and payable), levies, assessments, charges, liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll, income or gross receipts of Borrower, (d) Borrower’s ownership or use of any properties or other assets, or (e) any other aspect of Borrower’s business.
“Chattel Paper” means any “chattel paper,” as such term is defined in the Code, including electronic chattel paper, now owned or hereafter acquired by Borrower, wherever located.
“Closing Date” means March 29, 2007.
“Code” means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of New York; provided, that to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.
“Collateral” means the property covered by the Security Agreement and the other Collateral Documents and any other property, real or personal, tangible or intangible, now existing or hereafter acquired, that may at any time be or become subject to a security interest or Lien in favor of Lender to secure the Obligations or any portion thereof.
“Collateral Documents” means the Security Agreement, any Guaranties (together with any collateral therefor) and all similar agreements entered into guaranteeing payment of, or granting a Lien upon property as security for payment of, the Obligations or any portion thereof.
“Compliance Certificate” has the meaning ascribed to it in Section 4.1(l).
“Concentration Account” means Account No. 2501021 maintained with Heritage Bank of Commerce.
“Contingent Obligation” means, as applied to any Person, any direct or indirect liability of that Person: (i) with respect to Guaranteed Indebtedness and with respect to any Indebtedness, lease, dividend or other obligation of another Person if the purpose or intent of the Person incurring such liability, or the effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; (ii) with respect to any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (iii) under any foreign exchange contract, currency swap agreement, interest rate swap agreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in currency values or interest rates, (iv) under any agreement, contract or transaction involving commodity options or future contracts, (v) to make take-or-pay or similar payments if
required regardless of nonperformance by any other party or parties to an agreement, (vi) pursuant to any agreement to purchase, repurchase or otherwise acquire any obligation or any property constituting security therefor, to provide funds for the payment or discharge of such obligation or to maintain the solvency, financial condition or any balance sheet item or level of income of another or (vii) earnouts and similar payment obligations while they are contingent. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported or, if not a fixed and determined amount, the maximum amount so guaranteed.
“Contractual Obligations” means, as applied to any Person, any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject, including without limitation, the Related Transactions Documents.
“Copyright License” means any and all rights nor owned or hereafter acquired by Borrower under any written agreement granting any right to use any Copyright or Copyright registration.
“Copyrights” means all of the following now owned or hereafter adopted or acquired by Borrower: (a) all copyrights and General Intangibles of like nature (whether registered or unregistered), all registrations and recordings thereof, and all applications in connection therewith, including all registrations, recordings and applications in the United States Copyright Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision thereof; and (b) all reissues, extensions or renewals thereof.
“Default” means any event that, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default.
“Disclosure Schedules” means the Schedules prepared by Borrower and denominated as Schedules in the Index of Appendices to the Agreement.
“Dollars” or “$” means lawful currency of the United States of America.
“EBITDA” means consolidated net income for an accounting period before provision for payment of Interest Expense and Federal, state, local and foreign income taxes, plus depreciation and amortization to the extent deducted from such net income during such accounting period, plus to the extent deducted in the computation of such net income, one-time non-recurring costs and expenses related to the SPAC Merger and any New Acquisitions paid on or before March 31, 2008, not to exceed $5,000,000.00 in the aggregate.
“Environmental Laws” means all applicable federal, state, local and foreign laws, statutes, ordinances, codes, rules, standards and regulations, now or hereafter in effect, and any applicable judicial or administrative interpretation thereof, including any applicable judicial or administrative order, consent decree, order or judgment, imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include the
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Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 et seq.) (“CERCLA”); the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et seq.); the Clean Air Act (42 U.S.C. §§ 7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.); and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.), and any and all regulations promulgated thereunder, and all analogous state, local and foreign counterparts or equivalents and any transfer of ownership notification or approval statutes.
“Environmental Liabilities” means, with respect to any Person, all liabilities, obligations, responsibilities, response, remedial and removal costs, investigation and feasibility study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages, property damages, natural resource damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest incurred as a result of or related to any claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, including any arising under or related to any Environmental Laws, Environmental Permits, or in connection with any Release or threatened Release or presence of a Hazardous Material whether on, at, in, under, from or about or in the vicinity of any real or personal property.
“Environmental Permits” means all permits, licenses, authorizations, certificates, approvals or registrations required by any Governmental Authority under any Environmental Laws.
“Equipment” means all “equipment,” as such term is defined in the Code, now owned or hereafter acquired by Borrower, wherever located and, in any event, including all Borrower’s machinery and equipment, including processing equipment, conveyors, machine tools, data processing and computer equipment, including embedded software and peripheral equipment and all engineering, processing and manufacturing equipment, office machinery, furniture, materials handling equipment, tools, attachments, accessories, automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other equipment of every kind and nature, trade fixtures and fixtures not forming a part of real property, together with all additions and accessions thereto, replacements therefor, all parts therefor, all substitutes for any of the foregoing, fuel therefor, and all manuals, drawings, instructions, warranties and rights with respect thereto, and all products and proceeds thereof and condemnation awards and insurance proceeds with respect thereto.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any regulations promulgated thereunder.
