Exhibit 10.12
CREDIT AGREEMENT
BETWEEN
BANK LEUMI USA, AS LENDER
AND
COMVERGE TECHNOLOGIES, INC., AS BORROWER
Dated: As of February 7, 2000
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS.....................................................1
1.1 Definitions.....................................................1
1.2 Accounting Terms................................................5
SECTION 2. FINANCING.......................................................5
2.1 Term Loan.......................................................5
2.2 Interest........................................................6
2.2.1 LIBOR Rate...............................................6
2.2.2 Availability.............................................6
2.2.3 Calculation of Interest; Payment.........................6
2.2.4 Illegality...............................................7
2.2.5 Increased Costs..........................................7
2.2.6 Overdue Payments.........................................7
2.3 Prepayment......................................................8
2.4 Manner of Payments..............................................8
2.5 Security........................................................8
2.5.1 Security Agreements......................................8
2.5.2 Guarantee................................................8
2.5.3 Cash Collateral ........................................ 8
SECTION 3. CONDITIONS PRECEDENT............................................9
3.1. Evidence of Corporate Action....................................9
3.2. Representations and Warranties..................................9
3.3. Borrower's Obligations..........................................9
3.4. DSSI's Obligations..............................................9
3.5 Opinions.......................................................10
3.6 Event of Default...............................................10
SECTION 4. REPRESENTATIONS AND WARRANTIES.................................10
4.1 Organization...................................................10
4.1.1 Borrower's Corporate Existence and
Good Standing..........................................10
4.1.2 Organization Chart......................................10
4.1.3 DSSI's Corporate Existence and Good
Standing.............................................10
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4.2 Authority......................................................10
4.2.1 Borrower's Authority...................................10
4.2.2 DSSI's Authority.......................................11
4.3 No Conflicts...................................................11
4.4 Compliance and Other Agreements................................12
4.4.1 Agreements, etc.........................................12
4.4.2 Orders, etc.............................................12
4.4.3 Agreements, Etc.........................................12
4.5 ERISA..........................................................12
4.6 Investment Company.............................................13
4.7 Approvals and Consents.........................................13
4.8 Regulation U, etc..............................................13
4.9 Financial Statements...........................................13
4.10 Taxes..........................................................13
4.11 Title to Properties/Priority of Liens..........................14
4.11.1 Title..................................................14
4.11.2 Security Interest......................................14
4.12 Litigation.....................................................14
4.13 Insurance......................................................14
4.14 Disclosure.....................................................15
4.15 No Event of Default............................................15
4.16 Use of Proceeds................................................15
SECTION 5. AFFIRMATIVE COVENANTS..........................................15
5.1 Preservation of Existence......................................15
5.2 Maintenance of Properties; Insurance...........................15
5.2.1 Properties..............................................15
5.2.2 Insurance...............................................15
5.3 Payment of Taxes...............................................16
5.4 Accounting; Financial Statements and Other
Information.................................................16
5.4.1 Quarterly Financial Reports.............................16
5.4.2 Annual Financial Reports................................16
5.4.3 Reports.................................................17
5.4.4 SEC Filings.............................................17
5.4.5 Other Information.......................................17
5.5 Compliance.....................................................17
5.6 ERISA..........................................................17
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5.7 Payment of Indebtedness........................................18
5.8 Notification to Bank...........................................18
5.9 Further Assurances.............................................18
5.10 Inspection.....................................................18
5.11 Stock Ownership................................................19
SECTION 6. NEGATIVE COVENANTS.............................................19
6.1 Limitation on Liens............................................19
6.2 Mergers and Consolidations.....................................19
6.3 Change in Business.............................................19
6.4 Transfer of Assets.............................................19
6.5 No Pre-Payments................................................20
6.6 Guarantees to Others...........................................20
6.7 Change in Fiscal Year..........................................20
SECTION 7. EVENTS OF DEFAULT/REMEDIES.....................................20
7.1.1 Principal or Interest...................................20
7.1.2 Obligations.............................................20
7.1.3 Certain Covenants.......................................20
7.1.4 Other Covenant..........................................20
7.1.5 Representations.........................................20
7.1.6 Voluntary Insolvency Proceedings........................21
7.1.7 Involuntary Insolvency Proceedings......................21
7.1.8 Divestiture of Assets...................................21
7.1.9 Judgments...............................................21
7.1.10 Other Defaults.........................................22
7.1.11 ERISA..................................................22
7.1.12 Levies.................................................22
7.2 Remedies.......................................................22
SECTION 8. MISCELLANEOUS..................................................24
8.1 Expenses.......................................................24
8.2 Survival of Agreement..........................................24
8.3 No Waiver; Cumulative Remedies.................................24
8.4 Notices........................................................25
8.5 Amendments and Waivers.........................................25
8.6 Applicable Law.................................................25
8.7 Successors.....................................................25
8.8 Partial Invalidity.............................................25
8.9 Headings.......................................................25
8.10 WAIVER OF JURY TRIAL...........................................25
8.11 JURISDICTION; SERVICE OF PROCESS...............................26
8.12 Conflicts......................................................26
EXHIBITS AND SCHEDULES
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Exhibit A - Form of Note
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CREDIT AGREEMENT, dated February 7, 2000, between COMVERGE TECHNOLOGIES,
INC., a Delaware corporation having an office at 00 Xxxxxxxx Xxxx, Xxxxxxx Xxxx,
Xxx Xxxxxx (the "Borrower"), and BANK LEUMI USA, a New York banking corporation
having an office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (the "Bank").
R E C I T A L:
A. Data Systems & Software Inc., a Delaware corporation ("DSSI"), now
and at all times since August 30, 1999, has owned not less than seventy (70%)
percent of the issued and outstanding shares of the Borrower. Pursuant to an
Amended and Restated Credit Agreement, dated said date (the "First Restated
Agreement"), the Bank made a loan to DSSI, the proceeds of which were used by
DSSI, among other things, to finance the acquisition by the Borrower of
substantially all of the assets of the Control Systems Division of Scientific
Atlanta Corporation (the "Acquisition") and to finance, in part, the working
capital requirements of the Borrower.
B. Concurrently, the Restated Agreement is being terminated, and DSSI is
repaying the loan made by The Bank to it pursuant thereto, and is satisfying all
other obligations which it has to the Bank pursuant to the Restated Credit
Agreement. The Bank, in consideration thereof, has agreed to enter into this
Credit Agreement with the Borrower, and subject to the terms and conditions
herein set forth, to make a term loan to the Borrower in the principal amount of
$6,000,000 (the "Term Loan"). The proceeds of the Term Loan are to be used, in
part, by the Borrower to repay DSSI for the loans made by DSSI to the Borrower,
to finance the Acquisition and to finance, in part, the Borrower's working
capital requirements.
NOW, THEREFORE, IT IS AGREED:
SECTION 1. DEFINITIONS.
