Documents" means the Agreement, the Notes, the
Collateral Documents and all other agreements, instruments, documents and
certificates identified in the Closing Checklist executed and delivered to, or
in favor of, Administrative Agent or any Lenders (including, without limitation,
the Disclosure Document and all exhibits attached thereto or referred to
therein) and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Administrative Agent or any
Lender in connection with the Agreement or the transactions contemplated
thereby. Any reference in the Agreement or any other Loan Document to a Loan
Document shall include all appendices, exhibits or schedules thereto, and all
amendments, restatements, supplements or other modifications thereto, and shall
refer to the Agreement or such Loan Document as the same may be in effect at any
and all times such reference becomes operative.
"Loan Value of Eligible Existing Portfolio" means its
Collections Multiple Value, provided that in no event shall the Loan Value of
Eligible Existing Portfolio exceed an amount equal to the original cost of
acquiring such Existing Portfolio less the proceeds from the sale of any
Accounts in such Existing Portfolio to third parties.
A-18
"Loan Value of Eligible New Portfolio" means the Borrowers'
cost basis in the Eligible New Portfolio after taking into account the original
purchase cost of such Eligible New Portfolio less subsequent sales.
"Lock Boxes" has the meaning ascribed to it in Annex C.
"Margin Stock" has the meaning ascribed to in Section 3.10.
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations, prospects or financial or other condition
of the Credit Parties considered as a whole (but not on the Credit Parties'
industry generally, except to the extent of a direct effect on the Credit
Parties as provided above), (b) Borrowers' ability to pay the Revolving Loan or
any of the other Obligations in accordance with the terms of the Agreement, (c)
the Collateral or Administrative Agent's Liens, on behalf of itself and Lenders,
on the Collateral or the priority of such Liens, or (d) Administrative Agent's
or any Lender's rights and remedies under the Agreement and the other Loan
Documents.
"Maximum Amount" means, as of any date of determination, an
amount equal to the Revolving Loan Commitment of all Lenders as of that date.
"Maximum Lawful Rate" has the meaning ascribed to it in
Section 1.4(f).
"▇▇▇▇▇▇▇ ▇▇▇▇▇" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital, a Division of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial Services Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate
is making, is obligated to make or has or could reasonably be expected to have a
direct or indirect liability under Title IV of ERISA or under Section 412 of the
IRC.
"Net Sales Proceeds" means the total gross sales proceeds
generated from the disposition of Accounts or a Portfolio or any portion
thereof, less (A) commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction and payable
by such Credit Party in connection therewith (in each case, paid to non
Affiliates), and (B) sales, transfer, and similar taxes payable by such Credit
Party in connection therewith.
"Net Worth" means, with respect to any Person as of any date
of determination, the book value of the assets of such Person, minus the sum of
(a) reserves applicable thereto, and (b) all of such Person's liabilities on a
consolidated basis (including accrued and deferred income taxes), all as
determined in accordance with GAAP.
"New Line of Credit" has the meaning ascribed to it in the
recitals to the Agreement.
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"New Portfolio" shall mean a Portfolio that any Borrower has
owned for twenty four (24) months or less as to which such Borrower has all
right, title and interest in the Accounts comprising the Portfolio.
"Non-Consenting Lender" has the meaning ascribed to it in
Section 11.2(c)(i).
"Non-Credit Party Affiliate" means an entity that is wholly
owned by Asta Funding or another Credit Party that is not required by the
Administrative Agent and the Lenders to execute and deliver an Affiliate
Guaranty, an Affiliate Security Agreement and an Affiliate Confirmation pursuant
to Section 6.4(b) of this Agreement and that may incur debt on a non-recourse
basis for the purposes of acquiring portfolios subject to the following
conditions:
(a) The Borrower Representative has given the Administrative
Agent written notification of the formation of a Non-Credit Party
Affiliate prior to the incurrence of non-recourse financing.
(b) Lenders shall have declined to exercise their right of
first refusal on financing any portfolios being acquired by a
Non-Credit Party Affiliate.
(c) The Non-Credit Party Affiliate is not a Borrower or a
Guarantor.
(d) No Borrower or Guarantor is obligated with respect to such
non-recourse financing in a guarantee, indemnity, put agreement,
participation agreement or other agreement, except for servicing
obligations and customary representations and warranties (and the
indemnities relating to such representations and warranties or
servicing obligations) by Asta Funding or another Borrower or Guarantor
to the non-recourse lender.
(e) The maximum aggregate amount of Non-Recourse Debt at any
time shall not exceed an amount equal to $200,000,000, without the
prior written consent of Required Lenders.
"Non-Recourse Debt" shall mean in the aggregate all
Non-Recourse Non-Credit Party Loans.
"Non-Recourse Investment" means any funds invested or advanced
by any Credit Party or a Subsidiary of any Credit Party in or to a Non-Credit
Party Affiliate in a non-recourse transaction, provided that: (a) the maximum
aggregate amount of Non-Recourse Investments at any time shall not exceed an
amount equal to ten percent (10%) of the consolidated Tangible Net Worth of Asta
Funding at any time, and (b) such Non-Credit Party Affiliate shall be a legally
separate entity created for a limited purpose and with limited activities,
formed, incorporated or organized and maintained as a special purpose entity,
and such Non-Credit Party Affiliate shall take steps to ensure that the
separateness of such Non-Credit Party Affiliate will be recognized by the courts
in the event of a filing or entry of a petition, decree or order seeking relief
under the Bankruptcy Code, or any other applicable federal, state or foreign
bankruptcy or other similar law, of any Affiliate of such Non-Credit Party
Affiliate, and the inclusion of "separateness representations, warranties and
covenants" in the organizational and governing documents of such Non-Credit
Party Affiliate.
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"Non-Recourse Non-Credit Party Loan" shall mean a loan or
other extension of credit made by anyone other than the Lenders to a Non-Credit
Party Affiliate for the purpose of acquiring a Rejected Portfolio, provided that
such Non-Credit Party Affiliate delivers to Administrative Agent a true and
complete copy of all loan documentation relating to such transaction promptly
after the closing thereof and that any such indebtedness shall comply with
Section 1.1(a)(iii) hereof.
"Non-Funding Lender" has the meaning ascribed to it in Section
9.9(a)(ii).
"Notes" means, collectively, the Revolving Notes.
