REVOLVING CREDIT AND SECURITY AGREEMENT PNC BANK, NATIONAL ASSOCIATION (AS LENDER AND AS AGENT) WITH BCI COMMUNICATIONS, INC. (BORROWER) April 17, 2008
Exhibit
10.1
|
REVOLVING
CREDIT
|
|
AND
|
|
SECURITY
AGREEMENT
|
|
PNC
BANK, NATIONAL ASSOCIATION
|
|
(AS
LENDER AND AS AGENT)
|
|
WITH
|
|
BCI
COMMUNICATIONS, INC.
|
|
(BORROWER)
|
|
April
17, 2008
|
TABLE
OF CONTENTS
|
I
|
DEFINITIONS.
|
1
|
|
|
1.1.
|
Accounting
Terms.
|
1
|
|
|
1.2.
|
General
Terms.
|
1
|
|
|
1.3.
|
Uniform
Commercial Code Terms.
|
20
|
|
|
1.4.
|
Certain
Matters of Construction.
|
21
|
|
|
II
|
ADVANCES,
PAYMENTS.
|
22
|
|
|
2.1.
|
Revolving
Advances.
|
22
|
|
|
2.2.
|
Procedure
for Revolving Advances Borrowing.
|
22
|
|
|
2.3.
|
Disbursement
of Advance Proceeds.
|
24
|
|
|
2.4.
|
Maximum
Advances.
|
25
|
|
|
2.5.
|
Repayment
of Advances.
|
25
|
|
|
2.6.
|
Repayment
of Excess Advances.
|
25
|
|
|
2.7.
|
Statement
of Account.
|
26
|
|
|
2.8.
|
Letters
of Credit.
|
26
|
|
|
2.9.
|
Issuance
of Letters of Credit.
|
26
|
|
|
2.10.
|
Requirements
For Issuance of Letters of Credit.
|
27
|
|
|
2.11.
|
Disbursements,
Reimbursement.
|
27
|
|
|
2.12.
|
Repayment
of Participation Advances.
|
29
|
|
|
2.13.
|
Documentation.
|
29
|
|
|
2.14.
|
Determination
to Honor Drawing Request.
|
29
|
|
|
2.15.
|
Nature
of Participation and Reimbursement Obligations.
|
29
|
|
|
2.16.
|
Indemnity.
|
31
|
|
|
2.17.
|
Liability
for Acts and Omissions.
|
31
|
|
|
2.18.
|
Additional
Payments.
|
32
|
|
|
2.19.
|
Manner
of Borrowing and Payment.
|
32
|
|
|
2.20.
|
Mandatory
Prepayments.
|
34
|
|
|
2.21.
|
Use
of Proceeds.
|
34
|
|
|
2.22.
|
Defaulting
Lender.
|
35
|
|
|
III
|
INTEREST
AND FEES.
|
36
|
|
|
3.1.
|
Interest.
|
36
|
|
|
3.2.
|
Letter
of Credit Fees.
|
36
|
|
|
3.3.
|
Closing
Fee and Facility Fee.
|
37
|
|
|
3.4.
|
Collateral
Evaluation Fee, Collateral Monitoring Fee and Fee Letter.
|
37
|
|
|
3.5.
|
Computation
of Interest and Fees.
|
38
|
|
|
3.6.
|
Maximum
Charges.
|
38
|
|
|
3.7.
|
Increased
Costs.
|
38
|
|
|
3.8.
|
Basis
For Determining Interest Rate Inadequate or Unfair.
|
39
|
|
|
3.9.
|
Capital
Adequacy.
|
39
|
|
|
3.10.
|
Gross
Up for Taxes.
|
40
|
|
|
3.11.
|
Withholding
Tax Exemption.
|
40
|
|
|
IV
|
COLLATERAL:
GENERAL TERMS
|
41
|
|
|
4.1.
|
Security
Interest in the Collateral.
|
41
|
|
|
4.2.
|
Perfection
of Security Interest.
|
41
|
|
i
|
4.3.
|
Disposition
of Collateral.
|
42
|
|
|
4.4.
|
Preservation
of Collateral.
|
42
|
|
|
4.5.
|
Ownership
of Collateral.
|
42
|
|
|
4.6.
|
Defense
of Agent’s and Lenders’ Interests.
|
43
|
|
|
4.7.
|
Books
and Records.
|
43
|
|
|
4.8.
|
Financial
Disclosure.
|
44
|
|
|
4.9.
|
Compliance
with Laws.
|
44
|
|
|
4.10.
|
Inspection
of Premises.
|
44
|
|
|
4.11.
|
Insurance.
|
44
|
|
|
4.12.
|
Failure
to Pay Insurance.
|
45
|
|
|
4.13.
|
Payment
of Taxes.
|
45
|
|
|
4.14.
|
Payment
of Leasehold Obligations.
|
46
|
|
|
4.15.
|
Receivables.
|
46
|
|
|
4.16.
|
Inventory.
|
48
|
|
|
4.17.
|
Maintenance
of Equipment.
|
48
|
|
|
4.18.
|
Exculpation
of Liability.
|
48
|
|
|
4.19.
|
Environmental
Matters.
|
48
|
|
|
4.20.
|
Financing
Statements.
|
51
|
|
|
V
|
REPRESENTATIONS
AND WARRANTIES.
|
51
|
|
|
5.1.
|
Authority.
|
51
|
|
|
5.2.
|
Formation
and Qualification.
|
51
|
|
|
5.3.
|
Survival
of Representations and Warranties.
|
51
|
|
|
5.4.
|
Tax
Returns.
|
52
|
|
|
5.5.
|
Financial
Statements.
|
52
|
|
|
5.6.
|
Entity
Name.
|
52
|
|
|
5.7.
|
O.S.H.A.
and Environmental Compliance.
|
52
|
|
|
5.8.
|
Solvency;
No Litigation, Violation, Indebtedness or Default.
|
53
|
|
|
5.9.
|
Patents,
Trademarks, Copyrights and Licenses.
|
54
|
|
|
5.10.
|
Licenses
and Permits.
|
54
|
|
|
5.11.
|
Default
of Indebtedness.
|
55
|
|
|
5.12.
|
No
Default.
|
55
|
|
|
5.13.
|
No
Burdensome Restrictions.
|
55
|
|
|
5.14.
|
No
Labor Disputes.
|
55
|
|
|
5.15.
|
Margin
Regulations.
|
55
|
|
|
5.16.
|
Investment
Company Act.
|
55
|
|
|
5.17.
|
Disclosure.
|
55
|
|
|
5.18.
|
Delivery
of Subordinated Loan Documentation.
|
55
|
|
|
5.19.
|
Swaps.
|
56
|
|
|
5.20.
|
Conflicting
Agreements.
|
56
|
|
|
5.21.
|
Application
of Certain Laws and Regulations.
|
56
|
|
|
5.22.
|
Business
and Property of Borrower.
|
56
|
|
|
5.23.
|
Section
20 Subsidiaries.
|
56
|
|
|
5.24.
|
Anti-Terrorism
Laws.
|
56
|
|
|
5.25.
|
Trading
with the Enemy.
|
57
|
|
|
5.26.
|
Federal
Securities Laws.
|
57
|
|
ii
|
VI
|
AFFIRMATIVE
COVENANTS.
|
57
|
|
|
6.1.
|
Payment
of Fees.
|
57
|
|
|
6.2.
|
Conduct
of Business and Maintenance of Existence and Assets.
|
57
|
|
|
6.3.
|
Violations.
|
58
|
|
|
6.4.
|
Government
Receivables.
|
58
|
|
|
6.5.
|
Financial
Covenants.
|
58
|
|
|
6.6.
|
Execution
of Supplemental Instruments.
|
58
|
|
|
6.7.
|
Payment
of Indebtedness.
|
58
|
|
|
6.8.
|
Standards
of Financial Statements.
|
58
|
|
|
6.9.
|
Federal
Securities Laws.
|
59
|
|
|
VII
|
NEGATIVE
COVENANTS.
|
59
|
|
|
7.1.
|
Merger,
Consolidation, Acquisition and Sale of Assets.
|
59
|
|
|
7.2.
|
Creation
of Liens.
|
60
|
|
|
7.3.
|
Guarantees.
|
60
|
|
|
7.4.
|
Investments.
|
60
|
|
|
7.5.
|
Loans.
|
60
|
|
|
7.6.
|
Capital
Expenditures.
|
60
|
|
|
7.7.
|
Dividends.
|
60
|
|
|
7.8.
|
Indebtedness.
|
60
|
|
|
7.9.
|
Nature
of Business.
|
61
|
|
|
7.10.
|
Transactions
with Affiliates.
|
61
|
|
|
7.11.
|
Leases.
|
61
|
|
|
7.12.
|
Subsidiaries.
|
61
|
|
|
7.13.
|
Fiscal
Year and Accounting Changes.
|
61
|
|
|
7.14.
|
Pledge
of Credit.
|
61
|
|
|
7.15.
|
Amendment
of Articles of Incorporation, By-Laws.
|
61
|
|
|
7.16.
|
Compliance
with ERISA.
|
61
|
|
|
7.17.
|
Prepayment
of Indebtedness.
|
62
|
|
|
7.18.
|
Anti-Terrorism
Laws.
|
62
|
|
|
7.19.
|
Membership/Partnership
Interests.
|
62
|
|
|
7.20.
|
Trading
with the Enemy Act.
|
63
|
|
|
7.21.
|
Subordinated
Note.
|
63
|
|
|
7.22.
|
Other
Agreements.
|
63
|
|
|
VIII
|
CONDITIONS
PRECEDENT.
|
63
|
|
|
8.1.
|
Conditions
to Initial Advances.
|
63
|
|
|
8.2.
|
Conditions
to Each Advance.
|
68
|
|
|
IX
|
INFORMATION
AS TO BORROWERS.
|
68
|
|
|
9.1.
|
Disclosure
of Material Matters.
|
68
|
|
|
9.2.
|
Schedules.
|
68
|
|
|
9.3.
|
Environmental
Reports.
|
69
|
|
|
9.4.
|
Litigation.
|
69
|
|
|
9.5.
|
Material
Occurrences.
|
69
|
|
|
9.6.
|
Government
Receivables.
|
69
|
|
|
9.7.
|
Annual
Financial Statements.
|
70
|
|
|
9.8.
|
Quarterly
Financial Statements.
|
70
|
|
|
9.9.
|
Monthly
Financial Statements.
|
70
|
|
iii
|
9.10.
|
Other
Reports.
|
70
|
|
|
9.11.
|
Additional
Information.
|
70
|
|
|
9.12.
|
Projected
Operating Budget.
|
71
|
|
|
9.13.
|
Variances
From Operating Budget.
|
71
|
|
|
9.14.
|
Notice
of Suits, Adverse Events.
|
71
|
|
|
9.15.
|
ERISA
Notices and Requests.
|
71
|
|
|
9.16.
|
Additional
Documents.
|
72
|
|
|
X
|
EVENTS
OF DEFAULT.
|
72
|
|
|
10.1.
|
Nonpayment.
|
72
|
|
|
10.2.
|
Breach
of Representation.
|
72
|
|
|
10.3.
|
Financial
Information.
|
72
|
|
|
10.4.
|
Judicial
Actions.
|
72
|
|
|
10.5.
|
Noncompliance.
|
72
|
|
|
10.6.
|
Judgments.
|
73
|
|
|
10.7.
|
Bankruptcy.
|
73
|
|
|
10.8.
|
Inability
to Pay.
|
73
|
|
|
10.9.
|
Affiliate
Bankruptcy.
|
73
|
|
|
10.10.
|
Material
Adverse Effect.
|
73
|
|
|
10.11.
|
Lien
Priority.
|
73
|
|
|
10.12.
|
Subordinated
Loan Default and Default regarding J&J Leasing
Indebtedness.
|
73
|
|
|
10.13.
|
Cross
Default.
|
73
|
|
|
10.14.
|
Breach
of Guaranty.
|
74
|
|
|
10.15.
|
Change
of Ownership.
|
74
|
|
|
10.16.
|
Invalidity.
|
74
|
|
|
10.17.
|
Licenses.
|
74
|
|
|
10.18.
|
Seizures.
|
74
|
|
|
10.19.
|
Pension
Plans.
|
74
|
|
|
10.20.
|
Franchise
Tax Searches.
|
74
|
|
|
XI
|
LENDERS’
RIGHTS AND REMEDIES AFTER DEFAULT.
|
75
|
|
|
11.1.
|
Rights
and Remedies.
|
75
|
|
|
11.2.
|
Agent’s
Discretion.
|
76
|
|
|
11.3.
|
Setoff.
|
76
|
|
|
11.4.
|
Rights
and Remedies not Exclusive.
|
76
|
|
|
11.5.
|
Allocation
of Payments After Event of Default.
|
77
|
|
|
XII
|
WAIVERS
AND JUDICIAL PROCEEDINGS.
|
77
|
|
|
12.1.
|
Waiver
of Notice.
|
77
|
|
|
12.2.
|
Delay.
|
78
|
|
|
12.3.
|
Jury
Waiver.
|
78
|
|
|
XIII
|
EFFECTIVE
DATE AND TERMINATION.
|
78
|
|
|
13.1.
|
Term.
|
78
|
|
|
13.2.
|
Termination.
|
78
|
|
|
XIV
|
REGARDING
AGENT.
|
79
|
|
|
14.1.
|
Appointment.
|
79
|
|
|
14.2.
|
Nature
of Duties.
|
79
|
|
iv
|
14.3.
|
Lack
of Reliance on Agent and Resignation.
|
80
|
|
|
14.4.
|
Certain
Rights of Agent.
|
80
|
|
|
14.5.
|
Reliance.
|
80
|
|
|
14.6.
|
Notice
of Default.
|
81
|
|
|
14.7.
|
Indemnification.
|
81
|
|
|
14.8.
|
Agent
in its Individual Capacity.
|
81
|
|
|
14.9.
|
Delivery
of Documents.
|
81
|
|
|
14.10.
|
Borrower’s
Undertaking to Agent.
|
81
|
|
|
14.11.
|
No
Reliance on Agent’s Customer Identification Program.
|
82
|
|
|
14.12.
|
Other
Agreements.
|
82
|
|
|
XV
|
MISCELLANEOUS.
|
82
|
|
|
15.1.
|
Governing
Law.
|
82
|
|
|
15.2.
|
Entire
Understanding.
|
83
|
|
|
15.3.
|
Successors
and Assigns; Participations; New Lenders.
|
85
|
|
|
15.4.
|
Application
of Payments.
|
87
|
|
|
15.5.
|
Indemnity.
|
87
|
|
|
15.6.
|
Notice.
|
88
|
|
|
15.7.
|
Survival.
|
90
|
|
|
15.8.
|
Severability.
|
90
|
|
|
15.9.
|
Expenses.
|
90
|
|
|
15.10.
|
Injunctive
Relief.
|
90
|
|
|
15.11.
|
Damages.
|
91
|
|
|
15.12.
|
Captions.
|
91
|
|
|
15.13.
|
Counterparts;
Facsimile Signatures.
|
91
|
|
|
15.14.
|
Construction.
|
91
|
|
|
15.15.
|
Confidentiality;
Sharing Information.
|
91
|
|
|
15.16.
|
Publicity.
|
92
|
|
|
15.17.
|
Certifications
From Banks and Participants; US PATRIOT Act.
|
92
|
|
v
REVOLVING
CREDIT
AND
SECURITY
AGREEMENT
Revolving
Credit and Security Agreement dated April 17, 2008 by and among BCI
COMMUNICATIONS, INC., a corporation organized under the laws of the State of
Delaware (“Borrower”),
the
financial institutions which are now or which hereafter become a party hereto
(collectively, the “Lenders” and individually a “Lender”)
and
PNC BANK, NATIONAL ASSOCIATION (“PNC”),
as
agent for Lenders (PNC, in such capacity, the “Agent”).
IN
CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrower, Lenders and Agent hereby agree as follows:
I DEFINITIONS.
1.1. Accounting
Terms.
As
used
in this Agreement, the Other Documents or any certificate, report or other
document made or delivered pursuant to this Agreement, accounting terms not
defined in Section 1.2 or elsewhere in this Agreement and accounting terms
partly defined in Section 1.2 to the extent not defined, shall have the
respective meanings given to them under GAAP; provided, however, whenever such
accounting terms are used for the purposes of determining compliance with
financial covenants in this Agreement, such accounting terms shall be defined
in
accordance with GAAP as applied in preparation of the audited financial
statements of Borrower for the fiscal year ended June 30, 2007.
1.2. General
Terms. For
purposes of this Agreement the following terms shall have the following
meanings:
“Accountants”
shall
have the meaning set forth in Section 9.7 hereof.
“Advance
Rates”
shall
mean the Receivables Advance Rate.
“Advances”
shall
mean and include the Revolving Advances and Letters of Credit.
“Affiliate”
of
any
Person shall mean (a) any Person which, directly or indirectly, is in control
of, is controlled by, or is under common control with such Person, or (b) any
Person who is a director, managing member, general partner or officer (i) of
such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above. For purposes of this definition, control of
a
Person shall mean the power, direct or indirect, (x) to vote 5% or more of
the
Equity Interests having ordinary voting power for the election of directors
of
such Person or other Persons performing similar functions for any such Person,
or (y) to direct or cause the direction of the management and policies of such
Person whether by ownership of Equity Interests, contract or
otherwise.
“Agent”
shall
have the meaning set forth in the preamble to this Agreement and shall include
its successors and assigns.
“Agreement”
shall
mean this Revolving Credit and Security Agreement, as the same may be amended,
restated, supplemented or otherwise modified from time to time.
1
“Alternate
Base Rate”
shall
mean, for any day, a rate per annum equal to the higher of (i) the Base Rate
in
effect on such day and (ii) the Federal Funds Open Rate in effect on such day
plus 1/2 of 1%.
“Anti-Terrorism
Laws”
shall
mean any Applicable Laws relating to terrorism or money laundering, including
Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws comprising
or implementing the Bank Secrecy Act, and the Applicable Laws administered
by
the United States Treasury Department’s Office of Foreign Asset Control (as any
of the foregoing Applicable Laws may from time to time be amended, renewed,
extended, or replaced).
“Applicable
Law”
shall
mean all laws, rules and regulations applicable to the Person, conduct,
transaction, covenant, Other Document or contract in question, including all
applicable common law and equitable principles; all provisions of all applicable
state, federal and foreign constitutions, statutes, rules, regulations and
orders of any Governmental Body, and all orders, judgments and decrees of all
courts and arbitrators.
“Authority”
shall
have the meaning set forth in Section 4.19(d).
“Base
Rate”
shall
mean the base commercial lending rate of PNC as publicly announced to be in
effect from time to time, such rate to be adjusted automatically, without
notice, on the effective date of any change in such rate. This rate of interest
is determined from time to time by PNC as a means of pricing some loans to
its
customers and is neither tied to any external rate of interest or index nor
does
it necessarily reflect the lowest rate of interest actually charged by PNC
to
any particular class or category of customers of PNC.
“Berliner”
shall
mean Berliner Communications, Inc., a corporation of the State of
Delaware.
“Blocked
Accounts”
shall
have the meaning set forth in Section 4.15(h).
“Blocked
Account Bank”
shall
have the meaning set forth in Section 4.15(h).
“Blocked
Person”
shall
have the meaning set forth in Section 5.24(b) hereof.
“Borrower”
shall
have the meaning set forth in the preamble to this Agreement and shall extend
to
all permitted successors and assigns of such Person.
“Borrower’s
Account”
shall
have the meaning set forth in Section 2.7.
“Borrowing
Base Certificate”
shall
mean a certificate in substantially the form of Exhibit 1.2 duly executed by
the
President, Chief Financial Officer or Controller of the Borrower and delivered
to the Agent, appropriately completed, by which such officer shall certify
to
Agent the Formula Amount and calculation thereof as of the date of such
certificate.
“Business
Day”
shall
mean any day other than Saturday or Sunday or a legal holiday on which
commercial banks are authorized or required by law to be closed for business
in
East Brunswick, New Jersey and, if the applicable Business Day relates to any
Eurodollar Rate Loans, such day must also be a day on which dealings are carried
on in the London interbank market.
2
“Capital
Expenditures”
shall
mean expenditures made or liabilities incurred for the acquisition of any fixed
assets or improvements, replacements, substitutions or additions thereto which
have a useful life of more than one year, including the total principal portion
of Capitalized Lease Obligations, which, in accordance with GAAP, would be
classified as capital expenditures.
“Capitalized
Lease Obligation”
shall
mean any Indebtedness of Borrower represented by obligations under a lease
that
is required to be capitalized for financial reporting purposes in accordance
with GAAP.
“CERCLA”
shall
mean the Comprehensive Environmental Response, Compensation and Liability Act
of
1980, as amended, 42 U.S.C. §§9601 et seq.
“Change
of Control”
shall
mean (a) the occurrence of any event (whether in one or more transactions)
which
results in a transfer of control of Borrower to a Person who is not an Original
Owner or (b) any merger or consolidation of or with Borrower or sale of all
or
substantially all of the property or assets of Borrower. For purposes of this
definition, “control of Borrower” shall mean the power, direct or indirect (x)
to vote 50% or more of the Equity Interests having ordinary voting power for
the
election of directors (or the individuals performing similar functions) of
Borrower or (y) to direct or cause the direction of the management and policies
of Borrower by contract or otherwise.
“Change
of Ownership”
shall
mean (a) 50% or more of the Equity Interests of Borrower is no longer owned
or controlled by (including for the purposes of the calculation of percentage
ownership, any Equity Interests into which any Equity Interests of Borrower
held
by any of the Original Owners are convertible or for which any such Equity
Interests of Borrower or of any other Person may be exchanged and any Equity
Interests issuable to such Original Owners upon exercise of any warrants,
options or similar rights which may at the time of calculation be held by such
Original Owners) a Person who is an Original Owner or (b) any merger,
consolidation or sale of substantially all of the property or assets of
Borrower.
“Charges”
shall
mean all taxes, charges, fees, imposts, levies or other assessments, including
all net income, gross income, gross receipts, sales, use, ad valorem, value
added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation and property taxes, custom duties, fees,
assessments, liens, claims and charges of any kind whatsoever, together with
any
interest and any penalties, additions to tax or additional amounts, imposed
by
any taxing or other authority, domestic or foreign (including the Pension
Benefit Guaranty Corporation or any environmental agency or superfund), upon
the
Collateral, Borrower or any of its Affiliates.
“Closing
Date”
shall
mean April 17, 2008 or such other date as may be agreed to by the parties
hereto.
“Code”
shall
mean the Internal Revenue Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import,
and
the rules and regulations thereunder, as from time to time in
effect.
“Collateral”
shall
mean and include:
3
(a) all
Receivables;
(b) all
Equipment;
(c) all
General Intangibles;
(d) all
Inventory;
(e) all
Investment Property;
(f) all
Real
Property, specifically, excluding, however, the Texas Premises;
(g) all
Subsidiary Stock;
(h) the
Leasehold Interests;
(i) all
of
Borrower’s right, title and interest in and to, whether now owned or hereafter
acquired and wherever located, (i) its respective goods and other property
including, but not limited to, all merchandise returned or rejected by
Customers, relating to or securing any of the Receivables; (ii) all of
Borrower’s rights as a consignor, a consignee, an unpaid vendor, mechanic,
artisan, or other lienor, including stoppage in transit, setoff, detinue,
replevin, reclamation and repurchase; (iii) all additional amounts due to
Borrower from any Customer relating to the Receivables; (iv) other
property, including warranty claims, relating to any goods securing the
Obligations; (v) all of Borrower’s contract rights, rights of payment which have
been earned under a contract right, instruments (including promissory notes),
documents, chattel paper (including electronic chattel paper), warehouse
receipts, deposit accounts, letters of credit and money; (vi) all commercial
tort claims (whether now existing or hereafter arising); (vii) if and when
obtained by Borrower, all real and personal property of third parties in which
Borrower has been granted a lien or security interest as security for the
payment or enforcement of Receivables; (viii) all letter of credit rights
(whether or not the respective letter of credit is evidenced by a writing);
(ix)
all supporting obligations; and (x) any other goods, personal property or
real property now owned or hereafter acquired in which Borrower has expressly
granted a security interest or may in the future grant a security interest
to
Agent hereunder, or in any amendment or supplement hereto or thereto, or under
any other agreement between Agent and Borrower;
(j) all
of
Borrower’s ledger sheets, ledger cards, files, correspondence, records, books of
account, business papers, computers, computer software (owned by Borrower or
in
which it has an interest), computer programs, tapes, disks and documents
relating to (a), (b), (c), (d), (e), (f), (g), (h) or (i) of this Paragraph;
and
(k) all
proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h), (i) and (j)
in
whatever form, including, but not limited to: cash, deposit accounts (whether
or
not comprised solely of proceeds), certificates of deposit, insurance proceeds
(including hazard, flood and credit insurance), negotiable instruments and
other
instruments for the payment of money, chattel paper, security agreements,
documents, eminent domain proceeds, condemnation proceeds and tort claim
proceeds.
4
“Commitment
Percentage”
of
any
Lender shall mean the percentage set forth below such Lender’s name on the
signature page hereof as same may be adjusted upon any assignment by a Lender
pursuant to Section 15.3(c) or (d) hereof.
“Commitment
Transfer Supplement”
shall
mean a document in the form of Exhibit 15.3 hereto, properly completed and
otherwise in form and substance satisfactory to Agent by which the Purchasing
Lender purchases and assumes a portion of the obligation of Lenders to make
Advances under this Agreement.
“Compliance
Certificate”
shall
mean a compliance certificate to be signed by the Chief Financial Officer or
Controller of Borrower, which shall state that, based on an examination
sufficient to permit such officer to make an informed statement, no Default
or
Event of Default exists, or if such is not the case, specifying such Default
or
Event of Default, its nature, when it occurred, whether it is continuing and
the
steps being taken by Borrower with respect to such default and, such certificate
shall have appended thereto calculations which set forth Borrower’s compliance
with the requirements or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.6,
7.7, 7.8 and 7.11.
“Consents”
shall
mean all filings and all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Bodies and other third parties,
domestic or foreign, necessary to carry on Borrower’s business or necessary
(including to avoid a conflict or breach under any agreement, instrument, other
document, license, permit or other authorization) for the execution, delivery
or
performance of this Agreement, the Other Documents or the Subordinated Loan
Documentation, including any Consents required under all applicable federal,
state or other Applicable Law.
“Contract
Rate”
shall
mean, as applicable, the Revolving Interest Rate.
“Controlled
Group”
shall
mean, at any time, the Borrower and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with Borrower, are treated
as a single employer under Section 414 of the Code.
“Customer”
shall
mean and include the account debtor with respect to any Receivable and/or the
prospective purchaser of goods, services or both with respect to any contract
or
contract right, and/or any party who enters into or proposes to enter into
any
contract or other arrangement with Borrower, pursuant to which Borrower is
to
deliver any personal property or perform any services.
“Customs”
shall
have the meaning set forth in Section 2.10(b) hereof.
“Default”
shall
mean an event, circumstance or condition which, with the giving of notice or
passage of time or both, would constitute an Event of Default.
“Default
Rate”
shall
have the meaning set forth in Section 3.1 hereof.
“Defaulting
Lender”
shall
have the meaning set forth in Section 2.22(a) hereof.
5
“Depository
Accounts”
shall
have the meaning set forth in Section 4.15(h) hereof.
“Documents”
shall
have the meaning set forth in Section 8.1(c) hereof.
“Dollar”
and
the
sign “$”
shall
mean lawful money of the United States of America.
“Domestic
Rate Loan”
shall
mean any Advance that bears interest based upon the Alternate Base
Rate.
“Drawing
Date”
shall
have the meaning set forth in Section 2.11(b) hereof.
“Early
Termination Date”
shall
have the meaning set forth in Section 13.1 hereof.
“Earnings
Before Interest and Taxes”
shall
mean for any period the sum of (i) net income (or loss) of Borrower for such
period (excluding extraordinary gains and losses), plus (ii) all interest
expense of Borrower for such period, plus (iii) all charges against income
of
Borrower for provision for federal, state and local taxes for such
period.
“EBITDA”
shall
mean for any period the sum of (i) Earnings Before Interest and Taxes for such
period plus (ii) depreciation expenses for such period, plus (iii) amortization
expenses for such period.
“Eligible
Receivables”
shall
mean and include with respect to Borrower, each Receivable of Borrower arising
in the Ordinary Course of Business and which Agent, in its sole and reasonable
credit judgment, shall deem to be an Eligible Receivable, based on such
considerations as Agent may from time to time deem appropriate. A Receivable
shall not be deemed eligible unless such Receivable is subject to Agent’s first
priority perfected security interest and no other Lien (other than Permitted
Encumbrances), and is evidenced by an invoice or other documentary evidence
satisfactory to Agent. In addition, no Receivable shall be an Eligible
Receivable if:
(a) it
arises
out of a sale made by Borrower to an Affiliate of Borrower or to a Person
controlled by an Affiliate of Borrower;
(b) it
is
unpaid more than either (i) ninety (90) days after the original due date or
(ii)
due or unpaid one hundred twenty (120) days after the original invoice
date;
(c) fifty
percent (50%) or more of the Receivables from such Customer are not deemed
Eligible Receivables hereunder. Such percentage may, in Agent’s sole discretion,
be increased or decreased from time to time;
(d) any
covenant, representation or warranty contained in this Agreement with respect
to
such Receivable has been breached;
(e) the
Customer shall (i) apply for, suffer, or consent to the appointment of, or
the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property or call a meeting of its
creditors, (ii) admit in writing its inability, or be generally unable, to
pay
its debts as they become due or cease operations of its present business, (iii)
make a general assignment for the benefit of creditors, (iv) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, any petition which is filed
against it in any involuntary case under such bankruptcy laws, or (viii) take
any action for the purpose of effecting any of the foregoing;
6
(f) the
sale
is to a Customer outside the continental United States of America, unless the
sale is on letter of credit, guaranty or acceptance terms, in each case
acceptable to Agent in its sole and reasonable discretion;
(g) the
sale
to the Customer is on a ▇▇▇▇-and-hold, guaranteed sale, sale-and-return, sale
on
approval, consignment or any other repurchase or return basis or is evidenced
by
chattel paper;
(h) Agent
believes, in its sole and reasonable judgment, that collection of such
Receivable is insecure or that such Receivable may not be paid by reason of
the
Customer’s financial inability to pay;
(i) the
Customer is the United States of America, any state or any department, agency
or
instrumentality of any of them, unless Borrower assigns its right to payment
of
such Receivable to Agent pursuant to the Assignment of Claims Act of 1940,
as
amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et
seq.) or has otherwise complied with other applicable statutes or
ordinances;
(j) the
goods
giving rise to such Receivable have not been delivered to and accepted by the
Customer or the services giving rise to such Receivable have not been performed
by Borrower and accepted by the Customer or the Receivable otherwise does not
represent a final sale;
(k) the
Receivable is subject to any offset, deduction, defense, dispute, or
counterclaim, the Customer is also a creditor or supplier of Borrower or the
Receivable is contingent in any respect or for any reason;
(l) Borrower
has made any agreement with any Customer for any deduction therefrom, except
for
discounts or allowances made in the Ordinary Course of Business for prompt
payment, all of which discounts or allowances are reflected in the calculation
of the face value of each respective invoice related thereto;
(m) any
return, rejection or repossession of the merchandise has occurred or the
rendition of services has been disputed;
(n) such
Receivable is not payable to Borrower; or
(o) such
Receivable is not otherwise satisfactory to Agent as determined in good faith
by
Agent in the exercise of its discretion in a reasonable manner.
7
“Eligible
Unbilled Receivables”
shall
mean and include with respect to Borrower, each Receivable of Borrower relating
to completed jobs (as identified with specific job numbers by Borrower on the
monthly gross margin report identified in Section 9.2(ii)(d)) and arising in
the
Ordinary Course of Business which would be deemed an Eligible Receivable except
for the fact that such Receivable has not been billed to the Customer by the
Borrower provided,
however,
such
Receivable is not aged more than thirty one (31) days from the last day of
the
month during which such Receivable was generated.
“Eligible
Unbilled Receivables Sublimit”
shall
mean $6,500,000.
“Eligible
Work-In-Process Receivables”
shall
mean and include with respect to Borrower, each Receivable of Borrower arising
in the Ordinary Course of Business which would be deemed an Eligible Receivable
except for the fact that the goods giving rise to such Receivable have not
been
completely delivered to and accepted by the Customer or the services giving
rise
to such Receivable have not been fully completed by Borrower and accepted by
the
Customer or the Receivable otherwise does not represent a final sale
provided,
however,
that
the Agent receives a written authorization from each such Customer with regard
to such work-in-process billing in form and substance acceptable to the
Agent.
