LOAN
AND SECURITY AGREEMENT
This Loan
and Security Agreement dated July 28, 2008 is entered into by and among KINERGY
MARKETING LLC, an Oregon limited liability company (“Borrower” as hereinafter
further defined), the parties hereto from time to time as lenders, whether by
execution of this Agreement or an Assignment and Acceptance (each individually,
a “Lender” and collectively, “Lenders” as hereinafter further defined), WACHOVIA
BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as
Issuing Bank, and WACHOVIA CAPITAL FINANCE CORPORATION (WESTERN), a California
corporation, in its capacity as agent for Lenders (in such capacity, “Agent” as
hereinafter further defined).
W I T N E S S E T
H:
WHEREAS,
Borrower has requested that Agent, Issuing Bank and Lenders enter into financing
arrangements with Borrower pursuant to which Lenders may make loans and provide
other financial accommodations to Borrower; and
WHEREAS,
Issuing Bank and each Lender are willing to agree (severally and not jointly) to
make such loans and provide such financial accommodations to Borrower on a pro rata basis according
to its Commitment (as defined below) on the terms and conditions set forth
herein and Agent is willing to act as agent for Lenders on the terms and
conditions set forth herein and the other Financing Agreements;
NOW,
THEREFORE, in consideration of the mutual conditions and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
For
purposes of this Agreement, the following terms shall have the respective
meanings given to them below:
1.1 “Accounts”
shall mean, all present and future rights of Borrower to payment of a monetary
obligation, whether or not earned by performance, which is not evidenced by
chattel paper or an instrument, (a) for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of, (b) for services rendered
or to be rendered, (c) for a secondary obligation incurred or to be incurred, or
(d) arising out of the use of a credit or charge card or information contained
on or for use with the card.
1.2 “Adjusted
Eurodollar Rate” shall mean, with respect to each Interest Period for any
Eurodollar Rate Loan comprising part of the same borrowing (including
conversions, extensions and renewals), the rate per annum determined by dividing
(a) the London Interbank Offered Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve
Percentage. For purposes hereof, “Reserve Percentage” shall mean for
any day, that percentage (expressed as a decimal) which is in effect from time
to time under Regulation D of the Board of Governors of the Federal Reserve
System (or any successor), as such regulation may be amended from time to time
or any successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or marginal
reserves) applicable with respect to Eurocurrency liabilities as that term is
defined in Regulation D (or against any other category of liabilities that
includes deposits by reference to which the interest rate of Eurodollar Loans is
determined), whether or not any Lender has any Eurocurrency liabilities subject
to such reserve requirement at that time. Eurodollar Loans shall be
deemed to constitute Eurocurrency liabilities and as such shall be deemed
subject to reserve requirements without benefits of credits for proration,
exceptions or offsets that may be available from time to time to a
Lender. The Adjusted Eurodollar Rate shall be adjusted automatically
on and as of the effective date of any change in the Reserve
Percentage.
1.3 “Affiliate”
shall mean, with respect to a specified Person, any other Person which directly
or indirectly, through one or more intermediaries, controls or is controlled by
or is under common control with such Person, and without limiting the generality
of the foregoing, includes (a) any Person which beneficially owns or holds ten
(10%) percent or more of any class of Voting Stock of such Person or other
equity interests in such Person,(b) any Person of which such Person beneficially
owns or holds ten (10%) percent or more of any class of Voting Stock or in which
such Person beneficially owns or holds ten (10%) percent or more of the equity
interests and (c)any director or executive officer of such
Person. For the purposes of this definition, the term “control”
(including with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.
1.4 “Agent”
shall mean Wachovia Capital Finance Corporation (Western), in its capacity as
agent on behalf of Lenders pursuant to the terms hereof and any replacement or
successor agent hereunder.
1.5 “Agent
Payment Account” shall mean account no. 5000000030321 of Agent at Wachovia Bank,
National Association or such other account of Agent as Agent may from time to
time designate to Borrower as the Agent Payment
Account for purposes of this Agreement and the other Financing
Agreements.
1.6 “Applicable
Margin” shall mean:
(a) Subject
to clause (b) below, at any time, as to the Interest Rate for Prime Rate Loans
and the Interest Rate for Eurodollar Rate Loans, the applicable percentage (on a
per annum basis) set forth below if the EBITDA is at or within the amounts
indicated for such percentage:
|
Tier
|
Borrower’s
EBITDA
|
Applicable
Margin for
Eurodollar
Rate Loans
|
Applicable
Margin
for
Prime Rate Loans
|
|
1
|
Greater
than $3,000,000
|
2.00%
|
0.00%
|
|
2
|
Less
than or equal to $3,000,000 and greater than $2,000,000
|
2.25%
|
0.00%
|
|
3
|
Less
than or equal to $2,000,000
|
2.50%
|
0.25%
|
(b) Notwithstanding
anything to the contrary set forth above, (i) the Applicable Margin shall be
calculated and established once each fiscal quarter based upon the EBITDA for
such fiscal quarter and shall remain in effect until adjusted thereafter after
the end of such fiscal quarter, (ii) each adjustment of the Applicable Margin
shall be effective as of the first day of a fiscal quarter based on the EBITDA
for the immediately preceding fiscal quarter, and (iii) until Agent and Lenders
receive the Borrower’s audited financial statements required to be delivered
under Section 9.6(a)(iii) for the Borrower’s fiscal year ending December 31,
2008, the Applicable Margin shall be the amount for Tier 2 set forth
above. In the event that at any time after the end of a fiscal
quarter the EBITDA for such fiscal quarter used for the determination of the
Applicable Margin was greater than the actual amount of the EBITDA for such
fiscal quarter, the Applicable Margin for such prior fiscal quarter shall be
adjusted to the applicable percentage based on such actual EBITDA and any
additional interest for the applicable period as a result of such recalculation
shall be promptly paid to Agent. In the event that the EBITDA for
such fiscal quarter used for the determination of the Applicable Margin was less
than the actual amount of the EBITDA, the Applicable Margin for such prior
fiscal quarter shall be adjusted to the applicable percentage based on such
actual EBITDA and any reduction in interest for the applicable period as a
result of such recalculation shall be promptly credited to the loan account of
the Borrower; provided, that, the basis for
the EBITDA for purposes of the determination of the Borrowing Base having been
less than the actual EBITDA is not as a result of information provided by
Borrower or Guarantors to Agent. The foregoing shall not be construed
to limit the rights of Agent or Lenders with respect to the amount of interest
payable after a Default or Event of Default whether based on such recalculated
percentage or otherwise.
1.7 “Assignment
and Acceptance” shall mean an Assignment and Acceptance substantially in the
form of Exhibit A attached hereto (with blanks appropriately completed)
delivered to Agent in connection with an assignment of a Lender’s interest
hereunder in accordance with the provisions of Section 13.7 hereof.
1.8 “Bank
Product Provider” shall mean any Lender or Affiliate of any Lender (in each case
as to any such Lender or Affiliate of any such Lender to the extent approved by
Agent) that provides any Bank Products to Borrower or Guarantors (other than
Parent).
1.9 “Bank
Products” shall mean any one or more of the following types or services or
facilities provided to Borrower by a Bank Product Provider: (a) credit cards or
stored value cards or (b) cash management or related services, including (i) the
automated clearinghouse transfer of funds for the account of Borrower pursuant
to agreement or overdraft for any accounts of Borrower maintained at Agent or
any Bank Product Provider that are subject to the control of Agent pursuant to
any Deposit Account Control Agreement to which Agent or such Bank Product
Provider is a party, as applicable, and (ii) controlled disbursement services
and (c) Hedge Agreements if and to the extent permitted
hereunder. Any of the foregoing shall only be included in the
definition of the term “Bank Products” to the extent that the Bank
Product Provider has been approved by Agent.
1.10 “Blocked
Accounts” shall have the meaning set forth in Section 6.3 hereof.
1.11 “Borrower”
shall mean Kinergy Marketing LLC, an Oregon limited liability company, together
with its successors and assigns.
1.12 “Borrowing
Base” shall mean, at any time, the amount equal to:
(a) the sum
of:
(i) eighty-five
(85%) percent of the Eligible Accounts plus
(ii) the
lesser of (A) the Inventory Loan Limit or (B) seventy (70%) percent multiplied
by the Value of the Eligible Inventory consisting of ethanol and biodiesel
finished goods or (C) eighty-five (85%) percent of the Net Recovery Percentage
multiplied by the Value of such Eligible Inventory consisting of ethanol and
biodiesel finished goods, minus
(b) Reserves.
For
purposes only of applying the Inventory Loan Limit, Agent may treat the then
undrawn amounts of outstanding Letters of Credit for the purpose of purchasing
Eligible Inventory as Revolving Loans to the extent Agent is in effect basing
the issuance of the Letter of Credit on the Value of the Eligible Inventory
being purchased with such Letter of Credit. In determining the actual
amounts of such Letter of Credit to be so treated for purposes of the sublimit,
the outstanding Revolving Loans and Reserves shall be attributed first to any
components of the lending formulas set forth above that are not subject to such
sublimit, before being attributed to the components of the lending formulas
subject to such sublimit. The amounts of Eligible Inventory shall, at
Agent’s option, be determined based on the lesser of the amount of Inventory set
forth in the general ledger of Borrower or the perpetual inventory record (if
applicable) maintained by Borrower.
1.13 “Borrowing
Base Certificate” shall mean a certificate substantially in the form of Exhibit
D hereto, as such form may from time to time be modified by Agent in a manner
consistent with the terms of this Agreement, which is duly completed (including
all schedules thereto) and executed by the vice-president-finance, chief
financial officer, treasurer, assistant treasurer, controller or other financial
or senior officer of Borrower and delivered to Agent.
1.14 “Business
Day” shall mean any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized or required to close under the laws of the State
of California or the State of North Carolina, and a day on which Agent is open
for the transaction of business; except, that, if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market or other applicable
Eurodollar Rate market.
1.15 “Capital
Expenditures” means all payments or accruals (including Capital Lease
Obligations) for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.
1.16 “Capital
Leases” shall mean, as applied to any Person, any lease of (or any agreement
conveying the right to use) any property (whether real, personal or mixed) by
such Person as lessee which in accordance with GAAP, is required to be reflected
as a liability on the balance sheet of such Person.
1.17 “Capital
Stock” shall mean, with respect to any Person, any and all shares, interests,
participations or other equivalents (however designated) of such Person’s
capital stock or partnership, limited liability company or other equity
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).
1.18 “Cash
Equivalents” shall mean, at any time, (a) any evidence of Indebtedness with a
maturity date of ninety (90) days or less issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof; provided, that, full faith and
credit of the United States of America is pledged in support thereof; (b)
certificates of deposit or bankers’ acceptances with a maturity of ninety (90)
days or less of any financial institution that is a member of the Federal
Reserve System having combined capital and surplus and undivided profits of not
less than $1,000,000,000; (c) commercial paper (including variable rate demand
notes) with a maturity of ninety (90) days or less issued by a corporation
(except an Affiliate of Borrower) organized under the laws of any State of the
United States of America or the District of Columbia and rated at least A-1 by
Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies,
Inc. or at least P-1 by Moody’s Investors Service, Inc.; (d) repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (a) above entered into with any
financial institution having combined capital and surplus and undivided profits
of not less than $1,000,000,000; (e) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States of America or issued by any
governmental agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within ninety (90) days or less
from the date of acquisition; provided, that, terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985; and (f)
investments in money market funds and mutual funds which invest substantially
all of their assets in securities of the types described in clauses (a) through
(e) above.
1.19 “Change
of Control” shall mean (a) the transfer (in one transaction or a series of
transactions) of all or substantially all of the assets of Borrower or any
Obligor (other than Parent) to any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act), other than as permitted in Section 9.7
hereof; (b) the liquidation or dissolution of Borrower or any Obligor (other
than Parent) or the adoption of a plan by the stockholders of Borrower or any
Obligor (other than Parent) relating to the dissolution or liquidation of
Borrower or any Obligor (other than Parent), other than as permitted in Section
9.7 hereof; (c) the acquisition by any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act), except for Parent, of beneficial
ownership, directly or indirectly, of a majority of the voting power of the
total outstanding Voting Stock of Borrower or any Guarantor (other than Parent)
or the Board of Directors (or similar governing authority) of Borrower or any
Guarantor (other than Parent); or (d) the failure of Parent to own directly or
indirectly one hundred (100%) percent of the voting power of the total
outstanding Voting Stock of Borrower.
1.20 “Code”
shall mean the Internal Revenue Code of 1986, as the same now exists or may from
time to time hereafter be amended, modified, recodified or supplemented,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.21 “Collateral”
shall have the meaning set forth in Section 5 hereof.
1.22 “Collateral
Access Agreement” shall mean an agreement in writing, in form and substance
reasonably satisfactory to Agent, from any lessor of premises to Borrower, or
any other person to whom any Collateral is consigned or who has custody, control
or possession of any such Collateral or is otherwise the owner or operator of
any premises on which any of such Collateral is located, in favor of Agent with
respect to the Collateral at such premises or otherwise in the custody, control
or possession of such lessor, consignee or other person.
1.23 “Commitment”
shall mean, at any time, as to each Lender, the principal amount set forth below
such Lender’s signature on the signatures pages hereto designated as the
Commitment or on Schedule 1 to the Assignment and Acceptance Agreement pursuant
to which such Lender became a Lender hereunder in accordance with the provisions
of Section 13.7 hereof, as the same may be adjusted from time to time in
accordance with the terms hereof; sometimes being collectively referred to
herein as “Commitments”.
1.24 “Consolidated
Net Income” shall mean, with respect to any Person, for any period, the
aggregate of the net income (loss) of such Person and its Subsidiaries, on a
consolidated basis, for such period, excluding to the extent included therein
any extraordinary, one-time or non-recurring gains, after deducting all charges
which should be deducted before arriving at the net income (loss) for such
period and after deducting the Provision for Taxes for such period, all as
determined in accordance with GAAP; provided, that, (a) the net
income (loss) of any Person that is not a majority-owned Subsidiary or that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid or payable to such
Person or a majority-owned Subsidiary of such Person; (b) the effect of any
change in accounting principles adopted by (or applicable to) such Person or its
Subsidiaries after the date hereof (including any cumulative effects resulting
from changes in purchase accounting principles) shall be excluded; and (c) the
net income (if positive) of any majority-owned Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
majority-owned Subsidiary to such Person or to any other majority-owned
Subsidiary of such Person is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to such majority-owned Subsidiary
shall be excluded. For the purpose of this definition, net income
excludes any gain together with any related Provision for Taxes for such gain
realized upon the sale or other disposition of any assets or of any Capital
Stock of such Person or a Subsidiary of such Person.
1.25 “Credit
Facility” shall mean the Loans and Letters of Credit provided to or for the
benefit of Borrower pursuant to Sections 2.1 and 2.2 hereof.
1.26 “Default”
shall mean an act, condition or event which with notice or passage of time or
both would constitute an Event of Default.
1.27 “Defaulting
Lender” shall have the meaning set forth in Section 6.10 hereof.
1.28 “Deposit
Account Control Agreement” shall mean an agreement in writing, in form and
substance satisfactory to Agent, by and among Agent, Borrower and any bank at
which a deposit account is at any time maintained by Borrower, which provides
that such bank will comply with instructions originated by Agent directing
disposition of the funds in the deposit account without further consent by
Borrower and has such other terms and conditions as Agent may reasonably
require.
1.29 “EBITDA”
shall mean, as to any Person, with respect to any period, an amount equal to:
(a) the Consolidated Net Income of such Person and its Subsidiaries for such
period, plus
(b) depreciation and amortization (including amortization of deferred financing
fees), non-cash impairment charges, imputed interest and deferred compensation
for such period (all to the extent deducted in the computation of Consolidated
Net Income of such Person), all in accordance with GAAP, plus (c) Interest
Expense for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), plus (d) the
Provision for Taxes for such period (to the extent deducted in the computation
of Consolidated Net Income of such Person).
1.30 “Eligible
Accounts” shall mean Accounts created by Borrower that in each case satisfy the
criteria set forth below as determined by Agent in good faith and in the
exercise of its reasonable credit judgment. In general, Accounts
shall be Eligible Accounts if:
(a) such
Accounts arise from the actual and bona fide sale and
delivery of goods by Borrower or rendition of services by Borrower in the
ordinary course of its business which transactions are completed in accordance
with the terms and provisions contained in any documents related
thereto;
(b) such
Accounts are not unpaid more than the earlier of thirty (30) days after the
original due date for such Accounts or forty-five (45) days after the date of
the original invoice for them; except, that, (i) for the thirty (30) day period
immediately following the date hereof, Accounts which are unpaid more than
fifteen (15) days after the original due date for such Accounts but which are
not unpaid more than thirty (30) days after the original due date may be
considered Eligible Accounts; provided, that, the maximum
aggregate amount of such Accounts which may be considered Eligible Accounts
during such period shall not exceed twenty percent (20%) of all Eligible
Accounts in the aggregate, and (ii) from and after the thirty (30) day period
immediately following the date hereof, Accounts which are unpaid more than
fifteen (15) days after the original due date for such Accounts but which are
not unpaid more than thirty (30) days after the original due date may be
considered Eligible Accounts; provided, that, the maximum
aggregate amount of such Accounts which may be considered Eligible Accounts at
any given time shall not exceed twenty percent (20%) of all Eligible
Accounts;
(c) such
Accounts comply with the terms and conditions contained in Section 7.2(b) of
this Agreement;
(d) such
Accounts do not arise from sales on consignment, guaranteed sale, sale and
return, sale on approval, or similar terms under which payment by the account
debtor may be conditional or contingent;
(e) the chief
executive office of the account debtor with respect to such Accounts is located
in the United States of America or Canada (provided, that, at any time
promptly upon Agent’s request, Borrower shall execute and deliver, or cause to
be executed and delivered, such other agreements, documents and instruments as
may be reasonably required by Agent to perfect the security interests of Agent
in those Accounts of an account debtor with its chief executive office or
principal place of business in Canada in accordance with the applicable laws of
the Province of Canada in which such chief executive office or principal place
of business is located and take or cause to be taken such other and further
actions as Agent may reasonably request to enable Agent as secured party with
respect thereto to collect such Accounts under the applicable Federal or
Provincial laws of Canada) or, at Agent’s option, if the chief executive office
and principal place of business of the account debtor with respect to such
Accounts is located other than in the United States of America or Canada, then
if: (i) the account debtor has delivered to Borrower an irrevocable
letter of credit issued or confirmed by a bank reasonably satisfactory to Agent
and payable only in the United States of America and in U.S. dollars, sufficient
to cover such Account, in form and substance reasonably satisfactory to Agent
and if required by Agent, the original of such letter of credit has been
delivered to Agent or Agent’s agent and the issuer thereof, and Borrower has
complied with the terms of Section 5.2(f) hereof with respect to the assignment
of the proceeds of such letter of credit to Agent or naming Agent as transferee
beneficiary thereunder, as Agent may specify, or (ii) such Account is
subject to credit insurance payable to Agent issued by an insurer and on terms
and in an amount reasonably acceptable to Agent, or (iii) such Account is
otherwise reasonably acceptable in all respects to Agent (subject to such
lending formula with respect thereto as Agent may determine in good faith and in
the exercise of its reasonable credit judgment);
(f) such
Accounts do not consist of progress billings (such that the obligation of the
account debtors with respect to such Accounts is conditioned upon Borrower’s
satisfactory completion of any further performance under the agreement giving
rise thereto), bill and hold invoices or retainage invoices, except as to bill
and hold invoices, if Agent shall have received an agreement in writing from the
account debtor, in form and substance reasonably satisfactory to Agent,
confirming the unconditional obligation of the account debtor to take the goods
related thereto and pay such invoice;
(g) the
account debtor with respect to such Accounts has not asserted a counterclaim,
defense or dispute and is not owed or does not claim to be owed any amounts that
may give rise to any right of setoff or recoupment against such Accounts (but
the portion of the Accounts of such account debtor in excess of the amount at
any time and from time to time owed by Borrower to such account debtor or
claimed owed by such account debtor may be deemed Eligible
Accounts);
(h) there are
no facts, events or occurrences which would impair the validity, enforceability
or collectability of such Accounts or reduce the amount payable or delay payment
thereunder;
(i) such
Accounts are subject to the first priority, valid and perfected security
interest of Agent and any goods giving rise thereto are not, and were not at the
time of the sale thereof, subject to any liens except those permitted in this
Agreement that are subject to an intercreditor agreement in form and substance
satisfactory to Agent between the holder of such security interest or lien and
Agent;
(j) neither
the account debtor nor any officer or employee of the account debtor with
respect to such Accounts is an officer, employee, agent or other Affiliate of
Borrower or any Obligor;
(k) the
account debtors with respect to such Accounts are not any foreign government,
the United States of America, any State, political subdivision, department,
agency or instrumentality thereof, unless, if the account debtor is the United
States of America, any State, political subdivision, department, agency or
instrumentality thereof, upon Agent’s request, the Federal Assignment of Claims
Act of 1940, as amended or any similar State or local law, if applicable, has
been complied with in a manner satisfactory to Agent;
(l) there are
no proceedings or actions which are threatened or pending against the account
debtors with respect to such Accounts which might result in any material adverse
change in any such account debtor’s financial condition (including, without
limitation, any bankruptcy, dissolution, liquidation, reorganization or similar
proceeding);
(m) (i) the
aggregate amount of such Accounts owing by a single account debtor (other than
Royal Dutch Shell plc, Sinclair Oil Corporation, Flying J, Inc., Valero Energy
Corporation, Tesoro Corporation, Chevron Corporation, and ConocoPhillips
Company) do not constitute more than twenty (20%) percent of the aggregate
amount of all otherwise Eligible Accounts, (ii) the aggregate amount of such
Accounts owing by any of Royal Dutch Shell plc, Sinclair Oil Corporation or
Flying J, Inc. do not constitute more than twenty-five (25%) percent of the
aggregate amount of all otherwise Eligible Accounts, (iii) the aggregate amount
of such Accounts owing by any of Valero Energy Corporation or Tesoro Corporation
do not constitute more than thirty (30%) percent of the aggregate amount of all
otherwise Eligible Accounts, and (iv) the aggregate amount of such Accounts
owing by any of Chevron Corporation or ConocoPhillips Company do not constitute
more than forty (40%) percent of the aggregate amount of all otherwise Eligible
Accounts (but the portion of the Accounts not in excess of the applicable
percentages set forth above may be deemed Eligible Accounts);
(n) such
Accounts are not unpaid more than the earlier of thirty (30) days after the
original due date for such Accounts or forty-five (45) days after the date of
the original invoice for them; except, that, (i) for the thirty (30) day period
immediately following the date hereof, Accounts which are unpaid more than
fifteen (15) days after the original due date for such Accounts but which are
not unpaid more than thirty (30) days after the original due date may be
considered Eligible Accounts; provided, that, the maximum
aggregate amount of such Accounts which may be considered Eligible Accounts
during such period shall not exceed twenty percent (20%) of all Eligible
Accounts in the aggregate, and (ii) from and after the thirty (30) day period
immediately following the date hereof, Accounts which are unpaid more than
fifteen (15) days after the original due date for such Accounts but which are
not unpaid more than thirty (30) days after the original due date may be
considered Eligible Accounts; provided, that, the maximum
aggregate amount of such Accounts which may be considered Eligible Accounts at
any given time shall not exceed twenty percent (20%) of all Eligible Accounts,
which, in each case, constitute more than fifty (50%) percent of the total
Accounts of such account debtor;
(o) the
account debtor is not located in a state requiring the filing of a Notice of
Business Activities Report or similar report in order to permit Borrower to seek
judicial enforcement in such State of payment of such Account, unless Borrower
has qualified to do business in such state or has filed a Notice of Business
Activities Report or equivalent report for the then current year or such failure
to file and inability to seek judicial enforcement is capable of being remedied
without any material delay or material cost;
(p) such
Accounts are owed by account debtors whose total indebtedness to Borrower does
not exceed the credit limit with respect to such account debtors as determined
by Borrower from time to time, to the extent such credit limit as to any account
debtor is established consistent with the current practices of Borrower as of
the date hereof and such credit limit is reasonably acceptable to Agent (but the
portion of the Accounts not in excess of such credit limit may be deemed
Eligible Accounts); and
(q) such
Accounts are owed by account debtors deemed creditworthy at all times by Agent
in good faith and in the exercise of its reasonable credit
judgment.
The
criteria for Eligible Accounts set forth above may only be changed and any new
criteria for Eligible Accounts may only be established by Agent in good faith
and in the exercise of its reasonable credit judgment based on
either: (i) an event, condition or other circumstance arising after
the date hereof, or (ii) an event, condition or other circumstance existing on
the date hereof to the extent Agent has no written notice thereof from Borrower
prior to the date hereof, in either case under clause (i) or (ii) which
adversely affects or could reasonably be expected to adversely affect the
Accounts in the good faith determination of Agent based upon the exercise of its
reasonable credit judgment. Any Accounts that are not Eligible
Accounts shall nevertheless be part of the Collateral.
1.31 “Eligible
Inventory” shall mean, Inventory consisting of finished goods held for resale in
the ordinary course of the business of Borrower, that in each case satisfy the
criteria set forth below as determined by Agent in good faith and in the
exercise of its reasonable credit judgment. In general, Eligible
Inventory shall not include: (a) raw materials and work in process, (b)
components which are not part of finished goods; (c) spare parts for equipment;
(d) packaging and shipping materials; (e) supplies used or consumed in
Borrower’s business; (f) Inventory at premises other than those owned or leased
and controlled by Borrower unless Agent has received a Collateral Access
Agreement; (g) Inventory subject to a security interest or lien in favor of any
Person other than Agent except those permitted in this Agreement that are
subject to an intercreditor agreement in form and substance satisfactory to
Agent between the holder of such security interest or lien and Agent; (h) bill
and hold goods; (i) unserviceable, obsolete or slow moving Inventory; (j)
Inventory that is not subject to the first priority, valid and perfected
security interest of Agent; (k) damaged and/or defective Inventory or returned
Inventory to the extent that such returned Inventory remains subject to an
Account deemed to be an Eligible Account hereunder; (l) Inventory purchased or
sold on consignment; (m) in-transit inventory other than Eligible In-Transit
Inventory and (n) Inventory located outside the United States of
America. The criteria for Eligible Inventory set forth above may only
be changed and any new criteria for Eligible Inventory may only be established
by Agent in good faith and in the exercise of its reasonable credit judgment
based on either: (i) an event, condition or other circumstance
arising after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from Borrower prior to the date hereof, in either case under clause (i) or (ii)
which adversely affects or could reasonably be expected to adversely affect the
Inventory in the good faith determination of Agent based upon the exercise of
its reasonable credit judgment. Any Inventory that is not Eligible
Inventory shall nevertheless be part of the Collateral.
1.32 “Eligible
In-Transit Inventory” means all ethanol and biodiesel finished goods Inventory
owned by Borrower and not covered by Letters of Credit, and which Inventory is
in transit to one of the Borrower’s facilities or in transit to a customer and
which Inventory (a) has been paid for and is owned by Borrower, (b) is fully
insured, (c) is subject to a first priority security interest in and lien upon
such goods in favor of Agent (except for any possessory lien upon such goods in
the possession of a freight carrier or shipping company securing only the
freight charges for the transportation of such goods to Borrower), (d) is
evidenced or deliverable pursuant to documents that have been delivered to Agent
or an agent acting on its behalf or designating Agent as consignee (in each case
if requested by Agent), and (e) is otherwise deemed to be “Eligible Inventory”
hereunder.
1.33 “Eligible
Transferee” shall mean (a) any Lender; (b) the parent company of any Lender
and/or any Affiliate of such Lender which is at least fifty (50%) percent owned
by such Lender or its parent company; (c) any person (whether a corporation,
partnership, trust or otherwise) that is engaged in the business of making,
purchasing, holding or otherwise investing in bank loans and similar extensions
of credit in the ordinary course of its business and is administered or managed
by a Lender or with respect to any Lender that is a fund which invests in bank
loans and similar extensions of credit, any other fund that invests in bank
loans and similar extensions of credit and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor, and in
each case is approved by Agent; and (d) any other commercial bank, financial
institution or “accredited investor” (as defined in Regulation D under the
Securities Act of 1933) approved by Agent; provided, that, (i) neither
Borrower nor any Obligor or any Affiliate of Borrower or any Obligor shall
qualify as an Eligible Transferee and (ii) no Person to whom any Indebtedness
which is in any way subordinated in right of payment to any other Indebtedness
of Borrower or Obligor shall qualify as an Eligible Transferee, except as Agent
may otherwise specifically agree.
1.34 “Environmental
Laws” shall mean all foreign, Federal, State and local laws (including common
law), legislation, rules, codes, licenses, permits (including any conditions
imposed therein), authorizations, judicial or administrative decisions,
injunctions or agreements between Borrower and any Governmental Authority, (a)
relating to pollution and the protection, preservation or restoration of the
environment (including air, water vapor, surface water, ground water, drinking
water, drinking water supply, surface land, subsurface land, plant and animal
life or any other natural resource), or to human health or safety, (b) relating
to the exposure to, or the use, storage, recycling, treatment, generation,
manufacture, processing, distribution, transportation, handling, labeling,
production, release or disposal, or threatened release, of Hazardous Materials,
or (c) relating to all laws with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous
Materials. The term “Environmental Laws” includes (i) the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Federal Superfund Amendments and Reauthorization Act, the Federal Water
Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean
Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including
the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste
Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974,
(ii) applicable state counterparts to such laws and (iii) any common law or
equitable doctrine that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or exposure to any
Hazardous Materials.
1.35 “Equipment”
shall mean all of Borrower’s now owned and hereafter acquired equipment,
wherever located, including machinery, data processing and computer equipment
(whether owned or licensed and including embedded software), vehicles, tools,
furniture, fixtures, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.
1.36 “ERISA”
shall mean the Employee Retirement Income Security Act of 1974, together with
all rules, regulations and interpretations thereunder or related
thereto.
1.37 “ERISA
Affiliate” shall mean any person required to be aggregated with Borrower or any
of its Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the
Code.
1.38 “ERISA
Event” shall mean (a) any “reportable event”, as defined in Section 4043(c) of
ERISA or the regulations issued thereunder, with respect to a Pension Plan,
other than events as to which the requirement of notice has been waived in
regulations by the Pension Benefit Guaranty Corporation; (b) the adoption of any
amendment to a Pension Plan that would require the provision of security
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) a
complete or partial withdrawal by Borrower, any Obligor (other than Parent) or
any ERISA Affiliate (other than Parent) from a Multiemployer Plan or a cessation
of operations which is treated as such a withdrawal or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to
terminate, the treatment of a Pension Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the
Pension Benefit Guaranty Corporation to terminate a Pension Plan; (e) an event
or condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (f) the imposition of any liability under Title IV of
ERISA, other than the Pension Benefit Guaranty Corporation premiums due but not
delinquent under Section 4007 of ERISA, upon Borrower, any Obligor (other than
Parent) or any ERISA Affiliate (other than Parent) in excess of $250,000 and (g)
any other event or condition with respect to a Plan including any Pension Plan
subject to Title IV of ERISA maintained, or contributed to, by any ERISA
Affiliate (other than Parent) that could reasonably be expected to result in
liability of Borrower in excess of $250,000.
1.39 “Eurodollar
Rate Loans” shall mean any Loans or portion thereof on which interest is payable
based on the Adjusted Eurodollar Rate in accordance with the terms
hereof.
1.40 “Event
of Default” shall mean the occurrence or existence of any event or condition
described in Section 10.1 hereof.
1.41 “Excess
Availability” shall mean, the amount, as determined by Agent, calculated at any
date, equal to: (a) the lesser of: (i) the Borrowing Base and
(ii) the Maximum Credit (in each case under clause (i) or (ii), without
duplication, after giving effect to any Reserves other than any Reserves in
respect of Letter of Credit Obligations), minus (b) the sum of: (i) the amount
of all then outstanding and unpaid Obligations (but not including for this
purpose any outstanding Letter of Credit Obligations), plus (ii) the amount of
all Reserves then established in respect of Letter of Credit Obligations, plus
(iii) the aggregate amount of all then outstanding and unpaid trade payables and
other obligations of Borrower which are outstanding more than forty-five (45)
days past due as of the end of the immediately preceding month or at Agent’s
option, as of a more recent date based on such reports as Agent may from time to
time specify (other than trade payables or other obligations being contested or
disputed by Borrower in good faith), plus (iv) without duplication, the amount
of checks issued by Borrower to pay trade payables and other obligations which
are more than forty-five (45) days past due as of the end of the immediately
preceding month or at Agent’s option, as of a more recent date based on such
reports as Agent may from time to time specify (other than trade payables or
other obligations being contested or disputed by Borrower in good faith), but
not yet sent.
1.42 “Exchange
Act” shall mean the Securities Exchange Act of 1934, together with all rules,
regulations and interpretations thereunder or related thereto.
1.43 “Existing
Lenders” shall mean the lenders to Borrower listed on Schedule 1.43 hereto and
their respective predecessors, successors and assigns.
1.44 “Federal
Funds Rate” shall mean, for any period, a fluctuating interest rate per annum
equal, for each day during such period, to the weighted average of the rates on
overnight Federal Funds transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of Chicago, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three Federal Funds brokers of recognized standing
selected by it.
1.45 “Fee
Letter” shall mean the letter agreement, dated of even date herewith, by and
between Borrower and Agent, setting forth certain fees payable by Borrower to
Agent for the benefit of itself and Lenders, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.46 “Financing
Agreements” shall mean, collectively, this Agreement and all notes, guarantees,
security agreements, deposit account control agreements, investment property
control agreements, intercreditor agreements, mortgagee waivers and all other
agreements, documents and instruments now or at any time hereafter executed
and/or delivered by Borrower or any Obligor in connection with this Agreement;
provided, that, in no event
shall the term Financing Agreements be deemed to include any Hedge
Agreement.