"Notice of Borrowing" has the meaning ascribed to it in
Section 1.1(a).
"Notice of Conversion/Continuation" has the meaning ascribed
to it in Section 1.4(e).
"Obligations" means all loans, advances, debts, liabilities
and obligations for the performance of covenants, tasks or duties or for payment
of monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agents or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents and under all interest rate caps, swaps or collar
agreements, or similar agreements or arrangements to provide protection against
fluctuations in interest rates. This term includes all principal, interest
(including all interest that accrues after the commencement of any case or
proceeding by or against any Credit Party in bankruptcy, whether or not allowed
in such case or proceeding), Fees, Charges, expenses, attorneys' fees and any
other sum chargeable to any Credit Party under the Agreement or any of the other
Loan Documents.
"Other Lender" has the meaning ascribed to it in Section
9.9(d).
"Palisades" means Palisades Collection, L.L.C.
"Payment Intangibles" shall have the meaning given such term
in the UCC.
"Payments" means the payments of whatsoever nature made by
each Account Debtor with respect to the Accounts relating to such Account Debtor
and/or the payments made by any obligor with respect to any Account.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means a Plan described in Section 3(2) of
ERISA.
"Permitted Acquisition" has the meaning ascribed to it in
Section 6.1.
A-21
"Permitted Encumbrances" means the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges not yet due and
payable or which are being contested in accordance with Section 5.2(b); (b)
pledges or deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics',
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $100,000 at any time, so long as such Liens attach only
to Inventory; (f) inchoate and unperfected bailees' and landlord liens with
respect to locations in which a bailee or landlord waiver is not required, and
which arise in the ordinary course of business, so long as such Liens attach
only to assets located on the applicable Real Estate; (g) deposits securing, or
in lieu of, surety, appeal or customs bonds in proceedings to which any Credit
Party is a party; (h) any attachment or judgment lien not constituting an Event
of Default under Section 8.1(j); (i) with respect to any Real Estate, the
permitted exceptions set forth on an Exhibit of any mortgage granted to
Administrative Agent, on behalf of Lenders, applicable to such Real Estate, and
zoning restrictions, easements, licenses, or other restrictions on the use of
any Real Estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (j) presently existing or hereafter created
Liens in favor of Administrative Agent, on behalf of Lenders; and (k) Liens
expressly permitted under Section 6.7 (other than subsection (a) thereto) of the
Agreement.
"Permitted Formation" has the meaning ascribed to it in
Section 6.1.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" means, at any time, an "employee benefit plan", as
defined in Section 3(3) of ERISA (other than a Multiemployer Plan), that any
Credit Party or ERISA Affiliate maintains, contributes to or has an obligation
to contribute to or has or could reasonably be expected to have a direct or
indirect liability under Title IV of ERISA or under Section 412 of the IRC.
"Pledge Agreement" means the Pledge Agreement dated on or
about May 11, 2004 executed by each Credit Party in favor of Collateral Agent,
for the benefit of itself, the Agents and Lenders, pledging all of the Stock of
the Subsidiaries of each Credit Party.
"Pledge Agreements" means the Pledge Agreement and any pledge
agreements entered into after May 11, 2004 by any Credit Party (as required by
the Agreement or any other Loan Document).
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"Portfolio" means each group or pool of Consumer Loans
acquired by any of the Borrowers from a single Seller (or a single Seller and
its affiliates) in a single purchase transaction, which Consumer Loans are
recorded and administered in the Books and Records of the Borrower acquiring
same as a separate group or pool of Consumer Loans.
"Portfolio Acquisition Cost" means the actual or final amount
to be paid to the Seller of a Portfolio pursuant to the terms of the applicable
Portfolio Acquisition Documents.
"Portfolio Acquisition Documents" means the purchase and other
agreements between a Credit Party and the Seller of each Portfolio, as each may
be amended.
"Portfolio Bid" means the specific amount or the maximum of a
range of amounts, which are to be bid to acquire a Portfolio.
"Portfolio Loans" means the Consumer Loans, which comprise
each Portfolio, as more specifically detailed in the applicable Portfolio
Proposal.
"Portfolio Proposal" means a written proposal presented by
Borrowers or any other Credit Party with respect to a Portfolio that such party
intends to submit to a Seller for the purchase of such Portfolio, which shall
set forth in sufficient detail the (i) Portfolio Bid and the terms of payment
thereof, (ii) nature of the Consumer Loans comprising the Portfolio, (iii) a
computer disc or written report containing a detailed description of the
Consumer Loans, and (iv) name of the Seller.
"Proceeds" means "proceeds," as such term is defined in the
Code, including (a) any and all proceeds of any insurance, indemnity, warranty
or guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral including claims arising
out of the loss or nonconformity of, interference with the use of, defects in,
or infringement of rights in, or damage to, Collateral, (e) all amounts
collected on, or distributed on account of, other Collateral, including
dividends, interest, distributions and Instruments with respect to Investment
Property and pledged Stock, and (f) any and all other amounts, rights to payment
or other property acquired upon the sale, lease, license, exchange or other
disposition of Collateral and all rights arising out of Collateral.
"Proposed Change" has the meaning ascribed to it in Section
11.2(c).
"Pro Rata Share" means with respect to all matters relating to
any Lender, (a) with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Revolving Loan Commitment of that Lender by (ii) the aggregate
Revolving Loan Commitments of all Lenders, (b) with respect to the Revolving
Loan on and after the Commitment Termination Date, the percentage obtained by
dividing (i) the aggregate outstanding principal balance of the Revolving Loan
held by that Lender, by (ii) the outstanding principal balance of the Revolving
Loan held by all Lenders.
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"Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"Qualified Assignee" means (a) any Lender, any Affiliate of
any Lender and, with respect to any Lender that is an investment fund that
invests in commercial loans, any other investment fund that invests in
commercial loans and that is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor, and (b) any
commercial bank, savings and loan association or savings bank or any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act of 1933) which extends credit or buys loans as one of its
businesses, including insurance companies, mutual funds, lease financing
companies and commercial finance companies, in each case, which has a rating of
BBB or higher from S&P and a rating of Baa2 or higher from ▇▇▇▇▇'▇ at the date
that it becomes a Lender and which, through its applicable lending office, is
capable of lending to Borrowers without the imposition of any withholding or
similar taxes.
"Real Estate" has the meaning ascribed to it in Section 3.6.
