CREDIT FACILITY AGREEMENT
EXHIBIT 10.6
THIS
CREDIT FACILITY AGREEMENT is made as of the 12th day of February, 2010, by and
between PREMIER PACKAGING CORPORATION, a corporation formed under the laws of
the State of New York with offices at 0 Xxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx 00000
and RBS CITIZENS, N.A., a national banking association, with offices at 000
Xxxxxxxx Xxxxxx XX 00000
The
parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
The
following terms shall have the following meanings unless otherwise expressly
stated herein:
“Acquisition
Term Loan” shall have the meaning set forth in Section 3.1 hereof.
“Acquisition
Term Loan Maturity Date” shall be the earlier of (i) March 1, 2013, or (ii) the
date of an Event of Default.
“Acquisition
Term Loan Note” shall have the meaning set forth in Section 3.1(a)
hereof.
“Affiliate”
shall mean any entity which directly or indirectly, or through one or more
intermediaries, Controls or is Controlled By or is Under Common Control with the
Borrower. For purposes of this Agreement, the term “Affiliate” shall
include, but is not limited to, Document Security Systems, Inc., Secuprint,
Inc., and Plastic Printing Professionals, Inc.
“Bank”
shall mean RBS Citizens, N.A., and its successors, legal representatives, and
assigns.
“Borrower”
shall mean Premier Packaging Corporation and its successors, legal
representatives, and assigns.
“Borrowing
Base” shall have the meaning ascribed to such term in Section 2.8
hereof.
“Business
Day” means: (a) any day which is neither a Saturday or Sunday nor a legal
holiday on which commercial banks are authorized or required to be closed in New
York; (b) when such term is used to describe a day on which a payment or
prepayment is to be made in respect of a LIBOR Rate Loan, any day which is: (i)
neither a Saturday or Sunday nor a legal holiday on which commercial banks are
authorized or required to be closed in New York City; and (ii) a London Banking
Day; and (c) when such term is used to describe a day on which an interest rate
determination is to be made in respect of a LIBOR Rate Loan, any day which is a
London Banking Day.
“Capital
Expenditure” shall mean, for the applicable period, expenditures made to acquire
or construct fixed assets, plant, and equipment (including improvements,
renovations, and replacements required to be classified in accordance with GAAP
as capital expenditures but excluding maintenance and repairs not required to be
so classified). Capital expenditures shall include
the capitalized amount of obligations under leases or similar agreements
covering such fixed assets, plant, and equipment, to the extent that such
obligations are required to be treated as a capital lease for balance sheet
purposes under GAAP.
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“Change
of Control” means the acquisition of ownership, directly or indirectly,
beneficially or of record, by any person or group (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than twenty-five percent (25%) of the aggregate ordinary
voting power in the election of such entity’s directors represented by the
issued and outstanding capital stock of such entity.
“Controlled
Group” means a controlled group of corporations and all members of a controlled
group or trades or businesses (whether or not incorporated) under common
control, which, together with Borrower, are treated as a single employer under
Section 414 or Section 4001 of ERISA.
“Controls”
(including the terms “Controlled By” or “Under Common Control”) shall mean but
not be limited to the ownership of ten percent (10%) or more of the outstanding
equity interests of any entity having voting power for the election of directors
or managers, whether or not at the same time equity interest of any other class
or classes has or might have voting power by reason of the happening of any
contingency, or ownership of ten percent (10%) or more of any interest in any
partnership, or any other interest by reason of which a controlling influence
over the affairs of the entity may be exercised.
“Current
Assets” shall mean all assets treated as current assets in accordance with
GAAP.
“Current
Liabilities” shall mean all liabilities treated as current liabilities in
accordance with GAAP, including without limitation all obligations payable on
demand or within one year after the applicable measurement date as well as
installment, reimbursement, or sinking fund payments payable within one year
after the applicable measurement date, but excluding any such liabilities which
are renewable or extendable at the option of the obligor to a date more than one
year after the applicable measurement date.
“Current
Ratio” shall mean, for the applicable period and calculated according to GAAP on
a consolidated basis without duplication, the ratio of Current Assets to Current
Liabilities.
“Debt”
for any person or entity shall mean (i) indebtedness of such person or entity
for borrowed money, (ii) obligations of such person or entity for the deferred
purchase price of property or services (except trade payables incurred in the
ordinary course of business), (iii) capitalized or capitalizable obligations of
such person or entity with respect to leases, (iv) the amount available for
drawing under outstanding standby letters of credit issued for the account
of such person or entity and the amount of other off-balance sheet
obligations or liabilities, each to the extent not otherwise treated separately
as Debt, (v) all obligations endorsed (other than for collection in the ordinary
course of business) or guaranteed by such person or entity directly or
indirectly in any manner including without limitation contingent obligations to
purchase, pay or supply funds to any person or entity to assure a creditor
against loss, (vi) obligations of such person or entity arising under acceptance
facilities, and (vii) obligations secured by a lien, security
interest, or other arrangement for the purpose of security on property owned by
such person or entity whether or not the underlying obligations have been
assumed by such person or entity.
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“Default”
shall mean any event, action, inaction, or occurrence that with the giving of
notice or passage of time or both would constitute an Event of
Default.
“Distributions”
shall mean (i) dividends, payments, or distributions of any kind (including
without limitation cash or property) in respect of the capital stock, securities
or other equity interests or rights to acquire such equity interests of the
applicable entity excluding distributions in the form of such stock, equity
securities, equity interests, or rights to acquire equity interests, and (ii)
repurchases, redemptions, or acquisitions of capital stock, securities, or other
equity interests or rights to acquire such equity interests.
“EBITDA”
shall mean for any period, the sum of Net Income plus interest, taxes,
depreciation and amortization.
“Eligible
Receivables” shall mean: (i) for trade accounts receivable from payors whose
accounts are less than 90 days beyond date of invoice, all accounts receivable,
plus (ii) for trade accounts receivable from payors whose accounts are in whole
or in part more than 90 days beyond date of invoice, the portion of the accounts
receivable less than 90 days beyond date of invoice provided that at least 50%
of the outstanding amount from the payor is less than 90 days beyond date of
invoice, minus all (iii) contra accounts receivable, affiliate company accounts
receivable, foreign accounts receivable (unless backed by irrevocable letters of
credit, confirmed by a U.S. bank, and acceptable to Bank in its sole discretion,
and duly assigned to Bank), employee accounts receivable, xxxx and hold accounts
receivable (i.e. accounts relating to goods not yet shipped but invoiced),
uncollectible accounts receivable, accounts receivable arising from progressive
xxxxxxxx (i.e., accounts receivable from xxxxxxxx for work performed on a
partially completed contract), accounts receivable arising from guaranteed sales
with buy back provisions (i.e., sales in which the Borrower is obligated to
repurchase inventory or merchandise sold to customers), accounts receivable from
the United States of America or agency or department thereof (unless assignment
and notice thereof is effected in accordance with the Assignment of Claims Act),
and accounts receivable from businesses reasonably believed by the Bank to be at
risk of defaulting on accounts including without limitation accounts receivable
from insolvent payors. In the event that total accounts receivable from any
payor represent more than 20% of the Borrower’s total accounts receivable, the
Bank reserves the right in its sole discretion to delete those accounts
receivable from eligible accounts receivable. Eligible Accounts must be trade
accounts receivable that arise from goods sold or delivered or services rendered
in the Borrower’s ordinary course of business as it exists on the date of this
Agreement and must be subject to the first priority security interest of the
Bank and to no other security interest or lien.
“Environment”
means any water including but not limited to surface water and ground water or
water vapor; any land including land surface or subsurface; stream sediments;
air; fish; wildlife; plants; and all other natural resources or environmental
media.
“Environmental
Laws” means all federal, state and local environmental, land use, zoning,
health, chemical use, safety and sanitation laws, statutes, ordinances,
regulations, codes and rules relating
to the protection of the Environment and/or governing the use, storage,
treatment, generation, transportation, processing, handling, production or
disposal of Hazardous Substances and the regulations, rules, ordinances, bylaws,
policies, guidelines, procedures, interpretations, decisions, orders and
directives of federal, state and local governmental agencies and authorities
with respect thereto.
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“Environmental
Permits” means all licenses, permits, approvals, authorizations, consents or
registrations required by any applicable Environmental Laws and all applicable
judicial and administrative orders in connection with ownership, lease,
purchase, transfer, closure, use and/or operation of the Improvements and/or as
may be required for the storage, treatment, generation, transportation,
processing, handling, production or disposal of Hazardous
Substances.
“Environmental
Report” means written reports, if any, prepared for the Bank by an environmental
consulting or environmental engineering firm.
“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as
amended.
“Escrow
Account” means account #4009651228 maintained by the Bank in the name of the
Borrower.
“Escrow
Deposit Amount” shall have the meaning ascribed to such term in Section 2.6
hereof.
“Escrow
Deposit Date” shall mean the 15th of each month.
“Event of
Default” shall mean the occurrence of any event described in Section 11.1
hereof.
“Fixed
Charge Coverage Ratio” shall mean, for the applicable period and calculated
according to GAAP on a consolidated basis without duplication, the ratio of: (a)
the sum of EBITDA, plus Interest Expense and rent expense minus Distributions to
(b) current maturities long term debt plus cash Interest Expense plus current
maturities of capital leases plus rent expense plus cash Capital Expenditures
paid or required to be paid during the applicable period.
“Forfeiture
Action” shall mean any action, including investigations, hearings, and other
legal proceedings, before any court, tribunal, commission, or governmental
authority, agency, or instrumentality, whether domestic or foreign, that may
result in seizure of any property or asset.
“GAAP”
shall mean generally accepted accounting principles.
“Guarantors”
shall mean all of the Affiliates of the Borrower, jointly and severally,
including without limitation: Document Security Systems, Inc., Plastic Printing
Professionals, Inc., and Secuprint Inc. The “Guarantors” are
sometimes referred to individually, each as a “Guarantor.”
“Hazardous
Substances” means, without limitation, any explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and
petroleum products, methane, hazardous materials, hazardous wastes, hazardous or
toxic substances and any other material defined as a hazardous substance in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Sections 9601, et. seq.; the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Sections 1801, et. seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901, et. seq.;
Articles 15 and 27 of the New York State Environmental Conservation Law or any
other federal, state, or local law, regulation, rule, ordinance, bylaw, policy,
guideline, procedure, interpretation, decision, order, or directive, whether
existing as of the date hereof, previously enforced or subsequently
enacted.
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“Hedging
Contracts” means interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements, or any other agreements or arrangements entered
into between the Borrower and the Bank and designed to protect the Borrower
against fluctuations in interest rates or currency exchange rates.
“Hedging
Obligations” means, with respect to the Borrower, all liabilities of the
Borrower to the Bank under Hedging Contracts.
“Improvements”
shall mean any real property owned or used by the Borrower or the
Guarantors.
“Interest
Expense” shall mean for the applicable period, all interest paid, capitalized,
or accrued, and amortization of debt discount with respect to all Debt less all
related interest income during such period and determined after giving effect to
the net cost associated with Hedging Contracts.
“Letters
of Credit” shall have the meaning set forth in Section 2.6 hereof.
“LIBOR
Rate Loan” means the loan for the period(s) when the rate of interest applicable
to the loan is calculated by reference to the LIBOR Rate (as defined in the
applicable note).
“Loan
Documents” shall mean this Agreement and all notes, instruments, security
agreements, assignments, pledges, mortgages, guarantees, and other documents and
agreements of any kind or nature related to this Agreement or the Obligations
(including without limitation guarantees, security agreements, and the like
previously given in favor of the Bank which by their terms apply to or secure
both present and future obligations).
“London
Banking Day” shall mean any date on which United States Dollar deposits are
transacted on in the London interbank market.
“Material
Adverse Effect” shall mean a material adverse effect on (i) the property,
business, operations, financial condition, prospects, liabilities, or
capitalization of the Borrower and its Subsidiaries taken as a whole, (ii) the
legality, validity or enforceability of, or the legal ability of the Borrower or
any Guarantor to perform its obligations under, this Agreement or any of the
Loan Documents, (iii) the financial capacity of the Borrower or any Guarantor to
perform any of its obligations under this Agreement or any of the Loan
Documents, (iv) the rights and remedies of the Bank under this Agreement or any
of the Loan Documents, or (v) the perfection or priority of any security
interest or lien held by the Bank.
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“Net
Income” shall mean the gross revenues for such period less all expenses and
other proper charges but without deduction for Interest Expense and provision
for taxes, determined in accordance with GAAP consistently applied, but
excluding in any event:
(a) any
gains or losses on the sale or other disposition of investments or fixed or
capital assets, and any taxes on such excluded gains and any tax deductions or
credits on account of any such excluded losses;
(b) the
proceeds of any life insurance policy;
(c) net
earnings and losses of any corporation substantially all the assets of which
have been acquired in any manner, realized by such other corporation prior to
the date of such acquisition;
(d) net
earnings and losses of any corporation with which the Borrower shall have
consolidated or which shall have merged into or with the Borrower prior to the
date of such consolidation or merger;
(e) net
earnings of any business entity in which the Borrower has an ownership interest
unless such net earnings shall have actually been received by the Borrower in
the form of cash distributions;
(f) earnings
resulting from any reappraisal, revaluation or write-up of assets;
(g) any
gain arising from the acquisition of any securities of the
Borrower;
(h) any
reversal of any contingency reserve, except to the extent that provision for
such contingency reserve shall have been made from income arising during such
period;
(i) amortization
of negative good will net of good will,
(j) income
or loss attributable to equity in Affiliates, and
(k) other
extraordinary or unusual items.
“Obligations”
shall include all of the Borrower’s obligations to the Bank of any kind
or nature, arising now or in the future, including without limitation
obligations under or related to this Agreement, the Revolving Line Note, the
Acquisition Term Loan Note, the Loan Documents, any Letters of Credit or Hedging
Contracts, overdrafts, swap transactions, automated transfer transactions,
electronic funds transfers, and other transactions related to Borrower’s
dealings with Bank.
“PATRIOT
Act” shall have the meaning provided in Section 6.17.
“Purchased
Stock” means any and all of the issued and outstanding shares of stock of
Premier Packaging Corporation, all of which were purchased pursuant to that
certain Stock Purchase Agreement, dated February 12, 2010, by and between
Borrower and Document Security Systems, Inc.
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“Release”
has the same meaning as given to that term in Section 101(22) of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601(22), and the regulations promulgated
thereunder.
“Revolving
Line” shall mean the revolving line of credit established pursuant to Section
2.1 of this Agreement.
“Revolving
Line Note” shall mean the note evidencing Obligations related to the Revolving
Line as described in Section 2.2 of this Agreement.
“Revolving
Line Termination Date” shall mean the date on which the Revolving Line
terminates as described in Section 2.5 of this Agreement.
“Senior
Funded Debt” means the sum of total Debt of the Borrower owed to the Bank, plus
capital leases.
“Subsidiary”
shall mean any entity with respect to which the Borrower owns a majority of the
equity and voting interests including without limitation the
Guarantors.
“Total
Liabilities” shall mean the sum of all liabilities shown on the Borrower’s
balance sheet as of the applicable date of determination, determined in
accordance with GAAP including without limitation subordinated
debt.
ARTICLE
II.
