UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of
Report (Date of earliest event reported): June 25,
2020
LAKELAND INDUSTRIES, INC.
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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000-15335
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13-3115216
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(State
of Incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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202 Pride Lane SW, Decatur, AL 35603
(Address
of Principal Executive Offices, including Zip Code)
(256) 350-3873
(Registrant’s
telephone number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
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LAKE
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The NASDAQ Stock Market LLC
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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐
Written communication pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
Emerging growth
company ☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Item
1.01 Entry into a Material Definitive
Agreement.
On
June 25, 2020, Lakeland
Industries, Inc. (the “Company”) entered into a Loan
Agreement (the “Loan Agreement”) with Bank of America,
N.A. (the “Lender”). The Loan Agreement provides the
Company with a $12.5 million senior secured revolving credit
facility, which includes a $5 million letter of credit
sub-facility and an option to convert up to $5 million of the
revolving credit facility into a term loan facility. The senior
secured revolving credit facility includes an accordion feature
under which the Company may request from time to time an increase
in the revolving commitment of up to $5 million (for a total
commitment of up to $17.5 million).
Borrowing pursuant
to the revolving credit facility is subject to a borrowing base
amount calculated as (a) 80% of the balance due on acceptable
accounts receivable, as defined, plus (b) 50% of the value of
acceptable inventory, as defined, minus (c) an amount of
certain reserves as the Lender may establish for the amount of
estimated exposure, as reasonably determined by the Lender from
time to time, under certain interest rate swap contracts. The
borrowing base limitation only applies during periods when the
Company’s quarterly funded debt to EBITDA ratio, as defined,
exceeds 2.00 to 1.00.
The
revolving credit facility matures on June 25, 2025, subject to earlier termination
upon the occurrence of certain events of default as set forth in
the Loan Agreement. The Loan Agreement provides that the proceeds
of any amounts drawn under the revolving credit facility are to be
used only for business purposes.
Borrowings under
the revolving credit facility bear interest at a rate per annum
equal to the sum of the LIBOR Daily Floating Rate
(“LIBOR”), plus 125 basis points. LIBOR is subject to a
floor of 100 basis points. All outstanding principal and unpaid
accrued interest under the revolving credit facility is due and
payable on the maturity date. On a one-time basis, and subject to
there not existing an event of default, the Company may elect
convert up to $5 million of the then outstanding principal of
the revolving credit facility to a term loan facility with an
assumed amortization of 15 years and the same interest rate and
maturity date as the revolving credit facility. The Loan Agreement
provides for an annual unused line of credit commitment fee,
payable quarterly, of 0.25%, based on the difference between the
total credit line commitment and the average daily amount of credit
outstanding under the facility during the preceding
quarter.
The
Company made certain representations and warranties to the Lender
in the Loan Agreement that are customary for credit arrangements of
this type. The Company also agreed to maintain, as of the end of
each fiscal quarter, a minimum “basic fixed charge coverage
ratio” (as defined in the Loan Agreement) of at least 1.15 to
1.00 and a “funded debt to EBITDA ratio” (as defined in
the Loan Agreement) not to exceed 3.00 to 1.00, in each case for
the trailing 12-month period ending with the applicable quarterly
reporting period. The Company also agreed to certain negative
covenants that are customary for credit arrangements of this type,
including restrictions on the Company’s ability to enter into
mergers, acquisitions or other business combination transactions,
conduct its business, grant liens, make certain investments, make
substantial change in the present executive or management personnel
and incur additional indebtedness, which negative covenants are
subject to certain exceptions.
The
Loan Agreement contains customary events of default that include,
among other things (subject to any applicable cure periods and
materiality qualifier), non-payment of principal, interest or fees,
defaults under related agreements with the Lender, cross-defaults
under agreements for other indebtedness, violation of covenants,
inaccuracy of representations and warranties, bankruptcy and
insolvency events, material judgements and material adverse change.
Upon the occurrence of an event of default, the Lender may
terminate all loan commitments, declare all outstanding
indebtedness owing under the Loan Agreement and related documents
to be immediately due and payable, and may exercise its other
rights and remedies provided for under the Loan
Agreement.
In connection with the Loan Agreement, the Company
entered into with the Lender (i) a security agreement dated
June 25, 2020 (the “Security Agreement”), pursuant to
which the Company granted to the Lender a first priority perfected
security interest in substantially all of the personal property and
the intangibles of the Company, and (ii) a pledge agreement,
dated June 25, 2020 (the “Pledge Agreement”), pursuant
to which the Company granted to the Lender a first priority
perfected security interest in the stock of its subsidiaries
(limited to 65% of those subsidiaries that are considered
“controlled foreign subsidiaries” as set forth in the
Internal Revenue Code and regulations). The
Company’s obligations to the Lender under the Loan Agreement
are also secured by a negative pledge evidenced by a
Non-encumbrance Agreement (the “Non-encumbrance
Agreement”) covering the real property owned by the Company
in Decatur, Alabama.
The
foregoing descriptions of the Loan Agreement, the Security
Agreement, the Pledge Agreement and the Non-encumbrance Agreement
do not purport to be complete and are qualified in their entirety
by reference to the full text of the Loan Agreement, the Security
Agreement, the Pledge Agreement and the Non-encumbrance Agreement,
copies of which are attached to this Current Report on Form 8-K as
Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, and are
incorporated herein by reference.
Copies of the
Loan Agreement, the Security
Agreement, the Pledge Agreement and the Non-encumbrance
Agreement have been included as
exhibits to this Current Report on Form 8-K to provide investors
with information regarding their respective terms. They are not
intended to provide any other factual information about the Company
or any of its subsidiaries or affiliates. The representations,
warranties and covenants contained in the Loan Agreement, the Security Agreement, the Pledge
Agreement and
the Non-encumbrance Agreement were made only for
purposes of such agreements and as of the specific date of such
agreements; were made solely for the benefit of the parties to such
agreements; may be subject to limitations agreed upon by the
contracting parties, including being qualified by information that
may modify, qualify or create exceptions to the representations and
warranties set forth in such agreements; may not have been intended
to be statements of fact, but rather, as a method of allocating
contractual risk and governing the contractual rights and
relationships between the parties to such agreements; and may be
subject to standards of materiality applicable to contracting
parties that differ from those applicable to investors. Investors
should not rely on the representations, warranties and covenants or
any descriptions thereof as characterizations of the actual state
of facts or condition of the Company or any of its subsidiaries or
affiliates. Moreover, information concerning the subject matter of
the representations, warranties and covenants may change after the
date of such agreements, which subsequent information may or may
not be fully reflected the Company’s public
disclosures.
Item
1.02 Termination of a Material Definitive
Agreement.
On June
25, 2020, that certain loan agreement, dated May 10, 2017 (the
“Prior Loan Agreement”), by and between the Company, as
borrower, and Truist Bank (as the successor to SunTrust Bank), as
lender, and the related agreements between the Company and Truist
Bank, terminated. No indebtedness was outstanding under the Prior
Loan Agreement at the time of its termination.
Item
2.03 Creation of a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The
information set forth under Item 1.01 above is hereby incorporated
by reference into this Item 2.03. No amounts have been drawn down
under the revolving credit facility of the Loan Agreement as of the
date hereof.
Item
9.01 Financial Statements and
Exhibits.
(d)
Exhibits
The
following exhibits are filed herewith:
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Exhibit Number
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Description
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Loan
Agreement, dated as of June 25, 2020, by and between Lakeland
Industries, Inc. and Bank of America, N.A.
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Security
Agreement, dated as of June 25, 2020, by and between Lakeland
Industries, Inc. and Bank of America, N.A.
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Pledge
Agreement, dated as of June 25, 2020, by and between Lakeland
Industries, Inc. and Bank of America, N.A.
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Non-encumbrance
Agreement, dated as of June 25, 2020, by Lakeland Industries, Inc.
for the benefit of Bank of America, N.A.
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Press
Release dated July 1, 2020.
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SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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LAKELAND
INDUSTRIES, INC.
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Date: July 1,
2020
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By:
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/s/ Charles D.
Roberson
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Charles D.
Roberson
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Chief Executive
Officer
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Exhibit 10.1
LOAN
AGREEMENT
This
Agreement dated as of June 25, 2020, is between Bank of America,
N.A. (the "Bank") and Lakeland Industries, Inc., a Delaware
corporation (the "Borrower").
In
addition to the terms which are defined elsewhere in this
Agreement, the following terms have the meanings indicated for the
purposes of this Agreement:
1.1
"Acceptable Inventory" means
inventory which satisfies the following requirements:
(a)
The inventory is
owned by the Borrower free of any title defects or any liens or
interests of others except the security interest in favor of the
Bank. This does not prohibit any statutory liens which may exist in
favor of the growers of agricultural products which are purchased
by the Borrower.
(b)
The inventory is
located at locations which the Borrower has disclosed to the Bank
and which are acceptable to the Bank. If the inventory is covered
by a negotiable document of title (such as a warehouse receipt)
that document must be delivered to the Bank. Inventory which is in
transit is not acceptable.
(c)
The inventory is
held for sale or use in the ordinary course of the Borrower's
business and is of good and merchantable quality. Display items,
work-in-process, samples, and packing and shipping materials are
not acceptable. Inventory which is obsolete, unsalable, damaged,
defective, used, discontinued or slow-moving, or which has been
returned by the buyer, is not acceptable.
(d)
The inventory is
covered by insurance as required in the "Covenants" section of this
Agreement.
(e)
The inventory has
not been manufactured to the specifications of a particular account
debtor.
(f)
The inventory is
not subject to any licensing agreements which would prohibit or
restrict in any way the ability of the Bank to sell the inventory
to third parties.
(g)
The inventory has
been produced in compliance with the requirements of the U.S. Fair
Labor Standards Act (29 U.S.C. §§201 et
seq.).
(h)
The inventory is
not placed on consignment.
For the
sake of clarity, raw materials that satisfy the requirements set
forth above are included in the definition of “Acceptable
Inventory”.
1.2
"Acceptable Receivable" means an
account receivable which satisfies the following
requirements:
(a)
The account has
resulted from the sale of goods by the Borrower in the ordinary
course of the Borrower's business and without any further
obligation on the part of the Borrower to service, repair, or
maintain any such goods sold other than pursuant to any applicable
warranty.
(b)
There are no
conditions which must be satisfied before the Borrower is entitled
to receive payment of the account. Accounts arising from COD sales,
consignments or guaranteed sales are not acceptable.
(c)
The debtor upon the
account does not claim any defense to payment of the account,
whether well founded or otherwise.
(d)
The account is not
the obligation of an account debtor who has asserted or may assert
any counterclaims or offsets against the Borrower (including
offsets for any "contra accounts" owed by the Borrower to the
account debtor for goods purchased by the Borrower or for services
performed for the Borrower).
(e)
The account
represents a genuine obligation of the debtor for goods sold to and
accepted by the debtor. To the extent any credit balances exist in
favor of the debtor, such credit balances shall be deducted from
the account balance.
(f)
The account balance
does not include the amount of any finance or service charges
payable by the account debtor. To the extent any finance charges or
service charges are included, such amounts shall be deducted from
the account balance.
(g)
The Borrower has
sent an invoice to the debtor in the amount of the
account.
(h)
The Borrower is not
prohibited by the laws of the state where the account debtor is
located from bringing an action in the courts of that state to
enforce the debtor's obligation to pay the account. The Borrower
has taken all appropriate actions to ensure access to the courts of
the state where the account debtor is located, including, where
necessary, the filing of a Notice of Business Activities Report or
other similar filing with the applicable state agency or the
qualification by the Borrower as a foreign corporation authorized
to transact business in such state.
(i)
The account is
owned by the Borrower free of any title defects or any liens or
interests of others except the security interest in favor of the
Bank.
(j)
The debtor upon the
account is not any of the following:
(i)
An employee,
affiliate, parent or subsidiary of the Borrower, or an entity which
has common officers or directors with the Borrower.
(ii)
The U.S. government
or any agency or department of the U.S. government unless the Bank
agrees in writing to accept the obligation, the Borrower complies
with the procedures in the Federal Assignment of Claims Act of 1940
(41 U.S.C. §6305) with respect to the obligation, and the
underlying contract expressly provides that neither the U.S.
government nor any agency or department thereof shall have the
right of set-off against the Borrower.
(iii)
Intentionally
Deleted.
(iv)
Any person or
entity located in a foreign country unless (A) the account is
supported by an irrevocable letter of credit issued by a bank
acceptable to the Bank, and, if requested by the Bank, the original
of such letter of credit and/or any usance drafts drawn under such
letter of credit and accepted by the issuing or confirming bank
have been delivered to the Bank, or (B) the account is covered by
foreign credit insurance acceptable to the Bank and the account is
otherwise an Acceptable Receivable.
(k)
The account is not
in default. An account will be considered in default if any of the
following occur:
(i)
the account is not
paid within 90 days from its invoice date;
(ii)
the debtor
obligated upon the account suspends business, makes a general
assignment for the benefit of creditors, or fails to pay its debts
generally as they come due; or
(iii)
any petition is
filed by or against the debtor obligated upon the account under any
bankruptcy law or any other law or laws for the relief of
debtors.
(l)
The account is not
the obligation of a debtor who is in default (as defined above) on
50% or more of the accounts upon which such debtor is
obligated.
(m)
The account does
not arise from the sale of goods which remain in the Borrower's
possession or under the Borrower's control.
(n)
The account is not
evidenced by a promissory note or chattel paper, nor is the account
debtor obligated to the Borrower under any other obligation which
is evidenced by a promissory note.
In
addition to the foregoing limitations, the dollar amount of
accounts included as Acceptable Receivables which are the
obligations of a single debtor shall not exceed the concentration
limit established for that debtor. To the extent the total of such
accounts exceeds a debtor's concentration limit, the amount of any
such excess shall be excluded. The concentration limit for each
debtor shall be equal to 25% of the total amount of the Borrower's
total accounts receivable at that time.
1.3
“Beneficial Ownership
Certification” means a certification regarding
beneficial ownership required by the Beneficial Ownership
Regulation.
1.4
“Beneficial Ownership
Regulation” means 31 C.F.R. §
1010.230.
1.5
"Borrowing Base" means the sum
of:
(a)
80% of the balance
due on Acceptable Receivables; and
(b)
50% of the value of
Acceptable Inventory.
In
determining the value of Acceptable Inventory to be included in the
Borrowing Base, the Bank will use the lowest of (i) the Borrower's
cost, (ii) the Borrower's estimated market value, or (iii) the
Bank's independent determination of the resale value of such
inventory in such quantities and on such terms as the Bank deems
appropriate, provided that such valuation under this clause (iii)
shall in no event be less than 75% of the Borrower’s
cost.
After calculating the Borrowing Base as provided
above, the Bank may deduct such reserves as the Bank may establish
from time to time in good faith for the amount of estimated maximum
exposure, as reasonably determined by the Bank from time to time,
under any interest rate contracts which the Borrower enters into
with the Bank (including interest rate swaps, caps, floors, options
thereon, combinations thereof, or similar contracts).
1.6
"Borrowing Base Certificate"
means a report in the format shown as Exhibit A-1, calculated by
the Borrower and setting forth the Borrowing Base on which the
requested extension of credit is to be based.
1.8
"Credit Limit" means the amount
of Twelve Million Five Hundred Thousand Dollars
($12,500,000).
1.13
“Guarantor” means any
person or entity, if any, providing a guaranty with respect to the
obligations hereunder.
1.14
“Land” means the land
described in Non-encumbrance Agreement.
1.15
“Non-encumbrance
Agreement” means each non-encumbrance agreement of
even date herewith given by the Borrower or other applicable
Obligor to the Bank, as the same may from time to time be extended,
amended, restated, supplemented or otherwise modified.
1.16
“Obligor” means any
Borrower, Guarantor and/or Pledgor, or if the Borrower is comprised
of the trustees of a trust, any trustor.
1.19
“Pledgor” means any
person, if any, providing a pledge of collateral with respect to
the obligations hereunder.
1.20
“Related Party” means each
of the Borrower and its subsidiaries.
2.
LINE OF CREDIT
AMOUNT AND TERMS
2.1
Line of Credit
Amount.
