LOAN AND SECURITY AGREEMENT Dated as of September 17, 2007 among APPALACHIAN OIL COMPANY, INC., as Borrower, THE LENDERS THAT ARE PARTIES HERETO, as the Lenders, and GREYSTONE BUSINESS CREDIT II, L.L.C., as Agent
Dated
as of September 17, 2007
among
APPALACHIAN
OIL COMPANY, INC.,
as
Borrower,
THE
LENDERS THAT ARE PARTIES HERETO,
as
the Lenders,
and
GREYSTONE
BUSINESS CREDIT II, L.L.C.,
as
Agent
|
Greystone
Business Credit II, L.L.C.
|
TABLE
OF CONTENTS
|
Page
|
||||||
|
1.
|
LOANS
AND CREDIT ACCOMMODATIONS.
|
1
|
||||
|
1.1.
|
Amount.
|
1
|
||||
|
1.2.
|
Reserves.
|
4
|
||||
|
1.3.
|
Other
Provisions Applicable to Credit Accommodations.
|
5
|
||||
|
1.4.
|
Repayment.
|
5
|
||||
|
1.5.
|
Minimum
Borrowing.
|
6
|
||||
|
1.6.
|
Borrowing
Procedure/Credit Accommodation Procedure.
|
6
|
||||
|
2.
|
INTEREST
AND FEES.
|
7
|
||||
|
2.1.
|
Interest.
|
7
|
||||
|
2.2.
|
Fees
and Warrants.
|
7
|
||||
|
2.3.
|
Computation
of Interest and Fees.
|
8
|
||||
|
2.4.
|
Loan
Account; Monthly Accountings.
|
9
|
||||
|
3.
|
CONDITIONS.
|
9
|
||||
|
3.1.
|
Conditions
Precedent to the Initial Extension of Credit.
|
9
|
||||
|
3.2.
|
Conditions
Precedent to all Extensions of Credit.
|
9
|
||||
|
4.
|
SECURITY
INTEREST.
|
10
|
||||
|
4.1.
|
Grant
of Security Interest.
|
10
|
||||
|
4.2.
|
Possessory
Collateral.
|
10
|
||||
|
4.3.
|
Preservation
of Collateral and Perfection of Security Interest.
|
11
|
||||
|
5.
|
ADMINISTRATION.
|
11
|
||||
|
5.1.
|
Lock
Boxes and Blocked Accounts.
|
11
|
||||
|
5.2.
|
Remittance
of Proceeds.
|
11
|
||||
|
5.3.
|
Application
of Payments.
|
12
|
||||
|
5.4.
|
Notification;
Verification.
|
13
|
||||
|
5.5.
|
Power
of Attorney.
|
13
|
||||
|
5.6.
|
Disputes.
|
14
|
||||
|
5.7.
|
Invoices.
|
14
|
||||
|
5.8.
|
Inventory.
|
14
|
||||
|
5.9.
|
Access
to Collateral, Books and Records.
|
15
|
||||
|
6.
|
REPRESENTATIONS,
WARRANTIES AND COVENANTS.
|
15
|
||||
|
6.1.
|
Existence
and Authority.
|
15
|
||||
|
6.2.
|
Name;
Trade Names and Styles.
|
16
|
||||
|
6.3.
|
Title
to Collateral; Permitted Liens.
|
16
|
||||
|
6.4.
|
Accounts
and Chattel Paper.
|
17
|
||||
|
6.5.
|
Electronic
Chattel Paper.
|
17
|
||||
|
6.6.
|
Investment
Property.
|
18
|
||||
|
6.7.
|
Commercial
Tort Claims.
|
18
|
||||
|
6.8.
|
State
of Organization; Location of Collateral.
|
▇▇
|
||||
-▇-
|
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇.▇.▇.
|
|
6.9.
|
Financial
Condition, Statements and Reports.
|
18
|
||||
|
6.10.
|
Tax
Returns and Payments; Pension Contributions.
|
19
|
||||
|
6.11.
|
Compliance
with Laws.
|
19
|
||||
|
6.12.
|
Litigation.
|
19
|
||||
|
6.13.
|
Related
Agreements.
|
20
|
||||
|
6.14.
|
Use
of Proceeds.
|
20
|
||||
|
6.15.
|
Insurance.
|
21
|
||||
|
6.16.
|
Financial
and Collateral Reports.
|
21
|
||||
|
6.17.
|
Litigation
Cooperation.
|
23
|
||||
|
6.18.
|
Maintenance
of Collateral, Etc.
|
23
|
||||
|
6.19.
|
Notification
of Changes.
|
23
|
||||
|
6.20.
|
Further
Assurances.
|
23
|
||||
|
6.21.
|
Negative
Covenants.
|
24
|
||||
|
6.22.
|
Financial
Covenants.
|
26
|
||||
|
7.
|
RELEASE
AND INDEMNITY.
|
27
|
||||
|
7.1.
|
Release.
|
27
|
||||
|
7.2.
|
Indemnity.
|
27
|
||||
|
8.
|
TERM.
|
28
|
||||
|
8.1.
|
Maturity
Date.
|
28
|
||||
|
8.2.
|
Early
Termination.
|
28
|
||||
|
8.3.
|
Payment
of Obligations.
|
29
|
||||
|
8.4.
|
Effect
of Termination.
|
29
|
||||
|
9.
|
EVENTS
OF DEFAULT AND REMEDIES.
|
29
|
||||
|
9.1.
|
Events
of Default.
|
29
|
||||
|
9.2.
|
Remedies.
|
30
|
||||
|
9.3.
|
Application
of Proceeds.
|
32
|
||||
|
10.
|
AGENT;
THE LENDER GROUP.
|
33
|
||||
|
10.1.
|
Appointment
and Authorization of Agent.
|
33
|
||||
|
10.2.
|
Delegation
of Duties.
|
34
|
||||
|
10.3.
|
Liability
of Agent.
|
34
|
||||
|
10.4.
|
Reliance
By Agent.
|
34
|
||||
|
10.5.
|
Notice
of Default or Event of Default.
|
35
|
||||
|
10.6.
|
Credit
Decision.
|
35
|
||||
|
10.7.
|
Costs
and Expenses, Indemnification.
|
35
|
||||
|
10.8.
|
Agent
in Individual Capacity.
|
36
|
||||
|
10.9.
|
Successor
Agent.
|
37
|
||||
|
10.10.
|
Lender
in Individual Capacity.
|
37
|
||||
|
10.11.
|
Matters
Relating to Collateral and Obligations.
|
38
|
||||
|
10.12.
|
Restrictions
on Actions by the Lenders, Sharing Payments.
|
38
|
||||
|
10.13.
|
Agency
for Perfection.
|
39
|
||||
|
10.14.
|
Payments
by Agent to the Lenders.
|
39
|
||||
|
10.15.
|
Concerning
the Collateral and Related Loan Documents.
|
39
|
||||
-ii-
|
Greystone
Business Credit II, L.L.C.
|
|
10.16.
|
Field
Audits and Examination Reports, Confidentiality, Disclaimers by
the
Lenders, Other Reports and Information.
|
40
|
||||
|
10.17.
|
Several
Obligations, No Liability.
|
41
|
||||
|
11.
|
SETTLEMENTS,
DISTRIBUTIONS AND APPORTIONMENT OF PAYMENTS.
|
41
|
||||
|
11.1.
|
Procedure.
|
41
|
||||
|
12.
|
GENERAL
PROVISIONS.
|
42
|
||||
|
12.1.
|
Notices.
|
42
|
||||
|
12.2.
|
Severability.
|
43
|
||||
|
12.3.
|
Know
Your Customer.
|
43
|
||||
|
12.4.
|
Integration.
|
44
|
||||
|
12.5.
|
Waivers.
|
44
|
||||
|
12.6.
|
Amendment,
Waivers and Consents.
|
44
|
||||
|
12.7.
|
Time
of Essence.
|
45
|
||||
|
12.8.
|
Attorneys
Fees and Costs.
|
45
|
||||
|
12.9.
|
Benefit
of Agreement; Assignability.
|
46
|
||||
|
12.10.
|
Confidentiality.
|
48
|
||||
|
12.11.
|
Headings;
Construction.
|
49
|
||||
|
12.12.
|
GOVERNING
LAW; CONSENT TO FORUM, ETC.
|
49
|
||||
|
12.13.
|
WAIVER
OF JURY TRIAL, ETC.
|
50
|
||||
|
Schedule
3.1
|
Conditions
Precedent to the Initial Extension of Credit
|
|
|
Schedule
6.1
|
Ownership
of Borrower and Borrower's Subsidiaries
|
|
|
Schedule
6.2
|
Borrower's
Prior Names and Present and Prior Trade Names
|
|
|
Schedule
6.7
|
Commercial
Tort Claims
|
|
|
Schedule
6.8
|
Collateral
Locations
|
|
|
Schedule
6.12
|
Litigation
|
|
|
Schedule
6.21
|
Negative
Covenants
|
|
|
Schedule
A
|
Description
of Certain Terms
|
|
|
Schedule
B
|
Definitions
|
|
|
Schedule
B-1
|
Trademarks
|
|
|
Exhibit
A
|
Form
of Term Note A
|
|
|
Exhibit
B
|
Form
of Term Note B
|
|
|
Exhibit
C
|
Form
of Assignment and Acceptance
|
-iii-
This
Loan
and Security Agreement (as it may be amended, supplemented or modified from
time
to time, this "Agreement")
is
entered into on September 17, 2007, among Appalachian
Oil Company, Inc., ("Borrower"),
a
Tennessee corporation, the lenders from time to time party hereto (such lenders,
together with their respective successors and permitted assigns, being referred
to individually as a "Lender"
and
collectively as the "the
Lenders"),
and
Greystone
Business Credit II, L.L.C., in
its
capacity as administrative agent for the Lenders (in such capacity, together
with its successors and permitted assigns in such capacity, "Agent").
The
Exhibits and Schedules to this Agreement are an integral part of this Agreement
and are incorporated herein by reference. Terms used, but not defined elsewhere,
in this Agreement are defined in Schedule B.
|
1.
|
LOANS
AND CREDIT ACCOMMODATIONS.
|
1.1. Amount.
Subject
to the terms and conditions contained in this Agreement:
(a) Revolving
Loans and Credit Accommodations. From
time
to time during the Term at Borrower's request, each Lender with a Revolving
Loan
Commitment agrees (severally and not jointly) to make revolving loans to
Borrower ("Revolving
Loans";
for
the sake of clarity, such term also includes all Protective Advances and
Disproportionate Advances) and make letters of credit, bankers acceptances
and
other credit accommodations ("Credit
Accommodations")
available to Borrower, in proportion to such Lender's Pro Rata Revolving Share
of the requested Revolving Loans, up to such Lender's Revolving Loan Commitment,
in each case to the extent that there is sufficient Availability (defined below)
at the time of such request to cover, dollar for dollar, the requested Revolving
Loan or Credit Accommodation; provided,
that
after giving effect to such Revolving Loan or Credit Accommodation, (x) the
outstanding balance of all monetary Obligations (including the principal balance
of the Term Loans and the Credit Accommodation Balance) will not exceed the
Maximum Facility Amount and (y) none of the other Loan Limits will be
exceeded. For this purpose,
"Availability"
means:
(i) the
aggregate amount of Eligible Accounts other than the Cummins Accounts (less
maximum existing or asserted taxes, discounts, credits and allowances)
multiplied by the Accounts Advance Rate (but in no event to exceed the Accounts
Sublimit);
plus
(ii) the
aggregate amount of Eligible Accounts consisting solely of the Cummins Accounts
(less maximum existing or asserted taxes, discounts, credits and allowances)
multiplied by the Inventory Advance Rate (but in no event to exceed together
in
the aggregate with the advances pursuant to clause (iii) below, the Inventory
Sublimit);
-1-
plus
(iii) the
lower
of cost or market value (or, if applicable, the appraised net orderly
liquidation value) of Eligible Inventory multiplied by the applicable Inventory
Advance Rate, but not to exceed, together in the aggregate with the advances
pursuant to clause (ii) above, the Inventory Sublimit;
minus
(iv) all
Reserves which Agent has established pursuant to Section 1.2 (including
those to be established in connection with the requested Revolving Loan or
Credit Accommodation); and
minus
(v) the
outstanding principal balance of all Revolving Loans.
Neither
Agent nor any Lender shall be responsible for any failure by any other Lender
to
perform its obligations to make Revolving Loans, or make available Letter of
Credit Accommodations, hereunder, and the failure of any Lender to make, or
make
available, its Pro Rata Revolving Share of any Revolving Loan or Letter of
Credit Accommodation hereunder shall not relieve any other Lender of its
obligation, if any, to make its Pro Rata Revolving Share (or, if applicable,
its
Adjusted Pro Rata Revolving Share) of any Revolving Loans or Letter of Credit
Accommodation hereunder.
If
Borrower makes a request for a Revolving Loan as provided herein,
Agent,
at its
option and in its sole discretion,
shall do
either of the following:
(A) advance
the amount of the proposed Revolving Loan to Borrower disproportionately (a
"Disproportionate
Advance")
out of
Agent's own funds on behalf of the Lenders according to their respective Pro
Rata Revolving Loan Shares thereof (or,
if
applicable, their respective Adjusted Pro Rata Revolving Shares
thereof),
which
advance shall be on the same day as Borrower's request therefor if Borrower
notifies Agent of such request by 1:00 P.M. (New York time) on such day, and
request settlement in accordance with Section 11 such that upon such settlement
each Lender's share of the outstanding Revolving Loans (including the amount
of
any Disproportionate Advance) equals its Pro Rata Revolving Share (or,
if
applicable, its Adjusted Pro Rata Revolving Share);
or
(B) notify
each Lender by telecopy, electronic mail or other similar form of
teletransmission of the proposed advance on the same day Agent is notified
or
deemed notified by Borrower of Borrower's request for an advance pursuant to
this Section 1.1(a), in which event each Lender shall remit, to the demand
deposit account designated by Borrower, at or prior to 3:00 P.M. New York time,
on the date of notification, if such notification is made before 1:00 P.M.
New
York time, or 10:00 A.M. New York time, on the Business Day immediately
succeeding the date of such notification, if such notification is made after
1:00 P.M. New York time, immediately available funds in an amount equal to
such
Lender's Pro Rata Revolving Share (or,
if
applicable, such Lender's Adjusted Pro Rata Revolving Share) of
the
proposed advance.
-2-
If
and to
the extent that a Defaulting Lender does not settle with Agent as required
under
this Agreement, Borrower and the Defaulting Lender severally agree to repay
to
Agent forthwith, on demand, such amount required to be paid by such Defaulting
Lender to Agent, together with interest thereon, for each day from the date
such
amount is made available to Borrower until the date such amount is repaid to
Agent, (x) in the case of a Defaulting Lender, at the rate published by the
Federal Reserve Bank of New York on the next succeeding Business Day as the
"Federal Funds Rate" (or if no such rate is published for the applicable
Business Day, at the average rate quoted for such day for such transactions
from
three (3) federal funds brokers of recognized standing selected by Agent) and
(y) in the case of Borrower, at the interest rate applicable at such time
for such Loans; provided,
that
Borrower's obligation to repay such advance to Agent shall not relieve such
Defaulting Lender of its liability to Agent for failure to settle as provided
in
this Agreement.
(b) Protective
Advances.
Subject
to the limitations set forth in this Section 1.1(b), the Agent is hereby
authorized by the Borrower and the Lenders, from time to time in the Agent's
sole discretion, (A) after the occurrence of a Default or an Event of
Default, or (B) at any time that any of the other applicable conditions
precedent set forth in Section 3.2 or otherwise have not been satisfied
(including without limitation the condition precedent that the aggregate
principal amount of all outstanding Revolving Loans do not exceed Availability),
to require the Lenders to make Revolving Loans to the Borrower, according to
each such Lender's Pro Rata Revolving Share thereof, which such Revolving Loans
the Agent, in its sole judgment, deems necessary or desirable (1) to
preserve or protect the business conducted by any Credit Party, the Collateral,
or any portion thereof, (2) to enhance the likelihood of, or maximize the
amount of, repayment of the Loans and other Obligations, or (3) to pay any
amount chargeable to the Borrower pursuant to the terms of this Agreement or
any
other Loan Document, including required principal payments on the Term Loans,
interest costs, fees, expenses, costs and indemnification (any of the advances
described in this Section 1.1(b) being hereafter referred to as
"Protective
Advances");
provided,
that
(w) the Required Lenders may at any time revoke the Agent's authorization
to so require such Lenders to make Protective Advances, any such revocation
to
be in writing and to become effective prospectively upon the Agent's receipt
thereof, (y) the aggregate amount of Protective Advances outstanding at any
time, exclusive of those made pursuant to the preceding clause (3), shall not
exceed $2,000,000 and (z) the Agent shall be prohibited from so requiring
such Lenders to make Protective Advances to the extent the making thereof would
cause the aggregate principal amount of all outstanding Revolving Loans to
exceed the aggregate Revolving Loan Commitments then in effect less the amount
of any Reserves then in effect with respect to the Credit Accommodation Balance.
If a Protective Advance is made, or permitted to remain outstanding, pursuant
to
this Section 1.1(b), then all Lenders shall be bound to make, or permit to
remain outstanding, such Protective Advance based upon their Pro Rata Revolving
Loan Shares thereof. Borrower shall repay the aggregate outstanding principal
amount of Protective Advances upon demand therefore by the Agent.
-3-
(c) Term
Loan A.
Each
Lender with a Term Loan A Commitment agrees (severally and not jointly) to
make, on the date of this Agreement, an advance to Borrower computed with
respect to the value of certain Eligible Equipment owned by Borrower on the
date
of this Agreement in an amount equal to its Pro Rata Term Loan A Share of
the principal amount, if any, set forth in Section 2(a) of Schedule A.
Each such advance made by a Lender is sometimes referred to herein as a
"Term
Loan A Advance"
and
collectively as "Term
Loan A."
Each
Term Loan A Advance will be evidenced by a term note in the form attached
hereto as Exhibit A. After Term Loan A has been made on the date hereof,
the Term Loan A Commitment automatically shall be terminated.
(d) Term
Loan B. Each
Lender with a Term Loan B Commitment shall, at its option and in its sole
discretion, (severally and not jointly) make, from time to time on or after
the
date of this agreement, upon the written request of Borrower (including by
electronic mail); provided that no Default or Event of Default exists at such
time and Agent has received all appraisals, documents and other matters as
Agent
shall, in its sole discretion require prior to such advance, advances to
Borrower computed with respect to the value of certain Eligible Equipment,
real
property leases and other contract rights owned by Borrower on the date of
this
agreement in an amount equal to its Pro Rata Term Loan B Share of the
principal amount of such advance up to the aggregate principal amount set forth
in Section 2(a) of Schedule A. Each such advance made by a Lender is
sometimes referred to herein as a "Term
Loan B Advance"
and
collectively as "Term
Loan B."
Each
Term Loan B Advance will be evidenced by a term note in the form attached
hereto as Exhibit B. After Term Loan B has been advanced in full the
Term Loan B Commitment shall be automatically terminated.
1.2. Reserves.
Agent
may
from time to time establish and revise such reserves as Agent deems appropriate
in its sole discretion ("Reserves")
to
reflect (i) events, conditions, contingencies or risks which affect or may
affect (A) the Collateral or its value, or the security interests and other
rights of Agent or the Lenders in the Collateral or (B) the assets,
business or prospects of Borrower or any Obligor, (ii) Agent's good faith
concern that any Collateral report or financial information furnished to Agent
by or on behalf of Borrower or any Obligor is or may have been incomplete,
inaccurate or misleading in any material respect, (iii) any fact or
circumstance which Agent determines in good faith constitutes, or could
constitute, a Default or Event of Default or (iv) any other events or
circumstances which Agent determines in good faith make the establishment or
revision of a Reserve prudent. Without limiting the foregoing, Agent shall
(w) in the case of each Credit Accommodation issued for the purchase of
Inventory (A) which meets the criteria for Eligible Inventory set forth in
clauses (i), (ii), (iii), (v), (vi) and (vii) of the definition of Eligible
Inventory, (B) which is or will be in transit to one of the locations in
the continental United States set forth in Section 9 of Schedule A or
at another location in the continental United States of which Agent has been
notified as required by Section 6.8 (and which when arrives will constitute
Eligible Inventory), (C) which is fully insured in a manner satisfactory to
Agent and (D) with respect to which Agent is in possession of all bills of
lading and all other documentation which Agent has requested, all in form and
substance satisfactory to Agent in its sole discretion, establish a Reserve
equal to the Credit Accommodation Inventory Reserve Percentage of the cost
of
such Inventory (plus all duties, freight, taxes, insurance, costs and other
charges and expenses relating to such Credit Accommodation or such Eligible
Inventory), (x) in the case of any other Credit Accommodation issued for
any purpose, establish a Reserve equal to the full amount of such Credit
Accommodation plus all costs and other charges and expenses relating to such
Credit Accommodation and, (y) in the case of taxes with respect to fuel
inventory and pipeline inventory, establish a Reserve equal to the full amount
of such taxes plus all costs and other charges and expenses relating to such
taxes. In addition, Agent shall establish a permanent Reserve in the amount
set
forth in Section 1(f) of Schedule A. In no event shall the
establishment of a Reserve in respect of a particular actual or contingent
liability obligate Agent or the Lenders to make advances to pay such liability
or otherwise obligate Agent or the Lenders with respect thereto.
-4-
1.3. Other
Provisions Applicable to Credit Accommodations.
Agent
may, in its sole discretion and on terms and conditions acceptable to Agent,
make Credit Accommodations available to Borrower either by issuing them, or
by
causing other financial institutions to issue them supported by the Agent's
or
the applicable Lender's guaranty or indemnification; provided,
that
after giving effect to each Credit Accommodation, the Credit Accommodation
Balance will not exceed the Credit Accommodation Limit. Any amounts paid by
Agent, Issuing Lender or the Lenders in respect of a Credit Accommodation shall
be immediately payable by Borrower without notice, presentment or demand and
Borrower and Borrower agrees that each payment made by Agent, Issuing Lender
or
the Lenders in respect of a Credit Accommodation shall constitute a request
by
Borrower for a Revolving Loan to reimburse such Person. In the event such
Revolving Loan is not advanced by Agent or Lenders for any reason, such
reimbursement obligations (whether owing to the Agent, Issuing Lender or
Lenders) shall become part of the Obligations hereunder and shall bear interest
at the rate then applicable to Revolving Loans until repaid. Immediately
upon the issuance of a Credit Accommodation in accordance with this Agreement,
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received from Agent, without recourse or warranty, an undivided interest
and
participation therein to the extent of such Lender's Pro Rata Revolving Share
(including, without limitation, all obligations of Borrower with respect
thereto). Borrower hereby indemnifies Agent and each Lender against any and
all
liability and expense it may incur in connection with any Credit Accommodation
and agrees to reimburse Agent and each Lender for any payment made by Agent
or
any Lender to the issuer.
