Contract
AMENDED
AND RESTATED TERM
LOAN AND SECURITY AGREEMENT
This
AMENDED
AND RESTATED TERM LOAN AND SECURITY AGREEMENT
dated as
of the 27th
day of
February, 2007, is entered into by and among Pac-West Telecomm, Inc., a
corporation organized and existing under the laws of the State of Califorina
having its principal office at 0000 X. Xxxxx Xxxx, Xxxxxxxx, XX 00000 (and
as of
March 15, 2007, having its principal office at 0000 Xxxxxxxx Xxx., Xxxxxxxx,
XX
95204) (“Customer”),
and
Xxxxxxx
Xxxxx Capital,
a
division of Xxxxxxx Xxxxx Business Financial Services Inc., a corporation
organized and existing under the laws of the State of Delaware having its
principal office at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, XX 00000 (“MLC”)
(as
amended, restated, supplemented or otherwise modified from time to time, the
“Loan
Agreement”).
RECITALS
On
May
21, 2004, Customer delivered to MLC that certain Collateral Installment Note
of
even date in the original principal amount of Two Million Four Hundred Thousand
Eight Hundred Eighty Seven and 18/100 Dollars ($2,400,887.18)
(“May
2004 Note”)
which
is secured as provided by that certain Term Loan and Security Agreement of
even
date between Customer and the MLC (collectively, the “May
2004 Loan Agreement”).
Under
the May 2004 Loan Agreement, Customer is obligated to make monthly payments
to
MLC in the amount of approximately $76,046.54 per month, with the final monthly
payment due to MLC on June 1, 2007.
On
July
2, 2004, Customer delivered to MLC that certain Collateral Installment Note
of
even date in the original principal amount of Two Million Nine Hundred Ninety
Six Thousand Four Hundred Forty Five and 82/100 Dollars ($2,996,445.82)
(“July
2004 Note”)
which
is secured as provided by that certain Term Loan and Security Agreement of
even
date between Customer and MLC (collectively, the “July
2004 Loan Agreement”).
Under
the July 2004 Loan Agreement, Customer is obligated to make monthly payments
to
MLC in the amount of approximately $94,889.92 per month, with the final monthly
payment due to MLC on August 1, 2007.
On
May
27, 2005, Customer delivered to MLC that certain Collateral Installment Note
of
even date in the original principal amount of One Million Nine Hundred Forty
Nine Thousand Ninety and 94/100 Dollars ($1,949,090.94) (“May
2005 Note”)
which
is secured as provided by that certain Term Loan and Security Agreement of
even
date between Customer and MLC (collectively, the “May
2005 Loan Agreement”).
Under
the May 2005 Loan Agreement, Customer is obligated to make monthly payments
to
MLC in the amount of approximately $61,671.35 per month, with the final monthly
payment due to MLC on June 1, 2008.
On
November 30, 2005, Customer delivered to MLC that certain Collateral Installment
Note of even date in the original principal amount of Four Million Four Hundred
Seventy Four Thousand Five Hundred Eighty Eight and 64 /100 Dollars
($4,474,588.64) (“November
2005 Note”
and
together with the May 2004 Note, the July 2004 Note and the May 2005 Note,
the
“Original
Notes”)
which
is secured as provided by that certain Term Loan and Security Agreement of
even
date between Customer and MLC (collectively, the “November
2005 Loan Agreement”
and
together with the May 2004 Loan Agreement, July 2004 Loan Agreement and May
2005
Loan Agreement, as each may have been amended, restated supplemented or
otherwise modified from time to time prior hereto, the “Original
Loan Agreements”).
Under
the November 2005 Loan Agreement, Customer is obligated to make monthly payments
to MLC in the amount of approximately $142,866.14 per month, with the final
monthly payment due to MLC on December 1, 2008.
Pursuant
to the Original Loan Agreements, MLC agreed, at the request of Customer and
from
time to time, to lend money, advance funds or otherwise extend credit to
Customer so that Customer could purchase telecommunication and related
equipment, in accordance with the terms and provisions of the Original Loan
Agreements.
Pursuant
to that certain Agreement to Restructure dated as of November 15, 2006, between
Customer and MLC (“Restructuring
Agreement”)
(i)
upon the satisfaction of certain conditions precedent as set forth in Section
4(b) of the Restructuring Agreement, MLC agreed to restructure the obligations
of Customer under the Original Loan Agreements, but only subject to terms and
conditions set forth therein and (ii) Customer agreed to pay MLC in respect
of
the Customer’s obligations to MLC 20% of any interest savings achieved as a
result of the tender of more than $21.0 million in principal amount of the
Customer’s 13.5% Senior Notes due 2009 (the “Senior
Notes”)
as
part of an exchange offer the Customer intends to conduct in respect of the
Senior Notes.
In
consideration of the mutual covenants of the parties hereto, Customer and MLC
hereby agree to amend and restate the Original Loan Agreements, in their
entirety, but only on the terms and conditions set forth herein as
follows:
ARTICLE
I. DEFINITIONS
Section
1.1 Specific
Terms.
In
addition to terms defined elsewhere in this Loan Agreement, when used herein
the
following terms shall have the following meanings:
“Applicable
Law” shall mean all laws, judgments, decrees, ordinances and regulations and any
other governmental rules, orders and determinations and all requirements having
the force of law, now or hereafter enacted, made or issued, whether or not
presently contemplated, including (without limitation) compliance with all
requirements of zoning laws and labor laws.
“Bankruptcy
Event” shall mean any of the following: (i) a proceeding under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, liquidation,
winding up or receivership law or statute shall be commenced, filed or consented
to by any Credit Party; or (ii) any such proceeding shall be filed against
any
Credit Party and shall not be dismissed or withdrawn within sixty (60) days
after filing; or (iii) any Credit Party shall make a general assignment for
the
benefit of creditors; or (iv) any Credit Party shall generally fail to pay
or
admit in writing its inability to pay its debts as they become due; or (v)
any
Credit Party shall be adjudicated a bankrupt or insolvent; or (vi) any Credit
Party shall take advantage of any other law or procedure for the relief of
debtors or shall take any action for the purpose of or with a view towards
effecting any of the foregoing; or (vii) a receiver, trustee, custodian, fiscal
agent or similar official for any Credit Party or for any substantial part
of
any of their respective property or assets shall be sought by such Credit Party
or appointed.
“Business
Day” shall mean any day other than a Saturday, a Sunday, and any day on which
banking institutions located in the State of New York are authorized by law
or
other governmental action to close.
“Business
Guarantor” shall mean every Guarantor that is not a natural person.
“Closing
Date” shall mean the date upon which all conditions precedent to MLC’s
obligation to make the Loan shall have been met to the satisfaction of
MLC.
“Collateral”
shall mean the collateral more fully described on Exhibit
A
attached
hereto, howsoever arising, whether now owned or existing or hereafter acquired
or arising, and wherever located; together with all parts thereof (including
spare parts), all accessories, alterations and accessions thereto, all books
and
records (including computer records) directly related thereto, all proceeds
thereof (including, without limitation, proceeds in the form of Accounts and
insurance proceeds), and the additional collateral described in Section 4.4
hereof.
“Commitment
Expiration Date” shall mean the earlier to occurr of (i) August 1, 2009 and (ii)
any acceleration of the Obligations pursuant to Section
4.6(a)(ii)
below.
“Credit
Party” and “Credit Parties” shall mean, individually or collectively, the
Customer, all Guarantors, and all Pledgors.
“Default”
shall mean either an “Event of Default” as defined in Section
4.5
below,
or an event which with the giving of notice, passage of time, or both, would
constitute such an Event of Default.
“Default
Rate” shall mean an annual interest rate equal to the lesser of: (i) two
percentage points over the Interest Rate; or (ii) the highest interest rate
allowed by applicable law.
“Event
of
Loss” shall mean the occurrence whereby any tangible Collateral is damaged
beyond repair, lost, totally destroyed or confiscated.
“GAAP”
shall mean the generally accepted accounting principles in effect in the United
States of America from time to time.
