AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT Dated as of September 11, 2006 (as amended and restated as of June 30, 2008) Between MDU COMMUNICATIONS (USA) INC. (Borrower) and FCC, LLC, d/b/a First Capital (as Agent and as Lender) and FULL CIRCLE...
Exhibit
10.1
AMENDED
AND RESTATED
Dated
as
of September 11, 2006
(as
amended and restated as of June 30, 2008)
Between
MDU
COMMUNICATIONS (USA) INC.
(Borrower)
and
FCC,
LLC,
d/b/a First Capital
(as
Agent
and as Lender)
and
FULL
CIRCLE FUNDING, LP
(as
Lender)
TABLE
OF CONTENTS
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Page
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1.
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DEFINITIONS
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1
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2.
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BORROWING
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7
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3.
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INTEREST
AND FEES
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10
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4.
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REPRESENTATIONS
AND WARRANTIES OF BORROWER
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11
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5.
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COLLATERAL
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12
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6.
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FINANCIAL
COVENANTS
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13
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7.
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COLLATERAL
COVENANTS
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13
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8.
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NEGATIVE
COVENANTS
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19
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9.
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REPORTING
AND INFORMATION
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21
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10.
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INSPECTION
RIGHTS; EXPENSES; ETC.
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22
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11.
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RIGHTS
OF SETOFF, APPLICATION OF PAYMENTS, ETC.
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23
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12.
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ATTORNEY-IN-FACT
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23
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13.
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DEFAULTS
AND REMEDIES
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24
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14.
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INDEMNIFICATION
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26
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15.
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GENERAL
PROVISIONS
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27
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16.
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AGENT
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29
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Schedule
Exhibit
A – Form of Borrowing Base Certificate
Exhibit
B – Form of Compliance Certificate
Exhibit
C – Forms of Customer Contracts
Exhibit
D – Supplier Contracts
AMENDED
AND RESTATED
This
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”)
is
entered into as of the 11th day of September, 2006 (as amended and restated
as
of June 30, 2008) between MDU Communications (USA) Inc., a Washington
corporation (“Borrower”),
and
Full Circle Funding, L.P., a Delaware limited partnership (“Full Circle”) and
FCC, LLC, d/b/a FIRST CAPITAL, a Florida limited liability company
(“First
Capital”)
in its
capacity as a Lender and as Agent, (each of Full Circle and First Capital a
“Lender” and collectively “Lenders”).
RECITALS:
WHEREAS,
the
Borrower and the Lenders are parties to a Loan and Security Agreement dated
as
of September 11, 2006 (as amended to date, the “Original Credit
Agreement”);
WHEREAS,
Borrower has requested that Lenders provide Borrower with an increased secured
lending facility;
WHEREAS,
Lenders are willing to provide an increased secured lending facility to Borrower
on the terms set forth in this Agreement; and
WHEREAS,
the parties have agreed that, effective on the Restatement Date, the Original
Credit Agreement shall be amended and restated so as to read, in its entirety,
as herein set forth.
NOW,
THEREFORE, Borrower and Lenders hereby agree as follows:
1. Definitions.
For
purposes of this Agreement:
“Accounts”
means
all presently existing or hereafter arising accounts receivable due to Borrower
(including medical and health-care-insurance receivables), book debts, notes,
drafts and acceptances and other forms of obligations now or hereafter owing
to
Borrower, whether arising from the sale or lease of goods or the rendition
of
services by Borrower (including any obligation that might be characterized
as an
account, contract right, general intangible or chattel paper under the UCC),
all
of Borrower’s rights in, to and under all purchase orders now or hereafter
received by Borrower for goods and services, all proceeds from the sale of
Inventory, all monies due or to become due to Borrower under all contracts
for
the sale or lease of goods or the rendition of services by Borrower (whether
or
not yet earned) (including the right to receive the proceeds of said purchase
orders and contracts), all collateral security and guarantees of any kind given
by any obligor with respect to any of the foregoing, and all goods returned
to
or reclaimed by Borrower that correspond to any of the foregoing.
1
“Affiliate”
means,
with respect to a Person, (a) any family member, officer, director or managing
agent of such Person, and (b) any other Person (i) that, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such given Person, (ii) that, directly or indirectly
beneficially owns or holds 10% or more of any class of voting stock or
partnership or other interest of such Person or any subsidiary of such Person,
or (iii) 10% or more of the voting stock or partnership or other interest
of which is directly or indirectly beneficially owned or held by such Person
or
a subsidiary of such Person. The term “control” means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of voting securities or
partnership or other interests, by contract or otherwise.
“Agent”
means
First Capital in its capacity as agent for the Lenders under the Loan Documents
and any successor in such capacity appointed pursuant to section
16.
“Aggregate
Contracts”
shall
mean all of the Bulk Contracts, Choice Contacts, and Exclusive Contracts,
Consumer Service Agreements, Other Contracts and Supplier Contracts and any
other agreements with suppliers of satellite, cable, or other service that
Borrower resells as part of its business and rights, title, and interest in
and
payments under any of the foregoing.
“Agreement
Date”
means
the date as of which the Original Agreement is dated.
“Borrowing
Base”
has
the
meaning set forth in Item
1
of the Schedule.
“Borrowing
Base Certificate”
means
the certificate, substantially in the form of Exhibit
A,
with
appropriate insertions, to be submitted to Agent by Borrower pursuant to this
Agreement and certified as true and correct by the Chief Executive Officer
or
the Chief Financial Officer of Borrower.
“Bulk
Contract”
shall
mean those Contracts with Commercial Customers that provide for provision of
services to all units in the Property owned by the Commercial Customer and
a
monthly payment to Borrower from such Commercial Customer covering all units
in
the Property regardless of whether the Consumer Customer or resident in the
individual units in such Property elect to utilize the services provided by
Borrower and all rights, title and interest in and payments under any of the
foregoing.
“Business
Day”
means
any
day excluding Saturday, Sunday, and any day which is a legal holiday under
the
laws of the State of New York or which is a day on which any Lender is otherwise
closed for transacting business with the public.
“Change
of Control”
means
[redacted];
“Choice
Contracts”
shall
mean those Contracts with Commercial Customers where Borrower has a nonexclusive
right to sell its services in the Property owned by the Commercial Customer
and
all rights, title, and interest in and payments under any of the
foregoing.
“Collateral”
has
the
meaning set forth in Section
5(a).
“Commercial
Customer”
means
a
party to a Contract that owns or manages a multiple dwelling unit and that
is
not a Consumer Customer.
2
“Consumer
Customer”
means
a
customer that is an individual tenant or resident at a Property and that is
the
end user for the services provided by the Borrower to a Property.
“Contracts”
shall
mean those agreements or contracts entered into by and between Borrower (or
acquired by Borrower through an acquisition pursuant to which Borrower acquired
all of its predecessor in interest’s rights, title, interests and benefits under
the agreement), and its Customers [redacted] pursuant to which Borrower provides
digital satellite television programming, private cable video service, high
speed internet services, voice over internet protocol, other voice or data
delivery services, and other goods and services reasonable related thereto
in
the multiple dwelling unit market and all rights, title, and interest in and
payments under any of the foregoing, including all Contracts entered into after
the Agreement Date.
“Customer”
means
all of Borrower’s Commercial Customers and Consumer Customers.
“Customer
Contracts”
means
all of the Bulk Contract, Choice Contracts, Competitive Contracts, Digital
Satellite Agreements and Other Agreements, whether now existing or entered
into
after the Agreement Date.
“Default”
has
the
meaning set forth in Section
13(a).
“Consumer
Service Agreement”
means
the agreements between Borrower and its Consumer Customers that provide digital
satellite television service, high speed Internet and access thereto, including
without limitation, the agreement titled CN Work Order (Digital Satellite
Television Service) and the Terms and Conditions For Digital Satellite
Television Service, High-Speed Internet Activation and the related DirecTV
Multiple Unit Dwelling Programming Agreement.
“Direct
Costs”
means,
on a per Customer Contract basis, [redacted].
“Discounted
Cash Flow”
shall
mean an amount equal to the sum of [redacted].
“Eligible
Contracts”
means
those Contracts arising from the sale of Inventory or performance of services
in
the ordinary course of Borrower’s business including Bulk Contracts, Exclusive
Contracts, Choice Contracts and Supplier Contracts under which payments are
due;
provided,
however,
that
Eligible Contracts shall
not
include
the following: [redacted]
“Equipment”
means
all of Borrower’s machinery, apparatus, equipment, motor vehicles, tractors,
trailers, rolling stock, fittings, fixtures and other tangible personal property
of every kind and description, together with all parts, accessories and special
tools and all increases and accessions thereto and substitutions and
replacements therefore.
“Exclusive
Contracts”
shall
mean those Contracts with Commercial Customers that provide for Borrower to
have
the exclusive rights to sell its services to the Consumer Customers or other
residents of the Property owned by the Commercial Customer, but does not provide
for a payment to Borrower by the Commercial Customer other than for services
such Commercial Customer purchases for its own account and all rights, title,
and interest in and payments under any of the foregoing.
3
“GAAP”
means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute
of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board that are applicable to the circumstances as of the
date of determination and applied on a consistent basis.
“General
Intangibles”
means
all of Borrower’s present and future general intangibles and all other presently
owned or hereafter acquired intangible personal property of Borrower (including
payment intangibles and any and all choses or things in action, goodwill,
patents and patent applications, tradenames, servicemarks, trademarks and
trademark applications, copyrights, blueprints, drawings, purchase orders,
customer lists, monies due or recoverable from pension funds, route lists,
infringement claims, software, computer programs, computer discs, computer
tapes, literature, reports, catalogs, deposit accounts, tax refunds and tax
refund claims) other than Goods and Accounts, as well as Borrower’s books and
records relating to any of the foregoing.
“Goods”
means
all of Borrower’s present and hereafter acquired goods, as defined in the UCC,
wherever located, including imbedded software to the extent included in “goods”
as defined in the UCC, manufactured homes, and standing timber that is cut
and
removed for sale.
“Gross
Profit”
means,
on a per Contract basis, [redacted].
“Guarantor”
means
MDU Communications International, Inc. and any other Person that has guaranteed
all or any part of the Obligations.
“Indebtedness”
as
applied to any Person, means, without duplication [redacted].
“Inventory”
means
all of Borrower’s inventory as defined in the UCC, together with all of
Borrower’s present and future inventory, including goods held for sale or lease
or to be furnished under a contract of service and all of Borrower’s present and
future raw materials, work in process, finished goods, shelving and racking
upon
which the inventory is stored and packing and shipping materials, wherever
located, and any documents of title representing any of the above.
“Lien”
means
any
security interest, security title, mortgage, deed to secure debt, deed of trust,
lien, pledge, charge, conditional sale or other title retention agreement,
or
other encumbrance of any kind in respect of any property, including
the interest of each lessor under any capitalized lease in, of or on any assets
or properties of a Person, whether now owned or hereafter acquired and whether
arising by agreement or operation of law.
“Loan
Documents”
means,
collectively,
this Agreement and any other agreements, instruments, certificates (including
any Borrowing Base Certificate) or other documents entered into in connection
with this Agreement, including collateral documents, letter of credit
agreements, security agreements, pledges, guaranties, mortgages, deeds of trust,
assignments and subordination agreements, warrant purchase agreements and
registration rights agreements and any other agreement executed or delivered
by
any Obligor or any Affiliate of any Obligor pursuant hereto or in connection
herewith.
4
“Loans”
means
a
collective reference to the Revolving Loans and the Term Loan Tranche
A.
“Negotiable
Collateral”
means
all of Borrower’s present and future letters of credit, advises of credit,
notes, drafts, instruments, and documents, including, without limitation, bills
of lading, leases, and chattel paper, and Borrower’s books and records relating
to any of the foregoing.
“Obligations”
means
all Revolving Loans and Indebtedness, obligations and liabilities of Borrower
to
Agent and each Lender and their respective Affiliates under this Agreement
and
the Loan Documents of every kind and description, direct or indirect, secured
or
unsecured, joint or several, absolute or contingent, due or to become due,
including any overdrafts, whether for payment or performance, now existing
or
hereafter arising, whether presently contemplated or not, regardless of how
the
same arise, or by what instrument, agreement or book account they may be
evidenced, or whether evidenced by any instrument, agreement or book account,
including, but not limited to, all loans (including any loan by modification,
renewal or extension), all Indebtedness arising from any derivative
transactions, all undertakings to take or refrain from taking any action, all
Indebtedness, liabilities or obligations owing from Borrower to others which
a
Lender may have obtained by purchase, negotiation, discount, assignment or
otherwise, and all interest, taxes, fees, charges, expenses and attorney’s fees
(whether or not such attorney is a regularly salaried employee of a Lender
or
any of its Affiliates) chargeable to Borrower or incurred by a Lender under
this
Agreement or the Loan Documents.
“Obligor”
means
Borrower, any Guarantor, any validity guarantor or any other Person primarily
or
secondarily, directly or indirectly, liable on any of the
Obligations.
