TERM LOAN AND SECURITY AGREEMENT
TERM
LOAN AND SECURITY AGREEMENT
dated as
of 27thd
day of
May 2005, between Pac-West Telecomm, Inc., a corporation organized and existing
under the laws of the State of Califorina having its principal office at
0000 X.
Xxxxx Xxxx, Xxxxxxxx, XX 00000 (“Customer”), and Xxxxxxx
Xxxxx Capital,
a
division of Xxxxxxx Xxxxx Business Financial Services Inc., a corporation
organized and existing under the laws of the State of Delaware having its
principal office at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, XX 00000
(“MLC”).
In
consideration of the mutual covenants of the parties hereto, Customer and
MLC
hereby agree as follows:
ARTICLE
I. DEFINITIONS
Section
1.1 Specific
Terms.
In
addition to terms defined elsewhere in this Loan Agreement, when used herein
the
following terms shall have the following meanings:
“Applicable
Law” shall mean all laws, judgments, decrees, ordinances and regulations and
any
other governmental rules, orders and determinations and all requirements
having
the force of law, now or hereafter enacted, made or issued, whether or not
presently contemplated, including (without limitation) compliance with all
requirements of zoning laws and labor laws.
“Bankruptcy
Event” shall mean any of the following: (i) a proceeding under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, liquidation,
winding up or receivership law or statute shall be commenced, filed or consented
to by any Credit Party; or (ii) any such proceeding shall be filed against
any
Credit Party and shall not be dismissed or withdrawn within sixty (60) days
after filing; or (iii) any Credit Party shall make a general assignment for
the
benefit of creditors; or (iv) any Credit Party shall generally fail to pay
or
admit in writing its inability to pay its debts as they become due; or (v)
any
Credit Party shall be adjudicated a bankrupt or insolvent; or (vi) any Credit
Party shall take advantage of any other law or procedure for the relief of
debtors or shall take any action for the purpose of or with a view towards
effecting any of the foregoing; or (vii) a receiver, trustee, custodian,
fiscal
agent or similar official for any Credit Party or for any substantial part
of
any of their respective property or assets shall be sought by such Credit
Party
or appointed.
“Business
Day” shall mean any day other than a Saturday, a Sunday, and any day on which
banking institutions located in the State of New York are authorized by law
or
other governmental action to close.
“Business
Guarantor” shall mean every Guarantor that is not a natural person.
“Closing
Date” shall mean the date upon which all conditions precedent to MLC’s
obligation to make the Loan shall have been met to the satisfaction of
MLC.
“Collateral”
shall mean the collateral more fully described on Exhibit A attached hereto,
howsoever arising, whether now owned or existing or hereafter acquired or
arising, and wherever located; together with all parts thereof (including
spare
parts), all accessories, alterations and accessions thereto, all books and
records (including computer records) directly related thereto, all proceeds
thereof (including, without limitation, proceeds in the form of Accounts
and
insurance proceeds), and the additional collateral described in Section 3.6
(b)
hereof.
“Commitment
Expiration Date” shall mean December 31, 2005.
“Credit
Party” and “Credit Parties” shall mean, individually or collectively, the
Customer, all Guarantors, and all Pledgors.
“Default”
shall mean either an “Event of Default” as defined in Section 3.5 hereof, or an
event which with the giving of notice, passage of time, or both, would
constitute such an Event of Default.
“Default
Rate” shall mean an annual interest rate equal to the lesser of: (i) two
percentage points over the Interest Rate; or (ii) the highest interest rate
allowed by applicable law.
“Event
of
Loss” shall mean the occurrence whereby any tangible Collateral is damaged
beyond repair, lost, totally destroyed or confiscated.
“GAAP”
shall mean the generally accepted accounting principles in effect in the
United
States of America from time to time.
“General
Funding Conditions” shall mean each of the following conditions to each loan or
advance by MLC hereunder: (i) no Default or Event of Default shall have occurred
and be continuing or would result from the making of any such loan or advance
hereunder by MLC; (ii) there shall not have occurred and be continuing any
material adverse change in the business, condition (financial or otherwise)
of
any Credit Party; (iii) all representations and warranties of all of the
Credit
Parties herein or in any of the Loan Documents shall then be true and correct
in
all material respects; (iv) MLC shall have received this Loan Agreement and
all
of the other Loan Documents, duly executed, all of which shall be in form
and
substance satisfactory to MLC; (v) MLC shall have received, as and to the
extent
applicable, copies of invoices, bills of sale, loan payoff letters and/or
other
evidence reasonably satisfactory to it that the proceeds of the Loan will
satisfy the Loan Purpose; (vi) MLC shall have received evidence reasonably
satisfactory to it as to the ownership of the Collateral and the perfection
and
priority of MLC’s liens and security interests thereon, as well as the ownership
of and the perfection and priority of MLC’s liens and security interests on any
other collateral for the Obligations furnished pursuant to any of the Loan
Documents; (vii) MLC shall have received evidence reasonably satisfactory
to it
of the insurance required hereby or by any of the Loan Documents on the
Collateral; and (viii) any additional conditions, information and/or other
documents as reasonably requested by MLC with respect to the transactions
contemplated hereby shall have been met to the reasonable satisfaction of
MLC.
“Guarantor”
shall mean each Person obligated under a guaranty, endorsement or other
undertaking by which such Person guarantees or assumes responsibility in
any
capacity for the payment or performance of any of the Obligations.
“Individual
Guarantor” shall mean every Guarantor that is a natural person.
“Loan”
shall mean a 36 month term installment loan in an amount equal to
$1,949,090.94
“Loan
Agreement” shall mean this agreement as titled in the initial paragraph
hereof.
“Loan
Documents” shall mean this Loan Agreement, any note, any guaranty of any of the
Obligations and all other security and other instruments, assignments,
certificates, certifications and agreements of any kind relating to any of
the
Obligations, whether obtained, authorized, authenticated, executed, sent
or
received concurrently with or subsequent to this Loan Agreement, or which
evidence the creation, guaranty or collateralization of any of the Obligations
or the granting or perfection of liens or security interests upon any Collateral
or any other collateral for the Obligations, including any modifications,
amendments or restatements of the foregoing.
“Loan
Purpose” shall mean the purpose for which the proceeds of the Loan will be used;
to wit: to purchase or finance equipment.
“Location
of Tangible Collateral” shall mean the address of Customer where the collateral
is located as set forth on Exhibit A hereto.
“Material
Adverse Effect” shall mean any material adverse effect on the business or
financial condition of Customer taken as a whole as reasonably determined
by
MLC.
“Obligations”
shall mean all liabilities, indebtedness and obligations of Customer to MLC,
howsoever created, arising or evidenced, whether now existing or hereafter
arising, whether direct or indirect, absolute or contingent, due or to become
due, primary or secondary or joint or several, and, without limiting the
generality of the foregoing, shall include principal, accrued interest
(including without limitation interest accruing after the filing of any petition
in bankruptcy), all advances made by or on behalf of MLC under the Loan
Documents, collection and other costs and expenses incurred by or on behalf
of
MLC, whether incurred before or after judgment, and all present and future
liabilities, indebtedness and obligations of Customer under the Note issued
pursuant hereto and this Loan Agreement, or any other Note or evidence of
indebtedness to MLC.