“General
Funding Conditions” shall mean each of the following conditions to each loan or
advance by MLC hereunder: (i) no Default or Event of Default shall have occurred
and be continuing or would result from the making of any such loan or advance
hereunder by MLC; (ii) there shall not have occurred and be continuing any
material adverse change in the business, condition (financial or otherwise)
of
any Credit Party; (iii) all representations and warranties of all of the Credit
Parties herein or in any of the Loan Documents shall then be true and correct
in
all material respects; (iv) MLC shall have received this Loan Agreement and
all
of the other Loan Documents, duly executed, all of which shall be in form and
substance satisfactory to MLC; (v) MLC shall have received, as and to the extent
applicable, copies of invoices, bills of sale, loan payoff letters and/or other
evidence reasonably satisfactory to it that the proceeds of the Loan will
satisfy the Loan Purpose; (vi) MLC shall have received evidence reasonably
satisfactory to it as to the ownership of the Collateral and the perfection
and
priority of MLC’s liens and security interests thereon, as well as the ownership
of and the perfection and priority of MLC’s liens and security interests on any
other collateral for the Obligations furnished pursuant to any of the Loan
Documents; (vii) MLC shall have received evidence reasonably satisfactory to
it
of the insurance required hereby or by any of the Loan Documents on the
Collateral; (viii) MLC has received notice from Customer (attached as
Exhibit
B
hereto)
requesting that MLC restructure the obligations of Customer under the Original
Loan Agreements; (ix) except as set forth in Section
3(b)
of the
Restructuring Agreement, MLC shall have received all scheduled payments due
under the Original Loan Agreements, including, without limitation, the December
Payment (as defined in the Restructuring Agreement); (x) MLC shall have received
each Semi-Annual Interest Payment, if any, then due to MLC in accordance with
Section
5
Restructuring Agreement; (xi) MLC shall have received evidence (attached as
Exhibit
C
hereto)
that (a) Customer has fully drawn the full amount of the Tranche A Term Loan
(as
defined in the Senior Loan Facility), (b) the Tranche B Availability Date (as
defined in the Senior Loan Facility) has occurred, and (c) Customer has the
right to request Advances (as defined in the Senior Loan Facility); (xii) MLC
shall have been reimbursed by Customer for the reasonable documented fees and
expenses of MLC’s counsel incurred in connection with the Restructuring
Agreement, this Loan Agreement and any other Loan Document; (xiii) Customer
shall have provided to MLC the same financial information as is provided or
is
available to Pac-West Funding Company LLC (attached as Exhibit
D
hereto)
and (ivx) any additional conditions, information and/or other documents as
reasonably requested by MLC with respect to the transactions contemplated hereby
shall have been met to the reasonable satisfaction of MLC.
“Guarantor”
shall mean each Person obligated under a guaranty, endorsement or other
undertaking by which such Person guarantees or assumes responsibility in any
capacity for the payment or performance of any of the Obligations.
“Individual
Guarantor” shall mean every Guarantor that is a natural person.
“Loan”
shall have the meaning assigned to such term in Section
2.1
below.
“Loan
Agreement” shall mean this agreement as titled in the initial paragraph
hereof.
“Loan
Documents” shall mean this Loan Agreement, any note, any guaranty of any of the
Obligations and all other security and other instruments, assignments,
certificates, certifications and agreements of any kind relating to any of the
Obligations, whether obtained, authorized, authenticated, executed, sent or
received concurrently with or subsequent to this Loan Agreement, or which
evidence the creation, guaranty or collateralization of any of the Obligations
or the granting or perfection of liens or security interests upon any Collateral
or any other collateral for the Obligations, including any modifications,
amendments or restatements of the foregoing.
“Loan
Purpose” shall mean the purpose for which the proceeds of the Loan will be used;
to wit: to purchase or finance equipment.
“Location
of Tangible Collateral” shall mean the address of Customer where the collateral
is located as set forth on Exhibit
A
hereto.
“Material
Adverse Effect” shall mean any material adverse effect on the business or
financial condition of Customer taken as a whole as reasonably determined by
MLC.
“Note”
shall have the meaning assigned to such term in Section
2.2
below.
“Obligations”
shall mean all liabilities, indebtedness and obligations of Customer to MLC,
howsoever created, arising or evidenced, whether now existing or hereafter
arising, whether direct or indirect, absolute or contingent, due or to become
due, primary or secondary or joint or several, and, without limiting the
generality of the foregoing, shall include principal, accrued interest
(including without limitation interest accruing after the filing of any petition
in bankruptcy), all advances made (or deemed to be made) by or on behalf of
MLC
under the Loan Documents, collection and other costs and expenses incurred
by or
on behalf of MLC, whether incurred before or after judgment, and all present
and
future liabilities, indebtedness and obligations of Customer under the Note
issued pursuant hereto and this Loan Agreement (including, but not limited
to,
any Semi-Annual Interest Payments owing under Section
3
hereof),
or any other note or evidence of indebtedness to MLC.
“Permitted
Liens” shall mean with respect to the Collateral: (i) liens for current taxes
not yet due and payable, other non-consensual liens arising in the ordinary
course of business for sums not due, and, if MLC’s rights to and interest in the
Collateral would not be materially and adversely affected thereby, any such
liens for taxes or other non-consensual liens arising in the ordinary course
of
business being contested in good faith by appropriate proceedings and so long
as
adequate reserves are maintained with respect to such liens and available to
Customer for the payment of such taxes or other non-consensual liens; (ii)
liens
in favor of MLC; (iii) liens which will be discharged with the proceeds of
the
Loan; (iv) statutory liens of landlords, carriers, warehousemen, processors,
mechanics, materialmen, or suppliers incurred in the ordinary course of business
and securing amounts not yet due or declared to be due by the claimant
thereunder; and (v) any other liens expressly permitted in writing by
MLC.
“Person”
shall mean any natural person and any corporation, partnership (general, limited
or otherwise), limited liability company, trust, association, joint venture,
governmental body or agency or other entity having legal status of any
kind.
“Pledgor”
shall mean each Person who at any time provided or provides collateral, or
otherwise previously, now or hereinafter agrees to grant MLC a security interest
in any assets as security for Customer’s Obligations.
“Senior
Loan Facility” means the Amended and Restated Loan and Security Agreement, dated
as of November 15, 2006, by and between Pac-West Funding Company LLC, as Lender
(“PWFC”),
the
Customer, Pac-West Telecom of Virginia, Inc., PWT Services, Inc., and PWT of
New
York, Inc. (prior to giving effect to any amendments or modifications
thereto).
“UCC”
shall mean the Uniform Commercial Code of Illinois as in effect in Illinois
from
time to time.
Section
1.2 Other
Terms.
Except
as otherwise defined herein, all terms used in this Loan Agreement which are
defined in the UCC shall have the meanings set forth in the
UCC
and accounting terms not defined herein shall have the meaning ascribed to
them
in GAAP.
Section
1.3 UCC
Filing.
The
Customer hereby acknowledges that the financing statements filed in connection
with the Original Loan Agreements, and listed on the chart attached
as Exhibit
E
hereto,
continue to to be effective hereunder without further amendment thereof.
Customer hereby continues to authorize MLC to file a record or records (as
defined
or otherwise specified under the UCC), including, without limitation, financing
statements, in all jurisdictions and with all filing offices as MLC may
determine, in its sole discretion,
are necessary or advisable to perfect the security interest granted to MLC
herein. Such financing statements may describe the Collateral in the same manner
as described herein
or
may contain an indication or description of collateral that describes such
property in any other manner as MLC may determine, in its sole discretion,
is
necessary, advisable or
prudent to ensure the perfection of the security interest in the Collateral
granted to the MLC herein.
ARTICLE
II. THE
LOAN
Section
2.1 Reaffirmation of
Obligations under Original Loan Agreements.
Customer acknowledges, agrees and reaffirms that as of the Closing Date and
prior to giving effect
to
this Loan Agreement, it is indebted to MLC, in each case inclusive of accrued
or
accruing but unpaid interest, costs, fees and expenses (owing as of the date
hereof) as follows
(collectively, the “Original
Loans”):
$450,863.82
in connection with the May 2004 Loan Agreement;
$744,235.29
in connection with the July 2004 Loan Agreement;
$1,050,780.67
in connection with the May 2005 Loan Agreement; and
$3,159,451.08
in connection with the November 2005 Loan Agreement.
