Contract
Exhibit
99.1
EXECUTION
VERSION
AMENDED
AND RESTATED LOAN AND SECURITY AGREEMENT
THIS
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into as of November
26, 2008 among nFinanSe Inc., a Nevada corporation (“Parent”), and
nFinanSe Payments Inc., a Nevada corporation (“Sub”, and together
with Parent, on a joint and several basis, the “Borrowers”), each of
the Persons identified as Lenders on Schedule 1.1(a)
attached hereto (together with each of their successors and assigns, referred to
individually as a “Lender” and
collectively, as the “Lenders”), and
Ballyshannon Partners, L.P., a Pennsylvania limited partnership (“Ballyshannon Partners”), acting as agent (in such
capacity, and any successor to Ballyshannon Partners, the “Agent”).
WHEREAS,
Borrowers, Lenders and Agent are parties to that certain Loan and Security
Agreement, dated as of June 10, 2008, as modified by a First Amendment to Loan
and Security Agreement dated as of August 18, 2008 and a Second Amendment to
Loan and Security Agreement dated as of September 4, 2008 (as previously
amended, the “Original
Loan and Security Agreement”).
WHEREAS,
in connection with the Original Loan and Security Agreement, Parent issued
warrants to purchase common stock to each of the Lenders (the “Original
Warrants”).
WHEREAS,
the Borrowers have requested that the Lenders amend and restate the Original
Loan and Security Agreement to allow for Accommodation Loans (as defined
below).
WHEREAS,
in connection with the parties entering into this Agreement (as defined below),
the Parent is (i) repricing the Original Warrants issued to those certain
Lenders that are making the Accommodation Loans (the “Accommodation
Lenders”) such that the Original Warrants’ exercise price will be lowered
from $2.30 per share to $1.00 per share and (ii) issuing additional warrants to
each Accommodation Lender allowing the purchase of that number of shares equal
to 50% of the amount of such Accommodation Lender's Accommodation Loans, which
warrants shall have an exercise price of $2.00 per share.
WHEREAS,
Borrowers, Agent and Lenders desire to set forth the terms and conditions
pursuant to which the Lenders will make available to Borrowers certain
loans.
NOW,
THEREFORE, Borrowers, Agent and Lenders, intending to be legally bound hereby,
agree as follows:
ARTICLE
I: DEFINITIONS
1.1 General
Definitions:
As used
herein, the following terms shall have the meanings herein specified (to be
equally applicable to both the singular and plural forms of the term
defined):
“Accounts” shall mean
all of Borrowers’ “accounts” (as defined
in the Code), whether now existing or existing in the future, including, without
limitation, all accounts receivable, including, without limitation, all accounts
created by or arising from all sales of goods or rendition of services made
under either Borrower's corporate name or either Borrower’s trade name or styles
or through either Borrower’s divisions.
“Accommodation
Lenders” shall have the definition set forth in the recitals to this
Agreement.
“Accommodation Loan”
shall mean a Loan requested by the Borrowers and advanced by a Lender at such
Lender’s sole discretion in an amount, together with all other Loans advanced by
such Lender, not to exceed such Lender’s Commitment.
“Accounts Receivable
Loan” shall mean a Loan that is not an Accommodation Loan.
“Acceptance Date”
shall have the meaning set forth in Section 13.6(c) of this
Agreement.
“Affiliate” shall mean
any Person which directly or indirectly controls, is controlled by, or is under
common control with, a Borrower. For purposes of this definition, “control”
shall mean the possession, directly or indirectly, of the power to (i) vote 30% or more of the
Voting Stock of such Person, or (ii) direct or cause the direction of management
and policies of a business, whether through the ownership of Voting Stock, by
contract or otherwise and either alone or in conjunction with others or any
group.
“Agent” shall have the
meaning set forth in the first paragraph of this Agreement.
“Agreement” shall mean
this Amended and Restated Loan and Security Agreement, as the same may be
modified, amended, extended, restated or supplemented from time to
time.
“Applicable Rate”
shall mean either the Commitment Rate or the Investment Rate, as the case may
be.
“Approved Distributor”
means Interactive Communications, Inc., Blackhawk Network, a subsidiary of
Safeway, Inc., Supervalu, Inc., Walgreen Co., and any other distributor or large
chain store retailer of SVCs that is requested by a Borrower and approved by the
Required Lenders.
“Assignment and
Acceptance” shall mean an assignment and acceptance entered into by an
assigning Lender, and accepted by Agent, in accordance with Section
13.6.
“Authorized Person”
shall mean the President, any Vice President appointed by the Board of Directors
of a Borrower, Controller, or Chief Financial Officer of a
Borrower.
“Ballyshannon” shall
mean Ballyshannon Partners and Ballyshannon Family Partnership, L.P., a
Pennsylvania limited partnership.
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“Ballyshannon
Partners” shall have the meaning set forth in the first paragraph of this
Agreement.
“Benefit Plan” shall
mean a defined benefit plan as defined in Section 3(35) of ERISA (other than a
Multiemployer Plan) in respect of which a Borrower, or any ERISA Affiliate, is
or within the immediately preceding six (6) years was, an “employer” as defined
in Section 3(5) of ERISA.
“Borrowers” shall have
the meaning set forth in the first paragraph of this Agreement.
“Business Day” shall
mean any day other than a Saturday, a Sunday, a legal holiday or a day on which
banking institutions are authorized or required by law or other governmental
action to close in New York, New York.
“Capital Lease”
shall mean, as
applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in accordance
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.
“Capitalized Lease
Obligations” shall mean any Indebtedness under any lease of any property
(whether real, personal or mixed) which, in accordance with GAAP, is or should
be accounted for as a Capital Lease on the balance sheet of that
Person.
“Capital Stock” shall
mean (i) in the case of a corporation, capital stock, (ii) in the case of an
association or business entity, any and all shares, interests, participations,
rights or other equivalents (however designated) of capital stock, (iii) in the
case of a partnership, partnership interests (whether general or limited), (iv)
in the case of a limited liability company, membership interests and (v) any
other equity interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person
“Change of Control”
shall mean with respect to the Borrowers, the result caused by any “person” (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), becoming the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of more than thirty-three and one-third percent (33
1/3%) of the total voting power of the Voting Stock of a Borrower entitled to
vote, other than the Lenders and their Affiliates and any such person holding
such power at the Closing Date.
“Closing Date” shall
mean the date of this Agreement.
“Code” shall mean the
Uniform Commercial Code as in effect in the State of New York.
“Collateral” shall
mean any and all rights and interests in or to personal Property (including
leasehold improvements) of the Borrowers, whether now owned or hereafter
acquired, pledged from time to time as security for the Obligations pursuant to
this Agreement or any of the other Credit Documents.
“Commercial Tort
Claim” shall have the meaning given thereto in the Code.
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“Commission” means the
Securities and Exchange Commission and any successor agency.
“Commitment” shall
mean (i) with respect to Ballyshannon, $1,000,000, (ii) with respect to
Midsummer, $5,000,000, (iii) with respect to Xxxxxx, $2,500,000, and (iv) with
respect to Trellus, $7,000,000.
“Commitment Rate”
shall mean six percent (6%) per annum.
“Common Stock” shall
mean the common stock of Parent, par value $0.001 per share, and any other class
of securities into which such securities may hereafter be reclassified or
changed into.
“Compliance
Certificate” shall have the meaning set forth in Section 7.1(b) of this
Agreement.
“Credit Documents”
shall mean, collectively, this Agreement, the Notes, the Security Documents, the
Deposit Account Control Agreement, the Warrants, the Registration Rights
Agreement and all other documents, agreements, instruments, opinions and
certificates executed and delivered in connection herewith or therewith, as the
same may be modified, amended, extended, restated or supplemented from time to
time.
“Default” shall mean
an event, condition or default which, with the giving of notice, the passage of
time or both would be an Event of Default.
“Defaulting Financial
Institution” means any bank, thrift or financial institution with which a
Lender has a contractual right to cause such institution to fund a Loan on
behalf of such Lender and that has (a) failed to comply with instructions from a
Lender to fund a Loan, unless due to a good faith dispute with the
applicable Lender or (b) (i) become or is insolvent or (ii) become the subject
of a bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee or custodian appointed for it, or has taken any action in furtherance
of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment.
“Deposit Account”
shall mean the account of the Borrowers at the Depository Bank.
“Deposit Account Control
Agreement” shall mean the deposit account control agreement entered into
between Borrowers, Agent, and the Depository Bank with respect to the Deposit
Account.
“Deposit Account Interest
Payment” shall mean the product of (x) the Commitment Rate and (y) the
difference between (i) the average daily balance of the Deposit Account during
the calendar month preceding the date of such Deposit Account Interest Payment
and (ii) the average daily balance of the nFinanSe Deposit in the Deposit
Account during the calendar month preceding the date of such Deposit Account
Interest Payment.
“Depository Bank”
shall mean Wachovia Bank, National Association.
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“DOL” shall mean the
U.S. Department of Labor and any successor department or agency.
“Dollars” and “$” shall mean dollars
in lawful currency of the United States of America.
“Eligible Accounts”
shall mean all of the Borrowers’ Accounts with an Approved Distributor, and all
related supporting obligations, any other rights to the payment of money,
payment intangibles, all cash and non-cash proceeds of all of the foregoing, and
proceeds of proceeds, that (i) are lawfully and exclusively owned by a Borrower
and subject to no Lien (other than Liens granted under the Security Documents)
and a Borrower has the right of assignment thereof and the power to grant a
security interest therein, (ii) are valid and enforceable representing the
undisputed indebtedness of an Approved Distributor to a Borrower, (iii) are not
subject to any defense, set-off, or counterclaim, deduction, discount, credit,
chargeback, allowance or adjustment of any kind, (iv) arose in the ordinary
course of a Borrower's business, (v) no notice of the bankruptcy, receivership,
reorganization, liquidation, dissolution, or insolvency of an Approved
Distributor has been received by Agent, any Lender or a Borrower, and (vi) the
transaction which gave rise to the Eligible Account, complies in all respects
with all applicable laws, rules and regulations of any Governmental
Authority.
“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and any successor statute.
“ERISA Affiliate”
shall mean any (i) corporation which is or was at any time a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Internal Revenue Code) as the Borrowers, (ii) partnership or other trade or
business (whether or not incorporated) at any time under common control (within
the meaning of Section 414(c) of the Internal Revenue Code) with the Borrowers,
and (iii) member of the same affiliated service group (within the meaning of
Section 414(m) of the Internal Revenue Code) as the Borrowers, any corporation
described in clause (i) above, or any partnership or trade or business described
in clause (ii) above.
“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Excluded Taxes” shall
have the meaning set forth in Section 2.4(a) of this Agreement.
“Extension Conditions”
shall have the meaning set forth in Section 2.2(c) of this
Agreement.
“GAAP” shall mean
generally accounting principles in the United States of America, as in effect on
the date hereof.
“Governmental
Authority” shall mean any federal, state, local or foreign court or
governmental agency, authority, instrumentality or regulatory body.
“Highest Lawful Rate”
shall mean, at any given time during which any Obligations shall be outstanding
hereunder, the maximum nonusurious interest rate, if any, that at any time or
from time to time may be contracted for, taken, reserved, charged or received on
the Obligations under the laws of the State of New York (or the law of any other
jurisdiction whose laws may, by order of court, be mandatorily applicable
notwithstanding other provisions of this Agreement and the other Credit
Documents), in any case after taking into account, to the extent permitted by
applicable law, any and all relevant payments or charges under this Agreement
and any other Credit Documents, and any available exemptions, exceptions and
exclusions.
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“Indebtedness” shall
mean, with respect to any Person, without duplication, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, or upon which interest payments
are customarily made, (c) all obligations of such Person under conditional sale
or other title retention agreements relating to property purchased by such
Person (other than customary reservations or retentions of title under
agreements with suppliers entered into in the ordinary course of business), (d)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services purchased by such Person (other than trade debt incurred
in the ordinary course of business and payable in accordance with customary
practices) which would appear as liabilities on a balance sheet of such Person,
(e) all obligations of such Person under take-or-pay or similar arrangements,
(f) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on, or payable out of the proceeds of production from, property owned
or acquired by such Person, whether or not the obligations secured thereby have
been assumed, (g) all guaranties of such Person with respect to Indebtedness of
the type referred to in this definition of another Person, (h) the principal
portion of all Capitalized Lease Obligations of such Person, (i) the face amount
(less any amount thereof that shall have been drawn and reimbursed) of all
standby or commercial letters of credit issued or bankers’ acceptances
facilities created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (j) all preferred Capital
Stock issued by such Person and required by the terms thereof to be redeemed, or
for which mandatory sinking fund payments are due, by a fixed date, (k) the
principal portion of all obligations of such Person under off balance sheet
financing arrangements and (l) the Indebtedness of any partnership or
unincorporated joint venture in which such Person is a general partner or a
joint venturer.
“Independent
Accountant” shall mean a firm of independent public accountants of
nationally recognized standing selected by the Board of Directors of Parent,
which is “independent” as that term is defined in Rule 2-01 of Regulation S-X
promulgated by the Commission, or a firm of independent public accountants
otherwise reasonably acceptable to Agent.
“Initial Funding Date”
shall mean the date on which the Lenders fund the initial Loan to Borrowers
pursuant to this Agreement.
“Initial Loan Amount”
shall mean $850,000.
“Internal Revenue”
shall mean the Internal Revenue Service and any successor agency.
“Internal Revenue
Code” shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute thereto and all rules and regulations
promulgated thereunder.
“Inventory” shall mean
all of Borrowers’ inventory, including without limitation, (i) all raw
materials, work in process, parts, components, assemblies, supplies and
materials used or consumed in the Borrowers’ business, (ii) all goods, wares and
merchandise, finished or unfinished, held for sale or lease or leased or
furnished or to be furnished under contracts of service, and (iii) all goods
returned to or repossessed by the Borrowers.
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“Investment” in any
Person shall mean (i) the acquisition (whether for cash, property, services,
assumption of Indebtedness, securities or otherwise, but exclusive of the
acquisition of inventory, supplies, equipment and other property or assets used
or consumed in the ordinary course of business of the applicable Borrower) of
assets, shares of Capital Stock, bonds, notes, debentures, partnership, joint
ventures or other ownership interests or other securities of such Person, or
(ii) any other capital contribution to or investment in such
Person.
“Investment Rate”
shall mean sixteen percent (16%) per annum.
“Investment Rate
Amount” shall mean the difference between (x) the average daily balance
of the Outstanding Accounts Receivable Loan Amount and (y) (i) the average daily
balance of the Deposit Account during a calendar month, less (ii) the average
daily balance of the nFinanSe Deposit in the Deposit Account during such
calendar month.
“Investment Rate Interest
Payment” shall mean the product of (x) the Investment Rate Amount for the
calendar month preceding the date of such Investment Rate Interest Payment and
(y) the Investment Rate.
“Leases” shall have
the meaning set forth in Section 6.16 of this Agreement.
“Lenders” shall have
the meaning set forth in the first paragraph of this Agreement.
“Lender’s Extension
Notice” shall have the meaning set forth in Section 2.2(c) of this
Agreement.
“Lien(s)” shall mean
any lien, charge, trust, pledge, security interest, deed of trust, mortgage, assignment or
other claim or encumbrance of any kind or nature upon any interest in
Property.
“Loans” shall have the
meaning set forth in Section 2.1(b)(i) of this Agreement.
“Material Adverse
Change” shall mean a material adverse change in (a) the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of a Borrower, (b) the Collateral, (c) a Borrower’s
ability to perform its obligations under the Credit Documents, or (d) the
validity, enforceability or availability of rights and remedies of Agent or
Lender hereunder.
“Material Adverse
Effect” shall mean a material adverse effect on (a) the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of a Borrower, (b) the Collateral, (c) a Borrower’s
ability to perform its obligations under the Credit Documents, or (d) the
validity, enforceability or availability of rights and remedies of Agent or
Lender hereunder.
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“Material Contract”
shall mean any contract or other arrangement, whether written or oral, to which
a Borrower is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto could reasonably be expected to have a
Material Adverse Effect.
“Maturity Date” shall
mean the date one year after the Initial Funding Date, or, if such day is not a
Business Day, the first Business Day thereafter, as such date may be extended in
accordance with the terms hereof.
“Metavante” shall mean
Metavante Corporation, a Wisconsin corporation, and any successor thereto
approved by the Required Lenders.
“Midsummer” shall mean
Midsummer Investment, Ltd., an entity organized under the laws of
Bermuda.
“Multiemployer Plan”
shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA and (i) which is, or within the immediately preceding six (6) years was,
contributed to by a Borrower, or any ERISA Affiliate or (ii) with respect to
which a Borrower may incur any liability.
“nFinanSe Deposit”
shall mean the funds deposited by the Borrowers in the Deposit Account to fund
any Small Distributor Withdrawals.
“Notes” shall have the
meaning set forth in Section 2.1(c) of this Agreement.
“Notice of Borrowing”
shall have the meaning set forth in Section 2.1(b)(iv) of this
Agreement.
