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EXHIBIT 10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") dated as of this 28th
day of June, 2000, is made by and between LaSalle Bank National Association, a
national banking association (together with its successors and assigns,
"Lender"), and Electric City Corp., a Delaware corporation ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower desires to borrow funds and obtain other financial
accommodations from Lender, and Lender is willing to make certain loans and
provide other financial accommodations to Borrower upon the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, of any loans or extensions of credit now or hereafter made to or for the
benefit of Borrower by Lender, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. GENERAL DEFINITIONS
When used herein, the following terms shall have the following
meanings:
"ACCOUNT" shall mean any right to payment for goods sold or leased or
for services rendered.
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. A Person shall be deemed to
control another Person if such first Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through ownership
of voting securities, by contract or otherwise.
"ANCILLARY AGREEMENTS" shall mean all agreements, instruments and
documents, including, without limitation, notes, guaranties, mortgages,
deeds of trusts, chattel mortgages, pledges, powers of attorney,
consents, assignments, contracts, notices, security agreements, leases,
financing statements, subordination agreements, trust account
agreements and all other written matter, whether heretofore, now, or
hereafter executed by or on behalf of Borrower or any other Person
and/or delivered to Lender or any Participant with respect to this
Agreement (including, without limitation, the Security Agreement, the
Revolving Note, the Term Note and Equipment Term Note), as any of the
same may be amended or modified from time to time.
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"BORROWING BASE" shall mean, on any given date, without duplication,
with respect to the Revolving Loan (including, without limitation, fees
due to Lender under the Revolving Loan), an amount equal to the sum of
(i) and (ii) below:
(i) an amount, adjusted as described below, equal to
eighty percent (80%) of the face amount (less maximum
discounts, credits and allowances which are granted
to the Account debtor thereof in connection
therewith) of all existing Eligible Accounts that are
set forth in the report of Accounts then most
recently delivered by the Borrower to the Lender and
all existing Eligible Accounts that are set forth in
any report of Accounts delivered by the Borrower to
the Lender since the date of such report of Accounts,
which amount shall be reduced by 100% of the face
amount of all payments which the Borrower has
received on or in connection with its Eligible
Accounts since the date of such schedule of Accounts;
plus
(ii) an amount, adjusted as described below, equal to
fifty percent (50%) of the value of the Eligible
Inventory as set forth in the report of Inventory
then most recently delivered by the Borrower to the
Lender, which amount shall be reduced by 100% of the
Value of any reductions in Inventory made since the
date of such schedule of Inventory.
Notwithstanding any contrary provision contained herein,
Lender may elect at any time following an Event of Default and during
the continuance thereof, in its discretion, to change the foregoing
method of calculating the Borrowing Base by reducing advances against
Eligible Accounts or Eligible Inventory or to deduct additional
reserves from the Borrowing Base, each upon ten (10) Business Days'
prior written notice thereof to the Borrower.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in Chicago, Illinois are authorized
or required to close under the laws of the State of Illinois or the
laws of the United States.
"CHANGE" shall have the meaning set forth in Section 2.7.2 of this
Agreement.
"CHARGES" shall mean all national, federal, state, county, city,
municipal, and/or other governmental (including, the Pension Benefit
Guaranty Corporation), taxes, levies, assessments, charges, liens,
claims or encumbrances upon and/or relating to (i) the Collateral, (ii)
the Liabilities, (iii) Borrower's employees, payroll, income and/or
gross receipts, (iv) Borrower's ownership and/or use of any of its
assets, or (v) any other aspect of Borrower's business.
"CIB INDEBTEDNESS" means the Indebtedness owed by Borrower to CIB Bank
pursuant to that certain Business Loan Agreement dated as of August 31,
1998, as amended, by and
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between Borrower and CIB Bank, which Indebtedness is secured by that
certain Mortgage dated as of August 31, 1998 by and between Borrower
and CIB Bank.
"CIB LIEN" means the first lien on the Landmeier property in favor of
CIB Bank, which lien secures the CIB Indebtedness.
"CODE" shall mean the Uniform Commercial Code of the State of Illinois,
as the same may be amended from time to time.
"COLLATERAL" shall mean any and all property and interests in property
pledged, assigned, transferred or delivered to Lender by Borrower, or
in which Borrower grants Lender a security interest, whether now or
hereafter, to secure the Liabilities, including, without limitation,
all personal property of Borrower subject to the Security Agreement and
the Mortgage.
"CURRENT ASSETS" shall mean, as of any particular date, all of
Borrower's current cash and cash equivalents, marketable securities
(both short term and long term), accounts receivable and inventory, in
accordance with GAAP, consistently applied.
"DEFAULT" shall mean any event or condition which, upon occurrence or
with the passage of time, or upon the giving of notice, or both, would
constitute an Event of Default.
"DEFAULT RATE" shall have the meaning set forth in Section 2.3.4 of
this Agreement.
"EBITDA" means, for any period, determined in accordance with GAAP
consistently applied, the sum of (a) the net income (or net loss) for
such period, plus (b) all amounts deducted from net income (or net
loss)for such period for depreciation and/or amortization, plus (c) all
accrued taxes on or measured by income to the extent included in the
determination of such net income (or net loss) for such period and any
extraordinary losses or losses from discontinued operations; minus (e)
any extraordinary gains or gains from discontinued operations to the
extent included in net income (or net loss).
"ELIGIBLE ACCOUNT" shall mean any of the Borrower's Accounts which
meets each of the following requirements: (i) if it arises from the
sale or lease of goods, such goods have been shipped or delivered to
the Account debtor thereof; (ii) it is a valid, legally enforceable
obligation of the Account debtor thereunder, and is not, as a result of
Borrower's having an account payable to such Account debtor, subject to
any offset, counterclaim or other defense on such Account debtor's part
or to any claim on such Account debtor's part denying liability
thereunder in whole or in part as a result of such account payable;
(iii) it is subject to a perfected Lien in the Lender's favor and is
not subject to any other Lien whatsoever; (iv) it is payable in U.S.
dollars; (v) it is not owing by any governmental agency or body unless,
with respect to such Account, the Borrower has complied with the
Federal Assignment of Claims Act of 1940 (to the extent applicable) to
the Lender's satisfaction;
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(vi) it is not owing by any Account debtor residing, located or
having its principal activities or place of business outside the
United States of America or who is not subject to service of process
within the continental United States of America; (vii) it is not
owing by any Account debtor involved in any bankruptcy or insolvency
proceeding; (viii) it is not owing by the Borrower, any operating or
other division thereof or any Affiliate of Borrower; (ix) it is not
more than 90 days past due after delivery of such invoice to the
Account debtor; and (x) it is not an Account as to which the Lender,
at any time or times hereafter, determines, in good faith, upon ten
(10) days prior written notice to the Borrower, that the prospect of
payment or performance by the Account debtor thereof is or will be
impaired. An Account of the Borrower which is at any time an
Eligible Account, but which subsequently fails to meet any of the
foregoing requirements, shall forthwith cease to be an Eligible
Account. Additionally, to the extent the Borrower institutes new
Account dating programs or modifies existing Account dating
programs, the Lender shall review all information submitted by the
Borrower with respect to such dating program and shall be reasonable
in assessing requests to modify the definition of "Eligible Account"
with respect to such Account dating programs.
"ELIGIBLE EQUIPMENT" shall mean any of the Borrower's Equipment which
meets the following requirements:
(i) it is in good and workable condition, ordinary wear
and tear excepted;
(ii) no portion of the purchase price thereof remains
unpaid, as established by documentation satisfactory
to Lender;
(iii) it is not subject to any prior assignment, claim or
Lien;
(iv) it complies with Borrower's specifications and has
been delivered to and accepted by Borrower;
(v) there exists no material dispute with respect thereto
between Borrower and the manufacturer or supplier
thereof, including but not limited to material
warranty or other claims; and
(vi) it is not Equipment which in any way fails to meet or
violates any warranty, representation or covenant
contained in this Agreement or any Ancillary
Agreements relating directly or indirectly to
Borrower's Equipment.
Equipment which at any time is Eligible Equipment, but which
subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be Eligible Equipment.
"ELIGIBLE INVENTORY" shall mean the Borrower's Inventory (net of all
Inventory write-ups) which meets each of the following requirements:
(i) it is raw materials or finished goods
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only and does not include work-in-process; (ii) it is in such
condition that it may be sold in the ordinary course of the
Borrower's business or as raw materials; (iii) in the case of goods
held for sale or lease, it is new and unused; (iv) it is owned by
the Borrower and is subject to a perfected Lien in the Lender's
favor and is not subject to any other Lien whatsoever; and (v) it is
not Inventory as to which the Lender, in good faith, upon ten (10)
days prior written notice to the Borrower, has determined, in
accordance with the Lender's customary business practices, that it
is not acceptable due to age, type, category and/or quantity. Any of
the Borrower's Inventory which is Eligible Inventory at any time,
but which subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be Eligible Inventory.
"ENVIRONMENTAL LAWS" shall mean the Resource Conservation and Recovery
Act of 1976, as amended, the Hazardous Materials Transportation Act,
the Comprehensive 2 Environmental Response, Compensation and Liability
Act of 1980, as amended and reauthorized by the Superfund Amendments
and Reauthorization Act of 1986, any so-called "Superfund" or
"Superlien" laws, the Toxic Substances Control Act, as amended, the
Clean Air Act, the Federal Water Pollution Control Act or any other
federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material as in effect from time to time.
"EQUIPMENT TERM LOAN" shall have the meaning set forth in Section 2.1.2
of this Agreement.
"EQUIPMENT TERM NOTE" shall have the meaning set forth in Section
2.1.2.1 of this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EVENT OF DEFAULT" shall mean the occurrence or existence of any one or
more of the events described in Section 6.1 of this Agreement.
"FORD AUTOMOBILES" means the Ford Motor Company automobiles owned by
Borrower.
"FORD INDEBTEDNESS" means the Indebtedness owed by Borrower to Ford
Motor Credit Corporation, the proceeds of which were used to purchase
the Ford Automobiles.
"FORD LIEN" means the first lien on the Ford Automobiles in favor of
Ford Motor Credit Corporation, which lien secures the Ford
Indebtedness.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or any
successor authority)that are applicable to the circumstances as of the
date of determination.
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"GREAT LAKES ACQUISITION" means the acquisition by Borrower of all of
the issued and outstanding capital stock of Great Lakes Controlled
Energy Corporation pursuant to the Great Lakes Acquisition Instruments.
"GREAT LAKES ACQUISITION INSTRUMENTS" means that certain Stock Purchase
Agreement by and between Borrower, Great Lakes Controlled Energy
Corporation, and other parties which are signatories thereto, and all
documents executed and delivered in connection therewith.
"HAZARDOUS MATERIALS" shall mean any hazardous substance or pollutant
or contaminant defined as such in (or for the purposes of) any
Environmental Law and shall include, but shall not be limited to,
petroleum, including crude oil or any fraction thereof, natural gas,
any radioactive material and asbestos in any form or condition.
"INDEBTEDNESS" shall mean all of a Person's liabilities, obligations
and indebtedness to any Person of any and every kind and nature,
whether primary, secondary, direct, indirect, absolute, contingent,
fixed, or otherwise, heretofore, now or hereafter owing, due, or
payable, however evidenced, created, incurred, acquired or owing and
however arising, whether under written or oral agreement, by operation
of law, or otherwise. Without in any way limiting the generality of the
foregoing, Indebtedness specifically includes (i) the Liabilities, (ii)
all other indebtedness for borrowed money, the deferred purchase price
of goods or services, all guaranties, endorsements (other than for
collection or deposit in the ordinary course of business) and all
obligations under any letter of credit or acceptance facility, (iii)
all obligations or liabilities of any Person that are secured by any
lien, claim, encumbrance, or security interest upon property owned by
Borrower, even though Borrower has not assumed or become liable for the
payment thereof, (iv) all obligations or liabilities created or arising
under any lease of real or personal property, or conditional sale or
other title retention agreement with respect to property used and/or
acquired by Borrower, even though the rights and remedies of the
lessor, seller and/or lender thereunder are limited to repossession of
such property, (v) all unfunded pension fund obligations and
liabilities and (vi) deferred taxes.
"LANDMEIER PROPERTY" means the real property, improvements and fixtures
located at 1280 Landmeier Road, Elk Grove Village, Illinois 60007.
"LIABILITIES" shall mean all of Borrower's liabilities, obligations and
indebtedness to Lender of any and every kind and nature, whether
primary, secondary, direct, indirect, absolute, contingent, fixed, or
otherwise (including, without limitation, interest, charges, expenses,
reasonable attorneys' fees, liquidated damages, and other sums
chargeable to Borrower by Lender, future advances made to or for the
benefit of Borrower and obligations of performance), whether arising
under this Agreement, under any of the Ancillary Agreements or acquired
by Lender from any other source, whether heretofore, now or hereafter
owing, arising, due, or payable from Borrower to Lender, however
evidenced, created, incurred, acquired or owing and however arising,
whether under written or oral agreement, operation of law, or
otherwise, and any refinancings, substitutions, extensions, renewals,
replacements and modifications for or of any or all of the foregoing.