"Recency Aging Value" means for an Eligible Existing Portfolio
the contractual amount owed on each Account included in such Eligible Existing
Portfolio for which there has been Collections in the previous ninety (90) days.
"Refinancing" means the transaction contemplated by the
Agreement by which the proceeds of the Loan shall be used to refinance, amend
and restate the Prior Lender Obligations.
"Register" has the meaning ascribed to it in Section 9.1(a).
"Rejected Portfolio" means a Portfolio as to which the
Administrative Agent or Requisite Lenders, as the case may be, decline to make
an Advance to finance its acquisition by a Credit Party.
"Related Transactions" means the initial borrowing under the
Revolving Loan on the Closing Date and the payment of all fees, costs and
expenses associated with all of the foregoing and the execution and delivery of
all of the Related Transactions Documents.
"Related Transactions Documents" means the Loan Documents and
all other agreements or instruments executed in connection with the Related
Transactions.
"Release" means any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
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"Replacement Lender" has the meaning ascribed to it in Section
1.13(d).
"Reports" mean the Aging Reports and the Collection Reports,
including the computer discs containing all of the information contained
therein.
"Requisite Lenders" means Lenders having (a) more than 66 2/3%
of the Commitments of all Lenders, or (b) if the Commitments have been
terminated, more than 66 2/3% of the aggregate outstanding amount of the
Revolving Loan.
"Reserves" means any reserves that Administrative Agent may,
in its reasonable credit judgment, establish or impose from time to time that
relate to a specific Portfolio as a result of the occurrence of a material
adverse change in the performance or value of that Portfolio. For purposes of
this definition, the phrase "material adverse change in the performance or value
of any Portfolio" shall mean any decrease or diminution in value of ten percent
(10%) or more in the performance or value of any Portfolio, including, without
limitation, any decrease or diminution in value of 10% or more of the Loan Value
of Eligible Existing Portfolio or Loan Value of Eligible New Portfolio, as the
case may be, of any Portfolio during any period, all as reasonably determined by
Administrative Agent. Without limiting the foregoing, Administrative Agent may
establish or impose Reserves at such time as any Servicing Agent for any
Portfolio is entitled (or claims to be entitled) to receive payments, fees,
premiums or compensation (however characterized) for services rendered in excess
of the amount set forth in Section 6.23 of the Agreement relative to such
Portfolio. In connection with the establishment or imposition of Reserves,
Administrative Agent shall, in advance of establishing any Reserves, discuss
with Borrower's Representative Administrative Agent's intention to establish
such Reserves and, upon request of Borrower's Representative, provide Borrower's
Representative with such information and analysis as are reasonably necessary to
explain Administrative Agent's reasons for such Reserves, but in no event shall
Credit Parties have any right to approve or withhold approval of Administrative
Agent's determination or alter the timing of such Reserves, so long as such
determination is made in accordance with the terms of the Agreement and this
definition.
"Restricted Payment" means, with respect to any Credit Party
(a) the declaration or payment of any dividend or the incurrence of any
liability to make any other payment or distribution of cash or other property or
assets in respect of Stock; (b) any payment on account of the purchase,
redemption, defeasance, sinking fund or other retirement of such Credit Party's
Stock or any other payment or distribution made in respect thereof, either
directly or indirectly; (c) any payment or prepayment of principal of, premium,
if any, or interest, fees or other charges on or with respect to, and any
redemption, purchase, retirement, defeasance, sinking fund or similar payment
and any claim for rescission with respect to, any Subordinated Debt; (d) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire Stock
of such Credit Party now or hereafter outstanding; (e) any payment of a claim
for the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of, any shares of such Credit Party's Stock or of a
claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission; (f) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder of
such Credit Party other than payment of compensation in the ordinary course of
business and in accordance with past practices, to Stockholders who are
employees or consultants of such Person; and (g) any payment of management fees
(or other fees of a similar nature) by such Credit Party to any Stockholder of
such Credit Party or its Affiliates.
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"Retiree Welfare Plan" means, at any time, a Welfare Plan that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
or other applicable law or coverage through the last day of the month of a
participant's termination of employment.
"Revolving Lender" or "Revolving Lenders" means, as of any
date of determination, Lenders having a Revolving Loan Commitment.
"Revolving Loan" means, at any time, the aggregate amount of
Advances outstanding to Borrower.
"Revolving Loan Commitment" means (a) as to any Lender, the
aggregate commitment of such Lender to make Advances as set forth on Annex J to
the Agreement or in the most recent Assignment Agreement executed by such Lender
and (b) as to all Lenders, the aggregate commitment of all Lenders to make
Advances which aggregate commitment shall be ONE HUNDRED SEVENTY-FIVE MILLION
DOLLARS ($175,000,000) on the Closing Date, as such amount may be permanently
increased by an additional Fifty Million Dollars ($50,000,000) upon written
request by Borrower Representative and at Lenders' written consent, which
consent may be given or denied in the sole discretion of Lenders.
"Revolving Note" has the meaning ascribed to it in Section
1.1(a)(iv).
"Security Agreement" means, collectively and individually,
those certain Security Agreements dated on or about May 11, 2004, as amended
from time to time, by and among Collateral Agent, on behalf of itself, the
Agents and Lenders, and each Credit Party that is a signatory thereto.
"Seller" means the party (or parties) which has agreed to sell
Portfolio Loans to a Credit Party.
"Senior Executive" means each of ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇
▇▇▇▇▇.
"Senior Obligations" has the meaning ascribed to it in Section
12.9(a).
"Servicing Agent" shall mean any third-party engaged or
utilized by any Credit Party for the purpose of administrating and/or collecting
Payments made by an Account Debtor with respect to Accounts.
A-26
"Servicing Threshold" shall mean an amount equal to ten
percent (10%) or more of Collections, Proceeds and Payments (net of any
collection costs and other fees permitted to be deducted therefrom by the
express terms of the servicing agreement that corresponds to such Collections,
Proceeds and Payments), taken as a whole for the Credit Parties, reported by
such Credit Parties during the Fiscal Quarter prior to the date of
determination.
"Settlement Date" has the meaning ascribed to it in Section
9.9(a)(ii).
"Software" means all "software" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"Solvent" means, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including contingent liabilities,
of such Person; (b) the present fair salable value of the assets of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured; (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities (such as litigation, guaranties and pension plan
liabilities) at any time shall be computed as the amount that, in light of all
the facts and circumstances existing at the time, represents the amount that can
be reasonably be expected to become an actual or matured liability.