(a)
During the
availability period described below, the Bank will provide a line
of credit to the Borrower (the “Line of Credit”). The
amount of the Line of Credit (the "Commitment") is equal to the
lesser of (i) the Credit Limit, or (ii) at any time the
Borrower’s Funded Debt to EBITDA Ratio exceeds
2.00:1.00, the
Borrowing Base.
(b)
This is a revolving
line of credit. During the availability period, the Borrower may
repay principal amounts and reborrow them.
(c)
The Borrower agrees
not to permit the principal balance outstanding to exceed
Commitment. If the Borrower exceeds this limit, the Borrower will
immediately pay the excess to the Bank upon the Bank's
demand.
The
Line of Credit is available between the date of this Agreement and
June 12, 2025, or such earlier date as the availability may
terminate as provided in this Agreement (the "Expiration
Date").
The availability period for this Line of Credit will be considered
renewed if and only if the Bank has sent to the Borrower a written
notice of renewal for the Line of Credit (the “Renewal
Notice”). If this Line of Credit is renewed, it will continue
to be subject to all the terms and conditions set forth in this
Agreement except as modified by the Renewal Notice. If this Line of
Credit is renewed, the term “Expiration Date” shall
mean the date set forth in the Renewal Notice as the Expiration
Date and all outstanding principal plus all accrued interest shall
be paid on the Expiration Date. The same process for renewal will
apply to any subsequent renewal of this Line of
Credit. A renewal fee may be charged at the Bank’s
option. The amount of the renewal fee will be specified in
the Renewal Notice.
2.3
Conditions to Each Extension of
Credit.
The
Borrower will deliver the following documents, dated as of the most
recent fiscal quarter-end in accordance with the Financial
Information covenant of this Agreement, before each extension of
credit under this facility, but if and only if (i) the
Borrower’s Funded Debt to EBITDA Ratio exceeds 2.00:1.00, and
(ii) a borrowing base certificate has not been provided to the Bank
within 45 days prior to the date of such request for an extension
of credit:
(a)
a borrowing base
certificate setting forth the amount of Acceptable Receivables and
Acceptable Inventory,
(b)
a detailed aging of
the Borrower’s Acceptable Receivables by invoice or a summary
aging by account debtor, as specified by the Bank,
(c)
a detailed accounts
payable aging of the Borrower by invoice or a summary aging by
account creditor, as specified by the Bank, and
(d)
an inventory
listing, which must include a description of the inventory, its
location and cost, and such other information as the Bank may
require.
2.4 Repayment Terms.
(a)
The Borrower will
pay interest on July 1, 2020, and then on the same day of each
month thereafter until payment in full of all principal outstanding
under this facility. The amount of each interest payment shall be
the amount of accrued interest on the Line of Credit as of the
interest payment date or such earlier accrual date as indicated on
the billing statement for such interest payment.
(b)
The Borrower will
repay in full all principal, interest or other charges outstanding
under this Agreement no later than the Expiration
Date.
(c)
The Borrower may
prepay the Line of Credit in full or in part at any time. The
prepayment will be applied to the most remote payment of principal
due under this Agreement.
(a)
The interest rate
is a rate per year equal to the sum of (i) the greater of the LIBOR
Daily Floating Rate or the Index Floor, plus (ii) one and a quarter
percentage point(s). For the purposes of this paragraph, "Index
Floor" means one percent.
(b)
The LIBOR Daily
Floating Rate is a fluctuating rate of interest which can change on
each banking day. The rate will be adjusted on each banking day to
equal the London Interbank Offered Rate (or a comparable or
successor rate which is approved by the Bank) for U.S. Dollar
deposits for delivery on the date in question for a one month term
beginning on that date. The Bank will use the London Interbank
Offered Rate as published by Bloomberg (or other commercially
available source providing quotations of such rate as selected by
the Bank from time to time) as determined at approximately 11:00
a.m. London time two (2) London Banking Days prior to the date in
question, as adjusted from time to time in the Bank’s sole
discretion for reserve requirements, deposit insurance assessment
rates and other regulatory costs. If such rate is not available at
such time for any reason, then the rate will be determined by such
alternate method as reasonably selected by the Bank. A "London
Banking Day" is a day on which banks in London are open for
business and dealing in offshore dollars. If at any time the LIBOR
Daily Floating Rate is less than zero, such rate shall be deemed to
be zero for the purposes of this Agreement.
(a)
As a subfacility
under the Line of Credit, during the availability period, the Bank
agrees from time to time to issue or cause an affiliate to issue
commercial and standby letters of credit for the account of the
Borrower (each a "Letter of Credit," and collectively "Letters of
Credit"); provided however, that the aggregate drawn and undrawn
amount of all outstanding Letters of Credit shall not at any time
exceed Five Million Dollars ($5,000,000). The form and substance of
each Letter of Credit shall be subject to approval by the Bank, in
its sole discretion. Each Letter of Credit shall be issued for a
term, as designated by the Borrower; provided however, that no
Letter of Credit shall have an expiration date subsequent to the
Expiration Date unless approved by the Bank. The undrawn amount
of all Letters of Credit shall be reserved under the Line of Credit
and such amount shall not be available for borrowings. Each Letter
of Credit shall be subject to the additional terms and conditions
of the Letter of Credit agreements, applications and any related
documents required by the Bank in connection with the issuance of
Letters of Credit. At the option of the Bank, any drawing paid
under a Letter of Credit may be deemed an advance under the Line of
Credit and shall be repaid by the Borrower in accordance with the
terms and conditions of this Agreement applicable to such advances;
provided however, that if advances under the Line of Credit are not
available, for any reason, at the time any drawing is paid, then
the Borrower shall immediately pay to the Bank the full amount
drawn, together with interest from the date such drawing is paid to
the date such amount is fully repaid by the Borrower, at the rate
of interest applicable to advances under the Line of Credit. In
such event the Borrower agrees that the Bank, in its sole
discretion, may debit any account maintained by the Borrower with
the Bank for the amount of any such drawing. The Borrower agrees to
deposit in a cash collateral account with the Bank an amount equal
to the aggregate outstanding undrawn face amount of all letters of
credit which remain outstanding on the Expiration Date. The
Borrower grants a security interest in such cash collateral account
to the Bank. Amounts held in such cash collateral account shall be
applied by the Bank to the payment of drafts drawn under such
letters of credit and to the obligations and liabilities of the
Borrower to the Bank, in such order of application as the Bank may
in its sole discretion elect.
(b)
The Borrower shall
pay the Bank a non-refundable fee equal to 2.0% per annum of the
outstanding undrawn amount of each standby letter of credit,
payable in advance,
calculated on the basis of the face amount outstanding on the day
the fee is calculated. If there is a default under
this Agreement, at the Bank's option, the amount of the fee shall
be increased to 4.0%
per annum, effective starting on the day the Bank provides notice
of the increase to the
Borrower.
2.7
Increase in Line of
Credit.
(a)
Provided there
exists no Default, upon notice to the Bank, the Borrower may on a
one-time basis, request an increase in the Line of Credit by an
amount not exceeding $5,000,000 (an “Incremental
Facility”); provided that any such request for an Incremental
Facility shall be in a minimum amount of $1,000,000. Any such
request for an Incremental Facility will be subject to the
Bank’s approval, which may be withheld at the Bank’s
sole discretion.
(b)
If the Line of
Credit is increased in accordance with this Section 2.7, the Bank and the
Borrower shall determine the effective date of such increase (the
“Line of Credit
Increase Effective Date”). As a condition precedent to
such increase, the Borrower shall deliver to the Bank a certificate
of the Borrower and each Related Party date as of the Line of
Credit Increase Effective Date (i) certifying and attaching
the resolutions adopted by such party approving or consenting to
such increase, and (ii) in the case of the Borrower,
certifying that, before and after giving effect to such increase,
(A) the representations and warranties contained in this
Agreement and the other Loan Documents are true and correct, on and
as of the Line of Credit Increase Effective Date, and (B) both
before and after giving effect to the Incremental Facility, no
Default exists. The Borrower shall deliver or cause to be delivered
any other customary documents (including, without limitation, legal
opinions) as reasonably requested by the Bank in connection with
any Incremental Facility.
(c)
Except as otherwise
specifically set forth herein, all of the other terms and
conditions applicable to such Incremental Facility shall be
identical to the terms and conditions applicable to the Line of
Credit.
(a)
Provided there
exists no Default, upon notice to the Bank, on a one-time basis,
Borrower may elect to convert up to $5,000,000 of the then
outstanding principal of the Line of Credit to a term facility (the
“Term Facility”) with an assumed amortization of
fifteen (15) years and the same interest rate as the Line of Credit
(the “Term Option”).
(b)
Upon exercise of
the Term Option, the Bank will determine the amount of the monthly
payments that will be necessary to repay the unpaid principal of
the Term Facility over an assumed amortization period of fifteen
(15) years. The Borrower shall make monthly payments of the
principal and accrued interest due on the Term Facility beginning
on the first monthly payment date following the effective date of
the Term Option and continuing on each monthly payment date
thereafter until the last day of the Expiration Date, on which date
all remaining unpaid principal and accrued interest shall be due
and payable. For the avoidance of doubt, the Term Option will
mature on the same date as the Line of Credit, and all unpaid
principal and accrued interest shall be due and payable at such
time.
(c)
Except as otherwise
specifically set forth herein, all of the other terms and
conditions applicable to such Term Facility shall be identical to
the terms and conditions applicable to the Line of
Credit.
All
personal property and intangibles now owned or owned in the future
by Borrower or Guarantor will secure the Borrower’s
obligations to the Bank under this Agreement or, if the collateral
is owned by a Guarantor, will secure the guaranty, if so indicated
in the security agreement. The collateral is further defined in
security agreement(s) executed by the owners of the collateral.
Without limiting the generality of the foregoing, the Bank’s
security interest will include, without limitation, the
following:
(a)
Equipment owned by
Borrower or any domestic Guarantor.
(b)
Inventory owned by
Borrower or any domestic Guarantor.
(c)
Receivables owned
by Borrower or any domestic Guarantor.
(d)
Securities or other
investment property owned by Borrower or Guarantors as described in
the Pledge Agreement required by the Bank.
Regulation U of the
Board of Governors of the Federal Reserve System places certain
restrictions on loans secured by margin stock (as defined in the
Regulation). The Bank and the Borrower shall comply with Regulation
U. If any of the collateral is margin stock, the Borrower shall
provide to the Bank a Form U-1 Purpose Statement.
(e)
Time deposits with
the Bank and owned by Borrower or any domestic
Guarantor.
(f)
Accounts owned by
Borrower or any domestic Guarantor.
(a)
The Borrower's
obligations to the Bank under this Agreement will be secured by a
negative pledge evidenced by the Non-encumbrance Agreement covering
the real property described therein.
4.
LOAN ADMINISTRATION
AND FEES
The
Borrower will pay to the Bank the fees set forth on Schedule
A.
4.2
Collection of Payments; Payments
Generally.
(a)
Regularly scheduled
interest and principal payments will be made by debit to a deposit
account, if direct debit is provided for in this Agreement or is
otherwise authorized by the Borrower. For regularly scheduled
interest and principal payments not made by direct debit and for
all other payments, such payments will be made by such other method
as may be permitted by the Bank.
(b)
Each disbursement
by the Bank and each payment by the Borrower will be evidenced by
records kept by the Bank which will, absent manifest error, be
conclusively presumed to be correct and accurate and constitute an
account stated between the Borrower and the Bank.
(c)
All payments to be
made by the Borrower shall be made free and clear of and without
condition or deduction for any counterclaim, defense, recoupment or
setoff.
4.3
Borrower’s
Instructions.
Subject
to the terms, conditions and procedures stated elsewhere in this
Agreement, the Bank may honor instructions for advances or
repayments and any other instructions under this Agreement given by
the Borrower (if an individual), or by any one of the individuals
the Bank reasonably believes is authorized to sign loan agreements
on behalf of the Borrower, or any other individual(s) designated by
any one of such authorized signers (each an “Authorized
Individual”). The Bank may honor any such instructions made
by any one of the Authorized Individuals, whether such instructions
are given in writing or by telephone, telefax or Internet and
intranet websites designated by the Bank with respect to separate
products or services offered by the Bank.
(a)
The Borrower agrees
that on the due date of any amount due under this Agreement, the
Bank will debit the amount due from deposit account number
4451408189 101 owned by Borrower, or such other of the
Borrower’s accounts with the Bank as designated in writing by
the Borrower (the "Designated Account"). Should there be
insufficient funds in the Designated Account to pay all such sums
when due, the full amount of such deficiency shall be immediately
due and payable by the Borrower.
Unless
otherwise provided in this Agreement, a banking day is a day other
than a Saturday, Sunday or other day on which commercial banks are
authorized to close, or are in fact closed, in the state where the
Bank's lending office is located, and, if such day relates to
amounts bearing interest at an offshore rate (if any), means any
such day on which dealings in dollar deposits are conducted among
banks in the offshore dollar interbank market. All payments and
disbursements which would be due or which are received on a day
which is not a banking day will be due or applied, as applicable,
on the next banking day.
The
Borrower will pay the Bank, on demand, for the Bank's costs or
losses arising from any Change in Law which are allocated to this
Agreement or any credit outstanding under this Agreement. The
allocation will be made as determined by the Bank, using any
reasonable method. The costs include, without limitation, the
following:
(a)
any reserve or
deposit requirements (excluding any reserve requirement already
reflected in the calculation of the interest rate in this
Agreement); and
(b)
any capital
requirements relating to the Bank's assets and commitments for
credit.
“Change
in Law” means the occurrence, after the date of this
Agreement, of the adoption or taking effect of any new or changed
law, rule, regulation or treaty, or the issuance of any request,
rule, guideline or directive (whether or not having the force of
law) by any governmental authority; provided that (x) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, guidelines or directives issued in connection with
that Act, and (y) all requests, rules, guidelines or directives
promulgated by the Bank for International Settlements, the Basel
Committee on Banking Supervision (or any successor authority) or
the United States regulatory authorities, in each case pursuant to
Basel III, shall in each case be deemed to be a “Change in
Law,” regardless of the date enacted, adopted or
issued.
4.7
Interest
Calculation.
Except
as otherwise stated in this Agreement, all interest and fees, if
any, will be computed on the basis of a 360-day year and the actual
number of days elapsed. This results in more interest or a higher
fee than if a 365-day year is used. Installments of principal which
are not paid when due under this Agreement shall continue to bear
interest until paid. To the extent that any calculation of interest
or any fee required to be paid under this Agreement shall be less
than zero, such rate shall be deemed zero for purposes of this
Agreement.
4.8
Interest Apportionment and
Allocation.
The
amount of each year's interest on the loan will, as it accrues, be
apportioned among calendar months on the basis of a year consisting
of 12 thirty-day months. Each payment will be applied first to
accrued but unpaid interest (for the applicable accrual period)
then to principal. The early or late date of making a monthly
payment will be disregarded for purposes of allocating the payment
between principal and interest. For this purpose, the payment will
be treated as though made on the due date.
Upon
the occurrence of any default or after maturity or after judgment
has been rendered on any obligation under this Agreement, all
amounts outstanding under this Agreement, including any unpaid
interest, fees, or costs, will at the option of the Bank bear
interest at a rate which is 4.0 percentage point(s) higher than the
rate of interest otherwise provided under this Agreement. This may
result in compounding of interest. This will not constitute a
waiver of any default.
If any
payments to the Bank under this Agreement are made from outside the
United States, the Borrower will not deduct any foreign taxes from
any payments it makes to the Bank. If any such taxes are imposed on
any payments made by the Borrower (including payments under this
paragraph), the Borrower will pay the taxes and will also pay to
the Bank, at the time interest is paid, any additional amount which
the Bank specifies as necessary to preserve the after-tax yield the
Bank would have received if such taxes had not been imposed. The
Borrower will confirm that it has paid the taxes by giving the Bank
official tax receipts (or notarized copies) within thirty (30) days
after the due date.
At the
Bank's sole option in each instance, the Bank may do one of the
following:
(a)
The Bank may make
advances under this Agreement to prevent or cover an overdraft on
any account of the Borrower with the Bank. Each such advance will
accrue interest from the date of the advance or the date on which
the account is overdrawn, whichever occurs first, at the interest
rate described in this Agreement. The Bank may make such advances
even if the advances may cause any credit limit under this
Agreement to be exceeded.