1.47 “Foreign
Lender” shall mean any Lender that is organized under the laws of a jurisdiction
other than that in which Borrower is resident for tax purposes. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
1.48 “Funding
Bank” shall have the meaning given to such term in Section 3.3
hereof.
1.49 “GAAP”
shall mean generally accepted accounting principles in the United States of
America as in effect from time to time as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board which are applicable to the circumstances
as of the date of determination consistently applied; except, that, for purposes of
Section 9.17 hereof, GAAP shall be determined on the basis of such principles in
effect on the date hereof and consistent with those used in the preparation of
the most recent audited financial statements delivered to Agent prior to the
date hereof.
1.50 “Governmental
Authority” shall mean any nation or government, any state, province, or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, and any entity with authority to
exercise executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
1.51 “Guarantors”
shall mean, collectively, the following (together with their respective
successors and assigns): (a) Parent and (b) any other Person that at any time
after the date hereof becomes party to a guarantee in favor of Lender or
otherwise liable on or with respect to the Obligations; each sometimes being
referred to herein individually as a “Guarantor”.
1.52 “Hazardous
Materials” shall mean any hazardous, toxic or dangerous substances, materials
and wastes, including hydrocarbons (including naturally occurring or man-made
petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde
insulation, radioactive materials, biological substances, polychlorinated
biphenyls, pesticides, herbicides and any other kind and/or type of pollutants
or contaminants (including materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become regulated under any Environmental Law (including any that are
or become classified as hazardous or toxic under any Environmental
Law).
1.53 “Hedge
Agreement” shall mean an agreement between Borrower or any Guarantor and Agent
or any Bank Product Provider that is a swap agreement as such term is defined in
11 U.S.C. Section 101, and including any rate swap agreement, basis swap,
forward rate agreement, commodity swap, interest rate option, forward foreign
exchange agreement, spot foreign exchange agreement, rate cap agreement rate,
floor agreement, rate collar agreement, currency swap agreement, cross-currency
rate swap agreement, currency option, any other similar agreement (including any
option to enter into any of the foregoing or a master agreement for any the
foregoing together with all supplements thereto) for the purpose of protecting
against or managing exposure to fluctuations in interest or exchange rates,
currency valuations or commodity prices; sometimes being collectively referred
to herein as “Hedge Agreements.” For the purposes of this Agreement
and the Credit Facility, any Hedge Agreement between Parent and Agent or any
Bank Product Provider, together with all Indebtedness related thereto shall not
constitute a “Hedge Agreement” hereunder.
1.54 “Indebtedness”
shall mean, with respect to any Person, any liability, whether or not
contingent, (a) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof) or evidenced by bonds, notes, debentures or similar instruments; (b)
representing the balance deferred and unpaid of the purchase price of any
property or services (other than an account payable to a trade creditor (whether
or not an Affiliate) incurred in the ordinary course of business of such Person
and payable in accordance with customary trade practices); (c) all obligations
as lessee under leases which have been, or should be, in accordance with GAAP
recorded as Capital Leases; (d) any contractual obligation, contingent or
otherwise, of such Person to pay or be liable for the payment of any
indebtedness described in this definition of another Person, including, without
limitation, any such indebtedness, directly or indirectly guaranteed, or any
agreement to purchase, repurchase, or otherwise acquire such indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge thereof, or to maintain solvency, assets, level of income,
or other financial condition; (e) all obligations with respect to redeemable
stock and redemption or repurchase obligations under any Capital Stock or other
equity securities issued by such Person; (f) all reimbursement obligations and
other liabilities of such Person with respect to surety bonds (whether bid,
performance or otherwise), letters of credit, banker’s acceptances, drafts or
similar documents or instruments issued for such Person’s account; (g) all
indebtedness of such Person in respect of indebtedness of another Person for
borrowed money or indebtedness of another Person otherwise described in this
definition which is secured by any consensual lien, security interest,
collateral assignment, conditional sale, mortgage, deed of trust, or other
encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; (h) all obligations, liabilities and indebtedness
of such Person (marked to market) arising under swap agreements, cap agreements
and collar agreements and other agreements or arrangements designed to protect
such person against fluctuations in interest rates or currency or commodity
values; (i) all obligations owed by such Person under License Agreements with
respect to non-refundable, advance or minimum guarantee royalty payments; (j)
indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer to the extent such Person is liable therefor
as a result of such Person’s ownership interest in such entity, except to the
extent that the terms of such indebtedness expressly provide that such Person is
not liable therefor or such Person has no liability therefor as a matter of law
and (k) the principal and interest portions of all rental obligations of such
Person under any synthetic lease or similar off-balance sheet financing where
such transaction is considered to be borrowed money for tax purposes but is
classified as an operating lease in accordance with GAAP.
1.55 “Indemnitee”
shall have the meaning set forth in Section 11.5 hereof.
1.56 “Information
Certificate” shall mean the Information Certificate of Borrower constituting
Exhibit B hereto containing material information with respect to Borrower, its
businesses and assets provided by or on behalf of Borrower to Agent in
connection with the preparation of this Agreement and the other Financing
Agreements and the financing arrangements provided for herein.
1.57 “Intellectual
Property” shall mean Borrower’s now owned and hereafter arising or
acquired: patents, patent rights, patent applications, copyrights,
works which are the subject matter of copyrights, copyright applications,
copyright registrations, trademarks, servicemarks, trade names, trade styles,
trademark and servicemark applications, and licenses and rights to use any of
the foregoing and all applications, registrations and recordings relating to any
of the foregoing as may be filed in the United States Copyright Office, the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof, any political subdivision thereof or in
any other country or jurisdiction, together with all rights and privileges
arising under applicable law with respect to Borrower’s use of any of the
foregoing; all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to sue for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or servicemark, or the license of any trademark or
servicemark); customer and other lists in whatever form maintained; trade secret
rights, copyright rights, rights in works of authorship, domain names and domain
name registration; software and contract rights relating to computer software
programs, in whatever form created or maintained.
1.58 “Interest
Expense” shall mean, for any period, as to any Person, as determined in
accordance with GAAP, the total interest expense of such Person, whether paid or
accrued during such period but without duplication (including the interest
component of Capital Leases for such period), including, without limitation,
discounts in connection with the sale of any Accounts that are sold for purposes
other than collection, but excluding interest paid in property other than cash
and any other interest expense not payable in cash.
1.59 “Interest
Period” shall mean for any Eurodollar Rate Loan, a period of approximately one
(1), two (2), or three (3) months duration as Borrower may elect, the exact
duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; provided, that, Borrower may
not elect an Interest Period which will end after the last day of the
then-current term of this Agreement.
1.60 “Interest
Rate” shall mean,
(a) Subject
to clause (b) of this definition below:
(i) as to
Prime Rate Loans, a rate equal to the Prime Rate plus the Applicable Margin for
Prime Rate Loans,
(ii) as to
Eurodollar Rate Loans, a rate equal to the Adjusted Eurodollar Rate plus the
Applicable Margin for Eurodollar Rate Loans (in each case, based on the London
Interbank Offered Rate applicable for the Interest Period selected by Borrower
as in effect two (2) Business Days prior to the commencement of the Interest
Period, whether such rate is higher or lower than any rate previously quoted to
Borrower).
(b) Notwithstanding
anything to the contrary contained in clause (a) of this definition, the
Applicable Margin otherwise used to calculate the Interest Rate for Prime Rate
Loans and Eurodollar Rate Loans shall be the highest percentage set forth in the
definition of the term Applicable Margin for each category of Revolving Loans
plus two (2.00%) percent per annum, at Agent’s option, (i) for the period (A) on
and after the date of termination or non-renewal hereof until such time as all
Obligations are finally paid and satisfied in full in immediately available
funds (or in the case of contingent Obligations, Agent shall have received cash
collateral or a letter of credit, at its option, all in accordance with Section
13.1 below), or (B) from and after the date of the occurrence of any Event of
Default, and for so long as such Event of Default is continuing and (ii) on the
amount of the Revolving Loans to Borrower at any time outstanding in excess of
the Borrowing Base or any other material limitation with respect thereto
provided for herein (whether or not such excess(es) arise or are made with or
without Agent’s or any Lender’s knowledge or consent and whether made before or
after an Event of Default).
1.61 “Inventory”
shall mean all of Borrower’s now owned and hereafter existing or acquired goods,
wherever located, which (a) are leased by Borrower as lessor; (b) are held by
Borrower for sale or lease or to be furnished under a contract of service; (c)
are furnished by Borrower under a contract of service; or (d) consist of raw
materials, work in process, finished goods or materials used or consumed in its
business.
1.62 “Inventory
Loan Limit” shall mean the amount equal to $20,000,000.
1.63 “Investment
Property Control Agreement” shall mean an agreement in writing, in form and
substance reasonably satisfactory to Agent, by and among Agent, Borrower and any
securities intermediary, commodity intermediary or other person who has custody,
control or possession of any investment property of Borrower acknowledging that
such securities intermediary, commodity intermediary or other person has
custody, control or possession of such investment property on behalf of Agent,
that it will comply with entitlement orders originated by Agent with respect to
such investment property, or other instructions of Agent, and has such other
terms and conditions as Agent may reasonably require.
1.64 “Issuing
Bank” shall mean Wachovia Bank, National Association or any Lender that is
approved by Agent that shall issue a Letter of Credit for the account of
Borrower and has agreed in a manner reasonably satisfactory to Agent to be
subject to the terms hereof as an Issuing Bank.
1.65 “Lenders”
shall mean the financial institutions who are signatories hereto as Lenders and
other persons made a party to this Agreement as a Lender in accordance with
Section 13.7 hereof, and their respective successors and assigns; each sometimes
being referred to herein individually as a “Lender”.
1.66 “Letter
of Credit Documents” shall mean, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in connection
therewith, any application therefor, and any agreements, instruments, guarantees
or other documents (whether general in application or applicable only to such
Letter of Credit) governing or providing for (a) the rights and obligations of
the parties concerned or at risk or (b) any collateral security for such
obligations.
1.67 “Letter
of Credit Limit” shall mean $10,000,000.
1.68 “Letter
of Credit Obligations” shall mean, at any time, the sum of (a) the aggregate
undrawn amount of all Letters of Credit outstanding at such time, plus (b) the
aggregate amount of all drawings under Letters of Credit for which Issuing Bank
has not at such time been reimbursed, plus (c) without duplication, the
aggregate amount of all payments made by each Lender to Issuing Bank with
respect to such Lender’s participation in Letters of Credit as provided in
Section 2.2 for which Borrower has not at such time reimbursed the Lenders,
whether by way of a Revolving Loan or otherwise.
1.69 “Letters
of Credit” shall mean all letters of credit (whether documentary or stand-by and
whether for the purchase of inventory, equipment or otherwise) issued by an
Issuing Bank for the account of Borrower pursuant to this Agreement, and all
amendments, renewals, extensions or replacements thereof.
1.70 “License
Agreements” shall have the meaning set forth in Section 9.18
hereof.
1.71 “Loans”
shall mean the Revolving Loans.
1.72 “London
Interbank Offered Rate” shall mean, with respect to any Eurodollar Loan for the
Interest Period applicable thereto, the rate of interest per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for deposits
in U.S. Dollars at approximately 11:00 A.M. (London time) two (2) Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period; provided, that, if more than
one rate is specified on Telerate Page 3750, the applicable rate shall be the
arithmetic mean of all such rates. If, for any reason, such rate is
not available, the term “London Interbank Offered Rate” shall mean, with respect
to any Eurodollar Loan for the Interest Period applicable thereto, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 A.M. (London time) two
(2) Business Days prior to the first day of such Interest Period for
a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates.
1.73 “Material
Adverse Effect” shall mean any condition, change, effect or circumstance that,
individually or when taken together with all such conditions, changes, effects
or circumstances, has or would reasonably be expected to have an adverse effect
on the financial condition, assets, properties, business, operations or results
of operations of the Borrower which is material to the Borrower, excluding (a)
any changes or effects that are not unique to the Borrower and do not adversely
affect the Borrower disproportionately compared to its competitors, directly
resulting from general changes in economic, financial or capital market,
regulatory, political or national security conditions (including acts of war or
terrorism), (b) changes in conditions generally applicable to the industries in
which the Borrower is involved and (c) changes which result from the
announcement or the consummation of the transactions contemplated
hereby.
1.74 “Material
Contract” shall mean (a) any contract or agreement (other than the Financing
Agreements and any ethanol purchase and sale contracts or agreements), written
or oral, of Borrower involving monetary liability of or to any Person in an
amount in excess of $750,000, (b) any ethanol purchase and sale contract or
agreement with a stated term in excess of six (6) months and (c) any contract or
agreement (other than the Financing Agreements), whether written or oral, to
which Borrower is a party as to which the breach, nonperformance, cancellation
or failure to renew by any party thereto would have a Material Adverse
Effect.
1.75 “Maturity
Date” shall have the meaning set forth in Section 13.1 hereof.
1.76 “Maximum
Credit” shall mean the amount of $40,000,000 (subject to adjustment as provided
in Section 2.3 hereof).
1.77 “Maximum
Credit Increase Effective Date” shall have the meaning set forth in Section
2.3(c) hereof.
1.78 “Monthly
Average Excess Availability” shall mean, at any time, the daily average of the
Excess Availability for the immediately preceding calendar month as calculated
by Agent.
1.79 “Multiemployer
Plan” shall mean a “multi-employer plan” as defined in Section 4001(a)(3) of
ERISA which is or was at any time during the current year or the immediately
preceding six (6) years contributed to by Borrower or any ERISA Affiliate or
with respect to which Borrower or any ERISA Affiliate may incur any
liability.
1.80 “Net
Recovery Percentage” shall mean the fraction, expressed as a percentage,
(a) the numerator of which is the amount equal to the amount of the
recovery in respect of the Inventory at such time a “net orderly liquidation
value” basis as set forth in the most recent acceptable appraisal of Inventory
received by Agent in accordance with Section 7.3, net of operating expenses,
liquidation expenses and commissions, and (b) the denominator of which is
the applicable original cost of the aggregate amount of the Inventory subject to
such appraisal.
1.81 “Non-Restricted
Asset” shall have the meaning set forth in Section 5.1
1.82 “Obligations”
shall mean (a) any and all Loans, Letter of Credit Obligations and all other
obligations, liabilities and indebtedness of every kind, nature and description
owing by any or all of Borrower to Agent or any Lender or any Issuing Bank,
including principal, interest, charges, fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
arising under this Agreement or any of the other Financing Agreements or on
account of any Letter of Credit and all other Letter of Credit Obligations,
whether now existing or hereafter arising, whether arising before, during or
after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute (including the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part
in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated, or
secured or unsecured and (b) for purposes only of Section 5.1 hereof and subject
to the priority in right of payment set forth in Section 6.4 hereof, all
obligations, liabilities and indebtedness of every kind, nature and description
owing by Borrower or any or all of Guarantors (other than Parent) to Agent or
any Bank Product Provider arising under or pursuant to any Bank Products,
whether now existing or hereafter arising; provided, that, (i) as to any
such obligations, liabilities and indebtedness arising under or pursuant to a
Hedge Agreement, the same shall only be included within the Obligations if upon
Agent’s request, Agent shall have entered into an agreement, in form and
substance satisfactory to Agent, with the Bank Product Provider that is a
counterparty to such Hedge Agreement, as acknowledged and agreed to by Borrower
and Guarantors (other than Parent), providing for the delivery to Agent by such
counterparty of information with respect to the amount of such obligations and
providing for the other rights of Agent and such Bank Product Provider in
connection with such arrangements, (ii) any Bank Product Provider, other than
Wachovia and its Affiliates, shall have delivered written notice to Agent that
(A) such Bank Product Provider has entered into a transaction to provide Bank
Products to Borrower and Guarantors (other than Parent) and (B) the obligations
arising pursuant to such Bank Products provided to Borrower and Guarantors
(other than Parent) constitute Obligations entitled to the benefits of the
security interest of Agent granted hereunder, and Agent shall have accepted such
notice in writing and (iii) in no event shall any Bank Product Provider acting
in such capacity to whom such obligations, liabilities or indebtedness are owing
be deemed a Lender for purposes hereof to the extent of and as to such
obligations, liabilities or indebtedness; except, that, each reference
to the term “Lender” in Sections 12.1, 12.2, 12.3(b), 12.6, 12.7, 12.9, 12.12
and 13.6 hereof shall be deemed to include such Bank Product Provider and in no
event shall the approval of any such person in its capacity as Bank Product
Provider be required in connection with the release or termination of any
security interest or lien of Agent.
1.83 “Obligors”
shall mean, individually and collectively, Borrower and Guarantors; each
sometimes being referred to herein individually as a “Obligor.”
1.84 “Other
Taxes” shall have the meaning given to such term in Section 6.5
hereof.
1.85 “Parent”
shall mean Pacific Ethanol Inc., a Delaware corporation, and its successors and
assigns.
1.86 “Parent/Borrower
Operating Agreement” shall mean that certain Intercompany Operating Agreement,
dated as of July 28, 2008, between Borrower and Parent pursuant to which Parent
will provide certain services to Borrower as more particularly set forth
therein.
1.87 “Participant”
shall mean any financial institution that acquires and holds a participation in
the interest of any Lender in any of the Loans and Letters of Credit in
conformity with the provisions of Section 13.7 of this Agreement governing
participations.
1.88 “Person”
or “person” shall mean any individual, sole proprietorship, partnership,
corporation (including any corporation which elects subchapter S status under
the Code), limited liability company, limited liability partnership, business
trust, unincorporated association, joint stock corporation, trust, joint venture
or other entity or any government or any agency or instrumentality or political
subdivision thereof.
1.89 “Pension
Plan” shall mean a pension plan (as defined in Section 3(2) of ERISA) subject to
Title IV of ERISA which Borrower sponsors, maintains, or to which Borrower or
any ERISA Affiliate makes, is making, or is obligated to make contributions,
other than a Multiemployer Plan.
1.90 “Plan”
shall mean an employee benefit plan (as defined in Section 3(3) of ERISA) which
Borrower or any Obligor (other than Parent) sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of a
Multiemployer Plan has made contributions at any time during the immediately
preceding six (6) plan years or with respect to which Borrower or any Obligor
(other than Parent) may incur liability.
1.91 “Prime
Rate” shall mean, on any date, the greater of (a) the rate from time to time
publicly announced by Wachovia Bank, National Association, or its successors, as
its prime rate, subject to each increase or decrease in such prime rate,
effective as of the date of any such change, whether or not such announced rate
is the best rate available at such bank, or (b) the Federal Funds Rate in effect
on such day plus one-half of one (0.50%) percent.
1.92 “Prime
Rate Loans” shall mean any Loans or portion thereof on which interest is payable
based on the Prime Rate in accordance with the terms thereof.
1.93 “Pro
Rata Share” shall mean as to any Lender, the fraction (expressed as a
percentage) the numerator of which is such Lender’s Commitment and the
denominator of which is the aggregate amount of all of the Commitments of
Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; provided, that, if the
Commitments have been terminated, the numerator shall be the unpaid amount of
such Lender’s Loans and its interest in the Letters of Credit and the
denominator shall be the aggregate amount of all unpaid Loans and Letters of
Credit.
1.94 “Provision
for Taxes” shall mean an amount equal to all taxes imposed on or measured by net
income, whether Federal, State, Provincial, county or local, and whether foreign
or domestic, that are paid or payable by any Person in respect of any period in
accordance with GAAP.
1.95 “Real
Property” shall mean all now owned and hereafter acquired real property of
Borrower, including leasehold interests, together with all buildings,
structures, and other improvements located thereon and all licenses, easements
and appurtenances relating thereto, wherever located.
1.96 “Receivables”
shall mean all of the following now owned or hereafter arising or acquired
property of Borrower: (a) all Accounts; (b) all interest, fees, late charges,
penalties, collection fees and other amounts due or to become due or otherwise
payable in connection with any Account; (c) all payment intangibles of Borrower;
(d) letters of credit, indemnities, guarantees, security or other
deposits and proceeds thereof issued payable to Borrower or otherwise in favor
of or delivered to Borrower in connection with any Account; and (e) all other
accounts, contract rights (including, without limitation, all of Borrower’s
right, title and interest in and to the Parent/Borrower Operating Agreement),
chattel paper, instruments, notes, general intangibles and other forms of
obligations owing to Borrower, whether from the sale and lease of goods or other
property, licensing of any property (including Intellectual Property or other
general intangibles), rendition of services or from loans or advances by
Borrower or to or for the benefit of any third person (including loans or
advances to any Affiliates or Subsidiaries of Borrower) or otherwise associated
with any Accounts, Inventory or general intangibles of Borrower
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims, any funds which may become payable to Borrower in connection
with the termination of any Plan or other employee benefit plan and any other
amounts payable to Borrower from any Plan or other employee benefit plan, rights
and claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, casualty or any similar types of
insurance and any proceeds thereof and proceeds of insurance covering the lives
of employees on which Borrower is a beneficiary).
1.97 “Records”
shall mean all of Borrower’s present and future books of account of every kind
or nature, purchase and sale agreements, invoices, ledger cards, bills of lading
and other shipping evidence, statements, correspondence, memoranda, credit files
and other data relating to the Collateral or any account debtor, together with
the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of Borrower with respect to the foregoing maintained with
or by any other person).
1.98 “Reference
Bank” shall mean Wachovia Bank, National Association, or such other bank as
Agent may from time to time designate.
1.99 “Register”
shall have the meaning set forth in Section 13.7 hereof.
1.100 “Required
Lenders” shall mean, at any time, those Lenders whose Pro Rata Shares aggregate
sixty-six and two-thirds (66 2/3%) percent or more of the aggregate of the
Commitments of all Lenders, or if the Commitments shall have been terminated,
Lenders to whom at least sixty-six and two-thirds (66 2/3%) percent of the then
outstanding Obligations are owing.
1.101 “Reserves”
shall mean as of any date of determination, such amounts as Agent may from time
to time establish and revise in good faith and in the exercise of its reasonable
credit judgment reducing the amount of Loans and Letters of Credit that would
otherwise be available to Borrower under the lending formula(s) provided for
herein: (a) to reflect events, conditions, contingencies or risks
which, as determined by Agent in good faith and in the exercise of its
reasonable credit judgment, adversely affect, or would have a reasonable
likelihood of adversely affecting, either (i) the Collateral or any other
property which is security for the Obligations or its value or (ii) the assets,
business or prospects of Borrower or any Obligor (other than Parent) or (iii)
the security interests and other rights of Agent or any Lender in the Collateral
(including the enforceability, perfection and priority thereof) or (b) to
reflect Agent’s good faith belief that any collateral report or financial
information furnished by or on behalf of Borrower or any Obligor to Agent is or
may have been incomplete, inaccurate or misleading in any material respect or
(c) to reflect outstanding Letter of Credit Obligations as provided in Section
2.2 hereof or (d) in respect of any state of facts which Agent determines in
good faith and in the exercise of its reasonable credit judgment constitutes a
Default or an Event of Default. Without limiting the generality of the
foregoing, Reserves may, at Agent’s option, in good faith and in the exercise of
its reasonable credit judgment, be established to reflect: (i)
dilution with respect to the Accounts (based on the ratio of the aggregate
amount of non-cash reductions in Accounts for any period to the aggregate dollar
amount of the sales of Borrower for such period) as calculated by Agent for any
period is or is reasonably anticipated to be greater than five (5%) percent;
(ii) returns, discounts, claims, credits and allowances of any nature that are
not paid pursuant to the reduction of Accounts; (iii) sales, excise or similar
taxes included in the amount of any Accounts reported to Agent; (iv) a change in
the turnover, age or mix of the categories of Inventory that adversely affects
the aggregate value of all Inventory; (v) amounts due or to become due to owners
and lessors of premises where any Collateral is located, other than for those
locations where Agent has received a Collateral Access Agreement that Agent has
accepted in writing; (vi) amounts due or to become due to owners and licensors
of trademarks and other Intellectual Property used by Borrower and (vii)
obligations, liabilities or indebtedness (contingent or otherwise) of Borrower
or any Obligor (other than Parent) to Agent or any Bank Product Provider arising
under or in connection with any Bank Products or as such Affiliate or Person may
otherwise require in connection therewith to the extent that such obligations,
liabilities or indebtedness constitute Obligations as such term is defined
herein or otherwise receive the benefit of the security interest of Agent in any
Collateral. The amount of any Reserve established by Agent shall have
a reasonable relationship to the event, condition or other matter which is the
basis for such reserve as determined by Agent in good faith and in the exercise
of its reasonable credit judgment and to the extent that such Reserve is in
respect of amounts that may be payable to third parties Agent may, at its
option, deduct such Reserve from the Maximum Credit, at any time that such limit
is less than the amount of the Borrowing Base.
1.102 “Restricted
Assets” shall have the meaning set forth in Section 5.1 hereof.
1.103 “Revolving
Loans” shall mean the loans now or hereafter made by or on behalf of any Lender
or by Agent for the account of any Lender on a revolving basis pursuant to the
Credit Facility (involving advances, repayments and readvances) as set forth in
Section 2.1 hereof.
1.104 “Secured
Parties” shall mean, collectively, (a) Agent, (b) Issuing Bank, (c) Lenders, and
(d) Bank Product Providers (to the extent approved by Agent).
1.105 “Solvent”
shall mean, at any time with respect to any Person, that at such time such
Person (a) is able to pay its debts as they mature and has (and has a
reasonable basis to believe it will continue to have) sufficient capital (and
not unreasonably small capital) to carry on its business consistent with its
practices as of the date hereof, and (b) the assets and properties of such
Person at a fair valuation (and including as assets for this purpose at a fair
valuation all rights of subrogation, contribution or indemnification arising
pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
1.106 “Special
Agent Advances” shall have the meaning set forth in Section 12.11
hereof.
1.107 “Subsidiary”
or “subsidiary” shall mean, with respect to any Person, any corporation, limited
liability company, limited liability partnership or other limited or general
partnership, trust, association or other business entity of which an aggregate
of at least a majority of the outstanding Capital Stock or other interests
entitled to vote in the election of the board of directors of such corporation
(irrespective of whether, at the time, Capital Stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency), managers, trustees or other controlling
persons, or an equivalent controlling interest therein, of such Person is, at
the time, directly or indirectly, owned by such Person and/or one or more
subsidiaries of such Person.
1.108 “UCC”
shall mean the Uniform Commercial Code as in effect in the State of California
and any successor statute, as in effect from time to time (except, that, terms used
herein which are defined in the Uniform Commercial Code as in effect in the
State of California on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute except as Agent may
otherwise determine).
1.109 “Value”
shall mean, as determined by Agent in good faith and in the exercise of its
reasonable credit judgment, with respect to Inventory, the lower of (a) cost
computed on a first-in first-out basis in accordance with GAAP or (b) market
value; provided, that, for purposes of
the calculation of the Borrowing Base, (i) the Value of the Inventory shall not
include: (A) the portion of the value of Inventory equal to the
profit earned by any Affiliate on the sale thereof to Borrower or
(B) write-ups or write-downs in value with respect to currency exchange
rates and (ii) notwithstanding anything to the contrary contained herein, the
cost of the Inventory shall be computed in the same manner and consistent with
the most recent appraisal of the Inventory received and accepted by Agent prior
to the date hereof, if any.
1.110 “Voting
Stock” shall mean with respect to any Person, (a) one (1) or more classes of
Capital Stock of such Person having general voting powers to elect at least a
majority of the board of directors, managers or trustees of such Person,
irrespective of whether at the time Capital Stock of any other class or classes
have or might have voting power by reason of the happening of any contingency,
and (b) any Capital Stock of such Person convertible or exchangeable without
restriction at the option of the holder thereof into Capital Stock of such
Person described in clause (a) of this definition.
1.111 “Wachovia”
shall mean Wachovia Capital Finance Corporation (Western), a California
corporation, in its individual capacity, and its successors and
assigns.
SECTION
2. CREDIT
FACILITIES
(a) Subject
to and upon the terms and conditions contained herein, each Lender severally
(and not jointly) agrees to make its Pro Rata Share of Revolving Loans to
Borrower from time to time in amounts requested by Borrower up to the aggregate
amount outstanding for all Lenders at any time equal to the lesser of: (i)
the Borrowing Base at such time or (ii) the Maximum Credit.
(b) Except in
Agent’s discretion, with the consent of all Lenders, or as otherwise provided
herein, (i) the aggregate amount of the Loans and the Letter of Credit
Obligations outstanding at any time shall not exceed the Maximum Credit, (ii)
the aggregate principal amount of the Revolving Loans and Letter of Credit
Obligations outstanding at any time to Borrower shall not exceed the Borrowing
Base, (iii) the aggregate principal amount of Revolving Loans and Letter of
Credit Obligations based on Eligible Inventory shall not exceed the Inventory
Loan Limit and (iv) the aggregate principal amount of the Revolving Loans
outstanding at any time against (A) Eligible In-Transit Inventory shall not
exceed $10,000,000 and (B) Eligible Inventory consisting of biodiesel finished
goods shall not exceed $3,000,000 .
(c) In the
event that (i) the aggregate amount of the Loans and the Letter of Credit
Obligations outstanding at any time exceed the Maximum Credit, or (ii) except as
otherwise provided herein, the aggregate principal amount of the Revolving Loans
and Letter of Credit Obligations outstanding to Borrower exceed the Borrowing
Base or the Maximum Credit of Borrower, or (iii) the aggregate principal amount
of Revolving Loans and Letter of Credit Obligations based on the Eligible
Inventory exceed the Inventory Loan Limit, or (iv) the aggregate principal
amount of the Revolving Loans outstanding at any time against (A) Eligible
In-Transit Inventory exceeds $10,000,000 or (B) Eligible Inventory consisting of
biodiesel finished goods exceeds $3,000,000, such event shall not limit, waive
or otherwise affect any rights of Agent or Lenders in such circumstances or on
any future occasions and Borrower shall, upon demand by Agent, which may be made
at any time or from time to time, immediately repay to Agent the entire amount
of any such excess(es) for which payment is demanded.
(a) Subject
to and upon the terms and conditions contained herein and in the Letter of
Credit Documents, at the request of Borrower, Agent agrees to cause
Issuing Bank to issue, and Issuing Bank agrees to issue, for the account of
Borrower one or more Letters of Credit, for the ratable risk of each Lender
according to its Pro Rata Share, containing terms and conditions reasonably
acceptable to Agent and Issuing Bank.
(b) Borrower
shall give Agent and Issuing Bank two (2) Business Days’ prior written notice of
Borrower’s request for the issuance of a Letter of Credit. Such
notice shall be irrevocable and shall specify the original face amount of the
Letter of Credit requested, the effective date (which date shall be a Business
Day and in no event shall be a date less than ten (10) days prior to the end of
the then current term of this Agreement) of issuance of such requested Letter of
Credit, whether such Letter of Credit may be drawn in a single or in partial
draws, the date on which such requested Letter of Credit is to expire (which
date shall be a Business Day and shall not be more than one year from the date
of issuance), the purpose for which such Letter of Credit is to be issued, and
the beneficiary of the requested Letter of Credit. Borrower shall attach to such
notice the proposed terms of the Letter of Credit. The renewal or
extension of any Letter of Credit shall, for purposes hereof be treated in all
respects the same as the issuance of a new Letter of Credit
hereunder.
(c) In
addition to being subject to the satisfaction of the applicable conditions
precedent contained in Section 4 hereof and the other terms and conditions
contained herein, no Letter of Credit shall be available unless each of the
following conditions precedent have been satisfied in a manner satisfactory to
Agent: (i) Borrower shall have delivered to Issuing Bank at such
times and in such manner as Issuing Bank may require, an application, in form
and substance satisfactory to Issuing Bank and Agent, for the issuance of the
Letter of Credit and such other Letter of Credit Documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed Letter of
Credit shall be satisfactory to Agent and Issuing Bank, (ii) as of the date
of issuance, no order of any court, arbitrator or other Governmental Authority
shall purport by its terms to enjoin or restrain money center banks generally
from issuing letters of credit of the type and in the amount of the proposed
Letter of Credit, and no law, rule or regulation applicable to money center
banks generally and no request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over money center banks
generally shall prohibit, or request that Issuing Bank refrain from, the
issuance of letters of credit generally or the issuance of such Letter of
Credit; (iii) after giving effect to the issuance of such Letter of Credit, the
Letter of Credit Obligations shall not exceed the Letter of Credit Limit, and
(iv) the Excess Availability, prior to giving effect to any Reserves with
respect to such Letter of Credit, on the date of the proposed issuance of any
Letter of Credit, shall be equal to or greater than: (A) if the proposed Letter
of Credit is for the purpose of purchasing Eligible Inventory and the documents
of title with respect thereto are consigned to Issuing Bank, the sum of (1) the
percentage equal to one hundred (100%) percent minus the then applicable
percentage with respect to Eligible Inventory set forth in the definition of the
term Borrowing Base multiplied by the Value of such Eligible Inventory, plus (2)
freight, taxes, duty and other amounts which Agent estimates must be paid in
connection with such Inventory upon arrival and for delivery to one of
Borrower’s locations for Eligible Inventory within the United States of America
and (B) if the proposed Letter of Credit is for any other purpose or the
documents of title are not consigned to Issuing Bank in connection with a Letter
of Credit for the purpose of purchasing Inventory, an amount equal to one
hundred (100%) percent of the Letter of Credit Obligations with respect
thereto. Effective on the issuance of each Letter of Credit, a
Reserve shall be established in the applicable amount set forth in Section
2.2(c)(iv)(A) or Section 2.2(c)(iv)(B).
