LOAN AND SECURITY AGREEMENT
Exhibit 10.1
THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of the Effective Date between
SILICON VALLEY BANK, a California corporation with its principal place of business at 0000 Xxxxxx
Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan production office located at One Xxxxxx
Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (“Bank”), and
EVERGREEN SOLAR, INC., a Delaware corporation with offices located at 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000 (“Borrower”), provides the terms on which Bank shall lend to
Borrower and Borrower shall repay Bank. The parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed following GAAP.
Calculations and determinations must be made following GAAP. Capitalized terms not otherwise
defined in this Agreement shall have the meanings set forth in Section 13. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the
Code to the extent such terms are defined therein.
2 LOAN AND TERMS OF PAYMENT
2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Bank the outstanding
principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due
in accordance with this Agreement.
2.1.1 Revolving Advances.
(a) Availability. Subject to the terms and conditions of this Agreement and to
deduction of Reserves, Bank will make Advances to Borrower up to the Availability Amount. Amounts
borrowed under the Revolving Line may be repaid, and prior to the Revolving Line Maturity Date,
reborrowed, subject to the applicable terms and conditions precedent herein.
(b) Termination; Repayment. The Revolving Line terminates on the Revolving Line
Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all
other Obligations relating to the Revolving Line shall be immediately due and payable.
2.1.2 Letters of Credit Sublimit.
(a) As part of the Revolving Line and subject to deduction of Reserves, Bank shall issue or
have issued Letters of Credit for Borrower’s account. The face amount of outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit (but excluding any amounts drawn and
reimbursed) and any Letter of Credit Reserve) may not exceed Ten Million Dollars ($10,000,000)
inclusive of Credit Extensions relating to Sections 2.1.3 and 2.1.4. Such aggregate amounts
utilized hereunder shall at all times reduce the amount otherwise available for Advances under the
Revolving Line. If, on the Revolving Line Maturity Date, there are any outstanding Letters of
Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to 105%
of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to
become due in connection therewith (as estimated by Bank in its reasonable discretion), to secure
all of the Obligations relating to said Letters of Credit. All Letters of Credit shall be in form
and substance acceptable to Bank in its sole discretion and shall be subject to the terms and
conditions of Bank’s standard Application and Letter of Credit Agreement (the “Letter of Credit
Application”). Borrower agrees to execute any further documentation in connection with the Letters
of Credit as Bank may reasonably request. Borrower further agrees to be bound by the regulations
of the issuer of any Letters of Credit guarantied by Bank and opened for Borrower’s account or by
Bank’s interpretations of any Letter of Credit issued by Bank for Borrower’s account, and Borrower
understands and agrees that Bank shall not be liable for any error, negligence, or mistake, whether
of omission or commission, in following Borrower’s instructions or those contained in the Letters
of Credit or any modifications, amendments, or supplements thereto.
(b) The obligation of Borrower to immediately reimburse Bank for drawings made under Letters
of Credit shall be absolute, unconditional, and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, such Letters of Credit, and the Letter of Credit
Application.
(c) Borrower may request that Bank issue a Letter of Credit payable in a Foreign Currency. If
a demand for payment is made under any such Letter of Credit, Bank shall treat such demand as an
Advance to Borrower of the equivalent of the amount thereof (plus fees and charges in connection
therewith such as wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing rate of
exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the
country issuing such Foreign Currency.
(d) To guard against fluctuations in currency exchange rates, upon the issuance of any Letter
of Credit payable in a Foreign Currency, Bank shall create a reserve (the “Letter of Credit
Reserve”) under the Revolving Line in an amount equal to ten percent (10%) of the face amount of
such Letter of Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank from
time to time to account for fluctuations in the exchange rate. The availability of funds under the
Revolving Line shall be reduced by the amount of such Letter of Credit Reserve for as long as such
Letter of Credit remains outstanding.
2.1.3 Foreign Exchange Sublimit. As part of the Revolving Line, Borrower may enter into
foreign exchange contracts with Bank under which Borrower commits to purchase from or sell to Bank
a specific amount of Foreign Currency (each, a “FX Forward Contract”) on a specified date (the
“Settlement Date”). FX Forward Contracts shall have a Settlement Date of at least one (1) FX
Business Day after the contract date and shall be subject to a reserve of ten percent (10%) of each
outstanding FX Forward Contract in a maximum aggregate amount equal to One Million Dollars
($1,000,000) (the “FX Reserve”). The aggregate amount of FX Forward Contracts at any one time plus
Credit Extensions made pursuant to Sections 2.1.2 and 2.1.4 may not exceed ten (10) times the
amount of the FX Reserve. Any amounts needed to fully reimburse Bank will be treated as Advances
under the Revolving Line and will accrue interest at the interest rate applicable to Advances.
2.1.4 Cash Management Services Sublimit. Borrower may use up to Ten Million Dollars
($10,000,000) inclusive of Credit Extensions relating to Sections 2.1.2 and 2.1.3 (the “Cash
Management Services Sublimit”) of the Revolving Line for Bank’s cash management services which may
include merchant services, direct deposit of payroll, business credit card, and check cashing
services identified in Bank’s various cash management services agreements (collectively, the “Cash
Management Services”). The dollar amount of any Cash Management Services provided under this
sublimit will reduce the amount otherwise available under the Revolving Line. Any amounts used or
reserved by Borrower for any Cash Management Services will reduce the amount otherwise available
for Credit Extensions under the Revolving Line. Any amounts Bank pays on behalf of Borrower for
any Cash Management Services will be treated as Advances under the Revolving Line and will accrue
interest at the interest rate applicable to Advances.
2.2 Overadvances. If, at any time the sum of (a) the outstanding amount of any Advances
(including any amounts used for Cash Management Services) plus (b) the face amount of any
outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve, plus (c) the FX Reserve exceeds the lesser of either the Revolving Line or the
Borrowing Base (such excess amount being an “Overadvance”), Borrower shall immediately pay to Bank
in cash such Overadvance. Without limiting Borrower’s obligation to repay Bank any amount of the
Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on
demand, at the Default Rate.
2.3 Payment of Interest on the Credit Extensions.
(a) Advances. Subject to Section 2.3(b), each Advance shall bear interest on the
outstanding principal amount thereof from the date when made, continued or converted until paid in
full at a rate per annum equal to the Prime Rate plus the applicable Prime Rate Margin (as such
term is defined in the LIBOR Supplement) or the LIBOR Rate plus the applicable LIBOR Rate Margin
(as such term is defined in the LIBOR Supplement), as the case may be. Pursuant to the terms
hereof, interest on each Advance shall be paid in arrears on each Interest Payment Date. Interest
shall also be paid on the date of any prepayment of any Advance pursuant to the Loan Agreement for
the portion of any Advance so prepaid and upon payment (including prepayment) in full thereof. All
accrued but unpaid interest on the Advances shall be due and payable on the Revolving Line Maturity
Date.
(b) Default Rate. Immediately upon the occurrence and during the continuance of an
Event of Default, Obligations shall bear interest at a rate per annum which is four percentage
points (4.00%) above the rate effective immediately before the Event of Default (the “Default
Rate”). Payment or acceptance of the increased interest rate provided in this Section 2.3(b) is
not a permitted alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of Bank.
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(c) Prime Rate Advances. Each change in the interest rate of the Prime Rate Advances
based on changes in the Prime Rate shall be effective on the effective date of such change and to
the extent of such change. Bank shall use its best efforts to give Borrower prompt notice of any
such change in the Prime Rate; provided, however, that any failure by Bank to
provide Borrower with notice hereunder shall not affect Bank’s right to make changes in the
interest rate of the Prime Rate Advances based on changes in the Prime Rate.
(d) LIBOR Advances. The interest rate applicable to each LIBOR Advance shall be
determined in accordance with Section 5(a) of the LIBOR Supplement. Subject to Sections 5 and 6 of
the LIBOR Supplement, such rate shall apply during the entire Interest Period applicable to such
LIBOR Advance, and interest calculated thereon shall be payable on the Interest Payment Date
applicable to such LIBOR Advance.
(e) Computation of Interest. Interest on the Credit Extensions and all fees payable
hereunder shall be computed on the basis of a 360-day year and the actual number of days elapsed in
the period during which such interest accrues. In computing interest on any Credit Extension, the
date of the making of such Credit Extension shall be included and the date of payment shall be
excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is
made, such day shall be included in computing interest on such Credit Extension.
(f) Debit of Accounts. Bank may debit any of Borrower’s deposit accounts, including
the Designated Deposit Account, for principal and interest payments or any other amounts Borrower
owes Bank when due. These debits shall not constitute a set-off.
(g) Payment; Interest Computation; Float Charge. Interest is payable monthly on the
last calendar day of each month. In computing interest on the Obligations, all Payments received
after 12:00 p.m. Pacific time on any day shall be deemed received on the next Business Day. In
addition, so long as any principal or interest with respect to Credit Extensions remains
outstanding, Bank shall be entitled to charge Borrower a “float” charge in an amount equal to two
(2) Business Days interest, at the interest rate applicable to the Advances, on all Payments
received by Bank. The float charge for each month shall be payable on the last day of the month.
Bank shall not, however, be required to credit Borrower’s account for the amount of any item of
payment which is unsatisfactory to Bank in its reasonable discretion, and Bank may charge
Borrower’s Designated Deposit Account for the amount of any item of payment which is returned to
Bank unpaid.
2.4 Fees. Borrower shall pay to Bank:
(a) Commitment Fee. A fully earned, non-refundable commitment fee of Three Hundred
Fifty Thousand Dollars ($350,000), payable on the Effective Date;
(b) Anniversary Fee. A fully earned, non-refundable anniversary fee of Two Hundred
Thousand Dollars ($200,000), payable on the first anniversary of the Effective Date;
(c) Letter of Credit Fee. Bank’s customary fees and expenses for the issuance or
renewal of Letters of Credit, upon the issuance or renewal of such Letter of Credit by Bank;
(d) Termination Fee. In accordance with the terms of Section 12.1, a termination fee;
(e) Unused Revolving Line Facility Fee. A fee (the “Unused Revolving Line Facility
Fee”), payable monthly, in arrears, on the last day of each month, in an amount equal to one-half
of one percent (0.50%) per annum of the average unused portion of the Revolving Line in the
applicable monthly period, as determined by Bank. The unused portion of the Revolving Line, for
the purposes of this calculation, shall exclude any amounts reserved under the Cash Management
Services Sublimit for products provided and any amounts reserved under the Foreign Exchange
Sublimit for FX Forward Contracts. Borrower shall not be entitled to any credit, rebate or
repayment of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to this
Section 2.4(e) notwithstanding any termination of the Agreement or the suspension or termination of
Bank’s obligation to make loans and advances hereunder; and
(f) Bank Expenses. All Bank Expenses (including documented reasonable attorneys’ fees
and expenses for documentation and negotiation of this Agreement) incurred through and after the
Effective Date, when due.
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3 CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Credit Extension. Bank’s obligation to make the initial
Credit Extension is subject to the condition precedent that Bank shall have received, in form and
substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate, including, without limitation:
(a) Borrower shall have delivered duly executed original signatures to the Loan Documents to
which it is a party;
(b) Borrower shall have delivered duly executed original signatures to the Control Agreements;
(c) Borrower shall have delivered its Operating Documents and a good standing certificate of
Borrower certified by the Secretary of State of the State of Delaware as of a date no earlier than
thirty (30) days prior to the Effective Date;
(d) Borrower shall have delivered duly executed original signatures to the completed Borrowing
Resolutions for Borrower;
(e) (Reserved)
(f) the duly executed original signatures to each Guaranty Agreement and Guarantor Security
Agreement, together with the completed Borrowing Resolutions for each Guarantor;
(g) Bank shall have received certified copies, dated as of a recent date, of financing
statement searches, as Bank shall request, accompanied by written evidence (including any UCC
termination statements) that the Liens indicated in any such financing statements either constitute
Permitted Liens or have been or, in connection with the initial Credit Extension, will be
terminated or released;
(h) Borrower shall have delivered the Perfection Certificate executed by Borrower and each
Guarantor;
(i) Borrower shall have delivered a landlord’s consent executed by each landlord of the
Borrower for the locations identified in the Perfection Certificate, to the extent required by
Bank, in favor of Bank;
(j) Borrower shall have delivered a bailee’s/warehouseman’s waiver executed by each bailee of
Borrower, to the extent required by Bank, in favor of Bank;
(k) Borrower shall have delivered a legal opinion of Borrower’s counsel dated as of the
Effective Date together with the duly executed original signatures thereto;
(l) Borrower shall have delivered evidence satisfactory to Bank that the insurance policies
required by Section 6.7 hereof are in full force and effect, together with appropriate evidence
showing loss payable and/or additional insured clauses or endorsements in favor of Bank;
(m) the completion of the Initial Audit sixty (60) days prior to the initial Credit Extension,
with results satisfactory to Bank in its sole and absolute discretion; and
(n) Borrower shall have paid the fees and Bank Expenses then due as specified in Section 2.4
hereof.
3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit
Extension, including the initial Credit Extension, is subject to the following:
(a) Other than during a Streamline Period, timely receipt of an executed Transaction Report;
(b) the representations and warranties in Section 5 shall be true in all material respects on
the date of the Transaction Report and on the Funding Date of each Credit Extension;
provided, however, that such
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materiality qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date shall be true,
accurate and complete in all material respects as of such date, and no Default or Event of Default
shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension
is Borrower’s representation and warranty on that date that the representations and warranties in
Section 5 are true in all material respects as of such date; provided, however,
that such materiality qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date shall be true,
accurate and complete in all material respects as of such date; and
(c) in Bank’s reasonable discretion, there has not been a Material Adverse Change.
3.3 Covenant to Deliver.
Borrower agrees to deliver to Bank each item required to be delivered to Bank under this
Agreement as a condition to any Credit Extension. Borrower expressly agrees that the extension of
a Credit Extension prior to the receipt by Bank of any such item shall not constitute a waiver by
Bank of Borrower’s obligation to deliver such item, and any such extension in the absence of a
required item shall be in Bank’s sole discretion.
3.4 Procedures for Borrowing. In addition to and supplemental of the requirements set forth
in Section 3 the LIBOR Supplement and specifically incorporated by reference herein, subject to the
prior satisfaction of all other applicable conditions to the making of an Advance set forth in this
Agreement, to obtain an Advance (other than Advances under Sections 2.1.2 or 2.1.4), Borrower shall
notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by
12:00 p.m. Pacific time on the Funding Date of the Advance. Together with such notification,
Borrower must promptly deliver to Bank by electronic mail or facsimile a completed Transaction
Report executed by a Responsible Officer or his or her designee. Bank shall credit Advances to the
Designated Deposit Account. Bank may make Advances under this Agreement based on instructions from
a Responsible Officer or his or her designee or without instructions if the Advances are necessary
to meet Obligations which have become due. Bank may rely on any telephone notice given by a person
whom Bank reasonably believes is a Responsible Officer or designee.
