FINANCING AND SECURITY AGREEMENT
THIS
FINANCING AND SECURITY AGREEMENT (this “Agreement”) is
made this 27th day of
December, 2004, by and among by and between PAYMENTS INC., a corporation
organized under the laws the State of New York (the “Borrower”);
MANUFACTURERS AND TRADERS TRUST COMPANY, a New York State Bank organized under
the laws of the State of New York (“M&T”); and
each other financial institution that is a party to this Agreement, whether by
execution of this Agreement or otherwise (collectively, the “Lenders” and
individually, a “Lender”); and
MANUFACTURERS AND TRADERS TRUST COMPANY, a New York State Bank, in its capacity
as both collateral and administrative agent for each of the Lenders and sole
arranger (the “Agent”).
RECITALS
A. The
Borrower has applied to the Lenders for a revolving credit facility consisting
of (i) a revolving credit facility in the maximum principal amount of
$35,000,000 to be used by the Borrower for the Permitted Uses described in this
Agreement.
B. The
Lenders severally are willing to make a portion of that revolving credit
facility available to the Borrower upon the terms and subject to the conditions
set forth in this Agreement.
AGREEMENTS
NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereby
agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.1 Certain
Defined Terms.
As used
in this Agreement, the terms defined in the Preamble and Recitals hereto shall
have the respective meanings specified therein, and the following terms shall
have the following meanings:
“Account
Debtor” means
any Person who is obligated on a Receivable and “Account
Debtors” mean
all Persons who are obligated on the Receivables.
“ACH
Settlement Risk Reserve” means
any and all Reserves that the Agent from time to time establishes, in its sole
discretion, with respect to ACH Transactions.
“ACH
Transactions” means
any cash management or related services including the automatic clearing house
transfer of funds by the Agent for the account of the Borrower pursuant to
agreement or overdrafts.
“Adjustment
Date” means,
as applicable, the date on which a financial institution becomes a new Lender
pursuant to the provisions of Section
9.5
(Remaining Syndication) or the date on which an assignment by an existing Lender
is effective pursuant to the provisions of Section
9.6
(Assignments by Lenders).
“Advances” means
the collective reference to each advance under the Revolving Loan including,
without limitation, those under Section
2.1.1
(Revolving Credit Facility), Agent Advances, and Overadvances.
“Affiliate” means,
with respect to any designated Person, any other Person, (a) directly or
indirectly controlling, directly or indirectly controlled by, or under direct or
indirect common control with the Person designated, (b) directly or indirectly
owning or holding five percent (5%) or more of any equity interest in such
designated Person, or (c) five percent (5%) or more of whose stock or other
equity interest is directly or indirectly owned or held by such designated
Person. For purposes of this definition, the term “control” (including with
correlative meanings, the terms “controlling”, “controlled by” and “under common
control with”) means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities or other equity interests or by
contract or otherwise.
“Agent” means
the Person defined as the “Agent” in the
preamble of this Agreement and shall also include any successor Agent appointed
pursuant to Section
8.9
(Successor Agent).
“Agent
Advances” has the
meaning set forth in Section
2.5.1 (Agent
Advances).
“Agent’s
Liens” means
the Liens in the Collateral granted to the Agent, for the benefit of the
Lenders, M&T, and Agent pursuant to this Agreement and the other Financing
Documents.
“Agent-Related
Persons” means
the Agent, together with its Affiliates, and the officers, directors, employees,
counsel, representatives, agents and attorneys-in-fact of the Agent and such
Affiliates.
“Agent’s
Obligations” shall
mean any and all Obligations payable solely to and for the exclusive benefit of
the Agent or M&T (except in its capacity as a Lender) by the Borrower under
the terms of this Agreement and/or any of the other Financing Documents,
including, without limitation, indebtedness, liabilities and obligations with
respect to Bank Products, the Arrangement Fee, and any and all Monitoring
Fees.
“Agreement” means
this Financing and Security Agreement, as amended, restated, supplemented or
otherwise modified in writing in accordance with the provisions of Section
9.2
(Amendments; Waivers).
“Aggregate
Commitments” means
the collective reference to all of the Commitments.
“Applicable
Interest Rate” means
(a) the LIBOR Rate, or (b) the Base Rate.
“Applicable
Margin” means
the applicable rate per annum added, as set forth in Section
2.3.1
(Applicable Interest Rates), to the LIBOR Base Rate or the Prime
Rate.
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“Arranger” means
the Investment Banking Group of M&T.
“Arrangement
Fee” has the
meaning set forth in that certain letter agreement dated of even date herewith
between the Agent and the Borrower.
“Assignee” means
any Person to which any Lender assigns all or any portion of its interests under
this Agreement, any Commitment, and any Loan, in accordance with the provisions
of Section
9.6
(Assignments by Lenders), together with any and all successors and assigns of
such Person; “Assignees” means
the collective reference to all Assignees.
“Assignment
of Life Insurance” means
that certain assignment of life insurance as collateral dated the same date as
this Agreement from the Borrower to the Agent for the benefit of the Lenders
ratably and the Agent, which Assignment of Life Insurance assigns to the Agent
for the benefit of the Lenders ratably and the Agent, all of the right, title
and interest of the Borrower in, and to, that certain life insurance policy
issued by Zurich Life Insurance of New York on the life of Xxxxx X. Xxxxxxxxx in
the face amount of Four Million Dollars ($4,000,000), as amended, restated,
reissued, supplemented or otherwise modified in writing at any time and from
time to time.
“Back-Up
Servicing Agreement” means
the collective reference to the Media Storage Agreement dated April 21, 2004
between the Servicer and Media Storage and the IBM Business Recovery Services
Contract Document dated September, 2003 between Servicer and IBM, and each other
of the Borrower with a servicer (other than the Servicer) to provide
substantially the same services provided by the Servicer under the Servicing
Agreement in the event the Servicer does not provide such services, which
agreement shall be subject to such other agreements (by way of example and not
limitation, an agreement similar to the Servicing Agreement Assignment), and the
servicer and all of the foregoing agreements being in form and substance
satisfactory to the Agent in the exercise of its sole and absolute discretion
from time to time.
“Bank
Products” means
any service or facility extended to the Borrower by M&T or any Affiliate of
M&T including: (a) credit cards, (b) credit card processing services, (c)
debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash management,
including controlled disbursement, accounts or services, or (g) Hedge
Agreements.
“Bankruptcy
Code” means
Title 11 of the United States Code, as amended from time to time, and any
successor Laws.
“Borrower” means
the “Borrower” as
defined in the preamble of this Agreement.
“Borrowing
Base” has the
meaning described in Section
2.1.3(a)
(Computation of Borrowing Base).
“Borrowing
Base Deficiency” has the
meaning described in Section
2.1.3(d)
(Computation of Borrowing Base).
“Borrowing
Base Report” has the
meaning described in Section
2.1.5
(Borrowing Base Report).
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“Business
Day” means
any day other than a Saturday, Sunday or other day on which (a) in the case of
M&T (as Agent and Lender), commercial banks in the State are authorized or
required to close and, (b) in the case of the Lenders other than M&T, those
Lenders are closed for the transaction of business at the addresses stated after
their names on the signature pages of this Agreement.
“Capital
Adequacy Regulation” means
any guideline, request or directive of any central bank or other Governmental
Authority, or any other law, rule or regulation, whether or not having the force
of law, in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
“Capital
Expenditure” means
an expenditure (whether payable in cash or other property or accrued as a
liability) for Fixed or Capital Assets, including, without limitation, the
entering into of a Capital Lease.
“Capitalization” has the
meaning set forth in Section
6.1.15(a).
“Capitalization
Ratio”
has the
meaning set forth in Section
6.1.15(a).
“Capital
Lease” means
with respect to any Person any lease of real or personal property, for which the
related Lease Obligations have been or should be, in accordance with GAAP
consistently applied, capitalized on the balance sheet of that
Person.
“Cash
Equivalents” means
(a) securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed or insured by the United States Government or any
agency thereof, (b) certificates of deposit with maturities of one (1) year or
less from the date of acquisition of, or money market accounts maintained with,
the Agent, any Affiliate of the Agent, or any other domestic commercial bank
having capital and surplus in excess of One Hundred Million Dollars
($100,000,000.00) or such other domestic financial institutions or domestic
brokerage houses to the extent disclosed to, and approved by, the Agent and (c)
commercial paper of a domestic issuer rated at least either A-1 by Standard
& Poor’s Corporation (or its successor) or P-1 by Xxxxx’x Investors Service,
Inc. (or its successor) with maturities of six (6) months or less from the date
of acquisition.
“Closing
Date” means
December 27, 2004.
“Collateral” means
all property of the Borrower subject from time to time to the Liens of this
Agreement, any of the Security Documents and/or any of the other Financing
Documents, together with any and all cash and non-cash proceeds and products
thereof.
“Collateral
Account” has the
meaning described in Section
2.1.10
(Collateral Account).
“Commitment” means
with respect to each Lender, such Lender’s Revolving Credit Commitment, and
“Commitments” means
the collective reference to the Revolving Credit Commitments of all of the
Lenders.
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“Committed
Amount” means
with respect to each Lender, such Lender’s Revolving Loan Committed Amount, and
“Committed
Amounts” means
collectively the Revolving Loan Committed Amount of each of the
Lenders.
“Compliance
Certificate” means a
periodic Compliance Certificate furnished by the Borrower in compliance
Section
6.1.1(d)
(Borrower Information) and in substantially the form attached to this Agreement
as EXHIBIT C.
“Copyrights” means
and includes, in each case whether now existing or hereafter arising, all of the
Borrower’s rights, title and interest in and to (a) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright
registrations, copyright applications, and all renewals of any of the foregoing,
(b) all income, royalties, damages and payments now or hereafter due and/or
payable under any of the foregoing, including, without limitation, damages or
payments for past, current or future infringements of any of the foregoing, (c)
the right to xxx for past, present and future infringements of any of the
foregoing, and (d) all rights corresponding to any of the foregoing throughout
the world.
“Corporate
Guarantor” means
the Parent, and each of the direct and indirect wholly-owned Subsidiaries of the
Parent, as the case may be and each of their respective successors and assigns,
and “Corporate
Guarantors” means
collectively the Parent, such subsidiaries and each of their respective
successors and assigns.
“Corporate
Guaranties” means
the collective reference to each of those certain guaranties of payment for the
benefit of the Lenders ratably and the Agent dated the date hereof to the Agent
from the Corporate Guarantors, respectively, as the same may from time to time
be amended, restated, supplemented or otherwise modified; and “Corporate
Guaranty” means each of the Corporate Guaranties.
“Credit
Facility” means
the Revolving Credit Facility and “Credit
Facilities” means
collectively the Revolving Credit Facility and any and all other credit
facilities now or hereafter extended under or secured by this
Agreement.
“Default” means
an event that, with the giving of notice or lapse of time, or both, could or
would constitute an Event of Default under the provisions of this
Agreement.
“Defaulting
Lender” means
any Lender that fails to make any Advance (or other extension of credit) that it
is required to make hereunder on the date that it is required to do so
hereunder.
“Early
Termination Fee” has the
meaning described in Section
2.1.13 (Early
Termination Fee).
“EBITDA” has the
meaning set forth in Section
6.1.15(a).
“Eligible
Carrier” shall
mean a property and casualty insurance company which has an A. M. Best rating of
not less than “B” or
Standard and Poor’s rating of not less than “BBBq”, or
which is included in EXHIBIT E attached to and made a part of this Agreement, up
to and including the aggregate amount of Receivables financing insurance
policies of such insurance company as set forth in EXHIBIT E, all as acceptable
to the Agent in the exercise of its sole and absolute discretion from time to
time.
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“Eligible
Receivables” shall
mean shall mean any bona fide Receivable that is created by the Borrower in the
ordinary course of its business and that
satisfies and continues to satisfy, the following requirements:
(a) the
Receivable was created pursuant to a Premium Finance Agreement that is in form
and substance acceptable to the Agent, that reflects by its terms and in related
payment coupon books and other materials, the Agent as secured creditor to the
Borrower;
(b) the
insurance carrier issuing the underlying insurance relating to the Receivable
(i) is not a debtor in any case under any chapter of the Bankruptcy Code, is not
insolvent, has not made an assignment for the benefit of creditors and is not
the subject of any insolvency, liquidation, reorganization, dissolution,
receivership, conservatorship, trusteeship or other such proceeding, and (ii) is
an Eligible Carrier; provided, however, that a Receivable may be an Eligible
Receivable even if the insurance carrier is not an Eligible Carrier provided
that (A) such Receivable otherwise meets the criteria of an Eligible Receivable,
and (B) the Premium Finance Agreements relating to insurance carriers who are
not Eligible Carriers do not exceed an amount equal to twenty percent (20%) of
the Borrower’s Capitalization at any time;
(c) the
broker or agent of the underlying insurance relating to the Receivable is not a
debtor in any case under any chapter of the Bankruptcy Code, is not insolvent,
has not made an assignment for the benefit of creditors, and is not the subject
of any insolvency, liquidation, reorganization, dissolution, receivership,
conservatorship, trusteeship or other such proceeding;
(d) the
Receivable does not relate to an insurance policy that is subject in the
ordinary course to audit and adjustment;
(e) the
underlying insurance relating to the Receivable is cancelable by the Borrower
and its assignees at any time following a default by the insured and provides
for the return of unearned premiums and commissions upon
cancellation;
(f) the
rights to the return of unearned premiums and commissions upon cancellation of
the underlying insurance relating to the Receivable may be validly assigned to
the Borrower and to assignees of the Borrower;
(g) the
amount of unearned premiums or commissions payable upon cancellation of the
underlying insurance relating to the Receivable is calculable at all
times;
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(h) the
Premium Finance Agreement giving rise to the Receivable at the time of execution
was in compliance with, and was created, solicited and entered into in
compliance with, all applicable laws, statutes, regulations, rules, orders,
decrees or injunctions of any governmental body, including all applicable
insurance and consumer laws and regulations;
(i) the
Receivable, the related Premium Finance Agreement and the related underlying
insurance are each valid, binding and enforceable against each party
thereto;
(j) the
Premium Finance Agreement giving rise to the Receivable is fully and properly
completed and contains a valid, binding and enforceable assignment to the
Borrower of all unearned premiums and commissions payable upon cancellation of
the related underlying insurance and such assignment grants the Borrower a
perfected first-priority security interest in such unearned premiums and
commissions without the necessity of filing any financing statement or of making
any other filing or taking any other action;
(k) the
Premium Finance Agreement giving rise to the Receivable gives the Borrower and
its assignees a power of attorney or other legal authority that enables the
Borrower and its assignees to cancel the underlying insurance;
(l) the
Premium Finance Agreement giving rise to the Receivable is in the possession of
the Borrower;
(m) the
Receivable is in compliance with all representations and warranties made with
respect thereto in this Agreement, including all representations and warranties
made by the Borrower with respect to the Premium Finance Agreement giving rise
to the Receivable and with respect to the underlying insurance relating to the
Receivable;
(n) if the
related underlying insurance is canceled, cancellation was made before any
payment on the Receivable became more than forty-five (45) days past
due;
(o) if the
underlying insurance has been canceled, not more than 60 days have elapsed since
the date of cancellation;
(p) if the
underlying insurance has been canceled, the unearned premiums and commissions
have not been paid;
(q) except
for security interests securing the Obligations and security interests in favor
of the Borrower, the Receivable is not subject to any lien or security
interest;
(r) the
Receivable has been entered into and tracked by a premium finance software
system acceptable to the Agent;
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(s) the
Receivable relates to a premium for which the payee on the check or draft used
to pay the premium is either: (i) the insurance carrier on the policy securing
the Premium Finance Agreement, (ii) the New York Automobile Insurance Plan
(NYAIP), New Jersey Personal Automobile Insurance Plan (NJPAIP) or the
Pennsylvania Automobile Insurance Plan (PAIP); or (iii) or (iii) a Managing
General Agent or General Agent, duly authorized to receive payments on behalf of
the carrier on the underlying policy of insurance, based on documentation on
file with and satisfactory to the Agent, provided, however, that the Agent in
the exercise of its sole and absolute discretion from time to time may approve
additional or other State plans or payment arrangements;
(t) the
Receivable arises under either (i) a Premium Finance Agreement under which the
underlying insured is domiciled in the State of New York; or (ii) a Premium
Finance Agreement under which the underlying insured is domiciled in the State
of New Jersey or the Commonwealth of Pennsylvania provided, that no such
Receivables from such State shall be included among Eligible Receivables unless
the Agent shall have received an opinion of counsel that the Borrower has the
necessary Premium Finance Licenses for such State; and provided, further, that
the Agent in the exercise of its sole and absolute discretion from time to time
may approve Premium Finance Agreement relating to insureds in additional
States;
(u) the
Receivable arises under a Premium Finance Agreement under which the underlying
carrier participates in the NYAIP, NJPAIP and/or PAIP.
The Agent
may determine from time to time, in its sole and absolute discretion and
notwithstanding any previous determinations made by it or the preceding
criteria, to exclude from Eligible Receivables specific Receivables or specific
categories or types of Receivables, specific components of Receivables,
Receivables with respect to which the related underlying insurance is issued by
a specific issuer or by specific categories or types of issuers, Receivables
arising out of specific Premium Finance Agreements or specific categories or
types of Premium Finance Agreements, Receivables with respect to which the
related underlying insurance was produced by a specific agent, broker or other
producer or by specific categories or types of agents, brokers or other
producers, or otherwise to limit Receivables, or the amount of Receivables,
which shall constitute Eligible Receivables. Such determinations may be based
upon evaluations of risk or any other factors considered relevant by the Agent,
whether such factors have or have not heretofore been used, contemplated or
foreseen as bases for defining or limiting Eligible Receivables. Any such
determination by the Agent to modify Eligible Receivables will be promptly
communicated to the Borrower in writing. In order to enable the Agent to make
such determinations, the Borrower agrees to furnish, or cause to be furnished,
to the Agent from time to time such information and documentation that has been
requested and is reasonably available concerning Receivables, Premium Finance
Agreements, underlying insurance, issuers of underlying insurance, agents,
brokers and other producers of underlying insurance, premium down payments made
by insureds with respect to underlying insurance and other matters as the Agent
may from time to time request. Without implying any limitation on the foregoing,
the Borrower may propose that the Agent consider from time to time the inclusion
of Receivables from commercial Account Debtors among Eligible Receivables, which
the Agent may from time to time agree or decline to do from time to time in the
exercise of its sole and absolute discretion.
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“Enforcement
Costs” means
all expenses, charges, costs and fees whatsoever (including, without limitation,
reasonable outside and allocated in-house counsel attorney’s fees and expenses)
of any nature whatsoever paid or incurred by or on behalf of the Agent and/or
any of the Lenders (whether arising before or after the commencement of any
proceedings under the United States Bankruptcy Code or other applicable laws
related to insolvency or otherwise and whether or now allowed or allowable as a
claim in any such proceeding) in connection with (a) any or all of the
Obligations, this Agreement and/or any of the other Financing Documents, (b) the
creation, perfection, collection, maintenance, preservation, defense,
protection, realization upon, disposition, sale or enforcement of all or any
part of the Collateral, this Agreement or any of the other Financing Documents,
including, without limitation, those costs and expenses more specifically
enumerated in Section
3.7 (Costs)
and/or Section
9.11
(Enforcement Costs), and further including, without limitation, amounts paid to
lessors, processors, bailees, warehousemen, sureties, judgment creditors and
others in possession of or with a Lien against or claimed against the
Collateral, and (c) the monitoring, administration, processing and/or servicing
of any or all of the Obligations, the Financing Documents, and/or the
Collateral.
“Equipment” means
all equipment, machinery, computers, chattels, tools, parts, machine tools,
furniture, furnishings, fixtures and goods (other than inventory) of every
nature (including, without limitation, embedded software), presently existing or
hereafter acquired or created and wherever located, whether or not the same
shall be deemed to be affixed to real property, and all of such types of
property leased by the Borrower and all of the Borrower’s rights and interests
with respect thereto under such leases (including, without limitation, options
to purchase), together with all accessions, additions, fittings, accessories,
special tools, and improvements thereto and substitutions therefor and all parts
and equipment that may be attached to or that are necessary or beneficial for
the operation, use and/or disposition of such personal property, all licenses,
warranties, franchises and General Intangibles related thereto or necessary or
beneficial for the operation, use and/or disposition of the same, together with
all Receivables, chattel paper, instruments and other consideration received by
the Borrower on account of the sale, lease or other disposition of all or any
part of the foregoing, and together with all rights under or arising out of
present or future documents and contracts relating to the foregoing and all
proceeds (cash proceeds and noncash proceeds) of the foregoing.
“ERISA” means
the Employee Retirement Income Security Act of 1974, as amended from time to
time.
“ERISA
Affiliate” means
any Person that is a member of the Borrower’s controlled group, or under common
control with the Borrower, within the meaning of Section 414 of the Internal
Revenue Code.
“Event
of Default” has the
meaning described in ARTICLE
VII (Default
and Rights and Remedies).
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“Excess
Availability” means,
as of any time of determination, (a) the lesser of the Total Revolving Credit
Committed Amount or the Borrowing Base (after giving effect to provisions for
Reserves and other adjustments permitted by this Agreement) minus (b) the
aggregate Revolver Usage.
“Facilities” means
the collective reference to the loan, letter of credit, interest rate
protection, foreign exchange risk, cash management, and other credit facilities
now or hereafter provided to the Borrower by the Agent or the Lenders under this
Agreement or otherwise by M&T.
“Federal
Funds Rate” means
for any day of determination, the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is not a
Business Day) by the Federal Reserve Bank for the immediately preceding Business
Day) by the Federal Reserve Bank of Richmond or, if such rate is not so
published for any day that is a Business Day, the average of quotations for such
day on such transactions received by the Agent from three (3) federal funds
brokers of recognized standing selected by the Agent.
“Fees” means
the collective reference to each fee payable to the Agent, for its own account
or for the ratable benefit of the Lenders, under the terms of this Agreement or
under the terms of any of the other Financing Documents, including, without
limitation, the Revolving Credit Unused Line Fees, the Early Termination Fee,
the Arrangement Fee and the Monitoring Fees.
“Financing
Documents” means
at any time collectively this Agreement, the Notes, the Security Documents,
the
Personal Guaranty, the Wind Down Guaranty, the Corporate Guaranties, any
Hedge Agreement, agreements with respect to Bank Products, and any other
instrument, agreement or document previously, simultaneously or hereafter
executed and delivered by the Borrower, any Guarantor and/or any other Person,
singly or jointly with another Person or Persons, evidencing, securing,
guarantying or in connection with this Agreement, any Note, any of the Security
Documents, any of the Facilities, and/or any of the Obligations.
“Fiscal
Year” means
as to the Borrower a fiscal year ending December 31.
“Fixed
or Capital Assets” of a
Person at any date means all assets that would, in accordance with GAAP
consistently applied, be classified on the balance sheet of such Person as
property, plant or equipment at such date.
“Funded
Debt” has the meaning set forth in Section
6.1.15(a).
“GAAP” means
generally accepted accounting principles in the United States of America in
effect from time to time.
“General
Intangibles” means
all general intangibles of every nature, whether presently existing or hereafter
acquired or created, and without implying any limitation of the foregoing,
further means all books and records, commercial tort claims, other claims
(including without limitation all claims for income tax and other refunds),
payment intangibles, Supporting Obligations, choses in action, causes of action
in tort or equity, contract rights, judgments, customer lists, software,
Patents, Trademarks, licensing agreements, rights in intellectual property,
goodwill (including goodwill of the Borrower’s business symbolized by and
associated with any and all trademarks, trademark licenses, Copyrights and/or
service marks), royalty payments, licenses, letter-of-credit rights, letters of
credit, contractual rights, the right to receive refunds of unearned insurance
premiums, rights as lessee under any lease of real or personal property,
literary rights, Copyrights, service names, service marks, logos, trade secrets,
amounts received as an award in or settlement of a suit in damages, deposit
accounts, interests in joint ventures, general or limited partnerships, or
limited liability companies or partnerships, rights in applications for any of
the foregoing, books and records in whatever media (paper, electronic or
otherwise) recorded or stored with respect to any or all of the foregoing, all
Supporting Obligations with respect to any of the foregoing, and all equipment
and general intangibles necessary or beneficial to retain, access and/or process
the information contained in those books and records, and all proceeds (cash
proceeds and noncash proceeds) of the foregoing.
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“Governmental
Authority” means
any nation or government, any state or other political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any department,
agency or instrumentality thereof.
“Guarantor” means a
Personal Guarantor or a Corporate Guarantor, as the case may be, and
“Guarantors” means
the Personal Guarantor and all Corporate Guarantors.
“Guarantor
Security Agreements” means
the collective reference to those certain Security Agreements dated the same
date as this Agreement executed by each of the respective Corporate Guarantors
in favor of the Agent for itself and the ratable benefit of the Lenders, each as
amended,
restated, modified, substituted, extended and renewed from time to
time.
“Guaranty” means
the Personal Guaranty, the Wind Down Guaranty or the Corporate Guaranties, as
the case may be, and “Guaranties” means the Personal Guaranty, the Wind Down
Guaranty and the Corporate Guaranties.
“Hazardous
Materials” means
(a) any “hazardous
waste” as
defined by the Resource Conservation and Recovery Act of 1976, as amended from
time to time, and regulations promulgated thereunder; (b) any “hazardous
substance” as defined by the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time, and regulations
promulgated thereunder; (c) any substance the presence of which on any property
now or hereafter owned, acquired or operated by the Borrower is prohibited by
any Law similar to those set forth in this definition; and (d) any other
substance that by Law requires special handling in its collection, storage,
treatment or disposal.
“Hazardous
Materials Contamination” means
the contamination (whether presently existing or occurring after the date of
this Agreement) by Hazardous Materials of any property owned, operated or
controlled by the Borrower or for which the Borrower has responsibility,
including, without limitation, improvements, facilities, soil, ground water, air
or other elements on, or of, any property now or hereafter owned, acquired or
operated by the Borrower, and any other contamination by Hazardous Materials for
which the Borrower is, or is claimed to be, responsible.
-11-
“Hedge
Agreement” means
any and all transactions, agreements or documents now existing or hereafter
entered into, that provides for an interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging the
Borrower’s exposure to fluctuations in interest or exchange rates, loan, credit
exchange, security or currency valuations or commodity prices.
“Hedge
Reserve” means
any and all Reserves that the Agent from time to time establishes, in its sole
discretion, with respect to Hedge Agreement Transactions.
“Hedge
Transactions” means
the collection reference to transactions contemplated by Hedge
Agreements.
“Indebtedness
for Borrowed Money” of a
Person means at any time the sum at such time of (a) indebtedness of such Person
for borrowed money or for the deferred purchase price of property or services,
(b) any obligations of such Person in respect of letters of credit, banker’s or
other acceptances or similar obligations issued or created for the account of
such Person, (c) Lease Obligations of such Person with respect to Capital
Leases, (d) all liabilities secured by any Lien on any property owned by such
Person, to the extent attached to such Person’s interest in such property, even
though such Person has not assumed or become personally liable for the payment
thereof, (e) obligations of third parties that are being guarantied or
indemnified against by such Person or that are secured by the property of such
Person; (f) any obligation of such Person under or with respect to an employee
stock ownership plan or other similar employee benefit plan; (g) any obligation
of such Person or a ERISA Affiliate to a Multi-employer Plan; and (h) any
obligations, liabilities or indebtedness, contingent or otherwise, under or in
connection with, any Hedge Transactions; but excluding trade and other accounts
payable in the ordinary course of business in accordance with customary trade
terms and that are not overdue (as determined in accordance with customary trade
practices) or that are being disputed in good faith by such Person and for which
adequate reserves are being provided on the books of such Person in accordance
with GAAP.
“Indemnified
Liabilities” has the
meaning set forth in Section
9.19
(Indemnification).
“Indemnified
Parties” has the
meaning set forth in Section
9.19
(Indemnification).
“Interest
Payment Date” means
with respect to the Revolving Loan, the first day of each calendar month
commencing on January 1, 2005 and continuing thereafter until the Obligations
have been irrevocably paid in full.
“Interest
Period” means
as to any LIBOR Loan, the period commencing on and including the date such LIBOR
Loan is made (or on the effective date of the Borrower’s election to convert any
Base Rate Loan to a LIBOR Loan in accordance with the provisions of this
Agreement) and ending on and including the day which is one month, two months,
three or six months thereafter, as selected by the Borrower in accordance with
the provisions of this Agreement, and thereafter, each period commencing on the
last day of the then preceding Interest Period for such LIBOR Loan and ending on
and including the day which is one month, two months, three months or six months
thereafter, as selected by the Borrower in accordance with the provisions of
this Agreement; provided, however that:
-12-
(a) the first
day of any Interest Period shall be a LIBOR Business Day;
(b) if any
Interest Period would end on a day that shall not be a LIBOR Business Day, such
Interest Period shall be extended to the next succeeding LIBOR Business Day
unless such next succeeding LIBOR Business Day would fall in the next calendar
month, in which case, such Interest Period shall end on the next preceding LIBOR
Business Day; and
(c) no
Interest Period shall extend beyond the Revolving Credit Expiration
Date.
“Interest
Rate Election Notice” has the
meaning described in Section
2.3.2(e).
“Internal
Revenue Code” means
the Internal Revenue Code of 1986, as amended from time to time, and the Income
Tax Regulations issued and proposed to be issued thereunder.
“Item
of Payment” means
each check, draft, cash, money, instrument, item, wire transfer, ACH transfer,
other electronic transfer and other remittance, in any form or method
whatsoever, in payment or on account of payment of the Receivables or otherwise
with respect to any Collateral, including, without limitation, cash proceeds and
other proceeds of Collateral; and “Items
of Payment” means
the collective reference to all of the foregoing.
“Laws” means
all ordinances, statutes, rules, regulations, orders, injunctions, writs, or
decrees of any Governmental Authority.
“M&T
Loan” means
an Advance made by M&T in accordance with the provisions of Section
2.5.2 (M&T
Advances).
“Lease
Obligations” of a
Person means for any period the rental commitments of such Person for such
period under leases for real and/or personal property (net of rent from
subleases thereof, but including taxes, insurance, maintenance and similar
expenses that such Person, as the lessee, is obligated to pay under the terms of
said leases, except to the extent that such taxes, insurance, maintenance and
similar expenses are payable by sublessees), including rental commitments under
Capital Leases.
