Exhibit
10.1
LOAN AGREEMENT
This Loan
Agreement (" Agreement ") is entered into as of July13,
2009, but effective as of the Effective Date (as defined herein),
by and among UMPQUA BANK, an Oregon corporation (" Bank ")
and PREMIER POWER RENEWABLE ENERGY, INC., a Delaware corporation
(“ Borrower ”), with reference to the following
facts:
RECITALS
A. Borrower
has applied to Bank for a revolving line of credit to finance
working capital and general corporate purposes of Borrower and to
support the issuance of letters of credit, and for an Advised
Guidance Line pursuant to which the Loan Amount may be increased to
accommodate Borrower’s need for additional working capital
following acquisitions, subject to the terms and conditions set
forth in this Agreement. Subject to the terms and conditions as set
forth in this Agreement, Bank has agreed to make provide a
revolving line of credit to Borrower to finance working capital,
and to provide the Advised Guidance Line.
AGREEMENT
NOW,
THEREFORE in
consideration of the foregoing and for other valuable
consideration, the receipt of and sufficiency of which are hereby
acknowledged, Bank and Borrower hereby agree as follows:
1
DEFINITIONS. Capitalized terms not otherwise
defined in this Agreement shall have the meaning as defined in
Exhibit A which is attached hereto and incorporated herein
by this reference. Terms not otherwise defined in this Agreement
and the Loan Documents shall have the meanings attributed to such
terms in the Uniform Commercial Code. The defined terms in this
Agreement shall apply equally to both the singular and the plural
forms of the defined term. Whenever the context may
require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. All references to dollar amounts shall
mean amounts in lawful money of the United States of
America.
2
LINE OF CREDIT.
Subject to the terms and conditions contained herein,
Bank agrees to make Advances under the Line of Credit, under the
following terms and conditions:
2.1
Commitment . Subject to the terms
and conditions hereof and in reliance upon the warranties of the
Borrower herein, Bank agrees to make Advances under the Line of
Credit from time to time, at the request of Borrower, from the
Effective Date until the Maturity Date, during which period the
Borrower may repay and reborrow in accordance with the provisions
hereof; provided that the Principal Amount of all outstanding
Advances shall not at any time exceed the Maximum Borrowing
Availability. The Line of Credit shall be evidenced by,
among other documents, the Note.
2.2
Purpose . Advances under the Line
of Credit shall be used to finance working capital and short-term
capital expenditure needs of the Borrower, prior to and following
any acquisitions approved by Bank, and to support the issuance of
letters of credit.
2.3
Maximum Line Amount . The aggregate
Principal Amount of Advances outstanding under the Line of Credit,
together with the Aggregate Letter of Credit Exposure, shall not at
any time exceed the Maximum Line Amount.
2.4
Maturity Date . Unless declared to be due
and payable sooner pursuant to Section 11 of this Agreement,
all principal, interest and other amounts owing under the Line of
Credit shall be due and payable in full on the Maturity
Date.
2.5
Limitation on Advances . Notwithstanding
any provision of this Agreement to the contrary, Bank shall be
under no obligation to make any Advance under the Line of
Credit:
2.5.1 if
the requested Advance would cause the Principal Amount outstanding
under the Line of Credit to exceed the Maximum Borrowing
Availability; or
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if an Event of Default has occurred and is
continuing or an event or circumstance has occurred that with the
giving of notice or the passage of time would constitute an Event
of Default; or
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if Borrower engages in an Acquisition that is
not approved by Bank under the standards set forth in Section
3.1.3 , whether or not a Guidance Line Increase is requested in
connection with that Acquisition. Without limiting the generality
of the foregoing, Bank is not obligated to fund the Initial Line of
Credit Advance, or any other Advance, unless and until it has
approved the acquisition by Borrower of the prospective Italian
subsidiary known as “Arco Energy”; or
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2.5.4
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after the Maturity Date.
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2.6
Interest . Subject to the provisions of
Section 2.11 below, interest shall accrue on the principal
amount outstanding under the Note at the Prime Rate(as that rate
changes from time to time); provided, however, that in no event may
the interest rate being charged on the principal amount outstanding
be less than five Percent (5.00%) per annum. Interest shall accrue
daily on the outstanding principal balance on the basis of a 360
day year for the actual number of days elapsed on which any sums
are outstanding hereunder.
