Exhibit 10.23
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
DATED AS OF
OCTOBER 19, 2006
Between
CPI AEROSTRUCTURES, INC.
as Borrower,
and
JPMORGAN CHASE BANK, N.A.,
as Bank
Reference is made to the Revolving Credit Agreement dated
September 12,
2003 between CPI Aerostructures, Inc. ("Borrower") and JPMorgan
Chase Bank
("Bank") ("Existing Credit Agreement"). Borrower and Bank agree
that to the
extent that this Agreement (as defined below) amends the Existing
Credit
Agreement, the Existing Credit Agreement is amended, and to the
extent that this
Agreement restates the Existing Credit Agreement, the Existing
Credit Agreement
is restated.
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT dated as of
October 19,
2006 between CPI Aerostructures, Inc. ("Borrower") and JPMorgan
Chase Bank, N.A.
("Bank").
The parties to this Agreement hereby agree as follows:
ARTICLE I - DEFINITIONS, ACCOUNTING TERMS, ETC.
Section 1.01. Defined Terms. As used in this Agreement, the
following terms
have the following meanings (terms defined in the singular to have
the same
meaning when used in the plural and vice versa):
"Account" means any right to payment for goods sold or
services rendered.
"Account Debtor" means each Person obligated to make payment
on an Account.
"Affiliate" means any Person which directly or indirectly
Controls, or is
Controlled by, or is under common Control with a Credit Party.
"Affiliate Guarantor" means an Affiliate of Borrower in which
Borrower owns
or controls twenty percent (20%) or more of the Equity Interest of
such
Affiliate.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the
greatest of (1) the Prime Rate in effect on such day, or (2) the
Federal Funds
Effective Rate in effect on such day plus one-half of one percent
(0.50%). Any
change in the Alternate Base Rate due to a change in the Prime Rate
or the
Federal Funds Effective Rate shall be effective from and including
the effective
date of such change in the Prime Rate or the Federal Funds
Effective Rate,
respectively.
"Agreement" means this Amended and Restated Revolving Credit
Agreement.
"Applicable Margin" means 1.50% per annum.
"Bank" means JPMorgan Chase Bank, N.A..
"Bank's Office" means 395 North Service Road, Suite 302,
Melville, New York
11747.
"Board of Governors" means the Board of Governors of the
Federal Reserve
System.
1
"Borrower" means CPI Aerostructures, Inc.
"Borrowing Base" means, at any time, an amount equal to 85% of
the face
amount of all Eligible Accounts.
"Borrowing Base Certificate" means a certificate in
substantially the form
of "Borrowing Base Certificate" (Exhibit D).
"Business Day" means any day that is not a Saturday, Sunday or
other day on
which commercial banks in New York City are authorized or required
by law to
remain closed.
"Capital Lease" means a lease which is or should be
capitalized in
accordance with GAAP.
"Change in Control" means (1) the acquisition of ownership,
directly or
indirectly, beneficially or of record, by any Person or group
(within the
meaning of the Securities Exchange Act of 1934 and the rules of the
Securities
and Exchange Commission thereunder as in effect on the date
hereof), of Equity
Interests representing more than 25% of the aggregate ordinary
voting power
represented by the issued and outstanding Equity Interests of
Borrower; (2)
occupation of a majority of the seats (other than vacant seats) on
the board of
directors of Borrower by Persons who were neither (a) nominated by
the board of
directors of Borrower nor (b) appointed by directors so nominated;
or (3) the
acquisition of direct or indirect Control of Borrower by any Person
or group.
"Closing Date" means October 19, 2006.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means each asset in which Bank is granted a
security interest
pursuant to a Security Document.
"Consolidation Date" means the day Borrower forms, creates or
acquires a
Consolidated Subsidiary.
"Consolidated Subsidiary" means each Subsidiary of Borrower
which, in
accordance with GAAP, should be included in the consolidated
financial
statements of Borrower.
"Control" means the possession, directly or indirectly, of the
power to
direct or cause the direction of the management and policies of a
Person,
whether through the ownership of voting securities, by contract or
otherwise.