“LIBOR
Base Rate” means
for any Interest Period with respect to any LIBOR Loan, the per annum interest
rate rounded upward, if necessary, to the nearest 1/100 of 1%, appearing
on Page 3750 (or any successor page) on the Dow Xxxxx
Markets Screen as the
London interbank offered rate for deposits in Dollars at or
about 11:00 a.m. (London time) on the date that is two (2) LIBOR Business Days
prior to the first day of such Interest Period for a
term comparable to such Interest Period. If for any reason such rate is not
available, the term “LIBOR
Base Rate” shall
mean, for any LIBOR Loan for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the
Agent from time to time to be an equivalent rate.
-13-
“LIBOR
Business Day” means
any Business Day on which dealings in United States Dollar deposits are carried
out on the London interbank market and on which commercial banks are open for
domestic and international business (including dealings in Dollar deposits) in
London, England.
“LIBOR
Loan” means
any Loan for which interest is to be computed with reference to the LIBOR
Rate.
“LIBOR
Rate” means
for any Interest Period with respect to any LIBOR Loan, (a) the Applicable
Margin, plus (b) the
per annum rate of interest calculated pursuant to the following
formula:
LIBOR
Base Rate
1.00 -
Reserve Percentage
“Lien” means
any mortgage, deed of trust, deed to secure debt, grant, pledge, security
interest, assignment, encumbrance, judgment, lien, financing statement,
hypothecation, provision in any instrument or other document for confession of
judgment, cognovit or other similar right or other remedy, claim, charge,
control over or interest of any kind in real or personal property securing any
indebtedness, duties, obligations, and liabilities owed to, or a claimed to be
owed to, a Person, all whether perfected or unperfected, avoidable or
unavoidable, based on the common law, statute or contract or otherwise,
including, without limitation, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction, excluding the precautionary filing of any financing statement by
any lessor in a true lease transaction or by any xxxxxx in a true bailment
transaction under the Uniform Commercial Code of any jurisdiction or the
agreement to give any financing statement by any lessee in a true lease
transaction or by any bailee in a true bailment transaction.
“Loans” means
the collective reference to each Revolving Loan.
“Loan
Notice” has the
meaning described in Section
2.1.2
(Procedure for Making Advances).
“Lockbox” has the
meaning described in Section
2.1.10
(Collateral Account).
“Material
Adverse Effect” means
with respect to the applicable Person an effect, either in any case or in the
aggregate, which might result in a material adverse change (w) in the business,
prospects, condition, affairs or operations of that Person, (x) to that Person’s
material properties or assets, (y) in the right or ability of that Person to
carry on a substantial portion of its operations as now conducted or proposed to
be conducted or to perform its obligations under the Financing Documents, or (z)
to the value of, or the ability of the Agent or the Lenders to realize upon, the
Collateral.
“Maximum
Rate” has the
meaning described in Section
2.2.5 (Maximum
Interest Rate).
“Monitoring
Fees” has the
meaning described in Section
2.2.3
(Monitoring Fees).
-14-
“Multi-employer
Plan” means a
Plan that is a Multi-employer plan as defined in Section 4001(a)(3) of
ERISA.
“Net
Worth” has the
meaning set forth in Section
6.1.15(a).
“Note” means
any Revolving Credit Note, and “Notes” means
collectively each Revolving Credit Note, and any other promissory note that may
from time to time evidence all or any portion of the Obligations.
“Obligations” means
(a) all present and future indebtedness, duties, obligations, and liabilities,
whether now existing or contemplated or hereafter arising, of the Borrower to
the Lenders and/or Agent under, arising pursuant to, in connection with and/or
on account of the provisions of this Agreement, each Note, each Security
Document, and/or any of the other Financing Documents, the Loans, and/or any of
the Facilities including, without limitation, the principal of, and interest on,
each Note, late charges, the Fees, Enforcement Costs, and prepayment fees (if
any), letter of credit reimbursement obligations, letter of credit fees or fees
charged with respect to any guaranty of any letter of credit; (b) all other
present and future indebtedness, duties, obligations, and liabilities, whether
now existing or contemplated or hereafter arising, of the Borrower to the Agent
and/or to M&T or its Affiliates of any nature whatsoever including, without
limitation, any indebtedness, duties, obligations, and liabilities, under or in
connection with, any Bank Products; regardless of whether any or all of the
foregoing indebtedness, duties, obligations, and liabilities are direct,
indirect, primary, secondary, joint, several, joint and several, fixed or
contingent; and (c) any and all renewals, extensions, substitutions, amendments,
restatements and rearrangements of any or all of the foregoing indebtedness,
duties, obligations, and liabilities.
“Overadvance” means,
as of any date of determination, the amount, if any, by which the Revolver Usage
exceeds the Borrowing Base.
“Parent” means
DCAP Group, Inc., a corporation organized and existing under the laws of the
State of Delaware, of which the Borrower is a wholly-owned
subsidiary.
“Parent
Subordinated Debt” means
that certain Indebtedness for Borrowed Money of the Parent in favor of the
Parent Subordinated Note Purchasers in an aggregate face principal amount of
Three Million Five Hundred Thousand Dollars ($3,500,000).
“Parent
Subordinated Debt Documents” means
any and all promissory notes, agreements, documents or instruments now or at any
time evidencing, securing, guarantying or otherwise executed and delivered in
connection with the Subordinated Debt, as the same may from time to time be
amended, restated, supplemented or modified.
“Parent
Subordinated Note Purchasers” means,
collectively, (a) XXX FBO Xxxxxxx X. Xxxxxxx, Xxxxxxxx LLC Custodian, (b) XXX
FBO Xxxx X. Xxxxxxx, Xxxxxxxx LLC Custodian, (c) Xxxxxxx Opportunity Fund, (d)
J.M.J Realty Company, (e) Take-Two Capital LP, (f) Xxxxxxx Xxxxx and Xxxxxxxxx
Xxxxx, (g) Xxxxxx Xxxxxx and (h) Citco Trustees (B.V.I) Limited as Trustee of
the MS Deferred Income Trust.
-15-
“Parent
Subordination Agreements” means
the collective reference to (a) that certain subordination agreement by and
between the Parent and the Parent Subordinated Note Purchasers in favor of the
Agent for the benefit of the Lenders ratably and the Agent, and (b) that certain
subordination agreement by and between the Borrower and the Parent Subordinated
Note Purchasers in favor of the Agent for the benefit of the Lenders ratably and
the Agent, as the same may be from time to time amended, restated, supplemented
or modified.
“Patents” means
and includes, in each case whether now existing or hereafter arising, all of the
Borrower’s rights, title and interest in and to (a) any and all patents and
patent applications, (b) any and all inventions and improvements described and
claimed in such patents and patent applications, (c) reissues, divisions,
continuations, renewals, extensions and continuations-in-part of any patents and
patent applications, (d) income, royalties, damages, claims and payments now or
hereafter due and/or payable under and with respect to any patents or patent
applications, including, without limitation, damages and payments for past and
future infringements, (e) rights to xxx for past, present and future
infringements of patents, and (f) all rights corresponding to any of the
foregoing throughout the world.
“PBGC” means
the Pension Benefit Guaranty Corporation.
“Perfection
Certificate” has the
meaning described in Section
3.3
(Perfection Certificate).
“Permitted
Distributions” means
the collective reference to:
(a) on or
after the Closing Date, an optional principal prepayment on the Subordinated
Debt in an amount of $1,000,000, but such prepayment may only be made if at the
time of such prepayment (i) there exists no Event of Default, (ii) after giving
effect to the prepayment on a proforma basis and to the payment of the
Borrower’s other indebtedness, liabilities and obligations then due in the
ordinary course, the Borrower has Excess Availability of more than $1,000,000,
and (iii) Parent immediately uses all of the proceeds of such prepayment to make
an optional prepayment on the Subordinated Debt (Parent); and
(b) after the
prepayment under clause (a) has been made and, in any event on or after April
30, 2005, an optional principal prepayment on the Subordinated Debt in an amount
not to exceed $500,000 and an optional additional distribution to the Parent in
an amount not to exceed $500,000, but such prepayment and such distribution may
only be made if at the time thereof (i) there exists no Event of Default, (ii)
after giving effect to the prepayment and distribution on a proforma basis and
to the payment of the Borrower’s other indebtedness, liabilities and obligations
then due in the ordinary course, the Borrower has Excess Availability of more
than $1,500,000, and (iii) Parent immediately uses all of the proceeds of such
prepayment and distribution to make an optional prepayment on the Subordinated
Debt (Parent).
“Permitted
Liens” means:
(a) Liens for Taxes that are not delinquent or that the Agent has determined in
the exercise of its sole and absolute discretion (i) are being diligently
contested in good faith and by appropriate proceedings, and such contest
operates to suspend collection of the contested Taxes and enforcement of a Lien,
(ii) the Borrower has the financial ability to pay, with all penalties and
interest, at all times without materially and adversely affecting the Borrower,
and (iii) are not, and will not be with appropriate filing, the giving of notice
and/or the passage of time, entitled to priority over any Lien of Agent and/or
the Lenders; (b) deposits or pledges to secure obligations under workers’
compensation, social security or similar laws, or under unemployment insurance
in the ordinary course of business; (c) Liens securing the Obligations; (d)
judgment Liens to the extent the entry of such judgment does not constitute a
Default or an Event of Default under the terms of this Agreement or result in
the sale or levy of, or execution on, any of the Collateral; (e) purchase money
security interests securing Indebtedness for Borrowed Money for the purchase of
Equipment in arms-length, commercially reasonable transactions with Persons who
are not Affiliates; provided, however, that (i) the indebtedness secured shall
not exceed the unpaid purchase price of the Equipment acquired, plus reasonable
finance charges and the reasonable costs of collection (including, without
limitation, reasonable attorneys fees); (ii) each item of Equipment shall secure
only its portion of the indebtedness described in item (i); and (iii) the amount
of such indebtedness incurred shall not exceed $50,000 in the aggregate; and (f)
such other Liens, if any, as are set forth on Schedule
4.1.22
(Perfection and Priority of Collateral) attached hereto and made a part hereof.
-16-
“Permitted
Uses” means
the payment of expenses incurred in the ordinary course of the Borrower’s
business.
“Person” means
and includes an individual, a corporation, a partnership, a joint venture, a
limited liability company or partnership, a trust, an unincorporated
association, a Governmental Authority, or any other organization or
entity.
“Personal
Guarantor” means
Xxxxx X. Xxxxxxxxx and his heirs, personal representatives, successors and
assigns.
“Personal
Guaranty” means
that certain limited guaranty of payment for the benefit of the Lenders ratably
and the Agent dated the date hereof to the Agent from the Personal Guarantor, as
the same may from time to time be amended, restated, supplemented or otherwise
modified.
“Plan” means
any pension plan that is covered by Title IV of ERISA and in respect of which
the Borrower or a ERISA Affiliate is an “employer” as
defined in Section 3 of ERISA.
“Post-Default
Rate” means
the Prime Rate in effect from time to time, plus three and one-half percent
(3.5%) per annum.
“Premium
Claim Notices” has the
meaning set forth in Section
6.1.29
(Borrower’s Procedures).
“Premium
Finance Agreement” shall
mean any written agreement signed by an insured or prospective insured or, if
permitted under applicable state law, signed by the agent or broker or another
authorized person for such insured or such prospective insured by which the
insured or prospective insured promises or agrees to pay to Borrower an amount
advanced or to be advanced under the agreement by Borrower on behalf of the
insured or prospective insured to an insurer, agent or broker in payment of
premiums on insurance contracts and which contains an assignment of, or is
otherwise secured by, the unearned premium or refund obtainable from the
insurer, agent, broker or other parties upon cancellation of the insurance
contract, and is otherwise substantially in the form attached hereto as EXHIBIT
F, subject to required change under applicable Laws.
-17-
“Premium
Finance Licenses” shall
mean any and all franchises, licenses, rights, permits, authorizations, consents
ordinances, registrations, certificates, agreements, or other rights filed (or
entered into) with, or granted (or otherwise issued) by, the federal government
or any state or local governmental authority (whether pursuant to any franchise,
ordinance, license, other agreement, or otherwise), pursuant to which the
Borrower has the right to engage in the business of providing personal
automobile insurance premium finance services; including, without limitation,
the Borrower’s existing licenses issued by the State of New York and State of
New Jersey.
“Premium
Related Liabilities” shall
mean, at any time, the aggregate amount of the Borrower’s liabilities created
pursuant to the financing of insurance premiums, excluding any indebtedness for
credit extended to the Borrower relating to the financing of such insurance
premiums, but including (a) amounts due to insurance carriers, insureds, agents
and brokers (including an estimated amount with respect to outstanding checks
payable to such Persons), (b) escrow accounts, and (c) book and other
overdrafts.
“Prepayment” means a
Revolving Loan Mandatory Prepayment or a Revolving Loan Optional Prepayment as
the case may be, and “Prepayments” mean
collectively all Revolving Loan Mandatory Prepayments and all Revolving Loan
Optional Prepayments.
“Prime
Rate” means
the highest prime rate published in The Wall Street Journal in its table
entitled “Money Rates” or such similar publication, quoting service, or commonly
available source used by the Agent for determining prime rate of interest.
“Pro
Rata Share” means
with respect to all matters relating to any Lender, the percentage obtained by
dividing (i) the Commitments of that Lender by (ii) the Aggregate Commitments of
all Lenders.
“Receivables” means
the collective reference to: (a) all of the Borrower’s present and future
accounts, contract rights, receivables, promissory notes and other instruments,
chattel paper, General Intangibles, and investment property; (b) all present and
future tax refunds of the Borrower and all present and future rights of the
Borrower to refunds or returns of prepaid expenses, including unearned insurance
premiums; (c) all present and future cash of the Borrower; (d) all deposit
accounts now or hereafter maintained or established by, for or on behalf of the
Borrower with any bank or other institution, and all balances of funds now or
hereafter on deposit in all such accounts, including, without limitation, all
checking accounts, collection accounts, lockbox accounts, disbursement accounts,
concentration accounts and all other deposit accounts of every kind and nature;
(e) all present and future judgments, orders, awards and decrees in favor of the
Borrower and causes of action in favor of the Borrower; (f) all present and
future claims, rights of indemnification and other rights of the Borrower under
or in connection with any contracts or agreements to which the Borrower is or
becomes a party or third party beneficiary; (g) all rights and claims of the
Borrower with respect to any deposits of money or other property made with any
lessors of any property, insurers, bonding agents or any other persons; (h) all
present and future rights and claims which the Borrower may now or hereafter
have under any insurance policies, contracts or coverages now or hereafter in
effect; (i) all rights which the Borrower may now or at any time hereafter have,
by law or agreement, against any Account Debtor or other obligor of the
Borrower, and all supporting obligations, rights, liens and security interests
which the Borrower may now or at any time hereafter have, by law or agreement,
against any property of any Account Debtor or other obligor of the Borrower; (j)
all present and future customer lists of the Borrower; (k) all present and
future contingent and non-contingent rights of the Borrower to the payment of
money for any reason whatsoever, whether arising in contract, tort or otherwise
whether or not such rights are otherwise included in this definition, (l) all
books and records in whatever media (paper, electronic or otherwise) recorded or
stored, with respect to any or all of the foregoing and all equipment and
general intangibles necessary or beneficial to retain, access and/or process the
information contained in those books and records, and (m) all present and future
rights of the Borrower with respect to licenses patents copyrights franchises
trade names and trademarks. “Receivable” means
each of the Receivables. Without limitation of the foregoing it is specifically
understood and agree that the Receivables shall include all right, title and
interest of the Borrower in and to all Premium Finance Agreements whether now
existing or hereafter arising and all amounts due or to become due
thereunder.
-18-
“Reportable
Event” means
any of the events set forth in Section 4043(c) of ERISA or the regulations
thereunder.
“Required
Lenders” means
at any time of determination one or more of the Lenders holding at least
sixty-six and two-thirds percent (66-2/3%) of the Commitments.
“Reserve
Percentage” means,
at any time, the then current maximum rate for which reserves (including any
basic, special, supplemental, marginal and emergency reserves) are required to
be maintained by member banks of the Federal Reserve System under Regulation D
of the Board of Governors of the Federal Reserve System against “Eurocurrency
liabilities”, as
that term is defined in Regulation D. Without
limiting the effect of the foregoing, the Reserve Percentage shall reflect any
other reserves required to be maintained by such member banks with respect to
(i) any category of liabilities which includes deposits by reference to which
the LIBOR Rate is to be determined, or (ii) any category of extensions of credit
or other assets which include LIBOR Loans. The LIBOR
Rate shall be adjusted automatically on and as of the effective date of any
change in the Reserve Percentage.
“Reserves” means
the collective reference to reserves, in amounts and with respect to such
matters, as the Agent in its sole discretion shall deem necessary or appropriate
to establish against the Borrowing Base, including, without limitation, reserves
with respect to (i) sums that the Borrower is required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay under any
provision of this Agreement or any of the other Financing Documents, and (ii)
amounts owing by the Borrower to any Person to the extent secured by a Lien on,
or trust over, any of the Collateral, which Lien or trust as the Agent in its
discretion deems likely to have a priority superior to Liens of the Agent and
the Lenders (such as Liens or trusts in favor of landlords, warehousemen,
carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for
ad
valorem, excise,
sales, or other taxes where given priority under applicable law) in all or any
part of the Collateral; it being understood and agreed that Reserves are
established solely for the benefit of the Agent and the Lenders and no other
Person, including, without limitation, the Borrower, shall have any rights or
interests with respect to the establishment or failure to establish
Reserves.
-19-
“Responsible
Officer” means
the chief executive officer of the Borrower or the president of the Borrower or
as any Vice President of the Borrower.
“Responsible
Officer - Parent” means
the chief executive officer of the Parent or the president of the Parent or,
with respect to financial matters, the chief financial officer of the
Parent.
“Revolver
Usage” means,
as of any date of determination, the aggregate of the outstanding principal
balance of the Revolving Loan (including, without limitation, Agent Advances and
M&T Advances).
“Revolving
Credit Commitment” means
the agreement of a Lender relating to the making of Advances subject to and in
accordance with the provisions of this Agreement; “Revolving
Credit Commitments” means
the collective reference to the Revolving Credit Commitment of each of the
Lenders; and “Revolving Credit Optional Reduction” and “Revolving Credit
Optional Reductions” have the meaning set forth in Section
2.1.8
(Optional Reduction of Revolving Credit Committed Amount).
“Revolving
Credit Commitment Period” means
the period of time from the Closing Date to the Business Day preceding the
Revolving Credit Termination Date.
“Revolving
Credit Committed Amount” means
the amount of each Lender’s Revolving Credit Commitment, in each case as set
forth beside such Lender’s name under the applicable heading on EXHIBIT
A-2 to this
Agreement or in the assignment pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section
9.6
(Assignments by Lenders).
“Revolving
Credit Expiration Date” means
June 30, 2007.
“Revolving
Credit Facility” means
the facility established by the Lenders pursuant to Section
2.1
(Revolving Credit Facility).
“Revolving
Credit Note” and
“Revolving
Credit Notes” have
the meanings described in Section
2.1.6
(Revolving Credit Notes).
“Revolving
Credit Optional Reduction” and “Revolving Credit Optional Reductions” have the
meaning set forth in Section 2.1.8 (Optional Reduction of Revolving Credit
Committed Amount).
“Revolving
Credit Pro Rata Share” means
the Pro Rata Share.
-20-
“Revolving
Credit Termination Date” means
the earlier of (a) the Revolving Credit Expiration Date, or (b) the date on
which the Revolving Credit Commitments are terminated pursuant to Section
7.2
(Remedies) or otherwise.
“Revolving
Credit Unused Line Fee” and
“Revolving
Credit Unused Line Fees” have
the meanings described in Section
2.1.12
(Revolving Credit Unused Line Fee).
“Revolving
Loan” has the
meaning described in Section
2.1.1
(Revolving Credit Facility).
“Revolving
Loan Account” has the
meaning described in Section
2.1.11
(Revolving Loan Account).
“Revolving
Loan Mandatory Prepayment” and
“Revolving
Loan Mandatory Prepayments” have
the meanings described in Section
2.1.7
((Mandatory Prepayments of Revolving Loan).
“Revolving
Loan Optional Prepayment” and
“Revolving
Loan Optional Prepayments” have
the meanings described in Section
2.1.8
(Optional Prepayment of Revolving Loan).
“Security
Documents” means
collectively any assignment, pledge agreement, security agreement, mortgage,
deed of trust, deed to secure debt, financing statement and any similar
instrument, document or agreement under or pursuant to which a Lien is now or
hereafter granted to, or for the benefit of, the Agent and/or the Lenders on any
real or personal property of any Person to secure all or any portion of the
Obligations, all as the same may from time to time be amended, restated,
supplemented or otherwise modified including, without limitation, this
Agreement, the Personal Guaranty, the Wind Down Guaranty, the Corporate
Guaranties, the Assignment of Life Insurance, the Servicing Agreement
Assignment, the Stock Pledge Agreements, and the Guarantor Security
Agreements.
“Servicer” means
Input 1, LLC; and such additional or other servicer as Agent may approve in
writing from time to time.
“Servicing
Agreement” means
that certain Full Service Data Processing and Consulting Agreement, dated July
7, 2003, between the Borrower and the Servicer, as the same may be as amended,
restated, modified, substituted, extended, replaced and renewed from time to
time, with the Agent’s prior written consent.
“Servicing
Agreement Assignment” means
that certain collateral assignment of the Servicing Agreement among the Agent,
the Servicer and the Borrower, as amended, restated, modified, substituted,
extended, replaced and renewed from time to time.
“Servicing
Agreement Documents” means
the collective reference to the Servicing Agreement, the Servicing Agreement
Assignment, and any and all agreements and documents now or at any time
evidencing, securing, guarantying or otherwise executed and delivered in
connection with the Servicing Agreement, as the same may from time to time be as
amended, restated, modified, substituted, extended and renewed from time to
time.
-21-
“Settlement” has the
meaning set forth in Section
2.6.1(a).
“Settlement
Date” means
each Business Day after the Closing Date selected by the Agent in its sole
discretion subject to and in accordance with the provisions of Section
2.6
(Settlement Among Lenders) as of which a Settlement Report is delivered by the
Agent and on which settlement is to be made among the Lenders in accordance with
the provisions of Section
2.6.1
(Revolving Loan Settlement).
“Settlement
Report” means
each report prepared by the Agent and delivered to each Lender and setting
forth, among other things, as of the Settlement Date indicated thereon and as of
the immediately preceding Settlement Date, the aggregate outstanding principal
balance of the Revolving Loan, each Lender’s Revolving Credit Pro Rata Share
thereof, each Lender’s funded portion of the Advances (including, without
limitation, Agent Advances and M&T Loans) made, and all payments of
principal, interest, Fees and other amounts received by the Agent from the
Borrower during the period beginning on such immediately preceding Settlement
Date and ending on such Settlement Date.
“Solvent” means
when used with respect to any Person that at the time of
determination:
(a) the
assets of such Person, at a fair valuation, are in excess of the total amount of
its debts (including, without limitation, contingent liabilities);
and
(b) the
present fair saleable value of its assets is greater than its probable liability
on its existing debts as such debts become absolute and matured;
and
(c) it is
then able and expects to be able to pay its debts (including, without
limitation, contingent debts and other commitments) as they mature;
and
(d) it has
capital sufficient to carry on its business as conducted and as proposed to be
conducted.
For
purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
“State” means
the State of Maryland.
“Stock
Pledge Agreements” means
the collective reference to those certain pledge, assignment and security
agreements dated the date hereof from Parent and the other pledgors identified
below to the Agent for the benefit of the Lenders, as the same may from time to
time be amended, restated, supplemented or otherwise modified:
-00-
|
Xxxxxxx
|
Xxxxx
covered
|
|
Parent
|
Blast
Acquisition Corp., Intandem Corp., DCAP Management Corp., Dealers Choice
Automotive Planning, Inc., the Borrower, AADCAP Greenbrook, Inc., and IAH,
Inc. (formerly known as International Airport Hotel, Inc.)
|
|
Xxxxx
Xxxxx Acquisition Corp.
|
AARD-VARK
Agency, Ltd.
|
|
Xxxxx
Xxxxx Companies
|
Xxxxx
Xxxxx Acquisition Corp., Xxxxx Xxxxx Agency, Inc., Baron Cycle,
Inc.
|
|
Blast
Acquisition Corp.
|
AIA
DCAP Corp and Xxxxx Xxxxx Companies, Inc.
|
“Subordinated
Debt” means
that certain Indebtedness for Borrowed Money of the Borrower in favor of Parent
in a face principal amount of One Million Five Hundred Thousand Dollars
($1,500,000).
“Subordinated
Debt Documents” means
any and all promissory notes, agreements, documents or instruments now or at any
time evidencing, securing, guarantying or otherwise executed and delivered in
connection with the Subordinated Debt, as the same may from time to time be
amended, restated, supplemented or modified.
“Subordinated
Debt (Parent)” means
that certain Indebtedness for Borrowed Money of the Borrower owed by Parent to
Parent Subordinated Note Purchasers in a face principal amount of Three Million
Five Hundred Thousand Dollars ($3,500,000).
“Subordinated
Debt Documents” means
any and all promissory notes, agreements, documents or instruments now or at any
time evidencing, securing, guarantying or otherwise executed and delivered in
connection with the Subordinated Debt, as the same may from time to time be
amended, restated, supplemented or modified.
“Subordinated
Indebtedness” means
all indebtedness, including, without limitation, the Subordinated Debt, incurred
at any time by the Borrower, that is in amounts, subject to repayment terms, and
subordinated to the Obligations, as set forth in one or more written agreements,
all in form and substance satisfactory to the Agent in its sole and absolute
discretion.
“Subordination
Agreement” means
that certain subordination agreement by the Parent and the Borrower in favor of
the Agent and the Lenders, as the same may be from time to time amended,
restated, supplemented or modified.
“Subsidiary” means
of a Person means any corporation, association, partnership, joint venture or
other business entity of which more than fifty percent (50%) of the voting stock
or other equity interests (in the case of Persons other than corporations), is
owned or controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a “Subsidiary” refer
to a Subsidiary of the Borrower and to any Subsidiary of any such
Subsidiary.
-23-
“Supporting
Obligation” means a
letter-of-credit right, secondary obligation, or obligation of a secondary
obligor, or secondary obligation that supports the payment or performance of an
account, chattel paper, a document, a general intangible, an instrument, or
investment property.
“Tangible
Net Worth” has the
meaning set forth in Section
6.1.15(a).
“Taxes” means
all taxes and assessments whether general or special, ordinary or extraordinary,
or foreseen or unforeseen, of every character (including all penalties or
interest thereon), that at any time may be assessed, levied, confirmed or
imposed by any Governmental Authority on the Borrower or any of its properties
or assets or any part thereof or in respect of any of its franchises,
businesses, income or profits.
“Total
Revolving Credit Committed Amount” means
the lesser of $35,000,000 or the Aggregate Commitments set forth on EXHIBIT
A-3, as
amended from time to time.
“Trademarks” means
and includes in each case whether now existing or hereafter arising, all of the
Borrower’s rights, title and interest in and to (a) any and all trademarks
(including service marks), trade names and trade styles, and applications for
registration thereof and the goodwill of the business symbolized by any of the
foregoing, (b) any and all licenses of trademarks, service marks, trade names
and/or trade styles, whether as licensor or licensee, (c) any renewals of any
and all trademarks, service marks, trade names, trade styles and/or licenses of
any of the foregoing, (d) income, royalties, damages and payments now or
hereafter due and/or payable with respect thereto, including, without
limitation, damages, claims, and payments for past, present and future
infringements thereof, (e) rights to xxx for past, present and future
infringements of any of the foregoing, including the right to settle suits
involving claims and demands for royalties owing, and (f) all rights
corresponding to any of the foregoing throughout the world.
“Uniform
Commercial Code” means,
unless otherwise provided in this Agreement, the Uniform Commercial Code as
adopted by and in effect from time to time in the State or in any other
jurisdiction, as applicable.
“Wholly
Owned Subsidiary” means
any domestic United States corporation all the shares of stock of all classes of
which (other than directors’ qualifying shares) at the time are owned directly
or indirectly by the Borrower and/or by one or more Wholly Owned Subsidiaries of
the Borrower.
“Wind
Down Guaranty” means
that certain conditional guaranty of payment for the benefit of the Lenders
ratably and the Agent dated the date hereof to the Agent from the Personal
Guarantor, as the same may from time to time be amended, restated, supplemented
or otherwise modified.
-24-
Section
1.2 Accounting
Terms and Other Definitional Provisions.
Unless
otherwise defined herein, as used in this Agreement and in any certificate,
report or other document made or delivered pursuant hereto, accounting terms not
otherwise defined herein, and accounting terms only partly defined herein, to
the extent not defined, shall have the respective meanings given to them under
GAAP, as consistently applied to the applicable Person. All terms used herein
which are defined by the Uniform Commercial Code shall have the same meanings as
assigned to them by the Uniform Commercial Code unless and to the extent varied
by this Agreement. The words “hereof”, “herein” and “hereunder” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and article,
section, subsection, schedule and exhibit references are references to articles,
sections or subsections of, or schedules or exhibits to, as the case may be,
this Agreement unless otherwise specified. As used herein, the singular number
shall include the plural, the plural the singular and the use of the masculine,
feminine or neuter gender shall include all genders, as the context may require.
Reference to any one or more of the Financing Documents shall mean the same as
the foregoing may from time to time be amended, restated, substituted, extended,
renewed, supplemented or otherwise modified.
Section
1.3 Interpretive
Provisions.
(a) The term
“writing” shall have its ordinary meaning except that, to limited extent the
Agent in an authenticated record expressly so agrees from time to time in the
exercise of its sole and absolute discretion, the term may also include a record
in a form other than a writing. The terms “sign,” “signed” and signatures” shall
have their ordinary meanings except that, to limited extent the Agent in an
authenticated record expressly agrees otherwise from time to time in the
exercise of its sole and absolute discretion, the terms may also include other
methods used to authenticate.
(b) The
headings in this Agreement are included herein for convenience only, shall not
constitute a part of this Agreement for any other purpose, and shall not be
deemed to affect the meaning or construction of any of the provisions
hereof.
(c) This
Agreement and the other Financing Documents are the result of negotiations among
and have been reviewed by counsel to the Agent, the Lenders, the Borrower and
the other parties, and are the products of all parties. Accordingly, they shall
not be construed against the Lenders or the Agent because of the involvement of
the Agent, the Lenders and their counsel in their preparation.
ARTICLE
II
THE
CREDIT FACILITIES
Section
2.1 The
Revolving Credit Facility.