“Eligible Work-In-Process
Receivables Sublimit”
shall
mean $3,000,000.
“Environmental
Complaint”
shall
have the meaning set forth in Section 4.19(d) hereof.
“Environmental
Laws”
shall
mean all federal, state and local environmental, land use, zoning, health,
chemical use, safety and sanitation laws, statutes, ordinances and codes
relating to the protection of the environment and/or governing the use, storage,
treatment, generation, transportation, processing, handling, production or
disposal of Hazardous Substances and the rules, regulations, policies,
guidelines, interpretations, decisions, orders and directives of federal, state
and local governmental agencies and authorities with respect
thereto.
“Equipment”
shall
mean and include all of Borrower’s goods (other than Inventory) whether now
owned or hereafter acquired and wherever located including all equipment,
machinery, apparatus, fittings, furniture, furnishings, fixtures, parts,
accessories and all replacements and substitutions therefor or accessions
thereto.
“Equity
Interests”
of
any
Person shall mean any and all shares, rights to purchase, options, warrants,
general, limited or limited liability partnership interests, member interests,
participation or other equivalents of or interest in (regardless of how
designated) equity of such Person, whether voting or nonvoting, including common
stock, preferred stock, convertible securities or any other “equity security”
(as such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the SEC under the Exchange Act).
“ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as amended from time
to time and the rules and regulations promulgated thereunder.
“Eurodollar
Rate”
shall
mean for any Eurodollar Rate Loan for the then current Interest Period relating
thereto the interest rate per annum determined by Agent by dividing (the
resulting quotient rounded upwards, if necessary, to the nearest 1/100th of
1%
per annum) (i) the rate which appears on the Bloomberg page BBAM1 (or on such
other substitute Bloomberg page that displays rates at which U.S. dollar
deposits are offered by leading banks in the London interbank deposit market),
or the rate which is quoted by another source selected by the Agent which has
been approved by the British Bankers’ Association as an authorized information
vendor for the purpose of displaying rates at which U.S. dollar deposits are
offered by leading banks in the London interbank deposit market (an “Alternate
Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior
to the commencement of such Interest Period as the London interbank offered
rate
for U.S. dollars for an amount comparable to such Eurodollar Rate Loan and
having a borrowing date and a maturity comparable to such Interest Period (or
if
there shall at any time, for any reason, no longer exist a Bloomberg page BBAM1
(or any substitute page) or any Alternate Source, a comparable replacement
rate
determined by the Agent at such time (which determination shall be conclusive
absent manifest error), by (ii) a number equal to 1.00 minus the Reserve
Percentage. The Eurodollar Rate may also be expressed by the following
formula:
8
Average
of London interbank offered rates quoted by Bloomberg or
appropriate
successor
as shown on Bloomberg page BBAM1
Eurodollar
Rate = 1.00 - Reserve Percentage.
The
Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan
that
is outstanding on the effective date of any change in the Reserve Percentage
as
of such effective date. The Agent shall give prompt notice to the Borrower
of
the Eurodollar Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
“Eurodollar
Rate Loan”
shall
mean an Advance at any time that bears interest based on the Eurodollar
Rate.
“Event
of Default”
shall
have the meaning set forth in Article X hereof.
“Exchange
Act”
shall
have the mean the Securities Exchange Act of 1934, as amended.
“Executive
Order No. 13224”
shall
mean the Executive Order No. 13224 on Terrorist Financing, effective September
24, 2001, as the same has been, or shall hereafter be, renewed, extended,
amended or replaced.
“Federal
Funds Effective Rate”
for
any
day shall mean the rate per annum (based on a year of 360 days and actual days
elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal
Reserve Bank of New York (or any successor) on such day as being the weighted
average of the rates on overnight federal funds transactions arranged by federal
funds brokers on the previous trading day, as computed and announced by such
Federal Reserve Bank (or any successor) in substantially the same manner as
such
Federal Reserve Bank computes and announces the weighted average it refers
to as
the "Federal Funds Effective Rate" as of the date of this Agreement; provided,
if such Federal Reserve Bank (or its successor) does not announce such rate
on
any day, the "Federal Funds Effective Rate" for such day shall be the Federal
Funds Effective Rate for the last day on which such rate was
announced.
“Federal
Funds Open Rate”
shall
mean the rate per annum determined by the Agent in accordance with its usual
procedures (which determination shall be conclusive absent manifest error)
to be
the "open" rate for federal funds transactions as of the opening of business
for
federal funds transactions among members of the Federal Reserve System arranged
by federal funds brokers on such day, as quoted by ▇▇▇▇▇▇ Guybutler Corporation,
any successor entity thereto, or any other broker selected by the Agent, as
set
forth on the applicable Telerate display page; provided, however; that if such
day is not a Business Day, the Federal Funds Open Rate for such day shall be
the
"open" rate on the immediately preceding Business Day, or if no such rate shall
be quoted by a Federal funds broker at such time, such other rate as determined
by the Agent in accordance with its usual procedures.
9
“Fixed
Charge Coverage Ratio”
shall
mean and include, with respect to any fiscal period, the ratio of (a) EBITDA
minus unfinanced Capitalized Expenditures made during such period minus cash
taxes paid during such period to (b) the aggregate amount of all principal
and
interest payments due and/or made with regard to all Funded Debt of the Borrower
during such period minus all principal payments due and/or made with regard
to
the Subordinated Loan Documentation during such period.
“Foreign
Subsidiary”
of
any
Person, shall mean any Subsidiary of such Person that is not organized or
incorporated in the United States or any State or territory
thereof.
“Formula
Amount”
shall
have the meaning set forth in Section 2.1(a).
“Funded
Debt”
shall
mean, with respect to any Person, without duplication, all Indebtedness for
borrowed money evidenced by notes, bonds, debentures, or similar evidences
of
Indebtedness that by its terms matures more than one year from, or is directly
or indirectly renewable or extendible at such Person’s option under a revolving
credit or similar agreement obligating the lender or lenders to extend credit
over a period of more than one year from the date of creation thereof, and
specifically including Capitalized Lease Obligations, current maturities of
long-term debt, revolving credit and short-term debt extendible beyond one
year
at the option of the debtor, and also including, in the case of Borrower, the
Obligations and, without duplication, Indebtedness consisting of guaranties
of
Funded Debt of other Persons.
“GAAP”
shall
mean generally accepted accounting principles in the United States of America
in
effect from time to time.
“General
Intangibles”
shall
mean and include all of Borrower’s general intangibles, whether now owned or
hereafter acquired, including all payment intangibles, all choses in action,
causes of action, corporate or other business records, inventions, designs,
patents, patent applications, equipment formulations, manufacturing procedures,
quality control procedures, trademarks, trademark applications, service marks,
trade secrets, goodwill, copyrights, design rights, software, computer
information, source codes, codes, records and updates, registrations, licenses,
franchises, customer lists, tax refunds, tax refund claims, computer programs,
all claims under guaranties, security interests or other security held by or
granted to Borrower to secure payment of any of the Receivables by a Customer
(other than to the extent covered by Receivables) all rights of indemnification
and all other intangible property of every kind and nature (other than
Receivables).
10
“Governmental
Acts”
shall
have the meaning set forth in Section 2.16.
“Governmental
Body”
shall
mean any nation or government, any state or other political subdivision thereof
or any entity, authority, agency, division or department exercising the
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.
“Guarantor”
shall
mean Berliner and any other Person who may hereafter guarantee payment or
performance of the whole or any part of the Obligations and “Guarantors” means
collectively all such Persons.
“Guaranty”
shall
mean any guaranty of the obligations of Borrower executed by a Guarantor in
favor of Agent for its benefit and for the ratable benefit of
Lenders.
“Hazardous
Discharge”
shall
have the meaning set forth in Section 4.19(d) hereof.
“Hazardous
Substance”
shall
mean, without limitation, any flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products, methane, hazardous materials,
Hazardous Wastes, hazardous or Toxic Substances or related materials as defined
in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable Environmental Law and
in
the regulations adopted pursuant thereto.
“Hazardous
Wastes”
shall
mean all waste materials subject to regulation under CERCLA, RCRA or applicable
state law, and any other applicable Federal and state laws now in force or
hereafter enacted relating to hazardous waste disposal.
“Hedge
Liabilities”
shall
have the meaning provided in the definition of “Lender-Provided Interest Rate
Hedge”.
“Indebtedness”
of
a
Person at a particular date shall mean all obligations of such Person which
in
accordance with GAAP would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned or otherwise) and in any event, without
limitation by reason of enumeration, shall include all indebtedness, debt and
other similar monetary obligations of such Person whether direct or guaranteed,
and all premiums, if any, due at the required prepayment dates of such
indebtedness, and all indebtedness secured by a Lien on assets owned by such
Person, whether or not such indebtedness actually shall have been created,
assumed or incurred by such Person. Any indebtedness of such Person resulting
from the acquisition by such Person of any assets subject to any Lien shall
be
deemed, for the purposes hereof, to be the equivalent of the creation,
assumption and incurring of the indebtedness secured thereby, whether or not
actually so created, assumed or incurred.
“Ineligible
Security”
shall
mean any security which may not be underwritten or dealt in by member banks
of
the Federal Reserve System under Section 16 of the Banking Act of 1933 (12
U.S.C. Section 24, Seventh), as amended.
“Intellectual
Property”
shall
mean property constituting under any Applicable Law a patent, patent
application, copyright, trademark, service ▇▇▇▇, trade name, mask work, trade
secret or license or other right to use any of the foregoing.
11
“Intellectual
Property Claim”
shall
mean the assertion by any Person of a claim (whether asserted in writing, by
action, suit or proceeding or otherwise) that Borrower's ownership, use,
marketing, sale or distribution of any Inventory, Equipment, Intellectual
Property or other property or asset is violative of any ownership of or right
to
use any Intellectual Property of such Person.
“Interest
Period”
shall
mean the period provided for any Eurodollar Rate Loan pursuant to Section
2.2(b).
“Interest
Rate Hedge”
shall
mean an interest rate exchange, collar, cap, swap, adjustable strike cap,
adjustable strike corridor or similar agreements entered into by the Borrower
or
its Subsidiaries in order to provide protection to, or minimize the impact
upon,
the Borrower, any Guarantor and/or their respective Subsidiaries of increasing
floating rates of interest applicable to Indebtedness.
“Inventory”
shall
mean and include all of Borrower’s now owned or hereafter acquired goods,
merchandise and other personal property, wherever located, to be furnished
under
any consignment arrangement, contract of service or held for sale or lease,
all
raw materials, work in process, finished goods and materials and supplies of
any
kind, nature or description which are or might be used or consumed in Borrower’s
business or used in selling or furnishing such goods, merchandise and other
personal property, and all documents of title or other documents representing
them.
“Investment
Property”
shall
mean and include all of Borrower’s now owned or hereafter acquired securities
(whether certificated or uncertificated), securities entitlements, securities
accounts, commodities contracts and commodities accounts.
“Issuer”
shall
mean any Person who issues a Letter of Credit and/or accepts a draft pursuant
to
the terms hereof.
“J&J
Leasing Indebtedness”
shall
mean the Borrower’s Indebtedness to J&J Leasing Partnership as evidenced by
that certain Limited Recourse Promissory Note in the original principal amount
of $1,750,000 dated February 28, 2007 and secured by a certain Deed of Trust
dated February 28, 2007 encumbering the Texas Premises, as such documentation
may be amended, restated, replaced, modified and/or substituted from time to
time.
“Leasehold
Interests”
shall
mean all of Borrower’s right, title and interest in and to the premises
identified on Schedule 4.19 hereto.
“Lender”
and
“Lenders”
shall
have the meaning ascribed to such term in the preamble to this Agreement and
shall include each Person which becomes a transferee, successor or assign of
any
Lender.
“Lender-Provided
Interest Rate Hedge”
shall
mean an Interest Rate Hedge which is provided by any Lender and with respect
to
which the Agent confirms meets the following requirements: such Interest Rate
Hedge (i) is documented in a standard International Swap Dealer Association
Agreement, (ii) provides for the method of calculating the reimbursable amount
of the provider's credit exposure in a reasonable and customary manner, and
(iii) is entered into for hedging (rather than speculative) purposes. The
liabilities of the Borrower to the provider of any Lender-Provided Interest
Rate
Hedge (the “Hedge Liabilities”) shall be “Obligations” hereunder, guaranteed
obligations under the Guaranty and otherwise treated as Obligations for purposes
of each of the Other Documents. The Liens securing the Hedge Liabilities shall
be pari passu with the Liens securing all other Obligations under this Agreement
and the Other Documents.
12
“Letter
of Credit Fees”
shall
have the meaning set forth in Section 3.2.
“Letter
of Credit Borrowing”
shall
have the meaning set forth in Section 2.11(d).
“Letter
of Credit Sublimit”
shall
mean $1,000,000.
“Letters
of Credit”
shall
have the meaning set forth in Section 2.8.
“License
Agreement”
shall
mean any agreement between Borrower and a Licensor pursuant to which Borrower
is
authorized to use any Intellectual Property in connection with the
manufacturing, marketing, sale or other distribution of any Inventory of
Borrower or otherwise in connection with Borrower's business
operations.
“Licensor”
shall
mean any Person from whom Borrower obtains the right to use (whether on an
exclusive or non-exclusive basis) any Intellectual Property in connection with
Borrower's manufacture, marketing, sale or other distribution of any Inventory
or otherwise in connection with Borrower's business operations.
“Lien”
shall
mean any mortgage, deed of trust, pledge, hypothecation, assignment, security
interest, lien (whether statutory or otherwise), Charge, claim or encumbrance,
or preference, priority or other security agreement or preferential arrangement
held or asserted in respect of any asset of any kind or nature whatsoever
including any conditional sale or other title retention agreement, any lease
having substantially the same economic effect as any of the foregoing, and
the
filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction.
“Lien
Waiver Agreement”
shall
mean an agreement which is executed in favor of Agent by a Person who owns
or
occupies premises at Borrower’s chief executive office pursuant to Section
4.15(b) and by which such Person shall waive or subordinate any Lien that such
Person may ever have with respect to any of the Collateral and shall authorize
Agent from time to time to enter upon the premises to inspect or remove the
Collateral from such premises or to use such premises to store or dispose of
such Collateral.
“Material
Adverse Effect”
shall
mean a material adverse effect on (a) the condition (financial or otherwise),
results of operations, assets, business, properties or prospects of Borrower
or
any Guarantor, (b) Borrower’s ability to duly and punctually pay or perform the
Obligations in accordance with the terms thereof, (c) the value of the
Collateral, or Agent’s Liens on the Collateral or the priority of any such Lien
or (d) the practical realization of the benefits of Agent’s and each Lender’s
rights and remedies under this Agreement and the Other Documents.
13
“Maximum
Face Amount”
shall
mean, with respect to any outstanding Letter of Credit, the face amount of
such
Letter of Credit including all automatic increases provided for in such Letter
of Credit, whether or not any such automatic increase has become
effective.
“Maximum
Loan Amount”
shall
mean $15,000,000.
“Maximum
Revolving Advance Amount”
shall
mean $15,000,000.
“Maximum
Undrawn Amount”
shall
mean with respect to any outstanding Letter of Credit, the amount of such Letter
of Credit that is or may become available to be drawn, including all automatic
increases provided for in such Letter of Credit, whether or not any such
automatic increase has become effective.
“Modified
Commitment Transfer Supplement”
shall
have the meaning set forth in Section 15.3(d).
“Multiemployer
Plan”
shall
mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of
ERISA.
“Multiple
Employer Plan”
shall
mean a Plan which has two or more contributing sponsors (including the Borrower
or any member of the Controlled Group) at least two of whom are not under common
control, as such a plan is described in Section 4064 of ERISA.
“Note”
shall
mean the Revolving Credit Note.
“Obligations”
shall
mean and include any and all loans, advances, debts, liabilities, obligations,
covenants and duties owing by the Borrower to Lenders or Agent or to any other
direct or indirect subsidiary or affiliate of Agent or any Lender of any kind
or
nature, present or future (including any interest or other amounts accruing
thereon after maturity, or after the filing of any petition in bankruptcy,
or
the commencement of any insolvency, reorganization or like proceeding relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest or other amounts is allowed in such proceeding), whether or not
evidenced by any note, guaranty or other instrument, whether arising under
any
agreement, instrument or document, (including this Agreement and the Other
Documents) whether or not for the payment of money, whether arising by reason
of
an extension of credit, opening of a letter of credit, loan, equipment lease
or
guarantee, under any interest or currency swap, future, option or other similar
agreement, or in any other manner, whether arising out of overdrafts or deposit
or other accounts or electronic funds transfers (whether through automated
clearing houses or otherwise) or out of the Agent’s or any Lenders non-receipt
of or inability to collect funds or otherwise not being made whole in connection
with depository transfer check or other similar arrangements, whether direct
or
indirect (including those acquired by assignment or participation), absolute
or
contingent, joint or several, due or to become due, now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated, regardless of
how
such indebtedness or liabilities arise or by what agreement or instrument they
may be evidenced or whether evidenced by any agreement or instrument, including,
but not limited to, any and all of Borrower’s Indebtedness and/or liabilities
under this Agreement, the Other Documents or under any other agreement between
Agent or Lenders and Borrower and any amendments, extensions, renewals or
increases and all costs and expenses of Agent and any Lender incurred in the
documentation, negotiation, modification, enforcement, collection or otherwise
in connection with any of the foregoing, including but not limited to reasonable
attorneys’ fees and expenses and all obligations of Borrower to Agent or Lenders
to perform acts or refrain from taking any action.
14
“Ordinary
Course of Business”
shall
mean the ordinary course of Borrower’s business as conducted on the Closing
Date.
“Original
Owners”
shall
mean Berliner.
“Other
Documents”
shall
mean the Note, any Guaranty, the Subordinated Loan Documentation, any
Lender-Provided Interest Rate Hedge and any and all other agreements,
instruments and documents, including guaranties, pledges, powers of attorney,
consents, interest or currency swap agreements or other similar agreements
and
all other writings heretofore, now or hereafter executed by Borrower or any
Guarantor and/or delivered to Agent or any Lender in respect of the transactions
contemplated by this Agreement.
“Out-of-Formula
Loans”
shall
have the meaning set forth in Section 15.2(b).
“Parent”
of
any
Person shall mean a corporation or other entity owning, directly or indirectly
at least 50% of the shares of stock or other ownership interests having ordinary
voting power to elect a majority of the directors of the Person, or other
Persons performing similar functions for any such Person.
“Participant”
shall
mean each Person who shall be granted the right by any Lender to participate
in
any of the Advances and who shall have entered into a participation agreement
in
form and substance satisfactory to such Lender.
“Participation
Advance”
shall
have the meaning set forth in Section 2.11(d).
“Participation
Commitment”
shall
mean each Lender’s obligation to buy a participation of the Letters of Credit
issued hereunder.
“Payment
Office”
shall
mean initially ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇;
thereafter, such other office of Agent, if any, which it may designate by notice
to Borrower and to each Lender to be the Payment Office.
“PBGC”
shall
mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle
A
of Title IV of ERISA or any successor.
“Pension
Benefit Plan”
shall
mean at any time any employee pension benefit plan (including a Multiple
Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the
Code and either (i) is maintained by any member of the Controlled Group for
employees of any member of the Controlled Group; or (ii) has at any time within
the preceding five years been maintained by any entity which was at such time
a
member of the Controlled Group for employees of any entity which was at such
time a member of the Controlled Group.
“Permitted
Encumbrances”
shall
mean (a) Liens in favor of Agent for the benefit of Agent and Lenders; (b)
Liens
for taxes, assessments or other governmental charges not delinquent or being
contested in good faith and by appropriate proceedings and with respect to
which
proper reserves have been taken by Borrower; provided, that, the Lien shall
have
no effect on the priority of the Liens in favor of Agent or the value of the
assets in which Agent has such a Lien and a stay of enforcement of any such
Lien
shall be in effect; (c) Liens disclosed in the financial statements referred
to
in Section 5.5, the existence of which Agent has consented to in writing; (d)
deposits or pledges to secure obligations under worker’s compensation, social
security or similar laws, or under unemployment insurance; (e) deposits or
pledges to secure bids, tenders, contracts (other than contracts for the payment
of money), leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the Ordinary Course of Business; (f)
Liens
arising by virtue of the rendition, entry or issuance against Borrower or any
Subsidiary, or any property of Borrower or any Subsidiary, of any judgment,
writ, order, or decree for so long as each such Lien (a) is in existence for
less than 20 consecutive days after it first arises or is being Properly
Contested and (b) is at all times junior in priority to any Liens in favor
of
Agent; (g) mechanics’, workers’, materialmen’s or other like Liens arising in
the Ordinary Course of Business with respect to obligations which are not due
or
which are being contested in good faith by Borrower; (h) Liens placed upon
fixed
assets hereafter acquired to secure a portion of the purchase price thereof,
provided that (x) any such lien shall not encumber any other property of
Borrower and (y) the aggregate amount of Indebtedness secured by such Liens
incurred as a result of such purchases during any fiscal year shall not exceed
the amount provided for in Section 7.6; (i) other Liens incidental to the
conduct of Borrower’s business or the ownership of its property and assets which
were not incurred in connection with the borrowing of money or the obtaining
of
advances or credit, and which do not in the aggregate materially detract from
Agent’s or Lenders’ rights in and to the Collateral or the value of Borrower’s
property or assets or which do not materially impair the use thereof in the
operation of Borrower’s business; (j) Liens encumbering the Texas Premises with
regard to the J&J Leasing Indebtedness; (k) Liens with regard to the
Subordinated Loan Documentation; and (l) Liens disclosed on Schedule
1.2.
15
“Person”
shall
mean any individual, sole proprietorship, partnership, corporation, business
trust, joint stock company, trust, unincorporated organization, association,
limited liability company, limited liability partnership, institution, public
benefit corporation, joint venture, entity or Governmental Body (whether
federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
“Plan”
shall
mean any employee benefit plan within the meaning of Section 3(3) of ERISA
(including a Pension Benefit Plan), maintained for employees of Borrower or
any
member of the Controlled Group or any such Plan to which Borrower or any member
of the Controlled Group is required to contribute on behalf of any of its
employees.
“PNC”
shall
have the meaning set forth in the preamble to this Agreement and shall extend
to
all of its successors and assigns.
“Properly
Contested”
shall
mean, in the case of any Indebtedness of any Person (including any taxes) that
is not paid as and when due or payable by reason of such Person’s bona fide
dispute concerning its liability to pay same or concerning the amount thereof,
(i) such Indebtedness is being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted; (ii) such Person
has
established appropriate reserves as shall be required in conformity with GAAP;
(iii) the non-payment of such Indebtedness will not have a Material Adverse
Effect and will not result in the forfeiture of any assets of such Person;
(iv)
no Lien is imposed upon any of such Person’s assets with respect to such
Indebtedness unless such Lien is at all times junior and subordinate in priority
to the Liens in favor of the Agent (except only with respect to property taxes
that have priority as a matter of applicable state law) and enforcement of
such
Lien is stayed during the period prior to the final resolution or disposition
of
such dispute; (v) if such Indebtedness results from, or is determined by the
entry, rendition or issuance against a Person or any of its assets of a
judgment, writ, order or decree, enforcement of such judgment, writ, order
or
decree is stayed pending a timely appeal or other judicial review; and (vi)
if
such contest is abandoned, settled or determined adversely (in whole or in
part)
to such Person, such Person forthwith pays such Indebtedness and all penalties,
interest and other amounts due in connection therewith.
16
“Purchasing
CLO”
shall
have the meaning set forth in Section 15.3(d) hereof.
“Purchasing
Lender”
shall
have the meaning set forth in Section 15.3(c) hereof.
“RCRA”
shall
mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as
same may be amended from time to time.
“Real
Property”
shall
mean all of Borrower’s right, title and interest in and to the owned and leased
premises identified on Schedule 4.19 hereto.
“Receivables”
shall
mean and include, as to Borrower, all of Borrower’s accounts, contract rights,
instruments (including those evidencing indebtedness owed to Borrower by its
Affiliates), documents, chattel paper (including electronic chattel paper),
general intangibles relating to accounts, drafts and acceptances, credit card
receivables and all other forms of obligations owing to Borrower arising out
of
or in connection with the sale or lease of Inventory or the rendition of
services, all supporting obligations, guarantees and other security therefor,
whether secured or unsecured, now existing or hereafter created, and whether
or
not specifically sold or assigned to Agent hereunder.
“Receivables
Advance Rate”
shall
have the meaning set forth in Section 2.1(a)(y)(i) hereof.
“Register”
shall
have the meaning set forth in Section 15.3(e).
“Reimbursement
Obligation”
shall
have the meaning set forth in Section 2.11(b)hereof.
“Rent
Reserve”
shall
mean a reserve in an amount equal to three month’s rent relating to Borrower’s
chief executive office as set forth in Section 4.15(b) as such amount may change
from time to time at the reasonable discretion of the Agent.
“Release”
shall
have the meaning set forth in Section 5.7(c)(i) hereof.
“Reportable
Event”
shall
mean a reportable event described in Section 4043(c) of ERISA or the regulations
promulgated thereunder.
17
“Required
Lenders”
shall
mean Lenders holding at least fifty one percent (51%) of the Advances and,
if no
Advances are outstanding, shall mean Lenders holding fifty one percent (51%)
of
the Commitment Percentages; provided, however, if there are fewer than three
(3)
Lenders, Required Lenders shall mean all Lenders.
“Reserve
Percentage”
shall
mean as of any day the maximum percentage in effect on such day as prescribed
by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding (currently
referred to as “Eurocurrency Liabilities”.
“Revolving
Advances”
shall
mean Advances made other than Letters of Credit.
“Revolving
Credit Note”
shall
mean the promissory note referred to in Section 2.1(a) hereof.
“Revolving
Interest Rate”
shall
mean an interest rate per annum equal to (a) the sum of the Alternate Base
Rate
plus zero percent (0.00%)with respect to Domestic Rate Loans and (b) the sum
of
the Eurodollar Rate plus two percent (2.00%) with respect to Eurodollar Rate
Loans.
“Sales
Tax Reserve”
shall
mean a reserve in the amount of $700,000 which reserve shall terminate and
be
released upon delivery to the Agent of documentation acceptable to the Agent
indicating either a favorable final determination of the sales tax assessment
or
payment of the sales tax assessment currently being asserted against the
Borrower by the State of New Jersey.
“SEC”
shall
mean the Securities and Exchange Commission or any successor
thereto.
“Section
20 Subsidiary”
shall
mean the Subsidiary of the bank holding company controlling PNC, which
Subsidiary has been granted authority by the Federal Reserve Board to underwrite
and deal in certain Ineligible Securities.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended.
“Senior
Debt Payments”
shall
mean and include all cash actually expended by Borrower to make (a) interest
payments on any Advances hereunder, plus (b) payments for all fees, commissions
and charges set forth herein and with respect to any Advances, plus (c)
capitalized lease payments, plus (d) payments with respect to any other
Indebtedness for borrowed money.
“Settlement
Date”
shall
mean the Closing Date and thereafter Wednesday or Thursday of each week or
more
frequently if Agent deems appropriate unless such day is not a Business Day
in
which case it shall be the next succeeding Business Day.
“Subordinated
Debt Payments”
shall
mean and include all cash actually expended to make payments of principal and
interest on the Subordinated Note.
“Subordinated
Indebtedness Reserve”
shall
mean a reserve in the amount of (i) $1,000,000 as of the Closing Date through
and including July 17 , 2008, (ii) $2,000,000 from July 17 , 2008 through and
including October 17 , 2008 and (iii) $3,000,000 as of October 17 , 2008 and
thereafter, as such amount may change from time to time at the discretion of
the
Agent.
18
“Subordinated
Lender”
shall
mean, collectively, Sigma Opportunity Fund, LLC, Sigma Berliner, LLC, Operis
Partners I, LLC and Pacific Asset Partners.
“Subordinated
Loan”
shall
mean the loan evidenced by the Subordinated Note.
“Subordinated
Loan Documentation”
shall
mean, collectively, the Subordinated Note, the Subordination Agreement and
all
other documentation executed in connection therewith.
“Subordinated
Note”
shall
mean, collectively, that certain 7% Senior Subordinated Secured Convertible
Note
due on December 29, 2008, in the original principal amount of $3,000,000, issued
by Borrower on December 29, 2006 in favor of Sigma Opportunity Fund, LLC; that
certain 7% Senior Subordinated Secured Convertible Note due on December 29,
2008
in the original principal amount of $1,000,000 issued by Borrower on February
2,
2007 in favor of Pacific Asset Partners; that certain 7% Senior Subordinated
Secured Convertible Note due on December 29, 2008 in the original principal
amount of $1,500,000 issued by Borrower on February 15, 2007 in favor of Sigma
Berliner, LLC; and that certain 7% Senior Subordinated Secured Convertible
Note
due on December 29, 2008 in the original principal amount of $500,000 issued
by
Borrower on February 2, 2007 in favor of Operis Partners I, LLC.
“Subordination
Agreement”
shall
mean that certain Intercreditor and Subordination Agreement dated the date
hereof by and among Agent, Borrower and Subordinated Lender.
“Subsidiary”
of
any
Person shall mean a corporation or other entity of whose Equity Interests having
ordinary voting power (other than Equity Interests having such power only by
reason of the happening of a contingency) to elect a majority of the directors
of such corporation, or other Persons performing similar functions for such
entity, are owned, directly or indirectly, by such Person.
“Subsidiary
Stock”
shall
mean all of the issued and outstanding Equity Interests of any Subsidiary owned
by the Borrower (not to exceed 65% of the Equity Interests of any Foreign
Subsidiary).
“Term”
shall
have the meaning set forth in Section 13.1 hereof.
“Termination
Date”
shall
mean April 17, 2011 or such other date as the Lenders may agree in writing
to
extend the Termination Date until, without there being any obligation on the
part of the Lenders to extend the Termination Date.
“Termination
Event”
shall
mean (i) a Reportable Event with respect to any Plan or Multiemployer Plan;
(ii)
the withdrawal of Borrower or any member of the Controlled Group from a Plan
or
Multiemployer Plan during a plan year in which such entity was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of
notice of intent to terminate a Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which
might constitute grounds under Section 4042 of ERISA for the termination of,
or
the appointment of a trustee to administer, any Plan or Multiemployer Plan,
or
(b) that may result in termination of a Multiemployer Plan pursuant to Section
4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning
of
Sections 4203 and 4205 of ERISA, of Borrower or any member of the Controlled
Group from a Multiemployer Plan.
19
“Texas
Premises”
shall
mean the real property known as all of Block 10-R, Arlington Heights Addition,
in addition to the City of Arlington, Tarrant County, Texas, according to the
Plat recorded in Volume 388-48, Page 66, Plat Records of Tarrant County, Texas,
in the ▇. ▇▇▇▇▇▇▇ Survey, A-430.
“Toxic
Substance”
shall
mean and include any material present on the Real Property or the Leasehold
Interests which has been shown to have significant adverse effect on human
health or which is subject to regulation under the Toxic Substances Control
Act
(TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law, or any other applicable
Federal or state laws now in force or hereafter enacted relating to toxic
substances. “Toxic Substance” includes but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.
“Trading
with the Enemy Act”
shall
mean the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling
legislation or executive order relating thereto.
“Transactions”
shall
mean the transaction evidenced by this Agreement and the Other
Documents.
“Transferee”
shall
have the meaning set forth in Section 15.3(d) hereof.
“Undrawn
Availability”
at
a
particular date shall mean an amount equal to (a) the lesser of (i) the Formula
Amount or (ii) the Maximum Revolving Advance Amount, minus (b) the sum of (i)
the outstanding amount of Advances plus (ii) all amounts due and owing to
Borrower’s trade creditors which are outstanding beyond normal trade terms ,
plus (iii) fees and expenses for which Borrower is liable but which have not
been paid or charged to Borrower’s Account.
“Uniform
Commercial Code”
shall
have the meaning set forth in Section 1.3 hereof.
“USA
PATRIOT Act”
shall
mean the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56,
as
the same has been, or shall hereafter be, renewed, extended, amended or
replaced.
“Week”
shall
mean the time period commencing with the opening of business on a Wednesday
and
ending on the end of business the following Tuesday.
1.3. Uniform
Commercial Code Terms.