“Original
Loan Agreement”
has
the
meaning set forth in the recitals hereto.
“Other
Contracts”
means
those Contracts to provide services to Customers that are not Bulk Contracts,
Choice Contracts, or Competitive Contracts, but which are from a similar line
or
type of business or a new line or type of business.
“Permitted
Acquisitions”
shall
mean acquisitions of [redacted].
“Permitted
Liens”
means
(a) Liens or charges for current taxes, assessments or other governmental
charges which are not delinquent or remain payable without any penalty, or
the
validity of which is contested in good faith by appropriate proceedings upon
stay of execution of the enforcement thereof and for which appropriate reserves
have been established in accordance with GAAP; (b) deposits or pledges to secure
(i) statutory obligations, (ii) surety or appeal bonds, or (iii) bonds for
release of attachment, stay of execution or injunction; (c) statutory Liens
on
property arising in the ordinary course of business which, in the aggregate,
do
not materially impair the use of such property or materially detract from the
value of such property; (d) Liens existing on the Agreement Date and described
on Item
3
of the Schedule;
(e)
Liens on Equipment securing all or part of the purchase price of such Equipment;
provided,
however,
that
(i) such Lien is created contemporaneously with or within 30 days after the
acquisition of such Equipment, (ii) such Lien attaches only to the specific
items of Equipment so acquired, and (iii) such Lien secures only the
Indebtedness incurred to acquire such Equipment; and (f) Liens in favor of
Agent
for the benefit of Lenders.
5
“Person” means
an
individual, corporation, partnership, limited liability company, association,
trust, unincorporated organization, government or any agency or political
subdivision thereof, or any other entity.
“Property”
means
all multiple dwelling unit type properties, including but not limited to
apartments, condominiums, coops, military bases, gated communities, town homes
and dormitories owned by a Commercial Customer.
“Restatement
Date”
means
June 30, 2008.
“Revolving
Loans”
means
the total of all loans and advances made to Borrower hereunder and all interest
fees and expense reimbursement obligations of Borrower relating thereto and
shall include all of, Revolving Loan Tranche B, Revolving Loan Tranche C,
Revolving Loan Tranche D, Revolving Loan Tranche E and Revolving Loan Tranche
F
“Revolving
Loan Tranche B”
shall
mean all amounts outstanding under the Loans in excess of $5 million dollars
but
less than or equal to $10 million dollars.
“Revolving
Loan Tranche C”
shall
mean all amounts outstanding under the Loans in excess of $10 million dollars
but less than or equal to $15 million dollars.
“Revolving
Loan Tranche D”
shall
mean all amounts outstanding under the Loans in excess of $15 million dollars
but less than or equal to $20 million dollars.
“Revolving
Loan Tranche E”
shall
mean all amounts outstanding under the Loans in excess of $20 million dollars
but less than or equal to $25 million dollars.
“Revolving
Loan Tranche F”
shall
mean all amounts outstanding under the Loans in excess of $25 million dollars
but less than or equal to $30 million dollars.
“Subordinated
Debt”
means
all of the Indebtedness owed by Borrower to any other Person, the repayment
of
which is subordinated to the repayment of the Obligations pursuant to the terms
of a subordination agreement reasonably acceptable to Agent.
“Supplier
Contracts”
means
contracts or agreements with [redacted] and any other suppliers of satellite,
cable or other service that Borrower resells as part of its business and all
rights, title and interest in and payments under any of the
forgoing.
6
“Term
Loan Tranche A”
shall
mean a term loan in the original principal amount of $5 million dollars and
all
interest, fees and expense reimbursement obligations of Borrower relating
thereto.
“UCC”
means
the Uniform Commercial Code, as in effect from time to time, of the State of
New
York or of any other state the laws of which are required as a result thereof
to
be applied in connection with the issue of perfection of security interests;
provided,
that to
the extent that the UCC is used to define any term herein or in any other
documents and such term is defined differently in different Articles or
Divisions of the UCC, the definition of such term contained in Article or
Division 9 shall govern.
Other
Definitional Provisions.
References to the “Schedule” or any “Section” or “Exhibit” refer to the Schedule
or a section or exhibit, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in Section 1
may,
unless the context otherwise requires, be used in the singular or the plural
depending on the reference. In this Agreement: words importing any gender
include the other genders; the words “including”, “includes” and “include” shall
be deemed to be followed by the words “without limitation”; references to
agreements and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto, but only
to
the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement; references to any Person includes
their respective permitted successors and assigns or people succeeding to the
relevant functions of such Persons; any and all terms which are defined in
the
UCC and are not defined herein shall be construed and defined in accordance
with
the definition of such terms under the UCC; all references to statutes and
related regulations shall include any amendments of same and any successor
statutes and regulations; and all references to time of day shall refer to
New
York, New York time.
(i) Borrower
has borrowed $5,000,000, constituting Term Loan Tranche A. Provided that no
Default has occurred and sufficient availability exists under the Borrowing
Base, Borrower must maintain the outstanding balance of the Term Loan Tranche
A,
subject to Borrower’s right to prepay the Obligations in their entirety under
section 2 (h) hereof. Upon the request of Agent, the
Term
Loan Tranche A shall be evidenced by promissory notes.
(ii) Not
withstanding the forgoing, Borrower may not borrow amounts in excess of Term
Loan Tranche A and Revolving Loan Tranche B unless it meets the positive EBITDA
Covenant set forth in Item 21(e) of the Schedule.
(b) Standards.
Agent
will determine eligibility and the loan value of Collateral, Agent’s reasonable
judgment, consistent with Agent’s experience, prudent business judgment and
standards of commercial reasonableness applicable to asset-based credits and
in
good faith. Any Revolving Loans requested by Borrower and made by Lenders or
at
any time outstanding in excess of the Borrowing Base or any other limitation
set
forth in this Agreement will, nevertheless, be subject to the terms of this
Agreement, will constitute Obligations for all purposes and be entitled to
the
benefits of the Collateral.
7
(c) Persons
Authorized to Request Loans.
Borrower
hereby authorizes and directs Agent to make Revolving Loan advances to or for
the benefit of Borrower upon receipt of instructions from any of the persons
listed on Item
4
of the Schedule.
Neither
Agent nor Lenders shall have any liability whatsoever to Borrower or any other
Person for acting upon any such instructions which Agent, in good faith,
believes were given by any such person, and Agent shall have no duty to inquire
as to the propriety of any disbursement. Agent
is
hereby authorized to make the Revolving Loans provided for herein based on
instructions received by facsimile, electronic mail, telephone or other method
of communication from any of such persons. Although Agent shall make a
reasonable effort to determine the person’s identity, Agent shall not be
responsible for determining the authenticity of any such instructions, and
Agent
may act on the instructions of anyone it perceives to be one of the persons
authorized to request loans hereunder. Agent
shall have the right to accept the instructions of any of the foregoing persons
unless and until Agent actually receives from Borrower (in accordance with
the
notice provisions of this Agreement) written notice of termination of the
authority of that person. Borrower may change persons designated to give Agent
borrowing instructions only by delivering to Agent written notice of such
change. Borrower will ensure that each telephone instruction from any person
designated in or pursuant to this paragraph shall be followed by written
confirmation of the request for disbursement in such form as Agent makes
available to Borrower from time to time for such purpose; provided,
however, that Borrower’s failure to provide written confirmation of any
telephonic instruction shall not invalidate such telephonic
instruction.
(d) Application
of Remittances.
[redacted].
(e) Conditions
to Obligation to Make Loans.
Borrower acknowledges that Agent’s and each Lender’s obligation to make
Revolving Loans to Borrower (or to issue or create or cause the issuance or
creation by Lenders or its Affiliates of letters of credit or acceptances for
Borrower’s account) is subject to the following terms and
conditions:
(i) Agent
and
each Lender shall
have no obligation to make the initial Revolving Loan to Borrower or to extend
any other financial accommodation to Borrower unless and until each condition
precedent specified on Item
6
of the Schedule has
been
fulfilled to Agent’s and Lenders’ satisfaction.
(ii) Agents
and each Lender’s
obligation to make any loans to Borrower and extend other financial
accommodations to Borrower (including the initial loans) is subject to the
conditions that, as of the date of any such loan or other accommodation, no
Default will have occurred and be continuing hereunder, there will have occurred
no material adverse change in Borrower’s financial condition or operations or in
Borrower’s business prospects as compared to the state of facts existing on the
Agreement Date, and Borrower’s representations and warranties set forth in this
Agreement (including any amendment, modification, supplement or extension
hereof) will be true and correct as if made on and as of the date of each
subsequent credit request. Each request for a borrowing or other financial
accommodation by Borrower will be deemed to be a reaffirmation of each of
Borrower’s warranties and representations hereunder.
8
(f) Repayment
of Loans.
In the
event of Default by Borrower or upon termination of this Agreement, Borrower
will repay upon demand all of the Obligations. If no demand is earlier made,
Borrower will repay all Obligations in full, without demand or notice, on the
last day of the term of this Agreement (as provided in clause (g)
below).
If at any time for any reason, the aggregate outstanding principal amount of
all
Loans exceeds the Borrowing Base or any other limitation on the amount available
to be borrowed hereunder, Borrower will immediately, without notice or demand,
repay the outstanding principal amount of the Loans, together with accrued
and
unpaid interest on the amount repaid, in an amount equal to such excess.
Borrower shall make each payment required hereunder or under any other Loan
Document without setoff, deduction or counterclaim.
(h) Voluntary
Termination.
Borrower may terminate this Agreement at any time upon at least 30 days’ prior
written notice to Lenders. On the date specified in such notice, termination
will be effective, so long as Borrower has paid to Lenders, in same day funds,
an amount equal to the aggregate principal amount of all Loans outstanding
on
such date, together with accrued interest thereon, the originals of all letters
of credit and bankers acceptances, if any, issued, created or guaranteed by
Agent or Lenders or any of their Affiliates for Borrower’s account have been
returned for cancellation or have been presented and paid by Borrower or other
arrangements satisfactory to Agent and Lenders have been made, all other
Obligations outstanding and unpaid including any prepayment or other fees
provided for hereunder have been paid in full in cash, and Borrower has provided
Lenders and Agent an indemnification agreement satisfactory to Agent and Lenders
with respect to returned and dishonored items and such other matters as Agent
and Lenders shall reasonably require.
(i) Termination
on Default.
Notwithstanding the foregoing, should a Default occur and be continuing, Lenders
will have the right to terminate this Agreement at any time without
notice.
(j) Survival.
Notwithstanding termination, all the terms, conditions, and provisions hereof
(including Agent’s and Lenders security interest in the Collateral, but
excluding any obligations of Agent or Lenders hereunder) will continue to be
fully operative until all Obligations have been paid, satisfied, and
liquidated.
(k) Payments
as Loans.
Borrower’s failure to pay any amount due from Borrower under this Agreement or
any other Loan Document, whether for principal, interest, fees, premiums, costs,
expenses or otherwise, shall be deemed to be a request by Borrower for a loan
hereunder, and Agent on behalf of Lenders may charge Borrower’s loan account for
any such amount. Additionally, if Lenders determine in their reasonable judgment
that extensions of credit are necessary to protect the Collateral, Agent is
hereby authorized to make such extensions of credit and charge them to
Borrower’s loan account.
9
3. Interest
and Fees.
(a) Interest
on Loans.
|
(i)
|
Borrower
will pay to Agent for the benefit of Lenders or, at Agent’s option, Agent
may charge Borrower’s loan account with, interest on the average daily net
principal amount of Loans outstanding hereunder, calculated monthly
and
payable on the first day of each calendar month, at a rate (computed
on
the basis of the actual number of days elapsed over a year of 360
days)
equal to the Prime Rate plus the interest margin specified in Item
8
of the Schedule.
The “Prime
Rate”
is, at any time, the rate of interest noted in The
Wall Street Journal,
Money Rates section, as the “Prime Rate” (currently defined as the base
rate on corporate loans posted by at least 75% of the nation’s thirty (30)
largest banks) but in no event shall the Prime Rate be less than
7.75%. In
the event that The
Wall Street Journal
quotes more than one rate, or a range of rates, as the Prime Rate,
then
the Prime Rate shall mean the average of the quoted rates. In the
event
that The
Wall Street Journal
ceases to publish a Prime Rate, then the Prime Rate shall be the
average
of the “prime” or “base” rates quoted by the three (3) largest U.S. money
center commercial banks, as determined by Lender. The “Prime Rate” may not
be the lowest or best rate at which Agent calculates interest or
extends
credit. Any change in the Prime Rate shall be effective for purposes
of
calculating interest hereunder as of the date of such change.
|
(b) Default
Interest.