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"LIBOR" shall mean that fixed rate of interest per year for deposits
with maturity periods of one, two, or three month(s) (which maturity
period Borrower shall select subject to the terms stated herein) in
United States dollars offered to Lender in or through the London or
another offshore interbank market, as determined by the Lender in its
sole discretion for or as of the borrowing date requested by the
Borrower, DIVIDED BY one minus any applicable reserve requirement
(expressed as a decimal) on Eurodollar deposits of the same amount and
maturity as determined by Lender in its sole discretion.
"LIEN" shall mean any mortgage, pledge, lien, security interest or
other charge, encumbrance or preferential arrangement.
"LOAN ACCOUNT" shall have the meaning set forth in Section 3.1 of this
Agreement.
"LOANS" shall mean the Loans comprising the Total Facility as set forth
in Section 2.1.
"MARINO INDEBTEDNESS" means the Indebtedness owed by Borrower to Joseph
Marino pursuant to that certain Subordinated Secured Term Note dated as
of May 30, 2000, made by Borrower payable to the order of Joseph
Marino, as amended by that certain Amendment to Subordinated Secured
Term Note, which Indebtedness is secured by that General Security
Agreement dated as of May 30, 2000, by and between Borrower and Joseph
Marino, as amended by that certain Amendment to General Security
Agreement.
"MARINO LIEN" means the junior lien on the personal property of
Borrower in favor of Joseph Marino, which lien secures the Marino
Indebtedness, subject to the first lien in favor of Lender.
"NET WORTH" means stockholders' equity as shown on a balance sheet,
determined in accordance with GAAP applied on a consistent basis.
"PARTICIPANT" shall mean any Person, now or at any time or times
hereafter, participating with Lender in the Loans made by Lender to
Borrower pursuant to this Agreement and the Ancillary Agreements.
"PERMITTED ENCUMBRANCES" means the following:
(1) liens for taxes, assessments or other governmental charges not
yet due and payable;
(2) statutory liens of landlords, carriers, warehousemen,
mechanics, materialmen and other similar liens imposed by law,
which are incurred in the ordinary course of business for sums
not more than thirty (30) days delinquent or which are being
diligently contested in good faith in a manner which stays
enforcement of such liens, and with respect to which the
Borrower has provided for and is maintaining adequate reserves
in accordance with GAAP;
(3) liens (other than any lien imposed by the Employee Retirement
Income Security Act of 1974 or any rule or regulation
promulgated thereunder) incurred or deposits made
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in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other
types of social security, or deposits made to secure the
performance of tenders, statutory obligations, surety,
stay, customs and appeal bonds, bids, government contracts,
trade contracts, performance and return of money bonds and
other similar obligations (exclusive of obligations for the
payment of borrowed money);
(4) deposits, in an aggregate amount not to exceed $50,000, made
in the ordinary course of business to secure liability to
insurance carriers;
(5) liens for purchase money obligations; PROVIDED that: (a) the
Indebtedness secured by any such lien shall not exceed
$250,000 in the aggregate at any time outstanding; (b) any
such lien encumbers only the asset so purchased; and (c) the
Indebtedness secured by such lien is incurred within ninety
(90) days after the purchase of such asset;
(6) any attachment or judgment lien not constituting an Event of
Default under subsection 6.1.11;
(7) easements, rights of way, restrictions, and other similar
charges or encumbrances not interfering in any material
respect with the ordinary conduct of the business of Borrower
or any of its Subsidiaries;
(8) any interest or title of a lessor under any lease permitted by
subsection 5.2.10;
(9) liens in favor of the Lender;
(10) the CIB Lien;
(11) the Ford Lien; and
(12) the Mario Lien.
"PERSON" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, entity, party,
business organization of any other kind, or governmental agency, unit
or representative of any kind (whether national, federal, state,
county, city, municipal or otherwise, including, any instrumentality,
division, agency, body or department thereof).
"PRIME RATE" shall mean the interest rate per annum from time to time
announced and made effective by Lender at its office in Chicago,
Illinois, as the Prime Rate, or, as the case may be, the base,
reference or other similar rate then designated by Lender for
commercial loan reference purposes, it being understood that such rate
is a reference rate, not necessarily the lowest interest rate charged
by Lender to its customers, and as established from time to time serves
as the basis upon which effective rates of interest are calculated for
those loans making reference thereto.
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"RELEASE" shall have the same meaning as set forth in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as
amended and reauthorized.
"REPORTABLE EVENT" shall mean any of the events set forth in Section
4043 of ERISA, or the regulations thereunder.
"REVOLVING LOAN" shall have the meaning set forth in Section 2.1.1 of
this Agreement.
"REVOLVING NOTE" shall have the meaning set forth in Section 2.1.1.1 of
this Agreement.
"SECURITY AGREEMENT" means that certain Security Agreement of even date
herewith executed by Borrower in favor of Lender, as the same may be
amended or modified from time to time.
"STOCK" shall mean all shares, options, interests, participations or
other equivalents (however designated) of or in a corporation, whether
voting or non-voting, including, common stock, warrants, preferred
stock, convertible debentures and all agreements, instruments, and
documents convertible, in whole or in part, into any one or all of the
foregoing.
"SUBSIDIARY" shall mean any corporation of which more than 50% of the
outstanding shares of Stock which have voting power sufficient to elect
a majority of the board of directors of such corporation (irrespective
of whether or not at the time Stock of any other class or classes shall
have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned by Borrower,
by Borrower and one or more Affiliates or other Subsidiaries, or by one
or more Affiliates or other Subsidiaries.
"SWITCHBOARD ACQUISITION" means the acquisition by Electric City
Acquisition Corporation, a Subsidiary of Borrower, of all of the issued
and outstanding capital stock of Switchboard Apparatus, Inc.
("Switchboard") pursuant to the Switchboard Acquisition Instruments,
and the concurrent merger of Switchboard with and into Electric City
Acquisition Corporation, with Electric City Acquisition Corporation as
the surviving corporation.
"SWITCHBOARD ACQUISITION INSTRUMENTS" means that certain Agreement and
Plan of Merger by and among Borrower, Electric City Acquisition
Corporation, Switchboard and the other parties which are signatories
thereto, and all other documents executed and delivered in connection
therewith.
"TERM LOAN" shall have the meaning set forth in Section 2.1.2 of this
Agreement.
"TERM NOTE " shall have the meaning set forth in Section 2.1.2.1 of
this Agreement.
"TOTAL FACILITY" shall have the meaning set forth in Section 2.1 of
this Agreement.
Any accounting terms used in this Agreement which are not specifically
defined shall have the meanings customarily given them in accordance with GAAP.
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All other terms contained in this Agreement which are not otherwise
defined in Section 1 or in any other section of this Agreement shall, unless the
context indicates otherwise, have the meanings provided for by the Code to the
extent the same are used or defined therein.
2. LOANS: GENERAL TERMS
2.1 TOTAL FACILITY. Lender shall make available for
Borrower's use from time to time during the term of
this Agreement, upon Borrower's written request
therefor, certain loans and other financial
accommodation not to exceed the aggregate principal
amount of Three Million Dollars ($3,000,000.00)
("Total Facility"), subject to the additional
covenants contained in Sections 2.1.2 and 2.5 with
respect to Borrower's advancement of monetary amounts
received under the Term Loan (as defined herein) and
the Equipment Term Loan (as defined herein) to
Electric City Acquisition Corporation, a Subsidiary
of Borrower, following consummation of the
Switchboard Acquisition, and subject to and in
accordance with all of the terms and conditions of
this Agreement and Ancillary Agreements, and shall
consist of:
2.1.1 REVOLVING LOAN. A revolving line of credit
(the "Revolving Loan") in an aggregate
principal amount, as the Borrower may from
time to time request but not exceeding, at
any time outstanding, the lesser of (i) the
Borrowing Base minus the aggregate amount of
all outstanding fees due to Lender under the
Revolving Loan, or (ii) Two Million Dollars
($2,000,000.00) minus the aggregate amount
of all outstanding fees due to Lender under
the Revolving Loan. In no event shall Lender
issue to Borrower an amount greater than the
sum of 80% of Borrower's Eligible Accounts
and Borrower's Eligible Inventory or in the
case of advances made to Borrower hereunder
which are then advanced by Borrower to any
Subsidiary of Borrower prior to an audit of
such Subsidiary by Lender (and the results
of such audit being satisfactory to Lender),
an amount greater than the sum of 75% of the
Eligible Accounts of such Subsidiary and 40%
of the Eligible Inventory of such
Subsidiary. Further, Borrower shall not
advance any sums of money which it receives
under the Revolving Loan to any Subsidiary
of Borrower, without obtaining the prior
written consent of Lender, which consent
shall not be unreasonably withheld.
2.1.1.1 All indebtedness of the Borrower
evidenced by the Revolving Note or
relating to the Revolving Loan
(including, without limitation, all
principal and accrued interest
thereon) shall be repaid in full not
later than June ___, 2001 (the
"Revolving Loan Termination Date").
The Revolving Loan shall be
evidenced by a Revolving Note in the
form attached hereto as Exhibit A
(the "Revolving Note"). To the
extent payment is not already due,
Borrower may repay the Revolving
Loan in whole or in part (without
penalty or premium) upon one
business day's prior notice to
Lender with sums repaid
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available to be reborrowed
consistent with and subject to
the terms and conditions
described herein governing new
advances under the Revolving
Loan. Without obtaining Lender's
prior written consent, Borrower
may not borrow any sums hereunder
at any time that a Default or
Event of Default has occurred and
is continuing (including, without
limitation, noncompliance with
Section 5.1 hereof).
2.1.1.2 Borrower shall submit to Lender a
Borrowing Base Certificate, in the
form attached hereto as Exhibit D,
on a monthly basis so long as there
exists an outstanding balance on the
Revolving Loan. All requests for
advances under the Revolving Loan
and/or the Revolving Note shall be
in writing and signed by an
authorized representative of
Borrower. Lender shall respond to
such requests on the same Business
Day if the request is made by 2:00
p.m., central time. Any request for
advances made after 2:00 p.m. on any
Business Day shall be treated as
being received by Lender on the
following Business Day.
2.1.2 TERM LOANS. A term loan in the amount of the
lesser of: (a) $500,000.00, or (b) 75% of
the appraised value of the real property
secured by the Mortgage as determined by a
reputable appraiser satisfactory to Lender
and delivered to Lender pursuant to Section
7.2.3 below (the "Term Loan") and an
equipment loan in the amount of the lesser
of: (a) $500,000.00, or (b) 80% of the
invoice cost satisfactorily demonstrated to
Lender following the account receivable and
inventory audit pursuant to Section 7.2.4
below (the "Equipment Term Loan"; the Term
Loan and the Equipment Term Loan hereinafter
sometimes collectively referred to as the
"Term Loans") shall be made to Borrower.
Notwithstanding the foregoing, Borrower
acknowledges that Lender's obligation to
fund any amounts under the Term Loan and the
Equipment Term Loan is contingent upon
Borrower's acquisition of Switchboard. Upon
the closing of the Switchboard Acquisition,
Borrower shall cause Electric City
Acquisition Corporation, a Subsidiary of
Borrower, to (a) execute an intercompany
note in favor of Borrower, which Borrower
shall then pledge to Lender as security for
the amounts advanced from Borrower to
Electric City Acquisition Corporation, (b)
execute and deliver to Lender a Mortgage in
the form attached hereto as Exhibit F, and
(c) execute and deliver any security
agreements, mortgages, financing statements
or any other certificates, agreements or
documents as Lender may reasonably request.
2.1.2.1 All indebtedness of the Borrower
evidenced by the Term Loan or the
Equipment Term Loan (including,
without limitation, all principal
and accrued interest thereon), shall
be repaid in
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full not later than three (3)
years following the date of
execution of each of the Term
Loan and Equipment Term Loan (the
"Term Loans Termination Date").
The Term Loan shall be evidenced
by a Term (Mortgage) Note in the
form attached hereto as Exhibit B
(the "Term Note") and the
Equipment Term Loan shall be
evidenced by an Equipment Term
Note in the form attached hereto
as Exhibit C (the "Equipment Term
Note").
2.2 ADVANCES TO CONSTITUTE ONE LOAN: EFFECT OF REVOLVING
LOAN TERMINATION.
2.2.1 ONE LOAN. All loans and advances by Lender
to Borrower under this Agreement and the
Ancillary Agreements (whether made as a
Revolving Loan or Term Loans or otherwise),
shall constitute one loan, and all
Indebtedness of Borrower to Lender under
this Agreement and the Ancillary Agreements
shall constitute one general obligation
secured by the Collateral.
2.3 INTEREST RATE. Borrower shall pay Lender interest on
the outstanding principal balance of the Liabilities
at the following rates:
2.3.1 REVOLVING LOAN. (a) The principal amount
outstanding under the Revolving Loan will
bear interest at a varying rate equal to the
Prime Rate, or LIBOR plus 275 basis points
based upon 1, 2 and 3 month options.
