Exhibit 10.1
 
(CHASE LOGO) [c03113c0311301.gif]
CREDIT AGREEMENT
dated as of
June 30, 2010
by and among
JPMORGAN CHASE BANK, N.A.
and
ORION ENERGY SYSTEMS, INC., as the Borrower
ORION ASSET MANAGEMENT, LLC, as a Loan Guarantor
CLEAN ENERGY SOLUTIONS, LLC, as a Loan Guarantor
GREAT LAKES ENERGY TECHNOLOGIES, LLC, as a Loan Guarantor
 

 

 

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TABLE OF CONTENTS

         
1. Definitions; Rules of Interpretation; Accounting Terms; GAAP
    1  
 
       
1.1 Definitions
    1  
1.2 Rules of Interpretation
    17  
1.3 Accounting Terms; GAAP
    18  
1.4 Loan Parties
    18  
 
       
2. The Credit Facilities; Interest Rates; Fees
    19  
 
       
2.1 Revolving Loans
    19  
2.2 Borrowing Procedures for Revolving Loans
    19  
2.3 Unused Fee
    19  
2.4 Reduction or Termination of Loan Commitment
    20  
2.5 Interest Rates
    20  
2.6 Continuation and Conversion Procedure
    20  
2.7 Payments; Late Fee
    21  
2.8 Prepayments
    22  
2.9 Alternate Rate of Interest
    22  
2.10 Increased Costs
    22  
2.11 Break Funding Payments
    23  
2.12 Letters of Credit
    24  
2.13 Taxes
    25  
2.14 Use of Proceeds
    26  
 
       
3. Representations and Warranties
    26  
 
       
3.1 Organization; Subsidiaries; Corporate Power
    26  
3.2 Authorization and Binding Effect
    26  
3.3 Financial Statements
    27  
3.4 Litigation
    27  
3.5 Restricted Payments
    27  
3.6 Indebtedness; No Default
    27  
3.7 Ownership of Properties; Liens and Encumbrances
    27  
3.8 Tax Returns
    28  
3.9 Margin Stock
    28  
3.10 Regulated Entities
    28  
3.11 ERISA Compliance
    28  
3.12 No Burdensome Restrictions
    29  
3.13 Intellectual Property
    29  
3.14 Environmental Matters
    29  
3.15 Solvency
    30  
3.16 Accuracy of Information
    30  

 

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4. Conditions for Borrowing
    30  
 
       
4.1 On or Before the Effective Date
    30  
4.2 On or Before Each Subsequent Borrowing Date:
    32  
 
       
5. Affirmative Covenants
    33  
 
       
5.1 Financial Reporting
    33  
5.2 Books and Records; Inspections
    34  
5.3 Insurance
    34  
5.4 Condition of Property
    35  
5.5 Payment of Taxes
    35  
5.6 Compliance with Law
    35  
5.7 Compliance with ERISA
    35  
5.8 Compliance with Other Loan Documents
    35  
5.9 Notices
    35  
5.10 Banking Relationship
    36  
5.11 Additional Collateral; Further Assurances
    36  
 
       
6. Negative Covenants
    37  
 
       
6.1 Restricted Payments
    37  
6.2 Indebtedness
    37  
6.3 Contingent Obligations
    37  
6.4 Operating Leases
    38  
6.5 Liens
    38  
6.6 Mergers
    38  
6.7 Acquisitions, Advances and Investments
    38  
6.8 Lines of Business; Fiscal Year
    39  
6.9 Disposition of Assets
    39  
6.10 Subsidiaries
    39  
6.11 Total Liabilities to Tangible Net Worth Ratio
    39  
6.12 Unencumbered Liquidity; Debt Service Coverage Ratio
    39  
6.13 Transactions with Affiliates
    39  
6.14 Government Regulation
    40  
6.15 Rate Management Transactions
    40  
 
       
7. Event of Default; Remedies
    40  
 
       
7.1 Events of Default
    40  
7.2 Remedies
    42  
 
       
8. Guaranty
    42  
 
       
8.1 Guaranty
    42  
8.2 Guaranty of Payment
    42  
8.3 No Discharge or Diminishment of Loan Guaranty
    43  
8.4 Defenses Waived
    43  
8.5 Rights of Subrogation
    44  
8.6 Reinstatement; Stay of Acceleration
    44  
8.7 Information
    44  

 

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8.8 Termination
    44  
8.9 Maximum Liability
    45  
8.10 Contribution
    45  
8.11 Liability Cumulative
    46  
 
       
9. Miscellaneous
    46  
 
       
9.1 Survival of Representations and Warranties
    46  
9.2 Indemnification
    46  
9.3 Expenses
    46  
9.4 Notices
    47  
9.5 Setoff
    48  
9.6 Participations
    48  
9.7 Titles
    48  
9.8 Severability
    48  
9.9 Parties Bound; Waiver
    49  
9.10 Governing Law
    49  
9.11 Submission to Jurisdiction; Service of Process
    49  
9.12 Waiver of Jury Trial
    50  
9.13 Limitation of Liability
    50  
9.14 Counterparts
    50  
9.15 Entire Agreement
    50  
9.16 Confidentiality
    51  
9.17 USA PATRIOT Act Notification
    51  
9.18 Disclosure
    51  
 
       
EXHIBITS:
       

         
Exhibit A: Form of Revolving Note
       
Exhibit B: Financial Covenant Compliance Certificate
       
Exhibit C: Form of Borrowing Base Certificate
       
 
       
SCHEDULES:
       

         
Schedule 1: Permitted Liens
       
Schedule 3.1: Subsidiaries
       
Schedule 3.4: Litigation
       
Schedule 3.5: Restricted Payments
       
Schedule 3.14: Environmental Matters
       
Schedule 6.2: Indebtedness
       
Schedule 6.3: Contingent Obligations
       
Schedule 6.7: Investments
       

 

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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of June 30, 2010 (as amended, restated, or
otherwise modified from time to time, this “Agreement”), is by and among
JPMORGAN CHASE BANK, N.A., a national banking association (the “Bank”), ORION
ENERGY SYSTEMS, INC., a Wisconsin corporation (the “Borrower”), ORION ASSET
MANAGEMENT, LLC, a Wisconsin limited liability company (“OAM”), CLEAN ENERGY
SOLUTIONS, LLC, a Wisconsin limited liability company (“CES”), and GREAT LAKES
ENERGY TECHNOLOGIES, LLC, a Wisconsin limited liability company (“GLET” and
together with the Borrower, OAM and CES, each individually, a “Loan Party” and
collectively, the “Loan Parties”).
Each of the Loan Parties and the Bank agree as follows:
1. Definitions; Rules of Interpretation; Accounting Terms; GAAP.
1.1 Definitions. As used in this Agreement, the following terms have the
following meanings:
“Adjusted LIBOR Rate” means, with respect to any Interest Period, an interest
rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
the product of (a) the LIBOR Rate for such Interest Period multiplied by (b) the
Statutory Reserve Rate.
“Affiliate” means, as to any Person, any other Person, directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person (a) owns 10%
or more of any class of voting Equity Interests of the controlled Person or
(b) possesses, directly or indirectly, the power to direct or cause the
direction of the management or policies of the controlled Person, whether by
ownership of Equity Interests, by contract or otherwise.
“Applicable Margin” means, for any day, with respect to any DBLR Loan, LIBOR
Rate Loan or the unused fees payable hereunder, as the case may be, the
applicable rate per annum set forth below under the caption “DBLR Spread”,
“LIBOR Rate Spread” or “Unused Fee”, as the case may be, based upon the Debt
Service Coverage Ratio as of the end of the most recent fiscal quarter for which
the Borrower’s consolidated financial statements have been delivered to the Bank
pursuant to section 5.1; provided that until the delivery to the Bank, pursuant
to section 5.1(c), of the Financial Covenant Compliance Certificate for the
fiscal quarter ending June 30, 2010, the “Applicable Margin” shall be the
applicable rate per annum set forth below in Level 3:

                                      LIBOR Rate         Debt Service Coverage
Ratio   DBLR Spread     Spread     Unused Fee  
Level 1
Greater than or equal to 1.50:1.00
    2.00 %     2.00 %     0.250 %
Level 2
Greater than or equal to 1.20:1.00 but less than 1.50:1.00
    2.50 %     2.50 %     0.375 %
Level 3
Less than 1.20:1.00
    3.00 %     3.00 %     0.500 %

 

 

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For purposes of the foregoing, (a) the Applicable Margin shall be determined as
of the end of each fiscal quarter of the Borrower based upon the Financial
Covenant Compliance Certificate delivered pursuant to section 5.1(c) for such
fiscal quarter and (b) each change in the Applicable Margin resulting from a
change in the Debt Service Coverage Ratio shall be effective five (5) Business
Days after the date of delivery to the Bank of the final Financial Covenant
Compliance Certificate for any fiscal quarter and ending on the date immediately
preceding the effective date of the next such change; provided that the Debt
Service Coverage Ratio shall be deemed to be in Level 3 upon notice by the Bank
to the Borrower if the Borrower fails to deliver the Financial Covenant
Compliance Certificate required to be delivered by it pursuant to section
5.1(c), during the period from the expiration of the time for delivery thereof
until five (5) Business Days after such Financial Covenant Compliance
Certificate is delivered.
“Available Amount” of any Letter of Credit at any time means the maximum amount
available to be drawn at such time under such Letter of Credit (assuming
compliance with all conditions to drawing specified therein).
“Bank” means JPMorgan Chase Bank, N.A., a national banking association.
“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.
“Borrowing Base Availability” means, at any time, the sum of (a) 75% of the
outstanding principal balance of Eligible Accounts at such time, plus (b) 45% of
Eligible Inventory, valued, in the case of Eligible Inventory, at the lower of
cost or market at such time.
“Borrowing Base Certificate” means a certificate substantially in the form of
Exhibit C attached hereto.
“Borrowing Base Period” means each period of one day or two or more consecutive
days after the Effective Date upon which the outstanding principal balance of
Revolving Loans exceeds $5,000,000.
“Borrowing Date” means each date on which a Revolving Loan is made by the Bank
to the Borrower or on which a Letter of Credit is issued or amended.
“Business” has the meaning assigned to such term in section 3.14(b).
“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in Milwaukee, Wisconsin and New York City are authorized
or required by law to remain closed; provided that, when used in connection with
a LIBOR Rate Loan or a DBLR Loan, the term “Business Day” shall also exclude any
day on which banks are not open for dealings in US Dollar deposits in the London
interbank market.

 

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“Capitalized Lease” means, as to any Person, any lease, the obligations under
which have been, or are required to be, recorded as a capital lease liability on
the consolidated balance sheet of that Person and its Consolidated Subsidiaries
under GAAP in effect as of the date of this Agreement.
“Capitalized Lease Obligations” means, as to any Person, at any date, the
obligations of such Person or any of its Consolidated Subsidiaries under
Capitalized Leases.
“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) other than
Neal Verfuerth, and his spouse and children (or trusts created for their
benefit), of Equity Interests representing more than fifty percent (50%) of the
aggregate ordinary voting power represented by the issued and outstanding Equity
Interests of the Borrower; (b) occupation of a majority of the seats (other than
vacant seats) on the board of directors of the Borrower by Persons who were
neither (i) nominated by the board of directors of the Borrower nor
(ii) appointed by directors so nominated; (c) the acquisition of direct or
indirect Control of the Borrower by any Person or group other than Neal
Verfuerth, and his spouse and children (or trusts created for their benefit);
(d) except as expressly permitted under the terms of this Agreement, the
Borrower consolidates with or merges into another Person or conveys, transfers
or leases all or substantially all of its property to any Person, or any Person
consolidates with or merges into the Borrower, in either event pursuant to a
transaction in which the outstanding Equity Interests of the Borrower is
reclassified or changed into or exchanged for cash, securities or other
property; or (e) except as otherwise expressly permitted pursuant to section
6.7, the Borrower shall cease to own and control, directly or indirectly, all of
the economic and voting rights associated with all of the outstanding Equity
Interests of each of the Loan Parties and each of the Borrower’s other
Subsidiaries or shall cease to have the power, directly or indirectly, to elect
all of the members of the board of directors of each of the Loan Parties and
each of the Borrower’s other Subsidiaries.
“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by the Bank with any request, guideline
or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.
“Closing Date” means June 30, 2010.
“Code” means the Internal Revenue Code of 1986, as amended.
“Collateral Documents” means the documents described in section 4.1(b), and any
other document, instrument or agreement furnished by a Person to the Bank which
provides collateral, guarantees payment of, or grants a Lien upon property as
security, for the Obligations to the Bank.
“Consolidated Subsidiaries” means, as to any Person, Subsidiaries whose
financial statements are consolidated with those of such Person in accordance
with GAAP.

 

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“Contingent Obligation” means, as to any Person, any direct or indirect
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the “primary obligations”) of another Person (the “primary
obligor”), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, (iii) to
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, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof (each, a “Guaranty Obligation”); (b) with respect to any letter of
credit, banker’s acceptance, bank guaranty, surety bond and other similar
instruments issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered, or (d) in respect of any Rate Management Transaction.
The amount of any Contingent Obligation shall (x) in the case of Guaranty
Obligations, be deemed equal to the lesser of (i) the stated or determinable
amount of the primary obligation in respect of which such Guaranty Obligation is
made or, if not stated or if indeterminable, the maximum reasonably anticipated
liability in respect thereof and (ii) the stated amount of the guaranty, (y) in
the case of Rate Management Transactions, equal the Termination Value in the
case of Rate Management Transactions under which a “termination event” or “event
of default” has occurred and, in all other cases, shall equal $0 and (z) in the
case of other Contingent Obligations, be deemed equal to the maximum reasonably
anticipated liability of the Person in respect thereof.
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
“Daily Borrowing LIBOR Rate” means, on any date of determination, an interest
rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
the product of (a) the interest rate determined by the Bank by reference to the
Page to be the rate at approximately 11:00 a.m. London time, two Business Days
prior to the first Business Day of the month of such date of determination for
Dollar deposits with a maturity equal to one (1) month, multiplied by (b) the
Statutory Reserve Rate applicable to Dollar deposits in the London interbank
market with a maturity equal to one month.
“DBLR Loan” means any Loan under this Agreement when and to the extent that its
interest rate is determined by reference to the Daily Borrowing LIBOR Rate.

 

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“Debt Service Coverage Ratio” means, as to any Person, the relationship
expressed as a numeric ratio, between:
(a) (i) EBITDA, minus (ii) income taxes paid in cash, minus (iii) 50% of
depreciation expense,
to
(b) the sum of (i) interest expense paid in cash in respect of Indebtedness for
borrowed money, and (ii) scheduled principal payments made with respect to
Indebtedness for borrowed money;
all as determined, without duplication, for such Person and its Consolidated
Subsidiaries for the 12 month period ending as of the end of the applicable
fiscal quarter.
“Debt Service Period” means the period commencing on the date on which a Debt
Service Triggering Event occurs and ending on the Revolving Note Maturity Date.
“Debt Service Triggering Event” means the attainment of a Debt Service Coverage
Ratio as of the end of any fiscal quarter greater than 1.50:1.00.
“Default” means any act, event, condition or omission which, with the giving of
notice or lapse of time, would constitute an Event of Default if uncured or
unremedied.
“Default Rate” has the meaning assigned to such term in section 2.5(b).
“Dollar” or “$” means lawful currency of the United States of America.
“EBITDA” means, as to any Person and for any period as to which such amount is
being determined, the amount equal to (a) Net Income plus (b) to the extent
deducted in determining Net Income, (i) interest expense, (ii) amounts paid or
provided for in respect of income tax liability or taxes in lieu of income
taxes, (iii) depreciation and amortization expense, (iv) all non-cash charges,
minus (c) all non-cash income and revenue, all as determined, without
duplication, for such Person and its Consolidated Subsidiaries for such period.
For the purposes of calculating EBITDA for any period, if during such period the
applicable Person or any of its Subsidiaries shall have made an Acquisition or a
Disposition (in each case as defined below), EBITDA for such period shall be
calculated after giving pro forma effect thereto on the date such Acquisition or
Disposition occurred. For purposes hereof, “Acquisition” means any transaction
or series of related transactions resulting in (a) the acquisition of all or
substantially all of the assets of a Person, or of any business or division of a
Person, (b) the acquisition of in excess of 50% of the Equity Interests of any
Person or (c) a merger or consolidation or any other combination with another
Person (other than the Borrower or any of its Subsidiaries). For purposes
hereof, “Disposition” means any transaction or series of related transactions
resulting in the disposition by the Borrower or any of its Subsidiaries of
(a) all or substantially all of the assets of the Borrower or any of its
Subsidiaries, or of any business or division of the Borrower or any of its
Subsidiaries, or (b) all of the Equity Interests of a Subsidiary owned by the
Borrower and/or its Subsidiaries to a Person that is not a Subsidiary.
“Effective Date” means the date on which all of the conditions set forth in
section 4.1 are satisfied.

