LOAN AND SECURITY AGREEMENT
Exhibit 10.1
This LOAN
AND SECURITY AGREEMENT dated as of June 27, 2009 (this "Agreement"),
is executed among EQUITY TRUST COMPANY, a South Dakota corporation ("ETC"),
which has its chief executive office located at 000 Xxxxx Xxxx, Xxxxxx, Xxxx
00000, STERLING ADMINISTRATIVE SERVICES, LLC, a Texas limited liability company
("SAS"; ETC
and SAS each a "Co-Borrower" and collectively, the
"Co-Borrowers"),
which has its chief executive office located at 0000 Xxxx Xxxx Xxxx, Xxxx, Xxxxx
00000, EQUITY ADMINISTRATIVE SERVICES, INC., an Ohio corporation (the "Guarantor"),
which has its chief executive office located at 000 Xxxxx Xxxx, Xxxxxx, Xxxx
00000 and STERLING TRUST COMPANY, a Texas trust company (the "Lender"),
whose address is 000 00xx Xxxxxx,
Xxxxxx Xxxxxxxx 00000.
R E C I T A L S:
A. Pursuant
to the Acquisition Documents (as hereinafter defined), the Co-Borrowers are
acquiring substantially all of the assets of and operations of the
Lender.
B. In
connection therewith and in order to finance a portion of the purchase price for
the Acquisition, the Co-Borrowers, and the Guarantor desire to enter into this
Agreement with the Lender and (as applicable) to execute the Note and other Loan
Documents to and in favor of the Lender.
C. Pursuant
to the Co-Borrowers' request, the Lender is willing to extend such financial
accommodations to the Co-Borrowers under the terms and conditions set forth
herein.
NOW
THEREFORE, in consideration of the premises, and the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
A G R E E M E N T S:
Section
1. DEFINITIONS.
1.1 Defined
Terms. For the purposes of this Agreement, the following
capitalized words and phrases shall have the meanings set forth
below.
"Acquired
Business" shall mean the business of providing custody and administrative
services for self-directed individual retirement accounts and qualified business
retirement plans acquired pursuant to the Asset Purchase Agreement.
"Acquisition"
shall mean the acquisition by the Co-Borrowers of the Acquired Business from the
Lender.
"Acquisition
Documents" shall mean (a) the Asset Purchase Agreement, including
all schedules and exhibits thereto, and (b) each of the executory
agreements entered into in connection with the Acquisition.
"Affiliate"
of any Person shall mean (a) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person, (b) any officer or director of such Person, and (c) with
respect to the Lender, any entity administered or managed by the Lender, or an
Affiliate or investment advisor thereof and which is engaged in making,
purchasing, holding, investing in, servicing or otherwise dealing with
commercial loans. A Person shall be deemed to be "controlled by" any
other Person if such Person possesses, directly or indirectly, power to direct
or cause the direction of
the
management and policies of such Person whether by contract, ownership of voting
securities, membership interests or otherwise.
"Allocable
Amount" shall have the meaning set forth in Section 14
hereof.
"Amended and
Restated Subaccounting Agreement" shall mean that certain Amended and
Restated Subaccounting Agreement dated June 27, 2009, the form of which is
attached as an exhibit to the Asset Purchase Agreement.
"Asset
Disposition" shall mean the sale, lease, license, assignment or other
transfer (each a "Disposition")
by a Co-Borrowers or any Subsidiary to any Person (other than a Co-Borrower or
any Subsidiary) of any asset or right of a Co-Borrowers or any Subsidiary
(including any Involuntary Disposition).
"Asset Purchase
Agreement" shall mean that certain Asset Purchase Agreement dated as of
April 7, 2009, by and among, among others, the Co-Borrowers and the
Lender.
"Bankruptcy
Code" shall mean the United States Bankruptcy Code, as now existing or
hereafter amended.
"Business
Day" shall mean any day other than a Saturday, Sunday, or a legal holiday
on which banks are authorized or required to be closed for the conduct of
commercial banking business in Dallas, Texas.
"Capital
Expenditures" shall mean, with respect to any Person, all expenditures
(including Capitalized Lease Obligations) which, in accordance with GAAP, would
be required to be capitalized and shown on the balance sheet of such Person, but
excluding expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (a) from insurance proceeds
(or other similar recoveries) paid on account of the loss of or damage to the
assets being replaced or restored or (b) with awards of compensation
arising from the taking by eminent domain or condemnation of the assets being
replaced.
"Capital
Lease" shall mean, as to any Person, a lease of any interest in
any kind of property or asset, whether real, personal, or mixed, or tangible or
intangible, by such Person, as lessee, that is, or should be, in accordance with
Financial Accounting Standards Board Statement No. 13, as amended from time to
time, or, if such statement is not then in effect, such statement of GAAP as may
be applicable, recorded as a "capital lease" on the financial statements of such
Person prepared in accordance with GAAP.
"Capital
Securities" shall mean, with respect to any Person, all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's capital, whether now outstanding or
issued or acquired after the date hereof, including common shares, preferred
shares, membership interests in a limited liability company, limited or general
partnership interests in a partnership, or any other equivalent of such
ownership interest.
"Capitalized
Lease Obligations" shall mean, as to any Person, all rental obligations
of such Person as lessee under a Capital Lease which are or will be required to
be capitalized on the books of such Person.
"Cash Equivalent
Investment" shall mean, at any time, (a) any evidence of Debt,
maturing not more than one year after such time, issued or guaranteed by the
United States government or any agency thereof, (b) commercial paper,
maturing not more than one year from the date of issue, or
corporate
demand notes, in each case (unless issued by the Lender or its holding company)
rated at least A-l by Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. or P-l by Xxxxx'x Investors Service, Inc.,
(c) any certificate of deposit, time deposit or banker's acceptance,
maturing not more than one year after such time, or any overnight Federal Funds
transaction that is issued or sold by a commercial banking institution that is a
member of the Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000, (d) any repurchase
agreement entered into with a commercial banking institution of the nature
referred to in clause (c),
which (i) is secured by a fully perfected security interest in any
obligation of the type described in any of clauses (a) through
(c) above,
and (ii) has a market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of the
commercial banking institution thereunder, (e) money market accounts or
mutual funds which invest exclusively in assets satisfying the foregoing
requirements, and (f) other short term liquid investments approved in
writing by the Lender.
"Change in
Control" shall mean the occurrence of any of the following events: (a) the Current
Shareholders, collectively, shall cease to own and control, directly or
indirectly, at least fifty-one percent (51%) of the outstanding Capital
Securities of each Co-Borrowers and the Guarantor; or (b) a Co-Borrower or
the Guarantor shall cease to, directly or indirectly, own and control 100% of
each class of the outstanding Capital Securities of each of its
Subsidiaries. For the purpose hereof, the terms "control" or
"controlling" shall mean the possession of the power to direct, or cause the
direction of, the management and policies of a Person by contract or voting of
securities or ownership interests, and any pledge of any Capital Security which,
if exercised, would result in a change of control under clause (a)
above shall be deemed to be a loss of such "control".
"Closing
Date" shall mean the date on which the Lender has received executed
counterpart signature pages of this Agreement from each of the signatories and
the conditions set forth in Section
3 have been fulfilled.
"Collateral"
shall have the meaning set forth in Section 6.1
hereof.
"Collateral
Access Agreement" shall mean an agreement
in form and substance reasonably satisfactory to the Lender pursuant to which a
mortgagee or lessor of real property on which Collateral is stored or otherwise
located, or a warehouseman, processor or other bailee of Inventory or other
property owned by the Co-Borrowers or any Subsidiary, acknowledges the Liens of
the Lender and waives or subordinates any Liens held by such Person on such
property, and, in the case of any such agreement with a mortgagee or lessor,
permits the Lender reasonable access to and use of such real property following
the occurrence and during the continuance of an Event of Default to assemble,
complete, sell, and/or remove any collateral stored or otherwise located
thereon.
“Compliance
Certificate” shall mean the Compliance Certificate to be provided by the
Co-Borrowers to the Lender pursuant to this Agreement, in the form of Exhibit C, and
all supporting schedules.
"Contingent
Liability" and "Contingent
Liabilities" shall mean, with respect to any Person respectively, each
obligation and liability of such Person and all such obligations and liabilities
of such Person incurred pursuant to any agreement, undertaking or arrangement by
which such Person: (a) guarantees, endorses or otherwise becomes
or is contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
indebtedness, dividend, obligation or other liability of any other Person in any
manner (other than by endorsement of instruments in the course of collection),
including any indebtedness, dividend or other obligation which may be issued or
incurred at some future time; (b) guarantees the payment of dividends or
other distributions upon the shares or ownership interest of any other Person;
(c) undertakes or agrees (whether contingently or otherwise):
(i) to
purchase, repurchase, or otherwise acquire any indebtedness, obligation, or
liability of any other Person or any property or assets constituting security
therefor, (ii) to advance or provide funds for the payment or discharge of
any indebtedness, obligation or liability of any other Person (whether in the
form of loans, advances, stock purchases, capital contributions, or otherwise),
or to maintain solvency, assets, level of income, working capital or other
financial condition of any other Person, or (iii) to make payment to any
other Person other than for value received; (d) agrees to lease property or
to purchase securities, property, or services from such other Person with the
purpose or intent of assuring the owner of such indebtedness or obligation of
the ability of such other Person to make payment of the indebtedness or
obligation; (e) to induce the issuance of, or in connection with the
issuance of, any letter of credit for the benefit of such other Person; or
(f) undertakes or agrees otherwise to assure a creditor against
loss. The amount of any Contingent Liability shall (subject to any
limitation set forth herein) be deemed to be (x) the outstanding principal
amount of the indebtedness, obligation, or other liability guaranteed or
supported thereby at any time then due and payable, if such amount can be
determined, or (y) if the amount described in clause (x)
hereof cannot be so determined, the maximum permitted principal amount of the
indebtedness, obligation, or other liability guaranteed or supported
thereby.
"Contract"
shall have the meaning set forth in the Asset Purchase Agreement.
"Current
Shareholders" shall Xxxxxxx Xxxxxx, Xxxxxxx X. Xxxxxx and Xxxxxxx X.
Xxxxxx and any trusts or other Persons controlled by Xxxxxxx Xxxxxx, Xxxxxxx X.
Xxxxxx and Xxxxxxx X. Xxxxxx.
"Custodial
Account" shall have the meaning set forth in the Asset Purchase
Agreement.
"Custodial
Agreements" shall have the meaning set forth in the Asset Purchase
Agreement.
"Custodial
Assets" shall have the meaning set forth in the Asset Purchase
Agreement.
"Custodial
Deposits" shall have the meaning set forth in the Asset Purchase
Agreement.
"Custodial
Rights" shall have the meaning set forth in the Asset Purchase
Agreement.
"Debt"
shall mean, as to any Person, without duplication, (a) all indebtedness of
such Person for borrowed money of such Person (including principal, interest,
fees and charges), whether or not evidenced by bonds, debentures, notes or
similar instruments; (b) all obligations to pay the deferred purchase price
of property or services; (c) all obligations, contingent or otherwise, with
respect to the maximum face amount of all letters of credit (whether or not
drawn), bankers' acceptances and similar obligations issued for the account of
such Person, and all unpaid drawings in respect of such letters of credit,
bankers' acceptances and similar obligations; (d) all indebtedness secured
by any Lien on any property owned by such Person, whether or not such
indebtedness has been assumed by such Person (provided, however, if such Person
has not assumed or otherwise become liable in respect of such indebtedness, such
indebtedness shall be deemed to be in an amount equal to the fair market value
of the property subject to such Lien at the time of determination); (e) the
aggregate amount of all Capitalized Lease Obligations of such Person;
(f) all Contingent Liabilities of such Person, whether or not reflected on
its balance sheet; (g) all Hedging Obligations of such Person; (h) all
Debt of any partnership of which such Person is a general partner (except to the
extent that such Debt is non-recourse to such Person); and (i) all monetary
obligations of such Person under (i) a so-called synthetic, off-balance
sheet, or tax retention lease, or (ii) an agreement for the use or
possession of property creating obligations that do not appear on the balance
sheet of such Person but which, upon the insolvency or bankruptcy of such
Person, would be characterized as the indebtedness of such Person (without
regard to accounting treatment). Notwithstanding the foregoing, Debt
shall not include current trade payables and accrued expenses
incurred
by such Person in accordance with customary practices and in the ordinary course
of business of such Person.
"Default"
shall mean any event which, with the giving of notice, the passage of time or
both, would constitute an Event of Default.
"Default
Rate" shall mean a per annum rate of interest equal to the rate then in
effect plus two
percent (2.00%).
"Depreciation"
shall mean, with respect to any Person, the total amounts added to depreciation,
amortization, obsolescence, valuation and other proper reserves, as reflected on
such Person's financial statements and determined in accordance with
GAAP.
"EBITDA"
shall mean, with respect to any Person, for any period, the sum for such period
and such Person (determined on a consolidated basis for such Person) of:
(a) Net Income, plus
(b) Interest Expense, plus (c) federal
and state income taxes, plus
(d) Depreciation, plus
(e) non-cash management compensation expense, plus (f) all
other non-cash charges, in each case to the extent included in determining Net
Income for such period, plus (g) any
cash expense incurred in connection with the Acquisition during such period plus (h) any
other non-recurring expense or charge which has been deducted in calculating Net
Income for such period and which has been approved by the Lender to be added
back in calculating EBITDA.
"Eligible
Assignee" means an Affiliate of the Lender.
"Employee
Plan" shall mean with respect to any Person, each plan, fund, program,
agreement, arrangement or scheme, including each plan, fund, program, agreement,
arrangement or scheme maintained or required to be maintained under applicable
law that is at any time sponsored or maintained or required to be sponsored or
maintained by such Person or to which such Person makes or has made, or has or
has had an obligation to make, contributions providing for employee benefits or
for the remuneration, direct or indirect, of the employees, former employees,
directors, officers, consultants, independent contractors, contingent workers or
leased employees of such Person or the dependents of any of them (whether
written or oral), including: each deferred compensation, bonus, incentive
compensation, stock purchase, stock option and other equity compensation plan;
each "welfare" plan (within the meaning of Section 3(1) of ERISA determined
without regard to whether such plan is subject to ERISA); each "pension" plan
(within the meaning of Section 3(2) of ERISA, determined without regard to
whether such plan is subject to ERISA); and each severance, retention or change
of control plan or agreement, health, supplemental unemployment benefit,
hospitalization insurance, medical, dental, or life insurance, disability
insurance, legal services and each other employee benefit plan, fund, program,
agreement or arrangement.
"Environmental
Laws" shall mean all present or future federal, state, or local laws,
statutes, rules, regulations, ordinances and codes, together with all
administrative or judicial orders, consent agreements, directed duties,
requests, licenses, authorizations and permits of, and agreements with, any
Governmental Authority, in each case relating to any matter arising out of or
relating to public health and safety, or pollution or protection of the
environment or workplace, including any of the foregoing relating to the
presence, use, production, generation, handling, transport, treatment, storage,
disposal, distribution, discharge, emission, release, threatened release,
control or cleanup of any Hazardous Substance.
"ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time.
"Event of
Default" shall have the meaning set forth in Section
11 hereof.
"Excluded
Property" means, collectively:
(a) any
lease, permit, or license or any agreement entered into by any Co-Borrower
(i) that prohibits or requires the consent of any Person other than the
Co-Borrowers and their Affiliates as a condition to the creation of a Lien on
any right, title, or interest in such permit, license, or agreement or
(ii) to the extent that any applicable law prohibits the creation of a Lien
thereon, but, with respect to the prohibitions described in the foregoing clauses
(i) and (ii), only
to the extent, and for as long as, such prohibition is not waived, terminated,
or rendered unenforceable or otherwise deemed ineffective by the UCC or any
applicable law;
(b) fixed
or capital assets owned by any Co-Borrower that are subject to a purchase money
Lien or a Capital Lease if the agreement pursuant to which such Lien is granted
(or in the document providing for such Capital Lease) prohibits or requires the
consent of any Person other than the Co-Borrowers or any of their Affiliates as
a condition to the creation of any other Lien on such equipment; provided,
however, that, the foregoing exclusions shall in no way be construed (i) to
apply to the extent that any described prohibition is unenforceable under
Section 9-406, 9-407, 9-408, or 9-409 of the UCC or other applicable law,
(ii) to limit, impair, or otherwise affect the Lender's continuing security
interests in and Liens upon any rights or interests of the Co-Borrowers in or to
(A) monies due or to become due under any described contract, lease,
permit, license, charter, or license agreement (including any Accounts), or
(B) any proceeds, products, substitutions, or replacements of the sale,
license, lease, or other disposition thereof (unless such proceeds, products,
substitutions, or replacements would otherwise constitute Excluded Property), or
(iii) to apply at any time that such prohibitions are no longer effective
and enforceable or at any time that the consent of the other party to the
agreement, as applicable, is obtained to the grant of a security interest in and
to such asset in favor of the Lender;
(c) all
assets acquired in connection with a Permitted Acquisition that are subject to
the Liens of another lender permitted by clause (n) of the definition of
Permitted Liens; and
(d) any
right, title and interest of any Co-Borrower in and to the Acquisition Documents
that is enforceable against the Lender, including any right to indemnification
thereunder and any right arising as a result of the breach by the Lender of any
obligation thereunder or any false representation or warranty thereunder;
provided that each Co-Borrower agrees that any noncompetition, confidentiality
or similar covenants contained in the Acquisition Documents shall no longer be
binding on the Lender if the Lender re-acquires the assets acquired in the
Acquisition under the terms of this Agreement as a result of the exercise of the
rights and remedies hereunder;
provided, however, that in no
event shall the term "Excluded Property" include any Custodial Agreements,
Deposit Accounts, Subaccounting Agreements, any of the assets of the Acquired
Businesses or otherwise acquired by the Co-Borrowers under or in connection with
the Acquisition or any of the products and proceeds thereof.
"Funded
Debt" shall mean, as to any Person, all indebtedness for borrowed money
and that portion of Capitalized Lease Obligations that should be treated as
principal in accordance with GAAP, in each case that matures more than one year
from the date of the creation of such indebtedness (or such indebtedness that is
renewable or extendible, at the option of such Person, to a date more than one
year from such date).
"GAAP"
shall mean generally accepted accounting principles set forth from time to time
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards
Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
date of determination, provided, however, that interim financial statements or
reports shall be deemed in compliance with GAAP despite the absence of footnotes
and fiscal year-end adjustments as required by GAAP.
"Governmental
Authority" shall mean any federal, state, municipal, foreign or other
governmental department, agency, commission, board, bureau, court, tribunal,
instrumentality, political subdivision, or other entity or officer exercising
executive, legislative, judicial, regulatory or administrative functions for or
pertaining to any government or court, in each case whether associated with the
United States, a state, district or territory thereof, or a foreign entity or
government.
"Guarantor
Payment" shall have the meaning set forth in Section 14
hereof.
"Hazardous
Substances" shall mean (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could reasonably be
expected to become friable, urea formaldehyde foam insulation, dielectric fluid
containing levels of polychlorinated biphenyls, radon gas, and mold;
(b) any chemicals, materials, pollutant, or substances defined as or
included in the definition of "hazardous substances", "hazardous waste",
"hazardous materials", "extremely hazardous substances", "restricted hazardous
waste", "toxic substances", "toxic pollutants", "contaminants", "pollutants" or
words of similar import, under any applicable Environmental Law; and
(c) any other chemical, material or substance, the exposure to, or release
of which is prohibited, limited or regulated by any Governmental Authority or
for which any duty or standard of care is imposed pursuant to, any Environmental
Law.
"Hedging
Agreement" shall mean any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.
"Hedging
Obligation" shall mean, as of any date of determination, with respect to
any Person, any liability of such Person under any Hedging
Agreement.
"Indemnified
Party" and "Indemnified
Parties" shall mean, respectively, each of the Lender and any parent
corporation, Affiliate or Subsidiary of the Lender, and each of their respective
officers, directors, employees, attorneys and agents, and all of such parties
and entities.
"Intellectual
Property" shall mean the collective reference to all rights, priorities
and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including copyrights,
patents, service marks and trademarks, and all registrations and applications
for registration therefor and all licensees thereof, trade names, domain names,
technology, know-how and processes, and all rights to xxx at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.
"Interest
Expense" shall mean, with respect to any Person, for any period, the sum
of the following determined for such Person on a consolidated basis:
(a) all interest and like charges payable with respect to that fiscal
period to a lender in connection with borrowed money or the deferred purchase
price of assets that are treated as interest in accordance with GAAP, plus (b) the
portion of Capitalized Lease Obligations with respect to that fiscal period that
should be treated as interest in accordance with GAAP, plus (c) all
charges paid or payable (without duplication) during that period with respect to
any Hedging Agreements.
"Interest Rate"
shall mean, as of any date and subject to the proviso below, the Prime
Rate in effect on such date; provided, however, that in no
event shall the Interest Rate be less than 2.25% per annum or more than 4.25% per
annum.
"Investment"
shall mean, with respect to any Person, any investment in another Person,
whether by acquisition of any debt or equity security, by making any loan or
advance, or by becoming obligated with respect to a Contingent Liability in
respect of obligations of such other Person (other than travel and similar
advances to employees in the ordinary course of business).
"Involuntary
Disposition" shall mean any loss of, damage to, destruction of, or any
condemnation or other taking for public use of, any property of either
Co-Borrower or any Subsidiary.
"Lien"
shall mean, with respect to any Person, any interest granted by such Person in
any real or personal property, asset, or other right owned or being purchased or
acquired by such Person (including an interest in respect of a Capital Lease)
which secures payment or performance of any obligation and shall include any
mortgage, lien, encumbrance, title retention lien, charge or other security
interest of any kind, whether arising by contract, as a matter of law, by
judicial process or otherwise.
"Liquidity"
shall mean, with respect to any Person and at any time, all such Person's cash
and Cash Equivalent Investments at such time.
"Loan
Documents" shall mean each of the agreements, documents, instruments and
certificates set forth in Section
3 hereof, and any and all such other instruments, documents,
certificates and agreements from time to time executed and delivered by Obligor
for the benefit of the Lender pursuant to any of the foregoing.
"Mandatory
Prepayment" shall have the meaning set forth in Section 2.1(d) hereof.
"Material Adverse
Effect" shall mean (a) a material adverse change in, or a material
adverse effect upon, the assets, business, properties, financial condition or
results of operations of the Obligors taken as a whole, (b) a material
impairment of the ability of the Obligors to perform any of the Obligations
under any of the Loan Documents, or (c) a material adverse effect on
(i) any substantial portion of the Collateral, (ii) the legality,
validity, binding effect, or enforceability against the Obligors of any of the
Loan Documents, (iii) the perfection or priority of any Lien encumbering
any substantial portion of the Collateral granted to the Lender under any Loan
Document, or (iv) the rights or remedies of the Lender under any Loan
Document.