1.4. Repayment.
(a) Accrued
interest on all monetary Obligations shall be payable on the first day of each
month. Principal of the Term Loans shall be repaid as set forth in
Section 2(a)(ii) and 2(b)(ii) of Schedule A. If at any time any of the
Loan Limits are exceeded, Borrower will immediately pay to Agent, on behalf
of
the Agent and/or the applicable Lenders, such amounts (or provide cash
collateral to Agent with respect to the Credit Accommodation Balance in the
manner set forth in Section 8.3) as shall cause Borrower to be in full
compliance with all of the Loan Limits.
-5-
(b) All
unpaid monetary Obligations shall be payable in full on the Maturity Date (as
defined in Section 8.1) or, if earlier, on the date of any early
termination pursuant to Section 8.2.
1.5. Minimum
Borrowing.
Subject
to the terms and conditions of this Agreement, Borrower agrees to
(i) borrow sufficient amounts to cause the outstanding principal balance of
the Loans to equal or exceed, at all times prior to the Maturity Date, the
Minimum Loan Amount and (ii) maintain Availability sufficient to enable
Borrower to do so. However, the Agent and Lenders shall not be obligated to
loan
Borrower the Minimum Loan Amount other than in accordance with all of the terms
and conditions of this Agreement.
1.6. Borrowing
Procedure/Credit Accommodation Procedure.
(a) A
request
for a Revolving Loan shall be made or shall be deemed to be made in the
following manner: Borrower shall give Agent same day notice, no later than
1:00
P.M. New York time for such day, of its request for a Revolving Loan. As an
accommodation to Borrower, Agent may permit telephone requests for Revolving
Loans and electronic transmittal of instructions, authorizations, agreements
or
reports to Agent by Borrower. Unless Borrower specifically directs Agent in
writing not to accept or act upon telephonic or electronic communications from
Borrower, Agent shall have no liability to Borrower for any loss or damage
suffered by Borrower as a result of Agent's honoring of any requests, execution
of any instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have
been
sent to Agent by Borrower, and Agent shall have no duty to verify the origin
of
any such communication or the authority of the Person sending it.
(b) Borrower
hereby irrevocably authorizes Agent and Lenders to disburse the proceeds of
each
Revolving Loan requested by Borrower, or deemed to be requested by Borrower,
as
follows: The proceeds of each Revolving Loan requested under Section 1.1(a)
shall be disbursed by Agent, or Lenders, in lawful money of the United States
of
America in immediately available funds, in the case of the initial borrowing,
in
accordance with the terms of the written disbursement letter from Borrower
to
Agent, and in the case of each subsequent borrowing, by wire transfer or
Automated Clearing House (ACH) transfer to such bank account as may be agreed
upon by Borrower and Agent, or Borrower and the Lenders, as applicable, from
time to time, or elsewhere if pursuant to a written direction from Borrower.
(c) Borrower
shall make requests to Agent for Credit Accommodations in writing at least
three
(3) Business Days prior to the date such Credit Accommodation is to be made
available. Each such request shall specify the date such Credit Accommodation
is
to be made available, the amount thereof, the name and address of the
beneficiary thereof and a description of the transaction to be supported
thereby. Any such notice shall be accompanied by the form of letter of credit
requested and any application or reimbursement agreement required by the issuer
of such letter of credit. If any term of such application or reimbursement
agreement is inconsistent with this Agreement, then the provisions of this
Agreement shall control to the extent of such inconsistency.
-6-
|
2.
|
INTEREST
AND FEES.
|
2.1. Interest.
All
Loans
and other monetary Obligations shall bear interest at the Interest Rate(s)
set
forth in Section 3 of Schedule A ("Interest
Rates"),
except where expressly set forth to the contrary in this Agreement or another
Loan Document; provided,
that at
any time an Event of Default exists, if requested by Agent or Required Lenders
(or automatically during the existence of an Event of Default described in
Section 9.1(vii) or (viii)), all Loans and other monetary Obligations shall
bear
interest at a rate per annum equal to two percentage points (2.00) in
excess of the rate otherwise applicable thereto (the "Default
Rate")
until
paid in full (notwithstanding the entry of any judgment against Borrower or
the
exercise of any other right or remedy by Agent or Lenders), and all such
interest shall be payable on demand. Changes in the Interest Rate shall be
effective as of the date of any change in the Prime Rate. Notwithstanding
anything to the contrary contained in this Agreement, the aggregate of all
amounts deemed to be interest hereunder and charged or collected by the Agent
or
the Lenders is not intended to exceed the highest rate permissible under any
applicable law, but if it should, such interest shall automatically be reduced
to the extent necessary to comply with applicable law and Agent and the Lenders,
as applicable, will refund to Borrower any such excess interest received by
Agent and the Lenders, as applicable.
2.2. Fees
and Warrants.
Borrower
shall pay to Agent, for itself or for the benefit of Lenders, as the case may
be, the following fees, and issue to
Greystone Business Credit II, L.L.C. the following warrants, which
are
in addition to all interest and other sums payable by Borrower to the Lenders
and Agent under this Agreement, are to be shared among Lenders as agreed upon
between Agent and each Lender in a separate agreement, and are not
refundable:
(a) Fee
Letter.
To
Agent, for the account of Agent, each of the fees described in the Fee Letter,
on the dates specified in the Fee Letter.
(b) Closing
Fee.
A
closing fee (the "Closing
Fee")
in the
amount set forth in Section 6(b) of Schedule A, which shall be deemed
to be fully earned as of, and payable on, the date hereof.
(c) Facility
Fees.
A
facility fee for the Initial Term (the "Initial
Term Facility Fee")
in the
amount set forth in Section 6(c)(i) of Schedule A (which shall be
fully earned as of the date of this Agreement and shall be payable in equal
installments due, respectively, on the date hereof and on each anniversary
of
the date of this Agreement during the Initial Term, other than the Maturity
Date), and a facility fee for each Renewal Term (the "Renewal
Term Facility Fee")
in the
amount set forth in Section 6(c)(ii) of Schedule A (which shall be
fully earned as of the first day of such Renewal Term and shall be payable
in
equal installments due, respectively, on the first day of such Renewal Term
and
on each anniversary thereof during such Renewal Term, other than the Maturity
Date).
-7-
(d) Servicing
Fee.
A
monthly servicing fee (the "Servicing
Fee")
in the
amount set forth in Section 6(d) of Schedule A, in consideration of
Agent's administration and other services pursuant to this Agreement for each
month (or part thereof), which shall be fully earned as of, and payable in
advance on, the date of this Agreement and on the first day of each month
thereafter so long as any of the Obligations are outstanding.
(e) Minimum
Borrowing Fee.
A
minimum borrowing fee (the "Minimum
Borrowing Fee")
equal
to the excess, if any, of (i) interest which would have been payable in
respect of each period set forth in Section 6(e)(i) of Schedule A if,
at all times during such period, the principal balance of the Loans were equal
to the Minimum Loan Amount set forth in Section 6(e)(ii) over
(ii) the actual interest payable in respect of such period, which fee shall
be fully earned as of the last day of such period and payable on the date set
forth in Section 6(e)(iii) of Schedule A and on the Maturity Date,
commencing with the immediately following period.
(f) Credit
Accommodation Fees.
The fees
relating to Credit Accommodations (or guaranties thereof by the Lenders) in
the
amount(s) set forth in Section 6(g) of Schedule A (the "Credit
Accommodation Fees"),
payable, in arrears, on the first day of each month so long as any of the
Obligations are outstanding and on the Maturity Date, plus all costs and fees
charged by the issuer, payable as and when such costs and fees are charged.
(g) Warrants.
Warrants to acquire the capital stock of Borrower (the "Warrants"),
as
summarized in Section 6(f) of Schedule A and as more fully set forth
in a separate warrant agreement executed by Borrower contemporaneously with
this
Agreement.
2.3. Computation
of Interest and Fees.
(a) All
interest and fees shall be calculated daily on the closing balances in the
Loan
Account based on the actual number of days elapsed in a year of 360 days. For
purposes of calculating interest and fees, if the outstanding daily principal
balance of the Revolving Loans is a credit balance, such balance shall be deemed
to be zero.
(b) If
Agent
or any Lender shall have determined that the adoption of any law, rule or
regulation regarding capital adequacy, or any change therein or in the
interpretation or application thereof, or compliance by Agent or such Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any central bank or governmental authority enacted after
the date hereof, does or shall have the effect of reducing the rate of return
on
such party's capital as a consequence of its obligations hereunder to a level
below that which Agent or such Lender could have achieved but for such adoption,
change or compliance (taking into consideration such party's policies with
respect to capital adequacy), then from time to time, after submission by Agent
or such Lender, as applicable, to Borrower of a written demand therefor
("Capital
Adequacy Demand")
together with the certificate described below, Borrower shall pay to such party
such additional amount or amounts ("Capital
Adequacy Charge")
as
will compensate such party for such reduction, such Capital Adequacy Demand
to
be made with reasonable promptness following such determination. A certificate
of Agent or such Lender claiming entitlement to payment as set forth above
shall
be conclusive in the absence of manifest error. Such certificate shall set
forth
the nature of the occurrence giving rise to such reduction, the amount of the
Capital Adequacy Charge to be paid to Agent or such Lender, and the method
by
which such amount was determined. In determining such amount, the applicable
party may use any reasonable averaging and attribution method, applied on a
non-discriminatory basis.
-8-
2.4. Loan
Account; Monthly Accountings.
Agent
shall maintain a loan account for Borrower reflecting all advances, charges,
expenses and payments made pursuant to this Agreement (the "Loan
Account"),
and
shall provide Borrower with a monthly accounting reflecting the activity in
the
Loan Account. Each accounting shall be deemed correct, accurate and binding
on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by any Lender or Agent),
unless Borrower notifies Agent in writing to the contrary within 30 days after
such account is rendered, describing the nature of any alleged errors or
omissions. However, Agent's failure to maintain the Loan Account or to provide
any such accounting shall not affect the legality or binding nature of any
of
the Obligations. Principal, interest, fees and other monetary Obligations due
and owing under this Agreement (including fees and other amounts paid to issuers
of Credit Accommodations) may, in Agent's sole discretion, be charged to the
Loan Account, and will thereafter be deemed to be Revolving Loans (and be deemed
to have been requested by Borrower) and will bear interest at the same rate
as
other Revolving Loans.
|
3.
|
CONDITIONS.
|
3.1. Conditions
Precedent to the Initial Extension of Credit.
The
obligation of the Lenders to make the initial Loans, or make available the
initial Credit Accommodations, whichever occurs first, is subject to the
fulfillment (or waiver), to the satisfaction of Agent and each Lender, of each
of the conditions precedent set forth on Schedule 3.1 (the making of such
initial extension of credit by a Lender being conclusively deemed to be its
satisfaction or waiver of the conditions precedent).
3.2. Conditions
Precedent to all Extensions of Credit.
The
obligation of each Lender to make any Loans, or make available any Credit
Accommodations, hereunder at any time shall be subject to the following
conditions precedent: (i) the representations and warranties contained in this
Agreement or in the other Loan Documents shall be true and correct in all
material respects on and as of the date of such extension of credit, as though
made on and as of such date (except to the extent that such representations
and
warranties relate solely to an earlier date, in which case such representations
and warranties shall have been true and correct in all material respects as
of
such earlier date); (ii) no Default or Event of Default shall have occurred
and
be continuing on the date of such extension of credit, nor shall either result
from the making of such extension of credit; (iii) no injunction, writ,
restraining order, or other order of any nature restricting or prohibiting,
directly or indirectly, the extending of such credit shall have been issued
and
remain in force against any Credit Party, Agent, any Lender, or any of their
Affiliates; and (iv) no material adverse change shall have occurred and be
continuing since the Closing Date.
-9-
|
4.
|
SECURITY
INTEREST.
|
4.1. Grant
of Security Interest.
To
secure
the full payment and performance of all of the Obligations, Borrower hereby
assigns and grants to Agent, for the benefit of Agent and the Lenders, a
continuing security interest in the all of the property of Borrower, whether
tangible or intangible, whether now or hereafter owned, existing, acquired
or
arising and wherever now or hereafter located, and whether or not eligible
for
lending purposes, including all of the following property of Borrower:
(i) all Accounts (whether or not Eligible Accounts) and all Goods whose
sale, lease or other disposition by Borrower has given rise to Accounts and
have
been returned to, or repossessed or stopped in transit by, Borrower;
(ii) all Chattel Paper, Instruments, Documents and General Intangibles
(including all patents, patent applications, trademarks, trademark applications,
trade names, trade secrets, goodwill, copyrights, copyright applications,
registrations, licenses, software, franchises, customer lists, tax refund
claims, claims against carriers and shippers, guarantee claims, contracts
rights, payment intangibles, security interests, security deposits and rights
to
indemnification); (iii) all Inventory (whether or not Eligible Inventory);
(iv) all Goods (other than Inventory), including Equipment, vehicles and
Fixtures; (v) all Investment Property; (vi) all Deposit Accounts, bank
accounts, deposits and cash; (vii) all Letter-of-Credit Rights;
(viii) all Commercial Tort Claims listed in Schedule 6.7;
(ix) all Supporting Obligations; (x) any other property of Borrower
now or hereafter in the possession, custody or control of Lender or Agent or
any
parent, Affiliate or Subsidiary of Agent or Lender or any participant with
any
Lender in the Loans, for any purpose (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise) and (xi) all
additions and accessions to, substitutions for, and replacements, products
and
Proceeds of the foregoing property, including proceeds of all insurance policies
insuring the foregoing property, and all of Borrower's books and records
relating to any of the foregoing and to Borrower's business.
4.2. Possessory
Collateral.
Immediately
upon Borrower's receipt of any portion of the Collateral evidenced by an
agreement, Instrument or Document, including any Tangible Chattel Paper and
any
Investment Property consisting of certificated securities, Borrower shall
deliver the original thereof to Agent together with an appropriate endorsement
or other specific evidence of assignment thereof to Agent, for the benefit
of
Agent and the Lenders (in form and substance acceptable to Agent). If an
endorsement or assignment of any such items shall not be made for any reason,
Agent is hereby irrevocably authorized, as Borrower's attorney and
agent-in-fact, to endorse or assign the same on Borrower's behalf.
-10-
4.3. Preservation
of Collateral and Perfection of Security Interest.
Borrower
shall, at the request of Agent, at any time and from time to time, authenticate,
execute and deliver to Agent such financing statements, documents and other
agreements and instruments (and pay the cost of filing or recording the same
in
all public offices deemed necessary or desirable by Agent) and do such other
acts and things or cause third parties to do such other acts and things as
Agent
may deem necessary or desirable in its sole discretion in order to establish
and
maintain a valid, attached and perfected security interest in the Collateral
in
favor of Agent and the Lenders (free and clear of all other Liens, claims,
encumbrances and rights of third parties whatsoever, whether voluntarily or
involuntarily created, except Permitted Liens) to secure payment of the
Obligations and to facilitate the collection of the Collateral. Borrower
authorizes Agent to file, transmit, or communicate, as applicable, financing
statements and amendments describing the Collateral as "all personal property
of
debtor" or "all assets of debtor" or words of similar effect, in order to
perfect Agent's Liens in the Collateral without Borrower's signature. Borrower
also hereby ratifies its authorization for Agent to have filed in any
jurisdiction any financing statements filed prior to the date
hereof.
|
5.
|
ADMINISTRATION.
|
5.1. Lock
Boxes and Blocked Accounts.
Borrower
will, at its expense, establish (and revise from time to time as Agent may
require) procedures acceptable to Agent, in Agent's sole discretion, for the
collection of checks, wire transfers and other proceeds of Accounts
("Account
Proceeds"),
which
may include (i) directing all Account Debtors to send all such proceeds
directly to a post office box designated by Agent either in the name of Borrower
(but as to which Agent has exclusive access) or, at Agent's option, in the
name
of Agent (a "Lock
Box"),
(ii) depositing all Account Proceeds received by Borrower into one or more
bank accounts maintained in Agent's name (each, a "Blocked
Account"), under
an
arrangement acceptable to Agent with a depository bank acceptable to Agent,
pursuant to which all funds deposited into each Blocked Account are to be
transferred to Agent in such manner, and with such frequency, as Agent shall
specify, (iii) the deposit of collections from service stations into local
bank accounts which are swept daily to a concentration account that is a Blocked
Account or (iv) a combination of the foregoing. Borrower agrees to execute,
and to cause its depository banks to execute, such Lock Box and Blocked Account
agreements and other documentation as Agent shall require from time to time
in
connection with the foregoing.
5.2. Remittance
of Proceeds.
Except
as
provided in Section 5.1, all Proceeds arising from the sale or other
disposition of any Collateral shall be delivered, in kind, by Borrower to Agent
in the original form in which received by Borrower not later than the following
Business Day after receipt by Borrower. Until so delivered to Agent, Borrower
shall hold such Proceeds separate and apart from Borrower's other funds and
property in an express trust for Agent and the Lenders. Nothing in this
Section 5.2 shall limit the restrictions on disposition of Collateral set
forth elsewhere in this Agreement.
-11-
5.3. Application
of Payments.
(a) Subject
to clause (b) of this Section 5.3, Agent may, in its sole discretion, apply,
reverse and re-apply all cash and non-cash Proceeds of Collateral or other
payments received with respect to the Obligations, in such order and manner
as
Agent shall determine, whether or not the Obligations are due, and whether
before or after the occurrence of a Default or an Event of Default; provided,
that
Agent intends to apply (but shall not be obligated to apply) all payments of
Revolving Loans to Protective Advances until all Protective Advances are paid
in
full prior to applying any such payments to other Revolving Loans; provided,
further
that, without the consent of the Lenders, no payments shall be applied to the
principal balance of the Term Loans, other than regularly scheduled payments
described in Sections 2(a)(ii) and 2(b)(ii) of Schedule A, until all
Revolving Loans have been paid in full. For purposes of determining
Availability, such amounts will be credited to the Loan Account and the
Collateral balances to which they relate upon Agent's receipt of an advice
from
the Agent's Bank that such items have been credited to the Agent's account
at
the Agent's Bank (or upon Agent's deposit thereof at the Agent's Bank in the
case of payments received by Agent in kind), in each case subject to final
payment and collection. However, for purposes of computing interest on the
Obligations, such items shall be deemed applied by the Agent two (2) Business
Days after Agent's receipt of advice of deposit thereof at the Agent's
Bank.
(b) If
a
Waterfall Event shall have occurred and be continuing, notwithstanding anything
herein or in any other Loan Document to the contrary, Agent shall apply all
cash
and non-cash Proceeds of Collateral or other payments received with respect
to
the Obligations, in each case as received by Agent, to the payment of the
Obligations in the following order:
(i) FIRST,
to
the payment of all fees, costs, expenses and indemnities due and owing to Agent
under this Agreement or any other Loan Document, and any other Obligations
owing
to Agent in respect of Protective Advances or in respect of sums otherwise
advanced by Agent to preserve or protect the Collateral or to preserve or
protect Agent's Lien in the Collateral (whether or not such Obligations are
then
due and owing to Agent), until paid in full;
(ii) SECOND,
to the payment of all fees, costs, expenses and indemnities due and owing to
Lenders in respect of the Loans and Commitments, to be shared among the Lender's
as agreed upon between Agent and each Lender in a separate agreement, until
paid
in full;
(iii) THIRD,
to
the payment of all accrued and unpaid interest due and owing to Lenders in
respect of the Loans, to be shared among the Lender's as agreed upon between
Agent and each Lender in a separate agreement, until paid in full;
(iv) FOURTH,
to the payment of all principal of the Loans then due and owing and to cash
collateralize the Credit Accommodation Balance in the manner described in
Section 8.3, pro rata based on each Lender's Pro Rata Revolving Share thereof,
until paid in full; and
-12-
(v) FIFTH,
to
the payment of all other Obligations owing to Agent and each Lender, pro rata
based on Agent's and each Lender's Pro Rata Share thereof, until paid in
full.
5.4. Notification;
Verification.
Agent
or
its designee may, from time to time, whether or not a Default or Event of
Default has occurred: (i) verify directly with the Account Debtors the
validity, amount and other matters relating to the Accounts and Chattel Paper,
by means of mail, telephone or otherwise, either in the name of Borrower or
Agent or such other name as Agent may choose; (ii) notify Account Debtors
that Agent and Lenders have a security interest in the Accounts and that payment
thereof is to be made directly to Agent on behalf of Agent and the
Lenders.
5.5. Power
of Attorney.
