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EXHIBIT 10.15
LOAN AND SECURITY AGREEMENT
Dated as of July 28, 1999
Between
ENERGY AUCTION EXCHANGE, INC.
as the Borrower
and
CITICORP U.S.A., Inc.
as the Lender
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TABLE OF CONTENTS
Article I. INTERPRETATION OF THIS AGREEMENT.......................................................................1
1.1 Definitions............................................................................................1
1.2 Accounting Terms......................................................................................15
1.3 Other Terms...........................................................................................15
1.4 Computation of Time Periods...........................................................................15
Article II. LOANS AND OTHER FINANCIAL ACCOMMODATIONS.............................................................15
2.1 The Term Loan Facility................................................................................15
2.2 Working Capital Facility..............................................................................16
2.3 Notice of Borrowing; Making the Loans.................................................................17
2.4 Prepayments; Reserves.................................................................................18
2.5 Interest. ...........................................................................................18
2.6 Prepayment Provisions; Breakage Costs.................................................................19
2.7 Increased Costs; .....................................................................................19
2.8 Payments and Computations.............................................................................20
2.9 Taxes.................................................................................................21
2.10 Reserved..............................................................................................23
2.11 Conversions...........................................................................................23
2.12 Fees..................................................................................................24
Article III. [RESERVED]..........................................................................................24
Article IV. COLLATERAL...........................................................................................24
4.1 Grant of Security Interest............................................................................24
4.2 Intentionally Omitted.................................................................................25
4.3 Perfection and Protection of Security Interest........................................................25
4.4 Location of Collateral. ..............................................................................26
4.5 Title to, Liens on, and Sale and Use of Collateral. .................................................26
4.6 Access and Examination; Appraisals. .................................................................26
4.7 Intentionally Omitted.................................................................................26
4.8 Collection of Receivables. ..........................................................................27
4.9 Equipment. ..........................................................................................27
4.10 Contract Rights. ...................................................................................27
4.11 Right to Cure. ......................................................................................28
4.12 Power of Attorney. ..................................................................................28
4.13 The Lender's Rights, Duties and Liabilities. ........................................................29
Article V. BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.....................................................29
5.1 Books and Records. ..................................................................................29
5.2 Financial Information. .............................................................................30
5.3 Notices to the Lender. ..............................................................................31
Article VI. GENERAL WARRANTIES AND REPRESENTATIONS...............................................................32
6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan
Documents.............................................................................................32
6.2 Validity and Priority of Security Interest. .........................................................33
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6.3 Organization and Qualification. .....................................................................33
6.4 Corporate Name; Prior Transactions. ..................................................................33
6.5 Subsidiaries and Affiliates. ........................................................................33
6.6 Financial Statements and Projections. ...............................................................34
6.7 Intentionally Omitted.................................................................................34
6.8 Debt. ...............................................................................................34
6.9 Real Property; Leases. ..............................................................................34
6.10 Proprietary Rights. .................................................................................34
6.11 Intentionally Omitted.................................................................................34
6.12 Litigation. .........................................................................................34
6.13 Restrictive Agreements. .............................................................................35
6.14 Labor Disputes. .....................................................................................35
6.15 Environmental, Health and Safety Laws. ..............................................................35
6.16 No Violation of Law. ................................................................................35
6.17 No Default. .........................................................................................35
6.18 ERISA.................................................................................................36
6.19 Taxes. ..............................................................................................37
6.20 Investment Act. .....................................................................................37
6.21 Margin Securities.....................................................................................37
6.22 Disclosure. .........................................................................................38
Article VII. COVENANTS...........................................................................................38
7.1 Taxes and Other Obligations. ........................................................................38
7.2 Corporate Existence and Good Standing. ..............................................................38
7.3 Compliance with Law and Agreements....................................................................38
7.4 Maintenance of Property. ............................................................................39
7.5 Insurance.............................................................................................39
7.6 Intentionally Omitted.................................................................................40
7.7 Environmental, Health and Safety Laws. ..............................................................40
7.8 ERISA.................................................................................................40
7.9 Mergers, Consolidations or Sales. ...................................................................41
7.10 Restricted Payments; Capital Change. ................................................................41
7.11 Transactions Affecting Collateral or Obligations. ...................................................41
7.12 Guaranties. .........................................................................................41
7.13 Debt. ...............................................................................................42
7.14 Prepayment. .........................................................................................42
7.15 Transactions with Affiliates. .......................................................................42
7.16 Business Conducted. .................................................................................42
7.17 Liens. ..............................................................................................42
7.18 Sale and Leaseback Transactions.......................................................................42
7.19 New Subsidiaries. ...................................................................................43
7.20 Restricted Investments. .............................................................................43
7.21 Reserved..............................................................................................43
7.22 Consolidated Debt Service Coverage Ratio. ...........................................................43
7.23 Consolidated Leverage Ratio. ........................................................................43
7.24 Year 2000. ..........................................................................................43
7.25 Use of Proceeds. ....................................................................................43
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Article VIII. CONDITIONS OF LENDING..............................................................................44
8.1 Conditions Precedent to Making of Loans...............................................................44
8.2 Conditions Precedent to Each Loan.....................................................................45
Article IX. DEFAULT; REMEDIES....................................................................................46
9.1 Events of Default.....................................................................................46
9.2 Remedies..............................................................................................48
Article X. TERMINATION...........................................................................................49
Article XI. AMENDMENTS; ASSIGNMENTS; SUCCESSORS..................................................................49
11.1 Amendments and Waivers. .............................................................................49
11.2 Participations........................................................................................49
11.3 Assignments...........................................................................................50
Article XII. MISCELLANEOUS.......................................................................................51
12.1 Cumulative Remedies; No Prior Recourse to Collateral. ...............................................51
12.2 No Implied Waivers. .................................................................................51
12.3 Severability. .......................................................................................51
12.4 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.................................51
12.5 Survival of Representations and Warranties. .........................................................52
12.6 Other Security and Guaranties. ......................................................................53
12.7 Fees and Expenses. ..................................................................................53
12.8 Notices...............................................................................................53
12.9 Indemnity.............................................................................................54
12.10 Waiver of Notices. ..................................................................................55
12.11 Counterparts. .......................................................................................55
12.12 Captions. ...........................................................................................55
12.13 Confidentiality.......................................................................................55
12.14 Set-Off. ...........................................................................................56
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EXHIBITS
EXHIBIT A - Form of Notice of Borrowing
EXHIBIT B - Form of Term Note
EXHIBIT C - Form of Working Capital Note
EXHIBIT D Form of Notice of Conversion
SCHEDULES
Schedule 1.1-B - Existing Liens
Schedule 4.4 - List of Collateral Locations
Schedule 6.4 - List of Prior Names
Schedule 6.5 - Subsidiaries and Affiliates
Schedule 6.8 - Debt
Schedule 6.9 - Leases; Real Property
Schedule 6.10 - Proprietary Rights
Schedule 6.12 - Litigation
Schedule 6.14 - Labor Disputes
Schedule 6.15 - Environmental Matters
Schedule 6.18 - Employee Benefit Plans
Schedule 7.15 - Affiliate Transactions
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LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT (the "Agreement") is dated as of July
28, 1999 between CITICORP U.S.A., Inc. (the "Lender") and ENERGY AUCTION
EXCHANGE, INC. (the "Borrower"). In consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable
consideration, the receipt of which is hereby acknowledged, the Borrower and
the Lender hereby agree as follows.
Article I.
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
"Account Debtor" means each Person obligated in any way on or in
connection with an Account.
"Accounts" means, with respect to any Person, all of such Person's now
owned or hereafter acquired or arising accounts, contract rights, and any other
rights to payment for the sale or lease of goods or rendition of services
whether or not they have been earned by performance.
"Affiliate" means with respect to any Person: (i) any Person which,
directly or indirectly, controls, is controlled by or is under common control
with such first Person; (ii) any Person which beneficially owns or holds,
directly or indirectly, ten percent (10.0%) or more of any class of Voting
Stock of such first Person; or (iii) any Person, ten percent (10.0%) or more of
any class of the Voting Stock (or if such Person is not a corporation, ten
percent (10.0%) or more of the equity interest) of which is beneficially owned
or held, directly or indirectly, by such first Person. Control (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used herein, means the possession, directly or indirectly, of the
power in any form to direct or cause the direction of the management and
policies of the Person in question.
"Applicable Margin" shall mean, at any time of determination, with
respect to the interest rate payable on each of the Loans, the percentage set
forth below for such Loan opposite the applicable Debt to Cash Flow Ratio as at
the end of the Borrower's most recently ended second or fourth fiscal quarter,
as the case may be:
(a) for the Term Loan Facility:
DEBT TO CASH FLOW RATIO EURODOLLAR RATE BASE RATE
----------------------- --------------- ---------
< 2.0 to 1.0 1.75% (-0.50%)
> or = 2.0 to 1.0 and < 2.5 to 1.0 2.00% (-0.25%)
> or = 2.5 to 1.0 and < 3.0 to 1.0 2.25% 0%
> or = 3.0 to 1.0 < 4.0 to 1.0 2.50% 0%
> or = 4.0 to 1.0 2.75% 0%
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(b) for the Working Capital Facility:
DEBT TO CASH FLOW RATIO EURODOLLAR RATE BASE RATE
----------------------- --------------- ---------
< 2.0 to 1.0 2.25% 0%
---------------
> or = 2.0 to 1.0 and < 2.5 to 1.0 2.50% 0%
---------------
> or = 2.5 to 1.0 and < 3.0 to 1.0 2.75% 0%
---------------
> or = 3.0 to 1.0 and < 4.0 to 1.0 3.00% 0.25%
---------------
> or = 4.0 to 1.0 3.25% 0.50%
---------------
(c) Initially, the Applicable Margin shall be (a) 0% for Base Rate
Loans and 2.75% for Eurodollar Rate Loans under the Term Loan Facility and (b)
0% for Base Rate Loans and 3.25% for Eurodollar Rate Loans under the Working
Capital Facility and each such Applicable Margin shall remain in effect until
September 30, 2000. Thereafter, the Applicable Margin shall be determined by the
Lender each September 30 and March 31 thereafter (the "Rate Determination Date")
based upon the information set forth in previously delivered or concurrently
delivered audited or unaudited financial statements delivered pursuant to
Section 5.2 for each fiscal period ended June 30 and December 31 of each year
(each a "Determining Financial Statement"). Except as hereinafter provided, any
change in the Applicable Margin shall take effect on the Business Day following
the Rate Determination Date provided the Borrower has made delivery to the
Lender of the applicable Determining Financial Statement, and the Applicable
Margin, as so determined, shall remain in effect until the earlier of (i) the
Business Day next following the next Rate Determination Date provided the
Borrower has made delivery to the Lender of a subsequent Determining Financial
Statement evidencing a Debt to Cash Flow Ratio requiring either a higher or
lower Applicable Margin from that then in effect or (ii) the day on which
Borrower fails to deliver to the Lender the applicable Determining Financial
Statement within the time provided by Section 5.2(a) or Section 5.2(b), as the
case may be, the Applicable Margin shall be deemed to be based upon an assumed
Debt to Cash Flow Ratio of equal to or greater than 4.0 to 1.0 and such
Applicable Margin shall be effective on the date such Determining Financial
Statement was required to have been delivered and shall remain in effect until
the Business Day following the Business Day of delivery to the Lender of a
Determining Financial Statement reflecting a Debt to Cash Flow Ratio for which a
lower Applicable Margin would be applicable. Notwithstanding any other provision
of this Agreement, during any period that an Event of Default exists, the
Applicable Margin for a Debt to Cash Flow Ratio of > or = 4.0 to 1.00 shall be
effective.
"Arrangement Fee" has the meaning specified in Section 2.12(a).
"Bankruptcy Code" shall mean Title 11 of the United States Code (11
U.S.C. Section 101 et seq.), as amended from time to time and any successor
statute.
"Base Rate" means, at any time, a fluctuating interest rate per annum
as shall be in effect from time to time, which rate per annum shall at all
times be equal to the rate of interest announced publicly by Citibank, N.A. in
New York, New York, from time to time, as its base rate.
"Base Rate Loan" means a Loan which bears interest as provided in
Section 2.5(a).
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"Benefit Plan" shall mean a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which the
Borrower or any ERISA Affiliate is or within the immediately preceding six (6)
years was an "employer" as defined in Section 3(5) of ERISA.
"Borrowing" means a borrowing consisting of Loans of the same type
made on the same day by the Lender.
"Business Day" means a day on which banks are not required or
authorized to close in New York City and, if the applicable day relates to a
Eurodollar Rate Loan, a day on which dealings are carried on in the London
interbank market and banks are open for business in London.
"Capital Expenditures" shall mean with respect to any Person, for any
period, the aggregate of all expenditures, whether paid in cash or accrued as
liabilities during that period and including that portion of Capital Leases
that is capitalized on the balance sheet of such Person during such period
that, in conformity with GAAP, is required to be included in or reflected by
the property, plant or equipment or similar fixed asset accounts reflected in
the combined and consolidated balance sheet of such Person (including equipment
which is purchased simultaneously with the trade-in of existing equipment owned
by such Person to the extent of the gross amount of such purchase price less
the book value of the equipment being traded in at such time), but excluding
expenditures made in connection with the replacement or restoration of assets,
to the extent reimbursed or financed from insurance proceeds paid on account of
the loss of or damage to the assets being replaced or restored, or from awards
of compensation arising from the taking by condemnation of eminent domain of
such assets being replaced.
"Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of such Person.
"Cash Interest Expense" means, with respect to any Person, for any
period, total interest expense, whether paid or accrued (including the interest
component of Capital Leases), of such Person, including, without limitation,
all commissions, discounts and other fees and charges owed with respect to
letters of credit and net costs under Interest Rate Contracts, but excluding,
however, interest expense not payable in cash (including amortization of
discount), all as determined in conformity with GAAP.
"Change in Control" shall mean (a) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ individually or any
trust created for the benefit of said individual or his spouse or descendants
(provided in connection with any trust the voting rights of any stock deposited
in such trust is retained by such individual as trustee) or any entity over
which such individual shall have control shall cease to own, directly or
indirectly, (legally or beneficially), free and clear of all liens or other
encumbrances), at least 51% of the outstanding Voting Stock of the Borrower,
(b) the Borrower shall cease to own at least 80% of the Voting Stock of OGAC.
"Closing Date" shall mean the date all of the conditions precedent set
forth in Article VIII hereof are fulfilled with respect to the Term Loan and
any Working Capital Loan initially requested by Borrower.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning ascribed to it in Section 4.1.
"Commitment" shall mean the Lender's obligation to make the Working
Capital Loans under Section 2.2 up to the Working Capital Amount.
"Consolidated Debt Service Coverage Ratio" shall mean, for any period,
for the Borrower and its Subsidiaries on a consolidated basis, the ratio of (i)
EBITDA, minus unfinanced Capital Expenditures net of purchase money and Capital
Lease obligations with respect thereto, to the extent permitted hereunder and
made during such period, to (ii) Fixed Charges during such period.
"Consolidated Leverage Ratio" shall mean, at any time of
determination, with respect to the Borrower and its Subsidiaries on a
consolidated basis, the ratio of total liabilities to Net Worth.
"Contaminant" shall mean any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.
"Contract Rights" means all of the Borrower's right, title and
interest in, to and under any and all contracts and all other agreements
relating to the Borrower's business or its Property, whether such contracts or
agreements are currently in effect or executed by the Borrower after the date
hereof, together with any and all extensions, modifications, amendments and
renewals thereof, any and all payments or rents to be paid to the Borrower
under any such contracts and agreements, and all benefits and advantages to be
derived therefrom. Contract Rights shall, include, without limitation, any and
all rights of the Borrower under the Stock Purchase Agreement, the Shareholder
Agreement and all other documents executed in connection therewith and any
leases or subleases (whether as a lessor/sublessor or lessee/sublessee) to
which the Borrower is a party and all rents payable by any lessees/sublessees
under such leases or subleases and all claims for money due or to become due to
the Borrower under agreements and bills pursuant to which the Borrower
purchased any Property and all rights and claims of the Borrower now or
hereafter existing: (i) under any insurance, indemnities, warranties, and
guarantees provided for or arising out of or in connection with any of the
foregoing agreements; (ii) for any damages arising out of or for breach or
default under or in connection with any of the foregoing agreements; (iii) to
all other amounts from time to time paid or payable under or in connection with
any of the foregoing agreements; or (iv) to exercise or enforce any and all
covenants, remedies, powers and privileges thereunder.
"Conversion Date" shall have the meaning ascribed to it in Section
2.11(a).
"Credit Facility" means either the Term Loan Facility or the Working
Capital Facility.
"Debt" means all liabilities, obligations and indebtedness of the
Borrower and its Subsidiaries on a consolidated basis owing to any Person, of
any kind or nature, now or hereafter owing, arising, due or payable, howsoever
evidenced, created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or otherwise, without duplication, and including,
without in any way limiting the generality of the foregoing: (i) the Borrower's
or any
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Subsidiary's liabilities and obligations to trade creditors; (ii) all of the
Obligations; (iii) all of the Borrower's obligations for borrowed money; (iv)
all obligations and liabilities of any Person secured by any Lien on the
Borrower's or any Subsidiary's Property, even though the Borrower or such
Subsidiary shall not have assumed or become liable for the payment thereof;
provided, however, that all such obligations and liabilities which are limited
in recourse to such Property shall be included in Debt only to the extent of
the value of such Property as shown on a consolidated balance sheet of the
Borrower and its Subsidiaries prepared in accordance with GAAP; (v) all
obligations or liabilities created or arising under any Capital Lease or
conditional sale or other title retention agreement with respect to Property
used or acquired by the Borrower or any Subsidiary, even if the rights and
remedies of the lessor, seller or lender thereunder are limited to repossession
of such Property; provided, however, that all such obligations and liabilities
which are limited in recourse to such Property shall be included in Debt only
to the extent of the value of such Property as shown on a consolidated balance
sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP;
(vi) all accrued Plan liabilities; (vii) all obligations and liabilities under
Guaranties; and (viii) deferred taxes. Notwithstanding the foregoing, for
purposes of calculating or determining Debt, if the Borrower or any Subsidiary
are jointly and severally liable for the entire amount of any liability,
obligation or indebtedness or the Borrower or any Subsidiary is a guarantor of
any liability, obligation or indebtedness of the Borrower or Subsidiary, such
liability, obligation or indebtedness shall only be included in determining
Debt for the Borrower on a consolidated basis as the Debt of the Borrower or
Subsidiary, as the case may be, that is primarily liable therefor.
"Debt to Cash Flow Ratio" means for any period with respect to the
Borrower and its Subsidiaries on a consolidated basis at any time of
determination, the ratio of (a) Funded Indebtedness to (b) EBITDA for the 12
consecutive month period ended at such time.