"Maturity
Date" shall mean June 26, 2016.
"Net Cash
Proceeds" shall mean:
(a) with
respect to any Asset Disposition, the aggregate cash proceeds (including cash
proceeds received pursuant to policies of insurance or by way of deferred
payment of principal pursuant to a note, installment receivable or otherwise,
but only as and when received) received by either Co-Borrower pursuant to such
Asset Disposition net of (i) the reasonable direct costs relating to such
sale, transfer, or other disposition (including sales commissions and legal,
accounting and investment banking fees), (ii) taxes paid or reasonably
estimated by a Co-Borrower to be payable by the applicable Co-Borrower or any
Subsidiary as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), and (iii) amounts
required to be applied to the repayment of any Debt of the applicable
Co-Borrower secured by a prior Lien on the asset subject to such Asset
Disposition (other than the Term Loan); and
(b) with
respect to any issuance of Capital Securities, the aggregate cash proceeds
received by either Co-Borrower or any Subsidiary pursuant to such issuance, net
of the reasonable direct costs of either Co-Borrower or such Subsidiary relating
to such issuance
(including
sales and underwriters' commissions).
"Net
Income" shall mean, with respect to any Person and for any period, the
net income (or loss) of such Person for such period as determined in accordance
with GAAP on a consolidated basis, excluding any gains
or losses from Dispositions, any extraordinary gains or losses and any gains or
losses from discontinued operations.
"Net
Worth" means, in respect of a Person and as of any applicable date of
determination, all amounts which, in conformity with GAAP, would be included as
stockholders' equity on a balance sheet of such Person.
"Non-Excluded
Taxes" shall have the meaning set forth in Section 2.3(a) hereof.
"Note"
shall mean a promissory note in the form prepared by and acceptable to the
Lender, dated as of the date hereof, in the principal amount of the Term Loan
and maturing on the Maturity Date, duly executed by the Co-Borrowers and payable
to the order of the Lender, together with any and all renewal, extension,
modification or replacement notes executed by the Co-Borrowers and delivered to
the Lender and given in substitution therefor.
"Obligations"
shall mean the Term Loan and all interest accrued thereon (including interest
which would be payable post-petition in connection with any bankruptcy or
similar proceeding, whether or not permitted as a claim thereunder), any fees
due the Lender hereunder, any expenses incurred by the Lender hereunder and all
other liabilities and obligations under this Agreement or any other Loan
Document, howsoever created, arising or evidenced, whether direct or indirect,
joint or several, absolute or contingent, now or hereafter existing, or due or
to become due, together with any and all renewals, extensions, restatements or
replacements of any of the foregoing.
"Obligor"
shall mean each Co-Borrower, any Subsidiary of a Co-Borrower that is joined as
an "Obligor" pursuant to Section 9.9 and the
Guarantor.
"Organizational
Identification Number" means, with respect to a Person, the
organizational identification numbers assigned to such Person by the applicable
governmental unit or agency of the jurisdictions of organization of such
Person.
"Other
Taxes" shall mean any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from the
execution, delivery, enforcement or registration of, or otherwise with respect
to, this Agreement or any of the other Loan Documents.
"Permitted
Acquisition" shall have the meaning set forth in Section
9.2.
"Permitted Asset
Disposition" shall mean (a) the sale or lease of inventory in the
ordinary course of business; (b) the sale, lease, assignment, or other
transfer of obsolete or worn-out property which is no longer used or useful in
the conduct of the business of a Co-Borrower or any Subsidiary; (c) the
sale of delinquent receivables in the ordinary course of business in connection
with the collection or compromise thereof, to the extent that the amount of such
delinquent receivables so sold does not exceed $750,000 individually or in the
aggregate for both Co-Borrowers and their Subsidiaries in any one fiscal year;
and (d) the sale, lease, assignment, or other transfer of property by any
Subsidiary of a Co-Borrower to such Co-Borrower or another Subsidiary of such
Co-Borrower, provided that such property continues to constitute
Collateral.
"Permitted
Liens" shall mean (a) Liens for Taxes, assessments or other
governmental charges not at the time delinquent or thereafter payable without
penalty or being contested in good faith
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by
appropriate proceedings and, in each case, for which it maintains adequate
reserves in accordance with GAAP and in respect of which no Lien has been filed;
(b) Liens arising in the ordinary course of business (such as
(i) Liens of carriers, warehousemen, mechanics and materialmen and other
similar Liens imposed by law, and (ii) Liens in the form of deposits or
pledges incurred in connection with worker's compensation, unemployment
compensation and other types of social security (excluding Liens arising under
ERISA) or in connection with surety bonds, bids, performance bonds, and similar
obligations) for sums not overdue or being contested in good faith by
appropriate proceedings and not involving any advances or borrowed money or the
deferred purchase price of property or services, which do not in the aggregate
materially detract from the value of the property or assets of a Co-Borrower or
its Subsidiaries or materially impair the use thereof in the
operation of a Co-Borrower's or such a Subsidiaries' business and, in each case,
for which it maintains adequate reserves in accordance with GAAP and in respect
of which no Lien has been filed; (c) Liens described on Schedule 9.1
as of the Closing Date and the replacement, extension, or renewal of any such
Lien upon or in the same property subject thereto arising out of the extension,
renewal or replacement of the Debt secured thereby (without increase in the
principal amount thereof, excluding the effect of the capitalization of
interest); (d) attachments, appeal bonds, judgments and other similar
Liens, for sums not exceeding $250,000 in the aggregate arising in connection
with court proceedings, provided the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings and to the extent such judgments or awards do not
constitute an Event of Default under Section 11.7
hereof; (e) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any material
respect with the ordinary conduct of the business of the Co-Borrowers or any of
their Subsidiaries; (f) Liens arising in connection with Capitalized Lease
Obligations (and attaching only to the property being leased) not prohibited by
this Agreement; (g) Liens that constitute purchase money security interests
on any property securing Debt not prohibited by this Agreement and incurred for
the purpose of financing all or any part of the cost of acquiring such property,
provided that
any such Lien attaches to such property within thirty (30) days of the
acquisition thereof and attaches solely to the property so acquired;
(h) Liens granted to the Lender hereunder and under the Loan Documents;
(i) rights of lessees or sublessees in assets leased by a Co-Borrower or a
Subsidiary; (j) rights of set-off upon cash deposits with depository
institutions; (k) Liens of a collecting bank as provided pursuant to
Section 4-210 of the UCC; (l) Liens of sellers of goods under
Article 2 of the UCC securing the unpaid purchase price for such goods and
related expenses (and attaching only to the goods purchased); (m) Liens
encumbering the assets acquired in the Acquisition that were in existence prior
to the Closing Date which were not disclosed by the Lender to the Co-Borrowers
under the Asset Purchase Agreement; and (n) Liens encumbering assets
acquired in a Permitted Acquisition; provided that (i) such Lien extends
only to the assets acquired; (ii) any such Lien attaches to such property
within thirty (30) days of the acquisition thereof; and (iii) the holder of such
Liens enters into an intercreditor agreement with the Lender in form and
substance satisfactory to the Lender to specifically define the assets in which
each such party shall have a first priority Lien and to set forth such other
provisions protecting the Lender’s rights in and to the Collateral as the Lender
may reasonably request.
"Person"
shall mean any natural person, partnership, limited liability company,
corporation, trust, joint venture, joint stock company, association,
unincorporated organization, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.
"Prime
Rate" shall mean the floating per annum rate of interest which at any
time, and from time to time, shall be most recently published by the Wall Street
Journal as the prime rate. The effective date of any change in the
Prime Rate shall for purposes hereof be the date the Prime Rate
changes. The Lender shall not be obligated to give notice of any
change in the Prime Rate.
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"Regulatory
Action" shall mean the issuance against any Obligor of any formal
administrative action, temporary or permanent, by any federal or state
regulatory agency having jurisdiction or control over such Obligor, such action
taking the form of, but not limited to: (a) any formal directive citing
conditions or activities deemed to be unsafe or unsound or breaches of fiduciary
duty or law or regulation; (b) a cease and desist order; (c) the
suspension or removal of Xxxxxxx X. Xxxxxx as an executive officer or director
of an Obligor; or (d) any breach of a capital maintenance
agreement.
"Regulatory
Capital Requirements" shall mean the regulatory capital required by any
Governmental Authority.
"Regulatory
Change" shall mean the introduction of, or any change in any applicable
law, treaty, rule, regulation or guideline or in the interpretation or
administration thereof by any Governmental Authority or any central bank or
other fiscal, monetary or other authority having jurisdiction over the Lender or
its lending office, in each case which occurs after the date of this
Agreement.
"Subaccounting
Agreements" shall mean any Contract pursuant to which any Co-Borrower
provides, on behalf of or as agent for a bank or other financial institution,
sub-accounting, record-keeping or other services with respect to account
activities in Custodial Accounts held by such Co-Borrower with such bank or
other financial institution, including the Amended and Restated Subaccounting
Agreement.
"Subsidiary"
and "Subsidiaries"
shall mean, respectively, with respect to any Person, each and all such
corporations, partnerships, limited partnerships, limited liability companies,
limited liability partnerships, joint ventures or other entities of which or in
which such Person owns, directly or indirectly, such number of outstanding
Capital Securities as have more than fifty percent (50.00%) of the ordinary
voting power for the election of directors or other managers of such
corporation, partnership, limited liability company or other
entity. Unless the context otherwise requires, each reference to
Subsidiaries herein shall be a reference to Subsidiaries of the Co-Borrowers,
but, with respect to the Co-Borrowers, shall not include Unrestricted
Subsidiaries.
"Taxes"
shall mean any and all present and future taxes, duties, levies, imposts,
deductions, assessments, charges or withholdings, and any and all liabilities
(including interest and penalties and other additions to taxes) with respect to
the foregoing.
"Term
Loan" shall mean the portion of the purchase price for the Acquisition
financed hereby in the original principal amount of $46,049,830.06.
"UCC"
shall mean the Uniform Commercial Code in effect in the state of Texas from time
to time.
"United Western
Bank" shall mean United Western Bank, a federal savings bank, whose
address is 000 00xx Xxxxxx,
Xxxxxx Xxxxxxxx 00000.
"Unrestricted
Subsidiaries" shall have the meaning set forth in Section
9.9.
"Voidable
Transfer" shall have the meaning set forth in Section 13.19
hereof.
"Wholly-Owned
Subsidiary" shall mean any Subsidiary of which or in which any
Co-Borrower owns, directly or indirectly, one hundred percent (100%) of the
Capital Securities of such Subsidiary.
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1.2 Accounting
Terms. Any accounting terms used in this Agreement which are
not specifically defined herein shall have the meanings customarily given them
in accordance with GAAP. Calculations and determinations of financial
and accounting terms used and not otherwise specifically defined hereunder and
the preparation of financial statements to be furnished to the Lender pursuant
hereto shall be made and prepared, both as to classification of items and as to
amount, in accordance with GAAP as used in the preparation of the financial
statements of each Obligor on the date of this Agreement. If any
changes in accounting principles or practices from those used in the preparation
of the financial statements are hereafter occasioned by the promulgation of
rules, regulations, pronouncements and opinions by or required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or any successor thereto or agencies with similar functions), which
results in a material change in the method of accounting in the financial
statements required to be furnished to the Lender hereunder or in the
calculation of financial covenants, standards or terms contained in this
Agreement, the parties hereto agree to enter into good faith negotiations to
amend such provisions so as equitably to reflect such changes to the end that
the criteria for evaluating the financial condition and performance of each
Obligor will be the same after such changes as they were before such changes;
and if the parties fail to agree on the amendment of such provisions, each
Obligor will furnish financial statements in accordance with such changes, but
shall provide calculations for all financial covenants, perform all financial
covenants and otherwise observe all financial standards and terms in accordance
with applicable accounting principles and practices in effect immediately prior
to such changes. Calculations with respect to financial covenants
required to be stated in accordance with applicable accounting principles and
practices in effect immediately prior to such changes shall be reviewed and
certified by each Obligor's accountants.
1.3 Other Terms Defined in
UCC. All other capitalized words and phrases used herein and
not otherwise specifically defined herein shall have the respective meanings
assigned to such terms in the UCC, to the extent the same are used or defined
therein.
1.4 Other Interpretive
Provisions.
(a) The
meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms. Whenever the context so requires, the
neuter gender includes the masculine and feminine, the single number includes
the plural, and vice versa, and in particular the word "Co-Borrowers" shall be
so construed.
(b) Section and
Schedule references are to this Agreement unless otherwise
specified. The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(c) The term
"including" is not limiting, and means "including, without
limitation".
(d) In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each mean
"to but excluding", and the word "through" means "to and
including".
(e) Unless
otherwise expressly provided herein, (i) references to agreements
(including this Agreement and the other Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
supplements and other modifications thereto, but only to the extent such
amendments, restatements, supplements and other modifications are not prohibited
by the terms of any Loan Document, and (ii) references to
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any
statute or regulation shall be construed as including all statutory and
regulatory provisions amending, replacing, supplementing or interpreting such
statute or regulation.
(f) To the
extent any of the provisions of the other Loan Documents are inconsistent with
the terms of this Agreement, the provisions of this Agreement shall
govern.
(g) This
Agreement and the other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and each shall be
performed in accordance with its terms.
Section
2. LENDER
FINANCING.
2.1 Term
Loan.
(a) Term
Loan. Subject to the terms and conditions of this Agreement
and the other Loan Documents, and in reliance upon the representations and
warranties of the Obligors set forth herein and in the other Loan Documents, the
Lender agrees to finance a portion of the purchase price for the Acquisition in
the principal amount equal to the Term Loan. The financing provided
by the Lender shall be effective on the Closing Date. The Term Loan
shall partially finance the Acquisition. The Term Loan may be prepaid
in whole or in part on any date of the payment of any installment of principal
without penalty, but shall be due in full on the Maturity Date.
(b) Interest and
Payments. Except as otherwise provided in this Section 2.1(b),
the principal amount of the Term Loan outstanding from time to time shall bear
interest at the Interest Rate. Accrued and unpaid interest on the
Term Loan outstanding from time to time, shall be due and payable monthly, in
arrears, commencing on August 1, 2009, and continuing on the first (1st) day of
each calendar month thereafter, and on the Maturity Date. From and
after maturity, or after the occurrence and during the continuation of an Event
of Default, interest on the outstanding principal balance of the Term Loan shall
accrue at the Default Rate and shall be payable upon demand from the
Lender.
(c) Interest and Principal
Payments. Payments of principal shall be made in eighty-four
(84) equal monthly installments each in the amount of $548,212.26, together with
an additional amount representing accrued and unpaid interest on the principal
amount of the Term Loan outstanding as set forth above, beginning on August 1,
2009, and continuing on the first (1st) day of
each month thereafter, with a final payment of all outstanding principal and
accrued interest due on the Maturity Date. Principal amounts repaid
on the Term Loan may not be borrowed again.
(d) Prepayment. The
Co-Borrowers shall make a prepayment (the "Mandatory
Prepayment") of the outstanding principal amount of the Term Loan until
paid in full upon the occurrence of any of the following events, at the
following times and in the following amounts:
(i) within
five (5) calendar days after the receipt by any Co-Borrower or by any Subsidiary
of any Net Cash Proceeds from any Asset Disposition other than a Permitted Asset
Disposition, in an amount equal to 100% of such Net Cash Proceeds; provided that if a
Co-Borrower shall deliver to the Lender a certificate to the effect that the
applicable Co-Borrower or Subsidiary intends to apply the Net Cash Proceeds from
such event, within 180 days after receipt of such Net Cash Proceeds, to acquire
real property, equipment or other tangible assets to be used in the business of
the applicable Co-Borrower or Subsidiary, and certifying that no Default or
Event of Default has
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occurred
and is continuing, then no prepayment shall be required pursuant to this
paragraph in respect of such event except to the extent of any Net Cash Proceeds
therefrom that have not been so applied by the end of such 180-day period, at
which time a prepayment shall be required in an amount equal to the Net Cash
Proceeds that have not been so applied.
(ii) Concurrently
with the receipt by any Co-Borrower or by any Subsidiary of any Net Cash
Proceeds from any issuance of Capital Securities in an amount equal to
100% of such Net Cash Proceeds, excluding however, (A) any issuance of
Capital Securities pursuant to any employee or director option program, benefit
plan or compensation program, (B) any issuance of Capital Securities by a
Subsidiary to any Co-Borrower or another Subsidiary or (C) any issuance of
Capital Securities by a Co-Borrower, if a Co-Borrower shall deliver to the
Lender a certificate to the effect that the applicable Co-Borrower intends to
apply the Net Cash Proceeds from such event, within 120 days after receipt of
such Net Cash Proceeds, to pay the purchase price for a Permitted Acquisition,
and certifying that no Default or Event of Default has occurred and is
continuing, then no prepayment shall be required pursuant to this paragraph in
respect of such event except to the extent of any Net Cash Proceeds therefrom
that have not been so applied by the end of such 120-day period, at which time a
prepayment shall be required in an amount equal to the Net Cash Proceeds that
have not been so applied.
Voluntary
prepayments may be made on any scheduled payment date, without premium or
penalty. The principal amount of all prepayments shall be applied as
follows: first, to any expenses, legal fees or other fees due and owing, second,
to any outstanding interest, and third, to the principal amount of the Term
Loan, and shall be applied to reduce each remaining installments of the Term
Loan by an amount equal to the amount of the prepayment divided by the number of
installments remaining.
2.2 Interest and Fee
Computation; Collection of Funds. Except as otherwise set
forth herein, all interest and fees shall be calculated on the basis of a year
consisting of 360 days and shall be paid for the actual number of days
elapsed. Principal payments submitted in funds not immediately
available shall continue to bear interest until collected. If any
payment to be made by the Co-Borrowers hereunder or under the Note shall become
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in
computing any interest in respect of such payment. Notwithstanding
anything to the contrary contained herein, the final payment due under the Term
Loan must be made by wire transfer or other immediately available
funds. All payments made by the Co-Borrowers hereunder or under any
of the Loan Documents shall be made without setoff, counterclaim, or other
defense. To the extent permitted by applicable law, all payments
hereunder or under any of the Loan Documents (including any payment of
principal, interest, or fees) to, or for the benefit, of any Person shall be
made by the Co-Borrowers free and clear of, and without deduction or withholding
for, or account of, any taxes now or hereinafter imposed by any taxing
authority.
2.3 Taxes.
(a) All
payments made by the Obligors under the Loan Documents shall be made free and
clear of, and without deduction or withholding for or on account of, any present
or future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions, or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding net income taxes
and franchise taxes (imposed in lieu of net income taxes) imposed on the Lender
as a result of a present or former connection between the Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or
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taxing
authority thereof or therein (other than any such connection arising solely from
the Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or any other Loan
Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions, or withholdings (collectively, "Non-Excluded
Taxes") or Other Taxes are required to be withheld from any amounts
payable to the Lender hereunder, the amounts so payable to the Lender shall be
increased to the extent necessary to yield to the Lender (after payment of all
Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this
Agreement.
(b) The
Co-Borrowers shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.
(c) At the
request of the Co-Borrowers and at the Co-Borrowers' sole cost, the Lender shall
take reasonable steps to (i) contest its liability for any Non-Excluded
Taxes or Other Taxes that have not been paid, or (ii) seek a refund of any
Non-Excluded Taxes or Other Taxes that have been paid.
(d) Whenever
any Non-Excluded Taxes or Other Taxes are payable by the Co-Borrowers, as
promptly as possible thereafter the Co-Borrowers shall send to the Lender a
certified copy of an original official receipt received by the Co-Borrowers
showing payment thereof. If the Co-Borrowers fail to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority
or fails to remit to the Lender the required receipts or other required
documentary evidence or if any Governmental Authority seeks to collect a
Non-Excluded Tax or Other Tax directly from the Lender for any other reason, the
Co-Borrowers shall indemnify the Lender on an after-tax basis for any
incremental taxes, interest or penalties that may become payable by the
Lender.
(e) The
agreements in this Section shall survive the satisfaction and payment of
the Obligations and the termination of this Agreement.
2.4 Nature of Term
Loan. The Term Loan shall constitute one general obligation of
the Co-Borrowers, and shall be secured by Lender's priority security interest in
and Lien upon all of the Collateral and by all other security interests, Liens,
claims and encumbrances heretofore, now or at any time or times hereafter
granted by either Co-Borrower and or any Subsidiary to the Lender.
Section
3. CONDITIONS OF
BORROWING.
3.1 Conditions
Precedent. Notwithstanding any other provision of this
Agreement, the Lender shall not be required to finance a portion of the purchase
price of the Acquisition as contemplated hereby unless and until all the
following conditions shall have occurred (provided that the Lender may, in its
sole discretion and at any time, waive or not require the occurrence of any such
condition):
(a) Loan
Documents. The Co-Borrowers shall have executed and delivered
to the Lender all of the following Loan Documents, all of which must be
satisfactory to the Lender and the Lender's counsel in form, substance and
execution:
(i) This
Agreement. This Agreement duly executed by the Co-Borrowers
and the Guarantor.
(ii) Note. The
Note duly executed by the Co-Borrowers, as set forth in Exhibit
A.
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(iii) Guaranty. A
guaranty agreement dated as of the date of this Agreement executed by the
Guarantor, as set forth in Exhibit
B.
(iv) Collateral Access
Agreement. Collateral Access Agreements dated as of the date
of this Agreement, from the owner, lessor, or mortgagee, as the case may be, of
the real estate located (A) at 0000 Xxxxxx Xxxxx, Xxxxx 000, Xxxx, Xxxxx,
(B) 0000 Xxxx Xxxx Xxxx, Xxxx, Xxxxx, (X) 000 Xxxxx Xxxx, Xxxxxx,
Xxxx, and (D) 201 South Xxxxxxxx Avenue, Sioux Falls, South Dakota,
consisting where Collateral is stored or otherwise located, in the form prepared
by and reasonably acceptable to the Lender.
(v) Deposit
Account. A Deposit Account opened and maintained with United
Western Bank for the operating bank accounts of the Co-Borrowers and their
Subsidiaries with a deposit control agreement relating to such Deposit Account
in the form prepared by and acceptable to the Lender.
(vi) Search Results; Lien
Terminations. Copies of UCC search reports dated such a date
as is reasonably acceptable to the Lender, listing all effective financing
statements which name either Co-Borrower and any of their Subsidiaries, under
their present names and any previous names, as debtors, together with (A) copies
of such financing statements, and (B) such other UCC termination statements
as the Lender may reasonably request. No additional financing
statement shall appear on such reports after the delivery of such reports to the
Lender.
