Document:

fsnn_ex101.htm

EXHIBIT 10.1

 

Credit Agreement

by and among

Fusion NBS Acquisition Corp.,

as Borrower

and

Opus Bank,

as Administrative Agent and Lender

 

and

The Other Lenders from time to time party Hereto

 

 

	
  

	
$40,000,000 Senior Secured Credit Facilities

 

Dated as of August 28, 2015

 

 

  

  

  

TABLE OF CONTENTS

 

	
SECTION 1

	
DEFINITIONS AND ACCOUNTING TERMS

	
1

	
1.01.

	
Defined Terms

	
1

	
1.02.

	
Use of Certain Terms

	
23

	
1.03.

	
Accounting Terms

	
24

	
1.04.

	
Rounding

	
24

	
1.05.

	
Exhibits and Schedules

	
24

	
1.06.

	
References to Agreements and Laws

	
24

	
SECTION 2

	
EXTENSION OF CREDIT

	
24

	
2.01.

	
Loans; Maximum Amounts

	
24

	
2.02.

	
Prepayments

	
25

	
2.03.

	
Principal and Interest

	
27

	
2.04.

	
Fees

	
28

	
2.05.

	
Change or Termination of Commitments

	
28

	
2.06.

	
Computation of Interest and Fees

	
29

	
2.07.

	
Making Payments

	
29

	
2.08.

	
Funding Sources

	
29

	
2.09.

	
Collateral

	
29

	
SECTION 3

	
TAXES, YIELD PROTECTION AND ILLEGALITY

	
29

	
3.01.

	
Taxes

	
29

	
3.02.

	
Increased Cost and Reduced Return; Capital Adequacy

	
32

	
3.03.

	
Matters Applicable to all Requests for Compensation

	
33

	
3.04.

	
Survival

	
33

	
SECTION 4

	
CONDITIONS PRECEDENT TO EXTENSION OF CREDIT

	
33

	
4.01.

	
Conditions of Extension of Credit

	
33

	
4.02.

	
Conditions to Each Loan

	
35

	
4.03.

	
Conditions to Term Loan

	
36

	
SECTION 5

	
REPRESENTATIONS AND WARRANTIES

	
37

	
5.01.

	
Existence and Qualification; Power; Compliance with Laws

	
37

	
5.02.

	
Power; Authorization; Enforceable Obligations

	
37

	
5.03.

	
No Legal Bar

	
38

 

 

  

  

  

 

	
5.04.

	
Financial Statements; No Material Adverse Effect; Solvency

	
38

	
5.05.

	
Litigation

	
39

	
5.06.

	
No Default

	
39

	
5.07.

	
Ownership of Property; Liens

	
39

	
5.08.

	
Taxes

	
39

	
5.09.

	
Margin Regulations; Investment Company Act

	
39

	
5.10.

	
ERISA Compliance

	
40

	
5.11.

	
Intangible Assets

	
40

	
5.12.

	
Compliance With Laws

	
40

	
5.13.

	
Environmental Compliance

	
40

	
5.14.

	
Insurance

	
40

	
5.15.

	
Disclosure

	
41

	
5.16.

	
USA PATRIOT Act, Foreign Assets Control Regulations, Etc

	
41

	
5.17.

	
Material Contracts

	
42

	
5.18.

	
Target Transaction

	
42

	
SECTION 6

	
AFFIRMATIVE COVENANTS

	
43

	
6.01.

	
Financial Statements

	
44

	
6.02.

	
Certificates, Notices and Other Information

	
44

	
6.03.

	
Payment of Taxes and Claims

	
45

	
6.04.

	
Preservation of Existence

	
45

	
6.05.

	
Maintenance of Properties

	
45

	
6.06.

	
Maintenance of Insurance

	
45

	
6.07.

	
Compliance With Laws

	
46

	
6.08.

	
Inspection Rights

	
46

	
6.09.

	
Keeping of Records and Books of Account

	
46

	
6.10.

	
Compliance with ERISA

	
46

	
6.11.

	
Compliance With Agreements

	
47

	
6.12.

	
Further Assurances

	
47

	
6.13.

	
Use of Proceeds

	
48

	
6.14.

	
Post-Closing Requirement

	
48

 

 

  

  

  

 

	
6.15.

	
Deposit Accounts; Daily Sweeps

	
48

	
6.16.

	
Insurance

	
48

	
SECTION 7

	
NEGATIVE COVENANTS

	
48

	
7.01.

	
Indebtedness

	
49

	
7.02.

	
Liens

	
50

	
7.03.

	
Fundamental Changes

	
51

	
7.04.

	
Dispositions

	
51

	
7.05.

	
Investments; Acquisitions

	
52

	
7.06.

	
Restricted Payments

	
52

	
7.07.

	
ERISA

	
52

	
7.08.

	
Change in Nature of Business

	
52

	
7.09.

	
Transactions with Affiliates

	
52

	
7.10.

	
Certain Indebtedness Payments; Amendments to Documents

	
53

	
7.11.

	
Financial Covenants

	
53

	
7.12.

	
Accounting Changes

	
54

	
7.13.

	
Organization Documents

	
54

	
7.14.

	
Burdensome Agreements

	
54

	
7.15.

	
Business Services

	
54

	
SECTION 8

	
EVENTS OF DEFAULT AND REMEDIES

	
54

	
8.01.

	
Events of Default

	
54

	
8.02.

	
Remedies Upon Event of Default

	
56

	
SECTION 9

	
ADMINISTRATIVE AGENT

	
57

	
9.01.

	
Appointment and Authorization of Administrative Agent

	
57

	
9.02.

	
Delegation of Duties

	
58

	
9.03.

	
Liability of Administrative Agent

	
58

	
9.04.

	
Reliance by Administrative Agent

	
58

	
9.05.

	
Notice of Default

	
59

	
9.06.

	
Credit Decision; Disclosure of Information by Administrative Agent

	
59

	
9.07.

	
Indemnification of Administrative Agent

	
60

	
9.08.

	
Administrative Agent in Individual Capacity

	
60

 

 

  

  

  

 

	
9.09.

	
Successor Administrative Agent

	
61

	
SECTION 10

	
MISCELLANEOUS

	
61

	
10.01.

	
Amendments; Consents

	
61

	
10.02.

	
Transmission and Effectiveness of Communications and Signatures

	
62

	
10.03.

	
Attorney Costs, Expenses and Taxes

	
63

	
10.04.

	
Binding Effect; Assignment

	
63

	
10.05.

	
Set-off

	
64

	
10.06.

	
Sharing of Payments

	
64

	
10.07.

	
No Setoff

	
65

	
10.08.

	
No Waiver; Cumulative Remedies

	
65

	
10.09.

	
Usury

	
66

	
10.10.

	
Counterparts

	
66

	
10.11.

	
Integration

	
66

	
10.12.

	
Nature of Lender’s Obligations

	
66

	
10.13.

	
Survival of Representations and Warranties

	
66

	
10.14.

	
Indemnity by Borrower

	
67

	
10.15.

	
Nonliability of Lender

	
67

	
10.16.

	
No Third Parties Benefited

	
68

	
10.17.

	
Severability

	
68

	
10.18.

	
Confidentiality

	
68

	
10.19.

	
Further Assurances

	
69

	
10.20.

	
Headings

	
69

	
10.21.

	
Time of the Essence

	
69

	
10.22.

	
Governing Law; Consent to Jurisdiction; Waiver of Jury Trial

	
69

	
10.23.

	
PATRIOT Act Notification

	
70

	
10.24.

	
Entire Agreement

	
70

	
10.25.

	
Replacement of Lenders

	
70

 

 

  

  

  

 

EXHIBITS

A           Form of Notice of Borrowing

B           Form of Compliance Certificate

C-1           Form of Note (Term Loan)

C-2           Form of Note (Revolving Loans)

D-1           Form of Praesidian Subordination Agreement

D-2           Form of Rosen Subordination Agreement

D-3           Form of Prestige Subordination Agreement

E           [Reserved]

F           Form of General Security Agreement

G           Form of Guaranty

H           Form of Pledge Agreement

I           Form of Intellectual Property Security Agreement

SCHEDULES

1.01           Debt to be Repaid

2.01           Commitments

5.01           Subsidiaries

5.02           Consents for NBS

5.05           Litigation

5.08           Taxes

5.17           Material Contracts

7.01           Existing Indebtedness and Liens

7.05           Existing Investments

7.09           Transactions with Affiliates

9.02           Lending Offices, Addresses for Notices

  

  

  

 

Credit Agreement

 

This Credit Agreement is entered into as of August 28, 2015 by and among Fusion NBS Acquisition Corp., a Delaware corporation (“Borrower”), and Opus Bank, a California commercial bank, as Administrative Agent and a Lender and each other lender from time to time a party hereto (collectively, “Lenders,” and individually, a “Lender”).

 

Recitals

 

Borrower has requested that Lenders provide various credit facilities and Lenders are willing to do so on the terms and conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

 

SECTION 1

DEFINITIONS AND ACCOUNTING TERMS

 

1.01. Defined Terms.  As used in this Agreement, the following terms shall have the meanings set forth below:

 

“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any line of business or any division of a Person, (b) the acquisition of in excess of 50% of the capital stock, partnership interests or equity of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary).

 

“Acquisition Agreement” means the stock acquisition agreement to be executed by the Borrower with the owners of the Target Companies.

 

“Adjusted EBITDA” shall mean, for any period, Consolidated Net Income (including, for the avoidance of doubt, Tax Distributions) before taxes, plus interest expense, plus depreciation expense, plus amortization expense, plus all non-cash charges and expenses, including expenses related to the impairment of goodwill, employee stock compensation and any incremental non-cash charges or reduction in revenue as a result of any purchase accounting adjustments recorded as a result of acquisitions, plus Cash charges relating to the Target Transaction in an amount not to exceed $1,500,000 in the aggregate and incurred prior to March 30, 2016, plus all expenses, charges and losses during such period resulting from the Disposition of any asset of Borrower or any Subsidiary outside the ordinary course of business, to the extent permitted by this Agreement, plus all expenses, charges and losses that are properly classified as extraordinary in accordance with GAAP or are unusual or non-recurring, including without limitation expenses, charges and losses relating to or resulting from Acquisitions, plus those expenses set forth on Schedule 1.02 for the applicable period (provided that such expenses set forth on Schedule 1.02 shall only be added to the extent they were actually paid in the applicable period, and provided further that future expenses simillar to those listed on Schedule 1.02 shall not be added unless pursuant to some other provision of this definition), plus, to the extent not capitalized, all fees and expenses incurred in connection with the Loan Documents for such period, in each case, without duplication.

 

  

1

  

 

“Administrative Agent” means Opus Bank, in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

 

“Administrative Agent-Related Persons” means Administrative Agent (including any successor agent), together with its Affiliates and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.

 

“Affiliate” means any Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, another Person.  A Person shall be deemed to be “controlled by” any other Person if such other Person possesses, directly or indirectly, power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners; or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

 

“Agreement” means this Credit Agreement, as amended, restated, extended, supplemented or otherwise modified in writing from time to time.

 

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the any Loan Party or its Subsidiaries from time to time concerning or relating to bribery, corruption or money laundering.

 

“Anti-Money Laundering Laws” mean the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act), the USA PATRIOT Act, the U.S. Money Laundering Control Act of 1986  and any other United States law or regulation governing such activities.

 

“Anti-Terrorism Order” means Executive Order No. 13224 of September 24, 2001, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism, 66 Fed. Reg. 49,079 (2001), as amended.

 

“Applicable Margin” means the following amounts, based upon the ratio of Senior Indebtedness to Adjusted EBITDA:

 

	
Ratio of Senior Indebtedness to Adjusted EBITDA

	
Applicable Margin

	
Less than or equal to 1:50 to 1:00

	
1.25%

	
Greater than 1:50 to 1:00 but less than or equal to 2.00 to 1.00

	
1.50%

	
Greater than 2:00 to 1:00

	
2.00%

 

  

2

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

the Applicable Margin calculated in accordance with the most recent Compliance Certificate received by Lender pursuant to Section 6.02(b), and shall be in effect from the date such Compliance Certificate is received by Lender to but excluding the date the next Compliance Certificate is received; provided, however, that the Applicable Margin from the Closing Date until Lender’s receipt of Borrower’s first Compliance Certificate shall be 1.25%.

 

“Asset Sale” means a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback, assignment, conveyance, transfer or other disposition to, or any exchange of property with, any Person (other than Borrower or any Subsidiary), in one transaction or a series of transactions, of all or any part of Borrower or any of its Subsidiaries’ businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, including, without limitation, the Equity Securities of any Subsidiaries, other than (i) inventory or other assets (including Cash or Cash Equivalents) sold, transferred or otherwise Disposed of in the ordinary course of business consistent with past practice, (ii) sales or other Dispositions of other assets not otherwise covered by clauses (i), (iii), (iv) or (v) of this definition for aggregate consideration of less than $500,000 with respect to any transaction or series of related transactions and less than $1,000,000 in the aggregate during any fiscal year, (iii) leases, subleases, licenses and sublicenses, each to the extent entered into in the ordinary course of business, (iv) transactions permitted by Section 7.04(a) or Section 7.04(b) and (v) any taking of any assets of Borrower or its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale or other Disposition of any assets to a purchaser with such power under threat of such a taking for aggregate consideration of less than $500,000 with respect to any transaction or series of related transactions and less than $1,000,000 in the aggregate during any fiscal year.

 

“Attorney Costs” means and includes all reasonable, out-of-pocket attorneys’ and other fees and disbursements of any law firm or other external counsel and, with respect to Section 10.03(b), the allocated costs of internal legal services and all disbursements of internal counsel.

 

“Blocked Person” means any (i) OFAC Listed Person, (ii) agent, department, or instrumentality of, or any Person otherwise beneficially owned by, controlled by or acted on behalf of, directly or indirectly, (x) any OFAC Listed Person or (y) any Person, entity, organization, foreign country or regime that is subject to any OFAC Sanctions Program, or (iii) Person otherwise blocked, subject to sanctions under or engaged in any activity in violation of any U.S. Economic Sanctions.

 

“Board” means the Board of Governors the United States Federal Reserve System.

 

“Borrower” has the meaning set forth in the introductory paragraph hereto.

 

“Borrowing” and “Borrow” each mean a borrowing of Loans hereunder.

 

“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banks in New York, New York, San Francisco, California or Irvine, California are generally authorized or obligated, by law or executive order, to close.

 

“BVX Acquisition Agreement” shall mean the Asset Purchase and Sale Agreement, dated as of August 30, 2013, by and among Parent, Fusion BVX LLC (as the successor in interest to Fusion Broadvox Acquisition Corp.), a Delaware limited liability company, BroadvoxGo!, LLC, a Delaware limited liability company and Cypress Communications, LLC, a Delaware limited liability company, as amended by the First Amendment thereto dated as of November 15,2013 and the Second Amendment thereto dated as of December 16, 2013.

 

  

3

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Capital Expenditures” shall mean expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one (1) year, including the total principal portion of Capital Lease Obligations, which, in accordance with GAAP, would be classified as capital expenditures and all other expenditures made or liabilities incurred for intangible assets, which are capitalized.

 

“Capital Leases” means any and all leases under which certain obligations are required to be capitalized on the books of a lessee in accordance with GAAP.

 

“Capital Lease Obligations” means any Indebtedness of the Loan Parties represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

 

“Cash” or “Cash Equivalents” means assets properly classified as “marketable securities”, “cash”, “cash equivalents” or “short term investments” under GAAP.

 

“Change of Control” means the direct or indirect acquisition after the Closing Date by any person (as such term is used in Section 13(d) and Section 14(d)(2) of the Exchange Act, but excluding any employee benefit plan of Borrower or its Subsidiaries, or any Person acting it its capacity as trustee, agent or other fiduciary or administrator of any such plan) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act), of (a) beneficial ownership of the issued and outstanding shares of voting stock or similar equity interest of Borrower, the result of which acquisition is that such person or group possesses in excess of 50% of the combined voting power of all then-issued and outstanding voting stock of Borrower, or (b) the power to elect, appoint, or cause the election or appointment of at least a majority of the members of the board of directors of Borrower.

 

“CISADA” means the Comprehensive Iran Sanctions, Accountability and Divestment Act.

 

“Closing Date” means the date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 4.01.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto.

 

“Collateral” means all assets of Borrower and the Guarantors in which a Lien has been granted to the Lender pursuant to the Security Documents to secure the payment and performance of the Obligations.

 

“Commitment” means the Revolving Loan Commitment or the Term Loan Commitment, as the context requires.

 

  

4

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Compliance Certificate” means a certificate substantially in the form of Exhibit B, properly completed and signed by a Senior Officer of Borrower.

 

“Consolidated Basis” means, with respect to the financial statements or other financial information of a Person, the accounts and other items of such Person and its Subsidiaries on a consolidated basis in accordance with GAAP applied on a basis consistent with prior practices.

 

“Consolidated Net Income” means, for any period, for Borrower and its Subsidiaries on a consolidated basis, the net income of Borrower and its Subsidiaries determined in accordance with GAAP.

 

“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound.

 

“Controlled Entity” means (i) any of the Subsidiaries of the Borrower and any of their or the Borrower’s respective Controlled Affiliates and (ii) Parent and its Controlled Affiliates.  As used in this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Corporate Allocation Payments” shall mean intercompany payments made to Parent for allocation of expenses related to management support, professional services incurred, rent or utilities as set forth in the projections provided to Lender in accordance with Section 4.03(a)(iii).

 

“Credit Party” means the Administrative Agent or any other Lender.

 

“Customer Resale Transaction” means the (a) acquisition by the Borrower or any of its Domestic Subsidiaries of any equipment which does not constitute Collateral as of the Closing Date and (b) within 90 days after such acquisition, the subsequent sale or disposition of such equipment by the Borrower or Domestic Subsidiary to a customer of such Borrower or Domestic Subsidiary.

 

“Debt to be Repaid” means the Indebtedness listed on Schedule 1.01.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States of America or other applicable jurisdictions from time to time in effect affecting the rights of creditors generally.

 

“Default” means any event that has occurred and is in a cure period and which if not cured or waived on or before the end of such cure period will be an Event of Default.

 

“Default Rate” means, with respect to any Loan, the Interest Rate, plus 5.0% per annum, in each case to the fullest extent permitted by applicable Laws.

 

  

5

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Defaulting Lender” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund all or any portion of its Loans or (ii) pay over to any other Credit Party any other amount required to be paid by it hereunder that is not subject to a good faith dispute, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with all or any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of a proceeding under any Debtor Relief Law.

 

“Deposit Account Control Agreements” means, if any, the respective Deposit Account Control Agreements entered into among Borrower, any Guarantor or a Subsidiary, as customer, and Administrative Agent (for the benefit of the Lenders), as secured party, and any depository institutions at which Borrower or such Subsidiary maintains deposit accounts from time to time (other than Administrative Agent), in form and substance reasonably satisfactory to Administrative Agent.

 

“Designated Deposit Account” means a deposit account maintained by Borrower with the Administrative Agent, as from time to time designated by Borrower to Administrative Agent by Requisite Notice.  As of the Closing Date the Designated Deposit Account is Opus Bank account number 48322770.

 

“Disposition” or “Dispose” means the sale, transfer or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal with or without recourse of any notes or accounts receivable or any rights and claims associated therewith.

 

“Dollar” and “$” means lawful money of the United States of America.

 

“Domestic Subsidiary” means any Subsidiary of Borrower or any other Loan Party that is organized under the laws of the United States of America, any state or territory thereof, or the District of Columbia and is not a direct or indirect Subsidiary of a Foreign Subsidiary.

 

“Employee Benefit Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA, maintained or contributed to by Borrower or any ERISA Affiliate, other than a Multiemployer Plan.

 

  

6

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Environmental Laws” mean all applicable Laws relating to environmental, health, safety and land use matters applicable to any property of Borrower or any Subsidiary.

 

“Equity Securities” or “Equity Security” of any Person means (a) all common stock, preferred stock, participations, shares, partnership interests or other equity interests in such Person (regardless of how designated and whether voting or non-voting) and (b) all warrants, options and other rights to acquire any of the foregoing, other than convertible debt securities which have not been converted into common stock, preferred stock, participations, shares, partnership interests or other equity interests in any such Person.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor Federal statute.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with Borrower within the meaning of Sections 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 Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a 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 that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in critical status (as defined in ERISA Section 305(b)(2)) or is in endangered status (as defined in ERISA Section 305(b)(1)); (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Plan or Multiemployer Plan; (e) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any 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 Borrower or any ERISA Affiliate.

 

“Event of Default” means any of the events specified in Section 8.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor federal statute.

 

“Excluded Taxes” has the meaning set forth in Section 3.01.

 

“FATCA” means collectively, Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantially comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

 

  

7

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“First Tier Foreign Subsidiary” means, at any date of determination, each foreign Material Subsidiary in which Borrower or any of its Domestic Subsidiaries owns directly more than 50%, in the aggregate, of the capital stock of such Subsidiary.

 

“Fixed Charge Coverage Ratio” shall mean, with respect to any fiscal period of the Borrower, the ratio of (a) Adjusted EBITDA for such period, less Capital Expenditures of the Borrower on a Consolidated Basis during such period which are not funded by borrowed money (but excluding from “borrowed money” proceeds of revolving advances under the Working Capital Agreement) less all taxes (whether federal, local, state, income or otherwise) actually paid by the Borrower on a Consolidated Basis during such period to (b) Senior Debt Payments made or scheduled to be made by the Borrower on a Consolidated Basis during such period, plus payments made by the Borrower on a Consolidated Basis during such fiscal period on account of Capital Lease Obligations.

 

“Foreign Subsidiary” means any (i) Subsidiary that is (A) treated as a corporation for U.S. federal income tax purposes and (B) is not a United States persons for U.S. federal income tax purposes; and (ii) Foreign Subsidiary HoldCo.

 

“Foreign Subsidiary HoldCo” means any Domestic Subsidiary all or substantially all of whose assets consist of capital stock of (or other Equity Securities in or indebtedness of) one or more Subsidiaries that (i) is treated as a corporation for U.S. federal income tax purposes and (ii) is not United States persons for U.S. federal income tax purposes.

 

“Funded Debt” means, with respect to the Borrower and its Subsidiaries, all Indebtedness for borrowed money for which the Borrower or such Subsidiary is obligated, including all Indebtedness under all Capital Lease Obligations.

 

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession, that are applicable to the circumstances as of the date of determination, consistently applied.  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and Borrower or Administrative Agent shall so request, Administrative Agent and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP,  provided that, until so amended, (a) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (b) Borrower shall provide to Administrative Agent financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

 

“General Security Agreement” means that certain Security Agreement (Personal Property), substantially in the form of Exhibit F, dated as of the date hereof, between Borrower (and, as the case may be, each Guarantor), as Debtor(s), and Administrative Agent (for the account of each Lender in accordance with its Pro Rata Share), as Secured Party, securing the Obligations of Borrower (and, as the case may be, the obligations of each Guarantor), as the same may from time to time be amended, modified or supplemented.

 

  

8

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Governmental Authority” means (a) any international, foreign, federal, state, county or municipal government, or political subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality, central bank or public body, or (c) any court, administrative tribunal or public utility.

 

“Guarantor” means Parent and each Domestic Subsidiary that is also a Material Subsidiary in existence on the date hereof and designated as a Guarantor on Schedule 5.01 and each other Domestic Subsidiary that may from time to time deliver a Guaranty hereafter pursuant to the terms of Section 6.12.

 

“Guaranty” means each of those certain Guaranties, substantially in the form of Exhibit G, from each Guarantor in favor of the Administrative Agent and each Lender, together with any other Guaranty executed pursuant to the terms of Section 6.12, as the same may from time to time be amended, modified or supplemented.  The Guaranty to be delivered by NBS shall provide that it shall not be effective with respect to the Obligations (as defined therein) until (i) the consent to such Guaranty of such Obligations by the Delaware Public Service Commission, the Georgia Public Services Commission, the Maryland Public Service Commission the New Jersey Board of Public Utilities, the New York Public Service Commission, the Pennsylvania Public Utility Commission  and the West Virginia Public Service Commission shall have been obtained and (ii) notice of such Guaranty of such Obligations shall have been given to each of the Connecticut Public Utilities Regulatory Authority, the Massachusetts Department of Telecommunications and Cable and the Rhode Island Public Utilities Commission in accordance with the requirements of such Governmental Authority.

 

“Guaranty Obligation” means, as to any Person, any (a) guaranty by such Person of Indebtedness of, or other obligation payable or performable by, any other Person, or (b) assurance, agreement, letter of responsibility, letter of awareness, undertaking or arrangement given by such Person to an obligee of any other Person with respect to the payment or performance of an obligation by, or the financial condition of, such other Person, whether direct, indirect or contingent, including any purchase or repurchase agreement covering such obligation or any collateral security therefor, any agreement to provide funds (by means of loans, capital contributions or otherwise) to such other Person, any agreement to support the solvency or level of any balance sheet item of such other Person or any “keep-well” or other arrangement of whatever nature, in each such case, given for the purpose of assuring or holding harmless such obligee against loss with respect to any obligation of such other Person; provided, however, that the term “Guaranty Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business.  The amount of any Guaranty Obligation shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, covered by such Guaranty Obligation or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the Person in good faith.

 

“Hazardous Substance” means any substance, material or waste, including asbestos and petroleum (including crude oil or any fraction thereof), which is or becomes designated, classified or regulated as “toxic,” “hazardous,” a “pollutant” or similar designation under any Laws.

 

  

9

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Indebtedness” means, as to any Person at any date of determination, the following items:

 

(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

 

(b) any direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), banker’s acceptances, bank guaranties, surety bonds and similar instruments;

 

(c) whether or not so included as liabilities in accordance with GAAP but excluding any portion thereof which would be accounted for as interest under GAAP, net obligations under any Swap Contract in an amount equal to (i) if such Swap Contract has been closed out, the termination value thereof, or (ii) if such Swap Contract has not been closed out, the mark-to-market value thereof determined on the basis of readily available quotations provided by any recognized dealer in such Swap Contract;

 

(d) whether or not so included as liabilities in accordance with GAAP and whether with or without recourse, all obligations of such Person to pay the deferred purchase price of property or services, and indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements);

 

(e) Capital Leases in an amount of the capitalized lease liability appearing on Borrower’s financial statements delivered in accordance with Section 6.01(a) or (b) of this Agreement;

 

(f) the principal component or liquidation preference of all Equity Securities of such Person and which by the terms thereof could at any time prior to the Maturity Date (at the request of the holders thereof or otherwise) be subject to mandatory sinking fund payments, mandatory redemption or other acceleration; and

 

(g) all Guaranty Obligations of such Person in respect of any of the foregoing obligations of any other Person;

 

provided that for all purposes of this Agreement, Indebtedness shall exclude (i) trade and other accounts payable in the ordinary course of business in accordance with customary trade terms and which are not overdue for a period of more than one hundred twenty (120) days (unless contested in good faith by Borrower or any Subsidiary), (ii) deferred Taxes, and (iii) accrued interest and expenses, except to the extent capitalized.

 

For all purposes of this Agreement, the Indebtedness of any Person shall include, at any such time as such partnership or joint venture is not Solvent, the Indebtedness of any partnership or joint venture (to the extent the joint venture is a legal entity where the venture members have pass-through liability for all of the debts of the joint venture) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person (subject to customary recourse exceptions acceptable to Requisite Lenders).

 

  

10

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Indemnified Liabilities” has the meaning set forth in Section 10.14.

 

“Indemnitees” has the meaning set forth in Section 10.14.

 

“Intellectual Property Security Agreement” means that certain Intellectual Property Security Agreement, substantially in the form of Exhibit I, dated as of the date hereof, entered into by Borrower (and, as the case may be, each Guarantor), as Debtor(s), and Administrative Agent (for the account of each Lender in accordance with its Pro Rata Share), as Secured Party, securing the Obligations of Borrower (and, as the case may be, the obligations of each Guarantor), as the same may from time to time be amended, modified or supplemented.

 

“Interest Rate” means a fluctuating rate per annum equal to the higher of (a) the rate of interest in effect for such day as publicly announced from time to time by the Wall Street Journal as its “prime rate” (or the average prime rate if a high and a low prime rate are therein reported) plus the Applicable Margin then in effect at such time, or (b) 3.25% plus the Applicable Margin.

 

“Investment” means, as to any Person, any investment by such Person, whether by means of the purchase or other acquisition of stock or other securities of any other Person or by means of a loan, creating a debt, capital contribution, guaranty or other debt or equity participation or interest in any other Person.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

 

“IRS” means the United States Internal Revenue Service.

 

“Landlord’s Agreement” has the meaning set forth in Section 6.14.

 

“Laws” or “Law” means all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

“Lender” means each lender from time to time party hereto.

 

“Lending Office” as to any Lender, the office or offices of such Lender described as such on Schedule 9.02, or such other office or offices as a Lender may from time to time notify Administrative Agent and the Borrower.

 

“Leverage Ratio” means, with respect to each measuring period, the ratio of (a) the aggregate principal balance of all Funded Debt outstanding on the last day of such measuring period to (b) Adjusted EBITDA for such measuring period, where “measuring period” shall mean each period of four consecutive fiscal quarters of the Borrower on a Consolidated Basis.

 

  

11

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement (including in the nature of, cash collateral accounts or security interests), encumbrance, lien (statutory or other), fixed or floating charge, or other security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable Laws of any jurisdiction), including the interest of a purchaser of a material portion of a seller’s accounts receivable.

 

“Loan(s)” means a Revolving Loan and/or the Term Loan, as the context requires.

 

“Loan Documents” means this Agreement, each Notice of Borrowing, each Note, each Guaranty, each Security Document, each Subordination Agreement, any Landlord’s Agreement, the Perfection Certificate, and each certificate, fee letter, and other instrument or agreement from time to time executed by Borrower or any of its Subsidiaries or any Senior Officer and delivered in connection with this Agreement.

 

“Loan Parties” means Borrower, Parent, each other Guarantor and each Subsidiary of Borrower that is party to a Loan Document.

 

“Master Agreement” has the meaning set forth in the definition of “Swap Contract”.

 

“Material Adverse Effect” means any set of circumstances or events which (a) has any material adverse effect upon the validity or enforceability of any Loan Document, (b) is material and adverse to the financial condition, business, assets or operations of Loan Parties and their Subsidiaries taken as a whole, (c) has any material adverse effect upon the value or condition of the Collateral under any Security Document taken as a whole, or (d) materially impairs the ability of any Loan Party or any Subsidiary to perform its Obligations.

 

“Material Subsidiary” means a Subsidiary of Borrower which has assets with a total book value greater than 10% of the consolidated total assets of Borrower and its Subsidiaries, determined as of the end of the fiscal quarter immediately preceding the date of determination.

 

“Material Contract” means each contract or agreement of any Loan Party or any of their Subsidiaries that involves the receipt or payment of more than $500,000.

 

“Maturity Date” means (a) with respect to the Revolving Loan, August 28, 2019 and (b) with respect to the Term Loan, August 28, 2020, or, in each case, such earlier date upon which the Commitments may be terminated and/or the Obligations may be accelerated in accordance with the terms of this Agreement.

 

“Multiemployer Plan” means any Employee Benefit Plan of the type described in Section 4001(a)(3) of ERISA.

 

“NBS” means Network Billing Systems, L.L.C., a New Jersey limited liability company.

 

  

12

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount equal to:  (i) Cash payments (including any Cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) received by Borrower or any of its Subsidiaries from such Asset Sale, minus (ii) any direct costs incurred in connection with such Asset Sale, including (a) income, gains or transfer Taxes payable by the seller as a result of any gain recognized in connection with such Asset Sale (it being agreed that until such Taxes are actually paid, for purposes of this clause (a) a reasonable, good faith estimate of the amount of such Taxes will suffice), (b) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale, (c) a reasonable reserve for any purchase price adjustments indemnification or similar payments (fixed or contingent) attributable to seller’s obligations, indemnities and representations and warranties to purchaser in respect of such Asset Sale undertaken by Borrower or any of its Subsidiaries in connection with such Asset Sale and (d) reasonable fees and expenses of counsel, accountants, investment bankers, financial advisors, brokers and other professionals.

 

“Net Insurance/Condemnation Proceeds” means an amount equal to: (i) any Cash (or Cash Equivalents) payments or proceeds received by Borrower or any of its Subsidiaries (a) under any casualty insurance policy in respect of a covered loss thereunder or (b) as a result of the taking of any assets of Borrower or any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (ii) (a) any costs incurred by Borrower or any of its Subsidiaries in connection with the adjustment or settlement of any claims of Borrower or such Subsidiary in respect thereof, and (b) any costs incurred in connection with any sale of such assets as referred to in clause (i)(b) of this definition, including income, gains or transfer  Taxes payable as a result of any gain recognized in connection therewith (it being agreed that until such Taxes are actually paid, for purposes of this clause (ii)(b) a reasonable, good faith estimate of the amount of such Taxes will suffice).

 

“Note” means a promissory note made by Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit C-1 or C-2, as applicable (collectively, the “Notes”).

 

“Notice of Borrowing” has the meaning set forth in Section 4.02(a).

 

“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, Loan Parties arising under any Loan Document, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest that accrues after the commencement of any proceeding under any Debtor Relief Laws by or against any Loan Party or any Subsidiary or Affiliate of any Loan Party.

 

“OFAC” means the Office of Foreign Assets Control, United States Department of the Treasury.

 

“OFAC Listed Person” means any Person whose name appears on the SDN List.

 

  

13

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“OFAC Sanctions Program” means any economic or trade sanction that OFAC is responsible for administering and enforcing.  A list of OFAC Sanctions Programs may be found at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx .

 

“Opus Bank” means Opus Bank, a California commercial bank.

 

“Ordinary Course Dispositions” means:

 

(a) Dispositions of inventory in the ordinary course of business;

 

(b) Dispositions of damaged, obsolete, surplus or worn out property in the ordinary course of business; and

 

(c) Dispositions of non-exclusive licenses and similar arrangements for the use of property of Borrower or any Subsidiary in the ordinary course of business.

 

“Ordinary Course Indebtedness” means:

 

(a) Indebtedness arising from the honoring of a check, draft or similar instrument against insufficient funds or from the endorsement of instruments for collection in the ordinary course of any Loan Party’s or any Subsidiary’s business;

 

(b) Indebtedness of Loan Parties or any of their Subsidiaries with respect to surety, appeal, indemnity, performance or other similar bonds in the ordinary course of business; and

 

(c) Indebtedness arising in connection with Swap Contracts in the ordinary course of business to hedge bona fide risk and not for speculative purposes.

 

“Ordinary Course Investments” means Investments consisting of:

 

(a) (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one (1) year from the date of acquisition thereof, (ii) commercial paper maturing no more than one (1) year from the date of creation thereof and having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., (iii) certificates of deposit maturing no more than one (1) year from the date of investment therein, (iv)  money market accounts, and (v) time deposits maturing no more than thirty (30) days from the date of creation thereof with commercial banks having membership in the Federal Deposit Insurance Corporation in amounts not exceeding the lesser of $100,000 or the maximum amount of insurance applicable to the aggregate amount of the deposits at such institution;

 

(b) Investments in the ordinary course of business consisting of cash-in-advance payments and other deposits or credit obligations required by or to customers, suppliers, vendors and service providers that are not Affiliates of Loan Parties; provided that this clause (b) shall not apply to Investments of any Loan Party in any Subsidiary;

 

 

  

14

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

(c) [Reserved];

 

(d) advances to officers, directors and employees of Loan Parties and their Subsidiaries for travel, entertainment, relocation and analogous ordinary business purposes;

 

(e) Investments in the ordinary course of business by Loan Parties in Subsidiaries; provided that the aggregate amount of such Investments after the Closing Date in Subsidiaries that are not (or do not concurrently become) Guarantors shall not exceed $1,000,000; and

 

(f) Investments of any Subsidiary existing at the time it becomes a Subsidiary of Borrower, provided that such Investments were not made in anticipation of such Person becoming a Subsidiary of Borrower.

 

“Ordinary Course Liens” means:

 

(a) Liens pursuant to any Loan Document;

 

(b) Liens for Taxes not yet delinquent or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP no item or portion of property of Borrower or any of its Subsidiaries is in jeopardy of being seized, levied upon or forfeited as a result thereof;

 

(c) carriers’, warehousemen’s, mechanics’, materialman’s, repairmen’s, landlord’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than sixty (60) days or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

 

(d) pledges or deposits in connection with worker’s compensation, unemployment insurance and other social security legislation;

 

(e) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(f) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of any Person;

 

(g) attachment, judgment or other similar Liens arising in connection with litigation or other legal proceedings (and not otherwise constituting an Event of Default hereunder) in the ordinary course of business that is currently being contested in good faith by appropriate proceedings, so long as adequate reserves have been set aside therefor and no item or portion of property of Borrower or any of its Subsidiaries is in jeopardy of being seized, levied upon or forfeited as a result thereof;

 

  

15

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

(h) Liens arising from leasehold interests in leases or subleases; the rights of licensors under licenses under which Borrower or a Subsidiary is the licensee, and licenses granted in the ordinary course of business and not interfering in any material respect with the business of the licensor;

 

(i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties and in connection with the importation of goods in the ordinary course of Borrower’s and its Subsidiaries’ businesses that are promptly paid on or before the date they become due;

 

(j) Liens arising solely 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; provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by Borrower in excess of those set forth by regulations promulgated by the Board, and (ii) such deposit account is not intended by Borrower or any Subsidiary to provide collateral to the depository institution; and

 

(k) purported Liens evidenced by the filing of Uniform Commercial Code precautionary financing statements relating to operating leases entered into in the ordinary course of business and not otherwise prohibited under this Agreement.

 

“Organization Documents” means (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws; (b) with respect to any limited liability company, the certificate or articles of organization or formation and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership or joint venture agreement and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation with the secretary of state or other department in the jurisdiction of its formation, in each case as amended from time to time.

 

“Original Acquisition Agreements” shall mean (i) Original Membership Interest Purchase Agreement, and (ii) the Asset Purchase and Sale Agreement dated as of January 30, 2012 by and among Interconnect Services Group II, LLC, a/k/a Interconnect Systems Group II, LLC, Sellers, the JK Trust, Borrower and Parent, as amended, including amendments dated June 6, 2012, August 20, 2012, and September 21, 2012 and all exhibits and schedules thereto.

 

“Original Membership Interest Purchase Agreement” shall mean the Membership Interest Purchase and Sale Agreement, dated as of January 30, 2012, by and among Sellers, NBS,  Borrower and Parent, as amended, including amendments dated June 6, 2012, August 20, 2012, September 21,2012 and October 24,2012 and all exhibits and schedules thereto.

 

“Outstanding Obligations” means, as of any date, and giving effect to all payments, repayments and prepayments made on such date, the aggregate outstanding Obligations.

 

“Parent” means Fusion Telecommunications International, Inc., a Delaware corporation.

 

  

16

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Parent Consolidated Net Income” means, for any period, for Parent and its Subsidiaries on a consolidated basis, the net income of Parent and its Subsidiaries determined in accordance with GAAP.

 

“Parent EBITDA” shall mean, for any period, Parent Consolidated Net Income (including, for the avoidance of doubt, Tax Distributions) before taxes, plus interest expense, plus depreciation expense, plus amortization expense, plus all non-cash charges and expenses, including expenses related to the impairment of goodwill, employee stock compensation and any incremental non-cash charges or reduction in revenue as a result of any purchase accounting adjustments recorded as a result of acquisitions, plus Cash charges relating to the Target Transaction in an amount not to exceed $1,500,000 in the aggregate and incurred prior to March 30, 2016, plus all expenses, charges and losses during such period resulting from the Disposition of any asset of Parent or any Subsidiary outside the ordinary course of business, to the extent permitted by this Agreement, plus all expenses, charges and losses that are properly classified as extraordinary in accordance with GAAP or are unusual or non-recurring, including without limitation expenses, charges and losses relating to or resulting from Acquisitions, plus those expenses set forth on Schedule 1.02 for the applicable period (provided that such expenses set forth on Schedule 1.02 shall only be added to the extent they were actually paid in the applicable period, and provided further that future expenses simillar to those listed on Schedule 1.02 shall not be added unless pursuant to some other provision of this definition), plus, to the extent not capitalized, all fees and expenses incurred in connection with the Loan Documents for such period, in each case, without duplication.

 

 “Payment Date” means the first day of each calendar month and the Maturity Date; provided, further, that interest accruing at the Default Rate shall be payable from time to time upon demand by Administrative Agent.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto established under ERISA.

 

“Perfection Certificate” means that certain Perfection Certificate dated as of the date hereof executed by Borrower.

 

“Permitted Indebtedness” has the meaning specified in Section 7.01.

 

“Permitted Investments” has the meaning specified in Section 7.05.

 

“Permitted Liens” has the meaning specified in Section 7.02.

 

“Permitted Merger” the meaning specified in Section 7.03.

 

“Person” means any individual, trustee, corporation, general partnership, limited partnership, limited liability company, joint stock company, trust, unincorporated organization, bank, business association, firm, joint venture, or Governmental Authority.

 

“Ping Tone” means PingTone Communications, Inc., a Delaware corporation.

 

  

17

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“PingTone Acquisition Agreement” means the Agreement and Plan of Merger, dated as of October 15, 2014, by and among Parent, Fusion PTC Acquisition, Inc., a Delaware corporation, PingTone Communications, Inc., a Delaware corporation, J. Shelby Bryan, solely in his capacity as Stockholder Representative (the “PingTone Stockholder Representative”) and J. Shelby Bryan, Steven Wheeler, and Janal LLP.

 

“Plan” means any employee benefit plan maintained or contributed to by Borrower or by any ERISA Affiliate and insured by the PBGC under Title IV of ERISA.

 

 Pledge Agreement” means that certain Security and Pledge Agreement, substantially in the form of Exhibit H, among Borrower (and, as the case may be, each Guarantor), as Debtor(s), and Administrative Agent (for the account of each Lender in accordance with its Pro Rata Share), as Secured Party, securing the Obligations of Borrower (and, as the case may be, the obligations of each Guarantor), as the same may from time to time be amended, modified or supplemented.

 

“Praesidian Facility” means that certain Third Amended and Restated Securities Purchase Agreement and Security Agreement dated as of August 28, 2015 among the Borrower, the Parent, NBS, Fusion BVX LLC, Pingtone Communications, Inc., Praesidian Capital Opportunity Fund III, LP, as Agent and a Lender, Praesidian Capital Opportunity Fund III-A, LP, and United Insurance Company of America, and the Transaction Documents as defined in such Agreement.

 

“Praesidian Subordination Agreement” means that certain Subordination Agreement, in the form of Exhibit D-1 attached hereto, dated as of the date hereof by and among the Administrative Agent, Loan Parties and Praesidian Capital Opportunity Fund III, L.P. as agent for the subordinated lenders.

 

“Prestige Subordination Agreement” means that certain Intercreditor Agreement, in the form of Exhibit D-3 attached hereto, dated as of the date hereof by and among the Administrative Agent, Loan Parties and Prestige Capital.

 

“Pro Rata Share” means:

 

(a) with respect to a Lender’s obligation to make a Loan and receive payments of principal, interest, fees, costs and expenses with respect thereto, (x) prior to the making of the Loans, the percentage obtained by dividing (i) such Lender’s Commitment, by (ii) the aggregate amount of all Lenders’ Commitments, and (y) from and after the making of the Loan, the percentage obtained by dividing (i) the principal amount of such Lender’s Loan by (ii) the principal amount of all Loans of all Lenders; and

 

(b) with respect to all other matters as to a particular Lender, the percentage obtained by dividing (A) the principal amount of the unpaid principal amount of such Lender’s Loans by (B)  the unpaid outstanding principal amount of all Loans of all Lenders.

 

 “PT” means Pacific Time.

 

  

18

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, for which the reporting requirement has not been waived.

 

“Requisite Lenders” shall mean Lenders holding or being responsible for more than 50% of the sum of all Loans and unused Commitments then outstanding.

 

“Requisite Notice” means, unless otherwise provided herein, irrevocable written notice to the intended recipient.  Such notices shall be (i) delivered to such recipient at the address or telephone number specified on Schedule 9.02 or as otherwise designated by such recipient by Requisite Notice to Lender, and (ii) if made by Borrower, given or made by a Senior Officer of Borrower.  Any written notice delivered in connection with any Loan Document shall be in the form, if any, prescribed herein or therein.  Any notice sent by other than hardcopy shall be promptly confirmed by a telephone call to the recipient and, if requested by Lender, by a PDF copy of a manually-signed hardcopy thereof.

 

“Requisite Time” means, with respect to any of the actions listed below, the time and date set forth below opposite such action:

 

	
Borrowing or prepayment of a Loan

	
8:00 a.m. PT

	
Same date as such Borrowing or prepayment

	
Payments by Borrower to Lender

	
11:00 a.m. PT

	
On date payment is due

	
Voluntary reduction in or termination of Commitment

	
10:00 a.m. PT

	
Three Business Days prior to such reduction or termination

“Restricted Payment” means:

 

(a) the declaration or payment of any dividend or distribution by Borrower or any Subsidiary, either in cash, securities or other property, on any shares of Equity Securities of any class of Borrower or any Subsidiary, including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such Equity Securities; and

 

(b) any other payment or distribution by Borrower or any Subsidiary in respect of its Equity Securities, either directly or indirectly.

 

provided, however, the term “Restricted Payments” shall not include (i) salary payments to Jonathan Kaufman at a rate not greater than $250,000 per year without the prior written consent of Administrative Agent; (ii) payments by any Loan Party to Marvin Rosen permitted by the Rosen Subordination Agreement, provided that after giving effect to such payment the Loan Parties are in compliance on a pro forma basis with the covenants set forth in Section 7.11, recomputed for the most recent quarter for which financial statements have been delivered, (iii) payments to the sellers under the BVX Acquisition Agreement pursuant to the terms and conditions of the BVX Acquisition Agreement, (iv) payments to the Ping Tone Stockholders’ Representative or the stockholders of Ping Tone pursuant to the terms and conditions of the PingTone Acquisition Agreement, (v) intercompany payments made in the ordinary course of business for funding of such Loan Party’s payroll and terminating NBS traffic on the Parent’s network, provided that any payments by Borrower to Parent shall be at direct cost plus a mark-up not in excess of the average mark-up provided to third party customers for similar services; (vi) any Corporate Allocation Payment, provided that (A) no Default or Event of Default shall have occurred and be continuing or would result from the making of such payment, (B) any proposed Corporate Allocation Payment, together with all other Corporate Allocation Payments made during the period of twelve (12) consecutive fiscal months ending on the last day of the month in which such proposed Corporate Allocation Payment is to be made, shall not in the aggregate exceed the sum of $1,000,000 plus an amount equal to 0.30 multiplied by the amount, if any, by which Adjusted EBITDA for such period exceeds $12,000,000, and, (C) Corporate Allocation Payments made in any fiscal year shall not exceed $3,500,000 in the aggregate; or (vii) payments under the Original Acquisition Agreements.

 

  

19

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Revolving Loan” has the meaning specified in Section 2.01(c).

 

“Revolving Loan Commitment” means the commitment of the Lenders to make Revolving Loans in an aggregate outstanding amount not to exceed $15,000,000, as such amount may be changed from time to time pursuant to Section 2.05.

 

“Revolving Loan Lender” means each Lender with a Revolving Loan Commitment, as more fully set forth in Schedule 2.01 hereof.

 

“Revolving Outstandings”  means the aggregate outstanding principal amount of the Revolving Loans of all Revolving Loan Lenders or any Revolving Loan Lender, as the context may require, as of the date of determination.