4 CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and
performance in full of all of the Obligations, a continuing security interest in, and pledges to
Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof. Borrower represents, warrants, and covenants that the security
interest granted herein is and shall at all times continue to be a first priority perfected
security interest in the Collateral (subject only to Permitted Liens that may have superior
priority to Bank’s Lien under this Agreement). If Borrower shall acquire a commercial tort claim,
Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof
and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory
to Bank. If this Agreement is terminated, upon payment in full in cash of the Obligations (other
than inchoate indemnity obligations) and at such time as Bank’s obligation to make Credit
Extensions has terminated, Bank shall, at Borrower’s sole cost and expense, release its Liens in
the Collateral and all rights therein shall revert to Borrower.
4.2 Authorization to File Financing Statements. Borrower hereby authorizes Bank to file
financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or
protect Bank’s interest or rights hereunder, including a notice that any disposition of the
Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank
under the Code. Without limiting the foregoing, Borrower hereby authorizes Bank to file financing
statements which describe the collateral as “all assets” and/or “all personal property” of Borrower
or words of similar import.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 Due Organization and Authorization. Borrower, each of its Subsidiaries, if any, and each
Guarantor are duly existing and in good standing as Registered Organizations in their respective
jurisdictions of
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formation and are qualified and licensed to do business and are in good standing in any
jurisdiction in which the conduct of their business or their ownership of property requires that
they be qualified except where the failure to do so could not reasonably be expected to have a
material adverse effect on Borrower’s business. In connection with this Agreement, Borrower and
each Guarantor has delivered to Bank a completed certificate substantially in the form provided by
Bank prior to the effective date, signed by Borrower, each entitled “Perfection Certificate”.
Borrower represents and warrants to Bank that (a) Borrower’s and each Guarantor’s exact legal name
is that indicated on each respective Perfection Certificate and on the signature page thereof;
(b) Borrower and each Guarantor is an organization of the type and is organized in the jurisdiction
set forth in each respective Perfection Certificate; (c) each Perfection Certificate accurately
sets forth Borrower’s or Guarantors’, as the case may be, organizational identification number or
accurately states that Borrower or such Guarantor has none; (d) each Perfection Certificate
accurately sets forth Borrower’s and each Guarantor’s respective place of business, or, if more
than one, each chief executive office as well as Borrower’s and Guarantor’s respective mailing
address (if different than its chief executive office); (e) Borrower and each Guarantor (and each
respective predecessor) has not, in the past five (5) years, changed its jurisdiction of formation,
organizational structure or type, or any organizational number assigned by its jurisdiction; and
(f) all other information set forth on the Perfection Certificate pertaining to Borrower and each
of its Subsidiaries and each Guarantor is accurate and complete in all material respects. If
Borrower or any Guarantor is not now a Registered Organization but later becomes one, Borrower or
such Guarantor shall promptly notify Bank of such occurrence and provide Bank with Borrower’s or
such Guarantor’s organizational identification number.
The execution, delivery and performance of the Loan Documents have been duly authorized, and
do not conflict with Borrower’s or any Guarantor’s organizational documents, nor constitute an
event of default under any material agreement by which Borrower or any Guarantor is bound. Neither
Borrower nor any Guarantor is in default under any agreement to which either is a party or by which
either is bound in which the default could have a material adverse effect on Borrower’s business.
5.2 Collateral. Borrower has good title to or has rights in, and the power to transfer each
item of Collateral upon which it purports to xxxxx x Xxxx hereunder, free and clear of any and all
Liens except Permitted Liens. Borrower has no deposit accounts other than the deposit accounts
with Bank and deposit accounts described in the Perfection Certificate delivered to Bank in
connection herewith.
The Collateral is not in the possession of any third party bailee (such as a warehouse) except
as otherwise provided in the Perfection Certificate. None of the components of the Collateral
shall be maintained at locations other than as provided in the Perfection Certificate. In the
event that Borrower or Guarantor, after the date hereof, intend to store or otherwise deliver any
portion of the Collateral in excess of Two Hundred Fifty Thousand Dollars ($250,000) per location
or in the aggregate to a bailee, then such Borrower or Guarantor, as applicable, will first receive
the written consent of Bank and such bailee must execute and deliver a bailee agreement in form and
substance satisfactory to Bank in its sole discretion.
All Inventory is in all material respects of good and marketable quality, free from material
defects.
Borrower is the sole owner of its intellectual property, except for non-exclusive licenses
granted to its customers in the ordinary course of business. To the Borrower’s knowledge, each
patent is valid and enforceable, no part of the intellectual property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of the Intellectual
Property violates the rights of any third party.
Except for over-the-counter software and as otherwise set forth on Schedule 1 annexed hereto,
Borrower is not a party to, nor is bound by, any license or other agreement with respect to which
Borrower is the licensee that prohibits or otherwise restricts Borrower from granting a security
interest in Borrower’s interest in such license or agreement or any other property. Borrower shall
provide written notice to Bank within twenty (20) days of entering or becoming bound by any such
license or agreement which is reasonably likely to have a material impact on Borrower’s business or
financial condition (other than over-the-counter software that is commercially available to the
public).
5.3 Accounts Receivable.
(a) For each Account with respect to which Advances are requested, on the date each Advance is
requested and made, each such Account is an Eligible Account or an Eligible Foreign Account.
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(b) All statements made and all unpaid balances appearing in all invoices, instruments and
other documents evidencing the Accounts are and shall be true and correct and all such invoices,
instruments and other documents, and all of Borrower’s Books are genuine and in all respects what
they purport to be. All sales and other transactions underlying or giving rise to each Account
shall comply in all material respects with all applicable laws and governmental rules and
regulations. Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any
Account Debtor whose accounts are Eligible Accounts or Eligible Foreign Accounts in any Borrowing
Base Certificate. To the best of Borrower’s knowledge, all signatures and endorsements on all
documents, instruments, and agreements relating to all Accounts are genuine, and all such
documents, instruments and agreements are legally enforceable in accordance with their terms,
except as enforcement may be limited by equitable principles or by bankruptcy, insolvency or
similar laws relating to creditors’ rights generally.
5.4 Litigation. Except as disclosed in the Perfection Certificate, there are no actions or
proceedings pending or, to the knowledge of the Responsible Officers, threatened in writing by or
against Borrower or any of its Subsidiaries involving more than Five Hundred Thousand Dollars
($500,000).
5.5 No Material Deviation in Financial Statements. All consolidated financial statements for
Borrower and any of its Subsidiaries delivered to Bank fairly present in all material respects
Borrower’s consolidated financial condition and Borrower’s consolidated results of operations as of
the date hereof. There has not been any material deterioration in Borrower’s consolidated
financial condition since the date of the most recent financial statements submitted to Bank.
5.6 Solvency. The fair salable value of Borrower’s assets (including goodwill minus
disposition costs) on a going-concern basis exceeds the fair value of its liabilities; Borrower is
not left with unreasonably small capital after the transactions in this Agreement; and Borrower is
able to pay its debts (including trade debts) as they mature.
5.7 Regulatory Compliance. Borrower is not an “investment company” or a company “controlled”
by an “investment company” under the Investment Company Act of 1940. Borrower is not engaged as
one of its important activities in extending credit for margin stock (under Regulations T and U of
the Federal Reserve Board of Governors). Borrower has complied in all material respects with the
Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the
violation of which could reasonably be expected to have a material adverse effect on its business.
None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing,
producing, storing, treating, or transporting any hazardous substance other than legally. Borrower
and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all government authorities that are
necessary to continue its business as currently conducted.
5.8 Subsidiaries; Investments. Borrower does not own any stock, partnership interest or other
equity securities except for Permitted Investments.
5.9 Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required
tax returns and reports, and Borrower and its Subsidiaries, if any, have timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by Borrower. Borrower
may defer payment of any contested taxes, provided that Borrower (a) in good faith contests its
obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Bank in writing of the commencement of, and any material development in,
the proceedings, (c) posts bonds or takes any other steps required to prevent the governmental
authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is
other than a “Permitted Lien”. Borrower is unaware of any claims or adjustments proposed for any
of Borrower’s prior tax years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharing and
deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from
participation in, and has not permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency.
5.10 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as
working capital and to fund its general business requirements and not for personal, family,
household or agricultural purposes.
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5.11 Full Disclosure. No written representation, warranty or other statement of Borrower or
any Guarantor in any certificate or written statement given to Bank, as of the date such
representation, warranty, or other statement was made, taken together with all such written
certificates and written statements given to Bank, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained in the certificates or
statements not misleading in light of the circumstances in which they were made (it being
recognized by Bank that the projections and forecasts provided by Borrower in good faith and based
upon reasonable assumptions are not viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected or forecasted
results).
6 AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1 Government Compliance. Maintain its and all its Subsidiaries’ legal existence and good
standing in each respective jurisdiction of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to have a material
adverse effect on Borrower’s business or operations. Borrower shall comply, and have each
Subsidiary comply, with all laws, ordinances and regulations to which it is subject, the
noncompliance with which could have a material adverse effect on Borrower’s business.
6.2 Financial Statements, Reports, Certificates.
(a) Borrower shall provide Bank with the following:
(i) within thirty (30) days after the end of each month, and upon each request for an
Advance, a Transaction Report (including a Borrowing Base Certificate and all schedules related
thereto);
(ii) within thirty (30) days after the end of each month, (A) monthly accounts receivable
agings, aged by invoice date, (B) monthly accounts payable agings, aged by invoice date, and
outstanding or held check registers, if any, (C) monthly reconciliations of accounts receivable
agings (aged by invoice date), transaction reports, deferred revenue report and general ledger,
and (D) monthly detailed backlog and perpetual inventory reports for Inventory valued on a
first-in, first-out basis at the lower of cost or market (in accordance with GAAP) or such other
inventory reports as are requested by Bank in its reasonable discretion;
(iii) as soon as available, and in any event within thirty (30) days after the end of each
month, monthly unaudited financial statements;
(iv) within thirty (30) days after the end of each month a monthly Compliance Certificate
signed by a Responsible Officer, certifying that as of the end of such month, Borrower was in full
compliance with all of the terms and conditions of this Agreement, and setting forth calculations
showing compliance with the financial covenants set forth in this Agreement and such other
information as Bank shall reasonably request;
(v) as soon as available, and in any event within sixty (60) days following the end of
Borrower’s fiscal year, (A) annual operating budgets (including income statements, balance sheets
and cash flow statements, by month) for the upcoming fiscal year of Borrower, and (B) annual
financial projections for the following fiscal year (on a quarterly basis) as approved by
Borrower’s board of directors; and
(vi) as soon as available, and in any event within one hundred twenty (120) days following
the end of Borrower’s fiscal year, annual financial statements certified by, and with an
unqualified opinion of, independent certified public accountants reasonably acceptable to Bank.
Notwithstanding the foregoing, during a Streamline Period, provided no Event of Default has
occurred and is continuing, Borrower shall not be required to provide Bank the reports and
schedules required pursuant to clause (a)(i) and (ii) above.
(b) In the event that Borrower is or becomes subject to the reporting requirements under the
Securities Exchange Act of 1934, as amended, within ten (10) days after filing, all reports on
Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission or a link thereto on
Borrower’s or another website on the internet; provided that the reports required to be delivered
pursuant to this Section 6.2(b) shall be deemed to have been delivered on the date on which
Borrower posts such report or provides a link thereto on Borrower’s or another website on the
internet.
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6.3 Accounts Receivable.
(a) Schedules and Documents Relating to Accounts. Borrower shall deliver to Bank
transaction reports and schedules of collections, as provided in Section 6.2, on Bank’s standard
forms; provided, however, that Borrower’s failure to execute and deliver the same shall not affect
or limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall Bank’s failure to
advance or lend against a specific Account affect or limit Bank’s Lien and other rights therein.
If requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s request, originals) of
all contracts, orders, invoices, and other similar documents, and all shipping instructions,
delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or
disposition of which gave rise to such Accounts. In addition, Borrower shall deliver to Bank, on
its request, the originals of all instruments, chattel paper, security agreements, guarantees and
other documents and property evidencing or securing any Accounts, in the same form as received,
with all necessary endorsements, and copies of all credit memos.
(b) Disputes. Borrower shall promptly notify Bank of all disputes or claims relating
to Accounts involving more than One Hundred Thousand Dollars ($100,000). Borrower may forgive
(completely or partially), compromise, or settle any Account for less than payment in full, or
agree to do any of the foregoing so long as (i) Borrower does so in good faith, in a commercially
reasonable manner, in the ordinary course of business, in arm’s-length transactions, and reports
the same to Bank in the regular reports provided to Bank; (ii) no Event of Default has occurred and
is continuing; and (iii) after taking into account all such discounts, settlements and forgiveness,
the total outstanding Advances will not exceed the Availability Amount.
(c) Collection of Accounts. Borrower shall have the right to collect all Accounts,
unless and until an Event of Default has occurred and is continuing. All payments on, and proceeds
of, Accounts shall be deposited directly by the applicable Account Debtor into a lockbox account,
or such other “blocked account” as Bank may specify, pursuant to a blocked account agreement in
form and substance satisfactory to Bank in its sole discretion. Whether or not an Event of Default
has occurred and is continuing, Borrower shall hold all payments on, and proceeds of, Accounts in
trust for Bank, and Borrower shall promptly deliver all such payments and proceeds to Bank in their
original form, duly endorsed, to be applied to the Obligations pursuant to the terms of Section 9.4
hereof; provided, however, that during a Streamline Period, such payments and
proceeds shall be deposited into Borrower’s Designated Deposit Account.
(d) Returns. Provided no Event of Default has occurred and is continuing, if any
Account Debtor returns any Inventory to Borrower, Borrower shall promptly (i) determine the reason
for such return, (ii) issue a credit memorandum to the Account Debtor in the appropriate amount,
and (iii) provide a copy of such credit memorandum to Bank, upon request from Bank. In the event
any attempted return occurs after the occurrence and during the continuance of any Event of
Default, Borrower shall hold the returned Inventory in trust for Bank, and immediately notify Bank
of the return of the Inventory.
(e) Verification. Bank may, from time to time, verify directly with the respective
Account Debtors the validity, amount and other matters relating to the Accounts, either in the name
of Borrower or Bank or such other name as Bank may choose.
(f) No Liability. Bank shall not be responsible or liable for any shortage or
discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of
which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any Account, or for settling
any Account in good faith for less than the full amount thereof, nor shall Bank be deemed to be
responsible for any of Borrower’s obligations under any contract or agreement giving rise to an
Account. Nothing herein shall, however, relieve Bank from liability for its own gross negligence
or willful misconduct.