"Default" means any event or condition which, with notice, the passage
of time or both, would constitute an Event of Default.
"Default Rate" means a per annum interest rate equal to the sum of (a)
the interest rate otherwise applicable from time to time plus (b) two percent
(2.00%). Each Default Rate shall be adjusted simultaneously with any change in
the applicable interest rate.
"DOL" shall mean the United States Department of Labor and any
successor department or agency.
"Dollars" and "$" shall mean the lawful money of the United States of
America.
"EBITDA" shall mean with respect to any Person, for any period, the
sum of the amounts for such period, of (i) Net Income, plus (ii) depreciation
and amortization expense, plus (iii) Cash Interest Expense, plus (iv) accrued
federal and state income taxes plus (v) extraordinary losses as determined in
accordance with GAAP which have been included in the determination of Net
Income, minus (vi) extraordinary gains as determined in accordance with GAAP
which have been included in the determination of Net Income.
"Eligible Assignee" means either (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank organized
under the laws of any other country or a political subdivision of any such
country, and having a combined capital and surplus of at least
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$100,000,000, provided that such bank is acting through a branch or agency
located in the United States; or (c) a Person organized under the United
States, or any state thereof, that is primarily engaged in the business of
commercial banking and that is (i) a subsidiary of Lender, (ii) a subsidiary of
a Person of which Lender is a subsidiary, or (iii) a Person of which Lender is
a subsidiary.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to (i) the protection of the environment, (ii) the effect of the environment on
human health, (iii) emissions, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into surface water, ground water
or land, or (iv) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.
"Equipment" means, with respect to any Person, all of such Person's
now owned and hereafter acquired machinery, equipment, furniture, furnishings,
fixtures, and other tangible personal property, including, without limitation,
trade fixtures, and office equipment, as well as all of such types of property
leased by such Person and all of such Person's rights and interests with
respect thereto under such leases (including, without limitation, options to
purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies used
or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" shall mean, with respect to any Person, any (i)
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as the such Person, or (ii)
partnership or other trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the Code) with such
Person, or (iii) member of the same affiliated service group (within the
meaning of Section 414(m) of the Code) as such Person, any corporation
described in clause (i) above or any partnership or trade or business described
in clause (ii) above.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D.
"Eurodollar Rate" means, for any Interest Period applicable to a
Eurodollar Rate Loan, an interest rate per annum equal to the rate per annum
obtained by dividing (i) the rate per annum at which deposits in Dollars are
offered by the principal office of Citibank, N.A. in London, England to prime
banks in the London interbank market at 11:00 a.m. (London time) two Business
Days before the first day of such Interest Period in an amount substantially
equal to such Eurodollar Rate Loan and for a period equal to such Interest
Period by (ii) a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Interest Period. The Eurodollar Rate for the Interest
Period for each Eurodollar Rate Loan comprising part of the same Borrowing
shall be determined by the Lender two Business Days before the first day of
such Interest Period.
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"Eurodollar Rate Loan" means a Loan or portion thereof which bears
interest as provided in Section 2.5(b).
"Eurodollar Rate Reserve Percentage" for the Interest Period for any
Eurodollar Rate Loan means the reserve percentage applicable during such
Interest Period (or if more than one such percentage shall be so applicable,
the daily average of such percentages for those days in such Interest Period
during which any such percentage shall be so applicable) under regulations
issued from time to time by the Federal Reserve Board for determining the
maximum reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for the Lender with respect
to liabilities or assets consisting of or including Eurocurrency Liabilities
having a term equal to such Interest Period.
"Event of Default" shall mean any of the events listed in Section 9.1.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System and any successor thereto.
"Fiscal Year" shall mean the fiscal year of the Borrower, which shall
be the twelve-month period ending on the last day of December, or such other
period as the Borrower may designate and the Lender shall approve in writing.
"Fixed Charges" shall mean, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the amounts for such period of (i) Cash
Interest Expense, plus (ii) scheduled principal payments due under the Term
Note and other Funded Indebtedness (including the principal component of
Capital Lease obligations).
"Funded Indebtedness" shall mean, without duplication, at any time of
determination, the average principal amount outstanding under the Working
Capital Facility during the most recently ended 12 consecutive months plus all
Debt of the Borrower and its Subsidiaries on a consolidated basis at such time
except for (a) Debt described in clauses (i), (iv), (vi) and (viii) of the
definition of Debt, (b) Debt outstanding under the Working Capital Facility,
and (c) Subordinated Indebtedness.
"Funding Date" means the date the Term Loan or any Working Capital
Loan is to be made hereunder.
"GAAP" shall mean generally accepted accounting principles set forth
in the rules, regulations, statements, opinions and pronouncements of the
American Institute of Certified Public Accountants and of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the accounting profession), which, subject to
Section 5.1, are applicable to the circumstances as of the date of
determination.
"General Intangibles" shall mean and include with respect to any
Person, all of such Person's now owned and hereafter acquired causes in action,
causes of action and all other intangible personal property of every kind and
nature (other than Accounts), including, without limitation, limited
partnership interests, membership interests, corporate and other business
records, inventions, designs, patents, patent applications, service marks,
trademarks, trademark applications, trade names, trade secrets, goodwill,
registrations, copyrights, licenses, franchises, customer lists, reversions
from any Benefit Plan, tax refunds, tax refund claims, rights and claims
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against carriers, shippers, franchisees, lessors and lessees, and rights to
indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which such Person
is beneficiary, and any letter of credit, guarantee, claim, security interest
or other security held by or granted to the Borrower to secure payment by an
Account Debtor of any of the Accounts.
"Good Faith" shall mean honesty in fact in the conduct or transaction
concerned, without regard to whether standards which might be deemed
commercially reasonable have been observed.
"Governmental Authority" shall mean any nation or government, any
federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Guaranty" means, with respect to any Person, all obligations of such
Person which in any manner directly or indirectly guarantee or assure, or in
effect guarantee or assure, the payment or performance of any indebtedness,
dividend or other obligation of any other Person (the "guaranteed
obligations"), or to assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including, without limitation, any
such obligations incurred through an agreement, contingent or otherwise: (a) to
purchase the guaranteed obligations or any property constituting security
thereof; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other balance sheet
condition; (c) to lease property or to purchase any debt or equity securities
or other property or services.
"Indemnitees" shall have the meaning ascribed to it in Section 12.9.
"Interest Period" means, for each Eurodollar Rate Loan, the period
commencing on the date of such Loan or the conversion thereof and ending on the
last day of the period selected by the Borrower pursuant to the provisions
below. The duration of each such Interest Period shall be one, three or six
months as the Borrower may select, upon notice received by the Lender in
accordance with Section 2.3(b) or Section 2.11, as the case may be; provided,
however, that:
(i) whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur
on the next succeeding Business Day; provided, however, that
if such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the next
preceding Business Day; and
(ii) the Borrower shall not select an Interest
Period for any Loan that ends after the applicable
Termination Date for the Credit Facility under which such
Loan is made.
"Interest Rate Contracts" shall mean interest rate insurance product
agreements providing interest rate protection.
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"Inventory" shall mean and include, with respect to any Person, all of
such Person's now owned and hereafter acquired goods, materials, supplies,
merchandise and other personal property furnished under any contract of service
or intended for sale or lease, including, without limitation, work in process,
finished goods and materials, parts and supplies of any kind, nature or
description which are used or consumed in such Person's business or are or
might be used in connection with the manufacture, packing, shipping,
advertising, selling or finishing of such goods, merchandise and other personal
property, or are used in connection with the provision of services in such
Person's business, all returned or repossessed goods now, or at any time or
times hereafter, in the possession or under the control of such Person or
Lender, and all documents of title or documents representing the same.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance for the payment
of money, lien (statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financial lease
having substantially the same economic effect as any of the foregoing and the
filing of any financing statement (other than a financing statement filed by a
"true" lessor pursuant to Section 9-408 of the Code or other comparable law of
any jurisdiction) naming the owner of the asset to which such Lien relates as
debtor under the Code or other comparable law of any jurisdiction.
"Loan" shall mean a Term Loan or a Working Capital Loan.
"Loan Documents" shall mean this Agreement and all other agreements,
instruments and documents, including, without limitation, any other security
agreements, notes, warrants, guaranties, mortgages, deeds of trust,
subordination agreements, pledges, powers of attorney, consents, assignments,
collateral assignments, letter agreements, contracts, notices, leases,
amendments, financing statements, letter of credit applications and
reimbursement agreements, and all other writings heretofore, now, or hereafter
executed by or on behalf of the Borrower or any of its Affiliates and delivered
to the Lender in connection with or relating to this Agreement (including,
without limitation, any Interest Rate Contract entered into by the Borrower
with Lender or any Affiliate of Lender), together with all agreements,
instruments and documents referred to therein or contemplated thereby, in each
case, as amended from time to time.
"Mandatory Prepayment" shall have the meaning ascribed to it in
Section 2.4(b).
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by either Borrower or an ERISA Affiliate.
"Net Income" shall mean with respect to any Person, for any period,
the net earnings (or loss) after taxes of such Person for such period taken as
a single accounting period determined in conformity with GAAP.
"Net Worth" shall mean with respect to any Person, as at any date of
determination, the amount by which total assets of such Person exceed total
liabilities of such Person.
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"Notes" shall mean each and every Term Note and Working Capital Note
and any other note or notes executed by a Borrower pursuant to this Agreement.
"Notice of Borrowing" shall mean a notice substantially in the form of
EXHIBIT A attached hereto and made a part hereof.
"Non-Use Fee" shall have the meaning set forth in Section 2.12.
"Notice of Conversion" shall have the meaning provided in Section
2.11(a).
"Obligations" shall mean and include all loans, advances, debts,
liabilities, obligations, covenants and duties owing to the Lender, any
Affiliate of the Lender, any Indemnitee or any of their respective successors
and assigns, by the Borrower under or in connection with this Agreement and all
of the other Loan Documents, present or future, whether or not evidenced by any
note, guaranty or other instrument whether or not for the payment of money,
whether arising by reason of an extension of credit, opening or amendment of a
letter of credit (or payment of any draft drawn thereunder), loan, guaranty,
indemnification, foreign exchange or interest rate swap transactions or in any
other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, attorneys' fees and disbursements and
paralegals' fees, any other sums chargeable to Borrower under this Agreement or
any other Loan Document.
"OGA" shall mean OGA Clearinghouse I, L.L.C., a Delaware limited
liability company.
"OGAC" shall mean The Oil & Gas Asset Clearinghouse, Inc, a Texas
corporation.
"OGAC Entities" shall mean collectively OGAC, OGA and OGACLP.
"OGACLP" shall mean OGAC, L.P., a Texas limited partnership.
"Other Taxes" shall have the meaning ascribed to it in Section 2.9(b).
"Participating Lender" means any Person who shall have been granted
the right by Lender to participate in the financing provided pursuant to this
Agreement and who shall have entered into a participation agreement with
Lender.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
Person succeeding to the functions thereof.
"Pending Loans" shall mean, at any time, the aggregate principal
amount of all Working Capital Loans requested in any Notice(s) of Borrowing
previously received by the Lender but not yet advanced at such time.
"Permitted Liens" means the Liens reflected on SCHEDULE 1.1-B attached
hereto and incorporated herein by this reference and any of the following Liens
created after the date hereof:
(i) Liens for taxes not yet payable;
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(ii) statutory Liens for taxes in an amount not to
exceed $100,000 provided that the payment of such taxes which
are due and payable is being contested in Good Faith and by
proper proceedings diligently pursued, and that reserves or
other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor and that a stay of
enforcement of any such Lien is in effect;
(iii) Liens in favor of the Lender;
(iv) Liens upon Equipment granted or assumed in
connection with the acquisition of such Equipment after the
date hereof (including, without limitation, pursuant to
Capital Leases), provided, that (a) the Debt incurred to
finance each such acquisition is permitted by Section 7.13,
and (b) each such Lien attaches only to the Equipment
acquired with the Debt secured thereby;
(v) deposits under workmen's compensation,
unemployment insurance, social security and other similar
laws, or to secure the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or
to secure indemnity, performance or other similar bonds for
the performance of bids, tenders or contracts (other than for
the repayment of borrowed money) or to secure statutory
obligations or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds in the ordinary
course of business;
(vi) Liens which arise by operation of law under
Article 2 of the UCC in favor of unpaid sellers of goods or
prepaying buyers of goods, or liens in items of any
accompanying documents or proceeds of either arising by
operation of law under Article 4 of the UCC in favor of a
collecting bank;
(vii) Liens arising by operation of law securing the
claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons, provided that
the payment thereof is not at the time required by Section
7.1;
(viii) Liens arising from judgments, decrees or
attachments to the extent and only so long as such judgment,
decree or attachment has not caused or resulted in an Event
of Default;
(ix) easements, reservations, rights-of-way,
restrictions, minor defects or irregularities in title and
other similar Liens affecting real property not interfering
in any material respect with the ordinary conduct of the
business of Borrower and its Subsidiaries.
(x) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods;
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(xi) Liens arising solely by virtue of any statutory
or common law provision relating to banker's liens, rights of
setoff or similar rights and remedies as to deposit accounts
or other funds maintained with a creditor depository
institution;
(xii) extensions or renewals of any Lien described
in this definition; and
(xiii) Liens incurred in connection with Debt
otherwise permitted under this Agreement.
"Person" shall mean and include any person, employee, individual, sole
proprietorship, partnership, joint venture, trust, limited liability company,
unincorporated organization, association, corporation, institution, entity,
party or Governmental Authority.
"Plan" shall mean an employee benefit plan defined in Section 3(3) of
ERISA in respect of which the Borrower or an ERISA Affiliate is, or within the
immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.
"Pledge Agreements" shall mean collectively, the Stock Pledge
Agreement and the Pledge and Security Agreement.
"Pledge and Security Agreement" shall mean that certain Pledge and
Security Agreement of even date herewith executed by each of the OGAC Entities
in favor of the Lender.
"Property" shall mean, with respect to the Borrower or any Subsidiary,
any real or personal property, plant, building, facility, structure, equipment
or unit, or other asset owned, leased or operated by such Person and any of its
Subsidiaries, including, without limitation, such Person's Equipment and
Inventory.
"Proprietary Rights" means, with respect to any Person, all of such
Person's now owned and hereafter arising or acquired: licenses, franchises,
permits, patents, patent rights, copyrights, works which are the subject matter
of copyrights, trademarks, service marks, trade secrets, trade names, trade
styles, patent, trademark and service ▇▇▇▇ applications, and all licenses and
rights related to any of the foregoing, and all other rights under any of the
foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to ▇▇▇ for past,
present and future infringement of any of the foregoing.
"Regulation D" shall mean Regulation D of the Federal Reserve Board as
in effect from time to time.
"Regulation T" shall mean Regulation T of the Federal Reserve Board as
in effect from time to time.
"Regulation U" shall mean Regulation U of the Federal Reserve Board as
in effect from time to time.
"Regulation X" shall mean Regulation X of the Federal Reserve Board as
in effect from time to time.
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"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any Property, including the
movement of Contaminants through or in the air, soil, surface water,
groundwater or Property.
"Remedial Action" shall mean actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(iii) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
"Reportable Event" shall mean any of the events described in Section
4043 of ERISA.
"Restricted Investment" means any acquisition of property by the
Borrower or any of its Subsidiaries in exchange for cash or other property,
whether in the form of an acquisition of stock, debt security, or other
indebtedness or obligation, or the purchase or acquisition of any other
property, or by loan, advance, capital contribution, or subscription, except
acquisitions of the following: (i) fixed assets to be used in the business of
the Borrower or a Subsidiary; (ii) goods held for use in the provision of
services by the Borrower or a Subsidiary in the ordinary course of business;
(iii) current assets arising from the rendition of services in the ordinary
course of business of the Borrower or a Subsidiary; (iv) direct obligations of
the United States of America, or any agency thereof, or obligations guaranteed
by the United States of America, provided that such obligations mature within
one year from the date of acquisition thereof; (v) certificates of deposit
maturing within one year from the date of acquisition, bankers' acceptances,
Eurodollar bank deposits, or overnight bank deposits, in each case issued by,
created by, or with a bank or trust company organized under the laws of the
United States or any state thereof having capital and surplus aggregating at
least $100,000,000; and (vi) commercial paper given the highest rating by a
national credit rating agency and maturing not more than 90 days from the date
of creation thereof.
"Restricted Payment" shall mean, with respect to any Person, (i) any
dividend or other distribution, direct or indirect, on account of any shares of
any class of capital stock of such Person now or hereafter outstanding, except
a dividend payable solely in shares of the issuer, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of capital stock of such
Person now or hereafter outstanding, and (iii) any payment made to redeem,
purchase, repurchase or retire, or to obtain the surrender of or any
outstanding warrants, options or other rights to acquire shares of any class of
capital stock of such Person now or hereafter outstanding (other than the
issuance of common stock) upon the exercise of any such warrants, options or
rights to acquire such stock.
"SEC" shall mean the Securities and Exchange Commission and any
successor agency.
"Securities" shall mean any stock, shares, voting trust certificates,
partnership interests (whether general or limited), bonds, debentures, notes or
other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities", whether certificated or uncertificated, or any certificates of
interest, shares, or participation in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire
any of the foregoing, but shall not include the Notes or any other evidence of
the Obligations.
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"Shareholders Agreement" shall mean that certain Shareholders
Agreement dated as of June 1, 1999 among, the Borrower, OGAC and the other
shareholders of OGAC.
"Solvent" means when used with respect to any Person that (i) the fair
saleable value of all such Person's Property as a going concern, is in excess
of the total amount of its debts (including contingent liabilities); (ii) it is
able to pay its debts as they mature; (iii) it does not have unreasonably small
capital for the business in which it is engaged or for any business or
transaction in which it is about to engage; and (iv) it is not "insolvent" as
such term is defined in Section 101(31) of the Bankruptcy Code.
"Stock Pledge Agreement" shall mean that certain Pledge Agreement of
even date herewith executed by Borrower, OGAC and OGA in favor of the Lender.
"Stock Purchase Agreement" shall mean that certain Stock Purchase
Agreement dated as of June 1, 1999 among Borrower and the shareholders of OGAC.
"Subordinated Indebtedness" shall mean with respect to the Borrower
and its Subsidiaries that portion of any unsecured Funded Indebtedness of the
Borrower and its subsidiaries that is incurred on terms and conditions approved
in writing by the Lender and is subordinated, in a manner approved in writing
by the Lender, as to right and time of payment of principal and interest
thereon to any and all of the Obligations.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which more than fifty percent (50.0%) of the voting power of
the outstanding securities or interests of any class or classes, is at the
time, directly or indirectly through one or more intermediaries, owned by one
or more of such Person and/or one or more of its Subsidiaries.