(vii) Organizational and
Authorization Document. Copies of (A) the articles of
incorporation or organization and bylaws or operating agreement,
all as the case may be, of each Co-Borrower and the Guarantor;
(B) resolutions of the board of directors or managers, as the case may be,
of each Co-Borrower and the Guarantor approving and authorizing such Person's
execution, delivery and performance of the Loan Documents to which it is party,
and the transactions contemplated thereby; (C) signature and incumbency
certificates of the officers or managers, as the case may be, of each
Co-Borrower and the Guarantor, executing any of the Loan Documents, each of
which each the Co-Borrower and the Guarantor hereby certifies to be true and
complete, and in full force and effect without modification, it being understood
that the Lender may conclusively rely on each such document and certificate
until formally advised by the Co-Borrowers and the Guarantor of any changes
therein; and (D) good standing certificates in the state of incorporation
of the Co-Borrowers and the Guarantor and in each other state requested by the
Lender.
(viii) Insurance. Evidence
satisfactory to the Lender of the existence of insurance required to be
maintained pursuant to Section 8.6,
together with evidence that the Lender has been named as a lender's loss payee,
mortgagee, and as an additional insured on all related insurance
policies.
(ix) Legal
Opinions. The opinion of counsel to the Obligors as to the due
execution and enforceability of the Loan Documents and such other matters as the
Lender shall require.
(x) Additional
Documents. Such other certificates, schedules, resolutions,
opinions of counsel, notes and other documents which are provided for hereunder
or which the Lender shall require, including UCC financing statements, required
by law or
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reasonably
requested by the Lender to be filed, registered or recorded to create or perfect
the Liens intended to be created hereunder.
(b) Acquisition
Conditions. The following conditions shall have occurred with
respect to the Acquisition:
(i) Acquisition
Documents. The Lender shall have received fully executed
copies of the Acquisition Documents, each of which shall be in form and
substance reasonably satisfactory to the Lender.
(ii) Consummation of
Acquisition. The Acquisition will be consummated in accordance
with the terms of the Acquisition Documents.
(iii) Governmental Authority
Approval. All necessary regulatory approvals by Governmental
Authorities shall have been obtained by both the Co-Borrowers and the
Lender.
3.2 Satisfaction of Conditions
Precedent. The Lender's execution of this Agreement shall be
deemed to be the Lender's acknowledgement that all documents required to be
delivered as a condition to finance the purchase price of the Acquisition as
herein set forth have been received and are satisfactory to the Lender and its
counsel.
Section
4. NOTE EVIDENCING TERM
LOAN.
4.1 Note. The
Term Loan shall be evidenced by the Note. At the time of the Closing
Date or a repayment made in whole or in part thereon, a notation thereof shall
be made on the books and records of the Lender. All amounts recorded
shall be, absent demonstrable error, conclusive and binding evidence of
(a) the principal amount of the Term Loan, (b) any accrued and unpaid
interest owing on the Term Loan and (c) all amounts repaid on the Term
Loan. The failure to record any such amount or any error in recording
such amounts shall not, however, limit or otherwise affect the obligations of
the Co-Borrowers under the Note to repay the principal amount of the Term Loan,
together with all interest accruing thereon.
Section
5. MANNER OF
BORROWING.
5.1 Borrowing
Procedures. The Lender shall finance a portion of the purchase
price of the Acquisition concurrently with the consummation of the Acquisition
and upon the satisfaction (or waiver or determination by the Lender not to
require the occurrence) of the conditions precedent set forth in Section 3. The
Co-Borrowers do hereby irrevocably confirm, ratify and approve the Term Loan by
the Lender and, consistent with and subject to the provisions of Section 13.18,
does hereby indemnify the Lender against losses and expenses (including court
costs and attorneys' and paralegals' fees) and shall hold the Lender harmless
with respect thereto.
5.2 Automatic
Debit. In order to effectuate the timely payment of any of the
Obligations when due, the Co-Borrowers hereby authorize and direct the Lender,
at the Lender's option, to debit any due and payable amount of the Obligations
to any ordinary deposit account of the Co-Borrowers maintained with the Lender
or any Affiliate of the Lender.
Section
6. SECURITY FOR THE
OBLIGATIONS.
6.1 Security for
Obligations. As security for the payment and performance of
the Obligations, each Co-Borrower does hereby pledge, assign, transfer, deliver,
and grant to the Lender, for
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its own
benefit, a continuing and unconditional first-priority security interest
(subject to Permitted Liens) in and to any and all of its assets and property
(including any and all assets or property of the Acquired Business acquired or
to be acquired as a result of the Acquisition, but not including any of its
Excluded Property), of any kind or description, tangible or intangible,
wheresoever located and whether now existing or hereafter arising or acquired,
including the following (all of which property, along with the products and
proceeds therefrom, are individually and collectively referred to as the "Collateral"):
(a) all
property of, or for the account of, the Co-Borrower now or hereafter coming into
the possession, control or custody of, or in transit to, the Lender or any agent
or bailee for the Lender or any parent, Affiliate or Subsidiary of the Lender or
any participant with the Lender in the Term Loan (whether for safekeeping,
deposit, collection, custody, pledge, transmission or otherwise), including all
earnings, dividends, interest, or other rights in connection therewith and the
products and proceeds therefrom, including the proceeds of insurance thereon;
and
(b) the
additional property of the Co-Borrower, whether now existing or hereafter
arising or acquired, and wherever now or hereafter located, together with all
additions and accessions thereto, substitutions, betterments and replacements
therefor, products and Proceeds therefrom, and all of the Co-Borrower's books
and records and recorded data relating thereto (regardless of the medium of
recording or storage), together with all of the Co-Borrower's right, title and
interest in and to all computer software required to utilize, create, maintain
and process any such records or data on electronic media, identified and set
forth as follows:
(i) All
Accounts and all Goods whose sale, lease or other disposition by the Co-Borrower
has given rise to Accounts and have been returned to, or repossessed or stopped
in transit by, the Co-Borrower, or rejected or refused by an Account
Debtor;
(ii) All
Inventory, including raw materials, work-in-process and finished
goods;
(iii) All Goods
(other than Inventory), including embedded software, Equipment, vehicles,
furniture and Fixtures;
(iv) All
Software and computer programs;
(v) All
Securities, Investment Property, Financial Assets and Deposit
Accounts;
(vi) All
Chattel Paper, Electronic Chattel Paper, Instruments, Documents, Letter of
Credit Rights, all proceeds of letters of credit, Health-Care-Insurance
Receivables, Supporting Obligations, notes secured by real estate, Commercial
Tort Claims (including all Commercial Tort Claims set forth on Schedule 6.1),
and General Intangibles, including Payment Intangibles, Custodial Agreements and
Subaccounting Agreements; and
(vii) All
Proceeds (whether Cash Proceeds or Noncash Proceeds) of the foregoing property,
including all insurance policies and proceeds of insurance payable by reason of
loss or damage to the foregoing property, including unearned premiums, and of
eminent domain or condemnation awards.
For
avoidance of doubt, Collateral shall not include Custodial Assets, but shall
include Custodial Rights.
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6.2 Possession and Transfer of
Collateral. Except in connection with the payment in full of
all Obligations, the cancellation or surrender of any Note, upon payment or
otherwise, shall not affect the right of the Lender to retain the Collateral for
any other of the Obligations.
6.3 Financing
Statements. The Co-Borrowers shall, at the Lender's request,
at any time and from time to time, execute and deliver to the Lender such
documents and do such acts as the Lender deems necessary in order to establish
and maintain valid, attached and perfected first-priority (subject to Permitted
Liens) security interests in the Collateral in favor of the Lender, free and
clear of all Liens (other than Permitted Liens) and claims and rights of third
parties whatsoever, except Permitted Liens. The Co-Borrowers hereby
irrevocably authorize the Lender at any time, and from time to time, to file in
any jurisdiction any initial financing statements and amendments thereto without
the signature of the Co-Borrowers that (a) indicate the Collateral
(i) comprises all assets of the Co-Borrowers or words of similar effect,
regardless of whether any particular asset comprising a part of the Collateral
falls within the scope of Article 9 of the Uniform Commercial Code of the
jurisdiction wherein such financing statement or amendment is filed, or
(ii) as being of an equal or lesser scope or within greater detail as the
grant of the security interest set forth herein, and (b) contain any other
information required by Section 5 of Article 9 of the Uniform Commercial
Code of the jurisdiction wherein such financing statement or amendment is filed
regarding the sufficiency or filing office acceptance of any financing statement
or amendment, including (i) whether the Co-Borrowers are organizations, the
type of organizations and any Organizational Identification Numbers issued to
each Co-Borrower, and (ii) in the case of a financing statement filed as a
fixture filing or indicating Collateral as as-extracted collateral or timber to
be cut, a sufficient description of the real property to which the Collateral
relates. The Co-Borrowers agree to furnish any such information to
the Lender promptly upon request. The Co-Borrowers further ratify and
affirm their authorization for any financing statements and/or amendments
thereto, executed and filed by the Lender in any jurisdiction prior to the date
of this Agreement. In addition, the Co-Borrowers shall make
appropriate entries on their books and records disclosing the Lender's security
interests in the Collateral.
6.4 Preservation of the
Collateral. The Lender may, but is not required, to take such
actions from time to time as the Lender reasonably deems appropriate to maintain
or protect the Collateral. The Lender shall have exercised reasonable
care in the custody and preservation of the Collateral if the Lender takes such
action as the Co-Borrowers shall reasonably request in writing which is not
inconsistent with the Lender's status as a secured party, but the failure of the
Lender to comply with any such request shall not be deemed a failure to exercise
reasonable care; provided, however, the Lender's responsibility for the
safekeeping of the Collateral shall (a) be deemed reasonable if such
Collateral is accorded treatment substantially equal to that which the Lender
accords its own property, and (b) not extend to matters beyond the control
of the Lender, including acts of God, war, insurrection, riot or governmental
actions. In addition, any failure of the Lender to preserve or
protect any rights with respect to the Collateral against prior or third
parties, or to do any act with respect to preservation of the Collateral, not so
requested by the Co-Borrowers, shall not be deemed a failure to exercise
reasonable care in the custody or preservation of the Collateral. The
Co-Borrowers shall have the sole responsibility for taking such action as may be
necessary, from time to time, to preserve all rights of the Co-Borrowers and the
Lender in the Collateral against prior or third parties. Without
limiting the generality of the foregoing, where Collateral consists in whole or
in part of securities, the Co-Borrowers represent to, and covenant with, the
Lender that the Co-Borrowers have made arrangements for keeping informed of
changes or potential changes affecting the securities (including rights to
convert or subscribe, payment of dividends, reorganization or other exchanges,
tender offers and voting rights), and the Co-Borrowers agree that the Lender
shall have no responsibility or liability for informing the Co-Borrowers of any
such or other changes or potential changes or for taking any action or omitting
to take any action with respect thereto.
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6.5 Other Actions as to any and
all Collateral. The Co-Borrowers further agree to take any
other action reasonably requested by the Lender to ensure the attachment,
perfection and first priority (subject to Permitted Liens) of, and the ability
of the Lender to enforce, the Lender's security interest in any and all of the
Collateral, including (a) causing the Lender's name to be noted as secured
party on any certificate of title for a titled good if such notation is a
condition to attachment, perfection or priority of, or ability of the Lender to
enforce, the Lender's security interest in such Collateral, (b) complying
with any provision of any statute, regulation or treaty of the United States as
to any Collateral if compliance with such provision is a condition to
attachment, perfection or priority of, or ability of the Lender to enforce, the
Lender's security interest in such Collateral, (c) using commercially
reasonable efforts to obtain governmental and other third party consents and
approvals, including any consent of any licensor, lessor or other Person
obligated on Collateral, (d) using commercially reasonable efforts to
obtain waivers from mortgagees and landlords in form and substance satisfactory
to the Lender, and (e) taking all actions required by the UCC in effect
from time to time or by other law, as applicable in any relevant UCC
jurisdiction, or by other law as applicable in any foreign
jurisdiction. The Co-Borrowers further agree to indemnify and hold
the Lender harmless against claims of any Persons not a party to this Agreement
concerning disputes arising over the Collateral, except for claims arising from
Liens encumbering the assets acquired in the Acquisition and other matters, in
each case, that were in existence prior to the Closing Date which were not
disclosed by the Lender to the Co-Borrowers under the Acquisition
Agreement.
6.6 Collateral in the Possession
of a Warehouseman or Bailee. If any of the Collateral at any
time is in the possession of a warehouseman or bailee, the Co-Borrowers shall
promptly notify the Lender thereof, and shall use their reasonable efforts to
promptly obtain a Collateral Access Agreement; provided, however, that if at any
time the aggregate amount of all Inventory in the possession of such
warehouseman or bailee exceeds five percent (5.00%) of the aggregate amount of
all Inventory at such time, then the Co-Borrowers shall promptly obtain a
Collateral Access Agreement with respect thereto. The Lender agrees
with the Co-Borrowers that the Lender shall not give any instructions to such
warehouseman or bailee pursuant to any such Collateral Access Agreement unless
an Event of Default has occurred and is continuing, or would occur after taking
into account any action by the Co-Borrowers with respect to such warehouseman or
bailee.
6.7 Letter-of-Credit
Rights. If any Co-Borrower at any time is a beneficiary under
a letter of credit now or hereafter issued in favor of such Co-Borrower
involving an amount available to be drawn thereunder in excess of $250,000, the
Co-Borrowers shall promptly notify the Lender thereof and, at the request and
option of the Lender, the Co-Borrowers shall, pursuant to an agreement in form
and substance satisfactory to the Lender, either (a) arrange for the issuer
and any confirmer of such letter of credit to consent to a collateral assignment
to the Lender of the proceeds of any drawing under the letter of credit, or
(b) arrange for the Lender to become the transferee beneficiary of the
letter of credit, with the Lender agreeing, in each case, that the proceeds of
any drawing under the letter to credit are, after the occurrence and during the
continuation of an Event of Default, to be applied as provided in this
Agreement.
6.8 Commercial Tort
Claims. If the Co-Borrowers shall at any time hold or acquire
a Commercial Tort Claim in excess of $250,000, the Co-Borrowers shall
immediately notify the Lender in writing signed by the Co-Borrowers of the
details thereof and grant to the Lender in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, in
each case in form and substance satisfactory to the Lender, and shall execute
any amendments hereto deemed reasonably necessary by the Lender to perfect its
security interest in such Commercial Tort Claim.
6.9 Electronic Chattel Paper and
Transferable Records. If the Co-Borrowers at any time holds or
acquires an interest in any electronic chattel paper or any "transferable
record", as that term is defined in Section 201 of the federal Electronic
Signatures in Global and National Commerce Act, or in
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Section 16
of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, the Co-Borrowers shall promptly notify the Lender thereof and, at
the request of the Lender, shall take such action as the Lender may reasonably
request to vest in the Lender control under Section 9-105 of the UCC of
such electronic chattel paper or control under Section 201 of the federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as so in effect
in such jurisdiction, of such transferable record. The Lender agrees
with the Co-Borrowers that the Lender will arrange, pursuant to procedures
satisfactory to the Lender and so long as such procedures will not result in the
Lender's loss of control, for the Co-Borrowers to make alterations to the
electronic chattel paper or transferable record permitted under
Section 9-105 of the UCC or, as the case may be, Section 201 of the
federal Electronic Signatures in Global and National Commerce Act or
Section 16 of the Uniform Electronic Transactions Act for a party in
control to make without loss of control.
6.10 Certain Deposit
Accounts. In addition to and without limiting the generality
of any of the foregoing provisions of this Section 6,
each Co-Borrower hereby covenants and agrees that, with respect to each Deposit
Account set forth on Schedule
6.10, it shall execute and deliver, and cause such financial institution
where such Deposit Account is maintained to execute and deliver, a control
agreement among such financial institution, the Co-Borrowers and the Lender, in
form and substance satisfactory to the Lender, pursuant to which the Lender
perfects its security interest in such Deposit Account and all proceeds thereof
by control.
6.11 Release of
Collateral. The Lender shall, concurrently with any sale,
transfer, or other disposition of any Collateral that is permitted by this
Agreement or any other Loan Document, execute such agreements, documents, or
instruments as the Co-Borrowers may from time to time reasonably request to
evidence or effectuate the release of the Lender's Lien thereon.
Section
7. REPRESENTATIONS AND
WARRANTIES.
To induce
the Lender to finance a portion of the purchase price of the Acquisition as
contemplated hereby, each Obligor makes the following representations and
warranties to the Lender as of the date hereof (after giving effect to the
Acquisition and other transactions contemplated by the Acquisition Documents)
and as of the Closing Date, each of which representations and warranties shall
survive the execution and delivery of this Agreement:
7.1 Organization and
Name. ETC is a corporation duly organized, validly existing
and in good standing under the laws of the State of South Dakota, with full and
adequate corporate power to carry on and conduct its business as presently
conducted, SAS is a limited liability company duly formed, validly existing and
in good standing under the laws of the State of Texas, with full and adequate
limited liability company power to carry on and conduct its business as
presently conducted, the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio, and each
Subsidiary is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Each Obligor and each
Subsidiary is duly licensed or qualified in all foreign jurisdictions wherein
the nature of its activities require such qualification or licensing, except for
such jurisdictions where the failure to so qualify would not have a Material
Adverse Effect. ETC's Organizational Identification Number is
4478845. SAS's Organizational Identification Number is
0801105425. Guarantor's Registration Number is
1361919. The exact legal name of each Co-Borrower is as set forth in
the first paragraph of this Agreement, and, as of the Closing Date, each
Co-Borrower does not conduct, nor has it during the last five (5) years
conducted, business under any other name or trade name. The
Co-Borrowers and the Guarantor are duly authorized to conduct trust operations
in the State of South Dakota, the State of Texas and in each other state in
which it is necessary to conduct their trust operations.
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7.2 Authorization. Each
Obligor has full corporate or limited liability company, as the case may be,
right, power, and authority to enter into this Agreement and execute and deliver
the Loan Documents as provided herein, and to perform all of its duties and
obligations under this Agreement and the other Loan Documents. The
execution and delivery of this Agreement and the other Loan Documents will not,
and the observance or performance of any of the matters and things herein or
therein set forth will not, violate or contravene any provision of law or of the
governing documents of the respective Obligor. All necessary and
appropriate corporate or limited liability company, as the case may be, action
has been taken on the part of the Obligors to authorize the execution and
delivery of this Agreement and the other Loan Documents.
7.3 Validity and Binding
Nature. This Agreement and the other Loan Documents are the
legal, valid and binding obligations of the Obligors, enforceable against the
Obligors in accordance with their terms, subject to bankruptcy, insolvency and
similar laws affecting the enforceability of creditors' rights generally and to
general principles of equity.
7.4 Consent; Absence of
Breach. The execution, delivery, and performance of this
Agreement and the other Loan Documents by the Obligors, do not and will not
(a) require any consent, approval, authorization of, or filings with,
notice to or other act by or in respect of, any Governmental Authority or any
other Person (other than any consent or approval (i) which has been
obtained and is in full force and effect or (ii) which is required from a
party to any contract to which the Obligor is a party (whether directly or by
virtue of the Acquisition) and where the failure to obtain such consent or
approval could not reasonably be expected to have a Material Adverse Effect);
(b) violate any provision of law or any applicable regulation, order, writ,
injunction or decree of any court or Governmental Authority; (c) violate or
conflict with (i) the governing documents of the Obligors or any of their
Subsidiaries or (ii) any material agreement, indenture, instrument or other
document, or any judgment, order or decree, which is binding upon the Obligors
or any of their Subsidiaries or any of their respective properties or assets
(other than where such violation or conflict could not reasonably be expected to
have a Material Adverse Effect); or (d) require, or result in, the creation
or imposition of any Lien on any asset of the Obligors or any of their
Subsidiaries, other than Liens in favor of the Lender created pursuant to this
Agreement and Permitted Liens.
7.5 Ownership of Properties;
Liens. Each Obligor is the sole owner or has other rights in
all of its properties and assets, real and personal, tangible and intangible, of
any nature whatsoever (including patents, trademarks, trade names, service marks
and copyrights), free and clear of all Liens, charges and claims (including
infringement claims with respect to patents, trademarks, service marks,
copyrights and the like), other than Permitted Liens.
7.6 Subsidiaries; Equity
Ownership. As of the Closing Date, there are no Subsidiaries
of the Obligors. All issued and outstanding Capital Securities of the Obligors and each
of their Subsidiaries are duly authorized and validly issued, fully paid,
non-assessable, and free and clear of all Liens other than Permitted Liens or
Liens on the Capital Securities of the Obligors that would not constitute a
Change in Control, if any, and such securities were issued in compliance with
all applicable state and federal laws concerning the issuance of
securities. As of the Closing Date, except as set forth in Schedule 7.6,
there are no pre-emptive or other outstanding rights, options, warrants,
conversion rights or other similar agreements or understandings for the purchase
or acquisition of any Capital Securities of the Obligors and each
of their Subsidiaries.
7.7 Intellectual
Property. Except for matters relating to Intellectual Property
acquired in the Acquisition that were required to be disclosed pursuant to the
Asset Purchase Agreement by the Lender but were not, the breach by the Lender of
covenants required to be performed by the Lender under the Asset Purchase
Agreement relating to Intellectual Property acquired in the Acquisition and for
matters
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relating
to such Intellectual Property which the Lender has provided the Co-Borrowers
indemnification under the Asset Purchase Agreement, the Obligors own and possess
or have a license or other right to use all Intellectual Property, as are
necessary for the conduct of the businesses of the Obligors, without any
infringement upon rights of others which could reasonably be expected to have a
Material Adverse Effect, and no claim has been asserted and is pending by any
Person challenging or questioning the use of any Intellectual Property or the
validity or effectiveness of any Intellectual Property nor does the Obligors
know of any valid basis for any such claim, in each case which could reasonably
be expected to have a Material Adverse Effect upon the Obligors.
7.8 Financial
Statements. All financial statements submitted by and in
respect of the each Obligor to the Lender have been prepared in accordance with
GAAP on a basis, except as otherwise noted therein, consistent with the previous
fiscal year and present fairly in all material respects the financial condition
of each Obligor and the results of the operations for each Obligor as of such
date and for the periods indicated. Since the date of the initial
financial statement of an Obligor submitted by the Obligor to the Lender, there
has been no change in the financial condition or in the assets or liabilities of
the Obligor having a Material Adverse Effect.