From
and
after the Closing Date, the Original Loans shall be governed by the terms of
this Loan Agreement. This Loan Agreement shall constitute an amendment and
restatement of the terms governing the Original Loans and shall not be deemed
to
evidence a novation, extinguishment or a repayment and reborrowing of the
Original Loans. Such Original Loans and the Liens securing payment thereof
shall
be continuing in all respects.
All
references to the “Agreement” or the “Loan Agreement” in the Loan Documents
delivered pursuant to the Original Loan Agreements shall be deemed to refer
to
this Loan Agreement without further amendment of such Loan Documents. The Loan
Documents executed in connection with the Original Credit Agreement that are
not
amended and restated or otherwise superseded by corresponding Loan Documents
executed and delivered in connection with this Loan Agreement shall remain
in
full force and effect (collectively, the “Continuing
Loan Documents”).
All
references to the Original Loan Agreements (including any references to the
schedules, subschedules, annexes or exhibits thereto) in the Continuing Loan
Documents shall be deemed to refer to this Loan Agreement (and the applicable
schedules, subschedules, annexes or exhibits hereto) without further amendment
thereof. Each Credit Party hereby acknowledges and agrees that each of the
Continuing Loan Documents to which such Credit Party is a party remains in
full
force and effect and hereby ratifies and reaffirms all of its respective payment
and performance obligations, contingent or otherwise, under each of the
Continuing Loan Documents to which it is a party and, to the extent such Credit
Party granted Liens on or security interests in any of its properties pursuant
to any of the Continuing Loan Documents as security for the Obligations, such
Credit Party, as the case may be, hereby ratifies and reaffirms such grant
of
security and confirms and agrees that such Liens and security interests secure
all of the Obligations and remain in full force and effect after giving effect
to this Loan Agreement.
Section 2.1 Commitment.
Subject
to the terms and conditions hereof, Customer and MLC hereby agree to combine
the
Original Loans into a single 30-month term installment loan in the aggregate
principal amount of $5,405,330.86 (the “Loan”).
MLC
agrees to make the Loan to Customer for the Loan Purpose, and Customer agrees
that all amounts borrowed shall satisfy the Loan Purpose from MLC. The entire
proceeds of the Loan shall be deemed to have been disbursed on the Closing
Date.
Section
2.2 Note.
The
Loan will be evidenced by and repayable in accordance with that certain Amended
and Restated Collateral Installment Note made by Customer payable to the order
of MLC and issued pursuant to this Loan Agreement (the “Note”).
The
Note is hereby incorporated as a part hereof as if fully set forth
herein.
Section
2.3 Conditions
of MLC’s Obligation.
The
Closing Date and MLC’s obligation to make the Loan on the Closing Date are
subject to the prior fulfillment of each of the following conditions: (a) the
Commitment Expiration Date shall not then have occurred and (b) each of the
General Funding Conditions shall then have been met or satisfied to the
reasonable satisfaction of MLC.
Section
2.4 Use
of
Loan Proceeds.
The
proceeds of the Loan shall continue to be used by Customer solely for a Loan
Purpose, or, with the prior written consent of MLC, for other lawful business
purposes of Customer not prohibited hereby. Customer
agrees that under no circumstances will the proceeds of the Loan be used: (a)
for personal, family or household purposes of any Person whatsoever, or (b)
to
purchase, carry or trade in securities, or repay debt incurred to purchase,
carry or trade in securities, or (c) unless otherwise consented to in writing
by
MLC, to pay any amount to Xxxxxxx Xxxxx and Co., Inc. or any of its
subsidiaries, other xxxx Xxxxxxx Xxxxx Bank USA, Xxxxxxx Xxxxx Bank & Trust
Co. or any subsidiary of either of them (including MLC and Xxxxxxx Xxxxx Credit
Corporation).
ARTICLE
III. SENIOR
NOTES
Section
3.1 Senior
Note Interest Savings.
Customer has entered into a letter agreement pursuant to which the other party
thereto has, subject to the terms and conditions thereof, committed to cause
the
tender into an exchange offer made to holders of Senior Notes of approximately
$21.0 million of Senior Notes for which it holds investment discretion for
the
same principal amount of new 13.5% Senior Priority Notes due 2009 (the
“Exchange
Offer”).
To
the extent Customer receives and accepts as part of the Exchange Offer tenders
of Senior Notes in excess of $21.0 million in principal amount, the amount
of
interest associated with Senior Note principal amount tendered in excess of
$21.0 million is referred to herein as the “Senior
Note Interest Savings.”
Section
3.2 Semi-Annual
Interest Payments.
If
Customer receives and accepts as part of the Exchange Offer tenders of Senior
Notes in excess of $21.0 million in principal amount, until the Obligations
are
paid in full in cash, within five (5) business days of the payment of interest
by Customer in connection with each Interest Payment Date (as defined in the
Senior Notes) following consummation of the Exchange Offer, Customer shall
make
a payment to MLC equal to 20% of any Senior Note Interest Savings in respect
of
such Interest Payment Date, which amount, if any, shall be added to the
principal payments otherwise due under the Original Loan Agreements prior to
March 1, 2007 and after March 1, 2007, to the principal balance otherwise due
under this Loan Agreement.
ARTICLE
IV. GENERAL
PROVISIONS
Section
4.1 Representations and
Warranties.
Customer represents and warrants to MLC that:
(a). Organization
and Existence.
Customer is a corporation, duly organized and validly existing in good standing
under the laws of its jurisdiction of incorporation; the organizational number
assigned to Customer by such jurisdiction is C1968719; Customer is qualified
to
do business and in good standing in each other jurisdiction where the nature
of
its business or the property owned by it make such qualification necessary
and
where the failure to be so qualified would have a Material Adverse Effect;
and,
where applicable, each Business Guarantor is duly organized, validly existing
and in good standing under the laws of the state of its formation and is
qualified to do business and in good standing in each other jurisdiction where
the nature of its business or the property owned by it make such qualification
necessary, and where the failure to be so qualified would have a Material
Adverse Effect.
(b). Execution,
Delivery and Performance.
Each
Credit Party has the requisite power and authority to enter into and perform
the
Loan Documents. The Customer holds all necessary permits, licenses, certificates
of occupancy and other governmental authorizations and approvals required in
order to own or operate the Customer’s business except where the failure to do
so would have a Material Adverse Effect. The execution, delivery and performance
by Customer of this Loan Agreement and by each of the other Credit Parties
of
such of the other Loan Documents to which it is a party: (i) have been duly
authorized by all requisite corporate action by such Credit Party, (ii) do
not
and will not violate or conflict with any material law, order or other
governmental requirement, or any of the agreements, instruments or documents
which formed or govern any of the Credit Parties, and (iii) do not and will
not
breach or violate any of the provisions of, and will not result in a default
by
any of the Credit Parties under, any other material agreement, instrument or
document to which it is a party or is subject.
(c). Notices
and Approvals.
Except
as may have been given or obtained, no notice to or consent or approval of
any
governmental body or authority or other third party whatsoever (including,
without limitation, any other creditor) is required in connection with the
execution, delivery or performance by any Credit Party of this Loan Agreement,
the Note and the other Loan Documents to which it is a party other than where
the failure to have been given or to have obtained such notice, consent or
approval would not have a Material Adverse Effect.
(d). Enforceability.
The
Loan Documents to which any Credit Party is a party are the respective legal,
valid and binding obligations of such Credit Party, enforceable against it
or
them, as the case may be, in accordance with their respective terms, except
as
enforceability may be limited by bankruptcy and other similar laws affecting
the
rights of creditors generally or by general principles of equity.
(e). Collateral.
Except
for the existence of, or priorities afforded to, any Permitted Liens: (i)
Customer has good and marketable title to the Collateral, (ii) none of the
Collateral is subject to any lien, encumbrance or security interest, other
than
liens, encumbrances or security interests for the benefit of MLC, and (iii)
upon
the filing of all Uniform Commercial Code financing statements authenticated
or
otherwise authorized by Customer with respect to the Collateral in the
appropriate jurisdiction(s) and/or the completion of any other action required
by applicable law to perfect its liens and security interests, MLC has and
will
continue to have valid and perfected first liens and security interests upon
all
of the Collateral. Without limiting the foregoing:
(i). The
chief
executive office and chief place of business (as such terms are used in Article
9 of the UCC) of Customer is located at the address specified in the preamble
hereto.