"Taxes" shall have the meaning ascribed to it in Section 2.9(a).
"Term Loan" means the Loan described in Section 2.1(a).
"Termination Date" shall mean July 27, 2004.
"Term Loan Facility" shall mean the credit facility provided under
Section 2.1.
"Term Note" shall have the meaning ascribed to it in Section 2.1(b).
"Termination Event" shall mean (i) a Reportable Event with respect to
any Benefit Plan; (ii) the withdrawal of the Borrower or any ERISA Affiliate
from a Benefit Plan during a plan year in which the Borrower or such ERISA
Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA; (iii) the imposition of an obligation on the Borrower or any ERISA
Affiliate under Section 4041 of ERISA to provide affected parties written
notice of intent to terminate a Benefit Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Benefit Plan; (v) any event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan; or (vi) the partial
or complete withdrawal of the Borrower or any ERISA Affiliate from a
Multiemployer Plan.
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"Third Party Collateral" shall mean any property of any Person, other
than the Borrower, which, pursuant to the terms of any of the Loan Documents,
secures the payment and performance of any portion of the Obligations.
"UCC" means the Uniform Commercial Code (or any successor statute) of
the State of Colorado or of any other state the laws of which are required by
Section 9-103 thereof to be applied in connection with the issue of perfection
of security interests.
"Voting Stock" means securities of any class or classes of a
corporation, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
"Working Capital Amount" shall mean $3,000,000, as such amount may be
reduced from time to time pursuant to Section 9.2 of this Agreement.
"Working Capital Facility" shall mean the credit facility provided
under Section 2.2.
"Working Capital Loans" shall have the meaning ascribed to it in
Section 2.2(a).
"Working Capital Note" shall have the meaning ascribed to it in
Section 2.2(b).
1.2 Accounting Terms. Any accounting terms used in this Agreement
which are not specifically defined shall have the meanings customarily given
them in accordance with GAAP.
1.3 Other Terms. All other terms contained in this Agreement shall,
unless the context indicates otherwise, have the meanings provided for by the
UCC to the extent the same are defined therein.
1.4 Computation of Time Periods. For purposes of this Agreement, in
the computation of periods of time from a specified date to a later specified
date, unless otherwise specified, the word "from" means "from and including"
and the words "to" and "until" each means "to and including."
Article II.
LOANS AND OTHER FINANCIAL ACCOMMODATIONS
2.1 The Term Loan Facility.
(a) Amount of Term Loan. Subject to the terms and conditions
of this Agreement and in reliance upon the representations and
warranties of the Borrower herein set forth, the Lender hereby agrees
to loan to Borrower an amount equal to $6,000,000 (the "Term Loan").
Upon satisfaction of the applicable conditions set forth in Article
VIII hereof, the Lender shall make the proceeds of the Term Loan
available to the Borrower by transferring same day funds to an account
designated in writing by the Borrower. Initially, the Term Loan shall
be made as a Base Rate Loan.
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(b) Term Note. The Term Loan shall be evidence by a
promissory note, substantially in the form of EXHIBIT B attached
hereto and made a part hereof (the "Term Note").
(c) Use of Proceeds. Borrower shall use the proceeds of the
Term Loan only for the purpose of funding or refinancing of a portion
of the purchase price for its purchase of the stock of OGAC pursuant
to the terms of the Stock Purchase Agreement and to otherwise fund
working capital and for other corporate purposes.
(d) Repayment. The Term Loan shall be repaid in fifty-nine
consecutive monthly installments of $71,428.51 commencing on August 1,
1999 and on the first Business Day of each month thereafter and a
final installment on the Termination Date equal to the entire unpaid
principal balance of the Term Loan at such time.
2.2 Working Capital Facility.
(a) Availability.
(i) Subject to the terms and conditions of this
Agreement and in reliance upon the representations and
warranties of the Borrower herein set forth, the Lender
hereby agrees to make revolving loans ("Working Capital
Loans") to the Borrower from time to time at Borrower's
request during the period from the date hereof to the
Termination Date, in an amount which shall not exceed the
amount, if any, by which the Working Capital Amount exceeds
the aggregate amount of the outstanding Loans and Pending
Loans requested under this Section at such time.
(ii) Subject to all of the terms and conditions of
this Agreement, Working Capital Loans may be voluntarily
prepaid pursuant to Section 2.4(a), and any amounts so
prepaid, may be reborrowed, up to the amount available under
this Section 2.2(a) at the time of such Borrowing.
(iii) Working Capital Loans made on any Funding Date
which constitute Eurodollar Rate Loans shall be in the
aggregate minimum amount of $500,000.00 and integral
multiples of $100,000 in excess of that amount. Working
Capital Loans made on any Funding Date which constitute Base
Rate Loans shall be in the aggregate minimum amount of
$50,000.00 and integral multiples of $10,000 in excess of
that amount.
(b) Working Capital Note. The Working Capital Loans shall be
evidenced by a promissory note (a "Working Capital Note")
substantially in the form of EXHIBIT C attached hereto and made a
part. The Working Capital Note shall be dated as of the Funding Date
for the Term Loan and shall mature on the Termination Date.
(c) Use of Proceeds. Subject to the terms and conditions
contained herein, the Borrower shall use the proceeds of the Working
Capital Loans for working capital and other general corporate
purposes.
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(d) Repayment. All outstanding Working Capital Loans shall be
paid in full on the Termination Date.
2.3 Notice of Borrowing; Making the Loans.
(a) Each Loan shall be made on notice, given by the Borrower
to the Lender in writing not later than 11:00 a.m. (New York time) on
(A) the third Business Day prior to the date of the proposed
Borrowing, in the case of a request for a Eurodollar Rate Loan, and
(B) the Business Day of the proposed Borrowing, in the case of a
request for a Base Rate Loan. Each such notice of a borrowing (a
"Notice of Borrowing") shall be substantially in the form of EXHIBIT A
attached hereto. Any Notice of Borrowing must specify the requested
(i) date of such Loan, (ii) type of Loan, (iii) aggregate amount of
such Loan, (iv) applicable Interest Period for such Loan if such Loan
is a Eurodollar Rate Loan, and (v) the account or accounts to which
the proceeds of such Loan are to be disbursed. Upon fulfillment of the
applicable conditions set forth in Article VIII, the Lender will make
such funds available to the Borrower in such deposit account
maintained with the Lender as the Borrower shall designate.
(b) Anything in paragraph (a) above to the contrary
notwithstanding,
(i) if the Lender shall, at least one Business Day
before the date of any requested Borrowing, notify the
Borrower that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or
that any central bank or other Governmental Authority makes
it unlawful, for the Lender to perform its obligations
hereunder to make Eurodollar Rate Loans; or
(ii) if the Lender is unable, after reasonable
efforts, due to prevailing market conditions, to provide
timely information for the determination of the Eurodollar
Rate, or is otherwise unable to determine the Eurodollar Rate
at any time, or
(iii) if the Lender has reasonably determined that
the Eurodollar Rate is inadequate to compensate the Lender,
then, in any such event, the right of the Borrower to select
Eurodollar Rate Loans shall be suspended as of the date,
reasonably designated by the Lender until the Lender shall
notify the Borrower that the circumstances causing such
suspension no longer exist, and each Loan shall be a Base
Rate Loan.
(c) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower.
(d) The Borrower shall notify the Lender in writing of the names of
the officers and employees authorized to request any Loans on behalf of
Borrower, and shall provide the Lender with a specimen signature of each such
officer or employee. The Lender shall be entitled to rely conclusively on such
officer's or employee's authority to request a Loan on behalf of the Borrower,
until the Lender receives written notice to the
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contrary. Notwithstanding the foregoing, the Lender shall have no duty to
verify the authenticity of the signature appearing on any written Notice of
Borrowing.
2.4 Prepayments; Reserves.
(a) Voluntary Prepayments. Subject to Section 2.6, the
Borrower may (i) at any time prepay the Working Capital Loans in whole
or in part, subject to Section 2.6, and (ii) upon not less than two
(2) Business Days' prior written or telephonic notice confirmed
promptly in writing to the Lender, at any time and from time to time,
prepay the Term Loan in whole or in part, in an aggregate minimum
amount of $50,000 and integral multiples of $10,000 in excess of that
amount; provided, however, that the Borrower may prepay the Term Loan
in full without regard to such minimum amount. Any notice of
prepayment given to the Lender under this Section 2.4(a) shall specify
the date of prepayment, the aggregate principal amount of the
prepayment and which Loans such prepayment is to be applied against.
To the extent that any voluntary prepayment is made against the Term
Note, such voluntary prepayments shall be applied to the installments
due under the Term Note in the inverse order of maturity until paid in
full. Notice of prepayment having been delivered as provided herein,
the principal amount of the Loans specified in such notice shall
become due and payable on the prepayment date.
(b) Mandatory Prepayments. All Obligations shall become
immediately due and payable, at the option of the Lender upon the
occurrence of a Change in Control, whereupon the Borrower shall repay
the Term Loan and the Working Capital Loans in full together with all
accrued but unpaid interest thereon and the Commitment shall
terminate.
(c) Termination of Commitment. The Borrower may at any time,
subject to Section 2.6 below, upon two (2) Business Days prior written
notice to the Lender, terminate the Commitment.
2.5 Interest. The Borrower shall pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount
shall be paid in full, at the following intervals and at the following rates
per annum:
(a) Base Rate Loans. If such Loan is a Base Rate Loan, a rate
per annum equal to the Applicable Margin for Base Rate Loans at the
time of determination plus the Base Rate in effect from time to time,
payable, in arrears, on the first day of each calendar month and on
the date such Base Rate Loan shall be paid in full; and
(b) Eurodollar Rate Loans. If such Loan is a Eurodollar Rate
Loan, a rate per annum equal at all times during the Interest Period
for such Loan to the Eurodollar Rate for such Interest Period plus the
Applicable Margin at the time of determination, payable, in arrears,
on the first day of each calendar month, or, if earlier, on the date
such Eurodollar Rate Loan shall be paid in full;
provided, however, that, from and after the occurrence of an Event of
Default and unless and until such Event of Default is cured or waived, (i) the
Borrower shall not be entitled to elect that any portion of any Loan be a
Eurodollar Rate Loan; and (ii) the Borrower shall pay interest
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on the unpaid principal amount of all Loans at the Default Rate, such interest
being payable on demand.
2.6 Prepayment Provisions; Breakage Costs.
(a) The Borrower shall not voluntarily prepay any Loans other
than Base Rate Loans. If the Borrower repays any Eurodollar Rate Loan
prior to the last day of the applicable Interest Period for any reason
or fails to borrow a Eurodollar Rate Loan once requested, the Borrower
shall pay to the Lender the amount of any cost, loss or expense
incurred by the Lender as a result of the repayment of a Eurodollar
Rate Loan prior to the last day of the Interest Period applicable to
such Loan including, without limitation, any cost or expense incurred
by Lender by reason of the liquidation and reemployment of deposits or
other funds acquired by the Lender to fund the Eurodollar Rate Loan
being prepaid.
(b) If the Borrower prepays the Term Loan for any reason,
prior to the second anniversary date of the Closing Date, the Borrower
shall pay to Lender a prepayment fee equal to (i) during the first
year after the Closing Date, 2% of the amount prepaid and (ii) during
the second year after the Closing Date, 1% of the amount prepaid. If
the Borrower terminates the Commitment as a result of obtaining
refinancing from a Person other than the Lender prior to the second
anniversary of the Closing Date, the Borrower should pay a termination
fee equal to (i) during the first year after the Closing Date, 2% of
the Working Capital Amount and (ii) during the second year after the
Closing Date, 1% of the Working Capital Amount.
2.7 Increased Costs; Increased Capital. In the event that the Lender
determines that compliance with any United States (including any state,
political subdivision, territory or possession thereof) or foreign law,
regulation, treaty, directive or guideline, currently or hereafter in effect,
or the interpretation or application thereof, or the compliance with any
request, guideline or directive (whether or not having the force of law) from
any United States or foreign central bank or any other Governmental Authority:
(a) imposes, modifies or holds applicable any reserve,
special deposit, compulsory loan or similar requirement against, or
imposes any other conditions with respect to assets held by, or
deposits or other liabilities in or for the account of, advances or
loans by, or other credit or commitment therefor extended by, or any
other acquisition of funds by, any office of the Lender which is not
otherwise included or accounted for in any determination of the
Eurodollar Rate or any interest payable hereunder; or
(b) affects or would affect the amount of capital required or
expected to be maintained by the Lender or any corporation controlling
the Lender and the Lender determines that the amount of such capital
is increased by or based upon the existence of the Lender's
obligations to make, maintain or fund the Eurodollar Loans;
and the result is to increase (as reasonably determined by the Lender)
the cost to the Lender of (i) agreeing to make, making, funding, renewing or
maintaining the Eurodollar Loans hereunder, or (ii) agreeing to maintain, or
its maintenance of, the Commitment hereunder, or to reduce any amount
receivable in respect of any of the foregoing, or to reduce (as determined by
the Lender) the rate of return on the Lender's or such controlling
corporation's capital (taking
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into account the policies of the Lender or corporation with regard to capital)
("Increased Cost"), then, in any such case, the Borrower agrees to pay to the
Lender upon the Lender's demand any additional amount as may be necessary to
compensate fully the Lender for such additional cost, reduced amount
receivable, or reduced rate of return as reasonably determined by the Lender to
place the Lender in the same economic position as if such compliance had not
occurred. The Lender will promptly notify the Borrower, in writing, of the
occurrence of any of the events described in this Section 2.7. Notwithstanding
the foregoing, Lender agrees that if there is any Increased Cost with respect
to which Borrower would be obligated to compensate Lender pursuant to this
Section 2.7, Lender shall use reasonable efforts to select an alternative
lending office which would not result in any such Increased Cost to Lender;
provided, however, that Lender shall not be obligated to select an alternative
lending office if Lender determines in good faith that (i) as a result of such
selection Lender would be in violation of any applicable law, regulation,
treaty, or guideline, or would incur additional costs or expenses or (ii) such
selection would be inadvisable for regulatory reasons or inconsistent with the
interests of Lender. Notwithstanding anything to the contrary contained in this
Section 2.7, Borrower shall not be obligated to indemnify or reimburse Lender
for any Increased Costs hereunder (x) which arose or were incurred during or
are otherwise attributable to any period of time more than 180 days prior to
the date on which Lender delivered its written statement for indemnification or
reimbursement for such Increased Costs, or (ii) if such Increased Costs, or
substantially the same type of costs, are not also imposed on other borrowers
of such Lender who entered into similar credit facilities with a similar
pricing, taken as a whole, who have agreed to pay such costs, at the same time.
2.8 Payments and Computations.
(a) All payments of principal, interest and fees hereunder
and under the Notes payable to the Lender shall be made without
condition or reservation of right and in same day funds and delivered
to the Lender not later than 1:00 p.m. (New York time) on the date due
to such account of the Lender as the Lender may designate; and funds
received by the Lender after that time shall be deemed to have been
paid on the next succeeding Business Day.
(b) The Borrower hereby authorizes the Lender and unless the
Borrower has arranged for another means of timely payment satisfactory
to the Lender, the Lender shall, if and to the extent any payment is
due hereunder, to make a Working Capital Loan to Borrower which shall
be a Base Rate Loan in the amount of such payment. In addition, the
Borrower hereby authorizes the Lender, if and to the extent payment is
due hereunder and unless the Borrower has arranged for another means of
timely payment satisfactory to the Lender, the Lender shall charge from
time to time against the Borrower's accounts with the Lender any amount
so due. The Lender shall notify the Borrower of any such Loan or
charge; provided, however, that the failure to give such notice shall
not limit or otherwise affect the obligation of the Borrower to make
any payment when due hereunder.
(c) All computations of interest and fees shall be calculated
on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the
period for which such interest or fees are payable. Each determination
by the Lender of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
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(d) Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or the
Non-Use Fee, as the case may be; provided, however, if such extension
would cause payment of interest on or principal of Eurodollar Rate
Loans to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.
2.9 Taxes.
(a) Any and all payments by the Borrower hereunder shall be
made, in accordance with Section 2.8, free and clear of and without
deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on the Lender's income, and franchise
taxes imposed on the Lender, by the jurisdiction under the laws of
which the Lender is organized or any political subdivision thereof
(all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to the Lender, (i) the
sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 2.9) the Lender receives an
amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxing
authority or other appropriate authority in accordance with applicable
law.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made
hereunder or under the Notes or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or the
Notes (but specifically excluding, any taxes due as a result of any
assignment or participation made by the Lender as permitted by the
terms of Section 11.2 hereof) (hereinafter referred to as "Other
Taxes").
(c) The Borrower agrees to indemnify the Lender for the full
amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this Section 2.9) paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto. Any amounts due from the Borrower in accordance with
the foregoing indemnification shall be paid to the Lender within
thirty (30) days from the date the Lender makes written demand
therefor. Notwithstanding the foregoing, however, the Lender agrees
that it shall not pay any Taxes or Other Taxes if it has received
written notice from the Borrower that the Borrower is contesting the
same and for so long as the Borrower continues to contest the same in
accordance with the terms of Section 7.1 provided that such failure to
pay does not adversely affect the Lender's ability to obtain or
maintain a perfected security interest in any of the Borrower's
Property or any of the Lender's rights and remedies hereunder.
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(d) If the Lender shall request, within 30 days after the
date of any payment of Taxes, the Borrower will furnish to the Lender,
at its address referred to on the signature page hereto, the original
or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.9 shall survive the payment in
full of principal and interest hereunder and under the Notes.
