CREDIT AGREEMENT
Exhibit 10.1
THIS CREDIT AGREEMENT (this “Agreement”) is entered into effective as of December 29, 2014, by and between XXXXXXX BUSINESS SERVICES, INC., a Maryland corporation (“Borrower”), and XXXXX FARGO BANK, NATIONAL ASSOCIATION (“Bank”). This Agreement amends, restates and supersedes in its entirety that certain Restated Credit Agreement dated November 1, 2012 by and between Borrower and Bank, as such may have been amended from time to time prior to the date hereof.
Borrower has requested that Bank extend or continue to extend credit to Borrower as described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.
ARTICLE I
(a) Line of Credit. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time to time up to and including October 1, 2017, not to exceed at any time the aggregate principal amount of Fourteen Million Dollars ($14,000,000.00) (“Line of Credit”), the proceeds of which shall be used to finance working capital for Borrower. Borrower’s obligation to repay advances under the Line of Credit shall be evidenced by a promissory note dated as of December 29, 2014 (“Line of Credit Note”), all terms of which are incorporated herein by this reference.
(b) Letter of Credit Subfeature. As a subfeature under the Line of Credit, Bank agrees from time to time during the term thereof to issue or cause an affiliate to issue standby letters of credit for the account of Borrower (each, a “Line of Credit Letter of Credit” and collectively, “Line of Credit Letters of Credit”); provided however, that the aggregate undrawn amount of all outstanding Line of Credit Letters of Credit (including without limitation the Existing Line of Credit Letters of Credit, as that term is defined in Section 1.1(b)(ii) below) shall not at any time exceed Five Million Dollars ($5,000,000.00).
(i) The form and substance of each Line of Credit Letter of Credit shall be subject to approval by Bank, in its sole discretion. Each Line of Credit Letter of Credit shall be issued for a term not to exceed three hundred eighty (380) days, as designated by Borrower; provided however, that no Line of Credit Letter of Credit shall have an expiration date more than three hundred sixty-five (365) days beyond the maturity date of the Line of Credit. The undrawn amount of all Line of Credit Letters of Credit (including the Existing Line of Credit Letters of Credit) shall be reserved under the Line of Credit and shall not be available for borrowings thereunder. Each Line of Credit Letter of Credit shall be subject to the additional terms and conditions of the Letter of Credit Agreement (as that term is defined in Section 1.1(b)(ii) below), applications and any related documents required by Bank in connection with the issuance thereof. Each drawing paid under a Line of Credit Letter of Credit shall be deemed an advance under the Line of Credit and shall be repaid by Borrower in accordance with the terms and conditions of this Agreement applicable to such advances; provided however, that if advances under the Line of Credit are not available, for any reason, at the time any drawing is paid, then Borrower shall immediately pay to Bank the full amount drawn, together with interest thereon from the date such drawing is paid to the date such amount is fully repaid by Borrower, at the rate of interest applicable to advances under the Line of Credit. In such event, Borrower agrees that Bank, in its sole discretion, may debit any account maintained by Borrower with Bank for the amount of any such drawing.
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(ii) Bank has issued or caused an affiliate to issue the following standby letters of credit (each an “Existing Line of Credit Letter of Credit” and collectively, the “Existing Line of Credit Letters of Credit”), each of which is subject to the terms of that certain Standby Letter of Credit Agreement (Credit Agreement/Loan Agreement Version) between Bank and Borrower dated September 18, 2012, as amended (the “Letter of Credit Agreement”), together with applications and any related documents required by Bank in connection with the issuance (and any renewal) thereof, and is outstanding as of the date hereof: (A) Standby Letter of Credit No. XXX000000 in the amount of Two Million Five Hundred Thousand Dollars ($2,500,000.00) dated December 8, 2003, as amended from time to time, and (B) Standby Letter of Credit No. NZS401574 in the amount of One Million Six Hundred Fifty Thousand Dollars ($1,650,000.00) dated June 20, 2001, as amended from time to time.
