EXHIBIT 10.19
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REVOLVING CREDIT, TERM LOAN,
EQUIPMENT LINE OF CREDIT
AND
SECURITY AGREEMENT
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PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)
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WITH
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AIR INDUSTRIES MACHINING, CORP.
(BORROWER)
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November 30, 2005
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TABLE OF CONTENTS
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I.
DEFINITIONS..............................................................................................1
1.1
Accounting
Terms................................................................................1
1.2
General
Terms...................................................................................1
1.3
Uniform
Commercial Code
Terms..................................................................21
1.4
Certain
Matters of
Construction................................................................21
II. ADVANCES,
PAYMENTS......................................................................................22
2.1
Revolving
Advances.............................................................................22
2.2
Procedure
for Revolving Advances and Equipment Loan
Borrowing..................................23
2.3
Disbursement of Advance
Proceeds...............................................................25
2.4
Loans..........................................................................................25
2.5
Maximum
Advances...............................................................................26
2.6
Repayment
of
Advances..........................................................................26
2.7
Repayment
of Excess
Advances...................................................................27
2.8
Statement
of
Account...........................................................................27
2.9
Additional
Payments............................................................................28
2.10
Manner of Borrowing and
Payment................................................................28
2.11
Mandatory
Prepayments..........................................................................30
2.12
Use
of
Proceeds................................................................................30
2.13
Defaulting
Lender..............................................................................31
III. INTEREST AND
FEES.......................................................................................32
3.1
Interest.......................................................................................32
3.2
Closing
Fee and Facility
Fee...................................................................32
3.3
Collateral
Evaluation Fee, Collateral Monitoring Fee and Fee
Letter............................32
3.4
Computation of Interest and
Fees...............................................................33
3.5
Maximum
Charges................................................................................33
3.6
Increased
Costs................................................................................33
3.7
Basis For
Determining Interest Rate Inadequate or
Unfair.......................................34
3.8
Capital
Adequacy...............................................................................34
3.9
Gross Up
for
Taxes.............................................................................35
3.10
Withholding Tax
Exemption......................................................................35
IV. COLLATERAL: GENERAL
TERMS..............................................................................36
4.1
Security
Interest in the
Collateral............................................................36
4.2
Perfection
of Security
Interest................................................................36
4.3
Disposition of
Collateral......................................................................37
4.4
Preservation of
Collateral.....................................................................37
4.5
Ownership
of
Collateral........................................................................37
4.5
Defense of
Agent's and Lenders'
Interests......................................................38
4.7
Books and
Records..............................................................................38
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4.8
Financial
Disclosure...........................................................................39
4.9
Compliance
with
Laws...........................................................................39
4.10
Inspection of
Premises.........................................................................39
4.11
Insurance......................................................................................39
4.12
Failure to Pay
Insurance.......................................................................40
4.13 Payment of
Taxes...............................................................................40
4.14
Payment of Leasehold
Obligations...............................................................41
4.15
Receivables....................................................................................41
4.16
Inventory......................................................................................43
4.17
Maintenance of
Equipment.......................................................................43
4.18
Exculpation of
Liability.......................................................................43
4.19
Environmental
Matters..........................................................................44
4.20
Financing
Statements...........................................................................46
V. REPRESENTATIONS AND
WARRANTIES..........................................................................46
5.1
Authority......................................................................................46
5.2
Formation
and
Qualification....................................................................46
5.3
Survival
of Representations and
Warranties.....................................................47
5.4
Tax
Returns....................................................................................47
5.5
Financial
Statements...........................................................................47
5.6
Entity
Name....................................................................................47
5.7
O.S.H.A.
and Environmental
Compliance..........................................................47
5.8
Solvency;
No Litigation, Violation, Indebtedness or
Default....................................48
5.9
Patents,
Trademarks, Copyrights and
Licenses...................................................49
5.10
Licenses and
Permits...........................................................................50
5.11
Default of
Indebtedness........................................................................50
5.12
No
Default.....................................................................................50
5.13
No
Burdensome
Restrictions.....................................................................50
5.14
No
Labor
Disputes..............................................................................50
5.15
Margin
Regulations.............................................................................50
5.16
Investment Company
Act.........................................................................51
5.17
Disclosure.....................................................................................51
5.18
Delivery of Acquisition
Agreement..............................................................51
5.19
Swaps..........................................................................................51
5.20
Conflicting
Agreements.........................................................................51
5.21
Application of Certain Laws and
Regulations....................................................51
5.22
Business and Property of
Borrower..............................................................51
5.23
Section 20
Subsidiaries........................................................................52
5.24
Anti-Terrorism
Laws............................................................................52
5.25
Trading with the
Enemy.........................................................................52
5.26
Federal Securities
Laws........................................................................53
VI. AFFIRMATIVE
COVENANTS...................................................................................53
6.1
Payment of
Fees................................................................................53
6.2
Conduct of
Business and Maintenance of Existence and
Assets....................................53
6.3
Violations.....................................................................................53
6.4
Government
Receivables.........................................................................53
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6.5
Financial
Covenants............................................................................53
6.6
Execution
of Supplemental
Instruments..........................................................54
6.7
Payment of
Indebtedness........................................................................54
6.8
Standards
of Financial
Statements..............................................................54
6.9
Federal
Securities
Laws........................................................................54
6.10
Exercise of
Rights.............................................................................54
6.11
Inventory
Audits...............................................................................54
VII. NEGATIVE
COVENANTS......................................................................................54
7.1
Merger,
Consolidation, Acquisition and Sale of
Assets..........................................55
7.2
Creation
of
Liens..............................................................................55
7.3
Guarantees.....................................................................................55
7.4
Investments....................................................................................55
7.5
Loans..........................................................................................55
7.6
Capital
Expenditures...........................................................................55
7.7
Dividends......................................................................................55
7.8
Indebtedness...................................................................................56
7.9
Nature of
Business.............................................................................56
7.10
Transactions with
Affiliates...................................................................56
7.11
Leases.........................................................................................56
7.12
Subsidiaries...................................................................................56
7.13
Fiscal Year and Accounting
Changes.............................................................56
7.14
Pledge of
Credit...............................................................................56
7.15
Amendment of Articles of Incorporation,
By-Laws................................................56
7.16
Compliance with
ERISA..........................................................................57
7.17
Prepayment of
Indebtedness.....................................................................57
7.18
Anti-Terrorism
Laws............................................................................57
7.18
Membership/Partnership
Interests...............................................................57
7.19
Trading with the Enemy
Act.....................................................................58
7.21
Other
Agreements...............................................................................58
7.22
Progress
Payments..............................................................................58
VIII. CONDITIONS
PRECEDENT....................................................................................58
8.1
Conditions
to Initial
Advances.................................................................58
8.2
Conditions
to Each
Advance.....................................................................62
8.3
Conditions
to Each Equipment
Loan..............................................................63
IX. INFORMATION AS TO
BORROWERS.............................................................................63
9.1
Disclosure
of Material
Matters.................................................................63
9.2
Schedules......................................................................................63
9.3
Environmental
Reports..........................................................................64
9.4
Litigation.....................................................................................64
9.5
Material
Occurrences...........................................................................64
9.6
Government
Receivables.........................................................................64
9.7
Annual
Financial
Statements....................................................................64
9.8
Quarterly
Financial
Statements.................................................................65
9.9
Monthly
Financial
Statements...................................................................65
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9.10
Other
Reports..................................................................................65
9.11
Additional
Information.........................................................................65
9.12
Projected Operating
Budget.....................................................................65
9.13
Variances From Operating
Budget................................................................66
9.14
Notice of Suits,
Adverse
Events................................................................66
9.15
ERISA Notices and
Requests.....................................................................66
9.16
Additional
Documents...........................................................................66
X. EVENTS OF
DEFAULT.......................................................................................67
10.1
Nonpayment.....................................................................................67
10.2
Breach of
Representation.......................................................................67
10.3
Financial
Information..........................................................................67
10.4
Judicial
Actions...............................................................................67
10.5
Noncompliance..................................................................................67
10.6
Judgments......................................................................................67
10.7
Bankruptcy....................................................................................67
10.8
Inability to
Play..............................................................................68
10.9
Affiliate
Bankruptcy...........................................................................68
10.10
Material
Adverse
Effect........................................................................68
10.11
Lien
Priority..................................................................................68
10.12
Cross
Default..................................................................................68
10.13
Change of
Ownership............................................................................68
10.14
Invalidity.....................................................................................68
10.15
Licenses.......................................................................................68
10.16
Seizures.......................................................................................68
10.17
Operations.....................................................................................69
10.18
Pension
Plans..................................................................................69
XI. LENDERS' RIGHTS AND REMEDIES
AFTER
DEFAULT..............................................................69
11.1
Rights and
Remedies............................................................................69
11.2
Agent's
Discretion.............................................................................71
11.3
Setoff.........................................................................................71
11.4
Rights and Remedies not
Exclusive..............................................................71
11.5
Allocation of Payments After Event of
Default..................................................71
XII. WAIVERS AND JUDICIAL
PROCEEDINGS........................................................................72
12.1
Waiver of
Notice...............................................................................72
12.2
Delay..........................................................................................72
12.3
Jury
Waiver....................................................................................72
XIII. EFFECTIVE DATE AND
TERMINATION..........................................................................72
13.1
Term...........................................................................................72
13.2
Termination....................................................................................73
XIV. REGARDING
AGENT.........................................................................................73
14.1
Appointment....................................................................................73
14.2
Nature of
Duties...............................................................................74
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14.3
Lack
of Reliance on Agent and
Resignation......................................................74
14.4
Certain Rights of
Agent........................................................................75
14.5
Reliance.......................................................................................75
14.6
Notice of
Default..............................................................................75
14.7
Indemnification................................................................................75
14.8
Agent in its Individual
Capacity...............................................................75
14.9
Delivery of
Documents..........................................................................76
14.10
Borrower's
Undertaking to
Agent................................................................76
14.11
No
Reliance on Agent's Customer Identification
Program.........................................76
14.12
Other
Agreements...............................................................................76
XV.
MISCELLANEOUS...........................................................................................76
15.1
Governing
Law..................................................................................76
15.2
Entire
Understanding...........................................................................77
15.3
Successors and Assigns; Participations; New
Lenders............................................79
15.4
________________________.............................................Error!
Bookmark not defined.
15.4
Application of
Payments........................................................................81
15.5
Indemnity......................................................................................81
15.6
Notice.........................................................................................81
15.7
Survival.......................................................................................83
15.8
Severability...................................................................................83
15.9
Expenses.......................................................................................83
15.10
Injunctive
Relief..............................................................................84
15.11
Damages........................................................................................84
15.12.
Captions.......................................................................................84
15.13
Counterparts; Facsimile
Signatures.............................................................84
15.14
Construction...................................................................................84
15.15
Confidentiality; Sharing
Information...........................................................84
15.16
Publicity......................................................................................85
15.17
Certifications From Banks and Participants; US PATRIOT
Act.....................................85
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REVOLVING CREDIT, TERM LOAN, EQUIPMENT LINE OF CREDIT
AND
SECURITY AGREEMENT
Revolving
Credit, Term Loan, Equipment Line of Credit and Security
Agreement dated November 30, 2005 among AIR
INDUSTRIES MACHINING, CORP. (as
successor by merger with Gales Industries
Acquisition Corp., Inc.), a
corporation organized under the laws of the
State of New York ("Borrower"), the
financial institutions which are now or
which hereafter become a party hereto
(collectively, the "Lenders" and
individually a "Lender") and PNC BANK, NATIONAL
ASSOCIATION ("PNC"), as agent for Lenders
(PNC, in such capacity, the "Agent").
IN
CONSIDERATION of the mutual covenants and undertakings herein
contained, Borrower, Lenders and Agent
hereby agree as follows:
I. DEFINITIONS.
1.1 Accounting Terms. As used in this Agreement, the Other
Documents
or any certificate, report or other
document made or delivered pursuant to this
Agreement, accounting terms not defined in
Section 1.2 or elsewhere in this
Agreement and accounting terms partly
defined in Section 1.2 to the extent not
defined, shall have the respective meanings
given to them under GAAP; provided,
however, whenever such accounting terms are
used for the purposes of determining
compliance with financial covenants in this
Agreement, such accounting terms
shall be defined in accordance with GAAP as
applied in preparation of the
audited financial statements of Borrower
for the fiscal year ended December 31,
2004.
