LOAN AGREEMENT
Exhibit
10.1
THIS LOAN AGREEMENT ("Agreement"), dated as of
October 23, 2009, by and among XXXXXXX BANK, NATIONAL
ASSOCIATION, with a place of business at 00 Xxx Xxxxxx, Xxx Xxxxx,
Xxxxxxxxxxx 00000-0000 ("Lender") and MICROFLUIDICS INTERNATIONAL
CORPORATION, a Delaware corporation with a place of business at 00
Xxxxxxx Xxxx, Xxxxxx, XX 00000 (“MIC”), MICROFLUIDICS CORPORATION, a
Delaware corporation with a place of business at 00 Xxxxxxx Xxxx, Xxxxxx,
XX 00000 (“MC” and
MIC and MC are collectively the "Borrower").
Borrower
has requested that Lender extend to Borrower a revolving line of credit in the
principal amount of up to $1,000,000.00. Lender is willing to so
provide such credit, but only on the terms and subject to the conditions
contained in this Agreement.
ARTICLE 1
"Account
Debtor" means any Person who is or may become obligated to Borrower on or under
a Receivable.
"Affiliate"
means any Person: (1) that, directly or indirectly, controls, is
controlled by, or is under common control with Borrower; (2) that is an officer,
or director of Borrower or of any Person that, directly or indirectly, controls,
is controlled by, or is under common control with Borrower, together with,
successors, and assigns; and (3) any trust of which any of the foregoing Persons
is a settlor, trustee, or beneficiary. For the purposes of this
definition, the term "control" means the possession, directly or indirectly, or
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise; and "controlled" shall have the meaning correlative
thereto.
"Agreement"
means this Loan Agreement, as amended, supplemented, or modified and in effect
from time to time.
"Borrower"
means Microfluidics International Corporation and its Subsidiaries listed on
Schedule I hereto.
"Borrowing
Base" means, at the relevant time of reference, an amount determined by Lender
by reference to the most recent Borrowing Base Certificate delivered to Lender
which is equal to the sum of (i) 90% of Insured Foreign Accounts Receivable;
(ii) 75% of Uninsured Foreign Accounts Receivable approved by Lender and (iii)
80% of all other Eligible Accounts Receivable provided that Lender
reserves the right to modify the above advance rates and eligibility criteria if
Borrower’s billing practices change in any material respect and upon one
business day notice to Borrower of such modifications to the Borrowing Base
hereunder.
"Borrowing
Base Certificate" shall have the meaning set forth in Section 5.8(d) of this
Agreement.
"Borrowing
Request" shall have the meaning set forth in Section 2.2(a) of this
Agreement.
"Business
Day" means a day other than a Saturday, Sunday, or other day on which banks in
the State of Connecticut are required or authorized by law to be
closed.
"Capital
Lease" means any capital lease, conditional sales contract or other title
retention agreement relating to the purchase or acquisition of assets that in
accordance with GAAP is required or permitted to be depreciated or amortized on
Borrower's consolidated balance sheets.
"Collateral"
means all property of Borrower now or hereafter subject to the Liens granted in
the Security Documents.
"Commitment"
means with respect to the Revolving Loan, Lender's commitment to make Revolving
Advances to Borrower pursuant to Section 2.1 of this Agreement in an outstanding
aggregate principal amount not to exceed at any time $1,000,000.00.
"Compliance
Certificate" shall have the meaning set forth in Section 5.8(a) of this
Agreement.
"Contaminant"
means any pollutants, hazardous or toxic substances or wastes or contaminated
materials including but not limited to oil and oil products, asbestos, asbestos
containing materials, urea formaldehyde foam insulation, transformers or other
equipment which contain dielectric fluid containing levels of polychlorinated
biphenyls, flammables, explosives, radioactive materials, laboratory wastes,
biohazardous wastes, chemicals, elements, compounds or any other materials and
substances (including materials, substances or things which are composed of or
which have as constituents any of the foregoing substances), which are or may be
subject to regulation under, or the Release of which or exposure to which is
prohibited, limited or regulated under any Environmental Law.
"Credit
Availability" means, at the relevant time of reference, the dollar amount equal
to the lesser of (a) the Borrowing Base and (b) the Commitment, less, in each
case, the sum of the aggregate outstanding principal amount of all Revolving
Advances.
"Debt"
means, as applied to any Person: (1) indebtedness or liability of
such Person for borrowed money, or with respect to refundable deposits or
refundable advances of any kind; (2) all obligations of such Person evidenced by
notes, bonds, debentures or similar instruments; (3) all obligations of such
Person under conditional sale or other title retention agreements relating to
property or assets purchased by such Person; (4) all obligations of such Person
for the deferred purchase price of property or services (other than trade debt
payable in the ordinary course of business and, in each case, not past due for
more than 90 days after the date on which such trade debt was due); (5) all
obligations of such Person as lessee under Capital Leases; (6) current
liabilities of such Person in respect of unfunded vested benefits under any
Plan; (7) obligations of such Person under letters of credit, bankers
acceptances, or comparable arrangements; (8) obligations of such Person arising
under acceptance facilities; (9) all obligations of such Person under
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations of such Person to
purchase, to provide funds for payment, to supply funds to invest in any
Persons, or otherwise to assure a creditor against loss; (10) all obligations of
such Person (or of any other party) secured by any Lien on any of such Person's
assets or property, whether or not the obligations have been assumed, and (11)
all obligations of such Person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange
rate hedging arrangements.
"Default"
means an event or condition the occurrence or existence of which, with the lapse
of time or the giving of a required notice, or both, would, unless cured or
waived, become an Event of Default.
"Default
Rate" shall have the meaning set forth in Section 2.8(b) of this
Agreement.
"Drawdown
Date" means, as applicable, the date on which any Revolving Advance is made,
extended or renewed.
"EBITDA"
- shall have the meaning set forth in Section 7.3(c) of this
Agreement.
"Eligible
Accounts Receivable" means, at the time of calculation, bona fide outstanding
Receivables of Borrower which satisfy all of the following
requirements:
(A) It
is owing to Borrower and is subject to a validly perfected security interest in
favor of Lender having priority over any and all other liens or encumbrances
thereon, other than any liens permitted under this Agreement;
(B) It
arises from the sale or lease of goods by Borrower or the rendering of services
by Borrower which have been shipped, delivered or performed to or for an Account
Debtor (i) on an absolute sale basis and not on consignment, on approval, or on
a sale or return basis or subject to any other repurchase or return agreement or
credit addback and (ii) on an open receivable basis, which is not evidenced by
chattel paper or an instrument of any kind; provided, that in any
case, no material part of the subject goods or services has been
returned, rejected, lost or damaged, and the Account Debtor is not, insolvent,
or the subject of any bankruptcy or insolvency proceeding of any kind; and provided further that
Receivables arising from pallet charges or other non-trade Receivables shall not
be considered Eligible Accounts Receivable;
(C) It
is a valid, legally enforceable obligation of the Account Debtor thereunder and
is not and, to the knowledge of Borrower is not expected to be, subject to any
offset, counterclaim or, in the opinion of Lender, contra or other defense on
the part of such Account Debtor or to any claim on the part of such Account
Debtor denying liability thereunder; provided, that if it
is subject to any such offset, defense, or claim, it shall be ineligible only to
the extent of such offset, defense or claim;
(D) It
is subject to no lien or security interest whatsoever (including purchase money
security interests), except for the security interest of Lender hereunder and
liens or security interests which have been expressly subordinated to the
security interest of Lender in form and substance satisfactory to Lender or
liens permitted by this Agreement;
(E) It
is evidenced by an invoice or other proof of delivery in form acceptable to
Lender;
(F) It
has not remained unpaid for a period exceeding ninety (90) days after the date
of invoice;
(G) It
is not owing from an Account Debtor from whom 25% or more of the amounts owing
Borrower have remained unpaid for a period exceeding ninety (90) days from the
date of invoice;
(H) It
does not arise out of transactions with an employee, officer, director,
Affiliate, or Subsidiary of Borrower [other than those set forth on Schedule 1(H);
(I) It
is not an account with respect to which the Account Debtor is the United States
of America or any department, agency or instrumentality thereof unless Borrower
assigns its right to payment of such account to Lender pursuant to, and in
compliance with, the Assignment of Claims Act of 1940, as amended;
(J) It
is not an account with respect to which the Account Debtor is located in the
states of New Jersey, Minnesota, or West Virginia (or any other state or
province that requires a creditor to file a Business Activity Report or similar
document in order to bring suit or otherwise enforce its remedies against such
Account Debtor in the courts or through any judicial process of such state or
province), unless Borrower has qualified to do business in New Jersey,
Minnesota, West Virginia, or such other state or province, or has filed a Notice
of Business Activities Report with the applicable division of taxation, the
department of revenue, or with such other state or province offices, as
appropriate, for the then-current year, or is exempt from such filing
requirement; and
(K) It
is not a Receivable owing from an Account Debtor whose aggregate Receivables
exceed 25% of Borrower's total Receivables at the relevant time of reference (to
the extent of such excess); and
(L) Lender
has not determined in its sole discretion that it is not an Eligible Account
Receivable.