"Stock" means all shares, options, warrants, general or
limited partnership interests, membership interests or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity whether voting or nonvoting, including
common stock, preferred stock or any other "equity security" (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934).
"Stockholder" means, with respect to any Person, each holder
of Stock of such Person.
"Subordinated Debt" means any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to
Administrative Agent and Lenders in their sole discretion, as to right and time
of payment and as to any other rights and remedies thereunder.
"Subsidiary" means, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding 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
or classes 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 legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of more than 50% of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of a Borrower.
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"Supporting Obligations" means all "supporting obligations" as
such term is defined in the Code, including letters of credit and guaranties
issued in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.
"Tangible Net Worth" means, with respect to any Person at any
date, the Net Worth of such Person at such date, excluding, however, from the
determination of the total assets at such date, (a) all goodwill, capitalized
organizational expenses, capitalized research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other intangible items, (b) all unamortized debt
discount and expense, (c) treasury Stock, and (d) any write-up in the book value
of any asset resulting from a revaluation thereof.
"Taxes" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Administrative Agent or a Lender by the
jurisdictions under the laws of which Administrative Agent and Lenders are
organized or conduct business or maintain a permanent establishment or any
political subdivision thereof.
"Tax Returns" has the meaning ascribed to it in Section 3.11
"Telecom Receivables" means each of the performing and
non-performing receivables presently and hereafter owned by Borrowers, which
have been purchased from telecommunication service providers.
"Termination Date" means the date on which (a) the Revolving
Loan has been indefeasibly repaid in full, (b) all other Obligations under the
Agreement and the other Loan Documents have been completely discharged and (c)
none of Borrowers shall have any further right to borrow any monies under the
Agreement.
"Title IV Plan" means a Pension Plan (other than a
Multiemployer Plan), that is covered by Title IV of ERISA, and that any Credit
Party or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them.
"Total Liabilities" means, with respect to any Person as of
any date of determination, the total liabilities of such Person as determined as
determined in accordance with GAAP.
A-28
"Trademark License" means rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right to use
any Trademark.
"Trademarks" means all of the following now owned or hereafter
existing or adopted or acquired by any Credit Party: (a) all trademarks, trade
names, corporate names, business names, service marks, logos, all registrations
and recordings thereof, and all applications in connection therewith, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or territory thereof, or any other country or any political subdivision
thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill
associated with or symbolized by any of the foregoing.
"Transaction" has the meaning ascribed to it in Section 11.8.
"Unfunded Pension Liability" means, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of 5 years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
"Welfare Plan" means a Plan described in Section 3(i) of
ERISA.
Rules of construction with respect to accounting terms used in
the Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code to the
extent the same are used or defined therein; in the event that any term is
defined differently in different Articles or Divisions of the Code, the
definition contained in Articles or Divisions 1 and 9 shall control. Unless
otherwise specified, references in the Agreement or any of the Appendices to a
Section, subsection or clause refer to such Section, subsection or clause as
contained in the Agreement. The words "herein," "hereof" and "hereunder" and
other words of similar import refer to the Agreement as a whole, including all
Annexes, Exhibits and Schedules, as the same may from time to time be amended,
restated, modified or supplemented, and not to any particular section,
subsection or clause contained in the Agreement or any such Annex, Exhibit or
Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to Persons include their
respective successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all references
to statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations. Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any Credit Party,
such words are intended to signify that such Credit Party has actual knowledge
or awareness of a particular fact or circumstance or that such Credit Party, if
it had exercised reasonable diligence, would have known or been aware of such
fact or circumstance.
A-29
ANNEX C (SECTION 1.8)
TO
FOURTH AMENDED AND RESTATED
LOAN AGREEMENT
CASH MANAGEMENT SYSTEM
Each Borrower shall, and shall cause its Subsidiaries to,
establish and maintain the Cash Management Systems described below:
(a) On or before the Closing Date and until the Termination
Date, each Borrower shall (i) establish blocked accounts ("Blocked Accounts") at
Administrative Agent, and (ii) deposit and cause its Subsidiaries to deposit or
cause to be deposited promptly, and in any event no later than the second
Business Day after the date of receipt thereof (or in the event such deposit is
not practicable due to an Act of God, terrorism or other city-wide catastrophe,
the next day on which businesses generally are open), all cash, checks, drafts
or other similar items of payment relating to or constituting payments made in
respect of any and all Collateral into one or more Blocked Accounts in such
Borrower's name or any such Subsidiary's name at Administrative Agent, except
for items of payment that are not material that are being held temporarily, or
are to be returned, in the ordinary course of business due to a dispute or
irregularity. On or before the Closing Date, each Borrower shall have
established a concentration account in its name (each a "Concentration Account"
and collectively, the "Concentration Accounts") at Administrative Agent and at
the bank or banks that shall be designated as the Concentration Account bank for
each such Borrower in the Disclosure Document (each a "Concentration Account
Bank" and collectively, the "Concentration Account Banks"), which banks shall be
reasonably satisfactory to Administrative Agent. Borrowers may establish and
maintain a blocked account with such banks as are reasonably satisfactory to
Administrative Agent (a "Blocked Account Third-Party Bank"), provided that on or
before the Closing Date, each Blocked Account Third-Party Bank shall have
entered into a tri-party blocked account agreement with Administrative Agent,
for the benefit of itself and Lenders, and the applicable Borrower and
Subsidiaries thereof, as applicable, in form and substance reasonably acceptable
to Administrative Agent, which shall become operative on or prior to the Closing
Date. Each such blocked account agreement with any Blocked Account Third-Party
Bank shall provide, among other things, that (a) all items of payment deposited
in such account and proceeds thereof deposited in the applicable blocked account
are held by such bank as agent or bailee-in-possession for Administrative Agent,
on behalf of itself and Lenders, (b) the Blocked Account Third-Party Bank
executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, and (c) from and
after the Closing Date with respect to each blocked account, such Blocked
Account Third-Party Bank agrees to immediately forward all amounts received in
the applicable blocked account to the Collection Account through daily sweeps
from such blocked account into the Collection Account (except for amounts which
do not exceed $100,000 at any time in the blocked account established with Bank
of America, N.A. Collection Account as account no. 4158012504 (the "BofA Blocked
Account")). Except for the BofA Blocked Account, no Borrower shall, or shall
cause or permit any Subsidiary thereof to, accumulate or maintain cash in any
blocked account with any Blocked Account Third-Party Bank in excess of checks
outstanding against such accounts as of that date and amounts necessary to meet
minimum balance requirements, except as otherwise specifically permitted in
Section 6.2 of the Agreement.