To the
extent permitted by law and without limiting any other right or remedy of Agent
or Lenders hereunder, whenever there a Default has occurred and is continuing
under this Agreement, the rate of interest on the unpaid principal balance
of
the Obligations shall, at the option of Lenders, be increased by adding the
default margin identified on Item
9
of the Schedule
to the
interest rate otherwise in effect hereunder. Agent, on behalf of Lenders may
charge such default interest rate retroactively beginning on the date the
applicable Default first occurred or existed. Borrower acknowledges that: (i)
such additional rate is a material inducement to Lenders to make the loans
described herein; (ii) Lenders would not have made the loans in the absence
of
the agreement of Borrower to pay such additional rate; (iii) such additional
rate represents compensation for increased risk to Lenders that the loans will
not be repaid; and (iv) such rate is not a penalty and represents a reasonable
estimate of (A) the cost to Lenders in allocating its resources (both personnel
and financial) to the ongoing review, monitoring, administration and collection
of the loans, and (B) compensation to Lenders for losses that are difficult
to
ascertain. In the event of termination of this Agreement by either party hereto
when such charge has otherwise become payable, Lenders entitlement to this
charge will continue until all Obligations are paid in full.
(c) Fees.
Borrower will pay to Agent on behalf of Lenders the fees set forth in
Item
10
of the Schedule.
(d) No
Usury.
Borrower acknowledges that neither Agent nor Lenders intends to reserve, charge
or collect interest on money borrowed under this Agreement at any rate in excess
of the rates permitted by applicable law and that, should any interest rate
provided for in this Agreement exceed the legally permissible rate(s), the
rate
will automatically be reduced to the maximum rate permitted under applicable
law. If Agent or Lenders should collect any amount from Borrower which, if
it
were interest, would result in the interest rate charged hereunder exceeding
the
maximum rate permitted by applicable law, such amount will be applied to reduce
principal of the Obligations or, if no Obligations remain outstanding, will
be
refunded to Borrower.
10
(e) Monthly
Statements. Agent
will render a statement to Borrower each month for loans, payments, and other
transactions pursuant to this Agreement, and such statement rendered by Agent
will be binding upon Borrower unless Agent is notified in writing to the
contrary within 60 days after the date such statement is rendered.
4. Representations
and Warranties of Borrower.
(a) Authority,
Compliance with Laws, Litigation, No Material Adverse Change,
Etc.
Borrower
represents and warrants to Agent and each Lender that: (i) Borrower’s exact
legal name, type of organization, state of organization and organizational
identification number are fully and accurately set forth on Item
11
of the Schedule,
and
Borrower is duly organized and validly existing under the laws of such state
of
organization; (ii) the execution, delivery, and performance of this Agreement
and the other Loan Documents are within Borrower’s corporate powers, have been
duly authorized, do not violate Borrower’s constituent documents, any law or
regulation, including without limitation, any law or regulation relating to
occupational health and safety or protection of the environment, applicable
to
Borrower, or any indenture, agreement, or undertaking to which Borrower is
a
party or by which Borrower or Borrower’s property is bound; (iii) this Agreement
and the other Loan Documents to which Borrower is a party constitute valid,
binding and enforceable obligations of Borrower in accordance with the terms
hereof and thereof, except as enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, moratorium or other similar laws applicable
to creditors’ rights generally or by generally applicable equitable principles
affecting the enforcement of creditors’ rights; (iv) Borrower has no
subsidiaries or other investments in other Persons, except as set forth on
Item
12
of the Schedule;
(v)
Borrower is in compliance in all material respects with all laws, rules and
regulations applicable to Borrower, including laws, rules or regulations
concerning the environment, occupational health and safety and pensions or
other
employee benefits; (vi) except as set forth on Item
13
of the Schedule,
there
is no litigation or investigation pending against Borrower (or, so far as
Borrower is aware, threatened) which, if it were decided adversely to Borrower,
could reasonably be expected to have a material adverse effect on Borrower,
Borrower’s financial or operational condition or Borrower’s prospects (taking
into account any insurance coverage that has been acknowledged by the insurer);
(vii) other than debt that is to be repaid from the proceeds of the first
advance hereunder, Borrower is not indebted to any other Person for money
borrowed nor has Borrower issued any guaranty of payment or performance by
any
other Person, except as set forth on Item
14
of the Schedule;
(viii)
since the date of the financial statements of Borrower most recently delivered
to Lender, there has been no material adverse change in Borrower’s business,
Borrower’s financial or operational condition or Borrower’s business prospects;
and (ix) Borrower is, and after giving effect to the initial loans under this
Agreement and the application of the proceeds of such loans Borrower will be,
solvent and has sufficient revenues to pay Borrower’s obligations as they come
due and adequate capital with which to conduct Borrower’s business.
11
(b) Title
to Assets, Other Collateral Matters.
Borrower represents and warrants to Agent and Lenders that: (i) Borrower has
good and marketable title to the Collateral, free of all Liens except for
Permitted Liens, and no financing statement, mortgage, notice of Lien, deed
of
trust, security agreement, or any other agreement or instrument creating or
giving notice of any Lien against any of the Collateral has been signed,
authorized or delivered by Borrower, except in Agent’s (on behalf of Lenders)
favor or with respect to Permitted Liens; (ii) with regard to each Aggregate
Contract and any account related thereto, except as set forth on a Borrowing
Base Certificate including such Aggregate Contract and any account related
thereto: (A) the Customer or Supplier has accepted the Contract; and (B) all
representations, warranties and covenants set forth herein relating to Aggregate
Contracts are met; (iii) all Equipment is in good condition and state of repair,
ordinary wear and tear excepted and is currently usable or saleable in the
ordinary course of Borrower’s business; (iv) all Collateral meets applicable
government standards; (v) in the past five years, except as set forth on
Item
15
of the Schedule
(A)
Borrower has not used any other legal, trade or fictitious names, and (B)
Borrower has not been a party to any merger or purchased assets from any other
Person other than in the ordinary course of business; and (vii) each of
Borrower’s chief executive office and principal place of business, all
Inventory, all Equipment and all other Collateral (other than the Inventory
and
Equipment installed at Customer locations in the ordinary course of business)
is
located at the addresses set forth on Item
16
of the Schedule and
has
not been located at any other location during the five year period prior to
the
Agreement Date.
(c) Ownership
Structure. Borrower
represents and warrants that (i) Item
17
of the Schedule
accurately describes the ownership of Borrower’s capital stock, membership
interests or other equity interests, and (ii) the individual(s) listed on
Item
17
of the Schedule
have,
directly or indirectly, voting and managerial control of Guarantor.
(d) Additional
Representations.
Borrower represents and warrants to each Lender that: (i) Borrower is not
engaged as one of Borrower’s principal activities in owning, carrying or
financing the purchase or ownership by others of “margin stock” (as defined in
Regulation U of the Board of Governors of the Federal Reserve System); (ii)
Borrower owns no real property and leases no real property other than as listed
on Item
18
of the Schedule;
(iii) a
true, correct and complete list of any warehousemen, processors, consignees
or
other bailees with possession or control of any Inventory (excluding Customers)
is set forth on Item
18
of the Schedule;
and
(iv) a list and brief description of all bank accounts maintained by Borrower
with any bank or financial institution is set forth on Item
19
of the Schedule.
5. Collateral.
(a) Grant
of Security Interest.
To
induce Lenders to accept this Agreement and to make loans to Borrower from
time
to time pursuant to its terms, Borrower hereby grants to Agent on behalf of
Lenders, a security interest in, and assigns, mortgages and pledges to Agent
on
behalf of Lenders, all of Borrower’s right, title and interest in and to all of
Borrower’s property, whether real or personal, tangible or intangible, now owned
or existing or hereafter acquired or arising, including all of the following
(collectively, the “Collateral”):
(i) all
Accounts,
Contracts, Inventory,
Equipment, Goods, General Intangibles, Negotiable Collateral, Aggregate
Contracts, Supplier Contracts, all Customer Contracts and all other Contracts
or
other agreements and all rights title and interests in and to and payments
under
any of the foregoing;
12
(ii) all
investment property, securities and securities accounts and financial assets,
as
well as all bank and depository accounts;
(iii) all
chattel paper (whether tangible or electronic) and contract rights;
(iv) all
guaranties, collateral, Liens on real or personal property, leases, letters
of
credit, letter-of-credit rights, supporting obligations, and all other rights,
agreements, and property securing or relating to payment of Accounts or any
other Collateral;
(v) all
documents, books and records relating to any Collateral or to Borrower’s
business;
(vi) all
other
property of Borrower’s now or hereafter in the possession or control of Agent,
any Lender or any of Agent’s or any Lender’s respective Affiliates (including
cash, money, credits and balances of Borrower held by or on deposit with Agent
or any Lender or any Affiliate of Agent or Lenders);
(vii) all
other
assets of any Obligor in which Agent or any Lender receives a security interest
to secure all or part of the Obligations or which hereafter come into the
possession, custody or control of Agent or Lenders or any Affiliate of Agent
or
Lender;
(viii) all
of
Borrower’s commercial tort claims listed on (A) Item
20
of the Schedule (which
Borrower represents and warrants is a true, accurate and complete list of all
of
Borrower’s commercial tort claims as of the Agreement Date) or (B) any other
writing provided to Agent pursuant to Section
7(f);
and
(ix) all
proceeds and products of all of the foregoing in any form, including amounts
payable under any policies of insurance insuring all or any of the foregoing
against loss or damage, all parts, accessories, attachments, special tools,
additions, replacements, substitutions and accessions to or for all or any
of
the foregoing, all condemnation or requisition payments with respect to all
or
any of the foregoing and all increases and profits received from all or any
of
the foregoing.
(b) Obligations.
Such
grant, assignment, mortgage and transfer is made for the purpose of securing
and
the Collateral secures and will continue to secure all of the
Obligations.
6. Financial
Covenants.
Borrower shall comply with each of the financial covenants set forth on
Item
21
of the Schedule.
(a) Accounts.
After a
Default has occurred and is continuing, if Agent so elects, Agent will have
the
right at all times to settle, compromise, adjust, or litigate all material
Customer disputes directly with the Customer or other complainant upon such
terms and conditions as Agent deems advisable without incurring liability to
Borrower for Agent’s performance of such acts. All of Borrower’s books and
records concerning Accounts and a copy of Borrower’s general ledger will be
maintained at the address of Borrower’s chief executive office set forth on
Item
16
of the Schedule.
All
Accounts included on any Borrowing Base Certificate will be, except as indicated
on such Borrowing Base Certificate or subsequently in writing to Lender, bona
fide and
existing obligations of Customers arising out of the sale of goods and/or the
rendering of services by Borrower in the ordinary course of Borrower’s business,
owned by and owing to Borrower without defense, setoff or counterclaim, and
will
be subject to a perfected, first-priority security interest in Lender’s favor
and will be free and clear of all other Liens except Permitted
Liens.
13
(b) Equipment.
Borrower will maintain all Equipment used or useful in Borrower’s business in
good and workable condition, ordinary wear and tear excepted, subject to a
perfected, first-priority security interest in Agents on behalf of Lenders
favor
and free and clear of all other Liens (other than Permitted Liens), at one
of
the locations set forth on Item
16
of the Schedule
as the
current location of Borrower’s chief executive office or a current location of
other Collateral, or at another location established in accordance with this
Agreement.
(c) Defense
of Title.
All
Collateral will at all times be owned by Borrower, and Borrower will defend
Borrower’s title to the Collateral against the claims of third parties. Borrower
will at all times keep accurate and complete records of the
Collateral.
(d) Perfection;
Further Assurances.
Borrower will give Agent at least 30 days’ prior written notice of any change in
Borrower’s name, state of organization or organizational identification number,
any change in the location of Borrower’s principal place of business or chief
executive office, any change in the locations of Borrower’s Contracts, Inventory
or Equipment and any acquisition by Borrower of any interest in real property.
Borrower will, at Borrower’s expense, promptly execute and deliver from time to
time at Agent’s request and pay the costs of filing such additional financing
statements, mortgages, or other evidences of Liens as may be necessary or
desirable to perfect or continue perfection of Agents on behalf of Lenders
security interest in Borrower’s property or, at Agent’s request, to create and
perfect a Lien on newly acquired real property. Borrower will use all
commercially reasonable efforts to obtain from any landlord, warehouseman,
processor or other third party operator of premises on which any Collateral
is
located (other than Customers) an acceptable Lien waiver or subordination
agreement in Agent’s on behalf of Lender’s favor with respect to such
Collateral. All Collateral is and will continue to be, except as expressly
consented to by Agent on behalf of Lenders, personal property and will not,
by
reason of attachment or connection to any realty, either become or be deemed
to
be a fixture or appurtenance to such realty and will at all times be readily
removable without material damage to any realty, provided, however that Agent
and Lenders acknowledge that certain Inventory or Equipment such as satellite
dishes and other equipment installed in connection with the services Borrower
provides under its Customer Contracts may be affixed to realty of the particular
Customer. In the event that any Collateral, including proceeds, is evidenced
by
or consists of Negotiable Collateral, Borrower shall, immediately upon written
request therefor from Agent, endorse and assign such Negotiable Collateral
over
to Lenders and deliver actual physical possession of the Negotiable Collateral
to Agents on behalf of Lenders. Borrower shall at any time and from time to
time
use commercially reasonable efforts as Lenders may request for Agent on behalf
of Lenders (i) to obtain an acknowledgment, in form and substance satisfactory
to Agent on behalf of Lenders, of any bailee having possession of any of the
Collateral that such bailee holds such Collateral for Lenders, (ii)
to
obtain “control” of any investment property, deposit accounts, letter-of-credit
rights or chattel paper (including electronic chattel paper) in accordance
with
Article 9 of the UCC, with any agreements establishing control to be in form
and
substance satisfactory to Lenders, and (iii)
otherwise to insure the continued perfection and priority of Lenders’ security
interest in any of the Collateral and of the preservation of its rights therein.