In
addition, Lender reserves the right to modify any or all of the requirements
under Eligible Accounts Receivables if Borrower’s billing practices change in
any material respect and upon one (1) business day notice to Borrower of such
modification.
In the
event of any dispute as to whether a Receivable is or has ceased to be an
Eligible Accounts Receivable, the decision of Lender (using Lender's reasonable
credit judgment) shall control.
"Enforcement
Action" means any action, proceeding or investigation (administrative or
judicial, civil or criminal) instituted or threatened by the U.S. Environmental
Protection Agency, or any other federal, state or local governmental agency
related to any alleged or actual violation of any Environmental Law with respect
to any property owned or leased by any of Borrower and/or any business conducted
thereon by Borrower, including, but not limited to, actions seeking remediation,
the imposition or enforcement of liability pursuant to any Environmental Law and
compliance with any Environmental Law. Enforcement Action shall also
include any similar actual or threatened action by any private party pursuant to
any Environmental Law.
"Environmental
Laws" means any and all present and future: federal, state, and local
laws, statutes, ordinances, rules, and regulations, relating to protection of
human health and the environment from Contaminants including but not limited to
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended (CERCLA), 42 USC §9601 et seq.; the Resource
Conservation and Recovery Act, as amended (RCRA), 42 USC §6901 et seq.; the Clean Air
Act, as amended, 42 USC §7401 et seq.; the Federal
Water Pollution Control Act, as amended (including but not limited to as amended
by the Clean Water Act), 33 USC §1251 et seq.; The Toxic
Substances Control Act, as amended (TSCA), 15 USC §2601 et seq.; the Emergency
Planning and Community Right-to-Know Act (also known as XXXX Title III), as
amended (EPCRA), 42 USC §11001 et seq.; the Safe
Drinking Water Act, as amended, 42 USC §300(f) et seq.; the Federal
Insecticide, Fungicide and Rodenticide Act, as amended (FIFRA), 7 USC §136 et seq.; the
Occupational Safety and Health Act, as amended (OSHA), 29 USC §651 et seq.; the Endangered
Species Act, as amended, 16 USC §1531 et seq.; the National
Environmental Policy Act, as amended (NEPA), 42 USC §4321 et seq.; the Rivers and
Harbors Act of 1899 33 USC §401 et seq.; state and local
laws, rules and regulations similar to or addressing similar matters as the
foregoing federal laws; laws, rules and regulations governing underground or
above-ground storage tanks; laws, rules and regulations imposing liens for
response costs or costs of other remediation, whether or not those liens have a
higher priority than existing liens; laws, rules and regulations conditioning
transfer of property upon a form of negative declaration or other approval of a
Governmental Authority of the environmental condition of a property; laws, rules
and regulations requiring the disclosure of conditions relating to Contaminants
in connection with transfer of title to or interest in property law; laws, rules
and regulations requiring notifying of any government entity with regard to a
Release of any Contaminant; conditions or requirements imposed in connection
with any permits; government orders and demands and judicial orders pursuant to
any of the foregoing; laws, rules and regulations relating to the Release, use,
treatment, storage, disposal, transportation, transfer, generation, processing,
production, refining, control, management, or handling of Contaminants; and any
and all other laws, rules, regulations, guidance, guidelines and common law of
any governmental entity relating to the protection of human health or the
environment from Contaminants. The reference in this paragraph to
state laws specifically includes, but is not limited to, the applicable laws of
the State of Connecticut.
"ERISA"
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and the regulations and published interpretations
thereunder.
"ERISA
Affiliate" means any trade or business (whether or not incorporated) which,
together with Borrower, would be treated as a single employer under Sections
414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as
amended.
"Event of
Default" means any of the events specified in Section 9.1 of this
Agreement.
"GAAP" means, when used in Article 7
hereof, generally accepted accounting principles in the United States as in
effect from time to time, applied on a consistent basis and consistent with the
principles promulgated or adopted by the Financial Accounting Standards Board
and its predecessors, consistently applied from year to year.
"Governmental
Authority" means any nation or government, any state or other political
subdivision thereof, and any entity exercising executive, legislative, judicial,
regulatory, or administrative functions of or pertaining to
government.
“GSP”
means Global Strategic Partners, LLC, a Delaware limited liability
company.
“GSP
Subordinated Debt” means the “Subordinated Debt”, as such term is defined in the
Subordination Agreement.
“GSP
Subordinated Debt Documents” means the “Subordinate Loan Documents” as such term
is defined in the Subordination Agreement.
"Head
Office" means the office of Lender at 00 Xxx Xxxxxx, Xxx Xxxxx,
Xxxxxxxxxxx.
“Insured Eligible Foreign Accounts
Receivable” means an Receivable which meets all of the criteria of Eligible
Accounts Receivable as set forth above and is from an Account Debtor located
outside the United States and satisfies the following additional requirements:
(i) the subject goods shall have been shipped after receipt, by Borrower from
the Account Debtor, of (a) an irrevocable letter of credit, which letter of
credit shall have been issued or confirmed by a financial institution acceptable
to Lender and shall be in form and substance acceptable to Lender and shall be
transferred, assigned or otherwise made payable to Lender in form and substance
satisfactory to Lender, or (b) credit insurance in form and substance and issued
by an insurer satisfactory to Lender, and (ii) the Receivable shall be payable
in the full amount of the face value of the Receivable in United States
dollars.
“Intellectual
Property Agreements” means the Trademark Collateral Assignment and Security
Agreement, the Patent Collateral Assignment and Security Agreement and the
Domain Name Collateral Assignment and Security Agreement by and between Borrower
and Lender and dated as of the date hereof.
"Lender"
means Xxxxxxx Bank, National Association or any successors or assigns
thereof.
"Lender
Parties" means that term as defined in Section 10.5(b).
“LIBOR”
means, as applicable to any LIBOR Advance, a fluctuating rate of interest
(rounded upward, if necessary, to the nearest 1/32 of one percent) which can
change on each London Banking Day. The rate will be adjusted on each
London Banking Day and will be as determined on the basis of the offered rates
for deposits in U.S. dollars, for a period of thirty (30) days, which appears on
the Telerate page 3750 as of 11:00 a.m. London time on such London Banking Day,
provided, that,
if the rate described above does not appear on the Telerate System on any
applicable interest determination date, the LIBOR rate shall be the rate
(rounded upwards as described above, if necessary) for deposits in dollars for a
period substantially equal to the interest period on the Reuters Page "LIBO" (or
such other page as may replace the LIBO page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on such London Banking
Day.
If both
the Telerate and Reuters system are unavailable, then the rate for that banking
day will be determined on the basis of the offered rates for deposits in U.S.
dollars for a period of thirty (30) days which are offered by four major banks
in the London interbank market at approximately 11:00 a.m. London time, on such
London Banking Day as selected by the Bank. The principal London
office of each of the four major London banks will be requested to provide a
quotation of its U.S. dollar deposit offered rate. If at least two
such quotations are provided, the rate for that date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as
requested, the rate for that date will be determined on the basis of the rate
quoted for loans in U.S. dollars to leading European banks for a period of
thirty (30) days offered by major banks in New York City at approximately 11:00
a.m. New York City time, on such London Banking Day. In the
event Bank is unable to obtain any such quotation as provided above, it will be
deemed that LIBOR pursuant to a LIBOR Advance cannot be determined.