C-1
(b) Each Borrower may maintain, in its name, an account (each
a "Disbursement Account" and collectively, the "Disbursement Accounts") at
Administrative Agent into which Administrative Agent shall, from time to time,
deposit proceeds of Advances made to such Borrower pursuant to Section 1.1 for
use by such Borrower solely in accordance with the provisions of Section 1.2.
(c) On or before the Closing Date (or such later date as
Administrative Agent shall consent to in writing), each Concentration Account
Bank, shall have entered into tri-party blocked account agreements with
Administrative Agent, for the benefit of itself and Lenders, and the applicable
Borrower and Subsidiaries thereof, as applicable, in form and substance
reasonably acceptable to Administrative Agent, which shall become operative on
or prior to the Closing Date. Each such blocked account agreement shall provide,
among other things, that (i) all items of payment deposited in such account and
proceeds thereof deposited in the applicable Concentration Account are held by
such bank as agent or bailee-in-possession for Administrative Agent, on behalf
of itself and Lenders, (ii) the bank executing such agreement has no rights of
setoff or recoupment or any other claim against such account, as the case may
be, other than for payment of its service fees and other charges directly
related to the administration of such account and for returned checks or other
items of payment, and (iii) from and after the Closing Date with respect to each
Concentration Account Bank, such bank agrees to immediately forward all amounts
received in the applicable Concentration Account to the Collection Account
through daily sweeps from such Concentration Account into the Collection
Account. Except for amounts which do not exceed $100,000 in any one account and
$250,000 in the aggregate for all Borrowers, no Borrower shall, or shall cause
or permit any Subsidiary thereof to, accumulate or maintain cash in Disbursement
Accounts or payroll accounts as of any date of determination in excess of checks
outstanding against such accounts as of that date and amounts necessary to meet
minimum balance requirements.
(d) So long as no Default, which is not reasonably capable of
being cured, or Event of Default has occurred and is continuing, Borrowers may
amend the Disclosure Document to add or replace a Blocked Account or to replace
any Concentration Account; provided, that (i) Administrative Agent shall have
consented in writing in advance to the opening of such account with the relevant
bank and (ii) prior to the time of the opening of such account, the applicable
Borrower or its Subsidiaries, as applicable, and such bank shall have executed
and delivered to Administrative Agent a tri-party blocked account agreement, in
form and substance reasonably satisfactory to Administrative Agent. Borrowers
shall close any of their accounts (and establish replacement accounts in
accordance with the foregoing sentence) promptly and in any event within 30 days
following notice from Administrative Agent that the creditworthiness of any bank
holding an account is no longer acceptable in Administrative Agent's reasonable
judgment, or as promptly as practicable and in any event within 60 days
following notice from Administrative Agent that the operating performance, funds
transfer or availability procedures or performance with respect to accounts of
the bank holding such accounts or Administrative Agent's liability under any
tri-party blocked account agreement with such bank is no longer acceptable in
Administrative Agent's reasonable judgment.
C-2
(e) The Blocked Accounts, Disbursement Accounts and the
Concentration Accounts shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Revolving Loan and all other Obligations, and in which each Borrower and each
Subsidiary thereof shall have granted a Lien to Administrative Agent, on behalf
of itself and Lenders, pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account shall be
deemed received by Administrative Agent in accordance with Section 1.7 and shall
be applied (and allocated) by Administrative Agent in accordance with Section
1.8. In no event shall any amount be so applied unless and until such amount
shall have been credited in immediately available funds to the Collection
Account.
(g) Each Borrower shall and shall cause its Affiliates,
officers, employees, agents, directors or other Persons acting for or in concert
with such Borrower (each a "Related Person") to (i) hold in trust for
Administrative Agent, for the benefit of itself and Lenders, all checks, cash
and other items of payment received by such Borrower or any such Related Person,
and (ii) within 1 Business Day after receipt by such Borrower or any such
Related Person (or in the event such deposit is not practicable due to an Act of
God, terrorism or other city-wide catastrophe, the next day on which businesses
generally are open)of any checks, cash or other items of payment, deposit the
same into a Blocked Account of such Borrower. Each Borrower and each Related
Person thereof acknowledges and agrees that all cash, checks or other items of
payment constituting proceeds of Collateral are part of the Collateral. All
proceeds of the sale or other disposition of any Collateral, shall be deposited
directly into the applicable Blocked Accounts.
C-3
ANNEX D (SECTION 2.1(A))
TO
FOURTH AMENDED AND RESTATED
LOAN AGREEMENT
CLOSING CHECKLIST
In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(a), the following items must be
received by Administrative Agent in form and substance satisfactory to
Administrative Agent on or prior to the Closing Date (each capitalized term used
but not otherwise defined herein shall have the meaning ascribed thereto in
Annex A to the Agreement):
A. Appendices. All Appendices to the Agreement, in form and
substance satisfactory to Administrative Agent.
B. Revolving Notes. Duly executed originals of the Revolving
Notes for each applicable Lender, dated the Closing Date.
C. Opinions of Counsel. Duly executed originals of opinions of
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC, counsel for the Credit Parties (including with respect to
New York and New Jersey law and Delaware corporate law matters, together with
existing regulatory counsel opinions rendered in connection with Asta Funding's
last public offering) reasonably requested by Administrative Agent, each in form
and substance reasonably satisfactory to Administrative Agent and its counsel,
dated the Closing Date, and each accompanied by a letter addressed to such
counsel from the Credit Parties, authorizing and directing such counsel to
address its opinion to Administrative Agent, on behalf of Lenders, and to
include in the opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC, an express statement to the
effect that Administrative Agent and Lenders are authorized to rely on such
opinion.
D. Disclosure Document. The Credit Parties shall execute and
deliver to Administrative Agent for the benefit of Administrative Agent and
Lenders the Disclosure Document and the exhibits attached thereto, all of which
shall be in form and substance acceptable to Administrative Agent.
E. Fee Letters. Duly executed originals of the Agent Fee
Letter and Lenders' Fee Letter.