All
terms
used herein and defined in the Uniform Commercial Code as adopted in the State
of New Jersey from time to time (the “Uniform Commercial Code”) shall have the
meaning given therein unless otherwise defined herein. Without limiting the
foregoing, the terms “accounts”, “chattel paper”, “instruments”, “general
intangibles”, “payment intangibles”, “supporting obligations”, “securities”,
“investment property”, “documents”, “deposit accounts”, “software”, “letter of
credit rights”, “inventory”, “equipment” and “fixtures”, as and when used in the
description of Collateral shall have the meanings given to such terms in
Articles 8 or 9 of the Uniform Commercial Code. To the extent the definition
of
any category or type of collateral is expanded by any amendment, modification
or
revision to the Uniform Commercial Code, such expanded definition will apply
automatically as of the date of such amendment, modification or
revision.
20
1.4. Certain
Matters of Construction.
The
terms
“herein”, “hereof” and “hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular section, paragraph or
subdivision. All references herein to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, this Agreement. Any pronoun used shall be deemed to cover all
genders. Wherever appropriate in the context, terms used herein in the singular
also include the plural and vice versa. All references to statutes and related
regulations shall include any amendments of same and any successor statutes
and
regulations. Unless otherwise provided, all references to any instruments or
agreements to which Agent is a party, including references to any of the Other
Documents, shall include any and all modifications or amendments thereto and
any
and all extensions or renewals thereof. All references herein to the time of
day
shall mean the time in New York, New York. Unless otherwise provided, all
financial calculations shall be performed with Inventory valued on a first-in,
first-out basis. Whenever the words “including” or “include” shall be used, such
words shall be understood to mean “including, without limitation” or “include,
without limitation”. A Default or Event of Default shall be deemed to exist at
all times during the period commencing on the date that such Default or Event
of
Default occurs to the date on which such Default or Event of Default is waived
in writing pursuant to this Agreement or, in the case of a Default, is cured
within any period of cure expressly provided for in this Agreement; and an
Event
of Default shall “continue” or be “continuing” until such Event of Default has
been waived in writing by the Required Lenders. Any Lien referred to in this
Agreement or any of the Other Documents as having been created in favor of
Agent, any agreement entered into by Agent pursuant to this Agreement or any
of
the Other Documents, any payment made by or to or funds received by Agent
pursuant to or as contemplated by this Agreement or any of the Other Documents,
or any act taken or omitted to be taken by Agent, shall, unless otherwise
expressly provided, be created, entered into, made or received, or taken or
omitted, for the benefit or account of Agent and Lenders. Wherever the phrase
“to the best of Borrower’s knowledge” or words of similar import relating to the
knowledge or the awareness of Borrower are used in this Agreement or Other
Documents, such phrase shall mean and refer to (i) the actual knowledge of
a
senior officer of Borrower or (ii) the knowledge that a senior officer would
have obtained if he had engaged in good faith and diligent performance of his
duties, including the making of such reasonably specific inquiries as may be
necessary of the employees or agents of Borrower and a good faith attempt to
ascertain the existence or accuracy of the matter to which such phrase relates.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or otherwise within the
limitations of, another covenant shall not avoid the occurrence of a default
if
such action is taken or condition exists. In addition, all representations
and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact
that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached will not affect the incorrectness of a breach
of a
representation or warranty hereunder.
21
II ADVANCES,
PAYMENTS.
2.1. Revolving
Advances.
(a) Amount
of Revolving Advances.
Subject
to the terms and conditions set forth in this Agreement including Section
2.1(b), each Lender, severally and not jointly, will make Revolving Advances
to
Borrower in aggregate amounts outstanding at any time equal to such Lender’s
Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount
less the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit
or (y) an amount equal to the sum of:
(i) up
to
85%, subject to the provisions of Section 2.1(b) hereof (“Receivables Advance
Rate”), of the sum of (A) the value of Eligible Receivables, (B) the lesser of
(I) the value of Eligible Unbilled Receivables and (II) the Eligible Unbilled
Receivables Sublimit, and (C) the lesser of (I) the value of Eligible
Work-In-Process Receivables and (II) the Eligible Work-In-Process Receivables
Sublimit, minus
(ii) the
aggregate Maximum Undrawn Amount of all outstanding Letters of Credit,
minus
(iii) such
reserves as Agent may reasonably deem proper and necessary from time to time
including, but not limited to, the Subordinated Indebtedness Reserve, the Rent
Reserve and the Sales Tax Reserve.
The
amount derived from the sum of (x) Sections 2.1(a)(y)(i) minus (y) Section
2.1
(a)(y)(ii) and (iii) at any time and from time to time shall be referred to
as
the “Formula Amount”. The Revolving Advances shall be evidenced by one or more
secured promissory notes (collectively, the “Revolving Credit Note”)
substantially in the form attached hereto as Exhibit 2.1(a).
(b) Discretionary
Rights.
The
Advance Rates may be increased or decreased by Agent at any time and from time
to time in the exercise of its reasonable discretion. Borrower consents to
any
such increases or decreases and acknowledges that decreasing the Advance Rates
or increasing or imposing reserves may limit or restrict Advances requested
by
Borrower. The rights of Agent under this subsection are subject to the
provisions of Section 15.2(b).
(c) Subordinated
Indebtedness Reserve.
The
Agent on behalf of the Lenders hereby agrees to terminate the Subordinated
Indebtedness Reserve upon receipt of evidence satisfactory to the Agent that
either (i) the maturity date of the Subordinated Note has been extended to
a
date that is later than the Termination Date, (ii) the full amount of
Indebtedness evidenced by the Subordinated Note has been converted into equity
in the Borrower or (iii) the full amount of Indebtedness evidenced by the
Subordinated Note has been repaid in full, provided,
however,
that
the Borrower is in compliance with Section 7.21 herein at the time of such
repayment.
2.2. Procedure
for Revolving Advances Borrowing.
(a) Borrower
may notify Agent prior to 10:00 a.m. on a Business Day of Borrower’s request to
incur, on that day, a Revolving Advance hereunder. Should any amount required
to
be paid as interest hereunder, or as fees or other charges under this Agreement
or any other agreement with Agent or Lenders, or with respect to any other
Obligation, become due, same shall be deemed a request for a Revolving Advance
as of the date such payment is due, in the amount required to pay in full such
interest, fee, charge or Obligation under this Agreement or any other agreement
with Agent or Lenders, and such request shall be irrevocable.
22
(b) Notwithstanding
the provisions of subsection (a) above, in the event Borrower desires to obtain
a Eurodollar Rate Loan, Borrower shall give Agent written notice by no later
than 10:00 a.m. on the day which is three (3) Business Days prior to the date
such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of the
proposed borrowing (which shall be a Business Day), (ii) the type of borrowing
and the amount on the date of such Advance to be borrowed, which amount shall
be
an integral multiple of $500,000, and (iii) the duration of the first Interest
Period therefor. Interest Periods for Eurodollar Rate Loans shall be for one,
two or three months; provided, if an Interest Period would end on a day that
is
not a Business Day, it shall end on the next succeeding Business Day unless
such
day falls in the next succeeding calendar month in which case the Interest
Period shall end on the next preceding Business Day. No Eurodollar Rate Loan
shall be made available to Borrower during the continuance of a Default or
an
Event of Default. After giving effect to each requested Eurodollar Rate Loan,
including those which are converted from a Domestic Rate Loan under Section
2.2(d), there shall not be outstanding more than three (3) Eurodollar Rate
Loans, in the aggregate.
(c) Each
Interest Period of a Eurodollar Rate Loan shall commence on the date such
Eurodollar Rate Loan is made and shall end on such date as Borrower may elect
as
set forth in subsection (b)(iii) above provided that the exact length of each
Interest Period shall be determined in accordance with the practice of the
interbank market for offshore Dollar deposits and no Interest Period shall
end
after the last day of the Term.
Borrower
shall elect the initial Interest Period applicable to a Eurodollar Rate Loan
by
its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its
notice of conversion given to Agent pursuant to Section 2.2(d), as the case
may
be. Borrower shall elect the duration of each succeeding Interest Period by
giving irrevocable written notice to Agent of such duration not later than
10:00
a.m. on the day which is three (3) Business Days prior to the last day of the
then current Interest Period applicable to such Eurodollar Rate Loan. If Agent
does not receive timely notice of the Interest Period elected by Borrower,
Borrower shall be deemed to have elected to convert to a Domestic Rate Loan
subject to Section 2.2(d) hereinbelow.
(d) Provided
that no Event of Default shall have occurred and be continuing, Borrower may,
on
the last Business Day of the then current Interest Period applicable to any
outstanding Eurodollar Rate Loan, or on any Business Day with respect to
Domestic Rate Loans, convert any such loan into a loan of another type in the
same aggregate principal amount provided that any conversion of a Eurodollar
Rate Loan shall be made only on the last Business Day of the then current
Interest Period applicable to such Eurodollar Rate Loan. If Borrower desires
to
convert a loan, Borrower shall give Agent written notice by no later than 10:00
a.m. (i) on the day which is three (3) Business Days’ prior to the date on which
such conversion is to occur with respect to a conversion from a Domestic Rate
Loan to a Eurodollar Rate Loan, or (ii) on the day which is one (1) Business
Day
prior to the date on which such conversion is to occur with respect to a
conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying,
in
each case, the date of such conversion, the loans to be converted and if the
conversion is from a Domestic Rate Loan to any other type of loan, the duration
of the first Interest Period therefor.
23
(e) At
its
option and upon written notice given prior to 10:00 a.m. (New York time) at
least three (3) Business Days’ prior to the date of such prepayment, Borrower
may prepay the Eurodollar Rate Loans in whole at any time or in part from time
to time with accrued interest on the principal being prepaid to the date of
such
repayment. Borrower shall specify the date of prepayment of Advances which
are
Eurodollar Rate Loans and the amount of such prepayment. In the event that
any
prepayment of a Eurodollar Rate Loan is required or permitted on a date other
than the last Business Day of the then current Interest Period with respect
thereto, Borrower shall indemnify Agent and Lenders therefor in accordance
with
Section 2.2(f) hereof.
(f) Borrower
shall indemnify Agent and Lenders and hold Agent and Lenders harmless from
and
against any and all losses or expenses that Agent and Lenders may sustain or
incur as a consequence of any prepayment, conversion of or any default by
Borrower in the payment of the principal of or interest on any Eurodollar Rate
Loan or failure by Borrower to complete a borrowing of, a prepayment of or
conversion of or to a Eurodollar Rate Loan after notice thereof has been given,
including, but not limited to, any interest payable by Agent or Lenders to
lenders of funds obtained by it in order to make or maintain its Eurodollar
Rate
Loans hereunder. A certificate as to any additional amounts payable pursuant
to
the foregoing sentence submitted by Agent or any Lender to Borrower shall be
conclusive absent manifest error.
(g) Notwithstanding
any other provision hereof, if any Applicable Law, treaty, regulation or
directive, or any change therein or in the interpretation or application
thereof, shall make it unlawful for any Lender (for purposes of this subsection
(g), the term “Lender” shall include any Lender and the office or branch where
any Lender or any corporation or bank controlling such Lender makes or maintains
any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the
obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith
be
cancelled and Borrower shall, if any affected Eurodollar Rate Loans are then
outstanding, promptly upon request from Agent, either pay all such affected
Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans into loans
of another type. If any such payment or conversion of any Eurodollar Rate Loan
is made on a day that is not the last day of the Interest Period applicable
to
such Eurodollar Rate Loan, Borrower shall pay Agent, upon Agent’s request, such
amount or amounts as may be necessary to compensate Lenders for any loss or
expense sustained or incurred by Lenders in respect of such Eurodollar Rate
Loan
as a result of such payment or conversion, including (but not limited to) any
interest or other amounts payable by Lenders to lenders of funds obtained by
Lenders in order to make or maintain such Eurodollar Rate Loan. A certificate
as
to any additional amounts payable pursuant to the foregoing sentence submitted
by Lenders to Borrower shall be conclusive absent manifest error.
2.3. Disbursement
of Advance Proceeds.
All
Advances shall be disbursed from whichever office or other place Agent may
designate from time to time and, together with any and all other Obligations
of
Borrower to Agent or Lenders, shall be charged to Borrower’s Account on Agent’s
books. During the Term, Borrower may use the Revolving Advances by borrowing,
prepaying and reborrowing, all in accordance with the terms and conditions
hereof. The proceeds of each Revolving Advance requested by Borrower or deemed
to have been requested by Borrower under Section 2.2(a) hereof shall, with
respect to requested Revolving Advances to the extent Lenders make such
Revolving Advances, be made available to Borrower on the day so requested by
way
of credit to Borrower’s operating account at PNC, or such other bank as Borrower
may designate following notification to Agent, in immediately available federal
funds or other immediately available funds or, with respect to Revolving
Advances deemed to have been requested by Borrower, be disbursed to Agent to
be
applied to the outstanding Obligations giving rise to such deemed
request.
24
2.4. Maximum
Advances.
The
aggregate balance of Revolving Advances outstanding at any time shall not exceed
the lesser of (a) the Maximum Revolving Advance Amount or (b) the Formula Amount
less, in each case, the aggregate Maximum Undrawn Amount of all issued and
outstanding Letters of Credit.
2.5. Repayment
of Advances.
(a) The
Revolving Advances shall be due and payable in full on the last day of the
Term
subject to earlier prepayment as herein provided.
(b) Borrower
recognizes that the amounts evidenced by checks, notes, drafts or any other
items of payment relating to and/or proceeds of Collateral may not be
collectible by Agent on the date received. In consideration of Agent’s agreement
to conditionally credit Borrower’s Account as of the Business Day on which Agent
receives those items of payment, Borrower agrees that, in computing the charges
under this Agreement, all items of payment shall be deemed applied by Agent
on
account of the Obligations one (1) Business Day after (i) the Business Day
Agent
receives such payments via wire transfer or electronic depository check or
(ii)
in the case of payments received by Agent in any other form, the Business Day
such payment constitutes good funds in Agent’s account. Agent is not, however,
required to credit Borrower’s Account for the amount of any item of payment
which is unsatisfactory to Agent and Agent may charge Borrower’s Account for the
amount of any item of payment which is returned to Agent unpaid.
(c) All
payments of principal, interest and other amounts payable hereunder, or under
any of the Other Documents shall be made to Agent at the Payment Office not
later than 1:00 P.M. (New York time) on the due date therefor in lawful money
of
the United States of America in federal funds or other funds immediately
available to Agent. Agent shall have the right to effectuate payment on any
and
all Obligations due and owing hereunder by charging Borrower’s Account or by
making Advances as provided in Section 2.2 hereof.
(d) Borrower
shall pay principal, interest, and all other amounts payable hereunder, or
under
any related agreement, without any deduction whatsoever, including, but not
limited to, any deduction for any setoff or counterclaim.
2.6. Repayment
of Excess Advances.
The
aggregate balance of Advances outstanding at any time in excess of the maximum
amount of Advances permitted hereunder shall be immediately due and payable
without the necessity of any demand, at the Payment Office, whether or not
a
Default or Event of Default has occurred.
25
2.7. Statement
of Account.
Agent
shall maintain, in accordance with its customary procedures, a loan account
(“Borrower’s
Account”)
in the
name of Borrower in which shall be recorded the date and amount of each Advance
made by Agent and the date and amount of each payment in respect thereof;
provided, however, the failure by Agent to record the date and amount of any
Advance shall not adversely affect Agent or any Lender. Each month, Agent shall
send to Borrower a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between
Agent and Borrower, during such month. The monthly statements shall be deemed
correct and binding upon Borrower in the absence of manifest error and shall
constitute an account stated between Lenders and Borrower unless Agent receives
a written statement of Borrower’s specific exceptions thereto within thirty (30)
days after such statement is received by Borrower. The records of Agent with
respect to the loan account shall be conclusive evidence absent manifest error
of the amounts of Advances and other charges thereto and of payments applicable
thereto.
2.8. Letters
of Credit.
Subject
to the terms and conditions hereof, Agent shall issue or cause the issuance
of
standby Letters of Credit (“Letters of Credit”) for the account of Borrower;
provided, however, that Agent will not be required to issue or cause to be
issued any Letters of Credit to the extent that the issuance thereof would
then
cause the sum of (i) the outstanding Revolving Advances plus (ii) the Maximum
Undrawn Amount of all outstanding Letters of Credit to exceed the lesser of
(x)
the Maximum Revolving Advance Amount or (y) the Formula Amount. The Maximum
Undrawn Amount of all outstanding Letters of Credit shall not exceed in the
aggregate at any time the Letter of Credit Sublimit. All disbursements or
payments related to Letters of Credit shall be deemed to be Domestic Rate Loans
consisting of Revolving Advances and shall bear interest at the applicable
Contract Rate for Domestic Rate Loans; Letters of Credit that have not been
drawn upon shall not bear interest.
2.9. Issuance
of Letters of Credit.
(a) Borrower
may request Agent to issue or cause the issuance of a Letter of Credit by
delivering to Agent, at the Payment Office, prior to 10:00 a.m. (New York time),
at least five (5) Business Days’ prior to the proposed date of issuance, Agent’s
form of Letter of Credit Application (the “Letter
of Credit Application”)
completed to the satisfaction of Agent; and, such other certificates, documents
and other papers and information as Agent may reasonably request. Borrower
also
has the right to give instructions and make agreements with respect to any
application, any applicable letter of credit and security agreement, any
applicable letter of credit reimbursement agreement and/or any other applicable
agreement, any letter of credit and the disposition of documents, disposition
of
any unutilized funds, and to agree with Agent upon any amendment, extension
or
renewal of any Letter of Credit.
(b) Each
Letter of Credit shall, among other things, (i) provide for the payment of
sight
drafts, other written demands for payment, or acceptances of usance drafts
when
presented for honor thereunder in accordance with the terms thereof and when
accompanied by the documents described therein and (ii) have an expiry date
not
later than twenty-four (24) months after such Letter of Credit’s date of
issuance and in no event later than the last day of the Term. Each standby
Letter of Credit shall be subject either to the Uniform Customs and Practice
for
Documentary Credits as most recently published by the International Chamber
of
Commerce at the time a Letter of Credit is issued ("UCP") or the International
Standby Practices (ISP98-International Chamber of Commerce Publication Number
590) ("ISP98 Rules"), as determined by Agent, and each trade Letter of Credit
shall be subject to UCP.
26
(c) Agent
shall use its reasonable efforts to notify Lenders of the request by Borrower
for a Letter of Credit hereunder.
2.10. Requirements
For Issuance of Letters of Credit.
(a) Borrower
shall authorize and direct any Issuer to name Borrower as the “Applicant” or
“Account Party” of each Letter of Credit. If Agent is not the Issuer of any
Letter of Credit, Borrower shall authorize and direct the Issuer to deliver
to
Agent all instruments, documents, and other writings and property received
by
the Issuer pursuant to the Letter of Credit and to accept and rely upon Agent’s
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit, the application therefor or any acceptance
therefor.
(b) In
connection with all Letters of Credit issued or caused to be issued by Agent
under this Agreement, Borrower hereby appoints Agent, or its designee, as its
attorney, with full power and authority if an Event of Default shall have
occurred, (i) to sign and/or endorse Borrower’s name upon any warehouse or other
receipts, letter of credit applications and acceptance, (ii) to sign Borrower’s
name on bills of lading; (iii) to clear Inventory through the United States
of
America Customs Department (“Customs”) in the name of Borrower or Agent or
Agent’s designee, and to sign and deliver to Customs officials powers of
attorney in the name of Borrower for such purpose; and (iv) to complete in
Borrower’s name or Agent’s, or in the name of Agent’s designee, any order, sale
or transaction, obtain the necessary documents in connection therewith, and
collect the proceeds thereof. Neither Agent nor its attorneys will be liable
for
any acts or omissions nor for any error of judgment or mistakes of fact or
law,
except for Agent’s or its attorney’s willful misconduct. This power, being
coupled with an interest, is irrevocable as long as any Letters of Credit remain
outstanding.
2.11. Disbursements,
Reimbursement.
(a) Immediately
upon the issuance of each Letter of Credit, each Lender shall be deemed to,
and
hereby irrevocably and unconditionally agrees to, purchase from Agent a
participation in such Letter of Credit and each drawing thereunder in an amount
equal to such Lender’s Commitment Percentage of the Maximum Face Amount of such
Letter of Credit and the amount of such drawing, respectively.
(b) In
the
event of any request for a drawing under a Letter of Credit by the beneficiary
or transferee thereof, Agent will promptly notify Borrower. Provided that it
shall have received such notice, Borrower shall reimburse (such obligation
to
reimburse Agent shall sometimes be referred to as a “Reimbursement
Obligation”)
Agent
prior to 12:00 Noon, New York time on each date that an amount is paid by Agent
under any Letter of Credit (each such date, a “Drawing
Date”)
in an
amount equal to the amount so paid by Agent. In the event Borrower fails to
reimburse Agent for the full amount of any drawing under any Letter of Credit
by
12:00 Noon, New York time, on the Drawing Date, Agent will promptly notify
each
Lender thereof, and Borrower shall be deemed to have requested that a Domestic
Rate Loan be made by the Lenders to be disbursed on the Drawing Date under
such
Letter of Credit, subject to the amount of the unutilized portion of the lesser
of Maximum Revolving Advance Amount or the Formula Amount and subject to Section
8.2 hereof. Any notice given by Agent pursuant to this Section 2.11(b) may
be
oral if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect
of
such notice.
27
(c) Each
Lender shall upon any notice pursuant to Section 2.11(b) make available to
Agent
an amount in immediately available funds equal to its Commitment Percentage
of
the amount of the drawing, whereupon the participating Lenders shall (subject
to
Section 2.11(d)) each be deemed to have made a Domestic Rate Loan to Borrower
in
that amount. If any Lender so notified fails to make available to Agent the
amount of such Lender’s Commitment Percentage of such amount by no later than
2:00 p.m., New York time on the Drawing Date, then interest shall accrue on
such
Lender’s obligation to make such payment, from the Drawing Date to the date on
which such Lender makes such payment (i) at a rate per annum equal to the
Federal Funds Rate during the first three days following the Drawing Date and
(ii) at a rate per annum equal to the rate applicable to Domestic Rate Loans
on
and after the fourth day following the Drawing Date. Agent will promptly give
notice of the occurrence of the Drawing Date, but failure of Agent to give
any
such notice on the Drawing Date or in sufficient time to enable any Lender
to
effect such payment on such date shall not relieve such Lender from its
obligation under this Section 2.11(c), provided that such Lender shall not
be
obligated to pay interest as provided in Section 2.11(c) (i) and (ii) until
and
commencing from the date of receipt of notice from Agent of a drawing.
(d) With
respect to any unreimbursed drawing that is not converted into a Domestic Rate
Loan to Borrower in whole or in part as contemplated by Section 2.11(b), because
of Borrower’s failure to satisfy the conditions set forth in Section 8.2 (other
than any notice requirements) or for any other reason, Borrower shall be deemed
to have incurred from Agent a borrowing (each a “Letter of Credit Borrowing”) in
the amount of such drawing. Such Letter of Credit Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at the rate
per annum applicable to a Domestic Rate Loan. Each Lender’s payment to Agent
pursuant to Section 2.11(c) shall be deemed to be a payment in respect of its
participation in such Letter of Credit Borrowing and shall constitute a
“Participation Advance” from such Lender in satisfaction of its Participation
Commitment under this Section 2.11.
(e) Each
Lender’s Participation Commitment shall continue until the last to occur of any
of the following events: (x) Agent ceases to be obligated to issue or cause
to
be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created
hereunder remains outstanding and uncancelled and (z) all Persons (other than
the Borrower) have been fully reimbursed for all payments made under or relating
to Letters of Credit.
28
2.12. Repayment
of Participation Advances.
(a) Upon
(and
only upon) receipt by Agent for its account of immediately available funds
from
Borrower (i) in reimbursement of any payment made by the Agent under the Letter
of Credit with respect to which any Lender has made a Participation Advance
to
Agent, or (ii) in payment of interest on such a payment made by Agent under
such
a Letter of Credit, Agent will pay to each Lender, in the same funds as those
received by Agent, the amount of such Lender’s Commitment Percentage of such
funds, except Agent shall retain the amount of the Commitment Percentage of
such
funds of any Lender that did not make a Participation Advance in respect of
such
payment by Agent.
(b) If
Agent
is required at any time to return to Borrower, or to a trustee, receiver,
liquidator, custodian, or any official in any insolvency proceeding, any portion
of the payments made by Borrower to Agent pursuant to Section 2.12(a) in
reimbursement of a payment made under the Letter of Credit or interest or fee
thereon, each Lender shall, on demand of Agent, forthwith return to Agent the
amount of its Commitment Percentage of any amounts so returned by Agent plus
interest at the Federal Funds Effective Rate.
2.13. Documentation.
Borrower
agrees to be bound by the terms of the Letter of Credit Application and by
Agent’s interpretations of any Letter of Credit issued for Borrower’s account
and by Agent’s written regulations and customary practices relating to letters
of credit, though Agent’s interpretations may be different from Borrower’s own.
In the event of a conflict between the Letter of Credit Application and this
Agreement, this Agreement shall govern. It is understood and agreed that, except
in the case of gross negligence or willful misconduct (as determined by a court
of competent jurisdiction in a final non-appealable judgment), Agent shall
not
be liable for any error, negligence and/or mistakes, whether of omission or
commission, in following Borrower’s instructions or those contained in the
Letters of Credit or any modifications, amendments or supplements
thereto.
2.14. Determination
to Honor Drawing Request.
In
determining whether to honor any request for drawing under any Letter of Credit
by the beneficiary thereof, Agent shall be responsible only to determine that
the documents and certificates required to be delivered under such Letter of
Credit have been delivered and that they comply on their face with the
requirements of such Letter of Credit and that any other drawing condition
appearing on the face of such Letter of Credit has been satisfied in the manner
so set forth.
2.15. Nature
of Participation and Reimbursement Obligations.
Each
Lender’s obligation in accordance with this Agreement to make the Revolving
Advances or Participation Advances as a result of a drawing under a Letter
of
Credit, and the obligations of Borrower to reimburse Agent upon a draw under
a
Letter of Credit, shall be absolute, unconditional and irrevocable, and shall
be
performed strictly in accordance with the terms of this Section 2.15 under
all
circumstances, including the following circumstances:
(i) any
set-off, counterclaim, recoupment, defense or other right which such Lender
may
have against Agent, Borrower or any other Person for any reason
whatsoever;
29
(ii) the
failure of Borrower or any other Person to comply, in connection with a Letter
of Credit Borrowing, with the conditions set forth in this Agreement for the
making of a Revolving Advance, it being acknowledged that such conditions are
not required for the making of a Letter of Credit Borrowing and the obligation
of the Lenders to make Participation Advances under Section 2.11;
(iii) any
lack
of validity or enforceability of any Letter of Credit;
(iv) any
claim
of breach of warranty that might be made by Borrower or any Lender against
the
beneficiary of a Letter of Credit, or the existence of any claim, set-off,
recoupment, counterclaim, crossclaim, defense or other right which Borrower
or
any Lender may have at any time against a beneficiary, any successor beneficiary
or any transferee of any Letter of Credit or the proceeds thereof (or any
Persons for whom any such transferee may be acting), Agent or any Lender or
any
other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying
transaction between Borrower or any Subsidiaries of Borrower and the beneficiary
for which any Letter of Credit was procured);
(v) the
lack
of power or authority of any signer of (or any defect in or forgery of any
signature or endorsement on) or the form of or lack of validity, sufficiency,
accuracy, enforceability or genuineness of any draft, demand, instrument,
certificate or other document presented under or in connection with any Letter
of Credit, or any fraud or alleged fraud in connection with any Letter of
Credit, or the transport of any property or provisions of services relating
to a
Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has
been notified thereof;
(vi) payment
by Agent under any Letter of Credit against presentation of a demand, draft
or
certificate or other document which does not comply with the terms of such
Letter of Credit;
(vii) the
solvency of, or any acts or omissions by, any beneficiary of any Letter of
Credit, or any other Person having a role in any transaction or obligation
relating to a Letter of Credit, or the existence, nature, quality, quantity,
condition, value or other characteristic of any property or services relating
to
a Letter of Credit;
(viii) any
failure by the Agent or any of Agent’s Affiliates to issue any Letter of Credit
in the form requested by Borrower, unless the Agent has received written notice
from Borrower of such failure within three (3) Business Days after the Agent
shall have furnished Borrower a copy of such Letter of Credit and such error
is
material and no drawing has been made thereon prior to receipt of such
notice;
(ix) any
Material Adverse Effect on Borrower or any Guarantor;
(x) any
breach of this Agreement or any Other Document by any party
thereto;
(xi) the
occurrence or continuance of an insolvency proceeding with respect to Borrower
or any Guarantor;
30
(xii) the
fact
that a Default or Event of Default shall have occurred and be
continuing;
(xiii) the
fact
that the Term shall have expired or this Agreement or the Obligations hereunder
shall have been terminated; and
(xiv) any
other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing.
2.16. Indemnity.
In
addition to amounts payable as provided in Section 15.5, the Borrower hereby
agrees to protect, indemnify, pay and save harmless Agent and any of Agent’s
Affiliates that have issued a Letter of Credit from and against any and all
claims, demands, liabilities, damages, taxes, penalties, interest, judgments,
losses, costs, charges and expenses (including reasonable fees, expenses and
disbursements of counsel and allocated costs of internal counsel) which the
Agent or any of Agent’s Affiliates may incur or be subject to as a consequence,
direct or indirect, of the issuance of any Letter of Credit, other than as
a
result of (A) the gross negligence or willful misconduct of the Agent as
determined by a final and non-appealable judgment of a court of competent
jurisdiction or (b) the wrongful dishonor by the Agent or any of Agent’s
Affiliates of a proper demand for payment made under any Letter of Credit,
except if such dishonor resulted from any act or omission, whether rightful
or
wrongful, of any present or future de jure or de facto Governmental Body (all
such acts or omissions herein called “Governmental
Acts”).
2.17. Liability
for Acts and Omissions.
As
between Borrower and Agent and Lenders, Borrower assumes all risks of the acts
and omissions of, or misuse of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation
of
the respective foregoing, Agent shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for an issuance of
any
such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged (even if Agent
shall have been notified thereof); (ii) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (iii) the failure of the beneficiary of any such Letter of Credit,
or
any other party to which such Letter of Credit may be transferred, to comply
fully with any conditions required in order to draw upon such Letter of Credit
or any other claim of Borrower against any beneficiary of such Letter of Credit,
or any such transferee, or any dispute between or among Borrower and any
beneficiary of any Letter of Credit or any such transferee; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in
the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of Agent, including any governmental acts, and
none of the above shall affect or impair, or prevent the vesting of, any of
Agent’s rights or powers hereunder. Nothing in the preceding sentence shall
relieve Agent from liability for Agent’s gross negligence or willful misconduct
(as determined by a court of competent jurisdiction in a final non-appealable
judgment) in connection with actions or omissions described in such clauses
(i)
through (viii) of such sentence. In no event shall Agent or Agent’s Affiliates
be liable to the Borrower for any indirect, consequential, incidental, punitive,
exemplary or special damages or expenses (including without limitation
attorneys’ fees), or for any damages resulting from any change in the value of
any property relating to a Letter of Credit.
31
Without
limiting the generality of the foregoing, Agent and each of its Affiliates
(i)
may rely on any oral or other communication believed in good faith by Agent
or
such Affiliate to have been authorized or given by or on behalf of the applicant
for a Letter of Credit, (ii) may honor any presentation if the documents
presented appear on their face substantially to comply with the terms and
conditions of the relevant Letter of Credit; (iii) may honor a previously
dishonored presentation under a Letter of Credit, whether such dishonor was
pursuant to a court order, to settle or compromise any claim of wrongful
dishonor, or otherwise, and shall be entitled to reimbursement to the same
extent as if such presentation had initially been honored, together with any
interest paid by Agent or its Affiliates; (iv) may honor any drawing that is
payable upon presentation of a statement advising negotiation or payment, upon
receipt of such statement (even if such statement indicates that a draft or
other document is being delivered separately), and shall not be liable for
any
failure of any such draft or other document to arrive, or to conform in any
way
with the relevant Letter of Credit; (v) may pay any paying or negotiating bank
claiming that it rightfully honored under the laws or practices of the place
where such bank is located; and (vi) may settle or adjust any claim or demand
made on Agent or its Affiliate in any way related to any order issued at the
applicant’s request to an air carrier, a letter of guarantee or of indemnity
issued to a carrier or any similar document (each an “Order”) and honor any
drawing in connection with any Letter of Credit that is the subject of such
Order, notwithstanding that any drafts or other documents presented in
connection with such Letter of Credit fail to conform in any way with such
Letter of Credit.