Borrower
hereby grants to Agent, on behalf of the Agent and the Lenders, an irrevocable
power of attorney, coupled with an interest, authorizing and permitting Agent
(acting through any of its officers, employees, attorneys or agents), at
any time (whether or not a Default or Event of Default has occurred and is
continuing, except as expressly provided below), at Agent's option, but without
obligation, with or without notice to Borrower, and at Borrower's expense,
to do
any or all of the following, in Borrower's name or otherwise: (i) execute
on behalf of Borrower any documents that Agent may, in its sole discretion,
deem
advisable in order to perfect and maintain Agent's Liens in the Collateral,
to
exercise a right of Borrower, Agent or any Lender, or to fully consummate all
the transactions contemplated by this Agreement and the other Loan Documents
(including such financing statements and continuation financing statements,
and
amendments thereto, as Agent shall deem necessary or appropriate) and to file
as
a financing statement any copy of this Agreement or any financing statement
signed by Borrower; (ii) execute on behalf of Borrower any document
exercising, transferring or assigning any option to purchase, sell or otherwise
dispose of or lease (as lessor or lessee) any real or personal property which
is
part of the Collateral or in which Agent or Lender has an interest;
(iii) execute on behalf of Borrower any invoices relating to any Accounts,
any draft against any Account Debtor, any proof of claim in bankruptcy, any
notice of Lien or claim, and any assignment or satisfaction of mechanic's,
materialman's or other Lien; (iv) execute on behalf of Borrower any notice
to any Account Debtor; (v) receive and otherwise take control in any manner
of any cash or non-cash items of payment or Proceeds of Collateral;
(vi) endorse Borrower's name on all checks and other forms of remittances
received by Agent or Lender; (vii) pay, contest or settle any Lien, charge,
encumbrance, security interest and adverse claim in or to any of the Collateral,
or any judgment based thereon, or otherwise take any action to terminate or
discharge the same; (viii) after the occurrence of a Default or Event of
Default, grant extensions of time to pay, compromise claims relating to, and
settle Accounts, Chattel Paper and General Intangibles for less than face value
and execute all releases and other documents in connection therewith;
(ix) pay any sums required on account of Borrower's taxes or to secure the
release of any Liens therefor; (x) pay any amounts necessary to obtain, or
maintain in effect, any of the insurance described in Section 6.14;
(xi) settle and adjust, and give releases of, any insurance claim that
relates to any of the Collateral and obtain payment therefor;
(xii) instruct any third party having custody or control of any Collateral
or books or records belonging to, or relating to, Borrower to give Agent and
the
Lenders the same rights of access and other rights with respect thereto as
Agent
and the Lenders have under this Agreement; (xiii) after the occurrence of a
Default or Event of Default, change the address for delivery of Borrower's
mail
and receive and open all mail addressed to Borrower; and (xiv) endorse or
assign to Agent or the Lenders on Borrower's behalf any portion of Collateral
evidenced by an agreement, Instrument or Document if an endorsement or
assignment of any such items is not made by Borrower pursuant to
Section 4.2. Any and all sums paid, and any and all costs, expenses,
liabilities, obligations and reasonable attorneys' fees incurred, by Agent
or
the Lenders with respect to the foregoing shall be added to and become part
of
the Obligations, shall be payable on demand, and shall bear interest at a rate
equal to the highest interest rate applicable to any of the Obligations.
Borrower agrees that Agent's rights under the foregoing power of attorney or
any
of Agent's or the Lenders' other rights under this Agreement or the other Loan
Documents shall not be construed to indicate that Agent or the Lenders are
in
control of the business, management or properties of Borrower.
-13-
5.6. Disputes.
Borrower
shall promptly notify Agent of all disputes or claims relating to Accounts
and
Chattel Paper. Borrower will not, without Agent's prior written consent,
compromise or settle any Account or Chattel Paper for less than the full amount
thereof, grant any extension of time of payment of any Account or Chattel Paper,
release (in whole or in part) any Account Debtor or other person liable for
the
payment of any Account or Chattel Paper or grant any credits, discounts,
allowances, deductions, return authorizations or the like with respect to any
Account or Chattel Paper; except that prior to the occurrence of an Event of
Default, Borrower may take any of such actions in the ordinary course of its
business, provided that Borrower promptly reports the same to
Agent.
5.7. Invoices.
At
Agent's request, Borrower will cause all invoices and statements which it sends
to Account Debtors or other third parties to be marked, in a manner satisfactory
to Agent, to reflect the Agent's and Lenders' security interest
therein.
5.8. Inventory.
(a) Returns.
Provided
that no Event of Default has occurred and is continuing, if any Account Debtor
returns any Inventory to Borrower in the ordinary course of its business,
Borrower will promptly determine the reason for such return and promptly issue
a
credit memorandum to the Account Debtor in the appropriate amount (sending
a
copy to Agent). After the occurrence of an Event of Default, Borrower will
not
accept any return without Agent's prior written consent. Upon Agent's demand,
regardless of whether an Event of Default has occurred, Borrower will
(i) hold the returned Inventory in trust for the Agent and the Lenders;
(ii) segregate all returned Inventory from all of Borrower's other
property; (iii) conspicuously label the returned Inventory as the Agent's
and the Lenders' property; and (iv) immediately notify Agent of the return
of such Inventory, specifying the reason for such return, the location and
the
condition of the returned Inventory and, at Agent's request, deliver such
returned Inventory to Agent at an address specified by Agent.
-14-
(b) Other
Covenants.
Borrower
will not, without Agent's prior written consent, (i) store any Inventory
with any warehouseman or other third party other than as set forth in Schedule
6.8 or (ii) sell any Inventory on a sale-or-return, guaranteed sale, or
other contingent basis other than as set forth on Schedule 6.8. Borrower
warrants and represents that all of the Inventory has been produced only in
accordance with the Fair Labor Standards Act of 1938 and all rules, regulations
and orders promulgated thereunder.
5.9. Access
to Collateral, Books and Records.
At
reasonable times, and on one Business Day's notice prior to the occurrence
of a
Default or an Event of Default and at any time and with or without notice after
the occurrence of a Default or an Event of Default, Agent or its respective
agents shall have the right to inspect the Collateral, and the right to examine
and copy each Credit Party's books and records. Agent shall take reasonable
steps to keep confidential, to the extent required by and in the manner provided
by Section 12.10, all information obtained in any such inspection or
examination. Borrower shall, and shall cause each of the other Credit Parties
to, give Agent access to any or all of each Credit Party's premises to enable
Agent to conduct such inspections and examinations. Such inspections and
examinations shall be at Borrower's expense and the charge therefor shall be
$850 per person per day (or such higher amount as shall represent Agent's then
current standard charge), plus reasonable out-of-pocket expenses. Agent may,
at
Borrower's expense, use each Credit Party's personnel, computer and other
equipment, programs, printed output and computer readable media, supplies and
premises for the collection, sale or other disposition of Collateral to the
extent Agent, in its sole discretion, deems appropriate. Borrower hereby
irrevocably authorizes all accountants and third parties to disclose and deliver
to Agent, at Borrower's expense, all financial information, books and records,
work papers, management reports and other information in their possession
regarding Borrower. Borrower will not enter into any agreement with any
accounting firm, service bureau or third party to store Borrower's books or
records at any location other than Borrower's Address without first obtaining
Agent's written consent (which consent may be conditioned upon such accounting
firm, service bureau or other third party agreeing to give Agent the same rights
with respect to access to books and records and related rights as Agent has
under this Agreement).
|
6.
|
REPRESENTATIONS,
WARRANTIES AND COVENANTS.
|
To
induce
Agent and the Lenders to enter into this Agreement, Borrower represents,
warrants and covenants as follows (it being understood that (i) each such
representation and warranty will be deemed remade as of the date on which each
Loan is made and each Credit Accommodation is provided and shall not be affected
by any knowledge of, or any investigation by, Agent or any Lender, and
(ii) the accuracy of each such representation, warranty and covenant will
be a condition to each Loan and Credit Accommodation):
6.1. Existence
and Authority.
Borrower
is duly organized, validly existing and in good standing under the laws of
the
State of Tennessee and each of the other Credit Parties is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. Each Credit Party is qualified and licensed to do business in
all
jurisdictions in which any failure to do so would have a material adverse effect
on such Credit Party. The execution, delivery and performance by Borrower of
this Agreement and by each of the Credit Parties of the other Loan Documents
have been duly and validly authorized, do not violate any Credit Party's
articles or certificate of incorporation or formation, by-laws or other
organizational documents, or any law or any agreement or instrument or any
court
order which is binding upon any Credit Party or the property of any Credit
Party, do not constitute grounds for acceleration of any indebtedness or
obligation under any agreement or instrument which is binding upon any Credit
Party or its property, and do not require the consent of any Person. This
Agreement and such other Loan Documents have been duly executed and delivered
by, and are enforceable against, each Credit Party that has signed them, in
accordance with their respective terms. Schedule 6.1 sets forth the
ownership of each Credit Party and the names and ownership of each Credit
Party's Subsidiaries as of the date of this Agreement.
-15-
6.2. Name;
Trade Names and Styles.
The
name
of Borrower set forth in the heading to this Agreement is its correct and
complete legal name as of the date hereof. Listed in Schedule 6.2 are all
prior names of Borrower and all of Borrower's present and prior trade names,
including any name that it has used in any of its Federal tax returns or
correspondence pertaining thereto. Borrower shall give Agent at least thirty
days' prior written notice before changing its name or doing business under
any
other name and shall not use any name, other than its correct and complete
legal
name, on any of its Federal tax returns or related correspondence. Borrower
has
complied with all laws relating to the conduct of business under a fictitious
business name. Borrower represents and warrants that (i) each trade name
does not refer to another corporation or other legal entity; and (ii) all
Accounts invoiced under any such trade names are owned exclusively by Borrower
and are subject to Agent's Liens and the other terms of this
Agreement.
6.3. Title
to Collateral; Permitted Liens.
Borrower
has good and marketable title to the Collateral. The Collateral now is and
will
remain free and clear of any and all Liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens. Agent and the
Lenders now have, and will continue to have, a first-priority perfected and
enforceable security interest in all of the Collateral, subject only to the
Permitted Liens, and Borrower will at all times defend Agent and the Lenders
and
the Collateral against all claims of others. None of the Collateral which is
Equipment is or will be affixed to any real property in such a manner, or with
such intent, as to become a Fixture. Except for leases or subleases as to which
Borrower has delivered to Agent a landlord's waiver in form and substance
satisfactory to Agent or with respect to which Agent has, in its sole
discretion, maintained such Reserves as Agent deems appropriate, Borrower is
not
a lessee or sublessee under any real property lease or sublease pursuant to
which the lessor or sublessor may obtain any rights in any of the Collateral,
and no such lease or sublease now prohibits, restrains, impairs or conditions,
or will prohibit, restrain, impair or condition, Borrower's right to remove
any
Collateral from the premises. Except for warehouses as to which Borrower has
delivered to Agent a warehouseman's waiver in form and substance satisfactory
to
Agent, Borrower is not a ▇▇▇▇▇▇ of any Goods at any warehouse under an
arrangement pursuant to which the warehouseman may obtain any rights in any
of
the Collateral. Prior to causing or permitting any Collateral to be located
upon
premises in which any third party has an interest (whether as owner, mortgagee,
beneficiary under a deed of trust, lienholder or otherwise), Borrower shall,
whenever requested by Agent, cause each such third party to execute and deliver
to Agent, in form and substance acceptable to Agent, such waivers and
subordinations as Agent shall specify, so as to ensure that Agent's and the
Lenders' rights in the Collateral are, and will continue to be, superior to
the
rights of any such third party. Borrower will keep in full force and effect,
and
will comply with all the terms of, any lease of real property where any of
the
Collateral now or in the future may be located.
-16-
6.4. Accounts
and Chattel Paper.
As
of
each date reported by Borrower, all Accounts which Borrower has reported to
Agent as being Eligible Accounts comply in all respects with the criteria for
eligibility established by Agent and in effect at such time. All Accounts and
Chattel Paper are genuine and in all respects what they purport to be, arise
out
of a completed, bona fide and unconditional and non-contingent sale and delivery
of goods or rendition of services by Borrower in the ordinary course of its
business and in accordance with the terms and conditions of all purchase orders,
contracts or other documents relating thereto, each Account Debtor thereunder
had the capacity to contract at the time any contract or other document giving
rise to such Accounts and Chattel Paper were executed, and the transactions
giving rise to such Accounts and Chattel Paper comply with all applicable laws
and governmental rules and regulations.
6.5. Electronic
Chattel Paper.
To
the
extent that Borrower obtains or maintains any Electronic Chattel Paper, Borrower
shall create, store and assign the record or records comprising the Electronic
Chattel Paper in such a manner that (i) a single authoritative copy of the
record or records exists which is unique, identifiable and except as otherwise
provided below, unalterable, (ii) the authoritative copy identifies Agent
as the assignee of the record or records, (iii) the authoritative copy is
communicated to and maintained by Agent or its designated custodian,
(iv) copies or revisions that add or change an identified assignee of the
authoritative copy can only be made with the participation of Agent,
(v) each copy of the authoritative copy and any copy of a copy is readily
identifiable as a copy that is not the authoritative copy and (vi) any
revision of the authoritative copy is readily identifiable as an authorized
or
unauthorized revision.
-17-
6.6. Investment
Property.
Borrower
will take any and all actions required or requested by Agent, from time to
time,
to (i) cause Agent, for the benefit of Agent and the Lenders, to obtain
exclusive control of any Investment Property in a manner acceptable to Agent
and
(ii) obtain from any issuers of Investment Property and such other Persons
as Agent shall specify, for the benefit of Agent and the Lenders, written
confirmation of Agent's exclusive control over such Investment Property and
take
such other actions as Agent may request to perfect Agent's Liens in such
Investment Property. For purposes of this Section 6.6, Agent shall have
exclusive control of Investment Property if (A) pursuant to
Section 4.2, such Investment Property consists of certificated securities
and Borrower delivers such certificated securities to Agent (with appropriate
endorsements if such certificated securities are in registered form);
(B) such Investment Property consists of uncertificated securities and
either (x) Borrower delivers such uncertificated securities to Agent, on
behalf of the Lenders, or (y) the issuer thereof agrees, pursuant to
documentation in form and substance satisfactory to Agent, that it will comply
with instructions originated by Agent without further consent by Borrower,
and
(C) such Investment Property consists of security entitlements and either
(x) Agent becomes the entitlement holder thereof or (y) the
appropriate securities intermediary agrees, pursuant to documentation
in form and substance satisfactory to Agent, that it will comply with
entitlement orders originated by Agent without further consent by
Borrower.
6.7. Commercial
Tort Claims.
Borrower
has no Commercial Tort Claims pending other than those listed in
Schedule 6.7, and Borrower
shall promptly notify Lender in writing upon incurring or otherwise obtaining
a
Commercial Tort Claim after the date hereof against any third party. Such notice
shall constitute Borrower's authorization to amend such Schedule 6.7 to add
such
Commercial Tort Claim.
6.8. State
of Organization; Location of Collateral.
Borrower's
Address is Borrower's chief executive office and the location of its books
and
records. In addition, except as provided in the immediately following sentence,
Borrower has places of business and Collateral located only at the locations
set
forth on Schedule 6.8. Borrower will give Agent at least thirty days' prior
written notice (along with an update to Schedule 6.8 to reflect the same) before
changing Borrower's state of organization, opening any additional place of
business, changing its chief executive office or the location of its books
and
records, or moving any of the Collateral to a location other than Borrower's
Address or one of the locations set forth in Schedule 6.8, and will execute
and deliver all financing statements and other agreements, instruments and
documents which Agent shall require as a result thereof.
6.9. Financial
Condition, Statements and Reports.
All
financial statements delivered to Agent or any Lender by or on behalf of any
Credit Party have been prepared in conformity with GAAP and completely and
fairly reflect the financial condition of the Credit Parties, at the times
and
for the periods therein stated. Between the last date covered by any such
financial statement provided to Agent and the date hereof (or, with respect
to
the remaking of this representation in connection with the making of any Loan
or
the providing of any Credit Accommodation, the date such Loan is made or such
Credit Accommodation is provided) there has been no material adverse change
in
the financial condition or business of any Credit Party. Each Credit Party
is
solvent and able to pay its debts as they come due, and has sufficient capital
to carry on its business as now conducted and as proposed to be conducted.
All
schedules, reports and other information and documentation delivered by or
on
behalf of any Credit Party to Agent or any Lender with respect to the Collateral
are, or when delivered will be, true, correct and complete as of the date
delivered or the date specified therein; provided, that with respect to
locations resulting from new third party dealer supply contracts, such
information shall be reported to Agent within thirty days' after the execution
of such contracts.
-18-
6.10. Tax
Returns and Payments; Pension Contributions.
Each
Credit Party has timely filed all tax returns and reports required by applicable
law, has timely paid all applicable taxes, assessments, deposits and
contributions owing by each Credit Party and will timely pay all such items
in
the future as they became due and payable. The Credit Parties may, however,
defer payment of any contested taxes; provided,
that the
Credit Parties (i) in good faith contest their obligations to pay such
taxes by appropriate proceedings promptly and diligently instituted and
conducted; (ii) Borrower notifies Agent in writing of the commencement of,
and any material development in, the proceedings; (iii) post bonds or take
any other steps required to keep the contested taxes from becoming a Lien upon
any of the Collateral and (iv) maintain adequate reserves therefor in
conformity with GAAP. Borrower is unaware of any claims or adjustments proposed
for any of any Credit Party's prior tax years that could result in additional
taxes becoming due and payable by any Credit Party. Each Credit Party has paid,
and shall continue to pay, all amounts necessary to fund all present and future
pension, profit sharing and deferred compensation plans in accordance with
their
terms, and no Credit Party has withdrawn from participation in, permitted
partial or complete termination of, or permitted the occurrence of any other
event with respect to, any such plan which could result in any liability of
any
Credit Party, including any liability to the Pension Benefit Guaranty
Corporation or any other governmental agency.
6.11. Compliance
with Laws.
Each
Credit Party has complied in all material respects with all provisions of all
applicable laws and regulations, including those relating to each Credit Party's
ownership of real or personal property, the conduct and licensing of each Credit
Party's business, the payment and withholding of taxes, ERISA and other employee
matters, safety and environmental matters.
6.12. Litigation.
Schedule 6.12
discloses all claims, proceedings, litigation or investigations pending or
(to
the best of Borrower's knowledge) threatened against any Credit Party. There
is
no claim, suit, litigation, proceeding or investigation pending or (to the
best
of Borrower's knowledge) threatened by or against or affecting any Credit Party
in any court or before any governmental agency (or any basis therefor known
to
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of any Credit
Party, or in any material impairment in the ability of any Credit Party to
carry
on its business in substantially the same manner as it is now being conducted.
Borrower will promptly inform Agent in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
any Credit Party.
-19-
6.13. Related
Agreements.
Borrower
has caused to be delivered to Agent as of the date hereof a true and correct
copy of the Related Agreements.
Borrower, and each other party to the Related Agreements, has duly taken all
necessary organizational action to authorize the execution, delivery and
performance of the Related Agreements and the consummation of transactions
contemplated thereby.
As of
the date hereof, the Related Transactions have been consummated (or are being
consummated contemporaneously with the initial credit extension hereunder)
in
accordance with the terms of the Related Agreements. The Acquisition complies
with all applicable legal requirements, and all necessary governmental,
regulatory, creditor, shareholder, partner and other material consents,
approvals and exemptions
required to be obtained by Borrower and each
other party to the Related Agreements in connection with the Acquisition have
been duly obtained and are in full force and effect. All applicable waiting
periods with respect to the Acquisition have expired without
any action being taken by any competent governmental authority which restrains,
prevents or imposes material adverse conditions upon the consummation of the
Acquisition.
The
execution and delivery of the Related Agreements did not, and the consummation
of the Acquisition does not, violate any statute or regulation of the United
States (including any securities law) or of any state or other applicable
jurisdiction, or any order, judgment or decree of any court or governmental
body
binding on Borrower or any other party to the Related Agreements, or result
in a
breach of, or constitute a default under, any material agreement, indenture,
instrument or other document, or any judgment, order or decree, to which
Borrower is a party or by which Borrower is bound, or to which any other party
to the Related Agreements is a party or by which any such party is
bound.
No
statement or representation made in the Related Agreements by Borrower or any
other Person, contains any untrue statement of a material fact or omits to
state
any material fact required to be stated therein.
As of
the date hereof, (i) each of the representations and warranties contained
in the Related Agreements made by Borrower is true and correct in all material
respects and (ii) each of the representations and warranties contained in
the Related Agreements made by any other Person is true and correct in all
material respects.
6.14. Use
of Proceeds.
All
proceeds of all Loans will be used solely for lawful business
purposes.
-20-
6.15. Insurance.
Borrower
will, and will cause each other Credit Party to, at all times carry property,
liability, and other insurance (including insurance covering assets in-transit),
with insurers acceptable to Agent, in such form and amounts, and with such
deductibles and other provisions, as Agent shall require, and Borrower will,
and
will cause each other Credit Party to, provide Agent with evidence satisfactory
to Agent that such insurance is, at all times, in full force and effect. Each
property insurance policy shall name Agent as loss payee and shall contain
a
lender's loss payable endorsement in form acceptable to Agent, each liability
insurance policy shall name Agent as an additional insured, and each business
interruption insurance policy shall be collaterally assigned to Agent, all
in
form and substance satisfactory to Agent. All policies of insurance shall
provide that they may not be cancelled or changed without at least thirty days'
prior written notice to Agent, shall contain breach of warranty coverage, and
shall otherwise be in form and substance satisfactory to Agent. Upon receipt
of
the proceeds of any such insurance, Agent, will apply such proceeds in reduction
of the Obligations as provided in Section 5.3. Borrower will, and will cause
each other Credit Party to, promptly deliver to Agent copies of all reports
made
to insurance companies.
6.16. Financial
and Collateral Reports.
Each
Credit Party has kept and Borrower will, and will cause each other Credit Party
to, keep adequate records and books of account with respect to its business
activities and the Collateral in which proper entries are made in accordance
with GAAP reflecting all its financial transactions, and will cause to be
prepared and furnished to Lender the following (all to be prepared in accordance
with GAAP, unless such Credit Party's certified public accountants concur in
any
change therein and such change is disclosed to Agent):
(a) Collateral
Reports.
On or
before the fifteenth day of each month (or as more frequently from time to
time
required by Agent in its sole discretion), a schedule of sales made, credits
issued and cash received by Borrower, an aging of Borrower's Accounts, Chattel
Paper and notes receivable, and weekly Inventory reports, all in such form,
and
together with such additional certificates, schedules and other information
with
respect to the Collateral or the business of Borrower or any Obligor, as Agent
shall request; provided,
that
Borrower's failure to execute and deliver the same shall not affect or limit
Agent's Liens and other rights in any of the Accounts, nor shall the Lenders'
failure to advance or lend against a specific Account affect or limit Agent's
Liens and other rights therein. Together with each such schedule, Borrower
shall
furnish Agent with copies (or, at Agent's request, originals) of all contracts,
orders, invoices, and other similar documents, and all original shipping
instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such
Accounts, and Borrower warrants the genuineness of all of the foregoing. In
addition, Borrower shall deliver to Agent the originals of all Instruments,
Chattel Paper, security agreements, guaranties and other documents and property
evidencing or securing any Accounts, immediately upon receipt thereof and in
the
same form as received, with all necessary endorsements. Agent may destroy or
otherwise dispose of all documents, schedules and other papers delivered to
Agent pursuant to this Agreement (other than originals of Instruments, Chattel
Paper, security agreements, guaranties and other documents and property
evidencing or securing any Accounts) six months after Agent receives them,
unless Borrower requests their return in writing in advance and arranges for
their return to Borrower at Borrower's expense;
-21-
(b) Annual
Statements.
