Loan and Security Agreement
This
Loan
and Security Agreement (as it may be amended, this "Agreement")
is
entered into on December 14, 2007 between Greystone
Business Credit II, L.L.C. ("Lender"),
having an address at 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 and Titan
Apparel, Inc. ("Borrower"),
a
Delaware corporation, whose principal office is located at 0000 Xxx Xxx Xxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxx 00000 ("Borrower's
Address").
The
Schedules to this Agreement are an integral part of this Agreement and are
incorporated herein by reference. Terms used, but not defined elsewhere, in
this
Agreement are defined in Schedule B.
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1.
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LOANS.
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1.1 Amount.
Subject
to the terms and conditions contained in this Agreement, Lender
will:
(a) Revolving
Loans and Credit Accommodations. From
time
to time during the Term at Borrower's request, make revolving loans to Borrower
("Revolving
Loans"),
and
make letters of credit, bankers acceptances and other credit accommodations
("Credit
Accommodations")
available to Borrower, in each case to the extent that there is sufficient
Availability for Borrower at the time of such request to cover, dollar for
dollar, the requested Revolving Loan or Credit Accommodation of Borrower;
provided,
that
after giving effect to such Revolving Loan or Credit Accommodation, (x) the
outstanding balance of all monetary Obligations (excluding
the
principal balance of any Term Loans and including
the
Credit Accommodation Balance) will not exceed the Maximum Facility Amount set
forth in Section 1(a) of Schedule A and (y) none of the other
Loan Limits for Revolving Loans set forth in Section 1 of Schedule A
will be exceeded. For this purpose,
"Availability"
means,
with respect to Borrower:
(i) the
aggregate amount of Borrower's Eligible Accounts (less maximum existing or
asserted taxes, discounts, credits and allowances) multiplied by the Accounts
Advance Rate set forth in Section 1(b)(i) of Schedule A;
plus
(ii) the
lower
of cost or market value of Borrower's Eligible Inventory multiplied by the
applicable Inventory Advance Rate set forth in Section 1(b)(ii) of
Schedule A, but not to exceed the Inventory Sublimit set forth in
Section 1(c) of Schedule A;
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Greystone
Business Credit II, L.L.C.
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minus
(iii) all
Reserves with respect to Borrower which Lender has established pursuant to
Section 1.2 (including those to be established in connection with the
requested Revolving Loan or Credit Accommodation);
minus
(iv) the
outstanding balance of all monetary Obligations with respect to Borrower
(excluding
the
principal balance of the Term Loan but including
the
Credit Accommodation Balance).
(b) Term
Loan.
Make on
the date of this Agreement an advance to Borrower in the principal amount set
forth in Section 2(a) of Schedule A (the "Advance").
The
Advance is referred to as a "Term
Loan Advance"
and the
"Term
Loan"
and
will be wired to Borrower's Bank set forth in Section 16 of Schedule A. The
Term
Loan will be evidenced by a term note in the form attached hereto as Exhibit
A.
1.2 Reserves.
Lender
may from time to time establish and revise such reserves as Lender deems
appropriate in its sole discretion ("Reserves")
to
reflect (i) events, conditions, contingencies or risks which affect or may
affect (A) the Collateral or its value, or the security interests and other
rights of Lender in the Collateral or (B) the assets, business or prospects
of Borrower or any Obligor, (ii) Lender's good faith concern that any
Collateral report or financial information furnished to Lender by or on behalf
of Borrower or any Obligor is or may have been incomplete, inaccurate or
misleading in any material respect, (iii) any fact or circumstance which
Lender determines in good faith constitutes, or could constitute, a Default
or
Event of Default or (iv) any other events or circumstances which Lender
determines in good faith make the establishment or revision of a Reserve
prudent. Without limiting the foregoing, Lender shall (x) in the case of
each Credit Accommodation issued for the purchase of Inventory (a) which
meets the criteria for Eligible Inventory set forth in clauses (i), (ii), (iii),
(v) and (vi) of the definition of Eligible Inventory, (b) which is or will
be in transit to one of the locations set forth in Sections 9(d)
of
Schedule A, (c) which is fully insured in a manner satisfactory to
Lender and (d) with respect to which Lender is in possession of all bills
of lading and all other documentation which Lender has requested, all in form
and substance satisfactory to Lender in its sole discretion, establish a Reserve
equal to the cost of such Inventory (plus all duties, freight, taxes, insurance,
costs and other charges and expenses relating to such Credit Accommodation
or
such Eligible Inventory) multiplied by a percentage equal to 90% minus the
Inventory Advance Rate applicable to such Eligible Inventory and (y) in the
case of any other Credit Accommodation issued for any other purpose, establish
a
Reserve equal to the full amount of such Credit Accommodation plus all costs
and
other charges and expenses relating to such Credit Accommodation. Lender may,
in
its discretion, establish and revise Reserves by deducting them in determining
Availability or by reclassifying Eligible Accounts or Eligible Inventory as
ineligible. In no event shall the establishment of a Reserve in respect of
a
particular actual or contingent liability obligate Lender to make advances
to
pay such liability or otherwise obligate Lender with respect
thereto.
1.3 Other
Provisions Applicable to Credit Accommodations.
Lender
may, in its sole discretion and on terms and conditions acceptable to Lender,
make Credit Accommodations available to Borrower either by issuing them, or
by
causing other financial institutions to issue them supported by Lender's
guaranty or indemnification; provided,
that
after giving effect to each Credit Accommodation, the Credit Accommodation
Balance will not exceed the Credit Accommodation Limit set forth in
Section 1(d) of Schedule A. Any amounts paid by Lender in respect of a
Credit Accommodation to Borrower will be treated for all purposes as a Revolving
Loan to Borrower which shall be secured by the Collateral and bear interest,
and
be payable, in the same manner as a Revolving Loan. Borrower agrees to execute
all documentation required by Lender or the issuer of any Credit Accommodation
in connection with any such Credit Accommodation.
1.4 Repayment.
Accrued
interest on all monetary Obligations shall be payable on the first day of each
month. Principal of the Term Loan shall be repaid as set forth in
Section 2(b) of Schedule A. Payments of principal in respect of the
Term Loan may not be reborrowed. If at any time any of the Loan Limits are
exceeded, Borrower will immediately pay to Lender such amounts (or provide
cash
collateral to Lender with respect to the Credit Accommodation Balance in the
manner set forth in Section 7.3) as shall cause Borrower to be in full
compliance with all of the Loan Limits. Notwithstanding the foregoing, Lender
may, in its sole and absolute discretion, make or permit Revolving Loans, the
Term Loan, any Credit Accommodations or any other monetary Obligations to be
in
excess of any of the Loan Limits; provided,
that
Borrower shall, upon Lender's demand, pay to Lender such amounts as shall cause
Borrower to be in full compliance with all of the Loan Limits. Borrower shall
pay to Lender as a mandatory prepayment, promptly after the receipt thereof
by
Borrower, all refunds of value added tax received by Borrower in respect of
periods prior to the date hereof (the "VAT
Refunds").
Prior
to the Maturity Date, such VAT Refunds indefeasibly received by Lender (net
of
any costs and expenses paid or advanced by Lender in connection with the
collection thereof) shall be first applied by Lender to the then outstanding
balance of the Term Loan until the Term Loan is paid in full, and thereafter
paid to Lender as a fee. Borrower shall pay to Lender as a mandatory prepayment,
promptly after the receipt thereof by Borrower, 50% of all proceeds of
receivables included in the Collateral but deemed ineligible, as of the date
hereof, for borrowing base purposes (“Ineligible
Receivable Payments”).
Prior to
the Maturity Date, such Ineligible Receivable Payments indefeasibly received
by
Lender shall be applied by Lender to the then outstanding balance of the Term
Loan until the Term Loan is paid in full, and thereafter paid to Lender as
a
fee. All unpaid monetary Obligations shall be payable in full on the Maturity
Date (as defined in Section 7.1) or, if earlier, the date of any early
termination pursuant to Section 7.2.
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2.
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INTEREST
AND FEES.
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2.1 Interest.
Except
where expressly set forth to the contrary in this Agreement or another Loan
Document, all Revolving Loans and other monetary Obligations shall bear interest
at the Interest Rate set forth in Section 3(a) of Schedule A and the
Term Loan shall bear interest at the Interest Rate set forth in
Section 3(b) of Schedule A; provided,
that
(i) after the occurrence of an Event of Default, all Loans and other
monetary Obligations shall, at Lender's option, bear interest at a rate per
annum equal to three percent (3%) in excess of the rate otherwise applicable
thereto until paid in full (notwithstanding the entry of any judgment against
Borrower or the exercise of any other right or remedy by Lender), and all such
interest shall be payable on demand and (ii) after the occurrence of an
Event of Default under either of clauses (vii) or (viii) of Section 8, the
increase described in the foregoing clause (i) shall occur automatically and
shall continue until all Loans and other monetary Obligations are paid in full.
Changes in the Interest Rate shall be effective as of the date of any change
in
the Prime Rate. Notwithstanding anything to the contrary contained in this
Agreement, the aggregate of all amounts deemed to be interest hereunder and
charged or collected by Lender is not intended to exceed the highest rate
permissible under any applicable law, but if it should, such interest shall
automatically be reduced to the extent necessary to comply with applicable
law
and Lender will refund to Borrower any such excess interest received by
Lender.
2.2 Fees.
Borrower
shall pay Lender the following fees, which are in addition to all interest
and
other sums payable by Borrower to Lender under this Agreement, and are not
refundable:
(a) Credit
Accommodation Fees.
The fees
relating to Credit Accommodations (or guaranties thereof by Lender) in the
amount set forth in Section 6(a) of Schedule A (the "Credit
Accommodation Fees"),
payable, in arrears, on the first day of each month so long as any of the
Obligations are outstanding and on the Maturity Date, plus all costs and fees
charged by the issuer, payable as and when such costs and fees are
charged.
(b) Net
Sales Participation.
Borrower agrees to pay to Lender, monthly
in arrears beginning 120 days from the date hereof and on the first day of
each
calendar month thereafter,
an
amount equal to five percent (5%) of Borrower's Net Sales (the "Net Sales
Participation"). Such Net Sales Participation shall be applied by Lender to
the
outstanding balance of the Term Loan until the Term Loan is paid in full and
thereafter shall be paid to Lender as a fee.
(c) Sharing
Fee. Borrower
agrees to pay to Lender a fee in the amount of twenty-five percent (25%) of
Borrower's Net Profits with respect to each of the first four full fiscal
quarters of Borrower occurring after the date hereof. Such fee shall be deemed
to be fully earned as of the last day of each such fiscal quarter, and payable
on the date on which the financial statements of Borrower for such fiscal
quarter are to be delivered pursuant to Section 5.15.
2.3 Computation
of Interest and Fees. All
interest and fees shall be calculated daily on the closing balances in the
Loan
Account based on the actual number of days elapsed in a year of 360 days. For
purposes of calculating interest and fees, if the outstanding daily principal
balance of the Revolving Loans is a credit balance, such balance shall be deemed
to be zero.
2.4 Loan
Account; Monthly Accountings. Lender
shall maintain a loan account for Borrower reflecting all advances, charges,
expenses and payments made pursuant to this Agreement (the "Loan
Account"),
and
shall provide Borrower with a monthly accounting reflecting the activity in
the
Loan Account as soon as reasonably practicable. Each accounting shall be deemed
correct, accurate and binding on Borrower and an account stated (except for
reverses and reapplications of payments made and corrections of errors
discovered by Lender), unless Borrower notifies Lender in writing to the
contrary within sixty days after such account is rendered, describing the nature
of any alleged errors or omissions. However, Lender's failure to maintain the
Loan Account or to provide any such accounting shall not affect the legality
or
binding nature of any of the Obligations. Interest, fees and other monetary
Obligations due and owing under this Agreement (including fees and other amounts
paid by Lender to issuers of Credit Accommodations) may, in Lender's discretion,
be charged to the Loan Account, and will thereafter be deemed to be Revolving
Loans and will bear interest at the same rate as other Revolving
Loans.
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3.
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SECURITY
INTEREST.
