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Exhibit 10.1
CREDIT AND SECURITY AGREEMENT
BY AND BETWEEN
GARDENBURGER, INC.
AND
WELLS FARGO BANK, NATIONAL ASSOCIATION
Acting through its WELLS FARGO BUSINESS CREDIT operating division
November 22, 2005
TABLE OF CONTENTS
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CREDIT AND SECURITY AGREEMENT
Dated as of November 22, 2005
GARDENBURGER, INC., an Oregon corporation (the “Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION acting through its WELLS FARGO BUSINESS CREDIT operating division (together with its successors and assigns, the “Lender”) hereby agree as follows:
Section 1.1 Definitions . Except as otherwise expressly provided in this Agreement, the following terms shall have the meanings given them in this Section:
“Accounts” shall have the meaning given it under the UCC.
“Accounts Advance Rate” means up to eighty-five percent (85%), or such lesser rate as the Lender in its sole discretion may deem appropriate from time to time.
“Advance” means a Revolving Advance or a Term Advance.
“Affiliate” or “Affiliates” means any Person controlled by, controlling or under common control with the Borrower, including any Subsidiary of the Borrower. For purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.
“Agreement” means this Credit and Security Agreement.
“Annex Convertible Senior Subordinated Note” means the Convertible Senior Subordinated Note, as amended and restated, currently held by Annex Holdings I LP.
“Approved Plan of Reorganization” means a plan of reorganization that is acceptable to the Lender in its sole discretion, given all material changes in the Borrower’s operations and providing for Exit Financing by the Lender, which plan of reorganization is confirmed by the Bankruptcy Court within six months after the Funding Date.
“Availability” means the amount, if any, by which the Borrowing Base exceeds the sum of (i) the outstanding principal balance of the Revolving Note and (ii) the L/C Amount.
“Availability Reserve” means a reserve in the amount of $500,000.
“Bankruptcy Case” means the chapter 11 bankruptcy case in which the Borrower is a debtor and debtor-in-possession, pending before the United States Bankruptcy Court for the Central District of California, bearing case number 05-19539-JB.
“Bankruptcy Code” means Title 11 United States Code and the Federal Rules of Bankruptcy Procedure, as amended from time to time.
“Bankruptcy Court” means the United States Bankruptcy Court for the Central District of California, in which the Borrower’s Bankruptcy Case is pending.
“Borrowing Base” means at any time the lesser of:
(a) The Maximum Line Amount; or
(b) Subject to change from time to time in the Lender’s sole discretion, the sum of:
(i) The product of the Accounts Advance Rate times Eligible Accounts, plus
(ii) The lesser of (A) the lesser of (1) the sum of (x) the product of the Inventory Advance Rate applicable to raw materials times Eligible Inventory constituting raw materials plus (y) the product of the Inventory Advance Rate applicable to finished goods times Eligible Inventory constituting finished goods or (2) 85% of the Net Orderly Liquidation Value of Eligible Inventory or (B) $4,500,000, less
(iii) All Reserves, less
(iv) Obligations that the Borrower owes to the Lender that have not yet been advanced on the Revolving Note, and the dollar amount that the Lender in its reasonable discretion then determines to be a reasonable determination of the Borrower’s credit exposure with respect to Wells Fargo Bank Affiliate Obligations.
“Business Day” means a day on which the Federal Reserve Bank of New York is open for business and, if such day relates to a LIBOR Advance, a day on which dealings are carried on in the London interbank eurodollar market.
“Capital Expenditures” means for a period, any expenditure of money during such period for the purchase or construction of assets, or for improvements or additions thereto, which are capitalized on the Borrower’s balance sheet.
“Change of Control” means that either Scott C. Wallace, James W. Linford or Richard D. Werblin shall cease to actively manage the Borrower’s day-to-day business activities.
“Collateral” means all of the Borrower’s Accounts, chattel paper and electronic chattel paper, commercial tort claims, deposit accounts, documents, Equipment, General Intangibles (including payment intangibles), goods, instruments, Inventory, Investment Property, letter-of-credit rights, letters of credit, software, supporting obligations, and all sums on deposit in any Collateral Account, and any items in any Lockbox; together with (i) all substitutions and replacements for and products of any of the foregoing; (ii) in the case of all goods, all accessions; (iii) all accessories, attachments, parts, equipment and repairs now or hereafter attached or affixed to or used in connection with any goods; (iv) all warehouse receipts, bills of lading and other documents of title now or hereafter covering such goods; (v) all collateral subject to the Lien of any Security Document; (vi) any money, or other assets of the Borrower that now or
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hereafter come into the possession, custody, or control of the Lender; (vii) all sums on deposit in the Special Account; (viii) proceeds of any and all of the foregoing; (ix) books and records of the Borrower, including all mail or electronic mail addressed to the Borrower and all rights of access to such books, records and information, and all property in which such books, records and information are stored, recorded and maintained; (x) all liens, guaranties, rights, remedies and privileges pertaining to any of the foregoing ((i) through (ix), including the right of stoppage in transit; and (xi) all of the foregoing, whether now owned or existing or hereafter acquired or arising or in which the Borrower now has or hereafter acquires any rights.
“Collateral Account” means the “Lender Account” as defined in the Wholesale Lockbox and Collection Account Agreement.
“Commercial Letter of Credit Agreement” means an agreement governing the issuance of documentary letters of credit by the Lender entered into between the Borrower as applicants and the Lender as issuer.
“Commitment” means the Lender’s commitment to make Advances to, and to issue Letters of Credit for the account of, the Borrower.
“Constituent Documents” means with respect to any Person, as applicable, such Person’s certificate of incorporation, articles of incorporation, by-laws, certificate of formation, articles of organization, limited liability company agreement, management agreement, operating agreement, shareholder agreement, partnership agreement or similar document or agreement governing such Person’s existence, organization or management or concerning disposition of ownership interests of such Person or voting rights among such Person’s owners.
“Credit Facility” means the credit facility under which Revolving Advances and Letters of Credit may be made available to the Borrower by the Lender under Article II.
“Cut-off Time” means 10:00 a.m. Pasadena, California time; provided , however , with respect to December 24 th , December 31 st (if such dates are Business Days), and the last Business Day of any calendar month, “Cut-off Time” shall mean 9:30 a.m. Pasadena, California time.
“Debt” means of a Person as of a given date, all items of indebtedness or liability which in accordance with GAAP would be included in determining total liabilities as shown on the liabilities side of a balance sheet for such Person and shall also include the aggregate payments required to be made by such Person at any time under any lease that is considered a capitalized lease under GAAP.
“Default” means an event that, with giving of notice or passage of time or both, would constitute an Event of Default.
“Default Period” means any period of time beginning on the day a Default or Event of Default occurs and ending on the date identified by the Lender in writing as the date that such Default or Event of Default has been cured or waived.
