EXHIBIT 10.1
[Execution]
LOAN AND SECURITY
AGREEMENT
between
NEW STREAM COMMERCIAL FINANCE,
LLC
as Lender
and
AYIN TOWER MANAGEMENT SERVICES,
INC.
as Borrower
Dated: November 8,
2006
TABLE OF CONTENTS
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Page
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1.
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AMOUNT AND TERMS OF CREDIT
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1
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1.1
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Loans
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1
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1.2
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Term and Prepayment
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2
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1.3
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Use of Proceeds
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2
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1.4
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Single Loan
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2
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1.5
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Interest
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2
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1.6
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Cash Management System
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3
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1.7
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Fees
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3
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1.8
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Receipt of Payments
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3
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1.9
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Application and Allocation of
Payments
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3
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1.10
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Accounting
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4
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1.11
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Indemnity
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4
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1.12
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Borrowing Base; Reserves
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4
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2.
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CONDITIONS PRECEDENT
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5
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2.1
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Conditions to the Initial Loans
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5
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2.2
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Further Conditions to the Loans
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5
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3.
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REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE
COVENANTS
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6
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3.1
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Corporate Existence; Compliance with
Law
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6
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3.2
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Executive Offices; Corporate or Other
Names
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6
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3.3
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Corporate Power; Authorization; Enforceable
Obligations
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6
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3.4
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Financial Statements and Projections; Books and
Records
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7
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3.5
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Material Adverse Change
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7
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3.6
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Real Estate; Leasehold Property and
Equipment
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7
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3.7
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Ventures, Subsidiaries and Affiliates;
Outstanding Stock and Indebtedness
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8
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3.8
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Government Regulation; Permits; Margin
Regulations
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8
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3.9
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Taxes; Charges
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9
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3.10
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Payment of Obligations
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9
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3.11
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ERISA
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9
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3.12
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Litigation
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10
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3.13
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Intellectual Property
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10
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3.14
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Full Disclosure
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10
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3.15
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Hazardous Materials
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10
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3.16
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Insurance
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11
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3.17
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Deposit and Disbursement Accounts
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11
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3.18
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Accounts
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11
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3.19
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Conduct of Business
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11
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3.20
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Anti-Terrorism Laws
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12
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3.21
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Further Assurances
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12
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3.22
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Brokers
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12
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3.23
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Solvency
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12
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4.
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FINANCIAL MATTERS; REPORTS
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13
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4.1
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Reports and Notices
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13
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4.2
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Financial Covenants
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14
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4.3
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Other Reports and Information
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15
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5.
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NEGATIVE COVENANTS
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15
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6.
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SECURITY INTEREST
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17
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6.1
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Grant of Security Interest
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17
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6.2
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Lender’s Rights
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18
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6.3
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Lender’s Appointment as
Attorney-in-fact
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19
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6.4
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Grant of License to Use Intellectual Property
Collateral
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19
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6.5
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Leasehold Mortgages
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20
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7.
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EVENTS OF DEFAULT: RIGHTS AND
REMEDIES
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20
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7.1
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Events of Default
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20
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7.2
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Remedies
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22
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7.3
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Waivers by Borrower
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23
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7.4
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Proceeds
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23
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8.
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SUCCESSORS AND ASSIGNS
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24
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9.
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MISCELLANEOUS
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24
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9.1
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No Oral Agreement; Complete Agreement;
Modification of Agreement
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24
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9.2
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Expenses
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24
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9.3
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No Waiver
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25
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9.4
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Severability; Section Titles
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25
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9.5
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Authorized Signature
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25
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9.6
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Notices
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25
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9.7
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Counterparts
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26
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9.8
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Time of the Essence
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26
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9.9
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GOVERNING LAW
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26
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9.10
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SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL
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26
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9.11
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USA Patriot Act Notice
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27
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9.12
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Press Releases
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27
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9.13
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Reinstatement
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27
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9.14
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Maximum Legal Rate
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27
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ii
INDEX OF EXHIBITS AND
SCHEDULES
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Schedule A
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Definitions
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Schedule B
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Lender’s and Borrower’s Addresses
for Notices
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Schedule C
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[Intentionally Omitted]
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Schedule D
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Cash Management System
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Schedule E
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Fees and Expenses
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Schedule F
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Schedule of Documents
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Schedule G
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Financial Covenants
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Disclosure Schedule (3.2)
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Places of Business; Corporate Names
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Disclosure Schedule (3.6)
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Real Estate
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Disclosure Schedule (3.7)
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Stock; Affiliates
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Disclosure Schedule (3.9)
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Taxes
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Disclosure Schedule (3.11)
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ERISA
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Disclosure Schedule (3.12)
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Litigation
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Disclosure Schedule (3.13)
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Intellectual Property
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Disclosure Schedule (3.15)
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Environmental Matters
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Disclosure Schedule (3.16)
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Insurance
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Disclosure Schedule (3.22)
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Broker’s Fees
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Disclosure Schedule (5(b))
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Indebtedness
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Disclosure Schedule (5(e))
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Liens
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Disclosure Schedule (6.1)
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Actions to Perfect Liens
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Disclosure Schedule (6.5)
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Leasehold Mortgages as of the Closing
Date
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Exhibit A
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Form of Notice of Revolving Credit
Advance
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Exhibit B
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[Intentionally Omitted]
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Exhibit C
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Form of Borrowing Base Certificate
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Exhibit D
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Form of Accounts Payable Analysis
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Exhibit E
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[Intentionally Omitted]
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Exhibit F
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Form of Revolving Credit Note
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Exhibit G
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[Intentionally Omitted]
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Exhibit H
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Form of Secretarial Certificate
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Exhibit I
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Form of Power of Attorney
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Exhibit J
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Form of Certificate of Compliance
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i
This LOAN AND SECURITY AGREEMENT is
dated as of November 8, 2006, and agreed to by and between AYIN
TOWER MANAGEMENT SERVICES, INC. , a Delaware corporation
(“ Borrower ”), and NEW STREAM COMMERCIAL
FINANCE, LLC , a Delaware limited liability company (“
Lender ”).
RECITALS
A.
Borrower desires to obtain the Loans
and other financial accommodations from Lender and Lender is
willing to provide the Loans and accommodations all in accordance
with the terms of this Agreement.
B.
Capitalized terms used herein shall
have the meanings assigned to them in Schedule A and, for
purposes of this Agreement and the other Loan Documents, the rules
of construction set forth in Schedule A shall govern.
All schedules, attachments, addenda and exhibits hereto, or
expressly identified to this Agreement, are incorporated herein by
reference, and taken together with this Agreement, constitute but a
single agreement.
AGREEMENT
NOW, THEREFORE, in consideration of
the premises and the mutual covenants hereinafter contained, the
parties hereto agree as follows:
1.
AMOUNT AND TERMS OF
CREDIT
1.1
Loans . (a) Subject to the terms and
conditions of this Agreement, from the Closing Date and until the
Commitment Termination Date (i) Lender agrees to make available to
Borrower advances (each, a “Revolving Credit Advance”)
in an aggregate outstanding amount not to exceed the Borrowing
Availability, and (ii) Borrower may at its request from time to
time borrow, repay and reborrow under this Section 1.1. The
Revolving Credit Loan shall be evidenced by, and be repayable in
accordance with the terms of, the Revolving Credit Note and this
Agreement.
(b)
Borrower shall
request each Revolving Credit Advance by written notice to Lender
substantially in the form of Exhibit A (each a “Notice of
Revolving Credit Advance”) given no later than 11:00 a.m. New
York City time on the Business Day of the proposed advance.
