LOAN AGREEMENT

Exhibit 10.1

LOAN AGREEMENT (COMMITTED CUSTOMER FACILITY A)

BY AND AMONG

U.S. BANK NATIONAL ASSOCIATION, Lender

RIDGE CLEARING & OUTSOURCING SOLUTIONS, INC., Borrower,

and

BROADRIDGE FINANCIAL SOLUTIONS, INC., Guarantor

August 5, 2009

TABLE OF CONTENTS

 

 

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LOAN AGREEMENT (COMMITTED CUSTOMER FACILITY A)

THIS LOAN AGREEMENT (COMMITTED CUSTOMER FACILITY A) (this “ Agreement ”) is made and entered into as of August 5, 2009, by and among RIDGE CLEARING & OUTSOURCING SOLUTIONS, INC. , a New York corporation (“ Borrower ”), BROADRIDGE FINANCIAL SOLUTIONS, INC., a Delaware corporation (“ Guarantor ”), and U.S. BANK NATIONAL ASSOCIATION , a national banking association (and any Person that shall become a party hereto by assignment, “ Lender ”), and has reference to the following facts and circumstances:

A. Borrower has applied for a revolving credit facility from Lender in the principal amount of up to $75,000,000.00 to be used to fund daily net NSCC and DTC trading settlement transactions and to finance customer margin loans.

B. Borrower is a wholly-owned subsidiary of Guarantor and Guarantor is willing to guarantee the revolving credit facility.

C. Lender is willing to make said revolving credit facility available to Borrower upon, and subject to, the terms, provisions and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, Guarantor and Lender hereby mutually covenant and agree as follows:

SECTION 1. DEFINITIONS .

1.01 Definitions . In addition to the terms defined elsewhere in this Agreement or in any Exhibit or Schedule hereto, when used in this Agreement, the following terms shall have the following meanings (such meanings shall be equally applicable to the singular and plural forms of the terms used, as the context requires):

Act shall have the meaning ascribed thereto in Section 8.20.

Advance and Advances shall have the respective meanings ascribed thereto in Section 2.01(a).

Affiliate shall mean, with respect to any Person, any other Person that controls, is controlled by, or is under common control with, such Person.

Applicable Margin shall mean One and 75/100 Percent (1.75%).

Attorneys’ Fees shall mean the reasonable fees (and costs, charges and expenses related thereto) of the outside attorneys (and all paralegals, accountants and other staff employed by such attorneys) employed by Lender from time to time (a) in connection with the negotiation, preparation, execution, delivery, amendment, modification, extension, renewal, administration and/or enforcement of this Agreement and/or any other Transaction Document, (b) in connection with the preparation, negotiation or execution of any waiver or consent with respect to this Agreement and/or any other Transaction Document, (c) in connection with any Default or Event of Default under this Agreement, (d) to represent Lender in any litigation, contest, dispute, suit or proceeding, or to commence, defend or intervene in any litigation, contest, dispute, suit or proceeding, or to file any petition, complaint, answer, motion or other pleading or to take any other action in or with respect to any litigation, contest, dispute, suit or proceeding (whether instituted by Lender, Borrower, Guarantor or any other Person and whether in bankruptcy or otherwise) in any way or respect relating to this Agreement or any other Transaction Document, and/or (e) to enforce any of the rights or remedies of Lender to collect any of Borrower’s Obligations and the Guaranteed Obligations; provided , that all such Attorneys’ Fees shall be determined on the basis of rates then generally applicable to the attorneys (and all paralegals, accountants and other staff employed by such attorneys) employed by Lender, which may be higher than the rates such attorneys (and all paralegals, accountants and other staff employed by such attorneys) charge Lender in certain matters.

Attributable Debt shall mean, with respect to any Sale and Leaseback Transaction, the present value (discounted at the rate set forth or implicit in the terms of the lease included in such Sale and Leaseback Transaction) of the total obligations of the lessee for rental payments (other than amounts required to be paid on

account of taxes, maintenance, repairs, insurance, assessments, utilities, operating and labor costs and other items that do not constitute payments for property rights) during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended). In the case of any lease which is terminable by the lessee upon payment of a penalty, the Attributable Debt shall be the lesser of the Attributable Debt determined assuming termination upon the first date such lease may be terminated (in which case the Attributable Debt shall also include the amount of the penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated) or the Attributable Debt determined assuming no such termination.