6.4 Remittance of Proceeds. Except as otherwise provided in Section 6.3(c), deliver, in kind,
all proceeds received by Borrower arising from the disposition of any Collateral to Bank in the
original form in which received by Borrower not later than the following Business Day after receipt
by Borrower, to be applied to the Revolving Line pursuant to the terms of Section 9.4 hereof;
provided that, if no Default or Event of Default has occurred and is continuing, Borrower
shall not be obligated to remit to Bank the proceeds of the sale of worn out, surplus or obsolete
Equipment disposed of by Borrower in good faith in an arm’s length transaction for an aggregate
purchase price of Five Hundred Thousand Dollars ($500,000) or less (for all such transactions in
any fiscal year). Borrower agrees that it will not commingle proceeds of Collateral with any of
Borrower’s other funds or property,
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but will hold such proceeds separate and apart from such other
funds and property and in an express trust for Bank to the extent such proceeds are required to be delivered to Bank pursuant to the foregoing
sentence. Nothing in this Section 6.4 limits the restrictions on disposition of Collateral set
forth elsewhere in this Agreement.
6.5 Taxes; Pensions. Make, and cause each of its Subsidiaries, if any, to make, timely
payment of all foreign, federal, state and local taxes or assessments (other than taxes and
assessments which Borrower is contesting pursuant to the terms of Section 5.9 hereof), and shall
deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay all
amounts necessary to fund all present pension, profit sharing and deferred compensation plans in
accordance with their terms.
6.6 Access to Collateral; Books and Records. At reasonable times (but not more than two (2)
times per year prior to the occurrence of an Event of Default), on one (1) Business Day’s notice
(provided no notice is required if an Event of Default has occurred and is continuing), Bank, or
its agents, shall have the right to inspect the Collateral and the right to audit and copy
Borrower’s Books. The foregoing inspections and audits, including, without limitation, the Initial
Audit, shall be at Borrower’s expense, and the charge therefor shall be $750 per person per day (or
such higher amount as shall represent Bank’s then-current standard charge for the same), plus
reasonable out-of-pocket expenses provided that so long as no Event of Default shall have occurred
(or if an Event of Default shall have occurred, such Event of Default shall have been waived by
Bank in accordance with the terms hereof), Borrower shall only be liable for the expenses of two
(2) audits per fiscal year. In the event Borrower and Bank schedule an audit more than ten (10)
days in advance, and Borrower cancels or seeks to reschedules the audit with less than ten (10)
days written notice to Bank, then (without limiting any of Bank’s rights or remedies), Borrower
shall reimburse Bank for any out-of-pocket expenses incurred by Bank as a result of the
cancellation or rescheduling.
6.7 Insurance. Keep its business and the Collateral insured for risks and in amounts standard
for companies in Borrower’s industry and location and as Bank may reasonably request. Insurance
policies shall be in a form, with companies, and in amounts that are reasonably satisfactory to
Bank. All property policies shall have a lender’s loss payable endorsement showing Bank as the
sole lender loss payee and waive subrogation against Bank, and all liability policies shall show,
or have endorsements showing, Bank as an additional insured. All policies (or the loss payable and
additional insured endorsements) shall provide that the insurer must give Bank at least thirty (30)
days notice before canceling, amending, or declining to renew its policy. At Bank’s request,
Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy shall, at Bank’s option, be payable to Bank on account of the Revolving
Line. Notwithstanding the foregoing, (a) so long as no Event of Default has occurred and is
continuing, Borrower shall have the option, within ninety (90) days of the receipt by Borrower of
such proceeds, of (i) remitting such proceeds to Bank on account of the Obligations or (ii)
applying such proceeds of any casualty policy toward the replacement or repair of destroyed or
damaged property; provided that any such replaced or repaired property (X) shall be of
equal or like value as the replaced or repaired Collateral and (Y) shall be deemed Collateral in
which Bank has been granted a first priority security interest, and (b) after the occurrence and
during the continuance of an Event of Default, all proceeds payable under such casualty policy
shall, at the option of Bank, be payable to Bank on account of the Obligations. If Borrower fails
to obtain insurance as required under this Section 6.7 or to pay any amount or furnish any required
proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain
such insurance policies required in this Section 6.7, and take any action under the policies Bank
deems prudent.
6.8 Operating Accounts.
(a) Maintain its and its Subsidiaries’ depository, operating accounts and securities accounts
with Bank and Bank’s affiliates with all excess funds maintained at or invested through Bank or an
affiliate of Bank which accounts shall represent (i) at least fifty-one percent (51%) of the dollar
value of Borrower’s and such Subsidiaries’ accounts at all financial institutions and (ii) at least
sixty-seven percent (67%) of its and its Subsidiaries’ cash located in the United States.
(b) Provide Bank five (5) days prior-written notice before establishing any Collateral Account
at or with any bank or financial institution in the United States other than Bank or its
Affiliates. In addition, for each Collateral Account that Borrower at any time maintains in the
United States, Borrower shall cause the applicable bank or financial institution (other than Bank)
at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or
other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in such
Collateral Account in accordance with the terms hereunder. The provisions of the previous sentence
shall not apply to (i) deposit accounts exclusively used for payroll, payroll taxes and other
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employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to
Bank by
Borrower as such, (ii) the Deutsche Account, (iii) the Anglo Account and (iv) deposit accounts
used solely for xxxxx cash.
6.9 Financial Covenant.
Borrower shall maintain at all times, to be tested by Bank at any time in its sole discretion
and to be certified by Borrower as of the last day of each month:
(a) Liquidity. Borrower’s unrestricted cash at Bank and unrestricted Cash Equivalents
at Bank plus the lesser of (a) (i) the Revolving Line or (ii) the Borrowing Base
minus (b) the amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit plus an amount equal to the Letter of Credit Reserves), minus (c)
the FX Reserve, and minus (d) the outstanding principal balance of any Advances (including
any amounts used for Cash Management Services) of at least Eighty Million Dollars ($80,000,000).
6.10 Protection of Intellectual Property Rights. Borrower shall: (a) use reasonable efforts
to protect, defend and maintain the validity and enforceability of its intellectual property; (b)
promptly advise Bank in writing when Borrower becomes aware of material infringements of its
intellectual property; and (c) not allow any intellectual property material to Borrower’s business
to be abandoned, forfeited or dedicated to the public without Bank’s written consent, unless
Borrower determines that reasonable business practices suggest that abandonment, forfeiture or
dedication is appropriate.
6.11 Litigation Cooperation. From the date hereof and continuing through the termination of
this Agreement, make available to Bank, without expense to Bank, Borrower and its officers,
employees and agents and Borrower’s Books, to the extent that Bank may deem them reasonably
necessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank
with respect to any Collateral or relating to Borrower.
6.12 Designated Senior Debt. Borrower acknowledges that, other than as described herein and
except for Permitted Indebtedness that is subject to Permitted Liens, the Obligations are senior in
all respects to all other Indebtedness of the Borrower. Borrower shall designate all principal of,
interest (including all interest accruing after the commencement of any bankruptcy or similar
proceeding, whether or not a claim for post-petition interest is allowable as a claim in any such
proceeding), and all fees, costs, expenses and other amounts accrued or due under this Agreement as
“Designated Senior Debt”, or such similar term, in any future Subordinated Debt incurred by
Borrower after the date hereof, if such Subordinated Debt contains such term or similar term and if
the effect of such designation is to grant Bank the same or similar rights as granted to Bank as a
holder of “Designated Senior Indebtedness” or such other term or similar term under the Indenture.
6.13 Further Assurances. Borrower shall execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or to
effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
Borrower shall not do any of the following without Bank’s prior written consent, which consent
shall not be unreasonably withheld or delayed:
7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of (collectively,
“Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or
property, except for (a) Transfers of Inventory in the ordinary course of business; (b) Transfers
of worn-out, surplus or obsolete Equipment; (c) Transfers in connection with Permitted Liens and
Permitted Investments; (d) Transfers of property in connection with sale-leaseback transactions;
(e) Transfers of property to the extent such property is exchanged for credit against, or proceeds
are promptly applied to, the purchase price of other property used or useful in the business of
Borrower or its Subsidiaries; (f) Transfers of non-exclusive licenses or user agreements for the
use of the property of Borrower or its Subsidiaries in the ordinary course of business and licenses
that could not result in a legal transfer of title of the licensed property but that may be
exclusive in respects other than territory and that may be exclusive as to territory only as to
discreet geographical areas outside of the United States; (g) sales or discounting of delinquent
accounts in the ordinary course of business; (h) Transfers associated with the making or
disposition of a Permitted Investment; (i) Transfers in connection with a permitted acquisition of
a portion of the assets or rights acquired; (j) Transfers of intellectual property rights jointly
developed by Borrower and a third party in connection with a joint development
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agreement in which
Borrower obtains certain intellectual property rights and the applicable third party obtains certain intellectual property rights; and (k) Transfers not otherwise permitted in this
Section 7.1, provided, that the aggregate book value of all such Transfers by Borrower and its
Subsidiaries, together, shall not exceed in any fiscal year, five percent (5.0%) of Borrower’s
consolidated total assets as of the last day of the fiscal year immediately preceding the date of
determination. Borrower shall not enter into an agreement with any Person other than Bank which
restricts the subsequent granting of a security interest in Borrower’s intellectual property.
7.2 Changes in Business, Management, Control or Business Locations. (a) Engage in or permit
any of its Subsidiaries, if any, to engage in any business other than the businesses currently
engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto or (b)
liquidate or dissolve. Borrower shall not, without at least thirty (30) days prior written notice
to Bank: (1) add any new offices or business locations, including warehouses (unless such new
offices or business locations contain less than Two Hundred Fifty Thousand Dollars ($250,000) in
Borrower’s assets or property), (2) change its jurisdiction of organization, (3) change its
organizational structure or type, (4) change its legal name, or (5) change any organizational
number (if any) assigned by its jurisdiction of organization.
7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge
or consolidate, with any other Person other than with Borrower, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or property of another
Person, except where no Event of Default has occurred and is continuing or would result from such
action, and Borrower is the surviving entity.
7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
7.5 Encumbrance. Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or permit any of its
Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the
first priority security interest granted herein (subject only to Permitted Liens that may have
superior priority to Bank’s Lien under this Agreement), or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Bank) with any Person which directly or
indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning,
mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or
any Subsidiary’s intellectual property, except for over-the-counter software and as is otherwise
permitted in Section 7.1 hereof and the definition of “Permitted Lien” herein.
7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to
the terms of Section 6.8(b) hereof.
7.7 Investments; Distributions. (a) Directly or indirectly make any Investment other than
Permitted Investments, or permit any of its Subsidiaries to do so; or (b) pay any dividends or make
any distribution or payment or redeem, retire or purchase any capital stock other than Permitted
Distributions.
7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any
material transaction with any Affiliate of Borrower, except for (a) transactions that are in the
ordinary course of Borrower’s business, upon fair and reasonable terms (when viewed in the context
of any series of transactions of which it may be a part, if applicable) or (b) transactions among
Borrower and its Subsidiaries, if any and among Borrower’s Subsidiaries so long as no Event of
Default exists or could result therefrom.
7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except under
the terms of the subordination, intercreditor or similar agreement in form and substance acceptable
to Bank to which such Subordinated Debt is subject (a “Subordination Agreement”), or (b) amend any
provision in any document relating to the Subordinated Debt which would increase the amount thereof
or adversely affect the subordination thereof to Obligations owed to Bank.
7.10 Compliance. Become an “investment company” or a company controlled by an “investment
company”, under the Investment Company Act of 1940 or undertake as one of its important activities
extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or
non-exempt Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal
Fair Labor Standards Act or violate any other law or regulation, if the
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violation could reasonably
be expected to have a material adverse effect on Borrower’s business, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in,
permit partial or complete termination of, or permit the occurrence of any other event with respect
to, any present pension, profit sharing and deferred compensation plan which could reasonably be
expected to result in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.
8 EVENTS OF DEFAULT
Any one of the following shall constitute an event of default (an “Event of Default”) under
this Agreement:
8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest on any
Credit Extension on its due date, or (b) pay any other Obligations within three (3) Business Days
after such Obligations are due and payable. During the cure period, the failure to cure the
payment default is not an Event of Default (but no Credit Extension will be made during the cure
period);
8.2 Covenant Default.
(a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.5, 6.8, or 6.9 or
violates any covenant in Section 7; or
(b) Borrower fails or neglects to perform, keep, or observe any other term, provision,
condition, covenant or agreement contained in this Agreement, any Loan Documents, and as to any
default (other than those specified in this Section 8) under such other term, provision, condition,
covenant or agreement that can be cured, has failed to cure the default within ten (10) days after
the occurrence thereof; provided, however, that if the default cannot by its nature be cured within
the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10)
day period, and such default is likely to be cured within a reasonable time, then Borrower shall
have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure
such default, and within such reasonable time period the failure to cure the default shall not be
deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Grace
periods provided under this section shall not apply, among other things, to financial covenants or
any other covenants set forth in subsection (a) above;
8.3 Material Adverse Change. A Material Adverse Change occurs;
8.4 Change of Control. A Change of Control occurs;
8.5 Attachment. (a) Any material portion of Borrower’s assets is attached, seized, levied on,
or comes into possession of a trustee or receiver and the attachment, seizure or levy is not
removed in ten (10) days; (b) the service of process upon Bank (or Bank’s Affiliate) seeking to
attach, by trustee or similar process, any funds of Borrower, or of any entity under control of
Borrower (including a Subsidiary) on deposit with Bank; (c) Borrower is enjoined, restrained, or
prevented by court order from conducting a material part of its business; (d) a judgment or other
claim in excess of Five Hundred Thousand Dollars ($500,000) becomes a Lien on any of Borrower’s
assets; or (e) a notice of lien, levy, or assessment is filed against any of Borrower’s assets by
any government agency and not paid within ten (10) days after Borrower receives notice. These are
not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit
Extensions shall be made during the cure period);
8.6 Insolvency. Borrower is unable to pay its debts (including trade debts) as they become
due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an
Insolvency Proceeding is begun against Borrower and not dismissed or stayed within thirty (30) days
(but no Credit Extensions shall be made while of any of the conditions described in clause (a)
exist and/or until any Insolvency Proceeding is dismissed);
8.7 Other Agreements. If Borrower fails to (a) make any payment that is due and payable with
respect to any Material Indebtedness and such failure continues after the applicable grace or
notice period, if any, specified in the agreement or instrument relating thereto, or (b) perform or
observe any other condition or covenant, or any other event shall occur or condition shall exist
under any agreement or instrument relating to Material Indebtedness, and such failure continues
after the applicable grace or notice period, if any, specified in the agreement or instrument
relating thereto and the effect of such failure, event or condition is to cause the holder or
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holders of such Material Indebtedness to accelerate the maturity of indebtedness in excess of One
Million Dollars ($1,000,000) or cause the mandatory repurchase of any indebtedness in excess of One
Million Dollars ($1,000,000);
8.8 Judgments. A judgment or judgments for the payment of money in an amount, individually or
in the aggregate, of at least Five Hundred Thousand Dollars ($500,000) (not covered by independent
third-party insurance) shall be rendered against Borrower and shall remain unsatisfied and unstayed
for a period of ten (10) days after the entry thereof (provided that no Credit Extensions will be
made prior to the satisfaction or stay of such judgment);
8.9 Misrepresentations. Borrower or any Person acting for Borrower makes any representation,
warranty, or other statement now or later in this Agreement, any Loan Document or in any writing
delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such
representation, warranty, or other statement is incorrect in any material respect when made; or
8.10 Guaranty. (a) Any guaranty of any Obligations terminates or ceases for any reason to be
in full force and effect; (b) any Guarantor does not perform any obligation or covenant under any
guaranty of the Obligations; (c) any circumstance described in Sections 8.3, 8.4, 8.5, 8.7, or 8.8.
occurs with respect to any Guarantor, (d) the liquidation, winding up, or termination of existence
of any Guarantor; or (e) (i) a material impairment in the perfection or priority of Bank’s Lien in
the collateral provided by Guarantor or in the value of such collateral or (ii) a material adverse
change in the general affairs, management, results of operation, condition (financial or otherwise)
or the prospect of repayment of the Obligations occurs with respect to any Guarantor.