“Permitted
Liens” shall mean with respect to the Collateral: (i) liens for current taxes
not yet due and payable, other non-consensual liens arising in the ordinary
course of business for sums not due, and, if MLC’s rights to and interest in the
Collateral would not be materially and adversely affected thereby, any such
liens for taxes or other non-consensual liens arising in the ordinary course
of
business being contested in good faith by appropriate proceedings and so
long as
adequate reserves are maintained with respect to such liens and available
to
Customer for the payment of such taxes or other non-consensual liens; (ii)
liens
in favor of MLC; (iii) liens which will be discharged with the proceeds of
the
Loan; (iv) statutory liens of landlords, carriers, warehousemen, processors,
mechanics, materialmen, or suppliers incurred in the ordinary course of business
and securing amounts not yet due or declared to be due by the claimant
thereunder; and (v) any other liens expressly permitted in writing by
MLC.
“Person”
shall mean any natural person and any corporation, partnership (general,
limited
or otherwise), limited liability company, trust, association, joint venture,
governmental body or agency or other entity having legal status of any
kind.
“Pledgor”
shall mean each Person who at any time provides collateral, or otherwise
now or
hereinafter agrees to grant MLC a security interest in any assets as security
for Customer’s Obligations.
“UCC”
shall mean the Uniform Commercial Code of Illinois as in effect in Illinois
from
time to time.
1.2. Other
Terms.
Except
as otherwise defined herein, all terms used in this Loan Agreement which
are
defined in the UCC shall have the meanings set forth in the UCC and accounting
terms not defined herein shall have the meaning ascribed to them in
GAAP.
1.3. UCC
Filing.
Customer hereby authorizes MLC to file a record or records (as defined or
otherwise specified under the UCC), including, without limitation, financing
statements, in all jurisdictions and with all filing offices as MLC may
determine, in its sole discretion, are necessary or advisable to perfect
the
security interest granted to MLC herein. Such financing statements may describe
the Collateral in the same manner as described herein or may contain an
indication or description of collateral that describes such property in any
other manner as MLC may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in
the
Collateral granted to the MLC herein.
ARTICLE
II. THE
LOAN
2.1. Commitment.
Subject
to the terms and conditions hereof, MLC hereby agrees to make the Loan to
Customer for the Loan Purpose, and Customer agrees that all amounts borrowed
shall satisfy the Loan Purpose from MLC. The entire proceeds of the Loan
shall
be disbursed on the Closing Date either directly to the applicable third
party
or parties on account of the Loan Purpose or to reimburse Customer for amounts
directly expended by it; all as directed by Customer in a Pay Proceeds Notice
to
be executed by Customer and delivered to MLC as
set
forth in Section 2.3.
2.2. Note.
The
Loan will be evidenced by and repayable in accordance with that certain
Collateral Installment Note made by Customer payable to the order of MLC
and
issued pursuant to this Loan Agreement (the “Note”). The Note is hereby
incorporated as a part hereof as if fully set forth herein.
2.3. Conditions
of MLC’s Obligation.
The
Closing Date and MLC’s obligation to make the Loan on the Closing Date are
subject to the prior fulfillment of each of the following conditions: (a)
MLC
shall have received a written request from Customer that the Loan be funded
in
accordance with the terms hereof, together with a written direction from
Customer as to the method of payment and payee(s) of the proceeds of the
Loan,
which request and direction shall have been received by MLC not less than
two
Business Days prior to any requested funding date; (b) the Commitment Expiration
Date shall not then have occurred; and (c) each of the General Funding
Conditions shall then have been met or satisfied to the reasonable satisfaction
of MLC.
2.4. Use
of
Loan Proceeds.
The
proceeds of the Loan shall be used by Customer solely for a Loan Purpose,
or,
with the prior written consent of MLC, for other lawful business purposes
of
Customer not prohibited hereby. Customer
agrees that under no circumstances will the proceeds of the Loan be used:
(a)
for personal, family or household purposes of any Person whatsoever, or (b)
to
purchase, carry or trade in securities, or repay debt incurred to purchase,
carry or trade in securities, or (c) unless otherwise consented to in writing
by
MLC, to pay any amount to Xxxxxxx Xxxxx and Co., Inc. or any of its
subsidiaries, other xxxx Xxxxxxx Xxxxx Bank USA, Xxxxxxx Xxxxx Bank & Trust
Co. or any subsidiary of either of them (including MLC and Xxxxxxx Xxxxx
Credit
Corporation).
ARTICLE
III. GENERAL
PROVISIONS
3.1. Representations
and Warranties.
Customer represents and warrants to MLC that:
(a) Organization
and Existence.
Customer is a corporation, duly organized and validly existing in good standing
under the laws of its jurisdiction of incorporation; the organizational number
assigned to Customer by such jurisdiction is C1968719; Customer is qualified
to
do business and in good standing in each other jurisdiction where the nature
of
its business or the property owned by it make such qualification necessary
and
where the failure to be so qualified would have a Material Adverse Effect;
and,
where applicable, each Business Guarantor is duly organized, validly existing
and in good standing under the laws of the state of its formation and is
qualified to do business and in good standing in each other jurisdiction
where
the nature of its business or the property owned by it make such qualification
necessary, and where the failure to be so qualified would have a Material
Adverse Effect.
(b) Execution,
Delivery and Performance.
Each
Credit Party has the requisite power and authority to enter into and perform
the
Loan Documents. The Customer holds all necessary permits, licenses, certificates
of occupancy and other governmental authorizations and approvals required
in
order to own or operate the Customer’s business except where the failure to do
so would have a Material Adverse Effect. The execution, delivery and performance
by Customer of this Loan Agreement and by each of the other Credit Parties
of
such of the other Loan Documents to which it is a party: (i) have been duly
authorized by all requisite corporate action by such Credit Party, (ii) do
not
and will not violate or conflict with any material law, order or other
governmental requirement, or any of the agreements, instruments or documents
which formed or govern any of the Credit Parties, and (iii) do not and will
not
breach or violate any of the provisions of, and will not result in a default
by
any of the Credit Parties under, any other material agreement, instrument
or
document to which it is a party or is subject.
(c) Notices
and Approvals.
Except
as may have been given or obtained, no notice to or consent or approval of
any
governmental body or authority or other third party whatsoever (including,
without limitation, any other creditor) is required in connection with the
execution, delivery or performance by any Credit Party of this Loan Agreement,
the Note and the other Loan Documents to which it is a party other than where
the failure to have been given or to have obtained such notice, consent or
approval would not have a Material Adverse Effect.
(d)
Enforceability.
The
Loan Documents to which any Credit Party is a party are the respective legal,
valid and binding obligations of such Credit Party, enforceable against it
or
them, as the case may be, in accordance with their respective terms, except
as
enforceability may be limited by bankruptcy and other similar laws affecting
the
rights of creditors generally or by general principles of equity.
(e) Collateral.
Except
for the existence of, or priorities afforded to, any Permitted Liens: (i)
Customer has good and marketable title to the Collateral, (ii) none of the
Collateral is subject to any lien, encumbrance or security interest, and
(iii)
upon the filing of all Uniform Commercial Code financing statements
authenticated or otherwise authorized by Customer with respect to the Collateral
in the appropriate jurisdiction(s) and/or the completion of any other action
required by applicable law to perfect its liens and security interests, MLC
will
have valid and perfected first liens and security interests upon all of the
Collateral. Without limiting the foregoing:
(A) The
chief
executive office and chief place of business (as such terms are used in Article
9 of the UCC) of Customer is located at the address specified in the preamble
hereto.