Borrower’s Obligations shall mean any and all present and future indebtedness (principal, interest, fees, collection costs and expenses, and other amounts), liabilities and obligations (including, without limitation, guaranty obligations, and indemnity obligations) of Borrower to Lender evidenced by or arising under or in respect of this Agreement, the Note, any other Transaction Document and/or any other agreement, document or instrument heretofore, now or hereafter executed and delivered by Borrower to Lender, in each case whether now existing or hereafter arising, absolute or contingent, joint and/or several, secured or unsecured, direct or indirect, expressed or implied in law, contractual or tortious, liquidated or unliquidated, at law or in equity, or otherwise, and whether created directly or acquired by Lender by assignment or otherwise, and any and all costs of collection and/or Attorneys’ Fees from time to time incurred in connection therewith.

Borrowing Base shall mean, as of any New York Banking Day, with respect to Securities pledged to Lender pursuant to the Pledge Agreement, the sum of the following:

(i) Ninety Five Percent (95%) of the opening “bid” price on such New York Banking Day of United States Treasury, other United States agency, or United States sponsored agency securities, notes, bonds and obligations; plus

(ii) Ninety Percent (90%) of the opening “bid” price on such New York Banking Day of corporate and municipal bonds and obligations (rated BBB or better by S&P or Baa2 or better by Moody’s); plus

(iii) Eighty Percent (80%) of the opening “bid” price on such New York Banking Day of NYSE, NASDAQ, American Stock Exchange and OTC stocks and other equity instruments, including mutual funds, American Depository Receipts (ADR’s) and Exchange Traded Funds (ETF’s), in each case with an opening “bid” price of at least $5.00 per share; plus

(iv) Fifty Percent (50%) of the opening “bid” price on such New York Banking Day of Unit Investment Trusts (UIT’s).

The Borrowing Base on each New York Business Day shall be determined by reference to information provided by DTC with respect to the DTC account of Borrower containing the Securities pledged in favor of Lender, absent manifest error. If DTC is unable to provide such information on any New York Banking Day, then the Borrowing Base established on the immediately preceding New York Banking Day shall remain in effect until DTC can provide such information or Borrower is otherwise able to provide accurate updated information.

Business Day shall mean any day except a Saturday, Sunday or legal holiday observed by Lender.

Capital Expenditure shall mean any expenditure to purchase or otherwise acquire a fixed asset (other than a Capitalized Lease Obligation) which, in accordance with GAAP, is required to be capitalized on the balance sheet of the Person making the same.

Capitalized Lease shall mean any lease of Property, whether real and/or personal, by a Person as lessee which in accordance with GAAP is required to be capitalized on the balance sheet of such Person.

Capitalized Lease Obligations of any Person shall mean, as of the date of any determination thereof, the amount at which the aggregate rental obligations due and to become due under all Capitalized Leases under which such Person is a lessee would be reflected as a liability on a balance sheet of such Person in accordance with GAAP.

Certificate shall have the meaning ascribed thereto in Section 2.20(d).

 

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Change of Control Event shall mean each and every issue, sale, transfer or other disposition, directly or indirectly, of shares of capital stock of Borrower which, after giving effect thereto, results in Guarantor legally or beneficially owning or controlling in the aggregate less than a majority (by number of votes) of the Voting Stock of Borrower.

Code shall mean the Internal Revenue Code of 1986, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time.

Default shall mean any event or condition the occurrence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.

DTC shall mean The Depository Trust Company, a New York corporation, or any Affiliate thereof that performs securities clearance and settlement services.

Environmental Law shall mean all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

Environmental Liability shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Borrower, Guarantor or any Subsidiary of Borrower directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time.

ERISA Group means Guarantor and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with Borrower, are treated as a single employer under Section 414 of the Code or are considered to be one employer under Section 4001 of ERISA.

Event of Default shall have the meaning ascribed thereto in Section 6.

Facility Fee shall have the meaning ascribed thereto in Section 2.08(b).

Federal Reserve Board shall mean the Board of Governors of the Federal Reserve System (or any successor Governmental Authority).

FINRA shall mean Financial Industry Regulatory Authority, Inc., a Delaware not-for-profit corporation.

