Agent in connection with the Lender Group's transactions with Borrower, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, litigation, and UCC searches and including searches with the patent and trademark office, the copyright office, or the department of motor vehicles), filing, recording, publication and appraisal (including periodic collateral appraisals or business valuations), including the cost of real estate surveys, real estate title policies and endorsements, and environmental audits, in each case to the extent of the fees and charges (and up to the amount of any limitation) authorized in the Agreement, (c) charges paid or incurred by Agent resulting from the dishonor of checks, (d) reasonable costs and expenses paid or incurred by the Lender Group to correct any default or enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (e) reasonable audit fees and expenses of Agent related to any inspections or audits to the extent of the fees and charges (and up to the amount of any limitation) authorized in the Agreement, (f) reasonable costs and expenses of third party claims or any other suit paid or incurred by the Lender Group in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents or the Lender Group's relationship with Borrower arising under the Loan Documents, (g) Agent's reasonable costs and expenses (including reasonable attorneys fees) incurred in structuring and drafting the Loan Documents in an aggregate amount not to exceed $200,000, (h) following the Closing Date, Agent's reasonable costs and expenses (including reasonable attorneys fee and costs) incurred in reviewing, administering, or amending the Loan Documents, and (i) Agent's and each Lender's reasonable costs and expenses (including reasonable attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including reasonable fees and expenses of attorneys, accountants, consultants, and other advisors incurred in connection with a "workout," a "restructuring," or an Insolvency Proceeding concerning Borrower or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether suit is brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such Lender, together with such Lender's Affiliates, officers, directors, employees, attorneys, and agents.
"Lien" means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset, irrespective of whether (a) such interest is based on the common law, statute, or contract, (b) such interest is recorded or perfected, and (c) such interest is contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances. Without limiting the generality of the foregoing, the term "Lien" includes the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and also includes reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning specified therefor in Section 2.10.
"Loan Documents" means the Agreement, the Control Agreements, the Copyright Security Agreement, the Fee Letter, the Mortgages, the Notes, the Patent Security Agreement,
SCHEDULE 1.1 - 10
the Registration Rights Agreement, the Security Agreement, the Subordination Agreements, the Trademark Security Agreement, the Intellectual Property Security Agreement, any other note or notes executed by a Borrower in connection with the Agreement and payable to a member of the Lender Group, and any other agreement entered into, now or in the future, by any Borrower and the Lender Group in connection with the Agreement excluding, however, any nondisclosure agreements executed by some or all of the parties hereto prior to the date hereof and the letter of intent dated November 7, 2007 between Agent and Borrower.
"Material Adverse Change" means (a) a material adverse change in the business, operations, results of operations, assets, liabilities or condition (financial or otherwise) of Borrower or any of its Subsidiaries (taken as a whole), (b) a material impairment of Borrower's or a Subsidiary's ability to perform its obligations under the Loan Documents to which it is a party or of the Lender Group's ability to enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the enforceability or priority of the Agent's Liens with respect to the Collateral as a result of an action or failure to act on the part of Borrower or a Subsidiary of Borrower; provided, however, that none of the following shall constitute a "Material Adverse Change": any decline in the market price of Borrower's Stock reasonably determined to arise as a result of: (x) the transactions contemplated by the Loan Documents or the public announcement thereof, or (y) Borrower's sales or earnings results for Borrower's third quarter of its fiscal year ended on November 3, 2007 or the public announcement thereof.
"Material Debt Agreement" means monetary obligation (regardless of amount) under any currently existing or hereafter arising debenture or note (other than pursuant to the Loan Documents) or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any Indebtedness or under any long term leasing or factoring arrangement, if the aggregate amount of any such obligations and liabilities of Borrower and the Subsidiaries thereof exceed $1,000,000 (exclusive of (x) any monetary obligations of Borrower or any Subsidiary thereof with respect to defaults or terminations of less than ten percent (10%) of Borrower’s real property leases or other agreements or arrangements pursuant to which Borrower is entitled to the use or occupancy of any space, and (y) any failure to pay when due any monetary obligations under any real property leases or other agreements or arrangements pursuant to which Borrower is entitled to the use or occupancy of any space, vendor payables or factoring arrangements, which obligations are not more than 30 days past due).
"Maturity Date" has the meaning specified therefor in Section 3.3(a).
"Mortgages" means, individually and collectively, one or more mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a Subsidiary of Borrower in favor of Agent, in form and substance satisfactory to Agent, that encumber the Real Property.