Borrower shall only keep funds on deposit in bank or other deposit accounts
covered by deposit account control agreements except for those bank or deposit
accounts which are either zero balance accounts or maintain minimal balances
(i.e. less than $10,000 on an average basis). Lenders may, not more frequently
than once per year at Borrower’s expense (unless a Default has occurred and is
continuing), obtain an appraisal on some or all of the Collateral.
14
(e) Insurance.
Borrower will obtain and maintain in full force and effect insurance covering
the Collateral against all risks to which the Collateral is exposed, including
loss, damage, fire, theft, business interruption and all other such risks,
in
such amounts, with such companies, under such policies and in such form as
will
be reasonably satisfactory to Agent, which policies will name Agent on behalf
of
Lenders as an additional insured and provide that loss thereunder will be
payable to Agent as Agent on behalf of Lenders’ interests may appear upon a loss
payee endorsement acceptable to Agent on behalf of Lender. All proceeds of
any
such insurance will be paid over to Agent directly, and Agent on behalf of
Lenders may apply such proceeds to payment of the Obligations, whether or not
due, in such order of application as Agent on behalf of Lenders determines,
provided that so long as no Default has occurred and is continuing, Agent shall
permit Borrower to apply such proceeds, in whole or in part, to the replacement,
restoration or rebuilding of the lost or damaged property. Borrower will provide
to Agent from time to time certificates showing such coverage in effect and,
at
Lender’s request, the underlying policies. Borrower shall obtain a life
insurance policy covering [redacted]. Borrower shall execute such assignment
documents as Agent may request and shall deliver the original of such policy
to
Agent.
(f) Commercial
Tort Claims.
If
Borrower shall at any time acquire a commercial tort claim, Borrower shall
immediately notify Agent in a writing signed by Borrower of the details thereof
and grant to Agent in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to
be
in form and substance satisfactory to Agent.
(g) Financing
Statements.
Agent
on behalf of Lenders’ may at any time and from time to time file financing
statements, continuation statements and amendments thereto that describe the
Collateral as “all assets” of Borrower or words of similar effect and which
contain any other information required by Part 5 of Article 9 of the UCC
for the sufficiency or filing office acceptance of any financing statement,
continuation statement or amendment, including whether Borrower is an
organization, the type of organization and any organization identification
number issued to Borrower. Borrower agrees to furnish any such information
to
Agent promptly upon request. Any such financing statements, continuation
statements or amendments may be signed by Agent on behalf of Borrower or filed
by Agent without the signature of Borrower and may be filed at any time in
any
jurisdiction. Borrower
acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement
naming Borrower as the debtor and Agent on behalf of Lenders’ as the secured
party without the prior written consent of Agent, and Borrower agrees that
it
shall not do so without the prior written consent of Agent.
15
(h) Customer
Contracts Representations and Covenants.
Borrower
makes the following representations, warranties and covenants with respect
to
Customer Contracts (which shall be deemed to be continuing representations
and
warranties so long as any credit hereunder shall be available and until the
Obligations have been paid in full, other than contingent indemnification
obligations with respect to which there exists no claim):
(i) Borrower
represents and warrants that all Customer Contracts are and will be bona fide
existing obligations created by the sale or lease of goods or the rendition
of
services to Customers in the ordinary and usual course of business and will
be
owed to Borrower without any known defenses, disputes, offsets or counterclaims,
or any rights of return or cancellation without payment (except as disclosed
to
Agent in accordance with this Agreement and except for normal service-related
credits accurately reflected in Borrower’s records); Borrower shall have
received no notice of actual or imminent bankruptcy or insolvency of more than
[redacted] of its Customers and, to the best of Borrower’s knowledge, each
Customer shall be able to timely discharge all of its obligations to
Borrower.
(ii)
Borrower
represents and warrants it owns each Customer Contract and has not granted
to
any other Person any participation or similar interest therein, and none of
Borrower’s rights under any Customer Contract are subject to any security
interest, lien or encumbrance, other than the security interest in favor of
Lenders created under this Agreement and other Permitted Liens.
(iii) Borrower
represents and warrants that the Collateral, including without limitation,
all
Customer Contracts, is subject to a prior security interest in favor of Lenders,
(iv) Borrower
represents and warrants that neither any Customer Contract nor any transaction
entered into in connection therewith contravenes any applicable statute, law
or
regulation.
(v) Borrower
represents and warrants that each Customer Contract that has been duly
authorized, executed and delivered by the Borrower and, to the best of
Borrower’s knowledge, by the other parties thereto and is enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting creditors’ rights generally, or
by principles of equity, and all amounts due to Borrower under any Customer
Contract are payable without defense, offset, claim or
counterclaim.
(vi) Borrower
represents and warrants that each Customer Contract correctly sets forth the
terms of Borrower’s fees and other charges payable thereunder from the
applicable Customer. Borrower shall provide Lenders with prompt notice of any
material breach of, or nonpayment by or termination of more than [redacted]
of
Customer Contracts.
(vii) Borrower
shall cause each Customer to remit all payments due under a Customer Contract
or
otherwise directly to the Lockbox provided that with respect to payments
received directly by Borrower or its employees upon installation of equipment
for any Consumer Customer, Borrower shall forward such payments directly to
the
Lockbox.
(viii) Borrower
acknowledges and agrees that Lenders are not undertaking any authority or
responsibility with respect to any of the Customer Contracts entered into by
Borrower, nor are Lenders assuming any risk with respect to any Customer
Contract owned by or pledged to Borrower, nor are Lenders in any way involved
in
Borrower’s pricing, underwriting, installation or servicing or credit decisions
with respect to any Customer Contract.
16
(ix) Borrower
represents and warrants that it has provided Lenders with true, correct and
complete copies of each form of Customer Contracts, including Bulk Contract,
Choice Contracts, Exclusive Contracts, Competitive Contracts and Consumer
Service Agreements. Attached hereto as Exhibit
C
are a
sample of each of the versions of forms of Customer Contracts used by Borrower,
together with the forms of ancillary documents used by Borrower in connection
therewith and Borrower will not make any changes to the form of its
documentation with Customers without the prior written consent of Lenders,
which
consent shall not be unreasonably withheld. Borrower agrees that no Customer
Contract shall be modified or amended in any material way without Lender’s prior
written consent, which consent shall not be unreasonably withheld.
(x) Borrower
shall establish and maintain reasonable procedures (which may include random
sampling) to verify that Customers have been receiving the goods and/or services
that are the subject of the Customer Contracts.
(xi) Borrower
shall deliver to Lenders, as Lenders may from time to time require, Customer
Contracts and other documentation as applicable to each Customer Contract.
Absent such a request by Lenders, copies of all such documentation shall be
held
by Borrower as custodian for Lenders.
(xii) At
the
time of inclusion of each Customer Contract in any Borrowing Base Certificate
as
an Eligible Customer Contract, such Customer Contract will be due and payable
in
accordance with the terms set forth in such Contract and on the back up schedule
to the Borrowing Base.
(xiii) To
Borrower’s knowledge, no agreement exists permitting any return, deduction or
discount (other than the discount stated on the invoice) by a Customer. Borrower
will immediately notify Lenders in the event that a Customer alleges any dispute
or claim with respect to more than [redacted] in monthly revenue of total
Customer Contracts or of any other circumstances known to Borrower that may
impair the validity or collectibility of more than [redacted] in monthly revenue
of total Customer Contracts, provided, however that Borrower shall notify
Lenders of any material dispute relating to its Bulk Contracts. After the
occurrence of an Event of Default, Borrower shall not, without the prior consent
of Lenders, adjust, settle or compromise the amount or payment of any Customer
Contract, or release wholly or partly any Customer or obligor thereof, or allow
any credit or discount thereon.
(xiv) Lenders
shall have the right, at any time or times hereafter, to verify the validity,
amount or any other matter relating to a Customer Contract, by mail in its
name
or by telephone in conjunction with or in the presence of Borrower or its
designated employee.
(xv) Agent
agrees that, notwithstanding the foregoing, Customer Contracts acquired in
a
Permitted Acquisition do not have to meet the foregoing representations for
a
period of [redacted].
17
(i) Supplier
Contract Representations and Covenants.
Borrower
makes the following representations, warranties and covenants with respect
to
Supplier Contracts (which shall be deemed to be continuing representations
and
warranties so long as any credit hereunder shall be available and until the
Obligations have been paid in full, other than contingent indemnification
obligations with respect to which there exists no claim):
(i) Borrower
represents and warrants that all Supplier Contracts are and will be binding,
bona fide existing agreements between the parties thereto, in full force and
effect in accordance with their respective terms and not subject to any default
or breach that with the passage of time could become a default, without any
known defenses, disputes, offsets or counterclaims, or any rights of return
or
cancellation (except as disclosed to Agent); Borrower shall have received no
notice of actual or imminent bankruptcy or insolvency of any Supplier and,
to
the best of Borrower’s knowledge, each Supplier shall be able to timely
discharge all of its obligations under the Supplier Contracts.
(ii)
Borrower
represents and warrants that it has not granted to any other Person any
participation or similar interest therein, and none of Borrower’s rights under
any Supplier Contract are subject to any security interest, lien or encumbrance,
other than the security interest in favor of Lenders created under this
Agreement.
(iii) Borrower
represents and warrants that the Collateral, including without limitation,
all
Supplier Contracts, is subject to a prior security interest in favor of Lenders,
(iv) Borrower
represents and warrants that neither any Supplier Contract nor any transaction
entered into in connection therewith contravenes any applicable statute, law
or
regulation.
(v) Borrower
represents and warrants that each Supplier Contract that has been duly
authorized, executed and delivered by the parties thereto and is enforceable
in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting creditors’ rights generally, or
by principles of equity.
(vi) Borrower
represents and warrants that each Supplier Contract, where applicable, correctly
sets forth the terms of Borrower’s fees and other charges payable thereunder to
the applicable Supplier by a Supplier Contract. Borrower shall provide Lenders
with prompt notice of any material breach of, or nonpayment by or termination
of
any Supplier Contract.
(vii) Borrower
shall cause each Supplier to remit all payments due under a Supplier Contract
or
otherwise directly to the Lockbox.
(viii) Borrower
acknowledges and agrees that Lenders are not undertaking any authority or
responsibility with respect to any of the Supplier Contracts entered into by
Borrower, nor are Lenders assuming any risk with respect to any Supplier
Contract owned by or pledged to Borrower, nor are Lenders in any way involved
in
Borrower’s pricing, underwriting, installation or servicing or credit decisions
with respect to any Supplier Contract.
18
(ix) Borrower
represents and warrants that it has provided Lenders with true, correct and
complete copies of each Supplier Contract. Attached hereto as Exhibit
D
are all
Supplier Contracts [redacted].
(x) Borrower
shall deliver to Lenders, as Lenders may from time to time require, Supplier
Contracts and other documentation as applicable to each Supplier Contract.
Absent such a request by Lenders, copies of all such documentation shall be
held
by Borrower as custodian for Lenders.
(xi) Lenders
shall have the right, at any time or times hereafter, to verify the validity,
amount or any other matter relating to a Supplier Contract, by mail in its
name
or by telephone in conjunction with or in the presence of Borrower or its
designated employee.
(xv) All
payments due under any Supplier Contract by the Supplier to Borrower have been
made pursuant to such Supplier Contract.
8. Negative
Covenants.
(a) No
Merger.
Borrower will not merge or consolidate with any other Person or sell, transfer,
lease, abandon, or otherwise dispose of all or substantially all of Borrower’s
assets or a significant portion of any of the Collateral or any interest therein
without Agent’s prior written consent which shall not be unreasonably withheld,
except that, so long as no Default has occurred and is continuing, Borrower
may
sell Inventory in the ordinary course of Borrower’s business.
(b) No
Debt or Liens; Taxes.
Borrower will not obtain or attempt to obtain from any Person other than Agent
on behalf of Lenders any loans, advances, or other financial accommodations
or
Indebtedness of any kind, nor will Borrower enter into any direct or indirect
guaranty of any obligation of another Person, other than (i) Subordinated Debt,
(ii) Indebtedness in connection with purchase money security interests
constituting Permitted Liens (and capital leases) not to exceed, in aggregated
principal amount, the amount set forth on Item
22
of the Schedule
at any
one time outstanding, (iii) performance and surety bonds in the ordinary course
of business, and (iv) customary Indebtedness arising in connection with deposit
accounts. Borrower will not permit any of Borrower’s assets to be subject to any
Lien other than Permitted Liens. Borrower shall pay when due (or before the
expiration of any extension period) any tax or other assessment (including
all
required payments or deposits with respect to withholding taxes), and Borrower
will, upon request by Agent, promptly furnish Agent with proof satisfactory
to
Agent that Borrower has made such payments and deposits.