FOCUS Report shall mean each Financial and Operational Combined Uniform Single Report (FOCUS) (SEC Form X-17A-5) completed by Borrower and filed with the SEC.

GAAP shall mean, at any time, generally accepted accounting principles at such time in the United States.

Governmental Authority shall mean any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

Guarantee by any Person shall mean any obligation (other than endorsements of negotiable instruments for deposit or collection in the ordinary course of business), contingent or otherwise, of such Person guaranteeing, or in effect guaranteeing, any Indebtedness, liability, dividend or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, all obligations incurred through

 

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an agreement, contingent or otherwise, by such Person: (a) to purchase such Indebtedness or obligation or any Property constituting security therefor, (b) to advance or supply funds (i) for the purchase or payment of such Indebtedness or obligation, (ii) to maintain working capital or other balance sheet condition or otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation, (iii) to lease property or to purchase securities or other property or services primarily for the purpose of assuring the owner of such Indebtedness or obligation of the ability of the primary obligor to make payment of the Indebtedness or obligation or (iv) otherwise to assure the owner of the Indebtedness or obligation of the primary obligor against loss in respect thereof. For the purposes of all computations made under this Agreement, a Guarantee in respect of any Indebtedness for borrowed money shall be deemed to be Indebtedness equal to the then outstanding principal amount of such Indebtedness for borrowed money which has been guaranteed or such lesser amount to which the maximum exposure of the guarantor shall have been specifically limited, and a Guarantee in respect of any other obligation or liability or any dividend shall be deemed to be Indebtedness equal to the maximum aggregate amount of such obligation, liability or dividend or such lesser amount to which the maximum exposure of the guarantor shall have been specifically limited. Guarantee when used as a verb shall have a correlative meaning.

Guaranteed Obligations shall have the meaning ascribed thereto in Section 7.01.

Guaranty shall mean the unlimited continuing Guarantee made by Guarantor in favor of Lender as set forth in Section 7 below.

Hazardous Material shall mean all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

Indebtedness shall mean, with respect to any Person, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

Indemnified Liabilities shall have the meaning ascribed thereto in Section 8.05.

Indemnitees shall have the meaning ascribed thereto in Section 8.05.

Information shall have the meaning ascribed thereto in Section 8.19.

Lender’s Revolving Credit Commitment shall mean the sum of Seventy Five Million Dollars ($75,000,000.00), or such lesser sum if reduced pursuant to Section 2.01(d).

Lien shall mean any interest in any Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on common law, statute or contract, including, without limitation, any security interest, mortgage, deed of trust, pledge, hypothecation, judgment lien or other lien or encumbrance of any kind or nature whatsoever, any conditional sale or trust receipt, any lease, consignment or bailment for security purposes and any Capitalized Lease. The term “Lien” shall include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting Property.

 

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Material Adverse Effect shall mean (a) a material adverse effect on the consolidated Properties, business, operations, income or condition (financial or otherwise) of Guarantor and Borrower taken as a whole, (b) material impairment of the ability of Guarantor or Borrower to perform any of its material obligations under this Agreement, the Note and/or any other Transaction Document or (c) material impairment of the enforceability of the rights of, or benefits available to, Lender under this Agreement, the Note and/or any other Transaction Document.

Material Indebtedness shall mean Indebtedness (other than the Advances), or obligations in respect of one or more Swap Contracts, of Borrower, Guarantor and the Subsidiaries of Borrower in an aggregate principal amount exceeding $5,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of Borrower, Guarantor or any Subsidiary of Borrower in respect of any Swap Contract at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that Borrower, Guarantor or such Subsidiary of Borrower would be required to pay if such Swap Contract were terminated at such time.

Moody’s means Moody’s Investor Service, Inc., a Delaware corporation, and its successors.

Multi-Employer Plan shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any member of the ERISA Group is making or accruing an obligation to make contributions.

New York Banking Day shall mean any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

Non-U.S. Lender shall have the meaning ascribed thereto in Section 2.20(a).

Note shall have the meaning ascribed thereto in Section 2.04(a).

Notice of Borrowing shall have the meaning ascribed thereto in Section 2.03.

NSCC shall mean National Securities Clearing Corporation, a New York corporation.

Other Taxes shall have the meaning ascribed thereto in Section 2.20(b).

Participant shall have the meaning ascribed thereto in Section 8.12(b).

