AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT COHEN BROTHERS, LLC as Borrower with

EXHIBIT 10.25

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

COHEN BROTHERS, LLC

as Borrower

with

TD BANK, N.A.,

as Agent and Issuing Bank

and

THE FINANCIAL INSTITUTIONS

NOW OR HEREAFTER LISTED ON SCHEDULE A,

as Lenders

June 1, 2009

TABLE OF CONTENTS

 

 

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EXHIBITS AND SCHEDULES

 

 

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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This Amended and Restated Loan and Security Agreement (“Agreement”) is dated as of the 1st day of June, 2009, by and among Cohen Brothers, LLC, a Delaware limited liability company (“Borrower”), TD Bank, N.A. , a national banking association, in its capacity as agent (“Agent”), TD Bank, N.A., in its capacity as issuing bank (“Issuing Bank”) and each of the financial institutions which are now or hereafter identified as Lenders on Schedule A attached hereto and made a part of this Agreement (as such Schedule may be amended, modified or replaced from time to time), (each such financial institution, individually each being a “Lender” and collectively all being “Lenders”).

BACKGROUND

A. Borrower is a party to a certain Loan and Security Agreement dated July 27, 2007, with various financial institutions (“Existing Lenders”) and Agent and Issuing Bank, as successor by merger to Commerce Bank, N.A. (“Existing Loan Agreement”), pursuant to which Existing Lenders provided to Borrower a revolving credit facility in the maximum principal amount of $200,000,000.

B. Borrower has requested that Agent, Issuing Bank and Lenders amend and restate the Existing Loan Agreement in its entirety. The parties desire to define the terms and conditions of their relationship and reduce them to writing.

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

SECTION 1. DEFINITIONS AND INTERPRETATION

1.1 Terms Defined : As used in this Agreement, the following terms have the following respective meanings:

Acceptance Date – Section 10.12.

Adjusted LIBOR Rate – For the LIBOR Interest Period for each LIBOR Rate Loan comprising part of the same borrowing (including conversions, extensions and renewals), a per annum interest rate determined pursuant to the following formula:

 

Adjusted Revolving Credit Base Rate – The higher of (i) the Base Rate plus the Base Rate Applicable Margin and (ii) eight and one half percent (8.50%).

Advance(s) – Any monies advanced or credit extended to Borrower by any Lender under the Revolving Credit, including without limitation cash advances and Letters of Credit.

Advance Request – Section 2.5(b)(i).

Affiliate – With respect to any Person, (a) any Person which, directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with,

such Person, or (b) any Person who is a director or officer (i) of such Person or (ii) of any Subsidiary of such Person. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 10% or more of the Capital Stock having ordinary voting power for the election of directors (or comparable equivalent) of such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. Control may be by ownership, contract, or otherwise.

Affirmation of Security Documents – That certain Affirmation of Existing Security Documents to be executed by Borrower and Subsidiary Guarantors in favor of Agent, in form and substance satisfactory to Agent, on or prior to the Closing Date.

Aggregate Senior Callable Management Fees – At any time, the aggregate net present value of all senior management fees for the period after the non-callable period but prior to the auction call period (other than Excluded Management Fees) for any Collateralized Debt Offering solely related to bank and insurance trust preferred securities, to which Borrower and Subsidiary Guarantors are entitled pursuant to all Management Agreements in effect from time to time; provided that Agent, on behalf of Lenders, shall have an effective executed Notice Letter and a first priority perfected Lien (subject to Permitted Liens) in such fees. Net present value, for the purpose of this definition, shall be calculated as follows: the Senior Management Fee Amount, discounted by (i.e. divided by) seven percent (7%), to the power of “n” with “n” being the number of years in the discount period.

Aggregate Senior Non-Callable Management Fees – At any time, the aggregate net present value of (i) all senior management fees for the non-callable period (other than Excluded Management Fees) to which Borrower and Subsidiary Guarantors are entitled pursuant to all Management Agreements in effect from time to time, and (ii) all fees to which Borrower and Subsidiary Guarantors are entitled pursuant to the Tricadia Agreement; provided that Agent, on behalf of Lenders, shall have an effective executed Notice Letter and a first priority perfected Lien (subject to Permitted Liens) in such fees. Net present value, for the purpose of this definition, shall be calculated as follows: the Senior Management Fee Amount discounted by (i.e. divided by) seven percent (7%) to the power of “n” with “n” being the number of years in the discount period.

Agreement – This Loan and Security Agreement, as it may hereafter be amended, supplemented or replaced from time to time.

Amended and Restated Revolving Credit Notes – Those notes described in Section 2.1(b), as amended, modified, supplemented or restated from time to time.

Anti-Terrorism Laws – Any statute, treaty, law (including common law), ordinance, regulation, rule, order, opinion, release, injunction, writ, decree or award of any Governmental Authority relating to terrorism or money laundering, including Executive Order No. 13224 and the USA Patriot Act.

Approved Fund – Any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender.

 

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Asset Default Rate – With respect to an applicable asset class held in any Collateralized Debt Offering, the Asset Default Rate shall be the default rate, net of a recovery rate as applicable, as determined in accordance with the applicable rating guide set forth below or such other rating agency or authoritative source reasonably acceptable to Agent, but in no event shall the Asset Default Rate be less than the actual annualized net asset default rate for the applicable asset class for the prior twelve calendar months.

 

Asset Sale – The sale, transfer, lease, license or other disposition, by Borrower or by any Subsidiary Guarantor to any Person other than Borrower, or any Subsidiary Guarantor, of any Property now owned or hereafter acquired, of any nature whatsoever in any transaction or series of related transactions. An Asset Sale, includes without limitation, a division.

Assignment Agreement – An assignment and assumption agreement entered into by an assigning Lender and accepted by Agent, in accordance with Section 10.12, in the form of Exhibit A attached hereto.

Authorized Officer – Any officer (or comparable equivalent) of Borrower authorized by specific resolution of Borrower to request Advances or execute Quarterly Compliance Certificates as set forth in the authorization certificate delivered to Lender substantially in the form of Exhibit “B” attached hereto.

Bankruptcy Code – The United States Bankruptcy Code, 11 U.S.C. §101 et. seq. as amended from time to time.

Base Rate – The highest of (i) “Prime Rate” of interest as published in the “Money Rates” section of The Wall Street Journal on the applicable date (or the highest “Prime Rate” if more than one is published) as such rate may change from time to time, (ii) the Federal Funds Rate plus fifty (50) basis points, and (iii) the Daily LIBOR Rate plus one hundred (100) basis points. If The Wall Street Journal ceases to be published or goes on strike or is otherwise not published, Agent may use a similar published prime or base rate. The Base Rate is not necessarily the lowest or best rate of interest offered by Agent or any Lender to any borrower or class of borrowers.

Base Rate Applicable Margin – Three hundred seventy five (375) basis points.

Base Rate Loans – That portion of the Loans accruing interest based on a rate determined by reference to the Base Rate.

Blocked Person – Section 5.23.

 

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Borrowing Base – As of the date of determination, an amount equal to the lesser of (i) the Maximum Revolving Credit Amount or (ii) without duplication, the sum of (a) 90% of Aggregate Senior Non-Callable Management Fees plus (b) 30% of Aggregate Senior Callable Management Fees plus (c) 70% of the market value (as determined by reference to the applicable national exchange) of the Pledged Securities. Notwithstanding anything herein to the contrary with respect to any Collateralized Debt Offering related to bank and insurance trust preferred securities, if the weighted average spread for the aggregate assets in such Collateralized Debt Offering exceeds the Threshold Amount, then Borrower shall have no borrowing availability with respect to the Aggregate Senior Callable Management Fees from such Collateralized Debt Offering, until the next trustee report indicating that such weighted average spread is less than the Threshold Amount.

Borrowing Base Certificate – Section 6.9(b).

Brigadier Entities – Collectively, Brigadier Capital Master Fund, Ltd, a Cayman Island exempted company, Brigadier Capital Fund, LP, a Delaware limited partnership and Brigadier Capital Offshore Fund, Ltd, a Cayman Island exempted company.

Broker Entity – Cohen & Company Securities LLC, a Delaware limited liability company.

Business Day – (i) Any day that is not a Saturday or Sunday or day on which Agent or any Lender is required or permitted to close in Philadelphia, Pennsylvania or (ii) with respect to any LIBOR Rate Loan, any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in dollar deposits in the London interbank market.

Capital Expenditures – For any period, the aggregate of all expenditures (including that portion of Capitalized Lease Obligations attributable to that period) made in respect of the purchase, construction or other acquisition of fixed or capital assets, determined in accordance with GAAP.

Capital Stock – Any and all shares, equity interests, or other equivalents (however designated) of capital stock of a corporation, any and all other ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing.