(B) The
tangible Collateral is and will remain tangible personal property and is
not and
shall not constitute real property fixtures. The tangible Collateral is
removable from and
is
not essential to the premises at which the tangible Collateral is located.
(C) All
of
the tangible Collateral is located at the Location of Tangible Collateral.
(f) Financial
Statements.
Except
as expressly set forth in Customer’s or any Business Guarantor’s financial
statements, all financial statements of Customer and each Business Guarantor
furnished to MLC have been prepared in conformity with generally accepted
accounting principles, consistently applied, are true and correct in all
material respects, and fairly present the financial condition of it as at
such
dates and the results of its operations for the periods then ended (subject,
in
the case of interim unaudited financial statements, to normal year-end
adjustments); and since the most recent date covered by such financial
statements, there has been no material adverse change in any such financial
condition or operation.
(g) Litigation;
Compliance With All Laws.
No
litigation, arbitration, administrative or governmental proceedings are pending
or, to the knowledge of Customer, threatened against any Credit Party, which
would, materially and adversely affect (i) such Credit Party’s interest in the
Collateral or the liens and security interests of MLC hereunder or under
any of
the Loan Documents, or (ii) the financial condition of such Credit Party
or its
continued operations. Each Credit Party is in compliance in all material
respects with all laws, regulations, requirements and approvals applicable
to
such Credit Party.
(h) Tax
Returns.
All
federal, state and local tax returns, reports and statements required to
be
filed by any Credit Party have been filed with the appropriate governmental
agencies and all taxes due and payable by any Credit Party have been timely
paid
(except to the extent that any such failure to file or pay will not materially
and adversely affect (i) either the liens and security interests of MLC
hereunder or under any of the Loan Documents, (ii) the financial condition
of
any Credit Party, or (iii) its continued operations).
(i) Relationship
with Xxxxxxx Xxxxx. Neither Customer nor any shareholder or other Person
that controls Customer is (i) an executive officer or director of Xxxxxxx
Xxxxx
& Co., Inc. or any of its subsidiaries, or (ii) a holder of more than 10%
of
any class of voting securities of Xxxxxxx Xxxxx & Co., Inc. or any of its
subsidiaries. For purposes of this representation, “control” means the power to
vote 25% or more of any class of voting securities; the ability to control
the
election of a majority of directors; or the power to exercise a controlling
influence over management policies.
(j) No
Outside Broker.
Except
for employees of MLC, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Financial
Consultant (“MLPF&S”) or one of their affiliates or as described in writing
by Customer to MLC, Customer has not in connection with the transactions
contemplated hereby directly or indirectly engaged or dealt with, and was
not
introduced or referred to MLC by, any broker or other loan
arranger.
(k) Environmental
Matters.
In
the
ordinary course of its business, the officers of Customer consider the effect
of
Environmental Laws on the business of Customer, in the course of which they
identify and evaluate potential risks and liabilities accruing to Customer
due
to Environmental Laws. On the basis of this consideration, Customer has
concluded that Environmental Laws cannot reasonably be expected to have a
Material Adverse Effect on Customer or any Business Guarantor. Neither Customer
nor any Business Guarantor has received any notice to the effect that its
operations are not in material compliance with any of the requirements of
applicable Environmental Laws or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond
to a
release of any toxic or hazardous waste or substance into the environment,
which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect on Customer or any Business Guarantor. “Environmental
Laws” shall mean any Federal, foreign, state or local law, rule or regulation
pertaining to the protection of the environment, including, but not limited
to,
the Comprehensive Environmental Response, Compensation, and Liability Act
of
1980 (“CERCLA”) (42 U.S.C. section 9601 et seq.), the Hazardous Material
Transportation Act (49 U.S.C. section 1801 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. section 1251 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. section 6901 et seq.), the Clean Air Act (42 U.S.C.
section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. section
2601
et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
section 1361 et seq.), and the Occupational Safety and Health Act (19 U.S.C.
section 651 et seq.), as these laws have been amended or supplemented, and
any
analogous foreign, Federal, state or local statutes, and the regulations
promulgated pursuant thereto.
(l) Investment
Company Act.
Neither
Customer nor any Business Guarantor is an “investment company” or a company
“controlled” by an “investment company”, within the meaning of the Investment
Company Act of 1940, as amended.
(m)
Public
Utility Holding Company Act. Neither
Customer nor any Business Guarantor is a “holding company” or a “subsidiary
company” of a “holding company”, or an “affiliate” of a “holding company” or of
a “subsidiary company” of a “holding company”, within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(n)
Customer
Identification- USA Patriot Act Notice; OFAC and Bank Secrecy
Act.
MLC
hereby notifies Customer 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 MLC’s policies and practices, MLC is required to obtain, verify and record
certain information and documentation that identifies each Customer, which
information includes the name and address of each Customer and such other
information that will allow MLC to identify each Customer in accordance with
the
Act. In addition, Customer shall (a) ensure that no Person who owns a
controlling interest in or otherwise controls any Customer or any subsidiary
of
any Customer is or shall be listed on the 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 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 any of its subsidiaries to comply, with all applicable
Bank Secrecy Act (“BSA”) laws and regulations, as amended.
Each
of
the foregoing representations and warranties: (i) has been and will be relied
upon as an inducement to MLC to make the Loan, and (ii) is continuing and
shall
be deemed remade by Customer on the Closing Date and at no other
time.
3.2. Financial
and Other Information.
Customer shall furnish or cause to be furnished to MLC during the term of
this
Loan Agreement all of the following:
(a) Annual
Financial Statements.
Within
90 days after the close of each fiscal year of Customer, a copy of the annual
certified financial statements of Customer and the annual certified financial
statements of each Business Guarantor, including, in each case, in reasonable
detail, a balance sheet and statement of retained earnings as at the close
of
such fiscal year and statements of profit and loss and cash flow for such
fiscal
year;
(i) any
funding after Xxxxx 00, 0000, XXX requires a satisfactory review of the audited
2004 annual financial statements.
(b) Interim
Financial Statements.
Within
60 days after the close of each fiscal quarter of Customer, a copy of the
interim financial statements of Customer and each Business Guarantor for
such
fiscal quarter (including in reasonable detail both a balance sheet as of
the
close of such fiscal period, and statement of profit and loss for the applicable
fiscal period);
any
funding after July 30, 2005, MLC requires a satisfactory review of the 2005
quarterly financial statement.
(c) Other
Information.
Such
other information as MLC may from time to time reasonably request relating
to
Customer, any Credit Party or the Collateral.
(d) General
Agreements With Respect to Financial Information.
Customer agrees that except as otherwise specified herein or otherwise agreed
to
in writing by MLC: (i) all annual financial statements required to be furnished
by Customer to MLC hereunder will be audited by either the current independent
accountants for Customer or other independent accountants selected by Customer
and reasonably acceptable to MLC, and (ii) all other financial statements
required to be furnished by Customer to MLC hereunder will be certified as
fairly presenting the financial condition of the Customer in all material
respects by the respective chief financial officer.