"Credit Parties" means Borrower and each Guarantor, if any, or
any or all
of the foregoing, all as the context may require.
2
"Debt" means, with respect to any Person, each of the
following (1)
indebtedness or liability for borrowed money, or for the deferred
purchase price
of property or services (including trade obligations), (2) all
obligations
evidenced by bonds, debentures, notes or other similar instruments,
(3)
obligations as lessee under Capital Leases, (4) current and future
liabilities
in respect of unfunded vested benefits under any Plan, (5)
reimbursement
obligations under letters of credit issued for the account of any
Person, (6)
all reimbursement obligations arising under bankers' or trade
acceptances, (7)
all guarantees, endorsements (other than for collection or deposit
in the
ordinary course of business), and other contingent obligations to
purchase any
of the items included in this definition, to provide funds for
payment, to
supply funds to invest in any Person, or otherwise to assure a
creditor against
loss, (8) all obligations secured by any Lien on property owned by
such Person
even if the obligations secured by such Lien on such property have
not been
assumed, (9) all other liabilities recorded, or required to be
recorded, in such
Person's financial statements in accordance with GAAP, and (10) all
obligations
under any agreement providing for a swap, ceiling rates, ceiling
and floor
rates, contingent participation or other hedging mechanisms with
respect to
interest payable on any of the items described above in this
definition.
"Default" means any of the events specified in "Events of
Default" (Section
8.01), whether or not any requirement for the giving of notice, the
lapse of
time, or both, or any other condition, has been satisfied.
"Default Rate" means a variable rate 3.00% above the Prime
Rate plus the
Applicable Margin.
"Dollars" and the sign "$" mean lawful money of the United
States of
America.
"Eligible Account" means an Account owing to Borrower, now
existing or
hereinafter arising, which Account met the following specification
at the time
it came into existence and continues to meet the same until it is
collected in
full:
(1) A final or progress invoice was issued on such Account,
the Account
Debtor is not given more than 90 calendar days from the invoice
date of such
Account to pay such Account, such Account does not remain
outstanding and unpaid
on or after 90 days from the date of the invoice for such Account,
such Account
is payable in the United States in Dollars and the invoice on such
Account is
unconditional, does not permit returns except for defective goods,
does not
restrict collection rights,
(2) The Account arose from the outright sale of goods or from
the
performance of services in the ordinary course of business, and in
the case of
goods, such goods have been shipped to the Account Debtor and no
return,
rejection or repossession has occurred, and such goods have been
finally
accepted by the Account Debtor without dispute, and in the case of
services,
such services have been completed and finally accepted by the
Account Debtor
without dispute,
(3) The Account is a valid and legally enforceable obligation
of the
Account Debtor and is not subject to any credit, allowance,
defense, offset,
counterclaim or adjustment by the
3
Account Debtor other than a credit or allowance provided in
accordance with the
customary credit and collection practices of Borrower,
(4) The Account is not subject to any Lien (other than the
Lien of Bank)
and Bank has a first priority perfected Lien in such Account,
(5) The Account is evidenced by such invoices, shipping
documents, or other
instruments ordinarily used in the trade and the Account is not
evidenced by
chattel paper or an instrument of any kind, unless in the case of a
note such
note is duly endorsed to Bank,
(6) No notice or knowledge of the bankruptcy, insolvency,
failure, or
suspension or termination of business of the Account Debtor has
been received by
Borrower, nor has the Account been written-off, deemed
uncollectible or referred
to a collection agency or an attorney by Borrower,
(7) The Account conforms to all representations, warranties
and other
provisions of each of the Financing Documents,
(8) The Account Debtor is not an Affiliate of Borrower, nor a
creditor of
Borrower nor a supplier of goods or services to Borrower,
(9) The Account Debtor is not a Governmental Authority other
than the
United States of America or any department, agency, bureau or
division thereof,
(10) The Account Debtor is a resident of the United States
unless the
obligation of such Account Debtor is secured by a letter of credit
in a form and
issued by a financial institution satisfactory to Bank,
(11) The Accounts are not payable in accordance with a
contract where 50%
of the aggregate Dollar amount of invoices billed based on such
contract are 90
days past the date of their respective invoice dates,
(12) The Account Debtor has not attempted to renegotiate the
amount of such
Account,
(13) The Account Debtor is not located in any state in which
Borrower is
required to qualify to do business and Borrower is not so qualified
and such
state does not permit Borrower to retroactively cure its failure to
so qualify,
(14) The Account is not a credit balance, and
(15) Bank in its reasonable discretion has not deemed the
Account or
Account Debtor unsatisfactory.