1.1 Definitions. As used in this Agreement and the Financing
Agreements, the following terms shall have the following meanings unless the
context otherwise requires:
"Affiliate" means and includes any Person (i) which directly or
indirectly controls, or is controlled by, or is under common control with the
Borrower; (ii) which directly or indirectly beneficially owns or holds fifty
percent (50%) or more of any voting stock of either the Borrower or of any
Guarantor, or (iii) fifty percent (50%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Borrower or one of its
Affiliates. The term "control" means the possession, directly or indirectly, of
the power to direct or
cause the direction of the management policies of the Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agreement" means this Credit Agreement, as the same may be
amended or supplemented from time to time.
"Acquisition" shall have the meaning defined in Recital A.
"Bank" means Bank Leumi USA, a New York banking corporation.
"Borrower" means Comverge Technologies, Inc., a Delaware
corporation.
"Business Day" means any day other than (i) a Saturday, Sunday or
other day on which commercial banks in New York, New York are authorized or
required to close under the laws of the State of New York, and (ii) any day on
which commercial banks in London are not open for dealing in dollar deposits in
the London Interbank Market.
"Cash Collateral" shall have the meaning defined in Section
2.5.3.
"Consolidated Group" shall have the meaning defined in Section
4.9.
"DSSI" shall have the meaning defined in Recital A.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereof.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with the Borrower would be treated as a single
employer under Section 4001 (b)(1) of ERISA.
"Eurocurrency Reserve Requirement" means, for any Interest
Period, the daily average of the stated maximum rate (expressed as a decimal) at
which reserves (including any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation D by the
Bank against "Eurocurrency Liabilities" (as such term is used in Regulation D),
but without benefit or credit of proration, exemptions or offsets that might
otherwise be available to the Bank from time to time under Regulation D. Without
limiting the effect of the foregoing, the Eurocurrency Reserve Requirement shall
reflect any other reserves required to be maintained by the Bank against (i) any
category of liabilities that includes deposits by reference to which the LIBOR
Rate is to be determined, or (ii) any category or extension of credit or other
assets that include loans where the
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interest or other charges are based upon The London Interbank Offered Rate.
"Financing Agreements" means the following agreements and
instruments (as such agreements and instruments may be hereafter amended
or supplemented): (i) the Security Agreement, (ii) the Note, (iii) the Guaranty,
and (iv) any other agreements or other collateral documents delivered to the
Bank in connection with the Obligations, whether or not pursuant to this
Agreement.
"GAAP" means generally accepted accounting principles as used by
the United States Financial Accounting Standards Board, as in effect from time
to time, consistently applied.
"Guaranty" shall have the meaning set forth in Section 2.5.2 of
this Agreement.
"Interest Period" means (i) initially, the period commencing on
the date hereof and ending on the same day three (3) months thereafter, and (ii)
thereafter, each period commencing on the last day of the next preceding
Interest Period and ending on the same day three months thereafter; provided,
however, that one (a) each such Interest Period that commences on the last
Business Day of a calendar month (or on any day for which there is not
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month,
(b) no Interest Period may extend beyond the Maturity Date, and (c) if an
Interest Period would end on a day that is not a Business Day, such Interest
Period shall be extended to the next Business Day, unless such Business Day
would fall in the next calendar month, in which event such Interest Period shall
end on the immediately preceding Business Day.
"Knowledge" whether with an initial upper or lower case means the
knowledge of any senior executive of the Borrower or of the Guarantor,
including, but not limited to their Chief Financial Officers.
"LIBOR Rate" means the rate per annum (rounded upward, if
necessary, to the nearest 1/16 of 1%) determined by the Bank to be equal to the
quotient of (i) the London Interbank Offered Rate for the principal balance of
the Term Loan for such Interest Period, divided by (ii) one minus the
Eurocurrency Reserve Requirement for such Interest Period.
"London Interbank Offered Rate" applicable to any Interest Period
means: (i) the arithmetic mean (rounded upward to the nearest 1/16 of 1%) of the
rates per annum for dollar deposits for the relevant Interest Period which
appear on page "LIBOR" of the Reuters Monitor Money Rates Service (or such other
page(s) as may replace the LIBOR page for the purpose of displaying offered
rates of leading reference banks
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in London for interbank deposits in dollars) at or about 11:00 a.m., London
time, on the second Business Day prior to the commencement of the Interest
Period, and (ii) if the rate may not be determined by the Bank as provided in
the preceding clause (i) for any reason as determined by the Bank in its sole
judgment, then the rate equal to the rate per annum at which dollar deposits are
offered to the Bank or any of its Affiliates in the London Interbank Market at
11:00 a.m., London time,, two (2) Business Days prior to the commencement of an
Interest Period in an amount comparable to the Interest Period and in the
principal amount of the Term Loan which shall be outstanding during such
Interest Period.
"Maturity Date" shall have the meaning defined in Section 2.1.
"Multiemployer Plan" means a Plan described in Section 4001(a)(3)
of ERISA which covers employees of the Borrower or any of its ERISA Affiliates.
"Note" means the promissory note evidencing the Term Loan.
"Obligations" means collectively the Term Loan and any fees,
charges or other financial obligations of the Borrower, the Guarantor or any of
their Affiliates to the Bank pursuant to this Agreement, any of the Financing
Agreements, or any other agreement with the Bank.
"Person" means an individual, partnership, joint venture, firm,
corporation, trust, charitable institution or other business or legal entity.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Plan" means any plan established, maintained or to which
contributions have been made by the Borrower or any of its ERISA Affiliates, and
which is subject to Title IV of ERISA.
"Prohibited Transaction" means any transaction of the type set
forth in Section 406 of ERISA, and not exempt under Section 408 of ERISA or
Section 4975 of the Internal Revenue Code of 1954, as amended from time to time.
"Reference Rate" means the rate of interest designated by the
Bank, and in effect from time to time, as the "Reference Rate."
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System, as amended or supplemented from time to time.
"Reportable Event" means any of the events set forth in
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Section 4043 of ERISA, if such event reasonably may result in a liability of the
Borrower to the Plan or the PBGC.
"Restated Agreement" shall have the meaning defined in Recital B.
"Security Agreement" shall have the meaning set forth in
Sections 2.5.1 of this Agreement.
"Term Loan" shall have the meaning defined in Recital B.
1.2 Accounting Terms. Any accounting terms used in this
Agreement which are not specifically defined herein shall have the meanings
customarily given to such terms in accordance with United States GAAP. In the
event that changes in GAAP shall be mandated by the United States Financing
Accounting Standards Board, and such changes would materially modify the
interpretation or computation of the financial covenants contemplated by this
Agreement at the time of execution hereof, then in such event such changes shall
not be followed in calculating the financial covenants.
SECTION 2. FINANCING.