2.1.1 The
Revolving Loan.
(a) Subject
to and upon the provisions of this Agreement, the Lenders collectively, but
severally, establish during the Revolving Credit Period a revolving credit
facility (sometimes referred to in this Agreement as the “Revolving
Loan”) in
favor of the Borrower in an amount at any one time outstanding not to exceed
such Lender’s Revolving Credit Pro Rata Share of an amount equal to the lesser
of (i) the Total Revolving Credit Committed Amount or (ii) the Borrowing Base.
Neither the Agent nor any of the Lenders shall be responsible for the Revolving
Credit Commitment of any other Lender, nor will the failure of any Lender to
perform its obligations under its Revolving Credit Commitment in any way relieve
any other Lender from performing its obligations under its Revolving Credit
Commitment.
-25-
(b) Subject
to and upon the provisions of this Agreement, the Borrower may request Advances
during the Revolving Credit Commitment Period in accordance with the provisions
of this Agreement; provided that after giving effect to the Borrower’s request,
the aggregate Revolver Usage would not exceed the lesser of (i) the Total
Revolving Credit Committed Amount or (ii) the Borrowing Base.
(c) Unless
sooner paid, the unpaid Revolving Loan, together with interest accrued and
unpaid thereon, and all other Obligations shall be due and payable in full on
the Revolving Credit Expiration Date.
(d) If at any
time the Revolver Usage exceeds the Total Revolving Credit Committed Amount in
effect from time to time, the Borrower shall pay such excess to the Agent for
the benefit of the Lender ON DEMAND.
2.1.2 Requests
for Advances.
(a) The
Borrower may borrow under the Revolving Credit Facility on any Business Day
Revolving Credit Commitment Period. Not later than 10:00 a.m. (Baltimore City
Time) on the date of the requested borrowing, the Borrower shall give the Agent
written notice (a “Loan
Notice”) which
may be by fax of the amount and (if requested by the Agent) the purpose of the
requested borrowing. Any oral Loan Notice shall be confirmed in writing by the
Borrower within three (3) Business Days after the making of the requested
Advance. Each Loan Notice shall be irrevocable. Advances under the Revolving
Loan shall be deposited to a demand deposit account of the Borrower with the
Lender or shall be otherwise applied as directed by the Borrower, which
direction the Lender may require to be in writing, except that controlled
disbursement Advances shall be deposited to a demand deposit account of the
Borrower with the Agent or shall be otherwise applied as directed by the
Borrower, which direction the Agent may require to be in writing.
(b) In
addition, the Borrower hereby irrevocably authorizes the Lenders at any time and
from time to time, without further request from or notice to the Borrower, to
make Advances, and irrevocably authorizes the Agent to establish, without
duplication, Reserves against the Borrowing Base, that the Agent, in its sole
and absolute discretion, deems necessary or appropriate to protect the interests
of the Agent and/or any or all of the Lenders under this Agreement, including,
without limitation, Advances and Reserves to cover debit balances in the
Revolving Loan Account, principal of and interest on any Loan, Bank Products,
Revolver Usage, Enforcement Costs and the other Obligations, all of the
foregoing whether prior to, on, or after the termination of other advances under
this Agreement, and regardless of whether the outstanding principal amount of
the Revolving Loan that the Lenders may advance or the Agent may reserve
hereunder exceeds the Total Revolving Credit Committed Amount or the Borrowing
Base; provided, however, with respect to Bank Products consisting of credit
cards, credit card processing services, debit cards, or purchase cards, no such
Advances and Reserves shall be made or imposed unless (i) the Borrower so
agrees, (ii) the Agent has given the Borrower no less than ten (10) days’ prior
notice of the Agent’s intent to do so, or (iii) an Event of Default has
occurred.
-26-
(c) The Agent
may elect to process the Advances under the Agent’s First Investment Loan
Manager program, or other automated sweep program in effect at the Agent from
time to time, to facilitate automatic the Advances to cover items drawn under a
designated demand deposit account of the Borrower with the Agent. The Borrower
shall enter into the Agent’s standard agreements and instruments (which may
include promissory notes) in connection such program promptly upon the Agent’s
request from time to time. The Agent may cease funding under and use of that
program at any time upon notice to the Borrower.
2.1.3 Computation
of Borrowing Base.
(a) As used
in this Agreement, the term “Borrowing Base” means at any time, an amount equal
to the aggregate of eighty-five percent (85%) of the amount of Eligible
Receivables (subject to the adjustments provided in Section
2.1.3(b) less Premium
Related Liabilities).
(b) The
Borrowing Base shall be computed based on the Borrowing Base Report required by
Section
2.1.5
(Borrowing Base Report) most recently delivered to and accepted by the Agent in
its sole and absolute discretion. In the event the Borrower fails to furnish a
Borrowing Base Report, or in the event the Agent believes that a Borrowing Base
Report is no longer accurate, the Agent may, in its sole and absolute discretion
exercised from time to time and without limiting other rights and remedies under
this Agreement, direct the Lenders to suspend the making of or limit Advances.
The Borrowing Base shall be subject to reduction by the amount of Reserves
applicable from time to time, by amounts credited to the Collateral Account
since the date of the most recent Borrowing Base Report and by the amount of any
Receivable or that was included in the Borrowing Base but that the Agent
determines fails to meet the respective criteria applicable from time to time
for Eligible Receivables.
(c) Without
implying any limitation on the Agent’s discretion with respect to the Borrowing
Base, the criteria for Eligible Receivables contained in the respective
definitions of Eligible Receivables are in part based upon the business
operations of the Borrower existing on or about the Closing Date and upon
information and records furnished to the Agent by the Borrower. If at any time
or from time to time hereafter, the business operations of the Borrower change
or such information and records furnished to the Agent is incorrect or
misleading, the Agent in its discretion, may at any time and from time to time
during the duration of this Agreement change such criteria or add new criteria.
The Agent may communicate such changed or additional criteria to the Borrower
from time to time either orally or in writing.
(d) If at any
time the Revolver Usage exceeds the Borrowing Base, a borrowing base deficiency
(“Borrowing
Base Deficiency”) shall
exist. Each time a Borrowing Base Deficiency exists, the Borrower at the sole
and absolute discretion of the Agent exercised from time to time shall pay the
Borrowing Base Deficiency ON DEMAND to the Agent for the benefit of the
Lenders.
-27-
2.1.4 Agent’s
Election.
Promptly
after receipt of a request or authorization for an Advance pursuant to
Section
2.1.2
(Requests For Advances), Agent shall elect, in its discretion, the one of the
alternatives for funding set forth in Section
2.5 (Funding
of Advances).
2.1.5 Borrowing
Base Report.
The
Borrower will furnish to the Agent no less frequently than weekly and at such
other times as may be requested by the Agent or any of the Lenders a report of
the Borrowing Base (each a “Borrowing Base Report”; collectively, the “Borrowing
Base Reports”) in the form required from time to time by the Agent,
appropriately completed and duly signed. The Borrowing Base Report shall contain
the amount and payments on the Receivables and the calculations of the Borrowing
Base, all in such detail, and accompanied by such supporting and other
information, as the Agent may from time to time request. Upon the Agent’s
request and upon the creation of any Receivables, or at such intervals as the
Agent may require, the Borrower will provide the Agent with statements and such
further schedules, documents and/or information regarding the Receivables as the
Agent may reasonably require. The items to be provided under this subsection
shall be in form satisfactory to the Agent, and certified as true and correct by
a Responsible Officer (or by any other officers or employees of the Borrower
whom a Responsible Officer from time to time authorizes in writing to do so),
and delivered to the Agent from time to time solely for the Agent’s convenience
in maintaining records of the Collateral. The Borrower’s failure to deliver any
of such items to the Agent shall not affect, terminate, modify, or otherwise
limit the Liens of the Agent and the Lenders in the Collateral.
2.1.6 Revolving
Credit Notes.
The
obligation of the Borrower to pay each Lender’s Pro Rata Share of the Revolving
Loan, with interest, shall be evidenced by a series of promissory notes (as from
time to time extended, amended, restated, supplemented or otherwise modified,
collectively the “Revolving
Credit Notes”; and
individually a “Revolving
Credit Note”)
substantially in the form of EXHIBIT A-1 attached hereto and made a part hereof,
with appropriate insertions. Each Lender’s Revolving Credit Note shall be dated
as of the Closing Date, shall be payable to the order of such Lender at the
times provided in the Revolving Credit Notes, and shall be in the principal
amount of such Lender’s Revolving Credit Committed Amount. The Borrower
acknowledges and agrees that, if the outstanding principal balance of the
Revolving Loan outstanding from time to time exceeds the aggregate face amount
of the Revolving Credit Notes, the excess shall bear interest at the rate or
rates provided from time to time for Advances evidenced by the Revolving Credit
Notes and shall be payable, with accrued interest, ON DEMAND. The Revolving
Credit Notes shall not operate as a novation of any of the Obligations or
nullify, discharge, or release any such Obligations or the continuing
contractual relationship of the parties hereto in accordance with the provisions
of this Agreement.
2.1.7 Mandatory
Prepayments of Revolving Loan.
The
Borrower shall make the mandatory prepayments (each a “Revolving
Loan Mandatory Prepayment” and
collectively, the “Revolving
Loan Mandatory Prepayments”) of the
Revolving Loan at any time and from time to time in such amounts requested by
the Agent pursuant to Section
2.1.3
(Borrowing Base) in order to cover any Borrowing Base Deficiency, provided,
under the circumstances set forth in Section
2.1.13 (Early
Termination Fee), the Early Termination Fee may be due and payable.
-28-
2.1.8 Optional
Prepayments of Revolving Loan.
The
Borrower shall have the option at any time and from time to time to prepay (each
a “Revolving
Loan Optional Prepayment” and
collectively the “Revolving
Loan Optional Prepayments”) the
Revolving Loan, in whole or in part without premium or penalty; provided, under
the circumstances set forth in Section
2.1.13 (Early
Termination Fee), the Early Termination Fee may be due and payable.
2.1.9 Optional
Reduction of Revolving Credit Committed Amount.
The
Borrower shall have the right to reduce permanently (each a “Revolving Credit
Optional Reduction” and collectively the “Revolving Credit Optional Reductions”)
the Revolving Credit Committed Amount in effect from time to time in the amount
of any integral multiple of One Million Dollars ($1,000,000), upon at least ten
(10) Business Days prior written notice to the Lender specifying the date and
amount of such Revolving Credit Optional Reduction; provided, that no Revolving
Credit Optional Reduction shall be permitted if, after giving effect thereto and
to any Revolving Loan Optional Prepayment made on the effective date thereof,
either (a) the then Revolver Usage exceeds the Revolving Credit Committed Amount
as so reduced or (b) the Revolving Credit Committed Amount after such reduction
would be less than Twenty-five Million Dollars ($25,000,000). Such notice shall
be irrevocable as to the amount and date of such Revolving Credit Optional
Reduction. After each such Revolving Credit Optional Reduction, the Revolving
Credit Unused Line Fee provided for in Section
2.1.12
(Revolving Credit Unused Line Fee) and the Early Termination Fee provided for in
Section
2.1.13 (Early
Termination Fee) shall be calculated with respect to the Revolving Credit
Committed Amount as so reduced.
2.1.10 Collateral
Account.
The
Borrower will deposit, or cause to be deposited, all Items of Payment to a bank
account designated by the Agent and from which the Agent alone has power of
access and withdrawal (the “Collateral
Account”) styled
“Manufacturers and Traders Trust Company, assignee of Payments Inc.” or other
styling acceptable to the Agent. Each deposit shall be made not later than the
next Business Day after the date of receipt of the Items of Payment. The Items
of Payment shall be deposited in precisely the form received, except for the
endorsements of the Borrower where necessary to permit the collection of any
such Items of Payment, which endorsement the Borrower hereby agrees to make. In
the event the Borrower fails to do so, the Borrower hereby authorizes the Agent
to make the endorsement in the name of the Borrower. Prior to such a deposit,
the Borrower will not commingle any Items of Payment with any of the Borrower’s
other funds or property, but will hold them separate and apart in trust and for
the account of the Agent for the benefit of the Lenders ratably and the
Agent.
In
addition, if so directed by the Agent, the Borrower shall direct the mailing of
all Items of Payment from its Account Debtors to one or more post-office boxes
designated by the Agent (or, with the Agent’s consent, designated by the
Servicer), or to such other additional or replacement post-office boxes pursuant
to the request of the Agent from time to time (collectively, the “Lockbox”). The
Agent shall have unrestricted and exclusive access to the Lockbox.
-29-
The
Borrower hereby authorizes the Agent to inspect all Items of Payment, endorse
all Items of Payment in the name of the Borrower, and deposit such Items of
Payment in the Collateral Account. The Agent reserves the right, exercised in
its sole and absolute discretion from time to time, to provide to the Collateral
Account credit prior to final collection of an Item of Payment and to disallow
credit for any Item of Payment that is unsatisfactory to the Agent. In the event
Items of Payment are returned to the Agent for any reason whatsoever, the Agent
may, in the exercise of its discretion from time to time, forward such Items of
Payment a second time. Any returned Items of Payment shall be charged back to
the Collateral Account, the Revolving Loan Account, or other account, as
appropriate.
Upon the
Agent’s receipt of collected funds from the Collateral Account in Baltimore,
Maryland, the Agent will credit the collected funds to the Obligations arising
under this Agreement or under the Note (or following an Event of Default, any of
the Obligations), the order and method of such application to be in the sole
discretion of the Agent.
2.1.11 Revolving
Loan Account.
The Agent
will establish and maintain a loan account on its books (the “Revolving
Loan Account”) to
which the Agent will (a) debit (i) the
principal amount of each Advance made by the Lenders hereunder as of the date
made, (ii) the amount of any interest accrued on the Revolving Loan as and when
due, and (iii) any other amounts due and payable by the Borrower to the Agent
and/or the Lenders from time to time under the provisions of this Agreement in
connection with the Revolving Loan, including, without limitation, Enforcement
Costs, Fees, late charges, and service, collection and audit fees, as and when
due and payable, and (b) credit all
payments made by the Borrower to the Agent on account of the Revolving Loan as
of the date made including, without limitation, funds credited to the Revolving
Loan Account from the Collateral Account. The Agent may debit the Revolving Loan
Account for the amount of any Item of Payment that is returned to the Agent
unpaid. All credit entries to the Revolving Loan Account are conditional and
shall be readjusted as of the date made if final and indefeasible payment is not
received by the Agent in cash or solvent credits. Any and all periodic or other
statements or reconciliations, and the information contained in those statements
or reconciliations, of the Revolving Loan Account shall be final, binding and
conclusive upon the Borrower in all respects, absent manifest error, unless the
Agent receives specific written objection thereto from the Borrower within
thirty (30) Business Days after such statement or reconciliation shall have been
sent by the Agent.
2.1.12 Revolving
Credit Unused Line Fee.
The
Borrower shall pay to the Agent for the ratable benefit of the Lenders a monthly
revolving credit facility fee (collectively, the “Revolving
Credit Unused Line Fees” and
individually, a “Revolving
Credit Unused Line Fee”) in an
amount equal to one-quarter of one percent (0.25%) per annum of the average
daily unused and undisbursed portion of the Total Revolving Credit Committed
Amount in effect from time to time accruing during each month. The accrued and
unpaid portion of the Revolving Credit Unused Line Fee shall be paid by the
Borrower to the Agent on the first day of each month, commencing on the first
such date following the date hereof, and on the Revolving Credit Termination
Date.
-30-
2.1.13 Early
Termination Fee.
In the
event of the termination of the Revolving Credit Commitment by, or on behalf of,
the Borrower, the Borrower shall pay a fee (the “Early
Termination Fee”) equal
to following amount at the following times:
|
Period
|
Early
Termination Fee
|
|
Closing
Date through and including the first anniversary of the Closing
Date
|
2.0%
of the Revolving Credit Committed Amount
|
|
Commencing
after the first anniversary of the Closing Date up to and including the
second anniversary of the Closing Date
|
1.0%
of the Revolving Credit Committed Amount
|
|
Thereafter
|
0.0%
|
Termination
of the Revolving Credit Commitment in whole or in part following and as a result
of the institution of any bankruptcy proceeding by or against the Borrower,
shall be deemed to be a termination of the Revolving Credit Commitment subject
to the Early Termination Fee provided in this subsection. The Early Termination
Fee shall be paid to the Agent for the ratable benefit of the
Lenders.
Section
2.2 Certain
Interest and Fee Provisions.
2.2.1 Payment
of Interest.
Unpaid
and accrued interest on the Loans shall be paid monthly, in arrears, on the
first day of each calendar month, commencing on the first such date after the
date of this Agreement, and on the first day of each calendar month thereafter,
and at maturity (whether by acceleration, declaration, extension or
otherwise).
2.2.2 Arrangement
Fee.
The
Borrowers shall pay the Arrangement Fee to the Agent for the sole and exclusive
benefit of the Agent on or before the Closing Date, which Arrangement Fee shall
be fully earned and nonrefundable upon payment and shall be a part of the
Agent’s Obligations.
2.2.3 Monitoring
Fees.
The
Borrower shall pay to the Agent for the sole and exclusive benefit of the Agent
on the Closing Date and on the first day of each month thereafter until the
Obligations have been paid in full and the Revolving Credit Commitment has been
terminated, a loan administration fee (collectively, the “Monitoring Fees”) in
the amount of Two Thousand Five Hundred Dollars ($2,500), which shall be fully
earned when due and non-refundable.
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2.2.4 Computation
of Interest and Fees.
All
applicable Fees and interest shall be calculated on the basis of a year of 360
days for the actual number of days elapsed. Any change in the interest rate on
any of the Obligations resulting from a change in the Prime Rate shall become
effective as of the opening of business on the day on which such change in the
Prime Rate is announced.
2.2.5 Maximum
Interest Rate.
In no
event shall any interest rate provided for hereunder exceed the maximum rate
permissible for corporate borrowers under applicable law for loans of the type
provided for hereunder (the “Maximum
Rate”). If,
in any month, any interest rate, absent such limitation, would have exceeded the
Maximum Rate, then the interest rate for that month shall be the Maximum Rate,
and, if in future months, that interest rate would otherwise be less than the
Maximum Rate, then that interest rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the amount of interest
that would have been paid if the same had not been limited by the Maximum Rate.
In the event that, upon payment in full of the Obligations, the total amount of
interest paid or accrued under the terms of this Agreement is less than the
total amount of interest that would, but for this Section, have been paid or
accrued if the interest rates otherwise set forth in this Agreement had at all
times been in effect, then the Borrower shall, to the extent permitted by
applicable law, pay the Agent for the ratable benefit of the Lenders, an amount
equal to the excess of (a) the lesser of (i) the amount of interest that would
have been charged if the Maximum Rate had, at all times, been in effect or (ii)
the amount of interest that would have accrued had the interest rates otherwise
set forth in this Agreement, at all times, been in effect over (b) the amount of
interest actually paid or accrued under this Agreement. In the event that a
court determines that the Lenders have received interest and other charges
hereunder in excess of the Maximum Rate, such excess shall be deemed received on
account of, and shall automatically be applied to reduce, the Obligations other
than interest, in the inverse order of maturity, and if there are no Obligations
outstanding, the Lenders shall refund to the Borrower such excess.
2.2.6 Liens;
Setoff
The
Borrower hereby grants to the Agent and to the Lenders a continuing Lien for all
of the Obligations (including, without limitation, the Agent’s Obligations) upon
any and all monies, securities, and other property of the Borrower and the
proceeds thereof, now or hereafter held or received by or in transit to, the
Agent, any of the Lenders, and/or any Affiliate of the Agent and/or any of the
Lenders, from or for the Borrower, and also upon any and all deposit accounts
(general or special) and credits of the Borrower, if any, with the Agent, any of
the Lenders or any Affiliate of the Agent or any of the Lenders, at any time
existing, excluding any deposit accounts held by the Borrower in its capacity as
trustee for Persons who are not the Borrower or Affiliates of the Borrower.
Without implying any limitation on any other rights the Agent and/or the Lenders
may have under the Financing Documents or applicable Laws, during the
continuance of an Event of Default, the Agent and the each of the Lenders,
respectively, are hereby authorized by the Borrower at any time and from time to
time, without notice to the Borrower, to set off, appropriate and apply any or
all items hereinabove referred to against all Obligations (including, without
limitation, the Agent’s Obligations) then outstanding (whether or not then due),
all in such order and manner as shall be determined by the Agent in its sole and
absolute discretion; except that no Lender shall exercise any such right without
the prior written consent of the Agent. Any Lender exercising a right to set off
shall purchase for cash (and the other Lenders shall sell) interests in each of
such other Lender’s Pro Rata Share of the Obligations as would be necessary to
cause all Lenders to share the amount so set off with each other Lender in
accordance with their respective Pro Rata Shares. The Borrower agrees, to the
fullest extent permitted by law, that any Lender may exercise its right to set
off with respect to amounts in excess of its Pro Rata Share of the Obligations
and upon doing so shall deliver such amount so set off to the Agent for the
benefit of all Lenders in accordance with their Pro Rata Shares.
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2.2.7 Requirements
of Law.
In the
event that any Lender shall have determined in good faith that (a) the adoption
of any Capital Adequacy Regulation, or (b) any change in any Capital Adequacy
Regulation or in the interpretation or application thereof or (c) compliance by
such Lender or any corporation controlling 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, does or shall have the effect
of reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender, as a consequence of the obligations of such Lender
hereunder to a level below that which such Lender or any corporation controlling
such Lender would have achieved but for such adoption, change or compliance
(taking into consideration the policies of such Lender and the corporation
controlling such Lender, with respect to capital adequacy) by an amount deemed
by such Lender to be material, then from time to time, after submission by such
Lender to the Borrower of a written request therefor and a statement of the
basis for such determination, the Borrower shall pay to such Lender such
additional amount or amounts in order to compensate for such
reduction.
Section
2.3 Interest.
2.3.1 Applicable
Interest Rate.
(a) Each Loan
shall bear interest until paid at either the Base Rate or the LIBOR Rate, as
selected and specified by the Borrower in an Interest Rate Election Notice
furnished to the Lender in accordance with the provisions of Section
2.3.2(e), or as
otherwise determined in accordance with the provisions of this ARTICLE I, and as
may be adjusted from time to time in accordance with the provisions of
Section
2.3.3
(Inability to Determine LIBOR Base Rate).
(b) Notwithstanding
the foregoing, following the occurrence and during the continuance of an Event
of Default, at the option of the Agent, all Loans and all other Obligations
until paid shall bear interest at the Post-Default Rate.
(c) The
Applicable Margin for (i) LIBOR Loans shall be two hundred fifty (250) basis
points per annum, and (ii) Base Rate Loans shall be zero (0) basis points per
annum unless and until a change is required by the operation of Section
2.3.1(d).
(d) Changes
in the Applicable Margin for LIBOR Loans only shall be made not more frequently
than quarterly based on the average Excess Availability for the preceding fiscal
quarter, determined by the Agent in the exercise of its sole and absolute
discretion, except that the first such determination shall be made based on the
Borrower’s fiscal quarter ending September 30, 2005 and shall be effective as of
the first day of the first month after the quarter of determination. The
Applicable Margin (expressed as basis points) shall vary depending upon the
Borrower’s Excess Availability, as follows:
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|
Excess
Availability
|
Applicable
Margin for LIBOR Loans (expressed as basis points)
|
|
Less
than $3,500,000
|
250
|
|
Greater
than or equal to $3,500,000 but less than $4,500,000
|
225
|
|
Greater
than or equal to $4,500,000
|
200
|
2.3.2 Selection
of Interest Rates.
(a) The
Borrower may select the initial Applicable Interest Rate or Applicable Interest
Rates to be charged on the Loans.
(b) From time
to time after the date of this Agreement as provided in this Section, by a
proper and timely Interest Rate Election Notice furnished to the Agent in
accordance with the provisions of Section
2.3.2(e), the
Borrower may select an initial Applicable Interest Rate or Applicable Interest
Rates for any Loans or may convert the Applicable Interest Rate and, when
applicable, the Interest Period, for any existing Loan to any other Applicable
Interest Rate or, when applicable, any other Interest Period.
(c) The
Borrower’s selection of an Applicable Interest Rate and/or an Interest Period,
the Borrower’s election to convert an Applicable Interest Rate and/or an
Interest Period to another Applicable Interest Rate or Interest Period, and any
other adjustments in an interest rate are subject to the following
limitations:
(i) the
Borrower shall not at any time select or change to an Interest Period that
extends beyond the Revolving Credit Expiration Date;
(ii) except as
otherwise provided in Section
2.3.4
(Indemnity), no change from the LIBOR Rate to the Base Rate shall become
effective on a day other than a Business Day and on a day which is the last day
of the then current Interest Period, no change of an Interest Period shall
become effective on a day other than the last day of the then current Interest
Period, and no change from the Base Rate to the LIBOR Rate shall become
effective on a day other than a day which is a LIBOR Business Day;
(iii) any
Applicable Interest Rate change for any Loan to be effective on a date on which
any principal payment on account of such Loan is scheduled to be paid shall be
made only after such payment shall have been made;
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(iv) no more
than three (3) different LIBOR Rates may be outstanding at any time and from
time to time with respect to the Revolving Loan;
(v) the first
day of each Interest Period shall be a LIBOR Business Day;
(vi) as of the
effective date of a selection, there shall not exist an Event of Default;
and
(vii) the
minimum principal amount of a LIBOR Loan shall be Two Million Dollars
($2,000,000), plus integral increments of One Hundred Thousand Dollars
($100,000).
(d) If a
request for an advance under the Loans is not accompanied by an Interest Rate
Election Notice or does not otherwise include a selection of an Applicable
Interest Rate and, if applicable, an Interest Period, or if, after having made a
selection of an Applicable Interest Rate and, if applicable, an Interest Period,
the Borrower fails or is not otherwise entitled under the provisions of this
Agreement to continue such Applicable Interest Rate or Interest Period, the
Borrower shall be deemed to have selected the Base Rate as the Applicable
Interest Rate until such time as the Borrower has selected a different
Applicable Interest Rate and specified an Interest Period in accordance with,
and subject to, the provisions of this Section.
(e) The
Lenders will not be obligated to make Loans, to convert the Applicable Interest
Rate on Loans to another Applicable Interest Rate, or to change Interest
Periods, unless the Agent shall have received an irrevocable written or
telephonic notice (an “Interest
Rate Election Notice”) from
the Borrower specifying the following information:
(i) the
amount to be borrowed or converted;
(ii) a
selection of the Base Rate or the LIBOR Rate;
(iii) the
length of the Interest Period if the Applicable Interest Rate selected is the
LIBOR Rate; and
(iv) the
requested date on which such election is to be effective.
Any
telephonic notice must be confirmed in writing within three (3) Business Days.
Each Interest Rate Election Notice must be received by the Agent not later than
10:00 a.m. (Baltimore City time) on the Business Day of any requested borrowing
or conversion in the case of a selection of the Base Rate and not later than
10:00 a.m. (Baltimore City time) on the third Business Day before the effective
date of any requested borrowing or conversion in the case of a selection of the
LIBOR Rate.
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2.3.3 Inability
to Determine LIBOR Base Rate.
In the
event that (a) the Agent shall have determined that, by reason of circumstances
affecting the London interbank eurodollar market, adequate and reasonable means
do not exist for ascertaining the LIBOR Base Rate for any requested Interest
Period with respect to a Loan the Borrower have requested to be made as or to be
converted to a LIBOR Loan or (b) the Agent shall determine that the LIBOR Base
Rate for any requested Interest Period with respect to a Loan the Borrower have
requested to be made as or to be converted to a LIBOR Loan does not adequately
and fairly reflect the cost to the Lenders of funding or converting such Loan,
the Agent shall give telephonic or written notice of such determination to the
Borrower at least one (1) day prior to the proposed date for funding or
converting such Loan. If such notice is given, any request for a LIBOR Loan
shall be made as or converted to a Base Rate Loan. Until such notice has been
withdrawn by the Agent the Borrower will not request that any Loan be made as or
converted to a LIBOR Loan.
2.3.4 Indemnity.
The
Borrower agree to indemnify and reimburse the Agent and the Lenders and to hold
the Agent and the Lenders harmless from any loss, cost (including administrative
costs) or expense which any one or more of the Agent or the Lenders may sustain
or incur as a consequence of (a) a default by the Borrower in payment when due
of the principal amount of or interest on any LIBOR Loan, (b) the failure of the
Borrower to make, or convert the Applicable Interest Rate of, a Loan after the
Borrower has given a Loan Notice or an Interest Rate Election Notice, (c) the
failure of the Borrower to make any prepayment of a LIBOR Loan after the
Borrower have given notice of such intention to make such a prepayment, and/or
(d) the making by the Borrower of a prepayment of a LIBOR Loan on a day which is
not the last day of the Interest Period for such LIBOR Loan, calculated as
provided in the following paragraph including, without limitation, any such loss
or expense arising from the reemployment of funds obtained by the Lenders to
maintain any LIBOR Loan or from fees payable to terminate the deposits from
which such funds were obtained. This agreement and covenant of the Borrower
shall survive termination or expiration of this Agreement and payment of the
other Obligations.
2.3.5 Payment
of Interest.
(a) Unpaid
and accrued interest on any portion of the Loans which consists of a Base Rate
Loan shall be paid monthly, in arrears, on the first day of each calendar month,
commencing on the first such date after the date of this Agreement, and on the
first day of each calendar month thereafter, and at maturity (whether by
acceleration, declaration, extension or otherwise).
(b) Notwithstanding
the foregoing, any and all unpaid and accrued interest on any Base Rate Loan
converted to a LIBOR Loan or prepaid shall be paid immediately upon such
conversion and/or prepayment, as appropriate.
(c) Unpaid
and accrued interest on any LIBOR Loan shall be paid on the last Business Day of
each Interest Period for such LIBOR Loan, at maturity (whether by acceleration,
declaration, extension or otherwise), and, in the case of an Interest Period of
six (6) months, every three (3) months; provided, however that any and all
unpaid and accrued interest on any LIBOR Loan prepaid prior to expiration of the
then current Interest Period for such LIBOR Loan shall be paid immediately upon
prepayment.
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Section
2.4 General
Financing Provisions.
2.4.1 Borrower’s
Representatives.
The
Borrower hereby irrevocably authorizes each of the Lenders to make Loans
pursuant to the provisions of this Agreement upon the written, oral or telephone
request of any one or more of the Persons who is from time to time a Responsible
Officer of the Borrower under the provisions of the most recent certificate of
corporate resolutions and/or incumbency of the Borrower on file with the Agent.