“Obligations” shall
mean the Loans, any other loans and advances or extensions of credit made or to
be made at any time by any Lender (or by Agent on behalf of any Lender) to
Borrowers, or to either of them, or to others for a Borrower’s account in each
case pursuant to the terms and provisions of this Agreement, or any other Credit
Document, together with interest thereon (including interest which may accrue as
post-petition interest in connection with any bankruptcy or similar proceeding)
and, including, without limitation, any expenses, liabilities and obligations of
every kind or nature which may at any time be owing by Borrowers to Agent, or
any Lender in each case pursuant to this Agreement, or any other Credit
Document, whether now in existence, hereafter arising or incurred from time to
time by a Borrower, and all expenses incurred at any time by Agent or Lenders
hereunder, as well as expenditures to protect, preserve or defend any Collateral
and Agent’s rights hereunder or in the Collateral, all of the foregoing, whether
unsecured or secured, due or to become due, absolute or contingent, joint or
several, matured or unmatured, direct or indirect, related or unrelated and
whether Borrowers’ are liable to Agent or such Lender for such indebtedness as
principal, surety, endorser, guarantor or otherwise.
“Official Body” shall
mean any national, federal, state, local or other government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether domestic or foreign.
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“Original Loan and Security
Agreement” shall have the meaning set forth in the recitals to this
Agreement.
“Original Warrants”
shall have the meaning set forth in the recitals to this Agreement.
“Outstanding Accommodation
Loan Amount” shall mean the aggregate principal amount of all
Accommodation Loans made by Lenders to Borrowers, less the amount of any such
principal repaid by Borrowers to Lenders.
“Outstanding Loan
Amount” shall mean the sum of the Outstanding Accommodation Loan Amount
and the Outstanding Accounts Receivable Loan Amount.
“Outstanding Accounts
Receivable Loan Amount” shall mean the aggregate principal amount of all
Accounts Receivable Loans made by Lenders to Borrowers, less the amount of any
such principal repaid by Borrowers to Lenders.
“Other Taxes” shall
have the meaning set forth in Section 2.4(b).
“Parent” shall have
the meaning set forth in the first paragraph of this Agreement.
“PBGC” shall mean the
Pension Benefit Guaranty Corporation and any Person succeeding to the functions
thereof.
“Permitted
Indebtedness” shall mean:
(i) Indebtedness
to Lenders with respect to the Loans or otherwise, pursuant to the Credit
Documents;
(ii) trade
debt incurred by a Borrower in the ordinary course of business, consistent with
past practice;
(iii) the
short-term leases of the Borrowers set forth on Schedule 1.1(b)-1
attached hereto;
(iv) obligations
arising under surety bonds obtained by the Borrowers in the ordinary course of
business, which obligations may be direct obligations of the Borrowers to the
surety or may be reimbursement obligations to third parties contractually
obligated to the surety, including the obligations of the Borrowers set forth in
Schedule
1.1(b)-2 attached hereto.
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“Permitted
Investments” shall mean:
(i) interest-bearing
demand or time deposits (including certificates of deposit) which are insured by
the Federal Deposit Insurance Corporation (“FDIC”) or a similar federal
insurance program;
(ii) Investments
existing on the Closing Date and set forth on Schedule 1.1(c)
attached hereto;
(iii) marketable,
direct obligations of the United States of America, its agencies and
instrumentalities maturing within 365 days of the date of purchase;
(iv) commercial
paper issued by corporations, each of which shall have a net worth of at least
$100,000,000, and each of which conducts a substantial part of its business in
the United States of America, maturing within 270 days from the date of the
original issue thereof, and which at the time of acquisition has the highest
rating by Xxxxx’x Investors Service, Inc. or Standard and Poor’s
Corporation;
(v) bankers’
acceptances, and certificates of deposit maturing within 365 days of the date of
purchase which are issued by, or time deposits maintained with, an eligible
institution having capital, surplus and undivided profits totaling more than
$100,000,000 and which have the highest rating by Xxxxx’x Investors Service,
Inc. or Standard and Poor’s Corporation; and
(vi) money
market or similar funds that invest primarily in the types of
investments
referred
to in clauses (i), (iii), (iv) and (v) above.
“Permitted Liens”
shall mean:
(i) Liens
granted to Agent by Borrowers pursuant to any Credit Document;
(ii) existing
Liens set forth on Schedule 1.1(d)
attached hereto;
(iii) Liens of
warehousemen, mechanics, materialmen, workers, repairmen, fillers, packagers,
processors, common carriers, landlords and other similar Liens arising by
operation of law or otherwise, for amounts that are not yet due and payable or
which are being diligently contested in good faith by a Borrower by appropriate
proceedings, provided that in any such case an adequate reserve is being
maintained by Borrowers for the payment of same;
(iv) Liens for
taxes, assessments or other governmental charges not yet due and payable or
which are being diligently contested in good faith by a Borrower by appropriate
proceedings;
(vi) deposits or
pledges to secure leases and obligations under workmen’s compensation, social
security or similar laws, or under unemployment insurance; and
(vii) deposits to secure
obligations under surety bonds incurred in the ordinary course of business not
to exceed $1,800,000;
(viii) deposits of up to $300,000
to First National Bank & Trust; and
(ix) reserve
account deposits provided to issuing banks to secure obligations incurred in the
ordinary course of business.
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“Person” shall mean
any individual, sole proprietorship, partnership, joint venture, limited
liability entity, trust, unincorporated organization, association, corporation,
institution, entity, or government (including any division, agency or department
thereof), and, as applicable, the successors, heirs and assigns of
each.
“Plan” shall mean any
employee benefit plan, program or arrangement, whether oral or written,
maintained or contributed to by a Borrower, or with respect to which a Borrower
may incur liability.
“Xxxxxx” shall mean
Xxxxxx Partners, L.P., a California limited partnership.
“Property” shall mean
all personal and real property of every kind and description (whether tangible
or intangible) in which a Person has any right, title or interest.
“Proprietary Rights”
shall have the meaning set forth in Section 6.14 of this Agreement.
“Real Property” shall
mean all right, title and interest of the Borrowers (including any leasehold
estate) in and to any parcel of real property owned or operated by a Borrower,
together with, in each case, all improvements, and appurtenant fixtures,
equipment, easements and other property and rights incidental to the ownership,
lease or operation thereof.
“Registration Rights
Agreement” shall mean the Registration Rights Agreement, between the
Parent and the Agent with respect to the Registration Statement.
“Registration
Statement” shall mean a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale of the
Warrant Shares by each Lender as provided for in the Registration Rights
Agreement.
“Reportable Event”
shall mean any of the events described in Section 4043 of ERISA and the
regulations thereunder.
“Required Lenders”
shall mean, at any time, Lenders which are then in compliance with their
obligations hereunder and holding in the aggregate at least 67% of the
Commitments.
“Restricted Payment”
shall mean (i) any cash dividend or other cash distribution, direct or indirect,
on account of any shares of any class of Capital Stock of either Borrower, as
the case may be, now or hereafter outstanding, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of Capital Stock of either Borrower now
or hereafter outstanding by such Borrower, as the case may be, (iii) any cash
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire any
shares of any class of Capital Stock of either Borrower now or hereafter
outstanding, or (iv) any payment to any Affiliate of a Borrower (other than
those set forth on Schedule 1.1(e)
hereto).
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“SEC Filings” shall
have the meaning set forth in Section 6.5 of this Agreement.
“SEC Reports” shall
have the meaning set forth in Section 6.5 of this Agreement.
“Securities Act” shall
have the meaning set forth in Section 6.5 of this Agreement.
“Security Documents”
shall mean any existing or future agreement or document (including this
Agreement) granting, creating or conferring any Lien in favor of Agent for the
benefit of Lenders securing all or any portion of the Obligations.
“Small Distributor
Withdrawals” shall mean any automated clearing house withdrawals from the
Deposit Account made by Metavante to fund an SVC, which funding creates an
account that is not an Eligible Account.
“Structures” shall
mean all plants, offices, manufacturing facilities and warehouses.
“Sub” shall have the
meaning set forth in the first paragraph of this Agreement.
“Subsidiary” shall
mean, as to any Person, (a) any corporation more than 50% of whose Voting Stock
(irrespective of whether or not at the time, any class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time owned by such Person directly or indirectly
through Subsidiaries, (b) any partnership, association, joint venture or other
entity in which such Person directly or indirectly through Subsidiaries has more
than a 50% interest in the total capital, total income and/or total ownership
interests of such entity at any time and (c) any partnership in which such
Person is a general partner.
“SVC” shall mean a
stored value card whose cash value has been funded by a Borrower, either
directly or with the proceeds of a Loan.
“SVC Issuer” shall
mean First National Bank and Trust and Palm Desert National Bank, and any
successor thereto or any issuer consented to by the Agent.
“Taxes” shall mean any
federal, state, local or foreign income, sales, use, transfer, payroll,
personal, property, occupancy, franchise or other tax, levy, impost, fee,
imposition, assessment or similar charge, together with any interest or
penalties thereon.
“Termination Event”
shall mean (i) a Reportable Event with respect to any Benefit Plan or
Multiemployer Plan, (ii) the withdrawal of a Borrower, or any ERISA Affiliate
from a Benefit Plan during a plan year in which such entity was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA, (iii) the providing of
notice of intent to terminate a Benefit Plan pursuant to Section 4041 of ERISA,
(iv) the institution by the PBGC of proceedings to terminate a Benefit Plan or
Multiemployer Plan, (v) any event or condition (a) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Benefit Plan or Multiemployer Plan, or (b) that
may result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA, or (vi) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of a Borrower, or any ERISA Affiliate from a
Multiemployer Plan.
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“Trading Market” shall
mean the following markets or exchanges on which the Common Stock is listed or
quoted for trading on the date in question: the Nasdaq Capital Market, the
American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market
or the OTC Bulletin Board.
“Trellus” shall mean
Trellus Partners, L.P., a Delaware limited partnership.
“Voting Stock” shall
mean, with respect to any Person, Capital Stock issued by such Person the
holders of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar functions) of
such Person, even though the right so to vote has been suspended by the
happening of such a contingency.
“Warrants” shall mean
each of the Common Stock Purchase Warrants delivered by Parent to Lenders on or
before the Initial Funding Date.
“Warrant Shares” shall
mean the shares of Common Stock issued and issuable upon exercise of the
Warrants.
1.2. Accounting Terms and
Determinations:
Unless otherwise defined or specified
herein, all accounting terms shall be construed herein and all accounting
determinations to be made under this Agreement shall be made in accordance with
GAAP.
ARTICLE
II: LOANS
2.1 Loans:
a. Commitment.
(i) Subject
to the terms and conditions hereof and in reliance upon the representations and
warranties set forth herein, each Lender severally agrees to lend to Borrowers
at any time or from time to time on or after the conditions specified in Section
5.1 have been satisfied to Agent’s satisfaction and before the Maturity Date,
such Accounts Receivable Loans as may be requested by Borrowers, in an amount
(together with the principal amount of Accommodation Loans funded by
such Lender) not to exceed such Lender’s Commitment.
(ii) Trellus
shall only be obligated to lend to Borrowers if the Outstanding Loan Amount at
the time of the Notice of Borrowing, plus the amount requested in the Notice of
Borrowing, is in excess of $8,500,000; provided, however, that in such event,
Trellus shall only be responsible for funding the amount of such
excess.
(iii) Notwithstanding
the foregoing, each Lender (other than Midsummer) may, in its sole discretion,
fund Accommodation Loans, provided that the aggregate principal amount of
Accommodation Loans from all Lenders shall not exceed $3,400,000.
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b. Funding:
(i) At
any time from and after the date on which the conditions specified in Section
5.1 have been satisfied to Agent’s satisfaction, Borrowers may request that
Lenders make an initial loan for the benefit of Borrowers (each, a “Loan”; and
collectively, the “Loans”) in an amount
not less than the Initial Loan Amount, or, if such Loan is an Accommodation
Loan, in an amount not less than $200,000.
(ii) At
any time from and after the date on which the initial Loan is made pursuant to
Section 2.1(b)(i), Borrowers may request that Lenders make additional Loans in
the minimum amount of $400,000 at any one time when, on the date of such
request, the Outstanding Loan Amount is less than $10,000,000, or in the minimum
amount of $1,000,000 at any one time when, on the date of such request, the
Outstanding Loan Amount is greater than or equal to
$10,000,000. Notwithstanding the foregoing, Borrowers may request
that Lenders make Accommodation Loans in the minimum amount of $200,000 at any
one time.
(iii) Until
such time as their Commitments are fully drawn, Ballyshannon shall advance
11.77% of each Loan requested, Midsummer shall advance 58.82% of each Loan
requested, and Xxxxxx shall advance 29.41% of each Loan requested. At
such time as the Outstanding Loan Amount equals or exceeds $8,500,000, Trellus
shall advance 100% of each Loan requested. Notwithstanding the
foregoing, if the Borrowers request Loans that are not Accommodation Loans while
an Accommodation Loan is outstanding, then each of Ballyshannon, Midsummer and
Xxxxxx shall advance such portion of such requested Loan (which may be 0%) as
shall be necessary to cause the ratio of (a) the outstanding principal amount of
Loans (including Accommodation Loans, if any) advanced by such Lender to (b) the
aggregate outstanding principal amount of all Loans (including Accommodation
Loans) advanced by each such Lender to become equal to the percentage set forth
in the first sentence of this Section 2.1(b)(iii), at which point all requested
Loans that are not Accommodation Loans shall be funded in accordance with the
first sentence of this Section 2.1(b)(iii).
(iv) Each
request for borrowing hereunder (including the initial request) shall be made by
a notice from Borrowers to Agent and each Lender (a “Notice of
Borrowing”), given not later than 1:00 P.M. Eastern Standard Time not
less than five calendar days prior to the Business Day on which the proposed
borrowing is requested to be made (or, as to the initial Accounts Receivable
Loan and any Accommodation Loans, such shorter period as the advancing Lender
shall agree). Each Notice of Borrowing shall be given by either telephone or
facsimile and, if requested by Agent or any Lender, confirmed in writing if by
telephone, setting forth (1) the requested Business Day of such borrowing, (2)
the aggregate amount of such requested borrowing and (3) certification by
Borrowers that they have complied, and will comply, in all respects with Section
5.2 and Section 5.3. Each Notice of Borrowing shall be irrevocable by and
binding on Borrowers. Loans may be repaid and reborrowed in accordance with the
provisions hereof. No Loan shall be requested to be made, or shall be made, on a
day that is not a Business Day; and
(v) Prior
to the Initial Funding Date, the Borrowers will deposit $50,000.00 in the
Deposit Account to fund any Small Distributor Withdrawals.
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c. Notes. The
obligations to repay the Loans and to pay interest thereon shall be evidenced by
separate promissory notes of Borrowers in favor of each Lender (collectively,
the “Notes”),
in form and substance acceptable to Agent, one Note being payable to the order
of each Lender in a principal amount equal to such Lender’s Commitment and
representing the joint and several unconditional obligations of Borrowers to pay
to such Lender its Commitment, or, if less, the aggregate unpaid principal
amount of all Loans made by such Lender hereunder, plus interest accrued
thereon, as set forth herein. Borrowers irrevocably authorize each Lender, at
its option, to make or cause to be made appropriate notations on its Note, or on
a record pertaining thereto, reflecting Loans and repayments thereof. The
outstanding amount of the Loans set forth on such Lender's Note or record or on
the books and records of Agent shall be prima facie evidence of the
principal amount thereof owing and unpaid to such Lender, but the failure to
make such notation or record, or any error in such notation or record shall not
limit or otherwise affect the obligations of Borrowers hereunder or under any
Note to make payments of principal of or interest on any Note when
due.
d. Borrowings under the
Notes.
(i) No
later than 1:00 P.M. Eastern Standard Time on the date on which a borrowing
other than an Accommodation Loan is requested to be made pursuant to the
applicable Notice of Borrowing, and upon fulfillment of the conditions set forth
in Article V for such borrowing, each Lender will make available to Borrowers by
deposit into the Deposit Account, in immediately available funds, its applicable
portion of such borrowing requested to be made, as set forth in Section
2(b). No later than 1:00 P.M. Eastern Standard Time on the date on
which an Accommodation Loan borrowing is requested to be made pursuant to the
applicable Notice of Borrowing, and upon fulfillment of the conditions set forth
in Article V for such borrowing, the applicable Lender will make available to
Borrowers by deposit into an account designated by Borrowers (other than the
Deposit Account), in immediately available funds, its applicable portion of such
borrowing requested to be made, as set forth in Section 2(b).
(ii) The
failure of any Lender to make the Loan to be made by it as part of any borrowing
shall not relieve any other Lender of its obligation, if any, hereunder to make
its Loan on the date of such borrowing, but no Lender shall be responsible for
the failure of any other Lender to make the Loan to be made by such other Lender
on the date of any borrowing. The amounts payable to each Lender shall be a
separate and independent obligation.
(iii) Each
Lender shall earn interest at the Applicable Rate, calculated in accordance with
Article III, on outstanding Loans which it has funded hereunder from the date
such Lender funded such Loan to, but excluding, the date on which such Lender is
repaid with respect to such Loan.