2.7
Monthly Interest Payments . Interest on
the principal amount outstanding under the Line of Credit Note
shall be payable monthly in arrears commencing on August 1, 2009
and on the first day of each month thereafter, until all principal,
interest and other amounts owing under the Line of Credit Note have
been paid in full.
2.8
Mandatory Principal Payments . At any time
that the principal amount outstanding under the Line of Credit,
plus the Aggregate Letter of Credit exposure, exceeds the Borrowing
Base as of the date of the most recent Borrowing Base Certificate,
Borrower shall immediately, and without demand by Bank to do so,
pay down the principal amount of the Line of Credit to an amount
less than or equal to the Borrowing Base. Failure to pay down the
principal amount of the Line of Credit to an amount less than or
equal to the Borrowing Base, shall be an Event of
Default.
2.9
Maturity Date . All principal, interest and other
amounts owing under the Line of Credit shall be due and payable in
full on July 13, 2011(the “ Maturity Date
”).
2.10
Collateral . The Line of Credit
shall be secured by the collateral described in Section 4 of
this Agreement.
2.11
Interest After Default . If any Event of
Default occurs which continues after any applicable Cure Period,
and while such Event of Default is continuing, or after exercising
the Acceleration Right, Bank, at Bank’s option, may increase
the interest rate under the Line of Credit Note to the Default
Rate.
2.12
Entity Authorizations . As a condition
precedent to any obligation of Bank to make any Advance under the
Line of Credit, Borrower shall have executed and delivered to Bank
the Entity Authorizations.
2.13
Non-Use Fee. For each calendar quarter
during which the Principal Balance outstanding under the Line of
Credit is less than the Maximum Line Amount, Borrower shall pay to
Bank a per annum fee of one-quarter of one percent (0.25%) of the
average unused availability under the Line of Credit.
2.14
Other Documents . As a condition precedent
to any obligation of Bank to make any Advance under the
Line of Credit, Borrower shall execute and deliver to Bank such
other documents as Bank may reasonably require to evidence and
effect the Line of Credit, each in form reasonably satisfactory to
Bank, including but not limited to the Line of Credit Disbursement
Authorization, the Insurance Agreement and the Notice of Insurance
Requirements.
2.15
Other Terms and Conditions . The Line of
Credit shall be subject to all other terms and conditions contained
in the Loan Documents, each of which is incorporated herein by this
reference as if set forth herein in full. Except as
otherwise provided herein, in the event of any conflict between the
terms and conditions of this Agreement, and the terms and
conditions of any of the other Loan Documents, the terms and
conditions of this Agreement shall prevail.
2.16
USA Patriot Act Notice . Bank hereby
notifies Borrower that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October
26, 2003) (the “ Act ”), Bank is required to
obtain, verify and record information that identifies Borrower,
which information includes the name and address of Borrower and
other information that will allow Bank to identify Borrower in
accordance with the Act.
3
ADVISED GUIDANCE LINE. Borrower may request that
the Maximum Line Amount be increased from time to time, but no more
often than twice prior to the Maturity Date (each, a “
Guidance Line Increase ”) in connection with the
acquisition by Borrower of all of the stock of or substantially all
of the assets of another entity (each, an “
Acquisition ”), to finance increased need for working
capital following the Acquisition. In no event may any
Guidance Line Increase cause the Maximum Line Amount to exceed
Twelve Million and 00/100 Dollars ($12,000,000.00).
3.1
Conditions Precedent to Guidance Line Increases
. The following are conditions precedent to each
Guidance Line Increase:
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No Event of Default or Potential Default shall
have occurred and be continuing.
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Bank shall have been provided all documentation
concerning the proposed Acquisition that Bank shall
require.
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The Bank shall have approved the Acquisition and
the corresponding Guidance Line Increase according to its normal
credit quality standards, including but not limited to a
determination by Bank that the Acquisition will not impair
Borrower’s ability to pay or perform its obligations under
the Loan Documents.
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Bank shall have received the Guidance Line
Increase Documents, fully executed by all parties
thereto.
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Borrower shall have paid Bank a fee of one-half
of one percent (0.50%) of the amount of the Guidance Line
Increase.