8.11 Subordinated Debt. A default or breach by Borrower occurs under any agreement between
Borrower and any creditor of Borrower which gives such creditor the right to accelerate the
Subordinated Debt (whether or not such right is exercised by such creditor) owed by Borrower to
such creditor that (i) signed a Subordination Agreement or (ii) is otherwise subject to an
agreement pursuant to which its obligations are subordinated to the Obligations to Bank, or any
creditor that is subject to such an agreement breaches any terms of such agreement.
9 BANK’S RIGHTS AND REMEDIES
9.1 Rights and Remedies. While an Event of Default occurs and continues Bank may, without
notice or demand, do any or all of the following to the extent permitted by law:
(a) declare all Obligations immediately due and payable (but if an Event of Default described
in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);
(b) stop advancing money or extending credit for Borrower’s benefit under this Agreement or
under any other agreement between Borrower and Bank;
(c) demand that Borrower (i) deposits cash with Bank in an amount equal to the aggregate
amount of any Letters of Credit remaining undrawn, as collateral security for the repayment of any
future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such
amounts, and (ii) pay in advance all Letter of Credit fees scheduled to be paid or payable over the
remaining term of any Letters of Credit;
(d) terminate any FX Contracts;
(e) settle or adjust disputes and claims directly with Account Debtors for amounts on terms
and in any order that Bank considers advisable, notify any Person owing Borrower money of Bank’s
security interest in such funds, and verify the amount of such account;
(f) make any payments and do any acts it considers necessary or reasonable to protect the
Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral
if Bank requests and make it available as Bank designates. Bank may enter premises where the
Collateral is located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of
its premises, without charge by Borrower, to exercise any of Bank’s rights or remedies;
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(g) apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of Borrower;
(h) in Bank’s reasonable discretion, ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels,
patents, copyrights, mask works, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any similar property as it pertains to the Collateral, in
completing production of, advertising for sale, and selling any Collateral and, in connection with
Bank’s reasonable exercise of its rights under this Section, Borrower’s rights under all licenses
and all franchise agreements inure to Bank’s benefit;
(i) place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive
control, any entitlement order, or other directions or instructions pursuant to any Control
Agreement or similar agreements providing control of any Collateral;
(j) demand and receive possession of Borrower’s Books; and
(k) in Bank’s reasonable discretion, exercise all rights and remedies available to Bank under
the Loan Documents or at law or equity, including all remedies provided under the Code (including
disposal of the Collateral pursuant to the terms thereof, in Bank’s reasonable discretion).
9.2 Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of
Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b)
sign Borrower’s name on any invoice or xxxx of lading for any Account or drafts against Account
Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust all
claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge,
encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the
Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints
Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect
or continue the perfection of Bank’s security interest in the Collateral regardless of whether an
Event of Default has occurred until all Obligations have been satisfied in full and Bank is under
no further obligation to make Credit Extensions hereunder. Bank’s foregoing appointment as
Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are
irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation to
provide Credit Extensions hereunder terminates and shall thereupon terminate.
9.3 Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.7
or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to
pay under this Agreement or any other Loan Document, Bank may obtain such insurance or make such
payment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then highest applicable rate, and secured by the Collateral. Bank will make
reasonable efforts to provide Borrower with notice of Bank obtaining such insurance at the time it
is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to
make similar payments in the future or Bank’s waiver of any Event of Default.
9.4 Application of Payments and Proceeds. If no Event of Default has occurred and is
continuing and except for debits made by Bank pursuant to the terms of Section 2.3(f) hereof which
shall be applied to the payment of principal, interest or such other amounts for which such debit
shall have been made in accordance with the terms thereof, and subject to Section 12.1 hereof, Bank
may apply any funds in its possession, whether from Borrower account balances, payments, or
proceeds realized as the result of any collection of Accounts or other disposition of the
Collateral in accordance with the terms hereof, first, to Bank Expenses, including without
limitation, the documented reasonable costs, expenses, liabilities, obligations and attorneys’ fees
incurred by Bank in the exercise of its rights under this Agreement; second, to the interest due on
the Revolving Line; and third, to the principal of the Obligations and any applicable fees and
other charges, in such order as Bank shall determine in its reasonable discretion. Any surplus
shall be paid to Borrower or other Persons legally entitled thereto; Borrower shall remain liable
to Bank for any deficiency. If an Event of Default has occurred and is continuing, Bank may apply
any funds in its possession, whether from Borrower account balances, payments, proceeds realized as
the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to
the Obligations in such order as Bank shall determine in its sole discretion. Any surplus shall be
paid to Borrower or to other Persons legally entitled thereto; Borrower shall remain liable to Bank
for any deficiency. If Bank, in its reasonable
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judgment, directly or indirectly enters into a
deferred payment or other credit transaction with any purchaser at any sale of Collateral, Bank
shall have the option, exercisable at any time, of either reducing the Obligations by the
principal amount of the purchase price or deferring the reduction of the Obligations until the
actual receipt by Bank of cash therefor.
9.5 Bank’s Liability for Collateral. So long as Bank complies with reasonable banking
practices and is not in violation of any applicable law regarding the safekeeping of the Collateral
in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a)
the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in
the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.
9.6 No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict
performance by Borrower of any provision of this Agreement or any other Loan Document shall not
waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance
herewith or therewith. No waiver hereunder shall be effective unless signed by Bank and then is
only effective for the specific instance and purpose for which it is given. Bank’s rights and
remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights and
remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is
not an election, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s
delay in exercising any remedy is not a waiver, election, or acquiescence.
9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment
and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by
Bank on which Borrower is liable.
10 NOTICES
All notices, consents, requests, approvals, demands, or other communication (collectively,
“Communication”), other than Advance requests made pursuant to Section 3.4, by any party to this
Agreement or any other Loan Document must be in writing and be delivered by one of the methods set
forth in paragraphs (a) – (d) or sent by facsimile at the addresses or facsimile numbers listed
below. Bank or Borrower may change its notice address by giving the other party written notice
thereof. Each such Communication shall be deemed to have been validly served, given, or delivered:
(a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail,
registered or certified mail, return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by facsimile transmission (with such facsimile promptly confirmed by
delivery of a copy by personal delivery or United States mail as otherwise provided in this Section
10); (c) one (1) Business Day after deposit with a reputable overnight courier with all charges
prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to
the party to be notified and sent to the address or facsimile number indicated below. Advance
requests made pursuant to Section 3.4 must be in writing and may be in the form of electronic mail,
delivered to Bank by Borrower at the e-mail address of Bank provided below and shall be deemed to
have been validly served, given, or delivered when sent (with such electronic mail promptly
confirmed by delivery of a copy by personal delivery or United States mail as otherwise provided in
this Section 10). Bank or Borrower may change its address, facsimile number, or electronic mail
address by giving the other party written notice thereof in accordance with the terms of this
Section 10.
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| If to Borrower: | Evergreen Solar, Inc. | |||
| 000 Xxxxxxxx Xx. | ||||
| Xxxxxxxxxxx, XX 00000 | ||||
| Attn: Messrs. Xxxxxxx El-Hillow and Xxxx Xxxxxx | ||||
| Fax: 000-000-0000 | ||||
| Email: xxxxxxxxx@xxxxxxxxxxxxxx.xxx and
xxxxxxx@xxxxxxxxxxxxxx.xxx |
||||
| with a copy to: | Evergreen Solar, Inc. | |||
| 000 Xxxxxxxx Xx. | ||||
| Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000 | ||||
| Attn: Xxxxxxxxx X. Xxxxxx, Esquire | ||||
| Fax: 000-000-0000 | ||||
| Email: xxxxxxx@xxxxxxxxxxxxxx.xxx | ||||
| If to Bank: | Silicon Valley Bank | |||
| One Newton Executive Park, Suite 200 | ||||
| 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX 00000 | ||||
| Attn: Ms. Irina Case | ||||
| Fax: 000-000-0000 | ||||
| Email: xxxxx@xxx.xxx | ||||
| with a copy to: | Xxxxxx & Xxxxxxxxxx LLP | |||
| Xxxxx Xxxxxx Xxxxx | ||||
| Xxxxxx, Xxxxxxxxxxxxx 00000 | ||||
| Attn: Xxxxxxx X. Xxxxxxx, Esquire | ||||
| Fax: 000- 000-0000 | ||||
| Email: xxxxxxxx@xxxxxxxxx.xxx |
11 CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE
Massachusetts law governs the Loan Documents without regard to principles of conflicts of law.
Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in
Massachusetts; provided, however, that nothing in this Agreement shall be deemed to operate
to preclude Bank from bringing suit or taking other legal action in any other jurisdiction to
realize on the Collateral or any other security for the Obligations, or to enforce a judgment or
other court order in favor of Bank. Borrower expressly submits and consents in advance to such
jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any
objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non
conveniens and hereby consents to the granting of such legal or equitable relief as is deemed
appropriate by such court. Borrower hereby waives personal service of the summons, complaints, and
other process issued in such action or suit and agrees that service of such summons, complaints,
and other process may be made by registered or certified mail addressed to Borrower at the address
set forth in Section 10 of this Agreement and that service so made shall be deemed completed upon
the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the
U.S. mails, proper postage prepaid. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREINABOVE,
BANK SHALL SPECIFICALLY HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER
TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK’S RIGHTS AGAINST BORROWER OR ITS
PROPERTY.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR
ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS
REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
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12.1 Termination Prior to Maturity Date. This Agreement may be terminated prior to the
Revolving Line Maturity Date by Borrower, effective three (3) Business Days after written notice of
termination is given to Bank or if Bank’s obligation to fund Credit Extensions terminates pursuant
to the terms of Section 2.1.1(b). Notwithstanding any such termination, Bank’s lien and security
interest in the Collateral shall continue until Borrower fully satisfies its Obligations. If such
termination is at Borrower’s election (regardless of the existence of any Event of Default), or at
Bank’s election due to the occurrence and continuance of an Event of Default, Borrower shall pay to
Bank, in addition to the payment of any other expenses or fees then-owing, a termination fee in an
amount equal to either (i) if terminated at any time prior to the first anniversary of the
Effective Date, an amount equal to one and one-half of one percent (1.50%) of the Revolving Line
(i.e. Six Hundred Thousand Dollars ($600,000)) or (ii) if terminated at any time after the first
anniversary of the Effective Date but prior to the Revolving Line Maturity Date, an amount equal to
one percent (1.00%) of the Revolving Line (i.e. Four Hundred Thousand Dollars ($400,000));
provided that in no event will the fees in both of the immediately preceding
clauses (i) and (ii) be required to be paid and no termination fee shall be charged if the credit
facility hereunder is replaced with a new facility from another division of Silicon Valley Bank.
Upon payment in full of the Obligations and at such time as Bank’s obligation to make Credit
Extensions has terminated, Bank shall release its liens and security interests in the Collateral
and all rights therein shall revert to Borrower.
12.2 Successors and Assigns. This Agreement binds and is for the benefit of the successors
and permitted assigns of each party. Borrower may not assign this Agreement or any rights or
obligations under it without Bank’s prior written consent (which may be granted or withheld in
Bank’s discretion). Bank has the right, without the consent of or notice to Borrower, to sell,
transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s
obligations, rights, and benefits under this Agreement and the other Loan Documents.
12.3 Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors,
officers, employees, agents, attorneys, or any other Person affiliated with or representing Bank
harmless against: (a) all obligations, demands, claims, and liabilities (collectively, “Claims”)
asserted by any other party (other than Borrower) in connection with the transactions contemplated
by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from,
following, or arising from transactions between Bank and Borrower (including documented reasonable
attorneys’ fees and expenses), except for Claims and/or losses directly caused by Bank’s gross
negligence or willful misconduct.
12.4 Time of Essence. Time is of the essence for the performance of all Obligations in this
Agreement.
12.5 Severability of Provisions. Each provision of this Agreement is severable from every
other provision in determining the enforceability of any provision.
12.6 Amendments in Writing; Integration. All amendments to this Agreement must be in writing
signed by both Bank and Borrower. This Agreement and the Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations between the parties about
the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan
Documents.
12.7 Counterparts. This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and delivered, are an
original, and all taken together, constitute one Agreement.
12.8 Survival. All covenants, representations and warranties made in this Agreement continue
in full force until this Agreement has terminated pursuant to its terms and all Obligations (other
than inchoate indemnity obligations and any other obligations which, by their terms, are to survive
the termination of this Agreement) have been satisfied. The obligation of Borrower in Section 12.3
to indemnify Bank shall survive until the statute of limitations with respect to such claim or
cause of action shall have run.
12.9 Confidentiality. In handling any Borrower financial information or other Borrower
confidential information, Bank shall exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or
Affiliates; (b) to prospective transferees or purchasers of any interest in the Credit Extensions
(provided, however, Bank shall use commercially reasonable efforts to obtain such prospective
transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise required in
connection
- 18 -
with Bank’s examination or audit; and (e) as Bank considers appropriate in exercising remedies
under this Agreement. Confidential information does not include information that either: (i) is in
the public domain or in Bank’s possession when disclosed to Bank, or becomes part of the public
domain after disclosure to Bank; or (ii) is disclosed to Bank by a third party, if Bank does not
know that the third party is prohibited from disclosing the information.
12.10 Attorneys’ Fees, Costs and Expenses. In any action or proceeding between Borrower and
Bank arising out of or relating to the Loan Documents, provided that Bank is the prevailing party,
Bank shall be entitled to recover its reasonable attorneys’ fees and other costs and expenses
incurred, in addition to any other relief to which it may be entitled.
12.11 Right of Set Off. Borrower hereby grants to Bank, a lien, security interest and right
of set off as security for all Obligations to Bank, whether now existing or hereafter arising upon
and against all deposits, credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of Bank or any entity under the control of Bank (including a Bank
subsidiary) or in transit to any of them. At any time after the occurrence and during the
continuance of an Event of Default, without demand or notice, Bank may set off the same or any part
thereof and apply the same to any liability or obligation of Borrower even though unmatured and
regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO
REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES
THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR
OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
13 DEFINITIONS
13.1 Definitions. As used in this Agreement, the following terms have the following meanings
or the meanings set forth in the LIBOR Supplement:
“Account” is any “account” as defined in the Code with such additions to such term as may
hereafter be made, and includes, without limitation, all accounts receivable and other sums owing
to Borrower.