Capitalized Lease Obligations – Any Indebtedness represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

Change of Control – Prior to consummation of the Merger, with respect to Borrower, the result caused by the occurrence of any event which results in Parent (or Daniel G. Cohen) owning (beneficially, legally, or otherwise), in the aggregate, less than fifty-one percent (51%) of the voting power of the issued and outstanding Capital Stock of Borrower entitled to vote, and both prior to and after the Merger, with respect to any Subsidiary that is a Subsidiary Guarantor, the result caused by Borrower owning, directly or indirectly, less than fifty-one percent (51%) of any class of the issued and outstanding Capital Stock of such Subsidiary entitled to vote. Subsequent to consummation of the Merger, with respect to Borrower, the result caused by the occurrence of any event which results in any Person or group of Persons (other than Post-Merger Parent, Daniel G. Cohen, any Affiliate of Daniel G. Cohen, or trusts for the benefit of Daniel G. Cohen or one or more of his family members) obtaining (beneficially, legally or otherwise) more than thirty-three percent (33%) of the voting power of issued and outstanding Capital Stock of Borrower entitled to vote. Notwithstanding the foregoing, the Merger shall be deemed not to constitute a “Change of Control.”

 

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Closing – Section 4.6.

Closing Date – Section 4.6.

Code – The Internal Revenue Code of 1986, as amended from time to time.

Cohen Financial – Cohen Financial Group, Inc., a Delaware corporation.

Cohen Monthly Focus Report – That certain report filed monthly by the Broker Entity with the National Association of Securities Dealers (NASD), which calculates the Broker Entity’s net capital (as defined by the NASD).

Collateral – All of the Property and interests in Property described in Section 3.1 of this Agreement and in any Existing Security Document, and all other Property and interests in Property that now or hereafter secure payment of the Obligations and satisfaction by Borrower of all covenants and undertakings contained in this Agreement and the other Loan Documents.

Collateral Pledge Agreement – That certain Collateral Pledge Agreement executed by Parent in favor of Agent, dated July 27, 2007, as the same may be amended, modified, confirmed, supplemented or restated from time to time.

Collateralized Debt Offering – An offering, by a special purpose entity, of interests in secured debt obligations, and other investments permitted under the organizational and operating documents of such entity, which interests are sold to third party investors.

Consolidated Amortization Expense – For any period, the aggregate consolidated amount of amortization expense of Borrower, as determined in accordance with GAAP; provided however that such consolidation shall not include the amount of amortization expense of Non-Consolidation Entities.

Consolidated Cash Flow – For any period, Borrower’s Consolidated Net Income (or deficit) plus (a) Consolidated Interest Expense, plus (b) Consolidated Depreciation Expense, plus (c) Consolidated Amortization Expense, plus (d) Consolidated Tax Expense, plus (e) all other non-cash expenses (including non-cash stock compensation), minus (f) extraordinary gains, plus (g) Non-Controlling Interest Expense, all as determined in accordance with GAAP. Following consummation of the Merger, any realized or unrealized changes in an aggregate amount not to exceed Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000), in the fair value of financial instruments that are attributable to the Koch CDS shall be (without duplication) added back to Consolidated Net Income for purposes of determining Consolidated Cash Flow.

Consolidated Depreciation Expense – For any period, the aggregate, consolidated amount of depreciation expense of Borrower, as determined in accordance with GAAP; provided, however that such consolidation shall not include the amount of depreciation expense of Non-Consolidation Entities.

 

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Consolidated Funded Debt – At any time (without duplication), the aggregate principal amount of interest bearing Indebtedness of Borrower on a consolidated basis, as determined in accordance with GAAP; provided, however that such consolidation shall not include the amount of (i) interest bearing Indebtedness (including, without limitation, Repurchase Obligations) of Non-Consolidation Entities and (ii) interest bearing Indebtedness (including, without limitation, Repurchase Obligations) of the Broker Entity to the extent such Indebtedness of the Broker Entity is non-recourse to Borrower or any Subsidiary Guarantor.

Consolidated Interest Expense – For any period (without duplication), the aggregate, consolidated amount of interest expense required to be paid or accrued during such period on all Indebtedness of Borrower outstanding during all or any part of such period, as determined in accordance with GAAP; provided, however that such consolidation shall not include the amount of interest expense required to be paid or accrued during such period on any Indebtedness (including, without limitation, Repurchase Obligations) of Non-Consolidation Entities.

Consolidated Net Income – For any period, consolidated net income after taxes of Borrower as such would appear on Borrower’s consolidated statement of income, prepared in accordance with GAAP; provided, however that such consolidation shall not include the amount of net income after taxes of Non-Consolidation Entities.

Consolidated Net Worth – At any time, the sum of the amount by which all of Borrower’s (i) consolidated assets (excluding assets attributable to Non-Consolidation Entities), plus Subordinated Debt, exceed all of (ii) Consolidated Total Liabilities, all as would be shown on Borrower’s consolidated balance sheet prepared in accordance with GAAP.

Consolidated Tax Expense – For any period, the aggregate consolidated amount of income tax expense of Borrower, as determined in accordance with GAAP; provided, however that such consolidation shall not include the amount of income tax expense of Non-Consolidation Entities.

Consolidated Total Liabilities – At any time, the aggregate total amount of Borrower’s consolidated liabilities as would be shown on Borrower’s consolidated balance sheet prepared in accordance with GAAP; provided, however that such aggregation shall not include the amount of liabilities of Non-Consolidation Entities.

Convertible Notes – The 7.625% Contingent Convertible Senior Notes due 2027 issued pursuant to that certain Indenture, dated as of May 15, 2007, between Alesco Financial Inc. and U.S. Bank Trust National Association, as trustee.

Daily LIBOR Rate – For any day, the rate per annum determined by Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the LIBOR Reserve Percentage.

Default – An event which with the passage of time, the giving of notice, or both would constitute an Event of Default.

Default Rate – Section 2.7(b).

 

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Disqualified Stock – Any Capital Stock which by its terms (or by terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event (i) matures or is mandatorily redeemable for any reason, (ii) is convertible or exchangeable for Indebtedness or Capital Stock that meets the requirements of clauses (i) and (ii), or (iii) is redeemable at the option of the holder thereof, in whole or in part in each case on or prior to the Revolving Credit Maturity Date.

Distribution – (i) Cash dividends or other cash distributions (including Permitted Distributions) on any now or hereafter outstanding Capital Stock of Borrower or any Subsidiary Guarantor; (ii) the redemption, repurchase, defeasance or acquisition of such Capital Stock or of warrants, rights or other options to purchase such Capital Stock; and (iii) any loans or advances (other than salaries), to any shareholder(s), partner(s), or member(s) of Borrower or any Subsidiary Guarantor.

Environmental Laws – Any and all Federal, foreign, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees and any and all common law requirements, rules and bases of liability regulating, relating to or imposing liability or standards of conduct concerning pollution, protection of the environment, or the impact of pollutants, contaminants or toxic or hazardous substances on human health or the environment, as now or may at any time hereafter be in effect.

ERISA – The Employee Retirement Income Security Act of 1974, as the same may be amended, from time to time.

Event of Default – Section 8.1.

Excluded Management Fees – Fees received by Borrower or a Subsidiary Guarantor under any of the Management Agreements set forth on Schedule C attached hereto, as such Schedule C may be amended, supplemented, replaced or restated from time to time, which fees are to be paid to a sub-advisor or other Person in accordance with agreements entered into in connection with the Management Agreements set forth on Schedule C attached hereto.

Excluded Property – means (a) 35% of total foreign subsidiary voting stock of any foreign subsidiary and (b) Capital Stock of Alesco Financial, Inc., a Delaware corporation.

Executive Order No. 13224 – 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 Loan Agreement – As defined in the Background to this Agreement.

Existing Notice Letters – Collectively, each of the Notice Letters executed and delivered in connection with the Existing Loan Agreement.

Existing Security Documents – Collectively, the Surety and Guaranty Agreement, the Guarantor Security Agreement, the Subsidiary Collateral Pledge Agreement, the Securities Account Pledge Agreement, the Sponsored CDO Pledge Agreement, the Collateral Pledge Agreement and the Trademark Security Agreements, each executed by Borrower, Parent or Subsidiary Guarantors (as

 

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applicable), and any other agreements, instruments and documents executed and/or delivered from time to time pursuant to the Existing Loan Agreement (including the Existing Notice Letters) or in connection therewith related to any guaranty or suretyship obligation or the granting of any security interest or pledge of any Property to secure the repayment of Indebtedness under the Existing Loan Agreement.

Existing Letters of Credit – That certain Letter of Credit issued by Issuing Bank dated September 5, 2007 bearing L/C Number 136192070362 with a beneficiary of 181 West Madison CF Borrower LLC in the original amount of $50,000.

Expenses – Section 10.4.

Fee Letter – That certain letter agreement between Agent and Borrower dated on or prior to the Closing Date.

Fed Funds Rate – For any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day on the day next succeeding such day (or if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day which is a Business Day, the average of quotations for such day on such transactions received by Agent from three Federal funds brokers of recognized standing selected by Agent.

Fin 46 Entity – Any entity that is required pursuant to the requirements of the Financial Accounting Standards Board’s Interpretation Number 46 to be consolidated in the financial statements of Borrower.

Fixed Charge Coverage Ratio – For each period of four full fiscal quarters ended on the last day of each fiscal quarter, the ratio of (i) Consolidated Cash Flow to (ii) scheduled principal payments on account of Borrower’s and Subsidiary Guarantors’ long term Indebtedness for the preceding four fiscal quarter period plus Consolidated Interest Expense, plus unfunded Capital Expenditures all as determined in accordance with GAAP on the last day of each such fiscal quarter.

Fronting Fee – Section 2.8(b)(ii).

