LOAN AND SECURITY AGREEMENT by and between THE PRIVATEBANK AND TRUST COMPANY and ISI SECURITY GROUP, INC. Dated as of October 3, 2008
$25,000,000
by
and between
THE
PRIVATEBANK AND TRUST COMPANY
and
ISI
SECURITY GROUP, INC.
Dated
as of October 3, 2008
TABLE
OF CONTENTS
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Page
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SECTION
1. DEFINITIONS
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1
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1.1. Defined
Terms
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1
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1.2. Accounting
Terms
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15
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1.3. Other
Terms Defined in UCC
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16
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1.4. Other
Interpretive Provisions
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16
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SECTION
2. COMMITMENT OF THE BANK
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17
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2.1. Facility
A Loans
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17
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2.2. Facility
B Loans
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18
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2.3. Facility
C Loan
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19
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2.4. Additional
LIBOR Loan Provisions
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21
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2.5. Interest
and Fee Computation; Collection of Funds
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23
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2.6. Late
Charge
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23
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2.7.Letters
of Credit
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23
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2.8. Taxes
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24
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2.9. All
Loans to Constitute Single Obligation
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25
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2.10 Guaranty
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25
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SECTION
3. CONDITIONS OF BORROWING
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25
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3.1. Loan
Documents
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25
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3.2. Event
of Default
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27
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3.3. Material
Adverse Effect
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27
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3.4. Litigation
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27
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3.5. Representations
and Warranties
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27
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3.6. Commitment
Fee
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27
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3.7. Escrow
Agreement
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27
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SECTION
4. NOTES EVIDENCING LOANS
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28
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4.1. Facility
A Loan Note and Facility B Loan Note
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28
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4.2. Facility
C Note
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28
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SECTION
5. MANNER OF BORROWING
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28
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5.1. Borrowing
Procedures
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28
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5.2. LIBOR
Conversion and Continuation Procedures
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29
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5.3. Letters
of Credit
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29
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5.4. Automatic
Debit
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30
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5.5. Discretionary
Disbursements
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30
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SECTION
6. SECURITY FOR THE OBLIGATIONS
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30
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6.1. Security
for Obligations
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30
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6.2. Other
Collateral
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31
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6.3. Possession
and Transfer of Collateral
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31
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-i-
TABLE
OF CONTENTS
(continued)
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Page
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6.4. Financing
Statements
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31
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6.5. Additional
Collateral
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32
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6.6. Preservation
of the Collateral
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32
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6.7. Other
Actions as to any and all Collateral
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33
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6.8. Collateral
in the Possession of a Warehouseman or Bailee
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33
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6.9. Letter-of-Credit
Rights
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33
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6.10. Commercial
Tort Claims
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33
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6.11. Electronic
Chattel Paper and Transferable Records
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34
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SECTION
7. REPRESENTATIONS AND WARRANTIES
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34
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7.1. Borrower
Organization and Name
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34
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7.2. Authorization
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34
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7.3. Validity
and Binding Nature
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34
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7.4. Consent;
Absence of Breach
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35
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7.5. Ownership
of Properties; Liens
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35
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7.6. Equity
Ownership
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35
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7.7. Intellectual
Property
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35
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7.8. Financial
Statements
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35
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7.9. Litigation
and Contingent Liabilities
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35
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7.10. Event
of Default
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36
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7.11. Adverse
Circumstances
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36
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7.12. Environmental
Laws and Hazardous Substances
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36
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7.13. Solvency,
etc.
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37
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7.14. ERISA
Obligations
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37
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7.15. Labor
Relations
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37
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7.16. Security
Interest
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37
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7.17. Lending
Relationship
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37
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7.18. Business
Loan
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38
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7.19. Taxes
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38
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7.20. Compliance
with Regulation U
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38
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7.21. Governmental
Regulation
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38
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7.22.
Bank Accounts
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38
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7.23. Place
of Business
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38
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7.24. Complete
Information
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38
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7.25. Subordinated
Debt
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39
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7.26. Indebtedness
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39
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7.27. Affiliate
Transactions
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39
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SECTION
8. AFFIRMATIVE COVENANTS
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39
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8.1. Compliance
with Bank Regulatory Requirements; Increased Costs
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39
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8.2. Borrower
Existence
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40
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8.3. Compliance
With Laws
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40
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8.4. Payment
of Taxes and Liabilities
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40
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-ii-
TABLE
OF CONTENTS
(continued)
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Page
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8.5. Maintain
Property
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40
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8.6. Maintain
Insurance
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41
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8.7. ERISA
Liabilities; Employee Plans
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41
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8.8. Financial
Statements
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42
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8.9. Supplemental
Financial Statements
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43
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8.10. Aged
Accounts, Backlog Report and WIP Schedule
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43
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8.11. Covenant
Compliance Certificate
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43
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8.12. Field
Audits
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43
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8.13. Other
Reports
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43
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8.14. Collateral
Records
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44
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8.15. Intellectual
Property
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44
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8.16. Notice
of Proceedings
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44
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8.17. Notice
of Event of Default or Material Adverse Effect
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44
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8.18. Environmental
Matters
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44
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8.19. Further
Assurances
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44
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8.20. Banking
Relationship
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44
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8.21. Non-Utilization
Fee
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45
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8.22. Interest
Rate Protection
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45
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8.23.
Collateral Access Agreements
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45
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SECTION
9. NEGATIVE COVENANTS
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45
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9.1. Debt
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45
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9.2. Encumbrances
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46
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9.3. Investments
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46
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9.4. Transfer;
Merger; Sales
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47
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9.5. Issuance
of Capital Securities
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47
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9.6. Distributions
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47
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9.7. Transactions
with Affiliates
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48
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9.8. Unconditional
Purchase Obligations
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48
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9.9. Cancellation
of Debt
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48
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9.10. Inconsistent
Agreements
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48
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9.11. Use
of Proceeds
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49
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9.12. Bank
Accounts
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49
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9.13. Business
Activities; Change of Legal Status and Organizational
Documents
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49
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SECTION
10. FINANCIAL COVENANTS
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49
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10.1. Senior
Debt to EBITDA
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49
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10.2. Total
Debt to EBITDA
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49
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10.3. Fixed
Charge Coverage
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49
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10.4. Hedging
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50
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SECTION
11. EVENTS OF DEFAULT
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50
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-iii-
TABLE
OF CONTENTS
(continued)
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Page
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11.1. Nonpayment
of Obligations
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50
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11.2. Misrepresentation
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50
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11.3. Nonperformance
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50
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11.4. Default
under Loan Documents
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50
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11.5. Default
under Other Debt
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50
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11.6. Other
Material Obligations
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50
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11.7. Bankruptcy,
Insolvency, etc.
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51
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11.8. Judgments
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51
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11.9. Change
in Control
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51
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11.10. Collateral
Impairment
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51
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11.11. Material
Adverse Effect
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51
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11.12. Guaranty
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51
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11.13. Subordinated
Debt
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51
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SECTION
12. REMEDIES
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51
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12.1. Possession
and Assembly of Collateral
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52
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12.2. Sale
of Collateral
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52
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12.3. Standards
for Exercising Remedies
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53
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12.4. UCC
and Offset Rights
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53
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12.5. Additional
Remedies
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54
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12.6. Attorney-in-Fact
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55
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12.7. No
Marshaling
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55
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12.8. Application
of Proceeds
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55
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12.9. No
Waiver
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56
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12.10. Letters
of Credit
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56
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SECTION
13. MISCELLANEOUS
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56
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13.1. Obligations
Absolute
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56
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13.2. Entire
Agreement
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57
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13.3. Amendments;
Waivers
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57
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13.4. WAIVER
OF DEFENSES
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57
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13.5. FORUM
SELECTION AND CONSENT TO JURISDICTION
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57
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13.6. WAIVER
OF JURY TRIAL
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58
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13.7. Assignability
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58
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13.8. Confirmations
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58
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13.9. Confidentiality
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58
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13.10. Binding
Effect
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59
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13.11. Governing
Law
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59
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13.12. Enforceability
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59
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13.13. Survival
of Borrower Representations
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59
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13.14. Extensions
of Bank’s Commitment
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59
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13.15. Time
of Essence
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60
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13.16. Counterparts;
Facsimile Signatures
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60
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-iv-
TABLE
OF CONTENTS
(continued)
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Page
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13.17. Notices
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60
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13.18. Release
of Claims Against Bank
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61
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13.19. Costs,
Fees and Expenses
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61
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13.21. Indemnification
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62
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13.22. Revival
and Reinstatement of Obligations
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62
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-v-
SCHEDULES:
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7.1
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Business
Names
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7.6
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Corporate
Structure
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7.9
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Litigation
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7.22
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Bank
Accounts
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7.23
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Places
of Business
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7.25
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Subordinated
Debt
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7.26
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Permitted
Indebtedness
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7.27
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Affiliate
Transactions
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9.2
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Permitted
Liens
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9.7
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Transactions
with Affiliates
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-i-
This
LOAN AND SECURITY AGREEMENT
dated as
of October 3, 2008 (the “Agreement”),
is
executed by and between
ISI SECURITY GROUP, INC.,
a
Delaware corporation, (the “Borrower”),
which
has its chief executive office located at 00000 Xxxxxxxx Xxxxx, Xxx Xxxxxxx,
Xxxxx 00000, and
THE PRIVATEBANK AND TRUST COMPANY,
an
Illinois banking corporation (the “Bank”),
whose
address is 70 X. Xxxxxxx, 2nd
floor,
Xxxxxxx, Xxxxxxxx 00000.
RECITALS:
Pursuant
to and subject to the terms and conditions of this Agreement, the Bank will
make
available to the Borrower (a) the Facility A Loan secured revolving line
of
credit in the maximum amount of $10,000,000.00 with a $5,000,000.00 sublimit
for
the issuance of letters of credit, (b) the Facility B Loan secured revolving
line of credit in the maximum amount of $5,000,000.00, to be used solely
for the
issuance of letters of credit, and (c) the Facility C Loan term loan in the
maximum amount of $10,000,000.00. The loans shall be used to refinance existing
indebtedness, working capital and for other general corporate purposes. Payment
by the Borrower of the amounts due hereunder will be secured by liens on
and
security interests in the personal property of the Borrower and guaranteed
by
the affiliates identified in this Agreement.
NOW
THEREFORE, in consideration of the premises, and the mutual covenants and
agreements set forth herein, the Borrower agrees to borrow from the Bank,
and
the Bank agrees to lend to the Borrower, subject to and upon the following
terms
and conditions:
AGREEMENTS:
Section
1. DEFINITIONS.
1.1. Defined
Terms.
For the
purposes of this Agreement, in addition to the definitions included in the
Preamble and Recitals above, the following capitalized words and phrases
shall
have the meanings set forth below.
“Affiliate”
of
any
Person shall mean (a) any other Person which, directly or indirectly, controls
or is controlled by or is under common control with such Person, (b) any
officer
or director of such Person, and (c) with respect to the Bank, any entity
administered or managed by the Bank, or an Affiliate or investment advisor
thereof and which is engaged in making, purchasing, holding or otherwise
investing in commercial loans. A Person shall be deemed to be “controlled by”
any other Person if such Person possesses, directly or indirectly, power
to
direct or cause the direction of the management and policies of such Person
whether by contract, ownership of voting securities, membership interests
or
otherwise.
“Applicable
Margin”
shall
mean the rate per annum added to the Prime Rate and LIBOR to determine the
Interest Rate as determined by the ratio of Total Debt to EBITDA of the Borrower
for the prior fiscal quarter, effective as of any Interest Rate Change Date,
as
set forth below:
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FACILITY
A LOAN AND FACILITY B LOAN
AND
LETTER
OF CREDIT FEES
|
FACILITY
C LOAN
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Level
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Ratio of Total Debt to
EBITDA
|
Applicable
Margin for
Prime Loans
|
Applicable
Margin for
LIBOR
Loans
|
Applicable
Margin for
Prime Loans
|
Applicable
Margin for
LIBOR
Loans
|
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I
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Greater
than 3.50
|
1.00
|
%
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3.00
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%
|
1.50
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%
|
3.50
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%
|
|||||||
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II
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Greater
than 3.00
to
1.00
less
than or equal
to
3.50
to 1.00
|
0.75
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%
|
2.75
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%
|
1.25
|
%
|
3.25
|
%
|
|||||||
|
III
|
Greater
than 2.50
to
1.00;
less
than or equal
to
3.00
to 1.00
|
0.50
|
%
|
2.50
|
%
|
1.00
|
%
|
3.00
|
%
|
|||||||
|
IV
|
Greater
than 2.00
to
1.00;
less
than or equal
to
2.50
to 1:00
|
0.25
|
%
|
2.25
|
%
|
0.75
|
%
|
2.75
|
%
|
|||||||
|
V
|
Less
than or equal
to
2.00
to 1.00
|
0.00
|
%
|
2.00
|
%
|
0.50
|
%
|
2.50
|
%
|
|||||||
Level
I
pricing shall be in effect from the date hereof until the Bank’s receipt of the
Borrower’s financial statements for the period ending September 30, 2008 at
which time the Applicable Margin will be determined based on the Borrower’s
ratio of Total Debt to EBITDA for the period ending September 30, 2008.
Thereafter, the Applicable Margin shall be adjusted quarterly. Notwithstanding
the foregoing, in the event that any financial statement or related Compliance
Certificate is shown to be inaccurate (regardless of whether this Agreement
is
in effect or any of the Loans are outstanding when such inaccuracy is
discovered), and such inaccuracy, if corrected, would have led to the
application of a higher or lower Applicable Margin for any period (an
“Applicable
Period”)
than
the Applicable Margin actually applied during such Applicable Period, then
(i) the Borrower shall immediately deliver to the Bank a corrected
Compliance Certificate for such Applicable Period, (ii) the Applicable
Margin shall be determined as if such higher or lower Level were applicable
for such Applicable Period, and (iii) the Borrower shall immediately pay to
the Bank the accrued additional interest owing as a result of an increased
Applicable Margin for such Applicable Period, which payment shall be promptly
applied by the Bank in accordance with the terms of this Agreement or the
Bank
shall repay to the Borrower the accrued additional interest overpaid as a
result
of a decreased Applicable Margin for such Applicable Period, which payment
shall
be promptly applied by the Bank against the outstanding Obligations in
accordance with the terms of this Agreement, provided,
however, that
the
Borrower shall not be responsible for payments attributable to a period more
than one hundred fifty (150) days prior to timely delivery to the Bank of
the
corrected Compliance Certificate. This paragraph shall not limit the rights
of
the Bank with respect to its remedies under Section
12
hereof.
-2-
“Argyle”
shall
mean Argyle Security, Inc., a Delaware corporation.
“Asset
Disposition”
shall
mean the sale, lease, assignment or other transfer for value (each a
“Disposition”)
by the
Borrower or any Subsidiary to any Person (other than the Borrower or any
Subsidiary) of any asset or right of the Borrower or any Subsidiary (including,
the loss, destruction or damage of any thereof or any actual or threatened
(in
writing to the Borrower or such Subsidiary) condemnation, confiscation,
requisition, seizure or taking thereof), other than (a) the Disposition of
any
asset which is to be replaced, and is in fact replaced, within sixty (60)
days
with another asset performing the same or a similar function, (b) the sale
or
lease of inventory in the ordinary course of business, and (c) other
Dispositions in any fiscal year the net proceeds of which do not in the
aggregate exceed $100,000.00.
“Bank
Product Agreements”
shall
mean those certain agreements entered into from time to time by the Borrower
or
any Subsidiary with the Bank or any Affiliate of the Bank concerning Bank
Products.
“Bank
Product Obligations”
shall
mean all obligations, liabilities, contingent reimbursement obligations,
fees,
and expenses owing by the Borrower or any Subsidiary to the Bank or any
Affiliate of the Bank pursuant to or evidenced by the Bank Product Agreements
and irrespective of whether for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising.
“Bank
Products”
shall
mean any service or facility extended to the Borrower or any Subsidiary by
the
Bank or any Affiliate of the Bank, including: (a) credit cards, (b) credit
card
processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions,
(f) cash management, including controlled disbursement, accounts or services,
or
(g) Hedging Agreements.
“Bankruptcy
Code”
shall
mean the United States Bankruptcy Code, as now existing or hereafter
amended.
“Business
Day”
shall
mean any day other than a Saturday, Sunday or a legal holiday on which banks
are
authorized or required to be closed for the conduct of commercial banking
business in Chicago, Illinois.
“Capital
Expenditures”
shall
mean all expenditures (including Capitalized Lease Obligations) which, in
accordance with GAAP, would be required to be capitalized and shown on the
consolidated balance sheet of the Borrower, but excluding expenditures made
in
connection with the replacement, substitution or restoration of assets to
the
extent financed (i) from insurance proceeds (or other similar recoveries)
paid
on account of the loss of or damage to the assets being replaced or restored
or
(ii) with awards of compensation arising from the taking by eminent domain
or
condemnation of the assets being replaced.
-3-
“Capital
Lease”
shall
mean, as to any Person, a lease of any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible, by such
Person, as lessee, that is, or should be, in accordance with Financial
Accounting Standards Board Statement No. 13, as amended from time to time,
or,
if such statement is not then in effect, such statement of GAAP as may be
applicable, recorded as a “capital lease” on the financial statements of such
Person prepared in accordance with GAAP.
“Capital
Securities”
shall
mean, with respect to any Person, all shares, interests, participations or
other
equivalents (however designated, whether voting or non-voting) of such Person’s
capital, whether now outstanding or issued or acquired after the date hereof,
including common shares, preferred shares, membership interests in a limited
liability company, limited or general partnership interests in a partnership
or
any other equivalent of such ownership interest.
“Capitalized
Lease Obligations”
shall
mean, as to any Person, all rental obligations of such Person, as lessee
under a
Capital Lease which are or will be required to be capitalized on the books
of
such Person.
“Cash
Equivalent Investment”
shall
mean, at any time, (a) any evidence of Debt, maturing not more than one year
after such time, issued or guaranteed by the United States government or
any
agency thereof, (b) commercial paper, maturing not more than one year from
the
date of issue, or corporate demand notes, in each case (unless issued by
the
Bank or its holding company) rated at least A-l by Standard & Poor’s Ratings
Services, a division of The XxXxxx-Xxxx Companies, Inc. or P-l by Xxxxx’x
Investors Service, Inc., (c) any certificate of deposit, time deposit or
banker’s acceptance, maturing not more than one year after such time, or any
overnight Federal Funds transaction that is issued or sold by the Bank or
its
holding company (or by a commercial banking institution that is a member
of the
Federal Reserve System and has a combined capital and surplus and undivided
profits of not less than $500,000,000), (d) any repurchase agreement entered
into with the Bank, or other commercial banking institution of the nature
referred to in clause
(c),
which
(i) is secured by a fully perfected security interest in any obligation of
the
type described in any of clauses
(a)
through
(c)
above,
and (ii) has a market value at the time such repurchase agreement is entered
into of not less than 100% of the repurchase obligation of the Bank, or other
commercial banking institution, thereunder, (e) money market accounts or
mutual
funds which invest exclusively in assets satisfying the foregoing requirements,
and (f) other short term liquid investments approved in writing by the
Bank.
“Change
in Control”
shall
mean the occurrence of any of the following events: (a) Argyle shall cease
to
own and control, directly or indirectly, at least 100% of the outstanding
Capital Securities
of the Borrower; (b) the Borrower shall cease to, directly or indirectly,
own
and control 100% of each class of the outstanding Capital Securities of each
Subsidiary; or (c) the granting by Argyle, directly or indirectly, of a security
interest in its ownership interest in the Borrower, which could result in
a
change in the identity of the individuals or entities in control of the
Borrower. For the purpose hereof, the terms “control” or “controlling” shall
mean the possession of the power to direct, or cause the direction of, the
management and policies of the Borrower by contract or voting of securities
or
ownership interests.
-4-
“Collateral”
shall
have the meaning set forth in Section
6.1
hereof.
“Collateral
Access Agreement”
shall
mean an agreement in form and substance reasonably satisfactory to the Bank
pursuant to which a mortgagee or lessor of real property on which Collateral
is
stored or otherwise located, or a warehouseman, processor or other bailee
of
Inventory or other property owned by the Borrower or any Subsidiary,
acknowledges the Liens of the Bank and waives any Liens held by such Person
on
such property, and, in the case of any such agreement with a mortgagee or
lessor, permits the Bank reasonable access to and use of such real property
following the occurrence and during the continuance of an Event of Default
to
assemble, complete and sell any collateral stored or otherwise located
thereon.
“Compliance
Certificate”
shall
have the meaning set forth in Section
8.12
hereof.
“Contingent
Liability”
and
“Contingent
Liabilities”
shall
mean, respectively and without duplication, each obligation and liability
of the
Borrower and all such obligations and liabilities of the Borrower incurred
pursuant to any agreement, undertaking or arrangement by which the Borrower:
(a)
guarantees, endorses or otherwise becomes or is contingently liable upon
(by
direct or indirect agreement, contingent or otherwise, to provide funds for
payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise
to assure a creditor against loss) the indebtedness, dividend, obligation
or
other liability of any other Person in any manner (other than by endorsement
of
instruments in the course of collection, guarantees of Debt of a Subsidiary
that
is reflected on the consolidated balance sheet of the Borrower, or with respect
to surety bonds, bids, performance bonds, payment bonds and similar obligations,
and letters of credit securing the foregoing), including any indebtedness,
dividend or other obligation which may be issued or incurred at some future
time; (b) guarantees the payment of dividends or other distributions upon
the
shares or ownership interest of any other Person; (c) undertakes or agrees
(whether contingently or otherwise): (i) to purchase, repurchase, or otherwise
acquire any indebtedness, obligation or liability of any other Person or
any
property or assets constituting security therefor, (ii) to advance or provide
funds for the payment or discharge of any indebtedness, obligation or liability
of any other Person (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain solvency, assets, level
of
income, working capital or other financial condition of any other Person,
or
(iii) to make payment to any other Person other than for value received;
(d)
agrees to lease property or to purchase securities, property or services
from
such other Person with the purpose or intent of assuring the owner of such
indebtedness or obligation of the ability of such other Person to make payment
of the indebtedness or obligation; (e) to induce the issuance of, or in
connection with the issuance of, any letter of credit for the benefit of
such
other Person; or (f) undertakes or agrees otherwise to assure a creditor
against
loss. The amount of any Contingent Liability shall (subject to any limitation
set forth herein) be deemed to be the outstanding principal amount (or maximum
permitted principal amount, if larger) of the indebtedness, obligation or
other
liability guaranteed or supported thereby. If the Borrower and a Guarantor
are
responsible for or liable for the same obligation, such obligation shall
be
deemed to be only one obligation for the purposes of this definition.
Notwithstanding the foregoing, “Contingent Liability” will not include any
contingent liability that is also a Liability on the consolidated balance
sheet
of the Borrower.