Neither the Agent nor any of the Lenders assumes any responsibility or liability
for any errors, mistakes, and/or discrepancies in the oral, telephonic, written
or other transmissions of any instructions, orders, requests and confirmations
between the Agent and the Borrower or the Agent and any of the Lenders in
connection with the Credit Facilities, any Loan, any other Revolver Usage or any
other transaction in connection with the provisions of this
Agreement.
2.4.2 Use of
Proceeds of the Loans.
The
proceeds of each advance under the Loans shall be used by the Borrower for
Permitted Uses, and for no other purposes except as may otherwise be agreed by
the Lenders in writing. The Borrower shall use the proceeds of the Loans
promptly.
2.4.3 Payments
by Borrower.
(a) All
payments of the Obligations, including, without limitation, principal, interest,
Prepayments, and Fees, shall be paid by the Borrower without setoff or
counterclaim to the Agent (except as otherwise provided herein) at the Agent’s
office specified in Section
9.1
(Notices) in immediately available funds not later than 12 p.m. noon (Baltimore
City Time) on the due date of such payment. All payments received by the Agent
after such time shall be deemed to have been received by the Agent for purposes
of computing interest and Fees and otherwise as of the next Business Day.
Payments shall not be considered received by the Agent until such payments are
paid to the Agent in immediately available funds.
(b) Unless
the Agent shall have received notice from the Borrower prior to the date on
which any payment is due to the Agent that the Borrower will not make such
payment in full, the Agent may assume that the Borrower has made such payment in
full to the Agent on such date and the Agent in its sole discretion may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the Agent and
the Agent shall have distributed to any Lender all or any portion of such
amount, such Lender shall repay to the Agent on demand the amount so distributed
to such Lender, together with interest thereon at the Federal Funds Rate for the
first three (3) days from and after the date such amount is distributed to such
Lender and thereafter at the Base Rate applicable to the Revolving Loans, until
the date such Lender repays such amount to the Agent.
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2.4.4 Bank
Products.
The
Borrower may request, and the Agent or its affiliates may, in their sole and
absolute discretion, provide, Bank Products although the Borrower is not
required to do so. In the event the Borrower requests Agent and/or its
affiliates to procure or provide Bank Products, then the Borrower agrees with
the Agent and/or such affiliates, as applicable, to pay when due all
indebtedness, liabilities and obligations with respect to Bank Products and
further agrees to indemnify and hold the Agent and/or such affiliates harmless
from any and all indebtedness, liabilities, obligations, losses, costs and
expenses (including, without limitation, reasonable attorneys fees) now or
hereafter owing to or incurred by the Agent (including, without limitation,
those under agreements of indemnifications or assurances provided by the Agent
to its affiliates) and/or its affiliates with respect to Bank Products, all as
the same may arise. In the event the Borrower shall not have paid to the Agent
and/or its affiliates such amounts, the Agent may cover such amounts by an
advance under the Revolving Loan, which advance shall be deemed to have been
requested by the Borrower. The Borrower acknowledges and agrees that (a) all
indebtedness, liabilities and obligations with respect to Bank Products provided
by the Agent or its affiliates, and all of its agreements under this Section,
are part of the Obligations secured by the Collateral, and (b) the obtaining of
Bank Products from the Agent or its affiliates (i) is in the sole and absolute
discretion of the Agent or its affiliates and (ii) is subject to all rules and
regulations of the Agent or its affiliates.
Section
2.5 Funding
of Advances.
2.5.1 Advances
by Lenders.
Unless
the Agent elects, in the exercise of its discretion from time to time, to have
one of the other provisions of this Section
2.5 (Funding
of Advances) apply, upon the Agent’s receipt of a Loan Notice, the Agent shall
promptly notify each Lender of the amount of each Advance to be made by such
Lender on the requested borrowing date under such Lender’s Revolving Credit
Commitment. Not later than 1:00 p.m. (Baltimore City Time) on each requested
borrowing date for the making of Advances, each Lender shall, if it has received
timely notice from the Agent of the Borrower’s request for such Advances, make
available to the Agent, in funds immediately available to the Agent at the
Agent’s office set forth in Section
9.1
(Notices), such Lender’s Revolving Credit Pro Rata Share of the Advances to be
made on such date.
2.5.2 M&T
Advances.
Between
Settlement Dates, the Agent may request and M&T may (but shall not be
obligated to) advance to the Borrower out of M&T’s own funds, the entire
principal amount of any Advance requested or deemed requested pursuant to
Section
2.1.2
(Procedure for Making Advances Under the Revolving Loan) (any such Advance being
referred to as a “M&T
Loan”). The
making of each M&T Loan by M&T shall be deemed to be a purchase by
M&T of a 100% participation in each other Lender’s Revolving Credit Pro Rata
Share of the amount of such M&T Loan. All payments of principal, interest
and any other amount with respect to such M&T Loan shall be payable to and
received by the Agent for the account of M&T. Upon demand by M&T, with
notice to the Agent, each other Lender shall pay to M&T, as the repurchase
of such participation, an amount equal to 100% of such Lender’s Revolving Credit
Pro Rata Share of the principal amount of such M&T Loan. Any payments
received by the Agent between Settlement Dates that in accordance with the terms
of this Agreement are to be applied to the reduction of the outstanding
principal balance of Revolving Loan, shall be paid over to and retained by
M&T for such application, and such payment to and retention by M&T shall
be deemed, to the extent of each other Lender’s Revolving Credit Pro Rata Share
of such payment, to be a purchase by each such other Lender of a participation
in the Advance (including the repurchase of participations in M&T Loans)
made by M&T. Upon demand by another Lender, with notice thereof to the
Agent, M&T shall pay to the Agent, for the account of such other Lender, as
a repurchase of such participation, an amount equal to such other Lender’s
Revolving Credit Pro Rata Share of any such amounts (after application thereof
to the repurchase of any participations of M&T in such other Lender’s
Revolving Credit Pro Rata Share of any M&T Loans) paid only to M&T by
the Agent.
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2.5.3 Agent
Advances.
(a) Subject
to the limitations set forth in the provisos contained in this Section
2.5.3, the
Agent is hereby authorized by the Lenders and the Borrower, from time to time in
the Agent’s sole discretion, (i) after the occurrence of a Default or an Event
of Default or (ii) at any time that any of the other applicable conditions
precedent set forth in ARTICLE
V
(Conditions Precedent) have not been satisfied, to make Advances to the Borrower
on behalf of the Lenders that the Agent, in its reasonable business judgment,
deems necessary or desirable (A) to preserve or protect the Collateral, or
any portion thereof, (B) to enhance the likelihood of, or maximize the
amount of, repayment of the Loans and other Obligations, or (C) to pay any
other amount chargeable to the Borrower pursuant to the terms of this Agreement,
including, without limitation, Enforcement Costs (any of the Advances described
in this Section
2.5.3 being
hereinafter referred to as “Agent
Advances”);
provided, that the Required Lenders may at any time revoke the Agent’s
authorization contained in this Section
2.5.3 to
make Agent Advances, any such revocation to be in writing and to become
effective prospectively upon the Agent’s receipt thereof; and provided further,
that the Agent shall not make Agent Advances above that would cause the Revolver
Usage otherwise permitted to be outstanding under this Agreement to exceed the
lesser of the Total Revolving Credit Committed Amount or the Borrowing Base.
Nothing in this Section
2.5.3 shall
imply any limitation on the obligations of the Borrower to pay the Obligations
including, without limitation, Enforcement Costs or on the obligations of the
Lenders under Section
9.19
(Indemnification).
(b) The Agent
Advances shall be repayable on demand and secured by the Collateral, shall
constitute Advances and Obligations, and shall bear interest at the rate
applicable to the Revolving Loan from time to time. The Agent shall notify each
Lender in writing of each such Agent Advance.
2.5.4 Overadvances.
(a) Any
contrary provision of this Agreement notwithstanding, the Lenders hereby
authorize the Agent or M&T, as applicable, and the Agent or M&T, as
applicable, may, but is not obligated to, knowingly and intentionally, continue
to make Advances (including, without limitation, M&T Loans) to the Borrower
notwithstanding that an Overadvance exists or thereby would be created, so long
as (i) after giving effect to such Advances (including, without limitation,
M&T Loans), the aggregate outstanding principal balance of the Revolving
Loans does not exceed the amount of the Borrowing Base by more than 10% at the
time the Overadvance is made, (ii) after giving effect to such Advances
(including, without limitation, M&T Loans) the aggregate outstanding
principal balance of the Revolving Loans does not exceed the Total Revolving
Credit Committed Amount, and (iii) at the time of the making of any such Advance
(including, without limitation, M&T Loans), the Agent does not believe, in
good faith, that the Overadvance created by such Advance will be outstanding for
more than ninety (90) days. The foregoing provisions are for the exclusive
benefit of the Agent, M&T, and the Lenders and are not intended to benefit
the Borrower in any way. The Advances and M&T Loans, as applicable, that are
made pursuant to this Section
2.5.4 shall be
subject to the same terms and conditions as any other Advance or M&T Loan,
as applicable, except that they shall be Base Rate Loans.
-39-
(b) In the
event the Agent obtains actual knowledge that the Revolver Usage exceeds the
amounts permitted by the preceding paragraph, regardless of the amount of, or
reason for, such excess, the Agent shall notify Lenders as soon as practicable
(and prior to making any (or any additional) intentional Overadvances (except
for and excluding amounts charged to the Revolving Loan Account for interest,
fees, or Enforcement Costs) unless the Agent determines that prior notice would
result in imminent harm to the Collateral or its value), and the Lenders
thereupon shall, together with the Agent, jointly determine the terms of
arrangements that shall be implemented with the Borrower and intended to reduce,
within a reasonable time, the outstanding principal amount of the Advances to
the Borrower to an amount permitted by the preceding paragraph. In the event the
Agent or any Lender disagrees over the terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof shall be implemented
according to the determination of the Required Lenders.
(c) Each
Lender shall be obligated to settle with the Agent as provided in Section
2.6.1
(Revolving Loan Settlement) for the amount of such Lender’s Revolving Credit Pro
Rata Share of any unintentional Overadvances by the Agent reported to such
Lender, any intentional Overadvances made as permitted under this 2.5.4, and any
Overadvances resulting from the charging to the Revolving Loan Account of
interest, fees, Enforcement Costs or other amounts permitted by this
Agreement.
Section
2.6 Settlement
Among Lenders.
2.6.1 Revolving
Loan
Settlement.
It is
agreed that each Lender’s funded portion of the Advances are intended by the
Lenders to be equal at all times to such Lender’s Pro Rata Share of the
aggregate outstanding principal amount of the Revolving Loan outstanding.
Notwithstanding such agreement, the several and not joint obligation of each
Lender to fund the Revolving Loan made in accordance with the terms of this
Agreement ratably in accordance with such Lender’s Pro Rata Share and each
Lender’s right to receive its ratable share of principal payments on the
Revolving Loan in accordance with its Pro Rata Share, the Lenders agree (which
agreement shall not be for the benefit of or enforceable by the Borrower) that
in order to facilitate the administration of this Agreement and the Financing
Documents that settlement among them may take place on a periodic basis in
accordance with the provisions of this Section
2.6.1.
(a) Selection
of Settlement Dates. If the Agent elects, in its discretion, but subject to the
consent of M&T, to settle accounts (“Settlement”) among
the Lenders with respect to principal amounts of Revolving Loan less frequently
than each Business Day, then the Agent shall designate periodic Settlement Dates
that may occur on any Business Day after the Closing Date; provided, however,
that the Agent shall designate as a Settlement Date any Business Day that is an
Interest Payment Date; and provided further, that a Settlement Date shall occur
at least once each week. The Agent shall designate a Settlement Date by
delivering to each Lender a Settlement Report not later than 12:00 noon
(Baltimore City Time) on the proposed Settlement Date, which Settlement Report
shall be with respect to the period beginning on the immediately preceding
Settlement Date and ending on such
designated Settlement Date.
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(b) In
General. To the extent and in the manner hereinafter provided in this
Section
2.6.1,
Settlement among the Lenders as to the Revolving Loan may occur periodically on
Settlement Dates determined from time to time by the Agent. Settlements may
occur before or after the occurrence or during the continuance of a Default or
Event of Default and whether or not all of the conditions set forth in
Section
5.2
(Conditions to All Extensions of Credit) have been met. On each Settlement Date
payments shall be made by or to M&T, Agent and the other Lenders in
accordance with the Settlement Report delivered by the Agent pursuant to the
provisions of this Section
2.6.1 in
respect of such Settlement Date so that as of each Settlement Date, and after
giving effect to the transactions to take place on such Settlement Date, each
Lender’s funded portion of the Advances shall equal such Lender’s Pro Rata Share
of the Revolving Loan outstanding.
(c) Interim
Collections. Between Settlement Dates, the Agent, to the extent no Agent
Advances or M&T Loans are outstanding, may pay over to M&T any payments
received by the Agent, which in accordance with the terms of this Agreement
would be applied to the reduction of the Revolving Loans, for application to
M&T’s other outstanding Revolving Loans. If, as of any Settlement Date,
collections received since the then immediately preceding Settlement Date have
been applied to M&T’s other outstanding Revolving Loans other than to
M&T Loans or Agent Advances, as provided for in the previous sentence,
M&T shall pay to the Agent for the accounts of the Lenders, to be applied to
the outstanding Revolving Loans of such Lenders, an amount such that each Lender
shall, upon receipt of such amount, have, as of such Settlement Date, its Pro
Rata Share of the Revolving Loans. During the period between Settlement Dates,
M&T with respect to M&T Loans, the Agent with respect to Agent Advances,
and each Lender with respect to the Revolving Loans other than M&T Loans and
Agent Advances, shall be entitled to interest at the applicable rate or rates
payable under this Agreement on the actual average daily amount of funds
employed by M&T, the Agent and the other Lenders.
(d) Return
Payments. If any amounts received by M&T in respect of the Obligations are
later required to be returned or repaid by M&T to the Borrower or any other
obligor or their respective representatives or successors in interest, whether
by court order, settlement or otherwise, in excess of the M&T’s Pro Rata
Share of all such amounts required to be returned by all Lenders, each other
Lender shall, upon demand by M&T with notice to the Agent, pay to the Agent
for the account of M&T, an amount equal to the excess of such Lender’s Pro
Rata Share of all such amounts required to be returned by all Lenders over the
amount, if any, returned directly by such Lender.
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(e) Payment
by Lender. Payment by any Lender to the Agent shall be made not later than 2:00
p.m. (Baltimore City Time) on the Business Day such payment is due, provided
that if such payment is due on demand by another Lender, such demand is made on
the paying Lender not later than 12:00 p.m. noon (Baltimore City Time) on such
Business Day. Payment by the Agent to any Lender shall be made by wire transfer,
promptly following the Agent’s receipt of funds for the account of such Lender
and in the type of funds received by the Agent, provided that if the Agent
receives such funds at or prior to 12:00 p.m. noon (Baltimore City Time), the
Agent shall pay such funds to such Lender on such Business Day. If a demand for
payment is made after the applicable time set forth above, the payment due shall
be made on the first Business Day following the date of such
demand.
2.6.2 Settlement
of Other Obligations.
All other
amounts received by the Agent on account of, or applied by the Agent to the
payment of, any Obligation owed to the Lenders (including, without limitation,
Fees payable to the Lenders and proceeds from the sale of, or other realization
upon, all or any part of the Collateral following an Event of Default) that are
received by the Agent not later than 11:00 a.m. (Baltimore City Time) on a
Business Day will be paid by the Agent to each Lender on the same Business Day,
and any such amounts that are received by the Agent after 11:00 a.m. (Baltimore
City Time) will be paid by the Agent to each Lender on the following Business
Day. Unless otherwise stated herein, the Agent shall distribute Fees payable to
the Lenders ratably to the Lenders based on each Lender’s Revolving Credit Pro
Rata Share and shall distribute proceeds from the sale of, or other realization
upon, all or any part of the Collateral following an Event of Default ratably to
the Lenders based on the amount of the Obligations then owing to each
Lender.
2.6.3 Presumption
of Payment.
(a) Unless
the Agent shall have received notice from a Lender prior to 12:00 p.m. noon
(Baltimore City Time) on the date of the requested date for the making of
Advances that such Lender will not make available to the Agent, such Lender’s
Revolving Credit Pro Rata Share of the Advances to be made on such date, the
Agent may assume that such Lender has made such amount available to the Agent on
such date in accordance with this Section
2.6.3
(Presumption of Payment), and the Agent, in its sole discretion may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount on behalf of such Lender.
(b) If and to
the extent such Lender shall not have so made available to the Agent its
Revolving Credit Pro Rata Share of the Advances made on such date, and the Agent
shall have so made available to the Borrower a corresponding amount on behalf of
such Lender, such Lender shall, on demand, pay to the Agent such corresponding
amount, together with interest thereon, at the Federal Funds Rate for the first
three (3) days from and after the date such corresponding amount shall have been
so available by the Agent to the Borrower and thereafter at the Base Rate
applicable to the Revolving Loans, until the date such amount shall have been
repaid to the Agent. Such Lender shall not be entitled to payment of any
interest that accrues on the amount made available by the Agent to the Borrower
for the account of such Lender until such time as such Lender reimburses the
Agent for such amount, together with interest thereon, as provided in this
Section
2.6.3. The
failure of any Lender to make any Advance shall not relieve any other Lender of
any obligation hereunder to make an Advance, but no Lender shall be responsible
for the failure of any other Lender to make the Advance.
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(c) A
certificate of the Agent submitted to any Lender with respect to any amounts
owing to the Agent by such Lender under this Section
2.6.3 shall be
conclusive and binding on such Lender, absent manifest error. If such Lender
does not pay such amounts to the Agent promptly upon the Agent’s demand, the
Agent shall promptly notify the Borrower of such Lender’s failure to make
payment, and the Borrower shall immediately repay such amounts to the Agent,
together with accrued interest thereon at the applicable rate on the Revolving
Loan, all without prejudice to the rights and remedies of the Agent against any
defaulting Lender. Any and all amounts due and payable to the Agent by the
Borrower under this Section
2.6.3
constitute and shall be part of the Agent’s Obligations.
(d) The
Agent shall not be obligated to transfer to a Defaulting Lender any payments
made by the Borrower to the Agent. In such event, the Agent may, but shall not
be required to, retain payments that would otherwise be made to such Lender
hereunder, apply such payments to such Lender’s defaulted obligations hereunder,
transfer any such payments to each other non-Defaulting Lenders ratably in
accordance with their Commitments (but only to the extent that such Defaulting
Lender’s Advance was funded by the other Lenders), hold and re-lend to the
Borrower for the account of such Defaulting Lender the amount of all such
payments received and retained by it for the account of such Defaulting Lender,
and take such other action as the Agent may deem to be appropriate, all at such
time, and in such order, as the Agent may elect in its sole discretion exercised
from time to time. Solely for the purposes of voting or consenting to matters
with respect to the Financing Documents, such Defaulting Lender shall be deemed
not to be a “Lender” and
such Lender’s Commitment shall be deemed to be zero. This Section shall remain
effective with respect to such Lender until (x) the Obligations under this
Agreement shall have been declared or shall have become immediately due and
payable, (y) the non-Defaulting Lenders, the Agent, and the Borrower shall have
waived such Defaulting Lender’s default in writing, or (z) the Defaulting Lender
makes its Revolving Credit Pro Rata Share of the applicable Advance and pays to
the Agent all amounts owing by Defaulting Lender in respect thereof. The
operation of this Section
2.6.3
(Presumption of Payment) shall not be construed to increase or otherwise affect
the Commitment of any Lender, to relieve or excuse the performance by such
Defaulting Lender or any other Lender of its duties and obligations hereunder,
or to relieve or excuse the performance by the Borrower of its duties and
obligations hereunder to the Agent or to the Lenders other than such Defaulting
Lender. Any such failure to fund by any Defaulting Lender shall constitute a
material breach by such Defaulting Lender of this Agreement and shall entitle
the Borrower at its option, upon written notice to the Agent, to arrange for a
substitute Lender to assume the Commitment of such Defaulting Lender, such
substitute Lender to be acceptable to the Agent. In connection with the
arrangement of such a substitute Lender, the Defaulting Lender shall have no
right to refuse to be replaced hereunder, and agrees to execute and deliver a
completed form of Assignment and Acceptance Agreement in favor of the substitute
Lender (and agrees that it shall be deemed to have executed and delivered such
document if it fails to do so) subject only to being repaid its share of the
outstanding Obligations without any premium or penalty of any kind whatsoever;
provided further, however, that any such assumption of the Commitment of such
Defaulting Lender shall not be deemed to constitute a waiver of any of the
Agent’s, other Lenders’ or the Borrower’s rights or remedies against any such
Defaulting Lender arising out of or in relation to such failure to
fund.
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ARTICLE
III
THE
COLLATERAL
Section
3.1 Debt
and Obligations Secured.
All
property and Liens assigned, pledged or otherwise granted under or in connection
with this Agreement (including, without limitation, those under Section
3.2 (Grant
of Liens)) or any of the Financing Documents shall secure (a) the payment of all
of the Obligations, including, without limitation, all Revolver Usage and any
and all Agent’s Obligations, and (b) the performance, compliance with and
observance by the Borrower of the provisions of this Agreement and all of the
other Financing Documents or otherwise under the Obligations. The security
interest and Lien of each Lender in such property shall rank equally in priority
with the interest of each other Lender, but the security interest and Lien of
the Agent with respect to the Agent’s Obligations shall be superior and
paramount to the security interest and Lien of the Lenders.
Section
3.2 Grant
of Liens.
The
Borrower hereby assigns, pledges and grants to the Agent, for the ratable
benefit of the Lenders and for the benefit of the Agent with respect to the
Agent’s Obligations, and agrees that the Agent and the Lenders shall have a
perfected and continuing security interest in, and Lien on the following
property of the Borrower, all whether now owned or existing or hereafter
acquired or arising wherever situated: all of the Borrower’s Receivables,
inventory, chattel paper, documents, instruments, Equipment, investment
property, and General Intangibles; all of the Borrower’s deposit accounts with
any financial institution with which the Borrower maintains deposits; all
insurance policies covering the foregoing and the right to receive refunds of
unearned insurance premiums under those policies; all books and records in
whatever media (paper, electronic or otherwise) recorded or stored, with respect
to the foregoing and all Equipment and General Intangibles necessary or
beneficial to retain, access and/or process the information contained in those
books and records; all of the personal property of the Borrower, whether now
owned or existing or hereafter acquired or created; and, and all of the
Borrower’s other personal property of any kind or nature whatsoever, and all
cash proceeds and noncash proceeds and products of the foregoing. The Borrower
further agrees that the Agent, for the ratable benefit of the Lenders and for
the benefit of the Agent with respect to the Agent’s Obligations, shall have in
respect thereof all of the rights and remedies of a secured party under the
Uniform Commercial Code as well as those provided in this Agreement, under each
of the other Financing Documents and under applicable Laws.
Section
3.3 Perfection
Certificate.
On or
prior to the Closing Date, the Borrower shall deliver to the Agent a certificate
in substantially the form attached to this Agreement as EXHIBIT B (the
“Perfection
Certificate”) which
shall contain such information with respect to the Borrower’s business and real
and personal property as the Agent may require and shall be certified by a
Responsible Officer of the Borrower, all in the form provided to the Borrower by
the Agent and as revised in connection with Compliance Certificates from time to
time.
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Section
3.4 Personal
Property.
The
Borrower acknowledges and agrees that it is the intention of the parties to this
Agreement that the Agent, for the ratable benefit of the Lenders and for the
benefit of the Agent with respect to the Agent’s Obligations, shall have a first
priority, perfected Lien, in form and substance satisfactory to the Agent and
its counsel, on all of the Borrower’s personal property of any kind and nature
whatsoever, whether now owned or hereafter acquired, subject only to the
Permitted Liens, if any. In furtherance of the foregoing:
3.4.1 Promissory
Notes, etc.
Subject
to the provisions of subsection (b) below, on the Closing Date and without
implying any limitation on the scope of Section
3.2 (Grant
of Liens), the Borrower shall deliver to the Agent (or the Servicer, to the
extent so provided in the Servicing Agreement Assignment) all originals of all
of Premium Finance Agreements, the Borrower’s letters of credit, instruments and
other Collateral that may be perfected by possession and, if the Agent so
requires, shall execute and deliver a separate pledge, assignment and security
agreement in form and content acceptable to the Agent, which pledge, assignment
and security agreement shall assign, pledge and xxxxx x Xxxx to the Agent on all
of the Borrower’s letters of credit, instruments and possessory Collateral. In
the event that the Borrower shall acquire after the Closing Date any letters of
credit or instruments and other possessory Collateral, the Borrower shall
promptly so notify the Agent and deliver the originals of all of the foregoing
to the Agent promptly and in any event within ten (10) days of each acquisition.
All letters of credit, instruments and other possessory Collateral shall be
delivered to the Agent endorsed and/or assigned as required by the pledge,
assignment and security agreement and/or as the Agent may require and, if
applicable, shall be accompanied by blank irrevocable and unconditional stock or
bond powers.
3.4.2
Patents. Copyrights and Other Property Requiring Additional Steps to
Perfect.
On the
Closing Date and without implying any limitation on the scope of Section
3.2 (Grant
of Liens), the Borrower shall execute and deliver all Financing Documents and on
or after the Closing Date, as applicable, the Borrower take all actions
requested by the Agent in order to perfect a first priority assignment of
Patents, Copyrights, Trademarks, customer lists or any other type or kind of
intellectual property acquired by the Borrower after the Closing
Date.
Section
3.5 Record
Searches.
As of the
Closing Date and thereafter at the time any Financing Document is executed and
delivered by the Borrower pursuant to this Section, the Agent shall have
received, in form and substance satisfactory to the Agent, such Lien or record
searches with respect to all of the Borrower and/or any other Person, as
appropriate, and the property covered by such Financing Document showing that
the Lien of such Financing Document will be a perfected first priority Lien on
the property covered by such Financing Document subject only to Permitted Liens
or to such other matters as the Agent may approve.
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Section
3.6 Real
Property.
The
Borrower acknowledges and agrees that it is the intention of the parties to this
Agreement that the Agent, for the ratable benefit of the Lenders and for the
benefit of the Agent with respect to the Agent’s Obligations, shall have a first
priority, perfected Lien, in form and substance satisfactory to the Agent and
its counsel, on all of the Borrower’s real property of any kind and nature
whatsoever, whether now owned or hereafter acquired, subject only to the
Permitted Liens, if any, although the Borrower at this time owns no real
property. In furtherance of the foregoing:
With
respect to real property acquired by the Borrower after the Closing Date, the
Borrower shall, promptly after acquisition thereof, xxxxx x Xxxx covering such
real property to the Agent, for the ratable benefit of the Lenders and for the
benefit of the Agent with respect to the Agent’s Obligations, under the
provisions of a mortgage, deed of trust or other document, as appropriate. Each
Financing Document to be executed and delivered pursuant hereto
shall:
(a) be in
form and substance satisfactory to the Agent;
(b) create a
first priority Lien in such real property in favor of the Agent, for the ratable
benefit of the Lenders and for the benefit of the Agent with respect to the
Agent’s Obligations, subject only to Permitted Liens, zoning ordinances, and
such other matters as the Agent may approve;
(c) be
accompanied by a current appraisal of the fair market value of the subject real
property prepared by appraisers satisfactory to the Agent;
(d) be
accompanied by a current survey satisfactory in all respects to the Agent of the
subject real property, prepared by a registered land surveyor or engineer
satisfactory to the Agent;
(e) be
accompanied by evidence satisfactory to the Agent regarding the current and past
pollution control practices at such real property in connection with the
discharge, emission, handling, disposal or existence of Hazardous Materials,
which may include, at the Agent’s request, an environmental audit of such real
property prepared by a person or firm acceptable to the Agent;
(f) be
accompanied by a mortgagee’s title insurance policy or marked-up unconditional
commitment or binder for such insurance in form and substance satisfactory to
the Agent and issued by a title insurance company satisfactory to the Agent;
and
(g) upon
request of the Agent, be accompanied by a signed opinion of counsel addressed to
the Agent and each of the Lenders, in form and substance satisfactory to the
Agent, and from counsel, satisfactory to the Agent, licensed to practice in the
state where the subject real property is located.
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Section
3.7 Costs.
The
Borrower agrees to pay, as part of the Enforcement Costs and to the fullest
extent permitted by applicable Laws, on demand all costs, fees and expenses
incurred by the Agent and/or any of the Lenders in connection with the taking,
perfection, preservation, protection and/or release of a Lien on the Collateral,
including, without limitation:
(a) fees and
expenses incurred by the Agent and/or any of the Lenders in preparing,
reviewing, negotiating and finalizing the Financing Documents from time to time
(including, without limitation, reasonable attorneys’ fees incurred in
connection with preparing, reviewing, negotiating, and finalizing any of the
Financing Documents, including, any amendments and supplements
thereto);
(b) all
filing and/or recording taxes or fees;
(c) all title
insurance premiums and costs;
(d) all costs
of Lien and record searches;
(e) reasonable
attorneys’ fees in connection with all legal opinions required;
(f) appraisal
and/or survey costs; and
(g) all
related costs, fees and expenses.
Section
3.8 Release.
Upon the
indefeasible repayment in full in cash of the Obligations and performance of all
Obligations of the Borrower and all obligations and liabilities of each other
Person, other than the Agent and the Lenders, under this Agreement and all other
Financing Documents, the termination and/or expiration of all of the
Commitments, upon the Borrower’s request and at the Borrower’s sole cost and
expense, the Agent shall release and/or terminate any Financing Document but
only if and provided that there is no commitment or obligation (whether or not
conditional) of the Agent and/or any of the Lenders to re-advance amounts that
would be secured thereby.
Section
3.9 Inconsistent
Provisions.
In the
event that the provisions of any Financing Document directly conflict with any
provision of this Agreement, the provisions of this Agreement
govern.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
Section
4.1 Representations
and Warranties.
The
Borrower represents and warrants to the Agent and the Lenders, as
follows:
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4.1.1 Subsidiaries.
The
Borrower has no
Subsidiaries except as noted on the Perfection Certificate. Each of the
Subsidiaries is a Wholly Owned Subsidiary except as shown on the Perfection
Certificate, which correctly indicates the nature and amount of the Borrower’s
ownership interests therein. Each of the Subsidiaries (a) is a corporation duly
organized, existing and in good standing under the laws of the jurisdiction of
its incorporation, (b) has the corporate power to own its property and to carry
on its business as now being conducted, and (c) is duly qualified to do business
and is in good standing in each jurisdiction in which the character of the
properties owned by it therein or in which the transaction of its business makes
such qualification necessary..