Not
later than one hundred five days after the close of each Fiscal Year of
Borrower, unqualified (except for a qualification for a change in accounting
principles with which the accountant concurs) audited financial statements
of
Borrower and its Subsidiaries as of the end of such year, on a consolidated
and
consolidating basis, certified by a firm of independent certified public
accountants of recognized standing selected by Borrower but acceptable to Agent,
together with a copy of any management letter issued in connection therewith
and
a letter from such accountants acknowledging that Agent and the Lenders are
relying on such financial statements;
(c) Interim
Statements.
Not
later than thirty days after the end of each month hereafter (such period to
reduce to fifteen days after the end of each month beginning February 2008
unless Borrower provides evidence satisfactory to Agent that it is not able
to
produce such statements within fifteen days), including the last month of
Borrower's Fiscal Year, unaudited interim financial statements of Borrower
and
its Subsidiaries as of the end of such month and of the portion of Borrower's
Fiscal Year then elapsed, on a consolidated and consolidating basis, certified
by the principal financial officer of Borrower as prepared in accordance with
GAAP and fairly presenting the consolidated financial position and results
of
operations of Borrower and its Subsidiaries for such month and period subject
only to changes from audit and year-end adjustments and except that such
statements need not contain notes;
(d) Projections,
Etc.
Such
business projections, Availability projections, business plans, budgets and
cash
flow statements for Borrower and its Subsidiaries as Agent shall request from
time to time;
(e) Shareholder
Reports, Etc.
Promptly
after the sending or filing thereof, as the case may be, copies of any proxy
statements, financial statements or reports which any Credit Party has made
available to its shareholders and copies of any regular, periodic and special
reports or registration statements which any Credit Party files with the
Securities and Exchange Commission or any governmental authority which may
be
substituted therefor, or any national securities exchange;
(f) ERISA
Reports.
Upon
request by Agent, copies of any annual report to be filed pursuant to the
requirements of ERISA in connection with each plan subject thereto;
(g) Appraisals.
Not
earlier than 45 days before each six month anniversary (or each yearly
anniversary with respect to updated Equipment Appraisals and leasehold interest
and dealer contract right appraisals) of the date of this Agreement during
the
Term, and not later than 45 days after each six month anniversary (or each
yearly anniversary with respect to updated Equipment Appraisals) of the date
of
this Agreement during any Renewal Term, Borrower will cause to be prepared
and
delivered to Agent an updated auction sale value appraisal of Borrower's
Inventory (an "Updated
Inventory Appraisal")
and an
updated auction sale value appraisal of Borrower's Equipment consisting of
vehicles, tankers and trucks (an "Updated
Equipment Appraisal")
by
an
independent appraiser acceptable to Agent, and an appraisal of Borrower's
leasehold interests and dealer contract rights ("Additional
Updated Appraisals")
each
of which appraisals shall include all Inventory and Equipment acquired by
Borrower after the date of this Agreement; and
-22-
(h) Other
Information.
Such
other data and information (financial and otherwise) as Agent may reasonably
request from time to time, bearing upon or related to the Collateral or
Borrower's and each of its Subsidiary's financial condition or results of
operations.
6.17. Litigation
Cooperation.
Should
any third-party suit or proceeding be instituted by or against Agent or any
Lender with respect to any Collateral or in any manner relating to any Credit
Party, Borrower shall, and shall cause each other Credit Party to, without
expense to Agent or each such Lender, make available each Credit Party and
officers, employees and agents of each Credit Party, and books and records
of
each Credit Party, without charge, to the extent that Agent or each such Lender
deems them reasonably necessary in order to prosecute or defend any such suit
or
proceeding.
6.18. Maintenance
of Collateral, Etc.
Borrower
will, and will cause each other Credit Party to, maintain all of its Equipment
in good working condition, ordinary wear and tear excepted, and Borrower will
not, and will not permit any other Credit Party to, use the Collateral for
any
unlawful purpose. Borrower will immediately advise Agent in writing of any
material loss or damage to the Collateral and of any investigation, action,
suit, proceeding or claim relating to the Collateral or which may result in
an
adverse impact upon any Credit Party's business, assets or financial
condition.
6.19. Notification
of Changes.
Borrower
will promptly notify Agent in writing of any change in the officers or directors
of any Credit Party, the opening of any new bank account or other deposit
account of any Credit Party, or any material adverse change in the business
or
financial affairs of any Credit Party or the existence of any circumstance
which
would make any representation or warranty of any Credit Party untrue in any
material respect or constitute a material breach of any covenant of any Credit
Party.
6.20. Further
Assurances.
Borrower
agrees, at its expense, to take, and to cause each other Credit Party to take,
all actions, and execute or cause to be executed and delivered to Agent all
promissory notes, security agreements, agreements with landlords, mortgagees
and
processors and other bailees, subordination and intercreditor agreements and
other agreements, instruments and documents, as Agent may request from time
to
time to perfect and maintain Agent's Lien in the Collateral and to fully carry
out the transactions contemplated by this Agreement.
-23-
6.21. Negative
Covenants.
Until
payment and satisfaction in full of all Obligations and termination of this
Agreement, except as set forth in Schedule 6.21, Borrower
agrees as follows:
(a) Guaranties.
Borrower
shall not, and shall not permit any other Credit Party to, assume, guarantee
or
endorse, or otherwise become liable in connection with, the obligations of
any
Person, except (i) the guaranty by Borrower of the obligations of certain
Affiliates of Borrower to Greystone Business Credit II, L.L.C.,, (ii) the
guaranty by Borrower and its Subsidiaries of the obligations of Holdings to
YA
Global Investments, L.P. and (iii) by endorsement of instruments for
deposit or collection or similar transactions in the ordinary course of
business.
(b) Indebtedness.
Borrower
shall not, and shall not permit any other Credit Party to, create, incur, assume
or become obligated (directly or indirectly), for any loans or other
indebtedness for borrowed money other than the Loans, except that Credit Parties
may (i) borrow money from a Person other than the Lenders on an unsecured
and subordinated basis if a subordination agreement in favor of Agent and the
Lenders and in form and substance satisfactory to Agent is executed and
delivered to Agent relative thereto; (ii) maintain their present
indebtedness listed on Schedule 6.21(b); (iii) incur unsecured indebtedness
to trade creditors in the ordinary course of business; (iv) incur purchase
money indebtedness or capitalized lease obligations in connection with capital
expenditures permitted under this Agreement; and (v) incur operating lease
obligations requiring payments not to exceed $385,000 in the aggregate during
any Fiscal Year of Borrower.
(c) Liens.
Borrower
shall not, and shall not permit any other Credit Party to, grant or permit
to
exist (voluntarily or involuntarily) any Lien, claim, security interest or
other
encumbrance whatsoever on any of its assets, other than Permitted Liens.
(d) Mergers,
Sales, Acquisitions, Subsidiaries and Other Transactions Outside the Ordinary
Course of Business.
Borrower
shall not, and shall not permit any other Credit Party to, (i) enter into
any merger or consolidation; (ii) change the state of its organization or
enter into any transaction which has the effect of changing its state of
organization; (iii) sell, lease or otherwise dispose of any of its assets
other than in the ordinary course of business; (iv) purchase the stock,
other equity interests or all or a material portion of the assets of any Person
or division of such Person; (v) enter into any other transaction outside
the ordinary course of its business, including any purchase, redemption or
retirement of any shares of any class of its stock or any other equity interest,
and any issuance of any shares of, or warrants or other rights to receive or
purchase any shares of, any class of its stock or any other equity interest;
or
(vi) acquire any assets except in the ordinary course of business and as
otherwise permitted by this Agreement and the other Loan Documents. Borrower
shall not, and shall not permit any other Credit Party to, form any Subsidiaries
or enter into any joint ventures or partnerships with any other
Person.
(e) Dividends
and Distributions.
Except
for (i) distributions to Holdings of proceeds of Term Loan B Advances
exceeding $1,600,000 in the aggregate, so long as no Default or Event of Default
exists at such time, (ii) distributions on a quarterly basis to Holdings of
an amount not to exceed the cumulative net profits of Borrower that exceed
$1,000,000 on a year-to-date basis at the end of each fiscal quarter, less
any
previous distributions, so long as no Default or Event of Default is then in
existence and after giving effect to such distribution Availability exceeds
$2,000,000 and (iii) as provided in Schedule 6.21(e), Borrower shall not,
and shall not permit any other Credit Party to, declare or pay any dividend
or
other distribution (whether in cash or in kind) on any class of its stock or
other equity interest of such Credit Party, except dividends or other
distributions paid by a Subsidiary of Borrower to Borrower.
-24-
(f) Investments,
Loans. Borrower
shall not, and shall not permit any other Credit Party to, purchase or otherwise
acquire, or contract to purchase or otherwise acquire, the obligations or stock
of any Person, other than direct obligations of the United States, obligations
insured by the Federal Deposit Insurance Corporation and obligations
unconditionally guaranteed by the United States; nor shall Borrower lend or
otherwise advance funds to, or permit any other Credit Party to lend or
otherwise advance funds to, any Person except for advances made to employees,
officers and directors for travel and other expenses arising in the ordinary
course of business and certain loans that may be advanced to NewGen and its
subsidiaries by Holdings not to exceed $650,000 outstanding at any
time;
(g) Fundamental
Changes, Line of Business. Borrower
shall not, and shall not permit any other Credit Party to, (i) amend its
organizational documents or change its Fiscal Year unless (w) such action would
not have a material adverse effect on any Credit Party; (x) such actions would
not affect the obligations of any Credit Party, Agent or the Lenders, (y) such
actions would not affect the interpretation of any of the terms of this
Agreement or the Loan Documents and (z) Agent and the Lenders have received
ten (10) days prior written notice of such amendment of change or
(ii) or enter into a new line of business materially different from the
current business of the Credit Parties;
(h) Equipment.
Borrower
shall not, and shall not permit any other Credit Party to, (i) permit any
Equipment to become a Fixture to real property unless such real property is
owned by a Credit Party and is subject to a mortgage in favor of Agent, for
the
benefit of Agent and the Lenders, or if such real property is leased, is subject
to a landlord's agreement in favor of Agent on terms acceptable to Agent, or
(ii) permit any Equipment to become an accession to any other personal
property unless such personal property is subject to a first priority Lien
in
favor of Agent, for the benefit of Agent and the Lenders, in each case excluding
Equipment delivered to third party dealers pursuant to the terms of a supply
contract having a term of not less than five years and excluding Equipment
at
locations with respect to which Agent has maintained such Reserves as Agent
shall deem appropriate in its sole discretion;
(i) Affiliate
Transactions. Except
as
set forth on Schedule 6.21(i), Borrower shall not, and shall not permit any
other Credit Party to, conduct, permit or suffer to be conducted, transactions
with Affiliates other than transactions for the purchase or sale of Inventory
or
services in the ordinary course of business pursuant to terms that are no less
favorable to such Credit Party than the terms upon which such transactions
would
have been made had they been made to or with a Person that is not an Affiliate;
and
-25-
(j) Management
Fees, Compensation. Borrower
shall not, and shall not permit any other Credit Party to, pay any management
or
consulting fees to any Persons (excluding the consulting agreement with ▇▇▇▇
▇▇▇▇▇▇▇▇ entered into on or before the date hereof), or pay annual aggregate
compensation, whether as salary, bonus or otherwise, to all directors or
officers of Borrower in excess of one hundred ten percent (110%) of the
aggregate compensation, whether as salary, bonus or otherwise, to all directors,
and officers of the Credit Parties in effect on the date of this Agreement
for
the first year and one hundred ten percent (110%) of the prior year's aggregate
compensation amount for each subsequent year. The aggregate annual compensation
amount(s) shall be adjusted each year for the net addition or loss of directors
or officers.
6.22. Financial
Covenants.
(a) Capital
Expenditures.
Borrower
will not, and will not permit any other Credit Party to, expend or commit to
expend, directly or indirectly, for capital expenditures (including capital
lease obligations) for the Credit Parties on a consolidated basis in excess
of
the amount set forth as the capital expenditure limitation in Section 10(a)
of
Schedule A in any Fiscal Year.
(b) Net
Worth.
Borrower will at all times maintain a net worth of at least the amount set
forth
in Section 8(c) of Schedule A.
(c) Tangible
Net Worth.
Borrower
will, and will cause each other Credit Party to, at all times maintain a minimum
tangible net worth for the Credit Parties on a consolidated basis of at least
the amount set forth in Section 10(c) of Schedule A.
(d) Working
Capital.
Borrower
will at all times maintain working capital of at least the amount set forth
in
Section 8(d) of Schedule A.
(e) Net
Losses.
Borrower
will not, and will not permit any other Credit Party to, permit its cumulative
net loss for the Credit Parties on a consolidated basis to exceed the amount
set
forth in Section 10(e) of Schedule A.
(f) Net
Income.
Borrower will not permit its set forth in Section 10(f) of Schedule
A.
(g) Leverage.
Borrower will not permit the ratio of its total liabilities to its net worth
to
exceed, at any time, the ratio set forth in Section 10(g) of Schedule
A.
(h) Other
Financial Covenants.
Borrower
will, and will cause each other Credit Party to, comply with any additional
financial covenants for the Credit Parties on a consolidated basis set forth
in
Section 10(h) of Schedule A.
-26-
|
7.
|
RELEASE
AND INDEMNITY.
|
7.1. Release.
Borrower
hereby releases Agent, the Lenders and their respective Affiliates and their
respective directors, officers, employees, attorneys and agents and any other
Person affiliated with or representing Agent or any Lender (the "Released
Parties")
from
any and all liability arising from acts or omissions under or pursuant to this
Agreement, whether based on errors of judgment or mistake of law or fact, except
for those arising from willful misconduct. However, in no circumstance will
any
of the Released Parties be liable for lost profits or other special or
consequential damages. Such release is made on the date hereof and remade upon
each request for a Loan or Credit Accommodation by Borrower. Without limiting
the foregoing:
(a) Agent
and
Lenders shall not be liable for (i) any shortage or discrepancy in, damage
to, or loss or destruction of, any goods, the sale or other disposition of
which
gave rise to an Account; (ii) any error, act, omission, or delay of any
kind occurring in the settlement, failure to settle, collection or failure
to
collect any Account; (iii) settling any Account in good faith for less than
the full amount thereof; or (iv) any of Borrower's obligations under any
contract or agreement giving rise to an Account; and
(b) In
connection with Credit Accommodations or any underlying transaction, Agent
and
the Lenders shall not be responsible for the conformity of any goods to the
documents presented, the validity or genuineness of any documents, or any delay,
default or fraud by Borrower, shippers and/or any other Person. Borrower agrees
that any action taken by Agent or any Lender, if taken in good faith, or any
action taken by an issuer of any Credit Accommodation, under or in connection
with any Credit Accommodation, shall be binding on Borrower and shall not create
any resulting liability to Agent or the Lenders or limit Borrower's obligations
under this Agreement. In furtherance thereof, Agent and the Lenders shall have
the full right and authority to clear and resolve any questions of
non-compliance of documents, to give any instructions as to acceptance or
rejection of any documents or goods, to execute for Borrower's account any
and
all applications for steamship or airway guaranties, indemnities or delivery
orders, to grant any extensions of the maturity of, time of payment for, or
time
of presentation of, any drafts, acceptances or documents, and to agree to any
amendments, renewals, extensions, modifications, changes or cancellations of
any
of the terms or conditions of any of the Credit Accommodations or applications
and other documentation pertaining thereto.
7.2. Indemnity.
Borrower
hereby agrees to indemnify the Released Parties and hold them harmless from
and
against any and all claims, debts, liabilities, demands, obligations, actions,
causes of action, penalties, costs and expenses (including attorneys' fees),
of
every nature, character and description, which the Released Parties may sustain
or incur based upon or arising out of any of the transactions contemplated
by
this Agreement or the other Loan Documents or any of the Obligations, including
any transactions or occurrences relating to the issuance of any Credit
Accommodation, the Collateral relating thereto, any drafts thereunder and any
errors or omissions relating thereto (including any loss or claim due to any
action or inaction taken by the issuer of any Credit Accommodation) (and for
this purpose any charges to Agent and the Lenders by any issuer of Credit
Accommodations shall be conclusive as to their appropriateness and may be
charged to the Loan Account), or any other matter, cause or thing whatsoever
occurred, done, omitted or suffered to be done by Agent and the Lenders relating
to Borrower or the Obligations (except any such amounts sustained or incurred
as
the result of the willful misconduct of the Released Parties). Notwithstanding
any provision in this Agreement to the contrary, the indemnity agreement set
forth in this Section 7.2 shall survive any termination of this
Agreement.
-27-
|
8.
|
TERM.
|
8.1. Maturity
Date.
The
Lenders' obligation to make Loans and to provide Credit Accommodations under
this Agreement shall initially continue in effect for a term (the "Initial
Term")
beginning on the date of this Agreement and ending on the Initial Maturity
Date;
provided,
that the
Initial Maturity Date shall automatically be extended (the Initial Maturity
Date, as it may be so extended, being referred to as the "Maturity
Date")
for
successive additional terms of one year each (each a "Renewal
Term"),
unless Borrower, Agent or any Lender gives written notice to the other parties
hereto, not less than sixty days prior to the Maturity Date, that such party
elects not to extend the Maturity Date. This Agreement and the other Loan
Documents and the Agent's Liens, and all representations, warranties and
covenants of Borrower contained herein and therein, shall remain in full force
and effect after the Maturity Date until all of the monetary Obligations are
indefeasibly paid in full.
8.2. Early
Termination.
The
Lenders' obligation to make Loans and to provide Credit Accommodations under
this Agreement may be terminated prior to the Maturity Date as follows:
(i) by Borrower, effective thirty business days after written notice of
termination is given to Agent or (ii) by the Lenders at any time after the
occurrence of an Event of Default, without notice, effective
immediately.
If so
terminated under this Section 8.2, Borrower shall pay to (i) Agent, for the
benefit of Lenders in accordance with their respective Pro Rata Shares thereof,
(i) an early termination fee (the "Early
Termination Fee")
in the
amount set forth in Section 6(h) of Schedule A plus (ii) Agent,
for the sole account of Agent, any earned but unpaid fees provided for in the
Fee Letter. Such fees shall be due and payable on the effective date of
termination and thereafter shall bear interest at a rate equal to the highest
rate applicable to any of the Obligations. In addition, if Borrower so
terminates and repays the Obligations without having provided Agent with at
least thirty days' prior written notice thereof, Borrower shall pay to Agent,
for the benefit of Agent and the Lenders in accordance with their respective
Pro
Rata Shares thereof, on the effective date of termination, an additional amount
equal to thirty days of interest at the applicable interest rate(s), based
on
the average outstanding amount of the Obligations for the six month period
immediately preceding the date of termination.
-28-
8.3. Payment
of Obligations.
On
the
Maturity Date or on any earlier effective date of termination, Borrower shall
pay in full all Obligations, whether or not all or any part of such Obligations
are otherwise then due and payable. Without limiting the generality of the
foregoing, if, on the Maturity Date or on any earlier effective date of
termination, there are any outstanding Credit Accommodations, then on such
date
Borrower shall provide to Agent, for the benefit of Agent and the Lenders,
cash
collateral in an amount equal to 110% of the Credit Accommodation Balance to
secure all of the Obligations (including estimated attorneys' fees and other
expenses) relating to said Credit Accommodations or such greater percentage
or
amount as Agent reasonably deems appropriate, pursuant to a cash pledge
agreement in form and substance satisfactory to Agent.
8.4. Effect
of Termination.
No
termination shall affect or impair any right or remedy of Agent or the Lenders
or relieve Borrower of any of the Obligations until all of the monetary
Obligations have been indefeasibly paid in full. Upon indefeasible payment
and
performance in full of all of the monetary Obligations (and the provision of
cash collateral with respect to any Credit Accommodation Balance as required
by
Section 8.3) and termination of this Agreement, Agent and the Lenders shall
promptly deliver to Borrower, at the cost of Borrower, termination statements,
requests for reconveyances and such other documents as may be reasonably
required to terminate the Agent's Liens in the Collateral.
|
9.
|
EVENTS
OF DEFAULT AND REMEDIES.
|
9.1. Events
of Default.