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3.1 Grant
of Security Interest. To
secure
the full payment and performance of all of the Obligations, Borrower hereby
assigns to Lender and grants to Lender a continuing security interest in the
following property of Borrower, whether tangible or intangible, now or hereafter
owned, existing, acquired or arising and wherever now or hereafter located,
and
whether or not eligible for lending purposes: (i) all Accounts (whether or
not Eligible Inventory) and all Goods whose sale, lease or other disposition
by
Borrower has given rise to Accounts and have been returned to, or repossessed
or
stopped in transit by, Borrower; (ii) all Chattel Paper, Instruments,
Documents and General Intangibles (including all patents, patent applications,
trademarks, trademark applications, trade names, trade secrets, goodwill,
copyrights, copyright applications, registrations, licenses, software,
franchises, customer lists, tax refund claims, claims against carriers and
shippers, guarantee claims, contracts rights, payment intangibles, security
interests, security deposits and rights to indemnification); (iii) all
Inventory (whether or not Eligible Accounts); (iv) all Goods (other than
Inventory), including Equipment, vehicles and Fixtures; (v) all Investment
Property; (vi) all Deposit Accounts, bank accounts (including without
limitation the Deposit Accounts and bank accounts described in Section 15 of
Schedule A), deposits and cash; (vii) all Letter-of-Credit Rights;
(viii) all Commercial Tort Claims listed in Section 14 of Schedule A;
(ix) all Supporting Obligations; (x) any other property of Borrower
now or hereafter in the possession, custody or control of Lender or any agent
or
any parent, Affiliate or Subsidiary of Lender or any participant with Lender
in
the Loans, for any purpose (whether for safekeeping, deposit, collection,
custody, pledge, transmission or otherwise) and (xi) all additions and
accessions to, substitutions for, and replacements, products and Proceeds of
the
foregoing property, including proceeds of all insurance policies insuring the
foregoing property, and all of Borrower's books and records relating to any
of
the foregoing and to Borrower's business.
3.2 Possessory
Collateral.
Immediately upon Borrower's receipt of any portion of the Collateral evidenced
by an agreement, Instrument or Document, including any Tangible Chattel Paper
and any Investment Property consisting of certificated securities, Borrower
shall deliver the original thereof to Lender together with an appropriate
endorsement or other specific evidence of assignment thereof to Lender (in
form
and substance acceptable to Lender). If an endorsement or assignment of any
such
items shall not be made for any reason, Lender is hereby irrevocably authorized,
as Borrower's attorney and agent-in-fact, to endorse or assign the same on
Borrower's behalf.
3.3 Preservation
of Collateral and Perfection of Security Interest Therein.
Borrower
shall, at Lender's request, at any time and from time to time, authenticate,
execute and deliver to Lender such financing statements, documents and other
agreements and instruments (and pay the cost of filing or recording the same
in
all public offices deemed necessary or desirable by Lender) and do such other
acts and things or cause third parties to do such other acts and things as
Lender may deem necessary or desirable in its sole and absolute discretion
in
order to establish and maintain a valid, attached and perfected security
interest in the Collateral in favor of Lender (free and clear of all other
liens, claims, encumbrances and rights of third parties whatsoever, whether
voluntarily or involuntarily created, except Permitted Liens) to secure payment
of the Obligations and to facilitate the collection of the Collateral. Borrower
authorizes Lender to file, transmit, or communicate, as applicable, financing
statements and amendments describing the Collateral as "all personal property
of
debtor" or "all assets of debtor" or words of similar effect, in order to
perfect Lender's security interest in the Collateral without Borrower's
signature. Borrower also hereby ratifies its authorization for Lender to have
filed in any jurisdiction any financing statements filed prior to the date
hereof.
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4.
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ADMINISTRATION.
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4.1 Lock
Boxes and Blocked Accounts.
Borrower
will, at its expense, establish (and revise from time to time as Lender may
require) procedures acceptable to Lender, in Lender's sole and absolute
discretion, for the collection of checks, wire transfers and other proceeds
of
Accounts ("Account
Proceeds"),
which
may include (i) directing all Account Debtors to send all such proceeds
directly to a post office box designated by Lender either in the name of
Borrower (but as to which Lender has exclusive access) or, at Lender's option,
in the name of Lender (a "Lock
Box")
or
(ii) depositing all Account Proceeds received by Borrower into one or more
bank accounts maintained in Lender's name (each, a "Blocked
Account"),
under
an
arrangement acceptable to Lender with a depository bank acceptable to Lender,
pursuant to which all funds deposited into each Blocked Account are to be
transferred to Lender in such manner, and with such frequency, as Lender shall
specify or (iii) a combination of the foregoing. Borrower agrees to
execute, and to cause its depository banks to execute, such Lock Box and Blocked
Account agreements and other documentation as Lender shall require from time
to
time in connection with the foregoing.
4.2 Remittance
of Proceeds.
Except
as provided in Section 4.1, all Proceeds arising from the sale or other
disposition of any Collateral, shall be delivered, in kind, by Borrower to
Lender in the original form in which received by Borrower not later than the
following Business Day after receipt by Borrower. Until so delivered to Lender,
Borrower shall hold such Proceeds separate and apart from Borrower's other
funds
and property in an express trust for Lender. Nothing in this Section 4.2
shall limit the restrictions on disposition of Collateral set forth elsewhere
in
this Agreement.
4.3 Application
of Payments. Lender
may, in its sole and absolute discretion, apply, reverse and re-apply all cash
and non-cash Proceeds of Collateral or other payments received with respect
to
the Obligations, in such order and manner as Lender shall determine, whether
or
not the Obligations are due, and whether before or after the occurrence of
a
Default or an Event of Default. For purposes of determining Availability, such
amounts will be credited to the Loan Account and the Collateral balances to
which they relate upon Lender's receipt of an advice from Lender's Bank (set
forth in Section 11 of Schedule A) that such items have been credited
to Lender's account at Lender's Bank (or upon Lender's deposit thereof at
Lender's Bank in the case of payments received by Lender in kind), in each
case
subject to final payment and collection. However, for purposes of computing
interest on the Obligations, such items shall be deemed applied by Lender three
(3) Business Days after Lender's receipt of advice of deposit thereof at
Lender's Bank.
4.4 Notification;
Verification. Lender
or
its designee may, from time to time, whether or not a Default or Event of
Default has occurred: (i) verify directly with the Account Debtors the
validity, amount and other matters relating to the Accounts and Chattel Paper,
by means of mail, telephone or otherwise, either in the name of Borrower or
Lender or such other name as Lender may choose; (ii) notify Account Debtors
that Lender has a security interest in the Accounts and that payment thereof
is
to be made directly to Lender; and (iii) demand, collect or enforce payment
of any Accounts and Chattel Paper (but without any duty to do so).
4.5 Power
of Attorney. Borrower
hereby grants to Lender an irrevocable power of attorney, coupled with an
interest, authorizing and permitting Lender (acting through any of its officers,
employees, attorneys or agents), at any time (whether or not a Default or
Event of Default has occurred and is continuing, except as expressly provided
below), at Lender's option, but without obligation, with or without notice
to
Borrower, and at Borrower's expense, to do any or all of the following, in
Borrower's name or otherwise: (i) execute on behalf of Borrower any
documents that Lender may, in its sole and absolute discretion, deem advisable
in order to perfect and maintain Lender's security interests in the Collateral,
to exercise a right of Borrower or Lender, or to fully consummate all the
transactions contemplated by this Agreement and the other Loan Documents
(including such financing statements and continuation financing statements,
and
amendments thereto, as Lender shall deem necessary or appropriate) and to file
as a financing statement any copy of this Agreement or any financing statement
signed by Borrower; (ii) execute on behalf of Borrower any document
exercising, transferring or assigning any option to purchase, sell or otherwise
dispose of or lease (as lessor or lessee) any real or personal property which
is
part of the Collateral or in which Lender has an interest; (iii) execute on
behalf of Borrower any invoices relating to any Accounts, any draft against
any
Account Debtor, any proof of claim in bankruptcy, any notice of Lien or claim,
and any assignment or satisfaction of mechanic's, materialman's or other Lien;
(iv) execute on behalf of Borrower any notice to any Account Debtor;
(v) receive and otherwise take control in any manner of any cash or
non-cash items of payment or Proceeds of Collateral; (vi) endorse
Borrower's name on all checks and other forms of remittances received by Lender;
(vii) pay, contest or settle any Lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any judgment
based
thereon, or otherwise take any action to terminate or discharge the same;
(viii) after the occurrence of a Default or Event of Default, grant
extensions of time to pay, compromise claims relating to, and settle Accounts,
Chattel Paper and General Intangibles for less than face value and execute
all
releases and other documents in connection therewith; (ix) pay any sums
required on account of Borrower's taxes or to secure the release of any Liens
therefor; (x) pay any amounts necessary to obtain, or maintain in effect,
any of the insurance described in Section 5.14; (xi) settle and
adjust, and give releases of, any insurance claim in an amount in excess of
$50,000 (or upon the occurrence and during the continuance of an Event of
Default, any insurance claim regardless of its amount) that relates to any
of
the Collateral and obtain payment therefor; (xii) instruct any third party
having custody or control of any Collateral or books or records belonging to,
or
relating to, Borrower to give Lender the same rights of access and other rights
with respect thereto as Lender has under this Agreement; (xiii) after the
occurrence of a Default or Event of Default, change the address for delivery
of
Borrower's mail and receive and open all mail addressed to Borrower; and
(xiv) endorse or assign to Lender on Borrower's behalf any portion of
Collateral evidenced by an agreement, Instrument or Document if an endorsement
or assignment of any such items is not made by Borrower pursuant to
Section 3.2. Any and all sums paid, and any and all costs, expenses,
liabilities, obligations and reasonable attorneys' fees incurred, by Lender
with
respect to the foregoing shall be added to and become part of the Obligations,
shall be payable on demand, and shall bear interest at a rate equal to the
highest interest rate applicable to any of the Obligations. Borrower agrees
that
Lender's rights under the foregoing power of attorney or any of Lender's other
rights under this Agreement or the other Loan Documents shall not be construed
to indicate that Lender is in control of the business, management or properties
of Borrower.
4.6 Disputes.
Borrower
shall promptly notify Lender of all disputes or claims relating to Accounts
and
Chattel Paper. Borrower will not, without Lender's prior written consent,
compromise or settle any Account or Chattel Paper for less than the full amount
thereof, grant any extension of time of payment of any Account or Chattel Paper,
release (in whole or in part) any Account Debtor or other person liable for
the
payment of any Account or Chattel Paper or grant any credits, discounts,
allowances, deductions, return authorizations or the like with respect to any
Account or Chattel Paper; except that prior to the occurrence of an Event of
Default, Borrower may take any of such actions in the ordinary course of its
business, provided
that
Borrower promptly reports the same to Lender.
4.7 Invoices.
At
Lender's request, Borrower will cause all invoices and statements which it
sends
to Account Debtors or other third parties to be marked, in a manner satisfactory
to Lender, to reflect Lender's security interest therein.
4.8 Inventory.
(a) Returns.
Provided
that no Event of Default has occurred and is continuing, if any Account Debtor
returns any Inventory to Borrower in the ordinary course of its business,
Borrower will promptly issue a credit memorandum in an amount in excess of
$10,000 to the Account Debtor in an appropriate amount and send a copy thereof
to Lender. After the occurrence of an Event of Default, Borrower will not accept
any return without Lender's prior written consent. If an Event of Default has
occurred, Borrower will (i) hold the returned Inventory in trust for
Lender; (ii) segregate all returned Inventory from all of Borrower's other
property; (iii) conspicuously label the returned Inventory as Lender's
property; and (iv) immediately notify Lender of the return of such
Inventory, specifying the reason for such return, the location and the condition
of the returned Inventory and, at Lender's request, deliver such returned
Inventory to Lender at an address specified by Lender.
(b) Other
Covenants.
Borrower
will not, without Lender's prior written consent, (i) store any Inventory
with any warehouseman or other third party other than subject to a
warehouseman's or landlord's agreement in form and substance satisfactory to
Lender and at a location set forth in Section 9(d) of Schedule A or
(ii) sell any Inventory on a sale-or-return, guaranteed sale, consignment,
or other contingent basis. All of the Inventory has been produced only in
accordance with the Fair Labor Standards Act of 1938 and all rules, regulations
and orders promulgated thereunder.