4.1.2 Good
Standing.
The
Borrower (a) is a corporation duly organized, existing and in good standing
under the laws of the jurisdiction of its incorporation stated in the Perfection
Certificate and in no other jurisdiction, (b) has the corporate power to own its
property and to carry on its business as now being conducted, and (c) is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the properties owned by it therein or in which the transaction
of its business makes such qualification necessary.
4.1.3 Power
and Authority.
The
Borrower has full corporate power and authority to execute and deliver this
Agreement, and the other Financing Documents to which it is a party, to make the
borrowings under this Agreement and to incur and perform the Obligations whether
under this Agreement, the other Financing Documents or otherwise, all of which
have been duly authorized by all proper and necessary corporate action. No
consent or approval of shareholders or any creditors of the Borrower, and no
consent, approval, filing or registration with or notice to any Governmental
Authority on the part of the Borrower, is required as a condition to the
execution, delivery, validity or enforceability of this Agreement the other
Financing Documents, or the performance by the Borrower of the
Obligations.
4.1.4 Binding
Agreements.
This
Agreement and the other Financing Documents executed and delivered by the
Borrower have been properly executed and delivered and constitute the valid and
legally binding obligations of the Borrower and are fully enforceable against
the Borrower in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties, and general
principles of equity regardless of whether applied in a proceeding in equity or
at law.
4.1.5 No
Conflicts.
Neither
the execution, delivery and performance of the terms of this Agreement or of any
of the other Financing Documents executed and delivered by the Borrower nor the
consummation of the transactions contemplated by this Agreement will conflict
with, violate or be prevented by (a) the Borrower’s charter or bylaws, (b) any
existing mortgage, indenture, contract or agreement binding on the Borrower or
affecting its property, or (c) any Laws.
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4.1.6 No
Defaults, Violations.
(a) No
Default or Event of Default has occurred and is continuing.
(b) Neither
the Borrower nor any of its Subsidiaries is in default under or with respect to
any obligation under any existing mortgage, indenture, contract or agreement
binding on it or affecting its property in any respect that could have a
Material Adverse Effect.
4.1.7 Compliance
with Laws.
Neither
the Borrower nor any of its Subsidiaries is in violation of any applicable Laws
(including, without limitation, any Laws relating to employment practices, to
environmental, occupational and health standards and controls) or order, writ,
injunction, decree or demand of any court, arbitrator, or any Governmental
Authority affecting the Borrower or any of its properties, the violation of
which, considered in the aggregate, could have a Material Adverse
Effect.
4.1.8 Margin
Stock.
None of
the proceeds of the Loans will be used, directly or indirectly, by the Borrower
or any Subsidiary for the purpose of purchasing or carrying, or for the purpose
of reducing or retiring any indebtedness that was originally incurred to
purchase or carry, any “margin stock” within the meaning of Regulation U (12 CFR
Part 221), of the Board of Governors of the Federal Reserve System or for any
other purpose that might make the transactions contemplated in this Agreement a
“purpose credit” within the meaning of Regulation U, or cause this Agreement to
violate any other regulation of the Board of Governors of the Federal Reserve
System or the Securities Exchange Act of 1934 or the Small Business Investment
Act of 1958, as amended, or any rules or regulations promulgated under any of
such statutes.
4.1.9 Investment
Company Act; Margin Securities.
Neither
the Borrower nor any of its Subsidiaries is an investment company within the
meaning of the Investment Company Act of 1940, as amended, nor is it, directly
or indirectly, controlled by or acting on behalf of any Person which is an
investment company within the meaning of said Act. Neither the Borrower nor any
of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying “margin stock” within the meaning of Regulation U (12 CFR Part 221), of
the Board of Governors of the Federal Reserve System.
4.1.10 Litigation.
Except as
otherwise disclosed on Schedule
4.1.10 attached
hereto and made a part hereof, there are no proceedings, actions or
investigations pending or, so far as the Borrower knows, threatened before or by
any court, arbitrator or any Governmental Authority that, in any one case or in
the aggregate, if determined adversely to the interests of the Borrower or any
Subsidiary, could reasonably be expected to have a Material Adverse Effect on
the Borrower.
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4.1.11 Financial
Condition.
The
financial statements of the Parent dated September 30, 2004, are complete and
correct and fairly present the financial position of the Parent and its
Subsidiaries and the results of its operations and transactions in its surplus
accounts as of the date and for the period referred to and have been prepared in
accordance with GAAP applied on a consistent basis throughout the period
involved. The financial statements of the Borrower dated October 31, 2004, are
complete and correct and fairly present the financial position of the Borrower
and the results of its operations and transactions in its surplus accounts.
There are no liabilities, direct or indirect, fixed or contingent, of the Parent
or its Subsidiaries or the Borrower as of the date of such financial statements
that are not reflected therein or in the notes thereto. There has been no
adverse change in the financial condition or operations of the Parent or its
Subsidiaries or the Borrower since the date of such financial statements and to
the Borrower’s knowledge no such adverse change is pending or threatened.
Neither the Parent nor any of its Subsidiaries nor the Borrower has guaranteed
the obligations of, or made any investment in or advances to, any Person, except
as disclosed in such financial statements.
4.1.12 Full
Disclosure.
The
financial statements referred to in Section
4.1.11
(Financial Condition) of this Agreement, the Financing Documents (including,
without limitation, this Agreement), and the statements, reports or certificates
furnished by the Borrower in connection with the Financing Documents (a) do not
contain any untrue statement of a material fact and (b) when taken in their
entirety, do not omit any material fact necessary to make the statements
contained therein not misleading. There is no fact known to the Borrower that
the Borrower has not disclosed to the Agent and the Lenders in writing prior to
the date of this Agreement with respect to the transactions contemplated by the
Financing Documents that materially and adversely affects or in the future
could, in the reasonable opinion of the Borrower materially adversely affect the
condition, financial or otherwise, results of operations, business, or assets of
the Borrower or of any Subsidiary.
4.1.13 Indebtedness
for Borrowed Money.
Except
for the Obligations and except as set forth in Schedule
4.1.13 attached
hereto and made a part hereof, the Borrower has no Indebtedness for Borrowed
Money. The Agent has received photocopies of all promissory notes evidencing any
Indebtedness for Borrowed Money set forth in Schedule
4.1.13,
together with any and all subordination agreements, other agreements, documents,
or instruments securing, evidencing, guarantying or otherwise executed and
delivered in connection therewith.
4.1.14 Parent
Subordinated Debt.
None of
the Parent Subordinated Debt Documents has been amended, supplemented, restated
or otherwise modified except as otherwise disclosed to the Agent and the Lenders
in writing on or before the effective date of any such amendment, supplement,
restatement or other modification. In addition, there does not exist any default
or any event that upon notice or lapse of time or both would constitute a
default under the terms of any of the Parent Subordinated Debt
Documents.
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4.1.15 Taxes.
Each of
the Borrower and its Subsidiaries has filed all returns, reports and forms for
Taxes that, to the knowledge of the Borrower, are required to be filed, and has
paid all Taxes as shown on such returns or on any assessment received by it, to
the extent that such Taxes have become due, unless and to the extent only that
such Taxes, assessments and governmental charges are currently contested in good
faith and by appropriate proceedings by the Borrower, such Taxes are not the
subject of any Liens other than Permitted Liens, and adequate reserves therefor
have been established as required under GAAP. All tax liabilities of the
Borrower were as of the date of audited financial statements referred to in
Section
4.1.11
(Financial Condition), and are now, adequately provided for on the books of the
Borrower or its Subsidiaries, as appropriate. No tax liability has been asserted
by the Internal Revenue Service or any state or local authority against the
Borrower for Taxes in excess of those already paid.
4.1.16 ERISA.
With
respect to any Plan that is maintained or contributed to by the Borrower and/or
by any ERISA Affiliate or as to which the Borrower retains material liability:
(a) no “accumulated funding deficiency” as defined in Code §412 or ERISA §302
has occurred, whether or not that accumulated funding deficiency has been
waived; (b) no Reportable Event has occurred other than events for which
reporting has been waived or that are unlikely to result in material liability
for the Borrower; (c) no termination of any plan subject to Title IV of ERISA
has occurred; (d) neither the Borrower nor any ERISA Affiliate has incurred a
“complete withdrawal” within the meaning of ERISA §4203 from any Multi-employer
Plan that is likely to result in material liability for the Borrower; (e)
neither the Borrower nor any ERISA Affiliate has incurred a “partial withdrawal”
within the meaning of ERISA §4205 with respect to any Multi-employer Plan that
is likely to result in material liability for the Borrower; (f) no
Multi-employer Plan to which the Borrower or any ERISA Affiliate has an
obligation to contribute is to the knowledge of the Borrower, in
“reorganization” within the meaning of ERISA §4241 nor has notice been received
by the Borrower or any ERISA Affiliate that such a Multi-employer Plan will be
placed in “reorganization”.
4.1.17 Title
to Properties.
The
Borrower has good and marketable title to all of its properties, including,
without limitation, the Collateral and the properties and assets reflected in
the balance sheets described in Section
4.1.11
(Financial Condition). The Borrower has legal, enforceable and uncontested
rights to use freely such property and assets. All of such properties
(including, without limitation, the Collateral) that were purchased, were
purchased for fair consideration and reasonably equivalent value in the ordinary
course of business of both the seller and the Borrower and not, by way of
example only, as part of a bulk sale.
4.1.18 Patents,
Trademarks, Etc.
Each of
the Borrower or its Subsidiaries owns, possesses, or has the right to use all
necessary Patents, licenses, Trademarks, Copyrights, permits and franchises to
own its properties and to conduct its business as now conducted, without known
conflict with the rights of any other Person. Any and all obligations to pay
royalties or other charges with respect to such properties and assets are
properly reflected on the financial statements described in Section
4.1.11
(Financial Condition).
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4.1.19 Premium
Finance Licenses.
(a) The
Borrower holds all Premium Finance Licenses and all other licenses, permits,
approvals and authorizations required in connection with the conduct of its
present and proposed business. All such Premium Finance Licenses and the like
are (and shall remain) valid and in full force and effect.
(b) EXHIBIT G
sets forth a complete list and description of all Premium Finance Licenses
required for the conduct of the Borrower’s business in the normal course. Each
such Premium Finance License is validly issued and in full force and effect, and
constitutes all of the authorization necessary for the operation of the
Borrower’s business in the normal course. Complete and correct copies of the
Premium Finance Licenses have been delivered to the Agent. No event has occurred
which (i) permits, or after notice or lapse of time or both would permit,
revocation, lapse or termination of any Premium Finance Licenses, or (ii)
materially and adversely affects, or in the future would materially and
adversely affect, any of the rights of the Borrower thereunder. No other
license, permit, approval, authorization or franchise is required for the
operation of the Borrower’s business. The Borrower has no reason to believe nor
any knowledge that the Premium Finance Licenses listed and described on EXHIBIT
G will not be renewed in the ordinary course. The Borrower has filed or will
timely file all reports, applications, documents, instruments, and information
required to be filed by it pursuant to applicable rules and regulations or
requests of every regulatory body having jurisdiction over any of the Premium
Finance Licenses.
4.1.20 Employee
Relations.
Except as
disclosed on Schedule
4.1.20 attached
hereto and made a part hereof, (a) neither the Borrower nor any Subsidiary
thereof nor any of the Borrower’s or Subsidiary’s employees is subject to any
collective bargaining agreement, (b) no petition for certification or union
election is pending with respect to the employees of the Borrower or any
Subsidiary and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of the Borrower, (c)
there are no strikes, slowdowns, work stoppages or controversies pending or, to
the best knowledge of the Borrower after due inquiry, threatened between the
Borrower and its employees, and (d) neither the Borrower nor any of its
Subsidiaries is subject to an employment contract, severance agreement,
commission contract, consulting agreement or bonus agreement. Hours worked and
payments made to the employees of the Borrower have not been in violation of the
Fair Labor Standards Act or any other applicable law dealing with such matters.
All payments due from the Borrower or for which any claim may be made against
the Borrower, on account of wages and employee and retiree health and welfare
insurance and other benefits have been paid or accrued as a liability on its
books. The consummation of the transactions contemplated by this Agreement or
any of the other Financing Documents, will not give rise to a right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which the Borrower is a party or by which it
is bound.
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4.1.21 Presence
of Hazardous Materials or Hazardous Materials Contamination.
To the
best of the Borrower’s knowledge, (a) no Hazardous Materials are located on any
real property owned, controlled or operated by of the Borrower or for which the
Borrower is, or is claimed to be, responsible, except for reasonable quantities
of necessary supplies for use by the Borrower in the ordinary course of its
current line of business and stored, used and disposed in accordance with
applicable Laws; and (b) no property owned, controlled or operated by the
Borrower or for which the Borrower has, or is claimed to have, responsibility
has ever been used as a manufacturing, storage, or dump site for Hazardous
Materials nor is affected by Hazardous Materials Contamination at any other
property.
4.1.22 Perfection
and Priority of Collateral.
The Agent
and the Lenders have, or upon execution and recording of this Agreement and the
Security Documents will have, and will continue to have as security for the
Obligations, a valid and perfected Lien on and security interest in all
Collateral, free of all other Liens, claims and rights of third parties
whatsoever except Permitted Liens, including, without limitation, those
described on Schedule
4.1.22 attached
hereto and made a part hereof.
4.1.23 Places
of Business and Location of Collateral.
The
information contained in the Perfection Certificate is complete and correct. The
Perfection Certificate completely and accurately identifies the address of (a)
the state of organization of the Borrower, (b) the chief executive office of the
Borrower, (c) any and each other place of business of the Borrower, (d) the
location of all books and records pertaining to the Collateral, and (e) each
location, other than the foregoing, where any of the Collateral is located. The
proper and only places to file financing statements with respect to the
Collateral within the meaning of the Uniform Commercial Code are the filing
office for the jurisdiction in which the Borrower is organized and the local
real property filing office for any location at which the Borrower has fixtures,
all as identified on the Perfection Certificate.
4.1.24 Business
Information.
In the
five (5) years preceding the date hereof, the Borrower has not changed its name,
state of organization, identity or organizational structure, has conducted
business under any name other than its current name, and has conducted its
business in any jurisdiction other than those disclosed on the Perfection
Certificate.
4.1.25 Equipment.
All
Equipment is personalty and is not and will not be affixed to real estate in
such manner as to become a fixture or part of such real estate. No equipment is
held by the Borrower on a sale on approval basis.
4.1.26 Receivables.
With
respect to all Receivables and to the best of the Borrower’s knowledge (a) they
are genuine, and in all respects what they purport to be, and are not evidenced
by a judgment, an instrument, or chattel paper (unless such judgment has been
assigned and such instrument or chattel paper has been endorsed and delivered to
the Agent for the benefit of the Lenders ratably and the Agent); (b) they
represent bona fide transactions completed in accordance with the terms and
provisions contained in the invoices, purchase orders and other contracts
relating thereto, and the underlying transaction therefor is in accordance with
all applicable Laws; (c) the amounts shown on the Borrower’s books and records,
with respect thereto are actually and absolutely owing to the Borrower and are
not contingent or subject to reduction for any reason other than regular
discounts, credits or adjustments allowed by the Borrower in the ordinary course
of its business; (d) no payments have been or shall be made thereon except
payments turned over to the Agent by the Borrower; and (e) all Account Debtors
thereon have the capacity to contract.
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4.1.27 Compliance
with Eligibility Standards.
Each
Receivable included in the calculation of the Borrowing Base does and will at
all times meet and comply with all of the standards for Eligible Receivables.
With respect to those Receivable that the Agent has deemed Eligible Receivables
(a) there are no facts, events or occurrences that in any way impair the
validity, collectibility or enforceability thereof or tend to reduce the amount
payable thereunder; and (b) there are no proceedings or actions known to the
Borrower that are threatened or pending against any Account Debtor that might
result in any material adverse change in the Borrowing Base.
4.1.28 Solvency
The
Borrower is Solvent prior to and after giving effect to the making of the
Loans.
Section
4.2 Survival;
Updates of Representations and Warranties.
All
representations and warranties contained in or made under or in connection with
this Agreement and the other Financing Documents shall survive the Closing Date,
the making of any advance under the Loans and extension of credit made
hereunder, and the incurring of any other Obligations and shall be deemed to
have been made at the time of each request for, and again at the time of the
making of, each advance under the Loans and other Revolver Usage, except that
the representations and warranties that relate to the financial statements that
are referred to in Section
4.1.11
(Financial Condition), shall also be deemed to cover financial statements
furnished from time to time to the Agent and the Lenders pursuant to
Section
6.1.1
(Financial Statements).
ARTICLE
V
CONDITIONS
PRECEDENT
Section
5.1 Conditions
to the Initial Advance.
The
making of the initial Advance under the Loan and other Revolver Usage are
subject to the fulfillment of the following conditions precedent in a manner
satisfactory in form and substance to the Agent and its counsel:
5.1.1 Organizational
Documents - Borrower.
The Agent
shall have received with respect to the Borrower:
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(a) a
certificate of good standing certified by the Secretary of State, or other
appropriate Governmental Authority, of the state of incorporation of the
Borrower;
(b) a
certified copy from the appropriate Governmental Authority under which the
Borrower is organized, of the Borrower’s recorded articles of incorporation and
all recorded amendments thereto;
(c) a
certificate of qualification to do business for the Borrower certified by the
Secretary of State or other Governmental Authority of each state in which the
Borrower conducts business;
(d) a
certificate dated as of the Closing Date by the Secretary or an Assistant
Secretary of the Borrower covering:
(i) true and
complete copies of the Borrower’s corporate charter, bylaws, and all amendments
thereto;
(ii) true and
complete copies of the resolutions of its Board of Directors authorizing (A) the
execution, delivery and performance of the Financing Documents to which it is a
party, (B) the borrowings hereunder, and (C) the granting of the Liens
contemplated by this Agreement and the Financing Documents to which the Borrower
is a party;
(iii) the
incumbency, authority and signatures of the officers of the Borrower authorized
to sign this Agreement and the other Financing Documents to which the Borrower
is a party; and
(iv) the
identity of the Borrower’s current directors, common stock holders and other
equity holders, as well as their respective percentage ownership
interests.
5.1.2 Opinion
of Borrower’s Counsel.
The Agent
shall have received the favorable opinion of counsel for the Borrower addressed
to the Agent and the Lenders in form satisfactory to the Agent.
5.1.3 Organizational
Documents - Corporate Guarantor.
The Agent
shall have received with respect to each of the Corporate
Guarantors:
(a) a
certificate of good standing certified by the Secretary of State, or other
appropriate Governmental Authority, of the state of incorporation for the
Corporate Guarantor;
(b) a
certificate of qualification to do business certified by the Secretary of State
or other Governmental Authority of each state in which the Corporate Guarantor
conducts business;
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(c) a
certificate dated as of the Closing Date by the Secretary or an Assistant
Secretary of the Corporate Guarantor covering:
(i) true and
complete copies of the Corporate Guarantor’s corporate charter, bylaws, and all
amendments thereto;
(ii) true and
complete copies of the resolutions of the Board of Directors of the Corporate
Guarantor authorizing the execution, delivery and performance of the Financing
Documents to which the Corporate Guarantor is a party and the granting of the
Liens contemplated by any of the Financing Documents to which the Corporate
Guarantor is a party;
(iii) the
incumbency, authority and signatures of the officers of the Corporate Guarantor
authorized to sign its Corporate Guaranty and all other Financing Documents to
which the Corporate Guarantor is a party;
(iv) the
identity of the Corporate Guarantor’s current directors, common stock holders
and other equity holders, as well as their respective percentage ownership
interests;
(d) the
favorable opinion of counsel for the Corporate Guarantor addressed to the Agent
and the Lenders and in form satisfactory to the Agent.
5.1.4 Consents,
Licenses, Approvals, Etc.
The Agent
shall have received copies of all consents, licenses and approvals, including
all Premium Finance Licenses, required in connection with the execution,
delivery, performance, validity and enforceability of the Financing Documents
and continued operation of the Borrower’s business, and such consents, licenses
and approvals, including the Premium Finance Licenses, shall be in full force
and effect.
5.1.5 Notes.
The Agent
shall have received for delivery to each of the Lenders the Revolving Credit
Notes, each conforming to the requirements hereof and executed by a Responsible
Officer of the Borrower and attested by a duly authorized representative of the
Borrower.
5.1.6 Financing
Documents and Collateral.
The
Borrower shall have executed and delivered the Financing Documents to be
executed by it, and shall have delivered original chattel paper, instruments,
investment property, and related Collateral and all opinions, title insurance,
and other documents contemplated by Article III (The Collateral).
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5.1.7 Other
Financing Documents.
In
addition to the Financing Documents to be delivered by the Borrower, the Agent
shall have received the Financing Documents duly executed and delivered by
Persons other than the Borrower.
5.1.8 Documents,
Etc.
The Agent
shall have received such other certificates, opinions, documents and instruments
confirmatory of or otherwise relating to the transactions contemplated hereby as
may have been reasonably requested by the Agent.
5.1.9 Payment
of Fees.
The Agent
and the Lenders shall have received payment of any Fees due on or before the
Closing Date.
5.1.10 Perfection
Certificate.
The
Borrower shall have delivered the Perfection Certificate required under the
provisions of Section
3.3
(Perfection Certificate) duly executed by a Responsible Officer of the
Borrower.
5.1.11 Recordings
and Filings.
The
Borrower shall have: (a) executed and delivered all Financing Documents
(including, without limitation, UCC-1 and UCC-3 statements) required to be
filed, registered or recorded in order to create, in favor of the Agent and the
Lenders, a perfected Lien in the Collateral (subject only to the Permitted
Liens) in form and in sufficient number for filing, registration, and recording
in each office in each jurisdiction in which such filings, registrations and
recordations are required, and (b) delivered such evidence as the Agent may deem
satisfactory that all necessary filing fees and all recording and other similar
fees, and all Taxes and other expenses related to such filings, registrations
and recordings will be or have been paid in full.
5.1.12 Insurance
Certificate.
The Agent
shall have received an insurance certificate in accordance with the provisions
of Section
6.1.8
(Insurance) and Section
6.1.19
(Insurance With Respect to Equipment).
5.1.13 Bailee
Acknowledgements.
The Agent
shall have received an agreement acknowledging the Liens of the Agent and the
Lenders from each bailee, warehouseman, consignee or similar third party that
has possession of any of the Collateral, which agreements must be reasonably
acceptable to the Agent and its counsel in their sole and absolute
discretion.
5.1.14 Field
Examination.
The Agent
shall have completed a field examination of the Borrower’s business, operations
and income, the results of which field examination shall be in all respects
acceptable to the Agent in its sole and absolute discretion and shall include
reference discussions with key customers and vendors.
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5.1.15 Life
Insurance.
The Agent
shall have received a life insurance policy on the life of Xxxxx X. Xxxxxxxxx
the amount of Four Million Dollars ($4,000,000) issued by an insurance company
and in such form and content satisfactory to the Agent, together with the fully
executed duplicate originals of the Assignment of Life Insurance.
5.1.16 Subordination
Agreement.
The Agent
shall have received the fully executed Subordination Agreement and the Parent
Subordination Agreements in form and content acceptable to the Agent. The Agent
shall have received and approved copies of the fully executed Subordinated Debt
Documents and the Parent Subordinated Debt Documents, all of which must be in
form and content acceptable to the Agent.
5.1.17 Servicing
Agreement; Back-Up Servicing Agent.
The Agent
shall have received true and complete copies of the Servicing Agreement
Documents.
5.1.18 Servicing.
The Agent
shall have received true and complete copies of the Servicing Agreement
Documents and of the Back-Up Servicing Agreement.
Section
5.2 Conditions
to all Extensions of Credit.
The
making of all advances under the Loans is subject to the fulfillment of the
following conditions precedent in a manner satisfactory in form and substance to
the Agent and its counsel:
5.2.1 Compliance.
The
Borrower shall have complied and shall then be in compliance with all terms,
covenants, conditions and provisions of this Agreement and the other Financing
Documents that are binding upon it.
5.2.2 Borrowing
Base.
The
Borrower shall have furnished all Borrowing Base Reports required by
Section
2.1.5
(Collateral Reporting), there shall exist no Borrowing Base Deficiency, and as
evidence thereof, the Borrower shall have furnished to the Agent such reports,
schedules, certificates, records and other papers as may be requested by the
Agent, and the Borrower shall be in compliance with the provisions of this
Agreement both immediately before and immediately after the making of the
Advance requested.
5.2.3 Default.
There
shall exist no Event of Default or Default hereunder.
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5.2.4 Representations
and Warranties.
The
representations and warranties of the Borrower contained among the provisions of
this Agreement shall be true and with the same effect as though such
representations and warranties had been made at the time of the making of, and
of the request for, each advance under the Loans and other Revolver Usage,
except that the representations and warranties that relate to financial
statements which are referred to in Section
4.1.11
(Financial Condition), shall also be deemed to cover financial statements
furnished from time to time to the Agent pursuant to Section
6.1.1
(Financial Statements).
5.2.5 Adverse
Change.
No
adverse change shall have occurred in the condition (financial or otherwise),
operations or business of the Borrower that would, in the good faith judgment of
the Agent, materially impair the ability of the Borrower to pay or perform any
of the Obligations.
5.2.6 Legal
Matters.
All legal
documents incident to each advance under the Loans and other Revolver Usage
shall be reasonably satisfactory to counsel for the Agent.
5.2.7 Consents,
Licenses, Approvals, Etc.
No
Premium Finance Licenses or other consent, license or approval required for the
continued operation of the Borrower’s business, shall have been revoked,
forfeited, terminated, allowed to lapse or otherwise invalidated.
ARTICLE
VI
COVENANTS
OF THE BORROWER
Section
6.1 Affirmative
Covenants.
So long
as any of the Obligations (or any the Commitments therefor) shall be outstanding
hereunder, the Borrower agrees with the Agent and the Lenders as
follows:
6.1.1 Financial
Statements.
The
Borrower shall furnish to the Agent and the Lenders:
(a) Borrower
Information.The
Borrower shall provide the financial reports and information set forth on
EXHIBIT D attached to and a part of this Agreement and such other reports and
information as the Agent may require.
(b) Parent
Annual Statements and Certificates. The Parent shall furnish to the Agent and
each of the Lenders as soon as available, but in no event more than ninety (90)
days after the close of each fiscal year of the Parent, (i) a copy of the annual
financial statement in reasonable detail satisfactory to the Agent relating to
the Parent and its Subsidiaries, prepared in accordance with GAAP and examined
and certified by independent certified public accountants satisfactory to the
Agent, which financial statement shall include a consolidated and consolidating
balance sheet of the Parent and its Subsidiaries as of the end of such fiscal
year and consolidated and consolidating statements of income, cash flows and
changes in shareholders equity of the Parent and its Subsidiaries for such
fiscal year, and (ii) a management letter in the form prepared by the Parent’s
independent certified public accountants.
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(c) Annual
Opinion of Accountant. The Parent shall furnish to the Agent and each of the
Lenders as soon as available, but in no event more than ninety (90) days after
the close of the Parent’s fiscal years, a letter or opinion of the accountant
who examined and certified the annual financial statement relating to the Parent
and its Subsidiaries (i) stating whether anything in such accountant’s
examination has revealed the occurrence of a Default or an Event of Default
hereunder, and, if so, stating the facts with respect thereto and (ii)
acknowledging that the Agent will rely on the statement and that the Parent
knows of the intended reliance by the Agent.
(d) Quarterly
Statements and Certificates. The Parent shall furnish to the Agent and each of
the Lenders as soon as available, but in no event more than forty-five (45) days
after the close of the Parent’s fiscal quarters, consolidated and consolidating
balance sheets of the Parent and its Subsidiaries as of the close of such
period, consolidated and consolidating income, cash flows and changes in
shareholders equity statements for such period, projected cash flow on a month
to month basis and projected income statements, a certification that no change
has occurred to the information contained in the Perfection Certificate (except
as set forth on any schedule attached to the certification), prepared by a
Responsible Officer in a format acceptable to the Agent, all as prepared and
certified by a Responsible Officer and accompanied by a certificate of that
officer stating whether any event has occurred that constitutes a Default or an
Event of Default hereunder, and, if so, stating the facts with respect thereto.
With the foregoing, the Borrower shall provide a Compliance Certificate, in
substantially the form attached to this Agreement as EXHIBIT C.
(e) Annual
Budget and Projections. The Borrower shall furnish to the Agent and each of the
Lenders as soon as available, but in no event later than the 10th day before the
end of each fiscal year a consolidated and consolidating budget and pro forma
financial statements on a month-to-month basis for the following fiscal year.
(f) Personal
Guarantor. The Borrower shall furnish to the Agent and each of the Lenders as
soon as possible (i) but in no event more than March 31st of each year,
financial statements of the Personal Guarantor certified as true and complete by
the Personal Guarantor and in form and substance satisfactory to the Agent, and
(ii) but in no event later than ten (10) days after the filing each year, a copy
of the Personal Guarantor’s income tax returns and all schedules and other
submissions therewith.
(g) Perfection
Certificates. Promptly after request by the Agent from time to time and no later
than thirty (30) days prior to any material change to information contained on
the Perfection Certificate, the Borrower shall furnish to the Agent an update of
the information contained in the Perfection Certificate.
(h) Additional
Reports and Information. The Borrower shall furnish, or cause to be furnished,
to the Agent promptly, such additional information, reports or statements with
respect to the Borrower and/or any one or more of the Corporate Guarantors as
the Agent and/or any of the Lenders may from time to time reasonably
request.
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6.1.2 Reports
to SEC and to Stockholders.
The
Borrower will furnish to the Agent and the Lenders, promptly upon the filing or
making thereof, at least one (l) copy of all financial statements, reports,
notices and proxy statements sent by the Borrower to its stockholders, and of
all regular and other reports filed by the Borrower with any securities exchange
or with the Securities and Exchange Commission.
6.1.3 Recordkeeping,
Rights of Inspection, Field Examination, Etc.
(a) The
Borrower shall, and shall cause each of its Subsidiaries to, maintain (i) a
standard system of accounting in accordance with GAAP, and (ii) proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its properties, business and
activities.
