CREDIT AGREEMENT
EXHIBIT
10.1
This
Credit Agreement (the “Agreement”), dated as of August 21, 2006, is between
City
National Bank,
a
national banking association
(“CNB”)
and
Highbury
Financial Inc.,
a
Delaware corporation (“Borrower”).
1. DEFINITIONS.
As used
in this Agreement, these terms have the following meanings:
1.1 “Account”
or
“Accounts”
mean
any right to payment for goods sold or leased or for services rendered which
is
not evidenced by an instrument or chattel paper, whether or not it has been
earned by performance.
1.2 “Account
Debtor”
means
the Person obligated on an Account.
1.3 “Affiliate”
means
any Person directly or indirectly controlling, controlled by, or under common
control with, Borrower, and includes any employee stock ownership plan of
Borrower or an Affiliate. “Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and
policies of that Person, whether through the ownership of voting securities,
by
contract or otherwise.
1.4 “Aston
Funds”
means
the portion of the mutual fund business Borrower has agreed to acquire from
ABN
AMRO Asset Management Holdings pursuant to an agreement dated April 20,
2006.
1.5 “Borrower’s
Loan Account”
means
the statement of daily balances on the books of CNB in which will be recorded
Revolving Credit Loans made by CNB to Borrower, payments made by or on behalf
of
Borrower on such Revolving Credit Loans, and other appropriate debits and
credits as expressly provided by this Agreement. CNB will provide a statement
of
account for Borrower’s Loan Account at least once each month on a date
established in writing by CNB, which statement will be prima facie evidence
of
all amounts owed by Borrower unless Borrower notifies CNB in writing to the
contrary, within five (5) days of receipt of such statement, or ten (10)
days
after sending of such statement if Borrower does not notify CNB of its
non-receipt of the statement. Statements regarding other credit extended
to
Borrower will be provided separately.
1.6 “Business
Day”
means
a
day that CNB’s Head Office is open and conducts a substantial portion of its
business. For purposes of this Agreement, “Head Office” means the lending office
of CNB located in Beverly Hills, California.
1.7 “Code”
means
the California Uniform Commercial Code, except where the Uniform Commercial
Code
of another state governs the perfection of a security interest in Collateral
located in that state.
1.8 “Collateral”
means
the property, if any, securing the Obligations, as described in
Section 8.
1.9 “Commitment”
means
CNB’s commitment to make the Revolving Credit Loans to the Borrower in the
aggregate principal amount outstanding at any one time of up to Twelve Million
Dollars ($12,000,000.00).
1.10 “Debt”
means,
at any date, the aggregate amount of, without duplication, (a) all obligations
of Borrower for borrowed money; (b) all obligations of Borrower evidenced
by
bonds, debentures, notes or other similar instruments; (c) all obligations
of
Borrower to pay the deferred purchase price of property or services (other
than
trade accounts payable or accrued liabilities arising in the ordinary course
of
business or which are being contested in good faith); (d) all capitalized
lease
obligations of Borrower; (e) all obligations or liabilities of others secured
by
a lien on any asset of Borrower, whether or not such obligation or liability
is
assumed; (f) all obligations guaranteed by Borrower; (g) all obligations
of
Borrower, direct or indirect, for letters of credit; and (h) any other
obligations or liabilities which are required by generally accepted accounting
principles to be shown as debt on the balance sheet of Borrower.
1.11 “Demand
Deposit Account”
means
Borrower’s demand deposit account no. 665031519 maintained with
CNB.
1.12 “EBITDA”
will
be
determined on a consolidated basis for Borrower and means the sum of (a)
net
income of the Borrower determined in accordance with GAAP earned over the
twelve
month period ending on the date of determination, plus (b) amortization of
intangible assets, plus (c) interest expense, plus (d) depreciation, plus
(e)
other non-cash expenses, and plus (f) taxes, expensed during the twelve month
period ending on the date of determination. For periods prior to the acquisition
of the Aston Funds by Borrower, EBITDA for Borrower shall include eighteen
and
one fifth percent (18.2%) of the revenue of the Aston Funds, less $50,000.00
for
each month prior to acquisition.
1.13 “Eurocurrency
Reserve Requirement”
means
the aggregate (without duplication) of the rates (expressed as a decimal)
of
reserves (including, without limitation, any basic, marginal, supplemental,
or
emergency reserves) that are required to be maintained by banks during the
Interest Period under any regulations of the Board of Governors of the Federal
Reserve System, or any other governmental authority having jurisdiction with
respect thereto, applicable to funding based on so-called “Eurocurrency
Liabilities”, including Regulation D (12 CFR 204).
1.14 “Facility
Fee”
is
$7,500.00.
1.15 “GAAP”
means
generally accepted accounting principles and practices, consistently
applied.
1.16 “Interest
Period”
means
the period commencing on the date a LIBOR Loan is made (including the date
a
Prime Loan is converted to a LIBOR Loan, or a LIBOR Loan is renewed as a
LIBOR
Loan, which, in the latter case, will be the last day of the expiring Interest
Period) and ending on the last day of the month occurring prior to or on
the
date which is one (1), two (2), three (3), six (6), nine (9) or twelve (12)
months thereafter, as selected by the Borrower; provided, however, no Interest
Period may extend beyond the Termination Date.
1.17 “Inventory”
means
goods held for sale or lease in the ordinary course of business, work in
process
and any and all raw materials used in connection with the
foregoing.
1.18 “LIBOR
Base Rate”
means
the British Banker’s Association definition of the London InterBank Offered
Rates as made available by Bloomberg LP, or such other information
service
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available
to CNB, for the applicable Interest Period for the LIBOR Loan selected by
Borrower and as quoted by CNB on the Business Day Borrower requests a LIBOR
Loan
or on the last day of an expiring Interest Period.
1.19 “LIBOR
Interest Rate”
means
the rate per year (rounded upward to the next one-sixteenth (1/16th) of one
percent (0.0625%), if necessary) determined by CNB to be the quotient of
(a) the
LIBOR Base Rate divided by (b) one minus the Eurocurrency Reserve Requirement
for the Interest Period; which is expressed by the following
formula:
LIBOR
Base Rate
1
- Eurocurrency Reserve Requirement
1.20 “LIBOR
Loan”
means
any Loan tied to the LIBOR Interest Rate.
1.21 “Loan”
or
“Loans”
means
one or more of the Revolving Credit Loans extended by CNB to Borrower under
Section 2.
1.22 “Loan
Documents”
means,
individually and collectively, this Agreement, any Note, guaranty, security
or
pledge agreement, financing statement and all other contracts, instruments,
addenda and documents executed in connection with or related to the extensions
of credit under this Agreement.