“ERISA Affiliate” means, with respect to Borrower, any trade or business (whether or not incorporated) that, together with Borrower, are treated as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC.
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“ERISA Event” means, with respect to Borrower or any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a Title IV Plan; (b) the withdrawal of Borrower or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of Borrower or any ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan amendment as a termination under Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by Borrower or ERISA Affiliate to make when due required contributions to a Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other event or condition that might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan under Section 4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i) the loss of a Qualified Plan’s qualification or tax exempt status; or (j) the termination of a Plan described in Section 4064 of ERISA.
“ESOP” means a Plan that is intended to satisfy the requirements of Section 4975(e)(7) of the IRC.
“Event of Default” has the meaning ascribed to it in Section 6.1.
“Fair Labor Standards Act” means the Fair Labor Standards Act, 29 U.S.C. §201 et seq.
“Fees” means any and all fees payable to Lender pursuant to the Agreement or any of the other Loan Documents.
“Financial Statements” means the consolidated and consolidating income statements, statements of cash flows and balance sheets of Borrower and its Subsidiaries delivered in accordance with Section 4.1.
“Fiscal Quarter” means any of the three (3) month periods ending on March 31, June 30, September 30 and December 31 of each year.
“Fiscal Year” means any of the annual period ending on December 31 of each year.
“Fixed Charge Coverage Ratio” with respect to any period, the ratio of (i) EBITDAminus the non-financed portion of Capital Expenditures,plus all management, sponsor, consulting and similar fees paid in cash during such period to (ii) Fixed Charges, all as determined for such Person for such period in accordance with GAAP.
“Fixed Charges” means for any fiscal period, the consolidated aggregate of all (i) cash Interest Expense included in the determination of such Person’s net earnings (or loss) for such period, plus (ii) required payments of principal with respect to such Person’s indebtedness for such period (including the principal portion of scheduled payments of Capital Lease Obligations) paid or due within such period, plus (iii) Federal income and franchise taxes paid by such Person during such period, plus (iv) distributions and dividends paid by such Person during such period,
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plus (v) all management, sponsor, consulting and similar fees paid in cash by such Person during such period.
“Fixtures” means all “fixtures” as such term is defined in the Code, now owned or hereafter acquired by Borrower.
“Free Cash Flow” means, with respect to any Person for the period of determination, an amount equal to (i) net income for such period, plus (ii) non-cash charges (including depreciation and amortization) included in the calculation of such Person’s net income for such period, plus (iii) federal income and franchise taxes as shown on such Person’s financial statements for such period,minus (iv) the sum of (a) the non-financed portion of Capital Expenditures, (b) without duplication of the foregoing subpart (a), the principal portion of scheduled payments of indebtedness and Capital Lease Obligations paid or due within such period, (c) without duplication of the foregoing subparts (a) and (b), payments required to be made by Borrower under the Permitted Mezzanine Debt, (d) distributions and dividends paid during such period, and (e) federal income and franchise taxes paid during such period, all as determined for such Person in accordance with GAAP.
“GAAP” means generally accepted accounting principles in the United States of America, consistently applied.
“General Intangibles” means “general intangibles,” as such term is defined in the Code, now owned or hereafter acquired by Borrower, including all right, title and interest that Borrower may now or hereafter have in or under any Contractual Obligation, all payment intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor and reissues, extensions or renewals thereof, rights in Intellectual Property, interests in partnerships, joint ventures and other business associations, licenses, permits, copyrights, trade secrets, proprietary or confidential information, inventions (whether or not patented or patentable), technical information, procedures, designs, knowledge, know how, software, data bases, data, skill, expertise, experience, processes, models, drawings, materials and records, goodwill (including the goodwill associated with any Trademark or Trademark License), all rights and claims in or under insurance policies (including insurance for fire, damage, loss and casualty, whether covering personal property, real property, tangible rights or intangible rights, all liability, life, key man and business interruption insurance, and all unearned premiums), uncertificated securities, choses in action, deposit, checking and other bank accounts, rights to receive tax refunds and other payments, rights to receive dividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged Stock and Investment Property, rights of indemnification, all books and records, correspondence, credit files, invoices and other papers, including all tapes, cards, computer runs and other papers and documents in the possession or under the control of Borrower or any computer bureau or service company from time to time acting for Borrower.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
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“Guaranteed Indebtedness” means, as to any Person, any obligation of such Person guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease, dividend, or other obligation (“primary obligation”) of any other Person (the “primary obligor”) in any manner, including any obligation or arrangement of such Person to (a) purchase or repurchase any such primary obligation, (b) advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, (d) protect the beneficiary of such arrangement from loss (other than product warranties given in the ordinary course of business) or (e) indemnify the owner of such primary obligation against loss in respect thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation in respect of which such Guaranteed Indebtedness is incurred and (y) the maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness, or, if not stated or determinable, the maximum reasonably anticipated liability (assuming full performance) in respect thereof.