The
occurrence of any of the following events shall constitute an "Event
of Default"
under
this Agreement, and Borrower shall give Agent immediate written notice thereof:
(i) if any warranty, representation, statement, report or certificate made
or delivered to Agent or any Lender by any Credit Party or any other Obligor
or
any Credit Party's or any other Obligor's officers, employees or agents is
untrue or misleading; (ii) if Borrower fails to pay when due any principal
or interest on any Loan or any other monetary Obligation; (iii) if any
Credit Party or any other Obligor breaches any covenant or obligation contained
in this Agreement or any other Loan Document or fails to perform any other
non-monetary Obligation; (iv) if any levy, assessment, attachment, seizure,
Lien, security interest or encumbrance (other than a Permitted Lien) is made
or
permitted to exist on all or any part of the Collateral; provided, that if
such
levy, assessment, attachment, seizure, Lien, security interest or encumbrance
involves Collateral having a value of less than $25,000, such occurrence shall
not constitute an Event of Default unless it remains unreleased or is not
terminated within 30 days after the occurrence thereof; (v) if one or more
judgments aggregating in excess of $25,000, or any injunction or attachment,
is
obtained against any Credit Party or any other Obligor which remains unstayed
for more than ten days
or
is enforced; (vi) the occurrence of any default under any financing
agreement, security agreement or other agreement, instrument or document
executed and delivered by (A) any Credit Party or any other Obligor with,
or in favor of, any Person other than the Agent or a Lender or (B) any
Credit Party or any other Obligor or any Affiliate of any Credit Party or any
other Obligor with, or in favor of, the Agent or a Lender or any Affiliate
of
Agent or a Lender; (vii) the dissolution, death, termination of existence
in good standing, insolvency or business failure or suspension or cessation
of
business as usual of any Credit Party or any other Obligor (or of any general
partner of any Credit Party or any other Obligor if it is a partnership) or
the
appointment of a receiver, trustee or custodian for all or any part of the
property of, or an assignment for the benefit of creditors by any Credit Party
or any other Obligor, or the commencement of any proceeding by any Credit Party
or any other Obligor under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute
of
any jurisdiction, now or in the future in effect, or if any Credit Party or
any
other Obligor makes or sends a notice of a bulk transfer or calls a meeting
of
its creditors; (viii) the commencement of any proceeding against Borrower
or any Obligor under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; (ix) the actual or attempted
revocation or termination of, or limitation or denial of liability upon, any
guaranty of the Obligations, or any security document securing the Obligations,
by any Obligor; (x) if Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations other
than as permitted in the applicable subordination agreement, or if any Person
who has subordinated such indebtedness or obligations attempts to limit or
terminate its subordination agreement; (xi) if there is any actual or
threatened indictment of Borrower or any Obligor under any criminal statute
or
commencement or threatened commencement of criminal or civil proceedings against
Borrower or any Obligor, pursuant to which the potential penalties or remedies
sought or available include forfeiture of any property of Borrower or such
Obligor having a value greater than $150,000; (xii) if there is a change in
the record or beneficial ownership of an aggregate of more than 25% of the
outstanding shares of stock or other equity of Holdings, in one or more
transactions, compared to the ownership of outstanding shares of stock or other
equity of Holdings as of the date hereof or if Holdings fails to own 100% of
the
issued and outstanding stock of Borrower without the prior written consent
of
Agent; (xiii) if there is any change in the chief executive officer, chief
operating officer or chief financial officer of Borrower and a replacement
acceptable to Lender is not appointed within ninety days; or (xiv) if Agent
determines in good faith that the Collateral is insufficient to fully secure
the
Obligations or that the prospect of payment of performance of the Obligations
is
impaired.
-29-
9.2. Remedies.
(a) Upon
the
occurrence of any Event of Default, and at any time thereafter, Lenders may
and
without notice or demand of any kind (all of which are hereby expressly waived
by Borrower), cease making Loans or otherwise extending credit to Borrower
under
this Agreement or any other Loan Document.
(b) Upon
the
occurrence of an Event of Default under subsection (vii) or (viii) of Section
9.1, all of the Obligations shall immediately and automatically become due
and
payable, without demand, notice or legal process of any kind, and
notwithstanding any deferred or installment payments allowed by any instrument
evidencing or relating to any of the Obligations. Upon the occurrence of any
other Event of Default, all of the Obligations may, at the option of Agent
or
the Required Lenders, and without demand, notice and legal process of any kind,
be declared, and immediately shall become, due and payable, notwithstanding
any
deferred or installment payments allowed by any instrument evidencing or
relating to any of the Obligations.
-30-
(c) Upon
the
occurrence of an Event of Default, Agent may exercise from time to time any
rights and remedies available to it or the Lenders under the UCC and any other
applicable law in addition to, and not in lieu of, any rights and remedies
expressly granted in this Agreement or in any of the other Loan Documents and
all of Agent's and the Lenders' rights and remedies shall be cumulative and
non-exclusive to the extent permitted by law. In particular, but not by way
of
limitation of the foregoing, upon the occurrence of any Event of Default, and
at
any time thereafter, Agent may, without notice or demand of any kind (all of
which are hereby expressly waived by Borrower), do any one or more of the
following: (i) take possession of any or all of the Collateral (in
addition to Collateral of which it already has possession) wherever it may
be
found, and for that purpose Borrower hereby authorizes Agent, without judicial
process, to enter onto any of Borrower's premises without interference to search
for, take possession of, keep, store, or remove any of the Collateral, and
remain (or cause a custodian to remain) on the premises in exclusive control
thereof, without charge for so long as Agent deems it reasonably necessary
in
order to complete the enforcement of rights under this Agreement or any other
agreement; provided,
that if
Agent seeks to take possession of any of the Collateral by court process,
Borrower hereby irrevocably waives (A) any bond and any surety or security
relating thereto required by law as an incident to such possession, (B) any
demand for possession prior to the commencement of any suit or action to recover
possession thereof and (C) any requirement that Agent retain possession of,
and not dispose of, any such Collateral until after trial or final judgment;
(iv) require Borrower to assemble any or all of the Collateral and make it
available to Agent at one or more places designated by Agent which are
reasonably convenient to Lender and Borrower, and to remove the Collateral
to
such locations as Agent may deem advisable; (v) complete the processing,
manufacturing or repair of any Collateral prior to a disposition thereof and,
for such purpose and for the purpose of removal, Agent shall have the right
to
use Borrower's premises, vehicles and other Equipment and all other property
without charge; (vi) sell, lease or otherwise dispose of any of the
Collateral, in its condition at the time Agent obtains possession of it or
after
further manufacturing, processing or repair, at one or more public or private
sales, in lots or in bulk, for cash, exchange or other property, or on credit
(a
"Sale"),
and
to adjourn any such Sale from time to time without notice other than oral
announcement at the time scheduled for Sale (and, in connection therewith,
(A) Agent shall have the right to conduct such Sale on Borrower's premises
without charge, for such times as Agent deems reasonable, or on such other
premises as Agent shall designate, and the Collateral need not be located at
the
place of Sale; (B) Agent may directly, or through any of its Affiliates,
purchase or lease any of the Collateral at any such public disposition, and
if
permissible under applicable law, at any private disposition and (C) any
Sale of Collateral shall not relieve Borrower of any liability Borrower may
have
if any Collateral is defective as to title, physical condition or otherwise
at
the time of sale); (vii) demand payment of and collect any Accounts,
Chattel Paper, Instruments and General Intangibles included in the Collateral
and, in connection therewith, Borrower irrevocably authorizes Agent to endorse
or sign Borrower's name on all collections, receipts, Instruments and other
documents, to take possession of and open mail addressed to Borrower and remove
therefrom payments made with respect to any item of Collateral or Proceeds
thereof and, in Agent's sole discretion, to grant extensions of time to pay,
compromise claims and settle Accounts, General Intangibles and the like for
less
than face value; and (viii) demand and receive possession of any of
Borrower's federal and state income tax returns and the books and records
utilized in the preparation thereof or relating thereto. Borrower
recognizes that if Borrower fails to perform, observe or discharge any of its
Obligations under this Agreement or any of the Loan Documents, no remedy at
law
will provide adequate relief to Agent and the Lenders, and agrees that Agent
and
the Lenders shall be entitled to temporary and permanent injunctive relief
in
any such case without the necessity of proving actual damages. Any notification
of intended disposition of any of the Collateral required by law will be deemed
to be a reasonable authenticated notification of disposition if given at least
ten days prior to such disposition and such notice shall (i) describe Agent
and Borrower, (ii) describe the Collateral that is the subject of the
intended disposition, (iii) state the method of the intended disposition,
(iv) state that Borrower is entitled to an accounting of the Obligations
and state the charge, if any, for an accounting and (v) state the time and
place of any public disposition or the time after which any private sale is
to
be made. Agent and the Lenders may disclaim any warranties that might arise
in
connection with the sale, lease or other disposition of the Collateral and
have
no obligation to provide any warranties at such time. Any Proceeds of any
disposition by Agent of any of the Collateral shall be applied by Agent in
accordance with Section 5.3. In addition to the foregoing remedies, upon the
occurrence of any Event of Default resulting from a breach of any of the
financial covenants set forth in Section 6.21, Agent may, at its option,
upon not less than ten days' prior notice to Borrower, reduce any or all of
the
Advance Rates with the respect to any of the Loans, to the extent Agent, in
its
sole discretion, deems appropriate. Exercise or partial exercise by Agent or
the
Lenders of one or more of their rights or remedies shall not be deemed an
election or bar Agent and the Lenders from subsequent exercise or partial
exercise of any other rights or remedies. The failure or delay of Agent or
the
Lenders to exercise any rights or remedies shall not operate as a waiver
thereof, but all rights and remedies shall continue in full force and effect
until all of the Obligations have been fully paid and performed and this
Agreement has been terminated.
-31-
9.3. Application
of Proceeds.
Subject
to any application required by law, all Proceeds realized as the result of
any
Sale shall be applied by Agent in accordance with Section 5.3. Any surplus
shall
be paid to Borrower or other Persons legally entitled thereto; but Borrower
shall remain liable to Agent and the Lenders for any deficiency. If Agent
directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any Sale, Agent shall, at the election of
Agent and the Required Lenders, have the option, exercisable at any time, in
its
sole discretion, of either reducing the Obligations by the principal amount
of
the purchase price or deferring the reduction of the Obligations until the
actual receipt by Agent of the cash therefor.
-32-
|
10.
|
AGENT;
THE LENDER GROUP.
|
10.1. Appointment
and Authorization of Agent.
Each
Lender hereby designates and appoints Greystone as its representative as Agent
under this Agreement and the other Loan Documents and each Lender hereby
irrevocably authorizes Agent to execute and deliver each of the other Loan
Documents on its behalf and to take such other action on its behalf under the
provisions of this Agreement and each other Loan Document, and to exercise
such
powers and perform such duties, as are expressly delegated to Agent by the
terms
of this Agreement or any other Loan Document, together with such powers as
are
reasonably incidental thereto. Agent agrees to act as such on the express
conditions contained in this Section 10. The provisions of this Section 10
are
solely for the benefit of Agent and the Lenders, and no Credit Party or any
other Obligor shall have any rights as a third party beneficiary of any of
the
provisions contained herein. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Agent shall
not
have any duties or responsibilities, except those expressly set forth herein,
nor shall Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, and that Agent
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising
or
refraining from exercising any discretionary rights or taking or refraining
from
taking any actions that Agent expressly is entitled to take or assert under
or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, the Lenders agree that Agent shall
have
the right to exercise the following powers as long as this Agreement remains
in
effect: (i) to maintain, in accordance with its customary business
practices, ledgers and records reflecting the status of the Obligations, the
Collateral, collections and related matters, (ii) to execute or file any
and all UCC financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other written
agreements with respect to the Loan Documents, (iii) to make Advances, for
itself or on behalf of the Lenders as provided in the Loan Documents,
(iv) to exclusively receive, apply, and distribute the collections as
provided in the Loan Documents, (v) to open and maintain such bank accounts
and cash management arrangements as Agent deems necessary and appropriate in
accordance with the Loan Documents for the foregoing purposes with respect
to
the Collateral and collections, (vi) to perform, exercise, and enforce any
and all other rights and remedies of the Lender Group with respect to Borrower,
the Obligations, the Collateral, collections, or otherwise related to any of
same as provided in the Loan Documents, and (vii) to incur and pay such
Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
-33-
10.2. Delegation
of Duties.
Agent
may
execute any of its duties under this Agreement or any other Loan Document by
or
through agents, employees or attorneys in fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. Agent shall not
be
responsible for the negligence or misconduct of any agent or attorney in fact
that it selects as long as such selection was made without gross negligence
or
willful misconduct.
10.3. Liability
of Agent.
None
of
the Agent-Related Persons shall (i) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement
or
any other Loan Document or the transactions contemplated hereby or thereby
(except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by Borrower, any Obligor or any Subsidiary
or
Affiliate of Borrower or any Obligor, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability
or
sufficiency of this Agreement or any other Loan Document, or for any failure
of
Borrower or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance
of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the books and records or properties of
Borrower or any other Person.
10.4. Reliance
By Agent.
Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile or other electronic method of transmission, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent, or made by the proper
Person(s), and upon advice and statements of legal counsel (including counsel
to
Borrower or counsel to any Lender), independent accountants and other experts
selected by Agent. Agent shall be fully justified in failing or refusing to
take
any action under this Agreement or any other Loan Document unless Agent shall
first receive such advice or concurrence of the Lenders as it deems appropriate
and until such instructions are received, Agent shall act, or refrain from
acting, as it deems advisable. If Agent so requests, it shall first be
indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other
Loan
Document in accordance with a request or consent of the requisite the Lenders
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all of the Lenders.
-34-
10.5. Notice
of Default or Event of Default.
Agent
shall not be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default, except with respect to defaults in the payment of principal
or interest required to be paid to Agent for the account of the Lenders, unless
Agent shall have received written notice from a Lender or Borrower referring
to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a "notice of default." Agent promptly will notify the Lenders
of
its receipt of any such notice or of any Events of Default resulting from a
default by Borrower in the payment of principal or interest required to be
paid
to Agent for the account of the Lenders. Each Lender shall be solely responsible
for giving any notices to its participants, if any. Subject to Section 10.4,
Agent shall take such action with respect to any Default or Event of Default
as
may be requested by Agent and the Required Lenders in accordance with Section
9;
provided,
that
unless and until Agent has received any such request, Agent may (but shall
not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem
advisable.
10.6. Credit
Decision.
Each
Lender acknowledges that none of the Agent-Related Persons has made any
representation or warranty to it, and that no act by Agent hereinafter taken,
including any review of the affairs of Borrower or any Obligor or any Subsidiary
or Affiliate of Borrower or any Obligor, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance
upon
any Agent-Related Person and based on such documents and information as it
has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person party to a Loan Document,
and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrower. Each Lender also represents that it will, independently
and
without reliance upon any Agent-Related
Person and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of Borrower and any other Person party to a
Loan
Document. Except for notices, reports, and other documents expressly herein
required to be furnished to the Lenders by Agent, Agent shall have no duty
or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrower and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related
Persons.
10.7. Costs
and Expenses, Indemnification.
Agent
may
incur and pay expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, legal fees
and expenses, fees and expenses of financial accountants, advisors, consultants,
and appraisers, costs of collection by outside collection agencies, auctioneer
fees and expenses, and costs of security guards or insurance premiums paid
to
maintain the Collateral and any taxes related thereto (unless this Agreement
expressly provides that Borrower is not obligated to pay such taxes)
("Lender
Group Expenses"),
whether or not Borrower is obligated to reimburse Agent or the Lenders for
such
expenses pursuant to this Agreement or otherwise. Agent is authorized and
directed to deduct and retain sufficient amounts from any collections received
by Agent to reimburse Agent for such out-of-pocket costs and expenses prior
to
the distribution of any amounts to the Lenders. In the event Agent is not
reimbursed for such costs and expenses from the collections received by Agent,
each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed
by
or on behalf of Borrower and without limiting the obligation of Borrower to
do
so), according to their Pro Rata Shares, from and against any and all such
costs
and expenses; provided,
that no
Lender shall be liable for the payment to any Agent-Related
Person of any portion of such costs and expenses resulting solely from such
Person's gross negligence or willful misconduct, nor shall any Lender (other
than the Defaulting Lender) be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's Pro Rata Share of any costs or out of pocket expenses
(including legal, accountants, advisors, and consultants fees and expenses)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect
of
rights or responsibilities under, this Agreement, any other Loan Document,
or
any document contemplated by or referred to herein, to the extent that Agent
is
not reimbursed for such expenses by or on behalf of Borrower. The undertaking
in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
-35-
10.8. Agent
in Individual Capacity.
Agent
and
any of its Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in, and generally engage
in
any kind of banking, trust, financial advisory, underwriting, or other business
with Borrower and its Subsidiaries and Affiliates and any other Person party
to
any Loan Documents as Agent was not Agent hereunder, and, in each case, without
notice to or consent of the other members of the Lender Group. The other members
of the Lender Group acknowledge that, pursuant to such activities, Agent or
its
Affiliates may receive information regarding Borrower or its Affiliates and
any
other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge
that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them.
The
terms "Lender" and "the Lenders" include Agent in its individual capacity as
a
Lender.
-36-
10.9. Successor
Agent.
Agent
may
resign as Agent upon 45 days notice to the Lenders. If Agent resigns under
this
Agreement, the Required Lenders shall appoint a successor Agent for the Lenders;
provided,
that
Borrower shall have consented to such successor Agent (which consent shall
not
be unreasonably withheld or delayed), except that such consent of Borrower
shall
not be required if (a) an Event of Default then exists, (b) such
successor Agent is becoming a successor Agent in connection with a merger or
consolidation with or acquisition of Agent, or (c) such successor Agent is
an Affiliate of the resigning Agent. If no successor Agent is appointed prior
to
the effective date of the resignation of Agent, Agent may appoint, after
consulting with the Lenders (and, unless an Event of Default then exists,
Borrower), a successor Agent. In any such event, upon the acceptance of its
appointment as successor Agent hereunder, such successor Agent shall succeed
to
all the rights, powers, and duties of the retiring Agent and the term "Agent"
shall mean such successor Agent and the retiring Agent's appointment, powers,
and duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 10 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement. If no successor Agent has accepted appointment as Agent by
the
date which is 45 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective
and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Lenders appoint a successor Agent as provided for above.
10.10. Lender
in Individual Capacity.
Any
Lender and its respective Affiliates may make loans to, issue letters of credit
for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with Borrower and its Subsidiaries and Affiliates and any
other Person party to any Loan Documents as though such Lender were not a Lender
hereunder without notice to or consent of the other members of the Lender Group.
The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrower or its Affiliates and any other Person party to any Loan
Documents that is subject to confidentiality obligations in favor of Borrower
or
such other Person and that prohibit the disclosure of such information to the
Lenders, and the Lenders acknowledge that, in such circumstances (and in the
absence of a waiver of such confidentiality obligations, which waiver such
Lender will use its reasonable best efforts to obtain), such Lender shall not
be
under any obligation to provide such information to them. With respect to the
Disproportionate Advances and Protective Advances, Agent shall have the same
rights and powers under this Agreement as any other Lender and may exercise
the
same as though it were not the Agent.
-37-
10.11. Matters
Relating to Collateral and Obligations.
(a) The
Lenders hereby irrevocably authorize Agent, at its option and in its sole
discretion, to release Agent's Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrower
of all Obligations, (ii) constituting property being sold or disposed of if
a release is required or desirable in connection therewith and if Borrower
certifies to Agent that the sale or disposition is permitted under this
Agreement or the other Loan Documents (and Agent may rely conclusively on any
such certificate, without further inquiry), (iii) constituting property in
which no Credit Party owned any interest at the time Agent's Lien was granted
or
at any time thereafter, or (iv) constituting property leased to a Credit
Party under a lease that has expired or is terminated in a transaction permitted
under this Agreement. Except as provided above, Agent will not execute and
deliver a release of any Lien on any Collateral without the prior written
authorization of (y) if the release is of all or substantially all of the
Collateral, all of Agent and the Lenders, or (z) otherwise, Agent and the
Required Lenders. Upon request by Agent or Borrower at any time, the Lenders
will confirm in writing Agent's authority to release any such Liens on
particular types or items of Collateral pursuant to this Section 10.11;
provided,
that
(x) Agent shall not be required to execute any document necessary to
evidence such release on terms that, in Agent's opinion, would expose Agent
to
liability or create any obligation or entail any consequence other than the
release of such Lien without recourse, representation, or warranty, and
(y) such release shall not in any manner discharge, affect, or impair the
Obligations or any Liens (other than those expressly being released) upon (or
obligations of Borrower in respect of) all interests retained by Borrower,
including, the proceeds of any sale, all of which shall continue to constitute
part of the Collateral.
(b) Agent
shall have no obligation whatsoever to any of the Lenders to assure that the
Collateral exists or is owned by any Credit Party or any other Person or is
cared for, protected, or insured or has been encumbered, or that Agent's Liens
have been properly or sufficiently or lawfully created, perfected, protected,
or
enforced or are entitled to any particular priority, or to exercise at all
or in
any particular manner or under any duty of care, disclosure or fidelity, or
to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral and the Obligations, or any act,
omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral and the Obligations
in its capacity as one of the Lenders and that Agent shall have no other duty
or
liability whatsoever to any Lender as to any of the foregoing, except as
otherwise provided herein.
10.12. Restrictions
on Actions by the Lenders, Sharing Payments.
(a) Each
of
the Lenders agrees that it shall not, without the express written consent of
Agent, and that it shall, to the extent it is lawfully entitled to do so, upon
the written request of Agent, set off against the Obligations, any amounts
owing
by such Lender to Borrower or any deposit accounts of Borrower now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it shall
not, unless specifically requested to do so in writing by Agent, take or cause
to be taken any action, including, the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.
-38-
(b) If,
at
any time or times any Lender shall receive (i) by payment, foreclosure,
setoff, or otherwise, any proceeds of Collateral or any payments with respect
to
the Obligations, except for any such proceeds or payments received by such
Lender from Agent pursuant to the terms of this Agreement, or (ii) payments
from Agent in excess of such Lender's applicable portion of all such
distributions by Agent, such Lender promptly shall (x) turn the same over
to Agent, in kind, and with such endorsements as may be required to negotiate
the same to Agent, or in immediately available funds, as applicable, for the
account of all of the Lenders and for application to the Obligations in
accordance with Section 5.3, or (y) purchase, without recourse or warranty,
an undivided interest and participation in the Obligations owed to the other
the
Lenders so that such excess payment received shall be applied among the Lenders
in accordance with their ratable portions of principal and applicable portions
of interest and fees; provided,
however,
that to the extent that such excess payment received by the purchasing party
is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of
the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required
to
pay interest in connection with the recovery of the excess payment.
10.13. Agency
for Perfection.
Agent
hereby appoints each Lender as its agent (and each Lender hereby accepts such
appointment) for the purpose of perfecting Agent's Liens in assets which, in
accordance with the applicable personal property security legislation can be
perfected only by possession or control. Should any Lender obtain possession
or
control of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver possession or control
of
such Collateral to Agent or in accordance with Agent's
instructions.
10.14. Payments
by Agent to the Lenders.
All
payments to be made by Agent to the Lenders shall be made by bank wire transfer
of immediately available funds pursuant to such wire transfer instructions
as
each party may designate for itself by written notice to Agent. Concurrently
with each such payment, Agent shall identify whether such payment (or any
portion thereof) represents principal, premium, fees, or interest of the
Obligations.
10.15. Concerning
the Collateral and Related Loan Documents.
Each
member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents. Each member of the Lender Group agrees
that any action taken by Agent in accordance with the terms of this Agreement
or
the other Loan Documents relating to the Collateral and the exercise by Agent
of
its powers set forth therein or herein, together with such other powers that
are
reasonably incidental thereto, shall be binding upon all of the
Lenders.