In the
event that the Board of Governors of the Federal Reserve System shall impose a
Reserve Percentage with respect to LIBOR deposits of Bank then for any period
during which such Reserve Percentage shall apply, LIBOR shall be equal to the
amount determined above divided by an amount equal to 1 minus the Reserve
Percentage.”
"LIBOR
Advance" means any Revolving Advance which shall at all times bear interest at
the per annum rate equal to the LIBOR Rate.
"LIBOR
Rate" means, at any time of reference, a per annum rate equal to LIBOR plus Five
Fifty Hundred (550) basis points per annum.
"Lien"
means any interest in property securing an obligation owed to, or a claim by, a
Person other than the owner of the property, whether such interest is based on
common law, statute, or contract, and including but not limited to the security
interest lien arising from a security agreement, mortgage, encumbrance, pledge,
collateral assignment, conditional sale or trust receipt, or a lease,
consignment, or bailment for security purposes.
"Loans"
means the Revolving Loan.
"Loan
Documents" means all credit accommodations, notes, loan agreements, and any
other agreements and documents, now or hereafter existing, creating, evidencing,
securing or relating to any or all of the Obligations, together with all
amendments, modifications, renewals or extensions thereof, including without
limitation, this Agreement, the Revolving Note, the Security Documents, the
Subordination Agreement, the Intellectual Property Agreements and all other
promissory notes, guaranties, mortgages, security documents, deeds to secure
debt, deeds of trust, pledges, assignments, contracts, negative pledges, powers
of attorney, environmental indemnity agreements, landlord waivers, trust account
agreements, and written matters, whenever executed and delivered to Lender, with
respect to the transactions contemplated by this Agreement.
“London
Banking Day” means a day other than Saturday or Sunday on which dealings in
deposits in U.S. dollars are transacted in the London interbank
market.”
"Material
Adverse Effect" means a material adverse effect on (a) the business, operations,
properties, financial condition of the Borrower, taken as a whole, (b) the
validity or enforceability of this Agreement or any of the other Loan Documents
(c) the rights or remedies of Lender hereunder or under any of the other Loan
Documents or (d) the ability of Borrower to perform its Obligations hereunder or
under any of the other Loan Documents.
"Maturity
Date" means October 22, 2010.
“Minimum
Cash Balance” means that term as defined in Section 7.2.
"Multiemployer
Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to
which Borrower or any ERISA Affiliate is making or accruing an obligation to
make contributions or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Note"
means the Revolving Note.
"Obligations"
means any and all obligations and indebtedness owing by Borrower to Lender
and/or to any of Lender's direct and indirect affiliates and subsidiaries, under
the Loan Documents, of every kind and description, now or hereafter existing,
whether or not such debts or obligations are primary or secondary, direct or
indirect, absolute or contingent, sole, joint or several, secured or unsecured,
due or to become due, contractual or tortious, arising by operation of law, by
overdraft, or otherwise, including without limitation, all principal, interest,
fees, expenses, reasonable attorneys' fees and costs, and/or allocated
reasonable fees and costs of Lender's legal counsel, that have been or may
hereafter be contracted or incurred.
"Payment
Date" means the date on which any payment of principal or interest is
due.
"PBGC"
means the Pension Benefit Guaranty Corporation or any entity succeeding to any
or all of its functions under ERISA.
"Permitted
Liens" means those Liens permitted pursuant to Section 6.8 hereof.
“Permitted
Debt” means Debt permitted pursuant to Section 6.9 hereof.
"Person"
means a human being, sole proprietorship, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, organization,
joint venture, institution, Governmental Authority, or other entity of any
nature whatsoever.
"Plan"
means any plan established, maintained, or to which contributions have been made
by Borrower or any ERISA Affiliate for the benefit of any of their
employees.
"Prohibited
Transaction" means any transaction set forth in Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1954, as amended from time to
time.
"Receivable"
or "Receivables" means the right to payment for goods sold or leased or for
services rendered by Borrower.
"Release"
means any spilling, leaking, migrating, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing into the
environment of any Contaminant.
"Reportable
Event" means any of the events set forth in Section 4043 of ERISA.
"Revolving
Loan" has the meaning set forth in Section 2.1(b) of this
Agreement.
"Revolving
Advance" means that term as defined in Section 2.1(a) of this
Agreement.
"Revolving
Note" means that term as defined in Section 2.1(b) of this
Agreement.
"Security
Agreement" means the Security Agreement between Lender and Borrower of even date
herewith.
"Security
Documents" means the Security Agreement, and all other documents, contracts,
assignments, instruments and the like now or hereafter securing the
Loans.
"Senior
Funded Debt" means that term as defined Section 7.3(d) of this
Agreement.
"Senior
Funded Debt Ratio" shall have the meaning set forth in Section 7.2 of this
Agreement.
"Solvent"
means, as to any Person, that such Person on a particular date (a) at fair
valuation, all of the properties and assets of such Person are greater than the
sum of the debts, including contingent liabilities of such Person, (b) the
present fair saleable value of the properties and assets of such Person is not
less than the amount that would be required to pay the probable liability of
such Person on its debts and they become absolute and matures, (c) such Person
is able to realize upon its properties and assets and pay its debts and other
liabilities, contingent obligations and other commitments as they mature in the
normal course of business.
"Subordinated
Note" means the Convertible Debenture dated November 14, 2008, as amended, by
Borrower in favor of GSP in the original principal amount of
$5,000,000.
"Subordination Agreement" means the
Subordination Agreement, of near or event date herewith, among Lender and GSP
and assented to by Borrower.
"Subsidiary"
means any Person of which Borrower directly or indirectly through one or more
intermediaries (i) owns shares of stock having ordinary voting power to elect a
majority of the Board of Directors (or equivalent managing body) of such Person
(irrespective of whether at the time stock of any other class or classes of such
Person shall or might have voting power upon the occurrence of any contingency),
or (ii) owns more than 50% of any other equity or ownership interest in such
Person; or (iii) controls the management of such Person.
"UCC"
means the Uniform Commercial Code as in effect in the State of Connecticut from
time to time.
“Un-insured
Eligible Foreign Accounts Receivable” means a Receivable which (i) meets all of
the criteria of Eligible Accounts Receivable as set forth above; (ii) is from an
Account Debtor located outside the United States or Canada; (iii) the Account
Debtor does not have an irrevocable letter of credit, or credit insurance in
form and substance and issued by an insurer satisfactory to Lender, (iv) is
payable in the full amount of the face value of the Receivable in United States
dollars; and (v) has not been determined by Lender to be
ineligible;
ARTICLE 2.
(a) Subject
to the terms and conditions set forth in this Agreement, Lender agrees to make
advances (each a "Revolving
Advance" and collectively "Revolving Advances") to
Borrower from time to time on any Business Day during the period from the date
of this Agreement up to, but not including, the Maturity Date; provided, that at no time
shall the aggregate outstanding principal balance of all Revolving
Advances exceed the lesser of (i) the Borrowing Base or (ii) the
Commitment. Subject to the limits of this Agreement, Borrower may
borrow, pay, prepay (pursuant to Section 2.9(a) below), and re-borrow under this
Section 2.1.
(b) All
Revolving Advances shall be evidenced by, and repaid with interest in accordance
with, a single promissory note of Borrower in the form of Exhibit A attached
hereto, duly completed, executed, and delivered to Lender, in the principal
amount of up to One Million Dollars ($1,000,000.00), dated the date of this
Agreement, and payable to Lender on the Maturity Date if not sooner demanded in
accordance with this Agreement (such promissory note is referred to herein as
the "Revolving
Note"). Borrower hereby authorizes Lender to record on the
Revolving Note or in its internal computerized records the amount of each
Revolving Advance and of each payment of principal received by Lender
on account of the loans evidenced by the Revolving Note (individually, a "Revolving Loan" and
collectively, the "Revolving
Loans"), which recordation shall, in the absence of manifest error, be
conclusive as to the outstanding principal balance of the Revolving Loan and
shall be considered correct and binding on Borrower provided, that the
failure to make such recordation with respect to any Revolving Advance or
payment shall not limit or otherwise affect the obligations of Borrower under
this Agreement or the Revolving Note and provided further that
with respect to each recordation Lender shall provide Borrower with notice of
such recordation and Borrower shall have thirty (30) days from the date of
receipt of such notice to contest such recordation. For
purposes of this Section 2.1(b), Lender shall be deemed to have given Borrower
notice upon Lender’s delivery to Borrower of a monthly statement indicating the
amounts owed by Borrower to Lender as of the date of such
statement.
