LOAN AND SECURITY AGREEMENT
BETWEEN
NEW STREAM COMMERCIAL FINANCE, LLC
AS LENDER
AND
CROCHET & BOREL SERVICES, INC.
AS BORROWER
DATED: AUGUST 28, 2006
TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Term and Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Single Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Cash Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Receipt of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Application and Allocation of Payments . . . . . . . . . . . . . . . . . . . . . 4
1.10 Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Borrowing Base; Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Conditions to the Initial Loans. . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Further Conditions to the Loans. . . . . . . . . . . . . . . . . . . . . . . . . 6
3. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 6
3.1 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . 6
3.2 Executive Offices; Corporate or Other Names. . . . . . . . . . . . . . . . . . . 7
3.3 Corporate Power; Authorization; Enforceable Obligations. . . . . . . . . . . . . 7
3.4 Financial Statements and Projections; Books and Records. . . . . . . . . . . . . 7
3.5 Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 Real Estate; Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebt. . . . . . . 8
3.8 Government Regulation; Margin Regulations. . . . . . . . . . . . . . . . . . . . 9
3.9 Taxes; Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.15 Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.16 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.17 Deposit and Disbursement Accounts. . . . . . . . . . . . . . . . . . . . . . . . 11
3.18 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.19 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.20 Anti-Terrorism Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.21 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(i)
3.22 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.23 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.24 Acquisition Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4. FINANCIAL MATTERS; REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1 Reports and Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Other Reports and Information. . . . . . . . . . . . . . . . . . . . . . . . . . 15
5. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6. SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.1 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
6.2 Lender's Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 Lender's Appointment as Attorney-in-fact . . . . . . . . . . . . . . . . . . . . 20
6.4 Grant of License to Use Intellectual Property Collateral . . . . . . . . . . . . 20
7. EVENTS OF DEFAULT: RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.3 Waivers by Credit Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.4 Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 No Oral Agreement; Complete Agreement; Modification of Agreement . . . . . . . . 24
9.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.3 No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.4 Severability; Section Titles . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.5 Authorized Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.8 Time of the Essence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.9 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.10 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . 27
9.11 USA Patriot Act Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.12 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.13 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.14 Maximum Legal Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(ii)
INDEX OF EXHIBITS AND SCHEDULES
Schedule A Definitions
Schedule B Lender's and Borrower's Addresses for Notices
Schedule C [Intentionally Omitted]
Schedule D Cash Management System
Schedule E Fees and Expenses
Schedule F Schedule of Documents
Schedule G Financial Covenants
Disclosure Schedule (3.2) Places of Business; Corporate Names
Disclosure Schedule (3.6) Real Estate
Disclosure Schedule (3.7) Stock; Affiliates
Disclosure Schedule (3.9) Taxes
Disclosure Schedule (3.11) ERISA
Disclosure Schedule (3.12) Litigation
Disclosure Schedule (3.13) Intellectual Property
Disclosure Schedule (3.15) Environmental Matters
Disclosure Schedule (3.16) Insurance
Disclosure Schedule (3.22) Broker's Fees
Disclosure Schedule (4.1) Designated Vendors
Disclosure Schedule (5(b)) Indebtedness
Disclosure Schedule (5(e)) Liens
Disclosure Schedule (6.1) Actions to Perfect Liens
Exhibit A Form of Notice of Revolving Credit Advance
and Accounts Receivable Rollforward Analysis
Exhibit B [Intentionally Omitted]
Exhibit C Form of Borrowing Base Certificate
Exhibit D Form of Accounts Payable Analysis
Exhibit E [Intentionally Omitted]
Exhibit F Form of Revolving Credit Note
Exhibit G [Intentionally Omitted]
Exhibit H Form of Secretarial Certificate
Exhibit I Form of Power of Attorney
Exhibit J Form of Certificate of Compliance
-i-
This LOAN AND SECURITY AGREEMENT is dated as of August 28, 2006, and agreed
to by and between CROCHET & BOREL SERVICES, INC., a Texas corporation
("Borrower"), and NEW STREAM COMMERCIAL FINANCE, LLC, a Delaware limited
--------
liability company ("Lender").
------
RECITALS
A. Borrower desires to obtain the Loans and other financial accommodations
from Lender and Lender is willing to provide the Loans and accommodations all in
accordance with the terms of this Agreement.
B. Capitalized terms used herein shall have the meanings assigned to them in
Schedule A and, for purposes of this Agreement and the other Loan Documents, the
----------
rules of construction set forth in Schedule A shall govern. All schedules,
----------
attachments, addenda and exhibits hereto, or expressly identified to this
Agreement, are incorporated herein by reference, and taken together with this
Agreement, constitute but a single agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Loans. (a) Subject to the terms and conditions of this Agreement, from
-----
the Closing Date and until the Commitment Termination Date (i) Lender agrees to
make available to Borrower advances (each, a "Revolving Credit Advance") in an
aggregate outstanding amount not to exceed the Borrowing Availability, and (ii)
Borrower may at its request from time to time borrow, repay and reborrow under
this Section 1.1. The Revolving Credit Loan shall be evidenced by, and be
repayable in accordance with the terms of, the Revolving Credit Note and this
Agreement.
(b) Borrower shall request each Revolving Credit Advance by written
notice to Lender substantially in the form of Exhibit A (each a "Notice of
Revolving Credit Advance") given no later than 11:00 a.m. New York City time on
the Business Day of the proposed advance. Lender shall be fully protected under
this Agreement in relying upon, and shall be entitled to rely upon, (i) any
Notice of Revolving Credit Advance believed by Lender to be genuine, and (ii)
the assumption that the Persons making electronic requests or executing and
delivering a Notice of Revolving Credit Advance were duly authorized, unless the
responsible individual acting thereon for Lender shall have actual knowledge to
the contrary. As an accommodation to Borrower, Lender may permit telephonic,
electronic, or facsimile requests for a Revolving Credit Advance and electronic
or facsimile transmittal of instructions, authorizations, agreements or reports
to Lender by Borrower. Unless Borrower specifically directs Lender in writing
not to accept or act upon telephonic, facsimile or electronic communications
from Borrower, Lender shall have no liability to Borrower for any loss or damage
suffered by Borrower as a result of Lender's honoring of any requests, execution
of any instructions, authorizations or agreements or reliance on any reports
communicated to it
telephonically, by facsimile or electronically and purporting to have been sent
to Lender by Borrower and Lender shall have no duty to verify the origin of any
such communication or the identity or authority of the Person sending it.
(c) In making any Loan hereunder Lender shall be entitled to rely upon
the most recent Borrowing Base Certificate delivered to Lender by Borrower and
other information available to Lender. Lender shall be under no obligation to
make any further Revolving Credit Advance or incur any other Obligation if
Borrower shall have failed to deliver a Borrowing Base Certificate to Lender by
the time specified in Section 4.1(b). At Lender's option, all principal,
interest, fees, costs, expenses and other charges provided for in this Agreement
or the other Loan Documents may be charged directly to the loan account(s) of
Borrower maintained by Lender.
1.2 Term and Prepayment. (a) Upon the Commitment Termination Date the
---------------------
obligation of Lender to make Revolving Credit Advances and extend other credit
hereunder shall immediately terminate and Borrower shall pay to Lender in full,
in cash: (i) all outstanding Revolving Credit Advances and all accrued but
unpaid interest thereon; and (ii) all other non-contingent Obligations due to or
incurred by Lender.
(b) If the Revolving Credit Loan shall at any time exceed the
Borrowing Availability, then Borrower shall immediately repay the Revolving
Credit Loan in the amount of such excess.
(c) Borrower shall have the right, at any time upon thirty (30) days'
prior written notice to Lender to (i) terminate voluntarily Borrower's right to
receive or benefit from, and Lender's obligation to make and to incur, Revolving
Credit Advances and (ii) prepay all of the Obligations. The effective date of
termination of the Revolving Credit Loan specified in such notice shall be the
Commitment Termination Date. If Borrower exercises its right of termination and
prepayment, or if Lender's obligation to make Loans is terminated for any reason
prior to the Stated Expiry Date (including as a result of the occurrence of a
Default), Borrower shall pay to Lender the applicable Prepayment Fee.
1.3 Use of Proceeds. Borrower shall use the proceeds of the Loans to
-----------------
refinance on the Closing Date certain outstanding Indebtedness as provided in
Section 2.1(c) and for working capital and other general corporate purposes.
1.4 Single Loan. The Loans and all of the other Obligations of
------------
Borrower to Lender shall constitute one general obligation of Borrower secured
by all of the Collateral.
1.5 Interest. (a) Borrower shall pay interest to Lender on the
--------
aggregate outstanding Revolving Credit Advances at a floating rate equal to the
LIBOR Rate plus three (3%) percent per annum (the "Revolving Credit Rate"). All
computations of interest shall be made by Lender on the basis of a three hundred
and sixty (360) day year, in each case for the actual number of days occurring
in the period for which such interest or fee is payable. Each determination by
Lender of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error. In no event will Lender charge interest at a
rate that exceeds the Maximum Legal Rate.
0
2
(b) Interest shall be payable on the outstanding Revolving Credit
Advances (i) in arrears for the preceding calendar month on the first day of
each calendar month, (ii) on the Commitment Termination Date, and (iii) if any
interest accrues or remains payable after the Commitment Termination Date, upon
demand by Lender.
(c) Effective upon the occurrence of any Event of Default and for so
long as any Event of Default shall be continuing, the Revolving Credit Rate
shall automatically be increased by three percentage points (3%) per annum (such
increased rate, the "Default Rate"; provided, however, in no event shall the
Default Rate exceed the Maximum Legal Rate), and all outstanding Obligations
shall continue to accrue interest from the date of such Event of Default at the
Default Rate applicable to such Obligations.
(d) If any interest or any other payment (including Unused Line Fees
and Collateral Monitoring Fees) to Lender under this Agreement becomes due and
payable on a day other than a Business Day, such payment date shall be extended
to the next succeeding Business Day and interest thereon shall be payable at the
then applicable rate during such extension.
1.6 Cash Management System. On or prior to the Closing Date and until the
------------------------
Termination Date, Borrower will establish and maintain the cash management
system described in Schedule D. All payments in respect of the Collateral shall
----------
be made to or deposited in the blocked or lockbox accounts described in Schedule
--------
D in accordance with the terms thereof.
-
1.7 Fees. Borrower agrees to pay to Lender the Fees set forth in
----
Schedule E.
-----------
1.8 Receipt of Payments. Borrower shall make each payment under this
---------------------
Agreement (not otherwise made pursuant to Section 1.9) without set-off,
counterclaim or deduction and free and clear of all Taxes not later than 12:00
noon New York city time on the day when due in lawful money of the United States
of America in immediately available funds to the Collection Account. If Borrower
shall be required by law to deduct any Taxes from any payment to Lender under
any Loan Document, then the amount payable to Lender shall be increased so that,
after making all required deductions, Lender receives an amount equal to that
which it would have received had no such deductions been made. For purposes of
computing interest and Fees, all payments shall be deemed received by Lender on
the first (1st) Business Day following receipt of immediately available funds in
the Collection Account. For purposes of determining the Borrowing Availability,
payments shall be deemed received by Lender upon receipt of immediately
available funds in the Collection Account.
1.9 Application and Allocation of Payments. Borrower irrevocably
------------------------------------------
agrees that Lender shall have the continuing and exclusive right to apply any
and all payments against the then due and payable Obligations in such order as
Lender may deem advisable. Lender is authorized to, and at its option may
(without prior notice or precondition and at any time or times), but shall not
be obligated to, make or cause to be made Revolving Credit Advances on behalf of
Borrower for: (a) payment of all Fees, expenses, indemnities, charges, costs,
principal, interest, or other Obligations owing by Borrower under this Agreement
or any of the other Loan Documents, (b) the payment, performance or satisfaction
of any of Borrower's obligations with respect to preservation of the Collateral,
or (c) any premium in whole or in part required in respect of any of the
policies of insurance required by this Agreement, even if the making of any such
Revolving Credit Advance causes the outstanding
3
balance of the Revolving Credit Loan to exceed the Borrowing Availability, and
Borrower agrees to repay immediately, in cash, any amount by which the Revolving
Credit Loan exceeds the Borrowing Availability.
1.10 Accounting. Lender is authorized to record on its books and records
----------
the date and amount of each Loan and each payment of principal thereof and such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded absent manifest error. Lender shall provide Borrower on
a monthly basis a statement and accounting of such recordations but any failure
on the part of the Lender to keep any such recordation (or any errors therein)
or to send a statement thereof to Borrower shall not in any manner affect the
obligation of Borrower to repay any of the Obligations. Except to the extent
that Borrower shall, within thirty (30) days after such statement and accounting
is sent, notify Lender in writing of any objection Borrower may have thereto
(stating with particularity the basis for such objection), such statement and
accounting shall be deemed final, binding and conclusive upon Borrower, absent
manifest error.
1.11 Indemnity. Borrower agrees to indemnify and hold Lender and its
---------
Affiliates, and their respective employees, attorneys and agents (each, an
"Indemnified Person"), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses of any kind or
nature whatsoever (including attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) that may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents or with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement and the other Loan Documents or
any other documents or transactions contemplated by or referred to herein or
therein and any actions or failures to act with respect to any of the foregoing,
including any and all product liabilities, Environmental Liabilities, Taxes,
brokers' fees and legal costs and expenses arising out of or incurred in
connection with disputes between or among any parties to any of the Loan
Documents (collectively, "Indemnified Liabilities"), except to the extent that
any such Indemnified Liability is finally determined by a court of competent
jurisdiction to have resulted solely from such Indemnified Person's gross
negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO BORROWER, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY
OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR ANY ACT OR
FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR FOR INDIRECT, PUNITIVE, EXEMPLARY
OR CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.
1.12 Borrowing Base; Reserves. The Borrowing Base shall be determined
--------------------------
by Lender (including the eligibility of Accounts) based on the most recent
Borrowing Base Certificate delivered to Lender in accordance with Section 4.1(b)
and such other information available to Lender. The Revolving Credit Loan shall
be subject to Lender's continuing right to withhold from Borrowing Availability
reserves, and to increase and decrease such reserves from time to time, if and
to the extent that in Lender's good faith credit judgment such reserves are
necessary, including to protect Lender's interest in the Collateral or to
protect Lender against possible non-payment of Accounts for any
4
reason by Account Debtors or possible diminution of the value of any Collateral
or possible non-payment of any of the Obligations or for any Taxes or any
amounts due any contractor, subcontractor or any other Person by Borrower or in
respect of any state of facts that could constitute a Default. Lender may, at
its option, implement reserves by designating as ineligible a sufficient amount
of Accounts that would otherwise be Eligible Accounts so as to reduce the
Borrowing Base by the amount of the intended reserves.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. Lender shall not be obligated
-----------------------------------
to make any of the Loans perform any other action hereunder, until the following
conditions have been satisfied in a manner satisfactory to Lender in its sole
discretion, or waived in writing by Lender:
(a) the Loan Documents to be delivered on or before the Closing Date
shall have been duly executed and delivered by the appropriate parties, all as
set forth in the Schedule of Documents (Schedule F);
-----------
(b) all Liens upon any of the property of Borrower securing certain
obligations of Borrower to Texas State Bank under its financing documentation
shall have been terminated by Texas State Bank;
(c) Lender shall have received evidence satisfactory to it that the
insurance policies provided for in Section 3.16 are in full force and effect,
together with appropriate evidence showing loss payable or additional insured
clauses or endorsements in favor of Lender as required under such Section;
(d) as of the Closing Date, Net Borrowing Availability shall be not
less than $3,500,000 after giving effect to the initial Revolving Credit Advance
(on a pro forma basis, with trade payables being paid currently, and expenses
and liabilities being paid in the ordinary course of business and without
acceleration of sales); and
(e) Lender shall have received an opinion(s) of counsel to the Borrower
with respect to the Loan Documents in form and substance satisfactory to Lender.
2.2 Further Conditions to the Loans. Lender shall not be obligated to
-----------------------------------
fund any Loan (including the initial Loans), if, as of the date thereof:
(a) any representation or warranty by Borrower contained herein or in
any of the other Loan Documents shall be untrue or incorrect as of such date,
except to the extent that any such representation or warranty is expressly
stated to relate to a specific earlier date, in which case, such representation
and warranty shall be true and correct as of such earlier date; or
(b) any event or circumstance that has had or reasonably could be
expected to have a Material Adverse Effect shall have occurred since the Closing
Date; or
(c) any Default shall have occurred and be continuing or would result
after giving effect to such Loan; or
5
(d) after giving effect to such Loan, the Revolving Credit Loan would
exceed the Borrowing Availability.