(b)
The Bank may reduce
the amount of credit otherwise available under this Agreement by
the amount of any overdraft on any account of the Borrower with the
Bank.
This
paragraph shall not be deemed to authorize the Borrower to create
overdrafts on any of the Borrower's accounts with the
Bank.
If the
Bank requires delivery in kind of the proceeds of collection of the
Borrower's accounts receivable, such proceeds shall be credited to
interest, principal, and other sums owed to the Bank under this
Agreement in the order and proportion determined by the Bank in its
sole discretion. All such credits will be conditioned upon
collection and any returned items may, at the Bank's option, be
charged to the Borrower.
Before
the Bank is required to extend any credit to the Borrower under
this Agreement, it must receive any documents and other items it
may reasonably require, in form and content acceptable to the Bank,
including any items specifically listed below.
If the
Borrower or any other Obligor is anything other than a natural
person, evidence that the execution, delivery and performance by
the Borrower and/or such Obligor of this Agreement and any
instrument or agreement required under this Agreement have been
duly authorized.
If
required by the Bank, a copy of the Borrower's organizational
documents.
(a)
Upon the request of
the Bank, the Borrower shall have provided to the Bank, and the
Bank shall be reasonably satisfied with, the documentation and
other information so requested in connection with applicable
“know your customer” and anti-money-laundering rules
and regulations, including, without limitation, the PATRIOT
Act.
(b)
If the Borrower
qualifies as a “legal entity customer” under the
Beneficial Ownership Regulation, it shall have provided a
Beneficial Ownership Certification to the Bank if so
requested.
Guaranties
signed by each existing direct and indirect domestic and, to the
extent no material adverse tax consequences would result, foreign
subsidiary of the Borrower.
Signed
original security agreements covering the personal property
collateral which the Bank requires.
5.6
Perfection and Evidence of
Priority.
Evidence
that the security interests and liens in favor of the Bank are
valid, enforceable, properly perfected in a manner acceptable to
the Bank and prior to all others' rights and interests, except
those the Bank consents to in writing.
Payment
of all fees, expenses and other amounts due and owing to the Bank.
If any fee is not paid in cash, the Bank may, in its discretion,
treat the fee as a principal advance under this Agreement or deduct
the fee from the loan proceeds.
Certificates
of good standing for the Borrower from its state of formation and
from any other state in which the Borrower is required to qualify
to conduct its business.
A
written opinion from the Borrower's legal counsel, covering such
matters as the Bank may require. The legal counsel and the terms of
the opinion must be acceptable to the Bank.
Evidence
of insurance coverage, as required in the "Covenants" section of
this Agreement.
5.11
Non-encumbrance
Agreement.
Signed
and acknowledged original non-encumbrance agreement, as required by
the Bank, creating a negative pledge against the Land.
A title
search report covering the Land subject to the Non-encumbrance
Agreement that is acceptable to the Bank in all
respects.
5.13
Other Required
Documentation.
A
Pledge Agreement executed by Borrower pledging 65% of the ownership
of each of Borrower’s foreign subsidiaries.
6.
REPRESENTATIONS AND
WARRANTIES
When
the Borrower signs this Agreement, and until the Bank is repaid in
full, the Borrower makes the following representations and
warranties. Each request for an extension of credit constitutes a
renewal of these representations and warranties as of the date of
the request:
If the
Borrower is anything other than a natural person, it is duly formed
and existing under the laws of the state or other jurisdiction
where organized.
This
Agreement, and any instrument or agreement required under this
Agreement, are within the Borrower's powers, have been duly
authorized, and do not conflict with any of its organizational
papers.
6.3
Beneficial Ownership
Certification.
The
information included in the Beneficial Ownership Certification most
recently provided to the Bank, if applicable, is true and correct
in all respects.
In each
state in which the Borrower does business and where required, it is
properly licensed, in good standing, and in compliance with
fictitious name (e.g. trade name or d/b/a) statutes.
6.5
Government
Sanctions.
(a)
The Borrower
represents that no Obligor, nor any affiliated entities of any
Obligor, including in the case of any Obligor that is not a natural
person, subsidiaries nor, to the knowledge of the Borrower, any
owner, trustee, director, officer, employee, agent, affiliate or
representative of the Borrower or any other Obligor is an
individual or entity (“Person”) currently the subject
of any sanctions administered or enforced by the United States
Government, including, without limitation, the U.S. Department of
Treasury’s Office of Foreign Assets Control, the United
Nations Security Council, the European Union, Her Majesty’s
Treasury, or other relevant sanctions authority (collectively,
“Sanctions”), nor is the Borrower or any other Obligor
located, organized or resident in a country or territory that is
the subject of Sanctions.
(b)
The Borrower
represents and covenants that it will not, directly or indirectly,
use the proceeds of the credit provided under this Agreement, or
lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other Person, to fund any
activities of or business with any Person, or in any country or
territory, that, at the time of such funding, is the subject of
Sanctions, or in any other manner that will result in a violation
by any Person (including any Person participating in the
transaction, whether as underwriter, advisor, investor or
otherwise) of Sanctions.
6.6
Financial
Information.
All
financial and other information that has been or will be supplied
to the Bank is sufficiently complete to give the Bank accurate
knowledge of the Borrower's (and any other Obligor's) financial
condition, including all material contingent liabilities. Since the
date of the most recent financial statement provided to the Bank,
there has been no material adverse change in the business condition
(financial or otherwise), operations, properties or prospects of
the Borrower (or any other Obligor). If the Borrower is comprised
of the trustees of a trust, the above representations shall also
pertain to the trustor(s) of the trust.
There
is no lawsuit, tax claim or other dispute pending or threatened
against the Borrower or any other Obligor which, if lost, would
impair the Borrower's or such Obligor’s financial condition
or ability to repay its obligations as contemplated by this
Agreement or any other agreement contemplated hereby, except as
have been disclosed in writing to the Bank prior to the date of
this Agreement.
The
Borrower and each Related Party is not in default on any obligation
for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation,
except as have been disclosed in writing to the Bank prior to the
date of this Agreement.
The
Borrower has no knowledge of any pending assessments or adjustments
of income tax for itself or for any Related Party for any year and
all taxes due have been paid, except as have been disclosed in
writing to the Bank prior to the date of this
Agreement.
The
Borrower has not entered into any Property Assessed Clean Energy
(“PACE”) or similar energy efficiency or renewable
energy financing and has no knowledge of any pending assessments or
adjustments in connection therewith.
All
collateral required in this Agreement is owned by the grantor of
the security interest free of any title defects or any liens or
interests of others, except those which have been approved by the
Bank in writing.
6.12
No Event of
Default.
There
is no event which is, or with notice or lapse of time or both would
be, a default under this Agreement.
(a)
Each Plan (other
than a multiemployer plan) is in compliance in all material
respects with ERISA, the Code and other federal or state law,
including all applicable minimum funding standards and there have
been no prohibited transactions with respect to any Plan (other
than a multiemployer plan), which has resulted or could reasonably
be expected to result in a material adverse effect.
(b)
With respect to any
Plan subject to Title IV of ERISA:
(i)
No reportable event
has occurred under Section 4043(c) of ERISA which requires
notice.
(ii)
No action by the
Borrower or any ERISA Affiliate to terminate or withdraw from any
Plan has been taken and no notice of intent to terminate a Plan has
been filed under Section 4041 or 4042 of ERISA.
(c)
The following terms
have the meanings indicated for purposes of this
Agreement:
(i)
"Code" means the
Internal Revenue Code of 1986, as amended.
(ii)
"ERISA" means the
Employee Retirement Income Security Act of 1974, as
amended.
(iii)
"ERISA Affiliate"
means any trade or business (whether or not incorporated) under
common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code.
(iv)
"Plan" means a plan
within the meaning of Section 3(2) of ERISA maintained or
contributed to by the Borrower or any ERISA Affiliate, including
any multiemployer plan within the meaning of Section 4001(a)(3) of
ERISA.
The
Borrower represents that, as of the date hereof and throughout
the term of this Agreement, no Borrower or Guarantor, if any, is
(1) an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”), (2) a plan or account subject to Section
4975 of the Internal Revenue Code of 1986 (the “Code”);
(3) an entity deemed to hold “plan assets” of any such
plans or accounts for purposes of ERISA or the Code; or (4) a
“governmental plan” within the meaning of
ERISA.
6.15
Enforceable
Agreement.
This
Agreement is a legal, valid and binding agreement of the Borrower,
enforceable against the Borrower in accordance with its terms, and
any instrument or agreement required under this Agreement, when
executed and delivered, will be similarly legal, valid, binding and
enforceable.
This
Agreement does not conflict with any law, agreement, or obligation
by which the Borrower or any other Obligor is bound.
6.17
Permits,
Franchises.
Each Related Party possesses all permits, memberships,
franchises, contracts and licenses required and all trademark
rights, trade name rights, patent rights, copyrights, and
fictitious name rights necessary to enable it to conduct the
business in which it is now engaged.
The
Borrower and each Related Party has obtained, and maintained in
effect, the insurance coverage required in the "Covenants" section
of this Agreement.
6.19
Merchantable Inventory; Compliance
with FSLA.
All
inventory which is included in the Borrowing Base is of good and
merchantable quality and free from defects, and has been produced
in compliance with the requirements of the U.S. Fair Labor
Standards Act (29 U.S.C. §§201 et seq.)
The
Borrower agrees, so long as credit is available under this
Agreement and until the Bank is repaid in full, the Borrower shall,
and shall cause each Related Party:
To use
the proceeds of the credit extended under this Agreement only for
business purposes.
7.2
Financial
Information.
To
provide the following financial information and statements in form
and content acceptable to the Bank, and such additional information
as requested by the Bank from time to time The Bank reserves the
right, upon written notice to the Borrower, to require the Borrower
to deliver financial information and statements to the Bank more
frequently than otherwise provided below, and to use such
additional information and statements to measure any applicable
financial covenants in this Agreement.
(a)
Within 120 days of
the fiscal year, copies of the Form 10-K Annual Report of Borrower
for the immediately preceding fiscal year.
(b)
Within 45 days
after each fiscal quarter, a copy of the Form 10-Q Quarterly Report
for the immediately preceding fiscal quarter.
(c)
Within 120 days of
the end of each fiscal year, a compliance certificate of the
Borrower, signed by an authorized financial officer and setting
forth (i) the information and computations (in sufficient detail)
to establish compliance with all financial covenants at the end of
the period covered by the financial statements then being furnished
and (ii) whether there existed as of the date of such financial
statements and whether there exists as of the date of the
certificate, any default under this Agreement applicable to the
party submitting the information and, if any such default exists,
specifying the nature thereof and the action the party is taking
and proposes to take with respect thereto.
(d)
Within 45 days of
the end of each quarter (including the last period in each fiscal
year), a compliance
certificate of the Borrower, signed by an authorized financial
officer and setting forth (i) the information and computations (in
sufficient detail) to establish compliance with all financial
covenants at the end of the period covered by the financial
statements then being furnished and (ii) whether there existed as
of the date of such financial statements and whether there exists
as of the date of the certificate, any default under this Agreement
applicable to the party submitting the information and, if any such
default exists, specifying the nature thereof and the action the
party is taking and proposes to take with respect
thereto.
(e)
A borrowing base
certificate setting forth the amount of Acceptable Receivables and
Acceptable Inventory as of the last day of each fiscal quarter
within 30 days after the period end and, upon the Bank's request,
copies of the invoices or the record of invoices from the
Borrower's sales journal for such Acceptable Receivables, copies of
the delivery receipts, purchase orders, shipping instructions,
bills of lading and other documentation pertaining to such
Acceptable Receivables, and copies of the cash receipts journal
pertaining to the borrowing base certificate. The borrowing base
certificate will be required only when the Funded Debt to EBITDA
ratio exceeds 2.0:1.0.
(f)
A detailed
receivables aging of the Borrower by invoice or a summary aging by
account debtor, as specified by the Bank, within 30 days after the
end of each quarter. The foregoing report will be required only
when the Funded Debt to EBITDA ratio exceeds 2.0:1.0.
(g)
A detailed accounts
payable aging of the Borrower by invoice or a summary aging by
account creditor, as specified by the Bank, within 30 days after
the end of each quarter. The foregoing report will be required only
when the Funded Debt to EBITDA ratio exceeds 2.0:1.0.
(h)
An inventory
listing within 30 days after the end of each quarter. The listing
must include a description of the inventory, its location and cost,
and such other information as the Bank may require. The foregoing
report will be required only when the Funded Debt to EBITDA ratio
exceeds 2.0:1.0.
7.3
Funded Debt to EBITDA
Ratio.
To
maintain on a consolidated basis a ratio of Funded Debt to EBITDA
not exceeding 3.0:1.0.
“Funded
Debt” means all outstanding liabilities for borrowed money
and other interest-bearing liabilities, including current and long
term debt, less the non-current portion of Subordinated
Liabilities; provided that for the avoidance of doubt,
“Funded Debt” shall not include operating lease
liabilities.
“EBITDA"
means net income, less income or plus loss from discontinued
operations (including unusual and infrequent items, agreed to at
the sole discretion of the Bank), plus income taxes, plus interest
expense, plus depreciation, depletion, and amortization. This ratio
will be calculated at the end of each reporting period for which
the Bank requires financial statements, using the results of the
twelve-month period ending with that reporting period.
“Subordinated
Liabilities” means liabilities subordinated to the
Borrower’s obligations to the Bank in a manner acceptable to
the Bank in its sole discretion.
7.4
Basic Fixed Charge Coverage
Ratio.
To
maintain on a consolidated basis a Basic Fixed Charge Coverage
Ratio of at least 1.15:1.0.
"Basic
Fixed Charge Coverage Ratio" means the ratio of (a) the sum of
EBITDA plus lease expense and rent expense minus non-financed
capital expenditures to (b) the sum of lease expense and rent
expense, taxes, interest expense, scheduled principal payments and
dividends and distributions.
"EBITDA"
means net income, less income or plus loss from discontinued
operations (including unusual and infrequent items, agreed to at
the sole discretion of the Bank), plus income taxes, plus interest
expense, plus depreciation, depletion, and amortization and other
non-cash charges.
This
ratio will be calculated at the end of each reporting period for
which the Bank requires financial statements, using the results of
the twelve-month period ending with that reporting
period.
7.5
Bank as Principal
Depository.
To
maintain the Bank or one of its affiliates as its principal
depository bank, including for the maintenance of business, cash
management, operating and administrative deposit
accounts.
Not to
have outstanding or incur any direct or contingent liabilities or
lease obligations (other than those to the Bank or to any affiliate
of the Bank), or become liable for the liabilities of others,
without the Bank's written consent. This does not
prohibit:
(a)
Acquiring goods,
supplies, or merchandise on normal trade credit.
(b)
Liabilities, lines
of credit and leases in existence on the date of this Agreement
disclosed in writing to the Bank in the Borrower's most recent
financial statement.
(c)
Leases of real
estate in the ordinary course of business.
Not to
create, assume, or allow any security interest or lien (including
judicial liens) on property the Borrower and each Related Party now
or later owns without the Bank's written consent. This does not
prohibit:
(a)
Liens and security
interests in favor of the Bank or any affiliate of the
Bank.
(b)
Liens for taxes not
yet due.
(c)
Liens outstanding
on the date of this Agreement disclosed in writing to the
Bank.
7.8
Maintenance of
Assets.
(a)
Not to sell,
assign, lease, transfer or otherwise dispose of any part of any
Related Party’s business or any Related Party’s assets
except inventory sold in the ordinary course of such Related
Party’s business.
(b)
Not to sell,
assign, lease, transfer or otherwise dispose of any assets for less
than fair market value, or enter into any agreement to do
so.
(c)
Not to enter into
any sale and leaseback agreement covering any of its fixed
assets.
(d)
To maintain and
preserve all rights, privileges, and franchises the
Borrower or any Related
Party now has.
(e)
To make any
repairs, renewals, or replacements to keep the
Borrower's and each Related
Party’s properties in good working condition.
Not to
have any existing, or make any new, investments in any individual
or entity, or make any capital contributions or other transfers of
assets to any individual or entity, except for:
(a)
Existing
investments disclosed to the Bank in writing prior to the date of
this Agreement.