2. Subject to and upon the terms and conditions set forth in this
Agreement and the Financing Agreements, the Bank hereby agrees to provide a
Credit Facility to the Borrower as follows:
2.1 Term Loan. Concurrently the Bank is making the Term Loan
to the Borrower in the principal amount of $6,000,000, The Term Loan will mature
on February 1, 2002 (the "Maturity Date"). The principal of the Term Loan may be
prepaid in whole or in part as provided in Section 2.3. Concurrently with the
execution and delivery of this Agreement, the Borrower is evidencing its
obligation to pay the principal of, and interest on, the Term Loan by executing
and delivering a term note in the form of Exhibit A annexed (the "Note") to the
Bank in the principal sum of $6,000,000.
2.2 Interest.
2.2.1 LIBOR Rate. Except as otherwise expressly
provided in this Section 2.2, the Borrower shall pay interest to the Bank on the
outstanding and unpaid principal amount of the Term Loan at a rate per annum
equal to the LIBOR Rate plus three quarters of one percent (3/4%).
2.2.2 Availability. The Bank shall, as soon as
practicable after 10:00 a.m., New York City time, two (2) Business Days prior to
the commencement of any Interest Period, determine the LIBOR Rate applicable to
the Term Loan and such LIBOR Rate shall be applicable
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to the Term Loan during such Interest Period. In the event the Bank shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that dollar deposits in an amount approximately equal to the Term
Loan, with maturities comparable to the Interest Period, are not generally
available at such time in the London Interbank Market, or the rate at which such
dollar deposits are being offered will not adequately and fairly reflect the
cost to the Bank of making or maintaining a LIBOR Rate on the Term Loan or of
funding the same in the London Interbank Market during such Interest Period, or
reasonable means do not exist for ascertaining a LIBOR Rate, or a LIBOR Rate on
the Term Loan would be in excess of the maximum interest rate which the Borrower
may by law be required to pay, the Bank shall so notify the Borrower and the
Term Loan shall, on the date that otherwise would have been the first date of
the Interest Period, and at all times thereafter until the Bank notifies the
Borrower that the circumstances giving rise to such suspension no longer exist,
bear interest at a rate per annum equal the Reference Rate plus three quarters
of one percent (3/4%).
2.2.3 Calculation of Interest; Payment. Interest on
the Term Loan shall be calculated on the basis of the actual number of days
elapsed in a 360-day year and shall be due and payable on the last day of the
Interest Period with respect thereto. Whenever interest due on the Term Loan or
any portion thereof (as the case may be) shall be calculated by reference to the
Reference Rate, interest shall be due and payable on the outstanding principal
sum of the Term Loan or such portion (as the case may be) on the last day of
each month.
2.2.4 Illegality. Notwithstanding any other
provision in this Agreement, if the Bank determines that any applicable law,
rule or regulation, or any change therein, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Bank with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency shall
make it unlawful or impossible for the Bank to maintain or fund loans at the
LIBOR Rate or to give effect to its obligations as contemplated hereby, then
upon notice by the Bank to the Borrower, the Term Loan shall be automatically
converted to (and shall at all times thereafter, until the Bank notifies that
Borrower that such circumstances no longer exist, remain as) a loan bearing
interest at the Reference Rate plus three quarters of one percent (3/4%), but in
no event in excess of the maximum rate of interest permitted to be charged to
the Borrower pursuant to applicable law.
2.2.5 Increased Cost. The Borrower shall pay to the
Bank from time to time such amounts as the Bank may determine to be necessary to
compensate the Bank for any costs incurred by the Bank
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which the Bank determines are attributable to its making or maintaining any
loans at the LIBOR Rate hereunder, or any reduction in any amount receivable by
the Bank under this Agreement or the Note (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any change after the date of this Agreement in U.S. federal,
state, municipal, or foreign laws or regulations (including Regulation D), or
the adoption or making after such date of any interpretations, directives, or
requirements applying to a class of banks including the Bank of or under any
U.S. federal, state, municipal, or any foreign laws or regulations (whether or
not having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof ("Regulatory Change"),
which: (i) changes the basis of taxation of any amounts payable to the Bank
under this Agreement or the Note (other than taxes imposed on the overall net
income of the Bank for the Term Loan); or (ii) imposes or modifies any reserve,
special deposit, compulsory loan, or similar requirements relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, the Bank (including the Term Loan or any deposits referred to in
the definition of LIBOR Rate; or iii) imposes any other condition affecting this
Agreement or the Note (or any of such extensions of credit or liabilities). The
Bank will notify the Borrower of any event occurring after the date of this
Agreement which will entitle the Bank to compensation pursuant to this Section
2.2.5 as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. Determinations by the Bank for purposes
of this Section 2.2.5 of the effect of any Regulatory Change on its costs of
making or maintaining loans based on the LIBOR Rate or on amounts receivable by
it in respect of the Term Loan, and of the additional amounts required to
compensate the Bank in respect of any Additional Costs, shall be conclusive,
provided that such determinations are made on a reasonable basis.
2.2.6 Overdue Payments. If any payment of principal
(whether due at maturity, upon acceleration or otherwise), interest or other
fees or charges payable by the Borrower hereunder, or under any of the Financing
Agreements, shall not be paid when due, the Borrower will pay interest on the
overdue payment for the period for which it is overdue, on demand, at the higher
of twelve percent (12%) or three percent (3%) per annum in excess of the then
interest rate otherwise payable pursuant to this Agreement, but in no event in
excess of the maximum rate permitted by applicable law.
2.3 Prepayment. The Borrower may, upon at least five (5)
Business Days' notice to the Bank, prepay the Term Loan, in whole or in part,
with accrued interest to the date of such prepayment on the amount prepaid,
provided that (i) each partial prepayment shall be in a principal amount which
is not less than $250,000 and (ii) each prepayment shall be made only on the
last day of the Interest Period.
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The Borrower shall pay to the Bank, upon the request of the Bank, such amount or
amounts as shall be sufficient (in the reasonable opinion of the Bank) to
compensate it for any loss, cost or expenses incurred as a result of any payment
on account of the Term Loan on a date other than the last day of the Interest
Period including, but not limited to, acceleration of the Term Loan by the Bank
pursuant to Section 7.
2.4 Manner of Payments. All payments required to be made
by the Borrower hereunder on account of principal, interest or fees shall be
made in lawful money of the United States, in immediately available funds, at
the office of the Bank at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such
other place as the holder of the Note shall specify in writing. Whenever any
payment hereunder, or under any of the Financing Agreements, becomes due on a
day on which the Bank is closed (as required or permitted by law or otherwise),
such payment shall be made not later than the next succeeding business day of
the Bank, and such extension of time shall be included in the computation of
interest. The Borrower authorizes (but shall not require) the Bank to debit any
account maintained by the Borrower with the Bank, on any date on which a payment
is due hereunder or under any of the Financing Agree ments, in an amount equal
to any unpaid portion of such payment.
2.5 Security.
2.5.1 Security Agreement. Concurrently with the
execution and delivery of this Agreement, DSSI is granting a valid perfected
first priority security interest to the Bank in the Cash Collateral to secure
payment by the Borrower and DSSI of all of their Obligations to the Bank, by
executing and delivering to the Bank a Security Agreement, dated as of even date
herewith (the "Security Agreement").