-5-
“Debt”
shall
mean, as to any Person, without duplication, (a) all indebtedness of such
Person; (b) all borrowed money of such Person (including principal, interest,
fees and charges), whether or not evidenced by bonds, debentures, notes or
similar instruments; (c) all obligations to pay the deferred purchase price
of
property or services; (d) all obligations, contingent or otherwise, with
respect
to the maximum face amount of all letters of credit (whether or not drawn),
bankers’ acceptances and similar obligations issued for the account of such
Person (including the Letters of Credit), and all unpaid drawings in respect
of
such letters of credit, bankers’ acceptances and similar obligations; (e) all
indebtedness secured by any Lien on any property owned by such Person, whether
or not such indebtedness has been assumed by such Person (provided, however,
if
such Person has not assumed or otherwise become liable in respect of such
indebtedness, such indebtedness shall be deemed to be in an amount equal
to the
fair market value of the property subject to such Lien at the time of
determination); (f) the aggregate amount of all Capitalized Lease Obligations
of
such Person; (g) all Contingent Liabilities of such Person, whether or not
reflected on its balance sheet; (h) all Hedging Obligations of such Person;
(i)
all Debt of any partnership of which such Person is a general partner; and
(j)
all monetary obligations of such Person under (i) a so-called synthetic,
off-balance sheet or tax retention lease, or (ii) an agreement for the use
or
possession of property creating obligations that do not appear on the balance
sheet of such Person but which, upon the insolvency or bankruptcy of such
Person, would be characterized as the indebtedness of such Person (without
regard to accounting treatment). Notwithstanding the foregoing, Debt shall
not
include (i) trade payables and accrued expenses incurred by such Person in
accordance with customary practices and in the ordinary course of business
of
such Person, or (ii) operating leases as defined by GAAP.
“Default
Rate”
shall
mean a per annum rate of interest equal to rate then in effect plus
two
percent (2%).
“Deposit
Account”
shall
have the meaning given to such term in Section
9.12
herein.
“Depreciation”
shall
mean the total amounts added to depreciation, amortization, obsolescence,
valuation and other proper reserves, as reflected on the Borrower’s financial
statements and determined in accordance with GAAP.
“EBITDA”
shall
mean, for any period, the sum for such period of: (i) Consolidated Net
Income, plus
(ii)
Interest Charges, plus
(iii)
federal and state income taxes and the Texas Margin Tax, plus
(iv)
depreciation and amortization, plus
(v)
non-cash management compensation expense, plus
(vi) all
other non-cash charges.
“Employee
Plan”
includes any pension, stock bonus, employee stock ownership plan, retirement,
profit sharing, deferred compensation, stock option, bonus or other incentive
plan, whether qualified or nonqualified, or any disability, medical, dental
or
other health plan, life insurance or other death benefit plan, vacation benefit
plan, severance plan or other employee benefit plan or arrangement, including
those pension, profit-sharing and retirement plans of the Borrower described
from time to time in the financial statements of the Borrower and any pension
plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA) or
any
multi-employer plan, maintained or administered by the Borrower or to which
the
Borrower is a party or may have any liability or by which the Borrower is
bound.
-6-
“Environmental
Laws”
shall
mean all present or future federal, state or local laws, statutes, common
law
duties, rules, regulations, ordinances and codes, together with all
administrative or judicial orders, consent agreements, directed duties,
requests, licenses, authorizations and permits of, and agreements with, any
governmental authority, in each case relating to any matter arising out of
or
relating to public health and safety, or pollution or protection of the
environment or workplace, including any of the foregoing relating to the
presence, use, production, generation, handling, transport, treatment, storage,
disposal, distribution, discharge, emission, release, threatened release,
control or cleanup of any Hazardous Substance.
“ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as amended from
time
to time.
“Event
of Default”
shall
mean any of the events or conditions which are set forth in
Section 11
hereof.
“Excess
Cash Flow”
shall
mean, for any fiscal year of the Borrower, an amount equal to (a) EBITDA
minus
(b) income taxes and the Texas Margin Tax paid in cash by the Borrower and
its
Subsidiaries minus (c) cash Interest Charges minus (d) scheduled principal
payments on all Debt minus (e) amounts due and payable during such fiscal
year
for Capital Expenditures not financed with Funded Debt (f) either (1) minus
the
increase in Working Capital or (2) plus the decrease in Working Capital as
applicable, if any, by which the Working Capital of the Borrower and its
Subsidiaries increased/decreased during the last preceding fiscal year (except
as a result of the reclassification of items from long-term to
short-term).
“Existing
Indebtedness”
shall
mean the Debt evidenced by two Promissory Notes, each dated January 23, 2008,
in
the original principal amount of $12,000,000.00 and $4,250,000.00, respectively,
made by the Borrower to the order of LaSalle Bank National
Association.
“Facility
A Letter of Credit Obligations”
means
the Letter of Credit Obligations in the maximum amount of $5,000,000.00 incurred
by the Borrower under the Facility A Loan Commitment.
“Facility
A Loan Availability”
shall
mean, at any time, an amount equal to the lesser of the Facility A Loan
Commitment minus
the
Facility A Letter of Credit Obligations.
“Facility
A Loan
Commitment”
means
the commitment of the Bank to Advance Facility A Loans to the Borrower in
the
aggregate amount of $10,000,000.00 as provided in Section
2.1.
“Facility
A Loan Letter of Credit Commitment”
shall
mean, at any time, an amount equal to the lesser of (a) the Facility A Loan
Commitment minus
the
aggregate amount of all Facility A Loans outstanding, or (b) Five Million
and
00/100 Dollars ($5,000,000.00).
“Facility
A Loan Letter of Credit Maturity Date”
shall
mean October 3, 2011.
-7-
“Facility
A Loan”
means
the $10,000,000.00 secured revolving line of credit with a $5,000,000.00
sublimit to provide standby letters of credit.
“Facility
A Loan Note”
means
the promissory note in the principal amount of $10,000,000.00 evidencing
the
Facility A Loan, made by the Borrower and payable to the order of the Bank,
substantially in the form of Exhibit
A-1
hereto,
as the same may be supplemented, modified, amended or restated from time
to time
in the manner provided herein.
“Facility
A Loan Scheduled Maturity Date”
means
October 3, 2011.
“Facility
B Letter of Credit Obligations”
means
the Letter of Credit Obligations in the maximum amount of $5,000,000.00 incurred
by the Borrower under the Facility B Loan Commitment.
“Facility
B Loan Availability”
shall
mean, at any time, an amount equal to the lesser of the Facility B Loan
Commitment minus
the
Facility B Letter of Credit Obligations.
“Facility
B Loan
Commitment”
means
the commitment of the Bank to Advance Facility B Loans to the Borrower in
the
aggregate amount of $5,000,000.00 as provided in Section
2.2.
“Facility
B Loan”
means
the $5,000,000.00 secured revolving line of credit to be used exclusively
to
provide standby letters of credit.
“Facility
B Loan
Note”
means
the promissory note in the principal amount of $5,000,000.00 evidencing the
Facility B Loan, made by the Borrower and payable to the order of the Bank,
substantially in the form of Exhibit
A-2
hereto,
as the same may be supplemented, modified, amended or restated from time
to time
in the manner provided herein.
“Facility
B Loan Scheduled Maturity Date”
means
October 3, 2011.
“Facility
C Loan
Commitment”
means
the commitment of the Bank to Advance Facility C Loans to the Borrower in
the
aggregate amount of $10,000,000.00 as provided in Section
2.3.
“Facility
C Loan”
means
the $10,000,000.00 term loan.
“Facility
C Loan Scheduled Maturity Date”
means
October 3, 2011.
“Facility
C
Loan
Note”
means
the promissory note in the principal amount of $10,000,000.00 evidencing
the
Facility C Loan, made by the Borrower and payable to the order of the Bank,
substantially in the form of Exhibit
A-3
hereto,
as the same may be supplemented, modified, amended or restated from time
to time
in the manner provided herein.
“Facility
C Loan Mandatory Prepayment”
shall
have the meaning set forth in Section
2.3(d)
hereof.
“Federal
Funds Rate”
shall
mean, for any day, a fluctuating interest rate equal for each day during
such
period to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business
Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the
average of the quotations for such day on such transactions received by the
Bank
from three Federal funds brokers of recognized standing selected by the Bank.
The Bank’s determination of such rate shall be binding and conclusive absent
manifest error.
-8-
“Funded
Debt”
shall
mean, as to any Person, all Debt of such Person that matures more than one
year
from the date of its creation (or is renewable or extendible, at the option
of
such Person, to a date more than one year from such date).
“GAAP”
shall
mean generally accepted accounting principles set forth from time to time
in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements
of
the Financial Accounting Standards Board (or agencies with similar functions
of
comparable stature and authority within the U.S. accounting profession),
which
are applicable to the circumstances as of the date of determination, provided,
however, that interim financial statements or reports shall be deemed in
compliance with GAAP despite the absence of footnotes and fiscal year-end
adjustments as required by GAAP.
“Guarantor”
and
“Guarantors”
shall
mean, respectively, each of and collectively, the following: Detention
Contracting Group, Ltd., a Texas limited partnership, ISI Detention Contracting
Group, Inc., a Texas corporation, ISI Detention Contracting Group, Inc.,
a
California corporation, ISI Detention Contracting Group, Inc., a New Mexico
corporation, ISI Detention Systems, Inc., a Texas corporation, ISI Systems,
Ltd., a Texas limited partnership, Metroplex Control Systems, Inc., a Texas
corporation, ISI Controls, Ltd., a Texas limited partnership, Metroplex
Commercial Fire and Security Alarms, Inc., a Texas corporation, MCFSA, Ltd.,
a
Texas limited partnership, Com-Tec Security, LLC, a Wisconsin limited liability
company, Com-Tec California Limited Partnership, a Wisconsin limited partnership
and any other Person who shall hereafter become a Subsidiary of Borrower
or any
Guarantor.
“Guaranty”
shall
have the meaning set forth in
Section 3.1
hereof.
“Hazardous
Substances”
shall
mean (a) any petroleum or petroleum products, radioactive materials,
asbestos in any form that is or could become friable, urea formaldehyde foam
insulation, dielectric fluid containing levels of polychlorinated biphenyls,
radon gas and mold; (b) any chemicals, materials, pollutant or substances
defined as or included in the definition of “hazardous substances”, “hazardous
waste”, “hazardous materials”, “extremely hazardous substances”, “restricted
hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”,
“pollutants” or words of similar import, under any applicable Environmental Law;
and (c) any other chemical, material or substance, the exposure to, or
release of which is prohibited, limited or regulated by any governmental
authority or for which any duty or standard of care is imposed pursuant to,
any
Environmental Law.
“Hedging
Agreement”
shall
mean any interest rate, currency or commodity swap agreement, cap agreement
or
collar agreement, and any other agreement or arrangement designed to protect
a
Person against fluctuations in interest rates, currency exchange rates or
commodity prices.
-9-
“Hedging
Obligation”
shall
mean, with respect to any Person, any liability of such Person under any
Hedging
Agreement.
“Indemnified
Party”
and
“Indemnified
Parties”
shall
mean, respectively, each of the Bank and any parent corporation, Affiliate
or
Subsidiary of the Bank, and each of their respective officers, directors,
employees, attorneys and agents, and all of such parties and
entities.
“Intellectual
Property”
shall
mean the collective reference to all rights, priorities and privileges relating
to intellectual property, whether arising under United States, multinational
or
foreign laws or otherwise, including copyrights, patents, service marks and
trademarks, and all registrations and applications for registration therefor
and
all licensees thereof, trade names, domain names, technology, know-how and
processes, and all rights to xxx at law or in equity for any infringement
or
other impairment thereof, including the right to receive all proceeds and
damages therefrom.
“Interest
Charges”
shall
mean, for any period, the sum of: (a) all interest, charges and related expenses
payable with respect to that fiscal period to a lender in connection with
borrowed money or the deferred purchase price of assets that are treated
as
interest in accordance with GAAP, plus
(b) the
portion of Capitalized Lease Obligations with respect to that fiscal period
that
should be treated as interest in accordance with GAAP, plus
(c) all
charges paid or payable (without duplication) during that period with respect
to
any Hedging Agreements.
“Interest
Period”
shall
mean successive one, two, three or six month periods, beginning and ending
as
provided in this Agreement.
“Interest
Rate”
shall
mean the Borrower’s option from time to time of (i) a floating per annum rate of
interest equal to the Prime Rate
plus
the
Applicable Margin, or (ii) the LIBOR Rate plus
the
Applicable Margin.
“Interest
Rate Change Date”
shall
mean the date two (2) Business Days after the delivery to the Bank of the
quarterly or year-end financial statements of the Borrower, which initial
Change
Date shall occur after the delivery to the Bank of the financial statements
of
the Borrower for the fiscal quarter ending December 31, 2008.
“Investment”
shall
mean, with respect to any Person, any investment in another Person, whether
by
acquisition of any debt or equity security, by making any loan or advance,
by
becoming obligated with respect to a Contingent Liability in respect of
obligations of such other Person (other than travel and similar advances
to
employees in the ordinary course of business).
“Letter
of Credit”
and
“Letters
of Credit”
shall
mean, respectively, a standby letter of credit and all such standby letters
of
credit issued by the Bank, in its sole discretion, upon the execution and
delivery by the Borrower and the acceptance by the Bank of a Master Letter
of
Credit Agreement and a Letter of Credit Application, as set forth in
Section
2.7
of this
Agreement.
-10-
“Letter
of Credit Application”
shall
mean, with respect to any request for the issuance of a Letter of Credit,
a
letter of credit application in the form being used by the Bank at the time
of
such request for the type of Letter of Credit requested.
“Letter
of Credit Obligations”
shall
mean, at any time, an amount equal to the aggregate of the original face
amounts
of all Letters of Credit minus the sum of (i) the amount of any reductions
in
the original face amount of any Letter of Credit which did not result from
a
draw thereunder, (ii) the amount of any payments made by the Bank with respect
to any draws made under a Letter of Credit for which the Borrower has reimbursed
the Bank, (iii) the amount of any payments made by the Bank with respect
to any
draws made under a Letter of Credit which have been converted to a Facility
A
Loan or Facility B Loan, as applicable, as set forth in Section
2.7,
and
(iv) the portion of any issued but expired Letter of Credit which has not
been
drawn by the beneficiary thereunder. For purposes of determining the outstanding
Letter of Credit Obligations at any time, the Bank’s acceptance of a draft drawn
on the Bank pursuant to a Letter of Credit shall constitute a draw on the
applicable Letter of Credit at the time of such acceptance.
“Liabilities”
shall
mean at all times all liabilities of the Borrower that would be shown as
such on
a balance sheet of the Borrower prepared in accordance with GAAP.
“LIBOR”
shall
mean a rate of interest equal to (a) the per annum rate of interest at which
United States dollar deposits for a period equal to the relevant Interest
Period
are offered in the London Interbank Eurodollar market at 11:00 a.m. (London
time) two Business Days prior to the commencement of such Interest Period
(or
three Business Days prior to the commencement of such Interest Period if
banks
in London, England were not open and dealing in offshore United States dollars
on such second preceding Business Day), as displayed in the
Bloomberg Financial Markets
system
(or other authoritative source selected by the Bank in its sole discretion),
divided by (b) a number determined by subtracting from 1.00 the then stated
maximum reserve percentage for determining reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency funding or liabilities
as
defined in Regulation D (or any successor category of liabilities under
Regulation D), or as LIBOR is otherwise determined by the Bank in its sole
and
absolute discretion. The Bank’s determination of LIBOR shall be conclusive,
absent manifest error.
“LIBOR
Loan”
or
“LIBOR
Loans”
shall
mean that portion, and collectively those portions, of the aggregate outstanding
principal balance of the Loans that bear interest at the LIBOR Rate, of which
at
any time, the Borrower may identify no more than five (5) advances of the
Facility A Loans, Facility B Loans and Facility C Loans which bear interest
at
the LIBOR Rate.
“LIBOR
Rate”
shall
mean a per annum rate of interest equal to LIBOR for the relevant Interest
Period, plus
the
Applicable Margin, which LIBOR Rate shall remain fixed during such Interest
Period.
“Lien”
shall
mean, with respect to any Person, any interest granted by such Person in
any
real or personal property, asset or other right owned or being purchased
or
acquired by such Person (including an interest in respect of a Capital Lease)
which secures payment or performance of any obligation and shall include
any
mortgage, lien, encumbrance, title retention lien, charge or other security
interest of any kind, whether arising by contract, as a matter of law, by
judicial process or otherwise.
-11-
“Loans”
shall
mean, collectively, all Facility A Loans, Facility B Loans and Facility C
Loans
made by the Bank to the Borrower and all Letter of Credit Obligations, under
and
pursuant to this Agreement.
“Loan
Documents”
shall
mean each of the agreements, documents, instruments and certificates set
forth
in Section
3.1
hereof,
and any and all such other instruments, documents, certificates and agreements
from time to time executed and delivered by the Borrower, the Guarantors
or any
of its/their Subsidiaries for the benefit of the Bank pursuant to any of
the
foregoing, and all amendments, restatements, supplements and other modifications
thereto.
“Master
Letter of Credit Agreement”
shall
mean, at any time, with respect to the issuance of Letters of Credit, a Master
Letter of Credit Agreement in a form acceptable to Bank.
“Material
Adverse Effect”
shall
mean (a) a material adverse change in, or a material adverse effect upon,
the
assets, business, properties, prospects, condition (financial or otherwise)
or
results of operations of the Borrower and its Subsidiaries taken as a whole,
(b)
a material impairment of the ability of the Borrower and its Subsidiaries
to
perform any of the Obligations under any of the Loan Documents, or (c) a
material adverse effect on (i) any substantial portion of the Collateral,
(ii)
the legality, validity, binding effect or enforceability against the Borrower
and its Subsidiaries of any of the Loan Documents, (iii) the perfection or
priority of any Lien granted to the Bank under any Loan Document, or (iv)
the
rights or remedies of the Bank under any Loan Document.
“Net
Cash Proceeds”
shall
mean:
(a) with
respect to any Asset Disposition, the aggregate cash proceeds (including
cash
proceeds received pursuant to policies of insurance or by way of deferred
payment of principal pursuant to a note, installment receivable or otherwise,
but only as and when received) received by the Borrower pursuant to such
Asset
Disposition net of (i) the direct costs relating to such sale, transfer or
other
disposition (including sales commissions and legal, accounting and investment
banking fees), (ii) taxes paid or reasonably estimated by the Borrower to
be
payable as a result thereof (after taking into account any available tax
credits
or deductions and any tax sharing arrangements), and (iii) amounts required
to
be applied to the repayment of any Debt secured by a Lien on the asset subject
to such Asset Disposition (other than the Loans);
(b) with
respect to any issuance of Capital Securities, the aggregate cash proceeds
received by the Borrower pursuant to such issuance, net of the direct costs
relating to such issuance (including sales and underwriters’ commissions;
and
(c) with
respect to any issuance of Debt, the aggregate cash proceeds received by
the
Borrower pursuant to such issuance, net of the direct costs of such issuance
(including up-front, underwriters’ and placement fees).
-12-
“Net
Income”
shall
mean, with respect to the Borrower and its Subsidiaries for any period, the
consolidated net income (or loss) of the Borrower and its Subsidiaries for
such
period as determined in accordance with GAAP, excluding
any
gains from Asset Dispositions, any extraordinary gains and any gains from
discontinued operations.
“Non-Excluded
Taxes”
shall
have the meaning set forth in Section
2.7(a)
hereof.
“Note”
and
“Notes”
shall
mean,
respectively, each of and collectively,
the
Facility A Note, the Facility B Note and the Facility C Note.
“Obligations”
shall
mean the Loans, as evidenced by any Note, all interest accrued thereon
(including interest which would be payable as post-petition in connection
with
any bankruptcy or similar proceeding, whether or not permitted as a claim
thereunder), any fees due the Bank hereunder, any expenses incurred by the
Bank
hereunder, including without limitation, all liabilities and obligations
under
this Agreement, under any other Loan Document, any reimbursement obligations
of
the Borrower in respect of Letters of Credit and surety bonds, all Hedging
Obligations of the Borrower which are owed to the Bank or any Affiliate of
the
Bank, and all Bank Product Obligations of the Borrower, and any and all other
liabilities and obligations owed by the Borrower to the Bank from time to
time,
howsoever created, arising or evidenced, whether direct or indirect, joint
or
several, absolute or contingent, now or hereafter existing, or due or to
become
due, together with any and all renewals, extensions, restatements or
replacements of any of the foregoing.
“Obligor”
shall
mean the Borrower, the Guarantors and any
Subsidiary of the Borrower, and of any Guarantor, accommodation endorser,
third
party pledgor, or any other party liable with respect to the
Obligations.
“Other
Taxes”
shall
mean any present or future stamp or documentary taxes or any other excise
or
property taxes, charges or similar levies which arise from the execution,
delivery, enforcement or registration of, or otherwise with respect to, this
Agreement or any of the other Loan Documents.
“Permitted
Liens”
shall
mean (a) Liens
for
Taxes, assessments or other governmental charges not at the time delinquent
or
thereafter payable without penalty or being contested in good faith by
appropriate proceedings and, in each case, for which it maintains adequate
reserves in accordance with GAAP and in respect of which no Lien has been
filed;
(b) Liens arising in the ordinary course of business (i) in favor of landlords,
carriers, warehousemen, mechanics and materialmen and other similar Liens
imposed by law, and (ii) in the form of deposits or pledges incurred in
connection with worker’s compensation, unemployment compensation and other types
of social security (excluding Liens arising under ERISA); (c) Liens arising
in
the ordinary course of business in favor of the issuer of surety bonds, bids,
performance bonds, payment bonds, and similar obligations, which do not in
the
aggregate exceed an amount equal to one-half (1/2) of Borrower’s aggregate
Accounts Receivable; (d) Liens described on Schedule
9.2
as of
the Closing Date and the replacement, extension or renewal of any such Lien
upon
or in the same property subject thereto arising out of the extension, renewal
or
replacement of the Debt secured thereby (without increase in the amount
thereof); (e) attachments,
appeal bonds, judgments and other similar Liens arising in connection with
court
proceedings, to the extent such judgments or awards do not constitute an
Event
of Default under Section
11.8
hereof;
(f) easements, rights of way, restrictions, minor defects or irregularities
in
title and other similar Liens not interfering in any material respect with
the
ordinary conduct of the business of the Borrower or any of its Subsidiaries;
(g)
subject to the limitation set forth in Section
9.1(g),
Liens
arising in connection with Capitalized Lease Obligations (and attaching only
to
the property being leased); (h) subject to the limitation set forth in
Section
9.1(h),
Liens
that constitute purchase money security interests on any property securing
Debt
incurred for the purpose of financing all or any part of the cost of acquiring
such property, provided
that any
such Lien attaches solely to the property so acquired; (i) Liens
granted to the Bank hereunder and under the Loan Documents, (j) Liens securing
bonds related to accounts receivable, (k) Liens on amounts deposited by the
Borrower arising out of the financing of insurance premiums, and (l) Liens
of
Bank of America for the period from the Closing Date until payment is received
by Bank of America from the proceeds of the Loans to pay in full the Bank
shall
have received evidence satisfactory to it that all amounts due from the Borrower
pursuant to the Existing Debt has been paid in full out of the proceeds of
the
Loan on the Effective Date, or provision for payment thereof in a manner
acceptable to the Bank in its sole discretion, shall have been made by the
Borrower and approved by the Bank, and the Bank shall have received executed
termination statements, in form satisfactory for filing, evidencing the
termination of the security interests in the Borrower’s properties which secured
the Existing Debt.