(iv) Notwithstanding
the obligation of Borrowers to send written confirmation of a Notice of
Borrowing made by telephone if and when requested by Agent or any Lender, in the
event that Agent or any Lender agrees to accept a Notice of Borrowing made by
telephone, such telephonic Notice of Borrowing shall be binding on Borrowers
whether or not written confirmation is sent by Borrowers or requested by Agent
or such Lender. Agent and any Lender may act prior to the receipt of any
requested written confirmation, without any liability whatsoever, based upon
telephonic notice believed by Agent or such Lender in good faith to be from an
Authorized Person. Agent’s or any Lender’s records of the terms of
any telephonic Notices of Borrowing shall be conclusive on Borrowers in the
absence of gross negligence or willful misconduct on the part of Agent or Lender
in connection therewith.
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(v) The
proceeds of each Accounts Receivable Loan shall be deposited solely to the
credit of the Deposit Account (and shall not be available for credit to any
other Person or account) and Borrowers hereby acknowledge and confirm that upon
such proceeds being so credited, a Loan in an amount equal to such credit shall
have been made for all purposes of this Agreement.
2.2 Optional and Mandatory
Payments; Extension of Maturity Date:
a. Voluntary
Prepayments. Borrowers shall have the right to prepay Loans in whole or
in part from time to time in amounts of $1,000,000 or integral multiples thereof
(or, as to Accommodation Loans, $200,000 or integral multiples thereof, or such
other amount as the Lenders advancing such Loan shall agree), on five calendar
days’ notice to Agent and Lenders. All prepayments of principal hereunder shall
be accompanied by the payment of all accrued interest thereon at the Applicable
Rate. No such prepayment shall reduce the Commitment. Any amount of principal
prepaid hereunder may be reborrowed in accordance with the terms and conditions
hereof.
b. Mandatory
Payments.
(i) The
Borrowers shall pay each Lender interest on the Loans extended by such Lender
monthly in arrears on the fifth Business Day of each calendar month, which
interest shall be calculated daily at the Applicable Rate until such Loans are
paid in full. Interest shall be paid to each Lender’s designated
account in accordance with the schedule of Lender accounts set forth in Schedule 2.2(b);
provided, however, that each Lender may change the account information set forth
in Schedule
2.2(b) upon notice to the Borrowers and Agent. All outstanding
Obligations shall be paid in full on the Maturity Date.
(ii) If
any Borrower issues any debt or equity securities (other than Permitted
Indebtedness permitted under Section 8.2 and 8.5 or equity
securities issued by a Subsidiary of any Borrower to any Borrower or other
Subsidiary or debt securities evidencing Loans hereunder), then no later than
the Business Day following the date of receipt of the proceeds thereof,
Borrowers shall repay outstanding Accommodation Loans, in an amount equal to all
such proceeds, which payment shall be allocated pro rata in accordance with the
ratio that the aggregate principal amount of Accommodation Loans outstanding for
each Accommodation Loan Lender bears to the Outstanding Accommodation Loan
Amount.
c. Extension of Maturity
Date. In the event Borrowers desire to extend the Maturity
Date from the one year anniversary of the Initial Funding Date to the 18-month
anniversary of the Initial Funding Date, Borrowers shall notify Agent and
Lenders thereof not more than 90 days and not less than 60 days prior to the
one-year anniversary date of the Initial Funding Date. If Borrowers
so notify Agent and Lenders, not later than 45 days prior to the one-year
anniversary of the Initial Funding Date, each Lender shall notify Agent and
Borrowers if it desires to extend the Maturity Date to such 18-month anniversary
(the “Lender’s
Extension Notice”). In the event all Lenders so agree to extend the
Maturity Date and no Default or Event of Default then exists or exists on such
one-year anniversary (the foregoing being the “Extension
Conditions”), effective on such one-year anniversary, the Maturity Date
shall be extended to the 18-month anniversary of the Initial Funding
Date. In the event that less than all Lenders agree to so extend the
Maturity Date, upon the consent of the remaining Lenders and Borrowers and
fulfillment of the Extension Conditions, (x) the Maturity Date shall be extended
to the 18-month anniversary of the Initial Funding Date effective on such
one-year anniversary, and (y) such remaining Lender(s), Agent (if there is more
than one remaining Lender) and Borrowers shall execute and deliver such
documents and instruments, and amendments to Credit Documents, as shall be
necessary, in the opinion of such remaining Lender(s) and Agent (if applicable),
to evidence the Commitment as shall thereafter be in effect. In the event no
Lender so agrees to extend the Maturity Date to the 18-month anniversary of the
Initial Funding Date, the Maturity Date shall remain as the one-year anniversary
of the Initial Funding Date. Any Lender who fails to deliver a Lender’s
Extension Notice shall be deemed to have not agreed to extend the Maturity
Date.
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2.3 Payments and
Computations:
a. Borrowers
shall direct each Approved Distributor to make all payments due by it (other
than fees owed to Borrowers by such Approved Distributor) to a Borrower in
respect of Eligible Accounts directly to the Deposit Account. All
collections of Eligible Accounts not deposited directly into the Deposit Account
(other than fees owed to Borrowers by Approved Distributors) and received by the
Borrowers shall be held in trust for the benefit of Lenders (in accordance with
the priority of the Lien on the Accounts set forth in Section 4.1) and remitted,
in specie, for deposit
in the Deposit Account immediately upon receipt by the Borrowers. All
funds deposited into the Deposit Account shall immediately become cash
collateral in favor of the Agent, for the benefit of the Lenders (in accordance
with the priority of the Lien on the Accounts set forth in Section
4.1).
b. Borrowers
hereby agree to pay the Deposit Account Interest Payment and the Investment Rate
Interest Payment in the manner set forth herein, unless otherwise instructed by
Agent.
c. Borrowers
hereby authorize Agent to charge against the Deposit Account, at any time on or
after the Maturity Date (as the same may be extended in accordance with the
terms hereof), any of the Obligations which are due and payable (other than
Obligations for Accommodation Loans) in accordance with the terms
hereof.
d. Any
payments falling due under this Agreement on a day other than a Business Day
shall be due and payable on the next succeeding Business Day and shall accrue
interest at the Applicable Rate to but excluding such Business Day.
2.4 Taxes:
a. Any
and all payments by Borrowers hereunder or under the Notes to or
for
the
benefit of any Lender shall be made, in accordance with Section 2.3, free and
clear of and without deduction for any and all present or future Taxes,
deductions, charges or withholdings and all liabilities with respect thereto,
excluding, in the case of each such Lender and Agent, Taxes imposed on or
measured by Agent’s or any Lender’s net income or receipts (any such excluded
Taxes, collectively, “Excluded Taxes”). If
Borrowers shall be required by law to deduct any Taxes (other than Excluded
Taxes) from or in respect of any sum payable hereunder or under any Note to or
for the benefit of Agent or any Lender, (i) the sum payable shall be increased
as may be necessary so that after making all required deductions of Taxes
(including deductions of Taxes applicable to additional sums payable under this
Section 2.4) Agent or such Lender, as the case may be, receives an amount equal
to the sum it would have received had no such deductions been made, (ii)
Borrowers shall make such deductions and (iii) Borrowers shall pay the full
amount so deducted to the relevant taxation authority or other authority in
accordance with applicable law.
b. In
addition, Borrowers agree to pay any present or future stamp, documentary,
privilege, intangible or similar Taxes or any other excise or property Taxes,
charges or similar levies that arise at any time or from time to time (other
than Excluded Taxes) (i) from any payment made under any and all Credit
Documents, (ii) from the transfer of
the rights of Lender under any Credit Documents to any other Lender or Lenders
or (iii) from the execution or delivery by Borrowers of, or from the filing or
recording or maintenance of, or otherwise with respect to, any and all Credit
Documents (hereinafter referred to as “Other
Taxes”).
c. Borrowers
will indemnify Lenders for the full amount of Taxes and will indemnify Agent and
each Lender, as the case may be, for the full amount of Other Taxes paid by
Agent (on its own behalf or on behalf of any Lender), or by such Lender in
respect of payments made or to be made hereunder, and any liability (including
penalties, interest and expenses) arising solely therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Payment of this indemnification shall be made within 30 days from the
date such Lender or Agent, as the case may be, makes written demand
therefor.
d. Within 30 days
after Agent’s request, Borrowers shall furnish to Agent, at its address referred
to in Section 13.5, the original or certified copy of a receipt evidencing
payment of any Taxes.
e. Without
prejudice to the survival of any other agreement of Borrowers hereunder, the
agreements and obligations of Borrowers contained in this Section 2.4 shall
survive the payment in full of all Obligations.
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2.5 Sharing of
Payments:
If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
setoff or otherwise) on account of the Loans made by it in excess of its pro
rata share of such payment as provided for in this Agreement, such Lender shall
forthwith purchase from the other Lenders such participation in the applicable
Loans made by them as shall be necessary to cause such purchasing Lender to
share the excess payment accruing to all Lenders in accordance with their
respective ratable shares as provided for in this Agreement; provided, however,
that if all or any portion of such excess is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and each
such Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender’s ratable
share (according to the proportion of (i) the amount of such Lender’s required
repayment to (ii) the total amount so recovered from the purchasing Lender) or
any interest or other amount paid or payable by the purchasing Lender in respect
to the total amount so recovered. Borrowers agree that any Lender so purchasing
a participation from another Lender pursuant to this Section 2.5 may, to the
fullest extent permitted by law, exercise all of its rights of payment
(including the right of setoff) with respect to such participation as fully as
if such Lender were the direct creditor of Borrowers in the amount of such
participation.
2.6 Repayment of
Principal:
a. Each payment
or prepayment of principal on the Loans from amounts on deposit in the Deposit
Account or from collections of Eligible Accounts required to be deposited in the
Deposit Account in accordance with Section 2.3(a), shall be allocated (i) first,
to the repayment of all outstanding Loans from Trellus, and (ii) second, only
after the repayment of all outstanding Loans from Trellus, pro rata among the
other Lenders, in accordance with the first sentence of Section 2.1(b)(iii), to
the repayment of all outstanding Accounts Receivable Loans.
b. Each payment
or prepayment of principal on the Loans, other than from amounts on deposit in
the Deposit Account or from collections of Eligible Accounts required to be
deposited in the Deposit Account in accordance with Section 2.3(a), shall be
allocated (i) first, to the repayment of all outstanding Loans from Trellus,
(ii) second, pro rata among the other Lenders who have advanced Accommodation
Loans, in accordance with the ratio that the aggregate principal amount of
Accommodation Loans outstanding for each such Lender bears to the Outstanding
Accommodation Loan Amount; (iii) only after the repayment of all outstanding
Loans from Trellus and all outstanding Accommodation Loans, pro rata among the
other Lenders, in accordance with the first sentence of Section 2.1(b)(iii), to
the repayment of all outstanding Accounts Receivable Loans.
c. Notwithstanding
the foregoing Section 2.6(a) and (b), upon the occurrence and during the
existence of an Event of Default or the exercise by the Agent or the Lenders of
any remedies hereunder, each payment or prepayment of principal on the Loans
shall be allocated (i) first, to the extent of funds in the Deposit Account and
collections of accounts receivable, pro rata among the Lenders in the proportion
of the then outstanding principal amount of Accounts Receivable Loans made by
each Lender to the Outstanding Accounts Receivable Loan Amount and (ii) second,
after such application, pro rata among the Lenders in the proportion of the then
outstanding principal amount of any then remaining Loans made by each Lender to
the then Outstanding Loan Amount.
2.7 Joint and Several
Liability:
a. Each
Borrower shall be jointly and severally liable for all Obligations regardless
of, inter alia, which Borrower requested a particular Loan.
b. Without
limiting the effect of Section 13.15, to the extent that mandatory and
non-waivable provisions of applicable law (including but not limited to any
applicable business corporation laws) otherwise would render the other Credit
Documents invalid or unenforceable, the Borrowers’ obligations hereunder and
under the other Credit Documents shall be limited to the maximum amount which
does not result in such invalidity or unenforceability.
2.8 Defaulting Financial
Institution:
a. Notwithstanding
any provision of this Agreement to the contrary, if any bank, thrift or
financial institution holding funds on behalf of a Lender becomes a Defaulting
Financial Institution, then the following provisions shall apply for so long as
such entity is a Defaulting Financial Institution:
(i) any
Lender who has instructed such Defaulting Financial Institution to fund a Loan
shall have no liability for the failure of such Defaulting Financial Institution
to fund such Loan, provided that the Lender makes commercially reasonable
efforts to secure the funding of such Loan.
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ARTICLE
III: INTEREST
3.1 Interest on
Loans:
a. Interest
on the outstanding Loans shall accrue as follows: (i) for all outstanding Loans
the proceeds of which are on deposit in the Deposit Account, interest shall
accrue thereon at the Commitment Rate and (ii) for all outstanding Loans the
proceeds of which have been debited from the Deposit Account, interest shall
accrue thereon at the Investment Rate. Interest on the Accommodation
Loans shall accrue at the Investment Rate.
b. Prior
to the third Business Day of each month that any Loans are outstanding,
Borrowers shall calculate (and Agent shall approve) the Deposit Interest Payment
and/or Investment Rate Payment due on the fifth Business Day of that month and
shall notify Depository Bank, Borrowers and Lenders thereof. All calculations of
such payments by Borrowers shall be conclusive on Borrowers and Lenders if
approved by Agent, in the absence of manifest error.
c. All
computations of interest hereunder shall be made on the basis of a year of 360
days for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such interest is payable (to the
extent computed on the basis of days elapsed).
3.2 Interest After Event of
Default:
Interest on any amount of matured
principal under the Loans, and interest on the amount of principal under the
Loans outstanding as of the date an Event of Default occurs, and at all times
thereafter until the earlier of the date upon which (a) all Obligations have
been paid and satisfied in full or (b) such Event of Default shall have been
cured or waived, shall be payable on demand at a rate equal to the rate or rates
at which the Loans are then bearing interest pursuant to Section 3.1, plus
2.00%.
3.3 Interest from Depository
Bank:
Subject to the terms and conditions of
the Credit Documents, any interest payable by the Depository Bank on the
Depository Account in accordance with the terms of such account shall accrue to
the benefit of, and be payable to, the Borrowers.
ARTICLE
IV: COLLATERAL
4.1 Description:
As
security for the payment of the Obligations and satisfaction by Borrowers of all
covenants and undertakings contained in this Agreement and the other Credit
Documents, each Borrower hereby assigns and grants to Agent, for the pro rata
benefit of Lenders, a continuing Lien on and security interest in, upon and to
all of the Borrowers’ personal property, including, without limitation, all of
the following personal property. Notwithstanding the foregoing, the
security interest granted hereby to the Agent in Accounts and any and all
Proceeds thereof shall be held by the Agent (a) first, to secure those
Obligations consisting of Accounts Receivable Loans until the aggregate amount
of such Accounts equals such Obligations, and (b) second, solely to the extent
the aggregate amount of such Accounts exceeds the Accounts Receivable Loans, to
secure all other Obligations hereunder. Defined terms used in this
Section 4.1 and not otherwise defined in this Agreement have the meanings set
forth in the Code.
a. Accounts - All of
Borrowers’ now owned and hereafter acquired, created, or arising
Accounts;
b. Inventory - All of
the Borrowers’ now owned or hereafter acquired Inventory of every nature and
kind, wherever located;
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c. General Intangibles -
All of the Borrowers’ now owned and hereafter acquired, created or arising
General Intangibles of every kind and description, including, without
limitation, customer lists, choses in action, claims, books, records, goodwill,
patents and patent applications, copyrights, trademarks, tradenames, service
marks, tradestyles, trademark applications, trade secrets, contracts, contract
rights, royalties, licenses, franchises, deposits, license, franchise and
royalty agreements, formulae, tax and any other types of refunds, returned and
unearned insurance premiums, rights and claims under insurance policies
including without limitation, credit insurance and key man life insurance
policies, and computer information, software, records and data;
d. Equipment - All of
the Borrowers’ now owned and hereafter acquired Equipment, including, without
limitation, machinery, vehicles, furniture and Fixtures, wherever located, and
all replacements, parts, accessories, substitutions and additions
thereto;
e. Deposit Accounts -
All of the Borrowers’ now existing and hereafter acquired or arising Deposit
Accounts (as defined in the Code) (including without limitation, the Deposit
Account), reserves and credit balances of every nature, wherever located, and
all documents and records associated therewith;
f. Property in Agent’s or any
Lender’s Possession - All personal property of the
Borrowers, now or hereafter in the possession of Agent or any
Lender;
g. Investment Property -
All of the Borrowers’ now owned or hereafter acquired Investment Property of
every kind (including, without limitation, the Borrowers’ equity interest in any
Subsidiary or Affiliate);
h. Letter of Credit
Rights - All of the Borrowers’ now owned or hereafter acquired Letter of
Credit Rights;
i. Commercial Tort
Claims - All of the Borrowers’ now owned or hereafter acquired Commercial
Tort Claims;
j. Other Property - All
of the Borrowers’ now owned or hereafter acquired or created Instruments and
other notes receivable, Goods, Chattel Paper, Documents (including bills of
lading, warehouse receipts and other documents of title), Payment Intangibles,
guarantees, Supporting Obligations, letters of credit, rights of rescission,
stoppage in transit, replevin, and reclamation, and returned, reclaimed and
repossessed goods; and
k. Proceeds - The
Proceeds (including, without limitation, insurance proceeds), whether cash or
non-cash, of all of the foregoing personal property and interests in personal
property.