"Multiemployer Plan" means a "multiemployer plan" (as defined in Section 3(37) of ERISA) to which Borrower or any ERISA Affiliate is making, is obligated to make, has made or has been obligated to make, contributions on behalf of participants who are or were employed by any of them, other than a plan described in Section 4(b)(4) of ERISA.
SCHEDULE 1.1 - 11
“Nasdaq” or “NASDAQ” means the Nasdaq Stock Market LLC, including the Nasdaq Global Market (formerly known as the Nasdaq National Market) and the Nasdaq Capital Market and the Nasdaq Global Select Market.
"Net Cash Proceeds" means, with respect to any sale or disposition by any Person or any Subsidiary thereof of property or assets, the amount of Collections received (directly or indirectly) from time to time (whether as initial consideration or through the payment of deferred consideration) by or on behalf of such Person or such Subsidiary, in connection therewith after deducting therefrom only (i) the amount of any Indebtedness secured by any Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or any Lender under this Agreement or the other Loan Documents and (B) Indebtedness assumed by the purchaser of such asset) which is required to be, and is, repaid in connection with such disposition, (ii) reasonable expenses related thereto incurred by such Person or such Subsidiary in connection therewith, and (iii) taxes paid or payable to any taxing authorities by such Person or such Subsidiary in connection therewith, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate and are properly attributable to such transaction.
"Notes" means the Registered Notes.
"Obligations" means all loans (including the Term Loan), debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Proceeding regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), premiums, liabilities (including all amounts charged to Borrower's Loan Account pursuant hereto), obligations (including indemnification obligations), fees (including the fees provided for in the Fee Letter), charges, costs, Lender Group Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), lease payments, guaranties, covenants, and duties of any kind and description owing by Borrower to the Lender Group pursuant to or evidenced by the Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all Lender Group Expenses that Borrower is required to pay or reimburse by the Loan Documents, by law, or otherwise, but in any event excluding the Borrower’s obligations under the Registration Rights Agreement other than the Borrower's obligation to pay liquidated damages pursuant to Section 2(b) thereof. Any reference in the Agreement or in the other Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.
"Originating Lender" has the meaning specified therefor in Section 13.1(e).
"Patent" has the meaning specified therefor in the Security Agreement.
"Patent Security Agreement" has the meaning specified therefor in the Security Agreement.
SCHEDULE 1.1 - 12
"PBGC" means Pension Benefit Guaranty Corporation as defined in Title IV of ERISA, or any successor entity.
"PEMG" means Private Equity Management Group, Inc., a Nevada corporation.
"Permitted Acquisition" means an Acquisition in which all of the following conditions is satisfied:
(a) no Default or Event of Default then exists or would arise from the consummation of such Acquisition;
(b) the Borrower shall have furnished the Agent with: (i) at least ten (10) days’ prior written notice of such intended Acquisition; (ii) a current draft of the acquisition agreement and other acquisition documents; (iii) a summary of any due diligence undertaken by the Borrower in connection with such Acquisition; (iv) financial statements of the Person which is the subject of such Acquisition, to the extent available; (v) with respect to Acquisitions in excess of $2,000,000, (x) pro forma projected financial statements of the Borrower for the twelve (12) month period following such Acquisition after giving effect to such Acquisition and (y) the results of appraisals of the assets of the Person to be acquired in such Acquisition; and (vi) such other information as the Agent may reasonably require;
(c) if the Acquisition is of voting securities or equity interests, after consummation of such Acquisition the Borrower shall own, directly or indirectly, a majority of the voting securities or equity interests in the Person being acquired and the Person being acquired shall be Controlled by Borrower; and
(d) any assets acquired shall be utilized in, and if the Acquisition involves a merger, consolidation or stock acquisition, the Person which is the subject of such Acquisition shall be engaged in, only those businesses in which Borrower is engaged on the Closing Date. If the Person which is the subject of such Acquisition will be maintained as a Subsidiary of the Borrower, such Subsidiary shall have complied with the obligations set forth in Section 5.18 hereof.
"Permitted Discretion" means a determination made honestly in fact and in the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions of Equipment, Inventory and other fixed assets (other than Real Property) that are substantially worn, damaged, or obsolete in the ordinary course of business, (b) sales of Inventory to buyers in the ordinary course of business, (c) the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of the Agreement or the other Loan Documents, and (d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business.