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3.2
Guidance Line Increase Documents : Each Guidance Line
Increase shall be evidenced by the following:
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A modification of the existing Note to increase
the Principal Balance thereof to the new Maximum Line Amount,
substantially in the form of Exhibit C attached
hereto.
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One or more amended and restated Security
Agreements, or a modification of one or more of the Security
Agreements, providing that, following the Guidance Line Increase,
the Collateral will continue to secure the Indebtedness, including
the Note in the new Maximum Line Amount.
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If the Acquisition results in the creation of a
new Subsidiary or Affiliate, a Security Agreement executed by the
authorized officers of the new Subsidiary or Affiliate providing
that all Personal Property Collateral of that Subsidiary or
Affiliate will secure the Indebtedness, including the Note in the
new Maximum Line Amount.
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Such other documentation as Bank may require in
its sole discretion, including Entity Authorizations.
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4
COLLATERAL FOR LINE OF CREDIT. The Line of
Credit shall be secured by the following collateral (collectively,
the “ Collateral ”):
4.1
Personal Property Collateral . The Line
of Credit shall be secured by a security interest in the Personal
Property Collateral, which shall be a first priority security
interest. As a condition precedent to any obligation of Bank to
make the Initial Advance, the following shall have occurred (the
“ Personal Property Collateral Conditions
”):
4.1.1 Borrower
and the Subsidiaries shall have fully executed and delivered to
Bank the Security Agreements in substantially the form of
Exhibits D, E, F and G , respectively, attached
hereto;
4.1.2 Bank
shall have received a commitment from the holders of all Prior
Liens, if any, that such holders will release or terminate their
respective Prior Lien upon payment of the Prior Lien Payoff
Amount;
4.1.3 Borrower
and, to the extent required by Bank, each Subsidiary that is
pledging Collateral shall have executed and delivered the Insurance
Agreement, and shall have delivered, or caused to have delivered to
Bank, all policies of insurance or binders as required
therein.
4.1.4 Bank
shall have filed UCC-1 financing statements in each of the
jurisdictions in which the Borrower and the Subsidiaries are
located.
4.2
Personal Property Collateral of Future Subsidiaries
. Each Subsidiary that is created or acquired after the
Effective Date shall be required to pledge its interest in all
Personal Property Collateral (except to the extent that Bank has
agreed in writing to exclude certain of that Subsidiary’s
assets from Personal Property Collateral) to secure
Borrower’s obligations hereunder.
5
LETTERS OF CREDIT. At the request of Borrower,
and subject to the terms and conditions set forth herein, Bank
shall issue Letters of Credit in the amounts and on such terms as
Borrower may request, as follows:
5.1
Letter of Credit Limitations . Bank shall
be under no obligation to issue any Letter of Credit:
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if the issuance of that Letter of Credit would
cause the Aggregate Letter of Credit Exposure to exceed the Letter
of Credit Sublimit of $5,000,000;
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if the issuance of that Letter of Credit would
cause the Aggregate Letter of Credit Exposure, plus the Principal
Amount outstanding under the Line of Credit, to exceed the Maximum
Borrowing Availability; or
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if an Event of Default or Potential Default has
occurred and is continuing.
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5.2
Form of Letter of Credit . Any Letter of
Credit issued pursuant to this Agreement shall be in a form
determined by Bank pursuant to Bank = s standard practices for issuance of Letters of
Credit.
5.3
Requirements for Documents, Presentment and Other
Terms . The form of any Documents to be
presented, or the requirements for Presentation, and all other
terms and conditions precedent to any obligation of Bank to honor
any Letter of Credit issued pursuant to this Agreement, shall be
determined pursuant to Bank = s standard practices for issuance of Letters of
Credit.
5.4
Expiration Date . The expiration date of
any Letter of Credit issued under the Line of Credit shall not be
any date later than the Maturity Date.
5.5
Payment Under Letter of Credit . Bank
shall, without any further authorization from Borrower, make an
Advance under the Line of Credit to fund any payments made under
any Letter of Credit issued pursuant to this Agreement.