 

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“Eligible Accounts” means, at any time, each account (as defined in the UCC) of
the Loan Parties that meets, and so long as it continues to meet, the following
requirements:
(a) it is genuine and in all material respects what it purports to be;
(b) it is owned by the applicable Loan Party, the applicable Loan Party has the
right to subject it to a Lien in favor of the Bank or assign it to the Bank and
it is subject to a first priority perfected Lien in favor of the Bank and to no
other Lien whatsoever, other than Permitted Liens which are subordinated to the
Lien in favor of the Bank;
(c) it arises from (i) the performance of services by the applicable Loan Party
in the ordinary course of its business, and such services have been fully
performed; or (ii) the sale or lease of inventory by the applicable Loan Party
in the ordinary course of its business, and (x) such inventory has been
completed in accordance in all material respects, with the account debtor’s
specifications (if any) and delivered to the account debtor and (y) such account
debtor has not refused to accept, returned or offered to return, any of the
goods which are the subject of such account;
(d) it is evidenced by an invoice which requires payment within 60 days of the
invoice date and is not unpaid more than 60 days past the stated due date;
provided that if an invoice does not require payment within 60 days of the
invoice date and the Bank has made a good faith determination based on its
Permitted Discretion that such an account may be eligible, such invoice is not
unpaid more than 120 days past the invoice date;
(e) it is a valid, legally enforceable and unconditional obligation of the
account debtor thereunder (subject to the effect of bankruptcy, insolvency and
other similar laws affecting creditors’ rights generally and general principles
of equity), and it shall not be an Eligible Account to the extent of any setoff,
counterclaim, credit, allowance or adjustment by such account debtor, or to the
extent it is subject to any claim by such account debtor denying liability
thereunder in whole or in part;
(f) it does not arise out of a contract or order which fails in any material
respect to comply with the requirements of applicable law;
(g) the account debtor thereunder is not a director, officer, employee or agent
of the Borrower, any of the Loan Parties, or a Subsidiary or Affiliate of any
Loan Party;
(h) it is not an account with respect to which the account debtor is the United
States of America or any state or local government, or any department, agency or
instrumentality thereof, unless the applicable Loan Party assigns its right to
payment of such account to Bank pursuant to, and in full compliance with, the
Assignment of Claims Act of 1940, as amended, or any comparable state or local
law, as applicable;
(i) it is not an account with respect to which the account debtor is located in
a state which requires the applicable Loan Party, as a precondition to
commencing or maintaining an action in the courts of that state, either to
(i) receive a certificate of authority to do business and be in good standing in
such state; or (ii) file a notice of business activities report or similar
report with such state’s taxing authority, unless (x) the applicable Loan Party
has taken one of the actions described in clauses (i) or (ii); (y) the failure
to take one of the actions described in either clause (i) or (ii) may be cured
in all material respects by the applicable Loan Party; or (z) the Borrower has
reasonably determined that the applicable Loan Party is exempt from any such
requirements under any such state’s laws and has provided the Bank written
evidence, setting forth in reasonable detail, the basis for such determination;

 

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(j) the account debtor is located within the United States of America or, if the
account debtor is located outside of the United States, the applicable account
is secured by a letter of credit or guaranty issued by an entity acceptable to
Bank and in form and substance acceptable to Bank or is covered by credit
insurance from an insurer acceptable to Bank under a credit insurance policy in
form and substance satisfactory to Bank;
(k) it is not an account with respect to which the account debtor’s obligation
to pay is subject to any repurchase obligation or return right, as with sales
made on a bill-and-hold, guaranteed sale, sale on approval, sale or return or
consignment basis;
(l) it is not an account (i) with respect to which any representation or
warranty contained in this Agreement is untrue in any material respect when
made; or (ii) which violates any of the covenants of the Borrower contained in
this Agreement in any material respect;
(m) it is not an account which, when added to a particular account debtor’s
other indebtedness to the Loan Parties, exceeds 25% of all accounts of the Loan
Parties (except that accounts excluded from Eligible Accounts solely by reason
of this clause (m) shall be Eligible Accounts to the extent of such credit
limit); and
(n) it is not an account with respect to which the Bank has provided the
Borrower notice that the Bank has determined in its Permitted Discretion that
prospect of payment or performance by the account debtor is or will be
materially impaired.
“Eligible Inventory” means, at any time, the inventory of the Loan Parties that
meets, and so long as it continues to meet, the following requirements:
(a) it is owned by the applicable Loan Party, the applicable Loan Party has the
right to subject it to a Lien in favor of Bank and it is subject to a first
priority perfected Lien in favor of Bank and to no other Lien whatsoever, other
than Permitted Liens which are subordinated to the Lien in favor of the Bank;
(b) if it is located at a location leased by the applicable Loan Party, the
lessor thereof has delivered to the Bank a landlord agreement in form and
substance satisfactory to the Bank and is not in transit;
(c) if held for sale or lease or furnishing under contracts of service, it is
(except as the Bank may otherwise consent in writing) new and unused or
otherwise merchantable and saleable through normal trade channels and free from
defects which could reasonably be expected to affect its market value;
(d) if it is stored with a bailee, consignee, warehouseman, processor or similar
party, such bailee, consignee, warehouseman, processor or similar party has
issued and delivered to the Bank, a warehousemen’s letter in form and substance
satisfactory to the Bank;
(e) the Bank has determined in its Permitted Discretion and in accordance with
Bank’s customary business practices, that it is not unacceptable due to age,
type, category or quantity;
(f) it does not consist of work-in-process inventory; and

 

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(g) it is not inventory (i) with respect to which any of the representations and
warranties contained in this Agreement are untrue in any material respect when
made; (ii) which violates any of the covenants of the Borrower contained in this
Agreement in any material respect or (iii) which does not conform to all
standards imposed by any Governmental Authority in any material respect.
“Environmental Laws” means all federal, state and local laws including statutes,
regulations, ordinances, codes, rules and other governmental restrictions and
requirements relating to the discharge of air pollutants, water pollutants or
process waste water or otherwise relating to the environment or hazardous
substances including the Federal Solid Waste Disposal Act, the Federal Clean Air
Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery
Act of 1976, the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, regulations of the Environmental Protection Agency,
regulations of the Nuclear Regulatory Commission and regulations of any state
department of natural resources or state environmental protection agency now or
at any time hereafter in effect.
“Equity Interest” means, as to any Person, any share, capital stock, limited
liability company membership interest, partnership interest or other interest
representing equity in, or ownership of, such Person.
“ERISA” means, at any date, the Employee Retirement Income Security Act of 1974,
as amended, and the regulations thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with any of the Loan Parties within the meaning of section
414(b) or (c) of the Code (and sections 414(m) and (o) of the Code for purposes
of provisions relating to section 412 of the Code).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by any of the Loan Parties or any ERISA Affiliate from a Pension 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) or a cessation
of operations which is treated as such a withdrawal under section 4062(e) of
ERISA; (c) a complete or partial withdrawal by any of the Loan Parties or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization within the meaning of Section 4241 of ERISA; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which is reasonably expected to constitute grounds
under section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under section 4007 of ERISA, upon any of the Loan Parties
or any ERISA Affiliate.
“Event of Default” means the occurrence of any of the events described in
section 7.1.

 

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“Excluded Assets” means all throughput agreements, virtual power plant
agreements, power purchase agreements, leases, supply agreements and/or similar
agreements relating to solar photovoltaic and/or wind turbine systems or
facilities, all receivables, chattel paper, payments, revenues, rights, rebates,
intangibles, credits, benefits and financial assets originated, acquired or
serviced in connection therewith (including solar renewable energy credit (or
similar) revenues), all guarantees and insurance coverage in connection
therewith, all right, title and interest in, to and under related agreements,
instruments and documents, all assets related to the foregoing, all proceeds and
products of the foregoing, all books and records related to the foregoing and
all supporting obligations in respect of any of the foregoing, whether now
existing or hereafter created or acquired and wherever located.
“Excluded Taxes” means, with respect to the Bank or any other recipient of any
payment to be made by or on account of any obligation of any of the Loan Parties
under the Loan Documents, (a) taxes imposed on (or measured by) its net income
(however denominated), and franchise taxes imposed on it (in lieu of income
taxes), by the jurisdiction (or any political subdivision thereof) under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of the Bank, in which its applicable lending office is
located or (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which the Borrower is
located.
“Finance Receivables” means any receivables or other financial assets, whether
evidenced by or arising under notes, leases, contracts or otherwise, originated
by or payable to the Borrower or any of its Subsidiaries, including all related
collateral and assets.
“Financial Covenant Compliance Certificate” means a certificate substantially in
the form of Exhibit B attached hereto.
“GAAP” means generally accepted accounting principles in effect in the United
States from time to time.
“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any court or similar judicial authority thereof,
any entity exercising executive, legislative, regulatory or administrative
functions of or pertaining to government.
“Guaranteed Obligations” has the meaning specified in section 8.1.
“Hazardous Materials” means any gasoline or petroleum (including crude oil or
any fraction thereof) or petroleum products or any hazardous or toxic
substances, materials, containments or wastes, defined or regulated as such in
or under any Environmental Law, including asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.
“Indebtedness” means, as to any Person, without duplication, (a) all
indebtedness for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations under conditional
sale or other title retention agreements relating to property acquired by such
Person, (d) all obligations in respect of the deferred purchase price of
property or services (excluding (i) trade and similar accounts payable and
accrued expenses, in each case incurred in the ordinary course of business and
(ii) employee benefit and compensation obligations arising in the ordinary
course of business), (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property owned or acquired by the Person, whether or
not the Indebtedness secured thereby has been assumed and (f) all Capitalized
Lease Obligations. The Indebtedness of any Person shall include the Indebtedness
of any

 

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other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor. Notwithstanding the foregoing, “Indebtedness” shall not include
(1) any customary earnout or holdback in connection with an acquisition not
prohibited by this Agreement, (2) any obligations in respect of customer
advances held in the ordinary course of business or (3) performance bonds or
performance guarantees (or reimbursement obligations in respect of bank
guarantees or letters of credit in lieu thereof) entered into in the ordinary
course of business. If any Indebtedness is limited to recourse against a
particular asset or assets of a Person, the amount of the corresponding
Indebtedness shall be equal to the lesser of the amount of such Indebtedness and
the fair market value of such asset or assets, as determined by the Borrower in
good faith, at the date for determination of the amount of such Indebtedness.
For all purposes of this Agreement, the amount of Indebtedness of the Borrower
and its Subsidiaries hereunder shall be calculated without duplication of
guaranty obligations of the Company or any Subsidiary in respect thereof.
“Indemnified Taxes” means Taxes other than Excluded Taxes.
“Intercreditor Agreements” means, collectively, (a) that certain Intercreditor
Agreement dated on or about June 30, 2010, by and among the Bank, the Loan
Parties and Hometown Bank, (b) that certain Intercreditor Agreement dated on or
about June 30, 2010, by and among the Bank, the Loan Parties and Wisconsin
Department of Commerce and (c) that certain Intercreditor Agreement dated on or
about June 30, 2010 by and among the Bank, the Loan Parties and City of
Manitowoc.
“Interest Period” means with respect to any LIBOR Rate Loan, the period
commencing on the date of such LIBOR Rate Loan and ending on the numerically
corresponding day in the calendar month that is one or three months (or, with
the Bank’s consent, six, nine or twelve months) thereafter, as selected by the
Borrower pursuant to sections 2.2 and 2.6 of this Agreement; provided, that
(a) if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day,
(b) any Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period, (c) no Interest Period
for any Revolving Loan shall extend beyond the scheduled Revolving Note Maturity
Date.
“IRS” means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the Code.
“L/C Obligations” means at any time the sum of (a) the aggregate Available
Amount of all Letters of Credit then outstanding, plus (b) the aggregate amount
of unpaid Reimbursement Obligations. For all purposes of this Agreement, if on
any date of determination a Letter of Credit has expired by its terms but any
amount may still be drawn thereunder by reason of the operation of Rule 3.14 of
the International Standby Practices, such Letter of Credit shall be deemed to be
“outstanding” in the amount so remaining available to be drawn.

 

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“L/C Sublimit” means an amount equal to $2,000,000. The L/C Sublimit is part of,
and not in addition to, the Revolving Loan Commitment.
“Letter of Credit” means each standby or trade letter of credit issued by the
Bank pursuant to section 2.12 hereof.
“LIBOR Rate” means, with respect to any Interest Period, the interest rate
determined by the Bank by reference to the Page, to be the rate at approximately
11:00 a.m., London time, two Business Days prior to the commencement of the
Interest Period for Dollar deposits with a maturity equal to such Interest
Period. If no LIBOR Rate is available to the Bank, the applicable LIBOR Rate for
the relevant Interest Period shall instead be the rate determined by the Bank to
be the rate at which the Bank offers to place Dollar deposits having a maturity
equal to such Interest Period with first-class banks in the London interbank
market at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period.
“LIBOR Rate Loan” means any Loan under this Agreement when and to the extent
that its interest rate is determined by reference to the Adjusted LIBOR Rate.
“Lien” means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment for security purposes, encumbrance, lien (statutory or
otherwise) or similar charge of any kind, including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature of any of the foregoing (excluding any lease that is not a
Capitalized Lease) or any validly-filed financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the relevant
jurisdiction (or other similar recording or notice statute), except a filing for
precautionary purposes made with respect to a transaction not constituting any
of the foregoing.
“Loan” means, individually, any Revolving Loan or any unpaid Reimbursement
Obligation and “Loans” means, collectively, all Revolving Loans and all unpaid
Reimbursement Obligations.
“Loan Documents” means this Agreement, the Notes, the Letters of Credit, the
Collateral Documents, the Intercreditor Agreements and all other agreements,
documents and instruments executed in connection with this Agreement and the
transactions contemplated hereby, all as amended, restated, replaced,
supplemented or otherwise modified from time to time.
“Loan Guarantor” means each Loan Party other than the Borrower and any other
Person that executes a joinder to this Agreement for the purpose of guaranteeing
the Guaranteed Obligations.
“Loan Guaranty” means the guaranty set forth in section 8, together with any
other guaranty of the Obligations delivered by any Person after the Closing
Date.
“Loan Parties Representative” has the meaning assigned to such term in section
1.4.
“Margin Stock” means “margin stock” as such term is defined in Regulation T, U
or X of the Board.

 

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“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties or financial condition
of the Loan Parties and their Subsidiaries taken as a whole; (b) a material
impairment of the ability of the Loan Parties taken as a whole to perform under
any Loan Document; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability against any of the Loan Parties of any Loan
Document; provided that events, circumstances, changes, effects or conditions
disclosed in any Form 10-K, Form 10-Q or Form 8-K filed by the Borrower with the
Securities and Exchange Commission prior to the date of this Agreement shall not
constitute a “Material Adverse Effect”.
“Multiemployer Plan” means a “multiemployer plan”, within the meaning of section
4001(a)(3) of ERISA, to which any of the Loan Parties or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the preceding
three calendar years, has made, or been obligated to make, contributions.
“Net Income” means, as to any Person and for any period as to which such amount
is being determined, the excess of:
(a) all revenues and income derived from operations in the ordinary course of
business (excluding extraordinary gains and profits upon the disposition of
investments and fixed assets),
over
(b) all expenses and other proper charges against income (including payment or
provision for all applicable income and other taxes, but excluding extraordinary
losses and losses upon the disposition of investments and fixed assets),
all as determined for such Person and its Consolidated Subsidiaries.
“Note” means the Revolving Note.
“Obligations” means all obligations, contingent or otherwise, whether now
existing or hereafter arising, of any of the Loan Parties from time to time owed
to the Bank or an Affiliate of the Bank under the Loan Documents, whether for
principal, interest, Reimbursement Obligations, the Guaranteed Obligations, any
and all obligations, contingent or otherwise, whether now existing or hereafter
arising, of the Borrower to the Bank or an Affiliate of the Bank arising under
or in connection with Related Rate Management Transactions, obligations related
to banking services provided by the Bank to any of the Loan Parties, fees,
expenses, indemnification or otherwise.
“Operating Lease Obligations” means, as to any Person at any date, the
obligations of such Person and its Consolidated Subsidiaries under leases of
real or personal property (including taxes, insurance, maintenance and similar
expenses which such Person or Subsidiary is required to pay under any such
lease) other than Capitalized Lease Obligations.
“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement and the other Loan Documents.

 

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“Page” means such page of the Service or any successor or substitute page of the
Service providing rate quotations comparable to those currently provided on such
page of the Service, as determined by the Bank from time to time for purposes of
providing quotations of interest rates applicable to Dollar deposits in the
London interbank market.
“PBGC” means the Pension Benefit Guaranty Corporation, or any Governmental
Authority succeeding to any of its principal functions under ERISA.
“Pension Plan” means a pension plan (as defined in section 3(2) of ERISA)
subject to Title IV of ERISA which any of the Loan Parties sponsor, maintain, or
to which such Loan Party makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.
“Permitted Discretion” means a determination made in good faith in the exercise
of reasonable (from the perspective of a secured commercial lender) business
judgment.
“Permitted Financing” means any financing secured by Excluded Assets, including,
without limitation, any project financing relating to Excluded Assets and any
financial asset financing program or facility providing for the sale,
conveyance, pledge or other transfer of Finance Receivables by the Borrower
and/or any of its Subsidiaries to a trust or to one or more limited purpose
finance companies, special purpose entities or financial institutions or other
third party investors or financiers, either directly or through one or more
Subsidiaries.
“Permitted Liens” means (a) Liens listed on Schedule 1 attached hereto,
including extensions, renewals and substitutions thereof to the extent that the
obligations secured thereby are not increased; (b) Liens for taxes, fees,
assessments or governmental charges not delinquent or being contested in good
faith by any of the Loan Parties or any Subsidiary for which adequate reserves
are established and maintained; (c) statutory Lien claims not delinquent or
being contested in good faith by any of the Loan Parties or any Subsidiary for
which adequate reserves are established and maintained, including construction,
mechanic’s, warehousemen, carriers’, landlords’, repairmen’s or other similar
Liens; (d) purchase money Liens (including Liens securing Capitalized Lease
Obligations) on any property acquired by any of the Loan Parties and created or
incurred simultaneously with or within 90 days after the acquisition of such
property, if such Lien is limited to the property so acquired, the proceeds
thereof and other purchase money or Capitalized Lease financings provided by the
same lender and its affiliates and the aggregate Indebtedness secured by all
such Liens does not exceed $2,000,000 at any time outstanding for all of the
Loan Parties; (e) Liens or deposits in connection with worker’s compensation or
other insurance or social security legislation or to secure the performance of
bids, trade contracts (other than for borrowed money), leases, public or
statutory obligations, performance, surety or appeal bonds, reimbursement
obligations in respect of letters of credit or other obligations of like nature
incurred in the ordinary course of business; (f) Liens in favor of the Bank or
any Affiliate of the Bank; (g) easements, rights-of-way, restrictions, minor
title irregularities and similar matters which have no material adverse effect
as a practical matter upon the ownership or use of the applicable property by
any of the Loan Parties; (h) Liens consisting of judgment or judicial attachment
liens which do not constitute an Event of Default under section 7.1(f);
(i) Liens arising by virtue of any statutory or common law provision relating to
banker’s liens, rights of set-off or similar rights and remedies as to deposit
accounts or other funds maintained with a creditor depository institution;
(j) any Liens on Excluded Assets or otherwise securing a Permitted Financing;
and (k) other Liens securing obligations of the Loan Parties not to exceed
$100,000 in the aggregate at any one time outstanding. Any Lien permitted above
on any property may extend to the proceeds of such property.