(b) Borrower shall select and change its
selection of the interest rate as
between the Prime Rate and LIBOR to
apply to at least $100,000 and in
integral multiples of $100,000
thereafter (or the remaining amount
available under the Revolving Note)
of the Revolving Loan for the entire
outstanding principal balance of the
Loan, subject to the following
requirements:
(i) At the time the Loan is made;
(ii) At the expiration of the
particular LIBOR maturity period
selected for the outstanding
principal balance of any advance
("advance" referring to a portion of
the Revolving Loan) currently
bearing interest at LIBOR; and
(iii) At any time for the
outstanding principal balance of any
advance currently bearing interest
at the Prime Rate.
(c) Rate changes and notifications.
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(i) LIBOR. If Borrower wishes to
borrow funds at LIBOR or if Borrower
wishes to change the rate of
interest on any advance, within the
limits described above, from the
Prime Rate to LIBOR, it shall, not
less than three banking days of the
Lender prior to the banking day of
the Lender on which such rate is to
take effect, give Lender written or
telephonic notice thereof, which
shall be irrevocable. Such notice
shall specify the advance to which
LIBOR is to apply, and, in addition,
the desired LIBOR maturity period
(but not to exceed the maturity date
of the Revolving Note unless the
Lender consents otherwise).
(ii) Failure to Notify. If Borrower
does not notify Lender at the
expiration of a selected maturity
period with respect to any principal
outstanding at LIBOR, then in the
absence of such notice Borrower
shall be deemed to have elected to
have such principal accrue interest
after the respective LIBOR maturity
period at the Prime Rate. If
Borrower wishes to borrow money at,
or change the rate of interest on
any advance, within the limits
described above, to the Prime Rate,
it shall notify Lender on the date
of borrowing or conversion; if any
such notification is not received
before 2:00 p.m. Chicago time on a
banking day of the Lender, at
Lender's option the borrowing or
conversion may not be effected until
the next banking day. If Borrower
does not notify Lender as to its
selection of the interest rate
option with respect to any new
advance of principal, then in the
absence of such notice Borrower
shall be deemed to have elected to
have such advance accrue interest at
the Prime Rate.
(d) Interest payment dates. Accrued
interest shall be paid in respect of
each portion of principal to which:
(i) the Prime Rate applies, monthly
on the first day of each month of
each year, beginning with the first
of such dates to occur after the
date of the first advance, at
maturity of the Revolving Note, and
upon payment in full, whichever is
earlier or more frequent; and
(ii) LIBOR applies, monthly on the
first day of each month, at the end
of each respective maturity period
(unless interest is payable monthly
or quarterly as provided above),
every three months (unless interest
is payable monthly or quarterly as
provided above), at maturity of the
Revolving Note, and upon payment in
full, whichever is earlier or more
frequent.
After maturity, interest shall be
payable upon demand.
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<PAGE>
(e) Additional provisions with respect
to LIBOR Loans.
The selection by Borrower of LIBOR
and the maintenance of advances at
such rate shall be subject to the
following additional terms and
conditions:
(i) Availability of Deposits at a
Determinable Rate. If, after
Borrower has elected to borrow or
maintain any advance at LIBOR,
Lender notifies Borrower that:
(1) United States dollar
deposits in the amount and for
the maturity requested are not
available to Lender in the
London interbank market; or
(2) Reasonable means do not
exist for Lender to determine
LIBOR for the amount and
maturity requested,
all as determined by the
Lender in its sole
discretion, then the
principal subject or to be
subject to LIBOR shall
accrue or shall continue
to accrue interest at the
Prime Rate.
(ii) Prohibition of Making,
Maintaining, or Repayment of
Principal at LIBOR. If any treaty,
statute, regulation, interpretation
thereof, or any directive,
guideline, or otherwise by a central
bank or fiscal authority (whether or
not having the force of law) shall
either prohibit or extend the time
at which any principal subject to
LIBOR may be purchased, maintained,
or repaid, then on and as of the
date the prohibition becomes
effective, the principal subject to
that prohibition shall continue at
the Prime Rate.
(iii) Payments of Principal and
Interest to be Net of Any Taxes or
Costs. All payments of principal and
interest shall be made net of any
taxes and costs incurred by Lender
resulting from having principal
outstanding hereunder at LIBOR.
Without limiting the generality of
the preceding obligation,
illustrations of such taxes and
costs are:
(1) Taxes (or the withholding
of amounts for taxes) of any
nature whatsoever including
income, excise, and interest
equalization taxes (other
than income taxes imposed by
the United States or any
state thereof on the income
of Lender), as well as all
levies, imposts, duties, or
fees whether now in existence
or resulting from a change
in, or promulgation of, any
treaty, statute, regulation,
interpretation thereof, or
any directive, guideline, or
otherwise, by a central bank
or fiscal
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<PAGE>
authority (whether or not
having the force of law)
or a change in the basis
of, or time of payment of,
such taxes and other
amounts resulting
therefrom;
(2) Any reserve or special
deposit requirements against
assets or liabilities of, or
deposits with or for the
account of, Lender with
respect to principal
outstanding at LIBOR
(including those imposed
under Regulation D of the
Federal Reserve Board) or
resulting from a change in,
or the promulgation of, such
requirements by treaty,
statute, regulation,
interpretation thereof, or
any directive, guideline, or
otherwise by a central bank
or fiscal authority (whether
or not having the force of
law);
(3) Any other costs resulting
from compliance with
treaties, statutes,
regulations, interpretations,
or any directives or
guidelines, or otherwise by a
central bank or fiscal
authority (whether or not
having the force of law);
(4) Any loss (including
without limitation loss of
anticipated profits) or
expense incurred by reason of
the liquidation or
re-employment of deposits
acquired by Lender to make
advances or maintain
principal outstanding at
LIBOR:
(A) As the result of a
voluntary prepayment
at a date other than
the maturity date
selected for principal
outstanding at LIBOR;
or
(B) As the result of a
mandatory repayment at
a date other than the
maturity date selected
for principal
outstanding at LIBOR
as a result of (i)
Borrower exceeding any
applicable borrowing
base, (ii) the
occurrence of an Event
of Default and the
acceleration of any
portion of the
indebtedness
hereunder, or (iii)
the scheduled maturity
date of the Revolving
Note occurring prior
to the LIBOR maturity
date due to Borrower's
selection of a LIBOR
maturity period which
extends beyond the
scheduled maturity
date of the Revolving
Note; or
(C) As the result of a
prohibition on making,
maintaining, or
repaying principal
outstanding at LIBOR.
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<PAGE>
If Lender incurs any such taxes or costs, Borrower, within ten (10)
days following Lender's demand in writing specifying such taxes and costs, shall
promptly pay them; save for manifest error Lender's specification shall be
presumptively deemed correct. All advances made at LIBOR shall be conclusively
deemed to have been funded by or on behalf of Lender in the London interbank
market by the purchase of deposits corresponding in amount and maturity to the
amount and interest periods selected (or deemed to have been selected) by
Borrower under the Revolving Note.
2.3.2 TERM LOANS. The principal amount outstanding
under the Term Loans will bear interest at a
fixed rate of interest of ________ percent
(___%) per annum.(1)
2.3.3 COMPUTATION OF INTEREST. All interest shall
be computed on the basis of a year of 360
days and actual days elapsed, and shall be
payable as provided in Section 3.2 of this
Agreement. Any change in any interest rate
applicable to any of the Liabilities based
on the Prime Rate shall be effective as of
the effective date stated in the
announcement by the Lender of such change in
the Prime Rate.
2.3.4 DEFAULT RATE. Upon the occurrence and during
the continuance of an Event of Default,
Borrower shall pay Lender interest on the
outstanding Liabilities, including
principal, interest, fees if not paid when
due and reimbursable expenses if not paid
when due, at a rate (the "Default Rate"),
equal to the interest rate provided in the
Revolving Note, the Term Note or the
Equipment Term Note, as the case may be,
PLUS three percent (3%).
2.3.5 MAXIMUM INTEREST. It is the intention of
Lender and Borrowers to comply with the laws
of the State of Illinois, and
notwithstanding any provision to the
contrary contained herein or in the other
Ancillary Agreements, the Borrower shall not
be required to pay, and the Lender shall not
be permitted to collect, any amount in
excess of the maximum amount of interest
permitted by applicable law ("Excess
Interest"). If any Excess Interest is
provided for or determined to have been
provided for by a court of competent
jurisdiction in this Agreement or in any of
the other Ancillary Agreements, then in such
event (i) the provisions of this Section
shall govern and control; (ii) Borrower
shall not be obligated to pay any Excess
Interest; (iii) any Excess Interest that
Lender may have received hereunder shall be,
at Lender's sole option, (A) applied as a
credit against either
----------------------------
(1) To be determined based upon three year cost of funds plus 200 bps, fixed.
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<PAGE>
the outstanding principal balance of the
Loans or accrued and unpaid interest
hereon, (B) refunded to the payor
thereof, or (C) any combination of the
foregoing; (iv) the interest rate(s)
provided for herein shall be
automatically reduced to the maximum rate
allowed under applicable law, and this
Agreement and the other Ancillary
Agreements shall be deemed to have been,
and shall be, reformed and modified to
reflect such reduction; and (v) Borrower
shall not have any action against Lender
for any damages arising out of the
payment or collection of any Excess
Interest. Notwithstanding the foregoing,
if any interest payment or other charge
or fee payable hereunder or under any of
the other Ancillary Agreements exceeds
the maximum amount then permitted by
applicable law, then to the extent
permitted by law, Borrower shall be
obligated to pay the maximum amount then
permitted by applicable law and Borrower
shall continue to pay the maximum amount
from time to time permitted by applicable
law until all such interest payments and
other charges and fees otherwise due
hereunder or under any of the other
Ancillary Agreements (in the absence of
such restraint imposed by applicable law)
have been paid in full.
2.4 SETOFF. Borrower agrees that, if at any time any
Event of Default shall have occurred and be
continuing, then Lender or the holder of any
promissory note issued hereunder, in its sole
discretion, may apply to the payment of any and all
Liabilities, any and all balances, credits, deposits,
accounts or moneys of Borrower then or thereafter
with, maintained, or held by Lender or such holder.
Without limitation of the foregoing sentence,
Borrower agrees that, upon and after the occurrence
and during the continuance of any Event of Default,
Lender is hereby authorized, at any time and from
time to time, without notice to Borrower, (i) to set
off against and to appropriate and apply to the
payment of any and all Liabilities (whether matured
or fixed or liquidated or unliquidated) any and all
amounts which the Lender is obligated to pay over to
Borrower (whether matured, and, in the case of
deposits, whether general or special, time or demand
and however evidenced), and (ii) pending any such
action, to the extent necessary, to deposit such
amounts with Lender as Collateral to secure such
Liabilities and to dishonor any and all checks and
other items drawn against any deposits so held as the
Lender in its sole discretion may elect. The rights
of Lender under this Section are in addition to all
other rights and remedies which Lender may otherwise
have.
2.5 SECURITY. Pursuant to the Security Agreement, in the
form attached hereto as Exhibit E, and the Mortgage,
in the form attached hereto as Exhibit F, to be
executed and delivered by Electric City Acquisition
Corporation concurrent with the consummation of the
Switchboard Acquisition, payment of the Liabilities
in full (other than contingent indemnification
obligations to the extent no unsatisfied claim giving
rise thereto has been asserted) is
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<PAGE>
secured by a first priority perfected lien and
security interest in all of Borrower's assets,
personal property (excluding the Ford Automobiles)
and real property (excluding the Landmeier
Property), subject to Permitted Encumbrances.
Further, Borrower acknowledges and agrees that in
consideration of advances made to Borrower (a)
under the Revolving Loan which are then advanced
by Borrower to any Subsidiary of Borrower,
Borrower shall cause such Subsidiary to execute
and deliver to Lender any notes, security
agreements, mortgages, financing statements or any
other certificates, agreements or documents as
Lender may reasonably request prior to Lender
advancing such amounts to Borrower, and (b) under
either the Term Loan or the Equipment Term Loan,
Borrower shall cause Electric City Acquisition
Corporation, a Subsidiary of Borrower, to execute
and deliver to Lender the agreements, documents
and certificates identified in Section 2.1.2
hereof.
2.6 PROVISIONS OF AGREEMENT TO REMAIN IN FORCE.
Notwithstanding any termination of the Total
Facility, until all of the Liabilities shall have
been fully paid and satisfied (other than contingent
indemnification obligations to the extent no
unsatisfied claim giving rise thereto has been
asserted), Borrower shall continue to pay interest to
Lender as provided in Section 2.3 of this Agreement,
Lender shall be entitled to retain its security
interest in the Collateral, Borrower shall continue
to remit collection of Accounts and proceeds of
Collateral as provided in this Agreement, and Lender
shall retain all of its rights and remedies under
this Agreement, by law or in equity.