(f) Each Lender or Purchaser that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code),
shall submit to the Borrower when it becomes a Lender or Purchaser
hereunder duly completed and signed copies of (i) Internal Revenue
Services ("IRS") Form 1001 (relating to such Lender and entitling it
to a complete exemption from United States withholding on all amounts
to be received by such Lender, including fees, under this Agreement)
and, if necessary to prevent backup withholding, IRS Form W-8
(relating to the foreign status exemption from United States federal
income tax backup withholding), (ii) IRS Form 4224 (relating to all
amounts to be received by such Lender, including fees, under this
Agreement) and, if necessary to prevent backup withholding, IRS Form
W-9 (certification of taxpayer indemnification number), or (iii) IRS
Form W-8 (relating to the exemption from United States federal income
tax withholding on payments of portfolio interest under Section 871(h)
or Section 881(c) of the Code), together with any certificate or
statement of exemption required under the Code or the regulations
issued thereunder to establish that such Lender or Purchaser is not
subject to deduction or withholding of United States federal income
tax with respect to any payments to such Lender or any interest
payable under any of the Loan Documents. Thereafter and from time to
time, each such Lender or Purchaser, to the extent legally entitled to
do so, shall submit to the Borrower such additional duly completed and
signed copies of the previously provided forms (or such successor
forms as shall be adopted from time to time by the relevant United
States taxing authorities) as may be (i) requested by the Borrower
from such Lender or Purchaser and (ii) required under then-current
United States law or regulations to avoid United States withholding
taxes on payment in respect of amounts to be received by such Lender
or Purchaser, including fees, under this Agreement. Upon the request
of the Borrower, each Lender or Purchaser that is a United States
person (as such term is defined in Section 7701(a)(30) of the Code)
shall submit to the Borrower a certificate to the effect that it is
such a United States person. If any Lender or Purchaser determines
that it is unable to submit to the Borrower any form or certificate
that such Lender or Purchaser is obligated to submit pursuant to this
Section, or that such Lender or Purchaser is required to withdraw or
cancel any such form or certificate previously submitted, such Lender
or Purchaser shall promptly notify the Borrower of such fact.
(g) If any Lender or Purchaser shall obtain a credit with
respect to all or part of any tax indemnified by Borrower pursuant to
this Section 2.9, then, to the extent such items have not previously
been taken into account in computing the amount of any payment
pursuant to this sentence or the amount of indemnification payable
under this Section 2.9, such Lender or Purchaser shall promptly pay to
Borrower an amount equal to the amount of such credit, reduced by the
amount of any prior payments by such Lender or Purchaser to, or for
the benefit of, Borrower arising from the same claim. All computations
required hereunder shall be made by such Lender or Purchaser acting
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reasonably and in good faith and the results of such computations
shall be delivered to Borrower.
(h) Without affecting its right under this Section 2.9 or any
other provision of this Agreement, each Lender and Purchaser agrees
that if Borrower is obligated to pay taxes as are imposed on or
measured by the net income, net profits, or franchise taxes of such
Lender or Purchaser pursuant to this Section 2.9, such Lender or
Purchaser shall use reasonable efforts to select an alternative
lending office which would not result in any such tax or which would
result in a reduction of any such tax.
2.10 Reserved.
2.11 Conversions.
(a) On the terms and subject to the conditions of this
Agreement and provided that no Event of Default shall have occurred
and be continuing, upon written notice to the Lender in substantially
the form of EXHIBIT D attached hereto and made a part hereof (the
"Notice of Conversion"), the Borrower may convert all or any portion
not less than $500,000 of the Term Loan or any Working Capital Loan
which is (i) a Eurodollar Rate Loan to a Base Rate Loan upon
expiration of the applicable Interest Period, (ii) continue any
Eurodollar Rate Loan as a Eurodollar Rate Loan upon the expiration of
the applicable Interest Period, or (iii) convert any Base Rate Loan to
a Eurodollar Rate Loan at any time (any such date on which any Loan is
to be converted being referred to herein as a "Conversion Date"). Such
Notice of Conversion shall be delivered to the Lender prior to 1:00
p.m. (New York time) three (3) Business Days prior to the proposed
Conversion Date if conversion to, or continuation of, a Eurodollar
Rate Loan is requested, and prior to 11:00 a.m. (New York time) on the
proposed Conversion Date if conversion to a Base Rate Loan is
requested. Each proposed Conversion Date shall be a Business Day.
(b) If the Borrower shall fail to give notice of the duration
of the proposed Interest Period with respect to a proposed conversion
of an outstanding Base Rate Loan or a continuation of a Eurodollar
Rate Loan, the Borrower shall be deemed not to have elected to convert
the Base Rate Loan or continue the Eurodollar Rate Loan. If the
Borrower shall fail to give a timely and complete Notice of Conversion
with respect to an outstanding Eurodollar Rate Loan in accordance with
this Section 2.11, the Borrower shall be deemed to have elected to
convert such outstanding Eurodollar Rate Loan to a Base Rate Loan on
the last day of the applicable Interest Period.
(c) Any Notice of Conversion given or deemed to have been
given pursuant to this Section 2.11 shall be irrevocable.
(d) Each Eurodollar Rate Loan shall be converted to a Base
Rate Loan at the end of the then applicable Interest Period if (i) an
Event of Default has occurred and is continuing, or (ii) the Lender
shall be unable to determine the Eurodollar Rate or shall have deemed
the Eurodollar Rate to be inadequate or unfair (as provided in Section
2.3(b)). If the making or maintaining of Eurodollar Rate Loans shall
be unlawful, impossible, inadequate or unfair (as provided in Section
2.3(b)), all Eurodollar Rate Loans then outstanding shall be converted
into Base Rate Loans on either (i) the last day of the Interest Period
or Interest Periods applicable to such Loans if the Lender may
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lawfully continue to maintain and fund such Loans until such day, or
(ii) immediately, if the Lender may not lawfully continue to fund and
maintain such Loans.
(e) Notwithstanding any provision in this Agreement to the
contrary, Borrower shall have no more than ten (10) different Interest
Periods outstanding for Eurodollar Rate Loans at any time; provided,
however, in the event Lender permits additional Interest Periods, the
Borrower shall pay to Lender an additional fee of $250 per Interest
Period.
2.12 Fees.
(a) The Borrower shall pay to the Lender an arrangement fee
(the "Arrangement Fee") in the amount of Sixty Thousand Dollars
($60,000) of which $30,000 was paid with the acceptance of the
applicable commitment letter and $30,000 shall be payable on the
Closing Date.
(b) As additional compensation for Lender's costs and risks
in making the Working Capital Loans available to Borrower, Borrower
agrees to pay to Lender in arrears, on the first Business Day of each
calendar quarter prior to the Termination Date and on the Termination
Date, a fee for Borrower's non-use of available funds under the
Working Capital Facility (the "Non-Use Fee") in an amount equal to
0.25% per annum (calculated on the basis of a 360 day year for actual
days elapsed) on the difference between (i) the Working Capital Amount
and (ii) the daily average of the amount of the Working Capital Loans
outstanding during the period for which the Non-Use Fee is due.
Article III.
[RESERVED]
Article IV.
COLLATERAL
4.1 Grant of Security Interest.
(a) To secure the prompt, complete, payment and performance
of all Obligations, the Borrower hereby grants to the Lender a
continuing security interest in, and lien on, all of the Borrower's
right, title and interest in any of the following property, whether
now owned or existing or hereafter acquired or arising and wherever
located:
(i) all Accounts, Contract Rights, letters of
credit, chattel paper, instruments, notes, documents, and
documents of title;
(ii) General Intangibles;
(iii) Inventory;
(iv) Equipment;
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(v) all moneys, Securities and other investment
property;
(vi) deposit accounts, credits, and balances with
and other claims against the Lender or any of its affiliates
or any other financial institution with which the Borrower
maintains deposits;
(vii) all books, records and other property relating
to or referring to any of the foregoing, including, without
limitation, all books, records, ledger cards, data processing
records, computer software and other property and general
intangibles at any time evidencing or relating to any of the
foregoing; and
(viii) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing,
including, but not limited to, proceeds of any insurance
policies, claims against third parties, and condemnation or
requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with all other property in
which the Lender may at any time be granted a Lien to secure
the Obligations, is herein collectively referred to as the
"Collateral."
(b) All of the Obligations shall be secured by all of the
Collateral.
4.2 Intentionally Omitted.
4.3 Perfection and Protection of Security Interest.
(a) The Borrower shall, at its expense, perform all steps
reasonably requested by the Lender at any time to perfect, maintain,
protect, and enforce its Liens in the Collateral including, without
limitation: (i) executing and filing financing or continuation
statements, and amendments thereof, in form and substance satisfactory
to the Lender; (ii) delivering to the Lender the originals of all
instruments, documents, and chattel paper, and all other Collateral of
which the Lender determines it should have physical possession in
order to perfect and protect the Lender's security interest therein,
duly endorsed or assigned to the Lender without restriction; (iii)
delivering to the Lender warehouse receipts covering any portion of
the Collateral located in warehouses and for which warehouse receipts
are issued; (iv) delivering to the Lender all letters of credit on
which the Borrower is named beneficiary; and (v) taking such other
steps as are deemed necessary by the Lender to maintain and protect
its Liens. To the extent permitted by applicable law, the Lender may
file, without the Borrower's signature, one or more financing
statements disclosing its Liens. The Borrower agrees that a carbon,
photographic, photostatic, or other reproduction of this Agreement or
of a financing statement is sufficient as a financing statement.
(b) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any agent of the Borrower, then
the Borrower shall notify the Lender thereof and shall notify such
Person of the Lender's security interest in such Collateral and, upon
the Lender's request, instruct such Person to hold all such Collateral
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for the Lender's account subject to the Lender's instructions. If at
any time significant operations of the Borrower's business are
operated on or any significant Collateral is located on any premises
that are not owned by the Borrower, then the Borrower shall use Good
Faith efforts to obtain, at the request of the Lender, attornment
agreements in form and substance satisfactory to the Lender with the
owner or lessor of such premises.
(c) From time to time, the Borrower shall, upon the Lender's
request, execute and deliver confirmatory written instruments pledging
to the Lender the Collateral, but the Borrower's failure to do so
shall not affect or limit the Lender's security interest or the
Lender's other rights in and to the Collateral. So long as the
Commitment is in effect or any of the Obligations remain outstanding,
the Lender's Liens shall continue in full force and effect in all
Collateral.
4.4 Location of Collateral. Borrower represents and warrants to Lender
that: (a) SCHEDULE 4.4 attached hereto and incorporated herein by this
reference is a correct and complete list of the Borrower's chief executive
office, the location of its books and records, the locations of its property,
and the locations of all of its other places of business; and (b) SCHEDULE 4.4
attached hereto correctly identifies any of such facilities and locations that
are not owned by the Borrower and to the best of the Borrower's knowledge, sets
forth the names of the owners and lessors or sublessors of, and the holders of
any mortgages on, such facilities and locations. The Borrower covenants and
agrees that it will not maintain any of its property at any location other than
those listed for it on SCHEDULE 4.4 attached hereto, unless it gives the Lender
at least five (5) days' prior written notice thereof and executes any and all
financing statements and other documents that the Lender requests in connection
therewith.
4.5 Title to, Liens on, and Sale and Use of Collateral. The Borrower
represents and warrants to the Lender and agrees with the Lender that: (a) all
Collateral is and will continue to be owned by the Borrower or the grantor
thereof, free and clear of all Liens whatsoever, except for Permitted Liens;
(b) the Borrower will, and will cause each of its Subsidiaries, to use, store,
and maintain the Collateral with all reasonable care and will use the
Collateral for lawful purposes only; and (c) the Borrower will not, and will
not permit any of its Subsidiaries, without the Lender's prior written approval
(which will not be unreasonably withheld), sell, or dispose of or permit the
sale or disposition of any Collateral, except for sales of Inventory in the
ordinary course of business, and Equipment as permitted by Section 4.9. The
inclusion of proceeds in the Collateral shall not be deemed to constitute the
Lender's consent to any sale or other disposition of the Collateral except as
expressly permitted herein.
4.6 Access and Examination; Appraisals. The Lender may at all
reasonable times (and at any time when a Default or Event of Default exists)
have access to, examine, audit, make extracts from, copy and inspect Borrower's
and its Subsidiaries records, files, and books of account and the Collateral,
and discuss the Borrower's affairs with the Borrower's officers and management.
Borrower will deliver to the Lender any instrument necessary for the Lender to
obtain records from any service bureau or any other Person or Governmental
Authority maintaining records for the Borrower.
4.7 Intentionally Omitted.
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4.8 Collection of Receivables. The Lender may at any time after the
occurrence and during the continuance of an Event of Default, by giving the
Borrower written notice, elect to require that the Accounts be paid directly to
the Lender. In such event, Borrower shall, and shall permit the Lender to,
promptly notify the account debtors or obligors under the Accounts of the
Lender's interest therein and direct such account debtors or obligors to make
payment of all amounts then or thereafter due under the Accounts directly to
the Lender. Upon receipt of any such notice from the Lender, Borrower shall
thereafter hold in trust for the Lender, all amounts and proceeds received by
it with respect to the Accounts and other Collateral and immediately and at all
times thereafter deliver to the Lender all such amounts and proceeds in the
same form as so received, whether by cash, check, draft or otherwise, with any
necessary endorsements. After the occurrence and during the continuance of an
Event of Default, the Lender may require all cash proceeds of the Collateral to
be deposited in a special noninterest bearing cash collateral account with the
Lender and held there as security for the Obligations. The Borrower shall
thereafter have no control whatsoever over said cash collateral account. The
Lender may, from time to time, apply the collected balances in said cash
collateral account to the payment of the Obligations whether or not the
Obligations shall then be due.
4.9 Equipment. The Borrower represents and warrants to the Lender and
agrees with the Lender that all of the Equipment owned or leased by the
Borrower is and will be used or held for use in the Borrower's business (which
includes the lease of such equipment to third parties from time to time), and
is and will be fit for such purposes. The Borrower will use the Equipment in a
careful and proper manner and will comply with and conform to all governmental
laws, rules and regulations relating thereto. The Borrower shall keep and
maintain its Equipment in good operating condition and repair (ordinary wear
and tear excepted) and in Borrower's reasonable business judgment, shall make
all necessary replacements thereof so that the condition and operating
efficiency thereof will at all times be maintained and preserved, reasonable
wear and tear excepted. The Borrower shall promptly inform the Lender of any
material additions to or deletions from the Equipment. Borrower shall not
permit any Equipment to become a fixture to real property or an accession to
other personal property, unless the Lender has a valid and perfected Lien in
such real or personal property. Except for occasional sales of Equipment, the
proceeds of which represent the fair market value therefor and do not exceed in
the aggregate for any Fiscal Year $100,000, the Borrower shall not, without the
Lender's prior written consent, sell, lease as a lessor, or otherwise dispose
of any of the Equipment other than worn out or obsolete Equipment.
4.10 Contract Rights. The Borrower shall fully perform all of its
material obligations under each material contract to which it is a party and
shall enforce all of its rights and remedies thereunder as it deems appropriate
in its business judgment; provided, however, that the Borrower shall not take
any action or fail to take any action with respect to the Contract Rights
which, in the Borrower's business judgment, exercised in Good Faith, would
result in a waiver or other loss of any material right or remedy of the
Borrower thereunder. Without limiting the generality of the foregoing, the
Borrower shall take all action necessary or appropriate to permit, and shall
not take any action which would have any material adverse effect upon, the full
enforcement of all indemnification rights under the Contract Rights. Except in
the ordinary course of business and consistent with past practices, the
Borrower shall not, without the Lender's prior written consent, modify, amend,
supplement, compromise, satisfy, release, or discharge any of the Contract
Rights, any collateral securing the same, any Person liable directly or
indirectly with respect thereto, or any agreement relating to any of the
Contract Rights or the
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collateral therefor. The Borrower shall notify the Lender in writing, promptly
after the Borrower becomes aware thereof, of any event or fact which could give
rise to a claim by it for indemnification under any of the Contract Rights, and
shall diligently pursue such right and report to the Lender on all further
developments with respect thereto. If an Event of Default exists and the
Borrower has not cured or is unable to cure such Event of Default, then the
Lender may directly enforce any material right in the Contract Rights in its
own or the Borrower's name and may enter into such settlements or other
agreements with respect thereto as the Lender determines. In any suit,
proceeding or action brought by the Lender under any Contract Rights for any
sum owing thereunder or to enforce any provision thereof, the Borrower shall
indemnify and hold the Lender harmless from and against all expense, loss or
damage suffered by reason of any defense, setoff, counterclaims, recoupment, or
reduction of liability whatsoever of the obligor thereunder arising out of a
breach by the Borrower of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing from the Borrower to or
in favor of such obligor or its successors other than expense, loss or damage
resulting from Lender's gross negligence or willful misconduct. All such
obligations of the Borrower shall be and remain enforceable only against the
Borrower and shall not be enforceable against the Lender. Notwithstanding any
provision hereof to the contrary, the Borrower shall at all times remain liable
to observe and perform all of its duties and obligations under the Contract
Rights, and the Lender's exercise of any of its rights with respect to the
Collateral shall not release the Borrower from any of such duties and
obligations. The Lender shall not be obligated to perform or fulfill any of the
Borrower's duties or obligations under the Contract Rights or to make any
payment thereunder, or to make any inquiry as to the nature or sufficiency of
any payment or property received by it thereunder or the sufficiency of
performance by any party thereunder, or to present or file any claim, or to
take any action to collect or enforce any performance, any payment of any
amounts, or any delivery of any property. Notwithstanding any provision in this
Section 4.10 to the contrary, provided no Event of Default has occurred and is
continuing, the Lender shall not be permitted to waive or release on behalf of
the Borrower any rights that the Borrower may have (whether at law or in
equity) against any other party to the Contract Rights.
4.11 Right to Cure. The Lender may, in its discretion and at any time
after at least ten (10) days prior written notice, for the Borrower's account
and at the Borrower's expense, pay any amount not being disputed by Borrower in
Good Faith or do any act required of the Borrower hereunder or reasonably
requested by the Lender to preserve, protect, maintain or enforce the
Obligations, the Collateral or the Lender's Liens therein, and which the
Borrower fails to pay or do, including, without limitation, payment of any
judgment against the Borrower, any insurance premium, any warehouse charge, any
landlord's claim, and any other Lien upon or with respect to the Collateral.
All payments that the Lender makes under this Section 4.11 and all
out-of-pocket costs and expenses that the Lender pays or incurs in connection
with any action taken by it hereunder shall be payable on demand. Any payment
made or other action taken by the Lender under this Section 4.11 shall be
without prejudice to any right to assert an Event of Default hereunder and to
proceed thereafter as herein provided.
4.12 Power of Attorney. The Borrower hereby appoints the Lender and
the Lender's designees as the Borrower's attorney, with power, if an Event of
Default has occurred and is continuing, to send requests for verification of
accounts to customers or account debtors and after an Event of Default has
occurred and is continuing: (a) to endorse the Borrower's name on any checks,
notes, acceptances, money orders, or other forms of payment or security that
come
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into the Lender's possession; (b) to sign the Borrower's name on any invoice,
▇▇▇▇ of lading, or other document of title relating to any Collateral, on
drafts against customers, on assignments of Accounts, on notices of assignment,
financing statements and other public records; (c) to notify the post office
authorities to change the address for delivery of the Borrower's mail to an
address designated by the Lender and to receive, open and dispose of all mail
addressed to the Borrower; and (d) to do all things necessary to carry out this
Agreement. The Borrower ratifies and approves all acts of such attorney.