-39-
10.16. Field
Audits and Examination Reports, Confidentiality, Disclaimers by the Lenders,
Other Reports and Information.
(a) By
becoming a party to this Agreement, each Lender: (i) is deemed to have requested
that Agent furnish such Lender, promptly after it becomes available, a copy
of
each field audit or examination report (each a "Report"
and
collectively, "Reports")
prepared by or at the request of Agent, and Agent shall so furnish each Lender
with such Reports, (ii) expressly agrees and acknowledges that Agent
(A) makes no representation or warranty as to the accuracy of any Report
and (B) shall not be liable for any information contained in any Report,
(iii) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or any other party performing any audit
or
examination will inspect only specific information regarding Credit Parties
and
will rely significantly upon the books and records of Credit Parties, as well
as
on representations of Credit Parties' personnel, (iv) agrees to keep all Reports
and other material, non-public information regarding Credit Parties and their
operations, assets, and existing and contemplated business plans in a
confidential manner in accordance with Section 12.10, and (v) without limiting
the generality of any other indemnification provision contained in this
Agreement, agrees: (A) to hold Agent and any such other Lender preparing a
Report harmless from any action the indemnifying Lender may take or fail to
take
or any conclusion the indemnifying Lender may reach or draw from any Report
in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Credit Parties, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans
of
any of the Credit Parties; and (B) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, legal fees and costs) incurred by Agent and any
such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
(b) In
addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by any Credit Party to Agent that has not been
contemporaneously provided by such Credit Party to such Lender, and, upon
receipt of such request, Agent promptly shall provide a copy of same to such
Lender, (y) to the extent that Agent is entitled, under any provision of
the Loan Documents, to request additional reports or information from any Credit
Party, any Lender may, from time to time, reasonably request Agent to exercise
such right as specified in such Lender's notice to Agent, whereupon Agent
promptly shall request of Credit Parties the additional reports or information
reasonably specified by such Lender, and, upon receipt thereof from such Credit
Party, Agent promptly shall provide a copy of same to such Lender, and
(z) any time that Agent renders to Borrower a statement regarding the Loan
Account, Agent shall send a copy of such statement to each Lender.
-40-
10.17. Several
Obligations, No Liability.
Notwithstanding
that certain of the Loan Documents now or hereafter may have been or will
be
executed only by or in favor of Agent in its capacity as such, and not by
or in
favor of the Lenders, any and all obligations on the part of Agent (if any)
to
make any credit available hereunder shall constitute the several (and not
joint)
obligations of the respective the Lenders on a ratable basis, according to
their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender
shall
be solely responsible for notifying its participants of any matters relating
to
the Loan Documents to the extent any such notice may be required, and no
Lender
shall have any obligation, duty, or liability to any participant of any other
Lender. Except as expressly provided in this Agreement, no member of the
Lender
Group shall have any liability for the acts of any other member of the Lender
Group. No Lender shall be responsible to Borrower or any other Person for
any
failure by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
|
11.
|
SETTLEMENTS,
DISTRIBUTIONS AND APPORTIONMENT OF
PAYMENTS.
|
11.1. Procedure.
On
a
weekly basis (or more frequently if requested by Agent (a "Settlement
Date"),
Agent
shall provide each Lender with a statement of the outstanding balance of
the
Loans as of the end of the Business Day immediately preceding the Settlement
Date (the "Pre-Settlement
Determination Date")
and
the current balance of the Loans funded by each Lender (whether made directly
by
such Lender to Borrower or constituting a settlement by such Lender of a
previous Disproportionate Advance or Protective Advance made by Agent on
behalf
of such Lender to Borrower). If such statement discloses that such Lender's
current balance of the Loans as of the Pre-Settlement Determination Date
exceeds
such Lender's (a) Pro Rata Revolving Share of the Revolving Loans plus (b)
Pro
Rata Term Loan A Share of Term Loan A plus (c) Pro Rata Term
Loan B Share of Term Loan B, in each case outstanding as of the
Pre-Settlement Determination Date, then Agent shall, on the Settlement Date,
transfer, by wire transfer, the net amount due to such Lender in accordance
with
such Lender's instructions, and if such statement discloses that such Lender's
current balance of the Loans as of the Pre-Settlement Determination Date
is less
than such Lender's (a) Pro Rata Revolving Share of the Revolving Loans, plus
(b)
Pro Rata Term Loan A Share of Term Loan A, plus (c) Pro Rata Term
Loan B Share of Term Loan B, in each case outstanding as of the
Pre-Settlement Determination Date, then such Lender shall, on the Settlement
Date, transfer, by wire transfer the net amount due to Agent in accordance
with
Agent's instructions. In addition, on a monthly basis, Agent shall pay to
Lenders interest and fees as agreed between Agent and each Lender in a separate
agreement with each such Lender.
-41-
Notwithstanding
the foregoing, Agent shall not be obligated to transfer to any Defaulting
Lender
any payment made by Borrower to Agent, nor shall such Defaulting Lender be
entitled to share any interest, fees or other payment hereunder, until all
payments are made by such Defaulting Lender to Agent and Borrower as required
in
this Agreement.
|
12.
|
GENERAL
PROVISIONS.
|
12.1. Notices.
All
notices or demands to be given under this Agreement shall be in writing and
shall be given by hand delivery, by overnight courier, by regular first-class
mail or certified mail return receipt requested, addressed to Agent, a Lender
or
Borrower, as applicable, at the address shown below, or by facsimile to the
facsimile number shown below, or at any other address (or to any other facsimile
number) designated in writing by one party to the other parties in the manner
prescribed in this Section 12.1. All notices or demands sent in accordance
with this Section 12.1 by (a) facsimile transmission shall be deemed to have
been received when sent, (b) by mail shall be deemed to have been received
three
Business Days after the date when sent, and (c) by hand delivery or overnight
courier service shall be deemed to have been received one Business Day after
the
date when sent.
|
If
to Borrower:
|
APPALACHIAN
OIL COMPANY, INC.
▇.▇.
▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Fax
No. (▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
with
a copy to:
|
▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇
Chance
Fax
No. (▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
and
to:
|
SICHENZIA,
ROSS, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇. ▇▇▇▇, Esq.
Fax
No. (▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
If
to Agent:
|
GREYSTONE
BUSINESS CREDIT II, L.L.C.
▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇
▇▇▇▇, Portfolio Manager
Fax
No. (▇▇▇) ▇▇▇-▇▇▇▇
|
-42-
|
with
a copy to:
|
▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ BLACK ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LTD.
▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Esq.
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
If
to any Lender
|
See
notice address set forth below such Lender's signature block hereto
or as
specified in the Assignment and
Acceptance
|
12.2. Severability.
If
any
provision of this Agreement, or the application thereof to any party or
circumstance, is held to be void or unenforceable by any court of competent
jurisdiction, such defect shall not affect the remainder of this Agreement,
which shall continue in full force and effect.
12.3. Know
Your Customer.
If:
(a) the
introduction of or any change in (or in the interpretation, administration
or
application of) any law or regulation made after the date of this Agreement;
or
(b) any
change in the status of any Credit Party or the composition or ownership
of the
shareholders or partners of any Credit Party, as the case may be, after the
date
of this Agreement; or
(c) a
proposed assignment or transfer by Agent or any Lender of any of their
respective rights and/or obligations under this Agreement to a third party
prior
to such assignment or transfer,
obliges
Agent or any Lender (or, in the case of paragraph (c) above, any prospective
new
Agent or new Lender) to comply with "know your customer" or similar
identification procedures in circumstances where the necessary information
is
not already available to it, Borrower shall, promptly upon the request of
Agent
or such Lender, supply such documentation and other evidence as is reasonably
requested by Agent (for itself or on behalf of any Lender) or any Lender
(for
itself or, in the case of any event described in paragraph (c) above, on
behalf
of any prospective new Lender) in order for Agent, such Lender or, in the
case
of the event described in paragraph (c) above, any prospective new Lender
to
carry out and be satisfied with the results of all necessary "know your
customer" or other similar checks under all applicable law and regulations
pursuant to the transactions contemplated in the Loan Documents.
-43-
12.4. Integration.
This
Agreement and the other Loan Documents represent the final, entire and complete
agreement among Borrower, Agent and the Lenders and supersede all prior and
contemporaneous negotiations, oral representations and agreements, all of
which
are merged and integrated into this Agreement. THERE ARE NO ORAL UNDERSTANDINGS,
REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES THAT ARE NOT SET FORTH
IN THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS.
12.5. Waivers.
The
failure of Agent or the Lenders at any time or times to require Borrower
to
strictly comply with any of the provisions of this Agreement or any other
Loan
Documents shall not waive or diminish any right of Agent or the Lenders later
to
demand and receive strict compliance therewith. Any waiver of any default
shall
not waive or affect any other default, whether prior or subsequent, and whether
or not similar. None of the provisions of this Agreement or any other Loan
Document shall be deemed to have been waived by any act or knowledge of Agent,
the Lenders or their respective agents or employees, but only by a specific
written waiver signed by an authorized officer of Agent and the applicable
Lenders, if any, specified by Section 12.6 and delivered to Borrower. Borrower
waives demand, protest, notice of protest and notice of default or dishonor,
notice of payment and nonpayment, release, compromise, settlement, extension
or
renewal of any commercial paper, Instrument, Account, General Intangible,
Document, Chattel Paper, Investment Property or guaranty at any time held
by
Lender on which Borrower is or may in any way be liable, and notice of any
action taken by Lender, unless expressly required by this Agreement, and
notice
of acceptance hereof.
12.6. Amendment,
Waivers and Consents.
(a) No
amendment or waiver of any provision of this Agreement or any of the Loan
Documents, or consent to any departure by any Credit Party therefrom, shall
in
any event be effective unless the same shall be in writing and signed by
Agent
and Required Lenders, or if the Lenders shall not be parties thereto, by
the
parties thereto and consented to by Agent and Required Lenders, and each
such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided,
that no
amendment, waiver or consent shall, unless in writing and signed by all the
Lenders (or with respect to clauses (i), (ii), (iii) or (iv) below, all directly
affected Lenders), do any of the following: (i) increase the Revolving Loan
Commitment, Term Loan A Commitment or Term Loan B Commitment of any
Lender, (ii) reduce the principal of, or interest on, the Loans (other than
as expressly permitted herein) or any fees hereunder, (iii) postpone any
date fixed for any payment in respect of principal of, or interest on, the
Loans
or any fees hereunder, (iv) change the Adjusted Pro Rata Revolving Share,
Pro Rata Revolving Share, Pro Rata Share, Pro Rata Term Loan A Share or
Term Loan B Share of any Lender, or any minimum requirement necessary for
the Agent, Lenders or Required Lenders to take any action hereunder,
(v) amend or waive this Section 12.6, or change the definition of Required
Lenders, or (vii) except in connection with the financing, refinancing,
sale or other disposition of any asset of Borrower permitted under this
Agreement (or to the extent Agent's and Required Lenders' approval only is
required with any such release pursuant to Section 10.11), release or
subordinate any Agent's Liens on any of the Collateral and provided further,
that no amendment, waiver or consent affecting the rights or duties of Agent
under this Agreement or any Loan Documents shall in any event be effective,
unless in writing and signed by Agent in addition to the Lenders required
hereinabove to take such action. Notwithstanding any of the foregoing to
the
contrary, (A) for purposes of voting or consenting to matters with respect
to this Agreement and the Loan Documents, a Defaulting Lender shall not be
considered a Lender and such Defaulting Lender's Revolving Loan Commitment,
Term
Loan A Commitment and Term Loan B Commitment shall each be deemed to
be $0 until such Defaulting Lender makes the payments required in this Agreement
and (B) the consent of Borrower shall not be required for any amendment,
modification or waiver of the provisions of this Section 12.6.
-44-
(b) In
the
event that any consent, waiver or amendment requiring the approval of all
Lenders, all directly affected Lenders or Required Lenders as set forth above
is
agreed to by Agent, but not by all Lenders, all directly affected Lenders
or
Required Lenders (any such Lender not providing such approval is hereinafter
referred to as a "Non-Consenting
Lender"),
as
applicable, or in the event that any Lender is a Defaulting Lender, then
in
either case Agent may, in its sole discretion, cause any such Non-Consenting
Lender or Defaulting Lender to assign its rights and obligations under this
Agreement and the Loan Documents to one or more new Lenders or existing Lenders
in the manner and according to the terms set forth in Section 12.8; provided,
that (i)
in the case of a replacement of a Non-Consenting Lender, such new Lender
must be
willing to consent to the proposed consent, waiver or amendment and (ii) in
connection with such assignment the new Lender pays the assigning Lender
an
amount equal to the outstanding Obligations owing to such assigning Lender,
including all principal, accrued and unpaid interest and accrued and unpaid
fees
to the date of assignment. Such assignment shall occur within thirty (30)
(or
such shorter period of time as may be required by Agent in its sole discretion)
days of notice by Agent to such Non-Consenting Lender or Defaulting Lender
of
Agent's intent to cause such Lender to assign its interests hereunder. In
the
event that any such Non-Consenting Lender or Defaulting Lender fails to execute
any documents (including an Assignment and Acceptance) or take any other
action
required in connection with an assignment required pursuant to this clause
(b),
such Lender hereby grants to Agent an irrevocable power of attorney, coupled
with an interest, authorizing and permitting Agent (acting through any of
its
officers, employees, attorneys or agents), at any time, at Agent's option,
but without obligation, with or without notice to such Lender, and at such
Lender's expense, to execute any such document or take any such action, in
such
Lender's name or otherwise.
12.7. Time
of Essence.
Time
is
of the essence in the performance by Borrower of each and every obligation
under
this Agreement and the other Loan Documents.
12.8. Attorneys
Fees and Costs.
Borrower
shall reimburse Agent and the Lenders for all reasonable attorneys' and
paralegals' fees (including in-house attorneys and paralegals employed by
Agent
and the Lenders) and all filing, recording, search, title insurance, appraisal,
audit, and other costs incurred by Agent and the Lenders, pursuant to, in
connection with, or relating to this Agreement, including all reasonable
attorneys' fees and costs Agent and Lenders incur to prepare and negotiate
this
Agreement and the other Loan Documents; to obtain legal advice in connection
with this Agreement and the other Loan Documents or Borrower or any Obligor;
for
Agent to administer this Agreement and the other Loan Documents (including
the
cost of periodic financing statement, tax Lien and other searches conducted
by
Agent); to enforce, or seek to enforce, any of its rights; prosecute actions
against, or defend actions by, Account Debtors; to commence, intervene in,
or
defend any action or proceeding; to enforce and protect, or to seek to enforce
and protect, any of its rights and interests in any bankruptcy case of any
Credit Party or any other Obligor, including by initiating and prosecuting
any
motion for relief from the automatic stay and by initiating, prosecuting
or
defending any other contested matter or adversary proceeding in bankruptcy;
to
file or prosecute any probate claim, bankruptcy claim, third-party claim,
or
other claim; to examine, audit, copy, and inspect any of the Collateral or
any
of any Credit Party's or any other Obligor's books and records; to protect,
obtain possession of, lease, dispose of, or otherwise enforce Agent's Liens
in
the Collateral; and to otherwise represent Agent or any Lender in any litigation
relating to Borrower or any Obligor. If Agent, the Lenders or Borrower files
any
lawsuit against the other predicated on a breach of this Agreement, the
prevailing party in such action shall be entitled to recover its reasonable
costs and attorneys' fees, including reasonable attorneys' fees and costs
incurred in the enforcement of, execution upon or defense of any order, decree,
award or judgment. All attorneys' fees and costs to which Agent or the Lenders
may be entitled pursuant to this Section 12.8 shall immediately become part
of
the Obligations, shall be due on demand, and shall bear interest at a rate
equal
to the highest interest rate applicable to any of the Obligations.
-45-
12.9. Benefit
of Agreement; Assignability.
(a) The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the respective successors, permitted assigns, heirs, beneficiaries and
representatives of each of Borrower, Agent and Lenders; provided,
that
Borrower may not assign or transfer any of its rights under this Agreement
without the prior written consent of Agent and each Lender, and any prohibited
assignment shall be void. No consent by Agent and Lenders to any assignment
by
Borrower shall release Borrower from its liability for any of the Obligations.
(b) Each
Lender may, with the consent of Agent which consent shall be in Agent's sole
discretion, but without the consent of any other Lender or Borrower, assign
to
one or more Persons all or a portion of its rights and obligations under
this
Agreement and the Loan Documents; provided,
that
(i) for each such assignment, the parties thereto shall execute and deliver
to Agent, for its acceptance and recording in the Register, an Assignment
and
Acceptance Agreement in the form attached hereto as Exhibit B (the "Assignment
and Acceptance"),
and a
processing and recordation fee of $3,500 to be paid by the assignee, and
(ii) absent the consent of Agent, no such assignment (other than an
assignment of all of the Loans and Commitments of such Lender) shall be for
less
than $2,500,000. Upon such execution and delivery of the Assignment and
Acceptance to Agent and satisfaction of the other above noted terms and
conditions, from and after the date specified as the effective date in the
Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto, and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, such assignee
shall
have the rights and obligations of a Lender hereunder and (y) the assignor
thereunder shall, to the extent that rights and obligations hereunder have
been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights
(other than any rights it may have pursuant to Section 7.2, which will survive)
and be released from its obligations under this Agreement (and, in the case
of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).
-46-
(c) By
executing and delivering an Assignment and Acceptance, the assignee thereunder
confirms and agrees as follows: (i) other than as provided in such
Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement
and
the Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any of the other Loan
Documents, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or any Obligor or the performance or observance by Borrower or any
Obligor of its obligations under this Agreement and the other Loan Documents,
(iii) such assignee confirms that it has received a copy of this Agreement
and the other Loan Documents that it has requested, together with copies
of the
financial statements referred to in Section 6.9 and such other documents
and
information as it has deemed appropriate to make its own credit analysis
and
decision to enter into such Assignment and Acceptance, (iv) such assignee
will, independently and without reliance upon Agent, such assigning Lender
or
any other Lender and based on such documents and information as it shall
deem
appropriate at the time, continue to make its own credit decisions in taking
or
not taking action under this Agreement and under the other Loan Documents,
(v) such assignee appoints and authorizes Agent to take such action on its
behalf and to exercise such powers under this Agreement as are delegated
to
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of
this
Agreement are required to be performed by it as a Lender.
(d) Agent
shall, maintain at its address referred to in Section 12.1 a copy of each
Assignment and Acceptance delivered to and accepted by it and a register
for the
recordation of the names and addresses of the Lenders and the Revolving Loan
Commitment, Term Loan A Commitment, Term Loan B Commitment and
principal amount of the Loans owing to, each Lender from time to time (the
"Register").
The
entries in the Register shall be conclusive and binding for all purposes,
absent
manifest error, and Borrower, Agent and the Lenders may treat each Person
whose
name is recorded in the Register as a Lender hereunder for all purposes of
this
Agreement. The Register and copies of each Assignment and Acceptance shall
be
available for inspection by Borrower, Agent or any Lender at any reasonable
time
and from time to time upon reasonable prior notice.
(e) Upon
its
receipt of an Assignment and Acceptance executed by the assigning and assignee
Lender and consented to by Agent, Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit B hereto,
(i) record the information contained therein in the Register and
(ii) give prompt notice thereof to Borrower. Within five (5) Business Days
after its receipt of such notice, Borrower shall execute and deliver to Agent
in
exchange for the surrendered promissory note or notes, a new promissory note
or
notes to the order of the assignee in amounts equal to such assignee's
Commitments and outstanding Loans hereunder and, if the assigning Lender
has
retained a portion of the Commitments or Loans, a new promissory note or
notes
to the order of the assigning Lender in an amount equal to the remaining
Commitments and outstanding Loans hereunder of such assigning Lender under
the
terms of this Agreement. Such new promissory note or notes shall re-evidence
the
indebtedness outstanding under the old promissory note or notes and shall
be in
the aggregate principal amount of such surrendered promissory note or notes,
shall be dated of even date herewith and shall otherwise be in substantially
the
form of the promissory note or notes subject to such assignment.
-47-
(f) Each
Lender may, with prior written notice to Agent, sell participations (without
the
consent of Agent, Borrower or any other Lender) to one or more parties, in
or to
all (or a portion) of its rights and obligations under this Agreement (including
all or a portion of its Revolving Loan Commitment, Term Loan A Commitment,
Term Loan B Commitment or the Loans owing to it); provided,
that
(i) such Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) Borrower, Agent, and
the other the Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents and (iv) such Lender shall not transfer,
grant, assign or sell any participation under which the participant shall
have
rights to approve any amendment, waiver or consent of this Agreement or any
other Loan Document.
(g) Each
Lender agrees that, without the prior written consent of Borrower and Agent,
it
will not make any assignment hereunder in any manner or under any circumstances
that would require registration or qualification of, or filings in respect
of,
any Loan or other Obligations under the securities laws of the United States
of
America or of any jurisdiction.
(h) In
connection with the efforts of any Lender to assign its rights or obligations
or
to participate interests, such Lender may disclose any information in its
possession regarding Borrower.
12.10. Confidentiality.
Agent
and
Lenders each individually (and not jointly or jointly and severally) agree
that
material, non-public information regarding Credit Parties, their operations,
assets, and existing and contemplated business plans shall be treated by
Agents
and the Lenders in a confidential manner, and shall not be disclosed by Agents
and the Lenders to Persons who are not parties to this Agreement, except:
(a) to attorneys for and other advisors, accountants, auditors, and
consultants to any member of the Lender Group, (b) to Subsidiaries and
Affiliates of any member of the Lender Group, provided that any such Subsidiary
or Affiliate shall have agreed to receive such information hereunder subject
to
the terms of this Section 12.10, (c) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation, (d) as
may be agreed to in advance by Credit Parties or as requested or required
by any
governmental authority pursuant to any subpoena or other legal process,
(e) as to any such information that is or becomes generally available to
the public (other than as a result of prohibited disclosure by Agent or the
Lenders), (f) in connection with any assignment, prospective assignment,
sale, prospective sale, participation or prospective participations, or pledge
or prospective pledge of Agent or any Lender's interest under this Agreement,
provided that any such assignee, prospective assignee, purchaser, prospective
purchaser, participant, prospective participant, pledgee, or prospective
pledgee
shall have agreed to receive such information hereunder subject to the terms
of
this Section 12.10, and (g) in connection with any litigation or other
adversary proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties
under
this Agreement or the other Loan Documents.