 

“Rosen Subordination Agreement” means that certain Intercreditor and Subordination Agreement, in the form of Exhibit D-2 attached hereto, dated as of the date hereof by and among the Administrative Agent, Loan Parties and Marvin Rosen.

 

“Sanctioned Country” means a country subject to any OFAC Sanctions Program.

 

“SDN List” means the list of Special Designated Nationals and Blocked Persons published by OFAC. The SDN List is available at http://www.treasury.gov/sdn.

 

“Securities Account Control Agreements” means the respective Securities Account Control Agreements entered into among Borrower or a Subsidiary, as customer, the Administrative Agent (for the account of each Lender in accordance with its Pro Rata Share), as secured party, and any account holder with whom Borrower or such Subsidiary maintains securities accounts from time to time.

 

“Security Documents” means the General Security Agreement, the Intellectual Property Security Agreement, the Pledge Agreement, the Deposit Account Control Agreements, the Securities Account Control Agreements and each other security agreement executed in connection with this Agreement which recite that they secure all or a portion of the Obligations.

 

“Senior Indebtedness” means, at any time, the aggregate outstanding amount of all Indebtedness of Borrower and its Subsidiaries at such time, other than Subordinated Debt.

 

  

20

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Senior Leverage Ratio” means, as of the last day of any fiscal quarter, the ratio of (a) Senior Indebtedness on such date to (b) Adjusted EBITDA for the period of four (4) consecutive fiscal quarters ending on such date.

 

“Senior Officer” means, with respect to any Loan Party, any chief executive officer, the chief financial officer, the vice president, accounting and finance, the principal accounting officer, the chief operating officer or the treasurer of such Loan Party and any other Person reasonably designated in writing as a “Senior Officer” by a Loan Party.

 

“Solvent” means, as to any Person at any time, that (i) the fair value of the assets of such Person is greater than the amount of such Person’s liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy Code; (ii) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (iii) such Person is able to realize upon its assets and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (iv) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (v) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital.

 

“Subordinated Debt” shall mean Indebtedness subordinated to Administrative Agent and the Lenders in a manner, and pursuant to an agreement satisfactory to the Administrative Agent in its sole discretion, which shall include, without limitation, all indebtedness subject to any of the Subordination Agreements.

 

“Subordination Agreements” shall mean the Praesidian Subordination Agremeent, the Rosen Subordination Agreement and the Prestige Subordination Agreement.

 

 “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned or controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Borrower.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., or any other master agreement (any such master agreement, together with any related schedules, as amended, restated, extended, supplemented or otherwise modified in writing from time to time, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

 

  

21

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Target Companies” means Target One, Target Two, Target Three, Target Four, Target Five.

 

“Target Transaction” means the acquisition by Borrower of all of the outstanding Equity Securities of each of the Target Companies.

 

“Taxes” has the meaning specified in Section 3.01(a).

 

“Term Loan” has the meaning specified in Section 2.01(a).

 

“Term Loan Availability Period” means the period commencing on the Closing Date and ending on June 28, 2016, or such earlier date upon which the Term Loan Commitment is terminated in accordance with the terms of this Agreement.

 

“Term Loan Commitment” means the commitment of the Lenders to make a single Term Loan on the Term Loan Funding Date in the amount of $25,000,000.

 

“Term Loan Funding Date” means the date all the conditions precedent to funding the Term Loan set forth in Section 4.03 are satisfied or waived in accordance with Section 4.03.

 

“Term Loan Lender” means each Lender with a Term Loan Commitment, as more fully set forth in Schedule 2.01 hereof.

 

“Threshold Amount” means $1,000,000.

 

“to the best knowledge of” or “Knowledge” means, when modifying a representation, warranty or other statement of any Person, that the fact or situation described therein is known by such Person (or, (i)  in the case of Loan Party, known by any officer of such Loan Party, or, (ii) in the case of any other Person other than a natural Person, known by any officer of such Person) making the representation, warranty or other statement, or with the exercise of reasonable due diligence under the circumstances (in accordance with the standard of what a reasonable Person in similar circumstances would have done) would have been known by such Person (or, (i) in the case of any Loan Party, would have been known by any officer of such Loan Party, or, (ii) in the case of any other Person other than a natural Person, would have been known by any executive officer of such Person).

 

“U.S. Economic Sanctions” means all United States economic sanctions, including but not limited to the Trading with the Enemy Act, the International Emergency Economic Powers Act, CISADA or any similar law or regulation with respect to Iran or any other country, the Sudan Accountability and Divestment Act, any OFAC Sanctions Program, or any economic sanctions regulations administered and enforced by the United States or any enabling legislation or executive order relating to any of the foregoing.

 

  

22

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of such Pension Plan’s assets, determined in accordance with the assumptions used for funding such Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

 

“USA PATRIOT Act” means United States Public Law 107-56, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act of 2001), as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

 

“Working Capital Agreement” means that certain Purchase and Sale Agreement, dated as of September 16, 2011, by and between Prestige Capital Corporation and Parent, which provides a revolving line of credit to Parent not to exceed $3,000,000 outstanding at any one time.

 

1.02. Use of Certain Terms.

 

(a) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto or thereto, unless otherwise defined therein.

 

(b) As used herein, unless the context requires otherwise, the masculine, feminine and neuter genders and the singular and plural include one another.

 

(c) The words “herein” and “hereunder” and words of similar import when used in any Loan Document shall refer to the Loan Documents as a whole and not to any particular provision thereof.  The term “including” is by way of example and not limitation.  References herein to a Section, subsection or clause shall, unless the context otherwise requires, refer to the appropriate Section, subsection or clause in this Agreement.

 

(d) The term “or” is disjunctive; the term “and” is conjunctive.  The term “shall” is mandatory; the term “may” is permissive.

 

1.03. Accounting Terms.  All accounting terms not specifically or completely defined in this Agreement shall be construed in conformity with, and all financial data required to be submitted by this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, and applied in a manner consistent with that used in preparing Parent’s audited financial statements for the fiscal year ended December 31, 2014, except as otherwise specifically prescribed herein.  Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Financial Accounting Standards Board Accounting Standards Codification 825 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of Borrower or any Subsidiary at “fair value”, as defined therein.

 

  

23

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

1.04. Rounding.  Any financial ratios required to be maintained by Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed in this Agreement and rounding the result up or down to the nearest number (with a round-up if there is no nearest number) to the number of places by which such ratio is expressed in this Agreement.

 

1.05. Exhibits and Schedules.  All exhibits and schedules to this Agreement, either as originally existing or as the same may from time to time be supplemented, modified or amended, are incorporated herein by this reference.

 

1.06. References to Agreements and Laws.  Unless otherwise expressly provided herein, (a) references to agreements (including the Loan Documents) and other contractual instruments shall include all amendments, restatements, extensions, supplements and other modifications thereto (unless prohibited by any Loan Document), and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.

 

 

SECTION 2

EXTENSION OF CREDIT

 

2.01. Loans; Maximum Amounts.  Subject to the terms and conditions set forth in this Agreement, each Lender severally agrees to make Loans to Borrower as follows:

 

(a) Term Loan.  Subject to the terms and conditions set forth in this Agreement, each Term Loan Lender severally agrees to make one (1) advance to Borrower (a “Term Loan”) in Dollars during the Term Loan Availability Period in such Term Loan Lender’s Pro Rata Share of the Term Loan amount requested in an aggregate amount not to exceed the amount of the Term Loan Commitment. The Term Loan Commitment shall terminate on the last day of the Term Loan Availability Period.  Once prepaid or repaid, no Term Loan may be reborrowed.  The Term Loans shall be repaid in accordance with Section 2.02 and Section 2.03.

 

(b) Borrowing Procedure.  Borrower may irrevocably request a Borrowing of the Term Loan by delivering a Notice of Borrowing therefor by the Requisite Notice to Administrative Agent not later than the Requisite Time therefor. Each Revolving Loan Lender shall make the proceeds of the Term Loan available not later than 1:00 pm, PT, on the date of the borrowing. The Administrative Agent shall promptly disburse such proceeds to the Borrower.

 

(c) Revolving Loans.  Subject to the terms and conditions set forth in this Agreement, each Revolving Loan Lender severally agrees to make one or more loans on a revolving basis to Borrower (each a “Revolving Loan”) in Dollars from time to time until the Maturity Date in such Revolving Loan Lender’s Pro Rata Share of such aggregate amounts as Borrower may from time to time request from all such Revolving Loan Lenders; provided, however, that (i) the Revolving Outstandings of all Revolving Loan Lenders shall not exceed at any time the combined Revolving Commitments, as the same may be from time to time adjusted in accordance with this Agreement; and (ii) the Revolving Outstandings of each Revolving Loan Lender shall not at any time exceed such Revolving Loan Lender’s Revolving Commitment, as the same may be from time to time adjusted in accordance with this Agreement.  The Revolving Loans shall be repaid in accordance with Sections 2.02 and Section 2.03.  The Revolving Loans are a revolving credit and, subject to the terms and conditions hereof, Borrower may borrow, prepay and reborrow Revolving Loans as set forth herein without premium or penalty.

 

  

24

  

Fusion NBS Acquisition Corp.                           Credit Agreement

 

(d) Borrowing Procedure.  Borrower may irrevocably request a Borrowing of a Revolving Loan in a minimum amount of $250,000 or a higher integral multiple of $50,000 (or in amount equal to the undrawn Revolving Loan Commitments) by delivering a Notice of Borrowing therefor by Requisite Notice to the Administrative Agent not later than the Requisite Time therefor. The Administrative Agent shall promptly notify each Revolving Loan Lender of the receipt of any such Notice of Borrowing.  Each Revolving Loan Lender shall make the proceeds of any Revolving Loan available not later than 1:00 pm, PT, on the date of the borrowing. The Administrative Agent shall promptly make such proceeds available to the Borrower.

 

(e) Notes.  Loans shall be evidenced by one or more Notes.  The date, amount and maturity of each Lender’s Loans and payments and other particulars with respect thereto may be endorsed on schedule(s) attached to its Note by such Lender and/or recorded on one or more loan accounts or records maintained by Lender in the ordinary course of business.  Such Notes, loan accounts and records shall be prima facie evidence absent manifest error of the amount of such Loans and payments thereon.  Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of Borrower to pay any amount owing with respect to the Loans.

 

2.02. Prepayments.

 

(a) Voluntary.  Upon Requisite Notice to Administrative Agent not later than the Requisite Time therefor, Borrower may at any time and from time to time voluntarily prepay Loans in part (in a minimum amount of $250,000 or a higher integral multiple of $50,000) or in full, without premium or penalty.  Any prepayment of any Loan shall be accompanied by all accrued (but unpaid) interest thereon.  All voluntary prepayments of the Term Loan shall be applied pro rata to the then remaining scheduled payments of principal due with respect thereto (including, without limitation, the payment due on the maturity thereof).

 

(b) Mandatory Prepayment if Commitment Exceeded.  If at any time the aggregate outstanding principal amount of Revolving Loans exceeds the Revolving Loan Commitment then in effect, Borrower shall immediately prepay Revolving Loans in an amount equal to such excess, together with accrued (but unpaid) interest thereon.

 

(c) Other Mandatory Prepayments.  In addition to the payments required by Section 2.03(b) hereof, Borrower shall (subject to Section 2.02(d) below) make mandatory prepayments of the Term Loan as set forth below, all of which shall be without premium or penalty.  Subject to Section 2.02(d) below, all such prepayments required under clauses (i) and (ii) below shall be applied pro rata to the remaining scheduled payments of principal due under the Term Loan (including, without limitation, the payment due on the Maturity Date thereof).  To the extent any amounts remain after such application, other than any amounts remaining as a result of one or more Lenders declining prepayment pursuant to Section 2.02(d), such amounts may be retained by Borrower.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(i) Asset Sales.  No later than the tenth Business Day following the date of receipt by Borrower or any of its Domestic Subsidiaries of any Net Asset Sale Proceeds (or on the 271st day if the first proviso hereto applies) if such Net Asset Sale Proceeds are equal to or in excess of $1,000,000 received in any fiscal year through the applicable date of determination, Borrower shall prepay, subject to the provisions of Section 2.02(d) below, the Term Loan in an aggregate amount equal to such Net Asset Sale Proceeds;  provided that, so long as no Event of Default shall have occurred and be continuing, Borrower need not so apply such Net Asset Sale Proceeds so long as Borrower or one or more of its Subsidiaries invests such Net Asset Sale Proceeds within two hundred seventy (270) days of receipt thereof in assets of the general type used in the business of Borrower and its Subsidiaries (including acquisitions of assets by way of stock purchase, merger or acquisition of assets of a company or business unit in compliance with Section 7.03); provided, further, pending any such investment all such Net Asset Sale Proceeds shall be invested in Cash or Cash Equivalents and deposited in an account at Opus Bank and held therein until such time as such Net Asset Sale Proceeds are applied in payment of such investment; provided, further, that so long as no Event of Default shall have occurred and be continuing, Borrower need not so apply such Net Asset Sale Proceeds from any disposition or sale pursuant to a Customer Resale Transaction.

 

(ii) Insurance/Condemnation Proceeds.  No later than the tenth Business Day following the date of receipt by Borrower or any of its Subsidiaries (or on the 271st day if the first proviso hereto applies), or Administrative Agent, as loss payee, of any Net Insurance/Condemnation Proceeds equal to or in excess of $250,000 received in any fiscal year through the applicable date of determination, Borrower shall prepay, subject to the provisions of Section 2.02(d) below, the Term Loan in an aggregate amount equal to such Net Insurance/Condemnation Proceeds equal to or in excess of $250,000;  provided that so long as no Event of Default shall have occurred and be continuing, Borrower need not so apply such Net Insurance/Condemnation Proceeds so long as Borrower or one or more of its Subsidiaries invests such Net Insurance/Condemnation Proceeds within two hundred seventy (270) days of receipt thereof in assets of the general type used in the business of Borrower and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets thereof;  provided, further, that pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be invested in Cash or Cash Equivalents and deposited in an account at Opus Bank and held therein until such time as such Net Insurance/Condemnation Proceeds are applied in payment of such investment.

 

(d) Lenders’ Right to Decline Certain Mandatory Prepayments.  Each Lender has the right to decline requiring Borrower to pay to it the mandatory prepayment(s) described in Sections 2.02(c) above.  Upon receipt by the Administrative Agent of any such prepayment of the Term Loan, the amount of the prepayment that is available to prepay the Term Loan (the “Prepayment Amount”) shall be deposited in a cash collateral Account on terms reasonably satisfactory to the Administrative Agent and Borrower, pending application of such amount on the date on which such prepayment shall be made (the “Prepayment Date”), which date shall be ten (10) Business Days after the date of such receipt.  Any Lender declining such prepayment (a “Declining Lender”) shall give written notice to the Administrative Agent by 11:00 a.m. on the Business Day immediately preceding the Prepayment Date.  On the Prepayment Date, an amount equal to that portion of the Prepayment Amount accepted by the Term Loan Lenders other than the Declining Lenders (such Lenders being the “Accepting Lenders”) to prepay Term Loans owing to such Accepting Lenders shall be withdrawn from the applicable cash collateral account and applied ratably to prepay Term Loans owing to such Accepting Lenders in the manner described in the first paragraph of Section 2.04(b), for such prepayment.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

2.03. Principal and Interest.

 

(a) Except as otherwise provided hereunder, if not sooner paid, Borrower agrees to pay to Lender the outstanding principal amount of each Loan on the Maturity Date.

 

(b) Borrower shall repay the principal of the Term Loan as follows on the first day of each month, beginning one year after the Term Loan Funding Date (with the first day of the first month following the one-year anniversary of the Term Loan Funding Date being referred to herein as the “First Principal Prepayment Date”):

 

	
Dates

	 	
Principal Prepayment Amount

	 
	
From the Closing Date up to and not including the First Principal Prepayment Date

	 	$	0	 
	
First day of months 13 through and including month 30 following the First Principal Prepayment Date

	 	$	277,778	 
	
First day of months 31 through and including month 50 following the First Principal Prepayment Date

	 	$	500,000	 
	
First day of each month thereafter prior to the Maturity Date (Term Loan)

	 	$	750,000	 
	
Maturity Date (Term Loan)

	 	
Remaining principal amount outstanding under the Term Loan at such time

	 

(c) Subject to subsection (d) below, and unless otherwise specified herein, Borrower shall pay interest on the unpaid principal amount of each Loan (before and after default, before and after maturity, before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Laws) from the date borrowed until paid in full (whether by acceleration or otherwise) in arrears on each Payment Date at a rate per annum equal to the Interest Rate (for the avoidance of doubt, the first interest payment shall be made on  September 1, 2015).

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(d) While any Event of Default exists or after acceleration, Borrower shall pay to Lender interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of all Outstanding Obligations, at the Default Rate.

 

(e) In addition to interest as set forth herein, Borrower shall pay to Lender a late charge equal to five percent (5%) of any amounts due under the Loan in the event any such amount is not paid within one (1) day after the date when due.

 

2.04. Fees.

 

(a) Facility Fee.  Borrower shall pay to Administrative Agent (for the account of each Revolving Loan Lender according to its Pro Rata Share) a facility fee equal to 0.25% per annum on the daily average unused amount of the Revolving Loan Commitment, computed on a quarterly basis in arrears on the last day of each calendar quarter.  Such facility fee shall accrue from the Closing Date (including at any time during which one or more conditions in Section 4 are not met) to the Maturity Date and shall be due and payable quarterly in arrears on the first calendar day of each succeeding calendar quarter and on the Maturity Date.

 

(b) Other Fees.  Borrower shall pay to Administrative Agent such other fees, in such amounts and at such times as are set forth in that certain “financing proposal” (and attached Terms and Conditions) dated August 11, 2015 between Borrower and Opus Bank

 

2.05. Change or Termination of Commitments.  Upon Requisite Notice to Lender not later than the Requisite Time therefor, Borrower may at any time and from time to time, without premium or penalty, permanently and irrevocably reduce the Revolving Loan Commitment in a minimum amount of $250,000 or a higher integral amount of $50,000 or terminate the Revolving Loan Commitment.

 

2.06. Computation of Interest and Fees.  Computation of all types of interest and all fees shall be calculated on the basis of a year of 360 days and the actual number of days elapsed.

 

2.07. Making Payments.

 

(a) Except as otherwise provided herein, by no later than November 30, 2015, all payments by Borrower hereunder shall be made via automatic payment from the Designated Deposit Account.  All payments received after the Requisite Time shall be deemed received on the next succeeding Business Day.  All payments shall be made in immediately available funds in lawful money of the United States of America.  All payments by Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.

 

(b) Upon satisfaction of any applicable terms and conditions set forth herein, Administrative Agent shall promptly make  any amounts received in accordance with the prior subsection available in like funds as received by wire transfer to each Lender at its Lending Office.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(c) If any payment to be made by Borrower shall come due on a day other than a Business Day, payment shall instead be considered due on the next succeeding Business Day, and such extension of time shall be reflected in computing interest and fees.

 

(d) If Administrative Agent or any Lender is required at any time to return to Borrower, or to a trustee, receiver, liquidator, custodian, or any official under any proceeding under Debtor Relief Laws, any portion of a payments made by Borrower, each Lender shall, on demand of Administrative Agent, return its share of the amount to be returned, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the daily Prime Rate.

 

2.08. Funding Sources.  Nothing in this Agreement shall be deemed to obligate Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

 

2.09. Collateral.  The Obligations are secured by the Security Documents.

 

2.10. Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a) fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.04; and

 

(b) the Commitment of such Defaulting Lender shall not be included in determining whether the Requisite Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 10.01).

 

In the event that the Administrative Agent and the Borrower each agrees, acting in good faith and a commercially reasonable manner, that a Defaulting Lender has adequately remedied all matters that caused such Defaulting Lender to be a Defaulting Lender, on such date such Lender shall purchase at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Commitment.

 

 

SECTION 3

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01. Taxes.

 

(a) Any and all payments by Borrower to or for the account of Administrative Agent  or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto (“Taxes”), excluding the following (collectively, “Excluded Taxes”):  (i) franchise taxes and Taxes imposed or measured by Administrative Agent’s or Lender’s (as the case may be) net income, that are imposed on it by the jurisdiction (or any political subdivision thereof) (A) under the Laws of which Administrative Agent or Lender (as the case may be) is organized or maintains a lending office, or (B) with which the Administrative Agent or such Lender otherwise has a present or former connection (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, any Loan Document); (ii) any branch profits Tax imposed by the United States or any similar Tax imposed by another jurisdiction in which Borrower is located; (iii) any taxes that are attributable to Administrative Agent’s or such Lender’s failure or inability to comply with Section 3.01(e) below; (iv) United States withholding Taxes required to be imposed on amounts payable to Administrative Agent or any Lender pursuant to the Laws in force at the time Administrative Agent or such Lender becomes a party to this Agreement, except, if Lender designates a new Lending Office or becomes a party to this Agreement pursuant to an assignment, withholding Taxes shall not be Excluded Taxes to the extent that such Taxes were not Excluded Taxes with respect to Lender or its assignor, as the case may be, immediately before such designation of a new Lending Office or assignment; (v) United States withholding taxes imposed by FATCA; and (vi) any penalties, interest, costs and expenses (including Attorney Costs) imposed on Administrative Agent or any Lender arising from the assertion by any Governmental Authority that Administrative Agent or such Lender did not properly withhold any Tax.  If Borrower is required by any Law to deduct any Taxes other than Excluded Taxes (“Indemnified Taxes”) from or in respect of any sum payable under any Loan Document to Lender, (A) the sum payable shall be increased as necessary so that after making all required deductions of Indemnified Taxes (including deductions applicable to additional sums payable under this Section), Lender receives an amount equal to the sum it would have received had no such deductions been made, (B) Borrower shall make such deductions, (C) Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (D) within thirty (30) days after the date of such payment, Borrower shall furnish to Administrative Agent or such Lender the original or a certified copy of a receipt evidencing payment thereof.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(b) In addition, Borrower agrees to pay any and all present or future stamp, excise, court, or documentary Taxes, charges or similar levies, which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document, other than Taxes that are imposed with respect to an assignment and that are imposed as a result of a pre-existing connection between the Administrative Agent or Lender and the jurisdiction imposing the Tax (such Taxes that Borrower agrees to pay hereinafter referred to as “Other Taxes”).

 

(c) If Borrower shall be required by the Laws of any jurisdiction outside the United States to deduct any Indemnified Taxes from or in respect of any sum payable under any Loan Document to Lender, Borrower shall also pay to Administrative Agent (for payment to the applicable Lender), at the time interest is paid, such additional amount that such Lender specifies as necessary to preserve the after-tax yield (after factoring in United States (federal and state) Taxes imposed on or measured by net income, and taking into account any foreign tax credits available under Sections 901 through 903 of the Code or similar credit or exemption under a similar state law attributable to Borrower’s payment of such Indemnified Taxes) such Lender would have received if such deductions (including deductions applicable to additional sums payable under this Section) had not been made.  A certificate that such Lender delivers to Borrower as to any such additional amount shall be conclusive absent manifest error.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(d) Without duplication of any amounts payable under clauses (a), (b) or (c) above, Borrower agrees to indemnify, defend and hold Administrative Agent and each Lender harmless for (i) the full amount of Indemnified Taxes and Other Taxes (including any Indemnified Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by Administrative Agent and/or such Lender; and (ii) any liability (including penalties, interest and expenses) arising therefrom or with respect thereto; provided that (A) Borrower shall not be obligated to indemnify the Administrative Agent or any Lender for any interest or penalties described in clause (ii) above (and such interest and penalties shall be considered Excluded Taxes) to the extent the Administrative Agent or such Lender (1) had actual knowledge of the existence of the Tax, interest, or expense, the non-payment of which gave rise to such interest or penalties, and (2) failed to give Borrower notice of such Tax, interest or expense within ten (10) Business Days after the Administrative Agent or such Lender received actual knowledge of the existence thereof; and (B) nothing contained in this subsection (d) shall be deemed to imply any obligation on the part of the Administrative Agent or such Lender to provide Borrower with the notice of any such Tax, penalty, interest or expense.  Payment under this subsection (d) shall be made within thirty (30) days after the date the Lender makes a demand therefor.

 

(e) Each Lender, on or prior to the Closing Date, upon the effectiveness of any assignment or designation of a new Lending Office, and from time to time thereafter if reasonably requested in writing by Borrower, shall provide Borrower with (i) if such Lender is not a “United States Person” as that term is defined in Section 7701(a)(30) of the Code (“U.S. Person”) (a “Non-U.S. Lender”), a complete and properly executed IRS Form W-8BEN, W-8BEN-E, W-8ECI or W-8IMY (including all required accompanying information), as appropriate, or any successor form prescribed by the IRS (including a United States taxpayer identification number), certifying that such Non-U.S. Lender is entitled to benefits under an income Tax treaty to which the United States is a party that reduces the rate of withholding Tax on payments of interest, certifying that such Non-U.S. Lender is eligible for the “portfolio interest exemption” or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States or (ii) if Lender is a U.S. Person, an IRS Form W-9 or any successor form prescribed by the IRS. If a payment made by Borrower to Lender would be subject to U.S. federal withholding Tax imposed by FATCA if Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower at the time or times prescribed by law and at such time or times reasonably requested by Borrower such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower as may be necessary for Borrower to comply with its obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  In addition, each Lender will (A) take all actions reasonably requested in good faith by Borrower in writing that are consistent with applicable legal and regulatory restrictions to claim any available reductions or exemptions from Indemnified Taxes or Other Taxes and (B) otherwise cooperate with Borrower to minimize any amounts payable by Borrower under this Section 3.01; provided that, in each case, any out-of-pocket cost relating directly to such action or cooperation requested by Borrower shall be borne by Borrower, and no Lender shall be required to take any action that it determines in its sole good faith discretion may be adverse in any non de minimis respect to it and not indemnified to its satisfaction.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(f) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 3.01 (including by the payment of additional amounts pursuant to this Section 3.01), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (f) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid.  This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

 

3.02. Increased Cost and Reduced Return; Capital Adequacy.  If any Lender determines that any change in or the interpretation of any Laws announced after the date hereof have the effect of reducing the rate of return on the capital of such Lender or compliance by such Lender (or its Lending Office) or any corporation controlling such Lender as a consequence of such Lender’s obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender’s desired return on capital), then from time to time upon demand of such Lender (with a copy to Administrative Agent), Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction; provided that (a) Borrower shall not be required to pay such additional amounts to compensate any Lender for (i) any Excluded Taxes or any liabilities excluded from the definition of Indemnified Taxes by Section 3.01, (ii) any reduction in connection with any penalties, interest, costs and expenses (including Attorney Costs) arising from the assertion by any Governmental Authority that such Administrative Agent did not properly withhold any Tax or other amount from payments made in respect of any Lender, or (iii) any change in the rate of applicable Taxes imposed on or measured by net income, and (b) notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to have been implemented after the date hereof.

 

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

3.03. Matters Applicable to all Requests for Compensation.  Administrative Agent, or any Lender, if claiming compensation under this Section 3, shall deliver to Borrower a certificate (i) setting forth in reasonable detail the additional amount or amounts to be paid to it hereunder, which shall be conclusive in the absence of clearly demonstrable error and (ii) certifying that Administrative, or Lender, as applicable, is generally taking comparable action with respect to its other borrowers in similar circumstances.  In determining such amount, Lenders may use any reasonable averaging and attribution methods.

 

3.04. Survival.  All of Borrower’s obligations under this Section 3 shall survive the termination and payoff of the Obligations for a period of three (3) years after such payoff.

 

 

SECTION 4

CONDITIONS PRECEDENT TO EXTENSION OF CREDIT

 

4.01. Conditions of Extension of Credit.  The effectiveness of this Agreement and the obligations of each Lender to make its initial Loan hereunder are subject to satisfaction of the following conditions precedent:

 

(a) Unless waived by Administrative Agent and Lenders, Administrative Agent’s receipt of the following, each of which shall be originals or facsimiles, including pdfs or similar electronic transmission (followed promptly by originals, provided that the Notes must be delivered as originals and not facsimiles or pdfs) unless otherwise specified, each properly executed by a Senior Officer of Borrower or the applicable Guarantor, each dated on, or in the case of third-party certificates, dated on or as of a recent date before, the Closing Date and each in form and substance satisfactory to Administrative Agent, each Lender and their legal counsel:

 

(i) executed counterparts of this Agreement, sufficient in number for distribution to each Lender and Borrower;

 

(ii) executed original Notes executed by Borrower in favor of each Lender, each in the principal amount equal to such Lender’s Term Loan Commitment and the Revolving Loan Commitment, respectively;

 

(iii) executed original counterparts of the Guaranty executed by each Subsidiary that is required to be a Guarantor as of the Closing Date;

 

(iv) executed original counterparts of the Subordination Agreements, each in form and substance satisfactory to Administrative Agent;

 

  

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Fusion NBS Acquisition Corp.                                                  Credit Agreement

 

(v) executed original counterparts of each of the Security Documents (excluding any Deposit Account Control Agreement) together with all filings to be filed substantially contemporaneously therewith (including filings with respect to intellectual property with any applicable Governmental Authority but excluding the filings required in order for the Guarantee of NBS to become effective) deemed necessary or desirable by the Administrative Agent in order to perfect the Liens created thereby;

 

(vi) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Senior Officers of Borrower and each Guarantor as Administrative Agent may require to establish the identities of and verify the authority and capacity of each Senior Officer thereof authorized to act as a Senior Officer thereof;

 

(vii) such evidence as Administrative Agent and any Lender may reasonably require to verify that Borrower and each Guarantor is duly organized or formed, validly existing, in good standing and qualified to engage in business in Borrower’s or such Guarantor’s jurisdiction of organization and in each foreign jurisdiction in which Borrower or such Guarantor is required to be qualified, including copies of Borrower’s and each Guarantor’s Organization Documents certified by the corporate Secretary, certificates of good standing and/or qualification to engage in business, tax clearance certificates, and the like;

 

(viii) a Perfection Certificate signed by a Senior Officer of Borrower;

 

(ix) a certificate signed by a Senior Officer of Borrower certifying that (A) the representations and warranties made by each Loan Party in the Loan Documents are true and correct on and as of the Closing Date (except to the extent such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date), (B) each Loan Party is in compliance with all the terms and provisions of the Loan Documents to which it is a party, and no Default or Event of Default shall have occurred and be continuing, and (C) since December 31, 2014, there has been no event or circumstance which has or has had a Material Adverse Effect;

 

(x) evidence that all Debt to be Repaid has been (or, concurrently with the making of the initial Loans on the Closing Date will be) paid in full, and all Liens securing such Debt to be Repaid have been (or, concurrently with the payment in full of such Debt to be Repaid will be) released;

 

(xi) satisfactory completion of each Lender’s due diligence, including satisfactory completion by Administrative Agent of a collateral field audit;

 

(xii) a written opinion of legal counsel to the Loan Parties;

 

  

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Fusion NBS Acquisition Corp.                            Credit Agreement

 

(xiii) copies of all inspection reports and collateral audits related to the Collateral as the Administrative Agent deems necessary in its sole discretion;

 

(xiv) receipt of certificates of insurance required to be maintained under Section 5.14 or under any other Loan Documents, from insurance carriers acceptable to the Administrative Agent, which certificates of insurance are in such forms and amounts acceptable to the Administrative Agent under insurance policies with loss payable clauses in favor of Administrative Agent Lender; and

 

(xv) such other assurances, certificates, documents, consents or opinions as Administrative Agent reasonably may require.

 

(b) Any fees (including fees required to be paid on or before the Closing Date as specified in the Proposed Terms referred to in the “financing proposal” dated August 11, 2015 between Borrower and Opus Bank) shall have been paid.

 

(c) Unless waived by Administrative Agent, Borrower shall have paid all Attorney Costs of Administrative Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of Attorney Costs as shall constitute its reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude final settling of accounts between Borrower and Administrative Agent).

 

4.02. Conditions to Each Loan.  In addition to the applicable conditions precedent set forth elsewhere in this Section 4, the obligation of Lenders to make any Loan is subject to the satisfaction of the following conditions precedent:

 

(a) Lender shall have received a notice of borrowing with respect to such Loan, substantially in the form of Exhibit A, attached hereto (a “Notice of Borrowing”); and

 

(b) Both before and after giving effect to such Loan, (i) the representations and warranties of Borrower in Section 5 shall be true and correct (or in all material respects for such representations and warranties that are not by their terms already qualified as to materiality) on and as of the date of such Loan, except to the extent that any such representation and warranty relates to a specific earlier date, in which case such representation and warranty shall be true and correct (or in all material respects for such representations and warranties that are not by their terms already qualified as to materiality) as of such earlier date, and (ii) no Default or Event of Default shall exist or result from such Loan.  The making of each Loan shall be deemed to be a representation and warranty by Borrower on the date thereof as to the matters contained in the foregoing sentence.

 

4.03. Conditions to Term Loan.   In addition to the applicable conditions precedent set forth elsewhere in this Section 4, the obligation of Lenders to make any Loan is subject to the satisfaction of the following conditions precedent:

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(a) the Administrative Agent shall have received:

 

(i) evidence, reasonably satisfactory to the Administrative Agent, that the Borrower has completed, or concurrently with the making of the Term Loans will complete, the Target Transaction in accordance with the terms of the Acquisition Documents (without any material amendment thereto or waiver thereunder unless consented to by the Administrative Agent).  All material and necessary authorizations, consents, approvals, exceptions or other actions by or notices to or filings with any court or administrative or governmental body or other Person required in connection with the execution, delivery or performance of the Acquisition Agreement and related documents or the consummation of the Target Transaction shall be final and in full force and effect and shall be in form and substance satisfactory to Administrative Agent.  Administrative Agent shall have received a copy of the Acquisition Agreement and all instruments, documents and agreements related thereto, certified in an Officer’s Certificate, dated the Term Loan Funding Date, as correct and complete;

 

(ii) evidence reasonably satisfactory to it that (1) the sum of the aggregate purchase price under the Target Transaction is not in excess of $32,000,000, (2) the aggregate fees and expenses payable by the Borrower with respect to the Target Transaction will not exceed $1,500,000, and (3) there has been no Material Adverse Effect with respect to any Loan Party since December 31, 2014;

 

(iii) pro forma/projected financial statements of the Loan Parties and a pro forma calculation of the financial covenants contained in Section 7.11 (in each case giving effect to the Target Transaction and the funding of the Term Loans on the Term Loan Funding Date) showing pro forma compliance with the terms of Section 7.11 hereof, in form and substance satisfactory to Administrative Agent in its reasonable discretion;

 

(iv) a quality of earnings report reasonably acceptable to Administrative Agent and the Requisite Lenders in all respects;

 

(v) a written opinion of legal counsel to the Loan Parties;

 

(vi) evidence reasonably satisfactory to it that all requirements of Section 6.14 have been satisfied; and

 

(vii) confirmation of the satisfactory completion of each Lender’s due diligence, including satisfactory completion by Administrative Agent of results (satisfactory in form and substance to Administrative Agent and Requisite Lenders) of all due diligence items requested and reviewed in connection with the Target Transaction and the Acquisition Agreement and related documents.

 

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

SECTION 5

REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants to Administrative Agent and Lenders that:

 

5.01. Existence and Qualification; Power; Compliance with Laws.

 

(a) Borrower is a corporation duly formed, validly existing and in good standing under the Laws of the State of Delaware, has the power and authority and the legal right to own, lease and operate its properties and to conduct its business as currently conducted.  Borrower is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by Law, and is in compliance with all Laws, except to the extent that noncompliance or non-qualification could not reasonably be expected to have a Material Adverse Effect.  Each Guarantor and each Subsidiary of Borrower is a corporation or other legal entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, has the corporate power and authority and the legal right to own, lease and operate its properties and to conduct its business as currently conducted, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by Law and is in compliance with all Laws except to the extent that noncompliance or non-qualification could not reasonably be expected to have a Material Adverse Effect.

 

(b) Schedule 5.01 attached hereto lists, as of the Closing Date, each of the Subsidiaries of Parent and each other Guarantor, including a notation identifying each Material Subsidiary and each First Tier Foreign Subsidiary, if any.

 

(c) Immediately after giving effect to the Target Transaction on the Term Loan Funding Date, Borrower will own one hundred percent (100%) of the Equity Securities of each of the Target Companies.

 

5.02. Power; Authorization; Enforceable Obligations.  Borrower has the organizational power and authority and the legal right to make, deliver and perform each Loan Document to which it is a party and Borrower has the organizational power and authority to borrow hereunder and has taken all necessary action to authorize the borrowings on the terms and conditions of this Agreement and to authorize the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party.  Each Guarantor party to a Loan Document has the corporate or other organizational power and authority and the legal right to make, deliver and perform each Loan Document to which it is a party and each such Guarantor has the corporate or other organizational power and authority and has taken all necessary action to authorize the execution, delivery and performance of the Loan Documents to which it is a party.  Except for the filings noted on Schedule 5.02 with respect to the enforceability of the Guaranty by NBS, no consent or authorization of, filing with, or other act by or in respect of, any Governmental Authority is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the other Loan Documents, except (i) those that have been made, (ii) actions permitted by the Loan Documents to be taken after the Closing Date that may be required to perfect security interests in the Collateral and (ii) actions required under applicable securities Laws in connection with the Disposition of Collateral subject to such Laws.  The Loan Documents have been duly executed and delivered by each respective Loan Party and each Subsidiary party thereto, and constitute legal, valid and binding obligations of each such Loan Party and each such Subsidiary, enforceable against such Loan Party and such Subsidiary in accordance with their respective terms.  Schedule 5.02 lists each consent required from any Governmental Authority in order for the Guaranty of NBS to be fully enforceable against NBS.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

5.03. No Legal Bar.  The execution, delivery, and performance by each Loan Party and each Subsidiary of the Loan Documents to which it is a party and compliance with the provisions thereof have been duly authorized by all requisite action on the part of each such Loan Party and each such Subsidiary and do not and will not (a) violate or conflict with, or result in a breach of, or require any consent under (i) any Organization Documents of each Loan Party or any of its Subsidiaries, (ii) any material applicable Laws, rules, or regulations or any order, writ, injunction, or decree of any Governmental Authority or arbitrator, or (iii) any material Contractual Obligation of any Loan Party or any of its Subsidiaries or by which any of them or any of their property is bound or subject, (b) constitute a default under any such material agreement or instrument, or (c) result in, or require, the creation or imposition of any Lien on any of the properties of any Loan Party or any of its Subsidiaries (other than the Liens granted in connection herewith).

 

5.04. Financial Statements; No Material Adverse Effect; Solvency.

 

(a) The consolidated financial statements of the Parent and its Subsidiaries as of December 31, 2013 and December 31, 2014 (i) were prepared in accordance with GAAP consistently applied throughout the periods covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of the Parent and its Subsidiaries as of the dates thereof and their results of operations for the periods covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) to the extent required by GAAP, show all material indebtedness and other liabilities, direct or contingent, of the Parent and its Subsidiaries as of the dates thereof, including liabilities for Taxes, material commitments and Indebtedness in accordance with GAAP consistently applied throughout the periods covered thereby.

 

(b) Since December 31, 2014, there has been no event or circumstance which has or has had a Material Adverse Effect.

 

(c) On the date hereof, and after giving effect to all Loans made on the date hereof and the use of proceeds thereof, Borrower is, and the Loan Parties on a consolidated basis are, Solvent. On the Term Loan Funding Date, after giving effect to all Loans made on and prior to the Term Loan Funding Date and the use of proceeds thereof, Borrower will be, and the Loan Parties on a consolidated basis will be, Solvent.

 

5.05. Litigation.  Except as disclosed in Schedule 5.05, no litigation, investigation or proceeding of or before an arbitrator or Governmental Authority is pending or, to the best knowledge of Borrower after due and diligent investigation, threatened by or against any Loan Party or any of its Subsidiaries or against any of their properties or revenues which could reasonably be expected to have a Material Adverse Effect.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

5.06. No Default.  Neither Borrower, any Loan Party nor any its Subsidiaries are in default under or with respect to any Contractual Obligation which could reasonably be expected to have a Material Adverse Effect, and no Default or Event of Default has occurred and is continuing or will result from the consummation of this Agreement or any of the other Loan Documents, the consummation of the transactions contemplated hereby or thereby or the making of the Loans hereunder.

 

5.07. Ownership of Property; Liens.  Each Loan Party and its Subsidiaries have (a) valid fee or leasehold interests or valid licenses in all real property which they use in their respective businesses and (b) good and marketable title to all their other property, and none of such property is subject to any Lien, except as permitted in Section 7.02.

 

5.08. Taxes.  Except as specified in Schedule 5.08, each Loan Party and its Subsidiaries have filed all federal, state and other material tax returns which are required to be filed, and have paid, or made provision for the payment of, all Taxes with respect to the periods, property or transactions covered by said returns, or pursuant to any assessment received by any Loan Party or its Subsidiaries, except such Taxes, if any, as are being contested in good faith by appropriate proceedings and as to which adequate reserves have been established and maintained and no item or portion of property of any Loan Party or any of its Subsidiaries is in jeopardy of being seized, levied upon or forfeited as a result thereof.

 

5.09. Margin Regulations; Investment Company Act.

 

(a) Loan Parties are not engaged, nor will Loan Parties engage, principally or as one of their important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board as now and from time to time hereafter in effect.  No part of the proceeds of any Loan hereunder will be used for “purchasing” or “carrying” “margin stock” as so defined or for any purpose which violates, or which would be inconsistent with, the provisions of Regulations U or X of the Board.

 

(b) No Loan Party nor any of their Subsidiaries is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

 

5.10. ERISA Compliance.

 

(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state Laws.  Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification.  Borrower and each ERISA Affiliate have made all required contributions to each 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.  There has been no prohibited transaction (which is not otherwise exempt under Section 4975 of the Code) or violation of the fiduciary responsibility rules under ERISA with respect to any Plan that has or could reasonably be expected to have a Material Adverse Effect.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(b) (i) No ERISA Event has occurred or, to the best knowledge of Borrower with respect to any ERISA Affiliate, is reasonably expected to occur; (ii) no Pension Plan has any material Unfunded Pension Liability; (iii) neither Borrower nor any ERISA Affiliate, has incurred or, to the best knowledge of Borrower with respect to any ERISA Affiliate 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) neither Borrower 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 Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

 

5.11. Intangible Assets.  Each Loan Party and its Subsidiaries own, or possess the right to use, all trademarks, trade names, copyrights, patents, patent rights, franchises, licenses and other intangible assets that are necessary in the conduct of their respective businesses as now operated, and none of such items, to the best knowledge of Borrower, conflicts in any material respect with the valid trademark, trade name, copyright, patent, patent right or intangible asset of any other Person.

 

5.12. Compliance With Laws.  Each Loan Party and its Subsidiaries are in compliance in all material respects with all material Laws that are applicable to such Person.

 

5.13. Environmental Compliance.  No claims or notices alleging potential liability or responsibility for violation of any Environmental Law have been alleged or filed against any Loan Party or with respect to their respective businesses. 

 

5.14. Insurance.  The properties of each Loan Party and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where any Loan Party or such Subsidiary operates.

 

5.15. Disclosure.  No statement, information, report, representation, or warranty made by Borrower or any Subsidiary in any Loan Document or furnished in writing to Administrative Agent or any Lender in connection with any Loan Document contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading (it being recognized by Administrative Agent  and each Lender that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

 

5.16. USA PATRIOT Act, Foreign Assets Control Regulations, Etc.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(a) Neither the Loans contemplated hereunder nor the use of the proceeds thereof will violate the Anti-Terrorism Order, the USA PATRIOT Act, the Trading with the Enemy Act, as amended, or any U.S. Economic Sanctions or any enabling legislation or executive order relating thereto. Borrower has provided to Administrative Agent all information related to each Loan Party (including but not limited to names, addresses and tax identification numbers (if applicable)) reasonably requested in writing by the Administrative Agent, as required by regulatory authorities under applicable “know your customer” rules and regulations and other Anti-Money Laundering Laws, including, without limitation, the USA PATRIOT Act, and Borrower and its Subsidiaries are in compliance, in all material respects, with the USA PATRIOT Act.

 

(b) Neither Borrower nor any Controlled Entity is a Blocked Person, and neither Borrower nor any Controlled Entity has been notified that its name appears or may in the future appear on the SDN List.

 

(c) Neither Borrower nor any Controlled Entity (i) has been found in violation of, charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes under the Anti-Money Laundering Laws or any U.S. Economic Sanction violations, (ii) is under investigation by any Governmental Authority for possible violation of the Anti-Money Laundering Laws or any U.S. Economic Sanctions, (iii) has been assessed civil penalties under any Anti-Money Laundering Laws or any U.S. Economic Sanctions, or (iv) has had any of its funds seized or forfeited in an action under any Anti-Money Laundering Laws. Borrower has established policies to ensure that Parent and each Subsidiary is and will continue to be in compliance with all applicable current and future Anti-Money Laundering Laws and U.S. Economic Sanctions.

 

(d) No part of the proceeds from the Loans hereunder constitutes or will constitute funds obtained on behalf of any Blocked Person or Sanctioned Country or will otherwise be used by Borrower or any Controlled Entity, directly or indirectly, (i) in connection with any investment in, or any transactions or dealings with, any Blocked Person or Sanctioned Country, or (ii) otherwise in violation of any U.S. Economic Sanctions.

 

(e) (i)       Neither Borrower nor any Controlled Entity (aa) has been charged with, or convicted of bribery or any other anti-corruption related activity under any applicable law or regulation in a U.S. or any non-U.S. country or jurisdiction, including but not limited to the Anti-Corruption Laws, (bb) to the best knowledge of Borrower after making due inquiry, is under investigation by any U.S. or non-U.S. Governmental Authority for possible violation of Anti-Corruption Laws, (cc) has been assessed civil or criminal penalties under any Anti-Corruption Laws or (dd) has been or is the target of sanctions imposed by the United Nations or the European Union;

 

(ii) To the best knowledge of Borrower after making due inquiry, neither Borrower nor any Subsidiary has, within the last five years, directly or indirectly offered, promised, given, paid or authorized the offer, promise, giving or payment of anything of value to a governmental official or a commercial counterparty for the purposes of: (aa) influencing any act, decision or failure to act by such governmental official in his or her official capacity or such commercial counterparty, (bb) inducing a governmental official to do or omit to do any act in violation of the governmental official’s lawful duty, or (cc) inducing a governmental official or a commercial counterparty to use his or her influence with a government or instrumentality to affect any act or decision of such government or entity; in each case in order to obtain, retain or direct business or to otherwise secure an improper advantage in violation of any applicable law or regulation or which would cause any holder to be in violation of any law or regulation applicable to such holder; and

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(iii) No part of the proceeds from the Loans hereunder will be used, directly or indirectly, for any improper payments, including bribes, to any governmental official or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage.  Borrower has established policies to ensure that Borrower and each Subsidiary is and will continue to be in compliance with all applicable current and future Anti-Corruption Laws.

 

5.17. Material Contracts. Schedule 5.17 attached hereto lists, as of the Closing Date, each Material Contract of the Loan Parties.

 

5.18. Target Transaction.  On the Term Loan Funding Date:

 

(a) Loan Parties have heretofore furnished the Administrative Agent a true and correct copy of the Acquisition Agreement and other associated documents and there have been no amendments to such Acquisition Agreement or associated documents from the copies so provided.

 

(b) Loan Parties, and, to the Knowledge of a Senior Officer of each Loan Party, each other party to the Acquisition Agreement and associated documents, have duly taken all necessary corporate, partnership or other organizational action to authorize the execution, delivery and performance of the Acquisition Agreement and associated documents and the consummation of transactions contemplated thereby.