F. Charter and Good Standing. For each Credit Party, such
Person's (a) charter, and all amendments thereto, (b) good standing certificates
in its state of formation, (c) good standing certificates and certificates of
qualification to conduct business in each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
each dated a recent date prior to the Closing Date and certified by the
applicable Secretary of State or other authorized Governmental Authority.
G. Bylaws and Resolutions. For each Credit Party, (a) such
Person's bylaws or operating agreement, as applicable, together with all
amendments thereto and (b) resolutions of such Person's Board of Directors or
Members, as applicable, approving and authorizing the execution, delivery and
performance of the Loan Documents to which such Person is a party and the
transactions to be consummated in connection therewith, each certified as of the
Closing Date by such Person's corporate secretary or an assistant secretary or
Members, as applicable, as being in full force and effect without any
modification or amendment.
D-1
H. Officer's Certificate. Administrative Agent shall have
received duly executed originals of a certificate of the Chief Executive Officer
or Chairman of the Board of Borrower Representative, dated the Closing Date,
stating that to such officer's knowledge, since May 11, 2004 (a) no event or
condition has occurred or is existing which could reasonably be expected to have
a Material Adverse Effect; (b) there has been no material adverse change in the
industry in which any Borrower operates; (c) no Litigation has been commenced
which, if successful, could reasonably be expected to have a Material Adverse
Effect or which challenges any of the transactions contemplated by the Agreement
and the other Loan Documents; (d) there have been no Restricted Payments made by
any Credit Party in violation of the Agreement other than in connection with the
Related Transactions; and (e) there has been no material increase in
liabilities, liquidated or contingent (other than in connection with the Related
Transactions), and no material decrease in assets of any Borrower or any of its
Subsidiaries.
Furthermore, Administrative Agent shall have received duly
executed originals of a certificate of the Chief Executive Officer or Chairman
of the Board of Borrower Representative, dated the Closing Date, stating that to
such officer's knowledge, no changes have been made in the business operations
or activities or the licensing requirements of any Credit Party that would
reasonably require any changes to be made to the facts expressed in the existing
regulatory counsel opinions rendered in connection with Asta Funding's last
public offering in order for such existing regulatory counsel opinion and the
facts shown therein to continue to be true, complete and correct in all material
respects as of the Closing Date (or, if such changes would reasonably be
required, then setting forth in reasonable detail such changes) and stating that
to the best of his knowledge and belief, after having made reasonable
investigations, Palisades Collection, L.L.C., is the only Credit Party required
by applicable law to be licensed to conduct the consumer debt collection
business operations and activities of the Borrowers and the other Credit
Parties.
G. Other Documents. Such other certificates, documents and
agreements respecting any Credit Party as Administrative Agent may, in its
reasonable discretion, request.
D-2
ANNEX E (SECTION 4.1(A))
TO
FOURTH AMENDED AND RESTATED
LOAN AGREEMENT
FINANCIAL STATEMENTS -- REPORTING
Borrowers shall deliver or cause to be delivered to
Administrative Agent or to Administrative Agent and Lenders, as indicated, the
following:
(a) Quarterly Financials. To Administrative Agent and Lenders,
within 45 days after the end of each Fiscal Quarter, either the Form 10Q that
Asta Funding filed for that Fiscal Quarter with the Securities and Exchange
Commission or, in the event Asta Funding has not filed its Form 10Q on a timely
basis (without taking into consideration any extensions granted for the filing
of such Form 10Q), the following (hereinafter referred to as the "Alternative
Financial Information") consolidated financial information regarding Asta
Funding, its Subsidiaries, and Borrowers (in each case, together with
consolidating worksheets in the event a Non-Credit Party Affiliate has
Indebtedness or owns assets of any material nature), including (A) unaudited
balance sheets as of the close of such Fiscal Quarter and the related statements
of income and cash flow for that portion of the Fiscal Year ending as of the
close of such Fiscal Quarter, and (B) unaudited statements of income and cash
flows for such Fiscal Quarter, in each case setting forth in comparative form
the figures for the corresponding period in the prior year and the figures
contained in the Projections for such Fiscal Year, all prepared in accordance
with GAAP (subject to normal year-end adjustments). In any event, Borrowers
shall deliver to Administrative Agent and Lender a copy of any and all Form 10Q
that Asta Funding files with the Securities and Exchange Commission within 15
days after making any such filing. Such Form 10Q or Alternative Financial
Information, as the case may be, shall be accompanied by (A) a statement in
reasonable detail (each, a "Compliance Certificate") showing the calculations
used in determining compliance with a Compliance Certificate in respect of each
of the Financial Covenants that is tested on a quarterly basis and (B) the
certification of the Chief Financial Officer or other senior officer of Borrower
Representative that (i) such financial information presents fairly in accordance
with GAAP (subject to normal year-end adjustments) the financial position,
results of operations and statements of cash flows of Asta Funding, Borrowers
and their Subsidiaries, on a consolidated basis (together with consolidating
worksheets in the event a Non-Credit Party Affiliate has Indebtedness or owns
assets of any material nature), as at the end of such Fiscal Quarter and for
that portion of the Fiscal Year then ended, (ii) any other information presented
is true, correct and complete in all material respects and that there was no
Default, which is not reasonably capable of being cured, or Event of Default in
existence as of such time or, if a Default, which is not reasonably capable of
being cured, or Event of Default has occurred and is continuing, describing the
nature thereof and all efforts undertaken to cure such Default, which is not
reasonably capable of being cured, or Event of Default. In addition, Asta
Funding and Borrowers shall deliver to Administrative Agent and Lenders, within
45 days after the end of each Fiscal Quarter, a statement of the intercompany
loan balance of all Intercompany Notes as of the end of such Fiscal Quarter.
E-1
(b) Annual Audited Financials. To Administrative Agent and
Lenders, within 90 days after the end of each Fiscal Year, audited Financial
Statements for Asta Funding, Borrowers and their Subsidiaries on a consolidated
basis (together with consolidating worksheets), consisting of balance sheets and
statements of income and retained earnings and cash flows, setting forth in
comparative form in each case the figures for the previous Fiscal Year, which
Financial Statements shall be prepared in accordance with GAAP and certified
without qualification, by an independent certified public accounting firm of
national standing or otherwise reasonably acceptable to Administrative Agent.