REVOLVING
LINE
2.1. Revolving Line.
Subject to the terms and conditions of this Agreement, the Bank hereby
establishes for the benefit of the Borrower a revolving line of credit in the
maximum principal amount equal to the lesser of One Million and 00/100 Dollars
($1,000,000.00) and the Borrowing Base outstanding at any one time
(the “Revolving Line”). The proceeds of the Revolving Line shall be used for the
Borrower’s working capital purposes. Subject to the terms of this
Agreement, the Borrower may borrow, repay, and reborrow under the Revolving Line
so long as the aggregate principal amount outstanding at any time does not
exceed the lesser of $1,000,000.00 and the Borrowing Base.
2.2. Revolving Line Note.
The Borrower shall execute, together with this Agreement, a note evidencing
Obligations related to the Revolving Line in the form of Exhibit A attached
hereto and made a part hereof.
2.3. Interest
Rate. Outstanding amounts under the Revolving Line Note shall
accrue interest in accordance with the terms, covenants, and conditions of the
Revolving Line Note.
2.4. Payments. Payments
and prepayments of accrued interest and all outstanding principal shall be made
in accordance with the covenants, terms and conditions of the Revolving Line
Note.
2.5. Revolving Line
Termination. Unless extended in writing by the Bank on terms and
conditions then acceptable to the Bank, the Revolving Line will terminate on the
earlier of (i) February 12, 2011 or (ii) the date of an Event of
Default.
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2.6. Escrow
Account. Subject to the terms and conditions of this
agreement, on each Escrow Deposit Date until the Revolving Line is indefeasibly
paid in full, the Borrower shall deposit into the Escrow Account an amount equal
to the excess, if any, of all revenues received by the Borrower from and
including the immediately preceding Escrow Deposit Date to but excluding such
Escrow Deposit Date less all expenses paid by the Borrower from and including
the immediately preceding Escrow Deposit Date to but excluding such Escrow
Deposit Date (the “Escrow Deposit Amount”). The Borrower
shall not use any revenues for any purpose other than to pay expenses of the
Borrower currently due and owing and to fund the Escrow Account.
Upon
three (3) Business Days prior notice to the Bank, the Borrower shall have the
option to forego depositing the Escrow Deposit Amount into the Escrow Account
for such Escrow Deposit Date and instead apply such Escrow Deposit Amount to
reduce the outstanding balance of the Revolving Line; provided, however, that
the Borrower may not draw on the Revolving Line for a period of ten (10)
Business Days following the application of any Escrow Deposit Amounts to reduce
the outstanding balance of the Revolving Line.
The
Borrower shall not withdraw any amounts in the Escrow Account without the
express prior written consent of the Bank, which consent may be given or
withheld in the Bank’s sole discretion. All amounts in the Escrow
Account on the Revolving Line Termination Date shall be applied to the repayment
of all amounts outstanding under the Revolving Line. Any amounts
remaining in the Escrow Account following the indefeasible payment in full of
all amounts outstanding under the Revolving Line shall be remitted to the
Borrower within 60 days. The Escrow Account shall be an
interest-bearing account.
2.7. Letter of Credit
Subfacility. Subject to the terms and conditions of this
Agreement, the Bank agrees to issue and extend standby and commercial letters of
credit (“Letters of Credit”) for the account of Borrower; provided, however,
that (a) no Letter of Credit shall have an expiration date that is later than
the Revolving Line Termination Date; (b) the aggregate Letter of Credit
Obligations at any one time shall not exceed $250,000, and (c) the sum of the
aggregate Letter of Credit Obligations plus the aggregate outstanding principal
amount of all outstanding amounts under the Revolving Line shall not exceed the
lesser of $1,000,000 and the Borrowing base. All letters of credit
will be issued on terms and conditions acceptable to the Bank and the Borrower
will execute and deliver to the Bank any and all additional documents as are
usual and customary in connection with the issuance of any Letter of
Credit. The Borrower will pay to the Bank non-refundable Letter of
Credit fees based upon the aggregate outstanding face amount of Letters of
Credit quarterly in arrears, calculated at a per annum rate equal to the
interest rate specified in the Revolving Line Note.
On the
Revolving Line Termination Date, or upon any demand by the Bank during the
continuance of any Event of Default, the Borrower shall provide to the Bank cash
collateral in an amount equal to the then-existing exposure under Letters of
Credit.
If the
Bank is required to pay any amount with respect to any Letter of Credit issued
for the account of the Borrower, then such amount shall automatically be deemed
to be a draw on the Revolving Line and shall be subject to all of the terms and
conditions hereof.
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The
Borrower hereby agrees to indemnify and hold harmless the Bank from and against
any and all losses, liabilities, claims, damages, costs, or expenses of any kind
or nature (including consequential damages) that the Bank may incur or that may
be claimed against the Bank by reason of or related in any manner to the Letters
of Credit; provided, however, that the Borrower shall not be required to
indemnify the Bank from and against any such losses, liabilities, claims,
damages, costs, or expenses to the extent, but only to the extent, that they are
caused by a failure to honor a draw under a Letter of Credit that conforms
strictly to the requirements of the Letter of Credit, by a failure to perform
contractual obligations, or by the willful misconduct or gross negligence of the
Bank.
2.8. Borrowing
Base. Aggregate outstanding borrowings under the Revolving
Line at any one time may not exceed the lesser of $1,000,000 and the amounts
available under the following Borrowing Base:
(a) 65
percent (65%) of all Eligible Receivables, minus
(b) the
outstanding stated amount of the Letter of Credit and other letters of credit
issued by the Bank (after approval by the Bank) from time to time for the
account of the Borrower.
The Bank
reserves the right in its sole discretion to modify the Borrowing Base or make
changes in the definitions of Eligible Receivables, or to delete certain
receivables from the Borrowing Base in the event of a material adverse change in
the collateral for the Revolving Line or its collectibility, or in the event the
Bank reasonably concludes that there are circumstances or conditions which
materially affect the value of the collateral.
2.9. Audits and
Reconciliations. Borrower agrees to allow the Bank complete
access to all books and records of the Borrower upon reasonable request.
Borrower agrees to submit information which the Bank may reasonably request from
time to time in connection with the Revolving Line.
The Bank
reserves the right to perform full field audits of Borrower’s accounts
receivable and inventories at Borrower’s expense.
Borrower
agrees to allow the Bank to request accounts receivable verifications from the
Borrowers’ customers, but prior to an Event of Default, no more than four per
calendar year. These requests will be done under an assumed name and P. O. Box
address or its equivalent.
ARTICLE
III.
TERM
LOANS
3.1. Acquisition Term
Loan. Subject to the terms and conditions of this Agreement,
the Bank shall make a term loan (the “Acquisition Term Loan”) to the Borrower in
a principal amount equal to One Million and Five Hundred Thousand and 00/100
Dollars ($1,500,000), the proceeds of which shall be used to fund the
acquisition of the Purchased Stock.
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(a) Acquisition Term Loan
Note. The Acquisition Term Loan shall be evidenced by a note, dated the
date hereof, in the form of Exhibit B attached
hereto and made a part hereof (the “Acquisition Term Loan Note”).
(b) Acquisition Term Loan
Interest Rate. Outstanding amounts under the Acquisition Term Loan Note
shall accrue interest in accordance with the terms, covenants, and conditions of
the Acquisition Term Loan Note.
(c) Acquisition Term Loan
Payments. Payments and prepayments of accrued interest and all
outstanding principal under the Acquisition Term Loan shall be made in
accordance with the covenants, terms and conditions of the Acquisition Term Loan
Note.
ARTICLE
IV.
EXPENSES/FEES/DEFAULT
RATE/PAYMENT APPLICATION
4.1. Costs and Expenses.
The Borrower shall pay on demand all expenses of the Bank in connection with the
preparation, administration, default, collection, waiver or amendment of any
Obligation terms, or in connection with the Bank’s exercise, preservation, or
enforcement of any of its rights, remedies, or options hereunder, including
without limitation, fees of outside legal counsel or the allocated costs of
in-house legal counsel, accounting, consulting, brokerage or similar
professional fees or expenses, and any fees or expenses associated with travel
or other costs relating to any appraisals or examinations conducted in
connection with any Obligation or any collateral therefor, and the amount of all
such expenses shall, until paid, bear interest at the highest rate applicable to
any Obligation (including any default rate) and be an Obligation secured by any
collateral.
4.2. Application of
Payments. All payments shall be applied first to the payment of all fees,
expenses and other amounts due to the Bank (excluding principal and interest),
then to accrued interest, and the balance on account of outstanding principal;
provided, however, that after an Event of Default, payments will be applied to
the Obligations as the Bank determines in its sole discretion.
4.3. Default Interest
Rate. Upon a Default (whether or not the Bank has accelerated payment of
the Obligations), or after maturity or after judgment has been rendered with
respect to any of the Obligations, the unpaid principal of all Obligations
shall, at the option of the Bank, bear interest at a rate up to five (5)
percentage points per annum greater than that which would otherwise be
applicable.
4.4. Late Payment Fees. If
the entire amount of any required principal and/or interest is not paid in full
under any of the Loan Documents within ten (10) days after the same is due, the
Borrower shall pay to the Bank a late fee up to five percent (5%) of the
required payment.
4.5. Prepayments Upon
Default. If by reason of an Event of Default the Bank elects to declare
the Obligations to be immediately due and payable, then any charge owing upon
prepayment with respect to the Obligations shall become due and payable in the
same manner as though the Borrower had exercised a right of
prepayment.
4.6. Obligations Related to
Hedging Contracts. In the event that the Borrower enters into
any Hedging Contracts with the Bank or any of its affiliates, any costs incurred
by the Bank or its
affiliates in connection therewith, including without limitation any interest,
expenses, fees, premiums, penalties, or other charges associated with any
obligations undertaken by the Bank or its affiliates to hedge or offset the
Bank’s or its affiliates’ obligations pursuant to such agreement, or the
termination of any such obligations, shall be (i) deemed additional interest
and/or a related expense (to be determined in the sole discretion of the Bank)
and due as part of the Obligations and secured by all collateral and otherwise
therefor to the full extent thereof, and included in any judgment in any
proceeding instituted by the Bank.
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ARTICLE
V.
COLLATERAL
AND GUARANTEES
5.1. Security Interests.
As collateral for all Obligations, the Borrower shall grant to the Bank a
security interest and lien in all assets of the Borrower, including without
limitation goods, machinery, equipment, furniture, fixtures, vehicles, accounts,
inventory, chattel paper, interests in leases and property under lease,
intellectual property and proprietary interests, documents, instruments, and
general intangibles. Such security interests shall be first liens on such
assets, which shall not be otherwise encumbered except as specified on Schedule
5.1(a) attached hereto and made a part hereof. Without limiting the
generality of the foregoing, the Bank shall have a first priority security
interest on all business assets of the Borrower and a first priority security
interest on the equipment listed on Schedule 5.1(b) attached
hereto.
5.2. Guarantees. The
Borrower shall cause each Guarantor to provide an unconditional, unlimited
guarantee of the Obligations. As security for the aforementioned
guarantees, the Guarantors shall each grant to the Bank a security interest and
lien in all of their respective assets, including without limitation goods,
machinery, equipment, furniture, fixtures, vehicles, accounts, inventory,
chattel paper, interests in leases and property under lease, intellectual
property and proprietary interests, documents, instruments, and general
intangibles. Such security interests shall be first liens on such assets (to the
extent not otherwise encumbered as specified on Schedule 5.2 attached hereto),
which shall not be otherwise encumbered except as specified on Schedule 5.2
attached hereto and made a part hereof.
5.3. Landlord Waivers. The
Borrower shall deliver to the Bank a waiver from each landlord of premises on
which the Bank’s collateral is located and that is not owned by the
Borrower.
ARTICLE
VI.
REPRESENTATIONS
OF BORROWER
The
Borrower and the Guarantors represent and warrant to the Bank as
follows:
6.1. Organization and
Power. The Borrower and the Guarantors are duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of formation, and each is duly qualified to transact business and in good
standing in all states in which it is required to qualify or in which failure to
qualify could have a Material Adverse Effect. The Borrower and each Guarantor
has full power and authority to own its properties, to carry on their business
as now being conducted, to execute, deliver and perform the Loan Documents, and
to consummate the transactions contemplated thereby. The Borrower and each
Guarantor has no Subsidiaries or Affiliates except those listed on Schedule 6.1
attached hereto.
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6.2. Proceedings of Borrower and
the Guarantors. All necessary action on the part of the Borrower and each
Guarantor, including shareholder and membership approval to the extent required,
relating to authorization of the execution and delivery of the Loan Documents,
and the performance of the Obligations of the Borrower and the Guarantors
thereunder has been taken. The Loan Documents constitute legal, valid and
binding obligations of the Borrower and the Guarantors, enforceable in
accordance with their respective terms. The Borrower and the Guarantors have no
defenses, offsets, claims, or counterclaims with respect to their respective
obligations arising under the Loan Documents. The execution and delivery by the
Borrower and the Guarantors of the Loan Documents, and the performance by the
Borrower and the Guarantors of the Loan Documents, will not violate any
provision of law or the Borrower’s or any Guarantor’s Certificate of
Incorporation or By-laws, or organizational or other documents or agreements.
The execution, delivery and performance of the Loan Documents, and the
consummation of the transactions contemplated thereby will not violate, be in
conflict with, result in a breach of, or constitute a default under any
agreement to which either the Borrower or any Guarantor is a party or by which
any of its or his properties is bound, or any order, writ, injunction, or decree
of any court or governmental instrumentality, and will not result in the
creation or imposition of any lien, charge or encumbrance upon any of its or his
properties, other than those created by the Loan Documents in favor of the
Bank.
6.3. Capitalization. All
of the outstanding shares or membership interests, as applicable, and other
equity interests of the Borrower and the Guarantors are duly authorized, validly
issued, and fully paid. There is no existing contract, debenture, security,
right, option, warrant, call or similar commitment of any character calling for
or relating to the issuance of, purchase or receipt of, or redemption or
retirement of any other equity interests of the Borrower.
6.4. Litigation. There
is no action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency pending or, to the knowledge of the
Borrower or the Guarantors, threatened against or affecting the Borrower or any
Guarantor that brings into question the legality, validity or enforceability of
the Loan Documents or the transactions contemplated thereby or that, if
adversely determined, would have a Material Adverse Effect, other than those
described in Schedule 6.4 attached hereto.
6.5. Financial Statements.
All financial statements furnished by the Borrower and each Guarantor to the
Bank are complete and correct, have been prepared in accordance with GAAP
consistently applied throughout the periods indicated, and fairly present the
financial condition of the Borrower and each Guarantor, as of the respective
dates thereof and the results of its or his operations for the respective
periods covered thereby.
6.6. Adverse Changes.
Since the most recent financial statements described in Section 6.5 hereof there
has been no Material Adverse Effect.
6.7. Taxes. The Borrower
and each Guarantor has filed or caused to be filed when due all federal tax
returns and all state and local tax returns that are required to be filed, and
have paid or caused to be paid all taxes as shown on said returns or any
assessment received. The tax returns of the Borrower and each Guarantor are not
being audited on the date of this Agreement and neither the Borrower nor any
Guarantor has been notified of any intention by any taxing authority to conduct
such an audit.
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6.8. Properties. The
Borrower and each Guarantor has undisturbed peaceable possession under all
leases under which it is operating, none of which contain unusual or burdensome
provisions that have or may have a Material Adverse Effect, and all such leases
are in full force and effect.