Lender shall be fully protected under this Agreement in relying
upon, and shall be entitled to rely upon, (i) any Notice of
Revolving Credit Advance believed by Lender to be genuine, and (ii)
the assumption that the Persons making electronic requests or
executing and delivering a Notice of Revolving Credit Advance were
duly authorized, unless the responsible individual acting thereon
for Lender shall have actual knowledge to the contrary. As an
accommodation to Borrower, Lender may permit telephonic,
electronic, or facsimile requests for a Revolving Credit Advance
and electronic or facsimile transmittal of instructions,
authorizations, agreements or reports to Lender by Borrower.
Unless Borrower specifically directs Lender in writing not to
accept or act upon telephonic, facsimile or electronic
communications from Borrower, Lender shall have no liability to
Borrower for any loss or damage suffered by Borrower as a result of
Lender’s honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on any
reports communicated to it
telephonically,
by facsimile or electronically and purporting to have been sent to
Lender by Borrower and Lender shall have no duty to verify the
origin of any such communication or the identity or authority of
the Person sending it.
(c)
In making any
Loan hereunder Lender shall be entitled to rely upon the most
recent Borrowing Base Certificate delivered to Lender by Borrower
and other information available to Lender. Lender shall be
under no obligation to make any further Revolving Credit Advance or
incur any other Obligation if Borrower shall have failed to deliver
a Borrowing Base Certificate to Lender by the time specified in
Section 4.1(e). At Lender’s option, all principal,
interest, fees, costs, expenses and other charges provided for in
this Agreement or the other Loan Documents may be charged directly
to the loan account(s) of Borrower maintained by
Lender.
1.2
Term and Prepayment
. (a) Upon the
Commitment Termination Date the obligation of Lender to make
Revolving Credit Advances and extend other credit hereunder shall
immediately terminate and Borrower shall pay to Lender in full, in
cash: (i) all outstanding Revolving Credit Advances and all accrued
but unpaid interest thereon; and (ii) all other non-contingent
Obligations due to or incurred by Lender.
(b)
If the Revolving
Credit Loan shall at any time exceed the Borrowing Availability,
then Borrower shall immediately repay the Revolving Credit Loan in
the amount of such excess.
(c)
Borrower shall
have the right, at any time upon thirty (30) days’ prior
written notice to Lender to (i) terminate voluntarily
Borrower’s right to receive or benefit from, and
Lender’s obligation to make and to incur, Revolving Credit
Advances and (ii) prepay all of the Obligations. The
effective date of termination of the Revolving Credit Loan
specified in such notice shall be the Commitment Termination
Date.
(d)
No less than
thirty (30) days prior to the Stated Expiry Date, Lender and
Borrower may extend the Stated Expiry Date upon terms and
conditions satisfactory and acceptable to Lender in its
discretion. Any extension of the Stated Expiry Date shall be
for a period of one (1) year and the Stated Expiry Date may only be
extended twice pursuant to the terms of this Section 1.2(d).
Nothing contained herein shall be deemed to be a commitment or
agreement by Lender to extend the Stated Expiry Date, which shall
be in Lender’s sole discretion.
1.3
Use of Proceeds
. Borrower shall use the
proceeds of the Loans, in part, to refinance existing indebtedness,
for transaction expenses, for working capital and other general
corporate purposes, and for such other purposes as set forth in the
Authorization to Pay Proceeds.
1.4
Single Loan
. The Loans and all of the
other Obligations of Borrower to Lender shall constitute one
general obligation of Borrower secured by all of the
Collateral.
1.5
Interest . (a) Borrower shall pay interest to
Lender on the aggregate outstanding Revolving Credit Advances at a
floating rate equal to the LIBOR Rate plus 4.85% per annum (the
“Revolving Credit Rate”). All computations of
interest shall be made by Lender on the basis of a three hundred
and sixty (360) day year, in each case for the actual number of
days occurring in the period for which such interest or fee is
payable. Each determination by Lender of an interest rate
hereunder shall be
2
conclusive and binding for all
purposes, absent manifest error. In no event will Lender
charge interest at a rate that exceeds the Maximum Legal
Rate.
(b)
Interest shall be
payable on the outstanding Revolving Credit Advances (i) in arrears
for the preceding calendar month on the first day of each calendar
month, (ii) on the Commitment Termination Date, and (iii) if any
interest accrues or remains payable after the Commitment
Termination Date, upon demand by Lender.
(c)
Effective upon
the occurrence of any Event of Default under Section 7.1(a) and for
so long as such Event of Default shall be continuing, the Revolving
Credit Rate shall automatically be increased by five percentage
points (5%) per annum, and effective upon any other Event of
Default and for so long as such Event of Default shall be
continuing, the Revolving Credit Rate shall automatically be
increased by three percentage points (3%) per annum (each such
increased rate, the “Default Rate”; provided, however,
in no event shall the Default Rate exceed the Maximum Legal Rate),
and all outstanding Obligations shall continue to accrue interest
from the date of such Event of Default at the Default Rate
applicable to such Obligations.
(d)
If any interest
or any other payment (including Facility Fees and Collateral
Monitoring Fees) to Lender under this Agreement becomes due and
payable on a day other than a Business Day, such payment date shall
be extended to the next succeeding Business Day and interest
thereon shall be payable at the then applicable rate during such
extension.
1.6
Cash Management System
. On or prior to the Closing
Date and until the Termination Date, Borrower will establish and
maintain the cash management system described in Schedule D
. All payments in respect of the Collateral shall be made to
or deposited in the blocked or lockbox accounts described in
Schedule D in accordance with the terms thereof.
1.7
Fees . Borrower agrees to pay to Lender the
Fees set forth in Schedule E .
1.8
Receipt of Payments
. Borrower shall make each
payment under this Agreement (not otherwise made pursuant to
Section 1.9) without set-off, counterclaim or deduction and free
and clear of all Taxes not later than 12:00 noon New York city time
on the day when due in lawful money of the United States of America
in immediately available funds to the Collection Account. If
Borrower shall be required by law to deduct any Taxes from any
payment to Lender under any Loan Document, then the amount payable
to Lender shall be increased so that, after making all required
deductions, Lender receives an amount equal to that which it would
have received had no such deductions been made. For purposes
of computing interest and Fees, all payments shall be deemed
received by Lender on the first (1 st )
Business Day following receipt of immediately available funds in
the Collection Account. For purposes of determining the
Borrowing Availability, payments shall be deemed received by Lender
upon receipt of immediately available funds in the Collection
Account.
1.9
Application and Allocation of
Payments . Borrower
irrevocably agrees that Lender shall have the continuing and
exclusive right to apply any and all payments against the then due
and payable Obligations in such order as Lender may deem
advisable. Lender is authorized to, and at its option may
(without prior notice or precondition and at any time or times),
but shall not be obligated to, make or cause to be made Revolving
Credit Advances on behalf of Borrower for: (a) payment of
all
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Fees, expenses, indemnities,
charges, costs, principal, interest, or other Obligations owing by
Borrower under this Agreement or any of the other Loan Documents,
(b) the payment, performance or satisfaction of any of
Borrower’s obligations with respect to preservation of the
Collateral, or (c) any premium in whole or in part required in
respect of any of the policies of insurance required by this
Agreement, even if the making of any such Revolving Credit Advance
causes the outstanding balance of the Revolving Credit Loan to
exceed the Borrowing Availability, and Borrower agrees to repay
immediately, in cash, any amount by which the Revolving Credit Loan
exceeds the Borrowing Availability.