(b)
Investments in any
of the following:
(i)
certificates of
deposit;
(ii)
U.S. treasury bills
and other obligations of the federal government;
(iii)
readily marketable
securities (including commercial paper, but excluding restricted
stock and stock subject to the provisions of Rule 144 of the
Securities and Exchange Commission);
(iv)
stock of
subsidiaries.
Not to
make any loans, advances or other extensions of credit to any
individual or entity, except for:
(a)
Existing extensions
of credit disclosed to the Bank in writing prior to the date of
this Agreement.
(b)
Extensions of
credit to each Related Party’s current subsidiaries or
affiliates.
(c)
Extensions of
credit in the nature of accounts receivable or notes receivable
arising from the sale or lease of goods or services in the ordinary
course of business to non-affiliated entities.
7.11
Change of
Management.
Not to
make any substantial change in the present executive or management
personnel of the Borrower.
7.12
Change of
Ownership.
Not to cause, permit, or suffer any change in capital
ownership such that there is a material change, as determined by
the Bank in its sole discretion in the direct or indirect capital
ownership of the Borrower.
7.13
Additional Negative
Covenants.
Not to,
without the Bank's written consent:
(a)
Enter into any
consolidation, merger, or other combination, or become a partner in
a partnership, a member of a joint venture, or a member of a
limited liability company.
(b)
Acquire or purchase
a business or its assets.
(c)
Engage in any
business activities substantially different from the Borrower's
present business.
(d)
Liquidate or
dissolve any Obligor’s business.
(e)
Apply for or accept
any PACE or similar energy efficiency or renewable energy
financing.
(f)
With respect to any
Obligor which is a business entity, adopt a plan of division or
divide itself into two or more business entities (pursuant to a
“plan of division” under Section 18-217 of the Delaware
Limited Liability Company Act or a similar arrangement under any
other applicable state statute).
(g)
Voluntarily suspend
its business for more than thirty (30) days in any one hundred
eighty (180) day period.
To
promptly notify the Bank in writing of:
(a)
Any event of
default under this Agreement, or any event which, with notice or
lapse of time or both, would constitute an event of
default.
(b)
Any change in any
Obligor’s name, legal structure, principal residence, or name
on any driver’s license or special identification card issued
by any state (for an individual), state of registration (for a
registered entity), place of business, or chief executive office if
the Obligor has more than one place of business.
(c)
Any lawsuit in
which the claim for damages exceeds Two Hundred Fifty Thousand
Dollars ($250,000) against the Borrower or any other
Obligor.
(d)
Any actual or
potential contingent liabilities.
(a)
General Business Insurance. To
maintain insurance policies attached hereto as Schedule B or such
other policies acceptable to Bank covering property damage
(including loss of use and occupancy) to any of the Obligor’s
properties, business interruption insurance, public liability
insurance including coverage for contractual liability, product
liability and workers' compensation, and any other insurance which
is usual for such Obligor’s business. Each policy shall
include a cancellation clause in favor of the Bank.
(b)
Insurance Covering Collateral.
To maintain all risk property damage insurance policies (including
without limitation windstorm coverage, flood coverage, and
hurricane coverage as applicable) covering the tangible property
comprising the collateral. The insurance must be consistent with
the policies attached hereto as Schedule B or otherwise acceptable
to Bank.
(c)
Evidence of Insurance. Upon the
request of the Bank, to deliver to the Bank a copy of each
insurance policy, or, if permitted by the Bank, a certificate of
insurance listing all insurance in force.
Unless
the Borrower provides the Bank with satisfactory evidence of the
insurance coverage required hereby, the Bank may purchase insurance
at the Borrower’s expense to protect the Bank’s
interest in the collateral. This insurance may, but need not,
protect the interests of the Borrower. The coverage that the Bank
purchases may not pay any claim that the Borrower makes or any
claim that is made against the Borrower in connection with the
collateral. The Borrower may later cancel any insurance purchased
by the Bank, but only after providing the Bank with satisfactory
evidence that the Borrower has obtained insurance as required
hereby. If the Bank purchases insurance of the collateral, the
Borrower will be responsible for the costs of that insurance,
including interest thereon at the Default Rate and any other
charges which the Bank may impose in connection with the placement
of the insurance until the effective date of the cancellation or
expiration of the insurance. The costs of the insurance may be
added to the outstanding principal balance of the advances, shall
bear interest at the Default Rate as provided above, and shall be
payable upon demand. The costs of the insurance may be more than
the cost of insurance the Borrower may be able to obtain on its
own.
7.16
Compliance with Laws.
To
comply with the requirements of all laws and all orders, writs,
injunctions and decrees applicable to it or to its business or
property, except in such instances in which (a) such requirement of
law or order, writ, injunction or decree is being contested in good
faith by appropriate proceedings diligently conducted; or (b) the
failure to comply therewith could not reasonably be expected to
cause a material adverse change in any Obligor's business condition
(financial or otherwise), operations or properties, or ability to
repay the credit, or, in the case of the Controlled Substances Act,
result in the forfeiture of any material property of any
Obligor.
To
maintain adequate books and records including complete
and accurate records regarding all Collateral.
To
allow the Bank and its agents to inspect the Borrower's properties
and examine, audit, and make copies of books and records at any
time; provided such audits will be limited to one (1) in each
calendar year, unless a Default has occurred. If any of the
Borrower's properties, books or records are in the possession of a
third party, the Borrower authorizes that third party to permit the
Bank or its agents to have access to perform inspections or audits
and to respond to the Bank's requests for information concerning
such properties, books and records.
7.19
Perfection of
Liens.
To help
the Bank perfect and protect its security interests and liens, and
reimburse it for related costs it incurs to protect its security
interests and liens.
To take
any action reasonably requested by the Bank to carry out the intent
of this Agreement.
7.21
Patriot Act; Beneficial Ownership
Regulation.
Promptly following any request therefor, to provide
information and documentation reasonably requested by the Bank for
purposes of compliance with applicable “know your
customer” and anti-money-laundering rules and regulations,
including, without limitation, the PATRIOT Act and the Beneficial
Ownership Regulation.
7.22
Subsidiary Guaranties and
Collateral.
(a)
Guarantors. The Borrower will
cause each of its domestic subsidiaries and, to the extent no
material adverse tax consequences would result, foreign
subsidiaries, whether newly formed, after acquired or otherwise
existing to promptly (and in any event within thirty (30) days
after such subsidiary is formed or acquired (or such longer period
of time as agreed to by the Bank in its reasonable discretion))
become a Guarantor hereunder by way of execution of a Guaranty, in
form and substance satisfactory to the Bank. In connection
therewith, the Borrower shall give notice to the Bank not less than
ten (10) days prior to creating a subsidiary (or such shorter
period of time as agreed to by the Bank in its reasonable
discretion), or acquiring the equity interests of any other person.
In connection with the foregoing, the Borrower shall deliver to the
Bank, with respect to each new Guarantor, such other documents and
agreements as reasonably required by the Bank, including, without
limitation, resolutions, organizational documents and incumbency
certificates with respect to such new Guarantor.
(b)
[Intentionally
Omitted].
(c)
Further Assurances. At any time
upon request of the Bank, promptly execute and deliver any and all
further instruments and documents and take all such other action as
the Bank may deem necessary or desirable to maintain in favor of
the Bank, liens and insurance rights on the collateral required to
be delivered hereby that are duly perfected in accordance with the
requirements hereof, all other documents executed in connection
herewith and all applicable laws.
8.1
Indemnity Regarding Hazardous
Substances.
The
Borrower will indemnify and hold harmless the Bank from any loss or
liability the Bank incurs in connection with or as a result of this
Agreement, which directly or indirectly arises out of the use,
generation, manufacture, production, storage, release, threatened
release, discharge, disposal or presence of a hazardous substance.
This indemnity will apply whether the hazardous substance is on,
under or about the Borrower's property or operations or property
leased to the Borrower. The indemnity includes but is not limited
to attorneys' fees (including the reasonable estimate of the
allocated cost of in-house counsel and staff). The indemnity
extends to the Bank, its parent, subsidiaries and all of their
directors, officers, employees, agents, successors, attorneys and
assigns.
8.2
Compliance Regarding Hazardous
Substances.
The
Borrower represents and warrants that the Borrower has complied
with all current and future laws, regulations and ordinances or
other requirements of any governmental authority relating to or
imposing liability or standards of conduct concerning protection of
health or the environment or hazardous substances.
8.3
Notices Regarding Hazardous
Substances.
Until
full repayment of the loan, the Borrower will promptly notify the
Bank in writing of any threatened or pending investigation of the
Borrower or its operations by any governmental agency under any
current or future law, regulation or ordinance pertaining to any
hazardous substance.
8.4
Site Visits, Observations and
Testing.
The
Bank and its agents and representatives will have the right at any
reasonable time, after giving reasonable notice to the Borrower, to
enter and visit any locations where the collateral securing this
Agreement (the “Collateral”) is located for the
purposes of observing the Collateral, taking and removing
environmental samples, and conducting tests. The Borrower shall
reimburse the Bank on demand for the costs of any such
environmental investigation and testing. The Bank will make
reasonable efforts during any site visit, observation or testing
conducted pursuant to this paragraph to avoid interfering with the
Borrower’s use of the Collateral. The Bank is under no duty
to observe the Collateral or to conduct tests, and any such acts by
the Bank will be solely for the purposes of protecting the Bank's
security and preserving the Bank's rights under this Agreement. No
site visit, observation or testing or any report or findings made
as a result thereof (“Environmental Report”) (i) will
result in a waiver of any default of the Borrower; (ii) impose any
liability on the Bank; or (iii) be a representation or warranty of
any kind regarding the Collateral (including its condition or value
or compliance with any laws) or the Environmental Report (including
its accuracy or completeness). In the event the Bank has a duty or
obligation under applicable laws, regulations or other requirements
to disclose an Environmental Report to the Borrower or any other
party, the Borrower authorizes the Bank to make such a disclosure.
The Bank may also disclose an Environmental Report to any
regulatory authority, and to any other parties as necessary or
appropriate in the Bank’s judgment. The Borrower further
understands and agrees that any Environmental Report or other
information regarding a site visit, observation or testing that is
disclosed to the Borrower by the Bank or its agents and
representatives is to be evaluated (including any reporting or
other disclosure obligations of the Borrower) by the Borrower
without advice or assistance from the Bank.
8.5
Definition of Hazardous
Substances.
"Hazardous
substance" means any substance, material or waste that is or
becomes designated or regulated as "toxic," "hazardous,"
"pollutant," or "contaminant" or a similar designation or
regulation under any current or future federal, state or local law
(whether under common law, statute, regulation or otherwise) or
judicial or administrative interpretation of such, including
without limitation petroleum or natural gas.
8.6
Continuing
Obligation.
The
Borrower's obligations to the Bank under this Article, except the
obligation to give notices to the Bank, shall survive termination
of this Agreement and repayment of the Borrower's obligations to
the Bank under this Agreement.
If any
of the following events of default occurs, the Bank may do one or
more of the following without prior notice except as required by
law or expressly agreed in writing by Bank: declare the Borrower in
default, stop making any additional credit available to the
Borrower, and require the Borrower to repay its entire debt
immediately. If an event which, with notice or the passage of time,
will constitute an event of default has occurred and is continuing,
the Bank has no obligation to make advances or extend additional
credit under this Agreement. In addition, if any event of default
occurs, the Bank shall have all rights, powers and remedies
available under any instruments and agreements required by or
executed in connection with this Agreement, as well as all rights
and remedies available at law or in equity. If an event of default
occurs under the paragraph entitled
“Bankruptcy/Receivers,” below with respect to any
Obligor, then the entire debt outstanding under this Agreement will
automatically be due immediately.
The
Borrower fails to make a payment under this Agreement within ten
(10) days after the date when due.
9.2
Other Bank
Agreements.
(a)
(i) Any default occurs under any other document executed or
delivered in connection with this Agreement, including without
limitation, any note, guaranty, subordination agreement, mortgage
or other collateral agreement, (ii) any Obligor purports to revoke
or disavow any guaranty or collateral agreement provided in
connection with this Agreement; (iii) any representation or
warranty made by any Obligor is false when made or deemed to be
made; or (iv) any default
occurs under any other agreement the Borrower (or any Obligor) or
any of the Borrower's related entities or affiliates has with the
Bank or any affiliate of the Bank.
(b)
If, in the Bank's opinion, any breach under subparagraph (a)(iv)
above is capable of being remedied but the applicable document does
not provide a cure or remedy period, the breach will not be
considered an event of default under this Agreement for a period of
thirty (30) days after earlier of (x) the date that the Borrower
knew or should have known of the default, and (y) the date on which
the Bank gives written notice of the default to the
Borrower.
Any
default occurs under any agreement in connection with any credit
any Obligor or any of the Borrower's related entities or affiliates
has obtained from anyone else or which any Obligor or any of the
Borrower's related entities or affiliates has
guaranteed.
The
Borrower or any other Obligor has given the Bank false or
misleading information or representations.
9.5
Bankruptcy/Receivers.
Any
Obligor or any general partner of any Obligor files a bankruptcy
petition, a bankruptcy petition is filed against any of the
foregoing parties, or any Obligor, or any general partner of any
Obligor makes a general assignment for the benefit of creditors; or
a receiver or similar official is appointed for a substantial
portion of any Obligor's business; or the business is terminated,
or such Obligor is liquidated or dissolved.
The
Bank fails to have an enforceable first lien (except for any prior
liens to which the Bank has consented in writing) on or security
interest in any property given as security for this Agreement (or
any guaranty).
Any
material judgments or arbitration awards are entered against any
Obligor. Materiality will be determined in the Bank’s sole
discretion.
If any
Obligor is a natural person, such Obligor dies or becomes legally
incompetent; if any Obligor is a trust, a trustor dies or becomes
legally incompetent; if any Obligor is a partnership, any general
partner dies or becomes legally incompetent.
9.9
Material Adverse
Change.
A
material adverse change occurs, or is reasonably likely to occur,
in any Obligor's business condition (financial or otherwise),
operations or properties, or ability to repay its obligations as
contemplated hereunder or under any document executed in connection
with this Agreement.
9.10
[Intentionally
Omitted]
A
reportable event occurs under Section 4043(c) of ERISA, or any Plan
termination (or commencement of proceedings to terminate a Plan) or
the full or partial withdrawal from a Plan under Section 4041 or
4042 of ERISA occurs; provided such event or events could
reasonably be expected, in the judgment of the Bank, to have a
material adverse effect.
Any
default in the performance of or compliance with any obligation,
agreement or other provision contained in this Agreement (other
than those specifically described as an event of default in this
Article) and with respect to any such default that by its nature
can be cured, such default shall continue for a period of thirty
(30) days from the earlier of (x) the date that the Borrower knew
or should have known of the default, and (y) the date on which the
Bank gives written notice of the default to the
Borrower.
A
judicial or nonjudicial forfeiture or seizure proceeding is
commenced by a government authority and remains pending with
respect to any property of Borrower or any part thereof, on the
grounds that the property or any part thereof had been used to
commit or facilitate the commission of a criminal offense by any
person, including any tenant, pursuant to any law, including under
the Controlled Substances Act or the Civil Asset Forfeiture Reform
Act, regardless of whether or not the property shall become subject
to forfeiture or seizure in connection therewith.
10.
ENFORCING THIS
AGREEMENT; MISCELLANEOUS
Except
as otherwise stated in this Agreement, all financial information
provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently
applied.
If at
any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth herein, and either the
Borrower or the Bank shall so request, the Borrower and the Bank
shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in
GAAP; provided that, until so amended, (i) such ratio or
requirement shall continue to be computed in accordance with GAAP
prior to such change therein and (ii) the Borrower shall provide to
the Bank financial statements and other documents required under
this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement
made before and after giving effect to such change in
GAAP.
Except
to the extent that any law of the United States may apply, this
Agreement shall be governed and interpreted according to the laws
of Alabama (the “Governing Law State”), without regard
to any choice of law, rules or principles to the contrary. Nothing
in this paragraph shall be construed to limit or otherwise affect
any rights or remedies of the Bank under federal law.
10.3
Venue and
Jurisdiction.