6.9. Indebtedness. Except
as disclosed in the most recent financial statements referred to in Section 6.5
hereof, the Borrower and each Guarantor has no Debt, other than trade payables
not yet due incurred in the ordinary course of business, and those listed on
Schedules 5.1 and 5.2 attached hereto, respectively.
6.10. Franchise; Permits.
The Borrower and each Guarantor has all franchises, permits, licenses and other
authority as are necessary to enable the Borrower and/or such Guarantor to
conduct its, his or their businesses as now being conducted, and is not in
default under any such franchise, permit, license or authority.
6.11. ERISA. No action,
event, or transaction has occurred that could give rise to a lien or encumbrance
on the assets of the Borrower or any Guarantor as a result of the application of
relevant provisions of ERISA, and the Borrower and each Guarantor is in material
compliance with all requirements of ERISA. Neither Borrower, any
Guarantor, nor any member of its or their Controlled Group maintains,
contributes, or has any liability under (or with respect to) any pension plan,
whether or not terminated. No pension plan maintained by the Borrower
or any Guarantor or any member of its or their Controlled Group or to which such
person has an obligation to contribute, or with respect to which such employer
has any liability, has any material “unfunded liability” (i.e. accrued
liabilities in excess of the fair market value of its assets).
6.12. Margin Securities. No
proceeds of the Obligations have been or will be used for the purpose of
purchasing or carrying Margin Securities as defined in Regulation U of the
Federal Reserve Board.
6.13. Compliance With Law.
Neither the Borrower nor any Guarantor is in violation of any laws, ordinances,
governmental rules, requirements, or regulations to which it or he is subject
which violation might have a Material Adverse Effect. The Borrower and each
Guarantor have obtained and is in compliance with all licenses, permits,
franchises, and governmental authorizations necessary for the ownership of his
or its properties and the conduct of his or its businesses, for which failure to
comply could have a Material Adverse Effect.
6.14. Environmental
Matters. To the best of Borrower’s and each Guarantor’s
knowledge:
(a) neither
the Improvements nor any property adjacent to the Improvements is being used
for, and neither the Borrower nor any Guarantor is engaged in, the storage,
treatment, generation, transportation, processing, handling, production or
disposal of any Hazardous Substance except in compliance with all Environmental
Laws;
(b) underground
storage tanks are not located on the Improvements except in compliance with all
Environmental Laws;
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(c) the
soil, subsoil, bedrock, surface water and groundwater of the Improvements are
free of any Hazardous Substances;
(d) since
the occupancy of the Improvements by the Borrower or any Guarantor, there has
been no Release, nor is there the threat of a Release of any Hazardous Substance
on, at or from the Improvements or any property adjacent to or within the
immediate vicinity of the Improvements which through soil, subsoil, bedrock,
surface water or groundwater migration could come to be located on the
Improvements, and neither the Borrower nor any of the Guarantors has received
any form of notice or inquiry from any federal, state or local governmental
agency or authority, any operator, tenant, subtenant, licensee or occupant of
the Improvements or any property adjacent to or within the immediate vicinity of
the Improvements or any other person with regard to a Release or the threat of a
Release of any Hazardous Substance on, at or from the Improvements or any
property adjacent to the Improvements;
(e) all
Environmental Permits relating to the Borrower and the Guarantors in connection
with their respective operations on or within the Improvements have been
obtained and are in full force and effect, and no event has occurred with
respect to the Borrower, any Guarantor or the Improvements which, with the
passage of time or the giving of notice, or both, would constitute a violation
of any applicable Environmental Law or non-compliance with any Environmental
Permit; there are no agreements, consent orders, decrees, judgments, license or
permit conditions or other orders or directives of any federal, state or local
court, governmental agency or authority relating to the past, present or future
ownership, use, operation, sale, transfer or conveyance of the Improvements
which require any change in the present condition of the Improvements or any
work, repairs, construction, containment, clean up, investigations, studies,
removal or other remedial action or capital expenditures with respect to the
Improvements; and
(f) there
are no actions, suits, claims or proceedings, pending or threatened, which could
cause the incurrence of expenses or costs of any name or description or which
seek money damages, injunctive relief, remedial action or any other remedy that
arise out of, relate to or result from (i) a violation or alleged violation by
Borrower or any Guarantor of any applicable Environmental Law or non-compliance
or alleged non-compliance with any Environmental Permit, (ii) the presence of
any Hazardous Substance or a Release or the threat of a Release of any Hazardous
Substance on, at or from the Improvements or any property adjacent to or within
the immediate vicinity of the Improvements as a result of the operations of the
Borrower and/or any Guarantor therein or (iii) exposure to any Hazardous
Substance to the extent the same arises from the Improvements or business or
operations of Borrower or the Guarantors.
6.15. Patents, Trademarks and
Authorizations. The Borrower and each Guarantor owns or possesses all
patents, trade marks, service marks, trade names, copyrights, licenses,
authorizations, and all rights with respect to the foregoing, necessary to the
conduct of its businesses as now conducted without any material conflict with
the rights of others. All of the Borrower’s and Guarantors’ patents, trademarks,
and service marks are listed on Schedule 6.15 attached hereto.
6.16. Contracts and
Agreements. Neither the Borrower nor any Guarantor is a party to any
contract or agreement that has or can reasonably be expected to have a Material
Adverse Effect,
and the Borrower and each Guarantor is in compliance in all material respects
with all contracts and agreements to which each is a party.
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6.17. USA PATRIOT
Act. The Borrower and the Guarantors have provided,
sufficiently in advance of the date of this Agreement, all documentation and
other information reasonably requested by the Bank under applicable “know your
customer” and anti-money laundering rules and regulations, including without
limitation, the United States PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “PATRIOT Act”)
including, without limitation, information such as the name, address and tax
identification number, if any, of the Borrowers that allows the Bank to identify
the Borrower and the Guarantors in accordance with the PATRIOT Act.
ARTICLE
VII.
CONDITIONS
OF LENDING
The
following conditions must be satisfied before the Bank shall have any obligation
to make any advance under this Agreement:
7.1. Representations and
Warranties. The representations and warranties of the Borrower and the
Guarantors contained herein shall be true and correct as of the date of making
of each such advance, with the same effect as if made on and as of such
date.
7.2. No Defaults. There
shall exist no Default at the time each advance is made.
7.3. Performance. The
Borrower and each Guarantor shall have performed and complied with all
agreements and conditions required to be performed or complied with by it prior
to or at the time the advance is made.
7.4. Opinion of Counsel.
Upon the request of the Bank, the Borrower shall have delivered an opinion of
its counsel, dated the date of the advance, in form and substance reasonably
satisfactory to the Bank.
7.5. Documents to be
Delivered. The Borrower and each Guarantor shall have delivered to the
Bank all security agreements, guarantees, and any other documents necessary or
desirable in connection with this Agreement, including the requirements of
ARTICLE VIII hereof. All notes evidencing the Obligations shall have been
delivered to the Bank at the time of the making of the respective
loans.
7.6. Certified
Resolutions. Each of the Borrower and the Guarantors shall have delivered
a certificate of its corporate secretary or other duly appointed officer
certifying, as of the date of the first advance, resolutions duly adopted by the
Board of Directors, or Shareholders of the Borrower and the Guarantors, as
applicable, authorizing the execution, delivery and performance of the Loan
Documents, and the consummation of the transactions contemplated thereby, which
resolutions shall remain in full force and effect so long as any of the
Obligations are outstanding or any commitment to lend exists under this
Agreement or the Loan Documents.
7.7. Fees and Taxes. The
Borrower shall have paid all filing fees, taxes, and assessments related to the
borrowings and the perfection of any interests in collateral security required
hereunder.
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7.8. Insurance. The
Borrower and each Guarantor shall have delivered evidence satisfactory to the
Bank of the existence of insurance required hereby.
7.9. Organizational
Documents. The Borrower and each Guarantor shall have delivered to the
Bank a copy of its then-effective Certificate of Incorporation and By-laws,
d/b/a certificates, and other organizational documents and instruments, or a
written certificate that such documents and instruments have not been changed or
amended since the last advance to Borrower pursuant to the terms of this
Agreement.
7.10. Other Documents and
Agreements. On or before the date of this Agreement, the Borrower shall
have delivered such other documents, instruments, and agreements as the Bank and
its legal counsel may require in connection with the transactions contemplated
hereby.
7.11. Financial Statements.
On or before the date of this Agreement, the Borrower and each Guarantor shall
have delivered to the Bank a copy of his or its federal income tax
return and the Borrower’s most recent consolidated monthly financial
statement.
7.12. Certificates of Good
Standing. On or before the date of this Agreement the Borrower and each
Guarantor shall have delivered to the Bank certificates of good standing from
appropriate state or provincial officials to the effect that the Borrower or
such Guarantor is in good standing in the state of its formation as well as in
all other states or provinces in which qualification is necessary for the
Borrower or such Guarantor to carry on its business in such states or
provinces.
7.13. Environmental
Reports. The Bank may require at any time, at the Borrower’s
expense, a written report of a site assessment and environmental audit in scope,
form and substance satisfactory to the Bank, prepared by an independent,
competent and qualified engineer selected by the Bank, in the Bank’s sole and
unfettered discretion, showing that the engineer made all appropriate inquiry
consistent with good commercial and customary practice, that no evidence or
indication came to light which would suggest there was a Release involving the
Improvements which would necessitate an environmental response action and that
the Improvements comply with and do not deviate from, all applicable
Environmental Laws and Environmental Permits.
7.14. Stock Purchase
Agreement. The Borrower shall have consummated the transactions
contemplated by that certain Stock Purchase Agreement, dated February 12, 2010,
by and between Borrower and Document Security Systems, Inc. The Stock
Purchase Agreement shall be in a form and substance satisfactory to the
Bank.
7.15. Landlord
Waivers. Except as set forth on Schedule 7.15 attached
hereto, on or before the date of this Agreement, the Borrower and each Guarantor
shall deliver to the Bank a waiver from each landlord of premises on which any
collateral for the Obligations or the Guarantees is located and which is not
owned by the Borrower or a Guarantor, as applicable, as required by Section 5.3
hereof, which waiver is in form and substance satisfactory to the
Bank.
7.16. Anti-Terrorism
Laws. On or before the date of this Agreement, there shall
have been delivered to the Bank, to the extent requested by the Bank, all
documentation and other information required by bank regulatory authorities
under applicable “know your customer” and anti-money
laundering rules and regulations, including the Patriot Act (unless previously
delivered).
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ARTICLE
VIII.
AFFIRMATIVE
COVENANTS OF BORROWER
Any
affirmative covenant of the Borrower contained herein shall also be deemed to
include an affirmative covenant of any Affiliate of Borrower. So long
as any Obligations to the Bank shall be outstanding or this Agreement remains in
effect, unless the Bank otherwise consents in writing:
8.1. Financial
Statements.
(a) The
Borrower shall furnish to the Bank as soon as available, but in no event later
than 120 days following the fiscal year end of any year in which this Agreement
remains in effect, annual financial statements of the Borrower in reasonable
detail satisfactory to the Bank prepared in accordance with GAAP reviewed by,
and with an unqualified opinion from, an independent certified public accountant
satisfactory to the Bank. Said financial statements shall include at least a
balance sheet and a statement of profit and loss, and shall be accompanied by
(i) a schedule showing computation of financial covenants, (ii) a copy of any
management letter prepared by the Borrower’s accountants, and (iii) a
certificate of the Chief Financial Officer of the Borrower to the effect that no
Default has occurred.
(b) The
Borrower shall furnish to the Bank unaudited financial statements not more than
45 days after the close of each quarter of its fiscal year. Said statements
shall be in reasonable detail satisfactory to the Bank, shall be prepared in
accordance with GAAP, and shall include at least a balance sheet, a statement of
profit and loss, and a schedule showing computation of financial covenants. Said
financial statements shall be certified to be true and correct to the best
knowledge of the Chief Financial Officer of the Borrower. Such financial
statements shall be accompanied by a certificate of the Chief Financial Officer
of the Borrower to the effect that no Default has occurred.
(c) Not
more than 45 days after the close of each quarter, the Borrower shall deliver to
the Bank an aging of accounts receivable and an aging of accounts payable for
the Borrower. Said information shall be certified to be true and
correct to the best knowledge of a duly authorized officer of the Borrower, with
such knowledge necessary to make such certification.
(d) Not
more than 45 days after the close of each quarter, the Borrower shall deliver to
the Bank a borrowing base certificate for the Borrower in the form of Exhibit C attached
hereto.
(e) Within
30 days following its fiscal year end, the Borrower shall provide to the Bank
projections for the succeeding year, including quarterly profit and loss
statements, balance sheets, and cash flow statements, for each of the Borrower
and its Parents, Subsidiaries and Affiliates.
(f) Within
45 days of the end of each quarter, the Borrower shall provide to the Bank a
compliance certificate on the Bank’s standard form, as provided to the
Borrower.
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8.2. Other Reports and
Inspections. Furnish to the Bank such additional information, reports, or
financial statements as the Bank may, from time to time, reasonably request. The
Borrower shall permit or cause to be permitted any person designated by the Bank
to inspect the property, assets, and books of the Borrower and each Guarantor at
reasonable times and, prior to an Event of Default, upon reasonable notice, and
shall discuss its affairs, finances, and accounts at reasonable times with the
Bank from time to time as often as may be reasonably requested.
8.3. Taxes. Pay and
discharge all taxes, assessments, levies, and governmental charges upon the
Borrower and the Guarantors, and their income and property, prior to the date on
which penalties are attached thereto; provided, however, that the Borrower and
each Guarantor may in good faith contest any such taxes, assessments, levies, or
charges so long as such contest is diligently pursued, appropriate reserves are
reflected on the Borrower’s financial statements, and no lien or execution
exists or is levied against any of Borrower’s or such Guarantor’s assets related
to the contested items.
8.4. Insurance. Maintain
or cause to be maintained insurance, of kinds and in amounts satisfactory to the
Bank, with responsible insurance companies on all of its real and personal
properties in such amounts and against such risks as are prudent, including but
not limited to, full-risk extended coverage hazard insurance to the full
insurable value of real property (co-insurance not being permitted without the
prior written consent of the Bank), all-risk coverage for personal property,
business interruption or loss of rents coverage, worker’s compensation
insurance, and comprehensive general liability and products liability insurance.
The Borrower also shall maintain flood insurance covering any of its real
properties located in flood zones. The Borrower and each Guarantor shall provide
to the Bank, no less often than annually and upon its request, a detailed list
and evidence satisfactory to the Bank of its insurance carriers and coverage and
shall obtain such additional insurance as the Bank may reasonably request.
Hazard insurance policies for real property shall name the Bank as mortgagee,
and for personalty, additional insured, as its interests may appear. All
policies shall provide for at least thirty (30) days’ prior notice of
cancellation to the Bank.
8.5. Existence. Cause to
be done all things necessary to preserve and to keep in full force and effect
its existence, rights, and franchises and to comply in all material respects
with all valid laws and regulations now in effect or hereafter promulgated by
any properly constituted governmental authority having
jurisdiction.