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Greystone
Business Credit II, L.L.C.
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Loan
and Security
Agreement
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4.9 Access
to Collateral, Books and Records.
At
reasonable times, and on one Business Day's notice prior to the occurrence
of a
Default or an Event of Default and at any time and with or without notice after
the occurrence of a Default or an Event of Default, Lender or its agents shall
have the right to inspect the Collateral, and the right to examine and copy
Borrower's books and records. Lender shall take reasonable steps to keep
confidential all information obtained in any such inspection or examination,
but
Lender shall have the right to disclose any such information to its auditors,
regulatory agencies, attorneys and participants, and pursuant to any subpoena
or
other legal process. Borrower agrees to give Lender access to any or all of
Borrower's premises to enable Lender to conduct such inspections and
examinations. Such inspections and examinations shall be at Borrower's expense
and the charge therefor shall be $1,000 per person per day (or such higher
amount as shall represent Lender's then current standard charge), plus
reasonable out-of-pocket expenses. Lender may, at Borrower's expense, use
Borrower's personnel, computer and other equipment, programs, printed output
and
computer readable media, supplies and premises for the collection, sale or
other
disposition of Collateral to the extent Lender, in its sole discretion, deems
appropriate. Borrower hereby irrevocably authorizes all accountants and third
parties to disclose and deliver to Lender, at Borrower's expense, all financial
information, books and records, work papers, management reports and other
information in their possession regarding Borrower. Borrower will not enter
into
any agreement with any accounting firm, service bureau or third party to store
Borrower's books or records at any location other than Borrower's Address
without first obtaining Lender's written consent (which consent may be
conditioned upon such accounting firm, service bureau or other third party
agreeing to give Lender the same rights with respect to access to books and
records and related rights as Lender has under this Agreement).
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5.
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REPRESENTATIONS,
WARRANTIES AND COVENANTS.
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To
induce
Lender to enter into this Agreement, Borrower represents, warrants and covenants
as follows, after giving effect to the Related Transactions (it being understood
that (i) each such representation and warranty will be deemed remade as of
the date on which each Loan is made and each Credit Accommodation is provided
and shall not be affected by any knowledge of, or any investigation by, Lender,
and (ii) the accuracy of each such representation, warranty and covenant
will be a condition to each Loan):
5.1 Existence
and Authority.
Borrower
is, and at all times will be, duly organized, validly existing and in good
standing under the laws of the State of Delaware and its state organizational
indemnification number is DE4458560. Borrower is, and at all times will be,
qualified and licensed to do business in all jurisdictions in which any failure
to do so would have a material adverse effect on Borrower. The execution,
delivery and performance by Borrower of this Agreement and all of the other
Loan
Documents have been duly and validly authorized, do not violate Borrower's
articles or certificate of incorporation, by-laws or other organizational
documents, or any law or any agreement or instrument or any court order which
is
binding upon Borrower or its property, do not constitute grounds for
acceleration of any indebtedness or obligation under any agreement or instrument
which is binding upon Borrower or its property, and do not require the consent
of any Person. This Agreement and such other Loan Documents have been duly
executed and delivered by, and are enforceable against, Borrower, and all other
Obligors who have signed them, in accordance with their respective terms.
Sections 9(g) and 9(h) of Schedule A set forth the ownership of
Borrower and the names and ownership of Borrower's Subsidiaries as of the date
of this Agreement.
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5.2 Name;
Trade Names and Styles. The
name
of Borrower set forth in the heading to this Agreement is its correct and
complete legal name as of the date hereof. Listed in Sections 9(a), 9(b)
and 9(c) of Schedule A are all prior names of Borrower and all of
Borrower's present and prior trade names. Borrower shall give Lender at least
thirty days' prior written notice before changing its name or doing business
under any other name. Borrower has complied with all laws relating to the
conduct of business under a fictitious business name. Borrower represents and
warrants that (i) each trade name does not refer to another corporation or
other legal entity; and (ii) all Accounts invoiced under any such trade
names are owned exclusively by Borrower and are subject to the security interest
of Lender and the other terms of this Agreement.
5.3 Title
to Collateral; Permitted Liens. Borrower
has good and marketable title to the Collateral. The Collateral now is and
will
at all times remain free and clear of any and all liens, charges, security
interests, encumbrances and adverse claims, except for Permitted Liens. Lender
now has, and will continue to have, a first-priority perfected and enforceable
security interest in all of the Collateral, subject only to the Permitted Liens,
and Borrower will at all times defend Lender and the Collateral against all
claims of others. None of the Collateral which is Equipment is or will be
affixed to any real property in such a manner, or with such intent, as to become
a fixture. Except for leases or subleases as to which Borrower has delivered
to
Lender a landlord's waiver in form and substance satisfactory to Lender,
Borrower is not, and will at no time be, a lessee or sublessee under any real
property lease or sublease pursuant to which the lessor or sublessor may obtain
any rights in any of the Collateral, and no such lease or sublease now, or
at
any time, prohibits, restrains, impairs or conditions, or will prohibit,
restrain, impair or condition, Borrower's right to remove any Collateral from
the premises. Except for warehouses as to which Borrower has delivered to Lender
a warehouseman's waiver in form and substance satisfactory to Lender, Borrower
is not, and will at no time be, a xxxxxx of any Goods at any warehouse under
an
arrangement pursuant to which the warehouseman may obtain any rights in any
of
the Collateral. Prior to causing or permitting any Collateral to be located
upon
premises in which any third party has an interest (whether as owner, mortgagee,
beneficiary under a deed of trust, lienholder or otherwise), Borrower shall,
whenever requested by Lender, cause each such third party to execute and deliver
to Lender, in form and substance acceptable to Lender, such waivers and
subordinations as Lender shall specify, so as to ensure that Lender's rights
in
the Collateral are, and will continue to be, superior to the rights of any
such
third party. Borrower will keep in full force and effect, and will comply with
all the terms of, any lease of real property where any of the Collateral now
or
in the future may be located.
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5.4 Accounts
and Chattel Paper. As
of
each date reported by Borrower, all Accounts which Borrower has reported to
Lender as being Eligible Accounts comply in all respects with the criteria
for
eligibility established by Lender and in effect at such time. All Accounts
and
Chattel Paper are genuine and in all respects what they purport to be, arise
out
of a completed, bona fide and unconditional and non-contingent sale and delivery
of goods or rendition of services by Borrower in the ordinary course of its
business and in accordance with the terms and conditions of all purchase orders,
contracts or other documents relating thereto, each Account Debtor thereunder
had the capacity to contract at the time any contract or other document giving
rise to such Accounts and Chattel Paper were executed, and the transactions
giving rise to such Accounts and Chattel Paper comply with all applicable laws
and governmental rules and regulations.
5.5 Electronic
Chattel Paper.
To the
extent that Borrower obtains or maintains any Electronic Chattel Paper, Borrower
shall create, store and assign the record or records comprising the Electronic
Chattel Paper in such a manner that (i) a single authoritative copy of the
record or records exists which is unique, identifiable and except as otherwise
provided below, unalterable, (ii) the authoritative copy identifies Lender
as the assignee of the record or records, (iii) the authoritative copy is
communicated to and maintained by the Lender or its designated custodian,
(iv) copies or revisions that add or change an identified assignee of the
authoritative copy can only be made with the participation of Lender,
(v) each copy of the authoritative copy and any copy of a copy is readily
identifiable as a copy that is not the authoritative copy and (vi) any
revision of the authoritative copy is readily identifiable as an authorized
or
unauthorized revision.
5.6 Investment
Property.
Borrower
will take any and all actions required or requested by Lender, from time to
time, to (i) cause Lender to obtain exclusive control of any Investment
Property in a manner acceptable to Lender and (ii) obtain from any issuers
of Investment Property and such other Persons as Lender shall specify, for
the
benefit of Lender, written confirmation of Lender's exclusive control over
such
Investment Property and take such other actions as Lender may request to perfect
Lender's security interest in such Investment Property. For purposes of this
Section 5.6, Lender shall have exclusive control of Investment Property if
(A) pursuant to Section 3.2, such Investment Property consists of
certificated securities and Borrower delivers such certificated securities
to
Lender (with appropriate endorsements if such certificated securities are in
registered form); (B) such Investment Property consists of uncertificated
securities and either (x) Borrower delivers such uncertificated securities
to Lender or (y) the issuer thereof agrees, pursuant to documentation in
form and substance satisfactory to Lender, that it will comply with instructions
originated by Lender without further consent by Borrower, and (C) such
Investment Property consists of security entitlements and either (x) Lender
becomes the entitlement holder thereof or (y) the appropriate securities
intermediary agrees, pursuant to documentation
in form and substance satisfactory to Lender, that it will comply with
entitlement orders originated by Lender without further consent by
Borrower.
5.7 Commercial
Tort Claims.
Borrower
has no Commercial Tort Claims pending other than those listed in Section 14
of
Schedule A, and Borrower
shall promptly notify Lender in writing upon incurring or otherwise obtaining
a
Commercial Tort Claim after the date hereof against any third party. Such notice
shall constitute Borrower's authorization to amend such Section 14 to add such
Commercial Tort Claim.
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5.8 State
of Organization; Location of Collateral.
Borrower's Address is Borrower's chief executive office and the location of
its
books and records. In addition, except as provided in the immediately following
sentence, Borrower has places of business and Collateral located only at the
locations set forth on Sections 9(d) and 9(e) of Schedule A. Borrower
will give Lender at least thirty days' prior written notice before changing
Borrower's state of organization, opening any additional place of business,
changing its chief executive office or the location of its books and records,
or
moving any of the Collateral to a location other than Borrower's Address or
one
of the locations set forth in Sections 9(d) and 9(e) of Schedule A,
and will execute and deliver all financing statements and other agreements,
instruments and documents which Lender shall require as a result
thereof.
5.9 Financial
Condition, Statements and Reports. All
financial statements delivered to Lender by or on behalf of Borrower have been,
and will at all times continue to be, prepared in conformity with GAAP and
completely and fairly reflect the financial condition of Borrower, at the times
and for the periods therein stated. Between the last date covered by any such
financial statement provided to Lender and the date hereof (or, with respect
to
the remaking of this representation in connection with the making of any Loan
or
providing of any Credit Accommodation, the date such Loan is made or such Credit
Accommodation is provided) there has been no material adverse change in the
financial condition or business of Borrower. Borrower is solvent and able to
pay
its debts as they come due, and has sufficient capital to carry on its business
as now conducted and as proposed to be conducted. All schedules, reports and
other information and documentation delivered by Borrower to Lender with respect
to the Collateral are, or when delivered will be, true, correct and complete
as
of the date delivered or the date specified therein.
5.10 Tax
Returns and Payments; Pension Contributions. Borrower
has timely filed, and shall at all times continue to timely file, all tax
returns and reports required by applicable law or a request for an extension
thereof, has timely paid, and shall continue to timely pay, all applicable
taxes, assessments, deposits and contributions owing by Borrower and will timely
pay all such items in the future as they become due and payable. Borrower may,
however, defer payment of any contested taxes; provided,
that
Borrower (i) in good faith contests its obligation to pay such taxes by
appropriate proceedings promptly and diligently instituted and conducted;
(ii) notifies Lender in writing of the commencement of, and any material
development in, the proceedings; (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a Lien upon any of the
Collateral and (iv) maintains adequate reserves therefor in conformity with
GAAP. Borrower is unaware of any claims or adjustments proposed for any of
Borrower's prior tax years that could result in additional taxes becoming due
and payable by Borrower and shall give prompt written notice to Lender if it
becomes aware of any such claims or adjustments. Borrower has paid, and shall
continue to pay, all amounts necessary to fund all present and future pension,
profit sharing and deferred compensation plans in accordance with their terms,
and Borrower has not withdrawn from participation in, permitted partial or
complete termination of, or permitted the occurrence of any other event with
respect to, any such plan which could result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or any
other
governmental agency.
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5.11 Compliance
with Laws. Borrower
has complied, and shall at all times continue to comply, in all material
respects with all provisions of all applicable laws and regulations, including
those relating to Borrower's ownership of real or personal property, the conduct
and licensing of Borrower's business, the payment and withholding of taxes,
ERISA and other employee matters, safety and environmental matters.