1.23 “Net
Worth”
means
the total of all assets appearing on a balance sheet prepared in accordance
with
GAAP for Borrower, minus (a) all obligations which are required by GAAP to
be
reflected as a liability on the balance sheet of Borrower; minus (b) the
amount,
if any, at which shares of stock of a non-wholly owned subsidiary appear
on the
asset side of Borrower’s balance sheet, as determined in accordance with GAAP;
minus (c) minority interests; and minus (d) deferred income and reserves
not
otherwise reflected as a liability on the balance sheet of
Borrower.
1.24 “Obligations”
means
all present and future liabilities and obligations of Borrower to CNB whether
now existing or hereafter owing, matured or unmatured, direct or indirect,
absolute or contingent, joint or several, including any extensions and renewals
thereof and substitutions therefor.
1.25 “Person”
means
any individual or entity.
1.26 “Potential
Event of Default”
means
any condition that with the giving of notice or passage of time or both would,
unless cured or waived, become an Event of Default.
1.27 “Prime
Rate”
means
the rate most recently announced by CNB at its principal office in Beverly
Hills, California as its “Prime Rate.” Any change in the interest rate resulting
from a change in the Prime Rate will be effective on the day on which each
change in the Prime Rate is announced by CNB.
1.28 “Prime
Loan”
means
any Revolving Credit Loan tied to the Prime Rate.
1.29 “Revolving
Credit Commitment”
means
CNB’s commitment to make the Revolving Credit Loans in the aggregate principal
amount at any one time of up to Twelve Million Dollars
($12,000,000.00).
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1.30 “Termination
Date”
means
October 31, 2007. Notwithstanding the foregoing, CNB may, at its option,
terminate this Agreement pursuant to the Section entitled “CNB’s Remedies”; the
date of any such termination will become the Termination Date as that term
is
used in this Agreement.
1.31 “Unused
Facility Fee”
will
be
equal to one quarter of one percent (0.250%) of the average daily difference
between the Revolving Credit Commitment and the Revolving Credit
Loans.
2. LOANS.
2.1 Revolving
Credit Loan.
Subject
to the terms of this Agreement, CNB agrees to make loans (“Revolving Credit
Loans”) to Borrower, from the date of this Agreement up to but not including the
Termination Date, at such times as Borrower may request, up to the amount
of the
lesser of (a) the Revolving Credit Commitment, or (b) twice the amount of
EBITDA
at the time of such request. The Revolving Credit Loans may be repaid and
reborrowed at any time up to the Termination Date.
2.1.1 Interest.
The
Revolving Credit Loans will bear interest from disbursement until due (whether
at stated maturity, by acceleration or otherwise) at a rate equal to, at
Borrower’s option, either (a) for a LIBOR Loan, the LIBOR Interest Rate plus one
and one half percent (1.50%) per year, or (b) for a Prime Loan, the fluctuating
Prime Rate minus one half of one percent (-0.50%) per year. Interest on the
Revolving Credit Loans and other charges incurred under this Agreement will
accrue daily and be payable (a) in the case of a LIBOR Loan in which the
Interest Period is (i) 3 months or less, the last day of such Interest Period
and (ii) more than 3 months, the date that is 3 months from the first day
of
such Interest Period, then 3 months after each such date if applicable, and,
in
addition, the last day of such Interest Period and (b) in the case of a Prime
Loan, monthly in arrears, on the last day of each month, commencing on the
first
such date following disbursement; (c) if a LIBOR Loan, upon any prepayment
of
any LIBOR Loan (to the extent accrued on the amount prepaid); and (d) at
the
Termination Date. A Revolving Credit Loan will be a Prime Loan any time it
is
not a LIBOR Loan.
2.1.2 Procedure
for Revolving Credit Loans.
Each
Revolving Credit Loan may be made by CNB at the oral or written request of
anyone who is authorized in writing by Borrower to request Revolving Credit
Loans until written notice of the revocation of such authority is received
by
CNB. To the extent Borrower is requesting a LIBOR Loan, the procedures for
making such request shall be as set forth in Section 2.2.1 hereof. To the
extent
Borrower is requesting a Prime Loan, Borrower may request that a Loan be
a Prime
Loan (including a conversion of a LIBOR Loan to a Prime Loan), and Borrower’s
request will be irrevocable, will be made to CNB, orally or in writing, no
earlier than three (3) Business Day before and no later than 3:00 p.m. Pacific
Time on the date the Prime Loan is to be made, and will specify the amount
of
the Prime Loan and the disbursement date for such Prime Loan.
2.2 LIBOR
Loan Terms and Conditions
2.2.1 Procedure
for LIBOR Loans. Borrower may request that a Loan be a LIBOR Loan, if herein
allowed (including conversion of a Prime Loan to a LIBOR Loan, or continuation
of a LIBOR Loan as a LIBOR Loan upon the expiration of the Interest Period).
Borrower’s request will be irrevocable, will be made to CNB, orally or in
writing, no earlier than two (2) Business Days before and no later than 1:00
p.m. Pacific Time on the date the LIBOR Loan is to be made, and will specify
the
Interest Period, the amount of the LIBOR Loan, and such other information
as CNB
requests. If Borrower fails to select a LIBOR Loan in accordance herewith,
the
Loan will be a Prime Loan, and any LIBOR Loan will be deemed a Prime Loan
upon
expiration of the Interest Period.
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2.2.2 Availability
of LIBOR Loans.
Notwithstanding anything herein to the contrary, each LIBOR Loan must be
in the
minimum amount of $500,000.00 and increments of $100,000.00. Borrower may
not
have more than ten (10) LIBOR Loans outstanding at any one time under the
Revolving Credit Commitment. Borrower may have Prime Loans and LIBOR Loans
outstanding simultaneously.
2.2.3 Prepayment
of Principal. Borrower
may not make a partial principal prepayment on a LIBOR Loan. Borrower may
prepay
the full outstanding principal balance on a LIBOR Loan prior to the end of
the
Interest Period, provided, however, that such prepayment is accompanied a
fee
(“LIBOR Prepayment Fee”) equal to the amount, if any, by which (a) the
additional interest which would have been earned by CNB had the LIBOR Loan
not
been prepaid exceeds (b) the interest which would have been recoverable by
CNB
by placing the amount of the LIBOR Loan on deposit in the LIBOR market for
a
period starting on the date on which it was prepaid and ending on the last
day
of the applicable Interest Period. CNB’s calculation of the LIBOR Prepayment Fee
will be conclusive absent manifest error.
2.2.4 Suspension
of LIBOR Loans.