 

(c) The Target Transaction will comply in all material respects with all applicable legal requirements, and all necessary governmental, regulatory, creditor, shareholder, partner and other material consents, approvals and exemptions required to be obtained by any Loan Party or any of its Subsidiaries and, to the Knowledge of a Senior Officer of each Loan Party, each other party to the Acquisition Agreement and associated documents in connection with the Target Transaction will be, prior to consummation of the Target Transaction, duly obtained and will be in full force and effect.  As of the date of the closing for the transaction contemplated by the Acquisition Agreement, all applicable waiting periods with respect to the Target Transaction will have expired without any action being taken by any Governmental Authority which restrains, prevents or imposes material adverse conditions upon the consummation of the Target Transaction unless otherwise consented to by the Administrative Agent.

 

(d) The execution and delivery of the Acquisition Agreement and associated documents  did not, and the consummation of the Target Transaction will not, violate in any material respect any statute or regulation of the United States (including any securities law) or of any state or other applicable jurisdiction, or any order, judgment or decree of any court or governmental body binding on any Loan Party or any Subsidiary or, to the Knowledge of a Senior Officer of any Loan Party, any other party to the Acquisition Agreement and associated documents, or result in a breach of, or constitute a default under, any material agreement, indenture, instrument or other document, or any judgment, order or decree, to which any Loan Party or any Subsidiary is a party or by which any Loan Party or any Subsidiary is bound or, to the Knowledge of a Senior Officer of any Loan Party, to which any other party to the Acquisition Agreement and associated documents is a party or by which any such party is bound.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(e) No statement or representation made in the Acquisition Agreement or associated documents by any Loan Party or any Subsidiary or, to the Knowledge of a Senior Officer of any Loan Party, any other Person, contains any untrue statement of a material fact or, when viewed together with Parent’s periodic reports filed under the Exchange Act and the rules and regulations promulgated thereunder, if any, omits to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading in any material respect.

 

(f) No material condition to the consummation of the Target Transaction has been amended or waived without the prior consent of the Administrative Agent (which consent shall not be unreasonably withheld, conditioned or delayed).

 

 

SECTION 6

AFFIRMATIVE COVENANTS

 

So long as any Obligation remains unpaid or unperformed (or, in the case of Sections 6.13 and 6.14, within the time period specified therein) or any Commitment remains outstanding, Borrower shall, and shall (except in the case of Borrower’s reporting covenants set forth in Sections 6.01 and 6.02(a)-(c) and Borrower’s covenants set forth in Sections 6.13 and 6.14), cause each Loan Party and each Subsidiary of a Loan Party, to:

 

6.01. Financial Statements.  Deliver to Administrative Agent and each Lender, in form and detail satisfactory Administrative Agent and Lenders:

 

(a) (i) as soon as available, but in any event within 95 days after the end of each fiscal year (beginning with the fiscal year ending December 31, 2015) of Parent, a consolidated balance sheet of Parent and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, audited and accompanied by a report and opinion of an independent certified public accountant, which report and opinion shall be prepared in accordance with GAAP and shall not be subject to any qualifications or exceptions as to the scope of the audit and accompanied by a Compliance Certificate as required under Section 6.02(a);

 

(b) as soon as available, but in any event within 45 days after the end of each of the first three (3) fiscal quarters of each fiscal year of Parent (beginning with the fiscal quarter ending September 30, 2015), a consolidated balance sheet of Parent and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income and cash flows for such fiscal quarter and for the portion of Parent’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and accompanied by a Compliance Certificate as required under Section 6.02(a); and

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(c) such other financial reports as Administrative Agent or the Requisite Lenders may reasonably request from Borrower, including without limitation,  annual projections, as approved by the Board of Directors of Borrower, for Borrower’s next fiscal year to be delivered within 45 days after the end of each fiscal year of Borrower.

 

6.02. Certificates, Notices and Other Information.  Deliver to Administrative Agent and each Lender, in form and detail reasonably satisfactory to Administrative Agent and Requisite Lenders:

 

(a) concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a Senior Officer of Borrower;

 

(b) to the extent Parent or Borrower files or is required to file the below described reports, communications and/or statements, promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of Parent or Borrower, and copies of all annual, regular, periodic and special reports and registration statements which Parent or Borrower may file or be required to file with the Securities and Exchange Commission under Sections 13 or 15(d) of the Exchange Act, and not otherwise required to be delivered to Lender pursuant hereto;

 

(c) promptly after the occurrence thereof, notice of any Default or Event of Default;

 

(d) notice of any change in accounting policies or financial reporting practices by Parent or any Subsidiary that is material to Borrower or to Borrower and its Subsidiaries on a consolidated basis;

 

(e) promptly after the commencement thereof, notice of any litigation, investigation or proceeding affecting Borrower where the reasonably expected damages to Borrower exceed the Threshold Amount, or in which injunctive relief or similar relief is sought, which relief could reasonably be expected to have a Material Adverse Effect;

 

(f) promptly after the occurrence thereof, notice of any Reportable Event with respect to any Plan or the intent to terminate any Plan, or the institution of proceedings or the taking or expected taking of any other action to terminate any Plan or withdraw from any Plan;

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(g) promptly after the occurrence thereof, notice of any Material Adverse Effect; and

 

(h) promptly, such other data and information as from time to time may be reasonably requested by Administrative Agent or the Requisite Lenders.

 

Each notice pursuant to this Section shall be accompanied by a statement of a Senior Officer of Borrower setting forth details of the occurrence referred to therein and, if applicable, stating what action Borrower has taken and proposes to take with respect thereto.

 

6.03. Payment of Taxes and Claims.  Pay and discharge when due all federal, state and other material Taxes, assessments, governmental charges, levies and claims for sums that have become due and payable, except for any such tax, assessment, charge, levy or claim which is being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP and no item or portion of property of Borrower or any of its Subsidiaries is in jeopardy of being seized, levied upon or forfeited as a result thereof.

 

6.04. Preservation of Existence.  Preserve and maintain its existence, licenses, permits, rights, franchises and privileges necessary or desirable in the normal conduct of its business, except, other than with respect to any Loan Party, (i) as permitted by Section 7.03, or (ii) where failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

6.05. Maintenance of Properties.  Maintain, preserve and protect all of its properties and equipment necessary in the operation of its business in good order and condition, subject to wear and tear in the ordinary course of business, and not permit any material waste of its properties.

 

6.06. Maintenance of Insurance.  Maintain liability and casualty insurance with responsible insurance companies satisfactory to the Administrative Agent in such amounts and against such risks as is customary for similarly situated businesses.

 

6.07. Compliance With Laws.

 

(a) Comply with the requirements of all applicable Laws and orders of any Governmental Authority including, without limitation, ERISA, Environmental Laws, the Anti-Money Laundering Laws, U.S. Economic Sanctions and the Anti-Corruption Laws, the failure to comply with which would reasonably be expected to have a Material Adverse Effect.

 

(b) Prevent itself or any Controlled Entity from (i) becoming a Blocked Person, (ii) using any part of the proceeds of the Loan, directly or indirectly, to lend, contribute, provide, or otherwise make available to fund any activity or business with or related to any Blocked Peron or Sanctioned Country, or in any other manner that will result in any violation or breach by any Person of any U.S. Economic Sanctions and (iii) using any part of the proceeds of the Loan, directly or indirectly, for any payment to any governmental official or employee, political party, official of a political party, candidate for political officer, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the Anti-Corruption Laws.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

6.08. Inspection Rights.  Permit Administrative Agent or any Lender to perform an annual collateral field audit of Borrower’s accounts receivable, inventory and equipment.  In addition, at any time during regular business hours and as often as reasonably requested upon reasonable notice (but not more often than twice in a calendar year unless an Event of Default exists), Borrower shall permit Administrative Agent, or any employee, agent or representative thereof, to examine, audit and make copies and abstracts from Borrower’s records and books of account and to visit and inspect the properties of Borrower and its Subsidiaries, including, but not limited to, an annual collateral field audit on Borrower’s accounts receivable and inventory, and to discuss its affairs, finances and accounts with any of its officers and key employees, and, upon request, furnish promptly to Administrative Agent and each Lender true copies of all financial information and internal management reports made available to their board of directors of Parent (or any committee thereof), other than information and reports that involve the attorney-client privilege.  Borrower shall furnish to Administrative Agent such information concerning the intellectual property of Borrower and its Subsidiaries (including, without limitation, application and registration numbers for any filings in connection with such intellectual property) as is reasonably necessary to permit Administrative Agent to identify and to perfect a security interest in such intellectual property.

 

6.09. Keeping of Records and Books of Account.  Keep adequate records and books of account reflecting all financial transactions in conformity with GAAP, consistently applied, and in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over Borrower or any applicable Subsidiary.

 

6.10. Compliance with ERISA.  Cause, and cause each of its 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.

 

6.11. Compliance With Agreements.  Promptly and fully comply with all Contractual Obligations to which any one or more of them is a party, except for any such Contractual Obligations (a) the nonperformance of which would not cause a Default or Event of Default, (b) then being contested by any of them in good faith by appropriate proceedings, or (c) if the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

 

6.12. Further Assurances.

 

(a) In the event that Borrower or any Domestic Subsidiary creates or acquires (including, for the avoidance of doubt, pursuant to a Permitted Merger) a Domestic Subsidiary that is also a Material Subsidiary, Borrower or such Domestic Subsidiary shall within forty-five (45) days (unless a longer period is agreed to by Administrative Agent) (i) cause such Domestic Subsidiary (aa) to execute and deliver a Guaranty (or a joinder to an existing Guaranty), in form and substance reasonably satisfactory to Administrative Agent, in favor of Administrative Agent and each Lender, and (bb) to execute and deliver a security agreement substantially in the form of the Security Agreement (or a joinder to the Security Agreement), granting a security interest in its assets to secure the Guaranty; (ii) pledge to Administrative Agent the ownership interests of Borrower or such Domestic Subsidiary in such Domestic Subsidiary pursuant to a pledge agreement substantially in the form of the Pledge Agreement; and (iii) deliver to Administrative Agent the outstanding share certificates to the extent such equity interest are certificated (or other evidence of its equity) evidencing such pledged ownership interests; provided, however, in no event shall (1) the aggregate amount of assets for all Domestic Subsidiaries that are not Guarantors and parties to a security agreement referred to in this subsection (a) exceed 10% of the total assets of Borrower and its Subsidiaries as of the last day of the most recent fiscal year of Borrower for which Borrower has delivered audited financial statements and (2) the aggregate amount of revenues for all Domestic Subsidiaries that are not Guarantors and parties to a security agreement exceed 10% of the total revenues of Borrower and its Subsidiaries for the most recent fiscal year of Borrower for which Borrower has delivered audited financial statements and Borrower or such Domestic Subsidiary shall, from time to time, cause such additional Domestic Subsidiaries  to execute and deliver the documents referred to in this subsection (a) and comply with the other provisions of this subsection (a) as required to comply with this proviso.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(b) In the event that Borrower or any Domestic Subsidiary creates or acquires (including, for the avoidance of doubt, pursuant to a Permitted Merger) a First Tier Foreign Subsidiary that is a Material Subsidiary, then Borrower or such Subsidiary shall within forty-five (45) days after such acquisition (i) pledge to Administrative Agent sixty-five percent (65%) of the ownership interests in such First Tier Foreign Subsidiary owned by Borrower or such Domestic Subsidiary pursuant to a pledge agreement substantially in the form of the Pledge Agreement (or such other form as is necessary to comply with applicable Laws where the First Tier Foreign Subsidiary is organized); (ii) deliver to Administrative Agent the outstanding shares certificates (or other evidence of its equity) evidencing such pledged ownership interests; and (iii) take such further actions as Administrative Agent requests to perfect the security interest in such pledged ownership interests.

 

6.13. Use of Proceeds.  (a) Use the proceeds of the Revolving Loan to refinance the Debt to be Repaid and for other lawful general corporate purposes, including Acquisitions in accordance with the terms of this Agreement, capital expenditures and other expenses not otherwise in contravention of this Agreement, and (b) use the proceeds of the Term Loan to finance the Target Transaction.

 

6.14. Post-Closing Requirement.                                                       

 

(a) Provide within ten (10) Business Days after the date of this Agreement a fully executed copies of (i) a Deposit Account Control Agreement with JPMorgan Chase Bank and (ii) a Deposit Account Control Agreement with KeyBank, each in form and substance satisfactory to Administrative  and together covering all deposit accounts held by Parent or any of its Subsidiaries other than deposit accounts maintained at Opus Bank and the two Certificates of Deposit referred to in Section 6.14(d) below,

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(b) Within ten (10) Business Days after the date of this Agreement, NBS’ lockbox account at KeyBank shall have an automatic sweep in place that provides that such lockbox account be automatically swept on a daily basis to the Designated Deposit Account.

 

(c) Within ninety (90) calendar days after the date of this Agreement, Borrower will use commercially reasonable efforts to obtain an executed lien waiver (a “Landlord’s Agreement”) from each landlord, warehouseman, bailee or lessor of each facility leased by Borrower or any Subsidiary in which assets of Borrower or such Subsidiary having an aggregate fair market value in excess of $500,000 are located (including, without limitation, the principal place of business of Borrower), in form and substance reasonably satisfactory to Administrative Agent, each of which shall include, without limitation, the following: (i) waiver of said lessor’s lien rights with respect to any property of the Loan Parties located thereon and (ii) reasonable rights on entry for Administrative Agent (and its agents) to assemble and remove any Collateral located on such premises.

 

(d) Within one hundred twenty (120) days after the date of this Agreement, Borrower shall have (i) obtained all consents and provided all notices listed on Schedule 5.02 and (ii) provided a certificate from a Senior Officer stating that all such consents and notices have been obtained or provided, as applicable and attaching certified copies of each such notice and consent.

 

(e) Within one hundred eighty (180) days after the date of this Agreement, Borrower shall have caused Parent to (i) close each of the two Certificates of Deposit maintained at Signature Bank and (ii) deposit all cash proceeds therefrom into an account with Opus Bank.

 

6.15. Deposit Accounts.  (a) At all times on and after the Closing Date, shall maintain the Designated Deposit Account with Opus Bank and (b) at all times on and after November 30, 2015, maintain all Cash (other than Cash in the lockbox account referred to in Section 6.14(b) above) in accounts, including the Designated Deposit Account, with Opus Bank.

 

6.16. Insurance.  Cause the Administrative Agent to be named as loss payee on all property insurance policies, and each Lender, as so requested, to be named as additional insured on all liability insurance policies, obtained or maintained by or on behalf of Borrower or any of its Subsidiaries.  Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days prior written notice to the Administrative Agent in the event of cancellation of the policy for any reason whatsoever (except cancellation due to non-payment of premiums, for which 10 days’ notice will be provided) and a clause specifying that the interests of the Lender or Administrative Agent, as applicable, shall not be impaired or invalidated by any act or neglect by Borrower or any of its Subsidiaries.  If Borrower fails to provide and pay for such insurance, the Administrative Agent may, at its option, but shall not be required to, procure the same and charge Borrower therefor.

 

SECTION 7

NEGATIVE COVENANTS

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

So long as any Obligations remain unpaid or unperformed or any Commitment remains outstanding, Borrower shall not, nor shall it permit any Loan Party or any Subsidiary to, directly or indirectly:

 

7.01. Indebtedness.  Create, incur, assume or suffer to exist any Indebtedness except for the following (“Permitted Indebtedness”):

 

(a) Indebtedness under the Loan Documents;

 

(b) Indebtedness owing or that may become owing to Prestige Capital Corporation, with respect to the Working Capital Agreement, subject to Section 7.15 of this Agreement and not to exceed $3,000,000 at any one time outstanding, and secured by Liens granted by Parent in favor of Prestige Capital Corporation which are first priority security interests on accounts receivable and other assets of Parent (excluding, in any event, any Lien on any Equity Securities of any Subsidiary);

 

(c) other Indebtedness outstanding on the date hereof and listed on Schedule 7.01 and any refinancings, refundings, renewals or extensions thereof, provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to accrued but unpaid interest plus the premium or other amount paid, and fees and expenses incurred, in connection with such refinancing and by an amount equal to any utilized commitments thereunder, (ii) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to Borrower and its Subsidiaries or the Lender than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and (iii) the weighted average life of the principal payments pursuant to such refinanced, refunded, renewed or extended Indebtedness shall be no shorter than the weighted average life of such payments pursuant to such Indebtedness immediately prior to such refinancing, refunding, renewal or extension;

 

(d) Ordinary Course Indebtedness;

 

(e) Indebtedness of Borrower and its Subsidiaries secured by Liens permitted by Section 7.02(c); provided that in each case, (i) such Indebtedness is incurred by such Person at the time of, or not later than six (6) months after, the acquisition by such Person of the property so financed, (ii) such Indebtedness does not exceed the purchase price of the property so financed, and (iii) the aggregate outstanding principal amount(s) of all such Indebtedness does not exceed $1,000,000 at any time;

 

(f) Indebtedness of Borrower and its Subsidiaries under initial or successive refinancings, refundings, renewals or extensions of any Indebtedness permitted by clause (e) above or this clause (f), provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to accrued but unpaid interest plus the premium or other amount paid, and fees and expenses incurred, in connection with such refinancing, and (ii) the weighted average life of the principal payments pursuant to such refinanced, refunded, renewed or extended Indebtedness shall be no shorter than the weighted average life of such payments pursuant to such Indebtedness immediately prior to such refinancing, refunding, renewal or extension;

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(g) Indebtedness disclosed on Schedule 7.01 including up to $7,000,000 aggregate amount of Indebtedness at any time in respect of equipment financing leases, and any extension, renewal or refinancing thereof; provided that in connection with any such extension, renewal or refinancing: (i) the aggregate principal amount of such Indebtedness is not increased, (ii) the scheduled maturity date of such Indebtedness is not shortened, and (iii) the covenants or defaults are not materially more restrictive or more onerous than analogous provisions in the documentation of such Indebtedness as in effect on the Closing Date; and

 

(h) other unsecured Indebtedness not included in subsections (a) through (f) above and not exceeding, in the aggregate outstanding principal amount at any time, $1,000,000.

 

7.02. Liens.  Incur, assume or suffer to exist, any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for the following (“Permitted Liens”):

 

(a) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof;

 

(b) Ordinary Course Liens;

 

(c) Liens (i) upon or in any equipment and related software acquired (in either case that was not financed by Lender) or held by Borrower or any Subsidiary to secure the purchase price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition of such equipment and related software (including soft costs), (ii) existing on equipment of Borrower or any Subsidiary at the time of its acquisition, provided that such Lien is limited solely to the property so acquired and improvements thereon, and  the proceeds of such equipment and (iii) or rights of a lessor under a Capital Lease;

 

(d) Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in the foregoing clauses (a) through (c) above, provided that the property covered thereby is not increased and the principal amount of the Indebtedness being extended, renewed or refinanced does not increase;

 

(e) Liens on the property or assets of any entity which becomes a Subsidiary of Borrower after the date of this Agreement provided that (i) such Liens exist at the time such entity became a Subsidiary or such assets were acquired, and (ii) such Liens were not created in contemplation of such acquisition by Borrower;

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(f) Liens securing Indebtedness permitted under Section 7.01(b) or Section 7.01(g); and

 

(g) Liens not otherwise permitted hereunder on the property or assets of Borrower and any of its Subsidiaries securing obligations in an aggregate outstanding amount not to exceed $1,000,000 at any time.

 

7.03. Fundamental Changes.  Merge or consolidate with or into any Person or liquidate, wind-up or dissolve itself, or permit or suffer any liquidation or dissolution or sell all or substantially all of its assets, except for the following (each, a “Permitted Merger”):

 

(a) any Subsidiary may merge with Borrower or a Guarantor, provided that Borrower or such Guarantor, as applicable, shall be the continuing or surviving Person;

 

(b) any Subsidiary may merge with any one or more other Subsidiaries, provided that if any such Subsidiary is a Guarantor, such Subsidiary or another Subsidiary that is a Guarantor shall be the continuing or surviving Person; and

 

(c) any Subsidiary that is not a Material Subsidiary may merge or consolidate with or into any other Person or sell all or substantially all of its assets to the extent such transaction constitutes a Disposition otherwise permitted under Section 7.04(a) or 7.04(c) or constitutes an Investment otherwise permitted under Section 7.05(d).

 

7.04. Dispositions.  Make any Dispositions, except:

 

(a) Ordinary Course Dispositions;

 

(b) Dispositions permitted by Section 7.03; and

 

(c) Dispositions not otherwise prohibited hereunder, provided that the aggregate book value of the property so disposed in any fiscal year shall not exceed $1,000,000 in the aggregate.

 

7.05. Investments; Acquisitions.  Make any Investments or Acquisitions, except for the following (“Permitted Investments”):

 

(a) Investments existing on the Closing Date and listed on Schedule 7.05 attached hereto;

 

(b) Ordinary Course Investments;

 

(c) The Target Transaction;

 

(d) Investments permitted by Section 7.01 or Section 7.03; and

 

(e) Investments not otherwise prohibited hereunder, provided that the aggregate amount of such other Investments (less any return on any such Investments) does not at any time exceed $1,000,000.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

7.06. Restricted Payments.  Make any Restricted Payments, except that (a) the Parent may pay dividends or other distributions payable solely in shares of capital stock of Parent, (b) a Loan Party may make Restricted Payments to the Borrower or a Guarantor (other than Parent),  (c) a Subsidiary may make Restricted Payments to Borrower or a Guarantor (other than Parent), (d) Borrower may distribute rights pursuant to a shareholder rights plan or redeem such rights, provided that such redemption is in accordance with the terms of such shareholder rights plan, and (e) Borrower may make Restricted Payments in connection with or pursuant to any of its Employee Benefits Plans or in connection with the employment, termination or compensation of its service providers, employees, officers or directors.

 

7.07. ERISA.  Engage in any transaction which could be subject to Sections 4069 or 4212(c) of ERISA, or permit any Plan to (a) engage in any non-exempt “prohibited transaction” (as defined in Section 4975 of the Code) that has not been corrected within the applicable time period; (b) fail to comply with ERISA or any other applicable Laws; or (c) incur any material “unpaid required contribution” (as defined in Section 302 of ERISA), if any of the foregoing could reasonably be expected to have a Material Adverse Effect.

 

7.08. Change in Nature of Business.  Engage, either directly or indirectly through Affiliates, in any line of business other than the lines of business in which Borrower or such Subsidiary is engaged as of the Closing Date and any other business substantially similar or related thereto (or incidental thereto); or cease to conduct business in the manner conducted by Borrower or such Subsidiary as of the Closing Date.

 

7.09. Transactions with Affiliates.  Enter into or permit to exist any transaction of any kind with any Affiliate of Borrower other than arm’s-length transactions with Affiliates that are otherwise permitted hereunder and except for (i) the payment of customary and reasonable directors’ fees to directors who are not employees of a Loan Party or any Affiliate of a Loan Party as well as the payment of their reasonable out-of-pocket expenses incurred in performing their directorial duties and the payment of indemnities owing to them as directors; or (ii) certain loans by Affiliates to Parent as indicated in Schedule 7.09.

 

7.10. Certain Indebtedness Payments; Amendments to Documents.  Pay, prepay, redeem, purchase, defease or otherwise satisfy in any manner prior to the scheduled payment thereof any Indebtedness of Borrower and its Subsidiaries.

 

7.11. Financial Covenants.

 

(a) Borrower Leverage Ratio.  Permit the Leverage Ratio, as of and for each period of four consecutive fiscal quarters, to be greater than 4.00 to 1.00.

 

(b) Borrower Fixed Charge Coverage.  Permit the Fixed Charge Coverage Ratio, as of and for each period of four consecutive fiscal quarters, to be less than 1.20 to 1.00.

 

(c) Borrower Capital Expenditures.  Contract for, purchase or make any expenditure or commitments for Capital Expenditures in any fiscal year in an aggregate amount in excess of $4,500,000.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(d) Borrower Minimum EBITDA.  Permit Adjusted EBITDA, measured as of the last day of each period of four consecutive fiscal quarters, to be less than $11,000,000.

 

(e) Minimum Parent EBITDA.  Permit Parent EBITDA, measured as of the last day of each period of four consecutive fiscal quarters beginning with the four consecutive fiscal quarters ending December 31, 2016, to be less than $0.

 

(f) Minimum Cash.  Permit the Parent, on a non-Consolidated Basis, at all times from and after December 31, 2015 to have less than $1,000,000 of  (i) Cash Equivalents in excess of the amount of Indebtedness then outstanding under the Working Capital Agreement or (ii) “availability” under the Working Capital Agreement.

 

(g) Maximum Senior Leverage Ratio.  Permit the Senior Leverage Ratio to be greater than (i) 3:00 to 1.00 for each fiscal quarter ending September 30, 2015 through and including the fiscal quarter ending June 30, 2016 or (ii) 2.50 to 1:00 as of the last day of any fiscal quarter beginning with the fiscal quarter ending September 30, 2016 and each quarter thereafter.

 

For purposes of calculating the covenants in this Section 7.11, any Acquisition, including the Target Transaction, (and the incurrence or repayment of any Indebtedness in connection therewith) that has been made either (i) during the applicable period or (ii) subsequent to such period and prior to or simultaneously with the event for which the calculation of any such ratio is made, shall be calculated on a pro forma basis (including pro forma adjustments arising out of anticipated synergies, cost savings and other events directly attributable to such Acquisition that are factually supportable and are expected to have a continuing effect), in form and substance satisfactory to Administrative Agent in its reasonable discretion, assuming that such Acquisition (and any increase or decrease in Adjusted EBITDA or Parent EBITDA and the component financial definitions used therein attributable to such Acquisition) had occurred on the first day of the applicable period.

7.12. Accounting Changes. Without the Administrative Agent’s written consent, which shall not be unreasonably withheld, conditioned or delayed change (i) its fiscal year, or (ii) its accounting practices except as permitted by GAAP, in each case, except to the extent required in order to conform the fiscal year or accounting practices of a Subsidiary to those of Borrower.

 

7.13. Organization Documents.  Amend or modify its Organization Documents in a manner that could reasonably be expected to be adverse to the Lenders with respect to the Obligations, or the Collateral.

 

7.14. Burdensome Agreements.  Enter into any Contractual Obligation (other than this Agreement, the other Loan Documents, the Praesidian Facility, and Indebtedness of Subsidiaries permitted pursuant to Section 7.01) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to Borrower or any Guarantor or otherwise transfer property to Borrower or any Guarantor, (ii) of any Subsidiary to guarantee the Indebtedness of Borrower or (iii) of Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person, except with respect to specific property encumbered to secure payment of particular Indebtedness incurred to finance the acquisition thereof and permitted pursuant to Section 7.01(e); or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

7.15. Business Services.  Permit (i) any accounts receivable from, or any proceeds or payments related to or arising from, Borrower’s Business Services division, as Borrower and its Subsidiaries is conducting as of the date of this Agreement, to be billed by or paid to, or otherwise received or held by, Parent, or (ii) Parent to bill or receive payment (or possess any proceeds thereof) for any services other than for Parent’s Carrier Services division, as Parent is conducting on the date of this Agreement.

 

 

SECTION 8

EVENTS OF DEFAULT AND REMEDIES

 

8.01. Events of Default.  Any one or more of the following events shall constitute an Event of Default:

 

(a) Any Loan Party fails to pay any principal of any Outstanding Obligation (other than fees) as and on the date when due; or

 

(b) Any Loan Party fails to pay any interest on any Outstanding Obligation or fails to pay any other fee or amount payable to Administrative Agent or any Lender under any Loan Document within five (5) days after the date due; or

 

(c) Any default occurs in the observance or performance of any agreement contained in Section 7; or

 

(d) Any default occurs in the observance or performance of any agreement contained in Section 6.01 and such default continues for ten (10) days; or

 

(e) The occurrence of an Event of Default (as such term is or may hereafter be specifically defined in any other Loan Document) under any other Loan Document; or any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsections (a), (b) (c) or (d) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30) days after the earlier of (i) Borrower’s knowledge of such Event of Default or failure and (ii) receipt of Administrative Agent’s written notice thereof; or

 

(f) Any representation or warranty of any Loan Party in any Loan Document proves to have been incorrect in any material respect when made or deemed made; or

 

(g) (i) Borrower or any Subsidiary (x) defaults in any payment when due of principal of or interest on any Indebtedness (other than Indebtedness hereunder) having an aggregate principal amount in excess of the Threshold Amount which remains uncured beyond any applicable cure period, or (y) defaults in the observance or performance of any other agreement or covenant relating to any Indebtedness (other than Indebtedness hereunder) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, any Indebtedness in excess of the Threshold Amount to become payable or cash collateral in respect thereof to be demanded on account of such default or other event; or (ii) Borrower or any Subsidiary is unable or admits in writing its inability to pay its debts generally as they mature; or

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(h) Any Loan Document, at any time after its execution and delivery and for any reason other than the agreement of all Lenders or satisfaction in full of all the Obligations, ceases to be in full force and effect or is declared by a court of competent jurisdiction to be null and void, invalid or unenforceable in any respect; or Borrower or any Guarantor denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

 

(i) (i) A final judgment (to the extent not covered by insurance (less any deductible) from a solvent insurer who has either accepted tender of defense and is defending such action or has authorized the insured to defend such action) against Borrower or any Subsidiary is entered for the payment of money in excess of the Threshold Amount, or any non-monetary final judgment is entered against Borrower or any Subsidiary which could reasonably be expected to have a Material Adverse Effect and, in each case such judgment remains unsatisfied without procurement of a stay of execution within thirty (30) calendar days after the date of entry of judgment; or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person (to the extent not covered by insurance (less any deductible) from a solvent insurer who has either accepted tender of defense and is defending such action or has authorized the insured to defend such action) representing an obligation for the payment of money which is (singly or in the aggregate with all other such writs or warrants or similar process) in excess of the Threshold Amount and is not released, vacated or fully bonded (A) within thirty (30) calendar days after its issue or levy or (B) if earlier, five (5) Business Days prior to the date of any proposed sale; or

 

(j) Borrower, Guarantor or any Material Subsidiary institutes or consents to the institution of any proceeding under Debtor Relief Laws, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of that Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under Debtor Relief Laws relating to any such Person or to all or any part of its property is instituted without the consent of that Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or

 

(k) (i) An ERISA Event occurs with respect to a Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of Borrower under Title IV of ERISA to the Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount; (ii) the aggregate amount of Unfunded Pension Liability among all Plans at any time exceeds the Threshold Amount; or (iii) Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(l) There occurs (i) any Change of Control, or (ii) any event relating to a change in the corporate ownership, control or governance of Borrower or any Subsidiary as issuer (an “Issuer”) of any notes, bonds, debentures, convertible debt or other debt securities, the result of which is to cause Indebtedness evidenced by any such notes, bonds, debentures, convertible debt or other debt securities to be subject to mandatory redemption or repurchase by such Issuer, provided the outstanding amount of such outstanding Indebtedness exceeds the Threshold Amount.

 

8.02. Remedies Upon Event of Default.  Without limiting any other rights or remedies of the Administrative Agent or Lenders provided for elsewhere in this Agreement or in the other Loan Documents, or by applicable Law, or in equity, or otherwise:

 

(a) Upon the occurrence, and during the continuance, of any Event of Default other than an Event of Default described in Section 8.01(j):  Requisite Lenders may request Administrative Agent to, and Administrative Agent thereupon shall terminate the Commitments and/or declare all or any part of the unpaid principal of all Loans, all interest accrued and unpaid thereon and all other amounts payable under the Loan Documents to be immediately due and payable, whereupon the same shall become and be immediately due and payable, without protest, presentment, notice of dishonor, demand or further notice of any kind, all of which are expressly waived by Borrower; and/or

 

(b) Upon the occurrence of any Event of Default described in Section 8.01(j):

 

(i) the Commitments shall automatically terminate without notice to or demand upon Borrower, which are expressly waived by Borrower; and

 

(ii) the unpaid principal of all Loans, all interest accrued and unpaid thereon and all other amounts payable under the Loan Documents shall be immediately due and payable, without protest, presentment, notice of dishonor, demand or further notice of any kind, all of which are expressly waived by Borrower.

 

(c) Upon the occurrence and during the continuance of any Event of Default, Administrative Agent (and, to the extent applicable, Lenders), without notice to or demand upon Borrower, which are expressly waived by, may proceed (with the consent of the Requisite Lenders) to protect, exercise and enforce its rights and remedies under the Loan Documents against Borrower and its Subsidiaries and such other rights and remedies as are provided by Law or equity (including, without limitation, the provisions of the applicable Uniform Commercial Code).

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(d) Except as permitted by Section 10.05, no Lender may exercise any rights or remedies with respect to the Obligations without the consent of Requisite Lenders in their sole and absolute discretion.  The order and manner in which Administrative Agent’s and Lenders’ rights and remedies are to be exercised shall be determined by Requisite Lenders in their sole and absolute discretion.  Regardless of how a Lender may treat payments for the purpose of its own accounting, for the purpose of computing the Obligations hereunder, payments shall be applied first, to costs and expenses (including Attorney Costs) incurred by Administrative Agent and each Lender, second, to the payment of accrued and unpaid interest on the Loans to and including the date of such application, third, to the payment of the unpaid principal of the Loans, and fourth, to the payment of all other amounts (including fees) then owing to Administrative Agent and Lenders under the Loan Documents, in each case paid pro rata to each Lender in the same proportions that the aggregate Obligations owed to each Lender under the Loan Documents bear to the aggregate Obligations owed under the Loan Documents to all Lenders, without priority or preference among Lenders.  No application of payments will cure any Event of Default, or prevent acceleration, or continued acceleration, of amounts payable under the Loan Documents, or prevent the exercise, or continued exercise, of rights or remedies of Administrative Agent and Lenders hereunder or thereunder or at Law or in equity.

 

 

SECTION 9

ADMINISTRATIVE AGENT

 

9.01. Appointment and Authorization of Administrative Agent.  Each Lender hereby irrevocably (subject to Section 9.09) appoints, designates and authorizes Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto, including, without limitation, entering into the Praesidian Subordination Agreement, the Rosen Subordination Agreement and the Prestige Subordination Agreement.  Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Administrative Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Administrative Agent.  Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Agreement with reference to Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

 

9.02. Delegation of Duties.  Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

9.03. Liability of Administrative Agent.  No Administrative Agent-Related Person shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any Lender for any recital, statement, representation or warranty made by Borrower or any Subsidiary or Affiliate of Borrower, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder.  No Administrative Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of Borrower or any of Borrower’s Subsidiaries or Affiliates.

 

9.04. Reliance by Administrative Agent.

 

(a) Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrower), independent accountants and other experts selected by Administrative Agent. Administrative Agent shall be fully justified in failing or refusing to take any action under any other Loan Document unless it shall first receive such advice or concurrence of Requisite Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.  Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of Requisite Lenders or all Lenders, if required hereunder, and such request and any action taken or failure to act pursuant thereto shall be binding upon all of Lenders.  Where this Agreement expressly permits or prohibits an action unless Requisite Lenders otherwise determine, and in all other instances, Administrative Agent may, but shall not be required to, initiate any solicitation for the consent or a vote of Lenders.

 

(b) For purposes of determining compliance with the conditions specified in Section 4.01, each Lender that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent by Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Lender.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(c) Each Lender hereby authorizes Administrative Agent, upon payment of the amount certified by Borrower as the full and final payment of all principal, interest, fees and other charges outstanding under this Agreement, to execute with and in favor of Borrower a termination letter that, inter alia, terminates Borrower’s obligation to observe any or all of the covenants in Sections 3, 6 and 7 hereof.

 

9.05. Notice of Default.  Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to Administrative Agent for the account of Lenders, unless Administrative Agent shall have received written notice from a Lender or Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”.  Administrative Agent will notify Lenders of its receipt of any such notice.  Administrative Agent shall take such action with respect to such Default or Event of Default as may be directed by Requisite Lenders in accordance with Section 8; provided, however, that unless and until Administrative Agent has received any such direction, Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of Lenders.

 

9.06. Credit Decision; Disclosure of Information by Administrative Agent.  Each Lender acknowledges that no Administrative Agent-Related Person has made any representation or warranty to it, and that no act by Administrative Agent hereinafter taken, including any consent to and acceptance of any assignment or review of the affairs of Borrower and their Subsidiaries, shall be deemed to constitute any representation or warranty by any Administrative Agent-Related Person to any Lender as to any matter, including whether Administrative Agent-Related Persons have disclosed material information in their possession.  Each Lender, including any Lender by assignment, represents to Administrative Agent that it has, independently and without reliance upon any Administrative Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrower hereunder.  Each Lender also represents that it will, independently and without reliance upon any Administrative Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower.  Except for notices, reports and other documents expressly required to be furnished to Lenders by Administrative Agent herein, Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Borrower or any of its Subsidiaries which may come into the possession of any Administrative Agent-Related Person.

 

9.07. Indemnification of Administrative Agent.  Whether or not the transactions contemplated hereby are consummated, Lenders shall indemnify upon demand each Administrative Agent-Related Person (to the extent not reimbursed by or on behalf of Borrower and without limiting the obligation of Borrower to do so), ratably according to their Pro Rata Shares, and hold harmless each Administrative Agent-Related Person from and against any and all Indemnified Liabilities incurred by it; provided, however, that no Lender shall be liable for the payment to any Administrative Agent-Related Person of any portion of such Indemnified Liabilities resulting from such Person’s gross negligence or willful misconduct; provided, however, that no action taken in accordance with the directions of Requisite Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section; provided further that the foregoing shall not require any Lender to indemnify any Administrative Agent-Related Person to the extent such Administrative Agent-Related Person was not acting in the capacity of, or on behalf of, the Administrative Agent.  Without limitation of the foregoing, each Lender shall reimburse Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that Administrative Agent is not reimbursed for such expenses by or on behalf of Borrower.  The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Administrative Agent.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

9.08. Administrative Agent in Individual Capacity.  Opus and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with Borrower and its Subsidiaries and Affiliates as though Opus were not Administrative Agent hereunder and without notice to or consent of Lenders.  Lenders acknowledge that, pursuant to such activities, Opus or its Affiliates may receive information regarding Borrower or its Affiliates (including information that may be subject to confidentiality obligations in favor of Borrower or such Affiliate) and acknowledge that Administrative Agent shall be under no obligation to provide such information to them.  With respect to its Loans, Opus shall have the same rights and powers under this Agreement as any other Lender and may Opus the same as though it were not Administrative Agent.

 

9.09. Successor Administrative Agent.  Administrative Agent may, and at the request of Requisite Lenders shall, resign as Administrative Agent upon thirty (30) days’ notice to Lenders.  If Administrative Agent resigns under this Agreement, Requisite Lenders shall appoint from among Lenders a successor administrative agent for Lenders which successor administrative agent shall be approved by Borrower.  If no successor administrative agent is appointed prior to the effective date of the resignation of Administrative Agent, Administrative Agent may appoint, after consulting with Lenders and Borrower and upon approval of Borrower (other than at any time as there exists an Event of Default) which will not be unreasonably withheld, a successor administrative agent from among Lenders.  Upon the acceptance of its appointment as successor administrative agent hereunder, such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term “Administrative Agent” shall mean such successor administrative agent and the retiring Administrative Agent’s appointment, powers and duties as Administrative Agent shall be terminated.  After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 9 and Sections 10.03 and 10.11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.  If no successor administrative agent has accepted appointment as Administrative Agent (whether due to absence of Borrower approval or otherwise) by the date which is thirty (30) days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and Lenders shall perform all of the duties of Administrative Agent hereunder until such time, if any, as Requisite Lenders appoint a successor agent as provided for above.

 

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

SECTION 10

MISCELLANEOUS

 

10.01. Amendments; Consents.  No amendment, modification, supplement, extension, termination or waiver of any provision of this Agreement or any other Loan Document, no approval or consent thereunder, no consent to any departure by Borrower or any Subsidiary therefrom and no release of collateral in which Lender has a security interest prior to payment in full of the Obligations shall be effective unless in writing signed by the Requisite Lenders and  the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall: (a) extend or increase the Commitment of any Lender without the written consent of such Lender; (b) postpone any date fixed by this Agreement or any other Loan Document for any payment (but excluding the delay or waiver of any mandatory prepayment) of principal, interest, fees or other amounts due to the Lenders (or any of them), including the Maturity Date, in each case without the written consent of each Lender directly affected thereby; (c) reduce the principal of, or the rate of interest specified herein on, any Loan or any fees or other amounts payable hereunder or under any other Loan Document, without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Requisite Lenders shall be necessary (i) to amend the definition of “Default Rate” (so long as such amendment does not result in the Default Rate being lower than the interest rate then applicable to Loans) or to waive any obligation of the Borrower to pay interest at the Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used therein); (d) change the provisions requiring pro rata payments to the Lenders set forth herein without the written consent of each Lender directly affected thereby; (e) change any provision of this Section or the definition of “Requisite Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; (f) release the Borrower or all or substantially all of the Guarantors from this Agreement, any Guaranty or release any material Security Document to which any such Person is a party without the written consent of each Lender, except to the extent such Person is the subject of a Disposition permitted by the provisions of this Agreement or such Security Document (in which cases such release may be made by Administrative Agent acting alone); or (g) release all or substantially all of the Collateral without the written consent of each Lender except with respect to Dispositions and releases of Collateral permitted or required hereunder or as provided in the other Loan Documents (in which case such release may be made by Administrative Agent acting alone).  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Defaulting Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

10.02. Transmission and Effectiveness of Communications and Signatures.

 

(a) Modes of Delivery.  Except as otherwise provided in any Loan Document, notices, requests, demands, directions, agreements and documents delivered in connection with the Loan Documents (collectively, “communications”) shall be transmitted by Requisite Notice to the number and address set forth on Schedule 10.02, may be delivered by the following modes of delivery, and shall be effective as follows:

 

	
Mode of Delivery

	
Effective on earlier of actual receipt and:

	
Courier:

	
Scheduled delivery date

	
Facsimile:

	
When transmission in legible form complete

	
Mail:

	
Fourth Business Day after deposit in U.S. mail first class postage pre-paid

	
Personal delivery:

	
When received

	
Telephone:

	
When conversation completed

 

provided, however, that communications delivered to Lender pursuant to Section 2 must be in writing and shall not be effective until actually received by Lender.

 

(b) Reliance by Lender.  Lender shall be entitled to rely and act on any communications purportedly given by or on behalf of Borrower or any other Loan Party even if (i) such communications (A) were not made in a manner specified herein, (B) were incomplete or (C) were not preceded or followed by any other notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any subsequent related communications provided for herein.  Borrower shall indemnify Lender from any loss, cost, expense or liability as a result of relying on any communications permitted herein.

 

(c) Effectiveness of Facsimile Documents and Signatures.  Documents and agreements delivered from time to time in connection with the Loan Documents may be transmitted and/or signed by facsimile or electronic transmission.  The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as hardcopies with manual signatures.  Any party may also request that any such documents and signature be confirmed by a manually-signed hardcopy thereof; provided, however, that the failure to request or deliver any such manually-signed hardcopy shall not affect the effectiveness of any facsimile documents or signatures.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

10.03. Attorney Costs, Expenses and Taxes.  Borrower agrees (a) to pay or reimburse Lender for all reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation, negotiation and execution of the Loan Documents, and the development, preparation, negotiation and execution of any amendment, waiver, consent, supplement or modification to, any Loan Documents, and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby (including the performance by Lender of collateral field audits and inspections pursuant to Section 6.08), including all reasonable Attorney Costs, and (b) to pay or reimburse Lender for all costs and expenses incurred in connection with any refinancing, restructuring, reorganization (including a bankruptcy reorganization), collection and enforcement or attempted enforcement, or preservation of any rights under any Loan Documents, and any other documents prepared in connection herewith or therewith, or in connection with any refinancing, or restructuring of any such documents in the nature of a “workout” or of any insolvency or bankruptcy proceeding, including Attorney Costs.  The foregoing costs and expenses shall include all reasonable search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by Lender and the cost of independent public accountants and other outside experts retained by Lender.  Such costs and expenses shall also include administrative costs of Lender reasonably attributable to the administration of the Loan Documents.  Any amount payable by Borrower under this Section shall bear interest from the tenth day following the date of demand for payment at the Default Rate, unless waived by Lender.  The agreements in this Section shall survive repayment of all other Obligations and the termination of all Commitments.

 

10.04. Binding Effect; Assignment.

 

(a) Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Lender.  Any Lender may from time to time sell all or any portion of the Loans, the Commitments and the Loan Documents (or any interest therein) and may grant participations in the Loans, provided, that, with respect to any participation (but not with respect to any assignment) (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations,  (C) the Borrower and the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations (including, without limitation, voting rights) under this Agreement and (D) any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any  provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification set forth in clauses (a) through (g) of Section 10.01 that affects such Participant; provided, however that, so long as no Default or Event of Default has occurred and is continuing, (i) Borrower must consent to any such sale, which consent shall not be unreasonably withheld, delayed or conditioned and (ii) such assignee or participant is not a competitor of the Borrower;  provided, further, that no consent from Borrower shall be required for any assignment by one Lender to any other Lender.  Any Person to whom Lender sells all or any portion of the Loans or Commitments shall be deemed to be a “Lender” for purposes hereof.  Borrower agrees to cooperate with Lender’s efforts to do any of the foregoing and to execute all documents reasonably required by Lender in connection therewith.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(b) Certain Pledges.  Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release Lender from any of its obligations hereunder or substitute any such pledgee or assignee for Lender as a party hereto.

 

10.05. Set-off.  In addition to any rights and remedies of Lender or any assignee or participant of Lender or any Affiliate thereof (each, a “Proceeding Party”) provided by law, upon the occurrence and during the continuance of any Event of Default, each Proceeding Party is authorized at any time and from time to time, without prior notice to Borrower, any such notice being waived by Borrower to the fullest extent permitted by law, to proceed directly, by right of set-off, banker’s lien, or otherwise, against any assets of any Loan Party and their Subsidiaries which may be in the possession of such Proceeding Party (including all general or special, time or demand, provisional or other deposits and other indebtedness owing by such Proceeding Party to or for the credit or the account of Borrower) and apply such assets against the Obligations, irrespective of whether such Proceeding Party shall have made any demand therefor and although such Obligations may be unmatured.  Lender agrees promptly to notify Borrower after any such set-off and application made by Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.