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“Person”
shall
mean any natural person, partnership, limited liability company, corporation,
trust, joint venture, joint stock company, association, unincorporated
organization, government or agency or political subdivision thereof, or other
entity, whether acting in an individual, fiduciary or other
capacity.
“Prime
Loan”
or
“Prime
Loans”
shall
mean that portion, and collectively, those portions of the aggregate outstanding
principal balance of the Loans that bear interest at the Prime Rate plus
the
Applicable Margin.
“Prime
Rate”
shall
mean the floating per annum rate of interest which at any time, and from
time to
time, shall be most recently announced by the Bank as its Prime Rate, which
is
not intended to be the Bank’s lowest or most favorable rate of interest at any
one time. The effective date of any change in the Prime Rate shall for purposes
hereof be the date the Prime Rate is changed by the Bank. The Bank shall
not be
obligated to give notice of any change in the Prime Rate.
“Regulatory
Change”
shall
mean the introduction of, or any change in any applicable law, treaty, rule,
regulation or guideline or in the interpretation or administration thereof
by
any governmental authority or any central bank or other fiscal, monetary
or
other authority having jurisdiction over the Bank or its lending
office.
“Senior
Debt”
shall
mean all Debt of the Borrower and its Subsidiaries other than Subordinated
Debt.
“Subordinated
Debt”
shall
mean that portion of the Debt of the Borrower which is subordinated to the
Obligations in a manner satisfactory to the Bank, including right and time
of
payment of principal and interest.
-14-
“Subsidiary”
and
“Subsidiaries”
shall
mean, respectively, with respect to any Person, each and all such corporations,
partnerships, limited partnerships, limited liability companies, limited
liability partnerships, joint ventures or other entities of which or in which
such Person owns, directly or indirectly, such number of outstanding Capital
Securities as have more than fifty percent (50.00%) of the ordinary voting
power
for the election of directors or other managers of such corporation,
partnership, limited liability company or other entity. Unless the context
otherwise requires, each reference to Subsidiaries herein shall be a reference
to Subsidiaries of the Borrower.
“Taxes”
shall
mean any and all present and future taxes, duties, levies, imposts, deductions,
assessments, charges or withholdings, and any and all liabilities (including
interest and penalties and other additions to taxes) with respect to the
foregoing.
“Total
Debt”
shall
mean all Debt of the Borrower and its Subsidiaries, determined on a consolidated
basis, excluding (i) Contingent Liabilities (except to the extent constituting
Contingent Liabilities in respect of the Debt of a Person other than the
Borrower or any Subsidiaries), (ii) Hedging Obligations,
(iii)
Debt of the Borrower to Subsidiaries and Debt of Subsidiaries to the Borrower
or
to other Subsidiaries,
and (iv)
contingent obligations in respect of undrawn Letters of Credit.
“UCC”
shall
mean the Uniform Commercial Code in effect in the state of Illinois from
time to
time.
“United
States Treasury Securities”
means
actively traded United States Treasury bonds, bills and notes.
“Unmatured
Event of Default”
shall
mean any event which, with the giving of notice, the passage of time or both,
would constitute an Event of Default.
“Voidable
Transfer”
shall
have the meaning set forth in Section
13.21
hereof.
“Wholly-Owned
Subsidiary”
shall
mean any Subsidiary of which or in which the Borrower owns, directly or
indirectly, one hundred percent (100%) of the Capital Securities of such
Subsidiary.
“Working
Capital”
shall
mean the total of cash on hand, cash equivalents, marketable securities,
Accounts minus
adequate
reserves for doubtful Accounts, and readily salable Inventory at the lower
of
cost or market value, minus the total of all liabilities payable within one
year, all as determined in accordance with GAAP.
1.2. ACCOUNTING
TERMS.
Any
accounting terms used in this Agreement which are not specifically defined
herein shall have the meanings customarily given them in accordance with
GAAP.
Calculations and determinations of financial and accounting terms used and
not
otherwise specifically defined hereunder and the preparation of financial
statements to be furnished to the Bank pursuant hereto shall be made and
prepared, both as to classification of items and as to amount, in accordance
with sound accounting practices and GAAP as used in the preparation of the
financial statements of the Borrower on the date of this Agreement. If any
changes in accounting principles or practices from those used in the preparation
of the financial statements are hereafter occasioned by the promulgation
of
rules, regulations, pronouncements and opinions by or required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or any successor thereto or agencies with similar functions),
which
results in a material change in the method of accounting in the financial
statements required to be furnished to the Bank hereunder or in the calculation
of financial covenants, standards or terms contained in this Agreement, the
parties hereto agree to enter into good faith negotiations to amend such
provisions so as equitably to reflect such changes to the end that the criteria
for evaluating the financial condition and performance of the Borrower will
be
the same after such changes as they were before such changes; and if the
parties
fail to agree on the amendment of such provisions, the Borrower will furnish
financial statements in accordance with such changes, but shall provide
calculations for all financial covenants, perform all financial covenants
and
otherwise observe all financial standards and terms in accordance with
applicable accounting principles and practices in effect immediately prior
to
such changes. Calculations with respect to financial covenants required to
be
stated in accordance with applicable accounting principles and practices
in
effect immediately prior to such changes shall be reviewed and certified
by the
Borrower’s accountants.
-15-
1.3. OTHER
TERMS DEFINED IN UCC.
All
other capitalized words and phrases used herein and not otherwise specifically
defined herein shall have the respective meanings assigned to such terms
in the
UCC, to the extent the same are used or defined therein.
1.4. Other
Interpretive Provisions.
(a) The
meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms. Whenever the context so requires, the neuter
gender
includes the masculine and feminine, the single number includes the plural,
and
vice versa, and in particular the word “Borrower” shall be so
construed.
(b) Section
and Schedule references are to this Agreement unless otherwise specified.
The
words “hereof”, “herein” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
(c) The
term “including” is not limiting, and means “including, without
limitation”.
(d) In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including”; the words “to” and “until”
each mean “to but excluding”, and the word “through” means “to and
including”.
(e) Unless
otherwise expressly provided herein, (i) references to agreements
(including this Agreement and the other Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
supplements and other modifications thereto, but only to the extent such
amendments, restatements, supplements and other modifications are not prohibited
by the terms of any Loan Document, and (ii) references to any statute or
regulation shall be construed as including all statutory and regulatory
provisions amending, replacing, supplementing or interpreting such statute
or
regulation.
-16-
(f) To
the extent any of the provisions of the other Loan Documents are inconsistent
with the terms of this Agreement, the provisions of this Agreement shall
govern.
(g) This
Agreement and the other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters. All such
limitations, tests and measurements are cumulative and each shall be performed
in accordance with its terms.
Section
2. COMMITMENT
OF THE BANK.
2.1. Facility
A Loans.
(a) Facility
A Loan Commitment.
Subject
to the terms and conditions of this Agreement and the other Loan Documents,
and
in reliance upon the representations and warranties of the Borrower set forth
herein and in the other Loan Documents, the Bank agrees to make such Facility
A
Loans at such times as the Borrower may from time to time request until,
but not
including, the Facility A Loan Scheduled Maturity Date, and in such amounts
as
the Borrower may from time to time request, provided,
however,
that
the aggregate principal balance of all Facility A Loans outstanding at any
time
shall not exceed the Facility A Loan Availability. Facility A Loans made
by the
Bank may be repaid and, subject to the terms and conditions hereof, borrowed
again up to, but not including the Facility A Loan Scheduled Maturity Date
unless the Facility A Loans are otherwise accelerated, terminated or extended
as
provided in this Agreement. The Facility A Loans shall be used by the Borrower
for the purpose of paying in full the Existing
Indebtedness, for working capital, for the issuance of standby Letters of
Credit
and repayment of drawings against any standby Letters of Credit in an amount
not
to exceed the Facility A Letter of Credit Commitment and other lawful purposes.
(b) Facility
A Loan Interest and Payments.
Except
as otherwise provided in this
Section 2.1(b),
the
principal amount of the Facility A Loans outstanding from time to time shall
bear interest at the applicable Interest Rate. Accrued and unpaid interest
on
the unpaid principal balance of all Facility A Loans outstanding from time
to
time which are Prime Loans, shall be due and payable quarterly, in arrears,
commencing on September 30, 2008 and continuing on the last Business Day
of each
June, September, December and March thereafter, and on the Facility A Loan
Maturity Date. Accrued and unpaid interest on the unpaid principal balance
of
all Facility A Loans outstanding from time to time which are LIBOR Loans
shall
be payable on the last Business Day of each Interest Period (provided, however,
that for Interest Periods of six months, accrued interest shall also be paid
on
the date which is three months from the first day of such Interest Period),
commencing on the first such date to occur after the date hereof, on the
date of
any principal repayment of a LIBOR Loan and on the Facility A Loan Maturity
Date. From and after maturity, or after the occurrence and during the
continuation of an Event of Default, interest on the outstanding principal
balance of the Facility A Loans, at the option of the Bank, may accrue at
the
Default Rate and shall be payable upon demand from the Bank.
-17-
(c) Facility
A Loan Principal Payments.
(i) Facility
A Loan Mandatory Payments.
All
Facility A Loans hereunder shall be repaid by the Borrower on the Facility
A
Loan Scheduled Maturity Date, unless payable sooner pursuant to the provisions
of this Agreement. In the event the aggregate outstanding principal balance
of
all Facility A Loans and Letter of Credit Obligations hereunder exceeds the
Facility A Loan Availability, the Borrower shall, without notice or demand
of
any kind, immediately make such repayments of the Facility A Loans or take
such
other actions as are satisfactory to the Bank as shall be necessary to eliminate
such excess. Also, if the Borrower chooses not to continue any Facility A
Loan
which is a LIBOR Loan as a LIBOR Loan or the LIBOR Loan option is unavailable
with respect to such Facility A Loan, then such Facility A Loan will
automatically be converted to a Prime Loan on the last Business Day the then
existing Interest Period or on such earlier date as required by law, all
without
further demand, presentment, protest or notice of any kind, all of which
are
hereby waived by the Borrower.
(ii) Optional
Prepayments.
The
Borrower may from time to time prepay the Facility A Loans which are Prime
Loans, in whole or in part, without any prepayment penalty whatsoever, provided
that any prepayment of the entire principal balance of the Prime Loans shall
include accrued interest on such Prime Loans to the date of such
prepayment.
2.2. Facility
B Loans.
(a) Facility
B Loan Commitment.
Subject
to the terms and conditions of this Agreement and the other Loan Documents,
and
in reliance upon the representations and warranties of the Borrower set forth
herein and in the other Loan Documents, the Bank agrees to make such Facility
B
Loans at such times as the Borrower may from time to time request until,
but not
including, the Facility B Loan Scheduled Maturity Date, and in such amounts
as
the Borrower may from time to time request, provided,
however,
that
the aggregate principal balance of all Facility B Loans outstanding at any
time
shall not exceed the Facility B Loan Availability. Facility B Loans made
by the
Bank may be repaid and, subject to the terms and conditions hereof, borrowed
again up to, but not including the Facility B Loan Scheduled Maturity Date
unless the Facility B Loans are otherwise accelerated, terminated or extended
as
provided in this Agreement. The Facility B Loan Commitment shall be used
by the
Borrower for the exclusive purpose of the issuance of standby Letters of
Credit
and the repayment of drawings against such standby Letters of Credit.
(b) Facility
B Loan Interest and Payments.
Except
as otherwise provided in this
Section 2.2(b),
the
principal amount of the Facility B Loans outstanding from time to time shall
bear interest at the applicable Interest Rate. Amounts drawn on Letters of
Credit that are Facility B Loans shall be paid within two (2) Business Days
of
the draw on the Letter of Credit without notice or further demand from the
Bank.
Accrued and unpaid interest on the unpaid principal balance of all Facility
B
Loans outstanding from time to time which are Prime Loans, shall be due and
payable quarterly, in arrears, commencing on September 30, 2008 and continuing
on the last Business Day of each June, September, December and March thereafter,
and on the Facility B Loan Maturity Date. From and after maturity, or after
the
occurrence and during the continuation of an Event of Default, interest on
the
outstanding principal balance of the Facility B Loans, at the option of the
Bank, may accrue at the Default Rate and shall be payable upon demand from
the
Bank.
-18-
(c) Facility
B Loan Principal Payments.
(i) Facility
B Loan Mandatory Payments.
Amounts
drawn on Letters of Credit that are Facility B Loans shall be paid within
two
(2) Business Days of the draw on the Letter of Credit without notice or further
demand from the Bank. All Facility B Loans hereunder shall be repaid by the
Borrower on the Facility B Loan Scheduled Maturity Date, unless payable sooner
pursuant to the provisions of this Agreement. In the event the aggregate
outstanding principal balance of all Facility B Loans and Letter of Credit
Obligations hereunder exceeds the Facility B Loan Availability, the Borrower
shall, without notice or demand of any kind, immediately make such repayments
of
the Facility B Loans or take such other actions as are satisfactory to the
Bank
as shall be necessary to eliminate such excess. Also, if the Borrower chooses
not to continue any Facility B Loan which is a LIBOR Loan as a LIBOR Loan
or the
LIBOR Loan option is unavailable with respect to such Facility B Loan, then
such
Facility B Loan will automatically be converted to a Prime Loan on the last
Business Day the then existing Interest Period or on such earlier date as
required by law, all without further demand, presentment, protest or notice
of
any kind, all of which are hereby waived by the Borrower.
(ii) Optional
Prepayments.
The
Borrower may from time to time prepay the Facility B Loans which are Prime
Loans, in whole or in part, without any prepayment penalty whatsoever, provided
that any prepayment of the entire principal balance of the Prime Loans shall
include accrued interest on such Prime Loans to the date of such
prepayment.
2.3. Facility
C Loan.
(a) Facility
C Loan Commitment.
Subject
to the terms and conditions of this Agreement and the other Loan Documents,
and
in reliance upon the representations and warranties of the Borrower set forth
herein and in the other Loan Documents, the Bank agrees to make a Facility
C
Loan equal to the Facility C Loan Commitment. The Facility C Loan shall be
available to the Borrower in a single advance on the date of this Agreement
for
the exclusive purpose of paying in full the Existing Indebtedness. The Facility
C Loan may be prepaid in whole or in part at any time without penalty, but
shall
be due in full on the Facility C Loan Maturity Date, unless the credit extended
under the Facility C Loan is otherwise accelerated, terminated or extended
as
provided in this Agreement.
-19-
(b) Facility
C Loan Interest and
Payments.
Except
as otherwise provided in this
Section 2.3(b),
the
principal amount of the Facility C Loan outstanding from time to time shall
bear
interest at the applicable Interest Rate. Accrued and unpaid interest on
that
portion of the principal balance of the Facility C Loan outstanding from
time to
time which is a Prime Loan, shall be due and payable quarterly, in arrears,
commencing on the last Business Day of the first calendar month following
the
first advance under the Facility C Loan and continuing on the same day of
each
calendar quarter thereafter, and on the Facility C Loan Maturity Date. Accrued
and unpaid interest on those portions of the principal balance of the Facility
C
Loan outstanding from time to time which are LIBOR Loans shall be payable
on the
last Business Day of each Interest Period (provided, however, that for Interest
Periods of six months, accrued interest shall also be paid on the date which
is
three months from the first day of such Interest Period), commencing on the
first such date to occur after the date hereof, on the date of any principal
repayment of a LIBOR Loan and on the Facility C Loan Maturity Date.
From and
after maturity, or after the occurrence and during the continuation of an
Event
of Default, interest on the outstanding principal balance of the Facility
C
Loan, at the option of the Bank, may accrue at the Default Rate and shall
be
payable upon demand from the Bank.
(c) Facility
C Loan Principal Payments.
The
outstanding principal balance of the Facility C Loan shall be repaid in
installments of $500,000.00 commencing on December 31, 2008 and continuing
on
the last day of March, June, September and December, together with an additional
amount representing accrued and unpaid interest on the principal amount of
the
Facility C Loan outstanding as set forth above, with a final payment of all
outstanding principal and accrued interest due on the Facility C Loan Scheduled
Maturity Date. Principal amounts repaid on the Facility C Note may not be
borrowed again. Also, if the Borrower chooses not to continue any Facility
C
Loan which is a LIBOR Loan as a LIBOR Loan or the LIBOR Loan option is
unavailable with respect to such Facility C Loan, then such Facility C Loan
will
automatically be converted to a Prime Loan on the last Business Day of the
then
existing Interest Period or on such earlier date as required by law, all
without
further demand, presentment, protest or notice of any kind, all of which
are
hereby waived by the Borrower.
(d) Facility
C Loan Mandatory Prepayment.
The
Borrower shall make a prepayment (the “Facility
C Loan Mandatory Prepayment”)
of the
outstanding principal amount of the Facility C Loan until paid in full upon
the
occurrence of any of the following events, at the following times and in
the
following amounts:
(i) Concurrently
with the receipt by the Borrower or by any Subsidiary of any Net Cash Proceeds
from any Asset Disposition, in an amount equal to 100% of such Net Cash
Proceeds.
(ii) Concurrently
with the receipt by the Borrower of any Net Cash Proceeds from any issuance
of
Capital Securities
(excluding (A) any issuance of Capital Securities
pursuant
to any employee or director option program, benefit plan or compensation
program, and (B) any issuance by a Subsidiary to the Borrower or another
Subsidiary), in an amount equal to 100% of such Net Cash
Proceeds.
-20-
(iii) Within
one hundred twenty (120) days after the end of the Borrower’s fiscal year, fifty
percent (50%) of Excess Cash Flow, if any.
(e) Facility
C Loan Optional Prepayments.
Provided
that no Event of Default then exists under this Agreement or the Loans, the
Borrower may voluntarily prepay the principal balance of the Facility C Loan,
in
whole or in part, at any time on or after the date hereof, subject to the
following conditions:
(A) Not
less than thirty (30) days prior to the date upon which the Borrower desires
to
make such prepayment, the Borrower shall deliver to the Bank written notice
of
its intention to prepay the Facility C, which notice shall be irrevocable
and
state the prepayment amount and the prepayment date (the “Facility
C Loan Prepayment Date”);
(B) The
Borrower shall pay to the Bank all accrued and unpaid interest on the Facility
C
through the date of such prepayment on the principal balance being prepaid.
Each
prepayment of the Facility C Loan shall be applied to the scheduled installments
of the Facility C Loan in inverse order of maturity.
2.4. Additional
LIBOR Loan Provisions.
(a) LIBOR
Loan Prepayments.
Notwithstanding anything to the contrary contained herein, the principal
balance
of any LIBOR Loan may not be prepaid in whole or in part at any time. If,
for
any reason, a LIBOR Loan is paid prior to the last Business Day of any Interest
Period, whether voluntary, involuntary, by reason of acceleration or otherwise,
each such prepayment of a LIBOR Loan will be accompanied by the amount of
accrued interest on the amount prepaid and any and all costs, expenses,
penalties and charges incurred by the Bank as a result of the early termination
or breakage of a LIBOR Loan, plus the amount, if any, by which (i) the
additional interest which would have been payable during the Interest Period
on
the LIBOR Loan prepaid had it not been prepaid, exceeds (ii) the interest
which
would have been recoverable by the Bank by placing the amount prepaid on
deposit
in the domestic certificate of deposit market, the eurodollar deposit market,
or
other appropriate money market selected by the Bank, for a period starting
on
the date on which it was prepaid and ending on the last day of the Interest
Period for such LIBOR Loan. The amount of any such loss or expense payable
by
the Borrower to the Bank under this Section shall be determined in the Bank’s
sole discretion based upon the assumption that the Bank funded its loan
commitment for LIBOR Loans in the London Interbank Eurodollar market and
using
any reasonable attribution or averaging methods which the Bank deems appropriate
and practical, provided, however, that the Bank is not obligated to accept
a
deposit in the London Interbank Eurodollar market in order to charge interest
on
a LIBOR Loan at the LIBOR Rate.
-21-
(b) LIBOR
Unavailability.
If the
Bank determines in good faith (which determination shall be conclusive, absent
manifest error) prior to the commencement of any Interest Period that (i)
the
making or maintenance of any LIBOR Loan would violate any applicable law,
rule,
regulation or directive, whether or not having the force of law, (ii) United
States dollar deposits in the principal amount, and for periods equal to
the
Interest Period for funding any LIBOR Loan are not available in the London
Interbank Eurodollar market in the ordinary course of business, (iii) by
reason
of circumstances affecting the London Interbank Eurodollar market, adequate
and
fair means do not exist for ascertaining the LIBOR Rate to be applicable
to the
relevant LIBOR Loan, or (iv) the LIBOR Rate does not accurately reflect the
cost
to the Bank of a LIBOR Loan, the Bank shall promptly notify the Borrower
thereof
and, so long as the foregoing conditions continue, none of the Loans may
be
advanced as a LIBOR Loan thereafter. In addition, at the Borrower’s option, each
existing LIBOR Loan shall be immediately (1) converted to a Prime Loan on
the
last Business Day of the then existing Interest Period, or (2) prepaid without
penalty or premium on the last Business Day of the then existing Interest
Period.
(c) Regulatory
Change.
In
addition, if, after the date hereof, a Regulatory Change shall, in the
reasonable determination of the Bank, make it unlawful for the Bank to make
or
maintain the LIBOR Loans, then the Bank shall promptly notify the Borrower
and
none of the Loans may be advanced as a LIBOR Loan thereafter. In addition,
at
the Borrower’s option, each existing LIBOR Loan shall be immediately (1)
converted to a Prime Loan on the last Business Day of the then existing Interest
Period, or (2) prepaid without penalty or premium on the last Business Day
of
the then existing Interest Period.
(d) LIBOR
Indemnity.
If any
Regulatory Change, or compliance by the Bank or any Person controlling the
Bank
with any request or directive of any governmental authority, central bank
or
comparable agency (whether or not having the force of law) shall (a) impose,
modify or deem applicable any assessment, reserve, special deposit or similar
requirement against assets held by, or deposits in or for the account of
or
loans by, or any other acquisition of funds or disbursements by, the Bank;
(b)
subject the Bank or any LIBOR Loan to any tax, duty, charge, stamp tax or
fee or
change the basis of taxation of payments to the Bank of principal or interest
due from the Borrower to the Bank hereunder (other than a change in the taxation
of the overall net income of the Bank); or (c) impose on the Bank any other
condition regarding such LIBOR Loan or the Bank’s funding thereof, and the Bank
shall determine (which determination shall be conclusive, absent manifest
error)
that the result of the foregoing is to increase the cost to, or to impose
a cost
on, the Bank or such controlling Person of making or maintaining such LIBOR
Loan
or to reduce the amount of principal or interest received by the Bank hereunder,
then the Borrower shall pay to the Bank or such controlling Person, on demand,
such additional amounts as the Bank shall, from time to time, determine are
sufficient to compensate and indemnify the Bank for such increased cost or
reduced amount.