8.6. Maintenance of
Properties. At all times maintain, preserve, protect, and keep its
property used or useful in conducting its business, in good repair, working
order, and condition and, from time to time, make all needful and proper
repairs, renewals, replacements, betterments, and improvements thereto, so that
the business carried on may be properly and advantageously conducted at all
times.
8.7. Material Changes;
Judgments. Notify the Bank immediately of any Material Adverse Effect and
of the filing of any suits, judgments, or liens which, if adversely determined,
could have a Material Adverse Effect. The Borrower also shall notify the Bank
immediately of any change in the name, identity, or organizational structure of
the Borrower or any Guarantor, or any change in any equity or ownership interest
in the Borrower or any Guarantor other than Document
Security Systems, Inc. The Borrower shall notify the Bank immediately
of any Change of Control in Document Security Systems, Inc.
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8.8. Environmental
Compliance.
(a) Comply
with all applicable Environmental Laws and shall obtain and comply with all
Environmental Permits;
(b) promptly
provide the Bank with a copy of all notifications which it gives or receives
with respect to any past or present Release or the threat of a Release of any
Hazardous Substance on, at or from the Improvements or any property adjacent to
the Improvements or by the Borrower or any Guarantor;
(c) at
all times allow the Bank and its officers, employees, agents, representatives,
contractors and subcontractors reasonable access after reasonable prior notice
to the Improvements for the purposes of ascertaining compliance with
Environmental Laws and site conditions, including, but not limited to,
subsurface conditions;
(d) deliver
promptly to the Bank: (i) copies of any documents received from the United
States Environmental Protection Agency, or any state, county or municipal
environmental or health agency concerning the Borrower’s or any Guarantor’s
operations or the Improvements; and (ii) copies of any documents submitted by
the Borrower or any Guarantor to the United States Environmental Protection
Agency or any state, county or municipal environmental or health agency
concerning its operations or the Improvements; and
(e) if
at any time the Bank obtains any reasonable evidence or information which
suggests that a material potential environmental problem may exist with respect
to the Borrower, any Guarantor, or the Improvements, at the Bank’s request
provide to the Bank a full or supplemental environmental inspection and audit
report of a scope and level of detail satisfactory to Bank be prepared by an
environmental engineer or other qualified person acceptable to the Bank at
Borrower’s expense. If such audit report indicates the presence of any Hazardous
Substance or a Release or the threat of a Release of any Hazardous Substance by
the Borrower or on, at or from the Improvements, the Borrower shall promptly
undertake and diligently pursue to completion all necessary, appropriate and/or
legally required investigative, containment, removal, clean up and other
remedial actions, using methods recommended by the engineer or other person who
prepared said audit report and acceptable to the appropriate federal, state and
local agencies or authorities.
8.9. ERISA Compliance.
Comply in all material respects ERISA and regulations and interpretations
related thereto.
8.10. Franchises/Permits/Laws.
Preserve and keep in full force and effect all franchises, permits, licenses,
and other authority as are necessary to enable it to conduct its business as
being conducted on the date of this Agreement and comply in all material
respects with all laws, the provisions of regulations, and requirements now in
effect or hereafter promulgated by any properly constituted governmental
authority having jurisdiction over it.
8.11. Payments. Make all
payments as and when required by the Loan Documents.
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8.12. Deposits/Bank
Services. The Borrower and each Guarantor shall maintain all of its main
depository accounts at the Bank.
8.13. Shareholder and Officer
Loans. The Borrower shall provide to the Bank subordination agreements in
form satisfactory to the Bank covering any loans to the Borrower from, or other
obligations of the Borrower to, its Subsidiaries, Affiliates and shareholders,
officers, or members in existence from time to time.
8.14. Affiliate
Guarantors. The Borrower shall cause each and every Guarantor
to continue to provide and unconditional, unlimited Guaranty of the
Obligations.
8.15. Landlord
Waivers. To the extent not delivered on or before the date
hereof, the Borrower shall, and shall cause each Guarantor to, deliver to the
Bank a waiver from each landlord of premises on which any collateral for the
Obligations or the Guarantees is located and which is not owned by the Borrower
or a Guarantor, as applicable, as required by Section 5.3 hereof, which waiver
is in form and substance satisfactory to the Bank on or before the later of
March 1, 2010 and the date on which any collateral for the Obligations is
located on such premises.
8.16. Franchise Tax
Searches. On or before March 1, 2010, the Borrower shall
furnish to the Bank a franchise tax search in each jurisdiction in which the
Borrower or any Guarantor is organized or is qualified to do business as a
foreign entity, which franchise tax search shall indicate that the Borrower or
such Guarantor, as applicable, has filed and paid all franchise tax due and
owing in such jurisdiction.
8.17. Foreign
Qualification. On or before March 1, 2010, the Borrower shall
furnish to the Bank proof, in form and substance satisfactory to the Bank, that
Plastic Printing Professionals, Inc. is duly qualified to conduct business as a
foreign corporation in the State of California.
ARTICLE IX.
NEGATIVE COVENANTS OF
BORROWER
So long
as any Obligations shall be outstanding, or this Agreement shall remain in
effect, unless the Bank otherwise consents in writing, the Borrower shall not,
directly or indirectly:
9.1. Indebtedness. Create,
incur, assume, or allow to exist, voluntarily or involuntarily, any Debt,
excluding only (i) Obligations to the Bank, (ii) Debt described in Schedule 9.1
attached hereto and made a part hereof, and (iii) Debt to which the Bank
consents in writing.
9.2. Mortgages, Liens, and
Encumbrances. Create, incur, assume, or allow to exist, voluntarily or
involuntarily, any capitalizable lease, mortgage, security interest, pledge,
lien or other encumbrance of any kind (including the charge upon property
purchased under conditional sales or other title retention agreements) covering
any of its property or assets, whether now owned or hereafter acquired,
excluding only (i) interests held by the Bank, (ii) encumbrances described in
Schedule 9.2 attached hereto, and (iii) obligations and interests to which the
Bank consents in writing.
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9.3. Contingent
Liabilities. (i) Assume, guarantee, endorse, contingently agree to
purchase, or otherwise become liable in any manner upon any obligation,
contingent or otherwise, whether funded or current except for endorsement of
negotiable instruments for deposit, collection, or similar transactions in the
ordinary course of business, (ii) guarantee the dividends, of any person, firm,
corporation, or other entity, or (iii) become the general partner in any
partnership.
9.4. Loans and
Investments. Make any loan or advance to, or any investment in, any
person, firm, joint venture, corporation or other entity whatsoever, except
short-term investments in certificates of deposit of financial institutions and
similar investments made in the ordinary course of business.
9.5. Mergers Sales and
Acquisitions/Change in Ownership Interests. (i) Enter into any merger or
consolidation, (ii) acquire all or substantially all the stock or other
ownership interests or assets of any person, firm, joint venture, corporation,
or other entity, (iii) sell, lease, transfer, or otherwise dispose of any
material portion of its assets except in the ordinary course of business, or
(iv) allow any change in the ownership, legal or equitable, of its shareholder,
membership or other equity interests or allow a Change in Control of Document
Security Systems, Inc.
9.6. Amendments. Allow the
amendment or modification of its governing documents and agreements in any
material respect without the prior written consent of the Bank.
9.7. Distributions. Make
any Distributions or apply any of its property or assets to Distributions or set
apart any sum or asset for the purpose of Distributions without the explicit
written consent of the Bank, such consent to be exercised in the Bank’s sole
discretion.
9.8. Material Changes.
Allow to occur, voluntarily or involuntarily: (a) any change in the character of
its business, or in the nature of its operations as carried out on at the date
of this Agreement that in each case or in the aggregate has or could reasonably
be expected to have a Material Adverse Effect, (b) any change in its respective
key management personnel unless reasonably qualified replacements in such
management personnel are made within ninety (90) days, (c) except as a result of
force majeure, material damage to, or loss, theft, or destruction of Borrower’s
property, whether or not insured, if any such event or circumstance could
reasonably be expected to have a Material Adverse Effect, or (d) any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty which causes, for more than fifteen (15) consecutive Business
Days, the cessation or substantial curtailment of revenue producing activities
at any facility of Borrower if any such event or circumstance could reasonably
be expected to have a Material Adverse Effect.
9.9. Compensation.
Compensate any person or entity, including without limitation salaries, bonuses,
consulting fees, or otherwise, in excess of amounts reasonably related to
services rendered to it.
9.10. Judgments. Allow to
exist any judgments against it in excess of $25,000 which are not fully covered
by insurance or for which an appeal or other proceeding for the review
thereof
shall not have been taken and for which a stay of execution pending such appeal
shall not have been obtained.
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-
9.11. Margin Securities.
Allow any portion of the proceeds of the Obligations to be used, in whole or in
part, for the purpose of purchasing or carrying any “margin stock” as such term
is defined in Regulation U of the Board of Governors of the Federal
Reserve.
9.12. Asset Transfer and Affiliate
Loans. The Borrower shall not (a) distribute, transfer or
convey any asset or property of the Borrower to any Affiliate or Subsidiary or
(b) make any loan or extend any other credit accommodation to any Affiliate or
Subsidiary. The Borrower shall not permit any Guarantor, without the
express written consent of the Bank, such consent to be in the sole discretion
of the Bank, to (y) distribute, transfer or convey any asset or property of such
Guarantor to any Affiliate except the Borrower or another Guarantor or (z) make
any loan or extend any other credit accommodation to any Affiliate except the
Borrower or another Guarantor.
It is
hereby expressly greed that, except to the extent expressly provided herein, the
provisions of this Article IX shall not be applicable to any
Guarantor.
ARTICLE
X.
FINANCIAL
COVENANTS
So long
as any Obligations to the Bank shall be outstanding or this Agreement remains in
effect, unless the Bank otherwise consents in writing, the Borrower
shall:
10.1. Minimum Fixed Charge
Coverage Ratio. On a consolidated basis, maintain a minimum Fixed Charge
Coverage Ratio of 1.00 to 1.0, reported on a year to date basis commencing with
the quarter ending March 31, 2010; a minimum Fixed Charge Coverage Ratio of 1.10
to 1.0, reported on a year to date basis commencing with the quarter ending June
30, 2010; and at all times thereafter a minimum Fixed Charge Coverage Ratio of
1.15 to 1.0, reported on a year to date basis commencing with the quarter ending
September 30, 2010 and on a rolling four quarter basis thereafter commencing
with the quarter ending December 31, 2010.
10.2. Maximum Senior Funded Debt
to EBITDA Ratio. Maintain at all times a maximum Senior Funded Debt to
EBITDA Ratio of 3.0 to 1.0, reported on a revised rolling four quarter basis
commencing with the quarter ending March 31, 2010. The compliance of such
covenant will be tested on March 31, 2010, June 30, 2010 and September 30, 2010
on a revised EBITDA basis, with an officer salary cap of $260,000 and all
distributions limited to 40% of Net Income for all quarters calculated in 2009.
Commencing December 31, 2010, such covenant will be tested on a rolling four
quarter basis according to GAAP.
10.3. Current
Ratio. Maintain at all times a Current Ratio of 1.25 to 1.0,
reported on a rolling four quarter basis commencing with the quarter ending
March 31, 2010.
ARTICLE XI.
DEFAULTS
11.1. Defaults. The
following events shall constitute “Events of Default” under this
Agreement.
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-
(a) Nonpayment. Failure
of the Borrower or any Guarantor to make any payment of any type under the terms
of the Loan Documents within five (5) days after the same becomes due and
payable.
(b) Performance. Failure
of the Borrower or any Guarantor to observe or perform any condition, covenant
or term of the Loan Documents; provided, however, that if such failure occurs
under ARTICLE VIII and is susceptible to cure an Event of Default shall not
occur unless such failure is not cured within fifteen (15) days after the Bank
gives the Borrower notice of same.
(c) Other Obligations and Cross
Default. Failure of the Borrower or any Guarantor to observe or perform
any other condition, covenant, or term of any other agreement with the Bank,
including without limitation, any Hedging Contracts or other documents or
agreements giving rise to Hedging Obligations after any applicable cure or grace
period related thereto, or default by the Borrower or any Guarantor under any
agreement involving borrowed money or the like, or any other material agreement
with any third person or entity. Without limiting the foregoing, if
the Borrower or any Guarantor shall default in the payment of principal or
interest due and owing upon any obligation for borrowed money, beyond any grace
period provided with respect thereto, or in the performance or observance of any
other agreement, term or condition contained in any agreement under which such
obligation is created, and the effect of such default is to allow the
acceleration of the maturity of such indebtedness or to permit the holder
thereof to cause such indebtedness to become due prior to its stated maturity,
then, in such event, the Borrower and each Guarantor covenants and agrees that
any such default shall cause a Default under every obligation owed by the
Borrower and each Guarantor to the Bank.
(d) Representations.
Failure of any representation or warranty made by the Borrower or any Guarantor
in connection with the execution and performance of this Agreement, or any
certificate of officers pursuant hereto, to be truthful, accurate or correct in
all material respects.
(e) Financial
Difficulties. Financial difficulties of the Borrower or any Guarantor as
evidenced by:
(i) any
admission in writing of inability to pay debts as they become due;
or
(ii) the
filing of a voluntary or involuntary petition in bankruptcy, or under any
chapters of the Bankruptcy Code, or under any federal or state statute providing
for the relief of debtors; or
(iii) making
an assignment for the benefit of creditors; or
(iv) consenting
to the appointment of a trustee or receiver for all or a major part of any of
its property; or
(v) the
entry of a court order appointing a receiver or a trustee for all or a major
part of its property;
- 23
-
(vi) the
occurrence of any event, action, or transaction that could give rise to a lien
or encumbrance on the assets of the Borrower or any Guarantor as a result of
application of relevant provisions of ERISA; or
(vii) the
occurrence of any Forfeiture Action.
(f) Material Change.
Change in the Borrower’s or any Guarantor’s business or operations, including
but not limited to a Change in Control of Document Security Systems, Inc., or in
any factor affecting the Borrower’s or any Guarantor’s business or operations,
or regarding any obligation or agreement of the Borrower or any Guarantor, or in
the financial condition of the Borrower or any Guarantor or in the collateral
for the Borrower’s Obligations or the Guarantees, or any other condition
affecting the Borrower or any Guarantor, in each case by reason of which the
Bank reasonably believes the Borrower’s ability to timely repay any Obligations
to the Bank is materially impaired.
11.2. Remedies. If any one
or more Events of Default listed in Sections 11.1(e)(ii) through 11.1(e)(v)
occur, (i) any further commitments or obligations of the Bank shall be deemed to
be automatically and without need for further action terminated, and (ii) all
Obligations of the Borrower to the Bank, automatically and without need for
further action, shall become forthwith due and payable without presentment,
demand, protest, or other notice of any kind, all of which are hereby expressly
waived. If any one or more Events of Default other than those listed in Sections
11.1(e)(ii) through 11.1(e)(v) occur, the Bank may, at its option, take either
or both of the following actions at the same or different times: (i) terminate
any further commitments or obligations of the Bank, and (ii) declare all
Obligations of the Borrower to the Bank, automatically and without need for
further action, to be forthwith due and payable without presentment, demand,
protest, or other notice of any kind, all of which are hereby expressly
waived.