 

10.06. Sharing of Payments.  Each Lender severally agrees that if it, through the exercise of any right of setoff, banker’s lien or counterclaim against any Loan Party or otherwise, receives payment on account of the Outstanding Obligations held by it that is ratably more than any other Lender receives in payment on account of the Outstanding Obligations held by such other Lender, then, subject to applicable Laws:  (a) the Lender exercising the right of setoff, banker’s lien or counterclaim or otherwise receiving such payment shall purchase, and shall be deemed to have simultaneously purchased, from the other Lender a participation in the Outstanding Obligations held by the other Lender and shall pay to the other Lender a purchase price in an amount so that the share of the Outstanding Obligations held by each Lender after the exercise of the right of setoff, banker’s lien or counterclaim or receipt of payment shall be in the same proportion that existed prior to the exercise of the right of setoff, banker’s lien or counterclaim or receipt of payment; and (b) such other adjustments and purchases of participations shall be made from time to time as shall be equitable to ensure that all Lenders share any payment obtained in respect of the Outstanding Obligations ratably in accordance with each Lender’s share of the Outstanding Obligations immediately prior to, and without taking into account, the payment; provided that, if all or any portion of a disproportionate payment obtained as a result of the exercise of the right of setoff, banker’s lien, counterclaim or otherwise is thereafter recovered from the purchasing Lender by any Loan Party or any Person claiming through or succeeding to the rights of any Borrower, the purchase of a participation shall be rescinded and the purchase price thereof shall be restored to the extent of the recovery, but without interest.  Each Lender that purchases a participation in the Outstanding Obligations pursuant to this Section shall from and after the purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Outstanding Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Outstanding Obligations purchased.  Each Loan Party expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in an Obligation so purchased may exercise any and all rights of setoff, banker’s lien or counterclaim with respect to the participation as fully as if Lender were the original owner of the Obligation purchased.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

10.07. No Setoff.  As to any and all funds, securities or other assets of any Loan Party which are now or hereafter held by Administrative Agent or any Lender as collateral pursuant to this Agreement or any other Loan Document for any of the Obligations thereunder (including, without limitation, all amounts in any deposit account, securities account or other similar account) (collectively the “Collateral Assets”), Administrative Agent and the Lenders agree that they shall not exercise any right of setoff or recoupment against nor shall they assert any security interest in the Collateral Assets in connection with any other obligation owed to Administrative Agent or any Lender which is unrelated to this Agreement or the Loan Documents, except for:  (i) recovery for any items deposited with Administrative Agent or any Lender and returned unpaid or as to which claims have been asserted as to breach of transfer or presentment warranties, (ii) overdrafts on any account which generated the funds which constitute part of the Collateral Assets, (iii) automated clearing house entries, and (iv) Administrative Agent or any Lender's usual and customary fees for services rendered in connection with the assets or bank accounts which constitute the Collateral Assets.

 

10.08. No Waiver; Cumulative Remedies.

 

(a) No failure by Lender to exercise, and no delay by Lender in exercising, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege under any Loan Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

(b) The rights, remedies, powers and privileges herein or therein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law. Any decision by Lender not to require payment of any interest (including interest at the Default Rate), fee, cost or other amount payable under any Loan Document or to calculate any amount payable by a particular method on any occasion shall in no way limit or be deemed a waiver of Lender’s right to require full payment thereof, or to calculate an amount payable by another method that is not inconsistent with this Agreement, on any other or subsequent occasion.

 

10.09. Usury.  Notwithstanding anything to the contrary contained in any Loan Document, the interest and fees paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”).  If any Lender shall receive interest or a fee in an amount that exceeds the Maximum Rate, the excessive interest or fee shall be applied to the principal of the Outstanding Obligations or, if it exceeds the unpaid principal, refunded to Borrower.  In determining whether the interest or a fee contracted for, charged, or received by such Lender exceeds the Maximum Rate, such Lender may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

10.10. Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

10.11. Integration.  This Agreement, together with the other Loan Documents and any letter agreements referred to herein, comprises the complete and integrated agreement of the parties on the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof.  In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control and govern; provided that the inclusion of supplemental rights or remedies in favor of Lender in any other Loan Document shall not be deemed a conflict with this Agreement.  Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.

 

10.12. Nature of Lender’s Obligations.  Nothing contained in this Agreement or any other Loan Document and no action taken by Lender pursuant hereto or thereto may, or may be deemed to, make any Lender a partnership, an association, a joint venture or other entity, either with Borrower or any Affiliate of Borrower.  Each Lender’s obligation to make its portion of the Loans pursuant hereto is several and not joint or joint and several, and is conditioned upon the performance by all other Lenders of their obligations to make the Loans.  A default by any Lender will not increase the Pro Rata Share attributable to any other Lender.

 

10.13. Survival of Representations and Warranties.  All representations and warranties made hereunder and in any Loan Document, certificate or statement delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery thereof but shall terminate upon the termination of this Agreement and all Commitments and the payment in full in cash of all Obligations.  Such representations and warranties have been or will be relied upon by Administrative Agent and each Lender, notwithstanding any investigation made by Administrative Agent or any Lender or on its behalf.

 

10.14. Indemnity by Borrower.  Borrower agrees to indemnify, defend, save and hold harmless Administrative Agent and each Lender and their respective Affiliates, directors, officers, agents, attorneys and employees (collectively, the “Indemnitees”) from and against:  (a) any and all claims, demands, actions or causes of action that are asserted against any Indemnitee by any Person (other than another indemnitee) relating directly or indirectly to a claim, demand, action or cause of action that such Person asserts or may assert against Borrower, any of its Affiliates or any its officers or directors; (b) any and all claims, demands, actions or causes of action arising out of or relating to, the Loan Documents, any predecessor loan documents, the Commitments, the use or contemplated use of the proceeds of any Loan or any collateral given to secure the Obligations, or the relationship of Borrower and the Indemnitees under this Agreement; (c) any administrative or investigative proceeding by any Governmental Authority arising out of or related to a claim, demand, action or cause of action described in subsection (a) or (b) above; and (d) all liabilities, claims, actions, loss, damages, including, without limitation, foreseeable and unforeseeable consequential damages, costs and expenses (including sums paid in settlement of claims and all consultant, expert and legal fees and expenses of Indemnitees' counsel) directly or indirectly arising out of or resulting from any Hazardous Substance being present at any time in or around any part of the property of Borrower or any Subsidiary, or in the soil, groundwater or soil vapor on or under such property, including those incurred in connection with any investigation of site conditions or any clean-up, remedial, removal or restoration work, or any resulting damages or injuries to the person or property of any third parties or to any natural resources; and (e) any and all liabilities, losses, costs or expenses (including Attorney Costs) that any Indemnitee suffers or incurs as a result of the assertion of any foregoing claim, demand, action, cause of action or proceeding, or as a result of the preparation of any defense in connection with any foregoing claim, demand, action, cause of action or proceeding, in all cases, whether or not an Indemnitee is a party to such claim, demand, action, cause of action or proceeding, including those liabilities caused by an Indemnitee’s own negligence (all the foregoing, collectively, the “Indemnified Liabilities”); provided that no Indemnitee shall be entitled to indemnification for any loss caused by its own gross negligence or willful misconduct or for any loss asserted against it by another Indemnitee.  This Section 10.14 shall survive termination of this Agreement.

 

  

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10.15. Nonliability of Lender.

 

Borrower acknowledges and agrees that:

 

(a) Any inspections of any property of Borrower made by or through any Lender are for purposes of administration of the Loan Documents only, and Borrower is not entitled to rely upon the same (whether or not such inspections are at the expense of Borrower);

 

(b) By accepting or approving anything required to be observed, performed, fulfilled or given to any Lender pursuant to the Loan Documents, such Lender shall not be deemed to have warranted or represented the sufficiency, legality, effectiveness or legal effect of the same, or of any term, provision or condition thereof, and such acceptance or approval thereof shall not constitute a warranty or representation to anyone with respect thereto by such Lender;

 

(c) The relationship between Borrower and each Lender is, and shall at all times remain, solely that of borrower and lender; no Lender shall under any circumstance be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower or its Affiliates, or to owe any fiduciary duty to Borrower or its Affiliates; no Lender undertakes or assumes any responsibility or duty to Borrower or its Affiliates to select, review, inspect, supervise, pass judgment upon or inform Borrower or its Affiliates of any matter in connection with their property or the operations of Borrower or its Affiliates; Borrower and its Affiliates shall rely entirely upon its or their own judgment with respect to such matters; and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by such Lender in connection with such matters is solely for the protection of such Lender and neither Borrower nor any other Person is entitled to rely thereon; and

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(d) No Lender shall be responsible or liable to any Person for any loss, damage, liability or claim of any kind relating to injury or death to Persons or damage to property caused by the actions, inaction or negligence of Borrower and/or its Affiliates and Borrower hereby indemnifies and holds Lender harmless from any such loss, damage, liability or claim.

 

10.16. No Third Parties Benefited.  This Agreement is made for the purpose of defining and setting forth certain obligations, rights and duties of Borrower, Administrative Agent and Lenders in connection with the Loans, and is made for the sole benefit of Borrower, Administrative Agent and Lenders, and Administrative Agent and each Lender’s successors and assigns, and no other Person shall have any rights of any nature hereunder or by reason hereof.

 

10.17. Severability.  Any provision of the Loan Documents that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

10.18. Confidentiality.  Administrative Agent and each Lender shall use any confidential non-public information concerning each Loan Party and its respective Subsidiaries that is furnished to Administrative Agent or any Lender by or on behalf of any Loan Party and their respective Subsidiaries in connection with the Loan Documents (collectively, “Confidential Information”) solely for the purpose of evaluating and providing products and services to them and administering and enforcing the Loan Documents, and it will hold the Confidential Information in confidence.  Notwithstanding the foregoing, Administrative Agent and each Lender may disclose Confidential Information (a) to its Affiliates or any of its or their Affiliates’ directors, officers, employees, advisors or representatives (collectively, the “Representatives”) whom it determines need to know such information for the purposes set forth in this Section and who are bound to obligations of confidentiality; (b) to any bank or financial institution or other entity to which any Lender has assigned or desires to assign an interest or participation in the Loan Documents or the Obligations, provided that any such foregoing recipient of such Confidential Information agrees to keep such Confidential Information confidential as specified herein; (c) to any governmental agency or regulatory body having or claiming to have authority to regulate or oversee any aspect of Administrative Agent’s or any  Lender’s business or that of any Representative in connection with the exercise of such authority or claimed authority; (d) to the extent necessary or appropriate to effect or preserve Administrative Agent’s or any Lender’s or any of its Affiliates’ security (if any) for any Obligation or to enforce any right or remedy or in connection with any claims asserted by or against Administrative Agent  or any Lender, any of its Affiliates or any Representative under the Loan Documents; and (e) pursuant to any subpoena or any similar legal process so long as Borrower is, or has been, given notice of such legal process and the opportunity to seek a protective order; provided that any such recipient of such Confidential Information agrees to keep such Confidential Information confidential as specified herein.  For purposes hereof, the term “Confidential Information” shall not include information that (x) is in Administrative Agent’s or any Lender’s possession prior to its being provided by or on behalf of Borrower, provided that such information is not known by Administrative Agent  or, as the case may be, such Lender to be subject to another confidentiality agreement with, or other legal or contractual obligation of confidentiality to, Borrower, (y) is or becomes publicly available (other than through a breach hereof by Administrative Agent  or such Lender), or (z) becomes available to Administrative Agent  or any Lender on a non-confidential basis, provided that the source of such information was not known by Administrative Agent or such Lender to be bound by a confidentiality agreement or other legal or contractual obligation of confidentiality with respect to such information.  This Section 10.18 shall survive termination of this Agreement.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

10.19. Further Assurances.  Each Loan Party and its Subsidiaries shall, at their expense and without expense to Administrative Agent or Lenders, do, execute and deliver such further acts and documents as Administrative Agent from time to time reasonably requires for the assuring and confirming unto Administrative Agent of the rights hereby created or intended now or hereafter so to be, or for carrying out the intention or facilitating the performance of the terms of any Loan Document (including, without limitation, any matters set forth in any supplement agreement regarding post-closing deliveries or filings entered into with the Administrative Agent).

 

10.20. Headings.  Section headings in this Agreement and the other Loan Documents are included for convenience of reference only and are not part of this Agreement or the other Loan Documents for any other purpose.

 

10.21. Time of the Essence.  Time is of the essence of the Loan Documents.

 

10.22. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.

 

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER, ADMINISTRATIVE AGENT AND LENDERS EACH CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  BORROWER, ADMINISTRATIVE AGENT AND LENDERS EACH IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED HERETO.  BORROWER, ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

 

  

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Fusion NBS Acquisition Corp.                           Credit Agreement

 

(c) EACH PARTY HERETO HEREBY 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 OR THE TRANSACTIONS CONTEMPLATED HEREBY (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.

 

10.23. PATRIOT Act Notification.  Administrative Agent hereby notifies Borrower (and each Subsidiary and Guarantor) that, pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies Borrower (and, to the extent requested, each Subsidiary), which information includes the name and address of Borrower (and, to the extent requested, each Guarantor and Subsidiary) and other information that will allow Administrative Agent to identify Loan Parties (and, to the extent requested, each Subsidiary) in accordance with the USA PATRIOT Act.

 

10.24. Entire Agreement.  This Agreement and the other Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties.  There are no unwritten oral agreements between the parties.

 

10.25. Replacement of Lenders.  Notwithstanding anything in this Agreement to the contrary, if (a) any Lender requests compensation under Section 3.02, (b) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, (c) any Lender is a Defaulting Lender, or (d) any Lender fails to approve any amendment, waiver or consent requested by the Borrowers pursuant to Section 10.01 that has received the written approval of not less than the Requisite Lenders but also requires the approval of such Lender, then in each such case the Borrower may, at its sole expense and effort, upon notice to such Lender and Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.04), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

 

(i)           such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees, and all other amounts payable to it hereunder and under the other Loan Documents from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

 

  

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(ii)           in the case of any such assignment resulting from a claim for compensation under Section 3.02 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter;

 

(iii)           in the case of any such assignment resulting from the refusal of a Lender to approve a requested amendment, waiver or consent, the Person to whom such assignment is being made has agreed to approve such requested amendment, waiver or consent; and

 

(iv)           such assignment does not conflict with applicable Laws.

 

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

	 	
Fusion NBS Acquisition Corp., a Delaware corporation, as Borrower

	 
	 	 	 	 
	
 

	
By: 

	/s/ Gordon Hutchins, Jr.	 
	 	 	Gordon Hutchins, Jr.	 
	 	 	President and COO	 
	 	 	 	 

 

	 	
Opus Bank, as Administrative Agent and as a Lender

	 
	 	 	 	 
	
 

	
By: 

	/s/ Kevin McBride	 
	 	 	Kevin McBride	 
	 	 	Senior Managing Director	 
	 	 	 	 

 

72fsnn_ex102.htm

EXHIBIT 10.2

 

___________________________________________________________________

 

THIRD AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT AND SECURITY AGREEMENT

by and among

FUSION NBS ACQUISITION CORP.

as Borrower

 

and

 

FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

 

and

 

NETWORK BILLING SYSTEMS, L.L.C.,

FUSION BVX LLC,

PINGTONE COMMUNICATIONS, INC.

 

(AS SUCCESSOR BY MERGER TO FUSION PTC ACQUISITION, INC.)

 

and

 

EACH OTHER SUBSIDIARY

FROM TIME TO TIME PARTY HERETO

as Guarantors

 

and

 

PRAESIDIAN CAPITAL OPPORTUNITY FUND III, LP,

PRAESIDIAN CAPITAL OPPORTUNITY FUND III-A, LP,

 

and

 

UNITED INSURANCE COMPANY OF AMERICA,

as Lenders

and

PRAESIDIAN CAPITAL OPPORTUNITY FUND III, LP,

as Agent

Dated as of August 28, 2015

(amending and restating the Second Amended and Restated Securities Purchase Agreement and Security Agreement dated as of October 31, 2014 as amended prior to the date hereof)

___________________________________________________________________

  

  

  

TABLE OF CONTENTS

 

	
ARTICLE 1 DEFINITIONS

	
2

	
1.01

	
Definitions

	
2

	
1.02

	
Accounting Terms; Financial Statements

	
26

	
1.03

	
Knowledge of the Credit Parties

	
26

	
1.04

	
UCC Terms

	
26

	
1.05

	
Certain Matters of Construction

	
26

	
1.06

	
Effect of this Agreement; Modification of Transaction Documents.

	
27

	
ARTICLE 2 PURCHASE AND SALE OF THE SECURITIES

	
28

	
2.01

	
Purchase and Sale of the Series F Notes

	
28

	
2.02

	
Fees at Closing; Expenses

	
28

	
2.03

	
Closing

	
28

	
2.04

	
Financial Accounting Positions; Tax Reporting

	
28

	
2.05

	
Interest

	
28

	ARTICLE 3 CONDITIONS TO THE OBLIGATIONS OF THE LENDERS TO PURCHASE THE SERIES F NOTES	
30

	
3.01

	
Representations and Warranties

	
30

	
3.02

	
Compliance with this Agreement

	
31

	
3.03

	
Secretary’s Certificates

	
31

	
3.04

	
Transaction Documents

	
31

	
3.05

	
Purchase of Series F Notes Permitted by Applicable Laws

	
31

	
3.06

	
Opinion of Counsel

	
31

	
3.07

	
Approval of Counsel to the Lenders

	
31

	
3.08

	
Consents and Approvals

	
32

	
3.09

	
Lien Searches; Plexus Payoff

	
32

	
3.10

	
No Material Judgment or Order

	
32

	
3.11

	
Pro Forma Balance Sheet, Leverage Ratio; Fixed Charge Coverage Ratio and EBITDA.

	32
	
3.12

	
Good Standing Certificates

	
32

	
3.13

	
No Litigation

	
32

	
3.14

	
Warrants and Common Stock

	
33

	
3.15

	
Consummation of the Transactions

	
33

	
3.16

	
Flow of Funds

	
33

	
3.17

	
Adverse Change

	
33

	
3.18

	
Insurance Certificates

	
33

	
3.19

	
Fees and Expenses

	
33

	
3.20

	
Conduct of Business

	
33

	
3.21

	
Transfer Taxes

	
33

	
3.22

	
Separateness Requirements

	
34

	
ARTICLE 4 Collateral; General Terms

	  34
	
4.01

	
Security Interest in the Collateral

	
34

	
4.02

	
Perfection of Security Interest

	
34

	
4.03

	
Safeguarding Collateral

	
35

	
4.04

	
Ownership of Collateral

	
35

 

  

  

  

 

	
4.05

	
Defense of Agent’s Interest

	
35

	
4.06

	
Financial Disclosure

	
35

	
4.07

	
Accounts

	
36

	
4.08

	
Exculpation of Liability

	
38

	
4.09

	
Financing Statements

	
38

	ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES	  38
	
5.01

	
Existence and Power

	
38

	
5.02

	
Authorization; No Contravention

	
38

	
5.03

	
Governmental Authorization; Third Party Consents

	
39

	
5.04

	
Binding Effect

	
39

	
5.05

	
Litigation

	
39

	
5.06

	
Compliance with Laws

	
40

	
5.07

	
No Default or Breach

	
40

	
5.08

	
Title to Properties.

	
40

	
5.09

	
Use of Real Property

	
40

	
5.10

	
Taxes.

	
41

	
5.11

	
Financial Statements and Projections.

	
42

	
5.12

	
Operating Company

	
42

	
5.13

	
Disclosure.

	
42

	
5.14

	
Absence of Certain Changes or Events

	
43

	
5.15

	
O.S.H.A. and Environmental Compliance.

	
43

	
5.16

	
Investment Company/Government Regulations

	
44

	
5.17

	
Subsidiaries.

	
44

	
5.18

	
Capitalization

	
44

	
5.19

	
Private Offering

	
45

	
5.20

	
Broker’s, Finder’s or Similar Fees

	
45

	
5.21

	
Labor Relations

	
45

	
5.22

	
Employee Benefit Plans

	
45

	
5.23

	
Patents, Trademarks, Etc.

	
46

	
5.24

	
Potential Conflicts of Interest

	
46

	
5.25

	
Trade Relations

	
47

	
5.26

	
Indebtedness

	
47

	
5.27

	
Material Contracts

	
47

	
5.28

	
Insurance

	
48

	
5.29

	
[Intentionally Omitted].

	
48

	
5.30

	
Products Liability

	
48

	
5.31

	
Solvency

	
48

	
5.32

	
Questionnaire

	
48

	
5.33

	
Location of Assets

	
48

	
5.34

	
Certain Payments

	
48

	
5.35

	
Margin Requirements

	
49

	
5.36

	
Anti-Terrorism Laws.

	
49

	
5.37

	
Trading with the Enemy

	
49

	
5.38

	
Interest Rate Hedges and Other Hedging Agreements

	
49

	ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE LENDERS	  50
	
6.01

	
Authorization; No Contravention

	
50

 

  

  

  

 

	
6.02

	
Binding Effect

	
50

	
6.03

	
Purchase for Own Account

	
50

	
6.04

	
Broker’s, Finder’s or Similar Fees

	
50

	
6.05

	
Governmental Authorization; Third Party Consent

	
50

	ARTICLE 7 INDEMNIFICATION	  51
	
7.01

	
Indemnification

	
51

	
7.02

	
Procedure; Notification

	
52

	
7.03

	
Survival

	
53

	ARTICLE 8 AFFIRMATIVE COVENANTS	  53
	
8.01

	
Financial Statements and Other Information

	
53

	
8.02

	
Preservation of Existence

	
58

	
8.03

	
Payment of Obligations

	
58

	
8.04

	
Compliance with Laws

	
59

	
8.05

	
Violations

	
59

	
8.06

	
Board Observer

	
59

	
8.07

	
Inspection

	
59

	
8.08

	
Maintenance of Properties

	
59

	
8.09

	
Insurance

	
60

	
8.10

	
Books and Records

	
60

	
8.11

	
Use of Proceeds.

	
60

	
8.12

	
Standards of Financial Statements

	
61

	
8.13

	
[Intentionally Omitted]

	
61

	
8.14

	
New Real Property

	
61

	
8.15

	
Control Agreements; Cash Management Systems.

	
61

	
8.16

	
Collateral Access Agreements

	
62

	
8.17

	
Key-Man Life Insurance

	
62

	
8.18

	
Post Closing Covenants.

	
62

	ARTICLE 9 NEGATIVE COVENANTS	  63
	
9.01

	
Fundamental Changes; Consolidations, Mergers and Acquisitions; Asset Sales

	
63

	
9.02

	
Creation of Liens

	
63

	
9.03

	
Guarantees

	
63

	
9.04

	
Investments

	
63

	
9.05

	
Loans

	
64

	
9.06

	
Restricted Payments

	
64

	
9.07

	
Indebtedness

	
64

	
9.08

	
Nature of Business

	
65

	
9.09

	
Transactions with Affiliates

	
65

	
9.10

	
Leases

	
65

	
9.11

	
Subsidiaries; Partnerships; Joint Ventures

	
65

	
9.12

	
Fiscal Year and Accounting Changes

	
65

	
9.13

	
Amendment of Organizational Documents

	
66

	9.14	

Limitation on Modifications of Indebtedness; Modifications of Certain Other Agreements; Etc.

	
66

	
9.15

	
Financial Covenants.

	
66

	
9.16

	
Compliance with ERISA

	
67

 

  

  

  

 

	
9.17

	
Prepayment of Indebtedness

	
67

	
9.18

	
Anti-Terrorism Laws

	
67

	
9.19

	
Trading with the Enemy Act

	
68

	
9.20

	
Additional Negative Pledges

	
68

	ARTICLE 10 PRINCIPAL PAYMENTS	  68
	
10.01

	
Optional Prepayment

	
68

	
10.02

	
Mandatory Prepayments.

	
69

	
10.03

	
Scheduled Payments

	
70

	
10.04

	
Application of Payments.

	
70

	ARTICLE 11 EVENTS OF DEFAULT; REMEDIES	  71
	
11.01

	
Events of Default

	
71

	
11.02

	
Acceleration and Remedies

	
73

	
11.03

	
Application of Proceeds

	
74

	ARTICLE 12 MISCELLANEOUS 	  74
	
12.01

	
Survival of Representations and Warranties

	
74

	
12.02

	
Notices

	
75

	
12.03

	
Successors and Assigns; Third Party Beneficiaries.

	
76

	
12.04

	
Amendment and Waiver.

	
77

	
12.05

	
Signatures; Counterparts

	
77

	
12.06

	
Headings

	
77

	
12.07

	
GOVERNING LAW

	
77

	
12.08

	
JURISDICTION; JURY TRIAL WAIVER.

	
78

	
12.09

	
Severability

	
78

	
12.10

	
Rules of Construction

	
79

	
12.11

	
Entire Agreement

	
79

	
12.12

	
Certain Expenses

	
79

	
12.13

	
Publicity

	
79

	
12.14

	
Further Assurances

	
80

	
12.15

	
Obligations of the Lenders

	
80

	
12.16

	
No Strict Construction

	
80

	
12.17

	
Transfer of the Notes.

	
80

	
12.18

	
Subordination Agreement

	
81

	ARTICLE 13 GUARANTEE	  82
	
13.01

	
The Guarantee

	
82

	
13.02

	
Obligations Unconditional

	
82

	
13.03

	
Reinstatement

	
83

	
13.04

	
Subrogation

	
83

	
13.05

	
Remedies

	
84

	
13.06

	
Continuing Guarantee

	
84

	
13.07

	
General Limitation on Guarantors’ Obligations

	
84

	ARTICLE 14 REGARDING AGENT	  84
	
14.01

	
Appointment

	
84

	
14.02

	
Nature of Duties

	
85

	
14.03

	
Lack of Reliance on Agent and Resignation.

	
85

 

  

  

  

 

	
14.04

	
Certain Rights of Agent

	
86

	
14.05

	
Reliance

	
86

	
14.06

	
Notice of Default

	
86

	
14.07

	
Indemnification

	
86

	
14.08

	
Agent in its Individual Capacity

	
87

	
14.09

	
Delivery of Documents or Other Information

	
87

	
14.10

	
Credit Parties’ Undertaking to Agent

	
87

	
14.11

	
No Reliance on Agent’s Customer Identification Program

	
87

	
14.12

	
Other Agreements

	
87

	ARTICLE 15 TAXES	  88
	
15.01

	
Taxes.

	
88

	
15.02

	
Certificates of Lenders

	
89

	ARTICLE 16 SEPARATENESS COVENANTS	  90
	
16.01

	
Separate Legal Entity

	
90

	
16.02

	
Capital

	
90

	
16.03

	
Dissolution

	
90

	
16.04

	
Commingled Funds

	
90

	
16.05

	
Segregated Assets

	
90

	
16.06

	
Bank Accounts

	
90

	
16.07

	
Employees

	
91

	
16.08

	
Agents

	
91

	
16.09

	
Independent Director

	
91

	
16.10

	
Organization Documents

	
91

	
16.11

	
Ministerial or Administrative Actions

	
91

  

  

  

 

LIST OF EXHIBITS AND SCHEDULES

 

Exhibits

 

	Exhibit A	Form of Series F Notes
	Exhibit C	Compliance Certificate

 

Schedules

Schedule 2.01 – Lender Schedule – Series F Notes

Schedule 4.04 – Collateral Exceptions

Schedule 4.09 – Other Financing Statements

Schedule 5.01 – Jurisdiction of Organization and Qualifications

Schedule 5.05 – Litigation

Schedule 5.06 – Compliance with Laws

Schedule 5.08(a) – Owned Real Property

Schedule 5.08(b) – Leased Real Property

Schedule 5.09 – Use of Real Property

Schedule 5.10 – Taxes

Schedule 5.14 – Absence of Changes

Schedule 5.17 – Subsidiaries

Schedule 5.18 – Capitalization

Schedule 5.20 – Brokers’ or Finders’ Fees

Schedule 5.21 – Labor Relations

Schedule 5.22 – Employee Benefit Plans

Schedule 5.24 – Conflicts of Interest

Schedule 5.26 – Indebtedness

Schedule 5.27 – Material Contracts

Schedule 5.28 – Insurance

Schedule 5.30 – Products Liability

Schedule 5.33 – Location of Assets

Schedule 5.34 – Change of Control Payments

Schedule 9.02 – Permitted Liens

Schedule 9.04 – Investments

Schedule 9.07 – Indebtedness

 

  

  

  

 

THIRD AMENDED AND RESTATED

 

SECURITIES PURCHASE AGREEMENT AND SECURITY AGREEMENT

 

THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT AND SECURITY AGREEMENT, dated as of August __, 2015, by and among FUSION NBS ACQUISITION CORP., a Delaware corporation (“Borrower”), FUSION TELECOMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation (“Parent”), NETWORK BILLING SYSTEMS, L.L.C., a New Jersey limited liability company (“NBS”), FUSION BVX LLC, a Delaware limited liability company (“BVX”), PINGTONE COMMUNICATIONS, INC. (AS SUCCESSOR BY MERGER TO FUSION PTC ACQUISITION, INC.), a Delaware corporation (“PingTone,” and together with Parent, NBS, BVX and each other direct and indirect subsidiary of Parent from time to time party hereto, the “Guarantors”, and together with the Borrower, the “Credit Parties”), PRAESIDIAN CAPITAL OPPORTUNITY FUND III, LP, a Delaware limited partnership (“Fund III”), PRAESIDIAN CAPITAL OPPORTUNITY FUND III-A, LP, a Delaware limited partnership (“Fund III-A”), UNITED INSURANCE COMPANY OF AMERICA, an Illinois corporation (“United” and together with Fund III, Fund III-A and each of their respective successors and permitted assigns, each a “Lender”, and collectively, the “Lenders”), and Fund III as agent for the Lenders (in such capacity, the “Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Credit Parties, Fund III, Fund III-A, Plexus Fund II, L.P., a Delaware limited partnership (“Plexus” and together with Fund III and Fund III-A and each of their respective successors and assigns, each an “Original Lender” and collectively, the “Original Lenders”), and the Agent entered into a Securities Purchase Agreement and Security Agreement, dated as of October 29, 2012 (as amended or otherwise modified prior to December 31, 2013, the “Original Securities Purchase Agreement”) pursuant to which (i)(A) the Borrower issued to the Original Lenders Senior Notes in the initial aggregate principal amount of $6,500,000 bearing interest at 10% per annum (“Series A Notes”) and Senior Notes in the initial aggregate principal amount of $10,000,000 bearing interest at 11.5% per annum (“Series B Notes”) and (B) in connection with the Series A Notes, Parent issued to the Original Lenders Warrants (“Original Warrants”) to purchase 5.0% of the equity interests of Parent, calculated on a fully-diluted basis, as of the Initial Closing Date (as hereinafter defined), and (ii) the Borrower issued to the Original Lenders Senior Notes in the initial aggregate principal amount of $500,000 bearing interest at 11.15% per annum (the “Series C Notes”);

 

  

1

  

 

WHEREAS, the Credit Parties, the Existing Lenders and the Agent entered into an Amended and Restated Securities Purchase Agreement and Security Agreement, dated as of December 31, 2013 (as heretofore amended or otherwise modified, the “12/31/13 Securities Purchase Agreement”) pursuant to which the Original Securities Purchase Agreement was amended and restated to, among other things (i) provide for the issuance by Borrower to the Existing Lenders (other than Plexus II) of Senior Notes in the initial aggregate principal amount of $25,000,000 bearing interest at 11.15% per annum (“Series D Notes”), (ii) provide for the issuance by Parent to such Existing Lenders, in connection with their purchase of the Series D Notes, of warrants (“New Warrants”) to purchase 4.25% of the equity interests of Parent, calculated on a fully-diluted basis, as of the Series D Closing Date (as hereinafter defined), (iii) change the interest rate of the Series A Notes and the Series B Notes to 11.15% per annum, and (iv) extend the maturity date of the Series A Notes, Series B Notes and Series C Notes;

 

WHEREAS, the Credit Parties, the Existing Lenders and the Agent entered into a Second Amended and Restated Securities Purchase Agreement and Security Agreement, dated as of October 31, 2014 (as heretofore amended or otherwise modified, the “10/31/14 Securities Purchase Agreement”) pursuant to which the 12/31/13 Securities Purchase Agreement was amended and restated to, among other things (i) provide for the issuance by Borrower to the Existing Lenders of Senior Notes in the initial aggregate principal amount of $5,000,000 bearing interest at 11.15% per annum (“Series E Notes”), (ii) extend the maturity date of the Series A Notes, Series B Notes, Series C Notes and Series D Notes, and (iii) add PingTone as a Guarantor and Credit Party hereunder;

 

WHEREAS, the Borrower wishes to sell to the Lenders, and the Lenders wish to purchase from the Borrower, Senior Notes in the initial aggregate principal amount of $9,000,000 bearing interest at 10.8% per annum (“Series F Notes”);

 

WHEREAS, on the date hereof,  the Borrower has agreed to prepay the Obligations (as defined in the 10/31/14 Securities Purchase Agreement) owing to Plexus, Plexus Fund III, L.P., a Delaware limited partnership (“Plexus III”), Plexus Fund QP III, L.P., a Delaware limited partnership (“Plexus QP III” and together with Plexus and Plexus III, the “Plexus Lenders”) (such repayment, the “Plexus Payoff”) and the Existing Lenders have consented thereto; and

 

WHEREAS, the parties hereto have agreed to amend and restate the 10/31/14 Securities Purchase Agreement in order to, among other things (i) provide for the issuance and sale of the Series F Notes to finance, in part, the Plexus Payoff, (ii) extend the maturity date of the Series A Notes, Series B Notes, Series C Notes, Series D Notes and Series E Notes and (iii) change the interest rate of the Series A Notes, the Series B Notes, the Series C Notes, the Series D Notes and the Series E Notes to 10.8% per annum.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree to amend and restate the 10/31/14 Securities Purchase Agreement and the 10/31/14 Securities Purchase Agreement is hereby amended and restated in its entirety as follows:

 

ARTICLE 1

 

DEFINITIONS

 

1.01 Definitions.  As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:

 

  

2

  

 

“Accountants” shall have the meaning assigned to that term in Section 8.01(a).

 

“Affiliate” shall mean, with respect to any Person, any other Person (a) directly or indirectly controlling, controlled by, or under common control with, such Person, (b) directly or indirectly owning or holding five percent (5%) or more of any Equity Interests in such Person, or (c) five percent (5%) or more of whose voting stock or other Equity Interests is directly or indirectly owned or held by such Person.  For purposes of this definition, “control” (including with correlative meanings, the terms “controlling”, “controlled by” and under “common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Agent” shall have the meaning set forth in the first paragraph of this Agreement, and shall include its successors and assigns.

 

“Agreement” shall mean this Third Amended and Restated Securities Purchase Agreement and Security Agreement, including the exhibits and schedules attached hereto, as the same may be amended, restated, supplemented or otherwise modified in accordance with the terms hereof.

 

“Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the Applicable Laws comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Applicable Laws may from time to time be amended, renewed, extended, or replaced).

 

“Applicable Law” shall mean all international, foreign, federal, provincial, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

“Authorized Officer” shall mean any of the President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Vice President, Finance and Accounting or Treasurer of a Credit Party (or any other officer authorized by a Credit Party to perform all or any portion of the same or similar functions of any of such enumerated officers, as applicable).

 

“Bank Secrecy Act” shall mean 31 U.S.C. Sections 5311-5330, as the same has been, or shall hereafter be, extended, amended or replaced.

 

“Board of Directors” shall mean the board of directors of any corporation, board of managers of any limited liability company or similar governing body of any other Person.

 

  

3

  

 

“Blocked Person” shall mean (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (iii) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (iv) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224, (v) a Person that is named as a “specially designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or (vi) a Person who is affiliated or associated with a person or entity listed above.

 

“Borrower” shall have the meaning set forth in the first paragraph of this Agreement, and shall include each Person which becomes a successor or permitted assign of Borrower.

 

“BVX” shall have the meaning set forth in the first paragraph of this Agreement, and shall include each Person which becomes a successor or permitted assign of BVX.

 

“BVX Acquisition Agreement” shall mean the Asset Purchase and Sale Agreement, dated as of August 30, 2013, by and among Parent, BVX (as the successor in interest to Fusion Broadvox Acquisition Corp.), BroadvoxGo!, LLC, a Delaware limited liability company and Cypress Communications, LLC, a Delaware limited liability company, as amended by the First Amendment thereto dated as of November 15, 2013 and the Second Amendment thereto dated as of December 16, 2013.

 

“Business” shall mean the business of providing Internet Protocol voice, data and cloud services.

 

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law or executive order to close.

 

“Capital Expenditures” shall mean expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one (1) year, including the total principal portion of Capital Lease Obligations, which, in accordance with GAAP, would be classified as capital expenditures and all other expenditures made or liabilities incurred for intangible assets, which are capitalized.

 

“Capital Lease” shall mean, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee which would, in accordance with GAAP, be required to be accounted for as a capital lease on the balance sheet of such Person.

 

“Capital Lease Obligations” shall mean any Indebtedness of the Credit Parties represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

 

  

4

  

 

“Cash Equivalents” shall mean: (i) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one (1) year from the date of acquisition thereof; (ii) commercial paper maturing no more than one (1) year from the date issued and, at the time of acquisition, having a rating of at least A-1 from Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc., or at least P-1 from Moody’s Investors Service, Inc.; (iii) certificates of deposit or bankers’ acceptances maturing within one (1) year from the date of issuance thereof issued by, or overnight reverse repurchase agreements from, any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having combined capital and surplus of not less than $500,000,000; (iv) time deposits maturing no more than thirty (30) days from the date of creation thereof with commercial banks having membership in the Federal Deposit Insurance Corporation in amounts not exceeding the lesser of $100,000 or the maximum amount of insurance applicable to the aggregate amount of the Credit Parties’ and their respective Subsidiaries’ deposits at such institution; and (v) deposits or investments in mutual or similar funds offered or sponsored by brokerage or other companies having membership in the Securities Investor Protection Corporation in amounts not exceeding the lesser of $100,000 or the maximum amount of insurance applicable to the aggregate amount of the Credit Parties’ and their respective Subsidiaries’ deposits at such institution.  Notwithstanding the foregoing, unless otherwise consented to in writing by Agent, Cash Equivalents will not include and each Credit Party will be prohibited from purchasing, purchasing participations in, entering into any type of swap or other equivalent derivative transaction, or otherwise holding or engaging in any ownership interest in any type of debt instrument, including any corporate or municipal bond with a long-term nominal maturity for which the interest rate is reset through a dutch auction and more commonly referred to as an auction rate security.

 

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.

 

“Change in Law” shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

 

“Change of Control” shall mean (a) Parent ceasing to (i) own, directly or indirectly, one hundred percent (100%) of the issued and outstanding Equity Interests of Borrower, or (ii)  control, by contract, ownership or otherwise, that percentage of the outstanding voting Equity Interests of Borrower necessary at all times to elect a majority of the Board of Directors of Borrower and to direct the management policies and decisions of Borrower, (b) any merger, consolidation or sale of all or substantially all of the property or assets of Borrower or Parent or of one or more of Parent’s or Borrower’s Subsidiaries that, individually or in the aggregate, constitute a material part of the business, operations or assets of the Credit Parties taken as a whole, (c) the occurrence of any “Change of Control” (or similar term) under (and as defined in) (i) the First Lien Credit Documents or (ii) any documents evidencing Indebtedness senior to the Indebtedness existing pursuant to the Notes and this Agreement.  For purposes of this definition “control” means the power to direct or cause the direction of management and policies of a Person, whether by contract or otherwise, (d) both (x) Matthew Rosen ceasing to be the Chief Executive Officer of Parent for any reason unless a successor, reasonably acceptable to Agent, is appointed within 4 months thereof, and (y) Marvin Rosen ceasing to be the Chairman of the Board of Directors of Parent for any reason unless a successor, reasonably acceptable to Agent, is appointed within four (4) months thereof, or (e) Jonathan Kaufman ceasing to be an executive officer of NBS for any reason unless a successor, reasonably acceptable to Agent, is appointed within four (4) months thereof.

 

  

5

  

 

“CIP Regulations” shall have the meaning assigned to that term in Section 14.11.

 

“Closing” shall have the meaning assigned to that term in Section 2.03.

 

“Closing Date” shall have the meaning assigned to that term in Section 2.03.

 

“Closing Date Warrant Shares” shall have the meaning assigned to that term in Section 3.14.

 

“Code” shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

 

“Collateral” shall mean and include all personal property and fixtures, whether now owned or hereafter created or acquired, and wherever located, and consisting of (capitalized terms used in this definition shall have the meaning set forth in the UCC):

 

(a)           all Accounts;

 

(b)           all Equipment (other than motor vehicles);

 

(c)           all General Intangibles;

 

(d)           all Inventory;

 

(e)           all Investment Property;

 

(f)           all Deposit Accounts;

 

(g)           all Instruments;

 

(h)           all Chattel Paper and Electronic Chattel Paper;

 

(i)           all Letter of Credit Rights;

 

(j)           all Documents;

 

  

6

  

 

(k)           all Commercial Tort Claims;

 

(l)           all Goods;

 

(m)           all Software; and

 

(n)           all right, title and interest in and to, whether now owned or hereafter acquired and wherever located, (i) its respective goods and other property including all merchandise returned or rejected by Customers, relating to or securing any of the Accounts; (ii) all rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all other rights and interests, including warranty claims, relating to any goods; (iv) if and when obtained, all guarantees from and all real and personal property of third parties in which such Person has been granted a lien or security interest as security for the payment or enforcement of Accounts; and (v) all documents, instruments, and agreements supporting the foregoing or delivered in connection therewith;

 

(o)           all ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned or in which it has an interest), computer programs, tapes, disks and documents relating to any other property constituting part of the Collateral; and

 

(p)           all proceeds and products of the foregoing in whatever form, including: cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds.

 

Notwithstanding the foregoing, none of the following items will be included within the Collateral: (a) assets if the granting of a security interest in such asset would: (I) be prohibited by Applicable Laws (other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the UCC notwithstanding such prohibition), or (II) be prohibited by contract (except to the extent such prohibition is overridden by UCC Section 9-408) so long as such negative pledge is otherwise permitted under clause (c) hereof, (b) any property and assets, the pledge of which would require a Consent from a Governmental Authority, unless and until such Consent shall have been obtained or waived, and (c) assets in circumstances where the Lenders and the Borrower agree in writing that the cost, burden or consequence (including adverse tax consequences) of obtaining or perfecting a security interest in such assets is excessive in relation to the practical benefit afforded thereby, it being understood that neither the Borrower nor any Subsidiary thereof shall be required to provide any guarantee, pledge or asset support arrangement that, in the reasonable judgment of the Borrower, would subject the Borrower to any adverse tax consequence due to the application of Section 956 of the Code.

 

“Collateral Access Agreement” shall mean an agreement in the form of Exhibit M attached to the 10/31/14 Securities Purchase Agreement, or otherwise reasonably satisfactory to Agent, which is executed in favor of Agent by a Person who owns or occupies premises at which any Collateral may be located from time to time and by which such Person shall waive any Lien that such Person may ever have with respect to any of the Collateral and shall authorize Lenders from time to time to enter upon the premises to inspect or remove the Collateral from such premises or to use such premises to store or dispose of such Collateral.

 

  

7

  

 

“Commission” shall mean the Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act.

 

“Common Stock” shall mean shares of common stock of Parent, $0.01 par value per share.

 

“Compliance Certificate” shall have the meaning assigned to that term in Section 8.01(d).

 

“Consents” shall mean all filings with and all Licenses, consents, approvals, authorizations, qualifications and orders of Governmental Authorities and other third parties, domestic or foreign, necessary to carry on each Credit Party’s business or necessary (including to avoid a conflict or breach under any agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement or any of the Transaction Documents, including any Consents required under all applicable federal, state or other Applicable Law.

 

“Consolidated Basis” shall mean, with respect to the financial statements or other financial information of a Person, the accounts and other items of such Person and its Subsidiaries on a consolidated basis in accordance with GAAP applied on a basis consistent with prior practices.

 

“Consolidating Basis” shall mean, with respect to the financial statements or other financial information of a Person, the accounts and other items of such Person and its Subsidiaries on a consolidating basis in accordance with GAAP applied on a basis consistent with prior practices.

 

“Contingent Obligation” shall mean, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

 

“Contractual Obligations” shall mean as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument or arrangement (whether in writing or otherwise) to which such Person is a party or by which it or any of such Person’s property is bound.

 

  

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“Control Agreement” shall mean a tri-party or four-party deposit account, securities account or commodities account control agreement by and among the applicable Credit Party, Agent and the depository, securities intermediary or commodities intermediary and, in the case of a four-party deposit account, securities account or commodities account control agreement, the First Lien Agent, each in form and substance reasonably satisfactory in all respects to Agent and in any event, but subject to the terms of any four-party deposit account, securities account or commodities account control agreement, providing to Agent “control” of such deposit account, securities or commodities account within the meaning of Articles 8 and 9 of the UCC, as applicable, on a “springing” dominion basis upon the occurrence and during the continuance of an Event of Default.

 

“Controlled Group” shall mean all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which are, together with any Credit Party, treated as a single employer under Section 414 of the Code.

 

“Corporate Allocation Payments” shall mean intercompany payments made to Parent for allocation of expenses related to management support, professional services incurred, rent or utilities as set forth in the projections provided to Lenders in accordance with Section 8.01(g).

 

“Cost of Money” shall have the meaning defined in and shall be calculated as provided in the SBA Regulations.

 

“Credit Parties” shall have the meaning set forth in the first paragraph of this Agreement, and shall include their respective successors and assigns.

 

“Customer” shall mean and include the account debtor with respect to any Account and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with a Person, pursuant to which such Person is to deliver any personal property or perform any services.

 

“Default” shall mean a condition, act or event that, after notice or lapse of time or both, would constitute an Event of Default if that condition, act or event were not cured or removed within any applicable grace or cure period.

 

“Earnings Before Interest and Taxes” shall mean for any period the sum of (i) net income (or loss) of the Borrower on a Consolidated Basis for such period (excluding extraordinary gains and extraordinary losses, so long as any such exclusion from the calculation of Earnings Before Interest and Taxes is made in accordance with GAAP), plus (ii) to the extent deducted in the determination of net income (or loss) for such period, (A) all interest expense of the Borrower on a Consolidated Basis for such period, including interest expense resulting from original issue discount and other amortization of debt discount as determined in accordance with GAAP, plus (B) all charges against income of the Borrower on a Consolidated Basis for such period for federal, state and local income taxes, plus (C) any non-cash expense of the Borrower on a Consolidated Basis associated with ASC Topic 350, ASC Topic 360, ASC Topic 480 or ASC Topic 815, plus (D) any non-cash expenses of the Borrower on a Consolidated Basis associated with stock options, warrants or stock grants of Borrower and its Subsidiaries, plus (E) any non-cash expenses incurred in connection with the early extinguishment of Indebtedness of the Borrower or its Subsidiaries, plus (F) any other unusual or one-time items which are mutually agreed upon by the Lenders and the Credit Parties.  In addition, the calculation of Earnings Before Interest and Taxes for any period shall be adjusted to exclude (w) any aggregate net gain or loss arising from any permitted sale, conversion, exchange or other disposition of capital assets made during such period, including (1) all non-current assets, and (2) without duplication, the following assets, whether or not current: fixed assets, whether tangible or intangible, inventory sold in connection with the disposition of fixed assets and all Equity Interests and other securities, (x) any net gain from the collection during such period of any proceeds of life insurance policies, (y) any gain or loss (or other impact to the financial statements) arising from the repurchase during such period of Equity Interests and (z) any non-cash income or expense realized during such period relating to an Interest Rate Hedge or any Other Hedging Agreement.

 

  

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“EBITDA” shall mean for any period, the sum of (i) Earnings Before Interest and Taxes of the Borrower on a Consolidated Basis for such period, plus to the extent deducted in the determination of net income (or loss) for such period (ii) depreciation expenses of the Borrower on a Consolidated Basis for such period plus (iii) amortization expenses of the Borrower on a Consolidated Basis for such period.

 

“Environmental Laws” shall mean all present and future Applicable Laws, Requirements of Law, or Consents, relating to the protection of human health and safety or the environment, including (a) all Applicable Laws, Requirements of Law, or Consents, pertaining to reporting, licensing, permitting, investigation, and remediation of emissions, discharges, releases, or threatened releases of hazardous materials, chemical substances, pollutants, contaminants, or hazardous or toxic substances, materials or wastes whether solid, liquid, or gaseous in nature, into the air, surface water, groundwater, or land, or relating to the presence, generation, discharge, release, removal, manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of chemical substances, pollutants, emissions, contaminants, or hazardous, radioactive or toxic substances, materials, or wastes, whether solid, liquid, or gaseous in nature; and (b) all Applicable Laws, Requirements of Law or Consents, pertaining to the protection of the health and safety of employees or the public.