7.9 Litigation and Contingent
Liabilities. There is no litigation, arbitration proceeding,
demand, charge, claim, petition or governmental investigation or proceeding
pending, or to the knowledge of the Obligors, threatened, against the Obligors,
which, if adversely determined, might reasonably be expected to have a Material
Adverse Effect, except as set forth in Schedule 7.9
or except for any litigation, arbitration proceeding, demand, charge, claim,
petition or governmental investigation or proceeding relating to the Acquired
Business that were required to be disclosed pursuant to the Asset Purchase
Agreement by the Lender but were not, the breach by the Lender of covenants
required to be performed by the Lender under the Asset Purchase Agreement
relating to such matters and for matters relating thereto for which the Lender
has provided the Co-Borrowers indemnification under the Asset Purchase
Agreement. Other than any liability incident to such litigation or
proceedings and except as set forth in Schedule 7.9,
the Obligors have no material guarantee obligations (other than the guaranty
agreement executed by the Guarantor in connection with this Agreement),
contingent liabilities, liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not fully-reflected or fully reserved for in the most
recent audited financial statements delivered pursuant to Section 8.8(a) or
fully-reflected or fully reserved for in the most recent quarterly financial
statements delivered pursuant to Section 8.8(d)
(provided that such financial statements do not reflect such guaranty
obligations, contingent liabilities, liabilities for taxes or long-term leases,
or forward or long-term commitments that were incurred after the date of such
financial statements).
7.10 Event of
Default. As of the Closing Date, no Event of Default or
Default exists or would result from the incurrence by the Obligors of any of the
Obligations hereunder or under any of the other Loan Document, and the Obligors
are not in default (without regard to grace or cure periods) under any other
contract or agreement to which it is a party, which default could reasonably be
expected to have a Material Adverse Effect, except for defaults relating to
agreements relating to the Acquired Business that were required to be disclosed
pursuant to the Asset Purchase Agreement by the Lender but were not, the breach
by the Lender of covenants required to be performed by the Lender under the
Asset Purchase Agreement relating to such agreements and for matters relating
thereto for which the Lender has provided the Co-Borrowers indemnification under
the Asset Purchase Agreement.
7.11 Adverse
Circumstances. Except for matters relating to the Acquired
Business that were required to be disclosed pursuant to the Asset Purchase
Agreement by the Lender but were not, the breach by the Lender of covenants
required to be performed by the Lender under the Asset Purchase Agreement
relating to such matters and for matters relating thereto for which the Lender
has provided the Co-
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Borrowers
indemnification under the Asset Purchase Agreement, as of the Closing Date, no
condition, circumstance, event, agreement, document, instrument, restriction,
litigation, or proceeding (or threatened litigation or proceeding or basis
therefor) exists which (a) could reasonably be expected to have a Material
Adverse Effect, or (b) would constitute an Event of Default or
Default.
7.12 Environmental Laws and
Hazardous Substances.
(a) No
Obligor has generated, used, stored, treated, transported, manufactured,
handled, produced, or disposed of any Hazardous Substances, on or off any of the
premises of the Obligors (whether or not owned by it) in any manner which at any
time violates in any material respect any Environmental Law or any license,
permit, certificate, approval, or similar authorization thereunder.
(b) Each
Obligor will comply in all material respects with all Environmental Laws and
will obtain all licenses, permits certificates, approvals and similar
authorizations thereunder.
(c) As of the
Closing Date, except as described in this Section 7.12,
there has been no investigation, proceeding, complaint, order, directive, claim,
citation or notice by any Governmental Authority or any other Person, nor is any
pending or, except as described in this Section 7.12,
to the best of the Obligors' knowledge, threatened in writing against any of the
Obligors.
(d) The
Obligors shall immediately notify the Lender upon becoming aware of any
investigation, proceeding, complaint, order, directive, claim, citation or
notice of the kind described in the foregoing clause (c),
and shall take prompt and appropriate actions to respond thereto, with respect
to any material non-compliance with, or material violation of, the requirements
of any Environmental Law by any Obligor or the release, spill, or discharge,
threatened or actual, of any Hazardous Substances or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Substances or any other environmental, health or
safety matter, which materially adversely affects any Obligor or their business,
operations or assets or any properties at which any Obligor has transported,
stored or disposed of any Hazardous Substances.
(e) As of the
Closing Date, except as described in this Section 7.12,
no Obligor has any material liability, contingent or otherwise, in connection
with a release, spill or discharge, threatened or actual, of any Hazardous
Substances or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous
Substances.
7.13 Solvency,
etc. As of the date hereof, and immediately prior to and after
giving effect to the Term Loan hereunder and the consummation of the
Acquisition, (a) the fair value of each Obligor's assets is greater than
the amount of its liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated as required
under the Section 548 of the Bankruptcy Code, (b) the present fair
saleable value of each Obligor's assets is not less than the amount that will be
required to pay the probable liability on its debts as they become absolute and
matured, (c) each Obligor is able to realize upon its assets and pay its
debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business, (d) each
Obligor does not intend to, and does not believe that it will, incur debts or
liabilities beyond its ability to pay as such debts and liabilities mature, and
(e) each Obligor is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which its property would
constitute unreasonably small capital.
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7.14 ERISA
Obligations. All Employee Plans of the Obligors meet the
minimum funding standards of Section 302 of ERISA and 412 of the Internal
Revenue Code where applicable, and each such Employee Plan that is intended to
be qualified within the meaning of Section 401 of the Internal Revenue Code
of 1986 is qualified. No withdrawal liability has been incurred under
any such Employee Plans and no "Reportable Event" or "Prohibited Transaction"
(as such terms are defined in ERISA), has occurred with respect to any such
Employee Plans, unless approved by the appropriate governmental
agencies. Each Obligor has paid and discharged when due all material
obligations and liabilities arising under ERISA of a character which if unpaid
or unperformed would reasonably be expected to result in the imposition of a
Lien against any of its properties or assets.
7.15 Labor
Relations. Except as could not reasonably be expected to have
a Material Adverse Effect, (a) there are no strikes, lockouts or other
labor disputes against any Obligor or, to the knowledge of the Obligors,
threatened, (b) hours worked by and payment made to employees of each
Obligor has not been in violation of the Fair Labor Standards Act or any other
applicable law, and (c) no unfair labor practice complaint is pending
against any Obligor or, to the knowledge of the Obligors, threatened before any
Governmental Authority.
7.16 Security
Interest. This Agreement creates a valid security interest in
favor of the Lender in the Collateral and, when properly perfected by filing in
the appropriate jurisdictions, or by possession or Control of such Collateral by
the Lender or delivery of such Collateral to the Lender, shall constitute a
valid, perfected, first-priority (subject to Permitted Liens) security interest
in such Collateral.
7.17 Lending
Relationship. The relationship hereby created between the
Obligors and the Lender is and has been conducted on an open and arm's length
basis in which no fiduciary relationship exists, and the Obligors have not
relied and are not relying on any such fiduciary relationship in executing this
Agreement and in consummating the Term Loan.
7.18 Business
Loan. The Term Loan, including interest rate, fees and charges
as contemplated hereby, (a) is a business loan and is not for any personal,
xxxxxxxxxxx or consumer use, (b) is an exempted transaction under the Truth
In Lending Act, 12 U.S.C. 1601 et seq., as amended from
time to time, and (c) does not, and shall not, violate the provisions of
any consumer credit laws or the usury laws of any state which may have
jurisdiction over this transaction, the Obligors or any property securing the
Term Loan.
7.19 Taxes. Each
Obligor has timely filed all tax returns and reports required by law to have
been filed by it and has paid all taxes, governmental charges and assessments
due and payable with respect to such returns, except any such taxes or charges
which are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books, are insured against or bonded over to the reasonable
satisfaction of the Lender and the contesting of such payment does not create a
Lien on the Collateral which is not a Permitted Lien. There is no
controversy or objection pending, or to the knowledge of any Obligor, threatened
in writing in respect of any tax returns of the Obligors. Each
Obligor has made adequate reserves on its books and records in accordance with
GAAP for all taxes that have accrued but which are not yet due and
payable.
7.20 Compliance with Regulation
U. No portion of the proceeds of the Term Loan shall be used
by the Co-Borrowers, or any Affiliate of the Co-Borrowers, including the
Guarantor, either directly or indirectly, for the purpose of purchasing or
carrying any margin stock, within the meaning of Regulation U as adopted by the
Board of Governors of the Federal Reserve System or any successor
thereto.
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7.21 Governmental
Regulation. The Obligors and their Subsidiaries are not, or
after giving effect to any loan, will not be, subject to regulation under
Federal Power Act, the ICC Termination Act of 1995, or the Investment Company
Act of 1940 or to any federal or state statute or regulation limiting its
ability to incur indebtedness for borrowed money.
7.22 Deposit
Accounts. As of the Closing Date, all Deposit Accounts and
operating bank accounts of the Co-Borrowers and their Subsidiaries are
maintained with the financial institutions identified on Schedule
7.22 attached hereto.
7.23 Place of
Business. As of the Closing Date, the principal places of
business of each Obligor and the office were each Obligor maintains its books
and records are set forth in the preamble to this Agreement, and the locations
of all Collateral, if other than at such principal place of business of
Co-Borrowers, are as set forth on Schedule
7.23 attached hereto and made a part hereof, and the Co-Borrowers shall
promptly notify the Lender of any change in such locations. The
Co-Borrowers will not remove or permit the Collateral to be removed from such
locations without the prior written consent of the Lender, other than
(a) in connection with a Permitted Asset Disposition or (b) Inventory
that is in transit or stored and held in facilities with respect to which the
Lender is in possession of a Collateral Access Agreement if and to the extent
required under this Agreement.
7.24 Complete
Information. This Agreement and all financial statements,
schedules, certificates, confirmations, agreements, contracts, and other
materials and information heretofore or contemporaneously herewith furnished in
writing by the Obligors to the Lender for purposes of, or in connection with,
this Agreement and the Term Loan is, and all written information hereafter
furnished by or on behalf of the Obligors to the Lender pursuant hereto or in
connection herewith will be, true and accurate in every material respect on the
date as of which such information is dated or certified.
7.25 Acquisition
Documents. As of the Closing Date, no Obligor is in default in
the performance or compliance with any provisions thereof. As of the
Closing Date, the provisions of the Acquisition Documents binding upon the
Obligors comply in all material respects with all applicable laws, and upon the
financing of a portion of the purchase price of the Acquisition as contemplated
hereby, the Acquisition will be consummated on the part of the Obligors in all
material respects in accordance with the terms of the Acquisition Documents and
in compliance on the part of the Obligors with all applicable
laws. As of the Closing Date, the Acquisition Documents are in full
force and effect against the Obligors and have not been terminated, rescinded,
or withdrawn by any Obligor.
7.26 Ownership of Necessary
Assets. Except as set forth in Schedule 7.26
and except for except for matters relating to the title to assets acquired in
the Acquisition that were required to be disclosed pursuant to the Asset
Purchase Agreement by the Lender but were not, the breach by the Lender of
covenants required to be performed by the Lender under the Asset Purchase
Agreement relating to the title to assets acquired in the Acquisition and for
matters relating thereto for which the Lender has provided the Co-Borrowers
indemnification under the Asset Purchase Agreement, immediately after giving
effect to the Acquisition, the Co-Borrowers will be the sole owners of or have
other rights in all properties and assets necessary to conduct the businesses
engaged in by the Acquired Business prior to the Acquisition and businesses
reasonably related thereto.
7.27 Custodial
Accounts. The Co-Borrowers have, in all material respects,
properly administered all Custodial Accounts and other accounts for which the
Co-Borrowers served as fiduciary with respect to the Acquired Business,
including accounts for which they serve as a trustees, agents, custodians,
personal agents, guardians, conservators or investment advisors with respect to
the Acquired Business, in accordance with all material terms of the governing
documents and applicable state and federal law and regulation and common
law. No Co-Borrower nor any of its directors, officers
or
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employees
has committed any material breach of trust with respect to any Custodial
Account, and the accountings for each such Custodial Account are true and
correct in all material respects and accurately reflect the assets of such
Custodial Account in all material respects.
7.28 Compliance with
Laws. Each Obligor has complied, and caused each Subsidiary to
comply, in all respects, including the conduct of its business and operations
and the use of their properties and assets, with all applicable laws, rules,
regulations, decrees, orders, judgments, licenses, and permits, except where
failure to comply could not reasonably be expected to have a Material Adverse
Effect.
7.29 Insurance. The
Obligors maintain the insurance coverages set forth on Schedule
7.29 hereto as of the Closing Date.
Section
8. AFFIRMATIVE
COVENANTS.
8.1 Compliance with Lender
Regulatory Requirements; Increased Costs. If the Lender shall
reasonably determine that any Regulatory Change, or compliance by the Lender or
any Person controlling the Lender with any request or directive (whether or not
having the force of law) of any Governmental Authority, central bank, or
comparable agency has or would have the effect of reducing the rate of return on
the Lender's or such controlling Person's capital as a consequence of the
Lender's obligations hereunder to a level below that which the Lender or such
controlling Person could have achieved but for such Regulatory Change or
compliance (taking into consideration the Lender's or such controlling Person's
policies with respect to capital adequacy) by an amount deemed by the Lender or
such controlling Person to be material or would otherwise reduce the amount of
any sum received or receivable by the Lender under this Agreement or under any
Note with respect thereto, then from time to time, upon demand by the Lender
(which demand shall be accompanied by a statement setting forth the basis for
such demand and a calculation of the amount thereof in reasonable detail), the
Co-Borrowers shall pay directly to the Lender or such controlling Person such
additional amount as will compensate the Lender for such increased cost or such
reduction, so long as such amounts have accrued on or after the day which is one
hundred eighty days (180) days prior to the date on which the Lender first made
demand therefor.
8.2 Obligor
Existence. Each Obligor shall at all times (a) preserve
and maintain its existence and good standing in the jurisdiction of its
organization, (b) preserve and maintain its qualification to do business
and good standing in each jurisdiction where the nature of its business makes
such qualification necessary (other than such jurisdictions in which the failure
to be qualified or in good standing could not reasonably be expected to have a
Material Adverse Effect), and (c) continue as a going concern in the
business which the Obligor is presently conducting. If a Co-Borrower
does not have an Organizational Identification Number and later obtains one,
such Co-Borrower shall promptly notify the Lender of such Organizational
Identification Number.
8.3 Compliance with
Laws. Each Obligor agrees that the Term Loan shall finance a
portion of the purchase price for the Acquisition as contemplated hereby, and
each Obligor shall comply, and shall cause each Subsidiary to comply, in all
respects, including the conduct of its business and operations and the use of
their properties and assets, with all applicable laws, rules, regulations,
decrees, orders, judgments, licenses, and permits, except where failure to
comply could not reasonably be expected to have a Material Adverse Effect and
except for compliance matters that were required to be disclosed pursuant to the
Asset Purchase Agreement by the Lender but were not, the breach by the Lender of
covenants required to be performed by the Lender under the Asset Purchase
Agreement relating to such compliance matters and for matters relating thereto
for which the Lender has provided the Co-Borrowers indemnification under the
Asset Purchase Agreement. In addition, and without limiting the
foregoing sentence, the Obligors shall (a) ensure, and cause each
Subsidiary to ensure, that no Person who owns a controlling interest in or
otherwise controls any Obligors or any Subsidiary is or shall be listed on
the
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Specially
Designated Nationals and Blocked Person List or other similar lists maintained
by the Office of Foreign Assets Control ("OFAC"),
the Department of the Treasury or included in any Executive Orders, (b) not
use or permit the use of the proceeds of the Term Loan to violate any of the
foreign asset control regulations of OFAC or any enabling statute or Executive
Order relating thereto, and (c) comply, and cause each Subsidiary to
comply, with all applicable Lender Secrecy Act ("BSA")
laws and regulations, as amended.
8.4 Payment of Taxes and
Liabilities. Each Obligor shall pay, and cause each of their
respective Subsidiaries to pay, and discharge, prior to delinquency and before
penalties accrue thereon, all property and other taxes, and all governmental
charges or levies against it or any of the Collateral, as well as claims of any
kind which, if unpaid, could become a Lien (other than a Permitted Lien) on any
of its property; provided that the foregoing shall not require the Obligors or
any of their respective Subsidiaries to pay any such tax or charge so long as it
shall contest the validity thereof in good faith by appropriate proceedings and
shall set aside on its books adequate reserves with respect thereto in
accordance with GAAP and, in the case of a claim which could become a Lien on
any of the Collateral, such contest proceedings stay the foreclosure of such
Lien or the sale of any portion of the Collateral to satisfy such
claim.
8.5 Maintain
Property. Each Obligor shall at all times maintain, preserve
and keep its plant, properties and Equipment, including any Collateral, in good
repair, working order and condition, normal wear and tear excepted, and shall
from time to time make all needful and proper repairs, renewals, replacements,
and additions thereto so that at all times the efficiency thereof shall be
reasonably preserved and maintained. The Obligors shall permit the
Lender to examine and inspect such plant, properties and Equipment, including
any Collateral, at all times during business hours and upon prior notice to the
Obligor if no Default or Event of Default exists and without notice if a Default
or Event of Default exists.
8.6 Maintain
Insurance. The Obligors shall at all times maintain, and cause
each of their respective Subsidiaries to maintain, with the insurance companies
described on Schedule
7.29 or with such other insurance companies reasonably acceptable to the
Lender, casualty insurance coverage and such other insurance coverage as may be
required by any law or governmental regulation or court decree or order
applicable to it (including, without limitation, flood insurance coverage
concerning each parcel of real property owned by the Obligors or their
respective Subsidiaries, if required by the Flood Disaster Protection Act of
1973), and such other insurance, to such extent and against such hazards and
liabilities, including employers', public and professional liability risks, as
is customarily maintained by companies similarly situated, and shall have
insured amounts no less than, the insurance coverage described on Schedule
7.29. The Obligors shall furnish to the Lender a certificate
setting forth in reasonable detail the nature and extent of all insurance
maintained by the Obligors, which certificate shall be reasonably acceptable to
the Lender. The Obligors shall cause each issuer of an insurance
policy to provide the Lender with an endorsement (a) showing the Lender as
lender's loss payee and mortgagee with respect to each policy of property or
casualty insurance and naming the Lender as an additional insured with respect
to each policy of liability insurance; and (b) providing that thirty (30)
days' notice will be given to the Lender prior to any cancellation of, material
reduction or change in coverage provided by or other material modification to
such policy. Upon request, the Obligors shall execute and deliver to
the Lender a collateral assignment, in form and substance satisfactory to the
Lender, of each business interruption insurance policy maintained by the
Obligors.
In the
event the Obligors either fail to provide the Lender with evidence of the
insurance coverage required by this Section or at any time hereafter shall fail
to obtain or maintain any of the policies of insurance required above, or to pay
any premium in whole or in part relating thereto, then the Lender, without
waiving or releasing any obligation or default by the Obligors hereunder, may
upon providing the Co-Borrowers with three days prior notice (but shall be under
no obligation to so act), obtain and
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maintain
such policies of insurance and pay such premiums and take any other action with
respect thereto, which the Lender deems reasonable. This insurance
coverage (i) may, but need not, protect the Obligors' interests in such
property, including the Collateral, and (ii) may not pay any claim made by,
or against, the Obligors in connection with such property, including the
Collateral. The Obligors may later cancel any such insurance
purchased by the Lender, but only after providing the Lender with evidence that
the Obligors has obtained the insurance coverage required by this
Section. If the Lender purchases insurance for the Collateral, the
Obligors will be responsible for the costs of that insurance, including interest
and any other charges that may be imposed with the placement of the insurance,
until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the principal
amount of the Term Loan owing hereunder. The costs of the insurance
may be more than the cost of the insurance the Obligors may be able to obtain on
their own.
8.7 ERISA Liabilities; Employee
Plans. Each Obligor shall (a) keep in full force and
effect any and all Employee Plans which are presently in existence or may, from
time to time, come into existence under ERISA, and not withdraw from or
terminate any such Employee Plans, unless such withdrawal or termination can be
effected or such Employee Plans can be terminated without material liability to
the Obligors; (b) make contributions to all of such Employee Plans in a
timely manner and in a sufficient amount to comply with the standards of ERISA,
where applicable; including the minimum funding standards of ERISA;
(c) comply with all material requirements of ERISA which relate to such
Employee Plans; (d) promptly notify the Lender upon receipt by the Obligors
of any notice concerning the imposition of any withdrawal liability or of the
institution of any proceeding or other action which may result in the
termination of any such Employee Plans that are defined benefit pension plans or
the appointment of a trustee to administer any Employee Plans; (e) promptly
advise the Lender of the occurrence of any "Reportable Event" or "Prohibited
Transaction" (as such terms are defined in ERISA), with respect to any such
Employee Plans; and (f) amend any Employee Plan that is intended to be
qualified within the meaning of Section 401 of the Internal Revenue Code of
1986 to the extent necessary to keep the Employee Plan qualified, and to cause
the Employee Plan to be administered and operated in a manner that does not
cause the Employee Plan to lose its qualified status.
8.8 Financial
Statements. The Obligors shall at all times after the Closing
Date maintain a standard and modern system of accounting, on the accrual basis
of accounting and in all respects in accordance with GAAP, and shall furnish to
the Lender or its authorized representatives the following information regarding
the business affairs, operations and financial condition of the
Obligors:
(a) promptly
when available, and in any event, within ninety (90) days (or one hundred twenty
days (120) if an Obligor request and the Lender consents, which consent will not
be unreasonably withheld by the Lender) after the close of each fiscal year
commencing with the fiscal year ending December 31, 2008, a copy of the
annual audited financial statements of each Obligor and its Subsidiaries,
including a balance sheet, statement of income and retained earnings, statement
of cash flows for the fiscal year then ended and such other information
(including nonfinancial information) as the Lender may reasonably request, in
reasonable detail, prepared and certified without adverse reference to going
concern value and without qualification by an independent auditor of recognized
standing, selected by the Obligor and reasonably acceptable to the Lender, it
being agreed that Radachi and Company, shall be deemed acceptable to the Lender;
provided, however, the annual financial statement for the Guarantor are only
required to be reviewed by such independent auditor and not
audited;
(b) promptly
when available, and in any event, within ninety (90) days after the close of
each fiscal year commencing with the fiscal year ending December 31, 2008,
a copy of the annual reports of each Obligor which include evidence that they
are in good standing with the
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State of
their organization and qualified to do business in each other jurisdiction where
such Obligor conducts business;
(c) promptly
when available, and in any event, within thirty (30) days after it is filed with
the Internal Revenue Service, copies of the filed federal income tax return for
each Obligor; and
(d) promptly
when available, and in any event, within thirty (30) days following the end of
(i) each month commencing with the month ending June 30, 2009 and
until the month ending June 30, 2010, and (ii) each fiscal quarter
commencing with the fiscal quarter ending June 30, 2010 and each fiscal
quarter thereafter, a copy of the financial statements of each Obligor and its
Subsidiaries regarding such month or quarter, as applicable, including a balance
sheet, statement of income and retained earnings, statement of cash flows for
the month or quarter, as applicable, then ended and such other information
(including nonfinancial information) as the Lender may request, in reasonable
detail, prepared and certified as true and correct by the applicable Obligor's
treasurer, controller, or chief financial officer.