-22-
2.5. Interest
and Fee Computation; Collection of Funds.
Except
as otherwise set forth herein, all interest and fees shall be calculated
on the
basis of a year consisting of 360 days and shall be paid for the actual number
of days elapsed. Principal payments submitted in funds not immediately available
shall continue to bear interest until collected. If any payment to be made
by
the Borrower hereunder or under any Note shall become due on a day other
than a
Business Day, such payment shall be made on the next succeeding Business
Day and
such extension of time shall be included in computing any interest in respect
of
such payment. Notwithstanding anything to the contrary contained herein,
the
final payment due under any of the Loans must be made by wire transfer or
other
immediately available funds. All payments made by the Borrower hereunder
or
under any of the Loan Documents shall be made without setoff, counterclaim,
or
other defense. To the extent permitted by applicable law, all payments hereunder
or under any of the Loan Documents (including any payment of principal,
interest, or fees) to, or for the benefit, of any Person shall be made by
the
Borrower free and clear of, and without deduction or withholding for, or
account
of, any taxes now or hereinafter imposed by any taxing authority.
2.6. Late
Charge.
If any
payment of interest or principal due hereunder is not made within ten (10)
days
after such payment is due in accordance with the terms hereof, then, in addition
to the payment of the amount so due, to defray part of the cost of collection
and handling such late payment, the Borrower shall pay to the Bank a “late
charge” in an amount equal to the lesser of (i) five cents for each whole dollar
so overdue, or (ii) $500.00. The Borrower agrees that the damages to be
sustained by the Bank for the detriment caused by any late payment are extremely
difficult and impractical to ascertain, and that the amount set forth in
this
Section
2.6
is a
reasonable estimate of such damages, does not constitute interest, and is
not a
penalty.
2.7.
Letters
of Credit.
Subject
to the terms and conditions of this Agreement and upon (i) the execution by
the Borrower and the Bank of a Master Letter of Credit Agreement in form
and
substance acceptable to the Bank (together with all amendments, modifications
and restatements thereof, the “Master
Letter of Credit Agreement”),
and
(ii) the execution and delivery by the Borrower, and the acceptance by the
Bank, in its reasonable discretion, of a Letter of Credit Application, the
Bank
agrees to issue for the account of the Borrower from time to time up to,
but not
including, the Facility A Loan Maturity Date or the Facility B Loan Maturity
Date, as applicable, such Letters of Credit in the standard form of the
Bank and otherwise in form and substance acceptable to the Bank, provided
that
the Facility A Loan Letter of Credit Obligations may not at any time exceed
the
Facility A Loan Letter of Credit Commitment and that the Facility B Loan
Letter
of Credit Obligations may not at any time exceed the Facility B Loan Letter
of
Credit Commitment, and provided further, that no Letter of Credit shall have
an
expiration date later than the Facility A Loan Maturity Date or the Facility
B
Loan Maturity Date, as applicable. Letters of Credit requested by a Letter
of
Credit Application shall first be issued as Facility B Loan Letter of Credit
Obligations, and if the issuance of a Letter of Credit would result in the
Facility B Loan Letter of Credit Obligation at any time exceeding the Facility
B
Loan Letter of Credit Commitment, Letters of Credit requested by a Letter
of
Credit Application shall be issued as Facility A Letter of Credit Obligations
if
the issuance of such Letters of Credit do not exceed the Facility A Loan
Availability. In the event that the Borrower fails to reimburse the Bank
for the
amount of any payments made by the Bank with respect to draws made by a
beneficiary under a Letter of Credit within two (2) Business Days from the
date
of such payment to such beneficiary by the Bank, the Bank may make a Facility
A
Loan pursuant to a loan request and the terms and conditions of this Agreement
for the purpose of reimbursing the Bank for the amount of such payment to
such
beneficiary by the Bank in an amount equal to the lesser of (i) the amount
of
such payment to such beneficiary by the Bank, or (ii) in an amount equal
to any
remaining Facility A Loan Availability. The Borrower shall reimburse the
Bank
for any part of a payment made by the Bank under a Letter of Credit that
is not
converted to a Facility A Loan within two (2) Business Days of the payment
to
the beneficiary by the Bank. Upon the occurrence of an Event of a Default
and at
the option of the Bank, all Letter of Credit Obligations shall be converted
to
Facility A Loans or Facility B Loans, as applicable, consisting of Prime
Loans,
all without demand, presentment, protest or notice of any kind, all of which
are
hereby waived by the Borrower. All amounts advanced on such Facility A Loans
or
Facility B Loans shall be held in a restricted cash collateral account to
be
maintained with Bank as additional Collateral for the Obligations. Bank may
apply the balance of any such cash collateral account to the payment of any
Letters of Credit subsequently drawn. Upon discharge of all Obligations and
the
expiration of all Letters of Credit, the funds remaining in such accounts
shall
be paid to the Persons who have a beneficial interest therein. To the extent
the
provisions of the Master Letter of Credit Agreement differ from, or are
inconsistent with, the terms of this Agreement, the provisions of this Agreement
shall govern.
-23-
2.8. Taxes.
(a) All
payments made by the Borrower under this Agreement shall be made free and clear
of, and without deduction or withholding for or on account of, any present
or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any governmental authority, excluding net income taxes
and franchise taxes (imposed in lieu of net income taxes) imposed on the Bank
as
a result of a present or former connection between the Bank and the jurisdiction
of the governmental authority imposing such tax or any political subdivision
or
taxing authority thereof or therein (other than any such connection arising
solely from the Bank having executed, delivered or performed its obligations
or
received a payment under, or enforced, this Agreement or any other Loan
Document). If any such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions or withholdings (collectively, “Non-Excluded
Taxes”)
or
Other Taxes are required to be withheld from any amounts payable to the Bank
hereunder, the amounts so payable to the Bank shall be increased to the extent
necessary to yield to the Bank (after payment of all Non-Excluded Taxes and
Other Taxes) interest or any such other amounts payable hereunder at the rates
or in the amounts specified in this Agreement, provided, however, that the
Borrower shall not be required to increase any such amounts payable to the
Bank
with respect to any Non-Excluded Taxes that are attributable to the Bank’s
failure to comply with the requirements of subsection
2.8(c).
(b) The
Borrower shall pay any Other Taxes to the relevant governmental authority in
accordance with applicable law.
(c) At
the request of the Borrower and at the Borrower’s sole cost, the Bank shall take
reasonable steps to (i) contest its liability for any Non-Excluded Taxes or
Other Taxes that have not been paid, or (ii) seek a refund of any Non-Excluded
Taxes or Other Taxes that have been paid.
-24-
(d) Whenever
any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly
as possible thereafter the Borrower shall send to the Bank a certified copy
of
an original official receipt received by the Borrower showing payment thereof.
If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due
to
the appropriate taxing authority or fails to remit to the Bank the required
receipts or other required documentary evidence or if any governmental authority
seeks to collect a Non-Excluded Tax or Other Tax directly from the Bank for
any
other reason, the Borrower shall indemnify the Bank on an after-tax basis for
any incremental taxes, interest or penalties that may become payable by the
Bank.
(e) The
agreements in this Section shall survive the satisfaction and payment of the
Obligations and the termination of this Agreement.
2.9. All
Loans to Constitute Single Obligation.
The
Loans shall constitute one general obligation of the Borrower, and shall be
secured by Bank’s priority security interest in and Lien upon all of the
Collateral and by all other security interests, Liens, claims and encumbrances
heretofore, now or at any time or times hereafter granted by the Borrower and/or
any Subsidiary to Bank.
2.10 Guaranty.
Borrower shall cause the Obligations to be guaranteed by the Borrower’s present
Subsidiaries and any Person who hereafter shall become a Subsidiary of Borrower
or any Guarantor.
Section
3. CONDITIONS
OF BORROWING.
Notwithstanding
any other provision of this Agreement, the Bank shall not be required to
disburse, make or continue all or any portion of the Loans, if any of the
following conditions shall have occurred.
3.1. Loan
Documents.
The
Borrower shall have failed to execute and deliver to the Bank any of the
following Loan Documents, all of which must be satisfactory to the Bank and
the
Bank’s counsel in form, substance and execution:
(a) Loan
Agreement.
Two
copies of this Agreement duly executed by the Borrower.
(b) Facility
A Loan Note.
A
Facility A Loan Note duly executed by the Borrower, in the form prepared by
and
acceptable to the Bank.
(c) Facility
B Loan Note.
A
Facility B Loan Note duly executed by the Borrower, in the form prepared by
and
acceptable to the Bank.
(d) Facility
C Loan Note.
A
Facility C Loan Note duly executed by the Borrower, in the form prepared by
and
acceptable to the Bank.
(e) Security
Agreement.
A
Security Agreement duly executed by the Guarantors, in the form prepared by
and
acceptable to the Bank.
-25-
(f) Master
Letter of Credit Agreement.
A
Master Letter of Credit Agreement prepared by and acceptable to the Bank, duly
executed by the Borrower in favor of the Bank.
(g) Guaranty.
A
Continuing Unconditional Guaranty, executed by each of the Guarantors to and
for
the benefit of the Bank, in the form prepared by and acceptable to the Bank
(collectively, the “Guaranty”).
(h) Pledge
Agreement.
A
Pledge Agreement dated as of the date of this Agreement, executed by the
Borrower and the Guarantors, in the form prepared by and acceptable to the
Bank
together with the original stock certificates subject thereto and stock powers
therefor.
(i) Subordination
Agreements.
Subordination Agreements dated as of the date of this Agreement, from each
holder of Subordinated Debt, in the form prepared by and acceptable to the
Bank.
(j)
Deposit
Account Control Agreement.
A
deposit account control agreement dated as of the date of this Agreement, from
each signed by Frost National Bank, the Borrower and the Bank, in a form
acceptable to the Bank.
(k) Search
Results; Lien Terminations.
Copies
of UCC search reports dated such a date as is reasonably acceptable to the
Bank,
listing all effective financing statements which name the Borrower and any
of
its Subsidiaries, under its/their present names and any previous names, as
debtors, together with (i) copies of such financing statements, (ii) payoff
letters evidencing repayment in full of all the Existing Indebtedness shall
have
been received by the Bank or evidence satisfactory to it that all amounts due
from the Borrower pursuant to the Existing Indebtedness has been paid in full
out of the proceeds of the Loan on the Effective Date, or provision for payment,
thereof in a manner acceptable to the Bank in its sole discretion, shall have
been made by the Borrower and approved by the Bank, and the Bank shall have
received executed termination statements, in form satisfactory for filing,
evidencing the termination of the security interests in the Borrower’s
properties which secured the Existing Indebtedness and the termination of all
agreements relating thereto and the release of all Liens granted in connection
therewith, with UCC or other appropriate termination statements and documents
effective to evidence the foregoing (other than Permitted Liens), and (iii)
such
other UCC termination statements as the Bank may reasonably
request.
(l) Organizational
and Authorization Document.
Secretary’s Certificate dated as of the date of this Agreement executed by the
authorized officers of the Borrower and Guarantors, in a form acceptable to
the
Bank, that will have appended to it copies of (i) the Articles of Incorporation
and Bylaws / Limited Partnership Agreements / Articles of Organization
(Certificate of Formation) and Operating Agreements
of the
Borrower and each of its Subsidiaries; (ii) resolutions of the shareholders
/
board of directors / members / managers / partners of the Borrower and each
of
its Subsidiaries approving and authorizing such Person’s execution, delivery and
performance of the Loan Documents to which it is party and the transactions
contemplated thereby; (iii) signature and incumbency certificates of the
officers / members / managers / partners of the Borrower and each of its
Subsidiaries, executing any of the Loan Documents, each of which the Borrower
hereby certifies to be true and complete, and in full force and effect without
modification, it being understood that the Bank may conclusively rely on each
such document and certificate until formally advised by the Borrower of any
changes therein; and (iv) good standing certificates in the state of
incorporation / formation of the Borrower and each of its Subsidiaries and
in
each other state requested by the Bank.
-26-
(m) Legal
Opinions.
The
favorable opinion of K & L Gates LLP, legal counsel to the Borrower and the
Guarantors, substantially in the form acceptable to the Bank.
(n) Insurance.
Evidence satisfactory to the Bank of the existence of insurance required to
be
maintained pursuant to Section
8.6,
together with evidence that the Bank has been named as a lender’s loss payee on
all related insurance policies.
(n) Financial
Statements.
The
December 31, 2007 audited financial statements of the Borrower are acceptable
to
the Bank in its sole discretion.
(o) Additional
Documents.
Such
other certificates, financial statements, schedules, resolutions, opinions
of
counsel, notes and other documents which are provided for hereunder or which
the
Bank shall reasonably require.
3.2. Event
of Default.
Any
Event of Default, or Unmatured Event of Default shall have occurred and be
continuing.
3.3. Material
Adverse Effect.
The
occurrence of any event having a Material Adverse Effect upon the Borrower
and/or Subsidiaries.
3.4. Litigation.
Any
litigation or governmental proceeding shall have been instituted against the
Borrower or any of its officers or shareholders having a Materially Adverse
Effect upon the Borrower and/or Subsidiaries.
3.5. Representations
and Warranties.
Any
representation or warranty of the Borrower contained herein or in any Loan
Document shall be untrue or incorrect in any material respect as of the date
of
any Loan as though made on such date, except to the extent such representation
or warranty expressly relates to an earlier date.
3.6. Commitment
Fee.
The
Borrower shall have failed to pay to the Bank a commitment fee in the amount
of
SIXTY TWO THOUSAND, FIVE HUNDRED and 00/100 Dollars ($62,500.00) / one-quarter
of one percent (.25%) of the aggregate Facility A Loan Commitment, Facility
B
Loan Commitment and the Facility C Loan Commitment, payable on or before the
execution of this Agreement by the Bank
3.7. Escrow
Agreement.
The
Borrower, Bank and LaSalle Bank, National Association shall have executed and
delivered an escrow agreement concerning the deposit and transfer of the
Subsidiary stock, membership and partnership certificates listed on Schedule
7.6
after
the Bank has issued and delivered letters of credit to certain beneficiaries
that replace the existing LaSalle Bank, National Association letters of credit
have been issued at the request of the Borrower.
-27-
Section
4. NOTES
EVIDENCING LOANS.
4.1. Facility
A Loan Note and Facility B Loan Note.
The
Facility A Loans and Facility B Loans and the Letter of Credit Obligations
shall
be evidenced by the Facility A Loan Note and the Facility B Loan Note. At the
time of the initial disbursement of a Facility A Loan or Facility B Loan and
at
each time any additional Facility A Loan or Facility B Loan shall be requested
hereunder or a repayment made in whole or in part thereon, a notation thereof
shall be made on the books and records of the Bank. All amounts recorded shall
be, absent manifest error, conclusive and binding evidence of (i) the principal
amount of the Facility A Loans or Facility B Loans advanced hereunder and the
amount of all Letter of Credit Obligations, (ii) any accrued and unpaid interest
owing on the Facility A Loans or Facility B Loans, and (iii) all amounts repaid
on the Facility A Loans or Facility B Loans or the Letter of Credit Obligations.
The failure to record any such amount or any error in recording such amounts
shall not, however, limit or otherwise affect the Obligations of the Borrower
under the Facility A Loan Note and the Facility B Loan Note to repay the
principal amount of the Facility A Loans or Facility B Loans, as applicable,
together with all interest accruing thereon.
4.2. Facility
C Note.
The
Facility C Loan shall be evidenced by the Facility C Loan Note. At the time
of
the initial disbursement of the Facility C Loan or a repayment made in whole
or
in part thereon, a notation thereof shall be made on the books and records
of
the Bank. All amounts recorded shall be, absent demonstrable error, conclusive
and binding evidence of (i) the principal amount of the Facility C Loan advanced
hereunder, (ii) any accrued and unpaid interest owing on the Facility C and
(iii) all amounts repaid on the Facility C Loan. The failure to record any
such
amount or any error in recording such amounts shall not, however, limit or
otherwise affect the obligations of the Borrower under the Facility C Loan
Note
to repay the principal amount of the Facility C Loan, together with all interest
accruing thereon.
Section
5. MANNER
OF BORROWING.
5.1. Borrowing
Procedures.
Each
Facility A Loan, Facility B Loan and Facility C Loan may
be
advanced either as a Prime Loan or a LIBOR Loan, provided, however, that at
any
time, the Borrower may identify no more than five (5) Facility A Loans, Facility
B Loans and Facility C Loans which
may
be LIBOR Loans. Each Loan shall be made available to the Borrower upon any
written, verbal, electronic, telephonic or telecopy loan request which the
Bank
in good faith believes to emanate from a properly authorized representative
of
the Borrower, whether or not that is in fact the case. Each such request shall
be effective upon receipt by the Bank, shall be irrevocable, and shall specify
the date, amount and type of borrowing and, in the case of a LIBOR Loan, the
initial Interest Period therefor. The Borrower shall select Interest Periods
so
as not to require a payment or prepayment of any LIBOR Loan during an Interest
Period for such LIBOR Loan. The final Interest Period for any LIBOR Loan must
be
such that its expiration occurs on or before the Maturity Date
of such
Loan. A request for a Prime Loan must be received by the Bank no later than
2:00
p.m. Chicago, Illinois time,
on
the day it is to be funded. A request for a LIBOR Loan must be (i) received
by
the Bank no later than 2:00 p.m. Chicago, Illinois time, three Business Days
before the day it is to be funded, and (ii) in an amount equal to One Hundred
Thousand and 00/100 Dollars ($100,000.00) or a higher integral multiple of
One
Hundred Thousand and 00/100 Dollars ($100,000.00). The proceeds of each Loan
shall be made available at the office of the Bank by credit to the account
of
the Borrower or by other means requested by the Borrower and acceptable to
the
Bank. The Borrower does hereby irrevocably confirm, ratify and approve all
such
advances by the Bank and does hereby indemnify the Bank against losses and
expenses (including court costs, attorneys’ and paralegals’ fees) and shall hold
the Bank harmless with respect thereto.
-28-
5.2. LIBOR
Conversion and Continuation Procedures.
If
pursuant to the notice received by the Bank pursuant to Section
5.1,
the
initial Interest Period of any LIBOR Loan commences on any day other than the
first Business Day of any month, then the initial Interest Period of such LIBOR
Loan shall end on the first Business Day of the following calendar month,
notwithstanding the Interest Period specified in such notice, and the LIBOR
Rate
for such LIBOR Loan shall be equal to the LIBOR Rate for an Interest Period
equal to the length of such partial month. Thereafter, each LIBOR Loan shall
automatically renew for the Interest Period specified in the initial request
received by the Bank pursuant to Section
5.1,
at the
then current LIBOR Rate unless the Borrower, pursuant to a subsequent written
notice received by the Bank, shall elect a different Interest Period or the
conversion of all or a portion of such LIBOR Loan to a Prime Loan.
Each
Interest Period occurring after the initial Interest Period with respect to
any
LIBOR Loan shall commence on the same day of each applicable month as the first
day of the initial Interest Period. Whenever the last day of any Interest Period
with respect to any LIBOR Loan would otherwise occur on a day other than a
Business Day, the last day of such Interest Period shall be extended to occur
on
the next succeeding Business Day. Whenever an Interest Period with respect
to
any LIBOR Loan would otherwise end on a day of a month for which there is no
numerically corresponding day in the calendar month, such Interest Period shall
end on the last day of such calendar month, unless such day is not a Business
Day, in which event such Interest Period shall be extended to end on the next
Business Day.
Upon
receipt by the Bank of such subsequent notice, the Borrower may, subject to
the
terms and conditions of this Agreement, elect, as of the last day of the
applicable Interest Period, to continue any LIBOR Loan having an Interest Period
expiring on such day for a different Interest Period, or to convert any such
LIBOR Loan to a Prime Loan. Such notice shall, in the case of a conversion
to a
Prime Loan, be given before 11:00 a.m., Chicago, Illinois time, on the proposed
date of such conversion, and in the case of conversion to a LIBOR Loan having
a
different Interest Period, be given before 11:00 a.m., Chicago, Illinois time,
at least three Business Days prior to the proposed date of such conversion,
specifying: (i) the proposed date of conversion; (ii) the aggregate
amount of Loans to be converted; (iii) the type of Loans resulting from the
proposed conversion; and (iv) the duration of the requested Interest
Period. If the Facility C Loan is subject to a Facility C Loan Mandatory
Prepayment, the last day of the then current Interest Period for any portion
of
the Facility C Loan which is a LIBOR Loan must coincide with the date of the
Facility C Loan Mandatory Prepayment.
The
Borrower may not elect a LIBOR Rate, and an Interest Period for a LIBOR Loan
shall not automatically renew, with respect to any principal amount which is
scheduled to be repaid before the last day of the applicable Interest Period,
and any such amounts shall bear interest at the Prime Rate, until
repaid.
5.3. Letters
of Credit.
All
Letters of Credit shall bear such application, issuance, renewal, negotiation
and other fees and charges, and bear such interest as charged by the Bank or
otherwise payable pursuant to the Master Letter of Credit Agreement. In addition
to the foregoing, each standby Letter of Credit issued under and pursuant to
this Agreement shall bear an annual issuance fee equal to the Facility A Loan
and Facility B Loan LIBOR Applicable Margin then
in
effect multiplied by the undrawn face amount of such standby Letter of Credit,
payable by the Borrower quarterly in arrears beginning September 30, 2008 and
the last Business Day of each December, March, June and September thereafter,
until (i) such Letter of Credit has expired or has been returned to the Bank,
or
(ii) the Bank has paid the beneficiary thereunder the full face amount of such
Letter of Credit.
-29-
5.4. Automatic
Debit.
The
Borrower hereby authorizes and directs the Bank, at the Bank’s option, to (a)
debit the amount of the Obligations to any deposit account of the Borrower,
or
(b) debit any deposit account of the Borrower to pay an Obligation arising
under
the Loans. The Bank shall give the Borrower two (2) days prior notice of each
automatic debit of a deposit account under this Section
5.4.
5.5. Discretionary
Disbursements.
The
Bank, in its reasonable discretion, may immediately upon notice to the Borrower,
disburse any or all proceeds of the Loans made or available to the Borrower
pursuant to this Agreement to pay any fees, costs, expenses or other amounts
required to be paid by the Borrower hereunder and not so paid. All monies so
disbursed shall be a part of the Obligations, payable by the Borrower on demand
from the Bank.
Section
6. SECURITY
FOR THE OBLIGATIONS.