5.6
Other Terms and Conditions . The issuance
of any Letter of Credit pursuant to this Agreement shall also be
subject to all other terms, conditions and restrictions as may be
required by Bank, pursuant to Bank = s standard practices, policies and procedures
with respect to Letters of Credit, at the time such Letter of
Credit is issued.
5.7
Fees and Costs . Borrower shall pay to
Bank such fees and costs incurred by Bank in the issuance,
administration and payment of or under any Letter of Credit issued
pursuant to this Agreement, including, without limitation, a fee of
one and one-half percent (1.50%) per annum of the average aggregate
face amount of all Letters of Credit outstanding.
6
CONDITIONS PRECEDENT TO DISBURSEMENT. Any
obligation of Bank to make the Initial Line of Credit Advance is
conditioned up the satisfaction of the following conditions (the "
Conditions Precedent to Disbursement "), all of which shall
occur on or before August 15, 2009, or such other date as the
parties hereto shall mutually agree in writing:
6.1
Execution and Delivery of Loan Documents .
Borrower and each of the other Loan Parties shall fully
execute, and/or cause to be fully executed, and deliver to Bank
each of the Loan Documents required to be executed and delivered by
that Loan Party.
6.2
Satisfaction of Personal Property Collateral Conditions
. Each of the Personal Property Collateral
Conditions, as set forth in Section 4.1 above, shall have
been satisfied.
6.3
Payment of Fees and Costs . As a
condition precedent to the Effective Date and to any obligation of
Bank to make the Initial Line of Credit Advance, Borrower shall
have paid to Bank (i) all attorneys fees and costs incurred by Bank
in connection with the negotiation, drafting and preparation of
this Agreement and the Loan Documents; (ii) all fees and costs
incurred by Bank in connection with any environmental reports,
appraisals and inspections made in connection with this Agreement
(provided, however, that Bank will pay the cost of the two
collateral audits immediately preceding the Effective Date); and
(iii) all fees and costs incurred by Bank in connection with this
Agreement, including but not limited to, all costs of recording or
filing all of the documents which must be recorded or filed in the
Official Records of any county in which Borrower does or will do
business, or with the Secretary of State of the State of Delaware
or of any state in which a Subsidiary is located, pursuant to this
Agreement.
6.4
Satisfaction of Conditions Precedent .
Notwithstanding any other provisions of this Agreement,
Bank may, in its sole and absolute discretion, make the Initial
Line of Credit Advance, prior to satisfaction of all of the
Conditions Precedent to Disbursement, in which event, the failure
to satisfy, within any reasonable time period established in
writing by Bank, those Conditions Precedent to Disbursement which
have not been satisfied, shall constitute an Event of Default
pursuant to Section 10 of this Agreement.
7
ADDITIONAL WARRANTIES AND REPRESENTATIONS OF BORROWER
. Borrower represents and warrants that:
7.1
Incorporation, Good Standing, and Due Qualification .
Borrower is a corporation duly incorporated, validly existing, and
in good standing under the laws of the State of Delaware; has the
corporate power and authority to own its assets and to transact the
business in which it is now engaged or proposed to be engaged in;
and is duly qualified as a foreign corporation and in good standing
under the laws of each other jurisdiction in which such
qualification is required.
7.2
Corporate Power and Authority . The execution,
delivery, and performance by Borrower and the Subsidiaries of the
Loan Documents have been duly authorized by all necessary entity
action and do not and will not (i) require any consent or approval
of the stockholders of such entity; (ii) contravene such
entity’s formation documents; (iii) violate any provision of
any law, rule, regulation (including, without limitation,
Regulations U and X of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree,
determination, or award presently in effect having applicability to
such entity; (iv) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other
agreement, lease, or instrument to which such corporation is a
party or by which it or its properties may be bound or affected;
and (v) cause such entity to be in default under any such law,
rule, regulation, order, writ, judgment, injunction, decree,
determination, or award or any such indenture, agreement, lease, or
instrument.
7.3
Legally Enforceable Agreement . This Agreement is,
and each of the other Loan Documents when delivered under this
Agreement will be, legal, valid, and binding obligations of the
Borrowers and/or the other Loan Parties, as the case may be,
enforceable against the Borrower, and/or the other Loan Parties, as
the case may be, in accordance with their respective terms, except
to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency, and other similar laws affecting
creditors’ rights generally.