 

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“Person” means any natural person, corporation, limited liability company, joint
venture, limited liability partnership, partnership, association, trust or other
entity or any Governmental Authority.
“Plan” means an employee benefit plan (as defined in section 3(3) of ERISA)
which any of the Loan Parties sponsor or maintain or to which any of the Loan
Parties makes, is making, or is obligated to make contributions and includes any
Pension Plan.
“Prime Rate” means the rate of interest per annum announced or determined from
time to time by the Bank as its prime rate. The Prime Rate is a variable rate
and each change in the Prime Rate is effective from and including the date the
change is announced as being effective. THE PRIME RATE IS A REFERENCE RATE AND
MAY NOT BE THE BANK’S LOWEST RATE.
“Prime Rate Loan” means any Loan under this Agreement when and to the extent
that its interest rate is determined by reference to the Prime Rate.
“Properties” has the meaning assigned to such term in section 3.14(a).
“Rate Management Transaction” means (a) any transaction (including an agreement
with respect thereto) which is a rate swap, swap option, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap, floor, collar, currency swap, cross-currency rate
swap, currency option, credit protection transaction, credit swap, credit
default swap, credit default option, total return swap, credit spread,
repurchase transaction, reverse repurchase transaction, buy/sell-back
transaction, securities lending transaction, weather index transaction or
forward purchase or sale of a security, commodity or other financial instrument
or interest (including any option with respect to any of these transactions), or
(b) any type of transaction that is similar to any transaction referred to in
clause (a) above that is currently, or in the future becomes, recurrently
entered into in the financial markets and which is a forward, swap, future,
option or other derivative on one or more rates, currencies, commodities, equity
securities or other equity instruments, debt securities or other debt
instruments, economic indices or measures of economic risk or value, or other
benchmarks against which payments or deliveries are to be made, or any
combination of the foregoing transactions.
“Regulation D” means Regulation D of the Board as from time to time in effect
and any successor thereto or other regulation or official interpretation of the
Board relating to reserve requirements applicable to member banks of the Federal
Reserve System.
“Reimbursement Obligation” means the obligation of the Borrower to reimburse the
Bank for a drawing under a Letter of Credit.
“Related Rate Management Transaction” means a Rate Management Transaction
between any of the Loan Parties and the Bank or an Affiliate of the Bank.

 

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“Reportable Event” means any of the events set forth in section 4043(c) of ERISA
or the regulations thereunder (other than an event set forth in section
4043(c)(ii)), other than any such event for which the 30 day notice requirement
under ERISA has been waived in regulations issued by the PBGC.
“Requirement of Law” means, as to any Person, any law (statutory or common),
treaty, rule or regulation of a Governmental Authority applicable to or binding
upon the Person or any of its property or any ruling, order, judgment or
determination of an arbitrator or a Governmental Authority to which the Person
or any of its property is subject.
“Restricted Payments” means dividends or other distributions by any of the Loan
Parties based upon the Equity Interests of such Loan Party (except dividends or
other distributions payable to any of the Loan Parties and dividends or other
distributions payable solely in Equity Interests, or options or rights to
acquire Equity Interests, of any of the Loan Parties or dividends or other
distributions of Excluded Assets to effectuate a Permitted Financing) and
purchases, redemptions and other acquisitions, direct or indirect, by any of the
Loan Parties, of Equity Interests of such Loan Party.
“Revolving Loan” means an extension of credit to the Borrower by the Bank
pursuant to section 2.1.
“Revolving Loan Commitment” means the aggregate principal amount of Revolving
Loans which the Bank has committed to make to the Borrower hereunder, subject to
reduction pursuant to section 2.4. For the period from the Closing Date to the
Effective Date, the Revolving Loan Commitment is $0. For the period from the
Effective Date until the Revolving Note Maturity Date, the Revolving Loan
Commitment is $15,000,000.
“Revolving Note” means the promissory note of the Borrower in substantially the
form of Exhibit A.
“Revolving Note Maturity Date” means June 30, 2012, or such earlier date on
which the Revolving Note may become due and payable pursuant to section 7.2 of
this Agreement.
“Service” means Reuters Screen LIBOR01, formerly known as Page 3750 of the
Moneyline Telerate Service, together with any successor or substitute thereto.
“Solvent” means, with respect to any Person, that as of the date of
determination both:
(a) (i) the then fair saleable value of the property of such Person is [a]
greater than the Total Liabilities (including Contingent Obligations) of such
Person and [b] not less than the amount that will be required to pay the
probable liabilities on such Person’s then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person; (ii) such Person’s capital is not
unreasonably small in relation to its business or any contemplated or undertaken
transaction; and (iii) such Person does not intend to incur, or believe (nor
should it reasonably believe) that it will incur, debts beyond its ability to
pay such debts as they become due; and
(b) such Person is “solvent” within the meaning given that term and similar
terms under applicable laws relating to fraudulent transfers and conveyances.

 

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“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board for eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D). Such reserve percentages shall
include those imposed pursuant to Regulation D. The Statutory Reserve Rate shall
be adjusted automatically on and as of the effective date of any change in any
reserve percentage.
“Subordinated Debt” means, as to any Person, Indebtedness of such Person, the
payment of which is subordinated, in a manner satisfactory to the Bank, to the
prior payment of all Indebtedness of such Person owed to the Bank or any
Affiliate of the Bank.
“Subsidiary” of a Person means any other Person, as of a particular date, which
it directly, or indirectly through one or more of its Subsidiaries, owns greater
than 50% of the outstanding Equity Interests of such other Person; provided that
the foregoing definition shall not include any special purpose financing entity
which is wholly-owned, directly or indirectly, by any one or more of the Loan
Parties, and which is formed for the sole and exclusive purpose of (a)
purchasing or otherwise acquiring receivables from one or more of the Loan
Parties or their respective Affiliates, (b) financing such purchases (including
through one or more securitizations), and (c) conducting activities related
thereto.
“Tangible Net Worth” means, as to any Person, as of any determination date, the
total of all assets which would appear on the consolidated balance sheet of such
Person and its subsidiaries, less the sum of the following:
(a) the book amount of all such assets which would be treated as intangibles,
including all such items as goodwill, trademarks, trademark rights, trade names,
trade name rights, brands, copyrights, patents, patent rights, licenses,
deferred charges and unamortized debt discount and expense;
(b) any write-up in the book value of any such assets resulting from a
revaluation thereof subsequent to the date of the most recent financial
statement referred to in section 5.1(a) or 5.1(b);
(c) all reserves, including reserves for depreciation, obsolescence, depletion,
insurance and inventory valuation, but excluding contingency reserves not
allocated for any particular purpose and any reserves not deducted from assets;
(d) the amount, if any, at which any Equity Interests of the Person or any of
its subsidiaries appear on the asset side of such consolidated balance sheet;
(e) the Total Liabilities of the Person (excluding Subordinated Debt); and
(f) all investments in foreign Affiliates of the Person and unconsolidated
domestic Affiliates of the Person;
all as calculated for the Borrower and its Consolidated Subsidiaries.

 

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“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
“Termination Value” means, in respect of any Rate Management Transaction, after
taking into account the effect of any legally enforceable netting agreement
relating to such Rate Management Transaction, (a) for any date on or after the
date such Rate Management Transaction has been closed out and termination value
determined in accordance therewith, such termination value, and (b) for any date
prior to the date referenced in clause (a) the amount determined as the
mark-to-market value for such Rate Management Transaction, as reasonably
determined by the Bank based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in Rate Management
Transaction (which may include the Bank).
“Total Liabilities” means, as to any Person, all items which would be classified
as liabilities on the consolidated balance sheet of such Person and its
Consolidated Subsidiaries.
“Type” means, with respect to any Loan, its nature as a Prime Rate Loan, DBLR
Loan or LIBOR Rate Loan.
“UCC” means the Uniform Commercial Code in effect in the State of Wisconsin from
time to time.
“Unencumbered Liquidity” means, at any determination date, an amount equal to
(a) the amount available to be borrowed as Revolving Loans under section 2.1(a)
on such determination date plus (b) the aggregate amount of the Borrower’s funds
on deposit with the Bank and, subject to the Bank’s consent, in its Permitted
Discretion, its Affiliates, on such determination date.
“Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities
under section 4001(a)(16) of ERISA, over the current value of that Plan’s
assets, determined in accordance with the assumptions used for funding the
Pension Plan pursuant to section 412 of the Code for the applicable plan year.
“Unused Fee Triggering Event” means each period of one day or two or more
consecutive days upon which (a) during the period from the Closing Date through
June 30, 2011, the aggregate amount of the funds of the Borrower and/or its
Affiliates on deposit with the Bank and/or its Affiliates is less than
$20,000,000 and (b) during the period from July 1, 2011 through the Revolving
Note Maturity Date, the aggregate amount of the funds of the Borrower and/or its
Affiliates on deposit with the Bank and/or its Affiliates is less than
$10,000,000.
1.2 Rules of Interpretation. Except as otherwise explicitly specified to the
contrary or unless the context clearly requires otherwise: (a) all references to
a particular statute or regulation include all rules and regulations promulgated
thereunder and any successor statute, regulation or rules, in each case as from
time to time in effect; (b) references to agreements (including this Agreement)
and other contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto, but only to the extent such
amendments and other modifications are not prohibited by the terms of any Loan
Document; (c) in the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including”, the words “to”
and “until” each mean “to but excluding” and the word “through” means “to and
including”; (d) the word “including” shall be construed as “including without
limitation”; (e) references to a fiscal year or fiscal quarter mean the fiscal
year or fiscal quarter of the Borrower; and (f) references to the word
“Subsidiary” shall mean any direct or indirect Subsidiary of any of the Loan
Parties.

 

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1.3 Accounting Terms; GAAP. Except as otherwise expressly provided herein, all
terms of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time; provided that, if the Borrower notifies
the Bank that the Loan Parties request an amendment to any provision hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or in
the application thereof on the operation of such provision (or if the Bank
notifies the Borrower that the Bank requests an amendment to any provision
hereof for such purpose), regardless of whether any such notice is given before
or after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
1.4 Loan Parties. Each of the Loan Parties agrees:
(a) The term “Loan Party” and “Loan Parties” as used herein includes each of the
Loan Parties individually and collectively and all grants, representations,
warranties and covenants of and by the Loan Parties or any of them shall
constitute individual and joint and several grants, representations, warranties
and covenants of and by each of the Loan Parties.
(b) All obligations and liabilities of the Loan Parties under this Agreement and
the other Loan Documents shall be joint and several.
(c) The Borrower is appointed as the Loan Parties Representative, the Loan
Parties Representative is authorized to make such requests, give such notices or
furnish such certificates to the Bank as may be required or permitted by this
Agreement for the benefit of such Loan Party and the Bank is authorized to treat
such requests, notices, certificates or consents given or made by the Loan
Parties Representative to have been made, given or furnished by the applicable
Loan Parties for purposes of this Agreement. The Bank shall be entitled to rely
on each such request, notice, certificate or consent made, given or furnished by
the Loan Parties Representative pursuant to the provisions of this Agreement or
any other Loan Document as being made or furnished on behalf of, and with the
effect of irrevocably binding, the Loan Parties. Each warranty, covenant,
agreement and undertaking made on its behalf by the Loan Parties Representative
shall be deemed for all purposes to have been made by each of the Loan Parties
and shall be binding upon and enforceable against each of the Loan Parties to
the same extent as if the same had been made directly by each of the Loan
Parties. Any reference in this Agreement or any other Loan Document to the “Loan
Parties Representative” shall mean the Borrower in its capacity as the Loan
Parties Representative pursuant to this section.
(d) Any notice to or communication with an officer, agent or representative of
the Loan Parties Representative shall fulfill any obligation of the Bank in this
Agreement or any other Loan Document to provide notice to the Loan Parties.

 

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2. The Credit Facilities; Interest Rates; Fees.
2.1 Revolving Loans. The Bank agrees to lend to the Borrower, subject to the
terms and conditions hereof, (a) during any Borrowing Base Period up to the
maximum principal amount at any time outstanding equal to (i) the lesser of [a]
the Revolving Loan Commitment or [b] the Borrowing Base Availability minus
(ii) the L/C Obligations then existing and (b) at all other times from the
Effective Date until the Revolving Note Maturity Date up to the maximum
principal amount at any time outstanding equal to (i) the Revolving Loan
Commitment minus (ii) the L/C Obligations then existing. Within such maximum
amount Revolving Loans may be made, repaid and made again. All Revolving Loans
shall be evidenced by the Revolving Note and shall be payable on the Revolving
Note Maturity Date. Revolving Loans may only be denominated in Dollars. Although
the Revolving Note shall be expressed to be payable in the maximum amount
specified above, the Borrower shall be obligated to pay only the amount actually
disbursed to or for the account of the Borrower, together with interest on the
unpaid balance of the sums so disbursed in accordance with this Agreement, which
remain outstanding from time to time as shown on the records of the Bank, absent
demonstrable error.
2.2 Borrowing Procedures for Revolving Loans. The Borrower shall request
Revolving Loans by written notice, or by telephonic notice confirmed in writing,
to the Bank, (a) in the case of a LIBOR Rate Loan, not later than 11 a.m.,
Milwaukee time, on the date which is two Business Days prior to the requested
Borrowing Date (which must be a Business Day) and (b) in the case of a DBLR
Loan, not later than 11 a.m., Milwaukee time, on the requested Borrowing Date
(which must be a Business Day). Each such request by the Borrower must specify
(w) the amount of the requested Revolving Loan, (x) the date the requested
Revolving Loan is to be made by the Bank to the Borrower, (y) the Type of
requested Revolving Loan and (z) in the case of a requested LIBOR Rate Loan, the
applicable Interest Period therefor. If no Type of Revolving Loan is specified,
then the requested Revolving Loan shall be a DBLR Loan. In the case of a
requested LIBOR Rate Loan, if no Interest Period is specified, the Borrower
shall be deemed to have selected an Interest Period of one month. Each LIBOR
Rate Loan shall be in a minimum amount of $500,000 and in integral multiples of
$100,000 above such minimum. Each DBLR Loan shall be in a minimum amount of
$10,000 and in integral multiples of $10,000 above such minimum. The combined
number of LIBOR Rate Loans outstanding at any time shall not exceed five.
In the event of any inconsistency between the telephonic notice and the written
confirmation thereof, the telephonic notice shall control. Each request for a
Revolving Loan shall be irrevocable and shall constitute a certification by the
Borrower that the borrowing conditions specified in section 4.2 (other than in
Section 4.2(d)) will be satisfied on the specified Borrowing Date. Upon
fulfillment of the applicable borrowing conditions set forth in section 4, the
Bank shall deposit the proceeds thereof in the Borrower’s account maintained
with the Bank or as the Borrower may otherwise direct in writing.
2.3 Unused Fee. As consideration for the Revolving Loan Commitment, upon the
occurrence of each Unused Fee Triggering Event, the Loan Parties agree to pay to
the Bank on the last Business Day of each calendar quarter during which any
Unused Fee Triggering Event occurs, commencing with the last day of the first
quarter ended after the occurrence of the Unused Fee Triggering Event, and on
the Revolving Note Maturity Date (if the Revolving Note Maturity Date in the
calendar quarter in which an Unused Fee Triggering Event occurred), a fee equal
to the Applicable Margin then in effect on the daily average unused amount of
the Revolving Loan Commitment during such calendar quarter or other applicable
period ending on such date.

 

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2.4 Reduction or Termination of Loan Commitment. The Borrower may, on any
Business Day and upon two (2) Business Days’ prior written notice to the Bank,
permanently reduce or terminate the amount of the Revolving Loan Commitment;
provided that no such reduction shall reduce the amount of the Revolving Loan
Commitment to an amount less than the sum of the unpaid principal balance of the
Revolving Note plus the L/C Obligations on the date of such reduction; and
provided further that in the event of a termination of the Revolving Loan
Commitment in whole, the Borrower shall pay to the Bank, on or before the
effective date of the termination, the unpaid principal balance of the Revolving
Note, and in the event of a partial reduction in the Revolving Loan Commitment
or a termination of the Revolving Loan Commitment in whole, the Borrower shall
pay to the Bank, all interest accrued and unpaid thereon and all fees and
expenses payable by the Borrower accrued or incurred and unpaid through the
termination date. Each partial reduction in the Revolving Loan Commitment shall
be in a minimum amount of $100,000 and in integral multiples of $100,000 above
such minimum.
2.5 Interest Rates.
(a) The unpaid principal balances of each Revolving Loan outstanding from time
to time shall bear interest for the period commencing on the Borrowing Date of
such Loan until such Loan is paid in full. Each Loan comprised of a DBLR Loan
shall bear interest at the DBLR Rate plus the Applicable Margin and such rate
shall change on each date on which the Daily Borrowing LIBOR Rate or the
Applicable Margin changes. Each Loan comprised of a LIBOR Rate Loan shall bear
interest at the applicable Adjusted LIBOR Rate plus the Applicable Margin and
shall change on each date on which the Applicable Margin changes. Accrued and
unpaid interest on each DBLR Loan and Prime Rate Loan shall be due on the last
Business Day of each month, commencing June 30, 2010 and on the Revolving Note
Maturity Date. Accrued and unpaid interest on each LIBOR Rate Loan shall be due
on the last day of its Interest Period and on the Revolving Note Maturity Date;
provided that if an Interest Period is more than three months’ duration,
interest shall be due on each day prior to the last day of such Interest Period
that occurs at intervals of three months’ duration after the first day of such
Interest Period.
(b) Notwithstanding the provisions of section 2.5(a) above, upon the occurrence
and during the continuance of an Event of Default, the unpaid principal balance
of each Note shall, upon notice from the Bank to the Borrower, bear interest at
an annual rate equal to the rate otherwise in effect under section 2.5(a), plus
three percentage points payable upon demand. On and after the Revolving Note
Maturity Date, the unpaid principal balance of the Revolving Note and all
accrued and unpaid interest thereon at such time shall bear interest at an
annual rate equal to the Daily Borrowing LIBOR Rate plus the highest Applicable
Margin for DBLR Loans plus three percentage points (the “Default Rate”) and
shall be payable upon demand. .
(c) Interest shall be calculated for the actual number of days elapsed on the
basis of a 360-day year.
2.6 Continuation and Conversion Procedure.
(a) The Borrower may elect from time to time, subject to the terms and
conditions of this Agreement, to convert all or a portion of the outstanding
Revolving Loans comprised of DBLR Loans to LIBOR Rate Loans (in each case, in a
minimum amount of $500,000 and in integral multiples of $100,000 above such
minimum).