6.1. Security
for Obligations.
As
security for the payment and performance of the Obligations, the Borrower does
hereby pledge, assign, transfer, deliver and grant to the Bank, for its own
benefit and as agent for its Affiliates, a continuing and unconditional first
priority security interest in and to any and all property of the Borrower,
of
any kind or description, tangible or intangible, wheresoever located and whether
now existing or hereafter arising or acquired, including the following (all
of
which property, along with the products and proceeds therefrom, are individually
and collectively referred to as the “Collateral”):
(a) all
property of, or for the account of, the Borrower now or hereafter coming into
the possession, control or custody of, or in transit to, the Bank or any agent
or bailee for the Bank or any parent, Affiliate or Subsidiary of the Bank or
any
participant with the Bank in the Loans (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise), including all earnings,
dividends, interest, or other rights in connection therewith and the products
and proceeds therefrom, including the proceeds of insurance thereon;
and
(b) the
additional property of the Borrower, whether now existing or hereafter arising
or acquired, and wherever now or hereafter located, together with all additions
and accessions thereto, substitutions, betterments and replacements therefor,
products and Proceeds therefrom, and all of the Borrower’s books and records and
recorded data relating thereto (regardless of the medium of recording or
storage), together with all of the Borrower’s right, title and interest in and
to all computer software required to utilize, create, maintain and process
any
such records or data on electronic media, identified and set forth as
follows:
-30-
(i) All
Accounts and all Goods whose sale, lease or other disposition by the Borrower
has given rise to Accounts and have been returned to, or repossessed or stopped
in transit by, the Borrower, or rejected or refused by an Account
Debtor;
(ii) All
Inventory, including raw materials, work-in-process and finished
goods;
(iii) All
Goods (other than Inventory), including embedded software, Equipment, vehicles,
furniture and Fixtures;
(iv) All
Software and computer programs;
(v) All
Securities, Investment Property, Financial Assets and Deposit
Accounts;
(vi) All
Chattel Paper, Electronic Chattel Paper, Instruments, Documents, Letter of
Credit Rights, all proceeds of Letters of Credit, Health-Care-Insurance
Receivables, Supporting Obligations, notes secured by real estate, Commercial
Tort Claims and General Intangibles, including Payment Intangibles;
and
(vii) All
Proceeds (whether Cash Proceeds or Noncash Proceeds) of the foregoing property,
including all insurance policies and proceeds of insurance payable by reason
of
loss or damage to the foregoing property, including unearned premiums, and
of
eminent domain or condemnation awards.
6.2. Other
Collateral.
In
addition, the Obligations are also secured by (a) that certain Pledge Agreement,
of even date herewith, executed by Borrower and Guarantors to and for the
benefit of the Bank; and (b) that certain Security Agreement, of even date
herewith, executed by the Guarantors to and for the benefit of the
Bank.
6.3. Possession
and Transfer of Collateral.
Unless
an Event of Default exists hereunder, the Borrower shall be entitled to
possession or use of the Collateral (other than Instruments or Documents with
an
individual value in excess of $10,000.00, Tangible Chattel Paper, Investment
Property consisting of certificated securities and other Collateral required
to
be delivered to the Bank pursuant to this Section 6). The cancellation or
surrender of any Note, upon payment or otherwise, shall not affect the right
of
the Bank to retain the Collateral for any other of the Obligations. The Borrower
shall not sell, assign (by operation of law or otherwise), license, lease or
otherwise dispose of, or grant any option with respect to any of the Collateral,
except that the Borrower may sell Inventory in the ordinary course of
business.
6.4. Financing
Statements.
The
Borrower shall, at the Bank’s request, at any time and from time to time,
execute and deliver to the Bank such UCC financing statements, amendments and
other documents and do such acts as the Bank deems reasonably necessary in
order
to establish and maintain valid, attached and perfected first priority security
interests in the Collateral in favor of the Bank, free and clear of all Liens
and claims and rights of third parties whatsoever, except Permitted Liens.
The
Borrower hereby irrevocably authorizes the Bank at any time, and from time
to
time, to file in any jurisdiction any initial UCC financing statements and
amendments thereto without the signature of the Borrower that (a) indicate
the
Collateral (i) is comprised of all assets of the Borrower or words of similar
effect, regardless of whether any particular asset comprising a part of the
Collateral falls within the scope of Article 9 of the Uniform Commercial Code
of
the jurisdiction wherein such financing statement or amendment is filed, or
(ii)
as being of an equal or lesser scope or within greater detail as the grant
of
the security interest set forth herein, and (b) contain any other information
required by Section 5 of Article 9 of the Uniform Commercial Code of the
jurisdiction wherein such financing statement or amendment is filed regarding
the sufficiency or filing office acceptance of any financing statement or
amendment, including (i) whether the Borrower is an organization, the type
of
organization and any Organizational Identification Number issued to the
Borrower, and (ii) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be
cut,
a sufficient description of the real property to which the Collateral relates.
The Borrower hereby agrees that a photocopy or other reproduction of this
Agreement is sufficient for filing as a financing statement and the Borrower
authorizes the Bank to file this Agreement as a financing statement in any
jurisdiction. The Borrower agrees to furnish any such information to the Bank
promptly upon request. The Borrower further ratifies and affirms its
authorization for any financing statements and/or amendments thereto, executed
and filed by the Bank in any jurisdiction prior to the date of this Agreement.
In addition, the Borrower shall make appropriate entries on its books and
records disclosing the Bank’s security interests in the
Collateral.
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6.5. Additional
Collateral.
The
Borrower shall deliver to the Bank immediately upon its demand, such other
collateral as the Bank may from time to time request, should the value of the
Collateral, in the Bank’s reasonable discretion, decline, deteriorate,
depreciate or become impaired, and does hereby grant to the Bank a continuing
security interest in such other collateral, which, when pledged, assigned and
transferred to the Bank shall be and become part of the Collateral. The Bank’s
security interests in all of the foregoing Collateral shall be valid, complete
and perfected whether or not covered by a specific assignment.
6.6. Preservation
of the Collateral.
The
Bank may, but is not required, to take such actions from time to time as the
Bank deems appropriate to maintain or protect the Collateral. The Bank shall
have exercised reasonable care in the custody and preservation of the Collateral
if the Bank takes such action as the Borrower shall reasonably request in
writing which is not inconsistent with the Bank’s status as a secured party, but
the failure of the Bank to comply with any such request shall not be deemed
a
failure to exercise reasonable care; provided, however, the Bank’s
responsibility for the safekeeping of the Collateral shall (i) be deemed
reasonable if such Collateral is accorded treatment substantially equal to
that
which the Bank accords its own property, and (ii) not extend to matters beyond
the control of the Bank, including acts of God, war, insurrection, riot or
governmental actions. In addition, any failure of the Bank to preserve or
protect any rights with respect to the Collateral against prior or third
parties, or to do any act with respect to preservation of the Collateral, not
so
requested by the Borrower, shall not be deemed a failure to exercise reasonable
care in the custody or preservation of the Collateral. The Borrower shall have
the sole responsibility for taking such action as may be necessary, from time
to
time, to preserve all rights of the Borrower and the Bank in the Collateral
against prior or third parties. Without limiting the generality of the
foregoing, where Collateral consists in whole or in part of securities, the
Borrower represents to, and covenants with, the Bank that the Borrower has
made
arrangements for keeping informed of changes or potential changes affecting
the
securities (including rights to convert or subscribe, payment of dividends,
reorganization or other exchanges, tender offers and voting rights), and the
Borrower agrees that the Bank shall have no responsibility or liability for
informing the Borrower of any such or other changes or potential changes or
for
taking any action or omitting to take any action with respect
thereto.
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6.7. Other
Actions as to any and all Collateral. The
Borrower further agrees to take any other action reasonably requested by the
Bank to ensure the attachment, perfection and first priority (subject to
Permitted Liens) of, and the ability of the Bank to enforce, the Bank’s security
interest in any and all of the Collateral, including (a) causing the Bank’s name
to be noted as secured party on any certificate of title for a titled good
if
such notation is a condition to attachment, perfection or priority of, or
ability of the bank to enforce, the Bank’s security interest in such Collateral,
(b) complying with any provision of any statute, regulation or treaty of the
United States as to any Collateral if compliance with such provision is a
condition to attachment, perfection or priority of, or ability of the Bank
to
enforce, the Bank’s security interest in such Collateral, (c) obtaining
governmental and other third party consents and approvals, including any consent
of any licensor, lessor or other Person obligated on Collateral, (d) obtaining
waivers from mortgagees and landlords in form and substance satisfactory to
the
Bank, and (e) taking all actions required by the UCC in effect from time to
time
or by other law, as applicable in any relevant UCC jurisdiction, or by other
law
as applicable in any foreign jurisdiction. The Borrower further agrees to
indemnify and hold the Bank harmless against claims of any Persons not a party
to this Agreement concerning disputes arising over the Collateral.
6.8. Collateral
in the Possession of a Warehouseman or Bailee.
If any
of the Collateral with an aggregate value in excess of $25,000.00 at any time
is
in the possession of a warehouseman or bailee, the Borrower shall promptly
notify the Bank thereof, and shall promptly obtain a Collateral Access
Agreement. The Bank agrees with the Borrower that the Bank shall not give any
instructions to such warehouseman or bailee pursuant to such Collateral Access
Agreement unless an Event of Default has occurred and is continuing, or would
occur after taking into account any action by the Borrower with respect to
the
warehouseman or bailee.
6.9. Letter-of-Credit
Rights.
If the
Borrower at any time is a beneficiary under a letter of credit now or hereafter
issued in favor of the Borrower, the Borrower shall promptly notify the Bank
thereof and, at the request and option of the Bank, the Borrower shall, pursuant
to an agreement in form and substance satisfactory to the Bank, either (i)
arrange for the issuer and any confirmer of such letter of credit to consent
to
an assignment to the Bank of the proceeds of any drawing under the letter of
credit, or (ii) arrange for the Bank to become the transferee beneficiary of
the
letter of credit, with the Bank agreeing, in each case, that the proceeds of
any
drawing under the letter to credit are to be applied as provided in this
Agreement.
6.10. Commercial
Tort Claims.
If the
Borrower shall at any time hold or acquire a Commercial Tort Claim, the Borrower
shall immediately notify the Bank in writing signed by the Borrower of the
details thereof and grant to the Bank in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement,
in
each case in form and substance satisfactory to the Bank, and shall execute
any
amendments hereto deemed reasonably necessary by the Bank to perfect its
security interest in such Commercial Tort Claim.
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6.11. Electronic
Chattel Paper and Transferable Records.
If the
Borrower at any time holds or acquires an interest in any electronic chattel
paper or any “transferable record”, as that term is defined in Section 201 of
the federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any
relevant jurisdiction, the Borrower shall promptly notify the Bank thereof
and,
at the request of the Bank, shall take such action as the Bank may reasonably
request to vest in the Bank control under Section 9-105 of the UCC of such
electronic chattel paper or control under Section 201 of the federal Electronic
Signatures in Global and National Commerce Act or, as the case may be, Section
16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction, of such transferable record. The Bank agrees with the Borrower
that the Bank will arrange, pursuant to procedures satisfactory to the Bank
and
so long as such procedures will not result in the Bank’s loss of control, for
the Borrower to make alterations to the electronic chattel paper or transferable
record permitted under Section 9-105 of the UCC or, as the case may be, Section
201 of the federal Electronic Signatures in Global and National Commerce Act
or
Section 16 of the Uniform Electronic Transactions Act for a party in control
to
make without loss of control.
Section
7. REPRESENTATIONS
AND WARRANTIES.
To
induce
the Bank to make the Loans, the Borrower makes the following representations
and
warranties to the Bank, each of which shall survive the execution and delivery
of this Agreement:
7.1. Borrower
Organization and Name.
The
Borrower is a corporation duly
organized, existing and in good standing under the laws of the State of
Delaware, with full and adequate power to carry on and conduct its business
as
presently conducted. Each Subsidiary is validly existing and in good standing
under the laws of the jurisdiction of its organization. The Borrower and each
Subsidiary is duly licensed or qualified in all foreign jurisdictions wherein
the nature of its activities require such qualification or licensing, except
for
such jurisdictions where the failure to so qualify would not have a Material
Adverse Effect. Except as shown on Schedule
7. 1,
the
exact legal name of the Borrower is as set forth in the first paragraph of
this
Agreement, and the Borrower currently does not conduct, nor has it during the
last five (5) years conducted, business under any other name or trade name.
7.2. Authorization.
The
Borrower has full right, power and authority to enter into this Agreement,
to
make the borrowings and execute and deliver the Loan Documents as provided
herein and to perform all of its duties and obligations under this Agreement
and
the other Loan Documents. The execution and delivery of this Agreement and
the
other Loan Documents will not, nor will the observance or performance of any
of
the matters and things herein or therein set forth, violate or contravene any
provision of law or of the articles/certificate of incorporation or
bylaws
of the
Borrower. All necessary and appropriate action has been taken on the part of
the
Borrower to authorize the execution and delivery of this Agreement and the
Loan
Documents.
7.3. Validity
and Binding Nature.
This
Agreement and the other Loan Documents are the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance
with
their terms, subject to bankruptcy, insolvency and similar laws affecting the
enforceability of creditors’ rights generally and to general principles of
equity.
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7.4. Consent;
Absence of Breach.
The
execution, delivery and performance of this Agreement, the other Loan Documents
and any other documents or instruments to be executed and delivered by the
Borrower in connection with the Loans, and the borrowings by the Borrower
hereunder, do not and will not (a) require any consent, approval, authorization
of, or filings with, notice to or other act by or in respect of, any
governmental authority or any other Person (other than any consent or approval
which has been obtained and is in full force and effect); (b) conflict with
(i)
any provision of law or any applicable regulation, order, writ, injunction
or
decree of any court or governmental authority, (ii) the articles of
incorporation or bylaws
of the
Borrower or any of its Subsidiaries, or (iii) any material agreement, indenture,
instrument or other document, or any judgment, order or decree, which is binding
upon the Borrower or any of its Subsidiaries or any of its /their respective
properties or assets; or (c) require, or result in, the creation or imposition
of any Lien on any asset of Borrower
or any
of its Subsidiaries, other than Liens in favor of the Bank created pursuant
to
this Agreement.
7.5. Ownership
of Properties; Liens.
The
Borrower is the sole owner or has other rights in all of its properties and
assets, real and personal, tangible and intangible, of any nature whatsoever
(including patents, trademarks, trade names, service marks and copyrights),
free
and clear of all Liens, charges and claims (including infringement claims with
respect to patents, trademarks, service marks, copyrights and the like), other
than Permitted Liens.
7.6. Equity
Ownership.
All
issued and outstanding Capital Securities of
each
of the Borrower’s Subsidiaries are described in Schedule
7.6
and are
duly authorized and validly issued, fully paid, non-assessable, and free and
clear of all Liens, other than Permitted Liens, and such securities were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. All issued and outstanding Capital Securities of each of the
Borrower’s Subsidiaries are free and clear of all Liens other than those in
favor of the Bank, if any. As of the date hereof, there are no pre-emptive
or
other outstanding rights, options, warrants, conversion rights or other similar
agreements or understandings for the purchase or acquisition of any Capital
Securities
of the
Borrower and each of its Subsidiaries.
7.7. Intellectual
Property.
The
Borrower owns and possesses or has a license or other right to use all
Intellectual Property, as are necessary for the conduct of the businesses of
the
Borrower, without any infringement upon rights of others which could reasonably
be expected to have a Material Adverse Effect upon the Borrower, and no material
claim has been asserted and is pending by any Person challenging or questioning
the use of any Intellectual Property or the validity or effectiveness of any
Intellectual Property nor does the Borrower know of any valid basis for any
such
claim.
7.8. Financial
Statements.
All
financial statements submitted to the Bank have been prepared in accordance
with
GAAP on a basis, except as otherwise noted therein, consistent with the previous
fiscal year and present fairly the financial condition of the Borrower and
the
results of the operations for the Borrower as of such date and for the periods
indicated. Since August 31, 2008, there has been no change in the financial
condition or in the assets or liabilities of the Borrower having a Material
Adverse Effect on the Borrower.
7.9. Litigation
and Contingent Liabilities.
There
is no litigation, arbitration proceeding, demand, charge, claim, petition or
governmental investigation or proceeding pending, or to the knowledge of the
Borrower, threatened, against the Borrower, which, if adversely determined,
which might reasonably be expected to have a Material Adverse Effect upon the
Borrower, except as set forth in Schedule
7.9.
Other
than any liability incident to such litigation or proceedings, the Borrower
has
no material guarantee obligations, contingent liabilities, liabilities for
taxes, or any long-term leases or unusual forward or long-term commitments,
including any interest rate or foreign currency swap or exchange transaction
or
other obligation in respect of derivatives, that are not fully-reflected or
fully reserved for in the most recent audited financial statements delivered
pursuant to subsection
8.8(a)
or
fully-reflected or fully reserved for in the most recent quarterly financial
statements delivered pursuant to subsection
8.8(b)
and not
permitted by Section
9.1.
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7.10. Event
of Default.
No
Event of Default or Unmatured Event of Default exists or would result from
the
incurrence by the Borrower of any of the Obligations hereunder or under any
of
the other Loan Document, and the Borrower is not in default (without regard
to
grace or cure periods) under any other contract or agreement to which it is
a
party,
the
effect of which would have a Material Adverse Effect upon the
Borrower.
7.11. Adverse
Circumstances.
No
condition, circumstance, event, agreement, document, instrument, restriction,
litigation or proceeding (or threatened litigation or proceeding or basis
therefor) exists which (a) would have a Material Adverse Effect upon the
Borrower, or (b) would constitute an Event of Default or an Unmatured Event
of
Default.
7.12. Environmental
Laws and Hazardous Substances.
The
Borrower has not generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Substances, on or off any of
the
premises of the Borrower (whether or not owned by it) in any manner which at
any
time violates any Environmental Law or any license, permit, certificate,
approval or similar authorization thereunder. The Borrower will comply in all
material respects with all Environmental Laws and will obtain all licenses,
permits certificates, approvals and similar authorizations thereunder. There
has
been no investigation, proceeding, complaint, order, directive, claim, citation
or notice by any governmental authority or any other Person, nor is any pending
or, to the best of the Borrower’s knowledge, threatened, and the Borrower shall
immediately notify the Bank upon becoming aware of any such investigation,
proceeding, complaint, order, directive, claim, citation or notice, and shall
take prompt and appropriate actions to respond thereto, with respect to any
non-compliance with, or violation of, the requirements of any Environmental
Law
by the Borrower or the release, spill or discharge, threatened or actual, of
any
Hazardous Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Material or
any
other environmental, health or safety matter, which affects the Borrower or
its
business, operations or assets or any properties at which the Borrower has
transported, stored or disposed of any Hazardous Substances. The Borrower has
no
material liability, contingent or otherwise, in connection with a release,
spill
or discharge, threatened or actual, of any Hazardous Substances or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Material. The Borrower further agrees
to
allow the Bank or its agent access to the properties of the Borrower and its
Subsidiaries to confirm compliance with all Environmental Laws, and the Borrower
shall, following determination by the Bank that there is non-compliance, or
any
condition which requires any action by or on behalf of the Borrower in order
to
avoid any non-compliance, with any Environmental Law, at the Borrower’s sole
expense, cause an independent environmental engineer acceptable to the Bank
to
conduct such tests of the relevant site as are appropriate, and prepare and
deliver a report setting forth the result of such tests, a proposed plan for
remediation and an estimate of the costs thereof.
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7.13. Solvency,
etc.
As of
the date hereof, and immediately prior to and after giving effect to the
issuance of each Letter of Credit and each Loan hereunder and the use of the
proceeds thereof, (a) the fair value of the Borrower’s assets is greater than
the amount of its liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated as required
under the Section 548 of the Bankruptcy Code, (b) the present fair saleable
value of the Borrower’s assets is not less than the amount that will be required
to pay the probable liability on its debts as they become absolute and matured,
(c) the Borrower is able to realize upon its assets and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business, (d) the Borrower does not intend
to, and does not believe that it will, incur debts or liabilities beyond its
ability to pay as such debts and liabilities mature, and (e) the Borrower is
not
engaged in business or a transaction, and is not about to engage in business
or
a transaction, for which its property would constitute unreasonably small
capital.
7.14. ERISA
Obligations.
All
Employee Plans of the Borrower meet the minimum funding standards of Section
302
of ERISA and 412 of the Internal Revenue Code where applicable, and each such
Employee Plan that is intended to be qualified within the meaning of Section
401
of the Internal Revenue Code of 1986 is qualified. No withdrawal liability
has
been incurred under any such Employee Plans and no “Reportable Event” or
“Prohibited Transaction” (as such terms are defined in ERISA), has occurred with
respect to any such Employee Plans, unless approved by the appropriate
governmental agencies. The Borrower has promptly paid and discharged all
obligations and liabilities arising under the Employee Retirement Income
Security Act of 1974 (“ERISA”)
of a
character which if unpaid or unperformed might result in the imposition of
a
Lien against any of its properties or assets.
7.15. Labor
Relations.
Except
as could not reasonably be expected to have a Material Adverse Effect, (i)
there
are no strikes, lockouts or other labor disputes against the Borrower
or
,
to the
best knowledge of the Borrower
,
threatened, (ii) hours worked by and payment made to employees of the Borrower
have not been in violation of the Fair Labor Standards Act or any other
applicable law, and (ii) no unfair labor practice complaint is pending against
the Borrower or
,
to the
best knowledge of the Borrower
,
threatened before any governmental authority.
7.16. Security
Interest.
This
Agreement creates a valid security interest in favor of the Bank in the
Collateral and, when properly perfected by filing in the appropriate
jurisdictions, or by possession or Control of such Collateral by the Bank or
delivery of such Collateral to the Bank, shall constitute a valid, perfected,
first-priority security interest in such Collateral.
7.17. Lending
Relationship.
The
relationship hereby created between the Borrower and the Bank is and has been
conducted on an open and arm’s length basis in which no fiduciary relationship
exists, and the Borrower has not relied and is not relying on any such fiduciary
relationship in executing this Agreement and in consummating the Loans. The
Bank
represents that it will receive any Note payable to its order as evidence of
a
bank loan.
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7.18. Business
Loan.
The
Loans, including interest rate, fees and charges as contemplated hereby, (i)
are
business loans within the purview of 815 ILCS 205/4(1)(c), as amended from
time
to time, (ii) are an exempted transaction under the Truth In Lending Act, 12
U.S.C. 1601 et
seq.,
as
amended from time to time, and (iii) do not, and when disbursed shall not,
violate the provisions of the Illinois usury laws, any consumer credit laws
or
the usury laws of any state which may have jurisdiction over this transaction,
the Borrower or any property securing the Loans.