1.2 General Terms. For purposes of this Agreement the following
terms shall have the following
meanings:
"2005 Phase 1" shall mean that certain Phase 1 Environmental
Site
Assessment dated October 12, 2005 prepared
by CA Rich Consultants, Inc.
"Accountants" shall have the meaning set forth in Section 9.7
hereof.
"Acquisition Agreement" shall mean the Stock Purchase Agreement
including all exhibits and schedules
thereto dated as of July 25, 2005 by and
among Gales Industries Incorporated, as
buyer (the "Original Buyer"), and Air
Industries Machining, Corp., Luis
Peragallo, Jorge Peragallo, Peter Rettalliata
and Dario Peragallo, as sellers
(collectively, the "Seller"), as amended,
restated, modified and/or replaced from
time to time, and as assigned by the
Original Buyer in favor of Gales Industries
Acquisition Corp., Inc. (the
"Buyer").
"Advance Rates" shall mean, collectively, the Receivables
Advance
Rate and the Inventory Advance Rate.
"Advances" shall mean and include the Revolving Advances as well
as
the Term Loan, the Converted Equipment
Loans and the Equipment Loans.
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"Affiliate" of any Person shall mean (a) any Person which,
directly
or indirectly, is in control of, is
controlled by, or is under common control
with such Person, or (b) any Person who is
a director, managing member, general
partner or officer (i) of such Person, (ii)
of any Subsidiary of such Person or
(iii) of any Person described in clause (a)
above. For purposes of this
definition, control of a Person shall mean
the power, direct or indirect, (x) to
vote 33% or more of the Equity Interests
having ordinary voting power for the
election of directors of such Person or
other Persons performing similar
functions for any such Person, or (y) to
direct or cause the direction of the
management and policies of such Person
whether by ownership of Equity Interests,
contract or otherwise.
"Agent" shall have the meaning set forth in the preamble to
this
Agreement and shall include its successors
and assigns.
"Agreement" shall mean this Revolving Credit, Term Loan,
Equipment
Line of Credit and Security Agreement, as
the same may be amended, restated,
supplemented or otherwise modified from
time to time.
"Alternate Base Rate" shall mean, for any day, a rate per annum
equal to the higher of (i) the Base Rate in
effect on such day and (ii) the
Federal Funds Open Rate in effect on such
day plus 1/2 of 1%.
"Anti-Terrorism Laws" shall mean any Applicable Laws relating
to
terrorism or money laundering, including
Executive Order No. 13224, the USA
PATRIOT Act, the Applicable Laws comprising
or implementing the Bank Secrecy
Act, and the Applicable Laws administered
by the United States Treasury
Department's Office of Foreign Asset
Control (as any of the foregoing Applicable
Laws may from time to time be amended,
renewed, extended, or replaced).
"Applicable Law" shall mean all laws, rules and regulations
applicable to the Person, conduct,
transaction, covenant, Other Document or
contract in question, including all
applicable common law and equitable
principles; all provisions of all
applicable state, federal and foreign
constitutions, statutes, rules, regulations
and orders of any Governmental Body,
and all orders, judgments and decrees of
all courts and arbitrators.
"Assignment of Rents, Leases and Profits" shall mean that
certain
Assignment of Rents, Leases and Profits
executed by the Borrower in favor of the
Agent for the benefit of the Lenders dated
the date hereof with regard to the
Mortgaged Premises, together with all
extensions, renewals, amendments,
supplements, modifications, substitutions
and replacements thereto and thereof.
"Authority" shall have the meaning set forth in Section
4.19(d).
"Base Rate" shall mean the base commercial lending rate of PNC
as
publicly announced to be in effect from
time to time, such rate to be adjusted
automatically, without notice, on the
effective date of any change in such rate.
This rate of interest is determined from
time to time by PNC as a means of
pricing some loans to its customers and is
neither tied to any external rate of
interest or index nor does it necessarily
reflect the lowest rate of interest
actually charged by PNC to any particular
class or category of customers of PNC.
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"Blocked Accounts" shall have the meaning set forth in Section
4.15(h).
"Blocked Account Bank" shall have the meaning set forth in
Section
4.15(h).
"Blocked Person" shall have the meaning set forth in Section
5.24(b)
hereof.
"Borrower" shall have the meaning set forth in the preamble to
this
Agreement and shall extend to all permitted
successors and assigns of such
Person.
"Borrower's Account" shall have the meaning set forth in
Section
2.8.
"Borrowing Base Certificate" shall mean a certificate in
substantially the form of Exhibit 1.2 duly
executed by the President, Chief
Financial Officer or Controller of the
Borrower and delivered to the Agent,
appropriately completed, by which such
officer shall certify to Agent the
Formula Amount and calculation thereof as
of the date of such certificate.
"Borrowing Period" shall have the meaning set forth in Section
2.4(b) hereof.
"Business Day" shall mean any day other than Saturday or Sunday or
a
legal holiday on which commercial banks are
authorized or required by law to be
closed for business in East Brunswick, New
Jersey and, if the applicable
Business Day relates to any Eurodollar Rate
Loans, such day must also be a day
on which dealings are carried on in the
London interbank market.
"Capital Expenditures" shall mean expenditures made or
liabilities
incurred for the acquisition of any fixed
assets or improvements, replacements,
substitutions or additions thereto which
have a useful life of more than one
year, including the total principal portion
of Capitalized Lease Obligations,
which, in accordance with GAAP, would be
classified as capital expenditures.
"Capitalized Lease Obligation" shall mean any Indebtedness of
Borrower represented by obligations under a
lease that is required to be
capitalized for financial reporting
purposes in accordance with GAAP.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as
amended, 42 U.S.C. ss.ss.9601 et seq.
"Change of Control" shall mean (a) the occurrence of any event
(whether in one or more transactions) which
results in a transfer of control of
Borrower to a Person who is not an Original
Owner or (b) any merger or
consolidation of or with Borrower or sale
of all or substantially all of the
property or assets of Borrower. For
purposes of this definition, "control of
Borrower" shall mean the power, direct or
indirect (x) to vote 50% or more of
the Equity Interests having ordinary voting
power for the election of directors
(or the individuals performing similar
functions) of Borrower or (y) to direct
or cause the direction of the management
and policies of Borrower by contract or
otherwise.
"Change of Ownership" shall mean (a) 50% or more of the Equity
Interests of Borrower is no longer owned or
controlled by (including for the
purposes of the calculation of percentage
ownership, any Equity Interests into
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which any Equity Interests of Borrower held
by any of the Original Owners are
convertible or for which any such Equity
Interests of Borrower or of any other
Person may be exchanged and any Equity
Interests issuable to such Original
Owners upon exercise of any warrants,
options or similar rights which may at the
time of calculation be held by such
Original Owners) a Person who is an Original
Owner or (b) any merger, consolidation or
sale of substantially all of the
property or assets of Borrower.
"Charges" shall mean all taxes, charges, fees, imposts, levies
or
other assessments, including all net
income, gross income, gross receipts,
sales, use, ad valorem, value added,
transfer, franchise, profits, inventory,
capital stock, license, withholding,
payroll, employment, social security,
unemployment, excise, severance, stamp,
occupation and property taxes, custom
duties, fees, assessments, liens, claims
and charges of any kind whatsoever,
together with any interest and any
penalties, additions to tax or additional
amounts, imposed by any taxing or other
authority, domestic or foreign
(including the Pension Benefit Guaranty
Corporation or any environmental agency
or superfund), upon the Collateral,
Borrower or any of its Affiliates.
"Closing Date" shall mean November 30, 2005 or such other date
as
may be agreed to by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986, as the same
may
be amended or supplemented from time to
time, and any successor statute of
similar import, and the rules and
regulations thereunder, as from time to time
in effect.
"Collateral" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Investment Property;
(f) all Real Property;
(g) all Subsidiary Stock;
(h) the Leasehold Interests;
(i) all of Borrower's right, title and interest in and to,
whether now owned or hereafter acquired and
wherever located, (i) its respective
goods and other property including, but not
limited to, all merchandise returned
or rejected by Customers, relating to or
securing any of the Receivables; (ii)
all of Borrower's rights as a consignor, a
consignee, an unpaid vendor,
mechanic, artisan, or other lienor,
including stoppage in transit, setoff,
detinue, replevin, reclamation and
repurchase; (iii) all additional amounts due
to Borrower from any Customer relating to
the Receivables; (iv) other property,
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including warranty claims, relating to any
goods securing the Obligations; (v)
all of Borrower's contract rights, rights
of payment which have been earned
under a contract right, instruments
(including promissory notes), documents,
chattel paper (including electronic chattel
paper), warehouse receipts, deposit
accounts, letters of credit and money; (vi)
all commercial tort claims (whether
now existing or hereafter arising); (vii)
if and when obtained by Borrower, all
real and personal property of third parties
in which Borrower has been granted a
lien or security interest as security for
the payment or enforcement of
Receivables; (viii) all letter of credit
rights (whether or not the respective
letter of credit is evidenced by a
writing); (ix) all supporting obligations;
and (x) any other goods, personal property
or real property now owned or
hereafter acquired in which Borrower has
expressly granted a security interest
or may in the future grant a security
interest to Agent hereunder, or in any
amendment or supplement hereto or thereto,
or under any other agreement between
Agent and Borrower;
(j) all of
Borrower's ledger sheets, ledger cards, files,
correspondence, records, books of account,
business papers, computers, computer
software (owned by Borrower or in which it
has an interest), computer programs,
tapes, disks and documents relating to (a),
(b), (c), (d), (e), (f), (g), (h) or
(i) of this Paragraph; and
(k) all proceeds and products of (a), (b), (c), (d), (e), (f),
(g), (h), (i) and (j) in whatever form,
including, but not limited to: cash,
deposit accounts (whether or not comprised
solely of proceeds), certificates of
deposit, insurance proceeds (including
hazard, flood and credit insurance),
negotiable instruments and other
instruments for the payment of money, chattel
paper, security agreements, documents,
eminent domain proceeds, condemnation
proceeds and tort claim proceeds.
"Commitment Percentage" of any Lender shall mean the percentage
set
forth below such Lender's name on the
signature page hereof as same may be
adjusted upon any assignment by a Lender
pursuant to Section 15.3(b) hereof.
"Commitment Transfer Supplement" shall mean a document in the
form
of Exhibit 15.3 hereto, properly completed
and otherwise in form and substance
satisfactory to Agent by which the
Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to
make Advances under this Agreement.
"Compliance Certificate" shall mean a compliance certificate to
be
signed by the Chief Financial Officer or
Controller of Borrower, which shall
state that, based on an examination
sufficient to permit such officer to make an
informed statement, no Default or Event of
Default exists, or if such is not the
case, specifying such Default or Event of
Default, its nature, when it occurred,
whether it is continuing and the steps
being taken by Borrower with respect to
such default and, such certificate shall
have appended thereto calculations
which set forth Borrower's compliance with
the requirements or restrictions
imposed by Sections 6.5, 7.4, 7.5, 7.6,
7.7, 7.8 and 7.11.
"Consents" shall mean all filings and all licenses, permits,
consents, approvals, authorizations,
qualifications and orders of Governmental
Bodies and other third parties, domestic or
foreign, necessary to carry on
Borrower's business or necessary (including
to avoid a conflict or breach under
any agreement, instrument, other document,
license, permit or other
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authorization) for the execution, delivery
or performance of this Agreement, the
Other Documents, or the Acquisition
Agreement, including any Consents required
under all applicable federal, state or
other Applicable Law.
"Consigned Inventory" shall mean Inventory of Borrower that is
in
the possession of another Person on a
consignment, sale or return, or other
basis that does not constitute a final sale
and acceptance of such Inventory.
"Contract Rate" shall mean, as applicable, the Revolving
Interest
Rate or the Term Loan Rate or the Equipment
Line of Credit Rate, as more fully
described in Section 3.1 herein.
"Controlled Group" shall mean, at any time, the Borrower and
all
members of a controlled group of
corporations and all trades or businesses
(whether or not incorporated) under common
control and all other entities which,
together with Borrower, are treated as a
single employer under Section 414 of
the Code.
"Conversion Date" shall have the meaning set forth in Section
2.4(b)
hereof.
"Converted Equipment Loan(s)" shall have the meaning set forth
in
Section 2.4(b) hereof.
"Converted Equipment Line of Credit Note" shall mean the
promissory
notes referred to in Section 2.4(b)
hereof.