(d) Except in
Agent’s discretion, with the consent of all Lenders, the amount of all
outstanding Letter of Credit Obligations shall not at any time exceed the Letter
of Credit Limit.
(e) Borrower
shall reimburse immediately Issuing Bank for any draw under any Letter of Credit
issued for the account of Borrower and pay Issuing Bank the amount of all other
charges and fees payable to Issuing Bank in connection with any Letter of Credit
issued for the account of Borrower immediately when due, irrespective of any
claim, setoff, defense or other right which Borrower may have at any time
against Issuing Bank or any other Person. Each drawing under any
Letter of Credit or other amount payable in connection therewith when due shall
constitute a request by Borrower to Agent for a Prime Rate Loan in the amount of
such drawing or other amount then due and shall be made by Agent on behalf of
Lenders as a Revolving Loan (or Special Agent Advance, as the case may be). The
date of such Loan shall be the date of the drawing or as to other amounts, the
due date therefor. Any payments made by or on behalf of Agent or any
Lender to Issuing Bank and/or related parties in connection with any Letter of
Credit shall constitute additional Revolving Loans to Borrower pursuant to this
Section 2 (or Special Agent Advances as the case may be).
(f) Borrower
shall indemnify and hold Agent and Lenders harmless from and against any and all
losses, claims, damages, liabilities, costs and expenses which Agent or any
Lender may suffer or incur in connection with any Letter of Credit and any
documents, drafts or acceptances relating thereto, including any losses, claims,
damages, liabilities, costs and expenses due to any action taken by Issuing Bank
or correspondent with respect to any Letter of Credit, except for such losses,
claims, damages, liabilities, costs or expenses that are a direct result of the
gross negligence or willful misconduct of Agent or any Lender as determined
pursuant to a final non-appealable order of a court of competent
jurisdiction. Borrower assumes all risks with respect to the acts or
omissions of the drawer under or beneficiary of any Letter of Credit and for
such purposes the drawer or beneficiary shall be deemed Borrower’s
agent. Borrower assumes all risks for, and agrees to pay, all
foreign, Federal, State and local taxes, duties and levies relating to any goods
subject to any Letter of Credit or any documents, drafts or acceptances
thereunder. Borrower hereby releases and holds Agent and Lenders
harmless from and against any acts, waivers, errors, delays or omissions with
respect to or relating to any Letter of Credit, except for the gross negligence
or willful misconduct of Agent or any Lender as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction. The
provisions of this Section 2.2(f) shall survive the payment of Obligations and
the termination of this Agreement.
(g) In
connection with Inventory purchased pursuant to any Letter of Credit, Borrower
shall, at Agent’s request, instruct all suppliers, carriers, forwarders, customs
brokers, warehouses or others receiving or holding cash, checks, Inventory,
documents or instruments in which Agent holds a security interest that upon
Agent’s request, such items are to be delivered to Agent and/or subject to
Agent’s order, and if they shall come into Borrower’s possession, to deliver
them, upon Agent’s request, to Agent in their original form. Except
as otherwise provided herein, Agent shall not exercise such right to request
such items so long as no Default or Event of Default shall exist or have
occurred and be continuing. Except as Agent may otherwise specify,
Borrower shall designate Issuing Bank as the consignee on all bills of lading
and other negotiable and non-negotiable documents.
(h) Borrower
hereby irrevocably authorizes and directs Issuing Bank to name Borrower as the
account party therein and to deliver to Agent all instruments, documents and
other writings and property received by issuer pursuant to the Letter of Credit
and to accept and rely upon Agent’s instructions and agreements with respect to
all matters arising in connection with the Letter of Credit or the Letter of
Credit Documents with respect thereto. Nothing contained herein shall
be deemed or construed to grant Borrower any right or authority to pledge the
credit of Agent or any Lender in any manner. Borrower shall be bound
by any reasonable interpretation made by Agent, or Issuing Bank in good faith
and in the exercise of their reasonable credit judgment under or in connection
with any Letter of Credit or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrower.
(i) Immediately
upon the issuance or amendment of any Letter of Credit, each Lender shall be
deemed to have irrevocably and unconditionally purchased and received, without
recourse or warranty, an undivided interest and participation to the extent of
such Lender’s Pro Rata Share of the liability with respect to such Letter of
Credit and the obligations of Borrower with respect thereto (including all
Letter of Credit Obligations with respect thereto). Each Lender shall
absolutely, unconditionally and irrevocably assume, as primary obligor and not
as surety, and be obligated to pay to Issuing Bank therefor and discharge when
due, its Pro Rata Share of all of such obligations arising under such Letter of
Credit. Without limiting the scope and nature of each Lender’s
participation in any Letter of Credit, to the extent that Issuing Bank has not
been reimbursed or otherwise paid as required hereunder or under any such Letter
of Credit, each such Lender shall pay to Issuing Bank its Pro Rata Share of such
unreimbursed drawing or other amounts then due to Issuing Bank in connection
therewith.
(j) The
obligations of Borrower to pay Letter of Credit Obligations and the obligations
of Lenders to make payments to Agent for the account of Issuing Bank with
respect to Letters of Credit shall be absolute, unconditional and irrevocable
and shall be performed strictly in accordance with the terms of this Agreement
under any and all circumstances, whatsoever, notwithstanding the occurrence or
continuance of any Default, Event of Default, the failure to satisfy any other
condition set forth in Section 4 or any other event or circumstance. If such
amount is not made available by a Lender when due, Agent shall be entitled to
recover such amount on demand from such Lender with interest thereon, for each
day from the date such amount was due until the date such amount is paid to
Agent at the interest rate then payable by Borrower in respect of Loans that are
Prime Rate Loans. Any such reimbursement shall not relieve or
otherwise impair the obligation of Borrower to reimburse Issuing Bank under any
Letter of Credit or make any other payment in connection therewith.
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2.3
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Increase in Maximum
Credit.
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(a) Borrower
may, at any time, deliver a written request to Agent to increase the Maximum
Credit. Any such written request shall specify the amount of the
increase in the Maximum Credit that Borrower is requesting; provided, that, (i) in no event
shall the aggregate amount of any such increase in the Maximum Credit cause the
Maximum Credit to exceed $45,000,000, (ii) such request shall be for an increase
of not less than $2,500,000, (iii) any such request shall be irrevocable, and
(iv) in no event shall more than one such written request be delivered to Agent
in any calendar quarter.
(b) Upon the
receipt by Agent of any such written request, Agent shall notify each of the
Lenders of such request and each Lender shall have the option (but not the
obligation) to increase the amount of its Commitment by an amount up to its Pro
Rata Share of the amount of the increase in the Maximum Credit requested by
Borrower as set forth in the notice from Agent to such Lender. Each
Lender shall notify Agent within ten (10) days after the receipt of such notice
from Agent whether it is willing to so increase its Commitment, and if so, the
amount of such increase; provided, that, (i) the minimum
increase in the Commitments of each such Lender providing the additional
Commitments shall equal or exceed $1,000,000 and (ii) no Lender shall be
obligated to provide such increase in its Commitment and the determination to
increase the Commitment of a Lender shall be within the sole and absolute
discretion of such Lender. If the aggregate amount of the increases
in the Commitments received from the Lenders does not equal or exceed the amount
of the increase in the Maximum Credit requested by Borrower, Agent may seek
additional increases from Lenders or Commitments from such Eligible Transferees
as it may determine, after consultation with Borrower. In the event
Lenders (or Lenders and any such Eligible Transferees, as the case may be) have
committed in writing to provide increases in their Commitments or new
Commitments in an aggregate amount in excess of the increase in the Maximum
Credit requested by Borrower or permitted hereunder, Agent shall then have the
right to allocate such commitments, first to Lenders and then to Eligible
Transferees, in such amounts and manner as Agent may determine, after
consultation with Borrower.
(c) The
Maximum Credit shall be increased by the amount of the increase in Commitments
from Lenders or new Commitments from Eligible Transferees, in each case selected
in accordance with this Section 2.3, for which Agent has received Assignment and
Acceptances sixty (60) days after the date of the request by Borrower for the
increase or such earlier date as Agent and Borrower may agree (but subject to
the satisfaction of the conditions set forth below), whether or not the
aggregate amount of the increase in Commitments and new Commitments, as the case
may be, equal or exceed the amount of the increase in the Maximum Credit
requested by Borrower in accordance with the terms hereof, effective on the date
that Agent shall have notified Borrower that each of the following conditions
have been satisfied (such date being the “Maximum Credit Increase Effective
Date”):
(i) Agent
shall have received from each Lender or Eligible Transferee that is providing an
additional Commitment as part of the increase in the Maximum Credit, an
Assignment and Acceptance duly executed by such Lender or Eligible Transferee
and Borrower; provided, that, the aggregate
Commitments set forth in such Assignment and Acceptance(s) shall be not less
than $2,500,000;
(ii) the
conditions precedent to the making of Revolving Loans set forth in Section 4.2
shall be satisfied as of the Maximum Credit Increase Effective Date, both before
and after giving effect to such increase;
(iii) Agent
shall have received an opinion of counsel to Borrower in form and substance and
from counsel reasonably satisfactory to Agent and Lenders addressing such
matters as Agent may reasonably request (including an opinion as to no conflicts
with other Indebtedness);
(iv) such
increase in the Maximum Credit shall not violate any applicable law, regulation
or order or decree of any court or other Governmental Authority and shall not be
enjoined, temporarily, preliminarily or permanently;
(v) there
shall have been paid to each Lender and Eligible Transferee providing an
additional Commitment in connection with such increase in the Maximum Credit all
fees and expenses due and payable to such Person on or before the effectiveness
of such increase; and
(vi) there
shall have been paid to Agent, for the account of the Agent and Lenders (in
accordance with any agreement among them) all fees and expenses (including
reasonable fees and expenses of counsel) due and payable pursuant to any of the
Financing Agreements on or before the effectiveness of such
increase.
(d) As of the
Maximum Credit Increase Effective Date, each reference to the term Maximum
Credit herein, and in any of the other Financing Agreements shall be deemed
amended to mean the amount of the Maximum Credit specified in the most recent
written notice from Agent to Borrower of the increase in the Maximum
Credit.
2.4 Commitments. The
aggregate amount of each Lender’s Pro Rata Share of the Loans and Letter of
Credit Obligations shall not exceed the amount of such Lender’s Commitment, as
the same may from time to time be amended in accordance with the provisions
hereof.
SECTION
3. INTEREST AND
FEES
(a) Borrower
shall pay to Agent, for the benefit of Lenders, interest on the outstanding
principal amount of the Loans at the Interest Rate. All interest
accruing hereunder on and after the date of any Event of Default or
termination hereof shall be payable on demand.
(b) Borrower
may from time to time request Eurodollar Rate Loans or may request that Prime
Rate Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar
Rate Loans continue for an additional Interest Period. Such request
from Borrower shall specify the amount of the Eurodollar Rate Loans or the
amount of the Prime Rate Loans to be converted to Eurodollar Rate Loans or the
amount of the Eurodollar Rate Loans to be continued (subject to the limits set
forth below) and the Interest Period to be applicable to such Eurodollar Rate
Loans. Subject to the terms and conditions contained herein, two (2)
Business Days after receipt by Agent of such a request from Borrower, such
Eurodollar Rate Loans shall be made or Prime Rate Loans shall be converted to
Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case
may be; provided, that, (i) no Default
or Event of Default shall exist or have occurred and be continuing, (ii) no
party hereto shall have sent any notice of termination of this Agreement, (iii)
Borrower shall have complied with such customary procedures as are established
by Agent and specified by Agent to Borrower for Eurodollar Rate Loans, (iv) no
more than four (4) Interest Periods may be in effect at any one time, (v) the
aggregate amount of the Eurodollar Rate Loans must be in an amount not less than
$2,500,000 or an integral multiple of $100,000 in excess thereof, and (vi) Agent
and each Lender shall have determined that the Interest Period or Adjusted
Eurodollar Rate is available to Agent and such Lender and can be readily
determined as of the date of the request for such Eurodollar Rate Loan by
Borrower. Any request by or on behalf of Borrower for Eurodollar Rate
Loans or to convert Prime Rate Loans to Eurodollar Rate Loans or to continue any
existing Eurodollar Rate Loans shall be irrevocable; provided, however, that, Borrower may
revoke such request if and only if such Eurodollar Rate Loans are not made or
Prime Rate Loans are not converted to Eurodollar Rate Loans or Eurodollar Rate
Loans are not continued within the applicable time period as set
forth above. Notwithstanding anything to the contrary contained
herein, Agent and Lenders shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market to fund any Eurodollar Rate Loans, but the provisions hereof shall be
deemed to apply as if Agent and Lenders had purchased such deposits to fund the
Eurodollar Rate Loans.
(c) Any
Eurodollar Rate Loans shall automatically convert to Prime Rate Loans upon the
last day of the applicable Interest Period, unless Agent has received and
approved a request to continue such Eurodollar Rate Loan at least three (3)
Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Agent’s option, upon
notice by Agent to Borrower, be subsequently converted to Prime Rate Loans in
the event that this Agreement shall terminate or not be
renewed. Borrower shall pay to Agent, for the benefit of Lenders,
upon demand by Agent (or Agent may, at its option, charge any loan account of
Borrower) any amounts required to compensate any Lender or Participant for any
loss (including loss of anticipated profits), cost or expense incurred by such
person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate
Loans pursuant to any of the foregoing.
(d) Interest
shall be payable by Borrower to Agent, for the account of Lenders, monthly in
arrears not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate on non-contingent Obligations (other than
Eurodollar Rate Loans) shall increase or decrease by an amount equal to each
increase or decrease in the Prime Rate effective on the first day of the month
after any change in such Prime Rate is announced based on the Prime Rate in
effect on the last day of the month in which any such change
occurs. In no event shall charges constituting interest payable by
Borrower to Agent and Lenders exceed the maximum amount or the rate permitted
under any applicable law or regulation, and if any such part or provision of
this Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.
(a) Borrower
shall pay to Agent, for the account of Lenders, monthly an unused line fee at a
rate equal to three-eighths of one (.375%) percent per annum calculated (i) from
the date hereof up to and including December 31, 2008, upon the amount by which
the Interim Unused Line Fee Amount (as defined below) exceeds the average daily
principal balance of the outstanding Revolving Loans and Letters of Credit
during the immediately preceding month (or part thereof) while this Agreement is
in effect and for so long thereafter as any of the Obligations are outstanding,
which fee shall be payable on the first day of each month in arrears, and (ii)
from and after January 1, 2009, upon the amount by which the Maximum Credit
exceeds the average daily principal balance of the outstanding Revolving Loans
and Letters of Credit during the immediately preceding month (or part thereof)
while this Agreement is in effect and for so long thereafter as any of the
Obligations are outstanding, which fee shall be payable on the first day of each
month in arrears. For the purposes of this Section 3.2(a), the
“Interim Unused Line Fee Amount” shall mean $25,000,000, unless if, prior to
December 31, 2008, the average daily principal balance of the outstanding
Revolving Loans and Letters of Credit for either five (5) consecutive Business
Days or during any two (2) consecutive week period exceeds $25,000,000 (the date
that either of such events occurs, being referred to as the “Interim Unused Line
Fee Adjustment Date”), then the Interim Unused Line Fee Amount shall mean the
Maximum Credit, effective as of the first day immediately following the Interim
Unused Line Fee Adjustment Date.
(b) Subject
to Section 3.2(c) below, Borrower shall pay to Agent, for the account of
Lenders, a fee at a rate equal to the Applicable Margin for Eurodollar Rate
Loans then in effect per annum on the average daily maximum amount available to
be drawn under of Letters of Credit issued for the account or benefit of
Borrower for the immediately preceding month (or part thereof), payable in
arrears as of the first day of each succeeding month, computed for each day from
the date of issuance to the date of expiration.
(c) With
respect to the letter of credit fee payable under Section 3.2(b) above, Borrower
shall pay, at Agent’s option, without notice, such fee at a rate two (2%)
percent greater than the highest percentage set forth in the definition of the
term Applicable Margin with respect to the Applicable Margin for Eurodollar Rate
Loans on such average daily maximum amount for: (i) the period from and after
the date of termination or non-renewal hereof until Lenders have received full
and final payment of all Obligations (notwithstanding entry of a judgment
against Borrower or any Guarantor) and (ii) the period from and after the date
of the occurrence of an Event of Default for so long as such Event of Default is
continuing as determined by Agent. Such letter of credit fees shall
be calculated on the basis of a three hundred sixty (360) day year and actual
days elapsed and the obligation of Borrower to pay such fee shall survive the
termination or non-renewal of this Agreement. In addition to the
letter of credit fees provided above, Borrower shall pay to Issuing Bank for its
own account (without sharing with Lenders) the letter of credit fronting and
negotiation fees agreed to by Borrower and Issuing Bank from time to time and
the customary charges from time to time of Issuing Bank with respect to the
issuance, amendment, transfer, administration, cancellation and conversion of,
and drawings under, such Letters of Credit.
(d) Borrower
shall pay to Agent the other fees and amounts set forth in the Fee Letter in the
amounts and at the times specified therein. To the extent payment in
full of the applicable fee is received by Agent from Borrower on or about the
date hereof, Agent shall pay to each Lender its share of such fees in accordance
with the terms of the arrangements of Agent with such Lender.
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3.3
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Changes in Laws and
Increased Costs of
Loans.
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(a) If after
the date hereof, either (i) any change in, or in the interpretation of, any law
or regulation is introduced, including, without limitation, with respect to
reserve requirements, applicable to any Lender or any banking or financial
institution from whom any Lender borrows funds or obtains credit (a
“Funding Bank”), or (ii) a Funding Bank or any Lender complies with any future
guideline or request from any central bank or other Governmental Authority or
(iii) a Funding Bank, any Lender or Issuing Bank determines in good faith and in
the exercise of its reasonable business judgment that the adoption of any
applicable law, rule or regulation regarding capital adequacy, 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 has or would have the effect described
below, or a Funding Bank, any Lender or Issuing Bank complies with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, and in the case of any
event set forth in this clause (iii), such adoption, change or compliance has or
would have the direct or indirect effect of reducing the rate of return on any
Lender’s or Issuing Bank’s capital as a consequence of its obligations hereunder
to a level below that which such Lender or Issuing Bank could have achieved but
for such adoption, change or compliance (taking into consideration the Funding
Bank’s or Lender’s or Issuing Bank’s policies with respect to capital adequacy)
by an amount deemed by such Lender or Issuing Bank in good faith and in the
exercise of its reasonable business judgment to be material, and the result of
any of the foregoing events described in clauses (i), (ii) or (iii) is or
results in an increase in the cost to any Lender or Issuing Bank of funding or
maintaining the Loans, the Letters of Credit or its Commitment, then Borrower
shall from time to time upon demand by Agent pay to Agent additional amounts
sufficient to indemnify such Lender or Issuing Bank, as the case may be, against
such increased cost on an after-tax basis (after taking into account applicable
deductions and credits in respect of the amount indemnified). Agent
or the applicable Lender shall certify to Borrower in writing the amount of such
increased cost, which certification shall be conclusive, absent manifest
error.
(b) If prior
to the first day of any Interest Period, (i) Agent shall have determined in good
faith (which determination shall be conclusive and binding upon Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Adjusted Eurodollar Rate for
such Interest Period, (ii) Agent has received notice from the Required Lenders
that the Adjusted Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to Lenders of
making or maintaining Eurodollar Rate Loans during such Interest Period, or
(iii) Dollar deposits in the principal amounts of the Eurodollar Rate Loans to
which such Interest Period is to be applicable are not generally available in
the London interbank market, Agent shall give telecopy or telephonic notice
thereof to Borrower as soon as practicable thereafter, and will also give prompt
written notice to Borrower when such conditions no longer exist. If
such notice is given (A) any Eurodollar Rate Loans requested to be made on the
first day of such Interest Period shall be made as Prime Rate Loans, (B) any
Loans that were to have been converted on the first day of such Interest Period
to or continued as Eurodollar Rate Loans shall be converted to or continued as
Prime Rate Loans and (C) each outstanding Eurodollar Rate Loan shall be
converted, on the last day of the then-current Interest Period thereof, to Prime
Rate Loans. Until such notice has been withdrawn by Agent, no further
Eurodollar Rate Loans shall be made or continued as such, nor shall Borrower
have the right to convert Prime Rate Loans to Eurodollar Rate
Loans.
(c) Notwithstanding
any other provision herein, if the adoption of or any change in any law, treaty,
rule or regulation or final, non-appealable determination of an arbitrator or a
court or other Governmental Authority or in the interpretation or application
thereof occurring after the date hereof shall make it unlawful for Agent or any
Lender to make or maintain Eurodollar Rate Loans as contemplated by this
Agreement, (i) Agent or such Lender shall promptly give written notice of such
circumstances to Borrower (which notice shall be withdrawn whenever such
circumstances no longer exist), (ii) the commitment of such Lender hereunder to
make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert
Prime Rate Loans to Eurodollar Rate Loans shall forthwith be canceled and, until
such time as it shall no longer be unlawful for such Lender to make or maintain
Eurodollar Rate Loans, such Lender shall then have a commitment only to make a
Prime Rate Loan when a Eurodollar Rate Loan is requested and (iii) such Lender’s
Loans then outstanding as Eurodollar Rate Loans, if any, shall be converted
automatically to Prime Rate Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar
Rate Loan occurs on a day which is not the last day of the then current Interest
Period with respect thereto, Borrower shall pay to such Lender such amounts, if
any, as may be required pursuant to Section 3.3(d) below.
(d) Borrower
shall indemnify Agent and each Lender and hold Agent and each Lender harmless
from any loss or reasonable expense which Agent or such Lender may sustain or
incur as a consequence of (i) default by Borrower in making a borrowing of,
conversion into or extension of Eurodollar Rate Loans after Borrower has given a
notice requesting the same in accordance with the provisions of this Agreement,
(ii) default by Borrower in making any prepayment of a Eurodollar Rate Loan
after Borrower has given a notice thereof in accordance with the provisions of
this Agreement, and (iii) the making of a prepayment of Eurodollar Rate Loans on
a day which is not the last day of an Interest Period with respect
thereto. With respect to Eurodollar Rate Loans, such indemnification
may include an amount equal to the excess, if any, of (A) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed, converted
or extended, for the period from the date of such prepayment or of such failure
to borrow, convert or extend to the last day of the applicable Interest Period
(or, in the case of a failure to borrow, convert or extend, the Interest Period
that would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Eurodollar Rate Loans provided for herein
over (B) the
amount of interest (as determined by Agent or such Lender) which would have
accrued to Agent or such Lender on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank Eurodollar
market. This covenant shall survive the termination or non-renewal of
this Agreement and the payment of the Obligations.
SECTION
4. CONDITIONS
PRECEDENT
4.1 Conditions Precedent to
Initial Loans and Letters of Credit. The
obligation of Lenders to make the initial Loans or of Issuing Bank to issue the
initial Letters of Credit hereunder is subject to the satisfaction of, or waiver
of, immediately prior to or concurrently with the making of such Loan or the
issuance of such Letter of Credit of each of the following conditions
precedent:
(a) Agent
shall have received, in form and substance satisfactory to Agent, all releases,
terminations and such other documents as Agent may reasonably request to
evidence and effectuate the termination by the Existing Lenders of their
respective financing arrangements with Borrower and the termination and release
by it or them, as the case may be, of any interest in and to any assets and
properties of Borrower, duly authorized, executed and delivered by it or each of
them, including, but not limited to, (i) UCC termination statements for all UCC
financing statements previously filed by it or any of them or their
predecessors, as secured party and Borrower, as debtor; and (ii) satisfactions
and discharges of any mortgages, deeds of trust or deeds to secure debt by
Borrower in favor of it or any of them, in form acceptable for recording with
the appropriate Governmental Authority;
(b) all
requisite corporate or limited liability company action and proceedings in
connection with this Agreement and the other Financing Agreements shall be
satisfactory in form and substance to Agent, and Agent shall have received all
information and copies of all documents, including records of requisite
corporate or limited liability company action and proceedings which Agent may
have reasonably requested in connection therewith, such documents where
requested by Agent or its counsel to be certified by appropriate corporate
officers or Governmental Authority (and including a copy of the certificate of
incorporation or formation of Borrower certified by the Secretary of State (or
equivalent Governmental Authority) which shall set forth the same complete
corporate or limited liability company name of Borrower as is set forth herein
and such document as shall set forth the organizational identification number of
Borrower, if one is issued in its jurisdiction of incorporation or
formation);
(c) no
Material Adverse Effect shall have occurred as to Borrower since the date of
Agent’s latest field examination (not including for this purpose the field
review referred to in clause (d) below) and no change or event shall have
occurred which would impair the ability of Borrower or any Obligor to perform
its obligations hereunder or under any of the other Financing Agreements to
which it is a party or of Agent or any Lender to enforce the Obligations or
realize upon the Collateral;
(d) Agent
shall have completed a field review of the Records and such other information
with respect to the Collateral as Agent may reasonably require to determine the
amount of Loans available to Borrower (including, without limitation, current
perpetual inventory records and/or roll-forwards of Accounts and Inventory
through the date of closing in a manner reasonably satisfactory to Agent,
together with such supporting documentation as may be necessary or reasonably
appropriate, and other documents and information that will enable Agent to
accurately identify and verify the Collateral), the results of which in each
case shall be reasonably satisfactory to Agent, not more than three (3) Business
Days prior to the date hereof or such earlier date as Agent may
agree;
(e) Agent
shall have received, in form and substance reasonably satisfactory to Agent, all
consents, waivers, acknowledgments and other agreements from third persons which
Agent may reasonably deem necessary or desirable in order to permit, protect and
perfect its security interests in and liens upon the Collateral or to effectuate
the provisions or purposes of this Agreement and the other Financing Agreements,
including, without limitation, Collateral Access Agreements and mortgagee
waivers;
(f) the
Excess Availability as determined by Agent, as of the date hereof, shall be not
less than $5,000,000 after giving effect to the initial Loans made or to be made
and Letters of Credit issued or to be issued in connection with the initial
transactions hereunder (including, without limitation, such portion of the
initial Loans that is utilized by Borrower to repay to Parent, on the date
hereof, intercompany Indebtedness owing by Borrower to Parent in an amount not
to exceed $6,000,000);
(g) Agent
shall have received, in form and substance reasonably satisfactory to Agent,
Deposit Account Control Agreements by and among Agent, Borrower and each bank
where Borrower has a deposit account, in each case, duly authorized, executed
and delivered by such bank and Borrower, as the case may be (or Agent shall be
the bank’s customer with respect to such deposit account as Agent may
specify);
(h) Agent
shall have received evidence, in form and substance reasonably satisfactory to
Agent, that Agent has a valid perfected first priority security interest in all
of the Collateral;
(i) Agent
shall have received and reviewed lien and judgment search results for the
jurisdiction of organization of Borrower, the jurisdiction of the chief
executive office of Borrower and all jurisdictions in which assets of Borrower
are located, which search results shall be in form and substance reasonably
satisfactory to Agent;
(j) Agent
shall have received evidence of insurance and loss payee endorsements required
hereunder and under the other Financing Agreements, in form and substance
reasonably satisfactory to Agent, and certificates of insurance policies and/or
endorsements naming Agent as loss payee;
(k) Receipt
by Agent of all financial information, projections, budgets, business plans,
cash flows and such other information as Agent shall reasonably request from
time to time, including (i) any updates or modifications to the projected
financial statements of Borrower and Guarantors previously received by Agent, in
each case in form and substance reasonably satisfactory to Agent and (ii)
current agings of receivables, current perpetual inventory records and/or
rollforwards of accounts and inventory through the date of closing, together
with supporting documentation, each in form and substance reasonably
satisfactory to Agent;
(l) Agent
shall have received a Borrowing Base Certificate setting forth the Borrowing
Base as at the date set forth therein and completed in a manner reasonably
satisfactory to Agent and duly authorized, executed and delivered by
Borrower;
(m) Agent
shall have received, in form and substance reasonably satisfactory to Agent,
such opinion letters of counsel to Borrower with respect to the Financing
Agreements and such other matters as Agent may reasonably request;
(n) Agent
shall have received a copy of the Parent/Borrower Operating Agreement, which
agreement shall be in form and substance reasonably acceptable to Agent and
shall be subject to a letter agreement by Parent in favor of Agent and Lenders
pursuant to which Parent has agreed to, among other things, perform such
services and deliver such reports and information to and for the benefit of
Agent and Lenders as Agent and Lenders may request from time to time;
and
(o) the other
Financing Agreements and all instruments and documents hereunder and thereunder
shall have been duly executed and delivered to Agent, in form and substance
reasonably satisfactory to Agent.
4.2 Conditions Precedent to All
Loans and Letters of Credit. The
obligation of Lenders to make the Loans, including the initial Loans, or of
Issuing Bank to issue any Letter of Credit, including the initial Letters of
Credit, is subject to the further satisfaction of, or waiver of, immediately
prior to or concurrently with the making of each such Loan or the issuance of
such Letter of Credit of each of the following conditions
precedent:
(a) all
representations and warranties contained herein and in the other Financing
Agreements shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and as of
the date of the making of each such Loan or providing each such Letter of Credit
and after giving effect thereto, except to the extent that such representations
and warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date);
(b) no law,
regulation, order, judgment or decree of any Governmental Authority shall exist,
and no action, suit, investigation, litigation or proceeding shall be pending or
threatened in any court or before any arbitrator or Governmental Authority,
which (i) purports to enjoin, prohibit, restrain or otherwise affect (A) the
making of the Loans or providing the Letters of Credit, or (B) the consummation
of the transactions contemplated pursuant to the terms hereof or the other
Financing Agreements or (ii) has or has a reasonable likelihood of having a
Material Adverse Effect; and
(c) no
Default or Event of Default shall exist or have occurred and be continuing on
and as of the date of the making of such Loan or providing each such Letter of
Credit and after giving effect thereto.
SECTION
5. GRANT AND PERFECTION OF
SECURITY INTEREST
5.1 Grant of Security
Interest. To
secure payment and performance of all Obligations, Borrower hereby grants to
Agent, for itself and the benefit of Secured Parties, a continuing security
interest in, a lien upon, and a right of set off against, and hereby assigns to
Agent, for itself and the benefit of Secured Parties, as security, all personal
and real property and fixtures, and interests in property and fixtures, of
Borrower, whether now owned or hereafter acquired or existing, and wherever
located (together with all other collateral security for the Obligations at any
time granted to or held or acquired by Agent or any Secured Party, collectively,
the “Collateral”), including:
(a) all
Accounts;
(b) all
general intangibles, including, without limitation, all Intellectual
Property;
(c) all
goods, including, without limitation, Inventory and Equipment;
(d) all Real
Property and fixtures;
(e) all
chattel paper, including, without limitation, all tangible and electronic
chattel paper;
(f) all
instruments, including, without limitation, all promissory notes;
(g) all
documents;
(h) all
deposit accounts;
(i) all
letters of credit, banker’s acceptances and similar instruments and including
all letter-of-credit rights;
(j) all
supporting obligations and all present and future liens, security interests,
rights, remedies, title and interest in, to and in respect of Receivables and
other Collateral, including (i) rights and remedies under or relating to
guaranties, contracts of suretyship, letters of credit and credit and other
insurance related to the Collateral, (ii) rights of stoppage in transit,
replevin, repossession, reclamation and other rights and remedies of an unpaid
vendor, lienor or secured party, (iii) goods described in invoices, documents,
contracts or instruments with respect to, or otherwise representing or
evidencing, Receivables or other Collateral, including returned, repossessed and
reclaimed goods, and (iv) deposits by and property of account debtors or other
persons securing the obligations of account debtors;
(k) all (i)
investment property (including securities, whether certificated or
uncertificated, securities accounts, security entitlements, commodity contracts
or commodity accounts) and (ii) monies, credit balances, deposits and other
property of Borrower now or hereafter held or received by or in transit to
Agent, any Lender or its Affiliates or at any other depository or other
institution from or for the account of Borrower, whether for safekeeping,
pledge, custody, transmission, collection or otherwise;
(l) all
commercial tort claims, including, without limitation, those identified in the
Information Certificate;
(m) to the
extent not otherwise described above, all Receivables;
(n) all
Records; and
(o) all
products and proceeds of the foregoing, in any form, including insurance
proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
Notwithstanding
anything to the contrary contained in this Section 5.1, the foregoing grant of
security interest shall not attach to or encompass, and the Collateral shall not
include, any lease, license, contract, property rights, Intellectual Property or
agreement to which Borrower is a party or any of its rights or interest
thereunder if and for so long as the grant of such security interest shall
constitute or result in (i) the abandonment, invalidation or unenforceability of
any right, title or interest of Borrower or any Guarantor therein or (ii) in a
breach or termination pursuant to the terms of, or a default under, any such
lease, license, contract, property rights, or agreement (other than to the
extent that any such term would be rendered ineffective pursuant to Section
9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable law (including
the Bankruptcy Code) or principles of equity); provided, however, that, such security
interest shall attach immediately at such time as the condition causing such
abandonment, invalidation or unenforceability shall be remedied and to the
extent severable, shall attach immediately to any portion of such lease,
license, contract, property rights, Intellectual Property or agreement that does
not result in any of the consequences specified in (i) or (ii) above (such
assets and properties being collectively referred to herein as “Restricted
Assets”); provided, that, (A) Agent, for
the benefit of itself and Lenders, shall have a security interest in all
proceeds at any time arising from Restricted Assets and (B) at such time as any
Restricted Asset is no longer subject to the contractual or other legal
impediment to Borrower’s grant of a security interest therein to Agent (a
“Non-Restricted Asset”), then the Borrower shall be deemed to have thereupon,
without further act by Borrower, Agent or Lenders, automatically granted a
security interest to Agent in such Non-Restricted Asset and such Non-Restricted
Asset shall thereupon constitute Collateral.