No change
with respect to such accounting principles shall be made by any Obligor without
giving prior notification to the Lender. The Obligors represent and
warrant to the Lender that the financial statements delivered to the Lender at
or prior to the execution and delivery of this Agreement and to be delivered at
all times thereafter accurately reflect and will accurately reflect in all
material respects the financial condition of the Obligors. Upon
reasonable advance written notice to the Obligors, the Lender shall have the
right at all times during business hours to inspect the books and records of the
Obligors and make extracts therefrom.
8.9 Supplemental Financial
Statements. The Obligors shall, immediately upon receipt
thereof, provide to the Lender copies of interim and supplemental reports if
any, submitted to the Obligors by independent accountants in connection with any
interim audit or review of the books of the Obligors.
8.10 Covenant Compliance
Certificate. The Co-Borrowers shall, contemporaneously with
the furnishing of the financial statements pursuant to Sections 8.8(a)
and (d), deliver to the Lender a duly completed Compliance Certificate,
dated the date of such financial statements and certified as true and correct by
an appropriate officer of the Co-Borrowers, containing a computation of each of
the financial covenants set forth in Section
10 and stating that the Co-Borrowers have not become aware of any
Event of Default or Default that has occurred and is continuing or, if there is
any such Event of Default or Default, describing it and the steps, if any, being
taken to cure it.
8.11 Field
Audits. Upon reasonable advance written notice to the
Co-Borrowers, the Co-Borrowers shall permit the Lender to inspect the Inventory,
other tangible assets, and/or other business operations of the Co-Borrowers and
each Subsidiary and to inspect, audit, check and make copies of, and extracts
from, the books, records, computer data, computer programs, journals, orders,
receipts, correspondence and other data relating to Inventory, Accounts and any
other Collateral, the results of which must be satisfactory to the Lender in the
Lender's reasonable discretion. All such inspections or audits by the
Lender shall be at the Co-Borrowers' sole expense, provided, however, that so
long as no Event of Default or Default exists, the Co-Borrowers shall not be
required to reimburse the Lender for inspections, appraisals, or audits more
frequently than once each fiscal year.
8.12 Collateral
Records. The Co-Borrowers shall keep full and accurate books
and records relating to the Collateral in accordance with its customary practice
and, at the request of the Lender, shall xxxx such books and records to indicate
the Lender's Lien in the Collateral, including placing a legend, in
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form and
content acceptable to the Lender, on all Chattel Paper created by the
Co-Borrowers indicating that the Lender has a Lien in such Chattel
Paper.
8.13 Intellectual
Property. Each Co-Borrower shall maintain, preserve and renew
all Intellectual Property necessary for the conduct of its business as and where
the same is currently located as heretofore or as hereafter conducted by
it.
8.14 Notice of
Proceedings. Each Obligor, promptly upon becoming aware, shall
give written notice to the Lender of any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by such Obligor to the
Lender which has been instituted or, to the knowledge of such Obligor, is
threatened against the Obligors or any of their Subsidiaries or to which any of
their respective properties is subject which might reasonably be expected to
have a Material Adverse Effect.
8.15 Notice of Event of Default
or Material Adverse Effect. The Obligors shall, promptly after
the commencement thereof, give notice to the Lender in writing of the occurrence
of any Event of Default or any Default, or the occurrence of any condition or
event having a Material Adverse Effect.
8.16 Notice of any Regulatory
Action. The Obligors shall, promptly after the commencement
thereof, give notice to the Lender in writing of the occurrence of any
Regulatory Action.
8.17 Environmental
Matters.
(a) If any
material release or threatened material release or other material disposal of
Hazardous Substances shall occur or shall have occurred on any real property or
any other assets of any Obligor or any of their respective Subsidiaries, the
Obligors shall, or shall cause the applicable Subsidiary to, cause the prompt
containment and removal of such Hazardous Substances and the remediation of such
real property or other assets as necessary to comply in all material respects
with all Environmental Laws and to preserve the value of such real property or
other assets.
(b) Without
limiting the generality of the foregoing, each Obligor shall, and shall cause
each of its Subsidiary to, comply with any federal or state judicial or
administrative order requiring the performance at any real property of such
Obligor or any Subsidiary of activities in response to the release or threatened
release of a Hazardous Substance.
(c) To the
extent that the transportation of Hazardous Substances is permitted by this
Agreement, each Obligor shall, and shall cause its Subsidiaries to, dispose of
such Hazardous Substances, or of any other wastes, only at licensed disposal
facilities operating in material compliance with Environmental
Laws.
8.18 Further
Assurances. The Co-Borrowers shall take, and cause each
Subsidiary to take, such actions as are necessary or as the Lender may
reasonably request from time to time to ensure that the Obligations under the
Loan Documents are secured by substantially all of the assets of the
Co-Borrowers and their Subsidiaries (including upon the acquisition or creation
thereof, any Subsidiary acquired or created after the Closing Date), in each
case as the Lender may determine, including (a) the execution and delivery
of security agreements, pledge agreements, mortgages, deeds of trust, financing
statements and other documents, and the filing or recording of any of the
foregoing, and (b) the delivery of certificated securities and other
collateral with respect to which perfection is obtained by
possession.
8.19 Proceeds from Amended and
Restated Subaccounting Agreement. Each Obligor hereby
covenants and agrees that any fees paid to an Obligor under, or other proceeds
received under the terms
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of, the
Amended and Restated Subaccounting Agreement shall be deposited in a Deposit
Account set forth on Schedule
6.10, or in a Deposit Account where a control agreement is in place among
such financial institution, the Obligors and the Lender, in form and substance
satisfactory to the Lender, pursuant to which the Lender has a perfected
security interest in such Deposit Account and all proceeds thereof by
control.
Section
9. NEGATIVE
COVENANTS.
9.1 Encumbrances. Except
as set forth in Schedule
9.1, the Co-Borrowers shall not, either directly or indirectly, create,
assume, incur or suffer or permit to exist any Lien or charge of any kind or
character upon any asset of either Co-Borrower, whether owned at the date hereof
or hereafter acquired, except for Permitted Liens.
9.2 Transfer; Merger;
Sales. Each Co-Borrower shall not, and shall not permit any
Subsidiary to, whether in one transaction or a series of related transactions:
(a) sell, transfer, convey or lease all or any substantial part of its
assets or Capital Securities (including the sale of Capital Securities of any
Subsidiary), (b) be a party to any merger or consolidation, or purchase or
otherwise acquire all or substantially all of the assets of a Person or the
division or branch of a Person or purchase or acquire a controlling interest in
the Capital Securities of a Person, except for (i) any such merger,
consolidation, sale, transfer, conveyance, lease, or assignment of or by any
Wholly-Owned Subsidiary into a Co-Borrower or into any other domestic
Wholly-Owned Subsidiary; (ii) any such purchase or other acquisition by a
Co-Borrower or any domestic Wholly-Owned Subsidiary of the assets or equity
interests of any Wholly-Owned Subsidiary; or (iii) any purchase or other
acquisition of all or substantially all of the assets of a Person or the
division or branch of a Person or the purchase or acquisition of a controlling
interest in the Capital Securities of a Person by a Co-Borrower or a Subsidiary
of a Co-Borrower, where the following conditions are satisfied (any such
acquisition, herein a "Permitted
Acquisition"):
(A) No
Default nor any Event of Default exists or would result therefrom;
(B) the
business or assets acquired are for use in the businesses engaged in by
Co-Borrowers on the Closing Date, or the Person acquired is engaged in, or
reasonably related or complementary to, businesses engaged in by the
Co-Borrowers (including financial services);
(C) the
Co-Borrowers shall provide to Lender, prior to the consummation of the
acquisition, the projected balance sheet and income and cash flow statements for
each Obligor for the period through the Maturity Date, prepared on a basis
acceptable to the Lender, giving pro forma effect to acquisition and any Debt
incurred in connection therewith and a certificate signed by a financial officer
of the Obligors certifying: (1) that the Obligors shall be in compliance
with the covenants contained in Section 10
on a pro forma basis for the four (4) fiscal quarter period then most recently
ending and on a projected annual basis for the shorter of either the next five
(5) years or until the Maturity Date (assuming, for purposes of such projections
through the Maturity Date, the consummation of the acquisition in question, that
the incurrence or assumption of any Debt in connection therewith occurred on the
first day of such period and to the extent such Debt bears interest at a
floating rate, using the rate in effect at the time of calculation for the
entire period of calculation), (2) that after giving effect to the
acquisition in question, all representations and warranties contained in the
Loan Documents will be true and correct on and as of the date of the closing of
the acquisition with the same force and effect as if such representations and
warranties had been made on
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and as of
such date, except to the extent that such representations and warranties relate
specifically to another date and except for exceptions to such representations
and warranties that have resulted from events not prohibited hereunder after the
Closing Date which do not result in a Material Adverse Effect; (3) that no
Default nor any Event of Default exists or will result from the acquisition; and
(4) to the Co-Borrower's calculation of its compliance with clause (D)
of this Section;
(D) the
aggregate consideration to be paid by the Co-Borrowers (including Debt assumed
or issued in connection therewith, the amount thereof to be calculated in
accordance with GAAP, and the fair market value of any non-cash consideration)
in connection with all acquisitions after the Closing Date is less than
$250,000,000 in the aggregate;
(E) in the
case of the acquisition of any Person, the governing body of such Person has
approved such acquisition;
(F) reasonably
prior to such acquisition, Lender shall have received complete executed or
conformed copies of each material document, instrument and agreement to be
executed in connection with such acquisition;
(G) reasonably
prior to such acquisition, Lender shall have received an acquisition summary
with respect to the Person and/or business or division to be acquired, such
summary to include a reasonably detailed description thereof (including
financial information) and operating results (including financial statements for
the most recent twelve (12) month period for which they are available and as
otherwise available), the terms and conditions, including economic terms, of the
proposed acquisition; and
(H) the Debt
incurred in connection with the acquisition may not exceed in amount 90% of the
purchase price of such acquisition and may only be secured by Permitted Liens of
the type described in clause (n) of the definition thereof.
9.3 Issuance of Capital
Securities. The Co-Borrowers shall not, and shall not permit
any Subsidiary to, issue any Capital Securities other than (a) in
connection with the Acquisition or with Investments in the Co-Borrowers by
certain of the management of the Co-Borrowers, in each case as identified on
Schedule 9.3,
(b) any issuance of shares of the Co-Borrowers' common Capital Securities
pursuant to any employee or director option program, benefit plan or
compensation program, (c) any issuance of Capital Securities by a
Subsidiary to the Co-Borrowers or another Wholly-Owned Subsidiary in accordance
with Section 9.4,
or (d) any other issuance of Capital Securities that would not result in
the occurrence of a Change in Control.
9.4 Distributions. No
Co-Borrower shall: (a) make any distribution or dividend on its Capital
Securities (other than stock dividends), whether in cash or otherwise, to any of
its equityholders; (b) purchase or redeem any of its equity interests or
any warrants, options, or other rights in respect thereof; (c) pay any
management fees or similar fees to any of its equityholders or any Affiliate
thereof except for management fees disclosed on Schedule
9.5; (d) pay or prepay interest on, principal of, premium, if any,
redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund
or any other payment in respect of any subordinated Debt; or (e) set aside
funds for any of the foregoing; except a Co-Borrower may consummate any of the
transactions described in clauses (a), (b), (c) or (e) of this section
if:
(i) No
Default nor any Event of Default exists or would result therefrom;
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(ii) the
Co-Borrowers shall provide to Lender, prior to the consummation of the
applicable transaction, the projected balance sheet and income and cash flow
statements for each Obligor for the period through the Maturity Date, prepared
on a basis acceptable to the Lender, giving pro forma effect to transaction and
any Debt incurred in connection therewith and a certificate signed by a
financial officer of the Obligors certifying: (1) that the Obligors shall
be in compliance with the covenants contained in Section 10
on a pro forma basis for the four (4) fiscal quarter period then most recently
ending and on a projected annual basis for the shorter of either the next five
(5) years or until the Maturity Date (assuming, for purposes of such projections
through the Maturity Date, the consummation of the transaction in question
occurred on the first day of such period, that the incurrence or assumption of
any Debt in connection therewith occurred on the first day of such period and to
the extent such Debt bears interest at a floating rate, using the rate in effect
at the time of calculation for the entire period of calculation), (2) that
after giving effect to the transaction in question, all representations and
warranties contained in the Loan Documents will be true and correct on and as of
the date of the transaction with the same force and effect as if such
representations and warranties had been made on and as of such date, except to
the extent that such representations and warranties relate specifically to
another date and except for exceptions to such representations and warranties
that have resulted from events not prohibited hereunder after the Closing Date
which do not result in a Material Adverse Effect; and (3) that no Default
nor any Event of Default exists or will result from the
distribution;
provided, each Co-Borrower shall be permitted to
make periodic distributions to its shareholder or member, as applicable, in an
amount not to exceed in any fiscal year an amount equal to the federal, state
and local income tax obligations arising with respect to the taxable income
allocable to such Co-Borrower for such year calculated based on the highest
effective federal, state and local income tax rate applicable to a shareholder
or member, as applicable.
9.5 Transactions with
Affiliates. The Co-Borrowers shall not, directly or
indirectly, enter into or permit to exist any transaction with any of their
Affiliates or with any director, officer or employee of the Co-Borrowers other
than transactions in the ordinary course of, and pursuant to the reasonable
requirements of, the business of the Co-Borrowers and upon fair and reasonable
terms which are no less favorable to the Co-Borrowers than would be obtained in
a comparable arm's length transaction with a Person that is not an Affiliate of
the Co-Borrowers; provided, however, that nothing in this Section 9.5
shall prohibit the Co-Borrowers from engaging in any of the following
transactions: (a) the transactions evidenced or governed by the
Acquisition Documents; (b) expense reimbursements paid or payable by the
Co-Borrowers in connection with the transactions contemplated by the Acquisition
Documents; (c) the making or dividends or distributions, or the making of
other payments, to the extent permitted by Section 9.4;
(d) the performance of the Co-Borrowers' obligations under any employment
agreement, collective bargaining agreement, employee benefit plan, related trust
agreement, or any other similar arrangement heretofore or hereafter entered into
in the ordinary course of business; (e) the payment of compensation to
employees, officers, directors, or consultants in the ordinary course of
business and expense reimbursements paid or payable by the Co-Borrowers;
(f) the maintenance of benefit programs or arrangements for employees,
officers, or directors, including vacation plans, health and life insurance
plans, deferred compensation plans, retirement or savings plans, and similar
plans, in each case in the ordinary course of business and to the extent not
otherwise prohibited by this Agreement or (g) transactions described on Schedule
9.5, including any renewals thereof provided such renewals have
substantially the same terms.
9.6 Unconditional Purchase
Obligations. The Co-Borrowers shall not, and shall not permit
any Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other
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property
or services if such contract requires that payment be made by it regardless of
whether delivery is ever made of such materials, supplies or other property or
services, other than contracts assumed in connection with the
Acquisition.
9.7 Inconsistent
Agreements. The Co-Borrowers shall not, and shall not permit
any Subsidiary to, enter into any agreement containing any provision which would
(a) be violated or breached by any borrowing by the Co-Borrowers hereunder
or by the performance by the Co-Borrowers or any Subsidiary of any of their
Obligations hereunder or under any other Loan Document, (b) prohibit the
Co-Borrowers or any Subsidiary from granting to the Lender a Lien on any of
their assets or (c) create or permit to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (i) pay
dividends or make other distributions to the Co-Borrowers or any other
Subsidiary, or pay any Debt owed to the Co-Borrowers or any other Subsidiary,
(ii) make loans or advances to the Co-Borrowers or any other Subsidiary,
or(iii) transfer any of their assets or properties to the Co-Borrowers or
any other Subsidiary, other than (A) customary restrictions and conditions
contained in agreements relating to the sale of all or a substantial part of the
assets of any Subsidiary pending such sale, provided that such restrictions and
conditions apply only to the Subsidiary to be sold and such sale is permitted
hereunder,(B) restrictions or conditions imposed by any agreement relating
to purchase money Debt, Capital Leases and other secured Debt permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Debt, (C) customary provisions in leases and other
contracts restricting the assignment thereof, and (D) agreements assumed in
connection with the Acquisition.
9.8 Business Activities; Change
of Legal Status and Organizational Documents. The Co-Borrowers
shall not, and shall not permit any Subsidiary to, (a) engage in any line
of business other than the businesses engaged in by them or by the Acquired
Business prior to the Acquisition and businesses reasonably related or
complementary to, such lines of business (including financial services),
(b) change their name, their Organizational Identification Numbers, if they
have one, their type of organization, their jurisdiction of organization or
other legal structure, or (c) permit their charter, bylaws or other
organizational documents to be amended or modified in any way which could
reasonably be expected to materially adversely affect the interests of the
Lender.
9.9 New
Subsidiaries. The Co-Borrowers shall not acquire, form,
create, or establish any Subsidiaries after the Closing Date (other than
Subsidiaries acquired, formed, created or established to consummate a Permitted
Acquisition ("Unrestricted
Subsidiaries")), without first taking, and causing each such new
Subsidiary to take, such actions as are necessary or as the Lender may
reasonably request to ensure that the Obligations under the Loan Documents are
additionally secured by substantially all of the assets of such new Subsidiary
that is or would be a domestic Subsidiary (as well as all Capital Securities of
each such new Subsidiary that is or would be a domestic Subsidiary and
sixty-five percent (65%) of all Capital Securities of each such new
Subsidiary that is or would be a direct foreign Subsidiary) and guaranteed by
each such new Subsidiary that is or would be a domestic Subsidiary, in each case
as the Lender may determine, including (a) the execution and delivery of
guaranties, security agreements, pledge agreements, mortgages, deeds of trust,
financing statements, and other documents, and the filing or recording of any of
the foregoing, and (b) the delivery of certificated securities and other
Collateral with respect to which perfection is obtained by
possession.
Section
10. FINANCIAL
COVENANTS.
10.1 Cash Flow Coverage
Ratio. As of the end of each fiscal quarter (commencing with
the fiscal quarter ending September 30, 2009), the Obligors shall maintain
a ratio of (i) to (ii) of not less than 1.25 to 1.00 where:
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(i) equals
the sum of the following determined for the Obligors on a combined basis (but
excluding any Unrestricted Subsidiary) for the Calculation Period:
(A) EBITDA minus (B) the sum of the following (1) all income
taxes paid in cash, plus (2) all Capital Expenditures which are not
financed with Funded Debt, plus (3) all payments made under the permissions
of Section 9.4,
plus (C) non-recurring overhead costs incurred within one year of the
Closing Date not to exceed $300,000 in the aggregate for all periods of
calculation, and
(ii) equals
the sum of the following determined for the Obligors on a combined basis (but
excluding any Unrestricted Subsidiary) for the Calculation Period:
(i) Interest Expense, plus (ii) scheduled payments of principal of
Funded Debt (including the Term Loan).
The term "Calculation Period" means with
respect to any fiscal quarter, the four fiscal quarters then ended; provided,
that as of the end of each of the fiscal quarters ending September 30,
2009, December 31, 2009 and March 31, 2010, the foregoing components of the
ratios shall be calculated on an annualized basis with respect to the period
beginning as of the Closing Date and ending on the last day of such fiscal
quarter (the "Measurement
Period") by dividing the
applicable component of the ratios for the applicable Measurement Period by the
number of days during such Measurement Period and multiplying such amount by
365.
10.2 Minimum
Liquidity. The Obligors will at all times maintain, on a
combined basis (but excluding the Unrestricted Subsidiaries), Liquidity of not
less than $2,500,000.
10.3 Leverage
Ratio. As of the end of each fiscal quarter (commencing with
the fiscal quarter ending June 30, 2009), the Co-Borrowers shall maintain, on a
combined basis (but excluding the Unrestricted Subsidiaries), a ratio of Funded
Debt to Net Worth of not more than 3.50 to 1.00.
10.4 Regulatory Capital
Requirements. ETC will at all times maintain capital at least
equal to two (2) times the then applicable Regulatory Capital
Requirement.
Section
11. EVENTS OF
DEFAULT.
The
Co-Borrowers, without notice or demand of any kind, shall be in default under
this Agreement upon the occurrence and during the continuance of any of the
following events (each an "Event of
Default").
11.1 Nonpayment of
Obligations. The principal amount of, and any interest
accruing on, the Term Loan (or any Note evidencing the Term Loan) is not paid
when due. Any other amount due and owing in respect of any of the
Obligations, whether by its terms or as otherwise provided herein, is not paid
within five (5) days after notice from the Lender.
11.2 Misrepresentation. Any
warranty, representation, certificate or statement of any Obligor in this
Agreement, the other Loan Documents or any other agreement with the Lender shall
be false in any material respect when made, or if any financial data or any
other information now or hereafter furnished to the Lender by or on behalf of
any Obligor shall prove to have been false or inaccurate in any material respect
when made.
11.3 Nonperformance. Any
failure to perform or default in the performance of any covenant, condition or
agreement contained in this Agreement or any other Loan Document and, if capable
of being cured, such failure to perform or default in performance continues for
a period of thirty (30) days after the Obligors receives notice from any source
of such failure to perform or default in performance.
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11.4 Default under Other
Debt. Any default by any Obligor or any Unrestricted
Subsidiary in the payment of any Debt aggregating $1,000,000 or more in amount
(or any Debt secured by a Lien incurred under the permissions of clause (n) of
the definition of Permitted Liens encumbering assets acquired in a Permitted
Acquisition) or in the performance of any other term, condition or covenant
contained in any agreement (including any capital or operating lease or any
agreement in connection with the deferred purchase price of property) under
which any such obligation is created, in either case beyond any period of grace,
the effect of which default is to cause or permit the holder of such obligation
(or the other party to such other agreement) to cause such obligation to become
due prior to its stated maturity or terminate such other agreement.
11.5 Other Material
Obligations. Any default in the payment when due, or in the
performance or observance of, any material obligation exceeding $1,000,000 in amount of, or
condition agreed to by, any Obligor or any Unrestricted Subsidiary with respect
to any material purchase or lease of goods or services where such default,
singly or in the aggregate with all other such defaults, could reasonably be
expected to have a Material Adverse Effect.
11.6 Bankruptcy, Insolvency,
etc. Any Obligor or any Unrestricted Subsidiary becomes
insolvent or generally fails to pay, or admits in writing its inability or
refusal to pay, debts as they become due; or any Obligor or any Unrestricted
Subsidiary applies for, consents to, or acquiesces in the appointment of a
trustee, receiver or other custodian for such Obligor or Unrestricted Subsidiary
or any property thereof, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for any Obligor or any
Unrestricted Subsidiary for a substantial part of the property of any thereof
and is not discharged within sixty (60) days; or any bankruptcy, reorganization,
debt arrangement, or other case or proceeding under any bankruptcy or insolvency
law, or any dissolution or liquidation proceeding, is commenced in respect of
any Obligor or any Unrestricted Subsidiary, and if such case or proceeding is
not commenced by such Obligor or Unrestricted Subsidiary, it is consented to or
acquiesced in by such Obligor or Unrestricted Subsidiary, or remains undismissed
for sixty (60) days; or any Obligor or any Unrestricted Subsidiary takes any
action to authorize, or in furtherance of, any of the foregoing.