"Current Assets" at a particular date, shall mean all cash,
cash
equivalents, accounts and inventory of
Borrower and all other items which would,
in conformity with GAAP, be included under
current assets on a balance sheet of
Borrower as at such date; provided,
however, that such amounts shall not include
(a) any amounts for any Indebtedness owing
by an Affiliate of Borrower, unless
such Indebtedness arose in connection with
the sale of goods or rendition of
services in the Ordinary Course of Business
and would otherwise constitute
current assets in conformity with GAAP, (b)
any Equity Interests issued by an
Affiliate of Borrower, or (c) the cash
surrender value of any life insurance
policy.
"Current Liabilities" at a particular date, shall mean all
amounts
which would, in conformity with GAAP, be
included under current liabilities on a
balance sheet of Borrower, as at such date,
but in any event including the
amounts of (a) all Indebtedness of Borrower
payable on demand, or, at the option
of the Person to whom such Indebtedness is
owed, not more than twelve (12)
months after such date, (b) any payments in
respect of any Indebtedness of
Borrower (whether installment, serial
maturity, sinking fund payment or
otherwise) required to be made not more
than twelve (12) months after such date,
(c) all reserves in respect of liabilities
or Indebtedness payable on demand or,
at the option of the Person to whom such
Indebtedness is owed, not more than
twelve (12) months after such date, the
validity of which is not contested at
such date, and (d) all accruals for federal
or other taxes measured by income
payable within a twelve (12) month
period.
6
<PAGE>
"Customer" shall mean and include the account debtor with respect
to
any Receivable and/or the prospective
purchaser of goods, services or both with
respect to any contract or contract right,
and/or any party who enters into or
proposes to enter into any contract or
other arrangement with Borrower, pursuant
to which Borrower is to deliver any
personal property or perform any services.
"Default" shall mean an event, circumstance or condition which,
with
the giving of notice or passage of time or
both, would constitute an Event of
Default.
"Default Rate" shall have the meaning set forth in Section 3.1
hereof.
"Defaulting Lender" shall have the meaning set forth in Section
2.13(a) hereof.
"Depository Accounts" shall have the meaning set forth in
Section
4.15(h) hereof.
"Documents" shall have the meaning set forth in Section 8.1(c)
hereof.
"Dollar" and the sign "$" shall mean lawful money of the United
States of America.
"Domestic Rate Loan" shall mean any Advance that bears interest
based upon the Alternate Base Rate.
"Early Termination Date" shall have the meaning set forth in
Section
13.1 hereof.
"Earnings Before Interest and Taxes" shall mean for any period
the
sum of (i) net income (or loss) of Borrower
for such period (excluding
extraordinary gains and losses), plus (ii)
all interest expense of Borrower for
such period, plus (iii) all charges against
income of Borrower for such period
for federal, state and local taxes actually
paid.
"EBITDA" shall mean for any period the sum of (i) Earnings
Before
Interest and Taxes for such period plus
(ii) depreciation expenses for such
period, plus (iii) amortization expenses
for such period.
"Eligible Inventory" shall mean and include Inventory,
specifically
including work in process, valued at the
lower of cost or market value,
determined on a first-in-first-out basis,
which is not, in Agent's opinion,
obsolete, slow moving or unmerchantable and
which Agent, in its sole discretion,
shall not deem ineligible Inventory, based
on such considerations as Agent may
from time to time deem appropriate
including whether the Inventory is subject to
a perfected, first priority security
interest in favor of Agent and no other
Lien (other than a Permitted Encumbrance).
In addition, Inventory shall not be
Eligible Inventory if it (i) does not
conform to all standards imposed by any
Governmental Body which has regulatory
authority over such goods or the use or
sale thereof, (ii) is in transit, (iii) is
located outside the continental
United States or at a location that is not
otherwise in compliance with this
Agreement, (iv) constitutes Consigned
Inventory, (v) is the subject of an
Intellectual Property Claim; (vi) is
subject to a License Agreement or other
agreement that limits, conditions or
restricts Borrower's or Agent's right to
sell or otherwise dispose of such
Inventory, unless Agent is a party to a
7
<PAGE>
Licensor/Agent Agreement with the Licensor
under such License Agreement; or
(vii) or is situated at a location not
owned by Borrower unless the owner or
occupier of such location has executed in
favor of Agent a Lien Waiver
Agreement. Eligible Inventory shall include
all Inventory in-transit for which
title has passed to Borrower, which is
insured to the full value thereof and for
which Agent shall have in its possession
(a) all negotiable bills of lading
properly endorsed and (b) all
non-negotiable bills of lading issued in Agent's
name.
"Eligible Receivables" shall mean and include with respect to
Borrower, each Receivable of Borrower
arising in the Ordinary Course of Business
and which Agent, in its sole credit
judgment, shall deem to be an Eligible
Receivable, based on such considerations as
Agent may from time to time deem
appropriate. A Receivable shall not be
deemed eligible unless such Receivable is
subject to Agent's first priority perfected
security interest and no other Lien
(other than Permitted Encumbrances), and is
evidenced by an invoice or other
documentary evidence satisfactory to Agent.
In addition, no Receivable shall be
an Eligible Receivable if:
(a) it arises out of a sale made by Borrower to an Affiliate
of Borrower or to a Person controlled by an
Affiliate of Borrower;
(b) it is due or unpaid more than ninety (90) days after the
original invoice date;
(c) fifty percent (50%) or more of the Receivables from such
Customer are not deemed Eligible
Receivables hereunder. Such percentage may, in
Agent's sole discretion, be increased or
decreased from time to time;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable
has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to
the appointment of, or the taking of
possession by, a receiver, custodian,
trustee or liquidator of itself or of all
or a substantial part of its property
or call a meeting of its creditors, (ii)
admit in writing its inability, or be
generally unable, to pay its debts as they
become due or cease operations of its
present business, (iii) make a general
assignment for the benefit of creditors,
(iv) commence a voluntary case under any
state or federal bankruptcy laws (as
now or hereafter in effect), (v) be
adjudicated a bankrupt or insolvent, (vi)
file a petition seeking to take advantage
of any other law providing for the
relief of debtors, (vii) acquiesce to, or
fail to have dismissed, any petition
which is filed against it in any
involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of
effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United
States of America, unless the sale is on
letter of credit, guaranty or
acceptance terms, in each case acceptable
to Agent in its sole discretion;
(g) the sale to the Customer is on a bill-and-hold, guaranteed
sale, sale-and-return, sale on approval,
consignment or any other repurchase or
return basis or is evidenced by chattel
paper;
(h) Agent believes, in its sole judgment, that collection of
such Receivable is insecure or that such
Receivable may not be paid by reason of
the Customer's financial inability to
pay;
8
<PAGE>
(i) the Customer is the United States of America, any state or
any department, agency or instrumentality
of any of them, unless Borrower
assigns its right to payment of such
Receivable to Agent pursuant to the
Assignment of Claims Act of 1940, as
amended (31 U.S.C. Sub-Section 3727 et seq.
and 41 U.S.C. Sub-Section 15 et seq.) or
has otherwise complied with other
applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not been
delivered to and accepted by the Customer
or the services giving rise to such
Receivable have not been performed by
Borrower and accepted by the Customer or
the Receivable otherwise does not represent
a final sale;
(k) the Receivables of the Customer exceed a credit limit
determined by Agent, in its sole
discretion, to the extent such Receivable
exceeds such limit;
(l) the Receivable is subject to any offset, deduction,
defense, dispute, or counterclaim, the
Customer is also a creditor or supplier
of Borrower or the Receivable is contingent
in any respect or for any reason;
(m) Borrower has made any agreement with any Customer for any
deduction therefrom, except for discounts
or allowances made in the Ordinary
Course of Business for prompt payment, all
of which discounts or allowances are
reflected in the calculation of the face
value of each respective invoice
related thereto;
(n) any return, rejection or repossession of the merchandise
has occurred or the rendition of services
has been disputed;
(o) such Receivable is not payable to Borrower; or
(p) such Receivable is not otherwise satisfactory to Agent as
determined in good faith by Agent in the
exercise of its discretion in a
reasonable manner.
"Environmental Complaint" shall have the meaning set forth in
Section 4.19(d) hereof.
"Environmental Indemnity Agreement" shall mean that certain
Environmental Indemnity Agreement executed
by the Borrower in favor of the Agent
for the benefit of the Lenders dated the
date hereof with regard to the
Mortgaged Premises, together with all
extensions, renewals, amendments,
supplements, modifications, substitutions
and replacements thereto and thereof.
"Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, health,
chemical use, safety and sanitation
laws, statutes, ordinances and codes
relating to the protection of the
environment and/or governing the use,
storage, treatment, generation,
transportation, processing, handling,
production or disposal of Hazardous
Substances and the rules, regulations,
policies, guidelines, interpretations,
decisions, orders and directives of
federal, state and local governmental
agencies and authorities with respect
thereto.
9
<PAGE>
"Equipment" shall mean and include all of Borrower's goods
(other
than Inventory) whether now owned or
hereafter acquired and wherever located
including all equipment, machinery,
apparatus, motor vehicles, fittings,
furniture, furnishings, fixtures, parts,
accessories and all replacements and
substitutions therefor or accessions
thereto.
"Equipment Line of Credit Note" shall mean the promissory note
referred to in Section 2.4(b) hereof.
"Equipment Line of Credit Rate" shall mean an interest rate per
annum equal to (a) the sum of the Alternate
Base Rate plus one half of one
percent (.50%) with respect to Domestic
Rate Loans and (b) the sum of the
Eurodollar Rate plus two and three quarters
of one percent (2.75%) with respect
to Eurodollar Rate Loans.
"Equipment Loans" shall have the meaning set forth in Section
2.4(b)
hereof.
"Equipment Note" shall mean, collectively, the promissory notes
referred to in Section 2.4(b) hereof.
"Equity Interests" of any Person shall mean any and all shares,
rights to purchase, options, warrants,
general, limited or limited liability
partnership interests, member interests,
participation or other equivalents of
or interest in (regardless of how
designated) equity of such Person, whether
voting or nonvoting, including common
stock, preferred stock, convertible
securities or any other "equity security"
(as such term is defined in Rule
3a11-1 of the General Rules and Regulations
promulgated by the SEC under the
Exchange Act).
"ERISA" shall mean the Employee Retirement Income Security Act
of
1974, as amended from time to time and the
rules and regulations promulgated
thereunder.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for
the
then current Interest Period relating
thereto the interest rate per annum
determined by Agent by dividing (the
resulting quotient rounded upwards, if
necessary, to the nearest 1/100th of 1% per
annum) (i) the rate of interest
determined by Agent in accordance with its
usual procedures (which determination
shall be conclusive absent manifest error)
to be the average of the London
interbank offered rates for U.S. Dollars
quoted by the British Bankers'
Association as set forth on Moneyline
Telerate (or appropriate successor or, if
British Banker's Association or its
successor ceases to provide such quotes, a
comparable replacement determined by Agent)
display page 3750 (or such other
display page on the Moneyline Telerate
system as may replace display page 3750)
two (2) Business Days prior to the first
day of such Interest Period for an
amount comparable to such Eurodollar Rate
Loan and having a borrowing date and a
maturity comparable to such Interest Period
by (ii) a number equal to 1.00 minus
the Reserve Percentage. The Eurodollar Rate
may also be expressed by the
following formula:
Average of London interbank offered rates quoted by BBA as
shown on Moneyline Telerate Service display page 3750
Eurodollar Rate =
or appropriate successor
----------------------------------------------------------
1.00 - Reserve Percentage.
The Eurodollar Rate shall be adjusted with
respect to any Eurodollar Rate Loan
that is outstanding on the effective date
of any change in the Reserve
10
<PAGE>
Percentage as of such effective date. The
Agent shall give prompt notice to the
Borrower of the Eurodollar Rate as
determined or adjusted in accordance
herewith, which determination shall be
conclusive absent manifest error.
"Eurodollar Rate Loan" shall mean an Advance at any time that
bears
interest based on the Eurodollar Rate.
"Event of Default" shall have the meaning set forth in Article
X
hereof.
"Exchange Act" shall have the mean the Securities Exchange Act
of
1934, as amended.
"Executive Order No. 13224" shall mean the Executive Order No.
13224
on Terrorist Financing, effective September
24, 2001, as the same has been, or
shall hereafter be, renewed, extended,
amended or replaced.