 

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(b) At the end of the applicable Interest Period for a LIBOR Rate Loan, such
LIBOR Rate Loan shall automatically be converted to a DBLR Loan unless the
Borrower shall have given the Bank notice in accordance with section 2.6(c)
requesting that all or a portion of such LIBOR Rate Loan be continued as a LIBOR
Rate Loan.
(c) The Borrower shall furnish to the Bank an appropriately completed and
executed notice of conversion/continuation for each (i) conversion of a DBLR
Loan to a LIBOR Rate Loan or (ii) continuation of a LIBOR Rate Loan as a LIBOR
Rate Loan not later than 11 a.m., Milwaukee time, on the date two Business Days
prior to the date of the requested conversion or continuation. Each such request
by the Borrower for a conversion or continuation of a Loan shall be irrevocable
and shall set forth (x) the date of the conversion or continuation, (y) the
aggregate amount of Loans to be converted or continued, as applicable, and
(z) the applicable Interest Period.
(d) Notwithstanding anything to the contrary contained in this Agreement,
(i) the Borrower may not select an Interest Period ending after the Revolving
Note Maturity Date and (ii) no Loan may be converted into or continued as a
LIBOR Rate Loan when any Default or Event of Default has occurred and is
continuing unless the Bank consents thereto.
2.7 Payments; Late Fee.
(a) All payments of principal and interest on each Note and of all fees due
hereunder shall be made without setoff, deduction or counterclaim at the office
of the Bank in immediately available funds not later than 12:00 noon, Milwaukee
time, on the date due at the office of the Bank at 20935 Swenson Drive,
Suite 400, Waukesha, Wisconsin 53186; funds received after that time shall be
deemed to have been received on the next Business Day. Whenever any payment
hereunder or under a Note is stated to be due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in computing any interest or fee then due.
If a payment is 10 days or more late the Borrower shall pay to the Bank a late
fee of 5.00% of the total payment due, up to the maximum amount of $1,500 per
late fee; provided that if the Borrower and the Bank have agreed that a payment
due hereunder shall be made by automatic debit to one of the Borrower’s accounts
with the Bank and a payment is late because of the failure to initiate such an
automatic debit entry (other than by Borrower’s instructions not to initiate
such debit entry), the late payment described in this sentence shall
automatically be waived.
(b) To effectuate any payment due under this Agreement, a Note or any other Loan
Document, the Borrower hereby authorizes the Bank to initiate debit entries to
any deposit account of the Borrower maintained with the Bank and to debit the
same to such account. This authorization to initiate debit entries shall remain
in full force and effect until the Bank has received written notification of its
termination in such time and in such manner as to afford the Bank a reasonable
opportunity to act on it. The Borrower acknowledges that (i) such debit entries
may cause an overdraft of any such account which may result in the Bank’s
refusal to honor items drawn on any such account until adequate deposits are
made to any such account; (ii) the Bank is under no duty or obligation to
initiate any debit entry for any purpose; and (iii) if a debit is not made
because any such account does not have a sufficient available balance, or
otherwise, the payment may be late or past due.

 

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2.8 Prepayments.
(a) Mandatory. In the event and on such occasion that the aggregate outstanding
principal balance of Revolving Loans plus the L/C Obligations then outstanding
exceeds (i) during any Borrowing Base Period, the lesser of [a] the Revolving
Loan Commitment and [b] the Borrowing Base Availability and (ii) at all other
times, the Revolving Loan Commitment, the Borrower shall prepay the Revolving
Loans in an aggregate amount equal to such excess.
(b) Optional. The Borrower may prepay Revolving Loans comprised of DBLR Loans or
Prime Rate Loans without premium or penalty. The Borrower may optionally prepay
Revolving Loans comprised of LIBOR Rate Loans on the last day of the applicable
Interest Period only. The Borrower will give the Bank notice of any optional
prepayment of the Revolving Note not later than 10:00 a.m. Milwaukee time on the
prepayment date, specifying the prepayment date and the amount to be prepaid.
Each optional prepayment of the Revolving Note shall be in a minimum amount of
$10,000 (or if less, the unpaid principal balance of the Revolving Note). The
amount of such prepayment shall become due and payable by 12:00 p.m. Milwaukee
time on the specified prepayment date. All optional prepayments of the Revolving
Note shall be applied first to any fees the Borrower then owes the Bank
hereunder and then to the Obligations in such order and manner as the Borrower
specifies.
2.9 Alternate Rate of Interest. If prior to the commencement of any DBLR Loan or
the Interest Period for a LIBOR Rate Loan:
(a) the Bank determines (which determination shall be conclusive absent
demonstrable error) that adequate and reasonable means do not exist for
ascertaining the Daily Borrowing LIBOR Rate or the Adjusted LIBOR Rate for such
Interest Period; or
(b) the Daily Borrowing LIBOR Rate or the Adjusted LIBOR Rate for such Interest
Period will not adequately and fairly reflect the cost to the Bank of making or
maintaining the DBLR Loan or the LIBOR Rate Loan for such Interest Period;
then the Bank shall give notice thereof to the Borrower by telephone or telecopy
(confirmed in writing) as promptly as practicable thereafter and, until the Bank
notifies the Borrower that the circumstances giving rise to such notice no
longer exist (the Bank hereby agrees to promptly notify the Borrower at such
time as such circumstances no longer exist), (i) all DBLR Loans shall
automatically be converted to Prime Rate Loans, (ii) at the end of the
applicable Interest Period all LIBOR Rate Loans shall automatically be converted
to Prime Rate Loans and (iii) any new Revolving Loans shall be made as Prime
Rate Loans. The unpaid principal balance of each Prime Rate Loan shall be
interest at the Prime Rate and shall change on each date when the Prime Rate
changes.
2.10 Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, or Letters of Credit issued by, the Bank (except any such reserve
requirement reflected in the Adjusted LIBOR Rate or the Daily Borrowing LIBOR
Rate); or

 

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(ii) impose on the Bank or the London interbank market any other condition
affecting this Agreement, or LIBOR Rate Loans or DBLR Loans made by the Bank;
and the result of any of the foregoing shall be to increase the cost to the Bank
of making or maintaining any LIBOR Rate Loan or DBLR Loan (or of maintaining its
obligation to make any such Loan) or increase the cost to the Bank of agreeing
to issue or issuing or maintaining any Letter of Credit or of agreeing to make
or making, funding or maintaining any unpaid drawing under any Letter of Credit,
or to increase the cost or to reduce the amount of any sum received or
receivable by the Bank (whether or principal, interest or otherwise), then the
Borrower will pay to the Bank, upon the Bank’s demand therefor accompanied by
the certificate contemplated by section 2.10(c), such additional amount or
amounts as will compensate the Bank for such additional costs incurred or
reduction suffered.
(b) If the Bank determines that any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on the Bank’s
capital or on the capital of the Bank’s holding company, if any, as a
consequence of this Agreement or the Loans made by the Bank to a level below
that which the Bank or the Bank’s holding company could have achieved but for
such Change in Law (taking into consideration the Bank’s policies with respect
to capital adequacy), then from time to time the Borrower will pay to the Bank,
upon the Bank’s demand therefor accompanied by the certificate contemplated by
section 2.10(c), such additional amount or amounts as will compensate the Bank
or the Bank’s holding company for any such reduction suffered.
(c) A certificate of the Bank setting forth a reasonably detailed calculation of
the amount or amounts necessary to compensate the Bank or its holding company,
as the case may be, as specified in sections 2.10(a) or 2.10(b) shall be
delivered to the Borrower and shall be conclusive absent demonstrable error. The
Borrower shall pay the Bank the amount shown as due on any such certificate
(absent demonstrable error in such certificate) within 10 Business Days after
receipt thereof by the Borrower.
(d) Failure or delay on the part of the Bank to demand compensation pursuant to
this section shall not constitute a waiver of the Bank’s right to demand such
compensation; provided that the Borrower shall not be required to compensate the
Bank pursuant to this section for any amount or amounts that would otherwise be
payable under this section accruing more than 270 days prior to the date that
the Borrower receives the applicable certificate pursuant to section 2.11(c);
provided further that, if the Change in Law giving rise to such amount or
amounts is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.
2.11 Break Funding Payments. In the event of (a) the payment of any principal of
any LIBOR Rate Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the conversion of
any LIBOR Rate Loan other than on the last day of the Interest Period applicable
thereto or (c) the failure to borrow, convert, continue or prepay any LIBOR Rate
Loan on the date specified in any notice delivered pursuant hereto, then, in any
such event, the Borrower shall compensate the Bank for the loss, cost and
expense attributable to such event. In the case of a LIBOR Rate Loan, such loss,
cost or expense to the Bank shall be deemed to be an amount reasonably
determined by the Bank to be the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount of such Loan had such event

 

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not occurred, at the Adjusted LIBOR Rate that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then
current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period as the interest rate which the Bank would bid
were it to bid, at the commencement of such period, for Dollar deposits of a
comparable amount and period to such LIBOR Rate Loans from the other banks in
the eurodollar market. A certificate of the Bank setting forth a reasonably
detailed calculation of any amount or amounts that the Bank is entitled to
receive pursuant this section shall be delivered to the Borrower and shall be
conclusive absent demonstrable error. The Borrower shall pay the Bank the amount
shown as due on any such certificate (absent demonstrable error in such
certificate) within 10 days after receipt thereof.
2.12 Letters of Credit.
(a) General Terms. Subject to the terms and conditions hereof, as part of the
Revolving Loan Commitment, the Bank shall issue Letters of Credit for the
account of the Borrower in an aggregate undrawn face amount up to the L/C
Sublimit; provided that after giving effect to the issuance or amendment of any
Letter of Credit, the aggregate amount of (i) outstanding L/C Obligations, plus
(ii) the aggregate principal amount of Revolving Loans then outstanding shall
not exceed (y) during any Borrowing Base Period the lesser of [a] the Revolving
Loan Commitment or [b] Borrowing Base Availability and (z) at all other times,
the Revolving Loan Commitment.
(b) Applications. At any time prior to the Revolving Note Maturity Date, the
Bank shall, at the request of the Borrower, issue one or more Letters of Credit
in Dollars, in a form satisfactory to the Bank, with expiration dates no later
than the earlier of (y) 12 months from the date of issuance (or which are
cancelable not later than 12 months from the date of issuance and each renewal)
or (z) 5 days prior to the Revolving Note Maturity Date, in an aggregate face
amount as set forth above, upon the receipt of a letter of credit application
duly executed by the Borrower. Notwithstanding anything contained in any letter
of credit application to the contrary: (i) the Borrower shall pay fees in
connection with each Letter of Credit as set forth in section 2.12(d) hereof and
(ii) if the Bank is not timely reimbursed for the amount of any drawing under a
Letter of Credit on the date such drawing is paid, the Borrower’s obligation to
reimburse the Bank for the amount of such drawing shall bear interest (which the
Borrower hereby promises to pay) from and after the date such drawing is paid at
a rate per annum equal to the sum of the Applicable Margin plus the Daily
Borrowing LIBOR Rate from time to time in effect.
(c) The Reimbursement Obligations. Subject to section 2.12(b) hereof, the
Reimbursement Obligation of the Borrower in respect of a drawing under a Letter
of Credit shall be governed by the application related to such Letter of Credit.
(d) Letter of Credit Fees and Expenses. Quarterly in arrears, on the last day of
each March, June, September, and December, commencing on the first such date
occurring after the date hereof, the Borrower shall pay to the Bank a letter of
credit fee at a rate per annum equal to the Applicable Margin for LIBOR Rate
Loans in effect during each day of such quarter applied to the daily average
face amount of undrawn Letters of Credit during such quarter. The Borrower shall
pay to the Bank the Bank’s customary issuance, negotiation and transfer fees and
other fees and charges in connection with the issuance or administration of the
Letters of Credit in effect from time to time as separately agreed upon by the
Borrower and the Bank.

 

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(e) Obligations Absolute. The Borrower’s obligation to reimburse L/C Obligations
as provided in section 2.12(c) shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement
and the relevant application under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Bank under a Letter of Credit
against presentation of a draft or other document that does not strictly comply
with the terms of such Letter of Credit or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower’s obligations hereunder. The
Bank shall not have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Bank; provided that the foregoing shall not be construed to excuse the Bank from
liability to the Borrower to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
that are caused by the Bank’s failure to exercise care when determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof. The parties hereto expressly agree that, in the absence of
recklessness or willful misconduct on the part of the Bank (as finally
determined by a court of competent jurisdiction), the Bank shall be deemed to
have exercised care in each such determination. In furtherance of the foregoing
and without limiting the generality thereof, the parties agree that, with
respect to documents presented which appear on their face to be in substantial
compliance with the terms of a Letter of Credit, the Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
2.13 Taxes.
(a) Any and all payments by or on account of any obligation of any of the Loan
Parties hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if any of the Loan Parties shall
be required to deduct any Indemnified Taxes or Other Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this section) the Bank receives an amount equal to the sum it
would have received had no such deductions been made, (ii) such Loan Party shall
make such deductions and (iii) such Loan Party shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law. In addition, the Loan Parties shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

 

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(b) Each of the Loan Parties shall indemnify the Bank, within 10 days after
written demand therefor accompanied by a reasonably detailed calculation of the
amount demanded, for the full amount of any Indemnified Taxes or Other Taxes
paid by the Bank on or with respect to any payment by or on account of any
obligation of any of the Loan Parties hereunder or the other Loan Documents
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this section) and any penalties, interest
and reasonable out-of-pocket expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to the Loan Parties
Representative by the Bank shall be conclusive absent demonstrable error.
(c) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by any of the Loan Parties to a Governmental Authority, the Loan Parties shall
deliver to the Bank the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting
such payment or other evidence of such payment reasonably satisfactory to the
Bank.
2.14 Use of Proceeds. The Loan Parties will use the proceeds of Revolving Loans
to refinance certain Indebtedness owed to Wells Fargo Bank, National Association
and for working capital and other business purposes. None of the Loan Parties
shall use, directly or indirectly, any part of the proceeds of any Loan for the
purpose of purchasing or carrying, or to extend credit to others for the purpose
of purchasing or carrying, any Margin Stock.
3. Representations and Warranties. In order to induce the Bank to make the
Loans, each of the Loan Parties represent and warrant to the Bank as follows:
3.1 Organization; Subsidiaries; Corporate Power. The Borrower is a corporation,
duly incorporated and validly existing under the laws of the State of Wisconsin.
OAM is a limited liability company duly organized and validly existing under the
laws of the State of Wisconsin. CES is a limited liability company duly
organized and validly existing under the laws of the State of Wisconsin. GLET is
a limited liability company duly organized and validly existing under the laws
of the State of Wisconsin. Each of the Loan Parties is duly qualified to do
business in every jurisdiction in which the nature of such Loan Party’s business
or the ownership of such Loan Party’s properties requires such qualification and
in which the failure to so qualify would have a Material Adverse Effect.
Schedule 3.1 contains the name, jurisdiction of organization and number of
authorized and outstanding shares of each class of Equity Interests of each of
the Loan Parties and the number thereof owned by such Loan Party, in each case
as of the date of this Agreement. On the Closing Date, other than the Loan
Parties, the Borrower has no Subsidiaries. Each of the Loan Parties has the
power to own such Loan Party’s properties and carry on such Loan Party’s
business as currently being conducted, except to the extent the failure to have
such power could not reasonably be expected to have a Material Adverse Effect.
3.2 Authorization and Binding Effect. The execution and delivery by each of the
Loan Parties of the Loan Documents to which such Loan Party is a party, and the
performance by such Loan Party of its obligations thereunder: (a) are within its
power as a corporation or limited liability company, as applicable, (b) have
been duly authorized by proper action on the part of the governing body of such
Loan Party, (c) are not in violation of any Requirement of Law, the
organizational or charter documents of such Loan Party or the terms of any
material agreement, restriction or undertaking to which such Loan Party is a
party or by which such Loan Party is bound, and (d) do not require the approval
or consent of the holders of the Equity Interests of such Loan Party, any
Governmental Authority or any other Person, other than those obtained and in
full force and effect. The Loan Documents to which any of the Loan Parties are a
party, when executed and delivered, will constitute the valid and binding
obligations of such Loan Party enforceable in accordance with their terms,
except as limited by bankruptcy, insolvency or similar laws of general
application affecting the enforcement of creditors’ rights and general
principles of equity.

 

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3.3 Financial Statements.The Borrower has furnished to the Bank the consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of March 31,
2010, and related statements of income, retained earnings and cash flows of the
Borrower and its Consolidated Subsidiaries for the fiscal year ended on that
date, audited by Grant Thornton LLP. Such financial statements were prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as otherwise disclosed therein), are correct and complete in all
material respects and fairly present the consolidated financial condition of the
Borrower and its Consolidated Subsidiaries as of such date and the results of
their operations and cash flows for the period ended on such dates, subject, in
the case of any interim statements, to audit and normal year-end adjustments and
footnote disclosures. No Material Adverse Effect has occurred since the date of
the most recent financial statements furnished to the Bank.
3.4 Litigation. Except for the matters described on Schedule 3.4 or, with
respect to clause (b) below, as disclosed in any Form 10-K, Form 10-Q or Form
8-K filed by the Borrower with the Securities and Exchange Commission or
financial statements furnished to the Bank prior to the date of this Agreement,
there is no litigation or administrative proceeding pending or, to the knowledge
of any of the Loan Parties, threatened in writing against any of the Loan
Parties or any Subsidiary, or the properties of any of the Loan Parties or any
Subsidiary, which (a) purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby or thereby
or (b) would reasonably be expected to have a Material Adverse Effect.
3.5 Restricted Payments. Except as set forth on Schedule 3.5, none of the Loan
Parties has, since the date of the most recent financial statements furnished to
the Bank, made any Restricted Payments which is not permitted by the provisions
of this Agreement.
3.6 Indebtedness; No Default. None of the Loan Parties has any outstanding
Indebtedness or Contingent Obligations, except those permitted under sections
6.2 and 6.3. There exists no default by any Loan Party nor has any act or
omission occurred which, with the giving of notice or the passage of time, would
constitute a default by any Loan Party under the provisions of (a) any
instrument evidencing such Indebtedness, Contingent Obligation or any agreement
relating thereto or (b) any other agreement or instrument to which any of the
Loan Parties or any Subsidiary is a party and, in the case of either of the
foregoing clauses (a) or (b), which would reasonably be expected to have a
Material Adverse Effect.
3.7 Ownership of Properties; Liens and Encumbrances. Each of the Loan Parties
has good and marketable title in fee simple to, or valid leasehold or other
contractual interests in, all property, real and personal, necessary or used in
the ordinary conduct of its business, except for such defects in title or
interest as could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. The right, title and interest of the Loan
Parties in such property is free of any and all Liens, except Permitted Liens.
All owned and leased buildings and equipment of each of the Loan Parties are in
good condition, repair and working order, ordinary wear and tear excepted, and,
to each of the Loan Parties’ knowledge, conform to all Requirements of Law
except to the extent a failure to so conform could not reasonably be expected to
have a Material Adverse Effect.