5.12 Litigation.
Section 9(f)
of Schedule A discloses all claims, proceedings, litigation or
investigations pending or (to the best of Borrower's knowledge) threatened
against Borrower. There is no claim, suit, litigation, proceeding or
investigation pending or (to the best of Borrower's knowledge) threatened by
or
against or affecting Borrower in any court or before any governmental agency
(or
any basis therefor known to Borrower) which may result, either separately or
in
the aggregate, in any material adverse change in the financial condition or
business of Borrower, or in any material impairment in the ability of Borrower
to carry on its business in substantially the same manner as it is now being
conducted. Borrower will promptly inform Lender in writing of any claim,
proceeding, litigation or investigation in the future threatened or instituted
by or against Borrower.
5.13 Use
of Proceeds. All
proceeds of all Loans will be used solely for lawful business purposes,
including to finance the Related Transactions.
5.14 Insurance.
Borrower
will at all times carry property, liability and other insurance, with insurers
acceptable to Lender, in such form and amounts, and with such deductibles and
other provisions, as Lender shall require, and Borrower will provide Lender
with
evidence satisfactory to Lender that such insurance is, at all times, in full
force and effect. Each property insurance policy shall name Lender as loss
payee
and shall contain a lender's loss payable endorsement in form acceptable to
Lender, each liability insurance policy shall name Lender as an additional
insured, and each business interruption insurance policy shall be collaterally
assigned to Lender, all in form and substance satisfactory to Lender. All
policies of insurance shall provide that they may not be cancelled or changed
without at least thirty days' prior written notice to Lender, shall contain
breach of warranty coverage, and shall otherwise be in form and substance
satisfactory to Lender. Upon receipt of the proceeds of any such insurance,
Lender will apply such proceeds in reduction of the Obligations as Lender shall
determine in its sole discretion. Borrower will promptly deliver to Lender
copies of all reports made to insurance companies.
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5.15 Financial
and Collateral Reports. Borrower
has kept and will keep adequate records and books of account with respect
to its
business activities and the Collateral in which proper entries are made
in
accordance with GAAP reflecting all its financial transactions, and will
cause
to be prepared and furnished to Lender the following (all to be prepared
in
accordance with GAAP, unless Borrower's certified public accountants concur
in
any change therein and such change is disclosed to Lender):
(a) Collateral
Reports.
On or
before the fifteenth (15) day of each month, an aging of Borrower's Accounts,
Chattel Paper and notes receivable, and on a monthly basis, or more frequently
as requested by Lender Inventory reports, all in such form, and together with
such additional certificates, schedules and other information with respect
to
the Collateral or the business of Borrower or any Obligor, as Lender shall
request; provided,
that
Borrower's failure to execute and deliver the same shall not affect or limit
Lender's security interests and other rights in any of the Accounts, nor shall
Lender's failure to advance or lend against a specific Account affect or limit
Lender's security interest and other rights therein. Together with each such
schedule, Borrower shall furnish Lender with copies (or, at Lender's request,
originals) of all contracts, orders, invoices, and other similar documents,
and
all original shipping instructions, delivery receipts, bills of lading, and
other evidence of delivery, for any goods the sale or disposition of which
gave
rise to such Accounts, and Borrower warrants the genuineness of all of the
foregoing. In addition, Borrower shall deliver to Lender the originals of all
Instruments, Chattel Paper, security agreements, guaranties and other documents
and property evidencing or securing any Accounts, immediately upon receipt
thereof and in the same form as received, with all necessary endorsements.
Lender may destroy or otherwise dispose of all documents, schedules and other
papers delivered to Lender pursuant to this Agreement (other than originals
of
Instruments, Chattel Paper, security agreements, guaranties and other documents
and property evidencing or securing any Accounts) six months after Lender
receives them, unless Borrower requests their return in writing in advance
and
arranges for their return to Borrower at Borrower's expense;
(b) Annual
Statements.
Not
later than one hundred and five (105) days after the close of each fiscal year
of Borrower, unqualified (except for a qualification for a change in accounting
principles with which the accountant concurs) audited financial statements
of
Borrower and its Subsidiaries as of the end of such year, on a consolidated
and
consolidating basis, certified by a firm of independent certified public
accountants of recognized standing selected by Borrower but acceptable to
Lender, together with a copy of any management letter issued in connection
therewith and a letter from such accountants acknowledging that Lender is
relying on such financial statements;
(c) Interim
Statements.
Not
later than thirty (30) days after the end of each month hereafter, including
the
last month of Borrower's fiscal year, (i) unaudited interim financial
statements of Borrower and its Subsidiaries as of the end of such month and
of
the portion of Borrower's fiscal year then elapsed, on a consolidated and
consolidating basis, certified by the principal financial officer of Borrower
as
prepared in accordance with GAAP and fairly presenting the consolidated
financial position and results of operations of Borrower and its Subsidiaries
for such month and period subject only to changes from audit and year-end
adjustments and except that such statements need not contain notes and
(ii) a compliance certificate in form and substance satisfactory to Lender
setting forth the financial covenants set forth in Section 8 of Schedule A
for
such month, as certified by officer of Borrower;
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(d) Projections,
Etc.
Such
business projections, Availability projections, business plans, budgets and
cash
flow statements for Borrower and its Subsidiaries as Lender shall request from
time to time;
(e) Shareholder
Reports, Etc.
Promptly
after the sending or filing thereof, as the case may be, copies of any proxy
statements, financial statements or other material reports which Borrower has
made available to its shareholders and copies of any regular, periodic and
special reports or registration statements which Borrower files with the
Securities and Exchange Commission or any governmental authority which may
be
substituted therefor, or any national securities exchange;
(f) ERISA
Reports.
Upon
request by Lender, copies of any annual report to be filed pursuant to the
requirements of ERISA in connection with each plan subject thereto;
and
(g) Other
Information.
Such
other data, appraisals and information (financial and otherwise) as Lender,
from
time to time, may reasonably request, bearing upon or related to the Collateral
or Borrower's and each of its Subsidiary's financial condition or results of
operations.
5.16 Litigation
Cooperation. Should
any third-party suit or proceeding be instituted by or against Lender with
respect to any Collateral or in any manner relating to Borrower, Borrower shall,
without expense to Lender, make available Borrower and its officers, employees
and agents, and Borrower's books and records, without charge, to the extent
that
Lender may deem them reasonably necessary in order to prosecute or defend any
such suit or proceeding.
5.17 Maintenance
of Collateral, Etc. Borrower
will maintain all of its Equipment in good working condition, ordinary wear
and
tear excepted, and Borrower will not use the Collateral for any unlawful
purpose. Borrower will immediately advise Lender in writing of any material
loss
or damage to the Collateral and of any investigation, action, suit, proceeding
or claim relating to the Collateral or which may result in an adverse impact
upon Borrower's business, assets or financial condition.
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5.18 Notification
of Changes. Borrower
will promptly notify Lender in writing of any change in its officers or
directors, the opening of any new bank account or other deposit account,
or any
material adverse change in the business or financial affairs of Borrower
or the
existence of any circumstance which would make any representation or warranty
of
Borrower untrue in any material respect or constitute a material breach
of any
covenant of Borrower.
5.19 Further
Assurances. Borrower
agrees, at its expense, to take all actions, and execute or cause to be executed
and delivered to Lender all promissory notes, security agreements, agreements
with landlords, mortgagees and processors and other bailees, subordination
and
intercreditor agreements and other agreements, instruments and documents, as
Lender may request from time to time to perfect and maintain Lender's security
interests in the Collateral and to fully carry out the transactions contemplated
by this Agreement.
5.20 Negative
Covenants. Borrower
will not, without Lender's prior written consent, (i) merge or consolidate
with another Person, form any new Subsidiary or acquire any interest in any
Person; (ii) acquire any assets except in the ordinary course of business
and as otherwise permitted by this Agreement and the other Loan Documents;
(iii) enter into any transaction outside the ordinary course of business;
(iv) sell or transfer any Collateral or other assets, except that Borrower
may sell finished goods Inventory in the ordinary course of its business;
(v) make any loans to, or investments in, any Affiliate or other Person in
the form of money or other assets; (vi) incur any debt outside the ordinary
course of business; (vii) guaranty or otherwise become liable with respect
to the obligations of another party or entity; (viii) pay or declare any
dividends or other distributions on Borrower's Capital Stock (except for
dividends payable solely in Capital Stock of Borrower); (ix) redeem,
retire, purchase or otherwise acquire, directly or indirectly, any of Borrower's
Capital Stock or other equity interests; (x) make any change in Borrower's
capital structure; (xi) dissolve or elect to dissolve; (xii) pay any
principal or interest on any indebtedness owing to an Affiliate,
(xiii) enter into any transaction with an Affiliate other than on
arms-length terms disclosed to Lender in writing; (xiv) change the state of
Borrower's organization or enter into any transaction which has the effect
of
changing Borrower's state of organization except as provided for in
Section 5.8; or (xv) agree to do any of the foregoing.
5.21 [Intentionally
Omitted].
5.22 Other
Covenants. Borrower
will comply with the additional covenants set forth in Section 12 of
Schedule A.
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5.23 Related
Transactions. Borrower
have furnished Lender a true and correct copy of the Related Agreements pursuant
hereto.
Borrower
and each other party to the Related Agreements, has duly taken all necessary
organizational action to authorize the execution, delivery and performance
of
the Related Agreements and the consummation of transactions contemplated
thereby.
As of
the date hereof, the Related Transactions have been consummated (or are being
consummated substantially contemporaneously with the initial credit extension
hereunder) in accordance with the terms of the Related Agreements in all
material respects (except for any matters to which the Lender has consented).
The Related Transactions will comply in all material respects with all
applicable legal requirements, and all necessary governmental, regulatory,
creditor, shareholder, partner and other material consents, approvals and
exemptions
required to be obtained by any Person and
any
such consents, approvals and exemptions in connection with the Related
Transactions will be, prior to consummation of the Related Transactions, duly
obtained and will be in full force and effect. As of the date of the Related
Agreements, all applicable waiting periods with respect to the Related
Transactions will have expired without
any action being taken by any competent governmental authority which restrains,
prevents or imposes material adverse conditions upon the consummation of the
Related Transactions.
The
execution and delivery of the Related Agreements did not, and the consummation
of the Related Transactions will not, violate any statute or regulation of
the
United States (including any securities law) or of any state or other applicable
jurisdiction, or any order, judgment or decree of any court or governmental
body
binding on any Person, or result in a breach of, or constitute a default under,
any material agreement, indenture, instrument or other document, or any
judgment, order or decree, to which any Person is bound. No
material statement or representation made in the Related Agreements by any
Person, contains any untrue statement of a material fact or omits to state
any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time that such statement or representation is
made.
Borrower is not in any way obligated to any Person in respect of any
finder's or broker's fee or similar commission in connection with the closing
of
the Loans or any part of the Related Transactions.
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6.
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RELEASE
AND INDEMNITY.
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6.1 Release.
Borrower
hereby releases Lender and its Affiliates and their respective directors,
officers, employees, attorneys and agents and any other Person affiliated with
or representing Lender (the "Released
Parties")
from
any and all liability arising from acts or omissions under or pursuant to this
Agreement, whether based on errors of judgment or mistake of law or fact, except
for those arising from willful misconduct. However, in no circumstance will
any
of the Released Parties be liable for lost profits or other special or
consequential damages. Such release is made on the date hereof and remade upon
each request for a Loan by Borrower. Without limiting the
foregoing:
(a) Lender
shall not be liable for (i) any shortage or discrepancy in, damage to, or
loss or destruction of, any goods, the sale or other disposition of which gave
rise to an Account; (ii) any error, act, omission, or delay of any kind
occurring in the settlement, failure to settle, collection or failure to collect
any Account; (iii) settling any Account in good faith for less than the
full amount thereof; or (iv) any of Borrower's obligations under any
contract or agreement giving rise to an Account; and
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(b) In
connection with Credit Accommodations or any underlying transaction, Lender
shall not be responsible for the conformity of any goods to the documents
presented, the validity or genuineness of any documents, or any delay, default
or fraud by Borrower, shippers and/or any other Person. Borrower agrees that
any
action taken by Lender, if taken in good faith, or any action taken by an issuer
of any Credit Accommodation, under or in connection with any Credit
Accommodation, shall be binding on Borrower and shall not create any resulting
liability to Lender. In furtherance thereof, Lender shall have the full right
and authority to clear and resolve any questions of non-compliance of documents,
to give any instructions as to acceptance or rejection of any documents or
goods, to execute for Borrower's account any and all applications for steamship
or airway guaranties, indemnities or delivery orders, to grant any extensions
of
the maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents, and to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of
any
of the Credit Accommodations or applications and other documentation pertaining
thereto.