“Account Debtor” is any “account debtor” as defined in the Code with such additions to such
term as may hereafter be made.
“Advance” or “Advances” means an advance (or advances) under the Revolving Line.
“Affiliate” of any Person is a Person that owns or controls directly or indirectly the Person,
any Person that controls or is controlled by or is under common control with the Person, and each
of that Person’s senior executive officers, directors, partners and, for any Person that is a
limited liability company, that Person’s managers and members.
“Agreement” is defined in the preamble hereof.
“Availability Amount” is (I) during a Streamline Period, the Committed Availability; or (II)
at all other times, (a) the lesser of (i) the Revolving Line or (ii) the Borrowing Base
minus (b) the amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit but excluding any amounts drawn and reimbursed) plus an amount equal to
the Letter of Credit Reserves, minus (c) the FX Reserve, and minus (d) the
outstanding principal balance of any Advances (including any amounts used for Cash Management
Services).
“Bank” is defined in the preamble hereof.
“Bank Expenses” are all documented audit fees and expenses, costs, and expenses (including
documented reasonable attorneys’ fees and expenses) for preparing, negotiating, administering,
defending and enforcing the Loan Documents (including, without limitation, those incurred in
connection with appeals or Insolvency Proceedings) or otherwise incurred by Bank with respect to
Borrower.
“Borrower” is defined in the preamble hereof.
- 19 -
“Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state
tax returns, records regarding Borrower’s assets or liabilities, the Collateral, business
operations or financial condition, and all computer programs or storage or any equipment containing
such information.
“Borrowing Base” is (a) eighty percent (80%) of Eligible Accounts plus (b) sixty-five
percent (65%) of Eligible Foreign Accounts plus (c) forty percent (40%) of the value of
Borrower’s Eligible Inventory (valued at the lower of cost or wholesale fair market value)
(provided, however, such amount in clause (c) shall not exceed the lesser
of (i) Seven Million Five Hundred Thousand Dollars ($7,500,000) or (ii) forty percent (40%) of the
sum of clause (a) plus clause (b) plus clause (c)), plus, at any time prior
to October 1, 2008, Ten Million Dollars ($10,000,000), in the case of each of clauses (a), (b) and
(c), as reasonably determined by Bank from Borrower’s most recent Borrowing Base Certificate;
provided, however, that Bank may, after consultation with the Borrower, increase or
decrease the foregoing amounts and/or percentages in its reasonable discretion based on events,
conditions, contingencies, or risks which, as determined by Bank, may adversely affect Collateral.
“Borrowing Base Certificate” is that certain certificate included within each Transaction
Report.
“Borrowing Resolutions” are, with respect to any Person, those resolutions adopted by such
Person’s Board of Directors or other appropriate body and delivered by such Person to Bank
approving the transactions contemplated by the Loan Documents to which such Person is a party,
together with a certificate executed by its secretary on behalf of such Person certifying that
(a) such Person has the authority to execute, deliver, and perform its obligations under each of
the Loan Documents to which it is a party, (b) that attached to such certificate is a true,
correct, and complete copy of the resolutions then in full force and effect authorizing and
ratifying the execution, delivery, and performance by such Person of the Loan Documents to which it
is a party, (c) the name(s) and titles(s) of the Person(s) authorized to execute the Loan Documents
on behalf of such Person, together with a sample of the true signature(s) of such Person(s), and
(d) that Bank may conclusively rely on such certificate unless and until such Person shall have
delivered to Bank a further certificate canceling or amending such prior certificate.
“Business Day” is any day other than a Saturday, Sunday or other day on which Bank is closed,
except that if any determination of a “Business Day” shall relate to a LIBOR Advance, the term
“Business Day” shall also mean a day on which dealings are carried on in the London interbank
market, and if any determination of a “Business Day” shall relate to an FX Forward Contract, the
term “Business Day” shall mean a day on which dealings are carried on in the country of settlement
of the foreign (i.e., non-Dollar) currency.
“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally
guaranteed by the United States or any agency or any State thereof having maturities of not more
than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1)
year after its creation and having the highest rating from either Standard & Poor’s Ratings Group
or Xxxxx’x Investors Service, Inc., (c) Bank’s certificates of deposit issued maturing no more than
one (1) year after issue; (d) money market funds at least ninety-five percent (95%) of the assets
of which constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this
definition; and (e) any other short-term investments, as defined by U.S.GAAP or designated as such
by Bank, permitted under Borrower’s investment policy as in effect on the Effective Date.
“Cash Management Services” is defined in Section 2.1.4.
“Cash Management Services Sublimit” is defined in Section 2.1.4.
“Change of Control” is a transaction in which any “person” (within the meaning of Section
13(d)(3) and 14(d)(2) of the Securities Exchange Act, as amended) becomes the “beneficial owner”
(as defined in Rule 13-d-3 promulgated pursuant to Section 13(d) of the Securities Exchange Act of
1934, as amended), directly or indirectly, of greater than forty percent (40%) of the shares of all
classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of
directors.
“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in
effect in the Commonwealth of Massachusetts; provided, that, to the extent that the Code is used to
define any term herein or in any Loan Document and such term is defined differently in different
Articles or Divisions of the Code, the definition of such term contained in Article or Division 9
shall govern; provided further, that in the event that, by reason of mandatory provisions of law,
any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien
on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than
the Commonwealth of Massachusetts, the term “Code” shall mean the Uniform Commercial Code as
- 20 -
enacted and in effect in such other jurisdiction solely for purposes on the provisions thereof
relating to such attachment, perfection, priority, or remedies and for purposes of definitions
relating to such provisions.
“Collateral” is any and all properties, rights and assets of Borrower described on Exhibit
A.
“Collateral Account” is any Deposit Account, Securities Account, or Commodity Account.
“Committed Availability” means, as the date of determination, an amount equal to the sum of
(a) the Revolving Line minus (b) the amount of all outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit plus an amount equal to the Letter of Credit
Reserves), minus (c) the FX Reserve, and minus (d) the outstanding principal
balance of any Advances (including any amounts used for Cash Management Services).
“Commodity Account” is any “commodity account” as defined in the Code with such additions to
such term as may hereafter be made.
“Communication” is defined in Section 10.
“Compliance Certificate” is that certain certificate in the form attached hereto as
Exhibit B.
“Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or
not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation
of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted
or sold with recourse by that Person, or for which that Person is directly or indirectly liable;
(b) any obligations for undrawn letters of credit for the account of that Person; and (c) all
obligations from any interest rate, currency or commodity swap agreement, interest rate cap or
collar agreement, or other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business. The amount of a
Contingent Obligation is the stated or determined amount of the primary obligation for which the
Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability
for it determined by the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.
“Control Agreement” is any control agreement entered into among the depository institution at
which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary
at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank
pursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.
“Credit Extension” is any Advance, Letter of Credit, FX Forward Contract, amount utilized for
Cash Management Services, or any other extension of credit by Bank for Borrower’s benefit.
“Default” means any event which with notice or passage of time or both, would constitute an
Event of Default.
“Default Rate” is defined in Section 2.3(b).
“Deferred Revenue” is all amounts received or invoiced in advance of performance under
contracts and not yet recognized as revenue.
“Deposit Account” is any “deposit account” as defined in the Code with such additions to such
term as may hereafter be made.
“Designated Deposit Account” is Borrower’s deposit account, account number ___,
maintained with Bank.
“Dollars,” “dollars” and “$” each mean lawful money of the United States.
“Effective Date” is the date Bank executes this Agreement and as indicated on the signature
page hereof.
“Eligible Accounts” are Accounts which arise in the ordinary course of Borrower’s business
that meet all Borrower’s representations and warranties in Section 5.3. Bank reserves the right at
any time and from time to time
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after the Effective Date after consultation with Borrower, to adjust any of the criteria set
forth below and to establish new criteria in its reasonable discretion. Unless Bank agrees
otherwise in writing, Eligible Accounts shall not include:
(a) Accounts for which the Account Debtor has not been invoiced;
(b) Accounts that the Account Debtor has not paid within ninety (90) days of invoice date;
(c) Accounts owing from an Account Debtor, fifty percent (50%) or more of whose Accounts have
not been paid within ninety (90) days of invoice date;
(d) Credit balances over ninety (90) days from invoice date;
(e) Accounts owing from an Account Debtor, including Affiliates, whose total obligations to
Borrower exceed twenty-five (25%) of all Accounts, for the amounts that exceed that percentage,
unless Bank approves in writing;
(f) Represent progress xxxxxxxx, or be due under a fulfillment or requirements contract;
(g) Accounts owing from an Account Debtor which does not have its principal place of business
in the United States or Canada, except for Eligible L/C Foreign Accounts;
(h) Accounts owing from the United States or any department, agency, or instrumentality
thereof except for Accounts of the United States if Borrower has assigned its payment rights to
Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940,
as amended;
(i) Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated
in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise — sometimes called
“contra” accounts, accounts payable, customer deposits or credit accounts), with the exception of
customary credits, adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;
(j) Accounts for demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, “xxxx and hold”, or other terms
if Account Debtor’s payment may be conditional;
(k) Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee, or
agent;
(l) Accounts in which the Account Debtor disputes liability or makes any claim (but only up to
the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding,
or becomes insolvent, or goes out of business;
(m) Accounts owing from an Account Debtor with respect to which Borrower has received Deferred
Revenue (but only to the extent of such Deferred Revenue);
(n) Accounts for which Bank, after consultation with Borrower, has determined in its
reasonable discretion collection to be doubtful; and
(o) other Accounts, after consultation with Borrower, Bank deems ineligible in the exercise
of its reasonable discretion.
“Eligible Foreign Accounts” are Accounts for which the Account Debtor does not have its
principal place of business in the United States but that are otherwise Eligible Accounts that are
(a) covered by credit insurance satisfactory to Bank, less any deductible or (b) approved by Bank
in writing.
“Eligible L/C Foreign Accounts” are accounts for which the Account Debtor does not have its
principal place of business in the United States but that are otherwise Eligible Accounts that are
supported by letter(s) of credit acceptable to Bank.
- 22 -
“Eligible Inventory” means, at any time, the aggregate of Borrower’s Inventory that (a)
consists of raw materials and finished goods located in the United States, in each case that is in
good, new, and salable condition, which is not perishable, consigned, obsolete, not sellable,
damaged, or defective, and is not comprised of demonstrative or custom inventory, works in
progress, packaging or shipping materials, or supplies; (b) meets all applicable governmental
standards; (c) has been manufactured in compliance with the Fair Labor Standards Act; (d) is
subject only to the first priority Liens granted or in favor of Bank under this Agreement or any of
the other Loan Documents; (e) is located at Borrower’s principal place of business (or any location
that is subject to a landlord consent or bailee waiver in favor of Bank); and (f) is otherwise
acceptable to Bank in its reasonable discretion.
“Equipment” is all “equipment” as defined in the Code with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the foregoing.
“ERISA” is the Employment Retirement Income Security Act of 1974, and its regulations.
“Event of Default” is defined in Section 8.
“EverQ GmbH Joint Venture” means Borrower’s joint venture located in Thalheim, Germany,
established for the purposes of manufacturing solar panels using Borrower’s string ribbon
technology.
“Foreign Currency” means lawful money of a country other than the United States.
“Funding Date” is any date on which a Credit Extension is made to or on account of Borrower
which shall be a Business Day.
“FX Business Day” is any day when (a) Bank’s Foreign Exchange Department is conducting its
normal business and (b) the Foreign Currency being purchased or sold by Borrower is available to
Bank from the entity from which Bank shall buy or sell such Foreign Currency.
“FX Forward Contract” is defined in Section 2.1.3.
“FX Reserve” is defined in Section 2.1.3.
“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other Person as may be approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date of determination.
“General Intangibles” is all “general intangibles” as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and includes without
limitation, all copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or unpublished, any
patents, trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise
agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims,
income and other tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man, property damage, and
business interruption insurance), payments of insurance and rights to payment of any kind.
“Guarantor” is any present or future guarantor of the Obligations, including, without
limitation, Evergreen Solar Securities Corporation, a Massachusetts corporation and ESLR1, LLC, a
Delaware limited liability company.
“Guarantor Security Agreement” is that certain Guarantor Security Agreement, dated as of the
Effective Date, executed by each Guarantor in favor of Bank with respect to the Obligations of
Borrower, and any other security agreement executed by any other guarantor at any time after the
Effective Date in favor of Bank with respect to the Obligations of Borrower.
- 23 -
“Guaranty Agreement” is that certain Unconditional Guaranty Agreement, dated as of the
Effective Date, executed by each Guarantor in favor of Bank with respect to the Obligations of
Borrower, and any other guaranty agreement executed at any time after the Effective Date in favor
of Bank with respect to the Obligations of Borrower.
“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and letters of credit, (b)
obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease
obligations, and (d) Contingent Obligations.
“Indenture” is that certain First Supplemental Indenture dated as of July 2, 2008, executed by
and between Borrower, as issuer, and U.S. Bank National Association, as trustee, relating to 4%
Senior Convertible Notes due 2013, as supplemented from time to time.
“Initial Audit” is Bank’s initial inspection of Borrower’s Accounts, the Collateral, and
Borrower’s Books, to occur no later than December 31, 2008.
“Insolvency Proceeding” is any proceeding by or against any Person under the United States
Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit
of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
“Interest Expense” means for any fiscal period, interest expense (whether cash or non-cash)
determined in accordance with GAAP for the relevant period ending on such date, including, in any
event, interest expense with respect to any Credit Extension and other Indebtedness of Borrower and
its Subsidiaries, if any, including, without limitation or duplication, all commissions, discounts,
or related amortization and other fees and charges with respect to letters of credit and bankers’
acceptance financing and the net costs associated with interest rate swap, cap, and similar
arrangements, and the interest portion of any deferred payment obligation (including leases of all
types).
“Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation all merchandise,
raw materials, parts, supplies, packing and shipping materials, work in process and finished
products, including without limitation such inventory as is temporarily out of Borrower’s custody
or possession or in transit and including any returned goods and any documents of title
representing any of the above.
“Investment” is any beneficial ownership interest in any Person (including stock, partnership
interest or other securities), and any loan, advance or capital contribution to any Person.
“Joint Ventures” means EverQ GmbH Joint Venture and any joint ventures of Borrower entered
into after the date hereof.
“Letter of Credit” means a standby letter of credit issued by Bank or another institution
based upon an application, guarantee, indemnity or similar agreement on the part of Bank as set
forth in Section 2.1.2.
“Letter of Credit Application” is defined in Section 2.1.2(a).
“Letter of Credit Reserve” has the meaning set forth in Section 2.1.2(d).
“LIBOR Supplement” is attached as Exhibit C hereto.
“Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance.
“Loan Documents” are, collectively, this Agreement, the Perfection Certificate, each Guaranty
Agreement, each Guarantor Security Agreement, the Pledge Agreement, any note, or notes or
guaranties executed by Borrower or any Guarantor, and any other present or future agreement between
Borrower any Guarantor and/or for the benefit of Bank in connection with this Agreement, all as
amended, restated, or otherwise modified.