1.10
Accounting
. Lender is authorized to
record on its books and records the date and amount of each Loan
and each payment of principal thereof and such recordation shall
constitute prima facie evidence of the accuracy of the information
so recorded absent manifest error. Lender shall provide
Borrower on a monthly basis a statement and accounting of such
recordations but any failure on the part of the Lender to keep any
such recordation (or any errors therein) or to send a statement
thereof to Borrower shall not in any manner affect the obligation
of Borrower to repay any of the Obligations. Except to the
extent that Borrower shall, within thirty (30) days after such
statement and accounting is sent, notify Lender in writing of any
objection Borrower may have thereto (stating with particularity the
basis for such objection), such statement and accounting shall be
deemed final, binding and conclusive upon Borrower, absent manifest
error.
1.11
Indemnity . Borrower agrees to indemnify and hold
Lender and its Affiliates, and their respective employees,
attorneys and agents (each, an “Indemnified Person”),
harmless from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses of any kind or
nature whatsoever (including attorneys’ fees and
disbursements and other costs of investigation or defense,
including those incurred upon any appeal) that may be instituted or
asserted against or incurred by any such Indemnified Person as the
result of credit having been extended, suspended or terminated
under this Agreement and the other Loan Documents or with respect
to the execution, delivery, enforcement, performance and
administration of, or in any other way arising out of or relating
to, this Agreement and the other Loan Documents or any other
documents or transactions contemplated by or referred to herein or
therein and any actions or failures to act with respect to any of
the foregoing, including any and all product liabilities,
Environmental Liabilities, Taxes, brokers’ fees and legal
costs and expenses arising out of or incurred in connection with
disputes between or among any parties to any of the Loan Documents
(collectively, “Indemnified Liabilities”), except to
the extent that any such Indemnified Liability is finally
determined by a court of competent jurisdiction to have resulted
solely from such Indemnified Person’s gross negligence or
willful misconduct. NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO BORROWER, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER
OF ATTORNEY OR FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL
DAMAGES THAT MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.
1.12
Borrowing Base;
Reserves . The
Borrowing Base shall be determined by Lender (including the
eligibility of Accounts) based on the most recent Borrowing Base
Certificate delivered to Lender
4
in accordance with Section 4.1(e)
and such other information available to Lender. The Revolving
Credit Loan shall be subject to Lender’s continuing right to
withhold from Borrowing Availability reserves, and to increase and
decrease such reserves from time to time, if and to the extent that
in Lender’s good faith credit judgment such reserves are
necessary, including to protect Lender’s interest in the
Collateral or to protect Lender against possible non-payment of
Accounts for any reason by Account Debtors or possible diminution
of the value of any Collateral or possible non-payment of any of
the Obligations or for any Taxes or any amounts due any landlord,
lessor or any other Person by Borrower or in respect of any state
of facts that could constitute a Default. Lender may, at its
option, implement reserves by designating as ineligible a
sufficient amount of Accounts that would otherwise be Eligible
Accounts so as to reduce the Borrowing Base by the amount of the
intended reserves.
2.
CONDITIONS PRECEDENT
2.1
Conditions to the Initial
Loans . Lender
shall not be obligated to make any of the Loans perform any other
action hereunder, until the following conditions have been
satisfied in a manner satisfactory to Lender in its sole
discretion, or waived in writing by Lender:
(a)
the Loan
Documents to be delivered on or before the Closing Date shall have
been duly executed and delivered by the appropriate parties, all as
set forth in the Schedule of Documents ( Schedule F
);
(b)
Lender shall have
received evidence satisfactory to it that the insurance policies
provided for in Section 3.16 are in full force and effect, together
with appropriate evidence showing loss payable or additional
insured clauses or endorsements in favor of Lender as required
under such Section;
(c)
as of the Closing
Date, Net Borrowing Availability shall be not less than $30,000
after giving effect to the initial Revolving Credit Advance (on a
pro forma basis, with trade payables being paid currently, and
expenses and liabilities being paid in the ordinary course of
business and without acceleration of sales); and
(d)
Lender shall have
received an opinion(s) of counsel to the Borrower with respect to
the Loan Documents in form and substance satisfactory to
Lender.
2.2
Further Conditions to the
Loans . Lender
shall not be obligated to fund any Loan (including the initial
Loans), if, as of the date thereof:
(a)
any
representation or warranty by Borrower contained herein or in any
of the other Loan Documents shall be untrue or incorrect as of such
date, except to the extent that any such representation or warranty
is expressly stated to relate to a specific earlier date, in which
case, such representation and warranty shall be true and correct as
of such earlier date; or
(b)
any event or
circumstance that has had or reasonably could be expected to have a
Material Adverse Effect shall have occurred since the Closing Date;
or
5
(c)
any Default shall
have occurred and be continuing or would result after giving effect
to such Loan; or
(d)
after giving
effect to such Loan, the Revolving Credit Loan would exceed the
Borrowing Availability;
The request and acceptance by
Borrower of the proceeds of any Loan shall be deemed to constitute,
as of the date of such request and the date of such acceptance, (i)
a representation and warranty by Borrower that the conditions in
this Section 2.2 have been satisfied and (ii) a restatement by
Borrower of each of the representations and warranties made by it
in any Loan Document and a reaffirmation by Borrower of the
granting and continuance of Lender’s Liens pursuant to the
Loan Documents.
3.
REPRESENTATIONS, WARRANTIES AND
AFFIRMATIVE COVENANTS
To induce Lender to enter into this
Agreement and to make the Loans, Borrower represents and warrants
to Lender (each of which representations and warranties shall
survive the execution and delivery of this Agreement), and promise
to and agree with Lender until the Termination Date as
follows:
3.1
Corporate Existence; Compliance
with Law .
Borrower: (a) is, as of the Closing Date, and will continue to be
(i) a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas, (ii) duly qualified
to do business and in good standing in each other jurisdiction
where its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to
be so qualified could not reasonably be expected to have a Material
Adverse Effect, and (iii) in compliance with all Requirements of
Law and Contractual Obligations, except to the extent failure to
comply therewith could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and (b)
has and will continue to have (i) the requisite corporate power and
authority and the legal right to execute, deliver and perform its
obligations under the Loan Documents, and to own, pledge, mortgage
or otherwise encumber and operate its properties, to lease the
property it operates under lease, and to conduct its business as
now, heretofore or proposed to be conducted, and (ii) all licenses,
permits, franchises, rights, powers, consents or approvals from or
by all Persons or Governmental Authorities having jurisdiction over
Borrower that are necessary or appropriate for the conduct of its
business, except where the failure to maintain such licenses,
permits, franchises, rights, powers, consents or approvals could
not reasonably be expected to have a Material Adverse
Effect.
3.2
Executive Offices; Corporate or
Other Names . (a)
Borrower’s name as it appears in official filings in the
state of its incorporation, (b) the type of entity of Borrower, (c)
the organizational identification number issued by Borrower’s
state of incorporation or a statement that no such number has been
issued, (d) Borrower’s state of incorporation, and (e) the
location of Borrower’s chief executive office, corporate
offices, warehouses, other locations of Collateral and locations
where records with respect to Collateral are kept (including in
each case the county of such locations) are as set forth in
Disclosure Schedule (3.2 ). As of the Closing Date,
during the prior five years, except as set forth in Disclosure
Schedule (3.2 ), Borrower has been known as or conducted
business in any other name (including trade names). Borrower
has only one state of incorporation or organization.
6
3.3
Corporate Power; Authorization;
Enforceable Obligations . The execution, delivery and performance
by Borrower of the Loan Documents to which it is a party, and the
creation of all Liens provided for herein and therein: (a) are and
will continue to be within Borrower’s power and authority;
(b) have been and will continue to be duly authorized by all
necessary or proper action; (c) are not and will not be in
violation of any Requirement of Law or Contractual Obligation of
Borrower (d) do not and will not result in the creation or
imposition of any Lien (other than Permitted Encumbrances) upon any
of the Collateral; and (e) do not and will not require the consent
or approval of any Governmental Authority or any other
Person. As of the Closing Date, each Loan Document shall have
been duly executed and delivered on behalf of Borrower, and each
such Loan Document upon such execution and delivery shall be and
will continue to be a legal, valid and binding obligation of
Borrower, enforceable against it in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency
and other similar laws affecting creditors’ rights
generally.