(c) Borrowing and Repayment. Borrower may from time to time during the term of the Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that the total outstanding borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth above.
SECTION 1.2 TERM LOAN 1.
(a) Term Loan 1. Bank has made a loan to Borrower in the original principal amount of Five Million Five Hundred Twelve Thousand Five Hundred Dollars ($5,512,500.00) (“Term Loan 1”), on which the outstanding principal balance as of the date hereof is $5,053,125.00. Borrower’s obligation to repay Term Loan 1 is evidenced by a promissory note dated as of November 1, 2012, as amended (“Term Note 1”), all terms of which are incorporated herein by this reference. Any reference in Term Note 1 to any prior loan agreement between Bank and Borrower shall be deemed a reference to this Agreement. Subject to the terms and conditions of this Agreement, Bank hereby confirms that Term Loan 1 remains in full force and effect.
(c) Prepayment. Borrower may prepay principal on Term Loan 1 solely in accordance with the provisions of Term Note 1.
SECTION 1.3. TERM LOAN 2.
(a) Term Loan 2. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make a loan to Borrower in the principal amount of Forty Million Dollars ($40,000,000.00) (“Term Loan 2”), the proceeds of which shall be used to fund insurance reserves of Borrower and its wholly-owned subsidiaries. Borrower’s obligation to repay Term Loan 2 shall be evidenced by a promissory note dated as of December 29, 2014 (“Term Note 2”), all terms of which are incorporated herein by this reference. Bank’s commitment to grant the Term Loan 2 shall terminate on January 31, 2015.
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(b) Repayment. Principal and interest on Term Loan 2 shall be repaid in accordance with the provisions of Term Note 2.
(c) Prepayment. Borrower may prepay principal on Term Loan 2 solely in accordance with the provisions of Term Note 2.
SECTION 1.4. INSURANCE LETTERS OF CREDIT.
(i) Existing Insurance Letters of Credit. In addition to the Existing Line of Credit Letters of Credit, Bank has issued or caused an affiliate to issue the following standby letters of credit for the account of Borrower, each of which is subject to the terms of the Letter of Credit Agreement and is outstanding as of the date hereof (each an “Existing Insurance Letter of Credit” and collectively, the “Existing Insurance Letters of Credit”): (A) Standby Letter of Credit No. IS0133585U in the amount of Five Million Dollars ($5,000,000.00), for the benefit of Atlantic Specialty Insurance Company dated December 19, 2013, as amended from time to time (the “Existing Atlantic SLC”); (B) Standby Letter of Credit No. IS0133605U in the amount of Five Million Dollars ($5,000,000.00), for the benefit of Argonaut Insurance Co. dated December 19, 2013, as amended from time to time (the “Existing Argonaut SLC”); and (C) Standby Letter of Credit No. IS0133565U in the amount of Ten Million Nine Hundred Forty-Three Thousand Four Hundred Sixty-Six and 20/100 Dollars ($10,943,466.20) for the benefit of Westchester Fire Insurance Company dated December 19, 2013, as amended from time to time (the “Existing Westchester SLC”).
(ii) Amended Insurance Letters of Credit. Subject to the terms of this Agreement, Bank hereby agrees, for the benefit of Borrower to secure a portion of Borrower’s obligations to issuers of surety bonds issued to the Self Insurance Plans of the State of California, to amend or cause an affiliate to amend: (A) the Existing Atlantic SLC to increase the amount thereof from Five Million Dollars ($5,000,000.00) to Fifteen Million Dollars ($15,000,000.00); (B) the Existing Argonaut SLC to increase the amount thereof from Five Million Dollars ($5,000,000.00) to Fifteen Million Dollars ($15,000,000.00); and (C) the Existing Westchester SLC to increase the amount thereof from Ten Million Nine Hundred Forty-Three Thousand Four Hundred Sixty-Six and 20/100 Dollars ($10,943,466.20) to Eighty-Four Million Three Hundred Thirty-Four Thousand Six Hundred Sixty and 20/100 Dollars ($84,334,660.20). The form and substance of each such amended Existing Insurance Letter of Credit shall be subject to approval by Bank, in its sole discretion. For purposes of this Agreement, “Insurance Letters of Credit” means, collectively, the Existing Insurance Letters of Credit, amended as contemplated in this Section 1.4(a)(ii).