“Guaranties” or “Guaranty” means, collectively, any guaranty (together with any related security agreements or other documents executed in connection therewith) executed by any Guarantor in favor of Lender in respect of the Obligations, as the same may be amended, restated, supplemented, replaced, or otherwise modified from time to time.
“Guarantors” means any Person that executes a guaranty or other similar agreement in favor of Lender in connection with the transactions contemplated by the Agreement and the other Loan Documents.
“Hazardous Material” means any substance, material or waste that is regulated by, or forms the basis of liability now or hereafter under, any Environmental Laws, including any material or substance that is (a) defined as a “solid waste,” “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or other similar term or phrase under any Environmental Laws, or (b) petroleum or any fraction or by product thereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactive substance.
“Indebtedness” means, with respect to any Person, without duplication (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property payment, but excluding accounts payable incurred in the ordinary course of business that are unsecured and on usual terms, (b) all reimbursement and other obligations with respect to letters of credit, bankers’ acceptances and surety bonds, whether or not matured, (c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations and the present value (discounted at the rate of 10%) of future rental payments under all synthetic leases, (f) all obligations of such Person under commodity purchase
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or option agreements or other commodity price hedging arrangements, in each case whether contingent or matured, (g) all obligations of such Person under any foreign exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in currency values or interest rates, in each case whether contingent or matured, (h) all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and (i) “earnouts” and similar payment obligations that have been earned in full as of such date and are not contingent.
“Indemnitees” has the meaning ascribed to it in Section 8.1.
“Initial Payment Date” is defined in Section 1.2(a).
“Instruments” means all “instruments,” as such term is defined in the Code, now owned or hereafter acquired by Borrower, wherever located, and, in any event, including all certificated securities, all certificates of deposit, and all promissory notes and other evidences of indebtedness, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper.
“Intellectual Property” means any and all Licenses, Patents, Copyrights, Trademarks, and the goodwill associated with such Trademarks.
“Interest Expense” means, for any period, all amounts accrued by Borrower, whether as interest, late charges, service fees or other charge for money borrowed on account of or in connection with Borrower’s Indebtedness or with respect to which Borrower or any of its respective properties are liable by assumption, operation of law or otherwise, including, without limitation, any Capital Leases.
“Inventory” means any “inventory,” as such term is defined in the Code, now owned or hereafter acquired by Borrower, wherever located, including inventory, merchandise, goods and other personal property that are held by or on behalf of Borrower for sale or lease or are furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process, finished goods, returned goods, supplies or materials of any kind, nature or description used or consumed or to be used or consumed in Borrower’s business or in the processing, production, packaging, promotion, delivery or shipping of the same, including all supplies and embedded software.
“Investment” means (i) any direct or indirect purchase or other acquisition by Borrower or any of its Subsidiaries of any Stock, or other ownership interest in, any other Person, and (ii) any direct or indirect loan, advance or capital contribution by Borrower or any of its Subsidiaries to any other Person, including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business.
“Investment Property” means all “investment property,” as such term is defined in the Code, now owned or hereafter acquired by Borrower, wherever located, including: (i) all
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securities, whether certificated or uncertificated, including stocks, bonds, interests in limited liability companies, partnership interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all securities entitlements of Borrower, including the rights of Borrower to any securities account and the financial assets held by a securities intermediary in such securities account and any free credit balance or other money owing by any securities intermediary with respect to that account; (iii) all securities accounts of Borrower; (iv) all commodity contracts of Borrower; and (v) all commodity accounts held by Borrower.
“IRC” means the Internal Revenue Code of 1986, as amended, and all regulations promulgated thereunder.
“IRS” means the Internal Revenue Service.
“Lender” has the meaning ascribed to it in the Preamble.
“Leverage Ratio” with respect to the period of determination, the ratio of (i) Indebtedness of a Person and its Subsidiaries at the end of such period to (ii) EBITDA of a Person and its Subsidiaries at the end of such period, all as determined for such Person and its Subsidiaries on a Consolidated basis and in accordance with GAAP.
“License” means any Copyright License, Patent License, Trademark License or other license of rights or interests now held or hereafter acquired by Borrower.
“Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Code or comparable law of any jurisdiction).
“Litigation” has the meaning ascribed to it in Section 4.1(g).
“Loan Account” has the meaning ascribed to it in Section 1.8
“Loan Documents” means the Agreement, the Note, the Collateral Documents, and all other agreements, instruments, documents and certificates executed and delivered to, or in favor of, Lender and including all other pledges, powers of attorney, consents, assignments, contracts, notices, and all other written matter whether heretofore, now or hereafter executed by or on behalf of Borrower, or any employee of Borrower, and delivered to Lender in connection with the Agreement or the transactions contemplated thereby. Any reference in the Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements, replacements or other modifications thereto, and shall refer to the Agreement or such Loan Document as the same may be in effect at any and all times such reference becomes operative.