GAAP – Generally accepted accounting principles as in effect on the Closing Date applied in a manner consistent with the most recent audited financial statements of Borrower furnished to Lender and described in Section 5.7 herein, subject, however, in the case of determination of compliance with the financial covenants in Section 6.8, to the provisions of Section 1.3.

Government Acts – Section 2.2.

Government Authority – Any federal, state or local government or political subdivision, or any agency, authority, bureau, central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury, or arbitration.

 

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Guarantor Security Agreement – That certain security agreement executed by each Subsidiary Guarantor in favor of Agent, dated July 27, 2007, as the same may be amended, modified, confirmed, supplemented or restated from time to time.

Hazardous Substances – Any substances defined or designated as hazardous or toxic waste, hazardous or toxic material, hazardous or toxic substance or similar term, under any Environmental Law.

Hedging Agreements – Any Interest Hedging Instrument or any other interest rate protection agreement, foreign currency exchange agreement, commodity purchase or option agreement, or any other interest rate hedging device or swap agreement (as defined in 11 U.S.C. § 101 et. seq.).

Indebtedness – Of any Person at any date, without duplication, (i) all indebtedness of such Person for borrowed money (including with respect to Borrower, the Obligations) or for the deferred purchase price of property or services (other than current trade liabilities and other accruals incurred in the ordinary course of business and payable in accordance with customary practices), (ii) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (iii) all Capitalized Lease Obligations of such Person, (iv) the face amount of all letters of credit (including the Letters of Credit), issued for the account of such Person and all drafts drawn thereunder, (v) all obligations of other Persons described in this definition of Indebtedness which such Person has guaranteed (other than endorsements of instruments), (vi) Disqualified Stock, (vii) all obligations of such Person under Hedging Agreements (provided that the amount of such obligations to be included in Indebtedness shall be equal to the amount payable by such Person after giving effect to all legally enforceable netting agreements, if such Hedging Agreements were terminated on such date), and (viii) all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof.

Information – All information received from Borrower or any Subsidiary Guarantor relating to Borrower, any Subsidiary Guarantor or Post-Merger Parent or any of their respective businesses, other than any such information that is available to Agent, any Lender or Issuing Bank on a non-confidential basis prior to disclosure by Borrower or any Subsidiary Guarantor, provided that, in the case of information received from Borrower or any Subsidiary Guarantor after the date of this Agreement, such information is clearly identified at the time of delivery as confidential.

Interest Hedging Instrument – Any documentation evidencing any interest rate swap, interest “cap” or “collar” or any other interest rate hedging device or swap agreement (as defined in 11 U.S.C. § 101 et. seq.) between Borrower or any Subsidiary Guarantor and a Lender (or any Affiliate of a Lender).

IRS  – Internal Revenue Service.

Issuing Bank – TD Bank, N.A.

Koch CDS – That certain ISDA Master Agreement, dated as of October 11, 2007, between Alesco Funding Inc. and Assured Guaranty Corp, as supplemented by that certain Schedule to the Master Agreement, dated October 11, 2007, and as further supplemented by that certain Confirmation to the Master Agreement, dated as of October 11, 2007.

 

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L/C Fees – Section 2.8(b)(i).

L/C Sublimit – At any time, an amount equal to the lesser of (i) $3,000,000 or (ii) 10% of the Maximum Revolving Credit Amount.

Letter of Credit – Those certain stand-by letters of credit (as amended, supplemented, replaced or restated from time to time) issued from time to time pursuant to Section 2.2 of this Agreement, including the Existing Letters of Credit.

Letter of Credit Documents – Any Letter of Credit, any amendment thereto, any documents delivered in connection therewith, any application therefor, or any other documents (all in form and substance reasonably satisfactory to Issuing Bank), governing or providing for (i) the rights and obligations on the parties concerned or at risk, or (ii) any collateral security for such obligations.

Leverage Ratio – At any time, the ratio of Borrower’s (i) Consolidated Funded Debt less Subordinated Debt, to (ii) Consolidated Cash Flow.

LIBOR Applicable Margin – Six hundred fifty (650) basis points.

LIBOR Interest Period – As to LIBOR Rate Loans, a period of one month, two months or three months, as selected by Borrower pursuant to the terms of this Agreement (including continuations and conversions thereof); provided however, (i) if any LIBOR Interest Period would end on a day which is not a Business Day, such LIBOR Interest Period shall be extended to the next succeeding Business Day (except that where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day), (ii) no LIBOR Interest Period shall extend beyond the Revolving Credit Maturity Date, and (iii) any LIBOR Interest Period with respect to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such LIBOR Interest Period) shall end on the last Business Day of the relevant calendar month at the end of such LIBOR Interest Period.

LIBOR Rate Loans – That portion(s) of the Loans accruing interest based on a rate determined by reference to the Adjusted LIBOR Rate.

LIBOR Reserve Percentage – For any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D, as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of LIBOR Rate Loans is determined), whether or not a Lender has any Eurocurrency liabilities subject to such reserve requirement at that time. LIBOR Rate Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time to time to a Lender. The Adjusted LIBOR Rate shall be adjusted automatically on and as of the effective date of any change in the LIBOR Reserve Percentage.

 

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Lien – Any interest of any kind or nature in property securing an obligation owed to, or a claim of any kind or nature in Property by, a Person other than the owner of the Property, whether such interest is based on the common law, statute, regulation or contract, and including, but not limited to, a security interest or lien arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt, a capitalized lease, consignment or bailment for security purposes, a trust, or an assignment. For the purposes of this Agreement, Borrower shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes.

Liquidity – At any particular time, an amount (i) held by Borrower and/or any Subsidiary Guarantor and (ii) equal to the sum of (a) cash, (b) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed or insured by the United States or any agency thereof, (c) certificates of deposit with maturities of 180 days or less from the date of acquisition and overnight bank deposits of any commercial bank having capital, surplus and undivided profits aggregating at least $500,000,000, (d) repurchase obligations of any commercial bank satisfying the requirements of clause (c) of this definition, (e) commercial paper of a domestic issuer rated at least A-1 or better by S&P or P-1 or better by Moody’s and in either case maturing within 90 days after the date of acquisition, (f) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States or by any political subdivision or taxing authority of any such state, commonwealth or territory, and such securities of such state commonwealth, territory, political subdivision or taxing authority, as the case may be, are rated at least A by S&P or A by Moody’s, (g) securities with maturities of 90 days or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (c) of this definition, (h) shares of money market, mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (b) through (g) of this definition, or (i) other short term marketable securities with an investment grade of Ba2 or better from Moody’s or BB or better from Standard & Poor’s, as determined for Borrower and its consolidated Subsidiary Guarantors on a consolidated basis in accordance with GAAP.

Loans – Collectively, the unpaid balance of cash Advances under the Revolving Credit which may be Base Rate Loans or LIBOR Rate Loans and any unreimbursed draws under any Letter of Credit.

Loan Documents – Collectively, this Agreement, the Amended and Restated Revolving Credit Notes, the Existing Security Documents, the Affirmation of Security Documents, the Letter of Credit Documents, the Perfection Certificate, the Notice Letters, and all agreements, instruments and documents executed and/or delivered from time to time pursuant to this Agreement or in connection therewith, as amended, modified, confirmed, supplemented, or restated from time to time.

 

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London Interbank Offered Rate – With respect to any LIBOR Rate Loan for the LIBOR Interest Period applicable thereto, the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”) as published by Bloomberg (or such other commercially available source providing quotations of BBA LIBOR as designated by Agent from time to time) at approximately 11:00 A.M. (London time) 2 Business Days prior to the first day of such LIBOR Interest Period for a term comparable to such LIBOR Interest Period; provided however, if more than one BBA LIBOR Rate is specified, the applicable rate shall be the arithmetic mean of all such rates. If, for any reason, such rate is not available, the term London Interbank Offered Rate shall mean, with respect to any LIBOR Rate Loan for the LIBOR Interest Period applicable thereto, the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by Agent to be the average rates per annum at which deposits in dollars are offered for such LIBOR Interest Period to major banks in the London interbank market in London, England at approximately 11:00 A.M. (London time) 2 Business Days prior to the first day of such LIBOR Interest Period for a term comparable to such LIBOR Interest Period.

Management Agreements – Collectively, the Tricadia Agreement and those certain agreements set forth on Schedule D attached hereto, as such Schedule may be amended, supplemented, replaced or restated from time to time and any other collateral management agreement (whether now existing or hereafter created or acquired) pursuant to which Borrower or a Subsidiary Guarantor shall serve as collateral manager in connection with a Collateralized Debt Offering, a warehouse offering, a hedge fund or any other transaction.

Material Adverse Effect – A material adverse effect with respect to (a) the business, assets, properties, financial condition, stockholders’ equity, contingent liabilities, or results of operations of Borrower or any Subsidiary Guarantor, or (b) Borrower’s ability to pay the Obligations in accordance with the terms hereof, or (c) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights and remedies of Agent, Issuing Bank or any Lender hereunder or thereunder.

Maximum Lien Cap Amount – As defined in the definition of Permitted Liens.

Maximum Revolving Credit Amount – Subject to Section 2.9(b), (d) and (e), the amount of Thirty Million Dollars ($30,000,000); provided , however , that the Maximum Revolving Credit Amount shall automatically reduce by One Million Dollars ($1,000,000) on the fifteenth (15 ^th ) day of each month, starting on November 15, 2009, regardless of any reductions to the Maximum Revolving Credit Amount otherwise required pursuant to Section 2.9(b), (d) and (e).