3.3. Other
Covenants.
Customer further agrees during the term of this Loan Agreement
that:
(a) Financial
Records; Inspection.
Each
Credit Party (other than any Individual Guarantor) will: (i) maintain at
its
principal place of business complete and accurate books and records, and
maintain all of its financial records in a manner consistent with the financial
statements heretofore furnished to MLC, or prepared on such other basis as
may
be approved in writing by MLC or as required by law; and (ii) permit MLC
or its
duly authorized representatives, upon reasonable notice and at reasonable
times,
to inspect its properties (both real and personal), operations, books and
records, provided that absent the occurrence and continuance of an Event
of
Default, MLC shall not conduct more than one inspection in any 12 month
period.
(b) Taxes.
Each
Credit Party will pay when due all of its respective taxes, assessments and
other governmental charges, howsoever designated, and all other liabilities
and
obligations, except to the extent that any such failure to file or pay will
not
materially and adversely affect either the liens and security interests of
MLC
hereunder or under any of the Loan Documents, the financial condition of
any
Credit Party or its continued operations.
(c) Compliance
With Laws and Agreements.
No
Credit Party will violate (i) any law, regulation or other governmental
requirement, any judgment or order of any court or governmental agency or
authority; (ii) any agreement, instrument or document which is material to
its
operations or to the operation or use of any Collateral, in each case as
contemplated by the Loan Documents; or (iii) any agreement, instrument or
document to which it is a party or by which it is bound, if any such violation
will materially and adversely affect either the liens and security interests
of
MLC hereunder or under any of the Loan Documents, the financial condition
of any
Credit Party, or its continued operations.
(d) No
Use
of Xxxxxxx Xxxxx Name.
Except
upon the prior consent of MLC, no Credit Party will directly or indirectly
publish, disclose or otherwise use in any advertising or promotional material,
or press release, the name, logo or any trademark of MLC, MLPF&S, Xxxxxxx
Xxxxx and Co., Inc. or any of their affiliates;
provided, however, MLC hereby consents to any filing with the SEC or similar
regulatory body and the disclosure of the existence and terms of this
facility.
Notification
By Customer.
Customer shall provide MLC with prompt written notification of: (i) any Default
or Event of Default; (ii) any Material Adverse Effect in the business, financial
condition or operations of any Credit Party; (iii) any information which
indicates that any financial statements of any Credit Party fail in any material
respect to present fairly the financial condition and results of operations
purported to be presented in such statements; (iv) any threatened or pending
litigation involving any Credit Party which could reasonably be expected
to have
an Material Adverse Effect; (v) any casualty loss, attachment, lien, judicial
process, encumbrance or claim affecting or involving any material portion
of the
Collateral; and (vi) any change in Customer’s outside accountants. Each
notification by Customer pursuant hereto shall specify the event or information
causing such notification, and, to the extent applicable, shall specify the
steps being taken to rectify or remedy such event or information.
(e) Entity
Organization.
Each
Credit Party which is an entity will (i) remain (A) validly existing and
in good
standing in the state of its organization and (B) qualified to do business
and
in good standing in each other state where the nature of its business or
the
property owned by it make such qualification necessary and the failure to
do so
materially adversely affects MLC’s interest in the Collateral or its ability to
enforce the terms of the Loan Documents or exercise any remedies thereunder
or
under applicable law, as reasonably determined by MLC, and (ii) maintain
all
governmental permits, licenses and authorizations where the failure to do
so
would and the failure to do so materially adversely affects MLC’s interest in
the Collateral or its ability to enforce the terms of the Loan Documents
or
exercise any remedies thereunder or under applicable law, as reasonably
determined by MLC. Customer shall give MLC not less than 30 days prior written
notice of any change in name (including any fictitious name) or chief executive
office, place of business, or as applicable, the jurisdiction of organization
or
principal residence.
(f) Merger,
Change in Business.
Except
upon the prior written consent of MLC, Customer shall not cause or permit
any
Credit Party to: (i) be a party to any merger or consolidation except where
Customer is the surviving entity thereof, (ii) sell, transfer or lease all
or
any substantial part of its assets;
(iii)
engage in any material business substantially different from its business
in
effect as of the date of application by Customer for credit from MLC, or
cease
operating any such material business; or (iv) cause or permit any other Person
to assume or succeed to any material business or operations of such Credit
Party.
(g) Liquidity.
The
aggregate unrestricted cash and unrestricted marketable securities owned
and
controlled by Customer shall at all times exceed the lesser of (i)
$5,000,000.00, or (ii) the amount of indebtedness evidenced by the
Obligations.
3.4. Collateral.
(a) Pledge
of Collateral.
To
secure payment and performance of the Obligations, Customer hereby pledges,
assigns, transfers and sets over to MLC, and grants to MLC first liens and
security interests in and upon all of the Collateral, subject only to priorities
afforded to Permitted Liens.
(b) Liens.
Except
upon the prior written consent of MLC, Customer shall not create or permit
to
exist any lien, encumbrance or security interest upon or with respect to
any
Collateral now owned or hereafter acquired other than Permitted
Liens.
(c) Performance
of Obligations.
Customer shall perform in all material respects all of its obligations owing
on
account of or with respect to the Collateral; it being understood that nothing
herein, and no action or inaction by MLC, under this Loan Agreement or
otherwise, shall be deemed an assumption by MLC of any of Customer’s said
obligations.
(d) Sales
and Collections.
Customer shall not sell, transfer or otherwise dispose of any Collateral
so long
as there are any Obligations..
(e) Alterations
and Maintenance.
Except
upon the prior written consent of MLC, Customer shall not make or permit
any
material alterations to any tangible Collateral which might materially reduce
or
impair its market value or utility. Customer shall at all times (i) keep
the
tangible Collateral in good condition and repair, reasonable wear and tear
excepted, (ii) take reasonable precautions to protect the Collateral against
loss, damage or destruction, (iii) maintain, service, test and inspect the
Collateral (A) in accordance with manufacturer’s recommendations, and so as to
maintain in full force and effect any maintenance warranties, (B) in compliance
with Applicable Law and the requirements of insurance, (C) at a standard
consistent with industry practices, and (D) in all events not less than
Customer’s standard practices for similar equipment owned, operated or leased by
Customer and (iv) pay or cause to be paid all obligations arising from the
repair and maintenance of such Collateral, as well as all obligations with
respect to any Location of Tangible Collateral (e.g., all obligations under
any
lease, mortgage or bailment agreement), except for any such obligations being
contested by Customer in good faith by appropriate proceedings. Customer
shall
permit any Person designated by MLC, during normal business hours upon
reasonable notice and at MLC’s expense to visit, inspect and survey the tangible
Collateral, its condition, use and operation, and the records maintained
in
connection therewith. None of MLC or any of its designees shall have any
duty to
make any such inspection and shall not incur any liability or obligation
by
reason of not making any such inspection. The failure of any such party to
object to any condition or procedure observed or observable in the course
of an
inspection hereunder shall not be deemed to waive or modify any of the terms
of
this Loan Agreement with respect to such condition or procedure.
(f) Location.