(a) Borrower
shall give Lender irrevocable notice by telecopy or otherwise in writing of its
request that Lender make a Revolving Advance (each a “Borrowing Request”) not
later than 11:00 a.m. Connecticut time on the Drawdown Date
thereof. Notice received by Lender after 11:00 a.m. Connecticut time
shall be loaned against by Lender on the next Business Day after the proposed
Drawdown Date. Subject to the fulfillment of the applicable
conditions set forth in Article 3 hereof, Lender will make the Revolving
Advance in immediately available funds by crediting the amount thereof to
Borrower's account with Lender not later than the close of business on the
Drawdown Date, or if applicable, the next Business Day thereafter.
Section
2.4 Method of
Payment. Borrower shall make each payment due under this
Agreement and under the Revolving Note to Lender at its Head Office or any other
office of Lender not later than 1:00 P.M., Hartford, Connecticut time, on the
date when due in lawful money of the United States in immediately available
funds. Borrower hereby authorizes Lender to charge from time to time
(including without limitation at any time which any amount is due under this
Agreement) any amount due under this Agreement or the Revolving Note, including
without limitation principal, interest, fees and charges, against any account of
Borrower with Lender. Whenever any payment to be made under this
Agreement or under the Revolving Note shall be stated to be due on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall be included in the computation of
the payment of interest.
(a) Pre-default
Rates. During the period from the date made through and
including the date of payment in full, each Revolving Advance shall bear
interest on the outstanding principal amount thereof at the LIBOR
Rate. Interest shall be due and payable as set forth in the Revolving
Note.
In the event that applicable law,
treaty or regulation or directive from any government, governmental agency or
regulatory authority enacted after the date hereof, or any change therein or in
the interpretation or application thereof, or compliance by Lender with any
request or directive (whether or not having the force of law) enacted after the
date hereof from any central bank or government, governmental agency or
regulatory authority, shall:
(i) subject
Lender to any tax of any kind whatsoever (except taxes on the overall net income
or gross receipts of Lender) with respect to this Agreement, the Note or any of
the Loans made by it, or materially change the basis of taxation of payments to
Lender of principal, interest or any other amount payable hereunder or
thereunder (except for changes in the rate of tax on the overall net income of
Lender);
(ii) impose,
increase or hold applicable any reserve, special deposit, compulsory loan or
similar requirements against assets held by, or deposits or other liabilities in
or for the account of, advances or loans or other extensions of credit by, or
any other acquisition of funds by, any office of Lender, including (without
limitation) pursuant to Regulations of the Board of Governors of the Federal
Reserve System; or
(iii) in
the opinion of Lender, cause the Note, any Loans or this Agreement to be
included in any calculations used in the computation of regulatory capital
standards; or
(iv) impose
on Lender any other condition;
and the
result of any of the foregoing is to increase the cost to Lender of making,
converting into, continuing and/or maintaining the Loans (or any part thereof)
by an amount that Lender deems to be material, or to reduce the amount of any
payment (whether of principal, interest or otherwise) with respect of any of the
Loans by an amount that Lender deems material, then, in any case, Borrower, as
appropriate, shall promptly pay Lender, within five (5) days of its demand, such
additional amounts necessary, in the reasonable judgment of Lender, to
compensate Lender for such additional costs or such reduction, as the case may
be (collectively the "Additional
Costs"). Lender shall certify the amount of such Additional
Costs to Borrower, and such certification, absent manifest error, shall be
deemed conclusive. Lender agrees that, as promptly as practicable
after it becomes aware of any circumstances referred to above which would result
in any Additional Costs, Lender shall, to the extent not inconsistent with its
internal policies of general application or applicable law or regulation, use
reasonable commercial efforts to minimize costs and expenses incurred by it and
payable to it by Borrower pursuant to this Section 2.9, and Lender shall
calculate such Additional Costs among its borrowers in a nondiscriminatory way
to the extent such Additional Costs do not relate solely to this Agreement, the
Notes or the Loans.
(a) any
lack of validity or enforceability of all or any portion of this Agreement or
any other agreement or any instrument relating hereto;
(b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the obligations of Borrower;
(c) the
existence of any claim, setoff, defense or other right that Borrower may have;
or
(d) any
amendment or wavier of or consent to departure from any of the Loan Documents,
or all or any of the obligations of Borrower in respect of the Loans or this
Agreement.
ARTICLE 3.
(a) Lender
shall have received each of the following, in form and substance satisfactory to
Lender and its counsel:
(1) This
Agreement and the Note duly executed and delivered by Borrower;
(2) The
Security Agreement duly executed and delivered by Borrower together
with: (1) copies of the existing UCC-1 financing statements duly
filed or to be duly filed under the UCC in all jurisdictions desirable, in the
opinion of Lender, to perfect the security interests created by the Security
Agreement;, together with UCC-3s in form and substance satisfactory to Lender,
terminating any UCC-1 on file (other than those listed on Schedule 6.8, or with
respect to any Permitted Liens);
(3) Copies
of all corporate action taken by Borrower, including resolutions of its Board of
Directors, authorizing the execution, delivery, and performance of the Loan
Documents to which Borrower is a party and each other document to be delivered
pursuant to this Agreement, certified as of the date of this Agreement by
Borrower;
(4) A
certificate, dated as of the date of this Agreement, of the Secretary of
Borrower certifying the names and true signatures of the officers or managers of
Borrower authorized to sign the Loan Documents to which each of Borrower is a
party and the other documents to be delivered by Borrower under this
Agreement;
(5) A
favorable opinion of independent counsel for Borrower satisfactory to Lender,
dated the date of this Agreement;
(6) The
Security Documents duly executed by Borrower;
(7) Intentionally
Omitted;
(8) Certificates
of insurance and copies of insurance policies evidencing compliance with the
insurance requirements of Section 10 of the Security Agreement;
(9) The
Copies of the certificate of incorporation (certified by the Secretary of the
State of Delaware) and bylaws of Borrowers;
(10) Certificates
of Good Standing issued by the Secretary of the State of Delaware for
Borrower;
(11) A
Certificate of Good Standing or Existence issued by the Secretary of State of
each state, including without limitation, the Commonwealth of Massachusetts, in
which Borrowers are qualified to do business evidencing that Borrower is
qualified to do business in said state and Borrower is in good standing in such
state;
(12) Tax
clearance letters from the Delaware Department of Revenue for
Borrower;
(13) The
Subordination Agreement duly executed and delivered by GSP and assented to by
Borrower, together with such other subordination agreements as shall be
necessary to subordinate all other indebtedness for borrowed money owing by
Borrower to third parties (other than GSP), on terms and conditions satisfactory
to Lender;
(14) An
Environmental Indemnity Agreement in favor of Lender from Borrower;
(15) Landlord
Waiver with respect to 00 Xxxxxxx Xxxx, Xxxxxx, XX 00000 location of
Borrower;
(16) A
Borrowing Base Certificate dated the date hereof with respect to the Revolving
Loan;
(17) A
Compliance Certificate dated as of the closing date evidencing Borrower's
compliance with the financial covenants set forth in Sections 7.1 and 7.2 of the
Agreement;
(18)
Financial information in form and substance satisfactory to Lender;
(19) All
other documents, instruments and agreements that Lender shall reasonably require
in connection with this Agreement;
(20) Payment
of the Facility Fee due Lender by the Borrower; and
(21) The
Intellectual Property Agreements.
(b)
All representations and warranties contained in this Agreement shall be true and
correct in all material respects.