Merger – The consummation of the transactions contemplated under the Merger Agreement.

Merger Agreement – That certain Agreement and Plan of Merger by and among Alesco Financial Inc., Fortune Merger Sub, LLC and Borrower dated February 28, 2009 and as amended from time to time.

Merger Documents – Collectively, the Merger Agreement and each other instrument, document and agreement executed and/or delivered in connection therewith.

Net Cash Proceeds – Section 2.9(d).

 

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Net Outstanding Portfolio Balance – With respect to any Collateralized Debt Offering for which a Subsidiary Guarantor is collateral manager pursuant to a Management Agreement, the Net Outstanding Portfolio Balance (or some similarly defined term) of such Collateralized Debt Offering, as determined pursuant to the trustee report issued on a quarterly basis, or if not yet produced, as determined pursuant to the indenture or other governing document applicable to the Collateralized Debt Offering.

Non-Consolidation Entities – the Fin 46 Entities, collectively.

Non-Controlling Interest Expense – For any period, the amount of any non-controlling interest expense as shown on Borrower’s statement of income as determined in accordance with GAAP, that is deducted in the calculation of Consolidated Net Income for such period.

Notes – Collectively, the Amended and Restated Revolving Credit Notes.

Notice – Section 10.8.

Notice Letter – Each Payment Instruction Letter (including each of the Existing Notice Letters) in the form attached to the Guarantor Security Agreement as Exhibit “A”, which has been or will be issued by each applicable Subsidiary Guarantor and delivered to, and acknowledged by, the applicable trustee under the indenture related to the applicable Management Agreement.

Notice of Conversion/Extension – A written notice of conversion of a LIBOR Rate Loan to a Base Rate Loan, or of a Base Rate Loan to a LIBOR Rate Loan or extension of a LIBOR Rate Loan, in each case substantially in the form of Exhibit “C” attached hereto.

Obligations – All existing and future debts, liabilities and obligations of every kind or nature at any time owing by Borrower or any Subsidiary Guarantor to Lenders, Issuing Bank or Agent whether under this Agreement or any other Loan Document, whether joint or several, related or unrelated, primary or secondary, matured or contingent, due or to become due (including debts, liabilities and obligations obtained by assignment), and whether principal, interest, fees, indemnification obligations hereunder or Expenses (specifically including interest accruing after the commencement of any bankruptcy, insolvency or similar proceeding with respect to Borrower, whether or not a claim for such post-commencement interest is allowed), including, without limitation, debts, liabilities and obligations in respect of the Revolving Credit, Reimbursement Obligations and any extensions, modifications, substitutions, increases and renewals thereof; any amount payable by Borrower or any Subsidiary Guarantor pursuant to an Interest Hedging Instrument; the payment of all amounts advanced by Agent on behalf of any Secured Party to preserve, protect and enforce rights hereunder and in the Collateral; and all Expenses. Without limiting the generality of the foregoing, Obligations shall include any other debts, liabilities or obligations owing to Agent in connection with any lock box, cash management, or other services (including electronic funds transfers or automated clearing house transactions) provided by Agent to Borrower.

Overadvance – Section 2.1(a).

Parent – Cohen Bros. Financial, LLC, a Delaware limited liability company.

 

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Participant – Section 10.12.

Participant Register – Section 10.12.

PBGC – The Pension Benefit Guaranty Corporation.

Perfection Certificate – The Perfection Certificate provided by Borrower and each Subsidiary Guarantor to Agent on or prior to the Closing Date in form and substance satisfactory to Agent.

Permanent Investments – Those certain assets or investments owned by Borrower or a Subsidiary Guarantor and which are set forth on Schedule E attached hereto.

Permitted Distributions – a) Subsequent to the consummation of the Merger, (i) amounts necessary to enable Post-Merger Parent to make or cause to be made regularly scheduled payments of interest on account of the Trust Preferred Notes and the Convertible Notes, (ii) for any taxable year of Borrower for which Borrower is a pass through entity for income tax purposes, Distributions in the aggregate amount necessary for each holder of Borrower’s Capital Stock to pay federal and state income taxes resulting solely from such holder’s allocated share of Borrower’s income, and (iii) amounts necessary to enable Post-Merger Parent to pay any state or local franchise, capital stock or other taxes and any incidental de minimis administrative expenses; and b) prior to the Merger, the greater of (i) the preferred return to be paid to Class A Members of Borrower as required under Section 5.1 of Borrower’s Third Amended and Restated Limited Liability Company Agreement dated as of February 28, 2007 as in effect on July 27, 2007, and (ii) Distributions in the aggregate amount necessary for each holder of Borrower’s Capital Stock to pay federal and state income taxes resulting solely from such holder’s allocated share of Borrower’s income; provided that, prior to any Permitted Distribution, Borrower shall have delivered to Agent a written notice, in form and substance reasonably satisfactory to Agent, stating the intent to make a Permitted Distribution and reflecting how the amount of such Distribution was derived.

Permitted Indebtedness – (a) Indebtedness to Agent, Issuing Bank and Lenders in connection with the Revolving Credit and Letters of Credit or otherwise pursuant to the Loan Documents; (b) trade payables incurred in the ordinary course of Borrower’s or any Subsidiary Guarantor’s business; (c) purchase money Indebtedness (including Capitalized Lease Obligations) hereafter incurred by Borrower or any Subsidiary Guarantor to finance the purchase of fixed assets; provided that, (i) such Indebtedness incurred in any fiscal year shall not exceed $1,000,000 (ii) such Indebtedness shall not exceed the purchase price of the assets funded and (iii) no such Indebtedness may be refinanced for a principal amount in excess of the principal amount outstanding at the time of such refinancing; (d) Indebtedness existing on the Closing Date that is identified and described on Schedule “1.1(a)” attached hereto and made part hereof; (e) Subordinated Debt; (f) Indebtedness of a Fin 46 Entity which is non-recourse to Borrower or any Subsidiary Guarantor; (g) guarantees by Borrower of Indebtedness of a Subsidiary Guarantor so long as such Indebtedness of such Subsidiary Guarantor constitutes Permitted Indebtedness; (h) Indebtedness under Hedging Agreements; (i) upon and following the consummation of the Merger, Indebtedness of the Post-Merger Parent that is non-recourse to Borrower or any Subsidiary Guarantor, and (j) Indebtedness related to the Koch CDS.

 

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Permitted Investments – (a)(i) obligations issued or guaranteed by the United States of America or any agency thereof, (ii) commercial paper with maturities of not more than 180 days and a published rating of not less than A-1 or P-1 (or the equivalent rating) by a nationally recognized investment rating agency, (iii) certificates of time deposit and bankers’ acceptances having maturities of not more than 180 days and repurchase agreements backed by United States government securities of a commercial bank if (A) such bank has a combined capital and surplus of at least $500,000,000, or (B) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment rating agency, and (iv) U.S. money market funds that invest solely in obligations issued or guaranteed by the United States of America or an agency thereof; (b) loans to employees not to exceed $500,000 in the aggregate outstanding at any time; (c) so long as no Default or Event of Default exists, or after giving effect to any such investment would exist, (i) securities consisting of interests in an entity engaged in a Collateralized Debt Offering, structured finance transaction or any other similar transaction and (ii) after the Merger, credit default swaps, corporate bonds, mortgage and asset-backed securities, collateralized debt obligations and corporate mortgage and consumer loans, provided that with respect to both clause (i) and (ii) of this clause (c), no such investment in any single entity or asset shall exceed $15,000,000 and the aggregate amount of investments in all such entities and assets while this Agreement is in effect shall not exceed $50,000,000; (d) securities, notes or other forms of investment purchased by Borrower or a Subsidiary Guarantor that are or will be issued by entities advised or sub-advised by Borrower or a Subsidiary Guarantor; (e) investments existing on the Closing Date and disclosed on Schedule “5.10(a)” and up to an additional $675,000 worth of common shares of Muni Funding Company of America, LLC; (f) Capital Stock of an entity that satisfies the provisions of Section 7.4(b); and (g) investments in Subsidiaries reflected on Schedule “5.9”; provided however, that nothing contained herein shall prevent Borrower from organizing new Subsidiaries in accordance with all of the conditions set forth in this Agreement.

Permitted Liens – (a) Liens securing taxes, assessments or governmental charges or levies or the claims or demands of materialmen, mechanics, carriers, warehousemen, and other like persons not yet due; (b) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance, social security and other like laws; (c) Liens on fixed assets security purchase money Indebtedness permitted under Section 7.6; provided that, (i) such Lien is attached to such assets concurrently, or within 20 days of the acquisition thereof, and only to the assets so acquired, and (ii) a description of the asset acquired is furnished to Lender; and (d) Liens existing on the Closing Date and shown on Schedule “1.1(b)” attached hereto and made part hereof.

Person – An individual, partnership, corporation, trust, unincorporated association or organization, joint venture, limited liability company or partnership, or any other entity.

Pledged Securities – All shares of the common stock of RAIT Financial Trust (NYSE:RAS) that are subject to a first priority security interest in favor of Agent, for the ratable benefit of Secured Parties pursuant to the Subsidiary Collateral Pledge Agreement.