In the
event CNB, on any Business Day, is unable to determine the LIBOR Base Rate
applicable for a new, continued, or converted LIBOR Loan for any reason,
or any
law, regulation, or governmental order, rule or determination, makes it unlawful
for CNB to make a LIBOR Loan, Borrower’s right to select LIBOR Loans will be
suspended until CNB is again able to determine the LIBOR Base Rate or make
LIBOR
Loans, as the case may be. During such suspension, new Loans, outstanding
Prime
Loans and LIBOR Loans whose Interest Periods terminate may only be Prime
Loans.
2.3 Loans
and Payments.
All
payments will be in United States Dollars and in immediately available funds.
Interest will be computed on the basis of a 365 day year for Prime Loans
and a
360 day year for LIBOR Loans, actual days elapsed. CNB is authorized to note
the
date, amount and interest rate of each Loan and each payment of principal
and
interest on CNB’s books and records, which notations will constitute presumptive
evidence of the accuracy of the information noted. Any Loan will be conclusively
presumed to have been made to or for the benefit of Borrower when CNB, in
its
sole discretion, but without gross negligence or willful misconduct, believes
that the request therefor has been made by authorized persons (whether in
fact
that is the case), or when the Loan is deposited to the Demand Deposit Account,
regardless of whether any Person other than Borrower may have authority to
draw
against such account.
2.4 Default
Interest Rate.
From and
after written notice by CNB to Borrower of the occurrence of an Event of
Default
(and without constituting a waiver of such Event of Default), the Loans (and
interest thereon to the extent permitted by law) will bear additional interest
at a fluctuating rate equal to three percent (3.0%) per annum higher than
the
interest rate provided for herein, until the Event of Default has been cured
or
waived in writing by CNB; provided, however, for purposes of this Section,
a
LIBOR Loan will be treated as a Prime Loan upon the termination of the Interest
Period. All interest provided for in this Section will be compounded monthly
and
payable on demand.
2.5 Unused
Facility Fee.
Borrower will pay the Unused Facility Fee on the last day of each calendar
quarter; such fee will be non-refundable and fully earned when paid. Borrower
hereby authorizes CNB to charge the Demand Deposit Account or Borrower’s Loan
Account for the amount of each such fee.
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3. TERM
AND
TERMINATION.
3.1Establishment
of Termination Date.
The
term of this Agreement will begin as of the date hereof and continue until
the
Termination Date, unless the term is renewed for an additional period by
CNB
giving Borrower prior written notice, which is accepted by Borrower if Borrower
desires such renewal, in which event the Termination Date will mean the renewed
maturity date set forth in such notice. Notwithstanding the foregoing, CNB
may,
at its option, terminate this Agreement pursuant to the section entitled
“CNB’s
Remedies”; the date of any such termination will become the Termination Date as
that term is used in this Agreement.
3.2Obligations
Upon the Termination Date.
Borrower will, upon the Termination Date:
3.2.1 Repay
the
amount of the balance due as set forth in Borrower’s Loan Account plus any
accrued interest, fees and charges; and
3.2.2 Pay
the
amounts due on all other Obligations owing to CNB. In this connection and
notwithstanding anything to the contrary contained in the instruments evidencing
such Obligations, the Termination Date hereunder will constitute the maturity
date of such other Obligations.
3.3Survival
of Rights.
Any
termination of this Agreement will not affect the rights, liabilities and
obligations of the parties with respect to any Obligations outstanding on
the
date of such termination. Until all Obligations have been fully repaid, CNB
will
retain its security interest in all existing Collateral and Collateral arising
thereafter, and Borrower will continue to assign all Accounts to CNB and
to
immediately turn over to CNB, in kind, all collections received on the
Accounts.
3.4 Repayment/Termination
of Borrower.
Borrower
shall have the right, at its election, to repay the outstanding amount of
Revolving Credit Loans, as a whole or in part, at any time without penalty
or
premium, except as set forth in Section 2.2.3 hereof. In addition, Borrower
shall have the right at any time and from time to time to reduce or terminate
entirely the Revolving Credit Commitment by providing written notice to CNB
of
such election.
4. CONDITIONS
PRECEDENT.
4.1 Extension
of Credit.
The
obligation of CNB to make any Loan or other extension of credit hereunder
is
subject to CNB’s receipt of each of the following, in form and substance
satisfactory to CNB, and duly executed as required by CNB:
4.1.1 All
Loan
Documents required by CNB, including but not limited to this Agreement and
any
guaranties required hereunder;
4.1.2 The
closing of Borrower’s purchase of the Aston Funds;
4.1.3 (a)
a
copy of Borrower’s organizational and governing documents and any public filings
made in connection therewith; and (b) such authorizations and resolutions
approving and authorizing the execution, delivery and performance of this
Agreement and any other documents required pursuant to this Agreement, as
may be
required by CNB;
4.1.4 (a)
copies (and acknowledgement copies to the extent reasonably available) of
financing statements (Form UCC-1) duly filed under the Code in all such
jurisdictions as may be necessary or, in CNB’s reasonable opinion, desirable to
perfect CNB’s security interests created under this Agreement; and (b) evidence
that all filings, recordings and other actions that are necessary
or
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advisable,
in CNB’s opinion, to establish, preserve and perfect CNB’s security interests
and liens as legal, valid and enforceable first security interests and liens
in
the Collateral have been effected;
4.1.5 A
complete list of claims made against Borrower and evidence satisfactory to
CNB
that if such claim(s) is adversely determined, it would not have a material
adverse effect on the business, operations or condition, financial or otherwise,
of Borrower; and
4.1.6 The
Facility Fee.
4.2 Conditions
to Each Extension of Credit.
The
obligation of CNB to make any Loan or other extension of credit hereunder
will
be subject to the fulfillment of each of the following conditions to CNB’s
satisfaction:
4.2.1 The
representations and warranties of Borrower set forth in Section 5 will be
true
and correct in all material respects on the date of the making of each Loan
or
other extension of credit with the same effect as though such representations
and warranties had been made on and as of such date (except to the extent
changes resulting from transactions contemplated or permitted by this Agreement
and changes occurring in the ordinary course of business that singly or in
the
aggregate are not materially adverse, and to the extent that such representation
or warranty relates expressly to an earlier date);
4.2.2 There
will be in full force and effect in favor of CNB a legal, valid and enforceable
first security interest in, and a valid and binding first lien on the
Collateral; and CNB will have received evidence, in form and substance
acceptable to CNB, that all filings, recordings and other actions that are
necessary or advisable, in the opinion of CNB, in order to establish, protect,
preserve and perfect CNB’s security interests and liens as legal, valid and
enforceable first security interests and liens in the Collateral have been
effected;
4.2.3 There
will have occurred no Event of Default or Potential Event of Default;
and
4.2.4 All
other
documents and legal matters in connection with the transactions described
in
this Agreement will be satisfactory in form and substance to CNB.