"Permitted Investments" means (a) Investments in cash and Cash Equivalents, (b) Investments in negotiable instruments for collection, (c) advances made in connection with purchases of goods or services in the ordinary course of business, (d) Investments received in settlement of amounts due to Borrower or its Subsidiaries effected in the ordinary course of
SCHEDULE 1.1 - 13
business or owing to Borrower or its Subsidiaries as a result of Insolvency Proceedings involving an Account Debtor or upon the foreclosure or enforcement of any Lien in favor of a Borrower or its Subsidiaries, (e) Investments by any Foreign Subsidiary in a Parent or Domestic Subsidiary, (f) Investments by any Foreign Subsidiary in another Foreign Subsidiary, and (g) Permitted Acquisitions.
"Permitted Liens" means (a) Liens held by Agent to secure the Obligations, (b) Liens for unpaid taxes, assessments, or other governmental charges or levies that either (i) are not yet delinquent, or (ii) do not constitute an Event of Default hereunder and are the subject of Permitted Protests, (c) judgment Liens with respect to judgments not in excess of $500,000, (d) Liens set forth on Schedule P-1, (e) the interests of lessors under operating leases, (f) purchase money Liens or the interests of lessors under Capital Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as such Lien attaches only to the asset purchased or acquired and the proceeds thereof, (g) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of Borrower's business and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests, (h) Liens on amounts deposited in connection with obtaining worker's compensation or other unemployment insurance, (i) Liens on amounts deposited in connection with the making or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with the borrowing of money, (j) Liens on amounts deposited as security for surety or appeal bonds in connection with obtaining such bonds in the ordinary course of business, and (k) with respect to any Real Property, easements, rights of way, and zoning restrictions that do not materially interfere with or impair the use or operation thereof.
"Permitted Protest" means the right of Borrower or any of its Subsidiaries to protest any Lien (other than any Lien that secures the Obligations), taxes (other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with respect to such obligation is established on Borrower's or any of its Subsidiaries' books and records in such amount as is required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by Borrower or any of its Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied in its reasonable judgment that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of determination, Purchase Money Indebtedness incurred after the Closing Date in an aggregate principal amount outstanding at any one time not in excess of $2,500,000.
"Person" means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.
"Plan" means any employee benefit plan, program, or arrangement maintained or contributed to by Borrower or with respect to which it may incur liability.
SCHEDULE 1.1 - 14
“Prohibited Transaction” has the meaning specified therefor in Section 4A.3.
"Projections" means Borrower's forecasted (a) balance sheets, (b) profit and loss statements and (c) cash flow statements, all prepared on a basis consistent with Borrower's historical financial statements, in reasonable detail and accompanied by a statement of underlying assumptions.
"Pro Rata Share" means the percentage obtained by dividing (x) such Lender's Individual Lender Term Loan Exposure by (y) the Aggregate Term Loan Exposure.
"Purchase Money Indebtedness" means Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof.
"Qualified Affiliate" is an Affiliate that is exempt from United States withholding taxes in respect of interest paid or accrued on the Obligations.
"Qualified Related Fund" is a Related Fund that is exempt from United States withholding taxes in respect of interest paid or accrued on the Obligations.
"Rating Agencies" has the meaning specified therefor in Section 2.15.
"Real Property" means any real property hereafter acquired by Borrower or any of its Subsidiaries and the improvements thereto.
"Record" means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.
"Register" has the meaning specified therefor in Section 13.1.
"Registered Loan" means the Term Loan as recorded on the Register pursuant to Section 13.1.
"Registered Note" has the meaning specified therefor in Section 2.14.
"Registration Rights Agreement" means a registration rights agreement, in substantially the form attached hereto as Exhibit D-1 and executed and delivered by Borrower to Agent.
"Related Fund" means a fund or account managed by Agent or an Affiliate of Agent or its investment manager.
"Remedial Action" means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) perform any pre-remedial studies, investigations, or post-
SCHEDULE 1.1 - 15
remedial operation and maintenance activities, or (d) conduct any other actions with respect to Hazardous Materials authorized by Environmental Laws.
"Replacement Lender" has the meaning specified therefor in Section 14.2(a).
"Report" has the meaning specified therefor in Section 15.17.
"Reportable Event" means any of the events described in Section 4043(c) of ERISA or the regulations thereunder other than a Reportable Event as to which the provision of 30 days notice to the PBGC is waived under applicable regulations.
"Required Lenders" means, at any time, Lenders whose Pro Rata Share aggregate 50.1% or more, as determined pursuant to clause (c) of the definition of "Pro Rata Share."