“Default Rate” means an annual interest rate in effect during a Default Period or following the Termination Date, which interest rate shall be equal to three percent (3%) over the
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applicable Floating Rate or the LIBOR Advance Rate, as the case may be, as such rate may change from time to time.
“Director” means a director if the Borrower is a corporation, a governor or manager if the Borrower is a limited liability company, or a general partner if the Borrower is a partnership.
“Eligible Accounts” means all unpaid Accounts arising from the sale or lease of goods or the performance of services, net of any credits, but excluding any such Accounts having any of the following characteristics:
(i) That portion of Accounts unpaid 60 days or more after the invoice date to the extent not otherwise reserved in the Borrower’s allowance for Accounts deductions;
(ii) That portion of Accounts related to goods or services with respect to which the Borrower has received notice of a claim or dispute, which are subject to a claim of offset or a contra account, or which reflect a reasonable reserve for warranty claims or returns;
(iii) That portion of Accounts not yet earned by the final delivery of goods or rendition of services, as applicable, by the Borrower to the customer, including progress billings, and that portion of Accounts for which an invoice has not been sent to the applicable account debtor;
(iv) Accounts constituting (i) proceeds of copyrightable material unless such copyrightable material shall have been registered with the United States Copyright Office, or (ii) proceeds of patentable inventions unless such patentable inventions have been registered with the United States Patent and Trademark Office;
(v) Accounts owed by any unit of government, whether foreign or domestic ( provided , however , that there shall be included in Eligible Accounts that portion of Accounts owed by such units of government for which the Borrower has provided evidence satisfactory to the Lender that (A) the Lender has a first priority perfected security interest and (B) such Accounts may be enforced by the Lender directly against such unit of government under all applicable laws);
(vi) Accounts denominated in any currency other than United States dollars;
(vii) Accounts owed by an account debtor located outside the United States and Canada which are not (A) backed by a bank letter of credit naming the Lender as beneficiary or assigned to the Lender, in the Lender’s possession or control, and with respect to which a control agreement concerning the letter-of-credit rights is in effect, and acceptable to the Lender in all respects, in its sole discretion, or (B) covered by a foreign receivables insurance policy acceptable to the Lender in its sole discretion;
(viii) Accounts owed by an account debtor that is insolvent, the subject of bankruptcy proceedings or has gone out of business;
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(ix) Accounts owed by an Owner, Subsidiary, Affiliate, Officer or employee of the Borrower;
(x) Accounts not subject to a duly perfected security interest in the Lender’s favor or which are subject to any Lien in favor of any Person other than the Lender (other than the Lien in favor of Gordon Brothers securing the Gordon Brothers Term Loan);
(xi) That portion of Accounts that has been restructured, extended, amended or modified;
(xii) That portion of Accounts that constitutes advertising, finance charges, service charges or sales or excise taxes;
(xiii) Accounts owed by (A) either DOT Foods, Inc. and C&S Wholesale Grocers, Inc., regardless of whether otherwise eligible, to the extent that the aggregate balance of Accounts owing by such account debtor exceeds 30% of the aggregate amount of all Accounts, or (B) any other account debtor, regardless of whether otherwise eligible, to the extent that the aggregate balance of Accounts owing by such account debtor exceeds 15% of the aggregate amount of all Accounts; provided that the Lender shall have the ability after the Funding Date to adjust concentration limits applicable to individual account debtors of the Borrower in the Lender’s sole discretion;
(xiv) Accounts owed by an account debtor, regardless of whether otherwise eligible, if 25% or more of the total amount of Accounts due from such debtor is ineligible under clauses (i), (ii), or (x) above; and
(xv) Accounts, or portions thereof, otherwise deemed ineligible by the Lender in its sole discretion.
“Eligible Equipment” means that Equipment designated by the Lender as eligible from time to time in its sole discretion.
“Eligible Inventory” means all Inventory of the Borrower, valued at the lower of cost or market in accordance with GAAP; but excluding any Inventory having any of the following characteristics:
(i) Inventory that is: in-transit; located at any warehouse, job site or other premises not approved by the Lender in writing; not subject to a duly perfected first priority security interest in the Lender’s favor; subject to any lien or encumbrance that is subordinate to the Lender’s first priority security interest; covered by any negotiable or non-negotiable warehouse receipt, bill of lading or other document of title; on consignment from any Person; on consignment to any Person or subject to any bailment unless such consignee or bailee has executed an agreement with the Lender;
(ii) Supplies, packaging, maintenance parts or sample Inventory, or customer supplied parts or Inventory;
(iii) Work-in-process Inventory;
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(iv) Inventory that is damaged, defective, obsolete, slow moving or not currently saleable in the normal course of the Borrower’s operations, or the amount of such Inventory that has been reduced by shrinkage (“slow moving” refers to Inventory that has been on hand with the Borrower for more than six (6) months);
(v) Inventory that the Borrower has returned, has attempted to return, is in the process of returning or intends to return to the vendor thereof;
(vi) Inventory that is perishable or live;
(vii) Inventory manufactured by the Borrower pursuant to a license unless the applicable licensor has agreed in writing to permit the Lender to exercise its rights and remedies against such Inventory;
(viii) Inventory that is subject to a Lien in favor of any Person other than the Lender (other than the Lien in favor of Gordon Brothers securing the Gordon Brothers Term Loan);
(ix) Inventory stored at locations holding less than 5% of the aggregate value of Borrower’s Inventory, provided that, with respect to Inventory that is stored at any location that is under the control of either Millard Refrigerated Services, Inc. or AmeriCold Logistics, LLC, such Inventory shall only be deemed ineligible under this clause (ix) in the event that the Inventory stored in any such location has a book value of less than $100,000; and
(x) Inventory otherwise deemed ineligible by the Lender in its sole discretion.
“Environmental Law” means any federal, state, local or other governmental statute, regulation, law or ordinance dealing with the protection of human health and the environment.
“Equipment” means all of the Borrower’s equipment, as such term is defined in the UCC, whether now owned or hereafter acquired, including all present and future machinery, vehicles, furniture, fixtures, manufacturing equipment, shop equipment, office and recordkeeping equipment, parts, tools, supplies, and including specifically the goods described in any equipment schedule or list herewith or hereafter furnished to the Lender by the Borrower.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that is a member of a group which includes the Borrower and which is treated as a single employer under Section 414 of the IRC.
“Event of Default” is defined in Section 7.1.
“Existing Credit Facility” means that certain Revolving Credit and Term Loan Agreement dated as of January 10, 2002, as amended, between the Borrower and CapitalSource Finance LLC, as agent and lender.
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“Exit Financing” means the credit facility to be provided by the Lender to the Borrower after the Bankruptcy Court confirms an Approved Plan of Reorganization and pursuant to such Approved Plan of Reorganization; the terms of such credit facility to be substantially similar to the terms set forth in this Agreement as modified by the Exit Financing Commitment Letter attached hereto as Exhibit E.