(ii). The
tangible Collateral is and will remain tangible personal property and is not
and
shall not constitute real property fixtures. The tangible Collateral is
removable from and is not essential to the premises at which the tangible
Collateral is located.
(iii). All
of
the tangible Collateral is located at the Location of Tangible Collateral.
(f). Financial
Statements.
Except
as expressly set forth in Customer’s or any Business Guarantor’s financial
statements, all financial statements of Customer and each Business Guarantor
furnished to MLC have been prepared in conformity with generally accepted
accounting principles, consistently applied, are true and correct in all
material respects, and fairly present the financial condition of it as at such
dates and the results of its operations for the periods then ended (subject,
in
the case of interim unaudited financial statements, to normal year-end
adjustments); and since the most recent date covered by such financial
statements, there has been no material adverse change in any such financial
condition or operation.
(g). Litigation;
Compliance With All Laws.
No
litigation, arbitration, administrative or governmental proceedings are pending
or, to the knowledge of Customer, threatened against any Credit Party, which
would, materially and adversely affect (i) such Credit Party’s interest in the
Collateral or the liens and security interests of MLC hereunder or under any
of
the Loan Documents, or (ii) the financial condition of such Credit Party or
its
continued operations. Each Credit Party is in compliance in all material
respects with all laws, regulations, requirements and approvals applicable
to
such Credit Party.
(h). Tax
Returns.
All
federal, state and local tax returns, reports and statements required to be
filed by any Credit Party have been filed with the appropriate governmental
agencies and all taxes due and payable by any Credit Party have been timely
paid
(except to the extent that any such failure to file or pay will not materially
and adversely affect (i) either the liens and security interests of MLC
hereunder or under any of the Loan Documents, (ii) the financial condition
of
any Credit Party, or (iii) its continued operations).
(i). Relationship
with Xxxxxxx Xxxxx.
Neither
Customer nor any shareholder or other Person that controls Customer is (i)
an
executive officer or director of Xxxxxxx Xxxxx & Co., Inc. or any of its
subsidiaries, or (ii) a holder of more than 10% of any class of voting
securities of Xxxxxxx Xxxxx & Co., Inc. or any of its subsidiaries. For
purposes of this representation, “control” means the power to vote 25% or more
of any class of voting securities; the ability to control the election of a
majority of directors; or the power to exercise a controlling influence over
management policies.
(j). No
Outside Broker.
Except
for employees of MLC, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Financial
Consultant (“MLPF&S”) or one of their affiliates or as described in writing
by Customer to MLC, Customer has not in connection with the transactions
contemplated hereby directly or indirectly engaged or dealt with, and was not
introduced or referred to MLC by, any broker or other loan
arranger.
(k). Environmental
Matters.
In
the
ordinary course of its business, the officers of Customer consider the effect
of
Environmental Laws on the business of Customer, in the course of which they
identify and evaluate potential risks and liabilities accruing to Customer
due
to Environmental Laws. On the basis of this consideration, Customer has
concluded that Environmental Laws cannot reasonably be expected to have a
Material Adverse Effect on Customer or any Business Guarantor. Neither Customer
nor any Business Guarantor has received any notice to the effect that its
operations are not in material compliance with any of the requirements of
applicable Environmental Laws or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to
a
release of any toxic or hazardous waste or substance into the environment,
which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect on Customer or any Business Guarantor. “Environmental
Laws” shall mean any Federal, foreign, state or local law, rule or regulation
pertaining to the protection of the environment, including, but not limited
to,
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980 (“CERCLA”) (42 U.S.C. section 9601 et seq.), the Hazardous Material
Transportation Act (49 U.S.C. section 1801 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. section 1251 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. section 6901 et seq.), the Clean Air Act (42 U.S.C.
section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. section
2601
et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
section 1361 et seq.), and the Occupational Safety and Health Act (19 U.S.C.
section 651 et seq.), as these laws have been amended or supplemented, and
any
analogous foreign, Federal, state or local statutes, and the regulations
promulgated pursuant thereto.
(l). Investment
Company Act.
Neither
Customer nor any Business Guarantor is an “investment company” or a company
“controlled” by an “investment company”, within the meaning of the Investment
Company Act of 1940, as amended.
(m). Public
Utility Holding Company Act. Neither
Customer nor any Business Guarantor is 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.
Each
of
the foregoing representations and warranties: (i) has been and will be relied
upon as an inducement to MLC to make the Loan, and (ii) is continuing and shall
be deemed remade by Customer on the Closing Date and at no other
time.
(a) Annual
Financial Statements.
Within
90 days after the close of each fiscal year of Customer, a copy of the annual
certified financial statements of Customer and the annual certified financial
statements of each Business Guarantor, including, in each case, in reasonable
detail, a balance sheet and statement of retained earnings as at the close
of
such fiscal year and statements of profit and loss and cash flow for such fiscal
year;
(b) Interim
Quartlerly Financial Statements.
Within
60 days after the close of each fiscal quarter of Customer, a copy of the
interim financial statements of Customer and each Business Guarantor for such
fiscal quarter (including in reasonable detail both a balance sheet as of the
close of such fiscal period, and statement of profit and loss for the applicable
fiscal period);
(c) Interim
Monthly Financial Statements.
Within
thirty (30) days after the end of each calendar month, a consolidated and
consolidating balance sheet, statement of cash flows and income statement
prepared by Customer covering Customer’s operations during such period, in a
form reasonably acceptable to MLC and certified to be true and correct to the
best knowledge of a responsible officer of the Customer, and
(d) Other
Information.
Such
other information as MLC may from time to time reasonably request relating
to
Customer, any Credit Party or the Collateral.
(e) General
Agreements With Respect to Financial Information.
Customer agrees that except as otherwise specified herein or otherwise agreed
to
in writing by MLC: (i) all annual financial statements required to be furnished
by Customer to MLC hereunder will be audited by either the current independent
accountants for Customer or other independent accountants selected by Customer
and reasonably acceptable to MLC, and (ii) all other financial statements
required to be furnished by Customer to MLC hereunder will be certified as
fairly presenting the financial condition of the Customer in all material
respects by the respective chief financial officer.
Section
4.3 Other
Covenants.
Customer further agrees during the term of this Loan Agreement
that:
(a). Financial
Records; Inspection.
Each
Credit Party (other than any Individual Guarantor) will: (i) maintain at its
principal place of business complete and accurate books and records, and
maintain all of its financial records in a manner consistent with the financial
statements heretofore furnished to MLC, or prepared on such other basis as
may
be approved in writing by MLC or as required by law; and (ii) permit MLC or
its
duly authorized representatives, upon reasonable notice and at reasonable times,
to inspect its properties (both real and personal), operations, books and
records, provided that absent the occurrence and continuance of an Event of
Default, MLC shall not conduct more than one inspection in any 12 month
period.
(b). Taxes.
Each
Credit Party will pay when due all of its respective taxes, assessments and
other governmental charges, howsoever designated, and all other liabilities
and
obligations, except to the extent that any such failure to file or pay will
not
materially and adversely affect either the liens and security interests of
MLC
hereunder or under any of the Loan Documents, the financial condition of any
Credit Party or its continued operations.
(c). Compliance
With Laws and Agreements.
No
Credit Party will violate (i) any law, regulation or other governmental
requirement, any judgment or order of any court or governmental agency or
authority; (ii) any agreement, instrument or document which is material to
its
operations or to the operation or use of any Collateral, in each case as
contemplated by the Loan Documents; or (iii) any agreement, instrument or
document to which it is a party or by which it is bound, if any such violation
will materially and adversely affect either the liens and security interests
of
MLC hereunder or under any of the Loan Documents, the financial condition of
any
Credit Party, or its continued operations.
(d). No
Use
of Xxxxxxx Xxxxx Name.
Except
upon the prior consent of MLC, no Credit Party will directly or indirectly
publish, disclose or otherwise use in any advertising or promotional material,
or press release, the name, logo or any trademark of MLC, MLPF&S, Xxxxxxx
Xxxxx and Co., Inc. or any of their affiliates;
provided, however, MLC hereby consents to any filing with the SEC or similar
regulatory body and the disclosure of the existence and terms of this
facility.