5. REPRESENTATIONS
AND WARRANTIES. Borrower
represents and warrants (and each request for a Loan or other extension of
credit will be deemed a representation and warranty made on the date of such
request subject to Section 4.2.1) that:
5.1 Existence,
Power and Authorization. Borrower
is duly organized, validly existing and in good standing under the laws of
the
state of its organization, and is duly qualified to conduct business in each
jurisdiction in which its business is conducted unless the failure to so
qualify
could not reasonably be expected to have a material adverse effect on the
business or financial condition of Borrower (a “MAE”). The execution, delivery
and performance of all Loan Documents executed by Borrower are within Borrower’s
powers and have been duly authorized by the Borrower and do not require any
further consent or approval by the owners of Borrower.
5.2 Binding
Agreement. The
Loan
Documents constitute the valid and legally binding obligations of Borrower,
enforceable against Borrower in accordance with their terms.
5.3 Other
Agreements. The
execution and performance of the Loan Documents will not violate any provision
of law or regulation (including, without limitation, Regulations X and U
of
the
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Federal
Reserve Board) or any order of any governmental authority, court, or arbitration
board or the organizational and governing documents of Borrower, or result
in
the breach of, constitute a default under, contravene any provisions of,
or
result in the creation of any security interest, lien, charge or encumbrance
upon any of the assets of Borrower pursuant to any indenture or agreement
to
which Borrower or any of its properties is bound, except liens and security
interests in favor of CNB and except for a breach or default which could
not
reasonably be expected to have a MAE.
5.4 Litigation.
There is
no litigation, tax claim, investigation or proceeding pending, threatened
against or affecting Borrower or any of its properties which, if adversely
determined, would have a MAE.
5.5 Financial
Condition.
Borrower’s most recent financial statements, copies of which have been delivered
to CNB, have been prepared in accordance with GAAP and are true, complete
and
correct and fairly present the financial condition of Borrower, including
operating results, as of the accounting period referenced therein. There
has
been no material adverse change in the financial condition or business of
Borrower since the date of such financial statements. Borrower has no material
liabilities for taxes or long-term leases or commitments, except as disclosed
in
the financial statements.
5.6 No
Violations.
Borrower
is not in violation of any law, ordinance, rule or regulation to which it
or any
of its properties is subject except for a breach or default which could not
reasonably be expected to have a MAE.
5.7 Collateral.
Borrower owns and has possession of and has the right and power to grant
a
security interest in the Collateral, and the Collateral is genuine and free
from
liens, adverse claims, set-offs, defaults, prepayments, defenses and
encumbrances except those in favor of CNB. No bills of lading, warehouse
receipts or other documents or instruments of title are outstanding with
respect
to the Collateral or any portion of the Collateral, in favor of a Person
other
than Borrower. The office where Borrower keeps its records concerning all
Accounts is 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx XX 00000.
5.8 ERISA.
Borrower
is in compliance in all material respects with all applicable provisions
of the
Employee Retirement Income Security Act of 1974 (“ERISA”). No Reportable Event
(as defined in ERISA and the regulations issued thereunder [other than a
“Reportable Event” not subject to the provision for thirty (30) day notice to
the Pension Benefit Guaranty Corporation (“PBGC”) under such regulations]) has
occurred with respect to any benefit plan of Borrower nor are there any unfunded
vested liabilities under any benefit plan of Borrower. Borrower has met its
minimum funding requirements under ERISA with respect to each of its plans
and
has not incurred any material liability to the PBGC in connection with any
such
plan.
5.9 Consents.
No
consent, license, permit, or authorization of, exemption by, notice to, report
to, or registration, filing or declaration with, any governmental authority
or
agency is required in connection with the execution and performance by Borrower
of the Loan Documents or the transactions contemplated hereunder.
5.10 Use
of Proceeds.
Borrower
will use the proceeds of the Revolving Credit Loans for working capital,
general
corporate purposes, repurchases of Borrower’s outstanding securities, and to
finance the conversion of shares of Borrower’s common stock should the need
arise in conjunction with the closing of the acquisition of the Aston Funds.
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5.11 Regulation
U.
Borrower
is not engaged principally, or as one of its principal activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations U or X of the Federal Reserve Board).
No part of the proceeds of the Loans will be used by Borrower to purchase
or
carry any such margin stock or to extend credit to others for the purpose
of
purchasing or carrying such margin stock.
5.12 Environmental
Matters. The
operations of Borrower comply in all material respects with all applicable
federal, state and local environmental, health and safety statutes, regulations
and ordinances, and fully comply with all terms of all required permits and
licenses.
6. AFFIRMATIVE
COVENANTS. Borrower
agrees that until payment in full of all Obligations, Borrower will comply
with
the following covenants:
6.1 Books
and Records. Borrower
will maintain, in accordance with sound accounting practices, accurate records
and books of account showing, among other things, all Accounts, the proceeds
of
the sale or other disposition thereof and the collections therefrom. CNB
may, at
any reasonable time, subject to a limit of one time per year, unless a Potential
Event of Default or an Event of Default has occurred, and upon reasonable
notice
during regular business hours, inspect, audit, and make extracts from, or
copies
of, all books, records and other data, inspect any of Borrower’s properties and
confirm balances due on Accounts by direct inquiry to Account Debtors. Borrower
will furnish CNB with all information regarding the business or finances
of
Borrower promptly upon CNB’s request.
6.2 Financial
Statements. Borrower
will furnish to CNB on a continuing basis:
6.2.1 Within
forty-five (45) days after the end of each quarterly accounting period of
each
fiscal year, a financial statement consisting of not less than a balance
sheet,
income statement, reconciliation of net worth and statement of cash flows,
with
notes thereto, prepared in accordance with GAAP and accompanied by the
following: (a) supporting schedules of costs of goods sold, operating expenses
and other income and expense items, and (b) Borrower’s certification as to
whether any event has occurred which constitutes an Event of Default or
Potential Event of Default, and if so, stating the facts with respect thereto,
which financial statement may be internally prepared;
6.2.2 Within
one hundred and twenty (120) days after the close of Borrower’s fiscal year, a
copy of the annual audit report for Borrower including therein a balance
sheet,
income statement, reconciliation of net worth and statement of cash flows,
with
notes thereto, the balance sheet, income statement and statement of cash
flows
to be audited by a certified public accountant acceptable to CNB, certified
by
such accountant to have been prepared in accordance with GAAP and accompanied
by
the following: (a) supporting schedules of costs of goods sold, operating
expenses and other income and expense items, and (b) Borrower’s certification as
to whether any event has occurred which constitutes an Event of Default or
Potential Event of Default, and if so, stating the facts with respect
thereto;
6.2.3 As
soon
as available, any written report pertaining to material items involving
Borrower’s internal controls submitted to Borrower by Borrower’s independent
certified public accountants in connection with each annual or interim special
audit of the financial condition of Borrower made by such
accountants;
6.2.4 As
soon
as available, a copy of the letter to Borrower from its independent public
accountants, in form and substance satisfactory to CNB, setting forth the
scope
of such accountants’ engagement; and
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6.2.5 Such
additional information, reports and/or statements as CNB may, from time to
time,
reasonably request.