“Filing Date” means October 14, 2005, the date of commencement of the Bankruptcy Case.
“Financial Covenants” means the covenants set forth in Section 6.2.
“Final Financing Order” means the order defined in Section 4.1(t).
“Floating Rate” means (i) with respect to Revolving Advances evidenced by the Revolving Note, an annual interest rate equal to the sum of the Prime Rate plus one half of one percent (0.50%), and (ii) with respect to Term Advances evidenced by the Term Note, an annual interest rate equal to the sum of the Prime Rate plus one percent (1.00%), which interest rate shall, in each case, change when and as the Prime Rate changes.
“Floating Rate Advance” means an Advance bearing interest at the Floating Rate.
“Funding Date” is defined in Section 2.1.
“GAAP” means generally accepted accounting principles, applied on a basis consistent with the accounting practices applied in the financial statements described in Section 5.6.
“General Intangibles” shall have the meaning given it under the UCC.
“Gordon Brothers” means GB Retail Funding, LLC, a Delaware limited liability company.
“Gordon Brothers Credit Agreement” means that certain Credit and Security Agreement of even date herewith by and between the Borrower as borrower thereunder and Gordon Brothers as lender thereunder.
“Gordon Brothers Term Loan” means the term loan in an aggregate principal amount not to exceed $5,000,000 made by Gordon Brothers to the Borrower concurrently with the closing of this Agreement.
“Hazardous Substances” means pollutants, contaminants, hazardous substances, hazardous wastes, petroleum and fractions thereof, and all other chemicals, wastes, substances and materials listed in, regulated by or identified in any Environmental Law.
“Indemnified Liabilities” is defined in Section 8.6.
“Indemnitees” is defined in Section 8.6.
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“Infringement” or “Infringing” when used with respect to Intellectual Property Rights means any infringement or other violation of Intellectual Property Rights.
“Intellectual Property Rights” means all actual or prospective rights arising in connection with any intellectual property or other proprietary rights, including all rights arising in connection with copyrights, patents, service marks, trade dress, trade secrets, trademarks, trade names or mask works.
“Intellectual Property Security Agreement” means each and every Intellectual Property Security Agreement now or hereafter executed by the Borrower in favor of the Lender dated the same date as this Agreement.
“Intercreditor Agreement” means an intercreditor agreement between the Lender and Gordon Brothers in form and substance satisfactory to the Lender, which intercreditor agreement shall include provisions for subordination of Gordon Brothers’ Liens on the Collateral (other than the IP Collateral) to the Security Interest, a license for the Lender to use the intellectual property collateral in connection with any liquidation by the Lender of the Collateral (other than the IP Collateral) and such other provisions as the Lender shall require in order to protect its rights with respect to the Collateral (other than the IP Collateral).
“Interest Expense” means for any period, the Borrower’s total gross interest expense during such period (excluding interest income), and shall in any event include (i) interest expensed (whether or not paid) on all Debt and (ii) the portion of any capitalized lease obligation allocable to interest expense.
“Interest Payment Date” is defined in Section 2.10(a).
“Interest Period” means the period that commences on (and includes) the Business Day on which either a LIBOR Advance is made or continued pursuant to Sections 2.2(a) or 2.3(b), or on which a Floating Rate Advance is converted to a LIBOR Advance pursuant to Section 2.3(a), and ending on (but excluding) the Business Day numerically corresponding to such date that is one, three or six months thereafter as designated by the Borrower, during which period the outstanding principal balance of the LIBOR Advance shall bear interest at the LIBOR Advance Rate; provided , however , that:
(a) No Interest Period may be selected for an Advance for a principal amount less than Five Hundred Thousand Dollars ($500,000), and no more than three (3) different Interest Periods may be outstanding at any one time;
(b) If an Interest Period would otherwise end on a day which is not a Business Day, then the Interest Period shall end on the next Business Day thereafter, unless that Business Day is the first Business Day of a month, in which case the Interest Period shall end on the last Business Day of the preceding month);
(c) No Interest Period applicable to a Revolving Advance may end later than the Maturity Date; and
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(d) In no event shall the Borrower select Interest Periods with respect to Advances which, in the aggregate, would require payment of a contracted funds breakage fee under Section 2.9(h) in order to make required principal payments.
“Inventory” shall have the meaning given it under the UCC.
“Inventory Advance Rate” means (a) with respect to Inventory constituting raw materials, up to forty-four and nine-tenths of one percent (44.9%), or such lesser rate as the Lender in its sole discretion may deem appropriate from time to time, and (b) with respect to Inventory constituting finished goods, up to sixty-three and four-tenths of one percent (63.4%), or such lesser rate as the Lender in its sole discretion may deem appropriate from time to time.
“Investment Property” shall have the meaning given it under the UCC.
“IP Collateral” such portion of the Collateral consisting of, without limitation, copyrights, copyright licenses, licenses, patents, patent licenses, trademarks, trademark licenses, all renewals of the foregoing, all General Intangibles (except payment intangibles and proceeds therefrom), all income, all goodwill, recipes, customer lists, Licensed Intellectual Property, Owned Intellectual Property, royalties, damages and payments now and hereafter due and/or payable under and with respect to any of the foregoing, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof; and the right to sue for past, present and future infringements and dilutions of any of the foregoing; and all of the Borrower’s rights corresponding to any of the foregoing throughout the world.
“IRC” means the Internal Revenue Code of 1986, as amended from time to time.
“L/C Amount” means the sum of (i) the aggregate face amount of any issued and outstanding Letters of Credit and (ii) the unpaid amount of the Obligation of Reimbursement.
“L/C Application” means an application for the issuance of standby or documentary letters of credit pursuant to the terms of a Standby Letter of Credit Agreement or a Commercial Letter of Credit Agreement, in form acceptable to the Lender.
“Letter of Credit” is defined in Section 2.4(a).
“LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest whole 1/8 of 1%) determined pursuant to the following formula:
(i) “Base LIBOR” means the rate per annum for United States dollar deposits quoted by the Lender as the Inter-Bank Market Offered Rate, with the understanding that such rate is quoted by the Lender for the purpose of calculating effective rates of interest for loans making reference thereto, on the first day of a Interest Period for delivery of funds on said date for a period of time approximately equal to the number of days in such Interest Period and in an amount approximately equal to the principal amount to which such Interest Period applies. The
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Borrower understands and agrees that the Lender may base its quotation of the Inter-Bank Market Offered Rate upon such offers or other market indicators of the Inter-Bank Market as the Lender in its discretion deems appropriate including the rate offered for U.S. dollar deposits on the London Inter-Bank Market.