(e). Notification
By Customer.
Customer shall provide MLC with prompt written notification of: (i) any Default
or Event of Default; (ii) any Material Adverse Effect in the business, financial
condition or operations of any Credit Party; (iii) any information which
indicates that any financial statements of any Credit Party fail in any material
respect to present fairly the financial condition and results of operations
purported to be presented in such statements; (iv) any threatened or pending
litigation involving any Credit Party which could reasonably be expected to
have
an Material Adverse Effect; (v) any casualty loss, attachment, lien, judicial
process, encumbrance or claim affecting or involving any material portion of
the
Collateral; and (vi) any change in Customer’s outside accountants. Each
notification by Customer pursuant hereto shall specify the event or information
causing such notification, and, to the extent applicable, shall specify the
steps being taken to rectify or remedy such event or information.
(f). Entity
Organization.
Each
Credit Party which is an entity will (i) remain (A) validly existing and in
good
standing in the state of its organization and (B) qualified to do business
and
in good standing in each other state where the nature of its business or the
property owned by it make such qualification necessary and the failure to do
so
materially adversely affects MLC’s interest in the Collateral or its ability to
enforce the terms of the Loan Documents or exercise any remedies thereunder
or
under applicable law, as reasonably determined by MLC, and (ii) maintain all
governmental permits, licenses and authorizations where the failure to do so
would and the failure to do so materially adversely affects MLC’s interest in
the Collateral or its ability to enforce the terms of the Loan Documents or
exercise any remedies thereunder or under applicable law, as reasonably
determined by MLC. Customer shall give MLC not less than 30 days prior written
notice of any change in name (including any fictitious name) or chief executive
office, place of business, or as applicable, the jurisdiction of organization
or
principal residence.
(g). Merger,
Change in Business.
Except
upon the prior written consent of MLC, Customer shall not cause or permit any
Credit Party to: (i) be a party to any merger or consolidation except where
Customer is the surviving entity thereof, (ii) sell, transfer or lease all
or
any substantial part of its assets;
(iii)
engage in any material business substantially different from its business in
effect as of the date of application by Customer for credit from MLC, or cease
operating any such material business; or (iv) cause or permit any other Person
to assume or succeed to any material business or operations of such Credit
Party.
Section 4.4 Collateral.
(a) Pledge
of Collateral.
To
secure payment and performance of the Obligations, Customer previously pledged,
assigned, transfered and set over to MLC, and granted to MLC first liens and
security interests in and upon all of the Collateral, subject only to priorities
afforded to Permitted Liens.
(b) Liens.
Customer has not created or permited to exist any lien, encumbrance or security
interest upon or with respect to any Collateral now owned or hereafter acquired
other than Permitted Liens, and, except upon the prior written consent of MLC,
Customer shall not create or permit to exist any lien, encumbrance or security
interest upon or with respect to any Collateral now owned or hereafter acquired
other than Permitted Liens.
(c) Performance
of Obligations.
Customer shall perform in all material respects all of its obligations owing
on
account of or with respect to the Collateral; it being understood that nothing
herein, and no action or inaction by MLC, under this Loan Agreement or
otherwise, shall be deemed an assumption by MLC of any of Customer’s said
obligations.
(d) Sales
and Collections.
Customer shall not sell, transfer or otherwise dispose of any Collateral so
long
as there are any Obligations..
(e) Alterations
and Maintenance.
Except
upon the prior written consent of MLC, Customer shall not make or permit any
material alterations to any tangible Collateral which might materially reduce
or
impair its market value or utility. Customer shall at all times (i) keep the
tangible Collateral in good condition and repair, reasonable wear and tear
excepted, (ii) take reasonable precautions to protect the Collateral against
loss, damage or destruction, (iii) maintain, service, test and inspect the
Collateral (A) in accordance with manufacturer’s recommendations, and so as to
maintain in full force and effect any maintenance warranties, (B) in compliance
with Applicable Law and the requirements of insurance, (C) at a standard
consistent with industry practices, and (D) in all events not less than
Customer’s standard practices for similar equipment owned, operated or leased by
Customer and (iv) pay or cause to be paid all obligations arising from the
repair and maintenance of such Collateral, as well as all obligations with
respect to any Location of Tangible Collateral (e.g., all obligations under
any
lease, mortgage or bailment agreement), except for any such obligations being
contested by Customer in good faith by appropriate proceedings. Customer shall
permit any Person designated by MLC, during normal business hours upon
reasonable notice and at MLC’s expense to visit, inspect and survey the tangible
Collateral, its condition, use and operation, and the records maintained in
connection therewith. None of MLC or any of its designees shall have any duty
to
make any such inspection and shall not incur any liability or obligation by
reason of not making any such inspection. The failure of any such party to
object to any condition or procedure observed or observable in the course of
an
inspection hereunder shall not be deemed to waive or modify any of the terms
of
this Loan Agreement with respect to such condition or procedure.
(f) Location.
Customer shall not without MLC’s prior written notification place or move any
tangible Collateral to any location other than the Location of Tangible
Collateral identified on Exhibit
A.
In no
event shall Customer cause or permit any material tangible Collateral to be
removed from the United States without the express prior written consent of
MLC.
Customer will keep its books and records at its principal office address
specified in the first paragraph of this Loan Agreement or at such other
location notified to MLC on not less than 30 days’ prior notice.
(g) Insurance.
Customer
shall insure all of the tangible Collateral under a policy or policies of
physical damage insurance providing that losses will be payable to MLC as its
interests may appear pursuant to a MLC's Loss Payable Endorsement and containing
such other provisions as may be reasonably required by MLC. Customer shall
maintain such other insurance as may be required by law or is customarily
maintained by companies in a similar business or otherwise reasonably required
by MLC. All such insurance policies shall provide that MLC will receive not
less
than 10 days prior written notice of any cancellation, and shall otherwise
be in
form and amount and with an insurer or insurers selected by Customer and
reasonably acceptable to MLC. Customer shall furnish MLC with a copy or
certificate of each such policy or policies and, prior to any expiration or
cancellation, each renewal or replacement thereof.
(h) Forced
Placement.
In the
event that at any time the insurance required by this Section shall be reduced
or cease to be maintained below the level required, then (without limiting
the
rights of MLC hereunder in respect of the Default which arises as a result
of
such failure) MLC may at its option after failure of Customer to do so, maintain
the insurance required hereby in such event. Customer shall reimburse MLC upon
demand for the cost thereof with interest thereon at a rate per annum equal
to
the Default Rate, but in no event shall the rate of interest exceed the maximum
rate permitted by law.
(i) Use.
Customer agrees that the tangible Collateral will be used by Customer solely
in
the conduct of its business and in a manner complying in all material respects
with all applicable laws and any applicable insurance policies. All tangible
Collateral shall at all times remain personal property of Customer regardless
of
the degree of its annexation to any real property and shall not by reason of
any
installation in, or affixation to, real or personal property become a part
thereof. Unless otherwise waived by MLC, Customer shall obtain and deliver
to
MLC (to be recorded at Customer’s expense) from any Person having an interest in
the property where the tangible Collateral is to be located, waivers of any
lien, encumbrance or interest which such Person might have or hereafter obtain
or claim with respect to the tangible Collateral.
(j). Event
of Loss.
Customer shall at its expense promptly repair all repairable damage to any
tangible Collateral where such repair is economically feasible. In the event
that there is an Event of Loss and the affected Collateral had a value prior
to
such Event of Loss of $100,000.00 or more, then, on or before the first to
occur
of (i) 90 days after the occurrence of such Event of Loss, or (ii) 10 Business
Days after the date on which either Customer or MLC shall receive any proceeds
of insurance on account of such Event of Loss, or any underwriter of insurance
on such Collateral shall advise either Customer or MLC that it disclaims
liability in respect of such Event of Loss, Customer shall, at Customer’s
option, either replace the Collateral subject to such Event of Loss with
comparable Collateral free of all liens other than Permitted Liens (in which
event Customer shall be entitled to utilize the proceeds of insurance on account
of such Event of Loss for such purpose, and may retain any excess proceeds
of
such insurance), or permanently prepay the Obligations by an amount equal to
the
actual cash value of such Collateral as determined by either the insurance
company’s payment (plus any applicable deductible) or, in absence of insurance
company payment, as reasonably determined by MLC; it being further understood
that any such permanent prepayment shall cause an immediate permanent reduction
in the Loan in the amount of such prepayment and shall not reduce the amount
of
any future reductions in the Loan that may be required hereunder.