3.4
Financial Statements and
Projections; Books and Records . (a) The Financial Statements delivered
by Borrower to Lender for its most recently ended Fiscal Year and
Fiscal Month, are true, correct and complete in all material
respects and reflect fairly and accurately the financial condition
of Borrower as of the date of each such Financial Statement in
accordance with GAAP. The Projections most recently delivered
by Borrower to Lender have been prepared in good faith, with care
and diligence and use assumptions that are reasonable under the
circumstances at the time such Projections were prepared and as of
the date delivered to Lender and all such assumptions are disclosed
in the Projections.
(b)
Borrower shall
keep adequate Books and Records with respect to the Collateral and
its business activities in which proper entries, reflecting all
consolidated and consolidating financial transactions, and payments
and credits received on, and all other dealings with, the
Collateral, will be made in accordance with GAAP and all
Requirements of Law and on a basis consistent with the Financial
Statements.
3.5
Material Adverse
Change . Between
the date of Borrower’s most recently audited Financial
Statements delivered to Lender and the Closing Date and except as
otherwise disclosed in writing to the Lender by Borrower: (a)
Borrower has not incurred any obligations, contingent or
non-contingent liabilities, or liabilities for Charges, long-term
leases or unusual forward or long-term commitments that are not
reflected in the Projections delivered on the Closing Date and
which could, alone or in the aggregate, reasonably be expected to
have a Material Adverse Effect; (b) there has been no material
deviation from such Projections; and (c) no events have occurred
that alone or in the aggregate has had or could reasonably be
expected to have a Material Adverse Effect. No Requirement of
Law or Contractual Obligation of Borrower has or have had or could
reasonably be expected to have a Material Adverse Effect.
Borrower is not in default, and to Borrower’s knowledge no
third party is in default, under or with respect to any of its
Contractual Obligations, that alone or in the aggregate has had or
could reasonably be expected to have a Material Adverse
Effect.
3.6
Real Estate; Leasehold Property
and Equipment . The
Real Property listed in Disclosure Schedule (3.6 )
constitutes all of the Real Property owned, leased, or used by
Borrower in its business, and Borrower will not execute any
material agreement or contract in respect of such Real
7
Property after the date of this
Agreement, other than in the ordinary course of business, without
giving Lender prompt prior written notice thereof. Borrower
holds and will continue to hold good and marketable leasehold title
to all of its owned real estate, and good and marketable title to
all of its other properties and assets, and valid and insurable
leasehold interests in all of its leases (both as lessor and
lessee, sublessee or assignee), and none of the properties and
assets of Borrower are or will be subject to any Liens, except
Permitted Encumbrances. With respect to the Real Property,
Leasehold Property and Equipment, Borrower shall use the Real
Property, Leasehold Property and Equipment with all reasonable care
and caution and in accordance with applicable standards of any
insurance and in conformity with all applicable laws; and Borrower
shall assume all responsibility and liability arising from the use
of the Real Property, Leasehold Property and Equipment.
3.7
Ventures, Subsidiaries and
Affiliates; Outstanding Stock and Indebtedness
. Except as set forth in
Disclosure Schedule (3.7 ), as of the Closing Date Borrower
has no Subsidiaries, and is not engaged in any joint venture or
partnership with any other Person. All of the issued and
outstanding Stock of Borrower (including all rights to purchase,
options, warrants or similar rights or agreements pursuant to which
Borrower may be required to issue, sell, repurchase or redeem any
of its Stock) as of the Closing Date is owned by each of the
Stockholders (and in the amounts) set forth in Disclosure
Schedule (3.7 ). All outstanding Indebtedness of
Borrower as of the Closing Date is described in Disclosure
Schedule (5(b )).
3.8
Government Regulation; Permits;
Margin Regulations.
(a)
Borrower is not
subject to or regulated under any Federal or state statute, rule or
regulation that restricts or limits such Person’s ability to
incur Indebtedness, pledge its assets, or to perform its
obligations under the Loan Documents. The making of the
Loans, the application of the proceeds and repayment thereof, and
the consummation of the transactions contemplated by the Loan
Documents do not and will not violate any Requirement of Law by
Borrower.
(b)
Borrower is not
engaged, nor will it engage, in the business of extending credit
for the purpose of “purchasing” or
“carrying” any “margin security” as such
terms are defined in Regulation U of the Federal Reserve Board as
now and hereafter in effect (such securities being referred to
herein as “Margin Stock”). Borrower does not own
any Margin Stock, and none of the proceeds of the Loans or other
extensions of credit under this Agreement will be used, directly or
indirectly, for the purpose of purchasing or carrying any Margin
Stock or reducing or retiring any Indebtedness that was originally
incurred to purchase or carry any Margin Stock. Borrower will
not take or permit to be taken any action that might cause any Loan
Document to violate any regulation of the Federal Reserve
Board.
(c)
Borrower has
obtained all permits, licenses, approvals, authorizations,
licenses, filings, registrations, consents, permits, exemptions,
registrations, qualifications, designations, declarations, or other
actions or undertakings, consents, certificates, orders or
authorizations of any Governmental Authority, including, without
limitation, any certificates of public convenience and all grants,
approvals, licenses, filings and registrations from or to the FCC
or any PUC or any other Communications Regulatory Authority or
under Communications Law necessary for the lawful conduct of its
business as presently conducted, including the provision of the
telecommunication services set forth in any Permits (the
“Permits”) unless the failure to have any of the same
would not
8
individually or
in the aggregate result in a Material Adverse Effect. All of
the Permits are valid and subsisting and in full force and
effect. There are no investigations, actions, claims or
proceedings pending or to the best of Borrower’s knowledge,
as the result of the practices of Borrower or any of its Affiliates
pursuant to any violations of or failure to comply with any
Communications Laws or otherwise, or threatened in writing that
seek the revocation, cancellation, non-renewal, suspension or
modification of any of the Permits except where such
investigations, actions, claims or proceedings could not be
reasonably expected to have a Material Adverse Effect. Lender
will not, by reason of the execution, delivery and performance of
this Agreement or any of the other Loan Documents, be subject to
the regulation or control of either the FCC or any PUC.
3.9
Taxes; Charges
. Except as disclosed in
Disclosure Schedule (3.9 ) all tax returns, reports and
statements required by any Governmental Authority to be filed by
Borrower have, as of the Closing Date, been filed and will, until
the Termination Date, be filed with the appropriate Governmental
Authority, except where the failure to file such tax returns,
reports and statements could not reasonably be expected to have a
Material Adverse Effect, and no tax Lien has been filed against
Borrower or its property. Proper and accurate amounts have
been and will be withheld by Borrower from its employees for all
periods in compliance with all Requirements of Law and such
withholdings have and will be timely paid to the appropriate
Governmental Authorities, except where the failure to comply with
such Requirements of Law could not reasonably be expected to have a
Material Adverse Effect. Disclosure Schedule (3.9
) sets forth as of the Closing Date those taxable years for which
Borrower’s tax returns are currently being audited by the IRS
or any other applicable Governmental Authority and any assessments
or threatened assessments in connection with such audit, or
otherwise currently outstanding. Except as described on
Disclosure Schedule (3.9) , Borrower or its predecessors are
not liable for any Charges: (a) under any agreement (including any
tax sharing agreements or agreement extending the period of
assessment of any Charges) or (b) to Borrower’s knowledge, as
a transferee. As of the Closing Date, except as described on
Disclosure Schedule (3.9) , Borrower has not agreed or been
requested to make any adjustment under IRC Section 481(a), by
reason of a change in accounting method or otherwise, which could
reasonably be expected to have a Material Adverse
Effect.