7.19. Taxes.
The
Borrower has timely filed all tax returns and reports required by law to have
been filed by it and has paid all taxes, governmental charges and assessments
due and payable with respect to such returns, except any such taxes or charges
which are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books, are insured against or bonded over to the satisfaction
of
the Bank and the contesting of such payment does not create a Lien on the
Collateral which is not a Permitted Lien. There is no controversy or objection
pending, or to the knowledge of the Borrower, threatened in respect of any
tax
returns of the Borrower. The Borrower has made adequate reserves on its books
and records in accordance with GAAP for all taxes that have accrued but which
are not yet due and payable.
7.20. Compliance
with Regulation U.
No
portion of the proceeds of the Loans shall be used by the Borrower, or any
Affiliate of the Borrower, either directly or indirectly, for the purpose of
purchasing or carrying any margin stock, within the meaning of Regulation U
as
adopted by the Board of Governors of the Federal Reserve System or any successor
thereto.
7.21. Governmental
Regulation.
The
Borrower,
its
Subsidiaries and any of the Guarantors are not, or after giving effect to any
loan, will not be, subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the ICC Termination Act of 1995
or
the Investment Company Act of 1940 or to any federal or state statute or
regulation limiting its ability to incur indebtedness for borrowed
money.
7.22.
Bank
Accounts.
All
Deposit Accounts and operating bank accounts of the Borrower and its
Subsidiaries are listed on Schedule
7.22
attached
hereto and the Borrower has no other Deposit Accounts except those listed on
Schedule
7.22
attached
hereto.
7.23. Place
of Business.
The
principal place of business and books and records of the Borrower is set forth
in the preamble to this Agreement, and the location of all Collateral, if other
than at such principal place of business, is as set forth on Schedule
7.23
attached
hereto and made a part hereof, and the Borrower shall promptly notify the Bank
of any change in such locations. The Borrower will not remove or permit the
Collateral to be removed from such locations without the prior written consent
of the Bank, except for Inventory sold in the usual and ordinary course of
the
Borrower’s business.
7.24. Complete
Information.
This
Agreement and all financial statements, schedules, certificates, confirmations,
agreements, contracts, and other materials and information heretofore or
contemporaneously herewith furnished in writing by the Borrower to the Bank
for
purposes of, or in connection with, this Agreement and the transactions
contemplated hereby is, and all written information hereafter furnished by
or on
behalf of the Borrower to the Bank pursuant hereto or in connection herewith
will be, true and accurate in every material respect on the date as of which
such information is dated or certified, and none of such information is or
will
be incomplete by omitting to state any material fact necessary to make such
information not misleading in light of the circumstances under which made (it
being recognized by the Bank that any projections and forecasts provided by
the
Borrower are based on good faith estimates and assumptions believed by the
Borrower to be reasonable as of the date of the applicable projections or
assumptions and that actual results during the period or periods covered by
any
such projections and forecasts may differ from projected or forecasted
results).
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7.25. Subordinated
Debt.
All
Subordinated Debt, and the amounts owed in connection with each such Debt,
is
described in Schedule
7.25.
The
subordination provisions of the Subordinated Debt are enforceable against the
holders of the Subordinated Debt by the Bank. The Obligations constitute Senior
Debt entitled to the benefits of the subordination provisions contained in
the
Subordinated Debt. The Borrower acknowledges that the Bank is entering into
this
Agreement and is making the Loans in reliance upon the subordination provisions
of the Subordinated Debt and this Section
7.25.
7.26. Indebtedness.
Except
as set forth on
Schedule 7.26,
no
Obligor is obligated for any loans or other Indebtedness for borrowed money,
other than the Loans.
7.27. Affiliate
Transactions.
Except
as set forth in Schedule
7.27,
no
Obligor is conducting, permitting or suffering to be conducted, transactions
with any Affiliates other than for the purchase or sale of Inventory or services
in the ordinary course of business, pursuant to terms that are no less favorable
to the Obligor than the terms upon which such transactions would have been
made
had they been made with a Person who is not an Affiliate.
Section
8. AFFIRMATIVE
COVENANTS.
So
long
as any Obligation shall not have been fully paid or performed by the Borrower,
the Borrower will, unless the Bank shall otherwise consent in writing or by
electronic mail, perform and comply with the following covenants:
8.1. Compliance
with Bank Regulatory Requirements; Increased Costs.
If the
Bank shall reasonably determine that any Regulatory Change, or compliance by
the
Bank or any Person controlling the Bank with any request or directive (whether
or not having the force of law) of any governmental authority, central bank
or
comparable agency has or would have the effect of reducing the rate of return
on
the Bank’s or such controlling Person’s capital as a consequence of the Bank’s
obligations hereunder or under any Letter of Credit to a level below that which
the Bank or such controlling Person could have achieved but for such Regulatory
Change or compliance (taking into consideration the Bank’s or such controlling
Person’s policies with respect to capital adequacy) by an amount deemed by the
Bank or such controlling Person to be material or would otherwise reduce the
amount of any sum received or receivable by the Bank under this Agreement or
under any Note with respect thereto, then from time to time, upon demand by
the
Bank (which demand shall be accompanied by a statement setting forth the basis
for such demand and a calculation of the amount thereof in reasonable detail),
the Borrower shall pay directly to the Bank or such controlling Person such
additional amount as will compensate the Bank for such increased cost or such
reduction, so long as such amounts have accrued on or after the day which is
one
hundred eighty days (180) days prior to the date on which the Bank first made
demand therefor.
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8.2. Borrower
Existence.
The
Borrower shall at all times (a) preserve and maintain its existence and good
standing in the jurisdiction of its organization, (b) preserve and maintain
its
qualification to do business and good standing in each jurisdiction where the
nature of its business makes such qualification necessary (other than such
jurisdictions in which the failure to be qualified or in good standing could
not
reasonably be expected to have a Material Adverse Effect), and (c) continue
as a
going concern in the business which the Borrower is presently conducting. If
the
Borrower does not have an Organizational Identification Number and later obtains
one, the Borrower shall promptly notify the Bank of such Organizational
Identification Number.
8.3. Compliance
With Laws.
The
Borrower shall use the proceeds of the Loans for working capital and other
general corporate or business purposes not in contravention of any requirements
of law and not in violation of this Agreement, and shall comply, and cause
each
Subsidiary to comply, in all respects, including the conduct of its business
and
operations and the use of its properties and assets, with all applicable laws,
rules, regulations, decrees, orders, judgments, licenses and permits, except
where failure to comply could not reasonably be expected to have a Material
Adverse Effect. In addition, and without limiting the foregoing sentence, the
Borrower shall (a) ensure, and cause each Subsidiary to ensure, that no person
who owns a controlling interest in or otherwise controls the Borrower or any
Subsidiary is or shall be listed on the Specially Designated Nationals and
Blocked Person List or other similar lists maintained by the Office of Foreign
Assets Control (“OFAC”),
the
Department of the Treasury or included in any Executive Orders, (b) not use
or
permit the use of the proceeds of the Loans to violate any of the foreign asset
control regulations of OFAC or any enabling statute or Executive Order relating
thereto, and (c) comply, and cause each Subsidiary to comply, with all
applicable Bank Secrecy Act (“BSA”)
laws
and regulations, as amended.
8.4. Payment
of Taxes and Liabilities.
The
Borrower shall pay, and cause each Subsidiary to pay, and discharge, prior
to
delinquency and before penalties accrue thereon, all property and other taxes,
and all governmental charges or levies against it or any of the Collateral,
as
well as claims of any kind which, if unpaid, could become a Lien on any of
its
property; provided that the foregoing shall not require the Borrower or any
Subsidiary to pay any such tax or charge so long as it shall contest the
validity thereof in good faith by appropriate proceedings and shall set aside
on
its books adequate reserves with respect thereto in accordance with GAAP and,
in
the case of a claim which could become a Lien on any of the Collateral, such
contest proceedings stay the foreclosure of such Lien or the sale of any portion
of the Collateral to satisfy such claim. The Borrower shall have thirty (30)
days after it receives notice of delinquency, penalty or levy to cure such
delinquency or penalty or discharge such levy. Notwithstanding the foregoing,
the Borrower and Subsidiaries in the aggregate may have delinquencies, penalties
and levies under this Section of not more than $10,000 for any single
delinquency, penalty or levy and not more than $50,000 in the aggregate for
all
delinquencies, penalties or levies at any time.
8.5. Maintain
Property.
The
Borrower shall at all times maintain, preserve and keep its plant, properties
and material Equipment, including any Collateral, in good repair, working order
and condition, normal wear and tear excepted, and shall from time to time make
all needful and proper repairs, renewals, replacements, and additions thereto
so
that at all times the efficiency thereof shall be preserved and maintained
as is
customary in Borrower’s industry and as deemed appropriate by Borrower in its
reasonable business judgment. The Borrower shall permit the Bank to examine
and
inspect such plant, properties and Equipment, including any Collateral, at
all
reasonable times and upon reasonable prior notice.
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8.6. Maintain
Insurance.
The
Borrower shall at all times maintain, and cause each Subsidiary to maintain,
with Borrower’s current insurers or such other insurance companies reasonably
acceptable to the Bank, such insurance coverage as may be required by any law
or
governmental regulation or court decree or order applicable to it and such
other
insurance, and shall have insured amounts no less than, and deductibles no
higher than, the amounts set forth on Schedule
8.6
attached
hereto. The consent of the Bank to different insured amounts or deductibles
by
email shall be binding on the Bank. The Borrower shall furnish to the Bank
a
certificate setting forth in reasonable detail the nature and extent of all
insurance maintained by the Borrower, which shall be reasonably acceptable
in
all respects to the Bank. The consent of the Bank by email shall be valid.
The
Borrower shall cause each issuer of an insurance policy to provide the Bank
with
an endorsement (i) showing the Bank as lender’s loss payee with respect to each
policy of property or casualty insurance; and (ii) providing that thirty (30)
days notice will be given to the Bank prior to any cancellation of, material
reduction or change in coverage provided by or other material modification
to
such policy. The Borrower shall execute and deliver to the Bank a collateral
assignment, in form and substance satisfactory to the Bank, of each business
interruption insurance policy maintained by the Borrower.
In
the
event the Borrower either fails to provide the Bank with evidence of the
insurance coverage required by this Section or at any time hereafter shall
fail
to obtain or maintain any of the policies of insurance required above, or to
pay
any premium in whole or in part relating thereto, then the Bank, without waiving
or releasing any obligation or default by the Borrower hereunder, may at any
time (but shall be under no obligation to so act), obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto, which the Bank deems advisable. This insurance coverage (a)
may, but need not, protect the Borrower’s interests in such property, including
the Collateral, and (b) may not pay any claim made by, or against, the Borrower
in connection with such property, including the Collateral. The Borrower may
later cancel any such insurance purchased by the Bank, but only after providing
the Bank with evidence that the Borrower has obtained the insurance coverage
required by this Section. If the Bank purchases insurance for the Collateral,
the Borrower will be responsible for the costs of that insurance, including
interest and any other charges that may be imposed with the placement of the
insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the principal amount
of
the Loans owing hereunder. The costs of the insurance may be more than the
cost
of the insurance the Borrower may be able to obtain on its own.
8.7. ERISA
Liabilities; Employee Plans.
The
Borrower shall (i) keep in full force and effect any and all Employee Plans
which are presently in existence or may, from time to time, come into existence
under ERISA, and not withdraw from any such Employee Plans, unless such
withdrawal can be effected or such Employee Plans can be terminated without
liability to the Borrower; (ii) make contributions to all of such Employee
Plans
in a timely manner and in a sufficient amount to comply with the standards
of
ERISA; including the minimum funding standards of ERISA; (iii) comply with
all
material requirements of ERISA which relate to such Employee Plans; (iv) notify
the Bank immediately upon receipt by the Borrower of any notice concerning
the
imposition of any withdrawal liability or of the institution of any proceeding
or other action which may result in the termination of any such Employee Plans
or the appointment of a trustee to administer such Employee Plans; (v) promptly
advise the Bank of the occurrence of any “Reportable Event” or “Prohibited
Transaction” (as such terms are defined in ERISA), with respect to any such
Employee Plans; and (vi) amend any Employee Plan that is intended to be
qualified within the meaning of Section 401 of the Internal Revenue Code of
1986
to the extent necessary to keep the Employee Plan qualified, and to cause the
Employee Plan to be administered and operated in a manner that does not cause
the Employee Plan to lose its qualified status.
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8.8. Financial
Statements.
The
Borrower shall at all times maintain a standard and modern system of accounting,
on the accrual basis of accounting and in all respects in accordance with GAAP,
and shall furnish to the Bank or its authorized representatives such information
regarding the business affairs, operations and financial condition of the
Borrower, including:
(a) promptly
when available, and in any event, within one hundred twenty (120) days after the
close of each of its fiscal years, a copy of (i) the annual audited financial
statements of the Borrower and its Subsidiaries, including consolidated balance
sheet, statement of income and retained earnings, statement of cash flows for
the fiscal year then ended, in reasonable detail, prepared and certified without
adverse reference to going concern value and without qualification by an
independent auditor of recognized standing, selected by the Borrower and
reasonably acceptable to the Bank (it is understood that the annual audited
consolidating financial statements of Argyle will satisfy the reporting
requirements of Section
8.8(a)
as long
as the Borrower's financials are clearly shown as separate from the remainder
of
the Argyle entities and that the Borrower's financials are deemed to be audited
as part of the Argyle audit by the auditors), and (ii) and such other
information (including non-financial information) as the Bank may reasonably
request; "
(b) promptly
when available, and in any event, within forty five (45) days following the
end
of each fiscal month, a copy of the consolidated financial statements of the
Borrower and its Subsidiaries regarding such fiscal month, including balance
sheet, statement of income and retained earnings, statement of cash flows for
the fiscal month then ended and such other information (including nonfinancial
information) as the Bank may request, in reasonable detail, prepared and
certified as true and correct by the Borrower’s treasurer or chief financial
officer;
and
(c) promptly,
when available, and in any event within thirty (30) days following each fiscal
year, annual budgets and projections/business for the upcoming year in form,
substance and detail acceptable to the Bank.
No
change
with respect to such accounting principles shall be made by the Borrower without
giving prior notification to the Bank. The Borrower represents and warrants
to
the Bank that the financial statements delivered to the Bank at or prior to
the
execution and delivery of this Agreement and to be delivered at all times
thereafter accurately reflect and will accurately reflect the financial
condition of the Borrower. The Bank shall have the right at all times during
business hours to inspect the books and records of the Borrower and make
extracts therefrom.
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8.9. Supplemental
Financial Statements.
The
Borrower shall immediately upon receipt thereof, provide to the Bank copies
of
interim and supplemental reports if any, submitted to the Borrower by
independent accountants in connection with any interim audit or review of the
books of the Borrower.
8.10. Aged
Accounts, Backlog Report and WIP Schedule.
The
Borrower shall, within forty five (45)
days
after the end of each month, deliver to the Bank an aged schedule of the
Accounts of the Borrower, listing the name and amount due from each Account
Debtor and showing the aggregate amounts due from (a) 0-30 days, (b) 31-60
days,
(c) 61-90 days and (d) more than 90 days, backlog report and a work-in-progress
report, all in form, substance and detail acceptable to the Bank. The aged
accounts schedule and work-in-progress report will be accompanied by the
certificate of the Borrower’s treasurer or chief financial officer certifying
the accuracy of the aged accounts schedule and work-in-progress
report.
8.11. Covenant
Compliance Certificate.
The
Borrower shall, contemporaneously with the furnishing of the financial
statements pursuant to Section
8.8
that are
due at the end of each fiscal quarter, deliver to the Bank a duly completed
compliance certificate in a form acceptable to Bank (a “Compliance
Certificate”),
dated
the date of such financial statements and certified as true and correct by
an
appropriate officer of the Borrower, containing a computation of each of the
financial covenants set forth in Section
10,
stating
the percentage of the total accounts receivable that are related to bonded
projects, and stating that the Borrower has not become aware of any Event of
Default or Unmatured Event of Default that has occurred and is continuing or,
if
there is any such Event of Default or Unmatured Event of Default describing
it
and the steps, if any, being taken to cure it.
8.12. Field
Audits.
The
Borrower shall permit the Bank to inspect the Inventory, other tangible assets
and/or other business operations of the Borrower and each Subsidiary, to perform
appraisals of the Equipment of the Borrower and each Subsidiary, and to inspect,
audit, check and make copies of, and extracts from, the books, records, computer
data, computer programs, journals, orders, receipts, correspondence and other
data relating to Inventory, Accounts and any other Collateral, the results
of
which must be satisfactory to the Bank in the Bank’s sole and absolute
discretion. In addition, the Borrower shall permit the Bank to perform process
audits on the Borrower’s and each Subsidiary’s internal controls and billing
procedures, history and results. All such inspections or audits by the Bank
shall be at reasonable times, upon reasonable prior notice, and at the
Borrower’s sole expense, provided,
however,
that so
long as no Event of Default or Unmatured Event of Default exists, the Borrower
shall not be required to reimburse the Bank for inspections or audits more
frequently than once each fiscal year.
8.13. Other
Reports.
The
Borrower shall, within such period of time as the Bank may reasonably require,
deliver to the Bank such other schedules and reports as the Bank may
require.
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8.14. Collateral
Records.
The
Borrower shall keep full and accurate books and records relating to the
Collateral and shall xxxx such books and records to indicate the Bank’s Lien in
the Collateral,
including placing a legend, in form and content acceptable to the Bank, on
all
Chattel Paper created by the Borrower indicating that the Bank has a Lien in
such Chattel Paper.
8.15. Intellectual
Property.
The
Borrower shall maintain, preserve and renew all Intellectual Property necessary
for the conduct of its business as and where the same is currently located
as
heretofore or as hereafter conducted by it.
8.16. Notice
of Proceedings.
The
Borrower, promptly upon becoming aware, shall give written notice to the Bank
of
any litigation, arbitration or governmental investigation or proceeding not
previously disclosed by the Borrower to the Bank which has been instituted
or,
to the knowledge of the Borrower, is threatened against the Borrower or any
of
its Subsidiaries or to which any of
their
respective properties is subject which might reasonably be expected to have
a
Material Adverse Effect.
8.17. Notice
of Event of Default or Material Adverse Effect.
The
Borrower shall, immediately after the commencement thereof, give notice to
the
Bank in writing of the occurrence of any Event of Default or any Unmatured
Event
of Default, or the occurrence of any condition or event having a Material
Adverse Effect.
8.18. Environmental
Matters.
If any
release or threatened release or other disposal of Hazardous Substances shall
occur or shall have occurred on any real property or any other assets of the
Borrower or any of its Subsidiaries, the Borrower shall, or
shall
cause the applicable Subsidiary to, cause the prompt containment and removal
of
such Hazardous Substances and the remediation of such real property or other
assets as necessary to comply with all Environmental Laws and to preserve the
value of such real property or other assets. Without limiting the generality
of
the foregoing, the Borrower shall,
and
shall cause each Subsidiary to, comply with any Federal or state judicial or
administrative order requiring the performance at any real property of the
Borrower or any Subsidiary
of
activities in response to the release or threatened release of a Hazardous
Substance. To the extent that the transportation of Hazardous Substances is
permitted by this Agreement, the Borrower shall, and shall cause its
Subsidiaries to, dispose of such Hazardous Substances, or of any other wastes,
only at licensed disposal facilities operating in compliance with Environmental
Laws.
8.19. Further
Assurances.
The
Borrower shall take, and cause each Subsidiary to take, such actions as are
necessary or as the Bank may reasonably request from time to time to ensure
that
the Obligations under the Loan Documents are secured by substantially all of
the
assets of the Borrower
and its
Subsidiaries, in each case as the Bank may determine, including (a) the
execution and delivery of security agreements, pledge agreements, mortgages,
deeds of trust, financing statements and other documents, and the filing or
recording of any of the foregoing, and (b) the delivery of certificated
securities and other collateral with respect to which perfection is obtained
by
possession.
8.20. Banking
Relationship.
The
Borrower covenants and agrees, that at all times after the date that is sixty
(60) days of the date of this Agreement and during the remaining term of this
Agreement, to utilize the Bank as its primary bank of account and depository
for
all financial services, including all receipts, disbursements, cash management
and related services other than Deposit Accounts listed on Schedule
7.22
hereto.
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8.21. Non-Utilization
Fee.
The
Borrower agrees to pay to the Bank a non-utilization fee equal to one-half
of
one percent (0.50%) of the total of (a) the Facility A Loan and Facility B
Loan
Commitment, minus
(b) the
sum of (i) the daily average of the aggregate principal amount of all Facility
A
Loan and Facility B Loans outstanding, plus
(ii) the
daily average of the aggregate amount of the Letter of Credit Obligations,
which
non-utilization fee shall be (A) calculated on the basis of a year consisting
of
360 days, (B) paid for the actual number of days elapsed, and (C) payable
quarterly in arrears on the last day of each March, June, September and
December, commencing on September 30, 2008, and on the Facility A Loan and
Facility B Loan Maturity Date.
8.22. Interest
Rate Protection.
Within
sixty (60) days of the date of this Agreement, the Borrower agrees to enter
into
a Hedging Agreement with a term of at least two (2) years on an ISDA standard
form to hedge the interest rate with respect to not less than fifty percent
(50%) of the principal amount of the Facility C Loan, in form and substance
reasonably satisfactory to the Bank.
8.23.
Collateral
Access Agreements.
Within
thirty (30) days of the date of this Agreement, signed Collateral Access
Agreements, in a form prepared by and acceptable to the Bank from the owner,
lessor or mortgagee, as the case may be, of each of the following
locations:
(a) 0000
Xxxxxxxxx Xxxx, Xxxxxx, Xxxxx 00000,
(b) 000
X.
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000
(c) 000
X.
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000
(d) 0000
X.
Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx 00000; and
(e) such
other locations where inventory and equipment of the Borrower is stored or
otherwise located as the Bank may reasonably request from time to
time.
Section
9. NEGATIVE
COVENANTS.
So
long
as any Obligation shall not have been fully paid or performed by the Borrower,
the Borrower will, unless the Bank shall otherwise consent in writing or by
electronic mail, perform and comply with the following covenants:
9.1. Debt.
The
Borrower shall not, either directly or indirectly, create, assume, incur or
have
outstanding any Debt (including purchase money indebtedness), or become liable,
whether as endorser, guarantor, surety or otherwise, for any debt or obligation
of any other Person, except:
(a) the
Obligations under this Agreement and the other Loan Documents;
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(b) obligations
of the Borrower for Taxes, assessments, municipal or other governmental
charges;
(c) obligations
of the Borrower for accounts payable, other than for money borrowed, incurred
in
the ordinary course of business;
(d) Subordinated
Debt;
(e) Hedging
Obligations incurred in favor of the Bank or an Affiliate thereof for bona
fide
hedging purposes and not for speculation;
(f) Capitalized
Lease Obligations, provided that the aggregate amount of all such Debt
outstanding at any time shall not exceed, in the aggregate, Five Hundred
Thousand and 00/100 Dollars ($500,000.00) plus the amount of any Capitalized
Lease Obligations owing by the Borrower to Green Wing for so long as the Green
Wing lease remains subject to an enforceable Subordination
Agreement;
(g) Debt
for Capital Expenditures (other than Capitalized Lease Obligations permitted
by
Section
9.1(f)
and
purchase money indebtedness secured by vehicles permitted by Section
9.1(h))
not to
exceed Five
Hundred Thousand and 00/100 Dollars ($500,000.00) in the aggregate at any
time;
(h) Debt
for purchase money indebtedness secured by vehicles in an amount not to exceed
Five Hundred Thousand and 00/100 Dollars ($500,000.00) in the aggregate at
any
time.