7.4
Litigation . Except for the Pending
Litigation, there is no litigation or other proceeding pending or
threatened against or affecting Borrower or any Affiliate, and
neither Borrower nor any Affiliate is in default with respect to
any order, writ, injunction, decree or demand of any court or other
governmental or regulatory authority.
7.5
Priority of Security Interest . For so
long as Borrower is indebted to Bank under the Line of Credit, or
under any other obligation to the Bank that is secured by the
Security Interest, the Security Interest shall be and is a first
priority security interest not subject to any prior liens,
encumbrances or security interests.
7.6
Financial Condition . The Financial Statements and
all other statements and data submitted in writing by Borrower to
Bank in connection with Borrower’s request for credit under
this Agreement, are true and correct, and said Financial Statements
accurately present the projected financial condition of the
Borrower and the Subsidiaries as of the Closing
Date. Since that date of the preparation of Financial
Statements, there have been no material adverse changes in the
projected financial condition or business of
Borrower. Borrower has no knowledge of any liabilities,
contingent or otherwise, at the Closing Date not reflected in said
Financial Statements, and Borrower has not entered into any special
commitments or substantial contracts which are not reflected in
said Financial Statements, other than in the ordinary and normal
course of Borrower’s business, which may have a materially
adverse effect upon the financial condition of Borrower, or the
operations or business to be conducted by Borrower.
7.7
Title to Assets . Borrower has good title
to its assets, and the same are not subject to any liens or
encumbrances other than those previously disclosed to and approved
by Bank.
7.8
Tax Status . Borrower has no liability
for any delinquent state, local or federal taxes, and, if Borrower
has contracted with any governmental agency, Borrower has no
liability for renegotiation of profits.
7.9
Trademarks, Patents . Borrower, as of the
date of this Agreement, possess, or will on the Closing Date
possess, all necessary trademarks, trade names, copyrights,
patents, patent rights, and licenses to conduct its business as now
operated, without any known conflict with the valid trademarks,
trade names, copyrights, patents, and license rights of
others.
7.10
Regulation U . The proceeds of the Line
of Credit shall not be used to purchase or carry margin stock (as
defined within Regulation U of the Board of Governors of the
Federal Reserve system).
7.11
Labor Disputes and Acts of God . Neither the business
nor the properties of Borrower are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy, or
other casualty (whether or not covered by insurance) materially and
adversely affecting such business or properties or the operation of
the Borrower.
7.12
Other Agreements . Borrower is not a
party to any indenture, loan, or credit agreement, or to any lease
or other agreement or instrument, or subject to any charter or
corporate restriction which could have a material adverse effect on
the business, properties, assets, operations, or conditions,
financial or otherwise, of Borrower, or the ability of Borrower to
carry out its obligations under the Loan
Documents. Borrower is not in default in any respect in
the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in any agreement or
instrument material to Borrower’s business to which it is a
party.
7.13
ERISA . Borrower in compliance in all material
respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan; no notice of intent to
terminate a Plan has been filed, nor has any Plan been terminated;
no circumstances exist which constitute grounds entitling the PBGC
to institute proceedings to terminate, or appoint a trustee to
administer, a Plan, nor has the PBGC instituted any such
proceedings; the Subsidiaries, nor any Commonly Controlled Entity,
has completely or partially withdrawn from a Multiemployer Plan;
each Subsidiary and each Commonly Controlled Entity have met their
minimum funding requirements under ERISA with respect to all of
their Plans, and the present value of all vested benefits under
each Plan does not exceed the fair market value of all Plan assets
allocable to such benefits, as determined on the most recent
valuation date of the Plan and in accordance with the provisions of
ERISA; and neither any Subsidiary nor any Commonly Controlled
Entity has incurred any liability to the PBGC under
ERISA.
7.14
Other Representations In Loan Documents .
All other representations and warranties contained in
this Agreement and the Loan Documents are true and
correct.
7.15
Nature of Representations and Warranties .