The request and acceptance by Borrower of the proceeds of any Loan shall be
deemed to constitute, as of the date of such request and the date of such
acceptance, (i) a representation and warranty by Borrower that the conditions in
this Section 2.2 have been satisfied and (ii) a restatement by Borrower of each
of the representations and warranties made by it in any Loan Document and a
reaffirmation by Borrower of the granting and continuance of Lender's Liens
pursuant to the Loan Documents.
3. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
To induce Lender to enter into this Agreement and to make the Loans, Borrower
represents and warrants to Lender (each of which representations and warranties
shall survive the execution and delivery of this Agreement), and promise to and
agree with Lender until the Termination Date as follows:
3.1 Corporate Existence; Compliance with Law. Borrower: (a) is, as
--------------------------------------------
of the Closing Date, and will continue to be (i) a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas, (ii)
duly qualified to do business and in good standing in each other jurisdiction
where its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect, and (iii) in
compliance with all Requirements of Law and Contractual Obligations, except to
the extent failure to comply therewith could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; and (b) has
and will continue to have (i) the requisite corporate power and authority and
the legal right to execute, deliver and perform its obligations under the Loan
Documents, and to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease, and to conduct its
business as now, heretofore or proposed to be conducted, and (ii) all licenses,
permits, franchises, rights, powers, consents or approvals from or by all
Persons or Governmental Authorities having jurisdiction over Borrower that are
necessary or appropriate for the conduct of its business, except where the
failure to maintain such licenses, permits, franchises, rights, powers, consents
or approvals could not reasonably be expected to have a Material Adverse Effect.
3.2 Executive Offices; Corporate or Other Names. (a) Borrower's name
-------------------------------------------------
as it appears in official filings in the state of its incorporation, (b) the
type of entity of Borrower, (c) the organizational identification number issued
by Borrower's state of incorporation or a statement that no such number has been
issued, (d) Borrower's state of incorporation, and (e) the location of
Borrower's chief executive office, corporate offices, warehouses, other
locations of Collateral and locations where records with respect to Collateral
are kept (including in each case the county of such locations) are as set forth
in Disclosure Schedule (3.2). As of the Closing Date, during the prior five
---------------------------
years, except as set forth in Disclosure Schedule (3.2), Borrower has been known
-------------------------
as or conducted business in any other name (including trade names). Borrower has
only one state of incorporation or organization.
3.3 Corporate Power; Authorization; Enforceable Obligations. The
-----------------------------------------------------------
execution, delivery and performance by Borrower of the Loan Documents to which
it is a party, and the creation of all Liens
6
provided for herein and therein: (a) are and will continue to be within
Borrower's power and authority; (b) have been and will continue to be duly
authorized by all necessary or proper action; (c) are not and will not be in
violation of any Requirement of Law or Contractual Obligation of Borrower (d) do
not and will not result in the creation or imposition of any Lien (other than
Permitted Encumbrances) upon any of the Collateral; and (e) do not and will not
require the consent or approval of any Governmental Authority or any other
Person. As of the Closing Date, each Loan Document shall have been duly executed
and delivered on behalf of Borrower, and each such Loan Document upon such
execution and delivery shall be and will continue to be a legal, valid and
binding obligation of Borrower, enforceable against it in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency and
other similar laws affecting creditors' rights generally.
3.4 Financial Statements and Projections; Books and Records. (a) The
-------------------------------------------------------------
Financial Statements delivered by Borrower to Lender for its most recently ended
Fiscal Year and Fiscal Month, are true, correct and complete in all material
respects and reflect fairly and accurately the financial condition of Borrower
as of the date of each such Financial Statement in accordance with GAAP. The
Projections most recently delivered by Borrower to Lender have been prepared in
good faith, with care and diligence and use assumptions that are reasonable
under the circumstances at the time such Projections were prepared and as of the
date delivered to Lender and all such assumptions are disclosed in the
Projections.
(b) Borrower shall keep adequate Books and Records with respect
to the Collateral and its business activities in which proper entries,
reflecting all consolidated and consolidating financial transactions, and
payments and credits received on, and all other dealings with, the Collateral,
will be made in accordance with GAAP and all Requirements of Law and on a basis
consistent with the Financial Statements. Borrower shall backup Borrower's
general ledger on a daily basis, store such backup in a secure place, notify
Lender of the location of the backup, and provide Lender with access to same.
Borrower shall notify Lender immediately if Borrower fails to backup Borrower's
general ledger on any given day.
3.5 Material Adverse Change. Between the date of Borrower's most recently
-------------------------
audited Financial Statements delivered to Lender and the Closing Date and except
as otherwise disclosed in writing to the Lender by Borrower: (a) Borrower has
not incurred any obligations, contingent or non-contingent liabilities, or
liabilities for Charges, long-term leases or unusual forward or long-term
commitments that are not reflected in the Projections delivered on the Closing
Date and which could, alone or in the aggregate, reasonably be expected to have
a Material Adverse Effect; (b) there has been no material deviation from such
Projections; and (c) no events have occurred that alone or in the aggregate has
had or could reasonably be expected to have a Material Adverse Effect. No
Requirement of Law or Contractual Obligation of Borrower has or have had or
could reasonably be expected to have a Material Adverse Effect. Borrower is not
in default, and to Borrower's knowledge no third party is in default, under or
with respect to any of its Contractual Obligations, that alone or in the
aggregate has had or could reasonably be expected to have a Material Adverse
Effect.
3.6 Real Estate; Property. The real estate listed in Disclosure
----------------------- ----------
Schedule (3.6) constitutes all of the real property owned, leased, or used by
---------------
Borrower in its business, and Borrower will not execute any
7
material agreement or contract in respect of such real estate after the date of
this Agreement without giving Lender prompt prior written notice thereof.
Borrower holds and will continue to hold good and marketable fee simple title to
all of its owned real estate, and good and marketable title to all of its other
properties and assets, and valid and insurable leasehold interests in all of its
leases (both as lessor and lessee, sublessee or assignee), and none of the
properties and assets of Borrower are or will be subject to any Liens, except
Permitted Encumbrances. With respect to the premises located at 000 Xxxx Xxxx
Xxxxxxx, Xxxx Xxxxxx, Xxxxx 00000, Borrower will obtain a landlord waiver within
30 days after the Closing Date.
3.7 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
------------------------------------------------------------------
Indebtedness. Except as set forth in Disclosure Schedule (3.7), as of the
------------ -------------------------
Closing Date Borrower has no Subsidiaries, and is not engaged in any joint
venture or partnership with any other Person. All of the issued and outstanding
Stock of Borrower (including all rights to purchase, options, warrants or
similar rights or agreements pursuant to which Borrower may be required to
issue, sell, repurchase or redeem any of its Stock) as of the Closing Date is
owned by each of the Stockholders (and in the amounts) set forth in Disclosure
----------
Schedule(3.7).All outstanding Indebtedness of Borrower as of the Closing Date is
-------------
described in Disclosure Schedule (5(b)).
----------------------------
3.8 Government Regulation; Margin Regulations. Borrower is not subject
--------------------------------------------
to or regulated under any Federal or state statute, rule or regulation that
restricts or limits such Person's ability to incur Indebtedness, pledge its
assets, or to perform its obligations under the Loan Documents. The making of
the Loans, the application of the proceeds and repayment thereof, and the
consummation of the transactions contemplated by the Loan Documents do not and
will not violate any Requirement of Law by Borrower. Borrower is not engaged,
nor will it engage, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin security" as such terms are defined in
Regulation U of the Federal Reserve Board as now and hereafter in effect (such
securities being referred to herein as "Margin Stock"). Borrower does not own
any Margin Stock, and none of the proceeds of the Loans or other extensions of
credit under this Agreement will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock or reducing or retiring any
Indebtedness that was originally incurred to purchase or carry any Margin Stock.
Borrower will not take or permit to be taken any action that might cause any
Loan Document to violate any regulation of the Federal Reserve Board.
3.9 Taxes; Charges. Except as disclosed in Disclosure Schedule (3.9) all
--------------- -------------------------
tax returns, reports and statements required by any Governmental Authority to be
filed by Borrower have, as of the Closing Date, been filed and will, until the
Termination Date, be filed with the appropriate Governmental Authority, except
where the failure to file such tax returns, reports and statements could not
reasonably be expected to have a Material Adverse Effect, and no tax Lien has
been filed against Borrower or its property. Proper and accurate amounts have
been and will be withheld by Borrower from its employees for all periods in
compliance with all Requirements of Law and such withholdings have and will be
timely paid to the appropriate Governmental Authorities, except where the
failure to comply with such Requirements of Law could not reasonably be expected
to have a Material Adverse Effect. Disclosure Schedule (3.9) sets forth as of
-------------------------
the Closing Date those taxable years for which Borrower's tax returns are
currently being audited by the IRS or any other applicable Governmental
Authority and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as described on Disclosure
----------
Schedule
--------
8
(3.9), Borrower or its predecessors are not liable for any Charges: (a) under
-----
any agreement (including any tax sharing agreements or agreement extending the
period of assessment of any Charges) or (b) to Borrower's knowledge, as a
transferee. As of the Closing Date, except as described on Disclosure Schedule
-------------------
(3.9), Borrower has not agreed or been requested to make any adjustment under
-----
IRC Section 481(a), by reason of a change in accounting method or otherwise,
which could reasonably be expected to have a Material Adverse Effect.
3.10 Payment of Obligations. Borrower will pay, discharge or otherwise
------------------------
satisfy at or before maturity or before they become delinquent, as the case may
be, all of its Charges and other obligations of whatever nature, except where
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of Borrower and none of the Collateral
is or could reasonably be expected to become subject to any Lien or forfeiture
or loss as a result of such contest.
3.11 ERISA. No ERISA Event has occurred or is reasonably expected to
-----
occur that, when taken together with all other existing ERISA Events, could
reasonably be expected to result in a liability of Borrower of more than the
Minimum Actionable Amount. Except as disclosed in Disclosure Schedule (3.11),
--------------------------
the present value of all accumulated benefit obligations of Borrower under each
Plan (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
Financial Statements reflecting such amounts, exceed the fair market value of
the assets of such Plan by more than the Minimum Actionable Amount, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Account
Standards No. 87) did not, as of the date of the most recent Financial
Statements reflecting such amounts, exceed the fair market value of the assets
of such underfunded Plans by more than the Minimum Actionable Amount. Neither
Borrower nor any ERISA Affiliate has incurred or reasonably expects to incur any
Withdrawal Liability in excess of the Minimum Actionable Amount.
3.12 Litigation. No Litigation is pending or, to the knowledge of
----------
Borrower, threatened by or against Borrower or against Borrower's properties or
revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) that could reasonably be
expected to have a Material Adverse Effect. Except as set forth in Disclosure
----------
Schedule (3.12), as of the Closing Date there is no Litigation pending or to the
---------------
knowledge of Borrower threatened against Borrower that seeks damages in excess
of $250,000 or injunctive relief or alleges criminal misconduct of Borrower.
Borrower shall notify Lender promptly in writing upon learning of the existence,
threat or commencement of any Litigation against Borrower, any ERISA Affiliate
or any Plan or any allegation of Criminal misconduct against Borrower.
3.13 Intellectual Property. As of the Closing Date, all material
----------------------
registered Intellectual Property owned or used by Borrower is listed, together
with application or registration numbers, where applicable, in Disclosure
----------
Schedule (3.13). Borrower owns, or is licensed to use, all Intellectual Property
---------------
necessary to conduct its business as currently conducted except for such
Intellectual Property the failure of which to own or license could not
reasonably be expected to have a Material Adverse Effect. Borrower will maintain
the patenting and registration of all Intellectual Property necessary to conduct
its business as currently conducted (except for such Intellectual Property the
failure of which to own or license could not reasonably be expected to have a
Material Adverse
9
Effect) with the United States Patent and Trademark Office, the United States
Copyright Office, or other appropriate Governmental Authority and Borrower will
promptly patent or register, as the case may be, all new Intellectual Property
and notify Lender in writing five (5) Business Days prior to filing any such new
patent or registration.
3.14 Full Disclosure. No information contained in any Loan Document,
----------------
the Financial Statements or any written statement furnished by or on behalf of
Borrower under any Loan Document, or to induce Lender to execute the Loan
Documents, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
3.15 Hazardous Materials. Except as set forth in Disclosure Schedule
-------------------- --------------------
(3.15), as of the Closing Date, (a) each real property location owned, leased or
------
occupied by Borrower (the "Real Property") is maintained free of contamination
from any Hazardous Material, (b) Borrower is not subject to any Environmental
Liabilities or, to Borrower's knowledge, potential Environmental Liabilities, in
excess of $250,000 in the aggregate, (c) no notice has been received by Borrower
identifying it as a "potentially responsible party" or requesting information
under CERCLA or analogous state statutes, and to the knowledge of Borrower,
there are no facts, circumstances or conditions that may result in Borrower
being identified as a "potentially responsible party" under CERCLA or analogous
state statutes; and (d) Borrower has provided to Lender copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental Liabilities, in each case relating to
Borrower. Borrower: (i) shall comply in all material respects with all
applicable Environmental Laws and environmental permits; (ii) shall notify
Lender in writing within seven (7) days if and when it becomes aware of any
Release, on, at, in, under, above, to, from or about any of its Real Property;
and (iii) shall promptly forward to Lender a copy of any order, notice, permit,
application, or any communication or report received by it in connection with
any such Release.
3.16 Insurance. As of the Closing Date, Disclosure Schedule (3.16) lists
--------- --------------------------
all insurance of any nature maintained for current occurrences by Borrower, as
well as a summary of the terms of such insurance. Borrower shall deliver to
Lender certified copies and endorsements to all of its and those of its
Subsidiaries (if any) (a) "All Risk" insurance policies naming Lender loss
payee, and (b) general liability and other liability policies naming Lender as
an additional insured. All policies of insurance on real and personal property
will contain an endorsement, in form and substance acceptable to Lender, showing
loss payable to Lender (Form 438 BFU or equivalent). Such endorsement, or an
independent instrument furnished to Lender, will provide that the insurance
companies will give Lender at least thirty (30) days' prior written notice
before any such policy or policies of insurance shall be altered or canceled and
that no act or default of Borrower or any other Person shall affect the right of
Lender to recover under such policy or policies of insurance in case of loss or
damage. Borrower shall direct all present and future insurers under its "All
Risk" policies of insurance to pay all proceeds payable thereunder directly to
Lender. If any insurance proceeds are paid by check, draft or other instrument
payable to Borrower and Lender jointly, Lender may endorse Borrower's name
thereon and do such other things as Lender may deem advisable to reduce the same
to cash.
10
3.17 Deposit and Disbursement Accounts. Attachment I to Schedule D
------------------------------------ ----------
lists all banks and other financial institutions at which Borrower maintains
deposits and/or other accounts, including the Disbursement Account, and such
Attachment correctly identifies the name, address and telephone number of each
such depository, the name in which the account is held, a description of the
purpose of the account, and the complete account number.
3.18 Accounts. As of the date of each Borrowing Base Certificate
--------
delivered to Lender, each Account listed thereon as an Eligible Account shall be
an Eligible Account. Borrower has not made, and will not make, any agreement
with any Account Debtor for any extension of time for the payment of any
Account, any compromise or settlement for less than the full amount thereof, any
release of any Account Debtor from liability therefor, or any deduction
therefrom except a discount or allowance for prompt or early payment allowed by
Borrower in the ordinary course of its business consistent with historical
practice. With respect to the Accounts pledged as collateral pursuant to any
Loan Document (a) the amounts shown on all invoices, statements and reports that
may be delivered to the Lender with respect thereto are actually and absolutely
owing to Borrower as indicated thereon and are not in any way contingent; (b) no
payments have been or shall be made thereon except payments immediately
delivered to the applicable accounts described in paragraph 1 to Schedule D or
----------
the Lender as required hereunder; and (c) to Borrower's knowledge all Account
Debtors have the capacity to contract. Borrower shall notify Lender promptly of
any event or circumstance that to Borrower's knowledge would cause Lender to
consider any then existing Account as no longer constituting an Eligible
Account. With respect to any "get paid/when paid" contract, upon Lender's
request, Borrower shall use its commercially reasonable efforts to deliver to
Lender, in form and substance satisfactory to Lender, a written acknowledgment
from any contractor, subcontractor or other person to be paid in connection with
such contract, confirming that such contractor, subcontractor or other person is
to be paid when payment is received by the Borrower from the applicable Account
Debtor.
3.19 Conduct of Business. Borrower (a) shall conduct its business
---------------------
substantially as now conducted or as otherwise permitted hereunder, and (b)
shall at all times maintain, preserve and protect all of the Collateral and
Borrower's other property, used or useful in the conduct of its business and
keep the same in good repair, working order and condition and make, or cause to
be made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices.
3.20 Anti-Terrorism Laws.
---------------------
(a) Neither Borrower nor, to the knowledge of Borrower, any of
its Affiliates is in violation of any laws relating to terrorism or money
laundering ("Anti-Terrorism Laws"), including Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001 (the "Executive Order"), and
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56.