(a) On
each Drawdown Date, the following statements shall be true, and each request by
Borrower for a Revolving Advance shall be deemed to be a representation and
warranty by Borrower that:
(1) The
representations and warranties contained in Article 4 of this Agreement and
contained in each of the other Loan Documents containing representations and
warranties are correct in all material respects on and as of such Drawdown Date
as though made on and as of such date (except to the extent made as of a
specific date in which case such representations are true and
correct in all material respects as of such date); and
(2) No
Default or Event of Default has occurred and is continuing, or would result from
or after giving effect to such Revolving Advance; and
(b) Borrower
shall provide Lender with a Borrowing Base Certificate; and
(c) At
the time of each Revolving Advance, the sum of the aggregate outstanding
principal amount of all Revolving Advances including the requested Revolving
Advance does not exceed the Credit Availability.
ARTICLE 4.
To induce
Lender to enter into this Agreement, Borrower represents and warrants to Lender
that:
Section
4.1 Incorporation, Existence,
and Due Qualification. Borrower (a) is a corporation, duly
organized, validly existing, and in good standing under the laws of the State of
Delaware (b) has all power and authority necessary to own its properties
and to carry on the business in which it is now engaged or proposed to be
engaged; and (c) is duly qualified and in existence as a foreign
corporation under the laws of each other jurisdiction in which such
qualification is required, except where the failure to so qualify would not
result in a Material Adverse Effect.
Section
4.2 Power and
Authority. The execution and delivery by Borrower of the Loan
Documents and the performance by Borrower of the Loan Documents, and the
borrowings hereunder, are within the powers of Borrower and have been duly
authorized by all necessary corporate and, if required, shareholder action, and
do not and will not (a) violate (i) the certificate of incorporation or other
constitutive documents or bylaws of Borrower or any of its Subsidiaries, or (ii)
any material provision of any law, rule, regulation (including, without
limitation, Regulation U of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination, or award
presently in effect having applicability to Borrower, except as would not have a
Material Adverse Effect, or (b) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under any
indenture or loan or credit agreement or any other material agreement, lease, or
instrument to which any Borrower is a party or by which any Borrower or its
properties may be bound or affected, except as would not have a Material Adverse
Effect, or (c) result in the creation or imposition of any Lien (except in favor
of Lender or liens permitted under Section 6.8) upon or with respect to any
property or assets now owned or hereafter acquired by Borrower or any of its
Subsidiaries.
(a) Borrower
has submitted to Lender various historical consolidated financial statements and
such consolidated financial information fairly presents in all material respects
the financial condition and the results of operations of Borrower as of the
dates thereof and for the periods indicated therein; that such financial
statements disclose all material liabilities, direct or contingent of Borrower
as of the dates hereof and the periods indicated; that such financial statements
have been prepared in accordance with GAAP consistently maintained throughout
the periods involved; that, as of the date of said financial information
submitted, to Borrower’s knowledge, there were no material unrealized or
unanticipated losses from any unfavorable commitments of Borrower;
and that there has been no material adverse change in the business,
assets, operations, or condition, financial or otherwise of Borrower, taken as a
whole, from that set forth in said financial statements.
(b) After
giving effect to the transactions contemplated by this Agreement, Borrower is,
and on the Drawdown Date of each Revolving Advance will be,
Solvent.
(c) Except
as set forth in Schedule 4.4, upon
consummation of the transactions contemplated under the Loan Documents, Borrower
will not have any outstanding Debt other than the obligations and indebtedness
under this Agreement and trade debt incurred in the ordinary course of business
and the GSP Subordinated Debt.
(d) Neither
this Agreement nor any written information, exhibit, report, document, or
certificate furnished to Lender by or on behalf of Borrower in connection with
this Agreement (in each case as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not materially misleading;
provided however, that with respect to projected financial information, the
Borrower represents only that such information was prepared in good faith based
upon good faith assumptions believed to be reasonable at the
time. Borrower has disclosed to Lender all facts known to Borrower
that could reasonably result in a Material Adverse Effect.
(a) They
are genuine, are in all respects what they purport to be, are not evidenced by a
judgment and are only evidenced by one, if any, executed original instrument,
agreement, contract or document, which has been delivered to
Lender;
(b) They
represent undisputed, bona fide transactions completed in accordance with the
terms and provisions contained in any documents related thereto;
(c) The
amounts of the face value shown on any schedule of accounts or accounts
receivable aging report provided to Lender, and all invoices and statements
delivered to Lender with respect to any Receivable are actually and absolutely
owing to Borrower and are not contingent for any reason;
(d) Borrower
has not made any agreement with any Account Debtor thereunder for any deduction
therefrom, except a discount or allowance allowed by Borrower in the ordinary
course of its business for prompt payment;
(e) To
the knowledge of Borrower, there are no facts, events or occurrences which in
any way impair the validity or enforcement thereof or tend to reduce, in any
material way, the amount payable thereunder from the amount of the invoice face
value with respect to any, Eligible Accounts Receivable or Insured Eligible
Foreign Accounts Receivable or Uninsured Eligible Foreign Accounts Receivable,
and on all contracts, invoices and statements delivered to Lender with respect
thereto;
(f) To
the knowledge of Borrower's officers, directors and key employees, all Account
Debtors, under any Eligible Accounts Receivable or Insured Eligible Foreign
Accounts Receivable or Uninsured Eligible Foreign Accounts Receivable, (i) had
the capacity to contract at the time any contract or other document giving rise
to the Receivable was executed, (ii) are solvent, and (iii) are not the subject
of a bankruptcy or insolvency proceeding of any kind;
(g) The
goods giving rise thereto are not, and were not at the time of the sale thereof,
subject to any lien, claim, encumbrance or security interest, except those of
Lender, those terminated prior to the date hereof or those subordinate to
Lender's security interest;
(h)
Borrower has no knowledge of any fact or circumstance which would materially
impair the validity or collectability thereof;
(i) To
Borrower's knowledge, there are no proceedings or actions which are pending
against any Account Debtor thereunder which might result in any material adverse
change in the financial condition of such Account Debtor; and
(j) They
have not been pledged, assigned or transferred to any other Person.
(a) The
current and anticipated uses of any real property leased, owned or otherwise
used by Borrower comply with all Environmental Laws and all other laws,
ordinances or regulations pertaining to the use and operation of such premises,
except as would not have a Material Adverse Effect;
(b) To
Borrower's knowledge, no Release of any Contaminants has occurred or is now
occurring upon any real property leased, owned or otherwise used by Borrower;
and
(c) Borrower
has not been, is now or is threatened in writing to be the subject of any
Enforcement Action with respect to any real property leased, owned or otherwise
used by Borrower.
ARTICLE
5.
Borrower
covenants and agrees that so long as all or any portion of the Commitment
remains outstanding and until the payment in full of the Loans and the
performance, if any, of all of its other obligations hereunder, Borrower
shall:
(a) Copies
of filed Form 10K within one (1) business day of the filing of same with the SEC
together with a compliance certificate evidencing, with supporting material,
compliance with the financial covenants set forth in Article 7 (the "Compliance
Certificate"). All such financial statements included in the
Form 10K shall be audited by an independent certified public accountant
reasonably acceptable to Lender.
(b) Copies
of filed Form 10Q within one (1) business day of the filing of same with the SEC
together with a Compliance Certificate evidencing, with supporting material,
compliance with the financial covenants set forth in Article 7.
(c) As
soon as available and in no event later than thirty (30) days after the end of
each fiscal year, annual cash flow projections, presented on a monthly
basis.
(d) As
soon as available and in no event later than ten (10) days after the end of each
month, (i) a Borrowing Base Certificate in the form attached hereto as Exhibit B (a “Borrowing Base Certificate”)
and (ii) an aging of Receivables, including a breakdown of Eligible Accounts
Receivable, Insured Eligible Foreign Accounts Receivable, and Uninsured Eligible
Foreign Accounts Receivable as of the end of such month and (iii) an aging of
accounts payable as of the end of such month (together with the Borrowing Base
Certificate, the "Collateral
Package");
(e) Within
three (3) Business Days of Borrower's receipt thereof, and in any event
simultaneously with the delivery of the financial statements required by
subsection 5.8(a) hereof, copies of any reports and management letters submitted
to Borrower by independent certified public accountants in connection with the
examination of financial statements.
(f) Within
thirty (30) days of filing with the Internal Revenue Service, copies of federal
income tax returns of Borrower together with all schedules thereto, including,
without limitation, K-1 statements, if applicable, each of which shall be signed
and certified by Borrower to be true, correct and complete copies of such
returns. In the event an extension is filed Borrower shall also
deliver a copy of such extension within thirty (30) days of filing.