Post-Merger Parent – Alesco Financial, Inc., a Maryland corporation.

Property – Any interest of Borrower or any Subsidiary Guarantor in any kind of property or asset, whether real, personal or mixed, tangible or intangible.

 

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Pro Rata Percentage – As to each Lender, the pro rata percentage set forth opposite each Lender’s name on Schedule A hereto.

Published Rate – The rate of interest published each Business Day in The Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a one month period. If The Wall Street Journal ceases to be published or goes on strike or is otherwise not published, Agent may use a similar published eurodollar rate for a one month period.

Quarterly Compliance Certificate – Section 6.10.

Register – Section 10.12.

Regulation D – Regulation D of the Board of Governors of the Federal Reserve System, comprising Part 204 of Title 12, Code of Federal Regulations, as amended, and any successor thereto.

Reimbursement Obligations – Collectively, Borrower’s reimbursement obligation for any and all draws under Letters of Credit.

Related Parties – With respect to any specified Person, such Person’s Affiliates and the respective directors, managers, officers, employees and agents of such Person and such Person’s Affiliates.

Repurchase Agreement – Each agreement entered into by the Broker Entity with an investment bank counterparty, that gives the Broker Entity, acting as seller of securities the obligation to buy back the securities at a specified price on a given date or upon demand.

Requirement of Law – As to any Person, each law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

Revolving Credit – Section 2.1(a).

Revolving Credit Loans – Section 2.1(a).

Revolving Credit LIBOR Rate – The higher of (i) Adjusted LIBOR Rate plus the LIBOR Applicable Margin and (ii) eight and one half percent (8.50%).

Revolving Credit Maturity Date – May 31, 2011.

Revolving Credit Pro Rata Share – As to any Lender, at any time, such Lender’s Pro Rata Percentage of the outstanding balance of the Revolving Credit plus unreimbursed Letters of Credit and outstanding and undrawn Letters of Credit.

Secured Parties – Collectively, Agent, Issuing Bank, Lenders and any Lender (or Affiliate of a Lender) that is a counterparty to any Interest Hedging Instrument, permitted under the Loan Agreement and any permitted successors and assigns.

 

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Securities Account Pledge Agreement – That certain Securities Account Pledge Agreement executed by Borrower in favor of Agent dated January 11, 2008, as the same may be amended, modified, confirmed, supplemented or restated from time to time.

Securities Act – The Securities Act of 1933, as the same may be amended from time to time.

Senior Management Fee Amount – With respect to any Management Agreement, the product of (i) the difference between (A) the Net Outstanding Portfolio Balance, less (B) the product of (X) the product of (1) the Net Outstanding Portfolio Balance, times (2) the Asset Default Rate, less (C) any prepayments on, and amortization on account of, assets held in the Collateralized Debt Offering based on projections prepared by such Subsidiary Guarantor in accordance with such Subsidiary Guarantor’s historical practices, times (ii) the base collateral management fee only, as set forth in the Management Agreement.

Settlement Date – Section 2.5(b)(ii).

Specified Default Rate Certificate – A certificate, in form and substance reasonably satisfactory to Agent, from an Authorized Officer of Borrower setting forth the Asset Default Rates for a specific Collateralized Debt Offering for the immediately preceding three month period (based on the initial closing of such Collateralized Debt Offering).

Specified Default Test Date – Each date on which Agent receives a Specified Default Rate Certificate, pursuant to Section 6.9(g).

Sponsored CDO Equity Interests – Collectively, those certain equity interests in the Collateralized Debt Offerings set forth on Schedule “5.14(b)” attached hereto, as such Schedule may be amended, supplemented, replaced or restated from time to time and any other equity interests in additional Collateralized Debt Offerings sponsored by Borrower or any Subsidiary Guarantor (whether now existing or hereafter created or acquired).

Sponsored CDO Offerings – A Collateralized Debt Offering structured by a Subsidiary Guarantor and for which a Subsidiary Guarantor acts as collateral manager pursuant to a Management Agreement.

Sponsored CDO Pledge Agreement – That certain collateral pledge agreement executed by Borrower and certain Subsidiary Guarantors in favor of Agent, on July 27, 2007 covering all of the Sponsored CDO Equity Interests and all other Capital Stock owned by Borrower and such Subsidiary Guarantor (other than Capital Stock of a Subsidiary Guarantor, Subsidiary or a Non-Consolidation Entity), as the same may be amended, modified, confirmed, supplemented or restated from time to time.

Subordinated Debt – Indebtedness of Borrower or a Subsidiary Guarantor subject to payment terms and subordination provisions acceptable to Agent in its sole discretion.

Subordination Agreement – A written subordination agreement to be executed by the holder of any Subordinated Debt, in form and substance satisfactory to Agent.

 

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Subsidiary – With respect to any Person at anytime, (i) any corporation more than fifty percent (50%) of whose voting stock is legally and beneficially owned directly or indirectly by such Person or owned by a corporation more than fifty percent (50%) of whose voting stock is legally and beneficially owned directly or indirectly by such Person; (ii) any trust of which a majority of the beneficial interest is at such time owned directly or indirectly, beneficially or of record, by such Person or one or more Subsidiaries of such Person; and (iii) any partnership, joint venture, limited liability company or other entity of which ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions are at such time owned directly or indirectly, beneficially or of record, by, or which is otherwise controlled directly, indirectly or through one or more intermediaries by, such Person or one or more Subsidiaries of such Person. Notwithstanding the foregoing, Non-Consolidation Entities shall be deemed not to be Subsidiaries.

Subsidiary Collateral Pledge Agreement – That certain collateral pledge agreement executed by Borrower in favor of Agent, on July 27, 2007, and covering the Pledged Securities and all of the Capital Stock of each Subsidiary Guarantor, as the same may be amended, modified, confirmed, supplemented or restated from time to time.

Subsidiary Guarantor – Cohen & Compagnie, Dekania Investors, LLC, Strategos Capital Management, LLC, Cohen & Company Financial Management, LLC, Dekania Capital Management, LLC, CIRA ECM Holdings, LLC, DEEP Funding GP, LLC, Sapin Capital GP, LLC, Sapin Capital Management, LLC, CIRA ECM, LLC, Brigadier Capital Management, LLC, Brigadier GP, LLC, Cohen & Company Ventures, LLC, Cohen Municipal Capital Management, LLC, Cohen Asia Investments, Ltd., EuroDekania Management Limited, Cohen & Company Funding, LLC, Cohen & Company Management, LLC, and Cohen Bros. Acquisitions, LLC, and any other Person who may hereafter guaranty, as surety, all of the Obligations. Notwithstanding inclusion of Cohen & Compagnie and EuroDekania Management Limited as a “Subsidiary Guarantor” hereunder, Cohen & Compagnie and EuroDekania Management Limited shall not be required to execute the Surety and Guaranty Agreement or Guarantor Security Agreement.

Surety and Guaranty Agreement – That certain surety and guaranty agreement executed by Subsidiary Guarantors, in favor of Agent dated July 27, 2007, as the same may be amended, modified, confirmed, supplemented or replaced from time to time.

Taxes – Section 2.16(a).

Threshold Amount – A per annum rate equal to or greater than the Adjusted LIBOR Rate for a LIBOR Interest Period of one month plus 2.5%, as determined pursuant to the trustee report of such Collateralized Debt Offering.

Trademark Security Agreements – Collectively, those certain Trademark Security Agreements executed by Borrower and Cohen Bros. Financial Management, LLC in favor of Agent on July 27, 2007 as the same may be amended, modified, confirmed, supplemented or restated from time to time.

 

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Tricadia Agreement – The Assumption and Assignment Agreement, dated as of April 21, 2009, by and among Cohen Municipal Capital Management, LLC, Borrower, Cohen Municipal Capital Management, a division of Cohen & Company Financial Management, LLC (a Subsidiary Guarantor), Tricadia Municipal Management, LLC, and Tricadia Capital Management, LLC, pursuant to which the Portfolio Management Agreement, dated as of November 9, 2006, by and between and Non-Profit Preferred Funding Trust I and Cohen Municipal Capital Management, LLC (as assignee of Cohen Municipal Capital Management, a division of Cohen & Company Financial Management, LLC) was assigned to Tricadia Municipal Management, LLC.

Trust Preferred Notes – The notes issued by Post-Merger Parent to (i) Alesco Capital Trust I pursuant to that certain Junior Subordinated Indenture, dated as of June 25, 2007, by and between Parent and Wells Fargo Bank, N.A., and (ii) Sunset Financial Statutory Trust I pursuant to that certain Junior Subordinated Indenture, dated as of March 15, 2005, between Sunset Financial Resources, Inc. and Bank of New York Mellon (as successor to JPMorgan Chase Bank, National Association).

Unused Line Fee – The fee determined by multiplying (a) the positive difference, if any, between (i) the Maximum Revolving Credit Amount and (ii) the average daily balance of the Advances under the Revolving Credit during such quarter by (b) the rate of one-half of one percent (.50%) per annum, based on the number of days in such quarter.

UCC – The Uniform Commercial Code as adopted in the Commonwealth of Pennsylvania, as the same may be amended from time to time.

Website Posting – Section 10.8.

1.2 Other Capitalized Terms : All capitalized terms used without further definition herein shall have the respective meaning set forth in the UCC.