(b) Neither Borrower nor, to the knowledge of Borrower, any Affiliate
or other agent of Borrower acting or benefiting in any capacity in connection
with the Loans is any of the following: (i) a person that is listed in the annex
to, or is otherwise subject to the provisions of, the Executive Order; (ii) a
person owned or controlled by, or acting for or on behalf of, any person that is
listed in the annex to, or is otherwise subject to the provisions of, the
Executive Order; (iii) a person with
11
which the Lender is prohibited from dealing or otherwise engaging in any
transaction by any Anti-Terrorism Law; (iv) a person that commits, threatens or
conspires to commit or supports "terrorism" as defined in the Executive Order;
or (v) a person that is named as a "specially designated national and blocked
person" on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control ("OFAC") at its official website or any
replacement website or other replacement official publication of such list.
(c) Neither Borrower nor, to the knowledge of Borrower, any agent of
any Affiliate acting in any capacity in connection with the Loans (i) conducts
any business or engages in making or receiving any contribution of funds, goods
or services to or for the benefit of any person described in paragraph (b)
above, (ii) deals in, or otherwise engages in any transaction relating to, any
property or interests in property blocked pursuant to the Executive Order, or
(iii) engages in or conspires to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in any Anti-Terrorism Law.
3.21 Further Assurances. At any time and from time to time, upon the
-------------------
written request of Lender and at the sole expense of Borrower, Borrower shall
promptly and duly execute and deliver any and all such further instruments and
documents and take such further action as Lender may reasonably deem necessary
(a) to obtain the full benefits of this Agreement and the other Loan Documents,
(b) to protect, preserve and maintain Lender's rights in any Collateral, or (c)
to enable Lender to exercise all or any of the rights and powers herein granted.
3.22 Brokers. Except as set forth on Disclosure Schedule (3.22), no broker
------- --------------------------
or finder acting on behalf of Borrower or Affiliate thereof brought about the
obtaining, making or closing of the Loans or Acquisition and the consummation of
the transactions contemplated by the Acquisition Agreements, and neither
Borrower nor any Affiliate of Borrower has any obligation to any Person in
respect of any finder's or brokerage fees in connection therewith.
3.23 Solvency.
---------
(a) Both before and after giving effect to (a) the Loans to be
made or incurred on the Closing Date or such other date as Loans requested
hereunder are made or incurred, (b) the disbursement of the proceeds of such
Loans pursuant to the instructions of Borrower, (c) the Acquisition and the
consummation of the transactions contemplated by the Acquisition Agreements and
(d) the payment and accrual of all transaction costs in connection with the
foregoing, Borrower is and will be Solvent. With respect thereto, Lender shall
have received an executed Officer's Certificate, in form and substance
satisfactory to Lender, certifying the Borrower is Solvent as of the Closing
Date and after giving effect to the initial transactions contemplated hereunder.
(b) Within thirty (30) days from the Closing Date, Lender shall have
received, in form and substance reasonably satisfactory to Lender, a solvency
opinion from Xxxxxxxx Xxxxx Xxxxxx & Xxxxx (or another Person acceptable to
Lender) upon which Lender is expressly permitted to rely (the "Solvency
Opinion"), stating that after giving effect to the transactions contemplated
hereby, including the Loans to be made or incurred on the Closing Date and the
consummation of the transactions contemplated by the Acquisition Agreements,
including the payment of the Seller Note, the Borrower is Solvent.
12
3.24 Acquisition Agreements.
------------------------
(a) As of the Closing Date, Borrower has delivered to Lender a
complete and correct copy of the Acquisition Agreements (including all
schedules, exhibits, amendments, supplements, modifications, assignments and all
other documents delivered pursuant thereto or in connection therewith). After
giving effect to the Revolving Credit Advances on the Closing Date and the
application of the proceeds thereof, Borrower is not in default in the
performance or compliance with any provisions thereof.
(b) The Acquisition Agreements comply with, and the Acquisition has
been consummated in accordance with, all applicable laws. The Acquisition
Agreements are in full force and effect as of the date hereof and has not been
terminated, rescinded or withdrawn. All requisite approvals by Governmental
Authorities having jurisdiction over Seller, Parent, Borrower and other Persons
referenced therein, with respect to the transactions contemplated by the
Acquisition Agreements, have been obtained, and no such approvals impose any
conditions to the consummation of the transactions contemplated by the
Acquisition Agreements or to the conduct by Borrower or Parent of its business
thereafter.
4. FINANCIAL MATTERS; REPORTS
4.1 Reports and Notices. From the Closing Date until the Termination
---------------------
Date, Borrower shall deliver to Lender:
(a) within fifteen (15) days following the end of each Fiscal Month,
an aged trial balance by Account Debtor (as requested by Lender) and as soon as
available but in no event later than fifteen (15) days following the end of each
Fiscal Month, a reconciliation of the aged trial balance (as the case may be) to
the Borrower's general ledger and from the general ledger to the Financial
Statements for such Fiscal Month accompanied by supporting detail and
documentation as Lender may request;
(b) as frequently as Lender may request and in any event no later than
fifteen (15) days following the end of each Fiscal Month, a Borrowing Base
Certificate in the form of Exhibit C as of the last day of the previous Fiscal
---------
Month detailing ineligible Accounts for adjustment to the Borrowing Base,
certified as true and correct by the Chief Financial Officer of Borrower or such
other officer as is acceptable to Lender;
(c) within fifteen (15) days following the end of each Fiscal Month, an
Accounts Payable Analysis in the Form of Exhibit D (together with an accounts
---------
payable aging), certified as true and correct by the Chief Financial Officer of
Borrower or such other officer as is acceptable to Lender;
(d) within thirty (30) days following the end of each Fiscal Month, the
Financial Statements for such Fiscal Month, which shall provide comparisons to
budget and actual results for the corresponding period during the prior Fiscal
Year, both on a monthly and year-to-date basis, and accompanied by a
certification in the form of Exhibit J by the Chief Executive Officer or Chief
---------
Financial Officer of Borrower that such Financial Statements are complete and
correct, that there was
13
no Default (or specifying those Defaults of which he or she was aware), and
showing in reasonable detail the calculations used in determining compliance
with the financial covenants hereunder;
(e) within ninety (90) days following the close of each Fiscal Year,
the Financial Statements for such Fiscal Year certified without qualification by
an independent certified accounting firm acceptable to Lender, which shall
provide comparisons to the prior Fiscal Year, and shall be accompanied by any
management letter that may be issued;
(f) not less than thirty (30) days prior to the close of each Fiscal
Year, the Projections, which will be prepared by Borrower in good faith, with
care and diligence, and using assumptions that are reasonable under the
circumstances at the time such Projections are delivered to Lender and disclosed
therein when delivered; and
(g) all the reports and other information as Lender may reasonably
request from time to time.
4.2 Financial Covenants. Borrower shall not breach any of the financial
--------------------
covenants set forth in Schedule G. For purposes of Section 7.1, a breach
-----------
of a financial covenant set forth in Schedule G shall be deemed to have occurred
----------
as of any date of determination by Lender or as of the last day of any specified
measurement period, regardless of when the Financial Statements reflecting such
breach are delivered to Lender.
4.3 Other Reports and Information. Borrower shall advise Lender
--------------------------------
promptly, in reasonable detail, of: (a) any Lien, other than Permitted
Encumbrances, attaching to or asserted against any of the Collateral or any
occurrence causing a material loss or decline in value of any Collateral and the
estimated (or actual, if available) amount of such loss or decline; (b) any
material change in the composition of the Collateral; and (c) the occurrence of
any Default or other event that has had or could reasonably be expected to have
a Material Adverse Effect. Borrower shall, upon request of Lender, furnish to
Lender such other reports and information in connection with the affairs,
business, financial condition, operations, prospects or management of Borrower
or the Collateral as Lender may request, all in reasonable detail.
5. NEGATIVE COVENANTS
Borrower covenants and agrees that, without Lender's prior written consent, from
the Closing Date until the Termination Date, Borrower shall not, directly or
indirectly, by operation of law or otherwise:
(a) form any Subsidiary or merge with, consolidate with, acquire
all or substantially all of the assets or Stock of, or otherwise combine with or
make any investment in or, except as provided in Section 5(c) below, loan or
advance to, any Person;
(b) cancel any debt owing to it or create, incur, assume or permit to
exist any Indebtedness, except: (i) the Obligations, (ii) Indebtedness existing
as of the Closing Date set forth in Disclosure Schedule(5(b)), (iii) deferred
-------------------------
taxes, (iv) by endorsement of Instruments or items of payment for deposit to the
general account of Borrower, (v) for Guaranteed Indebtedness incurred for the
benefit of Borrower if the primary obligation is permitted by this Agreement;
and (vi) additional
14
Indebtedness (including Purchase Money Indebtedness) incurred after the Closing
Date in an aggregate outstanding amount not exceeding $750,000;
(c) enter into any lending, borrowing or other commercial transaction
with any of its employees, directors or Affiliates (including upstreaming and
downstreaming of cash and intercompany advances and payments by Borrower that
are not otherwise permitted hereunder) other than loans or advances to employees
in the ordinary course of business in an aggregate outstanding amount not
exceeding $100,000;
(d) make any changes in any of its business objectives, purposes, or
operations that could reasonably be expected to adversely affect repayment of
the Obligations or could reasonably be expected to have a Material Adverse
Effect or engage in any business other than that presently engaged in or
proposed to be engaged in the Projections delivered to Lender on the Closing
Date or amend its charter or by-laws or other organizational documents;
(e) create or permit any Lien on any of its properties or assets,
except for Permitted Encumbrances;
(f) sell, transfer, issue, convey, assign or otherwise dispose of any
of its assets or properties, including its Accounts or any shares of its Stock
or engage in any sale-leaseback, synthetic lease or similar transaction
(provided, that the foregoing shall not prohibit the sale of Inventory or
obsolete or unnecessary Equipment in the ordinary course of its business);
(g) change (i) its name as it appears in official filings in the state
of its incorporation or organization, (ii) its chief executive office, corporate
offices, warehouses or other Collateral locations, or location of its records
concerning the Collateral, (iii) the type of legal entity that it is, (iv) its
organization identification number, if any, issued by its state of incorporation
or organization, or (v) its state of incorporation or organization, or acquire,
lease or use any real estate after the Closing Date without such Person, in each
instance, giving thirty (30) days prior written notice thereof to Lender and
taking all actions deemed necessary or appropriate by Lender to continuously
protect and perfect Lender's Liens upon the Collateral;
(h) establish any depository or other bank account of any kind with any
financial institution (other than the accounts set forth in Attachment 1 to
Schedule D) without Lender's prior written consent;
-----------
(i) make or permit any Restricted Payment except for (i) management,
consulting or other fees for management or similar services of Parent to
Borrower for legal, accounting, insurance (including premiums for such
insurance), marketing, payroll and similar types of services paid for by Parent
to or on behalf of Borrower, including the reimbursement of fees and expenses
incurred and paid by Parent in connection with the Acquisition, (ii) in the
event the Borrower files a consolidated income tax return with Parent, Borrower
may make distributions to Parent to permit Parent to pay federal and state
income taxes then due and owing, franchise taxes and other similar licensing
expenses incurred in the ordinary course of business provided, that the amount
of such distribution shall not be greater, nor the receipt by the Borrower of
tax benefits less, than they would have been had the Borrower not filed a
consolidated return with Parent; and (iii) loans, advances, dividends or
15
distributions by Borrower to Parent for the sole purpose of allowing Parent to
make payments to Seller in respect of the Seller Note (the "Parent Seller Note
Distribution"), provided that as to any such Restricted Payment, each of the
-------- ----
following conditions is satisfied: (A) as of the date of such Restricted Payment
and immediately after giving effect thereto, no Default or Event of Default
shall exist or have occurred and be continuing, (B) such Restricted Payment
shall be paid with funds legally available therefor, (C) such Restricted Payment
shall not violate any law or regulation or the terms of any indenture, agreement
or undertaking to which Borrower is a party or by which Borrower or its property
is bound, (D) as of the date of such Restricted Payment, Borrowing Availability
for each of the immediately preceding ten (10) consecutive days shall not have
been less than $2,000,000, and immediately after giving effect to such
Restricted Payment, Borrowing Availability shall not be less than $2,000,000,
and (E) with respect to the Parent Seller Note Distribution, (1) the aggregate
amount of all Parent Seller Note Distributions shall not exceed the principal
amount of the Seller Note outstanding on the date hereof, plus interest thereon
at the rate set forth in the Seller Note as of the date hereof, (2) each Parent
Seller Note Distribution shall be used by Parent only to make payments in
respect of the Seller Note, and (3) Parent and Seller shall provide Lender
evidence that each Parent Seller Note Distribution has been received by Seller
in respect of the Seller Note;
(j) (i) knowingly conduct any business or engage in making or receiving
any contribution of funds, goods or services to or for the benefit of any Person
described in Section 3.20 above, (ii) knowingly deal in, or otherwise engage in
any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order or any other Anti-Terrorism Law, (iii) knowingly
engage in or conspire to engage in any transaction that evades or avoids, or has
the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law (and Borrower shall deliver to
the Lender any certification or other evidence requested from time to time by
Lender in its reasonable discretion, confirming Borrower's compliance with this
Section), or (iv) cause or permit any of the funds of Borrower that are used to
repay the Loans to be derived from any unlawful activity with the result that
the making of the Loans would be in violation of law; or
(k) knowingly cause or permit (i) any of the funds or properties of
Borrower that are used to repay the Loans to constitute property of, or be
beneficially owned directly or indirectly by, any Person subject to sanctions or
trade restrictions under United States law ("Embargoed Person" or "Embargoed
Persons") that is identified on (A) the "List of Specially Designated Nationals
and Blocked Persons" (the "SDN List") maintained by OFAC and/or on any other
similar list ("Other List") maintained by OFAC pursuant to any authorizing
statute including, but not limited to, the International Emergency Economic
Powers Act, 50 U.S.C. Sect. 1701 et seq., The Trading with the Enemy Act, 50
U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated
thereunder, with the result that the investment in the Borrower (whether
directly or indirectly) is prohibited by law, or the Loans made by the Lender
would be in violation of law, or (B) the Executive Order, any related enabling
legislation or any other similar Executive Orders, or (ii) any Embargoed Person
to have any direct or indirect interest, of any nature whatsoever in the
Borrower, with the result that the investment in the Borrower (whether directly
or indirectly) is prohibited by law or the Loans are in violation of law.
16
6. SECURITY INTEREST
6.1 Grant of Security Interest. (a) As collateral security for the
------------------------------
prompt and complete payment and performance of the Obligations, Borrower hereby
grants to the Lender a security interest in and Lien upon the following property
and assets (whether now owned or hereafter acquired, or in which it now has or
at any time in the future may acquire any right, title, or interest in): all
Accounts; all Deposit Accounts, all other bank accounts and all funds on deposit
therein; all money, cash and cash equivalents; all Investment Property; all
stock; all Inventory, Chattel Paper, Documents and Instruments; all Books and
Records; all General Intangibles (including all Intellectual Property, contract
rights, choses in action, Payment Intangibles and Software); all
Letter-of-Credit Rights; all Supporting Obligations; and to the extent not
otherwise included, all Proceeds, tort claims, insurance claims and other rights
to payment not otherwise included in the foregoing and products of all and any
of the foregoing and all accessions to, substitutions and replacements for, and
rents and profits of, each of the foregoing, but excluding in all events
Hazardous Waste (all of the foregoing, together with any other collateral
pledged to the Lender pursuant to any other Loan Document, collectively, the
"Collateral").