Customer shall not without MLC’s prior written notification place or move any
tangible Collateral to any location other than the Location of Tangible
Collateral identified on Exhibit A. In no event shall Customer cause or permit
any material tangible Collateral to be removed from the United States without
the express prior written consent of MLC. Customer will keep its books and
records at its principal office address specified in the first paragraph
of this
Loan Agreement or at such other location notified to MLC on not less than
30
days’ prior notice.
(g) Insurance.
Customer
shall insure all of the tangible Collateral under a policy or policies of
physical damage insurance providing that losses will be payable to MLC as
its
interests may appear pursuant to a Lender's Loss Payable Endorsement and
containing such other provisions as may be reasonably required by MLC. Customer
shall maintain such other insurance as may be required by law or is customarily
maintained by companies in a similar business or otherwise reasonably required
by MLC. All such insurance policies shall provide that MLC will receive not
less
than 10 days prior written notice of any cancellation, and shall otherwise
be in
form and amount and with an insurer or insurers selected by Customer and
reasonably acceptable to MLC. Customer shall furnish MLC with a copy or
certificate of each such policy or policies and, prior to any expiration
or
cancellation, each renewal or replacement thereof.
(h) Forced
Placement.
In the
event that at any time the insurance required by this Section shall be reduced
or cease to be maintained below the level required, then (without limiting
the
rights of MLC hereunder in respect of the Default which arises as a result
of
such failure) MLC may at its option after failure of Customer to do so, maintain
the insurance required hereby in such event. Customer shall reimburse MLC
upon
demand for the cost thereof with interest thereon at a rate per annum equal
to
the Default Rate, but in no event shall the rate of interest exceed the maximum
rate permitted by law.
(i) Use.
Customer agrees that the tangible Collateral will be used by Customer solely
in
the conduct of its business and in a manner complying in all material respects
with all applicable laws and any applicable insurance policies. All tangible
Collateral shall at all times remain personal property of Customer regardless
of
the degree of its annexation to any real property and shall not by reason
of any
installation in, or affixation to, real or personal property become a part
thereof. Unless otherwise waived by MLC, Customer shall obtain and deliver
to
MLC (to be recorded at Customer’s expense) from any Person having an interest in
the property where the tangible Collateral is to be located, waivers of any
lien, encumbrance or interest which such Person might have or hereafter obtain
or claim with respect to the tangible Collateral.
(j) Event
of Loss.
Customer shall at its expense promptly repair all repairable damage to any
tangible Collateral where such repair is economically feasible. In the event
that there is an Event of Loss and the affected Collateral had a value prior
to
such Event of Loss of $100,000.00 or more, then, on or before the first to
occur
of (i) 90 days after the occurrence of such Event of Loss, or (ii) 10 Business
Days after the date on which either Customer or MLC shall receive any proceeds
of insurance on account of such Event of Loss, or any underwriter of insurance
on such Collateral shall advise either Customer or MLC that it disclaims
liability in respect of such Event of Loss, Customer shall, at Customer’s
option, either replace the Collateral subject to such Event of Loss with
comparable Collateral free of all liens other than Permitted Liens (in which
event Customer shall be entitled to utilize the proceeds of insurance on
account
of such Event of Loss for such purpose, and may retain any excess proceeds
of
such insurance), or permanently prepay the Obligations by an amount equal
to the
actual cash value of such Collateral as determined by either the insurance
company’s payment (plus any applicable deductible) or, in absence of insurance
company payment, as reasonably determined by MLC; it being further understood
that any such permanent prepayment shall cause an immediate permanent reduction
in the Loan in the amount of such prepayment and shall not reduce the amount
of
any future reductions in the Loan that may be required hereunder.
Notwithstanding the foregoing, if at the time of occurrence of such Event
of
Loss or any time thereafter prior to replacement or line reduction, as
aforesaid, an Event of Default shall have occurred and be continuing hereunder,
then MLC may at its sole option, exercisable at any time while such Event
of
Default shall be continuing, require Customer to or prepay the Obligations,
as
aforesaid.
(k) Notice
of Certain Events.
Customer, upon obtaining knowledge thereof, shall give MLC immediate notice
of
any attachment, lien, judicial process, encumbrance or claim affecting or
involving the Collateral, other than Permitted Liens.
(l) Indemnification.
Customer shall indemnify, defend and save MLC harmless from and against any
and
all claims, liabilities, losses and reasonable costs and expenses (including,
without limitation, reasonable attorneys’ fees and expenses) of any nature
whatsoever which may be asserted against or incurred by MLC arising out of
or in
any manner occasioned by (i) the ownership, collection, possession, use or
operation of any Collateral, or (ii) any failure by Customer to perform any
of
its obligations hereunder or under the other Loan Documents; excluding, however,
from said indemnity any such claims, liabilities, etc. arising directly out
of
the willful wrongful act or active gross negligence of MLC as determined
in a
final non-appealable judgment by a court of competent jurisdiction. This
indemnity shall survive the expiration or termination of this Loan Agreement
as
to all matters arising or accruing prior to such expiration or
termination.
3.5. Events
of Default.
The
occurrence of any of the following events shall constitute an “Event of Default”
under this Loan Agreement:
(a) Failure
to Pay.
Customer shall fail to pay when due any amount owing by Customer to MLC under
the Note or this Loan Agreement, or shall fail to pay when due any other
Obligations, and any such failure shall continue for more than five (5) Business
Days from the due date.
(b) Failure
to Perform.
Any
Credit Party shall default in the performance or observance of any covenant
or
agreement on its part to be performed or observed under this Loan Agreement,
the
Note or any of the other Loan Documents (not constituting an Event of Default
under any other clause of this Section), and such default shall continue
unremedied for ten (10) Business Days (i) after written notice thereof shall
have been given by MLC to Customer, or (ii) from Customer’s receipt of any
notice or knowledge of such default from any other source.
(c) Breach
of Warranty.
Any
representation or warranty made by any Credit Party contained in this Loan
Agreement, the Note or any of the other Loan Documents shall at any time
prove
to have been incorrect in any material respect when made.
(d) Default
Under Other Xxxxxxx Xxxxx Agreement.
A
default or event of default by any Credit Party shall occur under the terms
of
any other agreement, instrument or document with or directly intended for
the
benefit of MLC, MLPF&S or any of their affiliates, and any required notice
shall have been given and required passage of time shall have elapsed, or
the
Agreement shall be terminated for any reason.
(e) Bankruptcy
Event.
Any
Bankruptcy Event shall occur.
(f) Material
Adverse Effect.
Any
event shall occur which shall result in a Material Adverse Effect.
(g) Default
Under Other Agreements.
Any
event shall occur which results in any default of any material agreement
involving any Credit Party or any agreement evidencing any indebtedness of
any
Credit Party of $5,000,000.00 or more the result of which default would permit
or result in the holder of such indebtedness to declare such indebtedness
due
prior to its original maturity.
(h) Collateral
Impairment or Lapse in Insurance Coverage.
The
loss, theft or destruction of any material portion of the Collateral, or
any
levy, attachment, seizure or confiscation of material portion of the Collateral
which is not released within ten (10) Business Days; or the failure to maintain
insurance in accordance with Section 3.4(h).
(i) Contested
Obligation.