In case
any such Events of Default shall occur, the Bank shall be entitled to recover
judgment against the Borrower for all Obligations of the Borrower to the Bank
either before, or after, or during the pendency of any proceedings for the
enforcement, of any security interests, mortgages, pledges, or guarantees and,
in the event of realization of any funds from any security or guarantee and
application thereof to the payment of the Obligations due, the Bank shall be
entitled to enforce payment of and recover judgment for all amounts remaining
due and unpaid on such Obligations. The Bank shall be entitled to exercise any
other legal or equitable right which it may have, and may proceed to protect and
enforce its rights by any other appropriate proceedings, including action for
the specific performance of any covenant or agreement contained in this
Agreement and other agreements held by the Bank.
If any
Default occurs, the Bank or its designee shall have the right, upon reasonable
notice to the Borrower, to enter upon the Borrower’s property and conduct such
tests, investigation and sampling, including but not limited to installation of
monitoring xxxxx, as shall be reasonably necessary for the Bank to determine
whether any disposal of Hazardous Substances has occurred on, at or near such
property. The costs of all such tests, investigations and samplings shall be
considered as additional indebtedness secured by all collateral for the
Obligations and shall become immediately due and payable without notice and with
interest thereon at highest rate then borne by any of the Obligations. The
Borrower agrees that the Bank
- 24
-
shall not
be liable in any way for the completeness or accuracy of any Environmental
Report or the information contained therein. The Borrower further agrees that
the Bank has no duty to warn the Borrower or any other person or entity about
any actual or potential environmental contamination or other problem that may
have become apparent or will become apparent to the Bank.
ARTICLE
XII.
MISCELLANEOUS
12.1. Entire
Agreement/Waiver. This Agreement and the Loan Documents are intended by
the parties as the final, complete, and exclusive statement of the transactions
evidenced by this Agreement and the Loan Documents. All prior or contemporaneous
promises, agreements, and understandings, whether oral or written, are deemed to
be superseded by this Agreement and the Loan Documents, and no party is relying
on any promise, agreement, or understanding not set forth in this Agreement and
the Loan Documents. This Agreement and the Loan Documents may not be amended or
modified except by a written instrument describing such amendment or
modification executed by the Borrower and the Bank.
No delay
or failure of the Bank to exercise any right, remedy, power or privilege
hereunder shall impair the same or be construed to be a waiver of the same or of
any Default or an acquiescence therein. No single or partial exercise of any
right, remedy, power or privilege shall preclude other or further exercise
thereof by the Bank. All rights, remedies, powers, and privileges herein
conferred upon the Bank shall be deemed cumulative and not exclusive of any
others available.
12.2. Survival of
Representations. All representations and warranties contained herein
shall survive the execution and delivery of this Agreement and the execution and
delivery of other agreements hereunder.
12.3. Setoff. The Borrower
and the Guarantors hereby grant to the Bank a continuing lien, security
interest, and right of set off as security for the Obligations, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of the Bank or any entity under the control of the Bank
and its successors and assigns or in transit to any of them. At any time without
demand or notice (any such notice being expressly waived by the Borrower and
each Guarantor), the Bank may set off the same or any part thereof and apply the
same to any Obligation of the Borrower and any Guarantor even though unmatured
and regardless of the adequacy of any other collateral securing the Obligations.
ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS, CREDITS, OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTOR ARE HEREBY KNOWINGLY, VOLUNTARILY, AND
IRREVOCABLY WAIVED.
12.4. Notices. Any notice
or demand upon any party hereto shall be deemed to have been sufficiently given
or served for all purposes hereof when delivered in person, one day after
delivery to a nationally recognized overnight courier with receipt requested, or
two business days after it is mailed certified mail postage prepaid, return
receipt requested, addressed as follows:
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-
If to the
Bank:
RBS
Citizens, N.A.
Commercial
Lending
000 Xxxx
Xxxxxx
Xxxxxxxxx,
Xxx Xxxx 00000
Attention:
Xx. Xxxxxxx X. Xxxxx
|
With
a copy to:
|
Xxxxxx
Beach PLLC
|
|
|
00
Xxxxxxx Xxxx
|
|
|
Xxxxxxxxx,
Xxx Xxxx 00000
|
|
|
Attention:
Xx. Xxxxxx X. Xxxxx, Esq.
|
|
If
to the Borrower
|
Premier
Packaging Corporation
|
|
or
the Guarantors:
|
Document
Security Systems, Inc.
|
|
|
Plastic
Printing Professionals, Inc.
|
|
|
Secuprint,
Inc.
|
Xxxxx
0000
00 Xxxx
Xxxx Xxxxxx
Xxxxxxxxx,
Xxx Xxxx 00000
| With a copy to: | Attention: Xx. Xxxxxx Xxxxx |
|
|
Xxxxxx
X. Xxxxxxx & Associates, X.X.
|
|
|
Xxxxx
Xxxxxxx Xxxxxx Xxxx
|
|
|
000
Xxxxx’s Trail, Xxxxx 0X
|
|
|
Xxxxxxxxx,
XX 00000
|
|
|
Attention:
Xxxxxx X. Xxxxxxx, Esq.
|
Any party
may change, by notice in writing to the other parties, the address to which
notices to it shall be sent.
12.5. Assignment/Participation.
All of the terms and provisions of this Agreement shall inure to the benefit of
and be binding upon and be enforceable by the parties and their respective
successors and assigns and shall inure to the benefit of and be enforceable by
any holder of notes executed hereunder.
The Bank
may at any time pledge or assign all or any portion of its rights under the Loan
Documents, including any portion of any note evidencing the Obligations, to any
of the twelve (12) Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or assignment or
enforcement thereof shall release the Bank from its obligations under any of the
Loan Documents.
- 26
-
The Bank
shall have the unrestricted right at any time or from time to time, and without
the Borrower’s or any Guarantor’s consent, to assign all or any portion of its
rights and obligations hereunder to one or more banks or other financial
institutions (each an “Assignee”), and the Borrower and each Guarantor agree
that it shall execute such documents, including without
limitation, amendments to this Agreement and to any other Loan Documents, as the
Bank shall deem necessary to effect the foregoing. In addition, at the request
of the Bank and any such Assignee, the Borrower shall issue one or more new
promissory notes, as applicable, to any such Assignee and, if the Bank has
retained any of its rights and obligations hereunder following such assignment,
to the Bank, which new promissory notes shall be issued in replacement of, but
not in discharge of, the liability evidenced by the promissory note held by the
Bank prior to such assignment and shall reflect the amount of the respective
commitments and loans held by such Assignee and the Bank after giving effect to
such assignment. Upon the execution and delivery of appropriate assignment
documentation, amendments, and any other documentation required by the Bank in
connection with such assignment, and the payment by such Assignee of the
purchase price agreed to by the Bank and such Assignee, such Assignee shall be a
party to this Agreement and shall have all of the rights and obligations of the
Bank hereunder (and under any and all of the other Loan Documents) to the extent
that such rights and obligations have been assigned by the Bank pursuant to the
assignment documentation between the Bank and such Assignee, and the Bank shall
be released from its obligations hereunder and thereunder to a corresponding
extent.
The Bank
shall have the unrestricted right at any time and from time to time, and without
the consent of or notice to the Borrower or any Guarantor, to grant to one or
more banks or other financial institutions (each a “Participant”) participating
interests in the Bank’s obligation to lend hereunder and/or any or all of the
Obligations. In the event of any such grant by the Bank of a participating
interest to Participant, whether or not upon notice to the Borrower, the Bank
shall remain responsible for the performance of its obligations hereunder and
the Borrower shall continue to deal solely and directly with the Bank in
connection with the Bank’s rights and obligations hereunder.
The Bank
may furnish any information concerning the Borrower in its possession from time
to time to prospective Assignees and Participants, provided that the Bank shall
require any such prospective Assignee or Participant to agree in writing to
maintain the confidentiality of such information.
12.6. Business Days. If any
Obligation or any payment hereunder becomes due on a day which is not a Business
Day, the due date of the Obligation or payment shall be extended to the next
succeeding Business Day, and such extension of time shall be included in
computing interest and fees in connection with such payment.
12.7. Telecopy Requests. As
a convenience to the Borrower, the Borrower hereby authorizes the Bank to rely
upon requests made by the Borrower or its employees by telecopy, and to treat
such requests as if they were made in a writing delivered to the Bank. Any
advance of funds made by the Bank pursuant to any such request shall be deemed
to be authorized by the Borrower unless immediately repaid in full.
12.8. Severability. In the
event that any one or more of the provisions contained in this Agreement or any
other agreement, document, or guarantee related hereto shall, for any reason, be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or such other agreement, document,
or guarantee. This Agreement has been prepared in cooperation of counsel for
each of the parties, and shall not be construed as against any particular party
as drafter.
- 27
-
12.9. Governing Law. This
Agreement and the Loan Documents, and the rights and obligations of the parties
hereunder, shall be construed, interpreted, governed and enforced in accordance
with the laws of the State of New York (excluding the laws applicable to
conflicts or choice of law).
12.10. Loss or Mutilation.
Upon receipt of an affidavit of an officer of the Bank as to the loss, theft,
destruction, or mutilation of any note evidencing any Obligation or any other
Loan Document which is not of public record, and, in the case of any such loss,
theft, destruction or mutilation, upon cancellation of such note or other Loan
Document, the Borrower will issue, in lieu thereof, a replacement note or other
Loan Document in the same principal amount thereof and otherwise of like
tenor.
12.11. Indemnity. The
Borrower and each Guarantor, jointly and severally, shall indemnify and hold
harmless the Bank and its affiliates, directors, officers, employees, agents,
and representatives from and against any and all claims, damages, liabilities,
and expenses that may be incurred by or asserted against such indemnified party
in connection with the Loan Documents and the transactions contemplated thereby
including without limitation in connection with the investigation of,
preparation for, or defense of any pending or threatened claim, action, or
proceeding; provided, however, that neither the Borrower nor any Guarantor shall
be liable to any indemnified party for such claims, damages, liabilities, and
expenses resulting from such indemnified party’s own gross negligence or willful
misconduct.
The
Borrower and each Guarantor, jointly and severally, agrees to indemnify, defend,
and hold harmless the Bank from and against any and all liabilities, claims,
damages, penalties, expenditures, losses, or charges, including, but not limited
to, all costs of investigation, monitoring, legal representation, remedial
response, removal, restoration or permit acquisition of any kind whatsoever,
which may now or in the future be undertaken, suffered, paid, awarded, assessed,
or otherwise incurred by the Bank (or any other person or entity affiliated with
the Bank or representing or acting for the Bank or at the Bank’s behest, or with
a claim on the Bank or to whom the Bank has liability or responsibility of any
sort related to this Section 12.11 relating to, resulting from or arising out of
(a) actions by the Borrower related to, or the use of the Improvements for, the
storage, treatment, generation, transportation, processing, handling, production
or disposal of any Hazardous Substance, (b) the presence of any Hazardous
Substance or a Release or the threat of a Release of any Hazardous Substance on,
at or from the Improvements, (c) the failure to promptly undertake and
diligently pursue to completion all necessary, appropriate and legally
authorized investigative, containment, removal, clean up and other remedial
actions with respect to a Release or the threat of a Release of any Hazardous
Substance on, at or from the Improvements, (d) exposure to any Hazardous
Substance to the extent the same arise from activities of the Borrower or the
condition of the Improvements or the ownership, use, operation, sale, transfer
or conveyance thereof, (e) a violation of any applicable Environmental Law, or
(f) non-compliance with any Environmental Permit. Such costs or other
liabilities incurred by the Bank or other entity described in this Section 12.11
shall be deemed to include, without limitation, any sums which the Bank deems it
necessary or desirable to expend to protect its security interests and liens.
Notwithstanding anything to the contrary contained herein,
the Borrower’s liability and obligations under this Section 12.11 shall survive
the discharge, satisfaction or assignment of this Agreement by the Bank and the
payment in full of all of the Obligations.
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-
12.12. Usury. All agreements
between and among the Borrower, the Guarantors and the Bank are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration or maturity of the indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to the Bank for the use or the
forbearance of the indebtedness evidenced hereby exceed the maximum permissible
under applicable law. As used herein, the term “applicable law” shall mean the
law in effect as of the date hereof, provided, however that in the event there
is a change in the law which results in a higher permissible rate of interest,
then the Loan Documents shall be governed by such new law as of its effective
date. In this regard, it is expressly agreed that it is the intent of the
Borrower and the Bank in the execution, delivery and acceptance of this
Agreement to contract in strict compliance with the laws of the State of New
York from time to time in effect. If, under or from any circumstances
whatsoever, fulfillment of any provision hereof or of any of the Loan Documents
at the time performance of such provision shall be due, shall involve
transcending the limit of such validity prescribed by applicable law, then the
obligation to be fulfilled shall automatically be reduced to the limits of such
validity, and if under or from any circumstances whatsoever the Bank should ever
receive as interest an amount which would exceed the highest lawful rate, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. This
provision shall control every other provision of all agreements between and
among the Borrower, the Guarantors, and the Bank.
12.13. JURISDICTION/VENUE.
THE BORROWER AND EACH GUARANTOR AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SET FORTH FOR NOTICES GIVEN
UNDER THIS AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH
SUIT IS BROUGHT IN AN INCONVENIENT FORUM.
12.14. WAIVER OF TRIAL BY
JURY. THE BORROWER, EACH GUARANTOR, AND THE BANK MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY 1N
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR, ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY, INCLUDING WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS OR ACTIONS OF THE BANK RELATING TO THE ADMINISTRATION OF THE LOAN OR
ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT NO PARTY WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, THE
BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWER CERTIFIES
THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF THE BANK HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR THE BANK TO ACCEPT THIS AGREEMENT AND MAKE THE LOANS CONTEMPLATED
HEREUNDER.
[SIGNATURE
PAGE IMMEDIATELY FOLLOWS.]
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-
IN
WITNESS WHEREOF, the parties have caused this Credit Facility Agreement to be
executed by their duly authorized representatives as of the date first above
written.
RBS
CITIZENS, N.A.
By:
Xxxxxxx
X. Xxxxx, Assistant Vice President
PREMIER
PACKAGING CORPORATION
By:
Name:
Title:
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-
INDEX
TO SCHEDULES
SCHEDULE
5.1(a) Liens and Encumbrances of the Borrower
SCHEDULE 5.1(b)
Certain Equipment of the Borrower
SCHEDULE
5.2 Liens and Encumbrances of the
Guarantors
SCHEDULE 6.1
Affiliates and Subsidiaries
SCHEDULE 6.4
Litigation
SCHEDULE 6.15
Patents, Trademarks and Authorizations
SCHEDULE 7.15
Landlord Waivers
SCHEDULE 9.1
Existing Indebtedness
SCHEDULE 9.2
Mortgages, Liens and Encumbrances
INDEX
TO EXHIBITS
EXHIBIT A
Revolving Line Note
EXHIBIT
B Acquisition Term Loan Note
EXHIBIT
C Borrowing Base Certificate
- 31
-
EXHIBIT
A
(FORM OF
REVOLVING LINE NOTE)
- 32
-
REVOLVING
LINE NOTE
(LIBOR
Advantage)
|
$1,000,000.00
|
February
12, 2010
|
FOR VALUE
RECEIVED, the undersigned, PREMIER PACKAGING CORPORATION, a New York
corporation, having a mailing address of 0 Xxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx 00000
(“Borrower”),
hereby promises to pay to the order of RBS CITIZENS, N. A., a
national banking association (“Bank”), at its
principal office at 000 Xxxxxxxx, Xxxxxx, Xxx Xxxx 00000, or at such other place
as the holder hereof may from time to time designate in writing, the principal
sum of ONE MILLION AND 00/100 DOLLARS U.S. ($1,000,000.00) or such
lesser amount as may be outstanding hereunder.