(b) Borrower and Lender agree that this Agreement creates, and is
intended to create, valid and continuing Liens upon the Collateral in favor of
Lender. Borrower executing this Agreement represents, warrants and promises to
Lender that: (i) Borrower has rights in and the power to transfer each item of
the Collateral upon which it purports to xxxxx x Xxxx pursuant to the Loan
Documents, free and clear of any and all Liens or claims of others, other than
Permitted Encumbrances; (ii) the security interests granted pursuant to this
Agreement, upon filing of Uniform Commercial Code financing statements in the
jurisdictions listed on Disclosure Schedule (6.1) will constitute valid
---------------------------
perfected security interests in all of the Collateral (to the extent such
Collateral may be perfected by filing of a financing statement) in favor of the
Lender as security for the prompt and complete payment and performance of the
Obligations, enforceable in accordance with the terms hereof against any and all
creditors of and purchasers from Borrower (other than purchasers of
Inventory in the ordinary course of business) and such security interests are
prior to all other Liens on the Collateral in existence on the date hereof
except for Permitted Encumbrances that have priority by operation of law; and
(iii) no effective security agreement, mortgage, deed of trust, financing
statement, equivalent security or Lien instrument or continuation statement
covering all or any part of the Collateral is or will be on file or of record in
any public office, except those relating to Permitted Encumbrances. Borrower
promises to defend the right, title and interest of Lender in and to the
Collateral against the claims and demands of all Persons whomsoever, and each
shall take such actions, including (A) all actions necessary to grant Lender
"control" of any Investment Property, Deposit Accounts, Letter-of-Credit Rights
or electronic Chattel Paper owned by Borrower, with any agreements establishing
control to be in form and substance satisfactory to Lender, (B) the prompt
delivery of all original Instruments, Chattel Paper, negotiable Documents and
certificated Stock owned by Borrower (in each case, accompanied by stock powers,
allonges or other instruments of transfer executed in blank, (C) notification of
Lender's interest in Collateral at Lender's request, and (D) the institution of
litigation against third parties as shall be prudent in order to protect and
preserve Borrower's and Lender's respective and several interests in the
Collateral. Borrower shall xxxx its Books and Records pertaining to the
Collateral to evidence the Loan Documents and the Liens granted under the Loan
Documents. If Borrower retains possession of any Chattel Paper or Instrument
with Lender's consent, such Chattel Paper and Instruments shall be marked with
the
17
following legend: "This writing and the obligations evidenced or secured hereby
are subject to the security interest of New Stream Commercial Finance, LLC."
Borrower shall promptly, and in any event within two (2) Business Days after the
same is acquired by it, notify Lender of any commercial tort claims (as defined
in the Code) acquired by it and unless otherwise consented by Lender, Borrower
shall enter into a supplement to this Loan Agreement granting to Lender a Lien
in such commercial tort claim.
6.2 Lender's Rights. (a) Lender may, (i) at any time in Lender's
----------------
own name or in the name of Borrower, communicate with Account Debtors, parties
to Contracts, and obligors in respect of Instruments, Chattel Paper or other
Collateral to verify to Lender's satisfaction, the existence, amount and terms
of, and any other matter relating to, Accounts, Payment Intangibles,
Instruments, Chattel Paper or other Collateral, and (ii) at any time after a
Default has occurred and is continuing and without prior notice to Borrower or
any other Credit Party, notify Account Debtors and other Persons obligated on
any Collateral that Lender has a security interest therein and that payments
shall be made directly to Lender. Upon the request of Lender, Borrower shall so
notify such Account Debtors, parties to Contracts, and obligors in respect of
Instruments, Chattel Paper or other Collateral. Borrower hereby constitutes
Lender or Lender's designee as Borrower's attorney with power to endorse
Borrower's name upon any notes, acceptance drafts, money orders or other
evidences of payment or Collateral.
(b) Borrower shall remain liable under each Contract, Instrument and
License to observe and perform all the conditions and obligations to be observed
and performed by it thereunder, and Lender shall have no obligation or liability
whatsoever to any Person under any Contract, Instrument or License (between
Borrower and any Person other than Lender) by reason of or arising out of the
execution, delivery or performance of this Agreement, and Lender shall not be
required or obligated in any manner (i) to perform or fulfill any of the
obligations of Borrower, (ii) to make any payment or inquiry, or (iii) to take
any action of any kind to collect, compromise or enforce any performance or the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times under or pursuant to any Contract, Instrument or
License.
(c) Borrower shall, with respect to each owned, leased, or controlled
property, during normal business hours and upon reasonable advance notice
(unless a Default shall have occurred and be continuing, in which event no
notice shall be required and Lender shall have access at any and all times): (i)
provide access to such property to Lender and any of its officers, employees and
agents, as frequently as Lender determines to be appropriate; (ii) permit Lender
and any of its officers, employees and agents to inspect, audit and make
extracts and copies (or take originals if reasonably necessary) from all of
Borrower's Books and Records; and (iii) permit Lender to inspect, review,
evaluate and make physical verifications and appraisals of the Inventory and
other Collateral in any manner and through any medium that Lender considers
advisable, and Borrower agrees to render to Lender, at Borrower's cost and
expense, such clerical and other assistance as may be reasonably requested with
regard thereto.
(d) After the occurrence and during the continuance of a Event of
Default, Borrower, at its own expense, shall cause the certified public
accountant then engaged by Borrower to prepare and deliver to Lender at any time
and from time to time, promptly upon Lender's request, the following reports:
(i) a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv)
18
test verifications of such Accounts as Lender may request. Borrower, at its own
expense, shall cause its certified independent public accountants to deliver to
Lender the results of any physical verifications of all or any portion of the
Inventory made or observed by such accountants when and if such verification is
conducted. Lender shall be permitted to observe and consult with Borrower's
accountants in the performance of these tasks.
6.3 Lender's Appointment as Attorney-in-fact. On the Closing Date,
-------------------------------------------
Borrower shall execute and deliver a Power of Attorney in the form attached as
Exhibit I. The power of attorney granted pursuant to the Power of Attorney and
----------
all powers granted under any Loan Document are powers coupled with an interest
and shall be irrevocable until the Termination Date. The powers conferred on
Lender under the Power of Attorney are solely to protect Lender's interests in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Lender agrees not to exercise any power or authority granted under the
Power of Attorney unless an Event of Default has occurred and is continuing.
Borrower also hereby (i) authorizes Lender to file any financing statements,
continuation statements or amendments thereto that (A) indicate the Collateral
(1) as all assets of the Borrower (or any portion of Borrower's assets) or words
of similar effect, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the Code of such jurisdiction,
or (2) as being of an equal or lesser scope or with greater detail, and (B)
contain any other information required by Part 5 of Article 9 of the Code for
the sufficiency or filing office acceptance of any financing statement,
continuation statement or amendment and (ii) ratifies its authorization for
Lender to have filed any initial financial statements, or amendments thereto if
filed prior to the date hereof. Borrower acknowledges that it is not authorized
to file any financing statement or amendment or termination statement with
respect to any financing statement without the prior written consent of Lender
and agrees that it will not do so without the prior written consent of Lender,
subject to Borrower's rights under Section 9-509(d)(2) of the Code.
6.4 Grant of License to Use Intellectual Property Collateral.
---------------------------------------------------------------
Borrower hereby grants to Lender an irrevocable, non-exclusive license
(exercisable upon the occurrence and during the continuance of an Event of
Default without payment of royalty or other compensation to Borrower) to use,
transfer, license or sublicense any Intellectual Property now owned, licensed
to, or hereafter acquired by Borrower, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof, and represents, promises and agrees that any
such license or sublicense is not and will not be in conflict with the
contractual or commercial rights of any third Person; provided, that such
license will terminate on the Termination Date.
7. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
7.1 Events of Default. The occurrence of any one or more of the following
-------------------
events (regardless of the reason therefor) shall constitute an "Event of
Default" hereunder which shall be deemed to be continuing until waived in
writing by Lender in accordance with Section 9.3:
(a) Borrower shall fail to make any payment in respect of any
Obligations when due and payable or declared due and payable (and such failure
shall continue for a period of five (5) Business Days with respect to interest
and fees); or
0
19
(b) Borrower shall fail or neglect to perform, keep or observe any of
the covenants, promises, agreements, requirements, conditions or other terms or
provisions contained in this Agreement or any of the other Loan Documents; or
(c) an event of default shall occur under any Contractual Obligation
of the Borrower (other than this Agreement and the other Loan Documents), and
such event of default (i) involves the failure to make any payment (whether or
not such payment is blocked pursuant to the terms of an intercreditor agreement
or otherwise), whether of principal, interest or otherwise, and whether due by
scheduled maturity, required prepayment, acceleration, demand or otherwise, in
respect of any Indebtedness (other than the Obligations) of such Person in an
aggregate amount exceeding the Minimum Actionable Amount, or (ii) causes (or
permits any holder of such Indebtedness or a trustee to cause) such
Indebtedness, or a portion thereof, in an aggregate amount exceeding the Minimum
Actionable Amount to become due prior to its stated maturity or prior to its
regularly scheduled date of payment; or
d) any representation or warranty in this Agreement or any other Loan
Document, or in any written statement pursuant hereto or thereto, or in any
report, financial statement or certificate made or delivered to Lender by
Borrower shall be untrue or incorrect in any material respect as of the date
when made or deemed made; or
(e) there shall be commenced against the Borrower any Litigation
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets that results in the
entry of an order for any such relief that remains unstayed or undismissed for
thirty (30) consecutive days; or Borrower shall have concealed, removed or
permitted to be concealed or removed, any part of its property with intent to
hinder, delay or defraud any of its creditors or made or suffered a transfer of
any of its property or the incurring of an obligation that may be fraudulent
under any bankruptcy, fraudulent transfer or other similar law; or
(f) a case or proceeding shall have been commenced involuntarily
against Borrower in a court having competent jurisdiction seeking a decree or
order: (i) under the United States Bankruptcy Code or any other applicable
Federal, state or foreign bankruptcy or other similar law, and seeking either
(A) the appointment of a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for such Person or of any substantial part of
its properties, or (B) the reorganization or winding up or liquidation of the
affairs of any such Person, and such case or proceeding shall remain undismissed
or unstayed for sixty (60) consecutive days or such court shall enter a decree
or order granting the relief sought in such case or proceeding; or (ii)
invalidating or denying any Person's right, power, or competence to enter into
or perform any of its obligations under any Loan Document or invalidating or
denying the validity or enforceability of this Agreement or any other Loan
Document or any action taken hereunder or thereunder; or
(g) Borrower shall (i) commence any case, proceeding or other action
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, conservatorship or relief of
debtors, seeking to have an order for relief entered with respect to it or
seeking appointment of a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for it or any substantial part of its
properties, (ii) make a general assignment for the benefit of creditors, (iii)
consent to or take any action in furtherance of, or,
20
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in paragraphs (e) or (f) of this Section 7.1 or clauses (i) and (ii) of
this paragraph (g), or (iv) shall admit in writing its inability to, or shall be
generally unable to, pay its debts as such debts become due; or
(h) a final judgment or judgments for the payment of money in excess
of the Minimum Actionable Amount in the aggregate shall be rendered against
Borrower, unless the same shall be (i) fully covered by insurance, or (ii)
vacated, stayed, bonded, paid or discharged within a period of fifteen (15) days
from the date of such judgment; or
(i) any provision of any Loan Document shall for any reason cease to be
valid, binding and enforceable in accordance with its terms, or any Lien
granted, or intended by the Loan Documents to be granted, to Lender shall cease
to be a valid and perfected Lien having the first priority (or a lesser priority
if expressly permitted in the Loan Documents) in any of the Collateral (or
Borrower shall so assert any of the foregoing); or
(j) a Change of Control shall have occurred with respect to the
Borrower; or
(k) if Xxxx Crochet is not the President of Borrower and is not
engaged in the day to day business operations of the Borrower consistent with
his responsibilities as an officer of the Borrower as of the date hereof; or
(l) an ERISA Event shall have occurred that, in the opinion of the
Lender, when taken together with all other ERISA Events that have occurred and
are then continuing, could reasonably be expected to result in liability of
Borrower in an aggregate amount exceeding the Minimum Actionable Amount.
7.2 Remedies. (a) If any Default shall have occurred and be continuing,
--------
then Lender may terminate or suspend its obligation to make further Revolving
Credit Advances. In addition, if any Event of Default shall have occurred and be
continuing, Lender may, without notice, take any one or more of the following
actions: (i) declare all or any portion of the Obligations to be forthwith due
and payable, whereupon such Obligations shall become and be due and payable; or
(ii) exercise any rights and remedies provided to Lender under the Loan
Documents or at law or equity, including all remedies provided under the Code;
provided, that upon the occurrence of any Event of Default specified in Sections
7.1(e), (f) or (g), the Obligations shall become immediately due and payable
(and any obligation of Lender to make further Loans, if not previously
terminated, shall immediately be terminated) without declaration, notice or
demand by Lender.
(b) Without limiting the generality of the foregoing, Borrower
expressly agrees that upon the occurrence of any Event of Default, Lender may
collect, receive, assemble, process, appropriate and realize upon the
Collateral, or any part thereof, and may forthwith sell, lease, assign, give an
option or options to purchase or otherwise dispose of and deliver said
Collateral (or contract to do so), or any part thereof, in one or more parcels
at public or private sale or sales, at any exchange at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. Lender shall have the right upon any such public sale, to the
extent permitted by law, to purchase for the benefit of Lender the whole or any
part of said Collateral so sold, free of any right of equity of redemption,
which right Borrower hereby releases. Such sales may be adjourned, or
21
continued from time to time with or without notice. Lender shall have the right
to conduct such sales on Borrower's premises or elsewhere and shall have the
right to use Borrower's premises without rent or other charge for such sales or
other action with respect to the Collateral for such time as Lender deems
necessary or advisable.
(c) Upon the occurrence and during the continuance of an Event of
Default and at Lender's request, Borrower agrees, to assemble the Collateral and
make it available to Lender at places that Lender shall reasonably select,
whether at its premises or elsewhere. Until Lender is able to effect a sale,
lease, or other disposition of the Collateral, Lender shall have the right to
complete, assemble, use or operate the Collateral or any part thereof, to the
extent that Lender deems appropriate, for the purpose of preserving such
Collateral or its value or for any other purpose. Lender shall have no
obligation to Borrower to maintain or preserve the rights of Borrower as against
third parties with respect to any Collateral while such Collateral is in the
possession of Lender. Lender may, if it so elects, seek the appointment of a
receiver or keeper to take possession of any Collateral and to enforce any of
Lender's remedies with respect thereto without prior notice or hearing. To the
maximum extent permitted by applicable law, Borrower waives all claims, damages,
and demands against Lender, its Affiliates, agents, and the officers and
employees of any of them arising out of the repossession, retention or sale of
any Collateral except such as are determined in a final judgment by a court of
competent jurisdiction to have arisen solely out of the gross negligence or
willful misconduct of such Person. Borrower agrees that ten (10) days' prior
notice by Lender to Borrower of the time and place of any public sale or of the
time after which a private sale may take place is reasonable notification of
such matters. Borrower shall remain liable for any deficiency if the proceeds of
any sale or disposition of the Collateral are insufficient to pay all amounts to
which Lender is entitled.
(d) Lender's rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies that Lender may
have under any Loan Document or at law or in equity. Recourse to the Collateral
shall not be required. All provisions of this Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited, to the extent necessary, so that they do not render this
Agreement invalid or unenforceable, in whole or in part.
7.3 Waivers by Borrower. Except as otherwise provided for in this Agreement
--------------------
and to the fullest extent permitted by applicable law, Borrower waives: (a)
presentment, demand and protest, and notice of presentment, dishonor, intent to
accelerate, acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all Loan Documents, the
Notes or any other notes, commercial paper, Accounts, Contracts, Documents,
Instruments, Chattel Paper and guaranties at any time held by Lender on which
Borrower may in any way be liable, and hereby ratifies and confirms whatever
Lender may do in this regard; (b) all rights to notice and a hearing prior to
Lender's taking possession or control of, or to Lender's replevy, attachment or
levy upon, any Collateral or any bond or security that might be required by any
court prior to allowing Lender to exercise any of its remedies; and (c) the
benefit of all valuation, appraisal and exemption laws. Borrower acknowledges
that it has been advised by counsel of its choices and decisions with respect to
this Agreement, the other Loan Documents and the transactions evidenced hereby
and thereby.
0
22
7.4 Proceeds. The Proceeds of any sale, disposition or other realization
--------
upon any Collateral shall be applied by Lender upon receipt to the Obligations
in such order as Lender may deem advisable in its sole discretion, and after the
indefeasible payment and satisfaction in full in cash of all of the Obligations,
and after the payment by Lender of any other amount required by any provision of
law, including Sections 9-608(a)(1) and 9-615(a)(3) of the Code (but only after
Lender has received what Lender considers reasonable proof of a subordinate
party's security interest), the surplus, if any, shall be paid to Borrower or
its representatives or to whomsoever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may direct.
8. SUCCESSORS AND ASSIGNS
Each Loan Document shall be binding on and shall inure to the benefit of
Borrower, Lender, and their respective successors and assigns, except as
otherwise provided herein or therein. Borrower may not assign, transfer,
hypothecate, delegate or otherwise convey its rights, benefits, obligations or
duties under any Loan Document without the prior express written consent of
Lender. Any such purported conveyance by Borrower without the prior express
written consent of Lender shall be void. There shall be no third party
beneficiaries of any of the terms and provisions of any of the Loan Documents.
Lender reserves the right at any time to create and sell participations in the
Loans and the Loan Documents and to sell, transfer or assign any or all of its
rights in the Loans and under the Loan Documents.