"Retiree Health Plan" means an "employee welfare benefit plan" within the meaning of Section 3(1) of ERISA that provides benefits to individuals after termination of their employment, other than as required by Section 601 of ERISA.
"Scheduled Intellectual Property Collateral" has the meaning set forth in Section 4.15.
"SEC" means the United States Securities and Exchange Commission and any successor thereto.
“SEC Filings” means Borrower’s periodic reports publicly filed with SEC pursuant to Section 13(a) or 15(d) of the Exchange Act, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
"Securities" means the Common Shares and the Notes.
"Securities Account" means a "securities account" (as that term is defined in the Code).
“Securities Act” means the Securities Act of 1933, as amended.
"Security Agreement" means a security agreement, in form and substance satisfactory to Agent, executed and delivered by Borrower and its Subsidiaries to Agent.
"Senior Lender" means Bank of America, N.A.
"Senior Loan Agreement" means the Second Amended and Restated Loan and Security Agreement, dated as of August 31, 2006, by and between Senior Lender and Borrower.
"Senior Loan Documents" means: (i) the Senior Loan Agreement, and (ii) all of the other Loan Documents (as defined in the Senior Loan Documents).
"Senior Loan Subordination Agreement" means a subordination agreement, in form and substance satisfactory to Agent, executed and delivered by Senior Lender to Agent.
"Solvent" means, with respect to any Person on a particular date, that, at fair valuations, the sum of such Person's assets is greater than all of such Person's debts.
SCHEDULE 1.1 - 16
"Stock" means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Store Deposit Account" means a Deposit Account established for one store owned by Borrower or one of its Subsidiaries which is maintained as a "zero balance account," in that all collected funds therein are swept each Business Day into a blocked or concentration Deposit Account maintained at Senior Lender.
"Subordinated Debt" shall mean any Indebtedness of Borrower as to which the subordinated creditor has agreed in writing on terms acceptable to the Required Lenders in their sole discretion to be subordinate and junior in right of payment to the rights of the Lender Group with respect to the Obligations under this Agreement.
"Subordination Agreements" means the Senior Loan Subordination Agreement and the Debenture Subordination Agreement.
"Subsidiary" of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or indirectly owns or controls the shares of voting rights or equity interests having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company, or other entity.
"Tangible Net Worth" means as of any date, (a) the total assets of Borrower minus (b)(i) the total liabilities of Borrower calculated in conformity with GAAP and (ii) all amounts due from Borrower’s Affiliates and the amount of all intangible items reflected therein, including all unamortized debt discount and expense, unamortized research and development expense, unamortized deferred charges, goodwill, intellectual property, unamortized excess cost of investments in subsidiaries over equity at dates of acquisition, and all similar items which should properly be treated as intangibles in accordance with GAAP, plus (c) any charge or other expense related to impairment of long-lived intangible or fixed assets recognized during the period from February 3, 2008 through the date of measurement.
"Taxes" has the meaning specified therefor in Section 15.11.
"Term Loan" has the meaning specified therefor in Section 2.2(a).
"Trademark" has the meaning specified therefor in the Security Agreement.
"Trademark Security Agreement" has the meaning specified therefor in the Security Agreement.
“Trading Affiliates” has the meaning specified therefor in Section 4A.3.
"Trading Day" means (i) a day on which the Common Stock is traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not traded on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not traded on any Trading Market and not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over the counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.
"Trading Market" means Nasdaq Global Market or any Eligible Market on which the Common Stock is then listed or quoted.
"USA Patriot Act" means the USA Patriot Act, Title III of Pub.L. 107-56, signed into law October 26, 2001.
"United States" means the United States of America.
"Voidable Transfer" has the meaning specified therefor in Section 16.6.
Schedule 3.1
CONDITIONS PRECEDENT TO EXTENSION OF CREDIT
The obligation of each Lender to make its portion of the Term Loan provided for in the Agreement is subject to the fulfillment, to the satisfaction of Agent and each Lender (the making of such portion of the Term Loan by any Lender being conclusively deemed to be its satisfaction or waiver of the following), of each of the following conditions precedent:
(a) the Closing Date shall occur on or before February 1, 2008;
(b) Agent shall have received a letter duly executed by Borrower authorizing Agent to file appropriate financing statements in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the security interests to be created by the Loan Documents;
(c) Agent shall have received evidence that appropriate financing statements have been duly filed in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the Agent's Liens in and to the Collateral;
(d) Agent shall have received each of the following documents, in form and substance satisfactory to Agent, duly executed, and each such document shall be in full force and effect:
(i) the Control Agreements,
(ii) the Copyright Security Agreement,
(iii) a disbursement letter executed and delivered by Borrower to Agent regarding the extension of credit to be made on the Closing Date, the form and substance of which is satisfactory to Agent,
(iv) the Fee Letter,
(v) the Notes,
(vi) the Patent Security Agreement,
(vii) the Registration Rights Agreement,
(viii) the Security Agreement,
(ix) the Stock Pledge Agreement,
(x) the Subordination Agreements, and
(xi) the Trademark Security Agreement.