(i) Debt
described on Schedule
7.25
and any
extension, renewal or refinancing thereof so long as the principal amount
thereof is not increased;
(j) other
unsecured Debt, in addition to the Debt listed above, in an aggregate amount
outstanding at any time not to exceed Two Hundred Fifty Thousand
and
00/100 Dollars ($250,000.00); and
(k) Debt
secured only by Liens on amounts deposited by or paid on behalf of the Borrower
arising out of the financing of insurance premiums.
9.2. Encumbrances.
The
Borrower shall not, either directly or indirectly, create, assume, incur or
suffer or permit to exist any Lien or charge of any kind or character upon
any
asset of the Borrower, whether owned at the date hereof or hereafter acquired,
except for Permitted Liens.
9.3. Investments.
The
Borrower shall not, either directly or indirectly, make or have outstanding
any
Investment, except:
(a) contributions
by the Borrower to the capital of any Wholly-Owned Subsidiary / Subsidiary
/
Guarantor[s] which have granted a first perfected security interest in all
of
its/their assets in favor of the Bank, or by any Subsidiary to the capital
of
any other domestic Wholly-Owned Subsidiary;
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(b) Investments
constituting Debt permitted by Schedule
7.25;
(c) Contingent
Liabilities constituting Debt permitted by Schedule
7.25
or Liens
permitted by Section
9.2;
(d) Cash
Equivalent Investments;
(e) bank
deposits in the ordinary course of business;
(f) Investments
in securities of Account Debtors received pursuant to any plan of reorganization
or similar arrangement upon the bankruptcy or insolvency of such account
debtors;
(g) Investments
listed on Schedule
7.21
as of
the Closing Date; and
(h)
Loans
to employees that shall not exceed $25,000.00 in the aggregate plus the loan
to
Xxxxx Xxxxxxx with an outstanding balance of $17,730.00 as of July 31,
2008.
provided,
however,
that
(i) any Investment which when made complies with the requirements of the
definition of the term “Cash Equivalent Investment” may continue to be held
notwithstanding that such Investment if made thereafter would not comply with
such requirements; and (ii) no Investment otherwise permitted by subsections
(b)
or (c) shall be permitted to be made if, immediately before or after giving
effect thereto, any Event of Default or Unmatured Event of Default
exists.
9.4. Transfer;
Merger; Sales.
The
Borrower shall not and not permit any Subsidiary to, whether in one transaction
or a series of related transactions, (a) be a party to any merger or
consolidation, or purchase or otherwise acquire all or substantially all of
the
assets or any Capital Securities of any class of, or any partnership or joint
venture interest in, any other Person, except for (i) any such merger,
consolidation, sale, transfer, conveyance, lease or assignment of or by any
Wholly-Owned Subsidiary into the Borrower or into any other domestic
Wholly-Owned Subsidiary; (ii) any such purchase or other acquisition by the
Borrower or any domestic Wholly-Owned Subsidiary of the assets or equity
interests of any Wholly-Owned Subsidiary, (b) sell, transfer, convey or lease
all or any substantial part of its assets or Capital Securities (including
the
sale of Capital Securities of any Subsidiary), except for (i) sales of Inventory
in the ordinary course of business, (ii) sales or leases of assets which are
replaced within sixty (60) days with another asset performing the same or a
similar function, and (iii) dispositions in any fiscal year , the net proceeds
of which do not in the aggregate exceed $100,000.00, or (c) sell or assign,
with
or without recourse, any receivables.
9.5. Issuance
of Capital Securities.
The
Borrower shall not and shall not permit any Subsidiary to issue any Capital
Securities other than (a) any issuance of shares of the Borrower’s common
Capital Securities pursuant to any employee or director option program, benefit
plan or compensation program, or (b) any issuance of Capital Securities by
a
Subsidiary to the Borrower or another Subsidiary in accordance with Section
7.6.
9.6. Distributions.
The
Borrower shall not and shall not permit any Subsidiary to, (a) make any
distribution or dividend (other than stock dividends), whether in cash or
otherwise, to any of its equityholders, (b) purchase or redeem any of its equity
interests or any warrants, options or other rights in respect thereof, (c)
pay
any management fees or similar fees to any of its equityholders or any Affiliate
thereof, (d) pay or prepay interest on, principal of, premium, if any,
redemption, conversion, exchange, purchase, retirement, defeasance, sinking
fund
or any other payment in respect of any Subordinated Debt, or (e) set aside
funds
for any of the foregoing. Notwithstanding the foregoing, (i) any Subsidiary
may
pay dividends or make other distributions to the Borrower or to a domestic
Wholly-Owned Subsidiary; (ii) so long as no Event of Default or Unmatured Event
of Default exists or would result therefrom, the Borrower may make regularly
scheduled payments of interest in respect of Subordinated Debt to the extent
permitted under the subordination provisions thereof, and (iii) the Borrower
may
make payments to the extent permitted under the Subordination
Agreements.
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9.7. Transactions
with Affiliates.
The
Borrower shall not, directly or indirectly, enter into or permit to exist any
transaction with any of its Affiliates or with any director, officer or employee
of the Borrower other than transactions set forth in Schedule
9.7
and
transactions in the ordinary course of, and pursuant to the reasonable
requirements of, the business of the Borrower and upon fair and reasonable
terms
which are fully disclosed to the Bank and are no less favorable to the Borrower
than would be obtained in a comparable arm’s length transaction with a Person
that is not an Affiliate of the Borrower, provided,
however,
that
the Borrower or any Subsidiary may make loans to employees in accordance with
Section
9.3(h)
above.
9.8. Unconditional
Purchase Obligations.
The
Borrower shall not and shall not permit any Subsidiary to enter into or be
a
party to any contract for the purchase of materials, supplies or other property
or services if such contract requires that payment be made by it regardless
of
whether delivery is ever made of such materials, supplies or other property
or
services.
9.9. Cancellation
of Debt.
The
Borrower shall not,
and not
permit any Subsidiary to, cancel any claim or debt owing to it, except (i)
in
exchange for reasonable consideration, in the ordinary course of business,
or
(ii) the cancellation of account receivables for doubtful collections to
non-Affiliates in an aggregate amount not to exceed $100,000.00 per
account.
9.10. Inconsistent
Agreements.
The
Borrower shall not and shall not permit any Subsidiary to enter into any
material agreement (other than the Loan Documents) containing any provision
which would (a) be violated or breached by any borrowing by the Borrower
hereunder or by the performance by the Borrower or any Subsidiary of any of
its
Obligations hereunder or under any other Loan Document, (b) prohibit the
Borrower or any Subsidiary from granting to the Bank a Lien on any of its assets
or (c) create or permit to exist or become effective any encumbrance or
restriction on the ability of any Subsidiary to (i) pay dividends or make other
distributions to the Borrower or any other Subsidiary, or pay any Debt owed
to
the Borrower or any other Subsidiary, (ii) make loans or advances to the
Borrower or any other Subsidiary, or (iii) transfer any of its assets or
properties to the Borrower or any other Subsidiary, other than (A) customary
restrictions and conditions contained in agreements relating to the sale of
all
or a substantial part of the assets of any Subsidiary pending such sale,
provided that such restrictions and conditions apply only to the Subsidiary
to
be sold and such sale is permitted hereunder, (B) restrictions or
conditions imposed by any agreement relating to purchase money Debt, Capital
Leases and other secured Debt permitted by this Agreement if such restrictions
or conditions apply only to the property or assets securing such Debt, and
(C) customary provisions in leases and other contracts restricting the
assignment thereof.
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9.11. Use
of
Proceeds.
Neither
the Borrower nor any of its Subsidiaries or Affiliates shall use any portion
of
the proceeds of the Loans, either directly or indirectly, for the purpose of
purchasing any securities underwritten by the Bank or any other Affiliate of
the
Bank.
9.12. Bank
Accounts.
Within
sixty (60) days of the date of this Agreement, the Borrower shall transfer
all
of its depository, collection, disbursement, cash management and investment
accounts (the “Deposit
Accounts”)
to the
Bank other than Deposit Accounts listed on Schedule
7.22(a) and (b)
attached
hereto. It shall maintain all such accounts with the Bank while any Obligations
are Outstanding. The Borrower shall not establish any new Deposit Accounts
or
other bank accounts, other than Deposit Accounts or other bank accounts
established at or with the Bank without the prior written consent of the
Bank.
9.13. Business
Activities; Change of Legal Status and Organizational Documents.
The
Borrower shall not and shall not permit any Subsidiary to (a) engage in any
line
of business other than the businesses engaged in on the date hereof and
businesses reasonably related thereto, (b) change its name, its Organizational
Identification Number, if it has one, its type of organization, its jurisdiction
of organization or other legal structure, or (c) permit its charter, bylaws
or
other organizational documents to be amended or modified in any way which could
reasonably be expected to materially adversely affect the interests of the
Bank.
Section
10. FINANCIAL
COVENANTS.
10.1. Senior
Debt to EBITDA.
As of
the end of each of its fiscal quarters, the Borrower and its Subsidiaries shall
maintain a ratio of consolidated Senior Debt to consolidated trailing
twelve (12) month EBITDA of not greater than 2.00 to 1.00.
10.2. Total
Debt to
EBITDA.
As of
the end of each of its fiscal quarters, the Borrower and its Subsidiaries shall
maintain a ratio of consolidated Total Debt plus
an
amount equal to undrawn Letters of Credit under the Facility A Loan Commitment
and the Facility B Loan Commitment to
consolidated trailing twelve (12) month EBITDA (a) for the fiscal quarters
ending September 30, 2008 through the fiscal quarter ending September 30, 2009
of not greater than 4.00 to 1.00, and (b) and for fiscal quarters ending
December 31, 2009 and thereafter of not greater than 3.50 to 1.00.
10.3. Fixed
Charge Coverage.
As of
the end of each of its fiscal quarters, the Borrower and its Subsidiaries shall
maintain a ratio of (a) for the applicable reporting period EBITDA
minus
the sum
of all income taxes paid in cash by the Borrower and its Subsidiaries and all
Capital Expenditures which are not financed with Funded Debt, to (b) the sum
for
such reporting period of (i) Interest Charges plus
(ii)
required payments of principal of Total Debt (including the Facility C Loans,
but excluding the Facility A Loans and Facility B Loans), of not less than
1.10
to 1.00. For the calendar year of 2008, the Fixed Charge Coverage Ratio shall
be
based upon cumulative 2008 reporting until December 31, 2008, and thereafter
it
shall be measured on a trailing twelve (12) month basis.
-49-
10.4. Hedging.
At
least fifty percent (50%) of the Facility C must be hedged on or before sixty
(60) days of the date of this Agreement.
Section
11. EVENTS
OF DEFAULT.
The
Borrower, without notice or demand of any kind, shall be in default under this
Agreement upon the occurrence of any of the following events (each an
“Event
of Default”).
11.1. Nonpayment
of Obligations.
Any
amount due and owing on any Note or any of the Obligations, whether by its
terms
or as otherwise provided herein, is not paid within five (5) days after notice
from the Bank that such amount was not paid when due.
11.2. Misrepresentation.
Any
oral or written warranty, representation, certificate or statement of any
Obligor in this Agreement, the other Loan Documents or any other agreement
with
the Bank shall be false in any material respect when made or at any time
thereafter, or if any financial data or any other information now or hereafter
furnished to the Bank by or on behalf of any Obligor shall prove to be false,
inaccurate or misleading in any material respect.
11.3. Nonperformance.
Any
failure to perform or default in the performance of any covenant, condition
or
agreement contained in this Agreement and, if capable of being cured (including
subsequent compliance with financial covenants contained in Section 10), such
failure to perform or default in performance continues for a period of thirty
(30) days after the Borrower receives notice or knowledge from any source of
such failure to perform or default in performance, or in the other Loan
Documents or any other agreement with the Bank and such failure to perform
or
default in performance continues beyond any applicable grace or cure
period.
11.4. Default
under Loan Documents.
A
default (after giving effect to notice and cure provisions contained therein)
under any of the other Loan Documents, all of which covenants, conditions and
agreements contained therein are hereby incorporated in this Agreement by
express reference, shall be and constitute an Event of Default under this
Agreement and any other of the Obligations.
11.5. Default
under Other Debt.
Any
default by any Obligor, at any one time in the payment of any Debt in an
aggregate amount in excess of $50,000.00 beyond any period of grace provided
with respect thereto or in the performance of any other term, condition or
covenant contained in any agreement (including any capital or operating lease
or
any agreement in connection with the deferred purchase price of property) under
which any such obligation is created, the effect of which default is to cause
or
permit the holder of such obligation (or the other party to such other
agreement) to cause such obligation to become due in an aggregate amount of
$50,000.00 prior to its stated maturity or terminate such other
agreement.
11.6. Other
Material Obligations.
Any
default in the payment when due, or in the performance or observance of, any
material obligation of, or condition agreed to by, any Obligor with respect
to
any material purchase or lease of goods or services where such default, singly
or in the aggregate with all other such defaults, might reasonably be expected
to have a Material Adverse Effect.
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11.7. Bankruptcy,
Insolvency, etc. Any
Obligor becomes insolvent or generally fails to pay, or admits in writing its
inability or refusal to pay, debts as they become due; or any Obligor applies
for, consents to, or acquiesces in the appointment of a trustee, receiver or
other custodian for such Obligor or any property thereof, or makes a general
assignment for the benefit of creditors; or, in the absence of such application,
consent or acquiescence, a trustee, receiver or other custodian is appointed
for
any Obligor or for a substantial part of the property of any thereof and is
not
discharged within sixty (60) days; or any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any bankruptcy or insolvency
law,
or any dissolution or liquidation proceeding, is commenced in respect of any
Obligor
,
and if
such case or proceeding is not commenced by such Obligor, it is consented to
or
acquiesced in by such Obligor, or remains undismissed for sixty (60) days;
or
any Obligor takes any action to authorize, or in furtherance of, any of the
foregoing.
11.8. Judgments.
The
entry of any final judgment, decree, levy, attachment, garnishment or other
process, or the filing of any Lien against any Obligor in an amount in excess
of
$50,000.00 which shall not have been, within thirty (30) days from the entry
thereof, (i) bonded over to the satisfaction of the Bank and appealed, (ii)
vacated, or (iii) discharged.
11.9. Change
in Control.
The
occurrence of any Change in Control.
11.10. Collateral
Impairment.
The
entry of any judgment, decree, levy, attachment, garnishment or other process,
or the filing of any Lien against, any of the Collateral or any collateral
under
a separate security agreement securing any of the Obligations and such judgment
or other process in excess of $50,000.00 and shall not have been, within thirty
(30) days from the entry thereof, (i) bonded over to the satisfaction of the
Bank and appealed, (ii) vacated, or (iii) discharged. The loss, theft,
destruction, seizure or forfeiture, of any of the Collateral which is not
covered for the full amount of such loss, theft, destruction, seizure or
forfeiture, or any of the collateral under any security agreement securing
any
of the Obligations which is not covered by insurance.
11.11. Material
Adverse Effect.
The
occurrence of any development, condition or event which has a Material Adverse
Effect on the Borrower.
11.12. Guaranty.
There
is a discontinuance by any of the Guarantors of any of the Guaranties, or any
of
the Guarantors shall contest the validity of such Guaranty.
11.13. Subordinated
Debt.
The
subordination provisions of any Subordinated Debt shall for any reason be
revoked or invalid or otherwise cease to be in full force and effect. The
Borrower shall contest in any manner, or any other holder thereof shall contest
in any judicial proceeding, the validity or enforceability of the Subordinated
Debt or deny that it has any further liability or obligation thereunder, or
the
Obligations shall for any reason not have the priority with respect to the
Subordinated Debt contemplated by the subordination provisions of the
Subordinated Debt.
Section
12. REMEDIES.
Upon
the
occurrence of an Event of Default, the Bank shall have all rights, powers and
remedies set forth in the Loan Documents, in any written agreement or instrument
(other than this Agreement or the Loan Documents) relating to any of the
Obligations or any security therefor, as a secured party under the UCC or as
otherwise provided at law or in equity. Without limiting the generality of
the
foregoing, the Bank may, at its option upon the occurrence of an Event of
Default, declare its commitments to the Borrower to be terminated and all
Obligations to be immediately due and payable, provided, however, that upon
the
occurrence of an Event of Default under Section
11.7,
all
commitments of the Bank to the Borrower shall immediately terminate and all
Obligations shall be automatically due and payable, all without demand, notice
or further action of any kind required on the part of the Bank. The Borrower
hereby waives any and all presentment, demand, notice of dishonor, protest,
and
all other notices and demands in connection with the enforcement of Bank’s
rights under the Loan Documents, and hereby consents to, and waives notice
of
release, with or without consideration, of any of the Borrower any of the
Guarantors or of any Collateral, notwithstanding anything contained herein
or in
the Loan Documents to the contrary. In addition to the
foregoing:
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12.1. Possession
and Assembly of Collateral.
The
Bank may, without notice, demand or legal process of any kind, take possession
of any or all of the Collateral (in addition to Collateral of which the Bank
already has possession), wherever it may be found, and for that purpose may
pursue the same wherever it may be found, and may at any time enter into any
of
the Borrower’s premises where any of the Collateral may be or is supposed to be,
and search for, take possession of, remove, keep and store any of the Collateral
until the same shall be sold or otherwise disposed of and the Bank shall have
the right to store and conduct a sale of the same in any of the Borrower’s
premises without cost to the Bank. At the Bank’s request, the Borrower will, at
the Borrower’s sole expense, assemble the Collateral and make it available to
the Bank at a place or places to be designated by the Bank which is reasonably
convenient to the Bank and the Borrower.
12.2. Sale
of Collateral.
The
Bank may sell any or all of the Collateral at public or private sale, upon
such
terms and conditions as the Bank may deem proper, and the Bank may purchase
any
or all of the Collateral at any such sale. The Borrower acknowledges that the
Bank may be unable to effect a public sale of all or any portion of the
Collateral because of certain legal and/or practical restrictions and provisions
which may be applicable to the Collateral and, therefore, may be compelled
to
resort to one or more private sales to a restricted group of offerees and
purchasers. The Borrower consents to any such private sale so made even though
at places and upon terms less favorable than if the Collateral were sold at
public sale. The Bank shall have no obligation to clean-up or otherwise prepare
the Collateral for sale. The Bank may apply the net proceeds, after deducting
all costs, expenses, attorneys’ and paralegals’ fees incurred or paid at any
time in the collection, protection and sale of the Collateral and the
Obligations, to the payment of any Note and/or any of the other Obligations,
returning the excess proceeds, if any, to the Borrower. The Borrower shall
remain liable for any amount remaining unpaid after such application, with
interest at the Default Rate. Any notification of intended disposition of the
Collateral required by law shall be conclusively deemed reasonably and properly
given if given by the Bank at least ten (10) calendar days before the date
of
such disposition. The Borrower hereby confirms, approves and ratifies all acts
and deeds of the Bank relating to the foregoing, and each part thereof, and
expressly waives any and all claims of any nature, kind or description which
it
has or may hereafter have against the Bank or its representatives, by reason
of
taking, selling or collecting any portion of the Collateral. The Borrower
consents to releases of the Collateral at any time (including prior to default)
and to sales of the Collateral in groups, parcels or portions, or as an
entirety, as the Bank shall deem appropriate. The Borrower expressly absolves
the Bank from any loss or decline in market value of any Collateral by reason
of
delay in the enforcement or assertion or nonenforcement of any rights or
remedies under this Agreement.
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12.3. Standards
for Exercising Remedies. To
the
extent that applicable law imposes duties on the Bank to exercise remedies
in a
commercially reasonable manner, the Borrower acknowledges and agrees that it
is
not commercially unreasonable for the Bank (a) to fail to incur expenses
reasonably deemed significant by the Bank to prepare Collateral for disposition
or otherwise to complete raw material or work-in-process into finished goods
or
other finished products for disposition, (b) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain governmental or third party consents
for the collection or disposition of Collateral to be collected or disposed
of,
(c) to fail to exercise collection remedies against Account Debtors or other
Persons obligated on Collateral or to remove liens or encumbrances on or any
adverse claims against Collateral, (d) to exercise collection remedies against
Account Debtors and other Persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (f)
to
contact other Persons, whether or not in the same business as the Borrower,
for
expressions of interest in acquiring all or any portion of the Collateral,
(g)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (h) to
dispose of Collateral by utilizing internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets, (i) to
dispose of assets in wholesale rather than retail markets, (j) to disclaim
disposition warranties, including any warranties of title, (k) to purchase
insurance or credit enhancements to insure the Bank against risks of loss,
collection or disposition of Collateral or to provide to the Bank a guaranteed
return from the collection or disposition of Collateral, or (l) to the extent
deemed appropriate by the Bank, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the Bank
in
the collection or disposition of any of the Collateral. The Borrower
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by the Bank would not be commercially
unreasonable in the Bank’s exercise of remedies against the Collateral and that
other actions or omissions by the Bank shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section. Without
limitation upon the foregoing, nothing contained in this Section shall be
construed to grant any rights to the Borrower or to impose any duties on the
Bank that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this Section.
12.4. UCC
and Offset Rights.
The
Bank may exercise, from time to time, any and all rights and remedies available
to it under the UCC or under any other applicable law in addition to, and not
in
lieu of, any rights and remedies expressly granted in this Agreement or in
any
other agreements between any Obligor and the Bank, and may, without demand
or
notice of any kind, appropriate and apply toward the payment of such of the
Obligations, whether matured or unmatured, including costs of collection and
attorneys’ and paralegals’ fees, and in such order of application as the Bank
may, from time to time, elect, any indebtedness of the Bank to any Obligor,
however created or arising, including balances, credits, deposits, accounts
or
moneys of such Obligor in the possession, control or custody of, or in transit
to the Bank. The Borrower, on behalf of itself and each Obligor, hereby waives
the benefit of any law that would otherwise restrict or limit the Bank in the
exercise of its right, which is hereby acknowledged, to appropriate at any
time
hereafter any such indebtedness owing from the Bank to any
Obligor.
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12.5. Additional
Remedies.