Borrower certifies to Bank that all representations and
warranties made in this Agreement and all other Loan Documents are
true and correct in all material respects and do not contain any
untrue statement of a material fact or omit any material fact
necessary to make the representations and warranties not
misleading. All representations and warranties will
remain true and correct in all material respects and will survive
so long as any of Borrower's obligations have not been satisfied or
the Loan or any part of it remains outstanding, and for any
applicable statute of limitations period. Each
representation and warranty made in this Agreement, in any other
Loan Documents, and in any other document delivered to Bank by
Borrower or any Loan Party, will be deemed to have been relied on
by Bank, regardless of any investigation, inspection, or inquiry
made by Bank or any related disbursement made by
Bank. The representations and warranties that are made
to the best knowledge of Borrower have been made after diligent
inquiry calculated to ascertain the truth and accuracy of the
subject matter of each representation and warranty.
8
AFFIRMATIVE COVENANTS OF BORROWER. Borrower
agrees that so long as Borrower is indebted to Bank, Borrower will,
unless Bank shall otherwise waive in writing:
8.1
Inspections . Allow Bank to conduct
inspections and examinations of accounts receivable and inventory
at such times and on such frequency as Bank deems necessary;
provided, however, that Bank shall in any case conduct an annual
examination of accounts receivable and inventory during such
periods of time that the outstanding principal balance of the Line
of Credit exceeds $500,000.00. All such inspections may be
performed by outside consultants hired by Bank for such purposes
and Borrower will, upon demand by Bank, reimburse Bank for all such
cost of inspection, including any fees and costs incurred for the
use of such outside consultants.
8.2
Additional Assignments . Execute and
deliver to Bank any documents reasonably requested by Bank to
specifically assign to Bank any contracts or proceeds from
contracts arising out of or evidencing any sale of Borrower’s
inventory which are subject to Bank's Security Interest.
8.3
Rights and Facilities . Maintain and
preserve all rights, franchises and other authority adequate for
the conduct of Borrower’s business; maintain Borrower’s
properties, equipment and facilities in good order and repair;
conduct Borrower's business in an orderly manner without voluntary
interruption.
8.4
Insurance . Maintain public liability,
property damage and workers' compensation insurance, and insurance
on all Borrower's insurable property against fire and other hazards
with responsible insurance carriers to the extent usually
maintained by similar businesses, as required by the Insurance
Agreement, each identifying Bank as Loss Payee.
8.5
Taxes and Other Liabilities . Pay and
discharge, before the same become delinquent and before penalties
accrue thereon, all taxes, assessments and governmental charges
upon or against Borrower or any of Borrower’s properties, and
all Borrower’s other liabilities at any time existing, except
to the extent and so long as:
8.5.1 The
same are being contested in good faith and by appropriate
proceedings in such manner as not to cause any materially adverse
effect upon Borrower’s financial condition or the loss of any
right of redemption from any sale thereunder; and
8.5.2 Borrower
shall have set aside on Borrower’s books reserves (aggregated
to the extent required by generally accepted accounting practice)
deemed by Borrower adequate with respect
thereto.
8.6
Financial Covenants and Ratios . Comply
with the following covenants and ratios, on a LIFO Inventory Basis,
each of which shall be measured on a consolidated basis with all
Subsidiaries:
8.6.1 Maintain
a minimum Debt Service Coverage Ratio of not less than1.20 to 1:00,
measured annually as of the end of each of Borrower’s fiscal
years, on a trailing twelve month basis;
8.6.2 Maintain
a maximum Debt to Tangible Net Worth Ratio of 3:00 to 1:00,
measured as of June 30, 2009 and as of the last day of each
calendar quarter thereafter;
8.6.3 Maintain
a minimum Current Ratio of 1.20 to 1:00, measured as of June 30,
2009 and as of the last day of each calendar quarter
thereafter;
8.6.4 Maintain
a minimum Tangible Net Worth of $6,000,000.00 as of the end of each
fiscal year.