9. MISCELLANEOUS
9.1 NO ORAL AGREEMENT; COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT.
-----------------------------------------------------------------------
THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REFERENCED HEREIN OR
CONTEMPLATED HEREBY REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE COMPLETE
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
THEREOF, SUPERSEDE ALL PRIOR AGREEMENTS, COMMITMENTS, UNDERSTANDINGS OR
INDUCEMENTS (ORAL OR WRITTEN, EXPRESSED OR IMPLIED). NO LOAN DOCUMENT MAY BE
MODIFIED, ALTERED OR AMENDED EXCEPT BY A WRITTEN AGREEMENT SIGNED BY LENDER AND
BORROWER. BORROWER SHALL HAVE ALL DUTIES AND OBLIGATIONS UNDER THIS AGREEMENT
AND SUCH OTHER LOAN DOCUMENTS FROM THE DATE OF ITS EXECUTION AND DELIVERY,
REGARDLESS OF WHETHER THE INITIAL LOAN HAS BEEN FUNDED AT THAT TIME.
9.2 Expenses. Borrower agrees to pay or reimburse Lender for all costs
--------
and expenses (including the fees and expenses of all counsel, advisors,
consultants (including environmental and management consultants) and auditors
retained in connection therewith), incurred in connection with: (a) the
preparation, negotiation, execution, delivery, performance and enforcement of
the Loan Documents and the preservation of any rights thereunder; (b) collection
including deficiency collections; (c) the forwarding to Borrower or any other
Person on behalf of Borrower by Lender of the proceeds of any Loan (including a
wire transfer fee of $25 per wire transfer); (d) any amendment, waiver or other
modification or waiver of, or consent with respect to any Loan Document or
advice in connection with the administration of the Loans or the rights
thereunder; (e) any litigation, dispute, suit,
0
23
proceeding or action (whether instituted by or between any combination of
Lender, Borrower or any other Person), and an appeal or review thereof, in any
way relating to the Collateral, any Loan Document, or any action taken or any
other agreements to be executed or delivered in connection therewith, whether as
a party, witness or otherwise; and (f) any effort to verify, protect, evaluate,
assess, appraise, collect, sell, liquidate or otherwise dispose of the
Collateral.
9.3 No Waiver. Neither Lender's failure, at any time, to require strict
----------
performance by Borrower of any provision of any Loan Document, nor Lender's
failure to exercise, nor any delay in exercising, any right, power or privilege
hereunder, shall operate as a waiver thereof or waive, affect or diminish any
right of Lender thereafter to demand strict compliance and performance
therewith. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or future exercise thereof or the exercise of
any other right, power or privilege. Any suspension or waiver of a Default or
other provision under the Loan Documents shall not suspend, waive or affect any
other Default or other provision under any Loan Document, and shall not be
construed as a bar to any right or remedy that Lender would otherwise have had
on any future occasion. None of the undertakings, indemnities, agreements,
warranties, covenants and representations of Borrower to Lender contained in any
Loan Document and no Default by Borrower under any Loan Document shall be deemed
to have been suspended or waived by Lender, unless such waiver or suspension is
by an instrument in writing signed by an officer or other authorized employee of
Lender and directed to Borrower specifying such suspension or waiver (and then
such waiver shall be effective only to the extent therein expressly set forth),
and Lender shall not, by any act (other than execution of a formal written
waiver), delay, omission or otherwise, be deemed to have waived any of its
rights or remedies hereunder.
9.4 Severability; Section Titles. Wherever possible, each provision of
------------------------------
the Loan Documents shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of any Loan Document shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of such
Loan Document. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under the Loan Documents shall in any way affect or impair
the Obligations, duties, covenants, representations and warranties, indemnities,
and liabilities of Borrower or the rights of Lender relating to any unpaid
Obligation, (due or not due, liquidated, contingent or unliquidated), or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is not required until after the Commitment
Termination Date, all of which shall not terminate or expire, but rather shall
survive such termination or cancellation and shall continue in full force and
effect until the Termination Date; provided, that all indemnity obligations of
the Borrower under the Loan Documents shall survive the Termination Date. The
Section titles contained in any Loan Document are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties thereto.
9.5 Authorized Signature. Until Lender shall be notified in writing by
---------------------
Borrower to the contrary, the signature upon any document or instrument
delivered pursuant hereto and believed by Lender or any of Lender's officers,
agents, or employees to be that of an officer of Borrower shall bind Borrower
and be deemed to be the act of Borrower affixed pursuant to and in accordance
with
24
resolutions duly adopted by Borrower's Board of Directors, and Lender shall be
entitled to assume the authority of each signature and authority of the person
whose signature it is or appears to be unless the person acting in reliance
thereon shall have actual knowledge to the contrary.
9.6 Notices. Except as otherwise provided herein, whenever any notice,
-------
demand, request or other communication shall or may be given to or served upon
any party by any other party, or whenever any party desires to give or serve
upon any other party any communication with respect to this Agreement, each such
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
days after deposit in the United States Mail, registered or certified mail,
return receipt requested, with proper postage prepaid, (b) upon transmission,
when sent by telecopy or other similar facsimile transmission (with such
telecopy or facsimile promptly confirmed by delivery of a copy by personal
delivery or United States Mail as otherwise provided in this Section 9.6), (c)
one (1) Business Day after deposit with a reputable overnight courier with all
charges prepaid or (d) when hand-delivered, all of which shall be addressed to
the party to be notified and sent to the address or facsimile number indicated
in Schedule B or to such other address (or facsimile number) as may be
-----------
substituted by notice given as herein provided. Failure or delay in delivering
copies of any such communication to any Person (other than Borrower or Lender)
designated in Schedule B to receive copies shall in no way adversely affect the
----------
effectiveness of such notice, demand, request or other communication.
9.7 Counterparts. Any Loan Document may be authenticated in any number
------------
of separate counterparts by any one or more of the parties thereto, and all of
said counterparts taken together shall constitute one and the same instrument.
Any Loan Document may be authenticated by manual signature, facsimile or, if
approved in writing by Lender, electronic means, all of which shall be equally
valid.
9.8 Time of the Essence. Time is of the essence for performance of
----------------------
the Obligations under the Loan Documents.
9.9 GOVERNING LAW. THE LOAN DOCUMENTS AND THE OBLIGATIONS ARISING UNDER
--------------
THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF
REGARDING CONFLICTS OF LAWS.
9.10 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. (A) BORROWER AND
--------------------------------------------------
LENDER HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN
CONNECTICUT SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT LENDER AND BORROWER
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF CONNECTICUT; AND FURTHER PROVIDED, THAT NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY
25
OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR
ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF LENDER. BORROWER AND LENDER EXPRESSLY SUBMIT AND CONSENT IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND BORROWER AND LENDER HEREBY WAIVE ANY OBJECTION THAT IT MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. BORROWER
AND LENDER HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER OR LENDER AT THE ADDRESS SET FORTH IN SCHEDULE B OF THIS
----------
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
BORROWER'S OR LENDER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID.
(B) THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN
CONTRACT, TORT, OR OTHERWISE BETWEEN LENDER, AND BORROWER ARISING OUT OF,
CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
9.11 USA Patriot Act Notice. The Lender hereby notifies the Borrower
-------------------------
that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)), it is required to obtain, verify and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow the
Lender to identify the Borrower in accordance therewith.
9.12 Press Releases. Neither Borrower nor any of its Affiliates will in
---------------
the future issue any press release or other public disclosure using the name of
New Stream Commercial Finance, LLC or its affiliates or referring to this
Agreement or the other Loan Documents without at least two (2) Business Days'
prior notice to Lender and without the prior written consent of Lender unless
(and only to the extent that) Borrower or Affiliate is required to do so under
law and then, in any event, Borrower or Affiliate will consult with Lender
before issuing such press release or other public disclosure.
9.13 Reinstatement. This Agreement shall continue to be effective, or be
--------------
reinstated, as the case may be, if at any time payment of all or any part of the
Obligations is rescinded or must otherwise be returned or restored by Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
Borrower, or otherwise, all as though such payments had not been made.
9.14 Maximum Legal Rate. It is the intent of the Borrower and the
--------------------
Lender to conform strictly to all applicable state and federal usury laws. The
Loan Documents and all other agreements between Borrower and the Lender whether
now existing or hereafter arising and whether written or oral, are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason
26
of acceleration of the maturity hereof or otherwise, shall the amount contracted
for, charged or received by the Lender for the use, forbearance, or detention of
the money loaned hereunder or otherwise, or for the payment or performance of
any covenant or obligation contained herein or in any other Loan Documents
evidencing, securing or pertaining to the Obligations evidenced hereby which may
be legally deemed to be for the use, forbearance or detention of money, exceed
the Maximum Legal Rate or the maximum amount which the Borrower and any
successors or assigns of the Borrower or any such person (if any) is obligated
to pay and which the Lender is legally entitled to contract for, charge or
collect under applicable state or federal law. If from any circumstances
whatsoever fulfillment of any provision hereof or of such other Loan Documents,
at the time performance of such provision shall be due, shall involve
transcending the Maximum Legal Rate, then the obligation to be fulfilled shall
be automatically reduced to such limit, and if from any such circumstance the
Lender shall ever receive as interest or otherwise an amount in excess of the
Maximum Legal Rate or the maximum that can be legally collected, then such
amount which would be excessive interest shall be applied to the reduction of
the principal indebtedness hereof and any other amounts due with respect to the
Obligations evidenced hereby or in any other Loan Document, but not to the
payment of interest and if such amount which would be excess interest exceeds
the Obligations and all other non interest indebtedness described above, then
such additional amount shall be refunded to the Borrower. If any excess interest
in such respect is provided for in this Agreement, or shall be adjudicated to be
so provided, or in any other Loan Document or otherwise in connection with this
transaction, the provisions of this Section 9.14 shall govern and prevail and
neither the Borrower nor any successors or assigns of the Borrower or any such
person (if any) shall be obligated to pay the excess amount of such interest or
any other excess sum paid for the use, forbearance, or detention of sums loaned
pursuant hereto. In determining whether or not all sums paid or agreed to be
paid by the Borrower for the use, forbearance or detention of the Obligations of
the Borrower to the Lender, under any specific contingency, exceeds the Maximum
Legal Rate or the maximum amount permitted by applicable law, the Borrower and
the Lender shall to the maximum extent permitted under applicable law, (a) treat
all Obligations as but a single extension of credit, (b) characterize any
non-principal payment as an expense, fee or premium rather than as sums paid or
agreed to be paid by the Borrower for the use, forbearance or detention of the
Obligations of the Borrower to the Lender, (c) exclude voluntary prepayments and
the effect thereof, and (d) amortize, prorate, allocate and spread in equal
parts, the total amount of such sums paid or agreed to be paid by the Borrower
for the use, forbearance or detention of the Obligations of the Borrower to the
Lender throughout the entire contemplated term of the Obligations so that the
interest rate is uniform through the entire term of the Obligations. In the
event that any of the contract rates computed under this Agreement or any other
Loan Document hereof would exceed the Maximum Legal Rate, the rate of interest
under this Agreement or such other Loan Agreement for any such period shall be
limited to the Maximum Legal Rate, but any subsequent reductions in the
applicable contract rate shall not reduce the rates of interest under this
Agreement or such other Loan Document below the Maximum Legal Rate until the
total amount of interest charged equals the amount of interest that would have
been charged had the applicable contract rate been charged at all times. The
Borrower and Lender hereby agree if, despite the provisions of Section 9.9 of
this Agreement, Texas law is deemed to apply, that except for Section 346.004
thereof, the provisions of Chapter 346 of the Texas Finance Code (Vernon's Texas
Code Annotated), as amended from time to time, shall not apply to this Agreement
or any of the other Loan Documents. The terms and provisions of this Section
9.14 shall control and
27
supersede every other provision hereof, the Loan Documents and all other
agreements between Borrower and Lender
[SIGNATURE PAGE FOLLOWS]
28
IN WITNESS WHEREOF, this Loan and Security Agreement has been duly executed as
of the date first written above.
CROCHET & BOREL SERVICES, INC.
By: ______________________________
Name: ______________________________
Title:______________________________
NEW STREAM CAPITAL FINANCE, LLC.
By: ______________________________
Name: ______________________________
Title:______________________________
SCHEDULE A - DEFINITIONS
Capitalized terms used in this Agreement and the other Loan Documents shall have
(unless otherwise provided elsewhere in this Agreement or in the other Loan
Documents) the following respective meanings:
"ACCOUNT DEBTOR" shall mean any Person who is or may become obligated with
respect to, or on account of, an Account, Chattel Paper or General Intangible
(including a Payment Intangible).
"ACCOUNTS" means all "accounts," as such term is defined in the Code, now
owned or hereafter acquired by any Person, including: (i) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments) (including
any such obligations which may be characterized as an account or contract right
under the Code); (ii) all of such Person's rights in, to and under all purchase
orders or receipts for goods or services; (iii) all of such Person's rights to
any goods represented by any of the foregoing (including unpaid sellers' rights
of rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods); (iv) all rights to payment due to
such Person for Goods or other property sold, leased, licensed, assigned or
otherwise disposed of, for a policy of insurance issued or to be issued, for a
secondary obligation incurred or to be incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Person or in connection with any
other transaction (whether or not yet earned by performance on the part of such
Person), and (v) all health care insurance receivables; and (vi) all collateral
security of any kind given by any Account Debtor or any other Person with
respect to any of the foregoing.
"ACCOUNTS PAYABLE ANALYSIS" means a certificate in the form of Exhibit D.
---------
"ACCOUNTS RECEIVABLE ROLL FORWARD ANALYSIS" means the analysis of the
Borrower's accounts receivable as reflected in a certificate in the form of
Exhibit A.
-----------
"ACQUISITION" means the acquisition of all or substantially all of the
stock of Borrower from Seller.
"ACQUISITION AGREEMENTS" means the Purchase Agreement, the Seller Note and
all related documents, instruments and agreements executed and delivered in
connection therewith.
"AFFILIATE" means, with respect to any Person: (i) each other Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, ten percent (10%) or more of the Stock having
ordinary voting power for the election of directors of such Person; (ii) each
other Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person; or (iii) each of such Person's
officers, directors, joint venturers and partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
Sch A-1
"AGREEMENT" means this Agreement including all appendices, exhibits or
schedules attached or otherwise identified thereto, restatements and
modifications and supplements thereto, and any appendices, exhibits or schedules
to any of the foregoing, each as effect at the time such reference becomes
operative; provided, that except as specifically set forth in this Agreement,
any reference to the Disclosure Schedules to this Agreement shall be deemed a
reference to the Disclosure Schedules as in effect on the Closing Date or in a
written amendment thereto executed by Borrower and Lender.
"BOOKS AND RECORDS" means all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual and pro
forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral or Borrower's business. "BORROWER" means
the Person identified as such in the preamble of this Agreement.
"BORROWING AVAILABILITY" means, at any time, the lesser of (i) the Maximum
Amount or (ii) the Borrowing Base, in each case less reserves established by
Lender from time to time.
"BORROWING BASE" means at any time an amount equal to the sum at such time
of: (i) 75% of the value of Borrower's Eligible Accounts consisting of (A)
Non-Catastrophe Accounts and (B) Catastrophe Accounts and Special Catastrophe
Accounts which are not more than 90 days from invoice date; plus (ii) 50% of the
----
value of Borrower's Eligible Accounts consisting of (A) Catastrophe Accounts
which are more than 90 days from invoice date but less than 270 days from
invoice date, and (B) Special Catastrophe Accounts which are more than 90 days
from invoice date but less than 360 days from invoice date. For the purposes of
calculating the Borrowing Base, value of Eligible Accounts shall be net of any
amounts due any contractor, subcontractor or any other Person by Borrower and
shall be determined by Lender in its discretion.
"BORROWING BASE CERTIFICATE" means a certificate in the form of Exhibit C.
---------
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or a day on
which banks are required or permitted to be closed in the State of Connecticut.
"CAPITAL EXPENDITURES" means all payments or accruals (including Capital
Lease Obligations) for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.
"CAPITAL LEASE" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise would be
disclosed as such in a note to such balance sheet, other than, in the case of
Borrower, any such lease under which Borrower is the lessor.
"CAPITAL LEASE OBLIGATION" means, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet
Sch A-2
of such lessee in respect of such Capital Lease or otherwise be disclosed in a
note to such balance sheet.
"CASH COLLATERAL ACCOUNT" has the meaning assigned to it in Schedule C.
"CATASTROPHE ACCOUNT" means an Account which arises from services performed by
the Borrower to a commercial business or municipality related to damages caused
by a natural disaster.
"CHANGE OF CONTROL" means, with respect to any Person on or after the
Closing Date, that any change in the composition of such Person's stockholders
as of the Closing Date shall occur which would result in any stockholder or
group acquiring 49.9% or more of any class of Stock of such Person, or that any
Person (or group of Persons acting in concert) shall otherwise acquire, directly
or indirectly (including through Affiliates), the power to elect a majority of
the Board of Directors of such Person or otherwise direct the management or
affairs of such Person by obtaining proxies, entering into voting agreements or
trusts, acquiring securities or otherwise.