PBGC shall mean the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.

Pension Plan shall mean a Plan that (i) is an employee pension benefit plan, as defined in Section 3(3) of ERISA (other than a Multiemployer Plan) and (ii) is subject to the provisions of Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

Permitted Liens shall mean collectively, the following:

(a) Liens for taxes, assessments, charges or levies not yet due or that are being contested in good faith by appropriate proceedings and (unless the amount thereof is not material to Guarantor’s consolidated financial condition) for which adequate reserves are being maintained (in accordance with GAAP);

(b) deposits or pledges to secure obligations under workers’ compensation, social security or similar laws, or under unemployment insurance;

(c) deposits or pledges to secure bids, tenders, contracts (other than Swap Contracts), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of like nature arising in the ordinary course of business;

(d) landlords’, carriers’, warehousemen’s, repairmen’s, mechanics’, workers’, materialmen’s or similar Liens arising in the ordinary course of business with respect to obligations which are not overdue for a period of more than thirty (30) days or which are being contested in good faith by appropriate proceedings;

 

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(e) Liens securing judgments;

(f) easements, zoning restrictions, rights-of-way, minor defects or other irregularities in title and other similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure obligations that are substantial in amount and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of Borrower;

(g) any Lien existing on any Property prior to the acquisition thereof by Borrower; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition, (ii) such Lien shall not apply to any other Property of Borrower, and (iii) such Lien shall secure only the obligations it secures on the date of such acquisition, and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

(h) Liens in favor of Lender to secure Borrower’s Obligations including, but not limited to, the Liens described in the Pledge Agreement;

(i) any Lien renewing, extending or refinancing a Lien permitted by the foregoing, provided that the principal amount secured is not increased and the Lien is not extended to other Property (other than by a substitution of like Property);

(j) Liens securing obligations under Swap Contracts;

(k) any Lien on any Property of Borrower existing on the date hereof; provided that (i) such Lien shall not apply to any other Property of Borrower, and (ii) such Lien shall secure only the obligations it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

(l) Liens on fixed or capital assets acquired, constructed or improved by Borrower; provided that (i) such Liens and the Indebtedness secured thereby are incurred prior to or within ninety (90) days after such acquisition or the completion of such construction or improvement, (ii) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets and (iii) such security interests shall not apply to any other Property of Borrower;

(m) Liens of any securities intermediary arising as a matter of law on securities or other Property held by such securities intermediary;

(n) Liens on Property of Borrower created or otherwise arising in the ordinary course of its business, that are not otherwise prohibited hereunder;

(o) Liens on securities deemed to exist under repurchase agreements and reverse repurchase agreements entered into by Borrower in the ordinary course of business;

(p) Liens arising from any interest or title of a lessor or sublessor under any lease or sublease not prohibited by Section 5.02(d) entered into by Borrower as lessee;

(q) Liens arising from precautionary Uniform Commercial Code financing statements filed in connection with leases;

(r) Liens in favor of banking institutions arising as a matter of law encumbering deposits (including the right of set-off);

(s) Liens on cash earnest money deposits made in connection with letters of intent or purchase agreements;

(t) Liens arising on intellectual property in connection with the grant by the owner of such intellectual property of non-exclusive licenses in the ordinary course; and

(u) other Liens not expressly permitted by clauses (a) through (t) above; provided that the sum, without duplication, of (i) the aggregate amount of the outstanding obligations secured by Liens permitted

 

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under this clause (u), (ii) the aggregate amount of Indebtedness permitted by Section 5.02(a)(xii), and (iii) the aggregate amount of Attributable Debt in respect of Sale and Leaseback Transactions permitted by Section 5.02(d) shall not at any time exceed $50,000,000.

Person shall mean any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, institution, entity or government (whether national, Federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

Plan shall mean an employee benefit plan as defined in Section 3(3) of ERISA (other than a Multiemployer Plan) which is maintained or contributed to by Guarantor or any member of the ERISA Group.

Pledge Agreement shall mean the Collateral Pledge Agreement dated as of the date hereof, executed by Borrower in favor of Lender, as the same may from time to time be amended, modified, extended, renewed or restated.

Property shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. Properties shall mean the plural of Property. For purposes of this Agreement, Guarantor, Borrower and each Subsidiary of Borrower shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes.