5.2 Perfection of Security
Interests.
(a) Borrower
irrevocably and unconditionally authorizes Agent (or its agent) to file at any
time and from time to time such financing statements with respect to the
Collateral naming Agent or its designee as the secured party and Borrower as
debtor, as Agent may require, and including any other information with respect
to Borrower or otherwise required by part 5 of Article 9 of the Uniform
Commercial Code of such jurisdiction as Agent may determine, together with any
amendment and continuations with respect thereto, which authorization shall
apply to all financing statements filed on, prior to or after the date
hereof. Borrower hereby ratifies and approves all financing
statements naming Agent or its designee as secured party and Borrower, as debtor
with respect to the Collateral (and any amendments with respect to such
financing statements) filed by or on behalf of Agent prior to the date hereof
and ratifies and confirms the authorization of Agent to file such financing
statements (and amendments, if any). Borrower hereby authorizes Agent
to adopt on behalf of Borrower any symbol required for authenticating any
electronic filing. In the event that the description of the
collateral in any financing statement naming Agent or its designee as the
secured party and Borrower as debtor includes assets and properties of Borrower
that do not at any time constitute Collateral, whether hereunder, under any of
the other Financing Agreements or otherwise, the filing of such financing
statement shall nonetheless be deemed authorized by Borrower to the extent of
the Collateral included in such description and it shall not render the
financing statement ineffective as to any of the Collateral or otherwise affect
the financing statement as it applies to any of the Collateral. In no
event shall Borrower at any time file, or permit or cause to be
filed, any correction statement or termination statement with respect
to any financing statement (or amendment or continuation with respect thereto)
naming Agent or its designee as secured party and Borrower as
debtor.
(b) Borrower
does not have any chattel paper (whether tangible or electronic) or instruments
as of the date hereof, except as set forth in the Information
Certificate. In the event that Borrower shall be entitled to or shall
receive any chattel paper or instrument after the date hereof, Borrower shall
promptly notify Agent thereof in writing. Promptly upon the receipt
thereof by or on behalf of Borrower (including by any agent or representative),
Borrower shall deliver, or cause to be delivered to Agent, all tangible chattel
paper and instruments that Borrower has or may at any time acquire, accompanied
by such instruments of transfer or assignment duly executed in blank as Agent
may from time to time reasonably specify, in each case except as Agent may
otherwise agree. At Agent’s option, Borrower shall, or Agent may at
any time on behalf of Borrower, cause the original of any such instrument or
chattel paper to be conspicuously marked in a form and manner reasonably
acceptable to Agent with the following legend referring to chattel paper or
instruments as applicable: “This [chattel paper][instrument] is subject to the
security interest of Wachovia Capital Finance Corporation (Western), and any
sale, transfer, assignment or encumbrance of this [chattel paper][instrument]
violates the rights of such secured party.”
(c) In the
event that Borrower shall at any time hold or acquire an interest in any
electronic chattel paper or any “transferable record” (as such term is defined
in Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in
effect in any relevant jurisdiction), Borrower shall promptly notify Agent
thereof in writing. Promptly upon Agent’s request, Borrower shall
take, or cause to be taken, such actions as Agent may reasonably request to give
Agent control of such electronic chattel paper under Section 9-105 of the UCC
and control of such transferable record under Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.
(d) Borrower
does not have any deposit accounts as of the date hereof, except as set forth in
the Information Certificate. Borrower shall not, directly or
indirectly, after the date hereof open, establish or maintain any deposit
account unless each of the following conditions is satisfied: (i) Agent shall
have received not less than five (5) Business Days prior written notice of the
intention of Borrower to open or establish such account which notice shall
specify in reasonable detail and specificity reasonably acceptable to Agent the
name of the account, the owner of the account, the name and address of the bank
at which such account is to be opened or established, the individual at such
bank with whom Borrower is dealing and the purpose of the account,
(ii) the bank where such account is opened or maintained shall be
reasonably acceptable to Agent, and (iii) on or before the opening of such
deposit account, Borrower shall as Agent may specify either (A) deliver to Agent
a Deposit Account Control Agreement with respect to such deposit account duly
authorized, executed and delivered by Borrower and the bank at which such
deposit account is opened and maintained or (B) arrange for Agent to become the
customer of the bank with respect to the deposit account on terms and conditions
reasonably acceptable to Agent. The terms of this subsection (d) shall not apply
to deposit accounts specifically and exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for the benefit of Borrower’s
salaried employees.
(e) Borrower
does not own or hold, directly or indirectly, beneficially or as record owner or
both, any investment property, as of the date hereof, or have any investment
account, securities account, commodity account or other similar account with any
bank or other financial institution or other securities intermediary or
commodity intermediary as of the date hereof, in each case except as set forth
in the Information Certificate.
(i) In the
event that Borrower shall be entitled to or shall at any time after the date
hereof hold or acquire any certificated securities, Borrower shall promptly
endorse, assign and deliver the same to Agent, accompanied by such instruments
of transfer or assignment duly executed in blank as Agent may from time to time
reasonably specify. If any securities, now or hereafter acquired by
Borrower are uncertificated and are issued to Borrower or its nominee directly
by the issuer thereof, Borrower shall promptly notify Agent thereof and shall as
Agent may specify, either (A) cause the issuer to agree to comply with
instructions from Agent as to such securities, without further consent of
Borrower or such nominee, or (B) arrange for Agent to become the
registered owner of the securities.
(ii) Borrower
shall not, directly or indirectly, after the date hereof open, establish or
maintain any investment account, securities account, commodity account or any
other similar account (other than a deposit account) with any securities
intermediary or commodity intermediary unless each of the following conditions
is satisfied: (A) Agent shall have received not less than five (5)
Business Days prior written notice of the intention of Borrower to open or
establish such account which notice shall specify in reasonable detail and
specificity reasonably acceptable to Agent the name of the account, the owner of
the account, the name and address of the securities intermediary or commodity
intermediary at which such account is to be opened or established, the
individual at such intermediary with whom Borrower is dealing and the purpose of
the account, (B) the securities intermediary or commodity intermediary (as the
case may be) where such account is opened or maintained shall be reasonably
acceptable to Agent, and (C) on or before the opening of such investment
account, securities account or other similar account with a securities
intermediary or commodity intermediary, Borrower shall as Agent may specify
either (1) execute and deliver, and cause to be executed and delivered to Agent,
an Investment Property Control Agreement with respect thereto duly authorized,
executed and delivered by Borrower and such securities intermediary or commodity
intermediary or (2) arrange for Agent to become the entitlement holder with
respect to such investment property on terms and conditions reasonably
acceptable to Agent.
(f) Borrower
is not the beneficiary or otherwise entitled to any right to payment under any
letter of credit, banker’s acceptance or similar instrument as of the date
hereof, except as set forth in the Information Certificate. In the
event that Borrower shall be entitled to or shall receive any right to payment
under any letter of credit, banker’s acceptance or any similar instrument,
having a value in excess of $250,000, whether as beneficiary thereof or
otherwise after the date hereof, Borrower shall promptly notify Agent thereof in
writing. Borrower shall promptly, as Agent may specify, either (i)
deliver, or cause to be delivered to Agent, with respect to any such letter of
credit, banker’s acceptance or similar instrument, the written agreement of the
issuer and any other nominated person obligated to make any payment in respect
thereof (including any confirming or negotiating bank), in form and substance
reasonably satisfactory to Agent, consenting to the assignment of the proceeds
of the letter of credit to Agent by Borrower and agreeing to make all payments
thereon directly to Agent or as Agent may otherwise direct or (ii) cause Agent
to become, at Borrower’s expense, the transferee beneficiary of the letter of
credit, banker’s acceptance or similar instrument (as the case may
be).
(g) Borrower
is not aware of any commercial tort claims in its favor as of the date hereof,
except as set forth in the Information Certificate. In the event that
Borrower shall at any time after the date hereof become aware of any commercial
tort claims in its favor in an amount in excess of $250,000, Borrower shall
promptly notify Agent thereof in writing, which notice shall (i) set forth in
reasonable detail the basis for and nature of such commercial tort claim and
(ii) include the express grant by Borrower to Agent of a security interest in
such commercial tort claim (and the proceeds thereof). In the event
that such notice does not include such grant of a security interest, the sending
thereof by Borrower to Agent shall be deemed to constitute such grant to Agent.
Upon the sending of such notice, any commercial tort claim described therein
shall constitute part of the Collateral and shall be deemed included
therein. Without limiting the authorization of Agent provided in
Section 5.2(a) hereof or otherwise arising by the execution by Borrower of this
Agreement or any of the other Financing Agreements, Agent is hereby irrevocably
authorized from time to time and at any time to file such financing statements
naming Agent or its designee as secured party and Borrower as debtor, or any
amendments to any financing statements, covering any such commercial tort claim
as Collateral. In addition, Borrower shall promptly upon Agent’s request,
execute and deliver, or cause to be executed and delivered, to Agent
such other agreements, documents and instruments as Agent may reasonably require
in connection with such commercial tort claim.
(h) Borrower
does not have any goods, documents of title or other Collateral in the custody,
control or possession of a third party as of the date hereof, except as set
forth in the Information Certificate and except for goods located in the United
States in transit to a location of Borrower permitted herein in the
ordinary course of business of Borrower in the possession of the carrier
transporting such goods. In the event that any goods, documents of
title or other Collateral are at any time after the date hereof in the custody,
control or possession of any other person not referred to in the Information
Certificate or such carriers, Borrower shall promptly notify Agent thereof in
writing. Promptly upon Agent’s request, Borrower shall deliver to
Agent a Collateral Access Agreement duly authorized, executed and delivered by
such person and Borrower.
(i) Borrower
shall take any other actions reasonably requested by Agent from time to time to
cause the attachment, perfection and first priority of, and the ability of Agent
to enforce, the security interest of Agent in any and all of the Collateral,
including, without limitation, (i) executing, delivering and, where appropriate,
filing financing statements and amendments relating thereto under the UCC or
other applicable law, to the extent, if any, that Borrower’s signature thereon
is required therefor, (ii) causing Agent’s name to be noted as secured party on
any certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of Agent to enforce, the
security interest of Agent in such Collateral, (iii) complying with any
provision of any statute, regulation or treaty of the United States as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of Agent to enforce, the security interest
of Agent in such Collateral, (iv) obtaining the consents and approvals of any
Governmental Authority or third party, including, without limitation, any
consent of any licensor, lessor or other person obligated on Collateral, and
taking all actions required by any earlier versions of the UCC or by other law,
as applicable in any relevant jurisdiction.
SECTION
6. COLLECTION AND
ADMINISTRATION
6.1 Borrower Loan
Account. Agent
shall maintain one or more loan account(s) on its books in which shall be
recorded (a) all Loans, Letters of Credit and other Obligations and the
Collateral, (b) all payments made by or on behalf of Borrower and (c) all other
appropriate debits and credits as provided in this Agreement, including fees,
charges, costs, expenses and interest. All entries in the loan
account(s) shall be made in accordance with Agent’s customary practices as in
effect from time to time.
6.2 Statements. Agent
shall render to Borrower each month a statement setting forth the balance in the
Borrower’s loan account(s) maintained by Agent for Borrower pursuant to the
provisions of this Agreement, including principal, interest, fees, costs and
expenses. Each such statement shall be subject to subsequent
adjustment by Agent but shall, absent manifest errors or omissions, be
considered correct and deemed accepted by Borrower and conclusively binding upon
Borrower as an account stated except to the extent that Agent receives a written
notice from Borrower of any specific exceptions of Borrower thereto within
forty-five (45) days after the date such statement has been received by
Borrower. Until such time as Agent shall have rendered to Borrower a
written statement as provided above, the balance in Borrower’s loan account(s)
shall be presumptive evidence of the amounts due and owing to Agent and Lenders
by Borrower.
6.3 Collection of
Accounts.
(a) Borrower
shall establish and maintain, at its expense, blocked accounts or lockboxes and
related blocked accounts (in either case, “Blocked Accounts”), as Agent may
reasonably specify, with such banks as are reasonably acceptable to Agent into
which Borrower shall promptly deposit and direct their respective account
debtors to directly remit all payments on Receivables and all payments
constituting proceeds of Inventory or other Collateral in the identical form in
which such payments are made, whether by cash, check or other
manner. Borrower shall deliver, or cause to be delivered to Agent a
Deposit Account Control Agreement duly authorized, executed and delivered by
each bank where a Blocked Account is maintained as provided in Section 5.2
hereof or at any time and from time to time Agent may become the bank’s customer
with respect to any of the Blocked Accounts and promptly upon Agent’s request,
Borrower shall execute and deliver such agreements and documents as Agent may
reasonably require in connection therewith. Borrower agrees that all
payments made to such Blocked Accounts or other funds received and collected by
Agent or any Lender, whether in respect of the Receivables, as proceeds of
Inventory or other Collateral or otherwise shall be treated as payments to Agent
and Lenders in respect of the Obligations and therefore shall constitute the
property of Agent and Lenders to the extent of the then outstanding
Obligations.
(b) For
purposes of calculating the amount of the Loans available to Borrower, such
payments will be applied (conditional upon final collection) to the Obligations
on the Business Day of receipt by Agent of immediately available funds in the
Agent Payment Account provided such payments and notice thereof are received in
accordance with Agent’s usual and customary practices as in effect from time to
time and within sufficient time to credit Borrower’s loan account on such day,
and if not, then on the next Business Day. For the purposes of
calculating interest on the Obligations, such payments or other funds received
will be applied (conditional upon final collection) to the Obligations one (1)
Business Day following the date of receipt of immediately available funds by
Agent in the Agent Payment Account provided such payments or other funds and
notice thereof are received in accordance with Agent’s usual and customary
practices as in effect from time to time and within sufficient time to credit
Borrower’s loan account on such day, and if not, then on the next Business
Day.
(c) Borrower
and its employees, agents and Subsidiaries shall, acting as trustee for Agent,
receive, as the property of Agent, any monies, checks, notes, drafts or any
other payment relating to and/or proceeds of Accounts or other Collateral which
come into their possession or under their control and promptly upon receipt
thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to
Agent. In no event shall the same be commingled with Borrower’s own
funds. Borrower agrees to reimburse Agent on demand for any amounts
owed or paid by Agent to any bank at which a Blocked Account or any other
deposit account is established or any other bank financial institution or other
person involved in the transfer of funds to or from the Blocked Accounts arising
out of Agent’s payments to or indemnification of such bank, financial
institution or other person. The obligations of Borrower to reimburse
Agent for such amounts pursuant to this Section 6.3 shall survive the
termination of this Agreement.
6.4 Payments.
(a) All
Obligations shall be payable to the Agent Payment Account as provided in Section
6.3 or such other place as Agent may designate from time to
time. Subject to the other terms and conditions contained herein,
Agent shall apply payments received or collected from Borrower or any Guarantor
or for the account of Borrower or any Guarantor (including the monetary proceeds
of collections or of realization upon any Collateral) as follows: first, to pay any
fees, indemnities or expense reimbursements then due to Agent, Lenders and
Issuing Bank from Borrower or any Guarantor; second, to pay
interest due in respect of any Loans (and including any Special Agent Advances)
or Letter of Credit Obligations; third, to pay or
prepay principal in respect of Special Agent Advances; fourth, to pay
principal due in respect of the Loans and to pay Obligations then due arising
under or pursuant to any Hedge Agreements of Borrower or a Guarantor with Agent
or a Bank Product Provider (up to the amount of any then effective Reserve
established in respect of such Obligations), on a pro rata basis; fifth, to pay or
prepay any other Obligations whether or not then due, in such order and manner
as Agent determines and at any time an Event of Default exists or has occurred
and is continuing, to provide cash collateral for any Letter of Credit
Obligations or other contingent Obligations (but not including for this purpose
any Obligations arising under or pursuant to any Bank Products); and sixth, to pay or
prepay any Obligations arising under or pursuant to any Bank Products (other
than to the extent provided for above) on a pro rata
basis. Notwithstanding anything to the contrary contained in this
Agreement, (i) unless so directed by Borrower, or unless a Default or an Event
of Default shall exist or have occurred and be continuing, Agent shall not apply
any payments which it receives to any Eurodollar Rate Loans, except (A) on the
expiration date of the Interest Period applicable to any such Eurodollar Rate
Loans or (B) in the event that there are no outstanding Prime Rate Loans and
(ii) to the extent Borrower uses any proceeds of the Loans or Letters of Credit
to acquire rights in or the use of any Collateral or to repay any Indebtedness
used to acquire rights in or the use of any Collateral, payments in respect of
the Obligations shall be deemed applied first to the Obligations arising from
Loans and Letters of Credit that were not used for such purposes and second to
the Obligations arising from Loans and Letters of Credit the proceeds of which
were used to acquire rights in or the use of any Collateral in the chronological
order in which Borrower acquired such rights in or the use of such
Collateral.
(b) At
Agent’s option, all principal, interest, fees, costs, expenses and other charges
provided for in this Agreement or the other Financing Agreements may be charged
directly to the loan account(s) of Borrower maintained by Agent. If
after receipt of any payment of, or proceeds of Collateral applied to the
payment of, any of the Obligations, Agent, any Lender or Issuing Bank is
required to surrender or return such payment or proceeds to any Person for any
reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
Agent or such Lender. Borrower shall be liable to pay to Agent, and
does hereby indemnify and hold Agent and Lenders harmless for the amount of any
payments or proceeds surrendered or returned. This Section 6.4(b)
shall remain effective notwithstanding any contrary action which may be taken by
Agent or any Lender in reliance upon such payment or proceeds. This
Section 6.4 shall survive the payment of the Obligations and the termination of
this Agreement.
6.5 Taxes.
(a) Any and
all payments by or on account of any of the Obligations shall be made free and
clear of and without deduction or withholding for or on account of, any setoff,
counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
charges, withholdings, liabilities, restrictions or conditions of any kind,
excluding (i) in the case of each Lender, Issuing Bank and Agent (A) taxes
measured by its net income, and franchise taxes imposed on it, by the
jurisdiction (or any political subdivision thereof) under the laws of which such
Lender, Issuing Bank or Agent (as the case may be) is organized and (B) any
United States withholding taxes payable with respect to payments under the
Financing Agreements under laws (including any statute, treaty or regulation) in
effect on the date hereof or thereafter (or, in the case of an Eligible
Transferee, the date of the Assignment and Acceptance) applicable to such
Lender, Issuing Bank or Agent, as the case may be, as well as any United States
withholding taxes payable as a result of any change in such laws occurring after
the date hereof (or the date of such Assignment and Acceptance) and (ii) in the
case of each Lender, taxes measured by its net income, and franchise taxes
imposed on it as a result of a present or former connection between such Lender
and the jurisdiction of the Governmental Authority imposing such tax or any
taxing authority thereof or therein (all such non-excluded taxes, levies,
imposts, fees, deductions, charges, withholdings and liabilities being
hereinafter referred to as “Taxes”).
(b) If any
Taxes shall be required by law to be deducted from or in respect of any sum
payable in respect of the Obligations to any Lender, Issuing Bank or Agent
(i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 6.5), such Lender, Issuing Bank or
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Borrower shall make
such deductions, (iii) the Borrower shall pay the full amount
deducted to the relevant taxing authority or other authority in accordance with
applicable law and (iv) Borrower shall deliver to Agent evidence of
such payment.
(c) In
addition, Borrower agrees to pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies of the
United States or any political subdivision thereof or any applicable foreign
jurisdiction, and all liabilities with respect thereto, in each case arising
from any payment made hereunder or under any of the other Financing Agreements
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or any of the other Financing Agreements (collectively,
“Other Taxes”).
(d) Borrower
shall indemnify each Lender, Issuing Bank and Agent for the full amount of Taxes
and Other Taxes (including any Taxes and Other Taxes imposed by any jurisdiction
on amounts payable under this Section 6.5) paid by such Lender, Issuing Bank or
Agent (as the case may be) and any liability (including for penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within thirty (30) days from the date such Lender,
Issuing Bank or Agent (as the case may be) makes written demand
therefor. Agent, Issuing Bank or the applicable Lender shall certify
to Borrower in writing the amount of such payment or liability, which
certification shall be conclusive absent manifest error.
(e) As soon
as practicable after any payment of Taxes or Other Taxes by Borrower, Borrower
shall furnish to Agent, at its address referred to herein, the original or a
certified copy of a receipt evidencing payment thereof.
(f) Without
prejudice to the survival of any other agreements of Borrower hereunder or under
any of the other Financing Agreements, the agreements and obligations of
Borrower contained in this Section 6.5 shall survive the termination of this
Agreement and the payment in full of the Obligations.
(g) Any
Foreign Lender that is entitled to an exemption from or reduction of withholding
tax under the law of the jurisdiction in which the Borrower is resident for tax
purposes, or any treaty to which such jurisdiction is a party, with respect to
payments hereunder or under any of the other Financing Agreements shall deliver
to Borrower (with a copy to Agent), at the time or times prescribed by
applicable law or reasonably requested by Borrower or Agent (in such number of
copies as is reasonably requested by the recipient), whichever of the following
is applicable (but only if such Foreign Lender is legally entitled to do
so): (i) duly completed copies of Internal Revenue Service Form
W-8BEN claiming exemption from, or a reduction to, withholding tax under an
income tax treaty, or any successor form, (ii) duly completed copies
of Internal Revenue Service Form 8-8ECI claiming exemption from withholding
because the income is effectively in connection with a U.S. trade or business or
any successor form, (iii) in the case of a Foreign Lender claiming the benefits
of the exemption for portfolio interest under Sections 871(h) or 881(c) of the
Code, (A) a certificate of the Lender to the effect that such Lender is not a
“bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent
shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code
or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the
Code and (B) duly completed copies of Internal Revenue Service Form W-8BEN
claiming exemption from withholding under the portfolio interest exemption or
any successor form or (iv) any other applicable form, certificate or document
prescribed by applicable law as a basis for claiming exemption from or a
reduction in United States withholding tax duly completed together with such
supplementary documentation as may be prescribed by applicable law to permit
Borrower to determine the withholding or deduction required to be
made. Unless Borrower and Agent have received forms or other
documents satisfactory to them indicating that payments hereunder or under any
of the other Financing Agreements to or for a Foreign Lender are not subject to
United States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, Borrower or Agent shall withhold amounts required to be
withheld by applicable requirements of law from such payments at the applicable
statutory rate.
(h) Any
Lender claiming any additional amounts payable pursuant to this Section 6.5
shall use its reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to change the jurisdiction of its applicable
lending office if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts that would be payable or may
thereafter accrue and would not, in the sole determination of such Lender, be
otherwise disadvantageous to such Lender.
6.6 Authorization to Make
Loans. Agent
and Lenders are authorized to make the Loans based upon telephonic or other
instructions received from anyone purporting to be an officer of Borrower or
other authorized person or, at the discretion of Agent, if such Loans are
necessary to satisfy any Obligations. All requests for Loans or
Letters of Credit hereunder shall specify the date on which the requested
advance is to be made (which day shall be a Business Day) and the amount of the
requested Loan. Requests received after 11:00 a.m. Los Angeles,
California time on any day shall be deemed to have been made as of the opening
of business on the immediately following Business Day. All Loans and
Letters of Credit under this Agreement shall be conclusively presumed to have
been made to, and at the request of and for the benefit of, Borrower or when
deposited to the credit of Borrower or otherwise disbursed or established in
accordance with the instructions of Borrower or in accordance with the terms and
conditions of this Agreement.
6.7 Use of Proceeds. Borrower
shall use the initial proceeds of the Loans and Letters of Credit hereunder only
for: (a) payments to each of the persons listed in the disbursement
direction letter furnished by Borrower to Agent on or about the date hereof,
including, without limitation, the payment to Parent of an amount not to exceed
$6,000,000 on account of intercompany Indebtedness owing by Borrower to Parent
as of the date hereof as permitted by Section 9.12(b) hereof, and (b) costs,
expenses and fees in connection with the preparation, negotiation, execution and
delivery of this Agreement and the other Financing Agreements. All
other Loans made or Letters of Credit provided to or for the benefit of Borrower
pursuant to the provisions hereof shall be used by Borrower only for general
operating, working capital and other proper corporate purposes of Borrower not
otherwise prohibited by the terms hereof. None of the proceeds will
be used, directly or indirectly, for the purpose of purchasing or carrying any
margin stock or for the purposes of reducing or retiring any indebtedness which
was originally incurred to purchase or carry any margin stock or for any other
purpose which might cause any of the Loans to be considered a “purpose credit”
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, as amended.
6.8 Pro Rata
Treatment. Except
to the extent otherwise provided in this Agreement or as otherwise agreed by
Lenders: (a) the making and conversion of Loans shall be made
among the Lenders based on their respective Pro Rata Shares as to the Loans and
(b) each payment on account of any Obligations to or for the account of one
or more of Lenders in respect of any Obligations due on a particular day shall
be allocated among the Lenders entitled to such payments based on their
respective Pro Rata Shares and shall be distributed accordingly.
6.9 Sharing of Payments,
Etc. Borrower
agrees that, in addition to (and without limitation of) any right of setoff,
banker’s lien or counterclaim Agent or any Lender may otherwise have, each
Lender shall be entitled, at its option (but subject, as among Agent and
Lenders, to the provisions of Section 12.3(b) hereof), to offset balances held
by it for the account of Borrower at any of its offices, in dollars or in any
other currency, against any principal of or interest on any Loans owed to such
Lender or any other amount payable to such Lender hereunder, that is not paid
when due (regardless of whether such balances are then due to Borrower), in
which case it shall promptly notify Borrower and Agent thereof; provided, that, such Lender’s
failure to give such notice shall not affect the validity thereof.
(a) If any
Lender (including Agent) shall obtain from Borrower payment of any principal of
or interest on any Loan owing to it or payment of any other amount under this
Agreement or any of the other Financing Agreements through the exercise of any
right of setoff, banker’s lien or counterclaim or similar right or otherwise
(other than from Agent as provided herein), and, as a result of such payment,
such Lender shall have received more than its Pro Rata Share of the principal of
the Loans or more than its share of such other amounts then due hereunder or
thereunder by Borrower to such Lender than the percentage thereof received by
any other Lender, it shall promptly pay to Agent, for the benefit of Lenders,
the amount of such excess and simultaneously purchase from such other Lenders a
participation in the Loans or such other amounts, respectively, owing to such
other Lenders (or such interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all Lenders shall share the benefit of such excess
payment (net of any expenses that may be incurred by such Lender in obtaining or
preserving such excess payment) in accordance with their respective Pro Rata
Shares or as otherwise agreed by Lenders. To such end all Lenders
shall make appropriate adjustments among themselves (by the resale of
participation sold or otherwise) if such payment is rescinded or must otherwise
be restored.
(b) Borrower
agrees that any Lender purchasing a participation (or direct interest) as
provided in this Section may exercise, in a manner consistent with this Section,
all rights of setoff, banker’s lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender were a direct holder of Loans
or other amounts (as the case may be) owing to such Lender in the amount of such
participation.
(c) Nothing
contained herein shall require any Lender to exercise any right of setoff,
banker’s lien, counterclaims or similar rights or shall affect the right of any
Lender to exercise, and retain the benefits of exercising, any such right with
respect to any other Indebtedness or obligation of Borrower. If,
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section applies, such
Lender shall, to the extent practicable, assign such rights to Agent for the
benefit of Lenders and, in any event, exercise its rights in respect of such
secured claim in a manner consistent with the rights of Lenders entitled under
this Section to share in the benefits of any recovery on such secured
claim.
6.10 Settlement
Procedures.(a) In order
to administer the Credit Facility in an efficient manner and to minimize the
transfer of funds between Agent and Lenders, Agent may, at its option, subject
to the terms of this Section, make available, on behalf of Lenders, the full
amount of the Loans requested or charged to Borrower’s loan account(s) or
otherwise to be advanced by Lenders pursuant to the terms hereof, without
requirement of prior notice to Lenders of the proposed Loans.
(b) With
respect to all Loans made by Agent on behalf of Lenders as provided in this
Section, the amount of each Lender’s Pro Rata Share of the outstanding Loans
shall be computed weekly, and shall be adjusted upward or downward on the basis
of the amount of the outstanding Loans as of 5:00 p.m. Los Angeles, California
time on the Business Day immediately preceding the date of each settlement
computation; provided, that, Agent retains
the absolute right at any time or from time to time to make the above described
adjustments at intervals more frequent than weekly, but in no event more than
twice in any week. Agent shall deliver to each of the Lenders after
the end of each week, or at such lesser period or periods as Agent shall
determine, a summary statement of the amount of outstanding Loans for such
period (such week or lesser period or periods being hereinafter referred to as a
“Settlement Period”). If the summary statement is sent by Agent and
received by a Lender prior to 12:00 p.m. Los Angeles, California time, then such
Lender shall make the settlement transfer described in this Section by no later
than 3:00 p.m. Los Angeles, California time on the same Business Day and if
received by a Lender after 12:00 p.m. Los Angeles, California time, then such
Lender shall make the settlement transfer by not later than 3:00 p.m. Los
Angeles, California time on the next Business Day following the date of
receipt. If, as of the end of any Settlement Period, the amount of a
Lender’s Pro Rata Share of the outstanding Loans is more than such Lender’s Pro
Rata Share of the outstanding Loans as of the end of the previous Settlement
Period, then such Lender shall forthwith (but in no event later than the time
set forth in the preceding sentence) transfer to Agent by wire transfer in
immediately available funds the amount of the
increase. Alternatively, if the amount of a Lender’s Pro Rata Share
of the outstanding Loans in any Settlement Period is less than the amount of
such Lender’s Pro Rata Share of the outstanding Loans for the previous
Settlement Period, Agent shall forthwith transfer to such Lender by wire
transfer in immediately available funds the amount of the
decrease. The obligation of each of the Lenders to transfer such
funds and effect such settlement shall be irrevocable and unconditional and
without recourse to or warranty by Agent. Agent and each Lender
agrees to mark its books and records at the end of each Settlement Period to
show at all times the dollar amount of its Pro Rata Share of the outstanding
Loans and Letters of Credit. Each Lender shall only be entitled to
receive interest on its Pro Rata Share of the Loans to the extent such Loans
have been funded by such Lender. Because the Agent on behalf of
Lenders may be advancing and/or may be repaid Loans prior to the time when
Lenders will actually advance and/or be repaid such Loans, interest with respect
to Loans shall be allocated by Agent in accordance with the amount of Loans
actually advanced by and repaid to each Lender and the Agent and shall accrue
from and including the date such Loans are so advanced to but excluding the date
such Loans are either repaid by Borrower or actually settled with the applicable
Lender as described in this Section.
(c) To the
extent that Agent has made any such amounts available and the settlement
described above shall not yet have occurred, upon repayment of any Loans
by Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section. In lieu of
weekly or more frequent settlements, Agent may, at its option, at any time
require each Lender to provide Agent with immediately available funds
representing its Pro Rata Share of each Loan, prior to Agent’s disbursement of
such Loan to Borrower. In such event, all Loans under this Agreement
shall be made by the Lenders simultaneously and proportionately to their Pro
Rata Shares. No Lender shall be responsible for any default by any
other Lender in the other Lender’s obligation to make a Loan requested hereunder
nor shall the Commitment of any Lender be increased or decreased as a result of
the default by any other Lender in the other Lender’s obligation to make a Loan
hereunder.
(d) If Agent
is not funding a particular Loan to Borrower pursuant to Sections 6.10(a) and
6.10(b) above on any day, but is requiring each Lender to provide Agent with
immediately available funds on the date of such Loan as provided in Section
6.10(c) above, Agent may assume that each Lender will make available to Agent
such Lender’s Pro Rata Share of the Loan requested or otherwise made on such day
and Agent may, in its discretion, but shall not be obligated to, cause a
corresponding amount to be made available to or for the benefit of Borrower on
such day. If Agent makes such corresponding amount available to
Borrower and such corresponding amount is not in fact made available to Agent by
such Lender, Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon for each day from the
date such payment was due until the date such amount is paid to Agent at the
Federal Funds Rate for each day during such period (as published by the Federal
Reserve Bank of New York or at Agent’s option based on the arithmetic mean
determined by Agent of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that day by each of
the three leading brokers of Federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days of
Agent’s demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to Prime Rate Loans. During the period in which such
Lender has not paid such corresponding amount to Agent, notwithstanding anything
to the contrary contained in this Agreement or any of the other Financing
Agreements, the amount so advanced by Agent to or for the benefit of Borrower
shall, for all purposes hereof, be a Loan made by Agent for its own
account. Upon any such failure by a Lender to pay Agent, Agent shall
promptly thereafter notify Borrower of such failure and Borrower shall pay such
corresponding amount to Agent for its own account within five (5) Business Days
of Borrower’s receipt of such notice. A Lender who fails to pay Agent
its Pro Rata Share of any Loans made available by the Agent on such Lender’s
behalf, or any Lender who fails to pay any other amount owing by it to Agent, is
a “Defaulting Lender”. Agent shall not be obligated to transfer to a
Defaulting Lender any payments received by Agent for the Defaulting Lender’s
benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder (including any principal, interest or
fees). Amounts payable to a Defaulting Lender shall instead be paid
to or retained by Agent. Agent may hold and, in its discretion,
relend to Borrower the amount of all such payments received or retained by it
for the account of such Defaulting Lender. For purposes of voting or
consenting to matters with respect to this Agreement and the other Financing
Agreements and determining Pro Rata Shares, such Defaulting Lender shall be
deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be
zero (0). This Section shall remain effective with respect to a
Defaulting Lender until such default is cured. The operation of this
Section shall not be construed to increase or otherwise affect the Commitment of
any Lender, or relieve or excuse the performance by Borrower or any Obligor of
their duties and obligations hereunder.