11.7 Judgments. The
entry of (a) any final judgment, decree, levy, attachment, garnishment, or
order, or the filing of any Lien (other than Permitted Liens), against any
Obligor which involves $1,000,000 or more in aggregate amount and which is not
covered by insurance (subject to customary deductibles), or (b) any final
judgment, decree, levy, attachment, garnishment, or order in respect of any
Taxes, or the filing of any Lien for any Taxes against any Obligor, and, with
respect to any judgment or other process set forth in clauses (a)
or (b) above,
such judgment or other process shall not have been, within sixty (60) days from
the entry thereof, (i) bonded over to the satisfaction of the Lender and
appealed, (ii) vacated, (iii) satisfied, or
(iv) discharged.
11.8 Change in
Control. The occurrence of any Change in Control.
11.9 Collateral
Impairment. The entry of any judgment, decree, levy,
attachment, garnishment or order, or the filing of any Lien (other than
Permitted Liens), against any material portion of the Collateral or any
collateral under a separate security agreement securing any of the Obligations
and such judgment or other process shall not have been, within sixty (60) days
from the entry thereof, (a) bonded over to the satisfaction of the Lender
and appealed, (b) vacated, or (c) discharged.
11.10 Material Adverse
Effect. The occurrence after the Closing Date of any
development, condition or event which has a Material Adverse Effect; provided,
however, that an Event of Default under this Section
11.10 shall not include effects resulting from (a) changes, effects,
events, occurrences or circumstances that generally affect the United States or
the global economy or the industry in which a
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Co-Borrower
operates, except to the extent such changes, effects, events, occurrences or
circumstances have a direct impact on such Co-Borrower, or (b) any outbreak or
material escalation of hostilities in which the United States is involved or any
act of terrorism within the United States or directed against its facilities or
citizens wherever located, except for such hostilities or acts of terrorism
impacting such Co-Borrower directly.
11.11 Subaccounting
Agreements. The breach or default in performance by an Obligor
under any Subaccounting Agreement, which breach or default in performance
continues for a period of twenty-one (21) days after such Obligor receives
notice from any counterparty to such Subaccounting Agreement of such breach or
default in performance.
11.12 Regulatory
Action. The occurrence of any Regulatory Action.
Section
12. REMEDIES.
Upon the
occurrence and during the continuation of an Event of Default, the Lender shall
have all rights, powers and remedies set forth in the Loan Documents, in any
written agreement or instrument (other than this Agreement or the Loan
Documents) relating to any of the Obligations or any security therefor, as a
secured party under the UCC or as otherwise provided at law or in
equity. Without limiting the generality of the foregoing, the Lender
may, at its option upon the occurrence of an Event of Default, declare all
Obligations to be immediately due and payable, provided, however, that upon the
occurrence of an Event of Default under Section 11.6,
all Obligations shall be automatically due and payable, all without demand,
notice, notice of intent to accelerate, notice of acceleration or further action
of any kind required on the part of the Lender. Each Obligor hereby
waives any and all presentment, demand, notice of dishonor, notice of intent to
accelerate, notice of acceleration, protest, and all other notices and demands
in connection with the enforcement of Lender's rights under the Loan Documents,
and hereby consents to, and waives notice of release, with or without
consideration, of any Collateral, in each case except as may be otherwise
expressly provided herein or in the other Loan Documents. In addition
to the foregoing, upon the occurrence and during the continuation of an Event of
Default and in each case to the extent permitted by applicable law:
12.1 Possession and Assembly of
Collateral. The Lender may, without notice, demand, or legal
process of any kind, take possession of any or all of the Collateral (in
addition to Collateral of which the Lender already has possession), wherever it
may be found, and for that purpose may pursue the same wherever it may be found,
and may at any time enter into any of the Co-Borrowers' premises where any of
the Collateral may be or is supposed to be, and search for, take possession of,
remove, keep, and store any of the Collateral until the same shall be sold or
otherwise disposed of and the Lender shall have the right to store and conduct a
sale of the same in any of the Co-Borrowers' premises without cost to the
Lender. At the Lender's request, the Co-Borrowers will, at the
Co-Borrowers' sole expense, assemble the Collateral and make it available to the
Lender at a place or places to be designated by the Lender which is reasonably
convenient to the Lender and the Co-Borrowers.
12.2 Sale of
Collateral. The Lender may sell any or all of the Collateral
at public or private sale, upon such commercially reasonable and otherwise
lawful terms and conditions as the Lender may deem proper, and the Lender may
purchase any or all of the Collateral at any such sale. The
Co-Borrowers acknowledge that the Lender may be unable to effect a public sale
of all or any portion of the Collateral because of certain legal and/or
practical restrictions and provisions which may be applicable to the Collateral
and, therefore, may be compelled to resort to one or more private sales to a
restricted group of offerees and purchasers. The Co-Borrowers consent
to any such commercially reasonable and otherwise lawful private sale so made
even though at places and upon terms less favorable than if the Collateral were
sold at public sale. The Lender shall have no obligation to clean-up
or otherwise prepare
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the
Collateral for sale. The Lender may apply the net proceeds, after
deducting all costs, expenses, attorneys' and paralegals' fees incurred or paid
at any time in the collection, protection and sale of the Collateral and the
Obligations, to the payment of the Note and/or any of the other Obligations,
returning the excess proceeds, if any, to the Co-Borrowers. The
Co-Borrowers shall remain liable for any amount remaining unpaid after such
application, with interest on the Obligations at the Default
Rate. Any notification of intended disposition of the Collateral
required by law shall be conclusively deemed reasonably and properly given if
given by the Lender at least ten (10) calendar days before the date of such
disposition. The Co-Borrowers hereby confirm, approve and ratify all
acts and deeds of the Lender relating to the foregoing, and each part thereof,
and expressly waives any and all claims of any nature, kind or description which
it has or may hereafter have against the Lender or its representatives, by
reason of taking, selling or collecting any portion of the
Collateral. The Co-Borrowers consents to releases of the Collateral
at any time (including prior to default) and to sales of the Collateral in
groups, parcels or portions, or as an entirety, as the Lender shall deem
appropriate. The Co-Borrowers expressly absolve the Lender from any
loss or decline in market value of any Collateral by reason of delay in the
enforcement or assertion or nonenforcement of any rights or remedies under this
Agreement. Notwithstanding the foregoing, in connection with any
sale, the Lender shall maintain in effect, reaffirm or renew, as the case may
be, any noncompetition, confidentiality and similar covenants contained in the
Acquisition Documents for the benefit of the buyer thereunder, in order to
support the value of the Collateral for a third-party purchaser; provided, however, that if the
Lender re-acquires the assets acquired in the Acquisition under the terms of
this Agreement as a result of the exercise of the rights and remedies hereunder,
any such noncompetition, confidentiality or similar covenants contained in the
Acquisition Documents shall no longer be binding on the Lender.
12.3 Standards for Exercising
Remedies. To the extent that applicable law imposes duties on
the Lender to exercise remedies in a commercially reasonable manner, the
Co-Borrowers acknowledge and agrees that it is not commercially unreasonable for
the Lender (a) to fail to incur expenses reasonably deemed significant by
the Lender to prepare Collateral for disposition or otherwise to complete raw
material or work-in-process into finished goods or other finished products for
disposition, (b) to fail to obtain third party consents for access to
Collateral to be disposed of, or to obtain or, if not required by other law, to
fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (c) to fail to
exercise collection remedies against Account Debtors or other Persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (d) to exercise collection remedies against Account
Debtors and other Persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact
other Persons, whether or not in the same business as the Co-Borrowers, for
expressions of interest in acquiring all or any portion of the Collateral, (g)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature,
(h) to dispose of Collateral by utilizing internet sites that provide for
the auction of assets of the types included in the Collateral or that have the
reasonable capability of doing so, or that match buyers and sellers of assets,
(i) to dispose of assets in wholesale rather than retail markets,
(j) to disclaim disposition warranties, including any warranties of title,
(k) to purchase insurance or credit enhancements to insure the Lender
against risks of loss, collection or disposition of Collateral or to provide to
the Lender a guaranteed return from the collection or disposition of Collateral,
or (l) to the extent reasonably deemed appropriate by the Lender, to obtain
the services of other brokers, investment bankers, consultants and other
professionals to assist the Lender in the collection or disposition of any of
the Collateral. The Co-Borrowers acknowledge that the purpose of this
section is to provide non-exhaustive indications of what actions or omissions by
the Lender would not be commercially unreasonable in the Lender's exercise of
remedies against the Collateral and that other actions or omissions by the
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this section. Without limitation upon the
foregoing, nothing contained in this section shall be
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construed
to grant any rights to the Co-Borrowers or to impose any duties on the Lender
that would not have been granted or imposed by this Agreement or by applicable
law in the absence of this section.
12.4 UCC and Offset
Rights. The Lender may exercise, from time to time, any and
all rights and remedies available to it under the UCC or under any other
applicable law in addition to, and not in lieu of, any rights and remedies
expressly granted in this Agreement or in any other agreements between any
Obligor and the Lender, and may, without demand or notice of any kind,
appropriate and apply toward the payment of such of the Obligations, whether
matured or unmatured, including costs of collection and attorneys' and
paralegals' fees, and in such order of application as the Lender may, from time
to time, elect, any indebtedness of the Lender to any Obligor, however created
or arising, including balances, credits, deposits, accounts, or moneys of such
Obligor in the possession, control or custody of, or in transit to the
Lender. The Obligors hereby waive the benefit of any law that would
otherwise restrict or limit the Lender in the exercise of its right, which is
hereby acknowledged, to appropriate at any time hereafter any such indebtedness
owing from the Lender to any Obligor.
12.5 Additional
Remedies. The Lender shall have the right and power
to:
(a) instruct
the Co-Borrowers, at their own expense, to notify any parties obligated on any
of the Collateral, including any Account Debtors, to make payment directly to
the Lender of any amounts due or to become due thereunder, or the Lender may
directly notify such obligors of the security interest of the Lender, and/or of
the assignment to the Lender of the Collateral and direct such obligors to make
payment to the Lender of any amounts due or to become due with respect thereto,
and thereafter, collect any such amounts due on the Collateral directly from
such Persons obligated thereon;
(b) enforce
collection of any of the Collateral, including any Accounts, by suit or
otherwise, or make any compromise or settlement with respect to any of the
Collateral, or surrender, release or exchange all or any part thereof, or
compromise, extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder;
(c) take
possession or control of any proceeds and products of any of the Collateral,
including the proceeds of insurance thereon;
(d) extend,
renew or modify for one or more periods (whether or not longer than the original
period) the Note, any other of the Obligations, any obligation of any nature of
any other obligor with respect to the Note or any of the
Obligations;
(e) grant
releases, compromises or indulgences with respect to the Note, any of the
Obligations, any extension or renewal of any of the Obligations, any security
therefor, or to any other obligor with respect to the Note or any of the
Obligations;
(f) transfer
the whole or any part of securities which may constitute Collateral into the
name of the Lender or the Lender's nominee without disclosing, if the Lender so
desires, that such securities so transferred are subject to the security
interest of the Lender, and any corporation, association, or any of the managers
or trustees of any trust issuing any of such securities, or any transfer agent,
shall not be bound to inquire, in the event that the Lender or such nominee
makes any further transfer of such securities, or any portion thereof, as to
whether the Lender or such nominee has the right to make such further transfer,
and shall not be liable for transferring the same;
(g) vote the
Collateral;
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(h) make an
election with respect to the Collateral under Section 1111 of the
Bankruptcy Code or take action under Section 364 or any other section of
the Bankruptcy Code; provided, however, that any such action of the Lender as
set forth herein shall not, in any manner whatsoever, impair or affect the
liability of the Co-Borrowers hereunder, nor prejudice, waive, nor be construed
to impair, affect, prejudice or waive the Lender's rights and remedies at law,
in equity or by statute, nor release, discharge, nor be construed to release or
discharge, the Co-Borrowers, any guarantor or other Person liable to the Lender
for the Obligations; and
(i) at any
time, and from time to time, accept additions to, releases, reductions,
exchanges or substitution of the Collateral, without in any way altering,
impairing, diminishing or affecting the provisions of this Agreement, the Loan
Documents, or any of the other Obligations, or the Lender's rights hereunder,
under any Note or under any of the other Obligations.
The
Co-Borrowers hereby ratify and confirm whatever the Lender may lawfully do with
respect to the Collateral and agrees that the Lender shall not be liable for any
error of judgment or mistakes of fact or law with respect to actions taken in
connection with the Collateral.
12.6 Attorney-in-Fact. The
Co-Borrowers hereby irrevocably make, constitute, and appoint the Lender (and
any officer of the Lender or any Person designated by the Lender for that
purpose) as the Co-Borrowers' true and lawful proxy and attorney-in-fact (and
agent-in-fact) in the Co-Borrowers' name, place and stead, with full power of
substitution, to (a) take such actions as are permitted in this Agreement,
(b) execute such financing statements and other documents and to do such other
acts as the Lender may require to perfect and preserve the Lender's security
interest in, and to enforce such interests in, the Collateral, and
(c) carry out any remedy provided for in this Agreement, including
endorsing the Co-Borrowers' name to checks, drafts, instruments, and other items
of payment, and proceeds of the Collateral, executing change of address forms
with the postmaster of the United States Post Office serving the address of the
Co-Borrowers, changing the address of the Co-Borrowers to that of the Lender,
opening all envelopes addressed to the Co-Borrowers, and applying any payments
contained therein to the Obligations. The Co-Borrowers hereby
acknowledge that the constitution and appointment of such proxy and
attorney-in-fact are coupled with an interest and are
irrevocable. The Co-Borrowers hereby ratify and confirm all that such
attorney-in-fact may do or cause to be done by virtue of any provision of this
Agreement.
12.7 No
Marshaling. The Lender shall not be required to marshal any
present or future collateral security (including this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order. To the extent that it lawfully may, the
Co-Borrowers hereby agree that it will not invoke any law relating to the
marshaling of collateral which might cause delay in or impede the enforcement of
the Lender's rights under this Agreement or under any other instrument creating
or evidencing any of the Obligations or under which any of the Obligations is
outstanding or by which any of the Obligations is secured or payment thereof is
otherwise assured, and, to the extent that it lawfully may, the Co-Borrowers
hereby irrevocably waives the benefits of all such laws.
12.8 Application of
Proceeds. The Lender will promptly, and in any event within
three (3) Business Days after receipt of cash or solvent credits from collection
of items of payment, proceeds of Collateral or any other source, apply the whole
or any part thereof against the Obligations secured hereby. The
Lender shall further have the exclusive right to determine how, when and what
application of such payments and such credits shall be made on the Obligations,
and such determination shall be conclusive upon the Co-Borrowers. Any
proceeds of any disposition by the Lender of all or any part of the Collateral
may be first applied by the Lender to the payment of expenses incurred by the
Lender in
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connection
with the Collateral, including attorneys' fees and legal expenses as provided
for in Section
13 hereof.
12.9 No
Waiver. No Event of Default shall be waived by the Lender
except in writing. No failure or delay on the part of the Lender in
exercising any right, power or remedy hereunder shall operate as a waiver of the
exercise of the same or any other right at any other time; nor shall any single
or partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder. There shall be no obligation on the part of the Lender to
exercise any remedy available to the Lender in any order. The
remedies provided for herein are cumulative and not exclusive of any remedies
provided at law or in equity. The Co-Borrowers agree that in the
event that the Co-Borrowers fail to perform, observe or discharge any of their
Obligations or liabilities under this Agreement or any other agreements with the
Lender, no remedy of law will provide adequate relief to the Lender, and further
agrees that the Lender shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual
damages.
12.10 Existence of Event of
Default. For avoidance of doubt, the Lender and the Obligors
agree that the rights and remedies of the Lender referred to in this Section
12 shall be in effect only upon the occurrence and during the
continuation of an Event of Default.
Section
13. MISCELLANEOUS.
13.1 Obligations
Absolute. None of the following shall affect the Obligations
of the Obligors to the Lender under this Agreement or the Lender's rights with
respect to the Collateral:
(a) acceptance
or retention by the Lender of other property or any interest in property as
security for the Obligations;
(b) release
by the Lender of all or any part of the Collateral or of any party liable with
respect to the Obligations;
(c) release,
extension, renewal, modification or substitution by the Lender of the Note, or
any note evidencing any of the Obligations, or the compromise of the liability
of any guarantor of the Obligations; or
(d) failure
of the Lender to resort to any other security or to pursue the Obligors or any
other obligor liable for any of the Obligations before resorting to remedies
against the Collateral.
13.2 ENTIRE
AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(A) ARE VALID, BINDING, AND ENFORCEABLE AGAINST THE OBLIGORS AND THE LENDER
IN ACCORDANCE WITH THEIR RESPECTIVE PROVISIONS AND NO CONDITIONS EXIST AS TO
THEIR LEGAL EFFECTIVENESS; (B) CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE
PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF; AND (C) ARE
THE FINAL EXPRESSION OF THE INTENTIONS OF THE OBLIGORS AND THE
LENDER. NO PROMISES, EITHER EXPRESSED OR IMPLIED, EXIST BETWEEN THE
OBLIGORS AND THE LENDER, UNLESS CONTAINED HEREIN OR THEREIN. THIS
AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, SUPERSEDES ALL NEGOTIATIONS,
REPRESENTATIONS, WARRANTIES, COMMITMENTS, TERM SHEETS, DISCUSSIONS,
NEGOTIATIONS, OFFERS OR CONTRACTS (OF ANY KIND OR NATURE, WHETHER ORAL OR
WRITTEN) PRIOR TO OR CONTEMPORANEOUS WITH THE EXECUTION HEREOF WITH RESPECT TO
ANY MATTER, DIRECTLY OR INDIRECTLY RELATED TO THE
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TERMS OF
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS ARE THE RESULT OF NEGOTIATIONS AMONG THE LENDER, THE
OBLIGORS AND THE OTHER PARTIES THERETO, AND HAVE BEEN REVIEWED (OR HAVE HAD THE
OPPORTUNITY TO BE REVIEWED) BY COUNSEL TO ALL SUCH PARTIES, AND ARE THE PRODUCTS
OF ALL PARTIES. ACCORDINGLY, THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL NOT BE CONSTRUED MORE STRICTLY AGAINST THE LENDER MERELY BECAUSE
OF THE LENDER'S INVOLVEMENT IN THEIR PREPARATION. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES HERETO.
13.3 Amendments;
Waivers. No delay on the part of the Lender in the exercise of
any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by the Lender of any right, power or remedy preclude
other or further exercise thereof, or the exercise of any other right, power or
remedy. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement or the other Loan Documents shall in
any event be effective unless the same shall be in writing and acknowledged by
the Lender, and then any such amendment, modification, waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
13.4 FORUM SELECTION AND CONSENT
TO JURISDICTION. ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF TEXAS
LOCATED IN WACO, TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF TEXAS; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE THE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION
IN ANY OTHER JURISDICTION. EACH OBLIGOR HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND
OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH OBLIGOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
TEXAS. EACH OBLIGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
13.5 WAIVER OF JURY
TRIAL. THE LENDER AND THE OBLIGORS, AFTER CONSULTING OR HAVING
HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY
OTHER LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT, OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY
COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE LENDER AND ANY OBLIGOR ARE
ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO THE
OBLIGORS.
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13.6 Assignability. The
Lender or any Eligible Assignee may at any time assign to any Eligible Assignee
the Lender's rights in this Agreement, the other Loan Documents, the
Obligations, or any part thereof (provided that any assignment of any part of
the Term Loan in principal amount of the Term Loan) and transfer the Lender's
rights in any or all of the Collateral, and the Lender thereafter shall be
relieved from all liability with respect to such Collateral. In
addition, the Lender may at any time sell one or more participations in the Term
Loan to any Person. The Lender may not otherwise assign its rights in
this Agreement, the Obligations, or any part thereof. The Obligors
may not sell or assign this Agreement, or any other agreement with the Lender or
any portion thereof, either voluntarily or by operation of law, without the
prior written consent of the Lender. Any assignment in violation of
this Section
13.6 shall be void. This Agreement shall be binding upon the
Lender and the Obligors and their respective legal representatives and
successors. All references herein to the Obligors shall be deemed to
include any successors, whether immediate or remote. In the case of a
joint venture or partnership, the term "Obligors" shall be deemed to include all
joint venturers or partners thereof, who shall be jointly and severally liable
hereunder.
13.7 Confirmations. The
Obligors and the Lender agree from time to time, upon written request received
by it from the other, to confirm to the other in writing the aggregate unpaid
principal amount of the Term Loan then outstanding under such Note.
13.8 Confidentiality. The
Lender agrees to use commercially reasonable efforts (equivalent to the efforts
the Lender applies to maintain the confidentiality of its own confidential
information) to maintain as confidential all information provided to it by or on
behalf of the Obligors, including all information designated as confidential,
except that the Lender may disclose such information as permitted under the
Asset Purchase Agreement or (a) to Persons employed or engaged by the
Lender in evaluating, approving, structuring or administering the Term Loan;
(b) to any assignee or participant or potential assignee or participant
that has agreed to comply with the covenant contained in this Section 13.8
(and any such assignee or participant or potential assignee or participant may
disclose such information to Persons employed or engaged by them as described in
clause (a)
above); (c) as required or requested by any federal or state
regulatory authority or examiner, or any insurance industry association, or as
reasonably believed by the Lender to be compelled by any court decree, subpoena
or legal or administrative order or process; (d) as, on the advice of the
Lender's counsel, is required by law; (e) in connection with the exercise
of any right or remedy under the Loan Documents or in connection with any
litigation to which the Lender is a party; (f) to any nationally recognized
rating agency that requires access to information about the Lender's investment
portfolio in connection with ratings issued with respect to the Lender;
(g) to any Affiliate of the Lender who may provide Lender products to the
Obligors or any Subsidiary, or (h) that ceases to be confidential through
no fault of the Lender.
13.9 Binding
Effect. This Agreement shall become effective upon execution
by the Obligors and the Lender. If this Agreement is not dated or
contains any blanks when executed by the Obligors, the Lender is hereby
authorized, without notice to the Obligors, to date this Agreement as of the
date when it was executed by the Obligors, and to complete any such blanks
according to the terms upon which this Agreement is executed.