 

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3.8 Tax Returns. Each of the Loan Parties and each Subsidiary has timely filed
or caused to be filed all Tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which such Loan Party or such Subsidiary, as applicable, has
set aside on its books adequate reserves or (b) to the extent that the failure
to do so could not reasonably be expected to result in a Material Adverse
Effect.
3.9 Margin Stock. None of the Loan Parties nor any Subsidiary is engaged
principally, or as one of such Loan Party’s or such Subsidiary’s important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
3.10 Regulated Entities. None of the Loan Parties nor any Subsidiary is an
“investment company” or a company controlled by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended. None of the Loan
Parties is subject to any Requirement of Law limiting such Loan Party’s ability
to incur Indebtedness.
3.11 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Requirements of Law. Each Plan which is
intended to qualify under section 401(a) of the Code has received a favorable
determination letter from the IRS and to each of the Loan Party’s knowledge,
nothing has occurred which would cause a loss of such qualification. Each of the
Loan Parties and each ERISA Affiliate has made all required contributions to any
Plan subject to section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to section 412 of the Code
has been made with respect to any Plan.
(b) There are no pending or, to any of the Loan Parties’ knowledge, threatened
(in writing) claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted, or could reasonably be
expected to result, in a Material Adverse Effect. There has been no prohibited
transaction or other violation of the fiduciary responsibility rules with
respect to any Plan which has resulted, or could reasonably be expected to
result, in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) none of the Loan Parties
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under section 4007 of ERISA); (iv) none of the
Loan Parties nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the giving of notice
under section 4219 of ERISA, would result in such liability) under section 4201
or 4243 of ERISA with respect to a Multiemployer Plan; and (v) none of the Loan
Parties nor any ERISA Affiliate has engaged in a transaction that could be
subject to section 4069 or 4212(c) of ERISA.

 

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3.12 No Burdensome Restrictions. None of the Loan Parties is a party to and is
bound by any agreement, instrument, undertaking, any Requirement of Law, or
subject to any other restriction (a) compliance with which could reasonably be
expected to have a Material Adverse Effect or (b) under or pursuant to which any
of the Loan Parties is or will be required to place (or under which any other
Person may place) a Lien (other than a Permitted Lien) upon any of such Loan
Party’s properties securing Indebtedness either upon demand or upon the
happening of a condition, with or without such demand.
3.13 Intellectual Property. Each of the Loan Parties possess adequate
trademarks, trade names, copyrights, patents, permits, service marks and
licenses, or rights thereto, for the present and planned future conduct of their
respective businesses substantially as now conducted, without any known conflict
with the rights of others which would reasonably be expected to have a Material
Adverse Effect.
3.14 Environmental Matters. Except for the matters described on Schedule 3.14 or
as disclosed in any Form 10-K, Form 10-Q or Form 8-K filed by the Borrower with
the Securities and Exchange Commission or financial statements furnished to the
Bank prior to the date hereof and except to the extent that all of the
following, in the aggregate, would not reasonably be expected to have a Material
Adverse Effect:
(a) The facilities and properties owned, leased or operated by any of the Loan
Parties (the “Properties”) do not contain any Hazardous Materials in amounts or
concentrations which (i) constitute a violation of or (ii) could reasonably be
expected to give rise to liability under, any Environmental Law.
(b) With respect to the period during which any of the Loan Parties owned or
occupied the Properties, and to the Loan Parties’ knowledge after reasonable
investigation, with respect to the time before any of the Loan Parties owned or
occupied the Properties, there has been no unremediated release or threat of
release of Hazardous Materials at or from the Properties, or arising from or
related to the operations of any of the Loan Parties (the “Business”), in
violation of or in amounts or in a manner that could reasonably be expected to
give rise to liability under Environmental Laws.
(c) The Properties and all operations of the Loan Parties at the Properties are
in compliance with all applicable Environmental Laws, except where the failure
to so comply could not reasonably be expected to result in a Material Adverse
Effect, and there is no material violation of any Environmental Law with respect
to the Properties or the Business. Each of the Loan Parties has all permits,
licenses and approvals required under Environmental Laws.
(d) With respect to the period during which any of the Loan Parties owned or
occupied the Properties, and to the Loan Parties’ knowledge after reasonable
investigation, with respect to the time before any of the Loan Parties owned or
occupied the Properties (i) Hazardous Materials have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could reasonably be expected to give rise to liability under, any
Environmental Law and (ii) Hazardous Materials have not been generated, treated,
stored or disposed of at, on or under any of the Properties in violation of, or
in a manner that could reasonably expected to give rise to liability under, any
applicable Environmental Law.

 

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(e) None of the Loan Parties has received any written notice of violation,
alleged violation, noncompliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of the Properties or the Business, nor does any of the Loan Parties have
knowledge or reason to believe that any such notice will be received or is being
threatened.
(f) No judicial proceeding or governmental or administrative action is pending
or, to the knowledge of any of the Loan Parties, threatened in writing under any
Environmental Law to which any of the Loan Parties is or will be named as a
party with respect to the Properties or the Business, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other orders,
or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business.
3.15 Solvency. Each of the Loan Parties is and, upon the incurrence of any
Obligations by the Loan Parties on any date on which this representation is
made, will be Solvent.
3.16 Accuracy of Information. All written information furnished by any of the
Loan Parties to the Bank in connection with the negotiation of this Agreement or
delivered under this Agreement (as modified or supplemented by other information
so furnished) is true, correct and complete in all material respects as of the
date furnished (or, if such written information specifies an earlier date, such
earlier date) and does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make such information, in light of
the circumstances under which they were made, not misleading as of the date
furnished (or, if such written information specifies an earlier date, such
earlier date); provided that, with respect to projected financial information,
the Borrower represents only that such information reflects the Borrower’s
good-faith estimates as of the date of preparation thereof, based upon methods
and data the Borrower believes to be reasonable, but actual results during the
periods covered by such projections may differ materially from such projections.
4. Conditions for Borrowing. The Bank’s obligation to make any Loan is subject
to the satisfaction, on or before the following Borrowing Dates, of the
following conditions:
4.1 On or Before the Effective Date. The Bank shall have received the following,
all in form, detail and content satisfactory to the Bank:
(a) Notes. Each Note, duly executed by the Borrower.
(b) Collateral Documents.
(i) a security agreement, duly executed by each of the Loan Parties (the
“Security Agreement”), granting the Bank a Lien in all of the personal property
of each of the Loan Parties (other than the Excluded Assets) including, without
limitation, the Equity Interests of any Subsidiary (except, in the case of
Subsidiaries organized outside of the United States or any State thereof,
limited as set forth in section 5.11(b));
(ii) all financing statements and other similar instruments required to perfect
the Lien granted to the Bank by each of the Loan Parties;
(iii) certificates representing [a] 100% of the outstanding certificated Equity
Interests in each domestic Subsidiary and [b] such percentage of the outstanding
certificated Equity Interests as set forth in section 5.11(b), in each
Subsidiary organized outside of the United States or any State thereof;
Each of the Collateral Documents shall be duly executed by the Persons party
thereto.

 

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(c) Loan Parties’ Charter Documents and Closing Certificate.
(i) a copy of the Certificate of Formation, Certificate of Incorporation or
other formation documents of each of the Loan Parties, certified as of a recent
date by the appropriate Governmental Authority of such Loan Party’s state,
province or jurisdiction of organization;
(ii) certificates of good standing or current status with respect to each of the
Loan Parties issued as of a recent date by the appropriate Governmental
Authority of such Loan Party’s state, province or jurisdiction of organization
and each other state, province or jurisdiction in which such Loan Party is
qualified to transact business; and
(iii) a closing certificate of each of the Loan Parties [a] containing copies,
certified as of the Closing Date by the Secretary of such Loan Party to be true
and correct and in full force and effect, of [i] the formation documents
referred to in section 4.1(c)(i) of such Loan Party, [ii] the by-laws, limited
liability company agreement or equivalent governing document of such Loan Party,
[iii] resolutions adopted by the governing body (members, managers, board of
directors, etc.) of such Loan Party authorizing the execution and delivery of
the Loan Documents to which such Loan Party is a party and [iv] the certificates
referred to in section 4.1(c)(ii) for such Loan Party and [b] identifying by
name and title of the officers of such Loan Party authorized to sign the Loan
Documents on behalf of such Loan Party, together with specimen signatures of
such Persons.
(d) Personal Property Searches. Searches of the appropriate public offices
demonstrating that no Lien is of record affecting any of the Loan Parties’
properties except Permitted Liens.
(e) No Default Certificate. A certificate signed by the chief executive officer,
chief financial officer or manager of each of the Loan Parties to the effect
that, the representations and warranties contained in section 3 hereof and in
the other Loan Documents are true and correct on and as of the Effective Date
and no Default or Event of Default exists on the Effective Date.
(f) Opinion of Counsel. An opinion of Foley & Lardner LLP, counsel to the Loan
Parties, addressing such matters as the Bank may reasonably request.
(g) Pay-Off Letter. The Bank shall have received a satisfactory pay-off letter
from Wells Fargo Bank, National Association, confirming that all Liens upon any
of the property of the Loan Parties have been terminated on or prior to the
Closing Date and all letters of credit issued or guaranteed as part of such
Indebtedness, if any, shall have been cash collateralized or supported by a
Letter of Credit.
(h) Insurance. The Bank shall have received evidence of insurance with coverage
in form, scope, and substance reasonably satisfactory to the Bank and otherwise
in compliance with the terms of the Security Agreement.

 

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(i) Governmental and Third Party Approvals. The Bank shall have received
evidence in form and substance satisfactory to the Bank that (i) the Borrower
has obtained all governmental and third party approvals and consents necessary
in connection with the financing contemplated by this Agreement and (ii) all
such approvals and consents are in full force and effect.
(j) Legal and Regulatory Matters. All legal (including tax implications) and
regulatory matters with respect to the transactions contemplated hereby shall be
satisfactory to the Bank, including but not limited to compliance with all
applicable requirements of Regulations U, T and X of the Board. The Bank’s
counsel shall have completed all legal due diligence.
(k) Tax Withholding. The Bank shall have received a properly completed and
signed IRS Form W-8 or W-9, as applicable, for each of the Loan Parties.
(l) Fees. The Bank shall have received all fees required to be paid and all
reasonable out-of-pocket expenses for which invoices have been presented
(including the reasonable fees and expenses of legal counsel), on or before the
Closing Date.
(m) Intercreditor Agreements. The Bank shall have received each of the
Intercreditor Agreements, duly executed by the Bank, the Loan Parties and
Hometown Bank, Wisconsin Department of Commerce or City of Manitowoc, as
applicable.
(n) Proceedings Satisfactory. Such other documents as the Bank may reasonably
request; and all proceedings taken in connection with the transactions
contemplated by this Agreement, and all instruments, authorizations and other
documents applicable thereto, shall be satisfactory to the Bank.
The Bank’s making of a Revolving Loan to the Borrower on the initial Borrowing
Date shall constitute an acknowledgment that all of the conditions set forth in
this section 4.1 have been satisfied or waived.
4.2 On or Before Each Subsequent Borrowing Date:
(a) Borrowing Procedure. The Borrower shall have complied with the borrowing
procedure specified in section 2.2.
(b) Representations and Warranties True and Correct. The representations and
warranties contained in section 3 hereof and in the other Loan Documents shall
be true and correct in all respects (in the case of representations and
warranties qualified by materiality, whether by reference to “material,” “in all
material respects,” or “Material Adverse Effect” or similar terms or phrase) or
in all material respects (in the case of all other representations and
warranties) on and as of the relevant Borrowing Date except (i) that the
representations and warranties contained in section 3.3 (other than in the first
sentence thereof) shall apply to the most recent financial statements delivered
pursuant to section 5.1 (other than any consolidating financial statements),
(ii) for changes permitted by this Agreement and (iii) that representations and
warranties expressly referring to an earlier date shall be true and correct as
of such earlier date.
(c) No Default. There shall exist on that Borrowing Date no Default or Event of
Default.

 

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(d) Proceedings and Documentation. The Bank shall have received such instruments
and other documents as it may reasonably request in connection with the making
of such Loan, and all such instruments and documents shall be in form and
content satisfactory to the Bank.
The Bank’s making of a Revolving Loan to the Borrower on any subsequent
Borrowing Date shall constitute an acknowledgment that all of the conditions set
forth in section 4.2(d) have been satisfied or waived.
5. Affirmative Covenants. Each of the Loan Parties covenants that such Loan
Party will, until the Revolving Loan Commitment and all Related Rate Management
Transactions have terminated or expired and all the Obligations have been paid
or cash collateralized in full with an account at the Bank (other than
contingent obligations not then due and payable and subject to the survival of
any provisions that survive termination of the applicable agreement):
5.1 Financial Reporting.
(a) Annual Financial Statements. Furnish to the Bank within 90 days after the
end of each fiscal year a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the close of such fiscal year and related
statements of income, retained earnings and cash flows for such fiscal year,
setting forth in each case in comparative form corresponding figures from the
preceding annual audit, all in reasonable detail and reasonably satisfactory in
scope to the Bank, audited by Grant Thornton LLP or another firm of independent
certified public accountants of recognized national standing selected by the
Borrower and satisfactory to the Bank. All such financial statements, and the
financial statements described in section 5.1(b), shall be accompanied by
consolidating financial statements (which tie to the consolidated financial
statements) prepared with respect to the Borrower and all Consolidated
Subsidiaries which it may at the time have.
(b) Interim Financial Statements. Furnish to the Bank within 60 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of each such fiscal quarter and related statements of
income, retained earnings and cash flows for the period from the beginning of
the fiscal year through the end of such fiscal quarter, prepared in the manner
set forth in section 5.1(a) hereof for the annual statements, certified, subject
to audit and normal year-end adjustments and footnote disclosure, by an
authorized financial officer of the Borrower and accompanied by the certificate
of such officer to the effect that, to the best knowledge of such officer after
diligent inquiry and investigation, there exists no Default or Event of Default
or, if any Default or Event of Default exists, specifying the nature thereof,
the period of existence thereof and what action the Loan Parties propose to take
with respect thereto.
(c) Financial Covenant Compliance Certificate. Concurrently with the delivery of
the financial statements required under sections 5.1(a) and 5.1(b) furnish to
the Bank a completed Financial Covenant Compliance Certificate executed by an
authorized financial representative of the Borrower.
(d) Borrowing Base Certificates. As soon as available but in any event within 10
Business Days after the commencement of any Borrowing Base Period and within
30 days of the end of each calendar month of each calendar year during each
Borrowing Base Period, a Borrowing Base Certificate as of the commencement of
such Borrowing Base Period or the calendar month then ended, as the case may be,
and supporting information in connection therewith, together with any additional
reports with respect to the Borrowing Base Availability as the Bank may
reasonably request, including, without limitation, accounts receivable aging
reports.

 

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(e) Annual Budget. Furnish to the Bank, within 90 days of the end of each fiscal
year, the budget for the Loan Parties for the next fiscal year in form and
detail reasonably satisfactory to the Bank (such budget shall, for the avoidance
of doubt, be subject to the confidentiality provisions of section 9.16 of this
Agreement).
(f) Filings. Promptly upon its becoming available, furnish to the Bank one copy
of each financial statement, report, notice, or proxy statement sent by any of
the Loan Parties to the holders of Equity Interests of such Loan Party generally
and of each regular or periodic report, registration statement or prospectus
filed by any of the Loan Parties with any securities exchange or the Securities
and Exchange Commission or any successor agency, and of any order issued by any
Governmental Authority in any proceeding to which any of the Loan Parties are a
party that could reasonably be expected to result in a Material Adverse Effect.
(g) Other Financial Information. Promptly furnish to the Bank such other
financial information as the Bank may from time to time reasonably request.
(h) Electronic Delivery. Documents required to be delivered pursuant to this
section 5.1 may be delivered electronically and, if so delivered, shall be
deemed to have been delivered on the date (i) on which the Borrower posts such
documents or (ii) provides a link thereto on the Borrower’s website or on which
such documents are posted on the Borrower’s behalf on an Internet or intranet
website, if any, to which the Bank has access; provided that the Borrower shall
notify (which may be by facsimile or electronic mail) the Bank of the posting of
any such document and, promptly upon request by the Bank, provide to the Bank by
electronic mail an electronic version (i.e., a soft copy) of any such document
specifically requested by the Bank.
5.2 Books and Records; Inspections. Keep proper, complete and accurate books of
record and account sufficient to prepare financial statements in accordance with
GAAP and permit any representative of the Bank to visit and inspect any of the
properties and examine and copy any of the books and records of any of the Loan
Parties at any reasonable time, and prior to the existence of an Event of
Default, upon reasonable prior written notice and as often as may reasonably be
desired; provided that so long as no Event of Default exists, the Company shall
be obligated to reimburse the Bank for only one such audit, examination or
inspection in any 12 month period.
5.3 Insurance. Maintain insurance coverage as may be required by law or the
Collateral Documents but in any event not less than insurance coverage, in the
forms, amounts and with companies, which would be carried by prudent management
in connection with similar properties and businesses. Without limiting the
foregoing, each of the Loan Parties will and will cause each Subsidiary to
(a) keep all its physical property insured against fire and extended coverage
risks in amounts at least equal to, and with deductibles no greater than, those
generally maintained by businesses engaged in similar activities in similar
geographic areas; (b) maintain all such worker’s compensation and similar
insurance as may be required by law; and (c) maintain, in amounts and with
deductibles at least equal to those generally maintained by businesses engaged
in similar activities in similar geographic areas, general public liability
insurance against claims for bodily injury, death or property damage occurring
on, in or about the properties of such Loan Party or such Subsidiary, business
interruption insurance and product liability insurance. The Bank hereby
acknowledges that the insurance coverage of the Loan Parties in effect as of the
Closing Date satisfies the requirements of this section 5.3.

