LOAN AND SECURITY AGREEMENT
Exhibit
10.16
THIS LOAN
AND SECURITY AGREEMENT, as amended, restated, extended or otherwise modified by
the parties hereto, their successors and assigns, from time to time, including,
without limitation, all schedules and attachments hereto (“Agreement”), is made
and entered into this 24th day of February
2010, by and between WLG (USA) LLC and World Commerce Services, L.L.C., limited
liability companies organized and existing under the laws of the State of
Illinois with principal places of business located at 000 Xxxx Xxxxxxxxx Xxxx,
Xxxxx 000, Xxxxxxxxxx, XX 00000(xxxx a “Borrower” and collectively, the
"Borrowers") and NOVA Business Credit, a division of NOVA Bank, with
offices located at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX 00000
("Lender").
WITNESSETH:
BACKGROUND
Borrowers
have requested Lender to establish on its books and records a revolving credit
facility ("Revolving Credit") pursuant to which Lender may make revolving loans
and advances to Borrowers up to an aggregate amount at one time outstanding
equal to Three Million Dollars ($3,000,000.00), subject to
Section 2.1.6 hereof ("Revolving Credit Limit") secured by the Collateral, as
such term is defined in Section 3 herein, and
evidenced by a promissory note (the “Revolving Loan Note”) of even date. Lender
is willing to do so upon the terms and conditions hereinafter set
forth.
NOW
THEREFORE, in consideration of the promises herein contained, and each intending
to be legally bound hereby, the parties agree as follows:
1. DEFINITIONS. All
terms defined in Schedule 1 and all
other capitalized terms defined in this Agreement, shall have the meanings
ascribed to them herein when used in the Loan Documents, unless otherwise
defined therein.
2. THE
LOANS.
2.1 The Revolving
Credit.
2.1.1 Subject to the terms and
limitations hereof, Borrowers (or either of them) may borrow, repay and
re-borrow hereunder the amount equal to the Borrowing Base or any lesser amount
(the “Revolving Loans” and together with all other loans and advances made
hereunder, the “Loans”), each advance evidenced by Lender’s books and Records,
from time to time until the earliest of:
(a) the date one (1) year from the date
of this Agreement;
(b) the occurrence of an Event of
Default; or
(c) that date specified in a written
notice of termination from either party to the other party, provided that if
such notice is from Borrowers to Lender, such date shall be no less than 60 days
following the date of such notice and subject to a prepayment penalty of three
(3%) of the Revolving Credit Limit in Year 1, reduced to 2% in Year 2, if
renewed.
Any such
event, a “Revolving Credit Termination Date”.
2.1.2
Each application by Borrowers for a Loan hereunder shall be accompanied
by;
(a) a fully completed Borrowing
Base Certificate;
(b) an accounts receivable aging report
based upon invoice dates;
(c) copies of:
(i) invoices and/or written contracts
or orders from which the Account arose;
(ii) credit memos (which shall be
issued promptly by Borrowers and reflected in Borrowers’ next Borrowing Base
Certificate and/or accounts receivable reconciliation);
(iii) debit memos;
(iv) valid shipping or delivery
receipts evidencing the shipment of the Goods that gave rise to the Account and
bills of lading (“Shipping Documents”);
(v) warehouse receipts, if
applicable;
(vi) sales journals;
(vii) cash receipts
registers;
(viii) credit memo
registers;
(ix) Chattel Paper
and, if applicable,
(x) any other documents required by
Lender (items (i) through (x) hereinafter referred to as “Account Substantiation
Documents”).
2.1.3 If,
at any time, the Revolving Loan exceeds the most current calculated Borrowing
Base of Borrowers in Lender's possession, Borrowers shall
immediately:
(a) repay to Lender, in cash, such
amounts, plus interest thereon, as may be necessary to eliminate such excess,
and Lender may charge any Deposit Account of any nature of Borrowers for such
amount; or
(b) forthwith pledge, assign, transfer
or grant Lender a continuing lien on and security interest in and to, or deposit
with Lender as part of the Collateral, additional property satisfactory to
Lender.
2.1.4 For
the purpose of determining the existence of a Borrowing Base sufficient to
support the Revolving Loans from time to time outstanding hereunder, Borrowers
shall deliver to Lender weekly and at such other time or times as Lender may
specify, a Borrowing Base Certificate, an accounts receivable aging report based
upon invoice dates and an Inventory listing, in form and content acceptable to
Lender and copies of all Account Substantiation Documents.
2.1.5 The
Lender may, at its option, allow advances in excess of the Borrowing Base (each,
an “Overadvance”) on terms conditions and at pricing determined by the
Lender.
2.1.6 The
Lender may, at its option, on not less than thirty (30) days’ written notice to
Borrowers, permanently reduce the Revolving Credit Limit.
2.2 Lender’s Special
Rights
2.2.1 Lender
(through any of its officers, employees, auditors or agents) shall have the
right in its sole discretion and without notice to Borrowers at any time or
times hereafter to:
(a) confirm orders, Account
Debtor balances and invoices and verify the validity of Accounts, and/or
invoices or any other matter relating to any Account by mail, telephone,
telegraph or otherwise, in the name of Borrowers or Lender or any other name
Lender so chooses;
(b)
notify all Account Debtors that the Accounts have been assigned to Lender and
Lender has a security interest therein;
(c)
direct all Account Debtors to make payment to Lender of all
Accounts;
(d)
enforce payment and collect, by legal proceedings or otherwise, any Accounts in
the name of Lender; and
(e)
during Borrowers’ usual business hours, or during the usual business hours of
any third party having control over the Records of Borrowers,
(i) conduct such collateral
examinations and audits Lender deems appropriate of Borrowers’ booksand Records,
and
(ii) inspect and verify Borrowers’
books and Records in order to verify the amount or condition of,or any other
matter relating to, the Collateral and Borrowers’ financial
condition.
2.2.2 Lender
shall be entitled to conduct, from time to time during the term of this
Agreement, examinations of Borrowers’ business operations, and Records and to
check and test the same as to quality, quantity, value and
condition. Borrowers will be obligated to pay or reimburse Lender for
the costs of such examinations.
2.3 Disbursement of the
Loans. On the next Business Day after Borrowers’ application
pursuant to Section 2.1 above, Lender will credit the proceeds of the Loans to
or for the benefit of Borrowers via wire transfer or ACH to Borrowers’ operating
account as Borrowers shall designate by written notice to Lender, except for the
payment of amounts due to or for the benefit of Lender hereunder, which shall be
made directly to Lender.
2.4 Interest Rates and Payments
of Interest. Interest shall accrue and be paid as
follows:
2.4.1 Interest
will accrue at the rate set forth in Schedule 2 and made
part hereof and shall be calculated on the basis of a 360-day year, counting the
actual number of days elapsed, on the greater of One Million Five
Hundred Thousand Dollars ($1,500,000.00) or the principal balance of the Loans,
from time to time outstanding, and shall be payable on the first (1st) day of
each month commencing on the first (1st) day of the first month after the
Closing Date and continuing on the same day of each month thereafter until all
Obligations are satisfied in full.
2.4.2 If
the rate is related to the Base Rate, each time the Base Rate shall change, the
Interest Rate on the Loans shall change contemporaneously with such change in
the Base Rate. If, at any time, any rate shall be deemed by any competent court
of law, Governmental Authority or tribunal to exceed the maximum rate of
interest permitted by any applicable Laws, then, for such time as such Rate
would be deemed excessive, application thereof shall be suspended and there
shall be charged in lieu thereof the maximum rate of interest permissible under
such Laws.
2.4.3 The
Lender agrees to give the Borrowers next Business Day availability on payments
received and deposited into Lender’s account at Wilmington Trust FSB (the
“Concentration Account”). Provided, however; that (a) for the purpose
of computing interest hereunder such items shall be applied by Lender on account
of the Revolving Loans the number of days equal to the Float Factor described in
Schedule 2
after same have been deposited into the Concentration Account, and (b) no such
item received by Lender shall constitute payment to Lender unless such item is
actually collected by the bank at which Lender maintains its Concentration
Account, presently, Wilmington Trust FSB.
2.5 Fees. Borrowers
hereby agree to pay the fees described on Schedule 2 which
shall constitute additional Obligations hereunder secured by the Collateral. Any
of such fees not paid when due shall bear interest from the date due until paid
at the interest rate specified in Paragraph 2.4.1.
2.5.1 Other Fees, Charges and
Expenses. The Borrowers shall promptly pay to or on behalf of
Lender from time to time the reasonable fees and expenses of the Lender’s
counsel, appraisers, environmental consultants, auditors and other expenses of
Lender in connection with this Agreement, the Obligations and the Collateral,
together with the costs described in Paragraph 3.4.3 hereof.
3. COLLATERAL
SECURITY.
3.1 Grant of Security
Interests. As security for the timely satisfaction of all
Obligations, each Borrower hereby grants Lender a continuing lien on
and security interest in and to all of the Borrowers’ Assets,
including Inventory, Accounts, General Intangibles, Equipment,
Contract Rights and those described in Schedule 3, wherever
located, whether now owned or hereafter acquired, together with all replacements
therefor and all cash and non-cash Proceeds (including, but without limitation,
insurance Proceeds and Proceeds of Proceeds) thereof, collectively called the
"Collateral" which, together with all of Borrowers’ other property of any kind
held by Lender, shall stand as one general, continuing collateral security for
all Obligations of the Borrowers to Lender and may be retained by Lender until
all Obligations have been satisfied in full.
3.2 Priority of
Liens. Except for the Liens set forth on Schedule 4
(“Permitted Liens”), Lender’s Liens in and to the Collateral shall be first and
prior Liens to all Liens against the Assets of each Borrower now existing or
hereafter arising ("Lender's Prior Security Interest").
3.3 Landlords' /Mortgagees’
Waivers. Borrowers will cause each landlord and mortgagee, of
all premises leased or owned, wherein any of the Collateral may be located, to
execute and deliver to Lender instruments, in form and substance satisfactory to
Lender, by which such landlord or mortgagee waives or subordinates its rights,
if any, to the Collateral.
3.4 Financing Statements.
Borrowers hereby:
3.4.1 authorize
Lender to file any financing statements (including amendments thereto and
continuation statements thereof) in form satisfactory to Lender as Lender may
specify;
3.4.2 agree
to take such other steps as Lender may direct, including the noting of Lender's
lien on the Collateral and on any certificates or documents of title therefor,
all to perfect Lender's liens on and security interests in the Collateral;
and
3.4.3 agree
to pay or reimburse Lender for all costs and taxes of filing or recording the
same in such public offices as Lender may designate. In addition to the
foregoing, and not in limitation thereof, a carbon, photographic, or other
reproduction of this Agreement shall be sufficient as a financing statement and
may be filed in any appropriate office in lieu thereof.
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3.5 Each
Borrower hereby irrevocably appoints Lender as its attorney-in-fact (without
requiring Lender to act as such) to execute any financing statements, including
amendments thereto and continuation statements thereof in the name of each
Borrower, and to perform all other acts and deeds that Lender deems appropriate
to perfect and continue its security interest in, and to protect and preserve,
the Collateral.
4. OTHER
PROVISIONS.
4.1 Lock Box. Borrowers
will direct all of their Account Debtors to forward payments directly to the
lockbox facility (“Lock Box”) maintained with Wilmington Trust FSB ("Lock Box
Bank"). The Lock Box address is Xxx 000000, Xxxxxxxxxxxx, XX
00000-0000. Lender shall apply such payments to reduce the outstanding
Obligations. In the event that Borrowers receive Remittances,
Borrowers agree that such Remittances shall be held in express trust for the benefit
of Lender which shall be immediately notified of such receipt. Borrowers shall
immediately upon receipt, turn over all Remittances to Lender in precisely the
form received, except for the endorsement of Borrowers when necessary to permit
the collection of the Remittances, which endorsement Borrowers hereby agree to
make. Pending such deposit, Borrowers will not commingle any
Remittances (including all pre-payments) with any of its other funds or
property, but will hold them separate and apart therefrom expressly in trust for
Lender. Such statements, reports of collections and adjustments as Lender may,
from time to time, specify shall accompany all Remittances. All funds received
by Lender will be applied to reduce the Obligations, subject to
collection. Borrowers shall have no right of access to or withdrawal
from the Lock Box. Lender shall have no duty to segregate Proceeds of
Collateral remitted to the Lock Box, or deposited in the Concentration Account
pursuant to Paragraph 4.2 below, from other funds or property remitted to the
Lock Box or deposited in the Concentration Account.
4.2 Concentration
Account. All Proceeds of any Collateral shall be deposited
into the Concentration Account through the Lock Box, direct deposit by Borrowers
(or either of them) or Account Debtor or otherwise. Borrowers hereby
absolutely assign to Lender all amounts now or hereafter due Borrowers in
connection with its Accounts. Borrowers shall, at the request of Lender, cause
all invoices of Borrowers forwarded to Account Debtors to notify such Account
Debtors to make all payments in connection with such invoices directly to the
Lender for deposit into the Concentration Account. It is further understood that
the Concentration Account is the Lender’s account and Borrowers agrees that
Borrowers shall have no right to withdraw monies from the Concentration
Account.
4.3 Collections. Lender
may at any time, in the exercise of its rights under Section 4.5, take
control of the cash and non-cash Proceeds of any of Borrowers’ Accounts, and
charge the collection costs and expenses to a deposit account of Borrowers, but,
unless and until Lender does so or gives Borrowers other written instructions,
the collection of the Accounts shall be in accordance with the terms and
conditions of this Agreement. The receipt of any wire transfer of
funds, check, or other item of payment by Lender shall be applied to
conditionally reduce the Obligations, but shall not be considered a payment on
account unless such wire transfer is of immediately available federal funds and
is made to the Concentration Account of Lender or unless and until such check or
other item of payment is honored when presented for payment.
4.3.1 The
costs of all collection and enforcement proceedings against any Account Debtor,
including reasonable attorney's fees and out-of- pocket expenses, shall be borne
solely by Borrowers whether incurred by Lender or by Borrowers.
4.4 Cash
Collateral. Until such time as the amounts now or hereafter on
deposit in any account are delivered to the Lender in accordance with the
provisions set forth in this Agreement, such amounts shall be deemed to be held
by Borrowers for the benefit of the Lender in express trust and such
amounts together with all amounts now or hereafter on deposit in the
Concentration Account shall be deemed to be "Cash Collateral" under Section 363
of the Bankruptcy Code. In the event that Borrowers (or either of
them) file a voluntary petition in Bankruptcy or are made subject to any
involuntary Bankruptcy proceeding, the Borrowers may not use such Cash
Collateral without the consent of the Lender and/or an order of any the
Bankruptcy Court pursuant to 11 U.S.C. § 363(b)(2). The Borrowers
hereby waive any right they may have to assert that the Lender’s liens on and
security interests in and to such amounts and other like Collateral does not
constitute Cash Collateral.
4.5 Power of
Attorney.
4.5.1 Upon
the occurrence of an Event of Default hereunder, which is not cured within five
(5) business days, after notice by Lender to Borrowers, Borrowers hereby
irrevocably authorize and empower Lender, grant a power of attorney, coupled
with an interest to, and appoint Lender, or any officer, director or employee of
Lender, as attorney-in-fact for Borrowers, with full authority for
and on behalf of Borrowers, and in its name, place and stead, to take
any action which Borrowers or any officer or director of Borrowers could do if
then present, as may, in the opinion of Lender, be necessary or advisable,
to;
(a) cause any amounts on deposit in any
Deposit Account of Borrowers (or either of them) with any bank or
other depository (“Depository”) to be transferred to Lender including, without
limitation, the power and authority to sign, seal, execute and deliver for and
on behalf of Borrowers (or either of them), and in their name, place
and xxxxx, any agreement, document or instrument of any nature, including,
without limitation, any Control Agreements, deposit agreements, signature cards,
corporate resolutions or as may otherwise be required by any Depository at which
Borrowers (or either of them)maintain any account of any nature, to cause such
Depository to transfer to Lender, all amounts of Borrowers now or hereafter on
deposit with such Depository;
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(b) cause such Depository to
provide to Lender all information in possession of such Depository with respect
to any accounts of Borrowers (or either of them), of any nature, on deposit with
such Depository, including, without limitation, account balances, account
statements, checks, drafts or other items drawn on such account, deposit and
withdraw tickets;
(c) change the name of any such account
from Borrowers’ names to the name of the Lender;
(d) give orders to any Depository with
respect to any such accounts, including, without limitation, orders to transfer
the balances in any such accounts to Lender; and
(e) take such other action as may in
the opinion of Lender, be necessary to cause all accounts now or hereafter on
deposit in any such depository institution to be transferred to
Lender.