13.10 Governing
Law. This Agreement, the Loan Documents, and the Note shall be
delivered and accepted in and shall be deemed to be contracts made under and
governed by the internal laws of the State of Texas (but giving effect to
federal laws applicable to national banks) applicable to contracts made and to
be performed entirely within such state, without regard to conflict of laws
principles.
13.11 Enforceability. Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by, unenforceable or invalid under any
jurisdiction, such provision shall as to such
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jurisdiction,
be severable and be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other
jurisdiction.
13.12 Survival of Obligors
Representations. All covenants, agreements, representations,
and warranties made by the Obligors herein shall, notwithstanding any
investigation by the Lender, be deemed material and relied upon by the Lender
and shall survive the making and execution of this Agreement and the Loan
Documents and the issuance of the Note, and shall be deemed to be continuing
representations and warranties until such time as the Obligors have fulfilled
all of their Obligations to the Lender, and the Lender has been indefeasibly
paid in full in cash. The Lender, in extending financial
accommodations to the Obligors, is expressly acting and relying on the aforesaid
representations and warranties.
13.13 Lender's Commitment To
Financing. This Agreement shall secure and govern the terms of
(a) any extensions or renewals of the Term Loan hereunder, and (b) any
replacement note executed by the Obligors and accepted by the Lender in its sole
and absolute discretion in substitution for any Note.
13.14 Time of
Essence. Time is of the essence in making payments of all
amounts due the Lender under this Agreement and in the performance and
observance by the Obligors of each covenant, agreement, provision and term of
this Agreement.
13.15 Counterparts; Facsimile
Signatures. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same
Agreement. Receipt of an executed signature page to this Agreement by
facsimile or other electronic transmission shall constitute effective delivery
thereof. Electronic records of executed Loan Documents maintained by
the Lender shall be deemed to be originals thereof.
13.16 Notices. Except
as otherwise provided herein, the Obligors waive all notices and demands in
connection with the enforcement of the Lender's rights hereunder. All
notices, requests, demands, and other communications provided for hereunder
shall be in writing and addressed as follows:
|
To
any Obligor:
|
c/o
Equity Trust Company
000
Xxxxx Xxxx
Xxxxxx,
Xxxx 00000
Attention: Xxxx
Xxxxxx
Telephone:(000)
000-0000, ext. 139
Facsimile:(000)
000-0000
E-mail: x.xxxxxx@xxxxxxxx.xxx
|
|
With
a copy to:
|
000
Xxxxx Xxxx
Xxxxxx,
Xxxx 00000
Attention:Xxxxxxx
Xxx
Telephone:(000)
000-0000, ext. 286
Facsimile:(000)
000-0000
E-mail: x.xxx@xxxxxxxx.xxx
|
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EMF_US 26692578v13
|
With
a copy to:
|
Xxxxx
& Xxxxxxxxx LLP
3200
National City Center
0000
Xxxx Xxxxx Xxxxxx
Xxxxxxxxx,
Xxxx 00000-0000
Attention:Xxxxxxx
X. Xxxxxxxx
Telephone:(000)
000-0000
Facsimile:(000)
000-0000
E-mail: xxxxxxxxx@xxxxxxxx.xxx
|
|
To
the Lender:
|
Sterling
Trust Company
000
00xx
Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Attention: Xxxx
X. Xxxxxxx, CFO
Telephone:(000)
000-0000
Facsimile:(000)
000-0000
E-mail: xxxxxxxx@xxxxxx.xxx
|
|
With
a copy to:
|
United
Western Bancorp
000
00xx
Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxxx X. XxXxxxxxx, COO
Telephone:(000)
000-0000
Facsimile:(000)
000-0000
E-mail: xxxxxxxxxx@xxxxxx.xxx
|
|
With
copy to:
|
Hunton
& Xxxxxxxx LLP
0000
Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000
Attention:
T. Xxxxx XxXxxxxxx, Esq.
Telephone:
000-000-0000
Facsimile:
000-000-0000
E-mail: xxxxxxxxxx@xxxxxx.xxx
|
or, as to
each party, at such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with the terms of
this subsection. All notices addressed as above shall be deemed to
have been properly given (a) if served in person, upon acceptance or
refusal of delivery; (b) if mailed by certified or registered mail, return
receipt requested, postage prepaid, or by recognized overnight courier, on the
date (i) that it shall be delivered to the address required by this
Agreement, (ii) that delivery shall have been refused at the address
required by this Agreement, (iii) as of which the postal or delivery
service shall have indicated such notice to be undeliverable at the address
required by this Agreement, unless the sending party has actual knowledge of a
different address as being the primary address of the addressee; and (c) if
sent by facsimile or e-mail, delivery receipt requested, upon receipt, as
confirmed by transmission confirmation or delivery receipt, respectively (and
shall be immediately followed by hard copy sent by certified or registered mail,
return receipt requested, postage prepaid, or by recognized overnight
courier). No notice to or demand on the Obligors in any case shall
entitle the Obligors to any other or further notice or demand in similar or
other circumstances.
13.17 Costs, Fees, and
Expenses. The Obligors shall pay or reimburse the Lender for
all reasonable out-of-pocket costs (including travel costs), fees and expenses
incurred by the Lender or for which the Lender becomes obligated in connection
with the collection of the Obligations, or enforcement
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of this
Agreement, the other Loan Documents and all other documents provided for herein
or delivered or to be delivered hereunder or in connection herewith (including
any amendment, supplement, or waiver to any Loan Document), or during any workout,
restructuring or negotiations in respect thereof, including reasonable
consultants' fees and attorneys' fees and time charges of counsel to the Lender
(provided, however, that if the Lender has assigned any but less than all of its
rights pursuant to Section 13.6
and there is then more than one lender, including the Lender, in respect to the
Term Loan, the aforementioned attorneys' fees and time charges of counsel to the
Lender payable or reimbursable by the Obligors shall be limited to those of a
single set of counsel to all such lenders, except to the extent that there
exists any conflict of interest, and then to those of only one set of conflicts
counsel); and all Non-Excluded Taxes and Other Taxes payable in connection with
this Agreement or the other Loan Documents. In furtherance of the
foregoing, the Obligors shall pay any and all stamp and other such taxes, filing
fees and other costs and expenses incurred after the Closing Date in connection
with this Agreement, any Note and the other Loan Documents, and agrees to save
and hold the Lender harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such costs
and expenses. That portion of the Obligations consisting of costs,
expenses or advances to be reimbursed by the Obligors to the Lender pursuant to
this Agreement or the other Loan Documents which are not paid on or prior to the
date hereof shall be payable by the Obligors to the Lender on
demand. If at any time or times hereafter the
Lender: (a) employs counsel for advice or other representation
(i) to represent the Lender in any litigation, contest, dispute, suit or
proceeding or to commence, defend, or intervene, or to take any other action in
or with respect to any litigation, contest, dispute, suit, or proceeding
(whether instituted by the Lender, the Obligors, or any other Person) in any way
or respect relating to this Agreement, the other Loan Documents or the Obligors'
business or affairs, or (ii) to enforce any rights of the Lender against
the Obligors or any other Person that may be obligated to the Lender by virtue
of this Agreement or the other Loan Documents; (b) takes any action to
protect, collect, sell, liquidate, or otherwise dispose of any of the
Collateral; and/or (c) attempts to or enforces any of the Lender's rights
or remedies under the Agreement or the other Loan Documents, the costs and
expenses incurred by the Lender in any manner or way with respect to the
foregoing, shall be part of the Obligations, payable by the Obligors to the
Lender on demand.
13.18 Indemnification. Each
Obligor, jointly and severally, agrees to defend (with counsel satisfactory to
the Lender), protect, indemnify, exonerate, and hold harmless each Indemnified
Party from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and distributions
of any kind or nature (including the disbursements and the reasonable fees of
counsel for each Indemnified Party thereto, which shall also include, without
limitation, reasonable attorneys' fees and time charges of attorneys who may be
employees of any Indemnified Party), which may be imposed on, incurred by, or
asserted against, any Indemnified Party (whether direct, indirect or
consequential and whether based on any federal, state, or local laws or
regulations, including securities laws, Environmental Laws, commercial laws, and
regulations, under common law or in equity, or based on contract or otherwise)
in any manner relating to or arising out of this Agreement or any of the Loan
Documents, or any act, event or transaction related or attendant thereto, the
enforcement of the Lender's rights and remedies under this Agreement, the Loan
Documents, any Note, or any other instruments and documents delivered hereunder
or in connection herewith; provided, however, that the Obligors shall not have
any obligations hereunder to any Indemnified Party with respect to matters
determined by a court of competent jurisdiction by final and nonappealable
judgment to have been caused by or resulting
directly from a breach of or inaccuracy in a representation or warranty of the
Lender under the Asset Purchase Agreement, a breach or non-performance by the
Lender of any covenant under the Asset Purchase Agreement or the willful
misconduct or gross negligence of such Indemnified Party or its
Affiliates. To the extent that the undertaking to indemnify set forth
in the preceding sentence may be unenforceable because it violates any law or
public policy, the Obligors shall satisfy such undertaking to the maximum extent
permitted by applicable law. Any liability, obligation, loss, damage,
penalty, cost or expense covered by this indemnity shall be paid to
each
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Indemnified
Party on demand, and failing prompt payment, together with interest thereon at
the Default Rate from the date incurred by each Indemnified Party until paid by
the Obligor, shall be added to the Obligations of the Obligors and be secured by
the Collateral. The provisions of this Section shall survive the
satisfaction and payment of the other Obligations and the termination of this
Agreement. WITHOUT LIMITATION OF THE FOREGOING, THE OBLIGORS AGREE
THAT THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH
RESPECT TO LOSSES, CLAIMS, DAMAGES, PENALTIES, LIABILITIES AND RELATED EXPENSES
(INCLUDING ALL EXPENSES OF LITIGATION OR PREPARATION THEREFOR), WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY
OTHER) INDEMNIFIED PARTY.
13.19 Revival and Reinstatement of
Obligations. If the incurrence or payment of the Obligations
by any Obligor or the transfer to the Lender of any property should for any
reason subsequently be declared to be void or voidable under any state or
federal law relating to creditors' rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences, or other
voidable or recoverable payments of money or transfers of property
(collectively, a "Voidable
Transfer"), and if the Lender is required to repay or restore, in whole
or in part, any such Voidable Transfer, or elects to do so upon the reasonable
advice of its counsel, then, as to any such Voidable Transfer, or the amount
thereof that the Lender is required or elects to repay or restore, and as to all
reasonable costs, expenses, and attorneys fees of the Lender, the Obligations
shall automatically shall be revived, reinstated, and restored and shall exist
as though such Voidable Transfer had never been made.
13.20 Customer Identification –
USA Patriot Act Notice. The Lender hereby notifies the
Obligors that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56, signed into law October 26, 2001) (the "Act"),
and the Lender's policies and practices, the Lender is required to obtain,
verify and record certain information and documentation that identifies the
Obligors, which information includes the name and address of the Obligors and
such other information that will allow the Lender to identify the Obligors in
accordance with the Act.
Section
14. NATURE AND EXTENT OF EACH
OBLIGOR'S LIABILITY.
14.1 Joint and Several
Liability. Each Obligor agrees that it is jointly and
severally liable for, and absolutely and unconditionally guarantees to the
Lender the prompt payment and performance of, all Obligations and all agreements
under the Loan Documents. Each Obligor agrees that its guaranty
obligations hereunder constitute a continuing guaranty of payment and
performance and not of collection, that such obligations shall not be discharged
until full payment of the Obligations, and that such obligations are absolute
and unconditional, irrespective of (a) the genuineness, validity,
regularity, enforceability, subordination or any future modification of, or
change in, any Obligations or Loan Document, or any other document, instrument
or agreement to which any Obligor is or may become a party or liable;
(b) the absence of any action to enforce this Agreement (including this
Section) or any other Loan Document, or any waiver, consent or indulgence of any
kind by the Lender with respect thereto; (c) the existence, value or
condition of, or failure to perfect a Lien or to preserve rights against, any
security or guaranty for the Obligations or any action, or the absence of any
action, by the Lender in respect thereof (including the release of any security
or guaranty); (d) the insolvency of any Obligor; (e) any election by
the Lender in any bankruptcy or similar proceeding for the application of
Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a
Lien by any other Obligor, as debtor-in-possession under Section 364 of the
Bankruptcy Code or otherwise; (g) the disallowance of any claims of the
Lender against any Obligor for the repayment of any Obligations under Section
502 of the Bankruptcy Code or otherwise; or (h) any other action or
circumstances that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, except full payment of all
Obligations.
LOAN AND
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EMF_US 26692578v13
14.2 Waivers.
(a) Each
Obligor expressly waives all rights that it may have now or in the future under
any statute, at common law, in equity or otherwise, to compel the Lender to
marshal assets or to proceed against any Obligor, other Person or security for
the payment or performance of any Obligations before, or as a condition to,
proceeding against such Obligor. Each Obligor waives all defenses
available to a surety, guarantor or accommodation co-obligor other than full
payment of all Obligations. It is agreed among each Obligor and the
Lender that the provisions of this Section 14
are of the essence of the transaction contemplated by the Loan Documents and
that, but for such provisions, the Lender would decline to make Term
Loan. Notwithstanding anything to the contrary in any Loan Document,
and except as set forth in Section
14.3, each Obligor expressly waives all rights at law or in equity to
subrogation, reimbursement, exoneration, contribution, indemnification or set
off, as well as all defenses available to a surety, guarantor or accommodation
co-obligor. Each Obligor acknowledges that its guaranty pursuant to
this Section is necessary to the conduct and promotion of its business, and can
be expected to benefit such business.
(b) The
Lender may, in its sole discretion, pursue such rights and remedies as they deem
appropriate, including realization upon Collateral by judicial foreclosure or
non-judicial sale or enforcement, without affecting any rights and remedies
under this Section
14. If, in taking any action in connection with the exercise
of any rights or remedies, the Lender shall forfeit any of its rights or
remedies, including its right to enter a deficiency judgment against any Obligor
or any other Person, whether because of any applicable laws pertaining to
"election of remedies" or otherwise, each Obligor consents to such action by the
Lender and waives any claim based upon such action, even if the action may
result in loss of any rights of subrogation that any Obligor might otherwise
have had but for such action. Any election of remedies that results
in denial or impairment of the right of the Lender to seek a deficiency judgment
against any Obligor shall not impair any other Obligor's obligation to pay the
full amount of the Obligations. Each Obligor waives all rights and
defenses arising out of an election of remedies, such as nonjudicial foreclosure
with respect to any security for the Obligations, even though that election of
remedies destroys such Obligor's rights of subrogation against any other
Person. The Lender may bid all or a portion of the Obligations at any
foreclosure or trustee's sale or at any private sale, and the amount of such bid
need not be paid by the Lender but shall be credited against the
Obligations. The amount of the successful bid at any such sale,
whether the Lender or any other Person is the successful bidder, shall be
conclusively deemed to be the fair market value of the Collateral, and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section
14, notwithstanding that any present or future law or court decision may
have the effect of reducing the amount of any deficiency claim to which the
Lender might otherwise be entitled but for such bidding at any such
sale.
14.3 Extent of Liability;
Contribution.
(a) Notwithstanding
anything herein to the contrary, each Obligor's liability under this Section 14
shall be limited to the greater of (i) all amounts for which such Obligor is
primarily liable, as described below, and (ii) such Obligor's Allocable
Amount.
(b) If any
Obligor makes a payment under this Section 14
of any Obligations (other than amounts for which such Obligor is primarily
liable) (a "Guarantor
Payment") that, taking into account all other Guarantor Payments
previously or concurrently made by any other Obligor, exceeds the amount that
such Obligor would otherwise have paid if each Obligor had paid the
LOAN AND
SECURITY AGREEMENT - Page 49
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EMF_US 26692578v13
aggregate
Obligations satisfied by such Guarantor Payments in the same proportion that
such Obligor's Allocable Amount bore to the total Allocable Amounts of all
Obligors, then such Obligor shall be entitled to receive contribution and
indemnification payments from, and to be reimbursed by, each other Obligor for
the amount of such excess, pro rata based upon their respective Allocable
Amounts in effect immediately prior to such Guarantor Payment. The
"Allocable
Amount" for any Obligor shall be the maximum amount that could then be
recovered from such Obligor under this Section 14
without rendering such payment voidable or avoidable under Section 548 of the
Bankruptcy Code or under any applicable state fraudulent transfer or conveyance
act, or similar statute or common law.
(c) Nothing
contained in this Section 14
shall limit the liability of any Obligor to pay the Term Loan made directly or
indirectly to that Obligor, and all accrued interest, fees, expenses and other
related Obligations with respect thereto, for which such Obligor shall be
primarily liable for all purposes hereunder.
14.4 Joint
Enterprise. Each Obligor has requested that the Lender make
the Term Loan available to the Obligors on a combined basis, in order to finance
the Obligors' business most efficiently and economically. The
Obligors' business is a mutual and collective enterprise, and the Obligors
believe that consolidation of the Term Loan will enhance the borrowing power of
each Obligor and ease the administration of their relationship with the Lender,
all to the mutual advantage of the Obligors. The Obligors acknowledge
and agree that the Lender's willingness to finance a portion of the purchase
price of the Acquisition as contemplated hereby and to administer the Collateral
on a combined basis, as set forth herein, is done solely as an accommodation to
the Obligors and at the Obligors' request.
14.5 Subordination. Each
Obligor hereby subordinates any claims, including any rights at law or in equity
to payment, subrogation, reimbursement, exoneration, contribution,
indemnification or set off, that it may have at any time against any other
Obligor, howsoever arising, to the full payment of all Obligations.
14.6 Maximum Interest
Rate.
(a) Limitation to Maximum Rate;
Recapture. No interest rate specified in any Loan Document
shall at any time exceed the Maximum Rate. If at any time the
interest rate (the "Contract
Rate") for any obligation under the Loan Documents shall exceed the
Maximum Rate, thereby causing the interest accruing on such obligation to be
limited to the Maximum Rate, then any subsequent reduction in the Contract Rate
for such obligation shall not reduce the rate of interest on such obligation
below the Maximum Rate until the aggregate amount of interest accrued on such
obligation equals the aggregate amount of interest which would have accrued on
such obligation if the Contract Rate for such obligation had at all times been
in effect. As used herein, the term "Maximum
Rate" means, at any time with respect to any Lender, the maximum rate of
nonusurious interest under applicable law that such Lender may charge
Borrower. The Maximum Rate shall be calculated in a manner that takes
into account any and all fees, payments, and other charges contracted for,
charged, or received in connection with the Loan Documents that constitute
interest under applicable law. Each change in any interest rate
provided for herein based upon the Maximum Rate resulting from a change in the
Maximum Rate shall take effect without notice to Borrower at the time of such
change in the Maximum Rate. For purposes of determining the Maximum
Rate under Texas law, the applicable rate ceiling shall be the weekly rate
ceiling described in, and computed in accordance with, Chapter 303 of the Texas
Finance Code.
(b) Cure
Provisions. No provision of any Loan Document shall require
the payment or the collection of interest in excess of the maximum amount
permitted by applicable law. If any excess of interest in such
respect is hereby provided for, or shall be adjudicated to be so provided, in
any Loan
LOAN AND
SECURITY AGREEMENT - Page 50
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EMF_US 26692578v13
Document
or otherwise in connection with this loan transaction, the provisions of this
Section shall govern and prevail and neither Borrower nor the sureties,
guarantors, successors, or assigns of Borrower shall be obligated to pay the
excess amount of such interest or any other excess sum paid for the use,
forbearance, or detention of sums loaned pursuant hereto. In the
event any Lender ever receives, collects, or applies as interest any such sum,
such amount which would be in excess of the maximum amount permitted by
applicable law shall be applied as a payment and reduction of the principal of
the obligations outstanding hereunder, and, if the principal of the obligations
outstanding hereunder has been paid in full, any remaining excess shall
forthwith be paid to the Borrower. In determining whether or not the
interest paid or payable exceeds the Maximum Rate, Borrower and each Lender
shall, to the extent permitted by applicable law, (a) characterize any
non-principal payment as an expense, fee, or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof, and
(c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the entire contemplated term of the
obligations outstanding hereunder so that interest for the entire term does not
exceed the Maximum Rate.
[SIGNATURE
PAGE FOLLOWS]
LOAN AND
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EMF_US 26692578v13
IN
WITNESS WHEREOF, the Co-Borrowers, the Guarantor and the Lender have executed
this Loan and Security Agreement as of the date first above
written.
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CO-BORROWERS:
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EQUITY
TRUST COMPANY
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By: /s/ Xxxxxxx
Xxxxxx
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Name:
Xxxxxxx Xxxxxx
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Title: CEO
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STERLING
ADMINISTRATIVE SERVICES, LLC
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By: /s/ Xxxxxxx
Xxx
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Name:
Xxxxxxx Xxx
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Title: CFO
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GUARANTOR:
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EQUITY
ADMINISTRATIVE SERVICES, INC.
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By: /s/ Xxxxxxx
Xxx
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Name:
Xxxxxxx Xxx
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Title: CFO
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LENDER:
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STERLING
TRUST COMPANY
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By:
/s/ Xxxx X.
Xxxxxxx
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Name: Xxxx
X. Xxxxxxx
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Title: Chairman
& CEO
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Signature
Page to Loan and Security Agreement
70352.000002 EMF_US 26692578v13
SCHEDULE
6.1
Commercial
Tort Claims
NONE.
Schedule
6.1 - 1
70352.000002 EMF_US 26692578v13
EXHIBIT
A
Form
of Note
Exhibit A
- Cover Page
70352.000002 EMF_US 26692578v13
PROMISSORY
NOTE
$46,049,830.06 June 27,
2009
FOR VALUE
RECEIVED, EQUITY TRUST COMPANY, a South Dakota trust company, and STERLING
ADMINISTRATIVE SERVICES, LLC, a Texas limited liability company (collectively,
the “Co-Borrowers”),
hereby promise to pay to the order of STERLING TRUST COMPANY, a Texas
corporation (the “Lender”) at its
offices at 000 00xx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxxxxx, in lawful money of the United States of America
and in immediately available funds, the principal amount of FORTY-SIX MILLION
FORTY-NINE THOUSAND EIGHT HUNDRED THIRTY AND 06/100 DOLLARS ($46,049,830.06) or
such lesser amount as shall equal the aggregate unpaid principal amount of the
Term Loan extended by the Lender to the Co-Borrower under the Loan Agreement
referred to below on the dates and in the principal amounts provided in the Loan
Agreement and to pay interest on the unpaid principal amount of the Term Loan,
at such office, in like money and funds, for the period commencing on the date
of the Term Loan until the Term Loan shall be paid in full, at the rates per
annum and on the dates provided in the Loan Agreement.