(e) Nothing
in this Section or elsewhere in this Agreement or the other Financing
Agreements shall be deemed to require Agent to advance funds on behalf of any
Lender or to relieve any Lender from its obligation to fulfill its Commitment
hereunder or to prejudice any rights that Borrower may have against any Lender
as a result of any default by any Lender hereunder in fulfilling its
Commitment.
6.11 Obligations Several;
Independent Nature of Lenders’ Rights. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender
hereunder. Nothing contained in this Agreement or any of the other
Financing Agreements and no action taken by the Lenders pursuant hereto or
thereto shall be deemed to constitute the Lenders to be a partnership, an
association, a joint venture or any other kind of entity. The amounts
payable at any time hereunder to each Lender shall be a separate and independent
debt, and subject to Section 12.3 hereof, each Lender shall be entitled to
protect and enforce its rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
6.12 Bank
Products. Borrower
and Guarantors (other than Parent), or any of their Subsidiaries, may (but no
such Person is required to) request that the Bank Product Providers provide or
arrange for such Person to obtain Bank Products from Bank Product Providers, and
each Bank Product Provider may, in its sole discretion, provide or arrange for
such Person to obtain the requested Bank Products. Borrower and
Guarantors (other than Parent) or any of their Subsidiaries that obtains Bank
Products shall indemnify and hold Agent, each Lender and their respective
Affiliates harmless from any and all obligations now or hereafter owing to any
other Person by any Bank Product Provider in connection with any Bank Products
other than for gross negligence or willful misconduct on the part of any such
indemnified Person. This Section 6.12 shall survive the payment of
the Obligations and the termination of this Agreement. Borrower and
Guarantors (other than Parent) and their Subsidiaries acknowledge and agree that
the obtaining of Bank Products from Bank Product Providers (a) is in the sole
discretion of such Bank Product Provider, and (b) is subject to all rules and
regulations of such Bank Product Provider.
SECTION
7. COLLATERAL REPORTING AND
COVENANTS
7.1 Collateral
Reporting.
(a) Borrower
shall provide Agent with the following documents in a form reasonably
satisfactory to Agent:
(i) (A) prior
to November 1, 2008 or at any time a Default or Event of Default exists or has
occurred and is continuing or Excess Availability is less than fifteen (15%)
percent of the Borrowing Base, on a daily basis (but in any event no later than
9:00 a.m. Los Angeles, California time on the immediately following day) and (B)
from and after November 1, 2008, and so long as no Default or Event of Default
exists or has occurred and is continuing and Excess Availability is equal to or
greater than fifteen (15%) percent of the Borrowing Base (up to $5,000,000), as
soon as practicable after the end of each week (but in any event within two (2)
Business Days after the end thereof) on a weekly basis or more frequently as
Agent may reasonably request: (1) schedules of sales made, credits
issued and cash received, (2) inventory reports by location and category (and
including the amounts of Inventory and the value thereof at any leased locations
and at premises of warehouses, processors or other third parties) and (3) a
Borrowing Base Certificate setting forth the calculation of the Borrowing Base
as of the last Business Day of the immediately preceding period, duly completed
and executed by the Chief Executive Officer, Chief Financial Officer or other
financial or senior officer of Borrower, together with all schedules required
pursuant to the terms of the Borrowing Base Certificate duly
completed;
(ii) as soon
as practicable after the end of each month (but in any event within two (2)
Business Days after the end thereof), on a monthly basis or more frequently as
Agent may reasonably request: (A) perpetual inventory reports, (B)
agings of accounts receivable (together with a reconciliation to the previous
month’s aging and general ledger), (C) agings of accounts payable (and including
information indicating the amounts owing to owners and lessors of leased
premises, warehouses, processors and other third parties from time to time in
possession of any Collateral) and (D) a schedule of all ethanol purchase and
sale contracts or agreements constituting a Material Contract entered into,
amended or terminated during the previous month;
(iii) promptly
following Agent’s request, (A) copies of customer statements, purchase orders,
sales invoices, credit memos, remittance advices and reports, and copies of
deposit slips and bank statements, (B) copies of shipping and delivery
documents, and (C) copies of purchase orders, invoices and delivery
documents for Inventory and Equipment acquired by Borrower; and
(iv) promptly
following Agent’s request, such other reports as to the Collateral as Agent
shall reasonably request from time to time.
(b) If
Borrower’s records or reports of the Collateral are prepared or maintained by an
accounting service, contractor, shipper or other agent, Borrower hereby
irrevocably authorizes such service, contractor, shipper or agent to deliver
such records, reports, and related documents to Agent and to follow Agent’s
instructions with respect to further services at any time that an Event of
Default exists or has occurred and is continuing.
7.2 Accounts
Covenants.
(a) Borrower
shall notify Agent promptly of: (i) any material delay in Borrower’s performance
of any of its material obligations to any account debtor or the assertion of any
material claims, offsets, defenses or counterclaims by any account debtor, or
any material disputes with account debtors, or any settlement, adjustment or
compromise thereof, (ii) all material adverse information known to Borrower
relating to the financial condition of any account debtor and (iii) any event or
circumstance which, to the best of Borrower’s knowledge, would cause Agent to
consider any then existing Accounts as no longer constituting Eligible
Accounts. No credit, discount, allowance or extension or agreement
for any of the foregoing shall be granted to any account debtor without Agent’s
consent, except in the ordinary course of Borrower’s business in
accordance with practices and policies previously disclosed in writing to Agent
and except as set forth in the schedules delivered to Agent pursuant to Section
7.1(a) above. So long as no Event of Default exists or has occurred
and is continuing, Borrower shall settle, adjust or compromise any claim,
offset, counterclaim or dispute with any account debtor. At any time
that an Event of Default exists or has occurred and is continuing, Agent shall,
at its option, have the exclusive right to settle, adjust or compromise any
claim, offset, counterclaim or dispute with account debtors or grant any
credits, discounts or allowances.
(b) With
respect to each Account: (i) the amounts shown on any invoice delivered to Agent
or schedule thereof delivered to Agent shall be true and complete in all
material respects, (ii) no payments shall be made thereon except payments
promptly delivered to Agent pursuant to the terms of this Agreement, (iii) no
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor except as reported to Agent in accordance
with this Agreement and except for credits, discounts, allowances or extensions
made or given in the ordinary course of Borrower’s business in accordance with
practices and policies previously disclosed to Agent, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Agent in accordance with the
terms of this Agreement, (v) none of the transactions giving rise thereto will
violate any applicable foreign, Federal, State or local laws or regulations in
any material respect, all documentation relating thereto will be legally
sufficient under such laws and regulations in all material respects and all such
documentation will be legally enforceable in accordance with its terms in all
material respects.
(c) Agent
shall have the right at any time or times, in Agent’s name or in the name of a
nominee of Agent, to verify the validity, amount or any other matter relating to
any Receivables or other Collateral, by mail, telephone, facsimile transmission
or otherwise.
7.3 Inventory
Covenants. With
respect to the Inventory: (a) Borrower shall at all times maintain
inventory records reasonably satisfactory to Agent, keeping correct and accurate
records itemizing and describing the kind, type, quality and quantity of
Inventory, Borrower’s cost therefor and daily withdrawals therefrom and
additions thereto; (b) Borrower shall conduct a count of the Inventory as
required by and in accordance with GAAP and Borrower’s own internal controls at
least once each year but at any other reasonable time or times as Agent may
request on or after an Event of Default, and promptly following such inventory
shall supply Agent with a report in the form and with such specificity as may be
reasonably satisfactory to Agent concerning such count; (c) Borrower shall not
remove any Inventory from the locations set forth or permitted herein, without
the prior written consent of Agent, except for sales of Inventory in the
ordinary course of its business and except to move Inventory directly from one
location set forth or permitted herein to another such location and except for
Inventory shipped from the manufacturer thereof to Borrower which is in transit
to the locations set forth or permitted herein; (d) upon Agent’s request,
Borrower shall, at its expense, no more than one (1) time in any twelve (12)
month period, but at any time or times as Agent may request on or after an Event
of Default, deliver or cause to be delivered to Agent written appraisals as to
the Inventory in form, scope and methodology reasonably acceptable to Agent and
by an appraiser reasonably acceptable to Agent, addressed to Agent and Lenders
and upon which Agent and Lenders are expressly permitted to rely; (e) Borrower
shall produce, use, store and maintain the Inventory with all reasonable care
and caution and in accordance with applicable standards of any insurance and in
material conformity with applicable laws (including the requirements of the
Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations
and orders related thereto); (f) none of the Inventory or other Collateral
constitutes farm products or the proceeds thereof; (g) Borrower assumes all
responsibility and liability arising from or relating to its production, use,
sale or other disposition of the Inventory; (h) Borrower shall not sell
Inventory to any customer on approval or any similar basis which entitles the
customer to return or may obligate Borrower to repurchase such Inventory; (i)
Borrower shall keep the Inventory in good and marketable condition; and (j)
Borrower shall not, without prior written notice to Agent or the specific
identification of such Inventory in a report with respect thereto provided by
Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or accept any
Inventory on consignment or approval.
7.4 Equipment and Real Property
Covenants. With
respect to the Equipment and Real Property: (a) Borrower shall keep the
Equipment in good order, repair, running and marketable condition (ordinary wear
and tear excepted); (b) Borrower shall use the Equipment and Real Property with
all reasonable care and caution and in accordance with applicable standards of
any insurance and in material conformity with all applicable laws;
(c) the Equipment is and shall be used in the business of Borrower
and not for personal, family, household or farming use; (d) Borrower
shall not remove any Equipment from the locations set forth or permitted herein,
except to the extent necessary to have any Equipment repaired or maintained in
the ordinary course of its business or to move Equipment directly from one
location set forth or permitted herein to another such location and except for
the movement of motor vehicles used by or for the benefit of Borrower in the
ordinary course of business; (e) the Equipment is now and shall
remain personal property and Borrower shall not permit any of the Equipment to
be or become a part of or affixed to real property; and (f) Borrower assumes all
responsibility and liability arising from the use of the Equipment and Real
Property.
7.5 Power of
Attorney. Borrower
hereby irrevocably designates and appoints Agent (and all persons designated by
Agent) as Borrower’s true and lawful attorney-in-fact, and authorizes Agent, in
Borrower’s, or Agent’s name, to: (a) at any time an Event of Default exists or
has occurred and is continuing (i) demand payment on Receivables or other
Collateral, (ii) enforce payment of Receivables by legal proceedings or
otherwise, (iii) exercise all of Borrower’s rights and remedies to collect any
Receivable or other Collateral, (iv) sell or assign any Receivable upon such
terms, for such amount and at such time or times as the Agent reasonably deems
advisable, (v) settle, adjust, compromise, extend or renew an Account, (vi)
discharge and release any Receivable, (vii) prepare, file and sign Borrower’s
name on any proof of claim in bankruptcy or other similar document against an
account debtor or other obligor in respect of any Receivables or other
Collateral, (viii) notify the post office authorities to change the address for
delivery of remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral to an address designated by Agent,
and open and dispose of all mail addressed to Borrower and handle and store all
mail relating to the Collateral; (ix) clear Inventory the purchase of which
was financed with a Letter of Credit through U.S. Customs or foreign export
control authorities in Borrower’s name, Agent’s name or the name of Agent’s
designee, and to sign and deliver to customs officials powers of attorney in
Borrower’s name for such purpose, and to complete in Borrower’s or Agent’s name,
any order, sale or transaction, obtain the necessary documents in connection
therewith and collect the proceeds thereof, and (x) sign Borrower’s name on
any verification of Receivables and notices thereof to account debtors or any
secondary obligors or other obligors in respect thereof; and (xi) do all acts
and things which are necessary, in Agent’s determination, to
fulfill Borrower’s obligations under this Agreement and the other
Financing Agreements and (b) at any time to (i) take control in any manner of
any item of payment in respect of Receivables or constituting Collateral or
otherwise received in or for deposit in the Blocked Accounts or otherwise
received by Agent or any Lender, (ii) have access to any lockbox or postal
box into which remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral are sent or received,
(iii) endorse Borrower’s name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise received by Agent and any
Lender and deposit the same in Agent’s account for application to the
Obligations, and (iv) endorse Borrower’s name upon any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any Receivable
or any goods pertaining thereto or any other Collateral, including any warehouse
or other receipts, or bills of lading and other negotiable or non-negotiable
documents. Borrower hereby releases Agent and Lenders and their
respective officers, employees and designees from any liabilities arising from
any act or acts under this power of attorney and in furtherance thereof, whether
of omission or commission, except as a result of Agent’s or any Lender’s own
gross negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
7.6 Right to Cure. Agent
may, at its option, upon notice to Borrower, (a) cure any default by Borrower
under any material agreement with a third party that affects the Collateral, its
value or the ability of Agent to collect, sell or otherwise dispose of the
Collateral or the rights and remedies of Agent or any Lender therein or the
ability of Borrower or any Obligor to perform its obligations hereunder or under
any of the other Financing Agreements, (b) pay or bond on appeal any judgment
entered against Borrower, (c) discharge taxes, liens, security interests or
other encumbrances at any time levied on or existing with respect to the
Collateral and (d) pay any amount, incur any expense or perform any act which,
in Agent’s reasonable judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Agent and Lenders
with respect thereto. Agent may add any amounts so expended to the
Obligations and charge Borrower’s account therefor, such amounts to be repayable
by Borrower on demand. Agent and Lenders shall be under no obligation
to effect such cure, payment or bonding and shall not, by doing so, be deemed to
have assumed any obligation or liability of Borrower or any
Obligor. Any payment made or other action taken by Agent or any
Lender under this Section shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed accordingly.
7.7 Access to
Premises. From
time to time as reasonably requested by Agent, at the cost and expense of
Borrower, (a) Agent or its designee shall have complete access to all of
Borrower’s premises during normal business hours and after notice to, or at any
time and without notice to Borrower if an Event of Default exists or has
occurred and is continuing, for the purposes of inspecting, verifying and
auditing the Collateral and all of Borrower’s books and records, including the
Records, and (b) Borrower shall promptly furnish to Agent such copies of such
books and records or extracts therefrom as Agent may request, and (c) Agent or
any Lender or Agent’s designee may use during normal business hours such of
Borrower’s personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists or has occurred
and is continuing for the collection of Receivables and realization of other
Collateral.
SECTION
8. REPRESENTATIONS AND
WARRANTIES
Borrower
hereby represents and warrants to Agent, Lenders and Issuing Bank the following
(which shall survive the execution and delivery of this Agreement):
8.1 Corporate Existence, Power
and Authority. Borrower
is a limited liability company duly organized and in good standing under the
laws of its jurisdiction of organization or formation and is duly qualified as a
foreign limited liability company and in good standing in all states or other
jurisdictions where the nature and extent of the business transacted by it or
the ownership of assets makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have a material
adverse effect on Borrower’s financial condition, results of operation or
business or the rights of Agent in or to any of the Collateral. The
execution, delivery and performance of this Agreement, the other Financing
Agreements and the transactions contemplated hereunder and thereunder (a) are
all within Borrower’s corporate powers, (b) have been duly authorized, (c) are
not in contravention of law or the terms of Borrower’s certificate of
incorporation or formation, bylaws, operating agreements or other organizational
documentation, or any indenture or material agreement or undertaking to which
Borrower is a party or by which Borrower or its property are bound and (d) will
not result in the creation or imposition of, or require or give rise to any
obligation to grant, any lien, security interest, charge or other encumbrance
upon any property of Borrower. This Agreement and the other Financing
Agreements to which Borrower is a party constitute legal, valid and binding
obligations of Borrower enforceable in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors’ rights generally and general
principles of equity.
8.2 Name; State of Organization;
Chief Executive Office; Collateral Locations.
(a) The exact
legal name of Borrower is as set forth on the signature page of this Agreement
and in the Information Certificate. Borrower has not, during the five
(5) years prior to the date of this Agreement, been known by or used any other
corporate or fictitious name or been a party to any merger or consolidation, or
acquired all or substantially all of the assets of any Person, or acquired any
of its property or assets out of the ordinary course of business, except as set
forth in the Information Certificate.
(b) Borrower
is an organization of the type and organized in the jurisdiction set forth in
the Information Certificate. The Information Certificate accurately
sets forth the organizational identification number of Borrower or accurately
states that Borrower has none and accurately sets forth the federal employer
identification number of Borrower.
(c) The chief
executive office and mailing address of Borrower and Borrower’s Records
concerning Accounts are located only at the address identified as such in
Schedule 8.2 to the Information Certificate and its only other places of
business and the only other locations of Collateral, if any, are the addresses
set forth in Schedule 8.2 to the Information Certificate, subject to the rights
of Borrower to establish new locations in accordance with Section 9.2
below. The Information Certificate correctly identifies any of such
locations which are not owned by Borrower and sets forth the owners and/or
operators thereof.
8.3 Financial Statements; No
Material Adverse Change. All
financial statements relating to Borrower which have been or may hereafter be
delivered by Borrower to Agent and Lenders have been prepared in accordance with
GAAP (except as to any interim financial statements, to the extent such
statements are subject to normal year-end adjustments and do not include any
notes) and fairly present in all material respects the financial condition and
the results of operations of Borrower as at the dates and for the periods set
forth therein. Except as disclosed in any interim financial
statements furnished by Borrower to Agent prior to the date of this Agreement,
there has been no act, condition or event which has had or is reasonably likely
to have a Material Adverse Effect since the date of the most recent audited
financial statements of Borrower furnished by Borrower to Agent prior to the
date of this Agreement. The projections dated May 14, 2008 for the
fiscal years ending 2008 through 2011 that have been delivered to Agent or any
projections hereafter delivered to Agent have been prepared in light of the past
operations of the businesses of Borrower and are based upon estimates and
assumptions stated therein, all of which Borrower has determined to be
reasonable and fair in light of the then current conditions and current facts
and reflect the good faith and reasonable estimates of Borrower of the future
financial performance of Borrower and its Subsidiaries and of the other
information projected therein for the periods set forth therein.
8.4 Priority of Liens; Title to
Properties. The
security interests and liens granted to Agent under this Agreement and the other
Financing Agreements constitute valid and perfected first priority liens and
security interests in and upon the Collateral subject only to the liens
indicated on Schedule 8.4 to the Information Certificate and the other liens
permitted under Section 9.8 hereof. Borrower has good and marketable
fee simple title to or valid leasehold interests in all of its Real Property and
good, valid and merchantable title to all of its other properties and assets
subject to no liens, mortgages, pledges, security interests, encumbrances or
charges of any kind, except those granted to Agent and such others as are
specifically listed on Schedule 8.4 to the Information Certificate or permitted
under Section 9.8 hereof.
8.5 Tax Returns. Borrower
has filed, or caused to be filed, in a timely manner all tax returns, reports
and declarations which are required to be filed by it and due. All
information in such tax returns, reports and declarations is complete and
accurate in all material respects. Borrower has paid or caused to be
paid all taxes due and payable or claimed due and payable in any assessment
received by it, except taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower
and with respect to which adequate reserves have been set aside on its
books. Adequate provision has been made for the payment of all
accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.
8.6 Litigation. Except
as set forth on Schedule 8.6 to the Information Certificate, (a) there is no
investigation by any Governmental Authority pending, or to the best of
Borrower’s knowledge threatened, against or affecting Borrower or its assets or
business and (b) there is no action, suit, proceeding or claim by any Person
pending, or to the best of Borrower’s knowledge threatened, against Borrower or
its assets or goodwill, or against or affecting any transactions contemplated by
this Agreement, in each case, which if adversely determined against Borrower has
or could reasonably be expected to have a Material Adverse Effect.
8.7 Compliance with Other
Agreements and Applicable Laws.
(a) Borrower
is not in default in any respect under, or in violation in any respect of the
terms of, any material agreement, contract, instrument, lease or other
commitment to which it is a party or by which it or any of its assets are bound
that could reasonably be expected to have a Material Adverse
Effect. Borrower is in compliance with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority
relating to their respective businesses, including, without limitation, those
set forth in or promulgated pursuant to the Occupational Safety and Health Act
of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA,
the Code, as amended, and the rules and regulations thereunder, and all
Environmental Laws, except where the failure to so comply could not be
reasonably expected to have a Material Adverse Effect.
(b) Borrower
has obtained all material permits, licenses, approvals, consents, certificates,
orders or authorizations of any Governmental Authority required for the lawful
conduct of its business (the “Permits”). All of the Permits are valid
and subsisting and in full force and effect. There are no actions,
claims or proceedings pending or to the best of Borrower’s knowledge, threatened
that seek the revocation, cancellation, suspension or modification of any of the
Permits.
8.8 Environmental
Compliance.
(a) Except as
set forth on Schedule 8.8 to the Information Certificate, Borrower and any
Subsidiary of Borrower have not generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates in any material respect any applicable Environmental Law or Permit, and
the operations of Borrower and any Subsidiary of Borrower complies in all
material respects with all Environmental Laws and all Permits.
(b) Except as
set forth on Schedule 8.8 to the Information Certificate, there has been no
investigation by any Governmental Authority or any proceeding, complaint, order,
directive, claim, citation or notice by any Governmental Authority or any other
person nor is any pending or to the best of Borrower’s knowledge threatened,
with respect to any non-compliance with or violation of the requirements of any
Environmental Law by Borrower or any Subsidiary of Borrower or the release,
spill or discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which adversely affects or could reasonably be expected
to adversely affect in any material respect Borrower or its or their business,
operations or assets or any properties at which Borrower has transported, stored
or disposed of any Hazardous Materials.
(c) Except as
set forth on Schedule 8.8 to the Information Certificate, Borrower and its
Subsidiaries have no material liability (contingent or otherwise) in connection
with a release, spill or discharge, threatened or actual, of any Hazardous
Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous
Materials.
(d) Borrower
and its Subsidiaries have all Permits required to be obtained or filed in
connection with the operations of Borrower under any Environmental Law and all
of such licenses, certificates, approvals or similar authorizations and other
Permits are valid and in full force and effect, except where the failure to do
any of the foregoing could not be reasonably expected to have a Material Adverse
Effect.
8.9 Employee
Benefits.
(a) Each Plan
is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other Federal or State law. Each Plan which is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and to the best of
Borrower’s knowledge, nothing has occurred which would cause the loss of such
qualification. Borrower and its ERISA Affiliates have made all
required contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any
Plan.
(b) There are
no pending, or to the best of Borrower’s knowledge, threatened claims, actions
or lawsuits, or action by any Governmental Authority, with respect to any
Plan. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan.
(c) (i) No
ERISA Event has occurred or is reasonably expected to occur; (ii) based on
the latest valuation of each Pension Plan and on the actuarial methods and
assumptions employed for such valuation (determined in accordance with the
assumptions used for funding such Pension Plan pursuant to Section 412 of the
Code), the aggregate current value of accumulated benefit liabilities of such
Pension Plan under Section 4001(a)(16) of ERISA does not exceed the aggregate
current value of the assets of such Pension Plan; (iii) Borrower and its
ERISA Affiliates, have not incurred and do not reasonably expect to incur, any
liability under Title IV of ERISA with respect to any Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) Borrower and its
ERISA Affiliates, have not incurred and do not reasonably expect to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) Borrower and
its ERISA Affiliates, have not engaged in a transaction that would be subject to
Section 4069 or 4212(c) of ERISA.
8.10 Bank Accounts. All
of the deposit accounts, investment accounts or other accounts in the name of or
used by Borrower maintained at any bank or other financial institution are set
forth on Schedule 8.10 to the Information Certificate, subject to the right of
Borrower to establish new accounts in accordance with Section 5.2
hereof.
8.11 Intellectual
Property. Borrower
owns or licenses or otherwise has the right to use all Intellectual Property
necessary for the operation of its business as presently conducted or proposed
to be conducted. As of the date hereof, Borrower does not have any
Intellectual Property registered, or subject to pending applications, in the
United States Patent and Trademark Office or any similar office or agency in the
United States, any State thereof, any political subdivision thereof or in any
other country, other than those described in Schedule 8.11 to the Information
Certificate and has not granted any licenses with respect thereto other than as
set forth in Schedule 8.11 to the Information Certificate. No event
has occurred which permits or would permit after notice or passage of time or
both, the revocation, suspension or termination of such rights. To
the best of Borrower’s knowledge, no slogan or other advertising device,
product, process, method, substance or other Intellectual Property or goods
bearing or using any Intellectual Property presently contemplated to be sold by
or employed by Borrower infringes any patent, trademark, servicemark, trade
name, copyright, license or other Intellectual Property owned by any other
Person presently and no claim or litigation is pending or threatened against or
affecting Borrower contesting its right to sell or use any such Intellectual
Property. Schedule 8.11 to the Information Certificate sets forth all
of the agreements or other arrangements of Borrower pursuant to which Borrower
has a license or other right to use any trademarks, logos, designs,
representations or other Intellectual Property owned by another person as in
effect on the date hereof (other than “shrink wrap” software licenses) and the
dates of the expiration of such agreements or other arrangements of Borrower as
in effect on the date hereof (collectively, together with such agreements or
other arrangements as may be entered into by Borrower after the date hereof,
collectively, the “License Agreements” and individually, a “License
Agreement”). No trademark, servicemark, copyright or other
Intellectual Property at any time used by Borrower which is owned by another
person, or owned by Borrower subject to any security interest, lien, collateral
assignment, pledge or other encumbrance in favor of any person other than Agent,
is affixed to any Eligible Inventory, except (a) to the extent
permitted under the term of the license agreements listed on Schedule 8.11 to
the Information Certificate and (b) to the extent the sale of Inventory to which
such Intellectual Property is affixed is permitted to be sold by Borrower under
applicable law (including the United States Copyright Act of 1976).
8.12 Subsidiaries; Affiliates;
Capitalization; Solvency.
(a) Borrower
does not have any direct or indirect Subsidiaries or Affiliates and is not
engaged in any joint venture or partnership except as set forth in Schedule 8.12
to the Information Certificate.
(b) Borrower
is the record and beneficial owner of all of the issued and outstanding shares
of Capital Stock of each of the Subsidiaries listed on Schedule 8.12 to the
Information Certificate as being owned by Borrower and there are no proxies,
irrevocable or otherwise, with respect to such shares and no equity securities
of any of the Subsidiaries are or may become required to be issued by reason of
any options, warrants, rights to subscribe to, calls or commitments of any kind
or nature and there are no contracts, commitments, understandings or
arrangements by which any Subsidiary is or may become bound to issue additional
shares of its Capital Stock or securities convertible into or exchangeable for
such shares.
(c) The
issued and outstanding membership interests of Borrower are directly and
beneficially owned and held by the persons indicated in the Information
Certificate, and in each case all of such membership interests have been duly
authorized and are fully paid and non-assessable, free and clear of all claims,
liens, pledges and encumbrances of any kind, except as disclosed in writing to
Agent prior to the date hereof.
(d) Borrower
is Solvent and will continue to be Solvent after the creation of the
Obligations, the security interests of Agent and the other transaction
contemplated hereunder.
8.13 Labor Disputes.
(a) Set forth
on Schedule 8.13 to the Information Certificate is a list (including dates of
termination) of all collective bargaining or similar agreements between or
applicable to Borrower and any union, labor organization or other bargaining
agent in respect of the employees of Borrower on the date hereof.
(b) There
is (i) no significant unfair labor practice complaint pending against Borrower
or, to the best of Borrower’s knowledge threatened, against it, before the
National Labor Relations Board, and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining
agreement is pending on the date hereof against Borrower or, to best of
Borrower’s knowledge, threatened against it, and (ii) no significant
strike, labor dispute, slowdown or stoppage is pending against Borrower or, to
the best of Borrower’s knowledge, threatened against
Borrower.
8.14 Restrictions on
Subsidiaries. Except
for restrictions contained in this Agreement or any other agreement with respect
to Indebtedness of Borrower permitted hereunder as in effect on the date hereof,
there are no contractual or consensual restrictions on Borrower or any of its
Subsidiaries which prohibit or otherwise restrict (a) the transfer of cash or
other assets (i) between Borrower and any of its Subsidiaries or (ii) between
any Subsidiaries of Borrower or (b) the ability of Borrower or any of its
Subsidiaries to incur Indebtedness or grant security interests to Agent or any
Lender in the Collateral.
8.15 Material
Contracts. Schedule
8.15 to the Information Certificate sets forth all Material Contracts to which
Borrower is a party or is bound as of the date hereof. Borrower has
delivered or otherwise made available true, correct and complete copies of such
Material Contracts to Agent on or before the date hereof. Borrower is
not in breach or in default in any material respect of or under any Material
Contract and has not received any notice of the intention of any other party
thereto to terminate any Material Contract.
8.16 Payable
Practices. Borrower
has not made any material change in the historical accounts payable practices
from those in effect immediately prior to the date hereof.
8.17 Accuracy and Completeness of
Information. All
information furnished by or on behalf of Borrower in writing to Agent or any
Lender in connection with this Agreement or any of the other Financing
Agreements or any transaction contemplated hereby or thereby, including all
information on the Information Certificate is true and correct in all material
respects on the date as of which such information is dated or certified and does
not omit any material fact necessary in order to make such information not
misleading. No event or circumstance has occurred which has had or
could reasonably be expected to have a Material Adverse Affect, which has not
been fully and accurately disclosed to Agent in writing prior to the date
hereof.
8.18 Survival of Warranties;
Cumulative. All
representations and warranties contained in this Agreement or any of the other
Financing Agreements shall survive the execution and delivery of this Agreement
and shall be deemed to have been made again to Agent and Lenders on the date of
each additional borrowing or other credit accommodation hereunder and shall be
conclusively presumed to have been relied on by Agent and Lenders regardless of
any investigation made or information possessed by Agent or any
Lender. The representations and warranties set forth herein shall be
cumulative and in addition to any other representations or warranties which
Borrower shall now or hereafter give, or cause to be given, to Agent or any
Lender.
SECTION
9. AFFIRMATIVE AND NEGATIVE
COVENANTS
9.1 Maintenance of
Existence.
(a) Borrower
shall at all times (i) preserve, renew and keep in full force and effect its
existence as a limited liability company and rights and franchises with respect
thereto and (ii) maintain in full force and effect all licenses, trademarks,
trade names, approvals, authorizations, leases, contracts and Permits necessary
to carry on the business as presently or proposed to be conducted.
(b) Borrower
shall not change its name unless each of the following conditions is satisfied:
(i) Agent shall have received not less than thirty (30) days prior written
notice from Borrower of such proposed change in its corporate name, which notice
shall accurately set forth the new name; and (ii) Agent shall have
received a copy of the amendment to the Certificate of Formation of
Borrower providing for the name change certified by the Secretary of State of
the jurisdiction of incorporation, formation or organization of Borrower as soon
as it is available.
(c) Borrower
shall not change its chief executive office or its mailing address or
organizational identification number (or if it does not have one, shall not
acquire one) unless Agent shall have received not less than thirty (30) days’
prior written notice from Borrower of such proposed change, which notice shall
set forth such information with respect thereto as Agent may reasonably require
and Agent shall have received such agreements as Agent may reasonably require in
connection therewith. Borrower shall not change its type of
organization, jurisdiction of organization or other legal
structure.
9.2 New Collateral
Locations. Borrower
may only open any new location within the continental United States provided
Borrower (a) gives Agent thirty (30) days prior written notice of the intended
opening of any such new location and (b) executes and delivers, or causes to be
executed and delivered, to Agent such agreements, documents, and instruments as
Agent may reasonably deem necessary or desirable to protect its interests in the
Collateral at such location.
9.3 Compliance with Laws,
Regulations, Etc.
(a) Borrower
shall, and shall cause any Subsidiary to, at all times, comply in all material
respects with all laws, rules, regulations, licenses, approvals, orders and
other Permits applicable to it and duly observe all requirements of any foreign,
Federal, State or local Governmental Authority.
(b) Borrower
shall give written notice to Agent promptly upon Borrower’s receipt of any
notice of, or Borrower’s otherwise obtaining knowledge of (in each case in the
event any of the following could reasonably be expected to have a Material
Adverse Effect), (i) the occurrence of any event involving the release, spill or
discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by Borrower or (B) the release, spill or discharge, threatened
or actual, of any Hazardous Material other than in the ordinary course of
business and other than as permitted under any applicable Environmental Law.
Copies of all environmental surveys, audits, assessments, feasibility studies
and results of remedial investigations shall be promptly furnished, or caused to
be furnished, by Borrower to Agent. Borrower shall take prompt action
to respond to any material non-compliance with any of the Environmental Laws and
shall regularly report to Agent on such response.
(c) Without
limiting the generality of the foregoing, whenever Agent reasonably determines
that there is non-compliance that could reasonably be expected to have a
Material Adverse Effect, or any condition which requires any action by or on
behalf of Borrower in order to avoid any non-compliance that could reasonably be
expected to have a Material Adverse Effect, with any Environmental Law, Borrower
shall, at Agent’s request and Borrower’s expense: (i) cause an independent
environmental engineer reasonably acceptable to Agent to conduct such tests of
the site where non-compliance or alleged non-compliance with such Environmental
Laws has occurred as to such non-compliance and prepare and deliver to Agent a
report as to such non-compliance setting forth the results of such tests, a
proposed plan for responding to any environmental problems described therein,
and an estimate of the costs thereof and (ii) provide to Agent a supplemental
report of such engineer whenever the scope of such non-compliance, or Borrower’s
response thereto or the estimated costs thereof, shall change in any material
respect.