4.5.2 Borrowers
do hereby irrevocably designate, make, constitute and appoint Lender (and any of
Lender's officers, employees or agents designated by Lender)
as Borrowers true and lawful attorney in fact (without requiring them
to act as such) coupled with an interest, with full power of substitution,
hereby ratifying and confirming all acts and deeds in connection herewith, with
power, without notice to Borrowers, and at such time or times hereafter as
Lender may in its sole election determine, in Borrowers’ name and
at Borrowers’ expense:
(a) to endorse the name of
Borrowers (or either of them) upon any and all remittances, checks, drafts,
money orders and other instruments for the payment of monies that are payable to
Borrowers and constitute collections on Borrowers’ Accounts or Proceeds of any
insurance;
(b) to demand payment of
Accounts;
(c) to execute in the name of Borrowers
any schedules, assignments, instruments, documents, notices, and statements that
Borrowers are obligated to give Lender hereunder;
(d) to enforce payment of Accounts by
legal proceedings or otherwise;
(e) to exercise all of Borrowers’
rights and remedies with respect to the collection of Accounts;
(f) to settle, adjust, compromise,
extend or renew any Account;
(g) to settle, adjust or compromise any
legal proceedings brought to collect an Account;
(h) to sell or assign any Account
upon such terms, for such amounts and at such time or times as Lender deems
advisable;
(i) to discharge and release any
Account;
(j) to take control in any manner
of any item of payment or proceeds of an Account and for this purpose to notify
the postal authorities to change the address for delivery of mail addressed to
Borrowers (or either of them) to such address as Lender may designate and to
receive, open and dispose of all mail addressed to Borrowers (or either of
them);
(k) to prepare, file and sign each
Borrower’s name on any Proof of Claim in any proceeding filed under Title 11 of
the United States Code or similar document as to an Account Debtor;
(l)
to prepare, file and sign each Borrower’s name on any Notice of Lien, Claim of
Mechanic's Lien, Assignment or Satisfaction of Lien or Mechanic's Lien, or
similar document in connection with an Account;
(m) to endorse the name of each
Borrower upon any Chattel Paper, Document, Instrument, Receivable, invoice,
freight xxxx, Xxxx of Lading, Warehouse Receipt or similar documents or
agreement relating to any Inventory, Account or Goods pertaining
thereto;
(n) to execute in the name of each
Borrower any Account Debtor notification; and
(o) to do all other acts necessary or
desirable to protect each Borrower’s interest in the Accounts and to enforce any
Account or other Collateral.
4.5.3 Each
Borrower releases Lender from any and all causes of action or claims which each
Borrower may now or hereafter have for any asserted loss or damage to each
Borrower claimed to be caused by or arising from:
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(a) any failure of Lender to protect,
enforce or collect in whole or in part any Account;
(b) Lender's notification to any
Account Debtors of Lender's security interests in any of the
Accounts;
(c) Lender's directing any Account
Debtors to pay any sums owing to Borrowers directly to Lender; and
(d) any other act or omission to act
on the part of Lender and any of its officers, employees or agents designated by
Lender except for willful misconduct.
4.6 Additional
Accounts. Except for accounts listed on Schedule 4, which are
subject to a Control Agreement, Borrowers (or either of them) shall not, without
the prior written consent of Lender, open or maintain any Deposit Accounts of
any nature with any Depository. Any Deposit Account shall, unless
otherwise agreed to by Lender, be subject to a Control Agreement and each
Borrower shall enter into with Lender, and cause each Depository to enter into
with Lender, a Control Agreement with respect to any account of Borrowers (or
either of them) now or hereafter maintained at any Depository.
4.7 Payments. All
payments of interest on and principal of the Loans and /or the Obligations, all
fees and all other sums payable to the Lender hereunder shall be paid directly
to the Lender in immediately available funds, in such currency of the United
States of America as is, at the time of payment, legal tender for the payment of
public and private debts. Borrowers (or either of
them) shall make each payment hereunder not later than 12:00 p.m.,
local time, on the day when due, pursuant to Section 2.4.1 above and to the
extent not paid from funds received in the Lock Box, at the office of the Lender
at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX 00000. Should any
payment of principal or interest or fees become due and payable on a Saturday,
Sunday or legal holiday under the laws of the Commonwealth of Pennsylvania, the
payment date thereof shall be extended to the next succeeding business day and
such extension of time shall in such case be included in computing such interest
or fees, as the case may be. Any such payments or prepayments made
shall be applied, first to the payment of unpaid costs and charges due including
late fees, then to interest due and payable under the Revolving Loan Note and
then to the reduction of the outstanding principal balance
thereof. So
long as a sufficient Borrowing Base exists, all payments of principal, interest,
costs, fees and expenses due to the Lender in connection with this Agreement,
the Loan Documents and the Loans shall be made as follows:
4.7.1 Borrowers
authorize and direct the Lender, at the Lender’s option, to cause all interest
and fees due and payable pursuant to this Agreement in connection with
the Loans to be paid on the due date thereof by charging all such
interest payments and fees as and when due, as an advance against the Revolving
Credit, and each such advance shall be deemed to be a Revolving Loan and shall
bear interest from the date due until paid at the interest rate specified in
Paragraph 2.4.1.
4.7.2 Borrowers
authorize and direct the Lender, at the Lender’s option, to cure all costs,
fees, taxes, charges and expenses of any kind or description payable pursuant to
this Agreement or paid or incurred by Lender with respect to the Loans hereunder
or any Collateral therefor or the Collection of or realization upon same on the
due date thereof to be paid by charging such costs, fees or expenses as an
advance against the Revolving Credit, each such advance shall be deemed to be a
Revolving Loan and shall bear interest from the date due until paid at the
interest rate specified in Paragraph 2.4.1.
4.7.3 Principal
payable on account of the Revolving Loans shall be due and payable to the extent
and on the date of any collections received with respect to any Proceeds of the
Collateral if not otherwise applied to interest or other Obligations, and the
outstanding balance thereof shall be paid in full on the earlier of the
Revolving Credit Termination Date or on the acceleration of the Obligations
under and pursuant to this Agreement.
4.7.4 The
balance of the Obligations, if any, shall be payable as and when provided in
this Agreement or other Loan Documents or in any other agreements relating to
such Obligation and, if not specified, then on DEMAND. Unless expressly
specified otherwise herein or in other Loan Documents, any of such Obligations
not paid when due shall bear interest from the due date until paid at the
interest rate specified in Paragraph 2.4.1 hereof.
4.7.5 Anything
herein to the contrary notwithstanding, Borrowers hereby authorize Lender,
without further order or authorization of Borrowers, to charge any of Borrowers’
Deposit Account(s) monthly, on the due date therefor, for all payments of
principal and interest and all other amounts due hereunder and under the Notes.
4.8 Statements of Amount
Due. At least once each month, Lender shall render to
Borrowers a statement of Borrowers Indebtedness to Lender hereunder plus
interest accrued thereon, which statements shall be considered correct and
accepted by Borrowers, and conclusively binding upon Borrowers unless Borrowers
notify Lender to the contrary within ten (10) days from the date such statement
is delivered setting forth any error claimed by Borrowers.
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4.9 Joint and Several
Obligations. Each of the undersigned Borrowers, if more than
one, hereby irrevocably designates the other Borrower its attorney-in-fact to
borrow, sign and endorse the Revolving Loan Note, and execute and deliver all
instruments, documents, writings and further assurances, required hereunder on
its behalf. Each Borrower authorizes Lender to pay over or credit all
Loan Proceeds to any Borrower for distribution among such Borrowers, as their
needs require. Each of the Borrowers affirms and agrees that all
Loans, advances, obligations and liabilities hereunder and under the Revolving
Loan Note issued pursuant hereto shall be the joint and several obligation of
each Borrower, and that each Borrower shall make payment upon the Revolving Loan
Note issued pursuant hereto in accordance with its terms, or upon its earlier
maturity by acceleration, call or otherwise and that such Borrowers shall in no
way be affected by any extensions, renewals or forbearances granted by Lender to
them or any of them, failure of Lender to give them or any of them notice of
borrowing or other notice, any failure of Lender to pursue or preserve its
rights against them or any of them, the release by Lender of any Collateral now
or hereafter acquired or any guarantees or obligations, failure of Lender’s best
efforts in obtaining "commercially reasonable" prices for any Collateral
disposed of, and that such agreement by each of such Borrowers to pay upon the
Revolving Loan Note issued pursuant hereto is unconditional and does not require
prior recourse by Lender to any Collateral .
4.10 Increased Costs. If
after the date of this Agreement, Lender shall have determined that its costs
(other than the Interest Rate and Collateral Management Fee as defined in
Schedule 2) of agreeing to make, or making, funding or maintaining the Loans or
Lender's obligations under this Agreement have increased, then Lender shall so
notify Borrowers (or either of them) and within 15 days after receipt of such
notice from Lender, Borrowers (or either of them) shall pay to
Lender, from time to time as specified by Lender, additional amounts that in the
aggregate shall be sufficient to compensate Lender for such increased cost. An
increase in the Interest Rate and/or the Collateral Management Fee as defined in
Schedule 2, will result only from the occurrence of an Event of Default
hereunder which is not cured within five (5) business days. A certificate as to
such increase in costs showing the manner of calculation thereof shall be
submitted by Lender to Borrowers (or either of them) and shall,
in the absence of manifest error, be conclusive as to the amount
thereof. This covenant shall survive the termination of this
Agreement and payment of the Revolving Loan Note.
5. CONDITIONS
PRECEDENT.
Any
obligation of Lender to make any of the Loans hereunder is subject to the
following conditions precedent:
5.1 Payments. On
or before the Closing Date, Borrowers shall have paid:
(a) each of the Fees described in
Paragraph 2.5;
(b) all charges, taxes and fees for
recording, insurance, title insurance, appraisals, environmental assessments and
other items required under this Agreement; and
(c) all costs and expenses of Lender in
establishing the Loans and perfecting its interest in the Collateral, including,
without limitation, the reasonable fees and disbursements of Lender's
counsel.
5.2 Documents Required for the
Closing. Unless waived by Lender, on or before the Closing
Date, Borrowers or each of them shall have duly delivered (or caused to be
delivered) to Lender duly executed original counterparts of the following, all
in form and content acceptable to Lender:
5.2.1 This
Agreement;
5.2.2 The
Revolving Loan Note;
5.2.3 A
fully completed and executed Perfection Certificate;
5.2.4 Disclosures
for Confession of Judgment of Borrower;
5.2.5 Validity
Certificates;
5.2.6 A
Surety Agreement from each Surety;
5.2.7 Subordination
Agreement(s) from any Person(s) with an interest in or to whom any Subordinated
Debt is payable, in favor of Lender with respect to such Subordinated
Indebtedness, if any;
5.2.8 The
UCC-1 financing statements as required by Lender;
5.2.9 UCC-3
Termination Statements with respect to any security interest of record in any of
the Collateral prior to the date hereof in favor of any Person other than
Lender;
5.2.10 Landlord
waivers and mortgagee waivers with respect to any leased or mortgaged premises
of Borrower in which any Collateral is located, and as otherwise required in
this Agreement;
5.2.11 Control
Agreement(s) with consent of Depository, to the extent applicable;
5.2.12 A
certified copy of the Borrowers’ fire, all risk, business interruption, public
liability, flood and casualty insurance policy or policies evidencing coverage
satisfactory to the Lender, with mortgagee and lender loss payable and
additional insured endorsements in form and substance satisfactory to the Lender
naming the Lender as mortgagee and loss payee and additional insured, as its
interest may appear, together with one or more certificates of insurance
broker(s) satisfactory to the Lender (Accord 27), setting forth the insurance
obtained in accordance with Paragraph 7.1.4 and stating that such insurance is
in full force and effect, all premiums then due thereon have been paid and the
insurance policies relating thereto comply with Paragraph 7.1.4, and such
insurance is adequate and providing not less than 30 days notice to Lender of
any change or cancellation of such coverages;
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5.2.13 The
initial Borrowing Base duly completed and executed by Borrowers;
5.2.14 Current
Aging of Borrowers’ Accounts based upon invoice date containing information
satisfactory to Lender;
5.2.15 Copies
of all Account Substantiation Documents in effect as of the Closing Date, if
required by Lender;
5.2.16 A
tax clearance certificate from each state for which Borrowers, each Subsidiary
or other entity constituent of Borrowers, if any, is required to pay any sales
and use taxes, evidencing payment of all sales and use taxes owed by any of them
as of the Closing Date:
5.2.17 A
certified (as of the date of the Closing) copy of resolutions of each Borrower
and each Subsidiary or other entity constituent of each Borrower, if any, boards
of directors or other governing agency authorizing the execution, delivery and
performance of this Agreement, the Revolving Loan Note, the Collateral and Loan
Documents and each other document to be delivered pursuant hereto;
5.2.18 A
certified (as of the date of the Closing) copy of each Borrower and each
Subsidiary or other entity constituent of each Borrower, if any, by-laws,
operating agreement, partnership agreement or other governing documents and all
amendments to the foregoing;
5.2.19 A
certificate (dated the date of the Closing) of each Borrower and each Subsidiary
or other entity constituent of each Borrower, if any, as applicable, corporate
secretary or other authorized officer, member or partner as to the incumbency
and signatures of the officers, members, partners, Authorized Financial
Officer(s) or authorized persons of each Borrower, and each Subsidiary or other
entity constituent of each Borrower, if any, signing this Agreement, the Notes,
the Collateral and Loan Documents and each other document to be delivered
pursuant hereto;
5.2.20 A
copy, certified as of the most recent date practicable by the Secretary of the
State of each entity's state of formation, of each Borrower’s, each Subsidiary’s
or other entity constituent of each Borrower, if any, certificate of
incorporation, partnership or formation, together with a certificate (dated the
date of the Closing) of each Borrower’s and each Subsidiary’s or other entity
constituent of each Borrower, if any, as applicable corporate secretaries or
other authorized Person to the effect that such certificate of incorporation,
partnership or formation has not been amended since the date of the aforesaid
certification;
5.2.21 Certificates,
as of the most recent dates practicable, of the aforesaid Secretary of State and
the Secretary of State of each state in which each Borrower, each Subsidiary or
other entity constituent of each Borrower, if any, is qualified as a foreign
corporation, partnership, limited liability company or other entity and the
department of revenue or taxation of each of the foregoing states, as to the
good standing of each Borrower, each Subsidiary or other entity constituent of
each Borrower, if any;
5.2.22 Mortgage
and Lien satisfactions as may be necessary to provide Lender a first Lien on and
security interest in the Collateral subject to Lender’s Priority Security
Interest, to the extent applicable;
5.2.23 Copies
of all documents evidencing the terms and conditions of any Debt specified as
Subordinated Indebtedness or any collateral therefor, or Borrowers’
representation that no such documentation exists;
5.2.24 Master
address list of each Borrower's Account Debtors;
5.2.25 Collateral
Assignments to Lender of all copyrights, trademarks and patents of each
Borrower, if any, included in the Collateral;
5.2.26 A
certified copy of fictitious name registration of Borrowers (or either of them)
..
5.2.27 Such
other agreements, documents or instruments required by Lender, or its counsel,
to evidence the transactions described in this Agreement and perfect the Liens
and security interests of Lender in the Collateral.
5.3 Miscellaneous
Conditions
5.3.1 The
audit of each Borrower's Collateral shall have been performed by Lender, the
results of which shall be satisfactory to Lender, in its sole
discretion.
5.3.2 Lender
shall have received UCC, Lien, tax, judgment and other searches required by
Lender.
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5.3.3 Lender
shall have received copies of all filing receipts and acknowledgments issued by
any governmental authority to evidence any recordation or filing necessary to
perfect the Lien of the Lender on the Collateral and evidence in a form
acceptable to the Lender that such Lien constitutes the Lender’s Prior Security
Interest and is a valid and perfected lien subject only to Permitted Liens as
set forth on Schedule
4.
5.4 Legal
Matters. At the time of Closing and each subsequent
disbursement, all legal matters incidental thereto shall be reasonably
satisfactory to Lender and its counsel.
6. REPRESENTATIONS
AND WARRANTIES.