In
furtherance and extension and not in limitation of the specific provisions
set
forth above, any action taken or omitted by Agent under or in connection with
the Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith and without gross negligence
(as
determined by a court of competent jurisdiction in a final non-appealable
judgment), shall not put Agent under any resulting liability to Borrower or
any
Lender.
2.18. Additional
Payments.
Any
sums
expended by Agent or any Lender due to Borrower’s failure to perform or comply
with its obligations under this Agreement or any Other Document including
Borrower’s obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof,
may be charged to Borrower’s Account as a Revolving Advance and added to the
Obligations.
2.19. Manner
of Borrowing and Payment.
(a) Each
borrowing of Revolving Advances shall be advanced according to the applicable
Commitment Percentages of Lenders.
(b) Each
payment (including each prepayment) by Borrower on account of the principal
of
and interest on the Revolving Advances, shall be applied to the Revolving
Advances pro rata according to the applicable Commitment Percentages of Lenders.
Except as expressly provided herein, all payments (including prepayments) to
be
made by Borrower on account of principal, interest and fees shall be made
without set off or counterclaim and shall be made to Agent on behalf of the
Lenders to the Payment Office, in each case on or prior to 1:00 P.M., New York
time, in Dollars and in immediately available funds.
32
(c)
(i) Notwithstanding
anything to the contrary contained in Sections 2.19(a) and (b) hereof,
commencing with the first Business Day following the Closing Date, each
borrowing of Revolving Advances shall be advanced by Agent and each payment
by
Borrower on account of Revolving Advances shall be applied first to those
Revolving Advances advanced by Agent. On or before 1:00 P.M., New York time,
on
each Settlement Date commencing with the first Settlement Date following the
Closing Date, Agent and Lenders shall make certain payments as follows: (I)
if
the aggregate amount of new Revolving Advances made by Agent during the
preceding Week (if any) exceeds the aggregate amount of repayments applied
to
outstanding Revolving Advances during such preceding Week, then each Lender
shall provide Agent with funds in an amount equal to its applicable Commitment
Percentage of the difference between (w) such Revolving Advances and (x) such
repayments and (II) if the aggregate amount of repayments applied to outstanding
Revolving Advances during such Week exceeds the aggregate amount of new
Revolving Advances made during such Week, then Agent shall provide each Lender
with funds in an amount equal to its applicable Commitment Percentage of the
difference between (y) such repayments and (z) such Revolving
Advances.
(ii) Each
Lender shall be entitled to earn interest at the applicable Contract Rate on
outstanding Advances which it has funded.
(iii) Promptly
following each Settlement Date, Agent shall submit to each Lender a certificate
with respect to payments received and Advances made during the Week immediately
preceding such Settlement Date. Such certificate of Agent shall be conclusive
in
the absence of manifest error.
(d) If
any
Lender or Participant (a “benefited
Lender”)
shall
at any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily
or
involuntarily or by set-off) in a greater proportion than any such payment
to
and Collateral received by any other Lender, if any, in respect of such other
Lender’s Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefited
Lender shall purchase for cash from the other Lenders a participation in such
portion of each such other Lender’s Advances, or shall provide such other Lender
with the benefits of any such Collateral, or the proceeds thereof, as shall
be
necessary to cause such benefited Lender to share the excess payment or benefits
of such Collateral or proceeds ratably with each of the other Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender’s Advances may exercise all rights of payment (including rights of
set-off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.
33
(e) Unless
Agent shall have been notified by telephone, confirmed in writing, by any Lender
that such Lender will not make the amount which would constitute its applicable
Commitment Percentage of the Advances available to Agent, Agent may (but shall
not be obligated to) assume that such Lender shall make such amount available
to
Agent on the next Settlement Date and, in reliance upon such assumption, make
available to Borrower a corresponding amount. Agent will promptly notify
Borrower of its receipt of any such notice from a Lender. If such amount is
made
available to Agent on a date after such next Settlement Date, such Lender shall
pay to Agent on demand an amount equal to the product of (i) the daily average
Federal Funds Rate (computed on the basis of a year of 360 days) during such
period as quoted by Agent, times (ii) such amount, times (iii) the number of
days from and including such Settlement Date to the date on which such amount
becomes immediately available to Agent. A certificate of Agent submitted to
any
Lender with respect to any amounts owing under this paragraph (e) shall be
conclusive, in the absence of manifest error. If such amount is not in fact
made
available to Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrower; provided, however, that Agent’s
right to such recovery shall not prejudice or otherwise adversely affect
Borrower’s rights (if any) against such Lender.
2.20. Mandatory
Prepayments.
Subject
to Section 4.3 hereof, when Borrower sells or otherwise disposes of any
Collateral other than Inventory and Equipment in excess of $50,000 in the
Ordinary Course of Business, Borrower shall repay the Advances in an amount
equal to the net proceeds of such sale (i.e., gross proceeds less the reasonable
costs of such sales or other dispositions), such repayments to be made promptly
but in no event more than one (1) Business Day following receipt of such net
proceeds, and until the date of payment, such proceeds shall be held in trust
for Agent. The foregoing shall not be deemed to be implied consent to any such
sale otherwise prohibited by the terms and conditions hereof. Such repayments
shall be applied to the Advances in such order as Agent may determine, subject
to Borrower’s ability to reborrow Revolving Advances in accordance with the
terms hereof.
2.21. Use
of
Proceeds.
(a) Borrower
shall apply the proceeds of Advances to (i) repay existing indebtedness owed
to
Presidential Financial Corporation of Delaware Valley, (ii) make Subordinated
Debt Payments, subject to the restrictions contained in the Agreement, (iii)
pay
fees and expenses relating to this transaction, (iv) provide for its working
capital needs and reimburse drawings under Letters of Credit and (v) assist
in
the acquisition of companies engaged in the same line of business pursuant
to
Section 7.1 hereof.
34
(b) Without
limiting the generality of Section 2.21(a) above, neither the Borrower, the
Guarantors nor any other Person which may in the future become party to this
Agreement or the Other Documents as Borrower or Guarantor, intends to use nor
shall they use any portion of the proceeds of the Advances, directly or
indirectly, for any purpose in violation of the Trading with the Enemy
Act.
2.22. Defaulting
Lender.
(a) Notwithstanding
anything to the contrary contained herein, in the event any Lender (x) has
refused (which refusal constitutes a breach by such Lender of its obligations
under this Agreement) to make available its portion of any Advance or (y)
notifies either Agent or Borrower that it does not intend to make available
its
portion of any Advance (if the actual refusal would constitute a breach by
such
Lender of its obligations under this Agreement) (each, a “Lender
Default”),
all
rights and obligations hereunder of such Lender (a “Defaulting
Lender”)
as to
which a Lender Default is in effect and of the other parties hereto shall be
modified to the extent of the express provisions of this Section 2.22 while
such
Lender Default remains in effect.
(b) Advances
shall be incurred pro rata from Lenders (the “Non-Defaulting
Lenders”)
which
are not Defaulting Lenders based on their respective Commitment Percentages,
and
no Commitment Percentage of any Lender or any pro rata share of any Advances
required to be advanced by any Lender shall be increased as a result of such
Lender Default. Amounts received in respect of principal of any type of Advances
shall be applied to reduce the applicable Advances of each Lender (other than
any Defaulting Lender) pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, Agent shall not be obligated to transfer to a Defaulting Lender any
payments received by Agent for the Defaulting Lender’s benefit, nor shall a
Defaulting Lender be entitled to the sharing of any payments hereunder
(including any principal, interest or fees). Amounts payable to a Defaulting
Lender shall instead be paid to or retained by Agent. Agent may hold and, in
its
discretion, re-lend to Borrower the amount of such payments received or retained
by it for the account of such Defaulting Lender.
(c) A
Defaulting Lender shall not be entitled to give instructions to Agent or to
approve, disapprove, consent to or vote on any matters relating to this
Agreement and the Other Documents. All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.
(d) Other
than as expressly set forth in this Section 2.22, the rights and obligations
of
a Defaulting Lender (including the obligation to indemnify Agent) and the other
parties hereto shall remain unchanged. Nothing in this Section 2.22 shall be
deemed to release any Defaulting Lender from its obligations under this
Agreement and the Other Documents, shall alter such obligations, shall operate
as a waiver of any default by such Defaulting Lender hereunder, or shall
prejudice any rights which Borrower, Agent or any Lender may have against any
Defaulting Lender as a result of any default by such Defaulting Lender
hereunder.
35
(e) In
the
event a Defaulting Lender retroactively cures to the satisfaction of Agent
the
breach which caused a Lender to become a Defaulting Lender, such Defaulting
Lender shall no longer be a Defaulting Lender and shall be treated as a Lender
under this Agreement.
III INTEREST
AND FEES.
3.1. Interest.
Interest
on Advances shall be payable in arrears on the first day of each month with
respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans,
at
the end of each Interest Period or, for Eurodollar Rate Loans with an Interest
Period in excess of three months, at the earlier of (a) each three months from
the commencement of such Eurodollar Rate Loan or (b) the end of the Interest
Period. Interest charges shall be computed on the actual principal amount of
Advances outstanding during the month at a rate per annum equal to with respect
to Revolving Advances, the applicable Revolving Interest Rate (as applicable,
the “Contract Rate”). Whenever, subsequent to the date of this Agreement, the
Alternate Base Rate is increased or decreased, the applicable Contract Rate
shall be similarly changed without notice or demand of any kind by an amount
equal to the amount of such change in the Alternate Base Rate during the time
such change or changes remain in effect. The Eurodollar Rate shall be adjusted
with respect to Eurodollar Rate Loans without notice or demand of any kind
on
the effective date of any change in the Reserve Percentage as of such effective
date. Upon and after the occurrence of an Event of Default, and during the
continuation thereof, (i) at the option of Agent or at the direction of Required
Lenders, the Obligations other than Eurodollar Rate Loans shall bear interest
at
the Revolving Interest Rate for Domestic Loans plus two (2%) percent per annum
and (ii) Eurodollar Rate Loans shall bear interest at the Revolving Interest
Rate for Eurodollar Rate Loans plus two (2%) percent per annum (as applicable,
the “Default Rate”).
3.2. Letter
of Credit Fees.
(a) Borrower
shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter
of Credit for the period from and excluding the date of issuance of same to
and
including the date of expiration or termination, equal to the average daily
face
amount of each outstanding Letter of Credit multiplied by two percent (2.00%)
per annum, such fees to be calculated on the basis of a 360-day year for the
actual number of days elapsed and to be payable quarterly in arrears on the
first day of each quarter and
on
the last day of the Term, and (y) to the Issuer, a fronting fee of one quarter
of one percent (0.25%) per annum, together with any and all administrative,
issuance, amendment, payment and negotiation charges with respect to Letters
of
Credit and all fees and expenses as agreed upon by the Issuer and the Borrower
in connection with any Letter of Credit, including in connection with the
opening, amendment or renewal of any such Letter of Credit and any acceptances
created thereunder and shall reimburse Agent for any and all fees and expenses,
if any, paid by Agent to the Issuer (all of the foregoing fees, the “Letter of
Credit Fees”). All such charges shall be deemed earned in full on the date when
the same are due and payable hereunder and shall not be subject to rebate or
pro-ration upon the termination of this Agreement for any reason. Any such
charge in effect at the time of a particular transaction shall be the charge
for
that transaction, notwithstanding any subsequent change in the Issuer’s
prevailing charges for that type of transaction. All Letter of Credit Fees
and
Acceptance Fees payable hereunder shall be deemed earned in full on the date
when the same are due and payable hereunder and shall not be subject to rebate
or pro-ration upon the termination of this Agreement for any
reason.
36
On
demand, and after the occurrence of an Event of Default, Borrower will cause
cash to be deposited and maintained in an account with Agent, as cash
collateral, in an amount equal to one hundred and five percent (105%) of the
Maximum Undrawn Amount of all outstanding Letters of Credit, and Borrower hereby
irrevocably authorizes Agent, in its discretion, on Borrower’s behalf and in
Borrower’s name, to open such an account and to make and maintain deposits
therein, or in an account opened by Borrower, in the amounts required to be
made
by Borrower, out of the proceeds of Receivables or other Collateral or out
of
any other funds of Borrower coming into any Lender’s possession at any time.
Agent will invest such cash collateral (less applicable reserves) in such
short-term money-market items as to which Agent and Borrower mutually agree
and
the net return on such investments shall be credited to such account and
constitute additional cash collateral. Borrower may not withdraw amounts
credited to any such account except upon the occurrence of all of the following:
(x) payment and performance in full of all Obligations, (y) the expiration
of
all Letters of Credit and (z) the termination of this
Agreement.
3.3. Closing
Fee and Facility Fee.
(a) Closing
Fee.
Upon
the
execution of this Agreement, Borrower shall pay to Agent for the ratable benefit
of Lenders a closing fee of $56,250 less that portion of the commitment fee
of
$25,000 and that portion of the deposit fee of $20,000 heretofore paid by
Borrower to Agent remaining after application of such fee to out of pocket
expenses.
(b) Facility
Fee.
If,
for
any calendar quarter during the Term, the average daily unpaid balance of the
Revolving Advances and undrawn amount of any outstanding Letters of Credit
for
each day of such calendar quarter does not equal the Maximum Revolving Advance
Amount, then Borrower shall pay to Agent for the ratable benefit of Lenders
a
fee at a rate equal to one quarter of one percent (.25%) per annum on the amount
by which the Maximum Revolving Advance Amount exceeds such average daily unpaid
balance. Such fee shall be payable to Agent in arrears on the first day of
each
calendar quarter with respect to the previous calendar quarter.
3.4. Collateral
Evaluation Fee, Collateral Monitoring Fee and Fee Letter.
(a) Collateral
Evaluation Fee.
Borrower
shall pay Agent a collateral evaluation fee equal to $750.00 per month
commencing on the first day of the month following the Closing Date and on
the
first day of each month thereafter during the Term. The collateral evaluation
fee shall be deemed earned in full on the date when same is due and payable
hereunder and shall not be subject to rebate or proration upon termination
of
this Agreement for any reason.
(b) Collateral
Monitoring Fee.
Borrower
shall pay to Agent on the first day of each month following any month in which
Agent performs any collateral monitoring - namely any field examination,
collateral analysis or other business analysis, the need for which is to be
determined by Agent and which monitoring is undertaken by Agent or for Agent’s
benefit - a collateral monitoring fee in an amount equal to $750.00 per day
for
each person employed to perform such monitoring, plus all costs and
disbursements incurred by Agent in the performance of such examination or
analysis. Unless a Default or an Event of Default has occurred, such Collateral
Monitoring shall be limited to no more than four times annually.
37
3.5. Computation
of Interest and Fees.
Interest
and fees hereunder shall be computed on the basis of a year of 360 days and
for
the actual number of days elapsed. If any payment to be made hereunder becomes
due and payable on a day other than a Business Day, the due date thereof shall
be extended to the next succeeding Business Day and interest thereon shall
be
payable at the applicable Contract Rate for Domestic Rate Loans during such
extension.
3.6. Maximum
Charges.
In
no
event whatsoever shall interest and other charges charged hereunder exceed
the
highest rate permissible under law. In the event interest and other charges
as
computed hereunder would otherwise exceed the highest rate permitted under
law,
such excess amount shall be first applied to any unpaid principal balance owed
by Borrower, and if the then remaining excess amount is greater than the
previously unpaid principal balance, Lenders shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate.
3.7. Increased
Costs.
In
the
event that any Applicable Law, treaty or governmental regulation, or any change
therein or in the interpretation or application thereof, or compliance by any
Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent
or any Lender and any corporation or bank controlling Agent or any Lender)
and
the office or branch where Agent or any Lender (as so defined) makes or
maintains any Eurodollar Rate Loans with any request or directive (whether
or
not having the force of law) from any central bank or other financial, monetary
or other authority, shall:
(a) subject
Agent or any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Other Document or change the basis of taxation of payments
to
Agent or any Lender of principal, fees, interest or any other amount payable
hereunder or under any Other Documents (except for changes in the rate of tax
on
the overall net income of Agent or any Lender by the jurisdiction in which
it
maintains its principal office);
(b) impose,
modify or hold applicable any reserve, special deposit, assessment or similar
requirement against assets held by, or deposits in or for the account of,
advances or loans by, or other credit extended by, any office of Agent or any
Lender, including pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or
(c) impose
on
Agent or any Lender or the London interbank Eurodollar market any other
condition with respect to this Agreement or any Other Document;
and
the
result of any of the foregoing is to increase the cost to Agent or any Lender
of
making, renewing or maintaining its Advances hereunder by an amount that Agent
or such Lender deems to be material or to reduce the amount of any payment
(whether of principal, interest or otherwise) in respect of any of the Advances
by an amount that Agent or such Lender deems to be material, then, in any case
Borrower shall promptly pay Agent or such Lender, upon its demand, such
additional amount as will compensate Agent or such Lender for such additional
cost or such reduction, as the case may be, provided that the foregoing shall
not apply to increased costs which are reflected in the Eurodollar Rate, as
the
case may be. Agent or such Lender shall certify the amount of such additional
cost or reduced amount to Borrower, and such certification shall be conclusive
absent manifest error.
38
3.8. Basis
For Determining Interest Rate Inadequate or Unfair.
In
the
event that Agent or any Lender shall have determined that:
(a) reasonable
means do not exist for ascertaining the Eurodollar Rate applicable pursuant
to
Section 2.2 hereof for any Interest Period; or
(b) Dollar
deposits in the relevant amount and for the relevant maturity are not available
in the London interbank Eurodollar market, with respect to an outstanding
Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed conversion
of a Domestic Rate Loan into a Eurodollar Rate Loan,
then
Agent shall give Borrower prompt written, telephonic or telegraphic notice
of
such determination. If such notice is given, (i) any such requested Eurodollar
Rate Loan shall be made as a Domestic Rate Loan, unless Borrower shall notify
Agent no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the date of such proposed borrowing, that its request for such borrowing
shall be cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii)
any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted
to an affected type of Eurodollar Rate Loan shall be continued as or converted
into a Domestic Rate Loan, or, if Borrower shall notify Agent, no later than
10:00 a.m. (New York City time) two (2) Business Days prior to the proposed
conversion, shall be maintained as an unaffected type of Eurodollar Rate Loan,
and (iii) any outstanding affected Eurodollar Rate Loans shall be converted
into
a Domestic Rate Loan, or, if Borrower shall notify Agent, no later than 10:00
a.m. (New York City time) two (2) Business Days prior to the last Business
Day
of the then current Interest Period applicable to such affected Eurodollar
Rate
Loan, shall be converted into an unaffected type of Eurodollar Rate Loan, on
the
last Business Day of the then current Interest Period for such affected
Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders shall
have
no obligation to make an affected type of Eurodollar Rate Loan or maintain
outstanding affected Eurodollar Rate Loans and Borrower shall not have the
right
to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan
into an affected type of Eurodollar Rate Loan.
3.9. Capital
Adequacy.
(a) In
the
event that Agent or any Lender shall have determined that any Applicable Law,
rule, regulation or guideline regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
Governmental Body, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or any Lender
(for purposes of this Section 3.9, the term “Lender” shall include Agent or any
Lender and any corporation or bank controlling Agent or any Lender) with any
request or directive regarding capital adequacy (whether or not having the
force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on Agent or any Lender’s capital
as a consequence of its obligations hereunder to a level below that which Agent
or such Lender could have achieved but for such adoption, change or compliance
(taking into consideration Agent’s and each Lender’s policies with respect to
capital adequacy) by an amount deemed by Agent or any Lender to be material,
then, from time to time, Borrower shall pay upon demand to Agent or such Lender
such additional amount or amounts as will compensate Agent or such Lender for
such reduction. In determining such amount or amounts, Agent or such Lender
may
use any reasonable averaging or attribution methods. The protection of this
Section 3.9 shall be available to Agent and each Lender regardless of any
possible contention of invalidity or inapplicability with respect to the
Applicable Law, regulation or condition.
39
(b) A
certificate of Agent or such Lender setting forth such amount or amounts as
shall be necessary to compensate Agent or such Lender with respect to Section
3.9(a) hereof when delivered to Borrower shall be conclusive absent manifest
error.
3.10. Gross
Up for Taxes.
If
Borrower shall be required by Applicable Law to withhold or deduct any taxes
from or in respect of any sum payable under this Agreement or any of the Other
Documents to Agent, or any Lender, assignee of any Lender, or Participant (each,
individually, a “Payee” and collectively, the “Payees”), (a) the sum payable to
such Payee or Payees, as the case may be, shall be increased as may be necessary
so that, after making all required withholding or deductions, the applicable
Payee or Payees receives an amount equal to the sum it would have received
had
no such withholding or deductions been made (the “Gross-Up Payment”), (b)
Borrower shall make such withholding or deductions, and (c) Borrower shall
pay
the full amount withheld or deducted to the relevant taxation authority or
other
authority in accordance with Applicable Law. Notwithstanding the foregoing,
Borrower shall not be obligated to make any portion of the Gross-Up Payment
that
is attributable to any withholding or deductions that would not have been paid
or claimed had the applicable Payee or Payees properly claimed a complete
exemption with respect thereto pursuant to Section 3.11 hereof.
3.11. Withholding
Tax Exemption.
(a) Each
Payee that is not incorporated under the Laws of the United States of America
or
a state thereof (and, upon the written request of Agent, each other Payee)
agrees that it will deliver to Borrower and Agent two (2) duly completed
appropriate valid Withholding Certificates (as defined under §1.1441-1(c)(16) of
the Income Tax Regulations (“Regulations”)) certifying its status (i.e., U.S. or
foreign person) and, if appropriate, making a claim of reduced, or exemption
from, U.S. withholding tax on the basis of an income tax treaty or an exemption
provided by the Code. The term “Withholding Certificate” means a Form W-9; a
Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and
certifications as required under §1.1441-1(e)(2) and/or (3) of the Regulations;
a statement described in §1.871-14(c)(2)(v) of the Regulations; or any other
certificates under the Code or Regulations that certify or establish the status
of a payee or beneficial owner as a U.S. or foreign person.
(b) Each
Payee required to deliver to Borrower and Agent a valid Withholding Certificate
pursuant to Section 3.11(a) hereof shall deliver such valid Withholding
Certificate as follows: (A) each Payee which is a party hereto on the Closing
Date shall deliver such valid Withholding Certificate at least five (5) Business
Days prior to the first date on which any interest or fees are payable by
Borrower hereunder for the account of such Payee; (B) each Payee shall deliver
such valid Withholding Certificate at least five (5) Business Days before the
effective date of such assignment or participation (unless Agent in its sole
and
reasonable discretion shall permit such Payee to deliver such Withholding
Certificate less than five (5) Business Days before such date in which case
it
shall be due on the date specified by Agent). Each Payee which so delivers
a
valid Withholding Certificate further undertakes to deliver to Borrower and
Agent two (2) additional copies of such Withholding Certificate (or a successor
form) on or before the date that such Withholding Certificate expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent Withholding Certificate so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by Borrower
or
Agent.
40
(c) Notwithstanding
the submission of a Withholding Certificate claiming a reduced rate of or
exemption from U.S. withholding tax required under Section 3.11(b) hereof,
Agent
shall be entitled to withhold United States federal income taxes at the full
30%
withholding rate if in its reasonable judgment it is required to do so under
the
due diligence requirements imposed upon a withholding agent under §1.1441-7(b)
of the Regulations. Further, Agent is indemnified under §1.1461-1(e) of the
Regulations against any claims and demands of any Payee for the amount of any
tax it deducts and withholds in accordance with regulations under §1441 of the
Code.
IV COLLATERAL: GENERAL
TERMS
4.1. Security
Interest in the Collateral.
To
secure
the prompt payment and performance to Agent and each Lender of the Obligations,
Borrower hereby assigns, pledges and grants to Agent for its benefit and for
the
ratable benefit of each Lender a continuing security interest in and to and
Lien
on all of its Collateral, whether now owned or existing or hereafter acquired
or
arising and wheresoever located. Borrower shall ▇▇▇▇ its books and records
as
may be necessary or appropriate to evidence, protect and perfect Agent’s
security interest and shall cause its financial statements to reflect such
security interest. Borrower shall promptly provide Agent with written notice
of
all commercial tort claims, such notice to contain the case title together
with
the applicable court and a brief description of the claim(s). Upon delivery
of
each such notice, Borrower shall be deemed to hereby grant to Agent a security
interest and lien in and to such commercial tort claims and all proceeds
thereof.
4.2. Perfection
of Security Interest.
Borrower
shall take all action that may be necessary or desirable, or that Agent may
request, so as at all times to maintain the validity, perfection, enforceability
and priority of Agent’s security interest in and Lien on the Collateral or to
enable Agent to protect, exercise or enforce its rights hereunder and in the
Collateral, including, but not limited to, (i) immediately discharging all
Liens
other than Permitted Encumbrances, (ii) obtaining Lien Waiver Agreements
relating only to Borrower’s chief place of business, unless Borrower’s books and
records are maintained at other locations, (iii) delivering to Agent, endorsed
or accompanied by such instruments of assignment as Agent may specify, and
stamping or marking, in such manner as Agent may specify, any and all chattel
paper, instruments, letters of credits and advices thereof and documents
evidencing or forming a part of the Collateral, (iv) entering into warehousing,
lockbox and other custodial arrangements satisfactory to Agent, and (v)
executing and delivering financing statements, control agreements, instruments
of pledge, mortgages, notices and assignments, in each case in form and
substance satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent’s security interest and Lien under the
Uniform Commercial Code or other Applicable Law. By its signature hereto,
Borrower hereby authorizes Agent to file against Borrower, one or more
financing, continuation or amendment statements pursuant to the Uniform
Commercial Code in form and substance satisfactory to Agent (which statements
may have a description of collateral which is broader than that set forth
herein). All charges, expenses and fees Agent may incur in doing any of the
foregoing, and any local taxes relating thereto, shall be charged to Borrower’s
Account as a Revolving Advance of a Domestic Rate Loan and added to the
Obligations, or, at Agent’s option, shall be paid to Agent for its benefit and
for the ratable benefit of Lenders immediately upon demand.
41
4.3. Disposition
of Collateral.
Borrower
will safeguard and protect all Collateral for Agent’s general account and make
no disposition thereof whether by sale, lease or otherwise except (a) the sale
of Inventory in the Ordinary Course of Business and (b) the disposition or
transfer of obsolete and worn-out Equipment in the Ordinary Course of Business
during any fiscal year having an aggregate fair market value of not more than
$150,000 and only to the extent that (i) the proceeds of any such disposition
are used to acquire replacement Equipment which is subject to Agent’s first
priority security interest or (ii) the proceeds of which in excess of $50,000
are remitted to Agent to be applied pursuant to Section 2.20.
4.4. Preservation
of Collateral.
Following
the occurrence of a Default or Event of Default, in addition to the rights
and
remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take
such
steps as Agent deems necessary to protect Agent’s interest in and to preserve
the Collateral, including the hiring of such security guards or the placing
of
other security protection measures as Agent may deem appropriate; (b) may employ
and maintain at any of Borrower’s premises a custodian who shall have full
authority to do all acts necessary to protect Agent’s interests in the
Collateral; (c) may lease warehouse facilities to which Agent may move all
or
part of the Collateral; (d) may use Borrower’s owned or leased lifts, hoists,
trucks and other facilities or equipment for handling or removing the
Collateral; and (e) shall have, and is hereby granted, a right of ingress and
egress to the places where the Collateral is located, and may proceed over
and
through any of Borrower’s owned or leased property. Borrower shall cooperate
fully with all of Agent’s efforts to preserve the Collateral and will take such
actions to preserve the Collateral as Agent may direct. All of Agent’s expenses
of preserving the Collateral, including any expenses relating to the bonding
of
a custodian, shall be charged to Borrower’s Account as a Revolving Advance and
added to the Obligations.
4.5. Ownership
of Collateral.
(a) With
respect to the Collateral, at the time the Collateral becomes subject to Agent’s
security interest: (i) Borrower shall be the sole owner of and fully
authorized and able to sell, transfer, pledge and/or grant a first priority
security interest in each and every item of the its respective Collateral to
Agent; and, except for Permitted Encumbrances the Collateral shall be free
and
clear of all Liens and encumbrances whatsoever; (ii) each document and agreement
executed by Borrower or delivered to Agent or any Lender in connection with
this
Agreement shall be true and correct in all respects; (iii) all signatures
and endorsements of Borrower that appear on such documents and agreements shall
be genuine and Borrower shall have full capacity to execute same; and
(iv) Borrower’s Equipment and Inventory shall be located as set forth on
Schedule 4.5 and shall not be removed from such location(s) without the
prior written consent of Agent except with respect to the sale of Inventory
in
the Ordinary Course of Business and Equipment to the extent permitted in Section
4.3 hereof and Equipment and Inventory located at job sites.
42
(b) (i)
There
is no location at which Borrower has any Inventory (except for Inventory in
transit) other than those locations listed on Schedule 4.5 or at job sites;
(ii)
Schedule 4.5 hereto contains a correct and complete list, as of the Closing
Date, of the legal names and addresses of each warehouse at which Inventory
of
Borrower is stored; none of the receipts received by Borrower from any warehouse
states that the goods covered thereby are to be delivered to bearer or to the
order of a named Person or to a named Person and such named Person’s assigns;
(iii) Schedule 4.5 hereto sets forth a correct and complete list as of the
Closing Date of (A) each place of business of Borrower and (B) the chief
executive office of Borrower; and (iv) Schedule 4.5 hereto sets forth a correct
and complete list as of the Closing Date of the location, by state and street
address, of all Real Property owned or leased by Borrower, together with the
names and addresses of any landlords.
4.6. Defense
of Agent’s and Lenders’ Interests.
Until
(a)
payment and performance in full of all of the Obligations and (b) termination
of
this Agreement, Agent’s interests in the Collateral shall continue in full force
and effect. During such period Borrower shall not, without Agent’s prior written
consent, pledge, sell (except Inventory in the Ordinary Course of Business
and
Equipment to the extent permitted in Section 4.3 hereof), assign, transfer,
create or suffer to exist a Lien upon or encumber or allow or suffer to be
encumbered in any way except for Permitted Encumbrances, any part of the
Collateral. Borrower shall defend Agent’s interests in the Collateral against
any and all Persons whatsoever. At any time following demand by Agent for
payment of all Obligations, Agent shall have the right to take possession of
the
indicia of the Collateral and the Collateral in whatever physical form
contained, including: labels, stationery, documents, instruments and advertising
materials. If Agent exercises this right to take possession of the Collateral,
Borrower shall, upon demand, assemble it in the best manner possible and make
it
available to Agent at a place reasonably convenient to Agent. In addition,
with
respect to all Collateral, Agent and Lenders shall be entitled to all of the
rights and remedies set forth herein and further provided by the Uniform
Commercial Code or other Applicable Law. Borrower shall, and Agent may, at
its
option, instruct all suppliers, carriers, forwarders, warehousers or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver same to Agent and/or subject to
Agent’s order and if they shall come into Borrower’s possession, they, and each
of them, shall be held by Borrower in trust as Agent’s trustee, and Borrower
will immediately deliver them to Agent in their original form together with
any
necessary endorsement.
4.7. Books
and Records.
Borrower
shall (a) keep proper books of record and account in which full, true and
correct entries will be made of all dealings or transactions of or in relation
to its business and affairs; (b) set up on its books accruals with respect
to
all taxes, assessments, charges, levies and claims; and (c) on a reasonably
current basis set up on its books, from its earnings, allowances against
doubtful Receivables, advances and investments and all other proper accruals
(including by reason of enumeration, accruals for premiums, if any, due on
required payments and accruals for depreciation, obsolescence, or amortization
of properties), which should be set aside from such earnings in connection
with
its business. All determinations pursuant to this subsection shall be made
in
accordance with, or as required by, GAAP consistently applied in the opinion
of
such independent public accountant as shall then be regularly engaged by
Borrower.
43
4.8. Financial
Disclosure.
Borrower
hereby irrevocably authorizes and directs all accountants and auditors employed
by Borrower at any time during the Term to exhibit and deliver to Agent and
each
Lender copies of any of Borrower’s financial statements, trial balances or other
accounting records of any sort in the accountant’s or auditor’s possession, and
to disclose to Agent and each Lender any information such accountants may have
concerning Borrower’s financial status and business operations. Borrower hereby
authorizes all Governmental Bodies to furnish to Agent and each Lender copies
of
reports or examinations relating to Borrower, whether made by Borrower or
otherwise; however, Agent and each Lender will attempt to obtain such
information or materials directly from Borrower prior to obtaining such
information or materials from such accountants or Governmental
Bodies.