Neither the Lender nor the attorney will be liable for any acts or omissions or
for any error of judgment or mistake of fact or law except to the extent of the
Lender's gross negligence or willful misconduct. This power, being coupled with
an interest, is irrevocable until the Commitment has been terminated and the
Obligations have been fully satisfied.
4.13 The Lender's Rights, Duties and Liabilities. The Borrower assumes
all responsibility and liability arising from or relating to the use, sale or
other disposition of the Collateral except for liability resulting from the
Lender's or any of its respective attorney's gross negligence or willful
misconduct. The Lender and its officers, directors, employees, and agents shall
not be liable or responsible in any way for the safekeeping of any of the
Collateral except to the extent of the Lender's gross negligence or willful
misconduct with respect thereto, or for any loss or damage thereto, or for any
diminution in the value thereof, or for any act of default of any warehouseman,
carrier, forwarding agency or other person whomsoever, all of which shall be at
the Borrower's sole risk. The Obligations shall not be affected by any failure
of the Lender to take any steps to perfect its Liens or to collect or realize
upon the Collateral, nor shall loss of or damage to the Collateral release the
Borrower from any of the Obligations. After the occurrence of and during the
continuance of a Default or Event of Default, the Lender may (but shall not be
required to), without notice to or consent from the Borrower, ▇▇▇ upon or
otherwise collect, extend the time for payment of, modify or amend the terms
of, compromise or settle for cash, credit, or otherwise upon any terms, grant
other indulgences, extensions, renewals, compositions, or releases, and take or
omit to take any other action with respect to the Collateral, any security
therefor, any agreement relating thereto, any insurance applicable thereto, or
any Person liable directly or indirectly in connection with any of the
foregoing, without discharging or otherwise affecting the liability of the
Borrower for the Obligations or under this Agreement or any other agreement now
or hereafter existing between the Lender and the Borrower.
Article V.
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
5.1 Books and Records. The Borrower shall maintain, at all times,
correct and complete books, records and accounts in which complete, correct and
timely entries are made of its transactions in a manner necessary to insure
that the audited financial statements required to be delivered pursuant to
Section 5.2(a) shall be prepared in accordance with GAAP. The Borrower shall,
by means of appropriate entries, reflect in such accounts and in all financial
statements proper liabilities and reserves for all taxes and proper provision
for depreciation and amortization of its Property and bad debts, all in
accordance with GAAP. The Borrower shall maintain at all times books and
records pertaining to the Collateral in such detail, form and scope as the
Lender shall reasonably require, including, but not limited to, records of (a)
all payments received and all credits and extensions granted with respect to
the Accounts; and (b) all other dealings affecting the Collateral.
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5.2 Financial Information. The Borrower shall promptly furnish to the
Lender all such financial information as the Lender shall reasonably request,
and notify its auditors and accountants that the Lender is authorized to obtain
such information directly from them. Without limiting the foregoing, the
Borrower will furnish to the Lender, in such detail as the Lender shall
request, the following:
(a) As soon as available, but in any event not later than
ninety (90) days after the close of each Fiscal Year, a copy of the
unaudited consolidating and the audited consolidated balance sheets,
related statements of income and operations, shareholders' equity
(only for consolidated statements) and cash flows for the Borrower and
its consolidated Subsidiaries for such Fiscal Year, and the
accompanying notes thereto, setting forth in each case in comparative
form figures for the previous Fiscal Year and the budgeted figures for
the current Fiscal Year, all in reasonable detail, fairly presenting
the financial position and the results of operations of the Borrower
and its consolidated Subsidiaries as at the date thereof and for the
Fiscal Year then ended, and prepared in accordance with GAAP. Such
statements shall be examined in accordance with generally accepted
auditing standards by and accompanied by a report thereon unqualified
as to scope of independent certified public accountants selected by
the Borrower and reasonably satisfactory to the Lender.
(b) As soon as available, but in any event not later than
forty-five (45) days after the close of each fiscal quarter other than
the fourth quarter of a Fiscal Year, a copy of the unaudited
consolidating and consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such quarter, and the
related consolidating and consolidated statements of income and
operations, shareholders' equity (only for consolidation) and cash
flows for the Borrower and its consolidated Subsidiaries for the last
month of such quarter and for the period from the beginning of the
Fiscal Year to the end of such quarter, together with the accompanying
notes thereto, all in reasonable detail, setting forth in each case in
comparative form the budgeted figures for the current Fiscal Year,
fairly presenting the financial position and results of operation of
the Borrower and its consolidated Subsidiaries as at the date thereof
and for such periods, prepared in accordance with GAAP. Such
statements shall be certified to be correct by the chief financial or
accounting officer of the Borrower, subject to normal year-end
adjustments.
(c) With each of the audited and unaudited financial
statements delivered pursuant to Sections 5.2(a) and 5.2(b), a
certificate of the chief executive or chief financial officer of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish that the Borrower was in compliance with its
covenants set forth in Section 7.22 and Section 7.23 during the period
covered in such financial statements and as at the end thereof, and
(ii) stating that, except as explained in reasonable detail in such
certificate, (A) all of the representations and warranties of the
Borrower contained in this Agreement and the other Loan Documents are
correct and complete as at the date of such certificate as if made at
such time, (B) the Borrower is, at the date of such certificate, in
compliance with all of its covenants and agreements in this Agreement
and the other Loan Documents, and (C) no Default or Event of Default
then exists or existed during the period covered by such financial
statements. If such certificate discloses that a representation or
warranty is not correct or complete, or that a covenant has not been
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complied with, or that a Default or Event of Default existed or
exists, such certificate shall set forth what action the Borrower has
taken or proposes to take with respect thereto.
(d) Such additional information as the Lender may from time
to time reasonably request regarding the financial and business
affairs of the Borrower or any Subsidiary, including, without
limitation, projections of future operations on both a consolidated
and consolidating basis.
5.3 Notices to the Lender. The Borrower shall notify the Lender in
writing of the following matters at the following times:
(a) Immediately after becoming aware thereof, any Default or
Event of Default.
(b) Immediately after becoming aware thereof, the assertion
by a holder or holders of Debt in an outstanding principal amount in
excess of $100,000 in the aggregate at any one time that a default
exists with respect thereto or that the Borrower is not in compliance
with the terms thereof, or the threat or commencement by such holder
of any enforcement action because of such asserted default or
non-compliance.
(c) Immediately after becoming aware thereof, any material
adverse change in the Borrower's Property, business, operations, or
condition (financial or otherwise) or any material decrease in the
Borrower' Accounts.
(d) Immediately after becoming aware thereof, any pending or
threatened action, suit, proceeding, or counterclaim by any Person, or
any pending or threatened investigation by a Governmental Authority,
which may materially and adversely affect the Collateral, the
repayment of the Obligations, the Lender's rights under the Loan
Documents, or the Borrower's Property, business, operations, or
condition (financial or otherwise).
(e) Immediately after becoming aware thereof, any violation
of any law, statute, regulation, or ordinance of Governmental
Authority applicable to the Borrower, any Subsidiary, or their
respective properties which may materially and adversely affect the
Collateral, the repayment of the Obligations, the Lender's rights
under the Loan Documents, or the Borrower's Property, business,
operations, or condition (financial or otherwise).
(f) Any change in the Borrower's name, state of
incorporation, or form of organization, at least ten (10) days prior
thereto.
(g) Any Termination Event with respect to a Plan within
fifteen (15) days after the Borrower knows or has reason to know
thereof, and any other Reportable Event, within forty (40) days after
the Borrower knows or has reason to know thereof, in each case
accompanied by any materials required to be filed with the PBGC with
respect thereto; immediately after the receipt by the Borrower or any
ERISA Affiliate of any notice concerning the imposition of any
withdrawal liability under Title IV of ERISA with respect to a Benefit
Plan or a Multiemployer Plan; within ten (10) days after the
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Borrower or any ERISA Affiliate fails to make a required installment
or any other required payment under Section 412 of the Code on or
before the due date for such installment or payment, a notification of
such failure; the establishment of any Plan not existing at the
Closing Date, or any increase in the benefits of any existing Plan or
the commencement of contributions by the Borrower to any Plan to which
the Borrower was not contributing at the Closing Date, within
fifty-five (55) days after the end of the fiscal quarter in which such
event occurs; within fifteen (15) days after the Borrower or an ERISA
Affiliate knows or has reason to know (i) a Multiemployer Plan has
been terminated, (ii) the administration or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan or (iii)
the PBGC has instituted or will institute proceedings under Section
4042 of ERISA to terminate a Multiemployer Plan; within forty-five
(45) days after the Borrower or an ERISA Affiliate knows or has reason
to know that a prohibited transaction (defined in Section 406 of ERISA
and Section 4975 of the Code) has occurred; immediately after filing
with the IRS a funding waiver request for any Plan, in each case
accompanied by a copy of such request and, subsequent thereto, copies
of all communications received by the Borrower or an ERISA Affiliate
with respect to such request; or immediately after becoming aware
thereof, any other event or condition regarding a Plan or the
Borrower's or an ERISA Affiliate's compliance with ERISA which may
materially and adversely affect the Borrower's Property, business,
operation, or condition (financial or otherwise).
Each notice given under this Section shall describe the subject matter
thereof in reasonable detail, and shall set forth the action that the Borrower
have taken or propose to take with respect thereto.
Article VI.
GENERAL WARRANTIES AND REPRESENTATIONS
The Borrower warrants and represents to Lender that all of the
Borrower's representations and warranties contained in this Agreement and the
other Loan Documents are true at the time of the Borrower' execution of this
Agreement, and shall survive the execution, delivery and acceptance hereof by
the parties hereto and the closing of the transactions described herein or
related hereto. Each request for a Loan hereunder shall constitute a
representation and warranty by Borrower, with the same effect as a certificate
delivered by the Borrower in writing, that all of the representations and
warranties made herein (other than representations and warranties which
expressly speak as of a certain date), are true and correct in all respects as
of the date of such request. Borrower warrants and represents to Lender that:
6.1 Authorization, Validity, and Enforceability of this Agreement and
the Loan Documents. Each of the Borrower and OGAC has the corporate power and
authority to execute, deliver and perform this Agreement and the other Loan
Documents, to incur the Obligations, and to grant to the Lender, Liens upon,
and security interests in, the Collateral. Each of the Borrower and OGAC has
taken all necessary corporate action (including, without limitation, obtaining
approval of its stockholders, if necessary) to authorize its execution,
delivery, and performance of this Agreement and the other Loan Documents. No
consent, approval, or authorization of, or declaration or filing with, any
Governmental Authority, and no consent of any other Person, is required in
connection with the Borrower's execution, delivery, and performance of this
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Agreement and the other Loan Documents, except for those already duly obtained.
Each of this Agreement and the other Loan Documents has been duly executed and
delivered by the Borrower and OGAC, and constitutes the legal, valid and
binding obligation of the Borrower and OGAC, enforceable against them in
accordance with their respective terms. The Borrower's and OGAC's execution,
delivery, and performance of the Loan Documents to which they are respectively
a party do not and will not conflict with, or constitute a violation or breach
of, or constitute a default under, or result in the creation or imposition of
any Lien upon the Property of the Borrower or OGAC by reason of the terms of
(a) any contract, mortgage, Lien, lease, agreement, indenture, or instrument to
which the Borrower or any of its Subsidiaries is a party or which is binding
upon it or its Property, (b) any judgment, law, statute, rule or governmental
regulation applicable to the Borrower or any of its Subsidiaries, or (c) the
Certificate of Incorporation or By-laws of the Borrower or any of its
Subsidiaries.
6.2 Validity and Priority of Security Interest. To the best of the
Borrower's knowledge, the provisions of this Agreement and the other Loan
Documents create legal and valid Liens on all the Collateral in the Lender's
favor, and upon filing of the financing statements referenced on the closing
list with the appropriate filing offices and the delivery of the "Pledged
Shares" to the Lender as contemplated by the Borrower Pledge Agreement, such
Liens constitute perfected (to the extent that a lien can be perfected by
filing a UCC-1 financing statement or, in the case of the Pledged Shares, to
the extent that filing can be perfected by delivery or control thereof) and
continuing Liens on all the Collateral, having priority over all other Liens on
the Collateral except for Permitted Liens, and enforceable against the Borrower
and all third parties.
6.3 Organization and Qualification. The Borrower and each of its
Subsidiaries (a) is duly incorporated and organized and validly existing in
good standing under the laws of the State of its incorporation, (b) is
qualified to do business as a foreign corporation and is in good standing in
all states where the failure of the Borrower to qualify to do business would
have a material adverse effect on the Borrower's or any of its Subsidiaries
ability to collect its Accounts or otherwise conduct its business or own or
lease Property in such state, and (c) has all requisite power and authority to
conduct its business and to own its Property.
6.4 Corporate Name; Prior Transactions. None of the Borrower or its
Subsidiaries has, during the past five (5) years, been known by or used any
other corporate or fictitious name, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any
Person, or acquired any of its property outside of the ordinary course of
business, except as set forth on SCHEDULE 6.4 attached hereto and incorporated
herein by this reference.
6.5 Subsidiaries and Affiliates. SCHEDULE 6.5 attached hereto and
incorporated herein by this reference is a correct and complete list of the
name and relationship to the Borrower and OGAC and all of their respective
Subsidiaries and other Affiliates as of the date hereof. Each Subsidiary is (a)
duly incorporated and organized and validly existing in good standing under the
laws of its state of incorporation set forth on SCHEDULE 6.5 attached hereto,
and (b) qualified to do business as a foreign corporation and in good standing
in the states set forth opposite its name on SCHEDULE 6.5 attached hereto,
which are the only states where the failure of such Subsidiary to qualify to do
business would have a material adverse effect on such Subsidiary's ability to
collect its Accounts or otherwise conduct its business or own or lease Property
in such state.
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6.6 Financial Statements and Projections. The Borrower has delivered
to the Lender its and OGAC's audited balance sheets and the related statements
of income and operations, shareholders equity and cash flow for the Fiscal Year
ended December 31, 1998, and the unaudited balance sheets and the related
statements of income and operations, shareholders equity and cash flow for the
Fiscal Year to date period ended March 31, 1999. All such financial statements
have been prepared in accordance with GAAP and present accurately and fairly in
all material respects each of such entities' financial position as at the dates
thereof and its results of operations for the periods then ended. Since
December 31, 1998, there has been no event or circumstance which is likely to
have a material adverse affect on the financial condition or operations of the
businesses of such entities.
6.7 Intentionally Omitted.
6.8 Debt. After giving effect to the making of the Term Loan and the
Working Capital Loans to be made on the Closing Date, the Borrower and its
Subsidiaries have no Debt, except (a) the Obligations, (b) Debt set forth on
SCHEDULE 6.8 attached hereto, (c) trade payables and other contractual
obligations arising in the ordinary course of business and (d) Debt permitted
under Section 7.13.
6.9 Real Property; Leases. To the best of Borrower's knowledge,
SCHEDULE 6.9 attached hereto and incorporated herein by this reference sets
forth a correct and complete list of all real property owned by the Borrower
and its Subsidiaries, all leases and subleases of real or personal property by
the Borrower and its Subsidiaries as lessee or sublessee, and all leases and
subleases of real or personal property by the Borrower and its Subsidiaries as
lessor or sublessor. To the best of Borrower's knowledge, each of such leases
and subleases is valid and enforceable in accordance with its terms and is in
full force and effect, and no default by any party to any such lease or
sublease which is material to the business or operations of the Borrower
exists.
6.10 Proprietary Rights. SCHEDULE 6.10 attached hereto and
incorporated herein by this reference sets forth a correct and complete list of
all of the Proprietary Rights of the Borrower and its Subsidiaries. None of the
Proprietary Rights of the Borrower and its Subsidiaries is subject to any
licensing agreement or similar arrangement except as set forth on SCHEDULE 6.10
attached hereto. To the best of the Borrower's knowledge, none of the
Proprietary Rights of the Borrower and its Subsidiaries infringes on or
conflicts with any other Person's property, and no other Person's property
infringes on or conflicts with the Proprietary Rights. The Proprietary Rights
described on SCHEDULE 6.10 attached hereto constitute all of the property of
such type necessary to the current and anticipated future conduct of the
businesses of the Borrower and its Subsidiaries.
6.11 Intentionally Omitted.
6.12 Litigation. Except as set forth on SCHEDULE 6.12 attached hereto
and incorporated herein by this reference, there is no pending or (to the best
of the Borrower's knowledge) threatened, action, suit, proceeding, or
counterclaim by any Person, or investigation by any Governmental Authority, or
any basis for any of the foregoing, which may materially and adversely affect
the Collateral, the repayment of the Obligations, the Lender's rights under the
Loan Documents, or the Borrower's and its Subsidiaries Property, business,
operations, or condition (financial or otherwise), taken as a whole.
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6.13 Restrictive Agreements. Neither the Borrower nor any of its
Subsidiaries is a party to any contract or agreement, and is not subject to any
charter or other corporate restriction, which affects its ability to execute,
deliver, and perform its obligations under the Loan Documents and repay the
Obligations or which materially and adversely affects or, insofar as the
Borrower can reasonably foresee, could materially and adversely affect, the
Borrower's or any of its Subsidiaries Property, business, operations, or
condition (financial or otherwise), or would in any respect materially and
adversely affect the Collateral, the repayment of the Obligations, the Lender's
rights under the Loan Documents, or the Borrower's or any of its Subsidiaries
Property, business, operations, or condition (financial or otherwise), taken as
a whole.
6.14 Labor Disputes. Except as set forth on SCHEDULE 6.14, there is no
collective bargaining agreement or other labor contract covering employees of
the Borrower or any of its Subsidiaries; no such collective bargaining
agreement or other labor contract is scheduled to expire during the term of
this Agreement and, to the best of the Borrower's knowledge, no union or other
labor organization is seeking to organize, or to be recognized as, a collective
bargaining unit of employees of the Borrower or any of its Subsidiaries or for
any similar purpose, and there is no pending or (to the best of the Borrower's
knowledge) threatened, strike, work stoppage, material unfair labor practice
claim, or other material labor dispute against or affecting the Borrower, or
any of its Subsidiaries or their respective employees.
6.15 Environmental, Health and Safety Laws. Except as disclosed on
SCHEDULE 6.15 attached hereto, in the ordinary course of its business, the
officers of the Borrower consider the effect of Environmental Laws on the
business of the Borrower and its Subsidiaries, in the course of which they
identify and evaluate potential risks and liabilities accruing to the Borrower
due to Environmental Laws. On the basis of this consideration, the Borrower has
concluded that compliance with Environmental Laws cannot reasonably be expected
to have a Material Adverse Effect. Neither the Borrower nor any Subsidiary has
received any notice to the effect that its operations are not in material
compliance with any of the requirements of applicable Environmental Laws or are
the subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which noncompliance or remedial action
could reasonably be expected to have a Material Adverse Effect.