3.10
Payment of Obligations
. Borrower will pay, discharge
or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all of its Charges and other
obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of Borrower and none of the
Collateral is or could reasonably be expected to become subject to
any Lien or forfeiture or loss as a result of such
contest.
3.11
ERISA . No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all
other existing ERISA Events, could reasonably be expected to result
in a liability of Borrower of more than the Minimum Actionable
Amount. Except as disclosed in Disclosure Schedule
(3.11) , the present value of all accumulated benefit
obligations of Borrower under each Plan (based on the assumptions
used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent Financial
Statements reflecting such amounts, exceed the fair market value of
the assets of such Plan by more than the Minimum Actionable Amount,
and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of
Statement of Financial Account Standards No. 87) did
not,
9
as of the date of the most recent
Financial Statements reflecting such amounts, exceed the fair
market value of the assets of such underfunded Plans by more than
the Minimum Actionable Amount. Neither Borrower nor any ERISA
Affiliate has incurred or reasonably expects to incur any
Withdrawal Liability in excess of the Minimum Actionable
Amount.
3.12
Litigation
. No Litigation is pending or,
to the knowledge of Borrower, threatened by or against Borrower or
against Borrower’s properties or revenues (a) with respect to
any of the Loan Documents or any of the transactions contemplated
hereby or thereby, or (b) that could reasonably be expected to have
a Material Adverse Effect. Except as set forth in
Disclosure Schedule (3.12 ), as of the Closing Date there is
no Litigation pending or to the knowledge of Borrower threatened
against Borrower that seeks damages in excess of $250,000 or
injunctive relief or alleges criminal misconduct of Borrower.
Borrower shall notify Lender promptly in writing upon learning of
the existence, threat or commencement of any Litigation against
Borrower, any ERISA Affiliate or any Plan or any allegation of
Criminal misconduct against Borrower.
3.13
Intellectual Property
. As of the Closing Date, all
material registered Intellectual Property owned or used by Borrower
is listed, together with application or registration numbers, where
applicable, in Disclosure Schedule (3.13 ). Borrower
owns, or is licensed to use, all Intellectual Property necessary to
conduct its business as currently conducted except for such
Intellectual Property the failure of which to own or license could
not reasonably be expected to have a Material Adverse Effect.
Borrower will maintain the patenting and registration of all
Intellectual Property necessary to conduct its business as
currently conducted (except for such Intellectual Property the
failure of which to own or license could not reasonably be expected
to have a Material Adverse Effect) with the United States Patent
and Trademark Office, the United States Copyright Office, or other
appropriate Governmental Authority and Borrower will promptly
patent or register, as the case may be, all new Intellectual
Property and notify Lender in writing five (5) Business Days prior
to filing any such new patent or registration.
3.14
Full Disclosure
. No information contained in
any Loan Document, the Financial Statements or any written
statement furnished by or on behalf of Borrower under any Loan
Document, or to induce Lender to execute the Loan Documents,
contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements contained herein
or therein not misleading in light of the circumstances under which
they were made.
3.15
Hazardous Materials
. Except as set forth in
Disclosure Schedule (3.15 ), as of the Closing Date, (a)
each Real Property location owned, leased or occupied by Borrower
is maintained free of contamination from any Hazardous Material,
(b) Borrower is not subject to any Environmental Liabilities or, to
Borrower’s knowledge, potential Environmental Liabilities, in
excess of $250,000 in the aggregate, (c) no notice has been
received by Borrower identifying it as a “potentially
responsible party” or requesting information under CERCLA or
analogous state statutes, and to the knowledge of Borrower, there
are no facts, circumstances or conditions that may result in
Borrower being identified as a “potentially responsible
party” under CERCLA or analogous state statutes; and (d)
Borrower has provided to Lender copies of all existing
environmental reports, reviews and audits and all written
information pertaining to actual or potential Environmental
Liabilities, in each case relating to Borrower. Borrower: (i)
shall comply in all material respects with all applicable
Environmental Laws and environmental permits; (ii) shall notify
Lender in writing within seven (7)
10
days if and when it becomes aware of
any Release, on, at, in, under, above, to, from or about any of its
Real Property; and (iii) shall promptly forward to Lender a copy of
any order, notice, permit, application, or any communication or
report received by it in connection with any such
Release.
3.16
Insurance . As of the Closing Date, Disclosure
Schedule (3.16 ) lists all insurance of any nature maintained
for current occurrences by Borrower, as well as a summary of the
terms of such insurance. Borrower shall deliver to Lender
certified copies and endorsements to all of its and those of its
Subsidiaries (if any) (a) “All Risk” insurance policies
naming Lender loss payee, and (b) general liability and other
liability policies naming Lender as an additional insured.
All policies of insurance on real and personal property will
contain an endorsement, in form and substance acceptable to Lender,
showing loss payable to Lender (Form 438 BFU or equivalent).
Such endorsement, or an independent instrument furnished to Lender,
will provide that the insurance companies will give Lender at least
thirty (30) days’ prior written notice before any such policy
or policies of insurance shall be altered or canceled and that no
act or default of Borrower or any other Person shall affect the
right of Lender to recover under such policy or policies of
insurance in case of loss or damage. Borrower shall direct
all present and future insurers under its “All Risk”
policies of insurance to pay all proceeds payable thereunder
directly to Lender. If any insurance proceeds are paid by
check, draft or other instrument payable to Borrower and Lender
jointly, Lender may endorse Borrower’s name thereon and do
such other things as Lender may deem advisable to reduce the same
to cash.
3.17
Deposit and Disbursement
Accounts .
Attachment I to Schedule D lists all banks and other
financial institutions at which Borrower maintains deposits and/or
other accounts, including the Disbursement Account, and such
Attachment correctly identifies the name, address and telephone
number of each such depository, the name in which the account is
held, a description of the purpose of the account, and the complete
account number.
3.18
Accounts . Borrower has not made, and will not
make, any agreement with any Account Debtor for any extension of
time for the payment of any Account, any compromise or settlement
for less than the full amount thereof, any release of any Account
Debtor from liability therefor, or any deduction therefrom except a
discount or allowance for prompt or early payment allowed by
Borrower in the ordinary course of its business consistent with
historical practice. With respect to the Accounts pledged as
collateral pursuant to any Loan Document (a) the amounts shown on
all invoices, statements and reports that may be delivered to the
Lender with respect thereto are actually and absolutely owing to
Borrower as indicated thereon and are not in any way contingent;
(b) no payments have been or shall be made thereon except payments
immediately delivered to the applicable accounts described in
paragraph 1 to Schedule D or the Lender as required
hereunder; and (c) to Borrower’s knowledge all Account
Debtors have the capacity to contract.
3.19
Conduct of Business
. Borrower (a) shall conduct
its business substantially as now conducted or as otherwise
permitted hereunder, and (b) shall at all times maintain, preserve
and protect all of the Collateral and Borrower’s other
property, used or useful in the conduct of its business and keep
the same in good repair, working order and condition and make, or
cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry
practices.
11
3.20
Anti-Terrorism
Laws.
(a)
Neither Borrower
nor, to the knowledge of Borrower, any of its Affiliates is in
violation of any laws relating to terrorism or money laundering
(“Anti-Terrorism Laws”), including Executive Order No.
13224 on Terrorist Financing, effective September 24, 2001 (the
“Executive Order”), and the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, Public Law 107-56.