"Existing Environmental Due Diligence" shall mean, collectively,
(i)
that certain Phase 1 Environmental Site
Assessment dated October 12, 2005
prepared by CA Rich Consultants, Inc. and
(ii) that certain letter from the
County of Suffolk, New York with regard to
Project No. 226-97-86 dated January
8, 1998.
"Federal Funds Effective Rate" for any day shall mean the rate
per
annum (based on a year of 360 days and
actual days elapsed and rounded upward to
the nearest 1/100 of 1%) announced by the
Federal Reserve Bank of New York (or
any successor) on such day as being the
weighted average of the rates on
overnight federal funds transactions
arranged by federal funds brokers on the
previous trading day, as computed and
announced by such Federal Reserve Bank (or
any successor) in substantially the same
manner as such Federal Reserve Bank
computes and announces the weighted average
it refers to as the "Federal Funds
Effective Rate" as of the date of this
Agreement; provided, if such Federal
Reserve Bank (or its successor) does not
announce such rate on any day, the
"Federal Funds Effective Rate" for such day
shall be the Federal Funds Effective
Rate for the last day on which such rate
was announced.
"Federal Funds Open Rate" shall mean the rate per annum
determined
by the Agent in accordance with its usual
procedures (which determination shall
be conclusive absent manifest error) to be
the "open" rate for federal funds
transactions as of the opening of business
for federal funds transactions among
members of the Federal Reserve System
arranged by federal funds brokers on such
day, as quoted by Garvin Guybutler
Corporation, any successor entity thereto, or
any other broker selected by the Agent, as
set forth on the applicable Telerate
display page; provided, however; that if
such day is not a Business Day, the
Federal Funds Open Rate for such day shall
be the "open" rate on the immediately
preceding Business Day, or if no such rate
shall be quoted by a Federal funds
broker at such time, such other rate as
determined by the Agent in accordance
with its usual procedures.
"Fixed Charge Coverage Ratio" shall mean and include, with
respect
to any fiscal period, the ratio of (a)
EBITDA, minus the aggregate amount of
unfunded capitalized expenditures made
during such period, minus the aggregate
amount of distributions made during such
period, minus the aggregate amount of
cash taxes paid during such period to (b)
the aggregate amount of principal
and/or interest payments made on Funded
Debt during such period.
11
<PAGE>
"Foreign Subsidiary" of any Person, shall mean any Subsidiary
of
such Person that is not organized or
incorporated in the United States or any
State or territory thereof.
"Formula Amount" shall have the meaning set forth in Section
2.1(a).
"Funded Debt" shall mean, with respect to any Person, without
duplication, all Indebtedness for borrowed
money evidenced by notes, bonds,
debentures, or similar evidences of
Indebtedness that by its terms matures more
than one year from, or is directly or
indirectly renewable or extendible at such
Person's option under a revolving credit or
similar agreement obligating the
lender or lenders to extend credit over a
period of more than one year from the
date of creation thereof, and specifically
including Capitalized Lease
Obligations, current maturities of
long-term debt, revolving credit and
short-term debt extendible beyond one year
at the option of the debtor, and also
including, in the case of Borrower, the
Obligations and, without duplication,
Indebtedness consisting of guaranties of
Funded Debt of other Persons.
"GAAP" shall mean generally accepted accounting principles in
the
United States of America in effect from
time to ---- time.
"General Intangibles" shall mean and include all of Borrower's
general intangibles, whether now owned or
hereafter acquired, including all
payment intangibles, all choses in action,
causes of action, corporate or other
business records, inventions, designs,
patents, patent applications, equipment
formulations, manufacturing procedures,
quality control procedures, trademarks,
trademark applications, service marks,
trade secrets, goodwill, copyrights,
design rights, software, computer
information, source codes, codes, records and
updates, registrations, licenses,
franchises, customer lists, tax refunds, tax
refund claims, computer programs, all
claims under guaranties, security
interests or other security held by or
granted to Borrower to secure payment of
any of the Receivables by a Customer (other
than to the extent covered by
Receivables) all rights of indemnification
and all other intangible property of
every kind and nature (other than
Receivables).
"Governmental Body" shall mean any nation or government, any
state
or other political subdivision thereof or
any entity, authority, agency,
division or department exercising the
legislative, judicial, regulatory or
administrative functions of or pertaining
to a government.
"Hazardous Discharge" shall have the meaning set forth in
Section
4.19(d) hereof.
"Hazardous Substance" shall mean, without limitation, any
flammable
explosives, radon, radioactive materials,
asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls,
petroleum and petroleum products,
methane, hazardous materials, Hazardous
Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the
Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801,
et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental
Conservation Law or any other applicable
Environmental Law and in the regulations
adopted pursuant thereto.
12
<PAGE>
"Hazardous Wastes" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable
state law, and any other applicable
Federal and state laws now in force or
hereafter enacted relating to hazardous
waste disposal.
"Hedge Liabilities" shall have the meaning provided in the
definition of "Lender-Provided Interest
Rate Hedge".
"Indebtedness" of a Person at a particular date shall mean all
obligations of such Person which in
accordance with GAAP would be classified
upon a balance sheet as liabilities (except
capital stock and surplus earned or
otherwise) and in any event, without
limitation by reason of enumeration, shall
include all indebtedness, debt and other
similar monetary obligations of such
Person whether direct or guaranteed, and
all premiums, if any, due at the
required prepayment dates of such
indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person,
whether or not such indebtedness actually
shall have been created, assumed or
incurred by such Person. Any indebtedness of
such Person resulting from the acquisition
by such Person of any assets subject
to any Lien shall be deemed, for the
purposes hereof, to be the equivalent of
the creation, assumption and incurring of
the indebtedness secured thereby,
whether or not actually so created, assumed
or incurred.
"Ineligible Security" shall mean any security which may not be
underwritten or dealt in by member banks of
the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12
U.S.C. Section 24, Seventh), as
amended.
"Intellectual Property" shall mean property constituting under
any
Applicable Law a patent, patent
application, copyright, trademark, service mark,
trade name, mask work, trade secret or
license or other right to use any of the
foregoing.
"Intellectual Property Claim" shall mean the assertion by any
Person
of a claim (whether asserted in writing, by
action, suit or proceeding or
otherwise) that Borrower's ownership, use,
marketing, sale or distribution of
any Inventory, Equipment, Intellectual
Property or other property or asset is
violative of any ownership of or right to
use any Intellectual Property of such
Person.
"Interest Period" shall mean the period provided for any
Eurodollar
Rate Loan pursuant to Section 2.2(b).
"Interest Rate Hedge" shall mean an interest rate exchange,
collar,
cap, swap, adjustable strike cap,
adjustable strike corridor or similar
agreements entered into by the Borrower or
its Subsidiaries in order to provide
protection to, or minimize the impact upon,
the Borrower, any guarantor and/or
their respective Subsidiaries of increasing
floating rates of interest
applicable to Indebtedness.
"Inventory" shall mean and include all of Borrower's now owned
or
hereafter acquired goods, merchandise and
other personal property, wherever
located, to be furnished under any
consignment arrangement, contract of service
or held for sale or lease, all raw
materials, work in process, finished goods
and materials and supplies of any kind,
nature or description which are or might
be used or consumed in Borrower's business
or used in selling or furnishing such
goods, merchandise and other personal
property, and all documents of title or
other documents representing them.
13
<PAGE>
"Inventory Advance Rate" shall have the meaning set forth in
Section
2.1(a)(y)(ii) hereof.
"Inventory Sublimit" shall mean $6,000,000.
"Investment Property" shall mean and include all of Borrower's
now
owned or hereafter acquired securities
(whether certificated or uncertificated),
securities entitlements, securities
accounts, commodities contracts and
commodities accounts.
"Leasehold Interests" shall mean all of Borrower's right, title
and
interest in and to the premises set forth
on Schedule 1.2(a) attached hereto.
"Lender" and "Lenders" shall have the meaning ascribed to such
term
in the preamble to this Agreement and shall
include each Person which becomes a
transferee, successor or assign of any
Lender.
"Lender-Provided Interest Rate Hedge" shall mean an Interest
Rate
Hedge which is provided by any Lender and
with respect to which the Agent
confirms meets the following requirements:
such Interest Rate Hedge (i) is
documented in a standard International Swap
Dealer Association Agreement, (ii)
provides for the method of calculating the
reimbursable amount of the provider's
credit exposure in a reasonable and
customary manner, and (iii) is entered into
for hedging (rather than speculative)
purposes. The liabilities of the Borrower
to the provider of any Lender-Provided
Interest Rate Hedge (the "Hedge
Liabilities") shall be "Obligations"
hereunder and otherwise treated as
Obligations for purposes of each of the
Other Documents. The Liens securing the
Hedge Liabilities shall be pari passu with
the Liens securing all other
Obligations under this Agreement and the
Other Documents.
"License Agreement" shall mean any agreement between Borrower and
a
Licensor pursuant to which Borrower is
authorized to use any Intellectual
Property in connection with the
manufacturing, marketing, sale or other
distribution of any Inventory of Borrower
or otherwise in connection with
Borrower's business operations.
"Licensor" shall mean any Person from whom Borrower obtains the
right to use (whether on an exclusive or
non-exclusive basis) any Intellectual
Property in connection with Borrower's
manufacture, marketing, sale or other
distribution of any Inventory or otherwise
in connection with Borrower's
business operations.
"Licensor/Agent Agreement" shall mean an agreement between Agent
and
a Licensor, in form and content
satisfactory to Agent, by which Agent is given
the unqualified right, vis-a-vis such
Licensor, to enforce Agent's Liens with
respect to and to dispose of Borrower's
Inventory with the benefit of any
Intellectual Property applicable thereto,
irrespective of Borrower's default
under any License Agreement with such
Licensor.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security
interest, lien (whether statutory or
otherwise), Charge, claim or encumbrance,
or preference, priority or other
14
<PAGE>
security agreement or preferential
arrangement held or asserted in respect of
any asset of any kind or nature whatsoever
including any conditional sale or
other title retention agreement, any lease
having substantially the same
economic effect as any of the foregoing,
and the filing of, or agreement to
give, any financing statement under the
Uniform Commercial Code or comparable
law of any jurisdiction.
"Lien
Waiver Agreement" shall mean an agreement which is executed in
favor of Agent by a Person who owns or
occupies premises at which any Collateral
may be located from time to time and by
which such Person shall waive any Lien
that such Person may ever have with respect
to any of the Collateral and shall
authorize Agent from time to time to enter
upon the premises to inspect or
remove the Collateral from such premises or
to use such premises to store or
dispose of such Inventory.
"Loans" shall mean, collectively, the Revolving Advances, the
Term
Loan, the Equipment Loans and the Converted
Equipment Loans.
"Material Adverse Effect" shall mean a material adverse effect
on
(a) the condition (financial or otherwise),
results of operations, assets,
business, properties or prospects of
Borrower or any guarantor, (b) Borrower's
ability to duly and punctually pay or
perform the Obligations in accordance with
the terms thereof, (c) the value of the
Collateral, or Agent's Liens on the
Collateral or the priority of any such Lien
or (d) the practical realization of
the benefits of Agent's and each Lender's
rights and remedies under this
Agreement and the Other Documents.
"Maximum Equipment Loan Amount" shall mean $1,500,000 less the
aggregate outstanding principal amount of
all Equipment Loans, whether or not
such have been converted to Converted
Equipment Loans.
"Maximum Loan Amount" shall mean $14,000,000 less repayments of
the
Term Loan, the Converted Equipment Loans
and Equipment Loans.
"Maximum Revolving Advance Amount" shall mean $9,000,000.
"Mortgage" shall mean that certain Mortgage and Security
Agreement
executed by Borrower in favor of the Agent
for the benefit of the Lenders with
regard to the Mortgaged Premises dated the
date hereof, together with all
extensions, renewals, amendments,
supplements, modifications, substitutions and
replacements thereto and thereof.
"Mortgaged Premises" shall mean, collectively, the real
property
located at (i) 1479 North Clinton Avenue,
Bay Shore, New York, (ii) 1480 North
Clinton Avenue, Bay Shore, New York and
(iii) 1460 North Fifth Avenue, Bay
Shore, New York.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined
in
Sections 3(37) and 4001(a)(3) of ERISA.