6.16 No Violation of Law. Neither the Borrower nor any of its
Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it which violation would in any
respect materially and adversely affect the Collateral, the repayment of the
Obligations, the Lender's rights under the Loan Documents, or the Borrower's
nor any of its Subsidiaries Property, business, operations, or condition
(financial or otherwise), taken as a whole.
6.17 No Default. Neither the Borrower nor any of its Subsidiaries is
in default with respect to any note, indenture, loan agreement, mortgage,
lease, deed, or other agreement to which it is a party or by which it is bound,
which default would materially and adversely affect the Collateral, the
repayment of the Obligations, any Lender's rights under the Loan Documents, or
the Borrower's or any of its Subsidiary's Property, business, operations, or
condition (financial or otherwise).
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6.18 ERISA.
(a) Neither the Borrower nor any ERISA Affiliate has or
contributes to any Plan other than those listed on SCHEDULE 6.18
attached hereto and incorporated herein by this reference.
(b) Except as provided on SCHEDULE 6.18 attached hereto, no
Benefit Plan has been terminated or partially terminated or is
insolvent or in reorganization, nor have any proceedings been
instituted to terminate or reorganize any Plan.
(c) Neither the Borrower nor any ERISA Affiliate has
withdrawn from any Multiemployer Plan in a complete or partial
withdrawal, nor has a condition occurred which if continued would
result in a complete or partial withdrawal.
(d) Neither the Borrower nor any ERISA Affiliate has incurred
any withdrawal liability, including contingent withdrawal liability,
to any Benefit Plan pursuant to Title IV of ERISA as of December 31,
1995.
(e) Neither the Borrower nor any ERISA Affiliate has any
liability to the PBGC other than for required insurance premiums which
have been paid when due.
(f) No Reportable Event has occurred with respect to a
Benefit Plan.
(g) No Benefit Plan has an "accumulated funding deficiency"
(whether or not waived) as defined in Section 302 of ERISA or in
Section 412 of the Code.
(h) Except as provided on SCHEDULE 6.18 attached hereto, to
the best of the Borrower's knowledge each Plan is in substantial
compliance with ERISA, and neither the Borrower nor any ERISA
Affiliate has received any notice asserting that a Plan is not in
compliance with ERISA.
(i) Except as provided on SCHEDULE 6.18 attached hereto, each
Plan which is intended to be a qualified Plan has been determined by
the IRS to be qualified under Section 401(a) of the Code as currently
in effect and neither the Borrower nor any ERISA Affiliate knows or
has reason to know why each such plan should not continue to be so
qualified, and each trust related to such Plan has been determined to
be exempt from federal income tax under Section 501(a) of the Code.
(j) Except as provided on SCHEDULE 6.18 attached hereto,
neither the Borrower nor any ERISA Affiliate maintains or contributes
to any employer welfare benefit plan within the meaning of Section
3(1) of ERISA which provides lifetime benefits to retirees.
(k) Neither the Borrower nor any ERISA Affiliate has failed
to make a required installment under subsection of Section 412 of the
Code or any other payment required under Section 412 of the Code on or
before the due date for such installment or other payment.
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(l) Neither the Borrower nor any ERISA Affiliate is required
to provide security to a Benefit Plan under Section 401(a)(29) of the
Code due to a Plan amendment that results in an increase in current
liability for the plan year.
(m) To the best of Borrower's knowledge, neither the
Borrower, nor any ERISA Affiliate, nor any other "party-in-interest"
or "disqualified person" has engaged in a "prohibited transaction," as
such terms are defined in Section 4975 of the Code and Section 406 of
ERISA, in connection with any Plan or any other employee benefit plan
to which the Borrower or any ERISA Affiliate is, or within the
immediately preceding six (6) years was, an "employer" as defined in
Section 3(5) of ERISA or has taken or failed to take any action which
would constitute or result in a Termination Event.
(n) To the best of Borrower's knowledge, neither the Borrower
nor any ERISA Affiliate has failed to comply with the health care
continuation coverage requirements of Section 4980B of the Code in
respect of employees and former employees of the Borrower or such
ERISA Affiliate and their dependant and beneficiaries which alone or
in the aggregate would subject the Borrower or such ERISA Affiliate to
any material liability.
(o) To the best knowledge of the Borrower or any ERISA
Affiliate after due inquiry, the consummation of the transactions
contemplated by the Acquisition shall not result in any liability to
the Borrower or any ERISA Affiliate under any employment-related
agreement, contract or arrangement, whether written or oral, including
without limitation, any severance pay agreement. The liability of the
Borrower or any ERISA Affiliate to make payments to any employee on
account of termination of employment under individual employment or
severance agreements does not in the aggregate give rise to any
material liability to the Borrower or such ERISA Affiliate.
6.19 Taxes. The Borrower has filed all tax returns and other reports
which it was required by law to file on or prior to the date hereof and has
paid all taxes assessments, fees, and other governmental charges, and penalties
and interest, if any, against it or its Property, income, or franchise, that
are due and payable except where the failure to do so could not, individually
or in the aggregate, have a material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise) of the
Borrower.
6.20 Investment Act. The Borrower is not an "investment company" nor
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended (15 U.S.C. Section 80(a)(l), et seq.). The making of the
Working Capital Loans, the Term Loan, and other financial accommodations
hereunder by the Lender, the application of the proceeds and repayment thereof
by the Borrower and the consummation of the other transactions contemplated by
this Agreement and the Loan Documents do not violate any provisions of such Act
or any rule, regulation or order issued by the Securities and Exchange
Commission thereunder.
6.21 Margin Securities. The Borrower does not own any "margin
security" (as that term is defined in Regulations U) and the proceeds of the
Working Capital Loans, the Term Loan, and the other financial accommodations
made pursuant to this Agreement will be used only for the purposes contemplated
hereunder. None of the transactions contemplated by this Agreement, or the Loan
Documents will violate Regulations T, U or X. None of the Working
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Capital Loans, the Term Loan, or the other financial accommodations hereunder
will be used, directly or indirectly, for the purpose of purchasing or carrying
any margin security, for the purpose of reducing or retiring any Debt or other
Person's indebtedness which was originally incurred to purchase or carry any
margin security, or for any other purpose which might cause any such loan or
other financial accommodation to be considered a "purpose credit" within the
meaning of Regulation T, U or X. The Borrower will neither take nor permit any
agent acting on its behalf to take any action which might cause any
transaction, obligation or right created by this Agreement, or any document or
instrument delivered pursuant hereto, to violate any regulation of the Federal
Reserve Board.
6.22 Disclosure. Neither this Agreement nor any document or statement
furnished to the Lender by or on behalf of the Borrower or in contemplation of
this Agreement or in connection herewith contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make
the statements contained herein or therein not materially misleading.
Article VII.
COVENANTS
The Borrower covenants that, so long as any of the Obligations remain
outstanding or the Commitment is in effect unless the Lender shall otherwise
consent in writing:
7.1 Taxes and Other Obligations. The Borrower shall, and shall cause
each of its Subsidiaries to (a) file when due all tax returns and other reports
which it is required to file (taking into account any allowed extensions), (b)
pay, or provide for the payment, when due, of all taxes, fees, assessments and
other governmental charges against it or upon its Property, income and
franchises, make all required withholding and other tax deposits, and establish
adequate reserves for the payment of all such items, and provide to the Lender,
upon request, satisfactory evidence of its timely compliance with the foregoing
and (c) pay when due all claims of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons, and all other indebtedness owed
by it and perform and discharge in a timely manner all other obligations
undertaken by it; provided, however, that the Borrower and its Subsidiaries
need not pay any tax, fee, assessment, governmental charge, or Debt, or
discharge any other obligation, that any of them is contesting in Good Faith by
appropriate proceedings diligently pursued, and for which adequate reserves are
maintained, so long as no Lien, other than a Permitted Lien, results from such
non-payment.
7.2 Corporate Existence and Good Standing. The Borrower shall, and
shall cause each of its Subsidiaries to, maintain its corporate existence and
its qualification and good standing in all states necessary to conduct its
business and own its Property, and shall obtain and maintain all licenses,
permits, franchises and governmental authorizations necessary to conduct its
business and own its Property.
7.3 Compliance with Law and Agreements. The Borrower shall, and shall
cause each of its Subsidiaries to, comply with the terms and provisions of each
judgment, law, statute, rule, and governmental regulation applicable to it and
each contract, mortgage, lien, lease, indenture, order, instrument, agreement,
or document to which it is a party or by which it is bound, the failure to
comply with which, whether considered individually or when aggregated with all
other
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failures, is likely to have a material adverse effect on the ability of the
Borrower to perform its obligations under this Agreement, or on the business,
operations, properties or condition (financial or otherwise) of the Borrower,
taken as a whole; provided, however, that the Borrower shall have the right to
contest the imposition of such laws, rules, regulations, court orders, decrees
and governmental agency orders if such contest is made in Good Faith and
diligently pursued by proper proceedings, adequate reserves with respect
thereto have been established in accordance with GAAP, and such contest could
not reasonably be expected to have a material adverse affect on the ability of
the Borrower to perform its obligations under this Agreement, or the business,
operations, properties or condition (financial or otherwise) of the Borrower,
taken as a whole.
7.4 Maintenance of Property. The Borrower shall, and shall cause each
of its Subsidiaries to, maintain all of its Property necessary and useful in
its business in good operating condition and repair, ordinary wear and tear
excepted.
7.5 Insurance.
(a) The Borrower shall maintain, and shall cause each of its
Subsidiaries to maintain, with financially sound and reputable
insurers, insurance against loss or damage by fire with extended
coverage; public liability and third party property damage; and such
other hazards or of such other types as is customary for Persons
engaged in the same or similar business, as the Lender shall
reasonably specify, in amounts, and under policies reasonably
acceptable to the Lender.
(b) The Borrower shall cause the Lender to be named in each
such policy as secured party or mortgagee and lender's loss payee or
additional insured, as appropriate, in a manner acceptable to the
Lender. Each policy of insurance shall contain a clause or endorsement
requiring the insurer to give not less than thirty (30) days' prior
written notice to the Lender in the event of cancellation of the
policy for any reason whatsoever and a clause or endorsement stating
that the interest of the Lender shall not be impaired or invalidated
by any act or neglect of the Borrower, any of its Subsidiaries, or the
owner of any premises for purposes more hazardous than are permitted
by such policy. All premiums for such insurance shall be paid by the
Borrower or their Subsidiaries when due, and certificates of insurance
and, if requested, photocopies of the policies shall be delivered to
the Lender.
(c) The Borrower shall promptly notify the Lender of any
material loss, damage, or destruction to the Collateral or arising
from its use, whether or not covered by insurance. In the absence of
any Default or Events of Default, the Borrower shall have the right to
determine, whether and to what extent such proceeds shall be used for
repair or replacement. If, however, any Default or Event of Default
shall be continuing, the Lender may determine, in its sole discretion,
whether the proceeds shall be used for repair or replacement. If
neither an Event of Default nor a Default exists, the Borrower or its
Subsidiary, as the case may be, may negotiate a settlement regarding
such proceeds with the insurance company and the Lender shall forward
such proceeds to the Borrower. If, however, an Event of Default or a
Default exists, the Lender shall collect the insurance proceeds
directly and neither the Borrower nor its Subsidiary, as the case may
be, shall
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enter into any settlement agreement with the applicable insurance
company without the prior written consent of Lender, which consent
shall not be unreasonably withheld.
(d) If an Event of Default shall exist, Lender may, and if a
decision to not rebuild or replace is made, the Lender shall, apply
the proceeds of insurance to the payment of the Obligations.
7.6 Intentionally Omitted.
7.7 Environmental, Health and Safety Laws. The Borrower shall, and
shall cause each of its Subsidiaries to, conduct its business in compliance in
all material respects with all health and safety laws and Environmental Laws
applicable to it, including, without limitation, those relating to the
generation, handling, use, storage, and disposal of hazardous and toxic wastes
and substances. The Borrower shall, and shall cause each of its Subsidiaries
to, take prompt and appropriate action to respond to any non-compliance with
health and safety laws and Environmental Laws and shall regularly report to the
Lenders on such response. Without limiting the generality of the foregoing,
whenever the Borrower gives notice to the Lender pursuant to Section 5.3(g),
the Borrower shall, at the Lender's request and the Borrower's expense (a)
cause an independent environmental engineer acceptable to the Lender to conduct
such tests of the site where the noncompliance or alleged non-compliance with
Environmental Laws has occurred and prepare and deliver to the Lender a report
setting forth the results of such tests, a proposed plan for responding to any
environmental problems described therein, and an estimate of the costs thereof,
and (b) provide to the Lender a supplemental report of such engineer whenever
the scope of the environmental problems, or the response thereto or the
estimated costs thereof, shall change.
7.8 ERISA.
(a) For each Plan adopted by the Borrower or any ERISA
Affiliate, the Borrower or such ERISA Affiliate shall (i) use its best
efforts to seek and receive a determination letter from the IRS that
such Plan is qualified under Section 401(a) of the Code (unless such
Plan is a master or prototype plan), and (ii) from and after the
adoption of any such Plan, use its best efforts to cause such Plan to
be qualified under Section 401(a) of the Code and to be administered
in all material respects in accordance with the requirements of ERISA
and Section 401(a) of the Code, and (iii) not take any action which
would cause such Plan not to be qualified under Section 401(a) of the
Code or not to be administered in all material respects in accordance
with the requirements of ERISA and Section 401(a) of the Code.
(b) The Borrower shall not, and shall not permit any ERISA
Affiliate, to:
(i) Engage in any transaction for which an exemption
is not available or has not been previously obtained from the
DOL in connection with which the Borrower or any ERISA
Affiliate could be subject to either a civil penalty assessed
pursuant to Section 502(i) of ERISA or tax imposed by Section
4975 of the Code;
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(ii) Permit to exist any accumulated funding
deficiency (whether or not waived), as defined in Section 302
of ERISA and Section 412 of the Code;
(iii) Fail to pay timely required contributions or
annual installments due with respect to any waived funding
deficiency to any Benefit Plan;
(iv) Fail to make any payments to any Multiemployer
Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto;
(v) Terminate or permit an ERISA Affiliate to
terminate a Benefit Plan or withdraw or partially withdraw
from, or permit an ERISA Affiliate to withdraw or partially
withdraw from, any Multiemployer Plan and fail to pay any
liability of the Borrower or an ERISA Affiliate under Title
IV of ERISA;
(c) Fail to pay any required installment under subsection of
Section 412 of the Code or any other payment required under Section
412 of the Code on or before the due date for such installment or
other payment; or
(i) Amend a Benefit Plan resulting in an increase in
current liability for the plan year such that the Borrower or
an ERISA Affiliate is required to provide security to such
Benefit Plan under Section 401(a)(29) of the Code.
7.9 Mergers, Consolidations or Sales. Neither the Borrower nor any of
its Subsidiaries shall enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any material part of its Property, or wind up, liquidate or dissolve, or agree
to do any of the foregoing, except for sales of Equipment as otherwise
permitted hereunder.
7.10 Restricted Payments; Capital Change. Neither the Borrower nor any
of its Subsidiaries shall (a) directly or indirectly declare or make, or incur
any liability to make, any Restricted Payment, except dividends to the Borrower
by OGAC or any other Subsidiary wholly owned by the Borrower or by one or more
other Subsidiaries that are wholly owned by the Borrower or (b) make any change
in its capital structure which could adversely affect the repayment of the
Obligations.
7.11 Transactions Affecting Collateral or Obligations. Neither the
Borrower nor any of its Subsidiaries shall enter into any transaction which
materially and adversely affects the Collateral or the Borrower's ability to
repay the Obligations.
7.12 Guaranties. Neither the Borrower nor any of its Subsidiaries
shall make, issue, or become liable on any guaranty, except guaranties in favor
of the Lender.
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7.13 Debt. Neither the Borrower nor any Subsidiary shall incur or
maintain any Debt, other than, (a) the Obligations; (b) trade payables and
contractual obligations to suppliers, customers and others incurred in the
ordinary course of business, including real property leases which are not
Capital Leases; (c) Debt incurred to finance the purchase of Equipment
constituting Capital Expenditures, so long as (i) the aggregate principal
amount of such Debt at any time outstanding (regardless of when the same
becomes due and payable) shall not exceed $300,000, (ii) the rate at which
interest accrues on such Debt does not exceed the market rate of interest for
similar transactions at such time, and (iii) such Debt would not, after giving
effect to such Debt on a pro forma basis, cause any Default or Event of
Default; (d) other Debt existing on the Closing Date and reflected on SCHEDULE
6.8 hereof; and (e) extensions, renewals, refundings, refinancings,
modifications, amendments and restatements of any of the items in (c) or (d)
above.
7.14 Prepayment. The Borrower shall not voluntarily prepay (a) any
Funded Indebtedness, except the Obligations in accordance with the terms hereof
unless such prepayment, after giving effect to such prepayment on a proforma
basis, does not cause any Default or Event of Default or (b) any Subordinated
Indebtedness.
7.15 Transactions with Affiliates. Except as set forth below, neither
the Borrower nor any of its Subsidiaries shall sell, transfer, distribute, or
pay any money or its Property, including, but not limited to, any fees or
expenses of any nature (including, but not limited to, any fees or expenses for
management services), to any Affiliate of the Borrower, or lend or advance
money or its Property to any Affiliate of the Borrower, or invest in (by
capital contribution or otherwise) or purchase or repurchase any stock or
indebtedness, or any of its Property, of any Affiliate of the Borrower, or
become liable on any Guaranty of the indebtedness, dividends, or other
obligations of any Affiliate of the Borrower except (a) actual expenses
incurred and approved in advance in writing by the Lender; (b) those
transactions described on Schedule 7.15 hereof; (c) reimbursement of actual and
reasonable out-of-pocket expenses incurred by employees or directors of the
Borrower in the ordinary course of the Borrower's business; (d) Guaranties in
favor of the Lender; (e) transactions in the ordinary course of Borrower's or
its Subsidiaries' business and upon fair and reasonable terms, no less
favorable to Borrower than would obtain in a comparable arm's length
transaction with a person not an Affiliate of Borrower and (f) certain
inter-company loans in connection with any investment set forth in Section
7.20(d), provided the Lender consents to such loan, which consent shall not be
unreasonably withheld and the note evidencing such loan shall be endorsed to
the Lender.
7.16 Business Conducted. The Borrower and its Subsidiaries shall not
engage, directly or indirectly in any line of business other than the
businesses in which the Borrower and the OGAC Entities are engaged in on the
Closing Date and any business related or incidental thereto or in facilitation
thereof.