(b)
Neither Borrower
nor, to the knowledge of Borrower, any Affiliate or other agent of
Borrower acting or benefiting in any capacity in connection with
the Loans is any of the following: (i) a person that is listed in
the annex to, or is otherwise subject to the provisions of, the
Executive Order; (ii) a person owned or controlled by, or acting
for or on behalf of, any person that is listed in the annex to, or
is otherwise subject to the provisions of, the Executive Order;
(iii) a person with which the Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;
(iv) a person that commits, threatens or conspires to commit or
supports “terrorism” as defined in the Executive Order;
or (v) a person that is named as a “specially designated
national and blocked person” on the most current list
published by the U.S. Treasury Department Office of Foreign Assets
Control (“OFAC”) at its official website or any
replacement website or other replacement official publication of
such list.
(c)
Neither Borrower
nor, to the knowledge of Borrower, any agent of any Affiliate
acting in any capacity in connection with the Loans (i) conducts
any business or engages in making or receiving any contribution of
funds, goods or services to or for the benefit of any person
described in paragraph (b) above, (ii) deals in, or otherwise
engages in any transaction relating to, any property or interests
in property blocked pursuant to the Executive Order, or (iii)
engages in or conspires to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism
Law.
3.21
Further Assurances
. At any time and from time to
time, upon the written request of Lender and at the sole expense of
Borrower, Borrower shall promptly and duly execute and deliver any
and all such further instruments and documents and take such
further action as Lender may reasonably deem necessary (a) to
obtain the full benefits of this Agreement and the other Loan
Documents, (b) to protect, preserve and maintain Lender’s
rights in any Collateral, or (c) to enable Lender to exercise all
or any of the rights and powers herein granted.
3.22
Brokers . Except as set forth on Disclosure
Schedule (3.22) , no broker or finder acting on behalf of
Borrower or Affiliate thereof brought about the obtaining, making
or closing of the Loans and neither Borrower nor any Affiliate of
Borrower has any obligation to any Person in respect of any
finder’s or brokerage fees in connection
therewith.
3.23
Solvency . Both before and after giving effect to
(a) the Loans to be made or incurred on the Closing Date or such
other date as Loans requested hereunder are made or incurred, (b)
the disbursement of the proceeds of such Loans pursuant to the
instructions of Borrower, and (c) the payment and accrual of all
transaction costs in connection with the foregoing, Borrower is and
will be Solvent. With respect thereto, Lender shall have
received an executed Officer’s Certificate, in
12
form and substance satisfactory to
Lender, certifying the Borrower is Solvent as of the Closing Date
and after giving effect to the initial transactions contemplated
hereunder.
4.
FINANCIAL MATTERS;
REPORTS
4.1
Reports and Notices
. From the Closing Date until
the Termination Date, Borrower shall deliver to Lender:
(a)
within five (5)
days following the end of each Fiscal Month, or such other time as
Lender may request, an accounts receivable aging and accounts
payable aging (and including information indicating the amounts
owing to owners and lessors of leased premises, warehouses,
processors and other third parties from time to time in possession
of any Collateral);
(b)
within fifteen
(15) days following the end of each Fiscal Month, an aged trial
balance by Account Debtor (as requested by Lender) and as soon as
available but in no event later than fifteen (15) days following
the end of each Fiscal Month, a reconciliation of the aged trial
balance (as the case may be) to the Borrower’s general ledger
and from the general ledger to the Financial Statements for such
Fiscal Month accompanied by supporting detail and documentation as
Lender may request;
(c)
within fifteen
(15) days following the end of each Fiscal Month, an Accounts
Payable Analysis in the Form of Exhibit D (together
with an accounts payable aging), certified as true and correct by
the Chief Financial Officer of Borrower or such other officer as is
acceptable to Lender;
(d)
within thirty
(30) days following the end of each Fiscal Month, the Financial
Statements for such Fiscal Month, which shall provide comparisons
to budget and actual results for the corresponding period during
the prior Fiscal Year, both on a monthly and year-to-date basis,
and accompanied by a certification in the form of Exhibit J
by the Chief Executive Officer or Chief Financial Officer of
Borrower that such Financial Statements are complete and correct,
that there was no Default (or specifying those Defaults of which he
or she was aware), and showing in reasonable detail the
calculations used in determining compliance with the financial
covenants hereunder;
(e)
as frequently as
Lender may request and in any event no later than fifteen (15) days
following the end of each Fiscal Quarter, (i) a Borrowing Base
Certificate in the form of Exhibit C as of the last day of
the previous Fiscal Quarter, certified as true and correct by the
Chief Financial Officer of Borrower or such other officer as is
acceptable to Lender and (ii) a detailed schedule of wireless
communications towers owned or leased by Borrower, in form and
substance satisfactory to Lender;
(f)
within forty-five
(45) days following the end of each Fiscal Quarter, the Financial
Statements for such Fiscal Quarter, which shall provide comparisons
to budget and actual results for the corresponding period during
the prior Fiscal Year, both on a quarterly and year-to-date basis,
and accompanied by a certification in the form of Exhibit J
by the Chief Executive Officer or Chief Financial Officer of
Borrower that such Financial Statements are complete and correct,
that there was no Default (or specifying those Defaults of which he
or she was aware), and showing in reasonable detail the
calculations used in determining compliance with the financial
covenants hereunder;
13
(g)
within one
hundred and five (105) days following the close of each Fiscal
Year, the Financial Statements for such Fiscal Year certified
without qualification by an independent certified accounting firm
acceptable to Lender, which shall provide comparisons to the prior
Fiscal Year, and shall be accompanied by any management letter that
may be issued and accompanied by a certification in the form of
Exhibit J by the Chief Executive Officer or Chief Financial
Officer of Borrower that such Financial Statements are complete and
correct, that there was no Default (or specifying those Defaults of
which he or she was aware), and showing in reasonable detail the
calculations used in determining compliance with the financial
covenants hereunder;
(h)
within thirty
(30) days following the end of each Fiscal Year, an annual
operating plan for Borrower, approved by the Board of Directors of
Borrower, for the following year, which will include a statement of
all of the material assumptions on which such plan is based, will
include monthly balance sheets and a monthly budget for the
following year and will integrate sales, gross profits, operating
expenses, operating profit, cash flow projections and Borrowing
Availability projections all prepared on the same basis and in
similar detail as that on which operating results are reported (and
in the case of cash flow projections, representing
management’s good faith estimates of future financial
performance based on historical performance), and including plans
for personnel, Capital Expenditures and facilities;
(i)
not less than
thirty (30) days prior to the close of each Fiscal Year, the
Projections, which will be prepared by Borrower in good faith, with
care and diligence, and using assumptions that are reasonable under
the circumstances at the time such Projections are delivered to
Lender and disclosed therein when delivered;
(j)
within forty-five
(45) days following the end of each Fiscal Quarter, the Financial
Statements for such Fiscal Quarter for Parent, which shall provide
comparisons to actual results for the corresponding period during
the prior Fiscal Year, both on a quarterly and year-to-date basis,
and accompanied by a certification in the form of Exhibit J
by the Chief Executive Officer or Chief Financial Officer of Parent
that such Financial Statements are complete and
correct;
(k)
within one
hundred and five (105) days following the close of each Fiscal Year
for Parent, the Financial Statements for such Fiscal Year certified
without qualification by an independent certified accounting firm
acceptable to Lender, which shall provide comparisons to actual
results for the prior Fiscal Year, and shall be accompanied by any
management letter that may be issued and accompanied by a
certification in the form of Exhibit J by the Chief
Executive Officer or Chief Financial Officer of Parent that such
Financial Statements are complete and correct; and
(l)
all the reports
and other information as Lender may reasonably request from time to
time.