(i) Any
of the Loan Documents shall for any reason cease to be, or are asserted by
any
Credit Party not to be a legal, valid and binding obligations of any Credit
Party, enforceable in accordance with their terms; or (ii) the validity,
perfection or priority of MLC’s first lien and security interest on any of the
Collateral is contested by any Person; or (iii) any Credit Party shall or
shall
attempt to repudiate, revoke, contest or dispute, in whole or in part, such
Credit Party’s obligations under any Loan Document.
(j) Judgments.
A
judgment shall be entered against any Credit Party in excess of $5,000,000.00
and the judgment is not paid in full and discharged, or stayed and bonded
to the
satisfaction of MLC.
(k) Change
in Control.
(i)Customer shall enter into any transaction of merger or consolidation where
Customer is not the surviving entity without the prior written consent of
MLC;
(ii) Customer shall cease to do business as a going concern, liquidate, or
dissolve; (iii) Customer shall sell, transfer, or otherwise dispose of all
or
substantially all of its assets or property.
(l) Dissolution.
The
dissolution, or the filing for dissolution of any Credit Party.
3.6. Remedies.
(a) Remedies
Upon Default.
Upon
the occurrence and during the continuance of any Event of Default, MLC may
at
its sole option do any one or more or all of the following, at such time
and in
such order as MLC may in its sole discretion choose:
(i) Termination.
MLC may
without notice terminate its obligation to extend any credit to or for
the
benefit of Customer (it being understood, however, that upon the occurrence
of any Bankruptcy Event all such obligations shall automatically terminate
without any action on the part of MLC).
(ii) Acceleration.
MLC may
declare the principal of and interest and any premium on the Note, and
all other
Obligations to be forthwith due and payable, whereupon
all such amounts shall be immediately due and payable, without presentment,
demand for payment, protest and notice of protest, notice of dishonor,
notice
of
acceleration, notice of intent to accelerate or other notice or formality
of any
kind, all of which are hereby expressly waived; provided, however, that
upon
the
occurrence of any Bankruptcy Event all such principal, interest, premium
and
other Obligations shall automatically become due and payable without
any action
on the
part
of MLC.
(iii) Exercise
Other Rights.
MLC may
exercise any or all of the remedies of a secured party under applicable
law and
in equity, including, but not limited to, the UCC, and
any
or all of its other rights and remedies under the Loan Documents.
(iv) Possession.
MLC may
require Customer to make the Collateral and the records pertaining to
the
Collateral available to MLC at a place designated by MLC which
is
reasonably convenient to Customer, or may take possession of the Collateral
and
the records pertaining to the Collateral without the use of any judicial
process
and without any prior notice to Customer.
(v) Sale.
MLC may
sell any or all of the Collateral at public or private sale upon such
terms and
conditions as MLC may reasonably deem proper, whether for cash, on
credit, or for future delivery, in bulk or in lots. MLC may purchase
any
Collateral at any such sale free of Customer’s right of redemption, if any,
which Customer expressly
waives to the extent not prohibited by applicable law. The net proceeds
of any
such public or private sale and all other amounts actually collected
or
received
by MLC pursuant hereto, after deducting all costs and expenses incurred
at any
time in the collection of the Obligations and in the protection, collection
and
sale
of
the Collateral, will be applied to the payment of the Obligations, with
any
remaining proceeds paid to Customer or whoever else may be entitled thereto,
and
with
Customer and each Guarantor remaining jointly and severally liable for
any
amount remaining unpaid after such application.
(vi) Delivery
of Cash, Checks, Etc.
MLC may
require Customer to forthwith upon receipt, transmit and deliver to MLC
in the
form received, all cash, checks, drafts and
other
instruments for the payment of money (properly endorsed, where required,
so that
such items may be collected by MLC) which may be received by Customer
at any time in full or partial payment of any Collateral, and require
that
Customer not commingle any such items which may be so received by Customer
with
any
other
of its funds or property but instead hold them separate and apart and
in trust
for MLC until delivery is made to MLC.
(vii) Control
of Collateral.
MLC may
otherwise take control in any lawful manner of any cash or non-cash items
of
payment or proceeds of Collateral and endorse Customer’s
name on any item of payment on or proceeds of the Collateral.
(b) Set-Off.
MLC
shall have the further right upon the occurrence and during the continuance
of
an Event of Default to set-off, appropriate and apply toward payment of any
of
the Obligations, in such order of application as MLC may from time to time
and
at any time elect, any cash, credit, deposits, accounts, financial assets,
investment property, securities and any other property of Customer which
is in
transit to or in the possession, custody or control of MLC, MLPF&S or any
agent, bailee, or affiliate of MLC or MLPF&S. Customer hereby collaterally
assigns and grants to MLC a continuing security interest in all such property
as
Collateral and as additional security for the Obligations. Upon the occurrence
and during the continuance of an Event of Default, MLC shall have all rights
in
such property available to collateral assignees and secured parties under
all
applicable laws, including, without limitation, the UCC.
(c) Power
of Attorney.
Effective upon the occurrence and during the continuance of an Event of Default,
Customer hereby irrevocably appoints MLC as its attorney-in-fact, with full
power of substitution, in its place and stead and in its name or in the name
of
MLC, to from time to time in MLC’s sole discretion take any action and to
execute any instrument which MLC may deem necessary or advisable to accomplish
the purposes of this Loan Agreement and the other Loan Documents, including,
but
not limited to, to receive, endorse and collect all checks, drafts and other
instruments for the payment of money made payable to Customer included in
the
Collateral. The powers of attorney granted to MLC in this Loan Agreement
are
coupled with an interest and are irrevocable until the Obligations have been
indefeasibly paid in full and fully satisfied and all obligations of MLC
under
this Loan Agreement have been terminated.
(d) Remedies
are Severable and Cumulative.
All
rights and remedies of MLC herein are severable and cumulative and in addition
to all other rights and remedies available in the Note, the other Loan
Documents, at law or in equity, and any one or more of such rights and remedies
may be exercised simultaneously or successively.
(e) No
Marshalling.
MLC
shall be under no duty or obligation to (i) preserve, protect or xxxxxxxx
the
Collateral; (ii) preserve or protect the rights of any Credit Party or any
other
Person claiming an interest in the Collateral; (iii) realize upon the Collateral
in any particular order or manner, (iv) seek repayment of any Obligations
from
any particular source; (v) proceed or not proceed against any Credit Party
pursuant to any guaranty or security agreement or against any Credit Party
under
the Loan Documents, with or without also realizing on the Collateral; (vi)
permit any substitution or exchange of all or any part of the Collateral;
or
(vii) release any part of the Collateral from the Loan Agreement or any of
the
other Loan Documents, whether or not such substitution or release would leave
MLC adequately secured.
(f) Notices.
To the
fullest extent permitted by applicable law, Customer hereby irrevocably waives
and releases MLC of and from any and all liabilities and penalties for failure
of MLC to comply with any statutory or other requirement imposed upon MLC
relating to notices of sale, holding of sale or reporting of any sale, and
Customer waives all rights of redemption or reinstatement from any such sale.
Any notices required under applicable law shall be reasonably and properly
given
to Customer if given by any of the methods provided herein at least 5 Business
Days prior to taking action. MLC shall have the right to postpone or adjourn
any
sale or other disposition of Collateral at any time without giving notice
of any
such postponed or adjourned date. In the event MLC seeks to take possession
of
any or all of the Collateral by court process, Customer further irrevocably
waives to the fullest extent permitted by law any bonds and any surety or
security relating thereto required by any statute, court rule or otherwise
as an
incident to such possession, and any demand for possession prior to the
commencement of any suit or action.