1.3 Accounting Principles : Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, this shall be done in accordance with GAAP as in effect on the Closing Date, to the extent applicable, except as otherwise expressly provided in this Agreement. If there are any changes in GAAP after the Closing Date that would affect the computation of the financial covenants in Section 6.8, such changes shall only be followed, with respect to such financial covenants, from and after the date this Agreement shall have been amended to take into account any such changes.

1.4 Construction : No doctrine of construction of ambiguities in agreements or instruments against the interest of the party controlling the drafting shall apply to this Agreement or any other Loan Documents.

SECTION 2. THE LOANS

2.1 Revolving Credit - Description :

(a)(i) Subject to the terms and conditions of this Agreement, each Lender hereby severally establishes for the benefit of Borrower a revolving credit facility (collectively, the “Revolving Credit”) which shall include Letters of Credit issued by Issuing Bank and cash Advances extended by Lenders to or for the benefit of Borrower from time to time hereunder (“Revolving

 

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Credit Loans”). The aggregate principal amount of all Revolving Credit Loans, unreimbursed Letters of Credit plus outstanding and undrawn Letters of Credit shall not, at any time, exceed the Borrowing Base. Subject to such limitation, the outstanding balance of Revolving Credit Loans may fluctuate from time to time, to be reduced by repayments made by Borrower, to be increased by future Revolving Credit Loans which may be made by Lenders and, subject to the provisions of Section 8 below, shall be due and payable on the Revolving Credit Maturity Date. If the aggregate principal amount of all Revolving Credit Loans, unreimbursed Letters of Credit plus outstanding and undrawn Letters of Credit at any time exceeds the Borrowing Base (such excess amount, an “Overadvance”), Borrower shall within five (5) Business Days after notice from Agent, repay the Overadvance in full.

(ii) Subject to the terms of this Agreement, each Lender severally agrees to lend to Borrower an amount equal to such Lender’s Pro Rata Percentage of the cash Advance requested by Borrower. The outstanding balance of Revolving Credit Loans, unreimbursed Letters of Credit plus outstanding and undrawn Letters of Credit of each Lender shall not exceed such Lender’s respective Revolving Credit Pro Rata Share.

(b) At Closing, Borrower shall execute and deliver a promissory note to each Lender for such Lender’s Pro Rata Percentage of the Maximum Revolving Credit Amount (collectively, as may be amended, supplemented, replaced or restated from time to time, the “Amended and Restated Revolving Credit Notes”). Each Amended and Restated Revolving Credit Note shall evidence Borrower’s, absolute, unconditional obligation to repay such Lender for all outstanding Revolving Credit Loans, unreimbursed Letters of Credit plus outstanding and undrawn Letters of Credit owed to such Lender, with interest as herein and therein provided. Each and every Advance under the Revolving Credit shall be deemed evidenced by the Amended and Restated Revolving Credit Notes, which are deemed incorporated herein by reference and made a part hereof.

(c) The term of the Revolving Credit shall expire on the Revolving Credit Maturity Date and on such date, unless having been sooner accelerated by Agent, all Revolving Credit Loans shall be due and payable in full (with any outstanding but undrawn Letters of Credit, cash collateralized to Agent’s satisfaction), and after such date no further Advances shall be available from Lenders.

2.2 Letters of Credit-Description :

(a) As part of the Revolving Credit and subject to its terms and conditions (including, without limitation, the Borrowing Base), Issuing Bank shall, upon the written request of Borrower which request shall not be given less than five (5) days prior to the issuance date, on behalf of and for the benefit of all Lenders, make available the Letters of Credit; the outstanding face amount of which shall not exceed, at any time, in the aggregate, the L/C Sublimit. Each Letter of Credit issued from time to time under the Revolving Credit which remains undrawn (and the amounts of draws on Letters of Credit prior to payment as hereinafter set forth) shall reduce dollar for dollar, the amount available to be borrowed under the Revolving Credit. Notwithstanding the foregoing, all Letters of Credit shall be in form and substance satisfactory to Issuing Bank and Agent. No Letter of Credit shall have an expiry date later than (i) 365 days from the date of issuance, provided that any such Letter of Credit may be extendable for successive periods each of up to one year, but not beyond ten (10) Business Days prior to the Revolving Credit Maturity Date or

 

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(ii) 10 Business Days prior to the Revolving Credit Maturity Date. Borrower shall execute and deliver to Issuing Bank all Letter of Credit Documents required by Issuing Bank for such purpose. Each Letter of Credit shall comply with the Letter of Credit Documents.

(b) Immediately upon the issuance of any Letter of Credit, Issuing Bank is deemed to have granted to each other Lender, and each other Lender is hereby deemed to have acquired, an undivided participating interest (without recourse or warranty), in accordance with each such other Lender’s respective Pro Rata Percentage, in all of Issuing Bank’s rights and liabilities with respect to such Letter of Credit. Each Lender shall be absolutely and unconditionally obligated without deduction or setoff of any kind, to Issuing Bank, according to its Pro Rata Percentage, to reimburse Issuing Bank on demand for any amount paid pursuant to any draws made at any time (including, without limitation, following the commencement of any bankruptcy, reorganization, receivership, liquidation or dissolution proceeding with respect to Borrower) under any Letter of Credit.

(c) In the event of any drawing under a Letter of Credit, Issuing Bank will promptly notify Borrower and Agent. Borrower shall, no later than 1:00 p.m. Eastern time on the Business Day such notice is given (if given prior to 11:00 a.m. Eastern time on such Business Day) or on the next Business Day if such notice is given after 11:00 a.m. Eastern time, absolutely and unconditionally reimburse Issuing Bank without offset or deduction of any kind, for any draws made under a Letter of Credit. Such reimbursement shall be made, in the event Borrower does not make such payment as required herein, by Lenders automatically making or having deemed made (without further request or approval of Borrower or Lenders, and irrespective of any conditions precedent under Section 4.8), a cash Advance (which shall be made as a Base Rate Loan) under the Revolving Credit. All cash Advances made by Agent which constitute a reimbursement to Issuing Bank for a draw under a Letter of Credit shall be repaid to Agent by Lenders, without deduction or setoff of any kind, in accordance with Section 2.5(b)(iii). All of Borrower’s Reimbursement Obligations hereunder with respect to Letters of Credit shall apply unconditionally and absolutely to all Letters of Credit issued hereunder on behalf of Borrower.

(d) The obligation of Borrower to reimburse Issuing Bank for drawings made (or for cash Advances made to cover drawings made) under the Letters of Credit shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances including, without limitation, the following circumstances:

(i) any lack of validity or enforceability of any Letter of Credit;

(ii) the existence of any claim, setoff, defense or other right that Borrower or any other Person may have at any time against a beneficiary or any transferee of any Letter of Credit (or any persons or entities for whom any such beneficiary or transferee may be acting), Agent, Issuing Bank, any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction;

(iii) any draft, demand, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

 

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(iv) payment by Issuing Bank under any Letter of Credit against presentation of a demand, draft or certificate or other document that does not comply with the terms of such Letter of Credit unless Issuing Bank shall have acted with willful misconduct or gross negligence in issuing such payment;

(v) any other circumstances or happening whatsoever that is similar to any of the foregoing; or

(vi) the fact that a Default or Event of Default shall have occurred and be continuing.

(e) If by reason of (i) any change after the Closing Date in any Requirement of Law or (ii) compliance by Issuing Bank or Lenders with any direction, reasonable request or requirement (whether or not having the force of law) of any governmental or monetary authority including, without limitation, Regulation D:

(i) Issuing Bank or Lenders shall be subject to any tax or other levy or charge of any nature or to any variation thereof (except for Taxes for which payments are due pursuant to, or excluded from, Section 2.16) or to any penalty with respect to the maintenance or fulfillment of its obligations under this Section 2.2, whether directly or by such being imposed on or suffered by Issuing Bank or Lenders;

(ii) any reserve, deposit or similar requirement is or shall be applicable, imposed or modified in respect of any Letter of Credit issued by Issuing Bank; or

(iii) there shall be imposed on Issuing Bank or any Lender any other condition regarding this Section 2.2 or any Letter of Credit; and the result of the foregoing is to directly or indirectly increase the cost to Issuing Bank or any Lender of issuing, creating, making or maintaining any Letter of Credit or to reduce the amount receivable in respect thereof by Issuing Bank or any Lender, then and in any such case, Issuing Bank shall, after the additional cost is incurred or the amount received is reduced, notify Borrower and Borrower shall pay on demand such amounts as may be necessary to compensate Issuing Bank or any Lender for such additional cost or reduced receipt, together with interest on such amount from the date demanded until payment in full thereof at a rate per annum equal at all times to the Adjusted Revolving Credit Base Rate; provided that Borrower shall not be obligated for any amounts which may be payable as a result of changes occurring more than one hundred eighty (180) days prior to the date Agent notifies Borrower of such changes. A certificate signed by an officer of Issuing Bank or such Lender as to the amount of such increased cost or reduced receipt showing in reasonable detail the basis for the calculation thereof, submitted to Borrower by Issuing Bank or such Lender shall, except for manifest error and absent written notice from Borrower to Issuing Bank or such Lender within ten (10) days from submission, be final, conclusive and binding for all purposes.