4.2
Financial Covenants
. Borrower shall not breach
any of the financial covenants set forth in Schedule G
. For purposes of Section 7.1, a breach of a financial
covenant set forth in Schedule G shall be deemed to have
occurred as of any date of determination by Lender or as of the
last day of any specified measurement period, regardless of when
the Financial Statements reflecting such breach are delivered to
Lender.
14
4.3
Other Reports and
Information .
Borrower shall advise Lender promptly, in reasonable detail, of:
(a) any Lien, other than Permitted Encumbrances, attaching to or
asserted against any of the Collateral or any occurrence causing a
material loss or decline in value of any Collateral and the
estimated (or actual, if available) amount of such loss or decline;
(b) any material change in the composition of the Collateral; and
(c) the occurrence of any Default or other event that has had or
could reasonably be expected to have a Material Adverse
Effect. Borrower shall, upon request of Lender, furnish to
Lender such other reports and information in connection with the
affairs, business, financial condition, operations, prospects or
management of Borrower or the Collateral as Lender may request, all
in reasonable detail.
5.
NEGATIVE COVENANTS
Borrower covenants and agrees that,
without Lender’s prior written consent, from the Closing Date
until the Termination Date, Borrower shall not, directly or
indirectly, by operation of law or otherwise:
(a)
form any
Subsidiary or merge with, consolidate with, acquire all or
substantially all of the assets or Stock of, or otherwise combine
with or make any investment in or, except as provided in Section
5(c) below, loan or advance to, any Person;
(b)
cancel any debt
owing to it or create, incur, assume or permit to exist any
Indebtedness, except: (i) the Obligations, (ii) Indebtedness
existing as of the Closing Date set forth in Disclosure Schedule
(5(b)) , (iii) deferred taxes, (iv) by endorsement of
Instruments or items of payment for deposit to the general account
of Borrower, (v) for Guaranteed Indebtedness incurred for the
benefit of Borrower if the primary obligation is permitted by this
Agreement; and (vi) additional Indebtedness (including Purchase
Money Indebtedness) incurred after the Closing Date in an aggregate
outstanding amount not exceeding $500,000;
(c)
enter into any
lending, borrowing or other commercial transaction with any of its
employees, directors or Affiliates (including upstreaming and
downstreaming of cash and intercompany advances and payments by
Borrower that are not otherwise permitted hereunder) other than
loans or advances to employees in the ordinary course of business
in an aggregate outstanding amount not exceeding
$100,000;
(d)
make any changes
in any of its business objectives, purposes, or operations that
could reasonably be expected to adversely affect repayment of the
Obligations or could reasonably be expected to have a Material
Adverse Effect or engage in any business other than that presently
engaged in or proposed to be engaged in the Projections delivered
to Lender on the Closing Date or amend its charter or by-laws or
other organizational documents;
(e)
create or permit
any Lien on any of its properties or assets, except for Permitted
Encumbrances;
(f)
sell, transfer,
issue, convey, assign or otherwise dispose of any of its assets or
properties, including its Accounts or any shares of its Stock or
engage in any sale-leaseback,
15
synthetic lease
or similar transaction (provided, that the foregoing shall not
prohibit the sale of Inventory or obsolete or unnecessary Equipment
in the ordinary course of its business);
(g)
change (i) its
name as it appears in official filings in the state of its
incorporation or organization, (ii) its chief executive office,
corporate offices, warehouses or other Collateral locations, or
location of its records concerning the Collateral, (iii) the type
of legal entity that it is, (iv) its organization identification
number, if any, issued by its state of incorporation or
organization, or (v) its state of incorporation or organization, or
acquire, lease or use any real estate after the Closing Date
without such Person, in each instance, giving thirty (30) days
prior written notice thereof to Lender and taking all actions
deemed necessary or appropriate by Lender to continuously protect
and perfect Lender’s Liens upon the Collateral;
(h)
establish any
depository or other bank account of any kind with any financial
institution (other than the accounts set forth in Attachment 1 to
Schedule D ) without Lender’s prior written
consent;
(i)
make or permit
any Restricted Payment except for (i) management, consulting or
other fees for management or similar services of Parent to Borrower
for legal, accounting, insurance (including premiums for such
insurance), marketing, payroll and similar types of services paid
for by Parent to or on behalf of Borrower and (ii) in the event the
Borrower files a consolidated income tax return with Parent,
Borrower may make distributions to Parent to permit Parent to pay
federal and state income taxes then due and owing, franchise taxes
and other similar licensing expenses incurred in the ordinary
course of business provided, that the amount of such distribution
shall not be greater, nor the receipt by the Borrower of tax
benefits less, than they would have been had the Borrower not filed
a consolidated return with Parent;
(j)
(i) knowingly
conduct any business or engage in making or receiving any
contribution of funds, goods or services to or for the benefit of
any Person described in Section 3.20 above, (ii) knowingly deal in,
or otherwise engage in any transaction relating to, any property or
interests in property blocked pursuant to the Executive Order or
any other Anti-Terrorism Law, (iii) knowingly engage in or conspire
to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law (and Borrower
shall deliver to the Lender any certification or other evidence
requested from time to time by Lender in its reasonable discretion,
confirming Borrower’s compliance with this Section), or (iv)
cause or permit any of the funds of Borrower that are used to repay
the Loans to be derived from any unlawful activity with the result
that the making of the Loans would be in violation of law;
or
(k)
knowingly cause
or permit (i) any of the funds or properties of Borrower that are
used to repay the Loans to constitute property of, or be
beneficially owned directly or indirectly by, any Person subject to
sanctions or trade restrictions under United States law
(“Embargoed Person” or “Embargoed Persons”)
that is identified on (A) the “List of Specially Designated
Nationals and Blocked Persons” (the “SDN List”)
maintained by OFAC and/or on any other similar list (“Other
List”) maintained by OFAC pursuant to any authorizing statute
including, but not limited to, the International Emergency Economic
Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with
the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or
regulation promulgated
16
thereunder, with
the result that the investment in the Borrower (whether directly or
indirectly) is prohibited by law, or the Loans made by the Lender
would be in violation of law, or (B) the Executive Order, any
related enabling legislation or any other similar Executive Orders,
or (ii) any Embargoed Person to have any direct or indirect
interest, of any nature whatsoever in the Borrower, with the result
that the investment in the Borrower (whether directly or
indirectly) is prohibited by law or the Loans are in violation of
law.
6.
SECURITY INTEREST
6.1
Grant of Security
Interest .
(a) As collateral security for the prompt and complete
payment and performance of the Obligations, Borrower hereby grants
to the Lender a security interest in and Lien upon all of its
property and assets, whether real or personal, tangible or
intangible, and whether now owned or hereafter acquired, or in
which it now has or at any time in the future may acquire any
right, title, or interest, including all of the following property
in which it now has or at any time in the future may acquire any
right, title or interest: all Accounts; all Deposit Accounts, all
other bank accounts and all funds on deposit therein; all money,
cash and cash equivalents; all Investment Property; all
stock; all Goods (including Inventory, Equipment and
Fixtures); all Chattel Paper, Documents and Instruments; all Books
and Records; all General Intangibles (including all Intellectual
Property, contract rights, choses in action, Payment Intangibles
and Software); all Letter-of-Credit Rights; all Supporting
Obligations; and to the extent not otherwise included, all
Proceeds, tort claims, insurance claims and other rights to payment
not otherwise included in the foregoing and products of all and any
of the foregoing and all accessions to, substitutions and
replacements for, and rents and profits of, each of the foregoing,
but excluding in all events Hazardous Waste (all of the foregoing,
together with any other collateral pledged to the Lender pursuant
to any other Loan Document, collectively, the
“Collateral”).