The
Bank shall have the right and power to:
(a) instruct
the Borrower, at its own expense, to notify any parties obligated on any of
the
Collateral, including any Account Debtors, to make payment directly to the
Bank
of any amounts due or to become due thereunder, or the Bank may directly notify
such obligors of the security interest of the Bank, and/or of the assignment
to
the Bank of the Collateral and direct such obligors to make payment to the
Bank
of any amounts due or to become due with respect thereto, and thereafter,
collect any such amounts due on the Collateral directly from such Persons
obligated thereon;
(b) enforce
collection of any of the Collateral, including any Accounts, by suit or
otherwise, or make any compromise or settlement with respect to any of the
Collateral, or surrender, release or exchange all or any part thereof, or
compromise, extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder;
(c) take
possession or control of any proceeds and products of any of the Collateral,
including the proceeds of insurance thereon;
(d) extend,
renew or modify for one or more periods (whether or not longer than the original
period) any Note, any other of the Obligations, any obligation of any nature
of
any other obligor with respect to any Note or any of the
Obligations;
(e) grant
releases, compromises or indulgences with respect to any Note, any of the
Obligations, any extension or renewal of any of the Obligations, any security
therefor, or to any other obligor with respect to any Note or any of the
Obligations;
(f) transfer
the whole or any part of securities which may constitute Collateral into the
name of the Bank or the Bank’s nominee without disclosing, if the Bank so
desires, that such securities so transferred are subject to the security
interest of the Bank, and any corporation, association, or any of the managers
or trustees of any trust issuing any of such securities, or any transfer agent,
shall not be bound to inquire, in the event that the Bank or such nominee makes
any further transfer of such securities, or any portion thereof, as to whether
the Bank or such nominee has the right to make such further transfer, and shall
not be liable for transferring the same;
(g) vote
the Collateral;
(h) make
an election with respect to the Collateral under Section 1111 of the Bankruptcy
Code or take action under Section 364 or any other section of the Bankruptcy
Code; provided, however, that any such action of the Bank as set forth herein
shall not, in any manner whatsoever, impair or affect the liability of the
Borrower hereunder, nor prejudice, waive, nor be construed to impair, affect,
prejudice or waive the Bank’s rights and remedies at law, in equity or by
statute, nor release, discharge, nor be construed to release or discharge,
the
Borrower, any guarantor or other Person liable to the Bank for the Obligations;
and
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(i) at
any time, and from time to time, accept additions to, releases, reductions,
exchanges or substitution of the Collateral, without in any way altering,
impairing, diminishing or affecting the provisions of this Agreement, the Loan
Documents, or any of the other Obligations, or the Bank’s rights hereunder,
under any Note or under any of the other Obligations.
The
Borrower hereby ratifies and confirms whatever the Bank may do with respect
to
the Collateral and agrees that the Bank shall not be liable for any error of
judgment or mistakes of fact or law with respect to actions taken in connection
with the Collateral.
12.6. Attorney-in-Fact.
The
Borrower hereby irrevocably makes, constitutes and appoints the Bank (and any
officer of the Bank or any Person designated by the Bank for that purpose)
as
the Borrower’s true and lawful proxy and attorney-in-fact (and agent-in-fact) in
the Borrower’s name, place and stead, with full power of substitution, to (i)
take such actions as are permitted in this Agreement, (ii) execute such
financing statements and other documents and to do such other acts as the Bank
may require to perfect and preserve the Bank’s security interest in, and to
enforce such interests in the Collateral, and (iii) carry out any remedy
provided for in this Agreement, including endorsing the Borrower’s name to
checks, drafts, instruments and other items of payment, and proceeds of the
Collateral, executing change of address forms with the postmaster of the United
States Post Office serving the address of the Borrower, changing the address
of
the Borrower to that of the Bank, opening all envelopes addressed to the
Borrower and applying any payments contained therein to the Obligations. The
Borrower hereby acknowledges that the constitution and appointment of such
proxy
and attorney-in-fact are coupled with an interest and are irrevocable. The
Borrower hereby ratifies and confirms all that such attorney-in-fact may do
or
cause to be done by virtue of any provision of this Agreement.
12.7. No
Marshaling.
The
Bank shall not be required to marshal any present or future collateral security
(including this Agreement and the Collateral) for, or other assurances of
payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order. To the extent
that it lawfully may, the Borrower hereby agrees that it will not invoke any
law
relating to the marshaling of collateral which might cause delay in or impede
the enforcement of the Bank’s rights under this Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any
of
the Obligations is outstanding or by which any of the Obligations is secured
or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Borrower hereby irrevocably waives the benefits of all such
laws.
12.8. Application
of Proceeds.
The
Bank will within three (3) Business Days after receipt of cash or solvent
credits from collection of items of payment, proceeds of Collateral or any
other
source, apply the whole or any part thereof against the Obligations secured
hereby. The Bank shall further have the exclusive right to determine how, when
and what application of such payments and such credits shall be made on the
Obligations, and such determination shall be conclusive upon the Borrower.
Any
proceeds of any disposition by the Bank of all or any part of the Collateral
may
be first applied by the Bank to the payment of expenses incurred by the Bank
in
connection with the Collateral, including attorneys’ fees and legal expenses as
provided for in
Section 13
hereof.
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12.9. No
Waiver.
No
Event of Default shall be waived by the Bank except in writing. No failure
or
delay on the part of the Bank in exercising any right, power or remedy hereunder
shall operate as a waiver of the exercise of the same or any other right at
any
other time; nor shall any single or partial exercise of any such right, power
or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. There shall be no obligation on the
part
of the Bank to exercise any remedy available to the Bank in any order. The
remedies provided for herein are cumulative and not exclusive of any remedies
provided at law or in equity. The Borrower agrees that in the event that the
Borrower fails to perform, observe or discharge any of its Obligations or
liabilities under this Agreement or any other agreements with the Bank, no
remedy of law will provide adequate relief to the Bank, and further agrees
that
the Bank shall be entitled to temporary and permanent injunctive relief in
any
such case without the necessity of proving actual damages.
12.10. Letters
of Credit.
With
respect to all Letters of Credit for which presentment for honor shall not
have
occurred at the time of an acceleration pursuant to this Section
12,
the
Borrower shall at such time deposit in a cash collateral account opened by
the
Bank an amount equal to the Letter of Credit Obligations then outstanding.
Amounts held in such cash collateral account shall be applied by the Bank to
the
payment of drafts drawn under such Letters of Credit, and the unused portion
thereof after all such Letters of Credit shall have expired or been fully drawn
upon, if any, shall be applied to repay the Obligations, in such order of
application as the Bank may, in its sole discretion, from time to time elect.
After all such Letters of Credit shall have expired or been fully drawn upon,
all commitments to make Loans hereunder have terminated and all other
Obligations have been indefeasibly satisfied and paid in full in cash, the
balance, if any, in such cash collateral account shall be returned to the
Borrower or such other Person as may be lawfully entitled thereto.
Section
13. MISCELLANEOUS.
13.1. Obligations
Absolute.
None of
the following shall affect the Obligations of the Borrower to the Bank under
this Agreement or the Bank’s rights with respect to the Collateral:
(a) acceptance
or retention by the Bank of other property or any interest in property as
security for the Obligations;
(b) release
by the Bank of or any of the Guarantors of all or any part of the Collateral
or
of any party liable with respect to the Obligations;
(c) release,
extension, renewal, modification or substitution by the Bank of any Note, or
any
note evidencing any of the Obligations, or the compromise of the liability
of
any of the Guarantors of the Obligations; or
(d) failure
of the Bank to resort to any other security or to pursue the Borrower or any
other obligor liable for any of the Obligations before resorting to remedies
against the Collateral.
-56-
13.2. Entire
Agreement.
This
Agreement and the other Loan Documents (i) are valid, binding and enforceable
against the Borrower and the Bank in accordance with their respective provisions
and no conditions exist as to their legal effectiveness; (ii) constitute the
entire agreement between the parties with respect to the subject matter hereof
and thereof; and (iii) are the final expression of the intentions of the
Borrower and the Bank. No promises, either expressed or implied, exist between
the Borrower and the Bank, unless contained herein or therein. This Agreement,
together with the other Loan Documents, supersedes all negotiations,
representations, warranties, commitments, term sheets, discussions,
negotiations, offers or contracts (of any kind or nature, whether oral or
written) prior to or contemporaneous with the execution hereof with respect
to
any matter, directly or indirectly related to the terms of this Agreement and
the other Loan Documents. This Agreement and the other Loan Documents are the
result of negotiations among the Bank, the Borrower and the other parties
thereto, and have been reviewed (or have had the opportunity to be reviewed)
by
counsel to all such parties, and are the products of all parties. Accordingly,
this Agreement and the other Loan Documents shall not be construed more strictly
against the Bank merely because of the Bank’s involvement in their
preparation.
13.3. Amendments;
Waivers.
No
delay on the part of the Bank in the exercise of any right, power or remedy
shall operate as a waiver thereof, nor shall any single or partial exercise
by
the Bank of any right, power or remedy preclude other or further exercise
thereof, or the exercise of any other right, power or remedy. No amendment,
modification or waiver of, or consent with respect to, any provision of this
Agreement or the other Loan Documents shall in any event be effective unless
the
same shall be in writing and acknowledged by the Bank, and then any such
amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
13.4. WAIVER
OF DEFENSES.
THE
BORROWER, ON BEHALF OF ITSELF AND ANY GUARANTOR OF ANY OF THE OBLIGATIONS,
WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF
WHICH THE BORROWER MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY THE
BANK
IN ENFORCING THIS AGREEMENT. PROVIDED THE BANK ACTS IN GOOD FAITH, THE BORROWER
RATIFIES AND CONFIRMS WHATEVER THE BANK MAY DO PURSUANT TO THE TERMS OF THIS
AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK GRANTING ANY
FINANCIAL ACCOMMODATION TO THE BORROWER.
13.5. FORUM
SELECTION AND CONSENT TO JURISDICTION.
ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING
IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE BANK FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
STATE
OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT
OF
ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE BORROWER
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.
THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE
AND
ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
-57-
13.6. WAIVER
OF JURY TRIAL.
THE
BANK AND THE BORROWER, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT
WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY,
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT, ANY OF
THE
OTHER OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN
CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF
DEALING IN WHICH THE BANK AND THE BORROWER ARE ADVERSE PARTIES, AND EACH AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK GRANTING ANY
FINANCIAL ACCOMMODATION TO THE BORROWER.
13.7. Assignability.
The
Bank may at any time assign the Bank’s rights in this Agreement, the other Loan
Documents, the Obligations, or any part thereof and transfer the Bank’s rights
in any or all of the Collateral, and the Bank thereafter shall be relieved
from
all liability with respect to such Collateral. In addition, the Bank may at
any
time sell one or more participations in the Loans. The Borrower may not sell
or
assign this Agreement, or any other agreement with the Bank or any portion
thereof, either voluntarily or by operation of law, without the prior written
consent of the Bank. This Agreement shall be binding upon the Bank and the
Borrower and their respective legal representatives and successors. All
references herein to the Borrower shall be deemed to include any successors,
whether immediate or remote. In the case of a joint venture or partnership,
the
term “Borrower” shall be deemed to include all joint venturers or partners
thereof, who shall be jointly and severally liable hereunder.
13.8. Confirmations.
The
Borrower and the Bank agree from time to time, upon written request received
by
it from the other, to confirm to the other in writing the aggregate unpaid
principal amount of the Loans then outstanding under such Note.
13.9. Confidentiality.
The
Bank agrees to use commercially reasonable efforts (equivalent to the efforts
the Bank applies to maintain the confidentiality of its own confidential
information) to maintain as confidential all information provided to it by
the
Borrower, including all information designated as confidential, except that
the
Bank may disclose such information (a) to Persons employed or engaged by the
Bank in evaluating, approving, structuring or administering the Loans; (b)
to
any assignee or participant or potential assignee or participant that has agreed
to comply with the covenant contained in this Section
13.9
(and any
such assignee or participant or potential assignee or participant may disclose
such information to Persons employed or engaged by them as described in clause
(a) above); (c) as required or requested by any federal or state regulatory
authority or examiner, or any insurance industry association, or as reasonably
believed by the Bank to be compelled by any court decree, subpoena or legal
or
administrative order or process; (d) as, on the advice of the Bank’s counsel, is
required by law; (e) in connection with the exercise of any right or remedy
under the Loan Documents or in connection with any litigation to which the
Bank
is a party; (f) to any nationally recognized rating agency that requires access
to information about the Bank’s investment portfolio in connection with ratings
issued with respect to the Bank; (g) to any Affiliate of the Bank who may
provide Bank Products to the Borrower or any Subsidiary, or (h) that ceases
to
be confidential through no fault of the Bank.
-58-
13.10. Binding
Effect.
This
Agreement shall become effective upon execution by the Borrower and the Bank.
If
this Agreement is not dated or contains any blanks when executed by the
Borrower, the Bank is hereby authorized, without notice to the Borrower, to
date
this Agreement as of the date when it was executed by the Borrower, and to
complete any such blanks according to the terms upon which this Agreement is
executed.
13.11. Governing
Law.
This
Agreement, the Loan Documents and any Note shall be delivered and accepted
in
and shall be deemed to be contracts made under and governed by the internal
laws
of the State of Illinois (but giving effect to federal laws applicable to
national banks) applicable to contracts made and to be performed entirely within
such state, without regard to conflict of laws principles.
13.12. Enforceability.
Wherever possible, each provision of this Agreement shall be interpreted in
such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by, unenforceable or invalid under any
jurisdiction, such provision shall as to such jurisdiction, be severable and
be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other
jurisdiction.
13.13. Survival
of Borrower Representations.
All
covenants, agreements, representations and warranties made by the Borrower
herein shall, notwithstanding any investigation by the Bank, be deemed material
and relied upon by the Bank and shall survive the making and execution of this
Agreement and the Loan Documents and the issuance of any Note, and shall be
deemed to be continuing representations and warranties until such time as the
Borrower has fulfilled all of its Obligations to the Bank, and the Bank has
been
indefeasibly paid in full in cash. The Bank, in extending financial
accommodations to the Borrower, is expressly acting and relying on the aforesaid
representations and warranties.
13.14. Extensions
of Bank’s Commitment.
This
Agreement shall secure and govern the terms of (i) any extensions or renewals
of
the Bank’s commitment hereunder, and (ii) any replacement note executed by the
Borrower and accepted by the Bank in its sole and absolute discretion in
substitution for any Note.
-59-
13.15. Time
of Essence.
Time is
of the essence in making payments of all amounts due the Bank under this
Agreement and in the performance and observance by the Borrower of each
covenant, agreement, provision and term of this Agreement.
13.16. Counterparts;
Facsimile Signatures.
This
Agreement may be executed in any number of counterparts and by the different
parties hereto on separate counterparts and each such counterpart shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same Agreement. Receipt of an executed signature page to this
Agreement by facsimile or other electronic transmission shall constitute
effective delivery thereof. Electronic records of executed Loan Documents
maintained by the Bank shall deemed to be originals thereof.
13.17. Notices.
Except
as otherwise provided herein, the Borrower waives all notices and demands in
connection with the enforcement of the Bank’s rights hereunder. All notices,
requests, demands and other communications provided for hereunder shall be
in
writing and addressed as follows:
|
To
the Borrower:
|
ISI
Security Group, Inc.
00000
Xxxxxxxx Xxxxx
Xxx
Xxxxxxx, Xxxxx 00000
Attention:
Xxx Xxxxxxxxxx
|
|
With
a copy to:
|
K
& L Gates LLP
000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
Attention:
X. Xxxx Xxxxxxxxxx, Esq.
|
|
To
the Bank:
|
The
PrivateBank and Trust Company
00
X. Xxxxxxx, 0xx Xxxxx
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Commercial Lending Division
|
or,
as to
each party, at such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with the terms
of
this subsection. All notices addressed as above shall be deemed to have been
properly given (i) if served in person, upon acceptance or refusal of delivery;
(ii) if mailed by certified or registered mail, return receipt requested,
postage prepaid, on the third (3rd) day following the day such notice is
deposited in any post office station or letter box; or (iii) if sent by
recognized overnight courier, on the first (1st) day following the day such
notice is delivered to such carrier. No notice to or demand on the Borrower
in
any case shall entitle the Borrower to any other or further notice or demand
in
similar or other circumstances.
-60-
13.18. Release
of Claims Against Bank.
In
consideration of the Bank making the Loans, the Borrower and all other Obligors
do each hereby release and discharge the Bank of and from any and all claims,
harm, injury, and damage of any and every kind, known or unknown, legal or
equitable, which any Obligor may have against the Bank from the date of their
respective first contact with the Bank until the date of this Loan Agreement,
including any claim arising from any reports (environmental reports, surveys,
appraisals, etc.) prepared by any parties hired or recommended by the Bank.
The
Borrower and all other Obligors confirm to Bank that they have reviewed the
effect of this release with competent legal counsel of their choice, or have
been afforded the opportunity to do so, prior to execution of this Agreement
and
the Loan Documents and do each acknowledge and agree that the Bank is relying
upon this release in extending the Loans to the Borrower.
13.19. Costs,
Fees and Expenses.
The
Borrower shall pay or reimburse the Bank for all reasonable costs, fees and
expenses incurred by the Bank or for which the Bank becomes obligated in
connection with the negotiation, preparation, consummation, collection of the
Obligations or enforcement of this Agreement, the other Loan Documents and
all
other documents provided for herein or delivered or to be delivered hereunder
or
in connection herewith (including any amendment, supplement or waiver to any
Loan Document), or during any workout, restructuring or negotiations in
respect thereof, including reasonable consultants’ fees and attorneys’ fees and
time charges of counsel to the Bank, which shall also include attorneys’ fees
and time charges of attorneys who may be employees of the Bank or any Affiliate
of the Bank, plus costs and expenses of such attorneys or of the Bank; search
fees, costs and expenses; and all taxes payable in connection with this
Agreement or the other Loan Documents, whether or not the transaction
contemplated hereby shall be consummated. In furtherance of the foregoing,
the
Borrower shall pay any and all stamp and other taxes, UCC search fees, filing
fees and other costs and expenses in connection with the execution and delivery
of this Agreement, any Note and the other Loan Documents to be delivered
hereunder, and agrees to save and hold the Bank harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omission to pay such costs and expenses. That portion of the Obligations
consisting of costs, expenses or advances to be reimbursed by the Borrower
to
the Bank pursuant to this Agreement or the other Loan Documents which are not
paid on or prior to the date hereof shall be payable by the Borrower to the
Bank
on demand. If at any time or times hereafter the Bank: (a) employs counsel
for advice or other representation (i) with respect to this Agreement or
the other Loan Documents, (ii) to represent the Bank in any litigation,
contest, dispute, suit or proceeding or to commence, defend, or intervene or
to
take any other action in or with respect to any litigation, contest, dispute,
suit, or proceeding (whether instituted by the Bank, the Borrower, or any other
Person) in any way or respect relating to this Agreement, the other Loan
Documents or the Borrower’s business or affairs, or (iii) to enforce any
rights of the Bank against the Borrower or any other Person that may be
obligated to the Bank by virtue of this Agreement or the other Loan Documents;
(b) takes any action to protect, collect, sell, liquidate, or otherwise
dispose of any of the Collateral; and/or (c) attempts to or enforces any of
the Bank’s rights or remedies under the Agreement or the other Loan Documents,
the costs and expenses incurred by the Bank in any manner or way with respect
to
the foregoing, shall be part of the Obligations, payable by the Borrower to
the
Bank on demand.
13.20.
Maximum
Interest.
Notwithstanding anything contained in this Agreement or any other Loan Document
to the contrary, the Bank shall never be deemed to have contracted for or be
entitled to receive, collect or apply as interest on the Obligations in excess
of the maximum rate or amount of nonusurious interest that may be contracted
for, taken, reserved, charged, or received under applicable law (the
“Maximum
Rate”),
and,
in the event the Bank ever receives, collects or applies as interest any amount
in excess of the amount permitted and calculated at the Maximum Rate, such
amount which would be excessive interest shall be applied to the reduction
of
the unpaid principal balance of the Obligations, and, if the principal balance
of the Obligations is paid in full, any remaining excess shall forthwith be
paid
to Borrower."
-61-
13.21. Indemnification.
The
Borrower agrees to defend (with counsel satisfactory to the Bank), protect,
indemnify, exonerate and hold harmless each Indemnified Party from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and distributions of any kind or
nature (including the disbursements and the reasonable fees of counsel for
each
Indemnified Party thereto, which shall also include, without limitation,
reasonable attorneys’ fees and time charges of attorneys who may be employees of
any Indemnified Party), which may be imposed on, incurred by, or asserted
against, any Indemnified Party (whether direct, indirect or consequential and
whether based on any federal, state or local laws or regulations, including
securities laws, Environmental Laws, commercial laws and regulations, under
common law or in equity, or based on contract or otherwise) in any manner
relating to or arising out of this Agreement or any of the Loan Documents,
or
any act, event or transaction related or attendant thereto, the preparation,
execution and delivery of this Agreement and the Loan Documents, including
the
making or issuance and management of the Loans, the use or intended use of
the
proceeds of the Loans, the enforcement of the Bank’s rights and remedies under
this Agreement, the Loan Documents, any Note, any other instruments and
documents delivered hereunder, or under any other agreement between the Borrower
and the Bank; provided, however, that the Borrower shall not have any
obligations hereunder to any Indemnified Party with respect to matters
determined by a court of competent jurisdiction by final and nonappealable
judgment to have been caused by or resulting from the willful misconduct or
gross negligence of such Indemnified Party. To the extent that the undertaking
to indemnify set forth in the preceding sentence may be unenforceable because
it
violates any law or public policy, the Borrower shall satisfy such undertaking
to the maximum extent permitted by applicable law. Any liability, obligation,
loss, damage, penalty, cost or expense covered by this indemnity shall be paid
to each Indemnified Party on demand, and failing prompt payment, together with
interest thereon at the Default Rate from the date incurred by each Indemnified
Party until paid by the Borrower, shall be added to the Obligations of the
Borrower and be secured by the Collateral. The provisions of this Section shall
survive the satisfaction and payment of the other Obligations and the
termination of this Agreement.
13.22. Revival
and Reinstatement of Obligations.
If the
incurrence or payment of the Obligations by any Obligor or the transfer to
the
Bank of any property should for any reason subsequently be declared to be void
or voidable under any state or federal law relating to creditors’ rights,
including provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers
of
property (collectively, a “Voidable
Transfer”),
and
if the Bank is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof that the Bank
is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Bank, the Obligations shall automatically
shall be revived, reinstated, and restored and shall exist as though such
Voidable Transfer had never been made.
-62-
IN
WITNESS WHEREOF, the Borrower and the Bank have executed this Loan and Security
Agreement as of the date first above written.
|
a
Delaware Corporation
|
|
|
By:
|
/s/
Xxx
Xxxxxxxxxx
|
|
Xxx
Xxxxxxxxxx
|
|
|
President
|
|
| Agreed and accepted: | |
|
THE
PRIVATEBANK AND TRUST COMPANY,
|
|
|
an
Illinois banking corporation
|
|
|
By:
|
/s/
Xxxx
Xxxxxx
|
|
Xxxx
Xxxxxx
|
|