4.2 Lien
Documents:
On or
before the Initial Funding Date, and thereafter from time to time as Agent deems
necessary, each Borrower shall execute and/or deliver to Agent the following
(all in form and substance satisfactory to Agent):
a. Financing Statements
- Financing statements, which Agent may file in any jurisdiction where any
Collateral is or may be located and in any other jurisdiction that Agent deems
appropriate; and
b. Other Agreements -
Any other agreements, documents, instruments and writings, including, without
limitation, trademark, patent and/or copyright security agreements and
amendments or supplements thereto, as may be required by Agent to evidence,
perfect or protect Agent’s Liens and security interests in the
Collateral.
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4.3 Other
Actions:
Each Borrower will defend the
Collateral against all Liens (other than Permitted Liens), claims and demands of
all Persons at any time claiming the same or any interest therein. Each Borrower
agrees to comply with the requirements of all state and federal laws and
requests of Agent in order for Agent to have and maintain a valid and perfected
first security interest (subject only to Permitted Liens) in the Collateral
including, without limitation, executing such documents as Agent may require to
obtain Control (as defined in the Code) over all Letter of Credit Rights,
Deposit Accounts and Investment Property. Agent is hereby authorized by each
Borrower to file any financing statements covering the Collateral or an
amendment that adds collateral covered by a financing statement or an amendment
that adds a debtor to a financing statement, in each case whether or not a
Borrower’s signature appears thereon. Each Borrower hereby authorizes Agent to
file all such financing statements and amendments to financing statements
describing the Collateral in any filing office as Agent, in its reasonable
discretion, may determine, including financing statements listing “All Assets”
in the collateral description therein. In addition to the foregoing, each
Borrower shall perform all further acts that may be lawfully and reasonably
required by Agent to secure Agent and effectuate the intentions and objects of
this Agreement, including, but not limited to, the execution and delivery of
continuation statements, amendments to financing statements, security
agreements, contracts and any other documents required hereunder. At Agent’s
request, each Borrower shall immediately deliver (with execution by the
Borrowers of all necessary documents or forms to reflect, implement or enforce
all Liens described herein thereon) to Agent all certificates of title to note
Agent’s Lien thereon and all documents or items for which Agent must receive
possession to obtain and/or maintain perfected security interests, including
without limitation, all notes, letters of credit, certificates and documents of
title, chattel paper, warehouse receipts, instruments, and any other similar
Collateral.
4.4 Searches and
Certificates:
Borrowers shall, on or before the
Initial Funding Date, at Borrowers’ expense, obtain (and Agent may also do so,
at its option, but at Borrowers’ expense from time to time) the following
searches (the results of which are to be consistent with the warranties made by
Borrowers in this Agreement and in any other Credit Documents):
a. UCC
searches with the Secretary of State of each Borrower’s jurisdiction of
organization;
b. Judgment,
federal tax lien and state tax lien searches, in all applicable filing offices
of each jurisdiction searched under subparagraph (a) above; and
c. Searches
of ownership and Lien status of intellectual property in the appropriate
governmental offices.
ARTICLE
V: CONDITIONS
PRECEDENT
5.1 Closing
Conditions:
The obligation of each Lender to make
Loans hereunder shall be subject to the satisfaction, on or prior to the Initial
Funding Date, of the following conditions precedent (all agreements and
documents from Borrowers or any other Person to be in form and substance
acceptable to Agent, in its sole discretion):
a. Executed Credit
Documents. Receipt by Agent of duly executed copies of: this Agreement,
the Notes, the Warrants, the Security Documents and all other Credit
Documents.
b. Corporate Documents.
Receipt by Agent of the following:
(i) Charter Documents.
Copies of the articles or certificates of incorporation or other charter
documents of each Borrower certified to be true and complete as of a recent date
by the appropriate Governmental Authority of the state or other jurisdiction of
its incorporation or organization and certified by a secretary or assistant
secretary of the Borrowers to be true and correct as of the Initial Funding
Date.
(ii) Bylaws/ Operating
Agreement. A copy of the bylaws or operating agreement, as applicable, of
each Borrower certified by a secretary or assistant secretary of the Borrowers
to be true and correct as of the Initial Funding Date.
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(iii) Resolutions. Copies
of resolutions or unanimous written consent of the board of directors or
members, as applicable, of each Borrower approving and adopting the Credit
Documents, the transactions contemplated therein and authorizing execution and
delivery thereof, certified by a secretary or assistant secretary of the
Borrowers to be true and correct and in force and effect as of the Initial
Funding Date.
(iv) Good Standing. Copies
of (i) a certificate of good standing, existence or its equivalent with respect
to each Borrower certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation or organization
and each other jurisdiction in which the failure to so qualify and be in good
standing could reasonably be expected to have a Material Adverse
Effect.
(v) Incumbency. An
incumbency certificate of each Borrower certified by a secretary or assistant
secretary of the Borrowers to be true and correct as of the Initial Funding
Date.
c. Opinions of Counsel.
Receipt by Agent of an opinion, or opinions (which shall cover, among other
things, authority, legality, validity, binding effect, enforceability, absence
of conflict with laws, corporate documents, material contracts and attachment
and perfection of Liens), satisfactory to Agent, addressed to Agent and dated
the Initial Funding Date, from legal counsel to Borrowers.
d.
Personal Property
Collateral. Agent shall have received duly authorized or, if required,
executed UCC financing statements and other lien documents for filing, all as
may be required by Agent.
e.
Priority of
Liens. Agent shall have received satisfactory evidence that (i) Agent, on behalf of
Lenders, holds a perfected, first priority Lien on all Collateral subject only
to Permitted Liens and (ii) none of the Co1lateral is subject to any other Liens
other than Permitted Liens.
f.
Officer’s
Certificates. Agent shall have received a certificate or certificates
executed by an Authorized Person covering the following: (i) all conditions to
closing contained herein have been satisfied, (ii) all representations and
warranties contained herein and in the other Credit Documents are true and
correct in all material respects, (iii) no Default or Event of Default exists
and (iv) each Borrower is solvent.
g.
No Material
Adverse Change. No Material Adverse Change shall have occurred since
March 29, 2008.
h.
Consents and
Directions. Receipt by Agent of evidence that (i) all governmental,
shareholder, member and third party consents and approvals required in
connection with the transactions contemplated by the Credit Documents have been
obtained and (ii) Borrowers have irrevocably instructed and directed each
Approved Distributor to remit all payments on account of each Eligible Account
(other than fees owed to Borrowers) directly to the Deposit Account, and not to
Borrowers or any other Person.
i. Other. Receipt by
Agent of such other documents, instruments, agreements or information as are
required to be provided herein or under any other Credit Documents or as may
otherwise be or have been requested by Agent.
5.2 Ongoing Borrowing
Conditions:
On the
date of the making of any Loan, both before and after giving effect thereto and
to the application of the proceeds therefrom, the following statements shall be
true (and each request for a Loan, shall constitute a representation and
warranty by Borrowers that on the date of such Loan, before and after giving
effect thereto and to the application of the proceeds therefrom, such statements
are true):
a. the representations and
warranties contained in this Agreement are true and correct in all material
respects on and as of the date thereof as though made on and as of such date,
except to the extent that such representations and warranties expressly relate
solely to an earlier date (in which case such representations and warranties
shall have been true and correct in all material respects on and as of such
earlier date); and
b. no
event has occurred and is continuing, or would result from such Loan, or the
application of the proceeds thereof, which would constitute an Event of Default
under this Agreement.
5.3 Notice of Borrowing,
Evidence of Eligible Account:
Agent shall
have received a Notice of Borrowing with respect to each Loan made hereunder in
accordance with the terms hereof.
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ARTICLE
VI: REPRESENTATIONS AND
WARRANTIES
In order
to induce Agent and Lenders to enter into this Agreement, and Lenders to make
available the Loans, each Borrower hereby represents and warrants to Agent and
Lenders:
6.1 Organization
and Qualification:
Each Borrower (i) is duly
organized, validly existing and in good standing under the laws of the state of
its incorporation or organization, (ii) has the power and authority to own its
Property and assets and to transact the businesses in which it is presently, or
proposes to be, engaged, and (iii) is duly qualified and is authorized to do
business and is in good standing in every jurisdiction in which the failure to
be so qualified could reasonably be expected to have a Material Adverse Effect.
Schedule 6.1
hereto contains a true, correct and complete list of all jurisdictions in which
each Borrower is qualified to do business as a foreign corporation or limited
liability company as of the Closing Date.
6.2 Liens:
There are
no Liens in favor of any Person with respect to any Property of Borrowers other
than Permitted Liens. Upon the filing of financing statements and the
recordation of other applicable documents with the appropriate filing or
recordation offices in each of the necessary
jurisdictions, the security interests granted pursuant to the Credit Documents
shall constitute valid and enforceable perfected Liens on the Collateral, prior
to all other Liens other than Permitted Liens.
6.3 No
Conflict:
The execution and delivery by each
Borrower of this Agreement and each of the other Credit Documents and the
performance of the obligations of each Borrower hereunder and thereunder and the
consummation by each Borrowers of the transactions contemplated hereby and
thereby: (i) are within the powers of the Borrowers; (ii) are duly authorized by
the respective boards of directors of the Borrowers and, if necessary, their
stockholders or members, as applicable; (iii) are not in contravention of the
terms of the articles or certificate of incorporation or organization or bylaws
or operating agreement of the Borrowers or of any indenture, contract, lease,
agreement, instrument or other commitment to which the Borrowers are a party or
by which the Borrowers or any of their Property are bound; (iv) do not require
the consent, registration or approval of any Governmental Authority or any other
Person; (v) do not contravene any statute, law, ordinance regulation, rule,
order or other governmental restriction applicable to or binding upon either
Borrower; and (vi) will not, except as contemplated herein for the benefit of
Agent on behalf of Lenders, result in the imposition of any Liens upon any
Property of the Borrowers under any existing indenture, mortgage, deed of trust,
loan or agreement or other material agreement or instrument to which either
Borrower is a party or by which it or any of its Property may be bound or
affected.
6.4 Enforceability:
The
Agreement and all of the other Credit Documents are the legal, valid and binding
obligations of Borrowers, and are enforceable against Borrowers in accordance
with their terms.
6.5 SEC Reports; Financial
Statements.
Except as
described on Schedule
6.5 hereto, Parent has filed all reports, schedules, forms, statements
and other documents required to be filed by it under the Securities Act of 1933,
as amended (the “Securities Act”), and
the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
two years preceding the date hereof (or such shorter period as the Parent was
required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports” and the
SEC Reports, together with any currently effective registration statement of
Parent or any amendment thereto, including exhibits thereto and documents
incorporated by reference therein, are referred to as the “SEC Filings”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Filings complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, as applicable, and none of the SEC Filings, when filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The financial statements of Parent included in the SEC
Filings comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been
prepared in accordance with GAAP, except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the consolidated financial position of Parent and its
consolidated Subsidiaries as of and for the dates thereof and the consolidated
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
Parent is in material compliance with all provisions of the Xxxxxxxx-Xxxxx Act
of 2002 which are applicable to it.
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6.6 Locations of Offices,
Records and Inventory:
Each
Borrower’s chief executive office and all other places of business are set forth
in Schedule 6.6
hereto, and the books and records of each Borrower and all chattel paper and all
records of accounts are located at the chief executive offices of the
Borrowers. Schedule 6.6 contains
a true, correct and complete list as of the date hereof of the legal names and
addresses of the manufacturer of Borrowers’ SVC inventory and the persons and
addresses to which such manufacturer is instructed to ship such SVC
inventory. None of the receipts received by a Borrower from any
warehouseman, filler, processor or packer states that the goods covered thereby
are to be delivered to bearer or to the order of a named person or to a named
person and such named person’s assigns.
6.7 Business
Names:
No
Borrower has used any corporate or fictitious name during the five (5) years
preceding the date hereof, other than the name shown on its Articles or
Certificate of Incorporation or Organization (as applicable), as it may be
amended to the date hereof, delivered to Agent and those names as set forth on
Schedule
6.7.
6.8 Affiliates and
Subsidiaries:
As of the
date hereof, there are no Affiliates or direct or indirect Subsidiaries of the
Borrowers except as set forth on Schedule 6.8. No
Borrower is a party to any partnership or joint venture except as set forth on
Schedule
6.8.
6.9 Judgments and
Litigation:
As of the
date hereof and except as set forth on Schedule 6.9, there
is no (a) judgment, order, writ or decree outstanding against the Borrowers or
(b) pending or, to the best of the Borrowers’ knowledge, threatened litigation,
contested claim, governmental, administrative or regulatory investigation,
arbitration, or governmental audit (for Taxes or otherwise) or proceeding by or
against the Borrowers. Except as specifically set forth and identified on Schedule 6.9, no such
matter (individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect.
6.10 Material Contracts;
Defaults:
Schedule 6.10 sets
forth a true, correct and complete list of all the Material Contracts in effect
on the date hereof. None of such Material Contracts contains provisions which
have or could reasonably be expected to have a Material Adverse
Effect. As of the date hereof, all of such Material Contracts are in
full force and effect and constitute the legal, valid, binding and enforceable
obligation of the parties thereto, and to the knowledge of Borrowers as of the
date hereof, no defaults or breaches exist thereunder.
6.11 Compliance with
Law:
No Borrower has violated or failed to
comply with (including without limitation in the ownership and use of its
Property and the conduct of its business) any statute, law, ordinance,
regulation, rule or order of any foreign, federal, state or local government, or
any other Governmental Authority or any self regulatory organization, or any
judgment, decree or order of any court, applicable to its business or
operations, the violation of or failure to comply with which could reasonably be
expected to have a Material Adverse Effect. No Borrower has received any notice
to the effect that, or otherwise been advised that, it is not in compliance
with, and no Borrower has reason to anticipate that any currently existing
circumstances are likely to result in the violation of any such statute, law,
ordinance, regulation, rule, judgment, decree or order which failure or
violation could reasonably be expected to have a Material Adverse
Effect.
6.12 ERISA:
As of the
date hereof, no Borrower, nor any ERISA Affiliate maintains or contributes to
any Benefit Plan other than those set forth on Schedule 6.12. Each
Benefit Plan has been and is being maintained and funded in accordance in all
material respects with its terms and in compliance in all material respects with
all provisions of ERISA and the Internal Revenue Code applicable thereto. Each
Borrower, and each ERISA Affiliate has fulfilled all obligations related to the
minimum funding standards of ERISA and the Internal Revenue Code for each
Benefit Plan, except as set forth on Schedule 6.12 is in
compliance in all material respects with the currently applicable provisions of
ERISA and of the Internal Revenue Code and has not incurred any liability (other
than routine liability for premiums) under Title IV of ERISA. No Termination
Event has occurred nor has any other event occurred that may result in such a
Termination Event. Except as set forth on Schedule 6.12, as of
the date hereof no event or events have occurred in connection with which either
Borrower, any ERISA Affiliate, any fiduciary of a Benefit Plan or any Benefit
Plan, directly or indirectly, would be subject to any material liability,
individually or in the aggregate, under ERIS1A, the Internal Revenue Code or any
other law, regulation or governmental order or under any agreement, instrument,
statute, rule of law or regulation pursuant to or under which any such entity
has agreed to indemnify or is required to indemnify any person against liability
incurred under, or for a violation or failure to satisfy the requirements of,
any such statute, regulation or order.
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6.13 Compliance with
Environmental Laws:
a. The
operations of each Borrower comply with all applicable federal, state or local
environmental, health and safety statutes, regulations, directions, ordinances,
criteria or guidelines, violations of which could reasonably be expected to have
a Material Adverse Effect, and none of the operations of Borrowers are the
subject of any judicial or administrative proceeding alleging the violation of
any federal, state or local environmental, health or safety statute, regulation,
direction, ordinance, criteria or guidelines, violations of which could
reasonably be expected to have a Material Adverse Effect. As of the
date hereof, neither Borrower has received notice that any of its operations are
the subject of any federal or state investigation evaluating whether such
Borrower disposed any hazardous or toxic waste, substance or constituent or
other substance at any site that may require remedial action, or any federal or
state investigation evaluating whether any remedial action is needed to respond
to a release of any hazardous or toxic waste, substance or constituent, or other
substance into the environment.