 

“Equity Interests” of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Commission under the Exchange Act).

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended and in effect from time to time and the rules and regulations promulgated thereunder.

 

  

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“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) under common control with any Credit Party 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).

 

“Event of Default” shall have the meaning assigned to such term in Section 11.01.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.

 

“Excluded Taxes” shall mean, with respect to any Lender or any other recipient of any payment to be made by or on account of any obligation of any Borrower hereunder, (i) Taxes imposed on net income imposed by the jurisdiction in which the Lender is organized or doing business by virtue of such Lender being organized or doing business in such jurisdiction or in which its principal executive office or applicable lending office is located, (ii) taxes imposed under FATCA, and (iii) U.S. withholding taxes (other than FATCA) unless such U.S. withholding taxes are imposed as a result of a Change in Law (including a change in interpretation of existing law by a court or administrative agency) after the date of this Agreement.

 

“Executive Order No. 13224” shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be renewed, extended, amended or replaced.

 

“Existing Lenders” shall mean, collectively, the Original Lenders, Plexus III, Plexus QP III and United.

 

“FATCA” shall mean Sections 1471 through 1474 of the Code (as of the date hereof) and any regulations or official interpretations thereof (including any Revenue Ruling, Revenue Procedure, Notice or similar guidance issued by the Internal Revenue Service thereunder as a precondition to relief or exemption from Taxes under such provisions); provided, however, FATCA shall also include any amendments to Section 1471 through 1474 of the Code if, as amended, FATCA provides a commercially reasonable mechanism to avoid the tax imposed thereunder by satisfying the information reporting and other requirements of FATCA.

 

“First Lien Agent” shall mean Opus Bank, in its capacity as Administrative Agent under, and as defined in, the First Lien Credit Agreement.

 

“First Lien Credit Agreement” shall mean that certain Credit Agreement, dated as of the Closing Date, by and among Borrower, the First Lien Agent and the Senior Lenders (as defined in the Subordination Agreement).

 

“First Lien Indebtedness” has the meaning given to the term “Bank Debt” in the Subordination Agreement.

 

  

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“First Lien Credit Documents” means the “Bank Documents” as such term is defined in the Subordination Agreement.

 

“Fixed Charge Coverage Ratio” shall mean, with respect to any fiscal period of the Borrower, the ratio of (a) EBITDA for such period, less Capital Expenditures of the Borrower on a Consolidated Basis during such period which are not funded by borrowed money (but excluding from “borrowed money” proceeds of revolving advances under the Working Capital Agreement)  less all taxes (whether federal, local, state, income or otherwise) actually paid by the Borrower on a Consolidated Basis during such period to (b) Senior Debt Payments and all payments made pursuant to, or in respect of, the Seller Note, in each case made or scheduled to be made by the Borrower on a Consolidated Basis during such period, plus payments made by the Borrower on a Consolidated Basis during such fiscal period on account of Capital Lease Obligations.

 

“Foreign Lender” shall mean any Lender that is not a United States Person as defined in Section 7701(a)(30) of the Code.

 

“Fund III” shall have the meaning provided in the preamble hereto.

 

“Fund III-A” shall have the meaning provided in the preamble hereto.

 

“Funded Debt” shall mean, with respect to the Borrower and its Subsidiaries, all Indebtedness for borrowed money for which the Borrower or such Subsidiary is obligated including all Indebtedness under all Capital Lease Obligations, it being understood that Funded Debt shall not include Indebtedness evidenced by the Seller Note.

 

“GAAP” shall mean generally accepted accounting principles in effect within the United States, consistently applied.

 

“Governmental Authority” shall mean the government of any nation, state, city, locality or other political subdivision of any thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, regulation or compliance, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

 

“Guarantor” shall have the meaning set forth in the first paragraph of this Agreement and any other Person who may hereafter guarantee payment or performance of the whole or any part of the obligations of the Borrower under the Notes and this Agreement and “Guarantors” shall mean collectively all such Persons.

 

“Guarantors’ Obligations” shall have the meaning assigned to that term in Section 13.01.

 

“Guaranty” shall mean any guaranty of the obligations of the Borrower executed by a Guarantor in favor of Agent or Lenders.

 

  

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“Hazardous Materials” shall mean any chemical, pollutant, contaminant, pesticide, petroleum or petroleum product or byproduct, radioactive substance, solid waste (hazardous or extremely hazardous), special, dangerous or toxic waste, hazardous or toxic substance, chemical or material regulated, listed, referred to, limited or prohibited under any Environmental Law, including:  (i) friable or damaged asbestos, asbestos containing material, polychlorinated biphenyls (PCBs), solvents and waste oil; (ii) any “hazardous substance” as defined under CERCLA or any Environmental Law; (iii) any hazardous waste defined under RCRA or any Environmental Law; and (iv) even if not prohibited, listed, limited or regulated by an Environmental Law, all pollutants, contaminants, hazardous, dangerous or toxic chemical, materials, wastes or any other substances, including any industrial process or pollution control waste (whether or not hazardous within the meaning of RCRA) which could pose a hazard to the environment, or the health or safety of any person or impair the use or value of any portion of the Real Property of the Credit Parties or their respective Subsidiaries.

 

“Hazardous Substance” shall mean any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA or any other applicable Environmental Law and in the regulations adopted pursuant thereto.

 

“Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA, RCRA or applicable state law, and any other applicable Federal and state laws now in force or hereafter enacted relating to hazardous waste disposal.

 

“Indebtedness” shall mean, as to any Person, without duplication, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (ii) the maximum amount available to be drawn or paid under all letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations issued for the account of such Person and all unpaid drawings and unreimbursed payments in respect of such letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations, (iii) all indebtedness of the types described in clause (i), (ii), (iv), (v), (vi) or (vii) of this definition secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person (provided that, if the Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the fair market value of the property to which such Lien relates as determined in good faith by such Person), (iv) the aggregate amount of all Capital Lease Obligations of such Person, (v) all obligations of such Person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e., take-or-pay and similar obligations, (vi) all Contingent Obligations of such Person, (vii) all obligations under any Interest Rate Hedges, Other Hedging Agreements or under any similar type of agreement.  Notwithstanding the foregoing, Indebtedness shall not include trade payables, accrued expenses and deferred Tax and other credits incurred by any Person in the Ordinary Course of Business.

 

“Indemnified Party” shall have the meaning assigned to that term in Section 7.01.

 

  

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“Indemnified Taxes” shall mean Taxes other than Excluded Taxes or Other Taxes.

 

“Independent Director” shall mean a natural Person who is designated by the Required Lenders.

 

“Initial Closing Date” shall mean October 29, 2012.

 

“Initial Intellectual Property Security Agreement” shall mean the Intellectual Property Security Agreement, dated as of the Initial Closing Date, by and among Parent, NBS, the Agent and certain of the Lenders.

 

“Intellectual Property Security Agreement” shall mean the Intellectual Property Security Agreement, dated as of the Second Restatement Closing Date, by and among the Borrower, each Subsidiary of Parent from time to time party thereto, and the Agent, substantially in the form of Exhibit E to the 10/31/14 Securities Purchase Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Interest” shall have the meaning assigned to that term in Section 2.06.

 

“Interest Payment Date” shall have the meaning assigned to that term in Section 2.06(a).

 

“Interest Rate” shall have the meaning assigned to that term in Section 2.06.

 

“Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap or similar agreements entered into by any Credit Party solely to provide protection to, or minimize the impact upon, the Credit Parties of increasing floating rates of interest applicable to Indebtedness.

 

“Investment” shall mean, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of the Equity Interests of another Person, (b) a loan, advance or capital contribution to, guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

 

“ISG” shall mean Interconnect Services Group II, LLC, a/k/a/ Interconnect Systems Group II, LLC, a New Jersey limited liability company.

 

“Lender” and “Lenders” shall have the meanings set forth in the first paragraph of this Agreement, and shall include each Person which becomes a transferee, successor or assign of any Lender.

 

  

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“Lending Office” shall mean, with respect to any Lender, the office or offices of such Lender specified in Section 12.02 hereto, or such other office or offices of such Lender as it may notify the Borrower pursuant to Section 12.02 from time to time.

 

“Leverage Ratio” shall mean, with respect to each measuring period, the ratio of (a) the aggregate principal balance of all Funded Debt outstanding on the last day of such measuring period to (b) EBITDA for such measuring period, where “measuring period” shall mean each period of four consecutive fiscal quarters of the Borrower on a Consolidated Basis.

 

“Liabilities” shall have the meaning assigned to that term in Section 7.01.

 

“License” or “Licenses” shall mean any license, permit, directive, authorization, approval or stipulation required to operate the Business at any location.

 

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever, including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the UCC or comparable law of any jurisdiction.

 

“Liquidity Event” shall have the meaning assigned to that term in Section 10.02

 

“Litigation” shall mean any action, proceeding, litigation, investigation, arbitration, mediation or claim.

 

“Loan Year” shall mean each period of twelve consecutive months beginning on the Closing Date and each anniversary thereof.

 

“Management Rights Agreements” shall mean those certain Management Rights Agreements, dated as of the Initial Closing Date, by and among the Borrower and each Original Lender in the form of Exhibit F to the Original Securities Purchase Agreement, each as may be amended, restated, supplemented or otherwise modified.

 

“Mandatory Redemption Prices” shall have the meaning assigned to that term in Section 10.02 hereof.

 

“Margin Stock” shall have the meaning assigned to that term in Regulation U of the Federal Reserve Board.

 

“Material Adverse Effect” shall mean (a) a material adverse change in, or a material adverse effect upon, the assets, properties, operations, business, condition (financial or otherwise), or prospects of the Business, any Credit Party or any of its Subsidiaries, or, (b) a material impairment of the ability of any Credit Party or any Affiliate of any Credit Party to perform under any Transaction Document to which it is a party, or (c) a material adverse effect upon the legality, validity, binding effect, or enforceability against each Credit Party of any Transaction Document to which it is a party.

 

  

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“Material Contracts” shall mean the contracts, agreements, commitments and other Contractual Obligations of the Credit Parties and their Subsidiaries required to be set forth on Schedule 5.27.

 

“Maturity Date” shall mean February 28, 2021.

 

“Modification” shall mean, with respect to any agreement, instrument or other document, any amendment, supplement or modification of or to any provision of such document, any waiver of any provision of such document, and any consent to any departure by any party from the terms of any provision of such document.

 

“Multiemployer Plan” shall mean a multiemployer plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code.

 

“NBS” shall have the meaning set forth in the first paragraph of this Agreement, and shall include each Person which becomes a successor or permitted assign of NBS.

 

“New Warrants” shall have the meaning assigned to that term in the recitals hereof.

 

“Note Register” shall have the meaning assigned to that term in Section 12.17(b).

 

“Notes” shall mean the Original Notes, the Series E Notes and the Series F Notes.

 

“Obligations” shall mean and include any and all loans (including the loans evidenced by the Notes), advances, debts, liabilities, obligations, covenants and duties owing by Borrower to Lenders, or to any other direct or indirect subsidiary or affiliate of Lenders of any kind or nature, present or future (including any interest accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to Borrower whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) arising under this Agreement and the other Transaction Documents, absolute or contingent, joint or several, due or to become due, contractual or tortious, liquidated or unliquidated, now existing or hereafter arising, including under any amendments, extensions, renewals or increases and all costs and expenses of Lenders incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including attorneys’ fees and expenses owing under this Agreement and the other Transaction Documents, and all obligations of Borrower to Lenders to perform acts or refrain from taking any action.

 

“Optional Redemption Prices” shall have the meaning assigned to that term in Section 10.01 hereof.

 

“Ordinary Course of Business” shall mean the ordinary course of the Credit Parties’ business as conducted on the Closing Date.

 

  

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“Organization Documents” shall mean, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

 

“Original Acquisition Agreements” shall mean (i) Original Membership Interest Purchase Agreement, and (ii) the Asset Purchase and Sale Agreement dated as of January 30, 2012 by and among ISG, Sellers, the JK Trust, Borrower and Parent, as amended, including amendments dated June 6, 2012, August 20, 2012, and September 21, 2012 and all exhibits and schedules thereto.

 

“Original Lenders” shall have the meaning assigned to that term in the recitals hereof.

 

“Original Loan Documents” shall have the meaning assigned to that term in Section 1.06.

 

“Original Membership Interest Purchase Agreement” shall mean the Membership Interest Purchase and Sale Agreement, dated as of January 30, 2012, by and among Sellers, NBS, Borrower and Parent, as amended, including amendments dated June 6, 2012, August 20, 2012, September 21, 2012 and October 24, 2012 and all exhibits and schedules thereto.

 

“Original Notes” shall mean the Series A Notes, the Series B Notes, the Series C Notes and the Series D Notes.

 

“Original Obligations” shall have the meaning assigned to that term in Section 1.06.

 

“Original Securities Purchase Agreement” shall have the meaning assigned to that term in the recitals hereof.

 

“Original Warrants” shall have the meaning assigned to that term in the recitals hereof.

 

“Other Hedging Agreements” shall mean any foreign exchange contracts, cur­rency swap agreements, commodity agreements or other similar agreements or arrangements designed to protect against fluctuations in currency or commodity values.

 

“Other Taxes” shall mean 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 under any other Transaction Document or from the execution or delivery of this Agreement or any other Transaction Document.

 

  

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“Parent” shall have the meaning set forth in the first paragraph of this Agreement, and shall include each Person which becomes a successor or permitted assign of Parent.

 

“Parent Earnings Before Interest and Taxes” shall mean for any period the sum of (i) net income (or loss) of Parent on a Consolidated Basis for such period (excluding extraordinary gains and extraordinary losses, so long as any such exclusion from the calculation of Parent Earnings Before Interest and Taxes is made in accordance with GAAP), plus (ii) to the extent deducted in the determination of net income (or loss) for such period, (A) all interest expense of Parent on a Consolidated Basis for such period, including interest expense resulting from original issue discount and other amortization of debt discount as determined in accordance with GAAP, plus (B) all charges against income of Parent on a Consolidated Basis for such period for federal, state and local income taxes, plus (C) any non-cash expense of Parent on a Consolidated Basis associated with ASC Topic 350, ASC Topic 360, ASC Topic 480 or ASC Topic 815, plus (D) any non-cash expenses of Parent on a Consolidated Basis associated with stock options, warrants or stock grants of Parent, plus (iii) any non-cash expenses incurred in connection with the early extinguishment of Indebtedness of Parent.  In addition, the calculation of Parent Earnings Before Interest and Taxes for any period shall be adjusted to exclude (w) any aggregate net gain or loss arising from any permitted sale, conversion, exchange or other disposition of capital assets made during such period, including (1) all non-current assets, and (2) without duplication, the following assets, whether or not current: fixed assets, whether tangible or intangible, inventory sold in connection with the disposition of fixed assets and all Equity Interests and other securities, (x) any net gain from the collection during such period of any proceeds of life insurance policies, (y) any gain or loss (or other impact to the financial statements) arising from the repurchase during such period of Equity Interests and (z) any non-cash income or expense realized during such period relating to an Interest Rate Hedge or any Other Hedging Agreement.

 

“Parent EBITDA” shall mean for any period, the sum of (i) Parent Earnings Before Interest and Taxes for such period, plus to the extent deducted in the determination of net income (or loss) for such period (ii) depreciation expenses of Parent on a Consolidated Basis for such period plus (iii) amortization expenses of Parent on a Consolidated Basis for such period.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Title IV of ERISA, or any successor agency or other Governmental Authority succeeding to the functions thereof.

 

“Pension Plan” shall mean any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Credit Party or any ERISA Affiliate or to which any Credit Party or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

 

“Permitted Liens” shall mean (a) Liens in favor of Agent, for its benefit and the ratable benefit of the Lenders, (b) Working Capital Liens granted to the Working Capital Lender by Credit Parties other than Borrower; (c) Liens for Taxes, assessments or other governmental charges not delinquent or being Properly Contested; (d) deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance; (e) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary Course of Business; (f) Liens arising by virtue of the rendition, entry or issuance against any Credit Party or any of its Subsidiaries, or any property of any such Person, of any judgment, writ, order or decree, provided that such Liens are in existence for less than twenty (20) consecutive days after they first arises or is being Properly Contested; (g) mechanics’, workers’, materialmen’s or other like Liens arising in the Ordinary Course of Business with respect to obligations which are not due or which are being Properly Contested; (h) Liens placed upon equipment or Real Property hereafter acquired or leased to secure a portion of the purchase price or lease thereof, provided that (A) any such lien shall not encumber any other property of the Credit Parties and (B) the aggregate amount of Indebtedness incurred as a result of such purchases, during any fiscal year, shall not exceed the amount provided for in Section 9.15(c); (i) Liens disclosed on Schedule 9.02; (j) non-exclusive licenses of intellectual property, and leases or subleases of equipment or Real Property, in each case granted to third Persons in the Ordinary Course of Business and which do not interfere in any material respect with the operations of the business of the Credit Parties; and (k) subject to the provisions of the Subordination Agreement, Liens in favor of the holders of the First Lien Indebtedness pursuant to the First Lien Credit Documents.

 

  

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“Person” shall mean any individual, firm, corporation, limited liability company, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.

 

“PingTone” shall have the meaning set forth in the first paragraph of this Agreement, and shall include each Person which becomes a successor or permitted assign of PingTone.

 

“PingTone Acquisition Agreement” shall mean the Agreement and Plan of Merger, dated as of October 15, 2014, by and among Parent, Fusion PTC Acquisition, Inc., a Delaware corporation, PingTone Communications, Inc., a Delaware corporation, J. Shelby Bryan, solely in his capacity as Stockholder Representative (the “PingTone Stockholder Representative”) and J. Shelby Bryan, Steven Wheeler, and Janal LLP.

 

“Plan” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA, other than a Multiemployer Plan, maintained for employees of the Credit Parties prior to the Closing Date, or any member of the Controlled Group or any such Plan to which any Credit Party or any member of the Controlled Group is required to contribute on behalf of any of its employees.

 

“Pledge Agreement” shall mean the Pledge Agreement, dated as of the Initial Closing Date, by and among Parent, each Subsidiary of Parent from time to time party thereto, and the Agent, substantially in the form of Exhibit D to the Original Securities Purchase Agreement, as the same may be amended, restated, supplemented or otherwise modified.

 

  

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“Plexus” shall have the meaning assigned to that term in the recitals hereof.

 

“Plexus Lenders” shall have the meaning assigned to that term in the recitals hereof.

 

“Plexus Payoff” shall have the meaning assigned to that term in the recitals hereof.

 

“Plexus QP III” shall have the meaning assigned to that term in the recitals hereof.

 

“Plexus III” shall have the meaning assigned to that term in the recitals hereof.

 

“Pro Forma Balance Sheet” shall have the meaning assigned to that term in Section 5.11(a).

 

“Properly Contested” shall mean contested in good faith by appropriate proceedings diligently conducted which stay the enforcement of any Lien and for which adequate reserves in accordance with GAAP are being maintained by the Credit Parties and their Subsidiaries; provided, that no such Lien shall have any effect on the priority of the Liens in favor of Agent for its benefit and for the ratable benefit of Lenders or the value of the assets on which Agent has such a Lien and a stay of enforcement of any such Lien shall be in effect.

 

“Purchase Money Indebtedness” shall mean and include (i) Indebtedness (other than the Indebtedness under the Notes) of any Credit Party for the payment of all or any part of the purchase price of any equipment, (ii) any Indebtedness (other than the Indebtedness under the Notes) of any Credit Party incurred at the time of or within thirty (30) days prior to or one hundred twenty (120) days after the acquisition of any equipment for the purpose of financing all or any part of the purchase price thereof (whether by means of a loan agreement, Capital Lease or otherwise), and (iii) any renewals, extensions or refinancings (but not any increases in the principal amounts) thereof outstanding at the time.

 

“Questionnaire” shall mean the Perfection Certificate and the responses thereto executed by the Borrower and delivered to Agent in connection with this Agreement.

 

“RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time.

 

“Real Property” shall mean, with respect to each Credit Party, all of such Credit Party’s right, title and interest in and to (x) the owned and leased premises identified on Schedules 5.08(a) and 5.08(b) hereto, and (y) any owned or leased premises acquired by such Credit Party after the Closing Date.

 

“Releases” shall have the meaning assigned to that term in Section 5.15(c) hereof.

 

  

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“Reportable Event” shall mean a reportable event described in Section 4043(b) of ERISA or the regulations promulgated thereunder.

 

“Required Lenders” shall mean Lenders holding greater than sixty percent (60%) of the outstanding principal amount of the Notes.

 

“Requirement of Law” or “Requirements of Law” shall mean any requirement, direction, policy or procedure of any Applicable Law or License, judgment, or Consent.

 

“Restricted Payment” shall mean: (a) any dividend or other distribution, direct or indirect (whether in cash or property), on account of any Equity Interests of any Credit Party or any of its Subsidiaries, now or hereafter outstanding, except a dividend payable solely in shares of that class of Equity Interest to the holders of that class; (b) any payment or prepayment of principal of, premium, if any, or interest on, or any redemption, conversion, exchange, retirement, defeasance, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Equity Interests of any Credit Party or any of its Subsidiaries now or hereafter outstanding, or the issuance of a notice of an intention to do any of the foregoing (or setting aside any funds for any of the foregoing purposes); (c) any payment or prepayment of interest on, principal of, premium, if any, redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Indebtedness subordinated to the Indebtedness existing pursuant to the Notes and this Agreement, other than, as expressly permitted under the terms of the applicable subordination agreement to which Agent and/or Lenders are a party; (d) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any Equity Interests of any Credit Party or any of its Subsidiaries now or hereafter outstanding; (e) any director fee paid to any member of the Board of Directors of any Credit Party who is also an employee of any Credit Party; (f) any payment by any Credit Party to any Seller, whether under the Seller Note or otherwise, except to the extent permitted by the Seller Subordination Agreement and provided that after giving effect to such payment the Credit Parties are in compliance on a pro forma basis with the covenants set forth in Section 9.15, recomputed for the most recent quarter for which financial statements have been delivered, and except for salary payments to Jonathan Kaufman at a rate not greater than $250,000 per year without the prior written consent of Agent; (g) any payment by any Credit Party to Marvin Rosen except to the extent permitted by the Rosen Subordination Agreement and provided that after giving effect to such payment the Credit Parties are in compliance on a pro forma basis with the covenants set forth in Section 9.15, recomputed for the most recent quarter for which financial statements have been delivered, (h) any payments to the sellers under the BVX Acquisition Agreement, except pursuant to the terms and conditions of the BVX Acquisition Agreement, as in effect on December 16, 2013, (i) any payments to the PingTone Stockholders’ Representative or the stockholders of PingTone existing immediately prior to the consummation of the merger contemplated by the PingTone Acquisition Agreement, except pursuant to the terms and conditions of the PingTone Acquisition Agreement, as in effect on the date hereof, or (j) any payments to Parent; provided, however, that the term “Restricted Payments” shall not include (x) intercompany payments made in the Ordinary Course of Business for funding of such Credit Party’s payroll and terminating NBS traffic on the Parent’s network, provided that any payments by Borrower to Parent shall be at direct cost plus a mark-up not in excess of the average mark-up provided to third party customers for similar services, (y) any Corporate Allocation Payment, provided that (A) no Default or Event of Default shall have occurred and be continuing or would result from the making of such payment, (B) any proposed  Corporate Allocation Payment,  together with all other Corporate Allocation Payments made during the period of twelve (12) consecutive fiscal months ending on the last day of the month in which such proposed Corporate Allocation Payment is to be made, shall  not in the aggregate exceed the sum of $1,000,000 plus an amount equal to 0.30 multiplied by the amount, if any, by which EBITDA for such period exceeds $12,000,000, and, (C) Corporate Allocation Payments made in any fiscal year shall not exceed $3,500,000 in the aggregate, or (z) payments under the Original Acquisition Agreements, other than under the Seller Note.

 

  

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“Rosen Notes” shall mean the letter agreement between Marvin Rosen and Parent, dated October 25, 2012, providing for, among other things, payment of $484,058.03 and the promissory note made by Parent, payable to Marvin Rosen, in the principal amount of $3,027,364.37.

 

“Right of First Refusal Agreement” shall mean the Right of First Refusal Agreement dated as of the Initial Closing Date among Parent and the Lenders substantially in the form of Exhibit G to the Original Securities Purchase Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Rosen Subordination Agreement” shall mean the Subordination Agreement dated as of the Initial Closing Date by and among Marvin Rosen, the Original Lenders, the Agent and Parent, substantially in the form of Exhibit I to the Original Securities Purchase Agreement, as the same may be amended, restated, supplemented or otherwise modified.

 

“SBA” shall mean the United States Small Business Administration or any successor thereto.

 

“SBA Regulations” shall mean the Small Business Investment Act of 1958, as amended, and the Regulations of SBA thereunder.

 

 

“SBA Side Letters” shall mean that certain Small Business Side Letter, dated as of the Initial Closing Date, by and between the Borrower and Fund III in the form of Exhibit L-1 to the Original Securities Purchase Agreement, as may be amended, restated, supplemented or otherwise modified.

 

“SBIC” shall mean a small business investment company that is licensed by the SBA.

 

“Second Restatement Closing Date” shall mean October 31, 2014.

 

“Securities” shall mean the Notes and the Warrants.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations thereunder as the same shall be in effect at the time.

 

  

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“Seller Note” shall mean the promissory note dated the Initial Closing Date issued by Borrower to Sellers pursuant to the Original Membership Interest Purchase Agreement, in the maximum principal amount of $600,000.

 

“Seller Subordination Agreement” shall mean the Subordination Agreement dated as of the Initial Closing Date by and among the Sellers, the Original Lenders, the Agent and Parent, substantially in the form of Exhibit H to the Original Securities Purchase Agreement, as the same may be amended, restated, supplemented or otherwise modified.

 

“Sellers” shall mean Jonathan Kaufman, a resident of the State of New Jersey and Christiana Trust, a division of WSFS Bank, as trustee of the LK Trust, a Delaware Trust.

 

“Senior Debt Payments” shall mean and include for any period, (a) the aggregate of regularly scheduled principal payments of all Senior Indebtedness made or to be made by the Borrower and its Subsidiaries during such period, plus (b) all interest expense actually paid on the Senior Indebtedness during such period, plus (c) all fees, commissions and charges (other than the Transaction Fee) with respect to the Senior Indebtedness paid during such period.

 

“Senior Indebtedness” shall mean the Indebtedness evidenced by the Notes and by the First Lien Credit Agreement.

 

“Separateness Requirements” shall mean the requirements set forth in Article 16 hereof.

 

“Series A Notes,” “Series B Notes,” “Series C Notes,” “Series D Notes,” “Series E Notes” and “Series F Notes” shall have the respective meaning assigned to those terms in the recitals to this Agreement; the Series F Notes shall be substantially in the form of Exhibit A hereto.

 

“Series D Closing Date” shall mean December 31, 2013.

 

“Solvent” shall mean, with respect to the Borrower and its Subsidiaries considered as a whole, based on the Pro Forma Balance Sheet, that (i) the assets and the property of the Borrower and its Subsidiaries, considered as a whole, exceed the aggregate liabilities (including contingent and unliquidated liabilities) of the Borrower and its Subsidiaries, considered as a whole, (ii) after giving effect to the transactions contemplated by this Agreement, the other Transaction Documents and the First Lien Credit Documents, the Borrower and its Subsidiaries, considered as a whole, will not be left with unreasonably small capital, and (iii) after giving effect to the transactions contemplated by this Agreement, the Borrower and its Subsidiaries, considered as a whole, are able to both service and pay their liabilities as they mature.  In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that is likely to become an actual or matured liability.

 

  

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“Subordinated Debt Payments” shall mean and include all cash actually expended by the Borrower and its Subsidiaries to make payments of (x) principal and interest on any Subordinated Debt (y) all fees, commissions and charges with respect to the Subordinated Debt.

 

“Subordinated Debt” shall mean all Indebtedness of Borrower and its Subsidiaries which is subordinated to the Senior Indebtedness on terms satisfactory to Lenders.

 

“Subordination Agreement” means that certain Subordination Agreement, dated as of the Closing Date, by and among Borrower, the other Credit Parties, Agent and the First Lien Agent.

 

“Subsidiary” of a Person (the “parent”), shall mean a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, by such parent; excluding however any such entity for so long as it conducts no business and has assets of less than $10,000.00.  For purposes of this definition, “controlled by” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of a Credit Party.

 

“Tax” shall mean any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

 

“Tax Return” shall mean any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

“Termination Event” shall mean (i) a Reportable Event with respect to any Plan or Multiemployer Plan; (ii) the withdrawal of any Credit Party or any member of the Controlled Group from a Plan or Multiemployer Plan during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of any Credit Party or any member of the Controlled Group from a Multiemployer Plan.

 

  

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“Trading with the Enemy Act” shall mean the foreign assets control regulations of the United States Treasury Department (31CFR, Subtitle B, Chapter V, as amended) and any enabling legislation, regulations or executive order relating thereto.

 

“Transaction Documents” shall mean collectively, this Agreement, the Notes, any Guaranty, the Pledge Agreement, the SBA Side Letters, the Right of First Refusal Agreement, the Seller Subordination Agreement, the Rosen Subordination Agreement, the Working Capital Intercreditor Agreement, the Subordination Agreement, the Intellectual Property Security Agreement, the Management Rights Agreements, any Collateral Access Agreement and any Control Agreement, as each may be amended, modified, supplemented or restated from time to time in accordance with the terms thereof.

 

“Transaction Fee” shall mean $180,000.

 

“Transactions” shall have the meaning assigned to that term in Section 5.11(a) hereof.

 

“12/31/13 Securities Purchase Agreement” shall have the meaning assigned to that term in the recitals hereof.

 

“UCC” shall have assigned to that term in Section 1.04 hereof.

 

“USA Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

 

“Warrants” shall mean the Original Warrants and the New Warrants.

 

“Working Capital Agreement” shall have the meaning assigned to that term in Section 9.07(g) hereof.

 

“Working Capital Debt” shall have the meaning assigned to that term in Section 9.07(g) hereof.

 

“Working Capital Lender” shall have the meaning assigned to that term in Section 9.07(g) hereof.

 

“Working Capital Liens” shall mean have the meaning assigned to that term in Section 9.07(g) hereof.

 

“Working Capital Intercreditor Agreement” shall mean the Intercreditor Agreement, dated as of the Initial Closing Date, by and among the Working Capital Lender, the Lenders, the Agent, Borrower, Parent, NBS, BVX, and each other Subsidiary from time to time party thereto, as amended by the First Amendment thereto dated as of the Series D Closing and as may be further amended, amended and restated, extended, supplemented, refinanced or otherwise modified from time to time.

 

  

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1.02 Accounting Terms; Financial Statements.  All accounting terms used herein and not expressly defined in this Agreement shall have the respective meanings given to them in conformance with GAAP, as consistently applied to the applicable Person.  Financial statements and other information furnished after the date hereof pursuant to this Agreement or the other Transaction Documents shall be prepared in accordance with GAAP as in effect at the time of such preparation, provided, however, that if at any time any change in GAAP would affect the computation of any financial ratio or financial requirement set forth in any Transaction Document, and any of the Borrower or the Agent shall so request, the Agent, the Lenders and the Credit Parties shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Credit Parties shall provide to the Lenders financial statements and other documents required under this Agreement which include a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

 

1.03 Knowledge of the Credit Parties.  All references to the knowledge of any Credit Party or to facts known by any Credit Party shall mean actual knowledge or notice of a senior officer of such Credit Party or of any of such Credit Party’s Subsidiaries or any division of such Credit Party, as the case may be, or knowledge which such Person could reasonably have acquired through the exercise of due inquiry.

 

1.04 UCC Terms.  All terms used herein and defined in the Uniform Commercial Code as adopted in the State of New York from time to time (the “UCC”) shall have the meaning given therein unless otherwise defined herein.  Without limiting the foregoing, the terms “accounts”, “chattel paper”, “instruments”, “general intangibles”, “payment intangibles”, “supporting obligations”, “securities”, “investment property”, “documents”, “deposit accounts”, “software”, “letter of credit rights”, “inventory”, “equipment” and “fixtures”, as and when used shall have the meanings given to such terms in Articles 8 or 9 of the UCC.  To the extent the definition of any category or type of Collateral is expanded by any amendment, modification or revision to the UCC, such expanded definition will apply automatically as of the date of such amendment, modification or revision.

 

1.05 Certain Matters of Construction.  The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision.  All references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.  Any pronoun used shall be deemed to cover all genders.  Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa.  All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations.  Unless otherwise provided, all references to any instruments or agreements to which Agent is a party, including references in any Transaction Document to any other Transaction Document, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof.  All references herein to the time of day shall mean the time in New York, New York.  Whenever the words “including” or “include” shall be used, such words shall be understood to mean “including, without limitation” or “include, without limitation”.  A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by the Required Lenders.  Any Lien referred to in this Agreement or any of the other Transaction Documents as having been created in favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Transaction Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement or any of the Transaction Documents, or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of Agent and Lenders.  All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or otherwise within the limitations of, another covenant shall not avoid the occurrence of a default if such action is taken or condition exists.  In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of a breach of a representation or warranty hereunder.

 

  

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1.06 Effect of this Agreement; Modification of Transaction Documents.

 

Upon the execution and delivery of this Agreement, the obligations and other liabilities (including interest and fees accrued to the date hereof) governed by the 10/31/14 Securities Purchase Agreement (collectively, the “Original Obligations”) shall continue to be in full force and effect to the extent remaining unpaid, but shall be governed by the terms and conditions set forth in this Agreement. Each Credit Party hereby reaffirms its obligations under each Transaction Document (as defined in the 10/31/14 Securities Purchase Agreement, collectively, the “Original Loan Documents”) to which it is party, as amended, supplemented or otherwise modified by this Agreement and by the other Transaction Documents delivered at the Closing.  Each Credit Party further agrees that each such Original Loan Document shall remain in full force and effect as amended as of the date hereof following the execution and delivery of this Agreement and that all references to the “Agreement” in such Original Loan Documents shall be deemed to refer to this Agreement.  The execution and delivery of this Agreement shall constitute an amendment, replacement and restatement, but not a novation or repayment, of the Original Obligations.  The parties hereto agree that the Intellectual Property Agreement supersedes the Initial Intellectual Property Agreement in its entirety.

 

  

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ARTICLE 2

 

PURCHASE AND SALE OF THE SECURITIES

 

2.01 Purchase and Sale of the Series F Notes.  Subject to the terms and conditions herein set forth, Borrower agrees that it will issue and sell to each Lender set forth on Schedule 2.01, and each such Lender agrees that it will acquire from the Borrower on the Closing Date the Series F Notes, substantially in the form thereof attached hereto, appropriately completed in conformity herewith, in the principal amounts set forth opposite such Lender’s name on Schedule 2.01 hereto, at the purchase prices with respect to such Series F Notes set forth opposite such Lender’s name on Schedule 2.01 hereto.

 

2.02 Fees at Closing; Expenses.  Concurrently with the execution hereof, the Borrower shall (a) pay to, or as directed by, the Lenders the Transaction Fee and (b) reimburse all of the Lenders’ reasonable out-of-pocket expenses (including fees, charges and disbursements of counsel and consultants after crediting amounts previously paid to Lenders by Borrower or Parent) incurred in connection with (i) the negotiation and execution and delivery of this Agreement and the other Transaction Documents and the Lenders’ due diligence investigation and (ii) the transactions contemplated by this Agreement and the other Transaction Documents, which payments shall be made by wire transfer of immediately available funds or Automated Clearing House (ACH) payment to an account or accounts designated by the Lenders.

 

2.03 Closing.  The purchase and issuance of the Series F Notes shall take place at the closing (the “Closing”) to be held at the offices of Morrison Cohen LLP, 909 Third Avenue, New York, NY 10022 at 10:00 a.m., New York time, on August 28, 2015 (the “Closing Date”).  At the Closing, the Borrower shall deliver the Series F Notes to the applicable Lenders against delivery by such Lenders to the Borrower of the respective purchase prices therefor.  In each case, payment of such purchase price shall be by wire transfer of immediately available funds.

 

2.04 Financial Accounting Positions; Tax Reporting.  Each of the parties hereto agrees to take reporting and other positions with respect to the Securities which are consistent with the purchase price of the Securities set forth in the 12/31/13 Securities Purchase Agreement, the 10/31/14 Securities Purchase Agreement and herein for all financial accounting purposes, unless otherwise required by applicable GAAP or Commission rules.  If any position inconsistent with the purchase price of the Securities set forth herein is taken, the covenants shall be adjusted to the extent necessary to eliminate any impact caused by such inconsistent position.  Each of the parties to this Agreement agrees to take reporting and other positions with respect to the Securities which are consistent with the purchase price of the Securities set forth in the 12/31/13 Securities Purchase Agreement, the 10/31/14 Securities Purchase Agreement and herein for all other purposes, including for all federal, state and local tax purposes, except as otherwise required by Applicable Law.

 

2.05 Interest.  The Borrower shall pay interest (“Interest”) (i) on the principal amount of the Notes at the rate, as of the Closing Date, of ten and eighty hundredths percent (10.8%) per annum (the “Interest Rate”), as set forth in clause (a) below.  Interest on the Notes shall accrue from and including the date of issuance through and until repayment of the principal amount of the Notes and payment of all Interest in full, and shall be computed on the basis of a 360-day year of twelve 30-day months.  Interest shall be paid as follows and all Interest accrued and unpaid through the Maturity Date shall be paid in full on the Maturity Date:

 

  

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(a) Cash Interest.  Interest shall be paid monthly in arrears on the last day of each calendar month of each year or, if any such date shall not be a Business Day, on the immediately preceding Business Day to occur prior to such date (each date upon which Interest shall be so payable, an “Interest Payment Date”), beginning on October 31, 2012 with respect to the Original Notes, January 31, 2014 with respect to the Series C Notes and the Series D Notes, November 30, 2014 with respect to the Series E Notes and August 31, 2015 with respect to the Series F Notes, by wire transfer of immediately available funds or by Automated Clearing House (ACH) payment, in either case to an account at a bank designated in writing by each Lender.  In the absence of any such written designation, any such Interest payment shall be deemed made on the date a check in the applicable amount payable to the order of each Lender is delivered to such Lender at its last address as reflected in the Note Register of the Borrower; if no such address appears, then to such Lender in care of the last address in such Note Register of any predecessor holder of the Notes (or its predecessor).

 

(b) [Intentionally Omitted].

 

(c) Default Interest.  Notwithstanding the foregoing provisions of this Section 2.06, but subject to Applicable Law, any overdue principal of and overdue Interest on the Notes shall bear interest, payable on demand in immediately available funds, for each day from the date payment thereof was due to the date of actual payment, at a rate equal to the sum of (i) the Interest Rate and (ii) an additional two percent (2%) per annum, and, upon and during the occurrence of an Event of Default, the Notes shall bear interest, from the date of the occurrence of such Event of Default until such Event of Default is cured or waived, payable on demand in immediately available funds, at a rate equal to the sum of (i) the Interest Rate, and (ii) an additional two percent (2%) per annum.  Subject to Applicable Law, any interest that shall accrue on overdue interest on the Notes as provided in the preceding sentence and shall not have been paid in full on or before the next Interest Payment Date to occur after the date on which the overdue interest became due and payable shall itself be deemed to be overdue interest to which the preceding sentence shall apply.

 

(d) No Usurious Interest. In the event that any interest rate(s) or premiums provided for in this Section 2.06 or otherwise in this Agreement, shall be determined to be unlawful, such interest rate(s) shall be computed at the highest rate permitted by Applicable Law.  Any payment by the Credit Parties of any interest amount in excess of that permitted by Applicable Law shall be considered a mistake, with the excess being applied to the principal amount of the Notes without prepayment premium or penalty; if no such principal amount is outstanding, such excess shall be returned to the Credit Parties.

 

(e) AHYDO.  Notwithstanding anything to the contrary contained in Section 2, if (1) the loans evidenced by the Notes remain outstanding after the fifth anniversary of the initial issuance thereof and (2) the aggregate amount of the accrued but unpaid interest on such loans (including any amounts treated as interest for federal income tax purposes, such as “original issue discount”) as of any Testing Date occurring after such fifth anniversary exceeds an amount equal to the Maximum Accrual, then all such accrued but unpaid interest on such loans (including any amounts treated as interest for federal income tax purposes, such as “original issue discount”) as of such time in excess of an amount equal to the Maximum Accrual shall be paid in cash by the Borrower to the holders thereof on such Testing Date, it being the intent of the parties hereto that the deductibility of interest under such loans shall not be limited or deferred by reason of Section 163(i) of the Code.  For these purposes, the “Maximum Accrual” is an amount equal to the product of the issue price of such loans (as defined in Code Sections 1273(b) and 1274(a)) and their yield to maturity, and a “Testing Date” is any Interest Payment Date and the date on which any “accrual period” (within the meaning of Section 1272(a)(5) of the Code) closes.  Any accrued interest which for any reason has not theretofore been paid shall be paid in full on the date on which the final principal payment on such loans is made.

 

  

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(f) SBA Cost of Money Limitation.  The sum of (i) the Interest Rate paid by the Credit Parties to the Lenders and (ii) all other consideration paid by the Credit Parties to the Lenders pursuant to the Notes and any other provision of this Agreement that constitutes Cost of Money, shall not exceed, with respect to any Lender that is an SBIC, the ceiling for the Cost of Money that is applicable to the Notes pursuant to SBA Regulations.  Any payment to a Lender that is an SBIC of default interest pursuant to Section 2.06(c), Mandatory Redemption Price or other consideration pursuant to this Agreement that results in the Cost of Money for the Notes being in excess of the applicable ceiling for the Cost of Money for the Notes shall be considered an error and shall be returned to the Credit Parties.

 

ARTICLE 3

 

CONDITIONS TO THE OBLIGATIONS OF THE

LENDERS TO PURCHASE THE SERIES F NOTES

 

The obligation of the Lenders to purchase the Series F Notes and to pay the purchase price therefor at the Closing and to perform any obligations hereunder shall be subject to the satisfaction as determined by, or waiver by, the Lenders of the following conditions on or before the Closing Date; provided, however, that any waiver of a condition shall not be deemed a waiver of any breach of any representation, warranty, agreement, term or covenant or of any misrepresentation by the Credit Parties.

 

3.01 Representations and Warranties.  The representations and warranties of the Credit Parties contained in Article 5 hereof shall be true and correct at and as of the date hereof and the Closing Date as if made at and as of such date, and the Agent shall have received at the Closing a certificate to the foregoing effect, dated the Closing Date, and executed by an Authorized Officer of each Credit Party.

 

  

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3.02 Compliance with this Agreement.  The Credit Parties shall have performed and complied with all of their agreements and conditions set forth or contemplated herein that are required to be performed or complied with by the Credit Parties on or before the Closing Date, and the Agent shall have received at the Closing certificates to the foregoing effect, dated the Closing Date, and executed by an Authorized Officer of each Credit Party.

 

3.03 Secretary’s Certificates

 

.  The Agent shall have received a certificate from each Credit Party, dated the Closing Date and signed by the Secretary or an Assistant Secretary of such Credit Party, certifying (a) that the attached copies of the Organization Documents of such Credit Party, as the case may be, (or other applicable organizational or constituent documents), and resolutions of the Board of Directors (or other applicable authority) of such Credit Party approving the Transaction Documents to which it is a party and the transactions contemplated hereby and thereby are all true, complete and correct and remain unamended and in full force and effect, and (b) the incumbency and specimen signature of each officer of such Credit Party executing any Transaction Document to which it is a party or any other document delivered in connection herewith and therewith on behalf of such Credit Party.

 

3.04 Transaction Documents.  The Agent shall have received all Transaction Documents, including, without limitation, the Subordination Agreement, and an amendment to the Intellectual Property Security Agreement, duly executed by the parties thereto and true, complete and correct copies of such other agreements, schedules, exhibits, certificates, documents, financial information and filings, including without limitation the Questionnaire,  as it may request in connection with or relating to the transactions contemplated hereby, all in form and substance satisfactory to the Agent.

 

3.05 Purchase of Series F Notes Permitted by Applicable Laws.  The acquisition of and payment for the Series F Notes to be acquired by the Lenders hereunder and the consummation of the transactions contemplated hereby and by the Transaction Documents (a) shall not be prohibited by any Requirement of Law, (b) shall not subject the Agent or any Lender to any penalty or other onerous condition under or pursuant to any Requirement of Law, and (c) shall be permitted by all Requirements of Law to which the Agent or any Lender or the transactions contemplated by or referred to herein or in the Transaction Documents are subject; and the Agent and each Lender shall have received such certificates or other evidence as the Agent or such Lender may reasonably request to establish compliance with this condition.

 

3.06 Opinion of Counsel.  The Agent shall have received an opinion of counsel and outside regulatory counsel to the Credit Parties, relating to the transactions contemplated by or referred to herein, dated as of the Closing Date and in form and substance acceptable to the Agent.

 

3.07 Approval of Counsel to the Lenders.  All actions and proceedings hereunder and all agreements, schedules, exhibits, certificates, financial information, filings and other documents required to be delivered by the Credit Parties and each of their respective Subsidiaries hereunder or in connection with the consummation of the transactions contemplated hereby, and all other related matters, shall have been in form and substance acceptable to Morrison Cohen LLP, counsel to the Agent and the Lenders, in its reasonable judgment (including the opinions of counsel referred to in Section 3.06 hereof).

 

  

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3.08 Consents and Approvals.  All Consents, exemptions, authorizations, or other actions by, or notices to, or filings with, Governmental Authorities and other Persons in respect of all Requirements of Law and with respect to those Contractual Obligations of each Credit Party and each of its Subsidiaries necessary, desirable, or required in connection with the execution, delivery or performance (including the payment of interest on the Notes and the issuance of the Closing Date Warrant Shares) by such Credit Party, or enforcement against such Credit Party of the Transaction Documents to which it is a party, shall have been obtained and be in full force and effect, and the Agent shall have been furnished with appropriate evidence thereof, and all waiting periods shall have lapsed without extension or the imposition of any conditions or restrictions.

 

3.09 Lien Searches; Plexus Payoff.  The Agent shall have received copies of all UCC financing statements and federal and state tax lien searches as Agent shall have reasonably requested of the Credit Parties and such other Persons as Agent may request, and such termination statements, releases or other documents as may be reasonably necessary to confirm that the Collateral is subject to no other Liens in favor of any Persons (other than Permitted Liens, and Liens to be terminated on the Closing Date).  Without limiting the foregoing, the Plexus Payoff shall have occurred substantially concurrently with the issuance of the Series F Notes and the application of the proceeds thereof.

 

3.10 No Material Judgment or Order.  There shall not be on the Closing Date any judgment or order of a court of competent jurisdiction or any ruling of any Governmental Authority or any condition imposed under any Requirement of Law which, in the judgment of the Lenders, would prohibit the purchase of the Series F Notes hereunder or subject any Lender to any penalty or other onerous condition under or pursuant to any Requirement of Law if the Series F Notes were to be purchased hereunder.

 

3.11 Pro Forma Balance Sheet, Leverage Ratio; Fixed Charge Coverage Ratio and EBITDA.  The Credit Parties shall have delivered to the Agent as of the Closing Date  the Pro Forma Balance Sheet, certified by the chief financial officer of each Credit Party that they fairly present the pro forma adjustments reflecting the consummation of the transactions contemplated by the Transaction Documents, including all fees and expenses in connection therewith.

 

3.12 Good Standing Certificates.  Each Credit Party shall have its delivered to the Agent as of the Closing Date, good standing certificates for itself and each of its Subsidiaries for each of their respective jurisdictions of incorporation and all other jurisdictions in which the failure to be qualified to do business could reasonably be expected to have a Material Adverse Effect.