 

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5.4 Condition of Property. Keep its properties (whether owned or leased) in good
condition, repair and working order (ordinary wear and tear excepted).
5.5 Payment of Taxes. Pay and discharge all lawful Taxes, assessments and
governmental charges upon it or against its properties prior to the date on
which penalties are attached thereto, except (a) to the extent only that the
same shall be contested in good faith and by appropriate proceedings by the
appropriate Loan Party or the appropriate Subsidiary and appropriate reserves
with respect thereto are established and maintained or (b) to the extent that
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
5.6 Compliance with Law. Except as permitted under section 6.6, do all things
necessary to (a) maintain its legal existence in current status in its state,
province or jurisdiction of organization and obtain and maintain its
qualification to transact business as a foreign corporation in any other state,
province of jurisdiction where the ownership of property or the conduct of
business make qualification necessary and where the failure to so qualify would
have a Material Adverse Effect, (b) preserve and keep in full force and effect
its material rights and franchises, if any, necessary to continue its business
and (c) comply in all material respects with all Requirements of Law, writs,
judgments, injunctions, decrees and awards to which it is subject including all
applicable Environmental Laws, except those being contested in good faith and
involving no possibility of criminal liability.
5.7 Compliance with ERISA. Each of the Loan Parties shall, and shall cause each
of such Loan Party’s ERISA Affiliates to: (a) maintain each Plan in compliance
in all material respects with the applicable provisions of ERISA, the Code and
other federal or state law; (b) cause each Plan which is qualified under section
401(a) of the Code to maintain such qualification; and (c) make all required
contributions to any Plan subject to section 412 of the Code.
5.8 Compliance with Other Loan Documents. Timely comply with all of its
obligations under the other Loan Documents (subject to applicable grace, notice
and similar provisions).
5.9 Notices. Promptly, and in any event within 5 Business Days after any of the
Loan Parties has become aware of the applicable event, notify the Bank in
writing of:
(a) any Default or Event of Default;
(b) any notice given, or any action taken with respect to, a claimed default by
any holder of any other Indebtedness in excess of $500,000 issued or assumed by
any of the Loan Parties, or the lessor under any lease in excess of $500,000 as
to which any of the Loan Parties is the lessee or under any agreement under
which any such Indebtedness was issued or secured;
(c) any correspondence, written notice, pleading, citation, indictment,
complaint, order, decree or other document received by any of the Loan Parties
from any Person asserting or alleging a circumstance or condition which requires
or may require a financial contribution by any of the Loan Parties or a cleanup,
removal, remedial action or other response by or on the part of any of the Loan
Parties or any Subsidiary, in each case under Environmental Laws or which seeks
damages or civil, criminal or punitive penalties from any of the Loan Parties or
any Subsidiary for an alleged violation of Environmental Laws and which, in any
such circumstance under this clause (c), could reasonably be expected to have a
Material Adverse Effect;

 

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(d) the commencement or nonfrivolous written threat of, or any material
development in, any action, suit, arbitration or other proceeding against any of
the Loan Parties or any Subsidiary which could reasonably be expected to have a
Material Adverse Effect;
(e) a Reportable Event has occurred with respect to any Plan; and
(f) any condition or event which would make any warranty contained in section 3
false in any respect (in the case of representations and warranties qualified by
materiality, whether by reference to “material,” “in all material respects,” or
“Material Adverse Effect” or similar terms or phrase) or is false in any
material respect (in the case of all other representations and warranties).
Each notice under this section shall be accompanied by a written statement by an
officer of the Loan Parties Representative setting forth details of the
occurrence referred to therein, stating what action any affected Loan Party or
any affected Subsidiary proposes to take with respect thereto and at what time
and accompanied by all documents and correspondences from and to third parties
relating to the occurrence referred to therein (subject to any applicable rights
or obligations with respect to confidentiality).
5.10 Banking Relationship. Each of the Loan Parties will and will cause each
Subsidiary to establish and maintain its primary banking depository and
disbursement relationship with the Bank, including establishing and maintaining
operating, administrative, cash management, collection activity, payroll and
disbursement accounts for the conduct of its business. Notwithstanding the
foregoing or any other provision of this Agreement or any of the other Loan
Documents, for a period of 270 days after the Closing Date, the Borrower may
maintain an account with Wells Fargo Bank, National Association with an average
daily balance not to exceed $300,000 for the purposes of cash collateralizing
its purchasing card program obligations.
5.11 Additional Collateral; Further Assurances.
(a) Subject to applicable law, each of the Loan Parties shall cause each of such
Loan Party’s domestic Subsidiaries formed or acquired after the date of this
Agreement in accordance with the terms of this Agreement to guaranty the
Obligations by executing a joinder to this Agreement for purposes of becoming a
Loan Guarantor hereunder.
(b) Each of the Loan Parties that is a domestic Subsidiary will cause (i) 100%
of the issued and outstanding Equity Interests of each of its domestic
Subsidiaries and (ii) 65% of the issued and outstanding Equity Interest entitled
to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of
the issued and outstanding Equity Interest not entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) in each foreign Subsidiary
directly owned by such Loan Party to be subject at all times to a first
priority, perfected Lien in favor of the Bank pursuant to the terms and
conditions of the Collateral Documents or Loan Documents as the Bank shall
reasonably request.

 

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(c) Without limiting the foregoing, each of the Loan Parties will, and will
cause each of the Subsidiaries to, execute and deliver, or cause to be executed
and delivered, to the Administrative Agent such documents, agreement and
instruments, and will take or cause to be taken such further actions (including
the filing and recording of financing statements, fixture filings, mortgages,
deeds of trust and other documents and such other actions or deliveries of the
type required by section 4.1(b), as applicable), which may be required by law or
which the Bank may, from time to time, reasonably request to carry out the terms
and conditions of this Agreement and the other Loan Documents and to ensure
perfection and priority of the Liens created or intended to be created by the
Collateral Documents, all at the expense of the Loan Parties.
(d) Each Loan Party will, promptly upon request by the Bank, do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and re-register
any and all such further acts, deeds, certificates, assurances and other
instruments as the Bank may reasonably require from time to time in order to
(i) to the fullest extent permitted by applicable law, subject any Loan Party’s
properties, assets, rights or interests to the Liens now or hereafter intended
to be covered by any the Collateral Documents, and (ii) perfect and maintain the
validity, effectiveness and priority of any of the Collateral Documents and any
of the Liens intended to be created thereunder.
6. Negative Covenants. Each of the Loan Parties covenants that, without the
prior written consent of the Bank, it will not, until the Revolving Loan
Commitment and all Related Rate Management Transactions have terminated or
expired and all the Obligations have been paid or cash collateralized in full
with an account at the Bank (other than contingent obligations not then due and
payable and subject to the survival of any provisions that survive termination
of the applicable agreement):
6.1 Restricted Payments. Make any Restricted Payments other than (a) so long as
no Default or Event of Default exists at the time thereof or after giving effect
thereto on a pro-forma basis as of the date such Restricted Payments are made,
Restricted Payments in the form of cash dividends and (b) so long as the Debt
Service Coverage Ratio is greater than 1:50:1:00 both before and after giving
effect thereto on a pro-forma basis as of the date such Restricted Payments are
made, Restricted Payments to repurchase its outstanding Equity Interests in an
aggregate amount not to exceed $15,000,000.
6.2 Indebtedness. Create, incur, assume or permit to exist any Indebtedness
except (a) Indebtedness owed to the Bank or to an Affiliate of the Bank;
(b) Indebtedness existing on the date hereof (including committed, but undrawn,
Indebtedness) and set forth in Schedule 6.2 and extensions, renewals and
replacements of any such Indebtedness to the extent they do not increase the
outstanding principal amount thereof; (c) Indebtedness of any of the Loan
Parties to any other Loan Party or to any Subsidiary; (d) Indebtedness secured
by Permitted Liens; and (e) Subordinated Debt; (f) Indebtedness constituting a
Permitted Financing or undertakings customary in connection with securitization
transactions and (g) other Indebtedness in an aggregate principal amount not
exceeding $100,000 at any time outstanding.
6.3 Contingent Obligations. Create, incur, assume or suffer to exist any
Contingent Obligations except (a) endorsements for collection or deposit in the
ordinary course of business; (b) obligations under Rate Management Transactions;
(c) Contingent Obligations existing on the Closing Date and listed in
Schedule 6.3 and Contingent Obligations in respect of extensions, renewals and
replacements of the primary obligations to which such scheduled Contingent
Obligations relate; (d) Guaranty Obligations in favor of the Bank or any
Affiliate of the Bank; (e) Contingent Obligations constituting, or in respect
of, Indebtedness permitted under section 6.2 or constituting investments
permitted under section 6.7 and (f) other Contingent Obligations in an aggregate
amount at any time outstanding not to exceed $1,000,000.

 

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6.4 Operating Leases. Permit the aggregate Operating Lease Obligations of the
Loan Parties and their Subsidiaries to exceed $2,500,000 due in any fiscal year.
6.5 Liens. Create, assume or permit to exist any Lien upon any of its property
or assets (other than (a) Liens on Excluded Assets in connection with a
Permitted Financing and (b) Liens described in the last sentence of section
5.10), whether now owned or hereafter acquired, except Permitted Liens.
6.6 Mergers. Merge with or consolidate into any other Person, or permit any
other Person to merge with or consolidate with it, except that (a) any of the
Loan Parties may merge into any of the other Loan Parties and (b) any Subsidiary
(other than a Loan Party) may liquidate or dissolve if the Borrower determines
in good faith that such liquidation or dissolution is in the best interests of
the Loan Parties, taken as a whole, and is not materially disadvantageous to the
Bank.
6.7 Acquisitions, Advances and Investments. Acquire any other business or
partnership in a transaction or series of related transactions that results in a
Person becoming a Subsidiary or a Loan Party acquiring all or substantially all
of the assets of any other Person or joint venture interest or make any loans,
advances or extensions of credit to, or any investments in, any Person except
(a) the purchase of direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America) in each case maturing
within one year of the date of acquisition; (b) extensions of credit to
customers in the ordinary course of business, advances or prepayments to
suppliers and investments received in satisfaction or partial satisfaction of
credit extended to financially troubled account debtors; (c) investments in
certificates of deposit, bankers’ acceptances, notes and time deposits maturing
within 180 days from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, the Bank or
any domestic office of any other commercial bank organized under the laws of the
United States of America, any state thereof or the District of Columbia or that
is the principal banking subsidiary of a bank holding company organized under
the laws of the United States of America, any state thereof or the District of
Columbia which has a combined capital and surplus and undivided profits of not
less than $500,000,000; (d) investments in commercial paper, demand notes,
master notes, promissory notes or other short-term debt obligations having a
maturity not exceeding 270 days and having, at such date of acquisition, the
highest credit rating obtainable from Moody’s Investors Service, Inc.
(“Moody’s”) or Standard and Poor’s Ratings Service (“S&P”); (e) investments in
money market funds that (i) comply with the criteria set forth in Securities
Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are
rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least
$500,000,000; (f) investments and advances permitted by section 6.2, 6.3 or 6.6
and investments made to consummate a Permitted Financing; (g) investments in
repurchase agreements at the Bank; (h) loans and advances to employees and
agents in the ordinary course of business for travel, entertainment and
relocation expenses and similar items or in connection with any employee stock
purchase plan; (i) investments in demand deposit accounts at financial
institutions or that are Federal Deposit Insurance Corporation insured deposit
accounts; (j) investments in any wholly-owned Subsidiary of the Borrower;
(k) investments identified on Schedule 6.7 and (l) acquisitions and other
investments not otherwise permitted pursuant to this section 6.7 in an aggregate
amount (net of, in the case of investments, cash returns received in respect of
such investments from time to time) not to exceed $10,000,000 in any fiscal year
provided that no Default or Event of Default exists before or after giving
effect to any such acquisition or investment and, provided, further, that the
Borrower comply with section 5.11.

 

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6.8 Lines of Business; Fiscal Year. Engage in any business other than those in
which it is now engaged and any business related thereto or using the
manufacturing processes and expertise of any of the Loan Parties or any
Subsidiaries, or permit any of the Loan Parties’ fiscal year to end on a date
other than March 31.
6.9 Disposition of Assets. Sell, lease, sell and lease back, transfer or
otherwise dispose (other than as permitted by section 6.5) of all or a
substantial or material part of any of its assets or become obligated to do so
(excluding, for the avoidance of doubt, any transfer of cash or cash equivalents
in the ordinary course of business and any issuance by a Person of its own
Equity Interests), except for the following: (a) sales and other dispositions of
inventory in the ordinary course of business; (b) dispositions of tangible
assets to be replaced in the ordinary course of business within 12 months by
other tangible assets of equal or greater value; (c) dispositions of tangible
assets that are no longer used or useful in the business of any of the Loan
Parties or any Subsidiary; (d) licensing of products and intangible assets in
the ordinary course of business; (e) any Subsidiary or any of the Loan Parties
may transfer any of its assets to any of the other Loan Parties;
(f) dispositions related to Orion through put assets and agreements and solar
photovoltaic assets, including dispositions of Excluded Assets made to
consummate a Permitted Financing; (g) dispositions constituting transactions
permitted under section 6.6 or 6.7; (h) dispositions consisting of the
abandonment of intellectual property rights that, in the reasonable good faith
determination of the applicable Loan Party, are not material to the conduct of
its business; and (i) dispositions that are not otherwise permitted under the
foregoing provisions of this section 6.9, provided that (i) any such disposition
is made for fair market value, (ii) no Event of Default shall exist at the time
of, or after giving effect to, such disposition and (iii) the aggregate value of
all assets disposed of pursuant to this section 6.9(i) during any fiscal year
shall not exceed $2,000,000.
6.10 Subsidiaries. Permit any of the Loan Parties (other than the Borrower) to
issue any Equity Interests, or any security or instrument convertible into
Equity Interests, except to any of the other Loan Parties.
6.11 Total Liabilities to Tangible Net Worth Ratio. Permit the ratio of Total
Liabilities to Tangible Net Worth to exceed 0.50:1.00 as of the last day of any
fiscal quarter.
6.12 Unencumbered Liquidity; Debt Service Coverage Ratio. (a) Prior to the Debt
Service Period, permit the average Unencumbered Liquidity to be less than (i)
$20,000,000 during any period of three consecutive Business Days through and
including June 2011 or (ii) $10,000,000 during any period of three consecutive
Business Days thereafter and (b) during the Debt Service Period, permit the Debt
Service Coverage Ratio to be less than 1.50:1.00 as of the last day of any
fiscal quarter.
6.13 Transactions with Affiliates. Enter into or be a party to any transaction
with any of its Affiliates that is not a Loan Party except as otherwise provided
herein (including to consummate a Permitted Financing) or in the ordinary course
of business and upon fair and reasonable terms which are no less favorable in
any material respect than a comparable arm’s length transaction with an entity
which is not an Affiliate, except for (a) any employment or severance agreement
and any amendment thereto entered into in the ordinary course of business;
(b) the payment of reasonable directors’ fees and benefits; (c) the provision of
officers’ and directors’ indemnification and insurance in the ordinary course of
business; (d) non-interest bearing intercompany loans or other advances in the
ordinary course of business and consistent with past practice permitted by
section 6.7; (e) the payment of employee salaries, bonuses and employee benefits
in the ordinary course of business; and (f) capital contributions made by the
Borrower to, and loans constituting Subordinated Debt made by the Borrower to,
any of the Loan Parties as set forth in 6.2 and 6.7.