6.14 Intellectual
Property:
Each
Borrower possesses adequate licenses, patents, patent applications, copyrights,
service marks, trademarks and tradenames to continue to conduct its business as
heretofore conducted by it. Schedule 6.14
attached hereto sets forth (a) all of the federal, state and foreign
registrations of trademarks, service marks and other marks, trade names or other
trade rights of Borrowers, and all pending applications for any such
registrations, (b) all of the patents and copyrights of Borrowers and all
pending applications therefor and (c) all other trademarks, service marks and
other marks, trade names and other trade rights used by Borrowers in connection
with their business (collectively, the “Proprietary
Rights”). As of the date hereof, Borrowers own each of the
Proprietary Rights set forth on Schedule 6.14 as
indicated on such schedule, and except as set forth on Schedule 6.14, to
Borrowers’ knowledge no other Person has the right to use any of such
Proprietary Rights. The Proprietary Rights set forth on Schedule 6.14 are all
those used in the businesses of Borrowers as of the date hereof. Except as set
forth on Schedule
6.14, no Person has a right to receive any royalty or similar payment in
respect of any Proprietary Rights pursuant to any contractual arrangements
entered into by Borrowers, and no Person otherwise has a right to receive any
royalty or similar payment in respect of any such Proprietary Rights except as
set forth on Schedule
6.14. No Borrower has granted any license or sold or otherwise
transferred any interest in any of the Proprietary Rights to any other Person.
The use of each of the Proprietary Rights by Borrowers is not infringing upon or
otherwise violating the rights of any third party in or to such Proprietary
Rights, and no proceeding has been instituted against or notice received by
either Borrower that are presently outstanding alleging that the use of any of
the Proprietary Rights infringes upon or otherwise violates the rights of any
third party in or to any of the Proprietary Rights. As of the date hereof, no
Borrower has given notice to any Person that it is infringing on any of the
Proprietary Rights. All of the Proprietary Rights of Borrowers are valid and
enforceable rights of Borrowers and will not cease to be valid and in full force
and effect by reason of the execution and delivery of this Agreement or the
Credit Documents or the consummation of the transactions contemplated hereby or
thereby.
6.15 Licenses and
Permits:
Each
Borrower has obtained and holds in full force and effect all material
franchises, licenses, leases, permits, certificates, authorizations,
qualifications, easements, rights of way and other rights and approvals which
are necessary or appropriate for the operation of its business as presently
conducted and as proposed to be conducted, except to the extent that the failure
to obtain or hold any such franchises, licenses, leases, permits, certificates,
authorizations, qualifications, easements, rights of way or other rights or
approvals could not have a Material Adverse Effect. No Borrower is in violation
of the terms of any such franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, right or approval in any
such case which could not have a Material Adverse Effect.
6.16 Title to
Property:
Each
Borrower has (i) valid leasehold interests in all of the real property it
occupies as a
tenant,
(all such real property as of the date hereof is set forth on Schedule 6.16) and
(ii) good, marketable and exclusive title to all of the other Property it
purports to own (including without limitation, all real and personal Property),
other than, with respect to Property described in clause (ii) above, properties
disposed of in the ordinary course of business or as set forth on
Schedule 6.16,
and in each case of (i) and (ii) above, subject to no claims, options, rights or
interests of any other Person. Each Borrower enjoys peaceful and undisturbed
possession of all its real property, and as of the date hereof there is no
pending or, to the best of its knowledge, threatened condemnation proceeding
relating to any such real property. The leases with respect to the leased
property, together with any leases of real property entered into by each
Borrower after the date hereof, are referred to collectively as the “Leases”. None of the
Leases contains provisions which have or could reasonably be expected to have a
Material Adverse Effect. As of the date hereof, no material default
exists under any Lease. All of the Structures and other tangible assets owned,
leased or used by Borrowers in the conduct of their business are (a) insured to
the extent and in a manner customary in the industry in which Borrowers are
engaged, (b) structurally sound with no known defects which have or could
reasonably be expected to have a Material Adverse Effect, (c) in good operating
condition and repair, subject to ordinary wear and tear, (d) not in need of
maintenance or repair except for ordinary, routine maintenance and repair the
cost of which is immaterial, and (e) sufficient for the operation of the
businesses of Borrowers as currently conducted.
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6.17 Labor
Matters:
To
Borrowers’ knowledge, as of the date hereof (a) no Borrower is engaged in any
unfair labor practice, (b) there is no material unfair labor practice complaint
pending against either Borrower or threatened against a Borrower, before the
National Labor Relations Board, and no grievance or arbitration proceeding with
any employee, or group or committee representing any employees, or arising out
of or under collective bargaining agreements that has or could reasonably be
expected to have a Material Adverse Effect is so pending against either Borrower
or threatened against either Borrower, (c) there is no strike, labor dispute,
slowdown or stoppage pending or threatened against either Borrower, and (d)
there is no union representation questions with respect to the employees of the
Borrowers and no union organizing activities.
6.18 Investment
Company:
Neither
Borrower is (a) an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, (b) a “holding company” or a “subsidiary company” of a “holding
company,” or an “affiliate” of a “holding company” or of a “subsidiary company”
of a “holding company” within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or (c) subject to any other law which purports to
regulate or restrict its ability to borrow money or to consummate the
transactions contemplated by this Agreement or the other Credit Documents or to
perform its obligations hereunder or thereunder.
6.19 Capitalization:
The
capitalization of the Parent and Sub as of the date hereof is as set forth on
Schedule 6.19
hereto. Except as set forth in Schedule 6.19, as of
the date hereof Parent has not issued any capital stock since the date of its
most recently filed SEC Report other than pursuant to the exercise of
employee stock options under Parent’s stock option plans, the issuance of shares
of Common Stock to employees pursuant to Parent’s employee stock purchase plan
and pursuant to the conversion or exercise of securities of Parent convertible
into Common Stock outstanding as of the date of the most recently filed SEC
Report. Except as described on Schedule 6.19, no
Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the
Credit Documents. Except as described on Schedule 6.19 and
except as a result of the issuance of the Warrants hereunder, as of the date
hereof there are no outstanding options, warrants, script rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which Parent
is or may become bound to issue additional shares of Common Stock. All of the
outstanding shares of capital stock of Parent are validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase
securities. No further approval or authorization of any member,
stockholder, the Board of Directors or managers of Parent or others is required
for the issuance of the Warrants. As of the date hereof, there are no
stockholders agreements, voting agreements or other similar agreements with
respect to Parent’s capital stock to which Parent is a party or, to the
knowledge of Parent, between or among any of the Parent’s stockholders. The
Warrant Shares, when issued in accordance with the terms of the Warrants, will
be validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by Parent. Parent has reserved from its duly authorized
capital stock a number of shares of Common Stock for issuance of the Warrant
Shares. Except as set forth on Schedule 6.19, as of
the date hereof other than each of Lenders, no Person has any unsatisfied right
to cause Parent to effect the registration under the Securities Act of any
securities of Parent.
6.20 Taxes and Tax
Returns:
a. Each
Borrower has timely filed (inclusive of any permitted extensions) with the
appropriate taxing authorities all returns (including, without limitation,
information returns and other material information) in respect of Taxes required
to be filed through the date hereof and will timely file (inclusive of any
permitted extensions) any such returns required to be filed on and after the
date hereof. The information so filed is complete and accurate in all material
respects.
b. (i)
All Taxes, in respect of periods beginning prior to the date hereof, have been
timely paid, or will be timely paid, or an adequate reserve has been established
therefor and (ii) no Borrower has any material liability for such Taxes for such
periods in excess of the amounts so paid or reserves so established. No material
deficiencies for Taxes have been claimed, proposed or assessed by any taxing or
other Governmental Authority against a Borrower and no material tax Liens have
been filed.
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6.21 SVC and Eligible
Accounts:
No
purchaser of an SVC is permitted to place more than $950 in cash on such SVC on
any single day. Upon payment by Metavante to the SVC Issuer of amounts debited
from the Deposit Account, an Approved Distributor becomes unconditionally
obligated to pay (without setoff or counterclaim) to a Borrower an amount equal
to such debited amount in the form of an Eligible Account.
6.22 Listing
Requirements:
The Common Stock is registered pursuant
to Section 12(b) or 12(g) of the Exchange Act, and Parent has taken no action
designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
Parent received any notification that the Commission is contemplating
terminating such registration. Parent has not, in the 12 months
preceding the date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that Parent is not in
compliance with the listing or maintenance requirements of such Trading Market.
Parent is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance
requirements. The issuance of the Warrants hereunder does not
contravene the rules and regulations of any Trading Market on which the Common
Stock is listed or quoted
6.23 Accuracy and Completeness of
Information:
All factual information heretofore, contemporaneously or hereafter furnished by
or on behalf of the Borrowers in writing to Agent or Lenders for purposes of or
in connection with this Agreement or any Credit Documents, or any transaction
contemplated hereby or thereby is or will be true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any material fact necessary to make such
information not misleading at such time. There is no fact now known to any
officer of the Borrowers which has, or would have, a Material Adverse Effect
which fact has not been set forth herein or in any certificate, opinion or other
written statement made or furnished by the Borrowers to Agent or the
Lenders.
6.24 Solvency:
After giving effect to the transactions contemplated under this Agreement, each
Borrower is able to pay its respective debts as they become due, and has capital
sufficient to carry on its respective business and all businesses in which it is
about to engage, and now owns Property having a value both at fair valuation and
at present fair salable value greater than the amount required to pay such
Borrower’s debts, and no Borrower will be rendered insolvent by the execution
and delivery of this Agreement or any of the other Credit Documents or by the
transactions contemplated hereunder or thereunder.
6.25 Interrelatedness of
Borrowers:
The business operations of each Borrower are interrelated and complement one
another, and Borrowers have a common business purpose, with inter-company
bookkeeping and accounting adjustments used to separate their respective
Properties, liabilities, and transactions. To permit their uninterrupted and
continuous operations, Borrowers now require and will from time to time
hereafter require funds for general business purposes. The proceeds of the Loans
will directly or indirectly benefit each Borrower hereunder severally and
jointly, regardless of which Borrower requests or receives part or all of the
proceeds of such advances.
6.26 Commercial Tort
Claims:
As of the date hereof, no Borrower has Commercial Tort Claims except as set forth on Schedule 6.26
attached hereto and made a part hereof.
6.27 Survival of
Representations:
All representations made by Borrowers in this Agreement and in any other Credit
Document shall survive the execution and delivery hereof and
thereof.
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ARTICLE
VII: AFFIRMATIVE
COVENANTS
Until
termination of this Agreement and the Commitments hereunder and payment and
satisfaction of all Obligations, each Borrower covenants and agrees with Agent
and Lenders as follows:
7.1 Financial
Information:
Borrowers
will furnish to Agent and each Lender the following information within the
following time periods:
a. if
requested by Agent, within forty five (45) days after the end of each fiscal
month, the earnings and retained earnings statement of Borrowers for such month
and for the expired portion of the fiscal year ending with the end of such
month, setting forth in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year, and the consolidated balance
sheet of Borrowers as at the end of such month, setting forth in comparative
form the corresponding figures as at the end of the corresponding period of the
previous fiscal year, all in reasonable detail and certified by the chief
financial officer of Parent to have been prepared from the books and records of
each Borrower;
b. at
the date when the foregoing statements that are due with respect to each fiscal
month that is the fiscal quarter (or year) end (whether or not Agent requests
such statements), a certificate (the “Compliance
Certificate”), executed by an Authorized Person, certifying that,
following a review of this Agreement, no Event of Default is
outstanding;
c. promptly
upon receipt thereof, copies of all management letters and other material
reports which are submitted to Borrowers by their Independent Accountant in
connection with any annual or interim audit of the books of Borrowers made by
such accountants;
d. within
15 days of the end of each fiscal month, detailed calculations and information
regarding Eligible Accounts and other Accounts, and such other reports as Agent
reasonably deems necessary, certified to Agent by Parent’s chief financial
officer; and
e. On
each Business Day, a report (which may be in electronic form) of the balance of
the Deposit Account, the Eligible Accounts, and the nFinanSe Deposit in the
Deposit Account, as of the close of business on the immediately preceding
Business Day.
f. Such
other reports, certificates, schedules, documents, data or information
concerning Borrowers’ finances and Property as Agent may reasonably request from
time to time.
7.2 Corporate
Existence.
Each
Borrower (a) will maintain its corporate existence, (b) will maintain in full
force and effect all licenses, bonds, franchise, leases, trademarks and
qualifications to do business, (c) will obtain or maintain contracts and other
rights necessary or desirable to the profitable conduct of its business and (d)
will comply with all applicable laws, rules and regulations of any federal,
state or local Governmental Authority, except in the case of (b), (c) and (d)
where noncompliance could not reasonably be expected to have a Material Adverse
Effect.
7.3 ERISA.
Each
Borrower will establish, maintain and operate all Plans to comply in all
material respects with the provisions of ERISA, the Internal Revenue Code, and
all other applicable laws, and the regulations and interpretations thereunder,
other than to the extent that a Borrower is in good faith contesting by
appropriate proceedings the validity or implication of any such provision, law,
rule, regulation or interpretation.
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7.4 Environmental
Matters:
Each
Borrower will conduct its business so as to comply in all material respects with
all environmental laws, regulations, directions, ordinances, criteria and
guidelines in all jurisdictions in which each of them is or may at any time be
doing business including, without limitation, environmental land use,
occupational safety or health laws, regulations, directions, ordinances,
criteria, guidelines, requirements or permits in all jurisdictions in which it
is or may at any time be doing business, except to the extent that such Borrower
is contesting, in good faith by appropriate legal proceedings, any such law,
regulation, direction, ordinance, criteria, guideline, or interpretation thereof
or application thereof.
7.5 Books and
Records:
Each
Borrower will maintain books and records pertaining to the Collateral in such
detail, form and scope as is consistent with good business practice. Each
Borrower agrees that Agent or its agents may, upon reasonable notice to
Borrowers, and during regular business hours, enter upon the premises of
Borrowers for the purpose of (a) enabling Agent’s auditors to conduct (at
Borrowers’ expense) field examinations, (b) inspecting and verifying the
Collateral, (c) inspecting and/or copying (at Borrowers’ expense) any and all
records pertaining thereto, and (d) discussing the affairs, finances and
business of Borrowers with any officers, employees and directors of Borrowers or
with the Independent Accountant. Agent shall be entitled from time to time, in
its name, a fictitious name or Borrowers’ names to verify
Accounts. Borrowers shall be liable for one of Agent’s customary
field examination fees per fiscal year, as well as out-of-pocket costs and
expenses associated with such examination (which limitation of one per year
shall not apply if an Event of Default has occurred and is
continuing).
7.6 Collateral
Records:
Each
Borrower will execute and deliver to Agent, from time to time, solely for
Agent’s convenience in maintaining a record of the Collateral, such written
statements and schedules as Agent may reasonably require, designating,
identifying or describing the Collateral pledged to Agent hereunder. Borrowers’
failure, however, to promptly give Agent such statements or schedules shall not
affect, diminish, modify or otherwise limit Agent’s security interests in the
Collateral. Each Borrower agrees to maintain such books and records regarding
Accounts and the other Collateral as Agent may reasonably require, and agrees
that such books and records will reflect Agent’s interest in the Accounts and
such other Collateral.
7.7 Changes in
Location:
Each
Borrower agrees to afford Agent 30 days prior written notice of any change in
either Borrower’s jurisdiction of organization or the location of any Collateral
(other than Inventory held for shipment by third Persons, Inventory in transit,
or Inventory held for processing by third Persons) or in the location of its
chief executive office or place of business from the locations specified in
Schedule 6.6,
and to execute in advance of such change, cause to be filed and/or delivered to
Agent any financing statements or other documents required by Agent, all in form
and substance satisfactory to Agent.
7.8 Insurance:
Each
Borrower will maintain public liability insurance, workers’ compensation
insurance, business interruption insurance, third party property damage
insurance and replacement value insurance on the Collateral under such policies
of insurance, with such insurance companies, in such amounts and covering such
risks as are at all times customary for businesses of this type and satisfactory
to Agent in its commercially reasonable judgment. All policies covering the
Collateral are to name Agent as an additional insured (as to liability coverage)
and lender’s loss payee (as to casualty and property coverage, as its interests
may appear), and are to contain such other provisions as Agent may reasonably
require to fully protect Agent’s interest in the Collateral and to any payments
to be made under such policies. True copies of all original insurance policies
or certificates of insurance evidencing such insurance covering the Collateral
are to be delivered to Agent on or prior to the Initial Funding Date, premium
prepaid, with the lender’s loss payable endorsement in Agent’s favor, and shall
provide for not less than 30 days prior written notice to Agent, of the exercise
of any right of cancellation. In the event Borrowers fail to respond in a timely
and appropriate manner (as reasonably determined by Agent) with respect to
collecting under any insurance policies required to be maintained under this
Section 7.8, Agent shall have the right, in the name of Agent or Borrowers, to
file claims under such insurance policies, to receive and give acquittance for
any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be reasonably necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
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7.9 Taxes:
Each
Borrower will pay, when due and in any event prior to delinquency, all Taxes
lawfully levied or assessed against it, and unless such Taxes have become a
federal tax or ERISA Lien on any of the assets of the Borrowers, no such Tax
need be paid if the same is being contested in good faith, by
appropriate proceedings promptly instituted and diligently conducted and if an
adequate reserve or other appropriate provision shall have been made therefor as
required in order to be in conformity with GAAP.
7.10 Compliance With
Laws:
Each Borrower will comply with all
acts, rules, regulations, orders, directions and ordinances of any legislative,
administrative or judicial body or official applicable to the Collateral or any
part thereof, and to the operation of its business, except where the failure to
so comply could not reasonably be expected to have a Material Adverse
Effect.