6.1 Corporate Existence,
etc. To induce Lender to enter into this Agreement, each
Borrower represents and warrants to Lender as follows:
6.1.1
Borrowers are duly organized and validly existing, and in good standing under
the laws of the State of Illinois and have the lawful power to own, lease,
encumber and operate their assets and properties and to engage in the business
they conduct, and are duly qualified and in good standing as a foreign
corporation in the jurisdictions wherein the nature of the business transacted
by their or property owned by them makes such qualification necessary. The
addresses of all places of business of each Borrower are as set forth in the
Perfection Certificate. Borrowers have no Subsidiaries or other entities
constituent of Borrowers, or Affiliates except as described in the Perfection
Certificate. Borrowers, except as disclosed to Lender, have not changed their
names, been the surviving entity in a merger, acquired any business, or changed
their principal executive offices within five (5) years and one (1) month prior
to the date hereof;
6.1.2
Borrowers have the requisite power and authority, corporate, partnership,
limited liability company or otherwise, to enter into and perform this
Agreement, the Revolving Loan Note and the Loan Documents to which they are a
party and to incur the Obligations herein and therein provided for and have
taken all proper and necessary action to authorize the execution, delivery and
performance of this Agreement, the Revolving Loan Note and the Loan Documents
which are duly and validly executed and constitute legal, valid, and binding
obligations of Borrowers enforceable in accordance with their respective
terms;
6.1.3 Borrowers
are not in default with respect to any of their existing
Indebtedness including without limitation any Federal, State, Local, payroll,
sales, use, excise or similar taxes, or under any agreement, commitment, lease,
contract, deed of trust, mortgage, note or other Instrument, and the making and
performance of this Agreement, the Revolving Loan Note and the Loan Documents
will not immediately, with the passage of time, with the giving of notice or
both: (a) violate the charter, by-laws, partnership agreement, operating
agreement, or other organizational documents of each Borrower or, in any
material respect, violate any Laws, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to each Borrower; or (b)
result in a default under any contract, agreement, indenture, note, loan or
credit agreement, license, lease or instrument to which each Borrower is a party
or by which it or its property is bound; or result in the creation or imposition
of any security interest in or Lien or encumbrance upon any of the Assets of
each Borrower except such as are in favor of Lender;
6.1.4 No
holder of any Indebtedness of each Borrower has given notice of any asserted
default thereunder. No liquidation or dissolution of each Borrower
and no receivership, insolvency, bankruptcy, reorganization or other similar
proceeding relative to each Borrower or their properties is pending or, to the
knowledge of each Borrower, threatened against them;
6.1.5 Except
as described in Schedule 4, there are
no pending orders, notices, litigation, actions, claims, suits, proceedings or
investigations pending, or, to the knowledge of Borrowers, threatened or
reasonably anticipated against or affecting the Borrowers (or either of them) at
law or in equity or before or by any governmental instrumentality or agency
(domestic or foreign), commission, board, bureau, arbitrator or arbitration
panel which may be expected to result in any Material Adverse Change in the
business, operations, prospects, properties or Assets (including, without
limitation, the Collateral), or condition (financial or otherwise)
of the Borrowers (or either of them) . There is no
judgment, liability or award, which may be expected to result in any Material
Adverse Change in the business, operations, prospects, properties or Assets
(including, without limitation, the Collateral), or condition (financial or
otherwise) of the Borrowers (or either of them). the Borrowers (or
either of them) are not in default with respect to any judgment, order, writ,
injunction, decree, rule, award or regulation of any court, governmental
instrumentality or agency, commission, board, bureau, or arbitrator or
arbitration panel;
6.1.6 The
Borrowers (or either of them) do not know of, or anticipate any Material Adverse
Change in their Assets, Liabilities, properties, business, or condition
(financial or otherwise);
6.1.7 The
Borrowers (or either of them) have good and marketable title to all of their
properties and Assets, subject to no security interest, encumbrance or Lien, or
the claim of any third person, except for Permitted Liens;
6.1.8 The
Financial Statements presented and to be presented to Lender, including any
related schedules and notes appended thereto, have been and will be prepared in
accordance with GAAP and fully and fairly present in all material respects the
financial condition of each Borrower and the Borrowers at the dates thereof and
the results of operations for the periods covered thereby. There have
been no Material Adverse Changes in the financial condition or business of the
Borrowers (or either of them) from the date such Financial Statements were
presented to Lender to the date hereof;
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6.1.9 As
of the date hereof, the Borrowers (or either of them) do not have any direct or
contingent liability or material Indebtedness of any nature, including, without
limitation, liabilities for taxes and any interest or penalties relating
thereto, except to the extent reflected (in a footnote or otherwise) and
reserved against in the Financial Statements of the Borrowers (or either of
them) delivered to Lender prior to the date hereof or as disclosed in Schedule 4. The
Borrowers (or either of them) do not know and have no
reasonable grounds to know of any basis for the assertion against the Borrowers
(or either of them) of any material Indebtedness of any nature not fully
reflected and reserved against in their Financial Statements;
6.1.10 Each
Borrower and the Borrowers have filed or caused to be filed all
federal, state and local tax returns and other reports they are required by Law
to file prior to the date hereof and which are material to the conduct
of their business, or have timely filed requests for extensions to
file the same as permitted by Law, and have paid or caused to be paid
all taxes, assessments and other governmental charges due and payable prior to
the date hereof, and have made adequate provision for the payment of such taxes,
assessments or other charges accruing but not yet payable. The
Borrowers (or either of them) do not have any knowledge of any
deficiency or additional assessment in a material amount in connection with any
taxes, assessments or charges not provided for on their books and
Records;
6.1.11 Each
Borrower and the Borrowers have complied in all material respects with all
applicable Laws with respect to:
(a) any restrictions,
specifications or other requirements pertaining to products that the Borrowers
(or either of them) import, manufacture or sell or to the services they
perform;
(b) the conduct of their business
and
(c) the use, maintenance and
operation of the real and personal properties owned or leased by them in the
operation of their business;
6.1.12 No
representation, warranty or statement by the Borrowers (or either of them)
contained herein or in any certificate or other document furnished pursuant
hereto contains any untrue statement of material fact or omits to state a
material fact necessary to make such representation or warranty not misleading
in light of the circumstances under which it was made;
6.1.13 No
recording, filing, registration, notice or other similar action is required in
order to insure the legality, validity, binding effect or enforceability of this
Agreement or the Revolving Loan Note or the other documents and instruments
executed hereunder as against all persons, other than such filings as may be
required under the UCC and mortgages to perfect Lender’s interest in all real
property owned by the Borrowers (or either of them);
6.1.14 Except
as described on Schedule 4, there are
no Liens or security interests in any of the Borrowers’ Assets and
Borrowers(or either of them) do not know of any
circumstances which might lead to the imposition of any Lien and Borrowers have
not entered into any loan or security agreement with any third person, including
an Affiliate.
6.1.15 Except
as described on Schedule 4, Borrowers
(or either of them) do not have any material leases, contracts or commitments of
any kind (such as employment agreements; collective bargaining agreements;
powers of attorney; distribution arrangements; patent, trademark or copyright
license agreements; contracts for future purchase or delivery of goods or
rendering of services; bonus, pension and retirement Plans; or accrued vacation
pay, insurance and welfare agreements); all parties (including the Borrowers) to
all such material leases, contracts and other commitments have complied with the
provisions of such leases, contracts and other commitments; no party is in
default under any thereof and no event has occurred which, but for the giving of
notice or the passage of time or both, could constitute a default;
6.1.16 Schedule 4 contains a
complete and accurate list and summary description of all Intellectual Property
owned, licensed, leased or in any way used by the Borrowers (or either of
them). None of the Intellectual Property infringes upon or interferes
with any other Intellectual Property or is being infringed upon or interfered
with by any other Intellectual Property. None of the Intellectual
Property has been challenged or threatened in any way. The
Intellectual Property is not a substantial part of the business of Borrowers and
the Intellectual Property is not necessary for the operation of Borrowers’
business.
6.1.17 Each
Borrower and the Borrowers are in compliance in all material respects with all
applicable provisions of ERISA;
6.1.18 Each
Borrower and the Borrowers do not have any Defined Benefit Pension Plan, as that
term is defined in ERISA;
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6.1.19 Except
as disclosed in the Financial Statements or on Schedule 4, or in the
ordinary course of Borrowers’ business, no officer of Borrowers (or
either of them) , and no other Affiliate of Borrowers (or either of
them) is currently a party to any transaction with Borrowers
(or either of them), including, without limitation, any contract, agreement or
other arrangement providing for the employment of, furnishing of advisory or
other services by, rental of real or personal property from, or otherwise
requiring payments to, any such officer or Affiliate;
6.1.20 No
Event of Default has occurred and is continuing or is about to
occur;
6.1.21 The
Obligations and Indebtedness of each Borrower and the Borrowers under
this Agreement, the Revolving Loan Note and any other Loan Document are not
subordinated in right of payment or otherwise to any other obligation of
the Borrowers (or either of them) or to the rights of
others;
6.1.22 There
are no strikes, work stoppages, material grievance proceedings or other material
controversies pending or, to the best of the Borrowers’ knowledge,
threatened between the Borrowers and any employees engaged in the business of
the Borrowers or any union or other collective bargaining unit representing such
employees. Borrowers have complied and are in compliance with all
Laws relating to the employment of labor, including, without limitation,
provisions relating to wages, hours, collective bargaining, occupational safety
and health, equal employment opportunities and the withholding of income taxes
and social security contributions, the non-compliance of which might have a
Material Adverse Effect on its business, operations, prospects, Assets,
properties or condition (financial or otherwise);
6.1.23 Except
as disclosed to Lender in Schedule 4, Borrowers
(or either of them) shall not pay any commission or finder's fee payable in
connection with the Loans;
6.1.24 Each
Account is:
(a) genuine and authentic,
(b) in all respects, what it purports
to be, and
(c) represents the bona fide sale of
Goods or performance of services in the ordinary course of each
of the Borrower’s business to the Account Debtor named in each such
Account. The amount set forth on the invoice or other billing
statement for such Account is true and correct. Each Account used as
a base for borrowing hereunder is an Eligible Account;
6.1.25 Borrowers
(or either of them) are not party to or bound by any agreement or
instrument or subject to any corporate or other restriction the performance or
observance of which now has or, as far as Borrowers can reasonably foresee, may
have a Material Adverse Effect, financial or otherwise, upon the Assets or
business of Borrowers (or either of them).
6.1.26 Borrowers
(or either of them) are not now and will not be engaged principally or, as one
of their important activities, in the business of extending credit for the
purpose of purchasing or carrying or trading in any margin stocks or margin
securities (within the meaning of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System) or other securities, and no part of the
proceeds of the Loans hereunder has been or will be applied for the purpose of
purchasing or carrying or trading in any such stock or securities or of
refinancing any credit previously extended, or of extending credit to others,
for the purpose of purchasing or carrying any such margin stock, margin
securities or other securities in contravention of such
Regulations.
6.1.27 Borrowers
(or either of them) do not operate or do business under any assumed, trade or
fictitious names except as described in the Perfection Certificate.
6.1.28 To
the actual knowledge of Borrowers (or either of them), no director, employee,
principal shareholder or Control Person of Borrowers (or either of
them) is a director, employee, principal shareholder or Control Person of Lender
and no employee, partner or Control Person of Lender is in Control of Borrowers
(or either of them).
6.1.29 There
is no activity at any real property or facility owned or operated by Borrowers
(or either of them) (each a "Property") which has been conducted, or is being
conducted, except in compliance with all Environmental Laws, statutes,
ordinances, regulations, orders, and requirements of common law concerning (a)
those activities, (b) repairs or construction of any improvements, (c) handling
or storing of any materials, (d) discharges to the air, soil, surface water or
ground water, and (e) storage, treatment or disposal of any waste at or
connected with any activity at any Property.
6.1.30 There
is not any contamination on the Property, nor to the best of each Borrower’s
knowledge has there been any contamination on the Property. As used
in this Agreement, the term "contamination" shall mean the uncontained presence
of hazardous substances at the Property, or arising from the Property, which may
require remediation under any applicable law; and the term "hazardous
substances" shall mean "hazardous substances" or "contaminants" or "regulated
substances" as defined pursuant to any applicable Environmental Laws, if such
presence would require removal or remediation thereof under such Environmental
Law.
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6.1.31 Borrowers
(or either of them) do not know of any chemical, material or substance, exposure
to which is prohibited, limited or regulated by a federal, state or local
government agency, authority or body, or which, even if not so regulated, to the
best of each Borrower’s knowledge after due investigation, may or could pose a
hazard to health and safety of the occupants of the Property or the owners or
occupants of property adjacent to or in the vicinity of the
Property.
6.1.32 Borrowers
(or either of them) do not know of any investigation of any Property for the
presence of radon or radon gas or the presence of the radioactive decay products
or radon.
6.1.33 No
tanks presently or formerly used for the storage of any liquid or gas above or
below ground are present on any Property.
6.2 Solvency. Each
Borrower has sufficient capital, including the Loan contemplated hereunder, to
carry on all businesses and transactions in which it now engages or is about to
engage, is solvent and will continue to be solvent after incurring the Loan and
creating security interests of Lender in the Collateral.
6.3 Investment
Company. Each Borrower is not an "investment company," or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
6.4 Survival. All
of the representations and warranties set forth in Paragraph 6.1 shall survive
the expiration or termination of this Agreement and the other Loan
Documents.
6.5 Names and addresses of
Borrowers.
6.5.1 The
addresses of all places of business of Borrowers and each trade name and trade
style utilized by each Borrower and the address related to each such name are as
set forth in the Perfection Certificate.
6.5.2 The
addresses where each Borrower keeps the Collateral and its books and Records
concerning the Collateral are as set forth in the Perfection
Certificate.
6.5.3 The
addresses at which Assets are located are as set forth in the Perfection
Certificate.
7. BORROWERS’
COVENANTS.