 

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6.14 Government Regulation. (a) Be or become subject at any time to any law,
regulation or list of any government agency (including without limitation the
U.S. Office of Foreign Asset Control list) that prohibits or limits the Bank
from making any advance or extension of credit to any of the Loan Parties or
from otherwise conducting business with any of the Loan Parties or (b) fail to
provide documentary and other evidence of such Loan Party’s identity as may be
requested by the Bank at any time to enable the Bank to verify such Loan Party’s
identity or to comply with any applicable law or regulation, including, without
limitation, Section 326 of the USA Patriot Act of 2001, 31, U.S.C. Section 5318.
6.15 Rate Management Transactions. Enter into any Rate Management Transaction
except (a) Rate Management Transactions entered into to hedge or mitigate risks
to which any of the Loan Parties or any Subsidiary has actual exposure (other
than those in respect of Equity Interest of any of the Loan Parties or any
Subsidiary) and (b) Rate Management Transactions entered into in order to
effectively cap, collar or exchange interest rates (from fixed to floating
rates, from one floating rate to another floating rate or otherwise) with
respect to any interest-bearing liability or investment of any of the Loan
Parties or any Subsidiary.
7. Event of Default; Remedies.
7.1 Events of Default. The occurrence of any of the following shall constitute
an Event of Default:
(a) Failure to Pay. (i) The Borrower fails to pay [a] principal on any Note when
the same becomes due and payable, whether at a stated payment date, or a date
fixed by the Borrower for prepayment or by acceleration, [b] any Reimbursement
Obligation when due and payable or (ii) any of the Loan Parties fails to pay any
interest or any fee or other amount payable hereunder, when the same becomes
payable and such failure to timely pay interest, such fee or other amount
continues uncured for a period of three Business Days; or
(b) Falsity of Representations and Warranties. Any representation or warranty
made in any Loan Document is false in any respect (in the case of
representations and warranties qualified by materiality, whether by reference to
“material,” “in all material respects,” or “Material Adverse Effect” or similar
terms or phrase) or is false in any material respect (in the case of all other
representations and warranties) on the date as of which it is made or as of
which the same is to be effective; or
(c) Breach of Covenants. Any of the Loan Parties fail to comply with any term,
covenant or agreement contained in (i) sections 5.1(a), 5.1(b), 5.1(c), 5.1(d),
5.1(e), 5.2, 5.3, 5.5, 5.6(a), 5.7, 5.8, 5.8 or 5.9 or any section of Article 6
hereof or (ii) any other section of Article 5 hereof and such failure continues
for a period of 10 days after the earlier of (y)any of the Loan Parties should
have known of such failure or (z) the date upon which written notice thereof is
given to the Loan Parties Representative by the Bank; or

 

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(d) Breach of Other Provisions. Any of the Loan Parties fail to comply with any
other agreement contained herein and such default continues for a period of
30 days after written notice to the Loan Parties Representative from the Bank;
or
(e) Default Under Other Agreements. Any of the Loan Parties or any Subsidiary
(i) fails to pay when due any other Indebtedness for borrowed money or
Contingent Obligation in respect thereof in an aggregate amount in excess of
$1,000,000 issued or assumed by such Loan Party or such Subsidiary or (ii) fails
to comply with the terms of any agreement executed in connection with such
Indebtedness or Contingent Obligation and such default continues beyond any
applicable cure period if the effect of such failure is (y) to cause, or permit
the holder or holders of such Indebtedness or the beneficiary or beneficiaries
of such Indebtedness (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, such Indebtedness to be declared to
be due and payable prior to its stated maturity, or (z) to cause such Contingent
Obligation to become payable or cash collateral in respect thereof to be
demanded; or
(f) Entry of Final Judgments. A final judgment, decree or arbitration award is
entered against any of the Loan Parties or any Subsidiary which (i) would
reasonably be expected to have a Material Adverse Effect or (ii) together with
all unsatisfied final judgments, decrees and awards entered against all of the
Loan Parties and all Subsidiaries, exceeds the sum of $1,000,000, and such
judgment, decree or award shall remain unsatisfied or unstayed pending appeal
for a period of 60 consecutive days after the entry thereof; or
(g) ERISA Liability. Any event in relation to any Plan which is reasonably
expected to result in any of the occurrences set forth in section 3.11 above; or
(h) Default Under Other Loan Documents. An “Event of Default” (as defined
therein) shall occur under any other Loan Document including the Loan Guaranty
or any of the Loan Guarantors cease to exist or revokes or terminates its
liability under the Loan Guaranty (except to the extent contemplated thereby) or
any Person contests in any manner the validity or enforceability thereof or
denies that any of the Loan Guarantors has any further liability or obligation
thereunder; or
(i) Default Under Related Rate Management Transactions. The occurrence or
existence of any default (subject to all applicable cure and grace periods),
event of default, including a “Termination Event” or other similar condition or
event (however described) with respect to any Related Rate Management
Transactions; or
(j) Change in Control. a Change in Control shall occur; or
(k) Insolvency, Failure to Pay Debts or Appointment of Receiver, etc. Any of the
Loan Parties becomes insolvent or the subject of state insolvency proceedings,
fails generally to pay its debts as they become due or makes an assignment for
the benefit of creditors generally; or voluntarily ceases to conduct business in
the ordinary course (other than in a transaction permitted under this
Agreement); or a receiver, trustee, custodian or other similar official is
appointed for, or takes possession of any substantial part of the property of,
any of the Loan Parties; or

 

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(l) Subject of United States Bankruptcy Proceedings. The taking of action any of
the Loan Parties to authorize such organization to become the subject of
proceedings under the United States Bankruptcy Code (or the equivalent under any
other jurisdiction where such Loan Party is organized or conducts business); or
the execution by any of the Loan Parties of a petition to become a debtor under
the United States Bankruptcy Code (or the equivalent under any other
jurisdiction where such Loan Party is organized or conducts business); or the
filing of an involuntary petition against any of the Loan Parties under the
United States Bankruptcy Code (or the equivalent under any other jurisdiction
where such Loan Party is organized or conducts business) which remains
undismissed for a period of 60 days; or the entry of an order for relief under
the United States Bankruptcy Code (or the equivalent under any other
jurisdiction where such Loan Party is organized or conducts business) against
any of the Loan Parties.
7.2 Remedies. Upon the occurrence and during the continuance of an Event of
Default, the Bank shall have no obligation to make Loans and (a) as to an Event
of Default described in sections 7.1(a) through 7.1(h), inclusive, the Bank may,
at its option and without notice, terminate the Revolving Loan Commitment and
declare the Loans then outstanding to be, and such Loans shall thereupon become,
immediately due and payable, together with accrued interest thereon, and (b) as
to an Event of Default described in sections 7.1(k) or 7.1(l), the Revolving
Loan Commitment shall terminate, without any action on the part of the Bank and
the Loans, without action on the part of the Bank or any notice or demand, shall
become automatically due and payable, together with accrued interest thereon.
Except as expressly provided otherwise in this Agreement or in any other Loan
Document, presentment, demand, protest and notice of acceleration, nonpayment
and dishonor are hereby expressly waived. Upon the occurrence and during the
continuance of an Event of Default, the Bank may exercise any rights and
remedies provided to the Bank under the Loan Documents or at law or in equity.
8. Guaranty.
8.1 Guaranty. Each of the Loan Guarantors hereby agrees that it is jointly and
severally liable for, and, as primary obligor and not merely as surety,
absolutely and unconditionally guarantees to the Bank the prompt payment when
due, whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of the Obligations (the “Guaranteed Obligations”). Each of the
Loan Guarantors further agrees that the Guaranteed Obligations may be extended
or renewed in whole or in part without notice to or further assent from it, and
that it remains bound upon its guarantee notwithstanding any such extension or
renewal. All terms of this apply to and may be enforced by or on behalf of any
domestic or foreign branch or Affiliate of the Bank that extended any portion of
the Guaranteed Obligations.
8.2 Guaranty of Payment. This Loan Guaranty is a guaranty of payment and not of
collection. Each of the Loan Guarantors waives any right to require the Bank to
sue the Borrower or any of the other Loan Guarantors, any other guarantor, or
any other person obligated for all or any part of the Guaranteed Obligations
(each, an “Obligated Party” and collectively, the “Obligated Parties”), or
otherwise to enforce its payment against any collateral securing all or any part
of the Guaranteed Obligations.

 

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8.3 No Discharge or Diminishment of Loan Guaranty.
(a) Except as otherwise provided for herein, the obligations of each of the Loan
Guarantors hereunder are unconditional and absolute and not subject to any
reduction, limitation, impairment or termination for any reason (other than the
payment in full in cash of the Guaranteed Obligations), including: (i) any claim
of waiver, release, extension, renewal, settlement, surrender, alteration, or
compromise of any of the Guaranteed Obligations, by operation of law or
otherwise; (ii) any change in the corporate existence, structure or ownership of
the Borrower, any other of the Loan Guarantors or any other guarantor of or
other person liable for any of the Guaranteed Obligations; (iii) any insolvency,
bankruptcy, winding up, liquidation, reorganization or other similar proceeding
affecting any of the Obligated Parties, or such Obligated Party’s property or
any resulting release or discharge of any obligation of any of the Obligated
Parties; or (iv) the existence of any claim, setoff or other rights which any
Loan Guarantor may have at any time against any Obligated Party, the Bank or any
other person, whether in connection herewith or in any unrelated transactions.
(b) The obligations of each of the Loan Guarantors hereunder are not subject to
any defense or setoff, counterclaim, recoupment, or termination whatsoever by
reason of the invalidity, illegality, or unenforceability of any of the
Guaranteed Obligations or otherwise, or any provision of applicable law or
regulation purporting to prohibit payment by any of the Obligated Parties, of
the Guaranteed Obligations or any part thereof.
(c) Further, the obligations of any of the Loan Guarantors hereunder are not
discharged or impaired or otherwise affected by: (i) the failure of the Bank to
assert any claim or demand or to enforce any remedy with respect to all or any
part of the Guaranteed Obligations; (ii) any waiver or modification of or
supplement to any provision of any agreement relating to the Guaranteed
Obligations (other than any of the foregoing in which the Bank expressly
modifies the obligations of any Loan Guarantor hereunder); (iii) any release,
non-perfection, or invalidity of any indirect or direct security for the
obligations of the Borrower or of all or any part of the Guaranteed Obligations
or any obligations of any other guarantor of or other person liable for any of
the Guaranteed Obligations; (iv) any action or failure to act by the Bank with
respect to any collateral securing any part of the Guaranteed Obligations (other
than actions or failures to act by the Bank or any of its Affiliates
constituting gross negligence or willful misconduct); or (v) any default,
failure or delay, willful or otherwise, in the payment or performance of any of
the Guaranteed Obligations, or any other circumstance, act, omission or delay
that might in any manner or to any extent vary the risk of such Loan Guarantor
or that would otherwise operate as a discharge of any of the Loan Guarantors as
a matter of law or equity (other than the payment in full in cash of the
Guaranteed Obligations or actions or failures to act by the Bank or any of its
Affiliates constituting gross negligence or willful misconduct).
8.4 Defenses Waived. To the fullest extent permitted by applicable law, each of
the Loan Guarantors hereby waives any defense based on or arising out of any
defense of the Borrower or any of the Loan Guarantors or the unenforceability of
all or any part of the Guaranteed Obligations from any cause, or the cessation
from any cause of the liability of the Borrower or any of the Loan Guarantors,
other than the payment in full in cash of the Guaranteed Obligations or any
defense arising from the gross negligence or willful misconduct of the Bank or
any of its Affiliates. Without limiting the generality of the foregoing, each of
the Loan Guarantors irrevocably waives acceptance hereof, presentment, demand,
protest and, to the fullest extent permitted by law, any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
person against any of the other Obligated Parties, or any other person. The Bank
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Obligations held by it by one or more judicial or nonjudicial sales, accept an
assignment of any such collateral in lieu of foreclosure or otherwise act or
fail to act with respect to any collateral securing all or a part of the
Guaranteed Obligations, compromise or adjust any part of the Guaranteed
Obligations, make any other accommodation with any of the Obligated Parties or
exercise any other right or remedy available to it against any of the Obligated
Parties, without affecting or impairing in any way the liability of such Loan
Guarantor under this Loan Guaranty except to the extent the Guaranteed
Obligations have been fully paid in cash or to the extent the Bank or any of its
Affiliates acts or fails to act in a manner constituting gross negligence or
willful misconduct. To the fullest extent permitted by applicable law, each of
the Loan Guarantors waives any defense arising out of any such election even
though that election may operate, pursuant to applicable law, to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
any of the Loan Guarantors against any of the Obligated Parties or any security.
8.5 Rights of Subrogation. No Loan Guarantor will assert any right, claim or
cause of action, including, without limitation, a claim of subrogation,
contribution or indemnification that it has against any of the Obligated
Parties, or any collateral, until the Loan Parties and the Loan Guarantors have
fully performed all their obligations to the Bank hereunder, under the Loan
Documents and under any agreement, document or instrument evidencing Related
Rate Management Transactions.
8.6 Reinstatement; Stay of Acceleration. If at any time any payment of any
portion of the Guaranteed Obligations is rescinded or must otherwise be restored
or returned upon the insolvency, bankruptcy, or reorganization of the Borrower,
each of the Loan Guarantors’ obligations under this Loan Guaranty with respect
to that payment shall be reinstated at such time as though the payment had not
been made and whether or not the Bank is in possession of this Loan Guaranty. If
acceleration of the time for payment of any of the Guaranteed Obligations is
stayed upon the insolvency, bankruptcy or reorganization of the Borrower, all
such amounts otherwise subject to acceleration under the terms of any agreement
relating to the Guaranteed Obligations shall nonetheless be payable by the Loan
Guarantors forthwith on demand by the Bank.
8.7 Information. Each of the Loan Guarantors assumes all responsibility for
being and keeping itself informed of the Borrower’s financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
each of the Loan Guarantors assumes and incurs under this Loan Guaranty, and
agrees that the Bank shall not have any duty to advise any of the Loan
Guarantors of information known to it regarding those circumstances or risks.
8.8 Termination. The Bank may continue to make loans or extend credit to the
Borrower based on this Loan Guaranty until five days after it receives written
notice of termination from any of the Loan Guarantors. Notwithstanding receipt
of any such notice, each of the Loan Guarantors will continue to be liable to
the Bank for any Guaranteed Obligations created, assumed or committed to prior
to the fifth day after receipt of the notice, and all subsequent renewals,
extensions, modifications and amendments with respect to, or substitutions for,
all or any part of the Guaranteed Obligations. Any Loan Guarantor’s liability
under this Agreement (including, without limitation, under this Loan Guaranty)
shall automatically cease if such Loan Guarantor ceases to be a Subsidiary as
the result of a transaction or series of related transactions that are not
prohibited by this Agreement, and the Bank agrees to deliver to the Borrower
such instruments of release or other documentation as the Borrower may
reasonably request to evidence any such cessation of liability.
All payments of the Guaranteed Obligations will be made giving effect to the
section 2.13.

 

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8.9 Maximum Liability. The provisions of this Loan Guaranty are severable, and
in any action or proceeding involving any state corporate law, or any state,
federal or foreign bankruptcy, insolvency, reorganization or other law affecting
the rights of creditors generally, if the obligations of any of the Loan
Guarantors under this Loan Guaranty would otherwise be held or determined to be
void, voidable, avoidable, invalid or unenforceable on account of the amount of
such Loan Guarantor’s liability under this Loan Guaranty, then, notwithstanding
any other provision of this Loan Guaranty to the contrary, the amount of such
liability shall, without any further action by the Loan Guarantors or the Bank,
be automatically limited and reduced to the highest amount that is valid and
enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the relevant Loan Guarantor’s “Maximum Liability”).
This section with respect to the Maximum Liability of each of the Loan
Guarantors is intended solely to preserve the rights of the Bank to the maximum
extent not subject to avoidance under applicable law, and no Loan Guarantor nor
any other person or entity shall have any right or claim under this section with
respect to such Maximum Liability, except to the extent necessary so that the
obligations of any of the Loan Guarantors hereunder shall not be rendered
voidable under applicable law. Each of the Loan Guarantors agrees that the
Guaranteed Obligations may at any time and from time to time exceed the Maximum
Liability of each of the Loan Guarantors without impairing this Loan Guaranty or
affecting the rights and remedies of the Bank hereunder; provided that, nothing
in this sentence shall be construed to increase any of the Loan Guarantors’
obligations hereunder beyond its Maximum Liability.
8.10 Contribution. In the event any of the Loan Guarantors (a “Paying
Guarantor”) shall make any payment or payments under this Loan Guaranty or shall
suffer any loss as a result of any realization upon any collateral granted by it
to secure its obligations under this Loan Guaranty, each of the other Loan
Guarantors (each a “Non-Paying Guarantor”) shall contribute to such Paying
Guarantor an amount equal to such Non-Paying Guarantor’s “Applicable Percentage”
of such payment or payments made, or losses suffered, by such Paying Guarantor.
For purposes of this section 8.10, each Non-Paying Guarantor’s “Applicable
Percentage” with respect to any such payment or loss by a Paying Guarantor shall
be determined as of the date on which such payment or loss was made by reference
to the ratio of (a) such Non-Paying Guarantor’s Maximum Liability as of such
date (without giving effect to any right to receive, or obligation to make, any
contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has
not been determined, the aggregate amount of all monies received by such
Non-Paying Guarantor from the Borrower after the date hereof (whether by loan,
capital infusion or by other means) to (b) the aggregate Maximum Liability of
all Loan Guarantors hereunder (including such Paying Guarantor) as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder), or to the extent that a Maximum Liability has not been
determined for any Loan Guarantor, the aggregate amount of all monies received
by such Loan Guarantors from the Borrower after the date hereof (whether by
loan, capital infusion or by other means). Nothing in this provision shall
affect any of the Loan Guarantors’ several liability for the entire amount of
the Guaranteed Obligations (up to such Loan Guarantor’s Maximum Liability). Each
of the Loan Guarantors covenants and agrees that its right to receive any
contribution under this Loan Guaranty from a Non-Paying Guarantor shall be
subordinate and junior in right of payment to the payment in full in cash of the
Guaranteed Obligations. This provision is for the benefit of the Bank and the
Loan Guarantors and may be enforced by any one, or more, or all of them in
accordance with the terms hereof.

 

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8.11 Liability Cumulative. The liability of each of the Loan Parties as one of
the Loan Guarantors under this Article 8 is in addition to and shall be
cumulative with all liabilities of each of the Loan Parties to the Bank under
this Agreement and the other Loan Documents to which such Loan Party is a party
or in respect of any obligations or liabilities of the other Loan Parties,
without any limitation as to amount, unless the instrument or agreement
evidencing or creating such other liability specifically provides to the
contrary.
9. Miscellaneous.
9.1 Survival of Representations and Warranties. The representations and
warranties contained in section 3 hereof and in the other Loan Documents shall
survive closing and execution and delivery of the Notes.
9.2 Indemnification. Except as incurred as a result of the Bank’s willful
misconduct or gross negligence, each of the Loan Parties agrees to defend,
indemnify and hold harmless the Bank, its directors, officers, employees and
agents from and against any and all loss, cost, expense or liability (including
reasonable attorneys’ fees) incurred in connection with any and all claims or
proceedings (whether brought by a private party or Governmental Authority) as a
result of, or arising out of or relating to:
(a) bodily injury, property damage, abatement or remediation, environmental
damage or impairment or any other injury or damage resulting from or relating to
any Hazardous Materials located on or migrating into, from or through property
previously, now or hereafter owned or occupied by any of the Loan Parties, which
the Bank may incur due to the making of the Loans, the exercise of any of its
rights under the Collateral Documents, or otherwise;
(b) any transaction financed or to be financed, in whole or in part, directly or
indirectly, with the proceeds of any Loan; or
(c) the entering into, performance of and exercise of its rights under any Loan
Document by the Bank.
This indemnity will survive foreclosure of any security interest or mortgage or
conveyance in lieu of foreclosure and the repayment of the Notes and the
discharge and release of any Collateral Documents.
Notwithstanding the foregoing, the foregoing indemnity shall not be available to
the extent that such losses, costs, expenses or liabilities result from a claim
brought by any of the Loan Parties against any indemnitee for breach of the
Bank’s or its Affiliates’ respective obligations hereunder or under any other
Loan Document, if the applicable Loan Party has obtained a final judgment in its
favor on such claim as determined by a court or other tribunal of competent
jurisdiction.
9.3 Expenses. Each of the Loan Parties agree, whether or not the transaction
hereby contemplated shall be consummated, to pay on demand (accompanied by a
reasonably detailed calculation of the amount demanded) (a) all out-of-pocket
expenses incurred by the Bank in connection with the negotiation, execution,
administration, amendment or enforcement of any Loan Document including the
reasonable out-of-pocket fees and expenses of the Bank’s legal counsel, and
(b) all out-of-pocket expenses, including the reasonable fees and expenses of
the Bank’s legal counsel, incurred by the Bank in connection with any
litigation, proceeding or dispute in any way related to this Agreement and the
other Loan Documents. The Bank agrees to provide written notice to the Borrower
at any time it has incurred amounts for which it will seek reimbursement under
this section 9.3 in an aggregate amount exceeding $25,000; provided that failure
to provide such notice shall not affect the obligations of the Loan Parties
under this section 9.3. The obligations of each of the Loan Parties under this
section 9.3 will survive payment of the Notes.