7.11 Use of
Proceeds:
(a) The
proceeds of the Accounts Receivable Loans shall be used solely to make deposits
in the Deposit Account, and all amounts withdrawn therefrom shall be used solely
(i) to make payments hereunder or (ii) to make payments to the SVC Issuer for
credit to SVCs.
(b) Notwithstanding
the foregoing, the proceeds of Accommodation Loans may be used for capital
expenditures, working capital needs and other general corporate purposes of the
Borrowers and any of their Subsidiaries.
7.12 Fiscal
Year:
Each
Borrower agrees that it will not change its fiscal year from its current fiscal
year.
7.13 Notification of Certain
Events:
Each
Borrower agrees that it will promptly notify Agent in writing of the occurrence
of any of the following events (but in no event shall such notice from the
Borrowers be received by Agent later than five Business Days after the
occurrence of any such event):
a. the
institution of any litigation, proceeding(s) or investigation against a Borrower
in any federal, state, local or foreign court or before any commission or other
regulatory body (federal, state, local or foreign) in which a claim of at least
$100,000 (not covered by insurance) has been or is reasonably likely to be
asserted against a Borrower;
b. any
notification of violation of any material law or regulation shall have been
received by a Borrower from any local, state, federal or foreign Governmental
Authority or agency, accompanied by a copy of any such notice;
c.
the occurrence of a Termination Event as to a Borrower or any ERISA Affiliate,
accompanied by a written statement of the chief financial officer of Parent
describing such Termination Event and the action, if any, which the Borrowers or
other such entities have taken, is taking or propose to take with respect
thereto, and when known, any action taken or threatened by the Internal Revenue
Service, DOL or PBGC with respect thereto;
d. the
occurrence of a prohibited transaction (as defined in Section 406 of ERISA and
Section 4975 of the Internal Revenue Code) as to a Borrower or any ERISA
Affiliate, accompanied by a statement of the chief financial officer of Parent
describing such transaction and the action which the Borrowers or other such
entities have taken, are taking or propose to take with respect
thereto;
e. receipt
by a Borrower, or any ERISA Affiliate, of notice of the PBGC’s intention to
terminate a Benefit Plan or to have a trustee appointed to administer a Benefit
Plan, accompanied by copies of each such notice;
f. receipt
by a Borrower, or any ERISA Affiliate, of a notice regarding the imposition of
withdrawal liability, accompanied by copies of each such notice; or
g. (i)
termination of a Multiemployer Plan, (ii) notice from the administrator or plan
sponsor of a Multiemployer Plan that it intends to terminate a Multiemployer
Plan, or (iii) commencement of proceedings by the PBGC under Section 4042 of
ERISA to terminate a Multiemployer Plan, accompanied by a written statement
setting forth any such event or information; or
h. the
occurrence of any Default or Event of Default.
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7.14 Collection of
Accounts:
Unless an
Event of Default is outstanding, Borrowers may and will enforce and collect all
amounts owing on the Accounts, for Lenders’ benefit and on Lenders behalf but at
Borrowers’ expense; such privilege shall terminate at Agent’s option, without
notice to Borrowers, which is hereby expressly waived by Borrowers, upon the
occurrence and during the continuance of any Event of Default which has not
otherwise been waived by Required Lenders. No checks, drafts or other
instruments received by Agent with respect to any Account shall constitute final
payment unless and until such instruments have actually been
collected.
7.15 Trademarks:
Each
Borrower will do and cause to be done all things necessary to preserve and keep
in full force and affect all registrations of trademarks, service marks and
other marks, trade names or other trade rights, the lack of which could
reasonably be expected to have a Material Adverse Effect.
7.16 Maintenance of
Property:
Each
Borrower will keep all Property useful and necessary to its business in good
working order and condition (ordinary wear and tear excepted) in accordance with
its past operating practices) and not to commit or suffer any waste with respect
to any of its Properties, except for Properties which either individually or in
the aggregate are not material.
7.17 Commercial Tort
Claims:
In the
event that Borrowers shall acquire any Commercial Tort Claim, Borrowers shall
give Agent written notice thereof; provided that Borrowers shall not be deemed
to have acquired any Commercial Tort Claim until Borrowers shall have filed such
claim in a court having jurisdiction over such claim. Such notice shall contain
a sufficient description of the Commercial Tort Claim including the parties, the
court in which the claim was commenced (if applicable), and the docket number
assigned to the case (if applicable) and a detailed explanation of the events
giving rise to such claim. The Borrowers shall grant Agent a security interest
in such Commercial Tort Claim to secure payment of the Obligations. The
Borrowers shall execute and deliver such instruments, documents and agreements
as Agent may reasonably require in order to obtain and perfect such security
interest including, without limitation, a security agreement or amendment to
this Agreement all in form and substance satisfactory to Agent. Borrowers
authorize Agent to file (without a Borrower’s signature), financing statements
or amendments to existing financing statements as Agent deems necessary to
perfect the security interest.
7.18 Letter of Credit
Rights:
Borrowers
shall provide written notice to Agent of any Letters of Credit for which a
Borrower is the beneficiary. The Borrowers shall execute and deliver such
instruments, documents and agreements and take such actions as Agent reasonably
may require in order to obtain and perfect its security interest in such Letter
of Credit Rights.
7.19 Revisions or Updates to
Schedules:
If any of the information or
disclosures provided on any of the Schedules originally attached hereto become
outdated or incorrect in any respect, Borrowers shall deliver to Agent and
Lenders as part of the Compliance Certificate required pursuant to Section
7.1(b), such revision or updates to such Schedule(s) as may be necessary or
appropriate to update or correct such Schedule(s), provided, that no such
revisions or updates to any such Schedules(s) shall be deemed to have amended,
modified or superseded such Schedules(s) as originally attached hereto, or to
have cured any breach of warranty or representation resulting from the
inaccuracy or incompleteness of any such Schedule(s), unless and until Required
Lenders, in their sole and absolute discretion, shall have accepted in writing
such revisions or updates to such Schedule(s).
7.20 Approved
Distributors.
The Borrowers shall fund the value on
all SVCs sold to Approved Distributors from funds in the Depository Account to
the extent amounts remain available therein.
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7.21 nFinanSe
Deposit.
On a daily basis, the Borrowers shall
make such deposits as are necessary to maintain the nFinanSe Deposit in the
Deposit Account in a minimum amount of $50,000.00, or such other minimum amount
as is determined by the Agent, provided that the minimum amount shall not be
less than 125% of the average daily Small Distributor Withdrawals during the
preceding week.
ARTICLE
VIII: NEGATIVE
COVENANTS
Until
termination of this Agreement and the Commitments hereunder and payment and
satisfaction of all Obligations, each Borrower further covenants and agrees with
Agent and Lenders that, unless otherwise agreed in writing by Agent, it will
not:
8.1 Liens:
Mortgage,
assign, pledge, transfer or otherwise permit any Lien of any kind to exist at
any time on any of its Property, except for Permitted
Liens.
8.2 Indebtedness:
Incur,
create or be liable for any Indebtedness, other than Permitted
Indebtedness.
8.3 Sale of
Assets:
Make any
sale, lease, assignment or other disposition of any Property of either Borrower
other than (a) sales of Inventory in the ordinary course of business, (b) sales
or other dispositions in the ordinary course of business of equipment that is
replaced or has been ordered by equipment of comparable or superior quality
within 90 days of the sale, lease, license, transfer or other disposition, and
(c) (i) sales in the ordinary course of business of Property used in Borrowers’
business that is worn out or in need of replacement in an aggregate amount not
to exceed $100,000 per calendar year so long as no Event of Default or Default
has occurred and is continuing and (ii) other sales in the ordinary course of
business of Property used in Borrowers’ business that is worn out or in need of
replacement and that is replaced with Property of reasonably equivalent value or
utility.
8.4 Organizational
Changes:
(a) Merge or consolidate with any
Person other than another Borrower or (b) enter into or engage in any business,
operation or activity materially different from that presently being conducted
by Borrowers.
8.5 Guarantees:
Except for Permitted Indebtedness,
assume, guarantee, endorse, or otherwise become liable upon the obligations of
any other Person, except by the endorsement of negotiable instruments in the
ordinary course of business.
8.6 Restricted
Payments:
Make a Restricted Payment, other than
(i) dividends to Parent by a Subsidiary of Parent and (ii) cash dividends or
other cash distributions to the holders of shares of Series A preferred stock of
Parent not in excess of $500,000 in any fiscal year.
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8.7 Investments:
Make any Investment, other than
Permitted Investments.
8.8 Affiliate
Transactions:
Enter
into any transaction with, including, without limitation, the purchase, sale or
exchange of property or the rendering of any service to any Affiliate of the
Borrowers except in the ordinary course of and pursuant to the reasonable
requirements of the Borrowers’ business and upon fair and reasonable terms no
less favorable to the Borrowers than could be obtained in a comparable
arm’s-length transaction with an unaffiliated Person or for incidental
administrative purposes.
8.9 Third Party
Loans:
Make any loan, extension of credit or
advance of funds to any Person other than in the ordinary course of
business.
8.10 Prohibited Transactions
Under ERISA:
a. Engage,
or permit any ERISA Affiliate to engage, in any prohibited transaction which
could reasonably be expected to result in a civil penalty or excise tax
described in Section 406 of ERISA or Section 4975 of the Internal Revenue Code
having a Material Adverse Effect;
b. Permit
to exist with respect to any Benefit Plan any accumulated funding (as defined in
Sections 302 of ERISA and 412 of the Internal Revenue Code), whether or not
waived;
c. Fail,
or permit any ERISA Affiliate to fail, to pay timely required contributions or
annual installments due with respect to any waived funding deficiency to any
Benefit Plan;
d. Terminate,
or permit any ERISA Affiliate to terminate, any Benefit Plan where such event
would result in any liability of the Borrowers, or any ERISA Affiliate under
Title IV of ERISA;
e. Fail,
or permit any ERISA Affiliate to fail to make any required contribution or
payment to any Multiemployer Plan;
f. Fail,
or permit any ERISA Affiliate to fail, to pay any required installment or any
other payment required under Section 412 of the Internal Revenue Code on or
before the due date for such installment or other payment;
g. Amend,
or permit any ERISA Affiliate to amend, a Benefit Plan resulting in an increase
in current liability for the plan year such that either of the Borrowers, or any
ERISA Affiliate is required to provide security to such Benefit Plan under
Section 401(a)(29) of the Internal Revenue Code;
h. Withdraw,
or permit any ERISA Affiliate to withdraw, from any Multiemployer Plan where
such withdrawal may result in any liability of any such entity under Title IV of
ERISA; or
i. Allow
any representation made in Section 6.12 to be untrue at any time during the term
of this Agreement.
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8.11 Amendments of Material
Contracts:
Amend, modify, cancel or terminate or
permit the amendment, modification, cancellation or termination of any of the
Material Contracts which would have a Material Adverse Effect.
8.12 Additional Negative
Pledges:
Create or
otherwise cause or suffer to exist or become effective, directly or indirectly,
(i) any prohibition or restriction (including any agreement to provide equal and
ratable security to any other Person in the event a Lien is granted to or for
the benefit of Agent) on the creation or existence of any Lien upon the assets
of the Borrowers, other than assets subject to Permitted Liens or (ii) any
contractual obligation which may restrict or inhibit Agent’s rights or ability
to sell or otherwise dispose of the Collateral or any part thereof after the
occurrence of an Event of Default.
8.13 Licenses,
Etc.:
Enter into licenses of, or otherwise
restrict the use of, any patents, trademarks or copyrights which would prevent
Borrowers from selling, transferring, encumbering or otherwise disposing of any
such patent, trademark or copyright.
ARTICLE
IX: POWERS
9.1 Appointment as Attorney-in
Fact:
Each
Borrower hereby irrevocably authorizes and appoints Agent, or any Person as
Agent may designate, as the Borrower’s attorney-in-fact, at Borrowers’ cost and
expense, to exercise all of the following powers, which being coupled with an
interest, shall be irrevocable until all of the Obligations have been paid and
satisfied in full and all of the Commitments have been
terminated:
a. To
receive, take, endorse, sign, assign and deliver, all in the name of Agent,
Lenders or the Borrowers, as the case may be, any and all checks, notes, drafts,
and other documents or instruments relating to the Collateral;
b. To
receive, open and dispose of all mail addressed to the Borrowers and to notify
postal authorities to change the address for delivery thereof to such address as
Agent may designate;
c. To
request at anytime from account debtors indebted on Accounts, in the name of the
Borrowers or a third party designee of Agent, information concerning the
Accounts and the amounts owing thereon;
d. To
give Persons indebted on Accounts notice of Agent’s interest therein, and/or to
instruct such Persons to make payment directly to Agent for the Borrowers’
account;
e. To
take or bring, in the name of Agent, Lenders or the Borrowers, all steps,
actions, suits or proceedings deemed by Agent necessary or desirable to enforce
or effect collection of the Accounts; and
f. To
file financing statements in any office deemed appropriate by Agent for such
purpose and execute, file, record and register any or all of Agent’s security
interest in any intellectual property of Borrowers with the United States Patent
and Trademark Office; and
g. To do all
other acts and things as Agent may deem reasonable to protect or preserve
Agent’s interest under this Agreement or to fulfill Borrowers’ obligations under
this Agreement, provided, however, that Agent shall not exercise any such power
(other than pursuant to clause (f) above), unless at such time an Event of
Default has occurred and is continuing.
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ARTICLE
X: EVENTS OF DEFAULT AND
REMEDIES
10.1 Events of
Default:
The occurrence of any of the following
events shall constitute an “Event of Default”
hereunder:
a. failure
of Borrowers to pay (i) any interest or any fees within three Business Days of
the date when due hereunder, in each case whether at stated maturity, by
acceleration or otherwise, (ii) any principal of the Loans when due, whether at
stated maturity, by acceleration or otherwise or (iii) any expenses payable by
Borrowers to any Agent or Lender hereunder within five days after receipt by
Borrowers from Agent or any applicable Lender of notice that such expenses are
payable;
b. any
representation or warranty, contained in this Agreement, the other Credit
Documents or any other agreement, document, instrument or certificate between
the Borrowers and Agent or any Lender or executed by the Borrowers in favor of
Agent or any Lender shall prove untrue in any material respect on or as of the
date it was made or was deemed to have been made;
c. failure
of either Borrower to perform, comply with or observe the covenants contained in
Sections 7.1(a), (b) and (d), Section 7.11, and Article VIII;
d. failure
of either Borrower to perform, comply with or observe any covenant herein (other
than those specified in 10.1(c) above), which failure continues for a period of
thirty days after its occurrence; provided, however, that
notwithstanding the foregoing, the failure of either Borrower to perform, comply
with or observe the covenant in Section 7.1(e) of this Agreement shall
constitute an Event of Default if such failure continues for a period of three
Business Days after its occurrence;
e. failure
of the Borrowers to comply with any other covenant contained in the other Credit
Documents or any other agreement, document, instrument or certificate among the
Borrowers and Agent or any Lender or executed by the Borrowers in favor of Agent
or any Lender and, in the event such breach or failure to comply is capable of
cure, such breach or failure to comply is not cured within 30 days after its
occurrence;
f. dissolution,
liquidation, winding up or cessation of the business (or any material portion of
the business) of a Borrower, or the failure of a Borrower to meet its debts
generally as they mature, or the calling of a meeting of a Borrower’s creditors
for purposes of compromising a Borrower’s debts;
g. the
commencement by or against a Borrower of any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceedings with respect to
it under any federal or state law and, in the event any such proceeding is
commenced against a Borrower, such proceeding is not dismissed within 60
days;
h. the
occurrence of a default or event of default (in each case which shall continue
beyond the expiration of any applicable grace periods) under, or the occurrence
of any event that results in or would permit the termination or acceleration of
the maturity of any other Indebtedness of Borrowers and the aggregate principal
amount of all such Indebtedness with respect to which a default or an event of
default has occurred, or the maturity of which is accelerated or permitted to be
accelerated, exceeds $100,000;
i. any
party (other than Agent or Lenders) to any Credit Document shall deny or
disaffirm its obligations under any of the Credit Documents, or any Credit
Document shall be canceled, terminated, revoked or rescinded without the express
prior written consent of Agent, or any action or proceeding shall have been
commenced by any Person (other than Agent or any Lender) seeking to invalidate,
declare unenforceable, cancel, revoke, rescind or disaffirm the obligations of
any party to any Credit Document;
j. trading
in the Common Stock shall have been suspended by the Commission or the Parent’s
principal Trading Market, or a banking moratorium shall have been declared
either by the United States or New York State authorities;
k. one
or more judgments or decrees shall be entered against either Borrower involving
a liability of $100,000 or more in the aggregate (to the extent not paid or
covered by insurance (i) provided by a carrier who has acknowledged coverage and
has the ability to perform or (ii) as determined by Agent
in its reasonable discretion) and any such judgments or decrees shall not have
been vacated, discharged or stayed or bonded pending appeal within 30 days from
the entry thereof;
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l.
any Termination Event with respect to a Benefit Plan shall have occurred and be
continuing 15 days after notice thereof shall have been given to a Borrower by
Agent and the then current value of such Benefit Plan's benefits guaranteed
under Title IV of ERISA exceeds the then current value of such Benefit Plan's
assets allocable to such benefits by more than $100,000 (or in the case of a
Termination Event involving the withdrawal of a substantial employer, the
withdrawing employer's proportionate share of such excess exceeds such
amount);
m. a
Material Adverse Change occurs;
n. a
Change of Control occurs;
o. the
failure of Approved Distributors to make payments within ten days of the dates
when due on Eligible Accounts, which unpaid Eligible Accounts exceed $500,000 in
the aggregate (unless such amounts are deposited into the Deposit Account by
Borrowers within such ten-day period);
p. a
Borrower is indicted or convicted of the commission of a crime or any proceeding
of any kind is pending or threatened which would reasonably be likely to result
in the forfeiture of any material portion of the Property of a Borrower to any
Governmental Authority; and
q. the
appointment of any person to act as an Authorized Representative of the Parent
and an Account Authorized Signer (as defined in the Non-Personal Signature Card
of the Depository Bank) for the Deposit Account or to otherwise have the power
or authority to direct the activities of the Deposit Account, other than Xxxxx
X. Xxxxxx, as Agent for the Lenders, or any successor Agent approved by the
Required Lenders; provided, however, that the Lenders acknowledge and agree that
any grant of authority from Xxxxx X. Xxxxxx, as Agent for the Lenders, or any
successor Agent approved by the Required Lenders, authorizing Metavante (or such
additional processors as are approved by the Required Lenders) to debit the
Deposit Account shall not constitute an Event of Default.