Notwithstanding the foregoing, if at the time of occurrence of such Event of
Loss or any time thereafter prior to replacement or line reduction, as
aforesaid, an Event of Default shall have occurred and be continuing hereunder,
then MLC may at its sole option, exercisable at any time while such Event of
Default shall be continuing, require Customer to or prepay the Obligations,
as
aforesaid.
(k). Notice
of Certain Events.
Customer, upon obtaining knowledge thereof, shall give MLC immediate notice
of
any attachment, lien, judicial process, encumbrance or claim affecting or
involving the Collateral, other than Permitted Liens.
(l). Indemnification.
Customer shall indemnify, defend and save MLC harmless from and against any
and
all claims, liabilities, losses and reasonable costs and expenses (including,
without limitation, reasonable attorneys’ fees and expenses) of any nature
whatsoever which may be asserted against or incurred by MLC arising out of
or in
any manner occasioned by (i) the ownership, collection, possession, use or
operation of any Collateral, or (ii) any failure by Customer to perform any
of
its obligations hereunder or under the other Loan Documents; excluding, however,
from said indemnity any such claims, liabilities, etc. arising directly out
of
the willful wrongful act or active gross negligence of MLC as determined in
a
final non-appealable judgment by a court of competent jurisdiction. This
indemnity shall survive the expiration or termination of this Loan Agreement
as
to all matters arising or accruing prior to such expiration or
termination.
Section 4.5 Events
of Default.
The
occurrence of any of the following events shall constitute an “Event of Default”
under this Loan Agreement:
(a). Failure
to Pay.
Customer shall fail to pay when due any amount owing by Customer to MLC under
the Note or this Loan Agreement, or shall fail to pay when due any other
Obligations, and any such failure shall continue for more than five (5) Business
Days from the due date.
(b). Failure
to Perform.
Any
Credit Party shall default in the performance or observance of any covenant
or
agreement on its part to be performed or observed under this Loan Agreement,
the
Note or any of the other Loan Documents (not constituting an Event of Default
under any other clause of this Section), and such default shall continue
unremedied for ten (10) Business Days (i) after written notice thereof shall
have been given by MLC to Customer, or (ii) from Customer’s receipt of any
notice or knowledge of such default from any other source.
(c). Breach
of Warranty.
Any
representation or warranty made by any Credit Party contained in this Loan
Agreement, the Note or any of the other Loan Documents shall at any time prove
to have been incorrect in any material respect when made.
(d). Default
Under Other Xxxxxxx Xxxxx Agreement.
A
default or event of default by any Credit Party shall occur under the terms
of
any other agreement, instrument or document with or directly intended for the
benefit of MLC, MLPF&S or any of their affiliates, and any required notice
shall have been given and required passage of time shall have elapsed, or the
Agreement shall be terminated for any reason.
(e). Bankruptcy
Event.
Any
Bankruptcy Event shall occur.
(f). Material
Adverse Effect.
Any
event shall occur which shall result in a Material Adverse Effect.
(g). Default
Under Other Agreements.
Any
event shall occur which results in any default of any material agreement
involving any Credit Party or any agreement evidencing any indebtedness of
any
Credit Party of $5,000,000.00 or more the result of which default would permit
or result in the holder of such indebtedness to declare such indebtedness due
prior to its original maturity.
(h). Collateral
Impairment or Lapse in Insurance Coverage.
The
loss, theft or destruction of any material portion of the Collateral, or any
levy, attachment, seizure or confiscation of material portion of the Collateral
which is not released within ten (10) Business Days; or the failure to maintain
insurance in accordance with Section
4.4(h).
(i). Contested
Obligation.
(i) Any
of the Loan Documents shall for any reason cease to be, or are asserted by
any
Credit Party not to be a legal, valid and binding obligations of any Credit
Party, enforceable in accordance with their terms; or (ii) the validity,
perfection or priority of MLC’s first lien and security interest on any of the
Collateral is contested by any Person; or (iii) any Credit Party shall or shall
attempt to repudiate, revoke, contest or dispute, in whole or in part, such
Credit Party’s obligations under any Loan Document.
(j). Judgments.
A
judgment shall be entered against any Credit Party in excess of $5,000,000.00
and the judgment is not paid in full and discharged, or stayed and bonded to
the
satisfaction of MLC.
(k). Change
in Control.
(i)Customer shall enter into any transaction of merger or consolidation where
Customer is not the surviving entity without the prior written consent of MLC;
(ii) Customer shall cease to do business as a going concern, liquidate, or
dissolve; (iii) Customer shall sell, transfer, or otherwise dispose of all
or
substantially all of its assets or property.
(l). Dissolution.
The
dissolution, or the filing for dissolution of any Credit Party.
Section 4.6 Remedies.
(a) Remedies
Upon Default.
Upon
the occurrence and during the continuance of any Event of Default, MLC may
at
its sole option do any one or more or all of the following, at such time and
in
such order as MLC may in its sole discretion choose:
(i). Termination.
MLC may
without notice terminate its obligation to extend any credit to or for the
benefit of Customer (it being understood, however, that upon the occurrence
of
any Bankruptcy Event all such obligations shall automatically terminate without
any action on the part of MLC).
(ii). Acceleration.
MLC may
declare the principal of and interest and any premium on the Note, and all
other
Obligations to be forthwith due and payable, whereupon all such amounts shall
be
immediately due and payable, without presentment, demand for payment, protest
and notice of protest, notice of dishonor, notice of acceleration, notice of
intent to accelerate or other notice or formality of any kind, all of which
are
hereby expressly waived; provided, however, that upon the occurrence of any
Bankruptcy Event all such principal, interest, premium and other Obligations
shall automatically become due and payable without any action on the part of
MLC.
(iii). Exercise
Other Rights.
MLC may
exercise any or all of the remedies of a secured party under applicable law
and
in equity, including, but not limited to, the UCC, and any or all of its other
rights and remedies under the Loan Documents.
(iv). Possession.
MLC may
require Customer to make the Collateral and the records pertaining to the
Collateral available to MLC at a place designated by MLC which is reasonably
convenient to Customer, or may take possession of the Collateral and the records
pertaining to the Collateral without the use of any judicial process and without
any prior notice to Customer.
(v). Sale.
MLC may
sell any or all of the Collateral at public or private sale upon such terms
and
conditions as MLC may reasonably deem proper, whether for cash, on credit,
or
for future delivery, in bulk or in lots. MLC may purchase any Collateral at
any
such sale free of Customer’s right of redemption, if any, which Customer
expressly waives to the extent not prohibited by applicable law. The net
proceeds of any such public or private sale and all other amounts actually
collected or received by MLC pursuant hereto, after deducting all costs and
expenses incurred at any time in the collection of the Obligations and in the
protection, collection and sale of the Collateral, will be applied to the
payment of the Obligations, with any remaining proceeds paid to Customer or
whoever else may be entitled thereto, and with Customer and each Guarantor
remaining jointly and severally liable for any amount remaining unpaid after
such application.
(vi). Delivery
of Cash, Checks, Etc.
MLC may
require Customer to forthwith upon receipt, transmit and deliver to MLC in
the
form received, all cash, checks, drafts and other instruments for the payment
of
money (properly endorsed, where required, so that such items may be collected
by
MLC) which may be received by Customer at any time in full or partial payment
of
any Collateral, and require that Customer not commingle any such items which
may
be so received by Customer with any other of its funds or property but instead
hold them separate and apart and in trust for MLC until delivery is made to
MLC.
(vii). Control
of Collateral.
MLC may
otherwise take control in any lawful manner of any cash or non-cash items of
payment or proceeds of Collateral and endorse Customer’s name on any item of
payment on or proceeds of the Collateral.
(b). Set-Off.