6.2 Indemnity.
Borrower
hereby agrees to indemnify the Released Parties and hold them harmless from
and
against any and all claims, debts, liabilities, demands, obligations, actions,
causes of action, penalties, costs and expenses (including attorneys' fees),
of
every nature, character and description, which the Released Parties may sustain
or incur based upon or arising out of any of the transactions contemplated
by
this Agreement or the other Loan Documents or any of the Obligations, including
any transactions or occurrences relating to the issuance of any Credit
Accommodation, the Collateral relating thereto, any drafts thereunder and any
errors or omissions relating thereto (including any loss or claim due to any
action or inaction taken by the issuer of any Credit Accommodation) (and for
this purpose any charges to Lender by any issuer of Credit Accommodations shall
be conclusive as to their appropriateness and may be charged to the Loan
Account), or any other matter, cause or thing whatsoever occurred, done, omitted
or suffered to be done by Lender relating to Borrower or the Obligations (except
any such amounts sustained or incurred as the result of the gross negligence
or
willful misconduct of the Released Parties). Notwithstanding any provision
in
this Agreement to the contrary, the indemnity agreement set forth in this
Section shall survive any termination of this Agreement.
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7.
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TERM.
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7.1 Maturity
Date.
Lender's
obligation to make Loans and provide Credit Accommodations under this Agreement
shall initially continue in effect for a term (the "Initial
Term")
from
the date of this Agreement until the Initial Maturity Date set forth in
Section 7 of Schedule A; provided,
that the
Initial Maturity Date shall automatically be extended (the Initial Maturity
Date, as it may be so extended, being referred to as the "Maturity
Date")
for
successive additional terms of one year each (each a "Renewal
Term"),
unless one party gives written notice to the other, not less than sixty days
prior to the Maturity Date, that such party elects not to extend the Maturity
Date. This Agreement and the other Loan Documents and Lender's security
interests in and Liens upon the Collateral, and all representations, warranties
and covenants of Borrower contained herein and therein, shall remain in full
force and effect after the Maturity Date until all of the monetary Obligations
are indefeasibly paid in full.
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7.2 Early
Termination. Lender's
obligation to make Loans and to provide Credit Accommodations under this
Agreement may be terminated prior to the Maturity Date as follows: (i) by
Borrower, effective thirty Business Days after written notice of termination
is
given to Lender or (ii) by Lender at any time after the occurrence of an
Event of Default, without notice, effective immediately; provided,
that if
any Affiliate of Borrower is also a party to a financing arrangement with
Lender, no such early termination shall be effective unless such Affiliate
simultaneously terminates its financing arrangement with Lender. In addition,
if
Borrower so terminates and repays the Obligations without having provided Lender
with at least thirty days' prior written notice thereof, Borrower shall pay
to
Lender, on the effective date of termination, an additional amount equal to
thirty days of interest at the applicable interest rate(s), based on the average
outstanding amount of the Obligations for the six month period immediately
preceding the date of termination.
7.3 Payment
of Obligations. On
the
Maturity Date or on any earlier effective date of termination, Borrower shall
pay in full all Obligations, whether or not all or any part of such Obligations
are otherwise then due and payable. Without limiting the generality of the
foregoing, if, on the Maturity Date or on any earlier effective date of
termination, there are any outstanding Credit Accommodations, then on such
date
Borrower shall provide to Lender cash collateral in an amount equal to 110%
of
the Credit Accommodation Balance to secure all of the Obligations (including
estimated attorneys' fees and other expenses) relating to said Credit
Accommodations or such greater percentage or amount as Lender reasonably deems
appropriate, pursuant to a cash pledge agreement in form and substance
satisfactory to Lender.
7.4 Effect
of Termination.
No
termination shall affect or impair any right or remedy of Lender or relieve
Borrower of any of the Obligations until all of the monetary Obligations have
been indefeasibly paid in full. Upon indefeasible payment and performance in
full of all of the monetary Obligations (and the provision of cash collateral
with respect to any Credit Accommodation Balance as required by
Section 7.3) and termination of this Agreement, Lender shall promptly
deliver to Borrower termination statements, requests for reconveyances and
such
other documents as may be reasonably required to terminate Lender's security
interests in the Collateral.
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Agreement
|
|
8.
|
EVENTS
OF DEFAULT AND REMEDIES.
|
8.1 Events
of Default. The occurrence of any of the following events shall
constitute an "Event
of Default"
under
this Agreement, and Borrower shall give Lender immediate written notice thereof:
(i) if any warranty, representation, statement, report or certificate made
or delivered to Lender by Borrower or any of Borrower's officers, employees
or
agents is untrue or misleading; (ii) if Borrower fails to pay when due any
principal or interest on any Loan or any other monetary Obligation;
(iii) if Borrower breaches any covenant or obligation contained in this
Agreement or any other Loan Document or fails to perform any other non-monetary
Obligation; (iv) if any levy, assessment, attachment, seizure, lien,
security interest or encumbrance (other than a Permitted Lien) is made or
permitted to exist on all or any part of the Collateral; (v) if one or more
judgments aggregating in excess of $150,000, or any injunction or attachment,
is
obtained against Borrower or any Obligor which remains unstayed for more than
ten days or is enforced; (vi) the occurrence of any default under any
financing agreement, security agreement or other agreement, instrument or
document executed and delivered by (A) Borrower with, or in favor of, any
Person other than Lender or (B) Borrower or any Affiliate of Borrower with,
or in favor of, Lender or any Affiliate of Lender; (vii) the dissolution,
death, termination of existence in good standing, insolvency or business failure
or suspension or cessation of business as usual of Borrower or any Obligor
(or
of any general partner of Borrower or any Obligor if it is a partnership) or
the
appointment of a receiver, trustee or custodian for all or any part of the
property of, or an assignment for the benefit of creditors by Borrower or any
Obligor, or the commencement of any proceeding by Borrower or any Obligor under
any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect, or if Borrower makes or sends a notice of a bulk transfer
or
calls a meeting of its creditors; (viii) the commencement of any proceeding
against Borrower or any Obligor under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law
or
statute of any jurisdiction, now or in the future in effect; (ix) the
actual or attempted revocation or termination of, or limitation or denial of
liability upon, any guaranty of the Obligations, or any security document
securing the Obligations, by any Obligor; (x) if Borrower makes any payment
on account of any indebtedness or obligation which has been subordinated to
the
Obligations other than as permitted in the applicable subordination agreement,
or if any Person who has subordinated such indebtedness or obligations attempts
to limit or terminate its subordination agreement; (xi) if there is any
actual or threatened indictment of Borrower or any Obligor under any criminal
statute or commencement or threatened commencement of criminal or civil
proceedings against Borrower or any Obligor, pursuant to which the potential
penalties or remedies sought or available include forfeiture of any property
of
Borrower or such Obligor having an aggregate value greater than or equal to
$150,000; (xii) if there is a change in the record or beneficial ownership
of an aggregate of more than 20% of the outstanding shares of stock of Borrower
(or partnership or membership interests if it is a partnership or limited
liability company), in one or more transactions, compared to the ownership
of
outstanding shares of stock (or partnership or membership interests) of Borrower
as of the date hereof, without the prior written consent of Lender;
(xiii) if there is any change in the chief executive officer, chief
operating officer or chief financial officer of Borrower and a replacement
acceptable to Lender is not appointed within ninety (90) days; (xiv) if an
Event of Default occurs under any Loan and Security Agreement between Lender
and
an Affiliate of Borrower; or (xv) if Lender determines in good faith that
the Collateral is insufficient to fully secure the Obligations or that the
prospect of payment of performance of the Obligations is impaired.
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8.2 Remedies.
Upon
the
occurrence of any Default, and at any time thereafter, Lender, at its option,
may cease making Loans or otherwise extending credit to Borrower under this
Agreement or any other Loan Document. Upon the occurrence of an Event of
Default, Lender may exercise from time to time any rights and remedies available
to it under the UCC and any other applicable law in addition to, and not in
lieu
of, any rights and remedies expressly granted in this Agreement or in any of
the
other Loan Documents and all of Lender's rights and remedies shall be cumulative
and non-exclusive to the extent permitted by law. In particular, but not by
way
of limitation of the foregoing, upon the occurrence of any Event of Default,
and
at any time thereafter, Lender, at its option, and without notice or demand
of
any kind (all of which are hereby expressly waived by Borrower), may do any
one
or more of the following: (i) cease making Loans or otherwise extending
credit to Borrower under this Agreement or any other Loan Document;
(ii) accelerate and declare all or any part of the Obligations to be
immediately due, payable and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any
of
the Obligations; (iii) take possession of any or all of the Collateral (in
addition to Collateral of which it already has possession) wherever it may
be
found, and for that purpose Borrower hereby authorizes Lender, without judicial
process, to enter onto any of Borrower's premises without interference to search
for, take possession of, keep, store, or remove any of the Collateral, and
remain (or cause a custodian to remain) on the premises in exclusive control
thereof, without charge for so long as Lender deems it reasonably necessary
in
order to complete the enforcement of its rights under this Agreement or any
other agreement; provided,
that if
Lender seeks to take possession of any of the Collateral by court process,
Borrower hereby irrevocably waives (A) any bond and any surety or security
relating thereto required by law as an incident to such possession, (B) any
demand for possession prior to the commencement of any suit or action to recover
possession thereof and (C) any requirement that Lender retain possession
of, and not dispose of, any such Collateral until after trial or final judgment;
(iv) require Borrower to assemble any or all of the Collateral and make it
available to Lender at one or more places designated by Lender which are
reasonably convenient to Lender and Borrower, and to remove the Collateral
to
such locations as Lender may deem advisable; (v) complete the processing,
manufacturing or repair of any Collateral prior to a disposition thereof and,
for such purpose and for the purpose of removal, Lender shall have the right
to
use Borrower's premises, vehicles and other Equipment and all other property
without charge; (vi) sell, lease or otherwise dispose of any of the
Collateral, in its condition at the time Lender obtains possession of it or
after further manufacturing, processing or repair, at one or more public or
private sales, in lots or in bulk, for cash, exchange or other property, or
on
credit (a "Sale"),
and
to adjourn any such Sale from time to time without notice other than oral
announcement at the time scheduled for Sale (and, in connection therewith,
(A) Lender shall have the right to conduct such Sale on Borrower's premises
without charge, for such times as Lender deems reasonable, on Lender's premises,
or elsewhere, and the Collateral need not be located at the place of Sale;
(B) Lender may directly or through any of its Affiliates purchase or lease
any of the Collateral at any such public disposition, and if permissible under
applicable law, at any private disposition and (C) any Sale of Collateral
shall not relieve Borrower of any liability Borrower may have if any Collateral
is defective as to title, physical condition or otherwise at the time of sale);
(vii) demand payment of and collect any Accounts, Chattel Paper,
Instruments and General Intangibles included in the Collateral and, in
connection therewith, Borrower irrevocably authorizes Lender to endorse or
sign
Borrower's name on all collections, receipts, Instruments and other documents,
to take possession of and open mail addressed to Borrower and remove therefrom
payments made with respect to any item of Collateral or Proceeds thereof and,
in
Lender's sole and absolute discretion, to grant extensions of time to pay,
compromise claims and settle Accounts, General Intangibles and the like for
less
than face value; and (viii) demand and receive possession of any of
Borrower's federal and state income tax returns and the books and records
utilized in the preparation thereof or relating thereto. Borrower
recognizes that if Borrower fails to perform, observe or discharge any of its
Obligations under this Agreement or any of the Loan Documents, no remedy at
law
will provide adequate relief to Lender, and agrees that Lender shall be entitled
to temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages. Any notification of intended disposition
of
any of the Collateral required by law will be deemed to be a reasonable
authenticated notification of disposition if given at least ten days prior
to
such disposition and such notice shall (i) describe Lender and Borrower,
(ii) describe the Collateral that is the subject of the intended
disposition, (iii) state the method of the intended disposition,
(iv) state that Borrower is entitled to an accounting of the Obligations
and state the charge, if any, for an accounting and (v) state the time and
place of any public disposition or the time after which any private sale is
to
be made. Lender may disclaim any warranties that might arise in connection
with
the sale, lease or other disposition of the Collateral and has no obligation
to
provide any warranties at such time. Any Proceeds of any disposition by Lender
of any of the Collateral may be applied by Lender to the payment of expenses
in
connection with the Collateral, including legal expenses and reasonable
attorneys' fees, and any balance of such Proceeds may be applied by Lender
toward the payment of such of the Obligations, and in such order of application,
as Lender may from time to time elect. In addition to the foregoing remedies,
upon the occurrence of any Event of Default resulting from a breach of any
of
the financial covenants set forth in Section 5.21, Lender may, at its
option, upon not less than ten days' prior notice to Borrower, reduce any or
all
of the Loan Limits set forth in Section 1(b) of Schedule A to the
extent Lender, in its sole discretion, deems appropriate. Exercise or partial
exercise by Lender of one or more of its rights or remedies shall not be deemed
an election or bar Lender from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Lender to exercise any rights
or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been
fully paid and performed.