-48-
12.11. Headings;
Construction.
Section
and subsection headings are used in this Agreement only for convenience and
do
not affect the meanings of the provisions that they precede.
12.12. GOVERNING
LAW; CONSENT TO FORUM, ETC.
THIS
AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED, AND SHALL BE DEEMED
TO
HAVE BEEN MADE, IN NEW YORK COUNTY, NEW YORK, AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. BORROWER
HEREBY
CONSENTS AND AGREES THAT THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK
COUNTY, NEW YORK OR ANY STATE IN WHICH ANY OF THE COLLATERAL IS LOCATED SHALL
HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN BORROWER, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT, ANY OTHER
LOAN
DOCUMENTS OR ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
OTHER
LOAN DOCUMENTS. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND WAIVES
ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS.
BORROWER ALSO AGREES THAT ANY CLAIM OR DISPUTE BROUGHT BY BORROWER AGAINST
AGENT
OR LENDERS PURSUANT TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY MATTER
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT
EXCLUSIVELY IN THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW
YORK. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF
SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE IN THE MANNER AND SHALL
BE
DEEMED RECEIVED AS SET FORTH IN SECTION 12.1 FOR NOTICES, TO THE EXTENT
PERMITTED BY LAW. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
AFFECT
THE RIGHT OF AGENT OR LENDERS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR LENDERS OF ANY
JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER
THIS
AGREEMENT TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
-49-
12.13. WAIVER
OF JURY TRIAL, ETC.
BORROWER
WAIVES (I) THE RIGHT TO TRIAL BY JURY (WHICH AGENT AND LENDERS ALSO WAIVE)
IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF
OR
RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL OR
ANY
CONDUCT, ACTS OR OMISSIONS OF AGENT OR LENDERS OR BORROWER OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OR ANY OTHER
PERSONS AFFILIATED WITH AGENT OR LENDERS OR BORROWER, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE; (II) THE RIGHT TO INTERPOSE ANY CLAIMS,
DEDUCTIONS, SETOFFS OR COUNTERCLAIMS OF ANY KIND IN ANY ACTION OR PROCEEDING
INSTITUTED BY AGENT OR LENDERS WITH RESPECT TO THE LOAN DOCUMENTS OR ANY
MATTER
RELATING THERETO, EXCEPT FOR COMPULSORY COUNTERCLAIMS; (III) NOTICE PRIOR
TO AGENT'S OR LENDERS' TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR
ANY
BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT
OR
LENDERS TO EXERCISE ANY OF THEIR REMEDIES AND (IV) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS. BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND LENDERS' ENTERING
INTO THIS AGREEMENT AND THAT AGENT AND LENDERS ARE RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS
THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS
KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED
AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
-50-
IN
WITNESS WHEREOF, Borrower and Lender have signed this Agreement as of the
date
first set forth above.
|
APPALACHIAN
OIL COMPANY, INC., as
Borrower
|
||
| |
|
|
| By: |
▇▇▇▇▇
Chance
|
|
|
Its
President
|
||
|
GREYSTONE
BUSINESS CREDIT II, L.L.C.,
as
Agent and a Lender
|
||
| |
|
|
| By: |
/s/
|
|
|
Its Authorized Signatory |
||
|
Term
Loan A Commitment: $600,000
Term
Loan B Commitment: $4,600,000
Revolving
Loan Commitment: $20,000,000
|
||
Schedule
B-1
Trademarks
Schedule
3.1
Conditions
Precedent to the Initial Extension of Credit
[To
come, based on Commitment Letter]
Schedule
6.1
Ownership
of Borrower; Borrower's Subsidiaries
Schedule
6.2
Borrower's
Prior Names and Present and Prior Trade Names
Schedule
6.7
Commercial
Tort Claims
Schedule
6.8
Collateral
Locations
Schedule
6.12
Litigation
Schedule
6.21
Negative
Covenants
Schedule A
Description
of Certain Terms
| 1. |
Loan
Limits for Revolving Loans:
|
|||
|
(a) Maximum
Facility Amount:
|
$20,000,000,
minus the outstanding principal balance at such time of (i) Term
Loan A,
(ii) Term Loan B and (iii) “Term Loan C” under that certain Loan and
Security Agreement dated as of December 29, 2006 among Holdings,
Titan PCB
West, Inc., Titan PCB East, Inc., Oblio Telecom, Inc., Titan Wireless
Communications, Inc., Start Talk Inc., Pinless, Inc. and Greystone
Business Credit II, L.L.C.
|
|||
|
(b) Advance
Rates:
|
||||
|
(i) Accounts
Advance Rate:
|
90%; provided,
that if the Dilution Percentage exceeds 3%, Agent may, at its option
(A) reduce such advance rate by the number of full or partial
percentage points comprising such excess or (B) establish a Reserve
in the amount of such excess
|
|||
|
(ii) Inventory
Advance Rate(s):
|
The
sum of (x) up to 45% of Eligible Inventory consisting of convenience
store Inventory valued at the lower of cost and market value plus
(y) up
to 75% of Eligible Inventory consisting of fuel valued at the lower
of cost or market value
|
|||
|
(c) Accounts
Sublimit:
|
Not
applicable
|
|||
|
(d) Inventory
Sublimits:
|
All
Inventory: $9,000,000
Inventory
consisting of convenience store Inventory: $2,100,000
|
|||
|
(e) Credit
Accommodation Limit:
|
$500,000
|
|||
|
(f) Permanent
Reserve:
|
[To
be determined]
|
|||
| 2. |
Term
Loans:
|
|||
|
(a) Term
Loan A
|
||||
|
(i) Principal
Amount
|
$600,000,
or if less, 85% of the net appraised forced liquidation value of
Borrower's Eligible Equipment consisting of vehicles, tank trailers
and
trucks as of the Closing Date
|
|
(ii) Repayment
Schedule:
|
Term
Loan A shall be repaid in consecutive equal monthly installments
amortized
over 60 months, payable on the first day of each calendar month
commencing
October, 2007; provided,
that if after the date of this Agreement, the unpaid principal
balance of
Term Loan A exceeds 75% of an Updated Equipment Appraisal, then
Borrower
shall repay such excess in 6 equal consecutive monthly installments
payable on the first day of the month immediately following such
determination by Agent (which payments shall be in addition to
the regular
amortization payments set forth above)
|
||
|
(b) Term
Loan B
|
|||
|
(i) Principal
Amount
|
Up
to $4,600,000, or if less, 40% of the net appraised value (consisting
of
vehicles, tank trailers and trucks) of leasehold mortgages and
dealer
contract rights
|
||
|
(ii) Repayment
Schedule:
|
Term
Loan B shall be repaid in consecutive equal monthly installments
amortized over 60 months payment on the first day of each calendar
month commencing on the first day of the first month immediately
following
the Term Loan B Advance; provided, that if after the date of this
Agreement, the unpaid principal balance of Term Loan B exceeds 40% of
any Additional Updated Appraisals of the assets upon which Term
Loan B is based, then Borrower shall repay such excess in 6 equal
consecutive monthly installments payable on the first day of the
month
immediately following such determination by Agent (which payments
shall be
in addition to the regular amortization payments set forth
above)
|
||
| 3. |
Interest
Rates:
|
||
|
(a) Revolving
Loans:
|
1.5%
per annum plus the Prime Rate
|
|
(b) Term
Loan A:
|
1.5%
per annum plus the Prime Rate
|
||
|
(c) Term
Loan B:
|
1.5%
per annum plus the Prime Rate
|
||
| 4. |
Reserved
|
||
| 5. |
Maximum
Days for Eligible Accounts:
|
||
|
(a) Maximum
days after original invoice
date
for Eligible
Accounts:
|
60
days
|
||
|
(b) Maximum
days after original
invoice due date for
Eligible
Accounts:
|
N/A
|
||
| 6. |
Fees:
|
||
|
(a) [Reserved.]
|
|||
|
(b) Closing
Fee:
|
$200,000,
which shall be fully earned and payable on the Closing Date
|
||
|
(c) Facility
Fees:
|
|||
|
(i) Initial
Term Facility Fee:
|
.675%
per annum of the Maximum Facility Amount
|
||
|
(ii) Renewal
Term Facility Fee:
|
.675%
per annum of the Maximum Facility Amount
|
||
|
(d) Servicing
Fee:
|
.25%
per month based on the average daily outstanding principal balance
of the
Loans and the Credit Accommodation Balance during the immediately
preceding month (or part thereof)
|
||
|
(e) Minimum
Borrowing Fee:
|
|||
|
(i) Applicable
Period:
|
Each
month
|
||
|
(ii) Minimum
Loan Amount:
|
$10,000,000
|
||
|
(iii) Date
Payable:
|
The
first day of each month
|
||
|
(f) Credit
Accommodation Fees:
|
For
documentary letters of credit, 2% of the face amount of the letter
of
credit for up to the first 60 days (or any part thereof) and 1%
of the
face amount of such letter of credit for each 30-day period (or
any part
thereof) thereafter
For
standby letters of credit, 2.25% per
annum
|
|
(g) Warrants:
|
Agent
shall receive warrants to purchase 500,000 shares of common stock
of
Holdings, which will have an exercise price of $2.00 per share,
and will
be immediately exercisable and freely transferable by Agent separate
from
the Facility. Within six months following the closing, the shares
of
Holdings subject to such warrants will be registered by Holdings
with the
Securities and Exchange Commission so that they will be freely
tradable
and shall be listed for trading on the principal market on which
Holding's
securities are then trading.
|
||
|
(h) Early
Termination Fee:
|
(i) 1%
of the Maximum Facility Amount if terminated during the first year
of the
Initial Term, (ii) 0.50% of the Maximum Facility Amount if terminated
during the second year of the Initial Term and (iii) 0.25% of the
Maximum Facility Amount if terminated thereafter during the Initial
Term
or any Renewal Term and prior to the Maturity Date.
|
||
|
(i) Other
Fees:
|
See
Fee Letter, if any
|
||
| 7. |
Initial
Maturity Date:
|
September
17, 2010
|
|
| 8. |
Agent's
Bank:
|
Such
bank as Agent shall from time to time designate as its
Bank
|
|
| 9. |
Other
Inventory Covenants:
|
N/A
|
|
| 10. |
Financial
Covenants:
|
Financial
covenants are to be determined within 21 days of the date hereof
by
agreement of Borrower, Agent and Required Lenders; provided, that
if the
parties cannot reach a mutually acceptable agreement with respect
to
financial covenants on or before the twenty-first day following
the date
hereof, Agent may determine financial covenants in its sole discretion
by
providing written notice to Borrower of such covenants.
|
|
|
(a) Capital
Expenditure Limitation:
|
[to
be inserted]
|
|
(b) Minimum
Net Worth Requirement:
|
[to
be inserted]
|
||
|
(c) Minimum
Tangible Net Worth:
|
[to
be inserted]
|
||
|
(d) Minimum
Working Capital:
|
[to
be inserted]
|
||
|
(e) Minimum
Cumulative Net Loss:
|
[to
be inserted]
|
||
|
(f) Minimum
Cumulative Net Income:
|
[to
be inserted]
|
||
|
(g) Maximum
Leverage Ratio:
|
[to
be inserted]
|
||
|
(h) Additional
Financial Covenants:
|
Debt
Coverage Ratio:
|
Schedule B
Definitions
As
used
in this Agreement, the following terms have the following meanings:
"Account"
has the
meaning set forth in the UCC.
"Account
Debtor"
has the
meaning set forth in the UCC.
"Account
Proceeds"
has the
meaning set forth in Section 5.1.
"Accounts
Advance Rate"
means
the percentage set forth in Section 1(b)(i) of
Schedule A.
"Accounts
Sublimit"
means
the amount set forth in Section 1(c) of Schedule A.
"Acquisition"
means
the acquisition by Holdings of the stock of Borrower pursuant to the Purchase
Agreement.
"Additional
Updated Appraisals"
has the
meaning set forth in Section 6.16(g).
"Advance
Rates"
means,
collectively, the Accounts Advance Rate and the Inventory Advance
Rate.
"Affiliate"
means,
with respect to any Person, a relative, partner, shareholder, member, manager,
director, officer, or employee of such Person, any parent or subsidiary of
such
Person, or any Person controlling, controlled by or under common control
with
such Person or any other Person affiliated, directly or indirectly, by virtue
of
family membership, ownership, management or otherwise.
"Agent"
has the
meaning set forth in the preamble to this Agreement.
"Agent-Related
Persons"
means
Agent, together with its Affiliates, officers, directors, employees, attorneys,
and agents.
"Agent's
Bank"
means
the bank set forth in Section 8 of Schedule A.
"Agent's
Liens"
means
the Liens granted to Agent, for the benefit of Agent and the Lenders, under
the
Loan Documents.
"Agreement"
and
"this
Agreement"
mean
the Loan and Security Agreement of which this Schedule B is a part and the
Exhibits and Schedules thereto.
"Assignment
and Acceptance"
means
an Assignment and Acceptance Agreement substantially in the form of Exhibit
B.
"Availability"
has the
meaning set forth in Section 1.1(a)
"Bankruptcy
Code"
means
the United States Bankruptcy Code (11 U.S.C. § 101 et seq.).
"Blocked
Account"
has the
meaning set forth in Section 5.1.
"Borrower"
has the
meaning set forth in the preamble to this Agreement.
"Borrower's
Address"
means
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Business
Day"
means a
day other than a Saturday or Sunday or any other day on which Lender or banks
in
New York are authorized to close.
"Capital
Adequacy Charge"
has the
meaning set forth in Section 2.3(b).
"Capital
Adequacy Demand"
has the
meaning set forth in Section 2.3(b).
"Chattel
Paper"
has the
meaning set forth in the UCC.
"Closing
Date"
means
the date of the making of the initial Loans or the making available the initial
Credit Accommodations (whichever occurs first) hereunder.
"Closing
Fee"
has the
meaning set forth in Section 2.2(b).
"Collateral"
means
all property and interests in property in or upon which a security interest
or
other Lien is granted pursuant to this Agreement or the other Loan Documents,
including all of the property of Borrower described in
Section 4.1.
"Commercial
Tort Claims"
has the
meaning set forth in the UCC.
"Commitment"
means,
with respect to each Lender, its Revolving Loan Commitment, Term Loan A
Commitment and Term Loan B Commitment, and, with respect to all the
Lenders, their Revolving Loan Commitments, their Term Loan A Commitments
and their Term Loan B Commitments.
"Credit
Accommodation"
has the
meaning set forth in Section 1.1(a).
"Credit
Accommodation Balance"
means
the sum of (i) the aggregate undrawn face amount of all outstanding Credit
Accommodations and (ii) all interest, fees and costs due or, in Agent's
estimation, likely to become due in connection therewith.
"Credit
Accommodation Fees"
has the
meaning set forth in Section 2.2(f).
"Credit
Accommodation Inventory Reserve Percentage"
means
with respect to any Inventory, 100% minus the applicable Inventory Advance
Rate
for such Inventory.
"Credit
Accommodation Limit"
means
the amount set forth in Section 1(e) of Schedule A.
"Credit
Parties"
means
Borrower and each of its Subsidiaries.
"Cummins
Accounts"
shall
mean Accounts owing by Cummins Terminals, Inc. with respect to gas in the
pipeline.
"Default"
means
any event which with notice or passage of time, or both, would constitute
an
Event of Default.
"Default
Rate"
has the
meaning set forth in Section 2.1.
"Defaulting
Lender"
means
any Lender that fails to make any advance of, or settlement of, any Loan
(or
other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Deposit
Account"
has the
meaning set forth in the UCC.
"Dilution
Percentage"
means
the gross amount of all returns, allowances, discounts, credits, write-offs
and
similar items relating to Borrower's Accounts computed as a percentage of
gross
sales, calculated on a ninety (90) day rolling average.
"Disproportionate
Advance"
has the
meaning set forth in Section 1.1(a).
"Document"
has the
meaning set forth in the UCC.
"Early
Termination Fee"
has the
meaning set forth in Section 8.2.
"Electronic
Chattel Paper"
has the
meaning set forth in the UCC.
"Eligible
Account"
means,
at any time of determination, an Account of Borrower which satisfies the
general
criteria set forth below and which is otherwise acceptable to Agent
(provided,
that
Agent may, in its sole discretion, change the general criteria for acceptability
of Eligible Accounts upon at least fifteen days' prior notice to Borrower).
An
Account of Borrower shall be deemed to meet the current general criteria
if
(i) neither the Account Debtor nor any of its Affiliates is an Affiliate,
creditor or supplier of Borrower; (ii) it does not remain unpaid more than
the earlier to occur of (A) the number of days after the original invoice
date set forth in Section 5(a) of Schedule A or (B) the number of
days after the original invoice due date set forth in Section 5(b) of
Schedule A; (iii) the Account Debtor or its Affiliates are not past
due on other Accounts owing to Borrower comprising more than 50% of all of
the
Accounts owing to Borrower by such Account Debtor or its Affiliates;
(iv) all Accounts owing by the Account Debtor or its Affiliates do not
represent more than [10%]
of all
otherwise Eligible Accounts (provided,
that
Accounts which are deemed to be ineligible solely by reason of this
clause (iv) shall be considered Eligible Accounts to the extent of the
amount thereof which does not exceed [10%]
of
all
otherwise Eligible Accounts); (v) no covenant, representation or warranty
contained in this Agreement with respect to such Account (including any of
the
representations set forth in Section 6.4) has been breached; (vi) the
Account is not subject to any contra relationship, counterclaim, dispute
or
set-off (provided,
that
Accounts which are deemed to be ineligible solely by reason of this
clause (vi) shall be considered Eligible Accounts to the extent of the
amount thereof which is not affected by such contra relationships,
counterclaims, disputes or set-offs); (vii) the Account Debtor's chief
executive office or principal place of business is located in the United
States
or Provinces of Canada which have adopted the Personal Property Security
Act or
a similar act, unless (A) the sale is fully backed by a letter of credit,
guaranty or acceptance acceptable to Agent in its sole discretion, and if
backed
by a letter of credit, such letter of credit has been issued or confirmed
by a
bank satisfactory to Agent, is sufficient to cover such Account, and if required
by Agent, the original of such letter of credit has been delivered to Agent
or
Agent's agent and the issuer thereof notified of the assignment of the proceeds
of such letter of credit to Agent or (B) such Account is subject to credit
insurance payable to Agent issued by an insurer and on terms and in an amount
acceptable to Agent; (viii) it is absolutely owing to Borrower and does not
arise from a sale on a ▇▇▇▇-and-hold, guarantied sale, sale-or-return,
sale-on-approval, retainage or any other repurchase or return basis or consist
of progress ▇▇▇▇▇▇▇▇; (ix) Agent shall have verified the Account in a
manner satisfactory to Agent; (x) the Account Debtor is not the United
States of America or any state or political subdivision (or any department,
agency or instrumentality thereof), unless Borrower has complied with the
Assignment of Claims Act of 1940 (31 U.S.C. §203 et seq.)
or
other applicable similar state or local law in a manner satisfactory to Agent;
(xi) it is at all times subject to Agent's duly perfected, first priority
security interest and to no other Lien that is not a Permitted Lien, and
the
goods giving rise to such Account (A) were not, at the time of sale,
subject to any Lien except Permitted Liens and (B) have been delivered to
and accepted by the Account Debtor, or the services giving rise to such Account
have been performed by Borrower and accepted by the Account Debtor;
(xii) the Account is not evidenced by Chattel Paper or an Instrument of any
kind and has not been reduced to judgment; (xiii) the Account Debtor's
total indebtedness to Borrower does not exceed the amount of any credit limit
established by Borrower or Agent and the Account Debtor is otherwise deemed
to
be creditworthy by Agent (provided,
that
Accounts which are deemed to be ineligible solely by reason of this
clause (xiii) shall be considered Eligible Accounts to the extent the
amount of such Accounts does not exceed the lower of such credit limits);
(xiv) there are no facts or circumstances existing, or which could
reasonably be anticipated to occur, which might result in any adverse change
in
the Account Debtor's financial condition or impair or delay the collectibility
of all or any portion of such Account; (xv) Agent has been furnished with
all documents and other information pertaining to such Account which Agent
has
requested, or which Borrower is obligated to deliver to Agent, pursuant to
this
Agreement; (xvi) Borrower has not made an agreement with the Account Debtor
to extend the time of payment thereof beyond the time periods set forth in
clause (ii) above; and (xvii) Borrower has not posted a surety or other
bond in respect of the contract under which such Account arose.
"Eligible
Equipment"
means,
at any time of determination, Equipment owned by Borrower which is not subject
to any Lien (other than the Lien granted to Lender pursuant to the Agreement)
and which Agent, in its sole discretion deems to be eligible for borrowing
purposes.
"Eligible
Inventory"
means,
at any time of determination, Inventory
(other than packaging materials and supplies) of Borrower which satisfies
the
general criteria set forth below and which is otherwise acceptable to Agent
(provided,
that
Agent may, in its sole discretion, change the general criteria for acceptability
of Eligible Inventory upon at least fifteen days' prior written notice to
Borrower). Inventory of Borrower shall be deemed to meet the current general
criteria if (i) it consists of finished goods fuel or convenience store
inventory; (ii) it is in good, new and saleable condition; (iii) it is
not slow-moving, obsolete, unmerchantable, returned or repossessed; (iv) it
is not in the possession of a processor or bailee, or located on premises
leased
or subleased to Borrower, or on premises subject to a mortgage in favor of
a
Person other than Agent, unless such processor, bailee or mortgagee or the
lessor or sublessor of such premises, as the case may be, has executed and
delivered all documentation which Agent shall require to evidence the
subordination or other limitation or extinguishment of such Person's rights
with
respect to such Inventory and Agent's right to gain access thereto; (v) it
meets all standards imposed by any governmental agency or authority;
(vi) it conforms in all respects to any covenants, warranties and
representations set forth in this Agreement; (vii) it is at all times
subject to Agent's duly perfected, first priority security interest and no
other
Lien except a Permitted Lien; and (viii) it is (a) situated in the
continental United States at an Inventory location listed in Section 9 of
Schedule A or at another location in the continental United States of which
Agent has been notified as required by Section 6.8 or in transit by
pipeline so long as Agent has received such agreement with the pipeline
operators as Agent shall require.