4.9. Compliance
with Laws.
Borrower
shall comply in all material respects with all Applicable Laws with respect
to
the Collateral or any part thereof or to the operation of Borrower’s business
the non-compliance with which could reasonably be expected to have a Material
Adverse Effect. Borrower may, however, contest or dispute any Applicable Laws
in
any reasonable manner, provided that any related Lien is inchoate or stayed
and
sufficient reserves are established to the reasonable satisfaction of Agent
to
protect Agent’s Lien on or security interest in the Collateral. The assets of
Borrower at all times shall be maintained in accordance with the requirements
of
all insurance carriers which provide insurance with respect to the assets of
Borrower so that such insurance shall remain in full force and
effect.
4.10. Inspection
of Premises.
At
all
reasonable times Agent and each Lender shall have full access to and the right
to audit, check, inspect and make abstracts and copies from Borrower’s books,
records, audits, correspondence and all other papers relating to the Collateral
and the operation of Borrower’s business. Agent, any Lender and their agents may
enter upon any of Borrower’s premises at any time during business hours and at
any other reasonable time, and from time to time, for the purpose of inspecting
the Collateral and any and all records pertaining thereto and the operation
of
Borrower’s business.
4.11. Insurance.
The
assets and properties of Borrower at all times shall be maintained in accordance
with the requirements of all insurance carriers which provide insurance with
respect to the assets and properties of Borrower so that such insurance shall
remain in full force and effect. Borrower shall bear the full risk of any loss
of any nature whatsoever with respect to the Collateral. At Borrower’s own cost
and expense in amounts and with carriers acceptable to Agent, Borrower shall
(a)
keep all its insurable properties and properties in which Borrower has an
interest insured against the hazards of fire, flood, sprinkler leakage, those
hazards covered by extended coverage insurance and such other hazards, and
for
such amounts, as is customary in the case of companies engaged in businesses
similar to Borrower’s including business interruption insurance; (b) maintain a
bond or insurance in such amounts as is customary in the case of companies
engaged in businesses similar to Borrower insuring against larceny, embezzlement
or other criminal misappropriation of insured’s officers and employees who may
either singly or jointly with others at any time have access to the assets
or
funds of Borrower either directly or through authority to draw upon such funds
or to direct generally the disposition of such assets; (c) maintain public
and
product liability insurance against claims for personal injury, death or
property damage suffered by others; (d) maintain all such worker’s compensation
or similar insurance as may be required under the laws of any state or
jurisdiction in which Borrower is engaged in business; (e) furnish Agent with
(i) copies of all policies and evidence of the maintenance of such policies
by
the renewal thereof at least thirty (30) days before any expiration date, and
(ii) appropriate loss payable endorsements in form and substance satisfactory
to
Agent, naming Agent as an additional insured and lender loss payee as its
interests may appear with respect to all insurance coverage referred to in
clauses (a) and (c) above, and providing (A) that all proceeds relating to
the
Collateral in excess of $50,000 thereunder shall be payable to Agent, (B) no
such insurance shall be affected by any act or neglect of the insured or owner
of the property described in such policy, and (C) that such policy and loss
payable clauses may not be cancelled, amended or terminated unless at least
thirty (30) days’ prior written notice is given to Agent. In the event of any
loss thereunder relating to the Collateral,, the carriers named therein hereby
are directed by Agent and Borrower to make payment for such loss as provided
herein to Agent and not to Borrower and Agent jointly. If any insurance losses
are paid by check, draft or other instrument payable to Borrower and Agent
jointly, Agent may endorse Borrower’s name thereon and do such other things as
Agent may deem advisable to reduce the same to cash. After the occurrence of
an
Event of Default, Agent is hereby authorized to adjust and compromise claims
under insurance coverage referred to in clauses (a) and (b) above. All loss
recoveries received by Agent upon any such insurance may be applied to the
Obligations, in such order as Agent in its sole and reasonable discretion shall
determine. Any surplus shall be paid by Agent to Borrower or applied as may
be
otherwise required by law. Any deficiency thereon shall be paid by Borrower
to
Agent, on demand.
44
4.12. Failure
to Pay Insurance.
If
Borrower fails to obtain insurance as hereinabove provided, or to keep the
same
in force, Agent, if Agent so elects, may obtain such insurance and pay the
premium therefor on behalf of Borrower, and charge Borrower’s Account therefor
as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall
be part of the Obligations.
4.13. Payment
of Taxes.
Borrower
will pay, when due, all taxes, assessments and other Charges lawfully levied
or
assessed upon Borrower or any of the Collateral including real and personal
property taxes, assessments and charges and all franchise, income, employment,
social security benefits, withholding, and sales taxes. If any tax by any
Governmental Body is or may be imposed on or as a result of any transaction
between Borrower and Agent or any Lender which Agent or any Lender may be
required to withhold or pay or if any taxes, assessments, or other Charges
remain unpaid after the date fixed for their payment, or if any claim shall
be
made which, in Agent’s or any Lender’s opinion, may possibly create a valid Lien
on the Collateral, Agent may without notice to Borrower pay the taxes,
assessments or other Charges and Borrower hereby indemnifies and holds Agent
and
each Lender harmless in respect thereof. Agent will not pay any taxes,
assessments or Charges to the extent that Borrower has contested or disputed
those taxes, assessments or Charges in good faith, by expeditious protest,
administrative or judicial appeal or similar proceeding provided that any
related tax lien is stayed and sufficient reserves are established to the
reasonable satisfaction of Agent to protect Agent’s security interest in or Lien
on the Collateral. The amount of any payment by Agent under this Section 4.13
shall be charged to Borrower’s Account as a Revolving Advance and added to the
Obligations and, until Borrower shall furnish Agent with an indemnity therefor
(or supply Agent with evidence satisfactory to Agent that due provision for
the
payment thereof has been made), Agent may hold without interest any balance
standing to Borrower’s credit and Agent shall retain its security interest in
and Lien on any and all Collateral held by Agent.
45
4.14. Payment
of Leasehold Obligations.
Borrower
shall at all times pay, when and as due, its rental obligations under all leases
under which it is a tenant, and shall otherwise comply, in all material
respects, with all other terms of such leases and keep them in full force and
effect and, at Agent’s request will provide evidence of having done
so.
4.15. Receivables.
(a) Nature
of Receivables.
Each
of
the Receivables shall be a bona fide and valid account representing a bona
fide
indebtedness incurred by the Customer therein named, for a fixed sum as set
forth in the invoice relating thereto (provided immaterial or unintentional
invoice errors shall not be deemed to be a breach hereof) with respect to an
absolute sale or lease and delivery of goods upon stated terms of Borrower,
or
work, labor or services theretofore rendered by Borrower as of the date each
Receivable is created. Same shall be due and owing in accordance with Borrower’s
standard terms of sale without dispute, setoff or counterclaim except as may
be
stated on the accounts receivable schedules delivered by Borrower to
Agent.
(b) Solvency
of Customers.
Each
Customer, to the best of Borrower’s knowledge, as of the date each Receivable is
created, is and will be solvent and able to pay all Receivables on which the
Customer is obligated in full when due or with respect to such Customers of
Borrower who are not solvent Borrower has set up on its books and in its
financial records bad debt reserves adequate to cover such
Receivables.
(c) Location
of Borrower.
Borrower’s
chief executive office is located at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇. The Agent hereby consents to the Borrower changing the location of it’s
chief executive offices to ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
provided,
however,
that
the Borrower provides written notice of such relocation to the Agent thirty
(30)
days prior to such relocation. Until written notice is given to Agent by
Borrower of any other office at which Borrower keeps its records pertaining
to
Receivables, all such records shall be kept at such executive
office.
(d) Collection
of Receivables.
Until
Borrower’s authority to do so is terminated by Agent (which notice Agent may
give at any time following the occurrence of an Event of Default or a Default
or
when Agent in its sole and reasonable discretion deems it to be in Lenders’ best
interest to do so), Borrower will, at Borrower’s sole cost and expense, but on
Agent’s behalf and for Agent’s account, collect as Agent’s property and in trust
for Agent all amounts received on Receivables, and shall not commingle such
collections with Borrower’s funds or use the same except to pay Obligations.
Borrower shall deposit in the Blocked Account or, upon request by Agent, deliver
to Agent, in original form and on the date of receipt thereof, all checks,
drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness.
(e) Notification
of Assignment of Receivables.
At
any
time following the occurrence of an Event of Default or a Default, Agent shall
have the right to send notice of the assignment of, and Agent’s security
interest in and Lien on, the Receivables to any and all Customers or any third
party holding or otherwise concerned with any of the Collateral. Thereafter,
Agent shall have the sole right to collect the Receivables, take possession
of
the Collateral, or both. Agent’s actual collection expenses, including, but not
limited to, stationery and postage, telephone and telegraph, secretarial and
clerical expenses and the salaries of any collection personnel used for
collection, may be charged to Borrower’s Account and added to the
Obligations.
46
(f) Power
of Agent to Act on Borrower’s Behalf.
Agent
shall have the right to receive, endorse, assign and/or deliver in the name
of
Agent or Borrower any and all checks, drafts and other instruments for the
payment of money relating to the Receivables, and Borrower hereby waives notice
of presentment, protest and non-payment of any instrument so endorsed. Borrower
hereby constitutes Agent or Agent’s designee as Borrower’s attorney with power
(i) to endorse Borrower’s name upon any notes, acceptances, checks, drafts,
money orders or other evidences of payment or Collateral; (ii) to sign
Borrower’s name on any invoice or ▇▇▇▇ of lading relating to any of the
Receivables, drafts against Customers, assignments and verifications of
Receivables; (iii) to send verifications of Receivables to any Customer; (iv)
to
sign Borrower’s name on all financing statements or any other documents or
instruments deemed necessary or appropriate by Agent to preserve, protect,
or
perfect Agent’s interest in the Collateral and to file same; (v) to demand
payment of the Receivables; (vi) to enforce payment of the Receivables by legal
proceedings or otherwise; (vii) to exercise all of Borrower’s rights and
remedies with respect to the collection of the Receivables and any other
Collateral; (viii) to settle, adjust, compromise, extend or renew the
Receivables; (ix) to settle, adjust or compromise any legal proceedings brought
to collect Receivables; (x) to prepare, file and sign Borrower’s name on a proof
of claim in bankruptcy or similar document against any Customer; (xi) to
prepare, file and sign Borrower’s name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables;
and
(xii) to do all other acts and things necessary to carry out this Agreement.
All
acts of said attorney or designee are hereby ratified and approved, and said
attorney or designee shall not be liable for any acts of omission or commission
nor for any error of judgment or mistake of fact or of law, unless done
maliciously or with gross (not mere) negligence (as determined by a court of
competent jurisdiction in a final non-appealable judgment); this power being
coupled with an interest is irrevocable while any of the Obligations remain
unpaid. Agent shall have the right at any time following the occurrence of
an
Event of Default or Default, to change the address for delivery of mail
addressed to Borrower to such address as Agent may designate and to receive,
open and dispose of all mail addressed to Borrower.
(g) No
Liability.
Neither
Agent nor any Lender shall, under any circumstances or in any event whatsoever,
have any liability for any error or omission or delay of any kind occurring
in
the settlement, collection or payment of any of the Receivables or any
instrument received in payment thereof, or for any damage resulting therefrom.
Following the occurrence of an Event of Default or Default Agent may, without
notice or consent from Borrower, ▇▇▇ upon or otherwise collect, extend the
time
of payment of, compromise or settle for cash, credit or upon any terms any
of
the Receivables or any other securities, instruments or insurance applicable
thereto and/or release any obligor thereof. Agent is authorized and empowered
to
accept the return of the goods represented by any of the Receivables, without
notice to or consent by Borrower, all without discharging or in any way
affecting Borrower’s liability hereunder.
47
(h) Establishment
of a Lockbox Account, Dominion Account.
All
proceeds of Collateral shall be deposited by Borrower into either (i) a lockbox
account, dominion account or such other “blocked account” (“Blocked Accounts”)
established at a bank or banks (each such bank, a “Blocked Account Bank”)
pursuant to an arrangement with such Blocked Account Bank as may be selected
by
Borrower and be acceptable to Agent or (ii) depository accounts (“Depository
Accounts”) established at the Agent for the deposit of such proceeds. Borrower,
Agent and each Blocked Account Bank shall enter into a deposit account control
agreement in form and substance satisfactory to Agent directing such Blocked
Account Bank to transfer such funds so deposited to Agent, either to any account
maintained by Agent at said Blocked Account Bank or by wire transfer to
appropriate account(s) of Agent. All funds deposited in such Blocked Accounts
shall immediately become the property of Agent and Borrower shall obtain the
agreement by such Blocked Account Bank to waive any offset rights against the
funds so deposited. Neither Agent nor any Lender assumes any responsibility
for
such blocked account arrangement, including any claim of accord and satisfaction
or release with respect to deposits accepted by any Blocked Account Bank
thereunder. All deposit accounts and investment accounts of Borrower and its
Subsidiaries are set forth on Schedule 4.15(h).
(i) Adjustments.
Borrower
will not, without Agent’s consent, compromise or adjust any material amount of
the Receivables (or extend the time for payment thereof) or accept any material
returns of merchandise or grant any additional discounts, allowances or credits
thereon except for those compromises, adjustments, returns, discounts, credits
and allowances as have been heretofore customary in the business of
Borrower.
4.16. Inventory.
To
the
extent Inventory held for sale or lease has been produced by Borrower, it has
been and will be produced by Borrower in accordance with the Federal Fair Labor
Standards Act of 1938, as amended, and all rules, regulations and orders
thereunder.
4.17. Maintenance
of Equipment.
The
Equipment shall be maintained in good operating condition and repair (reasonable
wear and tear excepted) and all necessary replacements of and repairs thereto
shall be made so that the value and operating efficiency of the Equipment shall
be maintained and preserved. Borrower shall not use or operate the Equipment
in
violation of any law, statute, ordinance, code, rule or regulation. Borrower
shall have the right to sell Equipment to the extent set forth in Section 4.3
hereof.
4.18. Exculpation
of Liability.
Nothing
herein contained shall be construed to constitute Agent or any Lender as
Borrower’s agent for any purpose whatsoever, nor shall Agent or any Lender be
responsible or liable for any shortage, discrepancy, damage, loss or destruction
of any part of the Collateral wherever the same may be located and regardless
of
the cause thereof. Neither Agent nor any Lender, whether by anything herein
or
in any assignment or otherwise, assume any of Borrower’s obligations under any
contract or agreement assigned to Agent or such Lender, and neither Agent nor
any Lender shall be responsible in any way for the performance by Borrower
of
any of the terms and conditions thereof.
4.19. Environmental
Matters.
(a) Borrower
shall ensure that the Real Property and all operations and businesses conducted
thereon remains in compliance with all Environmental Laws and they shall not
place or permit to be placed any Hazardous Substances on any Real Property
except as permitted by Applicable Law or appropriate governmental
authorities.
48
(b) Borrower
shall establish and maintain a system to assure and monitor continued compliance
with all applicable Environmental Laws which system shall include periodic
reviews of such compliance as is reasonable and customary for companies engaged
in business similar to Borrower’s.
(c) Borrower
shall (i) employ in connection with the use of the Real Property appropriate
technology necessary to maintain compliance with any applicable Environmental
Laws and (ii) dispose of any and all Hazardous Waste generated at the Real
Property only at facilities and with carriers that maintain valid permits under
RCRA and any other applicable Environmental Laws. Borrower shall use its best
efforts to obtain certificates of disposal, such as hazardous waste manifest
receipts, from all treatment, transport, storage or disposal facilities or
operators employed by Borrower in connection with the transport or disposal
of
any Hazardous Waste generated at the Real Property.
(d) In
the
event Borrower obtains, gives or receives notice of any Release or threat of
Release of a reportable quantity of any Hazardous Substances at the Real
Property (any such event being hereinafter referred to as a “Hazardous
Discharge”) or receives any notice of violation, request for information or
notification that it is potentially responsible for investigation or cleanup
of
environmental conditions at the Real Property, demand letter or complaint,
order, citation, or other written notice with regard to any Hazardous Discharge
or violation of Environmental Laws affecting the Real Property or Borrower’s
interest therein (any of the foregoing is referred to herein as an
“Environmental Complaint”) from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the “Authority”), then Borrower
shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and circumstances of which Borrower is aware giving rise to
the
Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its security interest in and Lien on the
Real
Property and the Collateral and is not intended to create nor shall it create
any obligation upon Agent or any Lender with respect thereto.
(e) Borrower
shall promptly forward to Agent copies of any request for information,
notification of potential liability, demand letter relating to potential
responsibility with respect to the investigation or cleanup of Hazardous
Substances at any other site owned, operated or used by Borrower to dispose
of
Hazardous Substances and shall continue to forward copies of correspondence
between Borrower and the Authority regarding such claims to Agent until the
claim is settled. Borrower shall promptly forward to Agent copies of all
documents and reports concerning a Hazardous Discharge at the Real Property
that
Borrower is required to file under any Environmental Laws. Such information
is
to be provided solely to allow Agent to protect Agent’s security interest in and
Lien on the Real Property and the Collateral.
(f) Borrower
shall respond promptly to any Hazardous Discharge or Environmental Complaint
and
take all necessary action in order to safeguard the health of any Person and
to
avoid subjecting the Collateral or Real Property to any Lien. If Borrower shall
fail to respond promptly to any Hazardous Discharge or Environmental Complaint
or Borrower shall fail to comply with any of the requirements of any
Environmental Laws, Agent on behalf of Lenders may, but without the obligation
to do so, for the sole purpose of protecting Agent’s interest in the Collateral:
(A) give such notices or (B) enter onto the Real Property (or authorize third
parties to enter onto the Real Property) and take such actions as Agent (or
such
third parties as directed by Agent) deem reasonably necessary or advisable,
to
clean up, remove, mitigate or otherwise deal with any such Hazardous Discharge
or Environmental Complaint. All reasonable costs and expenses incurred by Agent
and Lenders (or such third parties) in the exercise of any such rights,
including any sums paid in connection with any judicial or administrative
investigation or proceedings, fines and penalties, together with interest
thereon from the date expended at the Default Rate for Domestic Rate Loans
constituting Revolving Advances shall be paid upon demand by Borrower, and
until
paid shall be added to and become a part of the Obligations secured by the
Liens
created by the terms of this Agreement or any other agreement between Agent,
any
Lender and Borrower.
49
(g) Promptly
upon the written request of Agent from time to time, Borrower shall provide
Agent, at Borrower’s expense, with an environmental site assessment or
environmental audit report prepared by an environmental engineering firm
acceptable in the reasonable opinion of Agent, to assess with a reasonable
degree of certainty the existence of a Hazardous Discharge and the potential
costs in connection with abatement, cleanup and removal of any Hazardous
Substances found on, under, at or within the Real Property. Any report or
investigation of such Hazardous Discharge proposed and acceptable to an
appropriate Authority that is charged to oversee the clean-up of such Hazardous
Discharge shall be acceptable to Agent. If such estimates, individually or
in
the aggregate, exceed $100,000, Agent shall have the right to require Borrower
to post a bond, letter of credit or other security reasonably satisfactory
to
Agent to secure payment of these costs and expenses.
(h) Borrower
shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their
respective employees, agents, directors and officers harmless from and against
all loss, liability, damage and expense, claims, costs, fines and penalties,
including attorney’s fees, suffered or incurred by Agent or Lenders under or on
account of any Environmental Laws, including the assertion of any Lien
thereunder, with respect to any Hazardous Discharge, the presence of any
Hazardous Substances affecting the Real Property, whether or not the same
originates or emerges from the Real Property or any contiguous real estate,
including any loss of value of the Real Property as a result of the foregoing
except to the extent such loss, liability, damage and expense is attributable
to
any Hazardous Discharge resulting from actions on the part of Agent or any
Lender. Borrower’s obligations under this Section 4.19 shall arise upon the
discovery of the presence of any Hazardous Substances at the Real Property,
whether or not any federal, state, or local environmental agency has taken
or
threatened any action in connection with the presence of any Hazardous
Substances. Borrower’s obligation and the indemnifications hereunder shall
survive the termination of this Agreement.
(i) For
purposes of Section 4.19 and 5.7, all references to Real Property shall be
deemed to include all of Borrower’s right, title and interest in and to its
owned and leased premises.
50
4.20. Financing
Statements.
Except
as
respects the financing statements filed by Agent and the financing statements
described on Schedule 1.2, no financing statement covering any of the Collateral
or any proceeds thereof is on file in any public office.
V REPRESENTATIONS
AND WARRANTIES.
Borrower
represents and warrants as follows:
5.1. Authority.
Borrower
has full power, authority and legal right to enter into this Agreement and
the
Other Documents and to perform all its respective Obligations hereunder and
thereunder. This Agreement, the Subordinated Loan Documentation and the Other
Documents have been duly executed and delivered by Borrower, and this Agreement,
the Subordinated Loan Documentation and the Other Documents constitute the
legal, valid and binding obligation of Borrower enforceable in accordance with
their terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights
generally. The execution, delivery and performance of this Agreement and of
the
Other Documents (a) are within Borrower’s corporate powers, have been duly
authorized by all necessary corporate action, are not in contravention of law
or
the terms of Borrower’s by-laws, certificate of incorporation or other
applicable documents relating to Borrower’s formation or to the conduct of
Borrower’s business or of any material agreement or undertaking to which
Borrower is a party or by which Borrower is bound, including the Subordinated
Loan Documentation, (b) will not conflict with or violate any law or regulation,
or any judgment, order or decree of any Governmental Body, (c) will not require
the Consent of any Governmental Body or any other Person, except those Consents
set forth on Schedule 5.1 hereto, all of which will have been duly obtained,
made or compiled prior to the Closing Date and which are in full force and
effect and (d) will not conflict with, nor result in any breach in any of the
provisions of or constitute a default under or result in the creation of any
Lien except Permitted Encumbrances upon any asset of Borrower under the
provisions of any agreement, charter document, instrument, operating agreement
or other instrument to which Borrower is a party or by which it or its property
is a party or by which it may be bound, including under the provisions of the
Subordinated Loan Documentation.
5.2. Formation
and Qualification.
(a) Borrower
is duly incorporated and in good standing under the laws of the state listed
on
Schedule 5.2(a) and is qualified to do business and is in good standing in
the
states listed on Schedule 5.2(a) which constitute all states in which
qualification and good standing are necessary for Borrower to conduct its
business and own its property and where the failure to so qualify could
reasonably be expected to have a Material Adverse Effect. Borrower has delivered
to Agent true and complete copies of its certificate of incorporation and
by-laws and will promptly notify Agent of any amendment or changes
thereto.
(b) The
only
Subsidiaries of Borrower are listed on Schedule 5.2(b).
5.3. Survival
of Representations and Warranties.
All
representations and warranties of Borrower contained in this Agreement and
the
Other Documents shall be true at the time of Borrower’s execution of this
Agreement and the Other Documents, and shall survive the execution, delivery
and
acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.
51
5.4. Tax
Returns.
Borrower’s
federal tax identification number is set forth on Schedule 5.4. Borrower has
filed all federal, state and local tax returns and other reports it is required
by law to file and has paid all taxes, assessments, fees and other governmental
charges that are due and payable. Federal income tax returns of Borrower have
been examined and reported upon by the appropriate taxing authority or closed
by
applicable statute and satisfied for all fiscal years prior to and including
the
fiscal year ending June 30, 2003. Except as set forth on Schedule 5.4, the
provision for taxes on the books of Borrower is adequate for all years not
closed by applicable statutes, and for its current fiscal year, and Borrower
has
no knowledge of any deficiency or additional assessment in connection therewith
not provided for on its books.
5.5. Financial
Statements.
The
consolidated and consolidating balance sheets of Borrower, its Subsidiaries
and
such other Persons described therein (including the accounts of all Subsidiaries
for the respective periods during which a subsidiary relationship existed)
as of
June 30, 2007, and the related statements of income, changes in stockholder’s
equity, and changes in cash flow for the period ended on such date, all
accompanied by reports thereon containing opinions without qualification by
independent certified public accountants, copies of which have been delivered
to
Agent, have been prepared in accordance with GAAP, consistently applied (except
for changes in application in which such accountants concur) and present fairly
the financial position of Borrower and its Subsidiaries at such date and the
results of their operations for such period. Since June 30, 2007 there has
been
no change in the condition, financial or otherwise, of Borrower or its
Subsidiaries as shown on the consolidated balance sheet as of such date and
no
change in the aggregate value of machinery, equipment and Real Property owned
by
Borrower and its Subsidiaries, except changes in the Ordinary Course of
Business, none of which individually or in the aggregate has been materially
adverse.
5.6. Entity
Name.
Borrower
has not been known by any other corporate name in the past five years and does
not sell Inventory under any other name except as set forth on Schedule 5.6,
nor
has Borrower been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person during the
preceding five (5) years.
5.7. O.S.H.A.
and Environmental Compliance.
(a) Borrower
has duly complied with, and its facilities, business, assets, property,
leaseholds, Real Property and Equipment are in compliance in all material
respects with, the provisions of the Federal Occupational Safety and Health
Act,
the Environmental Protection Act, RCRA and all other Environmental Laws; there
have been no outstanding citations, notices or orders of non-compliance issued
to Borrower or relating to its business, assets, property, leaseholds or
Equipment under any such laws, rules or regulations.
(b) Borrower
has been issued all required federal, state and local licenses, certificates
or
permits relating to all applicable Environmental Laws.
52
(c) (i)
There
are no visible signs of releases, spills, discharges, leaks or disposal
(collectively referred to as “Releases”) of Hazardous Substances at, upon, under
or within any Real Property or any premises leased by Borrower; (ii) there
are
no underground storage tanks or polychlorinated biphenyls on the Real Property
or any premises leased by Borrower; (iii) neither the Real Property nor any
premises leased by Borrower has ever been used as a treatment, storage or
disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are
present on the Real Property or any premises leased by Borrower, excepting
such
quantities as are handled in accordance with all applicable manufacturer’s
instructions and governmental regulations and in proper storage containers
and
as are necessary for the operation of the commercial business of Borrower or
of
its tenants.
5.8. Solvency;
No Litigation, Violation, Indebtedness or Default.
(a) Borrower
is solvent, able to pay its debts as they mature, has capital sufficient to
carry on its business and all businesses in which it is about to engage, and
(i)
as of the Closing Date, the fair present saleable value of its assets,
calculated on a going concern basis, is in excess of the amount of its
liabilities and (ii) subsequent to the Closing Date, the fair saleable value
of
its assets (calculated on a going concern basis) will be in excess of the amount
of its liabilities.
(b) Except
as
disclosed in Schedule 5.8(b), Borrower has no (i) pending or threatened
litigation, arbitration, actions or proceedings which involve the possibility
of
having a Material Adverse Effect, and (ii) liabilities or indebtedness for
borrowed money other than the Obligations.
(c) Borrower
is not in violation of any applicable statute, law, rule, regulation or
ordinance in any respect which could reasonably be expected to have a Material
Adverse Effect, nor is Borrower in violation of any order of any court,
Governmental Body or arbitration board or tribunal.
(d) Neither
Borrower nor any member of the Controlled Group maintains or contributes to
any
Plan other than those listed on Schedule 5.8(d) hereto. (i) No Plan has incurred
any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA
and Section 412(a) of the Code, whether or not waived, and Borrower and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan; (ii) each
Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to
be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code; (iii) neither
Borrower nor any member of the Controlled Group has incurred any liability
to
the PBGC other than for the payment of premiums, and there are no premium
payments which have become due which are unpaid; (iv) no Plan has been
terminated by the plan administrator thereof nor by the PBGC, and there is
no
occurrence which would cause the PBGC to institute proceedings under Title
IV of
ERISA to terminate any Plan; (v) at this time, the current value of the assets
of each Plan exceeds the present value of the accrued benefits and other
liabilities of such Plan and neither Borrower nor any member of the Controlled
Group knows of any facts or circumstances which would materially change the
value of such assets and accrued benefits and other liabilities; (vi) neither
Borrower nor any member of the Controlled Group has breached any of the
responsibilities, obligations or duties imposed on it by ERISA with respect
to
any Plan; (vii) neither Borrower nor any member of a Controlled Group has
incurred any liability for any excise tax arising under Section 4972 or 4980B
of
the Code, and no fact exists which could give rise to any such liability; (viii)
neither Borrower nor any member of the Controlled Group nor any fiduciary of,
nor any trustee to, any Plan, has engaged in a “prohibited transaction”
described in Section 406 of the ERISA or Section 4975 of the Code nor taken
any
action which would constitute or result in a Termination Event with respect
to
any such Plan which is subject to ERISA; (ix) Borrower and each member of the
Controlled Group has made all contributions due and payable with respect to
each
Plan; (x) there exists no event described in Section 4043(b) of ERISA, for
which
the thirty (30) day notice period has not been waived; (xi) neither Borrower
nor
any member of the Controlled Group has any fiduciary responsibility for
investments with respect to any plan existing for the benefit of persons other
than employees or former employees of Borrower and any member of the Controlled
Group; (xii) neither Borrower nor any member of the Controlled Group maintains
or contributes to any Plan which provides health, accident or life insurance
benefits to former employees, their spouses or dependents, other than in
accordance with Section 4980B of the Code; (xiii) neither Borrower nor any
member of the Controlled Group has withdrawn, completely or partially, from
any
Multiemployer Plan so as to incur liability under the Multiemployer Pension
Plan
Amendments Act of 1980 and there exists no fact which would reasonably be
expected to result in any such liability; and (xiv) no Plan fiduciary (as
defined in Section 3(21) of ERISA) has any liability for breach of fiduciary
duty or for any failure in connection with the administration or investment
of
the assets of a Plan.
53
5.9. Patents,
Trademarks, Copyrights and Licenses.
All
patents, patent applications, trademarks, trademark applications, service marks,
service ▇▇▇▇ applications, copyrights, copyright applications, design rights,
trade names, assumed names, trade secrets and licenses owned or utilized by
Borrower are set forth on Schedule 5.9, are valid and have been duly registered
or filed with all appropriate Governmental Bodies and constitute all of the
intellectual property rights which are necessary for the operation of its
business; there is no objection to or pending challenge to the validity of
any
such patent, trademark, copyright, design rights, trade name, trade secret
or
license and Borrower is not aware of any grounds for any challenge, except
as
set forth in Schedule 5.9 hereto. Each patent, patent application, patent
license, trademark, trademark application, trademark license, service ▇▇▇▇,
service ▇▇▇▇ application, service ▇▇▇▇ license, design rights, copyright,
copyright application and copyright license owned or held by Borrower and all
trade secrets used by Borrower consist of original material or property
developed by Borrower or was lawfully acquired by Borrower from the proper
and
lawful owner thereof. Each of such items has been maintained so as to preserve
the value thereof from the date of creation or acquisition thereof.
5.10. Licenses
and Permits.
Except
as
set forth in Schedule 5.10, Borrower (a) is in compliance with and (b) has
procured and is now in possession of, all material licenses or permits required
by any applicable federal, state, provincial or local law, rule or regulation
for the operation of its business in each jurisdiction wherein it is now
conducting or proposes to conduct business and where the failure to procure
such
licenses or permits could have a Material Adverse Effect.
54
5.11. Default
of Indebtedness.
Borrower
is not in default in the payment of the principal of or interest on any
Indebtedness or under any instrument or agreement under or subject to which
any
Indebtedness has been issued and no event has occurred under the provisions
of
any such instrument or agreement which with or without the lapse of time or
the
giving of notice, or both, constitutes or would constitute an event of default
thereunder.
5.12. No
Default.
Borrower
is not in default in the payment or performance of any of its contractual
obligations and no Default has occurred.
5.13. No
Burdensome Restrictions.
Borrower
is not party to any contract or agreement the performance of which could have
a
Material Adverse Effect. Borrower has heretofore delivered to Agent true and
complete copies of all material contracts to which it is a party or to which
it
or any of its properties is subject. Borrower has not agreed or consented to
cause or permit in the future (upon the happening of a contingency or otherwise)
any of its property, whether now owned or hereafter acquired, to be subject
to a
Lien which is not a Permitted Encumbrance.
5.14. No
Labor Disputes.
Borrower
is not involved in any labor dispute; there are no strikes or walkouts or union
organization of Borrower’s employees threatened or in existence and no labor
contract is scheduled to expire during the Term other than as set forth on
Schedule 5.14 hereto.