MLC
shall have the further right upon the occurrence and during the continuance
of
an Event of Default to set-off, appropriate and apply toward payment of any
of
the Obligations, in such order of application as MLC may from time to time
and
at any time elect, any cash, credit, deposits, accounts, financial assets,
investment property, securities and any other property of Customer which is
in
transit to or in the possession, custody or control of MLC, MLPF&S or any
agent, bailee, or affiliate of MLC or MLPF&S. Customer previously
collaterally assigned and granted to MLC a continuing security interest in
all
such property as Collateral and as additional security for the Obligations.
Upon
the occurrence and during the continuance of an Event of Default, MLC shall
have
all rights in such property available to collateral assignees and secured
parties under all applicable laws, including, without limitation, the
UCC.
(c). Power
of Attorney.
Effective upon the occurrence and during the continuance of an Event of Default,
Customer hereby irrevocably appoints MLC as its attorney-in-fact, with full
power of substitution, in its place and stead and in its name or in the name
of
MLC, to from time to time in MLC’s sole discretion take any action and to
execute any instrument which MLC may deem necessary or advisable to accomplish
the purposes of this Loan Agreement and the other Loan Documents, including,
but
not limited to, to receive, endorse and collect all checks, drafts and other
instruments for the payment of money made payable to Customer included in the
Collateral. The powers of attorney granted to MLC in this Loan Agreement are
coupled with an interest and are irrevocable until the Obligations have been
indefeasibly paid in full and fully satisfied and all obligations of MLC under
this Loan Agreement have been terminated.
(d). Remedies
are Severable and Cumulative.
All
rights and remedies of MLC herein are severable and cumulative and in addition
to all other rights and remedies available in the Note, the other Loan
Documents, at law or in equity, and any one or more of such rights and remedies
may be exercised simultaneously or successively.
(e). No
Marshalling.
MLC
shall be under no duty or obligation to (i) preserve, protect or xxxxxxxx the
Collateral; (ii) preserve or protect the rights of any Credit Party or any
other
Person claiming an interest in the Collateral; (iii) realize upon the Collateral
in any particular order or manner, (iv) seek repayment of any Obligations from
any particular source; (v) proceed or not proceed against any Credit Party
pursuant to any guaranty or security agreement or against any Credit Party
under
the Loan Documents, with or without also realizing on the Collateral; (vi)
permit any substitution or exchange of all or any part of the Collateral; or
(vii) release any part of the Collateral from the Loan Agreement or any of
the
other Loan Documents, whether or not such substitution or release would leave
MLC adequately secured.
(f). Notices.
To the
fullest extent permitted by applicable law, Customer hereby irrevocably waives
and releases MLC of and from any and all liabilities and penalties for failure
of MLC to comply with any statutory or other requirement imposed upon MLC
relating to notices of sale, holding of sale or reporting of any sale, and
Customer waives all rights of redemption or reinstatement from any such sale.
Any notices required under applicable law shall be reasonably and properly
given
to Customer if given by any of the methods provided herein at least 5 Business
Days prior to taking action. MLC shall have the right to postpone or adjourn
any
sale or other disposition of Collateral at any time without giving notice of
any
such postponed or adjourned date. In the event MLC seeks to take possession
of
any or all of the Collateral by court process, Customer further irrevocably
waives to the fullest extent permitted by law any bonds and any surety or
security relating thereto required by any statute, court rule or otherwise
as an
incident to such possession, and any demand for possession prior to the
commencement of any suit or action.
Section 4.7 Miscellaneous.
(a). Non-Waiver.
No
failure or delay on the part of MLC in exercising any right, power or remedy
pursuant to this Loan Agreement, the Note or any of the other Loan Documents
shall operate as a waiver thereof, and no single or partial exercise of any
such
right, power or remedy shall preclude any other or further exercise thereof,
or
the exercise of any other right, power or remedy. Neither any waiver of any
provision of this Loan Agreement, the Note or any of the other Loan Documents,
nor any consent to any departure by Customer therefrom, shall be effective
unless the same shall be in writing and signed by MLC. Any waiver of any
provision of this Loan Agreement, the Note or any of the other Loan Documents
and any consent to any departure by Customer from the terms of this Loan
Agreement, the Note or any of the other Loan Documents shall be effective only
in the specific instance and for the specific purpose for which given. Except
as
otherwise expressly provided herein, no notice to or demand on Customer shall
in
any case entitle Customer to any other or further notice or demand in similar
or
other circumstances.
(b). Confidentiality.
MLC
agrees to keep confidential any information furnished or made available to
it by
Customer pursuant to this Loan Agreement; provided that nothing herein shall
prevent MLC from disclosing such information (a) to any officer, director,
employee, agent, auditor, attorney or advisor of MLC or Xxxxxxx Xxxxx & Co.,
Inc. or any of their affiliates, (b) to any other person if it is reasonably
necessary for 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, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public other than as
a
result of a disclosure by MLC prohibited by this Loan Agreement, (g) in
connection with any litigation to which MLC or any of its affiliates may be
a
party with any Credit Party, (h) in connection with the sale, assignment,
syndication or transfer of any or all of MLC’s rights and interests under the
Loan Documents, provided any purchaser, assignee or transferee agrees to keep
such information confidential, and (i) to the extent necessary in connection
with the exercise of any remedy under this Loan Agreement or the Loan
Documents.
(c). Communications.
Delivery of an agreement, instrument or other document may, at the discretion
of
MLC, be by electronic transmission. Except as required by law or otherwise
provided herein or in a writing executed by the party to be bound, all notices
demands, requests, accountings, listings, statements, advices or other
communications to be given under the Loan Documents shall be in writing, and
shall be served either personally, by deposit with a reputable overnight courier
with charges prepaid, or by deposit in the United States mail by certified
mail
return receipt required. Notices may be addressed to Customer as set forth
at
its address shown in the preamble hereto, or to any office to which billing
or
account statements are sent; to MLC at its address shown in the preamble hereto,
or at such other address designated in writing by MLC. Any such communication
shall be deemed to have been given upon, in the case of personal delivery the
date of delivery, one Business Day after deposit with an overnight courier
five
(5) Business Days after deposit in the United States by certified mail (return
receipt required), or receipt of electronic transmission (which shall be
presumed to be three hours after the time of transmission unless an error
message is received by the sender), except that any notice of change of address
shall not be effective until actually received.
(d). Fees,
Expenses and Taxes.
Customer shall upon demand pay or reimburse MLC for: (i) all UCC, recording
and
search fees and expenses incurred by MLC in connection with the verification,
perfection or preservation of MLC’s rights hereunder or in any Collateral or any
other collateral for the Obligations; (ii) any and all stamp, transfer,
mortgage, intangible, document, filing, recording and other taxes and fees,
excluding income taxes, payable or determined to be payable in connection with
the borrowings hereunder or the execution, delivery, filing and/or recording
of
the Loan Documents and any other instruments or documents provided for herein
or
delivered or to be delivered hereunder or in connection herewith; and (iii)
all
reasonable fees and out-of-pocket expenses (including reasonable attorneys’ fees
and legal expenses) incurred by MLC in connection with the preparation,
execution, administration, collection, enforcement, protection, waiver or
amendment of this Loan Agreement, or under any of the other Loan Documents
and
such other instruments or documents, and the rights and remedies of MLC
thereunder and all other matters in connection therewith. The obligations of
Customer under this paragraph shall survive the expiration or termination of
this Loan Agreement and the discharge of the other Obligations.
(e). Right
to Perform Obligations.
If
Customer shall fail to do any act or thing which it has covenanted to do under
this Loan Agreement or any of the Loan Documents, or any representation or
warranty on the part of Customer contained in this Loan Agreement or any of
the
Loan Documents shall be breached, MLC may, in its sole discretion, after 5
Business Days written notice is sent to Customer (or such lesser notice,
including no notice, as is reasonable under the circumstances), do the same
or
cause it to be done or remedy any such breach, and may expend its funds for
such
purpose. Any and all reasonable amounts so expended by MLC shall be repayable
to
MLC by Customer upon demand, with interest at the “Interest Rate” (as that item
is defined in the Note) during the period from and including the date funds
are
so expended by MLC to the date of repayment, and all such amounts shall be
additional Obligations. The payment or performance by MLC of any of Customer’s
obligations hereunder shall not relieve Customer of said obligations or of
the
consequences of having failed to pay or perform the same, and shall not waive
or
be deemed a cure of any Default.
(f). Late
Charge.