(e) Agent shall have received a certificate from the Secretary of Borrower (i) attesting to the resolutions of Borrower's Board of Directors authorizing its execution, delivery, and performance of this Agreement and the other Loan Documents to which Borrower is a party, (ii) authorizing specific officers of Borrower to execute the same, and (iii) attesting to the incumbency and signatures of such specific officers of Borrower;
(f) Agent shall have received copies of Borrower's Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of Borrower;
(g) Agent shall have received a certificate of status with respect to Borrower, dated within 10 days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of Borrower, which certificate shall indicate that such Borrower is in good standing in such jurisdiction;
(h) Agent shall have received certificates of status with respect to Borrower, each dated within 6 months of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of Borrower) in which its failure to be duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that Borrower is in good standing in such jurisdictions;
(i) Agent shall have received a certificate of insurance, together with the endorsements thereto, as are required by Section 5.8, the form and substance of which shall be reasonably satisfactory to Agent;
(j) Agent shall have received opinions of Borrower's counsel in form and substance reasonably satisfactory to Agent;
(k) Agent shall have received the valuation report on Borrower's inventory, in form and substance satisfactory to Agent; provided, however, that Borrower may satisfy this condition by delivery to Agent of a copy of a recent appraisal of Borrower's inventory obtained by Senior Lender.
(l) Agent shall have received the due diligence report on Borrower completed by Stonefield Josephson, Inc., in form and substance satisfactory to Agent;
(m) Agent shall have received the Closing Date Projections;
(n) Borrower shall have paid all Lender Group Expenses incurred in connection with the transactions evidenced by this Agreement;
(o) Borrower shall have received all licenses, approvals or evidence of other actions required by NASDAQ, any Governmental Authority or any third Person in connection with the execution and delivery by Borrower of the Loan Documents or with the consummation of the transactions contemplated thereby;
(p) all other documents and legal matters in connection with the transactions contemplated by this Agreement shall have been delivered, executed, or recorded and shall be in form and substance reasonably satisfactory to Agent;
(q) the representations and warranties contained in Section 4 of this Agreement or in the other Loan Documents shall be true and correct in all material respects on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date);
(r) no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof;
(s) no injunction, writ, restraining order, or other order of any nature restricting or prohibiting, directly or indirectly, the extending of such credit shall have been issued and remain in force by any Governmental Authority against Borrower, Agent, any Lender, or any of their Affiliates; and
(t) no Material Adverse Change shall have occurred.
Schedule 3.1A
CONDITIONS PRECEDENT TO BORROWER’S OBLIGATIONS
The obligation of Borrower to sell and issue the Notes and the Common Shares and to accept the extensions of credit at closing is subject to the fulfillment, to the satisfaction of Borrower of each of the following conditions precedent:
| (a) | The Closing Date shall occur on or before February 1, 2008; |
(b) Borrower shall have received each of the following documents, in form and substance satisfactory to Borrower, duly executed and each such document shall be in full force and effect:
| (i) | the Registration Rights Agreement; and |
| (ii) | the Subordination Agreements. |
(c) The representations and warranties contained in Section 4A of this Agreement shall be true and correct in all material respects on and as of the Closing Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date);
(d) Borrower shall have received all approvals identified by Borrower as necessary in connection with the consummation of the transactions contemplated hereby, including, without limitation, the consent of Bank of America, N.A. in its capacity as the Senior Lender and the Investors;
(e) The Borrower shall have received the proceeds of the Term Loan in an amount not less than $7,500,000;
(f) No injunction, writ, restraining order or other order of any nature restricting or prohibiting, directly or indirectly, the issuance of the Notes and the Common Shares or the consummation of the transactions contemplated by this Agreement shall have been issued and remain in force by any Governmental Authority against Borrower, Agent, any Lender or any of their Affiliates; and
| (g) | No Material Adverse Change shall have occurred. |
[Schedules 4.5 to 4.19 have been omitted. The registrant undertakes to furnish supplementally a copy of such schedules upon request.]