(g) Within
three (3) Business Days of the receipt thereof, notice of all actions, suits,
and proceedings before any Governmental Authority affecting Borrower, which, if
determined adversely to Borrower could have a Material Adverse Effect, and such
additional information regarding such actions, suits, and proceedings as Lender
may reasonably request from time to time.
(h) Promptly
upon, and in any event within one (1) Business Day of, the occurrence of each
Default or Event of Default, a written notice setting forth the details of such
Default or Event of Default and the action which is being taken or proposed to
be taken by Borrower with respect thereto.
(i) Upon
request of Lender, copies of all reports (including annual reports) and notices
which Borrower files with or receives from the PBGC or the U.S. Department of
Labor under ERISA; and as soon as possible but not later than ten (10) days
after Borrower knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that the PBGC or
Borrower has instituted or will institute proceedings under Title IV of ERISA to
terminate any Plan, Borrower will deliver to Lender a certificate of the chief
financial or accounting officer of Borrower setting forth details as to such
Reportable Event or Prohibited Transaction or Plan termination and the action
Borrower proposes to take with respect thereto.
(j) Within
three (3) Business Days of the furnishing thereof, copies of any material
statement or report furnished to any other party pursuant to the terms of any
material indenture, loan, credit, or similar agreement and not otherwise
required to be furnished to Lender pursuant to any other clause of this
Section.
(k) Together
with any of the financial statements required to be delivered to Lender pursuant
to this Section 5.8, a certificate from Borrower signed on behalf of Borrower by
its president or chief financial or accounting officer, certifying except as
otherwise disclosed, no Default or Event of Default exists and no event has
occurred which, upon the giving of notice or lapse of time or both would
constitute a Default or an Event of Default.
(l) Such
other information respecting the condition or operations, financial or
otherwise, of Borrower as Lender may from time to time reasonably
request.
With the
exception of Form 10K and Form 10Q filings and other public statements, the
statements, reports, certificates, agings, returns and notices described above
shall be in form and detail as shall be satisfactory to Lender and shall be
certified on behalf of Borrower by Borrower's president or chief financial or
accounting officer as being true, complete and correct in all material
respects.
ARTICLE 6.
Borrower
covenants and agrees that, without the prior written consent of Lender, so long
as all or any portion of the Commitment remains outstanding, until the payment
in full of the Loans and the performance of all its obligations hereunder,
Borrower shall not:
(a) Liens
in favor of Lender;
(b) Liens
for taxes or assessments or other government charges or levies not yet due and
payable or, if due and payable, Liens for taxes being contested in good faith by
appropriate proceedings and for which appropriate cash reserves are maintained
in accordance with GAAP;
(c) Liens
(other than Liens imposed by ERISA) incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance or other types of social security or retirement benefits;
(d) Liens
imposed by law, such as mechanics, materialmen's, landlords', warehousemen's,
and carriers' Liens, and other similar Liens, securing obligations incurred in
the ordinary course of business which do not exceed in the aggregate
$50,000 and which
are not past due for more than thirty (30) days, unless such Liens are being
contested in good faith by appropriate proceedings and appropriate cash reserves
have been established therefore in accordance with GAAP;
(e) deposits
to secure the performance of bids, trade contracts and leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature in the ordinary course of business;
(f) liens
in respect of judgments that would not constitute an Event of
Default;
(g) Purchase
money security interests and/or liens in connection with the financing of or
Capital Leases, not to exceed $50,000 in aggregate payments per year, incurred
in connection with the purchase of fixed assets.
(h) Liens,
if any, described in Schedule 6.8, and any renewals or extensions thereof,
provided that (i) the property covered thereby is not changed, (ii) except as
permitted pursuant to clause (b) of Section 6.9 the amount secured or benefited
thereby is not increased, (iii) the direct or any contingent obligor with
respect thereto is not changed, and (iv) any renewal or extension of the
obligations secured or benefited thereby is otherwise permitted
hereunder);
(i) Landlord
and lessors’ liens in respect of rent not in default;
(j) Liens
in favor of GSP securing the GSP Subordinated Debt to the extent such Liens
remain subordinated, to the Liens of Lender securing the Obligations, pursuant
to the terms of the Subordination Agreement.
(a) Debt
of Borrower under this Agreement;
(b) Debt
(if any) described in Schedule 4.4, and any
renewals or extensions or refinancing thereof provided that (i) the
amount of such Debt is not increased at the time of such renewals or extensions
except by an amount equal to fees and expenses reasonably incurred, in
connection with such refinancing, renewals or extensions and by an amount equal
to any existing commitments unutilized thereunder, and the direct or contingent
obligor with respect thereto is not changed as a result of or in connection with
such renewals, extensions, or refinancing and (ii) the result of such extension
or renewal or refinancing shall not be an earlier maturity;
(c) Accounts
payable to trade creditors for goods or services and current operating
liabilities (other than for borrowed money), in each case incurred in the
ordinary course of business and paid within the required time, unless contested
in good faith, by appropriate proceedings;
(d) Debt
incurred in connection with the purchase of fixed assets or capitalized lease
indebtedness, not to exceed $50,000 in aggregate payments per year, in either
case only secured by the fixed asset acquired;
(e) Debt
of a Borrower to any Subsidiary or Subsidiary to Borrower provided such Debt
constitutes Collateral and is evidenced by such documentation and on such terms
as Lender may reasonably require and provided further that such Debt is at all
times unsecured and subordinate to the Loan; or
(f) Debt
for refundable deposits or advances in the ordinary course of
business.
ARTICLE 7.
Borrower
covenants and agrees that so long as all or any portion of the Commitment
remains outstanding and until the payment in full of the Loans and the
performance of all its obligations hereunder, Borrower shall comply with the
covenants set forth below.
(a) "EBITDA"
means earnings
before expenses for interest, taxes, depreciation and amortization as reflected
on Borrower's financial statements for such period plus (i) any extraordinary,
unusual or non recurring expenses or losses (including whether or not otherwise
includable as a separate item in the statement of such net income for such
period, non cash losses on sales of assets outside of the ordinary course of
business), provided that such expenses or losses shall not exceed $100,000, in
the aggregate, in any twelve month period, (ii) equity based
compensation expense; (iii) such other allowable adjustments as agreed to by
Lender in its sole discretion and (iv) the transaction expenses
hereunder..
(b) "Senior
Funded Debt" means the total amount of Debt due to Lender by
Borrower.
ARTICLE 8.
The Loans
are secured and guaranteed by and pursuant to the Security
Documents.
ARTICLE 9.