8.7
Records and Reports . Maintain on a consistent basis
a standard and modern system of accounting, in accordance with
GAAP, permit Bank's representatives to have access to, and to
examine Borrower's properties, books and records at all reasonable
times, and to furnish Bank:
8.7.1 As
soon as available, and in any event within forty-five (45) days
after the close of each calendar quarter commencing with the
calendar quarter ending June 30, 2009, as of the last day of such
quarter:
8.7.1.1 a
consolidated balance sheet and profit and loss statement of the
Borrower, covering operations for the portion of the fiscal year
ending on the last day of such quarter, all in reasonable detail on
a basis consistently maintained and certified by Borrower to be
true and correct, subject, however, to year-end adjustments, except
that for the last quarter of each fiscal year, said balance sheet
and profit and loss statement shall be due within one hundred
twenty (120) days after the close of that quarter;
8.7.2 Within
thirty (30) days after the end of each calendar month, as of the
last day of the month:
8.7.2.1 a
Borrowing Base Certificate, in form reasonably satisfactory to
Bank, certified by Borrower to be true and correct.
8.7.2.2 an
Accounts Receivable Aging, in form reasonably satisfactory to Bank,
certified by Borrower to be true and correct;
8.7.2.3 an
Accounts Payable Aging, in form reasonably satisfactory to Bank,
certified by Borrower to be true and correct;
8.7.2.4 an
Inventory Report, in form reasonably satisfactory to Bank,
certified by Borrower to be true and correct; and
8.7.2.5 a
work in progress schedule, in form reasonable satisfactory to Bank,
certified by Borrower to be true and correct.
8.7.3 As
soon as available, and in any event within forty-five (45) days
after the close of each calendar quarter commencing with the
calendar quarter ending June 30, 2009, as of the last day of such
quarter, and within one hundred twenty (120) days after
Borrower’s fiscal year end, a Certificate of Compliance, in
form satisfactory to Bank, signed by a corporate officer of
Borrower:
8.7.3.1 showing
for each of the Financial Covenants and Ratios to be met by
Borrower pursuant to Section 8.6 above, calculating each
Financial Covenant and Ratio as of that quarter end or year end, as
applicable, and certifying Borrower’s compliance, or
non-compliance, as the case may be with the same; and
8.7.3.2 certifying
Borrower’s compliance, in all material respects, if true,
with all other terms and conditions in this Agreement and the Loan
Documents, and to the extent Borrower is in material violation or
in material non-compliance with any of the terms and conditions of
this Agreement or the Loan Documents, stating such provisions and
the nature and extent of such violation or
non-compliance.
8.7.4 As
soon as available, and in any event within one hundred twenty (120)
days after the close of each Borrower’s fiscal year
commencing with the fiscal year ended December 31, 2008, CPA
audited consolidated financial statements of the Borrower, as of
the close of and for such fiscal year, in reasonable detail,
showing consolidating entries, with the opinion of accountants
satisfactory to Bank;
8.7.5 Promptly
upon receipt thereof, copies of any reports submitted to Borrower
or any Subsidiary by independent certified public accountants in
connection with examination of the financial statements of Borrower
or any Subsidiary made by such accountants.
8.7.6 Simultaneously
with the delivery of the annual financial statement referred to in
Section 8.7.4 , a certificate of an officer of Borrower to
the effect that Borrower has obtained no knowledge of any condition
or event which constitutes a Default or Event of Default, or if
such accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such
condition or event of which they have knowledge and the nature and
status thereof.
8.7.7 As
soon as possible, and in any event within thirty (30) days after
Borrower or any Subsidiary knows or has reason to know that any
circumstances exist that constitute grounds entitling the PBGC to
institute proceedings to terminate a Plan subject to ERISA with
respect to Borrower or any Subsidiary, and promptly but in any
event within two (2) Business Days of receipt by Borrower or any
Subsidiary of notice that the PBGC intends to terminate a Plan or
appoint a trustee to administer the same, and promptly but in any
event within five (5) Business Days of the receipt of notice
concerning the imposition of withdrawal liability in excess of
$10,000.00 with respect to Borrower or any Subsidiary, the affected
entity will deliver to the Bank a certificate of its chief
financial officer setting forth all relevant details and the action
which the Borrower proposes to take with respect
thereto.
8.7.8 Promptly
after the furnishing thereof, copies of any statement or report
furnished to any other party pursuant to the terms of any
indenture, loan, credit, or similar agreement and not otherwise
required to be furnished to the Bank pursuant to any other clause
of this Section 8.7 ;
8.7.9 Such
other information relating to the affairs of Borrower or any
Subsidiary as Bank reasonably may request from time to
time.