2.7 CHANGE IN CIRCUMSTANCES.
2.7.1 YIELD PROTECTION. If any law or any
governmental or quasi-governmental rule,
regulation, policy, guideline or directive
(whether or not having the force of law),
adopted after the date of this Agreement and
having general applicability to all banks
within the jurisdiction in which Lender
operates, or any interpretation or
application thereof by any governmental
authority charged with the interpretation or
application thereof, or the compliance of
Lender therewith,
2.7.1.1 subjects Lender to any tax, duty,
charge or withholding on or from
payments due from the Borrower
(excluding federal taxation of the
overall net income of Lender), or
changes the basis of taxation of
payments to Lender in respect to its
Loans, or other amounts due it
hereunder, or
2.7.1.2 imposes or increases or deems
applicable any reserve, assessment,
insurance charge, special deposit or
similar requirement against assets
of, deposits with or for the account
of, or credit extended by, Lender
with respect to its Loans, or
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<PAGE>
2.7.1.3 imposes any other condition the
result of which is to increase the
cost to Lender of making, funding or
maintaining the Loans or reduces any
amount received by Lender in
connection with the Loans or
requires Lender to make any payment
calculated by reference to the
amount of Loans or interest received
by it by an amount deemed material
by Lender in its sole discretion;
and the result of any of the foregoing is to
increase the cost to Lender of making,
renewing or maintaining the Loans or to
reduce any amount received under this
Agreement, then, within 15 days after
receipt by Borrower of written demand by
Lender pursuant to 2.7.3, the Borrower shall
pay Lender that portion of such increased
expense incurred or reduction in an amount
received which Lender determines is
attributable to making, funding and
maintaining the Loans and its commitments
under this Agreement.
2.7.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS. If
Lender determines (i) the amount of capital
required or expected to be maintained by
Lender or any corporation controlling such
Lender is increased as a result of a
"Change" (as defined below), and (ii) such
increase in required capital will result in
an increase in the cost to Lender of
maintaining its Revolving Loan, the Term
Loans, or its obligation to make Loans
hereunder, then, within 15 days after
receipt by Borrower of written demand by
such Lender pursuant to Section 2.7.3,
Borrower shall pay Lender the amount
necessary to compensate Lender for any
shortfall in the rate of return on the
portion of such increased capital which
Lender determines is attributable to this
Agreement, its Loans, or its obligation to
make Loans hereunder. "Change" means (i) any
change after the date of this Agreement in
the "Risk-Based Capital Guidelines" (as
defined below), or (ii) adoption of or
change in any other law, governmental or
quasi-governmental rule, regulation, policy,
guideline, interpretation or directive
(whether or not having the force of law)
after the date of this Agreement and having
general applicability to all banks and
financial institutions within the
jurisdiction in which such Lender operates
which affects the amount of capital required
or expected to be maintained by Lender or
any corporation controlling lender.
"Risk-Based Capital Guidelines" means (i)
the risk-based capital guidelines in effect
in the United States on the date of this
Agreement, including transition rules, and
(ii) the corresponding capital regulations
promulgated by regulatory authorities
outside the United States including
transition rules, and any amendments to such
regulations.
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<PAGE>
2.7.3 LENDER STATEMENTS: SURVIVAL OF INDEMNITY.
Lender shall use its best efforts to notify
Borrower in writing of any Change, law,
policy rule, guideline or directive giving
rise to such demand for compensation not
later than ninety (90) days following the
date upon which Lender knows of such Change,
law, policy, rule, guideline or directive.
Any demand for compensation pursuant to this
Agreement shall be in writing and shall
state the amount due, if any, and shall set
forth, in reasonable detail the calculations
upon which Lender determined such amount.
Such written demand shall be rebuttably
presumed correct for all purposes. The
obligations of the Borrower under this
Section 2.7, shall survive payment of the
Liabilities and termination of this
Agreement for a period of 180 days.
3. PAYMENTS
3.1 BORROWER'S LOAN ACCOUNT. Lender shall maintain a loan
account ("Loan Account") on its books in which shall
be recorded (i) all loans and advances made by Lender
to Borrower pursuant to this Agreement, (ii) all
payments made by Borrower on all such loans and
advances and (iii) all other appropriate debits and
credits as provided in this Agreement, including, all
fees, charges, expenses and interest. All entries in
Borrower's Loan Account and other accounts shall be
made in accordance with Lender's customary accounting
practices as in effect from time to time.
3.2 PAYMENT TERMS. All of the Liabilities shall be
payable to Lender at the address set forth in Section
8.10 of this Agreement. Except (a) as otherwise
provided in this Agreement or in the Ancillary
Agreements or (b) in the case of acceleration of the
Liabilities, interest on the Liabilities shall be
payable monthly on the first day of each month.
Unless otherwise provided in this Agreement or the
Ancillary Agreements, all payments other than for
principal and interest shall be payable within one
(1) day of Lender's demand. At Lender's sole
discretion, such payment may be made by a debit to
Borrower's demand deposit account with Lender, and
fees, costs, expenses and similar charges shall also
be payable monthly by such debits.
3.3 CASH COLLATERAL ACCOUNT. Subject to Section 5.1.7
hereof, Borrower shall use Lender as its primary
depository and disbursement bank for substantially
all of its accounts. Borrower shall establish general
accounts with Lender, and if any of Borrower's
Affiliates, shareholders, directors, officers,
employees or agents of those Persons acting for or in
concert with Borrower shall, acting as trustee for
Lender, receive any monies, checks, notes, drafts or
any other payment relating to proceeds of Collateral
which come into their possession or under their
control, they shall immediately upon receipt thereof,
remit the same or cause the same to be remitted to
Lender for deposit into Borrower's general accounts
with Lender. Borrower hereby agrees that, upon the
occurrence and during the continuance of any Event of
Default,
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<PAGE>
Lender shall have the right, without the necessity
or prior or contemporaneous notice, to set-off
against all or any portion of the Liabilities all
payments made to and all funds deposited in
Borrower's accounts of any kind, or funds
otherwise received by Lender. Borrower agrees to
pay fees, costs and expenses which Lender charges
or incurs in connection with opening, servicing,
operating and maintaining Borrower's accounts with
Lender in accordance with Lender's standard fee
schedule, and such amounts will constitute part of
the Liabilities and shall be secured by any
Collateral.
3.4 APPLICATION OF PAYMENTS AND COLLECTIONS. Borrower
irrevocably waives the right to direct the
application of payments (except Lender agrees that,
in the absence of the occurrence and continuance of
any Event of Default, Lender will not direct the
application of payments which Borrower has designated
as a scheduled payment or a prepayment of either the
Term Loan or Equipment Term Loan) and collections
received by Lender from or on behalf of Borrower, and
Borrower agrees that Lender shall have the
continuing, exclusive right to apply and reapply any
and all such payments (except Lender agrees that, in
the absence of the occurrence and continuance of any
Event of Default, Lender will not direct the
application of payments which Borrower has designated
as a scheduled payment or a prepayment of either the
Term Loan or Equipment Term Loan) and collections
against the Liabilities in such manner as Lender may
deem appropriate, notwithstanding any term or
provision hereof or any entry by Lender upon any of
its books and records. Unless Lender in its
discretion determines otherwise, amounts credited to
the Loan Account shall be applied to the principal
balance of the Revolving Loan, and when the
outstanding principal balance of the Revolving Loan
is equal to zero (0) any amount remaining unapplied
shall be credited to Borrower's demand deposit
account with Lender.
3.5 STATEMENTS. Until such time as Lender shall have
rendered to Borrower written statements of account as
provided herein, the balance in Borrower's Loan
Account, as set forth on Lender's most recent
statement, shall be rebuttably presumptive evidence
of the amounts due and owing to Lender by Borrower.
Not less than ten (10) Business Days nor more than
twenty (20) Business Days after the final day of each
calendar month, Lender shall render to Borrower a
statement setting forth the balance of Borrower's
Loan Account, including principal, interest, expenses
and fees. Each such statement shall be subject to
subsequent adjustment by Lender and Lender's right to
reapply payments in accordance with Section 3.4 of
this Agreement shall, absent manifest errors or
omissions, be presumed correct and conclusively
binding upon Borrower and shall constitute an account
stated unless, within one hundred twenty (120) days
after receipt of any statement from Lender, Borrower
shall deliver to Lender written objection thereto
specifying the error or errors, if any, contained in
such statement. Any such objection by Borrower shall
toll the one hundred twenty (120) day period
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<PAGE>
referred to in the preceding sentence during the
period reasonably required to resolve such objection.
4. WARRANTIES AND REPRESENTATIONS
4.1 GENERAL WARRANTIES AND REPRESENTATIONS. Borrower
hereby warrants and represents to Lender that, as of
the date of this Agreement and continuing as long as
any Liabilities remain outstanding (other than
contingent indemnification obligations to the extent
no unsatisfied claim giving rise thereto has been
asserted) and this Agreement remains in effect:
4.1.1 Borrower is a corporation duly organized and
validly existing in good standing under the
laws of the state of its incorporation, as
represented at the beginning of this
Agreement, and is qualified or licensed to
do business in all other countries, states
and provinces where the failure to be so
qualified and/or licensed would have a
material adverse effect on Borrower;
4.1.2 Borrower has not used, during the five (5)
year period preceding the date of this
Agreement, and does not intend to use any
other corporate or fictitious name (other
than "Electric City Corp.," "Electric City,
LLC," "Pice Products Corporation" and
"Marino Electric, Inc.");
4.1.3 Borrower has the right and power and is duly
authorized and empowered to enter into,
execute, deliver and perform this Agreement
and the Ancillary Agreements;
4.1.4 The execution, delivery and performance by
Borrower of this Agreement and the Ancillary
Agreements shall not, by their execution or
performance, the lapse of time, the giving
of notice or otherwise, constitute a
violation of any applicable law, rule or
regulation or breach of any provision
contained in Borrower's Articles of
Incorporation or Bylaws or contained in any
agreement, instrument, indenture or other
document to which Borrower is now a party or
by which it is bound;
4.1.5 Borrower's uses of the proceeds of any
advances and readvances made by Lender to
Borrower pursuant to this Agreement are, and
will continue to be, legal and proper
corporate uses (duly authorized by its Board
of Directors, if necessary pursuant to
applicable corporate law, rule or
regulation) and such uses are consistent
with all applicable laws and statutes, as in
effect as of the date hereof;
4.1.6 To the best of the Borrower's knowledge,
Borrower has, and is current and in good
standing with respect to, all governmental
approvals, permits, certificates,
inspections, consents and franchises
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<PAGE>
necessary to conduct or to continue to
conduct its present or intended business as
heretofore conducted by it or in a manner
similar to that of the previous owner of the
business or of other Persons engaged in the
same or similar businesses and to own or
lease and operate its properties as now
owned or leased and operated by it or by the
previous owner of those properties;
4.1.7 To the best of the Borrower's knowledge,
none of said approvals, permits,
certificates, consents or franchises contain
any term, provision, condition or limitation
more burdensome than such as are generally
applicable to Persons engaged in the same or
similar business of Borrower;
4.1.8 Borrower is, and after consummation of the
transactions contemplated hereunder shall
continue to be, solvent, is and shall
continue to be able to pay its debts as they
become due and has capital sufficient to
carry on its business and all businesses in
which it is about to engage, and owns
property having a value both at fair
valuation and at present fair saleable value
greater than the amount required to pay its
debts, including, without limitation, its
Liabilities. Borrower will not be rendered
insolvent by the execution and delivery of
this Agreement or any Ancillary Agreement,
or by completion of the transactions
contemplated hereunder or thereunder;
4.1.9 As of the date hereof, except as set forth
on Schedule 4.1.9 hereto, no judgments are
outstanding against Borrower, nor is there
now pending or, to the best of Borrower's
knowledge after reasonable inquiry,
threatened, any material litigation,
contested claim, or federal, state or
municipal governmental proceeding by or
against Borrower, nor does Borrower, as of
the date hereof, have any Indebtedness
(except trade payables arising in the
ordinary course of its business, the CIB
Indebtedness, Ford Indebtedness and Marino
Indebtedness) nor has Borrower guaranteed
the obligations of any other Person, other
than those of a Subsidiary of Borrower;
4.1.10 Borrower is not a party to any contract or
agreement or subject to any charge,
corporate restrictions, judgment, decree or
order materially and adversely affecting its
business, property, assets, operations or
condition, financial or otherwise, and
Borrower is not a party to any labor
dispute; there are no strikes or walkouts
relating to any labor contracts and no such
contract is scheduled to expire prior to the
maturity of any portion of the Total
Facility, except the labor contract with the
International Brotherhood of Electrical
Workers which expires in December of 2000;
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4.1.11 Borrower has good, indefeasible and
merchantable title to and ownership of its
property free and clear of all liens,
claims, security interests and other
encumbrances other than the security
interest granted to Lender pursuant to the
Security Agreement, and the Mortgage and
Permitted Encumbrances;
4.1.12 Borrower is not in violation of any
applicable statute, rule, regulation or
ordinance, including those pertaining to
environmental pollution or disposal or OSHA
standards, of any governmental entity,
including, the United States of America, any
state, city, town, municipality, county or
any other jurisdiction, or any agency
thereof, in any respect materially and
adversely affecting the Borrower's business,
property, assets, operations or condition,
financial or otherwise;
4.1.13 Borrower is not in default under any
indenture, loan agreement, mortgage, lease,
trust deed, deed of trust or other similar
agreement relating to the borrowing of
monies to which it is a party or by which it
is bound;
4.1.14 The financial statements which Borrower has
supplied Lender prior to execution of this
Agreement, fairly present the assets,
liabilities and financial condition and
results of operations of Borrower and such
other Persons described therein as of the
dates thereof; there are no omissions or
other facts or circumstances which are
material to a complete and correct
understanding of the information set forth
therein; and there has been no material and
adverse change in the assets, liabilities or
financial or other condition of Borrower
since the dates of such documents; there
exist no equity or long term investments in
or outstanding advances to any Person
(except contractual deposits and expense
advances in each case made in the ordinary
course of business) not reflected in such
documents; except as set forth in Schedule
4.1.9, there are no actions or proceeding
which are pending or, to the best of
Borrower's knowledge, threatened against
Borrower which might result in any material
adverse change in Borrower's financial
condition or materially and adversely affect
Borrower's existing operations, or its
existing assets;
4.1.15 Borrower has received no notice to the
effect that it is not in full compliance
with any of the requirements of ERISA and
the regulations promulgated thereunder and,
to the best of its knowledge, there exists
no Reportable Event;
4.1.16 Borrower has filed all federal, state and
local tax returns (including, but not
limited to, income and payroll tax returns)
and other reports, or has been including in
consolidated returns or reports filed by an
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Affiliate, which Borrower is required by
law, rule or regulation to file, except
Borrower did not file its tax returns for
the fiscal year ended April 30, 1999
(Borrower has subsequently changed its
fiscal year end to December 31st) and all
Charges that are due and payable have been
paid;
4.1.17 This Agreement and all of the other
Ancillary Agreements to which Borrower is a
party are the legal, valid and binding
obligations of Borrower and are enforceable
against Borrower in accordance with their
terms, except to the effect of any
applicable bankruptcy, insolvency or similar
law affecting the rights of creditors
generally or of general principles of
equity.