7.17 Liens. Neither the Borrower nor any of its Subsidiaries shall
create, incur, assume, or permit to exist any Lien on any Property now owned or
hereafter acquired by any of them, except Permitted Liens.
7.18 Sale and Leaseback Transactions. Neither the Borrower nor any of
its Subsidiaries shall directly or indirectly, enter into any arrangement with
any Person providing for the Borrower or a Subsidiary to lease or rent Property
that the Borrower or a Subsidiary has or
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will sell or otherwise transfer to such Person if such property represents a
substantial portion of such entity's assets.
7.19 New Subsidiaries. The Borrower shall not, directly or indirectly,
organize or acquire any Subsidiary except as otherwise permitted under Section
7.20.
7.20 Restricted Investments. Neither the Borrower nor any of its
Subsidiaries shall make any Restricted Investment other than (a) investments in
OGAC which shall be assigned to the Lender, (b) investments in EBCO in the form
of loans not to exceed $900,000 in the aggregate and in the form of equity in
the amount of $1,250,000, provided such equity constitutes at least 50% of the
equity of EBCO and provided further that Lender receives financial statements
of EBCO satisfactory to Lender, (c) investments in Strataweb Systems Corp. of
Canada in the form of equity in the amount of $500,000 provided such equity
constitutes at least 51% of the equity in Strataweb Systems; (d) other equity
investments, not to exceed in the aggregate $2,000,000, and (e) any other
investment for which the Borrower has obtained the Lender's consent to such
investment, which consent shall not be unreasonably withheld, provided that
after giving effect to such investments in clauses (b) (c), (d) or (e), (w) no
Default or Event of Default exists, (x) the interest representing such
investment is pledged to the Lender, (y) no additional indebtedness shall be
incurred other than as permitted in above, and (z) the Lender will be granted a
guaranty of the Obligations from each such entity and lien on all of such
entity's assets.
7.21 Reserved.
7.22 Consolidated Debt Service Coverage Ratio. The Borrower and its
consolidated Subsidiaries on a consolidated basis shall maintain as at the end
of each fiscal quarter for the 12 consecutive month then ended a Consolidated
Debt Service Coverage Ratio not less than 1.50 to 1.0, provided that the
Borrower and its consolidated Subsidiaries shall maintain for the fiscal
quarter for the shorter period from June 1, 1999 (the "Inception Date") to
September 30, 1999, a Consolidated Debt Service Coverage Ratio not less than
1.20 to 1.0.
7.23 Consolidated Leverage Ratio. The Borrower and its Subsidiaries on
a consolidated basis shall maintain as at the end of each fiscal quarter for
the 12 consecutive month then ended a Consolidated Leverage Ratio not greater
than 1.0 to 1.0.
7.24 Year 2000. The Borrower will take and will cause its Subsidiaries
to take all such actions as are reasonably necessary to successfully implement
a realistic and achievable program for remediating Year 2000 Issues on a timely
basis and to assure that Year 2000 Issues will not have a material adverse
effect. At the reasonable request of the Lender, the Borrower will provide a
description of such program, together with any updates or progress report with
respect thereto. For purposes of this Section 7.24, "Year 2000 Issues" means
anticipated costs, problems and uncertainties associated with the inability of
certain computer applications to effectively handle data including dates on and
after January 1, 2000, as such inability affects the business, operations and
financial condition of the Borrower and its Subsidiaries.
7.25 Use of Proceeds. The Borrower can, and will cause each Subsidiary
to, use the proceeds (i) of the Term Loan to fund or refinance a portion of the
acquisition of OGAC and to otherwise fund the working capital and for other
corporate purposes and (ii) of the Working Capital Loans to fund working
capital and for other corporate purposes.
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Article VIII.
CONDITIONS OF LENDING
8.1 Conditions Precedent to Making of Loans. The obligation of the
Lender to make the initial Loans is subject to the following conditions
precedent having been satisfied in a manner satisfactory to the Lender:
(a) The Borrower shall have performed and complied with all
covenants, agreements and conditions contained herein which are
required to be performed or complied with by the Borrower before or on
the Funding Date for the Term Loan and any Working Capital Loans
initially requested by Borrower (including, without limitation, the
execution and deliver of the Term Note and the Working Capital Note).
(b) The Lender shall have received a certificate dated the
Closing Date and signed by the president or a vice president and the
chief financial officer or treasurer of Borrower certifying that the
conditions specified in this Section 8.1 have been fulfilled.
(c) The Borrower shall have caused the following to be
delivered to the Lender, all such items to be in form and substance
satisfactory to the Lender, and to be executed by all parties thereto
when the nature of such items so requires:
(i) a copy of this Agreement and each of the Term
Note and the Working Capital Note duly executed by the
Borrower;
(ii) the Pledge Agreements duly executed by the
parties thereto;
(iii) UCC financing statement and other documents
Lender requires to perfect the security interests granted in
the Collateral;
(iv) a UCC lien, tax lien and judgment search
against each of the Borrower and OGAC with results
satisfactory to the Lender;
(v) such officer's certificates, certificates of
incumbency and certified resolutions of Borrower and each of
the OGAC Entities evidencing the requisite authority of each
such entity to execute, deliver and perform the Loan
Documents to which they are a party;
(vi) a copy of each of the Stock Purchase Agreement,
the Investors Agreement and Shareholder Agreement, in each
case, in form and substance satisfactory to the Lender and
certified to be a true and correct copy and in full force and
effect by an officer of Borrower;
(vii) a certificate of an officer of Borrower
certifying that the transactions contemplated under the Stock
Purchase Agreement have been consummated in accordance with
the terms thereof;
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(viii) a proforma balance sheet of the Borrower and
OGAC on a consolidated basis, after giving effect to the
making of the initial Loans hereunder;
(ix) copies of the organizational documents of the
Borrower and each of the OGAC Entities certified by the
Secretary of State of the state of its organization;
(x) evidence of insurance as required under this
Agreement;
(xi) interim financial statements for each of the
Borrower and OGAC as at May 31, 1999 together with
projections of cash flow for the period through the
Termination Date, satisfactory to the Lender;
(xii) a financial condition certificate in form and
substance satisfactory to the Lender executed by the chief
financial officer of OGAC;
(xiii) a satisfactory opinion of Borrower's counsel;
and
(xiv) a satisfactory opinion of the OGAC Entities'
counsel.
(d) All proceedings taken in connection with the execution of
this Agreement, the Notes, all other Loan Documents and all documents
and papers relating thereto shall be satisfactory to the Lender. The
Lender shall have received copies of such documents and papers as the
Lender may reasonably request in connection therewith, all in form and
substance satisfactory to the Lender.
(e) The Borrower shall have paid to the Lender the balance of
the arrangement fee as well as all costs and expenses incurred as of
the Closing Date which the Borrower is obligated to pay pursuant to
the terms of Section 12.7 hereof.
The acceptance by the Borrower of any Loan made on the Closing Date
shall be deemed to be a representation and warranty made by the Borrower to the
effect that all of the conditions to the making of such Loan set forth in this
Section 8.1 have been satisfied, with the same effect as delivery to the Lender
of a certificate signed by the president and chief financial officer of the
Borrower, dated the Closing Date, to such effect.
8.2 Conditions Precedent to Each Loan. The obligation of the Lender
to make each Loan including the initial Loans on the Closing Date shall be
subject to the satisfaction of further conditions precedent that on the date of
any such extension of credit:
(a) with respect to a request for Working Capital Loans, the
Borrower shall be in compliance with Section 5.2(a) and a duly
executed Notice of Borrowing, or telecopy or telex notice in lieu
thereof, as and when required pursuant to Section 2.3(a); and
(b) the following statements shall be true, and the
acceptance by the Borrower of any extension of credit shall be deemed
to be a statement to the effect set forth in clauses (ii) and (iii),
with the same effect as the delivery to the Lender of a certificate
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signed by the president and chief financial officer of the Borrower,
dated the date of such extension of credit, stating that:
(i) The representations and warranties contained in
this Agreement and the other Loan Documents are correct in
all material respects on and as of the date of such extension
of credit as though made on and as of such date;
(ii) no event has occurred and is continuing, or
would result from such extension of credit, which constitutes
a Default or an Event of Default; and
(c) the Lender shall have received such other approvals,
opinions or documents as it may reasonably request in Good Faith.
Article IX.
DEFAULT; REMEDIES
9.1 Events of Default. It shall constitute an event of default ("Event
of Default") if any one or more of the following shall occur for any reason:
(a) any failure to pay the principal of or interest or
premium on any of the Obligations within three (3) days of when due,
whether upon demand or otherwise;
(b) any representation or warranty made by the Borrower in
this Agreement, or by the Borrower, the OGAC Entities or any of their
Subsidiaries in any of the other Loan Documents, any financial
statement, or any certificate furnished by the Borrower at any time to
the Lender shall prove to be untrue in any material respect as of the
date on which made;
(c) any failure by the Borrower to comply with any of the
covenants set forth in Article VII of this Agreement except for the
covenants set forth in Sections 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7,
7.8, 7.24 and 7.25;
(d) any failure by the Borrower, the OGAC Entities or any of
their respective Subsidiaries to comply with any of the covenants and
agreements contained in this Agreement (including, without limitation,
Sections 7.1, 7.2, 7.3, 7.4, 7.7, 7.8, 7.24 and 7.25), the other Loan
Documents, or any other agreement entered into at any time to which
the Borrower, the OGAC Entities or any of their respective
Subsidiaries and the Lender are party, for more than thirty (30) days
after notice of such failure by the Lender to the Borrower; provided,
however, that no such grace period shall apply, and an Event of
Default shall exist promptly upon such failure to comply, if such
failure to comply may not, in the Lender's reasonable determination,
be cured by the Borrower during such grace period; or if any such
agreement, instrument or document shall terminate (other than in
accordance with its terms or the terms hereof or with the written
consent of the Lender) or become void or unenforceable without the
written consent of the Lender;
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(e) failure of the Borrower or any of its Subsidiaries to pay
when due (whether by acceleration or otherwise) any Debt aggregating
in excess of $100,000; or the default by the Borrower or any of its
Subsidiaries with respect to any Debt in an outstanding principal
amount in excess of $250,000 under any agreement or instrument under
or pursuant to which any such Debt or indebtedness may have been
issued, created, assumed, or guaranteed by the Borrower and such
default shall continue for more than the period of grace, if any,
therein specified, if the effect thereof (with or without the giving
of notice or further lapse of time or both) is to accelerate, or to
permit the holders of any such Debt or indebtedness to accelerate, the
maturity of any such Debt; or any such Debt or indebtedness shall be
declared due and payable or be required to be prepaid (other than by a
regularly scheduled required prepayment) prior to the stated maturity
thereof unless and during such time the Borrower is contesting such
Debt in good faith by appropriate proceedings and has established
reserves required in accordance with GAAP;
(f) the Borrower, OGAC or any of their Subsidiaries shall (i)
file a voluntary petition in bankruptcy or file a voluntary petition
or an answer or otherwise commence any action or proceeding seeking
reorganization, arrangement or readjustment of its debts or for any
other relief under the federal Bankruptcy Code, as amended, or under
any other bankruptcy or insolvency act or law, state or federal, now
or hereafter existing, or consent to, approve of, or acquiesce in, any
such petition, action or proceeding; (ii) apply for or acquiesce in
the appointment of a receiver, assignee, liquidator, sequestrator,
custodian, trustee or similar officer for it or for all or any part of
its Property; (iii) make an assignment for the benefit of creditors;
(iv) take any corporate action in furtherance of any of the foregoing
or (v) be unable generally to pay its debts as they become due;
(g) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement or
readjustment of the Borrower's or any of its Subsidiaries debts or for
any other relief under the federal Bankruptcy Code, as amended, or
under any other bankruptcy or insolvency act or law, state or federal,
now or hereafter existing and such petition, action or proceeding is
not dismissed within sixty (60) days thereafter;
(h) a receiver, assignee, liquidator, sequestrator,
custodian, trustee or similar officer for the Borrower, the OGAC
Entities or any of their Subsidiaries or for all or any part of their
Property shall be appointed; or a warrant of attachment, execution or
similar process shall be issued against any material part of the
Property of the Borrower, the OGAC Entities or any of their
Subsidiaries;
(i) the Borrower shall file a certificate of dissolution
under applicable state law or shall be liquidated, dissolved or
wound-up or shall commence or have commenced against it any action or
proceeding for dissolution, winding-up or liquidation, or shall take
any corporate action in furtherance thereof;
(j) any guaranty of, subordination to, or material security
for, the Obligations shall be terminated, revoked or declared void or
invalid or fail to be perfected;
(k) one or more final judgments for the payment of money
aggregating in excess of $100,000 shall be rendered against the
Borrower, OGAC or any of their Subsidiaries which is not discharged in
full or stayed within thirty (30) days from the date
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of entry thereof unless such judgments are (i) covered by the
liability insurance as confirmed in writing by the insurance company
carrying such insurance, or (ii) the subject of an obligation of any
Person (other than the Borrower or any Affiliate of the Borrower) to
indemnify the Borrower against whom such judgment is rendered provided
the terms of such indemnification and the creditworthiness of the
indemnitor are satisfactory to the Lender in its sole discretion; or
(l) any event occurs which materially and adversely affects
the operations and financial condition of the Borrower and its
Subsidiaries taken as a whole.
9.2 Remedies.
(a) If an Event of Default exists, the Lender may, without
notice to or demand on the Borrower, do one or more of the following,
in addition to the actions described in the preceding sentence, at any
time or times and in any order: (i) terminate the Commitment and (ii)
declare any or all Obligations to be immediately due and payable
(provided, however that upon the occurrence of any Event of Default
described in Sections 9.1(f), 9.1(g), 9.1(h), or 9.1(i), all
Obligations shall automatically become immediately due and payable
without notice or demand of any kind); and (iii) pursue its other
rights and remedies under the Loan Documents and applicable law.
(b) If an Event of Default exists: (i) the Lender shall have,
in addition to all other rights, the rights and remedies of a secured
party under the UCC; (ii) the Lender may, at any time, take possession
of the Collateral and keep it on the Borrower's premises, at no cost
to the Lender, or remove any part of it to such other place or places
as the Lender may desire, or the Borrower shall, upon the Lender's
demand, at the Borrower's cost, assemble the Collateral and make it
available to the Lender at a place reasonably convenient to the
Lender; and (iii) the Lender may sell and deliver any Collateral at
public or private sales, for cash, upon credit or otherwise, at such
prices and upon such terms as the Lender deems advisable, in its sole
discretion, and may, if the Lender deems it reasonable, postpone or
adjourn any sale of the Collateral by an announcement at the time and
place of sale or of such postponed or adjourned sale without giving a
new notice of sale. Without in any way requiring notice to be given in
the following manner, the Borrower agrees that any notice by the
Lender of sale, disposition or other intended action hereunder or in
connection herewith, whether required by the UCC or otherwise, shall
constitute reasonable notice to the Borrower if such notice is mailed
by registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least ten (10)
Business Days prior to such action to the Borrower's address specified
in or pursuant to Section 12.8. If any Collateral is sold on terms
other than payment in full at the time of sale, no credit shall be
given against the Obligations until the Lender receives payment, and
if the buyer defaults in payment, the Lender may resell the Collateral
without further notice to the Borrower. In the event the Lender seeks
to take possession of all or any portion of the Collateral by judicial
process, the Borrower irrevocably waives: (i) the posting of any bond,
surety or security with respect thereto which might otherwise be
required; (ii) any demand for possession prior to the commencement of
any suit or action to recover the Collateral; and (iii) any
requirement that the Lender retain possession and not dispose of any
Collateral until after trial or final judgment. The Borrower agrees
that the Lender has no obligation
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to preserve rights to the Collateral or marshal any Collateral for the
benefit of any Person. The Lender is hereby granted a license or other
right to use, without charge, the Borrower's labels, patents,
copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production
of, advertising or selling any Collateral, and the Borrower's rights
under all licenses and all franchise agreements shall inure to the
Lender's benefit. The proceeds of sale shall be applied by Lender
against the principal and/or interest of any Loans and/or any other
Obligations, whether or not then due, in such order of application as
the Lender may determine. The Lender will return any excess to the
Borrower or such other Person as shall be legally entitled thereto and
the Borrower shall remain liable for any deficiency.
(c) After the occurrence and during the continuance of an
Event of Default, the Borrower hereby waive all rights to notice and
hearing prior to the exercise by the Lender of the Lender's rights to
repossess the Collateral without judicial process or to replevy,
attach or levy upon the Collateral without notice or hearing.
Article X.
TERMINATION
This Agreement shall terminate at such time as all of the Obligations
have been indefeasibly paid and satisfied in full and the Commitment shall have
been terminated, unless earlier terminated as provided herein.
Article XI.
AMENDMENTS; ASSIGNMENTS; SUCCESSORS
11.1 Amendments and Waivers. No amendment or modification of any
provision of this Agreement shall be effective without the written agreement of
the Lender and the Borrower, and no termination or waiver of any provision of
this Agreement, or consent to any departure by the Borrower therefrom, shall in
any event be effective without the written concurrence of the Lender, which the
Lender shall have the right to grant or withhold at its sole discretion. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances.
11.2 Participations.
(a) Permitted Participants, Effect. Upon notice to the
Borrower (which notice shall include the identity of each Participant
(as defined below)), the Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to
one or more banks or other entities ("Participants") participating
interests in any Loan owing to the Lender, any Note held by the
Lender, the Commitment of the Lender or any other interest of the
Lender under the Loan Documents. In the event of any such sale by a
Lender of participating interests to a Participant, the Lender's
obligations under the Loan Documents shall remain unchanged, the
Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, the Lender shall remain the owner
of its Loans and the holder of any Note issued to it in evidence
thereof for all
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purposes under the Loan Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if the Lender had not sold
such participating interests, and the Borrower and the Lender shall
continue to deal solely and directly with the Lender's rights and
obligations under the Loan Documents.
(b) Voting Rights. The Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other
than any amendment, modification or waiver with respect to any Loan or
the Commitment in which such Participant has an interest which
forgives principal, interest or fees or reduces the interest rate or
fees payable with respect to any such Loan or Commitment, extends the
Working Capital Termination Date, postpones any date fixed for any
regularly scheduled payment of principal of, or interest or fees on,
any such Loan or Commitment, releases any guarantor of any such Loan
or releases all or substantially all of the Collateral securing any
such Loan.
(c) Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in
Section 12.14 in respect of its participating interest in amounts
owing under the Loan Documents to the same extent as if the amount of
its participating interest were owing directly to it as the Lender
under the Loan Documents, provided that the Lender shall retain the
right of setoff provided in Section 12.14 with respect to the amount
of participating interests sold to each Participant. The Lender agrees
to share with each Participant, and each Participant, by exercising
the right of setoff provided in Section 12.14, agrees to share with
the Lender, any amount received pursuant to the exercise of its right
of setoff, such amounts to be shared as if each Participant were a
Lender.