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Greystone
Business Credit II, L.L.C.
|
Loan
and Security Agreement
|
8.3 Application
of Proceeds. Subject
to any application required by law, all Proceeds realized as the result of
any
Sale shall be applied by Lender to the Obligations in such order as Lender
shall
determine in its sole discretion. Any surplus shall be paid to Borrower or
other
Persons legally entitled thereto; but Borrower shall remain liable to Lender
for
any deficiency. If Lender, in its sole and absolute discretion, directly or
indirectly enters into a deferred payment or other credit transaction with
any
purchaser at any Sale, Lender shall have the option, exercisable at any time,
in
its sole and absolute discretion, of either reducing the Obligations by the
principal amount of the purchase price or deferring the reduction of the
Obligations until the actual receipt by Lender of the cash
therefor.
|
9.
|
GENERAL
PROVISIONS.
|
9.1 Notices.
All
notices to be given under this Agreement shall be in writing and shall be given
either personally, by reputable private delivery service, by regular first-class
mail or certified mail return receipt requested, addressed to Lender or Borrower
at the address shown in the heading to this Agreement, or by facsimile to the
facsimile number shown in Section 9(i) of Schedule A, or at any other
address (or to any other facsimile number) designated in writing by one party
to
the other party in the manner prescribed in this Section 9.1. All notices
shall be deemed to have been given when received or when delivery is refused
by
the recipient.
9.2 Severability.
If
any
provision of this Agreement, or the application thereof to any party or
circumstance, is held to be void or unenforceable by any court of competent
jurisdiction, such defect shall not affect the remainder of this Agreement,
which shall continue in full force and effect.
9.3 Integration.
This
Agreement and the other Loan Documents represent the final, entire and complete
agreement between Borrower and Lender and supersede all prior and
contemporaneous negotiations, oral representations and agreements, all of which
are merged and integrated into this Agreement. THERE ARE NO ORAL UNDERSTANDINGS,
REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES THAT ARE NOT SET FORTH IN
THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS.
9.4 Waivers.
The
failure of Lender at any time or times to require Borrower to strictly comply
with any of the provisions of this Agreement or any other Loan Documents shall
not waive or diminish any right of Lender later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or affect any
other default, whether prior or subsequent, and whether or not similar. None
of
the provisions of this Agreement or any other Loan Document shall be deemed
to
have been waived by any act or knowledge of Lender or its agents or employees,
but only by a specific written waiver signed by an authorized officer of Lender
and delivered to Borrower. Borrower waives demand, protest, notice of protest
and notice of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper,
Instrument, Account, General Intangible, Document, Chattel Paper, Investment
Property or guaranty at any time held by Lender on which Borrower is or may
in
any way be liable, and notice of any action taken by Lender, unless expressly
required by this Agreement, and notice of acceptance hereof.
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Greystone
Business Credit II, L.L.C.
|
Loan
and Security
Agreement
|
9.5 Amendment.
This
Agreement may not be amended or modified except in a writing executed by
Borrower and a duly authorized officer of Lender.
9.6 Time
of Essence. Time
is
of the essence in the performance by Borrower of each and every obligation
under
this Agreement and the other Loan Documents.
9.7 Attorneys
Fees and Costs. Borrower
shall reimburse Lender for all reasonable attorneys' and paralegals' fees
(including in-house attorneys and paralegals employed by Lender) and all filing,
recording, search, title insurance, appraisal, audit, and other costs incurred
by Lender, pursuant to, in connection with, or relating to this Agreement,
including all reasonable attorneys' fees and costs Lender incurs to prepare
and
negotiate this Agreement and the other Loan Documents; to obtain legal advice
in
connection with this Agreement and the other Loan Documents or Borrower or
any
Obligor; to administer this Agreement and the other Loan Documents (including
the cost of periodic financing statement, tax lien and other searches conducted
by Lender); to enforce, or seek to enforce, any of its rights; prosecute actions
against, or defend actions by, Account Debtors; to commence, intervene in,
or
defend any action or proceeding; to enforce and protect, or to seek to enforce
and protect, any of its rights and interests in any bankruptcy case of Borrower,
including by initiating and prosecuting any motion for relief from the automatic
stay and by initiating, prosecuting or defending any other contested matter
or
adversary proceeding in bankruptcy; to file or prosecute any probate claim,
bankruptcy claim, third-party claim, or other claim; to examine, audit, copy,
and inspect any of the Collateral or any of Borrower's books and records; to
protect, obtain possession of, lease, dispose of, or otherwise enforce Lender's
security interests in, the Collateral; and to otherwise represent Lender in
any
litigation relating to Borrower or any Obligor. If either Lender or Borrower
files any lawsuit against the other predicated on a breach of this Agreement,
the prevailing party in such action shall be entitled to recover its reasonable
costs and attorneys' fees, including reasonable attorneys' fees and costs
incurred in the enforcement of, execution upon or defense of any order, decree,
award or judgment. All attorneys' fees and costs to which Lender may be entitled
pursuant to this Section shall immediately become part of the Obligations,
shall
be due on demand, and shall bear interest at a rate equal to the highest
interest rate applicable to any of the Obligations.
9.8 Benefit
of Agreement; Assignability. The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the respective successors, assigns, heirs, beneficiaries and representatives
of
Borrower and Lender; provided,
that
Borrower may not assign or transfer any of its rights under this Agreement
without the prior written consent of Lender, and any prohibited assignment
shall
be void. No consent by Lender to any assignment shall release Borrower from
its
liability for any of the Obligations. Lender shall have the right to assign
all
or any of its rights and obligations under the Loan Documents, and to sell
participating interests therein, to one or more other Persons, and Borrower
agrees to execute all agreements, instruments and documents requested by Lender
in connection with each such assignment and participation.
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Greystone
Business Credit II, L.L.C.
|
Loan
and Security Agreement
|
9.9 Headings;
Construction. Section
and subsection headings are used in this Agreement only for convenience and
do
not affect the meanings of the provisions that they precede.
9.10 GOVERNING
LAW; CONSENT TO FORUM, ETC.
THIS
AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED, AND SHALL BE DEEMED
TO
HAVE BEEN MADE, IN NEW YORK COUNTY, NEW YORK, AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. BORROWER HEREBY
CONSENTS AND AGREES THAT THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK
COUNTY, NEW YORK OR ANY STATE IN WHICH ANY OF THE COLLATERAL IS LOCATED SHALL
HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENTS OR ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
OTHER
LOAN DOCUMENTS. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND WAIVES
ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS.
BORROWER ALSO AGREES THAT ANY CLAIM OR DISPUTE BROUGHT BY BORROWER AGAINST
LENDER PURSUANT TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING
OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT EXCLUSIVELY
IN
THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK. BORROWER
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE IN THE MANNER AND SHALL BE DEEMED
RECEIVED AS SET FORTH IN SECTION 9.1 FOR NOTICES, TO THE EXTENT PERMITTED
BY LAW. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE
RIGHT
OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO
PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH
FORUM OR THE TAKING OF
ANY
ACTION UNDER THIS AGREEMENT TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE FORUM
OR JURISDICTION.
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Greystone
Business Credit II, L.L.C.
|
Loan
and Security Agreement
|
9.11 WAIVER
OF JURY TRIAL, ETC.
BORROWER
WAIVES (I) THE RIGHT TO TRIAL BY JURY (WHICH LENDER ALSO WAIVES) IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED
TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL OR ANY CONDUCT,
ACTS OR OMISSIONS OF LENDER OR BORROWER OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OR ANY OTHER PERSONS AFFILIATED WITH
LENDER OR BORROWER, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE;
(II) THE RIGHT TO INTERPOSE ANY CLAIMS, DEDUCTIONS, SETOFFS OR
COUNTERCLAIMS OF ANY KIND IN ANY ACTION OR PROCEEDING INSTITUTED BY LENDER
WITH
RESPECT TO THE LOAN DOCUMENTS OR ANY MATTER RELATING THERETO, EXCEPT FOR
COMPULSORY COUNTERCLAIMS; (III) NOTICE PRIOR TO LENDER'S TAKING POSSESSION
OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED
BY
ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES AND
(IV) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS.
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT
TO
LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING UPON THE
FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL
COUNSEL
AND
HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
|
Greystone
Business Credit II, L.L.C.
|
Loan
and Security Agreement
|
IN
WITNESS WHEREOF, Borrower and Lender have signed this Agreement as of the date
first set forth above.
|
Borrower:
TITAN
APPAREL, INC.
By___________________________________________________
Its________________________________________________
|
Lender:
GREYSTONE
BUSINESS CREDIT II, L.L.C.
By__________________________________________________________________
Its
Authorized Signatory
|
Schedule A
Description
of Certain Terms
This
Schedule is an integral part of the Loan and Security Agreement between
Titan
Apparel, Inc.
and
Greystone
Business Credit II, L.L.C. (the
"Agreement").
|
1.
|
Loan
Limits for Revolving Loans:
|
|||
|
(a)
|
Maximum
Facility Amount:
|
$14,000,000
|
||
|
(b)
|
Advance
Rates:
|
|||
|
(i)
|
Accounts
Advance Rate:
|
Subject
to the reductions set forth below, 85%; provided,
that, in addition to the foregoing, if the Dilution Percentage
exceeds 2%,
Lender may, at its option (A) reduce such advance rate by the number
of full or partial percentage points comprising such excess or
(B) establish a Reserve on account of such excess
|
||
|
(ii)
|
Inventory
Advance Rate:
|
The
lesser of (A) 65% of cost or (B) 85% of the net orderly
liquidation value of Inventory, based in each case, upon a recent
appraisal in form and substance satisfactory to Lender
|
||
|
(c)
|
Inventory
Sublimit:
|
Commencing
eight (8) months after the date hereof, the lesser of (i) $6,000,000
and (ii) advances with respect to Eligible Accounts
outstanding
|
||
|
(d)
|
Credit
Accommodation Limit:
|
$3,000,000
|
||
|
2.
|
Loan
Limits for Term Loan:
|
|||
|
(a)
|
Principal
Amount:
|
$2,000,000
|
||
|
(b)
|
Repayment
Schedule:
|
Payable
in full in cash on the Initial Maturity Date
|
||
A-1
|
3.
|
Interest
Rate:
|
|||
|
(a)
|
Revolving
Loans and other monetary Obligations:
|
3%
per annum in excess of the Prime Rate for a period of six (6) months
from
the date hereof and 5% per annum in excess of the Prime Rate
thereafter
|
||
|
(b)
|
Term
Loan:
|
5%
per annum in excess of the Prime Rate for a period of six (6) months
from
the date hereof and 7% per annum in excess of the Prime Rate
thereafter
|
||
|
4.
|
[Intentionally
Omitted]
|
|||
|
5.
|
Maximum
Days:
|
|||
|
(a)
|
Maximum
days after original
invoice
date
for Eligible Accounts:
|
90
days
|
||
|
(b)
|
Maximum
days after original
invoice
due date
for Eligible Accounts:
|
60
days
|
||
|
6.
|
Fees:
|
|||
|
(a)
|
Credit
Accommodation Fees:
|
3%
of the face amount of any letters of credit issued in connection
with any
Credit Accommodation, plus any other fees and expenses charged
to Lender
with respect to any such letter of credit
|
||
|
7.
|
Initial
Maturity Date:
|
December
29, 2009
|
||
|
8.
|
Financial
Covenants:
|
|||
|
(a)
|
Limitation
on Purchase Money Security Interests:
|
$200,000
|
||
|
(b)
|
Limitation
on Equipment Leases:
|
$200,000
|
||
|
9.
|
Borrower
Information:
|
|||
|
(a)
|
Prior
Names of Borrower:
|
None
|
||
|
(b)
|
Prior
Trade Names of Borrower:
|
None
|
||
A-2
|
(c)
|
Existing
Trade Names of Borrower:
|
[to
be inserted]
|
||
|
(d)
|
Inventory
Locations:
|
[to
be inserted]
|
||
|
(e)
|
Other
Locations:
|
[to
be inserted]
|
||
|
(f)
|
Litigation:
|
[to
be inserted]
|
||
|
(g)
|
Ownership
of Borrower:
|
[to
be inserted]
|
||
|
(h)
|
Subsidiaries
(and ownership thereof):
|
[to
be inserted]
|
||
|
(i)
|
Facsimile
Numbers:
|
|||
|
Borrower:
|
[to
be inserted]
|
|||
|
Lender:
|
000-000-0000
|
|||
|
10.
|
Description
of Real Property:
|
None
|
||
|
11.
|
Lender's
Bank:
|
Xxxx
xx Xxxxxxx
X.X.