(b) The
Borrower shall, and shall cause each of its Subsidiaries to, permit authorized
representatives of the Agent to visit and inspect the properties of the Borrower
and its Subsidiaries, to review, audit, check and inspect the Collateral at any
time with or without notice, to conduct field examinations, to review, audit,
check and inspect the Borrower’s other books of record at any time with or
without notice and to make abstracts and photocopies thereof, and to discuss the
affairs, finances and accounts of the Borrower and/or any Subsidiaries, with the
officers, directors, employees and other representatives of the Borrower and/or
any Subsidiaries and their respective accountants, all at such times during
normal business hours and other reasonable times and as often as the Agent may
reasonably request.
(c) The
Borrower hereby irrevocably authorizes and directs all accountants and auditors
employed by the Borrower and/or any Subsidiaries at any time prior to the
repayment in full of the Obligations to exhibit and deliver to the Agent and the
Lenders copies of any and all of the financial statements, trial balances,
management letters, or other accounting records of any nature of the Borrower
and/or any Subsidiaries in the accountant’s or auditor’s possession, and to
disclose to the Agent and any of the Lenders any information they may have
concerning the financial status and business operations of the Borrower and its
Subsidiaries. Further, the Borrower hereby authorizes all Governmental
Authorities to furnish to the Agent and the Lenders copies of reports or
examinations relating to the Borrower and/or any Subsidiaries, whether made by
the Borrower or otherwise.
(d) Any and
all costs and expenses incurred by, or on behalf of, the Agent in connection
with the conduct of any of the foregoing, including, without limitation, the
actual fees and expenses charged for third party examinations and further
including, without limitation, travel, lodging, meals, and other expenses
together with an allocated charge of $90 per hour for each examiner that is an
employee of the Agent for inspections of the Collateral and the Borrower’s
operations and for associated write-up time, shall be part of the Enforcement
Costs and shall be payable to the Agent upon demand. The Borrower acknowledges
and agrees that such expenses may include, but shall not be limited to, any and
all out-of-pocket costs and expenses of the Agent’s employees, agents and third
party examiners in, and when, traveling to the Borrower’s
facilities.
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6.1.4 Corporate
Existence.
The
Borrower shall maintain, and cause each of its Subsidiaries to maintain, its
corporate existence in good standing in the jurisdiction in which it is
incorporated and in each other jurisdiction where it is required to register or
qualify to do business if the failure to do so in such other jurisdiction might
have a Material Adverse Effect on the Borrower or such Subsidiary.
6.1.5 Compliance
with Laws.
The
Borrower shall comply, and cause each of its Subsidiaries to comply, with all
applicable Laws and observe the valid requirements of Governmental Authorities,
the noncompliance with or the nonobservance of which might have a Material
Adverse Effect on the Borrower or such Subsidiary.
6.1.6 Preservation
of Properties.
The
Borrower will, and will cause each of its Subsidiaries to, at all times (a)
maintain, preserve, protect and keep its properties, whether owned or leased, in
good operating condition, working order and repair (ordinary wear and tear
excepted), and from time to time will make all proper repairs, maintenance,
replacements, additions and improvements thereto needed to maintain such
properties in good operating condition, working order and repair, and (b) do or
cause to be done all things necessary to preserve and to keep in full force and
effect its material franchises, leases of real and personal property, trade
names, patents, trademarks and permits that are necessary for the orderly
continuance of its business.
6.1.7 Line
of Business.
The
Borrower will continue to engage substantially only in the business of providing
personal and/or commercial automobile property and casualty insurance policies
premium finance services.
6.1.8 Insurance.
The
Borrower will, and will cause each of its Subsidiaries to, at all times
maintain, with financially sound and reputable insurers having a rating of at
least A-VII or better by Best Rating Guide or other comparable rating chosen by
the Agent, insurance as is required by applicable Laws and such other insurance,
in such amounts, of such types and against such risks, hazards, liabilities,
casualties and contingencies as are usually insured against in the same
geographic areas by business entities engaged in the same or similar business.
Without limiting the generality of the foregoing, the Borrower will, and will
cause each of its Subsidiaries to, keep adequately insured all of its property
against loss or damage resulting from fire or other risks insured against by
extended coverage and maintain public liability insurance against claims for
personal injury, death or property damage occurring upon, in or about any
properties occupied or controlled by it, or arising in any manner out of the
businesses carried on by it, all in such amounts not less than the Agent shall
reasonably determine from time to time. The Borrower shall deliver to the Agent
on the Closing Date (and thereafter on each date there is a material change in
the insurance coverage) a certificate of a Responsible Officer of the Borrower
containing a detailed list of the insurance then in effect and stating the names
of the insurance companies, the types, the amounts and rates of the insurance,
dates of the expiration thereof and the properties and risks covered thereby.
Within thirty (30) days after notice in writing from the Agent, the Borrower
will obtain such additional insurance as the Agent may reasonably
request.
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6.1.9 Taxes.
Except to
the extent that the validity or amount thereof is being contested in good faith
and by appropriate proceedings, the Borrower will, and will cause each of its
Subsidiaries to, pay and discharge all Taxes prior to the date when any interest
or penalty would accrue for the nonpayment thereof. The Borrower shall furnish
to the Agent, at such times as the Agent may require, proof satisfactory to the
Agent of the making of payments or deposits required by applicable Laws
including, without limitation, payments or deposits with respect to amounts
withheld by the Borrower from wages and salaries of employees and amounts
contributed by the Borrower on account of federal and other income or wage taxes
and amounts due under the Federal Insurance Contributions Act, as
amended.
6.1.10 ERISA.
The
Borrower will, and will cause each of its ERISA Affiliates to, comply with the
funding requirements of ERISA with respect to Plans for its respective
employees. The Borrower will not permit with respect to any Plan (a) any
prohibited transaction or transactions under ERISA or the Internal Revenue Code,
that results, or may result, in any material liability of the Borrower and/or
ERISA Affiliate, or (b) any Reportable Event if, upon termination of the plan or
plans with respect to which one or more such Reportable Events shall have
occurred, there is or would be any material liability of the Borrower and/or
ERISA Affiliates to the PBGC. Upon the Lender’s request, the Borrower will
deliver to the Lender a copy of the most recent actuarial report, financial
statements and annual report completed with respect to any Plan.
6.1.11 Notification
of Events of Default and Adverse Developments.
The
Borrower shall promptly notify the Agent upon obtaining knowledge of the
occurrence of:
(a) any Event
of Default;
(b) any
Default;
(c) any
litigation instituted or threatened against the Borrower or its Subsidiaries and
of the entry of any judgment or Lien (other than any Permitted Liens) against
any of the assets or properties of the Borrower or any of its Subsidiaries where
the claims against the Borrower or any of its Subsidiaries exceed One Hundred
Thousand Dollars ($100,000) and are not covered by insurance;
(d) any
event, development or circumstance whereby the financial statements furnished
hereunder fail in any material respect to present fairly, in accordance with
GAAP, the financial condition and operational results of the Borrower or any of
its Subsidiaries;
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(e) any
judicial, administrative or arbitral proceeding pending against the Borrower or
any of its Subsidiaries and any judicial or administrative proceeding known by
the Borrower to be threatened against the Borrower or any of its Subsidiaries
that, if adversely decided, could have a Material Adverse Effect;
(f) the
receipt by the Borrower or any of its Subsidiaries of any notice, claim or
demand from any Governmental Authority that alleges that the Borrower or any
Subsidiary is in violation of any of the terms of, or has failed to comply with
any applicable Laws regulating its operation and business, including, but not
limited to, the Occupational Safety and Health Act and the Environmental
Protection Act; and
(g) any other
development in the business or affairs of the Borrower or any of its
Subsidiaries that may have a Material Adverse Effect;
(h) in each
case describing in detail satisfactory to the Agent the nature thereof and the
action the Borrower proposes to take with respect thereto.
6.1.12 Hazardous
Materials; Contamination.
The
Borrower agrees to:
(a) give
notice to the Agent immediately upon acquiring knowledge of the presence of any
Hazardous Materials or any Hazardous Materials Contamination on any property
owned, operated or controlled by the Borrower or for which the Borrower is, or
is claimed to be, responsible (provided that such notice shall not be required
for Hazardous Materials placed or stored on such property in accordance with
applicable Laws in the ordinary course (including, without limitation, quantity)
of the Borrower’s line of business expressly described in this Agreement), with
a full description thereof;
(b) promptly
comply with any Laws requiring the removal, treatment or disposal of Hazardous
Materials or Hazardous Materials Contamination and provide the Agent with
satisfactory evidence of such compliance;
(c) provide
the Agent, within thirty (30) days after a demand by the Agent, with a bond,
letter of credit or similar financial assurance evidencing to the Agent’s
satisfaction that the necessary funds are available to pay the cost of removing,
treating, and disposing of such Hazardous Materials or Hazardous Materials
Contamination and discharging any Lien that may be established as a result
thereof on any property owned, operated or controlled by the Borrower or for
which the Borrower is, or is claimed to be, responsible; and
(d) as part
of the Obligations, defend, indemnify and hold harmless the Agent, each of the
Lenders and each of their respective agents, employees, trustees, successors and
assigns from any and all claims that may now or in the future (whether before or
after the termination of this Agreement) be asserted as a result of the presence
of any Hazardous Materials or any Hazardous Materials Contamination on any
property owned, operated or controlled by the Borrower for which the Borrower
is, or is claimed to be, responsible.
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The
Borrower acknowledges and agrees that this indemnification shall survive the
termination of this Agreement and the Commitments and the payment and
performance of all of the other Obligations.
6.1.13 Disclosure
of Significant Transactions.
The
Borrower shall deliver to the Agent a written notice describing in detail each
transaction by it involving the purchase, sale, lease, or other acquisition or
loss or casualty to or disposition of an interest in Fixed or Capital Assets
that exceeds Fifty Thousand Dollars ($50,000.00), said notices to be delivered
to the Agent within thirty (30) days of the occurrence of each such
transaction.
6.1.14 Key
Man Life Insurance.
The
Borrower shall at all times maintain life insurance with a responsible insurer
on the life of Xxxxx X. Xxxxxxxxx in an amount not less than Four Million
Dollars ($4,000,000) and will assign the proceeds of such life insurance to the
Agent pursuant to the Assignment of Life Insurance.
6.1.15 Financial
Covenants.
(a) Certain
Definitions. As used in this Agreement, the Term:
“Capitalization” means
as to the Borrower at any date of determination thereof the sum of the
Borrower’s Tangible Net Worth plus Borrower’s Subordinated Indebtedness minus
advances to the Parent.
“Capitalization
Ratio” means
the ratio of (a) total liabilities of the Borrower (including book overdraft as
a liability, not as an offset to cash) minus Borrower’s Subordinated
Indebtedness to (b) the Borrower’s Capitalization.
“Cash
Flow Coverage Ratio” means
for period of determination the ratio of (a) the Borrower’s EBITDA to (b) the
sum of (i) the aggregate amount of interest expense of the Borrower for such
period, plus (ii) any dividends paid by the Borrower to its stockholders plus
(iii) any other distributions that reduce the Borrower’s Net Worth.
“EBITDA” means
as to the Borrower for any period of determination thereof, the sum of (a) the
net profit (or loss) determined in accordance with GAAP consistently applied,
plus (b) interest expense and income tax provisions for such period, plus (c)
depreciation and amortization of assets for such period.
“Funded
Debt” means
the aggregate of the consolidated outstanding principal balance under the
Revolving Loan plus the Borrower’s Subordinated Indebtedness plus all other
Indebtedness for Borrowed Money (other than that described on clauses (f) and
(g) of that term) plus the amount of book overdrafts upon the Borrower’s deposit
accounts plus unfunded liabilities (that is, “Due to
carriers” accounts payable as shown on the Borrower’s balance sheet and
determined on a consistent basis).
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“Net
Worth” means
the shareholders’ equity of the Borrower, defined in accordance with GAAP.
“Tangible
Net Worth” means
as to the Borrower at any date of determination thereof, the aggregate at such
time of the Borrower’s Net Worth minus the total of (a) all assets that would be
classified as intangible assets under GAAP consistently applied, (b) applicable
reserves, allowances and other similar properly deductible items to the extent
such reserves, allowances and other similar properly deductible items have not
been previously deducted by the Agent in the calculation of shareholders’
equity, (c) any revaluation or other write-up in book value of assets subsequent
to the date of the most recent financial statements delivered to the Agent, and
(d) the amount of all loans and advances to, or investments in, any Person
(other than pursuant to Premium Finance Agreements), other than cash equivalents
and deposit accounts maintained with any financial institution.
(b) Capitalization
Ratio. The Borrower shall maintain, tested as of the last day of each month, for
the twelve (12) month period ending on the test date, a Capitalization Ratio, of
not greater than 7.0 to 1.0.
(c) Cash Flow
Coverage Ratio. The Borrower shall maintain, tested as of the last day of each
of the Borrower’s fiscal quarters for the twelve (12) month period ending on the
test date, a Cash Flow Coverage Ratio of not less than 1.50 to 1.0.
(d) Finance
Receivables to Funded Debt Ratio. The Borrower shall maintain, tested as of the
last day of each of month, a ratio
of total Receivables due and owing under Premium Finance Agreements net of all
reserves as required in accordance with GAAP, consistently applied, to Funded
Debt of not less than 1.0 to 1.0.
6.1.16 Collection
of Receivables.
Until
such time that the Agent shall notify the Borrower of the revocation of such
privilege, the Borrower and each of the Subsidiaries shall at its own expense
have the privilege for the account of, and in trust for, the Agent and the
Lenders of collecting its Receivables and receiving in respect thereto all Items
of Payment and shall otherwise completely service all of the Receivables
including (a) the billing, posting and maintaining of complete records
applicable thereto, (b) the taking of such action with respect to the
Receivables as the Agent may request or in the absence of such request, as the
Borrower and each of the Subsidiaries may deem advisable; and (c) the granting,
in the ordinary course of business, to any Account Debtor, any rebate, refund or
adjustment to which the Account Debtor may be lawfully entitled, and may accept,
in connection therewith, the return of goods, the sale or lease of which shall
have given rise to a Receivable and may take such other actions relating to the
settling of any Account Debtor’s claim as may be commercially reasonable. The
Agent may, at its option, at any time or from time to time after and during the
continuance of a Default hereunder, revoke the collection privilege given in
this Agreement to the Borrower and each of the Subsidiaries and by either giving
notice of its assignment of, and Lien on the Collateral to the Account Debtors
or giving notice of such revocation to the Borrower. The Agent shall not have
any duty to, and the Borrower hereby releases the Agent and the Lenders from all
claims of loss or damage caused by the delay or failure to collect or enforce
any of the Receivables or to preserve any rights against any other party with an
interest in the Collateral. The Agent shall be entitled at any time and from
time to time to confirm and verify Receivables.
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6.1.17 Assignments
of Receivables.
The
Borrower will promptly, upon request, execute and deliver to the Agent written
assignments, in form and content acceptable to the Agent, of specific
Receivables or groups of Receivables; provided, however, the Lien and/or
security interest granted to the Agent, for the ratable benefit of the Lenders
and for the benefit of the Agent with respect to the Agent’s Obligations, under
this Agreement shall not be limited in any way to or by the inclusion or
exclusion of Receivables within such assignments. Receivables so assigned shall
secure payment of the Obligations and are not sold to the Agent and/or the
Lenders whether or not any assignment thereof, that is separate from this
Agreement, is in form absolute. The Borrower agrees that neither any assignment
to the Lender nor any other provision contained in this Agreement or any of the
other Financing Documents shall impose on the Agent or the Lenders any
obligation or liability of the Borrower with respect to that which is assigned
and the Borrower hereby agrees to indemnify the Agent and the Lenders and hold
the Agent and the Lenders harmless from any and all claims, actions, suits,
losses, damages, costs, expenses, fees, obligations and liabilities that may be
incurred by or imposed upon the Agent and/or any of the Lenders by virtue of the
assignment of and Lien on the Borrower’s rights, title and interest in, to, and
under the Collateral.
6.1.18 Notice
of Commercial Tort Claims.
The
Borrower shall promptly notify the Agent in writing in the event the Borrower
shall have, receive or otherwise obtain a commercial tort claim, as plaintiff or
otherwise in its favor against any third party and, upon the request of the
Agent, shall promptly amend the Perfection Certificate and, without implying any
limitation on the provisions of Section
6.1.22 (Further
Assurances; Defense of Title), confirm that the Agent is authorized to file
additional, and to amend, financing statements and do such other acts or things
deemed necessary or desirable by the Agent to grant the Agent a first priority,
perfected security interest in any such commercial tort claim, including,
without limitation executing an assignment of such commercial tort
claim.
6.1.19 Insurance
With Respect to Equipment.
The
Borrower will (a) maintain and cause each of its Subsidiaries to maintain hazard
insurance with fire and extended coverage and naming the Agent as an additional
insured with loss payable to the Agent as its respective interest may appear on
the Equipment in an amount at least equal to the lesser amount of the
outstanding principal amount of the Obligations or the fair market value of the
Equipment (but in any event sufficient to avoid any co-insurance obligations)
and with a specific endorsement to each such insurance policy pursuant to which
the insurer agrees to give the Agent at least thirty (30) days written notice
before any alteration or cancellation of such insurance policy and that no act
or default of the Borrower shall affect the right of the Agent to recover under
such policy in the event of loss or damage; (b) file and cause each of its
Subsidiaries to file with the Agent, upon its request, a detailed list of the
insurance then in effect and stating the names of the insurance companies, the
amounts and rates of the insurance, dates of the expiration thereof and the
properties and risks covered thereby; and (c) within thirty (30) days after
notice in writing from the Agent, obtain and cause each of its Subsidiaries to
maintain such additional insurance as the Agent may reasonably
request.
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6.1.20 Maintenance
of the Collateral.
The
Borrower will maintain the Collateral in good working order, saving and
excepting ordinary wear and tear, and will not permit anything to be done to the
Collateral that may materially impair the value thereof. The Agent, or an agent
designed by the Agent, shall be permitted to enter the premises of the Borrower
and the Subsidiaries and examine, audit and inspect the Collateral at any
reasonable time and from time to time without notice. The Agent and the Lenders
shall not have any duty to, and the Borrower hereby releases the Agent and the
Lenders from all claims of loss or damage caused by the delay or failure to
collect or enforce any of the Receivables or to preserve any rights against any
other party with an interest in the Collateral.
6.1.21 Equipment.
The
Borrower shall (a) maintain all Equipment as personalty, (b) not affix any
Equipment to any real estate in such manner as to become a fixture or part of
such real estate, and (c) shall hold no Equipment on a sale on approval basis.
The Borrower hereby declares its intent that, notwithstanding the means of
attachment, no goods of the Borrower hereafter attached to any realty shall be
deemed a fixture, which declaration shall be irrevocable, without the Agent’s
consent, until all of the Obligations have been paid in full and all of the
Commitments have been terminated or have expired.
6.1.22 Further
Assurances; Defense of Title.
At its
expense, the Borrower will defend the title to the Collateral (and any part
thereof), and will immediately execute, acknowledge and deliver any financing
statement, renewal, affidavit, deed, assignment, continuation statement,
security agreement, certificate or other document that the Agent may require in
order to perfect, preserve, maintain, continue, protect and/or extend the Lien
or security interest granted to the Agent, for the ratable benefit of the
Lenders and for the benefit of the Agent with respect to the Agent’s
Obligations, under this Agreement, under any of the other Financing Documents
and the first priority of that Lien, subject only to the Permitted Liens. The
Borrower will from time to time do whatever the Agent may require by way of
obtaining, executing, delivering, and/or filing financing statements, landlords’
or mortgagees’ waivers, notices of assignment and other notices and amendments
and renewals thereof and the Borrower will take any and all steps and observe
such formalities as the Agent may require, in order to create and maintain a
valid Lien upon, pledge of, or paramount security interest in, the Collateral,
subject to the Permitted Liens. Without implying any limitation on the
foregoing, with respect to the Collateral that may be perfected by control, the
Borrower shall take such steps as the Lender may require in order that Agent may
have such control. The Borrower shall pay to the Agent on demand all taxes,
costs and expenses incurred by the Agent in connection with the preparation,
execution, recording and filing of any such document or instrument. To the
extent that the proceeds of any of the Receivables of the Borrower are expected
to become subject to the control of, or in the possession of, a party other than
the Borrower or the Agent, the Borrower shall cause all such parties to execute
and deliver on the Closing Date security documents, financing statements or
other documents as requested by the Agent and as may be necessary to evidence
and/or perfect the security interest of the Agent, for the ratable benefit of
the Lenders and for the benefit of the Agent with respect to the Agent’s
Obligations, in those proceeds. The Borrower agrees that a copy of a fully
executed security agreement and/or financing statement shall be sufficient to
satisfy for all purposes the requirements of a financing statement as set forth
in Article 9 of the applicable Uniform Commercial Code. The Borrower hereby
irrevocably appoints the Agent as the Borrower’s attorney-in-fact, with power of
substitution, in the name of the Agent or in the name of the Borrower or
otherwise, for the use and benefit of the Agent for itself and the Lenders, but
at the cost and expense of the Borrower and without notice to the Borrower, to
execute and deliver any and all of the instruments and other documents and take
any action which the Lender may require pursuant the foregoing provisions of
this Section
6.1.22.
Further, to the extent permitted by applicable Laws, the Agent is hereby
authorized to file, without the Borrower’s signature, one or more financing
statements or other notices disclosing the liens and other security interests of
the Agent and the Lenders. All financing statements and notices may describe the
collateral of the Agent and the Lenders as all assets and/or all personal
property of the Borrower. The Borrower hereby ratifies and confirms the Agent’s
authority to file and the validity of any and all such financing statements and
notices filed prior to the date of this Agreement.
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6.1.23 Business
Information.
The
Borrower will notify the Agent not less than thirty (30) days prior to (a) any
change in its name or in the name under which the Borrower conducts its
business, (b) any change to the Borrower’s state of organization, identity or
organizational structure, (c) any change of the location of the chief executive
office of the Borrower, and (d) the opening of any new place of business or the
closing of any existing place of business, and any change in the location of the
places where the Collateral, or any part thereof, or the books and records, or
any part thereof, are kept.
6.1.24 Subsequent
Opinion of Counsel as to Recording Requirements.
In the
event that the Borrower or any Subsidiary shall transfer its principal place of
business or the office where it keeps its records pertaining to the Collateral,
upon the Agent’s request the Borrower will provide to the Agent a subsequent
opinion of counsel as to the filing, recording and other requirements with which
the Borrower and its Subsidiaries have complied to maintain the Lien and
security interest in favor of the Agent, for the ratable benefit of the Lenders
and for the benefit of the Agent with respect to the Agent’s Obligations, in the
Collateral.
6.1.25 Use of
Premises and Equipment.
The
Borrower agrees that until the Obligations are fully paid and all of the
Commitments have been terminated or have expired, the Agent (a) after and during
the continuance of a Default or an Event of Default, may use any of the
Borrower’s owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral; and (b) shall have, and is
hereby granted, a right of ingress and egress to the places where the Collateral
is located, and may proceed over and through any of the Borrower’s owned or
leased property.
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6.1.26 Protection
of Collateral.
The
Borrower agrees that the Agent may at any time following an Event of Default
take such steps as the Agent deems reasonably necessary to protect the interest
of the Agent and the Lenders in, and to preserve the Collateral, including,
without limitation, the hiring of such security guards, the placing of other
security protection measures, and otherwise restricting access to owned or
leased locations where Collateral is located, all as the Agent deems appropriate
from time to time, may employ and maintain at any of the Borrower’s premises a
custodian who shall have full authority to do all acts necessary to protect the
interests of the Agent and the Lenders in the Collateral and may lease warehouse
facilities to which the Agent may move all or any part of the Collateral to the
extent commercially reasonable. The Borrower agrees to cooperate fully with the
Agent’s efforts to preserve the Collateral and will take such actions to
preserve the Collateral as the Agent may reasonably direct. All of the Agent’s
expenses of preserving the Collateral, including any reasonable expenses
relating to the compensation and bonding of a custodian, shall be part of the
Enforcement Costs.
6.1.27 Appraisals.
Whenever
a Default or an Event of Default exists, and at such other times as the Agent
may request, but not more frequently than once a year, the Borrower shall, at
its expense, provide the Agent with appraisals or updates thereof of any or all
of the Collateral from an appraiser and in form in all respects satisfactory to
the Agent.
6.1.28 Servicing
Agreements.
The
Borrower agrees that the Servicing Agreement Documents and the Back-Up Servicing
Agreement shall remain in full force and effect at all times. The agreements,
terms and conditions of this Agreement with respect to the Servicer and the
Servicing Agreement shall apply to the servicer under the Back-Up Servicing
Agreement and to the Back-Up Servicing Agreement at such times as the servicer
is providing, or is obligated to provide, services under the Back-Up Servicing
Agreement. Under the terms of the Servicing Agreement Documents, the Servicer
shall at all times: (a) be authorized and obligated, upon notification from the
Agent of an Event of Default, to perform its servicing duties solely for the
benefit of the Agent; (b) receive all Items of Payment and other Collateral as
the Agent’s bailee for the purpose of perfecting the Agent’s and the Lenders’
security interests therein, (c) deposit all proceeds of Items of Payment and
other Collateral into the Collateral Account; (d) be obligated to provide to the
Agent not less than three hundred sixty-five (365) days notice of the Servicer’s
intent to cancel the Servicing Agreement; and (e) along with the Borrower,
covenant and agree that the Servicer shall not be authorized to modify or amend
the Servicing Agreement Documents without the Agent’s express written
consent.
6.1.29 Borrower’s
Procedures.
The
Borrower’s forms and procedures shall at all times reflect the following to the
continuing satisfaction of the Agent:
(a) Premium
Finance Agreements, payment coupon books, and such other materials, shall
reflect the Agent as secured creditor to the Borrower and shall direct that
payments be made to the Servicer. References in the Premium Finance Agreements
to the “Loan and Security Agreement with” the Agent mean this Agreement,
as
amended, restated, modified, substituted, extended and renewed from time to
time.
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(b) Scheduled
monthly payments and all other Items of Payments shall be (i) received by the
Servicer for processing (or forwarded to the Servicer by the Borrower) for the
benefit of the Agent and the Lenders, and as bailee for the purpose of
perfecting Agent’s and the Lenders’ security interest therein, (ii) deposited by
the Servicer into the Collateral Account; (iii) if made payable to the Borrower
shall be endorsed by the Servicer pursuant to authority granted by the Borrower
to the Servicer in the Servicing Agreement for deposit to, and deposited
exclusively to the Collateral Account;
(c) The
Borrower’s “Notices of Financed Premium,” “Notices of Cancellation” and other
notices or claims with respect to returned premiums or Receivables (the
foregoing collectively, “Premium Claim Notices”) (i) shall specify the Agent’s
interest, as secured creditor to the Borrower, in returned premiums on policies
financed by the Borrower and (ii) shall direct that all remittances shall be
made payable to “M&T Bank, Secured Creditor”, as secured creditor to the
Borrower at the Servicer’s address, unless the Borrower and the Agent shall have
agreed otherwise in each instance. All Items of Payment with respect to those
remittances shall deposited into the Collateral Account in compliance with
Section
2.1.10
(Collateral Account).
(d) To the
extent that the Borrower receives any scheduled payments on Premium Finance
Agreements or payments of returned premiums on cancelled Premium Finance
Agreement or pursuant to Premium Claim Notices, via ACH transfers or other
standing transfer orders, the Borrower shall modify its notices and other
communication materials to instruct payors that such payments are to be directed
to the Collateral Account.
(e) The
Borrower shall irrevocably and continuously provide the Agent “read only”
access, or such other access to be determined, to the Borrower’s accounting and
financial records including, without limitation, those with respect to the
Receivables.
(f) No later
than fifteen (15) days after the end of each month, the Borrower to provide the
Agent with premium disbursement file monthly in electronic format acceptable to
the Agent.
(g) The
Borrower shall at all times use the Agent’s “Full Account Reconciliation”
program (or, at the Agent’s direction, other program or programs offered by the
Agent) for the Borrower’s deposit and contract disbursement accounts. The
proceeds of the Receivables shall be subject to the provisions of Section
2.1.10
(Collateral Account).
6.1.30 Amendment
to Subordinated Indebtedness.
No later
than March 31, 2005, with respect to Subordinated Indebtedness other than the
Subordinated Debt and with respect to Parent Subordinated Indebtedness other
than the Parent Subordinated Debt, the Agent shall have received evidence that
the scheduled maturity thereof is not sooner than ninety (90) days after the
scheduled maturity of the Revolving Credit Note.
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Section
6.2 Negative
Covenants.
So long
as any of the Obligations or the Commitments therefor shall be outstanding
hereunder, the Borrower agrees with the Agent and the Lenders that without the
prior written consent of the Agent:
6.2.1 Capital
Structure, Merger, Acquisition or Sale of Assets.
The
Borrower will not alter or amend its capital structure, authorize any additional
class of equity, issue any stock or equity of any class, enter into any merger
or consolidation or amalgamation, windup or dissolve itself (or suffer any
liquidation or dissolution) or acquire all or substantially all the assets of
any Person, or sell, lease or otherwise dispose of any of its assets. Any
consent of the Agent to the disposition of any assets may be conditioned on a
specified use of the proceeds of disposition.
6.2.2 Subsidiaries.
The
Borrower will not create or acquire any Subsidiaries other than the Subsidiaries
identified on the Perfection Certificate.
6.2.3 Issuance
of Stock.
The
Borrower will not issue, or grant any option or right to purchase, any of its
capital stock.
6.2.4 Purchase
or Redemption of Securities, Dividend Restrictions.
The
Borrower will not purchase, redeem or otherwise acquire any shares of its
capital stock or warrants now or hereafter outstanding, declare or pay any
dividends thereon (other than stock dividends), apply any of its property or
assets to the purchase, redemption or other retirement of, set apart any sum for
the payment of any dividends on, or for the purchase, redemption, or other
retirement of, make any distribution by reduction of capital or otherwise in
respect of, any shares of any class of capital stock of the Borrower, or any
warrants, permit any Subsidiary to purchase or acquire any shares of any class
of capital stock of, or warrants issued by, of the Borrower, make any
distribution to stockholders or set aside any funds for any such purpose, and
not prepay, purchase or redeem any Indebtedness for Borrowed Money other than
the Obligations, except for Permitted Distributions and except for dividends or
other distributions or advances made to the Parent when there exists no Default
or Event of Default in order to enable the
Parent to pay at a time payments due and payable (other than those payments
which may not be made due to applicable provisions of subordination) under the
Parent Subordinated Debt and the
corresponding portion of the Subordinated Debt to the extent the payments are
expressly permitted by this Agreement, the Subordination Agreement and the
Parent Subordination
Agreement..