(iii) Additional Terms. Each of the Insurance Letters of Credit shall remain subject to the additional terms of the Letter of Credit Agreement, applications and any related documents required by Bank in connection with the issuance (and any renewal) thereof. Notwithstanding the provisions of any Insurance Letter of Credit regarding automatic extension of its expiration date, Bank may, at its sole option, give notice to the beneficiary thereof in accordance with the terms of such Insurance Letter of Credit that Bank has elected not to renew such Insurance Letter of Credit beyond its current expiration date (or any other subsequent expiration date that may be agreed to by Bank at Bank’s sole discretion). If Borrower does not at any time want any Insurance Letter of Credit to be renewed, Borrower will so notify Bank at least fifteen (15) calendar days before Bank is to notify the beneficiary thereof of such nonrenewal pursuant to the terms of such Insurance Letter of Credit.
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(b) Repayment of Drafts. Each drawing paid under the Insurance Letters of Credit shall be repaid by Borrower in accordance with the provisions of the Letter of Credit Agreement.
(a) Interest. The outstanding principal balance of the Line of Credit, Term Loan 1 and Term Loan 2 shall bear interest, and the amount of each drawing paid under any Line of Credit Letter of Credit and any Insurance Letter of Credit shall bear interest from the date such drawing is paid to the date such amount is fully repaid by Borrower, at the rate of interest set forth in each promissory note or other instrument or document executed in connection therewith.
(b) Computation and Payment. Interest shall be computed on the basis of a 360-day year, actual days elapsed. Interest shall be payable at the times and place set forth in each promissory note or other instrument or document required hereby.
(c) Commitment Fee. Borrower shall pay to Bank a non-refundable commitment fee for Term Loan 2 equal to Four Hundred Thousand Dollars ($400,000.00), which fee shall be due and payable in full on the earlier of (i) the date of funding of Term Loan 2, or (ii) January 15, 2015.
(d) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to thirty-five one hundredths of one percent (0.35%) per annum (computed on the basis of a 360-day year, actual days elapsed) on the daily unused amount of the Line of Credit, which fee shall be calculated on a quarterly basis by Bank and shall be due and payable by Borrower in arrears on the first day of each quarter, commencing on April 1, 2015.
(e) Line of Credit Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the issuance of each Line of Credit Letter of Credit equal to one and three-quarters percent (1.75%) per annum (computed on the basis of a 360-day year, actual days elapsed) of the face amount thereof, and (ii) fees upon the payment or negotiation of each drawing under any Line of Credit Letter of Credit and fees upon the occurrence of any other activity with respect to any Line of Credit Letter of Credit (including without limitation, the transfer, amendment or cancellation of any Line of Credit Letter of Credit) determined in accordance with Bank's standard fees and charges then in effect for such activity.
(f) Insurance Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the issuance of each Insurance Letter of Credit equal to ninety-five one hundredths of one percent (0.95%) per annum (computed on the basis of a 360-day year, actual days elapsed) of the face amount thereof, and (ii) fees upon the payment or negotiation of each drawing under any Insurance Letter of Credit and fees upon the occurrence of any other activity with respect to any Insurance Letter of Credit (including without limitation, the transfer, amendment or cancellation of any Insurance Letter of Credit) determined in accordance with Bank’s standard fees and charges then in effect for such activity.
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As security for all indebtedness and other obligations of Borrower to Bank, Borrower shall grant, and hereby confirms its prior grant, to Bank security interests of first priority in all Borrower’s accounts receivable and other rights to payment, general intangibles, inventory and equipment.