7.1 Affirmative
Covenants. Each Borrower and the Borrowers do hereby covenant
and agree with Lender that, so long as any of the Obligations remain
unsatisfied, they will:
7.1.1 Furnish
Lender:
(a) within twenty (20) days after
the close of each monthly accounting period in each fiscal year of each Borrower
and the Borrowers, a balance sheet and income statement of each Borrower and the
Borrowers as of the end of such monthly accounting period, prepared by the
Authorized Financial Officer of each Borrower and the Borrowers, all in
reasonable detail and subject to year-end adjustments, all prepared in
accordance with GAAP, together with such other financial statements prepared by
each Borrower and the Borrowers for management during such monthly
period;
(b) within forty-five (45) days
after the close of each quarterly accounting period in each fiscal year of each
Borrower and the Borrowers, consolidated and consolidating income statements and
balance sheets and statements of changes in financial position of each Borrower
and its Affiliates, if any, and the Borrowers, all as of the end of such
quarterly period, prepared by the Authorized Financial Officer of each Borrower,
all in reasonable detail, and prepared in accordance with GAAP;
(c) within ninety (90) days after the
close of each fiscal year of each Borrower and the Borrowers:
(i) Consolidated and
consolidating income statements and balance sheets of each Borrower, and its
Affiliates, if any, and the Borrowers all as of the end of such fiscal year;
and
(ii) Consolidated and consolidating
statement of stockholders’ equity and a statement of changes in financial
position; all in reasonable detail, including supporting schedules and comments,
such annual statements, to be reviewed by an independent certified
public accountant selected by each Borrower, and acceptable to
Lender, to have been prepared in accordance with
GAAP. Lender shall have the right, from time to time, to discuss each
Borrower’s financial affairs directly with each Borrower’s independent certified
accountants;
(d) contemporaneously with
each
(i) monthly and quarterly report
required by the foregoing paragraphs, a certificate of the Authorized Financial
Officer of each Borrower, and
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(ii) year-end financial report
required by the foregoing paragraphs, a certificate by an Authorized Financial
Officer of each Borrower, in each case stating that the signer of such
certificate has individually reviewed the provisions of this Agreement and that
a review of the activities of each Borrower during such monthly, quarterly or
yearly period, as the case may be, has been made by or under the supervision of
the signer of such certificate with a view to determining whether each
Borrower has kept, observed, performed and fulfilled all their
obligations under this Agreement, and that, to the best of his/her knowledge,
each Borrower has observed and performed each and every undertaking
contained in this Agreement and is not at the time in default in the observance
or performance of any of the terms and conditions hereof or, if each Borrower
shall be so in default, specifying all such defaults and events of which he/she
may have knowledge and the proposed cure of such defaults;
(e) at Lender’s request, copies
of all receipts, if available or other evidence of the payment, of United States
withholding, FICA and other applicable state and local payroll taxes, as such
payments are made, and copies of each quarterly, or as otherwise required by the
Internal Revenue Service, FICA and FUTA income tax withholding forms filed by
each Borrower, each Borrower, acknowledges that each Borrower is responsible for
the timely payment, when due, of all such taxes;
(f) within five (5) days
after the close of each calendar month, a Borrowing Base Certificate, an
accounts receivable and accounts payable aging and listing all as of the end of
the immediately preceding month in form satisfactory to Lender. All
agings submitted hereunder shall reflect an allocation to the corresponding
invoice(s) of any and all payments or credits (or any part thereof) received or
given by Borrowers (or either of them);
(g) within five (5) days
after the close of each calendar month, and at Lender’s reasonable request, in
form satisfactory to Lender, an Accounts reconciliation which sets forth,
together with such other information requested by Lender, a listing of all
miscellaneous debits and credits to Borrowers, Accounts, sufficient
in detail to enable Lender to reconcile the differences, if any, between the
balance of Borrowers, Accounts as shown on Lender's books and
Records, and the balance of such Accounts shown on Borrowers, books
and Records. Upon receipt of such reconciliation, the value of
Borrowers, Accounts on Lender's Records shall be adjusted as
appropriate and shall be reflected by Borrowers in the next Borrowing
Base submitted by Borrowers to Lender hereunder;
(h) within five (5) days
after the close of each calendar month, and at Lender’s reasonable request, an
update and list of all changes to the master address list of each Borrower’s
Account Debtors;
(i) at Lender's request, all
Shipping Documents evidencing the shipment of Goods which gave rise to the
Accounts, completion certificates or other proof of the satisfactory performance
of services that gave rise to an Account, and each Borrower’s copy of any
written order or contract that gave rise to the Account;
(j) weekly, on or before
Tuesday of each week for the calendar week ending on the Friday of the
immediately preceding week, a Borrowing Base Certificate of
Borrowers.;
(k) at Lender’s
request, Borrowers shall submit copies of the invoices for each
Account of Borrowers and sales journals or such other Records
acceptable to Lender.;
(m) within ten (10) days
after filing, copies of the federal income tax returns filed (together with all
schedules) or extensions requested by each Borrower ; and
(n) such additional financial
information regarding each Borrower and the Borrowers and
its operations and financial condition as Lender may, from time to time,
reasonably require;
7.1.2 Cause
Surety, if any, to furnish to Lender:
(a) not later than ninety (90) days
after the close of each calendar year, financial statements of Surety, in form
and content acceptable to Lender;
(b) within 10 days of filing, copies of
Surety’s federal tax returns (together with all schedules) or extensions
requested by Surety; and
(c) such other financial information
regarding Surety as Lender may, from time to time, require;
7.1.3 Maintain
the Collateral and its other properties in good condition and repair (normal
wear and tear excepted) and will pay and discharge or cause to be paid and
discharged when due the costs of repairs to or maintenance of the same and will
pay or cause to be paid, all rental or mortgage payments due on the real estate
owned or leased by Borrowers (or either of them). Borrowers (or either of them)
hereby agree that in the event Borrowers (or either of them) fail to pay or
cause to be paid any such payment, Lender may do so and be immediately
reimbursed by Borrowers (or either of them) therefor;
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7.1.4 Maintain
or cause to be maintained, take out, pay for and keep in effect or cause to be
taken out, paid for, and kept in effect, so long as the Obligations remain
unsatisfied, such insurance against risks, including without limitation,
commercial general liability and property damage, business interruption, fire
and extended coverage with respect to the Collateral owned by Borrowers (or
either of them) (to the extent of its full insurable replacement value),
vandalism and malicious mischief and sprinkler leakage coverage and coverage
against such other hazards, as are customarily insured against by companies in
the same or similar business, and such other hazards as Lender may, from time to
time reasonably require, including flood hazard to the extent any Property is
located in an area designated or identified as an area having specified flood
hazards, all in amounts and with such insurance carriers as may be satisfactory
to Lender, and will deliver to Lender, upon their issuance, insurance policies
for all insurance then in force. All renewal and substitute policies
of insurance shall be delivered to Lender, premium paid, at least fifteen (15)
days prior to the termination of the policies previously delivered to
Lender. All such insurance policies will name Lender as loss payee
and/or additional insured, as required by Lender, and contain a provision
whereby they may not be canceled or amended except upon thirty (30) days written
notice to Lender and shall be endorsed with a standard mortgagee or loss payee
clause, as applicable, in favor of Lender and not subject to
contribution. Borrowers (or either of them) shall cause all hazard
insurance policies and any policies insuring the Collateral covered by this
Agreement to provide, and the insurers issuing such policies to certify to
Lender, that:
(a) the interest of Lender shall
be insured regardless of any warranties, declarations and conditions contained
in such policies;
(b) if such insurance be proposed to be
canceled or materially changed for any reason whatsoever, such insurer will
promptly notify Lender and such cancellation or change shall not be effective as
to Lender for thirty (30) days after receipt by Lender of such notice, unless
the effect of such change is to extend or increase coverage under the
policy;
(c) Lender will have the right at its
election to remedy any default in the payment of premiums within thirty (30)
days of notice from the insurer of such default; and
(d) loss payments in each instance will
be payable to Lender as mortgagee or secured party, or otherwise as its interest
may appear. So long as there is no Event of Default,
Borrowers may apply such Proceeds toward the repair or replacement of
any Collateral of Borrowers that has been damaged or destroyed and in respect of
which the insurance Proceeds were payable. If the amount of the
casualty is less than $25,000, Borrowers may deal with the insurer directly to
make any claims. Upon the occurrence of an Event of a Default,
without limitation of the foregoing, such Proceeds may be applied at Lender’s
option in whole or in part toward (i) the repair or replacement of any
Collateral of Borrowers that has been damaged or destroyed and in respect of
which the insurance Proceeds were payable or (ii) the payment or prepayment of
the outstanding principal of any of the Obligations and interest accrued
thereon. From and after the occurrence, and during the continuation
of an Event of Default, Borrowers hereby irrevocably appoint Lender as their
agent to sign and endorse any and all checks, drafts or other instruments
payable to Borrowers representing insurance Proceeds, and to satisfy any and all
claims in connection therewith;
7.1.5 Pay
or cause to be paid when due, all taxes, assessments and charges or levies
imposed upon them or on any of their property or which they are required to
withhold and pay over, except where contested in good faith by appropriate
proceedings with adequate reserves therefor having been set aside on their
books; but Borrowers shall pay or cause to be paid all such taxes, assessments,
charges or levies forthwith whenever foreclosure on any lien that attaches (or
security therefor) appears imminent;
7.1.6 To
the extent required by the Lender, maintain the Financial Ratios set forth in
Schedule 2
attached hereto and made part herof;
7.1.7 Collect
its Accounts only in the ordinary course of business;
7.1.8 Keep
accurate and complete in all material respects, books and Records relating to
Accounts, Inventory, receivables, other Collateral, and business affairs
consistent with sound accounting practices; keep complete and accurate Records
(including all books of original and final entry, computer programs, software,
stored material and data banks associated with or arising out of their business,
operations and/or record keeping) and make all necessary entries therein to
reflect the transactions and facts giving rise to Accounts, Chattel Paper,
Inventory, receivables and other Collateral, and all payments, debits, credits
and adjustments applicable thereto;
7.1.9 Give
prompt notice to Lender of:
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(a) any litigation in which Borrowers
(or either of them) is a party to the extent the liability of Borrowers (or
either of them) in respect of such litigation is reasonably expected to exceed
$10,000, and
(b) the institution of any other suit
or any administrative proceeding against Borrowers, or either of them that might
materially and adversely affect its individual operations, financial condition,
property or business; and
7.1.10 Maintain
financial records in accordance with GAAP and, upon reasonable notice by Lender,
permit any authorized representative designated by Lender to visit at reasonable
times and inspect any of the Properties of Borrowers (including, without
limitation, their books of account, Records, correspondence and other papers and
to make extracts therefrom) and to discuss its affairs, finances and accounts
with its officers and its independent certified public accountants or other
parties preparing statements for or on behalf of Borrowers;
7.1.11 Maintain
its corporate, partnership, limited liability company or other entity existence
in good standing; make no material change in the nature or character of its
business and not engage in any business which is materially different from the
business in which it is currently engaged; maintain and keep in full force and
effect all licenses and permits necessary to the proper conduct of its business;
and operate its business strictly in accordance with applicable federal, state
and local law;
7.1.12 Execute
such other and further documents, including, without limitation, indemnity
agreements, deeds of trust, security agreements, Pledge Agreements, Control
Agreements, assignments, financing statements, continuation statements and the
like as may, from time to time, in the reasonable opinion of Lender or Lender's
counsel, be necessary to perfect, confirm, establish, reestablish, continue or
complete Lender's security interest in the Collateral and the purposes and
intentions of this Agreement, it being the intention of Borrowers to provide
hereby a full and absolute warranty of further assurance to
Lender. If Borrowers (or either of them) fail to execute any such
documents within five (5) days of being reasonably requested to do so by Lender,
Borrowers (or either of them) hereby appoint Lender or any officer of Lender as
Borrowers’ attorney-in-fact for purposes of executing such documents in
Borrowers’ names, place and stead, which power of attorney shall be considered
to be coupled with an interest and irrevocable;
7.1.13 Notify
Lender immediately of the occurrence of any Event of Default hereunder, under
the agreements, documents or instruments, evidencing Loans by Lender to
Borrowers (or either of them) or of any fact, condition or event that only with
the giving of notice and/or passage of time, or both would become an Event of
Default, or of the failure of Borrowers (or either of them) to observe any of
its undertakings hereunder;
7.1.14 Notify
Lender ninety (90) days in advance of any change in the location of any of its
places of business or of the establishment of any new or the discontinuance of
any existing place of business and furnish to Lender any new or replacement
UCC-1 financing statements, duly signed by Borrowers (or either of them)
necessary to keep perfected Lender's security interest in the
Collateral;
7.1.15 Pay
when due (or within applicable grace periods) all Indebtedness due third
Persons, except when the amount thereof is being contested in good faith, by
appropriate proceedings and with adequate reserves therefor being set aside on
the books of Borrowers (or either of them). If default be made by
Borrowers (or either of them) in the payment of any principal (or installment
thereof) of, or interest on, any such Indebtedness, the Lender shall have the
right, in its discretion, to pay such interest or principal for the account of
Borrowers (or either of them) and be reimbursed by Borrowers (or either of them)
therefor;
7.1.16 Furnish,
or cause to be furnished to Lender, any information regarding Borrowers (or
either of them) or any Subsidiaries’ or Affiliates’ business affairs and
financial condition within a reasonable time after request
therefor;
7.1.17 Permit
Lender, its officers, employees, designees and agents to have access, to inspect
and audit, at any time and from time to time, without prior notice to Borrowers
(or either of them), during regular business hours, the Collateral without
hindrance or delay, such Collateral audits to be performed at the times
determined by Lender in its sole discretion;
7.1.18 Permit
Lender, its officers, employees, designees and agents, without hindrance or
delay, at such times as Lender deems reasonably appropriate and without prior
notice to Borrowers (or either of them) to have reasonable access during normal
business hours to, audit, inspect, and make copies of or extracts from all of
Borrowers’ books and Records including, without limitation, all journals,
orders, receipts and correspondence and any other books and Records pertaining
to Borrowers” business which Lender may request, wherever located;
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7.1.19 Cause
all persons, including computer service bureaus, bookkeeping services,
accountants, auditors and the like, to make all such books and Records in their
possession available to Lender, its officers, employees, designees and
agents. If deemed necessary by Lender, in Lender's sole discretion,
upon the occurrence of an Event of Default, Lender may remove them from any
Borrowers’ place of business or any other place where the same may be found for
the purposes of examining, auditing or reproducing the same. Any
books or Records so removed by Lender shall be returned by Lender as soon as
Lender shall have completed its inspection, audit or reproduction
thereof;
7.1.20 Take
all necessary steps to preserve its corporate, partnership, limited liability
company or other entity existence and franchises and comply with all present and
future Laws applicable to it in the operation of its business, and all material
agreements to which it is subject except those with respect to which the failure
to do so would not have a Material Adverse Effect on Borrowers (or either of
them);
7.1.21 Do
all acts and make all such filings as may be necessary to ensure that each
Borrower is duly qualified to do business in all jurisdictions in which the
conduct of its business or the ownership of its properties makes such
qualification necessary;
7.1.22 If
any Account is or becomes Chattel Paper and/or evidenced by a Promissory Note,
trade acceptance or any other Instrument for the payment of money, promptly
deliver such Chattel Paper and/or Instrument to Lender appropriately endorsed to
Lender's order. Regardless of the form of such endorsement, each
Borrower them) hereby waive presentment, demand, dishonor, notice of dishonor,
protest and notice of protest, and all other notices with respect
thereto;
7.1.23 Promptly
advise Lender whenever an Account Debtor refuses to accept delivery of any Goods
or services in an amount of not less than One Thousand ($1,000.00)
Dollars from the sale of which an Account arose and comply with any instructions
that Lender may give regarding the sale or other disposition of such
returns;
7.1.24 Immediately
notify Lender if any Account arises out of a contract with the United States or
any department, agency, or instrumentality thereof, and execute any documents or
instruments and take any steps required by Lender so that all monies due and to
become due under such Accounts or Contracts shall be assigned to Lender and
notice thereof given to the government under the Federal Assignment of Claims
Act;
7.1.25 Promptly
notify Lender in writing of any agreement (express or implied) under which any
terms of sale (written or oral) differ from original terms or normal operating
procedures that may have been or will be granted;
7.1.26 When
requested by Lender from time to time, give Lender specific assignments and
schedules of Accounts after they come into existence, the form and content of
such assignments and schedules to be satisfactory to Lender;
7.1.27 Xxxx
its books and Records concerning Collateral in a manner reasonably satisfactory
to Lender to show Lender's security interest therein; and at Lender's request,
upon the occurrence of an Event of Default, notify all shippers, agents,
landlords, processors or others in possession of Inventory, and instruct them to
hold such Inventory for Lender's account and subject to Lender's
instructions;
7.1.28 Instruct each
Borrower’s outside computer service company and accountants that Lender is
irrevocably empowered to have full access to and to have printouts and all
information respecting each Borrower’s financial records maintained by each
Borrower’s outside computer service company and/or accountants respecting any
and all financial Records now or hereafter maintained by the same on account of
each Borrower or the Borrowers at each Borrower’s expense and Lender
will notify Borrowers (or either of them) of any such contact;
7.1.29 Promptly
notify Lender of the occurrence or discovery of any event which would cause or
has caused all or any part of a previously Eligible Account or Eligible
Inventory to become ineligible;
7.1.30 Execute
and deliver to Lender any instrument, document, assignment or other writing
which Lender deems necessary or desirable to carry out the terms of this
Agreement or to enable Lender to perfect or enforce its Liens and security
interests in the Collateral;
7.1.31 Pay
Lender on demand the cost of collection or enforcement, including reasonable
attorney's fees, of all Accounts or other Collateral, if Lender undertakes such
collection or enforcement together with all taxes, charges and expenses of any
nature paid or incurred by Lender under or with respect to Loans hereunder or
any of the Collateral therefor, or Lender may charge any bank account of
Borrowers (or either of them) of any nature for such amounts;
7.1.32 Not
Used;
7.1.33 Enter
into a Subordination Agreement with Lender and such other Person(s), as
applicable, who have made loans to Borrowers (or either of them) to provide that
the loan payable to any such Person and any collateral security therefor will be
subordinated to Lender on such terms and conditions acceptable to
Lender;
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7.1.34 Indemnify
and agree to protect, defend and hold harmless Lender, any entity which
"controls" Lender, within the meaning of Section 15 of the Securities Act of
1933, as amended, or is under common control with Lender and any member,
partner, officer, director, official, agent, employee or attorney of Lender, and
their respective heirs, administrators, executors, successors and assigns
(collectively, the "Indemnified Parties"), from and against any and all losses,
damages, expenses or liabilities of any kind or nature and from any suits,
claims or demands, including reasonable attorneys’ fees incurred in defending
such claim, suffered by any of them and caused by, relating to, arising out of,
resulting from, or in any way connected with this Agreement, the Loan Documents
or the transactions contemplated herein and therein (unless determined by a
final judgment of a court of competent jurisdiction to have been caused by the
gross negligence or willful misconduct of the Indemnified Parties), including,
without limitation,
(a) losses, damages (including
consequential damages payable to third parties), expenses or liabilities
sustained by Lender in connection with any environmental inspection, monitoring,
sampling or cleanup of any real estate or other Collateral owned or operated by
Borrowers (or either of them), required or mandated by any applicable
environmental law;
(b) any untrue statement of a material
fact contained in information submitted to Lender by Borrowers (or either of
them) or the omission of any material fact necessary to be stated therein in
order to make such statement not misleading or incomplete;
(c) the failure of Borrowers (or
either of them) to perform any undertakings or obligations herein required to be
performed by Borrowers (or either of them) ; and
(d) the ownership, occupancy,
operation, use or maintenance of any Property or Collateral;
(e) any breach of any covenant,
warranty, representation or other provision of this Agreement or the Loan
Documents;
(f) any sale, lease, encumbrance
or other disposition of any of the Collateral, as that term is defined
herein;
(g) any alleged violation of any
Law, regulation or ordinance by Borrowers (or either of them) in connection with
this Agreement or any other agreement or instrument with Borrowers (or either of
them);
(h) any personal injury or property
damage alleged to have been suffered in connection with the ownership, use,
possession, sale, lease or other disposition of any Collateral; or
(i) any claim by any person arising out
of each Borrower’s or the Borrowers’ breach of warranty or failure to perform
any of each Borrower’s or the Borrowers’, obligations under any contract
regarding the use, sale, lease or other disposition of any
Collateral. Borrowers further agree to reimburse Lender for all
reasonable counsel fees and costs expended or incurred by Lender in connection
with the foregoing. This indemnification shall survive, for the
period of the applicable statute of limitations, the termination of this
Agreement.