(ii) “LIBOR Reserve Percentage” means the reserve percentage prescribed by the Board of Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve Board, as amended), adjusted by the Lender for expected changes in such reserve percentage during the applicable Interest Period.
“LIBOR Advance” means an Advance bearing interest at the LIBOR Advance Rate.
“LIBOR Advance Rate” means (i) with respect to Revolving Advances evidenced by the Revolving Note, an annual interest rate equal to the sum of LIBOR plus three and one quarter of one percent (3.25%), and (ii) with respect to Term Advances evidenced by the Term Note, an annual interest rate equal to the sum of LIBOR plus three and three quarters of one percent (3.75%).
“Licensed Intellectual Property” is defined in Section 5.11(c) .
“Lien” means any security interest, mortgage, deed of trust, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device, including the interest of each lessor under any capitalized lease and the interest of any bondsman under any payment or performance bond, in, of or on any assets or properties of a Person, whether now owned or subsequently acquired and whether arising by agreement or operation of law.
“Loan Documents” means this Agreement, the Notes, the Intercreditor Agreement, any L/C Applications and the Security Documents, together with every other agreement, note, document, contract or instrument to which the Borrower now or in the future may be a party and which is required by the Lender.
“Loan Year” is defined in Section 2.8(c).
“Lockbox” means “Lockbox” as defined in the Wholesale Lockbox and Collection Account Agreement.
“Maturity Date” means the earliest to occur of (a) July 31, 2006, or (b) the date on which the credit facilities under the Exit Financing are effective.
“Maximum Line Amount” means $7,500,000.
“Minimum Interest Charge” is defined in Section 2.8(b).
“Multiemployer Plan” means a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to which the Borrower or any ERISA Affiliate contributes or is obligated to contribute.
“Net Cash Flow” means, for any period, (a) Borrower’s cash collections from account debtors received during such period, minus (b) Borrower’s operating disbursements made during
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such period, minus (c) all principal payments on Borrower’s Debt paid or payable during such period, minus (d) Interest Expense for such period.
“Net Cash Proceeds” means in connection with any asset sale, the cash proceeds (including any cash payments received by way of deferred payment whether pursuant to a note, installment receivable or otherwise, but only as and when actually received) from such asset sale, net of (i) attorneys’ fees, accountants’ fees, investment banking fees, brokerage commissions and amounts required to be applied to the repayment of any portion of the Debt secured by a Lien not prohibited hereunder on the asset which is the subject of such sale, and (ii) taxes paid or reasonably estimated to be payable as a result of such asset sale.
“Net Forced Liquidation Value” means a professional opinion of the estimated most probable Net Cash Proceeds which could typically be realized at a properly advertised and conducted public auction sale without reserve, held under forced sale conditions and under economic trends current within 60 days of the appraisal. The opinion may consider physical location, difficulty of removal, adaptability, specialization, marketability, physical condition, overall appearance and psychological appeal.
“Net Income” means fiscal year-to-date after-tax net income from continuing operations, including extraordinary losses but excluding extraordinary gains, all as determined in accordance with GAAP.
“Net Loss” means fiscal year-to-date after-tax net loss from continuing operations as determined in accordance with GAAP.
“Net Orderly Liquidation Value” means a professional opinion of the estimated most probable Net Cash Proceeds which could typically be realized at a properly advertised and professionally managed liquidation sale, conducted under orderly sale conditions for an extended period of time (usually six to nine months), under the economic trends existing at the time of the appraisal.
“Net Sales” means, for any period, (a) Borrower’s gross sales, minus (b) Borrower’s slotting distributions, minus (c) contractual customer payments made by the Borrower, minus (d) trade allowances made by the Borrower, minus (e) coupon redemptions, minus (f) all other offsets made or attributable to the Borrower’s gross sales.
“Note” means the Revolving Note or the Term Note, and “Notes” means the Revolving Note and the Term Note.
“Obligation of Reimbursement” means the obligation of the Borrower to reimburse the Lender pursuant to the terms of the Standby Letter of Credit Agreement or the Commercial Letter of Credit Agreement and any applicable L/C Application.
“Obligations” means each Note, the Obligation of Reimbursement and each and every other debt, liability and obligation of every type and description which the Borrower may now or at any time hereafter owe to the Lender, whether such debt, liability or obligation now exists or is hereafter created or incurred, whether it arises in a transaction involving the Lender alone or in a transaction involving other creditors of the Borrower, and whether it is direct or indirect, due or
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to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or sole, joint, several or joint and several, and including all indebtedness of the Borrower arising under any Loan Document or guaranty between the Borrower and the Lender, whether now in effect or subsequently entered into, and all Wells Fargo Bank Affiliate Obligations.
“Officer” means with respect to the Borrower, an officer if the Borrower is a corporation, a manager if the Borrower is a limited liability company, or a partner if the Borrower is a partnership.
“OFAC” is defined in Section 6.12(c).
“Overadvance” means the amount, if any, by which the outstanding principal balance of the Revolving Note, plus the L/C Amount, is in excess of the then-existing Borrowing Base.
“Owned Intellectual Property” is defined in Section 5.11(a).
“Owner” means with respect to the Borrower, each Person having legal or beneficial title to an ownership interest in the Borrower or a right to acquire such an interest.
“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) maintained for employees of the Borrower or any ERISA Affiliate and covered by Title IV of ERISA.
“Permitted Lien” and “Permitted Liens” are defined in Section 6.3(a) .
“Person” means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) maintained for employees of the Borrower or any ERISA Affiliate.
“Premises” means all locations where the Borrower conducts its business or has any rights of possession, including the locations legally described in Exhibit D attached hereto.
“Prime Rate” means at any time the rate of interest most recently announced by the Lender at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of the Lender’s base rates, and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof in such internal publication or publications as the Lender may designate. Each change in the rate of interest shall become effective on the date each Prime Rate change is announced by the Lender.
“Reportable Event” means a reportable event (as defined in Section 4043 of ERISA), other than an event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the Pension Benefit Guaranty Corporation.
“Reserves” means, as of any date of determination, such amounts (expressed as either a specified amount or as a percentage of a specified category or item) as the Lender may from time to time establish and adjust in reducing Availability (a) to reflect events, conditions,
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contingencies or risks which, as determined by the Lender, do or may affect (i) the Collateral or its value, (ii) the assets, business or prospects of the Borrower, or (iii) the security interests and other rights of the Lender in the Collateral (including the enforceability, perfection and priority thereof), or (b) to reflect the Lender’s judgment that any collateral report or financial information furnished by or on behalf of the Borrower to the Lender is or may have been incomplete, inaccurate or misleading in any material respect, or (c) in respect of any state of facts that the Lender determines constitutes a Default or an Event of Default. Reserves will include, without limitation, (A) the Availability Reserve, (B) reserves for budgeted Third Party Service Provider fees and expenses (provided that the Lender may release proportionate amounts of such reserves at such time and to the extent that the Borrower pays such fees and expenses pursuant to Bankruptcy Court approval), (C) reserves for bankruptcy carve-outs approved by the Bankruptcy Court, (D) reserves for post-petition trade payables not paid within 30 days after the due date thereof, and (E) reserves for goods reclaimed under section 546(c) of the Bankruptcy Code (unless such goods have been returned).