Provided, however, the above definition of Eligible Accounts
Receivable may
be modified by Bank in its sole discretion at any time after the
occurrence of a
Default or Event of Default and at any other time upon thirty (30)
days prior
written notice.
4
Provided further, notwithstanding any other term of this
Agreement,
including this definition, Accounts due under a Government Contract
are not
Eligible Accounts, whether or not there is compliance with the
Assignment of
Claims Act of 1940 with respect to such Account.
"Environmental Discharge" means any discharge or release of
any Hazardous
Materials in violation of any applicable Environmental Law.
"Environmental Law" means any Law relating to pollution or the
environment,
including Laws relating to noise or to emissions, discharges,
releases or
threatened releases of Hazardous Materials into the workplace, the
community or
the environment, or otherwise relating to the generation,
manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or
handling of Hazardous Materials.
"Environmental Notice" means any complaint, order, citation,
letter,
inquiry, notice or other written communication from any Person (1)
affecting or
relating to the failure of a Credit Party to comply or requirements
with respect
to future compliance with any Environmental Law in connection with
any activity
or operations at any time conducted by such Credit Party, (2)
relating to the
occurrence or presence of or exposure to, or possible or threatened
or alleged
occurrence or presence of or exposure to Environmental Discharges
or Hazardous
Materials at the locations or facilities of a Credit Party,
including, without
limitation: (a) the existence of any contamination or possible or
threatened
contamination at any such location or facility, (b) remediation of
any
Environmental Discharge or Hazardous Materials at any such location
or facility
or any part thereof, and (3) any material violation or alleged
material
violation of any relevant Environmental Law.
"Equity Interest" means shares of capital stock, partnership
interest,
membership interest, beneficial interests in a trust or other
equity ownership
interests in a Person, and any warrants, options or other rights
entitling the
holder thereof to purchase or acquire any such equity interest.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA Affiliate" means any corporation or trade or business
which is a
member of the same controlled group of corporations (within the
meaning of
Section 414(b) of the Code) as Borrower or is under common control
(within the
meaning of Section 414(c) of the Code) with Borrower.
"Event of Default" means any of the events specified in
"Events of Default"
(Section 8.01), provided that any requirement for the giving of
notice, the
lapse of time, or both, or any other condition, has been satisfied.
"Federal Funds Effective Rate" means, for any day, the
weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on
overnight Federal funds transactions with members of the Federal
Reserve System
arranged by Federal funds brokers, as published on the next
succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is
not so
published for any day that is a Business Day, the average (rounded
upwards, if
5
necessary, to the next 1/100 of 1%) of the quotations for such day
for such
transactions received by Bank from three Federal funds brokers of
recognized
standing selected by Bank.
"Field Audit" has the meaning specified in "Rights of
Inspection" (Section
5.07).
"Financing Documents" means this Agreement, the Revolving
Credit Note, each
Security Document, each Guaranty, and each other agreement or
document executed
pursuant to or in connection with any such agreement, or any or all
of the
foregoing, all as the context may require.
"Fiscal Quarter" means each period from January 1 to March 31,
April 1 to
June 30, July 1 to September 30 and October 1 to December 31.
"Fiscal Year" means each period from January 1 to December 31.
"GAAP" means generally accepted accounting principles as then
in effect in
the United States.
"Good Faith Contest" means the contest of an item if (1) the
item is
diligently contested in good faith by appropriate proceedings
timely instituted,
(2) adequate reserves are established with respect to the contested
item, (3)
during the period of such contest, the enforcement of any contested
item is
effectively stayed, and (4) the failure to pay or comply with the
contested item
has not and could not result in a Material Adverse Change.