5.15. Margin
Regulations.
Borrower
is not 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” within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect. No part of the proceeds
of any Advance will be used for “purchasing” or “carrying” “margin stock” as
defined in Regulation U of such Board of Governors.
5.16. Investment
Company Act.
Borrower
is not an “investment company” registered or required to be registered under the
Investment Company Act of 1940, as amended, nor is it controlled by such a
company.
5.17. Disclosure.
No
representation or warranty made by Borrower in this Agreement, the Subordinated
Loan Documentation or in any financial statement, report, certificate or any
other document furnished in connection herewith or therewith contains any untrue
statement of a material fact or omits to state any material fact necessary
to
make the statements herein or therein not misleading. There is no fact known
to
Borrower or which reasonably should be known to Borrower which Borrower has
not
disclosed to Agent in writing with respect to the transactions contemplated
by
the Subordinated Loan Documentation or this Agreement which could reasonably
be
expected to have a Material Adverse Effect.
5.18. Delivery
of Subordinated Loan Documentation.
Agent
has
received complete copies of the Subordinated Loan Documentation (including
all
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any) and all amendments thereto, waivers relating thereto
and other side letters or agreements affecting the terms thereof. None of such
documents and agreements has been amended or supplemented, nor have any of
the
provisions thereof been waived, except pursuant to a written agreement or
instrument which has heretofore been delivered to Agent.
55
5.19. Swaps.
Borrower
is not a party to, nor will it be a party to, any swap agreement whereby
Borrower has agreed or will agree to swap interest rates or currencies unless
same provides that damages upon termination following an event of default
thereunder are payable on an unlimited “two-way basis” without regard to fault
on the part of either party.
5.20. Conflicting
Agreements.
No
provision of any mortgage, indenture, contract, agreement, judgment, decree
or
order binding on Borrower or affecting the Collateral conflicts with, or
requires any Consent which has not already been obtained to, or would in any
way
prevent the execution, delivery or performance of, the terms of this Agreement
or the Other Documents.
5.21. Application
of Certain Laws and Regulations.
Neither
Borrower nor any Affiliate of Borrower is subject to any law, statute, rule
or
regulation which regulates the incurrence of any Indebtedness, including laws,
statutes, rules or regulations relative to common or interstate carriers or
to
the sale of electricity, gas, steam, water, telephone, telegraph or other public
utility services.
5.22. Business
and Property of Borrower.
Upon
and
after the Closing Date, Borrower does not propose to engage in any business
other than providing turnkey value added services to carriers, major and
secondary equipment suppliers, tower management companies, public safety and
enterprise projects within the communications industry and activities necessary
to conduct the foregoing. On the Closing Date, Borrower will own all the
property and possess all of the rights and Consents necessary for the conduct
of
the business of Borrower.
5.23. Section
20 Subsidiaries.
Borrower
does not intend to use and shall not use any portion of the proceeds of the
Advances, directly or indirectly, to purchase during the underwriting period,
or
for 30 days thereafter, Ineligible Securities being underwritten by a Section
20
Subsidiary.
5.24. Anti-Terrorism
Laws.
(a) General.
Neither
Borrower nor any Affiliate of Borrower is in violation of any Anti-Terrorism
Law
or engages in or conspires to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law.
(b) Executive
Order No. 13224.
Neither
Borrower nor any Affiliate of Borrower or their respective agents acting or
benefiting in any capacity in connection with the Advances or other transactions
hereunder, is any of the following (each a “Blocked Person”):
(i) a
Person
that is listed in the annex to, or is otherwise subject to the provisions of,
the Executive Order No. 13224;
(ii) a
Person
owned or controlled by, or acting for or on behalf of, any Person that is listed
in the annex to, or is otherwise subject to the provisions of, the Executive
Order No. 13224;
56
(iii) a
Person
or entity with which any Lender is prohibited from dealing or otherwise engaging
in any transaction by any Anti-Terrorism Law;
(iv) a
Person
or entity that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order No. 13224;
(v) a
Person
or entity that is named as a “specially designated national” on the most current
list published by the U.S. Treasury Department Office of Foreign Asset Control
at its official website or any replacement website or other replacement official
publication of such list, or
(vi) a
Person
or entity who is affiliated or associated with a Person or entity listed
above.
Neither
Borrower or to the knowledge of Borrower, any of its agents acting in any
capacity in connection with the Advances or other transactions hereunder (i)
conducts any business or engages in making or receiving any contribution of
funds, goods or services to or for the benefit of any Blocked Person, or (ii)
deals in, or otherwise engages in any transaction relating to, any property
or
interests in property blocked pursuant to the Executive Order No.
13224.
5.25. Trading
with the Enemy.
Borrower
has not engaged, nor does it intend to engage, in any business or activity
prohibited by the Trading with the Enemy Act.
5.26. Federal
Securities Laws.
Neither
Borrower nor any of its Subsidiaries (i) is required to file periodic reports
under the Exchange Act, (ii) has any securities registered under the Exchange
Act or (iii) has filed a registration statement that has not yet become
effective under the Securities Act.
VI AFFIRMATIVE
COVENANTS.
Borrower
shall, until payment in full of the Obligations and termination of this
Agreement:
6.1. Payment
of Fees.
Pay
to
Agent on demand all usual and customary fees and expenses which Agent incurs
in
connection with (a) the forwarding of Advance proceeds and (b) the establishment
and maintenance of any Blocked Accounts or Depository Accounts as provided
for
in Section 4.15(h). Agent may, without making demand, charge Borrower’s Account
for all such fees and expenses.
6.2. Conduct
of Business and Maintenance of Existence and Assets.
(a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in
its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including all licenses, patents, copyrights, design rights, trade
names, trade secrets and trademarks and take all actions necessary to enforce
and protect the validity of any intellectual property right or other right
included in the Collateral; (b) keep in full force and effect its existence
and
comply in all material respects with the laws and regulations governing the
conduct of its business where the failure to do so could reasonably be expected
to have a Material Adverse Effect; and (c) make all such reports and pay all
such franchise and other taxes and license fees and do all such other acts
and
things as may be lawfully required to maintain its rights, licenses, leases,
powers and franchises under the laws of the United States or any political
subdivision thereof where the failure to do so could reasonably be expected
to
have a Material Adverse Effect.
57
6.3. Violations.
Promptly
notify Agent in writing of any violation of any law, statute, regulation or
ordinance of any Governmental Body, or of any agency thereof, applicable to
Borrower which could reasonably be expected to have a Material Adverse
Effect.
6.4. Government
Receivables.
Take
all
steps necessary to protect Agent’s interest in the Collateral under the Federal
Assignment of Claims Act, the Uniform Commercial Code and all other applicable
state or local statutes or ordinances and deliver to Agent appropriately
endorsed, any instrument or chattel paper connected with any Receivable arising
out of contracts between Borrower and the United States, any state or any
department, agency or instrumentality of any of them.
6.5. Financial
Covenants.
(a) Fixed
Charge Coverage Ratio.
Cause
to
be maintained at all times a Fixed Charge Coverage Ratio of not less than 1.10
to 1.00, tested quarterly on a rolling four (4) quarter basis.
6.6. Execution
of Supplemental Instruments.
Execute
and deliver to Agent from time to time, upon demand, such supplemental
agreements, statements, assignments and transfers, or instructions or documents
relating to the Collateral, and such other instruments as Agent may reasonably
request, in order that the full intent of this Agreement may be carried into
effect.
6.7. Payment
of Indebtedness.
Pay,
discharge or otherwise satisfy at or before maturity (subject, where applicable,
to specified grace periods and, in the case of the trade payables, to normal
payment practices) all its obligations and liabilities of whatever nature,
except when the failure to do so could not reasonably be expected to have a
Material Adverse Effect or when the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and Borrower shall
have
provided for such reserves as Agent may reasonably deem proper and necessary,
subject at all times to any applicable subordination arrangement in favor of
Lenders.
6.8. Standards
of Financial Statements.
Cause
all
financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12,
9.13 and 9.14 as to which GAAP is applicable to be complete and correct in
all
material respects (subject, in the case of interim financial statements, to
normal year-end audit adjustments) and to be prepared in reasonable detail
and
in accordance with GAAP applied consistently throughout the periods reflected
therein (except as concurred in by such reporting accountants or officer, as
the
case may be, and disclosed therein).
58
6.9. Federal
Securities Laws.
Promptly
notify Agent in writing if Borrower or any of its Subsidiaries (i) is required
to file periodic reports under the Exchange Act, (ii) registers any securities
under the Exchange Act or (iii) files a registration statement under the
Securities Act.
VII NEGATIVE
COVENANTS.
Borrower
shall not, until satisfaction in full of the Obligations and termination of
this
Agreement:
7.1. Merger,
Consolidation, Acquisition and Sale of Assets.
(a) Enter
into any merger, consolidation or other reorganization with or into any other
Person or acquire all or a substantial portion of the assets or Equity Interests
of any Person or permit any other Person to consolidate with or merge with
it,
provided,
however,
that
the Borrower may enter into any such transactions so long as (i) they do not
exceed the sum of $15,000,000 in the aggregate, and (ii) effective as of the
closing date of such acquisition and for the period commencing seven (7) days
prior to the closing date through the date of the closing of such acquisition,
the Borrower has a Minimum Undrawn Availability of at least $2,000,000 after
giving effect to such acquisition (which shall include assets acquired by the
Borrower with regard to such transaction solely upon completion by the Agent
to
it satisfaction of a field examination), and either (I) finance such with
Advances so long as (A) the Borrower is the surviving entity after such
transaction is completed, (B) the aggregate amount of Advances used by the
Borrower and attributable to such transactions does not exceed $6,500,000 during
the Term, (C) the aggregate amount of Advances used by the Borrower and
attributable to such transactions does not exceed $3,000,000 during any
consecutive twelve (12) month period during the Term, (D) the aggregate amount
of any single Advance requested by the Borrower to pay for any such transactions
does not exceed $3,000,000, (E) any Subsidiary and/or Affiliate created with
regard to such transaction becomes a “Borrower” hereunder and under the Other
Documents simultaneously with the closing of such transaction, (F) such
transaction would not cause any additional Liens, encumbrances and/or judgments
to be placed on Borrower and/or any assets of Borrower, other than Permitted
Encumbrances, (G) no Default or Event of Default exists at the time of such
transaction or shall be caused by such transaction, (H) the target of the
acquisition or the business acquired as a result of such acquisition is in
the
same industry as the Borrower, and (I) the Borrower provides evidence reasonably
satisfactory to the Agent that the Borrower, on a pro forma basis, will be
in
compliance with all of the terms and conditions set forth in this Agreement
after giving effect to any acquisition or (II) finance such transaction without
utilizing Advances so long as (A) the Borrower is the surviving entity after
such transaction is completed, (B) any Subsidiary and/or Affiliate created
with
regard to such transaction becomes a “Borrower” hereunder and under the Other
Documents simultaneously with the closing of such transaction, (C) such
transaction would not cause any additional Liens, encumbrances and/or judgments
to be placed on Borrower and/or any assets of Borrower, other than Permitted
Encumbrances, (D) no Default or Event of Default exists at the time of such
transaction or shall be caused by such transaction, (E) the target of the
acquisition or the business acquired as a result of such acquisition is in
the
same industry as the Borrower, and (F) the Borrower provides evidence reasonably
satisfactory to the Agent that the Borrower, on a pro forma basis, will be
in
compliance with all of the terms and conditions set forth in this Agreement
after giving effect to any acquisition.
59
(b) Sell,
lease, transfer or otherwise dispose of any of its properties or assets, except
(i) dispositions of Inventory and Equipment to the extent expressly permitted
by
Section 4.3 and (ii) any other sales or dispositions expressly permitted by
this
Agreement.
7.2. Creation
of Liens.
Create
or
suffer to exist any Lien or transfer upon or against any of its property or
assets now owned or hereafter acquired, except Permitted
Encumbrances.
7.3. Guarantees.
Become
liable upon the obligations or liabilities of any Person by assumption,
endorsement or guaranty thereof or otherwise (other than to Lenders) except
(a)
as disclosed on Schedule 7.3, (b) guarantees made in the Ordinary Course of
Business up to an aggregate amount of $100,000 and (c) the endorsement of checks
in the Ordinary Course of Business.
7.4. Investments.
Purchase
or acquire obligations or Equity Interests of, or any other interest in, any
Person, except (a) obligations issued or guaranteed by the United States of
America or any agency thereof, (b) commercial paper with maturities of not
more
than 180 days and a published rating of not less than A-1 or P-1 (or the
equivalent rating), (c) certificates of time deposit and bankers’ acceptances
having maturities of not more than 180 days and repurchase agreements backed
by
United States government securities of a commercial bank if (i) such bank has
a
combined capital and surplus of at least $500,000,000, or (ii) its debt
obligations, or those of a holding company of which it is a Subsidiary, are
rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency, (d) U.S. money market funds that invest solely in
obligations issued or guaranteed by the United States of America or an agency
thereof, and (e) except as permitted by Section 7.1.
7.5. Loans.
Make
advances, loans or extensions of credit to any Person, including any Parent,
Subsidiary or Affiliate except with respect to (a) the extension of commercial
trade credit in connection with the sale of Inventory in the Ordinary Course
of
Business and (b) loans to its employees in the Ordinary Course of Business
not
to exceed the aggregate amount of $100,000 at any time outstanding.
7.6. Capital
Expenditures.
Contract
for, purchase or make any expenditure or commitments for Capital Expenditures
in
any fiscal year in an aggregate amount in excess of $2,500,000.
7.7. Dividends.
Declare,
pay or make any dividend or distribution (other than dividends or distributions
payable in its stock, or split-ups or reclassifications of its stock) or apply
any of its funds, property or assets to the purchase, redemption or other
retirement of any common or preferred stock, or of any options to purchase
or
acquire any such shares of common or preferred stock of Borrower except,
however, provided that no Default or Event of Default has occurred, the Borrower
may declare, pay, or make any dividend or distribution provided that such
dividend or distribution does not exceed amounts required by the Guarantor
to
(i) pay its taxes, (ii) make interest payments to the Subordinated Lender,
or
(iii) pay expenses of the Guarantor in amounts not to exceed $250,000 per
annum.
7.8. Indebtedness.
Create,
incur, assume or suffer to exist any Indebtedness (exclusive of trade debt)
except in respect of (i) Indebtedness to Lenders; (ii) Indebtedness incurred
for
Capital Expenditures permitted under Section 7.6 hereof; (iii) Indebtedness
due under the Subordinated Loan Documentation, (iv) Indebtedness incurred with
respect to transactions permitted pursuant to Section 7.1 provided that any
such
Indebtedness is unsecured and subordinate to the Obligations in form and
substance satisfactory to the Agent, and provided further such Indebtedness
does
not exceed $3,000,000 for any single transaction, nor $7,000,000 in the
aggregate, and (v) any Indebtedness related to a Permitted
Encumbrance.
60
7.9. Nature
of Business.
Substantially
change the nature of the business in which it is presently engaged, nor except
as specifically permitted hereby purchase or invest, directly or indirectly,
in
any assets or property other than in the Ordinary Course of Business for assets
or property which are useful in, necessary for and are to be used in its
business as presently conducted.
7.10. Transactions
with Affiliates.
Directly
or indirectly, purchase, acquire or lease any property from, or sell, transfer
or lease any property to, or otherwise enter into any transaction or deal with,
any Affiliate, except transactions disclosed to the Agent, which are in the
Ordinary Course of Business, on an arm’s-length basis on terms and conditions no
less favorable than terms and conditions which would have been obtainable from
a
Person other than an Affiliate.
7.11. Leases.
Enter
as
lessee into any lease arrangement for real or personal property (unless
capitalized and permitted under Section 7.6 hereof) if after giving effect
thereto, aggregate annual rental payments for all leased property would exceed
$3,500,000 with respect to real property leases or $4,000,000 with respect
to
personal property leases in any one fiscal year in the aggregate for
Borrower.
7.12. Subsidiaries.
(a) Form
any
Subsidiary unless (i) such Subsidiary expressly joins in this Agreement as
a
borrower and becomes jointly and severally liable for the obligations of
Borrower hereunder, under the Note and under any other agreement between
Borrower and Lenders and (ii) Agent shall have received all documents, including
legal opinions, it may reasonably require to establish compliance with each
of
the foregoing conditions.
(b) Enter
into any partnership, joint venture or similar arrangement.
7.13. Fiscal
Year and Accounting Changes.
Change
its fiscal year from June 30th
or make
any significant change (i) in accounting treatment and reporting practices
except as required by GAAP or (ii) in tax reporting treatment except as
required by law.
7.14. Pledge
of Credit.
Now
or
hereafter pledge Agent’s or any Lender’s credit on any purchases or for any
purpose whatsoever or use any portion of any Advance in or for any business
other than Borrower’s business as conducted on the date of this
Agreement.
7.15. Amendment
of Articles of Incorporation, By-Laws.
Amend,
modify or waive any term or material provision of its Articles of Incorporation
or By-Laws unless required by law.
7.16. Compliance
with ERISA.
(i)
(x)
Maintain, or permit any member of the Controlled Group to maintain, or (y)
become obligated to contribute, or permit any member of the Controlled Group
to
become obligated to contribute, to any Plan, other than those Plans disclosed
on
Schedule 5.8(d), (ii) engage, or permit any member of the Controlled Group
to
engage, in any non-exempt “prohibited transaction”, as that term is defined in
section 406 of ERISA and Section 4975 of the Code, (iii) incur, or permit any
member of the Controlled Group to incur, any “accumulated funding deficiency”,
as that term is defined in Section 302 of ERISA or Section 412 of the Code,
(iv)
terminate, or permit any member of the Controlled Group to terminate, any Plan
where such event could result in any liability of Borrower or any member of
the
Controlled Group or the imposition of a lien on the property of Borrower or
any
member of the Controlled Group pursuant to Section 4068 of ERISA, (v) assume,
or
permit any member of the Controlled Group to assume, any obligation to
contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d), (vi)
incur, or permit any member of the Controlled Group to incur, any withdrawal
liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of
the
occurrence of any Termination Event, (viii) fail to comply, or permit a member
of the Controlled Group to fail to comply, with the requirements of ERISA or
the
Code or other Applicable Laws in respect of any Plan, (ix) fail to meet, or
permit any member of the Controlled Group to fail to meet, all minimum funding
requirements under ERISA or the Code or postpone or delay or allow any member
of
the Controlled Group to postpone or delay any funding requirement with respect
of any Plan.
61
7.17. Prepayment
of Indebtedness.
Except
as
permitted pursuant to Section 7.21 hereof, at any time, directly or indirectly,
prepay any Indebtedness (other than to Lenders), or repurchase, redeem, retire
or otherwise acquire any Indebtedness of Borrower.
7.18. Anti-Terrorism
Laws.
Borrower
shall not, until satisfaction in full of the Obligations and termination of
this
Agreement, nor shall it permit any Affiliate or agent to:
(a) Conduct
any business or engage in any transaction or dealing with any Blocked Person,
including the making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person.
(b) Deal
in,
or otherwise engage in any transaction relating to, any property or interests
in
property blocked pursuant to the Executive Order No. 13224.
(c) Engage
in
or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in the Executive Order No. 13224, the USA PATRIOT Act or any other
Anti-Terrorism Law. Borrower shall deliver to Lenders any certification or
other
evidence requested from time to time by any Lender in its sole discretion,
confirming Borrower’s compliance with this Section.
7.19. Membership/Partnership
Interests.
Elect
to
treat or permit any of its Subsidiaries to (x) treat its limited liability
company membership interests or partnership interests, as the case may be,
as
securities as contemplated by the definition of “security” in Section 8-102(15)
and by Section 8-103 of Article 8 of Uniform Commercial Code or (y) certificate
its limited liability company membership interests or partnership interests,
as
the case may be.
62
7.20. Trading
with the Enemy Act.
Engage
in
any business or activity in violation of the Trading with the Enemy
Act.
7.21. Subordinated
Note.
At
any
time, directly or indirectly, pay, prepay, repurchase, redeem, retire or
otherwise acquire, or make any payment on account of any principal of, interest
on or premium payable in connection with the repayment or redemption of the
Subordinated Loan Documentation, provided,
however,
the
Borrower may
make
(i) scheduled payments of interest pursuant to the Subordinated Loan
Documentation so long as at the time of each such interest payment no event
or
condition which constitutes or which, with notice or the lapse of time, or
both,
would constitute a Default or an Event of Default shall have occurred and be
continuing or be caused by any such interest payment and (ii) repayment in
full
of all interest and principal on the maturity date of the Subordinated Note
so
long as (A) at the time of repayment in full, and for the period commencing
seven days prior to such repayment through the date of such repayment, the
Borrower has a minimum Undrawn Availability of at least $2,000,000 after giving
effect to such repayment in full and (B) at the time of such repayment in full
no event or condition which constitutes or which, with notice or the lapse
of
time, or both, would constitute a Default or an Event of Default shall have
occurred and be continuing or be caused by any such repayment in
full.
7.22. Other
Agreements.
Enter
into any material amendment, waiver or modification of the Subordinated Loan
Documentation, the documentation evidencing the J&J Leasing Indebtedness or
any related agreements.
VIII CONDITIONS
PRECEDENT.
8.1. Conditions
to Initial Advances.
The
agreement of Lenders to make the initial Advances requested to be made on the
Closing Date is subject to the satisfaction, or waiver by Agent, immediately
prior to or concurrently with the making of such Advances, of the following
conditions precedent:
(a) Note.
Agent
shall have received the Note duly executed and delivered by an authorized
officer of Borrower;
(b) Filings,
Registrations and Recordings.
Each
document (including any Uniform Commercial Code financing statement) required
by
this Agreement, any related agreement or under law or reasonably requested
by
the Agent to be filed, registered or recorded in order to create, in favor
of
Agent, a perfected security interest in or lien upon the Collateral shall have
been properly filed, registered or recorded in each jurisdiction in which the
filing, registration or recordation thereof is so required or requested, and
Agent shall have received an acknowledgment copy, or other evidence satisfactory
to it, of each such filing, registration or recordation and satisfactory
evidence of the payment of any necessary fee, tax or expense relating
thereto;
(c) Corporate
Proceedings of Borrower.
Agent
shall have received a copy of the resolutions in form and substance reasonably
satisfactory to Agent, of the Board of Directors of Borrower authorizing (i)
the
execution, delivery and performance of this Agreement, the Note, any related
agreements, the Other Documents, the Subordinated Loan Documentation
(collectively the “Documents”) and (ii) the granting by Borrower of the security
interests in and liens upon the Collateral in each case certified by the
Secretary or an Assistant Secretary of Borrower as of the Closing Date; and,
such certificate shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded as of the date of such
certificate;
63
(d) Incumbency
Certificates of Borrower.
Agent
shall have received a certificate of the Secretary or an Assistant Secretary
of
Borrower, dated the Closing Date, as to the incumbency and signature of the
officers of Borrower executing this Agreement, the Other Documents, any
certificate or other documents to be delivered by it pursuant hereto, together
with evidence of the incumbency of such Secretary or Assistant
Secretary;
(e) Corporate
Proceedings of Guarantor.
Agent
shall have received a copy of the resolutions in form and substance reasonably
satisfactory to Agent, of the Board of Directors of Guarantor authorizing the
execution, delivery and performance of the Guaranty and each Other Document
to
which it is a party certified by the Secretary or an Assistant Secretary of
Guarantor as of the Closing Date; and, such certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded as of the date of such certificate;
(f) Incumbency
Certificates of Guarantor.
Agent
shall have received a certificate of the Secretary or an Assistant Secretary
of
Guarantor, dated the Closing Date, as to the incumbency and signature of the
officers of Guarantor executing this Agreement, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of
the
incumbency of such Secretary or Assistant Secretary;
(g) Certificates.
Agent
shall have received a copy of the Articles or Certificate of Incorporation
of
Borrower and each Guarantor, and all amendments thereto, certified by the
Secretary of State or other appropriate official of its jurisdiction of
incorporation together with copies of the By-Laws of Borrower and Guarantor
and
all agreements of Borrower’s and Guarantor’s shareholders certified as accurate
and complete by the Secretary of Borrower and Guarantor;
(h) Good
Standing Certificates.
Agent
shall have received good standing certificates for Borrower and Guarantor dated
not more than 30 days prior to the Closing Date, issued by the Secretary of
State or other appropriate official of Borrower’s and Guarantor’s jurisdiction
of incorporation and each jurisdiction where the conduct of Borrower’s and
Guarantor’s business activities or the ownership of its properties necessitates
qualification;
(i) Legal
Opinion.
Agent
shall have received the executed legal opinion of ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
in form and substance satisfactory to Agent which shall cover such matters
incident to the transactions contemplated by this Agreement, the Note, the
Other
Documents, the Subordinated Loan Documentation and related agreements as Agent
may reasonably require and Borrower hereby authorizes and directs such counsel
to deliver such opinions to Agent and Lenders;
(j) No
Litigation.
(i)
No
litigation, investigation or proceeding before or by any arbitrator or
Governmental Body shall be continuing or threatened against Borrower or against
the officers or directors of Borrower (A) in connection with this Agreement,
the
Other Documents, the Subordinated Loan Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction, writ, restraining order or other order
of any nature materially adverse to Borrower or the conduct of its business
or
inconsistent with the due consummation of the Transactions shall have been
issued by any Governmental Body. Agent shall have received a summary of all
existing litigation regarding the Borrower;
64
(k) Financial
Condition Certificates.
Agent
shall have received an executed Financial Condition Certificate in the form
of
Exhibit 8.1(k).
(l) Collateral
Examination.
Agent
shall have completed Collateral examinations and received appraisals, the
results of which shall be satisfactory in form and substance to Lenders, of
the
Receivables, Inventory, General Intangibles, Real Property, Leasehold Interest
and Equipment of Borrower and all books and records in connection
therewith;
(m) Fees.
Agent
shall have received all fees payable to Agent and Lenders on or prior to the
Closing Date hereunder, including pursuant to Article III hereof;
(n) Financial
Statements.
Agent
shall have received a copy of the Borrower’s most recent financial statements
for fiscal years 2004, 2005 and 2006 and federal income tax returns and income
tax reports (if any) as well as annual financial statements for the fiscal
years
2005 and 2006, which shall be satisfactory in all respects to the
Agent;
(o) Subordinated
Loan Documents.
Agent
shall have received final executed copies of the Subordinated Loan Documentation
and all related agreements, documents and instruments as in effect on the
Closing Date all of which shall be satisfactory in form and substance to
Agent;
(p) ERISA
Compliance.
Agent
shall have received in form and substance satisfactory to Agent evidence that
Borrower is in compliance with ERISA as required in Section 7.16 herein along
with a certificate from Borrower’s accountant, attorney or actuary delineating
all existing pension and/or profit sharing plans, if any;
(q) Insurance.
Agent
shall have received in form and substance satisfactory to Agent, certified
copies of Borrower’s casualty insurance policies or, at Agent’s option, evidence
of same, together with loss payable endorsements on Agent’s standard form of
loss payee endorsement naming Agent as lender loss payee, and certified copies
of Borrower’s liability insurance policies, together with endorsements naming
Agent as an additional insured;
(r) Fictitious,
Assumed or Alternate Names.
Agent
shall have received certified copies of any fictitious, assumed or alternate
names of the Borrower;
(s) Other
Documents.
Agent
shall have received the executed Other Documents, all in form and substance
satisfactory to Agent;
65
(t) Payment
Instructions.
Agent
shall have received written instructions from Borrower directing the application
of proceeds of the initial Advances made pursuant to this Agreement;
(u) Blocked
Accounts.
Agent
shall have received duly executed agreements establishing the Blocked Accounts
or Depository Accounts with financial institutions acceptable to Agent for
the
collection or servicing of the Receivables and proceeds of the Collateral;
(v) Consents.
Agent
shall have received any and all Consents necessary to permit the effectuation
of
the transactions contemplated by this Agreement and the Other Documents; and,
Agent shall have received such Consents and waivers of such third parties as
might assert claims with respect to the Collateral, as Agent and its counsel
shall deem necessary;
(w) No
Adverse Material Change.
(i)
since
December 31, 2007, there shall not have occurred any event, condition or state
of facts which could reasonably be expected to have a Material Adverse Effect
and (ii) no representations made or information supplied to Agent or Lenders
shall have been proven to be inaccurate or misleading in any material
respect;
(x) Leasehold
Agreements.
Agent
shall have received landlord agreements satisfactory to Agent with respect
to
the Borrower’s chief executive office;
(y) Projections.
Agent
shall have received monthly and annual projections of the Borrower for the
immediately succeeding three (3) fiscal years demonstrating Borrower's’ ability
to make payments under this Agreement;
(z) Contract
Review.
Agent
shall have received copies of all material contracts of Borrower including,
without limitation, leases, union contracts, labor contracts, vendor supply
contracts, management agreements, option agreements, warrant agreements, royalty
agreements, member agreements, purchase agreements, warranty agreements,
employment agreements, license agreements and distributorship agreements and
such contracts and agreements shall be satisfactory in all reasonable respects
to Agent;
(aa) Operating
Accounts.
Agent
shall have received evidence that the Borrower has established and is
maintaining demand depository accounts with the Agent;
(bb) Searches.
Agent
shall have received UCC searches, Federal and State Litigation searches, Upper
Court and Local Judgment searches, franchise tax searches, bankruptcy searches,
Federal and State Tax Lien searches and any other Lien searches run against
the
names of the Borrower as well as any previous, alternate and fictitious names,
and against the names of all entities which were acquired by or merged into
the
Borrower, or orders of applicable bankruptcy courts reflecting lien releases
(as
applicable), showing no existing security interests in or Liens on the
Collateral other than Permitted Encumbrances and other Liens permitted by the
Agent;
(cc) Intellectual
Property.
Agent
shall have received a list of intellectual property of the Borrower including
trademarks and trademark applications, patents and patent applications,
copyrights and copyright applications, together with a search/abstract relating
to the same;
66
(dd) Closing
Certificate.
Agent
shall have received a closing certificate signed by the Chief Financial Officer
of Borrower dated as of the date hereof, stating that (i) all representations
and warranties set forth in this Agreement and the Other Documents are true
and
correct on and as of such date, (ii) Borrower is on such date in compliance
with
all the terms and provisions set forth in this Agreement and the Other Documents
and (iii) on such date no Default or Event of Default has occurred or is
continuing;
(ee) Borrowing
Base.
Agent
shall have received a Borrowing Base Certificate from Borrower evidencing that
the Borrower will have a minimum aggregate Undrawn Availability of at least
$2,500,000 at closing (after all fees and expenses and subtraction of trade
payables 60 days or more past due);
(ff) Review
of Records.
Agent
shall have reviewed to its satisfaction all of Borrower’s books and
records;
(gg) Privity
Letter.
Agent
shall have received a privity letter from Borrower’s accountant authorizing the
Agent to rely on the financial statements and other documentation prepared
by
such accountant;
(hh) Existing
Indebtedness.
Agent
shall have received a copy of documentation relating to the debt of the
Borrower, including promissory notes, security agreements, etc. including,
specifically, a certain promissory note and security agreement, mortgage, etc.
issued by the Borrower in favor of J & J Leasing Partnership;
(ii) Field
Audit.
Agent
shall complete an asset based field audit as well as a field examination, both
to the satisfaction of the Agent;
(jj) Compliance
with Laws.
Agent
shall be reasonably satisfied that Borrower is in compliance with all pertinent
federal, state, local or territorial regulations, including those with respect
to the Federal Occupational Safety and Health Act, the Environmental Protection
Act, ERISA and the Trading with the Enemy Act; and
(kk) Sales
Tax Obligation.
Receipt
and review by Agent of all documentation with regard to certain outstanding
sales tax obligations of the Borrower in the approximate amount of $1,800,000
along with documentation evidencing any and all negotiations with regard
thereto;
(ll) Security
Interest Issues.
Receipt
and review by Agent of all documentation with regard to Collateral security
interest issues concerning materialmen’s, sub-contractors and suppliers’
lien;
(mm) Prefund
Exam.
Satisfactory performance by Agent of prefund exam which includes an analysis
of
▇▇▇▇▇▇▇▇ in excess of costs in earnings to ascertain whether a reserve for
a
portion of such category needs to be implemented prior to closing;
67
(nn) Other.
All
corporate and other proceedings, and all documents, instruments and other legal
matters in connection with the Transactions shall be reasonably satisfactory
in
form and substance to Agent and its counsel.