“Revolving Advance” is defined in Section 2.1.
“Revolving Note” means the Borrower’s revolving promissory note, payable to the order of the Lender in substantially the form of Exhibit A hereto, as same may be renewed and amended from time to time, and all replacements thereto.
“Security Documents” means this Agreement, the Wholesale Lockbox and Collection Account Agreement, the Intellectual Property Security Agreement(s) and any other document delivered to the Lender from time to time to secure the Obligations.
“Security Interest” is defined in Section 3.1.
“Special Account” means a specified cash collateral account maintained with Lender or another financial institution acceptable to the Lender in connection with Letters of Credit, as contemplated by Section 2.5.
“Standby Letter of Credit Agreement” means an agreement governing the issuance of standby letters of credit by Lender entered into between the Borrower as applicant and Lender as issuer.
“Subsidiary” means any Person of which more than 50% of the outstanding ownership interests having general voting power under ordinary circumstances to elect a majority of the board of directors or the equivalent of such Person, regardless of whether or not at the time ownership interests of any other class or classes shall have or might have voting power by reason of the happening of any contingency, is at the time directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries.
“Term Advance” is defined in Section 2.6.
“Term Note” means the Borrower’s promissory note, payable to the order of the Lender in substantially the form of Exhibit B hereto, as same may be renewed and amended from time to time, and all replacements thereto.
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“Termination Date” means the earliest of (i) the Maturity Date, (ii) the date the Borrower terminates the Credit Facility, (iii) the date of the sale of all or substantially all of the Borrower’s assets pursuant to a sale under 11 U.S.C. Section 363, 1123 or 1129 or otherwise, (iv) the effective date of a plan of reorganization in the Bankruptcy Case that is not an Approved Plan of Reorganization, (v) conversion or dismissal of the Bankruptcy Case, (vi) appointment of a trustee or examiner in the Bankruptcy Case or (vii) the date the Lender demands payment of the Obligations, following an Event of Default, pursuant to Section 7.2.
“Third Party Service Provider” means any person or entity which provides professional services, including legal, consulting, accounting, or management which are compensable by the Borrower’s estate after approval by the Bankruptcy Court in the Bankruptcy Case.
“UCC” means the Uniform Commercial Code as in effect in the state designated in this Agreement as the state whose laws shall govern this Agreement, or in any other state whose laws are held to govern this Agreement or any portion of this Agreement.
“Unused Amount” is defined in Section 2.9(c).
“Wells Fargo Bank Affiliate Obligations” means all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by the Borrower or its Subsidiaries to any Person that is owned in material part by the Lender, and that relates to any service or facility extended to the Borrower or its Subsidiaries, including: (a) credit cards, (b) credit card processing services, (c) debit cards, and (d) purchase cards, as well as any other services or facilities from time to time specified by the Lender, whether direct or indirect, absolute or contingent, due or to become due, and whether existing now or in the future.
“Wholesale Lockbox and Collection Account Agreement” means the Wholesale Lockbox and Collection Account Agreement by and between the Borrower and the Lender, dated the same date as this Agreement.
Section 1.2 Other Definitional Terms; Rules of Interpretation . The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP. All terms defined in the UCC and not otherwise defined herein have the meanings assigned to them in the UCC. References to Articles, Sections, subsections, Exhibits, Schedules and the like, are to Articles, Sections and subsections of, or Exhibits or Schedules attached to, this Agreement unless otherwise expressly provided. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. Unless the context in which used herein otherwise clearly requires, “or” has the inclusive meaning represented by the phrase “and/or”. Defined terms include in the singular number the plural and in the plural number the singular. Reference to any agreement (including the Loan Documents), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof (and, if applicable, in accordance with the terms hereof and the other Loan Documents), except where otherwise explicitly provided, and reference to any promissory note includes any promissory note which is an extension or renewal thereof or a substitute or replacement therefor. Reference to any law,
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rule, regulation, order, decree, requirement, policy, guideline, directive or interpretation means as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect on the determination date, including rules and regulations promulgated thereunder.
AMOUNT AND TERMS OF THE CREDIT FACILITY
Section 2.1 Revolving Advances . The Lender agrees, subject to the terms and conditions of this Agreement, to make advances (“Revolving Advances”) to the Borrower from time to time from the date that all of the conditions set forth in 4.1 are satisfied (the “Funding Date”) to and until (but not including) the Termination Date in an amount not in excess of the Maximum Line Amount. The Lender shall have no obligation to make a Revolving Advance to the extent that the amount of the requested Revolving Advance exceeds Availability. The Borrower’s obligation to pay the Revolving Advances shall be evidenced by the Revolving Note and shall be secured by the Collateral. Within the limits set forth in this Section 2.1, the Borrower may borrow, prepay pursuant to Section 2.12, and reborrow.
Section 2.2 Procedures for Requesting Advances . The Borrower shall comply with the following procedures in requesting Revolving Advances:
(a) Type of Advances. Each Advance shall be funded as either a Floating Rate Advance or a LIBOR Advance, as the Borrower shall specify in a request delivered to the Lender conforming to the requirements of Section 2.2(b); Floating Rate Advances and LIBOR Advances may be outstanding at the same time. Each request for a LIBOR Advance shall be in multiples of $100,000, with a minimum request of at least $500,000. LIBOR Advances shall not be available during Default Periods.
(b) Time for Requests . The Borrower shall request each Advance not later than the Cut-off Time on the Business Day on which the Advance is to be made . Each request that conforms to the terms of this Agreement shall be effective upon receipt by the Lender, shall be in writing or by telephone or telecopy transmission, and shall be confirmed in writing by the Borrower if so requested by the Lender , by (i) an Officer of the Borrower; or (ii) a Person designated as the Borrower’s agent by an Officer of the Borrower in a writing delivered to the Lender; or (iii) a Person whom the Lender reasonably believes to be an Officer of the Borrower or such a designated agent, which confirmation shall specify whether the Advance shall be a Floating Rate Advance or a LIBOR Advance and, with respect to any LIBOR Advance, shall specify the principal amount of the LIBOR Advance and the Interest Period applicable thereto. The Borrower shall repay all Advances even if the Lender does not receive such confirmation and even if the Person requesting an Advance was not in fact authorized to do so. Any request for an Advance, whether written or telephonic, shall be deemed to be a representation by the Borrower that the conditions set forth in Section 4.2 have been satisfied as of the time of the request.