"Multiple Employer Plan" shall mean a Plan which has two or
more
contributing sponsors (including the
Borrower or any member of the Controlled
Group) at least two of whom are not under
common control, as such a plan is
described in Section 4064 of ERISA.
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"Note" shall mean collectively, the Term Note, , the Converted
Equipment Line of Credit Note, the
Equipment Line of Credit Note and the
Revolving Credit Note.
"Obligations" shall mean and include any and all loans,
advances,
debts, liabilities, obligations, covenants
and duties owing by the Borrower to
Lenders or Agent or to any other direct or
indirect subsidiary or affiliate of
Agent or any Lender of any kind or nature,
present or future (including any
interest accruing thereon after maturity,
or after the filing of any petition in
bankruptcy, or the commencement of any
insolvency, reorganization or like
proceeding relating to the Borrower,
whether or not a claim for post-filing or
post-petition interest is allowed in such
proceeding), whether or not evidenced
by any note, guaranty or other instrument,
whether arising under any agreement,
instrument or document, (including this
Agreement and the Other Documents)
whether or not for the payment of money,
whether arising by reason of an
extension of credit, opening of a letter of
credit, loan, equipment lease or
guarantee, under any interest or currency
swap, future, option or other similar
agreement, or in any other manner, whether
arising out of overdrafts or deposit
or other accounts or electronic funds
transfers (whether through automated
clearing houses or otherwise) or out of the
Agent's or any Lenders non-receipt
of or inability to collect funds or
otherwise not being made whole in connection
with depository transfer check or other
similar arrangements, whether direct or
indirect (including those acquired by
assignment or participation), absolute or
contingent, joint or several, due or to
become due, now existing or hereafter
arising, contractual or tortious,
liquidated or unliquidated, regardless of how
such indebtedness or liabilities arise or
by what agreement or instrument they
may be evidenced or whether evidenced by
any agreement or instrument, including,
but not limited to, any and all of
Borrower's Indebtedness and/or liabilities
under this Agreement, the Other Documents
or under any other agreement between
Agent or Lenders and Borrower and any
amendments, extensions, renewals or
increases and all costs and expenses of
Agent and any Lender incurred in the
documentation, negotiation, modification,
enforcement, collection or otherwise
in connection with any of the foregoing,
including but not limited to reasonable
attorneys' fees and expenses and all
obligations of Borrower to Agent or Lenders
to perform acts or refrain from taking any
action.
"Ordinary Course of Business" shall mean the ordinary course of
Borrower's business as conducted on the
Closing Date.
"Original Owners" shall mean Gales Industries Incorporated, a
Delaware corporation.
"Other Documents" shall mean the Note, the Mortgage, the
Assignment
of Rents, Leases and Profits, the
Environmental Indemnity Agreement, any
Lender-Provided Interest Rate Hedge and any
and all other agreements,
instruments and documents, including
guaranties, pledges, powers of attorney,
consents, interest or currency swap
agreements or other similar agreements and
all other writings heretofore, now or
hereafter executed by Borrower or any
guarantor and/or delivered to Agent or any
Lender in respect of the transactions
contemplated by this Agreement.
"Out-of-Formula Loans" shall have the meaning set forth in
Section
15.2(b).
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"Parent" of any Person shall mean a corporation or other entity
owning, directly or indirectly at least 50%
of the shares of stock or other
ownership interests having ordinary voting
power to elect a majority of the
directors of the Person, or other Persons
performing similar functions for any
such Person.
"Participant" shall mean each Person who shall be granted the
right
by any Lender to participate in any of the
Advances and who shall have entered
into a participation agreement in form and
substance satisfactory to such
Lender.
"Payment Office" shall mean initially Two Tower Center
Boulevard,
East Brunswick, New Jersey 08816;
thereafter, such other office of Agent, if
any, which it may designate by notice to
Borrower and to each Lender to be the
Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title
IV of ERISA or any successor.
"Pension Benefit Plan" shall mean at any time any employee
pension
benefit plan (including a Multiple Employer
Plan, but not a Multiemployer Plan)
which is covered by Title IV of ERISA or is
subject to the minimum funding
standards under Section 412 of the Code and
either (i) is maintained by any
member of the Controlled Group for
employees of any member of the Controlled
Group; or (ii) has at any time within the
preceding five years been maintained
by any entity which was at such time a
member of the Controlled Group for
employees of any entity which was at such
time a member of the Controlled Group.
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent
for
the benefit of Agent and Lenders; (b) Liens
for taxes, assessments or other
governmental charges not delinquent or
being contested in good faith and by
appropriate proceedings and with respect to
which proper reserves have been
taken by Borrower; provided, that, the Lien
shall have no effect on the priority
of the Liens in favor of Agent or the value
of the assets in which Agent has
such a Lien and a stay of enforcement of
any such Lien shall be in effect; (c)
Liens disclosed in the financial statements
referred to in Section 5.5, the
existence of which Agent has consented to
in writing; (d) deposits or pledges to
secure obligations under worker's
compensation, social security or similar laws,
or under unemployment insurance; (e)
deposits or pledges to secure bids,
tenders, contracts (other than contracts
for the payment of money), leases,
statutory obligations, surety and appeal
bonds and other obligations of like
nature arising in the Ordinary Course of
Business; (f) Liens arising by virtue
of the rendition, entry or issuance against
Borrower or any Subsidiary, or any
property of Borrower or any Subsidiary, of
any judgment, writ, order, or decree
for so long as each such Lien (a) is in
existence for less than 20 consecutive
days after it first arises or is being
Properly Contested and (b) is at all
times junior in priority to any Liens in
favor of Agent; (g) mechanics',
workers', materialmen's or other like Liens
arising in the Ordinary Course of
Business with respect to obligations which
are not due or which are being
contested in good faith by Borrower; (h)
Liens placed upon fixed assets
hereafter acquired to secure a portion of
the purchase price thereof, provided
that (x) any such lien shall not encumber
any other property of Borrower and (y)
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<PAGE>
the aggregate amount of Indebtedness
secured by such Liens incurred as a result
of such purchases during any fiscal year
shall not exceed the amount provided
for in Section 7.6; (i) other Liens
incidental to the conduct of Borrower's
business or the ownership of its property
and assets which were not incurred in
connection with the borrowing of money or
the obtaining of advances or credit,
and which do not in the aggregate
materially detract from Agent's or Lenders'
rights in and to the Collateral or the
value of Borrower's property or assets or
which do not materially impair the use
thereof in the operation of Borrower's
business; and (j) Liens disclosed on
Schedule 1.2.
"Person" shall mean any individual, sole proprietorship,
partnership, corporation, business trust,
joint stock company, trust,
unincorporated organization, association,
limited liability company, limited
liability partnership, institution, public
benefit corporation, joint venture,
entity or Governmental Body (whether
federal, state, county, city, municipal or
otherwise, including any instrumentality,
division, agency, body or department
thereof).
"Plan" shall mean any employee benefit plan within the meaning
of
Section 3(3) of ERISA (including a Pension
Benefit Plan), maintained for
employees of Borrower or any member of the
Controlled Group or any such Plan to
which Borrower or any member of the
Controlled Group is required to contribute
on behalf of any of its employees.
"PNC" shall have the meaning set forth in the preamble to this
Agreement and shall extend to all of its
successors and assigns.
"Properly Contested" shall mean, in the case of any Indebtedness
of
any Person (including any taxes) that is
not paid as and when due or payable by
reason of such Person's bona fide dispute
concerning its liability to pay same
or concerning the amount thereof, (i) such
Indebtedness is being properly
contested in good faith by appropriate
proceedings promptly instituted and
diligently conducted; (ii) such Person has
established appropriate reserves as
shall be required in conformity with GAAP;
(iii) the non-payment of such
Indebtedness will not have a Material
Adverse Effect and will not result in the
forfeiture of any assets of such Person;
(iv) no Lien is imposed upon any of
such Person's assets with respect to such
Indebtedness unless such Lien is at
all times junior and subordinate in
priority to the Liens in favor of the Agent
(except only with respect to property taxes
that have priority as a matter of
applicable state law) and enforcement of
such Lien is stayed during the period
prior to the final resolution or
disposition of such dispute; (v) if such
Indebtedness results from, or is determined
by the entry, rendition or issuance
against a Person or any of its assets of a
judgment, writ, order or decree,
enforcement of such judgment, writ, order
or decree is stayed pending a timely
appeal or other judicial review; and (vi)
if such contest is abandoned, settled
or determined adversely (in whole or in
part) to such Person, such Person
forthwith pays such Indebtedness and all
penalties, interest and other amounts
due in connection therewith.
"Purchasing Lender" shall have the meaning set forth in Section
16.3
hereof.
"RCRA" shall mean the
Resource Conservation
and Recovery
Act, 42
U.S.C. ss.ss. 6901 et seq., as same may be
amended from time to time.
"Real Property" shall mean all of Borrower's right, title and
interest in and to the owned and leased
premises identified on Schedule 4.19
hereto.
"Receivables" shall mean and include, as to Borrower, all of
Borrower's accounts, contract rights,
instruments (including those evidencing
indebtedness owed to Borrower by its
Affiliates), documents, chattel paper
(including electronic chattel paper),
general intangibles relating to accounts,
18
<PAGE>
drafts and acceptances, credit card
receivables and all other forms of
obligations owing to Borrower arising out
of or in connection with the sale or
lease of Inventory or the rendition of
services, all supporting obligations,
guarantees and other security therefor,
whether secured or unsecured, now
existing or hereafter created, and whether
or not specifically sold or assigned
to Agent hereunder.
"Receivables Advance Rate" shall have the meaning set forth in
Section 2.1(a)(y)(i) hereof.
"Release" shall have the meaning set forth in Section 5.7(c)(i)
hereof.
"Reportable Event" shall mean a reportable event described in
Section 4043(c) of ERISA or the regulations
promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least fifty
one
percent (51%) of the Advances and, if no
Advances are outstanding, shall mean
Lenders holding fifty one percent (51%) of
the Commitment Percentages; provided,
however, if there are fewer than three (3)
Lenders, Required Lenders shall mean
all Lenders.
"Reserve Percentage" shall mean as of any day the maximum
percentage
in effect on such day as prescribed by the
Board of Governors of the Federal
Reserve System (or any successor) for
determining the reserve requirements
(including supplemental, marginal and
emergency reserve requirements) with
respect to eurocurrency funding (currently
referred to as "Eurocurrency
Liabilities".
"Revolving Advances" shall mean Advances made other than
Equipment
Loans, the Converted Equipment Loans and
the Term Loan.
"Revolving Credit Note" shall mean the promissory note referred
to
in Section 2.1(a) hereof.
"Revolving Interest Rate" shall mean an interest rate per annum
equal to (a) the sum of the Alternate Base
Rate plus one quarter of one percent
(.25%)with respect to Domestic Rate Loans
and (b) the sum of the Eurodollar Rate
plus two and one half of one percent
(2.50%)with respect to Eurodollar Rate
Loans.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Section 20 Subsidiary" shall mean the Subsidiary of the bank
holding company controlling PNC, which
Subsidiary has been granted authority by
the Federal Reserve Board to underwrite and
deal in certain Ineligible
Securities.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Seller Note Payable Reserve" shall mean a reserve established
by
the Agent in the amount of $11,800.
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<PAGE>
"Settlement Date" shall mean the Closing Date and thereafter
Wednesday or Thursday of each week or more
frequently if Agent deems appropriate
unless such day is not a Business Day in
which case it shall be the next
succeeding Business Day.
"Subsidiary" of any Person shall mean a corporation or other
entity
of whose Equity Interests having ordinary
voting power (other than Equity
Interests having such power only by reason
of the happening of a contingency) to
elect a majority of the directors of such
corporation, or other Persons
performing similar functions for such
entity, are owned, directly or indirectly,
by such Person.
"Subsidiary Stock" shall mean all of the issued and outstanding
Equity Interests of any Subsidiary owned by
the Borrower (not to exceed 65% of
the Equity Interests of any Foreign
Subsidiary).
"Tangible Net Worth" shall mean, at a particular date, (a) the
aggregate amount of all assets of Borrower
as may be properly classified as such
in accordance with GAAP consistently
applied excluding such other assets as are
properly classified as intangible assets
under GAAP, less (b) the aggregate
amount of all liabilities of Borrower.
"Term" shall have the meaning set forth in Section 13.1 hereof.
"Term Loan" shall mean the Advances made pursuant to Section
2.4
hereof.