6.3 Taxes
and Premiums.
Borrower
will pay and discharge all taxes, assessments, governmental charges and real
and
personal property taxes, including, but not limited to, federal and state
income
taxes, employee withholding taxes and payroll taxes, and all premiums for
insurance required under this Agreement, prior to the date upon which penalties
are attached thereto.
6.4 Notice.
Borrower
will promptly advise CNB in writing of (a) the opening of any new, or the
closing of any existing, places of business, each location at which Inventory
or
Equipment is or will be kept, and any change to Borrower’s name, trade name or
other name under which it does business or of any such new or additional
name;
(b) the occurrence of any Event of Default or Potential Event of Default;
(c)
any litigation pending or threatened against Borrower where the amount or
amounts in controversy exceed $100,000.00; (d) any unpaid taxes of Borrower
which are more than fifteen (15) days delinquent unless the same are being
contested in good faith in bona
fide
proceedings; and (e) any other matter that might materially or adversely
affect
Borrower’s financial condition, property or business.
6.5 Fair
Labor Standards Act.
Borrower
will comply with the requirements of, and all regulations promulgated under,
the
Fair Labor Standards Act of 1938 (29 U.S.C. Code § 201 et seq.).
6.6 Corporate
Existence.
Borrower
will maintain its corporate existence and all of its rights, privileges and
franchises necessary or desirable in the normal course of its
business.
6.7 Compliance
with Law.
Borrower
will comply with all requirements of all applicable laws, rules, regulations,
orders of any governmental agency and all material agreements to which they
are
a party, except where noncompliance could not reasonably be expected to have
a
MAE.
6.8 Financial
Tests.
Borrower
will maintain:
6.8.1 Net
Worth
of not less than $20,000,000 at the end of any fiscal quarter; and
6.8.2 A
ratio
of Debt to EBITDA of not more than 2.0 to 1 at the end of any fiscal
quarter.
7. NEGATIVE
COVENANTS. Borrower
agrees that until payment in full of all Obligations, Borrower will not do
any
of the following, without CNB’s prior written consent:
7.1 Borrowing.
Create,
incur, assume or permit to exist any Debt, except (a) Debt to CNB, (b) Debt
junior in right of payment to the Obligations owing to CNB, and (c) trade
Debt
incurred in the ordinary course of business.
7.2 Sale
of Assets.
Sell,
lease or otherwise dispose of any of Borrower’s assets, other than in the
ordinary course of business.
7.3 Loans.
Make
loans or advances to any Person except credit extended to (a) Affiliates
in any
amount, or (b) officers not to exceed $1,000,000.00 in the aggregate.
7.4 Contingent
Liabilities. Assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
for the obligation of any Person including any Affiliate, except (a) by
the
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endorsement
of negotiable instruments for deposit or collection or similar transactions
in
the ordinary course of business, and (b) contingent liabilities in favor
of
CNB.
7.5 Investments.
Purchase
or acquire the obligations or stock of, or any other interest in, any
partnership, joint venture, limited liability company or corporation, except
(a)
investments permitted by Section 5.10, (b) direct obligations of the United
States of America; (c) investments in certificates of deposit issued by,
and
other deposits with, commercial banks organized under the United States or
a
State thereof having capital of at least One Hundred Million Dollars
($100,000,000.00); (d) investments in short-term money market instruments
or
money market mutual funds; and (e) investments in any investment product
advised
by any Affiliate.
7.6 Mortgages,
Liens, etc.
Mortgage, pledge, hypothecate, grant or contract to grant any security interest
of any kind in any property or assets, to anyone except (a) to secure Debt
incurred which is permitted by Section 7.1(b), and (b) Debt owed to
CNB.
7.7 Involuntary
Liens.
Permit
any involuntary liens to arise with respect to any property or assets including
but not limited to those arising from the levy of a writ of attachment or
execution, or the levy of any state or federal tax lien which lien will not
be
removed within a period of thirty (30) days.
7.8 Sale
and Leaseback. Enter
into any sale-leaseback transaction.
7.9 Mergers
and Acquisitions.
Enter
into any merger or consolidation, or acquire all or substantially all the
assets
of any Person, which act requires the incurring of Debt, except as permitted
by
Section 5.10.
7.10 Purchase
of Stock.
Purchase stock or partnership interests, except in (a) repurchases of Borrower’s
outstanding securities, or (b) transactions permitted by Section
5.10.
7.11 Event
of Default.
Permit a
default to occur under any document or instrument evidencing Debt incurred
under
any indenture, agreement or other instrument under which such Debt may be
issued, or any event to occur under any of the foregoing which would permit
any
holder of the Debt outstanding thereunder to declare the same due and payable
before its stated maturity, whether or not such acceleration occurs or such
default be waived.
8. SECURITY
AGREEMENT.
8.1 Grant
of Security Interest.
To
secure all Obligations hereunder as well as all other Obligations to CNB,
Borrower hereby grants and transfers to CNB a continuing security interest
in
the following property whether now owned or hereafter acquired:
8.1.1 All
of
Borrower’s Inventory;
8.1.2 All
of
Borrower’s Accounts;
8.1.3 All
of
Borrower’s general intangibles as that term is defined in the Code;
8.1.4 All
of
Borrower’s equipment, as that term is defined in the Code;
8.1.5 All
of
Borrower’s interest in any patents (now existing or pending), copyrights, trade
names, trademarks and service marks useful to the operation of Borrower’s
business;
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8.1.6 All
notes, drafts, acceptances, instruments, documents of title, policies and
certificates of insurance, chattel paper, guaranties and securities now or
hereafter received by Borrower or in which Borrower has or acquires an
interest;
8.1.7 All
cash
and noncash proceeds of the foregoing property, including, without limitation,
proceeds of policies of fire, credit or other insurance;
8.1.8 All
of
Borrower’s books and records pertaining to any of the Collateral described in
this Section; and
8.1.9 Any
other
Collateral which CNB and Borrower may designate as additional security from
time
to time by separate instruments.