8.2. Conditions
to Each Advance.
The
agreement of Lenders to make any Advance requested to be made on any date
(including the initial Advance), is subject to the satisfaction of the following
conditions precedent as of the date such Advance is made:
(a) Representations
and Warranties.
Each
of
the representations and warranties made by Borrower in or pursuant to this
Agreement, the Other Documents and any related agreements to which it is a
party, and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement, the Other Documents or any related
agreement shall be true and correct in all material respects on and as of such
date as if made on and as of such date;
(b) No
Default.
No
Event
of Default or Default shall have occurred and be continuing on such date, or
would exist after giving effect to the Advances requested to be made, on such
date; provided, however that Agent, in its sole discretion, may continue to
make
Advances notwithstanding the existence of an Event of Default or Default and
that any Advances so made shall not be deemed a waiver of any such Event of
Default or Default; and
(c) Maximum
Advances.
In
the
case of any type of Advance requested to be made, after giving effect thereto,
the aggregate amount of such type of Advance shall not exceed the maximum amount
of such type of Advance permitted under this Agreement.
Each
request for an Advance by Borrower hereunder shall constitute a representation
and warranty by Borrower as of the date of such Advance that the conditions
contained in this subsection shall have been satisfied.
IX INFORMATION
AS TO BORROWERS.
Borrower
shall, until satisfaction in full of the Obligations and the termination of
this
Agreement:
9.1. Disclosure
of Material Matters.
Immediately
upon learning thereof, report to Agent all matters materially affecting the
value, enforceability or collectibility of any portion of the Collateral,
including Borrower’s reclamation or repossession of, or the return to Borrower
of, a material amount of goods or claims or disputes asserted by any Customer
or
other obligor.
9.2. Schedules.
Deliver
to Agent on or before (I) Wednesday of each week as and for the immediately
preceding week a list of all sales, cash remittances, credits and collection
reports in form and substance satisfactory to Agent; and (II) the thirtieth
(30th
) day of
each month as and for the prior month (a) accounts receivable ageings inclusive
of reconciliations to the general ledger, (b) accounts payable schedules
inclusive of reconciliations to the general ledger, (c) Eligible Unbilled
Receivables and Eligible Work-in-Process Receivables, (d) monthly gross margin
report of Borrower in form and substance satisfactory to the Agent, and (e)
a
Borrowing Base Certificate in form and substance satisfactory to Agent (which
shall be calculated as of the last day of the prior month and which shall not
be
binding upon Agent or restrictive of Agent's rights under this Agreement).
In
addition, Borrower will deliver to Agent at such intervals as Agent may require:
(i) confirmatory assignment schedules, (ii) copies of Customer’s
invoices, (iii) evidence of shipment or delivery, and (iv) such
further schedules, documents and/or information regarding the Collateral as
Agent may require including trial balances and test verifications. Agent shall
have the right to confirm and verify all Receivables by any manner and through
any medium it considers advisable and do whatever it may deem reasonably
necessary to protect its interests hereunder. The items to be provided under
this Section are to be in form satisfactory to Agent and executed by Borrower
and delivered to Agent from time to time solely for Agent’s convenience in
maintaining records of the Collateral, and Borrower’s failure to deliver any of
such items to Agent shall not affect, terminate, modify or otherwise limit
Agent’s Lien with respect to the Collateral.
68
9.3. Environmental
Reports.
Furnish
Agent, concurrently with the delivery of the financial statements referred
to in
Sections 9.7 and 9.8, with a certificate signed by the President of Borrower
stating, to the best of his knowledge, that Borrower is in compliance in all
material respects with all federal, state and local Environmental Laws. To
the
extent Borrower is not in compliance with the foregoing laws, the certificate
shall set forth with specificity all areas of non-compliance and the proposed
action Borrower will implement in order to achieve full compliance.
9.4. Litigation.
Promptly
notify Agent in writing of any claim, litigation, suit or administrative
proceeding affecting Borrower or any Guarantor, whether or not the claim is
covered by insurance, and of any litigation, suit or administrative proceeding,
which in any such case affects the Collateral or which could reasonably be
expected to have a Material Adverse Effect.
9.5. Material
Occurrences.
Promptly
notify Agent in writing upon the occurrence of (a) any Event of Default or
Default; (b) any event of default under the Subordinated Loan Documentation;
(c)
any event which with the giving of notice or lapse of time, or both, would
constitute an event of default under the Subordinated Loan Documentation; (d)
any event, development or circumstance whereby any financial statements or
other
reports furnished to Agent fail in any material respect to present fairly,
in
accordance with GAAP consistently applied, the financial condition or operating
results of Borrower as of the date of such statements; (e) any accumulated
retirement plan funding deficiency which, if such deficiency continued for
two
plan years and was not corrected as provided in Section 4971 of the Code, could
subject Borrower to a tax imposed by Section 4971 of the Code; (f) each and
every default by Borrower which might result in the acceleration of the maturity
of any Indebtedness, including the names and addresses of the holders of such
Indebtedness with respect to which there is a default existing or with respect
to which the maturity has been or could be accelerated, and the amount of such
Indebtedness; and (g) any other development in the business or affairs of
Borrower or any Guarantor, which could reasonably be expected to have a Material
Adverse Effect; in each case describing the nature thereof and the action
Borrower propose to take with respect thereto.
9.6. Government
Receivables.
Notify
Agent immediately if any of its Receivables in excess of $250,000 in the
aggregate arise out of contracts between Borrower and the United States, any
state, or any department, agency or instrumentality of any of them.
69
9.7. Annual
Financial Statements.
Furnish
Agent within one hundred twenty (120) days after the end of each fiscal year
of
Borrower, financial statements of Borrower and Berliner on a consolidated basis
including, but not limited to, statements of income and stockholders’ equity and
cash flow from the beginning of the current fiscal year to the end of such
fiscal year and the balance sheet as at the end of such fiscal year, all
prepared in accordance with GAAP applied on a basis consistent with prior
practices, and in reasonable detail and reported upon without qualification
by
an independent certified public accounting firm selected by Borrower and
satisfactory to Agent (the “Accountants”). The accounting firm of BDO ▇▇▇▇▇▇▇ is
acceptable to the Agent. The report of the Accountants shall be accompanied
by a
statement of the Accountants certifying that (i) they have caused this Agreement
to be reviewed, (ii) in making the examination upon which such report was based
either no information came to their attention which to their knowledge
constituted an Event of Default or a Default under this Agreement or any related
agreement or, if such information came to their attention, specifying any such
Default or Event of Default, its nature, when it occurred and whether it is
continuing, and such report shall contain or have appended thereto calculations
which set forth Borrower’s compliance with the requirements or restrictions
imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.11 hereof. In addition,
the reports shall be accompanied by a Compliance Certificate.
9.8. Quarterly
Financial Statements.
Furnish
Agent within forty-five (45) days after the end of each fiscal quarter, an
unaudited balance sheet of Borrower and Berliner on a consolidated basis and
unaudited statements of income and stockholders’ equity and cash flow of
Borrower and Berliner on a consolidated basis reflecting results of operations
from the beginning of the fiscal year to the end of such quarter and for such
quarter, prepared on a basis consistent with prior practices and complete and
correct in all material respects, subject to normal and recurring year end
adjustments that individually and in the aggregate are not material to
Borrower’s or Berliner’s business. The reports shall be accompanied by a
Compliance Certificate.
9.9. Monthly
Financial Statements.
Furnish
Agent within thirty (30) days after the end of each month, unaudited statements
of income of Borrower reflecting results of operations from the beginning of
the
fiscal year to the end of such month and for such month, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal and recurring year end adjustments that individually
and in the aggregate are not material to Borrower’s business. The reports shall
be accompanied by a Compliance Certificate.
9.10. Other
Reports.
Furnish
Agent as soon as available, but in any event within ten (10) days after the
issuance thereof, (i) with copies of such financial statements, reports and
returns as Borrower shall send to its stockholders and (ii) copies of all
notices, reports, financial statements and other materials sent pursuant to
the
Subordinated Loan Documentation.
9.11. Additional
Information.
Furnish
Agent with such additional information as Agent shall reasonably request in
order to enable Agent to determine whether the terms, covenants, provisions
and
conditions of this Agreement and the Note have been complied with by Borrower
including, without the necessity of any request by Agent, (a) copies of all
environmental audits and reviews, (b) at least fifteen (15) days prior thereto,
notice of Borrower’s opening of any new office or place of business or
Borrower’s closing of any existing office or place of business, and (c) promptly
upon Borrower’s learning thereof, notice of any labor dispute to which Borrower
may become a party, any strikes or walkouts relating to any of its plants or
other facilities, and the expiration of any labor contract to which Borrower
is
a party or by which Borrower is bound.
70
9.12. Projected
Operating Budget.
Furnish
Agent, no later than ninety (90) days following the beginning of Borrower’s
fiscal years commencing with fiscal year 2009, a month by month projected
operating budget and cash flow of Borrower for such fiscal year (including
an
income statement for each month and a balance sheet as at the end of the last
month in each fiscal quarter), such projections to be accompanied by a
certificate signed by the President or Chief Financial Officer of Borrower
to
the effect that such projections have been prepared on the basis of sound
financial planning practice consistent with past budgets and financial
statements and that such officer has no reason to question the reasonableness
of
any material assumptions on which such projections were prepared.
9.13. Variances
From Operating Budget.
Furnish
Agent quarterly written reports summarizing all material variances from budgets
submitted by Borrower pursuant to Section 9.12 and a discussion and analysis
by
management with respect to such variances.
9.14. Notice
of Suits, Adverse Events.
Furnish
Agent with prompt written notice of (i) any lapse or other termination of any
Consent issued to Borrower by any Governmental Body or any other Person that
is
material to the operation of Borrower’s business, (ii) any refusal by any
Governmental Body or any other Person to renew or extend any such Consent;
and
(iii) copies of any periodic or special reports filed by Borrower or any
Guarantor with any Governmental Body or Person, if such reports indicate any
material change in the business, operations, affairs or condition of Borrower
or
any Guarantor, or if copies thereof are requested by Lender, and (iv) copies
of
any material notices and other communications from any Governmental Body or
Person which specifically relate to Borrower or any Guarantor.
9.15. ERISA
Notices and Requests.
Furnish
Agent with immediate written notice in the event that (i) Borrower or any member
of the Controlled Group knows or has reason to know that a Termination Event
has
occurred, together with a written statement describing such Termination Event
and the action, if any, which Borrower or any member of the Controlled Group
has
taken, is taking, or proposes to take with respect thereto and, when known,
any
action taken or threatened by the Internal Revenue Service, Department of Labor
or PBGC with respect thereto, (ii) Borrower or any member of the Controlled
Group knows or has reason to know that a prohibited transaction (as defined
in
Sections 406 of ERISA and 4975 of the Code) has occurred together with a written
statement describing such transaction and the action which Borrower or any
member of the Controlled Group has taken, is taking or proposes to take with
respect thereto, (iii) a funding waiver request has been filed with respect
to
any Plan together with all communications received by Borrower or any member
of
the Controlled Group with respect to such request, (iv) any increase in the
benefits of any existing Plan or the establishment of any new Plan or the
commencement of contributions to any Plan to which Borrower or any member of
the
Controlled Group was not previously contributing shall occur, (v) Borrower
or
any member of the Controlled Group shall receive from the PBGC a notice of
intention to terminate a Plan or to have a trustee appointed to administer
a
Plan, together with copies of each such notice, (vi) Borrower or any member
of
the Controlled Group shall receive any favorable or unfavorable determination
letter from the Internal Revenue Service regarding the qualification of a Plan
under Section 401(a) of the Code, together with copies of each such letter;
(vii) Borrower or any member of the Controlled Group shall receive a notice
regarding the imposition of withdrawal liability, together with copies of each
such notice; (viii) Borrower or any member of the Controlled Group shall fail
to
make a required installment or any other required payment under Section 412
of
the Code on or before the due date for such installment or payment; (ix)
Borrower or any member of the Controlled Group knows that (a) a Multiemployer
Plan has been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC
has instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multiemployer Plan.
71
9.16. Additional
Documents.
Execute
and deliver to Agent, upon request, such documents and agreements as Agent
may,
from time to time, reasonably request to carry out the purposes, terms or
conditions of this Agreement.
X EVENTS
OF
DEFAULT.
The
occurrence of any one or more of the following events shall constitute an “Event
of Default”:
10.1. Nonpayment.
Failure
by Borrower to pay any principal or interest on the Obligations when due,
whether at maturity or by reason of acceleration pursuant to the terms of this
Agreement or by notice of intention to prepay, or by required prepayment or
failure to pay any other liabilities or make any other payment, fee or charge
provided for herein when due or in any Other Document;
10.2. Breach
of Representation.
Any
representation or warranty made or deemed made by Borrower or any Guarantor
in
this Agreement, any Other Document or any related agreement or in any
certificate, document or financial or other statement furnished at any time
in
connection herewith or therewith shall prove to have been misleading in any
material respect on the date when made or deemed to have been made;
10.3. Financial
Information.
Failure
by Borrower to (i) furnish financial information when due or when requested
which is unremedied for a period of fifteen (15) days, or (ii) permit the
inspection of its books or records;
10.4. Judicial
Actions.
Issuance
of a notice of Lien, levy, assessment, injunction or attachment against
Borrower’s Inventory or Receivables or against a material portion of Borrower’s
other property which is not stayed or lifted within forty-five (45)
days;
10.5. Noncompliance.
Except
as
otherwise provided for in Sections 10.1, 10.3 and 10.5(ii), (i) failure or
neglect of Borrower or any Guarantor to perform, keep or observe any term,
provision, condition, covenant herein contained, or contained in any Other
Document or any other agreement or arrangement, now or hereafter entered into
between Borrower or any Guarantor, and Agent or any Lender, or (ii) failure
or
neglect of Borrower to perform, keep or observe any term, provision, condition
or covenant, contained in Sections 4.6, 4.7, 4.9, 6.1, 6.3, 6.4, 9.4 or 9.6
hereof which is not cured within twenty (20) days from the occurrence of such
failure or neglect;
72
10.6. Judgments.
Any
judgment or judgments are rendered against Borrower or any Guarantor for an
aggregate amount in excess of $250,000 which (i) is not contested in good faith
by the Borrower, (ii) the Borrower does not establish reserves satisfactory
to
the Agent with regard thereto, and (iii) is not within sixty (60) days of such
rendering or filing either satisfied, stayed or discharged of record;
10.7. Bankruptcy.
Borrower
or any Guarantor shall (i) apply for, consent to or suffer the appointment
of,
or the taking of possession by, a receiver, custodian, trustee, liquidator
or
similar fiduciary of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence
a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws,
or
(vii) take any action for the purpose of effecting any of the
foregoing;
10.8. Inability
to Pay.
Borrower
or any Guarantor shall admit in writing its inability, or be generally unable,
to pay its debts as they become due or cease operations of its present
business;
10.9. Affiliate
Bankruptcy.
Any
Affiliate or any Subsidiary of Borrower, or any Guarantor, shall (i) apply
for,
consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or
of
all or a substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for
the
purpose of effecting any of the foregoing;
10.10. Material
Adverse Effect.
Any
change in Borrower’s or any Guarantor’s results of operations or condition
(financial or otherwise) which in Agent’s reasonable opinion has a Material
Adverse Effect;
10.11. Lien
Priority.
Except
for Permitted Encumbrances identified in such definition under subsections
(h)
and (j), any Lien created hereunder or provided for hereby or under any related
agreement for any reason ceases to be or is not a valid and perfected Lien
having a first priority interest;
10.12. Subordinated
Loan Default and Default regarding J&J Leasing Indebtedness.
An
event
of default has occurred under the Subordinated Loan Documentation and/or the
documentation evidencing the J&J Leasing Indebtedness, which default shall
not have been cured or waived within any applicable grace period;
73
10.13. Cross
Default.
A
default
of the obligations of Borrower under any other agreement to which it is a party
shall occur which adversely affects its condition, affairs or prospects
(financial or otherwise) which default is not cured within any applicable grace
period;
10.14. Breach
of Guaranty.
Termination
or breach of any Guaranty or similar agreement executed and delivered to Agent
in connection with the Obligations of Borrower, or if any Guarantor attempts
to
terminate, challenges the validity of, or its liability under, any such Guaranty
or similar agreement;
10.15. Change
of Ownership.
Any
Change of Ownership or Change of Control shall occur;
10.16. Invalidity.
Any
material provision of this Agreement or any Other Document shall, for any
reason, cease to be valid and binding on Borrower or any Guarantor, or Borrower
or any Guarantor shall so claim in writing to Agent or any Lender;
10.17. Licenses.
(i)
Any
Governmental Body shall (A) revoke, terminate, suspend or adversely modify
any
license, permit, patent trademark or trade name of Borrower or any Guarantor,
the continuation of which is material to the continuation of Borrower’s or such
Guarantor’s business, or (B) commence proceedings to suspend, revoke, terminate
or adversely modify any such license, permit, trademark, trade name or patent
and such proceedings shall not be dismissed or discharged within sixty (60)
days, or (c) schedule or conduct a hearing on the renewal of any material
license, permit, trademark, trade name or patent necessary for the continuation
of Borrower’s or any Guarantor’s business and the staff of such Governmental
Body issues a report recommending the termination, revocation, suspension or
material, adverse modification of such license, permit, trademark, trade name
or
patent; (ii) any agreement which is necessary or material to the operation
of
Borrower’s or any Guarantor’s business shall be revoked or terminated and not
replaced by a substitute acceptable to Agent within thirty (30) days after
the
date of such revocation or termination, and such revocation or termination
and
non-replacement would reasonably be expected to have a Material Adverse
Effect;
10.18. Seizures.
Any
portion of the Collateral shall be seized or taken by a Governmental Body,
or
Borrower or any Guarantor or the title and rights of Borrower, any Guarantor
or
any Original Owner which is the owner of any material portion of the Collateral
shall have become the subject matter of claim, litigation, suit or other
proceeding which might, in the opinion of Agent, upon final determination,
result in impairment or loss of the security provided by this Agreement or
the
Other Documents;
10.19. Pension
Plans.
An
event
or condition specified in Sections 7.16 or 9.15 hereof shall occur or exist
with
respect to any Plan and, as a result of such event or condition, together with
all other such events or conditions, Borrower or any member of the Controlled
Group shall incur, or in the opinion of Agent be reasonably likely to incur,
a
liability to a Plan or the PBGC (or both) which, in the reasonable judgment
of
Agent, would have a Material Adverse Effect.
10.20. Franchise
Tax Searches.
Failure
by Borrower to deliver to the Agent within three hundred sixty (360) days of
the
date hereof franchise tax searches naming the Borrower and Guarantor, conducted
in the jurisdictions set forth on Schedule 5.2(a), such searches to indicate
that all franchise tax returns have been duly filed and all franchise taxes
have
been paid.
74
XI LENDERS’
RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. Rights
and Remedies. (a) Upon
the
occurrence of (i) an Event of Default pursuant to Section 10.7 all Obligations
shall be immediately due and payable and this Agreement and the obligation
of
Lenders to make Advances shall be deemed terminated; and, (ii) any of the other
Events of Default and at any time thereafter (such default not having previously
been cured), at the option of Required Lenders all Obligations shall be
immediately due and payable and Lenders shall have the right to terminate this
Agreement and to terminate the obligation of Lenders to make Advances[ and
(iii)
a filing of a petition against Borrower in any involuntary case under any state
or federal bankruptcy laws, all Obligations shall be immediately due and payable
and the obligation of Lenders to make Advances hereunder shall be terminated
other than as may be required by an appropriate order of the bankruptcy court
having jurisdiction over Borrower]. Upon the occurrence of any Event of Default,
Agent shall have the right to exercise any and all rights and remedies provided
for herein, under the Other Documents, under the Uniform Commercial Code and
at
law or equity generally, including the right to foreclose the security interests
granted herein and to realize upon any Collateral by any available judicial
procedure and/or to take possession of and sell any or all of the Collateral
with or without judicial process. Agent may enter any of Borrower’s premises or
other premises without legal process and without incurring liability to Borrower
therefor, and Agent may thereupon, or at any time thereafter, in its discretion
without notice or demand, take the Collateral and remove the same to such place
as Agent may deem advisable and Agent may require Borrower to make the
Collateral available to Agent at a convenient place. With or without having
the
Collateral at the time or place of sale, Agent may sell the Collateral, or
any
part thereof, at public or private sale, at any time or place, in one or more
sales, at such price or prices, and upon such terms, either for cash, credit
or
future delivery, as Agent may elect. Except as to that part of the Collateral
which is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Agent shall give Borrower reasonable
notification of such sale or sales, it being agreed that in all events written
notice mailed to Borrower at least ten (10) days prior to such sale or sales
is
reasonable notification. At any public sale Agent or any Lender may bid for
and
become the purchaser, and Agent, any Lender or any other purchaser at any such
sale thereafter shall hold the Collateral sold absolutely free from any claim
or
right of whatsoever kind, including any equity of redemption and all such
claims, rights and equities are hereby expressly waived and released by
Borrower. In connection with the exercise of the foregoing remedies, including
the sale of Inventory, Agent is granted a perpetual nonrevocable, royalty free,
nonexclusive license and Agent is granted permission to use all of Borrower’s
(a) trademarks, trade styles, trade names, patents, patent applications,
copyrights, service marks, licenses, franchises and other proprietary rights
which are used or useful in connection with Inventory for the purpose of
marketing, advertising for sale and selling or otherwise disposing of such
Inventory and (b) Equipment for the purpose of completing the manufacture of
unfinished goods. The cash proceeds realized from the sale of any Collateral
shall be applied to the Obligations in the order set forth in Section 11.5
hereof. Noncash proceeds will only be applied to the Obligations as they are
converted into cash. If any deficiency shall arise, Borrower shall remain liable
to Agent and Lenders therefor.
75
(b) To
the
extent that Applicable Law imposes duties on the Agent to exercise remedies
in a
commercially reasonable manner, Borrower acknowledges and agrees that it is
not
commercially unreasonable for the Agent (i) to fail to incur expenses reasonably
deemed significant by the Agent to prepare Collateral for disposition or
otherwise to complete raw material or work in process into finished goods or
other finished products for disposition, (ii) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain governmental or third party consents
for the collection or disposition of Collateral to be collected or disposed
of,
(iii) to fail to exercise collection remedies against Customers or other Persons
obligated on Collateral or to remove Liens on or any adverse claims against
Collateral, (iv) to exercise collection remedies against Customers and other
Persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (v) to advertise dispositions of
Collateral through publications or media of general circulation, whether or
not
the Collateral is of a specialized nature, (vi) to contact other Persons,
whether or not in the same business as the Borrower, for expressions of interest
in acquiring all or any portion of such Collateral, (vii) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether
or
not the Collateral is of a specialized nature, (viii) to dispose of Collateral
by utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of doing so,
or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Agent against risks of loss, collection or
disposition of Collateral or to provide to the Agent a guaranteed return from
the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Agent in the
collection or disposition of any of the Collateral. Borrower acknowledges that
the purpose of this Section 11.1(b) is to provide non-exhaustive indications
of
what actions or omissions by the Agent would not be commercially unreasonable
in
the Agent’s exercise of remedies against the Collateral and that other actions
or omissions by the Agent shall not be deemed commercially unreasonable solely
on account of not being indicated in this Section 11.1(b). Without limitation
upon the foregoing, nothing contained in this Section 11.1(b) shall be construed
to grant any rights to Borrower or to impose any duties on Agent that would
not
have been granted or imposed by this Agreement or by Applicable Law in the
absence of this Section 11.1(b).
11.2. Agent’s
Discretion.
Agent
shall have the right in its sole discretion to determine which rights, Liens,
security interests or remedies Agent may at any time pursue, relinquish,
subordinate, or modify or to take any other action with respect thereto and
such
determination will not in any way modify or affect any of Agent’s or Lenders’
rights hereunder.
11.3. Setoff.
Subject
to Section 14.12, in addition to any other rights which Agent or any Lender
may
have under Applicable Law, upon the occurrence of an Event of Default hereunder,
Agent and such Lender shall have a right, immediately and without notice of
any
kind, to apply Borrower’s property held by Agent and such Lender to reduce the
Obligations.
11.4. Rights
and Remedies not Exclusive.
The
enumeration of the foregoing rights and remedies is not intended to be
exhaustive and the exercise of any rights or remedy shall not preclude the
exercise of any other right or remedies provided for herein or otherwise
provided by law, all of which shall be cumulative and not
alternative.
76
11.5. Allocation
of Payments After Event of Default.
Notwithstanding
any other provisions of this Agreement to the contrary, after the occurrence
and
during the continuance of an Event of Default, all amounts collected or received
by the Agent on account of the Obligations or any other amounts outstanding
under any of the Other Documents or in respect of the Collateral may, at Agent’s
discretion, be paid over or delivered as follows:
FIRST,
to
the payment of all reasonable out-of-pocket costs and expenses (including
reasonable attorneys’ fees) of the Agent in connection with enforcing its rights
and the rights of the Lenders under this Agreement and the Other Documents
and
any protective advances made by the Agent with respect to the Collateral under
or pursuant to the terms of this Agreement;
SECOND,
to payment of any fees owed to the Agent;
THIRD,
to
the payment of all reasonable out-of-pocket costs and expenses (including
reasonable attorneys’ fees) of each of the Lenders to the extent owing to such
Lender pursuant to the terms of this Agreement;
FOURTH,
to the payment of all of the Obligations consisting of accrued fees and
interest;
FIFTH,
to
the payment of the outstanding principal amount of the Obligations (including
the payment or cash collateralization of any outstanding Letters of
Credit);
SIXTH,
to
all other Obligations and other obligations which shall have become due and
payable under the Other Documents or otherwise and not repaid pursuant to
clauses “FIRST” through “FIFTH” above; and
SEVENTH,
to the payment of the surplus, if any, to whoever may be lawfully entitled
to
receive such surplus.
In
carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive (so long as it
is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to
the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses “FOURTH”, “FIFTH” and “SIXTH” above; and (iii) to the extent that any
amounts available for distribution pursuant to clause “FIFTH” above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by the Agent in a cash collateral account and applied
(A) first, to reimburse the Issuer from time to time for any drawings under
such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses “FIFTH” and
“SIXTH” above in the manner provided in this Section 11.5.
XII WAIVERS
AND JUDICIAL PROCEEDINGS.
12.1. Waiver
of Notice.
Borrower
hereby waives notice of non-payment of any of the Receivables, demand,
presentment, protest and notice thereof with respect to any and all instruments,
notice of acceptance hereof, notice of loans or advances made, credit extended,
Collateral received or delivered, or any other action taken in reliance hereon,
and all other demands and notices of any description, except such as are
expressly provided for herein.
77
12.2. Delay.
No
delay
or omission on Agent’s or any Lender’s part in exercising any right, remedy or
option shall operate as a waiver of such or any other right, remedy or option
or
of any Default or Event of Default.
12.3. Jury
Waiver.
EACH
PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT
OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT
OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII EFFECTIVE
DATE AND TERMINATION.
13.1. Term.
This
Agreement, which shall inure to the benefit of and shall be binding upon the
respective successors and permitted assigns of Borrower, Agent and each Lender,
shall become effective on the date hereof and shall continue in full force
and
effect until the Termination Date (the “Term”) unless sooner terminated as
herein provided. Borrower may terminate this Agreement at any time upon sixty
(60) days’ prior written notice upon payment in full of the Obligations. In the
event the Obligations are prepaid in full prior to the last day of the Term
(the
date of such prepayment hereinafter referred to as the “Early Termination
Date”), Borrower shall pay to Agent for the benefit of Lenders an early
termination fee in an amount equal to (y) one half of one percent (0.50%) of
the
Maximum Loan Amount if the Early Termination Date occurs on or after the Closing
Date to and including the date immediately preceding the first anniversary
of
the Closing Date, and (z) three eighths of one percent (0.375%) of the Maximum
Loan Amount if the Early Termination Date occurs on or after the first
anniversary of the Closing Date to and including the date immediately preceding
the second anniversary of the Closing Date.
13.2. Termination.
The
termination of the Agreement shall not affect Borrower’s, Agent’s or any
Lender’s rights, or any of the Obligations having their inception prior to the
effective date of such termination, and the provisions hereof shall continue
to
be fully operative until all transactions entered into, rights or interests
created or Obligations have been fully and indefeasibly paid, disposed of,
concluded or liquidated. The security interests, Liens and rights granted to
Agent and Lenders hereunder and the financing statements filed hereunder shall
continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that Borrower’s Account may from time to time be
temporarily in a zero or credit position, until all of the Obligations of
Borrower have been indefeasibly paid and performed in full after the termination
of this Agreement or Borrower has furnished Agent and Lenders with an
indemnification satisfactory to Agent and Lenders with respect thereto.
Accordingly, Borrower waives any rights which it may have under the Uniform
Commercial Code to demand the filing of termination statements with respect
to
the Collateral, and Agent shall not be required to send such termination
statements to Borrower, or to file them with any filing office, unless and
until
this Agreement shall have been terminated in accordance with its terms and
all
Obligations have been indefeasibly paid in full in immediately available funds.
All representations, warranties, covenants, waivers and agreements contained
herein shall survive termination hereof until all Obligations are indefeasibly
paid and performed in full.
78
XIV REGARDING
AGENT.
14.1. Appointment.
Each
Lender hereby designates PNC to act as Agent for such Lender under this
Agreement and the Other Documents. Each Lender hereby irrevocably authorizes
Agent to take such action on its behalf under the provisions of this Agreement
and the Other Documents and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of Agent
by the terms hereof and thereof and such other powers as are reasonably
incidental thereto and Agent shall hold all Collateral, payments of principal
and interest, fees (except the fees set forth in Sections 3.3(a) and 3.4),
charges and collections (without giving effect to any collection days) received
pursuant to this Agreement, for the ratable benefit of Lenders. Agent may
perform any of its duties hereunder by or through its agents or employees.
As to
any matters not expressly provided for by this Agreement (including collection
of the Note) Agent shall not be required to exercise any discretion or take
any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions
of
the Required Lenders, and such instructions shall be binding; provided, however,
that Agent shall not be required to take any action which exposes Agent to
liability or which is contrary to this Agreement or the Other Documents or
Applicable Law unless Agent is furnished with an indemnification reasonably
satisfactory to Agent with respect thereto.
14.2. Nature
of Duties.
Agent
shall have no duties or responsibilities except those expressly set forth in
this Agreement and the Other Documents. Neither Agent nor any of its officers,
directors, employees or agents shall be (i) liable for any action taken or
omitted by them as such hereunder or in connection herewith, unless caused
by
their gross (not mere) negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final non-appealable judgment), or (ii)
responsible in any manner for any recitals, statements, representations or
warranties made by Borrower or any officer thereof contained in this Agreement,
or in any of the Other Documents or in any certificate, report, statement or
other document referred to or provided for in, or received by Agent under or
in
connection with, this Agreement or any of the Other Documents or for the value,
validity, effectiveness, genuineness, due execution, enforceability or
sufficiency of this Agreement, or any of the Other Documents or for any failure
of Borrower to perform its obligations hereunder. Agent shall not be under
any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any of the Other Documents, or to inspect the properties, books
or
records of Borrower. The duties of Agent as respects the Advances to Borrower
shall be mechanical and administrative in nature; Agent shall not have by reason
of this Agreement a fiduciary relationship in respect of any Lender; and nothing
in this Agreement, expressed or implied, is intended to or shall be so construed
as to impose upon Agent any obligations in respect of this Agreement except
as
expressly set forth herein.
79
14.3. Lack
of Reliance on Agent and Resignation.
Independently
and without reliance upon Agent or any other Lender, each Lender has made and
shall continue to make (i) its own independent investigation of the financial
condition and affairs of Borrower and each Guarantor in connection with the
making and the continuance of the Advances hereunder and the taking or not
taking of any action in connection herewith, and (ii) its own appraisal of
the
creditworthiness of Borrower and each Guarantor. Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before making of the Advances or at any time or times thereafter
except as shall be provided by Borrower pursuant to the terms hereof. Agent
shall not be responsible to any Lender for any recitals, statements,
information, representations or warranties herein or in any agreement, document,
certificate or a statement delivered in connection with or for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any Other Document, or of the financial
condition of Borrower or any Guarantor, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement, the Note, the Other Documents or the financial
condition of Borrower, or the existence of any Event of Default or any
Default.
Agent
may
resign on sixty (60) days’ written notice to each of Lenders and Borrower and
upon such resignation, the Required Lenders will promptly designate a successor
Agent reasonably satisfactory to Borrower.