4.1.18 Borrower owns, licenses or otherwise
possesses all patents, patent applications,
copyrights, trademarks, trademark
applications, trade names, service marks and
other intellectual property that are
necessary for the proper operation and
conduct of its business. No claim has been
asserted and is pending by any Person
challenging or questioning the use of any
such intellectual property or rights
associated therewith or the validity or
effectiveness of any such intellectual
property or rights associated therewith. The
use of such intellectual property by
Borrower does not, to Borrower's knowledge,
infringe on the rights of any Person, and to
Borrower's knowledge, no Person is
infringing the rights of Borrower in such
intellectual property.
4.1.19 No information provided or statements made
by Borrower or of Borrower's representatives
to the Lender in this Agreement, any
Ancillary Agreement, or any document,
agreement, certificate or instrument
delivered in connection herewith or
therewith contains any untrue statement of a
material fact or omits to state a material
fact necessary to make the statements
therein, in light of the circumstances under
which they were made, not misleading.
4.2 ENVIRONMENTAL WARRANTIES AND REPRESENTATIONS.
Borrower hereby warrants and represents to Lender
that (i) the operations of Borrower have complied and
currently comply with all Environmental Laws; (ii)
none of the operations of Borrower is subject to or,
to the best knowledge of Borrower will be subject to
any threatened or pending judicial or administrative
proceeding alleging the violation of any
Environmental Laws; (iii) none of the operations of
Borrower is the subject of a federal or state
investigation evaluating whether any remedial action
is needed to respond to a Release of any Hazardous
Material into the environment; (iv) Borrower has not
filed any notice under any federal or state law
indicating past or present treatment, storage or
disposal of a Hazardous Material or reporting a spill
or release of a Hazardous Material into the
environment; and (v) Borrower has no known
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liability in connection with any Releases of
Hazardous Material into the environment.
4.3 AUTOMATIC WARRANTY AND REAFFIRMATION OF WARRANTIES
AND REPRESENTATIONS. Each request for any loan or
advance made by Borrower pursuant to this Agreement
or the Ancillary Agreements shall constitute (i) an
automatic warranty and representation by Borrower to
Lender that there does not then exist a Default or an
Event of Default and (ii) a reaffirmation as of the
date of said request of all of the representations
and warranties of Borrower contained in this
Agreement or the Ancillary Agreements, except to the
extent such representation or warranty expressly
relates to a prior date.
4.4 SURVIVAL OF WARRANTIES AND REPRESENTATIONS. Borrower
covenants, warrants and represents to Lender that all
representations and warranties of Borrower contained
in this Agreement and the Ancillary Agreements shall
be true at the time of Borrower's execution of this
Agreement and the Ancillary Agreements, and shall
survive the execution, delivery and acceptance
thereof by the parties hereto and the closing of the
transactions described herein or related hereto,
except to the extent such representation or warranty
expressly relates to a prior date. Borrower and
Lender expressly agree that any misrepresentations or
breach of any representation or warranty by Borrower
whatsoever contained in this Agreement or the
Ancillary Agreements shall be deemed material.
5. COVENANT AND CONTINUING AGREEMENTS
5.1 AFFIRMATIVE COVENANTS. Borrower covenants and agrees
that it shall, as of the date of this Agreement and
continuing as long as any Liabilities remain
outstanding (other than contingent indemnification
obligations to the extent no unsatisfied claim giving
rise thereto has been asserted) and this Agreement
remains in effect:
5.1.1 Comply with the following financial
covenants on a quarterly basis during the
term of this Agreement:
5.1.1.1 Maintain a minimum EBITDA of not
less than 85% of the projections
prepared by Borrower and attached
hereto as Exhibit G, as measured at
the end of each fiscal quarter of
Borrower; and
5.1.1.2 Maintain at all times a Net Worth
(including proceeds from the sale of
2,181,179 shares of Borrower's
common stock subject to rescission
by those investors identified on
Schedule 5.1.1.2 hereto prior to the
end of January, 2001) of not less
than Five Million Dollars
($5,000,000), tested as of the last
day of each calendar quarter.
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5.1.2 Furnish Lender with the following information:
5.1.2.1 As soon as available, but no later
than forty-five (45) days after the
end of each fiscal quarter, a copy
of Borrower's quarterly 10-Q Report
filed with the Securities and
Exchange Commission, and accompanied
by a certificate of the chief
financial officer of Borrower
stating (i) that such financial
statements have been prepared on a
consistent basis and reflect all
adjustments (other than year-end and
audit adjustments) necessary to
fairly present the financial
condition of the Borrower for the
periods indicated, (ii) whether he
has knowledge of any Default or
Event of Default hereunder and, if
so, stating in reasonable detail the
facts with respect thereto, and
(iii) calculating Borrower's
compliance with the financial
covenants set forth in Section 5.1.1
hereof;
5.1.2.2 As soon as available, but no later
than ninety (90) days after the end
of each fiscal year of Borrower, a
copy of the annual audited financial
statements reviewed by independent
certified public accountants
selected by Borrower and reasonably
acceptable to Lender, which annual
financial statements shall include
the balance sheet of Borrower as at
the end of such fiscal year, the
related statements of income,
retained earnings and cash flows,
and notes of Borrower for the fiscal
year then ended, and appropriate
notes to same, all in reasonable
detail and consistent with the form
and detail reasonably requested by
Lender, and all prepared in
accordance with GAAP, together with
a certificate of the chief financial
officer of Borrower stating that
such financial statements have been
prepared in accordance with GAAP,
consistently applied, and whether or
not he has knowledge of any failure
of Borrower to comply with the
financial covenants set forth in
Section 5.1.1 hereof and, if so,
stating in reasonable detail the
facts with respect thereto;
5.1.2.3 As soon as available, but no later
than ten (10) days after filing,
copies of all material financial
information, proxy materials and
other information and reports, if
any, filed by Borrower with the
Securities and Exchange Commission;
5.1.2.4 As soon as available, but not later
than ten (10) days after Borrower's
receipt thereof, a copy of any
"management letter" received from
Borrower's certified public
accountant;
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5.1.2.5 Each month, so long as there exists
an outstanding balance on the
Revolving Loan, a Borrowing Base
Certificate, in the form attached
hereto as Exhibit D; and
5.1.2.6 Such other data and information
(financial and other) as Lender,
from time to time, may reasonably
request, bearing upon or related to
Borrower's financial condition
and/or results of operations.
5.1.3 Maintain product liability insurance in the
amount of $3,000,000 per occurrence, as
presently maintained by Borrower;
5.1.4 Keep and maintain, at Borrower's sole cost
and expense, its assets insured against loss
or damage by fire, theft, explosion,
spoilage and all other hazards and risks
ordinarily insured against by other owners
or users of such properties in similar
businesses in an amount at least equal to
the insurable value of all such property.
Borrower shall, at its cost and expense,
maintain business interruption insurance and
liability insurance in such amounts and with
such deductibles as are acceptable to the
Lender, the proceeds of which liability
insurance shall be assigned to the Lender.
All such policies of insurance shall be in
form and substance reasonably satisfactory
to the Lender. Borrower shall deliver to the
Lender the original certificate of insurance
evidencing each policy and evidence of
payment of all premiums therefor. Such
policies of insurance shall contain an
endorsement, in form and substance
satisfactory to the Lender, naming Lender as
loss payee and additional insured, as its
interests may appear. Such endorsement shall
provide that such insurance company will
give the Lender at least thirty (30) days
prior written notice before any such policy
or policies of insurance shall be altered in
a manner adverse to Lender, which shall
include, but not be limited to, decreases in
the amount of coverage limits under such
policies of insurance, increases in
deductibles required to be paid under such
policies of insurance, and elimination or
other reduction of specific types of
coverage provided under such policies of
insurance, or cancelled and that no act or
default of Borrower or any other Person
shall affect the right of the Lender to
recover under such policy or policies of
insurance in case of loss or damage.
Borrower hereby directs all insurers under
such policies of liability insurance to pay
all proceeds of insurance policies directly
to the Lender and the Lender shall, in its
reasonable discretion, either apply such
proceeds against the Liabilities (in such
order as Lender, in its sole discretion, may
determine) or permit the Borrower to use
such proceeds to restore or rebuild the
damaged property; provided, however, any
such insurance proceeds attributable to
losses or damages in the amount of One
Hundred Fifty Thousand Dollars ($150,000) or
less individually or up
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to Two Hundred Fifty Thousand Dollars
($250,000) in the aggregate at any time
shall be paid to the Borrower for
application as Borrower shall determine
in its reasonable discretion. Borrower
irrevocably makes, constitutes and
appoints the Lender (and all officers,
employees or agents designated by the
Lender in writing to Borrower) as
Borrower's true and lawful attorney in
fact upon the occurrence and during the
continuance of an Event of Default for
the purpose of making, settling and
adjusting claims under all such policies
of insurance, endorsing the name of
Borrower on any check, draft, instrument
or other item of payment received by
Borrower or the Lender pursuant to any
such policies of insurance and for making
all determinations and decisions with
respect to such policies of insurance;
5.1.5 Notify Lender in writing, promptly upon, but
in no event later than, five (5) Business
Days after an officer of Borrower obtains
knowledge thereof, of the occurrence of any
event which constitutes a Default or an
Event of Default, together with a detailed
statement by a responsible officer of
Borrower of the steps being taken by
Borrower to cure the effect of such event;
5.1.6 Notify Lender in writing, promptly upon
Borrower's learning of any litigation
affecting Borrower, whether or not the claim
is considered by Borrower to be covered by
insurance, and of the institution of any
suit or administrative proceeding which may
materially and adversely affect the
property, operations, financial condition or
business of Borrower;
5.1.7 Use Lender as its primary depository and
disbursement bank for substantially all of
its deposits, investment, trust and other
accounts and cash management services,
provided, however, that Borrower may
maintain other minimal depository
relationships, solely as necessary for local
operational requirements;
5.1.8 Notify Lender in writing within thirty (30)
days of any of the following:
5.1.8.1 the receipt by Borrower of any
notice from a governmental entity
alleging the occurrence of a
Reportable Event with respect to any
pension plan governed by ERISA (such
notice shall contain the statement
of the chief financial officer of
Borrower setting forth details as to
such Reportable Events and the
action which Borrower proposes to
take with respect thereto and a
copy, as soon as available, of the
notice of such Reportable Event to
the Pension Benefit Guaranty
Corporation);
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5.1.8.2 the commencement of proceedings to
terminate any such plan;
5.1.8.3 the appointment of a trustee by an
appropriate United States District
Court to administer any such plan;
5.1.8.4 the institution of any proceedings
by the Pension Benefit Guaranty
Corporation to terminate any such
plan or to appoint a trustee to
administer any such plan;
5.1.9 Comply in all material respects with all
applicable laws, rules, regulations, and
orders unless contested in good faith and by
appropriate proceedings otherwise permitted
by law or this Agreement, and with respect
to which appropriate reserves are
maintained.