11.3 Assignments.
(a) Permitted Assignments. The Lender may, in the ordinary
course of its business and in accordance with applicable law, at any
time assign to one or more banks or other entities which are Eligible
Assignees ("Purchasers") all or any part of its rights and obligations
under the Loan Documents. Such assignment shall be in such form as may
be agreed to by the parties thereto and shall be in a minimum amount
of $3,000,000. The consent of the Borrower shall be required prior to
an assignment becoming effective with respect to a Purchaser which is
not an Affiliate thereof; provided, however, that if a Default has
occurred and is continuing, the consent of the Borrower shall not be
required. Such consent shall not be unreasonably withheld or delayed.
(b) Effect, Effective Date. Upon (i) delivery to the Lender
of an assignment, together with any consents required by Section 11.3,
and (ii) the delivery of an intercreditor agreement in form
satisfactory to both the Lender and Borrower which agreement shall
provide for the appointment of one of the Lenders as agent who shall
act as representative for all such Lenders in dealings with the
Borrower, such assignment shall become effective on the effective date
specified in such assignment. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to
this Agreement and any other Loan Document executed by or on behalf of
the Lender and shall have all the rights and obligations of a Lender
under the Loan Documents, to the same extent as if it were an original
party hereto, and no further
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consent or action by the Borrower, or the Lender shall be required to
release the transferor Lender with respect to the percentage of the
Commitment and Loans assigned to such Purchaser. Upon the consummation
of any assignment to a Purchaser pursuant to this Section 11.3, the
transferor Lender, the Lender and the Borrower shall, if the Purchaser
desires that its Loans be evidenced by Notes, make appropriate
arrangements so that new Notes or, as appropriate, replacement Notes
are issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in
principal amounts reflecting their respective portion of the
Commitment, as adjusted pursuant to such assignment.
Article XII.
MISCELLANEOUS
12.1 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Lender's rights and remedies is not intended to be
exclusive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies that the Lender may have under the
UCC or other applicable law. The Lender shall have the right, in its sole
discretion, to determine which rights and remedies are to be exercised and in
which order. The exercise of one right or remedy shall not preclude the
exercise of any others, all of which shall be cumulative. The Lender may,
without limitation, proceed directly against the Borrower to collect the
Obligations without any prior recourse to the Collateral.
12.2 No Implied Waivers. No act, failure or delay by the Lender shall
constitute a waiver of any of its rights and remedies. No single or partial
waiver by the Lender of any provision of this Agreement or any other Loan
Document, or of breach or default hereunder or thereunder, or of any right or
remedy which the Lender may have, shall operate as a waiver of any other
provision, breach, default, right or remedy or of the same provisions, breach,
default, right or remedy on a future occasion. No waiver by the Lender shall
affect its rights to require strict performance of this Agreement.
12.3 Severability. If any provision of this Agreement shall be
prohibited or invalid, under applicable law, it shall be ineffective only to
such extent, without invalidating the remainder of this Agreement.
12.4 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS) OF THE
STATE OF NEW YORK.
(b) SUBJECT ONLY TO THE EXCEPTION IN THE NEXT SENTENCE, THE
BORROWER AND THE LENDER HEREBY AGREE TO THE EXCLUSIVE JURISDICTION OF
THE FEDERAL COURT OF THE SOUTHERN DISTRICT OF NEW YORK AND WAIVE ANY
OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY
ACTION INSTITUTED THEREIN, AND AGREE THAT ANY DISPUTE CONCERNING THE
RELATIONSHIP BETWEEN THE LENDER AND THE BORROWER OR THE CONDUCT OF ANY
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PARTY IN CONNECTION WITH THIS AGREEMENT OR OTHERWISE SHALL BE HEARD
ONLY IN THE COURTS DESCRIBED ABOVE. NOTWITHSTANDING THE FOREGOING THE
LENDER SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST
THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
THE LENDER DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS.
(c) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY
BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE
BORROWER AT ITS ADDRESS SET FORTH IN SECTION 12.8 AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL
HAVE BEEN SO DEPOSITED IN THE U.S. MAILS. THE BORROWER HEREBY CONSENTS
TO SERVICE OF PROCESS AS AFORESAID.
(d) THE BORROWER AND THE LENDER HEREBY WAIVE ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR (II) IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED, IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE. THE LENDER AND BORROWER HEREBY AGREE
AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) NOTHING IN THIS SECTION 12.4 SHALL AFFECT THE RIGHT OF
THE LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR AFFECT THE RIGHT OF THE LENDER TO BRING ANY ACTION OR PROCEEDING
AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
12.5 Survival of Representations and Warranties. All of the Borrower's
representations, and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Lender or any of its respective agents.
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12.6 Other Security and Guaranties. The Lender, may, without notice or
demand and without affecting the Borrower's obligations hereunder, from time to
time: (a) take from any Person and hold collateral (other than the Collateral)
for the payment of all or any part of the Obligations and exchange, enforce or
release such collateral or any part thereof; and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute the Borrower or any such endorser or guarantor, or any
Person who has given any Lien in any other collateral as security for the
payment of all or any part of the Obligations, or any other Person in any way
obligated to pay all or any part of the Obligations.
12.7 Fees and Expenses. The Borrower shall pay to the Lender within
ten (10) days of demand all reasonable costs and expenses that Lender pays or
incurs in connection with the negotiation, preparation, consummation,
enforcement, and termination of this Agreement and the other Loan Documents,
including, without limitation: (a) reasonable attorneys' and paralegals' fees
and disbursements of counsel to the Lender; (b) reasonable costs and expenses
(including reasonable attorneys' and paralegals' fees and disbursements) for
any amendment, supplement, waiver, consent, or subsequent closing in connection
with the Loan Documents and the transactions contemplated thereby; (c) costs
and expenses of lien and title searches and title insurance; (d) taxes, fees
and other charges for recording any mortgages, filing financing statements and
continuations, and other actions to perfect, protect, and continue the Lender's
Liens; (e) sums paid or incurred to pay any amount or take any action required
of the Borrower under the Loan Documents that the Borrower fails to pay or
take; (f) reasonable costs of inspections, and verifications of the Collateral,
including, without limitation, due diligence appraisals, travel, lodging, and
meals for inspections of the Collateral and the Borrower's operations by the
Lender's agents up to one (1) time during any Fiscal Year and whenever an Event
of Default exists; (g) costs and expenses (which shall not exceed the Lender's
costs and expenses customarily charged to other customers) of forwarding loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining the Concentration Account; (h) costs and expenses of preserving and
protecting the Collateral; and (i) costs and expenses (including attorneys' and
paralegals' fees and disbursements) paid or incurred to obtain payment of the
Obligations, enforce the Lender's Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
defend any claims made or threatened against the Lender arising out of the
transactions contemplated hereby (including without limitation, preparations
for and consultations concerning any such matters). The foregoing shall not be
construed to limit any other provisions of the Loan Documents regarding costs
and expenses to be paid by the Borrower. All of the foregoing costs and
expenses may be paid from the proceeds of Working Capital Loans as described in
Section 2.8(b).
12.8 Notices. Except as otherwise provided herein, all notices,
demands and requests that any party is required or elects to give to any other
party shall be in writing, or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, (b) on the Business Day following the Business Day
on which it was delivered to an overnight mail or courier service with charges
prepaid, (c) five (5) days after it shall have been mailed by United States
mail, first class, certified or registered, with postage prepaid, or (d) in the
case of notice by a telecommunication device, upon acknowledgement of receipt
when properly transmitted, in each case addressed with respect to each party as
set forth below:
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If to the Lender: Citicorp U.S.A., Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: 312-876-7934
If to the Borrower: Energy Auction Exchange, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ Godward LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ C.T. Linfield, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by
like notice. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the persons
designated above to receive copies shall not adversely affect the effectiveness
of such notice, demand, request, consent, approval, declaration or other
communication. Any notices, demands or consents required or permitted to be
given to or by the Borrower will be valid and binding on all Borrower if given
to or by, as the case may be, the Borrower.
12.9 Indemnity. The Borrower agrees to (a) reimburse the Lender for
any costs and expenses (including, without limitation, reasonable attorneys'
and paralegals' fees and expenses) incurred by the Lender in defending any suit
brought against it by the Borrower or any other Person in connection with the
transactions contemplated by this Agreement or the Loan Documents, and (b)
indemnify and hold the Lender, and its officers, directors, employees,
attorneys and agents (collectively, the "Indemnitees") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever incurred by the Indemnitees, whether direct, indirect or
consequential, as a result of or arising from or relating to any proceeding by
any Person, whether threatened or initiated, asserting any claim for legal or
equitable remedy against any Person under any statute or regulation (including,
without limitation, any federal or state securities or commercial laws or under
any common law or equitable cause or otherwise,
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including any liability and costs under Environmental Laws or common law
principles arising from or in connection with the past, present or future
operations of the Borrower or their predecessors in interest, or the past,
present or future environmental condition of the Borrower's Property, the
presence of asbestos-containing materials at or on such Property, or the
release or threatened release of any contaminant into the environment from such
Property), in any way arising from or in connection with the negotiation,
preparation, execution, delivery, enforcement, performance and administration
of this Agreement or any other document executed in connection herewith,
provided that the Borrower shall have no obligation hereunder with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of any Indemnitee seeking such indemnification. To the extent that the
indemnity set forth in this Section 12.9 may be unenforceable because it is
violative of any law or public policy, Borrower shall pay the maximum portion
which it is permitted to pay under applicable law. Any Indemnitee will promptly
notify the Borrower of the commencement of any legal proceeding which may give
rise to any indemnified liability under the foregoing indemnity and shall
permit the Borrower to participate in the defense of such Indemnitee in any
such proceeding. The foregoing indemnity shall survive the payment of the
Obligations and the termination of this Agreement. All of the foregoing fees,
costs and expenses shall be part of the Obligations, payable upon demand, and
secured by the Collateral.
12.10 Waiver of Notices. Unless otherwise expressly provided herein,
each Borrower waives presentment, protest and notice of demand or dishonor and
protest as to any instrument, as well as any and all other notices to which it
might otherwise be entitled. No notice to or demand on the Borrower which the
Lender may elect to give shall entitle the Borrower to any or further notice or
demand in the same, similar or other circumstances.
12.11 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Lender and the Borrower in separate counterparts, each
of which shall be an original, but all of which shall together constitute one
and the same agreement.
12.12 Captions. The captions contained in this Agreement are for
convenience only, are without substantive meaning and should not be construed
to modify, enlarge, or restrict any provision.
12.13 Confidentiality. The Lender hereby agrees that it will use
reasonable efforts to keep confidential any information from time to time
supplied to it by the Borrower under this Agreement unless such information was
already known to the Lender on a nonconfidential basis at the time it was
received or was obtained from a third party on a nonconfidential basis, or was,
is or becomes publicly available; provided, however, that nothing herein shall
affect the disclosure of any such information to: (a) the extent required by
statute, rule, regulation or judicial process; (b) provided that all such
persons agree to keep such information confidential in accordance with this
Section 12.13 (i) counsel for the Lender or to its accountants; (ii) bank
examiners and auditors; and (iii) any transferee or prospective transferee of
any Note; or (c) any other Person in connection with any litigation to which
the Lender is a party; provided, further, that the Lender hereby agrees that it
will notify the Borrower in writing of any request for information under
clauses (a) and (c) above or with respect to any other request for information
not enumerated in this Section 12.13 at least five (5) Business Days before
complying with any such request, unless such notice is specifically prohibited
by applicable law, court order or governmental authority. If the terms of any
request for information subject to the last proviso of
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the preceding sentence do not provide a reasonably sufficient time to give the
Borrower five (5) Business Days' notice, the Lender will use its best efforts
to seek additional time for compliance in order to permit such notice and in
any event will notify the Borrower of such request as soon as practicable.
12.14 Set-Off. In addition to, and without limitation of, any rights
of the Lender under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all account
balances, whether provisional or final and whether or not collected or
available) and any other Debt at any time held or owing by the Lender or for
the credit or account of the Borrower may be offset and applied toward the
payment of the Obligations owing to the Lender, whether or not the Obligations,
or any part hereof, shall then be due.
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IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
ENERGY AUCTION EXCHANGE, INC.
By: /s/
------------------------------------
Title:
----------------------------------
CITICORP U.S.A., INC.
By: /s/
------------------------------------
Title:
----------------------------------
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NOTICE OF BORROWING
July 28, 1999
Citicorp U.S.A., Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Loan and Security Agreement dated as of July
28, 1999 by and between Energy Auction Exchange, Inc. (referred to herein as the
"Borrower") and Citicorp U.S.A., Inc. (the "Lender") (as amended from time to
time, the "Loan Agreement"). Capitalized terms used herein have the meanings
specified in the Loan Agreement.
The undersigned hereby deliveries this Notice of Borrowing pursuant to
Section 2.3 of the Loan Agreement as follows:
(i) The date of borrowing of the proposed Loan is July ___, 1999.
(ii) The aggregate amount of the proposed Loan which is to be the
Term Loan is $6,000,000.
(iii) The aggregate amount of the proposed Loan which is to be the
Working Capital Loan is $________.
(iv) The proposed Loan to be made pursuant to Section 2.3 shall be
a Base Rate Loan.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the proposed
borrowing, before and after giving effect thereto and to the application of the
proceeds therefrom:
(a) the representations and warranties contained in Article
VI of the Loan Agreement are true and correct as though made on the
date hereof (except to the extent such representations and warranties
relate to an earlier date, in which case they are true and correct as
of such date); and
(b) no Default or Event of Default has occurred and is
continuing, or would result from such proposed borrowing.
ENERGY AUCTION EXCHANGE, INC.
By:
------------------------
Title:
----------------------
64
TERM NOTE
US$6,000,000 Dated: July 28, 1999
FOR VALUE RECEIVED, the undersigned, ENERGY AUCTION EXCHANGE, INC., a
Delaware corporation (referred to herein as the "Borrower"), hereby promises to
pay to the order to Citicorp U.S.A., Inc. (the "Lender") the principal amount
of Six Million and 00/100 Dollars ($6,000,000). Capitalized terms used herein
have the meanings specified for such terms in the Loan Agreement (as defined
below).
In addition to Mandatory Prepayments required under Section 2.4, the
Borrower shall pay such amounts under this Term Note to result in the
outstanding principal amount of the Term Loan to be reduced to zero by the
Termination Date on the schedule set forth below: by the amount of $71,428.51
commencing on August 1, 1999 and continuing on a monthly basis to and including
July 1, 2004, and a final installment on the Termination Date equal to the
entire unpaid principal balance of the Term Loan at such time.
The Borrower promises to pay interest on the unpaid principal amount
of the Term Loan from the Closing Date until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in
the Loan Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Citicorp U.S.A., Inc. at its office or branch at ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other offices as the Lender
may subsequently designate in writing, in same day funds. All payments made on
account of principal hereof shall be recorded by the Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Term Note.
This Term Note is the Term Note referred to in, and is entitled to the
benefits of, the Loan and Security Agreement dated as of July 28, 1999 (the
"Loan Agreement") by and between the Borrower and the Lender. The Loan
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon
the terms and conditions therein specified.
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IN WITNESS WHEREOF, the undersigned has entered into this Term Note on
the date first stated above.
ENERGY AUCTION EXCHANGE, INC.
By: /s/
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Title:
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Type Amount Interest Amount Principal
of of Period of Unpaid Notation
Date Loan Loan (if applicable) Principal Paid Balance made by
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67
WORKING CAPITAL NOTE
US$3,000,000 Dated: July 28, 1999
FOR VALUE RECEIVED, the undersigned, ENERGY AUCTION EXCHANGE,
INC., a Delaware corporation (referred to herein as the "Borrower"), hereby
promises to pay to the order of Citicorp U.S.A., Inc. (the "Lender") the
principal amount of each Working Capital Loan (as defined in the Loan Agreement
referred to below) made by the Lender to the Borrower pursuant to the Loan
Agreement (as defined below) when required by the Loan Agreement and in full on
the Termination Date (as defined in the Loan Agreement). Capitalized terms used
herein have the meanings specified in the Loan Agreement (as defined below).
The Borrower promises to pay interest on the unpaid principal
amount of each Working Capital Loan from the date of such Working Capital Loan
until such principal amount is paid in full, at such interest rates, and
payable at such times, as are specified in the Loan Agreement.
Both principal and interest are payable in lawful money of
the United States of America to Citicorp U.S.A., Inc., at its office or branch
at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other
office as the Lender may subsequently designate in writing, in same day funds.
Each Working Capital Loan made by the Lender to the Borrowers and the maturity
thereof, and all payments made on account of principal thereof, shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Working Capital Note.
This Working Capital Note is the Working Capital Note
referred to in, and is entitled to the benefits of, the Loan and Security
Agreement dated as of July 28, 1999 (the "Loan Agreement") by and between the
Borrower and the Lender. The Loan Agreement, among other things, (i) provides
for the making of Working Capital Loans by the Lender to the Borrower from time
to time in an aggregate amount not to exceed at any time outstanding the U.S.
dollar amount first above mentioned, the indebtedness of the Borrower resulting
from each such Working Capital Loan being evidenced by this Working Capital
Note, and (ii) contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
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IN WITNESS WHEREOF, the undersigned has entered into this
Working Capital Note on the date first stated above.
ENERGY AUCTION EXCHANGE, INC.
By: /s/
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Title:
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Type Amount Interest Amount Principal
of of Period of Unpaid Notation
Date Loan Loan (if applicable) Principal Paid Balance made by
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FORM OF NOTICE OF CONVERSION
--------- --, ----
Citibank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Loan and Security Agreement dated as of July
28, 1999 between Energy Auction Exchange, Inc. (the "Borrower") and Citicorp
USA, Inc. (the "Lender") (as amended from time to time, the "Loan Agreement").
Capitalized terms used herein have the meanings specified in the Loan
Agreement.
The undersigned, on behalf of the Borrowers, hereby delivers this
Notice of Conversion pursuant to Section 2.11 of the Loan Agreement that:
the undersigned hereby requests to [convert] [continue] an
aggregate principal amount of $____________ of the outstanding Loans
which are currently [Base Rate Loans] [Eurodollar Rate Loans with an
Interest Period expiring on __________] to Eurodollar Rate Loans on
_________ ___, ____. [The Interest Period for such Eurodollar Rate
Loan is requested to be a ___ [one] [three] [six] month period.]
The undersigned hereby certifies that no Default or Event of Default
has occurred and is continuing, or would result from such proposed borrowing.
ENERGY AUCTION EXCHANGE, INC.
By:
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Name:
--------------------------------
Title:
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