Such Financial Statements shall be accompanied by (i) a statement prepared in
reasonable detail showing the calculations used in determining compliance with
each of the Financial Covenants, (ii) a report from such accounting firm to the
effect that, in connection with their audit examination, nothing has come to
their attention to cause them to believe that the Asta Funding and/or Borrowers
have failed to comply with the terms, covenants, provisions or conditions of
Section 5.3, Section 6.2 through Section 6.8 inclusive, Section 6.10, Section
6.12, through Section 6.16 inclusive, of this Agreement (or specifying any
non-compliance that they became aware of), it being understood that such audit
examination extended only to financial and accounting matters and that no
special investigation was made with respect to the existence of any such
non-compliance, (iii) from Asta Funding and the Borrowers, the annual letters to
such accountants in connection with their audit examination detailing contingent
liabilities and material litigation matters, and (iv) the certification of the
Chief Executive Officer or Chief Financial Officer of Asta Funding and the
Borrowers that all such Financial Statements present fairly in all material
respect in accordance with GAAP the financial position, results of operations
and statements of cash flows of Asta Funding, Borrowers and their Subsidiaries
on a consolidated basis (together with consolidating worksheets), as at the end
of such Fiscal Year and for the period then ended, and that there was no Default
or Event of Default in existence as of such time or, if a Default, which is not
reasonably capable of being cured, or Event of Default has occurred and is
continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default.
(c) Management Letters. To Administrative Agent and Lenders,
within 5 Business Days after receipt thereof by any Credit Party, copies of all
management letters, exception reports or similar letters or reports received by
such Credit Party from its independent certified public accountants.
(d) Default Notices. To Administrative Agent and Lenders, as
soon as practicable, and in any event within 2 Business Days after an executive
officer of any Borrower has actual knowledge of the existence of any Default,
Event of Default or other event that has had a Material Adverse Effect,
telephonic or telecopied notice specifying the nature of such Default or Event
of Default or other event, including the anticipated effect thereof, which
notice, if given telephonically, shall be promptly confirmed in writing on the
next Business Day.
(e) SEC Filings and Press Releases. To Administrative Agent
and Lenders, promptly upon their becoming available, copies of: (i) all
Financial Statements, reports, notices and proxy statements made publicly
available by any Credit Party to its security holders; (ii) all regular
(including, without limitation, all 10Ks and 10Qs) and periodic reports and all
registration statements and prospectuses, if any, filed by any Credit Party with
any securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material changes or developments in the business of any such Person.
E-2
(f) [Intentionally Omitted].
(g) Supplemental Schedules. To Administrative Agent (and upon
the request of any Lender, such Lender), supplemental disclosures, if any,
required by Section 5.6.
(h) Litigation. To Administrative Agent (and upon the request
of any Lender, such Lender) in writing, promptly upon learning thereof, notice
of any Litigation commenced or threatened against any Credit Party that (i)
seeks damages in excess of $250,000 (except that in the case of Litigation
relating to Accounts, any Litigation that seeks damages in excess of $500,000
with respect to claims for which the applicable Credit Party has no right of
indemnification from the originator or seller of any such Account, or Litigation
that seeks damages in excess of $1,000,000 with respect to claims for which the
applicable Credit Party has a right of indemnification from the originator or
seller of any such Account), (ii) seeks injunctive relief, (iii) is asserted or
instituted against any Plan, its fiduciaries or its assets or against any Credit
Party or ERISA Affiliate in connection with any Plan (iv) alleges criminal
misconduct by any Credit Party, (v) alleges the violation of any law regarding,
or seeks remedies in connection with, any Environmental Liabilities or (vi)
involves any consumer credit violations.
(i) Insurance Notices. To Administrative Agent (and upon the
request of any Lender, such Lender), disclosure of losses or casualties required
by Section 5.4.
(j) Lease Default Notices. To Administrative Agent (and upon
the request of any Lender, such Lender), within 2 Business Days after receipt
thereof, copies of (i) any and all default notices received under or with
respect to any leased location or public warehouse where Collateral is located,
and (ii) such other notices or documents as Administrative Agent may reasonably
request.
(k) Lease Amendments. To Administrative Agent (and upon the
request of any Lender, such Lender), within 2 Business Days after receipt
thereof, copies of all material amendments to real estate leases.
(l) Other Documents. To Administrative Agent and Lenders, such
other financial and other information respecting any Credit Party's business or
financial condition as Administrative Agent or any Lender shall from time to
time reasonably request.
E-3
ANNEX F (SECTION 4.1(B))
TO
FOURTH AMENDED AND RESTATED
LOAN AGREEMENT
COLLATERAL REPORTS
Borrowers shall deliver or cause to be delivered the
following:
Monthly Reports. To Administrative Agent and Lenders, within 20 days after the
end of each Fiscal Month, a Borrowing Base Certificate as of the last business
day of the previous Fiscal Month, prepared by and certified by the chief
financial officer of each Borrower, together with a payment in reduction of the
Obligations of an amount equal to the Advances, if any, in excess of the
Borrowing Base in such Borrowing Base Certificate, and together with each
Borrowing Base Certificate a reporting package setting forth the following as of
the last business day of the previous Fiscal Month:
Borrowing Base Calculation by Portfolio
Accounts Receivable Roll Forward
Collection History by Portfolio
Schedule of Sales Adjustments to Portfolio Acquisition Cost
Recency Summary Aging by Portfolio
Recency Detail Aging by Portfolio (delivered electronically) (this
report will only be delivered to the Administrative Agent)
Schedule of all Portfolio sales and leases
Quarterly Reports. To Administrative Agent and Lenders, within 20 days after the
end of each Fiscal Quarter, a reasonably detailed report of any and all
Servicing Agents or other Persons (including any collection agent, agency or
attorney) who, in the aggregate, are contractually responsible for the
collection of Accounts and other Collateral in excess of an amount equal to ten
percent (10%) of all Accounts and other Collateral of all Credit Parties,
together with a reasonable description of all Accounts and other Collateral for
which such Servicing Agent or other Person is responsible, and the collection
history of such Accounts and other Collateral during that Fiscal Quarter.
Furthermore, Borrowers shall deliver or cause to be delivered to Administrative
Agent and Lenders (within a reasonable period of time after request therefor)
such additional reports, summaries and information relating to the Portfolios,
the Collateral, the Accounts, the business operations and activities of the
Credit Parties, the transactions and other matters contemplated by the
Agreement, the Loan Documents, and the Obligations, as Administrative Agent
shall reasonably request from time to time.