As security for all indebtedness and other obligations of Borrower to Bank under Term Loan 1, Borrower shall grant, and hereby confirms its prior grant, to Bank a lien of not less than first priority on that certain real property located at 0000 XX Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000.
As security for all indebtedness and other obligations of Borrower to Bank under the Insurance Letters of Credit, Borrower shall cause Associated Insurance Company for Excess, an Arizona corporation (“AICE”), to grant, and confirm its prior grant, to Bank security interests of first priority in (i) deposit account number xxxxxxxxxx with Bank (“AICE Deposit Account No. 1”), (ii) deposit account number xxxxxxxxx with Bank (“AICE Deposit Account No. 2”), and (iii) deposit account number xxxxxxxxx with Bank (“AICE Deposit Account No. 3”) (the deposit accounts described in clauses (i) through (iii) in this sentence, collectively, the “AICE Deposit Accounts”).
All of the foregoing shall be evidenced by and subject to the terms of such security agreements, financing statements, deeds or mortgages, and other documents as Bank shall reasonably require, all in form and substance satisfactory to Bank. Borrower shall pay to Bank immediately upon demand the full amount of all charges, costs and expenses (to include fees paid to third parties and all allocated costs of Bank personnel), expended or incurred by Bank in connection with any of the foregoing security, including without limitation, filing and recording fees and costs of appraisals, audits and title insurance.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this Agreement.
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(a) All taxes, governmental assessments, insurance premiums, and water, sewer and municipal charges, and rents (if any) which previously became due and owing in respect thereof have been paid as of the date hereof.
(b) There are no construction or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under law could give rise to any such lien) which affect all or any interest in any such real property and which are or may be prior to or equal to the lien thereon in favor of Bank.
(c) None of the improvements which were included for purpose of determining the appraised value of any such real property lies outside of the boundaries and/or building restriction lines thereof, and no improvements on adjoining properties materially encroach upon any such real property.
(d) There is no pending, or to the best of Borrower's knowledge threatened, proceeding for the total or partial condemnation of all or any portion of any such real property, and all such real property is in good repair and free and clear of any damage that would materially and adversely affect the value thereof as security and/or the intended use thereof.
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ARTICLE III
(a) Approval of Bank Counsel. All legal matters incidental to the extension of credit by Bank shall be satisfactory to Bank's counsel.
(i) This Agreement and each promissory note or other instrument or document required hereby;
(ii) Second Amended and Restated Third Party Security Agreement: Specific Rights to Payment;
(iii) First Modification to Term Note;
(iv) Corporate Resolution: Borrowing;
(v) Incumbency Certificate;
(vi) Corporate Resolution: Third Party Collateral [AICE];
(vii) Incumbency Certificate [AICE]; and
(viii) Such other documents as Bank may require under any other Section of this Agreement.
(c) Financial Condition. There shall have been no material adverse change, as determined by Bank, in the financial condition or business of Borrower, any of the Affiliates or any Third Party Obligor hereunder, if any, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower, any of the Affiliates, or any such Third Party Obligor, if any.
(d) Insurance. Borrower shall have delivered to Bank evidence of insurance coverage, in form, substance, amounts, covering risks and issued by companies satisfactory to Bank, and where required by Bank, with lender loss payable endorsements in favor of Bank, including without limitation, policies of fire and extended coverage insurance covering all real property collateral required hereby, with replacement cost and mortgagee loss payable endorsements, and such policies of insurance against specific hazards affecting any such real property, including terrorism, as may be required by governmental regulation or Bank.
(e) Deposit Account Funds. Borrower shall have deposited, or caused AICE to deposit, into AICE Deposit Account No. 3, in immediately available funds, cash in an amount equal to $93,391,194.00 as a time deposit for a period not less than three (3) months following the date hereof.