8.2 Non-Transferable
Collateral.
The
grant of the security interest contained in Section 8.1 shall not extend
to, and
the term “Collateral” shall not include, any directly held investment property,
or any general intangibles, now or hereafter held or owned by the Borrower,
to
the extent, in each case, that (a) a security interest may not be granted
by the
Borrower in such directly held investment property or general intangibles
as a
matter of law, or under the terms of the governing document applicable thereto,
without the consent of one or more applicable parties thereto and (b) such
consent has not been obtained.
8.3 Notification
of Account Debtors.
CNB
will have the right to notify any Account Debtor to make payments directly
to
CNB, take control of the cash and noncash proceeds of any Account, and settle
any Account, which right CNB may exercise at any time whether or not an Event
of
Default has occurred or whether Borrower was theretofore making collections
thereon.
8.4 Attorney-In-Fact.
CNB or
any of its officers is hereby irrevocably made the true and lawful attorney
for
Borrower with full power of substitution to do the following: (a) endorse
the
name of Borrower upon any and all checks, drafts, money orders and other
instruments for the payment of moneys which are payable to Borrower and
constitute collections on Accounts; (b) execute in the name of Borrower any
schedules, assignments, instruments, documents and statements which Borrower
is
obligated to give CNB hereunder; (c) receive, open and dispose of all mail
addressed to Borrower; (d) notify the Post Office authorities to change the
address for delivery of mail addressed to Borrower to such address as CNB
will
designate; and (e) do such other acts in the name of Borrower which CNB may
deem
necessary or desirable to enforce any Account or other Collateral. The powers
granted CNB hereunder are solely to protect its interests in the Collateral
and
will not impose any duty upon CNB to exercise any such powers.
8.5 Limitation
on Remedies.
Notwithstanding anything to the contrary contained herein or in any other
Loan
Document, CNB hereby agrees that CNB shall not take any action whatsoever,
including, without limitation, in connection with taking actions regarding
the
Collateral, which would cause, or could reasonably be expected to cause,
an
assignment of any investment advisory contracts under the Investment Advisors
Act or the Investment Company Act. Without limiting the generality of the
foregoing, CNB hereby agrees that until the Required Consents have been
obtained, and notwithstanding the existence of any Event of Default, CNB
shall
not acquire or exercise:
8.5.1 the
right
to sell, hold or otherwise transfer the stock of Borrower or any Subsidiary
or
person or entity acquired by Borrower or any Subsidiary (such Subsidiary
or
person or entity so acquired being hereinafter referred to as the “Acquired
Entity”);
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8.5.2 any
voting or other consensual rights with respect to the stock of the Borrower
or
such Acquired Entity;
8.5.3 any
rights with respect to the management of Borrower or such Acquired Entity;
or
8.5.4 any
other
rights the acquisition or exercise of which would constitute an
Assignment.
8.5.5 For
purposes of this Section 8.5:
“Assignment”
shall mean any direct or indirect transfer or hypothecation of an investment
advisory contract by the assignor or of a controlling block of the assignor’s
outstanding voting securities by a security holder of the assignor, and shall
specifically include any “assignment” within the meaning of the Investment
Advisers Act of 1940 or the Investment Company Act of 1940.
“Consent”
shall mean (A) with respect to a client of an Acquired Entity whose contract
by
its terms terminates upon its Assignment (including, without limitation,
each
client that is a registered investment company), that Borrower or the respective
Acquired Entity shall have entered into a new contract with such client on
substantially equivalent terms to the terms of the existing contract, which
new
contract is effective after any Assignment, and (B) with respect to a client
of
an Acquired Entity whose contract requires consent from a party or parties
thereto to authorize an Assignment, that Borrower or the respective Acquired
Entity shall have obtained all such consents as may be required under such
contract or under the Investment Advisers Act of 1940.
“Required
Consents” shall mean Consents from investment advisory clients representing at
least 95% of the assets under management of each Acquired Entity.
9. EVENTS
OF DEFAULT.
9.1 Events
of Default.
The
occurrence of any of the following will constitute an Event of Default:
9.1.1 Borrower
fails to pay when due any installment of principal or interest or any other
amount payable under the Loan Documents;
9.1.2 Any
Person, other than CNB, which is a party to any Loan Document fails to perform
or observe any of the terms, provisions, covenants, conditions, agreements
or
obligations contained in the Loan Documents;
9.1.3 The
entry
of an order for relief or the filing of an involuntary petition with respect
to
Borrower under the United States Bankruptcy Code, the appointment of a receiver,
trustee, custodian or liquidator of or for any part of the assets or property
of
Borrower, or Borrower makes a general assignment for the benefit of
creditors;
9.1.4 Any
financial statement, representation or warranty made or furnished by Borrower
in
connection with the Loan Documents proves to be in any material respect
incorrect;
9.1.5 CNB’s
security interest in or lien on any portion of any Collateral becomes impaired
or otherwise unenforceable;
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9.1.6 Any
Person obtains an order or decree in any court of competent jurisdiction
enjoining or prohibiting Borrower or CNB or either of them from performing
this
Agreement, and such proceedings are not dismissed or such decree is not vacated
within ten (10) days after the granting thereof;
9.1.7 Borrower
fails or refuses to keep in full force and effect any governmental permit
or
approval which is necessary to the operation of its business;
9.1.8 All
or
substantially all of the property of Borrower is condemned, seized or otherwise
appropriated;
9.1.9 The
occurrence of (a) a Reportable Event as defined in ERISA which CNB determines
in
good faith constitutes grounds for the institution of proceedings to terminate
any pension plan by the PBGC, (b) an appointment of a trustee to administer
any
pension plan of Borrower, or (c) any other event or condition which might
constitute grounds under ERISA for the involuntary termination of any pension
plan of Borrower, where such event set forth in (a), (b) or (c) results in
a
significant monetary liability to Borrower;
9.1.10 A
change
in control of Borrower consisting of any of the following:
(a) Individuals
who, as of the date of this Agreement, are employees of or employees of an
Affiliate of Berkshire Capital Securities LLC no longer have operating control
over Borrower; or
(b) Approval
by the shareholders of Borrower of a reorganization, merger or consolidation;
or
(c) Approval
by the shareholders of Borrower of (A) a complete liquidation or dissolution
of
Borrower or (B) the sale or other disposition of all or substantially all
of the
assets of Borrower; or
9.1.11 The
Termination Date is not extended.