(c) Disbursement . Upon fulfillment of the applicable conditions set forth in Article IV, the Lender shall disburse the proceeds of the requested Advance by crediting the
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same to the Borrower’s demand deposit account maintained with the Lender unless the Lender and the Borrower shall agree in writing to another manner of disbursement.
(a) Converting Floating Rate Advances to LIBOR Advances; Procedures . So long as no Default Period is in effect, the Borrower may convert all or any part of the principal amount of any outstanding Floating Rate Advance into a LIBOR Advance by requesting that the Lender convert same no later than the Cut-off Time on the Business Day on which the Borrower wishes the conversion to become effective. Each request that conforms to the terms of this Agreement shall be effective upon receipt by the Lender and shall be confirmed in writing by the Borrower if the Lender so requests by any Officer or designated agent identified in Section 2.2(b) or Person reasonably believed by the Lender to be such an Officer or designated agent, which request shall specify the Business Day on which the conversion is to occur (which Business Day shall be at least three (3) Business Days after the date that the Lender receives such request), the total amount of the Floating Rate Advance to be converted, and the applicable Interest Period. Each such conversion shall occur on a Business Day, and the aggregate amount of Floating Rate Advances converted to LIBOR Advances shall be in multiples of $100,000, with a minimum conversion amount of at least $500,000.
(b) Procedures at End of an Interest Period . Unless the Borrower requests a new LIBOR Advance in accordance with the procedures set forth below, or prepays the principal of an outstanding LIBOR Advance at the expiration of an Interest Period, the Lender shall automatically and without request of the Borrower convert each LIBOR Advance to a Floating Rate Advance on the last day of the relevant Interest Period. So long as no Default exists, the Borrower may cause all or any part of any maturing LIBOR Advance to be renewed as a new LIBOR Advance by requesting that the Lender continue the maturing Advance as a LIBOR Advance no later than the Cut-off Time on the Business Day constituting the first day of the new Interest Period. Each such request shall be confirmed in writing by the Borrower upon the Lender’s request by any Officer or designated agent identified in Section 2.2(b), which confirmation shall be effective upon receipt by the Lender, and which shall specify the amount of the expiring LIBOR Advance to be continued and the applicable Interest Period. Each new Interest Period shall begin on a Business Day and the amount of each LIBOR Advance shall be in multiples of $100,000, with a minimum Advance of at least $500,000.
(c) Setting and Notice of Rates . The Lender shall, with respect to any request for a LIBOR Advance under Section 2.2 or a conversion or renewal of a LIBOR Advance under this Section 2.3, provide the Borrower with a LIBOR quote for each Interest Period identified by the Borrower on the Business Day on which the request was made, if the request is received by the Lender prior to the Cut-off Time, or for requests received by the Lender after the Cut-off Time, on the next Business Day or on the Business Day on which the Borrower has requested that the LIBOR Advance be made effective. If the Borrower does not immediately accept a LIBOR quote, the quoted rate shall expire and any subsequent request from Borrower for a LIBOR quote shall be subject to redetermination by the Lender of the applicable LIBOR for the LIBOR Advance.
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(d) Taxes and Regulatory Costs . The Borrower shall pay the Lender with respect to any Advance, upon demand and in addition to any other amounts due or to become due hereunder, any and all (i) withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed by any domestic or foreign governmental authority and related in any manner to LIBOR, and (ii) future, supplemental, emergency or other changes in the LIBOR Reserve Percentage, assessment rates imposed by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by any domestic or foreign governmental authority or resulting from compliance by the Lender with any request or directive (whether or not having the force of law) from any central bank or other governmental authority and related in any manner to LIBOR to the extent they are not included in the calculation of LIBOR. In determining which of the foregoing are attributable to any LIBOR option available to the Borrower hereunder, any reasonable allocation made by the Lender among its operations shall be conclusive and binding upon the Borrower.
Section 2.4 Letters of Credit .
(a) The Lender agrees, subject to the terms and conditions of this Agreement, to issue, at any time after the Funding Date and prior to the Termination Date, one or more irrevocable standby or documentary letters of credit (each, a “Letter of Credit”) for the Borrower’s account. The Lender will not issue any Letter of Credit if the face amount of the Letter of Credit to be issued would exceed the lesser of:
(i) $1,000,000 less the L/C Amount, or
(ii) Availability.
Each Letter of Credit, if any, shall be issued pursuant to a separate L/C Application made by the Borrower to the Lender, which must be completed in a manner satisfactory to the Lender. The terms and conditions set forth in each such L/C Application shall supplement the terms and conditions of the Standby Letter of Credit Agreement or the Commercial Letter of Credit Agreement, as applicable.
(b) No Letter of Credit shall be issued with an expiry date later than one (1) year from the date of issuance or the Maturity Date in effect as of the date of issuance, whichever is earlier.
(c) Any request for issuance of a Letter of Credit shall be deemed to be a representation by the Borrower that the conditions set forth in Section 4.2 have been satisfied as of the date of the request.
(d) If a draft is submitted under a Letter of Credit when the Borrower is unable, because a Default Period exists or for any other reason, to obtain a Revolving Advance to pay the Obligation of Reimbursement, the Borrower shall pay to the Lender on demand and in immediately available funds, the amount of the Obligation of Reimbursement together with interest, accrued from the date of the draft until payment in full at the Default Rate. Notwithstanding the Borrower’s inability to obtain a Revolving Advance for any reason, the Lender is irrevocably authorized, in its sole discretion, to make a Revolving Advance in an amount sufficient to discharge the Obligation of Reimbursement and all accrued but unpaid interest thereon.
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Section 2.5 Special Account . If the Credit Facility is terminated for any reason while any Letter of Credit is outstanding, the Borrower shall thereupon pay the Lender in immediately available funds for deposit in the Special Account an amount equal to the L/C Amount plus any anticipated fees and costs. If the Borrower fails to promptly make any such payment in the amount required hereunder, then the Lender may make a Revolving Advance against the Credit Facility in an amount sufficient to fulfill this obligation and deposit the proceeds to the Special Account. The Special Account shall be an interest bearing account either maintained with the Lender or with a financial institution acceptable to the Lender. Any interest earned on amounts deposited in the Special Account shall be credited to the Special Account. The Lender may apply amounts on deposit in the Special Account at any time or from time to time to the Obligations in the Lender’s sole discretion. The Borrower may not withdraw any amounts on deposit in the Special Account as long as the Lender maintains a security interest therein. The Lender agrees to transfer any balance in the Special Account to the Borrower when the Lender is required to release its security interest in the Special Account under applicable law.
(a) The Lender agrees, subject to the terms and conditions of this Agreement, to make a single advance to the Borrower on the Funding Date (the “Term Advance”) in the amount of $2,238,000. The Borrower’s obligation to pay the Term Advance shall be evidenced by the Term Note and shall be secured by the Collateral as provided in Article III.