(f) Issuance of Surety Bonds. Each issuer of the surety bonds who are beneficiaries of the Insurance Letters of Credit shall be irrevocably obligated to issue, subject only to such issuer’s receipt of the respective Insurance Letters of Credit, surety bonds to the State of California Department of Industrial Relations Office of Self Insurance Plans (“OSIP”) in satisfaction of Borrower’s security deposit required by OSIP with respect to worker’s compensation obligations in the State of California in the aggregate dollar amount of $190,557,767.00 comprised of: (i) a surety bond in the amount of $25,000,000.00 issued by Atlantic Specialty Insurance Company; (ii) a surety bond in the amount of $25,000,000.00 issued by Argonaut Insurance Co.; and (iii) a surety bond or surety bonds in the amount of $140,557,767.00 issued by Westchester Fire Insurance Company. Borrower shall have provided, or caused the surety bond issuers to provide, to Bank true and correct copies of each of the above described surety bonds.
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(g) Confirmation of Regulatory Authority. Bank shall have received written confirmation, in form and substance satisfactory to Bank in its sole discretion, that the transactions contemplated in this Agreement (including AICE’s pledge of additional collateral securing the Insurance Letters of Credit) (i) satisfy the obligations of Borrower to OSIP, and (ii) have been approved by the Department of Insurance of the State of Arizona.
(h) Capitalization of AICE. Bank shall have received confirmation, in form and substance satisfactory to Bank in its sole discretion, that (i) Borrower has provided to AICE additional capital from Borrower’s cash on hand in an amount not less than Thirty-Five Million Dollars ($35,000,000.00), which amount, together with the proceeds of Term Loan 2, shall be sufficient to satisfy Borrower’s obligations to the Department of Insurance of the State of Arizona with respect to the required capital and surplus of AICE; and (ii) true and correct copies of all corporate consents, approval and authorizations of Borrower evidencing the capital contributions to AICE required by the Department of Insurance of the State of Arizona.
(a) Compliance. The representations and warranties contained herein and in each of the other Loan Documents shall be true on and as of the date of the signing of this Agreement and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date, and on each such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist.
(b) Documentation. Bank shall have received all additional documents which may be required in connection with such extension of credit.
ARTICLE IV
Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in writing:
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(a) not later than 120 days after and as of the end of each fiscal year, an audited consolidated financial statement of Borrower, prepared by a certified public accountant acceptable to Bank, to include balance sheet, income statement, and statement of cash flows and sources, and shall be accompanied by the unqualified opinion of such accountant addressed to Bank;
(b) not later than 180 days after and as of the end of each fiscal year, an audited financial statement for each of AICE, and Ecole Insurance Company, an Arizona corporation wholly owned by Borrower (“Ecole”) (AICE and Ecole, each an “Affiliate” and collectively, the “Affiliates”), prepared by a certified public accountant acceptable to Bank, to include balance sheet, income statement and statement of cash flows and sources, and shall be accompanied by the unqualified opinion of such accountant addressed to Bank;
(c) promptly upon their becoming available, copies of (i) all financial statements, reports, notices and proxy statements made publicly available by Borrower to its security holders; (ii) all regular and periodic reports and all registration statements and prospectuses, if any, filed by Borrower with any securities exchange or with the U.S. Securities and Exchange Commission (“SEC”) or any governmental or private regulatory authority, including, but not limited to (A) not later than 95 calendar days after the end of each fiscal year, Borrower’s 10-K filing with the SEC (including all exhibits and certifications) for the fiscal year just ended, and (B) not later than 50 calendar days after the end of each fiscal quarter, Borrower’s 10-Q filing with the SEC (including all exhibits and certifications) for the fiscal quarter just ended; and (iii) all press releases and other statements made available by Borrower to the public concerning material changes or developments in the business of Borrower;
(d) not later than 30 days after and as of the end of each month, a borrowing base certificate, and immediately upon each request from Bank, any supporting information relating thereto requested by Bank;
(e) contemporaneously with each annual and quarterly financial statement of Borrower and the Affiliates required hereby, a certificate of the president or chief financial officer of Borrower that said financial statements are accurate, that Borrower is in compliance with all financial covenants in this Agreement (as evidenced by detailed calculations attached to such certificate), and that there exists no Event of Default nor any condition, act or event which with the giving of notice or the passage of time or both would constitute an Event of Default;
(f) annually, but in all events not later than October 15 of each year (commencing October 15, 2015), true and correct copies of a Uniform Certificate of Authority Application-Certificate of Compliance issued by the State of Arizona Director of Insurance for each of the Affiliates indicating that, as of a date no earlier than thirty (30) days prior to the date each such certificate is delivered to Bank, each of the Affiliates is duly organized under the laws of the State of Arizona and authorized to transact the relevant insurance business of each of the Affiliates in the State of Arizona;
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(g) annually, but in all events not later than April 30 of each year (commencing April 30, 2015), true and correct copies of all third party actuarial reviews of the workers’ compensation obligations of Borrower and the Affiliates, including such actuarial reviews of Borrower and the Affiliates provided to OSIP.