5.1.10 At least once during each calendar year upon
reasonable advance notice to Borrower (and
at any time and from time to time at
Lender's option after the occurrence and
during the continuance of a Default or an
Event of Default without the necessity of
providing any advance notice), the Lender,
or any Person designated by the Lender in
writing from time to time, shall have the
right: (a) to call and visit at Borrowers'
place or places of business (or any other
place where the Collateral or any
information relating thereto is kept or
located) to inspect, audit, check and make
copies of and extracts from Borrower's
books, records, journals, orders, receipts
and any correspondence and other data
relating to their business or to any
transactions between the parties hereto, and
to discuss the affairs, finances and
business of Borrower with any officers or
employees of Borrower, and (b) to make such
verification concerning the Collateral as
the Lender may consider reasonable under the
circumstances. The Borrower shall pay on
demand all reasonable out-of-pocket costs
and expenses as determined and incurred by
the Lender with respect to this Section.
5.2 NEGATIVE COVENANTS. Borrower covenants and agrees
that it shall not, as of the date of this Agreement
and continuing as long as any Liabilities remain
outstanding, other than contingent indemnification
obligations to the extent no unsatisfied claim giving
rise thereto has been asserted, and this Agreement
remains in effect:
5.2.1 Be a party to any merger, consolidation, or
exchange of stock or other equity interests,
or purchase or otherwise acquire all or
substantially all of the assets or stock or
equity interests of any class of, or any
partnership or joint venture interest in,
any other Person, or sell, transfer, convey
or lease all or any substantial part of its
assets, or sell
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<PAGE>
or assign, with or without recourse, any
receivables, except that Borrower may (i)
consummate the Switchboard Acquisition
pursuant to the Switchboard Acquisition
Instruments, (ii) consummate the Great
Lakes Acquisition pursuant to the Great
Lakes Acquisition Instruments and (ii)
with the prior written consent of Lender,
which consent shall not be unreasonably
withheld, consummate acquisitions of
other Persons in similar lines of
business;
5.2.2 Other than in the ordinary course of its
business, make any investment in the
securities of any Person without fifteen
(15) days prior written notice to Lender,
except that Borrower may (i) consummate the
Switchboard Acquisition pursuant to the
Switchboard Acquisition Instruments, (ii)
consummate the Great Lakes Acquisition
pursuant to the Great Lakes Acquisition
Instruments and (ii) with the prior written
consent of Lender, which consent shall not
be unreasonably withheld, consummate
acquisitions of other Persons in similar
lines of business;
5.2.3 Declare or pay (or cause to be declared or
paid) dividends upon the Stock, or make (or
cause to be made) any distribution of
Borrower's property or assets or make (or
cause to be made) any loans, advances and/or
extensions of credit to any Person,
including, any Affiliate, officer or
employee of Borrower, except that Borrower
may make intercompany loans to any of its
Subsidiaries, subject to the Borrower's
agreement to cause any such Subsidiary to
execute and deliver to Lender the documents
identified in Section 2.5 hereof, and loans
to employees not to exceed $100,000 in the
aggregate at any time outstanding;
5.2.4 Make (or cause to be made) any loans or
other advances of money (other than salary
paid in the ordinary course of Borrower's
business) to officers, directors,
shareholders or Affiliates of Borrower;
provided that Borrower may make reasonable
advances of money to its employees in
payment of reasonable expenses incurred by
such employees in the ordinary course of
business and loans to employees not to
exceed $100,000 in the aggregate at any time
outstanding;
5.2.5 Redeem, retire, purchase or otherwise
acquire, directly or indirectly, the Stock
of Borrower, or make (or cause to be made)
any material change in Borrower's capital
structure or in any of its business
objectives, purposes and operations which
might reasonably be expected to adversely
affect the repayment of the Liabilities;
5.2.6 Enter into, or be a party to, any
transaction with any Affiliate or
shareholder of Borrower, except in the
ordinary course of and pursuant to the
reasonable requirements of Borrower's
business and
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upon fair and reasonable terms which are
fully disclosed to Lender and are no less
favorable to Borrower than would be
obtained in a comparable arm's length
transaction with a Person not an
Affiliate or shareholder of Borrower;
5.2.7 Enter into any transaction which materially
and adversely affects Borrower's ability to
repay Indebtedness for borrowed money;
5.2.8 Guaranty or otherwise, in any way, become
liable with respect to the obligations or
liabilities of any Person except (i) by
endorsement of instruments or items of
payment for deposit to the general account
of Borrower or for delivery to Lender on
account of the Liabilities; and (ii)
Borrower may guaranty the liabilities of its
Subsidiaries in the ordinary course of
business;
5.2.9 Except as otherwise expressly permitted
herein or in the Ancillary Agreements,
pledge, mortgage, grant a security interest
in or, encumber, assign, sell, lease or
otherwise dispose of or transfer, whether by
sale, merger, consolidation, liquidation,
dissolution, or other transactions not in
Borrower's ordinary course of business, any
of Borrower's assets excluding the CIB Lien,
the Ford Lien and the Marino Lien;
5.2.10 Incur, create, assume, become liable or be
liable in any manner with respect to any
Indebtedness for borrowed money (other than
the Liabilities) from any Person, excluding
the CIB Indebtedness, the Ford Indebtedness,
the Marino Indebtedness and Indebtedness not
to exceed $250,000 in the aggregate at any
time outstanding in connection with lease
obligations and purchase money obligations
of Borrower and its Subsidiaries;
5.2.11 Change its name or identity, or add any new
fictitious name without fifteen (15) days
prior written notice to Lender, or change
its business structure;
5.2.12 Engage in any line of business materially
different from that previously engaged in by
Borrower, or make any significant change in
accounting treatment or reporting practices,
except as required by GAAP, or change its
fiscal year; and
5.2.13 Change or relocate its chief executive
office or principal place of business
without fifteen (15) days prior written
notice to Lender.
5.3 PAYMENT OF CHARGES. Subject to the provisions of
Section 5.4 of this Agreement, Borrower shall pay
promptly when due all of the Charges. In the
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event Borrower, at any time or times hereafter, shall
fail to pay the Charges or to promptly obtain the
satisfaction of such Charges under circumstances
where Section 5.4 does not relieve Borrower from
doing so, Borrower shall so advise Lender thereof in
writing and Lender may, without waiving or releasing
any obligation or liability of Borrower hereunder or
any Default or Event of Default, in its sole and
absolute discretion, at any time or times thereafter,
make (but not be obligated to make) such payment or
any part thereof, or obtain such satisfaction and
take any other action with respect thereto which
Lender deems advisable. All sums so paid by Lender
and any expenses, including reasonable attorneys'
fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by
Borrower to Lender and shall be additional
Liabilities hereunder secured by the Collateral.
5.4 CONTESTING CHARGES. Notwithstanding anything to the
contrary herein, Borrower may dispute any Charges
without prior payment thereof, even if such
nonpayment may cause a lien to attach to any
Borrower's assets, provided that Borrower shall give
Lender written notice of such dispute and shall be
diligent in contesting the same in good faith, with
due diligence and by an appropriate proceeding and
there is no danger of a loss or forfeiture of any of
Borrower's assets (as reasonably determined by
Lender), and provided further that, if the same are
in excess of One Hundred Thousand Dollars ($100,000)
in the aggregate at any time or times hereafter,
Borrower shall give Lender such additional collateral
and assurances as Lender, in its sole discretion,
deems necessary under the circumstances.
5.5 INSURANCE: PAYMENT OF PREMIUMS. All policies of
insurance required hereunder shall be in form and
with insurers recognized as adequate by prudent
business persons and all such policies shall be in
such amounts as may be satisfactory to Lender.
Borrower shall deliver to Lender the original
certificate of insurance for each policy of insurance
and evidence of payment of all premiums therefor.
Such policies of insurance shall contain an
endorsement, in form and substance acceptable to
Lender, naming Lender as additional insured or loss
payee. Such endorsement shall provide that the
insurance companies will give Lender at least thirty
(30) days' prior notice before any such policy shall
be altered in a manner adverse to Lender, which shall
include, but not be limited to, decreases in the
amount of coverage limits under such policies of
insurance, increases in deductibles required to be
paid under such policies of insurance, and
elimination or other reduction of specific types of
coverage provided under such policies of insurance,
or canceled and that no act or default of Borrower or
any other Person shall affect the right of Lender to
recover under such policy in case of loss or damage.
If Borrower shall fail to obtain or maintain any of
the policies required by this Agreement or to pay any
premium relating thereto, then Lender, without
waiving or releasing any obligation or default by
Borrower hereunder, may (but shall be under an
obligation to do so) obtain and
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maintain such policies of insurance and pay such
premium and take any other action with respect
thereto which Lender deems advisable. All sums so
disbursed by Lender, including reasonable
attorneys' fees, court costs, expenses and other
charges relating thereto, shall be payable, on
demand, by Borrower to Lender and shall be
additional Liabilities hereunder secured by the
Collateral.
5.6 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF
AGREEMENT. Except as otherwise provided herein, all
of the obligations and duties of Borrower under this
Agreement and the Ancillary Agreements shall survive
the termination or cancellation of this Agreement
until Borrower has paid in full the Liabilities
(other than contingent indemnification obligations to
the extent no unsatisfied claim has been asserted)
owed to Lender under this Agreement or any of the
Ancillary Agreements, provided that Borrower's
indemnification obligations pursuant to Section 8.17
hereto shall survive any termination or cancellation
of this Agreement or any of the Ancillary Agreements.
6. EVENTS OF DEFAULT: RIGHTS AND REMEDIES ON EVENTS OF DEFAULT
6.1 EVENTS OF DEFAULT. The occurrence and continuance of
any one or more of the following events shall
constitute an Event of Default:
6.1.1 Borrower fails to pay any of the Liabilities
when any or all of such Liabilities are due
and payable or declared due and payable
pursuant to the terms of this Agreement,
after a three (3) day grace period has
expired; or Borrower is in default in the
payment of any Indebtedness for borrowed
money exceeding $200,000 in the aggregate,
after a five (5) day grace period has
expired;
6.1.2 Borrower fails or neglects to perform, keep
or observe any term, provision, condition or
covenant contained in this Agreement or in
the Ancillary Agreements, which is required
to be performed, kept or observed by
Borrower; or
6.1.3 A default shall occur by Borrower under any
agreement, document or instrument, other
than this Agreement or any of the Ancillary
Agreements, now or hereafter existing, to
which Borrower is a party, but only if that
default has a material effect upon the
operation, business, assets or business of
Borrower; or
6.1.4 An "event of default" shall occur and be
continuing after any applicable cure period
under any of the Ancillary Agreements, or
any mortgage, assignment of rents and
leases, assignment of beneficial interest in
land trust or any other security document
entered into between Lender and any Person
which secures the Liabilities;
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6.1.5 Any statement, warranty, representation,
report, financial statement, or certificate
now or hereafter made or delivered by
Borrower, or any of its officers, employees
or agents, to Lender shall not have been
true and correct in any material respect
when made; or
6.1.6 There shall occur any material uninsured
damage to, or loss, theft, or destruction
of, any Collateral in which Borrower shall
have granted to Lender a security interest
hereunder; or
6.1.7 Any of Borrower's assets are attached,
seized, levied upon or subjected to a writ
or distress warrant, or come within the
possession of any receiver, trustee,
custodian or assignee for the benefit of
creditors and the same is not cured within
sixty (60) days thereafter; an application
is made by any Person other than Borrower
for the appointment of a receiver, trustee,
or custodian for any of Borrower's assets
and the same is not dismissed within sixty
(60) days after the application therefor; or
6.1.8 An application is made by Borrower for the
appointment of a receiver, trustee or
custodian for any of Borrower's assets; a
petition under any section or chapter of the
Bankruptcy Code or any similar law or
regulation is filed by Borrower; Borrower
makes an assignment for the benefit of its
creditors or any case or proceeding is filed
by Borrower for its dissolution,
liquidation, or termination; Borrower ceases
to conduct its business as now conducted or
is enjoined, restrained or in any way
prevented by court order from conducting all
or any material part of its business
affairs; or
6.1.9 A petition under any section or chapter of
the Bankruptcy Code or any similar law or
regulation is filed against Borrower and is
not dismissed within sixty (60) days after
filing; or any case or proceeding is filed
against Borrower for its dissolution,
liquidation or termination and such case and
proceeding is not dismissed within sixty
(60) days; or
6.1.10 A notice of lien, levy or assessment is
filed of record with respect to all or any
substantial portion of Borrower's assets by
the United States, or any department, agency
or instrumentality thereof, or by any state,
county, municipal or other governmental
agency, including, the Pension Benefit
Guaranty Corporation, or any taxes or debts
owing to any of the foregoing becomes a lien
or encumbrance upon or any of Borrower's
assets and such lien or encumbrance is not
released within ten (10) days after is
creation; or
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6.1.11 Judgment in an amount exceeding $250,000
cash and not covered by insurance is
rendered against Borrower, and becomes final
and nonappealable, for any amount and
Borrower fails to pay such judgment within
ten (10) days of the due date thereof; or
6.1.12 Borrower becomes insolvent or fails
generally to pay its debts as they become
due; or
6.1.13 Any of the following events shall occur or
exist with respect to Borrower or an
Affiliate of Borrower under ERISA.