Any
such
successor Agent shall succeed to the rights, powers and duties of Agent, and
the
term “Agent” shall mean such successor agent effective upon its appointment, and
the former Agent’s rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former Agent.
After
any Agent’s resignation as Agent, the provisions of this Article XIV shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was
Agent under this Agreement.
14.4. Certain
Rights of Agent.
If
Agent
shall request instructions from Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any Other
Document, Agent shall be entitled to refrain from such act or taking such action
unless and until Agent shall have received instructions from the Required
Lenders; and Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, Lenders shall not have any right
of
action whatsoever against Agent as a result of its acting or refraining from
acting hereunder in accordance with the instructions of the Required
Lenders.
14.5. Reliance.
Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype
or
telecopier message, cablegram, order or other document or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person or entity, and, with respect to all legal matters
pertaining to this Agreement and the Other Documents and its duties hereunder,
upon advice of counsel selected by it. Agent may employ agents and
attorneys-in-fact and shall not be liable for the default or misconduct of
any
such agents or attorneys-in-fact selected by Agent with reasonable
care.
80
14.6. Notice
of Default.
Agent
shall not be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default hereunder or under the Other Documents, unless Agent has
received notice from a Lender or Borrower referring to this Agreement or the
Other Documents, describing such Default or Event of Default and stating that
such notice is a “notice of default”. In the event that Agent receives such a
notice, Agent shall give notice thereof to Lenders. Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided, that, unless and until Agent shall have
received such directions, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of
Lenders.
14.7. Indemnification.
To
the
extent Agent is not reimbursed and indemnified by Borrower, each Lender will
reimburse and indemnify Agent in proportion to its respective portion of the
Advances (or, if no Advances are outstanding, according to its Commitment
Percentage), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Agent in performing its duties hereunder, or in any way
relating to or arising out of this Agreement or any Other Document; provided
that, Lenders shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent’s gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment).
14.8. Agent
in its Individual Capacity.
With
respect to the obligation of Agent to lend under this Agreement, the Advances
made by it shall have the same rights and powers hereunder as any other Lender
and as if it were not performing the duties as Agent specified herein; and
the
term “Lender” or any similar term shall, unless the context clearly otherwise
indicates, include Agent in its individual capacity as a Lender. Agent may
engage in business with Borrower as if it were not performing the duties
specified herein, and may accept fees and other consideration from Borrower
for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders.
14.9. Delivery
of Documents.
To
the
extent Agent receives financial statements required under Sections 9.7, 9.8,
9.9, 9.12 and 9.13 or Borrowing Base Certificates from Borrower pursuant to
the
terms of this Agreement which Borrower is not obligated to deliver to each
Lender, Agent will promptly furnish such documents and information to
Lenders.
14.10. Borrower’s
Undertaking to Agent.
Without
prejudice to its obligations to Lenders under the other provisions of this
Agreement, Borrower hereby undertakes with Agent to pay to Agent from time
to
time on demand all amounts from time to time due and payable by it for the
account of Agent or Lenders or any of them pursuant to this Agreement to the
extent not already paid. Any payment made pursuant to any such demand shall
pro
tanto satisfy the relevant Borrower’s obligations to make payments for the
account of Lenders or the relevant one or more of them pursuant to this
Agreement.
81
14.11. No
Reliance on Agent’s Customer Identification Program.
Each
Lender acknowledges and agrees that neither such Lender, nor any of its
Affiliates, participants or assignees, may rely on the Agent to carry out such
Lender’s, Affiliate’s, participant’s or assignee’s customer identification
program, or other obligations required or imposed under or pursuant to the
USA
PATRIOT Act or the regulations thereunder, including the regulations contained
in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or
any other Anti-Terrorism Law, including any programs involving any of the
following items relating to or in connection with Borrower, its Affiliates
or
its agents, this Agreement, the Other Documents or the transactions hereunder
or
contemplated hereby: (1) any identity verification procedures, (2) any
record-keeping, (3) comparisons with government lists, (4) customer notices
or
(5) other procedures required under the CIP Regulations or such other laws.
14.12. Other
Agreements.
Each
of
the Lenders agrees that it shall not, without the express consent of Agent,
and
that it shall, to the extent it is lawfully entitled to do so, upon the request
of Agent, set off against the Obligations, any amounts owing by such Lender
to
Borrower or any deposit accounts of Borrower now or hereafter maintained with
such Lender. Anything in this Agreement to the contrary notwithstanding, each
of
the Lenders further agrees that it shall not, unless specifically requested
to
do so by Agent, take any action to protect or enforce its rights arising out
of
this Agreement or the Other Documents, it being the intent of Lenders that
any
such action to protect or enforce rights under this Agreement and the Other
Documents shall be taken in concert and at the direction or with the consent
of
Agent or Required Lenders.
XV MISCELLANEOUS.
15.1. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Jersey applied to contracts to be performed wholly within the State
of
New Jersey. Any judicial proceeding brought by or against Borrower with respect
to any of the Obligations, this Agreement, the Other Documents or any related
agreement may be brought in any court of competent jurisdiction in the State
of
New Jersey, United States of America, and, by execution and delivery of this
Agreement, Borrower accepts for itself and in connection with its properties,
generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts, and irrevocably agrees to be bound by any judgment rendered thereby
in
connection with this Agreement. Borrower hereby waives personal service of
any
and all process upon it and consents that all such service of process may be
made by registered mail (return receipt requested) directed to Borrower at
its
address set forth in Section 15.6 and service so made shall be deemed completed
five (5) days after the same shall have been so deposited in the mails of the
United States of America. Nothing herein shall affect the right to serve process
in any manner permitted by law or shall limit the right of Agent or any Lender
to bring proceedings against Borrower in the courts of any other jurisdiction.
Borrower waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. Borrower waives the right to remove
any judicial proceeding brought against Borrower in any state court to any
federal court. Any judicial proceeding by Borrower against Agent or any Lender
involving, directly or indirectly, any matter or claim in any way arising out
of, related to or connected with this Agreement or any related agreement, shall
be brought only in a federal or state court located in the County of Middlesex,
State of New Jersey.
82
15.2. Entire
Understanding.
(a) This
Agreement and the documents executed concurrently herewith contain the entire
understanding between Borrower, Agent and each Lender and supersedes all prior
agreements and understandings, if any, relating to the subject matter hereof.
Any promises, representations, warranties or guarantees not herein contained
and
hereinafter made shall have no force and effect unless in writing, signed by
Borrower’s, Agent’s and each Lender’s respective officers. Neither this
Agreement nor any portion or provisions hereof may be changed, modified,
amended, waived, supplemented, discharged, cancelled or terminated orally or
by
any course of dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged. Borrower acknowledges that it has been
advised by counsel in connection with the execution of this Agreement and Other
Documents and is not relying upon oral representations or statements
inconsistent with the terms and provisions of this Agreement.
(b) The
Required Lenders, Agent with the consent in writing of the Required Lenders,
and
Borrower may, subject to the provisions of this Section 15.2 (b), from time
to
time enter into written supplemental agreements to this Agreement or the Other
Documents executed by Borrower, for the purpose of adding or deleting any
provisions or otherwise changing, varying or waiving in any manner the rights
of
Lenders, Agent or Borrower thereunder or the conditions, provisions or terms
thereof or waiving any Event of Default thereunder, but only to the extent
specified in such written agreements; provided, however, that no such
supplemental agreement shall, without the consent of all Lenders: increase
the Commitment Percentage, the maximum dollar commitment of any Lender or the
Maximum Loan Amount.
(ii) extend
the maturity of any Note or the due date for any amount payable hereunder,
or
decrease the rate of interest or reduce any fee payable by Borrower to Lenders
pursuant to this Agreement.
(iii) alter
the
definition of the term Required Lenders or alter, amend or modify this Section
15.2(b).
(iv) release
any Collateral during any calendar year (other than in accordance with the
provisions of this Agreement) having an aggregate value in excess of
$100,000.
(v) change
the rights and duties of Agent.
(vi) permit
any Revolving Advance to be made if after giving effect thereto the total of
Revolving Advances outstanding hereunder would exceed the Formula Amount for
more than sixty (30) consecutive Business Days or exceed one hundred and five
percent (105%) of the Formula Amount.
(vii) increase
the Advance Rates above the Advance Rates in effect on the Closing
Date.
83
(viii) release
any Guarantor.
Any
such
supplemental agreement shall apply equally to each Lender and shall be binding
upon Borrower, Lenders and Agent and all future holders of the Obligations.
In
the case of any waiver, Borrower, Agent and Lenders shall be restored to their
former positions and rights, and any Event of Default waived shall be deemed
to
be cured and not continuing, but no waiver of a specific Event of Default shall
extend to any subsequent Event of Default (whether or not the subsequent Event
of Default is the same as the Event of Default which was waived), or impair
any
right consequent thereon.
In
the
event that Agent requests the consent of a Lender pursuant to this Section
15.2
and such Lender shall not respond or reply to Agent in writing within five
(5)
days of delivery of such request, such Lender shall be deemed to have consented
to the matter that was the subject of the request. In the event that Agent
requests the consent of a Lender pursuant to this Section 15.2 and such consent
is denied, then PNC may, at its option, require such Lender to assign its
interest in the Advances to PNC or to another Lender or to any other Person
designated by the Agent (the “Designated Lender”), for a price equal to the then
outstanding principal amount thereof plus accrued and unpaid interest and fees
due such Lender, which interest and fees shall be paid when collected from
Borrower. In the event PNC elects to require any Lender to assign its interest
to PNC or to the Designated Lender, PNC will so notify such Lender in writing
within forty five (45) days following such Lender’s denial, and such Lender will
assign its interest to PNC or the Designated Lender no later than five (5)
days
following receipt of such notice pursuant to a Commitment Transfer Supplement
executed by such Lender, PNC or the Designated Lender, as appropriate, and
Agent.
Notwithstanding
(a) the existence of a Default or an Event of Default, (b) that any of the
other
applicable conditions precedent set forth in Section 8.2 hereof have not been
satisfied or (c) any other provision of this Agreement, Agent may at its
discretion and without the consent of the Required Lenders, voluntarily permit
the outstanding Revolving Advances at any time to exceed an amount equal to
the
sum of (i) the Formula Amount by up to ten percent (10%) of the Formula Amount
for up to thirty (30) consecutive Business Days (the “Out-of-Formula Loans”). If
Agent is willing in its sole and absolute discretion to make such Out-of-Formula
Loans, such Out-of-Formula Loans shall be payable on demand and shall bear
interest at the Default Rate for Revolving Advances consisting of Domestic
Rate
Loans; provided that, if Lenders do make Out-of-Formula Loans, neither Agent
nor
Lenders shall be deemed thereby to have changed the limits of Section 2.1(a).
For purposes of this paragraph, the discretion granted to Agent hereunder shall
not preclude involuntary overadvances that may result from time to time due
to
the fact that the Formula Amount was unintentionally exceeded for any reason,
including, but not limited to, Collateral previously deemed to be “Eligible
Receivables”, as applicable, becomes ineligible, collections of Receivables
applied to reduce outstanding Revolving Advances are thereafter returned for
insufficient funds or overadvances are made to protect or preserve the
Collateral. In the event Agent involuntarily permits the outstanding Revolving
Advances to exceed the Formula Amount by more than ten percent (10%), Agent
shall use its efforts to have Borrower decrease such excess in as expeditious
a
manner as is practicable under the circumstances and not inconsistent with
the
reason for such excess. Revolving Advances made after Agent has determined
the
existence of involuntary overadvances shall be deemed to be involuntary
overadvances and shall be decreased in accordance with the preceding
sentence.
84
In
addition to (and not in substitution of) the discretionary Revolving Advances
permitted above in this Section 15.2, the Agent is hereby authorized by Borrower
and the Lenders, from time to time in the Agent’s sole discretion, (A) after the
occurrence and during the continuation of a Default or an Event of Default,
or
(B) at any time that any of the other applicable conditions precedent set forth
in Section 8.2 hereof have not been satisfied, to make Revolving Advances to
Borrower on behalf of the Lenders which the Agent, in its reasonable business
judgment, deems necessary or desirable (a) to preserve or protect the
Collateral, or any portion thereof, (b) to enhance the likelihood of, or
maximize the amount of, repayment of the Advances and other Obligations, or
(c)
to pay any other amount chargeable to Borrower pursuant to the terms of this
Agreement; provided, that at any time after giving effect to any such Revolving
Advances the outstanding Revolving Advances do not exceed one hundred and ten
percent (110%) of the Formula Amount.
15.3. Successors
and Assigns; Participations; New Lenders.
(a) This
Agreement shall be binding upon and inure to the benefit of Borrower, Agent,
each Lender, all future holders of the Obligations and their respective
successors and assigns, except that Borrower may not assign or transfer any
of
its rights or obligations under this Agreement without the prior written consent
of Agent and each Lender.
(b) Borrower
acknowledges that in the regular course of commercial banking business one
or
more Lenders may at any time and from time to time sell participating interests
in the Advances to other financial institutions (each such transferee or
purchaser of a participating interest, a “Participant”). Each Participant may
exercise all rights of payment (including rights of set-off) with respect to
the
portion of such Advances held by it or other Obligations payable hereunder
as
fully as if such Participant were the direct holder thereof provided that
Borrower shall not be required to pay to any Participant more than the amount
which it would have been required to pay to Lender which granted an interest
in
its Advances or other Obligations payable hereunder to such Participant had
such
Lender retained such interest in the Advances hereunder or other Obligations
payable hereunder and in no event shall Borrower be required to pay any such
amount arising from the same circumstances and with respect to the same Advances
or other Obligations payable hereunder to both such Lender and such Participant.
Borrower hereby grants to any Participant a continuing security interest in
any
deposits, moneys or other property actually or constructively held by such
Participant as security for the Participant’s interest in the
Advances.
(c) Any
Lender, with the consent of Agent which shall not be unreasonably withheld
or
delayed, may sell, assign or transfer all or any part of its rights and
obligations under or relating to Revolving Advances under this Agreement and
the
Other Documents to one or more additional banks or financial institutions and
one or more additional banks or financial institutions may commit to make
Advances hereunder (each a “Purchasing Lender”), in minimum amounts of not less
than $5,000,000, pursuant to a Commitment Transfer Supplement, executed by
a
Purchasing Lender, the transferor Lender, and Agent and delivered to Agent
for
recording. Upon such execution, delivery, acceptance and recording, from and
after the transfer effective date determined pursuant to such Commitment
Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto
and, to the extent provided in such Commitment Transfer Supplement, have the
rights and obligations of a Lender thereunder with a Commitment Percentage
as
set forth therein, and (ii) the transferor Lender thereunder shall, to the
extent provided in such Commitment Transfer Supplement, be released from its
obligations under this Agreement, the Commitment Transfer Supplement creating
a
novation for that purpose. Such Commitment Transfer Supplement shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting adjustment
of
the Commitment Percentages arising from the purchase by such Purchasing Lender
of all or a portion of the rights and obligations of such transferor Lender
under this Agreement and the Other Documents. Borrower hereby consents to the
addition of such Purchasing Lender and the resulting adjustment of the
Commitment Percentages arising from the purchase by such Purchasing Lender
of
all or a portion of the rights and obligations of such transferor Lender under
this Agreement and the Other Documents. Borrower shall execute and deliver
such
further documents and do such further acts and things in order to effectuate
the
foregoing.
85
(d) Any
Lender, with the consent of Agent which shall not be unreasonably withheld
or
delayed, may directly or indirectly sell, assign or transfer all or any portion
of its rights and obligations under or relating to Revolving Advances under
this
Agreement and the Other Documents to an entity, whether a corporation,
partnership, trust, limited liability company or other entity that (i) is
engaged in making, purchasing, holding or otherwise investing in bank loans
and
similar extensions of credit in the ordinary course of its business and (ii)
is
administered, serviced or managed by the assigning Lender or an Affiliate of
such Lender (a “Purchasing CLO” and together with each Participant and
Purchasing Lender, each a “Transferee” and collectively the “Transferees”),
pursuant to a Commitment Transfer Supplement modified as appropriate to reflect
the interest being assigned (“Modified Commitment Transfer Supplement”),
executed by any intermediate purchaser, the Purchasing CLO, the transferor
Lender, and Agent as appropriate and delivered to Agent for recording. Upon
such
execution and delivery, from and after the transfer effective date determined
pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO
thereunder shall be a party hereto and, to the extent provided in such Modified
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder and (ii) the transferor Lender thereunder shall, to the extent
provided in such Modified Commitment Transfer Supplement, be released from
its
obligations under this Agreement, the Modified Commitment Transfer Supplement
creating a novation for that purpose. Such Modified Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only
to
the extent, necessary to reflect the addition of such Purchasing CLO. Borrower
hereby consents to the addition of such Purchasing CLO. Borrower shall execute
and deliver such further documents and do such further acts and things in order
to effectuate the foregoing.
(e) Agent
shall maintain at its address a copy of each Commitment Transfer Supplement
and
Modified Commitment Transfer Supplement delivered to it and a register (the
“Register”) for the recordation of the names and addresses of each Lender and
the outstanding principal, accrued and unpaid interest and other fees due
hereunder. The entries in the Register shall be conclusive, in the absence
of
manifest error, and Borrower, Agent and Lenders may treat each Person whose
name
is recorded in the Register as the owner of the Advance recorded therein for
the
purposes of this Agreement. The Register shall be available for inspection
by
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice. Agent shall receive a fee in the amount of $3,500
payable by the applicable Purchasing Lender and/or Purchasing CLO upon the
effective date of each transfer or assignment (other than to an intermediate
purchaser) to such Purchasing Lender and/or Purchasing CLO.
86
(f) Borrower
authorizes each Lender to disclose to any Transferee and any prospective
Transferee any and all financial information in such Lender’s possession
concerning Borrower which has been delivered to such Lender by or on behalf
of
Borrower pursuant to this Agreement or in connection with such Lender’s credit
evaluation of Borrower.
(g) Notwithstanding
any other term or provision contained in the Agreement, the Agent, without
the
consent of the Borrower, shall not sell, assign or transfer all or any part
of
its rights and obligations under or relating to the Revolving Advances under
this Agreement and the Other Documents, nor shall it sell participating interest
in the Advances provided, however, that such sale of participating interest
or
the sale, assignment or transfer of all or any part of its rights and
obligations under or relating to the Revolving Advances in this Agreement shall
be permitted without the consent of the Borrower in the event that (i) the
Agent
or any of its affiliates or subsidiaries shall merge with any other entity,
or
(ii) the Agent or any of its affiliates or subsidiaries should assign or
otherwise transfer this Agreement and the right and obligations created
thereunder as part of a bulk transfer with other credit facilities.
15.4. Application
of Payments.
Agent
shall have the continuing and exclusive right to apply or reverse and re-apply
any payment and any and all proceeds of Collateral to any portion of the
Obligations. To the extent that Borrower makes a payment or Agent or any Lender
receives any payment or proceeds of the Collateral for Borrower’s benefit, which
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, debtor in possession, receiver,
custodian or any other party under any bankruptcy law, common law or equitable
cause, then, to such extent, the Obligations or part thereof intended to be
satisfied shall be revived and continue as if such payment or proceeds had
not
been received by Agent or such Lender.
15.5. Indemnity.
Borrower
shall indemnify Agent, each Lender and each of their respective officers,
directors, Affiliates, attorneys, employees and agents from and against any
and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever
(including fees and disbursements of counsel) which may be imposed on, incurred
by, or asserted against Agent or any Lender in any claim, litigation, proceeding
or investigation instituted or conducted by any Governmental Body or
instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement or the Other Documents, whether or not Agent or any Lender is a party
thereto, except to the extent that any of the foregoing arises out of the
willful misconduct of the party being indemnified (as determined by a court
of
competent jurisdiction in a final and non-appealable judgment). Without limiting
the generality of the foregoing, this indemnity shall extend to any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (including fees
and
disbursements of counsel) asserted against or incurred by any of the indemnitees
described above in this Section 15.5 by any Person under any Environmental
Laws
or similar laws by reason of Borrower’s or any other Person’s failure to comply
with laws applicable to solid or hazardous waste materials, including Hazardous
Substances and Hazardous Waste, or other Toxic Substances. Additionally, if
any
taxes (excluding taxes imposed upon or measured solely by the net income of
Agent and Lenders, but including any intangibles taxes, stamp tax, recording
tax
or franchise tax) shall be payable by Agent, Lenders or Borrower on account
of
the execution or delivery of this Agreement, or the execution, delivery,
issuance or recording of any of the Other Documents, or the creation or
repayment of any of the Obligations hereunder, by reason of any Applicable
Law
now or hereafter in effect, Borrower will pay (or will promptly reimburse Agent
and Lenders for payment of) all such taxes, including interest and penalties
thereon, and will indemnify and hold the indemnitees described above in this
Section 15.5 harmless from and against all liability in connection
therewith.
87
15.6. Notice.
Any
notice or request hereunder may be given to Borrower or to Agent or any Lender
at their respective addresses set forth below or at such other address as may
hereafter be specified in a notice designated as a notice of change of address
under this Section. Any notice, request, demand, direction or other
communication (for purposes of this Section 15.6 only, a “Notice”) to be given
to or made upon any party hereto under any provision of this Loan Agreement
shall be given or made by telephone or in writing (which includes by means
of
electronic transmission (i.e., “e-mail”) or facsimile transmission or by setting
forth such Notice on a site on the World Wide Web (a “Website Posting”) if
Notice of such Website Posting (including the information necessary to access
such site) has previously been delivered to the applicable parties hereto by
another means set forth in this Section 15.6) in accordance with this Section
15.6. Any such Notice must be delivered to the applicable parties hereto at
the
addresses and numbers set forth under their respective names on Section 15.6
hereof or in accordance with any subsequent unrevoked Notice from any such
party
that is given in accordance with this Section 15.6. Any Notice shall be
effective:
(a) In
the
case of hand-delivery, when delivered;
(b) If
given
by mail, four days after such Notice is deposited with the United States Postal
Service, with first-class postage prepaid, return receipt requested;
(c) In
the
case of a telephonic Notice, when a party is contacted by telephone, if delivery
of such telephonic Notice is confirmed no later than the next Business Day
by
hand delivery, a facsimile or electronic transmission, a Website Posting or
an
overnight courier delivery of a confirmatory Notice (received at or before
noon
on such next Business Day);
(d) In
the
case of a facsimile transmission, when sent to the applicable party’s facsimile
machine’s telephone number, if the party sending such Notice receives
confirmation of the delivery thereof from its own facsimile
machine;
(e) In
the
case of electronic transmission, when actually received;
88
(f) In
the
case of a Website Posting, upon delivery of a Notice of such posting (including
the information necessary to access such site) by another means set forth in
this Section 15.6; and
(g) If
given
by any other means (including by overnight courier), when actually
received.
Any
Lender giving a Notice to Borrower shall concurrently send a copy thereof to
the
Agent, and the Agent shall promptly notify the other Lenders of its receipt
of
such Notice.
| (A) |
If
to Agent or PNC at:
|
PNC
Bank,
National Association
▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
| Attention: |
▇▇▇▇
▇. ▇▇▇▇▇, VP
|
| Telephone: |
(▇▇▇)
▇▇▇-▇▇▇▇
|
| Facsimile: |
(▇▇▇)
▇▇▇-▇▇▇▇
|
with
a
copy to:
PNC
Bank,
National Association
PNC
Agency Services
PNC
Firstside Center
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
Attention:
|
▇▇▇▇
▇▇▇▇▇▇
|
|
Telephone:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
|
Facsimile:
|
(▇▇▇)
▇▇▇-▇▇▇▇
|
with
an
additional copy to:
Wilentz,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ P.A.
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
| Attention: |
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
| Telephone: |
(▇▇▇)
▇▇▇-▇▇▇▇
|
| Facsimile: |
(▇▇▇)
▇▇▇-▇▇▇▇
|
89
|
(B)
|
If
to a Lender other than Agent, as specified on the signature pages
hereof
|
|
(C)
|
If
to Borrower:
|
BCI
Communications, Inc.
▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
|
Attention:
|
Nichoals
Day, General Counsel and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.,
CFO
|
|
Telephone:
|
▇▇▇-▇▇▇-▇▇▇▇
|
|
Facsimile:
|
▇▇▇-▇▇▇-▇▇▇▇
|
with
a
copy to:
▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇
Centre, 13th
Floor
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
| Attention: |
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
|
| Telephone: |
(▇▇▇)
▇▇▇-▇▇▇▇
|
| Facsimile: |
(▇▇▇)
▇▇▇-▇▇▇▇
|
15.7. Survival.
The
obligations of Borrower under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(h), and
15.5
and the obligations of Lenders under Section 14.7, shall survive termination
of
this Agreement and the Other Documents and payment in full of the
Obligations.
15.8. Severability.
If
any
part of this Agreement is contrary to, prohibited by, or deemed invalid under
Applicable Laws or regulations, such provision shall be inapplicable and deemed
omitted to the extent so contrary, prohibited or invalid, but the remainder
hereof shall not be invalidated thereby and shall be given effect so far as
possible.
15.9. Expenses.
All
costs
and expenses including reasonable attorneys’ fees (including the allocated costs
of in house counsel) and disbursements incurred by Agent on its behalf or on
behalf of Lenders (a) in all efforts made to enforce payment of any Obligation
or effect collection of any Collateral, or (b) in connection with the entering
into, modification, amendment, administration and enforcement of this Agreement,
the Subordination Agreement or any consents or waivers hereunder or thereunder
and all related agreements, documents and instruments, or (c) in instituting,
maintaining, preserving, enforcing and foreclosing on Agent’s security interest
in or Lien on any of the Collateral, or maintaining, preserving or enforcing
any
of Agent’s or any Lender’s rights hereunder, under the Subordination Agreement
and under all related agreements, documents and instruments, whether through
judicial proceedings or otherwise, or (d) in defending or prosecuting any
actions or proceedings arising out of or relating to Agent’s or any Lender’s
transactions with Borrower, any Guarantor or any Subordinated Lender or (e)
in
connection with any advice given to Agent or any Lender with respect to its
rights and obligations under this Agreement, the Subordination Agreement and
all
related agreements, documents and instruments, may be charged to Borrower’s
Account and shall be part of the Obligations.
15.10. Injunctive
Relief.
Borrower
recognizes that, in the event Borrower fails to perform, observe or discharge
any of its obligations or liabilities under this Agreement, or threatens to
fail
to perform, observe or discharge such obligations or liabilities, any remedy
at
law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent
so
requests, shall be entitled to temporary and permanent injunctive relief in
any
such case without the necessity of proving that actual damages are not an
adequate remedy.
90
15.11. Damages.
Neither
Agent nor any Lender, nor any agent or attorney for any of them, shall be liable
to Borrower or any Guarantor (or any Affiliate of any such Person) for indirect,
punitive, exemplary or consequential damages arising from any breach of
contract, tort or other wrong relating to the establishment, administration or
collection of the Obligations or as a result of any transaction contemplated
under this Agreement or any Other Document.
15.12. Captions.
The
captions at various places in this Agreement are intended for convenience only
and do not constitute and shall not be interpreted as part of this
Agreement.
15.13. Counterparts;
Facsimile Signatures.
This
Agreement may be executed in any number of and by different parties hereto
on
separate counterparts, all of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same agreement.
Any signature delivered by a party by facsimile transmission shall be deemed
to
be an original signature hereto.
15.14. Construction.
The
parties acknowledge that each party and its counsel have reviewed this Agreement
and that the normal rule of construction to the effect that any ambiguities
are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments, schedules or exhibits
thereto.
15.15. Confidentiality;
Sharing Information.
Agent,
each Lender and each Transferee shall hold all non-public information obtained
by Agent, such Lender or such Transferee pursuant to the requirements of this
Agreement in accordance with Agent’s, such Lender’s and such Transferee’s
customary procedures for handling confidential information of this nature;
provided, however, Agent, each Lender and each Transferee may disclose such
confidential information (a) to its examiners, Affiliates, outside auditors,
counsel and other professional advisors, (b) to Agent, any Lender or to any
prospective Transferees, and (c) as required or requested by any Governmental
Body or representative thereof or pursuant to legal process; provided, further
that (i) unless specifically prohibited by Applicable Law or court order, Agent,
each Lender and each Transferee shall use its reasonable best efforts prior
to
disclosure thereof, to notify Borrower of the applicable request for disclosure
of such non-public information (A) by a Governmental Body or representative
thereof (other than any such request in connection with an examination of the
financial condition of a Lender or a Transferee by such Governmental Body)
or
(B) pursuant to legal process and (ii) in no event shall Agent, any Lender
or
any Transferee be obligated to return any materials furnished by Borrower other
than those documents and instruments in possession of Agent or any Lender in
order to perfect its Lien on the Collateral once the Obligations have been
paid
in full and this Agreement has been terminated. Borrower acknowledges that
from
time to time financial advisory, investment banking and other services may
be
offered or provided to Borrower or one or more of its Affiliates (in connection
with this Agreement or otherwise) by any Lender or by one or more Subsidiaries
or Affiliates of such Lender and Borrower hereby authorizes each Lender to
share
any information delivered to such Lender by Borrower and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Lender
to
enter into this Agreement, to any such Subsidiary or Affiliate of such Lender,
it being understood that any such Subsidiary or Affiliate of any Lender
receiving such information shall be bound by the provisions of this Section
15.15 as if it were a Lender hereunder. Such authorization shall survive the
repayment of the other Obligations and the termination of this
Agreement.
91
15.16. Publicity.
Borrower
and each Lender hereby authorizes Agent to make appropriate announcements of
the
financial arrangement entered into among Borrower, Agent and Lenders, including
announcements which are commonly known as tombstones, in such publications
and
to such selected parties as Agent shall in its sole and absolute discretion
deem
appropriate.
15.17. Certifications
From Banks and Participants; US PATRIOT Act.
Each
Lender or assignee or participant of a Lender that is not incorporated under
the
Laws of the United States of America or a state thereof (and is not excepted
from the certification requirement contained in Section 313 of the USA PATRIOT
Act and the applicable regulations because it is both (i) an affiliate of a
depository institution or foreign bank that maintains a physical presence
in the United States or foreign country, and (ii) subject to supervision by
a
banking authority regulating such affiliated depository institution or foreign
bank) shall deliver to the Agent the certification, or, if applicable,
recertification, certifying that such Lender is not a “shell” and certifying to
other matters as required by Section 313 of the USA PATRIOT Act and the
applicable regulations: (1) within 10 days after the Closing Date, and (2)
as
such other times as are required under the USA PATRIOT Act.
Each
of
the parties has signed this Agreement as of the day and year first above
written.
|
ATTEST:
|
BCI
COMMUNICATIONS, INC.
|
||
|
|
By:
|
|
|
|
Name:
▇▇▇▇▇▇▇▇ ▇▇▇
|
Name:
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
|
|
Title:
General Counsel & Secretary
|
Title:
|
Chief
Executive Officers & President
|
|
|
PNC
BANK, NATIONAL ASSOCIATION,
|
|||
|
as
Lender and as Agent
|
|||
|
By:
|
|
||
|
Name:
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇
|
||
|
Title:
|
Vice
President
|
||
|
Commitment
Percentage: 100%
|
|||
92
List
of Exhibits and Schedules
Exhibits
|
Exhibit
1.2
|
Borrowing
Base Certificate
|
|
Exhibit
2.1(a)
|
Revolving
Credit Note
|
|
Exhibit
8.1(k)
|
Financial
Condition Certificate
|
|
Exhibit
16.3
|
Commitment
Transfer Supplement
|
|
Schedules
|
|
|
Schedule
1.2
|
Permitted
Encumbrances
|
|
Schedule
4.5
|
Equipment
and Inventory Locations
|
|
Schedule
4.15(h)
|
Deposit
and Investment Accounts
|
|
Schedule
4.19
|
Real
Property
|
|
Schedule
5.1
|
Consents
|
|
Schedule
5.2(a)
|
States
of Qualification and Good Standing
|
|
Schedule
5.2(b)
|
Subsidiaries
|
|
Schedule
5.4
|
Federal
Tax Identification Number
|
|
Schedule
5.6
|
Prior
Names
|
|
Schedule
5.8(b)
|
Litigation
|
|
Schedule
5.8(d)
|
Plans
|
|
Schedule
5.9
|
Intellectual
Property, Source Code Escrow Agreements
|
|
Schedule
5.10
|
Licenses
and Permits
|
|
Schedule
5.14
|
Labor
Disputes
|
|
Schedule
7.3
|
Guarantees/Bonds
|
93