3.7. Miscellaneous.
(a) Non-Waiver.
No
failure or delay on the part of MLC in exercising any right, power or remedy
pursuant to this Loan Agreement, the Note or any of the other Loan Documents
shall operate as a waiver thereof, and no single or partial exercise of any
such
right, power or remedy shall preclude any other or further exercise thereof,
or
the exercise of any other right, power or remedy. Neither any waiver of any
provision of this Loan Agreement, the Note or any of the other Loan Documents,
nor any consent to any departure by Customer therefrom, shall be effective
unless the same shall be in writing and signed by MLC. Any waiver of any
provision of this Loan Agreement, the Note or any of the other Loan Documents
and any consent to any departure by Customer from the terms of this Loan
Agreement, the Note or any of the other Loan Documents shall be effective
only
in the specific instance and for the specific purpose for which given. Except
as
otherwise expressly provided herein, no notice to or demand on Customer shall
in
any case entitle Customer to any other or further notice or demand in similar
or
other circumstances.
(b) Confidentiality.
MLC
agrees to keep confidential any information furnished or made available to
it by
Customer pursuant to this Loan Agreement; provided that nothing herein shall
prevent MLC from disclosing such information (a) to any officer, director,
employee, agent, auditor, attorney or advisor of MLC or Xxxxxxx Xxxxx & Co.,
Inc. or any of their affiliates, (b) to any other person if it is reasonably
necessary for the administration of the credit facility provided herein,
(c) as
required by any law, rule, or regulation, (d) upon the order of any court
or
administrative agency, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public other than as
a
result of a disclosure by MLC prohibited by this Loan Agreement, (g) in
connection with any litigation to which MLC or any of its affiliates may
be a
party with any Credit Party, (h) in connection with the sale, assignment,
syndication or transfer of any or all of MLC’s rights and interests under the
Loan Documents, provided any purchaser, assignee or transferee agrees to
keep
such information confidential, and (i) to the extent necessary in connection
with the exercise of any remedy under this Loan Agreement or the Loan
Documents.
(c) Communications.
Delivery of an agreement, instrument or other document may, at the discretion
of
MLC, be by electronic transmission. Except as required by law or otherwise
provided herein or in a writing executed by the party to be bound, all notices
demands, requests, accountings, listings, statements, advices or other
communications to be given under the Loan Documents shall be in writing,
and
shall be served either personally, by deposit with a reputable overnight
courier
with charges prepaid, or by deposit in the United States mail by certified
mail
return receipt required. Notices may be addressed to Customer as set forth
at
its address shown in the preamble hereto, or to any office to which billing
or
account statements are sent; to MLC at its address shown in the preamble
hereto,
or at such other address designated in writing by MLC. Any such communication
shall be deemed to have been given upon, in the case of personal delivery
the
date of delivery, one Business Day after deposit with an overnight courier
five
(5) Business Days after deposit in the United States by certified mail (return
receipt required), or receipt of electronic transmission (which shall be
presumed to be three hours after the time of transmission unless an error
message is received by the sender), except that any notice of change of address
shall not be effective until actually received.
(d) Fees,
Expenses and Taxes.
Customer shall upon demand pay or reimburse MLC for: (i) all UCC, recording
and
search fees and expenses incurred by MLC in connection with the verification,
perfection or preservation of MLC’s rights hereunder or in any Collateral or any
other collateral for the Obligations; (ii) any and all stamp, transfer,
mortgage, intangible, document, filing, recording and other taxes and fees,
excluding income taxes, payable or determined to be payable in connection
with
the borrowings hereunder or the execution, delivery, filing and/or recording
of
the Loan Documents and any other instruments or documents provided for herein
or
delivered or to be delivered hereunder or in connection herewith; and (iii)
all
reasonable fees and out-of-pocket expenses (including reasonable attorneys’ fees
and legal expenses) incurred by MLC in connection with the preparation,
execution, administration, collection, enforcement, protection, waiver or
amendment of this Loan Agreement, or under any of the other Loan Documents
and
such other instruments or documents, and the rights and remedies of MLC
thereunder and all other matters in connection therewith. The obligations
of
Customer under this paragraph shall survive the expiration or termination
of
this Loan Agreement and the discharge of the other Obligations.
(e) Right
to Perform Obligations.
If
Customer shall fail to do any act or thing which it has covenanted to do
under
this Loan Agreement or any of the Loan Documents, or any representation or
warranty on the part of Customer contained in this Loan Agreement or any
of the
Loan Documents shall be breached, MLC may, in its sole discretion, after
5
Business Days written notice is sent to Customer (or such lesser notice,
including no notice, as is reasonable under the circumstances), do the same
or
cause it to be done or remedy any such breach, and may expend its funds for
such
purpose. Any and all reasonable amounts so expended by MLC shall be repayable
to
MLC by Customer upon demand, with interest at the “Interest Rate” (as that item
is defined in the Note) during the period from and including the date funds
are
so expended by MLC to the date of repayment, and all such amounts shall be
additional Obligations. The payment or performance by MLC of any of Customer’s
obligations hereunder shall not relieve Customer of said obligations or of
the
consequences of having failed to pay or perform the same, and shall not waive
or
be deemed a cure of any Default.
(f) Late
Charge.
Any
payment required to be made by Customer pursuant to this Loan Agreement or
any
of the Loan Documents not paid within five (5) days of the applicable due
date
shall be subject to a late charge in an amount equal to the lesser of: (i)
5% of
the overdue amount, or (ii) the maximum amount permitted by applicable law.
Such
late charge shall be payable on demand.
(g) Further
Assurances.
Customer agrees to do such further acts and things and to execute and deliver
to
MLC such additional agreements, instruments and documents as MLC may reasonably
require or deem advisable to effectuate the purposes of this Loan Agreement,
the
Note or any of the other Loan Documents, or to establish, perfect and maintain
MLC’s security interests and liens upon the Collateral, including, but not
limited to: (i) executing financing statements or amendments thereto when
and as
reasonably requested by MLC; and (ii) if in the reasonable judgment of MLC
it is
required by local law, causing the owners and/or mortgagees of the real property
on which any Collateral may be located to execute and deliver to MLC waivers
or
subordinations reasonably satisfactory to MLC with respect to any rights
in such
Collateral.
(h) Binding
Effect.
This
Loan Agreement, the Note and the other Loan Documents shall be binding upon,
and
shall inure to the benefit of MLC, Customer and their respective successors
and
assigns. MLC reserves the right, at any time while the Obligations remain
outstanding, to sell, assign, syndicate or otherwise transfer or dispose
of any
or all of MLC’s rights and interests under the Loan Documents. MLC also reserves
the right at any time to pool the Loan with one or more other loans originated
by MLC or any other Person, and to securitize or offer interests in such
pool on
whatever terms and conditions MLC shall determine; provided all parties agree
to
the confidentiality restrictions herein. MLC shall, acting for this purpose
as
an agent of Customer, maintain at its offices a register for the recordation
of
the names and addresses of its participants or assignees, and the amount
and
terms of its participations and assignments including specifying any such
participant's or assignee's entitlement to payments of principal and interest,
and any payments made, with respect to each such participation or assignment.