10.2 Rights and Remedies upon a
Default or an Event of Default:
a. Upon
the occurrence and during the continuance of a Default or an Event of Default
each Lender may cease making Loans. Upon the occurrence and during the
continuance of any Event of Default, Agent may, or, at the discretion of
Required Lenders, shall take any or all of the following actions: (i) declare
all Obligations to be immediately due and payable (except with respect to any
Event of Default set forth in Section 10.1(g), in which case all Obligations
shall automatically become immediately due and payable without the necessity of
any action, decision, notice or demand) without presentment, demand, protest or
any other action or obligation of Agent or any Lender, and (ii) immediately
terminate this Agreement and the Commitments hereunder.
b. Upon
acceleration of the Obligations as provided in clause (a), Agent may, or at the
direction of Required Lenders, shall at any time, and from time to time, take
any and all such action as Agent may elect to enforce any and all rights and
interests created and existing under the Credit Documents, or arising under
applicable law, including without limitation, all rights and remedies existing
under the Security Documents, all rights of setoff and the following rights (the
enumeration of any such rights not intended to be exhaustive and the exercise of
any right shall not preclude the exercise of any other rights):
(i) The
right to take possession of, send notices regarding and collect directly the
Collateral, with or without judicial process (including, without limitation, the
right to notify the United States postal authorities to redirect mail addressed
to Borrowers or to an address designated by Agent); or
(ii) By
its own means or with judicial assistance, enter any or all of Borrowers’
premises and take possession of the Collateral, or render it unusable, or
dispose of the Collateral on such premises, without any liability for rent,
storage, utilities or other sums, and Borrowers shall not resist or interfere
with such action, or take any other action permitted to be taken by a secured
party under the Code; or
(iii) Require
Borrowers at Borrowers’ expense to assemble all or any part of the Collateral
and make it available to Agent at any place designated by Agent; or
(iv) The
right to modify the terms and conditions upon which Lenders may be willing to
consider making further Loans.
c. Borrowers
agree that a notice received by them at least 10 days before the time of any
intended public sale or of the time, after which any private sale or other
disposition of the Collateral is to be made, shall be deemed to be reasonable
notice of such sale or other disposition. If permitted by applicable law, any
perishable Inventory or other Collateral which threatens to speedily decline in
value or which is sold on a recognized market may be sold immediately by Agent
without prior notice to Borrowers. Borrowers covenant and agree not to interfere
with or impose any obstacle to Agent’s exercise of its rights and remedies
hereunder with respect to the Collateral. Agent shall have no obligation to
clean up or prepare the Collateral for sale. If Agent sells any of the
Collateral upon credit, Borrowers will only be credited with payments actually
made by the purchaser that are received by Agent and applied to the Obligations.
Agent may, in connection with any sale of the Collateral, specifically disclaim
any warranties of title or the like.
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10.3 Nature of
Remedies:
All
rights and remedies granted Agent and/or Lenders hereunder and under the other
Credit Documents, or otherwise available at law or in equity, shall be deemed
concurrent and cumulative, and not alternative remedies, and Agent may proceed
with any number of remedies at the same time or at different times until all
Obligations are satisfied in full. The exercise of any one right or remedy shall
not be deemed a waiver or release of any other right or remedy, and Agent, upon
or at any time after the occurrence of an Event of Default, may proceed against
Borrowers, any guarantor, or their Property at any time, under any agreement,
with any available remedy and in any order. Nothing contained in this Agreement
or the other Credit Documents shall be deemed to compel Agent or Lenders at any
time to accept a cure of any Event of Default hereunder. In no event shall prior
recourse to any Collateral be a prerequisite to Agent’s right to demand payment
of any Obligation from Borrowers or any guarantor upon the occurrence and during
the continuance of any Event of Default.
10.4 Contribution:
At any time following the occurrence
and during the continuance of an Event of Default (other than an Event of
Default set forth in Sections 10.1(d) or 10.1(f)), to the extent any Lender has
not received the full amount of principal and interest owed to such Lender by
the Borrowers, each Lender shall have a right of contribution from the other
Lenders, such that no Lender’s loss shall exceed the total loss of all the
Lender’s multiplied by a fraction, the numerator of which is the total amount of
outstanding Loans of such Lender at the time of the Event of Default and the
denominator of which is the total amount of all outstanding Loans at the time of
the Event of Default.
ARTICLE
XI: TERMINATION
Except as
otherwise provided in Article X, the Commitments shall automatically terminate
on the Maturity Date and all then outstanding Loans shall be immediately due and
payable in full. Unless sooner demanded, all Obligations shall become due and
payable as of any termination hereunder or under Article X and, pending a final
accounting, Agent may withhold any balances in the Deposit Account, in an amount
sufficient, in Agent’s discretion, to cover all of the Obligations, whether
absolute or contingent, unless supplied with a satisfactory indemnity to cover
all of such Obligations. All of Agent’s and Lenders’ rights, Liens and security
interests in and to Borrowers’ Property shall continue after any termination
until (a) all Obligations have been indefeasible paid and satisfied in full, (b)
Agent shall have received a written agreement (in form and substance acceptable
to Agent in its reasonable discretion) executed by Borrowers and by a Person
whose loans or advances to Borrowers are used in whole or in part to satisfy the
Obligations, indemnifying Agent and Lenders from any loss or damage, or (c)
Agent shall have retained such monetary reserves necessary to pay in full all
Obligations for such period of time, in its reasonable discretion.
ARTICLE
XII: AGENT
12.1 Appointment of
Agent:
a. Each Lender
hereby designates Ballyshannon Partners as Agent to act as herein specified.
Each Lender hereby irrevocably authorizes, and each holder of any Note by the
acceptance of a Note shall be deemed irrevocably to authorize Agent to take such
action on its behalf under the provisions of this Agreement and the Notes and
any other instruments and agreements referred to herein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto. Agent shall hold all Collateral and
all payments of principal, interest, fees, charges and expenses received
pursuant to this Agreement or any other Credit Document for the ratable benefit
of Lenders. Agent may perform any of its duties hereunder by or through its
agents or employees.
b. The
provisions of this Article XII (other than the last sentence of Section 12.9(a))
are solely for the benefit of Agent and Lenders, and no Borrower shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, Agent shall act solely
as agent of Lenders and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for
Borrowers.
12.2 Nature of Duties of
Agent:
Agent
shall have no duties or responsibilities except those expressly set forth in
this Agreement. Neither Agent nor any of its partners, officers, employees or
agents shall be liable for any action taken or omitted by it as such hereunder
or in connection herewith, unless caused by its or their willful misconduct. The
duties of Agent shall be mechanical and administrative in nature; Agent shall
not have by reason of this Agreement a fiduciary relationship in respect of any
Lender; and nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon Agent any obligations in respect of this
Agreement, except as expressly set forth herein.
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12.3 Lack of Reliance on
Agent:
a.
Independently and without reliance upon Agent, each Lender, to
the extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial or other condition and affairs of
Borrowers in connection with the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of
Borrowers, and, except as expressly provided in this Agreement, Agent shall have
no duty or responsibility, either initially or on a continuing basis, to provide
any Lender with any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at any time or
times thereafter.
b. Agent
shall not be responsible to any Lender for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, collectibility,
priority or sufficiency of this Agreement or the Notes or the financial or other
condition of Borrowers. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or the Notes, or the financial condition of
Borrowers, or the existence or possible existence of any Default or Event of
Default, unless specifically requested to do so in writing by any
Lender.
12.4 Certain Rights of
Agent:
Without
limiting Agent’s rights and discretion under any provision hereof, Agent shall
have the right to request instructions from the Required Lenders or, as
required, each of the Lenders. If Agent shall request instructions from the
Required Lenders or of each Lender, as the case may be, with respect to any act
or action (including the failure to act) in connection with this Agreement,
Agent shall be entitled to refrain from such act or taking such action unless
and until Agent shall have received instructions from the Required Lenders or
each Lender, as the case may be, and Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting hereunder in accordance with the
instructions of the Required Lenders or each Lender, as the case may
be.
12.5 Reliance by
Agent:
Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex teletype or telecopier message, cablegram,
radiogram, order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person. Agent may consult with legal counsel (including counsel
for Borrowers with respect to matters concerning Borrowers), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
12.6 Indemnification of
Agent:
To the extent Agent is not reimbursed
and indemnified by Borrowers, each Lender will reimburse and indemnify Agent,
pro rata in the proportion that such Lender’s Commitment bears to the aggregate
of all Commitments, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, cost, expenses (including
reasonable counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against Agent
in any way relating to or arising out of this Agreement, provided that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent’s willful misconduct.
12.7 Agent in its Individual
Capacity:
With
respect to its obligation to lend under this Agreement the loans made by it and
the Notes issued to it, and all of its
rights and obligations as a Lender hereunder and under the other Credit
Documents, Agent shall have the same rights
and powers hereunder as any other Lender or holder of a Note and may exercise
the same as though it was not performing the duties specified herein,
and the terms “Lenders”, “Required Lenders”, “holders of Notes”, or any similar
terms shall, unless the context dearly otherwise indicates, include Agent in its
individual capacity. Agent may lend money to, acquire equity interests in, and
generally engage in any kind of business with Borrowers or any Affiliate of
Borrowers as if it were not performing the duties specified herein, and may
accept fees and other consideration from Borrowers for services in connection
with this Agreement and otherwise without having to account for the same with
Lenders. Notwithstanding anything to the contrary herein, Agent and Lenders
agree that they will not set off against any amounts held in the Deposit Account
for any indebtedness owed by Borrowers not created under this Agreement or any
other Credit Documents.
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12.8 Holder of
Notes:
Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
shall have been filed with Agent. Any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
12.9 Successor
Agent:
a. Agent
may, upon five Business Days notice to Lenders and Borrowers, resign at any time
(effective upon the appointment of a successor Agent pursuant to the provisions
of this Section 12.9(a)) by giving written notice thereof to Lenders and
Borrowers. Upon any such resignation, the Required Lenders shall have the right,
upon five days notice, to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent’s giving of notice of
resignation, then, upon five days notice, the retiring Agent may, on behalf of
Lenders, appoint a successor Agent, which shall be a bank or other financial
institution which maintains an office in the United States, or a commercial bank
organized under the laws of the United States of America or of any State
thereof, or any affiliate of such bank or trust company or other financial
institution which is engaged in the banking business, having a combined capital
and surplus of at least $500,000,000. Notwithstanding anything herein to the
contrary, so long as no Event of Default shall have occurred and be continuing,
any successor Agent (whether appointed by the Required Lenders or Agent) shall
have been approved in writing by Borrowers (such approval not to be unreasonably
withheld).
b. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article XII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement. In the event Agent or
its assets are taken over by any state or federal agency having jurisdiction
over Agent or its assets, a majority of Lenders other than Agent may appoint a
successor to Agent.
12.10 Collateral
Matters:
a. Each
Lender authorizes and directs Agent to enter into the Security Documents and
accept the other Credit Documents for the benefit of Lenders. Agent is hereby
authorized, on behalf of all Lenders, without the necessity of any notice to or
further consent from any Lender, from time to time prior to an Event of Default,
to take any action, in its sole discretion, with respect to any Collateral or
Security Document which may be necessary or appropriate to perfect and maintain
perfected or enforce the Liens upon the Collateral granted pursuant to the
Security Documents.
b. Lenders
hereby authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any Collateral (i) upon termination of the
Commitments and payment in cash and satisfaction of all of the Obligations, (ii)
constituting Property being sold or disposed of if the sale or disposition is
permitted under this Agreement or any other Credit Document or is made by Agent
in the enforcement of its rights hereunder following the occurrence of an Event
of Default and (iii) if approved, authorized or ratified in writing by the
Required Lenders, unless such release is required to be approved by all Lenders
hereunder. Upon request by Agent at any time, Lenders will confirm in writing
Agent's authority to release particular types or items of Collateral pursuant to
this Section 12.10(b).
c. Agent
shall have no obligation whatsoever to Lenders or to any other Person to assure
that the Collateral exists or is owned by Borrowers or is cared for, protected
or insured or that the liens granted to Agent herein or pursuant hereto have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise or to
continue exercising at all or in any manner or under any duty of care,
disclosure or fidelity any of the rights, authorities and powers granted or
available to Agent in this Section 12.10 or in any of the Security Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its sole discretion, given Agent's own interest in the
Collateral as one of Lenders and that Agent shall have no duty or liability
whatsoever to Lenders, except for its willful misconduct.
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12.11 Delivery of
Information:
Agent shall not be required to deliver to any Lender originals or copies of any
documents, instruments, notices, communications or other information received by
Agent from Borrowers, the Required Lenders, any Lender or any other Person under
or in connection with this Agreement or any other Credit Document except (a) as
specifically provided in this Agreement or any other Credit Document and (b) as
specifically requested from time to time in writing by any Lender with respect
to a specific document instrument, notice or other written communication
received by and in the possession of Agent at the time of receipt of such
request and then only in accordance with such specific request.
12.12 Defaults:
Agent
shall not be deemed to have knowledge of the occurrence of a Default or Event of
Default (other than the non-payment of principal of or interest on the Loans to
the extent the same is required to be paid to Agent for the account of Lenders)
unless Agent has actual knowledge thereof or has received notice from a Lender
or Borrowers specifying such Default or Event of Default and stating that such
notice is a “Notice of Default”. In the event that Agent has such knowledge of
or receives such a notice of the occurrence of a Default or Event of Default,
Agent shall give prompt notice thereof (other than breaches of affirmative
covenants in Article VII herein) to Lenders (and shall give each Lender prompt
notice of each such non-payment). Agent shall (subject to Section 13.10) take
such action with respect to such Default or Event of Default or refrain from
taking such action, with respect to such Default or Event of Default as directed
by Required Lenders, or absent direction as Agent shall deem advisable in the
best interest of Lenders and shall, without limiting Agent’s rights or
discretion under this Agreement, use reasonable efforts under the circumstances
to consult with Lenders before taking any material enforcement action; and
provided further that Agent shall not be required to take any such action which
it determines to be contrary to law.
ARTICLE
XIII: MISCELLANEOUS
13.1 Waivers:
Borrowers
hereby waive due diligence, demand, presentment and protest and any notices
thereof as well as notice of nonpayment. No delay or omission of Agent or
Lenders to exercise any right or remedy hereunder, whether before or after the
happening of any Event of Default, shall impair any such right or shall operate
as a waiver thereof or as a waiver of any such Event of Default. No single or
partial exercise by Agent or Lenders of any right or remedy shall preclude any
other or further exercise thereof, or preclude any other right or
remedy.
13.2 JURY
TRIAL:
AGENT,
BORROWERS AND LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT, THE CREDIT DOCUMENTS OR ANY
OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
13.3 GOVERNING LAW; SUBMISSION TO
JURISDICTION; VENUE:
a. THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
shall be brought in the courts of the State of New York in New York County or of
the United States for the Southern District of New York, and, by execution and
delivery of this Agreement, Borrowers hereby irrevocably accept for themselves
and in respect of their property, generally and unconditionally, the
nonexclusive jurisdiction of such courts. Borrowers further irrevocably consent
to the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, or by nationally recognized overnight courier to it at
the address set out for notices pursuant to Section 13.5, such service to become
effective three days (or one day if sent by such courier) after such mailing.
Nothing herein shall affect the right of Agent or any Lender to serve process in
any other manner permitted by law or to commence legal proceedings or to
otherwise proceed against Borrowers in any other jurisdiction.
b. Borrowers
hereby irrevocably waive any objection which they may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Credit Document brought in
the courts referred to in subsection (a) above and hereby further irrevocably
waive and agree not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient
forum.