Any
payment required to be made by Customer pursuant to this Loan Agreement or
any
of the Loan Documents not paid within five (5) days of the applicable due date
shall be subject to a late charge in an amount equal to the lesser of: (i)
5% of
the overdue amount, or (ii) the maximum amount permitted by applicable law.
Such
late charge shall be payable on demand.
(g). Further
Assurances.
Customer agrees to do such further acts and things and to execute and deliver
to
MLC such additional agreements, instruments and documents as MLC may reasonably
require or deem advisable to effectuate the purposes of this Loan Agreement,
the
Note or any of the other Loan Documents, or to establish, perfect and maintain
MLC’s security interests and liens upon the Collateral, including, but not
limited to: (i) executing financing statements or amendments thereto when and
as
reasonably requested by MLC; and (ii) if in the reasonable judgment of MLC
it is
required by local law, causing the owners and/or mortgagees of the real property
on which any Collateral may be located to execute and deliver to MLC waivers
or
subordinations reasonably satisfactory to MLC with respect to any rights in
such
Collateral.
(h). Binding
Effect.
This
Loan Agreement, the Note and the other Loan Documents shall be binding upon,
and
shall inure to the benefit of MLC, Customer and their respective successors
and
assigns. MLC reserves the right, at any time while the Obligations remain
outstanding, to sell, assign, syndicate or otherwise transfer or dispose of
any
or all of MLC’s rights and interests under the Loan Documents. MLC also reserves
the right at any time to pool the Loan with one or more other loans originated
by MLC or any other Person, and to securitize or offer interests in such pool
on
whatever terms and conditions MLC shall determine; provided all parties agree
to
the confidentiality restrictions herein. Subject to Section
4.7(b),
Customer consents to MLC releasing financial and other information regarding
Credit Parties, the Collateral and the Loan in connection with any such sale,
pooling, securitization or other offering. Customer shall not assign any of
its
rights or delegate any of its obligations under this Loan Agreement, the Note
or
any of the other Loan Documents without the prior written consent of MLC. Unless
otherwise expressly agreed to in a writing signed by MLC, no such consent shall
in any event relieve Customer of any of its obligations under this Loan
Agreement, the Note or any of the other Loan Documents.
(i). Interpretation;
Construction.
(i)
Captions and section and paragraph headings in this Loan Agreement are inserted
only as a matter of convenience, and shall not affect the interpretation hereof;
(ii) no provision of this Loan Agreement shall be construed against a particular
Person or in favor of another Person merely because of which Person (or its
representative) drafted or supplied the wording for such provision; and (iii)
where the context requires: (a) use of the singular or plural incorporates
the
other, and (b) pronouns and modifiers in the masculine, feminine or neuter
gender shall be deemed to refer to or include the other genders.
(j). Governing
Law.
This
Loan Agreement, the Note and, unless otherwise expressly provided therein,
each
of the other Loan Documents, shall be governed in all respects by the laws
of
the State of Illinois, not including its conflict of law
provisions.
(k). Severability
of Provisions.
Whenever possible, each provision of this Loan Agreement, the Note and the
other
Loan Documents shall be interpreted in such manner as to be effective and valid
under applicable law. Any provision of this Loan Agreement, the Note or any
of
the other Loan Documents which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Loan Agreement, the Note and the other Loan Documents or
affecting the validity or enforceability of such provision in any other
jurisdiction.
(l). Term.
This
Loan Agreement shall become effective when accepted by MLC at its office in
Chicago, Illinois, and subject to the terms hereof, shall continue in effect
so
long thereafter as there shall be any moneys owing hereunder or under the Note,
or there shall be any other Obligations outstanding. Customer hereby waives
notice of acceptance of this Loan Agreement by MLC.
(m). Exhibits.
The
exhibits to this Loan Agreement are hereby incorporated and made a part hereof
and are an integral part of this Loan Agreement.
(n). Counterparts.
This
Loan Agreement may be executed in one or more counterparts (which may be
delivered by facsimile) which, when taken together, constitute one and the
same
agreement.
(o). Jurisdiction;
Waiver.
Customer acknowledges that this Loan Agreement is being accepted by MLC in
partial consideration of MLC’s right and option, in its sole discretion, to
enforce the Loan Documents in either the State of Illinois or in any other
jurisdiction where Customer or any Collateral may be located. Customer
irrevocably submits itself to jurisdiction in the State of Illinois and venue
in
any state or federal court in the County of Xxxx for such purposes, and Customer
waives any and all rights to contest said jurisdiction and venue and the
convenience of any such forum, and any and all rights to remove such action
from
state to federal court. Customer further waives any rights to commence any
action against MLC in any jurisdiction except in the County of Xxxx and State
of
Illinois. Customer agrees that all such service of process shall be made by
mail
or messenger directed to it in the same manner as provided for notices to
Customer in this Loan Agreement and that service so made shall be deemed to
be
completed upon the earlier of actual receipt or three (3) days after the same
shall have been posted to Customer or Customer’s agent. Nothing contained herein
shall affect the right of MLC to serve legal process in any other manner
permitted by law or affect the right of MLC to bring any action or proceeding
against Customer or its property in the courts of any other jurisdiction.
Customer waives, to the extent permitted by law, any bond or surety or security
upon such bond which might, but for this waiver, be required of MLC.
(p). Jury
Waiver.
MLC and
Customer hereby each expressly waive any and all rights to a trial by jury
in
any action, proceeding or counterclaim brought by either of the parties against
the other party with respect to any matter relating to, arising out of or in
any
way connected with the Loan, the Obligations, this Loan Agreement, any of the
other Loan Documents and/or any of the transactions which are the subject matter
of this Loan Agreement.
(q). Integration.
This
Loan Agreement, together with the other Loan Documents, constitutes the entire
understanding and represents the full and final agreement between the parties
with respect to the subject matter hereof, and may not be contradicted by
evidence of prior written agreements or prior, contemporaneous or subsequent
oral agreements of the parties. There are no unwritten oral agreements of the
parties. Without limiting the foregoing, Customer acknowledges that: (i) no
promise or commitment has been made to it by MLC, MLPF&S or any of their
respective employees, agents or representatives to make any Loan on any terms
other than as expressly set forth herein, or to make any other loan or otherwise
extend any other credit to Customer or any other party; and (ii) except as
otherwise expressly provided herein, this Loan Agreement supersedes and replaces
any and all proposals, letters of intent and approval and commitment letters
from MLC to Customer, none of which shall be considered a Loan Document. No
amendment or modification of any of the Loan Documents to which Customer is
a
party shall be effective unless in a writing signed by both MLC and
Customer.
(r). Survival.
All
representations, warranties, agreements and covenants contained in the Loan
Documents shall survive the signing and delivery of the Loan Documents, and
all
of the waivers made and indemnification obligations undertaken by Customer
shall
survive the termination, discharge or cancellation of the Loan
Documents.
(s). Customer’s
Acknowledgments.
The
Customer acknowledges that the Customer: (i) has had ample opportunity to
consult with counsel and such other parties as deemed advisable prior to signing
and delivering this Loan Agreement and the other Loan Documents; (ii)
understands the provisions of this Loan Agreement and the other Loan Documents,
including all waivers contained therein; and (iii) signs and delivers this
Loan
Agreement and the other Loan Documents freely and voluntarily, without duress
or
coercion.
[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
IN
WITNESS WHEREOF,
this
Loan Agreement has been executed as of the day and year first above
written.
PAC-WEST
TELECOMM, INC.
By:
Signature
/s/ Xxxxxxx X. Xxxxxx
Printed
Name Xxxxxxx X. Xxxxxx
Title
Chief Financial Officer
Accepted
at Chicago, Illinois:
Xxxxxxx
Xxxxx Capital,
a
division of Xxxxxxx Xxxxx Business Financial Services Inc.
By: /s/Xxxxxx
X. Xxxxx
Name:
Xxxxxx X. Xxxxx
Exhibit
A
Collateral
(See
attached)
|
Exhibit
B
Restructuring
Notice
(See
attached)
|
Exhibit
C
Senior
Loan Facility Notice
(See
attached)
|
Exhibit
D
Financial
Information privided or available to Pac-West Funding Company LLC
(See
attached)
|
Exhibit
E
Financing
Statements filed under Original Loan Agreement
(See
attached)