 

3.13 No Litigation.  No Litigation shall have been commenced or threatened, and no investigation by any Governmental Authority shall have been commenced or threatened:  (i) seeking to restrain, prevent or change the transactions contemplated hereby or questioning the validity or legality of any of such transactions, or (ii) which, if resolved adversely to any such Person, could reasonably be expected to have a Material Adverse Effect.

 

  

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3.14 Warrants and Common Stock.  In connection with the exercise of the Warrants issued to the Existing Lenders, Parent shall have issued to the Existing Lenders certificates for shares of Common Stock (the “Closing Date Warrant Shares”) and made payments to the Existing Lenders, in each case as contemplated by Second Amendment to Second Amended and Restated Securities Purchase Agreement and Security Agreement, dated as of June 16, 2015, by and among the Credit Parties, the Existing Lenders and Agent.

 

3.15 Consummation of the Transactions. The Borrower shall have entered into, or substantially simultaneously herewith will enter into, the First Lien Credit Agreement, which shall provide for a revolving credit facility of up to $15,000,000 of which no more than $12,000,000 shall be outstanding on the Closing Date and a delayed-draw term loan facility of up to $25,000,000; and the Lenders shall have received fully executed copies of the First Lien Credit Agreement and the other First Lien Credit Documents, which shall be certified by an Authorized Officer of the Borrower as being true, correct and complete and the transactions contemplated by such documentation shall be consummated prior to or simultaneously with the making of the sale of the Series F Notes.

 

3.16 Flow of Funds.  The Agent shall have received a certificate executed by an Authorized Officer of the Borrower setting forth a flow of funds evidencing the accounts to which the investment evidenced by the Series F Notes being made on the Closing Date are to be funded and the amounts being funded into each account.

 

3.17 Adverse Change.  Nothing shall have occurred since December 31, 2014, which the Lenders shall determine has had, or could reasonably be expected to have, a Material Adverse Effect or otherwise impact the markets in which any Credit Party or any of its Subsidiaries conducts its business.

 

3.18 Insurance Certificates.  On the Closing Date, the Lenders shall have received evidence of insurance complying with the requirements of Section 8.09 for the business and properties of the Credit Parties and their respective Subsidiaries.

 

3.19 Fees and Expenses.  On the Closing Date, Agent and the Lenders shall have received all costs, fees and expenses contemplated by Section 2.03.

 

3.20 Conduct of Business.  Since December 31, 2014, the Credit Parties shall have conducted their business in the Ordinary Course of Business, and the holders of the Equity Interests of the Credit Parties shall have taken no actions to impair the value of the business of the Credit Parties.

 

3.21 Transfer Taxes.  The Credit Parties shall pay all sales, use, transfer, real property transfer and other similar Taxes, if any, arising out of or in connection with the transactions effected pursuant to this Agreement.

 

  

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3.22 Separateness Requirements.  The Agent shall have received evidence satisfactory to it that Borrower is in compliance with the Separateness Requirements on the Closing Date.

 

ARTICLE 4

 

Collateral; General Terms

 

4.01 Security Interest in the Collateral.  To secure the prompt payment and performance of the Obligations, Borrower hereby grants to Agent for its benefit and the benefit of each Lender a continuing security interest in and to and Lien on all of its Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located.  To secure the prompt payment and performance of the Guarantors’ Obligations, each Guarantor hereby grants to Agent for its benefit and the benefit of each Lender a continuing security interest in and to and Lien on all of its Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located.  Each Credit Party shall provide Agent with written notice of all commercial tort claims promptly following its determination that it has any such claim, such notice to contain the case title (if any proceeding has been commenced thereon) together with the applicable court and a brief description of the claim(s).  Upon delivery of each such notice, each Credit Party shall be deemed to hereby grant to Agent for its benefit and the benefit of each Lender a security interest and Lien in and to such commercial tort claim(s) and all proceeds thereof and execute and deliver to Agent any further agreement or document requested by Agent to further evidence the grant of a security interest in such claim.

 

4.02 Perfection of Security Interest.  Each Credit Party shall take all action that may be reasonably necessary or desirable, or that Agent may reasonably request, in order to maintain at all times the validity, perfection, enforceability and priority of Agent’s security interest in and Lien on the Collateral or to enable Agent and Lenders to protect, exercise or enforce their rights hereunder and in the Collateral, including (i) immediately discharging all Liens other than Permitted Liens, (ii) obtaining Collateral Access Agreements in accordance with Section 8.16, (iii) delivering to Agent, endorsed or accompanied by such instruments of assignment as Agent may specify, and stamping or marking, in such manner as Agent may specify, any and all chattel paper, instruments, letters of credit and advices thereof and documents evidencing or forming a part of the Collateral, and (iv) executing and/or delivering financing statements, control agreements, instruments of pledge, mortgages, notices, assignments and other documents, in each case in form and substance reasonably satisfactory to Agent, relating to the creation, validity, perfection, maintenance or continuation of Agent’s security interest and Lien under the Uniform Commercial Code or other Applicable Law.  Each Credit Party hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements or any similar document in any applicable jurisdictions and with any filing offices as Agent may determine are necessary or advisable to perfect the security interest granted to Agent for its benefit and the benefit of each Lender herein.  Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or a description of collateral that describes such property in any other manner as Agent may determine is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral granted to Agent for its benefit and the benefit of each Lender herein, including describing such property as “all assets” or “all personal property, whether now owned or hereafter acquired.”  All actual, out-of-pocket charges, expenses and fees Agent may incur in doing any of the foregoing, and any local taxes relating thereto, shall be added to the Obligations, or, at Agent’s option, shall be paid by each Credit Party to Agent immediately upon demand.

 

  

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4.03 Safeguarding Collateral.  Each Credit Party will take commercially reasonable efforts at all times to safeguard, protect and preserve all Collateral other than dispositions expressly permitted hereunder.

 

4.04 Ownership of Collateral.  With respect to the Collateral, at the time the Collateral becomes subject to Agent’s security interest: (i) except as set forth on Schedule 4.04, each Credit Party shall be the sole owner of and fully authorized and able to sell, transfer, assign each Credit Party’s rights to, pledge and/or grant a security interest and Lien in each and every item of Collateral to Agent for its benefit and the benefit of each Lender and, except for Permitted Liens, the Collateral shall be free and clear of all Liens or encumbrances whatsoever; (ii) the Lien on the Collateral granted by each Credit Party other than Parent shall be, except for the Liens in favor of the holders of the First Lien Indebtedness, but subject to the Subordination Agreement, a first priority security interest and the Lien on the Collateral granted by Parent shall be a security interest subject only to the Working Capital Liens; (iii) each document and agreement executed by each Credit Party or delivered to Agent and Lenders in connection with this Agreement shall be true and correct in all material respects; and (iv) all signatures and endorsements of each Credit Party that appear on such documents and agreements shall be genuine and each Credit Party shall have full capacity to execute same.

 

4.05 Defense of Agent’s Interest.  Until (a) full and indefeasible payment and performance of all of the Obligations and (b) termination of this Agreement, Agent’s interest in the Collateral shall continue in full force and effect.  Each Credit Party shall use commercially reasonable efforts to defend Agent’s interest in the Collateral against any and all Persons whatsoever.

 

4.06 Financial Disclosure.  Each Credit Party hereby irrevocably authorizes and directs all accountants and auditors employed by each Credit Party at any time to exhibit and deliver to Agent copies of any of each Credit Party’s financial statements, trial balances or other accounting records of any sort in the accountant’s or auditor’s possession (other than work papers and other proprietary information of such accountants and auditors), and to disclose to Agent any information such accountants may have concerning each Credit Party’s financial status and business operations.  Each Credit Party hereby authorizes all Governmental Authorities to furnish to Agent copies of material reports or examinations relating to each Credit Party; however, Agent will attempt to obtain such information or materials directly from each Credit Party prior to obtaining such information or materials from such accountants or Governmental Bodies.

 

  

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4.07 Accounts.

 

(a) Nature of Accounts.  Each of the Accounts of the Credit Parties is and shall be a bona fide and valid account representing a bona fide indebtedness incurred by the Customer therein named, for a fixed sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice errors shall not be deemed to be a breach hereof) with respect to an absolute sale or lease and delivery of goods upon stated terms of each Credit Party, or work, labor or services theretofore rendered by each Credit Party, as applicable, as of the date each Account is created.  The Customer’s obligation with respect thereto shall be due and owing in accordance with each Credit Party’s standard terms of sale without dispute, setoff or counterclaim except as may be stated on the accounts receivable schedules delivered by each Credit Party to Agent.

 

(b) Solvency of Customers.  Each Customer, to each Credit Party’s knowledge, as of the date each Account is created, is and will be solvent and able to pay all Accounts on which the Customer is obligated in full when due or with respect to such Customers of each Credit Party who are not solvent, each Credit Party has set up on its books and in its financial records bad debt reserves adequate to cover such Accounts.

 

(c) Chief Executive Offices.  Unless at least ten (10) Business Days prior written notice is given to Agent by each Credit Party of any other office at which each Credit Party keeps its records pertaining to Accounts, all such records shall be kept at such chief executive office shown in Schedule 5.33.

 

(d) Collection of Accounts.  Upon request of Agent at any time after the occurrence and during the continuance of an Event of Default, each Credit Party will, at each Credit Party’s sole cost and expense but on Agent’s behalf and for Agent’s account, collect all amounts owing on its Accounts, shall not commingle any collections with each Credit Party’s funds or use the same except to pay Obligations, and shall deposit or cause to be deposited into a blocked account designated by the Working Capital Lender, or if not so designated by the Working Capital Lender, Agent, all such collections; and upon request Agent, shall deliver to the Working Capital Lender (as bailee for Lenders, subject to the terms of the Working Capital Intercreditor Agreement) or upon payment in full of the Working Capital Debt, to Agent, in original form and on the date of receipt thereof all checks, drafts, notes, money orders, acceptances, cash and other evidences of Indebtedness.

 

(e) Verification and Notification of Assignment of Accounts.  Agent shall have the right, at any time upon the occurrence and during the continuance of an Event of Default, to confirm and verify any and all Accounts by any manner and through any medium it considers advisable.  Upon the occurrence and during the continuance of an Event of Default, Agent shall have the right to send notice of the assignment of, and Agent’s security interest in and Lien on, the Accounts to any and all Customers or any third party holding or otherwise concerned with any of the Collateral.  At all times during such period, the Working Capital Lender and (subject to the Working Capital Intercreditor Agreement) Agent for its benefit and the benefit of each Lender shall have the sole right to collect and commence legal proceedings to collect the Accounts, take possession of the Collateral, or both.  Agent’s actual, out-of-pocket collection expenses, including stationery and postage, telephone, secretarial and clerical expenses and the salaries of any collection personnel used for collection, may be added to the Obligations.

 

  

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(f) Power of Agent to Act on Each Credit Party’s Behalf.  Each Credit Party hereby constitutes Agent or Agent’s designee as each Credit Party’s attorney and agent with power to take each of the following actions (if an Event of Default shall have occurred and be continuing, except those described in the following clause (iii) and (iv) which actions may be taken at any time and from time to time):  (i) to endorse each Credit Party’s name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment or Collateral; (ii) to sign each Credit Party’s name on any invoice or bill of lading relating to any of the Accounts, drafts against Customers, assignments and verifications of Accounts; (iii) to send verifications of Accounts to any Customer, (iv) to sign each Credit Party’s name on all financing statements or any other documents or instruments deemed necessary or appropriate by Agent to preserve, protect, or perfect Agent’s interest in the Collateral and to file same; (v) to demand payment of the Accounts; (vi) to enforce payment of the Accounts by legal proceedings or otherwise; (vii) to exercise all of each Credit Party’s rights and remedies with respect to the collection of the Accounts and any other Collateral; (viii) to settle, adjust, compromise, extend or renew the Accounts; (ix) to settle, adjust or compromise any legal proceedings brought to collect Accounts; (x) to prepare, file and sign each Credit Party’s name on a proof of claim in bankruptcy or similar document against any Customer; (xi) to prepare, file and sign each Credit Party’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Accounts; (xii) to change the address for delivery of mail addressed to each Credit Party to such address as Agent may designate and to receive, open and dispose of all mail addressed to either of them and (xiii) to do all other acts and things necessary to carry out this Agreement.  All acts of said attorney and agent or designee are hereby ratified and approved, and said attorney and agent or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake of fact or of law, unless done maliciously or with gross (not mere) negligence; this power being coupled with an interest is irrevocable while any of the Obligations remain unpaid.

 

(g) No Liability.  Agent shall not, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Accounts or any instrument received in payment thereof, or for any damage resulting therefrom except as a result of the gross negligence or willful misconduct of such Person.  If an Event of Default shall have occurred and be continuing, Agent may, without notice or consent from each Credit Party, sue upon or otherwise collect, extend the time of payment of, compromise or settle for cash, credit or upon any terms any of the Accounts or any other securities, instruments or insurance applicable thereto and/or release any Credit Party thereof.  If an Event of Default shall have occurred and be continuing, Agent is authorized and empowered to accept the return of the goods represented by any of the Accounts, without notice to or consent by each Credit Party, all without discharging or in any way affecting each Credit Party’s liability hereunder.

 

  

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(h) Adjustments.  Each Credit Party will not, without Agent’s consent, compromise or adjust any Accounts (or extend the time for payment thereof) or accept any returns of merchandise or grant any additional discounts, allowances or credits thereon except for those compromises, adjustments, returns, discounts, credits and allowances as have been heretofore customary in the ordinary course of business of each Credit Party.

 

4.08 Exculpation of Liability.  Nothing herein contained shall be construed to constitute Agent as agent of any Credit Party for any purpose whatsoever, nor shall Agent be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof.  Agent, whether by anything herein or in any assignment or otherwise, does not assume any of any Credit Party’s obligations under any contract or agreement assigned to Agent, and Agent shall not be responsible in any way for the performance by any Credit Party of any of the terms and conditions thereof.

 

4.09 Financing Statements.  Except with respect to (a) the financing statements filed by the Working Capital Lender and the First Lien Agent, (b) the financing statements described on Schedule 4.09, and (c) any financing statement with respect to any other  Permitted Lien, no financing statement covering any of the Collateral or any proceeds thereof is on file in any public office.

 

ARTICLE 5

 

REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES

 

The Credit Parties, jointly and severally, represent and warrant to each Lender that the following are, and after giving effect to the transactions contemplated by the Transaction Documents, will be, true, correct and complete:

 

5.01 Existence and Power.  Each Credit Party and each of its Subsidiaries:  (a) is a corporation, limited liability company or limited partnership, as applicable, duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (b) has all requisite power and authority to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently, or is currently proposed to be, engaged; (c) is duly qualified as a foreign entity, licensed and in good standing under the laws of its state of organization and of each other jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent that the failure to so qualify would not have a Material Adverse Effect; and (d) has the power and authority to execute, deliver and perform its obligations under each Transaction Document to which it is or will be a party and to borrow hereunder.  Schedule 5.01 contains a true, complete and correct list of each Credit Party’s and each of its Subsidiaries’ jurisdiction of organization and each jurisdiction where it is qualified to do business as a foreign entity.

 

5.02 Authorization; No Contravention.  The execution, delivery and performance by each Credit Party of this Agreement and each other Transaction Document to which it is or will be a party and the consummation of the transactions contemplated hereby and thereby, including the issuance of, or performance of the terms of, the Securities and the Closing Date Warrant Shares:  (a) has been duly authorized by all necessary action (including, obtaining approval of its stockholders, partners, general partners, members or other applicable equity owners, if necessary); (b) do not and will not contravene the terms of the Organization Documents of such Credit Party or any of its Subsidiaries (or any other applicable organizational or constituent documents), or any amendment thereof or any Requirement of Law applicable to such Person or such Person’s assets, business or properties; (c) do not and will not (i) conflict with, contravene, result in any violation or breach of or default under (with or without the giving of notice or the lapse of time or both), (ii) create in any other Person a right or claim of termination or amendment of, or (iii) require modification, acceleration or cancellation of, any Contractual Obligation of any Credit Party or any of its Subsidiaries; and (d) do not and will not result in the creation of any Lien (or obligation to create a Lien) against any property, asset or business of any Credit Party or any of its Subsidiaries (other than Permitted Liens).

 

  

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5.03 Governmental Authorization; Third Party Consents.  Except for the requirements of applicable “blue sky” laws, in the case of dispositions of Collateral that constitute securities, applicable securities laws, no approval, consent, compliance, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person in respect of any Requirement of Law or Contractual Obligation, and no lapse of a waiting period under a Requirement of Law or Contractual Obligation, is necessary or required in connection with the execution, delivery or performance by (including the payment of interest on the Notes), or enforcement against (except for any Consents that may be required from a Governmental Authority before Agent may exercise certain rights in connection with an Event of Default), any Credit Party of the Transaction Documents to which it is a party or the consummation of the transactions contemplated hereby or thereby.

 

5.04 Binding Effect.  This Agreement has been, and each of the Transaction Documents to which any Credit Party will be a party will be, duly executed and delivered by such Credit Party and this Agreement constitutes, and such Transaction Documents will constitute, the legal, valid and binding obligation of such Credit Party enforceable against such Credit Party in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity relating to enforceability.

 

5.05 Litigation.  Except as set forth on Schedule 5.05, there are no legal actions, suits, proceedings, claims or disputes pending or, to the knowledge of any Credit Party, threatened, at law, in equity, in arbitration or before any Governmental Authority against or affecting such Credit Party or any of its Subsidiaries that (a) purport to affect or pertain to this Agreement, any other Transaction Document, any First Lien Credit Document or any of the transactions contemplated hereby or thereby, or (b) could reasonably be expected to result in equitable relief or in monetary judgments, individually or in the aggregate, in excess of $250,000.  No injunction, writ, temporary restraining order, decree or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of the Transaction Documents or the First Lien Credit Documents.

 

  

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5.06 Compliance with Laws.  Except as set forth on Schedule 5.06, each Credit Party and each of its Subsidiaries is in compliance, in all material respects, with all Requirements of Law.

 

5.07 No Default or Breach.  No event has occurred and is continuing or would result from the incurring of obligations by the Credit Parties under the Transaction Documents which constitutes or, with the giving of notice or lapse of time or both, would constitute an Event of Default.  Neither any Credit Party nor any of its Subsidiaries is in default under or with respect to any Contractual Obligation in any material respect.  Immediately prior to the execution and delivery of this Agreement no Default or Event of Default existed under, and as defined in,  the 12/31/13 Securities Purchase Agreement or the 10/31/14 Securities Purchase Agreement.

 

5.08 Title to Properties.

 

(a) Schedule 5.08(a) contains a true, complete and correct list of all owned real property reflected on the Pro Forma Balance Sheet or used in connection with the respective businesses of the Credit Parties and each of their respective Subsidiaries.  Each Credit Party and/or each of its Subsidiaries has good indefeasible and marketable title in and to all real property and good title to all other properties reflected on the Pro Forma Balance Sheet or used in connection with their respective businesses, in each case, free and clear of all Liens, liabilities and rights except for Permitted Liens and as provided on Schedule 5.08(a).

 

(b) Schedule 5.08(b) contains a list of all real property leases reflected on the Pro Forma Balance Sheet or used in connection with the respective businesses of the Credit Parties and each of their respective Subsidiaries.  Each Credit Party and/or each of its Subsidiaries holds all of the right, title and interest of the tenant under the leases reflected on the Pro Forma Balance Sheet or used in connection with their respective businesses free and clear of all Liens, liabilities and rights except as provided on Schedule 5.08(b).

 

5.09 Use of Real Property.  Except as set forth on Schedule 5.09, (x) the owned and leased real properties reflected on the Pro Forma Balance Sheet or used in connection with the respective businesses of the Credit Parties and their respective Subsidiaries are used and operated in compliance and conformity with all Contractual Obligations and Requirements of Law, except to the extent that the failure so to comply would not have a Material Adverse Effect, and (y) neither any Credit Party nor any of its Subsidiaries has received notice of violation of any applicable zoning or building regulation, ordinance or other law, order, regulation or other Requirements of Law relating to the operations of any Credit Party or any of its Subsidiaries and there is no such violation.  Except as set forth on Schedule 5.09, all structures, improvements and other buildings that are owned or covered by leases reflected on the Pro Forma Balance Sheet or used in connection with the business of the Credit Parties and their respective Subsidiaries comply with all applicable ordinances, codes, regulations and other Requirements of Law, have a valid and subsisting certificate of occupancy for their present use, and neither any Credit Party nor any of its Subsidiaries has received any written notice from any Governmental Authority which is still outstanding of any failure to obtain any certificate, permit, license, authorization or approval with respect to the real property, or any intended revocation, modification or cancellation of same, and no Requirement of Law presently in effect or condition precludes or materially restricts continuation of the present use of such properties.  Each lease relating to leased real property reflected on the Pro Forma Balance Sheet or used in connection with the business of the Credit Parties or any of their respective Subsidiaries, is in full force and effect, and the applicable Credit Party and/or Subsidiary enjoys peaceful and undisturbed possession thereunder.  There is no default on the part of any Credit Party or any of its Subsidiaries or event or condition which (with notice or lapse of time, or both) would constitute a default on the part of any Credit Party or any of its Subsidiaries, under any such lease.  There are no service contracts, maintenance contracts, union contracts, concession agreements, licenses, agency agreements or any other Contractual Obligations affecting the real property or the leased property reflected on the Pro Forma Balance Sheet or used in connection with the business of the Credit Parties and their respective Subsidiaries or the operation thereof, other than those listed on Schedule 5.09, except for Contractual Obligations which are cancelable on no more than thirty (30) days’ notice.  There are no pending or, to the knowledge of any Credit Party, threatened condemnation or eminent domain proceedings that would affect any part of the leased property reflected on the Pro Forma Balance Sheet or used in connection with the business of the Credit Parties and their respective Subsidiaries.  There is no Litigation pending or, to the knowledge of any Credit Party, threatened against the real property or the leased property on the Pro Forma Balance Sheet or used in connection with the business of the Credit Parties and their respective Subsidiaries which would in any way affect title to such real property or leased property.

 

 

  

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5.10 Taxes.

 

(a) Except as set forth on Schedule 5.10, each Credit Party and each of its Subsidiaries has filed all Tax Returns that it was required to file.  All such Tax Returns were true, correct and complete in all material respects.  All Taxes, other than de minimus amounts, owed by any Credit Party or any of its Subsidiaries (whether or not shown on any Tax Return) have been paid.  Except as set forth on Schedule 5.10, neither any Credit Party nor any of its Subsidiaries currently is the beneficiary of any extension of time within which to file any Tax Return.  There are no Liens on any of the assets of any Credit Party or any of their respective Subsidiaries that arose in connection with any failure (or alleged failure) to pay any Tax, other than Permitted Liens as provided on Schedule 5.10.  Each of NBS and ISG has, since its inception, been treated as a partnership for federal, state and local income Tax purposes.  Each of NBS and ISG has never made an election to classify as a corporation for federal, state or local income Tax purposes.

 

(b) Each Credit Party and each of its Subsidiaries has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

 

(c) There is no dispute or claim concerning any Tax liability of any Credit Party or any of its Subsidiaries either (i) claimed or raised by any Governmental Authority in writing or (ii) as to which any Credit Party has knowledge based upon personal contact with any agent of such authority.

 

  

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(d) Neither any Credit Party nor any of its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

 

(e) Neither any Credit Party nor any of its Subsidiaries has any liability for the Taxes of any Person other than such Credit Party and its Subsidiaries (i) as a transferee or successor, (ii) by contract, or (iii) otherwise.

 

(f) Any reference in this Section 5.10 to any Credit Party shall be deemed to include each predecessor of such Credit Party, each subsidiary of such Credit Party, and each entity with respect to which such Credit Party has successor or transferee liability.

 

5.11 Financial Statements and Projections.

 

(a) The pro-forma balance sheet of each of the Credit Parties dated as of June 30, 2015 (collectively, the “Pro Forma Balance Sheet”) furnished to the Agent on the Closing Date reflects the consummation of the transactions contemplated under this Agreement, including the Plexus Payoff, the First Lien Credit Documents, and the other Transaction Documents (all such transactions, collectively, the “Transactions”) and is accurate, complete and correct and fairly reflects the financial condition of the Credit Parties as of the Closing Date after giving effect to the Transactions.  The Pro Forma Balance Sheet has been certified as accurate, complete and correct in all material respects by an Authorized Officer of each Credit Party.

 

(b) [Reserved].

 

(c) To the best of each Credit Party’s knowledge, since the last day of such Credit Party’s most recently ended fiscal year, there has been no material changes in the condition, financial or otherwise, of the Credit Parties and their respective Subsidiaries, on a Consolidated Basis, shown on the consolidated balance sheet as of such date and no change in the aggregate value of machinery, equipment and Real Property owned by the Credit Parties, except changes in the Ordinary Course of Business, none of which individually or in the aggregate has been materially adverse.

 

5.12 Operating Company.  Each Credit Party is “an entity that is primarily engaged, directly or through a majority owned subsidiary or subsidiaries, in the production or sale of a product or service other than the investment of capital” within the meaning of the U.S. Department of Labor plan asset regulations, 29 C.F. R. §2510.3 101.  None of the Credit Parties is a “passive business” as defined in the SBA Regulations.

 

5.13 Disclosure.

 

(a) Agreement and Other Documents.  This Agreement and the other Transaction Documents, together with all exhibits and schedules hereto and thereto, and the agreements, certificates and other documents furnished to the Agent or any Lender by or on behalf of the Credit Parties and their respective Subsidiaries at the Closing, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which they were made, not misleading.

 

  

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(b) Material Adverse Effects.  There is no fact known to any Credit Party which such Credit Party has not disclosed to the Lenders in writing which could reasonably be expected to have a Material Adverse Effect.

 

5.14 Absence of Certain Changes or Events.  Since December 31, 2014, except as set forth on Schedule 5.14 and except for the issuance of the Series F Notes and the incurrence of the First Lien Indebtedness, neither any Credit Party nor any of its Subsidiaries has (i) issued any stock, bonds or other corporate securities, (ii) borrowed any amount or incurred any liabilities (absolute or contingent), other than in the Ordinary Course of Business, in excess of $100,000, (iii) discharged or satisfied any Lien or incurred or paid any obligation or liability (absolute or contingent), other than in the Ordinary Course of Business, in excess of $100,000, (iv) declared or made any payment or distribution to the holders of its Equity Interests or purchased or redeemed any shares of its Equity Interests, (v) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible, (vi) sold, assigned or transferred any of its tangible assets, or canceled any debts or claims, (vii) sold, assigned or transferred any patents, trademarks, trade names, copyrights, trade secrets or other intangible assets, (viii) suffered any losses of property, or waived any rights of substantial value, (ix) suffered any Material Adverse Effect, (x) expended any material amount, granted any bonuses or extraordinary salary increases, (xi) entered into any transaction involving consideration in excess of $100,000 except as otherwise contemplated hereby or (xii) entered into any agreement or transaction, or amended or terminated any agreement, with an Affiliate.

 

5.15 O.S.H.A. and Environmental Compliance.

 

(a) Each Credit Party and each of its Subsidiaries has duly complied in all material respects with, and its facilities, business, assets, property, leaseholds, Real Property and equipment are in compliance in all material respects with and (the provisions of the Federal Occupational Safety and Health Act, the Environmental Protection Act, RCRA and all other Environmental Laws; there are no outstanding citations, notices or orders of non-compliance issued to any Credit Party or any of its Subsidiaries as of the Closing Date or relating to their business, assets, property, leaseholds, Real Property or equipment under any such laws, rules or regulations;

 

(b) Each Credit Party and each of its Subsidiaries has all federal, state and local licenses, certificates or permits relating to all applicable Environmental Laws necessary to operate the business of the Credit Parties and their Subsidiaries; and

 

(c) (i) There are no signs of releases, spills, discharges, leaks or disposal (collectively referred to as “Releases”), of Hazardous Substances at, upon, under or within any Real Property owned or leased by any Credit Party or any of its Subsidiaries, (ii) there are no underground storage tanks or to the best of any Credit Party’s knowledge polychlorinated biphenyls on any Real Property owned or leased by any Credit Party or any of its Subsidiaries, (iii) no Real Property owned or leased by any Credit Party or any of its Subsidiaries has ever been used as a treatment, storage or disposal facility of Hazardous Waste; (iv) no Hazardous Substances or substances governed by an Environmental Law are present on any Real Property owned or leased by any Credit Party or any of its Subsidiaries excepting such quantities as are handled in compliance with all applicable manufacturer’s instructions and Environmental Laws and in proper storage containers and as are necessary for the operation of the commercial business of the Credit Parties, their respective Subsidiaries or of their respective tenants; and (v) all underground storage tanks on the Real Property are in good condition and are being maintained in compliance with all applicable federal, state and local laws and regulations, including all Environmental Laws.

 

  

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5.16 Investment Company/Government Regulations.  No Credit Party is an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  Neither any Credit Party nor any of its Subsidiaries is subject to regulation under the Federal Power Act, the Interstate Commerce Act, or any federal or state statute or regulation limiting its ability to incur Indebtedness.

 

5.17 Subsidiaries.

 

(a) Schedule 5.17 sets forth a complete and accurate list of all of the Subsidiaries of each Credit Party as of the Closing Date together with their respective jurisdictions of incorporation or organization.  All of the outstanding Equity Interests in, the Subsidiaries are validly issued, fully paid and non-assessable.  Except as set forth on Schedule 5.17, as of the Closing Date, all of the outstanding Equity Interests in each of the Subsidiaries are owned by a Credit Party or by a wholly-owned Subsidiary free and clear of any Liens other than the Liens created by this Agreement and the other Transaction Documents in favor of Agent and the Lenders and Liens in favor of the First Lien Agent.  No Subsidiary has outstanding options, warrants, subscriptions, calls, rights, convertible securities or other agreements or commitments obligating the Subsidiary to issue, transfer or sell any securities of the Subsidiary.

 

(b) Except for the Subsidiaries of the Credit Parties, no Credit Party owns of record or beneficially, directly or indirectly, (i) any Equity Interests convertible into Equity Interests any other Person, and (ii) any Equity Interest in any limited liability company, partnership, joint venture or other non-corporate business enterprises.

 

5.18 Capitalization.  Schedule 5.18 sets forth, as of the Closing Date (after giving effect to the Transactions to occur on or prior to the Closing Date), a true and complete listing of each class of authorized Equity Interests of each Credit Party and its Subsidiaries, the number of Equity Interests which are issued and outstanding, as well as a list of all warrants, options, rights and securities convertible into Equity Interests, together with the number of Equity Interests to be issued upon the exercise or conversion of such warrants, options, rights and convertible securities, all of which have been reserved for insurance.  No Credit Party has any Equity Interests held in treasury.  Schedule 5.18 sets forth, (A) as of the Closing Date (after giving effect to the Transactions to occur on or prior to the Closing Date), (i) the number of shares of Common Stock of Parent which were issued and outstanding, including the Closing Date Warrant Shares and (ii) the number of shares of Common Stock of Parent which were reserved for issuance (x) pursuant to the exercise of stock options as of the Closing Date,  and (y) upon conversion of outstanding shares of preferred stock of Parent.  The Closing Date Warrant Shares and all other outstanding Equity Interests have been duly authorized by all necessary action.  The Closing Date Warrant Shares are validly issued, fully paid and non-assessable and are free and clear of all Liens, are not be subject to preemptive rights in favor of any Person and will not result in the issuance of any additional Equity Interests of Parent or the triggering of any anti-dilution or similar rights contained in any options, warrants, debentures or other securities or agreements of Parent.

 

  

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5.19 Private Offering.  No form of general solicitation or general advertising was used by any Credit Party or any of its Subsidiaries, or their respective representatives in connection with the offer or sale of the Securities.  No registration of the Securities pursuant to the provisions of the Securities Act or the state securities or “blue sky” laws will be required for the offer, sale or issuance of the Securities pursuant to this Agreement.  Each Credit Party agrees that neither it, nor anyone acting on its behalf, will offer or sell the Securities or any other security so as to require the registration of the Securities pursuant to the provisions of the Securities Act or any state securities or “blue sky” laws, unless such Securities are so registered.

 

5.20 Broker’s, Finder’s or Similar Fees.  Except as set forth on Schedule 5.20, there are no brokerage commissions, finder’s fees or similar fees or commissions payable in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with any Credit Party or any of its Subsidiaries, or any action taken by any such Person.

 

5.21 Labor Relations.  Neither any Credit Party nor any of its Subsidiaries has committed or is engaged in any unfair labor practice.  Except as set forth in Schedule 5.21, there is (a) no unfair labor practice complaint pending or threatened against any Credit Party or any of its Subsidiaries before the National Labor Relations Board or any other Governmental Authority and no grievance or arbitration proceeding arising out of or under collective bargaining agreements is so pending or threatened, (b) no strike, labor dispute, slowdown or stoppage pending or threatened against any Credit Party or any of its Subsidiaries, (c) no union representation question existing with respect to the employees of any Credit Party or any of its Subsidiaries and no union organizing activities are taking place, and (d) no employment contract with any employee or independent contractor of any Credit Party or any of its Subsidiaries.  Each Credit Party and each of its Subsidiaries is in compliance in all material respects with all Applicable Laws respecting employment and employment practices, terms and conditions of employment and wages and hours.  Neither any Credit Party nor any of its Subsidiaries is a party to any collective bargaining agreement.

 

5.22 Employee Benefit Plans.  Neither any Credit Party nor any member of the Controlled Group maintains or contributes to any Plan other than those listed on Schedule 5.22 hereto.  Except as set forth in Schedule 5.22, (i) no Plan has incurred any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived, and each Credit Party and each member of the Controlled Group has met all applicable minimum funding requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and the trust related thereto is exempt from federal income Tax under Section 501(a) of the Code, (iii) neither any Credit Party nor any member of the Controlled Group has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due which are unpaid, (iv) no Plan has been terminated by the plan administrator thereof nor by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Plan, (v) at this time, the current value of the assets of each Plan exceeds the present value of the accrued benefits and other liabilities of such Plan and neither any Credit Party nor any member of the Controlled Group knows of any facts or circumstances which would materially change the value of such assets and accrued benefits and other liabilities, (vi) neither any Credit Party nor any member of the Controlled Group has materially breached any of the responsibilities, obligations or duties imposed on it by ERISA with respect to any Plan, (vii) neither any Credit Party nor any member of a Controlled Group has incurred any material liability for any excise Tax arising under Section 4972 or 4980B of the Code, and, to the best of each Credit Party’s knowledge, no fact exists which could give rise to any such liability, (viii) neither any Credit Party nor any member of the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has engaged in a material non-exempt “prohibited transaction” described in Section 406 of the ERISA or Section 4975 of the Code, nor taken any action which would constitute or result in a Termination Event with respect to any such Plan which is subject to ERISA, (ix) each Credit Party and each member of the Controlled Group has made all contributions due and payable with respect to each Plan, (x) there exists no event described in Section 4043(b) of ERISA, for which the thirty (30) day notice period contained in 29 CFR §2615.3 has not been waived, (xi) neither any Credit Party nor any member of the Controlled Group has any fiduciary responsibility for investments with respect to any Plan existing for the benefit of persons other than employees or former employees of the Credit Parties or any member of the Controlled Group, (xii) neither any Credit Party nor any member of the Controlled Group has withdrawn, completely or partially, from any Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980; and (xiii) no Credit Party is, and no Credit Party shall become, a member of a Multiemployer Plan.

 

  

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5.23 Patents, Trademarks, Etc. Each Credit Party and each of its Subsidiaries owns all patents, trademarks, permits, service marks, trade names, copyrights, licenses, franchises and formulas, or rights with respect to the foregoing, and has obtained assignments of all leases and other rights of whatever nature, necessary for the present conduct of its business, without any known conflict with the rights of others which, or the failure to own or obtain which, as the case may be, would be reasonably likely to result in a Material Adverse Effect.

 

5.24 Potential Conflicts of Interest.  Except as set forth on Schedule 5.24, no officer, director, stockholder or other security holder of any Credit Party or any of its Subsidiaries:  (a) owns, directly or indirectly, any interest in (excepting less than 5% holdings for investment purposes in Equity Interests of publicly held and traded companies), or is an officer, director, employee or consultant of, any Person that is, or is engaged in business as, a competitor, lessor, lessee, supplier, distributor, sales agent or customer of, or lender to or from, such Credit Party or any of such Credit Party’s Subsidiaries; (b) owns, directly or indirectly, in whole or in part, any tangible or intangible property that any Credit Party or any of its Subsidiaries uses in the conduct of business; or (c) has any cause of action or other claim whatsoever against, or owes or has advanced any amount to, any Credit Party or any of its Subsidiaries, except for claims in the Ordinary Course of Business such as for accrued vacation pay, accrued benefits under employee benefit plans, and similar matters and agreements existing on the date hereof.

 

  

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5.25 Trade Relations.  There exists no actual or, to the knowledge of any Credit Party, threatened termination, cancellation or limitation of, or any adverse modification or change in, the business relationship of such Credit Party or its business with any customer or any group of customers whose purchases are individually or in the aggregate material to the business of such Credit Party, or with any material supplier, and there exists no present condition or state of facts or circumstances that could reasonably be expected to have a Material Adverse Effect or prevent such Credit Party or its Subsidiaries from conducting their business after the consummation of the transactions contemplated by this Agreement, in substantially the same manner in which such business has heretofore been conducted.

 

5.26 Indebtedness.  Schedule 5.26 lists (i) the amount of all outstanding Indebtedness of the Credit Parties and their respective Subsidiaries (other than Indebtedness under this Agreement) as of the Closing Date, (ii) the Liens that relate to such Indebtedness and that encumber the assets of the Credit Parties and their respective Subsidiaries, (iii) the name of each lender thereof, and (iv) the amount of any unfunded commitments available to the Credit Parties or any of their respective Subsidiaries in connection with any such Indebtedness.  The subordination provisions contained in the Seller Subordination Agreement and the Rosen Subordination Agreement are enforceable against the holders of the Seller Notes and the Rosen Notes, respectively, by the Agent on behalf of the Lenders.  The Obligations (including post petition interest, whether or not allowed as a claim under bankruptcy or similar laws) constitutes “Senior Debt” or similar term relating to such obligations and all such obligations are entitled to the benefits of the subordination provisions contained in the Rosen Subordination Agreement.  Each Credit Party acknowledges that the Agent and each Lender is entering into this Agreement and is purchasing the Notes in reliance upon the subordination provisions contained in the Seller Subordination Agreement and the Rosen Subordination Agreement.

 

5.27 Material Contracts.  Neither any Credit Party nor any of its Subsidiaries is or will be a party to any Contractual Obligation, or is subject to any charge, corporate restriction, judgment, injunction, decree, or Requirement of Law, that could reasonably be expected to have a Material Adverse Effect.  Schedule 5.27 lists all contracts, agreements, commitments and other Contractual Obligations of the Credit Parties and their Subsidiaries, whether written or oral, other than (a) the Transaction Documents, (b) purchase orders in the Ordinary Course of Business, and (c) any other contracts, agreements, commitments and other Contractual Obligations of the Credit Parties or any of their Subsidiaries that do not extend beyond one year and involve the receipt or payment of not more than $500,000.  Each of the Material Contracts are in full force and effect.  Each Credit Party and each of its Subsidiaries has satisfied in full or provided for all of its liabilities and obligations under each Material Contract requiring performance prior to the date hereof in all material respects, and are not in default under any of them, nor, to the knowledge of any Credit Party, does any condition exist that with notice or lapse of time or both would constitute such a default.  To the knowledge of any Credit Party, no other party to any such Material Contract is in default thereunder, nor does any condition exist that with notice or lapse of time or both would constitute such a default.  Except as set forth on Schedule 5.27, no approval or consent of any Person is needed for all of the Material Contracts to continue to be in full force and effect.

 

  

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5.28 Insurance.  Schedule 5.28 accurately summarizes all of the insurance policies or programs of the Credit Parties and their Subsidiaries in effect as of the date hereof, and indicates the insurer’s name, policy number, expiration date, amount of coverage, type of coverage, annual premiums, exclusions and deductibles, and also indicates any self insurance program that is in effect.  All such policies are in full force and effect, are underwritten by financially sound and reputable insurers, are sufficient for all applicable Requirements of Law and otherwise are in compliance with the criteria set forth in Section 8.09 hereof.  All such policies will remain in full force and effect and will not in any way be affected by, or terminate or lapse by reason of any of the transactions contemplated hereby.

 

5.29 [Intentionally Omitted].

 

5.30 Products Liability.  Except as set forth on Schedule 5.30, there is no action, suit, proceeding, inquiry or investigation pending, or, to the knowledge of any Credit Party, threatened, by or before any Governmental Authority against any Credit Party or any of its Subsidiaries relating to any product alleged to have been sold by any Credit Party or any of its Subsidiaries and alleged to have been defective, or improperly designed or manufactured, nor to the knowledge of any Credit Party is there any valid basis for any such action, proceeding or investigation.

 

5.31 Solvency.  The Borrower and its Subsidiaries, taken as a whole, are Solvent.

 

5.32 Questionnaire.  All statements made by the Credit Parties in the Questionnaire are true and correct and do not, as of the date of this Agreement, contain any untrue statement of material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading in any material respect.

 

5.33 Location of Assets.  The chief executive offices of each Credit Party and each of its Subsidiaries and the books and records of each Credit Party and each of its Subsidiaries concerning their respective accounts are located only at the address set forth on Schedule 5.33 identified as such, and the only other places of business and locations of assets of each Credit Party and each of its Subsidiaries, if any, are the addresses set forth on Schedule 5.33.

 

5.34 Certain Payments.  Except as set forth on Schedule 5.34, neither the execution, delivery and performance by any Credit Party of this Agreement, nor the execution, delivery and performance by any Credit Party or any of its Subsidiaries of any of the other Transaction Documents, the First Lien Credit Documents nor the consummation of the transactions contemplated hereby or thereby shall require any payment by any Credit Party or any of its Subsidiaries, in cash or kind, under any other agreement, plan, policy, commitment or other arrangement.  There are no agreements, plans, policies, commitments or other arrangements with respect to any compensation, benefits or consideration which will be materially increased, or the vesting of benefits of which will be materially accelerated, as a result of this Agreement, the other Transaction Documents, the First Lien Credit Documents  or the occurrence of any of the transactions contemplated hereby or thereby.  There are no payments or other benefits payable by any Credit Party or any of its Subsidiaries, the value of which will be calculated on the basis of any of the transactions contemplated by this Agreement, the other Transaction Documents or the First Lien Credit Documents.

 

  

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5.35 Margin Requirements.  No part of the proceeds from the sale of the Securities hereunder will be used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock.  Neither the sale of the Securities nor the use of the proceeds thereof will violate or be inconsistent with the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

 

5.36 Anti-Terrorism Laws.

 

(a) General.  Neither any Credit Party nor any Subsidiary or Affiliate of any Credit Party is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

 

(b) Executive Order No. 13224.  Neither any Credit Party nor any Subsidiary or Affiliate of any Credit Party or their respective agents acting or benefiting in any capacity in connection with the Notes or other transactions hereunder is a Blocked Person.

 

(c) Blocked Person or Transactions.  Neither any Credit Party nor to any Credit Party’s knowledge any of its Subsidiaries, Affiliates or agents acting in any capacity in connection with the Notes or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224.

 

5.37 Trading with the Enemy.  Neither any Credit Party nor any of its Subsidiaries has engaged, nor does any Credit Party or any of its Subsidiaries intend to engage, in any business or activity prohibited by the Trading with the Enemy Act.

 

5.38 Interest Rate Hedges and Other Hedging Agreements.  As of the Closing Date, neither any Credit Party nor any of their Subsidiaries are a party to any Interest Rate Hedges or any Other Hedging Agreements.

 

  

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ARTICLE 6

 

REPRESENTATIONS AND WARRANTIES OF THE LENDERS

 

Each Lender hereby, severally, but not jointly, represents and warrants as to itself as follows:

 

6.01 Authorization; No Contravention.  The execution, delivery and performance by it of this Agreement:  (a) is within its power and authority and has been duly authorized by all necessary action; (b) does not contravene the terms of its organizational documents or any amendment thereof; and (c) will not violate, conflict with or result in any breach or contravention of any of its Contractual Obligations, or any order or decree directly relating to it.

 

6.02 Binding Effect.  This Agreement has been duly executed and delivered by it and this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.

 

6.03 Purchase for Own Account.  The Securities to be acquired by it pursuant to this Agreement are being or will be acquired for its own account and with no intention of distributing or reselling such securities or any part thereof in any transaction that would be in violation of the securities laws of the United States of America, or any state, without prejudice, however, to each Lender’s right at all times to sell or otherwise dispose of all or any part of the Securities, in the case of a Lender under an effective registration statement under the Securities Act, or under an exemption from such registration available under the Securities Act, and subject, nevertheless, to the disposition of its property being at all times within its control.  If any Lender should in the future decide to dispose of any of the Securities, such Lender understands and agrees that it may do so only in compliance with the Securities Act and applicable state securities laws, as then in effect.  Each Lender agrees to the imprinting of a legend on certificates representing all of the Securities to the following effect:  “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.”

 

6.04 Broker’s, Finder’s or Similar Fees.  Except as set forth in Section 2.03 and Schedule 5.20 hereof, there are no brokerage commissions, finder’s fees or similar fees or commissions payable in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with it or any action taken by it.

 

6.05 Governmental Authorization; Third Party Consent.  No approval, consent, compliance, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person in respect of any Requirement of Law, and no lapse of a waiting period under a Requirement of Law, is necessary or required in connection with the execution, delivery or performance by it or enforcement against it of this Agreement or the transactions contemplated hereby.

 

  

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ARTICLE 7

 

INDEMNIFICATION

 

7.01 Indemnification.  In addition to all other sums due hereunder or provided for in this Agreement, each Credit Party, jointly and severally, agrees to indemnify and hold harmless Agent, each Lender and their respective Affiliates and each of their respective officers, directors, agents, employees, Subsidiaries, partners, members, attorneys, accountants and controlling persons (each, an “Indemnified Party”) to the fullest extent permitted by law from and against any and all losses, claims, damages, expenses (including reasonable fees, disbursements and other charges of counsel and costs of investigation incurred by an Indemnified Party in any action or proceeding between any Credit Party or any of its Subsidiaries and such Indemnified Party (or Indemnified Parties) or between an Indemnified Party (or Indemnified Parties) and any third party or otherwise) or other liabilities, losses, or diminution in value (collectively, “Liabilities”) resulting from or arising out of any breach of any representation or warranty, covenant or agreement of any Credit Party in this Agreement, the Notes, the Warrants, or any of the other Transaction Documents, including the failure to make payment when due of amounts owing pursuant to this Agreement, the Notes, or any of the other Transaction Documents, on the due date thereof (whether at the scheduled maturity, by acceleration or otherwise) or any legal, administrative or other actions (including actions brought by the Agent, any Lender, any Credit Party, any of its Subsidiaries or any holders of equity or indebtedness of any Credit Party or any of its Subsidiaries or derivative actions brought by any Person claiming through or in the name of any Credit Party or any of its Subsidiaries, proceedings or investigations (whether formal or informal), or written threats thereof, based upon, relating to or arising out of any of the Transaction Documents, the transactions contemplated thereby, or any Indemnified Party’s role therein or in the transactions contemplated thereby; provided, however, that neither any Credit Party nor any of its Subsidiaries shall be liable under this Section 7.01 to an Indemnified Party:  (a) for any amount paid by the Indemnified Party in settlement of claims by the Indemnified Party without such Credit Party’s consent (which consent shall not be unreasonably withheld or delayed), (b) to the extent that it is judicially determined in a final non-appealable judgment that such Liabilities resulted primarily from the willful misconduct or gross negligence of such Indemnified Party or (c) to the extent that it is judicially determined in a final non-appealable judgment that such Liabilities resulted primarily from the breach by such Indemnified Party of any representation, warranty, covenant or other agreement of such Indemnified Party contained in this Agreement; provided, further, that if and to the extent that such indemnification is unenforceable for any reason, the Credit Parties shall make the maximum contribution to the payment and satisfaction of such Liabilities which shall be permissible under Applicable Laws.  In connection with the obligation of the Credit Parties to indemnify for expenses as set forth above, each Credit Party further agrees, upon presentation of appropriate invoices containing reasonable detail, to reimburse each Indemnified Party for all such expenses (including fees, disbursements and other charges of counsel and costs of investigation incurred by an Indemnified Party in any action or proceeding between any Credit Party (or any of its Subsidiaries) and such Indemnified Party (or Indemnified Parties) or between an Indemnified Party (or Indemnified Parties) and any third party or otherwise) as they are incurred by such Indemnified Party; provided, however, that if an Indemnified Party is reimbursed hereunder for any expenses, such reimbursement of expenses shall be refunded to the extent it is finally judicially determined that the Liabilities in question resulted primarily from (i) the willful misconduct or gross negligence of such Indemnified Party or (ii) the breach by such Indemnified Party of any representation, warranty, covenant or other agreement of such Indemnified Party contained in this Agreement or any other Transaction Document.