"Governmental Approvals" means any authorization, consent, or
approval of,
or any license, permit, or certification issued by, or any
exemption of,
registration or filing with or report or notice to, any
Governmental Authority.
"Governmental Authority" means 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.
"Government Contract" means any contract entered into between
Borrower and
the government of the Unites States of America or any department,
agency or
instrumentality thereof.
"Guarantors" means all Persons that execute and deliver a
Guaranty, or any
or all of the foregoing, all as the context may require.
"Guaranty" means a Guaranty in substantially the form of
"Guaranty"
(Exhibit B).
"Hazardous Materials" means any pollutant, contaminants, toxic
or hazardous
wastes or other substances regulated by Environmental Law, as any
of those terms
are defined from time to time in or for the purposes of any
relevant
Environmental Law, including asbestos fibers and friable asbestos,
polychlorinated biphenyls, and any petroleum or hydrocarbon-based
products or
derivatives.
6
"Interest Payment Date" means the last Business Day of each
month and the
Revolving Credit Facility Termination Date.
"Law" means any treaty, federal, state or local statute, law,
rule,
regulation, ordinance, order, code, policy or rule of common law,
now or
hereafter in effect, and any judicial or administrative
interpretation thereof
by a Governmental Authority or otherwise, including any judicial or
administrative order, consent decree, judgment or agreement with a
Governmental
Authority.
"Lien" means any mortgage, deed of trust, pledge, security
interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or
other), or preference, priority, or other security agreement or
preferential
arrangement, charge, or encumbrance of any kind or nature
whatsoever (including,
without limitation, any conditional sale or other title retention
agreement, any
financing lease having substantially the same economic effect as
any of the
foregoing, and the filing of any financing statement under the
Uniform
Commercial Code or comparable law of any jurisdiction to evidence
any of the
foregoing).
"Material Adverse Change" means either (1) a material adverse
change in the
status of the business, assets, liabilities, results of operations,
conditions
(financial or otherwise), property or prospects of any Credit
Party, or (2) any
event or occurrence of whatever nature which could have a material
adverse
effect on the ability of any Credit Party to perform its
obligations under the
Financing Documents to which it is a party.
"Material Contract" means each contract pursuant to which
Borrower will
receive total payments of $250,000 or more.
"Material Contract Schedule" means a schedule in substantially
the form of
"Material Contracts Schedule" (Exhibit E).
"Multiemployer Plan" means a Plan described in Section
4001(a)(3) of ERISA
which covers employees of Borrower or any ERISA Affiliate.
"Net Income" means, for any period, (1) prior to the
Consolidation Date,
the net income (exclusive of extraordinary gains and inclusive of
extraordinary
losses) of Borrower for such period, and (2) on and after the
Consolidation
Date, the net income (exclusive of extraordinary gains and
inclusive of
extraordinary losses) of Borrower and its Consolidated
Subsidiaries, on a
consolidated basis, for such period, all as determined in
accordance with GAAP.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means each of the Liens permitted under
"Liens" (Section
6.03).
"Person" means an individual, partnership (including limited
liability
partnerships), limited liability company, corporation, business
trust, joint
stock company, trust, unincorporated association, joint venture,
Governmental
Authority or other entity of whatever nature.
7
"Plan" means any employee benefit or other plan established or
maintained,
or to which contributions have been made, by Borrower or any ERISA
Affiliate.
"Prime Rate" means the rate of interest per annum publicly
announced from
time to time by JPMorgan Chase Bank as its prime rate in effect at
its principal
office in New York City, each change in the Prime Rate shall be
effective from
and including the date such change is publicly announced as being
effective.
"Prohibited Transaction" means any transaction set forth in
Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986.
"Reportable Event" means any of the events set forth in
Section 4043 of
ERISA.
"Revolving Credit Commitment" means Bank's obligations to make
Revolving
Credit Loans to Borrower pursuant to "Revolving Credit" (Section
2.01).
"Revolving Credit Facility" means the lesser of (1) the
Revolving Credit
Facility Maximum Amount or (2) the then current Borrowing Base.