2.5.2 Guarantee. Concurrently with the execution and
delivery of this Agreement, DSSI is guaranteeing payment of all of the
Obligations of the Borrower to the Bank by executing and delivering to the Bank
a Guarantee, dated as of even date herewith (each a "Guaranty").
2.5.3 Cash Collateral. Concurrently with the
execution of this Agreement, DSSI as collateral under its Security Agreement,
has pledged a Certificate of Deposit to the Bank (the "Cash Collateral") in an
aggregate principal amount which is not less than $6,000,000, as collateral
security for payment of the Term Loan and the other Obligations, with a maturity
date of February 10, 2002 (the "Cash Collateral"). Unless an Event of Default
shall have occurred, the Bank shall remit to DSSI all interest earned on the
Cash Collateral within ten (10) days of the payment date thereof.
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SECTION 3. CONDITIONS PRECEDENT. The obligation of the Bank to
execute and deliver this Agreement, and to make the Term Loan, is
subject to the conditions precedent that:
3.1. Evidence of Corporate Action. The Bank shall have received
(i) Certificates of Good Standing from the Secretary of State of Delaware,
listing all charter documents of the Borrower and DSSI on file; (ii) a
Certificates of an authorized officer of each of the Borrower and DSSI
certifying (a) that attached thereto is a true and complete copy of resolutions
adopted by the Board of Directors of the
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Borrower or DSSI, as is appropriate, authorizing the execution, delivery and
performance of this Agreement and such Financing Agreements as to which it is a
party, (b) the incumbency and specimen signature of each officer of the Borrower
and DSSI executing the said documents, and a certification by another officer
thereof as to the incumbency and signature of the authorized officer, (iii)
copies of the Certificate of Incorporation and By-Laws of the Borrower and DSSI,
each as amended to date, certified as complete and correct by its Secretary, and
(iv) such other documents as the Bank or its counsel may reasonably request, in
order that all legal matters incident to the making of the Term Loan, shall be
satisfactory to the Bank and its counsel.
3.2. Representations and Warranties. All representations
and warranties contained herein or otherwise made to the Bank pursuant
to or in connection with this Agreement or any of the Financing
Agreements, shall be correct and complete in all material respects.
3.3. Borrower's Obligations. The Borrower shall have
executed and delivered to the Bank (i) the Note, and (ii) such other
documents as the Bank shall reasonably require.
3.4. DSSI's Obligations. DSSI shall have (i) satisfied all of
its obligations to the Bank pursuant to the Restated Agreement, and all of the
documents executed and delivered by it pursuant thereto, (ii) executed and
delivered to the Bank its Guaranty and Security Agreement and such other
documents as the Bank shall reasonably require, and (iii) deposited the Cash
Collateral with the Bank.
3.5 Opinions. The Bank shall have received a written opinions
from counsel to the Borrower and DSSI, in form and substance satisfactory to the
Bank and its counsel.
3.6 Event of Default. There shall exist no Event of Default and
no condition, event or act which, with notice or lapse of time, or both, would
constitute either an Event of Default or an event of default under the March
Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank
to enter into this Agreement and to make the Term Loan hereunder, the Borrower
represents and warrants to the Bank as follows:
4.1 Organization.
4.1.1 Borrower's Corporate Existence and Good
Standing. The Borrower is a duly organized and validly existing corporation in
good standing under the laws of the State of Delaware with perpetual corporate
existence and has all requisite legal right, power and authority and all
necessary licenses and permits to own and operate its assets and properties and
to carry on its business as now conducted
10
and as presently proposed to be conducted. The Borrower has qualified and is in
good standing as a foreign corporation in each state or other jurisdiction where
the nature of its business or the ownership or use of its property requires such
qualification.
4.1.2 DSSI's Corporate Existence and Good Standing.
DSSI is a duly organized and validly existing corporation in good standing under
the laws of the State of Delaware, with perpetual corporate existence and has
all requisite legal right, power and authority and all necessary licenses and
permits to own and operate its assets and properties and to carry on its
business as now conducted and as presently proposed to be conducted. DSSI has
qualified and is in good standing as a foreign corporation in each other
jurisdiction where the nature of its business or the ownership or use of its
property requires such qualification.
4.2 Authority.
4.2.1 Borrower's Authority. The Borrower has, all
requisite legal right, power and authority to execute, deliver and perform the
terms and provisions of this Agreement, the Financing Agreements executed by
it, and all other instruments or documents delivered by it pursuant hereto and
thereto. The Borrower has taken or caused to be taken all necessary action to
authorize the execution, delivery and performance of this Agreement, the
Financing Agreements executed by it, and all other instruments or documents
delivered or to be delivered by it pursuant hereto and thereto. This Agreement,
the Financing Agree ments executed by the Borrower, and all related instruments
or documents delivered or to be delivered pursuant hereto or thereto constitute
and will constitute legal, valid and binding obligations of the Borrower,
enforceable in accordance with their respective terms, except to the extent that
enforcement thereof may be limited by applicable bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and the
availability of equitable remedies.
4.2.2 DSSI's Authority. DSSI has all of the requisite
legal right, power and authority to execute, deliver and perform the terms and
provisions of the Guaranty, its Security Agreement, the other Financing
Agreements executed by it, and all other instruments and documents delivered by
it pursuant hereto and thereto. DSSI has taken or caused to be taken all
necessary action to authorize the execution, delivery and performance of the
Guaranty, its Security Agreement, the other Financing Agreements executed by it
and all other instruments or documents delivered or to be delivered by it
pursuant hereto and thereto. The Guaranty, its Security Agreement and all other
instruments or documents delivered or to be delivered pursuant hereto and
thereto constitute and will constitute a legal, valid and binding obligation of
DSSI, enforceable in accordance with their respective terms, except to the
extent that enforcement thereof may be limited by applicable
11
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and the availability of equitable remedies.
4.3 No Conflicts. Neither the execution and delivery of this
Agreement, the Financing Agreements, or any of the instruments and documents
delivered or to be delivered pursuant hereto or thereto, or the consummation of
the transactions herein or therein contemplated, nor compliance with the
provisions hereof or thereof, will violate any law or regulation, or any order,
writ or decree of any court or governmental instrumentality, or will conflict
with, or result in the breach of, or constitute a default in any respect under,
any indenture, mortgage, deed of trust, agreement or other instrument to which
the Borrower or DSSI is a party, or by which either of them or any of their
respective properties may be bound or affected, or will result in the creation
or imposition of any lien, charge or encumbrance upon any of the property of
either of them (except as contemplated hereunder or under the Financing
Agreements) or will violate any provision of the certificate of incorporation
(as amended to date) or by-laws (as currently in effect) of either of the
Borrower or DSSI
4.4 Compliance and Other Agreements.
4.4.1 Agreements, etc. Neither the Borrower nor DSSI
is in default under any indenture, mortgage, deed of trust, agreement or other
instrument to which it is a party, or by which it or any of its properties may
be bound or affected, except for such defaults which, individually or in the
aggregate, will not have a material and adverse effect on the business,
operations, property or assets or in the condition, financial or otherwise, of
the Borrower or DSSI.