Subject to Section 3.7(b), Customer consents to MLC releasing financial and
other information regarding Credit Parties, the Collateral and the Loan in
connection with any such sale, pooling, securitization or other offering.
Customer shall not assign any of its rights or delegate any of its obligations
under this Loan Agreement, the Note or any of the other Loan Documents without
the prior written consent of MLC. Unless otherwise expressly agreed to in
a
writing signed by MLC, no such consent shall in any event relieve Customer
of
any of its obligations under this Loan Agreement, the Note or any of the
other
Loan Documents.
(i) Interpretation;
Construction.
(i)
Captions and section and paragraph headings in this Loan Agreement are inserted
only as a matter of convenience, and shall not affect the interpretation
hereof;
(ii) no provision of this Loan Agreement shall be construed against a particular
Person or in favor of another Person merely because of which Person (or its
representative) drafted or supplied the wording for such provision; and (iii)
where the context requires: (a) use of the singular or plural incorporates
the
other, and (b) pronouns and modifiers in the masculine, feminine or neuter
gender shall be deemed to refer to or include the other genders.
(j) Governing
Law.
This
Loan Agreement, the Note and, unless otherwise expressly provided therein,
each
of the other Loan Documents, shall be governed in all respects by the laws
of
the State of Illinois, not including its conflict of law
provisions.
(k) Severability
of Provisions.
Whenever possible, each provision of this Loan Agreement, the Note and the
other
Loan Documents shall be interpreted in such manner as to be effective and
valid
under applicable law. Any provision of this Loan Agreement, the Note or any
of
the other Loan Documents which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Loan Agreement, the Note and the other Loan Documents
or
affecting the validity or enforceability of such provision in any other
jurisdiction.
(l) Term.
This
Loan Agreement shall become effective when accepted by MLC at its office
in
Chicago, Illinois, and subject to the terms hereof, shall continue in effect
so
long thereafter as there shall be any moneys owing hereunder or under the
Note,
or there shall be any other Obligations outstanding. Customer hereby waives
notice of acceptance of this Loan Agreement by MLC.
(m) Exhibits.
The
exhibits to this Loan Agreement are hereby incorporated and made a part hereof
and are an integ-ral part of this Loan Agreement.
(n) Counterparts.
This
Loan Agreement may be executed in one or more counterparts which, when taken
together, constitute one and the same agreement.
(o) Jurisdiction;
Waiver.
Customer acknowledges that this Loan Agreement is being accepted by MLC in
partial consideration of MLC’s right and option, in its sole discretion, to
enforce the Loan Documents in either the State of Illinois or in any other
jurisdiction where Customer or any Collateral may be located. Customer
irrevocably submits itself to jurisdiction in the State of Illinois and venue
in
any state or federal court in the County of Xxxx for such purposes, and Customer
waives any and all rights to contest said jurisdiction and venue and the
convenience of any such forum, and any and all rights to remove such action
from
state to federal court. Customer further waives any rights to commence any
action against MLC in any jurisdiction except in the County of Xxxx and State
of
Illinois. Customer agrees that all such service of process shall be made
by mail
or messenger directed to it in the same manner as provided for notices to
Customer in this Loan Agreement and that service so made shall be deemed
to be
completed upon the earlier of actual receipt or three (3) days after the
same
shall have been posted to Customer or Customer’s agent. Nothing contained herein
shall affect the right of MLC to serve legal process in any other manner
permitted by law or affect the right of MLC to bring any action or proceeding
against Customer or its property in the courts of any other jurisdiction.
Customer waives, to the extent permitted by law, any bond or surety or security
upon such bond which might, but for this waiver, be required of MLC.
(p) Jury
Waiver.
MLC and
Customer hereby each expressly waive any and all rights to a trial by jury
in
any action, proceeding or counterclaim brought by either of the parties against
the other party with respect to any matter relating to, arising out of or
in any
way connected with the Loan, the Obligations, this Loan Agreement, any of
the
other Loan Documents and/or any of the transactions which are the subject
matter
of this Loan Agreement.
(q) Integration.
This
Loan Agreement, together with the other Loan Documents, constitutes the entire
understanding and represents the full and final agreement between the parties
with respect to the subject matter hereof, and may not be contradicted by
evidence of prior written agreements or prior, contemporaneous or subsequent
oral agreements of the parties. There are no unwritten oral agreements of
the
parties. Without limiting the foregoing, Customer acknowledges that: (i)
no
promise or commitment has been made to it by MLC, MLPF&S or any of their
respective employees, agents or representatives to make any Loan on any terms
other than as expressly set forth herein, or to make any other loan or otherwise
extend any other credit to Customer or any other party; and (ii) except as
otherwise expressly provided herein, this Loan Agreement supersedes and replaces
any and all proposals, letters of intent and approval and commitment letters
from MLC to Customer, none of which shall be considered a Loan Document.
No
amendment or modification of any of the Loan Documents to which Customer
is a
party shall be effective unless in a writing signed by both MLC and
Customer.
(r) Survival.
All
representations, warranties, agreements and covenants contained in the Loan
Documents shall survive the signing and delivery of the Loan Documents, and
all
of the waivers made and indemnification obligations undertaken by Customer
shall
survive the termination, discharge or cancellation of the Loan
Documents.
(s) Customer’s
Acknowledgments.
The
Customer acknowledges that the Customer: (i) has had ample opportunity to
consult with counsel and such other parties as deemed advisable prior to
signing
and delivering this Loan Agreement and the other Loan Documents; (ii)
understands the provisions of this Loan Agreement and the other Loan Documents,
including all waivers contained therein; and (iii) signs and delivers this
Loan
Agreement and the other Loan Documents freely and voluntarily, without duress
or
coercion.
(t) Specific
Cross-Collateralization and Cross Default.
The
provisions set forth in this paragraph shall be construed as additional and
supplemental and shall not in any way limit or negate any related provisions
in
the Prior Loan Documents (hereafter defined) or the current providing for
cross
default and cross collateralization rights for MLC. The “Collateral” as defined
in the Prior Loan Documents shall be deemed included within Collateral as
defined and in the Loan Documents and the Collateral shall be deemed included
within the “Collateral” as defined in the Prior Loan Documents, and the
“Collateral” and the Collateral shall each upon an Event of Default under either
set of loan documents serve as security for the repayment of both the Loan
Documents and the Prior Loan Documents. Any Event of Default as defined in
the
applicable loan documents shall be an Event of Default under the other set
of
loan documents. “Prior Loan Documents” means the “Loan Documents” as defined in
the Term Loan and Security Agreement dated May 21, 2004, Term Loan and Security
Agreement dated July 2, 2004, Collateral Installment Note dated May 21, 2004
and
Collateral Installment Note dated July 2, 2004.
IN
WITNESS WHEREOF,
this
Loan Agreement has been executed as of the day and year first above
written.
PAC-WEST
TELECOMM, INC.
By: /s/ H.
Xxxx Xxxx
Signature
H. Xxxx Xxxx
Printed
Name
CFO
Title
Accepted
at Chicago, Illinois:
Xxxxxxx
Xxxxx Capital,
a
division of Xxxxxxx Xxxxx Business Financial Services Inc.
By:
/s/
Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