9.2 Notice
of Default and Cure of Potential Events of Default. Except
with respect to the Events of Default specified in Subsections 1, 3, or 5
above,
and subject to the provisions of the Section entitled “Additional Remedies”, CNB
will give Borrower at least ten (10) days’ written notice of any event which
constitutes or, with the lapse of time would become an Event of Default,
during
which time Borrower will be entitled to cure same.
9.3 CNB’s
Remedies. Upon
the
occurrence of an Event of Default, at the sole and exclusive option of CNB,
and
upon written notice to Borrower, CNB may (a) declare the principal of and
accrued interest on the Loans, and all other Obligations immediately due
and
payable in full, whereupon the same will immediately become due and payable;
(b)
terminate this Agreement as to any future liability or obligation of CNB,
but
without affecting CNB’s rights and security interest in the Collateral and
without affecting the Obligations owing by Borrower to CNB; and/or (c) exercise
its rights and remedies under the Loan Documents and all rights and remedies
of
a secured party under the Code and other applicable laws with respect to
all of
the Collateral. Notwithstanding anything to the contrary contained herein
or in
any other Loan Document, CNB hereby agrees that CNB shall not take any action
whatsoever, including, without limitation, in connection with taking actions
regarding the Collateral, which would cause, or could reasonably be expected
to
cause, an assignment of any investment advisory contracts under the Investment
Advisors Act or the Investment Company Act.
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9.4 Additional
Remedies.
Notwithstanding any other provision of this Agreement, upon the occurrence
of
any event, action or inaction by Borrower, or if any action or inaction is
threatened which CNB reasonably believes will materially affect the value
of the
Collateral, CNB may take such legal actions as it deems necessary to protect
the
Collateral, including but not limited to, seeking injunctive relief and the
appointment of a receiver, whether or not an Event of Default or Potential
Event
of Default has occurred under this Agreement.
10. MISCELLANEOUS.
10.1 Reimbursement
of Costs and Expenses. Subject
to a $20,000 cap on costs and expenses through the closing of this Agreement,
Borrower will reimburse CNB for all reasonable costs and expenses relating
to
this Agreement including, but not limited to, filing, recording or search
fees,
audit or verification fees, and other out-of-pocket expenses, and reasonable
attorneys’ fees and expenses expended or incurred by CNB (or allocable to CNB’s
in-house counsel) in documenting or administering the Loan Documents or
collecting any sum which becomes due CNB under the Loan Documents, irrespective
of whether suit is filed, or in the protection, perfection, preservation
or
enforcement of any and all rights of CNB in connection with the Loan Documents,
including, without limitation, the fees and costs incurred in any out-of-court
work-out or a bankruptcy or reorganization proceeding.
10.2 Dispute
Resolution.
10.2.1 Mandatory
Arbitration. At
the
request of CNB or Borrower, any dispute, claim or controversy of any kind
(whether in contract or tort, statutory or common law, legal or equitable)
now
existing or hereafter arising between CNB and Borrower and in any way arising
out of, pertaining to or in connection with: (a) this Agreement, and/or any
renewals, extensions, or amendments thereto; (b) any of the Loan Documents;
(c)
any violation of this Agreement or the Loan Documents; (d) all past, present
and
future loans; (e) any incidents, omissions, acts, practices or occurrences
arising out of or related to this Agreement or the Loan Documents causing
injury
to either party whereby the other party or its agents, employees or
representatives may be liable, in whole or in part, or (f) any aspect of
the
past, present or future relationships of the parties, will be resolved through
final and binding arbitration conducted at a location determined by the
arbitrator in Los Angeles, California, and administered by the American
Arbitration Association (“AAA”) in accordance with the California Arbitration
Act (California Code of Civil Procedure §1280 et. seq.) and the then existing
Commercial Rules of the AAA. Judgment upon any award rendered by the
arbitrator(s) may be entered in any state or federal courts having jurisdiction
thereof.
10.2.2 Real
Property Collateral. No
controversy or claim will be submitted to arbitration without the consent
of all
the parties if, at the time of the proposed submission, such controversy
or
claim arises from or relates to an obligation owed to CNB which is secured
in
whole or in part by real property collateral. If all parties do not consent
to
submission of such a controversy or claim to arbitration, the controversy
or
claim will be determined as provided in the subsection entitled “Judicial
Reference”.
10.2.3 Judicial
Reference. At
the
request of any party, a controversy or claim which is not submitted to
arbitration will be determined by a reference in accordance with California
Code
of Civil Procedure §638 et. seq. If such an election is made, the parties will
designate to the court a referee or referees selected under the auspices
of the
AAA in the same manner as arbitrators are selected in AAA-sponsored proceedings.
The presiding referee of the panel, or the referee if there is a single referee,
will be an active attorney or retired judge. Judgment upon the award rendered
by
such referee
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or
referees will be entered in the court in which such proceeding was commenced
in
accordance with California Code of Civil Procedure §644 and §645.
10.2.4 Provisional
Remedies, Self Help and Foreclosure. No
provision of this Agreement will limit the right of any party to: (a) foreclose
against any real property collateral by the exercise of a power of sale under
a
deed of trust, mortgage or other security agreement or instrument, or applicable
law, (b) exercise any rights or remedies as a secured party against any personal
property collateral pursuant to the terms of a security agreement or pledge
agreement, or applicable law, (c) exercise self help remedies such as setoff,
or
(d) obtain provisional or ancillary remedies such as injunctive relief or
the
appointment of a receiver from a court having jurisdiction before, during
or
after the pendency of any arbitration or referral. The institution and
maintenance of an action for judicial relief or pursuit of provisional or
ancillary remedies, or exercise of self help remedies will not constitute
a
waiver of the right of any party, including the plaintiff, to submit any
dispute
to arbitration or judicial reference.
10.2.5 Powers
and Qualifications of Arbitrators. The
arbitrator(s) will give effect to statutes of limitation, waiver and estoppel
and other affirmative defenses in determining any claim. Any controversy
concerning whether an issue is arbitratable will be determined by the
arbitrator(s). The laws of the State of California will govern. The arbitration
award may include equitable and declaratory relief. All arbitrator(s) selected
will be required to be a practicing attorney or retired judge licensed to
practice law in the State of California and will be required to be experienced
and knowledgeable in the substantive laws applicable to the subject matter
of
the controversy or claim at issue.
10.2.6 Discovery.
The
provisions of California Code of Civil Procedure Section 1283.05 or its
successor section(s) are incorporated herein and made a part of this Agreement.