(c) No
Distributions.
Borrower will not retire, repurchase or redeem any of Borrower’s capital stock
or other ownership interest in Borrower, nor declare or pay any dividend in
cash
or other property (other than additional shares of capital stock or additional
ownership interests) to any owner or holder of Borrower’s shares or other
ownership interest. Notwithstanding the foregoing, provided that i) so long
as
no Default exists hereunder or would be caused by any such transaction, and
ii)
sufficient availability exists under the Borrowing Base to effect such
transaction, Borrower may acquire up to [redacted] of its capital stock or
equity interests without any additional consent from Lenders. In addition,
provided that i) so long as no Default exists hereunder or would be caused
by
any such transaction, and ii) sufficient availability exists under the Borrowing
Base to effect such transaction, Borrower may request Lenders’ consent to
purchases by Borrowers of more than [redacted] of its capital stock or equity
interests, which consent shall not be unreasonably withheld.
19
(d) No
ERISA Liabilities.
Borrower will make timely payments of all contributions required to meet the
minimum funding standards for Borrower’s employee benefit plans subject to the
Employee Retirement Income Security Act of 1974 (as amended, “ERISA”)
and
will promptly report to Agent the occurrence of any reportable event (as defined
in ERISA) and any giving or receipt by Borrower of any governmental notice
(other than routine requests for information) in respect of any such
plan.
(e) Transactions
with Affiliates.
Borrower will not engage in any transaction with any of Borrower’s officers,
directors, employees, owners or other Affiliates, except for an “arms-length”
transaction on terms no less favorable to Borrower than would be granted to
Borrower in a transaction with a Person who is not an Affiliate, which
transaction shall be approved by Borrower’s disinterested directors and shall be
disclosed in a timely manner to Agent prior to the consummation of the
transaction.
(f) Loans/Investments.
Borrower will not make any loans or advances to or extend any credit to any
Person except (i) the extension of trade credit in the ordinary course of
business; and (ii) advances to employees (other than cashless exercise
transactions) not to exceed an aggregate outstanding amount of [redacted] at
any
one time outstanding for all employees, without the consent of Lender. Borrower
shall not purchase, acquire or otherwise invest in any Person except: (A)
existing investments in Borrower’s subsidiaries described on Item
12
of the Schedule;
(B)
direct obligations of the United States of America maturing within one year
from
the acquisition thereof; (C) certificates of deposit issued by, or investment
accounts in, banks or financial institutions having a net worth of not less
than
$50,000,000; (D) commercial paper rated A-1 by Standard & Poor’s Ratings
Group or P-1 by Xxxxx’x Investors Service, Inc. and (E) so long as no Default
has occurred or is continuing, Permitted Acquisitions. Without limiting the
generality of the foregoing, Borrower shall not create any new
subsidiary.
(g) Capital
Expenditures.
Borrower shall not make or incur capital expenditures in excess of the amount
set forth on Item
21(a)
of the Schedule
during
any fiscal year.
(h) Compensation.
Borrower shall not increase the total compensation paid to its officers or
directors (or any of their relatives), including salaries, withdrawals, fees,
bonuses, commissions, drawing accounts and other payments, whether directly
or
indirectly, in money or otherwise, during any fiscal year of Borrower during
the
term of this Agreement in an aggregate amount for all such officers and
directors in excess of the limit specified in Item
28
of the Schedule.
(i) Amendments
of Documents.
Borrower shall not materially amend or modify any note, instrument or agreement
in connection with any Subordinated Debt without the prior written consent
of
Agent on behalf of Lenders, which consent shall not be unreasonably
withheld.
20
(j) Use
of Proceeds.
Borrower shall not use the proceeds of any Loans for any purpose other than
to
finance the development, build-out and installation of digital
satellite television systems and broadband internet services to multiple
dwelling units under contract to the Borrower or to acquire any such systems
or
service contracts, develop or acquire new services or lines of business in
the
multiple dwelling unit market, make permitted acquisitions of Borrower’s capital
stock and fund general working capital needs of the Borrower.
9. Reporting
and Information.
(a) Financial
Statements.
Borrower will submit to Agent as soon as available, and in any case not later
than 30 days after the end of each month, a balance sheet, and a statement
of
profit and loss, in each case prepared in accordance with GAAP by Borrower’s
chief financial or accounting officer as presenting fairly, in accordance with
GAAP, Borrower’s financial condition as of the last day of such month and
Borrower’s results of operations for such month and for the portion of
Borrower’s fiscal year ending with such month. Borrower will also submit to
Agent annual financial statements within 90 days after the end of each fiscal
year, including a balance sheet, the related statement of profit and loss and
stockholders’ equity and a statement of cash flows, in each case prepared in
accordance with the requirements set forth on Item
23
of the Schedule.
Borrower will also submit to Agent annually within 30 days after Borrower’s
fiscal year end forecasted financial statements for the upcoming fiscal year,
containing a projected balance sheet and profit and loss statement. Together
with each monthly and annual financial statement, Borrower will deliver to
Agent
the certification of Borrower’s chief financial or accounting officer in the
form of Exhibit
B
attached
hereto to the effect that Borrower is in compliance with the terms and
conditions of this Agreement, and setting forth in detail the calculation of
all
financial covenants, or, if Borrower is not in compliance, describing the nature
of any noncompliance and the steps Borrower is taking or proposes to take to
remedy the same. Borrower shall also submit a copy of each Federal income tax
return filed by it within 5 business days of the date of such filing and copies
of all filings made by Borrower with the Securities and Exchange Commission
with
5 business days of such filings.
(b) Collateral
Reports.
Concurrent with the execution of this Agreement by Borrower and concurrent
with
each request for a loan pursuant to Section
2(a),
but no
less frequently than as required by Item
24
of the Schedule,
Borrower shall deliver to Agent a fully completed Borrowing Base Certificate
certified by the Chief Executive Officer or Chief Financial Officer of Borrower
as being true and correct. Concurrent with the delivery of each such Borrowing
Base Certificate, Borrower shall provide a written report to Agent of all
materially significant returns, disputes and claims, chargebacks, cancellations,
together with sales and other reports relating to the Collateral as required
by
Agent. Borrower shall deliver to Agent within ten (10) days after the end of
each month a report, reflecting the status as of the end of each month and
certified by the Chief Executive Officer or Chief Financial Officer of Borrower
as being true and correct, containing (i)
a
current detailed aging, by total and by Customer, of Borrower’s Accounts, and
(ii)
a
current detailed aging, by total and by vendor, of Borrower’s accounts payable,
all of which shall be set forth in a form and shall contain such information
as
is acceptable to Agent. Borrower shall deliver to Agent at least semiannually
a
list of locations of Inventory and the types and values of Inventory at each
such location, in such form as Agent may require. At Agent’s request, Borrower
shall deliver such information with respect to the Collateral, Borrower or
Borrower’s business or financial condition as Agent may reasonably
request.
21
(c) Obligor
Financials.
At
least once during each twelve-month period (or more frequently if Lenders shall
so request), Borrower will cause each Obligor (other than Borrower) to deliver
to Agent a financial statement for such Obligor as of a date satisfactory to
Agent, in such form as Agent may reasonably request.
(d) Other
Information.
Borrower will notify Agent as promptly as possible of any Default, any receipt
by Borrower of notice from any governmental authority that Borrower has or
may
have violated any law, rule or regulation applicable to Borrower or the terms
or
conditions of any permit or license Borrower holds or is required to hold in
connection with the conduct of Borrower’s business, any amendment to Borrower’s
constituent documents and any change in Borrower’s management or ownership, and
the commencement of any material litigation, claim or action against
Borrower.
10. Inspection
Rights; Expenses; Etc.
(a) Inspection.
Agent
and Lenders’ may examine and make copies of Borrower’s records, the Collateral
and all other assets of Borrower or any portion thereof, wherever located,
and
may enter upon Borrower’s premises for such purposes, with reasonable prior
notice, during business hours. Borrower will assist Agent and Lenders in
whatever way as reasonably necessary to make each such examination. Agent may
discuss Borrower’s financial condition with Borrower’s independent accountants
without liability to Lenders or such accountants.
(b) Performance
by Lender.
Agent
on behalf of Lenders may, from time to time at Agents or Lender’s option,
perform any obligation of Borrower’s hereunder which Borrower fails to perform
and take any other action which Agent or Lenders deem necessary for the
maintenance or preservation of any of the Collateral or Agents or Lenders’
interest therein, and Borrower agrees to reimburse Agent immediately on demand
for all of Agent or Lenders’ expenses in connection with the foregoing
(including, without being limited to, reasonable fees and expenses of legal
counsel), together with interest thereon at the default rate of interest
provided for herein from the date any such expense is incurred until reimbursed
by Borrower.
(c) Field
Examinations; Inspections.
Agent
on behalf of Lenders shall have the right without hindrance or delay to conduct
field examinations to inspect the Collateral, Borrower’s books and records and
all other aspects of Borrower’s business. Borrower agrees to pay for such
examinations as more fully described on Item
25
of the Schedule.
Agent
on behalf of Lenders shall have full access to all records available to Borrower
from any credit reporting service, bureau or similar service and shall have
the
right to examine and make copies of any such records. Agent and Lenders’ may
exhibit a copy of this Agreement to such service and such service shall be
entitled to rely on the provisions hereof in providing access to Agent on behalf
of Lenders as provided herein.
22
11. Rights
of Setoff, Application of Payments, Etc.
Agent on
behalf of Lenders will be entitled to hold or set off all sums and all other
property of Borrower at any time to Borrower’s credit or in Agent’s or Lender’s
possession (or the possession of any of Agent or Lender’s Affiliates) by pledge
or otherwise or upon or in which Agent or any Lender may have a Lien, as
security for any and all of the Obligations. Agent on behalf of Lenders will
have the right and is hereby irrevocably authorized and directed to charge
to
Borrower’s loan account the amounts of any and all such Obligations. Recourse to
the Collateral or other security for the Obligations will not at any time be
required and Borrower hereby waives any right of marshalling Borrower may have.
Borrower’s obligation to pay or repay the Obligations is unconditional. Borrower
agrees that Agent, on behalf of Lenders, may take such action with regard to
the
custody and after a Default has occurred and is continuing, collection of
Collateral assigned to Agent on behalf Lenders as Agent may deem necessary.
Borrower agrees that failure to take any action with regard to any given Account
will not be unreasonable until and unless Agent or Lenders receives a written
request for specific action from Borrower with regard thereto and fails to
respond thereto within a commercially reasonable time. Borrower irrevocably
waives the right to direct the application of any and all payments and
collections at any time or times hereafter received by Agent from or on behalf
of Borrower, and Borrower hereby irrevocably agrees that Agent or Lenders shall
have the continuing exclusive right to apply and reapply any and all such
payments and collections received at any time or times hereafter by Agent or
a
Lender or its agent against the Obligations, in such manner and in such order
as
such Lender may deem advisable.
12. Attorney-in-Fact.
Borrower hereby appoints and constitutes Agent on behalf of Lenders as
Borrower’s attorney-in-fact: (a) at any time, (i) to endorse Borrower’s name
upon any notes, acceptances, checks, drafts, money orders, and other evidences
of payment that come into Agent or Lenders’ possession and to deposit or
otherwise collect the same; (ii) to send verifications of accounts to Customers;
and (iii) to execute in Borrower’s name any financing statements, affidavits and
notices with regard to any and all Lien rights; and (b) while any Default
exists, (i) to receive, open, and dispose of all mail addressed to Borrower;
(ii) to notify the postal authorities to change the address and delivery of
mail
addressed to Borrower to such address as Agent may designate; (iii) to sign
Borrower’s name on any invoice or xxxx of lading relating to the Collateral, on
drafts against Customers, and notices to Customers; (iv) to sign any agreement
or certificate in connection with any insurance policy of Borrower (including
any documentation to receive benefit payments due thereunder or to cancel such
insurance policy and receive a refund of the unearned premium with respect
thereto); and (v) to do all other acts and things necessary to carry out this
Agreement. All acts of said attorney-in-fact are hereby authorized, ratified
and
approved, and said attorney-in-fact will not be liable for any errors or mistake
of fact or law. This power, being coupled with an interest, is irrevocable
while
any of the Obligations remain unpaid or Lenders have any commitment to Borrower
under this Agreement or otherwise.
23
(b) Remedies.
If a
Default occurs and is continuing, in each case without demand or notice to
Borrower, any other Obligor or any other Person (unless such notice is expressly
required hereunder or under applicable law):
(i) Agent
may
and shall upon request of a Lender to terminate each such Lenders’ commitment,
if any, to make loans or to extend other financial accommodations to Borrower,
and may declare the entire principal amount of all loans outstanding hereunder,
all interest thereon, any unpaid fees and all other Obligations of any kind
or
nature to be, and thereupon the same will immediately become, due and payable
in
full; and, in the event of a Default described under clause (vi) of Section
13(a),
such
termination and acceleration shall automatically occur without any notice,
demand or presentment of any kind. Borrower agrees to deposit with Agent on
behalf of Lenders a cash sum equal to the amount of letters of credit and
acceptances issued or guaranteed by Agent or Lenders or any Affiliate of Agent
or Lenders which have not been drawn upon or matured, which funds will be used
to reimburse Agent or Lenders or such Affiliate of Agent or Lenders upon drawing
under any letter of credit or maturity of any acceptance.