Xxx 0000
Xxxxxxx,
XX 00000-0000
ABA
No.: 000-000-000
For
credit to: Greystone Business Credit II, L.L.C.
Account
No.: 0000-0000-0000
Re:
Titan Apparel, Inc.
|
||
|
12.
|
Other
Covenants:
|
For
each location set forth in Section 9(d) of Schedule A, Borrower
shall use commercially reasonable efforts to obtain a landlord's
agreement
in form and substance satisfactory to Lender
|
||
|
13.
|
[Intentionally
Omitted]
|
|||
|
14.
|
Commercial
Tort Claims
|
[to
be inserted]
|
||
|
15.
|
Deposit
Accounts
|
[to
be inserted]
|
||
|
16.
|
Borrower's
Bank
|
[to
be inserted]
|
||
A-3
IN
WITNESS WHEREOF, Borrower and Lender have signed this Schedule A as of the
date
set forth in the heading to the Agreement.
|
Borrower:
|
Lender:
|
|
|
TITAN
APPAREL, INC.
|
GREYSTONE
BUSINESS CREDIT II, L.L.C.
|
|
|
By
/s/
|
By
/s/
|
|
|
Its_____________________________________________
|
Its
Authorized Signatory
|
A-4
Schedule B
Definitions
This
Schedule is an integral part of the Loan and Security Agreement between
Titan
Apparel, Inc. and
Greystone
Business Credit II, L.L.C. (the
"Agreement").
As
used
in the Agreement, the following terms have the following meanings:
"Account"
has the
meaning set forth in the UCC.
"Account
Debtor"
has the
meaning set forth in the UCC.
"Account
Proceeds"
has the
meaning set forth in Section 4.1.
"Accounts
Advance Rate"
means
the percentage set forth in Section 1(b)(i) of
Schedule A.
"Advance"
has the
meaning set forth in Section 1.1(b).
"Advance
Rates"
means,
collectively, the Accounts Advance Rate and the Inventory Advance
Rate.
"Affiliate"
means,
with respect to any Person, a relative, partner, shareholder, member, manager,
director, officer, or employee of such Person, any parent or subsidiary of
such
Person, or any Person controlling, controlled by or under common control with
such Person or any other Person affiliated, directly or indirectly, by virtue
of
family membership, ownership, management or otherwise.
"Agreement"
and
"this
Agreement"
mean
the Loan and Security Agreement of which this Schedule B is a part and the
Schedules thereto.
"Availability"
has the
meaning set forth in Section 1.1(a)
"Bankruptcy
Code"
means
the United States Bankruptcy Code (11 U.S.C. § 101 et seq.).
"Blocked
Account"
has the
meaning set forth in Section 4.1.
"Borrower"
has the
meaning set forth in the heading to the Agreement.
"Borrower's
Address"
has the
meaning set forth in the heading to the Agreement.
"Business
Day"
means a
day other than a Saturday or Sunday or any other day on which Lender or banks
in
New York are authorized to close.
B-1
"Capital
Stock"
means
any and all shares, interests, participations or other equivalents (however
designated) of capital stock of a corporation, any and all equivalent ownership
interests in a Person (other than a corporation) and any and all warrants,
rights or options to purchase any of the foregoing.
"Chattel
Paper"
has the
meaning set forth in the UCC.
"Collateral"
means
all property and interests in property in or upon which a security interest
or
other Lien is granted pursuant to this Agreement or the other Loan Documents,
including all of the property of Borrower described in
Section 3.1.
"Commercial
Tort Claims"
has the
meaning set forth in the UCC.
"Credit
Accommodation"
has the
meaning set forth in Section 1.1(a).
"Credit
Accommodation Balance"
means
the sum of (i) the aggregate undrawn face amount of all outstanding Credit
Accommodations and (ii) all interest, fees and costs due or, in Lender's
estimation, likely to become due in connection therewith.
"Credit
Accommodation Fees"
has the
meaning set forth in Section 2.2(a).
"Credit
Accommodation Limit"
means
the amount set forth in Section 1(e) of Schedule A.
"Default"
means
any event which with notice or passage of time, or both, would constitute an
Event of Default.
"Deposit
Account"
has the
meaning set forth in the UCC.
"Dilution
Percentage"
means
the gross amount of all returns, allowances, discounts, credits, write-offs
and
similar items relating to Borrower's Accounts computed as a percentage of
Borrower's gross sales, calculated on a ninety (90) day rolling
average.
"Document"
has the
meaning set forth in the UCC.
"Electronic
Chattel Paper"
has the
meaning set forth in the UCC.
B-2
"Eligible
Account"
means,
at any time of determination, an Account which satisfies the general criteria
set forth below and which is otherwise acceptable to Lender (provided,
that
Lender may, in its sole discretion, change the general criteria for
acceptability of Eligible Accounts upon at least fifteen days' prior notice
to
Borrower). An Account shall be deemed to meet the current general criteria
if
(i) neither the Account Debtor nor any of its Affiliates is an Affiliate,
creditor or supplier of Borrower; (ii) it does not remain unpaid more than
the earlier to occur of (A) the number of days after the original
invoice
date
set
forth in Section 5(a) of Schedule A or (B) the number of days
after the original invoice
due date
set
forth in Section 5(b) of Schedule A; (iii) the Account Debtor or
its Affiliates are not past due on other Accounts owing to Borrower comprising
more than 50% of all of the Accounts owing to Borrower by such Account Debtor
or
its Affiliates; (iv) all Accounts owing by the Account Debtor or its
Affiliates do not represent more than 30% of all otherwise Eligible Accounts
(provided,
that
Accounts which are deemed to be ineligible solely by reason of this
clause (iv) shall be considered Eligible Accounts to the extent of the
amount thereof which does not exceed the applicable percentage of
all
otherwise Eligible Account as set forth in this clause (iv)); (v) no
covenant, representation or warranty contained in this Agreement with respect
to
such Account (including any of the representations set forth in
Section 5.4) has been breached; (vi) the Account is not subject to any
contra relationship, counterclaim, dispute or set-off (provided,
that
Accounts which are deemed to be ineligible solely by reason of this
clause (vi) shall be considered Eligible Accounts to the extent of the
amount thereof which is not affected by such contra relationships,
counterclaims, disputes or set-offs); (vii) the Account Debtor's chief
executive office or principal place of business is located in the United States
or Provinces of Canada which have adopted the Personal Property Security Act
or
a similar act, unless (A) the sale is fully backed by a letter of credit,
guaranty or acceptance acceptable to Lender in its sole discretion, and if
backed by a letter of credit, such letter of credit has been issued or confirmed
by a bank satisfactory to Lender, is sufficient to cover such Account, and
if
required by Lender, the original of such letter of credit has been delivered
to
Lender or Lender's agent and the issuer thereof notified of the assignment
of
the proceeds of such letter of credit to Lender or (B) such Account is
subject to credit insurance payable to Lender issued by an insurer and on terms
and in an amount acceptable to Lender; (viii) it is absolutely owing to
Borrower and does not arise from a sale on a xxxx-and-hold, guarantied sale,
sale-or-return, sale-on-approval, consignment, retainage or any other repurchase
or return basis or consist of progress xxxxxxxx; (ix) Lender shall have
verified the Account in a manner satisfactory to Lender; (x) the Account
Debtor is not the United States of America or any state or political subdivision
(or any department, agency or instrumentality thereof), unless Borrower has
complied with the Assignment of Claims Act of 1940 (31 U.S.C. §203 et seq.)
or
other applicable similar state or local law in a manner satisfactory to Lender;
(xi) it is at all times subject to Lender's duly perfected, first priority
security interest and to no other Lien that is not a Permitted Lien, and the
goods giving rise to such Account (A) were not, at the time of sale,
subject to any Lien except Permitted Liens and (B) have been delivered to
and accepted by the Account Debtor, or the services giving rise to such Account
have been performed by Borrower and accepted by the Account Debtor;
(xii) the Account is not evidenced by Chattel Paper or an Instrument of any
kind and has not been reduced to judgment; (xiii) the Account Debtor's
total indebtedness to Borrower does not exceed the amount of any credit limit
established by Borrower or Lender and the Account Debtor is otherwise deemed
to
be creditworthy by Lender (provided,
that
Accounts which are deemed to be ineligible solely by reason of this
clause (xiii) shall be considered Eligible Accounts to the extent the
amount of such Accounts does not exceed the lower of such credit limits);
(xiv) there are no facts or circumstances existing, or which could
reasonably be anticipated to occur, which might result in any adverse change
in
the Account Debtor's financial condition or impair or delay the collectibility
of all or any portion of such Account; (xv) Lender has been furnished with
all documents and other information pertaining to such Account which Lender
has
requested, or which Borrower is obligated to deliver to Lender, pursuant to
this
Agreement; (xvi) Borrower has not made an agreement with the Account Debtor
to extend the time of payment thereof beyond the time periods set forth in
clause (ii) above; and (xvii) Borrower has not posted a surety or other
bond in respect of the contract under which such Account arose.
B-3
"Eligible
Inventory"
means,
at any time of determination, Inventory
(other than packaging materials and supplies) which satisfies the general
criteria set forth below and which is otherwise acceptable to Lender
(provided,
that
Lender may, in its sole discretion, change the general criteria for
acceptability of Eligible Inventory upon at least fifteen days' prior written
notice to Borrower). Inventory shall be deemed to meet the current general
criteria if (i) it consists of raw materials or finished goods, or
work-in-process that is readily marketable in its current form; (ii) it is
in good, new and saleable condition; (iii) it is not slow-moving, obsolete,
unmerchantable, returned or repossessed; (iv) it is not in the possession
of a processor, consignee or bailee, or located on premises leased or subleased
to Borrower, or on premises subject to a mortgage in favor of a Person other
than Lender, unless such processor, consignee, bailee or mortgagee or the lessor
or sublessor of such premises, as the case may be, has executed and delivered
all documentation which Lender shall require to evidence the subordination
or
other limitation or extinguishment of such Person's rights with respect to
such
Inventory and Lender's right to gain access thereto; (v) it meets all
standards imposed by any governmental agency or authority; (vi) it conforms
in all respects to any covenants, warranties and representations set forth
in
the Agreement; (vii) it is at all times subject to Lender's duly perfected,
first priority security interest and no other Lien except a Permitted Lien;
and
(viii) it is situated at an Inventory Location listed in Section 9(d)
of Schedule A or other location of which Lender has been notified as
required by Section 5.8.
"Equipment"
has the
meaning set forth in the UCC.
"ERISA"
means
the Employee Retirement Income Security Act of 1974 and all rules, regulations
and orders promulgated thereunder.