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13.4 RESERVED
13.5 Notices:
Except as
otherwise provided herein, all notices and correspondences hereunder shall be in
writing and sent by certified or registered mail return receipt requested, by
overnight delivery service, with all charges prepaid, or by facsimile, if to
Agent, Lenders or Borrowers to the addresses or by facsimile transmission set
forth on Schedule
13.5 hereto. All such notices and correspondence shall be deemed given
(i) if sent by certified or registered mail, three Business Days after being
postmarked, (ii) if sent by overnight delivery service, when received at the
above stated addresses or when delivery is refused and (iii) if sent by
facsimile transmission, when receipt of such transmission is acknowledged;
provided that all notices shall not be effective until actually
received.
13.6 Assignability:
a. Borrowers
shall not have the right to assign or delegate their obligations and duties
under this Agreement or any other Credit Documents or any interest therein
except with the prior written consent of Agent and Lenders.
b. Notwithstanding
subsection (c) of this Section 13.6, nothing herein shall restrict, prevent or
prohibit any Lender from granting assignments or participations in the Loans
and/or Commitments to any Affiliate of such Lender or to any other existing
Lender or Affiliate thereof.
c. Each
Lender may, with the consent of Agent (such consent not to be unreasonably
withheld or delayed) and (if no Event of Default is outstanding) with the
consent of Borrowers (such consent not to be unreasonably withheld or delayed),
but without the consent of any other Lender, assign to one or more Persons all
or a portion of its rights and obligations under this Agreement and the Notes;
provided that (i) for each such assignment, the parties thereto shall execute
and deliver to Agent, for its acceptance (if properly completed and executed in
accordance with the terms hereof and recording in its books and records, an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,500 to be paid by the
assignee, (ii) no such assignment shall be for less than a Commitment share of
$2,000,000 or, if less, the entire remaining Commitments of such Lender of the
Commitments and (iii) each such assignment shall be of a uniform, and not a
varying, percentage of all rights and obligations under and in respect of both
the Commitment of such Lender and all Loans of such Lender. Upon such execution
and delivery of the Assignment and Acceptance to Agent, from and after the date
specified as the effective date in the Assignment and Acceptance (the “Acceptance Date”),
(x) the assignee thereunder shall be a party hereto, and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, such assignee shall have the rights and obligations
of a Lender hereunder and (y) the assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (other than any rights it may
have pursuant to Section 13.8 which will survive) and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
d. Within
two Business Days after demand by Agent, Borrowers shall execute and deliver to
Agent in exchange for any surrendered Note or Notes (which the assigning Lender
agrees to promptly deliver to Borrowers) a new Note or Notes to the order of the
assignee in an amount equal to the Commitment or Commitments assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Commitment or Commitments, a new Note or Notes to the order of the
assigning Lender in an amount equal to the Commitment or Commitments retained by
it hereunder. Such new Note or Notes shall re-evidence the indebtedness
outstanding under the old Notes or Notes and shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note or
Notes, shall be dated the Closing Date and shall otherwise be in substantially
the form of the Note or Notes subject to such assignments.
e. Each
Lender may sell participations (without the consent of Agent, Borrowers or any
other Lender) to one or more parties in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the Loans owing to it and the Note or Notes held by
it); provided that (i) such Lender’s obligations under this Agreement
(including, without limitation, its Commitments) shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
any such Note for all purposes of this Agreement, (iv) Borrowers, 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
(v) such Lender shall not transfer, grant, assign or sell any participation
under which the participant shall have rights to approve any amendment or waiver
of this Agreement, except to the extent such amendment or waiver would (A)
extend the final maturity date or the date for the payments of any installment
of fees or principal or interest of any Loans in which such participant is
participating, (B) reduce the amount of any installment of principal of the
Loans in which such participant is participating, (C) except as otherwise
expressly provided in this Agreement, reduce the interest rate applicable to the
Loans in which such participant is participating, or (D) except as otherwise
expressly provided in this Agreement, reduce any fees payable
hereunder.
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f. Each
Lender agrees that, without the prior written consent of Borrowers and Agent, it
will not make any assignment or sell a participation hereunder in any manner or
under any circumstances that would require registration or qualification of, or
filings in respect of, any Loan, Note or other Obligation under the securities
laws of the United States of America or of any jurisdiction.
g. In
connection with the efforts of any Lender to assign its rights or obligations or
to participate interests, Agent or such Lender may disclose any information in
its possession regarding Borrowers, their finances and/or Property.
13.7 Payment of
Expenses:
Borrowers
agree to pay on demand all reasonable out-of-pocket costs and expenses (whether
paid or incurred) of (i) Agent in connection with (A) the negotiation,
preparation, execution and delivery and administration of this Agreement and the
other Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of counsel to
Agent) (subject to a maximum amount of $60,000 plus out-of-pocket expenses); (B)
searches, title examinations, filings and recordings (including, without
limitation, all stamp or recording taxes or charges), and all other actions
pertaining to the Collateral (whether pursuant to Article IV hereof or
otherwise); (C) any amendment, waiver or consent relating hereto and thereto
including, without limitation, any such amendments, waivers or consents
resulting from or related to any work-out, re-negotiation or restructure
relating to the performance by Borrowers under this Agreement; and (ii) Agent
and Lenders in connection with enforcement of the Credit Documents, including
but not limited to, any work-out, re-negotiation or restructure relating to the
performance by Borrowers under this Agreement, including, without limitation,
the reasonable fees and disbursements of counsel for Agent and each
Lender. In addition, Borrowers shall, upon demand, pay to Agent and
Lenders all reasonable costs and expenses (including the reasonable fees and
disbursements of counsel and other professionals) paid or incurred by Agent and
Lenders in (A) enforcing, protecting, preserving or defending its rights under
or in respect of this Agreement and the other Credit Documents; (B) in
collecting the Loans; and (C) in foreclosing or otherwise collecting upon the
Collateral or any part thereof. Borrowers’ obligations under this Section 13.7
shall survive any termination of this Agreement and the other Credit Documents
and the payment in full of the Obligations, and are in addition to, and not in
substitution of, any other of their Obligations set forth in this
Agreement.
13.8 Indemnification:
Borrowers
shall indemnify, defend and hold harmless Agent and each Lender and their
respective partners, members, directors, officers, agents, employees and counsel
from and against (a) any and all losses, claims, damages, liabilities,
deficiencies, judgments or expenses incurred by any of them (except to the
extent that it is finally judicially determined to have resulted from their own
gross negligence or willful misconduct) arising out of or by reason of any
litigation, investigation, claim or proceeding which arises out of or is in any
way related to (i) this Agreement, the other Credit Documents, the Collateral or
the transactions contemplated thereby, (ii) any actual or proposed use by
Borrowers of the proceeds of the Loans, (iii) Agent and Lenders entering into,
performing under or enforcing this Agreement, the other Credit Documents or any
other agreements and documents relating hereto, including, without limitation,
amounts paid in settlement, court costs and the fees and disbursements of
counsel incurred in connection with any such litigation, investigation, claim or
proceeding or any advice rendered in connection with any of the foregoing, or
(iv) the breach by Borrowers of any warranty, undertaking or covenant made at
any time hereunder or under any other Credit Document and (b) any such losses,
claims, damages, liabilities, deficiencies, judgments or expenses incurred in
connection with any remedial or other action taken by Borrowers, Agent or
Lenders in connection with compliance by Borrowers, or any of their respective
Properties, with any federal, state or local environmental laws, acts, rules,
regulations, orders, directions, ordinances, criteria or guidelines. If and to
the extent that the obligations of Borrowers hereunder are unenforceable for any
reason, Borrowers hereby agree to make the maximum contribution to the payment
and satisfaction of such obligations which is permissible under applicable law.
Borrowers’ obligations under this Section 13.8 shall survive any termination of
this Agreement and the other Credit Documents and the payment in full of the
Obligations, and are in addition to, and not in substitution of, any other of
their Obligations set forth in this Agreement.
13.9
Entire Agreement,
Successors and Assigns:
This Agreement along with the other Credit Documents constitutes the entire
agreement among Borrowers, Agent and Lenders regarding the subject matter
hereof, supersedes any prior agreements among them, and shall bind and benefit
Borrowers, Agent and Lenders and their respective successors and permitted
assigns. No rights are intended to be created hereunder or under any other
Credit Documents for the benefit of any Person not a signatory hereto or
thereto.
13.10 Amendments:
Neither
the amendment or waiver of any provision of this Agreement or any other Credit
Document, nor the consent to any departure by Borrowers therefrom, shall in any
event be effective unless the same shall be in writing and signed by Borrowers
and Required Lenders (or by Agent at the direction of Required Lenders), or if
Lenders shall not be parties thereto, by the parties thereto and consented to by
Required Lenders, and each such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided that:
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a. no
amendment, waiver or consent shall unless in writing and signed by each Lender
affected thereby, do any of the following: (i) modify the Commitments, (ii)
except as otherwise expressly provided in this Agreement, reduce the principal
of, or interest on, any Note or any fees hereunder, (iii) postpone any date
fixed for any payment in respect of principal of, or interest on, any Note or
any fees hereunder, (iv) change any minimum requirement necessary for Lenders or
Required Lenders to take any action hereunder, (v) amend or waive this Section
13.10, or change the definition of Required Lenders, (vi) except as otherwise
expressly provided in this Agreement, and other than in connection with the
financing, refinancing, sale or other disposition of any Property of Borrowers
permitted under this Agreement, release any Liens in favor of Lenders on any
portion of the Collateral, (vii) permit Borrowers or any guarantor to delegate,
transfer or assign any of its, his or her obligations to any Lender, (viii)
except as otherwise expressly provided in this Agreement, extend the Maturity
Date or (ix) release or compromise the obligations of Borrowers or any guarantor
to any Lender.
b. the
Commitment of Ballyshannon may be increased in an amount not to exceed
$1,500,000, with only the consent of Ballyshannon.
c. if
Ballyshannon is provided an opportunity to increase its Commitment in accordance
with Section 13.10(b), the Commitments of the other Lenders may be increased pro
rata in accordance with the percentages set forth in Section 2.1(b)(iii), to the
extent the aggregate of all Commitments after such increase does not exceed
$20,000,000; provided, however, that no
Lender shall be required to increase its Commitment; and provided further, that
if any Lender shall decline the opportunity to increase its Commitment in
accordance with this Section 13.10(c), such Lender’s portion of the proposed
increase shall be offered to the other Lenders then a party to this Agreement in
the proportion by which each such Lender has agreed to increase its
Commitment.
d. if
the requirements of Sections 13.10(b) and 13.10(c) have been met, then a new
“Lender” may be added hereto with the consent of the Required
Lenders.
e. no
amendment, waiver or consent affecting the rights or duties of Agent under any
Credit Document shall in any event be effective, unless in writing and signed by
Agent in addition to Lenders required hereinabove to take such action.
Notwithstanding any of the foregoing to the contrary, the consent of Borrowers
shall not be required for any amendment, modification or waiver of the
provisions of Article XII (other than the provisions of Section 12.9). In
addition, Borrowers and Lenders hereby authorize Agent to modify this Agreement
by unilaterally amending or supplementing Schedule 1.1(a) from
time to time in the manner requested by Borrowers, Agent or any Lender in order
to reflect any assignments or transfers of the Loans as provided for hereunder;
provided, however, that Agent shall promptly deliver a copy of any such
modification to Borrowers and each Lender.
Notwithstanding
anything to the contrary contained elsewhere in this Agreement or in any other
Credit Document, Borrowers, Agent and Lenders hereby agree that all agreements
among them under this Agreement and the other Credit Documents, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever shall the amount paid, or agreed
to be paid, to Agent or any Lender for the use, forbearance, or detention of the
money loaned to Borrowers and evidenced hereby or thereby or for the performance
or payment of any covenant or obligation contained herein or therein, exceed the
Highest Lawful Rate. If due to any circumstance whatsoever, fulfillment of any
provisions of this Agreement or any of the other Credit Documents at the time
performance of such provision shall be due shall exceed the Highest Lawful Rate,
then, automatically, the obligation to be fulfilled shall be modified or reduced
to the extent necessary to limit such interest to the Highest Lawful Rate, and
if from any such circumstance any Lender should ever receive anything of value
deemed interest by applicable law which would exceed the Highest Lawful Rate,
such excessive interest shall be applied (as determined by Agent) to the
reduction of the principal amount then outstanding hereunder or on account of
any other then outstanding Obligations and not to the payment of interest, or if
such excessive interest exceeds the principal unpaid balance then outstanding
hereunder and such other then outstanding Obligations, such excess shall be
refunded to Borrowers. All sums paid or agreed to be paid to Agent or any Lender
for the use, forbearance, or detention of the Obligations and other indebtedness
of Borrowers to Agent or any Lender shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such indebtedness until payment in full so that the actual rate of interest on
account of all such indebtedness does not exceed the Highest Lawful Rate
throughout the entire term of such indebtedness. The terms and provisions of
this Section shall control every other provision of this Agreement and all
agreements among Borrowers, Agent and Lenders.
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In
addition to and not in limitation of all rights of offset that Agent and Lender
may have under applicable law, Agent and Lenders shall, if any Event of Default
has occurred and is continuing and whether or not Agent has made any demand or
the Obligations are matured, have the right to appropriate and apply to the
payment of the Obligations any other indebtedness or property then or thereafter
owing by Agent or such Lender, including, without limitation, any and all
amounts in the Deposit Account. Any amount received as a result of the exercise
of such rights shall be reallocated among Lenders as set forth in Section
2.5.
Agent and
each Lender (each, a “Lending Party”) agree
to keep confidential any information furnished or made available to it by
Borrowers pursuant to this Agreement that is marked confidential; provided that
nothing herein shall prevent any Lending Party from disclosing such information
(a) to any other Lending Party or any Affiliate of any Lending Party, or any
officer, director, employee, attorney, agent, or advisor of any Lending Party or
Affiliate of any Lending Party, (b) to any other Person if reasonably incidental
to the administration of the credit facility provided herein, (c) as required by
any law, rule, or regulation, (d) upon the order of any court or administrative
agency, provided if allowed under such order, Agent and each Lender shall
endeavor to give notice to the Borrowers prior to such disclosure, (e) upon the
request or demand of any regulatory agency or authority; provided if allowed
under such request or demand, Agent and each Lender shall endeavor to give
notice to the Borrowers prior to such disclosure, (f) that is or becomes available to
the public or that is or becomes available to
any Lending Party other than as a result of a disclosure by any Lending Party
prohibited by this Agreement, (g) in connection with any litigation to which
such Lending Party or any of its Affiliates may be a party relating to this
Agreement or the transactions contemplated hereunder, (h) to the extent
necessary in connection with the exercise of any remedy under
this Agreement or any other Credit Document, (i) subject to provisions
substantially similar to those contained in this Section 13.19, to any actual or
proposed participant or assignee and (j) to trade publications without listing
the Borrowers’ names; such information to consist of deal terms and other
information customarily found in such publications.
[REMAINDER
OF PAGE LEFT INTENTIONALLY BLANK]
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[SIGNATURE
PAGE TO AMENDED AND RESTATED
LOAN AND
SECURITY AGREEMENT]
Dated the
date and year first written above.
|
BORROWERS:
|
|
By:
|
/s/ Xxxxxxx X. Xxxxxxxx | |
|
Name:
|
Xxxxxxx
X. Xxxxxxxx
|
|
|
Title:
|
Chief
Financial Officer
|
|
NFINANSE
PAYMENTS INC.
|
|
By:
|
/s/ Xxxxxxx X. Xxxxxxxx | |
|
Name:
|
Xxxxxxx
X. Xxxxxxxx
|
|
|
Title:
|
Chief
Financial Officer
|
-45-
[SIGNATURE
PAGE TO AMENDED AND RESTATED
LOAN AND
SECURITY AGREEMENT]
Dated the
date and year first written above.
|
LENDERS:
|
BALLYSHANNON
PARTNERS, L.P., as Agent and as a
Lender
|
|
By:
|
/s/ Xxxxx X.
Xxxxxx
|
||
|
Name:
|
Xxxxx
X. Xxxxxx
|
||
|
Title:
|
President
of the General Partner
|
|
BALLYSHANNON
FAMILY PARTNERSHIP, L.P.
|
|
By:
|
/s/ Xxxxx X.
Xxxxxx
|
||
|
Name:
|
Xxxxx
X. Xxxxxx
|
||
|
Title:
|
President
of the General Partner
|
|
MIDSUMMER
INVESTMENT, LTD.
|
|
By:
|
/s/ Xxxxxx
Xxxxxx
|
||
|
Name:
|
Xxxxxx
Xxxxxx
|
||
|
Title:
|
Vice
President, Midsummer Capital, LLC
|
||
|
Acting
Investment Manager
|
|
XXXXXX
PARTNERS, L.P.
|
|
By:
|
/s/Xxxxxxx X.
Xxxxxx
|
||
|
Name:
|
Xxxxxxx
X. Xxxxxx
|
||
|
Title:
|
General
Partner
|
|
TRELLUS
PARTNERS, L.P.
|
|
By:
|
/s/ Xxxx
Xxxxx
|
||
|
Name:
|
Xxxx
Xxxxx
|
||
|
Title:
|
President
|
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