Certain
Definitions. Unless otherwise expressly provided herein, all
capitalized terms in this Note shall have the meanings given to them in the
Credit Facility Agreement, dated on even date herewith, by and among Borrower
and Bank, as the same may be amended, extended, replaced, or modified from time
to time (the “Credit Agreement”). The following terms shall have the
following meanings in this Note:
“Business Day” means
any day which is neither a Saturday, Sunday nor a legal holiday on which
commercial banks are authorized or required to be closed in Rochester, New
York.
“Event of Default”
means an Event Default under the Credit Agreement.
“LA Interest Payment
Date” means, initially, the 1st day of March, 2010, and thereafter the
day of each succeeding month which numerically corresponds to such date or, if a
month does not contain a day that numerically corresponds to such date, the LA
Interest Payment Date shall be the last day of such month.
“LA Interest Period”
means, with respect to any LIBOR Advantage Loan, the period commencing on (and
including) the date hereof (the “Start Date”) and ending on (but
excluding) the date which numerically corresponds to such date one month later,
and thereafter, each one month period ending on the day of such month that
numerically corresponds to the Start Date. If an Interest Period is
to end in a month for which there is no day which numerically corresponds to the
Start Date, the LA Interest Period will end on the last day of such
month. Notwithstanding the date of commencement of any LA Interest
Period, interest shall only begin to accrue as of the date the initial LIBOR
Advantage Loan is made hereunder.
“LA Margin” means
three and three-fourths percent (3.75%) per annum.
“LIBOR Advantage
Loan” means any loan or advance for which the applicable rate of interest
is based upon the LIBOR Advantage Rate.
“LIBOR Advantage
Rate” means, relative to any LA Interest Period, the offered rate for
delivery in two London Banking Days of deposits of U.S. Dollars for a term
coextensive with the designated LA Interest Period which the British Bankers’
Association fixes as its LIBOR rate as of 11:00 a.m. London time on the day on
which such LA Interest Period commences. If
the first day of any Interest Period is not a day which is both a (i) Business
Day, and (ii) a London Banking Day, the LIBOR Advantage Rate shall be determined
by reference to the next preceding day which is both a Business Day and a London
Banking Day. If for any reason the LIBOR Advantage Rate is
unavailable and/or Bank is unable to determine the LIBOR Advantage Rate for any
LA Interest Period, Bank may, at its discretion, either: (a) select a
replacement index based on the arithmetic mean of the quotations, if any, of the
interbank offered rate by first class banks in London or New York for deposits
with comparable maturities or (b) accrue interest at a rate per annum
equal to Bank’s Prime Rate as of the first day of any Interest Period for which
the LIBOR Advantage Rate is unavailable or cannot be determined.
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Loan Documents” means
this Note and all related documents and agreements evidencing and/or securing
the Loan including the Credit Agreement.
“London Banking Day”
means any day on which dealings in US dollar deposits are transacted in the
London interbank market.
“Maturity Date” means
the Revolving Line Termination Date, as defined in Article 2.2 of the Credit
Agreement.
Advances.
Borrower
may request advances hereunder from time to time from Bank, and provided that no
Event of Default has occurred and further provided that advance requests are
received on or before the Maturity Date, Bank shall advance such funds to
Borrower so long as the aggregate principal amount outstanding at any time does
not exceed the lesser of (i) $1,000,000.00 and (ii) the Borrowing Base as
defined in Section 2.8 of the Credit Agreement.
Bank
shall maintain a record of amounts of principal and interest payable by Borrower
from time to time, and the records of Bank maintained in the ordinary course of
business shall be prima facie evidence (absent manifest error by Bank) of the
existence and amounts of Borrower’s obligations recorded therein. In
addition, Bank may mail or deliver periodic statements to Borrower indicating
the date and amount of each advance hereunder (but any failure to do so shall
not relieve Borrower of the obligation to repay any advance). Unless
Borrower questions the accuracy of an entry on any periodic statement within 30
calendar days after such mailing or delivery by Bank, Borrower shall be deemed
to have accepted and be obligated by the terms of each such periodic statement
as accurately representing the advances hereunder. In the event of
transfer of this Note, or if Bank shall otherwise deem it appropriate, Borrower
hereby authorizes Bank to endorse on this Note the amount of advances and
payments to reflect the principal balance outstanding from time to
time. Bank is hereby authorized to honor borrowing and other requests
received from Xxxxxx Xxxxx by telecopy or otherwise in writing.
Interest.
Interest
on the outstanding principal amounts outstanding hereunder shall accrue during
the LA Interest Period at a rate per annum equal to the sum of the LIBOR
Advantage Rate for such LA Interest Period plus the LA
Margin. Interest shall be due and payable on each LA Interest
Payment Date and on the Maturity Date. Interest shall be calculated
for the actual number of days elapsed on the basis of a 360-day year, including
the first date of the applicable period to, but not including, the date of
repayment.
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Interest
shall continue to accrue after maturity, acceleration, and judgment at the rate
required by Section 4.3 of the Credit Agreement until this Note is paid in
full.
The rate
of interest on this Note may be increased under the circumstances provided in
the Credit Agreement. The right of Bank to receive such increased
rate of interest shall not constitute a waiver of any other right or remedy of
Bank.
Payments.
All
accrued interest hereunder shall be due and payable on each LA Interest Payment
Date. All remaining accrued interest and all outstanding principal
shall be due and payable in full on the Maturity Date.
In the
event Borrower becomes aware, or receives notice (oral or written) from Bank,
that principal amounts outstanding under the Revolving Line exceed the maximum
available amount hereunder, Borrower promptly shall make a principal payment to
Bank sufficient to reduce outstanding principal amounts to the maximum amount
available hereunder.
Prepayments. Borrower
may prepay principal outstanding under this Note at any time without premium or
charge. Borrower acknowledges that additional obligations may be
associated with prepayment in accordance with the terms and conditions of any
applicable Hedging Contracts.
Events of
Default. This Note shall become immediately due and payable in
full, without further presentment, protest, notice, or demand, upon the
happening of any Event of Default.
Late
Charge. This Note is subject to the late charges provided for
in Section 4.4 of the Credit Agreement.
Maximum
Rate. All agreements between Borrower and Bank are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration or maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to Bank for the use or the
forbearance of the indebtedness evidenced hereby exceed the maximum permissible
under Applicable Law (the “Maximum Interest
Rate”). As used herein, the term “Applicable Law”
shall mean the law in effect as of the date hereof, provided, however that in
the event there is a change in the law which results in a higher permissible
rate of interest, then this Note and the Loan Documents shall be governed by
such new law as of its effective date. In this regard, it is
expressly agreed that it is the intent of Borrower and Bank in the execution,
delivery and acceptance of this Note to contract in strict compliance with the
laws of the State of New York from time to time in effect. If, under
or from any circumstances whatsoever, fulfillment of any provision hereof or of
any of the Loan Documents at the time performance of such provision shall be
due, shall involve transcending the limit of such validity prescribed by
applicable law, then the obligation to be fulfilled shall automatically be
reduced to the limits of such validity, and if under or from any circumstances
whatsoever Bank should ever receive
as interest an amount which would exceed the highest lawful rate, such amount
which would be excessive interest shall be applied to the reduction of the
principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of all
agreements between Borrower and Bank.
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Business
Days. If this Note or any payment hereunder becomes due on a
day which is not a Business Day, the due date of this Note or payment shall be
extended to the next succeeding Business Day, and such extension of time shall
be included in computing interest and fees in connection with such
payment.
Entire
Agreement/Modification of Terms. This Note and the Loan
Documents are intended by the parties as the final, complete, and exclusive
statement of the transactions evidenced by this Note and the Loan
Documents. All prior or contemporaneous promises, agreements, and
understandings, whether oral or written, are deemed to be superseded by this
Note and the Loan Documents, and no party is relying on any promise, agreement,
or understanding not set forth in this Note and the Loan
Documents. This Note and the Loan Documents may not be amended or
modified except by a written instrument describing such amendment or
modification executed by the Borrower and the Bank. The terms of this
Note cannot be changed, nor may this Note be discharged in whole or in part,
except by a writing executed by Bank. In the event that Bank demands
or accepts partial payments of this Note, such demand or acceptance shall not be
deemed to constitute a waiver of the right to demand the entire unpaid balance
of this Note at any time in accordance with the terms hereof. Any
delay or omission by Bank in exercising any rights hereunder shall not operate
as a waiver of such rights.
Additional Security/Set
Off. The Borrower hereby grants to Bank a continuing lien,
security interest, and right of set off as security for all liabilities and
obligations to the Bank, whether now existing or hereafter arising, upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of Citizens Financial Group and its successors and assigns or in transit
to any of them. At any time without demand or notice (any such notice
being expressly waived by Borrower), Bank may set off the same or any part
thereof and apply the same to any liability or obligation of Borrower even
though unmatured and regardless of the adequacy of any other collateral securing
the obligation. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE
OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS, OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY,
VOLUNTARILY, AND IRREVOCABLY WAIVED.
Assignment/Participation.
All the
terms and provisions of this Note shall inure to the benefit of and be binding
upon and be enforceable by the parties and their respective successors and
assigns and shall inure to the benefit of and be enforceable by any holder
hereof.
Bank may
at any time pledge or assign all or any portion of its rights under this Note to
any of the twelve (12) Federal Reserve Banks organized under Section 4 of the
Federal Reserve
Act, 12 U.S.C. Section 341. No such pledge or assignment or
enforcement thereof shall release Bank from its obligations under any of the
Loan Documents.
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-
Bank
shall have the unrestricted right at any time or from time to time, and without
Borrower’s consent, to assign all or any portion of its rights and obligations
hereunder to one or more banks or other financial institutions (each an “Assignee”), and
Borrower agrees that it shall execute, or cause to be executed, such documents,
including without limitation, amendments to this Note and to any other Loan
Documents, as Bank shall deem necessary to effect the foregoing. In
addition, at the request of Bank and any such Assignee, Borrower shall issue one
or more new promissory notes, as applicable, to any such Assignee and, if Bank
has retained any of its rights and obligations hereunder following such
assignment, to Bank, which new promissory notes shall be issued in replacement
of, but not in discharge of, the liability evidenced by the promissory note held
by Bank prior to such assignment and shall reflect the amount of the respective
commitments and loans held by such Assignee and Bank after giving effect to such
assignment. Upon the execution and delivery of appropriate assignment
documentation, amendments, and any other documentation required by Bank in
connection with such assignment, and the payment by Assignee of the purchase
price agreed to by Bank and such Assignee, such Assignee shall be a party to
this agreement and shall have all of the rights and obligations of Bank
hereunder (and under any and all other Loan Documents) to the extent that such
rights and obligations have been assigned by Bank pursuant to the assignment
documentation between Bank and such Assignee, and Bank shall be released from
its obligations hereunder and thereunder to a corresponding extent.
Bank
shall have the unrestricted right at any time and from time to time, and without
the consent of or notice to Borrower, to grant to one or more banks or other
financial institutions (each a “Participant”)
participating interests in Bank’s obligation to lend hereunder and/or any or all
of the loans held by Bank hereunder. In the event of any such grant
by Bank of a participating interest to Participant, whether or not upon notice
to Borrower, Bank shall remain responsible for the performance of its
obligations hereunder and Borrower shall continue to deal solely and directly
with Bank in connection with Bank’s rights and obligations
hereunder.
Bank may
furnish any information concerning Borrower in its possession from time to time
to prospective Assignees and Participants, provided that Bank shall require any
such prospective Assignee or Participant to agree in writing to maintain the
confidentiality of such information.
Loss or
Mutilation. Upon receipt of an affidavit of an officer of Bank
as to the loss, theft, destruction, or mutilation of this Note or any other Loan
Document which is not of public record, and, in the case of any such loss,
theft, destruction or mutilation, upon cancellation of this Note or other Loan
Document, Borrower will issue, in lieu thereof, a replacement note or other Loan
Document in the same principal amount thereof and otherwise of like
tenor.
Enforcement/Waiver of Jury
Trial.
BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OF THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL
COURT SITTING THEREIN
AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER BY MAIL AT THE ADDRESS FIRST
SET FORTH ABOVE IN THIS NOTE. BORROWER HEREBY WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH
COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT FORUM.
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BORROWER
AND BANK (BY ACCEPTANCE OF THIS NOTE) MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN
DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING WITHOUT LIMITATION, ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF BANK RELATING TO
THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE
THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT
AS PROHIBITED BY LAW, BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR
ATTORNEY OF BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BANK TO
ACCEPT THIS AGREEMENT AND MAKE THE LOANS CONTEMPLATED HEREUNDER.
Miscellaneous.
To the
fullest extent permissible by law, Borrower waives presentment, demand for
payment, protest, notice of nonpayment, and all other demands or notices
otherwise required by law in connection with the delivery, acceptance,
performance, default, or enforcement of this Note. Borrower consents
to extensions, postponements, indulgences, amendments to notes and agreements,
substitutions or releases of collateral, and substitutions or releases of other
parties primarily or secondarily liable herefor, and agrees that none of the
same shall affect Borrower’s obligations under this Note which shall be
unconditional.
This Note
and the Loan Documents are intended by the parties as the final, complete and
exclusive statement of the transactions evidenced by this Note and the Loan
Documents. All prior or contemporaneous promises, agreements, and
understandings, whether oral or written, are deemed to be superseded by this
Note and the Loan Documents, and no party is relying on any promise, agreement,
or understanding not set forth in this Note and the Loan
Documents. This Note may not be amended or modified except by a
written instrument describing such amendment or modification executed by the
Borrower and the Bank.
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No
portion of the proceeds of this Note shall be used, in whole or in part, for the
purpose of purchasing or carrying any “margin stock” as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve
System.
This Note
and the Loan Documents, and the rights and obligations of the parties hereunder,
shall be construed, interpreted, governed and enforced in accordance with the
internal laws of the State of New York (excluding the laws applicable to
conflicts or choice of law).
PREMIER
PACKAGING CORPORATION
By:
Name:
Title:
|
STATE
OF NEW YORK
|
)
|
|
|
COUNTY
OF MONROE
|
)
|
ss.:
|
On the
____ day of February , in the year 2010, before me, the undersigned, a Notary
Public in and for said State, personally appeared personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her capacity, and that by his/her signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.
Notary
Public
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EXHIBIT
B
(FORM OF
ACQUISITION TERM LOAN NOTE)
- 40
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ACQUISITION TERM LOAN
NOTE
|
$1,500,000.00
|
February
12, 2010
|
FOR VALUE
RECEIVED, the undersigned, PREMIER PACKAGING CORPORATION, a New York
corporation, having a mailing address of 0 Xxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx 00000
(“Borrower”),
hereby promises to pay to the order of RBS CITIZENS, N. A., a
national banking association (“Bank”), at its
principal office at 000 Xxxxxxxx, Xxxxxx, Xxx Xxxx 00000, or at such other place
as the holder hereof may from time to time designate in writing, the principal
sum of ONE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS U.S.
($1,500,000.00).