Regulatory Capital shall mean “Net Capital” as calculated by Borrower, and set forth on line 10 of the “Computation of Net Capital” section of Part IIA of each FOCUS Report.

Regulatory Capital to Aggregate Indebtedness Ratio shall mean the ratio (expressed as a percentage) of (i) Regulatory Capital, to (ii) “Total aggregate indebtedness” as calculated by Borrower, and set forth on line 18 of the “Computation of Aggregate Indebtedness” section of Part IIA of each FOCUS Report.

Release shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the environment, including, without limitation, the abandonment or discarding of barrels, drums, containers, tanks and/or other receptacles containing (or containing traces of) any Hazardous Material.

Responsible Officer shall mean the chief executive officer, president, chief financial officer, chief accounting officer, comptroller, treasurer or any senior vice president or executive vice president of Borrower or Guarantor.

Revolving Credit Period shall mean the period commencing on the date of this Agreement and ending August 4, 2010, unless such period is extended pursuant to Section 2.01(e); provided , however , that the Revolving Credit Period shall end on the date the Lender’s Revolving Credit Commitment is terminated pursuant to Section 6 or terminated in full pursuant to Section 2.01(d).

S&P means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., a New York corporation, and its successors.

Sale and Leaseback Transaction means any arrangement whereby Borrower or its Subsidiaries, directly or indirectly, shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred.

SEC shall mean the United States Securities and Exchange Commission (or any successor Governmental Authority).

Securities shall have the meaning ascribed thereto in Section 2.01 of the Pledge Agreement.

SIPC shall mean the Securities Investor Protection Corporation.

 

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Statutory Reserve Rate shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Federal Reserve Board to which Lender is subject for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Advances shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

Subsidiary shall mean any corporation or other entity of which more than Fifty Percent (50%) of the issued and outstanding capital stock or other equity interests entitled to vote for the election of directors, managers or other persons performing similar functions (other than by reason of default in the payment of dividends or other distributions) is at the time owned directly or indirectly by Guarantor, Borrower or any Subsidiary thereof, as the context requires.

Swap Contract shall mean (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.

Swap Termination Value shall mean, in respect of any Swap Contract, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contract, (a) for any date on or after the date such Swap Contract has been closed out and a termination value determined in accordance therewith, such termination value and (b) for any date prior to the date referenced in clause (a), the amount determined as the mark-to-market value for such Swap Contract, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contract (which may include Lender or any Affiliate of Lender).

Taxes shall have the meaning ascribed thereto in Section 2.20(a).

Transaction Documents shall mean this Agreement, the Note, the Pledge Agreement, and any and all other agreements, documents and instruments heretofore, now or hereafter delivered to Lender with respect to or in connection with or pursuant to this Agreement, any Advances made hereunder, any of Borrower’s Obligations and/or any guarantee of any of Borrower’s Obligations, and executed by or on behalf of Borrower and/or Guarantor, each as the same may from time to time be amended, modified, extended, renewed or restated.

Voting Stock shall mean, with respect to any corporation or other entity, any shares of stock or other equity interests of such corporation or other entity whose holders are entitled under ordinary circumstances to vote for the election of directors (or Persons performing similar functions) of such corporation or other entity (irrespective of whether at the time stock or other equity interests of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

1.02 [RESERVED].

1.03 Accounting Terms and Determinations . Except as otherwise specified in this Agreement, all accounting terms used in this Agreement shall be interpreted, all accounting determinations under this Agreement shall be made and all financial statements required to be delivered under this Agreement shall be prepared in accordance with GAAP as in effect from time to time, applied on a basis consistent (except for changes approved by Borrower and by Lender) with the most recent audited financial statements of Guarantor and Borrower delivered to Lender.

 

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SECTION 2. REVOLVING CREDIT ADVANCES .