(a) With
respect to Borrower, any one or more of the following events (whether voluntary
or involuntary or effected by operation of law or otherwise) shall be an Event
of Default:
(1) Borrower
shall (A) fail to pay the principal of, premium, if any, or interest on the
Revolving Note when due, or (B) shall fail to pay any amount of any fee, or any
other liability or indebtedness owing by Borrower to Lender within ten (10) days
of when due;
(2) Any
representation or warranty made by or on behalf of Borrower in any of the Loan
Documents, or which is contained in any certificate, document, opinion, report,
or financial or other statement furnished at any time under or in connection
with any Loan Document, shall have been incorrect in any material respect on or
as of the date made or deemed made;
(3) Borrower
shall fail to comply with any of the covenants contained in Sections 5.5,
5.8(d), 5.8(f), 5.8(g), 5.8(h), 5.8(i), 5.9, 5.12 and 5.13 and Articles 6 and 7,
inclusive;
(4) Borrower
shall fail to perform or observe any other term, covenant or agreement contained
herein or in any of the other Loan Documents for thirty (30) days
after written notice of such failure shall have been given to Borrower by
Lender;
(5) (A)
The occurrence of and “Event of Default” (as defined in the GSP Subordinated
Debt Documents) shall permit the GSP Subordinated Debt to become due and payable
prior to the stated maturity thereof or (B) Borrower shall (i) fail to pay any
indebtedness for borrowed money (other than the Revolving Note and the GSP
Subordinated Debt), or any other financial accommodation, in an aggregate amount
in excess of $50,000
including any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) and such
failure to pay extends beyond any grace period, (ii) fail to perform or observe
any term, covenant, or condition on its part to be performed or observed under
any agreement or instrument relating to any such indebtedness, when required to
be performed or observed (including any applicable grace periods), if the effect
of such failure to perform or observe is to cause or permit such indebtedness to
become due and payable prior to the stated maturity thereof, (iii) be in default
beyond any applicable cure or grace period under any other indebtedness (other
than GSP Subordinated Debt), contracts or agreements of Borrower to or with
Lender in excess of $50,000, or (D) fail to perform or observe any term,
covenant, or condition on its part to be performed or observed under any
material agreement (other than any GSP Subordinated Debt Document) where such
failure would have a Material Adverse Effect;
(6) Borrower
(A) shall generally not, or shall be unable to, or shall admit in writing its
inability to pay its respective debts as such debts become due; or (B) shall
make an assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver, or trustee for it or a
substantial part of its respective assets; or (C) shall commence any proceeding
under any bankruptcy, reorganization, arrangements, readjustment of debt,
dissolution, or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (D) shall have any such petition or application filed or
any such proceeding commenced against it in which an order for relief is entered
or adjudication or appointment is made and which remains undismissed for a
period of sixty (60) days or more; or (E) by any act or omission shall indicate
its consent to, approval of, or acquiescence in any such petition, application,
or proceeding, or order for relief, or the appointment of a custodian, receiver,
or trustee for all or any substantial part of its respective
properties;
(7) One
or more tax liens, writ of garnishment or attachment, judgments, decrees, or
orders for the payment of money shall be rendered against Borrower, in an
aggregate of $50,000 or more, and such judgments, decrees, or orders shall
continue unsatisfied and in effect for a period of thirty (30) consecutive days
without being vacated, discharged, satisfied, or stayed or bonded pending
appeal;
(8) Any
Security Document shall at any time after its execution and delivery and for any
reason cease to create a valid and perfected first priority (except as set forth
in this Agreement) security interest in and to the material property purported
to be subject to such Security Document, except as caused by Lender's act or
failure to act, or otherwise to be in full force and effect, or any Security
Document shall be declared null and void, or the validity or enforceability
thereof shall be contested by Borrower, or Borrower shall deny it has any
further liability or obligation under any Security Document, or Borrower shall
fail to perform any of its obligations under any Security Document subject to
any notice and cure provisions contained in any such Security
Document;
(9) Any
event shall occur or exist with respect to Borrower which subjects Borrower to
any tax, penalty, or other liability under or in connection with ERISA in excess
of $100,000;
(10) There
shall occur any uninsured damage to or loss, theft, or destruction of any
Collateral in an aggregate amount or having an aggregate value in excess of $
100,000;
(11) Borrower
shall cease to conduct its business materially as currently conducted or is
enjoined, restrained or in any way prevented by court order from conducting all
or any material part of its business affairs;
(12) There
shall occur any Material Adverse Effect;
(13) Any
of the following events shall occur or exist with respect to
Borrower: (i) a sale of all or substantially all of its assets to any
Person or related group of Persons as an entirety or substantially as an
entirety in one transaction or a series of transactions, (ii) a merger or
consolidation with or into another corporation, partnership or limited liability
company or the merger of another corporation, partnership or limited
liability company into Borrower, with the effect that the shareholders or
members of Borrower, on the date hereof hold less than 51% of the total voting
power entitled to vote in the election of directors, managers, trustees or
general partners of the surviving corporation or partnership after such merger
or consolidation, (iii) the liquidation or dissolution of Borrower;
or
(14) Borrower
fails to satisfy at least one of the following: (i) to establish its primary
domestic cash management and depository accounts (other than deposit accounts
specially and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of the Borrower’s employees)
with Lender within thirty (30) days after the date of Closing, or (ii) provided
Borrower has obtained a deposit account control agreement for such accounts
reasonably acceptable to Lender within (30) days of Closing, to establish its
primary domestic cash management and depository accounts with Lender within
sixty (60) days of Closing.
(b) Upon
the occurrence and during the continuance of an Event of Default, (1) Lender may
declare the Commitment to be terminated, whereupon the same shall forthwith
terminate including without limitation any obligation to make any advances under
the Revolving Loan, and/or (2) Lender may declare all the outstanding
Obligations to be forthwith due and payable, whereupon the Commitment shall be
terminated and all Obligations shall become and be forthwith due and payable,
without presentment, demand, protest, or notice of any kind, all of which are
hereby expressly waived by Borrower, and Borrower shall pay and perform all of
the outstanding Obligations in full in cash; provided, that upon
the occurrence of any event described in Section 9.1(a)(6), the Commitment shall
terminate and the outstanding Obligations, all interest thereon, and all such
other amounts payable under this Agreement shall become automatically due and
payable, without presentment, demand, protest, or further notice of any kind,
all of which are hereby expressly waived by Borrower. Upon
satisfaction in full of the outstanding Obligations and the termination of the
Commitment, Lender will promptly return any and all Collateral to Borrower,
including, but not limited to, cash Collateral, subject to the terms and
conditions of the Subordination Agreement.
(a) If
to Lender, to it at:
Xxxxxxx
Bank, National Association
00 Xxx
Xxxxxx
Xxx
Xxxxx, XX 00000
Attn: Xxxxx
Xxxxx, Vice President
Telephone:
(000) 000-0000
Telecopier:
(000) 000-0000
With a
copy to:
Xxxxxxx
& Xxxxxxx LLP
Xxx
Xxxxxxxxxxxx Xxxxx
Xxxxxxxx,
XX 00000-0000
Attn: Xxxxx
X. Xxxxxxxxx, Esq.
Telephone:
(000) 000-0000
Telecopier:
(000) 000-0000
(b) If
to Borrower, at:
00 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx
Attention: Xxxxx Xxxxxx, VP of Finance
& Chief Accounting Officer
Telephone: (000) 000-0000
Telecopier: (000)
000-0000
With a
copy to:
|
|
Xxxxxxxxx
Xxxxxxxxxx & Xxxx LLP
|
|
|
Prudential
Tower
|
|
|
000
Xxxxxxxx Xxxxxx
|
|
|
Xxxxxx,
Xxxxxxxxxxxxx 00000
|
|
|
Attn: Xxxxxx
X. Xxxxxx, P.C.
|
Telephone: (617)
000- 0000
Telecopier: (000)
000-0000
or to
such other address (and/or facsimile transmission number) as Borrower or Lender,
as the case may be, shall have specified in a notice sent to the other in
accordance with this Section.
(a) Borrower
agrees to pay on demand all reasonable costs and expenses in connection with the
preparation, execution, delivery, filing and recording of any of the Loan
Documents, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for Lender with respect thereto and with respect to advising
Lender as to its rights and responsibilities under any of the Loan Documents
including without limitation, ongoing advice following the effectiveness of this
Agreement and all reasonable costs and expenses, if any, in connection with the
administration, protection, collection and/or other enforcement of this
Agreement or any of the Loan Documents. In addition, Borrower shall
pay any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing, and recording of any
of the Loan Documents and the other documents to be delivered under any of the
Loan Documents, and agrees to hold and save Lender harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
failure to pay such taxes and fees.
(b) To
the fullest extent permitted by applicable law, Borrower agrees to defend,
indemnify and hold harmless Lender, any other holder of the Obligations and each
of the present and future shareholders, partners, directors, officers,
employees, agents, counsel and successors and assigns of each of them
(collectively with Lender the "Lender Parties") from and
against any and all loss, cost, expense, claim, liability (including strict
liability) or asserted liability incurred from or out of the Loans, the
execution, delivery or performance of this Agreement, or any of the documents or
instruments to be executed and delivered hereunder, or otherwise arising out of
the debtor/creditor relationship between them, Lender or Lender Parties relating
to the Loans, the exercise of any of Lender's rights under the Loans, any
litigation or proceeding instituted or conducted by any Governmental Authority,
any act or omission of Borrower or otherwise, except to the extent (and only to
the extent) that the same arises from the gross negligence or willful misconduct
of Lender. Borrower shall have the right to choose counsel to defend
any such action, provided that such counsel is reasonably acceptable to Lender;
and provided further that neither
Borrower nor such counsel shall settle or compromise any such claim with respect
to Lender without the prior written consent of Lender, unless such settlement or
compromise includes a full and unconditional release of Lender from all
liability in respect of such claim.