Certain
Definitions. Unless otherwise expressly provided herein, all
capitalized terms in this Note shall have the meanings given to them in the
Credit Facility Agreement, dated on even date herewith, by and between Borrower
and Bank, as the same may be amended, extended, replaced, or modified from time
to time (the “Credit Agreement”). The following terms shall have the
following meanings in this Note:
“Account” means
account #_____________ maintained by the Bank in the name of the
Borrower.
“Applicable Margin”
means three and three fourths percent (3.75%) per annum.
“Business Day”
means:
any day
which is neither a Saturday or Sunday nor a legal holiday on which commercial
banks are authorized or required to be closed in New York State;
when such
term is used to describe a day on which a payment or prepayment is to be made in
respect of a LIBOR Rate Loan, any day which is: (i) neither a Saturday or Sunday
nor a legal holiday on which commercial banks are authorized or required to be
closed in New York City; and (ii) a London Banking Day; and
when such
term is used to describe a day on which an interest rate determination is to be
made in respect of a LIBOR Rate Loan, any day which is a London Banking
Day.
“Event of
Default” means an Event Default under the Credit Agreement.
“Funding Date” means
the 12th day of February, 2010.
“Hedging Contracts”
means, interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements, or any other agreements or arrangements entered into
between the Borrower and the Bank and designed to protect the Borrower against
fluctuations in interest rates or currency exchange rates.
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“Hedging Obligations”
means, with respect to the Borrower, all liabilities of the Borrower to the Bank
under Hedging Contracts.
“Interest Period”
means:
initially,
the period beginning on (and including) the Funding Date and ending on (but
excluding) March 1, 2010 (the “Stub Period”);
and
then,
each period commencing on the last day of the next preceding Interest Period and
ending on the day which numerically corresponds to last day of the Stub Period
one month thereafter (or, if such month has no numerically corresponding day, on
the last Business Day of such month); and
thereafter,
each period commencing on the last day of the next preceding Interest Period and
ending one month thereafter;
provided, however,
that
if the
Borrower has or may incur Hedging Obligations with the Bank in connection with
the Loan, the Interest Period shall be of the same duration as the relevant
period set under the applicable Hedging Contract;
if such
Interest Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next following Business Day unless such day
falls in the next calendar month, in which case such Interest Period shall end
on the first preceding Business Day; and
no
Interest Period may end later than the Maturity Date.
“Interest Payment
Date” means the last Business Day of each Interest Period.
“LIBOR Rate” means
relative to any Interest Period for a LIBOR Rate Loan, the offered rate for
deposits of U.S. Dollars in an amount approximately equal to the amount of the
LIBOR Rate Loan for a term coextensive with the Interest Period which the
British Bankers’ Association fixes as its LIBOR rate as of 11:00 a.m. London
time on the day which is two London Banking Days prior to the beginning of such
Interest Period.
“LIBOR Rate Loan”
means the Loan for the period(s) when the rate of interest applicable to the
Loan is calculated by reference to the LIBOR Rate
“LIBOR Lending Rate”
means, relative to a LIBOR Rate Loan for any Interest Period, a rate per annum
determined pursuant to the following formula:
|
LIBOR
Lending Rate
|
=
|
LIBOR
Rate
|
|
(1.00
- LIBOR Reserve Percentage)
|
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“LIBOR-Reference Banks
Loan” means the Loan for any period(s) when the rate of interest
applicable to the Loan is calculated by reference to the LIBOR-Reference Banks
Rate.
“LIBOR-Reference Banks
Lending Rate” means, relative to a LIBOR-Reference Banks Rate Loan for
any Interest Period, a rate per annum determined pursuant to the following
formula:
|
LIBOR-Reference
Banks Lending Rate
|
=
|
LIBOR-Reference Banks
Rate
|
|
(1.00
- LIBOR Reserve Percentage)
|
“LIBOR-Reference Banks
Rate” means relative to any Interest Period for LIBOR-Reference Banks
Loans, the rate for which deposits in U.S. Dollars are offered by the Reference
Banks to prime banks in the London interbank market in an amount approximately
equal to the amount requested LIBOR-Reference Banks Loan at approximately 11:00
a.m., London time on the day that is two London Banking Days prior to the
beginning of such Interest Period. The Bank will request the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate for
such date will be the arithmetic mean of the quotations. If fewer
than two quotations are provided as requested, the rate for such date will be
the arithmetic mean of the rates quoted by major banks in New York City selected
by the Bank, at approximately 11:00 a.m. New York City time for loans in U.S.
Dollars to leading European banks for such Interest Period and in an amount
approximately equal to the amount requested LIBOR-Reference Banks
Loan.
“LIBOR Reserve
Percentage” means, relative to any day of any Interest Period for the
LIBOR Rate Loan, the maximum aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements (including all basic,
emergency, supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
under any regulations of the Board of Governors of the Federal Reserve System
(the “Board”)
or other governmental authority having jurisdiction with respect thereto as
issued from time to time and then applicable to assets or liabilities consisting
of “Eurocurrency Liabilities”, as currently defined in Regulation D of the
Board, having a term approximately equal or comparable to such Interest
Period.
“Loan” means
all amounts outstanding under the Note and/or advanced pursuant to this
agreement.
“Loan Documents”
means this Note and all related documents and agreements evidencing and/or
securing the Loan including the Credit Agreement.
“London Banking Day”
means a day on which dealings in US dollar deposits are transacted in the London
interbank market.
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“Maturity Date” means
the 1st day of March, 2013.
“Note” means that
certain promissory note dated as of the 12th day of February, 2010 in the
principal amount of One Million Five Hundred Thousand and 00/100 Dollars
($1,500,000.00) made payable by the Borrower to the order, and for the benefit,
of the Bank.
“Prime Rate” means
the rate of interest announced by Bank in New York State from time to time as
its “Prime Rate.” The Borrower acknowledges that the Bank may make
loans to its customers above, at or below the Prime Rate. Interest
accruing by reference to the Prime Rate shall be calculated on the basis of
actual days elapsed and a 360-day year.
“Prime Rate Loan”
means the Loan for the period(s) when the rate of interest applicable to the
Loan is calculated by reference to the Prime Rate
“Principal Repayment
Amount” means the regularly scheduled reductions in the outstanding
principal of the Loan, to be made at the end of each Interest Period in an
amount corresponding to such Interest Period and as set out in the attached
Schedule A
entitled “Principal Repayment Schedule”.
“Reference Banks”
means four major banks in the London interbank market.
Loan Funding. On the
Funding Date and on terms and subject to the conditions of this agreement, the
Loan shall be made available to the Borrower no later than 11:00 a.m. New York
City time by a deposit to the Account (or as otherwise instructed by the
Borrower in writing) in the full principal amount of the Loan. Unless
otherwise prohibited by this agreement, the Loan shall initially be classified
as a LIBOR Rate Loan and interest shall accrue by reference to the LIBOR
Rate.
Repayments, Prepayments, and
Interest.
Repayment of Loan; Automatic
Rollover of LIBOR Rate Loan. During the period(s) the Loan is
classified as a LIBOR Rate Loan, it shall mature and become payable in full on
the last day of each Interest Period. Upon maturity the Loan shall
automatically be continued as a LIBOR Rate Loan with an equal Interest Period in
an amount equal to the expiring LIBOR Rate Loan LESS the applicable
Principal Repayment Amount, provided, however, that no
portion of the outstanding principal amount of a LIBOR Rate Loan may be
continued as a LIBOR Rate Loan when any default or Event of Default has occurred
and is continuing. If any default or Event of Default has occurred
and is continuing (if the Bank does not otherwise elect to exercise any right to
accelerate the Loan it is granted hereunder), the maturing LIBOR Rate Loan shall
automatically be continued as a Prime Rate Loan. During the period(s)
that the Loan is classified as a Prime Rate Loan, the Borrower shall make
regular payments of principal in amounts equal to the applicable Principal
Repayment Amount on the last day of each Interest
Period. Notwithstanding the foregoing, the Loan shall mature and
become payable in full upon the Maturity Date.
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Voluntary Prepayment of the
LIBOR Rate Loan. When classified as a LIBOR Rate Loan, the
Loan may be prepaid upon the terms and conditions set forth
herein. The Borrower acknowledges that additional obligations may be
associated with prepayment, in accordance with the terms and conditions of any
applicable Hedging Contracts. The Borrower shall give the Bank, no
later than 10:00 a.m., New York City time, at least four (4) Business Days
notice of any proposed prepayment of the LIBOR Rate Loan, specifying the
proposed date of payment and the principal amount to be paid. Each
partial prepayment shall be accompanied by the payment of all charges
outstanding on the LIBOR Rate Loan and of all accrued interest on the principal
repaid to the date of payment. Borrower acknowledges that prepayment
or acceleration of the LIBOR Rate Loan during an Interest Period shall result in
the Bank incurring additional costs, expenses and/or liabilities and that it is
extremely difficult and impractical to ascertain the extent of such costs,
expenses and/or liabilities. Therefore, all full or partial
prepayments of the LIBOR Rate Loan shall be accompanied by, and the Borrower
hereby promises to pay, on each date the LIBOR Rate Loan is prepaid or the date
all sums payable hereunder become due and payable, by acceleration or otherwise,
in addition to all other sums then owing, an amount (“LIBOR Rate Loan Prepayment
Fee”) determined by the Bank pursuant to the following formula:
the then
current rate for United States Treasury securities (bills on a discounted basis
shall be converted to a bond equivalent) with a maturity date closest to the end
of the Interest Period as to which prepayment is made, subtracted from the
LIBOR Lending Rate plus the Applicable Margin then applicable to the LIBOR Rate
Loan.
If the
result of the calculation in subsection 0 is zero or a negative number, then
there shall be no LIBOR Rate Loan Prepayment Fee. If the result of
this calculation is a positive number, then the resulting percentage shall be
multiplied by the amount of the LIBOR Rate Loan being prepaid. The resulting
amount shall be divided by 360 and multiplied by the number of days
remaining in the Interest Period as to which the prepayment is being
made. Said amount shall be reduced to present value calculated by
using the referenced United States Treasury securities rate and the number of
days remaining on the Interest Period for the LIBOR Rate Loan. The
resulting amount of these calculations shall be the LIBOR Rate Loan Prepayment
Fee.
Interest
Provisions.
Interest
on the outstanding principal amount of the Loan when classified as a: (i) LIBOR
Rate Loan shall accrue during each Interest Period at a rate equal to the sum of
the LIBOR Lending Rate for such Interest Period plus the Applicable Margin
thereto and be payable on each Interest Payment Date, (ii) LIBOR-Reference Banks
Rate Loan shall accrue during each Interest Period at a rate equal to the sum of
the LIBOR-Reference Banks Lending Rate for such Interest Period plus the
Applicable Margin thereto and be payable on each Interest Payment Date, and
(iii) Prime Rate Loan shall accrue during each Interest Period at a rate equal
to the Prime Rate and be payable on each Interest Payment
Date. Interest shall continue to accrue after maturity, acceleration,
and judgment at the rate required by Section 4.3 of the Credit Agreement until
this Note is paid in full.
- 45
-
LIBOR Rate Lending
Unlawful. If the Bank shall determine (which determination
shall, upon notice thereof to the Borrower be conclusive and binding on the
Borrower) that the introduction of or any change in or in the interpretation of
any law, rule, regulation or guideline, (whether or not having the force of law)
makes it unlawful, or any central bank or other governmental authority asserts
that it is unlawful, for the Bank to make, continue or maintain the Loan as, or
to convert the Loan into, a LIBOR Rate Loan, and if the Loan is then presently a
LIBOR Rate Loan, it shall automatically convert into a LIBOR-Reference Banks
Loan at the end of the then current Interest Period or sooner, if required by
such law or assertion. For purposes of this agreement, in the event
of such a conversion, all LIBOR-Reference Banks Rate Loans shall be treated
(except as to interest rate) as equivalent to a LIBOR Rate Loan of similar
amount and Interest Period. For greater certainty, all provisions of
this agreement relating to LIBOR Rate Loans shall apply equally to
LIBOR-Reference Banks Loans, including, but not limited to the manner in which
LIBOR-Reference Banks Loans are requested, continued, converted, the manner in
which interest accrues, is payable, principal payments are made, whether
voluntary or involuntary, as well as any penalties, increased costs or taxes
associated with any of the foregoing.
Substitute
Rate. If the Bank shall have determined that (i) US
dollar deposits in the relevant amount and for the relevant Interest Period are
not available to the Bank in the London interbank market; (ii) by reason of
circumstances affecting the Bank in the London interbank market, adequate means
do not exist for ascertaining the LIBOR Rate applicable hereunder to the LIBOR
Rate Loan, or (iii) the LIBOR Rate no longer adequately reflects the Bank’s cost
of funding the Loan, then, upon notice from the Bank to the Borrower, the LIBOR
Rate Loan shall automatically convert to a LIBOR-Reference Banks
Loan. During any such suspension, the Loan shall be classified as a
LIBOR-Reference Banks Loan.
Indemnities.
In
addition to the LIBOR Rate Loan Prepayment Fee, the Borrower agrees to reimburse
the Bank (without duplication) for any increase in the cost to the Bank, or
reduction in the amount of any sum receivable by the Bank, in respect, or as a
result of:
any
conversion or repayment or prepayment of the principal amount of the LIBOR Rate
Loan on a date other than the scheduled last day of the Interest Period
applicable thereto, whether pursuant to Section 0 above or
otherwise;
any costs
associated with marking to market any Hedging Obligations that (in the
reasonable determination of the Bank) are required to be terminated as a result
of any conversion, repayment or prepayment of the principal amount of the LIBOR
Rate Loan on a date other than the scheduled last day of the Interest Period
applicable thereto, whether pursuant to Section 0 above or
otherwise;
- 46
-
The Bank
shall promptly notify the Borrower in writing of the occurrence of any such
event, such notice to state, in reasonable detail, the reasons therefor and the
additional amount required fully to compensate the Bank for such increased cost
or reduced amount. Such additional amounts shall be payable by the
Borrower to the Bank within five days of its receipt of such notice, and such
notice shall, in the absence of manifest error, be conclusive and binding on the
Borrower. The Borrower understands, agrees and acknowledges the
following: (i) the Bank does not have any obligation to purchase, sell and/or
match funds in connection with the use of the LIBOR Rate as a basis for
calculating the rate of interest on the LIBOR Rate Loan, (ii) the LIBOR Rate may
be used merely as a reference in determining such rate, and (iii) the Borrower
has accepted the LIBOR Rate as a reasonable and fair basis for calculating such
rate, the LIBOR Rate Prepayment Fee, and other funding losses incurred by the
Bank. Borrower further agrees to pay the LIBOR Rate Prepayment Fee
and other funding losses, if any, whether or not the Bank elects to purchase,
sell and/or match funds.