“Loan” has the meaning ascribed to it in Section 1.1(a)
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“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, prospects or financial or other condition of Borrower taken as a whole enterprise, (b) Borrower’s ability to pay the Loan or any of the other Obligations in accordance with the terms of the Agreement and the other Loan Documents, (c) the Collateral or Lender’s Liens on the Collateral or the priority of such Liens, or (d) Lender’s rights and remedies under the Agreement and the other Loan Documents.
“Material Contracts” means any contract or License the termination of which could reasonably be expected to have a Material Adverse Effect.
“Maturity Date” means March 8, 2010 as may be extended pursuant to Section 1.5.
“Maximum Lawful Rate” has the meaning ascribed to it in Section 1.2(d).
“Mortgage Debt” means Indebtedness in an amount not to exceed $3,000,000 secured solely by Real Estate.
“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, and to which Borrower or any ERISA Affiliate is making, is obligated to make or has made or been obligated to make, contributions on behalf of participants who are or were employed by any of them.
“Note” has the meaning ascribed to it in Section 1.1(d).
“Obligations” means all loans, advances, debts, liabilities and obligations, for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable), owing by Borrower to Lender, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, including, without limitation, arising under the Agreement or any of the other Loan Documents. This term includes all principal, interest (including all interest that accrues after the commencement of any case or proceeding by or against Borrower in bankruptcy, whether or not allowed in such case or proceeding), Fees, Charges, expenses, attorneys’ fees and any other sum chargeable to Borrower under the Agreement or any of the other Loan Documents.
“Other Default Rate” is defined in Section 1.2(c).
“New Acquisition” is defined in Section 3.21.
“Patent License” means rights under any written agreement now owned or hereafter acquired by Borrower granting any right with respect to any invention on which a Patent is in existence.
“Patents” means all of the following in which Borrower now holds or hereafter acquires any interest: (a) all letters patent of the United States or any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or of any other country, including registrations, recordings and applications in the United States Patent and
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Trademark Office or in any similar office or agency of the United States, any State or any other country, and (b) all reissues, continuations, continuations in part or extensions thereof.
“Payment Date” is defined in Section 1.2(a).
“Payment Default” is defined in Section 1.2(c).
“Payment Default Rate” is defined in Section 1.2(c).
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Plan” means a Plan described in Section 3(2) of ERISA.
“Perfection Certificate” means individually and collectively the Perfection Certificate issued by each Borrower in connection with the Security Agreement.
“Permitted Encumbrances” means the following encumbrances: (a) Liens for taxes or assessments or other Charges of any Governmental Authority not yet due and payable or which are being contested in good faith by appropriate proceedings and with adequate reserves; (b) Liens incurred or deposits made securing statutory obligations under workmen’s compensation, unemployment insurance, social security or public liability laws or similar legislation or securing the performance of tenders, bids, leases, contracts (other than for the repayment of Indebtedness) and other similar obligations (excluding Liens under ERISA); (c) pledges or deposits of money securing bids, tenders, contracts (other than contracts for the payment of money) or leases to which Borrower is a party as lessee made in the ordinary course of business; (d) inchoate and unperfected workers’, mechanics’ or similar liens arising in the ordinary course of business, so long as such Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers’, warehousemen’s, suppliers’ or other similar possessory liens arising in the ordinary course of business and securing liabilities in an outstanding aggregate amount not in excess of $50,000 at any time, so long as such Liens attach only to Inventory; (f) deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings to which Borrower is a party; (g) any attachment or judgment lien not constituting an Event of Default under Section 6.1; (h) zoning restrictions, easements, licenses, or other restrictions on the use of any Real Estate or other minor irregularities in title (including leasehold title) thereto, so long as the same do not materially impair the use, value, or marketability of such Real Estate; (i) presently existing or hereafter created Liens in favor of Lender; (j) Liens existing on the date hereof and renewal, and extensions (without increase in underlying Indebtedness) thereof which Liens are set forth on Schedule 3.2; and (k) Liens to secure the Seller Debt, subject to the terms hereof.
“Permitted Mezzanine Debt” means Borrower’s indebtedness in the aggregate amount not to exceed $3,500,000 to Huntington Capital, LP and St. Cloud Capital Partners, LP.
“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation, other entity or government (whether federal, state, county, city, municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof).
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“Plan” means, at any time, an “employee benefit plan,” as defined in Section 3(3) of ERISA, that Borrower or any ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by Borrower.
“Pro Forma” means the unaudited consolidated balance sheets of Borrower and its Subsidiaries prepared in accordance with GAAP as of the Closing Date after giving effect to the Related Transactions.