The
Borrower agrees that any action or suit against the Bank arising
out of or relating to this Agreement shall be filed in federal
court or state court located in the Governing Law State. The
Borrower agrees that the Bank shall not be deemed to have waived
its rights to enforce this section by filing an action or suit
against the Borrower or any Obligor in a venue outside of the
Governing Law State. If the Bank does commence an action or suit
arising out of or relating to this Agreement, the Borrower agrees
that the case may be filed in federal court or state court in the
Governing Law State. The Bank reserves the right to commence an
action or suit in any other jurisdiction where any Borrower, any
other Obligor, or any Collateral has any presence or is located.
The Borrower consents to personal jurisdiction and venue in such
forum selected by the Bank and waives any right to contest
jurisdiction and venue and the convenience of any such forum. The
provisions of this section are material inducements to the
Bank’s acceptance of this Agreement.
10.4
Successors and
Assigns.
This
Agreement is binding on the Borrower's and the Bank's successors
and assignees. The Borrower agrees that it may not assign this
Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan and the related loan
documents, and may exchange information about the Borrower and any
other Obligor (including, without limitation, any information
regarding any hazardous substances) with actual or potential
participants or assignees. If a participation is sold or the loan
is assigned, the purchaser will have the right of set-off against
the Borrower.
10.5
Waiver of Jury Trial.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (b) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER DOCUMENTS CONTEMPLATED HEREBY BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION AND (c) CERTIFIES THAT THIS WAIVER IS KNOWINGLY, WILLINGLY
AND VOLUNTARILY MADE.
10.6
Waiver of Class
Actions.
The
terms “Claim” or “Claims” refer to any
disputes, controversies, claims, counterclaims, allegations of
liability, theories of damage, or defenses between Bank of America,
N.A., its subsidiaries and affiliates, on the one hand, and the
other parties to this Agreement, on the other hand (all of the
foregoing each being referred to as a “Party” and
collectively as the “Parties”). Whether in state court,
federal court, or any other venue, jurisdiction, or before any
tribunal, the Parties agree that all aspects of litigation and
trial of any Claim will take place without resort to any form of
class or representative action. Thus the Parties may only bring
Claims against each other in an individual capacity and waive any
right they may have to do so as a class representative or a class
member in a class or representative action. THIS CLASS ACTION WAIVER PRECLUDES ANY PARTY
FROM PARTICIPATING IN OR BEING REPRESENTED IN ANY CLASS OR
REPRESENTATIVE ACTION REGARDING A CLAIM.
10.7
Severability;
Waivers.
If any
part of this Agreement is not enforceable, the rest of the
Agreement may be enforced. The Bank retains all rights, even if it
makes a loan after default. If the Bank waives a default, it may
enforce a later default. Any consent or waiver under this Agreement
must be in writing.
(a)
The Borrower shall
pay to the Bank immediately upon demand the full amount of all
reasonable and necessary payments, advances, charges, costs and
expenses payable to any third parties, including reasonable
attorneys' fees, actually expended or incurred by the Bank in
connection with (i) the negotiation and preparation of this
Agreement and any related agreements, the Bank's continued
administration of this Agreement and such related agreements, and
the preparation of any amendments and waivers related to this
Agreement or such related
agreements, (ii) filing, recording and search fees, appraisal fees,
field examination fees, title report fees, and documentation fees
with respect to any collateral and books and records of the
Borrower or any other Obligor (iii) the Bank's costs or losses
arising from any changes in law which are allocated to this
Agreement or any credit outstanding under this Agreement, and (iv)
costs or expenses required to be paid by the Borrower or any other
Obligor that are paid, incurred or advanced by the
Bank.
The
Bank reserves the right to conduct field examinations at its own
expense, provided that the Bank will not conduct more than one
field examination per calendar year so long as no Event of Default
exists.
(b)
The Borrower will
indemnify and hold the Bank harmless from any loss, liability,
damages, judgments, and costs of any kind relating to or arising
directly or indirectly out of (i) this Agreement or any document
required hereunder, (ii) any credit extended or committed by the
Bank to the Borrower hereunder, (iii) any claim, whether
well-founded or otherwise, that there has been a failure to comply
with any law regulating the Borrower's sales or leases to or
performance of services for debtors obligated upon the Borrower's
accounts receivable and disclosures in connection therewith, and
(iv) any litigation or proceeding related to or arising out of this
Agreement, any such document, any such credit, or any such claim,
including, without limitation, any act resulting from (A) the Bank
complying with instructions the Bank reasonably believes are made
by any Authorized Individual and (B)
the Bank’s reliance on any Communication executed using an
Electronic Signature, or in the form of an Electronic Record, that
the Bank reasonably believes is made by any Authorized
Individual. This paragraph will survive this Agreement's
termination, and will benefit the Bank and its officers, employees,
and agents.
(c)
The Borrower shall
reimburse the Bank for any reasonable costs and attorneys' fees
incurred by the Bank in connection with (a) the enforcement or
preservation of the Bank's rights and remedies and/or the
collection of any obligations of the Borrower which become due to
the Bank and in connection with any "workout" or restructuring, and
(b) the prosecution or defense of any action in any way related to
this Agreement, the credit provided hereunder or any related
agreements, including without limitation, any action for
declaratory relief, whether incurred at the trial or appellate
level, in an arbitration proceeding or otherwise, and including any
of the foregoing incurred in connection with any bankruptcy
proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by the Bank or any other person)
relating to the Borrower or any other person or
entity.
10.9
Individual
Liability.
If the
Borrower is a natural person, the Bank may proceed against the
Borrower's business and non-business property in enforcing this
Agreement and other agreements relating to this loan. If the
Borrower is a partnership, the Bank may proceed against the
business and non-business property of each general partner of the
Borrower in enforcing this Agreement and other agreements relating
to this loan.
Upon
and after the occurrence of an event of default under this
Agreement, (a) the Borrower hereby authorizes the Bank at any time
without notice and whether or not the Bank shall have declared any
amount owing by the Borrower to be due and payable, to set off
against, and to apply to the payment of, the Borrower’s
indebtedness and obligations to the Bank under this Agreement and
all related agreements, whether matured or unmatured, fixed or
contingent, liquidated or unliquidated, any and all amounts owing
by the Bank to the Borrower, and in the case of deposits, whether
general or special (except trust and escrow accounts), time or
demand and however evidenced, and (b) pending any such action, to
hold such amounts as collateral to secure such indebtedness and
obligations of the Borrower to the Bank and to return as unpaid for
insufficient funds any and all checks and other items drawn against
any deposits so held as the Bank, in its sole discretion, may
elect. The Borrower hereby grants to the Bank a security interest
in all deposits and accounts maintained with the Bank to secure the
payment of all such indebtedness and obligations of the Borrower to
the Bank.
This
Agreement and any related security or other agreements required by
this Agreement constitute the entire agreement between the Borrower
and the Bank with respect to each credit subject hereto and
supersede all prior negotiations, communications, discussions and
correspondence concerning the subject matter hereof. In the event
of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will
prevail.
Unless
otherwise provided in this Agreement or in another agreement
between the Bank and the Borrower, all notices required under this
Agreement shall be personally delivered or sent by first class
mail, postage prepaid, or by overnight courier, to the addresses on
the signature page of this Agreement, or sent by facsimile to the
fax number(s) listed on the signature page, or to such other
addresses as the Bank and the Borrower may specify from time to
time in writing (any such notice a “Written Notice”). Written
Notices shall be effective (i) if mailed, upon the earlier of
receipt or five (5) days after deposit in the U.S. mail, first
class, postage prepaid, (ii) if telecopied, when transmitted, or
(iii) if hand-delivered, by courier or otherwise (including
telegram, lettergram or mailgram), when delivered. In lieu of a
Written Notice, notices and/or communications from the Bank to the
Borrower may, to the extent permitted by law, be delivered
electronically (i) by transmitting the communication to the
electronic address provided by the Borrower or to such other
electronic address as the Borrower may specify from time to time in
writing, or (ii) by posting the communication on a website and
sending the Borrower a notice to the Borrower’s postal
address or electronic address telling the Borrower that the
communication has been posted, its location, and providing
instructions on how to view it (any such notice, an
“Electronic
Notice”). Electronic Notices shall be effective when
the communication, or a notice advising of its posting to a
website, is sent to the Borrower’s electronic
address.
Article
and paragraph headings are for reference only and shall not affect
the interpretation or meaning of any provisions of this
Agreement.
10.14
Electronic Records and
Signatures.
This
Agreement and any document, amendment, approval, consent,
information, notice, certificate, request, statement, disclosure or
authorization related to this Agreement (each a “Communication”),
including Communications required to be in writing, may, if agreed
by the Bank, be in the form of an Electronic Record and may be
executed using Electronic Signatures, including, without
limitation, facsimile and/or .pdf. The Borrower agrees that any
Electronic Signature (including, without limitation, facsimile or
.pdf) on or associated with any Communication shall be valid and
binding on the Borrower to the same extent as a manual, original
signature, and that any Communication entered into by Electronic
Signature, will constitute the legal, valid and binding obligation
of the Borrower enforceable against the Borrower in accordance with
the terms thereof to the same extent as if a manually executed
original signature was delivered to the Bank. Any Communication may
be executed in as many counterparts as necessary or convenient,
including both paper and electronic counterparts, but all such
counterparts are one and the same Communication. For the avoidance
of doubt, the authorization under this paragraph may include,
without limitation, use or acceptance by the Bank of a manually
signed paper Communication which has been converted into electronic
form (such as scanned into PDF format), or an electronically signed
Communication converted into another format, for transmission,
delivery and/or retention. The Bank may, at its option, create one
or more copies of any Communication in the form of an imaged
Electronic Record (“Electronic Copy”), which
shall be deemed created in the ordinary course of the Bank’s
business, and destroy the original paper document. All
Communications in the form of an Electronic Record, including an
Electronic Copy, shall be considered an original for all purposes,
and shall have the same legal effect, validity and enforceability
as a paper record. Notwithstanding anything contained herein to the
contrary, the Bank is under no obligation to accept an Electronic
Signature in any form or in any format unless expressly agreed to
by the Bank pursuant to procedures approved by it; provided,
further, without limiting the foregoing, (a) to the extent the Bank
has agreed to accept such Electronic Signature, the Bank shall be
entitled to rely on any such Electronic Signature purportedly given
by or on behalf of any Obligor without further verification and (b)
upon the request of the Bank any Electronic Signature shall be
promptly followed by a manually executed, original counterpart. For
purposes hereof, “Electronic Record” and
“Electronic
Signature” shall have the meanings assigned to them,
respectively, by 15 USC §7006, as it may be amended from time
to time.
10.15
Borrower/Obligor Information;
Reporting to Credit Bureaus.
The
Borrower authorizes the Bank at any time to verify or check any
information given by the Borrower to the Bank, check the
Borrower’s credit references, verify employment, and obtain
credit reports and other credit bureau information from time to
time in connection with the administration, servicing and
collection of the loans under this Agreement. The Borrower agrees
that the Bank shall have the right at all times to disclose and
report to credit reporting agencies and credit rating agencies such
information pertaining to the Borrower and all other Obligors as is
consistent with the Bank's policies and practices from time to time
in effect.
10.16
Customary Advertising
Material.
The
Borrower consents to the publication by the Bank of customary
advertising material relating to the transactions contemplated
hereby using the name, product photographs, logo or trademark of
the Borrower.
10.17
Acknowledgement Regarding Any
Supported QFCs.
To the
extent that this Agreement and any document executed in connection
with this Agreement (collectively, “Loan Documents”) provide
support, through a guarantee or otherwise, for any Swap Contract or
any other agreement or instrument that is a QFC (such support,
“QFC Credit
Support”, and each such QFC, a “Supported QFC”), the
parties acknowledge and agree as follows with respect to the
resolution power of the Federal Deposit Insurance Corporation under
the Federal Deposit Insurance Act and Title II of the Dodd-Frank
Wall Street Reform and Consumer Protection Act (together with the
regulations promulgated thereunder, the “U.S. Special Resolution
Regimes”) in respect of such Supported QFC and QFC
Credit Support (with the provisions below applicable
notwithstanding that the Loan Documents and any Supported QFC may
in fact be stated to be governed by the laws of the Governing Law
State and/or of the United States or any other state of the United
States):
(a)
In the event a
Covered Entity that is party to a Supported QFC (each, a
“Covered
Party”) becomes subject to a proceeding under a U.S.
Special Resolution Regime, the transfer of such Supported QFC and
the benefit of such QFC Credit Support (and any interest and
obligation in or under such Supported QFC and such QFC Credit
Support, and any rights in property securing such Supported QFC or
such QFC Credit Support) from such Covered Party will be effective
to the same extent as the transfer would be effective under the
U.S. Special Resolution Regime if the Supported QFC and such QFC
Credit Support (and any such interest, obligation and rights in
property) were governed by the laws of the United States or a state
of the United States. In the event a Covered Party or a BHC Act
Affiliate of a Covered Party becomes subject to a proceeding under
a U.S. Special Resolution Regime, Default Rights under the Loan
Documents that might otherwise apply to such Supported QFC or any
QFC Credit Support that may be exercised against such Covered Party
are permitted to be exercised to no greater extent than such
Default Rights could be exercised under the U.S. Special Resolution
Regime if the Supported QFC and the Loan Documents were governed by
the laws of the United States or a state of the United
States
(b)
As used in this
paragraph, the following terms have the following
meanings:
“BHC Act Affiliate” of a
party means an “affiliate” (as such term is defined
under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of
such party.
“Covered Entity” means any
of the following: (i) a “covered entity” as that term
is defined in, and interpreted in accordance with, 12 C.F.R.
§ 252.82(b); (ii) a “covered bank” as that
term is defined in, and interpreted in accordance with, 12 C.F.R.
§ 47.3(b); or (iii) a “covered FSI” as that
term is defined in, and interpreted in accordance with, 12 C.F.R.
§ 382.2(b).
“Default Right” has the
meaning assigned to that term in, and shall be interpreted in
accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as
applicable.
“QFC” has the meaning
assigned to the term “qualified financial contract” in,
and shall be interpreted in accordance with, 12 U.S.C.
5390(c)(8)(D).
“Swap Contract” means (a)
any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps
or options, bond or bond price or bond index swaps or options or
forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other
similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether
or not any such transaction is governed by or subject to any master
agreement, and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any
other master agreement (any such master agreement, together with
any related schedules, a “Master Agreement”),
including any such obligations or liabilities under any Master
Agreement.
This
Agreement may only be amended by a writing signed by the parties
hereto; which, to the extent expressly agreed to by the Bank in its
discretion, may include being amended by an Electronic Record
signed by the parties hereto using Electronic Signatures pursuant
to the terms of this Agreement.
10.19
Disposition of Schedules and
Reports.
The
Bank will not be obligated to return any schedules, invoices,
statements, budgets, forecasts, reports or other papers delivered
by the Borrower. The Bank will destroy or otherwise dispose of such
materials at such time as the Bank, in its discretion, deems
appropriate.
10.20
Returned
Merchandise.
Until
the Bank exercises its rights to collect the accounts receivable as
provided under any security agreement required under this
Agreement, the Borrower may continue its present policies for
returned merchandise and adjustments. Credit adjustments with
respect to returned merchandise shall be made immediately upon
receipt of the merchandise by the Borrower or upon such other
disposition of the merchandise by the debtor in accordance with the
Borrower's instructions. If a credit adjustment is made with
respect to any Acceptable Receivable, the amount of such adjustment
shall no longer be included in the amount of such Acceptable
Receivable in computing the Borrowing Base.
10.21
Verification of
Receivables.
The
Bank may at any time, either orally or in writing, request
confirmation from any debtor of the current amount and status of
the accounts receivable upon which such debtor is
obligated.
10.22
Waiver of
Confidentiality.
The
Borrower authorizes the Bank to discuss the Borrower's financial
affairs and business operations with any accountants, auditors,
business consultants, or other professional advisors employed by
the Borrower, and authorizes such parties to disclose to the Bank
such financial and business information or reports (including
management letters) concerning the Borrower as the Bank may
request.
10.23
Limitation of Interest and Other
Charges.
Notwithstanding any other provision contained in this
Agreement, the Bank does not intend to charge and the Borrower
shall not be required to pay any amount of interest or other fee or
charge that is in excess of the maximum rate or amount permitted by
applicable law. Any payment in excess of such amount shall be
refunded to the Borrower or credited against principal, at the
option of the Bank. As used herein, the term “applicable
law” means the law in effect as of the date of this
Agreement; provided, however, that in the event there is a change
in the law which results in a higher permissible rate of interest
or a greater permissible fee or charge, then this Agreement shall
be governed by such new provision of law as of its effective
date.