7.1.35 In
case any action shall be brought against Lender or any other Indemnified Party
in respect to which indemnity may be sought against the Borrowers (or either of
them), Lender or such other Indemnified Party shall promptly notify Borrowers
(or either of them) and Borrowers (or either of them) shall assume the defense
thereof, including the employment of counsel selected by Borrowers (or either of
them) and satisfactory to Lender, the payment of all reasonable costs and
expenses and the right to negotiate and consent to settlement. The
failure of Lender to so notify Borrowers (or either of them) shall not relieve
Borrowers (or either of them) of any liability they may have under the foregoing
indemnification provisions from any liability which Borrowers (or either of
them) may otherwise have to Lender, or any of the other Indemnified Parties,
except to the extent materially prejudiced by such delay or failure of
notice. In the event that Borrowers (or either of them) shall not be
proceeding diligently to defend such claim, Lender shall have the right, at its
sole option, to employ separate counsel in any such action and to participate in
the defense thereof, all at Borrowers’, or either of them, sole cost and
expense. Borrowers (or either of them) shall not be liable for any
settlement of any such action effected without the applicable Person’s consent
(unless Borrowers (or either of them) fail to defend such claim), but if settled
with Borrowers’, or either of them, consent, or if there be a final judgment for
the claimant in any such action, Borrowers (or either of them) agree to
indemnify and save harmless Lender from and against any loss or liability by
reason of such settlement or judgment;
7.1.36 Immediately
notify Lender should any circumstances arise that might lead to imposition of a
Lien pursuant to any Environmental Law, as such statutes may be amended from
time to time and take such actions as may be necessary to prevent such Lien from
attaching to any of the Collateral;
7.1.37 Obtain
all Permits required to be obtained from any Governmental Authority under any
law, rule or regulation, including any Environmental Law, shall maintain all
Permits required to be maintained under any such laws, rules or regulations, and
shall immediately notify Lender of the Borrower’s or each Borrower’s failure to
obtain or maintain any Permit required to be obtained or maintained under any
such laws, rules or regulations;
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7.1.38 Upon
an Event of Default, grant Lender an irrevocable and exclusive, worldwide,
royalty free license to use in any manner and for any purpose all of the
Intellectual Property;
7.2 Negative
Covenants. Without the prior written consent of Lender, each
Borrower or the Borrowers shall not:
7.2.1 Change
its name, its place of business, or, if more than one, chief executive office or
its mailing address, organizational identification number, if it has one; change
its type of organization, jurisdiction of organization or other legal structure
or enter into any merger, consolidation, reorganization or
recapitalization;
7.2.2 Create,
incur or assume or permit to exist any liability for borrowed money or lease
except for borrowings from Lender, the existing Indebtedness set forth on Schedule 4 and
purchase money loans or leases incurred to purchase or lease Equipment used in
the ordinary course of each Borrower or the Borrowers’ business provided
that;
(a) any Liens created to secure such
Debt shall be created within 6 months of the acquisition or lease of the related
asset;
(b) such Liens do not at any time
encumber any property other than the property financed by such Debt
(c) the amount of Debt secured
thereby is not increased; and
(d) the principal amount of Debt
secured by any such Lien shall at no time exceed one hundred percent (100%) of
the original purchase price or lease payment amount of such property at the time
it was acquired;
7.2.3 Wind
up, liquidate or dissolve its affairs, enter into any merger, consolidation,
reorganization or recapitalization, reclassify its capital stock or make any
change to its formation documents;
7.2.4 Sell,
transfer, assign, lease or otherwise dispose of all or (except in the ordinary
course of business) any material part of its Assets, nor permit the transfer of
any Collateral or Property or any interest of Borrowers (or either of them)
therein;
7.2.5 Factor
any of its Accounts, nor grant, create, incur or permit to exist any mortgage,
pledge, a security interest in or Lien upon, or for any other purpose assign or
transfer, either absolutely or as collateral security, any of the Collateral
except in favor of Lender;
7.2.6 Notify
any Account Debtor to make payment except to the Lock Box, or request an Account
Debtor to withhold or stop any payment otherwise directed by
Lender;
7.2.7 Become
liable, directly or indirectly, as guarantor, surety, endorser or otherwise for
any obligation of any other person, firm, or corporation except for endorsement
of commercial paper for deposit or collection in the ordinary course of
business;
7.2.8 Declare
or pay any dividends, return any capital to any of its stockholders, partners,
members or other principals, authorize or make any distribution, payment or
delivery of property or cash to its Affiliates, parent or related entities,
stockholders, partners, members or other principals, or make any other payment
or distribution on account of its stock or other ownership interest in cash or
in equity except to the extent necessary to pay the income taxes payable by the
shareholders, partners or members of each Borrower o if such Borrower
is a Subchapter S Corporation, partnership or limited liability
company;
7.2.9 Make
any loan or advance to any Affiliate, parent or related entity, officer,
shareholder, member, partner, director or employee of each Borrower, except for
temporary advances in the ordinary course of business;
7.2.10 Purchase
or otherwise invest in or hold securities, non-operating real estate or other
non-operating Assets, in excess of $20,000 in the aggregate except:
(a) direct obligations of the United
States of America;
(b) the present investment in any such
Assets;
(c) operating Assets that hereafter
become non-operating Assets; and
(d) investment in bank certificates of
deposit at banks subject to a Control Agreement;
7.2.11 Issue,
redeem, purchase or retire any of its stock, partnership interests, limited
liability company interests, or other ownership interests, or grant or issue any
warrant, right or option pertaining thereto or other security exercisable or
convertible into any of the foregoing.
7.2.12 Enter
into any new agreement to rent or lease any real or personal property or enter
into any arrangement with any bank, insurance company or other lender or
investor providing for the leasing of any real or personal property or
equipment
(a) which has been or is sold or
transferred by Borrowers (or either of them) to such lender or investor
or
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(b) which has been or is being acquired
from another Person by such lender or investor or
(c) on which one or more buildings have
been or are to be constructed by such lender or investor, for the purpose of
leasing such property to Borrowers (or either of them);
7.2.13 Make
or furnish Lender any financial statement, representation, warranty, certificate
or other document, statement or information that will contain any untrue,
incorrect or incomplete statement of material fact or that will omit to state a
material fact necessary to make it not misleading in light of the circumstances
under which it was furnished;
7.2.14 Directly
or indirectly apply any part of the proceeds of the Loan to the purchasing or
carrying of any "margin stock" within the meaning of Regulation G, T, X or U of
the Board of Governors of the Federal Reserve System, or any regulations,
interpretations or rulings thereunder;
7.2.15 Prepay
any Subordinated Indebtedness, Indebtedness for borrowed money, or Indebtedness
secured by any of its Assets (except the Obligations) or enter into or modify
any agreement as a result of which the terms of payment of any of the foregoing
Indebtedness are waived or modified, or otherwise satisfy a Debt, in whole or in
part, except as permitted in or under the Loan Documents,
7.2.16 Enter
into a sale-leaseback or synthetic lease transaction;
7.2.17 Acquire
a controlling interest of any stock of, membership or partnership interest in,
or all or substantially all of the Assets of, any Person;
7.2.18 Change
its fiscal year;
7.2.19 Assign
or attempt to assign this Agreement or any other Loan Document or any of its
rights, duties or obligations hereunder or thereunder; or.
7.2.20 Store,
locate, move or relocate all or any portion of the Collateral or the Records
related thereto in or to any other location except upon thirty (30) days prior
written notice to Lender.
8. DEFAULT.
8.1 Events of
Default. The occurrence of any one or more of the
following events shall constitute an “Event of Default” hereunder:
8.1.1 Any
Obligor shall fail to pay when due, any installment of principal or interest or
fee payable hereunder or any Obligation when it is due;
8.1.2 Any
Obligor shall fail to observe or perform any other obligation or covenant
required to be observed or performed by it hereunder, under any of the Loan
Documents within five (5) business days of notice of such failure to observe or
perform such obligation or covenant, or under any other agreement between any
Obligor and Lender or the occurrence of an Event of Default under any other
agreement between any Obligor and Lender;
8.1.3 Any
Obligor shall:
(a) fail to pay any Indebtedness due
any third Person and such failure is not cured prior to any acceleration of such
Indebtedness by the applicable creditors, whichever is earlier, or the exercise
of any remedies permitted under any of the documents evidencing such
Indebtedness, unless indebtedness is the subject of a bona fide dispute;
or
(b) any Obligor shall suffer to exist
any event of default under any agreement binding upon any Obligor,
provided that the failure of any Individual Surety to pay any non-material
consumer debt shall not constitute an Event of Default hereunder, provided
further that Obligor shall be entitled to fail to pay Indebtedness which is the
subject of a bona fide dispute between such Obligor and the creditor thereof
which is being prosecuted diligently by such Obligor;
8.1.4 Any
Obligor shall make or furnish to Lender any representation, warranty, statement
or certificate in connection with this Agreement, the Loan Documents or the
Obligations which is not true and correct in all material respects when made or
furnished, or shall be false, incorrect or incomplete when made or shall have
breached any Affirmative or Negative Covenant hereunder;
8.1.5 Any
Obligor shall admit its inability to pay its debts as they mature, or shall make
an assignment for the benefit of its creditors;
8.1.6 Proceedings
in bankruptcy, or for reorganization of any Obligor, or for the readjustment of
any of its debts under Bankruptcy Code, as amended, or any part thereof, or
under any other laws, whether state or federal, for the relief of debtors, now
or hereafter existing, shall be commenced by or against any Obligor and, if
commenced against any Obligor, shall not be discharged within thirty (30) days
of their commencement;
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8.1.7 A
receiver or trustee shall be appointed for any Obligor or for any substantial
part of its Assets, or any proceedings shall be instituted for the dissolution
or the full or partial liquidation of any Obligor, and such receiver or trustee
shall not be discharged within thirty (30) days of its appointment, or any
Obligor shall discontinue business or materially change the nature of its
business;
8.1.8 The
entry of any judgment against any Obligor which, if adversely decided, would
have a Material Adverse Effect, which remains unsatisfied for thirty (30) days
unless being contested by Obligor in good faith with appropriate proceedings and
with execution stayed; or a judgment creditor of any Obligor shall obtain
possession of any of the Collateral by any means, including, but without
limitation, levy, distraint, replevin or self-help;
8.1.9 Any
Governmental Authority or instrumentality seizes, appropriates, condemns or
occupies all or a substantial part of the Properties of any Obligor or
interferes in any substantial manner with the operation of the business of any
Obligor;
8.1.10 Any
Plan is terminated within the meaning of Title IV of ERISA, or a trustee is
appointed by the appropriate United States District Court to administer any
Plan, or the Pension Benefit Guaranty Corporation, or any successor thereto,
institutes proceedings to terminate any Plan or to appoint a trustee to
administer any Plan, or any Reportable Event or COBRA Violation occurs which
Lender determines in good faith indicates a substantial likelihood that an event
described above will occur;
8.1.11 If,
in Lender’s judgment, the value of the Collateral so substantially deteriorates
or diminishes that Lender reasonably deems the Obligations to be inadequately
secured, and Obligor neither reduces the amount of the Obligations, nor provides
additional Collateral;
8.1.12 Any
obligee of Subordinated Indebtedness fails to comply with the subordination
provisions of the instrument evidencing Subordinated Indebtedness or any
Subordination Agreement referred to in this Agreement;
8.1.13 The
validity or enforceability of this Agreement, the Revolving Loan Note or any of
the Loan Documents, shall be contested by any Obligor or any Obligor shall deny
that it has any or further liability or obligation hereunder or
therewith;
8.1.14 The
occurrence of any Material Adverse Change in the financial condition of any
Obligor;
8.1.15 A
Change in Control of Borrowers (or either of them).
8.2 Acceleration. Immediately
and without notice upon the occurrence and during the continuation of any Event
of Default, all Obligations, whether hereunder or otherwise, shall immediately
become due and payable without further action of any kind; and, notwithstanding
any outstanding commitment of Lender to Borrowers (or either of them) to make
additional and further Loans to Borrowers (or either of them), upon the
occurrence of any Event of Default, any such commitment shall immediately become
null and void and of no force and effect whatsoever.
8.3 Remedies.
8.3.1 After
any acceleration due to an Event of Default, interest on the principal balance
of the Obligations outstanding from time to time shall accrue and is payable at
the interest rate set forth in Schedule 2 attached
hereto plus five percent 5%) per annum from the date of such acceleration until
all such Obligations are satisfied in full and whether or not any judgment is
entered hereon (the sum of both rates, the "Default Rate"). In
addition to the rights and remedies given it by this Agreement and the Loan
Documents, Lender shall have all those allowed by all applicable laws,
including, but without limitation, the Uniform Commercial Code as enacted in any
jurisdiction in which any Collateral may be located and Lender may enforce such
rights and pursue such remedies without demand of performance and without other
notice. Without limiting the generality of the foregoing, Lender may
immediately, without demand of performance and without other notice (except as
specifically required by this Agreement or the Loan Documents) or demand
whatsoever to any Obligor, all of which are hereby expressly waived, and without
advertisement, take possession of the Collateral, exercise the Warrant of
Attorney contained in Section 9.17 herein, retain all of each Borrower’s
Records, sell at public or private sale or otherwise realize upon in
Pennsylvania, or elsewhere, the whole or, from time to time, any part of the
Collateral or any interest which any Obligor may have therein. After
deducting from the Proceeds of sale or other disposition of the Collateral all
expenses (including all expenses for legal services), Lender shall apply such
Proceeds toward the satisfaction of the Obligations. Any remainder of
the Proceeds after satisfaction in full of the Obligations shall be distributed
as required by applicable Laws. Notice of any sale or other
disposition shall be given to Borrowers (or either of them) at least ten (10)
days before the time of any intended public sale or of the time after which any
intended private sale or other disposition of the Collateral is to be made,
which Borrowers hereby agree shall be reasonable notice of such sale or other
disposition. Borrowers (or either of them) agree to assemble, or to
cause to be assembled at its expense, the Collateral at such place or places, as
Lender shall designate. At any such sale or other disposition, Lender
may, to the extent permissible under applicable laws, purchase the whole or any
part of the Collateral, free from any right of redemption on the part of any
Obligor, which right is hereby waived and released. Without limiting
the generality of any of the rights and remedies conferred upon Lender under
this paragraph, Lender may, to the full extent permitted by applicable
Laws:
Page 20
of 38
(a) enter upon the premises of
Borrowers, exclude therefrom Borrowers or any Affiliate thereof, and take
immediate possession of the Collateral, either personally or by means of a
receiver appointed by a court of competent jurisdiction, using all necessary
force to do so;
(b) at Lender's option, use,
operate, manage and control the Collateral in any lawful manner;
(c) collect and receive all
rents, income, revenue, earnings, issues and profits therefrom; and
(d) maintain, repair, renovate,
alter or remove the Collateral as Lender may determine in its
discretion.
8.3.2 To
the extent that applicable law imposes duties on Lender to exercise remedies in
a commercially reasonable manner, each Borrower acknowledges and agrees that it
is not commercially unreasonable for Lender
(a) to fail to incur expenses
reasonably deemed significant by Lender to prepare Collateral for disposition or
otherwise to complete raw material or work in process into finished goods or
other finished products for disposition,
(b) 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,
(c) to fail to exercise
collection remedies against Account Debtors or other Persons obligated on
Collateral or to remove Liens on or any adverse claims against
Collateral,
(d) to exercise collection remedies
against Account Debtors and other persons obligated on Collateral directly or
through the use of collection agencies and other collection
specialists,
(e) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature,
(f) to contact other Persons,
whether or not in the same business as each Borrower for expressions of interest
in acquiring all or any portion of the Collateral,
(g) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the
Collateral is of a specialized nature,
(h) to dispose of Collateral by
private sale or by utilizing Internet sites that provide for the auction of
assets of the types included in the Collateral or that have the
reasonable capability of doing so, or that match buyers and sellers of
assets,
(i) to dispose of assets in
wholesale rather than retail markets,
(j) to disclaim disposition
warranties,
(k) to purchase insurance or
credit enhancements to insure Lender against risks of loss, collection or
disposition of Collateral or to provide to Lender a guaranteed return from the
collection or disposition of Collateral, or
(l) to the extent deemed
appropriate by Lender, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Lender in the collection
or disposition of any of the Collateral.
Each
Borrower acknowledges that the purpose of this Paragraph 8.3.2 is to provide
non-exhaustive indications of what actions or omissions by Lender would not be
commercially unreasonable in Lender's exercise of remedies against the
Collateral and that other actions or omissions by Lender shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Paragraph 8.3.2. Without limitation upon the foregoing, nothing contained in
this Paragraph 8.3.2 shall be construed to grant any rights to the Borrowers (or
either of them) or to impose any duties on Lender that would not have been
granted or imposed by this Agreement or by applicable law in the absence of this
Paragraph 8.3.2.
Page 21
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9. MISCELLANEOUS.