Depositions may be taken and discovery may be obtained in any arbitration
under
this Agreement in accordance with said section(s).
10.2.7 Miscellaneous.
The
arbitrator(s) will determine which is the prevailing party and will include
in
the award that party’s reasonable attorneys’ fees and costs (including allocated
costs of in-house legal counsel). Each party agrees to keep all controversies
and claims and the arbitration proceedings strictly confidential, except
for
disclosures of information required in the ordinary course of business of
the
parties or by applicable law or regulation.
10.3 Cumulative
Rights and No Waiver.
All
rights and remedies granted to CNB under the Loan Documents are cumulative
and
no one such right or remedy is exclusive of any other. No failure or delay
on
the part of CNB in exercising any power, right or remedy under any Loan Document
will operate as a waiver thereof, and no single or partial exercise or waiver
by
CNB of any such power, right or remedy will preclude any further exercise
thereof or the exercise of any other power, right or remedy.
10.4 Applicable
Law.
This
Agreement will be governed by California law.
10.5 Lien
and Right of Setoff.
Borrower
grants to CNB a continuing lien for all Obligations of Borrower to CNB upon
any
and all moneys, securities and other property of Borrower and the proceeds
thereof, now or hereafter held or received by or in transit to CNB from or
for
Borrower, whether for safekeeping, custody, pledge, transmission, collection
or
otherwise, and also upon any and all deposits (general or special) and credits
of Borrower with, and any and all claims of Borrower against CNB at any time
existing. Upon the occurrence of any Event of Default, CNB is authorized
at any
time and from time to time, without notice to Borrower or any other Person,
to
setoff, appropriate and apply
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any
or
all items hereinabove referred to against all Obligations of Borrower whether
under this Agreement or otherwise, and whether now existing or hereafter
arising.
10.6 Counterparts.
This
Agreement may be signed in any number of counterparts which, when taken
together, will constitute but one agreement.
10.7 Indemnification.
Borrower
will, at all times, defend and indemnify and hold CNB (which for purposes
of
this Section includes CNB’s parent company and subsidiaries and all of their
respective shareholders, directors, officers, employees, agents,
representatives, successors, attorneys, and assigns) harmless from and against
any and all liabilities, claims, demands, causes of action, losses, damages,
expenses (including without limitation reasonable attorneys’ fees) costs,
settlements, judgments or recoveries arising out of or resulting from (a)
any
breach of the representations, warranties, agreements or covenants made by
Borrower herein; (b) any suit or proceeding of any kind or nature whatsoever
against CNB arising from or connected with the transactions contemplated
by the
Loan Documents or any of the rights and properties assigned to CNB hereunder;
and/or (c) any suit or proceeding that CNB may deem necessary or advisable
to
institute, in the name of CNB, Borrower or both, against any other Person,
for
any reason whatsoever to protect the rights of CNB hereunder or under any
of the
documents, instruments or agreements executed or to be executed pursuant
hereto,
including attorneys’ fees and court costs and all other costs and expenses
incurred by CNB, all of which will be charged to and paid by Borrower and
will
be secured by the Collateral provided, notwithstanding the foregoing, the
Borrower shall not be required to indemnify CNB or any other person for any
liabilities, claims, demands, causes of action, damages, expenses, costs,
settlements, judgments or recoveries arising as a result of CNB’s or such other
person’s gross negligence or willful misconduct. Any obligation or liability of
Borrower to CNB under this Section will survive the expiration or termination
of
this Agreement and the repayment of all Loans and the payment or performance
of
all other Obligations of Borrower to CNB.
10.8 Notices.
Any
notice required or permitted under any Loan Document will be given in writing
and will be deemed to have been given when personally delivered or when sent
by
the U.S. mail, postage prepaid, certified, return receipt requested, properly
addressed. For the purposes hereof, the addresses of the parties will, until
further notice given as herein provided, be as follows:
CNB:
City
National Bank, Structured Finance Dept.
000
Xxxxx
Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxx,
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxxx Xxxxx, Senior Vice President
with
copy
to:
City
National Bank, Legal Department
000
Xxxxx
Xxxxxxx Xxxxx
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000-0000
Attention:
Managing Counsel, Credit Unit
Borrower:
000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx
XX
00000
Attention:
Xxxxxxx Forth, Chief Financial Officer
10.9 Assignments.
The
provisions of this Agreement are hereby made applicable to and will inure
to the
benefit of CNB’s successors and assigns and Borrower’s successors and assigns;
provided, however, that Borrower may not assign or transfer its rights or
obligations under this Agreement without
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the
prior
written consent of CNB. CNB may assign this Agreement and its rights and
duties
hereunder, provided, however, so long as no Event of Default has occurred
and is
continuing, CNB may not transfer any of its rights, duties and obligations
hereunder without the prior written consent of Borrower. CNB reserves the
right
to sell, assign, transfer, negotiate, or grant participations in all or any
part
of, or any interest in CNB’s rights and benefits hereunder, provided, however,
so long as no Event of Default has occurred and is continuing, CNB may not
sell,
assign, transfer, negotiate or grant participations in all or any part of,
or
any interest in CNB’s rights and benefits hereunder without the prior written
consent of Borrower. In connection therewith, CNB may disclose all documents
and
information which CNB now or hereafter may have relating to Borrower or
Borrower’s business so long as such recipient agrees to keep all such
information confidential.
10.10 Accounting
Terms.
Except
as otherwise stated in this Agreement, all accounting terms and financial
covenants and information will be construed in conformity with, and all
financial data required to be submitted will be prepared in conformity with,
GAAP as in effect on the date hereof.
10.11 Severability.
Any
provision of the Loan Documents which is prohibited or unenforceable in any
jurisdiction, will be, only as to such jurisdiction, ineffective to the extent
of such prohibition or unenforceability, but all the remaining provisions
of the
Loan Documents will remain valid.
10.12 Complete
Agreement.
This
Agreement, together with the other Loan Documents, constitutes the entire
agreement of the parties and supersedes any prior or contemporaneous oral
or
written agreements or understandings, if any, which are merged into this
Agreement. The other Loan Documents are subject to the terms and conditions
of
this Agreement, and, in the event of a conflict between the other Loan Documents
and this Agreement, the provisions of this Agreement shall control. This
Agreement may be amended only in a writing signed by Borrower and
CNB.
This
Agreement is executed as of the date stated at the top of the first page.
“Borrower”
Delaware
corporation
By:__________________________________
Xxxxxxx
Xxxxx, Chief Executive Officer
“CNB”
City
National Bank,
a
national
banking association
By:___________________________________
Xxxxx
Xxxxx, Senior Vice President
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