(c) The
obligations of Borrower described in this Section 10.5 shall survive the closing
of the transactions described in this Agreement, including the making of any and
all Loans and the payment and satisfaction of the Revolving Note.
(a) This
Agreement and the other Loan Documents shall be construed in accordance with and
governed by the laws of the State of Connecticut without regard to its conflict
of laws rules.
(b) Borrower
hereby irrevocably submits to the jurisdiction of any Connecticut State or
United States Federal court sitting in Connecticut over any action or proceeding
arising out of or relating to this Agreement, or the other Loan Documents, and
Borrower hereby irrevocably agrees that all claims in respect to such action or
proceeding may be heard and determined in such Connecticut State or Federal
court. Borrower irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies of such
process to Borrower at the address specified in Section
10.2. Borrower agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Borrower
further waives any objection to venue in such state and any objection to an
action or proceeding in such State on the basis of forum non
conveniens. Borrower further agrees that any action or proceeding
brought against Lender shall be brought only in Connecticut State or United
States Federal courts sitting in Connecticut.
(c) Nothing
in this Section 10.7 shall affect the right of Lender to serve legal process in
any other manner permitted by law or affect the right of Lender to bring any
action or proceeding against Borrower or its property in the courts of any other
jurisdiction.
(d) To
the extent that Borrower has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether from service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to Borrower, or its respective property, Borrower
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement, the Revolving Note, and the other Loan Documents.
(e) TO INDUCE LENDER TO ENTER INTO THE
COMMERCIAL LOAN TRANSACTION EVIDENCED BY THIS AGREEMENT, THE REVOLVING NOTE, AND
ANY OTHER LOAN DOCUMENT EVIDENCING OR SECURING THE SAME, BORROWER AGREES THAT
THIS IS A COMMERCIAL TRANSACTION AND NOT A CONSUMER TRANSACTION, AND WAIVES ANY
RIGHT TO NOTICE AND A HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL
STATUTES, AS AMENDED, OR OTHER STATUTE OR STATUTES AFFECTING PREJUDGMENT
REMEDIES AND AUTHORIZES LENDER'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT
REMEDY WITHOUT COURT ORDER; PROVIDED, THAT THE COMPLAINT SHALL SET FORTH
A COPY OF THIS WAIVER AND WAIVES ANY CLAIM IN TORT, CONTRACT OR OTHERWISE
AGAINST LENDER'S ATTORNEY WHICH MAY ARISE OUT OF SUCH ISSUANCE OF A WRIT FOR A
PREJUDGMENT REMEDY WITHOUT COURT ORDER. BORROWER ACKNOWLEDGES AND
STIPULATES THAT SUCH WAIVER AND AUTHORIZATION GRANTED ABOVE ARE MADE KNOWINGLY
AND FREELY AND AFTER FULL CONSULTATION WITH COUNSEL. SPECIFICALLY,
BORROWER RECOGNIZES AND UNDERSTANDS THAT THE EXERCISE OF LENDER'S RIGHTS
DESCRIBED ABOVE MAY RESULT IN THE ATTACHMENT OF OR LEVY AGAINST BORROWER'S
PROPERTY, AND SUCH WRIT FOR A PREJUDGMENT REMEDY WILL NOT HAVE THE PRIOR WRITTEN
APPROVAL OR SCRUTINY OF A COURT OF LAW OR OTHER JUDICIAL OFFICER AND BORROWER
WILL NOT HAVE THE RIGHT TO ANY NOTICE OR PRIOR HEARING WHERE BORROWER MIGHT
CONTEST SUCH A PROCEDURE. THE INTENT OF BORROWER IS TO GRANT TO
LENDER FOR GOOD AND VALUABLE CONSIDERATION THE RIGHT TO OBTAIN SUCH A
PREJUDGMENT REMEDY AND TO EXPRESS ITS BELIEF THAT ANY SUCH PREJUDGMENT REMEDY
OBTAINED IS VALID AND CONSTITUTIONAL UNLESS A COURT OF COMPETENT JURISDICTION
SHOULD DETERMINE OTHERWISE. FURTHER, TO THE EXTENT ALLOWED UNDER
APPLICABLE LAW, BORROWER HEREBY WAIVES DEMAND, PRESENTMENT FOR PAYMENT, PROTEST,
NOTICE OF PROTEST, NOTICE OF DISHONOR, DILIGENCE IN COLLECTION, NOTICE OF
NONPAYMENT OF THIS AGREEMENT AND ANY NOTE AND ANY AND ALL NOTICES OF A LIKE
NATURE. FURTHER BORROWER WAIVES ALL RIGHTS TO REQUEST THAT LENDER
POST A BOND, WITH OR WITHOUT SURETY, TO PROTECT THE BORROWER AGAINST DAMAGES
THAT MAY BE CAUSED BY ANY SUCH REMEDY OR REMEDIES.
(a) This
Agreement and the other Loan Documents collectively constitute the entire
agreement and understanding between the parties hereto relating to the
transactions contemplated by this Agreement and supersede any and all
contemporaneous and prior agreements, representations, arrangements and
understandings (written or oral, express or implied) relating to the subject
matter hereof.
(b) If
any term or provision of any of the Loan Documents or the application thereof to
any circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction only to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
thereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.
(a) EACH PARTY HEREBY EXPRESSLY WAIVES
ANY AND ALL RIGHTS IT MAY HAVE TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
BORROWER HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND LENDER MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF IT TO THE WAIVER OF ITS RIGHT TO TRIAL BY
JURY.
(b) NONE OF LENDER, BORROWER, OR ANY
AGENT OR ATTORNEY OF ANY OF THEM SHALL BE LIABLE TO ANY OF THE OTHERS FOR
CONSEQUENTIAL DAMAGES ARISING FROM ANY BREACH OF CONTRACT, TORT, OR OTHER WRONG
RELATING TO THE ESTABLISHMENT, ADMINISTRATION, OR COLLECTION OF THE OBLIGATIONS
RELATING IN ANY WAY TO THIS AGREEMENT, THE REVOLVING NOTE, OR ANY OF THE OTHER
LOAN DOCUMENTS, OR THE ACTION OR INACTION OF ANY OF SUCH PERSONS UNDER ANY ONE
OR MORE HEREOF OR THEREOF.
(c) IN THE EVENT LENDER SEEKS TO TAKE
POSSESSION OF ANY OR ALL OF THE COLLATERAL OR THE PROPERTY BY COURT PROCESS OR
OTHER METHOD AVAILABLE UNDER THE LAW, BORROWER IRREVOCABLY WAIVES ANY BOND AND
ANY SURETY OR SECURITY RELATING THERETO REQUIRED BY ANY STATUTE, COURT RULE OR
OTHERWISE AS AN INCIDENT TO SUCH POSSESSION, AND WAIVES ANY DEMAND FOR
POSSESSION PRIOR TO THE COMMENCEMENT OF ANY SUIT OR ACTION TO RECOVER WITH
RESPECT THERETO.
For
purposes of this Section, “Information” means all information received from the
Borrower or any Subsidiary relating to Borrower or any Subsidiary thereof or
their respective businesses, other than any such information that is available
to Lender on a non-confidential basis prior to disclosure by Borrower or any
Subsidiary thereof. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
Lender
hereof acknowledges that the Information may include material non-public
information concerning the Borrower or a Subsidiary and it will handle such
material non-public information in accordance with applicable Law, including
Federal and state securities Laws.
BORROWER:
By:/s/ Xxxxx X.
Xxxxxx
Xxxxx X.
Xxxxxx
Its Vice
President of Finance and Chief Accounting Officer
(Duly
Authorized)
MICROFLUIDICS
CORPORATION
By:/s/ Xxxxx X.
Xxxxxx
Xxxxx X.
Xxxxxx
Its Vice
President of Finance and Chief Accounting Officer
(Duly
Authorized)
LENDER:
XXXXXXX
BANK, NATIONAL ASSOCIATION
By:/s/ Xxxxx Xxxxx
Xxxxx
Xxxxx
Its Vice
President
(Duly
Authorized)