9.1 Construction. The
provisions of this Agreement shall be in addition to those of any guaranty,
surety, hypothecation, pledge or security agreement, note, or other evidence of
liability held by Lender, and any other agreement between Borrowers (or either
of them) and any entity constituent of Borrowers (or either of them) as
guarantor or otherwise, and Lender, all of which shall be construed as
complementary to each other. Nothing herein contained shall prevent
Lender from enforcing any or all other notes, guaranty, surety, hypothecation,
pledge or security agreements in accordance with their respective
terms. The parties acknowledge that any and all Accounts assigned or
transferred to Lender or in which Lender is granted a security interest
hereunder have been assigned, and transferred to Lender, and Lender was granted
a security interest therein, as security for Lender's Loan and advances
hereunder, and each Borrower and the Borrowers’ Obligations, and are not and
have not been, in fact, sold to Lender regardless of whether any assignment
thereof, which is or may be separate from this Agreement, is
absolute.
9.2 Term of
Agreement. This Agreement shall terminate after payment in
full of the Revolving Loan Note and the discharge of all obligations and
undertakings of each Borrower and the Borrowers to Lender, whether arising
hereunder or otherwise. Lender’s agreement hereunder to make the
Loans shall terminate on the earliest of:
(a) the occurrence of an Event of
Default;
(b) the Revolving Credit Termination
Date; or
(c) on the date specified in the
notice given by Lender pursuant to this Agreement (including pursuant to the
provisions of Section 2.1.1 hereof); provided that certain agreements of
Borrowers (or either of them) hereunder shall continue in full force
and effect beyond the Revolving Credit Termination Date or other termination
hereof. In addition, the renewal of the Revolving Credit shall be
subject to annual review by Lender in its sole discretion.
9.2.1 On
the Revolving Credit Termination Date, all of the Obligations shall be
immediately due and payable. The termination of this Agreement shall
not affect the rights, liabilities and obligations of the parties with respect
to the Obligations as of the date of termination, or the Collateral which
secures and is to secure the Obligations, which Collateral shall remain subject
to the liens and security interests granted hereunder until all of the
Obligations are satisfied in full. The failure of Lender to enforce
any of the terms and provisions hereof or failure to declare default hereunder
shall apply only in a particular instance, and shall not operate as a continuing
waiver.
9.3 Accounting
Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP, except as otherwise stated
herein.
9.4 Stamp or Excise
Tax. Should any stamp or excise tax be payable in respect of
this Agreement, the Revolving Loan Note and other documents to be delivered
hereunder, or any modification hereof or thereof, Borrowers (or either of them)
shall pay the same and shall hold Lender harmless from any and all liabilities
with respect to or resulting from any delay in paying or any failure to pay such
taxes.
9.5 Further
Assurance. From time to time, Borrowers (or either of them)
will execute and deliver to Lender such additional documents and will provide
such additional information as Lender may reasonably require to carry out the
terms of this Agreement and be informed of Borrowers (or either of them)’s
status and affairs.
9.6 Enforcement and Waiver by
Lender. Lender shall have the right at all times to enforce
the provisions of this Agreement and the Loan Documents in strict accordance
with the terms hereof and thereof, notwithstanding any conduct or custom on the
part of Lender in refraining from so doing at any time or times. The
failure of Lender at any time or times to enforce its rights under such
provisions strictly in accordance with the same shall not be construed as having
created a custom in any way or manner contrary to specific provisions of this
Agreement or as having in any way or manner modified or waived the
same. All rights and remedies of Lender are cumulative and the
occurrence and the exercise of one right or remedy shall not be deemed a waiver
or release of any other right or remedy.
9.7 Expenses of
Lender. Borrowers (or either of them) will pay all expenses
including the fees and expenses of legal counsel for Lender, incurred in
connection with the administration, amendment, modification or enforcement of
this Agreement and the Loan Documents and the collection or attempted collection
of the Obligations, the Revolving Loan Note and the Collateral.
9.8 Notice. Any
notices or consents required or permitted by this Agreement shall be in writing
and shall be delivered in person or sent by first class or certified mail,
return receipt requested, postage prepaid, by reputable overnight carrier, or by
fax, as follows, unless such address is changed by written notice
hereunder:
Page 22
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If to
Borrowers:
WLG (USA)
LLC and World Commerce Services, L.L.C.
000 Xxxx
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxx, Chief Executive Officer
Facsimile:
000-000-0000
If to
Lender:
NOVA
Business Credit, a division of NOVA Bank
0000
Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Attn:
Xxxxx X. Xxxxxxxxxxx, Vice President
Facsimile: 000-000-0000
9.8.1 Notices
shall be deemed to have been received if hand delivered, when delivered, if sent
by certified mail or first class mail, three (3) calendar days after the date
deposited in the United States Mail, if by overnight courier, on the date
scheduled for delivery, and if by fax, when transmitted. Any party
may change the name and address of the person to whom notices hereunder are to
be sent by giving notice to such other party as specified
hereunder.
9.9
Waiver and Release by
Borrowers . To the maximum extent permitted by applicable
Laws, each Borrower and the Borrowers waive protest of all commercial
paper at any time held by Lender on which each Borrower or the Borrowers is in
any way liable and notice after acceleration in the manner herein provided
before exercise by Lender of the remedies of self-help, set-off, or of other
summary procedures permitted by any applicable laws, or by any agreement with
each Borrower or the Borrowers, and, except where required hereby or by any
applicable laws, notice of any other action taken by Lender; and release Lender
and its officers, attorneys, agents and employees from any and all claims for
loss or damages caused by any act or omission on the part of any of them except
willful misconduct.
9.10 Applicable
Law. The internal laws of the Commonwealth of Pennsylvania
shall govern the construction of this Agreement, the Loan Documents and the
rights and remedies of the parties hereto, without regard to its conflict of
laws principles.
9.11 Consent to Jurisdiction,
Service and Venue. For the purpose of any suit, action or
proceeding arising out of or relating to this Agreement, the Revolving Loan Note
or the Loan Documents, each Borrower hereby irrevocably consent and submit to
the jurisdiction and venue of any of the Courts of the Commonwealth of
Pennsylvania or any Federal court located in the Eastern District of
Pennsylvania including, without limitation, the Court of Common Pleas of
Xxxxxxxxxx County and the United States District Court for the Eastern District
of Pennsylvania, regardless of the convenience of such forum, and each
Borrower further agree and consent to accept and acknowledge all
service of process carried out by means of registered mail, return receipt
requested in connection with any such matter. The provisions of this
Section shall not limit or otherwise affect the right of Lender to institute and
conduct action in any other appropriate manner, jurisdiction or court. Each
Borrower and the Borrowers hereby acknowledge and agree that this Agreement has
been negotiated, executed and delivered by the parties hereto, and the
transactions described herein have been consummated, exclusively within the
Commonwealth of Pennsylvania.
9.12 Binding Effect, Assignment
and Entire Agreement. This Agreement shall inure to the
benefit of and shall be binding upon the respective successors and permitted
assigns of the parties hereto. Borrowers (or either of them) do not
have any right to assign any of their rights or obligations hereunder without
the prior written consent of Lender; provided, however, that Lender
shall be permitted to assign all of its rights, privileges and obligations
hereunder at any time. This Agreement and the Loan Documents executed
and delivered pursuant hereto, constitute the entire agreement between the
parties and may be amended only by a writing signed on behalf of each
party.
9.13 Severability. If
any provision of this Agreement shall be held invalid under any applicable Laws,
such invalidity shall not affect any other provision of this Agreement that can
be given effect without the invalid provision, and to this end, the provisions
hereof are severable.
9.14 Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute but one and
the same instrument.
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9.15 Seal. This
Agreement is intended to take effect as an instrument under seal.
9.16 Time of the
Essence. Time is of the essence in this
Agreement.
9.17 WARRANT
OF ATTORNEY.
THE
FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR ANY ATTORNEY TO
CONFESS JUDGMENT AGAINST BORROWERS (OR EITHER OF THEM). IN GRANTING
THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST BORROWERS (OR EITHER OF
THEM) EACH BORROWER FOLLOWING CONSULTATION WITH SEPARATE COUNSEL FOR EACH
BORROWER AND WITH KNOWLEDGE OF THE LEGAL EFFECT HEREOF, HEREBY KNOWINGLY,
INTENTIONALLY, VOLUNTARILY AND UNCONDITIONALLY WAIVE ANY AND ALL RIGHTS
BORROWERS (OR EITHER OF THEM HAVE OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY
FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES OF
AMERICA, THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE. IT IS
SPECIFICALLY ACKNOWLEDGED BY THE UNDERSIGNED THAT LENDER HAS RELIED ON THIS
WARRANT OF ATTORNEY IN ENTERING INTO THIS AGREEMENT AND AS AN INDUCEMENT TO
GRANT FINANCIAL ACCOMMODATIONS TO BORROWERS (OR EITHER OF THEM) .
EACH
BORROWER AND THE BORROWERS HEREBY IRREVOCABLY AUTHORIZE AND EMPOWER ANY ATTORNEY
OR ANY CLERK OF ANY COURT OF RECORD, TO APPEAR FOR AND CONFESS JUDGMENT AGAINST
BORROWERS (OR EITHER OF THEM: (A) FOR SUCH SUMS AS ARE DUE AND/OR MAY BECOME DUE
ON THE OBLIGATIONS EVIDENCED BY THIS AGREEMENT, AND/OR (B) IN ANY ACTION OF
REPLEVIN INSTITUTED BY LENDER TO OBTAIN POSSESSION OF ANY COLLATERAL SECURING
THE NOTE OR SECURING ANY OF THE OBLIGATIONS, IN EITHER CASE WITH OR WITHOUT
DECLARATION, WITH COSTS OF SUIT, WITHOUT STAY OF EXECUTION AND WITH AN AMOUNT,
FOR LIEN PRIORITY PURPOSES, EQUAL TO THE AMOUNT OF SUCH JUDGMENT, PLUS
ATTORNEYS’ COLLECTION FEES. TO THE EXTENT PERMITTED BY LAW, OBLIGORS:
(1) WAIVE THE RIGHT OF INQUISITION ON ANY REAL ESTATE LEVIED ON, VOLUNTARILY
CONDEMN THE SAME, AUTHORIZE THE PROTHONOTARY OR CLERK TO ENTER UPON THE WRIT OF
EXECUTION; (2) WAIVE AND RELEASE ALL RELIEF FROM ALL REDEMPTION, APPRAISEMENT,
STAY, EXEMPTION, OR APPEAL LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED;
AND (3) RELEASE ALL ERRORS IN SUCH PROCEEDINGS. IF A COPY OF THIS
AGREEMENT, VERIFIED BY AFFIDAVIT BY OR ON BEHALF OF LENDER SHALL HAVE BEEN FILED
IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL OF THIS AGREEMENT
AS A WARRANT OF ATTORNEY. THE AUTHORITY AND POWER TO APPEAR FOR AND
ENTER JUDGMENT AGAINST BORROWERS (OR EITHER OF THEM) SHALL NOT BE EXHAUSTED BY
THE INITIAL EXERCISE THEREOF, AND THE SAME MAY BE EXERCISED, FROM TIME TO TIME,
AS OFTEN AS LENDER MAY DEEM NECESSARY AND DESIRABLE, AND THIS AGREEMENT SHALL BE
A SUFFICIENT WARRANT THEREFOR. LENDER MAY ENTER ONE OR MORE JUDGMENTS
IN THE SAME OR DIFFERENT JURISDICTIONS FOR ALL OR PART OF BORROWERS’
OBLIGATIONS, WITHOUT REGARD TO WHETHER JUDGMENT HAS THERETOFORE BEEN ENTERED ON
MORE THAN ONE OCCASION FOR THE SAME OBLIGATIONS. IN THE EVENT ANY
JUDGMENT ENTERED AGAINST BORROWERS (OR EITHER OF THEM) HEREUNDER IS STRICKEN OR
OPENED UPON APPLICATION BY OR ON BORROWERS’ BEHALF FOR ANY REASON WHATSOEVER,
LENDER IS HEREBY AUTHORIZED AND EMPOWERED TO AGAIN APPEAR FOR AND CONFESS
JUDGMENT AGAINST BORROWERS (OR EITHER OF THEM) FOR ANY PART OR ALL OF
THE OBLIGATIONS; INCLUDING, WITHOUT LIMITATION, A SUBSEQUENT ENTRY OR ENTRIES OF
JUDGMENT BY LENDER TO CURE ANY ERROR OR DEFECTS IN SUCH PRIOR
PROCEEDINGS.
9.18 Usury. If the
applicable interest rate from time to time shall exceed the maximum rate of
interest permitted by applicable law, then the applicable interest rate during
such time shall be reduced so as to equal the maximum rate of interest permitted
by applicable law, and, in the event a payment is made by Borrowers or received
by Lender in excess of the applicable legal limits, the amount of such excess
payment shall be credited to the account of Borrowers as a payment of
principal.
9.19 Gender,
Etc. Whenever used herein, the singular shall include the
plural, the plural shall include the singular, and the use of the masculine,
feminine or neuter gender shall include all genders, as the context may
require.
9.20 Headings. The
Section and subsection headings of this Agreement are for convenience of
reference only, and shall not limit or otherwise affect any of the terms
hereof.
9.21 Signatures by
Facsimile. Any facsimile signature of any party hereto shall
constitute a legal, valid and binding execution hereby by such
party.
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9.22 WAIVER OF
JURY TRIAL. EACH BORROWER
ACKNOWLEDGES AND AGREES THAT: (a) ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM
OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY THE LENDER, BORROWERS (OR EITHER OF
THEM) OR ANY OTHER PARTY HERETO OR ANY SUCCESSOR OR ASSIGN OF LENDER, BORROWERS
(OR EITHER OFTHEM) OR ANY OTHER PARTY HERETO, ON OR WITH RESPECT TO
THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR THE OTHER DOCUMENTS REQUIRED
HEREUNDER OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO, OR THERETO, SHALL
BE TRIED ONLY BY A COURT AND NOT BY A JURY AND EACH BORROWER AND THE BORROWERS
WAIVE THE RIGHT TO TRIAL BY JURY; (b) EACH BORROWER AND THE BORROWERS WAIVE ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING,
ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES; AND (c) THIS SECTION IS A SPECIFIC AND
MATERIAL ASPECT OF THIS AGREEMENT AND THE LENDER WOULD NOT EXTEND CREDIT TO THE
BORROWERS (OR EITHER OF THEM) IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT
A PART OF THIS AGREEMENT.
-SIGNATURE
PAGE FOLLOWS-
Page 25
of 38
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
|
ATTEST:
|
WLG
(USA) LLC (a “Borrower”)
|
||||
|
By:
|
/s/ Xxxx X. XxXXxxx
|
By:
|
/s/ Xxxxxx X. Xxxxxxx
|
(SEAL)
|
|
|
Name:
|
Xxxxxx
X. Xxxxxxx
|
||||
|
Its:
|
Chief
Executive Officer
|
||||
|
ATTEST:
|
World
Commerce Services, L.L.C. (a “Borrower”)
|
||||
|
By:
|
/s/ Xxxx X. XxXXxxx
|
By:
|
/s/ Xxxxxx X. Xxxxxxx
|
(SEAL)
|
|
|
Name:
|
Xxxxxx
X. Xxxxxxx
|
||||
|
Its:
|
Chief
Executive Officer
|
||||
|
NOVA
Business Credit, a division of NOVA Bank (“Lender”)
|
|||
|
By:
|
/s/ Xxxxx X. Xxxxxxxxxxx
|
||
|
Name:
Xxxxx X. Xxxxxxxxxxx
|
|||
|
Its:
Vice President
|
|||
Page 26
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Schedule
1
1) "Accounts", "Chattel Paper",
"Contracts",
"Contract
Rights", "Documents", "Equipment", "Fixtures" "General Intangibles",
"Goods", "Inventory", "Investment Property",
"Instruments",
"Letter-of-Credit
Rights", "Deposit Accounts",
"Payment
Intangibles", "Health Care Insurance
Receivables", "Records", "Promissory Notes",
"Supporting
Obligations" and "Proceeds" shall have
the same respective meanings as are given to those terms in the Uniform
Commercial Code except that the term "Accounts" shall also
include all amounts due under any lease of real property, a note receivable, any
right to payment under a note receivable, any right to payment which has been
earned under an Account, a Contract Right, HealthCare Insurance Receivable, or
credit card receivable, Letter-of-Credit Right, Payment Intangibles and all
rights to payment arising out of or related to any and all personal property
lease agreements, personal property rental agreements and consignment agreements
in which any the Borrowers (or either of them) are the lessor, renter or
consignor, and this Agreement shall also be considered an assignment of all such
lease, rental and consignment agreements and "Inventory" shall
include the property described in this Schedule 1,Paragraph
30).