(b)
Borrower and
Lender agree that this Agreement creates, and is intended to
create, valid and continuing Liens upon the Collateral in favor of
Lender. Borrower executing this Agreement represents,
warrants and promises to Lender that: (i) Borrower has rights in
and the power to transfer each item of the Collateral upon which it
purports to grant a Lien pursuant to the Loan Documents, free and
clear of any and all Liens or claims of others, other than
Permitted Encumbrances; (ii) the security interests granted
pursuant to this Agreement, upon filing of Uniform Commercial Code
financing statements in the jurisdictions listed on Disclosure
Schedule (6.1) will constitute valid perfected security
interests in all of the Collateral (to the extent such Collateral
may be perfected by filing of a financing statement) in favor of
the Lender as security for the prompt and complete payment and
performance of the Obligations, enforceable in accordance with the
terms hereof against any and all creditors of and purchasers from
Borrower (other than purchasers of Inventory in the ordinary course
of business) and such security interests are prior to all other
Liens on the Collateral in existence on the date hereof except for
Permitted Encumbrances that have priority by operation of law; and
(iii) no effective security agreement, mortgage, deed of trust,
financing statement, equivalent security or Lien instrument or
continuation statement covering all or any part of the Collateral
is or will be on file or of record in any public office, except
those relating to Permitted Encumbrances. Borrower promises
to defend the right, title and interest of Lender in and to the
Collateral against the claims and demands of all Persons
whomsoever, and each shall take such actions, including (A) all
actions necessary to grant Lender “control” of any
Investment Property, Deposit Accounts, Letter-of-Credit Rights or
electronic Chattel Paper owned by Borrower, with any
17
agreements
establishing control to be in form and substance satisfactory to
Lender, (B) the prompt delivery of all original Instruments,
Chattel Paper, negotiable Documents and certificated Stock owned by
Borrower (in each case, accompanied by stock powers, allonges or
other instruments of transfer executed in blank, (C) notification
of Lender’s interest in Collateral at Lender’s request,
and (D) the institution of litigation against third parties as
shall be prudent in order to protect and preserve Borrower’s
and Lender’s respective and several interests in the
Collateral. Borrower shall mark its Books and Records
pertaining to the Collateral to evidence the Loan Documents and the
Liens granted under the Loan Documents. If Borrower retains
possession of any Chattel Paper or Instrument with Lender’s
consent, such Chattel Paper and Instruments shall be marked with
the following legend: “This writing and the obligations
evidenced or secured hereby are subject to the security interest of
New Stream Commercial Finance, LLC.” Borrower shall
promptly, and in any event within two (2) Business Days after the
same is acquired by it, notify Lender of any commercial tort claims
(as defined in the Code) acquired by it and unless otherwise
consented by Lender, Borrower shall enter into a supplement to this
Loan Agreement granting to Lender a Lien in such commercial tort
claim.
6.2
Lender’s Rights
. (a) Lender may, (i) at any
time in Lender’s own name or in the name of Borrower,
communicate with Account Debtors, parties to Contracts, and
obligors in respect of Instruments, Chattel Paper or other
Collateral to verify to Lender’s satisfaction, the existence,
amount and terms of, and any other matter relating to, Accounts,
Payment Intangibles, Instruments, Chattel Paper or other
Collateral, and (ii) at any time after a Default has occurred and
is continuing and without prior notice to Borrower, notify Account
Debtors and other Persons obligated on any Collateral that Lender
has a security interest therein and that payments shall be made
directly to Lender. Upon the request of Lender, Borrower
shall so notify such Account Debtors, parties to Contracts, and
obligors in respect of Instruments, Chattel Paper or other
Collateral. Borrower hereby constitutes Lender or
Lender’s designee as Borrower’s attorney with power to
endorse Borrower’s name upon any notes, acceptance drafts,
money orders or other evidences of payment or
Collateral.
(b)
Borrower shall
remain liable under each Contract, Instrument and License to
observe and perform all the conditions and obligations to be
observed and performed by it thereunder, and Lender shall have no
obligation or liability whatsoever to any Person under any
Contract, Instrument or License (between Borrower and any Person
other than Lender) by reason of or arising out of the execution,
delivery or performance of this Agreement, and Lender shall not be
required or obligated in any manner (i) to perform or fulfill any
of the obligations of Borrower, (ii) to make any payment or
inquiry, or (iii) to take any action of any kind to collect,
compromise or enforce any performance or the payment of any amounts
which may have been assigned to it or to which it may be entitled
at any time or times under or pursuant to any Contract, Instrument
or License.
(c)
Borrower shall,
with respect to each owned, leased, or controlled property, during
normal business hours and upon reasonable advance notice (unless a
Default shall have occurred and be continuing, in which event no
notice shall be required and Lender shall have access at any and
all times): (i) provide access to such property to Lender and any
of its officers, employees and agents, as frequently as Lender
determines to be appropriate; (ii) permit Lender and any of its
officers, employees and agents to inspect, audit and make extracts
and copies (or take originals if reasonably necessary) from all of
Borrower’s Books and Records; and (iii) permit Lender to
inspect, review, evaluate and make physical verifications and
appraisals of the Inventory and other Collateral in any
18
manner and
through any medium that Lender considers advisable, and Borrower
agrees to render to Lender, at Borrower’s cost and expense,
such clerical and other assistance as may be reasonably requested
with regard thereto.
(d)
After the
occurrence and during the continuance of a Event of Default,
Borrower, at its own expense, shall cause the certified public
accountant then engaged by Borrower to prepare and deliver to
Lender at any time and from time to time, promptly upon
Lender’s request, the following reports: (i) a reconciliation
of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) test verifications of such Accounts as Lender
may request. Borrower, at its own expense, shall cause its
certified independent public accountants to deliver to Lender the
results of any physical verifications of all or any portion of the
Inventory made or observed by such accountants when and if such
verification is conducted. Lender shall be permitted to
observe and consult with Borrower’s accountants in the
performance of these tasks.
6.3
Lender’s Appointment as
Attorney-in-fact .
On the Closing Date, Borrower shall execute and deliver a Power of
Attorney in the form attached as Exhibit I . The power
of attorney granted pursuant to the Power of Attorney and all
powers granted under any Loan Document are powers coupled with an
interest and shall be irrevocable until the Termination Date.
The powers conferred on Lender under the Power of Attorney are
solely to protect Lender’s interests in the Collateral and
shall not impose any duty upon it to exercise any such
powers. Lender agrees not to exercise any power or authority
granted under the Power of Attorney unless an Event of Default has
occurred and is continuing. Borrower also hereby (i)
authorizes Lender to file any financing statements, continuation
statements or amendments thereto that (A) indicate the Collateral
(1) as all assets of the Borrower (or any portion of
Borrower’s assets) or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the Code of such jurisdiction, or
(2) as being of an equal or lesser scope or with greater detail,
and (B) contain any other information required by Part 5 of Article
9 of the Code for the sufficiency or filing office acceptance of
any financing statement, continuation statement or amendment and
(ii) ratifies its authorization for Lender to have filed any
initial financial statements, or amendments thereto if filed prior
to the date hereof. Borrower acknowledges that it is not
authorized to file any financing statement or amendment or
termination statement with respect to any financing statement
without the prior written consent of Lender and agrees that it will
not do so without the prior written consent of Lender, subject to
Borrower’s rights under Section 9-509(d)(2) of the
Code.
6.4
Grant of License to Use
Intellectual Property Collateral . Borrower hereby grants to Lender an
irrevocable, non-exclusive license (exercisable upon the occurrence
and during the continuance of an Event of Default without payment
of royalty or other compensation to Borrower) to use, transfer,
license o
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