"Revolving Credit Facility Maximum Amount" means $1,000,000,
as such amount
may be reduced in accordance with "Reduction in Revolving Credit
Facility"
(Section 2.02).
"Revolving Credit Facility Termination Date" means December
31, 2006.
"Revolving Credit Loans" has the meaning specified in
"Revolving Credits"
(Section 2.01).
"Revolving Credit Note" has the meaning specified in
"Revolving Credit
Note" (Section 2.09).
"Security Agreement (Borrower) means the Amended and Restated
Security
Agreement dated the Closing Date made by Borrower for the benefit
of Bank.
"Security Agreement (Guarantor)" means a Security Agreement in
substantially the form of "Security Agreement" (Exhibit C).
"Security Documents" means the Security Agreement (Borrower)
and each
Security Agreement (Guarantor), if any, or any or all of the
foregoing, all as
the context may require.
"Solvent" means, when used with respect to any Person, that
(1) the fair
value of the property of such Person, on a going concern basis, is
greater than
the total amount of liabilities (including, without limitation,
contingent
liabilities) of such Person, (2) the present fair salable value of
the assets of
such Person, on a going concern basis, is not less than the amount
that will be
required to pay the probable liabilities of such Person on its
debts as they
become absolute and matured, (3) such Person does not intend to,
and does not
believe that it will, incur debts or
8
liabilities beyond such Person's ability to pay as such debts and
liabilities
mature, and (4) such Person is not engaged in business or a
transaction, and is
not about to engage in business or a transaction, for which such
Person's
property would constitute unreasonably small capital after giving
due
consideration to the prevailing practice in the industry in which
such Person is
engaged. Contingent liabilities will be computed at the amount
that, in light of
all the facts and circumstances existing at such time, represents
the amount
that can reasonably be expected to become an actual or matured
liability.
"Subsidiary" means, as to any Person, any corporation,
partnership, limited
liability company or joint venture whether now existing or
hereafter organized
or acquired (1) in the case of a corporation, of which a majority
of the
securities having ordinary voting power for the election of
directors (other
than securities having such power only by reason of the happening
of a
contingency) are at the time owned by such Person and/or one or
more
Subsidiaries of such Person or (2) in the case of a partnership,
limited
liability company or joint venture, of which a majority of the
partnership,
membership or other ownership interests are at the time owned by
such Person
and/or one or more Subsidiaries of such Person.
Section 1.02. Rules of Construction. When used in this
Agreement (1) "or"
is not exclusive, (2) a reference to a Law includes any amendment
or
modification to such Law, (3) a reference to a Person includes its
permitted
successors and permitted assigns, and (4) unless otherwise provided
for in this
Agreement, a reference to an agreement, instrument or document
shall include
such agreement, instrument or document as the same may be amended,
modified or
supplemented from time to time in accordance with its terms and as
permitted by
the Financing Documents.
Section 1.03. Accounting Principles and Terms. Except as
otherwise provided
in this Agreement, (1) all computations and determinations as to
financial
matters, and all financial statements to be delivered under this
Agreement,
shall be made or prepared in accordance with GAAP, and (2) all
accounting terms
used in this Agreement shall have the meaning ascribed to such
terms by such
principles.
ARTICLE II REVOLVING CREDIT
Section 2.01 Revolving Credit. Subject to the terms and
conditions of this
Agreement, Bank agrees to make loans pursuant to this Section
("Revolving Credit
Loans") to Borrower from time to time during the period from the
Closing Date to
but not including the Revolving Credit Facility Termination Date,
provided that
the aggregate principal amount of all Revolving Credit Loans
outstanding at any
time does not exceed the Revolving Credit Facility. Each Revolving
Credit Loan
which shall not utilize the Revolving Credit Facility in full shall
be in the
minimum amount of $100,000. Within the limits of the Revolving
Credit Facility
Borrower may borrow, prepay pursuant to "Optional Prepayments"
(Section 2.11),
and reborrow under this Section.