“Material Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s
Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the
business, results of operations, or financial condition of Borrower; (c) a material impairment of
the prospect of repayment of any portion of the Obligations or (d) Bank determines, based upon
information available to it and in its reasonable judgment, that there
- 24 -
is a reasonable likelihood that Borrower shall fail to comply with one or more of the
financial covenants in Section 6 during the next succeeding financial reporting period.
“Material Indebtedness” is any Indebtedness (excluding trade payables or other accrued
expenses incurred in the ordinary course of business), the principal amount of which is equal to or
greater than One Million Dollars ($1,000,000.00), and in any event, includes the Indebtedness
evidenced by the Indenture.
“Obligations” are Borrower’s obligation to pay when due any debts, principal, interest, Bank
Expenses and other amounts Borrower owes Bank now or later, whether under this Agreement, the Loan
Documents, or otherwise, including, without limitation, all obligations relating to letters of
credit, cash management services, and foreign exchange contracts, if any, and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower
assigned to Bank, and the performance of Borrower’s duties under the Loan Documents.
“Operating Documents” are, for any Person, such Person’s formation documents, as certified
with the Secretary of State of such Person’s state of formation on a date that is no earlier than
30 days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in
current form, (b) if such Person is a limited liability company, its limited liability company
agreement (or similar agreement), and (c) if such Person is a partnership, its partnership
agreement (or similar agreement), each of the foregoing with all current amendments or
modifications thereto.
“Payment” means all checks, wire transfers and other items of payment received by Bank
(including proceeds of Accounts and payment of all the Obligations in full) for credit to
Borrower’s outstanding Credit Extensions or, if the balance of the Credit Extensions has been
reduced to zero, for credit to its Deposit Accounts.
“Perfection Certificate” is defined in Section 5.1.
“Permitted Distributions” is:
(a) purchases of capital stock from former employees, consultants and directors pursuant to
repurchase agreements or other similar agreements in an aggregate amount not to exceed Two Hundred
Fifty Thousand Dollars ($250,000.00) in any fiscal year provided that at the time of such purchase
no Default or Event of Default has occurred and is continuing;
(b) distributions or dividends consisting solely of Borrower’s capital stock;
(c) purchases for value of any rights distributed in connection with any stockholder rights
plan;
(d) purchases of capital stock or options to acquire such capital stock with the proceeds
received from a substantially concurrent issuance of capital stock or convertible securities;
(e) purchases of capital stock pledged as collateral for loans to employees;
(f) purchases of capital stock in connection with the exercise of stock options or stock
appreciation rights by way of cashless exercise or in connection with the satisfaction of
withholding tax obligations;
(g) purchases of fractional shares of capital stock arising out of stock dividends, splits or
combinations or business combinations;
(h) dividends or distributions from Subsidiary to Borrower or another Subsidiary; and
(i) the settlement or performance of such Person’s obligations under any equity derivative
transaction, warrant agreement, option contract or similar transaction or combination of
transactions.
“Permitted Indebtedness” is:
(a) Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;
(b) Indebtedness existing on the Effective Date and shown on the Schedule;
- 25 -
(c) Subordinated Debt;
(d) unsecured Indebtedness to trade creditors incurred in the ordinary course of business; and
(e) (1) Indebtedness of Borrower to any Subsidiary and Contingent Obligations of any
Subsidiary with respect to obligations of Borrower (provided that the primary obligations are not
prohibited hereby), and (2) Indebtedness of any Subsidiary to any other Subsidiary and Contingent
Obligations of any Subsidiary with respect to the obligations of any other Subsidiary (provided
that the primary obligations are not prohibited hereby; and (3) Indebtedness of any Subsidiary to
Borrower that are permitted under clause (d) of the definition of Permitted Investments, in the
aggregate (inclusive of amounts under clause (d) of Permitted Investments) not to exceed Five
Million Dollars ($5,000,000.00) in any fiscal year;
(f) Indebtedness incurred as a result of endorsing negotiable instruments received in the
ordinary course of business;
(g) Indebtedness consisting of reimbursement obligations under letters of credit issued for
the benefit of any landlord or other Person or guarantees required to secure rental payments on any
real estate lease;
(h) Indebtedness consisting of interest rate, currency, or commodity swap agreements, interest
rate cap or collar agreements or arrangements designated to protect a Person against fluctuations
in interest rates, currency exchange rates, or commodity prices;
(i) Indebtedness with respect to documentary letters of credit;
(j) capitalized leases and purchase money Indebtedness secured by Permitted Liens;
(k) Indebtedness consisting of a guaranty of Indebtedness incurred by the EverQ GmbH Joint
Venture, up to a maximum aggregate amount of 15,000,000 EUR;
(l) Indebtedness of entities acquired in any permitted merger or acquisition transaction;
(m) Indebtedness evidenced by the Indenture and the convertible notes issued thereunder;
(n) extensions, refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (m) above, provided that the principal amount thereof is not
increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or
its Subsidiary, as the case may be; and
(o) the State-Sponsored Loans.
“Permitted Investments” are:
(a) Investments on the Effective Date;
(b) Cash Equivalents;
(c) (i) marketable direct obligations issued or unconditionally guaranteed by the United
States or its agencies or any State maturing within 1 year from its acquisition, (ii) commercial
paper maturing no more than 2 years after its creation and having the highest rating from either
Standard & Poor’s Corporation or Xxxxx’x Investors Service, Inc., and (iii) Bank’s certificates of
deposit maturing no more than 2 years after issue;
(d) Investments in, or equity contributions or asset transfers to Borrower’s Subsidiaries, or
the establishment of such Subsidiaries, or Investments in, or equity contributions or asset
transfers in connection with the Joint Ventures, provided, however, that such
investments may not be made without the prior written consent of Bank unless Borrower’s
unrestricted cash at Bank and Cash Equivalents at Bank minus any outstanding Credit Extensions is,
and will continue to be immediately after any such Investment, at least two and one-half (2.5)
times the maximum amount of the Revolving Line;
- 26 -
(e) Investments consisting of Collateral Accounts in the name of Borrower or any Subsidiary,
provided that any such Collateral Accounts are permitted by this Agreement;
(f) Investments consisting of extensions of credit to Borrower’s or its Subsidiaries’
customers in the nature of accounts receivable, prepaid royalties or notes receivable arising from
the sale or lease of goods, provision of services or licensing activities of Borrower;
(g) Investments received in satisfaction or partial satisfaction of obligations owed by
financially troubled obligors;
(h) Investments acquired in exchange for any other Investments in connection with or as a
result of a bankruptcy, workout, reorganization or recapitalization;
(i) Investments acquired as a result of a foreclosure with respect to any secured Investment;
(j) Investments consisting of interest rate, currency, or commodity swap agreements, interest
rate cap or collar agreements or arrangements designated to protect a Person against fluctuations
in interest rates, currency exchange rates, or commodity prices;
(k) Investments consisting of (i) travel advances and employee relocation loans and other
employee loans and advances in the ordinary course of business and (ii) loans to employees relating
to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock
purchase plan agreements approved by Borrower’s Board of Directors as long as no cash proceeds are
distributed in connection therewith;
(l) deposits, repayments and other credits to suppliers who are not Affiliates made in the
ordinary course of business;
(m) Investments received in a transaction permitted under Section 7.3;
(n) Investments in an aggregate amount of up to Two Million Dollars ($2,000,000) after the
Effective Datein the EverQ GmbH Joint Venture;
(o) Investments in the EverQ GmbH Joint Venture in excess of the amounts permitted pursuant to
clause (d) and (n) hereof (an “Additional Investment”); provided, however, that prior to making any
such Additional Investment, (I) no Event of Default shall have occurred and be continuing; and (II)
Borrower shall provide Bank (X) ten (10) Business Days advance notice of Borrower’s intent to make
such Additional Investment, and (Y) evidence satisfactory to Bank, in its reasonable discretion,
that immediately prior to and after giving effect to such Additional Investment, Borrower will be
in compliance with the Liquidity covenant contained in Section 6.9(a) hereof; and
(p) other Investments in an amount not to exceed One Million Dollars ($1,000,000) in any
fiscal year.
“Permitted Liens” are:
(a) (i) Liens existing on the Effective Date and shown on the Perfection Certificate or (ii)
Liens arising under this Agreement and the other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains adequate reserves on
Borrower’s Books, if they have no priority over any of Bank’s Liens;
(c) purchase money Liens or leases (i) on Equipment (including accessions, additions, parts,
replacements, fixtures, improvements and attachments thereto, and the proceeds thereof) acquired or
held by Borrower or its Subsidiaries incurred for financing such Equipment (including accessions,
additions, parts, replacements, fixtures, improvements and attachments thereto, and the proceeds
thereof) securing no more than Two Million Dollars ($2,000,000) on the aggregate amount
outstanding, or (ii) existing on Equipment (and accessions, additions, parts, replacements,
fixtures, improvements and attachments thereto, and the proceeds thereof) when
- 27 -
acquired, if the Lien is confined to such Equipment (including accessions, additions,
parts, replacements, fixtures, improvements and attachments thereto, and the proceeds thereto);
(d) Liens in favor of carriers, warehouseman, mechanics, materialmen, repairmen or other like
Liens arising in the ordinary course of business which are not overdue for a period of more than 30
days or which are being contested in good faith and by appropriate proceeding if adequate reserves
with respect thereto are maintained on the books of the applicable Person;
(e) Liens to secure pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and compliance with other social security
requirements applicable to Borrower;
(f) Liens in the nature of easements, rights-of-way, restrictions and other similar
encumbrances affecting real property which do not in any case materially detract from the value of
the property subject thereto or materially interfere with the ordinary conduct of the business of
the applicable Person and which do not represent or secure an obligation for borrowed money;
(g) Liens arising under lease or rental agreements to secure landlords, lessors or renters and
confined to the premises or property rented so long as such Liens have been subordinated to Bank’s
lien pursuant to an agreement or agreements in form and substance satisfactory to Bank;
(h) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described in (a) through (g), but any extension, renewal or replacement Lien must be limited
to the property encumbered by the existing Lien and the principal amount of the indebtedness it
secures may not increase;
(i) leases or subleases of real property granted in the ordinary course of business, and
leases, subleases, non-exclusive licenses or sublicenses of property (other than real property or
intellectual property) granted in the ordinary course of Borrower’s business, if the leases,
subleases, licenses and sublicenses do not prohibit granting Bank a security interest;
(j) non-exclusive licenses of intellectual property granted to third parties in the ordinary
course of business, and licenses of intellectual property that could not result in a legal transfer
of title of the licensed property that may be exclusive in respects other than territory and that
may be exclusive as to territory only as to discreet geographical areas outside of the United
States;
(k) Liens on assets acquired in mergers and acquisitions not prohibited by Section 7 of this
Agreement;
(l) Liens consisting of pledges of cash, cash equivalents or government securities to secure
swap or foreign exchange contracts or letters of credit;
(m) Liens arising from judgments, decrees or attachments in circumstances not constituting an
Event of Default under Sections 8.4 or 8.7;
(n) Liens in favor of other financial institutions arising in connection with Borrower’s
deposit or securities accounts held at such institutions, to the extent such Liens secure amounts
due as a result of administrative or maintenance of such deposit or securities accounts;
(o) deposits to secure the performance of bids, trade contracts (other than for borrowed
money), contracts for the purchase of property, leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature, in each case, incurred in the
ordinary course of business and not representing an obligation for borrowed money;
(p) Liens in favor of customs or revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods;
- 28 -
(q) Liens on insurance proceeds in favor of insurance companies granted solely to secure
financed insurance premiums; and
(r) Liens on equipment with a purchase price of up to Twenty-Five Million Dollars
($25,000,000) to be specified by Borrower to secure amounts borrowed pursuant to the
State–Sponsored Loans.
“Person” is any individual, sole proprietorship, partnership, limited liability company, joint
venture, company, trust, unincorporated organization, association, corporation, institution, public
benefit corporation, firm, joint stock company, estate, entity or government agency.
“Pledge Agreement” means the Stock Pledge Agreements, dated as of the Effective Date, executed
by Borrower in favor of Bank with respect to the Obligations of Borrower, and any other pledge
agreement executed at any time after the Effective Date in favor of Bank with respect to the
Obligations of Borrower.
“Prime Rate” is the greater of (i) five percent (5.00%) and (ii) Bank’s most recently
announced “prime rate,” even if it is not Bank’s lowest rate.
“Registered Organization” is any “registered organization” as defined in the Code with such
additions to such term as may hereafter be made.
“Reserves” means, as of any date of determination, such amounts as Bank may from time to time
establish and revise in its reasonable discretion after consultation with Borrower, reducing the
amount of Advances and other financial accommodations which would otherwise be available to
Borrower (a) to reflect adverse events or conditions not contemplated by Borrower’s most recent
business plan presented to and accepted by Bank which, as determined by Bank in its reasonable
discretion after consultation with Borrower, do or may adversely affect (i) the Collateral or any
other property which is security for the Obligations or its value (including without limitation any
material increase in delinquencies of Accounts), (ii) the assets or business of Borrower or any
Guarantor, or (iii) the security interests and other rights of Bank in the Collateral (including
the enforceability, perfection and priority thereof); or (b) to reflect Bank’s determination made
in its reasonable discretion after consultation with Borrower that any collateral report or
financial information furnished by or on behalf of Borrower or any Guarantor to Bank is or may have
been incomplete, inaccurate or misleading in any material respect; or (c) in respect of any state
of facts which Bank determines in its reasonable discretion after consultation with Borrower
constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event
of Default. Consultation with Borrower by the Bank shall consist of at least five (5) business
days written notice by email or otherwise in accordance with Article 10 of the Agreement and a good
faith effort on the part of Bank and Borrower to review together and discuss the basis for Reserves
or an increase in the Reserves. From time-to-time following the establishment of Reserves, upon
the request of Borrower, Bank shall in good faith consider and consult with Borrower regarding a
reduction in the Reserves in light of any change in, or elimination of, the events or conditions
that gave rise to the Reserves.
“Responsible Officer” is any of the Chief Executive Officer, President, Chief Financial
Officer and Controller of Borrower.
“Revolving Line” is an Advance or Advances in an aggregate amount of up to Forty Million
Dollars ($40,000,000) outstanding at any time.
“Revolving Line
Maturity Date” is
October , 2010.
“Securities Account” is any “securities account” as defined in the Code with such additions to
such term as may hereafter be made.
“Settlement Date” is defined in Section 2.1.3.
“State-Sponsored Loans” means loans in the aggregate amount of up to Twenty Million Dollars
($20,000,000) to be made to Borrower by the Commonwealth of Massachusetts or agencies thereof or by
private banking institutions in connection with loans made by the Commonwealth of Massachusetts or
agencies thereof.