(d) Borrower
shall indemnify and hold harmless Agent and Lenders and their respective
directors, officers, employees, agents, invitees, representatives, successors
and assigns, from and against any and all losses, claims, damages, liabilities,
costs, and expenses (including reasonable attorneys’ fees and expenses) directly
or indirectly arising out of or attributable to Borrower’s use, generation,
manufacture, reproduction, storage, release, threatened release, spill,
discharge, disposal or presence of a Hazardous Material, including the costs of
any required or necessary repair, cleanup or other remedial work with respect to
any property of Borrower and the preparation and implementation of any closure,
remedial or other required plans. All representations, warranties,
covenants and indemnifications in this Section 9.3 shall survive the payment of
the Obligations and the termination of this Agreement.
9.4 Payment of Taxes and
Claims. Borrower
shall, and shall cause any Subsidiary to, duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or its
properties or assets, except for taxes the validity of which is being contested
in good faith by appropriate proceedings diligently pursued and available to
Borrower or such Subsidiary, as the case may be, and with respect to which
adequate reserves have been set aside on its books to the extent required by
GAAP.
9.5 Insurance. Borrower
shall, and shall cause any Subsidiary to, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be reasonably satisfactory
to Agent as to form, amount and insurer. Borrower shall furnish
certificates, policies or endorsements to Agent as Agent shall reasonably
require as proof of such insurance, and, if Borrower fails to do so, Agent is
authorized, but not required, to obtain such insurance at the expense of
Borrower. All policies shall provide for at least thirty (30) days
prior written notice to Agent of any cancellation or reduction of coverage and
that Agent may act as attorney for Borrower in obtaining, and at any time an
Event of Default exists or has occurred and is continuing, adjusting, settling,
amending and canceling such insurance. Borrower shall cause Agent to
be named as a loss payee and an additional insured (but without any liability
for any premiums) under such insurance policies and Borrower shall obtain
non-contributory lender’s loss payable endorsements to all insurance policies in
form and substance satisfactory to Agent. Such lender’s loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Agent as its interests may appear and further specify that Agent and Lenders
shall be paid regardless of any act or omission by Borrower or any of its or
their Affiliates. Without limiting any other rights of Agent or Lenders, any
insurance proceeds received by Agent at any time may be applied to payment of
the Obligations, whether or not then due, in any order and in such manner as
Agent may determine. Upon application of such proceeds to the
Revolving Loans, Revolving Loans may be available subject and pursuant to the
terms hereof to be used for the costs of repair or replacement of the Collateral
lost or damages resulting in the payment of such insurance
proceeds.
9.6 Financial Statements and
Other Information.
(a) Borrower
shall, and shall cause any Subsidiary to, keep proper books and records in which
true and complete entries in all material respects shall be made of all dealings
or transactions of or in relation to the Collateral and the business of Borrower
and its Subsidiaries in accordance with GAAP. Borrower shall promptly
furnish to Agent and Lenders all such financial and other information as Agent
shall reasonably request relating to the Collateral and the assets, business and
operations of Borrower, and Borrower shall notify the auditors and accountants
of Borrower that Agent is authorized to obtain such information directly from
them. Without limiting the foregoing, Borrower shall furnish or cause
to be furnished to Agent, the following:
(i) within
thirty (30) days after the end of each fiscal month, monthly unaudited
consolidated financial statements and unaudited consolidating financial
statements (including in each case balance sheets, statements of income and
loss, statements of cash flow, and statements of shareholders’ equity), all in
reasonable detail, fairly presenting in all material respects the consolidated
financial position and the consolidated results of the operations of Borrower
and its Subsidiaries as of the end of and through such fiscal month, certified
to be correct by the chief financial officer of Borrower, subject to normal
year-end adjustments and accompanied by a compliance certificate substantially
in the form of Exhibit C hereto, along with a schedule in form reasonably
satisfactory to Agent of the calculations used in determining, as of the end of
such month, whether Borrower is in compliance with the covenants set forth in
Section 9.17 of this Agreement for such month; and
(ii) within
fifty(50) days after the end of each of the first three (3) fiscal quarters of
each fiscal year, (A) quarterly unaudited consolidated financial statements and
unaudited consolidating financial statements of Borrower and its Subsidiaries
(including in each case balance sheets, statements of income and loss,
statements of cash flow, and statements of shareholders’ equity), all in
reasonable detail, fairly presenting in all material respects the consolidated
financial position and the consolidated results of the operations of Borrower
and its Subsidiaries as of the end of and through such fiscal quarter, certified
to be correct by the chief financial officer of Borrower, subject to normal
quarterly and year-end adjustments and accompanied by a compliance certificate
substantially in the form of Exhibit C hereto along with a schedule in form
reasonably satisfactory to Agent of the calculations used in determining, as of
the end of such fiscal quarter, whether Borrower is in compliance with the
covenants set forth in Section 9.17 of this Agreement for such fiscal quarter,
and (B) quarterly unaudited consolidated financial statements of Parent and its
Subsidiaries (including balance sheets, statements of income and loss,
statements of cash flow, and statements of shareholders’ equity), all in
reasonable detail, fairly presenting in all material respects the consolidated
financial position and the consolidated results of the operations of Parent and
its Subsidiaries as of the end of and through such fiscal quarter, certified to
be correct by the chief financial officer of Parent, subject to normal quarterly
and year-end adjustments and accompanied by a compliance certificate
substantially in the form of Exhibit C hereto along with a schedule in form
reasonably satisfactory to Agent of the calculations used in determining, as of
the end of such fiscal quarter, whether Borrower is in compliance with the
covenants set forth in Section 9.17 of this Agreement for such fiscal quarter;
and
(iii) within
one hundred and twenty (120) days after the end of each fiscal year, (A) audited
consolidated financial statements and unaudited consolidating financial
statements of Borrower and its Subsidiaries (including in each case balance
sheets, statements of income and loss, statements of cash flow, and statements
of shareholders’ equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting in all material respects the consolidated financial
position and the consolidated results of the operations of Borrower and its
Subsidiaries as of the end of and for such fiscal year, together with the
unqualified opinion of independent certified public accountants with respect to
the audited consolidated financial statements, which accountants shall be an
independent accounting firm selected by Parent on behalf of Borrower and
reasonably acceptable to Agent, that such audited consolidated financial
statements have been prepared in accordance with GAAP, and present fairly in all
material respects the results of operations and financial condition of Borrower
and its Subsidiaries as of the end of and for the fiscal year then ended, and
(B) audited consolidated financial statements of Parent and its Subsidiaries
(including balance sheets, statements of income and loss, statements of cash
flow, and statements of shareholders’ equity), and the accompanying notes
thereto, all in reasonable detail, fairly presenting in all material respects
the consolidated financial position and the consolidated results of the
operations of Parent and its Subsidiaries as of the end of and for such fiscal
year, together with the unqualified opinion of independent certified public
accountants with respect to the audited consolidated financial statements, which
accountants shall be an independent accounting firm selected by Parent and
reasonably acceptable to Agent, that such audited consolidated financial
statements have been prepared in accordance with GAAP, and present fairly in all
material respects the consolidated results of operations and consolidated
financial condition of Parent and its Subsidiaries as of the end of and for the
fiscal year then ended, and
(iv) at such
time as available, but in no event later than the end of each fiscal year
(commencing with the fiscal year of Borrower ending December 31, 2009),
projected consolidated financial statements (including in each case, forecasted
balance sheets and statements of income and loss, statements of cash flow, and
statements of shareholders’ equity) of each of Parent and its Subsidiaries, on a
consolidated basis, and Borrower and its Subsidiaries, on a consolidated basis,
for the next fiscal year, all in reasonable detail, and in a format consistent
with the projections delivered by Borrower (both for itself and for Parent) to
Agent prior to the date hereof, together with such supporting information as
Agent may reasonably request. Such projected financial statements
shall be prepared on a monthly basis for the next succeeding
year. Such projections shall represent Parent’s and Borrower’s
reasonable best estimate of the future financial performance of Parent and
Borrower for the periods set forth therein and shall have been prepared on the
basis of the assumptions set forth therein which Parent and Borrower each
believes are fair and reasonable as of the date of preparation in light of
current and reasonably foreseeable business conditions (it being understood that
actual results may differ from those set forth in such projected financial
statements). Each year Parent and Borrower shall provide to Agent a
semi-annual update with respect to such projections or at any time a Default or
Event of Default exists or has occurred and is continuing, more frequently as
Agent may require.
(b) Borrower
shall promptly, after becoming aware thereof, notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $500,000 or which if
adversely determined would result in any Material Adverse Effect on Borrower,
(ii) any Material Contract being terminated or amended or any new Material
Contract entered into, other than ethanol purchase and sale contracts or
agreements constituting a Material Contract (in which event Borrower shall
provide Agent with a copy of such Material Contract), (iii) any order, judgment
or decree in excess of $500,000 shall have been entered against Borrower any of
its properties or assets, (iv) any notification of a material violation of laws
or regulations received by Borrower, (v) any ERISA Event, and (vi) the
occurrence of any Default or Event of Default.
(c) Promptly
after the sending or filing thereof, Borrower shall send to Agent copies of (i)
all reports which Parent or any of its Subsidiaries sends to its security
holders generally, (ii) all reports and registration statements which Parent or
any of its Subsidiaries files with the Securities Exchange Commission, any
national or foreign securities exchange or the National Association of
Securities Dealers, Inc., and such other reports as Agent may hereafter
specifically identify to Borrower that Agent reasonably requires be provided to
Agent, (iii) all press releases and (iv) all other statements concerning
material changes or developments in the business of Borrower made available by
Borrower to the public.
(d) Borrower
shall furnish or cause to be furnished to Agent such budgets, forecasts,
projections and other information respecting the Collateral and the business of
Borrower, as Agent may, from time to time, reasonably request. Agent
is hereby authorized to deliver a copy of any financial statement or any other
information relating to the business of Borrower to any court or other
Governmental Authority, or to any Lender or Participant or prospective Lender or
Participant, or any Affiliate of any Lender or Participant. Borrower
hereby irrevocably authorizes and directs all accountants or auditors to deliver
to Agent, at Borrower’s expense, copies of the financial statements of Borrower
and any reports or management letters prepared by such accountants or auditors
on behalf of Borrower and to disclose to Agent and Lenders such information as
they may have regarding the business of Borrower. Any documents,
schedules, invoices or other papers delivered to Agent or any Lender may be
destroyed or otherwise disposed of by Agent or such Lender one (1) year after
the same are delivered to Agent or such Lender, except as otherwise designated
by Borrower to Agent or such Lender in writing.
9.7 Sale of Assets,
Consolidation, Merger, Dissolution, Etc. Borrower
shall not, and shall not permit any Subsidiary to, directly or indirectly,
(a) merge
into or with or consolidate with any other Person or permit any other Person to
merge into or with or consolidate with it;
(b) sell,
issue, assign, lease, license, transfer, abandon or otherwise dispose of any
Capital Stock or Indebtedness to any other Person or any of its assets to any
other Person, except for
(i) sales of
Inventory in the ordinary course of business,
(ii) the sale
or other disposition of Equipment (including worn-out or obsolete Equipment or
Equipment no longer used or useful in the business of Borrower) so long as such
sales or other dispositions do not involve Equipment having an aggregate fair
market value in excess of $25,000 for all such Equipment disposed of in any
fiscal year of Borrower or as Agent may otherwise agree, and
(iii) the
issuance and sale by Borrower of Capital Stock of Borrower after the date
hereof; provided, that, (A) Agent shall
have received not less than ten (10) Business Days’ prior written notice of such
issuance and sale by Borrower, which notice shall specify the parties to whom
such shares are to be sold, the terms of such sale, the total amount which it is
anticipated will be realized from the issuance and sale of such stock and the
net cash proceeds which it is anticipated will be received by Borrower from such
sale, (B) Borrower shall not be required to pay any cash dividends or repurchase
or redeem such Capital Stock or make any other payments in respect thereof,
except as otherwise permitted in Section 9.11 hereof, (C) the terms of such
Capital Stock, and the terms and conditions of the purchase and sale thereof,
shall not include any terms that include any limitation on the right of Borrower
to request or receive Loans or Letters of Credit or the right of Borrower to
amend or modify any of the terms and conditions of this Agreement or any of the
other Financing Agreements or otherwise in any way relate to or affect the
arrangements of Borrower with Agent and Lenders or are more restrictive or
burdensome to Borrower than the terms of any Capital Stock in effect on the date
hereof, (D) except as Agent may otherwise agree in writing, all of the proceeds
of the sale and issuance of such Capital Stock shall be paid to Agent for
application to the Obligations in such order and manner as Agent may determine
or at Agent’s option, to be held as cash collateral for the Obligations and (E)
as of the date of such issuance and sale and after giving effect thereto, no
Default or Event of Default shall exist or have occurred, and
(iv) the
issuance of Capital Stock of Borrower consisting of common stock pursuant to an
employee stock option or grant or similar equity plan or 401(k) plans of
Borrower for the benefit of its employees, directors and consultants; provided, that, in no event
shall Borrower be required to issue, or shall Borrower issue, Capital Stock
pursuant to such stock plans or 401(k) plans which would result in a Change of
Control or other Event of Default,
(c) wind up,
liquidate or dissolve; or
(d) agree to
do any of the foregoing.
9.8 Encumbrances. Borrower
shall not, and shall not permit any Subsidiary to, create, incur, assume or
suffer to exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including the Collateral, or file or permit the filing of, or permit to remain
in effect, any financing statement or other similar notice of any security
interest or lien with respect to any such assets or properties,
except:
(a) the
security interests and liens of Agent for itself and the benefit of Secured
Parties;
(b) liens
securing the payment of taxes, assessments or other governmental charges or
levies either not yet overdue or the validity of which is being contested in
good faith by appropriate proceedings diligently pursued and available to
Borrower or Subsidiary, as the case may be and with respect to which adequate
reserves have been set aside on its books;
(c) non-consensual
statutory liens (other than liens securing the payment of taxes) arising in the
ordinary course of Borrower’s or such Subsidiary’s business to the extent: (i)
such liens secure Indebtedness which is not overdue or (ii) such liens secure
Indebtedness relating to claims or liabilities which are fully insured and being
defended at the sole cost and expense and at the sole risk of the insurer or
being contested in good faith by appropriate proceedings diligently pursued and
available to Borrower or such Subsidiary, in each case prior to the commencement
of foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;
(d) zoning
restrictions, easements, licenses, covenants and other restrictions affecting
the use of Real Property which do not interfere in any material respect with the
use of such Real Property or ordinary conduct of the business of Borrower or
such Subsidiary as presently conducted thereon or materially impair the value of
the Real Property which may be subject thereto;
(e) purchase
money security interests in Equipment (including Capital Leases) and purchase
money mortgages on Real Property to secure Indebtedness permitted under Section
9.9(b) hereof;
(f) pledges
and deposits of cash by Borrower after the date hereof in the ordinary course of
business in connection with workers’ compensation, unemployment insurance and
other types of social security benefits consistent with the current practices of
Borrower as of the date hereof;
(g) pledges
and deposits of cash by Borrower after the date hereof to secure the performance
of tenders, bids, leases, trade contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar obligations in each case
in the ordinary course of business consistent with the current practices of
Borrower as of the date hereof; provided, that, in connection
with any performance bonds issued by a surety or other person, the issuer of
such bond shall have waived in writing any rights in or to, or other interest
in, any of the Collateral in an agreement, in form and substance satisfactory to
Agent;
(h) liens
arising from (i) operating leases and the precautionary UCC financing statement
filings in respect thereof and (ii) equipment or other materials which are not
owned by Borrower located on the premises of Borrower (but not in connection
with, or as part of, the financing thereof) from time to time in the ordinary
course of business and consistent with current practices of Borrower and the
precautionary UCC financing statement filings in respect thereof;
(i) judgments
and other similar liens arising in connection with court proceedings that do not
constitute an Event of Default; provided, that, (i) such liens
are being contested in good faith and by appropriate proceedings diligently
pursued, (ii) adequate reserves or other appropriate provision, if any, as are
required by GAAP have been made therefor, (iii) a stay of enforcement of any
such liens is in effect and (iv) Agent may establish a Reserve with respect
thereto; and
(j) the
security interests and liens set forth on Schedule 8.4 to the Information
Certificate.
9.9 Indebtedness. Borrower
shall not, and shall not permit any Subsidiary to, incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any
Indebtedness, or guarantee, assume, endorse, or otherwise become responsible for
(directly or indirectly), the Indebtedness, performance, obligations or
dividends of any other Person, except:
(a) the
Obligations;
(b) purchase
money Indebtedness (including Capital Leases) arising after the date hereof to
the extent secured by purchase money security interests in Equipment (including
Capital Leases) and purchase money mortgages on Real Property not to exceed
$2,000,000 in the aggregate at any time outstanding so long as such security
interests and mortgages do not apply to any property of Borrower or any
Subsidiary other than the Equipment or Real Property so acquired, and the
Indebtedness secured thereby does not exceed the cost of the Equipment or Real
Property so acquired, as the case may be;
(c) guarantees
by Borrower or any Guarantor of the Obligations in favor of Agent for the
benefit of Lenders and the other Secured Parties;
(d) the
Indebtedness set forth on Schedule 9.9 to the Information Certificate; provided, that, (i) Borrower
may only make regularly scheduled payments of principal and interest in respect
of such Indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such Indebtedness as in effect on the date hereof,
(ii) Borrower shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of such Indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof; except, that, Borrower may,
after prior written notice to Agent, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof, or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (iii) Borrower shall
furnish to Agent all notices or demands in connection with such Indebtedness
either received by Borrower or on its behalf, promptly after the receipt
thereof, or sent by Borrower or on its behalf, concurrently with the sending
thereof, as the case may be; and
(e) Indebtedness
of Borrower or any Guarantor entered into in the ordinary course of business
pursuant to a Hedge Agreement; provided, that, (i) such
arrangements are with a Bank Product Provider, (ii) such arrangements are not
for speculative purposes, and (iii) such Indebtedness shall be unsecured, except
to the extent such Indebtedness constitutes part of the Obligations arising
under or pursuant to Hedge Agreements with a Bank Product Provider that are
secured under the terms hereof.
9.10 Loans, Investments,
Etc. Borrower
shall not, and shall not permit any Subsidiary to, directly or indirectly, make
any loans or advance money or property to any person, or invest in (by capital
contribution, dividend or otherwise) or purchase or repurchase the Capital Stock
or Indebtedness or all or a substantial part of the assets or property of any
person, or form or acquire any Subsidiaries, or agree to do any of the
foregoing, except:
(a) the
endorsement of instruments for collection or deposit in the ordinary course of
business;
(b) investments
in cash or Cash Equivalents; provided, that, (i) no Loans
are then outstanding and (ii) the terms and conditions of Section 5.2 hereof
shall have been satisfied with respect to the deposit account, investment
account or other account in which such cash or Cash Equivalents are
held;
(c) the
existing equity investments of Borrower as of the date hereof in its
Subsidiaries; provided, that, Borrower shall
not have any further obligations or liabilities to make any capital
contributions or other additional investments or other payments to or in or for
the benefit of any of such Subsidiaries;
(d) loans and
advances by Borrower to employees of Borrower not to exceed the principal amount
of $250,000 in the aggregate at any time outstanding for: (i)
reasonably and necessary work-related travel or other ordinary business expenses
to be incurred by such employee in connection with their work for Borrower and
(ii) reasonable and necessary relocation expenses of such employees
(including home mortgage financing for relocated employees);
(e) stock or
obligations issued to Borrower by any Person (or the representative of such
Person) in respect of Indebtedness of such Person owing to Borrower in
connection with the insolvency, bankruptcy, receivership or reorganization of
such Person or a composition or readjustment of the debts of such Person; provided, that, the original of
any such stock or instrument evidencing such obligations shall be promptly
delivered to Agent, upon Agent’s request, together with such stock power,
assignment or endorsement by Borrower as Agent may request;
(f) obligations
of account debtors to Borrower arising from Accounts which are past due
evidenced by a promissory note made by such account debtor payable to Borrower;
provided, that, promptly upon
the receipt of the original of any such promissory note by Borrower, such
promissory note shall be endorsed to the order of Agent by Borrower and promptly
delivered to Agent as so endorsed; and
(g) the loans
and advances set forth on Schedule 9.10 to the Information Certificate; provided, that, as to such
loans and advances, (i) Borrower shall not, directly or indirectly, amend,
modify, alter or change the terms of such loans and advances or any agreement,
document or instrument related thereto and (ii) Borrower shall furnish to Agent
all notices or demands in connection with such loans and advances either
received by Borrower or on its behalf, promptly after the receipt thereof, or
sent by Borrower or on its behalf, concurrently with the sending thereof, as the
case may be.
9.11 Dividends and
Redemptions. Borrower
shall not, directly or indirectly, declare or pay any dividends on account of
any shares or class of Capital Stock of Borrower now or hereafter outstanding,
or set aside or otherwise deposit or invest any sums for such purpose, or
redeem, retire, defease, purchase or otherwise acquire any shares of any class
of Capital Stock (or set aside or otherwise deposit or invest any sums for such
purpose) for any consideration or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing; except, that:
(a) Borrower
may declare and pay such dividends or redeem, retire, defease, purchase or
otherwise acquire any shares of any class of Capital Stock for consideration in
the form of shares of common stock (so long as after giving effect thereto no
Change of Control or other Default or Event of Default shall exist or
occur);
(b) Borrower
may pay dividends to the extent permitted in Section 9.12 below;
(c) any
Subsidiary of Borrower may pay dividends to Borrower;
(d) Borrower
may repurchase Capital Stock consisting of common stock held by employees
pursuant to any employee stock ownership plan thereof upon the termination,
retirement or death of any such employee in accordance with the provisions of
such plan; provided, that, as to any such
repurchase, each of the following conditions is satisfied: (i) as of the date of
the payment for such repurchase and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing, (ii) such
repurchase shall be paid with funds legally available therefor, (iii) such
repurchase shall not violate any law or regulation or the terms of any
indenture, agreement or undertaking to which Borrower is a party or by which
Borrower or its or their property are bound, and (iv) the aggregate amount of
all payments for such repurchases in any calendar year shall not exceed $50,000;
and
(e) so long
as Borrower is treated as a limited liability company for federal income tax
purposes, Borrower may distribute to the Parent, to the extent actually payable
by Parent to the applicable taxing authority, with respect to each taxable year
an aggregate amount equal to the product of (i) the maximum combined federal and
state income tax rate applicable to corporations (or individuals, if higher)
doing business in the state to which the Parent allocates at least ten (10%)
percent of its taxable income and which has the highest such rate (or the state
in which the Parent allocates more income than any other state, if it doesn’t
allocate at least ten percent of its taxable income to any state) times (ii) the
excess of the taxable income of the Parent for such taxable year over the
taxable losses of the Parent for all prior taxable years that have not
previously been used to reduce taxable income pursuant to this clause
(e).
9.12 Transactions with
Affiliates. Borrower
shall not, directly or indirectly:
(a) purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
any officer, director or other Affiliate of Borrower, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower’s
business (as the case may be) and upon fair and reasonable terms no less
favorable to Borrower than Borrower would obtain in a comparable arm’s length
transaction with an unaffiliated person; or
(b) make any
payments (whether by dividend, loan or otherwise) of management, consulting or
other fees for management or similar services, or of any Indebtedness owing to
any officer, employee, shareholder, director or any other Affiliate of Borrower,
except (i)
reasonable compensation to officers, employees and directors of Borrower and its
affiliates for any services rendered to Borrower in the ordinary course of
business, (ii) payment by Borrower to Parent on the date hereof of an amount not
to exceed $6,000,000 on account of intercompany Indebtedness due and owing by
Borrower to Parent as of the date hereof, and (iii) payments by Borrower to
Parent for those services provided by Parent to Borrower pursuant to the
Parent/Borrower Operating Agreement as in effect on the date hereof; provided, that, with respect to
any reimbursement payment by Borrower to Parent on account of any margin call
due in connection with any hedging position created by Parent for or on behalf
of Borrower pursuant to the Parent/Borrower Operating Agreement, Borrower shall
have Excess Availability of not less than $1,000,000 after giving effect to such
payment.
9.13 Compliance with
ERISA. Borrower
shall, and shall cause each of its ERISA Affiliates to: (a) maintain
each Plan in compliance in all material respects with the applicable provisions
of ERISA, the Code and other Federal and State law; (b) cause each Plan which is
qualified under Section 401(a) of the Code to maintain such qualification; (c)
not terminate any Pension Plan so as to incur any material liability to the
Pension Benefit Guaranty Corporation; (d)not allow or suffer to exist any
prohibited transaction involving any Plan or any trust created thereunder which
would subject Borrower or such ERISA Affiliate to a material tax or other
liability on prohibited transactions imposed under Section 4975 of the Code or
ERISA; (e) make all required contributions to any Plan which it is obligated to
pay under Section 302 of ERISA, Section 412 of the Code or the terms of such
Plan; (f) not allow or suffer to exist any accumulated funding deficiency,
whether or not waived, with respect to any such Pension Plan; (g) not engage in
a transaction that could be subject to Section 4069 or 4212(c) of ERISA; or (h)
not allow or suffer to exist any occurrence of a reportable event or any other
event or condition which presents a material risk of termination by the Pension
Benefit Guaranty Corporation of any Plan that is a single employer plan, which
termination could result in any material liability to the Pension Benefit
Guaranty Corporation.
9.14 End of Fiscal Years; Fiscal
Quarters. Parent
shall, for financial reporting purposes, cause its, and each of its
Subsidiaries’ (a) fiscal years to end on December 31 of each year and
(b) fiscal quarters to end on March 31, June 30, September 30, and December
31 of each year.
9.15 Change in
Business. Borrower
shall not engage in any business other than the business of Borrower on the date
hereof and any business reasonably related, ancillary or complimentary to the
business in which Borrower is engaged on the date hereof.
9.16 Limitation of Restrictions
Affecting Subsidiaries. Borrower
shall not, directly, or indirectly, create or otherwise cause or suffer to exist
any encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of Borrower to (a) pay dividends or make other distributions or pay
any Indebtedness owed to Borrower or any Subsidiary of Borrower; (b) make loans
or advances to Borrower or any Subsidiary of Borrower, (c) transfer
any of its properties or assets to Borrower or any Subsidiary of Borrower; or
(d) create, incur, assume or suffer to exist any lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than
encumbrances and restrictions arising under (i) applicable law, (ii) this
Agreement, (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of Borrower or any Subsidiary of
Borrower, (iv) customary restrictions on dispositions of real property interests
found in reciprocal easement agreements of Borrower or any Subsidiary of
Borrower, (v) any agreement relating to permitted Indebtedness incurred by a
Subsidiary of Borrower prior to the date on which such Subsidiary was acquired
by Borrower and outstanding on such acquisition date, and (vi) the extension or
continuation of contractual obligations in existence on the date hereof; provided, that, any such
encumbrances or restrictions contained in such extension or continuation are no
less favorable to Agent and Lenders than those encumbrances and restrictions
under or pursuant to the contractual obligations so extended or
continued.
9.17 EBITDA. Borrower
shall maintain EBITDA of not less than the amounts set forth on Schedule 9.17
hereto for each period specified therein.
9.18 License
Agreements.
(a) Borrower
shall (i) promptly and faithfully observe and perform all of the material terms,
covenants, conditions and provisions of the material License Agreements to which
it is a party to be observed and performed by it, at the times set forth
therein, if any, (ii) not do, permit, suffer or refrain from doing anything that
could reasonably be expected to result in a default under or breach of any of
the terms of any material License Agreement, (iii) not cancel, surrender,
modify, amend, waive or release any material License Agreement in any material
respect or any term, provision or right of the licensee thereunder in any
material respect, or consent to or permit to occur any of the foregoing; except, that, subject to
Section 9.18(b) below, Borrower may cancel, surrender or release any material
License Agreement in the ordinary course of the business of Borrower; provided, that, Borrower (as
the case may be) shall give Agent not less than thirty (30) days prior written
notice of its intention to so cancel, surrender and release any such material
License Agreement, (iv) give Agent prompt written notice of any material License
Agreement entered into by Borrower after the date hereof, together with a true,
correct and complete copy thereof and such other information with respect
thereto as Agent may reasonably request, (v) give Agent prompt written notice of
any material breach of any obligation, or any default, by any party under any
material License Agreement, and deliver to Agent (promptly upon the receipt
thereof by Borrower in the case of a notice to Borrower and concurrently with
the sending thereof in the case of a notice from Borrower ) a copy of each
notice of default and every other notice and other communication received or
delivered by Borrower in connection with any material License Agreement which
relates to the right of Borrower to continue to use the property subject to such
License Agreement, and (vi) furnish to Agent, promptly upon the request of
Agent, such information and evidence as Agent may reasonably require from time
to time concerning the observance, performance and compliance by Borrower or the
other party or parties thereto with the material terms, covenants or provisions
of any material License Agreement.
(b) Borrower
will either exercise any option to renew or extend the term of each material
License Agreement to which it is a party in such manner as will cause the term
of such material License Agreement to be effectively renewed or extended for the
period provided by such option and give prompt written notice thereof to Agent
or give Agent prior written notice that Borrower does not intend to renew or
extend the term of any such material License Agreement or that the term thereof
shall otherwise be expiring, not less than sixty (60) days prior to the date of
any such non-renewal or expiration. In the event of the failure of
Borrower to extend or renew any material License Agreement to which it is a
party, Agent shall have, and is hereby granted, the irrevocable right and
authority, at its option, to renew or extend the term of such material License
Agreement, whether in its own name and behalf, or in the name and behalf of a
designee or nominee of Agent or in the name and behalf of Borrower, as Agent
shall determine at any time that an Event of Default shall exist or have
occurred and be continuing. Agent may, but shall not be required to,
perform any or all of such obligations of Borrower under any of the License
Agreements, including, but not limited to, the payment of any or all sums due
from Borrower thereunder. Any sums so paid by Agent shall constitute
part of the Obligations.
9.19 Foreign Assets Control
Regulations, Etc. None
of the requesting or borrowing of the Loans or the requesting or issuance,
extension or renewal of any Letter of Credit or the use of the proceeds of any
thereof will violate the Trading With the Enemy Act (50 USC §1 et seq., as
amended) (the “Trading With the Enemy Act”) or any of the foreign assets control
regulations of the United States Treasury Department (31 C.F.R., Subtitle B,
Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any
enabling legislation or executive order relating thereto (including, but not
limited to (a) Executive order 13224 of September 21, 2001 Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (Public Law
107-56). Neither Borrower nor any of its Subsidiaries or other
Affiliates is or will become a “blocked person” as described in the Executive
Order, the Trading with the Enemy Act or the Foreign Assets Control Regulations
or engages or will engage in any dealings or transactions, or be
otherwise associated, with any such “blocked person”.
9.20 Costs and
Expenses. Borrower
shall pay to Agent on demand all documented out-of-pocket costs, expenses,
filing fees and taxes paid or payable in connection with the preparation,
negotiation, execution, delivery, recording, syndication, administration,
collection, liquidation, enforcement and defense of the Obligations, Agent’s
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including: (a) all costs
and expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) all costs and
expenses and fees for insurance premiums, environmental audits, title insurance
premiums, surveys, assessments, engineering reports and inspections, appraisal
fees and search fees, background checks, costs and expenses of remitting loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining the Blocked Accounts, together with Agent’s customary charges and
fees with respect thereto; (c) charges, fees or expenses charged by any Issuing
Bank in connection with any Letter of Credit; (d) costs and expenses of
preserving and protecting the Collateral; (e) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Agent, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Agent or any Lender arising out of the transactions contemplated hereby and
thereby (including preparations for and consultations concerning any such
matters); (f) all reasonable out-of-pocket expenses and costs heretofore and
from time to time hereafter incurred by Agent during the course of periodic
field examinations of the Collateral and Borrower ‘s operations, plus a per diem
charge at Agent’s then standard rate for Agent’s examiners in the field and
office (which rate as of the date hereof is $900 per person per day); and (g)
the reasonable fees and disbursements of counsel (including legal assistants) to
Agent in connection with any of the foregoing.
9.21 Further
Assurances.
(a) At the
request of Agent at any time and from time to time, Borrower shall, at its
expense, duly execute and deliver, or cause to be duly executed and delivered,
such further agreements, documents and instruments, and do or cause to be done
such further acts as may be reasonably necessary or proper to evidence, perfect,
maintain and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements.
(b) Agent may
at any time and from time to time request a certificate from an officer of
Borrower representing that all conditions precedent to the making of Loans and
providing Letters of Credit contained herein are satisfied, which certificate
shall be delivered by Borrower to Agent promptly after Agent’s request
therefor. In the event of such request by Agent, Agent and Lenders
may, at Agent’s option, cease to make any further Loans or provide any further
Letters of Credit until Agent has received such certificate and, in addition,
Agent has determined in good faith and in the exercise of its reasonable credit
judgment that such conditions are satisfied.