4.4.2 Orders, etc. Neither the Borrower nor DSSI is
in default with respect to any order, writ, injunction or decree of any court or
of any federal, state, municipal or other governmental department, commission,
board, bureau, agency or authority, domestic or foreign, or in violation of any
law, statute or regulation, domestic or foreign, to which it is, or any of its
properties are subject, except for such defaults or violations which,
individually or in the aggregate, will not have a material and adverse effect on
the business, operations, property or assets or in the condition, financial or
otherwise, of the Borrower or DSSI.
4.4.3 Agreements, Etc. Neither the Borrower nor DSSI
is a party to or bound by, nor are any of their respective properties bound or
affected by, any agreement, deed, lease or other instrument, or subject to any
charter or other corporate restriction or any judgment, order, writ, injunction,
decree or award, or any law, statute, rule or regulation, any of which
materially and adversely affects or in the future may (so far as the Borrower
should reasonably foresee) materially
12
and adversely affect the business, operations, prospects, properties or assets,
or the condition, financial or otherwise, of the Borrower or DSSI.
4.5 ERISA. The Borrower is in compliance in all material
respects with all applicable provisions of ERISA in connection with any Plan.
Neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan; no notice of intent to terminate a Plan has
been filed nor has any Plan been terminated; no circumstances exist which
constitute grounds under Section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administrate a Plan, nor has
the PBGC instituted any such proceedings; neither the Borrower, nor any ERISA
Affiliate of the Borrower has completely or partially withdrawn under Sections
4201 or 4204 of ERISA from a Multiemployer Plan; the Borrower, and each of its
ERISA Affiliates has met its minimum funding requirements under ERISA with
respect to all of their Plans, and the present fair market value of all Plan
assets exceeds the present value of all vested benefits under each Plan, as
determined on the most recent valuation date of the Plan, and in accordance with
the provisions of ERISA and the regulations thereunder for calculating the
potential liability of the Borrower, or any of its ERISA Affiliates to PBGC or
the Plan under Title IV of ERISA; and neither the Borrower, nor any of its ERISA
Affiliates has incurred any liability to the PBGC under ERISA.
4.6 Investment Company. Neither the Borrower nor DSSI is
an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940.
4.7 Approvals and Consents. All authorizations, consents,
registrations, exemptions, approvals and licenses (governmental or otherwise) or
the taking of any other action (including, without limitation, by the
shareholders of the Borrower or DSSI) which are required as a condition to the
validity or enforceability of this Agreement, the Financing Agreements or any
of the instruments or documents delivered or to be delivered pursuant hereto or
thereto have been effected or obtained and are in full force and effect.
4.8 Regulation U, etc. Neither the Borrower nor DSSI is
engaged in the business of extending credit for the purpose of purchasing or
carrying any margin stock (within the meaning of Regulation U or G of the Board
of Governors of the Federal Reserve System). The Term Loan will not be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
stock or for any other purpose which might constitute any of the Loans a
"purpose credit" within the meaning of such Regulation U.
4.9 Financial Statements. The Borrower has heretofore
delivered to the Bank consolidated financial statements of the Xxxxxxxx,
00
XXXX, and certain Affiliates of DSSI (the "Consolidated Group") for the fiscal
years ended December 31, 1997, and December 31, 1998 and for the nine months
ended September 30, 1998 and September 30, 1999 (consisting of a consolidated
balance sheet and the related consolidated statements of operations, retained
earnings, stockholders equity and changes in financial position for the
respective periods then ended, including the related notes thereto). The annual
financial statements referred to have been audited and include an unqualified
report and opinion of Deloitte & Touche, LLP, independent certified public
accountants. All such annual and interim financial statements are correct and
complete and were prepared in accordance with GAAP and present fairly the
consolidated financial position and results of operation of the Consolidated
Group, as of the dates of and for the periods involved. There are no
liabilities, direct or indirect, fixed or contingent, of the Borrower and DSSI
as of the date of such financial statements which are required to be reflected
or disclosed therein under GAAP which are not so reflected or disclosed therein
or in the notes thereto.
4.10 Taxes. The Borrower and DSSI have filed or caused to be
filed all tax returns required to be filed by each of them. The Borrower and
DSSI have paid all taxes (including interest and penalties) as shown on such
returns, or any assessment or notice of tax claim or deficiency received by them
to the extent that such taxes have become due. Neither the Borrower nor DSSI
knows of any proposed material tax assessment against or affecting it and is not
otherwise obligated by any agreement, instrument or otherwise to contribute to
the payment of taxes owed by any other Person. All tax liabilities are
adequately provided for or reserved against on the books of the Borrower and
DSSI (as the case may be) in accordance with GAAP.
4.11 Title to Properties/Priority of Liens.
4.11.1 Title. The Borrower and DSSI have good and
marketable title to, or valid leasehold interests in, all of the properties and
assets reflected on their latest financial statements referred to in Section 5.9
of this Agreement or acquired by it after the date of such financial statements
and prior to the date hereof, except for those properties and assets which have
been disposed of since such dates in the ordinary course of business. All such
properties and assets are owned or leased by the Borrower or DSSI, as the case
may be, free and clear of all mortgages, pledges, liens, security interests,
encumbrances or charges of any kind, except such as are identified in such
Financial Statements, except for liens in favor of the Bank.
4.11.2 Security Interest. The security interest
granted by DSSI to the Bank under the Security Agreement, constitutes a valid
and perfected first priority security interest and lien on the Cash Collateral,
as contemplated by the Security Agreement.
14
4.12 Litigation. There are no actions, suits, investigations or
administrative proceedings of or before any court, arbitrator or governmental
authority, pending or threatened against the Borrower or DSSI or any of their
respective properties or assets, which (i) either in any case or in the
aggregate, if adversely determined, would materially and adversely affect the
business, operations, prospects, properties or assets or the condition,
financial or otherwise, of the Borrower or DSSI, or (ii) question the validity
or enforceability of this Agreement, the Financing Agreements, or any action to
be taken in connection with the transactions contemplated hereby or thereby.
4.13 Insurance. All physical properties and assets of the
Borrower are covered by fire and other insurance with responsible insurance
companies against casualty and other losses customarily obtained to cover
comparable properties and assets by businesses in the region in which such
properties and assets are located, in amounts, scope and coverage which are
reasonable in light of existing conditions.
4.14 Disclosure. None of the information contained in the
representations and warranties made by the Borrower and DSSI set forth in this
Agreement, the Financing Agreements, or in any other agreement, instrument,
document, list, certificate, statement, schedule or exhibit heretofore delivered
or to be delivered to the Bank, as contemplated in this Agreement or in the
Financing Agreements, contains or will contain any untrue statement of a
material fact or omits or will omit to state a fact necessary in order to make
the statements contained herein or therein not materially misleading.