Signature Page
The
Borrower executed this Agreement as of the date stated at the top
of the first page, intending to create an instrument executed under
seal.
Bank:
Bank of America, N.A.
By: /s/
J.
Brooks Emory IV
J.
Brooks Emory IV, VP, Senior Relationship Manager
Borrower:
Lakeland Industries, Inc., a Delaware
corporation
By: /s/
Allen
Dillard
(Seal)
Allen
Dillard, Chief Financial Officer
Prepared
by: Butler Snow
LLP:
Bank of America
NC1-001-05-13
One Independence Center
101 North Tryon Street
Charlotte, NC 28255-0001
|
Address
where notices to
|
Address
where notices to
|
|
the
Bank are to be sent:
|
the
Borrower are to be sent:
|
|
|
|
|
Bank of
America
|
202
Pride Lane SW
|
|
NC1-001-05-13
|
Decatur,
AL 35603
|
|
One
Independence Center
|
Attn:
Allen Dillard
|
|
101
North Tryon Street
|
aedillard@lakeland.com
|
|
Charlotte,
NC 28255-0001
|
Telephone:
256-445-4100
|
USA Patriot Act Notice; Affiliate
Sharing Notice; Affiliate Marketing Notice.
Federal law requires Bank of America, N.A. (the “Bank”)
to provide the following three notices. The notices are not
part of the foregoing agreement or instrument and may not be
altered. Please read the notices carefully.
(1)
USA
PATRIOT ACT NOTICE
Federal
law requires all financial institutions to obtain, verify and
record information that identifies each person who opens an account
or obtains a loan. The Bank will ask for the Borrower’s legal
name, address, tax ID number or social security number and other
identifying information. The Bank may also ask for additional
information or documentation or take other actions reasonably
necessary to verify the identity of the Borrower, guarantors or
other related persons.
30
Exhibit 10.2
SECURITY AGREEMENT
1. THE
SECURITY. The undersigned Lakeland Industries, Inc., a Delaware
corporation (the “Pledgor") hereby assigns and grants to Bank
of America, N.A., its successors and assigns (“BANA”),
and to Bank of America Corporation and its subsidiaries and
affiliates (BANA and all such secured parties, collectively, the
"Bank") a security interest in the following described property now
owned or hereafter acquired by the Pledgor (the
"Collateral"):
(a) All
accounts, and all chattel paper, instruments, deposit accounts,
letter of credit rights, and general intangibles related thereto;
and all returned or repossessed goods which, on sale or lease,
resulted in an account.
(b) All
inventory.
(c) All
equipment now owned or hereafter acquired by the
Pledgor.
(d) All
of the Pledgor’s deposit accounts with the Bank. The
Collateral shall include any renewals or rollovers of the deposit
accounts, any successor accounts, and any general intangibles and
choses in action arising therefrom or related thereto.
(e) All
instruments, chattel paper, documents, certificates of deposit,
securities and investment property of every type.
(f) All
general intangibles. The Collateral shall include all good will
connected with or symbolized by any of such general
intangibles.
(g) All
negotiable and nonnegotiable documents of title covering any
Collateral.
(h) All
accessions, attachments and other additions to the Collateral, and
all tools, parts and equipment used in connection with the
Collateral.
(i) All
substitutes or replacements for any Collateral, all cash or
non-cash proceeds (including insurance proceeds), products, rents
and profits of the Collateral, and all income, benefits and
property receivable on account of the Collateral, and all
supporting obligations covering any Collateral.
(j) All
books, data and records pertaining to any Collateral, whether in
the form of a writing, photograph, microfilm or electronic media,
including but not limited to any computer-readable memory and any
computer software necessary to process such memory ("Books and
Records").
2. THE
INDEBTEDNESS. The obligations secured by this Agreement are the
payment and performance of (a) all present and future Indebtedness
of the Pledgor to the Bank; (b) all obligations of the Pledgor and
rights of the Bank under this Agreement; and (c) all present and
future obligations of the Pledgor to the Bank of other kinds. Each
party obligated under any Indebtedness is referred to in this
Agreement as a “Debtor.” "Indebtedness" is used in its
most comprehensive sense and includes any and all advances, debts,
obligations and liabilities of the Debtor, now or hereafter
existing, absolute or contingent, liquidated or unliquidated,
determined or undetermined, voluntary or involuntary, including
under any swap, derivative, foreign exchange, hedge, or other
arrangement (“Swap”), deposit, treasury management or
other similar transaction or arrangement, and whether the Debtor
may be liable individually or jointly with others, or whether
recovery upon such Indebtedness may be or hereafter becomes
unenforceable. "Indebtedness" secured by the Collateral of such
Pledgor shall not include obligations arising under any Swap to
which it is not party if, and to the extent that, all or a portion
of the guaranty by such Pledgor to the Bank of, or the grant by
such Pledgor of a security interest to the Bank to secure, such
Swap, would violate the Commodity Exchange Act (7 U.S.C., Sec. 1.
et. seq.) by virtue of such Pledgor’s failure to constitute
an “eligible contract participant” as defined in the
Commodity Exchange Act at the time such guaranty or grant of such
security interest becomes effective with respect to such
Swap.
Except
as otherwise agreed in writing by the Bank and the Pledgor, if the
Indebtedness includes, now or hereafter, any Special Flood Zone
Loan, then the following shall apply: The Special Flood Zone Loan
shall not be secured under this Agreement by any Collateral which
would constitute “contents” located within the Flood
Zone Improvements. For the purposes of this subparagraph, (a)
“Flood Zone Improvements” means any
“improved” real property that is located within a
Special Flood Hazard Area; (b) a “Special Flood Zone
Loan” means a loan or line of credit which is secured by
Flood Zone Improvements; and (c) the terms “improved”
real property, “Special Flood Hazard Area,” and
“contents” shall have the meaning ascribed to them by
the Flood Disaster Protection Act of 1973, 42 U.S.C. § 4001
et seq., and implementing
regulations, 44 C.F.R. Parts 59 et
seq., and/or the Federal Emergency Management Agency
(“FEMA”).
3.
PLEDGOR'S COVENANTS. The Pledgor represents, covenants and warrants
that unless compliance is waived by the Bank in
writing:
(a) The
Pledgor agrees: (i) to indemnify the Bank against all
losses, claims, demands, liabilities and expenses of every kind
caused by any Collateral; (ii) to permit the Bank to exercise
its rights under this Agreement; (iii) to execute and deliver such
documents as the Bank deems necessary to create, perfect and
continue the security interests contemplated by this Agreement;
(iv) not to change its name (including, for an individual, the
Pledgor’s name on any driver’s license or special
identification card issued by any state), and as applicable, its
chief executive office, its principal residence or the jurisdiction
in which it is organized and/or registered or its business
structure without giving the Bank at least 30 days prior written
notice; (v) not to change the places where the Pledgor keeps any
Collateral or the Pledgor's Books and Records concerning the
Collateral without giving the Bank prior written notice of the
address to which the Pledgor is moving same; and (vi) to
cooperate with the Bank in perfecting all security interests
granted by this Agreement and in obtaining such agreements from
third parties as the Bank deems necessary, proper or convenient in
connection with the preservation, perfection or enforcement of any
of its rights under this Agreement.
(b) The
Pledgor agrees with regard to the Collateral, unless the Bank
agrees otherwise in writing: (i) that the Bank is authorized
to file financing statements in the name of the Pledgor to perfect
the Bank's security interest in the Collateral; (ii) that the Bank
is authorized to notify any account debtors, any buyers of the
Collateral, or any other persons of the Bank's interest in the
Collateral, (iii) where applicable, to operate the Collateral
in accordance with all applicable statutes, rules and regulations
relating to the use and control of the Collateral, and not to use
any Collateral for any unlawful purpose or in any way that would
void any insurance required to be carried; (iv) not to remove
the Collateral from the Pledgor's premises except in the ordinary
course of the Pledgor's business; (v) to pay when due all
license fees, registration fees and other charges in connection
with any Collateral; (vi) not to permit any lien on the
Collateral, including without limitation, liens arising from
repairs to or storage of the Collateral, except in favor of the
Bank; (vii) not to sell, hypothecate or dispose of, nor permit
the transfer by operation of law of, any Collateral or any interest
in the Collateral, except sales of inventory to buyers in the
ordinary course of the Pledgor's business; (viii) to permit
the Bank to inspect the Collateral at any time; (ix) to keep,
in accordance with generally accepted accounting principles,
complete and accurate Books and Records regarding all the
Collateral, and to permit the Bank to inspect the same and make
copies at any reasonable time; (x) if requested by the Bank,
to receive and use reasonable diligence to collect the Collateral
consisting of accounts and other rights to payment and proceeds, in
trust and as the property of the Bank, and to immediately endorse
as appropriate and deliver such Collateral to the Bank daily in the
exact form in which they are received together with a collection
report in form satisfactory to the Bank; (xi) not to commingle
the Collateral, or collections with respect to the Collateral, with
other property; (xii) to give only normal allowances and
credits and to advise the Bank thereof immediately in writing if
they affect any rights to payment or proceeds in any material
respect; (xiii) from time to time, when requested by the Bank,
to prepare and deliver a schedule of all the Collateral subject to
this Agreement and to assign in writing and deliver to the Bank all
accounts, contracts, leases and other chattel paper, instruments,
and documents; (xiv) in the event the Bank elects to receive
payments or rights to payment or proceeds hereunder, to pay all
reasonable third-party expenses actually incurred by the Bank,
including expenses of accounting, correspondence, collection
efforts, reporting to account or contract debtors, filing,
recording, record keeping and other expenses; and (xv) to
provide any service and do any other acts which may be necessary to
maintain, preserve and protect all the Collateral and, as
appropriate and applicable, to keep all the Collateral in good and
saleable condition, to deal with the Collateral in accordance with
the standards and practices adhered to generally by users and
manufacturers of like property, and to keep all the Collateral free
and clear of all defenses, rights of offset and
counterclaims.
.
(c) If
any Collateral is or becomes the subject of any registration
certificate, certificate of deposit or negotiable document of
title, including any warehouse receipt or bill of lading, the
Pledgor shall immediately deliver such document to the Bank,
together with any necessary endorsements.
(d) The
Pledgor will maintain and keep in force all risk insurance covering
the Collateral against fire, theft, liability and extended
coverages (including without limitation flood, windstorm coverage
and hurricane coverage as applicable), to the extent that any
Collateral is of a type which can be so insured. Such insurance
shall be in form, amounts, coverages and basis reasonably
acceptable to the Bank, shall require losses to be paid on a
replacement cost basis, shall be issued by insurance companies
acceptable to the Bank and include a lender loss payable
endorsement and additional insured endorsement in favor of the Bank
in a form acceptable to the Bank. Upon the request of the Bank, the
Pledgor will deliver to the Bank a copy of each insurance policy,
or, if permitted by the Bank, a certificate of insurance listing
all insurance in force. Unless the Pledgor provides the Bank with
satisfactory evidence of the insurance coverage required hereby,
the Bank may purchase insurance at the Pledgor’s expense to
protect the Bank’s interest in the Collateral. This insurance
may, but need not, protect the interests of the Pledgor. The
coverage that the Bank purchases may not pay any claim that the
Pledgor makes or any claim that is made against the Pledgor in
connection with the Collateral. The Pledgor may later cancel any
insurance purchased by the Bank, but only after providing the Bank
with satisfactory evidence that the Pledgor has obtained insurance
as required hereby. If the Bank purchases insurance of the
Collateral, the Pledgor will be responsible for the costs of that
insurance, including interest thereon at the highest default rate provided in the
Indebtedness and any other charges which the Bank may impose in
connection with the placement of the insurance until the effective
date of the cancellation or expiration of the insurance.
The costs of the insurance may be
added to the outstanding principal balance of the Indebtedness,
shall bear interest at the default rate as provided above, and
shall be payable upon demand. The costs of the insurance may be more
than the cost of insurance the Pledgor may be able to obtain on its
own.
(e) The
Pledgor will not attach any Collateral to any real property or
fixture in a manner which might cause such Collateral to become a
part thereof unless the Pledgor first obtains the written consent
of any owner, holder of any lien on the real property or fixture,
or other person having an interest in such property to the removal
by the Bank of the Collateral from such real property or fixture.
Such written consent shall be in form and substance acceptable to
the Bank and shall provide that the Bank has no liability to such
owner, holder of any lien, or any other person.
(f) The
Pledgor shall not withdraw funds from any deposit account which is
part of the Collateral without the Bank's prior written
consent.
4. BANK
RIGHTS. The Pledgor appoints the Bank its attorney in fact to
perform any of the following rights, which are coupled with an
interest, are irrevocable until termination of this Agreement and
may be exercised from time to time by the Bank's officers and
employees, or any of them, whether or not the Pledgor is in
default: (a) to perform any obligation of the Pledgor
hereunder in the Pledgor's name or otherwise; (b) to release
persons liable on the Collateral and to give receipts and
acquittances and compromise disputes; (c) to release or
substitute security; (d) to prepare, execute, file, record or
deliver notes, assignments, schedules, designation statements,
financing statements, continuation statements, termination
statements, statements of assignment, applications for registration
or like documents to perfect, preserve or release the Bank's
interest in the Collateral; (e) to take cash, instruments for the
payment of money and other property to which the Bank is entitled;
(f) to verify facts concerning the Collateral by inquiry of
obligors thereon, or otherwise, in its own name or a fictitious
name; (g) to endorse, collect, deliver and receive payment
under instruments for the payment of money constituting or relating
to the Collateral; (h) to prepare, adjust, execute, deliver
and receive payment under insurance claims, and to collect and
receive payment of and endorse any instrument in payment of loss or
returned premiums or any other insurance refund or return, and to
apply such amounts received by the Bank, at the Bank's sole option,
toward repayment of the Indebtedness or, where appropriate,
replacement of the Collateral; (i) to enter onto the Pledgor's
premises in inspecting the Collateral; (j) to make withdrawals
from and to close deposit accounts or other accounts with any
financial institution, wherever located, into which proceeds may
have been deposited, and to apply funds so withdrawn to payment of
the Indebtedness; (j) to preserve or release the interest
evidenced by chattel paper to which the Bank is entitled and to
endorse and deliver any evidence of title; and (k) to do all
acts and things and execute all documents in the name of the
Pledgor or otherwise, deemed by the Bank as necessary, proper and
convenient in connection with the preservation, perfection or
enforcement of its rights.
5.
DEFAULTS. Any one or more of the following shall be a default
hereunder:
(a) The
occurrence of any defined or described event of default under, or
any default in the performance of or compliance with any
obligation, agreement, representation, warranty, or other provision
contained in (i) this Agreement, or (ii) any other contract or
instrument evidencing the Indebtedness.
(b) Any
involuntary lien of any kind or character attaches to any
Collateral, except for liens for taxes not yet due.
6.
BANK'S REMEDIES AFTER DEFAULT. In the event of any default, the
Bank may do any one or more of the following, to the extent
permitted by law:
(a)
Declare any Indebtedness immediately due and payable, without
notice or demand.
(b)
Enforce the security interest given hereunder pursuant to the
Uniform Commercial Code and any other applicable law.
(c)
Enforce the security interest of the Bank in any deposit account of
the Pledgor maintained with the Bank by applying such account to
the Indebtedness.
(d)
Require the Pledgor to obtain the Bank's prior written consent to
any sale, lease, agreement to sell or lease, or other disposition
of any Collateral consisting of inventory.
(e)
Require the Pledgor to segregate all collections and proceeds of
the Collateral so that they are capable of identification and
deliver daily such collections and proceeds to the Bank in
kind.
(f)
Require the Pledgor to direct all account debtors to forward all
payments and proceeds of the Collateral to a post office box under
the Bank's exclusive control.
(g)
Give notice to others of the Bank's rights in the Collateral, to
enforce or forebear from enforcing the same and make extension and
modification agreements.
(h)
Require the Pledgor to assemble the Collateral, including the Books
and Records, and make them available to the Bank at a place
designated by the Bank.