9
Section 2.02. Reduction in Revolving Credit Facility. Upon at
least 3
Business Days prior written notice to Bank, Borrower has the right
to terminate
in whole, or reduce in part, the unused portion of the Revolving
Credit
Facility, provided that each partial reduction shall be in an
amount of not less
than $500,000. Once the Revolving Credit Facility has been reduced
it cannot be
reinstated by Borrower.
Section 2.03. Commitment Fee. Borrower agrees to pay to Bank a
commitment
fee ("Commitment Fee") on the average daily difference between the
Revolving
Credit Facility Maximum Amount and the aggregate principal amount
of all
outstanding Revolving Credit Loans from and including the Closing
Date to but
excluding the Revolving Credit Facility Termination Date at a rate
per annum
equal to 0.25%. The Commitment Fee is calculated based on a year of
360 days for
the actual number of days elapsed. The accrued Commitment Fee shall
be paid in
arrears at Bank's Office in immediately available funds on the last
day of each
calendar quarter.
Section 2.04. Notice and Manner of Borrowing. Borrower shall
give Bank
telephonic notice (immediately confirmed in writing) of each
Revolving Credit
Loan by 11:00 a.m. on the day of making such Revolving Credit Loan.
Each such
notice must specify (1) the date of the requested Revolving Credit
Loan and (2)
the amount of the requested Revolving Credit Loan. Not later than
4:00 p.m. (New
York City time) on the date of each Revolving Credit Loan and upon
fulfillment
of the applicable conditions set forth in this Agreement, Bank will
make such
Revolving Credit Loan available to Borrower in immediately
available funds by
crediting the amount of such Revolving Credit Loan to the account
of Borrower
with Bank.
All notices given under this Section shall be irrevocable and
shall be
given not later than 11:00 a.m. (New York City time) on a Business
Day which is
not less than the number of Business Days specified above for such
notice.
Section 2.05. Interest. Borrower shall pay interest to Bank on
the
outstanding and unpaid principal amount of the Revolving Credit
Loans at a rate
per annum equal to the Alternate Base Rate plus the Applicable
Margin. Any
change in the interest rate based on the Alternate Base Rate
resulting from a
change in the Alternate Base Rate shall be effective as of the
opening of
business on the day on which such change in the Alternate Base Rate
becomes
effective. Interest on the Revolving Credit Loans shall be
calculated on the
basis of a year of 360 days for the actual number of days elapsed.
Interest on
the Revolving Credit Loan shall be payable on each Interest Payment
Date. Any
principal or interest not paid when due (at maturity, by
acceleration, or
otherwise) shall bear interest from the date when due until paid in
full,
payable on demand, at the Default Rate. The applicable Alternate
Base Rate shall
be determined by Bank, and such determination shall be conclusive
absent
manifest error. Notwithstanding the foregoing, during the
continuance of an
Event of Default, at the option of Bank, the revolving Credit Loans
will bear
interest at the Default Rate.
Section 2.06. Revolving Credit Note. The Revolving Credit
Loans shall be
evidenced by, and repaid with interest in accordance with, a single
promissory
note of Borrower in substantially the form of the "Amended and
Restated
Revolving Credit Note" (Exhibit A) duly completed. The Revolving
Credit Note
shall be (1) in the principal amount of $1,000,000, (2)
10
dated the Closing Date, and (3) payable to Bank at Bank's Office.
The Revolving
Credit Loans will be repaid in full on the Revolving Credit
Facility Termination
Date.
Section 2.07. Method of Payment. Borrower shall make each
payment under
this Agreement and under the Revolving Credit Note not later than
11:00 a.m.
(New York City time) on the date when due in Dollars to Bank at
Bank's Office in
immediately available funds. Borrower hereby authorizes Bank to
charge against
any account of Borrower with Bank each payment under this Agreement
and under
the Revolving Credit Note when due. Whenever any payment to be made
under this
Agreement or under the Revolving Credit Note is 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 the payment of interest.
Section 2.08. Optional Prepayments. Borrower may, upon at
least one (1)
Business Day prior written notice (effective upon receipt) to Bank,
prepay the
Revolving Credit Loans in whole or in part with accrued interest to
the date of
such prepayment on the amount prepaid, provided that each partial
prepayment
shall be in a principal amount of not less than $100,000.