"Equipment"
has the
meaning set forth in the UCC.
"ERISA"
means
the Employee Retirement Income Security Act of 1974 and all rules, regulations
and orders promulgated thereunder.
"Event
of Default"
has the
meaning set forth in Section 9.1.
"Fee
Letter" means
that certain letter agreement dated as of the date hereof by Agent and
acknowledged by Borrower.
"Fiscal
Year" means
each twelve (12) month accounting period of Borrower, which ends on December
31
of each year.
"Fixtures"
has the
meaning set forth in the UCC.
"GAAP"
means
generally accepted accounting principles as in effect from time to time,
consistently applied.
"General
Intangibles"
has the
meaning set forth in the UCC.
"Goods"
has the
meaning set forth in the UCC.
"Greystone"
means
Greystone Business Credit II, L.L.C., a Delaware limited liability company.
"Holdings"
means
Titan Global Holdings, Inc., a Utah corporation.
"Initial
Maturity Date"
means
the date set forth in Section 7 of Schedule A.
"Initial
Term"
has the
meaning set forth in Section 8.1.
"Initial
Term Facility Fee"
has the
meaning set forth in Section 2.2(c).
"Instrument"
has the
meaning set forth in the UCC.
"Interest
Rates"
has the
meaning set forth in Section 2.1.
"Inventory"
has the
meaning set forth in the UCC.
"Inventory
Advance Rate"
means
the percentage(s) set forth in Section 1(b)(ii) of
Schedule A.
"Inventory
Sublimit"
means
the amount(s) set forth in Section 1(d) of Schedule A.
"Investment
Property"
has the
meaning set forth in the UCC.
"Issuing
Lender"
means
Greystone or any other Lender or Affiliate of Lender that, at the request
of
Borrower and with the consent of Agent, agrees, in such Lender's sole
discretion, to become Issuing Lender for the purpose of issuing Credit
Accommodations.
"Lender"
has the
meaning set forth in the preamble to this Agreement.
"Lender
Group"
means,
individually and collectively, each of the Lenders (including Issuing Lender)
and Agent.
"Lender
Group Expenses"
has the
meaning set forth in Section 10.7.
"Letter-of-Credit
Right"
has the
meaning set forth in the UCC.
"Lien"
means
any interest in property securing an obligation owed to, or a claim by, a
Person
other than the owner of the property, whether such interest is based on common
law, statute or contract, including rights of sellers under conditional sales
contracts or title retention agreements and reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting property. For
the
purpose of this Agreement, Borrower shall be deemed to be the owner of any
property which it has acquired or holds subject to a conditional sale agreement
or other arrangement pursuant to which title to the property has been retained
by or vested in some other Person for security purposes.
"Loan
Account"
has the
meaning set forth in Section 2.4.
"Loan
Documents"
means,
collectively, this Agreement, the Fee Letter, the Agreement Among Certain
Lenders, and all notes, guaranties, security agreements, pledge agreements,
certificates, landlord's agreements, Lock Box and Blocked Account agreements
and
all other agreements, documents and instruments now or hereafter executed
or
delivered by Borrower or any Obligor in connection with, or to evidence the
transactions contemplated by, this Agreement.
"Loan
Limits"
means,
collectively, the Availability limits and all other limits on the amount
of
Loans and Credit Accommodations set forth in this Agreement.
"Loans"
means,
collectively, the Revolving Loans and the Term Loans.
"Lock
Box"
has the
meaning set forth in Section 5.1.
"Maturity
Date"
has the
meaning set forth in Section 8.1.
"Maximum
Facility Amount"
means
the amount set forth in Section 1(a) of Schedule A.
"Minimum
Borrowing Fee"
has the
meaning set forth in Section 2.2(e).
"Minimum
Loan Amount"
means
the amount set forth in Section 6(e)(ii) of Schedule A.
"Obligations"
means
all present and future Loans, advances, debts, liabilities, obligations,
guaranties, covenants, duties and indebtedness at any time owing by Borrower
to
Agent or the Lenders, in connection with this Agreement and the other Loan
Documents, whether arising from an extension of credit, opening of a Credit
Accommodation, guaranty, indemnification or otherwise (including all fees,
costs
and other amounts which may be owing to issuers of Credit Accommodations
and all
taxes, duties, freight, insurance, costs and other expenses, costs or amounts
payable in connection with Credit Accommodations or the underlying goods),
whether direct or indirect, whether absolute or contingent, whether due or
to
become due, and whether arising before or after the commencement of a proceeding
under the Bankruptcy Code or any similar statute, including all interest,
charges, expenses, fees (including attorney's fees) and any other sums
chargeable to Borrower under this Agreement or under any other Loan
Document.
"Obligor"
means
any guarantor, endorser, acceptor, surety or other Person liable on, or with
respect to, the Obligations or who is the owner of any property which is
security for the Obligations, other than Borrower.
"Permitted
Liens"
means:
(i) purchase money security interests in specific items of Equipment in an
aggregate amount not to exceed the limit set forth in Schedule 6.21;
(ii) leases of specific items of Equipment in an aggregate amount not to
exceed the limit set forth in Schedule 6.21; (iii) Liens for taxes not yet
due and payable; (iv) additional Liens which are fully subordinate to the
security interests of the Lenders and are consented to in writing by Agent;
(v) security interests being terminated concurrently with the execution of
this Agreement; (vi) Liens of materialmen, mechanics or carriers (but
excluding Liens in favor of warehousemen) arising in the ordinary course
of
business and securing obligations which are not delinquent; (vii) Liens
incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by Liens of the type described in clause (i) or (ii)
above; provided,
that
any extension, renewal or replacement Lien is limited to the property encumbered
by the existing Lien and the principal amount of the indebtedness being
extended, renewed or refinanced does not increase; (viii) Liens in favor of
customs and revenue authorities which secure payment of customs duties in
connection with the importation of goods; and (ix) security deposits posted
in connection with real property leases or subleases. Agent will have the
right
to require, as a condition to its consent under clause (iv) above, that the
holder of the additional Lien sign an intercreditor agreement in form and
substance satisfactory to Agent, in its sole discretion, acknowledging that
the
Lien is subordinate to the security interests of Agent, and agreeing not
to take
any action to enforce its subordinate Lien so long as any Obligations remain
outstanding, and that Borrower agree that any uncured default in any obligation
secured by the subordinate Lien shall also constitute an Event of Default
under
this Agreement.
"Person"
means
any individual, sole proprietorship, partnership, joint venture, limited
liability company, trust, unincorporated organization, association, corporation,
government or any agency or political division thereof, or any other
entity.
"Pre-Settlement
Determination Date"
has the
meaning set forth in Section 11.1.
"Prime
Rate"
means,
at any given time, the prime rate as quoted in The
Wall Street Journal
as the
base rate on corporate loans posted as of such time by at least 75% of the
nation's 30 largest banks (which rate is not necessarily the lowest rate
offered
by such banks).
"Proceeds"
has the
meaning set forth in the UCC.
"Pro
Rata Revolving Share"
means,
at any time, with respect to any Lender, a fraction (expressed as a percentage
in no more than nine (9) decimal places), the numerator of which shall be
the
Revolving Loan Commitment (or if the Revolving Loan Commitment has then been
terminated, the outstanding principal amount of the Revolving Loans and the
Credit Accommodation Balance) of such Lender at such time and the denominator
of
which shall be the aggregate Revolving Loan Commitments (or if the Revolving
Loan Commitment has then been terminated, the aggregate outstanding principal
amount of the Revolving Loans and the Credit Accommodation Balance) of all
Lenders at such time.
"Pro
Rata Share"
means,
at any time, with respect to any Lender, a fraction (expressed as a percentage
in no more than nine (9) decimal places), the numerator of which shall be
the
sum of the Revolving Loan Commitment (or if the Revolving Loan Commitment
has
then been terminated, the outstanding principal amount of the Revolving Loans
and the Credit Accommodation Balance), the Term Loan A Commitment (or if
the
Term Loan A Commitment has then been terminated, the outstanding principal
amount of the Term Loan A) of such Lender at such time and the Term
Loan B Commitment (or if the Term Loan B Commitment has then been
terminated, the outstanding principal amount of Term Loan B) of such Lender
at such time and the denominator of which shall be the Maximum Facility Amount
at such time.
"Pro
Rata Term Loan A Share"
means,
at any time, with respect to any Lender, a fraction (expressed as a percentage
in no more than nine (9) decimal places), the numerator of which shall be
the
Term Loan A Commitment (or if the Term Loan A Commitment has then been
terminated, the outstanding principal amount of the Term Loan A) of such
Lender at such time and the denominator of which shall be the aggregate Term
Loan A Commitments (or if the Term Loan A Commitment has then been
terminated, the aggregate outstanding principal amount of the Term Loan A)
of all Lenders at such time.
"Pro
Rata Share"
means,
at any time, with respect to any Lender, a fraction (expressed as a percentage
in no more than nine (9) decimal places), the numerator of which shall be
the
sum of the Revolving Loan Commitment (or if the Revolving Loan Commitment
has
then been terminated, the outstanding principal amount of the Revolving Loans
and the Credit Accommodation Balance), the Term Loan B Commitment (or if
the Term Loan B Commitment has then been terminated, the outstanding
principal amount of the Term Loan B) of such Lender at such time and the
Term Loan A Commitment (or if the Term Loan A Commitment has then been
terminated, the outstanding principal amount of Term Loan A) of such Lender
at such time and the denominator of which shall be the Maximum Facility Amount
at such time.
"Pro
Rata Term Loan B Share"
means,
at any time, with respect to any Lender, a fraction (expressed as a percentage
in no more than nine (9) decimal places), the numerator of which shall be
the
Term Loan B Commitment (or if the Term Loan B Commitment has then been
terminated, the outstanding principal amount of the Term Loan B) of such
Lender at such time and the denominator of which shall be the aggregate Term
Loan B Commitments (or if the Term Loan B Commitment has then been
terminated, the aggregate outstanding principal amount of the Term Loan A)
of all Lenders at such time.
"Protective
Advances"
has the
meaning set forth in Section 1.1(b).
"Purchase
Agreement"
means
the Stock Purchase Agreement dated as of July 11, 2007 among Borrower, The
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Revocable Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, The ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Irrevocable Trust, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Titan Global Holdings,
Inc.
"Register"
has the
meaning set forth in Section 12.9(d).
"Related
Agreements"
means
the Purchase Agreement and all documents, instruments and agreements executed
in
connection with the Related Transactions.
"Related
Transactions"
means
the acquisition by Holdings of the stock of Borrower pursuant to the Purchase
Agreement, the acquisition by YA Land Holdings, LLC and YA Land Holdings 7,
LLC of certain real property to be leased to Borrower and the financing by
YA
Global Investments, LLC of YA Land Holdings, LLC and YA Land Holding 7,
LLC.
"Released
Parties"
has the
meaning set forth in Section 7.1.
"Renewal
Term"
has the
meaning set forth in Section 8.1.
"Renewal
Term Facility Fee"
has the
meaning set forth in Section 2.2(c).
"Report"
and
"Reports"
each
have the meaning set forth in Section 10.16(a).
"Required
Lenders"
means,
at any time, the Lenders whose aggregate Pro Rata Shares exceed (i) all Lenders,
if the total number of Lenders at such time is less than or equal to two,
(ii)
two out of three Lenders, if the number of Lenders at such time is three,
or
(iii) Lenders whose aggregate Pro Rata Shares exceed 50%, if the number of
Lenders at such time is greater than three.
"Reserves"
has the
meaning set forth in Section 1.2.
"Revolving
Loan Commitment"
means,
with respect to each Lender, its Revolving Loan Commitment, and with respect
to
all the Lenders, their "Revolving
Loan Commitments,"
in each
case as such dollar amounts are set forth beside each Lender's name on the
signature pages to this Agreement or in the Assignment and Acceptance pursuant
to which such Lender became a Lender hereunder, as such amounts may be reduced
or increased from time to time pursuant to assignments made in accordance
with
the provisions of Section 12.9.
"Revolving
Loans"
has the
meaning set forth in Section 1.1(a).
"Sale"
has the
meaning set forth in Section 9.2.
"Sellers"
means
collectively, The ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Revocable Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, The
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ Irrevocable Trust and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"Servicing
Fee"
has the
meaning set forth in Section 2.2(d).
"Settlement
Date"
has the
meaning set forth in Section 11.1.
"Subsidiary"
means
any corporation or other entity of which a Person owns, directly or indirectly,
through one or more intermediaries, more than 50% of the capital stock or
other
equity interest at the time of determination.
"Supporting
Obligations"
has the
meaning set forth in the UCC.
"Tangible
Chattel Paper"
has the
meaning set forth in the UCC.
"Term"
means
the period commencing on the date of this Agreement and ending on the Maturity
Date.
"Term
Loan A"
has the
meaning set forth in Section 1.1(c).
"Term
Loan A Advance"
has the
meaning set forth in Section 1.1(c).
"Term
Loan A Commitment"
means,
with respect to each Lender, its Term Loan A Commitment, and, with respect
to all the Lenders, their "Term
Loan A Commitments,"
in each
case as such amounts are set forth beside such Lender's name on the signature
pages to this Agreement or in the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder, as such amounts may be reduced or
increased from time to time pursuant to assignments made in accordance with
the
provisions of Section 12.9.
"Term
Loan B"
has the
meaning set forth in Section 1.1(d).
"Term
Loan B Advance"
has the
meaning set forth in Section 1.1(d).
"Term
Loan B Commitment"
means,
with respect to each Lender, its Term Loan B Commitment, and, with respect
to all the Lenders, their "Term
Loan B Commitments,"
in each
case as such amounts are set forth beside such Lender's name on the signature
pages to this Agreement or in the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder, as such amounts may be reduced or
increased from time to time pursuant to assignments made in accordance with
the
provisions of Section 12.9.
"Term
Loans"
means
collectively Term Loan A and Term Loan B.
"Trademarks"
means
the trademarks owned by Borrower and described in Schedule B-1.
"UCC"
means,
at any given time, the Uniform Commercial Code as adopted and in effect at
such
time in the State of New York.
"Updated
Equipment Appraisal"
has the
mean set forth in Section 6.16(g).
"Updated
Inventory Appraisal" has
the
meaning set forth in Section 6.16(g).
"Warrants"
has the
meaning set forth in Section 2.2(g).
"Waterfall
Event"
means
the occurrence of any of the following: (i) an Event of Default under
clauses (vii) or (viii) of Section 9.1; (ii) an Event of Default under
clause (ii) of Section 9.1 as a result of the failure to pay in full all
of the
monetary Obligations on the Maturity Date; or (iii) any Event of Default
under Section 9.1 and the election by Agent and the Required Lenders to declare
the Obligations to be due and payable prior to their schedules maturity date
or
to terminate the Revolving Loan Commitment pursuant to Section 8.2.
All
accounting terms used in this Agreement, unless otherwise indicated, shall
have
the meanings given to such terms in accordance with GAAP. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the UCC, to the extent such terms are defined therein. The term
"including,"
whenever used in this Agreement, shall mean "including but not limited to."
The
singular form of any term shall include the plural form, and vice versa,
when
the context so requires. References to Sections, subsections, Exhibits and
Schedules are to Sections and subsections of, and Exhibits and Schedules
to,
this Agreement. All references to agreements and statutes shall include all
amendments, supplements, restatements and other modifications thereto (except,
with respect to such agreements, to the extent to such amendments, supplements,
restatements or other modifications are prohibited by this Agreement) and
successor statutes in the case of statutes.
Exhibit
A
FORM
OF TERM NOTE A
|
$______________
|
____________,
Tennessee
|
|
_____________,
____
|
FOR
VALUE
RECEIVED, the undersigned, APPALACHIAN OIL COMPANY, INC., a Tennessee
corporation ("Borrower"),
hereby unconditionally promises to pay to the order of
_____________________________ ("Lender"),
having an address at __________________________________________, or at such
other place as the holder of this Term Note A ("Term
Note A")
may
from time to time designate in writing, in lawful money of the United States
of
America and in immediately available funds, the principal sum of
________________________ and __/100 Dollars ($____________). Reference is
hereby
made to the Loan and Security Agreement among Borrower, Greystone Business
Credit II, L.L.C., as Agent, and the Lenders Party thereto of even date herewith
(as it may be amended, supplemented or modified from time to time, the
"Loan
Agreement")
for a
statement of the terms and conditions under which the loan evidenced hereby
was
made and is to be repaid. This Term Note A evidences a Term Loan A
Advance described in the Loan Agreement. Capitalized terms used herein which
are
not otherwise specifically defined herein shall have the meanings ascribed
to
such terms in the Loan Agreement.
The
outstanding principal balance of this Term Note A shall be payable in full
on the Maturity Date. Prior thereto, the Term Note A shall be repayable as
set forth in the Loan Agreement.
Borrower
further promises to pay interest on the outstanding principal amount hereof
from
the date hereof until payment in full hereof at the per annum rate rates,
and on
the dates, specified in the Loan Agreement. After maturity, whether by
acceleration or otherwise, accrued interest shall be payable on demand. Interest
as aforesaid shall be charged for the actual number of days elapsed over
a year
consisting of three hundred sixty (360) days on the actual daily outstanding
balance hereof. Changes in the interest rate provided for herein which are
due
to changes in the Prime Rate shall be effective on the date of the change
in the
Prime Rate.
Notwithstanding
anything to the contrary contained herein, the aggregate of all interest
hereunder and charged or collected by Lender is not intended to exceed the
highest rate permissible under any applicable law, but if it should, such
interest shall automatically be reduced to the extent necessary to comply
with
applicable law and Lender will refund to Borrower any such excess interest
received by Lender.
Subject
to Section 8.2 of the Loan Agreement, Borrower may, prepay the outstanding
principal balance hereof in whole or in part. Any partial prepayment of Term
Loan A shall be applied to the Obligations as provided in the Loan
Agreement.
Payments
received by Lender from Borrower on this Term Note A shall be applied to
the Obligations as provided in the Loan Agreement.
Presentment,
demand, protest and notice of presentment, demand, nonpayment and protest
are
hereby waived by Borrower.
This
Term
Note A shall be interpreted, and the rights and liabilities of the parties
hereto determined, in accordance with the laws of the State of New York.
If any
provision of this Term Note A or the application thereof shall be held to
be void or unenforceable by any court of competent jurisdiction, such defect
shall not affect the remainder of this Term Note A, which shall continue in
full force and effect. Whenever in this Term Note A reference is made to
Agent, Lender(s) or Borrower, such reference shall be deemed to include,
as
applicable, a reference to their respective successors and permitted assigns.
The provisions of this Term Note A shall be binding upon Borrower and its
successors and assigns, and shall inure to the benefit of Lender and its
successors and permitted assigns.
|
APPALACHIAN
OIL COMPANY, INC.
|
||
| |
|
|
| By: | ||
|
Its
|
||
Exhibit
B
FORM
OF TERM NOTE B
|
$______________
|
____________,
Tennessee
|
|
_____________,
____
|
FOR
VALUE
RECEIVED, the undersigned, APPALACHIAN OIL COMPANY, INC., a Tennessee
corporation ("Borrower"),
hereby unconditionally promises to pay to the order of
_____________________________ ("Lender"),
having an address at __________________________________________, or at such
other place as the holder of this Term Note B ("Term
Note B")
may
from time to time designate in writing, in lawful money of the United States
of
America and in immediately available funds, the principal sum of
________________________ and __/100 Dollars ($____________). Reference is
hereby
made to the Loan and Security Agreement among Borrower, Greystone Business
Credit II, L.L.C., as Agent, and the Lenders Party thereto of even date herewith
(as it may be amended, supplemented or modified from time to time, the
"Loan
Agreement")
for a
statement of the terms and conditions under which the loan evidenced hereby
was
made and is to be repaid. This Term Note B evidences a Term Loan B
Advance described in the Loan Agreement. Capitalized terms used herein which
are
not otherwise specifically defined herein shall have the meanings ascribed
to
such terms in the Loan Agreement.
The
outstanding principal balance of this Term Note B shall be payable in full
on the Maturity Date. Prior thereto, the Term Note B shall be repayable as
set forth in the Loan Agreement.
Borrower
further promises to pay interest on the outstanding principal amount hereof
from
the date hereof until payment in full hereof at the per annum rate rates,
and on
the dates, specified in the Loan Agreement. After maturity, whether by
acceleration or otherwise, accrued interest shall be payable on demand. Interest
as aforesaid shall be charged for the actual number of days elapsed over
a year
consisting of three hundred sixty (360) days on the actual daily outstanding
balance hereof. Changes in the interest rate provided for herein which are
due
to changes in the Prime Rate shall be effective on the date of the change
in the
Prime Rate.
Notwithstanding
anything to the contrary contained herein, the aggregate of all interest
hereunder and charged or collected by Lender is not intended to exceed the
highest rate permissible under any applicable law, but if it should, such
interest shall automatically be reduced to the extent necessary to comply
with
applicable law and Lender will refund to Borrower any such excess interest
received by Lender.
Subject
to Section 8.2 of the Loan Agreement, Borrower may, prepay the outstanding
principal balance hereof in whole or in part. Any partial prepayment of Term
Loan B shall be applied to the Obligations as provided in the Loan
Agreement.
Payments
received by Lender from Borrower on this Term Note B shall be applied to
the Obligations as provided in the Loan Agreement.
Presentment,
demand, protest and notice of presentment, demand, nonpayment and protest
are
hereby waived by Borrower.
This
Term
Note B shall be interpreted, and the rights and liabilities of the parties
hereto determined, in accordance with the laws of the State of New York.
If any
provision of this Term Note B or the application thereof shall be held to
be void or unenforceable by any court of competent jurisdiction, such defect
shall not affect the remainder of this Term Note B, which shall continue in
full force and effect. Whenever in this Term Note B reference is made to
Agent, Lender(s) or Borrower, such reference shall be deemed to include,
as
applicable, a reference to their respective successors and permitted assigns.
The provisions of this Term Note B shall be binding upon Borrower and its
successors and assigns, and shall inure to the benefit of Lender and its
successors and permitted assigns.
|
APPALACHIAN
OIL COMPANY, INC.
|
||
| |
|
|
| By: | ||
|
Its
|
||
EXHIBIT
C
FORM
OF ASSIGNMENT AND ACCEPTANCE