(i)
Enter upon the property where any Collateral, including any Books
and Records, are located and take possession of such Collateral and
such Books and Records, and use such property (including any
buildings and facilities) and any of the Pledgor's equipment, if
the Bank deems such use necessary or advisable in order to take
possession of, hold, preserve, process, assemble, prepare for sale
or lease, market for sale or lease, sell or lease, or otherwise
dispose of, any Collateral.
(j)
Demand and collect any payments on and proceeds of the Collateral.
In connection therewith the Pledgor irrevocably authorizes the Bank
to endorse or sign the Pledgor's name on all checks, drafts,
collections, receipts and other documents, and to take possession
of and open the mail addressed to the Pledgor and remove therefrom
any payments and proceeds of the Collateral.
(k)
Grant extensions and compromise or settle claims with respect to
the Collateral for less than face value, all without prior notice
to the Pledgor.
(l)
Intentionally Omitted.
(m)
Have a receiver appointed by any court of competent jurisdiction to
take possession of the Collateral. The Pledgor hereby consents to
the appointment of such a receiver and agrees not to oppose any
such appointment.
(n)
Take such measures as the Bank may deem necessary or advisable to
take possession of, hold, preserve, process, assemble, insure,
prepare for sale or lease, market for sale or lease, sell or lease,
or otherwise dispose of, any Collateral, and the Pledgor hereby
irrevocably constitutes and appoints the Bank as the Pledgor's
attorney-in-fact to perform all acts and execute all documents in
connection therewith.
(o)
Without notice or demand to the Pledgor, set off and apply against
any and all of the Indebtedness any and all deposits (general or
special, time or demand, provisional or final) and any other
indebtedness, at any time held or owing by the Bank or any of the
Bank's agents or affiliates to or for the credit of the account of
the Pledgor or any guarantor or endorser of the Pledgor's
Indebtedness.
(p)
Exercise all rights, powers and remedies which the Pledgor would
have, but for this Agreement, with respect to all
Collateral.
(q)
Receive, open and read mail addressed to the Pledgor.
(r)
Resort to the Collateral under this Agreement, and any other
collateral related to the Indebtedness, in any order.
(s)
Exercise any other remedies available to the Bank at law or in
equity.
7.
MISCELLANEOUS.
(a) Any
waiver, express or implied, of any provision hereunder and any
delay or failure by the Bank to enforce any provision shall not
preclude the Bank from enforcing any such provision
thereafter.
(b) The
Pledgor shall, at the request of the Bank, execute such other
agreements, documents, instruments, or financing statements in
connection with this Agreement as the Bank may reasonably deem
necessary.
(c) All
notes, security agreements, subordination agreements and other
documents executed by the Pledgor or furnished to the Bank in
connection with this Agreement must be in form and substance
satisfactory to the Bank.
(d)
Governing Law.
Except to the extent that any law of the United States may apply,
this Agreement shall be governed and interpreted according to the
laws of Alabama (the “Governing Law State”), without
regard to any choice of law, rules or principles to the
contrary. Nothing in this paragraph shall be construed to
limit or otherwise affect any rights or remedies of the Bank under
federal law.
(e) All
rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies otherwise provided by law. Any
single or partial exercise of any right or remedy shall not
preclude the further exercise thereof or the exercise of any other
right or remedy.
(f) All
terms not defined herein are used as set forth in the Uniform
Commercial Code.
(g) The
Pledgor shall pay to the Bank immediately upon demand the full
amount of all payments, advances, and expenses, including
reasonable attorneys' fees, expended or incurred by the Bank in
connection with (a) the perfection and preservation of the
Collateral or the Bank's interest therein, and (b) the realization,
enforcement and exercise of any right, power, privilege or remedy
conferred by this Agreement, relating to the Pledgor, or in any way
affecting any of the Collateral or the Bank's ability to exercise
any of its rights or remedies with respect to the
Collateral.
(h) In
the event the Bank seeks to take possession of any or all of the
Collateral by judicial process, the Pledgor irrevocably waives any
bonds and any surety or security relating thereto that may be
required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any
such suit or action.
(i)
This Agreement shall constitute a continuing agreement, applying to
all future as well as existing transactions.
(j)
This Agreement shall be binding upon and inure to the benefit of
the heirs, executors, administrators, legal representatives,
successors and assigns of the parties, and may be amended or
modified only in writing signed by the Bank and the
Pledgor.
(k) The
secured parties covered by this Agreement include BANA as well as
Bank of America Corporation and its subsidiaries and affiliates.
Such secured parties are collectively referred to as the
“Bank.” If, from time to time, any of the Indebtedness
covered by this Agreement includes obligations to entities other
than BANA, then BANA shall act as collateral agent for itself and
all such other secured parties. BANA shall have the right to apply
proceeds of the Collateral against debts, obligations or
liabilities constituting all or part of the Indebtedness in such
order as BANA may determine in its sole discretion, unless
otherwise agreed by BANA and one or more of the other secured
parties.
(l)
Acknowledgement Regarding
Any Supported QFCs. To the extent that this Agreement and
any document executed in connection with this Agreement
(collectively, “Loan
Documents”) provide support, through a guarantee or
otherwise, for any Swap Contract or any other agreement or
instrument that is a QFC (such support, “QFC Credit Support”, and
each such QFC, a “Supported QFC”), the
parties acknowledge and agree as follows with respect to the
resolution power of the Federal Deposit Insurance Corporation under
the Federal Deposit Insurance Act and Title II of the Dodd-Frank
Wall Street Reform and Consumer Protection Act (together with the
regulations promulgated thereunder, the “U.S. Special Resolution
Regimes”) in respect of such Supported QFC and QFC
Credit Support (with the provisions below applicable
notwithstanding that the Loan Documents and any Supported QFC may
in fact be stated to be governed by the laws of the Governing Law
State and/or of the United States or any other state of the United
States):
(i) In
the event a Covered Entity that is party to a Supported QFC (each,
a “Covered
Party”) becomes subject to a proceeding under a U.S.
Special Resolution Regime, the transfer of such Supported QFC and
the benefit of such QFC Credit Support (and any interest and
obligation in or under such Supported QFC and such QFC Credit
Support, and any rights in property securing such Supported QFC or
such QFC Credit Support) from such Covered Party will be effective
to the same extent as the transfer would be effective under the
U.S. Special Resolution Regime if the Supported QFC and such QFC
Credit Support (and any such interest, obligation and rights in
property) were governed by the laws of the United States or a state
of the United States. In the event a Covered Party or a BHC Act
Affiliate of a Covered Party becomes subject to a proceeding under
a U.S. Special Resolution Regime, Default Rights under the Loan
Documents that might otherwise apply to such Supported QFC or any
QFC Credit Support that may be exercised against such Covered Party
are permitted to be exercised to no greater extent than such
Default Rights could be exercised under the U.S. Special Resolution
Regime if the Supported QFC and the Loan Documents were governed by
the laws of the United States or a state of the United
States.
(ii) As
used in this paragraph, the following terms have the following
meanings:
“BHC Act Affiliate” of a
party means an “affiliate” (as such term is defined
under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of
such party.
“Covered Entity” means any
of the following: (i) a “covered entity” as that term
is defined in, and interpreted in accordance with, 12 C.F.R.
§ 252.82(b); (ii) a “covered bank” as that
term is defined in, and interpreted in accordance with, 12 C.F.R.
§ 47.3(b); or (iii) a “covered FSI” as that
term is defined in, and interpreted in accordance with, 12 C.F.R.
§ 382.2(b).
“Default Right” has the
meaning assigned to that term in, and shall be interpreted in
accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as
applicable.
“QFC” has the meaning
assigned to the term “qualified financial contract” in,
and shall be interpreted in accordance with, 12 U.S.C.
5390(c)(8)(D).
“Swap Contract” means (a)
any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps
or options, bond or bond price or bond index swaps or options or
forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other
similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether
or not any such transaction is governed by or subject to any master
agreement, and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any
other master agreement (any such master agreement, together with
any related schedules, a “Master Agreement”),
including any such obligations or liabilities under any Master
Agreement.
8. FINAL
AGREEMENT. BY SIGNING THIS
DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS DOCUMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER HEREOF, (B) THIS DOCUMENT SUPERSEDES ANY
COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN OUTLINE OF TERMS
AND CONDITIONS RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH
COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN OUTLINE OF TERMS
AND CONDITIONS EXPRESSLY PROVIDES TO THE CONTRARY, (C) THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (D) THIS
DOCUMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF
THE PARTIES.
9.
Notices. Unless
otherwise provided in this Agreement or in another agreement
between the Bank and the Pledgor, all notices required under this
Agreement shall be personally delivered or sent by first class
mail, postage prepaid, or by overnight courier, to the addresses on
the signature page of this Agreement, or sent by facsimile to the
fax number(s) listed on the signature page, or to such other
addresses as the Bank and the Pledgor may specify from time to time
in writing (any such notice a “Written Notice”). Written
Notices shall be effective (i) if mailed, upon the earlier of
receipt or five (5) days after deposit in the U.S. mail, first
class, postage prepaid, (ii) if telecopied, when transmitted, or
(iii) if hand-delivered, by courier or otherwise (including
telegram, lettergram or mailgram), when delivered. In lieu of a
Written Notice, notices and/or communications from the Bank to the
Pledgor may, to the extent permitted by law, be delivered
electronically (i) by transmitting the communication to the
electronic address provided by the Pledgor or to such other
electronic address as the Pledgor may specify from time to time in
writing, or (ii) by posting the communication on a website and
sending the Pledgor a notice to the Pledgor’s postal address
or electronic address telling the Pledgor that the communication
has been posted, its location, and providing instructions on how to
view it (any such notice, an “Electronic Notice”).
Electronic Notices shall be effective when the communication, or a
notice advising of its posting to a website, is sent to the
Pledgor’s electronic address.
10.
Amendments. This
Agreement may only be amended by a writing signed by the parties
hereto; which, to the extent expressly agreed to by the Bank in its
discretion, may include being amended by an Electronic Record
signed by the parties hereto using Electronic Signatures pursuant
to the terms of this Agreement.
11.
Electronic Records and
Signatures. This Agreement and any document, amendment,
approval, consent, information, notice, certificate, request,
statement, disclosure or authorization related to this Agreement
(each a “Communication”),
including Communications required to be in writing, may, if agreed
by the Bank, be in the form of an Electronic Record and may be
executed using Electronic Signatures, including, without
limitation, facsimile and/or .pdf. The Pledgor agrees that any
Electronic Signature (including, without limitation, facsimile or
.pdf) on or associated with any Communication shall be valid and
binding on the Pledgor to the same extent as a manual, original
signature, and that any Communication entered into by Electronic
Signature, will constitute the legal, valid and binding obligation
of the Pledgor enforceable against the Pledgor in accordance with
the terms thereof to the same extent as if a manually executed
original signature was delivered to the Bank. Any Communication may
be executed in as many counterparts as necessary or convenient,
including both paper and electronic counterparts, but all such
counterparts are one and the same Communication. For the avoidance
of doubt, the authorization under this paragraph may include,
without limitation, use or acceptance by the Bank of a manually
signed paper Communication which has been converted into electronic
form (such as scanned into PDF format), or an electronically signed
Communication converted into another format, for transmission,
delivery and/or retention. The Bank may, at its option, create one
or more copies of any Communication in the form of an imaged
Electronic Record (“Electronic Copy”), which
shall be deemed created in the ordinary course of the Bank’s
business, and destroy the original paper document. All
Communications in the form of an Electronic Record, including an
Electronic Copy, shall be considered an original for all purposes,
and shall have the same legal effect, validity and enforceability
as a paper record. Notwithstanding anything contained herein to the
contrary, the Bank is under no obligation to accept an Electronic
Signature in any form or in any format unless expressly agreed to
by the Bank pursuant to procedures approved by it; provided,
further, without limiting the foregoing, (a) to the extent the Bank
has agreed to accept such Electronic Signature, the Bank shall be
entitled to rely on any such Electronic Signature purportedly given
by or on behalf of any Pledgor without further verification and (b)
upon the request of the Bank any Electronic Signature shall be
promptly followed by a manually executed, original counterpart. For
purposes hereof, “Electronic Record” and
“Electronic
Signature” shall have the meanings assigned to them,
respectively, by 15 USC §7006, as it may be amended from time
to time.
[SIGNATURES ON FOLLOWING PAGE]
The
parties executed this Agreement as of June 25, 2020, intending to
create an instrument executed under seal.
Bank:
Bank of America, N.A.
By: /s/
J.
Brooks Emory IV
J.
Brooks Emory IV, VP, Senior Relationship Manager
Address
for Notices:
Bank of
America
NC1-001-05-13
One
Independence Center
101
North Tryon Street
Charlotte,
NC 28255-0001
Pledgor:
Lakeland Industries, Inc.
By: /s/
Allen
Dillard
(Seal)
Allen
Dillard, Chief Financial Officer
Address
for Notices:
202
Pride Lane SW
Decatur,
AL 35603
Attn:
Allen Dillard
aedillard@lakeland.com
Exhibit 10.3
PLEDGE AGREEMENT
1.
GRANT OF SECURITY INTEREST/DELIVERY OF CERTIFICATES.
(a) The
undersigned Lakeland Industries, Inc., a Delaware corporation
("Pledgor") hereby irrevocably and unconditionally grants security
interest in, a lien upon and the right of set-off against, and
assigns and transfers to Bank of America, N.A. and its successors
and assigns (collectively, "Bank") all property referred to in
Exhibit A attached hereto and incorporated herein, as hereafter
amended or supplemented from time to time (the "Collateral"). The
parties hereto expressly agree that all rights, assets and property
at any time held in or credited to any securities account
constituting Collateral shall be treated as financial assets as
defined in the Uniform Commercial Code as in effect in any
applicable state (the “UCC”). Notwithstanding the
foregoing, the Collateral shall not include any voting stock of any
direct subsidiary of any Pledgor that is a controlled foreign
corporation (as defined in Section 957 of the Internal Revenue Code
(a "CFC")) in excess of 65% of the total combined voting power of
all classes of stock of such CFC that are entitled to vote (within
the meaning of Section 1.956-2(c)(2) of the Treasury
Regulations).
(b) Pledgor
certifies that except as indicated on Exhibit A hereto, the
Borrower’s ownership of the Collateral is not evidenced by
certificates. Pledgor further certifies that all certificates
evidencing the Collateral have been delivered to Lender except for
the certificates evidencing Pledor’s ownership of the
following entities: (i) Industrias Lakeland S.A. de C.V., (ii)
Lakeland Protective Wear Inc., (iii) Lakeland Industries Australis
Pty Limited, and (iv) Migliara, S.A. (collectively, the
“Post-Closing Certificates”). Pledgor shall deliver the
Post Closing Certificates and any related stock powers requested by
Lender to Lender by July 18, 2020 (the “Post-Closing
Deadline”). Pledgor’s failure to deliver the
Post-Closing Certificates and any related stock powers requested by
Lender on or prior to the Post-Closing Deadline shall constitute an
Event of Default hereunder.
2.
INDEBTEDNESS.
(a) The
Collateral secures and will secure all Indebtedness of Pledgor to
Bank. Each person or entity obligated under any Indebtedness is
sometimes referred to in this Agreement as a
“Debtor.”
(b)
"Indebtedness" means:
(i) all
debts, obligations or liabilities, of every kind or character of
Pledgor to Bank, now or hereafter existing or incurred, whether
absolute or contingent, primary or secondary, secured or unsecured,
joint or several, voluntary or involuntary, due or not due, or
incurred directly or indirectly
or acquired by Bank by assignment or otherwise; including interest
accruing after commencement of any insolvency, reorganization or
like proceeding relating to Pledgor, whether or not allowed in such
proceeding and further including all debt, obligations or
liabilities arising under or incurred in connection with any and
all letters of credit issued by Bank for the account of Pledgor or
at the request of Pledgor and any reimbursement, indemnity or
similar agreements given by Pledgor to Bank in connection
therewith,
(ii)
all debts, obligations or liabilities arising pursuant to any
agreement between Pledgor and Bank or any affiliate of Bank now
existing or hereafter entered into, which provides for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate
swap, currency option, securities puts, calls, collars, options or
forwards or any combination of, or option with respect to, these or
similar transactions (each a "Hedge Transaction”) other than
Excluded Hedge Obligations.