4.15 No Event of Default. After giving effect to the
transactions contemplated by this Agreement, the Financing Agreements, and the
other instruments or documents delivered in connection herewith and therewith,
there does not exist any condition, event or act which constitutes an Event of
Default hereunder or which, after notice or lapse of time, or both, would
constitute an Event of Default hereunder.
4.16 Use of Proceeds. The proceeds of the Term Loan will be
used (i) to repay the loans made to the Borrower by DSSI to finance the
Acquisition and working capital needs of the Borrower, and (ii) for the ongoing
working capital needs of the Borrower.
SECTION 5 AFFIRMATIVE COVENANTS. The Borrower covenants and agrees that,
until the Term Loan has been paid in full and all other Obligations discharged
in full, and all fees and charges payable hereunder or under any the Financing
Agreements have been paid, it shall comply or cause compliance with the
following covenants:
5.1 Preservation of Existence. The Borrower will (i) preserve
and maintain its corporate existence and its rights, franchises
15
and privileges in the jurisdiction of its incorporation, and (ii) qualify and
remain qualified as a foreign corporation in each jurisdiction in which such
qualification is necessary or desirable in view of its business and operations
or in view of the ownership of its properties.
5.2 Maintenance of Properties; Insurance.
5.2.1 Properties. The Borrower will maintain in good
repair, working order and condition all properties used in its respective
business (ordinary wear and tear excepted), and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements, additions
and improvements thereto.
5.2.2 Insurance. The Borrower will maintain, at its
expense, with financially sound and reputable insurers reasonably acceptable to
the Bank, insurance, with respect to its properties and business, against loss
or damage of the kinds and in amounts reasonably acceptable to the Bank.
5.3 Payment of Taxes. The Borrower will pay and discharge
promptly all taxes (including, without limitation, all payroll withholdings),
assessments and governmental charges or levies imposed upon it or upon its
income or profits or upon any of its property, real, personal or mixed, or upon
any part thereof, before the same shall become in default; provided, however,
that neither the Borrower nor DSSI shall be required to pay any such tax,
assessment, charge, levy or claim if the validity or amount thereof shall be
contested in good faith by proper proceedings and if the Borrower or DSSI, as
the case may be, shall have set aside appropriate and proper reserves which are
reflected on its books.
5.4 Accounting; Financial Statements and Other Information.
The Borrower and DSSI will maintain a system of accounting established and
administered in accordance with GAAP and will set aside on its books all such
proper reserves for each fiscal year as shall be required by GAAP. The Borrower
will deliver, or cause to be delivered, to the Bank:
5.4.1 Quarterly Financial Reports. As soon as
practicable after the end of each of the first three (3) quarter annual periods
in each fiscal year of the Borrower, and in any event within sixty (60) days
thereafter, a consolidated balance sheet of the Consolidated Group as at the end
of such period, and the related consolidated statements of operations, retained
earnings, stockholders equity and changes in the financial position of the
Consolidated Group for each such period and for that part of the fiscal year of
the Borrower and DSSI then ended, all in the form filed by the Borrower or DSSI
with the Securities and Exchange Commission, setting forth in each case in
comparative form the corresponding figures for the corresponding
16
periods of the preceding fiscal year, each of which statements shall be prepared
in accordance with GAAP, and subject to normal year-end audit adjustments, shall
fairly present the consolidated financial position of the Consolidated Group.
5.4.2 Annual Financial Reports. As soon as
practicable after the end of each fiscal year of the Borrower, and in any event
within ninety (90) days thereafter, an certified consolidated balance sheet of
the Consolidated Group as at the end of such year and the related certified
consolidated statements of operations, retained earnings, stockholders equity
and changes in financial position of the Consolidated Group for such year,
setting forth in each case in comparative form the corresponding figures for
the preceding fiscal year, which statements shall be prepared in accordance with
GAAP, and shall include an unqualified report and opinion of Deloitte & Touche,
LLP or another independent certified public accountant of recognized standing
selected by the Borrower and reasonably acceptable to the Bank.
5.4.3 Reports. Promptly upon receipt thereof, copies
of any reports (including, without limitation, any management letters) submitted
to the Borrower or DSSI by any independent certified public accountant in
connection with the examination of the annual or interim financial statements of
the Borrower and the Guarantors by such accountant.
5.4.4 SEC Filings. Within ten (10) days after filing
with the United States Securities and Exchange Commission, copies of all Forms
10Q and 10K and any other forms so filed by the Borrower or DSSI.
5.4.5 Other Information. With reasonable promptness,
such other data and information as from time to time may be reasonably requested
by the Bank with respect to the Borrower or DSSI.
5.5 Compliance. The Borrower will comply with the requirements
of all applicable laws, rules, regulations or orders of any applicable
governmental or administrative authority, and all agreements to which the
Borrower or DSSI (as the case may be) is a party, the noncompliance with which
laws, rules, regulations, orders and agreements would materially adversely
affect the business, operations, property or assets, or the condition, financial
or otherwise, of the Borrower or DSSI (as the case may be).
5.6 ERISA. The Borrower shall maintain compliance in all
material respects with any applicable provisions of ERISA in connection with
each Plan. The Borrower will deliver to the Bank, promptly after the filing or
receipt thereof, copies of all reports, including annual reports and notices,
which the Borrower files with or receives from the PBGC or the U.S. Department
of Labor under ERISA with respect to any Plan; and as soon as possible and in
any event within thirty (30) days
17
after either of the Borrower knows or has reason to know that any Reportable
Event or Prohibited Transaction has occurred with respect to any Plan or that
the PBGC or the Borrower has instituted or will institute proceedings under
Title IV of ERISA to terminate any Plan, the Borrower will deliver to the Bank a
certificate of its Chief Financial Officer setting forth the details as to such
Reportable Event or Prohibited Transaction or Plan termination and the action
the Borrower proposes to take with respect thereto.
5.7 Payment of Indebtedness. The Borrower shall promptly pay,
discharge, or satisfy before they become delinquent all of its material
indebtedness for borrowed money; provided, however, that the Borrower shall not
be required to pay any such indebtedness if the validity or amount thereof shall
be contested in good faith by proper proceedings, and the Borrower shall have
set aside appropriate and proper reserves which are reflected on its books.
5.8 Notification to Bank. The Borrower shall promptly notify
the Bank of (i) any Event of Default hereunder, (ii) any event, condition or act
which with the giving of notice or the lapse of time, or both, would constitute
an Event of Default hereunder, (iii) any material litigation or proceedings that
are instituted or threatened (to the knowledge of the Borrower) against the
Borrower or any of its assets, except when the relief sought is monetary damages
which in any one litigation or proceeding in the aggregate do not exceed
$100,000 and the litigation or proceeding resulted from or arose out of
transactions in the regular course of the Borrower's business, (iv) each and
every default by the Borrower or DSSI under any obligation for borrowed money
which would permit the holder of such obligation to accelerate its maturity,
including the names and addresses of the holders of such obligation and the
amount thereof, and (v) any change in the location of the chief executive
offices of the Borrower, as identified in Section 7.4 hereof or of DSSI as
identified in the Security Agreement.