2) "Account Debtor" shall
mean the Person with respect to any Account, and/or the prospective purchaser
with respect to any Contract Right, and/or any party who enters into or proposes
to enter into any contract or other arrangement with the Borrowers (or either of
them) pursuant to which the Borrowers (or either of them) are to deliver any
personal property or perform any service.
3) "Affiliate" shall mean
any Person which, directly or indirectly, controls, is controlled by or is under
common control with the Borrowers (or either of them), or any stockholder,
partner, owner or member of the Borrowers (or either of them) or any Person
which controls any stockholder, partner, owner or member of the Borrowers (or
either of them). For the purpose of this definition, "control" means
the possession, directly or indirectly, of the power to direct or to cause the
direction of management and policies or having the ordinary voting power to
elect the Board of Directors or other governing body, whether through the
ownership of voting securities, by contract, by agreement or
otherwise.
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4) "Assets" means all
assets that should, in accordance with GAAP, consistently applied, be classified
as assets on a balance sheet of the Borrowers (or either of them).
5) “Authorized Financial
Officer” means any corporate officer, proprietor, partner or any
individual designated in writing by the Borrowers (or either of them) as
such.
6) "Base Rate” means the
base commercial lending rate of Wilmington Trust FSB as publicly announced to be
in effect from time to time, such Base Rate to be adjusted automatically,
without notice, on the effective date of any change in Wilmington Trust's base
commercial lending rate. If such rate ceases to be available or is
otherwise not published, Lender may use a similar published prime or base rate
as chosen by Lender. The Base Rate is not necessarily the lowest or
best rate of interest offered by Lender to any Borrower or class of
Borrowers.
7) “Borrowing Base” means
an amount equal to the lesser of:
a)
the Revolving Credit Limit or
b) the
aggregate of the percentage advances and other limitations and sub-limits set
forth in Schedule
2 attached hereto and made part hereof, which Schedule 2 may be
amended from time to time by the Lender at its sole discretion.
8) “Borrowing Base
Certificate” means a certificate, satisfactory to Lender, certified to be
true and correct by an Authorized Financial Officer of the Borrowers that
mathematically computes the Borrowing Base.
9) "Business Day" shall
mean any day other than a Saturday, Sunday or other day on which banking
institutions in the Commonwealth of Pennsylvania are either authorized or
required to be and remain closed to the general public.
10) "Change in Control"
shall mean the termination of the employment of Xxxxxx X. Xxxxxxx, Chief
Executive Officer of each Borrower or Xxxxx X. Xxxxxx, Chief
Financial Officer of WLG, Inc., or any change in the manager/ sole
member’s (WLG INC.) interest in the Borrowers, or either of them. For
purposes hereof, "Control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the Borrowers’ management or
policies, whether through the ownership of securities, by contract or
otherwise.
11) "Closing" means the
receipt or waiver by Lender of all the agreements, documents and instruments
required hereunder in form and content acceptable to Lender, and the
satisfaction by the Borrowers or waiver or extension by Lender of all or part of
the Conditions Precedent set forth in Section 5 hereof. "Closing Date", means
the date upon which Lender has elected to make the initial disbursement of the
Loan(s) to the Borrowers. The Closing Date shall be February 24, 2010
unless otherwise extended by Lender.
12) "COBRA Violations"
shall mean a failure by the Borrowers (or either of them) to comply with group
health plan continuation coverage requirements of Section 601 et seq. of
ERISA.
13) "Collateral Documents"
means all other agreements, documents or instruments pursuant to which Lender
obtains any Lien or other security interest in the Collateral or any other
property of the Borrowers (or either of them).
14) "Control Agreement"
shall mean the agreement between each Borrower, Lender and each Borrower’s bank
evidencing Lender's security interest in and control of the Borrowers’ bank
account(s).
15) "Debt" shall mean all
of the Borrowers’ Liabilities (determined in accordance with GAAP).
16) "Dollars" and "$"
means dollars in the lawful currency of the United States.
17) "Eligible Account"
means an Account that Lender in its reasonable credit judgment determines shall
be an "Eligible Account" and conforms and continues to conform to the following
conditions which Lender may, in its sole discretion, establish, determine or
adjust from time to time:
a) The
Account and all papers and documents relating thereto are authentic, valid and
subsisting and arose from a bona fide outright sale of Goods, merchandise or
other property by the Borrowers (or either of them) , or for services performed
by the Borrowers (or either of them) in the ordinary course of the Borrowers’
business, based upon an enforceable order or contract, written or oral, for
Goods shipped or services performed, and such Goods, merchandise or other
property have been shipped to the appropriate Account Debtor (or the sale has
otherwise been consummated), and the services have been performed for the
appropriate Account Debtor in full compliance with the specifications of the
Account Debtor, and an invoice has been issued for the full amount due from the
Account Debtor;
Page 28
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b) Each
Borrower’s or Borrowers’ title to the Account and, except as to the rights of
the Account Debtor, to any Goods, is absolute and is not subject to any prior
assignment, claim, lien or security interest;
c) The
amount shown on the books of the Borrowers (or either of them) and on any
invoice or statement delivered to Lender is owing to Borrowers, and no partial
payment has been made thereon by anyone;
d) The
Account is not;
(i) a contra account,
(ii) C.O.D. or sight draft
account,
(iii) a commission account
(iv) an Intercompany Account, (v) in
default, or
(vi) subject to any claim or reduction,
counterclaim, set off, recoupment or any claim for credits, allowances or
adjustments by the Account Debtor because of returned, inferior or damaged Goods
or unsatisfactory services, or for any other reason, except for customary
discounts allowed for prompt payment;
e) Under
terms satisfactory to the Lender, the Account is not due from an Account Debtor
located outside of the continental United States, unless credit insured with
Lender named as loss payee.
f) The
Account is readily collectible and is not an invalid, disputed or unenforceable
Account, and is not an Account that Lender, in its sole discretion, has
determined to be ineligible, in whole or in part, and has notified the
Borrowers(or either of them) thereof;
g) The
Account Debtor has not returned or refused to retain any Goods from the sale of
which the Account arose;
h) The
Account is evidenced by an invoice that has a definite due date, is not
pre-billed and is due and payable not more than thirty (30) days from the
invoice date and is not more than sixty (60) days past due on such thirty (30)
day terms, and in any event is not outstanding more than ninety (90) days from
the invoice date;
i) No
Account arises out of a contract with or from, an Account Debtor that, by its
terms, forbids or makes void or unenforceable the assignment by each Borrower to
Lender of the Account arising with respect thereto;
j) Borrowers
(or either of them) have not received any note, trade acceptance, draft or other
Instrument with respect to or in payment for the Account, nor any Chattel Paper
with respect to the Goods giving rise to the Account and, if any such Instrument
or Chattel Paper is received, Borrowers will immediately notify Lender and, at
the latter's request, endorse or assign and deliver the same to Lender (if
Borrowers receive any such Instrument or Chattel Paper, Borrowers shall not
replace the Account with such Instrument or Chattel Paper without prior notice
to Lender and delivery of such original Instrument or Chattel Paper to
Lender);
k) Borrowers
(or either of them) have no knowledge of and have not received any notice of the
death of any Account Debtor or a partner thereof if the Account Debtor is an
individual or a partnership, nor of the dissolution, termination of existence,
insolvency, business failure, appointment of a receiver for any part of the
property of, assignment for the benefit of creditors by, or the filing of a
petition in bankruptcy or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against the Account Debtor (if Borrowers
have or obtain any such knowledge or upon the receipt by Borrowers of any such
notice (whether oral or written), it will immediately give Lender written advice
thereof);
l) The
Account Debtor is not a parent, Subsidiary, or an Affiliate of Borrowers (or
either of them), nor an officer, director, employee or partner of Borrowers or
of a parent, Subsidiary or Affiliate of Borrowers nor owned or controlled by any
of the foregoing;
m)
The Account is not due from any federal governmental authority unless such
Account, if necessary to perfect Lender’s interest therein or Lender’s right of
direct payment thereunder, has been properly assigned directly to Lender (and
acknowledged as assigned by the Account Debtor thereon) in form satisfactory to
Lender;
n) The
Account is not contingent upon the fulfillment of any condition or contingent
upon the payment of any monies due from a third party;
o) The
Account is supported by valid Shipping Documents;
p) The
Account is not the result of guaranteed sales nor does it arise from a
consignment arrangement or similar transaction;
q) The
Account is not a "xxxx and hold" transaction, nor did it arise as a result of a
billing for Goods which have not been shipped nor a "pre-billed" transaction,
however denominated;
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r) The
Account is not a progress billing (if any Account results from a progress
billing, Borrowers(or either of them) shall furnish Lender with copies of all
Contracts related to such Account upon Lender's request, but in any event, prior
to the start of the initial fabrication of the product or shipment or provision
of services);
s)
The Account is not a retainer (including, but not limited to construction
retainages), nor does it represent interest or finance charges;
t) Less
than 50% of the Account is ineligible for any reason;
u) The
Account represents not more than the percentage of the total accounts receivable
as described in Schedule 2 (“Account
Concentration”);
v) The
Account is an Account on which Lender has a first and exclusive lien and
security interest;
w) The
Account meets such other specifications and requirements as Lender may in its
sole discretion establish or determine from time to time. Lender shall have the
right, at any time and from time to time after the Closing Date, to adjust any
such criteria and to establish new criteria, all in its reasonable credit
judgment; and
x) Any
Account that was originally an Eligible Account shall cease to be an Eligible
Account in the event
i) it shall not continue to
conform to the conditions and warranties set forth in this Agreement
or
ii) Lender shall notify Borrowers that
such Account or the Account Debtor is unsatisfactory. In the event of any
dispute whether an Account is or has ceased to be an Eligible Account, the
decision of the Lender shall control.
18) "Eligible Inventory"
means Inventory that Lender in its reasonable credit judgment determines shall
be "Eligible Inventory" and meets the following criteria and conforms and
continues to conform to the following conditions which Lender may, in its sole
discretion, establish, determine or adjust from time to time:
a) The
title of Borrowers (or either of them) in and to the Inventory is absolute and
lawfully in Borrowers (or either of them) and subject to no prior assignment,
claim, lien or security interest, and Borrowers (or either of them) have the
right of assignment thereof and the power to grant to Lender a lien on and
security interest therein;
b) The
Inventory is intended for sale or lease by Borrowers in the ordinary course of
Borrowers’ business at regular prices;
c) If
the Inventory is represented by a Document, the Document is lawfully owned by,
and in possession of Borrowers, and Borrowers shall immediately deliver such
Document to Lender;
d) The
Inventory is located on Borrowers’ premises or on premises leased by Borrowers
with a landlord which has delivered to Lender a Landlord’s Waiver in form and
content acceptable to Lender;
e) The
Inventory is otherwise acceptable to Lender in its discretion;
f) Eligible
Inventory shall exclude all Inventory which is obsolete, damaged, returned,
consigned, leased, "on hold", bailed or determined by Lender in its sole
discretion to be ineligible in whole or in part and has so notified Borrowers.
Lender shall have the right, at any time and from time to time after the Closing
Date, to adjust any such criteria and to establish new criteria, all in its
reasonable credit judgment; and
g) Advances
based on Eligible Inventory shall be made only at the time Borrowers (or either
of them) obtains all rights to such Eligible Inventory.
19) "Environmental Laws"
shall mean any federal, state, county, regional or local statute, law,
ordinance, rule, regulation, order, directive, regulations or requirement,
together with all successor statutes, laws, ordinances, rules, regulations,
orders, directives, regulations or requirements governing the control, storage,
removal, spill, release or discharge of Hazardous Materials.
20) "ERISA" shall mean the
Employee Retirement Income Security Act of 1974 (together with all rules and
regulations promulgated thereunder), as amended, supplemented, replaced, or
modified from time to time.
21) "ERISA Affiliate"
shall mean, as to each Borrower or the Borrowers, any Person (whether or not
incorporated), which, together with each Borrower or the Borrowers, would be
treated as a single employer under Section 4001 of ERISA.
22) "Financial Statements"
means the consolidated and consolidating balance sheet, statements of income and
retained earnings and statements of cash flow of the Borrowers and its
Subsidiaries and Affiliates and all other financial statements of Borrowers and
its Subsidiaries or Affiliates, prepared in accordance with GAAP, submitted and
to be submitted to Lender hereunder, and in form and content acceptable to
Lender.
23) "Float Factor" shall
mean the number of days described in Schedule
2.
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of 38
24) "GAAP" or "generally accepted
accounting principles" shall mean generally accepted accounting
principles applied on a consistent basis, in accordance with the Statement of
Auditing Standards No. 69, "The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles in the Independent Auditor's Report"
(SAS 69) or superseding pronouncements, issued by the Auditing Standards Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board and/or in such other statements by
such other entity as Lender may reasonably approve, which are applicable in the
circumstances as of the date in question. The requirement that such
principles be applied on a consistent basis shall mean that the accounting
principles observed in a current period are comparable in all material respects
to those applied in a preceding period, or, in the event of a material change in
any accounting principle from that observed in any previous period, (a)
financial reports covering preceding periods during the term of this Agreement
are restated to reflect such change and provide a consistent basis for
comparison among periods and (b) the financial covenants set forth herein, if
any, shall be adjusted as determined by the Lender to reflect similar
performance standards as those measured by the existing covenants using the
previously observed accounting principles.
25) "Governmental
Authority" means any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
26) "Indebtedness" means,
as to any Obligor, all Liabilities, indebtedness or obligations of Borrowers (or
either of them) to any Person of any kind or nature, now or hereafter arising,
due and payable, or to become due and payable, matured or unmatured, liquidated
or unliquidated, direct, secondary or contingent, fixed or otherwise, joint or
several.
27) "Ineligible Account"
means all or any part of any Account that is not an Eligible
Account.
28) “Intellectual
Property” means
i) the names WLG (USA) LLC
and World Commerce Services, L.L.C., as well as all fictional
business names, trading names, registered and unregistered trademarks, service
marks, and applications;
ii) all patents, patent applications,
and inventions and discoveries that may be patentable;
iii) all copyrights in both published
works and unpublished works;
iv) all rights in mask works;
and
v) all know-how, trade secrets,
confidential information, customer lists, software, technical information, data,
process technology, plans, drawings, and blueprints; owned, used, or licensed by
Borrowers.
29) "Intercompany
Accounts" means all assets and liabilities, however arising, which are
due to the Borrowers (or either of them) from, which are due from the Borrowers
(or either of them) to, or which otherwise arise from any transaction by the
Borrowers (or either of them) with, any Affiliate of the Borrowers
30) "Inventory" means and
includes all of the following, whether now owned or hereafter acquired, new or
used and wherever located;
a) All
tangible personal property or Goods or Equipment now owned or hereafter acquired
by Borrowers (or either of them), which are held for sale, consignment or lease
by Borrowers (or either of them) in the ordinary course of Borrowers’ business
or are furnished or to be furnished by Borrowers under contracts of
service;
b) All
tangible personal property or Goods or Equipment which Borrowers (or either of
them) have so consigned, leased or furnished, including all tangible personal
property or Goods or Equipment held by others for sale or consignment from
Borrowers (or either of them);
c) All
tangible personal property or Goods or Equipment sold by Borrowers (or either of
them) on a sale or return basis;
d) All
tangible personal property or Goods or Equipment returned to Borrowers (or
either of them) or repossessed by Borrowers (or either of them) following a
sale, consignment or lease thereof by Borrowers (or either of them) and all
Documents of Title (as that term is defined in the UCC) or certificates of title
or origin and tangible personal property represented thereby;
e) All
raw materials, ingredients, work in process, finished goods, packaging
materials, labels and other materials and supplies ("Materials") of every kind
or nature used, useful or consumed in connection with the production, packaging,
packing, shipping, installation, advertising or sale of such personal property
or Goods or Equipment;
f) All
Proceeds and products from the sale or other disposition of such personal
property or Goods, Equipment or Materials, including all personal property,
Goods, Equipment or Materials returned, repossessed or acquired by Borrowers (or
either of them) by way of substitution or replacement, and all additions and
accessions thereto, and all Documents and Instruments covering such personal
property, Goods, Equipment or Materials;
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g) All
of the rights or interests of Borrowers (or either of them)as an unpaid seller,
including stoppage in transit, detinue and reclamation; and
h) All
of the above owned by Borrowers (or either of them) or in which Borrowers(or
either of them) now has or in which Borrowers(or either of
them) may hereafter acquire an interest, whether in transit or
in the constructive or actual possession of Borrowers(or either of
them) or held by Borrowers(or either of them) or by
others for the account of Borrowers(or either of
them) (including any of the above held on consignment)
including, without limitation, all of the above which may be located at the
property or other premises of Borrowers or upon the premises of any carriers,
forwarding agents, truckers, warehousemen, vendors, selling agents, finishers,
converters, distributors, customers or other third parties who may have
possession, temporary or otherwise, thereof.
31) “Inventory
Certificate” means a certificate, satisfactory to Lender, certified to be
true and correct by an Authorized Financial Officer of Borrower that accurately
represents the breakdown, value and location of the then current Inventory of
Borrowers.