"CHARGES" means all Federal, state, county, city, municipal, local, foreign
or other governmental taxes (including taxes owed to PBGC at the time due and
payable), levies, customs or other duties, assessments, charges, liens, and all
additional charges, interest, penalties, expenses, claims or encumbrances upon
or relating to (i) the Collateral, (ii) the Obligations, (iii) the employees,
payroll, income or gross receipts of Borrower, (iv) the ownership or use of any
assets by Borrower, or (v) any other aspect of Borrower's business.
"CHATTEL PAPER" means all "chattel paper," as such term is defined in the
Code, including electronic chattel paper, now owned or hereafter acquired by any
Person.
"CLOSING DATE" means the Business Day on which the conditions precedent set
forth in Section 2 have been satisfied or specifically waived in writing by
Lender, and the initial Loan has been made.
"CLOSING FEE" has the meaning assigned to it in Schedule E.
"CODE" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Connecticut; provided, that in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of, or remedies with respect to, Lender's Lien on any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Connecticut, the term "Code" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions of this Agreement relating to such attachment, perfection,
priority or remedies and for purposes of definitions related to such provisions;
provided further, that to the extent that the Code is used to define any term
herein or in any Loan Document and such term is defined differently in different
Articles or Divisions of the Code, the definition of such term contained in
Article or Division 9 shall govern.
"COLLATERAL" has the meaning assigned to it in Section 6.1.
Sch A-3
"COLLECTION ACCOUNT" means that certain account of Lender, account number
1050454734 in the name of Lender at Citibank, F.S.B. in Ridgefield, Connecticut,
ABA No. 000000000, or such other account as may be specified in writing by
Lender as the "Collection Account".
"COMMISSION" has the meaning assigned to it in Schedule E.
"COMMITMENT TERMINATION DATE" means the earliest of (i) the Stated Expiry
Date, (ii) the date Lender's obligation to advance funds is terminated pursuant
to Section 7.2, and (iii) the date of indefeasible prepayment in full by
Borrower of the Obligations in accordance with the provisions of Section 1.2(c).
"CONTRACTS" means all the contracts, undertakings, or agreements (other
than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Person may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Account.
"CONTRACTUAL OBLIGATION" means as to any Person, any provision of any
security issued by such Person or of any agreement, instrument, or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"COPYRIGHT LICENSE" means rights under any written agreement now owned or
hereafter acquired by any Person granting the right to use any Copyright or
Copyright registration.
"COPYRIGHTS" shall mean all of the following now owned or hereafter adopted
or acquired by any Person: (i) all copyrights in any original work of authorship
fixed in any tangible medium of expression, now known or later developed, all
registrations and applications for registration of any such copyrights in the
United States or any other country, including registrations, recordings and
applications, and supplemental registrations, recordings, and applications in
the United States Copyright Office; and (ii) all Proceeds of the foregoing,
including license royalties and proceeds of infringement suits, the right to xxx
for past, present and future infringements, all rights corresponding thereto
throughout the world and all renewals and extensions thereof.
"DEFAULT" means any Event of Default or any event that, with the passage of
time or notice or both, would, unless cured or waived, become an Event of
Default.
"DEFAULT RATE" has the meaning assigned to it in Section 1.5(c).
"DEPOSIT ACCOUNTS" means all "deposit accounts" as such term is defined in
the Code, now or hereafter held in the name of any Person.
"DESIGNATED VENDORS" shall mean each of the Borrower's vendors set forth on
Disclosure Schedule (4.1).
----------------------
"DOCUMENTS" means all "documents," as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including all bills
of lading, dock warrants, dock receipts, warehouse receipts, and other documents
of title, whether negotiable or non-negotiable.
Sch A-4
"EBITDA" means, for any period, the Net Income (Loss) of Borrower and its
Subsidiaries on a consolidated basis for such period, plus interest expense,
income tax expense, amortization expense, depreciation expense and extraordinary
losses and minus extraordinary gains, in each case, of Borrower and its
Subsidiaries on a consolidated basis for such period determined in accordance
with GAAP to the extent included in the determination of such Net Income (Loss).
"ELIGIBLE ACCOUNTS" means as at the date of determination, all Accounts of
the Borrower except any Account:
(a) that does not arise from the sale of goods or the performance
of services by Borrower in the ordinary course of Borrower's business;
(b) upon which (i) Borrower's right to receive payment is not absolute
or is contingent upon the fulfillment of any condition whatsoever or (ii)
Borrower is not able to bring suit or otherwise enforce its remedies against the
Account Debtor through judicial process;
(c) against which any defense, counterclaim or setoff, whether well
-founded or otherwise, is asserted or which is a "contra" Account, but only to
the extent of such defense, counterclaim or setoff;
(d) that is not a true and correct statement of a bona fide
indebtedness incurred in the amount of the Account for merchandise sold or
services performed and accepted by the Account Debtor obligated upon such
Account;
(e) with respect to which an invoice, acceptable to Lender in form
and substance, has not been sent;
(f) that is not owned by Borrower or is subject to any right,
claim, or interest of another Person, other than the Lien in favor of Lender;
(g) that arises from a sale to or performance of services for an
employee, Affiliate, Subsidiary or Stockholder of Borrower;
(h) that is the obligation of an Account Debtor that is the Federal
(or local) government or a political subdivision thereof, unless Lender has
agreed to the contrary in writing and Borrower has complied with the Federal
Assignment of Claims Act of 1940 (or the state equivalent thereof, if any) with
respect to such obligation;
(i) that is the obligation of an Account Debtor located in a foreign
country;
(j) that is the obligation of an Account Debtor to whom Borrower is
or may become liable for goods sold or services rendered by the Account Debtor
to Borrower, to the extent of Borrower's liability to such Account Debtor;
(k) that arises with respect to goods which are delivered on a
cash-on-delivery basis or placed on consignment, guaranteed sale or other terms
by reason of which the payment by the Account Debtor may be conditional;
Sch A-5
(l) that is an obligation for which the total unpaid Accounts of the
Account Debtor exceed 20% of the aggregate of all Accounts (excluding the
Accounts of Certified Cleaning & Restoration for the period up to and including
December 31, 2006) to the extent of such excess;
(m) that is: (i) a Non-Catastrophe Account that is not paid within 90
days from its invoice date; (ii) a Catastrophe Account that is not paid within
270 days from its invoice date; or (iii) a Special Catastrophe Account that is
not paid within 360 days from its invoice date;
(o) that are Accounts of an Account Debtor if 50% or more of the
Accounts owing from such Account Debtor remain unpaid within the time periods
set forth in subsection (m) above;
(p) any Account for which the Lender has requested, but has not
received a written verification thereof from the respective Account Debtor(s);
(q) is an obligation of an Account Debtor that has suspended business,
made a general assignment for the benefit of creditors, is unable to pay its
debts as they become due or as to which a petition has been filed (voluntary or
involuntary) under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors;
(r) that arises from any xxxx-and-hold or other sale of goods which
remain in Borrower's possession or under Borrower's control;
(s) as to which Lender's interest therein is not a first priority
perfected security interest;
(t) to the extent that such Account exceeds any credit limit
established by Lender in Lender's good faith credit judgment;
(u) as to which any of Borrower's representations or warranties
pertaining to Accounts are untrue;
(v) that represents interest payments, late or finance charges, or
service charges owing to Borrower;
(w) that is an Account that arises under a "get paid/when paid"
contract, to the extent that such Account is subject to a claim or interest of
any contractor, subcontractor or any other person (the portion of such Account
which is not subject to any claim or interest may be an Eligible Account); or
(w) that is not otherwise acceptable in the good faith discretion of
Lender, provided, that Lender shall have the right to create and adjust
eligibility standards and related reserves from time to time in its good faith
credit judgment.
"ENVIRONMENTAL LAWS" means all Federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any applicable judicial or
administrative interpretation thereof relating to the regulation and protection
of human health, safety, the environment and natural resources (including
ambient air, surface water, groundwater, wetlands, land surface or subsurface
strata, wildlife, aquatic species and vegetation).
Sch A-6
"ENVIRONMENTAL LIABILITIES" means all liabilities, obligations,
responsibilities, remedial actions, removal costs, losses, damages of whatever
nature, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts and consultants and costs of investigation and
feasibility studies), fines, penalties, sanctions and interest incurred as a
result of any claim, suit, action or demand of whatever nature by any Person and
which relate to any health or safety condition regulated under any Environmental
Law, environmental permits or in connection with any Release, threatened
Release, or the presence of a Hazardous Material.
"EQUIPMENT" means all "equipment" as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including any and
all machinery, apparatus, equipment, fittings, furniture, fixtures, motor
vehicles and other tangible personal property (other than Inventory) of every
kind and description that may be now or hereafter used in such Person's
operations or which are owned by such Person or in which such Person may have an
interest, and all parts, accessories and accessions thereto and substitutions
and replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
that, together with Borrower, is treated as a single employer under Section
414(b), (c), (m) or (o) of the IRC, or, solely for the purposes of Section 302
of ERISA and Section 412 of the IRC, is treated as a single employer under
Section 414 of the IRC.
"ERISA EVENT" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the IRC or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(b) of the IRC or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by Borrower or any ERISA Affiliate of any liability
under Title IV of ERISA with respect to the termination of any Plan; (e) the
receipt by Borrower or any ERISA Affiliate from the PBGC or a plan administrator
of any notice relating to an intention to terminate any Plan or to appoint a
trustee to administer any Plan; (f) the incurrence by Borrower or any ERISA
Affiliate of any liability with respect to any withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by Borrower or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from Borrower
or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA.
"EVENT OF DEFAULT" has the meaning assigned to it in Section 7.1.
"FEES" means the fees due to Lender as set forth in Schedule E.
"FINANCIAL STATEMENTS" means the consolidated and consolidating income
statement, balance sheet and statement of cash flows of Borrower and its
Subsidiaries, internally prepared for each Fiscal Month, and audited for each
Fiscal Year, prepared in accordance with GAAP.
Sch A-7
"FISCAL MONTH" means any of the monthly accounting periods of Borrower.
"FISCAL QUARTER" means any of the quarterly accounting periods of Borrower.
"FISCAL YEAR" means the 12 month period of Borrower ending April 30 of each
year. Subsequent changes of the fiscal year of Borrower shall not change the
term "Fiscal Year" unless Lender shall consent in writing to such change.
"FIXTURES" means all "fixtures" as such term is defined in the Code, now
owned or hereafter acquired by any Person.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, consistently applied.
"GENERAL INTANGIBLES" means all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Person, including
all right, title and interest that such Person may now or hereafter have in or
under any Contract, all Payment Intangibles, customer lists, Licenses,
Intellectual Property, interests in partnerships, joint ventures and other
business associations, permits, proprietary or confidential information,
inventions (whether or not patented or patentable), technical information,
procedures, designs, knowledge, know-how, software, data bases, data, skill,
expertise, experience, processes, models, drawings, materials, Books and
Records, Goodwill (including the Goodwill associated with any Intellectual
Property), all rights and claims in or under insurance policies (including
insurance for fire, damage, loss, and casualty, whether covering personal
property, real property, tangible rights or intangible rights, all liability,
life, key-person, and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit accounts, rights
to receive tax refunds and other payments, rights to receive dividends,
distributions, cash, Instruments and other property in respect of or in exchange
for pledged Stock and Investment Property, and rights of indemnification.
"GOODS" means all "goods," as such term is defined in the Code, now owned
or hereafter acquired by any Person, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
"GOODWILL" means all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"GUARANTEED INDEBTEDNESS" means, as to any Person, any obligation of such
Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, including any obligation or arrangement of such
Sch A-8
guaranteeing Person (whether or not contingent): (i) to purchase or repurchase
any such primary obligation; (ii) to advance or supply funds (a) for the
purchase or payment of any such primary obligation or (b) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor;
(iii) to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation; or (iv) to indemnify the
owner of such primary obligation against loss in respect thereof.
"GUARANTOR" means each Person that executes a guaranty or a support, put or
other similar agreement in favor of Lender in connection with the transactions
contemplated by this Agreement.
"GUARANTY" means any agreement to perform all or any portion of the
Obligations on behalf of Borrower, in favor of, and in form and substance
satisfactory to, Lender, together with all amendments, modifications and
supplements thereto, and shall refer to such Guaranty as the same may be in
effect at the time such reference becomes operative.
"HAZARDOUS MATERIAL" means any substance, material or waste that is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance.
"HAZARDOUS WASTE" has the meaning ascribed to such term in the Resource
Conservation and Recovery Act (42 U.S.C. 6901 et. seq.).
"INDEBTEDNESS" of any Person means: (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(including reimbursement and all other obligations with respect to surety bonds,
letters of credit and bankers' acceptances, whether or not matured, but not
including obligations to trade creditors incurred in the ordinary course of
business and not paid in the ordinary course of Borrower's business consistent
with past practices); (ii) all obligations evidenced by notes, bonds, debentures
or similar instruments; (iii) all indebtedness created or arising under any
conditional sale or other title retention agreements with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property); (iv) all Capital Lease Obligations; (v) all
Guaranteed Indebtedness; (vi) all Indebtedness referred to in clauses (i), (ii),
(iii), (iv) or (v) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; (vii) the Obligations; and (viii) all liabilities
under Title IV of ERISA.
"INDEMNIFIED LIABILITIES" and "INDEMNIFIED PERSON" have the respective
meanings assigned to them in Section 1.11.
Sch A-9
"INSTRUMENTS" means all "instruments," as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including all
certificated securities and all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"INTELLECTUAL PROPERTY" means any and all Licenses, Patents, Copyrights,
Trademarks, trade secrets and customer lists.
"INVENTORY" means all "inventory," as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including all
inventory, merchandise, goods and other personal property that are held by or on
behalf of such Person for sale or lease or are furnished or are to be furnished
under a contract of service or that constitute raw materials, work in process,
finished goods, returned goods or materials or supplies of any kind, nature or
description used or consumed or to be used or consumed in such Person's business
or in the processing, production, packaging, promotion, delivery or shipping of
the same, including all supplies and embedded software.
"INVESTMENT PROPERTY" means all "investment property," as such term is
defined in the Code, now owned or hereafter acquired by any Person, wherever
located.
"IRC" and "IRS" mean respectively, the Internal Revenue Code of 1986 and
the Internal Revenue Service, and any successors thereto.
"LENDER" means New Stream Commercial Finance, LLC and, if at any time
Lender shall decide to assign or syndicate all or any of the Obligations, such
term shall include such assignee or such other members of the syndicate.
"LETTER-OF-CREDIT RIGHTS" means "letter-of-credit rights" as such term is
defined in the Code, now owned or hereafter acquired by any Person, including
rights to payment or performance under a letter of credit, whether or not such
Person, as beneficiary, has demanded or is entitled to demand payment or
performance.
"LIBOR RATE" means, a fluctuating rate of interest determined on a monthly
basis equal to the one-month rate of interest appearing on Telerate Page 3750
(or any successor page) as the one-month London interbank offered rate for
deposits in U.S. Dollars on the first (1st) Business Day of each month. If for
any reason such rate is not available, "LIBOR" shall mean the fluctuating rate
of interest calculated on a daily basis equal to the one-month rate of interest
appearing on Reuters Screen Page LIBO Page as the one-month London interbank
offered rate for deposits in U.S. Dollars on the first (1st) Business Day;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates.
"Telerate Page 3750" means the British Bankers Association Libor Rates
(determined as on the first (1st) Business Day of each month) that are published
by Moneyline Telerate (or any successor thereto). As used in this definition,
the term "Business Day" means a day on which commercial banks are open for
international business (including dealings in U.S. Dollar deposits in London,
England).
Sch A-10
"LICENSE" means any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by any
Person.
"LIEN" means any mortgage, security deed or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, security title, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Code or comparable law of any jurisdiction).
"LITIGATION" means any claim, lawsuit, litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Financial Statements,
each Guaranty, the Power of Attorney, the Lock Box Account Agreements, and the
other documents and instruments listed in Schedule F, and all security
agreements, mortgages and all other documents, instruments, certificates, and
notices at any time delivered by any Person (other than Lender) in connection
with any of the foregoing.
"LOANS" means the Revolving Credit Loan.
"LOCK BOX ACCOUNT" and "LOCK BOX ACCOUNT AGREEMENT" have the meanings
assigned to such terms in Schedule D.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of
Borrower or the industry within which Borrower operates, (b) Borrower's ability
to pay or perform the Obligations under the Loan Documents to which it is a
party in accordance with the terms thereof, (c) the Collateral or Lender's Liens
on the Collateral or the priority of any such Lien, or (d) Lender's rights and
remedies under this Agreement and the other Loan Documents.
"MAXIMUM AMOUNT" means $35,000,000.