F-1
ANNEX G (SECTION 6.10)
TO
FOURTH AMENDED AND RESTATED
LOAN AGREEMENT
FINANCIAL COVENANTS
Borrowers shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:
(a) Minimum Fixed Charge Coverage Ratio. Asta Funding and its
Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Quarter a Fixed Charge Coverage Ratio for the 12-month period then ended of not
less than 1.50 to 1.0.
(b) Minimum Tangible Net Worth. Asta Funding and its
Subsidiaries on a consolidated basis shall maintain at all times during each
Fiscal Quarter a minimum Tangible Net Worth of not less than $92,000,000 plus
fifty percent (50%) of cumulative net income reported after December 31, 2003.
(c) Maximum Cash Flow Leverage Ratio. Asta Funding and its
Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Quarter a Cash Flow Leverage Ratio of not more than 1.25 to 1.0.
(d) No Net Loss. Asta Funding and its Subsidiaries shall have
no net loss on a consolidated basis during any Fiscal Year. For purposes of
computing net loss of Asta Funding and its Subsidiaries, the net income of any
Non-Credit Party Affiliate (to the extent such net income is greater than zero)
shall be excluded from such computation.
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrowers, Administrative Agent and Lenders agree to enter into
negotiations in order to amend such provisions of the Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating Borrowers' and their Subsidiaries' financial condition
shall be the same after such Accounting Changes as if such Accounting Changes
had not been made; provided, however, that the agreement of Requisite Lenders to
any required amendments of such provisions shall be sufficient to bind all
Lenders. "Accounting Changes" means (i) changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants (or successor thereto or any agency with similar
functions), (ii) changes in accounting principles concurred in by any Borrower's
certified public accountants; (iii) purchase accounting adjustments under A.P.B.
16 or 17 and EITF 88-16, and the application of the accounting principles set
forth in FASB 109, including the establishment of reserves pursuant thereto and
any subsequent reversal (in whole or in part) of such reserves; and (iv) the
reversal of any reserves established as a result of purchase accounting
adjustments. All such adjustments resulting from expenditures made subsequent to
the Closing Date (including capitalization of costs and expenses or payment of
pre-Closing Date liabilities) shall be treated as expenses in the period the
expenditures are made and deducted as part of the calculation of EBITDA in such
period. If Administrative Agent, Borrowers and Requisite Lenders agree upon the
required amendments, then after appropriate amendments have been executed and
the underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in the Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting Change. If
Administrative Agent, Borrowers and Requisite Lenders cannot agree upon the
required amendments within 30 days following the date of implementation of any
Accounting Change, then all Financial Statements delivered and all calculations
of financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change. For purposes of Section 8.1,
a breach of a Financial Covenant contained in this Annex G shall be deemed to
have occurred as of any date of determination by Administrative Agent or as of
the last day of any specified measurement period, regardless of when the
Financial Statements reflecting such breach are delivered to Administrative
Agent.
G-1
ANNEX H (Section 9.9(a))
to
FOURTH AMENDED AND RESTATED
LOAN AGREEMENT
WIRE TRANSFER INFORMATION
Name: Palisades Collections LLC
Israel Discount Bank of New York
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
ABA# ▇▇▇▇▇▇▇▇▇
Accounts Payable-ABL
Account #: 355397901611
Attention:
Re: Palisades Collection LLC
H-1
ANNEX I (Section 11.10)
to
FOURTH AMENDED AND RESTATED
LOAN AGREEMENT
NOTICE ADDRESSES
(A) If to Administrative Agent:
Israel Discount Bank of New York
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, First Vice President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to (which shall not constitute notice):
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to any Borrower, any Credit Party, or any Guarantor, to Borrower
Representative, at
Palisades Collection, L.L.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.:
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇, extension 213
with copies to (which shall not constitute notice):
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
I-1
ANNEX J (from Annex A - Commitments definition)
to
FOURTH AMENDED AND RESTATED
LOAN AGREEMENT
------------------------------------------------------------- --------------------------
LENDER REVOLVING LOAN COMMITMENT
------------------------------------------------------------- --------------------------
Israel Discount Bank of New York $50,000,000
------------------------------------------------------------- --------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial Services Inc. 30,000,000
------------------------------------------------------------- --------------------------
Bank Leumi USA 20,000,000
------------------------------------------------------------- --------------------------
▇▇▇▇▇▇ ▇.▇. 25,000,000
------------------------------------------------------------- --------------------------
The Berkshire Bank 10,000,000
------------------------------------------------------------- --------------------------
JPMorgan Chase Bank, N.A. 25,000,000
------------------------------------------------------------- --------------------------
North Fork Bank 15,000,000
------------------------------------------------------------- --------------------------
------------------------------------------------------------- --------------------------
TOTAL $175,000,000
------------------------------------------------------------- --------------------------
J-1
SCHEDULE 1.1
AGENTS' REPRESENTATIVE
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Operations Manager
Israel Discount Bank of New York
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
K-1
SCHEDULE 1.1 (b)
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
Owner Borrower/ Description of Cert. Number of % of Outstanding
Credit Party Pledged Interest No.(s) Interests Interests
and Operating
Agreement
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
Asta Funding, Inc. Palisades Collection, Membership 100%
L.L.C. Interests
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
Asta Funding, Inc. Asta Funding Membership 100%
Acquisition I, LLC Interests
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
Asta Funding, Inc. Asta Funding Membership 100%
Acquisition II, LLC Interests
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
Asta Funding, Inc. Asta ▇▇▇▇▇▇▇.▇▇▇, LLC Membership 100%
Interests
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
Asta Funding, Inc. Asta Commercial, LLC Membership 100%
Interests
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
Asta Funding, Inc. Computer Finance, LLC Membership 100%
Interests
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
Asta Funding, Inc. Palisades Membership 100%
Acquisition I, LLC Interests
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
Asta Funding, Inc. Palisades Membership 100%
Acquisition II, LLC Interests
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
Asta Funding, Inc. Palisades Membership 100%
Acquisition IV, LLC Interests
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
Asta Funding, Inc. E.R. Receivables Corp., Membership 100%
LLC Interests
------------------------- ------------------------- ------------------- -------------- --------------- ------------------
L-1