Schedule 5.2
Provide Agent, upon Agent's request within 10 business days, but no more frequently than monthly, with each of the documents set forth below in form reasonably satisfactory to Agent:
| (a) A current "Stock Ledger Inventory Report" (including a "Department on hand" (Cost/Retail Inventory) concerning the Borrower’s Inventory; (b) a current aging of Borrower’s accounts payable; (c) a current aging of Borrower’s credit card accounts receivable; (d) a current reconciliation of the Accounts to the general ledger; and |
| (e) such other reports as to the Collateral or the financial condition of Borrower as Agent may reasonably request. |
Schedule 5.3
Deliver to Agent, each of the financial statements, reports, or other items set forth set forth below at the following times in forms reasonably satisfactory to Agent:
as soon as available, but in any event within 45 days after the end of each fiscal quarter during each of Borrower's fiscal years | (a) an original counterpart of a management prepared financial statement of the Borrower for the period from the beginning of Borrower’s then current fiscal year through the end of the subject quarter, with comparative information for the same period of the previous fiscal year, which statement shall include, at a minimum, a balance sheet, income statement (on a store specific and on a “consolidated” basis), statement of changes in shareholders’ equity, and cash flows and comparisons for the corresponding quarter of the then immediately previous year as well as to Borrower’s business plan. (b) a Compliance Certificate. |
as soon as available, but in any event within 120 days after the end of each of Borrower's fiscal years | (c) An original signed counterpart of the Borrower’s annual financial statement, which statement shall have been prepared by, and bear the unqualified opinion of, the Borrower’s independent certified public accountants (i.e. said statement shall be “certified” by such accountants) and shall include, at a minimum (with comparative information for the then prior fiscal year) a balance sheet, income statement, statement of changes in shareholders’ equity, and cash flows. (d) a Compliance Certificate. |
if and when filed by Borrower, within 5 Business Days of filing | (e) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current reports, (f) any other filings made by Borrower with the SEC, and (g) any other information that is provided by Borrower to its shareholders generally. |
promptly, but in any event within 5 Business Days after Borrower has knowledge of any event or condition that constitutes a Default or an Event of Default, | (h) notice of such event or condition and a statement of the curative action that Borrower proposes to take with respect thereto. |
promptly after the commencement thereof, but in any event within 5 Business Days after the service of process with respect thereto on Borrower, | (i) notice of all actions, suits, or proceedings brought by or against Borrower before any Governmental Authority which reasonably would be expected to result in a Material Adverse Change. |
upon the request of Agent within 10 Business Days but no more frequently than annually | (j) copies of Borrower's Projections, either (i) in the form most recently delivered to the Senior Lender or (ii) in form and substance (including as to scope and underlying assumptions) satisfactory to Agent, in its Permitted Discretion, in any event for a period through and including the Maturity Date, year by year, and for the forthcoming fiscal year, quarter by quarter, certified by the chief executive officer of Borrower as being such officer's good faith estimate of the financial performance of Borrower during the period covered thereby, and subject to the qualifications set forth in Section 4.18, and (k) copies of Borrower's federal income tax returns, and any amendments thereto, filed with the IRS. |
upon the request of Agent | (l) any other information reasonably requested relating to the financial condition of Borrower or its Subsidiaries. |
[Schedules 5.8(a) through Schedule 6.4 have been omitted. The registrant undertakes to furnish supplementally a copy of such schedules upon request.]
SCHEDULE 6.13
Transactions with Affiliates
| 1. | The Borrower issued subordinated convertible debentures on June 26, 2007. Certain affiliates of the Borrower, including directors and advisory directors, are holders of these debentures. The debentures contain a weighted average conversion price adjustment (and other adjustments) that can be affected by future corporate transactions and will be impacted by this transaction. |
| 2. | The Borrower may enter into any of the following transactions with its affiliates: (a) a transaction that is contemplated and in compliance with any of Borrower’s existing cash bonus plans, bonus letters, directors fee arrangements, employment agreements, stock option plans, equity incentive plans, or any such future plans or arrangements approved by the Borrower’s Board of Directors, Compensation Committee or shareholders, (b) payment of salaries and bonuses approved by the Borrower’s Board of Directors or Compensation Committee in the ordinary course of business, and (c) payment of severance benefits pursuant to severance arrangements that the Borrower may enter from time to time with its employees, officers and directors. |
[Table of Contents and Index to Exhibits and Schedules have been omitted. The registrant undertakes to furnish supplementally a copy of such documents upon request.]