"MAXIMUM LEGAL RATE" shall mean the maximum lawful interest rate which may
be contracted for, charged, taken, received or reserved under this Agreement or
the other Loan Documents by Lender in accordance with applicable state or
federal law (whichever provides for the highest permitted rate), taking into
account all items contracted for, charged or received in connection with the
Obligations evidenced hereby which are treated as interest under the applicable
state or federal law, as such rate may change from time to time. The Maximum
Legal Rate shall be calculated in a manner that takes into account any and all
fees, payments and other charges in respect of the Loan Documents that
constitute interest under applicable law. Each change in any interest rate
provided for herein based upon the Maximum Legal Rate resulting from a change in
the Maximum Legal Rate shall take effect without notice to the Borrower at the
time of such change in the Maximum Legal Rate. If, despite the provisions of
Section 9.9 of this Agreement, Texas law is deemed to apply, for purposes of
determining the Maximum Legal Rate under Texas law, the
Sch A-11
applicable rate ceiling shall be: (a) the "weekly ceiling" described in and
computed in accordance with the provisions of Section 303.003 of the Texas
Finance Code, as amended; or (b) if the parties subsequently contract as allowed
by Texas law, the quarterly ceiling or the annualized ceiling computed pursuant
to Section 303.008 of the Texas Finance Code, as amended; provided, however,
that at any time the "weekly ceiling", the quarterly ceiling or the annualized
ceiling shall be less than 18% per annum or more than 24% per annum, the
provisions of Section 303.009(a)and Section 303.009(b) of the Texas Finance
Code, as amended, shall control for purposes of such determination, as
applicable.
"MINIMUM ACTIONABLE AMOUNT" means $250,000.
"MULTIEMPLOYER PLAN" means a "multiemployer plan," as defined in Section
4001(a) (3) of ERISA, to which Borrower or any ERISA Affiliate is making, is
obligated to make, has made or been obligated to make, contributions on behalf
of participants who are or were employed by any of them.
"NET BORROWING AVAILABILITY" means at any time the Borrowing Availability
less the Revolving Credit Loan.
"NET INCOME (LOSS)" means with respect to any Person and for any period,
the aggregate net income (or loss) after taxes of such Person for such period,
determined in accordance with GAAP.
"NON-CATASTROPHE ACCOUNT" means any Account which does not qualify as a
Catastrophe Account.
"NOTES" means the Revolving Credit Note.
"NOTICE OF REVOLVING CREDIT ADVANCE" has the meaning assigned to it in
Section 1.1(b).
"OBLIGATIONS" means all loans, advances, debts, expense reimbursement,
fees, liabilities, and obligations for the performance of covenants, tasks or
duties or for payment of monetary amounts (whether or not such performance is
then required or contingent, or amounts are liquidated or determinable) owing by
Borrower to Lender, of any kind or nature, present or future, whether or not
evidenced by any note, agreement or other instrument, whether arising under any
of the Loan Documents or under any other agreement between Borrower and Lender,
and all covenants and duties regarding such amounts. This term includes all
principal, interest (including interest accruing at the then applicable rate
provided in this Agreement after the maturity of the Loans and interest accruing
at the then applicable rate provided in this Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), Fees, Charges, expenses, attorneys'
fees and any other sum chargeable to Borrower under any of the Loan Documents,
and all principal and interest due in respect of the Loans and all obligations
and liabilities of any Guarantor under any Guaranty.
"PARENT" shall mean Charys Holdings Company, Inc. and its permitted
successors and assigns.
Sch A-12
"PATENT LICENSE" means rights under any written agreement now owned or
hereafter acquired by any Person granting any right with respect to any
invention on which a Patent is in existence.
"PATENTS" means all of the following in which any Person now holds or
hereafter acquires any interest: (i) all letters patent of the United States or
any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or Territory thereof, or any other country; and (ii) all reissues,
continuations, continuations-in-part or extensions thereof.
"PAYMENT INTANGIBLES" means all "payment intangibles" as such term is
defined in the Code, now owned or hereafter acquired by any Person.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PERMITTED ENCUMBRANCES" means the following encumbrances: (i) Liens for
taxes or assessments or other governmental Charges or levies, either not yet due
and payable or to the extent that nonpayment thereof is permitted by the terms
of Section 3.10; (ii) pledges or deposits securing obligations under worker's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which
Borrower is a party as lessee made in the ordinary course of business; (iv)
deposits securing public or statutory obligations of Borrower; (v) inchoate and
unperfected workers', mechanics', or similar liens arising in the ordinary
course of business so long as such Liens attach only to Equipment, fixtures or
real estate; (vi) carriers', warehousemans', suppliers', landlords' or other
similar statutory liens arising in the ordinary course of business and securing
indebtedness not yet due and payable; (vii) deposits of money securing, or in
lieu of, surety, appeal or customs bonds in proceedings to which Borrower is a
party; (viii) zoning restrictions, easements, licenses, or other restrictions on
the use of real property or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially impair the use,
value, or marketability of such real estate; (ix) Purchase Money Liens securing
Purchase Money Indebtedness (or rent) to the extent permitted under Section
5(b)(vi); (x) Liens in existence on the Closing Date as disclosed on Disclosure
----------
Schedule(5(e)) provided that no such Lien is spread to cover additional property
--------------
after the Closing Date and the amount of Indebtedness secured thereby is not
increased.; (xi) Liens in favor of Lender securing the Obligations; and (xii)
other Liens in an aggregate amount not to exceed $750,000 at any time
outstanding.
"PERSON" means any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public benefit
corporation, entity or government (whether Federal, state, county, city,
municipal or otherwise, including any instrumentality, division, agency, body or
department thereof), and shall include such Person's successors and assigns.
"PLAN" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the IRC
or Section 302 of ERISA, and in respect of which Borrower or any ERISA Affiliate
is (or, if such plan were terminated, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
Sch A-13
"PREPAYMENT FEE" means the prepayment fee specified in Schedule E.
"PROCEEDS" means "proceeds," as such term is defined in the Code and, in
any event, shall include: (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Borrower with respect to any Collateral; (ii)
any and all payments (in any form whatsoever) made or due and payable to
Borrower in connection with any requisition, confiscation, condemnation, seizure
or forfeiture of any Collateral by any governmental body, authority, bureau or
agency (or any person acting under color of governmental authority); (iii) any
claim of Borrower against third parties (a) for past, present or future
infringement of any Intellectual Property or (b) for past, present or future
infringement or dilution of any Trademark or Trademark License or for injury to
the goodwill associated with any Trademark, Trademark registration or Trademark
licensed under any Trademark License; (iv) any recoveries by Borrower against
third parties with respect to any litigation or dispute concerning any
Collateral, including claims arising out of the loss or nonconformity of,
interference with the use of, defects in, or infringement of rights in, or
damage to, Collateral; (v) all amounts collected on, or distributed on account
of, other Collateral, including dividends, interest, distributions and
Instruments with respect to Investment Property and pledged Stock; and (vi) any
and all other amounts, rights to payment or other property acquired upon the
sale, lease, license, exchange or other disposition of Collateral and all rights
arising out of Collateral.
"PROJECTIONS" means as of any date the consolidated and consolidating
balance sheet, statements of income and cash flow for Borrower and its
Subsidiaries (including forecasted Capital Expenditures and Net Borrowing
Availability) (i) by month for the next Fiscal Year, and (ii) by year for the
following three Fiscal Years, in each case prepared in a manner consistent with
GAAP and accompanied by senior management's discussion and analysis of such
plan.
"PURCHASE AGREEMENT" shall mean that certain Stock Purchase Agreement dated
as of June 5, 2006 by and among Parent, Borrower and Seller.
"PURCHASE MONEY INDEBTEDNESS" means (i) any Indebtedness incurred for the
payment of all or any part of the purchase price of any fixed asset, (ii) any
Indebtedness incurred for the sole purpose of financing or refinancing all or
any part of the purchase price of any fixed asset, and (iii) any renewals,
extensions or refinancings thereof (but not any increases in the principal
amounts thereof outstanding at that time).
"PURCHASE MONEY LIEN" means any Lien upon any fixed assets which secures
the Purchase Money Indebtedness related thereto but only if such Lien shall at
all times be confined solely to the asset the purchase price of which was
financed or refinanced through the incurrence of the Purchase Money Indebtedness
secured by such Lien and only if such Lien secures only such Purchase Money
Indebtedness.
"REAL PROPERTY" has the meaning assigned to it in Section 3.15.
"RELEASE" means as to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials in the indoor or outdoor environment by such
Person, including the movement of Hazardous Materials through or in the air,
soil, surface water, ground water or property.
Sch A-14
"REQUIREMENT OF LAW" means as to any Person, the Certificate or Articles of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case binding upon
such Person or any of its property or to which such Person or any of its
property is subject.
"RESTRICTED PAYMENT" means, after the Closing Date: (i) the declaration or
payment of any dividend or the incurrence of any liability to make any other
payment or distribution of cash or other property or assets on or in respect of
Borrower's Stock; (ii) any payment or distribution made in respect of any
subordinated Indebtedness of Borrower in violation of any subordination or other
agreement made in favor of Lender; (iii) any payment on account of the purchase,
redemption, defeasance or other retirement of Borrower's Stock or Indebtedness
or any other payment or distribution made in respect of any thereof, either
directly or indirectly; other than (a) that arising under this Agreement or (b)
interest and principal, when due without acceleration or modification of the
amortization as in effect on the Closing Date, under Indebtedness (not including
subordinated Indebtedness, payments of which shall be permitted only in
accordance with the terms of the relevant subordination agreement made in favor
of Lender) described in Disclosure Schedule (5(b)) or otherwise permitted under
--------------------------
Section 5(b)(vi); or (iv) any payment, loan, contribution, or other transfer of
funds or other property to any Stockholder of such Person which is not expressly
and specifically permitted in this Agreement; provided, that no payment to
Lender shall constitute a Restricted Payment.
"REVOLVING CREDIT ADVANCE" has the meaning assigned to it in Section
1.1(a).
"REVOLVING CREDIT LOAN" means at any time the sum of (i) the aggregate
amount of Revolving Credit Advances then outstanding, plus (ii) the amount of
accrued but ---- unpaid interest thereon, plus (iii) the amount of accrued but
unpaid costs, fees ---- and expenses payable hereunder
"REVOLVING CREDIT NOTE" means the promissory note of Borrower dated the
Closing Date, substantially in the form of Exhibit F.
-----------
"REVOLVING CREDIT RATE" has the meaning assigned to it in Section 1.5(a).
"SELLER" shall mean Xxxx Crochet.
"SELLER NOTE" means that certain Promissory Note dated as of June 5, 2006
in the original principal amount of $19,000,000 executed and delivered by Parent
in favor of Seller in effect on the date hereof.
"SOFTWARE" means all "software" as such term is defined in the Code, now
owned or hereafter acquired by any Person, including all computer programs and
all supporting information provided in connection with a transaction related to
any program.
"SOLVENCY OPINION" shall have the meaning assigned to it in Section 3.23.
"SOLVENT" means, with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including
Sch A-15
contingent liabilities, of such Person; (b) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured; (c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature; and (d) such Person is not engaged in a business
or transaction, and is not about to engage in a business or transaction, for
which such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities (such as litigation, guaranties and pension
plan liabilities) at any time shall be computed as the amount that, in light of
all the facts and circumstances existing at the time, represents the amount that
can be reasonably be expected to become an actual or matured liability.
"SPECIAL CATASTROPHE ACCOUNT" means the following Catastrophe Accounts in
existence as of the Closing Date; Certified Cleaning & Restoration, LVI
Environmental Services, Bayou Xxxxxx Professional Building, Mississippi Gulf
Coast Community College and Xxxxxxx Bank.
"STATED EXPIRY DATE" means August 28, 2007.
"STOCK" means all certificated and uncertificated shares, options,
warrants, membership interests, general or limited partnership interests,
participation or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934).
"STOCKHOLDER" means each holder of Stock of Borrower.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (ii) any partnership or limited liability
company in which such Person or one or more Subsidiaries of such Person has an
equity interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% or of which any such Person is a general
partner or manager or may exercise the powers of a general partner or manager.
"SUCCESS FEE" has the meaning assigned to it in Schedule E.
"SUPPORTING OBLIGATIONS" means all "supporting obligations" as such term is
defined in the Code, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.
"TANGIBLE NET WORTH" means, with respect to any Person, at any date, the
total assets (excluding any assets attributable to any issuances by such Person
of any Stock after the Closing
Sch A-16
Date and excluding any intangible assets) minus the total liabilities, in
each case, of such Person at such date determined in accordance with GAAP.
"TAXES" means taxes, levies, imposts, deductions, Charges or withholdings, and
all liabilities with respect thereto, excluding taxes imposed on or measured by
the net income of Lender.
"TERMINATION DATE" means the date on which all Obligations under this
Agreement are indefeasibly paid in full, in cash, and Borrower shall have no
further right to borrow any moneys or obtain other credit extensions or
financial accommodations under this Agreement.
"TRADEMARK LICENSE" means rights under any written agreement now owned or
hereafter acquired by any Person granting any right to use any Trademark or
Trademark registration.
"TRADEMARKS" means all of the following now owned or hereafter adopted or
acquired by any Person: (i) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature (whether registered or
unregistered) all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State or Territory thereof, or any other
country or any political subdivision thereof: (ii) all reissues, extensions or
renewals thereof; and (iii) all goodwill associated with or symbolized by any of
the foregoing.
"TRANSACTION SUMMARY" means the Transaction Summary set forth in the
Recitals to this Agreement.
"UNUSED LINE FEE" has the meaning assigned to it in Schedule E. "VENDOR
ACKNOWLEDGMENTS" shall mean each of the acknowledgments executed and delivered
by the Designated Vendors, which acknowledgments shall be in form and substance
satisfactory to Lender in all respects.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
Any accounting term used in this Agreement or the other Loan Documents
shall have, unless otherwise specifically provided therein, the meaning
customarily given such term in accordance with GAAP, and all financial
computations thereunder shall be computed, unless otherwise specifically
provided therein, in accordance with GAAP consistently applied; provided, that
all financial covenants and calculations in the Loan Documents shall be made in
accordance with GAAP as in effect on the Closing Date unless Borrower and Lender
shall otherwise specifically agree in writing. That certain items or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. All other undefined terms
contained in this Agreement or the other Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code. The
words "herein,""hereof" and "hereunder" or other words of similar import refer
to this Agreement as a whole, including the exhibits and schedules thereto, as
Sch A-17
the same may from time to time be amended, modified or supplemented, and not to
any particular section, subsection or clause contained in this Agreement.
For purposes of this Agreement and the other Loan Documents, the following
additional rules of construction shall apply, unless specifically indicated to
the contrary: (a) wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural; (b) the term "or" is not exclusive; (c) the term "including" (or any
form thereof) shall not be limiting or exclusive; (d) all references to statutes
and related regulations shall include any amendments of same and any successor
statutes and regulations; and (e) all references to any instruments or
agreements, including references to any of the Loan Documents, shall include any
and all modifications or amendments thereto and any and all extensions or
renewals thereof.
Sch A-18
SCHEDULE B
LENDER'S AND BORROWER'S ADDRESS FOR NOTICES
Lender's Address
Name: NEW STREAM COMMERCIAL FINANCE, LLC
Address: 00X Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000 Ext. 824
Facsimile: (000) 000-0000
Borrower's Address
Name: CROCHET & BOREL SERVICES, INC.
Address: 000 Xxxx Xxxx Xxxxxxx
Xxxx Xxxxxx, Xxxxx 00000
Attn: Xxxx Crochet, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Sch B-1
SCHEDULE C
[INTENTIONALLY OMITTED]
Sch C-1
SCHEDULE D - CASH MANAGEMENT
Borrower agrees to establish, and to maintain, until the Termination Date, the
cash management system described below:
1. Borrower: (i) shall not (nor shall it permit any of its Subsidiaries to)
open or maintain any deposit, checking, operating or other bank account, or
similar money handling account, with any bank or other financial institution
except for those accounts identified in Attachment I hereto (to include a xxxxx
cash account not to exceed $5,000 during any Fiscal Month, and a payroll account
not to exceed an amount equal to one regular payroll at any time); and (ii)
shall close or permit to be closed any of the accounts listed in Attachment I
------------
hereto, in each case without Lender's prior written consent, and then only after
Borrower has implemented agreements with such bank or financial institution and
Lender acceptable to Lender.
2. Commencing on the Closing Date and until the Termination Date, Borrower
shall cause to be deposited directly all cash, checks, notes, drafts or other
similar items relating to or constituting proceeds of or payments made in
respect of any and all Collateral into lock boxes or lock box accounts in
Borrower's or Lender's name (collectively, the "Lock Box Accounts") set forth in
-----------------
paragraph 1 of Attachment I hereto.