SECTION
10. EVENTS OF DEFAULT AND
REMEDIES
10.1 Events of
Default. The
occurrence or existence of any one or more of the following events are referred
to herein individually as an “Event of Default”, and collectively as “Events of
Default”:
(a) (i) Borrower
fails to pay any of the Obligations when due or (ii) Borrower fails to perform
any of the terms, covenants, conditions or provisions contained in Sections
5.2(a), 5.2(d), 5.2(e), 5.2(f), 5.2(i), 6.3, 6.7, 7.1(a)(i), 7.1(a)(ii), 7.7,
9.1(a)(i), 9.5, 9.6(a), 9.7, 9.8, 9.9, 9.10, 9.11, 9.12 or 9.17 of this
Agreement or (iii) Borrower or any Obligor fails to perform any of the terms,
covenants, conditions or provisions contained in Sections 5.2(b), 5.2(c),
5.2(g), 5.2(h), 7.1(a)(iii), 7.1(a)(iv), 7.2, 7.3, 7.4, 9.20 or 9.21(b) of this
Agreement and such failure shall continue for ten (10) days or (iv) any Borrower
or Obligor fails to perform any of the terms, covenants, conditions or
provisions contained in this Agreement or any of the other Financing Agreements
other than those described in Sections 10.1(a)(i), 10.1(a)(ii) and 10.1(a)(iii)
above and such failure shall continue for thirty (30) days; provided, that, such thirty
(30) day period shall not apply in the case of an intentional breach by Borrower
or any Obligor of any such term, covenant, condition or provision;
(b) any
representation, warranty or statement of fact made by Borrower to Agent in this
Agreement, the other Financing Agreements or any other written agreement,
schedule, confirmatory assignment or otherwise shall when made or deemed made be
false or misleading in any material respect;
(c) any
Obligor revokes or terminates, or purports to revoke or terminate any guarantee
of the Obligations;
(d) any
judgment for the payment of money is rendered against Borrower or any Obligor
(other than Parent) in excess of $100,000 in any one case or in excess of
$250,000 in the aggregate (to the extent not covered by insurance where the
insurer has assumed responsibility in writing for such judgment) and shall
remain undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against Borrower or any Obligor (other than Parent) or any
of the Collateral having a value in excess of $100,000;
(e) any
Obligor (being a natural person or a general partner of an Obligor which is a
partnership) dies or Borrower or any Obligor, which is a partnership, limited
liability company, limited liability partnership or a corporation, dissolves or
suspends or discontinues doing business;
(f) Borrower
or any Obligor makes an assignment for the benefit of creditors or makes or
sends notice of a bulk transfer, or Borrower or any Obligor (other than Parent)
calls a meeting of its creditors or principal creditors in connection with a
moratorium or adjustment of the Indebtedness due to them;
(g) a case or
proceeding under the bankruptcy laws of the United States of America now or
hereafter in effect or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in equity) is filed
against Borrower or any Obligor or all or any part of its properties (except, in
the case of Parent, as to any direct or indirect Subsidiary of Parent other than
Borrower) and such petition or application is not dismissed within forty-five
(45) days after the date of its filing or Borrower or any Obligor (except, in
the case of Parent, as to any direct or indirect Subsidiary of Parent other than
Borrower) shall file any answer admitting or not contesting such petition or
application or indicates its consent to, acquiescence in or approval of, any
such action or proceeding or the relief requested is granted
sooner;
(h) a case or
proceeding under the bankruptcy laws of the United States of America now or
hereafter in effect or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at a law or equity) is filed by
Borrower or any Obligor or for all or any part of its property (except, in the
case of Parent, as to any direct or indirect Subsidiary of Parent other than
Borrower);
(i) any
default in respect of any Indebtedness of Borrower or any Obligor (other than
Parent) (other than Indebtedness owing to Agent and Lenders hereunder), in any
case in an amount in excess of $100,000, which default continues for more than
the applicable cure period, if any, with respect thereto or any default by
Borrower or any Obligor (other than Parent) under any Material Contract, which
default continues for more than the applicable cure period, if any, with respect
thereto and/or is not waived in writing by the other parties
thereto;
(j) any
material provision hereof or of any of the other Financing Agreements shall for
any reason cease to be valid, binding and enforceable with respect to any party
hereto or thereto (other than Agent) in accordance with its terms, or any such
party shall challenge the enforceability hereof or thereof, or shall assert in
writing, or take any action or fail to take any action based on the assertion
that any provision hereof or of any of the other Financing Agreements has ceased
to be or is otherwise not valid, binding or enforceable in accordance with its
terms, or any security interest provided for herein or in any of the other
Financing Agreements shall cease to be a valid and perfected first priority
security interest in any of the Collateral purported to be subject thereto
(except as otherwise permitted herein or therein);
(k) an ERISA
Event shall occur which results in or could reasonably be expected to result in
liability of Borrower in an aggregate amount in excess of $250,000;
(l) any
Change of Control;
(m) the
indictment by any Governmental Authority, or as Agent may reasonably determine,
the threatened indictment by any Governmental Authority of Borrower or any
Obligor (other than Parent) of which Borrower, such Obligor (other than Parent)
or Agent receives notice, in either case, as to which there is a reasonable
possibility of an adverse determination, in the reasonable determination of
Agent, under any criminal statute, or commencement or threatened commencement of
criminal or civil proceedings against Borrower or any Obligor (other than
Parent), pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of (i) any of the Collateral having a
value in excess of $250,000 or (ii) any other property of Borrower or any
Obligor (other than Parent) which is necessary or material to the conduct of its
business;
(n) (i) the
Parent/Borrower Operating Agreement or (ii) the letter agreement by Parent in
favor of Agent and Lenders pursuant to which Parent has agreed to, among other
things, perform such services and deliver such reports and information to and
for the benefit of Agent and Lenders as Agent and Lenders may request from time
to time, shall have been terminated without the prior written consent of
Agent;
(o) there
shall have occurred a Material Adverse Effect as to Borrower or any Obligor
(other than Parent); or
(p) there
shall be a material breach by any Obligor under any of the other Financing
Agreements, which breach continues for more than the applicable cure period (if
any) with respect thereto.
10.2 Remedies.
(a) At any
time an Event of Default exists or has occurred and is continuing, Agent and
Lenders shall have all rights and remedies provided in this Agreement, the other
Financing Agreements, the UCC and other applicable law, all of which rights and
remedies may be exercised without notice to or consent by Borrower or any
Obligor, except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted
to Agent and Lenders hereunder, under any of the other Financing Agreements, the
UCC or other applicable law, are cumulative, not exclusive and enforceable, in
Agent’s discretion, alternatively, successively, or concurrently on any one or
more occasions, and shall include, without limitation, the right to apply to a
court of equity for an injunction to restrain a breach or threatened breach by
Borrower or any Obligor of this Agreement or any of the other Financing
Agreements. Subject to Section 12 hereof, Agent may, and at the
direction of the Required Lenders shall, at any time or times, proceed directly
against Borrower or any Obligor to collect the Obligations without prior
recourse to the Collateral.
(b) Without
limiting the generality of the foregoing, at any time an Event of Default exists
or has occurred and is continuing, Agent may, at its option and shall upon the
direction of the Required Lenders, (i) upon notice to Borrower, accelerate the
payment of all Obligations and demand immediate payment thereof to Agent for
itself and the benefit of Lenders (provided, that, upon the
occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h),
all Obligations shall automatically become immediately due and payable), and
(ii) terminate the Commitments whereupon the obligation of each Lender to make
any Loan and Issuing Bank to issue any Letter of Credit shall immediately
terminate (provided, that, upon the
occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h),
the Commitments, the obligation of each Lender to make any Loans and Issuing
Bank to issue any Letters of Credit, and any other future obligation of the
Agent or a Lender hereunder shall automatically terminate (other than
obligations which by their terms expressly survive such
termination)).
(c) Without
limiting the foregoing, at any time an Event of Default exists or has occurred
and is continuing, Agent may, in its discretion (i) with or without judicial
process or the aid or assistance of others, enter upon any premises on or in
which any of the Collateral may be located and take possession of the Collateral
or complete processing, manufacturing and repair of all or any portion of the
Collateral, (ii) require Borrower or any Obligor, at Borrower’s expense, to
assemble and make available to Agent any part or all of the Collateral at any
place and time designated by Agent, (iii) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (iv) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (v) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into contracts
with respect thereto, public or private sales at any exchange, broker’s board,
at any office of Agent or elsewhere) at such prices or terms as Agent may deem
reasonable, for cash, upon credit or for future delivery, with the Agent having
the right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing being free from any right or equity of redemption of
Borrower or any Obligor, which right or equity of redemption is hereby expressly
waived and released by Borrower and any Obligor and/or (vi) terminate this
Agreement. If any of the Collateral is sold or leased by Agent upon
credit terms or for future delivery, the Obligations shall not be reduced as a
result thereof until payment therefor is finally collected by
Agent. If notice of disposition of Collateral is required by law, ten
(10) days prior notice by Agent to Borrower designating the time and place of
any public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and Borrower and Obligors waive any other notice. In the
event Agent institutes an action to recover any Collateral or seeks recovery of
any Collateral by way of prejudgment remedy, Borrower and each Obligor waives
the posting of any bond which might otherwise be required. At any time an Event
of Default exists or has occurred and is continuing, upon Agent’s request,
Borrower will either, as Agent shall specify, furnish cash collateral to Issuing
Bank to be used to secure and fund the reimbursement obligations to Issuing Bank
in connection with any Letter of Credit Obligations or furnish cash collateral
to Agent for the Letter of Credit Obligations. Such cash collateral
shall be in the amount equal to one hundred five (105%) percent of the amount of
the Letter of Credit Obligations plus the amount of any fees and expenses
payable in connection therewith through the end of the latest expiration date of
the Letters of Credit giving rise to such Letter of Credit
Obligations.
(d) At any
time or times that an Event of Default exists or has occurred and is continuing,
Agent may, in its discretion, enforce the rights of Borrower or any Obligor
against any account debtor, secondary obligor or other obligor in respect of any
of the Accounts or other Receivables. Without limiting the generality
of the foregoing, Agent may, in its discretion, at such time or times (i) notify
any or all account debtors, secondary obligors or other obligors in respect
thereof that the Receivables have been assigned to Agent and that Agent has a
security interest therein and Agent may direct any or all account debtors,
secondary obligors and other obligors to make payment of Receivables directly to
Agent, (ii) extend the time of payment of, compromise, settle or adjust for
cash, credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Receivables or other obligations included in the
Collateral and thereby discharge or release the account debtor or any secondary
obligors or other obligors in respect thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any Receivables or such
other obligations, but without any duty to do so, and Agent and Lenders shall
not be liable for any failure to collect or enforce the payment thereof nor for
the negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may reasonably deem necessary or desirable for the
protection of its interests and the interests of Lenders. At any time
that an Event of Default exists or has occurred and is continuing, at Agent’s
request, all invoices and statements sent to any account debtor shall state that
the Accounts and such other obligations have been assigned to Agent and are
payable directly and only to Agent and Borrower shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may
require. In the event any account debtor returns Inventory when an
Event of Default exists or has occurred and is continuing, Borrower shall, upon
Agent’s request, hold the returned Inventory in trust for Agent, segregate all
returned Inventory from all of its other property, dispose of the returned
Inventory solely according to Agent’s instructions, and not issue any
credits, discounts or allowances with respect thereto without Agent’s prior
written consent.
(e) To the
extent that applicable law imposes duties on Agent or any Lender to exercise
remedies in a commercially reasonable manner (which duties cannot be waived
under such law), Borrower acknowledges and agrees that it is not commercially
unreasonable for Agent or any Lender (i) to fail to incur expenses reasonably
deemed significant by Agent or any Lender to prepare Collateral for disposition
or otherwise to complete raw material or work in process into finished goods or
other finished products for disposition, (ii) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain consents of any Governmental Authority
or other third party for the collection or disposition of Collateral to be
collected or disposed of, (iii) to fail to exercise collection remedies against
account debtors, secondary obligors or other persons obligated on Collateral or
to remove liens or encumbrances on or any adverse claims against Collateral,
(iv) to exercise collection remedies against account debtors and other persons
obligated on Collateral directly or through the use of collection agencies and
other collection specialists, (v) to advertise dispositions of Collateral
through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other persons, whether or
not in the same business as Borrower, for expressions of interest in acquiring
all or any portion of the Collateral, (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the
collateral is of a specialized nature, (viii) to dispose of Collateral by
utilizing Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets, (ix) to dispose of assets in
wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure Agent or Lenders
against risks of loss, collection or disposition of Collateral or to provide to
Agent or Lenders a guaranteed return from the collection or disposition of
Collateral, or (xii) to the extent reasonably deemed appropriate by Agent, to
obtain the services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or disposition of any of the
Collateral. Borrower acknowledges that the purpose of this Section is to provide
non-exhaustive indications of what actions or omissions by Agent or any Lender
would not be commercially unreasonable in the exercise by Agent or any Lender of
remedies against the Collateral and that other actions or omissions by Agent or
any Lender shall not be deemed commercially unreasonable solely on account of
not being indicated in this Section. Without limitation of the foregoing,
nothing contained in this Section shall be construed to grant any rights to
Borrower or to impose any duties on Agent or Lenders that would not have been
granted or imposed by this Agreement or by applicable law in the absence of this
Section.
(f) For the
purpose of enabling Agent to exercise the rights and remedies hereunder,
Borrower hereby grants to Agent, to the extent assignable, an irrevocable,
non-exclusive license (exercisable at any time an Event of Default shall exist
or have occurred and for so long as the same is continuing) without payment of
royalty or other compensation to Borrower, to use, assign, license or sublicense
any of the trademarks, service-marks, trade names, business names, trade styles,
designs, logos and other source of business identifiers and other Intellectual
Property and general intangibles now owned or hereafter acquired by Borrower,
wherever the same maybe located, including in such license reasonable access to
all media in which any of the licensed items may be recorded or stored and to
all computer programs used for the compilation or printout thereof.
(g) At any
time an Event of Default exists or has occurred and is continuing, Agent may
apply the cash proceeds of Collateral actually received by Agent from any sale,
lease, foreclosure or other disposition of the Collateral to payment of the
Obligations, in whole or in part and in accordance with the terms hereof,
whether or not then due, or may hold such proceeds as cash collateral for any
Letter of Credit Obligations or other contingent Obligations or if Agent and
Lenders are stayed or otherwise prohibited from applying such proceeds under
applicable law or otherwise. Borrower and Obligors shall remain
liable to Agent and Lenders for the payment of any deficiency with interest at
the highest rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys’ fees and expenses.
(h) Without
limiting the foregoing, upon the occurrence and during the continuance of an
Event of Default, (i) Agent and Lenders may, at Agent’s option, and upon the
occurrence and during the continuance of an Event of Default, at the direction
of the Required Lenders, Agent and Lenders shall, without notice,
(A) cease making Loans or arranging for Letters of Credit or reduce
the lending formulas or amounts of Loans and Letters of Credit available to
Borrower and/or (B) terminate any provision of this Agreement providing for any
future Loans to be made by Agent and Lenders or Letters of Credit to be issued
by Issuing Bank, and (ii) Agent may, at its option, establish such Reserves as
Agent determines without limitation or restriction, notwithstanding anything to
the contrary contained herein.
SECTION
11. JURY TRIAL WAIVER; OTHER
WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of
Forum; Service of Process; Jury Trial Waiver.
(a) The
validity, interpretation and enforcement of this Agreement and the other
Financing Agreements (except as otherwise provided therein) and any dispute
arising out of the relationship between the parties hereto, whether in contract,
tort, equity or otherwise, shall be governed by the internal laws of the State
of California but excluding any principles of conflicts of law or other rule of
law that would cause the application of the law of any jurisdiction other than
the laws of the State of California
(b) Borrower,
Agent, Lenders and Issuing Bank irrevocably consent and submit to the
non-exclusive jurisdiction of Los Angeles County, State of California or the
United States District Court for the Central District of California whichever
Agent may elect, and waive any objection based on venue or forum non conveniens with
respect to any action instituted therein arising under this Agreement or any of
the other Financing Agreements or in any way connected with or related or
incidental to the dealings of the parties hereto in respect of this Agreement or
any of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and whether in
contract, tort, equity or otherwise, and agree that any dispute with respect to
any such matters shall be heard only in the courts described above (except, that, Agent and
Lenders shall have the right to bring any action or proceeding against Borrower
or any Obligor or its or their property in the courts of any other jurisdiction
which Agent deems necessary or appropriate in order to realize on the Collateral
or to otherwise enforce its rights against Borrower or any Obligor or its or
their property).
(c) Borrower
hereby waives personal service of any and all process upon it and consents that
all such service of process may be made by certified mail (return receipt
requested) directed to its address set forth herein and service so made shall be
deemed to be completed five (5) days after the same shall have been so deposited
in the U.S. mails, or, at Agent’s option, by service upon Borrower in any other
manner provided under the rules of any such courts. Within thirty
(30) days after such service, Borrower shall appear in answer to such process,
failing which Borrower shall be deemed in default and judgment may be entered by
Agent against Borrower for the amount of the claim and other relief
requested.
(d) BORROWER,
AGENT, LENDERS AND ISSUING BANK EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR
ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED
HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER, AGENT,
LENDERS AND ISSUING BANK EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT BORROWER, AGENT, ANY LENDER OR ISSUING BANK MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
(e) Agent,
Lenders and Issuing Bank shall not have any liability to Borrower or any Obligor
(whether in tort, contract, equity or otherwise) for losses suffered by Borrower
in connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Agent, such Lender and Issuing
Bank, that the losses were the result of acts or omissions constituting gross
negligence or willful misconduct. Borrower: (i) certifies
that neither Agent, any Lender, Issuing Bank nor any representative, agent or
attorney acting for or on behalf of Agent, any Lender or Issuing Bank has
represented, expressly or otherwise, that Agent, Lenders and Issuing Bank would
not, in the event of litigation, seek to enforce any of the waivers provided for
in this Agreement or any of the other Financing Agreements and (ii) acknowledges
that in entering into this Agreement and the other Financing Agreements, Agent,
Lenders and Issuing Bank are relying upon, among other things, the waivers and
certifications set forth in this Section 11.1 and elsewhere herein and
therein.
11.2 Waiver of
Notices. Borrower
hereby expressly waives demand, presentment, protest and notice of protest and
notice of dishonor with respect to any and all instruments and chattel paper,
included in or evidencing any of the Obligations or the Collateral, and any and
all other demands and notices of any kind or nature whatsoever with respect to
the Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on Borrower which Agent
or any Lender may elect to give shall entitle Borrower to any other or further
notice or demand in the same, similar or other circumstances.
11.3 Amendments and
Waivers.
(a) Neither
this Agreement nor any other Financing Agreement nor any terms hereof or thereof
may be amended, waived, discharged or terminated unless such amendment, waiver,
discharge or termination is in writing signed by Agent and the Required Lenders
or at Agent’s option, by Agent with the authorization or consent of the Required
Lenders, and as to amendments to any of the Financing Agreements (other than
with respect to any provision of Section 12 hereof), by Borrower and such
amendment, waiver, discharge or termination shall be effective and binding as to
all Lenders and Issuing Bank only in the specific instance and for the specific
purpose for which given; except, that, no such
amendment, waiver, discharge or termination shall:
(i) reduce
the interest rate or any fees or extend the time of payment of principal,
interest or any fees or reduce the principal amount of any Loan or Letters of
Credit, in each case without the consent of each Lender directly affected
thereby,
(ii) increase
the Commitment of any Lender over the amount thereof then in effect or provided
hereunder, in each case without the consent of the Lender directly affected
thereby,
(iii) release
any Collateral (except as expressly required hereunder or under any of the other
Financing Agreements or applicable law and except as permitted under Section
12.11(b) hereof), without the consent of Agent and all of Lenders,
(iv) reduce
any percentage specified in the definition of Required Lenders, without the
consent of Agent and all of Lenders,
(v) consent
to the assignment or transfer by Borrower or any Obligor of any of their rights
and obligations under this Agreement, without the consent of Agent and all of
Lenders,
(vi) amend,
modify or waive any terms of this Section 11.3 hereof, without the consent of
Agent and all of Lenders, or
(vii) increase
the advance rates constituting part of the Borrowing Base or increase the
Inventory Loan Limit or the Letter of Credit Limit, without the consent of Agent
and all of Lenders.
(b) Agent,
Lenders and Issuing Bank shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its or their rights, powers
and/or remedies unless such waiver shall be in writing and signed as provided
herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent, any Lender or
Issuing Bank of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which
Agent, any Lender or Issuing Bank would otherwise have on any future occasion,
whether similar in kind or otherwise.
(c) Notwithstanding
anything to the contrary contained in Section 11.3(a) above, in connection with
any amendment, waiver, discharge or termination, in the event that any Lender
whose consent thereto is required shall fail to consent or fail to consent in a
timely manner (such Lender being referred to herein as a “Non-Consenting
Lender”), but the consent of any other Lenders to such amendment, waiver,
discharge or termination that is required are obtained, if any, then Wachovia
shall have the right, but not the obligation, at any time thereafter, and upon
the exercise by Wachovia of such right, such Non-Consenting Lender shall have
the obligation, to sell, assign and transfer to Wachovia or such Eligible
Transferee as Wachovia may specify, the Commitment of such Non-Consenting Lender
and all rights and interests of such Non-Consenting Lender pursuant
thereto. Wachovia shall provide the Non-Consenting Lender with prior
written notice of its intent to exercise its right under this Section, which
notice shall specify the date on which such purchase and sale shall
occur. Such purchase and sale shall be pursuant to the terms of an
Assignment and Acceptance (whether or not executed by the Non-Consenting
Lender); except, that, on the date of
such purchase and sale, Wachovia, or such Eligible Transferee specified by
Wachovia, shall pay to the Non-Consenting Lender (except as Wachovia and such
Non-Consenting Lender may otherwise agree) the amount equal to: (i) the
principal balance of the Loans held by the Non-Consenting Lender outstanding as
of the close of business on the business day immediately preceding the effective
date of such purchase and sale, plus (ii) amounts accrued and unpaid in respect
of interest and fees payable to the Non-Consenting Lender to the effective date
of the purchase (but in no event shall the Non-Consenting Lender be deemed
entitled to any early termination fee), minus (iii) the amount of the closing
fee received by the Non-Consenting Lender pursuant to the terms hereof or of any
of the other Financing Agreements multiplied by the fraction, the numerator of
which is the number of months remaining in the then current term of the Credit
Facility and the denominator of which is the total number of months in the then
current term thereof. Such purchase and sale shall be effective on
the date of the payment of such amount to the Non-Consenting Lender and the
Commitment of the Non-Consenting Lender shall terminate on such
date.
(d) The
consent of Agent shall be required for any amendment, waiver or consent
affecting the rights or duties of Agent hereunder or under any of the other
Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory
shall not be deemed an amendment to the advance rates provided for in this
Section 11.3. The consent of Issuing Bank shall be required for any
amendment, waiver or consent affecting the rights or duties of Issuing Bank
hereunder or under any of the other Financing Agreements, in addition to the
consent of the Lenders otherwise required by this Section; provided, that, the consent of
Issuing Bank shall not be required for any other amendments, waivers or
consents. Notwithstanding anything to the contrary contained in
Section 11.3(a) above, (i) in the event that Agent shall agree that any items
otherwise required to be delivered to Agent as a condition of the initial Loans
and Letters of Credit hereunder may be delivered after the date hereof, Agent
may, in its discretion, agree to extend the date for delivery of such items or
take such other action as Agent may deem appropriate as a result of the failure
to receive such items as Agent may determine or may waive any Event of Default
as a result of the failure to receive such items, in each case without the
consent of any Lender and (ii) Agent may consent to any change in the type of
organization, jurisdiction of organization or other legal structure of Borrower,
or any of its Subsidiaries and amend the terms hereof or of any of the other
Financing Agreements as may be necessary or desirable to reflect any such
change, in each case without the approval of any Lender.
(e) The
consent of Agent and a Bank Product Provider that is providing Bank Products and
has outstanding any such Bank Products at such time that are secured hereunder
shall be required for any amendment to the priority of payment of Obligations
arising under or pursuant to any Hedge Agreements of Borrower or a Guarantor or
other Bank Products as set forth in Section 6.4(a) hereof.
11.4 Waiver of
Counterclaims. Borrower
waives all rights to interpose any claims, deductions, setoffs or counterclaims
of any nature (other than compulsory counterclaims) in any action or proceeding
with respect to this Agreement, the Obligations, the Collateral or any matter
arising therefrom or relating hereto or thereto.
11.5 Indemnification. Borrower
shall indemnify and hold Agent, each Lender and Issuing Bank, and their
respective officers, directors, agents, employees, advisors and counsel and
their respective Affiliates (each such person being an “Indemnitee”), harmless
from and against any and all losses, claims, damages, liabilities, costs or
expenses (including reasonable attorneys’ fees and expenses) imposed on,
incurred by or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel; except, that, Borrower shall
not have any obligation under this Section 11.5 to indemnify an Indemnitee with
respect to a matter covered hereby resulting from the gross negligence or
willful misconduct of such Indemnitee as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction (but without limiting
the obligations of Borrower as to any other Indemnitee). To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section may be unenforceable because it violates any law or public policy,
Borrower shall pay the maximum portion which it is permitted to pay under
applicable law to Agent and Lenders in satisfaction of indemnified matters under
this Section. To the extent permitted by applicable law, Borrower
shall not assert, and Borrower hereby waives any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement, any of the other Financing Agreements
or any undertaking or transaction contemplated hereby. No Indemnitee
referred to above shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or any of the other Financing Agreements or
the transaction contemplated hereby or thereby. All amounts due under
this Section shall be payable upon demand. The foregoing indemnity shall survive
the payment of the Obligations and the termination or non-renewal of this
Agreement.
12.1 Appointment, Powers and
Immunities. Each
Lender and Issuing Bank irrevocably designates, appoints and authorizes Wachovia
to act as Agent hereunder and under the other Financing Agreements with such
powers as are specifically delegated to Agent by the terms of this Agreement and
of the other Financing Agreements, together with such other powers as are
reasonably incidental thereto. Agent (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement and in the
other Financing Agreements, and shall not by reason of this Agreement or any
other Financing Agreement be a trustee or fiduciary for any Lender; (b) shall
not be responsible to Lenders for any recitals, statements, representations or
warranties contained in this Agreement or in any of the other Financing
Agreements, or in any certificate or other document referred to or provided for
in, or received by any of them under, this Agreement or any other Financing
Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Financing Agreement
or any other document referred to or provided for herein or therein or for any
failure by Borrower or any Obligor or any other Person to perform any of its
obligations hereunder or thereunder; and (c) shall not be responsible to Lenders
for any action taken or omitted to be taken by it hereunder or under any other
Financing Agreement or under any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Agent
may employ agents and attorneys-in-fact and shall not be responsible to Lenders
or Issuing Bank for the negligence or willful misconduct of any such agents or
attorneys-in-fact selected by it in good faith. Agent may deem and
treat the payee of any note as the holder thereof for all purposes hereof unless
and until the assignment thereof pursuant to an agreement (if and to the extent
permitted herein) in form and substance satisfactory to Agent shall have been
delivered to and acknowledged by Agent.
12.2 Reliance by
Agent. Agent
shall be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telecopy, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by
Agent. As to any matters not expressly provided for by this Agreement
or any other Financing Agreement, Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder or thereunder in accordance with
instructions given by the Required Lenders or all of Lenders as is required in
such circumstance, and such instructions of such Lenders and any action taken or
failure to act pursuant thereto shall be binding on all Lenders.
12.3 Events of
Default.
(a) Agent
shall not be deemed to have knowledge or notice of the occurrence of a Default
or an Event of Default or other failure of a condition precedent to the Loans
and Letters of Credit hereunder, unless and until Agent has received written
notice from a Lender, or Borrower specifying such Event of Default or
any unfulfilled condition precedent, and stating that such notice is a “Notice
of Default or Failure of Condition”. In the event that Agent receives
such a Notice of Default or Failure of Condition, Agent shall give prompt notice
thereof to the Lenders. Agent shall (subject to Section 12.7) take
such action with respect to any such Event of Default or failure of condition
precedent as shall be directed by the Required Lenders to the extent provided
for herein; provided, that, unless and
until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to or by reason of such Event of Default or failure of condition precedent, as
it shall deem advisable in the best interest of Lenders. Without
limiting the foregoing, and notwithstanding the existence or occurrence and
continuance of an Event of Default or any other failure to satisfy any of the
conditions precedent set forth in Section 4 of this Agreement to the contrary,
unless and until otherwise directed by the Required Lenders, Agent may, but
shall have no obligation to, continue to make Loans and Issuing Bank may, but
shall have no obligation to, issue or cause to be issued any Letter of Credit
for the ratable account and risk of Lenders from time to time if Agent believes
making such Loans or issuing or causing to be issued such Letter of Credit is in
the best interests of Lenders.
(b) Except
with the prior written consent of Agent, no Lender or Issuing Bank may assert or
exercise any enforcement right or remedy in respect of the Loans, Letter of
Credit Obligations or other Obligations, as against Borrower or any Obligor or
any of the Collateral or other property of Borrower or any Obligor.
12.4 Wachovia in its Individual
Capacity. With
respect to its Commitment and the Loans made and Letters of Credit issued or
caused to be issued by it (and any successor acting as Agent), so long as
Wachovia shall be a Lender hereunder, it shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as Agent, and the term “Lender” or “Lenders” shall, unless the context
otherwise indicates, include Wachovia in its individual capacity as Lender
hereunder. Wachovia (and any successor acting as Agent) and its
Affiliates may (without having to account therefor to any Lender) lend money to,
make investments in and generally engage in any kind of business with Borrower
(and any of its Subsidiaries or Affiliates) as if it were not acting as Agent,
and Wachovia and its Affiliates may accept fees and other consideration from
Borrower or any Obligor and any of its Subsidiaries and Affiliates for services
in connection with this Agreement or otherwise without having to account for the
same to Lenders.
12.5 Indemnification. Lenders
agree to indemnify Agent and Issuing Bank (to the extent not reimbursed by
Borrower hereunder and without limiting any obligations of Borrower hereunder)
ratably, in accordance with their Pro Rata Shares, for any and all claims of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against Agent (including by any Lender) arising out of or by reason of any
investigation in or in any way relating to or arising out of this Agreement or
any other Financing Agreement or any other documents contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby
(including the costs and expenses that Agent is obligated to pay hereunder) or
the enforcement of any of the terms hereof or thereof or of any such other
documents; provided, that, no Lender shall
be liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent
jurisdiction. The foregoing indemnity shall survive the payment of
the Obligations and the termination or non-renewal of this
Agreement.
12.6 Non-Reliance on Agent and
Other Lenders. Each
Lender agrees that it has, independently and without reliance on Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of Borrower and Obligors and has made
its own decision to enter into this Agreement and that it will, independently
and without reliance upon Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or any of the other Financing Agreements. Agent shall not be required
to keep itself informed as to the performance or observance by Borrower or any
Obligor of any term or provision of this Agreement or any of the other Financing
Agreements or any other document referred to or provided for herein or therein
or to inspect the properties or books of Borrower or any
Obligor. Agent will use reasonable efforts to provide Lenders with
any information received by Agent from Borrower or any Obligor which is required
to be provided to Lenders or deemed to be requested by Lenders hereunder and
with a copy of any Notice of Default or Failure of Condition received by Agent
from Borrower or any Lender; provided, that, Agent shall not
be liable to any Lender for any failure to do so, except to the extent that such
failure is attributable to Agent’s own gross negligence or willful misconduct as
determined by a final non-appealable judgment of a court of competent
jurisdiction. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Agent or deemed requested by
Lenders hereunder, Agent shall not have any duty or responsibility to provide
any Lender with any other credit or other information concerning the affairs,
financial condition or business of Borrower or any Obligor that may come into
the possession of Agent.
12.7 Failure to Act. Except
for action expressly required of Agent hereunder and under the other Financing
Agreements, Agent shall in all cases be fully justified in failing or refusing
to act hereunder and thereunder unless it shall receive further assurances to
its satisfaction from Lenders of their indemnification obligations under
Section 12.5 hereof against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such
action.
12.8 Additional Loans. Agent
shall not make any Revolving Loans or Issuing Bank provide any Letter of Credit
to Borrower on behalf of Lenders intentionally and with actual knowledge that
such Revolving Loans or Letter of Credit would cause the aggregate amount of the
total outstanding Revolving Loans and Letters of Credit to Borrower to exceed
the Borrowing Base, without the prior consent of all Lenders; except, that, Agent may make
such additional Revolving Loans or Issuing Bank may provide such additional
Letter of Credit on behalf of Lenders, intentionally and with actual knowledge
that such Revolving Loans or Letter of Credit will cause the total outstanding
Revolving Loans and Letters of Credit to Borrower to exceed the Borrowing Base,
as Agent may deem necessary or advisable in its discretion; provided, that: (a)
the total principal amount of the additional Revolving Loans or additional
Letters of Credit to Borrower which Agent may make or provide after obtaining
such actual knowledge that the aggregate principal amount of the Revolving Loans
equal or exceed the Borrowing Base, plus the amount of Special Agent Advances
made pursuant to Section 12.11(a)(ii) hereof then outstanding, shall not exceed
the aggregate amount equal to ten (10%) percent of the Maximum Credit and shall
not cause the total principal amount of the Loans and Letters of Credit to
exceed the Maximum Credit and (b) no such additional Revolving Loan or Letter of
Credit shall be outstanding more than ninety (90) days after the date such
additional Revolving Loan or Letter of Credit is made or issued (as the case may
be), except as the Required Lenders may otherwise agree. Each Lender
shall be obligated to pay Agent the amount of its Pro Rata Share of any such
additional Revolving Loans or Letters of Credit.