The
Co-Borrowers hereby authorize the Lender to record in its records the amount of
the Term Loan and all interest rate elections and payments of principal in
respect thereof, which records shall, in the absence of manifest error, be
conclusive; provided, however, that the
failure to make such notation with respect to the Term Loan or payment shall not
limit or otherwise affect the obligations of the Co-Borrowers under the Loan
Agreement or this Promissory Note ("Note").
This Note
is executed in connection with that certain Loan and Security Agreement dated as
of June 27, 2009 among the Co-Borrowers, Equity Administrative Services, Inc. as
guarantor, and the Lender (such Loan Agreement, as the same may be amended or
otherwise modified from time to time, being referred to herein as the "Loan
Agreement"). The Loan Agreement, among other things, contains
provisions for acceleration of the maturity of the principal evidenced by this
Note upon the happening of certain stated events and for prepayments of the Term
Loan prior to the maturity of this Note upon the terms and conditions specified
in the Loan Agreement. Capitalized terms used in this Note have the
respective meanings assigned to them in the Loan Agreement.
This Note
shall be governed by and construed in accordance with the laws of the State of
Texas and the applicable laws of the United States of America.
Each
Co-Borrower and each surety, guarantor, endorser, and other party ever liable
for payment of any sums of money payable on this Note jointly and severally
waive notice, presentment, demand for payment, protest, notice of protest and
non-payment or dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, diligence in collecting, grace, and all other
formalities of any kind, and consent to all extensions without notice for any
period or periods of time and partial payments, before or after maturity, and
any impairment of any collateral securing this Note, all without prejudice to
the holder.
PROMISSORY
NOTE, Page 1
70352.000002 EMF_US 26692578v13
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CO-BORROWERS:
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EQUITY
TRUST COMPANY
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By:_____________________________________
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Name:
__________________________________
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Title:
___________________________________
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STERLING
ADMINISTRATIVE SERVICES, LLC
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By:_____________________________________
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Name:
__________________________________
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Title:
___________________________________
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PROMISSORY
NOTE, Page 2
70352.000002 EMF_US 26692578v13
EXHIBIT
B
Form
of Guaranty
Exhibit B
- Cover Page
70352.000002 EMF_US 26692578v13
GUARANTY
AGREEMENT
WHEREAS,
EQUITY TRUST COMPANY, a South Dakota trust company ("ETC"), STERLING
ADMINISTRATIVE SERVICES, LLC, a Texas limited liability company ("SAS"; ETC and SAS
each a "Co-Borrower" and
collectively, the "Co-Borrowers"), and
EQUITY ADMINISTRATIVE SERVICES, INC., an Ohio corporation (the "Guarantor"), have
entered into that certain Credit and Security Agreement dated June 27, 2009,
among Co-Borrowers, Guarantor and STERLING TRUST COMPANY, a Texas trust company
(the "Lender")
(such Loan and Security Agreement, as it may hereafter be amended or otherwise
modified from time to time, being hereinafter referred to as the "Credit Agreement",
and capitalized terms not otherwise defined herein shall have the same meaning
as set forth in the Credit Agreement);
WHEREAS,
the execution of this Guaranty Agreement is a condition to Lender's obligations
under the Loan and Security Agreement;
NOW,
THEREFORE, for valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Guarantor hereby irrevocably and unconditionally guarantees
to Lender the full and prompt payment and performance of the Guaranteed
Indebtedness (hereinafter defined), this Guaranty Agreement being upon the
following terms:
1. The
term "Guaranteed Indebtedness", as used herein means all of the "Obligations",
as defined in the Loan and Security Agreement and shall include any and all
post-petition interest and expenses (including attorneys' fees) whether or not
allowed under any bankruptcy, insolvency, or other similar law; provided that the
Guaranteed Indebtedness shall be limited, with respect to Guarantor, to an
aggregate amount equal to the largest amount that would not render Guarantor's
obligations hereunder subject to avoidance under Section 544 or 548 of the
United States Bankruptcy Code or under any applicable state law relating to
fraudulent transfers or conveyances.
2. This
instrument shall be an absolute, continuing, irrevocable and unconditional
guaranty of payment and performance, and not a guaranty of collection, and
Guarantor shall remain liable on its obligations hereunder until the payment and
performance in full of the Guaranteed Indebtedness. No set-off,
counterclaim, recoupment, reduction, or diminution of any obligation, or any
defense of any kind or nature which any Co-Borrower may have against Lender or
any other party, or which Guarantor may have against any Co-Borrower, Lender or
any other party, shall be available to, or shall be asserted by, Guarantor
against Lender or any subsequent holder of the Guaranteed Indebtedness or any
part thereof or against payment of the Guaranteed Indebtedness or any part
thereof.
3. If
Guarantor becomes liable for any indebtedness owing by any Co-Borrower to Lender
by endorsement or otherwise, other than under this Guaranty Agreement, such
liability shall not be in any manner impaired or affected hereby, and the rights
of Lender hereunder shall be cumulative of any and all other rights that Lender
may ever have against Guarantor. The exercise by Lender of any right
or remedy hereunder or under any other instrument, or at law or in equity, shall
not preclude the concurrent or subsequent exercise of any other right or
remedy.
4. In
the event of default by any Co-Borrower in payment or performance of the
Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness
becomes due, whether by its terms, by acceleration, or otherwise, Guarantor
shall promptly pay the amount due thereon to Lender, without notice or demand,
in lawful currency of the United States of America, and it shall not be
necessary for Lender, in order to enforce such payment by Guarantor, first to
institute suit or exhaust its remedies against any Co-Borrower or others liable
on such Guaranteed Indebtedness, or to enforce any rights against any collateral
which shall ever have been given to secure such Guaranteed
Indebtedness. In the event such payment is made by Guarantor, then
Guarantor shall be subrogated to the rights then held by
GUARANTY
AGREEMENT - Page 1
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EMF_US 26692578v13
Lender
with respect to the Guaranteed Indebtedness to the extent to which the
Guaranteed Indebtedness was discharged by Guarantor and, in addition, upon
payment by Guarantor of any sums to Lender hereunder, all rights of Guarantor
against any Co-Borrower, any other guarantor or any Collateral arising as a
result therefrom by way of right of subrogation, reimbursement, or otherwise
shall in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full of the Guaranteed Indebtedness.
5. If
acceleration of the time for payment of any amount payable by any Co-Borrower
under the Guaranteed Indebtedness is stayed upon the insolvency, bankruptcy, or
reorganization of any Co-Borrower, all such amounts otherwise subject to
acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be
payable by Guarantor hereunder forthwith on demand by Lender.
6. Guarantor
hereby agrees that its obligations under this Guaranty Agreement shall not be
released, discharged, diminished, impaired, reduced, or affected for any reason
or by the occurrence of any event, including one or more of the following
events, whether or not with notice to or the consent of
Guarantor: (a) the taking or accepting of collateral as security
for any or all of the Guaranteed Indebtedness or the release, surrender,
exchange, or subordination of any collateral now or hereafter securing any or
all of the Guaranteed Indebtedness; (b) any partial release of the
liability of Guarantor hereunder, or the full or partial release of any other
guarantor from liability for any or all of the Guaranteed Indebtedness;
(c) any disability of any Co-Borrower, or the dissolution, insolvency, or
bankruptcy of any Co-Borrower, Guarantor, or any other party at any time liable
for the payment of any or all of the Guaranteed Indebtedness; (d) any
renewal, extension, modification, waiver, amendment, or rearrangement of any or
all of the Guaranteed Indebtedness or any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (e) any adjustment, indulgence, forbearance, waiver, or
compromise that may be granted or given by Lender to any Co-Borrower, Guarantor,
or any other party ever liable for any or all of the Guaranteed Indebtedness;
(f) any neglect, delay, omission, failure, or refusal of Lender to take or
prosecute any action for the collection of any of the Guaranteed Indebtedness or
to foreclose or take or prosecute any action in connection with any instrument,
document, or agreement evidencing, securing, or otherwise relating to any or all
of the Guaranteed Indebtedness; (g) the unenforceability or invalidity of
any or all of the Guaranteed Indebtedness or of any instrument, document, or
agreement evidencing, securing, or otherwise relating to any or all of the
Guaranteed Indebtedness; (h) any payment by any Co-Borrower or any other
party to Lender is held to constitute a preference under applicable bankruptcy
or insolvency law or if for any other reason Lender is required to refund any
payment or pay the amount thereof to someone else; (i) the settlement or
compromise of any of the Guaranteed Indebtedness; (j) the non-perfection of
any security interest or lien securing any or all of the Guaranteed
Indebtedness; (k) any impairment of any collateral securing any or all of
the Guaranteed Indebtedness; (l) the failure of Lender to sell any
collateral securing any or all of the Guaranteed Indebtedness in a commercially
reasonable manner or as otherwise required by law; (m) any change in the
corporate existence, structure, or ownership of any Co-Borrower; or (n) any
other circumstance which might otherwise constitute a defense available to, or
discharge of, any Co-Borrower or Guarantor (other than payment of the Guaranteed
Indebtedness).
7. Guarantor
represents and warrants to Lender as follows:
(a) All
representations and warranties in the Loan and Security Agreement relating to it
are true and correct as of the date hereof and on each date the representations
and warranties hereunder are restated pursuant to any of the Loan Documents with
the same force and effect as if such representations and warranties had been
made on and as of such date except to the extent that such representations and
warranties relate specifically to another date.
GUARANTY
AGREEMENT - Page 2
70352.000002
EMF_US 26692578v13
(b) It
has, independently and without reliance upon Lender and based upon such
documents and information as it has deemed appropriate, made its own analysis
and decision to enter into the Loan Documents to which it is a
party.
(c) It
has adequate means to obtain from Co-Borrowers on a continuing basis information
concerning the financial condition and assets of Co-Borrowers and it is not
relying upon Lender to provide (and Lender shall have no duty to provide) any
such information to it either now or in the future.
(d) The
value of the consideration received and to be received by Guarantor as a result
of Co-Borrowers' entering into the Loan and Security Agreement and Guarantor's
executing and delivering this Guaranty Agreement is reasonably worth at least as
much as the liability and obligation of Guarantor hereunder, and such liability
and obligation and the Loan and Security Agreement have benefited and may
reasonably be expected to benefit Guarantor directly or indirectly.
8. Guarantor
covenants and agrees that, as long as the Guaranteed Indebtedness or any part
thereof is outstanding or the Lender has any commitment under the Loan and
Security Agreement, it will comply with all covenants set forth in the Loan and
Security Agreement specifically applicable to it.
9. When
an Event of Default exists, Lender shall have the right to set-off and apply
against this Guaranty Agreement or the Guaranteed Indebtedness or both, at any
time and without notice to Guarantor, any and all deposits (general or special,
time or demand, provisional or final, but excluding any account established by
Guarantor as a fiduciary for another party) or other sums at any time credited
by or owing from Lender to Guarantor whether or not the Guaranteed Indebtedness
is then due and irrespective of whether or not Lender shall have made any demand
under this Guaranty Agreement. The rights and remedies of Lender
hereunder are in addition to other rights and remedies (including other rights
of set-off) which Lender may have.
10. (a) Guarantor
hereby agrees that the Subordinated Indebtedness (as defined below) shall be
subordinate and junior in right of payment to the prior payment in full of all
Guaranteed Indebtedness as herein provided. The Subordinated
Indebtedness shall not be payable, and no payment of principal, interest or
other amounts on account thereof, and no property or guarantee of any nature to
secure or pay the Subordinated Indebtedness shall be made or given, directly or
indirectly by or on behalf of any Debtor (hereafter defined) or received,
accepted, retained or applied by Guarantor unless and until the Guaranteed
Indebtedness shall have been paid in full in cash; except that prior to the
occurrence and continuance of an Event of Default, Guarantor shall have the
right to receive payments on the Subordinated Indebtedness made in the ordinary
course of business. After the occurrence and during the continuance
of an Event of Default, no payments of principal or interest may be made or
given, directly or indirectly, by or on behalf of any Debtor or received,
accepted, retained or applied by Guarantor unless and until the Guaranteed
Indebtedness shall have been paid in full in cash. If any sums shall
be paid to Guarantor by any Debtor or any other Person on account of the
Subordinated Indebtedness when such payment is not permitted hereunder, such
sums shall be held in trust by Guarantor for the benefit of Lender and shall
forthwith be paid to Lender without affecting the liability of Guarantor under
this Guaranty Agreement and may be applied by Lender against the Guaranteed
Indebtedness in accordance with the Loan and Security Agreement. Upon
the request of Lender, Guarantor shall execute, deliver, and endorse to Lender
such documentation as Lender may request to perfect, preserve, and enforce its
rights hereunder. For purposes of this Guaranty Agreement and with
respect to Guarantor, the term "Subordinated
Indebtedness" means all indebtedness, liabilities, and obligations of any
Co-Borrower or any Obligor other than Guarantor (Co-Borrowers and such Obligors
herein the "Debtors") to
Guarantor, whether such indebtedness, liabilities, and obligations now exist or
are hereafter incurred or arise, or are direct, indirect, contingent, primary,
secondary, several, joint and several, or otherwise, and
irrespective
GUARANTY
AGREEMENT - Page 3
70352.000002
EMF_US 26692578v13
of
whether such indebtedness, liabilities, or obligations are evidenced by a note,
contract, open account, or otherwise, and irrespective of the Person or Persons
in whose favor such indebtedness, obligations, or liabilities may, at their
inception, have been, or may hereafter be created, or the manner in which they
have been or may hereafter be acquired by Guarantor.
(b) Guarantor
agrees that any and all Liens (including any judgment liens), upon any Debtor's
assets securing payment of any Subordinated Indebtedness shall be and remain
inferior and subordinate to any and all Liens upon any Debtor's assets securing
payment of the Guaranteed Indebtedness or any part thereof, regardless of
whether such Liens in favor of Guarantor, Lender presently exist or are
hereafter created or attached. Without the prior written consent of
Lender, Guarantor shall not (i) file suit against any Debtor or exercise or
enforce any other creditor's right it may have against any Debtor, or
(ii) foreclose, repossess, sequester, or otherwise take steps or institute
any action or proceedings (judicial or otherwise, including the commencement of,
or joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or
insolvency proceeding) to enforce any obligations of any Debtor to Guarantor or
any Liens held by Guarantor on assets of any Debtor.
(c) In
the event of any receivership, bankruptcy, reorganization, rearrangement,
debtor's relief, or other insolvency proceeding involving any Debtor as debtor,
Lender shall have the right to prove and vote any claim under the Subordinated
Indebtedness and to receive directly from the receiver, trustee or other court
custodian all dividends, distributions, and payments made in respect of the
Subordinated Indebtedness until the Guaranteed Indebtedness has been paid in
full in cash. Lender may apply any such dividends, distributions, and
payments against the Guaranteed Indebtedness in accordance with the Loan and
Security Agreement.
(d) Guarantor
agrees that all promissory notes, accounts receivable, ledgers, records, or any
other evidence of Subordinated Indebtedness shall contain a specific written
notice thereon that the indebtedness evidenced thereby is subordinated under the
terms of this Guaranty Agreement.
11. No
amendment or waiver of any provision of this Guaranty Agreement or consent to
any departure by Guarantor therefrom shall in any event be effective unless the
same shall be in writing and signed by Lender except as otherwise provided in
the Loan and Security Agreement. No failure on the part of Lender to
exercise, and no delay in exercising, any right, power, or privilege hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power, or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
12. To
the extent permitted by law, any acknowledgment or new promise, whether by
payment of principal or interest or otherwise and whether by Co-Borrowers or
others (including Guarantor), with respect to any of the Guaranteed Indebtedness
shall, if the statute of limitations in favor of Guarantor against Lender shall
have commenced to run, toll the running of such statute of limitations and, if
the period of such statute of limitations shall have expired, prevent the
operation of such statute of limitations.
13. This
Guaranty Agreement is for the benefit of Lender and its successors and assigns,
and in the event of an assignment of the Guaranteed Indebtedness, or any part
thereof, the rights and benefits hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such
indebtedness. This Guaranty Agreement is binding not only on
Guarantor, but on Guarantor's successors and assigns.
14. Guarantor
recognizes that Lender is relying upon this Guaranty Agreement and the
undertakings of Guarantor hereunder and under the other Loan Documents to which
each is a party in
GUARANTY
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EMF_US 26692578v13
making
extensions of credit to Co-Borrowers under the Loan and Security Agreement and
further recognizes that the execution and delivery of this Guaranty Agreement
and the other Loan Documents to which Guarantor is a party is a material
inducement to Lender in entering into the Loan and Security Agreement and
continuing to extend credit thereunder. Guarantor hereby acknowledges
that there are no conditions to the full effectiveness of this Guaranty
Agreement or any other Loan Document to which it is a party.
15. Any
notice or demand to Guarantor under or in connection with this Guaranty
Agreement or any other Loan Document to which it is a party shall be deemed
effective if given to Guarantor, care of Co-Borrowers in accordance with the
notice provisions in the Loan and Security Agreement.
16. Guarantor
shall pay on demand all reasonable attorneys' fees and all other reasonable
costs and expenses incurred by Lender in connection with the administration,
enforcement, or collection of this Guaranty Agreement.
17. Guarantor
hereby waives promptness, diligence, notice of any default under the Guaranteed
Indebtedness, demand of payment, notice of acceptance of this Guaranty
Agreement, presentment, notice of protest, notice of dishonor, notice of the
incurring by any Co-Borrower of additional indebtedness, and all other notices
and demands with respect to the Guaranteed Indebtedness and this Guaranty
Agreement.
18. The
Loan and Security Agreement, and all of the terms thereof, are incorporated
herein by reference, the same as if stated verbatim herein, and Guarantor agrees
that Lender may exercise any and all rights granted to it under the Loan and
Security Agreement and the other Loan Documents without affecting the validity
or enforceability of this Guaranty Agreement.
19. THIS
GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT OF GUARANTOR, LENDER
WITH RESPECT TO GUARANTOR'S GUARANTY OF THE GUARANTEED INDEBTEDNESS AND
SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER
HEREOF. THIS GUARANTY AGREEMENT IS INTENDED BY GUARANTOR AND LENDER
AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY AGREEMENT, AND
NO COURSE OF DEALING AMONG GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO
TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE
USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY
AGREEMENT. THERE ARE NO ORAL AGREEMENTS AMONG GUARANTOR AND
LENDER.
20. This
Guaranty Agreement shall be governed by, and construed in accordance with, the
laws of the State of Texas and applicable laws of the United States of
America.
GUARANTY
AGREEMENT - Page 5
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EMF_US 26692578v13
EXECUTED
as of the date of the Credit Agreement.
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GUARANTOR:
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EQUITY
ADMINISTRATIVE SERVICES, INC.
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By:_____________________________________
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Name:
__________________________________
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Title:
___________________________________
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GUARANTY
AGREEMENT - Page 6
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EMF_US 26692578v13
EXHIBIT
C
Form
of Compliance Certificate
Exhibit C
- Cover Page
70352.000002
EMF_US 26692578v13
COMPLIANCE
CERTIFICATE
The undersigned, duly appointed and
acting _______________ of __________________, being duly authorized, hereby
delivers this Compliance Certificate to the Lender, pursuant to Section 8.10 of
that certain Loan and Security Agreement, dated as of ________________, 2009 (as
such Loan and Security Agreement may be amended, restated, or otherwise modified
from time to time, the "Loan and Security
Agreement"), among Equity Trust Company ("ETC"),
Sterling Administrative Services, LLC ("SAS"; ETC
and SAS each a "Co-Borrower" and collectively, the
"Co-Borrowers"),
Equity Administrative Services, Inc. (the "Guarantor"),
and Sterling Trust Company, (the "Lender"). Terms
defined in the Loan and Security Agreement, wherever used herein, shall have the
same meanings as are prescribed by the Loan and Security Agreement.
1. Obligors
hereby deliver to the Lender [check as applicable]:
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[_]
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the
fiscal year end financial statements with respect to balance sheets and
statement of income, and the certificates of such accountants required by
Section
8.8(a) of the Loan and Security Agreement each dated as of
________, ____; or
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[_]
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the
financial statements with respect to balance sheets and statement of
income, required by Section 8.8(d)
of the Loan and Security Agreement, dated as of
________, ____.
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Such
financial statements are complete and correct in all material respects and have
been prepared in accordance with GAAP (as applicable) applied consistently
throughout the periods reflected therein.
2. The
undersigned represents and warrants to the Lender that, except as may have been
previously or concurrently disclosed to the Lender in writing by the Obligors,
the representations and warranties contained in Section 7 of the Loan
and Security Agreement and contained in the other Loan Documents are correct and
complete on and as of the date of this Compliance Certificate as if made on and
as of the date hereof (except to the extent that such representations and
warranties are expressly by their terms made only as of the Closing Date or
another specified date).
3. Attached
hereto as schedule 1 are the calculations showing compliance with the financial
covenants set forth in Section 10 of the Loan and Security
Agreement. All information contained herein and on the attached
schedules is true and correct.
4. The
undersigned represents and warrants to the Lender that as of the date of this
Compliance Certificate, except as previously or concurrently disclosed to the
Lender in writing by the Obligors, the Obligors are in compliance in all
material respects with all of their respective covenants and agreements in the
Loan and Security Agreement and the other Loan Documents and the financial
statements attached hereto were prepared in accordance with GAAP and fairly
present in all material respects (subject to year end audit adjustments and
absence of footnotes) the financial conditions and the results of the operations
of the Persons reflected thereon, at the date and for the periods indicated
therein.
5. The
undersigned hereby states that, to the best of his or her knowledge and based
upon an examination sufficient to enable an informed statement [check as
applicable]:
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[_]
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No
Default or Event of Default exists as of the date hereof or existed during
the period covered by the financial statements referenced in paragraph 1 of
this Compliance Certificate.
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COMPLIANCE
CERTIFICATE – Page 1
70352.000002
EMF_US 26692578v13
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[_]
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One
or more Defaults or Events of Default exist as of the date hereof or
existed during the period covered by the financial statements referenced
in paragraph
1 of this Compliance Certificate. Included within Exhibit A
attached hereto is a written description specifying each such Default or
Event of Default, its nature, when it occurred, whether it is continuing
as of the date hereof and the steps being taken by the Obligors with
respect thereto. Except as so specified, no Default or Event of
Default exists as of the date
hereof.
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Date of
execution of this Compliance Certificate: __________, ____.
_____________________________________________
By:
Name:
__________________
COMPLIANCE
CERTIFICATE – Page 2
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EMF_US 26692578v13
EXHIBIT
A
to
COMPLIANCE
CERTIFICATE
dated
______________, 20__
The
following is attached to and made a part of the above referenced Compliance
Certificate.
[specify
Defaults or Events of Default]
EXHIBIT A
TO COMPLIANCE CERTIFICATE
70352.000002
EMF_US 26692578v13