 

  

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7.02 Procedure; Notification.  Each Indemnified Party under this Article 7 will, promptly after the receipt of notice of the commencement of any action, investigation, claim or other proceeding against such Indemnified Party in respect of which indemnity may be sought from the Credit Parties under this Article 7, notify the Credit Parties in writing of the commencement thereof.  The omission of any Indemnified Party so to notify the Credit Parties of any such action shall not relieve the Credit Parties from any liability which they may have to such Indemnified Party unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses of the Credit Parties.  In case any such action, claim or other proceeding shall be brought against any Indemnified Party and it shall notify the Credit Parties of the commencement thereof, the Credit Parties shall be entitled to assume the defense thereof at their own expense, with counsel satisfactory to such Indemnified Party in its reasonable judgment; provided, however, that, if the Credit Parties have assumed the defense of any such action, claim or other proceeding, any Indemnified Party may, at its own expense, retain separate counsel to participate in such defense.  Notwithstanding the foregoing, in any action, claim or proceeding in which the Credit Parties, on the one hand, and an Indemnified Party, on the other hand, is, or is reasonably likely to become, a party, such Indemnified Party shall have the right to employ separate counsel at the expense of the Credit Parties and to control its own defense of such action, claim or proceeding if, in the reasonable opinion of counsel to such Indemnified Party, a conflict or potential conflict exists between the Credit Parties, on the one hand, and such Indemnified Party, on the other hand, that would make such separate representation advisable; provided, however, that in no event shall the Credit Parties be required to pay fees and expenses under this Article 7 for more than one firm of attorneys in any jurisdiction in any one legal action or group of related legal actions.  Each Credit Party agrees that it will not, without the prior written consent of the Lenders, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated hereby (if any Indemnified Party is a party thereto or has been actually threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of the Lenders and each other Indemnified Party from all liability arising or that may arise out of such claim, action or proceeding.  Neither any Credit Party nor any of its Subsidiaries shall be liable for any settlement of any claim, action or proceeding effected against an Indemnified Party without their written consent, which consent shall not be unreasonably withheld.  The rights accorded to Indemnified Parties hereunder shall be in addition to any rights that any Indemnified Party may have at common law, by separate agreement or otherwise.

 

  

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7.03 Survival.  The obligations of the Credit Parties under this Article 7 shall survive termination of this Agreement and the Transaction Documents and payment in full of the Notes.

 

ARTICLE 8

 

AFFIRMATIVE COVENANTS

 

Until the payment in full of all principal of and interest on the Notes and all other amounts due to the Agent and Lenders under this Agreement and the other Transaction Documents, including all fees, expenses and amounts due in respect of indemnity obligations under Article 7, each Credit Party hereby covenants and agrees with the Agent and Lenders as set forth in this Article 8, provided, however, that following payment in full of all such amounts, for so long as any of the Closing Date Warrant Shares are outstanding and owned by any Lender, each Credit Party hereby covenants and agrees with the Agent and Lenders only as set forth in (i)  Sections 8.01(a) and (b) if Parent does not timely file periodic reports with the SEC which provide the information described in Sections 8.01(a) and (b), and (ii) Sections 8.13 and 8.17:

 

8.01 Financial Statements and Other Information.  Each Credit Party shall maintain, and cause each of its Subsidiaries to maintain, a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP (it being understood that monthly financial statements are not required to have footnote disclosures).  The Credit Parties shall deliver to the Agent each of the financial statements and other reports described below:

 

(a) Annual Financial Statements.  Furnish Agent within one hundred twenty (120) days after the end of each fiscal year of the Credit Parties, audited financial statements of Parent and of Borrower, including statements of income and stockholders’ equity and cash flow from the beginning of the current fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year, all prepared on, with respect to each of Parent and Borrower, a Consolidated Basis and Consolidating Basis, in reasonable detail and complete and correct in all material respects and reported upon without qualification by EisnerAmper LLP or another independent certified public accounting firm selected by the Credit Parties and reasonably satisfactory to Agent (collectively, the “Accountants”).

 

(b) Quarterly Financial Statements.  Furnish Agent within forty five (45) days after the end of each fiscal quarter, an unaudited balance sheet of Parent and of Borrower and unaudited statements of income and stockholders’ equity and cash flow of Parent and of Borrower reflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such quarter, all prepared on, with respect to each of Parent and Borrower, a Consolidated Basis and Consolidating Basis, in reasonable detail and complete and correct in all material respects, subject to normal and recurring year-end adjustments that individually and in the aggregate are not material to the business of Parent and Borrower respectively

 

(c) Monthly Financial Statements.  Furnish Agent within thirty (30) days after the end of each month, an unaudited balance sheet of Parent and of Borrower and unaudited statements of income and stockholders’ equity and cash flow of the Credit Parties reflecting results of operations from the beginning of the fiscal year to the end of such month and for such month, all prepared on, with respect to each of Parent and of Borrower, a Consolidated Basis and Consolidating Basis, in reasonable detail and complete and correct in all material respects, subject to normal and recurring year-end adjustments that individually and in the aggregate are not material to the Credit Parties’ business.

 

 

  

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(d) Compliance Certificate.  Together with each delivery of financial statements pursuant to Sections 8.01(a), 8.01(b) and 8.01(c) above, the Credit Parties shall deliver or cause to be delivered a fully and properly completed compliance certificate (in substantially the form attached hereto as Exhibit C (or in such other form or substance as shall be satisfactory to Agent) and referred to as a “Compliance Certificate”) signed by the chief executive officer or principal accounting officer of each Credit Party.

 

(e) Accountants’ Reports.  Promptly upon receipt thereof, each Credit Party shall deliver copies of all significant reports submitted by the Accountants in connection with each annual, interim or special audit or review of any type of the financial statements or related internal control systems of the Credit Parties and their Subsidiaries made by the Accountant, including any comment letter submitted by the Accountant to management in connection with its services.

 

(f) Management Reports.  Together with each delivery of financial statements of Parent and of Borrower, and their respective Subsidiaries pursuant to Sections 8.01(a), 8.01(b) and 8.01(c), the Credit Parties will deliver a management report, which can be in the form of an e-mail (i) summarizing the results of operations and financial condition of Parent and of the Borrower and their respective Subsidiaries for the month then ended and the portion of the current fiscal year then elapsed (or for the fiscal year then ended in the case of year end financials) and (ii) setting forth in comparative form the corresponding figures for the corresponding periods of the previous fiscal year and the corresponding figures from the most recent projections for the current fiscal year delivered pursuant to subsection 8.01(g) including explanations for any significant variations.  The information above shall be presented in reasonable detail and shall be certified by the chief financial officer of each Credit Party to the effect that such information fairly presents the results of operations and financial condition of each of Parent and of Borrower on a Consolidated Basis and Consolidating Basis as at the dates and for the periods indicated.

 

(g) Projections.  No earlier than sixty (60) days prior nor later than the last day of each fiscal year beginning with the current fiscal year, the Credit Parties shall prepare and deliver to Agent projections of the Credit Parties and their Subsidiaries for the next succeeding fiscal year, on a month to month basis, including a balance sheet and cash flow statement as at the end of each quarterly period and income statements and statements of cash flows for each relevant period and for the period commencing at the beginning of the fiscal year and ending on the last day of such relevant period.  Such projections shall be prepared in good faith on the basis of sound financial planning practice consistent with past budgets and financial statements and that such Authorized Officer has no reason to question the reasonableness of any material assumptions on which such projections were prepared.

 

  

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(h) SEC Filings/Press Releases.  Promptly after the same are (i) filed, copies of all financial statements and regular, periodic or special reports which any Credit Party or Subsidiary may make to, or file with, the Securities and Exchange Commission or any successor or similar Governmental Authority, (ii) sent, copies of all financial statements, management reports and reports related thereto which any Credit Party or Subsidiary sends generally to its shareholders or other equity holders, and (iii) made available, all press releases to the public concerning material developments in the business of any of the Credit Parties or any of their respective Subsidiaries.

 

(i) Material Occurrences.  Promptly notify Agent in writing upon the occurrence of (a) any Event of Default or Default; (b) any event, development or circumstance due to which any financial statements or other reports furnished to Agent or the Lenders fail in any material respect to present fairly, in accordance with GAAP consistently applied, the financial condition or operating results of the Parent or Borrower as of the date of such statements; (c) any accumulated retirement plan funding deficiency which, if such deficiency continued for two plan years and was not corrected as provided in Section 4971 of the Code, could subject any Credit Party or Subsidiary to a Tax imposed by Section 4971 of the Code; (d) each and every default by any Credit Party or Subsidiary which permits the holders of any Indebtedness of any Credit Party or Subsidiary, the outstanding principal amount of which exceeds $250,000, to accelerate the maturity of such Indebtedness, including the names and addresses of the holders of such Indebtedness and the amount of such Indebtedness; and (e) any other development in the business or affairs of any Credit Party or Subsidiary which could reasonably be expected to have a Material Adverse Effect; in each case describing the nature thereof and the action the Credit Party or such Subsidiary proposes to take with respect thereto.  In addition, the Credit Parties shall notify Agent in writing promptly of any change in senior management (which, for purposes hereof, shall include any officer holding the title of vice president, or the functional equivalent thereof, and any executive officer holding a more senior title than vice president, or the functional equivalent thereof), and, in any event (i) if such change arises from a voluntary termination of employment, or as the result of death or disability of such officer, such notice shall be given no later than three (3) Business Days after any Credit Party shall have obtained knowledge (excluding the knowledge of such officer) of such event and (ii) if such change arises from an involuntary termination of employment, such notice shall be given no later than the date that is five (5) Business Days prior to the occurrence of such event, unless the Credit Parties determine, in the good faith exercise of their commercially reasonable judgment, that the delay in effectuating such termination due to the aforedescribed notice obligation would be reasonably likely to have a Material Adverse Effect, in which case the Credit Parties shall notify Agent in writing within one (1) Business Day after the occurrence of such involuntary termination.

 

(j) Litigation.  Promptly upon any officer of any Credit Party obtaining knowledge of (i) the institution of any action, suit, proceeding, governmental investigation or arbitration against or affecting any Credit Party or any Subsidiary or any property of any Credit Party or Subsidiary not previously disclosed by the Credit Parties to the Agent or (ii) any material development in any action, suit, proceeding, governmental investigation or arbitration at any time pending against or affecting any Credit Party or Subsidiary or any property or former property of any Credit Party or Subsidiary which, in each case, could reasonably be expected to have a Material Adverse Effect, the Credit Parties will promptly give notice thereof to the Agent and provide such other information as may be reasonably available to it to enable the Agent, Lenders and their counsel to evaluate such matter.

 

  

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(k) Subsidiaries.  Not less than fifteen (15) days prior to creating a Subsidiary or acquiring the Equity Interests in a Person, such that such Person will become a Subsidiary, the applicable Credit Party shall notify the Agent of such Credit Party’s or of such Credit Party’s Subsidiary’s intention to create such Subsidiary or acquire such Equity Interests, and following such notice such Subsidiary will not be created or acquired until such Credit Party has caused each Subsidiary to execute a joinder to this Agreement, and the other Transaction Documents and/or a Guaranty in form and substance satisfactory to the Agent and Lenders.

 

(l) Notice of Corporate Changes.  The Credit Parties shall provide prompt written notice to the Agent of any material change after the Closing Date in the authorized and issued Equity Interests of any Credit Party or any Subsidiary or any other material amendment to their applicable charter, by laws or other organizational documents, such notice, in each case, to identify the applicable jurisdictions, capital structures or amendments, as applicable.

 

(m) Notice of Adverse Events.  Furnish Agent with prompt written notice of (i) any lapse or other termination of any Consent issued to any Credit Party or any Subsidiary by any Governmental Authority or any other Person that is material to the operation of any Credit Party’s or Subsidiary’s business, (ii) any refusal by any Governmental Authority or any other Person to renew or extend any such Consent, (iii) copies of any periodic or special reports filed by any Credit Party or Subsidiary with any Governmental Authority or Person, if such reports indicate any material change, (iv) copies of any material notices and other communications from any Governmental Authority or Person which specifically relate to any Credit Party or Subsidiary or the industry in which they operate, and (v) the occurrence of any development or event which is reasonably likely to cause any Credit Party or Subsidiary not to be in compliance in all material respects with all federal, state and local laws relating to environmental protection and control and occupational safety and health.

 

(n) ERISA Notices and Requests.  Furnish Agent with immediate written notice in the event that (i) any Credit Party or any member of the Controlled Group knows or has reason to know that a Termination Event has occurred, together with a written statement describing such Termination Event and the action, if any, which such Credit Party or member of the Controlled Group has taken, is taking, or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, Department of Labor or PBGC with respect thereto, (ii) any Credit Party or any member of the Controlled Group knows or has reason to know that a material non-exempt prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred together with a written statement describing such transaction and the action which such Credit Party or member of the Controlled Group has taken, is taking or proposes to take with respect thereto, (iii) a funding waiver request has been filed with respect to any Plan together with all communications received by any Credit Party or any member of the Controlled Group with respect to such request, (iv) any increase in the benefits of any existing Plan or the establishment of any new Plan or the commencement of contributions to any Plan to which any Credit Party or any member of the Controlled Group was not previously contributing shall occur, (v) any Credit Party or any member of the Controlled Group shall receive from the PBGC a notice of intention to terminate a Plan or to have a trustee appointed to administer a Plan, together with copies of each such notice, (vi) any Credit Party or any member of the Controlled Group shall receive an unfavorable determination letter from the Internal Revenue Service regarding the qualification of a Plan under Section 401(a) of the Code, together with copies of each such letter; (vii) any Credit Party or any member of the Controlled Group shall receive a notice regarding the imposition of withdrawal liability, together with copies of each such notice; (viii) any Credit Party or any member of the Controlled Group shall fail to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment; (ix) any Credit Party or any member of the Controlled Group knows that (a) a Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.  Without limiting any of the foregoing, each Credit Party shall provide the Agent with copies of all of the final documentation related to any transactions whereby any Plan that is a deferred benefit plan is converted into a Plan that is a defined contribution plan at least ten (10) days prior to the effectiveness of such documents and/or the consummation of such transactions.

 

  

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(o) Environmental Reports.  Furnish Agent, concurrently with the delivery of the financial statements referred to in Sections 8.01(a), 8.01(b) and 8.01(c) with a certificate signed by an Authorized Officer of each Credit Party stating that, to the best of such Authorized Officer’s knowledge, each Credit Party and Subsidiary is in compliance in all material respects with all Environmental Laws.  To the extent any Credit Party or Subsidiary is not in compliance with the foregoing laws, the certificate shall set forth with reasonable specificity all areas of non-compliance and the proposed action such Credit Party or Subsidiary will implement in order to achieve full compliance.

 

(p) Other Information.  With reasonable promptness, each Credit Party shall deliver such other information and data with respect to such Credit Party or any of its Subsidiaries as from time to time may be reasonably required by the Agent or any Lender, including evidence that Borrower is in compliance with the Separateness Requirements and, without the necessity of any request by the Agent or any Lender, (a) copies of all environmental audits and reviews, (b) at least thirty (30) days prior thereto, notice of any Credit Party’s or such Subsidiary’s opening of any new office or place of business or any Credit Party’s or such Subsidiary’s closing of any existing office or place of business, and (c) promptly upon any Credit Party’s learning thereof, notice of any labor dispute to which any Credit Party or such Subsidiary may become a party, any strikes or walkouts relating to any of its plants or other facilities, and the expiration of any labor contract to which any Credit Party or such Subsidiary is a party or by which any Credit Party or such Subsidiary is bound.  Promptly upon request therefor by the Agent or any Lender, the Credit Parties shall deliver such other business or financial data, reports, appraisals and projections as the Agent or such Lender may reasonably request.

 

  

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(q) Additional Documents.  Execute and deliver to Agent, upon request, such documents and agreements as Agent may, from time to time, reasonably request to carry out the purposes, terms or conditions of this Agreement or any other Transaction Document.

 

8.02 Preservation of Existence.  Each Credit Party shall, and shall cause each of its Subsidiaries to:

 

(a) conduct continuously and operate actively its business according to good business practices and maintain all of its properties useful or necessary in its business in good working order and condition (reasonable wear and tear excepted and except as may be disposed of in each case in accordance with the terms of this Agreement), including all licenses, patents, copyrights, design rights, tradenames, trade secrets and trademarks, in each case that are material to its business, and take all actions necessary to enforce and protect the validity of any intellectual property right;

 

(b) keep in full force and effect its existence and comply in all material respects with Applicable Laws governing the conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect; and

 

(c) except as otherwise permitted herein, make all such reports and pay all such franchise and other taxes and license fees and do all such other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers and franchises under the laws of the United States or any political subdivision thereof.

 

8.03 Payment of Obligations.  Each Credit Party shall, and shall cause each of its Subsidiaries to, pay and discharge as the same shall become due and payable, all their respective obligations and liabilities, including:

 

(a) all Tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless same are being Properly Contested;

 

(b) all lawful claims which any Credit Party or any of its Subsidiaries is obligated to pay, which are due and which, if unpaid, might by law become a Lien upon its property, unless the same are being contested in good faith by appropriate proceedings diligently conducted which stay the enforcement of any Lien and for which adequate reserves in accordance with GAAP are being maintained by the Credit Parties and their Subsidiaries; and

 

(c) pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to specified grace periods and, in the case of the trade payables, to normal payment practices) all its obligations and liabilities of whatever nature, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect or when the amount or validity thereof is currently being Properly Contested, or if a Credit Party, in its reasonable commercial judgment, determines to delay payments to certain vendors while it is having bona fide negotiations with such vendors.

 

 

  

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8.04 Compliance with Laws.  Each Credit Party shall comply, and shall cause each of its Subsidiaries to comply, in all material respects with all Requirements of Law and with the directions of each Governmental Authority having jurisdiction over them or their respective business or property (including all applicable Environmental Laws), including any requirements to clean up, remove, or remediate Hazardous Materials at any location where necessary to protect human health or the environment.

 

8.05 Violations.  Each Credit Party shall promptly notify Agent in writing of any material violation of Applicable Law of any Governmental Authority, applicable to such Credit Party or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect.

 

8.06 Board Observer.  Each Credit Party shall give Lenders notice of (in the same manner as notice is given to directors), and permit three persons designated by Agent to attend as an observer, all meetings of its Board of Directors and all executive and other committee meetings of its Board of Directors and shall provide to Lenders the same information concerning the Credit Parties and their Subsidiaries, and access thereto, provided to members of the Credit Parties’ respective Board of Directors and such committees, as applicable.  The reasonable travel expenses incurred by any such designees of Lenders in attending any board or committee meetings shall be reimbursed by the Credit Parties; provided, that the Credit Parties will not be required to permit a person designated by Lenders to attend, as an observer, any committee meeting of its Board of Directors or provide information to Lenders as provided to such committees, unless the Lender has executed a confidentiality agreement satisfactory to Lender in its reasonable determination, or in the event the Board of Directors of the Credit Parties reasonably determines that a conflict of interest may exist between Agent and the Credit Parties.

 

8.07 Inspection.  Each Credit Party will permit, and will cause each of its Subsidiaries to permit, representatives of the Agent to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably requested, upon reasonable advance notice; provided, however, that no such inspection, examination or inquiry, the failure to conduct same, nor any knowledge of the Agent, including any knowledge obtained by the Agent in connection with any such inspection, investigation or inquiry, shall constitute a waiver of any rights the Agent and Lenders may have under any representation, warranty, covenant, term or agreement under any of the Transaction Documents.

 

8.08 Maintenance of Properties.  Each Credit Party shall maintain or cause to be maintained, and shall cause its Subsidiaries to maintain or cause to be maintained, in good repair, working order and condition all material properties used in their respective businesses and will make or cause to be made, and shall cause its Subsidiaries to make or cause to be made, all appropriate repairs, renewals and replacements thereof.

 

 

  

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8.09 Insurance.  Each Credit Party and its Subsidiaries will maintain or cause to be maintained with financially sound and reputable insurers that have a rating of “A” or better as established by Best’s Rating Guide (or an equivalent rating with such other publication of a similar nature as shall be in current use), the life insurance policies required by Section 8.17 and public liability and property damage insurance with respect to their respective businesses and properties against loss or damage of the kinds customarily carried or maintained by a company of established reputation engaged in similar businesses and in amounts acceptable to Agent and will deliver evidence thereof to Agent.  Without limiting the foregoing, each Credit Party and its Subsidiaries will have established on the Closing Date and maintain at all times thereafter (a) business interruption insurance in an amount satisfactory to the Agent and (b) products liability insurance coverage for the Credit Parties in amounts satisfactory to the Agent.  All such insurance policies shall provide that Agent shall be named as an additional insured or loss payee, as applicable and that such insurance policies may not be canceled unless the insurance carrier gives at least 30 days prior written notice of such cancellation to Agent.  If any Credit Party fails to obtain insurance as hereinabove provided, or to keep the same in force, Agent, if Agent so elects, upon notice to such Credit Party, may obtain such insurance and pay the premium therefor on behalf of such Credit Party, and such expenses so paid shall be part of the Obligations.

 

8.10 Books and Records.  Each Credit Party shall keep, and shall cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of such Credit Party and each of its Subsidiaries in accordance with GAAP consistently applied to the Credit Parties and their Subsidiaries taken as a whole.

 

8.11 Use of Proceeds.

 

(a) The Credit Parties shall use the proceeds of the sale of the Original Notes and the Original Warrants hereunder only as follows:  (i) the partial payment of the purchase price under the Original Acquisition Agreements and the BVX Acquisition Agreement, (ii) for the payment of fees and expenses in connection with the transactions contemplated hereunder and in the other Transaction Documents, and (iii) for general corporate purposes.

 

(b) The Credit Parties shall use the proceeds of the sale of the Series E Notes hereunder only as follows:  (i) the partial payment of the purchase price under the PingTone Acquisition Agreement, (ii) for the payment of fees and expenses in connection with the transactions contemplated hereunder and in the other Transaction Documents, and (iii) for general corporate purposes.

 

(c) The Credit Parties shall use the proceeds of the sale of the Series F Notes hereunder only as follows:  (i) to fund the Plexus Payoff, and (ii) for the payment of fees and expenses in connection with the transactions contemplated hereunder, under the First Lien Credit Agreement and in the other Transaction Documents.

 

  

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(d) No proceeds of the Notes will be used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock.  Neither the sale of any Securities nor the use of the proceeds thereof will violate or be inconsistent with the provisions of Regulation T, U, or X of the Board of Governors of the Federal Reserve System.

 

8.12 Standards of Financial Statements.  The Credit Parties shall cause all financial statements referred to in Sections 8.01(a), (b), (c) and (h), as to which GAAP is applicable to be complete and correct in all material respects (subject, in the case of interim financial statements, to normal year-end audit adjustments and the absence of footnotes) and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except as concurred in by such reporting accountants or officer, as the case may be, and disclosed therein).

 

8.13 [Intentionally Omitted].

 

8.14 New Real Property.  If any Credit Party acquires at any time or times hereafter any fee simple interest in real property, then within ninety (90) days of the acquisition thereof such Credit Party shall execute and deliver to Agent, as additional security and Collateral for the obligations, deeds of trust, security deeds, mortgages or other collateral assignments reasonably satisfactory in form and substance to Agent and its counsel (herein collectively referred to as “New Mortgages”) covering such real property.  The New Mortgages shall be duly recorded (at the Credit Parties’ expense) in each office where such recording is required to constitute a valid lien on the real property covered thereby.  In respect of any New Mortgage, Credit Parties shall deliver to Agent, at Credit Parties’ expense, mortgagee title insurance policies issued by a title insurance company reasonably satisfactory to Agent, which policies shall be in form and substance reasonably satisfactory to Agent and shall insure a valid lien in favor of Agent on the property covered thereby, subject only to Permitted Liens and those other exceptions reasonably acceptable to Agent and its counsel.  Credit Parties shall also deliver to Agent such other usual and customary documents, including ALTA surveys of the real property described in the New Mortgages, as Agent and its counsel may reasonably request relating to the real property subject to the New Mortgages.

 

8.15 Control Agreements; Cash Management Systems.

 

(a) Subject to Section 8.18(b), each Credit Party and each of its Subsidiaries shall have entered into a Control Agreement with the applicable depository, securities intermediary or commodities intermediary with respect to each deposit, securities, commodity or similar account maintained by such Credit Party or Subsidiary on the Closing Date.  Concurrently with the opening of any new deposit, securities, commodity or similar account by any Credit Party or any of its Subsidiaries after the Closing Date, such Credit Party or Subsidiary shall enter into a Control Agreement with the applicable depository, securities intermediary or commodities intermediary with respect to such account.  Notwithstanding the foregoing, this Section 8.15(a) shall not apply to (i) any payroll account so long as such payroll account is a zero balance account, or (ii) withholding Tax, employee benefits and similar fiduciary accounts. After the occurrence and during the continuation of an Event of Default, the Agent shall be entitled to deliver a notice to any financial institution that is party to a Control Agreement of its exercise of control over any deposit, securities, commodity or other account subject to such Control Agreement.

 

  

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(b) Each Credit Party shall provide the Lenders with electronic access at all times to each of its and its Subsidiaries’ depositary, securities intermediary or commodities intermediary accounts so that the Lenders may monitor the activity in such accounts.

 

8.16 Collateral Access Agreements. The Credit Parties have obtained Collateral Access Agreements from the lessors of the leased premises at 155 Willowbrook Boulevard, Wayne, New Jersey 07470 and 3565 Piedmont Road, Atlanta, Georgia 33309.  Each Credit Party shall, with respect to each lease entered into following the Closing Date for leased property where books and records of accounts or Collateral with an original book value greater than $100,000 is stored or located, obtain a Collateral Access Agreement from the lessor of such leased property in connection with entering into such lease.

 

8.17 Key-Man Life Insurance. The Credit Parties shall maintain a $5,000,000 key-man life insurance policy with respect to the life of Jonathan Kaufman and a $3,000,000 key-man life insurance policy with respect to the life of Matthew Rosen.

 

8.18  Post Closing Covenants.

 

(a) The Credit Parties shall use their commercially reasonable efforts to obtain a Collateral Access Agreement from the lessor of each lease existing on the Closing Date for premises where books and records of accounts or Collateral with an original book value greater than $100,000 is stored or located.

 

(b) Within 45 days following the Closing Date (or such longer period a Agent may agree to in its sole discretion), the Lenders shall have received duly executed Control Agreements with respect to each deposit, securities, commodity or similar account maintained by such Credit Party or Subsidiary on the Closing Date.

 

(c) The Credit Parties covenant and agree that if, within one (1) year from the Closing Date, any Existing Lender sells its Closing Date Warrant Shares as a result of a merger or other transaction not initiated by such Existing Lender, then the Credit Parties shall pay to each such Existing Lender an amount equal to 20% of the gain realized by such Existing Lender as a result of its sale of such Closing Date Warrant Shares. The amount of gain shall be calculated by each Existing Lender and shall be paid upon the closing of the merger or such other transaction.  The obligations contained in this section 8.18(c) shall survive the termination of this Agreement and the Transaction Documents and payment in full of the Notes.

 

(d) Upon the closing of the Term Loan, under and as such term is defined in the First Lien Credit Agreement as in effect on the date hereof, the Credit Parties shall pay an advisory fee in the amount of $200,000 (the "Advisory Fee") as directed by Agent. If the Term Loan Availability Period (as defined in the First Lien Credit Agreement as in effect on the date hereof) expires without the Term Loan closing, then the Advisory Fee shall be reduced to $75,000, which amount shall be paid by the Credit Parties, as directed by Agent, within three (3) Business Days following such expiration. Agent may at any time require that $75,000 of the Advisory Fee be paid prior to the expiration of the Term Loan Availability Period, in which event such amount shall be paid by Credit Parties, as directed by Agent, within three (3) Business Days notice thereof to Credit Parties and the balance of the Advisory Fee shall be paid by the Credit Parties if and upon the closing of the Term Loan, as directed by Agent.

 

  

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ARTICLE 9

 

NEGATIVE COVENANTS

 

Until the payment in full of all principal of and interest on the Notes and all other amounts due to the Agent and Lenders under this Agreement and the other Transaction Documents, including all fees, expenses and amounts due at such time in respect of indemnity obligations under Article 7, each Credit Party covenants and agrees with the Agent and Lenders as set forth in this Article 9:

 

9.01 Fundamental Changes; Consolidations, Mergers and Acquisitions; Asset Sales.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, directly or indirectly: (a) enter into any merger, consolidation or other reorganization with or into any other Person or acquire all or a substantial portion of the assets or Equity Interests of any Person or permit any other Person to consolidate with or merge with it (other than the merger of PingTone and BVX with and into NBS), or (b) sell, lease, transfer or otherwise dispose of any of its properties or assets, except dispositions of inventory in the Ordinary Course of Business.

 

9.02 Creation of Liens.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, directly or indirectly, create or suffer to exist any Lien or transfer upon or against any of its property or assets now owned or hereafter acquired, except Permitted Liens, including Liens disclosed on Schedule 9.02.

 

9.03 Guarantees.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, directly or indirectly become liable upon the obligations or liabilities of any Person by assumption, endorsement or guaranty thereof or otherwise (other than to Lenders) except (a) guarantees made in the Ordinary Course of Business up to an aggregate amount of $300,000, and (b) the endorsement of checks in the Ordinary Course of Business.

 

9.04 Investments.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, directly or indirectly make any Investments, except:

 

(a) investments in Cash and Cash Equivalents;

 

(b) investments existing on the Closing Date as set forth on Schedule 9.04 hereto;

 

  

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(c) investments in wholly-owned Subsidiaries of such Credit Party created or acquired after the Closing Date, to the extent permitted hereunder;

 

(d) loans permitted by Section 9.05;

 

(e) investments by the Credit Parties and their respective Subsidiaries in Capital Expenditures permitted to be made pursuant to Section 9.15(c).

 

9.05 Loans.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, directly or indirectly make or have outstanding advances, loans or extensions of credit to any Person, including any Subsidiary or Affiliate, except for (a) the extension of commercial trade credit in connection with the sale of inventory in the Ordinary Course of Business and (b) loans to employees of the Credit Parties in the Ordinary Course of Business not to exceed, in the aggregate, $25,000 at any time outstanding.

 

9.06 Restricted Payments.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, directly or indirectly declare, pay or make any Restricted Payments.

 

9.07 Indebtedness.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist any Indebtedness except:

 

(a) trade debt incurred in the Ordinary Course of Business;

 

(b) the Indebtedness created under this Agreement;

 

(c) Indebtedness for Capital Expenditures permitted under Section 9.15(c), including Purchase Money Indebtedness and indebtedness incurred under Capital Lease Obligations, in each case incurred in connection with such Capital Expenditures, in an aggregate amount not to exceed $500,000 per year for all Credit Parties and their respective Subsidiaries;

 

(d) Indebtedness disclosed on Schedule 9.07 including up to $7,000,000 aggregate amount of Indebtedness at any time in respect of equipment financing leases, and any extension, renewal or refinancing thereof; provided that in connection with any such extension, renewal or refinancing: (i) the aggregate principal amount of such Indebtedness is not increased, (ii) the scheduled maturity date of such Indebtedness is not shortened, (iii) the covenants or defaults are not materially more restrictive or more onerous than analogous provisions in the documentation of such Indebtedness as in effect on the Closing Date;

 

(e) Indebtedness under any Interest Rate Hedge or any Other Hedging Agreement reasonably acceptable to Agent;

 

(f) guaranty obligations permitted pursuant to Section 9.03 hereof;

 

(g) Indebtedness owing or that may become owing to Prestige Capital Corporation or a replacement institutional lender (the “Working Capital Lender”), with respect to a working capital revolving line of credit provided to Parent (the “Working Capital Agreement”) not to exceed $3,000,000 at any one time outstanding (the “Working Capital Debt”) and secured by Liens (“Working Capital Liens”) granted by Parent in favor of the Working Capital Lender which are first priority security interests on accounts receivable and other assets of Parent (excluding in any event, any Lien on any Equity Interests of any Subsidiary); and

 

  

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(h) the First Lien Indebtedness; provided that the aggregate principal amount thereof shall not exceed the Bank Debt Limit (as such term is defined in the Subordination Agreement).

 

9.08 Nature of Business.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, substantially change the nature of the business in which it is presently engaged, or except as specifically permitted hereby purchase or invest, directly or indirectly, in any assets or property other than in the Ordinary Course of Business and where such assets or property are useful in, necessary for and are to be used in its business as presently conducted.

 

9.09 Transactions with Affiliates.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise enter into any transaction or deal with, any Affiliate, except for (i) transactions in the Ordinary Course of Business, entered into on an arm’s-length basis on fair and reasonable terms no less favorable than terms which would have been obtainable from a Person other than an Affiliate; (ii) the payment of customary and reasonable directors’ fees to directors who are not employees of the Credit Parties or any Affiliate of the Credit Parties as well as the payment of their reasonable out-of-pocket expenses incurred in performing their directorial duties and the payment of indemnities owing to them as directors; or (iii) certain loans by Affiliates to Parent as indicated in Schedule 9.07.

 

9.10 Leases.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, directly or indirectly enter as lessee into any lease arrangement for real or personal property (unless capitalized and permitted under Section 9.15(c) hereof) if after giving effect thereto, aggregate annual rental payments for all leased property, whether real or personal, would exceed $250,000 in any one fiscal year in the aggregate for all Credit Parties and their respective Subsidiaries, other than renewals of existing leases and replacement leases on terms consistent with the lease it is replacing.

 

9.11 Subsidiaries; Partnerships; Joint Ventures.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, form any Subsidiary (other than a Subsidiary, the formation of which shall have been consented to in advance in writing by the Required Lenders), or enter into any partnership, joint venture or similar arrangement unless consented to by Required Lenders.

 

9.12 Fiscal Year and Accounting Changes.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, directly or indirectly maintain a fiscal year other than a year ending on December 31, or make any change (i) in accounting treatment and reporting practices except as required by GAAP or (ii) in Tax reporting treatment except as required by Applicable Law.

 

  

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9.13 Amendment of Organizational Documents.  From and after the Closing Date, no Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, amend, modify or waive any material term or material provision of its Organization Documents except as required by Applicable Law and except that Parent may amend its certificate of incorporation to increase its authorized number of shares of common stock to 50,000,000.

 

9.14 Limitation on Modifications of Indebtedness; Modifications of Certain Other Agreements; Etc.  No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, (i) amend or modify, or permit the amendment or modification of, any provision of the Indebtedness described in Section 9.07 hereto or of any agreement (including any purchase agreement, indenture, loan agreement or security agreement) relating thereto other than any amendments or modifications to such Indebtedness which do not in any way adversely affect the interests of the Lenders and are otherwise permitted under Section 9.07, (ii) make (or give any notice in respect thereof) any voluntary or optional payment or prepayment on or redemption or acquisition for value of, or any prepayment or redemption as a result of any asset sale, change of control or similar event of, any Indebtedness which is contractually subordinated to the Notes, or (iii) amend or modify, or permit the amendment or modification of, any provision of (A) the Working Capital Agreement except as permitted by the Working Capital Intercreditor Agreement, (B) Seller Notes, except as permitted by the Seller Subordination Agreement, (C) the Rosen Notes, except as permitted by the Rosen Subordination Agreement, or (D) the First Lien Credit Documents, except as permitted by the Subordination Agreement, respectively.

 

9.15 Financial Covenants.

 

(a) Borrower Leverage Ratio.  The Borrower shall maintain, and shall cause its Subsidiaries to maintain, a Leverage Ratio, as of and for each period of four consecutive fiscal quarters, of not greater than 4.00:1.00.

 

(b) Borrower Fixed Charge Coverage.  The Borrower shall maintain, and shall cause each of its Subsidiaries to maintain, a Fixed Charge Coverage Ratio, as of and for each period of four consecutive fiscal quarters, of not less than 1.20:1.00.

 

(c) Borrower Capital Expenditures.  The Borrower shall not, and shall cause its Subsidiaries not to, contract for, purchase or make any expenditure or commitments for Capital Expenditures in any fiscal year in an aggregate amount in excess of $4,500,000.

 

(d) Borrower Minimum EBITDA.  The Borrower shall not permit its EBITDA, measured as of the last day of each period of four consecutive fiscal quarters, to be less than $11,000,000.

 

(e) Minimum Parent EBITDA.  The Parent shall not permit Parent EBITDA, measured as of the last day of each period of four consecutive fiscal quarters beginning with the four consecutive fiscal quarters ending December 31, 2016, to be less than $0.

 

  

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(f) Minimum Cash.  The Parent, on a non-Consolidated Basis, shall at all times from and after December 31, 2015 have at least $1,000,000 of  (i) Cash Equivalents in excess of the amount of the Working Capital Debt then outstanding or (ii) “availability” under the Working Capital Agreement.

 

(g) Compliance with the covenants in this Section 9.15 (other than Section 9.15(f)) shall be determined on a Consolidated Basis in accordance with GAAP consistently applied, unless explicitly stated otherwise.

 

9.16 Compliance with ERISA.  No Credit Party shall, nor shall any Credit Party permit any of its Subsidiaries, to (x) maintain, or permit any member of the Controlled Group to maintain, or (y) become obligated to contribute, or permit any member of the Controlled Group to become obligated to contribute, to any Plan, other than those Plans disclosed on Schedule 5.22, (ii) engage, or permit any member of the Controlled Group to engage, in any non-exempt “prohibited transaction”, as that term is defined in section 406 of ERISA and Section 4975 of the Code; (iii) incur, or permit any member of the Controlled Group to incur, any “accumulated funding deficiency”, as that term is defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any member of the Controlled Group to terminate, any Plan where such event could result in any liability of any Credit Party or any member of the Controlled Group or the imposition of a lien on the property of any Credit Party or any member of the Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any member of the Controlled Group to assume, any obligation to contribute to any Multiemployer Plan not disclosed on Schedule 5.22, (vi) incur, or permit any member of the Controlled Group to incur, any withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify Lenders of the occurrence of any Termination Event, (viii) fail to comply, or permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the Code or other Applicable Laws in respect of any Plan , (ix) fail to meet, or permit any member of the Controlled Group to fail to meet, all minimum funding requirements under ERISA or the Code or postpone or delay or allow any member of the Controlled Group to postpone or delay any funding requirement with respect of any Plan.

 

9.17 Prepayment of Indebtedness.  No Credit Party shall, nor shall any Credit Party permit any of its Subsidiaries to, at any time, directly or indirectly, prepay any Indebtedness (other than to Lenders or,  subject to the Subordination Agreement, the First Lien Indebtedness), or repurchase, redeem, retire or otherwise acquire any Indebtedness (other than to Lenders or, subject to the Subordination Agreement, the First Lien Indebtedness).

 

9.18 Anti-Terrorism Laws.  No Credit Party shall, nor shall any Credit Party permit any Affiliate or agent to: (a) conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, (b) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224 and (c) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order No. 13224, the USA Patriot Act or any other Anti-Terrorism Law.  Each Credit Party shall deliver to Agent any certification or other evidence reasonably requested from time to time by Agent, in its sole discretion, confirming such Credit Party’s compliance with this Section.

 

  

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9.19 Trading with the Enemy Act.  No Credit Party shall nor shall any Credit Party permit any of its Subsidiaries to engage in any business or activity in violation of the Trading with the Enemy Act.

 

9.20 Additional Negative Pledges.  No Credit Party shall, nor shall any Credit Party permit any of its Subsidiaries, to create or otherwise cause or suffer to exist or become effective, directly or indirectly, (i) any prohibition or restriction (including any agreement to provide equal and ratable security to any other Person) on the creation or existence of any Lien upon the assets of any Credit Party or any of its Subsidiaries, other than Permitted Liens or (ii) any contractual obligation (other than the Subordination Agreement) which may restrict or inhibit Agent’s rights or ability to sell or otherwise dispose of the Collateral or any part thereof after the occurrence of an Event of Default.

 

ARTICLE 10

 

PRINCIPAL PAYMENTS

 

10.01 Optional Prepayment.  The Borrower may prepay the outstanding principal amount (together with accrued Interest) on the Notes as follows:

 

(a) The Borrower may, at its option, at any time upon notice given to Agent as provided in Section 10.01(b), unless such notice is waived by the Required Lenders, prepay all or any portion of the principal amount of any of the Notes, by payment to the Lenders, of an amount equal to the redemption prices (the “Optional Redemption Prices”) set forth below (expressed as a percentage of the outstanding principal amount being prepaid, from time to time) together with Interest accrued and unpaid on the principal amount of the Notes so prepaid through the date fixed for such prepayment, and reasonable out-of-pocket costs and expenses (including reasonable fees, charges and disbursements of counsel), if any, associated with such prepayment; provided, however, that each payment of less than the full outstanding balance of the principal amount of the Notes shall be in an aggregate amount of not less than $250,000 or integral multiples of $100,000 in excess thereof.  If such prepayment is to be made by the Borrower to the Lenders during any Loan Year set forth below, the Optional Redemption Price shall be determined based upon the percentage indicated below for such Loan Year multiplied by the principal amount which is being prepaid:

 

	
Loan Year

	
Optional Redemption Price

	
1

	
104%

	
2

	
103%

	
Thereafter

	
100%

 

  

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(b) The Borrower shall give written notice of prepayment of the Notes pursuant to this Section 10.01 not less than 10 nor more than 60 days prior to the date fixed for such prepayment.  Such notice of prepayment pursuant to this Section 10.01 shall be given in the manner specified in Section 12.02 of this Agreement.  Upon notice of prepayment pursuant to this Section 10.01 being given by the Borrower, the Borrower covenants and agrees that it will prepay, on the date therein fixed for prepayment, the Notes or the portion thereof so called for prepayment, at the applicable Optional Redemption Price set forth above with respect to the principal amount or the portion thereof so called for prepayment, together with Interest accrued and unpaid thereon to the date fixed for such prepayment, and the costs and expenses referred to in Section 10.01(a).

 

(c) Any optional prepayment under this Section 10.01 shall include payment of accrued Interest on the principal amount of the Notes so prepaid and shall be applied first to all costs, expenses and indemnities payable under this Agreement, then to payment of default interest, if any, then to accrued but unpaid Interest, if any, and thereafter to the principal amount.

 

10.02 Mandatory Prepayments.

 

(a) Liquidity Event.  Upon the occurrence of a Liquidity Event (as hereinafter defined), the Borrower shall, prepay the outstanding principal amount of all Notes in accordance with the redemption prices (the “Mandatory Redemption Prices”) set forth below (expressed as a percentage of the outstanding principal amount being prepaid), together with Interest accrued and unpaid on the outstanding principal amount of the Notes so prepaid through the date of such prepayment and reasonable out-of-pocket costs and expenses (including reasonable fees, charges and disbursements of counsel), if any, associated with such prepayment.  If a Liquidity Event shall occur during any Loan Year set forth below, the Mandatory Redemption Price shall be determined based upon the percentage indicated below for such Loan Year multiplied by the principal amount which is being prepaid.  For the purposes hereof, “Liquidity Event” means (i) the occurrence of a Change of Control, or (ii) the liquidation, dissolution or winding up of Parent or Borrower or of one or more of Parent’s Subsidiaries that, individually or in the aggregate, constitute a material part of the business, operations or assets of the Credit Parties and all of their respective Subsidiaries, taken as a whole.

 

	
Loan Year

	
Mandatory Redemption Price

	
1

	
104%

	
2

	
103%

	
Thereafter

	
100%

 

(b) Notice.  The Borrower shall give written notice to the Agent of any mandatory prepayment pursuant to Section 10.02(a) at least five (5) Business Days prior to the date of such prepayment.  Such notice shall be given in the manner specified in Section 12.02 of this Agreement.

 

  

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10.03 Scheduled Payments.  The principal amount of the Series A Notes shall be paid in installments of $20,508.27 each, together with accrued and unpaid Interest, on each Interest Payment Date. The remaining balance of the principal amount of the Series A Notes shall be paid in full, together with accrued and unpaid Interest, on the Maturity Date.   The principal amount of the Series B Notes and the principal amount of the Series C Notes shall be paid in full, together with accrued and unpaid Interest, on the Maturity Date.  The principal amount of the Series D Notes shall be paid in installments of $36,640.08 each, together with accrued and unpaid Interest, on each Interest Payment Date. The remaining balance of the principal amount of the Series D Notes shall be paid in full, together with accrued and unpaid Interest, on the Maturity Date.  The principal amount of the Series E Notes shall be paid in full, together with accrued and unpaid Interest, on the Maturity Date. The principal amount of the Series F Notes shall be paid in full, together with accrued and unpaid Interest, on the Maturity Date.

 

10.04 Application of Payments.

 

(a) Upon any payment or prepayment of Series A Notes pursuant to any provision of this Agreement, the principal amount so paid or prepaid shall be allocated to all Series A Notes at the time outstanding pro rata (based upon the proportion of the respective outstanding principal amount of the Series A Notes) until such Series A Notes have been paid in full.

 

(b) Upon any payment or prepayment of Series B Notes pursuant to any provision of this Agreement, the principal amount so paid or prepaid shall be allocated to all Series B Notes at the time outstanding pro rata (based upon the proportion of the respective outstanding principal amount of the Series B Notes) until such Series B Notes have been paid in full.

 

(c) Upon any payment or prepayment of Series C Notes pursuant to any provision of this Agreement, the principal amount so paid or prepaid shall be allocated to all Series C Notes at the time outstanding pro rata (based upon the proportion of the respective outstanding principal amount of the Series C Notes) until such Series C Notes have been paid in full.

 

(d) Upon any payment or prepayment of Series D Notes pursuant to any provision of this Agreement, the principal amount so paid or prepaid shall be allocated to all Series D Notes at the time outstanding pro rata (based upon the proportion of the respective outstanding principal amount of the Series D Notes) until such Series D Notes have been paid in full.

 

(e) Upon any payment or prepayment of Series E Notes pursuant to any provision of this Agreement, the principal amount so paid or prepaid shall be allocated to all Series E Notes at the time outstanding pro rata (based upon the proportion of the respective outstanding principal amount of the Series E Notes) until such Series E Notes have been paid in full.