6.1.13.1 the happening of a Reportable Event
with respect to any pension plan
governed by ERISA;
6.1.13.2 the termination of any pension
plan, or the withdrawal from a
multi-employer pension plan
governed by ERISA;
6.1.13.3 the appointment of a trustee by an
appropriate United States District
Court to administer any pension
plan;
6.1.13.4 the institution of any proceedings
by the Pension Benefit Guaranty
Corporation to terminate any
pension plan (other than a
multi-employer plan) or to appoint
a trustee to administer any such
plan, or
6.1.13.5 a Prohibited Transaction, as
defined in ERISA, shall occur; and
in each such case, Lender
determines that such event or
condition could subject Borrower to
a tax, penalty or other liability
which would materially, adversely
affect the financial condition of
Borrower; or
6.1.14 There is a substantial change in the
existing or prospective business,
properties, operations or condition,
financial or otherwise, of Borrower which
Lender in good faith determines to be
materially adverse; or
6.1.15 Any lien or security interest securing the
Liabilities shall, in whole or in part,
cease to be a perfected first priority lien
and security interest, except the Lender's
lien on the Ford Automobiles and the
Landmeier Property which is junior to the
Ford Lien and the CIB Lien, respectively.
6.2 ACCELERATION OF THE LIABILITIES. Upon and after the
occurrence and during the continuance of an Event of
Default, all of the Liabilities may, at the option of
Lender and without demand, notice, or legal process
of any kind, be declared, and immediately shall
become, due and payable; provided,
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however, upon the occurrence of an Event of
Default described in Sections 6.1.8, 6.1.9 or
6.1.10 hereof, all of the Liabilities shall
immediately and automatically, without
presentment, demand, protest or notice of any kind
(all of which are hereby expressly waived), be
immediately due and payable.
6.3 REMEDIES. Upon and after the occurrence and during
the continuance of an Event of Default, Lender shall
have the following rights and remedies:
6.3.1 All of the rights and remedies of a secured
party under the Code or other applicable
law, all of which rights and remedies shall
be cumulative, and none exclusive, to the
extent permitted by law, in addition to any
other rights and remedies contained in this
Agreement and in all of the Ancillary
Agreements.
6.3.2 The right to (i) peacefully enter upon the
premises of Borrower or any other place or
places where any Collateral is located and
kept, without any obligation to pay rent to
Borrower (if Borrower owns the place or
places where any Collateral is kept),
through self-help and without judicial
process or first obtaining a final judgment
or giving Borrower notice and opportunity
for a hearing on the validity of Lender's
claim, and remove any Collateral from such
premises and places to the premises of
Lender or any agent of Lender, for such time
as Lender may require to collect or
liquidate any Collateral, and/or (ii)
require Borrower to assemble and deliver any
Collateral to Lender at a place to be
designated by Lender.
6.3.3 The right to sell or to otherwise dispose of
all or any Collateral in its then condition,
or after any further manufacturing or
processing thereof (if applicable), at
public or private sale or sales, with such
notice as provided in Section 8.10 of this
Agreement, in lots or in bulk, for cash or
on credit, all as Lender, in its sole and
absolute discretion, may deem advisable. At
any such sale or sales of the Collateral,
the Collateral need not be in view of those
present and attending the sale, nor at the
same location at which the sale is being
conducted. Lender shall have the right to
conduct such sales on any Borrower's
premises or elsewhere and shall have the
right to use any Borrower's premises without
charge for such sales for such time or times
as Lender may see fit. Lender is hereby
granted an irrevocable license or other
right to use, without charge or royalty, any
Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets,
trade names, trademarks and advertising
matter, or any property of a similar nature,
as it pertains to the Collateral, in
advertising for sale and selling any
Collateral and any Borrower's rights under
all licenses and all franchise agreements
shall inure to Lender's benefit. Lender may
purchase all or any part of the
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Collateral at public or, if permitted by
law, private sale and, in lieu of actual
payment of such purchase price, may set
off the amount of such price against the
Liabilities. The proceeds realized from
the sale of any Collateral shall be
applied first to the reasonable
out-of-pocket costs, and expenses (as
determined by Lender) and attorneys' and
paralegal fees and expenses incurred by
Lender for collection and for
acquisition, completion, protection,
removal, storage, sale and delivery of
the Collateral; second to interest due
upon any of the Liabilities; and third to
the principal of the Liabilities. If any
deficiency shall arise, Borrower shall
remain liable to Lender therefor. If any
surplus shall arise, Lender shall remit
such surplus to Borrower.
6.3.4 The right to specifically enforce any of
Borrower's covenants or agreements herein.
6.4 NOTICE. Any notice required to be given by Lender of
a sale, lease, other disposition of the Collateral or
any other intended action by Lender, which is
deposited in the United States mail, postage prepaid
and duly addressed to Borrower, at the address set
forth in Section 8.10 of this Agreement, ten (10)
days prior to such proposed action, shall constitute
commercially reasonable and fair notice thereof to
Borrower.
7. CONDITION PRECEDENT TO INITIAL FUNDING AND ADDITIONAL ADVANCES
7.1 CONDITIONS TO ALL ADVANCES. In addition to those
conditions set forth in Section 7.2 regarding the
initial advances and funding of the Loans, and
notwithstanding other provisions in this Agreement
concerning the making and the funding of the Loans,
Lender's obligations under this Agreement, including
Lender's obligations (if any) to make or consider any
and all requests for advances under the Revolving
Loan shall constitute a representation to Lender that
each of the following conditions have been met or
satisfied as of the date of the request.
7.1.1 All of the warranties and representations of
Borrower contained herein shall be true and
correct;
7.1.2 No material adverse change in the business,
assets or financial condition of Borrower
has occurred since the date of this
Agreement;
7.1.3 No Default or Event of Default currently
exists and the granting of the request by
the Lender will not give rise to a Default
or an Event of Default (including, without
limitation, noncompliance with Section 5.1
hereof);
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7.1.4 No litigation is pending against Borrower
which, if adversely determined, would have a
material adverse effect on the financial
operations, business or assets of Borrower;
and
7.1.5 Borrower has provided Lender with all
certificates, financial statements and other
information and documentation which Lender
has requested pursuant to the terms of this
Agreement.
7.2 CONDITIONS TO INITIAL ADVANCES UNDER THE LOANS. In
addition to those conditions set forth in other
portions of this Agreement, Lender's obligation to
perform any of its obligations under this Agreement
or the Ancillary Agreements, including its obligation
to advance any funds to Borrower, is conditioned upon
the following:
7.2.1 FINANCIAL CONDITION. No material adverse
change in the business, property, assets,
operations or condition, financial or
otherwise, of Borrower shall have occurred
since December 31, 1999 as determined by
Lender.
7.2.2 FEES. Borrower shall have paid a closing fee
of $15,000 to Lender (which fee shall be
nonrefundable and deemed fully earned on the
date hereof), plus all recording fees,
reasonable attorneys' fees and all other
costs, fees and out-of-pocket expenses (as
reasonably determined by Lender) paid or
incurred by Lender in connection with the
negotiation, preparation, execution and
origination of the transactions contemplated
herein.
7.2.3 REAL PROPERTY APPRAISAL. Lender shall have
reviewed and been satisfied with the real
property appraisal prepared by a reputable
appraiser satisfactory to Lender on the
Borrower's real property secured by the
Mortgage.
7.2.4 ACCOUNT AND INVENTORY AUDIT. Lender shall
have reviewed and been satisfied with the
written report on Borrower's Accounts and
Inventory prepared by Lender's auditor.
7.2.5 ANCILLARY AGREEMENTS. Borrower and other
necessary parties shall have executed all
Ancillary Agreements, including the
Revolving Note, the Term Note, the Equipment
Term Note, the Security Agreement, the
Mortgage and all UCC financing statements.
7.2.6 FINANCIAL STATEMENTS. Lender shall have
reviewed and been satisfied with Borrower's
financial statements for the fiscal year
ended December 31, 1999.
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7.2.7 CLOSING CERTIFICATE. The chief executive
officer of Borrower shall have provided
Lender with a certificate stating, in form
acceptable to Lender, that:
7.2.7.1 As of the date of the transactions
contemplated by this Agreement, no
Default or Event of Default has
occurred;
7.2.7.2 No litigation, investigation, or
proceeding, except as specifically
disclosed in this Agreement, is
pending or threatened;
7.2.7.3 The representations and warranties
contained in this Agreement are
true and correct;
7.2.7.4 The Borrower is in compliance with
all of the terms and provisions of
this Agreement; and
7.2.7.5 Each of the conditions described in
this Section 7 have been complied
with and/or satisfied.
7.2.8 CORPORATE MATTERS. Borrower shall have
provided Lender with (a) a copy of its
Certificate of Incorporation certified by
the Delaware Secretary of State, (b) a copy
of Borrower's Bylaws, certified by the
Borrower's Secretary, (c) certified copies
of Certificates of Good Standing and
Certificates of Authority to Transact
Business in those countries, states and
provinces where the failure to be so
qualified would have a material adverse
effect on Borrower, (d) certified copies of
resolutions of the Borrower's Board of
Directors, and, where required,
shareholders, authorizing or ratifying the
execution, delivery and performance of this
Agreement and the Ancillary Agreements, and
(e) a Certificate of the Borrower's
Secretary certifying the name of the
Borrower's officer authorized to sign this
Agreement and the Ancillary Agreements
together with a sample of the true signature
of such officer, in each case, acceptable in
form and substance to Lender.
7.2.9 OPINION OF COUNSEL. Borrower's counsel shall
have provided Lender with an opinion letter
concerning the validity and enforceability
of all provisions of this Agreement and the
Ancillary Agreements which is acceptable in
form and in substance to Lender.
7.2.10 UCC FINANCING STATEMENTS/SEARCHES. Form
UCC-1 Financing Statements from the Borrower
covering the Collateral shall have been
filed in all jurisdictions that Lender deems
necessary. UCC lien, tax, pending suit and
judgment searches for Borrower (under its
corporate
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name and all trade names) dated a date
reasonably near to the date hereof in all
jurisdictions as deemed necessary by the
Lender.
7.2.11 INSURANCE CERTIFICATES. Certificates from
Borrower's insurance carriers evidencing
that all required insurance coverage is in
effect, each designating Lender as loss
payee and additional insured thereunder, as
applicable.
7.2.12 ADDITIONAL DOCUMENTS. Borrower shall have
provided Lender with such other certificates
and documents as Lender shall reasonably
require.
8. MISCELLANEOUS
8.1 MODIFICATION OF AGREEMENT; SALE OF INTEREST. This
Agreement and the Ancillary Agreements may not be
modified, altered or amended, except by an agreement
in writing signed by Borrower and Lender. Borrower
may not sell, assign or transfer this Agreement or
the Ancillary Agreements or any portion hereof or
thereof, including, Borrower's right, title,
interest, remedies, powers, and/or duties hereunder
or thereunder. Borrower hereby consents to Lender's
participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this
Agreement or the Ancillary Agreements or of any
portion hereof or thereof, including, Lender's right,
title, interest, remedies, powers, and/or duties
hereunder or thereunder.
8.2 ATTORNEYS' FEES AND EXPENSES: LENDER'S OUT-OF-POCKET
EXPENSES; AUDIT FEES. If, at any time or times,
whether prior or subsequent to the date hereof, and
regardless of the existence of a Default or an Event
of Default, Lender employs counsel for advice or
other representation or incurs legal and/or other
costs and expenses in connection with:
8.2.1 The preparation, negotiation and execution
of this Agreement, all Ancillary Agreements,
any amendment or modification of this
Agreement or the Ancillary Agreements; or
8.2.2 Any litigation, contest, dispute, suit,
restructuring, workout, proceeding or action
(whether instituted by Lender, Borrower or
any other Person) in any way relating to any
Collateral, this Agreement, the Ancillary
Agreements or Borrower's affairs; or
8.2.3 Any attempt to enforce any rights of Lender
or any Participant against Borrower or any
other Person which may be obligated to
Lender by virtue of this Agreement or the
Ancillary Agreements; or
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8.2.4 Any attempt to inspect, verify, protect,
collect, sell, liquidate or otherwise
dispose of any Collateral; or
8.2.5 Any audit of any Collateral (which, in the
absence of an Event of Default, shall not
occur more than once per fiscal year of
Borrower); then, in any of the foregoing
events, the reasonable fees arising from
such services and all reasonably incurred
expenses, costs and charges in any way or
respect arising in connection with or
relating to any of the events or actions
described in this Section 8.2 shall be
payable, on demand, by Borrower to Lender
and shall be additional Liabilities
hereunder. Without limiting the generality
of the foregoing, such expenses, costs,
charges and reasonable fees may include
legal fees, costs and expense; paralegals'
fees, costs and expenses; accountants' and
expert witness' fees, costs and expenses;
court costs, fees and expenses; photocopying
and duplicating expenses; court reporter
fees, costs and expenses; long distance
telephone charges; air express charges;
telegram charges; secretarial overtime
charges; and expenses for travel, lodging
and food paid or incurred in connection with
the performance of such legal services.