“Projections” means Borrower’s forecasted consolidated and consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow statements; and (d) capitalization statements, all prepared on a Subsidiary by Subsidiary or division-by-division basis, if applicable, and otherwise consistent with the historical Financial Statements of Borrower, together with appropriate supporting details and a statement of underlying assumptions.
“Qualified Plan” means a Pension Plan that is intended to be tax-qualified under Section 401(a) of the IRC.
“Real Estate” has the meaning ascribed to it in Section 5.12
“Related Transactions” means the borrowing of the Loan, the payment of all Fees, costs and expenses associated with all of the foregoing in each case as contemplated herein and the execution and delivery of all of the Related Transactions Documents.
“Related Transactions Documents” means the Loan Documents and all other agreements or instruments executed in connection with the Related Transactions.
“Release” means any release, threatened release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Material in the indoor or outdoor environment, including the movement of Hazardous Material through or in the air, soil, surface water, ground water or property.
“Restricted Payment” means, with respect to Borrower (a) the declaration or payment of any cash dividend or the incurrence of any liability to make any other payment or distribution of cash or other property or assets in respect of Stock; (b) any payment on account of the purchase, redemption, defeasance, sinking fund or other retirement of Borrower’s Stock or any other payment or distribution made in respect thereof, either directly or indirectly, other than any such payment made to redeem securities of the Borrower held by a terminated employee; (c) any payment or prepayment of principal or premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to the Loan (except in accordance with the terms hereof) or any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire Stock of Borrower now or hereafter outstanding, other than any such payment made to redeem securities of the Borrower held by a terminated employee; (e) any payment of a claim for the rescission of the purchase or sale of, or for material damages arising from the purchase or sale of, any shares of Borrower’s Stock or of a claim for reimbursement, indemnification or contribution arising out of or related to any such claim for damages or rescission; (f) any
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payment, loan, contribution, or other transfer of funds or other property to any Stockholder of Borrower other than payment of compensation approved by Lender to Stockholders who are employees of Borrower and other senior management of Borrower or severance payments approved by Lender upon the termination thereof; (g) any prepayment of principal with respect to any Indebtedness of Borrower not otherwise permitted by this Agreement; and (h) any payment of management fees (or other fees of a similar nature), or out-of-pocket expenses in connection therewith by Borrower to any Stockholder of Borrower or its Affiliates.
“Retiree Welfare Plan” means, at any time, a Welfare Plan that provides for continuing coverage or benefits for any participant or any beneficiary of a participant after such participant’s termination of employment, other than continuation coverage provided pursuant to Section 4980B of the IRC and at the sole expense of the participant or the beneficiary of the participant.
“Securitization Transaction” shall mean any financing transaction undertaken by Lender or an Affiliate of Lender that is secured, directly or indirectly, by the Note or any portion thereof or any interest therein, including any sale, whole loan sale, commercial paper warehouse transaction, asset securitization, secured loan or other transfer.
“Security Agreement” means the Security Agreement of even date herewith entered into by and among Lender and Borrower, as the same may be amended, restated, supplemented, replaced, or otherwise modified from time to time.
“Seller Debt” means the financing provided to Borrower by sellers pursuant to prior acquisitions which has been approved by Lender and in the amounts shown on Schedule 3.1 hereto and any financing provided by sellers in connection with any New Acquisition, subject to the restrictions set forth in Section 3.21.
“Servicing Fee” is defined in Section 1.3(b).
“Solvent” means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including subordinated and contingent liabilities, of such Person; (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts and liabilities, including subordinated and contingent liabilities as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s property would constitute an unreasonably small capital; and (e) if such Person is not “insolvent” as defined in the Code. The amount of contingent liabilities (such as Litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be reasonably be expected to become an actual or matured liability.
“SPAC Merger” is defined in Section 3.6.
“Stock” means all shares, options, warrants, general or limited partnership interests, membership interests or other equivalents (regardless of how designated) of or in a corporation,
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partnership, limited liability company or equivalent entity 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 Securities and Exchange Commission under the Securities Exchange Act of 1934).
“Stockholder” means, with respect to any Person, each holder of Stock of such Person.
“Subordinated Debt” means any Indebtedness of Borrower subordinated to the Obligations in a manner and form satisfactory to Lender in its sole discretion, as to right and time of payment and as to any other rights and remedies thereunder.
“Subsidiary” means, with respect to any Person, (a) any corporation of which an aggregate of more than 50% of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of 50% or more of such Stock whether by proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability company in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than 50% or of which any such Person is a general partner or may exercise the powers of a general partner. Unless the context otherwise requires, each reference to a Subsidiary shall be a reference to a Subsidiary of Borrower.
“Tangible Net Worth” means, as of any date, the amount by which a Person’s total assets exceeds its total liabilities, less any intangible assets (as defined by GAAP), less deferred charges.