(b) Upon fulfillment of the applicable conditions set forth in Article IV, the Lender shall deposit the proceeds of the Term Advance by crediting the same to the Borrower’s demand deposit account specified in Section 2.2(c) unless the Lender and the Borrower shall agree in writing to another manner of disbursement.
Section 2.7 Payment of Term Note . The outstanding principal balance of the Term Note shall be due and payable as follows:
(a) In equal monthly installments of $37,300, beginning on December 1, 2005, and on the first day of each month thereafter.
(b) If the Lender at any time obtains an appraisal of the Equipment as permitted under Section 6.8(d) herein, and the appraisal shows the aggregate outstanding principal balance of the Term Note to exceed 100% of the Net Forced Liquidation Value of Eligible Equipment, then the Borrower, upon demand by the Lender, shall immediately prepay the Term Note in the amount of such excess.
(c) All prepayments of principal with respect to the Term Note shall be applied to the most remote principal installment or installments then unpaid.
(d) On the Termination Date, the entire unpaid principal balance of the Term Note, and all unpaid interest accrued thereon, shall in any event be due and payable.
Section 2.8 Interest; Minimum Interest Charge; Default Interest Rate; Application of Payments; Participations; Usury .
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(a) Interest . Except as provided in Section 2.3, Section 2.8(c) and Section 2.8(f), the principal amount of each Advance shall bear interest as a Floating Rate Advance.
(b) Minimum Interest Charge. Notwithstanding any other terms of this Agreement to the contrary, the Borrower shall pay, in arrears, to the Lender interest of not less than $15,000 per calendar month on the Revolving Advances (the “Minimum Interest Charge”) during the term of this Agreement, and the Borrower shall pay, in arrears, any deficiency between the Minimum Interest Charge and the amount of interest otherwise calculated under Section 2.8(a) on the first day of each month and on the Termination Date. When calculating this deficiency, the Default Rate, if applicable, shall be disregarded.
(c) Default Interest Rate . At any time during any Default Period or following the Termination Date, in the Lender’s sole discretion and without waiving any of its other rights or remedies, the principal of the Notes shall bear interest at the Default Rate or such lesser rate as the Lender may determine, effective as of the first day of the month in which any Default Period begins through the last day of such Default Period, or any shorter time period that the Lender may determine. The decision of the Lender to impose a rate that is less than the Default Rate or to not impose the Default Rate for the entire duration of the Default Period shall be made by the Lender in its sole discretion and shall not be a waiver of any of its other rights and remedies, including its right to retroactively impose the full Default Rate for the entirety of any such Default Period or following the Termination Date.
(d) Application of Payments. Payments shall be applied to the Obligations on the Business Day of receipt by the Lender in the Lender’s general account, but the amount of principal paid shall continue to accrue interest at the interest rate applicable under the terms of this Agreement from the calendar day the Lender receives the payment, and continuing through the end of the first Business Day following receipt of the payment.
(e) Participations . If any Person shall acquire a participation in the Advances or the Obligation of Reimbursement, the Borrower shall be obligated to the Lender to pay the full amount of all interest calculated under this Section 2.8, along with all other fees, charges and other amounts due under this Agreement, regardless if such Person elects to accept interest with respect to its participation at a lower rate than that calculated under this Section 2.8, or otherwise elects to accept less than its pro rata share of such fees, charges and other amounts due under this Agreement.
(f) Usury . In any event no rate change shall be put into effect which would result in a rate greater than the highest rate permitted by law. Notwithstanding anything to the contrary contained in any Loan Document, all agreements which either now are or which shall become agreements between the Borrower and the Lender are hereby limited so that in no contingency or event whatsoever shall the total liability for payments in the nature of interest, additional interest and other charges exceed the applicable limits imposed by any applicable usury laws. If any payments in the nature of interest, additional interest and other charges made under any Loan Document are held to be in excess of the limits imposed by any applicable usury laws, it is agreed that any such amount held to be in excess shall be considered payment of principal hereunder, and the indebtedness evidenced hereby shall be reduced by such amount so that the total liability for payments in the nature of interest, additional interest and other charges shall not
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exceed the applicable limits imposed by any applicable usury laws, in compliance with the desires of the Borrower and the Lender. This provision shall never be superseded or waived and shall control every other provision of the Loan Documents and all agreements between the Borrower and the Lender, or their successors and assigns.
(a) Proposal Fee . The Borrower has paid to the Lender a fully earned and non-refundable proposal fee of $50,000, which fee was due and payable upon the execution of the proposal letter between the Borrower and the Lender.
(b) Origination Fee . The Borrower shall pay the Lender a fully earned and non-refundable origination fee of $175,000, due and payable at the time the initial Advances are available under this Agreement.
(c) Unused Line Fee . For the purposes of this Section 2.9(c), “Unused Amount” means the Maximum Line Amount reduced by outstanding Revolving Advances and the L/C Amount. The Borrower agrees to pay to the Lender an unused line fee at the rate of one-half of one percent (0.50%) per annum on the average daily Unused Amount from the date of this Agreement to and including the Termination Date, due and payable monthly in arrears on the first day of the month and on the Termination Date.
(d) Collateral Exam Fees . The Borrower shall pay the Lender fees in connection with any collateral exams, audits or inspections conducted by or on behalf of the Lender of any Collateral or the Borrower’s operations or business at the rates established from time to time by the Lender as its collateral exam fees (which fees are currently $95 per hour per collateral examiner), together with all actual out-of-pocket costs and expenses incurred in conducting any such collateral examination or inspection.
(e) Letter of Credit Fees . The Borrower shall pay to the Lender a fee with respect to each Letter of Credit, if any, accruing on a daily basis and computed at an annual rate of one and one-half of one percent (1.50%) of the aggregate amount that may then be drawn, assuming compliance with all conditions for drawing (the “Aggregate Face Amount”), from and including the date of issuance of such Letter of Credit until such date as such Letter of Credit shall terminate by its terms or be returned to the Lender, due and payable monthly in arrears on the first day of each month and on the date that the Letter of Credit shall terminate by its terms or be returned to the Lender; provided , however , effective as of the first day of the month in which any Default Period begins through the last day of such Default Period, or any shorter time period that the Lender may determine, in the Lender’s sole discretion and without waiving any of its other rights and remedies, such fee shall increase to four and one-half of one percent (4.50%) of the Aggregate Face Amount. The foregoing fee shall be in addition to any and all fees, commissions and charges imposed by Lender with respect to or in connection with such Letter of Credit.
(f) Letter of Credit Administrative Fees . The Borrower shall pay all administrative fees charged by Lender in connection with the honoring of drafts under any Letter of Credit, amendments thereto, transfers thereof and all other activity with respect to the Letters
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of Credit at the then-current rates published by Lender for such services rendered on behalf of customers of Lender generally.