-------------
3. On or before the Closing Date, each bank at which the Lock Box Accounts
are held shall have entered into tri-party lock box agreements (the "Lock Box
--------
Account Agreements") with Lender and Borrower, in form and substance acceptable
-------------------
to Lender. Each such Lock Box Account Agreement shall provide, among other
things, that (a) such bank executing such agreement has no rights of setoff or
recoupment or any other claim against such Lock Box Account, other than for
payment of its service fees and other charges directly related to the
administration of such account, and (b) such bank agrees to sweep on a daily
basis all amounts in the Lock Box Account to the Collection Account.
4. On the Closing Date, (a) the lock box and blocked account arrangements
shall immediately become operative at the banks at which the Lock Box Accounts
are maintained, and (b) amounts outstanding under the Revolving Credit Loan (for
purposes of the Borrowing Availability) shall be reduced through daily sweeps,
by wire transfer, of the Lock Box Accounts into the Collection Account.
Borrower acknowledges that it shall have no right to gain access to any of the
moneys in the Lock Box Accounts until after the Termination Date.
5. Borrower may maintain, in its name, accounts (the "Disbursement
------------
Accounts") at a bank or banks acceptable to Lender into which Lender shall, from
time to time, deposit proceeds of Revolving Credit Advances made pursuant to
Section 1.1 for use solely in accordance with the provisions of Section 1.3.
All of the Disbursement Accounts as of the Closing Date are listed in paragraph
2 of Attachment I hereto.
-------------
6. Upon the request of Lender, Borrower shall forward to Lender, on a daily
basis, evidence of the deposit of all items of payment received by Borrower into
the Lock Box Accounts and copies of all such checks and other items, together
with a statement showing the application of those items
Sch D-1
relating to payments on Accounts to outstanding Accounts and a collection report
with regard thereto in form and substance satisfactory to Lender.
Sch D-2
ATTACHMENT I TO SCHEDULE D
LIST OF BANK ACCOUNTS
1. Lock Box Accounts.
-----------------
2. Disbursement Accounts.
---------------------
3. Xxxxx Cash Account (not to exceed $5,000).
------------------
4. Payroll Account (not to exceed one regular payroll).
---------------
Sch D-3
SCHEDULE E - FEES
1. UNUSED LINE FEE: For each day from the Closing Date, and through and
including the Termination Date, an amount equal to the Maximum Amount less the
Revolving Credit Loan for such day multiplied by one-half of one (.50%) percent,
the product of which is then divided by 360. The Unused Line Fee for each month
(except for the month in which the Termination Date occurs) is payable on the
first day of each calendar month following the Closing Date; the final monthly
installment of the Unused Line Fee is payable on the Termination Date.
Notwithstanding the foregoing, any unpaid Unused Line Fee is immediately due and
payable on the Commitment Termination Date.
2. COMMITMENT FEE; CLOSING FEE: A non-refundable commitment fee of
$350,000, less the amount of such commitment fee previously received by Lender
prior to the Closing Date, which commitment fee shall be paid at closing. A
non-refundable closing fee of $350,000, payable and fully earned at closing (the
"Closing Fee").
3. MAKE WHOLE SUCCESS FEE: If the Commitment Termination Date occurs after
the date which is ninety (90) days from the Closing Date, a non-refundable
success fee of $2,450,000 (the "Make Whole Success Fee"). The Make Whole
Success Fee shall be fully earned for services rendered to Borrower on the date
which is ninety-one (91) days from the Closing Date, and shall be payable on the
earlier of (a) the Commitment Termination Date and (b) the date which is one
hundred eighty (180) days from the Closing Date.
4. COLLATERAL MONITORING FEE: A fully earned and non-refundable collateral
monitoring fee of $10,000 per month, payable in advance on the Closing Date and
on the first day of each month thereafter.
5. PREPAYMENT FEE: An amount equal to the Maximum Amount multiplied by five
(5%) percent if Lender's obligation to make further Revolving Credit Advances is
terminated (voluntarily by Borrower, upon Default or otherwise) on or after the
Closing Date and on or before the date which is ninety (90) days from the
Closing Date, payable on the Commitment Termination Date ("Prepayment Fee"). No
Prepayment Fee shall be payable after the date which is ninety (90) days from
the Closing Date. Borrower acknowledges and agrees that (i) it would be
difficult or impractical to calculate Lender's actual damages from early
termination of Lender's obligation to make further Revolving Credit Advances for
any reason pursuant to Section 1.2(c) or Section 7.2, (ii) the Prepayment Fees
provided above are intended to be fair and reasonable approximations of such
damages, and (iii) the Prepayment Fees are not intended to be penalties.
6. AUDIT FEES: Borrower will reimburse Lender per person per day at the
then prevailing rate (which rate as of the Closing Date is $800), plus out of
pocket expenses, for the audit reviews, field examinations and collateral
examinations conducted by Lender.
7. COMMISSIONS: A commission at a rate of one-tenth of one percent (0.10%)
of the gross face amount of each Catastrophe Account and Special Catastrophe
Account of Borrower deposited in the Lock Box Accounts or otherwise collected by
Borrower orLender or their respective agents or
Sch E-1
designees after the Closing Date (the "Commissions"). Commissions shall be
earned on a daily basis and shall be payable to Lender on the last day of each
month; except that, any earned and unpaid Commissions shall be payable on the
Termination Date.
Sch E-2
SCHEDULE F
SCHEDULE OF DOCUMENTS
The obligation of Lender to make the initial Revolving Credit Advances and
extend other credit is subject to satisfaction of the condition precedent that
Lender shall have received the following, each, unless otherwise specified below
or the context otherwise requires, dated the Closing Date, in form and substance
satisfactory to Lender and its counsel:
PRINCIPAL LOAN DOCUMENTS
1. Agreement. The Loan and Security Agreement duly executed by Lender,
---------
Borrower and Parent.
2. Note(s). Duly executed Note(s) to the order of Lender evidencing the
-------
Loan(s).
3. Borrowing Base Certificate. An original Borrowing Base Certificate duly
---------------------------
executed by a responsible officer of Borrower(s).
4. Notice of Revolving Credit Advance. An original Notice of Revolving
--------------------------------------
Credit Advance duly executed by a responsible officer of Borrower(s).
COLLATERAL DOCUMENTS
1. Acknowledgment Copies of Financing Statements. Acknowledgment copies of
----------------------------------------------
proper Financing Statements (Form UCC-l) (the "Financing Statements") duly filed
under the Code in all jurisdictions as may be necessary or, in the opinion of
Lender, desirable to perfect Lender's Lien on the Collateral.
2. UCC Searches. Certified copies of UCC Searches, or other evidence
-------------
satisfactory to Lender, listing all effective financing statements which name
Borrower(s) (under present name, any previous name or any trade or doing
business name) as debtor and covering all jurisdictions referred to in paragraph
(1) immediately above, together with copies of such other financing statements.
3. Other Recordings and Filings. Evidence of the completion of all other
-------------------------------
recordings and filings (including UCC-3 termination statements and other Lien
release documentation) as may be necessary or, in the opinion of and at the
request of Lender, desirable to perfect Lender's Lien on the Collateral and
ensure such Collateral is free and clear of other Liens
4. Power of Attorney. Power of Attorney duly executed by Borrower.
-------------------
THIRD PARTY AGREEMENTS
Sch F-1
1. Landlord Consents. Within 30 days after the Closing Date, a duly
------------------
executed landlord waiver from the landlord for the Borrower's leased premises
located at 000 Xxxx Xxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxx, in form and substance
reasonably satisfactory to Lender.
2. Cash Management System. Duly executed Lock Box Account Agreements and,
------------------------
if required by Lender, pledged account agreements in respect of the Disbursement
Accounts as contemplated by Schedule D.
3. Pledge Agreement. Pledge Agreement and related stock powers executed by
-----------------
Parent.
4. Warrant. Warrant executed by Parent for Lender to purchase 2,000,000
-------
shares of Parent. Warrant to be exercisable for a five (5) year period
following the Closing Date.
5. Vendor Acknowledgment. Vendor Acknowledgment by each of the Designated
----------------------
Vendors.
OTHER DOCUMENTS
1. Secretary Certificate. A Secretary Certificate in the form of Exhibit H
---------------------- ---------
to the Agreement duly completed and executed by the Secretary of Borrower,
together with all attachments thereto.
2. Financial Statements and Projections. Copies of the Financial Statements
------------------------------------
and Projections, which Projections shall include a capital expenditures budget
for Borrower(s) in form and substance satisfactory to Lender.
4. Insurance Policies. Certified copies of insurance policies described in
-------------------
Section 3.16, together with evidence showing loss payable or additional insured
clauses or endorsements in favor of Lender.
5. Existing Lease Agreements. Copies of any existing real property leases
---------------------------
and equipment leases to which (each) Borrower is a party and any other document
or instrument evidencing or relating to existing Indebtedness of Borrower(s),
together with all certificates, opinions, instruments, security documents and
other documents relating thereto, all of which shall be satisfactory in form and
substance to Lender, certified by an authorized officer of Borrower(s) as true,
correct and complete copies thereof.
6. Solvency Opinion. Within thirty (30) days from the Closing Date, the
-----------------
Solvency Opinion, the results of which shall be in form and Substance
satisfactory to Lender and shall reflect that as of the Closing Date and after
giving effect to the initial transactions hereunder, Borrower is Solvent.
7. Officer's Certificate. Lender shall have received an executed
----------------------
Officer's Certificate, in form and substance satisfactory to Lender, certifying
the Borrower is Solvent as of the Closing Date and after giving effect to the
initial transactions contemplated hereunder.
Sch F-2
SCHEDULE G
FINANCIAL COVENANTS
1. EBITDA. Borrower shall have cumulative EBITDA, beginning at the start of
------
the quarter in which the Closing Date occurs, of not less than the amounts set
forth below:
FISCAL QUARTER ENDING MINIMUM EBITDA
October 31, 2006 $15,000,000
January 31, 2007 $30,000,000
April 30, 2007 $45,000,000
July 31, 2007 $60,000,000
2. Minimum Tangible Net Worth. Borrower shall have at the end of each
-----------------------------
Fiscal Quarter, Tangible Net Worth of not less than the amount for such Fiscal
Quarter set forth below:
FISCAL QUARTER ENDING MINIMUM TANGIBLE NET WORTH
October 31, 2006 $1,000,000
January 31, 2007 $38,000,000
April 30, 2007 $40,000,000
July 31, 2007 $45,000,000
Sch G-1
DISCLOSURE SCHEDULE (3.2)
CHIEF EXECUTIVE OFFICE & CORPORATE NAMES
Official Name Type of Entity (e.g. corporation,
partnership, limited partnership,
limited liability company)
------------- ----------------------------------
Organization Identification
Number Issued by State of Incorporation
or Organization Or Statement that State of Incorporation or
no such number has been issued Organization
--------------------------------------- --------------------------
Chief Executive Office County/State [BE SURE TO INCLUDE
NAMES OF COUNTIES]
---------------------- ----------------------------------
Locations of Inventory and County/State [BE SURE TO INCLUDE
other Collateral NAMES OF OCOUNTIES]
-------------------------- ----------------------------------
[OTHER CORPORATR TRADE NAMES IF ANY]
DISCLOSURE SCHEDULE (3.6)
REAL ESTATE
[DESCRIBE ALL REAL PROPERTY OWNED OR LEASED OR USED IN BUSINESS]
Address Type [OWNED, LEASED, WAREHOUSE] County
---- ------
DISCLOSURE SCHEDULE (3.7)
STOCK & AFFILIATES
[LIST ALL SUBSIDIARIES, AFFILIATES AND JOINT VENTURES]
Name Type (subsidiary, affiliate etc.) Percentage owned by Borrower
---- ---- ----------------------------
DISCLOSURE SCHEDULE (3.9)
TAXES
DISCLOSURE SCHEDULE (3.11)
ERISA
[LIST ALL PLANS AND ANY LIABILITIES AND EVENTS DESCRIBED IN 3.11 OF LOAN
AGREEMENT]
DISCLOSURE SCHEDULE (3.12)
LITIGATION
[DESCRIBE ALL MATERIAL LITIGATION AND AMOUNT IN CONTROVERSY]
DISCLOSURE SCHEDULE (3.13)
INTELLECTUAL PROPERTY
[DESCRIBE ALL INTELLECTUAL PROPERTY USED OR LICENSED]
------------------------------------------------------------------------------------------------
TYPE (TRADEMARK
DESCRIPTION OWNER LICENSEE(IF ANY) PATENT, COPYRIGHT, ETC.) REGISTRATION #
------------- ---------- -------------------- --------------------------- ------------------
------------- ---------- -------------------- --------------------------- ------------------
------------- ---------- -------------------- --------------------------- ------------------
------------------------------------------------------------------------------------------------
DISCLOSURE SCHEDULE (3.15)
ENVIRONMENTAL MATTERS
[DESCRIBE ANY ENVIRONMENTAL MATTERS REFERENCED TO IN 3.16 OF LOAN AGREEMENT]
DISCLOSURE SCHEDULE (3.16)
INSURANCE
[LIST ALL INSURANCE POLICIES]
-------------------------------------------------------------------------------------
TYPE INSURED BENEFICIARY AMOUNT
------------- -------------------- ----------------------- -----------------------
------------- -------------------- ----------------------- -----------------------
------------- -------------------- ----------------------- -----------------------
-------------------------------------------------------------------------------------
DISCLOSURE SCHEDULE (4.1)
DESIGNATED VENDORS
DISCLOSURE SCHEDULE (5(B))
INDEBTEDNESS
[GIVE DETAILED DESCRIPTION OF INDEBTEDNESS EXISTING AS OF CLOSING DATE.]
DISCLOSURE SCHEDULE (5(E))
LIENS
[GIVE DETAILED DESCRIPTION OF LIENS EXISTING AS OF THE CLOSING DATE]
DISCLOSURE SCHEDULE (6.1)
ACTIONS TO PERFECT LIENS
UCC Filings [LIST STATE AND COUNTY FILINGS NECESSARY TO PERFECT LIENS]
------------
Mortgage Recordings [IF ANY]
--------------------
Other Actions to Perfect Liens [IF ANY]
----------------------------------
Exhibit F
REVOLVING CREDIT NOTE
$35,000,000 August , 2006
---
Ridgefield, Connecticut
FOR VALUE RECEIVED, CROCHET & BOREL SERVICES, INC., a Texas corporation
("Borrower"), HEREBY PROMISES TO PAY to the order of NEW STREAM COMMERCIAL
FINANCE, LLC, a Delaware limited liability company ("Lender"), at Lender's chief
executive office at 00X Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000, or at such
other place as Lender may designate from time to time in writing, in lawful
money of the United States of America and in immediately available funds, the
amount of THIRTY-FIVE MILLION DOLLARS AND NO CENTS ($35,000,000) or, if less,
the aggregate unpaid amount of all Revolving Credit Advances made to the
Borrower under the "Loan Agreement" (as hereinafter defined). All capitalized
terms used but not otherwise defined herein have the meanings given to them in
the Loan Agreement or in Annex A thereto.
This Revolving Note (a) is the Revolving Credit Note issued pursuant to
that certain Loan and Security Agreement dated as of the date hereof by and
between Borrower and Lender (including all annexes, exhibits and schedules
thereto, and as from time to time amended, restated, supplemented or otherwise
modified, the "Loan Agreement"), and (b) is entitled to the benefit and security
of the Loan Agreement and all of the other Loan Documents referred to therein.
Reference is hereby made to the Loan Agreement for a statement of all of the
terms and conditions under which the Loans evidenced hereby are made and are to
be repaid. The date and amount of each Revolving Credit Advance made by Lender
to Borrower, the rates of interest applicable thereto and each payment made on
account of the principal thereof, shall be recorded by Lender on its books;
provided that the failure of Lender to make any such recordation shall not
-------- ----
affect the obligations of Borrower to make a payment when due of any amount
owing under the Loan Agreement or this Revolving Note in respect of the
Revolving Credit Advances made by Lender to Borrower.
The principal amount of the indebtedness evidenced hereby shall be payable
in the amounts and on the dates specified in the Loan Agreement, the terms of
which are hereby incorporated herein by reference. Interest thereon shall be
paid until such principal amount is paid in full at such interest rates and at
such times, and pursuant to such calculations, as are specified in the Loan
Agreement.
If any payment on this Revolving Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
Upon and after the occurrence of any Event of Default, this Revolving Note
may, as provided in the Loan Agreement, and without demand, notice or legal
process of any kind, be declared, and immediately shall become, due and payable.
Time is of the essence of this Revolving Note. Demand, presentment,
protest and notice of nonpayment and protest are hereby waived by Borrower.
Except as provided in the Loan Agreement, this Revolving Note may not be
assigned by Lender to any Person.
THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CONNECTICUT APPLICABLE TO CONTRACTS MADE AND PERFORMED
IN THAT STATE.
CROCHET & BOREL SERVICES, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
2