“Taxes” means any present or future income, excise, stamp or franchise taxes and other taxes, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all liabilities with respect thereto of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by any lender’s net income or receipts.
“Termination Date” means the date on which (a) the Loan has been indefeasibly repaid in full, (b) all other Obligations (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted in accordance with the terms of this Agreement) under the Agreement and the other Loan Documents have been completely discharged; and (c) Borrower shall not have any further right to borrow any monies under the Agreement.
“Title IV Plan” means a Pension Plan (other than a Multiemployer Plan), that is covered by Title IV of ERISA, and that Borrower or any ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them.
“Trademark License” means rights under any written agreement now owned or hereafter acquired by Borrower granting any right to use any Trademark.
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“Trademarks” means all of the following now owned or hereafter adopted or acquired by Borrower: (a) all trademarks, trade names, corporate names, business names, trade styles, service marks, logos, internet domain names, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature (whether registered or unregistered), all registrations and recordings thereof, and all applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill associated with or symbolized by any of the foregoing.
“Welfare Plan” means a Plan described in Section 3(1) of ERISA.
Rules of construction with respect to accounting terms used in the Agreement or the other Loan Documents shall be as set forth or referred to in this Annex A. All other undefined terms contained in any of the Loan Documents shall, unless the context indicates otherwise, have the meanings provided for by the Code to the extent the same are used or defined therein; in the event that any term is defined differently in different Articles or Divisions of the Code, the definition contained in Article or Division 9 shall control. Unless otherwise specified, references in the Agreement or any of the Appendices to a Section, subsection or clause refer to such Section, subsection or clause as contained in the Agreement. The words “herein,” “hereof” and “hereunder” and other words of similar import refer to the Agreement as a whole, including all Annexes, Exhibits and Schedules, as the same may from time to time be amended, restated, modified or supplemented, and not to any particular section, subsection or clause contained in the Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neuter genders. The words “including”, “includes” and “include” shall be deemed to be followed by the words “without limitation”; the word “or” is not exclusive; references to Persons include their respective successors and assigns (to the extent and only to the extent permitted by the Loan Documents) or, in the case of governmental Persons, Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations shall include any amendments of the same and any successor statutes and regulations. Whenever any provision in any Loan Document refers to the knowledge (or an analogous phrase) of Borrower, such words are intended to signify that Borrower has actual knowledge or awareness of a particular fact or circumstance or that Borrower, if it had exercised reasonable diligence, would have known or been aware of such fact or circumstance.
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EXHIBIT 4.1
COMPLIANCE CERTIFICATE
| |
TO: | FIFTH STREET MEZZANINE PARTNERS II, L.P., as Lender under the Agreement (the “Lender”) |
| |
FROM: | [________________________________] (the “Borrower”) |
The undersigned authorized officer of Borrower hereby certifies that in accordance with the terms and conditions of the Credit Agreement among, Borrower and Lender (the “Agreement”), (i) Borrower is in complete compliance for the period ending _______________ with all required covenants, including without limitation Section 4.3, except as noted below and (ii) all representations and warranties of Borrower stated in the Agreement are true and correct in all material respects as of the date hereof; provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date. Attached herewith are the required documents supporting the above certification, including without limitation, a completed Microsoft Excel spreadsheet used to calculate each of the financial covenants contained in Exhibit 4.3 in the form provided to Borrower by Lender. The Officers further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes.
| | | | | |
Comments Regarding Exceptions: See Attached. | | LENDER USE ONLY | | | |
| | | | |
| | Received by: | | |
| | |
Sincerely, | | AUTHORIZED SIGNER | | |
| | | | |
| | Date: | | |
| | |
| | | | |
| | Verified: | | |
| | |
SIGNATURE | | AUTHORIZED SIGNER | | |
| | | | |
| | Date: | | |
| | |
TITLE | | | | |
| | Compliance Status | Yes | No |
| | | | |
| | | | | |
DATE | | | | |
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EXHIBIT 4.3
FINANCIAL COVENANTS AND RATIOS
Borrower shall continuously maintain the following:
1.Free Cash Flow. Borrower shall have Free Cash Flow to be tested as of the end of each Fiscal Quarter on a trailing twelve month basis of greater than $500,000.00.
2.Fixed Charge Coverage Ratio. Borrower shall have a Fixed Charge Coverage Ratio to be tested as of the end of each Fiscal Quarter on a trailing twelve month basis, of not less than 1.2 to 1.0.
3.Leverage Ratio. Borrower shall have a Leverage Ratio to be tested as of the end of each Fiscal Quarter on a trailing twelve month basis of not greater than:
(a) 8.0 to 1.0, for the Fiscal Quarters ending December 31, 2007 and March 31, 2008;
(b) 5.0 to 1.0 (or, in the event that the SPAC Merger was consummated by June 30, 2008 but was not consummated prior to February 15, 2008, 8.0 to 1.0), for the Fiscal Quarter ending June 30, 2008;
(b) 5.0 to 1.0, for the Fiscal Quarter ending September 30, 2008 and for each Fiscal Quarter thereafter.