2.01 Revolving Credit Commitment .

(a) Subject to the terms and conditions set forth in this Agreement and so long as no Default or Event of Default has occurred and is continuing, during the Revolving Credit Period, Lender agrees to make such loan advances to Borrower (each, an “ Advance ”; and collectively, the “ Advances ”) as Borrower may from time to time request pursuant to Section 2.03. Each Advance shall be for an aggregate principal amount of at least $100,000 or any larger multiple of $25,000. The aggregate principal amount of Advances which Lender shall be required to have outstanding under this Agreement as of any date shall not exceed the lesser of (i) Lender’s Revolving Credit Commitment as of such date, or (ii) the Borrowing Base in effect on such date. Within the foregoing limits, Borrower may borrow under this Section 2.01(a), prepay under Section 2.10 and reborrow at any time during the Revolving Credit Period under this Section 2.01(a). All Advances not prepaid prior to the last day of the Revolving Credit Period, together with all accrued and unpaid interest thereon and all fees and other amounts owing by Borrower to Lender with respect thereto, shall be due and payable on the last day of the Revolving Credit Period.

(b) If the total outstanding Advances on any date are greater than the Borrowing Base as in effect on such date, Borrower shall be required (upon notice by Lender) to repay the Advances and/or deliver additional Securities to Lender on the next Business Day, in an amount sufficient to reduce the amount of the total outstanding Advances to an amount equal to or less than the amount of the Borrowing Base.

(c) If the amount of Lender’s Revolving Credit Commitment on any date is less than the Advances outstanding on such date, whether as a result of Borrower’s election to decrease the amount of Lender’s Revolving Credit Commitment pursuant to Section 2.01(d) or otherwise, Borrower shall be automatically required (without demand or notice of any kind by Lender, all of which are hereby expressly waived by Borrower) to promptly repay the Advances in an amount sufficient to reduce the amount of the Advances outstanding to an amount equal to or less than the amount of Lender’s Revolving Credit Commitment.

(d) Borrower may, upon three (3) New York Banking Days’ prior written notice to Lender, terminate entirely at any time, or reduce from time to time by an aggregate amount of $1,000,000 or any larger multiple of $250,000 the unused portions of Lender’s Revolving Credit Commitment; provided , however , that any such termination or reduction shall be permanent and Borrower shall have no right to thereafter reinstate or increase, as the case may be, Lender’s Revolving Credit Commitment.

(e) The Revolving Credit Period may, at the written request of Borrower not less than sixty (60) days before the last day of the then current Revolving Credit Period, be extended for an additional 364 day period from the last day of the then current Revolving Credit Period; provided that the failure of Lender to respond to such a request and extend the then current Revolving Credit Period for such additional 364 day period by not less than thirty (30) days before the last day of the then current Revolving Credit Period shall be conclusively deemed an election by Lender not to extend the Revolving Credit Period; provided further any date to which the then current Revolving Credit Period has been extended may be extended in a like manner. At the time of any such extension, Lender reserves the right to renegotiate terms and conditions of this Agreement and the other Transaction Documents as a condition to granting any such extension.

2.02 [RESERVED].

2.03 Method of Borrowing .

(a) Borrower shall give Lender oral or written notice (a “ Notice of Borrowing ”) by 4:30 p.m. (New York time) (if not by telecopy or other writing, to be confirmed by telecopy or other writing not later than 5:00 p.m. (New York time) on the same day) on the New York Banking Day of each Advance to be made to Borrower, specifying: (i) the date of such Advance, which shall be a New York Banking Day during the Revolving Credit Period; and (ii) the aggregate principal amount of such Advance.

(b) A Notice of Borrowing shall not be revocable by Borrower.

 

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(c) Subject to the terms and conditions of this Agreement, provided that Lender has received the Notice of Borrowing, Lender shall (unless Lender determines that any applicable condition specified in Section 3 has not been satisfied) make the applicable Advance to Borrower by crediting the amount of such Advance to a demand deposit account of Borrower specified by Borrower not later than 6:00 p.m. (New York time) on the New York Banking Day specified in said Notice of Borrowing.

(d) If Lender makes a new Advance under this Agreement on a day on which Borrower is required to or has elected to repay all or any part of an outstanding Advance, Lender shall apply the proceeds of its new Advance to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed and the amount being repaid shall be made available by Lender to Borrower as provided in Section 2.03(c), or remitted by Borrower to Lender as provided in Section 2.11, as the case may be.

(e) Borrower hereby irrevocably authorizes Lender to rely on telephonic, telegraphic, telecopy, telex or written instructions of any individual identifying himself or herself as one of the individuals listed on Schedule 2.03 attached hereto (or any other individual from time to time authorized to act on behalf of Borrower pursuant to a resolution adopted by the board of directors of Borrower and certified by the Secretary of Borrower and delivered to Lender) with respect to any request to make a Advance or a repayment under this Agreement, and on any signature which Lender believes to be genuine, and Borrower shall be bound thereby in the same manner as if such individual were actually authorized or such signature were genuine.