Prepayments of the
Revolving Credit Loans in accordance with the terms of this Section
shall be
without premium or penalty.
Section 2.09. Mandatory Prepayment. If the aggregate principal
amount of
all outstanding Revolving Credit Loans exceeds the Borrowing Base
then Borrower
will immediately prepay the Revolving Credit Loans in an amount so
that the
aggregate principal amount of the outstanding Revolving Credit
Loans does not
exceed the Borrowing Base.
Section 2.10. Use of Proceeds. The proceeds of the Revolving
Credit Loans
will be used by Borrower to partially finance its ongoing working
capital
requirements, and specifically, to provide liquidity to support the
performance
under contracts of Borrower. Borrower will not, directly or
indirectly, use any
part of the proceeds of the Revolving Credit Loans for the purpose
of purchasing
or carrying any margin stock within the meaning of Regulation U of
the Board of
Governors or to extend credit to any Person for the purpose of
purchasing or
carrying any such margin stock.
ARTICLE III CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent. The obligation of Bank to
enter into
this Agreement and to make the initial Revolving Credit Loan is
subject to the
condition precedent that Bank shall have received on or before the
Closing Date
each of the following, each in form and substance reasonably
satisfactory to
Bank and its counsel:
(1) Revolving Credit Note. The Revolving Credit Note duly
executed and
delivered by Borrower.
(2) Security Agreement. The Security Agreement duly executed
and delivered
by Borrower, together with Uniform Commercial Code searches
identifying all
financing statements
11
on file with respect to Borrower in all applicable jurisdictions
indicating that
no Person, other than Bank, has a Lien (other than a Permitted
Lien) on any of
the Collateral as to which perfection is obtained by the filing of
a financing
statement.
(3) Evidence of Insurance. Evidence that (a) all insurance
required to be
maintained under the Financing Documents is in full force and
effect, and (b) to
the extent required under the Financing Documents, Bank has been
designated a
loss payee and additional insured under such insurance.
(4) Certificate. The following statements shall be true and
Bank shall have
received a certificate signed by a duly authorized representative
of Borrower
(dated the Closing Date) stating that:
(a) The representations and warranties contained in each of
the Financing
Documents are, if subject to a materiality limitation or
qualification,
correct, and if not subject to such a limitation or
qualification,
materially correct, on and as of the Closing Date, as though
made on and as
of such date, and
(b) No Default or Event of Default has occurred and is
continuing, or would
result from the transactions contemplated by this Agreement
and the other
Financing Documents.
(5) Consents and Approvals. Evidence that all consents and
approvals
required from any Person, including Governmental Authorities in
connection with
the transactions and the financing contemplated by the Financing
Documents have
been obtained.
(6) Form 10-Q. A copy of Borrower's "Form 10-Q" for the fiscal
quarter
ended June 30, 2006.
(7) Borrowing Base Certificate. A Borrowing Base Certificate
dated as of
the Closing Date.
(8) Loan and Credit Agreements. Delivery of copies of all
material loan or
credit agreements entered into by Borrower.
(9) Fee. Payment to Bank of a fee of $2,500.
(10) Accounts Receivable Aging. Delivery of an accounts
receivable aging
for Borrower (dated within 30 days prior to the Closing Date).
(11) Fees and Expense. Payment of all fees and expenses
required to be paid
in accordance with the Financing Document, including the reasonable
fees and
expenses of counsel to Bank.
Section 3.02 Conditions Precedent to All Revolving Credit
Loans. The
obligation of Bank to make each Revolving Credit Loan after the
Closing Date is
subject to the further conditions precedent that on the date of
making such
Revolving Credit Loan:
12
(1) Representations and Warranties, No Defaults or Events of
Default. The
following statements shall be true:
(a) The representations and warranties contained in each of
the Financing
Documents are, if subject to a materiality limitation or
qualification, correct
and if not subject to such a limitation or qualification,
materially correct, on
and as of the date of making such Revolving Credit Loan as though
made on and as
of such date,
(b) No Default or Event of Default has occurred and is
continuing, or would
result from making such Revolving Credit Loan, and
|