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EXHIBIT 7.1
CLOSING AGENDA
[See Attached.]
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CREDIT AGREEMENT
DATED AS OF MARCH 29, 2007
by and between
XLNT VETERINARY CARE, INC.
and
ADLER VETERINARY GROUP, INC.,ANIMAL CLINIC OF YUCCA VALLEY, INC.,ANIMAL EMERGENCY CLINIC OF THE DESERT, INC.,ANIMAL MEDICAL HOSPITAL, INC.,BONITA PET HOSPITAL, INC.,BRENTWOOD PET CLINIC, INC.,ELDORADO ANIMAL HOSPITAL, INC.,JERAULD L. WOODRING, INC.,LAWRENCE PET HOSPITAL, INC.,MCCONNELL & FENTON CORPORATION,RAINBOW HAWK, INC.,SAN CARLOS VETERINARY HOSPITAL, INC.,SOUTH BAY VETERINARY SPECIALISTS, INC., SOUTH COUNTY EMERGENCY ANIMAL CLINIC, INC.,STANFORD PET CLINIC, INC.,TARVIN & LENEHAN, INC.,VETS & PETS, INCORPORATED,YUBA-SUTTER VETERINARY HOSPITAL, INC., CALIFORNIA ANIMAL HOSPITAL VETERINARY SPECIALTY GROUP, INC., AND VETSURG, INC.
collectively, Borrower
and
FIFTH STREET MEZZANINE PARTNERS II, L.P.
as Lender
INDEX OF APPENDICES
Annexes
| | |
Annex A | - | Definitions |
| | |
Exhibits | | |
| | |
Exhibit 4.1 | - | Compliance Certificate |
Exhibit 4.3 | - | Financial Covenants and Ratios |
Exhibit 7.1 | - | Closing Agenda |
| | |
Schedules | | |
| | |
Schedule 3.1 | - | Indebtedness |
Schedule 3.2 | - | Liens |
Schedule 3.4 | - | Contingent Obligations |
Schedule 3.8 | - | Affiliate Transactions |
Schedule 5.4(b) | - | Capitalization |
Schedule 5.5 | - | Financial Statements |
Schedule 5.6 | - | Intellectual Property |
Schedule 5.7 | - | Investigations and Audits |
Schedule 5.10 | - | Litigation |
Schedule 5.11 | | Use of Proceeds |
Schedule 5.12 | - | Real Estate |
Schedule 5.13 | - | Environmental Matters |
Schedule 5.14 | - | ERISA |
Schedule 5.16 | - | Deposit and Disbursement Accounts |
Schedule 5.17 | - | Agreements and Other Documents |
Schedule 5.18 | - | Insurance |
Schedule 5.19 | - | ADA Compliance |
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TABLE OF CONTENTS
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| | | | | Page |
| | | | | |
| | | | | | |
SECTION 1 | | AMOUNTS AND TERMS OF LOAN | | 1 | |
| 1.1 | | Loan | | 1 | |
| 1.2 | | Interest and Payment Terms | | 2 | |
| 1.3 | | Fees | | 3 | |
| 1.4 | | Payments | | 4 | |
| 1.5 | | Maturity | | 4 | |
| 1.6 | | Continuing Liens | | 5 | |
| 1.7 | | Application and Allocation of Payments | | 5 | |
| 1.8 | | Loan Account | | 5 | |
| 1.9 | | Taxes | | 5 | |
| 1.10 | | Joint and Several Liability; Waivers | | 6 | |
| | | | | |
SECTION 2 | | AFFIRMATIVE COVENANTS | | 8 | |
| 2.1 | | Payment and Performance of Obligations | | 8 | |
| 2.2 | | Perfection Certificate | | 8 | |
| 2.3 | | Compliance With Laws and Contractual Obligations | | 8 | |
| 2.4 | | Maintenance of Properties; Insurance | | 9 | |
| 2.5 | | Inspection; Lender Meeting | | 9 | |
| 2.6 | | Organizational Existence | | 10 | |
| 2.7 | | Environmental Matters | | 10 | |
| 2.8 | | Landlords’ Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases | | 10 | |
| 2.9 | | Meetings; Board Observer Rights | | 11 | |
| 2.10 | | Further Assurances | | 11 | |
| | | | | |
SECTION 3 | | NEGATIVE COVENANTS | | 11 | |
| 3.1 | | Indebtedness | | 11 | |
| 3.2 | | Liens and Related Matters | | 12 | |
| 3.3 | | Investments | | 12 | |
| 3.4 | | Contingent Obligations | | 13 | |
| 3.5 | | Restricted Payments | | 13 | |
| 3.6 | | Restriction on Fundamental Changes | | 13 | |
| 3.7 | | Disposal of Assets | | 13 | |
| 3.8 | | Transactions with Affiliates | | 14 | |
| 3.9 | | Conduct of Business | | 14 | |