8.8
Notice of Default . Promptly, and in any
event within ten (10) days of the occurrence thereof, notify the
Bank in writing of the occurrence of any Event of Default under
this Agreement or under any of the Loan Documents or any event
which upon notice and lapse of time would be an Event of
Default.
8.9
Litigation . Promptly, and in any event
within ten (10) days of the occurrence thereof, notify Bank in
writing of any litigation commenced or threatened affecting
Borrower, any Subsidiary, or any of the Collateral securing the
Loan, seeking damages in excess of $25,000.
8.10
Primary Banking Relationship . Borrower
shall maintain its primary banking relationship with
Bank.
9
NEGATIVE COVENANTS OF BORROWER S.
Borrower agrees that so long as Borrower is indebted to
Bank, Borrower will not, without Bank's written consent, which will
not be unreasonably withheld:
9.1
Outside Indebtedness . Create, incur, or
assume any indebtedness for borrowed moneys other than loans from
Bank; or sell or transfer, either with or without recourse, any
accounts or notes receivable or any moneys due; provided, however,
that Borrower may finance accounts and inventory of foreign
subsidiaries so long as said accounts and inventory are not
considered “eligible” accounts or
“eligible” inventory for purposes of calculation of the
Borrowing Base, and the borrowing structure has been previously
approved by Bank, which approval shall not be unreasonably
withheld.
9.2
Liens and Encumbrances . Create, incur, or assume any
mortgage, pledge, encumbrance, lien or charge of any kind
(including the charge upon property at any time purchased or
acquired under conditional sale or other title retention
agreement) upon any asset now owned, or hereafter
acquired by either Borrower, other than liens for taxes not
delinquent and liens in Bank's favor.
9.3
Guaranties, Etc . Except in the normal
course of business with respect to the provision of goods and
services to customers, assume, guaranty, endorse, or otherwise be
or become directly or contingently responsible or liable, or permit
any Subsidiary to assume, guaranty, endorse, or otherwise be or
become directly or contingently responsible or liable (including,
but not limited to, an agreement to purchase any obligation, stock,
assets, goods, or services, or to supply or advance any funds,
assets, goods, or services, or an agreement to maintain or cause
such Person to maintain a minimum working capital or net worth, or
otherwise to assure the creditors of any Person against loss) for
obligations of any Person, except guaranties by endorsement of
negotiable instruments for deposits or collection or similar
transactions in the ordinary course of business.
9.4
Loans, Investments, Secondary Liabilities .
Make any loans or advances to any Person (including
without limitation, any Subsidiary) other than in the ordinary and
normal course of Borrower’s business, or make any investment
in the securities of any Person other than the United States
Government; or guarantee or otherwise become liable upon the
obligation of any Person, except by endorsement of negotiable
instruments for deposit or collection in the ordinary and normal
course of its business, unless previously approved by Bank in
writing, which approval shall not be unreasonably
withheld.
9.5
Dividends . Pay any dividends on common
stock.
9.6
Transactions With Affiliates . Enter into any
transaction, including, without limitation, the purchase, sale, or
exchange of property or the rendering of any service, with any
Affiliate, or permit any Subsidiary to enter into any transaction,
including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate,
except in the ordinary course of and pursuant to the reasonable
requirements of Borrower’s or such Subsidiary’s
business and upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary than would obtain in a comparable
arm’s-length transaction with a Person not an
Affiliate.
9.7
Continuity of Operations . Engage in any
business activities substantially different than Borrower’s
existing business, or cease operations, liquidate, merge, transfer,
acquire or consolidate with any other entity, change ownership,
dissolve or transfer or sell any of the Personal Property
Collateral outside of the ordinary course of business, unless such
merger, transfer, acquisition or consolidation does not result in a
Change of Control.
9.8
Project Financing . Notwithstanding anything to the contrary
herein, Subsidiaries located outside the United States may engage
in any of the activities listed in Sections 9.1 , 9.2
, 9.3 and 9.4 above in connection with the financing
of solar projects or the financing of project-specific special
purpose entities owned by Borrower or Subsidiaries located outside
the United States that have been created to hold such solar
projects so long as such project financing will not have recourse
against the Borrower
10
EVENTS OF DEFAULT . The occurrence of any
one of the following events of default beyond any applicable Cure
Period (the " Events of De