"Term Loan Rate" shall mean an interest rate per annum equal to
(a)
the sum of the Alternate Base Rate plus one
half of one percent (.50%) with
respect to Domestic Rate Loans and (b) the
sum of the Eurodollar Rate plus two
and three quarters of one percent (2.75%)
with respect to Eurodollar Rate Loans.
"Term Note" shall mean the promissory note described in Section
2.4
hereof.
"Termination Date" shall mean November 30, 2009 or such other
date
as the Lenders may agree in writing to
extend the Termination Date until,
without there being any obligation on the
part of the Lenders to extend the
Termination Date.
"Termination Event" shall mean (i) a Reportable Event with
respect
to any Plan or Multiemployer Plan; (ii) the
withdrawal of Borrower or any member
of the Controlled Group from a Plan or
Multiemployer Plan during a plan year in
which such entity was a "substantial
employer" as defined in Section 4001(a)(2)
of ERISA; (iii) the providing of notice of
intent to terminate a Plan in a
distress termination described in Section
4041(c) of ERISA; (iv) the institution
by the PBGC of proceedings to terminate a
Plan or Multiemployer Plan; (v) any
event or condition (a) which might
constitute grounds under Section 4042 of
ERISA for the termination of, or the
appointment of a trustee to administer, any
Plan or Multiemployer Plan, or (b) that may
result in termination of a
Multiemployer Plan pursuant to Section
4041A of ERISA; or (vi) the partial or
complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA, of
Borrower or any member of the Controlled
Group from a Multiemployer Plan.
"Toxic Substance" shall mean and include any material present on
the
Real Property or the Leasehold Interests
which has been shown to have
significant adverse effect on human health
or which is subject to regulation
20
<PAGE>
under the Toxic Substances Control Act
(TSCA), 15 U.S.C. ss.ss. 2601 et seq.,
applicable state law, or any other
applicable Federal or state laws now in force
or hereafter enacted relating to toxic
substances. "Toxic Substance" includes
but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based
paints.
"Trading with the Enemy Act" shall mean the foreign assets
control
regulations of the United States Treasury
Department (31 CFR, Subtitle B,
Chapter V, as amended) and any enabling
legislation or executive order relating
thereto.
"Transaction" shall mean the transaction evidenced by this
Agreement
and the Other Documents.
"Transferee" shall have the meaning set forth in Section
15.3(c)
hereof.
"Undrawn Availability" at a particular date shall mean an
amount
equal to (a) the lesser of (i) the Formula
Amount or (ii) the Maximum Revolving
Advance Amount, minus (b) the sum of (i)
the outstanding amount of Advances
(other than the Equipment Loans, Converted
Equipment Loans and Term Loan) plus
(ii) all amounts due and owing to
Borrower's trade creditors which are
outstanding beyond normal trade terms ,
plus (iii) fees and expenses for which
Borrower is liable but which have not been
paid or charged to Borrower's
Account.
"Uniform Commercial Code" shall have the meaning set forth in
Section 1.3 hereof.
"USA PATRIOT Act" shall mean the Uniting and Strengthening
America
by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act
of 2001, Public Law 107-56, as the same has
been, or shall hereafter be,
renewed, extended, amended or replaced.
"Week" shall mean the time period commencing with the opening
of
business on a Wednesday and ending on the
end of business the following Tuesday.
1.3 Uniform Commercial Code Terms. All terms used herein and
defined
in the Uniform Commercial Code as adopted
in the State of New York from time to
time (the "Uniform Commercial Code") shall
have the meaning given therein unless
otherwise defined herein. Without limiting
the foregoing, the terms "accounts",
"chattel paper", "instruments", "general
intangibles", "payment intangibles",
"supporting obligations", "securities",
"investment property", "documents",
"deposit accounts", "software", "letter of
credit rights", "inventory",
"equipment" and "fixtures", as and when
used in the description of Collateral
shall have the meanings given to such terms
in Articles 8 or 9 of the Uniform
Commercial Code. To the extent the
definition of any category or type of
collateral is expanded by any amendment,
modification or revision to the Uniform
Commercial Code, such expanded definition
will apply automatically as of the
date of such amendment, modification or
revision.
1.4 Certain Matters of Construction. The terms "herein",
"hereof"
and "hereunder" and other words of similar
import refer to this Agreement as a
whole and not to any particular section,
paragraph or subdivision. All
references herein to Articles, Sections,
Exhibits and Schedules shall be
construed to refer to Articles and Sections
of, and Exhibits and Schedules to,
this Agreement. Any pronoun used shall be
deemed to cover all genders. Wherever
appropriate in the context, terms used
herein in the singular also include the
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<PAGE>
plural and vice versa. All references to
statutes and related regulations shall
include any amendments of same and any
successor statutes and regulations.
Unless otherwise provided, all references
to any instruments or agreements to
which Agent is a party, including
references to any of the Other Documents,
shall include any and all modifications or
amendments thereto and any and all
extensions or renewals thereof. All
references herein to the time of day shall
mean the time in New York, New York. Unless
otherwise provided, all financial
calculations shall be performed with
Inventory valued on a first-in, first-out
basis. Whenever the words "including" or
"include" shall be used, such words
shall be understood to mean "including,
without limitation" or "include, without
limitation". A Default or Event of Default
shall be deemed to exist at all times
during the period commencing on the date
that such Default or Event of Default
occurs to the date on which such Default or
Event of Default is waived in
writing pursuant to this Agreement or, in
the case of a Default, is cured within
any period of cure expressly provided for
in this Agreement; and an Event of
Default shall "continue" or be "continuing"
until such Event of Default has been
waived in writing by the Required Lenders.
Any Lien referred to in this
Agreement or any of the Other Documents as
having been created in favor of
Agent, any agreement entered into by Agent
pursuant to this Agreement or any of
the Other Documents, any payment made by or
to or funds received by Agent
pursuant to or as contemplated by this
Agreement or any of the Other Documents,
or any act taken or omitted to be taken by
Agent, shall, unless otherwise
expressly provided, be created, entered
into, made or received, or taken or
omitted, for the benefit or account of
Agent and Lenders. Wherever the phrase
"to the best of Borrower's knowledge" or
words of similar import relating to the
knowledge or the awareness of Borrower are
used in this Agreement or Other
Documents, such phrase shall mean and refer
to (i) the actual knowledge of a
senior officer of Borrower or (ii) the
knowledge that a senior officer would
have obtained if he had engaged in good
faith and diligent performance of his
duties, including the making of such
reasonably specific inquiries as may be
necessary of the employees or agents of
Borrower and a good faith attempt to
ascertain the existence or accuracy of the
matter to which such phrase relates.
All covenants hereunder shall be given
independent effect so that if a
particular action or condition is not
permitted by any of such covenants, the
fact that it would be permitted by an
exception to, or otherwise within the
limitations of, another covenant shall not
avoid the occurrence of a default if
such action is taken or condition exists.
In addition, all representations and
warranties hereunder shall be given
independent effect so that if a particular
representation or warranty proves to be
incorrect or is breached, the fact that
another representation or warranty
concerning the same or similar subject matter
is correct or is not breached will not
affect the incorrectness of a breach of a
representation or warranty hereunder.
II. ADVANCES, PAYMENTS.
2.1 Revolving Advances. (a) Subject to the terms and conditions
set
forth in this Agreement including Section
2.1(b), each Lender, severally and not
jointly, will make Revolving Advances to
Borrower in aggregate amounts
outstanding at any time equal to such
Lender's Commitment Percentage of the
lesser of (x) the Maximum Revolving Advance
Amount or (y) an amount equal to the
sum of:
(i) up to 85%, subject to the provisions of Section
2.1(b) hereof ("Receivables Advance Rate"), of Eligible
Receivables, plus
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<PAGE>
(ii) up to the lesser of (A) 50%, subject to the
provisions of Section 2.1(b) hereof, of the value of the
Eligible Inventory, (B) 85% of the appraised net orderly
liquidation value of Eligible Inventory (as evidenced by an
Inventory appraisal satisfactory to Agent in its sole
discretion exercised in good faith) or (C) the Inventory
Sublimit in the aggregate at any one time ("Inventory Advance
Rate" and together with the Receivables Advance Rate,
collectively, the "Advance Rates"), minus
(iii) such reserves as Agent may reasonably deem proper
and necessary from time to time including, but not limited to,
the Seller Note Payable Reserve.
The amount
derived from the sum of (x) Sections 2.1(a)(y)(i) and (ii)
minus (y) Section 2.1 (a)(y)(iii) at any
time and from time to time shall be
referred to as the "Formula Amount". The
Revolving Advances shall be evidenced
by one or more secured promissory notes
(collectively, the "Revolving Credit
Note") substantially in the form attached
hereto as Exhibit 2.1(a).
(b) Discretionary Rights. The Advance Rates may be increased
or decreased by Agent at any time and from
time to time in the exercise of its
reasonable discretion. Borrower consents to
any such increases or decreases and
acknowledges that decreasing the Advance
Rates or increasing or imposing
reserves may limit or restrict Advances
requested by Borrower. The rights of
Agent under this subsection are subject to
the provisions of Section 15.2(b).
2.2 Procedure for Revolving Advances and Equipment Loan
Borrowing.
(a) Borrower may notify Agent prior to
10:00 a.m. on a Business Day of
Borrower's request to incur, on that day, a
Revolving Advance hereunder. Subject
to the satisfaction of the conditions set
forth in Section 8.3 hereof, in the
event Borrower desires an Equipment Loan,
Borrower shall give Agent at least
three (3) Business Days' prior written
notice. Should any amount required to be
paid as interest hereunder, or as fees or
other charges under this Agreement or
any other agreement with Agent or Lenders,
or with respect to any other
Obligation, become due, same shall be
deemed a request for a Revolving Advance
as of the date such payment is due, in the
amount required to pay in full such
interest, fee, charge or Obligation under
this Agreement or any other agreement
with Agent or Lenders, and such request
shall be irrevocable.
(b) Notwithstanding the provisions of subsection (a) above, in
the event Borrower desires to obtain a
Eurodollar Rate Loan, Borrower shall give
Agent written notice by no later than 10:00
a.m. on the day which is three (3)
Business Days prior to the date such
Eurodollar Rate Loan is to be borrowed,
specifying (i) the date of the proposed
borrowing (which shall be a Business
Day), (ii) the type of borrowing and the
amount on the date of such Advance to
be borrowed, which amount shall be an
integral multiple of $250,000, and (iii)
the duration of the first Interest Period
therefor. Interest Periods for
Eurodollar Rate Loans shall be for one, two
or three months; provided, if an
Interest Period would end on a day that is
not a Business Day, it shall end on
the next succeeding Business Day unless
such day falls in the next succeeding
calendar month in which case the Interest
Period shall end on the next preceding
Business Day. No Eurodollar Rate Loan shall
be made available to Borrower during
the continuance of a Default or an Event of
Default. After giving effect to each
requested Eurodollar Rate Loan, including
those which are converted from a
Domestic Rate Loan under Section 2.2(d),
there shall not be outstanding more
than four (4) Eurodollar Rate Loans, in the
aggregate.
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<PAGE>
(c) Each Interest Period of a Eurodollar Rate Loan shall
commence on the date such Eurodollar Rate
Loan is made and shall end on such
date as Borrower may elect as set forth in
subsection (b)(iii) above provided
that the exact length of each Interest
Period shall be determined in accordance
with the practice of the interbank market
for offshore Dollar deposits and no
Interest Period shall end after the last
day of the Term.
(d) Borrower shall elect the initial Interest Period
applicable to a Eurodollar Rate Loan by its
notice of borrowing given to Agent
pursuant to Section 2.2(b) or by its notice
of conversion given to Agent
pursuant to Section 2.2(d), as the case may
be. Borrower shall elect the
duration of each succeeding Interest Period
by giving irrevocable written notice
to Agent of such duration not later than
10:00 a.m. on the day which is three
(3) Business Days prior to the last day of
the then current Interest Period
applicable to such Eurodollar Rate Loan. If
Agent does not receive timely notice
of the Interest Period elected by Borrower,
Borrower shall be deemed to have
elected to convert to a Domestic Rate Loan
subject to Section 2.2(d)
hereinbelow.
(e) At its option and upon written notice given prior to 10:00
a.m. (New York time) at least three (3)
Business Days' prior to the date of such
prepayment, Borrower may prepay the
Eurodollar Rate Loans in whole at any time
or in part from time to time with accrued
interest on the principal being
prepaid to the date of such repayment.