(h) promptly upon Borrower’s receipt thereof each month, a true and correct copy of the monthly actuarial consultant’s report provided to Borrower; and
(i) from time to time such other information as Bank may reasonably request, including without limitation, copies of rent rolls and other information with respect to any real property collateral required hereby.
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(a) Fixed Charge Coverage Ratio not less than 1.50 to 1.0 as of each fiscal quarter end, determined on a rolling 4-quarter basis, with “Fixed Charge Coverage Ratio” defined as (i) EBITDA minus distributions and dividends, plus cash tax refunds less cash taxes paid, divided by (ii) prior period scheduled principal payments plus interest plus current portion of capital lease payments, with “EBITDA” defined as net profit before taxes plus interest expense (net of capitalized interest expense), depreciation expense and amortization expense; provided, however, that for purposes of calculating the Fixed Charge Coverage Ratio: (i) $66,500,000 will be added to the numerator, and $5,000,000 will be added to the denominator, for each of the periods ending December 31, 2014, March 31, 2015 and June 30, 2015, and (ii) $5,000,000 will be added to the denominator for the period ending September 30, 2015.
(b) Liquid Assets to Worker’s Compensation Claims & Safety Incentive Liabilities not less than 1.0 to 1.0 as of each fiscal quarter end, with “Liquid Assets” defined as the sum of (i) restricted and unrestricted cash and cash equivalents, plus (ii) restricted and unrestricted marketable securities acceptable to Bank in its sole discretion, and with “Worker’s Compensation Claims & Safety Incentive Liabilities” defined as the aggregate of Borrower’s obligations with respect to (i) workers’ compensation claims liabilities, and (ii) safety incentive liabilities, in each case as the assets described in clauses (i) and (ii) of the foregoing definition of “Liquid Assets” and as the liabilities described in clauses (i) and (ii) of the foregoing definition of “Worker’s Compensation Claims & Safety Incentive Liabilities” are required to be reflected in Borrower’s annual audited consolidated financial statements and quarterly unaudited consolidated financial statements, consistent with past practices.
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ARTICLE V
Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower will not without Bank's prior written consent:
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ARTICLE VI
SECTION 6.1. The occurrence of any of the following shall constitute an “Event of Default” under this Agreement:
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(a) Borrower shall fail to pay when due any principal, interest, fees or other amounts payable under any of the Loan Documents.
(b) Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made.
(c) Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan Document (other than those specifically described as an “Event of Default” in this section 6.1), and with respect to any such default that by its nature can be cured, such default shall continue for a period of twenty (20) days from (i) its occurrence, or (ii) solely with respect to Borrower’s information reporting obligations under Section 4.3(d), Section 4.3 (g) or Section 4.3(h), Bank’s giving of notice to Borrower of the occurrence thereof.
(d) Any default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract, instrument or document (other than any of the Loan Documents) pursuant to which Borrower, any of the Affiliates, any guarantor hereunder or any general partner or joint venturer in Borrower if a partnership or joint venture (with each such guarantor, general partner and/or joint venturer referred to herein as a “Third Party Obligor”) has incurred any debt or other liability to any person or entity, including Bank.