24
(ii) Agent
may, and upon request of Lenders, shall decrease the advance rates set forth
in
the definition of “Borrowing Base” in Lender’s discretion.
(iii) Agent
may, and upon request of Lenders, shall designee may notify Customers that
the
Accounts have been assigned to Lenders and that Lenders have a security interest
therein, collect them directly, and charge the collection costs and expenses
to
Borrower’s loan account.
(iv) Agent
may, and upon request of Lenders shall (A) exercise any of its remedies under
any other Loan Document, (B) apply any cash collateral to the Obligations
(without limiting the foregoing, Lenders may instruct any bank or other
financial institution holding any cash, certificate of deposit or other
Collateral to pay over such Collateral to Agent on behalf of Lenders), and
(C)
draw on any letter of credit issued for the benefit of Agent on behalf of
Lenders in connection with this Agreement or any other Loan Document and apply
the proceeds thereof to the Obligations, in each case without demand or notice
to Borrower or any other Person.
(v) Agent
may, and upon request of Lenders shall, make such payments and do such acts
as
Agent or Lenders consider necessary or reasonable to protect its security
interest in the Collateral. Borrower authorizes Agent and Lenders to enter
each
premise where any Collateral is located, take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest or compromise
any
Lien which in Agent or Lenders opinion appears to be prior or superior to its
security interest and to pay all expenses incurred in connection
therewith.
(vi) As
permitted by the UCC, Agent may, and upon request of Lenders shall, ship,
reclaim, recover, store, finish, maintain, repair, continue to provides services
required by the Contracts, prepare for sale, advertise for sale and sell the
Collateral. Any
such
sale may be either a public or private sale, or both, by way of one or more
contracts or transactions, for cash or on terms. It is not necessary that the
Collateral be present at any such sale.
(vii) Agent
may, and upon request of Lenders shall, without regard to any waste, adequacy
of
the security or solvency of Borrower, apply for the appointment of a receiver
of
the Collateral, to which appointment Borrower hereby consents, whether or not
foreclosure proceedings have been commenced hereunder or under any other Loan
Document and whether or not a foreclosure sale has occurred.
(viii) Reserved.
25
(ix) Agent
may, at Lender’s option, exercise any of the remedies available to Lender as a
secured party under the Uniform Commercial Code as in effect in any applicable
jurisdiction, or otherwise available to Agents or Lenders under applicable
law.
Borrower agrees, upon Default, to cease the sale or other disposition of the
Collateral, except with Lenders’ prior written consent, and to assemble at
Borrower’s expense all the Collateral at a convenient place acceptable to agent.
Agent may charge to Borrower’s loan account and Borrower will pay Agent upon
demand all costs and expenses, including reasonable attorneys’ fees (including
fees of attorneys that are regular salaried employees of Agent or a Lender
or
any of its Affiliates), in connection with: (A) the liquidation of any
Collateral; (B) obtaining or enforcing payment of the Obligations; (C) the
settlement, adjustment, compromise, or litigation of Customer disputes; or
(D)
the prosecution or defense of any action or proceeding either against Agent
or a
Lender or against Borrower concerning any matter growing out of or in connection
with this Agreement and/or any Collateral and/or any Obligations. If at any
time
Agent or any Lender pays any state, city, local, federal, or other tax or levy
attributable to the Collateral, Borrower will repay to Agent or such Lender
the
amount of tax so paid by Agent. Borrower agrees that Agent may apply any
proceeds from disposition of the Collateral first to satisfy obligations secured
by Liens prior to Lender’s security interest. Borrower will remain liable and
will pay on demand any deficiencies arising upon the liquidation of any
Collateral held by Lender.
(c) Notices.
If any
notice of intended disposition of the Collateral or of any other act by Agent
is
required by law and a specific time period is not stated therein, such notice,
if given ten days before such disposition or act, in accordance with the
provisions of Section
15(a),
will be
deemed reasonably and properly given.
(d) License.
Borrower hereby grants to Agent on behalf of Lenders a license or other right
to
use, without charge, Borrower’s labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks and advertising matter, or
any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale and selling any Collateral and Borrower’s
rights under all licenses, and all franchise agreements shall inure to Agent
for
Lenders benefit.
(e) Remedies
Cumulative.
Agent’s
and Lenders rights and remedies under this Agreement and all other Loan
Documents shall be cumulative. Agent and Lenders shall have all other rights
and
remedies not inconsistent herewith as provided under the UCC, by law, or in
equity. No exercise by Agent or Lenders of one right or remedy shall be deemed
an election, and no waiver by Agent or any Lender of any default on Borrower’s
part shall be deemed a continuing waiver. No delay by Agent or any Lender shall
constitute a waiver, election or acquiescence by it.
14. Indemnification.
Borrower agrees to defend, indemnify, and hold harmless Agent, each Lender
and
Agent’s and each Lender’s respective directors, officers, employees, Affiliates,
representatives, attorneys and agents (each an “Indemnified
Person”)
from
and against any and all penalties, fines, liabilities, damages, costs, or
expenses of whatever kind or nature asserted against any such Indemnified
Person, arising out of, or in any way related to this Agreement or any other
Loan Document, or the transactions contemplated hereby or thereby, including
by
reason of the violation of any law or regulation relating to the protection
of
the environment or the presence, generation, disposal, release, or threatened
release of any hazardous materials in connection with Borrower’s business on, at
or from any property at any time owned or operated by Borrower, including,
without limitation, reasonable attorneys’ and consultants’ fees, investigation
and laboratory fees, court costs, and litigation expenses actually incurred.
Without limiting the foregoing, Borrower represents and warrants that there
has
been no loan broker or investment banker other than Xxxxxx Xxxxxx involved
in
connection with the transactions contemplated hereby and Borrower agrees to
indemnify and hold Agent and each Lender harmless from any claim of compensation
payable to any loan broker or investment banker in connection with the
transactions contemplated hereby.
26
(b) No
Waiver.
No
waiver hereunder will be valid unless in writing signed by Agent on behalf
of
Lenders and then only to the extent therein stated. No delay or failure by
Agent
on behalf of Lenders in the exercise of any right or remedy hereunder will
operate as a waiver thereof or of Agent’s or Lender’s right to exercise any
other right or remedy.
(c) Time
of Essence.
Time is
of the essence of this Agreement.
(d) Severability.
Wherever possible, each provision of this Agreement will be interpreted in
such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement will be prohibited by or invalid under applicable law, such
provision will be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
(e) Successors
and Assigns.
Borrower’s, Agent’s and Lenders’ rights and obligations hereunder will inure to
the benefit of Borrower’s, Agent’s and Lender’s respective successors and
assigns, provided
that
Borrower acknowledges and agrees that without Agent’s or Lenders prior written
consent, which may be withheld for any reason or no reason, Borrower may not
assign Borrower’s rights or obligations or any part thereof hereunder to any
other Person. Notwithstanding anything herein to the contrary, each Lender
may,
without the consent of Borrower, grant a security interest in, sell or assign,
grant or sell participations or otherwise transfer all or any portion of its
rights and obligations hereunder to one or more Persons.
27
(f) Governing
Law; Submission
to Jurisdiction; Service; Etc.
This
Agreement and the other Loan Documents shall be governed by and construed in
accordance with the substantive laws (other than conflict of law provisions
and
principles) of the State of New York. Borrower hereby consents to the
non-exclusive jurisdiction of any United States Federal Court sitting in or
with
direct or indirect jurisdiction over the Southern District of New York or any
New York state court located in New York County in any action, suit or other
proceeding arising out of or relating to this Agreement or any of the other
Loan
Documents, and Borrower irrevocably agrees that all claims and demands in
respect of any such action, suit or proceeding may be heard and determined
in
any such court and irrevocably waives any objection it may now or hereafter
have
as to the venue of any such action, suit or proceeding brought in any such
court
or that such court is an inconvenient forum. Borrower waives personal service
of
any and all process upon it and consents that all such service of process may
be
made by registered mail (return receipt requested) directed to Borrower at
Borrower’s address for notices pursuant to this Agreement, and service so made
shall be deemed to be completed five (5) days after the same shall have been
so
deposited in the United States mails. Nothing herein shall limit the right
of
Agent or Lenders to bring proceedings against Borrower or any of its Affiliates
in the courts of any other jurisdiction. Any judicial proceeding commenced
by
Borrower against Agent or Lenders or any other holder of any Obligations, or
any
Affiliate of Agent or Lenders or any other holder of any Obligations, involving,
directly or indirectly, any matter in any way arising out of, related to or
connected with any Loan Document shall be brought only in a United States
Federal Court sitting in or with direct jurisdiction over the Southern District
of New York or any New York state court sitting in New York county. Nothing
in
this Agreement shall be deemed or operate to affect the right of the Agent
or
Lenders to serve legal process in any other manner permitted by law or to
preclude the enforcement by Agent or Lenders of any judgment or order obtained
in such forum or the taking of any action under this Agreement to enforce same
in any other appropriate forum or jurisdiction.
(g) Waiver
of Jury Trial.
TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, AGENT AND LENDERS HEREBY
IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, THE
OBLIGATIONS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR EITHER
PARTY’S ACTIONS IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT HEREOF OR
THEREOF. EACH OF BORROWER, AGENT AND EACH LENDER ACKNOWLEDGES THAT SUCH WAIVER
IS MADE WITH FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND
BENEFITS WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS
CHOOSING.
(h) Waiver
of Hearing.
BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES ALL RIGHTS
WHICH
BORROWER HAS UNDER APPLICABLE LAW TO NOTICE AND TO A JUDICIAL HEARING PRIOR
TO
THE ISSUANCE OF A WRIT OF POSSESSION ENTITLING LENDER, ITS SUCCESSORS AND
ASSIGNS TO POSSESSION OF THE COLLATERAL UPON A DEFAULT. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING AND WITHOUT LIMITING ANY OTHER RIGHT WHICH AGENT
OR
ANY LENDER MAY HAVE, BORROWER CONSENTS THAT, IF AGENT OR ANY LENDER FILES A
PETITION FOR AN IMMEDIATE WRIT OF POSSESSION UNDER APPLICABLE LAW AND THIS
WAIVER OR A COPY HEREOF IS ALLEGED IN SUCH PETITION AND ATTACHED THERETO, THE
COURT BEFORE WHICH SUCH PETITION IS FILED MAY DISPENSE WITH ALL RIGHTS AND
PROCEDURES HEREIN WAIVED AND MAY ISSUE FORTHWITH AN IMMEDIATE WRIT OF
POSSESSION, WITHOUT THE NECESSITY OF AN ACCOMPANYING BOND AS OTHERWISE REQUIRED
BY ANY PROVISION OF APPLICABLE LAW.
28
(i) Expenses.
Borrower shall pay on demand all of Agent and Lenders’ reasonable costs and
expenses in connection with underwriting and performing due diligence with
respect to the transactions contemplated hereby and the preparation,
reproduction, execution, delivery, and administration of this Agreement, and
all
such costs and expenses of Agent and Lenders in connection with the enforcement
hereof, including the reasonable fees and out-of-pocket expenses of Agent and
Lenders’ counsel, in each case whether incurred on, prior or subsequent to the
Agreement Date. In addition, Borrower shall pay any and all stamp and other
taxes and recording and filing fees payable in connection with the execution
and
delivery of all other instruments and documents to be delivered hereunder.
Such
amounts may be charged by Agent and Lenders to Borrower’s account as one or more
loans hereunder. All provisions in this Agreement providing for the payment
or
reimbursement of Agent and Lenders’ attorneys’ fees and expenses include,
without limitation, such fees and expenses incurred pursuant to or in connection
with proceedings brought under 11 U.S.C., the Federal Bankruptcy
Code.
(j) Execution
in Counterparts; Execution by Fax; Waiver of Acceptance.
This
Agreement may be executed in separate counterparts, all of which shall
constitute one and the same agreement. Delivery of an executed counterpart
of
this Agreement or any other Loan Document by facsimile or electronic mail shall
be equally as effective as delivery of an original executed counterpart of
this
Agreement or such other Loan Document. Any party delivering an executed
counterpart of this Agreement or any other Loan Document by facsimile or
electronic mail shall deliver an original executed counterpart of this Agreement
or such other Loan Document, but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect
of
this Agreement or such other Loan Document. To the fullest extent permitted
by
applicable law, Borrower waives notice of Lender’s acceptance of this Agreement
and the other Loan Documents.
(k) Entire
Agreement.
This
Agreement and the other Loan Documents embody the entire agreement and
understanding between Agent, each Lender and Borrower and supersede all prior
agreements and understandings relating to the subject matter
hereof.