| 3.10 | | Changes Relating to Indebtedness | | 14 | |
| 3.11 | | Fiscal Year | | 14 | |
| 3.12 | | Press Release; Public Offering Materials | | 15 | |
| 3.13 | | Subsidiaries | | 15 | |
| 3.14 | | Bank Accounts | | 15 | |
| 3.15 | | Hazardous Materials | | 15 | |
| 3.16 | | ERISA | | 16 | |
| 3.17 | | Prepayments of Other Indebtedness | | 16 | |
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| | | | | Page |
| | | | | |
| | | | | | |
| 3.18 | | Changes to Material Contracts | | 16 | |
| 3.19 | | Guaranties | | 16 | |
| 3.20 | | Organization | | 16 | |
| | | | | |
SECTION 4 | | FINANCIAL COVENANTS/REPORTING | | 17 | |
| 4.1 | | Financial Statements and Other Reports | | 17 | |
| 4.2 | | Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement | | 19 | |
| 4.3 | | Financial Covenants and Ratios | | 20 | |
| 4.4 | | Capital Expenditures | | 20 | |
| 4.5 | | Notice to Lender of Certain Events | | 20 | |
| | | | | |
SECTION 5 | | REPRESENTATIONS AND WARRANTIES | | 20 | |
| 5.1 | | Disclosure | | 20 | |
| 5.2 | | No Material Adverse Effect | | 21 | |
| 5.3 | | No Conflict | | 21 | |
| 5.4 | | Organization, Powers, Capitalization and Good Standing | | 21 | |
| 5.5 | | Financial Statements and Projections | | 22 | |
| 5.6 | | Intellectual Property | | 22 | |
| 5.7 | | Investigations, Audits, Etc | | 22 | |
| 5.8 | | Employee Matters | | 22 | |
| 5.9 | | Solvency | | 23 | |
| 5.10 | | Litigation; Adverse Facts | | 23 | |
| 5.11 | | Margin Regulations; Use of Proceeds | | 23 | |
| 5.12 | | Ownership of Property; Liens | | 23 | |
| 5.13 | | Environmental Matters | | 24 | |
| 5.14 | | ERISA | | 24 | |
| 5.15 | | Brokers | | 25 | |
| 5.16 | | Deposit and Disbursement Accounts | | 25 | |
| 5.17 | | Agreements and Other Documents | | 25 | |
| 5.18 | | Insurance | | 25 | |
| 5.19 | | ADA Compliance | | 25 | |
| 5.20 | | Patriot Act | | 26 | |
| | | | | |
SECTION 6 | | DEFAULT, RIGHTS AND REMEDIES | | 26 | |
| 6.1 | | Event of Default | | 26 | |
| 6.2 | | Acceleration and other Remedies | | 29 | |
| 6.3 | | Performance by Lender | | 30 | |
| 6.4 | | Application of Proceeds | | 30 | |
| | | | | |
SECTION 7 | | CONDITIONS TO THE LOAN | | 30 | |
| 7.1 | | Conditions to the Loan | | 30 | |
| 7.2 | | Condition to Loan | | 32 | |
| | | | | |
SECTION 8 | | MISCELLANEOUS | | 32 | |
| 8.1 | | Indemnities | | 32 | |
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| | | | | | |
| | | | | Page |
| | | | | |
| | | | | | |
| 8.2 | | Amendments and Waivers | | 32 | |
| 8.3 | | Notices | | 33 | |
| 8.4 | | Obligations Absolute; Failure or Indulgence Not Waiver; Remedies Cumulative | | 33 | |
| 8.5 | | Marshaling; Payments Set Aside | | 34 | |
| 8.6 | | Protection of Assets | | 34 | |
| 8.7 | | Severability | | 34 | |
| 8.8 | | Headings | | 34 | |
| 8.9 | | Applicable Law | | 34 | |
| 8.10 | | Successors and Assigns | | 34 | |
| 8.11 | | No Fiduciary Relationship; Limited Liability | | 35 | |
| 8.12 | | Construction | | 35 | |
| 8.13 | | Confidentiality | | 35 | |
| 8.14 | | CONSENT TO JURISDICTION | | 36 | |
| 8.15 | | WAIVER OF JURY TRIAL | | 36 | |
| 8.16 | | Survival of Warranties and Certain Agreements | | 36 | |
| 8.17 | | Entire Agreement | | 37 | |
| 8.18 | | Counterparts; Effectiveness | | 37 | |
| 8.19 | | Delivery of Termination Statement | | 37 | |
| 8.20 | | Participation | | 37 | |
| 8.21 | | Protection of Collateral | | 37 | |
| 8.22 | | Additional Waivers | | 37 | |
| 8.23 | | Severance of Loan | | 38 | |
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