(f) (i) In addition to amounts payable as elsewhere provided in this Section 2.2, without duplication, Borrower hereby agrees to protect, indemnify, pay and save Agent, Issuing Bank and each Lender harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys’ fees) which Agent, Issuing Bank and each Lender may incur or be subject to as a consequence, direct or indirect, of (a) the issuance of

 

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the Letters of Credit or (b) the failure of Issuing Bank to honor a drawing under any Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Government Authority (all such acts or omissions herein called “Government Acts”) in each case except for claims, demands, liabilities, damages, losses, costs, charges and expenses arising from acts or conduct of Issuing Bank constituting gross negligence or willful misconduct.

(ii) As among Borrower and Issuing Bank, Borrower assumes all risks of the acts and omissions of or misuse of the Letters of Credit issued by Issuing Bank by the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, unless caused by the gross negligence or willful misconduct of Issuing Bank, Issuing Bank shall not be responsible: (A) for the form, validity, sufficiency, accuracy, genuineness or legal effects of any document submitted by any party in connection with the application for and issuance if such Letters of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits there under or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (C) for failure of the beneficiary of any such Letter of Credit to comply fully with conditions required in order to draw upon such Letter of Credit; (D) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they are in cipher; (E) for errors in interpretation of technical terms; (F) for any loss or delay in the transmission of any document or required in order to make a drawing under such Letter of Credit or of the proceeds thereof; (G) for the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; and (H) for any consequences arising from causes beyond the control of Issuing Bank, including, without limitation, any Government Acts. None of the above shall affect, impair or prevent the vesting of any of Issuing Bank’s rights or powers hereunder.

(iii) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by Issuing Bank in connection with the Letters of Credit issued by it or the related certificates, if taken or omitted in good faith and in the absence of gross negligence, shall not create any liability on the part of Issuing Bank to Borrower.

2.3 Reserved :

2.4 Reserved :

 

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2.5 Advances, Conversions, Renewals and Payments :

(a) (i) Except to the extent otherwise set forth in this Agreement (or in the case of an Interest Hedging Instrument under the applicable agreements), all payments of principal and of interest on the Revolving Credit, Reimbursement Obligations, the Unused Line Fee, the L/C Fees, Expenses, indemnification obligations and all other fees, charges and any other Obligations of Borrower hereunder, shall be made to Agent at its main banking office, 1701 Route 70 East, Cherry Hill, New Jersey, 08034, in United States dollars, in immediately available funds. Alternatively, Agent, on behalf of all Lenders, shall have the unconditional right and discretion (and Borrower hereby authorizes Agent) to make a cash Advance under the Revolving Credit to pay, and/or to charge Borrower’s operating and/or deposit account(s) with Agent or any Lender for, all of Borrower’s Obligations as they become due from time to time under this Agreement including without limitation, interest, principal, fees and reimbursement of Expenses. Any payments received prior to 2:00 p.m. Eastern time on any Business Day shall be deemed received on such Business Day. Any payments (including any payment in full of the Obligations), received after 2:00 p.m. Eastern time on any Business Day shall be deemed received on the immediately following Business Day.

(ii) Agent will have the right to collect and receive all payments of the Obligations, and to collect and receive all reimbursements for draws made under the Letters of Credit, together with all fees, charges or other amounts due under this Agreement and the Loan Documents and shall promptly distribute such payments to Lenders and Issuing Bank in accordance with the terms of Sections 2.5 and 2.12.

(iii) If any such payment received by Agent is rescinded, determined to be unenforceable or invalid or is otherwise required to be returned for any reason at any time, whether before or after termination of this Agreement and the Loan Documents, each Lender shall, upon written notice from Agent, promptly pay over to Agent its Pro Rata Percentage of the amount so rescinded, held unenforceable or invalid or required to be returned, together with interest and other fees thereon if also required to be rescinded or returned.

(iv) All payments by Agent and Lenders to each other hereunder shall be in immediately available funds. Agent will at all times maintain proper books of account and records reflecting the interest of each Lender in the Revolving Credit and the Letters of Credit, in a manner customary to Agent’s keeping of such records, which books and records shall be available for inspection by each Lender at reasonable times during normal business hours, at such Lender’s sole expense. In the event that any Lender shall receive any payments (whether prior to or after the occurrence of an Event of Default) in reduction of the Obligations in an amount greater than its applicable Pro Rata Percentage in respect of indebtedness to Lenders evidenced hereby (including, without limitation, amounts obtained by reason of setoffs), such Lender shall hold such excess in trust (to the extent such Lender is lawfully able to do so) for Agent (on behalf of all other Lenders) and shall promptly remit to Agent such excess amount so that the amounts received by each Lender hereunder shall at all times be in accordance with its applicable Pro Rata Percentage. To the extent necessary for each Lender’s actual percentage of all outstanding Loans to equal its applicable Pro Rata Percentage, the Lender having a greater share of any payment(s) than its applicable Pro Rata Percentage shall acquire a participation in the applicable outstanding balances of the Revolving Credit Pro Rata Shares of the other Lenders as determined by Agent.

 

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(b) Cash Advances which may be made by Lenders from time to time under the Revolving Credit shall be made available for the use and benefit of Borrower by crediting such proceeds to Borrower’s operating account with Agent as designated in the Advance Request.

(i) All cash Advances requested by Borrower under the Revolving Credit that are (a) LIBOR Rate Loans must be in the minimum amount of Five Hundred Thousand Dollars ($500,000) and integral multiples of One Hundred Thousand Dollars ($100,000) in excess thereof and (b) Base Rate Loans must be in the minimum amount of One Hundred Thousand Dollars ($100,000) and integral multiples of Fifty Thousand Dollars ($50,000) in excess thereof. All cash Advances requested by Borrower under the Revolving Credit are to be in writing pursuant to a written request (“Advance Request”) executed by an Authorized Officer in the form of Exhibit D attached hereto along with a Borrowing Base Certificate. Requests for Base Rate Loans must be requested by 10:00 A.M., Eastern time, on the date such Advance is to be made. Requests for LIBOR Rate Loans must be requested by 10:00 A.M. Eastern time, three (3) Business Days in advance of the date such Advance is to be made and must specify the amount of the LIBOR Rate Loan and the LIBOR Interest Period. If no LIBOR Interest Period is specified, the LIBOR Interest Period shall be deemed to be a one month period.

(ii) (a) Between each Settlement Date, Agent, in its capacity as a Lender, shall have the discretion (without any duty or obligation regardless of any prior practice or procedures) to make all cash Advances for the account and on behalf of each Lender in accordance with each Lender’s Pro Rata Percentage. Periodically but not less frequently than once every week on the same day of each week, unless such day is not a Business Day, in which event such determination shall be made the next Business Day (“Settlement Date”), Agent shall make a determination of the appropriate dollar amount of each Lender’s Revolving Credit Loans based upon each such Lender’s Pro Rata Percentage of all then outstanding Revolving Credit Loans, which amounts shall be calculated as of the close of the Business Day immediately preceding each respective Settlement Date. Amounts of principal paid to Agent by Borrower from time to time, between Settlement Dates, shall be applied to the outstanding balance of Revolving Credit Loans made by Agent, as a Lender pursuant hereto, with the outstanding balance of Revolving Credit Loans made by each other Lender to be adjusted on the next Settlement Date. Interest shall accrue and each Lender shall be entitled to receive interest at the applicable rate only on the actual outstanding dollar amount of its respective outstanding Revolving Credit Loans without regard to a prospective settlement. On each Settlement Date, Agent shall then issue to each Lender a settlement schedule containing information with respect to the status of the Revolving Credit Loans and the relevant net positions of Lenders and the outstanding balances of their respective Revolving Credit Loans as of the close of the Business Day preceding such Settlement Date. Each settlement schedule shall show the net amount then owing by each Lender to Agent or by Agent to each such Lender based upon the aggregate cash Advances made and payments received since the most recent Settlement Date and settlement among Lenders and Agent shall be made in accordance with the direction of Agent no later than 11:00 A.M. Eastern time, on each Settlement Date. To the extent Agent is not reimbursed by any Lender on a Settlement Date in accordance with Agent’s direction, Borrower shall immediately repay Agent on demand the amount of any reimbursement not so made by any Lender on the same Business Day (if notice is received by Borrower by 11:00 a.m.) and on the next Business Day if notice is received after 11:00 a.m. All Revolving Credit Loans made under this Section 2.5(b)(ii) shall be made as Base Rate Loans.

 

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1) Each Lender is absolutely and unconditionally obligated without setoff or deduction of any kind, to remit to Agent on the Settlement Date any amount showing to be owing to Agent by such Lender on the settlement schedule for such date. Agent shall also be entitled to recover any and all actual losses and damages (including without limitation, reasonable attorneys’ fees) from any party failing to remit payment on the Settlement Date in accordance with this Agreement. Agent may set off the obligations of such party under this paragraph against any distributions or payments of the Obligations, which such party would otherwise make available at any time.