Borrower shall specify the date of
prepayment of Advances which are Eurodollar
Rate Loans and the amount of such
prepayment. In the event that any
prepayment of a Eurodollar Rate Loan is
required or permitted on a date other than
the last Business Day of the then
current Interest Period with respect
thereto, Borrower shall indemnify Agent and
Lenders therefor in accordance with Section
2.2(f) hereof.
(f) Borrower shall indemnify Agent and Lenders and hold Agent
and Lenders harmless from and against any
and all losses or expenses that Agent
and Lenders may sustain or incur as a
consequence of any prepayment, conversion
of or any default by Borrower in the
payment of the principal of or interest on
any Eurodollar Rate Loan or failure by
Borrower to complete a borrowing of, a
prepayment of or conversion of or to a
Eurodollar Rate Loan after notice thereof
has been given, including, but not limited
to, any interest payable by Agent or
Lenders to lenders of funds obtained by it
in order to make or maintain its
Eurodollar Rate Loans hereunder. A
certificate as to any additional amounts
payable pursuant to the foregoing sentence
submitted by Agent or any Lender to
Borrower shall be conclusive absent
manifest error.
(g) Notwithstanding any other provision hereof, if any
Applicable Law, treaty, regulation or
directive, or any change therein or in the
interpretation or application thereof,
shall make it unlawful for any Lender
(for purposes of this subsection (g), the
term "Lender" shall include any Lender
and the office or branch where any Lender
or any corporation or bank controlling
such Lender makes or maintains any
Eurodollar Rate Loans) to make or maintain
its Eurodollar Rate Loans, the obligation
of Lenders to make Eurodollar Rate
Loans hereunder shall forthwith be
cancelled and Borrower shall, if any affected
Eurodollar Rate Loans are then outstanding,
promptly upon request from Agent,
either pay all such affected Eurodollar
Rate Loans or convert such affected
Eurodollar Rate Loans into loans of another
type. If any such payment or
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conversion of any Eurodollar Rate Loan is
made on a day that is not the last day
of the Interest Period applicable to such
Eurodollar Rate Loan, Borrower shall
pay Agent, upon Agent's request, such
amount or amounts as may be necessary to
compensate Lenders for any loss or expense
sustained or incurred by Lenders in
respect of such Eurodollar Rate Loan as a
result of such payment or conversion,
including (but not limited to) any interest
or other amounts payable by Lenders
to lenders of funds obtained by Lenders in
order to make or maintain such
Eurodollar Rate Loan. A certificate as to
any additional amounts payable
pursuant to the foregoing sentence
submitted by Lenders to Borrower shall be
conclusive absent manifest error.
2.3 Disbursement of Advance Proceeds. All Advances shall be
disbursed from whichever office or other
place Agent may designate from time to
time and, together with any and all other
Obligations of Borrower to Agent or
Lenders, shall be charged to Borrower's
Account on Agent's books. During the
Term, Borrower may use the Revolving
Advances by borrowing, prepaying and
reborrowing, all in accordance with the
terms and conditions hereof. The
proceeds of each Revolving Advance
requested by Borrower or deemed to have been
requested by Borrower under Section 2.2(a)
hereof shall, with respect to
requested Revolving Advances to the extent
Lenders make such Revolving Advances,
be made available to Borrower on the day so
requested by way of credit to
Borrower's operating account at PNC, or
such other bank as Borrower may
designate following notification to Agent,
in immediately available federal
funds or other immediately available funds
or, with respect to Revolving
Advances deemed to have been requested by
Borrower, be disbursed to Agent to be
applied to the outstanding Obligations
giving rise to such deemed request.
2.4 Loans.
(a) Term Loan. Subject to the terms and conditions of this
Agreement, each Lender, severally and not
jointly, will make a Term Loan to
Borrower in the sum equal to such Lender's
Commitment Percentage of $3,500,000.
The Term Loan shall be advanced on the
Closing Date and shall be, with respect
to principal, payable as follows, subject
to acceleration upon the occurrence of
an Event of Default under this Agreement or
termination of this Agreement:
eighty four (84) consecutive monthly
principal installments, the first eighty
three (83) of which shall be in the amount
of $31,667 commencing on the first
Business Day of January, 2006, and
continuing on the first Business Day of each
month thereafter, with an eighty fourth
(84th) and final payment of any unpaid
balance of principal and interest payable
on the first Business Day of December,
2012, subject to mandatory prepayment and
acceleration upon the occurrence of an
Event of Default hereunder or earlier
termination of the Loan Agreement pursuant
to the terms hereof. Notwithstanding
anything to the contrary herein, in the
Term Note and/or in any Other Document, all
outstanding principal and interest
hereunder is due and payable on the
Termination Date in the event that the
Termination Date is before the first
Business Day of December, 2012. The Term
Loan shall be evidenced by one or more
secured promissory notes (collectively,
the "Term Note") in substantially the form
attached hereto as Exhibit 2.4a.
(b) Equipment Loans. Subject to the terms and conditions of
this Agreement, each Lender, severally and
not jointly, shall, from time to
time, make available Advances to Borrower
(each, an "Equipment Loan" and
collectively, the "Equipment Loans") to
finance Borrower's purchase of Equipment
for use in Borrower's business. All such
Equipment Loans shall be in such
amounts as are requested by Borrower, but
in no event shall any Equipment Loan
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exceed eighty percent (80%) of the net
invoice cost (excluding taxes, shipping,
delivery, handling, installation, overhead
and other so called "soft" costs) of
the Equipment then to be purchased by
Borrower and the total amount of all
Equipment Loans outstanding hereunder
(whether or not such Equipment Loans have
been converted to a Converted Equipment
Loan) shall not exceed, in the
aggregate, the Maximum Equipment Loan
Amount. Once repaid (whether or not such
Equipment Loans have been converted to and
repaid as a Converted Equipment Loan)
Equipment Loans may not be reborrowed.
Notwithstanding anything in the contrary
herein, the maximum amount of Equipment
Loans advanced by the Lenders in any
fiscal year shall not exceed $750,000. The
Equipment Loans shall be evidenced by
a secured promissory note (the "Equipment
Line of Credit Note"), executed by
Borrower in substantially the form annexed
hereto as Exhibit 2.4(b)(i). Until
the Termination Date, Advances constituting
Equipment Loans shall be accumulated
during at the end of each fiscal year of
the Borrower (each a "Borrowing
Period") during the Term. Notwithstanding
the foregoing, the first Borrowing
Period shall commence on the Closing Date
and end on December 31, 2006. Each
subsequent Borrowing Period shall consist
of twelve month periods commencing on
January 1, 2007 provided, however, that no
Borrowing Period shall extend beyond
the Termination Date. During each Borrowing
Period, the Borrower shall pay to
the Agent interest accrued on the
outstanding balance of the Equipment Loans on
the first day of each month. At the end of
each Borrowing Period (each a
"Conversion Date"), the sum of all
Equipment Loans made during the Borrowing
Period shall be converted to a term loan
(each a "Converted Equipment Loan") and
shall amortize on the basis of a sixty (60)
month schedule (such amount
converted shall be referred to as the
"Amortization Amount") provided, however,
if, for any such Borrowing Period, the sum
of all Equipment Loans made during
such Borrowing Period is less than
$500,000, then such Equipment Loans shall not
convert to a Converted Equipment Loan until
the earliest Conversion Date
thereafter on which the sum of all
outstanding Equipment Loans are equal to or
greater than $500,000. Each Converted
Equipment Loan shall be, with respect to
principal, payable in equal monthly
installments based upon the amortization
schedule set forth above, commencing on the
first day of the first month
following the applicable Conversion Date
and continuing on the first day of each
month thereafter with the balance payable
upon the first day of the sixtieth
(60th) month thereafter, subject to
acceleration upon the occurrence and during
the continuance of an Event of Default
under this Agreement or termination of
this Agreement. Notwithstanding anything to
the contrary herein, in any
Converted Equipment Line of Credit Note
and/or in any Other Document, all
outstanding principal and interest
hereunder is due and payable on the
Termination Date. Each Converted Equipment
Loan shall be evidenced by a secured
promissory note (the "Converted Equipment
Line of Credit Note"), executed by
Borrower in substantially the form annexed
hereto as Exhibit 2.4(b)(ii).
2.5 Maximum Advances. The aggregate balance of Revolving
Advances
outstanding at any time shall not exceed
the lesser of (a) the Maximum Revolving
Advance Amount or (b) the Formula
Amount.
2.6 Repayment of
Advances.
(a) The Revolving Advances shall be due and payable in full on
the Termination Date subject to earlier
prepayment as herein provided. The Term
Loan shall be due and payable as provided
in Section 2.4(a) hereof and in the
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Term Note, subject to mandatory prepayments
as herein set forth provided,
however, notwithstanding anything to the
contrary herein or in any Other
Document, all outstanding principal and
interest with regard to the Term Note
shall be due and payable on the Termination
Date. The Equipment Loans shall be
due and payable as provided in Section
2.4(b) hereof and in the Equipment Line
of Credit Note, subject to mandatory
prepayments as herein provided, however,
notwithstanding anything to the contrary
herein or in any Other Document, all
outstanding principal and interest with
regard to the Equipment Line of Credit
Note shall be due and payable on the
Termination Date. The Converted Equipment
Loans shall be due and payable as provided
in Section 2.4(b) and in the
Converted Equipment Line of Credit Note,
subject to mandatory prepayments as
herein provided, however, notwithstanding
anything to the contrary herein or in
any Other Document, all outstanding
principal and interest with regard to the
Converted Equipment Line of Credit Note
shall be due and payable on the
Termination Date.
(b) Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment
relating to and/or proceeds of
Collateral may not be collectible by Agent
on the date received. In
consideration of Agent's agreement to
conditionally credit Borrower's Account as
of the Business Day on which Agent receives
those items of payment, Borrower
agrees that, in computing the charges under
this Agreement, all items of payment
shall be deemed applied by Agent on account
of the Obligations one (1) Business
Day after (i) the Business Day Agent
receives such payments via wire transfer or
electronic depository check or (ii) in the
case of payments received by Agent in
any other form, the Business Day such
payment constitutes good funds in Agent's
account. Agent is not, however, required to
credit Borrower's Account for the
amount of any item of payment which is
unsatisfactory to Agent and Agent may
charge Borrower's Account for the amount of
any item of payment which is
returned to Agent unpaid.
(c) All payments of principal, interest and other amounts
payable hereunder, or under any of the
Other Documents shall be made to Agent at
the Payment Office not later than 1:00 P.M.
(New York time) on the due date
therefor in lawful money of the United
States of America in federal funds or
other funds immediately available to Agent.
Agent shall have the right to
effectuate payment on any and all
Obligations due and owing hereunder by
charging Borrower's Account or by making
Advances as provided in Section 2.2
hereof.
(d) Borrower shall pay principal, interest, and all other
amounts payable hereunder, or under any
related agreement, without any deduction
whatsoever, including, but not limited to,
any deduction for any setoff or
counterclaim.
2.7 Repayment of Excess Advances. The aggregate balance of
Advances
outstanding at any time in excess of the
maximum amount of Advances permitted
hereunder shall be immediately due and
payable without the necessity of any
demand, at the Payment Office, whether or
not a Default or Event of Default has
occurred.
2.8 Statement of Account. Agent shall maintain, in accordance
with
its customary procedures, a loan account
("Borrower's Account") in the name of
Borrower in which shall be recorded the
date and amount of each Advance made by
Agent and the date and amount of each
payment in respect thereof; provided,
however, the failure by Agent to record the
date and amount of any Advance shall
not adversely affect Agent or any Lender.
Each month, Agent shall send to
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Borrower a statement showing the accounting
for the Advances made, payments made
or credited in respect thereof, and other
transactions between Agent and
Borrower, during such month. The monthly
statements shall be deemed correct and
binding upon Borrower in the absence of
manifest error and shall constitute an
account stated between Lenders and Borrower
unless Agent receives a written
statement of Borrower's specific exceptions
thereto within thirty (30) days
after such statement is received by
Borrower. The records of Agent with respect
to the loan account shall be conclusive
evidence absent manifest error of the
amounts of Advances and other charges
thereto and of payments applicable
thereto.