16. Agent.
(A)
Appointment.
Each
Lender hereby designates and appoints First Capital as its agent under this
Agreement and the Loan Documents, and each Lender hereby irrevocably authorizes
Agent to take such action or to refrain from taking such action on its behalf
under the provisions of this Agreement and the Loan Documents and to exercise
such powers as are set forth herein or therein, together with such other powers
as are reasonably incidental thereto. Agent is authorized and empowered to
amend, modify, or waive any provisions of this Agreement or the other Loan
Documents on behalf of Lenders. The provisions of this Section 16 are solely
for
the benefit of Agent and Lenders and neither Borrower nor any Loan Party shall
have any rights as a third party beneficiary of any of the provisions hereof.
In
performing its functions and duties under this Agreement, Agent shall act solely
as an administrative representative of Lenders and does not assume and shall
not
be deemed to have assumed any obligation toward or relationship of agency or
trust with or for Lenders, Borrower or any Loan Party. Agent may perform any
of
its duties hereunder, or under the Loan Documents, by or through its agents
or
employees.
29
(B) Reliance
Agent
shall be entitled to rely upon any written notices, statements, certificates,
orders or other documents or any telephone message or other communication
(including any writing, telex, telecopy or telegram) believed by it in good
faith to be genuine and correct and to have been signed, sent or made by the
proper Person, and with respect to all matters pertaining to this Agreement
or
any of the Loan Documents and its duties hereunder or thereunder, upon advice
of
counsel selected by it. Agent shall be entitled to rely upon the advice of
legal
counsel, independent accountants, and other experts selected by Agent in its
sole discretion.
(C) First
Capital Individually.
With
respect to the Loans made by it, First Capital shall have and may exercise
the
same rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms "Lenders" or any similar terms shall, unless the context clearly otherwise
indicates, include First Capital in its individual capacity as a Lender. First
Capital may lend money to, and generally engage in any kind of banking, trust
or
other business with any Loan Party as if it were not acting as Agent pursuant
hereto.
(D) Successor
Agent
(1) Resignation.
Agent
may resign from the performance of all its functions and duties hereunder at
any
time by giving at least thirty (30) Business Days' prior written notice to
Borrower and the Lenders. Such resignation shall take effect upon the acceptance
by a successor Agent of appointment pursuant to clause (2) below or as otherwise
provided below.
(2) Appointment
of Successor
Upon any
such notice of resignation pursuant to clause (G)(1) above, Lenders shall,
upon
receipt of Borrower's prior consent which shall not unreasonably be withheld,
appoint a successor Agent. If a successor Agent shall not have been so appointed
within said thirty (30) Business Day period, the retiring Agent, upon notice
to
Borrower, shall then appoint a successor Agent who shall serve as Agent until
such time, as Lenders, upon receipt of Borrower's prior written consent which
shall not be unreasonably withheld, appoint a successor Agent as provided
above.
(3) Successor
Agent
Upon the
acceptance of any appointment as Agent under the Loan Documents by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under the
Loan Documents.
30
(E) Confirmation
of Authority; Execution of Releases.
Without
in any manner limiting Agent's authority to act without any specific or further
authorization or consent by Lenders, each Lender agrees to confirm in writing,
upon request by Borrower, the authority to release any property covered by
this
Agreement or the Loan Documents. So long as no Event of Default is then
continuing, upon receipt by Agent of confirmation from the requisite percentage
of Lenders, of its authority to release any particular item or types of property
covered by this Agreement or the Loan Documents, and upon at least five (5)
Business Days prior written request by Borrower, Agent shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be necessary
to evidence the release of the Liens granted to Agent for the benefit of Lenders
herein or pursuant hereto upon such Collateral; provided,
however,
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 obligation or
entail any consequence other than the release of such Liens without recourse
or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens upon (or obligations of any Loan Party,
in
respect of), all interests retained by any Loan Party, including, without
limitation, the proceeds of any sale, all of which shall continue to constitute
part of the property covered by this Agreement or the Loan
Documents.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
31
IN
WITNESS WHEREOF, Borrower, Agent and Lenders have executed this Agreement as
of
the day and year first above written.
|
BORROWER:
|
|||
|
MDU
COMMUNICATIONS (USA) INC.
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
32
|
AGENT
AND LENDER:
|
||
|
FCC,
LLC, d/b/a FIRST CAPITAL
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
33
|
LENDER:
|
|||
|
FULL
CIRCLE FUNDING, LP
|
|||
|
By
its General Partner
|
|||
|
|
|||
|
FULL
CIRCLE FUNDING, LLC
|
|||
|
By
its Managing Members
|
|||
|
By:
|
|||
|
Name:
Xxxxxx X. Xxxx
|
|||
|
Title:
Managing Member
|
|||
|
By:
|
|||
|
Name:
Xxxx X. Xxxxxx
|
|||
|
Title:
Managing Member
|
|||
34
NOTARY
JURAT FOR EXECUTION OF
WRITTEN
OBLIGATIONS TO PAY MONEY
On
this
the ____ day of ______________, 2008, before me, the undersigned, a Notary
Public in and for the State of _____________, County of _________________,
___________________________ personally appeared, who is personally known to
me
or proved to me on the basis of satisfactory evidence to be the
_______________________________ of ___________________________, a
_____________________ corporation, who, being by me first duly sworn, stated
that:
| 1. |
He
executed the foregoing Loan and Security Agreement on behalf of such
corporation pursuant to its by-laws or a resolution of its board
of
directors, said execution taking place in the State of
______________________, County of ________________;
and
|
| 2. |
He
has this day delivered the foregoing Loan and Security Agreement
to FCC,
LLC, d/b/a FIRST CAPITAL, AND FULL CIRCLE FUNDING, L.P. at Oklahoma
City,
Oklahoma via overnight courier.
|
|
Signature
of Borrower’s Officer:
|
|
|
By:__________________________________________________
|
|
|
Name:________________________________________________
|
Sworn
to
and subscribed before me this ___ day of _______________, 20__:
__________________________________
Notary
Signature
My
Commission Expires:
_________________________________
[Affix
Notarial Seal]
35
AFFIDAVIT
REGARDING DELIVERY
On
this
the ____ day of _______________, 2008, before me, the undersigned, a Notary
Public in and for the State of New York, County of _______________,
_______________________ personally appeared, personally known to me or proved
to
me on the basis of satisfactory evidence to be the ________________________
of
FCC, LLC, d/b/a FIRST CAPITAL, who, being by me first duly sworn, stated that
he/she has received delivery of the foregoing Loan and Security Agreement on
behalf of FCC, LLC, d/b/a FIRST CAPITAL in the State of New York, County of
New
York.
| Signature of Officer of FCC, LLC, d/b/a First Capital |
Sworn
to
and subscribed before me this ___ day of _______________, 2008:
__________________________________
Notary
Signature
My
Commission Expires:
_________________________________
[Affix
Notarial Seal]
36
AFFIDAVIT
REGARDING DELIVERY
On
this
the ____ day of _______________, 2008, before me, the undersigned, a Notary
Public in and for the State of New York, County of _______________,
_______________________ personally appeared, personally known to me or proved
to
me on the basis of satisfactory evidence to be the ________________________
of
FULL CIRCLE FUNDING, LLC, the General Partner of FULL CIRCLE FUNDING, L.P.
being
by me first duly sworn, stated that he/she has received delivery of the
foregoing Loan and Security Agreement on behalf of FULL CIRCLE FUNDING, LLC
in
the State of New York, County of New York.
| Signature of Officer of Full Circle Funding, LLC |
Sworn
to
and subscribed before me this ___ day of _______________, 2008:
__________________________________
Notary
Signature
My
Commission Expires:
_________________________________
[Affix
Notarial Seal]
37
SCHEDULE
This
Schedule is a part of the foregoing Amended and Restated Loan and Security
Agreement dated as
of the
11th day of September 2006 (as amended and restated as of June 30, 2008) between
MDU Communications (USA) Inc., a Washington corporation (“Borrower”),
and
Full Circle Funding, L.P. a Delaware limited partnership (“Full Circle”) and
FCC, LLC, d/b/a First Capital, a Florida limited liability company
(“First
Capital”)
in its
capacity as a Lender and as Agent, (each of Full Circle and First Capital a
“Lender” and collectively “Lenders”).
“Borrowing
Base” means, at any time, an amount equal to: [redacted]
| 2. |
Accounts
Eligibility
|
(a) Contract
Ageing: [redacted]
(b) Concentration
Limit:
[redacted]
38
Existing
Liens and financing statements:
|
Financing
Statement Number,
|
|
|
||
|
Jurisdiction
and Filing Date
|
Secured
Party
|
Collateral
|
||
|
0000-000-0000,
Washington Secretary of State
|
Cisco
Systems
|
Specific
Leased
|
||
|
August
1, 2001
|
Capital
Corporation
|
Equipment
|
||
|
200610098101,
Washington Secretary of State
|
Leasing
Innovations,
|
Specific
Leased
|
||
|
April
10, 2006
|
Incorporated
|
Equipment
|
||
|
200610819935,
Washington Secretary of State
|
Leasing
Innovations
|
Specific
Leased
|
||
|
April
17, 2006
|
Innovations
|
Equipment
|
||
|
200616794007,
Washington Secretary of State
|
Leasing
Innovations
|
Specific
Leased
|
||
|
June
15, 2006
|
Innovations
|
Equipment
|
||
|
200620598721,
Washington Secretary of State
July, 24, 2006 |
Citicorp
Leasing, Inc.
|
Specific
Leased
Equipment
|
|
Name:
|
Title:
|
|
|
Xxxxxxx
Xxxxxx
|
President
and Chief Executive Officer
|
|
|
Xxxxxx
Xxxxxx
|
Vice
President
|
|
|
Xxxx
Xxxxxxxxx
|
Secretary
and Legal Counsel
|
Items
listed below are required to be delivered, in form and substance satisfactory
to
Agent in its sole discretion, as a condition to each Lender’s obligation to fund
the initial loan or extend the first financial accommodation to Borrower under
this Agreement.
Certified
copy of articles/certificate of incorporation
Bylaws
Secretary’s
certificate as to constituent documents, bylaws, authorizing action (e.g.,
corporate resolutions) and incumbency of officers/status and specimen signatures
of authorized signers
Good
Standing Certificate (state of organization and all other states in which
Borrower is qualified to do business)
39
Lien
search results
Payoff
letter from any lender whose loans are to be refinanced from proceeds of loans
made under this Agreement
Lien
termination documents from existing lender, any other creditor whose filings
are
to be terminated, etc.
Landlord,
warehouseman or other bailee waivers
Collateral
Assignment of all Customer Contracts
Agreement
with any third party billing and collecting agents
Lockbox,
blocked account or agency account agreement(s)
Financial
statements
Borrowing
Base Certificate, together with schedules of Accounts and Inventory and other
supporting documentation, in each case as of a date acceptable to
Lenders
Financing
statements
Officer’s
certificate as to representations, warranties and no defaults
Solvency
certificates
Opinion
letter of Borrower’s legal counsel
Warrant
Agreements (including as of the Restatement Date)
Registration
Rights Agreements (including as of the Restatement Date)
Assignment
of a Life Insurance Policy [redacted]
All
other
items described on the Schedule of Closing Documents previously delivered by
Lenders or Lenders’ counsel to Borrower or Borrower’s counsel
This
Agreement will terminate on the third anniversary of the Restatement Date,
provided, however, that the term shall automatically be extended for an
additional month at the end of each month during the first twenty-four (24)
month period starting on the Restatement Date up to a maximum term of sixty
(60)
months from the Restatement Date.
40
Revolving
Loan Tranche B: Prime Rate plus 3%;
Revolving
Loan Tranche C: Prime Rate plus 2%; and
Revolving
Loan Tranche D: Prime Rate plus 1%.
Revolving
Loans Tranches E and F: Prime Rate plus
the
margins set forth below (the “Margin”),
subject to adjustment with respect to each fiscal quarter, based on the
following Total Leverage Ratios:
|
Total
Leverage Ratio
|
Margin
(in
basis points)
|
|
[redacted]
|
[redacted]
|
|
[redacted]
|
[redacted]
|
|
[redacted]
|
[redacted]
|
|
[redacted]
|
[redacted]
|
“Total
Leverage Ratio” shall mean the ratio of (i) the aggregate stated balance sheet
amount of Indebtedness (solely under clause (i) of the definition thereof)
of
the Borrower determined in accordance with GAAP to (ii) EBITDA (calculated
as
set forth in Item 21(e) of the Schedule) provided that at the option of the
Borrower EBITDA shall be calculated based on the higher of (i) trailing twelve
months results or (ii) trailing six months results multiplied by two
(2).
| 10. |
a. Upon
execution of this Agreement, in consideration of Lender’s structuring, approving
and committing to this Agreement, and for services by Lenders in connection
with
Lenders continuing administration of the Loans, but without affecting Borrower’s
obligation to reimburse Lenders for costs associated with this Agreement and
the
transactions contemplated hereby as provided elsewhere in this Agreement,
Borrower agrees to pay to Agent for the benefit of Lenders Closing/Annual Fees
as follows:
Closing
Fee of 3.5% of Term Loan Tranche A shall be due and payable at closing,
regardless of whether all of Tranche A is borrowed at Closing.