(g) Termination Fee . If (i) the Lender terminates the Credit Facility during a Default Period, or if (ii) the Borrower terminates the Credit Facility on a date other than the Maturity Date, then the Borrower shall pay the Lender as liquidated damages a termination fee in an amount equal to one percent (1.00%) of the Maximum Line Amount.
(h) Prepayment Fees and Contracted Funds Breakage Fees . The Borrower may prepay the principal amount of the Revolving Note and the Term Note at any time, whether voluntarily or by acceleration, subject to the payment of fees as follows:
(i) If the Term Note is prepaid for any reason, the Borrower shall pay to the Lender a prepayment fee in an amount equal to one percent (1.00%) of the amount prepaid.
(ii) If the principal amount of any Revolving Note or Term Note LIBOR Advance is prepaid, the Borrower shall pay to the Lender immediately upon demand a contracted funds breakage fee equal to the sum of the discounted monthly differences for each month from the month of prepayment through the month in which such Interest Period matures, calculated as follows for each such month:
(A) Determine the amount of interest which would have accrued each month on the amount prepaid at the interest rate applicable to such amount had it remained outstanding until the last day of the applicable Interest Period.
(B) Subtract from the amount determined in (A) above the amount of interest which would have accrued for the same month on the amount prepaid for the remaining term of such Interest Period at LIBOR in effect on the date of prepayment for new loans made for such term and in a principal amount equal to the amount prepaid.
(C) If the result obtained in (B) for any month is greater than zero, discount that difference by LIBOR used in (B) above.
The Borrower acknowledges that a prepayment may result in the Lender incurring additional costs, expenses or liabilities, and that it is difficult to ascertain the full extent of such costs, expenses or liabilities. The Borrower therefore agrees to pay the above-described prepayment fee and agrees that said prepayment fee represents a reasonable estimate of the prepayment costs, expenses or liabilities of the Lender.
(i) Waiver of Termination and Prepayment Fees . The Borrower, at the Lender’s discretion, will be excused from the payment of termination and prepayment fees otherwise due under Section 2.9(g) and 2.9(h) if such termination or prepayment is made because of refinancing through another division of Lender.
(j) Overadvance Fees . The Borrower shall pay an Overadvance fee in the amount of $500.00 for each day or portion thereof during which an Overadvance exists, regardless of how the Overadvance arises or whether or not the Overadvance has been agreed to in advance by
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the Lender. The acceptance of payment of an Overadvance fee by the Lender shall not be deemed to constitute either consent to the Overadvance or a waiver of the resulting Event of Default, unless the Lender specifically consents to the Overadvance in writing and waives the Event of Default on whatever conditions the Lender deems appropriate.
(k) Collateral Monitoring Fee . The Borrower shall pay to the Lender a collateral monitoring fee in the amount of $2,000, due and payable monthly in arrears on the first day of each month and on the Termination Date.
(l) Other Fees and Charges; Payment of Fees . The Lender may from time to time impose additional fees and charges as consideration for Advances made in excess of Availability or for other events that constitute an Event of Default or a Default hereunder, including fees and charges for the administration of Collateral by the Lender, and fees and charges for the late delivery of reports, which may be assessed in the Lender’s sole discretion on either an hourly, periodic, or flat fee basis, and in lieu of or in addition to imposing interest at the Default Rate.
Section 2.10 Time for Interest Payments; Payment on Non-Business Days; Computation of Interest and Fees .
(a) Time For Interest Payments . Accrued and unpaid interest accruing on Floating Rate Advances shall be due and payable on the first day of each month and on the Termination Date (each an “Interest Payment Date”), or if any such day is not a Business Day, on the next succeeding Business Day. Interest will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of advance to the Interest Payment Date. If an Interest Payment Date is not a Business Day, payment shall be made on the next succeeding Business Day. Interest accruing on each LIBOR Advance shall be due and payable on the last day of the applicable Interest Period; provided , however , for Interest Periods that are longer than one month, interest shall nevertheless be due and payable monthly on the last day of each month, and on the last day of the Interest Period.
(b) Payment on Non-Business Days . Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest on the Advances or the fees hereunder, as the case may be.
(c) Computation of Interest and Fees . Interest accruing on the outstanding principal balance of the Advances and fees hereunder outstanding from time to time shall be computed on the basis of actual number of days elapsed in a year of 360 days.
Section 2.11 Lockbox and Collateral Account; Sweep of Funds .
(a) Lockbox and Collateral Account .
(i) The Borrower shall instruct all account debtors to pay all Accounts directly to the Lockbox. If, notwithstanding such instructions, the Borrower receives any payments on Accounts, the Borrower shall deposit such payments into the Collateral Account. The Borrower shall also deposit all other cash proceeds of Collateral regardless of source or nature directly into the Collateral Account. Until so deposited, the Borrower
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shall hold all such payments and cash proceeds in trust for and as the property of the Lender and shall not commingle such property with any of its other funds or property. All deposits in the Collateral Account shall constitute proceeds of Collateral and shall not constitute payment of the Obligations.
(ii) All items deposited in the Collateral Account shall be subject to final payment. If any such item is returned uncollected, the Borrower will immediately pay the Lender, or, for items deposited in the Collateral Account, the bank maintaining such account, the amount of that item, or such bank at its discretion may charge any uncollected item to the Borrower’s commercial account or other account. The Borrower shall be liable as an endorser on all items deposited in the Collateral Account, whether or not in fact endorsed by the Borrower.
(b) Sweep of Funds . The Lender shall from time to time, in accordance with the Wholesale Lockbox and Collection Account Agreement, cause funds in the Collateral Account to be transferred to the Lender’s general account for payment of the Obligations. Amounts deposited in the Collateral Account shall not be subject to withdrawal by the Borrower, except after payment in full and discharge of all Obligations.
Section 2.12 Voluntary Prepayment; Reduction of the Maximum Line Amount; Termination of the Credit Facility by the Borrower . Except as otherwise provided herein, the Borrower may prepay the Advances in whole at any time or from time to time in part. The Borrower may terminate the Credit Facility or reduce the Maximum Line Amount at any time if it (i) gives the Lender at least 90 days advance written notice prior to the proposed Termination Date, and (ii) pays the Lender applicable termination, prepayment and contracted funds breakage fees in accordance with Section 2.9(g) and Section 2.9(h). If the Borrower terminates the Credit Facility or reduces the Maximum Line Amount to zero, all Obligations shall be immediately due and payable, and if the Borrower gives the Lender less than the required 90 days advance written notice, then the interest rate applicable to borrowings evidenced by Revolving Note shall be the Default Rate for the period of time commencing 90 days prior to the proposed Termination Date through the date that the Lender ac | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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