2.04 Note .

(a) All Advances of Lender to Borrower shall be evidenced by the Revolving Credit Note (Committed Customer Facility A) of Borrower payable to the order of Lender in the principal amount equal to the maximum amount of Lender’s Revolving Credit Commitment, which Revolving Credit Note (Committed Customer Facility A) shall be in substantially the form of Exhibit A attached hereto and incorporated herein by reference (with appropriate insertions) (as the same may from time to time be amended, modified, extended, renewed or restated, the “ Note ”).

(b) Lender shall record in its books and records the date, amount and type of each Advance made by it to Borrower and the date and amount of each payment of principal and/or interest made by Borrower with respect thereto; provided , however , that the obligation of Borrower to repay each Advance made by Lender to Borrower under this Agreement shall be absolute and unconditional, notwithstanding any failure of Lender to make any such recordation or any mistake by Lender in connection with any such recordation. The books and records of Lender showing the account between Lender and Borrower shall be admissible in evidence in any action or proceeding and shall constitute prima facie proof of the items therein set forth.

2.05 [RESERVED].

2.06 Interest Rates .

So long as no Event of Default under Section 6.01 or 6.02 below has occurred and is continuing, each Advance shall bear interest on the outstanding principal amount thereof, for each day from the date such Advance is made until it becomes due, at an annual rate equal to the Applicable Margin plus the one-month LIBOR rate quoted by Lender from Reuters Screen LIBOR01 Page (or any successor thereto) at approximately 11:00 a.m., London time, which shall be that one-month LIBOR rate in effect and reset each New York Banking Day, adjusted for the Statutory Reserve Rate and any subsequent costs arising from a change in government regulation, as described in Section 2.15 below, such rate rounded up to the nearest one-sixteenth percent. The amount of interest accrued on the Note in each calendar month shall be payable on the third Business Day of the next calendar month and also on the last day of the Revolving Credit Period. If any principal of or interest on any Advance or any fee or other amount payable by Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to Two Percent (2%) plus the rate otherwise applicable to such Advance as provided in this Section 2.06. Interest shall be payable monthly in arrears on the third Business Day of each calendar month, commencing on the first such date after such Advance is made, and on the last day of the Revolving Credit Period (whether by reason of acceleration or otherwise). If on any New York Banking Day, Lender determines that adequate and reasonable means do not exist for ascertaining the one-month LIBOR rate, then until such circumstance no longer exists, the most recently determined one-month LIBOR rate shall remain in effect. Lender shall determine each interest rate applicable to the Advances under this Agreement and its determination thereof shall be conclusive in the absence of manifest error.

 

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2.07 Computation of Interest . Interest shall be computed on the basis of a year consisting of 360 days and paid for actual days elapsed (including the first day, but excluding the last day).

2.08 Fees .

(a) Borrower shall pay to Lender a nonrefundable upfront fee, in the amount of $37,500.00, due and payable contemporaneously with the execution of this Agreement.

(b) From and including the date of this Agreement to but excluding the last day of the Revolving Credit Period, Borrower shall pay a nonrefundable facility fee on Lender’s Revolving Credit Commitment (determined by multiplying the amount of Lender’s Revolving Credit Commitment by 0.20%) (the “ Facility Fee ”). The Facility Fee shall be (i) payable quarterly in arrears on the last day of each March, June, September and December during the Revolving Credit Period commencing September 30, 2009, and on the last day of the Revolving Credit Period and (ii) calculated on an actual day, 360-day year basis (including the first day, but excluding the last day).

2.09 [RESERVED].

2.10 Prepayments .

(a) Borrower may, upon notice to Lender specifying that it is paying any Advance, pay without penalty or premium any such Advances in whole at any time or in part from time to time, by paying the principal amount to be paid.

(b) A notice of prepayment from Borrower may not be revoked by Borrower.