“Streamline Period” is, (X) solely for purposes of determining the LIBOR Rate Margin and the
Prime Rate Margin (as each term is defined in the LIBOR Supplement), each fiscal quarter for which
Borrower has maintained, for the immediately preceding fiscal quarter of Borrower, an average daily
balance of unrestricted cash
- 29 -
at Bank and Cash Equivalents at Bank minus the average daily balance of outstanding
Credit Extensions for such fiscal quarter in an amount greater than or equal to One Hundred Million
Dollars ($100,000,000); and (Y) for all other purposes, any date on which Borrower has unrestricted
cash at Bank and Cash Equivalents at Bank minus any outstanding Credit Extensions in an
amount greater than or equal to One Hundred Million Dollars ($100,000,000), as determined by Bank
at any time in its sole discretion.
“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now
or hereafter indebtedness to Bank (either by its terms or pursuant to a Subordination Agreement or
other similar agreement in form and substance satisfactory to Bank, entered into between Bank and
the other creditor), on terms acceptable to Bank.
“Subordination Agreement” is defined in Section 7.9.
“Subsidiary” means, with respect to any Person, any Person of which more than 50% of the
voting stock or other equity interests is owned or controlled, directly or indirectly, by such
Person or one or more Affiliates of such Person.
“Transaction Report” is the Bank’s standard reporting package provided by Bank directly to
Borrower.
“Transfer” is defined in Section 7.1.
“Unused Revolving Line Facility Fee” is defined in Section 2.4(e).
[Signature page follows.]
- 30 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a sealed
instrument under the laws of the Commonwealth of Massachusetts as of the Effective Date.
BORROWER:
EVERGREEN SOLAR, INC.
By |
/s/ Xxxxxxx
El-Xxxxxx |
|||
Name:
|
Xxxxxxx
El-Hillow |
|||
Title:
|
Chief Financial Officer |
|||
BANK:
SILICON VALLEY BANK
By |
/s/ Xxxxxxx
X. Xxxxxxx |
|||
Name:
|
Xxxxxxx
X. Xxxxxxx |
|||
Title:
|
Senior Vice
President |
|||
Effective
Date: October 16, 2008
[Signature page to Loan and Security Agreement]
EXHIBIT A
The Collateral consists of all of Borrower’s right, title and interest in and to the following
personal property:
(i) all goods, Accounts (including health-care receivables), Equipment, Inventory, contract
rights or rights to payment of money, leases, license agreements, franchise agreements, General
Intangibles (except as provided below), commercial tort claims, documents, instruments (including
any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts,
fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing),
securities, and all other investment property, supporting obligations, and financial assets,
whether now owned or hereafter acquired, wherever located;
(ii) all Borrower’s Books relating to the foregoing, and any and all claims, rights and
interests in any of the above and all substitutions for, additions, attachments, accessories,
accessions and improvements to and replacements, products, proceeds and insurance proceeds of any
or all of the foregoing.
Notwithstanding the foregoing, the Collateral does not include any of the following, whether
now owned or hereafter acquired: (a) more than 65% of the presently existing and hereafter arising
issued and outstanding shares of capital stock owned by Borrower of any controlled foreign
corporation (as defined in the Internal Revenue Code of 1986, as amended), which shares entitle the
holder thereof to vote for directors or any other matter; or (b) any copyright rights, copyright
applications, copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, any patents, patent applications and like
protections, including improvements, divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, trademarks, service marks and, to the extent permitted under
applicable law, any applications therefor, whether registered or not, and the goodwill of the
business of Borrower connected with and symbolized thereby, know-how, operating manuals, trade
secret rights, rights to unpatented inventions, and any claims for damage by way of any past,
present, or future infringement of any of the foregoing; provided, however, the Collateral shall
include all Accounts, license and royalty fees and other revenues, proceeds, or income arising out
of or relating to any of the foregoing.
Pursuant to the terms of a certain negative pledge arrangement with Bank, Borrower has agreed
not to encumber any of its copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work, whether published or unpublished,
any patents, patent applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks,
service marks and, to the extent permitted under applicable law, any applications therefor, whether
registered or not, and the goodwill of the business of Borrower connected with and symbolized
thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any
claims for damage by way of any past, present, or future infringement of any of the foregoing,
without Bank’s prior written consent.
1
EXHIBIT B
COMPLIANCE CERTIFICATE
TO:
|
SILICON VALLEY BANK | Date: | ||||
FROM:
|
EVERGREEN SOLAR, INC. |
The undersigned authorized officer of EVERGREEN SOLAR, INC. (“Borrower”) certifies that under
the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the
“Agreement”), (1) Borrower is in complete compliance for the period ending
with all
required covenants except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all material respects on
this date except as noted below; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in all material
respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required
tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to
the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against
Borrower or any of its Subsidiaries, if any, relating to unpaid employee payroll or benefits of
which Borrower has not previously provided written notification to Bank. Attached are the required
documents supporting the certification. The undersigned certifies that these are prepared in
accordance with generally GAAP consistently applied from one period to the next except as explained
in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be
requested at any time or date of determination that Borrower is not in compliance with any of the
terms of the Agreement, and that compliance is determined not just at the date this certificate is
delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given
them in the Agreement.
Please indicate compliance status by circling Yes/No under “Complies” column.
| Reporting Covenant | Required | Complies | ||
Monthly financial statements with
Compliance Certificate
|
Monthly within 30 days | Yes No | ||
Annual financial statement (CPA Audited) + XX
|
XXX within 120 days | Yes No | ||
10-Q, 10-K and 8-K
|
Within 10 days after filing with SEC | Yes No | ||
A/R & A/P Agings
|
Monthly within 30 days (not required during a Streamline Period) | Yes No | ||
Projections
|
FYE within 60 days | Yes No | ||
Transaction Reports
|
Monthly within 30 days and with each Request for an Advance (not required during a Streamline Period) | Yes No |
The following Intellectual Property was registered after the Effective Date (if no registrations, state “None”)
| Financial Covenant | Required | Actual | Complies | |||||||||
Maintain at all times: |
||||||||||||
Liquidity |
$ | $ | Yes No | |||||||||
1
The following financial covenant analyses and information set forth in Schedule 1 attached
hereto are true and accurate as of the date of this Certificate.
The following are the exceptions with respect to the certification above: (If no exceptions
exist, state “No exceptions to note.”)
| EVERGREEN SOLAR, INC. | ||||
By:
|
||||
Name:
|
||||
Title:
|
||||
| BANK USE ONLY | ||||
Received by:
|
||||
| authorized signer | ||||
Date:
|
||||
Verified: |
||||
| authorized signer | ||||
Date: |
||||
| Compliance Status: Yes þ No o | ||||
2
Schedule 1 to Compliance Certificate
Financial Covenants of Borrower
Dated:
I. Liquidity (Section 6.9(a))
Required: Maintain unrestricted cash at Bank and Cash Equivalents at Bank plus the lesser
of (a)(i) the Revolving Line or (ii) the Borrowing Base minus (b) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit plus an
amount equal to the Letter of Credit Reserves), minus (c) the FX Reserve, and minus
(d) the outstanding principal balance of any Advances (including any amounts used for Cash
Management Services) of at least Eighty Million Dollars ($80,000,000)
Actual:
A. Unrestricted Cash at Bank and Cash Equivalents at Bank |
$ | |||
B. Lesser of Revolving Line/Borrowing Base |
$ | |||
C. Outstanding Credit Extensions (including Advances, FX Reserves,
drawn but unreimbursed Letters of Credit, Letter of Credit Reserves,
amounts used for Cash Management Services and any other Reserves) |
$ | |||
D. LIQUIDITY (line A plus line B minus line C) |
$ |
Is line D equal to or greater than $80,000,000?
No, not in compliance
Yes, in compliance
3
EXHIBIT C
LIBOR SUPPLEMENT TO AGREEMENT
This LIBOR Supplement to Agreement (the “LIBOR Supplement”) is a supplement to the Loan and
Security Agreement (the “Loan Agreement”) dated as of October , 2008 between Silicon Valley Bank
(“Bank”) and Evergreen Solar, Inc. (the “Borrower”), and forms a part of and is incorporated into
the Loan Agreement. Notwithstanding any other provision of the Loan Agreement to the contrary, the
following provisions shall govern with respect to LIBOR Advances as to the matters covered:
1 DEFINITIONS.
“Additional Costs” is defined in Section 6(b) of this LIBOR Supplement.
“Continuation Date” means any date on which Borrower elects to continue a LIBOR Advance into
another Interest Period.
“Conversion Date” means any date on which Borrower elects to convert a Prime Rate Advance to a
LIBOR Advance or a LIBOR Advance to a Prime Rate Advance.
“Effective Amount” means with respect to any Advances on any date, the aggregate outstanding
principal amount thereof after giving effect to any borrowing and prepayments or repayments thereof
occurring on such date.
“Interest Payment Date” means (a) with respect to any LIBOR Advance, the last day of each
Interest Period applicable to such LIBOR Advance and the last day of each month, and (b) with
respect to Prime Rate Advances, the first (1st ) day of each month (or, if the first day
of the month does not fall on a Business Day, then on the first Business Day following such date),
and each date a Prime Rate Advance is converted into a LIBOR Advance to the extent of the amount
converted to a LIBOR Advance.
“Interest Period” means, as to any LIBOR Advance, the period commencing on the date of such
LIBOR Advance, or on the conversion/continuation date on which the LIBOR Advance is converted into
or continued as a LIBOR Advance, and ending on the date that is one (1), two (2), or three (3)
months thereafter, in each case as Borrower may elect in the applicable Notice of Borrowing or
Notice of Conversion/Continuation; provided, however, that (a) no Interest Period with respect to
any LIBOR Advance shall end later than the Revolving Line Maturity Date, (b) the last day of an
Interest Period shall be determined in accordance with the practices of the LIBOR interbank market
as from time to time in effect, (c) if any Interest Period would otherwise end on a day that is not
a Business Day, that Interest Period shall be extended to the following Business Day unless, in the
case of a LIBOR Advance, the result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end on the preceding Business
Day, (d) any Interest Period pertaining to a LIBOR Advance that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last Business Day of the calendar month
at the end of such Interest Period, and (e) interest shall accrue from and include the first
Business Day of an Interest Period but exclude the last Business Day of such Interest Period.
“Interest Rate Determination Date” means each date for calculating the LIBOR for purposes of
determining the interest rate in respect of an Interest Period. The Interest Rate Determination
Date shall be the second Business Day prior to the first day of the related Interest Period for a
LIBOR Advance.
“LIBOR” means, for any Interest Rate Determination Date with respect to an Interest Period for
any Advance to be made, continued as or converted into a LIBOR Advance, the rate of interest per
annum determined by Bank to be the per annum rate of interest at which deposits in United States
Dollars are offered to Bank in the London interbank market (rounded upward, if necessary, to the
nearest 1/10,000th of one percent (0.0001%)) in which Bank customarily participates at 11:00 a.m.
(local time in such interbank market) two (2) Business Days prior to the first day of such Interest
Period for a period approximately equal to such Interest Period and in an amount approximately
equal to the amount of such Advance.
“LIBOR Advance” means an Advance that bears interest based at the LIBOR Rate.
1
“LIBOR Rate” means, for each Interest Period in respect of LIBOR Advances comprising part of
the same Advances, an interest rate per annum (rounded upward, if necessary, to the nearest
1/10,000th of one percent (0.0001%)) equal to the greater of (i) LIBOR for such Interest Period
divided by one (1) minus the Reserve Requirement for such Interest Period or (ii) two and
one-quarter of one percent (2.25%).
“LIBOR Rate Margin” is three and three quarters of one percent (3.75%); provided,
however, during a Streamline Period, the LIBOR Rate Margin shall be three percent (3.00%).
“Notice of Borrowing” means a notice given by Borrower to Bank in accordance with Section 3(a)
of this LIBOR Supplement, substantially in the form of Schedule I, with appropriate
insertions.
“Notice of Conversion/Continuation” means a notice given by Borrower to Bank in accordance
with Section 4(b) of this LIBOR Supplement, substantially in the form of Schedule II, with
appropriate insertions.
“Parent” is defined in Section 6(c) of this LIBOR Supplement.
“Prime Rate Advance” means an Advance that bears interest based at the Prime Rate.
“Prime Rate Margin” is one percent (1.00%); provided, however, during a
Streamline Period, the Prime Rate Margin shall be zero percent (0.00%).
“Regulatory Change” means, with respect to Bank, any change on or after the Effective Date of
the Loan Agreement in United States federal, state, or foreign laws or regulations, including
Regulation D, or the adoption or making on or after such date of any interpretations, directives,
or requests applying to a class of lenders including Bank, of or under any United States federal or
state, 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.
“Reserve Requirement” means, for any Interest Period, the average maximum rate at which
reserves (including any marginal, supplemental, or emergency reserves) are required to be
maintained during such Interest Period under Regulation D against “Eurocurrency liabilities” (as
such term is used in Regulation D) by member banks of the Federal Reserve System. Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to
be maintained by Bank by reason of any Regulatory Change against (a) any category of liabilities
which includes deposits by reference to which the LIBOR Rate is to be determined as provided in the
definition of LIBOR or (b) any category of extensions of credit or other assets which include
Advances.
2 GENERAL PROVISIONS RELATING TO THE ADVANCES.
Each Advance shall, at Borrower’s option in accordance with the terms of the Loan Agreement,
be either in the form of a Prime Rate Advance or a LIBOR Advance; provided that in no event
shall Borrower maintain at any time LIBOR Advances having more than three (3) different Interest
Periods. Borrower shall pay interest accrued on the Advances at the rates and in the manner set
forth in Section 2.3(a) of the Loan Agreement.
3 PROCEDURES FOR BORROWING.
(a) Subject to the prior satisfaction of all other applicable conditions to the making of an
Advance set forth in the Loan Agreement, each Advance shall be made upon Borrower’s irrevocable
written notice delivered to Bank in the form of a Notice of Borrowing, each executed by a
Responsible Officer of Borrower or his or her designee or without instructions if the Advances are
necessary to meet Obligations which have become due. Bank may rely on any telephone notice given
by a person whom Bank believes is a Responsible Officer or designee. Borrower will indemnify Bank
for any loss Bank suffers due to such reliance. Such Notice of Borrowing must be received by Bank
prior to 12:00 p.m. Pacific time, (i) at least three (3) Business Days prior to the requested
Funding Date, in the case of LIBOR Advances, and (ii) on the requested Funding Date, in the case of
Prime Rate Advances, specifying:
(1) the amount of the Advance;
(2) the requested Funding Date;
2
(3) whether the Advance is to be comprised of LIBOR Advances or Prime Rate Advances;
and
(4) the duration of the Interest Period applicable to any such LIBOR Advances included in such
notice; provided that if the Notice of Borrowing shall fail to specify the duration of the Interest
Period for any Advance comprised of LIBOR Advances, such Interest Period shall be one (1) month.
(b) The proceeds of all such Advances will then be made available to Borrower on the Funding
Date by Bank by transfer to the Designated Deposit Account and, subsequently, by wire transfer to
such other account as Borrower may instruct in the Notice of Borrowing. No Advances shall be
deemed made to Borrower, and no interest shall accrue on any such Advance, until the related funds
have been deposited in the Designated Deposit Account.