 

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9.4 Notices. Except as otherwise expressly provided in this Agreement, all
notices provided for herein shall be in writing and shall be delivered by hand
or overnight courier service, mailed by certified or registered mail or sent by
facsimile or e-mail transmission addressed as follows, or to such other address,
facsimile number or e-mail address, as applicable, with respect to either party
as such party shall notify the other in writing in accordance herewith; such
notices shall be deemed given when received:
If to the Bank:
JPMorgan Chase Bank, N.A.
20935 Swenson Drive
Suite 400
Waukesha, WI 53186
Attention: Richard Bennett
Facsimile No.: (262) 798-7811
E-mail Address: richard.b.bennett@chase.com
If to the Loan Parties Representative:
Orion Energy Systems, Inc.
2001 Mirro Drive
Manitowoc, WI 54220
Attention: Scott Jensen, Chief Financial Officer
Facsimile No.: (920) 892-5455
E-mail Address: sjensen@oriones.com
With a copy (which shall not constitute notice) to:
Steven R. Barth
Foley & Lardner LLP
777 E. Wisconsin Avenue
Milwaukee, WI 53202
Facsimile No.: (414) 297-4900
sbarth@foley.com
The Bank or the Loan Parties Representative may, in its discretion, agree to
accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of
such procedures may be limited to particular notices or communications.

 

47

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9.5 Setoff. As security for payment of the Obligations, each of the Loan Parties
grants to the Bank a security interest in and lien on any credit balance or
other money now or hereafter owed such Loan Party by the Bank. In addition, each
of the Loan Parties agrees that the Bank may, at any time after the occurrence
and during the continuance of an Event of Default, without prior notice, set off
against any such credit balance or other money all or any part of the
Obligations, irrespective of whether the Bank shall have made demand under this
Agreement or any Loan Document and although such Obligations may be contingent
or unmatured. The Bank agrees to provide prompt written notice of any such
setoff to the Borrower, provided that any failure to give any such notice shall
not invalidate the applicable setoff.
9.6 Participations. Each of the Loan Parties agree that the Bank may, at its
option, sell to another financial institution or institutions participation
interests in any Note and, in connection with each such sale and thereafter,
disclose to the purchaser or prospective purchaser of each such interest
financial and other information concerning such Loan Party (subject to such
purchaser or prospective purchaser agreeing to treat such information as
confidential as set forth in section 9.16). In the event of a sale by the Bank
of a participating interest to a purchaser, (a) the Bank’s obligations hereunder
shall remain unchanged for all purposes and the Bank shall remain solely
responsible for the performance of such obligations, (b) each of the Loan
Parties shall continue to deal solely and directly with the Bank in connection
with the Bank’s rights and obligations hereunder, (c) all amounts payable by any
of the Loan Parties shall be paid directly to the Bank, (d) the Bank shall not
transfer or grant any participating interest under which the purchaser has the
right to approve any amendment to, or any consent or waive with respect to, this
Agreement or any of the other Loan Documents, except to (i) extend the final
maturity date of the Loans hereunder in which such purchaser is participating,
(ii) reduce the interest rate applicable to the Loans hereunder in which such
purchaser is participating, (iii) release all or substantially all of the
collateral or guaranties (except to the extent expressly provided herein or in
any of the Loan Documents) supporting the Loans hereunder in which such
purchaser is participating, (iv) postpone the payment of, or reduce the amount
of, the interest or fees payable to such purchaser through the Bank (other than
a waiver of default interest) or (v) change the amount or due dates of scheduled
principal repayments or prepayments or premiums and (e) all amounts payable by
any of the Loan Parties hereunder shall (except as set forth below) be
determined as if the Bank had not sold such participation. Each of the Loan
Parties agree that if any portion of the Obligations are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each such purchaser shall be deemed to have,
to the extent permitted by applicable law, the right of setoff in respect of its
participating interest to the same extent as if the amount of its participating
interest were owed directly to it. Each of the Loan Parties further agree that
each such purchaser shall be entitled to the benefits of section 2.10(d) with
respect to its participation in the Bank’s obligation to make Loans; provided
that no such purchaser shall be entitled to receive any greater amount pursuant
to that section than the Bank would have been entitled to receive if no such
sale had occurred.
9.7 Titles. The titles of sections in this Agreement are for convenience only
and do not limit or construe the meaning of any section.
9.8 Severability. In case any provision or obligation under any Loan Document
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

 

48

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9.9 Parties Bound; Waiver. The provisions of this Agreement shall inure to the
benefit of and be binding upon any successor of any of the parties hereto;
provided that none of the rights of any of the Loan Parties under this Agreement
are assignable, and provided, further, that the consent of the Borrower (such
consent not to be unreasonably withheld or delayed) shall be required unless
(a) an Event of Default has occurred and is continuing at the time of such
assignment, (b) such assignment is to an Affiliate of the Bank or (c) such
assignment occurs with the sale of all or substantially all of the Bank’s
assets. No delay on the part of the Bank in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, and no single or partial
exercise of any right, power or privilege hereunder shall preclude other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights provided for in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, documents
or agreement now existing or hereafter arising.
9.10 Governing Law. This Agreement is being delivered in and shall be deemed to
be a contract governed by the laws of the State of Wisconsin and shall be
interpreted and the rights and obligations of the parties hereunder enforced in
accordance with the internal laws of that state without regard to the principles
of conflicts of laws providing for the application of the laws of another
jurisdiction.
9.11 Submission to Jurisdiction; Service of Process. ALL JUDICIAL PROCEEDINGS IN
ANY MANNER RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS, OR ANY OBLIGATIONS HEREUNDER OR THEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF WISCONSIN
LOCATED IN MILWAUKEE COUNTY. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF
THE LOAN PARTIES IRREVOCABLY:
(a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND
VENUE OF SUCH COURTS;
(b) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS WITH RESPECT TO SUCH COURTS;
(c) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT
MAY BE MADE IN ACCORDANCE WITH SECTION 9.4;
(d) AGREES THAT SERVICE AS PROVIDED IN SECTION 9.11(c) IS SUFFICIENT TO CONFER
PERSONAL JURISDICTION OVER SUCH LOAN PARTY IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
AND
(e) AGREES THAT THE BANK RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH LOAN PARTY IN THE COURTS
OF ANY OTHER JURISDICTION.

 

49

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9.12 Waiver of Jury Trial. EACH PARTY HERETO HEREBY VOLUNTARILY, KNOWINGLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (a) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (b) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
9.13 Limitation of Liability. EACH OF THE LOAN PARTIES AND THE BANK HEREBY WAIVE
ANY RIGHT ANY OF THEM MAY HAVE TO CLAIM OR RECOVER FROM ANY OTHER PARTY HERETO
IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES, OF WHATEVER NATURE,
OTHER THAN ACTUAL DAMAGES.
9.14 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signatures pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. Delivery of an executed counterpart hereto by facsimile or by
electronic transmission (e-mail) shall be as effective as delivery of an
original executed counterpart.
9.15 Entire Agreement. This Agreement and the other Loan Documents shall
constitute the entire agreement of the parties pertaining to the subject matter
hereof and thereof and supersede all prior or contemporaneous agreements and
understandings of the parties in connection therewith.

 

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9.16 Confidentiality. The Bank agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential); (b) to the extent requested by any regulatory authority
purporting to have jurisdiction over it; (c) to the extent required by
Requirement of Law or by any subpoena or similar legal process; (d) to any other
party to this Agreement; (e) in connection with the exercise of any remedies
hereunder or any suit, action or proceeding relating to this Agreement or any
other Loan Document or the enforcement of rights hereunder or thereunder;
(f) subject to an agreement for the benefit of the Borrower containing
provisions substantially the same as those of this section, to (i) any assignee
of or participant in, or any prospective assignee of or in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any Rate Management Transaction relating to the Loan
Parties and its obligations; (g) with the consent of the Loan Parties
Representative; or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this section or (ii) becomes
available to the Bank on a nonconfidential basis from a source other than the
Loan Parties. For the purposes of this Section, “Information” means all
information received from the Loan Parties relating to the Loan Parties or their
respective businesses, other than any such information that is available to the
Bank on a nonconfidential basis prior to disclosure by the Loan Parties. The
Bank shall be responsible for the failure of any of its Affiliates or its or its
Affiliates’ respective directors, officers, employees and agents, including
accountants, legal counsel and other advisors, to maintain the confidentiality
of Information in accordance with this section 9.16. Any Person required to
maintain the confidentiality of Information as provided in this section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
9.17 USA PATRIOT Act Notification. The following notification is provided to
each of the Loan Parties pursuant to Section 326 of the USA Patriot Act of 2001,
31 U.S.C. Section 5318:
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the
government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify and record
information that identifies each person or entity that opens an account,
including any deposit account, treasury management account, loan, other
extension of credit or other financial services product. What this means for the
Loan Parties: When any of the Loan Parties opens an account, if an individual
the Bank will ask for such Person’s name, taxpayer identification number,
residential address, date of birth and other information that will allow the
Bank to identify such Person, and if not an individual, the Bank will ask for
such Loan Party’s name, taxpayer identification number, business address and
other information that will allow the Bank to identify such Loan Party. The Bank
may also act, if such Person is an individual, to see such Person’s driver’s
license or other identifying documents and, if not an individual, to see such
Loan Party’s legal organizational documents or other identifying documents.
9.18 Disclosure. Each of the Loan Parties and each Subsidiary hereby acknowledge
and agree that the Bank and/or its Affiliates from time to time may hold
investments in, make other loans to or have other relationships with any of the
Loan Parties or any Subsidiary and their respective Affiliates. Each of the Loan
Parties agree that the Bank may provide any information or knowledge the Bank
may have about such Loan Party or about any matter relating to this Agreement or
the other Loan Documents to JPMorgan Chase & Co. or any of its subsidiaries or
affiliates or their successors.
[remainder of page intentionally left blank; signature page follows]

 

51

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IN WITNESS WHEREOF, the parties have executed this Credit Agreement as of the
date first written above.

            BANK:

JPMORGAN CHASE BANK, N.A.
      By:   /s/ Richard B. Bennett         Richard B. Bennett, Vice President   
          BORROWER:

ORION ENERGY SYSTEMS, INC.
      By:   /s/ Neal R. Verfuerth         Neal R. Verfuerth, Chairman and       
Chief Executive Officer     
LOAN PARTIES:

ORION ASSET MANAGEMENT, LLC
      By:   /s/ Neal R. Verfuerth         Neal R. Verfuerth, Manager           
  CLEAN ENERGY SOLUTIONS, LLC
      By:   /s/ Neal R. Verfuerth         Neal R. Verfuerth, Manager           
  GREAT LAKES ENERGY TECHNOLOGIES, LLC
      By:   /s/ Neal R. Verfuerth         Neal R. Verfuerth, Manager   

Signature Page to Credit Agreement

 

 

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EXHIBIT A

Form of Revolving Note

         
$15,000,000
  Milwaukee, Wisconsin    
 
  [_________ __], 2010    

FOR VALUE RECEIVED, on or before the Revolving Note Maturity Date (as defined in
the Credit Agreement referred to below) the undersigned, ORION ENERGY SYSTEMS,
INC., a Wisconsin corporation (the “Borrower”), promises to pay to the order of
JPMORGAN CHASE BANK, N.A. (the “Bank”) the principal sum of Fifteen Million and
00/100 Dollars ($15,000,000), or such lesser principal amount as is shown to be
outstanding according to the records of the Bank, which shall be conclusive
absent demonstrable error, together with interest on the principal balance
outstanding from time to time at such rates and payable at such times as set
forth in the Credit Agreement referred to below.
Payments of both principal and interest are to be made in immediately available
funds in lawful currency of the United States of America at the office of the
Bank, 20935 Swenson Drive, Suite 400, Waukesha, Wisconsin 53186, or at any other
office of the Bank designated by the Bank.
This Note is the Revolving Note issued by the Borrower pursuant to that certain
Credit Agreement dated as of the date hereof (as amended, restated, supplemented
or otherwise modified from time to time, the “Credit Agreement”), by and among
the Loan Parties (as defined therein) and the Bank.
Reference is made to the Credit Agreement for rights and obligations as to
prepayment and acceleration of maturity.
The undersigned agrees to pay all costs of collection, including reasonable
attorneys’ fees as set forth in section 9.3 of the Credit Agreement.

            ORION ENERGY SYSTEMS, INC.
      By:           Name:           Title:      

 

A-1

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EXHIBIT B
Form of Financial Covenant Compliance Certificate
JPMorgan Chase Bank, N.A.
20935 Swenson Drive
Suite 400
Waukesha, WI 53186
Attention: Richard B. Bennett, Vice President
Dear Sir or Madam:
This Certificate is furnished to you pursuant to Section 5.1(c) of the Credit
Agreement (the “Agreement”) dated as of _________ __, 2010 by and among the Loan
Parties and you (the “Bank”) concurrently with the delivery of the financial
statements required pursuant to Sections 5.1(a) and 5.1(b), as applicable, of
the Agreement. Capitalized terms not otherwise defined in this Certificate have
the meanings assigned in the Agreement.
The Loan Parties Representative hereby certifies to the Bank that:
1. No Default or Event of Default has occurred and is continuing, except as
described in Attachment 1 hereto (if applicable);
2. The computations set forth on the attached worksheet are true and correct as
of (insert date of quarter end)1 (the “Computation Date”); and
3. There have been no material changes in accounting policies or financial
reporting of the Company or any of its Subsidiaries since the date of the last
compliance certificate delivered to you except as described in Attachment 2
hereto (if applicable).
Dated ________, 20__.

            ORION ENERGY SYSTEMS, INC.
      By:           Name:           Title:      

 

      1   The last day of the accounting period for which statements are being
concurrently delivered.

 

B-1

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EXHIBIT C
Form of Borrowing Base Certificate
JPMorgan Chase Bank, N.A.
20935 Swenson Drive
Suite 400
Waukesha, WI 53186
Attention: Richard B. Bennett, Vice President
Dear Sir or Madam:
This Certificate is furnished to you pursuant to Section 5.1(d) of the Credit
Agreement (the “Agreement”) dated as of ________ __, 2010 by and among the Loan
Parties and you (the “Bank”). Capitalized terms not otherwise defined in this
Certificate have the meanings assigned in the Agreement.
The Loan Parties Representative hereby certifies to the Bank that the worksheet
attached hereto is a true and correct calculation of the Borrowing Base
Availability as of ________.
Dated as of ________, 20___.

            ORION ENERGY SYSTEMS, INC.
      By:           Name:           Title:      

 

C-1

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SCHEDULE 1
Existing Liens
1. Liens in favor of Hometown Bank securing the Indebtedness described on
Schedule 6.2, which are subject to the Intercreditor Agreement with Hometown
Bank.
2. Liens in favor of Wisconsin Department of Commerce securing the Indebtedness
described on Schedule 6.2, which are subject to the Intercreditor Agreement with
Wisconsin Department of Commerce.
3. Liens in favor of City of Manitowoc securing the Indebtedness described on
Schedule 6.2, which are subject to the Intercreditor Agreement with City of
Manitowoc.

 

S1-1

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SCHEDULE 3.1
Subsidiaries

                    Jurisdiction of   Authorized and Outstanding   Percent of
Shares   Entity   Organization   Shares1   Owned by Borrower  
Borrower
  Wisconsin   Authorized:   N/A  
 
      230,000,000 consisting of      
 
      200,000,000 common stock and      
 
      30,000,000 preferred stock                      
 
      Outstanding:      
 
      22,591,811 common stock      
 
      0 preferred stock      
OAM
  Wisconsin   N/A   100 %
CES
  Wisconsin   N/A   100 %
GLET
  Wisconsin   N/A   100 %

 

      1   As of June 9, 2010

 

S3.1-1

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SCHEDULE 3.4
Litigation
Incorporated herein by reference to Borrower’s Annual Report on Form 10-K filed
with the Securities and Exchange Commission on June 14, 2010 (File
No. 333-145569).

 

S3.4-1

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SCHEDULE 3.5
Restricted Payments
None.

 

S3.5-1

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SCHEDULE 3.14
Environmental Matters
None.

 

S3.14-1

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SCHEDULE 6.2
Indebtedness

              Approximate Principal Amount   Lender   as of May 31, 2010  
 
       
Hometown Bank (term loan agreement)
  $ 1,893,252.25  
 
       
Hometown Bank (SBA 404 loan)
  $ 840,801.63  
 
       
Wisconsin Department of Commerce
  $ 348,809.71  
 
       
City of Manitowoc
  $ 541,178.65  

 

S6.2-1

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SCHEDULE 6.3
Contingent Obligations
None.

 

S6.3-1

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SCHEDULE 6.7
Investments

         
Northland Capital Financial Services LLC
  $ 206,000  

 

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