5.9 Further Assurances. The Borrower will duly execute and
deliver, or will cause to be duly executed and delivered, such further
instruments and documents, and will do or use its best efforts to cause to be
done such further acts as may be necessary or proper in the Bank's opinion to
effectuate the provisions or purposes of this Agreement or the Financing
Agreements.
5.10 Inspection. The Bank, or any Person designated by the
Bank, shall have the right, from time to time, to visit the Borrower's place or
places of business during reasonable business hours, and absent an Event of
Default upon reasonable notice, without hindrance or delay, (i) to inspect,
audit, check and make copies of and extracts from the Borrower's or DSSI's
books, records, journals, orders, receipts, correspondence and other data
relating to the Borrower's business, (ii) to verify such matters concerning the
Collateral, as the Bank (in its
18
sole and absolute discretion) may consider appropriate, and (iii) to discuss the
affairs, finances and business of the Borrower with its officers and directors.
Upon request, the Borrower and DSSI will provide the Bank with copies of such
documents as the Bank may reasonably request. The Bank shall have the right, at
any time or times hereafter after an Event of Default has occurred, to verify by
mail, telephone, telegraph or other communication with any account debtor,
under any name and in any form, the validity, amount or any other matter
relating to any or all of the accounts receivable. The Borrower shall pay on
demand all expenses reasonably incurred by the Bank in acquiring information
pursuant to this Section 5.10.
5.11 Stock Ownership. DSSI, at all times, shall own not
less than fifty-one (51%) percent of all of the issued and outstanding
stock of each class of the Borrower.
SECTION 6. EVENTS OF DEFAULT/REMEDIES.
6.1 The occurrence of any one or more of the following events
shall constitute an "Event of Default":
6.1.1 Principal or Interest. If the Borrower shall
fail to pay any installment of principal or interest on the Note when
due and payable; or
6.1.2 Obligations. If the Borrower shall fail to pay
and satisfy any Obligation when due and payable; or
6.1.3 Certain Covenants. If there shall be a default
in the observance or performance of any covenant, condition or agreement
set forth in Sections 5.1 or 5.11; or
6.1.4 Other Covenant. If there shall be a default in
the observance or performance of any other covenant, condition or agreement
contained in this Agreement, in any of the Financing Agreements or in any other
document or instrument referred to herein or therein, which default shall
continue unremedied or uncured for a period of fifteen (15) days after notice
thereof has been given to the Borrower; or
6.1.5 Representations. If any material represen-
tation or warranty made by or on behalf of the Borrower or DSSI, whether
contained in this Agreement, in any of the Financing Agreements, or in any other
document or instrument referred to herein or therein or delivered in connection
with any of the transactions contemplated herein or therein, shall prove to have
been false or incorrect in any material respect when made; or
6.1.6 Voluntary Insolvency Proceedings. If the
Borrower or DSSI or any of their Affiliates shall (i) apply for or
19
consent to or acquiesce in the appointment of or the taking of possession by a
receiver, liquidator, custodian or trustee of itself or of all or a substantial
part of its property, (ii) admit in writing its inability, or be generally
unable, to pay its debts as such debts become due, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a voluntary case
under the Federal Bankruptcy Code (as now or hereafter in effect) or any similar
foreign law, (v) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, (vi) fail to controvert in a timely or appropriate
manner, or acquiesce in writing to, any petition filed against itself in an
involuntary case under such Bankruptcy Code, or any similar foreign law, or
(vii) take any action for the purpose of effecting any of the foregoing; or
6.1.7 Involuntary Insolvency Proceedings. A
proceeding or case shall be commenced, without the application or consent of the
Borrower, DSSI or any of their Affiliates, in any court of competent
jurisdiction, seeking (i) liquidation, reorganization, dissolution, winding-up
or composition or adjustment of debts of the Borrower or DSSI, (ii) the
appointment of a trustee, receiver, liquidator, custodian or the like of the
Borrower, or DSSI or of all or any substantial part of any of their assets, or
(iii) similar relief under any law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgement or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of thirty (30) days; or any order for
relief against the Borrower or DSSI, shall be entered in an involuntary case
under the Bankruptcy Code, or any similar foreign law, and shall continue
unstayed and in effect for a period of thirty (30) days; or
6.1.8 Divestiture of Assets. If any order, judgment,
or decree shall be entered in any proceeding requiring the Borrower, or DSSI, to
divest itself of a substantial part of its assets, and if, within sixty (60)
days after entry thereof (unless or until enforcement is sooner commenced), such
order, judgment or decree shall not have been discharged or execution thereof
stayed pending appeal; or if, within thirty (30) days after the expiration of
any such stay (unless or until enforcement is sooner commenced), such judgment,
order or decree shall not have been discharged; or
6.1.9 Judgments. If one or more judgments exceeding
$1,000,000 in the aggregate, against the Borrower, or attachments to recover
more than $1,000,000 against any Borrower's property remain unpaid, unstayed on
appeal, undischarged, unbonded or undismissed for a period of thirty (30) days,
or enforcement proceedings are commenced with respect to any judgment against
the Borrower; or
20
6.1.10 Other Defaults. If the Borrower shall (i)
fail to pay any indebtedness for borrowed money or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise); or (ii) fail to perform or observe any term,
covenant or condition on its part to be performed or observed under any
agreement or instrument relating to any indebtedness for borrowed money, when
required to be performed or observed, if the effect of such failure to perform
or observe is to accelerate, or to permit the acceleration after the giving of
notice or passage of time, or both, of the maturity of such indebtedness, or any
such indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior to the
stated maturity thereof; or (iii) allow any account maintained by them at the
Bank to be overdrawn for a period which exceeds five (5) days after notice from
the Bank; or
6.1.11 ERISA. Any of the following events occur or
exist with respect to the Borrower or any of its ERISA Affiliates: (i) any
Prohibited Transaction involving any Plan; (ii) any Reportable Event with
respect to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan; (iv) any event or
circumstance that might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Plan, or the institution by the
PBGC of any such proceedings; (v) complete or partial withdrawal under Section
4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization,
insolvency or termination of any Multiemployer Plan; and in each case above,
such event or condition, together with all other events or conditions, if any,
could in the reasonable opinion of the Bank subject either the Borrower or any
ERISA Affiliate to any material tax, penalty or other liability to a Plan, a
Multiemployer Plan, the PBGC or otherwise (or any combination thereof); or
6.1.12 Levies. Any portion of the Cash Collateral is
attached, seized, becomes subject to a writ or distress or a warrant, or
is levied upon.