4 CONVERSION AND CONTINUATION ELECTIONS.
(a) So long as (i) no Event of Default or Default exists; (ii) Borrower shall not have sent
any notice of termination of the Loan Agreement; and (iii) Borrower shall have complied with such
customary and reasonable procedures as Bank has established from time to time for Borrower’s
requests for LIBOR Advances, Borrower may, upon irrevocable written notice to Bank:
(1) elect to convert on any Business Day, Prime Rate Advances into LIBOR Advances;
(2) elect to continue on any Interest Payment Date any LIBOR Advances maturing on such
Interest Payment Date; or
(3) elect to convert on any Interest Payment Date any LIBOR Advances maturing on such
Interest Payment Date into Prime Rate Advances.
(b) Borrower shall deliver a Notice of Conversion/Continuation to be received by Bank prior to
12:00 p.m. Pacific time (i) at least three (3) Business Days in advance of the Conversion Date or
Continuation Date, if any Advances are to be converted into or continued as LIBOR Advances; and
(ii) on the Conversion Date, if any Advances are to be converted into Prime Rate Advances, in each
case specifying the:
(1) proposed Conversion Date or Continuation Date;
(2) aggregate amount of the Advances to be converted or continued;
(3) nature of the proposed conversion or continuation; and
(4) duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to any LIBOR Advances, Borrower
shall have failed to timely select a new Interest Period to be applicable to such LIBOR Advances,
Borrower shall be deemed to have elected to convert such LIBOR Advances into Prime Rate Advances.
(d) Any LIBOR Advances shall, at Bank’s option, convert into Prime Rate Advances in the event
that (i) an Event of Default or Default shall exist, or (ii) the aggregate principal amount of the
Prime Rate Advances which have been previously converted to LIBOR Advances, or the aggregate
principal amount of existing LIBOR Advances continued, as the case may be, at the beginning of an
Interest Period shall at any time during such Interest Period exceed the Revolving Line. Borrower
agrees to pay Bank, upon demand by Bank (or Bank may, at its option, charge the Designated Deposit
Account or any other account Borrower maintains with Bank) any amounts required to compensate Bank
for any loss (including loss of anticipated profits), cost, or expense incurred by Bank, as a
result of the conversion of LIBOR Advances to Prime Rate Advances pursuant to any of the foregoing.
3
(e) Notwithstanding anything to the contrary contained herein, Bank shall not be required to
purchase United States Dollar deposits in the London interbank market or other applicable LIBOR
market to fund any LIBOR Advances, but the provisions hereof shall be deemed to apply as if Bank
had purchased such deposits to fund the LIBOR Advances.
5 SPECIAL PROVISIONS GOVERNING LIBOR ADVANCES.
(a) Determination of Applicable Interest Rate. As soon as practicable on each
Interest Rate Determination Date, Bank shall determine (which determination shall, absent manifest
error in calculation, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the LIBOR Advances for which an interest rate is then being determined for the
applicable Interest Period and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to Borrower.
(b) Inability to Determine Applicable Interest Rate. In the event that Bank shall
have reasonably determined (which determination shall be final and conclusive and binding upon all
parties hereto), on any Interest Rate Determination Date with respect to any LIBOR Advance, that by
reason of circumstances affecting the London interbank market adequate and fair means do not exist
for ascertaining the interest rate applicable to such Advance on the basis provided for in the
definition of LIBOR, Bank shall on such date give notice (by facsimile or by telephone confirmed in
writing) to Borrower of such determination, whereupon (i) no Advances may be made as, or converted
to, LIBOR Advances until such time as Bank notifies Borrower that the circumstances giving rise to
such notice no longer exist, and (ii) any Notice of Borrowing or Notice of Conversion/Continuation
given by Borrower with respect to Advances in respect of which such determination was made shall be
deemed to be rescinded by Borrower.
(c) Compensation for Breakage or Non-Commencement of Interest Periods. Borrower shall
compensate Bank, upon written request by Bank (which request shall set forth the manner and method
of computing such compensation), for all reasonable losses, expenses and liabilities, if any
(including any interest paid by Bank to lenders of funds borrowed by it to make or carry its LIBOR
Advances and any loss, expense or liability incurred by Bank in connection with the liquidation or
re-employment of such funds) such that Bank may incur: (i) if for any reason (other than a default
by Bank or due to any failure of Bank to fund LIBOR Advances due to impracticability or illegality
under Sections 6(d) and 6(e) of this LIBOR Supplement) a borrowing or a conversion to or
continuation of any LIBOR Advance does not occur on a date specified in a Notice of Borrowing or a
Notice of Conversion/Continuation, as the case may be, or (ii) if any principal payment or any
conversion of any of its LIBOR Advances occurs on a date prior to the last day of an Interest
Period applicable to that Advance.
(d) Assumptions Concerning Funding of LIBOR Advances. Calculation of all amounts
payable to Bank under this Section 5 and under Section 3 of this LIBOR Supplement shall be made as
though Bank had actually funded each of its relevant LIBOR Advances through the purchase of a
Eurodollar deposit bearing interest at the rate obtained pursuant to the definition of LIBOR Rate
in an amount equal to the amount of such LIBOR Advance and having a maturity comparable to the
relevant Interest Period; provided, however, that Bank may fund each of its LIBOR
Advances in any manner it sees fit and the foregoing assumptions shall be utilized only for the
purposes of calculating amounts payable under this Section 5 and under Section 3 of this LIBOR
Supplement.
(e) LIBOR Advances After and Event of Default. After the occurrence and during the
continuance of an Event of Default, (i) Borrower may not elect to have an Advance be made or
continued as, or converted to, a LIBOR Advance after the expiration of any Interest Period then in
effect for such Advance and (ii) subject to the provisions of Section 5(c) of this LIBOR
Supplement, any Notice of Conversion/Continuation given by Borrower with respect to a requested
conversion/continuation that has not yet occurred shall be deemed to be rescinded by Borrower and
be deemed a request to convert or continue Advances referred to therein as Prime Rate Advances.
6 ADDITIONAL REQUIREMENTS/PROVISIONS REGARDING LIBOR ADVANCES.
(a) If for any reason (including voluntary or mandatory prepayment or acceleration), Bank
receives all or part of the principal amount of a LIBOR Advance prior to the last day of the
Interest Period for such Advance, Borrower shall immediately notify Borrower’s account officer at
Bank and, on demand by Bank, pay Bank the amount (if any) by which (i) the additional interest
which would have been payable on the amount so received had it not been received until the last day
of such Interest Period exceeds (ii) the interest which would have
4
been recoverable by Bank by placing the amount so received on deposit in the certificate of
deposit markets, the offshore currency markets, or United States Treasury investment products, as
the case may be, for a period starting on the date on which it was so received and ending on the
last day of such Interest Period at the interest rate determined by Bank in its reasonable
discretion. Bank’s determination as to such amount shall be conclusive absent manifest error.
(b) Borrower shall pay Bank, upon demand by Bank, from time to time such amounts as Bank may
determine to be necessary to compensate it for any reasonable costs incurred by Bank that Bank
determines are attributable to its making or maintaining of any amount receivable by Bank hereunder
in respect of any Advances relating thereto (such increases in costs and reductions in amounts
receivable being herein called “Additional Costs”), in each case resulting from any Regulatory
Change which:
(1) changes the basis of taxation of any amounts payable to Bank under the Loan
Agreement in respect of any Advances (other than changes which affect taxes measured by or
imposed on the overall net income of Bank by the jurisdiction in which Bank has its
principal office);
(2) imposes or modifies any reserve, special deposit or similar requirements relating
to any extensions of credit or other assets of, or any deposits with, or other liabilities
of Bank (including any Advances or any deposits referred to in the definition of LIBOR); or
(3) imposes any other condition affecting the Loan Agreement (or any of such extensions
of credit or liabilities).
Bank will notify Borrower of any event occurring after the Effective Date which will entitle
Bank to compensation pursuant to this Section 6 as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation. Bank will furnish Borrower with a
statement setting forth the basis and amount of each request by Bank for compensation under this
Section 6. Determinations and allocations by Bank for purposes of this Section 6 of the effect of
any Regulatory Change on its costs of maintaining its obligations to make Advances, of making or
maintaining Advances, or on amounts receivable by it in respect of Advances, and of the additional
amounts required to compensate Bank in respect of any Additional Costs, shall be made in good faith
and be conclusive absent manifest error.
(c) If Bank shall reasonably determine that the adoption or implementation after the Effective
Date of any applicable law, rule, regulation, or treaty regarding capital adequacy, 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 Bank (or its applicable lending office) with any respect or directive
adopted regarding capital adequacy (whether or not having the force of law) of any such authority,
central bank, or comparable agency, has or would have the effect of reducing the rate of return on
capital of Bank or any person or entity controlling Bank (a “Parent”) as a consequence of its
obligations hereunder to a level below that which Bank (or its Parent) could have achieved but for
such adoption, change, or compliance (taking into consideration policies with respect to capital
adequacy) by an amount reasonably deemed by Bank to be material, then from time to time, within
fifteen (15) days after demand by Bank, Borrower shall pay to Bank such additional amount or
amounts as will compensate Bank for such reduction. A statement of Bank claiming compensation
under this Section 6(c) and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive absent manifest error.
(d) If, at any time, Bank, in its reasoanable discretion, determines that (i) the amount of
LIBOR Advances for periods equal to the corresponding Interest Periods are not available to Bank in
the offshore currency interbank markets, or (ii) LIBOR does not accurately reflect the cost to Bank
of lending the LIBOR Advances, then Bank shall promptly give notice thereof to Borrower. Upon the
giving of such notice, Bank’s obligation to make the LIBOR Advances shall terminate;
provided, however, Advances shall not terminate if Bank and Borrower agree in
writing to a different interest rate applicable to LIBOR Advances.
(e) If it shall become unlawful for Bank to continue to fund or maintain any LIBOR Advances,
or to perform its obligations hereunder, upon demand by Bank, Borrower shall prepay the Advances in
full with accrued interest thereon and all other amounts payable by Borrower hereunder (including,
without limitation, any amount payable in connection with such prepayment pursuant to Section 6(a)
of this LIBOR Supplement). Notwithstanding the foregoing, to the extent a determination by Bank as
described above relates to a LIBOR Advance then being requested by Borrower pursuant to a Notice of
Borrowing or a Notice of
5
Conversion/Continuation, Borrower shall have the option, subject to the provisions of
Section 5(c) of this LIBOR Supplement, to (i) rescind such Notice of Borrowing or Notice of
Conversion/Continuation by giving notice (by facsimile or by telephone confirmed in writing) to
Bank of such rescission on the date on which Bank gives notice of its determination as described
above, or (ii) modify such Notice of Borrowing or Notice of Conversion/Continuation to obtain a
Prime Rate Advance or to have outstanding Advances converted into or continued as Prime Rate
Advances by giving notice (by facsimile or by telephone confirmed in writing) to Bank of such
modification on the date on which Bank gives notice of its determination as described above.
6
SCHEDULE I
FORM OF NOTICE OF BORROWING
FORM OF NOTICE OF BORROWING
EVERGREEN SOLAR, INC.
Date:
| To: | Silicon Valley Bank 0000 Xxxxxx Xxxxx Xxxxx Xxxxx, XX 00000 Attention: Corporate Services Department |
| Re: | Loan and Security Agreement dated as of October , 2008 (as amended, modified, supplemented or restated from time to time, the “Loan Agreement”), by and between Evergreen Solar, Inc. (“Borrower”), and Silicon Valley Bank (“Bank”) |
Ladies and Gentlemen:
The undersigned refers to the Loan Agreement, the terms defined therein and used herein as so
defined, and hereby gives you notice irrevocably, pursuant to Section 3 of the LIBOR Supplement to
the Loan Agreement, of the borrowing of an Advance.
1. The Funding Date, which shall be a Business Day, of the requested borrowing is
.
2. The aggregate amount of the requested borrowing is $ .
3. The requested Advance shall consist of $ of
Prime Rate Advances and $
of
LIBOR Advances.
4. The duration of the Interest Period for the LIBOR Advances included in the requested
Advance shall be month(s).
The undersigned hereby certifies that the following statements are true on the date hereof,
and will be true on the date of the proposed Advance before and after giving effect thereto, and to
the application of the proceeds therefrom, as applicable:
(a) all representations and warranties of Borrower contained in the Loan Agreement are
true, accurate and complete in all material respects as of the date hereof;
(b) no Default or Event of Default has occurred and is continuing, or would result from
such proposed Advance; and
(c) the requested Advance (i) if during a Streamline Period, will not exceed, as of the
Funding Date, the Committed Availability, and (ii) at all other times will not cause the
aggregate principal amount of the outstanding Advances to exceed, as of the designated
Funding Date, (a) the Revolving Line, minus (b) the amount of all outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit plus an amount equal to the
Letter of Credit Reserves), minus (c) the FX Reserve, and minus (d) the outstanding
principal balance of any Advances (including any amounts used for Cash Management Services).
[Signature page follows.]
7
| Borrower: | ||||||
| EVERGREEN SOLAR, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
For internal Bank use only
| LIBOR Pricing Date | LIBOR | LIBOR Variance | Maturity Date | |||
| % |
8
SCHEDULE II
FORM OF NOTICE OF CONVERSION/CONTINUATION
FORM OF NOTICE OF CONVERSION/CONTINUATION
EVERGREEN SOLAR, INC.
Date:
| To: | Silicon Valley Bank 0000 Xxxxxx Xxxxx Xxxxx Xxxxx, XX 00000 Attention: |
| Re: | Loan and Security Agreement dated as of October ___, 2008 (as amended, modified, supplemented or restated from time to time, the “Loan Agreement”), by and between Evergreen Solar, Inc. (“Borrower”), and Silicon Valley Bank (“Bank”) |
Ladies and Gentlemen:
The undersigned refers to the Loan Agreement, the terms defined therein being used herein as
therein defined, and hereby gives you notice irrevocably, pursuant to Section 4 of the LIBOR
Supplement to the Loan Agreement, of the [conversion] [continuation] of the Advances specified
herein, that:
1. The date of the [conversion] [continuation] is , 20 .
2. The aggregate amount of the proposed Advances to be [converted] is
$ or [continued] is
$ .
3. The Advances are to be [converted into] [continued as] [LIBOR] [Prime Rate] Advances.
4. The duration of the Interest Period for the LIBOR Advances included in the [conversion]
[continuation] shall be month(s).
The undersigned, on behalf of Borrower, hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the proposed [conversion] [continuation],
before and after giving effect thereto and to the application of the proceeds therefrom:
(a) all representations and warranties of Borrower stated in the Loan Agreement are
true, accurate and complete in all material respects as of the date hereof; and
(b) no Default or Event of Default has occurred and is continuing, or would result from
such proposed [conversion] [continuation].
[Signature page follows.]
1
| Borrower: | ||||||
| EVERGREEN SOLAR, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
For internal Bank use only
| LIBOR Pricing Date | LIBOR | LIBOR Variance | Maturity Date | |||
| % |
2