Closing/Annual
Fee of 1% shall be and payable on the entire amount of Revolving Loan Tranche
B
(i.e. on the full $5 Million of such Tranche) at such time as the outstanding
principal balance of the Loans exceed $5,000,000 and on each anniversary of
the
date the outstanding principal balance first exceeded $5 Million.
Closing/Annual
Fee of 1% shall be and payable on the entire amount of Revolving Loan Tranche
C
(i.e. on the full $5 Million of such Tranche) at such time as the outstanding
principal balance of the Loan exceed $10,000,000, and on each anniversary of
the
date the outstanding principal balance first exceeded $10 Million.
41
Closing/Annual
Fee of 1% shall be and payable on the entire amount of Revolving Loan Tranche
D
(i.e. on the full $5 Million of such Tranche) at such time as the outstanding
principal balance of the Loans exceed $15,000,000, and on each anniversary
of
the date the outstanding principal balance first exceeded $15
Million.
Closing/Annual
Fee of 1% shall be and payable on the entire amount of Revolving Loan Tranche
E
(i.e. on the full $5 Million of such Tranche) at such time as the outstanding
principal balance of the Loans exceed $20,000,000, and on each anniversary
of
the date the outstanding principal balance first exceeded $20
Million.
Closing/Annual
Fee of 1% shall be and payable on the entire amount of Revolving Loan Tranche
F
(i.e. on the full $5 Million of such Tranche) at such time as the outstanding
principal balance of the Loans exceed $25,000,000, and on each anniversary
of
the date the outstanding principal balance first exceeded $25
Million.
Any
Annual Fee shall be prorated to the extent there are less than 12 months
remaining in the original term at the time such Annual Fee is charged, based
on
the number of months remaining in the original term to 12 months.
b. In
consideration of the maintenance of Lender’s commitment hereunder, Borrower will
pay Agent for the benefit of Lenders a fee as set forth below on the daily
average unused portion of Lender’s commitment to make Revolving Loans hereunder,
payable monthly in arrears on the first day of each calendar month, beginning
on
the first such date following the Agreement Date.
An
Unused
line fee on Revolving Loan Tranche B (i.e. on the full $5 Million of such
Tranche) of one half of one percent (.50%) per annum, charged monthly in
arrears, on the average unused amount of Tranche B at such time as the
outstanding principal balance of the Loans exceeds $5,000,000 and continuing
thereafter regardless of whether the balance on the Loans drops below $5
Million.
An
Unused
line fee on Revolving Loan Tranche C (i.e. on the full $5 Million of such
Tranche) of one third of one percent (.33%) per annum, charged monthly in
arrears, on the average unused amount of Tranche C at such time as the
outstanding principal balance of the Loans exceeds $10,000,000 and continuing
thereafter regardless of whether the balance on the Loan drops below $10
Million.
An
Unused
line fee on Revolving Loan Tranche D (i.e. on the full $5 Million of such
Tranche) of one quarter of one percent (.25%) per annum, charged monthly in
arrears, on the average unused amount of Tranche D at such time as the
outstanding principal balance of the Loans exceeds $15,000,000 and continuing
thereafter regardless of whether the balance on the Loan drops below $15
Million.
An
Unused
line fee on Revolving Loan Tranche E (i.e. on the full $5 Million of such
Tranche) of one quarter of one percent (.25%) per annum, charged monthly in
arrears, on the average unused amount of Tranche D at such time as the
outstanding principal balance of the Loans exceeds $20,000,000 and continuing
thereafter regardless of whether the balance on the Loan drops below $20
Million.
An
Unused
line fee on Revolving Loan Tranche F (i.e. on the full $5 Million of such
Tranche) of one quarter of one percent (.25%) per annum, charged monthly in
arrears, on the average unused amount of Tranche F at such time as the
outstanding principal balance of the Loans exceeds $25,000,000 and continuing
thereafter regardless of whether the balance on the Loan drops below $25
Million.
42
c. In
the
event that this Agreement is terminated for any reason Borrower will pay to
Agent for the benefit of Lenders on or prior to the effective date of such
termination an early termination fee as follows: The Borrower may elect to
prepay the Loans in whole upon 30 days’ notice to Lender. Such prepayment shall
be at the following pre-payment prices as a percentage of pre-paid principal
based
on
the highest principal amount of Loans outstanding at any time during the
immediately preceding twelve month period:
|
Months
0-12 after Restatement Date
|
102
|
%
|
||
|
Months
13-24 after Restatement Date
|
101
|
%
|
||
|
Months
25-33 after Restatement Date
|
101
|
%
|
(No
fee
shall apply to Prepayments made within the last 3 months of the original term
or
during any automatic extension period.)
All
of
the foregoing fees constitute compensation to Agent for the benefit of Lenders
for services rendered and are not interest or a charge for the use of money.
Each installment of such fees shall be fully earned when due and payable and
shall not be subject to refund or rebate.
Exact
Legal Name of Borrower: MDU
Communications (USA) Inc.
State
of Organization:
Washington
Type
of Organization:
Corporation
Organizational
Identification Number:
00-0000000
Loan
from
Wachovia Bank in the amount of [redacted] secured by deposit accounts maintained
at Wachovia
Lease
obligations to Leasing Innovations secured by the liens identified in Item
3 of
the Schedule in principal amount of [redacted]
Lease
obligations to Citicorp Leasing Inc. secured by the liens identified in Item
3
of the Schedule in principal amount of [redacted]
Lease
obligations to Cisco Systems Capital Corporation secured by the liens identified
in Item 3 of the Schedule in principal amount of [redacted]
43
Prior
or Current Trade or Fictitious Names:
MDU
Communications
Mergers
and Acquisitions:
Digital
Solutions LLC, a Connecticut limited liability company
Direct
Satellite, Inc., an Illinois corporation
PCM
Acquisitions Corp., a Delaware corporation
Current
Chief Executive Office:
00
Xxxxxxxx Xxx, Xxxxxx, Xxx Xxxxxx 00000
Other
Locations of Chief Executive Office in past five years:
None
Other
Current Collateral Locations:
None
Leased
Real Property (including legal name of landlord and monthly
rent):
[redacted]
Warehousemen,
processors, consignees or other bailees in possession or control of any
Inventory (include name, address where Inventory is stored and description
of
the arrangement):
None
44
None
(a) Capital
expenditures (excluding those incurred in connection with the installation
or
development and build-out of digital satellite television systems and broadband
internet services to multiple dwelling units under Contract to the Borrower),
shall not exceed [redacted].
(b) Ratio
of
Subscriber Acquisition Costs to Monthly Subscriber Revenue/ROI: [redacted]
(c) Minimum
gross monthly revenue of $900,000 during the first 12 months following the
Closing Date; $1,200,000 for months 13 through 24 following the Closing Date;
and [redacted] for each month thereafter.
(d) Minimum
Number of Subscribers prior to Borrower drawing Loans in the specified Tranche
as follows:
|
Tranche
A
|
Minimum
40,000 Subscribers
|
|
Tranche
B
|
Minimum
45,000 Subscribers
|
|
Tranche
C
|
Minimum
50,000 Subscribers
|
|
Tranche
D
|
Minimum
55,000 Subscribers
|
|
Tranche
E
|
Minimum
60,000 Subscribers
|
|
Tranche
F
|
Minimum
65,000 Subscribers
|
Such
minimum must be met while any balance remains outstanding under the applicable
Tranche.
(e)
Prior
to
funding any advances under Tranche C or Tranche D, Borrower’s EBITDA must
be
positive. Prior to funding and advances under Tranche E and for so long as
any
portion of Tranche E is outstanding, Borrower’s EBITDA must be at least
[redacted], provided that solely for purposes of Tranche E, EBITDA shall be
calculated based on the higher of (i) trailing twelve month results or (ii)
trailing six month results multiplied by two (2). Prior to funding and advances
under Tranche F and for so long as any portion of Tranche F is outstanding,
Borrower’s EBITDA must be at least [redacted]. EBITDA shall mean Borrower’s
net income (excluding extraordinary gains and non-cash charges) before provision
for interest expense, taxes, depreciation and amortization. For purposes of
this
calculation, the Closing Fee due hereunder and any fees paid to Xxxxxx Xxxxxx
shall be excluded. This
covenant
will be measured on a trailing a 3-month basis at each month end during the
period beginning on July 1, 2006 and ending September 30, 2006, on a trailing
6
month basis at each month end during the period beginning October 1, 2006 and
ending on December 31, 2006, on a trailing 9 months basis at each month end
for
the period beginning on January 1, 2007 and ending on March 31, 2007 and on
a
trailing 12 months basis at each month end after April 30, 2007 and
thereafter.
(f)
[redacted]
45
|
If
to Borrower:
|
MDU
Communications (USA), Inc.
|
|
00
Xxxxxxxx Xxx, Xxxx X
|
|
|
Xxxxxx,
Xxx Xxxxxx, 00000
|
|
|
Attn.:President
|
|
|
Facsimile
No.: 000-000-0000
|
|
|
If
to Agent:
|
FCC,
LLC, d/b/a First Capital
|
|
0000
X. X. 00xx Xxxxxx
|
|
|
Xxxxxxxx
Xxxx, Xx 00000
|
|
|
Attention:
Xxxx Xxxxxx
|
|
|
Facsimile
No.: (000) 000-0000
|
|
|
With
a copy to:
|
FCC,
LLC d/b/a First Capital
|
|
000
Xxxx Xxxx Xxxxx, Xxxxx 000
|
|
|
Xxxxxxxx,
Xxxxxxx, 00000
|
|
|
Attention:
Xxxxxxxx Xxxxx Xxxxxxx
|
|
|
Facsimile
No.: (000) 000-0000
|
46
And
to:
|
If
to Lenders:
|
FCC,
LLC, d/b/a First Capital
|
|
0000
X. X. 00xx Xxxxxx
|
|
|
Xxxxxxxx
Xxxx, Xx 00000
|
|
|
Attention:
Xxxx Xxxxxx
|
|
|
Facsimile
No.: (000) 000-0000
|
|
Full
Circle Funding, LP
|
|
|
000
Xxxxxxxxxxx Xxxxxx
|
|
|
Xxxxx
X-000
|
|
|
Xxx
Xxxxx, XX 00000
|
|
|
Attn.:
Xxxxxx X. Xxxx
|
|
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Facsimile
No.: (000) 000-0000
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47
EXHIBIT
A
First
Capital Corporation –
Online
Asset Based Lending
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Certificate
#
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Client:
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MDU
Communications
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Certificate
Date:
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User:
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Loan
# - Type
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MDUC01
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Collateral
Balance
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Sales/Additions
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+
Adjustments
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Cash
(Memo)/Removals
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Discounts
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Returns
& Allowances
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Non-AR
Cash
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Bad
Debt Write-Offs
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-
Adjustments
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New
Collateral Balance
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Ineligibles
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Advance
Rate
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[redacted]
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Reserves
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Collateral
Limit
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[redacted]
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New
Net Collateral
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Revolving
Limit
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25,000,000
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Term
Limit
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$5,000,000
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Total
Line Limit
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30,000,000
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Total
Collateral
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Loan
Balance
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Advance
Request
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DDA
Account
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Collections
(Memo)
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New
Loan Balance
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New
Availability
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EXHIBIT
B
FORM
OF COMPLIANCE CERTIFICATE
[to
be provided on borrower’s letterhead]
__________________,
200__
FCC,
LLC,
d/b/a First Capital
0000
XX
00xx
Xxxxxx
Xxxxxxxx
Xxxx XX 00000
Attn.:
Xxxx Xxxxxx
The
undersigned, the of
MDU
Communications (USA) Inc., a
Washington corporation (“Borrower”), gives this certificate to FCC,
LLC,
d/b/a
First Capital, a Florida limited liability company (“Agent”),
in accordance with the requirements of that certain Loan and Security Agreement
dated as of September 11, 2006 (as amended and restated as June __ __, 2008)
between Borrower, Agent and Lenders (as amended from time to time, the “Loan
Agreement”). Capitalized terms used in this Certificate, unless otherwise
defined herein, shall have the meanings ascribed to them in the Loan
Agreement.
No
Default exists on the date hereof, other than: [if
none,
so state].
As
of the
date hereof, Borrower is current in its payment of all accrued rent and other
charges to Persons who own or lease any premises where any of the Collateral
is
located, and there are no pending disputes or claims regarding Borrower’s
failure to pay or delay in payment of any such rent or other
charges.
Set
forth
on Appendix 1 attached hereto is a true, accurate and complete calculation
with
respect to the financial covenants of Borrower under the Loan
Agreement.
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Yours
truly,
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MDU
Communications (USA) Inc.
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By:__________________________________________
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Name:__________________________________________
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Title:__________________________________________
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