2.11 General Provisions as to Payments . Borrower shall make each payment of principal of, and interest on, the Advances and of fees and all other amounts payable by Borrower under this Agreement, not later than 3:00 p.m. (New York time) on the date when due and payable or otherwise being prepaid, in Federal or other funds immediately available in New York, to Lender at its address referred to in Section 8.07. All payments received by Lender after 4:00 p.m. (New York time) shall be deemed to have been received by Lender on the next succeeding New York Banking Day. Whenever any payment of principal of, or interest on, the Advances or of fees shall be due on a day which is not a New York Banking Day, the date for payment thereof shall be extended to the next succeeding New York Banking Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon, at the then applicable rate, shall be payable for such extended time.

2.12 [RESERVED].

2.13 [RESERVED].

2.14 [RESERVED].

2.15 Increased Cost and Capital Adequacy .

(a) If after the date hereof, any change in any law or regulation or in the interpretation thereof by any court or administrative or Governmental Authority charged with the administration thereof or the enactment of any law or regulation shall either (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against Lender’s Revolving Credit Commitment or any Advances, or (ii) impose on Lender any other condition regarding this Agreement, Lender’s Revolving Credit Commitment or any Advances and the result of any event referred to in clause (i) or (ii) shall be to increase the cost (other than any increase attributable to Taxes) to Lender of maintaining Lender’s Revolving Credit Commitment (which increase in cost shall be calculated in accordance with Lender’s reasonable averaging and attribution methods) by an amount which Lender deems to be material, then, upon demand by Lender, Borrower shall pay to such Lender, not later than the fifteenth (15 ^th ) day following Borrower’s receipt of a certificate complying with the requirements of Section 2.15(c), an amount equal to such increase in cost actually incurred by Lender.

 

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(b) If, after the date hereof, Lender shall have determined in good faith that the adoption of any applicable law, rule, regulation or guideline regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental or regulatory authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Lender with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or will have the effect of reducing the rate of return on Lender’s capital in respect of its obligations under this Agreement to a level below that which Lender could have achieved but for such adoption, change or compliance (taking into consideration Lender’s policies with respect to capital adequacy), then from time to time Borrower shall pay to Lender, not later than the fifteenth (15 ^th ) day following Borrower’s receipt of a certificate complying with the requirements of Section 2.15(c), such additional amount or amounts as will compensate Lender for such reduction actually suffered by Lender. In determining such amount or amounts, Lender may use any reasonable averaging and attribution methods.

(c) Lender shall notify Borrower of any event occurring after the date hereof entitling such Lender to compensation under this Section 2.15 as promptly as practicable, but in any event within forty five (45) days, after Lender obtains actual knowledge thereof; provided that if Lender fails to give such notice within forty five (45) days after it obtains actual knowledge of such an event, Lender shall, with respect to compensation payable pursuant to this Section 2.15 in respect of such event, only be entitled to payment under this Section 2.15 for costs incurred, or a reduction in return, from and after the date forty five (45) days prior to the date that such Lender does give such notice. When demanding payment pursuant to this Section 2.15, Lender shall provide to Borrower a certificate, signed by an officer of Lender, setting forth in reasonable detail the basis for such demand, the amount required to be paid by Borrower to Lender, the computations made by Lender to determine such amount and satisfaction of the conditions set forth in the next sentence. Anything to the contrary herein notwithstanding, Lender shall not have the right to demand any payment or compensation under this Section 2.15 (i) with respect to any period more than one hundred eighty (180) days prior to the date it has made a demand pursuant to this Section 2.15, (ii) to the extent that Lender determines in good faith that the interest rate or margin on the relevant Advances appropriately accounts for any increased cost or reduced rate of return, and (iii) unless demand thereunder is made in accordance with the general policy or practice of Lender being applied in good faith to all borrowers in similar circumstances under comparable provisions of other credit agreements. In the absence of manifest error, the certificate referred to above shall be conclusive as to the amount so required to be paid.

2.16 [RESERVED].

2.17 [RESERVED].

2.18 Survival of Indemnities . All indemnities and all provisions relating to reimbursement to Lender of amounts sufficient to protect the yield to Lender with respect to the Loans under Section 2.15 hereof, shall survive the payment of the Note and the other Borrower’s Obligations and the termination of this Agreement.

2.19 Discretion of Lender as to Manner of Funding and Obligation of Mitigation .

(a) Notwithstanding any provision contained in this Agreement to the contrary, Lender shall be entitled to fund and maintain its funding of all or any part of the Advances in any manner it elects, it being unders