8.3 NO WAIVER BY LENDER. Lender's failure, at any time or
times hereafter, to require strict performance by
Borrower of any provision of this Agreement shall not
constitute a waiver, or affect or diminish any right
of Lender thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by
Lender of a Default or Event of Default by Borrower
under this Agreement or the Ancillary Agreements
shall not suspend, constitute a waiver of or affect
any other Default or Event of Default by Borrower
under this Agreement or the Ancillary Agreements,
whether the same is prior or subsequent thereto and
whether of the same or of a different type. None of
the undertakings, agreements, warranties and
covenants of Borrower contained in this Agreement or
the Ancillary Agreements and no Default or Event of
Default by the Borrower under this Agreement or the
Ancillary Agreements shall be deemed to have been
suspended or waived by Lender, unless such suspension
or waiver is by an instrument in writing signed by an
officer of Lender and directed to Borrower specifying
such suspension or waiver.
8.4 SEVERABILITY. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but
if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such
provisions shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the
remainder of such provision or the remaining
provisions of this Agreement.
8.5 PARTIES: ENTIRE AGREEMENT. This Agreement and the
Ancillary Agreements shall be binding upon and inure
to the benefit of the successors and assigns
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of Borrower and Lender. Borrower's successors and
assigns shall include, without limitation, a trustee,
receiver or debtor-in-possession of or for Borrower.
Nothing contained in this Section 8.5 shall be deemed
to modify Section 8.1 of this Agreement. This
Agreement (together with the Revolving Note, the Term
Note, the Equipment Term Note, the Security Agreement
and the Mortgage) is the complete statement of the
agreement by and between Borrower and the Lender and
supersedes all prior negotiations, understandings and
representations (written or oral) between them with
respect to the subject matter of this Agreement.
8.6 CONFLICT OF TERMS. The provisions of the Ancillary
Agreements are incorporated in this Agreement by this
reference thereto. Except as otherwise provided in
this Agreement and except as otherwise provided in
the Ancillary Agreements by specific reference to the
applicable provision of this Agreement, if any
provision contained in this Agreement is in conflict
with, or inconsistent with, any provision in the
Ancillary Agreements, the provision contained in this
Agreement shall govern and control.
8.7 WAIVERS BY BORROWER. Except as otherwise provided for
in this Agreement, Borrower waives (i) presentment,
demand and protest, notice of protest, notice of
presentment, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any
or all commercial paper, contract rights, documents,
instruments, chattel paper and guaranties at any time
held by Lender on which Borrower may in any way be
liable and hereby ratifies and confirms whatever
Lender may do in this regard; (ii) all rights to
notice and a hearing prior to Lender's taking
possession or control of or to Lender's replevy,
attachment or levy upon, any Collateral or any bond
or security which might be required by any court
prior to allowing Lender to exercise any of Lender's
remedies; and (iii) the benefit of all valuation,
appraisement, extension and exemption laws. Borrower
acknowledges that it has been advised by counsel of
its choice with respect to this Agreement and the
transactions evidenced by this Agreement.
8.8 GOVERNING LAW. This Agreement shall be governed,
enforced and interpreted, and the rights and
liabilities of the parties hereto determined, in
accordance with the internal laws (as opposed to
conflicts of law provision) of the State of Illinois.
8.9 FORUM: SERVICE OF PROCESS. BORROWER HEREBY CONSENTS
TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN COOK COUNTY, ILLINOIS AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
BORROWER, AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY MESSENGER OR REGISTERED MAIL
DIRECTED TO BORROWER AT THE ADDRESS STATED IN
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SECTION 8.10 OF THIS AGREEMENT AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER
OF DATE OF DELIVERY IF SENT BY MESSENGER OR THREE
(3) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO
BORROWER'S ADDRESS AS SET FORTH BELOW. BORROWER
HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY
HAVE BASED ON IMPROPER VENUE OR FORUM NON
CONVENIENS TO THE CONDUCT OF ANY PROCEEDING
INSTITUTED HEREUNDER OR RELATED IN ANY WAY TO THIS
AGREEMENT OR THE ANCILLARY AGREEMENTS AND CONSENT
TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING
CONTAINED IN THIS SECTION 8.9 SHALL AFFECT THE
RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT
OF LENDER TO BRING ANY ACTION OR PROCEEDING
AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF
ANY OTHER JURISDICTION.
8.10 NOTICE. Except as otherwise provided herein, any
notice required hereunder shall be in writing and
shall be deemed to have been validly served, given or
delivered (i) three (3) Business Days after deposit
in the United States mails, with proper postage
prepaid, certified or registered mail, (ii) upon
receipt when personally delivered or delivered by
reputable overnight courier or (iii) when sent by
confirmed facsimile transmission, in each case
addressed to the party to be notified as follows.
If to Lender, at:
LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603
Attention: Marc D. Horner
Telefax: (312) 904-4660
with a copy (which copy shall not constitute notice)
to:
Ross & Hardies
150 North Michigan Avenue, Suite 2500
Chicago, Illinois 60601
Attention: Scott Hodes, Esq.
Telefax: (312) 750-8600
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If to Borrower, at
Electric City Corp.
1280 Landmeier Road
Elk Grove Village, Illinois 60007
Attention: Jeffrey R. Mistarz, Chief Financial
Officer
Telefax: (847) 437-4969
with a copy (which copy shall not constitute notice)
to:
Katten Muchin Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
Attention: Kenneth W. Miller, Esq.
Telefax: (312) 902-1061
or to such other address as each party may designate for
itself by like notice.
8.11 DELEGATION OF DUTIES AND GRANT OF AUTHORITY. Lender
may perform any of its duties under this Agreement or
under the Ancillary Agreements by or through agents
or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such
duties. In such capacity, such agent or
attorney-in-fact shall have the right to undertake,
exercise and enforce, on behalf of Lender, all
duties, rights, demands and acts of discretion of
Lender provided for in, or in any way related to,
this Agreement or the Ancillary Agreements and to
receive all payments, notices and requests from
Borrower on behalf of and for the account of Lender
that are provided for in, or in any way related to,
this Agreement or the Ancillary Agreements; provided,
as used herein, the phrase "to Lender" shall be
deemed to mean a reference to such agent or attorney
in fact, as agent for Lender, as well as a reference
to Lender.
8.12 TRANSACTION EXPENSES. In addition to the payment of
the attorneys' fees referred to in Section 8.2 of
this Agreement, Borrower agrees to pay all of
Lender's expenses incurred in connection with the
preparation, negotiation, execution and
implementation of this Agreement and the Ancillary
Agreements, plus all audit fees and document search
fees. Lender shall deduct these expenses from
borrower's loan proceeds at the time of closing.
Payment of such expenses shall not be credited to any
of the Liabilities.
8.13 SECTION TITLES. The section titles contained in this
Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not
a part of the agreement between the parties hereto.
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8.14 RELEASE BY BORROWER. In connection with Borrower's
repayment in full of the Liabilities (other than
contingent indemnification obligations to the extent
no unsatisfied claim giving rise thereto has been
asserted) to Lender under this Agreement and the
Ancillary Agreements, Borrower shall deliver to
Lender a release of all claims Borrower may have
against Lender other than those resulting from the
willful misconduct or gross negligence of Lender, the
form, substance and content of which shall otherwise
be satisfactory to Lender.
8.15 TERMINATION. Upon payment in full of the Liabilities
(other than contingent indemnification obligations to
the extent no unsatisfied claim giving rise thereto
has been asserted), this Agreement shall terminate
and Lender shall deliver to Borrower, at Borrower's
expense, such termination statements and releases as
are necessary to terminate and release the liens and
security interests in favor of Lender pursuant to
this Agreement and the Ancillary Agreements.
8.16 PARTICIPATION. Lender shall be permitted to sell a
participation in the Total Facility hereunder on
terms satisfactory to such parties. Borrower shall
cooperate with any credit investigations and reviews
undertaken by such Participant.
8.17 INDEMNIFICATION. Borrower agrees to defend, protect,
indemnify and hold harmless the Lender and each and
all of its officers, directors, employees, attorneys
and agents (collectively, the "INDEMNIFIED PARTIES")
from and against any and all liabilities,
obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees
and disbursements of counsel for the Indemnified
Parties in connection with any investigative,
administrative or judicial proceeding, whether or not
the Indemnified Parties shall be designated by a
party thereto), which may be imposed on, incurred by,
or asserted against any Indemnified Party (whether
direct, indirect or consequential and whether based
on any federal or state laws or other statutory
regulations) in any manner relating to or arising out
of this Agreement or the Ancillary Agreements, or any
act, event or transaction related or attendant
thereto, the making and the management of the Loans
or the use or intended use of the proceeds of the
Loans hereunder, or the presence on or under any real
property of the Borrower of any hazardous material or
underground storage tank or any violation of any
Environmental Law with respect to any such real
property; provided, that Borrower shall not have any
obligation to any Indemnified Party hereunder with
respect to matters caused by or resulting from the
willful misconduct or gross negligence of such
Indemnified Party. To the extent that the undertaking
to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is
violative of any law or public
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policy, Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy
under applicable law, to the payment and
satisfaction of all matters incurred by the
Indemnified Parties. Any liability, obligation,
loss, damage, penalty, cost or expense incurred by
the Indemnified Parties shall be paid to the
Indemnified Parties on demand, together with
interest thereon at the Default Rate from the date
incurred by the Indemnified Parties until paid by
Borrower, be added to the Liabilities of the
Borrower, and be secured by the Collateral. The
provisions of and undertakings and
indemnifications set out in this Section shall
survive the satisfaction and payment of the
Liabilities of Borrower and the termination of
this Agreement for a period of one (1) year from
such termination unless a longer period is
provided for under applicable law, and then for
such longer period as provided by such law.
8.18 MARSHALING: PAYMENTS SET ASIDE. The Lender shall be
under no obligation to marshal any assets in favor of
Borrower or any other Person or against or in payment
of any or all of the Liabilities of Borrower. To the
extent that the Borrower makes a payment or payments
to the Lender or the Lender enforces its liens in the
Collateral or exercises its rights of setoff, and
such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent
or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of
such recovery, the obligation or part thereof
originally intended to be satisfied shall be revived
and continued in full force and effect as if such
payment had not been made or such enforcement or
setoff had not occurred.
8.19 COUNTERPARTS. This Agreement and any amendment or
supplement hereto or any waiver granted in connection
herewith may be executed in any number of
counterparts and by the different parties on separate
counterparts and each such counterpart shall be
deemed to be an original, but all such counterparts
shall together constitute but one and the same
Agreement.
8.20 WAIVER OF JURY TRIAL. BORROWER AND THE LENDER HEREBY
IRREVOCABLY AND KNOWINGLY WAIVE (TO THE FULLEST
EXTENT PERMITTED BY LAW) ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING (INCLUDING, WITHOUT
LIMITATION, ANY COUNTERCLAIM) ARISING OUT OF THIS
AGREEMENT, THE ANCILLARY AGREEMENTS OR ANY OTHER
AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO,
INCLUDING, WITHOUT LIMITATION, ANY ACTION OR
PROCEEDING (A) TO ENFORCE OR DEFEND ANY RIGHTS UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN
-47-
<PAGE>
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR
(B) ARISING FROM ANY DISPUTE OR CONTROVERSY IN
CONNECTION WITH OR RELATED TO THIS AGREEMENT AND
THE ANCILLARY AGREEMENTS. THE LENDER AND THE
BORROWER AGREE THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT A JURY.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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<PAGE>
IN WITNESS WHEREOF, this Loan Agreement has been duly executed as of
the day and year specified at the beginning hereof.
ELECTRIC CITY CORP.
By: /s/ Jeffrey Mistarz
-------------------------------
Its: Chief Financial Officer
-------------------------------
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ Marc Horner
-------------------------------
Its: Assistant Vice President
-------------------------------
<PAGE>
EXHIBIT A
REVOLVING CREDIT NOTE
[TO BE ATTACHED]
<PAGE>
EXHIBIT B
TERM (MORTGAGE) NOTE
[TO BE ATTACHED]
<PAGE>
EXHIBIT C
EQUIPMENT TERM NOTE
[TO BE ATTACHED]
<PAGE>
EXHIBIT D
BORROWING BASE CERTIFICATE
[TO BE ATTACHED]
<PAGE>
EXHIBIT E
SECURITY AGREEMENT
[TO BE ATTACHED]
<PAGE>
EXHIBIT F
MORTGAGE
[TO BE ATTACHED]
<PAGE>
EXHIBIT G
EBITDA PROJECTIONS
[TO BE ATTACHED]