(e) Borrower, any of the Affiliates, or any Third Party Obligor shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower, any of the Affiliates or any Third Party Obligor shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time (“Bankruptcy Code”), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or Borrower, any of the Affiliates or any Third Party Obligor shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower, any of the Affiliates or any Third Party Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower, any of the Affiliates or any Third Party Obligor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.
(f) The filing of a notice of judgment lien against Borrower, any of the Affiliates or any Third Party Obligor; or the recording of any abstract of judgment against Borrower, any of the Affiliates or any Third Party Obligor in any county in which Borrower, any of the Affiliates or such Third Party Obligor has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower, any of the Affiliates or any Third Party Obligor; or the entry of a judgment against Borrower, any of the Affiliates or any Third Party Obligor; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower, any of the Affiliates or any Third Party Obligor.
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(g) There shall exist or occur any event or condition that Bank in good faith believes impairs, or is substantially likely to impair, the prospect of payment or performance by Borrower, any of the Affiliates, any Third Party Obligor, or the general partner of either if such entity is a partnership, of its obligations under any of the Loan Documents.
(h) The death or incapacity of Borrower or any Third Party Obligor if an individual. The dissolution or liquidation of Borrower, any of the Affiliates or any Third Party Obligor if a corporation, partnership, joint venture or other type of entity; or Borrower, any of the Affiliates or any such Third Party Obligor, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower, any of the Affiliates or such Third Party Obligor.
(i) Any change in control of Borrower, any of the Affiliates or any entity or combination of entities that directly or indirectly control Borrower or any of the Affiliates, with “control” defined as ownership of an aggregate of twenty-five percent (25%) or more of the common stock, members' equity or other ownership interest (other than a limited partnership interest).
(j) The sale, transfer, hypothecation, assignment or encumbrance, whether voluntary, involuntary or by operation of law, without Bank’s prior written consent, of all or any part of or interest in any real property collateral required hereby.
(k) Any amount is drawn on any of the Insurance Letters of Credit.
ARTICLE VII
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BORROWER: | XXXXXXX BUSINESS SERVICES, INC. | |
0000 XX Xxxxxxx Xxxxx, Xxxxx 000 | ||
Xxxxxxxxx, Xxxxxxxxxx 00000 | ||
Attn.: | Xxxxx X. Xxxxxx, Vice President-Finance | |
BANK: | XXXXX FARGO BANK, NATIONAL ASSOCIATION | |
Portland RCBO | ||
MAC P6101-250 | ||
0000 XX Xxxxx Xxxxxx | ||
Xxxxxxxx, Xxxxxx 00000 | ||
Attn: | Xxxxx X. Xxxxxx, Vice President |
or to such other address as any party may designate by written notice to all other parties. Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.
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SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Oregon.
(a) Arbitration. The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit. In the event of a court ordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in that party’s right to demand arbitration being automatically terminated.
(b) Governing Rules. Any arbitration proceeding will (i) proceed in a location in Oregon selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.
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(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.
(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State of Oregon or a neutral retired judge of the state or federal judiciary of Oregon, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of Oregon and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the Oregon Rules of Civil Procedure or other applicable law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.
(e) Discovery. In any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.
(f) Class Proceedings and Consolidations. No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.
(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and expenses of the arbitration proceeding.
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(h) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE ENFORCEABLE.
XXXXXXX BUSINESS SERVICES, INC. | XXXXX FARGO BANK, NATIONAL ASSOCIATION | ||||
By: | /s/ Xxxxx X. Xxxxxx | By: | /s/ Xxxxx X. Xxxxxx | ||
Name: | Xxxxx X. Xxxxxx | Name: | Xxxxx X. Xxxxxx | ||
Title: | Vice President-Finance | Title: | Vice President |
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