Increased
Costs. If on or after the date hereof the adoption of any
applicable law, rule or regulation or guideline (whether or not having the force
of law), or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Bank with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency: (i)
shall subject the Bank to any tax, duty or other charge with respect to the
LIBOR Rate Loan or its obligation to make the LIBOR Rate Loan, or shall change
the basis of taxation of payments to the Bank of the principal of or interest on
the LIBOR Rate Loan or any other amounts due under this agreement in respect of
the LIBOR Rate Loan or its obligation to make the LIBOR Rate Loan (except for
the introduction of, or change in the rate of, tax on the overall net income of
the Bank or franchise taxes, imposed by the jurisdiction (or any political
subdivision or taxing authority thereof) under the laws of which the Bank is
organized or in which the Bank’s principal executive office is located); or (ii)
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement (including, without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System of the United States) against
assets of, deposits with or for the account of, or credit extended by, the Bank
or shall impose on the Bank or on the London interbank market any other
condition affecting the LIBOR Rate Loan or its obligation to make the LIBOR Rate
Loan; and the result of any of the foregoing is to increase the cost
to the Bank of making or maintaining the Loan as a LIBOR Rate Loan, or to reduce
the amount of any sum received or receivable by the Bank under this agreement
with respect thereto, by an amount deemed by the Bank to be material, then,
within 15 days after demand by the Bank, the Borrower shall pay to the Bank such
additional amount or amounts as will compensate the Bank for such increased cost
or reduction.
Increased Capital
Costs. If any change in, or the introduction, adoption,
effectiveness, interpretation, reinterpretation or phase-in of, any law or
regulation, directive, guideline, decision or request (whether or not having the
force of law) of any court, central bank, regulator or other governmental
authority affects or would affect the amount of capital required or expected to
be maintained by the Bank, or person controlling the Bank, and the Bank
determines (in its sole and absolute discretion) that the rate of return on its
or such controlling person’s capital as a consequence of its commitments or the
Loan made by the Bank is reduced to a level below that which the Bank or such
controlling person could have achieved but for the occurrence of any such
circumstance, then, in any such case upon notice from time to time by the Bank
to the Borrower, the Borrower shall immediately pay directly to the Bank
additional amounts sufficient to compensate the Bank or such controlling person
for such reduction in rate of return. A statement of the Bank as to
any such additional amount or amounts (including calculations thereof in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on the Borrower. In determining such amount, the Bank may use
any method of averaging and attribution that it (in its sole and absolute
discretion) shall deem applicable.
- 47
-
Taxes.
All
payments by the Borrower of principal of, and interest on, the LIBOR Rate Loan
and all other amounts payable hereunder shall be made free and clear of and
without deduction for any present or future income, excise, stamp or franchise
taxes and other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding franchise taxes and
taxes imposed on or measured by the Bank’s net income or receipts (such
non-excluded items being called “Taxes”). In the event that any
withholding or deduction from any payment to be made by the Borrower hereunder
is required in respect of any Taxes pursuant to any applicable law, rule or
regulation, then the Borrower will
pay
directly to the relevant authority the full amount required to be so withheld or
deducted;
promptly
forward to the Bank an official receipt or other documentation satisfactory to
the Bank evidencing such payment to such authority; and
pay to
the Bank such additional amount or amounts as is necessary to ensure that the
net amount actually received by the Bank will equal the full amount the Bank
would have received had no such withholding or deduction been
required.
Moreover,
if any Taxes are directly asserted against the Bank with respect to any payment
received by the Bank hereunder, the Bank may pay such Taxes and the Borrower
will promptly pay such additional amount (including any penalties, interest or
expenses) as is necessary in order that the net amount received by the Bank
after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount the Bank would have received had not such Taxes been
asserted.
- 48
-
If the
Borrower fails to pay any Taxes when due to the appropriate taxing authority or
fails to remit to the Bank the required receipts or other required documentary
evidence, the Borrower shall indemnify the Bank for any incremental Taxes,
interest or penalties that may become payable by the Bank as a result of any
such failure.
Events of Default.
This Note shall become immediately due and payable in full, without further
presentment, protest, notice, or demand, upon the happening of any Event of
Default.
Late
Charge. This Note is subject to the late charges provided for
in Section 4.4 of the Credit Agreement.
Maximum
Rate. All agreements between Borrower and Bank are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration or maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to Bank for the use or the
forbearance of the indebtedness evidenced hereby exceed the maximum permissible
under Applicable Law (the “Maximum Interest
Rate”). As used herein, the term “Applicable Law”
shall mean the law in effect as of the date hereof, provided, however that in
the event there is a change in the law which results in a higher permissible
rate of interest, then this Note and the Loan Documents shall be governed by
such new law as of its effective date. In this regard, it is
expressly agreed that it is the intent of Borrower and Bank in the execution,
delivery and acceptance of this Note to contract in strict compliance with the
laws of the State of New York from time to time in effect. If, under
or from any circumstances whatsoever, fulfillment of any provision hereof or of
any of the Loan Documents at the time performance of such provision shall be
due, shall involve transcending the limit of such validity prescribed by
applicable law, then the obligation to be fulfilled shall automatically be
reduced to the limits of such validity, and if under or from any circumstances
whatsoever Bank should ever receive as interest an amount which would exceed the
highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the principal balance evidenced hereby and not to
the payment of interest. This provision shall control every other
provision of all agreements between Borrower and Bank.
Business
Days. If this Note or any payment hereunder becomes due on a
day which is not a Business Day, the due date of this Note or payment shall be
extended to the next succeeding Business Day, and such extension of time shall
be included in computing interest and fees in connection with such
payment.
Entire
Agreement/Modification of Terms. This Note and the Loan
Documents are intended by the parties as the final, complete, and exclusive
statement of the transactions evidenced by this Note and the Loan
Documents. All prior or contemporaneous promises, agreements, and
understandings, whether oral or written, are deemed to be superseded by this
Note and the Loan Documents, and no party is relying on any promise, agreement,
or understanding not set forth in this Note and the Loan
Documents. This Note and the Loan Documents may not be amended or
modified except by a written instrument describing such amendment or
modification executed by the Borrower and the Bank. The terms of this
Note cannot be changed, nor may this Note be discharged in whole or in part,
except by a writing executed by Bank. In the event that Bank demands
or accepts partial payments of this Note, such demand or acceptance shall not be
deemed to constitute a waiver of the right to demand the entire unpaid balance
of this Note at any time in accordance with the terms hereof. Any
delay or omission by Bank in exercising any rights hereunder shall not operate
as a waiver of such rights.
- 49
-
Additional Security/Set
Off. The Borrower hereby grants to Bank a continuing lien,
security interest, and right of set off as security for all liabilities and
obligations to the Bank, whether now existing or hereafter arising, upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of Citizens Financial Group and its successors and assigns or in transit
to any of them. At any time without demand or notice (any such notice
being expressly waived by Borrower), Bank may set off the same or any part
thereof and apply the same to any liability or obligation of Borrower even
though unmatured and regardless of the adequacy of any other collateral securing
the obligation. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE
OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS, OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY,
VOLUNTARILY, AND IRREVOCABLY WAIVED.
Assignment/Participation.
All the
terms and provisions of this Note shall inure to the benefit of and be binding
upon and be enforceable by the parties and their respective successors and
assigns and shall inure to the benefit of and be enforceable by any holder
hereof.
Bank may
at any time pledge or assign all or any portion of its rights under this Note to
any of the twelve (12) Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or
assignment or enforcement thereof shall release Bank from its obligations under
any of the Loan Documents.
Bank
shall have the unrestricted right at any time or from time to time, and without
Borrower’s consent, to assign all or any portion of its rights and obligations
hereunder to one or more banks or other financial institutions (each an “Assignee”), and
Borrower agrees that it shall execute, or cause to be executed, such documents,
including without limitation, amendments to this Note and to any other Loan
Documents, as Bank shall deem necessary to effect the foregoing. In
addition, at the request of Bank and any such Assignee, Borrower shall issue one
or more new promissory notes, as applicable, to any such Assignee and, if Bank
has retained any of its rights and obligations hereunder following such
assignment, to Bank, which new promissory notes shall be issued in replacement
of, but not in discharge of, the liability evidenced by the promissory note held
by Bank prior to such assignment and shall reflect the amount of the respective
commitments and loans held by such Assignee and Bank after giving effect to such
assignment. Upon the execution and delivery of appropriate assignment
documentation, amendments, and any other documentation required by Bank in
connection with such assignment, and the payment by Assignee of the purchase
price agreed to by Bank and such Assignee, such Assignee shall be a party to
this agreement and shall have all of the rights and obligations of Bank
hereunder (and under any and all other Loan Documents) to the extent that such
rights and obligations have been assigned by Bank pursuant to the assignment
documentation between Bank and such Assignee, and Bank shall be released from
its obligations hereunder and thereunder to a corresponding extent.
- 50
-
Bank
shall have the unrestricted right at any time and from time to time, and without
the consent of or notice to Borrower, to grant to one or more banks or other
financial institutions (each a “Participant”)
participating interests in Bank’s obligation to lend hereunder and/or any or all
of the loans held by Bank hereunder. In the event of any such grant
by Bank of a participating interest to Participant, whether or not upon notice
to Borrower, Bank shall remain responsible for the performance of its
obligations hereunder and Borrower shall continue to deal solely and directly
with Bank in connection with Bank’s rights and obligations
hereunder.
Bank may
furnish any information concerning Borrower in its possession from time to time
to prospective Assignees and Participants, provided that Bank shall require any
such prospective Assignee or Participant to agree in writing to maintain the
confidentiality of such information.
Loss or
Mutilation. Upon receipt of an affidavit of an officer of Bank
as to the loss, theft, destruction, or mutilation of this Note or any other Loan
Document which is not of public record, and, in the case of any such loss,
theft, destruction or mutilation, upon cancellation of this Note or other Loan
Document, Borrower will issue, in lieu thereof, a replacement note or other Loan
Document in the same principal amount thereof and otherwise of like
tenor.
Enforcement/Waiver of Jury
Trial.
BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE OR ANY OF THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL
COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH
COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER BY MAIL
AT THE ADDRESS FIRST SET FORTH ABOVE IN THIS NOTE. BORROWER HEREBY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
FORUM.
BORROWER
AND BANK (BY ACCEPTANCE OF THIS NOTE) MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN
DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING WITHOUT LIMITATION, ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF BANK RELATING TO
THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE
THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT
AS PROHIBITED BY LAW, BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR
ATTORNEY OF BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BANK TO
ACCEPT THIS AGREEMENT AND MAKE THE LOANS CONTEMPLATED HEREUNDER.
- 51
-
Miscellaneous.
To the
fullest extent permissible by law, Borrower waives presentment, demand for
payment, protest, notice of nonpayment, and all other demands or notices
otherwise required by law in connection with the delivery, acceptance,
performance, default, or enforcement of this Note. Borrower consents
to extensions, postponements, indulgences, amendments to notes and agreements,
substitutions or releases of collateral, and substitutions or releases of other
parties primarily or secondarily liable herefor, and agrees that none of the
same shall affect Borrower’s obligations under this Note which shall be
unconditional.
This Note
and the Loan Documents are intended by the parties as the final, complete and
exclusive statement of the transactions evidenced by this Note and the Loan
Documents. All prior or contemporaneous promises, agreements, and
understandings, whether oral or written, are deemed to be superseded by this
Note and the Loan Documents, and no party is relying on any promise, agreement,
or understanding not set forth in this Note and the Loan
Documents. This Note may not be amended or modified except by a
written instrument describing such amendment or modification executed by the
Borrower and the Bank.
No
portion of the proceeds of this Note shall be used, in whole or in part, for the
purpose of purchasing or carrying any “margin stock” as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve
System.
- 52
-
This Note
and the Loan Documents, and the rights and obligations of the parties hereunder,
shall be construed, interpreted, governed and enforced in accordance with the
internal laws of the State of New York (excluding the laws applicable to
conflicts or choice of law).
PREMIER
PACKAGING CORPORATION
By:
Name:
Title:
|
STATE
OF NEW YORK
|
)
|
|
|
COUNTY
OF MONROE
|
)
|
ss.:
|
On the
12th day of February , in the year 2010, before me, the undersigned, a Notary
Public in and for said State, personally appeared personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her capacity, and that by his/her signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.
Notary
Public
- 53
-
SCHEDULE
A
[Principal
Repayment Schedule]
|
Payment
No.
|
Principal
Payment
Date
|
Principal
Payment
Amount
|
|
1
|
4/1/2010
|
$25,000.00
|
|
2
|
5/1/2010
|
$25,000.00
|
|
3
|
6/1/2010
|
$25,000.00
|
|
4
|
7/1/2010
|
$25,000.00
|
|
5
|
8/1/2010
|
$25,000.00
|
|
6
|
9/1/2010
|
$25,000.00
|
|
7
|
10/1/2010
|
$25,000.00
|
|
8
|
11/1/2010
|
$25,000.00
|
|
9
|
12/1/2010
|
$25,000.00
|
|
10
|
1/1/2010
|
$25,000.00
|
|
11
|
2/1/2011
|
$25,000.00
|
|
12
|
3/1/2011
|
$25,000.00
|
|
13
|
4/1/2011
|
$25,000.00
|
|
14
|
5/1/2011
|
$25,000.00
|
|
15
|
6/1/2011
|
$25,000.00
|
|
16
|
7/1/2011
|
$25,000.00
|
|
17
|
8/1/2011
|
$25,000.00
|
|
18
|
9/1/2011
|
$25,000.00
|
|
19
|
10/1/2011
|
$25,000.00
|
|
20
|
11/1/2011
|
$25,000.00
|
|
21
|
12/1/2011
|
$25,000.00
|
|
22
|
1/1/2011
|
$25,000.00
|
|
23
|
2/1/2012
|
$25,000.00
|
|
24
|
3/11/2012
|
$25,000.00
|
|
25
|
4/1/2012
|
$25,000.00
|
|
26
|
5/1/2012
|
$25,000.00
|
|
27
|
6/1/2012
|
$25,000.00
|
|
28
|
7/1/2012
|
$25,000.00
|
|
29
|
8/1/2012
|
$25,000.00
|
|
30
|
9/1/2012
|
$25,000.00
|
|
31
|
10/1/2012
|
$25,000.00
|
|
32
|
11/1/2012
|
$25,000.00
|
|
33
|
12/1/2012
|
$25,000.00
|
|
34
|
1/1/2012
|
$25,000.00
|
|
35
|
2/1/2013
|
$25,000.00
|
|
36
|
3/1/2013
|
$625,000.00
|
- 54
-
EXHIBIT
C
(FORM OF
BORROWING BASE CERTIFICATE)
- 55
-
BORROWING
BASE CERTIFICATE
RBS
Citizens, N.A.
Commercial
Lending
000 Xxxx
Xxxxxx
Xxxxxxxxx,
Xxx Xxxx 00000
Attn.:
Xxxxxxx X. Xxxxx
Re: Premier
Packaging Corporation
This
certificate is submitted by the undersigned (hereinafter the
“Company”).
The
Company hereby certifies to the RBS Citizens, N.A. (the “Bank”) that the
following information is true, accurate and complete as of February 12, 2010
(the “Reporting Date”). The Company further certifies that as of the
Reporting Date, no default has occurred, exists or to the knowledge of the
Company, will exist in the future, with the passage of time or otherwise, under
the Credit Agreement, as amended, by and between the Company and the
Bank.
|
|
I.
|
Company’s
Eligible Accounts Receivable
|
(as
defined in the Credit
Agreement): $______________________
65% of Eligible Accounts Receivable
=
$_____________________
II. Outstanding
Letters of
Credit:
$_____________________
II. Borrowing
Base
=
$______________________
(I –
II)
Premier
Packaging Corporation
By:
Name:
Title:
- 56 -