(ii) (b) In lieu of the procedure set forth in the preceding subparagraph 2.5(b)(ii), Agent may provide Lenders with notice that Borrower has requested a Base Rate Loan, on the same Business Day as such request and request each Lender to provide Agent with such Lender’s Pro Rata Percentage of such requested Base Rate Loan prior to Agent’s making such Base Rate Loan. Upon receipt of such notice from Agent prior to 11:00 A.M. Eastern time, each Lender shall remit to Agent its respective Pro Rata Percentage of such requested Base Rate Loan, prior to 2:00 P.M. Eastern time, on the Business Day Agent is scheduled to make such Base Rate Loan in accordance with Section 2.5(b)(i) hereof. If notice is received after 11:00 A.M. Eastern time, each Lender shall remit its respective Pro Rata Percentage of the Base Rate Loan on the next Business Day.

1) In lieu of the procedure set forth in the preceding subparagraph 2.5(b)(ii), Agent may provide Lenders with notice that Borrower has requested a LIBOR Rate Loan, three (3) Business Days in advance of the requested LIBOR Rate Loan and request each Lender to provide Agent with such Lender’s Pro Rata Percentage of such requested LIBOR Rate Loan prior to Agent’s making such LIBOR Rate Loan. Upon receipt of such notice from Agent, each Lender shall remit to Agent its respective Pro Rata Percentage of such requested LIBOR Rate Loan, prior to 2:00 P.M. Eastern time, on the Business Day Agent is scheduled to make such LIBOR Rate Loan in accordance with Section 2.5(b)(i) hereof.

2) Neither Agent nor any other Lender shall be obligated, for any reason whatsoever, to remit or advance the share of any other Lender. Agent shall not be required to make the full amount of the requested cash Advance unless and until it receives funds representing each other Lender’s Pro Rata Percentage of such requested cash Advance, but Agent shall advance to Borrower that portion of the requested cash Advance equal to the Pro Rata Percentages of such requested cash Advance which it has received from Lenders.

3) If Agent does not receive each other Lender’s Pro Rata Percentage of such requested cash Advance, and Agent elects, in its sole discretion, to make the requested cash Advance on behalf of Lenders or any of them, Agent shall be entitled to recover each Lender’s Pro Rata Percentage of each cash Advance together with interest at a per annum rate equal to the Federal Funds Rate during the period commencing on the date such cash Advance is made and ending on (but excluding) the date Agent recovers such amount. Each Lender is absolutely and unconditionally obligated, without deduction or setoff of any kind, to forward to Agent its Pro Rata Percentage of each cash Advance made pursuant to the terms of this Agreement. To the extent Agent is not reimbursed by such Lender, Borrower shall repay Agent immediately on demand, such amount. Agent shall also be entitled to recover any and all actual losses and damages (including, without limitation, reasonable attorneys’ fees) from any Lender failing to so advance upon demand

 

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of Agent. Agent may set off the obligations of a Lender under this paragraph against any distributions or payments of the Obligations, which Agent would otherwise make available to such Lender at any time.

(iii) To the extent and during the time period in which any Lender fails to provide or delays providing its respective payment to Agent pursuant to clause (iii) or (iv) above, such Lender’s percentage of all payments of the Obligations (but not the Pro Rata Percentage of future Advances required to be funded by such Lender) shall decrease to reflect the actual percentage which its actual outstanding Loans bears to the total outstanding Loans of all Lenders. During the time period in which any Lender fails to provide or delays providing its respective payment to Agent pursuant to clause (iii) or (iv) above, such 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 Loan Documents. All amendments, waivers and other modifications of this Agreement and the Loan Documents may be made without regard to such Lender.

2.6 Interest :

(a) The unpaid principal balance of cash Advances under the Revolving Credit shall bear interest, subject to the terms hereof at a per annum rate equal to, at Borrower’s option, the Adjusted Revolving Credit Base Rate or Revolving Credit LIBOR Rate.

(b) Changes in the interest rate applicable to Base Rate Loans shall become effective on the same day that there is a change in the Base Rate.

(c) Interest on Base Rate Loans shall be payable monthly, in arrears, on the first day of each month, beginning on the first day of the first full calendar month after the Closing Date, and on the Revolving Credit Maturity Date. Interest on LIBOR Rate Loans shall be payable on the last day of the LIBOR Interest Period, and on the Revolving Credit Maturity Date.

(d) Borrower may elect from time to time to convert Base Rate Loans to LIBOR Rate Loans, by delivering a Notice of Conversion/Extension to Agent at least three (3) Business Days prior to the proposed date of conversion. In addition, Borrower may elect from time to time to convert all or any portion of a LIBOR Rate Loan to a Base Rate Loan by giving Agent irrevocable written notice thereof by 12:00 noon one (1) Business Day prior to the proposed date of conversion. LIBOR Rate Loans may only be converted to Base Rate Loans on the last day of the applicable LIBOR Interest Period. If the date upon which a LIBOR Rate Loan is to be converted to a Base Rate Loan is not a Business Day, then such conversion shall be made on the next succeeding Business Day and during the period from such last day of a LIBOR Interest Period to such succeeding Business Day such Loan shall bear interest as if it were a Base Rate Loan. All or any part of outstanding Base Rate Loans may be converted as provided herein; provided that unless Agent otherwise consents thereto, no Loan may be converted into a LIBOR Rate Loan when any Event of Default has occurred and is continuing.

(e) Borrower may continue any LIBOR Rate Loans upon the expiration of a LIBOR Interest Period with respect thereto by delivering a Notice of Conversion/Extension to Agent at least three (3) Business Days prior to the proposed date of extension; provided that, unless Agent otherwise consents thereto, no LIBOR Rate Loan may be continued as such when any Event of

 

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Default has occurred and is continuing, in which case such Loan shall be automatically converted to a Base Rate Loan at the end of the applicable LIBOR Interest Period with respect thereto. If Borrower shall fail to give timely notice of an election to continue a LIBOR Rate Loan, or the continuation of LIBOR Rate Loans is not permitted hereunder, each such LIBOR Rate Loan shall be automatically converted to a Base Rate Loan at the end of the applicable LIBOR Interest Period with respect thereto.

(f) Borrower may not have more than five (5) LIBOR Rate Loans outstanding at any time.

2.7 Additional Interest Provisions :

(a) Interest on the LIBOR Rate Loans shall be based on a three hundred sixty (360) day year but charged for the actual number of days elapsed. Interest on Base Rate Loans shall be based on a three hundred sixty five (365)/three hundred sixty six (366) day year but charged for the actual number of days elapsed.

(b) After the occurrence and during the continuance of an Event of Default hereunder, Agent may increase the per annum effective rate of interest on all Loans, including amounts drawn and not yet reimbursed under Letters of Credit, to a rate equal to two hundred (200) basis points in excess of the applicable interest rate (“Default Rate”). Such increase shall be retroactive from and after the date of the occurrence of the Event of Default.

(c) Borrower shall not request and Lenders shall not make any LIBOR Rate Loans while an Event of Default exists.

(d) All contractual rates of interest chargeable on outstanding Loans, shall continue to accrue and be paid even after a Default or Event of Default, maturity, acceleration, judgment, bankruptcy, insolvency proceedings of any kind or the happening of any event or occurrence similar or dissimilar.

(e) In no contingency or event whatsoever shall the aggregate of all amounts deemed interest hereunder and charged or collected pursuant to the terms of this Agreement exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such court determines Lenders have charged or received interest hereunder in excess of the highest applicable rate, Agent, on behalf of Lenders, shall in its sole discretion, apply and set off such excess interest received by Lenders against other Obligations due or to become due and such rate shall automatically be reduced to the maximum rate permitted by such law.

2.8 Fees :

(a) Borrower shall pay to Agent and Lenders all fees required to be paid to Agent or Lenders, as applicable, pursuant to, and in accordance with, the terms of the Fee Letter.

(b) (i) Borrower shall pay to Agent, for the benefit of Lenders in accordance with their Pro Rata Percentage, letter of credit fees at a per annum rate equal to six and one-half percent (6.50%) of the average daily maximum amount available to be drawn under each Letter of Credit on the first day of each calendar quarter in arrears. Such fees are the “L/C Fees”.

 

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(ii) Borrower shall also pay to Issuing Bank for the account of Issuing Bank all of Issuing Bank’s standard charges (including without limitation all cable and wire transfer charges) for the account of Issuing Bank for the issuance, amendment, negotiation/payment, extension and cancellation of each such Letter of Credit. In addition, Borrower shall pay to Issuing Bank for Issuing Bank’s own account an additional fronting fee equal to one quarter of one percent (0.25%) per annum (“Fronting Fee”) on the average daily maximum amount available to be drawn under each Letter of Credit on the first day of each calendar quarter in arrears.

(c) Borrower shall unconditionally pay to Agent, for the benefit of Lenders in accordance with their Pro Rata Percentage, the Unused Line Fee, which shall be due and payable quarterly in arrears on the first day of each calendar quarter after the Closing Date, and on the Revolving Credit Maturity Date.

(d) All fees provided for in this Section 2.8 shall be based on a three hundred sixty (360) day year and charged for the actual number of days elapsed.

2.9 Prepayments :

(a) Borrower may, upon three (3) Business Days prior notice, voluntarily prepay the Revolving Credit Loans in whole or in part (but in no event may such prepayment be less Five Hundred Thousand Dollars ($500,000)) at any time or from time to time; provided that, any prepayment of a LIBOR Rate Loan shall be subject to Section 2.10. Any prepayment shall be accompanied by all accrued and unpaid interest.

(b) (i) Borrower may, upon five (5) Business Days prior notice, permanently reduce the M