6.2 Remedies. Upon the occurrence and continuance beyond any
applicable cure period of any one or more of such Events of Default, the Bank
may, at its option, without presentment for payment, demand, notice of dishonor
or notice of protest or any other notice, all of which are hereby expressly
waived by the Borrower, declare any and all of the liabilities of the Borrower
to the Bank (including, without limitation, the Term Loan) to be due and payable
together with interest at the rate specified in this Agreement until fully paid.
The Bank shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code of the State of New York and under the Uniform
Commercial Code of any other state in which any of the Collateral may be
21
situated, and, additionally, all of the rights and remedies set forth in this
Agreement and the Financing Agreements, and in any instrument or document
referred to herein or therein, and under any other applicable law relating to
this Agreement or the Financing Agreements. The Bank may, at its option, cure
any default by the Borrower or DSSI under any agreement with a third party which
constitutes, or would with notice or lapse of time or both constitute, an Event
of Default hereunder, and may add the reasonable amount expended in such cure to
the liabilities of the Borrower or DSSI hereunder and charge the Borrower's
account therefor, such amounts to be repayable by Borrower on demand; the Bank
shall be under no obligation to effect such cure and shall not by making any
payment for the Borrower's account be deemed to have assumed any obligation or
liability of the Borrower or DSSI.
SECTION 7. MISCELLANEOUS.
7.1 Expenses. The Borrower, whether or not the transactions
contemplated hereby are consummated, shall pay to the Bank, or reimburse the
Bank for, all out-of-pocket expenses incurred by the Bank in connection with the
preparation and enforcement of this Agreement, the Financing Agreements, all
other agreements, instruments and documents executed in connection herewith and
therewith and the transactions contemplated hereunder and thereunder, together
with any amendments, supplements, consents or modifications which may be
hereafter made or entered into in respect thereof, including, but not limited
to, filing fees, expenses for searches, and the reasonable fees and
disbursements of counsel to the Bank. The Bank shall invoice the Borrower for
the amounts to be reimbursed by the Borrower to the Bank as is provided in this
Section, and if same are not paid by the Borrower within ten (10) days of the
date of such invoice, the Bank is hereby authorized to charge any amounts
payable hereunder directly to the account(s) of the Borrower maintained with the
Bank.
7.2 Survival of Agreement. All agreements, representations and
warranties contained herein or made in writing by the parties hereto in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement, the Financing Agreements and the consummation of
the transactions contemplated herein or therein regardless of any investigation
made by or on behalf of the Bank.
7.3 No Waiver; Cumulative Remedies. No failure to exercise,
and no delay in exercising on the part of the Bank, any right, power or
privilege under this Agreement or under any of the Financing Agreements or other
documents referred to herein or therein shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise of
any other right, power and
22
privilege. The rights and remedies of the Bank hereunder and under the Financing
Agreements and under any other present and future agreements between the Bank
and the Borrower are cumulative and not exclusive of any rights or remedies
provided by law, or under any of said Financing Agreements or agreements and all
such rights and remedies may be exercised successively or concurrently.
7.4 Notices. All notices, approvals, consents, requests,
demands or other communications (collectively, "Communications") to or upon the
respective parties hereto shall be made in writing in one of the following ways
and shall be deemed to have been given, received and dated: if by hand,
immediately upon delivery; if by telegram, express mail or any other overnight
delivery service, one (1) day after dispatch; and if by certified mail, return
receipt requested, or first class mail, three (3) business days after mailing.
All Communications are to be given to the following addresses (or to such other
address as any party may designate by Communication in accordance with this
Section):
If to the Bank:
Bank Leumi USA
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxx Xxxxxx
Assistant Vice President
with a copy to:
Xxxxxxx Xxxxxxxx Xxxxx
Xxxxxxxxxxx & Kuh, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
If to the Borrower:
Comverge Technologies, Inc.
00 Xxxxxxxx Xxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxxx Xxxxxxxx, President
With a copy to:
Xxxxxxxxxx Xxxxxxxxx & Xxxxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxx, Esq.
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7.5 Amendments and Waivers. Neither this Agreement, nor any of
the Financing Agreements or any other instrument or document referred to herein
or therein may be changed, waived, discharged or terminated orally, except by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
7.6 Applicable Law. This Agreement and the Financing
Agreements and any other document referred to herein or therein and the
obligations of the parties hereunder or thereunder are being executed and
delivered in New York, New York and shall be construed and interpreted in
accordance with the laws of the State of New York applied to agreements entered
into and performed therein.
7.7 Successors. This Agreement, the Financing Agreements and
any other document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by the parties and their respective heirs,
legal representatives, successors and assigns, except that the Borrower may not
assign its rights under this Agreement, the Financing Agreements and any other
document referred to herein or therein without the prior written consent of the
Bank.
7.8 Partial Invalidity. If any provision of this Agreement or
the Financing Agreements is held to be invalid or unenforceable, such invalidity
or unenforceability shall not invalidate this Agreement or the Financing
Agreements as a whole but this Agreement or the particular Financing Agreement,
as the case may be, shall be construed as though it did not contain the
particular provision or provisions held to be invalid or unenforceable and the
rights and obligations of the parties shall be construed and enforced only to
such extent as shall be permitted by law.
7.9 Headings. The headings used herein are for convenience
only and do not constitute matters to be considered in interpreting this
Agreement.
7.10 WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY WAIVE
TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION
WITH, OR ARISING OUT OF THIS AGREEMENT, THE FINANCING AGREEMENTS OR ANY
INSTRUMENT, DOCUMENT OR GUARANTY DELIVERED PURSUANT HERETO OR THERETO, OR THE
VALIDITY, PROTECTION, INTERPRETATION, ADMINISTRATION, COLLECTION OR ENFORCEMENT
HEREOF OR THEREOF, OR ANY OTHER CLAIM OR DISPUTE HEREUNDER OR THEREUNDER.
7.11 JURISDICTION; SERVICE OF PROCESS. THE BORROWER HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE SUPREME COURT OF THE STATE OF
NEW YORK FOR THE COUNTY OF NEW YORK, AND THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT,
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THE FINANCING AGREEMENTS OR ANY DOCUMENT, INSTRUMENT OR GUARANTY DELIVERED
PURSUANT HERETO OR THERETO. IN ANY SUCH LITIGATION THE BORROWER WAIVES PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT THE SERVICE
THEREOF MAY BE MADE IN ANY OTHER MANNER PERMITTED BY THE RULES OF EITHER OF SAID
COURTS.
7.12 Conflicts. In the event that any provision of this
Agreement conflicts with the Financing Agreements, or with any document or
instrument delivered in connection herewith or therewith, the terms of this
Agreement shall control, notwithstanding such conflict.
COMVERGE TECHNOLOGIES, INC.
By:
---------------------------------
Xxxxx Xxxxxxxx
President
BANK LEUMI USA
By:
---------------------------------
Xxxxx Xxxxx
First Vice President
By:
---------------------------------
Xxxxxx Xxxxxx
Assistant Vice President
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