32) "Laws" means all
ordinances, statutes, rules, regulations, orders, injunctions, writs or decrees
of any Governmental Authority or agency thereof or any court or similar entity
established by any thereof.
33) "Lien"
means:
a) Any
interest in real, personal and intangible property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes;
b) To
the extent not included under clause (a), any reservation, exception,
encroachment, easement, right-of-way, covenant, condition, restriction, lease or
other title exception or encumbrance affecting property; and
c) Any
contingent or other agreement to provide any of the foregoing.
34) "Loan Documents" shall
mean this Agreement, the Revolving Loan Note, the Collateral Documents, Surety
Agreement(s), Validity Indemnification(s), Subordination Agreement(s), Letter(s)
of Credit and/or any deed of trust, mortgage, assignment of lease, note,
contract, security instrument, encumbrance, financing statement, certificate,
assignment, pledge, report, subordination, conditional sale, other title
retention agreement, or other document related to or delivered in connection
with the transactions contemplated by this Agreement.
35) "Material Adverse
Change" shall mean any changes that could result in a Material Adverse
Effect.
36) "Material Adverse
Effect" shall mean any set of circumstances or events which
a) Has
or could reasonably be expected to have any material adverse effect whatsoever
upon the validity or enforceability of this Agreement or any other Loan
Document,
b) Is
or could reasonably be expected to be material and adverse to the properties,
Assets, condition (financial or otherwise) or business operations, results of
operations of the Borrowers(or either of them) , any Subsidiary or to
the prospects of Borrowers(or either of them) , or any
Subsidiary,
c) Impairs
materially or could reasonably be expected to impair materially the ability of
Borrowers (or either of them), or any Subsidiary to duly and punctually pay or
perform its Obligations or
d) Materially
impairs or could reasonably be expected to materially impair the ability of the
Lender to enforce its legal remedies pursuant to this Agreement or any other
Loan Document.
37) "Obligations" means
the obligations of any Obligor:
a) To
pay the principal of and all interest on all present and future Loans and
advances made hereunder in accordance with the terms hereof or otherwise to or
for the benefit of Borrowers (or either of them) and to satisfy all of its other
Indebtedness, obligations, liabilities, covenants, duties and Debts to Lender
for payment or performance, whether hereunder or otherwise, whether now existing
or hereafter incurred or arising, matured or unmatured, due or to become due,
absolute, direct or contingent, joint or several, primary or secondary,
including any extensions, modifications, renewals thereof and substitutions
therefor, whether or not evidenced by any note, agreement or other Instrument or
Document, whether arising from an extension of credit, opening of a Letter of
Credit, acceptance, loan, guaranty, indemnification, overdraft or otherwise
including all Indebtedness, liabilities or obligations arising from any Obligor
to others which the Lender may have obtained by purchase, negotiation, discount,
assignment or otherwise;
Page 32
of 38
b) To
repay to Lender all amounts advanced by Lender hereunder or under the Loan
Documents or otherwise on behalf of (or for the benefit of) any Obligor
including, without limitation, advances for principal or interest payments to
prior or subordinate secured parties, mortgagees, or lienors, or for taxes,
levies, insurance, rent, repairs to, maintenance or storage of any of the
Collateral; and
c) To
pay all of Lender's expenses and costs including without limitation, all filing,
recording and satisfaction fees, or taxes, and the fees and expenses of its
counsel in connection with the preparation, administration, amendment,
modification or enforcement of this Agreement and the documents required
hereunder, the perfection or maintenance of Lender's Liens on and security
interests in the Collateral, or any proceeding brought or threatened to enforce
payment of any of the Obligations referred to in the foregoing.
38) "Obligor" means each
Borrower, the Borrowers, each Surety, each Indemnifier and any other Person
directly or indirectly obligated with respect to the Obligations.
39) "Perfection
Certificate" means the Perfection Certificate to be completed and
delivered by each Borrower prior to Closing with appropriate insertions and
signed by an Authorized Financial Officer of Borrower.
40) “Permit” means any
permit, license, registration, authorization or other governmental approval
required to be obtained and maintained under any Environmental Law or other
applicable law, rule or regulation of any Governmental Authority.
41) "Person" means any
individual, sole proprietorship, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, joint venture, limited
liability company, court, Governmental Authority, government or political
subdivision or agency thereof or any other entity.
42) "Plan" shall mean any
pension plan, which is covered by Title IV of ERISA and in respect of which each
Borrower or the Borrowers, or any ERISA Affiliate thereof is an "employer" as
defined in Section 3(5) of ERISA.
43) "Pledge Agreement"
means an agreement in favor of Lender, in form and content acceptable to Lender
executed by any Person maintaining any property on behalf of the Borrowers (or
either of them), acknowledging Lender’s control over and rights in and to the
pledged property.
44) "Real Estate" means
the real property of WLG (USA) LLC and World Commerce Services, L.L.C. located
at 000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000 and all improvements
thereon.
45) "Records" means
correspondence, memoranda, tapes, discs, CD-ROMS, papers, books and other
documents, or transcribed information of any type, whether expressed in
ordinary, computer, machine or electronic language and the Equipment in which
such information is stored or by which it is retrieved.
46) “Remittances” means
(a) all checks, drafts, cash and other remittances in payment of or on account
of payment of all its Accounts (including Ineligible Accounts and Accounts with
respect to which Lender has made no loan or advance hereunder) and (b) whenever
expressly required by Lender, the cash Proceeds of any returned Goods from the
sale of which any Account arose.
47) "Reportable Event"
shall mean any of the events set forth in Section 4043(b) of ERISA or the
regulations thereunder.
48) "Subordinated Debt" or
"Subordinated Indebtedness" shall mean obligations of Borrowers (or
either of them) evidenced by a promissory note or notes or other written
instrument in form and content reasonably acceptable to Lender and all
collateral therefor, which are subordinated in right of payment, priority and in
all other respects to the right of Lender to receive payments on the Loans and
all collateral therefor, provided that the
holder of the subordinated debt has executed a subordination agreement in form
and content reasonably acceptable to Lender or the instrument evidencing the
subordinated debt expressly includes a provision, in form and content acceptable
to Lender, specifying that the instrument and all collateral therefor is
subordinated to the Obligations to and that Lender is an intended beneficiary of
such provision.
49) "Subsidiary" shall
mean, as to each Borrower, any corporation of which each Borrower directly or
indirectly through one or more intermediaries owns or controls at the
time
a) at least a majority of the
outstanding stock having, under ordinary circumstances (not dependent upon the
happening of a contingency), voting power to elect a majority of the board of
directors (in the case of a corporation having directors), or
bi) a majority of the voting stock of
any corporation not having directors. The term "Subsidiary" shall
also mean any general or limited partnership or other entity, of which more than
fifty percent (50%) of the outstanding partnership interests or ownership
interests shall, at the time of determination, be owned, directly or indirectly,
through one or more intermediaries, by each Borrower.
50) "Surety" means
collectively, any corporation, partnership, limited liability company or other
business entity which is now or may hereafter become a Surety under this
Agreement (each a "Corporate Surety"),
and any individual which is now or may hereafter become a Surety under this Agreement (an "Individual Surety"),
all of which shall be collectively obligated hereunder.
51) "Surety Agreement"
means a duly authorized and executed surety agreement in favor of
Lender.
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52) "Uniform Commercial Code" or
"UCC" shall mean the Uniform Commercial Code as in effect in the
Commonwealth of Pennsylvania or of any other state in which any Collateral is
located from time to time, (or any successor statute) the laws of which are
required, as a result thereof, to be applied in connection with the perfection
of security interest in the Collateral.
53) "Validity Certificate"
means a duly authorized and executed Certificate in favor of
Lender.
54) Other Definitional
Provisions and Interpretive Provisions.
a) The
meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms.
b) The
words "hereof," "herein," "hereunder" and similar words refer to this Agreement
as a whole and not to any particular provision of this Agreement; and Paragraph,
Subparagraph, Subsection, Section, Schedule references are to this Agreement
unless otherwise specified.
c) The
term "documents" includes any and all instruments, documents, agreements,
certificates, indentures, notices and other writings, however
evidenced.
d) The
term "including" is not limiting and means "including without
limitation."
e) In
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including", the words "to" and "until"
each mean "to but excluding" and the word "through" means "to and
including."
f) Unless
otherwise expressly provided herein, (a) references to agreements (including
this Agreement) and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of any
Loan Document, and (b) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or
regulation.
g) This
Agreement and the other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
h) This
Agreement and the other Loan Documents are the result of negotiations among and
have been reviewed by counsel to the Lender, each Borrower, the Borrowers, and
the other parties, and are the products of all parties. Accordingly,
they shall not be construed against the Lender merely because of the Lender’s
involvement in their preparation.
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This
Schedule 2
dated this 24th day of February 2010, is attached to and made part of that
certain Loan and Security Agreement between WLG (USA) LLC and World Commerce
Services, L.L.C. (each a "Borrower, and
collectively the “Borrowers”) and NOVA Business Credit, a division
of NOVA Bank ("Lender") dated the 24th day of February 2010 (the
"Agreement").
The
Agreement is hereby modified by the additional terms and provisions set forth in
this Schedule 2
as such schedule may from time to time be amended and supplemented by Lender in
its sole discretion ("Additional Terms"), all of which are incorporated into and
made part of the Agreement as of the date hereof. If there is a
conflict or discrepancy between the terms and provisions of this Schedule 2, and any
other Schedule
2 dated prior to the date hereof, or of the Agreement, the terms and
provisions of this Schedule 2 shall
continue and prevail. All other terms and provisions of all Schedule 2’s dated
prior to the date hereof, and of the Agreement are hereby ratified and confirmed
in all respects and without condition are all incorporated herein by reference
as if set forth at length herein.
|
1)
|
Borrowing Base Rates
of Advance:
|
|
|
a)
|
WLG
(USA) LLC - Seventy percent (70%) of Eligible Accounts;
plus
|
|
|
b)
|
World
Commerce Services, L.L.C. - Eighty Percent (80%) of Eligible Accounts;
plus
|
|
|
c)
|
Such
other percentages of the above as Lender may, from time to time at its
sole discretion, determine and give advance notice to
Borrowers).
|
|
2)
|
Interest
Rate(s):
|
|
|
a)
|
Eligible
Accounts: Base Rate (Wilmington Trust FSB Prime Rate) plus 3.0%
(floating with daily resets), but not to be less than 9.50% for advances
against accounts receivable;
|
|
3)
|
Fees:
|
|
|
a)
|
Origination
Fee. The Borrowers (or either of them) shall pay to
Lender, on or before the Closing Date a
non-refundable origination fee ("Origination Fee") in an amount equal to
One Percent (1%) percent of the Revolving Credit
Limit.
|
|
|
b)
|
Facility
Fee. The Borrowers (or either of them) shall pay to
Lender, on or before the annual anniversary of the Closing Date a
non-refundable commitment fee ("Facility Fee") equal to One Percent (1%)
of the Revolving Credit Limit.
|
|
c)
|
Audit
Fee. The
Borrowers (or either of them) shall reimburse Lender for the cost of and
related travel, out-of-pocket and other expenses. Audits shall
be performed at such times as the Lender deems necessary or advisable in
its sole discretion.
Ongoing collateral examinations are expected to be performed at least
quarterly.
|
|
d)
|
Collateral
Management Fee. The Borrowers (or
either of them) shall pay Lender monthly, a collateral management fee of
0.35% of the average monthly balance of the Loans
outstanding. Such fee shall be due and payable on the first day
of each month in arrears.
|
|
4)
|
Float
Factor:
|
Five
(5) Business Days for checks; One (1) Business Day for
wires.
|
|
5)
|
Account
Concentration: Not to exceed Fifteen Percent (15%) of
total Accounts Receivable except as approved in advance by Lender, at its
sole discretion.
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Collateral
1) All
money and cash of Borrowers (or either of them) and all property
of Borrowers (or either of them) which at any time
Lender shall have in its possession, or which is in transit to it, all amounts
that may be owing from time to time by Lender to Borrowers (or either
of them), and any balance or share belonging, in whole or in part, to Borrowers
(or either of them), in any deposit, agency, trust, escrow or other account or
accounts with any bank or other financial institution (excluding all XXX, Xxxxxx
and any trust, pension, profit sharing and similar accounts subject to ERISA),
including any certificate of deposit;
2) All
Assets, including without limitation, all now owned or hereafter acquired
present and future Accounts (including Ineligible Accounts), Contract Rights,
Contracts, Chattel Paper, accounts receivable, notes receivable, Documents,
machinery, Equipment, Fixtures, furniture, Instruments, Inventory, Investment
Property, Letter-of- Credit Rights, Deposit Accounts, Payment Intangibles,
Health Care Insurance Receivables, Promissory Notes, Supporting Obligations,
General Intangibles, Goods, including any returned or repossessed Goods and all
rights of stoppage in transit and similar rights, Proceeds, all lease or
consignment agreements in which Borrowers (or either of them) is
lessor, consignor or consignee and all rights of payment related to any of the
foregoing, and all liens and security instruments, books and Records evidencing,
securing or relating to the foregoing including, all data processing cards,
tapes, tabulating runs, programs, software and similar materials;
3) All
guarantees, sureties and endorsements of Borrowers (or either
of them) existing and future Accounts, Contracts, Contract Rights,
Chattel Paper, Documents, Instruments, accounts receivable, Investment Property,
Letter-of-Credit Rights, Deposit Accounts, Payment Intangibles, Health Care
Insurance Receivables, Promissory Notes, Supporting Obligations, and
Inventory;
4) All
security or collateral held or taken by Borrowers (or either of them) to secure
the payment and/or satisfaction of any Account, Chattel Paper, Contract,
Contract Rights, Document, Instrument, account receivable, Investment Property,
Letter-of-Credit Rights, Deposit Accounts, Payment Intangibles, Health Care
Insurance Receivables, Promissory Notes, Supporting Obligations, or Inventory,
including any returned or repossessed Goods;
5) All
notes, drafts, acceptances, documents or certificates of title, including bills
of lading, warehouse receipts, policies and certificates of insurance (including
without limitation credit insurance), and securities (domestic and foreign) now
or hereafter owned by Borrowers (or either of them) or in
which Borrowers (or either of them) has or acquires an interest
in connection with its Accounts, Contracts, Contract Rights, Chattel Paper,
Documents, Instruments, accounts receivable, Investment Property,
Letter-of-Credit Rights, Deposit Accounts, Payment Intangibles, Health Care
Insurance Receivables, Promissory Notes, Supporting Obligations, and
Inventory;
6) All
other rights of Borrowers (or either of them) to the
payment of money, including, without limitation, tax refunds and amounts due
from Affiliates, and rights under any Letter of Credit;
7) All
rights in connection with the residual value of any Goods or Inventory sold,
leased, consigned or otherwise disposed of, including but not limited to, the
proceeds of any third party’s option to purchase such Inventory;
8)
All of the Borrowers’ (or either
of their) rights in sale agreements, rental agreements, lease agreements, bills
of lading, documents of title, warehouse receipts, charters, charter parties,
bills of sale and other agreements arising out of or relating to purchase of
Goods or Inventory by or to the Borrowers (or either of them), whether directly
or through any Affiliate of Borrower, or the sale, rental, lease, consignment or
other disposition of the such property or any portion
thereof;
9)
All patents, processes, trade names, trademarks, copyrights, licenses, now or
hereafter affixed thereto, arising therefrom, used in connection therewith, or
related to the possession, use, manufacture, processing, advertisement, sale,
consignment, lease, other disposition or operation thereof;
10) The
Real Estate, the improvements, all materials, supplies, equipment, apparatus and
other items now or hereafter attached to, installed on or in the Real Estate or
any improvements thereon, or which in some fashion are deemed to be Fixtures to
the Real Estate or improvements;
11) Any
and all replacements and substitutions of all or any of the property described
in subparagraphs 1) through 10);
12) All
insurance and all rights of payment or other rights
of Borrowers (or either of them) arising out of, related to, or
in connection with any of the foregoing;
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13) All
General Intangibles now or hereafter related to or arising from, used in
connection with or related to the possession, use, sale, lease, consignment or
other disposition of any of the foregoing and all insurance and all rights of
payment or other rights of Borrowers (or either of them) arising out
of, related to, or in connection with any of the foregoing; and
14) All
Records pertaining to any of the foregoing.
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Exceptions/Additional
Information
|
Section
4.6
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Additional Accounts:
|
|
Section
5.3.3
|
Permitted Liens:
|
|
Section
6.1.4
|
Litigation/Claims:
|
|
Section
6.1.9, 6.1.15 & 7.2.2
|
Indebtedness/Leases/Contracts:
|
|
Section
6.1.14
|
Other Liens
|
|
Section
6.1.16
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Intellectual Property:
|
|
Section
6.1.23
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Finder’s
Fees:
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