12.9 Concerning the Collateral
and the Related Financing Agreements. Each
Lender authorizes and directs Agent to enter into this Agreement and the other
Financing Agreements. Each Lender agrees that any action taken by
Agent or Required Lenders in accordance with the terms of this Agreement or the
other Financing Agreements and the exercise by Agent or Required Lenders of
their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
12.10 Field Audit, Examination
Reports and other Information; Disclaimer by Lenders. By
signing this Agreement, each Lender:
(a) is deemed
to have requested that Agent furnish such Lender, promptly after it becomes
available, a copy of each field audit or examination report and report with
respect to the Borrowing Base prepared or received by Agent (each field audit or
examination report and report with respect to the Borrowing Base being referred
to herein as a “Report” and collectively, “Reports”), appraisals with respect to the
Collateral and financial statements with respect to Borrower and its
Subsidiaries received by Agent;
(b) expressly
agrees and acknowledges that Agent (i) does not make any representation or
warranty as to the accuracy of any Report, appraisal or financial statement or
(ii) shall not be liable for any information contained in any Report,
appraisal or financial statement
(c) expressly
agrees and acknowledges that the Reports are not comprehensive audits or
examinations, that Agent or any other party performing any audit or examination
will inspect only specific information regarding Borrower and any Obligor and
will rely significantly upon Borrower’s and such Obligor’s books and records, as
well as on representations of Borrower’s and such Obligor’s personnel;
and
(d) agrees to
keep all Reports confidential and strictly for its internal use in accordance
with the terms of Section 13.5 hereof, and not to distribute or use any Report
in any other manner.
12.11 Collateral
Matters.
(a) Agent
may, at its option, from time to time, at any time on or after an Event of
Default and for so long as the same is continuing or upon any other failure of a
condition precedent to the Loans and Letters of Credit hereunder, make such
disbursements and advances (“Special Agent Advances”) which Agent, in its sole
discretion, (i) deems necessary or desirable either to preserve or protect the
Collateral or any portion thereof or (ii) to enhance the likelihood or maximize
the amount of repayment by Borrower of the Loans and other Obligations; provided, that, (A) the
aggregate principal amount of the Special Agent Advances pursuant to this clause
(ii) outstanding at any time, plus the then outstanding principal amount of the
additional Loans and Letters of Credit which Agent may make or provide as set
forth in Section 12.8 hereof, shall not exceed the amount equal to ten (10%)
percent of the Maximum Credit and (B) the aggregate principal amount of the
Special Agent Advances pursuant to this clause (ii) outstanding at any time,
plus the then outstanding principal amount of the Loans and Letters of Credit,
shall not exceed the Maximum Credit, except at Agent’s option; provided, that, to the extent
that the aggregate principal amount of Special Agent Advances plus the then
outstanding principal amount of the Loans and Letters of Credit exceed the
Maximum Credit the Special Agent Advances that are in excess of the Maximum
Credit shall be for the sole account and risk of Agent and notwithstanding
anything to the contrary set forth below, no Lender shall have any obligation to
provide its share of such Special Agent Advances in excess of the Maximum
Credit, or (iii) to pay any other amount chargeable to Borrower or Obligor
pursuant to the terms of this Agreement or any of the other Financing Agreements
consisting of (A) costs, fees and expenses and (B) payments to Issuing Bank in
respect of any Letter of Credit Obligations. The Special Agent
Advances shall be repayable on demand and together with all interest thereon
shall constitute Obligations secured by the Collateral. Special Agent
Advances shall not constitute Loans but shall otherwise constitute Obligations
hereunder. Interest on Special Agent Advances shall be payable at the
Interest Rate then applicable to Prime Rate Loans and shall be payable on
demand. Without limitation of its obligations pursuant to Section
6.11, each Lender agrees that it shall make available to Agent, upon Agent’s
demand, in immediately available funds, the amount equal to such Lender’s Pro
Rata Share of each such Special Agent Advance. If such funds are not
made available to Agent by such Lender, such Lender shall be deemed a Defaulting
Lender and Agent shall be entitled to recover such funds, on demand from such
Lender together with interest thereon for each day from the date such payment
was due until the date such amount is paid to Agent at the Federal Funds Rate
for each day during such period (as published by the Federal Reserve Bank of New
York or at Agent’s option based on the arithmetic mean determined by Agent of
the rates for the last transaction in overnight Federal funds arranged prior to
9:00 a.m. (New York City time) on that day by each of the three leading brokers
of Federal funds transactions in New York City selected by Agent) and if such
amounts are not paid within three (3) days of Agent’s demand, at the highest
Interest Rate provided for in Section 3.1 hereof applicable to Prime Rate
Loans.
(b) Lenders
hereby irrevocably authorize Agent, at its option and in its discretion to
release any security interest in, mortgage or lien upon, any of the Collateral
(i) upon termination of the Commitments and payment and satisfaction of all
of the Obligations and delivery of cash collateral to the extent required under
Section 13.1 below, or (ii) constituting property being sold or disposed of
if Borrower certifies to Agent that the sale or disposition is made in
compliance with Section 9.7 hereof (and Agent may rely conclusively on any such
certificate, without further inquiry), or (iii) constituting property in which
Borrower or any Obligor did not own an interest at the time the security
interest, mortgage or lien was granted or at any time thereafter, or (iv) having
a value in the aggregate in any twelve (12) month period of less than
$5,000,000, and to the extent Agent may release its security interest in and
lien upon any such Collateral pursuant to the sale or other disposition thereof,
such sale or other disposition shall be deemed consented to by Lenders, or (v)
if required or permitted under the terms of any of the other Financing
Agreements, including any intercreditor agreement, or (vi) approved, authorized
or ratified in writing by all of Lenders. Except as provided above,
Agent will not release any security interest in, mortgage or lien upon, any of
the Collateral without the prior written authorization of all of
Lenders. Upon request by Agent at any time, Lenders will promptly
confirm in writing Agent’s authority to release particular types or items of
Collateral pursuant to this Section. In no event shall the consent or
approval of Issuing Bank to any release of Collateral be required.
(c) Without
any manner limiting Agent’s authority to act without any specific or further
authorization or consent by the Required Lenders, each Lender agrees to confirm
in writing, upon request by Agent, the authority to release Collateral conferred
upon Agent under this Section. Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary to evidence
the release of the security interest, mortgage or liens granted to Agent upon
any Collateral to the extent set forth above; provided, that, (i) Agent
shall not be required to execute any such document on terms which, in Agent’s
opinion, would expose Agent to liability or create any obligations or entail any
consequence other than the release of such security interest, mortgage or liens
without recourse or warranty and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any security interest, mortgage
or lien upon (or obligations of Borrower or any Obligor in respect of) the
Collateral retained by Borrower or such Obligor.
(d) Agent
shall have no obligation whatsoever to any Lender, Issuing Bank or any other
Person to investigate, confirm or assure that the Collateral exists or is owned
by Borrower or any Obligor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letters of Credit hereunder, or
whether any particular reserves are appropriate, or that the liens and security
interests granted to Agent pursuant hereto or any of the Financing Agreements or
otherwise have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Agent in this Agreement or in any of the other Financing
Agreements, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, subject to the other terms and
conditions contained herein, Agent may act in any manner it may deem
appropriate, in its discretion, given Agent’s own interest in the Collateral as
a Lender and that Agent shall have no duty or liability whatsoever to any other
Lender or Issuing Bank.
12.12 Agency for
Perfection. Each
Lender and Issuing Bank hereby appoints Agent and each other Lender and Issuing
Bank as agent and bailee for the purpose of perfecting the security interests in
and liens upon the Collateral of Agent in assets which, in accordance with
Article 9 of the UCC can be perfected only by possession (or where the security
interest of a secured party with possession has priority over the security
interest of another secured party) and Agent and each Lender and Issuing Bank
hereby acknowledges that it holds possession of any such Collateral for the
benefit of Agent as secured party. Should any Lender or Issuing Bank
obtain possession of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent’s request therefor shall deliver such
Collateral to Agent or in accordance with Agent’s instructions.
12.13 Successor
Agent. Agent
may resign as Agent upon thirty (30) days’ notice to Lenders and Borrower. If
Agent resigns under this Agreement, the Required Lenders shall appoint from
among the Lenders a successor agent for Lenders. If no successor
agent is appointed prior to the effective date of the resignation of Agent,
Agent may appoint, after consulting with Lenders and Borrower, a successor agent from
among Lenders. Upon the acceptance by the Lender so selected of its
appointment as successor agent hereunder, such successor agent shall succeed to
all of the rights, powers and duties of the retiring Agent and the term “Agent”
as used herein and in the other Financing Agreements shall mean such successor
agent and the retiring Agent’s appointment, powers and duties as Agent shall be
terminated. After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Section 12 shall inure to its benefit as to any
actions taken or omitted by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by
the date which is thirty (30) days after the date of a retiring Agent’s notice
of resignation, the retiring Agent’s resignation shall nonetheless thereupon
become effective and Lenders shall perform all of the duties of Agent hereunder
until such time, if any, as the Required Lenders appoint a successor agent as
provided for above.
12.14 Other Agent
Designations. Agent
may at any time and from time to time determine that a Lender may, in addition,
be a “Co-Agent”, “Syndication Agent”, “Documentation Agent” or similar
designation hereunder and enter into an agreement with such Lender to have it so
identified for purposes of this Agreement. Any such designation shall
be effective upon written notice by Agent to Borrower of any such
designation. Any Lender that is so designated as a Co-Agent,
Syndication Agent, Documentation Agent or such similar designation by Agent
shall have no right, power, obligation, liability, responsibility or duty under
this Agreement or any of the other Financing Agreements other than those
applicable to all Lenders as such. Without limiting the foregoing,
the Lenders so identified shall not have or be deemed to have any fiduciary
relationship with any Lender and no Lender shall be deemed to have relied, nor
shall any Lender rely, on a Lender so identified as a Co-Agent,
Syndication Agent, Documentation Agent or such similar designation in deciding
to enter into this Agreement or in taking or not taking action
hereunder.
SECTION
13. TERM OF AGREEMENT;
MISCELLANEOUS
13.1 Term.
(a) This
Agreement and the other Financing Agreements shall become effective as of the
date set forth on the first page hereof and shall continue in full force and
effect for a term ending on the date three (3) years from the date hereof (the
“Maturity Date”), unless sooner terminated pursuant to the terms
hereof. Borrower may terminate this Agreement at any time upon ten
(10) days prior written notice to Agent (which notice shall be irrevocable) and
Agent may, at its option, and shall at the direction of Required Lenders,
terminate this Agreement at any time on or after an Event of Default has
occurred and is continuing. Upon the Maturity Date or any other
effective date of termination of the Financing Agreements, Borrower shall pay to
Agent all outstanding and unpaid Obligations and shall furnish cash collateral
to Agent (or at Agent’s option, a letter of credit issued for the account of
Borrower and at Borrower’s expense, in form and substance satisfactory to Agent,
by an issuer acceptable to Agent and payable to Agent as beneficiary) in such
amounts as Agent determines are reasonably necessary to secure Agent, Lenders
and Issuing Bank from loss, cost, damage or expense, including attorneys’ fees
and expenses, in connection with any contingent Obligations, including issued
and outstanding Letter of Credit Obligations and checks or other payments
provisionally credited to the Obligations and/or as to which Agent or any Lender
has not yet received final and indefeasible payment and any continuing
obligations of Agent or any Lender pursuant to any Deposit Account Control
Agreement and for any of the Obligations arising under or in connection with any
Bank Products in such amounts as the Bank Product Provider providing such Bank
Products may require (unless such Obligations arising under or in connection
with any Bank Products are paid in full in cash and terminated in a manner
satisfactory to such Bank Product Provider). The amount of such cash
collateral (or letter of credit, as Agent may determine) as to any Letter of
Credit Obligations shall be in the amount equal to one hundred five (105%)
percent of the amount of the Letter of Credit Obligations plus the amount of any
fees and expenses payable in connection therewith through the end of the latest
expiration date of the Letters of Credit giving rise to such Letter of Credit
Obligations. Such payments in respect of the Obligations and cash
collateral shall be remitted by wire transfer in Federal funds to the Agent
Payment Account or such other bank account of Agent, as Agent may, in its
discretion, designate in writing to Borrower for such
purpose. Interest shall be due until and including the next Business
Day, if the amounts so paid by Borrower to the Agent Payment Account or other
bank account designated by Agent are received in such bank account later than
12:00 noon, Los Angeles, California time.
(b) No
termination of the Commitments, this Agreement or any of the other Financing
Agreements shall relieve or discharge Borrower or any Obligor of its respective
duties, obligations and covenants under this Agreement or any of the other
Financing Agreements until all Obligations have been fully and finally
discharged and paid, and Agent’s continuing security interest in the Collateral
and the rights and remedies of Agent and Lenders hereunder, under the other
Financing Agreements and applicable law, shall remain in effect until all such
Obligations have been fully and finally discharged and
paid. Accordingly, Borrower waives any rights it may have under the
UCC to demand the filing of termination statements with respect to the
Collateral and Agent shall not be required to send such termination statements
to Borrower, or to file them with any filing office, unless and until this
Agreement shall have been terminated in accordance with its terms and all
Obligations paid and satisfied in full in immediately available funds, other
than the contingent Obligations for which Agent has received cash collateral, or
at its option, a letter of credit, in accordance with Section 13.1(a)
above.
(c) If for
any reason this Agreement is terminated prior to the Maturity Date, in view of
the impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Agent’s and
each Lender’s lost profits as a result thereof, Borrower agrees to pay to Agent,
for the benefit of Lenders, upon the effective date of such termination, an
early termination fee in the amount equal to
|
Amount
|
Period
|
|
(i) 1.00%
of Maximum Credit
|
From
the date hereof to and including the first anniversary of the date
hereof
|
|
(ii) .50%
of Maximum Credit
|
After
the first anniversary of the date hereof and to and including the second
anniversary of the date hereof
|
|
(iii) 0%
of Maximum Credit
|
After
the second anniversary of the date
hereof
|
Such
early termination fee shall be presumed to be the amount of damages sustained by
Agent and Lenders as a result of such early termination and Borrower agrees that
it is reasonable under the circumstances currently existing (including, but not
limited to, the borrowings that are reasonably expected by Borrower hereunder
and the interest, fees and other charges that are reasonably expected to be
received by Agent and Lenders pursuant to the Credit Facility). In
addition, Agent and Lenders shall be entitled to such early termination fee upon
the occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h)
hereof, even if Agent and Lenders do not exercise the right to terminate this
Agreement, but elect, at their option, to provide financing to Borrower or
permit the use of cash collateral under the United States Bankruptcy
Code. The early termination fee provided for in this Section 13.1
shall be deemed included in the Obligations.
13.2 Interpretative
Provisions.
(a) All terms
used herein which are defined in Article 1, Article 8 or Article 9 of the UCC
shall have the meanings given therein unless otherwise defined in this
Agreement.
(b) All
references to the plural herein shall also mean the singular and to the singular
shall also mean the plural unless the context otherwise requires.
(c) All
references to Borrower, any Obligor, Agent and Lenders pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns.
(d) The words
“hereof”, “herein”, “hereunder”, “this Agreement” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(e) The word
“including” when used in this Agreement shall mean “including, without
limitation” and the word “will” when used in this Agreement shall be construed
to have the same meaning and effect as the word “shall”.
(f) An Event
of Default shall exist or continue or be continuing until such Event of Default
is waived in accordance with Section 11.3 or is cured in a manner satisfactory
to Agent, if such Event of Default is capable of being cured as determined by
Agent.
(g) All
references to the term “good faith” used herein when applicable to Agent and/or
any Lender shall mean, notwithstanding anything to the contrary contained herein
or in the UCC, honesty in fact in the conduct or transaction concerned and the
observance of reasonable commercial standards of fair dealing based on how an
asset based lender with similar rights providing a credit facility of the type
set forth herein would act in similar circumstances at the time with the
information then available to it. Borrower shall have the burden of
proving any lack of good faith on the part of Agent or any Lender alleged by
Borrower at any time.
(h) Any
accounting term used in this Agreement shall have, unless otherwise specifically
provided herein, the meaning customarily given in accordance with GAAP, and all
financial computations hereunder shall be computed unless otherwise specifically
provided herein, in accordance with GAAP as consistently applied and using the
same method for inventory valuation as used in the preparation of the financial
statements of Borrower most recently received by Agent prior to the date
hereof. Notwithstanding anything to the contrary contained in GAAP or
any interpretations or other pronouncements by the Financial Accounting
Standards Board or otherwise, the term “unqualified opinion” as used herein to
refer to opinions or reports provided by accountants shall mean an opinion or
report that is unqualified and also does not include any explanation,
supplemental comment or other comment concerning the ability of the applicable
person to continue as a going concern or the scope of the audit.
(i) In the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including”, the words “to” and “until” each mean
“to but excluding” and the word “through” means “to and including”.
(j) Unless
otherwise expressly provided herein, (i) references herein to any
agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect thereto, but only to the extent the same are not
prohibited by the terms hereof or of any other Financing Agreement, and
(ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or
regulation.
(k) The
captions and headings of this Agreement are for convenience of reference only
and shall not affect the interpretation of this Agreement.
(l) This
Agreement and other Financing Agreements may use several different limitations,
tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(m) This
Agreement and the other Financing Agreements are the result of negotiations
among and have been reviewed by counsel to Agent and the other parties, and are
the products of all parties. Accordingly, this Agreement and the
other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent’s or any Lender’s involvement in their
preparation.
13.3 Notices.
(a) All
notices, requests and demands hereunder shall be in writing and deemed to have
been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing. Notices delivered through electronic
communications shall be effective to the extent set forth in Section 13.3(b)
below. All notices, requests and demands upon the parties are to be
given to the following addresses (or to such other address as any party may
designate by notice in accordance with this Section):
|
If
to Borrower or any Obligor:
|
Kinergy
Marketing LLC
400
Capital Mall, Suite 2060
Sacramento,
California 95814
Attention: Chief
Financial Officer
Telephone
No.: 916-403-2123
Telecopy
No.: 916-446-3937
|
|
with copy to:
|
Kinergy
Marketing LLC
400
Capital Mall, Suite 2060
Sacramento,
California 95814
Attention: General
Counsel
Telephone
No.: 916-403-2123
Telecopy
No.: 916-446-3936
|
|
If
to Agent, Lenders or Issuing Bank:
|
Wachovia
Capital Finance Corporation (Western)
251
South Lake Avenue, Suite 900
Pasadena,
California 91101
Attention:
Portfolio Administrator
Telephone
No.: 626-304-4900
Telecopy
No.: 626-304-4969
|
(b) Notices
and other communications to Lenders and Issuing Bank hereunder may be delivered
or furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved by Agent or as otherwise
determined by Agent; provided, that, the foregoing
shall not apply to notices to any Lender or Issuing Bank pursuant to Section 2
hereof if such Lender or Issuing Bank, as applicable, has notified Agent that it
is incapable of receiving notices under such Section by electronic
communication. Unless Agent otherwise requires, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement) ; provided, that, such notice or
other communication is not given during the normal business hours of the
recipient, such notice shall be deemed to have been sent at the opening of
business on the next Business Day for the recipient, and (ii) notices or
communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such notice or
communications is available and identifying the website address
therefor.
13.4 Partial
Invalidity. If
any provision of this Agreement is held to be invalid or unenforceable, such
invalidity or unenforceability shall not invalidate this Agreement as a whole,
but this Agreement shall be construed as though it did not contain the
particular provision held to be invalid or unenforceable and the rights and
obligations of the parties shall be construed and enforced only to such extent
as shall be permitted by applicable law.
13.5 Confidentiality.
(a) Agent,
each Lender and Issuing Bank shall use all reasonable efforts to keep
confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by Borrower (or Parent on behalf of Borrower)
pursuant to this Agreement which is clearly and conspicuously marked as
confidential at the time such information is furnished by Borrower (or Parent on
behalf of Borrower) to Agent, such Lender or Issuing Bank; provided, that, nothing
contained herein shall limit the disclosure of any such
information: (i) to the extent required by statute, rule, regulation,
subpoena or court order, (ii) to bank examiners and other regulators, auditors
and/or accountants, in connection with any litigation to which Agent,
such Lender or Issuing Bank is a party, (iii) to any Lender or Participant (or
prospective Lender or Participant) or Issuing Bank or to any Affiliate of any
Lender so long as such Lender, Participant (or prospective Lender or
Participant), Issuing Bank or Affiliate shall have been instructed to treat such
information as confidential in accordance with this Section 13.5, or (iv) to
counsel for Agent or any Lender or Participant (or prospective Lender or
Participant) or Issuing Bank.
(b) In the
event that Agent, any Lender or Issuing Bank receives a request or demand to
disclose any confidential information pursuant to any subpoena or court order,
Agent or such Lender or Issuing Bank, as the case may be, agrees (i) to the
extent permitted by applicable law or if permitted by applicable law, to the
extent Agent or such Lender or Issuing Bank determines in good faith and in its
reasonable business judgment that it will not create any risk of liability to
Agent or such Lender or Issuing Bank, Agent or such Lender or Issuing Bank will
promptly notify Borrower of such request so that Borrower may seek a protective
order or other appropriate relief or remedy and (ii) if disclosure of such
information is required, disclose such information and, subject to reimbursement
by Borrower of Agent’s or such Lender’s or Issuing Bank’s expenses, cooperate
with Borrower in the reasonable efforts to obtain an order or other reliable
assurance that confidential treatment will be accorded to such portion of the
disclosed information which Borrower so designates, to the extent permitted by
applicable law or if permitted by applicable law, to the extent Agent or such
Lender or Issuing Bank determines in good faith and in its reasonable business
judgment that it will not create any risk of liability to Agent or such Lender
or Issuing Bank.
(c) In no
event shall this Section 13.5 or any other provision of this Agreement, any of
the other Financing Agreements or applicable law be deemed: (i) to apply to or
restrict disclosure of information that has been or is made public by Borrower,
any Obligor or any third party or otherwise becomes generally available to the
public other than as a result of a disclosure in violation hereof, (ii) to apply
to or restrict disclosure of information that was or becomes available to Agent,
any Lender (or any Affiliate of any Lender) or Issuing Bank on a
non-confidential basis from a person other than Borrower (unless sent by Parent
on behalf of Borrower), (iii) to require Agent, any Lender or Issuing Bank to
return any materials furnished by Borrower to Agent, a Lender or Issuing Bank
or prevent Agent, a Lender or Issuing Bank from responding to routine
informational requests in accordance with the Code of Ethics for the
Exchange of Credit Information promulgated by The Robert Morris
Associates or other applicable industry standards relating to the exchange of
credit information. The obligations of Agent, Lenders and Issuing
Bank under this Section 13.5 shall supersede and replace the obligations of
Agent, Lenders and Issuing Bank under any confidentiality letter signed prior to
the date hereof or any other arrangements concerning the confidentiality of
information provided by Borrower to Agent or any Lender. In addition,
Agent and Lenders may disclose information relating to the Credit Facility to
Gold Sheets and other publications, with such information to consist of deal
terms and other information customarily found in such publications and that
Wachovia may otherwise use the corporate name and logo of Borrower and any
Obligor or deal terms in “tombstones” or other advertisements, public statements
or marketing materials. Agent shall provide Borrower with drafts of
any “tombstones” or other advertisements, public statements or marketing
materials and Borrower shall have three (3) business days to provide comments to
such drafts to Agent.
13.6 Successors. This
Agreement, the other Financing Agreements and any other document referred to
herein or therein shall be binding upon and inure to the benefit of and be
enforceable by Agent, Lenders, Issuing Bank, Borrower, and their respective
successors and assigns; except, that, Borrower may
not assign its rights under this Agreement, the other Financing Agreements and
any other document referred to herein or therein without the prior written
consent of Agent and Lenders. Any such purported assignment without
such express prior written consent shall be void. No Lender may
assign its rights and obligations under this Agreement without the prior written
consent of Agent, except as provided in Section 13.7 below. For the
avoidance of doubt, no assignment shall relieve any party of any breach of this
Agreement or any other Financing Agreement that occurred prior to such
assignment. The terms and provisions of this Agreement and the other
Financing Agreements are for the purpose of defining the relative rights and
obligations of Borrower, Agent, Lenders and Issuing Bank with respect to the
transactions contemplated hereby and there shall be no third party beneficiaries
of any of the terms and provisions of this Agreement or any of the other
Financing Agreements.
13.7 Assignments;
Participations.
(a) Each
Lender may, with the prior written consent of Agent, assign all or,
if less than all, a portion equal to at least $5,000,000 in the aggregate for
the assigning Lender, of such rights and obligations under this Agreement to one
or more Eligible Transferees (but not including for this purpose any assignments
in the form of a participation), each of which assignees shall become a party to
this Agreement as a Lender by execution of an Assignment and Acceptance; provided, that, (i) such
transfer or assignment will not be effective until recorded by Agent on the
Register and (ii) Agent shall have received for its sole account payment of a
processing fee from the assigning Lender or the assignee in the amount of
$5,000.
(b) Agent
shall maintain a register of the names and addresses of Lenders, their
Commitments and the principal amount of their Loans (the
“Register”). Agent shall also maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and shall modify the Register to give
effect to each Assignment and Acceptance. The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
Borrower, Obligors, Agent and Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by Borrower
and any Lender at any reasonable time and from time to time upon reasonable
prior notice.
(c) Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, the assignee thereunder shall be a
party hereto and to the other Financing Agreements and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations (including, without
limitation, the obligation to participate in Letter of Credit Obligations) of a
Lender hereunder and thereunder and the assigning Lender shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement.
(d) By
execution and delivery of an Assignment and Acceptance, the assignor and
assignee thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the other
Financing Agreements or the execution, legality, enforceability, genuineness,
sufficiency or value of this Agreement or any of the other Financing Agreements
furnished pursuant hereto, (ii) the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower, any Obligor or any of their Subsidiaries or the
performance or observance by Borrower or any Obligor of any of the Obligations;
(iii) such assignee confirms that it has received a copy of this Agreement
and the other Financing Agreements, together with such other documents and
information it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance, (iv) such assignee will,
independently and without reliance upon the assigning Lender, Agent and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Financing Agreements, (v) such assignee appoints
and authorizes Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Financing Agreements as are
delegated to Agent by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto, and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement and the other Financing Agreements are required to be
performed by it as a Lender. Agent and Lenders may furnish any
information concerning Borrower or any Obligor in the possession of Agent or any
Lender from time to time to assignees and Participants.
(e) Each
Lender may sell participations to one or more banks or other entities in or to
all or a portion of its rights and obligations under this Agreement and the
other Financing Agreements (including, without limitation, all or a portion of
its Commitments and the Loans owing to it and its participation in the Letter of
Credit Obligations, without the consent of Agent or the other Lenders); provided, that, (i) such
Lender’s obligations under this Agreement (including, without limitation, its
Commitment hereunder) and the other Financing Agreements shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, and Borrower, the other Lenders and Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement and the other
Financing Agreements, and (iii) the Participant shall not have any rights under
this Agreement or any of the other Financing Agreements (the Participant’s
rights against such Lender in respect of such participation to be those set
forth in the agreement executed by such Lender in favor of the Participant
relating thereto) and all amounts payable by Borrower or any Obligor hereunder
shall be determined as if such Lender had not sold such
participation.
(f) Nothing
in this Agreement shall prevent or prohibit any Lender from pledging its Loans
hereunder to a Federal Reserve Bank in support of borrowings made by such
Lenders from such Federal Reserve Bank; provided, that, no such pledge
shall release such Lender from any of its obligations hereunder or substitute
any such pledgee for such Lender as a party hereto.
(g) Borrower
shall assist Agent or any Lender permitted to sell assignments or participations
under this Section 13.7 in whatever manner reasonably necessary in order to
enable or effect any such assignment or participation, including (but not
limited to) the execution and delivery of any and all agreements, notes and
other documents and instruments as shall be reasonably requested and the
delivery of informational materials, appraisals or other documents for, and the
reasonable participation of relevant management in meetings and conference calls
with, potential Lenders or Participants. Borrower shall certify the correctness,
completeness and accuracy, in all material respects, of all descriptions of
Borrower and its affairs provided, prepared or reviewed by Borrower that are
contained in any selling materials and all other information provided by it and
included in such materials.
(h) Any
Lender that is an Issuing Bank may at any time assign all of its Commitments
pursuant to this Section 13.7. If such Issuing Bank ceases to be a
Lender, it may, at its option, resign as Issuing Bank and such Issuing Bank’s
obligations to issue Letters of Credit shall terminate but it shall retain all
of the rights and obligations of Issuing Bank hereunder with respect to Letters
of Credit outstanding as of the effective date of its resignation and all Letter
of Credit Obligations with respect thereto (including the right to require
Lenders to make Revolving Loans or fund risk participations in outstanding
Letter of Credit Obligations), shall continue.
13.8 Entire Agreement. This
Agreement, the other Financing Agreements, any supplements hereto or thereto,
and any instruments or documents delivered or to be delivered in connection
herewith or therewith represents the entire agreement and understanding
concerning the subject matter hereof and thereof between the parties hereto, and
supersede all other prior agreements, understandings, negotiations and
discussions, representations, warranties, commitments, proposals, offers and
contracts concerning the subject matter hereof, whether oral or
written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
13.9 USA Patriot
Act. Each
Lender subject to the USA PATRIOT Act (Title III of Pub.L. 107-56 (signed into
law October 26, 2001) (the “Act”) hereby notifies Borrower that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies each person or corporation who opens an account and/or enters
into a business relationship with it, which information includes the name and
address of Borrower and other information that will allow such Lender to
identify Borrower in accordance with the Act and any other applicable
law. Borrower is hereby advised that any Loans or Letters of Credit
hereunder are subject to satisfactory results of such verification.
13.10 Counterparts,
Etc. This
Agreement or any of the other Financing Agreements may be executed in any number
of counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of this Agreement or any of the other Financing Agreements by
telefacsimile or other electronic method of transmission shall have the same
force and effect as the delivery of an original executed counterpart of this
Agreement or any of such other Financing Agreements. Any party
delivering an executed counterpart of any such agreement by telefacsimile or
other electronic method of transmission shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, Agent, Lenders and Borrower have caused these presents to be
duly executed as of the day and year first above written.
|
AGENT
|
BORROWER
|
| |
|
|
WACHOVIA CAPITAL FINANCE
CORPORATION (WESTERN), as Agent
|
KINERGY MARKETING LLC,
as Borrower
|
| |
|
|
By: /S/ JAMES
CAMPBELL
Name: James Campbell
Title: Director
|
By: /S/ JOSEPH
HANSEN
Name: Joseph
Hansen
Title: Chief Financial
Officer
|
|
|
|
|
ISSUING
BANK
|
|
| |
|
|
WACHOVIA BANK, NATIONAL
ASSOCIATION, as Issuing Bank
|
|
|
By: /S/ RON SWANSON
Name: Ron Swanson
Title: SVP
|
|
|
|
|
|
LENDERS
|
|
| |
|
|
WACHOVIA
CAPITAL FINANCE CORPORATION (WESTERN)
|
|
|
By: /S/ JAMES
CAMPBELL
Name: James Campbell
Title: Director
|
|
| |
|
|
Commitment: $40,000,000
|
|
SCHEDULE
1.43
TO
LOAN
AND SECURITY AGREEMENT
Existing
Lenders
Comerica
Bank
SCHEDULE
9.17
TO
LOAN
AND SECURITY AGREEMENT
Minimum
EBITDA
|
Fiscal Period
|
Minimum
EBITDA
|
|
six
(6) consecutive month period ending June 30, 2008
|
$6,000,000
|
| |
|
|
seven
(7) consecutive month period ending July 1, 2008
|
$6,000,000
|
| |
|
|
eight
(8) consecutive month period ending August 31, 2008
|
$6,000,000
|
| |
|
|
nine
(9) consecutive month period ending September 30, 2008
|
$7,250,000
|
| |
|
|
ten
(10) consecutive month period ending October 31, 2008
|
$7,250,000
|
| |
|
|
eleven
(11) consecutive month period ending November 30, 2008
|
$7,250,000
|
| |
|
|
twelve
(12) consecutive month period ending December 31, 2008
|
$8,500,000
|
| |
|
|
one
(1) month period ending January 31, 2009
|
$0
|
| |
|
|
two
(2) consecutive month period ending February 28, 2009
|
$500,000
|
| |
|
|
three
(3) consecutive month period ending March 31, 2009
|
$1,500,000
|
| |
|
|
four
(4) consecutive month period ending April 30, 2009
|
$1,500,000
|
| |
|
|
five
(5) consecutive month period ending May 31, 2009
|
$1,500,000
|
| |
|
|
six
(6) consecutive month period ending June 30, 2009
|
$3,000,000
|
| |
|
|
seven
(7) consecutive month period ending July 31, 2009
|
$3,000,000
|
| |
|
|
eight
(8) consecutive month period ending August 31, 2009
|
$3,000,000
|
| |
|
|
nine
(9) consecutive month period ending September 30, 2009
|
$4,500,000
|
| |
|
|
ten
(10) consecutive month period ending October 31, 2009
|
$4,500,000
|
| |
|
|
eleven
(11) consecutive month period ending November 30, 2009
|
$4,500,000
|
| |
|
|
twelve
(12) consecutive month period ending December 31, 2009
|
$6,000,000
|
| |
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For
the fiscal year commencing January 1, 2010 and for each fiscal year
thereafter, the minimum EBITDA covenant amounts shall be determined based
upon the financial projections received for each such fiscal year by Agent
in accordance with Section 9.6(a)(iv) of the Agreement. The
minimum EBITDA covenant amounts shall be mutually agreed upon between
Agent and Borrower based upon such projections; except, that, if Agent and Borrower are unable to
agree on the minimum EBITDA covenant amounts for any such fiscal year,
then the minimum EBITDA covenant amounts for such fiscal year shall be the
same amounts as the minimum EBITDA covenant amounts for the immediately
preceding fiscal year.
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