2.9 Additional Payments. Any sums expended by Agent or any
Lender
due to Borrower's failure to perform or
comply with its obligations under this
Agreement or any Other Document including
Borrower's obligations under Sections
4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof,
may be charged to Borrower's Account
as a Revolving Advance and added to the
Obligations.
2.10 Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances shall be advanced
according to the applicable Commitment
Percentages of Lenders. The Term Loan
shall be advanced according to the
Commitment Percentages of Lenders. Each
borrowing of Equipment Loans shall be
advanced according to the applicable
Commitment Percentages of Lenders. The
Converted Equipment Loan shall be
advanced according to the applicable
Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrower on
account of the principal of and interest on
the Revolving Advances, shall be
applied to the Revolving Advances pro rata
according to the applicable
Commitment Percentages of Lenders. Each
payment (including each prepayment) by
Borrower on account of the principal of and
interest on the Term Note, shall be
made from or to, or applied to that portion
of the Term Loan evidenced by the
Term Note pro rata according to the
Commitment Percentages of Lenders. Each
payment (including each prepayment) by
Borrower on account of the principal of
and interest on the Equipment Note, shall
be applied to that portion of the
Equipment Loan evidenced by the Equipment
Note pro rata according to the
Commitment Percentages of Lenders. Each
payment (including each prepayment) by
Borrower on account of the principal of and
interest on the Converted Equipment
Line of Credit Note, shall be applied to
that portion of the Converted Equipment
Loan evidenced by the Converted Equipment
Line of Credit Note pro rata according
to the Commitment Percentages of Lenders.
Except as expressly provided herein,
all payments (including prepayments) to be
made by Borrower on account of
principal, interest and fees shall be made
without set off or counterclaim and
shall be made to Agent on behalf of the
Lenders to the Payment Office, in each
case on or prior to 1:00 P.M., New York
time, in Dollars and in immediately
available funds.
(c)
(i) Notwithstanding anything to the contrary contained
in Sections 2.10(a) and (b) hereof, commencing with the first
Business Day following the Closing Date, each borrowing of
Revolving Advances shall be advanced by Agent and each payment
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<PAGE>
by Borrower on account of Revolving Advances shall be applied
first to those Revolving Advances advanced by Agent. On or
before 1:00 P.M., New York time, on each Settlement Date
commencing with the first Settlement Date following the
Closing Date, Agent and Lenders shall make certain payments as
follows: (I) if the aggregate amount of new Revolving Advances
made by Agent during the preceding Week (if any) exceeds the
aggregate amount of repayments applied to outstanding
Revolving Advances during such preceding Week, then each
Lender shall provide Agent with funds in an amount equal to
its applicable Commitment Percentage of the difference between
(w) such Revolving Advances and (x) such repayments and (II)
if the aggregate amount of repayments applied to outstanding
Revolving Advances during such Week exceeds the aggregate
amount of new Revolving Advances made during such Week, then
Agent shall provide each Lender with funds in an amount equal
to its applicable Commitment Percentage of the difference
between (y) such repayments and (z) such Revolving Advances.
(ii) Each Lender shall be entitled to earn interest at
the applicable Contract Rate on outstanding Advances which it
has funded.
(iii) Promptly following each Settlement Date, Agent
shall submit to each Lender a certificate with respect to
payments received and Advances made during the Week
immediately preceding such Settlement Date. Such certificate
of Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or Participant (a "benefited Lender") shall
at any time receive any payment of all or
part of its Advances, or interest
thereon, or receive any Collateral in
respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater
proportion than any such payment to
and Collateral received by any other
Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and
such greater proportionate payment
or receipt of Collateral is not expressly
permitted hereunder, such benefited
Lender shall purchase for cash from the
other Lenders a participation in such
portion of each such other Lender's
Advances, or shall provide such other Lender
with the benefits of any such Collateral,
or the proceeds thereof, as shall be
necessary to cause such benefited Lender to
share the excess payment or benefits
of such Collateral or proceeds ratably with
each of the other Lenders; provided,
however, that if all or any portion of such
excess payment or benefits is
thereafter recovered from such benefited
Lender, such purchase shall be
rescinded, and the purchase price and
benefits returned, to the extent of such
recovery, but without interest. Each Lender
so purchasing a portion of another
Lender's Advances may exercise all rights
of payment (including rights of
set-off) with respect to such portion as
fully as if such Lender were the direct
holder of such portion.
(e) Unless Agent shall have been notified by telephone,
confirmed in writing, by any Lender that
such Lender will not make the amount
which would constitute its applicable
Commitment Percentage of the Advances
available to Agent, Agent may (but shall
not be obligated to) assume that such
Lender shall make such amount available to
Agent on the next Settlement Date
and, in reliance upon such assumption, make
available to Borrower a
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<PAGE>
corresponding amount. Agent will promptly
notify Borrower of its receipt of any
such notice from a Lender. If such amount
is made available to Agent on a date
after such next Settlement Date, such
Lender shall pay to Agent on demand an
amount equal to the product of (i) the
daily average Federal Funds Effective
Rate (computed on the basis of a year of
360 days) during such period as quoted
by Agent, times (ii) such amount, times
(iii) the number of days from and
including such Settlement Date to the date
on which such amount becomes
immediately available to Agent. A
certificate of Agent submitted to any Lender
with respect to any amounts owing under
this paragraph (e) shall be conclusive,
in the absence of manifest error. If such
amount is not in fact made available
to Agent by such Lender within three (3)
Business Days after such Settlement
Date, Agent shall be entitled to recover
such an amount, with interest thereon
at the rate per annum then applicable to
such Revolving Advances hereunder, on
demand from Borrower; provided, however,
that Agent's right to such recovery
shall not prejudice or otherwise adversely
affect Borrower's rights (if any)
against such Lender.
2.11 Mandatory Prepayments. Subject to Section 4.3 hereof, when
Borrower sells or otherwise disposes of any
Collateral other than Inventory in
the Ordinary Course of Business, Borrower
shall repay the Advances in an amount
equal to the net proceeds of such sale
(i.e., gross proceeds less the reasonable
costs of such sales or other dispositions),
such repayments to be made promptly
but in no event more than one (1) Business
Day following receipt of such net
proceeds, and until the date of payment,
such proceeds shall be held in trust
for Agent. The foregoing shall not be
deemed to be implied consent to any such
sale otherwise prohibited by the terms and
conditions hereof. Such repayments
shall be applied (i) if the Collateral
disposed of is Equipment the purchase of
which was financed by an Equipment Loan,
(x) first, to the outstanding principal
installments of the Equipment Loans and/or
the Converted Equipment Loans in the
inverse order of the maturities thereof,
(y) second, to the outstanding
principal installments of the Term Loan in
the inverse order of the maturities
thereof and (z) third, to the remaining
Advances in such order as Agent may
determine, subject to Borrower's ability to
reborrow Revolving Advances in
accordance with the terms hereof, (ii) if
the Collateral disposed of is
Equipment other than as set forth in (i)
above, (x) first, to the outstanding
principal installments of the Term Loan in
the inverse order of the maturities
thereof, (y) second, to the outstanding
principal installments of the Equipment
Loans and/or the Converted Equipment Loans
in the inverse order of the
maturities thereof and (z) third, to the
remaining Advances in such order as
Agent may determine, subject to Borrower's
ability to reborrow Revolving
Advances in accordance with the terms
hereof, or (ii) if the Collateral disposed
of is the Mortgaged Premises, (y) first, to
the outstanding principal
installments of the Term Loan in the
inverse order of the maturities thereof up
to $2,800,000, and (z) second, to the
Revolving Advances in such order as Agent
may determine, subject to Borrower's
ability to reborrow Revolving Advances in
accordance with the terms hereof.
2.12 Use of Proceeds. Borrower shall apply the proceeds of
Advances
to (i) purchase the Mortgaged Premises,
(ii) repay existing indebtedness owed to
Citibank, (iii) pay fees and expenses
relating to this transaction, and (iv)
provide for its working capital needs.
Without
limiting the generality of Section 2.12(a) above, neither the
Borrower nor any other Person which may in
the future become party to this
Agreement or the Other Documents as
Borrower, intends to use nor shall they use
any portion of the proceeds of the
Advances, directly or indirectly, for any
purpose in violation of the Trading with
the Enemy Act.
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2.13 Defaulting Lender.
(a) Notwithstanding anything to the contrary contained herein,
in the event any Lender (x) has refused
(which refusal constitutes a breach by
such Lender of its obligations under this
Agreement) to make available its
portion of any Advance or (y) notifies
either Agent or Borrower that it does not
intend to make available its portion of any
Advance (if the actual refusal would
constitute a breach by such Lender of its
obligations under this Agreement)
(each, a "Lender Default"), all rights and
obligations hereunder of such Lender
(a "Defaulting Lender") as to which a
Lender Default is in effect and of the
other parties hereto shall be modified to
the extent of the express provisions
of this Section 2.13 while such Lender
Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not
Defaulting Lenders based on their
respective Commitment Percentages, and no
Commitment Percentage of any Lender or
any pro rata share of any Advances required
to be advanced by any Lender shall
be increased as a result of such Lender
Default. Amounts received in respect of
principal of any type of Advances shall be
applied to reduce the applicable
Advances of each Lender pro rata based on
the aggregate of the outstanding
Advances of that type of all Lenders at the
time of such application; provided,
that, such amount shall not be applied to
any Advances of a Defaulting Lender at
any time when, and to the extent that, the
aggregate amount of Advances of any
Non-Defaulting Lender exceeds such
Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve,
disapprove, consent to or vote on any
matters relating to this Agreement and the
Other Documents. All amendments,
waivers and other modifications of this
Agreement and the Other Documents may be
made without regard to a Defaulting Lender
and, for purposes of the definition
of "Required Lenders", a Defaulting Lender
shall be deemed not to be a Lender
and not to have Advances outstanding.
(d) Other than as expressly set forth in this Section 2.13,
the rights and obligations of a Defaulting
Lender (including the obligation to
indemnify Agent) and the other parties
hereto shall remain unchanged. Nothing in
this Section 2.13 shall be deemed to
release any Defaulting Lender from its
obligations under this Agreement and the
Other Documents, shall alter such
obligations, shall operate as a waiver of
any default by such Defaulting Lender
hereunder, or shall prejudice any rights
which Borrower, Agent or any Lender may
have against any Defaulting Lender as a
result of any default by such Defaulting
Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to
the satisfaction of Agent the breach which
caused a Lender to become a
Defaulting Lender, such Defaulting Lender
shall no longer be a Defaulting Lender
and shall be treated as a Lender under this
Agreement.
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III. INTEREST AND FEES.
3.1 Interest. Interest on Advances shall be payable in arrears
on
the first day of each month with respect to
Domestic Rate Loans and, with
respect to Eurodollar Rate Loans, at the
end of each Interest Period or, for
Eurodollar Rate Loans with an Interest
Period in excess of three months, at the
earlier of (a) each three months from the
commencement of such Eurodollar Rate
Loan or (b) the end of the Interest Period.
Interest charges shall be computed
on the actual principal amount of Advances
outstanding during the month at a
rate per annum equal to (i) with respect to
Revolving Advances, the applicable
Revolving Interest Rate and (ii) with
respect to the Term Loan, the applicable
Term Loan Rate and (iii) with respect to
the Equipment Loans and the Converted
Equipment Loan, the applicable Equipment
Line of Credit Rate (as applicable, the
"Contract Rate"). Whenever, subsequent to
the date of this Agreement, the
Alternate Base Rate is increased or
decreased, the applicable Contract Rate for
Domestic Rate Loans shall be similarly
changed without notice or demand of any
kind by an amount equal to the amount of
such change in the Alternate Base Rate
during the time such change or changes
remain in effect. The Eurodollar Rate
shall be adjusted with respect to
Eurodollar Rate Loans without notice or demand
of any kind on the effective date of any
change in the Reserve Percentage as of
such effective date. Upon and after the
occurrence of an Event of Default, and
during the continuation thereof, (i) at the
option of Agent or at the direction
of Required Lenders, the Obligations other
than Eurodollar Rate Loans shall bear
interest at the applicable Contract Rate
for Domestic Loans plus two percent
(2%) per annum and (ii) Eurodollar Rate
Loans shall bear interest at the
Revolving Interest Rate for Eurodollar Rate
Loans plus two percent (2%) per
annum (as applicable, the "Default
Rate").
3.2 Closing Fee and Facility Fee.
(a) Closing Fee. Upon the execution of this Agreement,
Borrower