6.2.5 Indebtedness.
The
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or suffer to exist any Indebtedness for Borrowed Money, or permit any Subsidiary
so to do, except:
(a) the
Obligations;
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(b) current
accounts payable arising in the ordinary course;
(c) indebtedness
secured by Permitted Liens;
(d) Subordinated
Indebtedness; and
(e) indebtedness
of the Borrower existing on the date hereof and reflected on the financial
statements furnished pursuant to Section
4.1.11
(Financial Condition).
6.2.6 Investments,
Loans and Other Transactions.
Except as
otherwise provided in this Agreement, the Borrower will not, and will not permit
any of its Subsidiaries to, (a) make, assume, acquire or continue to hold any
investment in any real property (unless used in connection with its business and
treated as a Fixed or Capital Asset of the Borrower or the Subsidiary) or any
Person, whether by stock purchase, capital contribution, acquisition of
indebtedness of such Person or otherwise (including, without limitation,
investments in any joint venture or partnership), (b) guaranty or otherwise
become contingently liable for the indebtedness, liabilities or other
obligations of any Person, or (c) make any loans or advances, or otherwise
extend credit to any Person, except:
(i) any
advance to an officer or employee of the Borrower or of any Subsidiary for
travel or other business expenses in the ordinary course of business, provided
that the aggregate amount of all such advances by all of the Borrower and its
Subsidiaries (taken as a whole) outstanding at any time shall not exceed Two
Thousand Five Hundred Dollars ($2,500);
(ii) the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business;
(iii) any
investment in Cash Equivalents, that are pledged to the Agent, for the ratable
benefit of the Lenders and for the benefit of the Agent with respect to the
Agent’s Obligations, as collateral and security for the Obligations;
and
(iv) trade
credit extended to customers in the ordinary course of business.
6.2.7 Operating
Lease Obligations.
The
Borrower will not incur or permit to exist any Lease Obligations (including,
without limitation, Lease Obligations with respect to real property) except
Capital Leases expressly permitted by this Agreement or permit any Subsidiary so
to do, if the aggregate amount of all such Lease Obligations of the Borrower and
the Subsidiaries (taken as a whole) would at any time exceed Two Hundred
Thousand Dollars ($200,000) during any fiscal year of the Borrower.
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6.2.8 Stock
of Subsidiaries.
The
Borrower will not sell or otherwise dispose of any shares of capital stock of
any Subsidiary (except in connection with a merger or consolidation of a Wholly
Owned Subsidiary into the Borrower or another Wholly Owned Subsidiary of the
Borrower or with the dissolution of any Subsidiary) or permit any Subsidiary to
issue any additional shares of its capital stock except pro rata to its
stockholders.
6.2.9 Subordinated
Indebtedness.
The
Borrower will not, and will not permit any Subsidiary to make:
(a) except
from the Permitted Distributions, any payment of principal of, or interest on,
any of the Subordinated Indebtedness, including, without limitation, the
Subordinated Debt, if a Default or Event of Default then exists hereunder or
would result from such payment;
(b) any
payment of the principal or interest due on the Subordinated Indebtedness as a
result of acceleration thereunder or a mandatory prepayment
thereunder;
(c) any
amendment or modification of or supplement to the documents evidencing or
securing the Subordinated Indebtedness; and
(d) payment
of principal or interest on the Subordinated Indebtedness other than when due
(without giving effect to any acceleration of maturity or mandatory
prepayment).
6.2.10 Liens.
The
Borrower agrees that it (a) will not create, incur, assume or suffer to exist
any Lien upon any of its properties or assets, whether now owned or hereafter
acquired, or permit any Subsidiary so to do, except for Liens securing the
Obligations and Permitted Liens, (b) will not agree to, assume or suffer to
exist any provision in any instrument or other document for confession of
judgment, cognovit or other similar right or remedy, (c) will not allow or
suffer to exist any Permitted Liens to be superior to Liens securing the
Obligations except as expressly set forth in Schedule
4.1.22, (d)
will not enter into any contracts for the consignment of goods, will not execute
or suffer the filing of any financing statements or the posting of any signs
giving notice of consignments, and will not, as a material part of its business,
engage in the sale of goods belonging to others, and (e) will not allow or
suffer to exist the failure of any Lien described in the Security Documents to
attach to, and/or remain at all times perfected on, any of the property
described in the Security Documents.
6.2.11 Transactions
with Affiliates.
Except
(a) as permitted in Section
6.2.4
(Purchase or Redemption of Securities; Dividend Restrictions) or Section
6.2.17
(Compensation), (b) for the reimbursement of reasonable payroll expenses
incurred by DCAP Management Corp. on behalf of the Borrower as further set forth
in that certain letter agreement dated July 10, 2003 between the Borrower and
Parent, a true copy of which the Borrower and Parent have provided to the Agent
prior to the execution and delivery of this Agreement, (c) transactions between
the Borrower and the Corporate Guarantors (other than the Parent) that are in
the ordinary course of business relating or incidental to the financing of
automobile insurance premiums and that are upon fair and reasonable terms which
are no less favorable than would be obtained in a comparable arms-length
transaction with a Person who is not an Affiliate and which are profitable for
the Borrower, and (d) the payment of sublease payments in the ordinary course
from Borrower to the Parent pursuant to that certain sublease agreement dated
October 1, 2002, the Borrower and its Subsidiaries will not enter into or
participate in any transaction with any Affiliate or, except in the ordinary
course of business, with the officers, directors, employees and other
representatives of the Borrower and/or any Subsidiary.
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6.2.12 Other
Businesses.
The
Borrower and its Subsidiaries will not, without the prior written consent of the
Agent, engage directly or indirectly in any business other than the business of
financing premiums for personal and/or commercial automobile property and
casualty insurance policies in the States of New York and New Jersey and the
Commonwealth of Pennsylvania, and such other States as the Agent may approve in
the exercise of its sole and absolute discretion from time to time.
6.2.13 ERISA
Compliance.
None of
the Borrower nor any ERISA Affiliate shall: (a) engage in or permit any
“prohibited transaction” (as defined in ERISA); (b) cause any “accumulated
funding deficiency” as defined in ERISA and/or the Internal Revenue Code; (c)
terminate any pension plan in a manner that could result in the imposition of a
lien on the property of the Borrower pursuant to ERISA; (d) terminate or consent
to the termination of any Multi-employer Plan; or (e) incur a complete or
partial withdrawal with respect to any Multi-employer Plan.
6.2.14 Prohibition
on Hazardous Materials.
The
Borrower shall not place, manufacture or store or permit to be placed,
manufactured or stored any Hazardous Materials on any property owned, operated
or controlled by the Borrower or for which the Borrower is responsible other
than Hazardous Materials placed or stored on such property in accordance with
applicable Laws in the ordinary course of the Borrower’s business expressly
described in this Agreement.
6.2.15 Amendments.
The
Borrower will not amend, terminate or allow to lapse or agree to amend,
terminate or allow to lapse the Premium Finance Licenses or any other franchise,
license, consent, approval or agreement necessary for the Borrower to operate
its business in the normal course, or
consent to or waive any material provisions thereof. The Borrower shall conduct
no business in the Commonwealth of Pennsylvania until the Premium Finance
Licenses have been duly issued by the applicable Pennsylvania Governmental
Authorities.
6.2.16 Method
of Accounting; Fiscal Year.
The
Borrower agrees that:
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(a) it shall
not change the method of accounting employed in the preparation of any financial
statements furnished to the Agent under the provisions of Section
6.1.1
(Financial Statements), unless required to conform to GAAP and on the condition
that the Borrower’s accountants shall furnish such information as the Agent may
request to reconcile the changes with the Borrower’s prior financial
statements
(b) it will
not change its fiscal year from a year ending on December 31.
6.2.17 Compensation.
Neither
the Borrower nor any of its Subsidiaries will pay any bonuses, fees,
compensation, commissions, salaries, drawing accounts, or other payments (cash
and non-cash), whether direct or indirect, to any stockholders of the Borrower
or its Subsidiaries, or any Affiliate of the Borrower or its Subsidiaries, other
than reasonable compensation for actual services rendered by stockholders in
their capacity as officers or employees of the Borrower and other compensation
pursuant to (i) that certain Employment Agreement dated May 28, 2003 between
AIA-DCAP Corp. and Xxxxx Xxxxxxxxx and (ii) that certain Employment Agreement
dated May 10, 2001 between the Parent and Xxxxx Xxxxxxxxx, true and correct
copies of which have been provided to the Agent prior to the execution of this
Agreement. The Employment Agreements will not be modified or amended without the
prior written consent of the Agent.
6.2.18 Transfer
of Collateral.
The
Borrower and the Subsidiaries will not transfer, or permit the transfer, to
another location of any of the Collateral or the books and records related to
any of the Collateral.
6.2.19 Sale
and Leaseback.
The
Borrower and the Subsidiaries will not directly or indirectly enter into any
arrangement to sell or transfer all or any substantial part of its fixed assets
and thereupon or within one (1) year thereafter rent or lease the assets so sold
or transferred.
6.2.20 Disposition
of Collateral.
Neither
the Borrower nor the Subsidiaries will sell, discount, allow credits or
allowances, transfer, assign, extend the time for payment on, convey, lease,
assign, transfer or otherwise dispose of the Collateral, except, prior to an
Event of Default, dispositions expressly permitted elsewhere in this Agreement,
the sale of unnecessary or obsolete Equipment, but only if the proceeds of the
sale of such Equipment are (a) used to purchase similar Equipment to replace the
unnecessary or obsolete Equipment or (b) immediately turned over to the Agent
for application to the Obligations in accordance with the provisions of this
Agreement.
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ARTICLE
VII
DEFAULT
AND RIGHTS AND REMEDIES
Section
7.1 Events
of Default.
The
occurrence of any one or more of the following events shall constitute an “Event
of Default” under the provisions of this Agreement:
7.1.1 Failure
to Pay.
The
failure of the Borrower to pay any of the Obligations as and when due and
payable in accordance with the provisions of this Agreement, the Notes and/or
any of the other Financing Documents.
7.1.2 Breach
of Representations and
Warranties.
Any
representation or warranty made in this Agreement or in any report, statement,
schedule, certificate, opinion (including any opinion of counsel for the
Borrower), financial statement or other document furnished in connection with
this Agreement, any of the other Financing Documents, or the Obligations, shall
prove to have been false or misleading when made (or, if applicable, when
reaffirmed) in any material respect.
7.1.3 Failure
to Comply with Covenants.
The
failure of the Borrower to perform, observe or comply with any covenant,
condition or agreement contained in this Agreement.
7.1.4 Default
Under Other Financing Documents or Obligations.
A default
shall occur under any of the other Financing Documents or under any other
Obligations, and such default is not cured within any applicable grace period
provided therein.
7.1.5 Receiver;
Bankruptcy.
The
Borrower or any Subsidiary shall (a) apply for or consent to the appointment of
a receiver, trustee or liquidator of itself or any of its property, (b) admit in
writing its inability to pay its debts as they mature, (c) make a general
assignment for the benefit of creditors, (d) be adjudicated a bankrupt or
insolvent, (e) file a voluntary petition in bankruptcy or a petition or an
answer seeking or consenting to reorganization or an arrangement with creditors
or to take advantage of any bankruptcy, reorganization, insolvency, readjustment
of debt, dissolution or liquidation law or statute, or an answer admitting the
material allegations of a petition filed against it in any proceeding under any
such law, or take corporate action for the purposes of effecting any of the
foregoing, or (f) by any act indicate its consent to, approval of or
acquiescence in any such proceeding or the appointment of any receiver of or
trustee for any of its property, or suffer any such receivership, trusteeship or
proceeding to continue undischarged for a period of sixty (60) days, or (g) by
any act indicate its consent to, approval of or acquiescence in any order,
judgment or decree by any court of competent jurisdiction or any Governmental
Authority enjoining or otherwise prohibiting the operation of a material portion
of the Borrower’s or any Subsidiary’s business or the use or disposition of a
material portion of the Borrower’s or any Subsidiary’s assets.
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7.1.6 Involuntary
Bankruptcy, etc.
(a) An
order for relief shall be entered in any involuntary case brought against the
Borrower or any Subsidiary under the Bankruptcy Code, or (b) any such case shall
be commenced against the Borrower or any Subsidiary and shall not be dismissed
within sixty (60) days after the filing of the petition, or (c) an order,
judgment or decree under any other Law is entered by any court of competent
jurisdiction or by any other Governmental Authority on the application of a
Governmental Authority or of a Person other than the Borrower or any Subsidiary
(i) adjudicating the Borrower or any Subsidiary bankrupt or insolvent, or (ii)
appointing a receiver, trustee or liquidator of the Borrower or of any
Subsidiary, or of a material portion of the Borrower’s or any Subsidiary’s
assets, or (iii) enjoining, prohibiting or otherwise limiting the operation of a
material portion of the Borrower’s or any Subsidiary’s business or the use or
disposition of a material portion of the Borrower’s or any Subsidiary’s assets,
and such order, judgment or decree continues unstayed and in effect for a period
of thirty (30) days from the date entered.
7.1.7 Judgment.
Unless
adequately insured in the opinion of the Agent, the entry of a final judgment or
final judgments for the payment of money involving more than $50,000 in the
aggregate against the Borrower and/or any one or more of the Corporate
Guarantors, and the failure by the Borrower and the Corporate Guarantors to
discharge the same, or cause it to be discharged, within thirty (30) days from
the date of the order, decree or process under which or pursuant to which such
judgment was entered, or to secure a stay of execution pending appeal of such
judgment.
7.1.8 Execution;
Attachment.
Any
execution or attachment shall be levied against the Collateral, or any part
thereof, and such execution or attachment shall not be set aside, discharged or
stayed within thirty (30) days after the same shall have been
levied.
7.1.9 Default
Under Other Borrowings.
Default
shall be made with respect to any Indebtedness for Borrowed Money (other than
the Loan) with an aggregate outstanding principal balance of more than $100,000
if the default is a failure to pay at maturity or if the effect of such default
is to accelerate the maturity of such Indebtedness for Borrowed Money or to
permit the holder or obligee thereof or other party thereto to cause any such
Indebtedness for Borrowed Money to become due prior to its stated
maturity.
7.1.10 Challenge
to Agreements.
The
Borrower or any of the Guarantors shall challenge the validity and binding
effect of any provision of any of the Financing Documents or shall state its
intention to make such a challenge of any of the Financing Documents or any of
the Financing Documents shall for any reason (except to the extent permitted by
its express terms) cease to be effective or to create a valid and perfected
first priority Lien (except for Permitted Liens) on, or security interest in,
any of the Collateral purported to be covered thereby.
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7.1.11 Material
Adverse Effect Change.
The
Agent, in its sole discretion, determines in good faith that an event has
occurred with respect to the Borrower that may have Material Adverse
Effect.
7.1.12 Change
of Control.
Any
Person, other than the Parent, shall own any equity interest in the Borrower, or
any Person (other than Xxxxx X. Xxxxxxxxx) or group (as such term is used in
Sections 13 and 14 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the rules and regulations thereunder) shall have become the
direct or indirect beneficial owner (as defined in Rules 13d-3 and 13d-5
promulgated under the Exchange Act) of, or shall have the right to vote or
otherwise control, 30% or more of any class of voting securities of the
Parent.
7.1.13 Liquidation,
Termination, Dissolution, Change in Management, etc.
The
Borrower shall liquidate, dissolve or terminate its existence or shall suspend
or terminate a substantial portion of its business operations or Xxxxx X.
Xxxxxxxxx shall no longer hold the office and perform the duties of chief
executive and chief operating officer of the Borrower any change occurs in the
management or control of the Borrower without the prior written consent of the
Agent.
7.1.14 Subordinated
Debt (Parent).
On or
before March 31, 2005, the maturity date of the subordinated debt in Parent
shall be not have been extended to at least December 31, 2007.
Section
7.2 Remedies.
Upon the
occurrence of any Event of Default, the Agent may, in the exercise of its sole
and absolute discretion from time to time, and shall, at the direction of the
Required Lenders, at any time thereafter exercise any one or more of the
following rights, powers or remedies.
7.2.1 Acceleration.
The Agent
may declare any or all of the Obligations to be immediately due and payable,
notwithstanding anything contained in this Agreement or in any of the other
Financing Documents to the contrary, without presentment, demand, protest,
notice of protest or of dishonor, or other notice of any kind, all of which the
Borrower hereby waives.
7.2.2 Further
Advances.
The Agent
may from time to time without notice to the Borrower suspend, terminate or limit
any further Advances, loans or other extensions of credit under the Commitment,
under this Agreement and/or under any of the other Financing Documents. Further,
upon the occurrence of an Event of Default or Default specified in Section
7.1.5
(Receiver; Bankruptcy) or Section
7.1.6
(Involuntary Bankruptcy, etc.), the Commitments and any agreement in any of the
Financing Documents to provide additional credit shall immediately and
automatically terminate and the unpaid principal amount of the Notes (with
accrued interest thereon) and all other Obligations then outstanding, shall
immediately become due and payable without further action of any kind and
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived by the Borrower.
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7.2.3 Uniform
Commercial Code.
The Agent
shall have all of the rights and remedies of a secured party under the
applicable Uniform Commercial Code and other applicable Laws. Upon demand by the
Agent, the Borrower shall assemble the Collateral and make it available to the
Agent, at a place designated by the Agent. The Agent or its agents may without
notice from time to time enter upon the Borrower’s premises to take possession
of the Collateral, to remove it, to render it unusable, to process it or
otherwise prepare it for sale, or to sell or otherwise dispose of
it.
Any
written notice of the sale, disposition or other intended action by the Agent
with respect to the Collateral that is sent by regular mail, postage prepaid, to
the Borrower at the address set forth in Section
9.1
(Notices), or such other address of the Borrower that may from time to time be
shown on the Agent’s records, at least ten (10) days prior to such sale,
disposition or other action, shall constitute commercially reasonable notice to
the Borrower. The Agent may alternatively or additionally give such notice in
any other commercially reasonable manner. Nothing in this Agreement shall
require the Agent to give any notice not required by applicable
Laws.
If any
consent, approval, or authorization of any state, municipal or other
Governmental Authority or of any other Person or of any Person having any
interest therein, should be necessary to effectuate any sale or other
disposition of the Collateral, the Borrower agrees to execute all such
applications and other instruments, and to take all other action, as may be
required in connection with securing any such consent, approval or
authorization.
The
Borrower recognizes that the Agent may be unable to effect a public sale of all
or a part of the Collateral consisting of investment property by reason of
certain prohibitions contained in the Securities Act of 1933, as amended, and
other applicable Federal and state Laws. The Agent may, therefore, in its
discretion, take such steps as it may deem appropriate to comply with such Laws
and may, for example, at any sale of the Collateral consisting of securities
restrict the prospective bidders or purchasers as to their number, nature of
business and investment intention, including, without limitation, a requirement
that the Persons making such purchases represent and agree to the satisfaction
of the Agent that they are purchasing such securities for their account, for
investment, and not with a view to the distribution or resale of any thereof.
The Borrower covenants and agrees to do or cause to be done promptly all such
acts and things as the Agent may request from time to time and as may be
necessary to offer and/or sell the securities or any part thereof in a manner
that is valid and binding and in conformance with all applicable Laws. Upon any
such sale or disposition, the Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral consisting of securities so
sold.
7.2.4 Specific
Rights With Regard to Collateral.
In
addition to all other rights and remedies provided hereunder or as shall exist
at law or in equity from time to time, the Agent may (but shall be under no
obligation to), without notice to the Borrower, and the Borrower hereby
irrevocably appoints the Agent as its attorney-in-fact, with power of
substitution, in the name of the Agent and/or any or all of the Lenders and/or
in the name of the Borrower or otherwise, for the use and benefit of the Agent
and the Lenders, but at the cost and expense of the Borrower and without notice
to the Borrower:
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(a) request
any Account Debtor obligated on any of the Receivables to make payments thereon
directly to the Agent, with the Agent taking control of the cash and non-cash
proceeds thereof;
(b) compromise,
extend or renew any of the Collateral or deal with the same as it may deem
advisable;
(c) make
exchanges, substitutions or surrenders of all or any part of the
Collateral;
(d) copy,
transcribe, or remove from any place of business of the Borrower or any
Subsidiary all books, records, ledger sheets, correspondence, invoices and
documents, relating to or evidencing any of the Collateral or without cost or
expense to the Agent or the Lenders, make such use of the Borrower’s or any
Subsidiary’s place(s) of business as may be reasonably necessary to administer,
control and collect the Collateral;
(e) repair,
alter or supply goods if necessary to fulfill in whole or in part the purchase
order of any Account Debtor;
(f) demand,
collect, receipt for and give renewals, extensions, discharges and releases of
any of the Collateral;
(g) institute
and prosecute legal and equitable proceedings to enforce collection of, or
realize upon, any of the Collateral;
(h) settle,
renew, extend, compromise, compound, exchange or adjust claims in respect of any
of the Collateral or any legal proceedings brought in respect
thereof;
(i) endorse
or sign the name of the Borrower upon any Items of Payment, certificates of
title, instruments, investment property, stock powers, documents, documents of
title, financing statements, assignments, notices or other writing relating to
or part of the Collateral and on any proof of claim in bankruptcy against an
Account Debtor;
(j) notify
the Post Office authorities to change the address for the delivery of mail to
the Borrower to such address or Post Office Box as the Agent may designate and
receive and open all mail addressed to the Borrower ; and
(k) take any
other action necessary or beneficial to realize upon or dispose of the
Collateral or to carry out the terms of this Agreement.
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7.2.5 Application
of Proceeds.
Any
proceeds of sale or other disposition of the Collateral will be applied by the
Agent to the payment first of any and all Agent’s Obligations, then to any and
all Enforcement Costs, and any balance of such proceeds will be remitted to the
Lenders in like currency and funds received ratably in accordance with their
respective Pro Rata Shares of such balance. Each Lender shall apply any such
proceeds received from the Agent to its Obligations in such order and manner as
such Lender shall determine. If the sale or other disposition of the Collateral
fails to fully satisfy the Obligations, the Borrower shall remain liable to the
Agent and the Lenders for any deficiency.
7.2.6 Performance
by Agent.
If the
Borrower shall fail to pay the Obligations or otherwise fail to perform, observe
or comply with any of the conditions, covenants, terms, stipulations or
agreements contained in this Agreement or any of the other Financing Documents,
the Agent without notice to or demand upon the Borrower and without waiving or
releasing any of the Obligations or any Default or Event of Default, may (but
shall be under no obligation to) at any time thereafter make such payment or
perform such act for the account and at the expense of the Borrower, and may
enter upon the premises of the Borrower for that purpose and take all such
action thereon as the Agent may consider necessary or appropriate for such
purpose and the Borrower hereby irrevocably appoints the Agent as its
attorney-in-fact to do so, with power of substitution, in the name of the Agent,
in the name of any or all of the Lenders, or in the name of the Borrower or
otherwise, for the use and benefit of the Agent, but at the cost and expense of
the Borrower and without notice to the Borrower. All sums so paid or advanced by
the Agent together with interest thereon from the date of payment, advance or
incurring until paid in full at the Post-Default Rate and all costs and
expenses, shall be deemed part of the Enforcement Costs, shall be paid by the
Borrower to the Agent on demand, and shall constitute and become a part of the
Agent’s Obligations.
7.2.7 Other
Remedies.
The Agent
may from time to time proceed to protect or enforce the rights of the Agent
and/or any of the Lenders by an action or actions at law or in equity or by any
other appropriate proceeding, whether for the specific performance of any of the
covenants contained in this Agreement or in any of the other Financing
Documents, or for an injunction against the violation of any of the terms of
this Agreement or any of the other Financing Documents, or in aid of the
exercise or execution of any right, remedy or power granted in this Agreement,
the Financing Documents, and/or applicable Laws. The Agent and each of the
Lenders is authorized to offset and apply to all or any part of the Obligations
all moneys, credits and other property of any nature whatsoever of the Borrower
now or at any time hereafter in the possession of, in transit to or from, under
the control or custody of, or on deposit with, the Agent, any of the Lenders or
any Affiliate of the Agent or any of the Lenders.
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ARTICLE
VIII
THE
AGENT
Section
8.1 Appointment
and Authorization.
Each
Lender hereby designates and appoints M&T as its Agent under this Agreement
and the other Financing Documents and each Lender hereby irrevocably authorizes
the Agent to take such action on its behalf under the provisions of this
Agreement and each other Financing Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Financing Document, together with such powers as are
reasonably incidental thereto. The Agent agrees to act as such on the express
conditions contained in this ARTICLE
VIII. The
provisions of this ARTICLE
VIII are
solely for the benefit of the Agent and the Lenders and the Borrower shall have
no rights as a third party beneficiary of any of the provisions contained
herein.
Section
8.2 Nature
of Duties
8.2.1 In
General.
Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in any
other Financing Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the 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 Financing Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term “agent” in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the 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 which the Agent is expressly entitled to take
or assert under this Agreement and the other Financing Documents, including (a)
the determination of the applicability of ineligibility criteria with respect to
the calculation of the Borrowing Base, (b) the making of Agent Advances, and (c)
the exercise of remedies pursuant to this Agreement and the other Financing
Documents, and any action so taken or not taken shall be deemed consented to by
the Lenders.
8.2.2 Delegation
of Duties.
The Agent
may execute any of its duties under this Agreement or any other Financing
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.
The 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 as determined by a final non-appealable
order by a court of competent jurisdiction,.
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8.2.3 Express
Authorization
The Agent
is hereby expressly and irrevocably authorized by each of the Lenders, as agent
on behalf of itself and the other Lenders:
(a) to
receive on behalf of each of the Lenders any payment or collection on account of
the Obligations and to distribute to each Lender its Pro Rata Share of all such
payments and collections so received as provided in this Agreement;
(b) to
receive all documents and items to be furnished to the Lenders under the
Financing Documents (nothing contained herein shall relieve the Borrower of any
obligation to deliver any item directly to the Lenders to the extent expressly
required by the provisions of this Agreement);
(c) to act or
refrain from acting in this Agreement and in the other Financing Documents with
respect to those matters so designated for the Agent;
(d) to act as
nominee for and on behalf of the Lenders in and under this Agreement and the
other Financing Documents;
(e) to
arrange for the means whereby the funds of the Lenders are to be made available
to the Borrower;
(f) to
distribute promptly to the Lenders, if required by the terms of this Agreement,
all written information, requests, notices, Loan Notices, payments, Prepayments,
documents and other items received from the Borrower or other
Person;
(g) to amend,
modify, or waive any provisions of this Agreement or the other Financing
Documents on behalf of the Lenders subject to the requirement that certain of
the Lenders’ consent be obtained in certain instances as provided in
9.2.2 (Consent
of All Lenders Required);
(h) to
deliver to the Borrower and other Persons, all requests, demands, approvals,
notices, and consents received from any of the Lenders;
(i) to
exercise on behalf of each Lender all rights and remedies of the Lenders upon
the occurrence of any Event of Default and/or Default specified in this
Agreement and/or in any of the other Financing Documents or applicable
Laws;
(j) to
execute any of the Security Documents and any other documents on behalf of the
Lenders as the secured party for the benefit of the Agent and the Lenders;
and
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(k) to take
such other actions as may be requested by the Required Lenders.
Section
8.3 Liability
of Agent.
None of
the Agent-Related Persons shall (a) 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
Financing Document or the transactions contemplated hereby (except for its own
gross negligence or willful misconduct as determined by a final non-appealable
order by a court of competent jurisdiction,), (b) be liable for any
apportionment or distribution of payments made by it in good faith and if any
such apportionment or distribution is subsequently determined to have been made
in error the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from the other Lenders any payment in excess of the amount
to which they are determined to be entitled (and such other Lenders hereby agree
to return to such Lender any such erroneous payments received by them), or (c)
be responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by the Borrower or any Subsidiary or Affiliate
of the Borrower, or any officer thereof, contained in this Agreement or in any
other Financing Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Financing Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Financing Document, or for any failure of the Borrower or
any other party to any Financing 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
Financing Document, or to inspect the properties, books or records of the
Borrower or any of the Borrower’s Subsidiaries or Affiliates.
Section
8.4 Reliance
by Agent.
The Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, 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 or Persons, and upon advice and statements of
legal counsel (including counsel to the Borrower), independent accountants and
other experts selected by the Agent. The Agent may deem and treat the original
Lenders as the owners of the respective Notes for all purposes until receipt by
the Agent of a written notice of assignment, negotiation or transfer of any
interest therein by the Lenders in accordance with the terms of this Agreement.
The Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Financing Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Financing Document in accordance with
a request or consent of the Required Lenders (or all Lenders if so required by
Section
9.2.2 (Consent
of All Lenders Required)) and such request and any action taken or failure to
act pursuant thereto shall be binding upon all of the Lenders.
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Section
8.5 Notice
of Default.
The Agent
shall not be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default, unless the Agent shall have received written notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a “notice of default.” The
Agent will notify the Lenders of its receipt of any such notice. The Agent shall
take such action with respect to such Default or Event of Default as may be
requested by the Required Lenders in accordance with Section
9.2.2 (Consent
of All Lenders Required); provided,
however, that
unless and until the Agent has received any such request, the 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.
Section
8.6 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 the Agent hereinafter
taken, including any review of the affairs of the Borrower and its Affiliates,
shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Lender. Each Lender represents to the 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 the Borrower and
its Affiliates, 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 the 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 Financing
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 the Borrower. Except for notices, reports and
other documents expressly herein required to be furnished to the Lenders by the
Agent, the Agent shall not have any duty or responsibility to provide any Lender
with (and, to the extent provided, Agent-Related Persons shall have no liability
for the accuracy or completeness of) any credit or other information, including,
without limitation, field examinations performed by Agent-Related Persons,
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower which may come into the possession
of any of the Agent-Related Persons. For
purposes of determining compliance with the conditions specified in ARTICLE
V
(CONDITIONS PRECEDENT), each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.
Section
8.7 Indemnification.
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 the Borrower and without limiting the obligation of the Borrower
to do so), in accordance with their Pro Rata Shares, from and against any and
all Indemnified Liabilities as such term is defined in Section
9.19
(Indemnification); provided,
however, that no
Lender shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from such Person’s
gross negligence or willful misconduct as determined by a final non-appealable
order by a court of competent jurisdiction,. Without limitation of the
foregoing, each Lender shall reimburse the Agent upon demand for its Pro Rata
Share of any costs or out-of-pocket expenses (including Enforcement Costs)
incurred by the 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 Financing Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrower. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
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Section
8.8 Agent
in Individual Capacity.