"Event
of Default"
has the
meaning set forth in Section 8.1.
"Fixtures"
has the
meaning set forth in the UCC.
"GAAP"
means
generally accepted accounting principles as in effect from time to time,
consistently applied.
"General
Intangibles"
has the
meaning set forth in the UCC.
"Goods"
has the
meaning set forth in the UCC.
"Ineligible
Receivable Payments"
has the
meaning set forth in Section 1.4.
"Initial
Maturity Date"
means
the date set forth in Section 7 of Schedule A.
B-4
"Initial
Term"
has the
meaning set forth in Section 7.1.
"Instrument"
has the
meaning set forth in the UCC.
"Inventory"
has the
meaning set forth in the UCC.
"Inventory
Advance Rate"
means
the percentage(s) set forth in Section 1(b)(ii) of
Schedule A.
"Inventory
Sublimit"
means
the amount(s) set forth in Section 1(d) of Schedule A.
"Investment
Property"
has the
meaning set forth in the UCC.
"Lender"
has the
meaning set forth in the heading to the Agreement.
"Letter-of-Credit
Right"
has the
meaning set forth in the UCC.
"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, including rights of sellers under conditional sales
contracts or title retention agreements and reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting property. For
the
purpose of this Agreement, Borrower shall be deemed to be the owner of any
property which it has acquired or holds subject to a conditional sale agreement
or other arrangement pursuant to which title to the property has been retained
by or vested in some other Person for security purposes.
"Loan
Account"
has the
meaning set forth in Section 2.4.
"Loan
Documents"
means,
collectively, the Agreement and all notes, guaranties, security agreements,
certificates, landlord's agreements, Lock Box and Blocked Account agreements
and
all other agreements, documents and instruments now or hereafter executed or
delivered by Borrower or any Obligor in connection with, or to evidence the
transactions contemplated by, this Agreement.
"Loan
Limits"
means,
collectively, the Availability limits, all other limits on the amount of Loans
or Credit Accommodations set forth in this Agreement.
"Loans"
means
collectively the Revolving Loans and the Term Loan.
"Lock
Box"
has the
meaning set forth in Section 4.1.
"Maturity
Date"
has the
meaning set forth in Section 7.1.
"Maximum
Facility Amount"
means
the amount set forth in Section 2(a) of Schedule A.
B-5
"Net
Profits"
means,
for any given period of determination, Borrower's net profits for such period
determined in accordance with GAAP.
"Net
Sales" means
net
sales as determined in accordance with GAAP.
"Net
Sales Participation" has
the
meaning set forth in Section 2.2(b).
"Obligations"
means
all present and future Loans, advances, debts, liabilities, obligations,
guaranties, covenants, duties and indebtedness at any time owing by Borrower
to
Lender, whether evidenced by this Agreement, any other Loan Document or
otherwise whether arising from an extension of credit, opening a Credit
Accommodation, guaranty, indemnification or otherwise (including all fees,
costs
and other amounts which may be owing to issuers of Credit Accommodations and
all
taxes, duties, freight, insurance, costs and other expenses, costs or amounts
payable in connection with Credit Accommodations or the underlying goods),
whether direct or indirect (including those acquired by assignment and any
participation by Lender in Borrower's indebtedness owing to others), whether
absolute or contingent, whether due or to become due, and whether arising before
or after the commencement of a proceeding under the Bankruptcy Code or any
similar statute whether or not allowed in any proceeding under the Bankruptcy
Code, including all interest, charges, expenses, fees, attorney's fees, expert
witness fees, audit fees, letter of credit fees, Credit Accommodation Fees
and
any other sums chargeable to Borrower under this Agreement or under any other
Loan Document.
"Obligor"
means
any guarantor, endorser, acceptor, surety or other person liable on, or with
respect to, the Obligations or who is the owner of any property which is
security for the Obligations, other than Borrower.
"Permitted
Liens"
means:
(i) purchase money security interests in specific items of Equipment in an
aggregate amount not to exceed the limit set forth in Section 8(a) of
Schedule A; (ii) leases of specific items of Equipment in an aggregate
amount not to exceed the limit set forth in Section 8(b) of
Schedule A; (iii) Liens for taxes not yet due and payable;
(iv) additional Liens which are fully subordinate to the security interests
of Lender and are consented to in writing by Lender; (v) security interests
being terminated concurrently with the execution of this Agreement;
(vi) Liens of materialmen, mechanics or carriers, but excluding Liens in
favor of warehousemen, arising in the ordinary course of business and securing
obligations which are not delinquent; (vii) Liens incurred in connection
with the extension, renewal or refinancing of the indebtedness secured by Liens
of the type described in clause (i) or (ii) above; provided,
that
any extension, renewal or replacement Lien is limited to the property encumbered
by the existing Lien and the principal amount of the indebtedness being
extended, renewed or refinanced does not increase; (viii) Liens in favor of
customs and revenue authorities which secure payment of customs duties in
connection with the importation of goods; and (ix) security deposits posted
in connection with real property leases or subleases. Lender will have the
right
to require, as a condition to its consent under clause (iv) above, that the
holder of the additional Lien sign an intercreditor agreement in form and
substance satisfactory to Lender, in its sole discretion, acknowledging that
the
Lien is subordinate to the security interests of Lender, and agreeing not to
take any action to enforce its subordinate Lien so long as any Obligations
remain outstanding, and that Borrower agree that any uncured default in any
obligation secured by the subordinate Lien shall also constitute an Event of
Default under this Agreement.
B-6
"Person"
means
any individual, sole proprietorship, partnership, joint venture, limited
liability company, trust, unincorporated organization, association, corporation,
government or any agency or political division thereof, or any other
entity.
"Prime
Rate"
means,
at any given time, the prime rate as quoted in The
Wall Street Journal
as the
base rate on corporate loans posted as of such time by at least 75% of the
nation's 30 largest banks (which rate is not necessarily the lowest rate offered
by such banks).
"Proceeds"
has the
meaning set forth in the UCC.
"Projected
EBITDA"
means
EBITDA as reflected on the projections delivered on or prior to the date hereof
and attached as Annex I hereto.
"Real
Property"
means
the real property described in Section 10 of Schedule A.
"Related
Agreements"
means
that certain Secured Party Xxxx of Transfer dated as of the date hereof between
GBC Funding, LLC, a Delaware limited liability company (as successor to Lender),
and Borrower, and the documents, instruments and agreements executed in
connection therewith.
"Related
Transactions"
means
the transactions contemplated by the Related Agreements.
"Released
Parties"
has the
meaning set forth in Section 6.1.
"Renewal
Term"
has the
meaning set forth in Section 7.1.
"Reserves"
has the
meaning set forth in Section 1.2.
"Revolving
Loans"
has the
meaning set forth in Section 1.1(a).
"Sale"
has the
meaning set forth in Section 8.2.
"Subsidiary"
means
any corporation or other entity of which a Person owns, directly or indirectly,
through one or more intermediaries, more than 50% of the Capital Stock or other
equity interest at the time of determination.
"Tangible
Chattel Paper"
has the
meaning set forth in the UCC.
B-7
"Term"
means
the period commencing on the date of this Agreement and ending on the Maturity
Date.
"Term
Loan"
has the
meaning set forth in Section 1.1(b).
"UCC"
means,
at any given time, the Uniform Commercial Code as adopted and in effect at
such
time in the State of New York.
"Unfinanced
Capital Expenditures"
shall
mean, for any period, as to any Person, total Capital Expenditures less
(a) long-term indebtedness and (b) proceeds of sales of rental
containers.
"Utilization"
means,
with respect to any period, the average owned containers on rent divided by
the
average total owned containers.
"VAT
Refunds"
has the
meaning set forth in Section 1.4.
All
accounting terms used in this Agreement, unless otherwise indicated, shall
have
the meanings given to such terms in accordance with GAAP. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the UCC, to the extent
such terms are defined therein. The term "including,"
whenever used in this Agreement, shall mean "including but not limited to."
The
singular form of any term shall include the plural form, and vice versa, when
the context so requires. References to Sections, subsections and Schedules
are
to Sections and subsections of, and Schedules to, this Agreement. All references
to agreements and statutes shall include all amendments thereto and successor
statutes in the case of statutes.
B-8
IN
WITNESS WHEREOF, Borrower and Lender have signed this Schedule B as of the
date set forth in the heading to the Agreement.
|
Borrower:
|
Lender:
|
||||
|
TITAN
APPAREL, INC.
|
GREYSTONE
BUSINESS CREDIT II, L.L.C.
|
||||
|
By
|
By
|
||||
|
Its
|
Its
Authorized Signatory
|
||||
B-9
Annex
I
See
attached.
Exhibit
A
FORM
OF TERM NOTE
|
$_________________
|
New
York, New York
|
|
|
______________ ___, 2007
|
FOR
VALUE
RECEIVED, the undersigned, Titan
Apparel, Inc.,
a
__________ corporation ("Borrower"),
hereby unconditionally promises to pay to the order of Greystone
Business Credit II, L.L.C. ("Lender"),
a
Delaware limited liability company having an address at 000 Xxxx 00xx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as the holder
of
this Term Note ("Term
Note")
may
from time to time designate in writing, in lawful money of the United States
of
America and in immediately available funds, the principal sum of
_______________________________ ___/100 Dollars ($________________).
Reference is hereby made to the Loan and Security Agreement between Borrower
and
Lender of even date herewith (the "Loan
Agreement")
for a
statement of the terms and conditions under which the loan evidenced hereby
was
made and is to be repaid. This Term Note evidences a Term Loan Advance described
in the Loan Agreement. Capitalized terms used herein which are not otherwise
specifically defined herein shall have the meanings ascribed to such terms
in
the Loan Agreement.
The
outstanding principal balance of this Term Note shall be payable in full on
the
Maturity Date. Prior thereto, the Term Note shall be repayable as set forth
in
the Loan Agreement.
Borrower
further promises to pay interest on the outstanding principal amount hereof
from
the date hereof until payment in full hereof at the per annum rate as set forth
in the Loan Agreement. Following the occurrence and during the continuance
of an
Event of Default the entire outstanding principal balance of this Term Note
shall, at Lender's option, bear interest until paid in full at a per annum
rate
equal to the interest rate applicable to the Term Loan from time to time in
effect plus three percent (3.00%). Until maturity, interest on the outstanding
principal amount hereof shall be payable in arrears on the first day of each
month, commencing January 1, 2008 and on the Maturity Date. After maturity,
whether by acceleration or otherwise, accrued interest shall be payable on
demand. Interest as aforesaid shall be charged for the actual number of days
elapsed over a year consisting of three hundred sixty (360) days on the actual
daily outstanding balance hereof. Changes in the interest rate provided for
herein which are due to changes in the Prime Rate shall be effective on the
date
of the change in the Prime Rate.
Notwithstanding
anything to the contrary contained herein, the aggregate of all interest
hereunder and charged or collected by Lender is not intended to exceed the
highest rate permissible under any applicable law, but if it should, such
interest shall automatically be reduced to the extent necessary to comply with
applicable law and Lender will refund to Borrower any such excess interest
received by Lender.
Subject
to Section 7.2 of the Loan Agreement, Borrower may, prepay the outstanding
principal balance hereof in whole or in part. Any partial prepayment of the
Term
Loan shall be applied to the unpaid installments of the Term Loan in the inverse
order of their maturities.
Upon
and
after the occurrence of an Event of Default, this Term Note may, at the option
of Lender, and without demand, notice or legal process of any kind, be declared,
and immediately shall become, due and payable.
Payments
received by Lender from Borrower on this Term Note shall be applied to the
Obligations as provided in the Loan Agreement.
Presentment,
demand, protest and notice of presentment, demand, nonpayment and protest are
hereby waived by Borrower.
THIS
TERM
NOTE SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. If any
provision of this Term Note or the application thereof shall be held to be
void
or unenforceable by any court of competent jurisdiction, such defect shall
not
affect the remainder of this Term Note, which shall continue in full force
and
effect. Whenever in this Term Note reference is made to Lender or Borrower,
such
reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns. The provisions of this Term Note shall be
binding upon Borrower and its successors and assigns, and shall inure to the
benefit of Lender and its successors and assigns.
|
By
|
||
|
Its
|
||