 

  

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(f) Upon any payment or prepayment of Series F Notes pursuant to any provision of this Agreement, the principal amount so paid or prepaid shall be allocated to all Series F Notes at the time outstanding pro rata (based upon the proportion of the respective outstanding principal amount of the Series F Notes) until such Series F Notes have been paid in full

 

(g) Payments of the principal amount of each Note to each Lender shall be made to the same account and in the same manner as provided in Section 2.06(a).

 

ARTICLE 11

 

EVENTS OF DEFAULT; REMEDIES

 

11.01 Events of Default.  An “Event of Default” shall occur if:

 

(a) any Credit Party shall default in the payment of the principal amount of the Notes, when and as the same shall become due and payable, whether at maturity or at a date fixed for payment or prepayment or by acceleration or otherwise; or

 

(b) any Credit Party shall default in the payment of any installment of Interest or any other amount due under this Agreement or the Notes (other than as set forth in clause (a) of this Section 11.01) according to its terms, when and as the same shall become due and payable and such default shall continue for a period of three days after the due date for the payment thereof; or

 

(c) any Credit Party or any of its Subsidiaries shall default in the due observance or performance of any covenant to be observed or performed pursuant to Sections 8.01, 8.02, 8.03, 8.08, 8.15, 8.16, 8.17, 8.18 or Articles 9 or 16 of this Agreement; or

 

(d) any Credit Party or any of its Subsidiaries shall default in the due observance or performance of any other covenant, condition or agreement on the part of such Credit Party or such Subsidiary to be observed or performed pursuant to the terms hereof or any of the Transaction Documents (other than those referred to in clauses (a), (b) or (c) of this Section 11.01), and such default shall continue for fifteen (15) days after the earliest of (A) if any Credit Party has knowledge of such default, the date such Credit Party is required pursuant to the Transaction Documents or otherwise to give notice thereof to the Agent or Lenders (whether or not such notice is actually given) or (B) the date of written notice thereof, specifying such default, shall have been given to the Credit Parties by Agent or any Lender; or

 

(e) any representation, warranty or certification made by or on behalf of any Credit Party or any of its Subsidiaries in this Agreement, the Notes, the Transaction Documents or in any certificate or other document delivered pursuant hereto or thereto shall have been incorrect in any material respect (without duplication of any materiality qualification therein) when made; or

 

  

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(f) any event or condition shall occur that results in the acceleration of the maturity of any Indebtedness of any Credit Party or any of its Subsidiaries in an amount in excess of $150,000 for any Credit Party or its Subsidiaries or $250,000 for all Credit Parties and their respective Subsidiaries, or any default shall occur by any Credit Party under the Working Capital Agreement or the First Lien Credit Documents, in each case which the Credit Parties fail to cure within any applicable cure period; or

 

(g) any uninsured damage to or loss, theft or destruction of any assets of any Credit Party or any of its Subsidiaries shall occur that is in excess of $250,000 in the aggregate for all Credit Parties and Subsidiaries; or

 

(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (A) relief in respect of any Credit Party or any of its Subsidiaries, or of a substantial part of any of their respective property or assets, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, (B) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Credit Party or any of its Subsidiaries, or for a substantial part of any of their respective property or assets, or (C) the winding up or liquidation of any Credit Party or any of its Subsidiaries; and such proceeding or petition shall continue undismissed for sixty (60) days, or an order or decree approving or ordering any of the foregoing shall be entered; or

 

(i) any Credit Party or any of its Subsidiaries shall (A) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar Applicable Law, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in paragraph (h) of this Section 11.01, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official, for a substantial part of its property or assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (E) make a general assignment for the benefit of creditors, (F) become unable, admit in writing its inability or fail generally to pay its debts as they become due, or (G) take any action for the purpose of effecting any of the foregoing; or

 

(j) one or more judgments for the payment of money in an aggregate amount in excess of $150,000 shall be rendered against any Credit Party or any of its Subsidiaries or in excess of $250,000 for all Credit Parties and their respective Subsidiaries (in either case, except to the extent covered by insurance as to which the insurance company has acknowledged coverage) and the same shall remain undischarged for a period of thirty (30) days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of any Credit Party or any of its Subsidiaries to enforce any such judgment; or

 

(k) any Credit Party or any of its Subsidiaries shall commence legal action challenging the validity and binding effect of any provision of any of the Transaction Documents or any of the Transaction Documents shall for any reason (except to the extent permitted by its express terms) cease to be effective or, if in the case of the Transaction Documents intended to provide a Lien in favor of the Agent or any Lender, fail to create a valid and perfected first priority Lien (except for the Liens in favor of the holders of the First Lien Indebtedness, but subject to the Subordination Agreement, and Permitted Liens that by operation of law would take priority) on, or security interest in, any of the Collateral purported to be covered; or

 

  

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(l) unless otherwise waived or consented to by the Required Lenders in writing, the subordination provisions relating to any Indebtedness subordinated to the Indebtedness pursuant to the Notes and the Agreement (collectively, the “Subordination Provisions”) shall fail to be enforceable by the Agent and the Lenders in accordance with the terms thereof, or the monetary obligations pursuant to the Notes and this Agreement shall fail to constitute “Senior Debt” (or similar term) referring to such obligations; or any Credit Party shall, directly or indirectly, disavow or contest in any manner (i) the effectiveness, validity or enforceability of any of the Subordination Provisions, (ii) that the Subordination Provisions exist for the benefit of the Agent and the Lenders or (iii) that all payments of principal of or premium and interest on the such subordinated Indebtedness, or realized from the liquidation of any property of any Credit Party or Subsidiary, shall be subject to any of such Subordination Provisions; or any Credit Party shall make any Subordinated Debt Payment not permitted by the applicable subordination agreement; or

 

(m) [reserved]; or

 

(n) the occurrence of any event or condition that could reasonably be expected to have a Material Adverse Effect.

 

11.02 Acceleration and Remedies.  If an Event of Default occurs under Section 11.01(h) or (i), then the outstanding principal amount of and all accrued Interest on the Notes shall automatically become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived.  If any other Event of Default occurs and is continuing, Agent may, and at the request of the Required Lenders shall, by written notice to the Credit Parties, declare the principal amount of and accrued Interest on the Notes to be immediately due and payable.  Upon any such declaration, such principal amount and Interest shall become immediately due and payable.  The Required Lenders may rescind an acceleration and its consequences if all existing Events of Default have been cured or waived, except nonpayment of principal or Interest that has become due solely because of the acceleration, and if the rescission would not conflict with any judgment or decree.  Any notice or rescission shall be given in the manner specified in Section 12.02 hereof.  Upon the occurrence of an Event of Default, Agent shall have the right to exercise any and all rights and remedies provided for herein, under any of the other Transaction Documents, under the UCC and at law or equity generally, including the right to foreclose the security interests granted and to realize upon any Collateral by any available judicial procedure and/or to take possession of and sell any or all of the Collateral with or without judicial process.

 

 

  

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11.03 Application of Proceeds.  Notwithstanding any other provisions of this Agreement to the contrary, after the occurrence and during the continuance of an Event of Default, all amounts collected or received by the Agent on account of the Notes or any other amounts outstanding under any of the Transaction Documents or in respect of the Collateral may, at Agent’s discretion, or shall, at the direction of the Required Lenders, be paid over or delivered as follows:

 

(a) FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of the Agent in connection with enforcing its rights and the rights of the Lenders under this Agreement and the other Transaction Documents;

 

(b) SECOND, to the payment of any fees owed to the Agent;

 

(c) THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of each of the Lenders to the extent owing to such Lender pursuant to the terms of this Agreement or the other Transaction Documents;

 

(d) FOURTH, to the payment of all accrued fees and Interest which has not been included in the principal amount, in respect of the Notes, this Agreement or the other Transaction Documents;

 

(e) FIFTH, to the payment of the principal amount of the Notes, pro rata, until paid in full;

 

(f) SIXTH, to all other obligations which shall have become due and payable under the Transaction Documents or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH” above; and

 

(g) SEVENTH, the balance, if any, to whoever may be lawfully entitled to receive such surplus.

 

In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; and (ii) each of the Lenders shall receive an amount equal to its pro rata share (based on the proportion of the principal amount of the Notes held by such Lender bears to the aggregate then outstanding principal amount of the Notes) of amounts available to be applied pursuant to clauses “FOURTH”, “FIFTH” and “SIXTH” above.

 

ARTICLE 12

 

MISCELLANEOUS

 

12.01 Survival of Representations and Warranties.  All of the representations and warranties made herein shall survive the execution and delivery of this Agreement, any investigation by or on behalf of the Agent or any Lender, acceptance of the Securities and the Closing Date Warrant Shares and the respective payments therefor, or termination of this Agreement.

 

  

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12.02 Notices.  All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first class mail, return receipt requested, facsimile (with receipt confirmed), electronic transmission (i.e., e-mail), courier service or personal delivery:

 

if to Agent or Fund III or Fund III-A:

 

c/o Praesidian Capital Opportunity Fund III, LP

419 Park Avenue South

New York, NY 10016

Facsimile:                      212-520-2601

Attention:                      Jason D. Drattell

Email:                      jdrattell@praesidian.com

 

with a copy to:

 

Morrison Cohen LLP

909 Third Avenue

New York, NY 10022

Facsimile:                      (917) 522-3168

Attention:                      Stephen I. Budow, Esq.

Email:                      sbudow@morrisoncohen.com

 

If to United:

 

United Insurance Company of America

c/o Kemper Corporation

1 E. Wacker Dr.

Chicago, IL 60601

Facsimile: (312) 467-6210

Attention:  Jonathan Wilson

Email: jpwilson@kemper.com

 

if to any Credit Party:

 

(Name of Credit Party)

c/o Fusion Telecommunications International, Inc.

420 Lexington Avenue, Suite 1718

New York, NY 10170

Facsimile:  (212) 972-7884

Attention:  General Counsel

Email:        legal@fusionconnect.com

 

 

  

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All such notices and communications shall be deemed to be effective: (i) in the case of hand-delivery, when delivered; (ii) in the case of a facsimile transmission, when sent to the applicable party’s facsimile machine’s telephone number, if the party sending such notice or communication receives confirmation of the delivery thereof from its own facsimile machine; (iii) in the case of electronic transmission, when actually received; (iv) in the case of mail, five (5) Business Days after being deposited in the mail, postage prepaid; or (v) if given by any other means (including by overnight courier), when actually received.

 

12.03 Successors and Assigns; Third Party Beneficiaries.

 

(a) This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto.  Subject to applicable securities laws and, subject to the prior written consent of the Borrower (such consent of the Borrower not to be unreasonably withheld or delayed, and shall be deemed provided unless expressly withheld by the Borrower within three (3) Business Days of written request therefor), Agent and each Lender may assign any of its rights under any of the Transaction Documents to any Person, and any holder of the Notes may assign, in whole or in part, the Notes to any Person; provided, however, that no such consent of the Borrower will be required (i) with respect to any assignment to another Lender or any Affiliate of any Lender, or (ii) during the continuation of any Event of Default.  No Credit Party may assign any of their respective rights, or delegate any of its obligations, under this Agreement or any of the other Transaction Documents without the prior written consent of the Lenders, and any such purported assignment by any Credit Party without the written consent of the Lenders shall be void and of no effect.  Each Plexus Lender shall be an express third party beneficiary with respect to any provisions hereof with respect to the Closing Date Warrant Shares, including, without limitation, Section 8.18(c). Except as provided in this Section 12.03 and Article 7, no Person other than the parties hereto and to the other Transaction Documents and their successors and permitted assigns is intended to be a beneficiary of any of such Transaction Documents.

 

(b) Notwithstanding any other provision of this Agreement or any Transaction Document to the contrary, Agent and any Lender may at any time create a security interest in all or any portion of its rights under this Agreement, the Notes or any other Transaction Document, and the Collateral.

 

(c) Notwithstanding anything in this Agreement or any Transaction Document to the contrary, there shall be no limitation or restriction on (A) the ability of any Lender or Agent to assign or otherwise transfer this Agreement, any Note, or any of the other Transaction Documents, or any rights thereunder, to any of its Affiliates or (B) (x) the ability of any Lender or Agent to pledge, or otherwise grant a security interest in, this Agreement, any Note, or any of the other Transaction Documents, or any of its rights thereunder, to any lender or other funding or financing source of such Lender or Agent or (y) the assignment or other transfer in connection with the realization of any such pledge or other security interest; provided, however, such Lender shall continue to be liable as a “Lender” under this Agreement and the other Transaction Documents unless any such Affiliate, lender or funding or financing source agrees to be bound by this Agreement and the other Transaction Documents.

 

  

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12.04 Amendment and Waiver.

 

(a) No failure or delay on the part of any of the parties hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  The remedies provided for in this Agreement are cumulative and are not exclusive of any remedies that may be available to the parties hereto at law, in equity or otherwise.

 

(b) Any Modification of this Agreement, the Notes or any other Transaction Document, shall be effective as to the Lenders (i) only if it is made or given in writing and signed by each Credit Party and the Required Lenders, except that, without the written consent of the holder or holders of all Notes at the time outstanding, no amendment to this Agreement or any other Transaction Document shall change the maturity of any Note, or change the principal of, or the rate, method of computation or time of payment of interest on or any fee payable with respect to, any Note, or affect the time, amount or allocation of any prepayments, or change the proportion of the principal amount of the Notes required with respect to any amendment, supplement or modification, and (ii) only in the specific instance and for the specific purpose for which made or given.  No amendment, supplement or modification of or to any provision of this Agreement or any of the other Transaction Documents, or any waiver of any such provision or consent to any departure by any party from the terms of any such provision may be made orally.  Except where notice is specifically required by this Agreement, no notice to or demand on any Credit Party in any case shall entitle such Credit Party to any other or further notice or demand in similar or other circumstances.

 

12.05 Signatures; Counterparts.  Facsimile or electronic transmissions of any executed original document and/or retransmission of any executed facsimile or electronic transmission shall be deemed to be the same as the delivery of an executed original.  At the request of any party hereto, the other parties hereto shall confirm facsimile or electronic transmissions by executing duplicate original documents and delivering the same to the requesting party or parties.  This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

12.06 Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

12.07 GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED IN ACCORDANCE WITH, AND ENFORCED UNDER, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS OR INSTRUMENTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN SUCH STATE.

 

 

  

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12.08 JURISDICTION; JURY TRIAL WAIVER.

 

(a) EACH CREDIT PARTY HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE SECURITIES OR ANY AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH CREDIT PARTY HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM.  EACH CREDIT PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 12.02, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF AGENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION.

 

(b) EACH CREDIT PARTY AND EACH OF ITS SUBSIDIARIES HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE SECURITIES OR ANY OF THE OTHER TRANSACTION DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.  EACH CREDIT PARTY AND EACH OF ITS SUBSIDIARIES (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (II) ACKNOWLEDGES THAT EACH LENDER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, AND THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

 

12.09 Severability.  If any one or more of the provisions contained in this Agreement, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions of this Agreement.  The parties hereto further agree to replace such invalid, illegal or unenforceable provisions of this Agreement with valid, legal and enforceable provisions that will achieve, to the extent possible, the economic, business and other purposes of such invalid, illegal or unenforceable provisions.

 

  

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12.10 Rules of Construction.  Unless the context otherwise requires, “or” is not exclusive.

 

12.11 Entire Agreement.  This Agreement and the other Transaction Documents, together with the exhibits and schedules hereto and thereto, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or therein.  This Agreement and the other Transaction Documents, together with the exhibits and schedules hereto and thereto, supersede all prior agreements and understandings between the parties with respect to such subject matter.

 

12.12 Certain Expenses.  The Credit Parties will pay all expenses of the Agent and Lenders (including reasonable fees, charges and disbursements of counsel) in connection with (i) any amendment, supplement, modification or waiver of or to any provision of this Agreement or any of the other Transaction Documents or any documents relating thereto (including a response to a request by any Credit Party for the Lenders’ consent to any action otherwise prohibited hereunder or thereunder), or consent to any departure from, the terms of any provision of this Agreement or such other documents, (ii) all efforts made to enforce payment of the Notes, (iii) instituting, maintaining, preserving, enforcing and foreclosing on Agent’s security interest in or Lien on any of the Collateral, or maintaining, preserving or enforcing any of Agent’s or any Lender’s rights hereunder, under the Working Capital Intercreditor Agreement, the Seller Subordination Agreement, the Rosen Subordination Agreement or the Subordination Agreement and under all related agreements, documents and instruments, whether through judicial proceedings or otherwise, or (iv) defending or prosecuting any actions or proceedings arising out of or relating to Agent’s or any Lender’s transactions with any Credit Party or any other Lender or (v) any advice given to any Agent or any Lender with respect to its rights and obligations under this Agreement, the Working Capital Intercreditor Agreement, the Seller Subordination Agreement, the Rosen Subordination Agreement or  the Subordination Agreement and all related agreements, documents and instruments.

 

12.13 Publicity.  Except as may be required by Applicable Law, none of the parties hereto shall issue a publicity release or announcement or otherwise make any public disclosure concerning this Agreement or the transactions contemplated hereby, without prior approval by the other parties hereto.  If any announcement is required by law to be made by any party hereto, prior to making such announcement such party will deliver a draft of such announcement to the other parties and shall give the other parties an opportunity to comment thereon.  Notwithstanding the foregoing, any Lender or any Affiliate of any Lender may (i) disclose a general description of transactions arising under the Transaction Documents for advertising, marketing or other similar purposes, and (ii) use any Credit Party’s name, logo or other indicia germane to such party in connection with such advertising, marketing or other similar purposes, and, in each case, may post such information on its website.

 

  

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12.14 Further Assurances.  Each of the parties shall execute such documents and perform such further acts (including obtaining any consents, exemptions, authorizations, or other actions by, or giving any notices to, or making any filings with, any Governmental Authority or any other Person) as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement, including any post-closing assignment(s) by any Lender of a portion of the Securities to a Person not currently a party hereto.

 

12.15 Obligations of the Lenders.  The obligations of each Lender shall be several and not joint and no Lender shall be liable or responsible for the acts or omissions of any other Lender.

 

12.16 No Strict Construction.  The parties hereto have participated jointly in the negotiation and drafting of this Agreement and the other Transaction Documents.  In the event an ambiguity or question of intent or interpretation arises under any provision of this Agreement or any Transaction Document, this Agreement or such other Transaction Document shall be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement or any other Transaction Document.  No knowledge of, or investigation, including due diligence investigation, conducted by, or on behalf of, any Lender shall limit, modify or affect the representations set forth in Article 5 of this Agreement or the right of any Lender to rely thereon.

 

12.17 Transfer of the Notes.

 

(a) The term “Lender” as used herein shall include any transferee of any Note whose name has been recorded by the Borrower in the Note Register.  Each transferee of any Note acknowledges that the Notes have not been registered under the Securities Act, and may be transferred only pursuant to an effective registration under the Securities Act or pursuant to an applicable exemption from the registration requirements of the Securities Act.

 

(b) The Borrower shall maintain a register (the “Note Register”) in its principal offices for the purpose of registering the Notes and any transfer or partial transfer thereof, which register shall reflect and identify, at all times, the ownership of record of any interest in the Notes or any interest therein.  Upon the issuance of the Notes, the Borrower shall record the name and address of the initial Lender of each Note in the Note Register as the first Lender.  Upon surrender for registration of transfer or exchange of any Note at the principal offices of the Borrower, the Borrower shall, at its expense, execute and deliver one or more Notes of like tenor and of denominations of at least $500,000 (except as may be necessary to reflect any principal amount not evenly divisible by $500,000) of a like aggregate principal amount, registered in the name of the Lender or a transferee or transferees.  Every Note surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by written instrument of transfer duly executed by the Lender of such Note or such Lender’s attorney duly authorized in writing.

 

 

  

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(c) On receipt by the Borrower of an affidavit of an authorized representative of any Lender stating the circumstances of the loss, theft, destruction or mutilation of any Note (and in the case of any such mutilation, on surrender and cancellation of such Note), the Borrower, at its expense, will promptly execute and deliver, in lieu thereof, a new Note of like tenor.  If required by the Borrower, such Lender must provide indemnity sufficient in the reasonable judgment of the Borrower to protect the Borrower from any loss which they may suffer if a lost, stolen or destroyed Note is replaced.

 

12.18 Subordination Agreement.

 

(a)   In connection with the incurrence by the Borrower of the First Lien Indebtedness and the Credit Parties’ guarantees in respect thereof, each Lender hereby authorizes and directs Agent to execute deliver and perform the Subordination Agreement on behalf of such Lender and agrees that Agent in its various capacities thereunder may take such actions on such Lender’s behalf as is contemplated by the terms of the Subordination Agreement. Each Lender further acknowledges that is has received and reviewed the Subordination Agreement and agrees that it will be bound by and will take no actions contrary to the provisions of the Subordination Agreement, authorizes and instructs Agent and to execute deliver and perform the Subordination Agreement as agent and on behalf of such Lender and authorizes and agrees that Agent may take such actions on behalf of such Lender as is contemplated by the terms of the Subordination Agreement.

 

(b) The provisions of this Section 12.18 are not intended to summarize all relevant provisions of the Subordination Agreement.  Reference must be made to the Subordination Agreement itself to understand all terms and conditions thereof.  Each Lender is responsible for making its own analysis and review of the Subordination Agreement and the terms and provisions thereof, and neither Agent nor or any of its affiliates makes any representation to any Lender as to the sufficiency or advisability of the provisions contained in the Subordination Agreement.

 

(c) Each Lender (a) hereby consents to the subordination of the Liens securing the Obligations on the terms set forth in the Subordination Agreement, (b) hereby agrees that this Agreement and the other Transaction Documents, and the rights and remedies of Agent and the Lenders hereunder and thereunder, are subject to the terms of the Subordination Agreement, (c) hereby agrees that it will be bound by and will take no actions contrary to the provisions of the Subordination Agreement and (d) hereby authorizes and instructs Agent to enter into the Subordination Agreement and to subject the Liens securing the Obligations to the provisions thereof.

 

(d) The delivery of any Collateral or any certificates, titles, instruments, chattel paper or documents evidencing or in connection with such Collateral to the First Lien Agent under and in accordance with the First Lien Credit Documents shall constitute compliance by the Credit Parties with the provisions of this Agreement or any other Transaction Document which require delivery or possession of certain types of Collateral to or by Agent so long as such First Lien Credit Documents are in full force and effect, the First Lien Indebtedness has not been paid in full and the Credit Parties are in compliance with the applicable provisions thereof with respect to such Collateral.

 

  

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ARTICLE 13

 

GUARANTEE

 

13.01 The Guarantee.  The Guarantors hereby jointly and severally guarantee, as a primary obligor and not as a surety to each Lender and Agent and their respective successors and assigns, the prompt payment in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal amount of and Interest (including any interest, fees, costs or charges that would accrue but for the provisions of Title 11 of the United States Code after any bankruptcy or insolvency petition under Title 11 of the United States Code) on the Notes and all other obligations from time to time owing to such Lender and Agent by the Borrower under any Transaction Document, in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the “Guarantors’ Obligations”).  The Guarantors hereby jointly and severally agree that if the Borrower shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guarantors’ Obligations, the Guarantors will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guarantors’ Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise and after giving effect to any applicable notice or cure period) in accordance with the terms of such extension or renewal.

 

13.02 Obligations Unconditional.  The obligations of the Guarantors under Section 13.01 shall constitute a guaranty of payment and not of collection and, to the fullest extent permitted by Applicable Law, are absolute, irrevocable and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guarantors’ Obligations of the Borrower under this Agreement, the Notes, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guarantors’ Obligations and, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or Guarantor (except for payment in full).  Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantors hereunder, which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above:

 

(i) at any time or from time to time, without notice to the Guarantors, the time for any performance of or compliance with any of the Guarantors’ Obligations shall be extended, or such performance or compliance shall be waived;

 

(ii) any of the acts mentioned in any of the provisions of this Agreement or the Notes or any other agreement or instrument referred to herein or therein shall be done or omitted;

 

  

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(iii) the maturity of any of the Guarantors’ Obligations shall be accelerated, or any of the Guarantors’ Obligations shall be amended in any respect, or any right under the Transaction Documents or any other agreement or instrument referred to herein or therein shall be amended or waived in any respect or any other guarantee of any of the Guarantors’ Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with;

 

(iv) any Lien granted to, or in favor of, Agent, on behalf of the Lenders, as security for any of the Guarantors’ Obligations shall fail to be perfected.

 

The Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that Agent or any Lender exhaust any right, power or remedy or proceed against the Borrower under this Agreement or the Notes, or any other agreement or instrument referred to herein or therein, or against any other person under any other guarantee of, or security for, any of the Guarantors’ Obligations.  The Guarantors waive any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guarantors’ Obligations and notice of or proof of reliance by upon the guarantee provided under this Article XIII (the “Guarantee”) or acceptance of this Guarantee, and the Guarantors’ Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee, and all dealings between any Credit Party and any Lender or Agent shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee.  This Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment without regard to any right of offset with respect to the Guarantors’ Obligations at any time or from time to time held by any Lender or Agent, and the obligations and liabilities of the Guarantors hereunder shall not be conditioned or contingent upon the pursuit by such Lender or any other person at any time of any right or remedy against any Credit Party or against any other person which may be or become liable in respect of all or any part of the Guarantors’ Obligations or against any collateral security or guarantee therefore or right of offset with respect thereto.  This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantors and the successors and assigns thereof, and shall inure to the benefit of each Lender, Agent and their respective successors and assigns, notwithstanding that from time to time during the term of this Agreement there may be no Guarantors’ Obligations outstanding.

 

13.03 Reinstatement.  The obligations of the Guarantors under this Article 13 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Credit Party in respect of the Guarantors’ Obligations is rescinded or must be otherwise restored by any holder of any of the Guarantors’ Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.

 

13.04 Subrogation.  Each Guarantor hereby agrees that until the indefeasible payment and satisfaction in full in cash of all Guarantors’ Obligations under this Agreement it shall waive any claim and shall not exercise any right or remedy, direct or indirect, arising by reason of any performance by it of its guarantee in Section 13.01, whether by subrogation or otherwise, against any Credit Party or any security for any of the Guarantors’ Obligations.

 

  

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13.05 Remedies.  The Guarantors jointly and severally agree that if the obligations of any Borrower under this Agreement and the Notes are declared to be forthwith due and payable as provided in the Notes (or shall be deemed to have become automatically due and payable in the circumstances provided in the Notes) for purposes of Section 13.01, notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower such obligations (whether or not due and payable by any Borrower) shall forthwith become due and payable by the Guarantors for purposes of Section 13.01.

 

13.06 Continuing Guarantee.  The guarantee in this Article 13 is a continuing guarantee of payment, and shall apply to all Guarantors’ Obligations whenever arising.

 

13.07 General Limitation on Guarantors’ Obligations.  In any action or proceeding involving any state corporate, limited partnership or limited liability company law, or any applicable state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Guarantor under Section 13.01 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 13.01, then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by such Guarantor, or any other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

 

ARTICLE 14

 

REGARDING AGENT

 

14.01 Appointment.  Each Lender hereby designates Fund III to act as Agent for such Lender under this Agreement and the Transaction Documents.  Each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and the Transaction Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto and Agent shall hold all Collateral, payments of principal and interest, fees, charges and collections received pursuant to this Agreement, for itself and for the ratable benefit of the Lenders.  Agent may perform any of its duties hereunder by or through its agents or employees.  As to any matters not expressly provided for by this Agreement (including collection of the Notes) Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders (or, if applicable pursuant to Section 12.04, the holders of 100% of the Notes), and such instructions shall be binding; provided, however, that Agent shall not be required to take any action which exposes Agent to liability or which is contrary to this Agreement or the Transaction Documents or any Requirement of Law unless Agent is furnished with an indemnification reasonably satisfactory to Agent with respect thereto.

 

  

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14.02 Nature of Duties.  Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the Transaction Documents.  Neither Agent nor any of its officers, directors, employees or agents shall be (i) liable for any action taken or omitted by them as such hereunder or in connection herewith, unless caused by their gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), or (ii) responsible in any manner for any recitals, statements, representations or warranties made by any Credit Party or any of its Subsidiaries or any officer of any of any Credit Party or any of its Subsidiaries contained in this Agreement, or in any of the Transaction Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any of the Transaction Documents or for the value, validity, effectiveness, genuineness, due execution, enforceability or sufficiency of this Agreement, or any of the Transaction Documents or for any failure of any Credit Party or any of its Subsidiaries to perform its obligations hereunder.  Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any of the Transaction Documents, or to inspect the properties, books or records of any Credit Party or any of its Subsidiaries.  The duties of Agent as respects payments or collections shall be mechanical and administrative in nature; Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth herein.

 

14.03 Lack of Reliance on Agent and Resignation.

 

(a) Independently and without reliance upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Credit Parties and their Subsidiaries in connection with the purchase of any Securities hereunder and the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the creditworthiness of the Credit Parties.  Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the purchase of any Securities or at any time or times thereafter except as shall be provided by the Credit Parties pursuant to the terms hereof.  Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any agreement, document, certificate or a statement delivered in connection with or for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Agreement or any Transaction Document, or of the financial condition of the Credit Parties and their Subsidiaries, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, the Notes, the Transaction Documents or the financial condition of the Credit Parties and their Subsidiaries, or the existence of any Event of Default or any Default.

 

(b) Agent may resign on thirty (30) days’ written notice to each Lender and upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably satisfactory to the Credit Parties (provided that the consent of the Credit Parties shall not be required after the occurrence and during the continuance of an Event of Default).

 

 

  

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(c) Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the term “Agent” shall mean such successor agent effective upon its appointment, and the former Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent.  After any Agent’s resignation as Agent, the provisions of this Article 14 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.

 

14.04 Certain Rights of Agent.  If Agent shall request instructions from the Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any Transaction Document, Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from the Lenders; and Agent shall not incur liability to any Person by reason of so refraining.  Without limiting the foregoing, no Lender shall have any right of action whatsoever against Agent as a result of its acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders.

 

14.05 Reliance.  Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, order or Transaction Document or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to this Agreement and the Transaction Documents and its duties hereunder, upon advice of counsel selected by it.  Agent may employ agents and attorneys-in-fact and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent with reasonable care.

 

14.06 Notice of Default.  Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder or under the Transaction Documents, unless Agent has received notice from a Lender or a Credit Party referring to this Agreement or the Transaction Documents, describing such Default or Event of Default and stating that such notice is a “notice of default”.  In the event that Agent receives such a notice, Agent shall give notice thereof to each Lender.  Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by Required Lenders; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

 

14.07 Indemnification.  To the extent Agent is not reimbursed and indemnified by the Credit Parties and their Subsidiaries, each Lender will reimburse and indemnify Agent in proportion to its respective portion of the Notes, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in performing its duties hereunder, or in any way relating to or arising out of this Agreement or any Transaction Document; provided that, no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent’s gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment).  The obligations of the Lenders under this Section 14.07 shall survive termination of this Agreement and the Transaction Documents and payment in full of the Notes.

 

  

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14.08 Agent in its Individual Capacity.  With respect to the obligation of Agent to purchase Securities under this Agreement, the Securities purchased by it shall have the same rights and powers hereunder as any other Lender and as if it were not performing the duties as Agent specified herein; and the term “Lender” or any similar term shall, unless the context clearly otherwise indicates, include Agent in its individual capacity as a Lender.  Agent may engage in business with any Credit Party as if it were not performing the duties specified herein.

 

14.09 Delivery of Documents or Other Information.  To the extent Agent receives financial statements or other information required under this Agreement from the Credit Parties pursuant to the terms of this Agreement which the Credit Parties are not obligated to deliver to the Lenders, Agent will promptly furnish such documents and information to the Lenders.

 

14.10 Credit Parties’ Undertaking to Agent.  Without prejudice to its respective obligations to each Lender under the other provisions of this Agreement, each Credit Party undertakes with Agent to pay to Agent from time to time on demand all amounts from time to time due and payable by it for the account of Agent or Lenders or any of them pursuant to this Agreement to the extent not already paid.  Any payment made pursuant to any such demand shall pro tanto satisfy such Credit Party’s obligations to make payments for the account of Lenders or the relevant one or more of them pursuant to this Agreement.

 

14.11 No Reliance on Agent’s Customer Identification Program.  Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any Credit Party, its Affiliates or its agents, this Agreement, the Transaction Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other laws.

 

14.12 Other Agreements.  Each Lender hereby specifically authorizes and directs Agent to enter into each of the Transaction Documents on behalf of such Lender.  Each Lender agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the request of Agent, set off against the obligations of the Credit Parties and their Subsidiaries to Agent and Lenders under the Agreement and Transaction Documents, any amounts owing by such Lender to the Credit Parties or any of their Subsidiaries.  Anything in this Agreement to the contrary notwithstanding, each Lender further agrees that it shall not take any action to protect or enforce its rights arising out of this Agreement or the Transaction Documents, it being the intent of each Lender that any such action to protect or enforce rights under this Agreement and the Transaction Documents shall be taken by Agent at the direction of Required Lenders.

 

  

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ARTICLE 15

 

TAXES

 

15.01 Taxes.

 

(a) Any and all payments by or on account of any obligation of each Credit Party hereunder or under any other Transaction Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if any Credit Party shall be required by Applicable Law 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 for Indemnified Taxes or Other Taxes (including deductions applicable to additional sums payable under this Section) Lenders and Agent receive an amount equal to the sum they would have received had no such deductions for Indemnified Taxes or Other Taxes been made, (ii) such Credit Party shall make such deductions and (iii) such Credit Party shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with Applicable Law.

 

(b) Without limiting the provisions of paragraph (a) above, each Credit Party shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with Applicable Law.

 

(c) Each Credit Party shall jointly and severally indemnify each Lender and Agent, within thirty (30) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by such Lender or Agent and any penalties, interest and reasonable 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 such Credit Party by a Lender or Agent shall be conclusive absent manifest error.

 

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by a Credit Party to a Governmental Authority, such Credit Party shall deliver to Lenders and Agent 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 Agent.

 

  

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(e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding Tax under the law of the United States, or any treaty to which such jurisdiction is a party, with respect to payments by a Credit Party under this Agreement or under any other Transaction Document shall deliver to such Credit Party, at the time or times prescribed by Applicable Law or reasonably requested by two original Internal Revenue Service Form W-8 (e.g., W-8 BEN, W-8 ECI), as appropriate, or any successor or other form prescribed by the Internal Revenue Service, and related documentation certifying that such Foreign Lender is exempt from or entitled to a reduced rate of United States federal withholding tax on payments pursuant to this Agreement or any other Transaction Document.  In addition, any Lender, if requested by Borrower or the Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by Borrower or the Agent as will enable Borrower to determine whether or not such Lender is subject to backup withholding or information reporting requirements; provided, that the Borrower or Agent, as applicable, agrees to maintain the confidentiality of any non-public information provided by such Lender in accordance with its customary procedures for handling confidential information and to not disclose such information except as required by Applicable Law, and provided, further, that should any Lender become subject to Indemnified Taxes because of its failure to deliver a form required hereunder, the Credit Parties shall take such steps as such Lender shall reasonably request to reasonably assist (consistent with its preexisting internal policies applied on a nondiscriminatory basis and legal and regulatory restrictions) such Lender to recover such Indemnified Taxes.

 

(f) The agreements in this Section shall survive the termination of this Agreement and payment of the Notes and all other amounts payable hereunder, under the Notes or under any other Transaction Document.

 

(g) No Lender shall be obligated to contest a Tax indemnified by a Credit Party under the Transaction Documents that is asserted in the name of such Lender nor will the Credit Parties be permitted to contest such a Tax, unless in the judgment of such Lender, there is a reasonable basis for such contest and the contest and its resolution does not materially disadvantage such Lender.

 

(h) In the event that a Lender is entitled, on the effective date of any assignment and acceptance under this Agreement, to the benefits of a payment pursuant to subsection (a), (b) or (c) of this Section 15.01, the assignee of such Lender shall be entitled, without duplication, to the benefits of such payments (in addition to any future benefits of payment that may arise with respect to such assignee) that would have been available to such Lender had such Lender not entered into such assignment and acceptance with such assignee.

 

(i) In the event any Credit Party incorrectly withholds Indemnified Taxes under this Section 15.01 from amounts payable to any Lender or Agent, the Credit Parties shall pay such party interest at 10% per annum compounded semi-annually on the amount incorrectly withheld from the date withheld to the date of payment.

 

15.02 Certificates of Lenders.  Any Lender claiming reimbursement or compensation pursuant to this Article 15 shall deliver to Borrower a certificate setting forth in reasonable detail the amount payable to such Lender hereunder and such certificate shall be conclusive and binding on the Credit Parties in the absence of manifest error.

 

 

 

  

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ARTICLE 16

SEPARATENESS COVENANTS

 

        The Credit Parties, jointly and severally, (i) represent and warrant to each Lender that the following representations are and will be, true, correct and complete and (ii) covenant and agree, until the payment in full of all principal of and interest on the Notes and all other amounts due to the Agent and Lenders under this Agreement and the other Transaction Documents, including all fees, expenses and amounts due in respect of indemnity obligations under Article 7, with the Agent and Lenders as set forth in this Article 16:

 

16.01 Separate Legal Entity.  Except as expressly permitted by this Agreement, neither any Credit Party nor any of its Subsidiaries shall take any action, or conduct its affairs in a manner, which is likely to result in the corporate existence of such Credit Party or any of its Subsidiaries being ignored, or in the property and liabilities of such Credit Party or any of its Subsidiaries being substantively consolidated with those of any other such Person in a bankruptcy, reorganization or other insolvency proceeding.

 

16.02 Capital.  Borrower on the one hand, and Parent on the other, will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations.

 

16.03 Dissolution.  None of Borrower, Parent, or any Subsidiary will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of Borrower.

 

16.04 Commingled Funds.  Borrower will not commingle the funds and other assets of Borrower with those of any Affiliate or any other Person, and will hold all of its assets in its own name.  Parent will not commingle the funds and other assets of Parent with those of any Affiliate or any other Person, and will hold all of its assets in its own name.

 

16.05 Segregated Assets.  Borrower has and will maintain its assets in such manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or any other Person.  Parent shall not cause any business opportunities of Borrower to be directed to Parent or to any Credit Party other than Borrower, or take any other action which advantages Parent or any other Credit Party, to the disadvantage of Borrower.

 

16.06 Bank Accounts.  Borrower will not permit any Affiliate independent access to its bank accounts.  Parent will not permit any Affiliate independent access to its bank accounts.

 

 

  

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16.07 Employees.  Each of Borrower and Parent will pay the salaries of its own employees (if any) from its own funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations.

 

16.08 Agents.  Each of Borrower and Parent will compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred.

 

16.09 Independent Director. At all times (except during such periods when the position temporarily is vacant) the Required Lenders shall have the right to designate at least one (1) duly appointed Independent Director of each of Borrower, NBS, BVX and PingTone.  The Organization Documents of Borrower, NBS, BVX and PingTone shall provide the prior written consent of the Independent Director shall be required (and Borrower, NBS, BVX and PingTone, respectively, shall not take any such consent or authorize the taking of any of the actions set forth in this paragraph below unless there is at least one Independent Director then serving in such capacity) for Borrower, NBS, BVX and PingTone, or any other Person on behalf of Borrower, NBS, BVX or PingTone, to:

 

(i) file or consent to the filing by or against Borrower, NBS, BVX or PingTone, as applicable, as debtor, of any bankruptcy, insolvency or reorganization case or proceeding; institute any proceedings by Borrower, NBS, BVX or PingTone, as applicable, as debtor, under any applicable insolvency law; or otherwise seek relief for Borrower, NBS, BVX or PingTone, as applicable, as debtor, under any laws relating to the relief from debts or the protection of debtors generally;

 

(ii) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for Borrower, NBS, BVX or PingTone, as applicable, as debtor, or a substantial portion of Borrower’s, NBS’s, BVX’s or PingTone’s property, as applicable;

 

(iii) make any assignment for the benefit of the creditors of Borrower, NBS, BVX or PingTone, as applicable; or

 

(iv) modify or amend any of the foregoing.

 

16.10 Organization Documents. The Organization Documents of Borrower, NBS, BVX and PingTone shall set forth the foregoing requirements and such other customary requirements relating to the separate nature, existence and operation of Borrower, NBS, BVX or PingTone as the Agent may reasonably request from time to time.

 

16.11 Ministerial or Administrative Actions. The foregoing provisions are not intended to restrict Credit Parties from having a consolidated payroll function or a combined accounting and finance department or from using one another’s employees provided in any event that each of the Credit Parties shall maintain separate books and records with appropriate entries to account for such transactions, including an appropriate allocation of the direct cost of any employee used by more than one Credit Party.

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their respective officers hereunto duly authorized as of the date first above written.

 

Borrower:               

 

	 	 FUSION NBS ACQUISITION CORP.	 
	 	 	 	 
	
 

	
By: 

	/s/ Gordon Hutchins, Jr.	 
	 	 	Gordon Hutchins, Jr.	 
	 	 	President and COO	 
	 	 	 	 

 

 

 

                                             

  

92

  

 

 

 

	
Guarantors:

	
 

 

 

	 	
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

	 
	 	 	 	 
	
 

	
By: 

	/s/ Gordon Hutchins, Jr.	 
	 	 	Gordon Hutchins, Jr.	 
	 	 	President and COO	 
	 	 	 	 

	 	
NETWORK BILLING SYSTEMS, L.L.C.

	 
	 	 	 	 
	
 

	
By: 

	/s/ Gordon Hutchins, Jr.	 
	 	 	Gordon Hutchins, Jr.	 
	 	 	Executiv Vice President	 
	 	 	 	 

 

	 	
FUSION BVX LLC

	 
	 	 	 	 
	
 

	
By: 

	/s/ Gordon Hutchins, Jr.	 
	 	 	Gordon Hutchins, Jr.	 
	 	 	President	 
	 	 	 	 

	 	
PINGTONE COMMUNICATIONS, INC.

	 
	 	 	 	 
	 	
By: 

	/s/ Gordon Hutchins, Jr.	 
	 	 	Gordon Hutchins, Jr.	 
	 	 	President and COO	 
	 	 	 	 

 

 

  

93

  

 

Lenders:

 

	 	
PRAESIDIAN CAPITAL OPPORTUNITY

FUND III, LP

	 
	 	 	 
	 	By:	Praesidian Capital Opportunity GP III, LLC,	 
	 	 	 its General Partner	 
	 	 	 	 
	
 

	
By: 

	/s/ Jason D. Drattell	 
	 	 	Jason D. Drattell	 
	 	 	Manager	 
	 	 	 	 

 

	 	
PRAESIDIAN CAPITAL OPPORTUNITY

FUND III-A, LP

	 
	 	 	 
	 	By:	Praesidian Capital Opportunity GP III-A, LLC,	 
	 	 	
its General Partner

	 
	 	 	 	 
	
 

	
By: 

	/s/ Jason D. Drattell	 
	 	 	Jason D. Drattell	 
	 	 	Manager	 
	 	 	 	 

 

	 	
UNITED INSURANCE COMPANY

OF AMERICA

	 
	 	 	 	 
	
 

	
By: 

	/s/ John Boschelle	 
	 	 	John Boschelle	 
	 	 	Assistant Treasurer	 
	 	 	 	 

 

  

94

  

 

Agent:

 

	 	
PRAESIDIAN CAPITAL OPPORTUNITY

FUND III, LP

	 
	 	 	 	 
	 	By:	Praesidian Capital Opportunity GP III, LLC,	 
	 	 	
its General Partner

	 
	 	 	 	 
	
 

	
By: 

	/s/ Jason D. Drattell	 
	 	 	Jason D. Drattell	 
	 	 	Manager	 
	 	 	 	 

 

 

  

95

  

 

Schedule 2.01

 

Lender Schedule – Series F Notes

 

	
Name of Lender

 

	 	
Principal Amount

 

	 	 	
Purchase Price

 

	 
	
Praesidian Capital Opportunity Fund III, LP

	 	$	3,242,958.20	 	 	$	3,242,958.20	 
	
Praesidian Capital Opportunity Fund III-A, LP

	 	$	1,257,041.80	 	 	$	1,257,041.80	 
	
United Insurance Company of America

	 	$	4,5000,000	 	 	$	4,500,000	 

 

 

  

96

  

 

EXHIBIT C

 

COMPLIANCE CERTIFICATE

 

___________________

 

Date:   _________, 20__

 

This certificate is given by among Fusion NBS Acquisition Corp. a Delaware corporation, Fusion Telecommunications International, Inc., a Delaware Corporation, Network Billing Systems, L.L.C., a New Jersey limited liability company, Fusion BVX LLC, a Delaware limited liability company, PingTone Communications, Inc., a Delaware corporation (successor by merger to Fusion PTC Acquisition, Inc., and [insert name of other Credit Parties if any] (the “Credit Parties”), pursuant to Section 8.01(d) of that certain Third Amended and Restated Securities Purchase Agreement and Security Agreement dated as of August 28, 2015 by and among the Credit Parties, Praesidian Capital Opportunity Fund III, LP, Praesidian Capital Opportunity Fund III-A, LP and United Insurance Company of America as such agreement may have been amended, restated, supplemented or otherwise modified from time to time (the “Agreement”).  Capitalized terms used herein without definition shall have the meanings set forth in the Agreement.

 

The undersigned is executing this certificate is the Chief Financial Officer of each Credit Party and as such is duly authorized to execute and deliver this certificate on behalf of such Credit Party.  By executing this certificate the undersigned hereby certifies that:

 

(a)           the financial statements delivered with this certificate in accordance with Section 8.01[a][b][c] of the Agreement fairly present in all material respects the results of operations and financial condition of the Credit Parties on a Consolidated Basis as of the dates of such financial statements;

 

(b)           he has reviewed the terms of the Agreement and the Notes and has made, or caused to be made under his supervision, a review in reasonable detail of the transactions and conditions of the Credit Parties and their respective Subsidiaries during the accounting period covered by such financial statements;

 

(c)           such review has not disclosed the existence during or at the end of such accounting period, and he has no knowledge of the existence as of the date hereof, of any condition or event that constitutes an Event of Default, except as set forth in Exhibit A hereto which includes a description of the nature and period of existence of such Event of Default and what action the Credit Parties have taken, are undertaking and propose to take with respect thereto;

 

(d)           the Credit Parties and their Subsidiaries are in compliance with the covenants contained in Articles 8 and 9 of the Agreement, as demonstrated on the attached worksheets, except as set forth or described in Exhibit A; and

 

(e)           (i)           Leverage Ratio is   _____:1.00.

 

 

  

97

  

 

(ii)           Fixed Charge Coverage is   _____:1.00.

 

(iii)           Capital Expenditures are $__________.

 

(iv)           Minimum EBITDA is $__________.

 

(v)           Minimum Parent EBITDA is $__________.

 

(vi)           Cash of Parent in excess of Working Capital Debt is $_________.

 

IN WITNESS WHEREOF, each Credit Party has caused this Certificate to be executed by its Principal Accounting Officer this [__] day of [___________], 20[___].

 

 

	 	
FUSION NBS ACQUISITION CORP.

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Principal Accounting Officer	 
	 	 	 	 
	 	 	 	 

 

	 	
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Principal Accounting Officer

	 
	 	 	 	 
	 	 	 	 

	 	
NETWORK BILLING SYSTEMS, L.L.C.

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Principal Accounting Officer

	 
	 	 	 	 
	 	 	 	 

 

	 	
FUSION BVX LLC

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Principal Accounting Officer

	 
	 	 	 	 
	 	 	 	 

 

	 	
PINGTONE COMMUNICATIONS, INC.

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Principal Accounting Officer

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