The
M&T and 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 the Borrower and its
Subsidiaries and Affiliates as though the M&T were not the Agent hereunder
and without notice to or consent of the Lenders. The M&T or its Affiliates
may receive information regarding the Borrower, its Affiliates and Account
Debtors (including information that may be subject to confidentiality
obligations in favor of the Borrower or such Subsidiary) and acknowledge that
the Agent and the M&T shall be under no obligation to provide such
information to them. With respect to its Loans, the M&T 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, and the terms “Lender” and “Lenders”
include the M&T in its individual capacity.
Section
8.9 Successor
Agent.
The Agent
may resign as Agent upon at least 30 days’ prior notice to the Lenders and the
Borrower, such resignation to be effective upon the acceptance of a successor
agent to its appointment as Agent. In the event the M&T sells all of its
Commitment and Revolving Loans as part of a sale, transfer or other disposition
by the M&T of substantially all of its loan portfolio, the M&T shall
resign as Agent and such purchaser or transferee shall become the successor
Agent hereunder. Subject to the foregoing, if the Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
agent for the Lenders. If no successor agent is appointed prior to the effective
date of the resignation of the Agent, the Agent may appoint, after consulting
with the Lenders and the Borrower, a successor agent from among the Lenders.
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 ARTICLE
8 shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement.
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Section
8.10 Status
of Lenders.
Each
Lender represents and warrants to the Agent that the Lender is a “United States
person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code
and such Lender claims exemption from, or a reduction of, U.S. withholding tax
under Sections 1441 or 1442 of the Internal Revenue Code, or has complied with
the provisions of Section
8.11
(Withholding Tax).
Section
8.11 Withholding
Tax.
If any
Lender is a “foreign corporation, partnership or trust” within the meaning of
the Code and such Lender claims exemption from, or a reduction of, U.S.
withholding tax under Sections 1441 or 1442 of the Code, such Lender agrees with
and in favor of the Agent, to deliver to the Agent:
(a) if such
Lender claims an exemption from, or a reduction of, withholding tax under a
United States of America tax treaty, properly completed IRS Forms W-8BEN and
W-8ECI before the payment of any interest in the first calendar year and before
the payment of any interest in each third succeeding calendar year during which
interest may be paid under this Agreement;
(b) if such
Lender claims that interest paid under this Agreement is exempt from United
States of America withholding tax because it is effectively connected with a
United States of America trade or business of such Lender, two properly
completed and executed copies of IRS Form W-8ECI before the payment of any
interest is due in the first taxable year of such Lender and in each succeeding
taxable year of such Lender during which interest may be paid under this
Agreement, and IRS Form W-9; and
(c) such
other form or forms as may be required under the Code or other laws of the
United States of America as a condition to exemption from, or reduction of,
United States of America withholding tax.
Such
Lender agrees to promptly notify the Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction.
If any
Lender claims exemption from, or reduction of, withholding tax under a United
States of America tax treaty by providing IRS Form FW-8BEN and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations owing to such Lender, such Lender agrees to notify the Agent of
the percentage amount in which it is no longer the beneficial owner of
Obligations of the Borrower to such Lender. To the extent of such percentage
amount, the Agent will treat such Lender’s IRS Form W-8BEN as no longer
valid.
If any
Lender claiming exemption from United States of America withholding tax by
filing IRS Form W-8ECI with the Agent sells, assigns, grants a participation in,
or otherwise transfers all or part of the Obligations owing to such Lender, such
Lender agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the
Code.
-88-
If any
Lender is entitled to a reduction in the applicable withholding tax, the Agent
may withhold from any interest payment to such Lender an amount equivalent to
the applicable withholding tax after taking into account such reduction. If the
forms or other documentation required by subsection
(a) of this
Section are not delivered to the Agent, then the Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
If the
IRS or any other Governmental Authority of the United States of America or other
jurisdiction asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form
was not delivered, was not properly executed, or because such Lender failed to
notify the Agent of a change in circumstances which rendered the exemption from,
or reduction of, withholding tax ineffective, or for any other reason) such
Lender shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section, together with all costs and expenses (including,
without limitation, reasonable attorneys fees and other Enforcement Costs). The
obligation of the Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of the Agent.
Section
8.12 Collateral
Matters.
8.12.1 Release
of Collateral.
The
Lenders hereby irrevocably authorize the Agent, at its option and in its sole
discretion, to release any Agent’s Liens upon any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrower
of all Loans and reimbursement obligations in respect of letters of credit and
any other Obligations, and the termination of all outstanding letters of credit
(whether or not any of such obligations are due) and all other Obligations;
(ii) constituting property being sold or disposed of if the Borrower
certifies to the Agent that the sale or disposition is made in compliance with
Section
6.2.1 (Capital
Structure, Merger, Acquisition or Sale of Assets) (and the Agent may rely
conclusively on any such certificate, without further inquiry);
(iii) constituting property in which the Borrower owned no interest at the
time the Lien was granted or at any time thereafter or property which was the
subject of a Permitted Lien in which the other secured party holds a Lien with
priority over the Agent’s Liens; or (iv) constituting property leased to the
Borrower under a lease which has expired or been terminated in a transaction
permitted under this Agreement. Except as provided above, the Agent will not
release any of the Agent’s Liens without the prior written authorization of the
Lenders; provided that the
Agent may, in its discretion, release the Agent’s Liens on Collateral valued in
the aggregate not in excess of $500,000 during each Fiscal Year without the
prior written authorization of the Lenders and the Agent may release the Agent’s
Liens on Collateral valued in the aggregate not in excess of $1,000,000 during
each Fiscal Year with the prior written authorization of Required Lenders. Upon
request by the Agent or the Borrower at any time, the Lenders will confirm in
writing the Agent’s authority to release any Agent’s Liens upon particular types
or items of Collateral pursuant to this Section
8.12.
Upon
receipt by the Agent of any necessary authorization required pursuant to this
Section
8.12 (a) from
the Lenders of the Agent’s authority to release Agent’s Liens upon particular
types or items of Collateral, and upon at least five (5) Business Days prior
written request by the Borrower, the Agent shall (and is hereby irrevocably
authorized by the Lenders to) execute such documents as may be necessary to
evidence the release of the Agent’s Liens upon such Collateral; provided,
however, that
(i) the Agent shall not be required to execute any such document on terms which,
in the Agent’s opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) 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 the Borrower in respect of)
all interests retained by the Borrower, including the proceeds of any sale, all
of which shall continue to constitute part of the Collateral.
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8.12.2 Status
of Agent’s Liens.
The Agent
shall have no obligation whatsoever to any of the Lenders to assure that the
Collateral exists or is owned by the Borrower or is cared for, protected or
insured or has been encumbered, or that the 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
the Agent pursuant to any of the Financing Documents, it being understood and
agreed that in respect of the Collateral, or any act, omission or event related
thereto, the Agent may act in any manner it may deem appropriate, in its sole
discretion given the Agent’s own interest in the Collateral in its capacity as
one of the Lenders and that the Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing.
Section
8.13 Restrictions
on Actions by Lenders; Sharing of Payments.
Each of
the Lenders agrees that it shall not, without the express consent of all
Lenders, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of all Lenders, set off against the Obligations, any amounts owing
by such Lender to the Borrower or any accounts of the Borrower now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it shall
not, unless specifically requested to do so by the Agent, take or cause to be
taken any action to enforce its rights under this Agreement or against the
Borrower, 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.
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 of the Borrower to such Lender arising under, or relating to, this
Agreement or the other Financing Documents, except for any such proceeds or
payments received by such Lender from the Agent pursuant to the terms of this
Agreement, or (ii) payments from the Agent in excess of such Lender’s
ratable portion of all such distributions by the Agent, such Lender shall
promptly (1) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided,
however, that if
all or part of 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.
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Section
8.14 Agency
for Perfection.
Each
Lender hereby appoints each other Lender as agent for the purpose of perfecting
the Lenders’ security interest in assets which, in accordance with Article 9 of
the Uniform Commercial Code can be perfected only by possession. Should any
Lender (other than the Agent) obtain possession of any such Collateral, such
Lender shall notify the Agent thereof, and, promptly upon the Agent’s request
therefor shall deliver such Collateral to the Agent or in accordance with the
Agent’s instructions.
Section
8.15 Dissemination
of Information.
The Agent
will provide the Lenders with any information received by the Agent from the
Borrower that is required to be provided to the Agent or to the Lenders
hereunder; provided,
however, that
the Agent shall not be liable to any one or more the Lenders for any failure to
do so, except to the extent that such failure is attributable to the Agent’s
gross negligence or willful misconduct as determined by a final non-appealable
order by a court of competent jurisdiction.
ARTICLE
IX
MISCELLANEOUS
Section
9.1 Notices.
All
notices, requests and demands to or upon the parties to this Agreement shall be
in writing and shall be deemed to have been given or made when delivered by hand
on a Business Day, or two (2) days after the date when deposited in the mail,
postage prepaid by registered or certified mail, return receipt requested, or
when sent by overnight courier, on the Business Day next following the day on
which the notice is delivered to such overnight courier, addressed as
follows:
|
Borrower:
|
Payments
Inc.
0000
Xxxxxxxx
Xxxxxxx,
Xxx Xxxx 00000
Attention: Xxxxx
X. Xxxxxxxxx |
|
with
a copy to:
|
Xxxx
Xxxxxxxx, Esquire
Certilman,
Balin, Xxxxx & Xxxxx, LLP
00
Xxxxxxx Xxxxxx
Xxxx
Xxxxxx, XX 00000 |
|
Agent:
|
Manufacturers
and Traders Trust Company
00
Xxxxx Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxxxx Xxxxx |
|
with
a copy to:
|
Xxxxxxxxx
X. Xxxxx, Xx., Esquire
Miles
& Stockbridge P. C.
00
Xxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxx 00000 |
|
M&T:
|
Manufacturers
and Traders Trust Company
00
Xxxxx Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxxxx Xxxxx |
|
with
a copy to:
|
Xxxxxxxxx
X. Xxxxx, Xx., Esquire
Miles
& Stockbridge P. C.
00
Xxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxx 00000 |
|
Other
Lenders:
|
at
the address set forth below their respective
signatures |
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By
written notice, each party to this Agreement may change the address to which
notice is given to that party, provided that such changed notice shall include a
street address to which notices may be delivered by overnight courier in the
ordinary course on any Business Day.
Section
9.2 Amendments;
Waivers.
9.2.1 Generally.
This
Agreement and the other Financing Documents may not be amended, modified, or
changed in any respect except by an agreement in writing signed by the Agent,
the Required Lenders and the Borrower, and, to the extent provided in
Section
9.2.2 (Consent
of all Lenders Required), by an agreement in writing signed by the Agent, all of
the Lenders and the Borrower. No waiver of any provision of this Agreement or of
any of the other Financing Documents, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing signed by the Required Lenders. No course of dealing between the
Borrower and the Agent and/or any of the Lenders and no act or failure to act
from time to time on the part of the Agent and/or any of the Lenders shall
constitute a waiver, amendment or modification of any provision of this
Agreement or any of the other Financing Documents or any right or remedy under
this Agreement, under any of the other Financing Documents or under applicable
Laws. Without implying any limitation on the foregoing, and subject to the
provisions of Section
9.2.2 (Consent
of all Lenders Required)
(a) Any
waiver or consent shall be effective only in the specific instance, for the
terms and purpose for which given, subject to such conditions as the Agent and
Lenders may specify in any such instrument.
(b) No waiver
of any Default or Event of Default shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent
thereto.
(c) No notice
to or demand on the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in the same, similar or other
circumstance.
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(d) No
failure or delay by the Lenders to insist upon the strict performance of any
term, condition, covenant or agreement of this Agreement or of any of the other
Financing Documents, or to exercise any right, power or remedy consequent upon a
breach thereof, shall constitute a waiver, amendment or modification of any such
term, condition, covenant or agreement or of any such breach or preclude the
Lenders from exercising any such right, power or remedy at any time or
times.
(e) By
accepting payment after the due date of any amount payable under this Agreement
or under any of the other Financing Documents, the Lenders shall not be deemed
to waive the right either to require prompt payment when due of all other
amounts payable under this Agreement or under any of the other Financing
Documents, or to declare a default for failure to effect such prompt payment of
any such other amount.
9.2.2 Consent
of all Lenders Required.
Notwithstanding
anything to the contrary contained herein, no amendment, modification, change or
waiver shall be effective without the consent of all of the Lenders
to:
(a) change
the Maturity Date or the date of payment of principal of, or interest on, any
Note;
(b) reduce
the principal amount of any Note, the rate of interest thereon or the Fees due
to the Lenders, except as expressly permitted in this Agreement;
(c) increase
the Total Revolving Credit Committed Amount, except as expressly permitted in
this Agreement; or
(d) modify
this Section
9.2.2 or the
definition of “Required Lenders.”
Section
9.3 Cumulative
Remedies.
The
rights, powers and remedies provided in this Agreement and in the other
Financing Documents are cumulative, may be exercised concurrently or separately,
may be exercised from time to time and in such order as the Agent shall
determine, subject to the provisions of this Agreement, and are in addition to,
and not exclusive of, rights, powers and remedies provided by existing or future
applicable Laws, all without regard to any right of the Borrower or any other
Person to the marshalling of assets, which right the Borrower and any other
Person (including, without limitation, the Guarantors) who may be liable (by
endorsement, guaranty, indemnity or otherwise) for all or any part of the
Obligations hereby waive to the extent permitted by applicable Laws. In order to
entitle the Agent to exercise any remedy reserved to it in this Agreement, it
shall not be necessary to give any notice, other than such notice as may be
expressly required in this Agreement. Without limiting the generality of the
foregoing and subject to the terms of this Agreement, the Agent
may:
(a) proceed
against the Borrower with or without proceeding against any other Person
(including, without limitation, any one or more of the Guarantors) who may be
liable (by endorsement, guaranty, indemnity or otherwise) for all or any part of
the Obligations;
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(b) proceed
against the Borrower with or without proceeding under any of the other Financing
Documents or against any Collateral or other collateral and security for all or
any part of the Obligations;
(c) without
reducing or impairing the obligation of the Borrower and without notice, release
or compromise with any guarantor or other Person liable for all or any part of
the Obligations under the Financing Documents or otherwise;
(d) without
reducing or impairing the obligations of the Borrower and without notice
thereof:
(i) fail to
perfect the Lien in any or all Collateral or to release any or all the
Collateral or to accept substitute Collateral;
(ii) approve
the making of Advances under this Agreement;
(iii) waive any
provision of this Agreement or the other Financing Documents;
(iv) exercise
or fail to exercise rights of set-off or other rights; or
(v) accept
partial payments or extend from time to time the maturity of all or any part of
the Obligations.
Section
9.4 Severability.
In case
one or more provisions, or part thereof, contained in this Agreement or in the
other Financing Documents shall be invalid, illegal or unenforceable in any
respect under any Law, then without need for any further agreement, notice or
action:
(a) the
validity, legality and enforceability of the remaining provisions shall remain
effective and binding on the parties thereto and shall not be affected or
impaired thereby;
(b) the
obligation to be fulfilled shall be reduced to the limit of such
validity;
(c) if such
provision or part thereof pertains to repayment of the Obligations, then, at the
sole and absolute discretion of the Agent, all of the Obligations of the
Borrower to the Agent and the Lenders shall become immediately due and payable;
and
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(d) if the
affected provision or part thereof does not pertain to repayment of the
Obligations, but operates or would prospectively operate to invalidate this
Agreement in whole or in part, then such provision or part thereof only shall be
void, and the remainder of this Agreement shall remain operative and in full
force and effect.
Section
9.5 Remaining
Syndication.
(a) On the
date of this Agreement, M&T is the only Lender, with a Revolving Credit
Committed Amount limited to $25,000,000, so that the Total Revolving Credit
Committed Amount on the date of this Agreement is $25,000,000. The Arranger has
reserved the right to syndicate all or a portion of the remaining $10,000,000
Revolving Credit Committed Amount to one or more financial institutions, which
will become Lenders under this Agreement, with the consent of the Borrower,
which consent shall not be unreasonably withheld or delayed and shall not be
required if an Event of Default has occurred.
(b) The
Arranger, in cooperation with the Borrower, will manage all aspects of the
syndication, including the selection of Lenders, the determination of when
Arranger will approach potential Lenders, and the final allocations among
Lenders. The Borrower agrees to assist Arranger actively in achieving a timely
syndication that is reasonably satisfactory to Arranger, such assistance to
include, among other things, (i) direct contact during the syndication between
the Borrower’s senior officers, representatives and advisors, on the one hand,
and prospective Lenders, on the other hand at such times and places as Arranger
may reasonably request, (ii) providing to Arranger all financial and other
information with respect to the Borrower and the transactions contemplated that
Arranger may reasonably request, including but not limited to financial
projections relating to the foregoing, and (iii) assistance in the preparation
of a confidential information memorandum and other marketing materials to be
used in connection with the syndication.
(c) The
Arranger shall notify the Agent and the Borrower in writing of the Adjustment
Date with respect to any new Lender under the provisions of this Section
9.5. On or
before the Adjustment Date, the Agent, the Borrower and the respective new
Lender shall execute and deliver a written amendments to this agreement in a
form acceptable to the Agent, and such other documents (including, without
limitation, a new Note to the order of the new Lender) as the Agent may require
to reflect the new Lender’s Revolving Credit Committed Amount and the increase
in the Total Revolving Credit Committed Amount.
Section
9.6 Assignments
by Lenders.
Any
Lender may, with the prior written consent of the Agent (which consent shall not
be unreasonably withheld), but without notice to or consent of the Borrower,
assign to any Person (each an “Assignee” and collectively, the “Assignees”) all
or a portion of such Lender’s Commitments; provided that, unless the Lender has
assigned all of its Commitments, after giving effect to such assignment, such
Lender must continue to hold a Pro Rata Share of the Commitments at least equal
to Five Million Dollars ($5,000,000). Any Lender that elects to make such an
assignment shall pay to the Agent, for the exclusive benefit of the Agent, an
administrative fee for processing each such assignment in the amount of Three
Thousand Five Hundred Dollars ($3,500.00). Such Lender and its Assignee shall
notify the Agent and the Borrower in writing of the date on which the assignment
is to be effective (the “Adjustment Date”). On or before the Adjustment Date,
the assigning Lender, the Agent, the Borrower and the respective Assignee shall
execute and deliver a written assignment agreement in a form acceptable to the
Agent, which shall constitute an amendment to this Agreement to the extent
necessary to reflect such assignment. Upon the request of any assigning Lender
following an assignment made in accordance with this Section
9.6, the
Borrower shall issue new Notes to the assigning Lender and its Assignee
reflecting such assignment, in exchange for the existing Notes held by the
assigning Lender.
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In
addition, notwithstanding the foregoing, any Lender may at any time pledge all
or any portion of such Lender’s rights under this Agreement, any of the
Commitments or any of the Obligations to a Federal Reserve Bank.
Section
9.7 Participations
by Lenders.
Any
Lender may at any time sell to one or more financial institutions participating
interests in any of such Lender’s Obligations or Commitments; provided, however,
that (a) no such participation shall relieve such Lender from its obligations
under this Agreement or under any of the other Financing Documents to which it
is a party, (b) such Lender shall remain solely responsible for the performance
of its obligations under this Agreement and under all of the other Financing
Documents to which it is a party, and (c) the Borrower, the Agent and the other
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 Financing Documents.
Section
9.8 Disclosure
of Information by Lenders.
In
connection with any transaction contemplated by Section
9.5
(Remaining Syndication) sale, transfer, assignment or participation by any
Lender in accordance with Section
9.6
(Assignments by Lenders) or Section
9.7
(Participations by Lenders), each Lender shall have the right to disclose to any
actual or potential Lender, purchaser, assignee, transferee or participant all
financial records, information, reports, financial statements and documents
obtained in connection with this Agreement and/or any of the other Financing
Documents or otherwise.
Section
9.9 Successors
and Assigns.
This
Agreement and all other Financing Documents shall be binding upon and inure to
the benefit of the Borrower, the Agent and the Lenders and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Agent and the Required Lenders of the Lenders.
Section
9.10 Continuing
Agreements.
All
covenants, agreements, representations and warranties made by the Borrower in
this Agreement, in any of the other Financing Documents, and in any certificate
delivered pursuant hereto or thereto shall survive the making by the Lenders of
the Loans and the execution and delivery of the Notes, shall be binding upon the
Borrower regardless of how long before or after the date hereof any of the
Obligations were or are incurred, and shall continue in full force and effect so
long as any of the Obligations are outstanding and unpaid. From time to time
upon the Agent’s request, and as a condition of the release of any one or more
of the Security Documents, the Borrower and other Persons obligated with respect
to the Obligations shall provide the Agent with such acknowledgments and
agreements as the Agent may require to the effect that there exists no defenses,
rights of setoff or recoupment, claims, counterclaims, actions or causes of
action of any kind or nature whatsoever against the Agent, any Agent-Related
Persons, any or all of the Lenders, and/or any of its or their agents and
others, or to the extent there are, the same are waived and
released.
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Section
9.11 Enforcement
Costs.
The
Borrower agrees to pay to the Agent on demand all Enforcement Costs, together
with interest thereon from the date incurred or advanced until paid in full at a
per annum rate of interest equal at all times to the Post-Default Rate.
Enforcement Costs shall be immediately due and payable at the time advanced or
incurred, whichever is earlier. Without implying any limitation on the
foregoing, the Borrower agrees, as part of the Enforcement Costs, to pay upon
demand any and all stamp and other Taxes and fees payable or determined to be
payable in connection with the execution and delivery of this Agreement and the
other Financing Documents and to save the Agent and the Lenders harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay any Taxes or fees referred to in this Section. The
provisions of this Section shall survive the execution and delivery of this
Agreement, the repayment of the other Obligations and shall survive the
termination of this Agreement.
Section
9.12 Applicable
Law; Jurisdiction.
9.12.1 Applicable
Law.
As a
material inducement to the Agent and the Lenders to enter into this Agreement,
the Borrower acknowledges and agrees that the Financing Documents, including,
this Agreement, shall be governed by the Laws of the State, as if each of the
Financing Documents and this Agreement had each been executed, delivered,
administered and performed solely within the State even though for the
convenience and at the request of the Borrower, one or more of the Financing
Documents may be executed elsewhere. The Agent and the Lenders acknowledge,
however, that remedies under certain of the Financing Documents that relate to
property outside the State may be subject to the laws of the state in which the
property is located.
9.12.2 Submission
to Jurisdiction.
The
Borrower irrevocably submits to the jurisdiction of any state or federal court
sitting in the State over any suit, action or proceeding arising out of or
relating to this Agreement or any of the other Financing Documents. The Borrower
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding brought in any such court and any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. Final judgment in any such suit, action or proceeding brought in any such
court shall be conclusive and binding upon the Borrower and may be enforced in
any court in which the Borrower is subject to jurisdiction, by a suit upon such
judgment, provided that service of process is effected upon the Borrower in one
of the manners specified in this Section or as otherwise permitted by applicable
Laws.
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9.12.3 Service
of Process.
The
Borrower hereby consents to process being served in any suit, action or
proceeding of the nature referred to in this Section by (a) the mailing of a
copy thereof by registered or certified mail, postage prepaid, return receipt
requested, to the Borrower at the Borrower’s address designated in or pursuant
to Section
9.1
(Notices), and (b) serving a copy thereof upon the agent, if any, designated and
appointed by the Borrower as the Borrower’s agent for service of process by or
pursuant to this Section. The Borrower irrevocably agrees that such service (y)
shall be deemed in every respect effective service of process upon the Borrower
in any such suit, action or proceeding, and (z) shall, to the fullest extent
permitted by law, be taken and held to be valid personal service upon the
Borrower. Nothing in this Section shall affect the right of the Agent to serve
process in any manner otherwise permitted by law or limit the right of the Agent
otherwise to bring proceedings against the Borrower in the courts of any
jurisdiction or jurisdictions.
Section
9.13 Duplicate
Originals and Counterparts.
This
Agreement may be executed in any number of duplicate originals or counterparts,
each of such duplicate originals or counterparts shall be deemed to be an
original and all taken together shall constitute but one and the same
instrument..
Section
9.14 No
Agency.
Nothing
herein contained shall be construed to constitute the Borrower as the agent of
the Agent or any of the Lenders for any purpose whatsoever or to permit the
Borrower to pledge any of the credit of the Agent or any of the Lenders. Neither
the Agent nor any of the Lenders shall be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof. Neither
the Agent nor any of the Lenders shall, by anything herein or in any of the
Financing Documents or otherwise, assume any of the Borrower’s obligations under
any contract or agreement assigned to the Agent and/or the Lenders, and neither
the Agent nor any of the Lenders shall be responsible in any way for the
performance by the Borrower of any of the terms and conditions
thereof.
Section
9.15 Date
of Payment.
Should
the principal of or interest on the Notes become due and payable on other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day and in the case of principal, interest shall be payable thereon at
the rate per annum specified in the Notes during such extension.
Section
9.16 Entire
Agreement.
This
Agreement is intended by the Agent, the Lenders and the Borrower to be a
complete, exclusive and final expression of the agreements contained herein.
Neither the Agent, the Lenders nor the Borrower shall hereafter have any rights
under any prior agreements pertaining to the matters addressed by this Agreement
but shall look solely to this Agreement for definition and determination of all
of their respective rights, liabilities and responsibilities under this
Agreement.
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Section
9.17 Waiver
of Trial by Jury.
THE
BORROWER, THE AGENT AND THE LENDERS HEREBY JOINTLY AND SEVERALLY WAIVE TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO WHICH THE BORROWER AND THE AGENT AND/OR ANY
OR ALL OF THE LENDERS MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO
(A) THIS AGREEMENT, (B) ANY OF THE FINANCING DOCUMENTS, OR (C) THE COLLATERAL.
THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL
PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE
NOT PARTIES TO THIS AGREEMENT.
This
waiver is knowingly, willingly and voluntarily made by the Borrower, the Agent
and the Lenders, and the Borrower, the Agent and the Lenders hereby represent
that no representations of fact or opinion have been made by any individual to
induce this waiver of trial by jury or to in any way modify or nullify its
effect. The Borrower, the Agent and the Lenders further represent that they have
been represented in the signing of this Agreement and in the making of this
waiver by independent legal counsel, selected of their own free will, and that
they have had the opportunity to discuss this waiver with counsel.
Section
9.18 Liability
of the Agent and the Lenders.
The
Borrower hereby agrees that neither the Agent nor any of the Lenders shall be
chargeable for any negligence, mistake, act or omission of any accountant,
examiner, agency or attorney employed by the Agent and/or any of the Lenders in
making examinations, investigations or collections, or otherwise in perfecting,
maintaining, protecting or realizing upon any lien or security interest or any
other interest in the Collateral or other security for the
Obligations.
By
inspecting the Collateral or any other properties of the Borrower or by
accepting or approving anything required to be observed, performed or fulfilled
by the Borrower or to be given to the Agent and/or any of the Lenders pursuant
to this Agreement or any of the other Financing Documents, neither the Agent nor
any of the Lenders shall be deemed to have warranted or represented the
condition, sufficiency, legality, effectiveness or legal effect of the same, and
such acceptance or approval shall not constitute any warranty or representation
with respect thereto by the Agent and/or the Lenders.
Section
9.19 Indemnification.
The
Borrower agrees to indemnify and hold harmless, the Agent, the Lenders, the
respective parent and Affiliates of the Agent and the Lenders and the respective
parent’s and Affiliates’ officers, directors, shareholders, employees and agents
(each an “Indemnified Party;” and collectively, the “Indemnified Parties”), from
and against any and all claims, liabilities, losses, damages, costs and expenses
(whether or not such Indemnified Party is a party to any litigation), including
without limitation, reasonable attorney’s fees and costs and costs of
investigation, document production, attendance at depositions or other
discovery, incurred by any Indemnified Party with respect to, arising out of or
as a consequence of (a) this Agreement or any of the other Financing Documents,
including without limitation, any failure of the Borrower to pay when due (at
maturity, by acceleration or otherwise) any principal, interest, fee or any
other amount due under this Agreement or the other Loan documents, or any other
Event of Default; (b) the use by the Borrower of any proceeds advanced
hereunder; (c) the transactions contemplated hereunder; or (d) any claim,
demand, action or cause of action being asserted against (i) the Borrower or any
of its Affiliates by any other Person, or (ii) any Indemnified Party by the
Borrower in connection with the transactions contemplated hereunder (the
foregoing collectively, the “Indemnified Liabilities”). Notwithstanding anything
herein or elsewhere to the contrary, the Borrower shall not be obligated to
indemnify or hold harmless any Indemnified Party from any liability, loss or
damage resulting from the gross negligence or willful misconduct (as determined
by a final non-appealable order by a court of competent jurisdiction) of such
Indemnified Party. Any amount payable to the Agent and/or the Lenders under this
Section will bear interest at the Post-Default Rate from the due date until
paid.
[Signatures
follow on next page]
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Signature
Page to
Payments
Inc.,
Manufacturers
and Traders Trust Company, Agent
and
Certain
Lenders
IN
WITNESS WHEREOF, each of the parties hereto have executed and delivered this
Agreement under their respective seals as of the day and year first written
above.
|
WITNESS:
/s/
|
PAYMENTS
INC.
By:/s/
Xxxxx X. Xxxxxxxxx(Seal)
Xxxxx
X. Xxxxxxxxx
President
|
|
WITNESS:
/s/
|
MANUFACTURERS
AND TRADERS TRUST COMPANY
in
its capacity as Agent
By:/s/
Xxxxxxxx Xxxxx(Seal)
Xxxxxxxx
Xxxxx
Vice
President
|
|
WITNESS:
/s/
|
MANUFACTURERS
AND TRADERS TRUST COMPANY
in
its capacity as Lender
By:/s/
Xxxxxxxx Xxxxx(Seal)
Xxxxxxxx Xxxxx
Vice
President |
LIST
OF EXHIBITS
A-1. Revolving
Credit Note
A-2 Commitments
B. Perfection
Certificate
C. Form of
Compliance Certificate
D. Borrower
Financial Reports and Information
E. Carrier
Eligibility
F. Form of
Premium Finance Agreement
G. Premium
Finance Licenses
LIST
OF SCHEDULES
Schedule
4.1.10 Litigation
Schedule
4.1.13 Indebtedness
for Borrowed Money
Schedule
4.1.20 Employee
Relations
Schedule
4.1.22 Perfection
and Priority of Collateral