“Excluded
Hedge Obligations” shall mean any obligations arising under
any Hedge Transaction to which Pledgor is not party if, and to the
extent that, the grant by such Pledgor of a security interest in
the Collateral to Bank to secure such obligations under such Hedge
Transaction would violate the Commodity Exchange Act by virtue of
such Pledgor’s failure to constitute an “eligible
contract participant” as defined in the Commodity Exchange
Act as of the date required thereunder with respect to such
security interest. “Commodity Exchange Act” means 7
U.S.C. Section 1 et seq.,
as amended from time to time, any successor statute, and any rules,
regulations and orders applicable thereto;
(iii)
all obligations and liabilities of Pledgor to Bank hereunder,
and
(iv)
all costs, attorneys’ fees and expenses incurred by Bank in
connection with the collection or enforcement of any of the
above.
3.
PLEDGOR'S COVENANTS, REPRESENTATIONS AND WARRANTIES. Pledgor
covenants, represents and warrants that unless compliance is waived
by Bank in writing:
(a)
Pledgor is the legal and beneficial owner of all the Collateral
free and clear of any and all liens, encumbrances, or interests of
any third parties other than the security interest of Bank, and
will keep the Collateral free of all liens, claims, security
interests and encumbrances of any kind or nature, whether voluntary
or involuntary, except the security interest of Bank.
(b)
Pledgor shall, at Pledgor’s expense, take all actions
necessary or advisable from time to time to maintain the first
priority and perfection of the security interest of Bank in the
Collateral and shall not take any actions that would alter, impair
or eliminate said priority or perfection.
(c)
Pledgor agrees to pay prior to delinquency all taxes, charges,
liens and assessments against the Collateral, and upon the failure
of Pledgor to do so, Bank at its option may pay any of them and
shall be the sole judge of the legality or validity thereof and the
amount necessary to discharge the same.
(d) If
any of the Collateral is margin stock as defined in Regulation U
promulgated by the Board of Governors of the Federal Reserve System
of the United States (“FRB”), Pledgor will provide Bank
a properly executed Form U-1 Purpose Statement. Bank and Pledgor
will comply with the requirements and restrictions imposed by
Regulation U.
(e)
Pledgor’s exact legal name is correctly set forth on the
signature page hereof. Pledgor will notify Bank in writing at least
30 days prior to any change in Pledgor's name or
identity.
(f) If
Pledgor is an Individual, Pledgor resides and has for the four
month period preceding the date hereof resided, or if Pledgor is
not an individual, Pledgor's chief executive office is, and has
been for the four-month period preceding the date hereof (or, if
less, the entire period of the existence of Pledgor) located, in
the state specified on the signature page hereof. In addition, if
Pledgor is not an Individual, Pledgor is an organization of the
type and (if not an individual or other unregistered entity), is
incorporated in or organized under the laws of the state specified
on such signature page. Pledgor shall give Bank at least thirty
(30) days notice before changing the location of its residence or
its chief executive office, type of organization, business
structure or state of incorporation or organization.
(g) If
Pledgor is not an individual, Pledgor’s organizational
identification number, if any, assigned by its state of
incorporation or organization is correctly set forth on the
signature page hereof. Pledgor shall promptly notify Bank (i) of
any change of its organizational identification number, or (ii) if
Pledgor does not have an organizational identification number and
later obtains one, of such organizational identification
number.
4.
REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING EQUITY
SECURITIES COLLATERAL. Pledgor hereby represents, warrants and
covenants the following with respect to any equity securities
comprising any or all of the Collateral (the "Equity Securities")
and covenants and agrees to promptly notify Bank in writing in the
event that any of the foregoing representations and warranties is
no longer true and correct:
(a) The
Equity Securities have been duly authorized and validly issued and
are fully paid and non-assessable.
(b)
There are no restrictions on the pledge of the Equity Securities by
Pledgor to Bank nor on the sale of the Equity Securities by Pledgor
or Bank (whether pursuant to securities laws or regulations or any
shareholder, lock-up or other similar agreement or insider trading
rules of the issuer).
5. BANK
APPOINTED ATTORNEY IN FACT. Pledgor authorizes and irrevocably
appoints Bank as Pledgor's true and lawful attorney-in-fact with
full power of substitution in order to allow Bank upon an Event of
Default to take any action and execute or otherwise authenticate
any record or other documentation that Bank considers necessary or
advisable to accomplish the purposes of this Agreement, including
but not limited to, the following actions: (a) to endorse, receive,
accept and collect all checks, drafts, other payment orders and
instruments representing or included in the Collateral or
representing any payment, dividend or distribution relating to any
Collateral or to take any other action to enforce, collect or
compromise any of the Collateral; (b) to transfer any Collateral
(including converting physical certificates to book-entry holdings)
into the name of Bank or its nominee or any broker-dealer (which
may be an affiliate of Bank) and to execute any control agreement
covering any Collateral on Pledgor's behalf and as attorney-in-fact
for Pledgor in order to perfect Bank's first priority and
continuing security interest in the Collateral and in order to
provide Bank with control of the Collateral, and Pledgor's
signature on this Agreement or other authentication of this
Agreement shall constitute an irrevocable direction by Pledgor to
any bank, custodian, broker dealer, any other securities
intermediary or commodity intermediary holding any Collateral or
any issuer of any letters of credit to comply with any instructions
or entitlement orders, of Bank without further consent of Pledgor;
(c) to participate in any recapitalization, reclassification,
reorganization, consolidation, redemption, stock split, merger or
liquidation of any issuer of securities which constitute
Collateral, and in connection therewith Bank may deposit or
surrender control of the Collateral, accept money or other property
in exchange for the Collateral, and take such action as it deems
proper in connection therewith, and any money or property received
on account of or in exchange for the Collateral shall be applied to
the Indebtedness or held by Bank thereafter as Collateral pursuant
to the provisions hereof; (d) to exercise any right, privilege or
option pertaining to any Collateral, but Bank has no obligation to
do so; (e) to file any claims, take any actions or institute any
proceedings which Bank determines to be necessary or appropriate to
collect or preserve the Collateral or to enforce Bank's rights with
respect to the Collateral; (f) to execute in the name or otherwise
authenticate on behalf of Pledgor any record reasonably believed
necessary or appropriate by Bank for compliance with laws, rules or
regulations applicable to any Collateral, or in connection with
exercising Bank's rights under this Agreement; (g) to file any
financing statement relating to this Agreement electronically, and
Bank's transmission of Pledgor's signature on and authentication of
the financing statement shall constitute Pledgor's signature on and
authentication of the financing statement; (h) to make any
compromise or settlement it deems desirable or proper with
reference to the Collateral; (i) to do and take any and all actions
with respect to the Collateral and to perform any of Pledgor's
obligations under this Agreement; I(j) to close out or otherwise
terminate any calls, puts or other options in the account, and (k)
to execute any documentation reasonably believed necessary by Bank
for compliance with Rule 144 or any other restrictions, laws, rules
or regulations applicable to any Collateral hereunder that
constitutes restricted or control securities under the securities
laws. The foregoing appointments are irrevocable and coupled with
an interest and shall survive the death or disability of Pledgor
and shall not be revoked without Bank’s written consent. To
the extent permitted by law, Pledgor hereby ratifies all said
attorney-in-fact shall lawfully do by virtue hereof.
6.
VOTING RIGHTS.
(a) So
long as no Event of Default shall have occurred and is continuing
and Bank has not delivered the notice specified in subsection (b)
below, Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral or any part
thereof for any purpose not inconsistent with the terms of this
Agreement or any document or agreement executed in connection
herewith.
(b)
Upon the occurrence and during the continuance of an Event of
Default, at the option of Bank exercised in a writing sent to
Pledgor, all rights of Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to subsection (a) above shall cease, and Bank shall
thereupon have the sole right to exercise such voting and other
consensual rights.
7.
EVENTS OF DEFAULT; REMEDIES.
(a) Any
default under the Loan Agreement executed between the parties dated
of even date herewith, or under any other agreement executed
between Bank and Pledgor relating to the Indebtedness, shall
consititute an Event of Default hereunder.
(b) If
an Event of Default occurs, Bank may do any one or more of the
following, to the extent permitted by law:
(i)
Declare any Indebtedness immediately due and payable, without
notice or demand.
(ii)
Exercise as to any or all of the Collateral all the rights, powers
and remedies of an owner, subject to the Section entitled
“VOTING RIGHTS”, including without limitation, the
right to close out any options held in any Account.
(iii)
Enforce the security interest given hereunder pursuant to the UCC
and any other applicable law.
(iv)
Sell all or any part of the Collateral at public or private sale in
accordance with the UCC, without advertisement, in such manner and
order as Bank may elect. Bank may execute any sale of the
Collateral through an affiliate of Bank and such affiliate shall be
entitled to charge standard fees for such sale. Bank or any
affiliate of Bank may purchase the Collateral for its own account
at any such sale. Bank shall give Pledgor such notice of any public
or private sale as may be required by the UCC, provided that to the
extent notice of any such sale is required by the UCC or other
applicable law, Pledgor agrees that at least three (3) days’
notice to Pledgor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute
reasonable notification and provided further that, if Bank fails to
comply with this sentence in any respect, its liability for such
failure shall be limited to the liability (if any) imposed on it as
a matter of law under the UCC or other applicable law. Pledgor
acknowledges that Collateral may be sold at a loss to Pledgor, and
that, in such event, Bank shall have no liability or responsibility
to Pledgor for such loss. Pledgor further acknowledges that a
private sale may result in prices and other terms less favorable to
the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that no such private
sale shall, to the extent permitted by applicable law, be deemed
not to be "commercially reasonable" solely as a result of such
prices and other sale terms. Pledgor acknowledges and agrees that
Bank, in conducting a private sale, may impose such conditions as
Bank deems appropriate to insure a lawful sale under the securities
laws, including, without limitation, the right to approach and
negotiate with only a limited number of potential purchasers, and
to restrict purchasers to those who can make appropriate
representations and warranties. Upon any such sale, Bank shall have
the right to deliver, assign and transfer to the buyer thereof the
Collateral so sold. Each buyer at any such sale shall hold the
Collateral so sold absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of
Pledgor that may be waived or any other right or claim of Pledgor,
and Pledgor, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal that Pledgor has
or may have under any law now existing or hereafter
adopted.
Without
limiting any other rights and remedies available to Bank, Pledgor
expressly acknowledges and agrees that with respect to Collateral
consisting of hedge funds and similar private investment funds, the
sale of such Collateral to the issuing fund in accordance with the
issuing fund’s redemption practices shall be deemed to be a
commercially reasonable sale of such Collateral.
(v)
Enforce the security interest of Bank in any deposit account which
is part of the Collateral by applying such account to the
Indebtedness.
(vi)
Exercise any other right or remedy provided under this Agreement,
any other agreement executed or delivered in connection with this
Agreement or the Indebtedness or by any applicable
law.
(vii)
Comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and such compliance
will not be considered to affect adversely the commercial
reasonableness of any sale or other disposition of the
Collateral.
(viii)
Sell the Collateral without giving any warranties as to the
Collateral. Bank may specifically disclaim any warranties of title
or the like. This procedure will not be considered to affect
adversely the commercial reasonableness of any sale or other
disposition of the Collateral.
8.
RIGHT TO CURE; LIMITATION ON BANK'S DUTIES. If Pledgor fails to
perform any agreement contained herein, Bank may perform or cause
performance of such agreement and the reasonable third-party
expenses of Bank actually incurred in connection therewith shall be
payable by Pledgor or Debtor under the Section entitled
“COSTS”. Any powers conferred on Bank hereunder are
solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for
reasonable care in the custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder,
Bank shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral. Bank shall be deemed to
have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which Bank accords its own
property, it being understood that Bank shall not have any
responsibility for (a) ascertaining, exercising or taking other
action or giving Pledgor notice with respect to subscription
rights, calls, conversions, exchanges, maturities, lenders or other
matters relative to any Collateral, whether or not Bank has or is
deemed to have knowledge of such matters, or (b) taking any
necessary steps to preserve rights against any parties with respect
to any Collateral. Bank shall not be liable for any loss to the
Collateral resulting from acts of God, war, civil commotion, fire,
earthquake, or other disaster or for any other loss or damage to
the Collateral except to the extent such loss is determined by a
court of competent jurisdiction by final and nonappealable judgment
to have resulted from Bank's gross negligence or willful
misconduct.
9.
WAIVERS. Bank shall be under no duty or obligation whatsoever and
Pledgor waives any right to require Bank to (i) make or give any
presentment, demands for performances, notices of nonperformance,
protests, notices of protest or notices of dishonor in connection
with any obligations or evidences of indebtedness held by Bank as
Collateral, or in connection with any obligation or evidences of
indebtedness which constitute in whole or in part the Indebtedness,
(ii) proceed against any person or entity, (iii) proceed against or
exhaust any collateral, or (iv) pursue any other remedy in Bank's
power; and Pledgor waives any defense arising by reason of any
disability or other defense of Debtor or any other person, or by
reason of the cessation from any cause whatsoever of the liability
of Debtor or any other person. Until the Indebtedness is paid in
full, Pledgor waives any right of subrogation, reimbursement,
indemnification, and contribution (contractual, statutory or
otherwise), including without limitation any claim or right of
subrogation under the Bankruptcy Code (Title 11 of the U.S. Code)
or any successor statute, arising from the existence or performance
of this Agreement, and Pledgor waives any right to enforce any
remedy which Bank now has or may hereafter have against Debtor or
against any other person and waives any benefit of and any right to
participate in any Collateral or security whatsoever now or
hereafter held by Bank. If Pledgor is not also a Debtor with
respect to a specified Indebtedness, Pledgor authorizes Bank
without notice or demand and without affecting Pledgor's liability
hereunder, from time to time to: (i) renew, extend, accelerate or
otherwise change the time for payment of or otherwise change the
terms of the Indebtedness or any part thereof, including increase
or decrease of the rate of interest thereon; (ii) take and hold
security, other than the Collateral, for the payment of the
Indebtedness or any part thereof, and exchange, enforce, waive and
release the Collateral or any part thereof or any such other
security; and (iii) release or substitute Debtor or any one or more
of them, or any of the endorsers or guarantors of the Indebtedness
or any part thereof, or any other parties thereto and Pledgor
consents to the taking of, or failure to take, any action by Bank
which might in any manner or to any extent vary the risks of
Pledgor under this Agreement or which, but for this provision,
might operate as a discharge of Pledgor. Pledgor agrees that it is
solely responsible for keeping itself informed as to the financial
condition of Debtor and of all circumstances which bear upon the
risk of nonpayment or the risk of a margin call or liquidation of
the Collateral.
10.
TRANSFER, DELIVERY AND RETURN OF COLLATERAL.
(a)
Pledgor shall immediately deliver or cause to be delivered to Bank
(or the Securities Intermediary, if any) (i) any certificates or
instruments now or hereafter representing or evidencing Collateral
and such certificates and instruments shall be in suitable form for
transfer without restriction or stop order by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment
in blank in form and substance satisfactory to Bank, and (ii) in
the same form as received (with any necessary endorsement), all
dividends and other distributions paid or payable in cash in
respect of any Collateral and any such amounts, if received by
Pledgor, shall be received in trust for the benefit of Bank and be
segregated from the other property or funds of
Pledgor.
(b)
Bank may at any time deliver the Collateral or any part thereof to
Pledgor and the receipt by Pledgor shall be a complete and full
acquittance for the Collateral so delivered, and Bank shall
thereafter be discharged from any liability or responsibility
therefor.
(c)
Upon the transfer of all or any part of the Indebtedness, Bank may
transfer all or any part of the Collateral and shall be fully
discharged thereafter from all liability and responsibility with
respect to such Collateral so transferred, and the transferee shall
be vested with all the rights and powers of Bank hereunder with
respect to such Collateral so transferred; but with respect to any
Collateral not so transferred Bank shall retain all rights and
powers hereby given. Pledgor agrees that Bank may disclose to any
prospective purchaser or transferee and any purchaser or transferee
of all or part of the Indebtedness any and all information in
Bank’s possession concerning Pledgor, this Agreement and the
Collateral.
11.
CONTINUING AGREEMENT AND POWERS.
(a)
This is a continuing Agreement and all the rights, powers and
remedies hereunder shall, unless otherwise limited herein, apply to
all past, present and future Indebtedness of Debtor or any one or
more of them to Bank, including that arising under successive
transactions which shall either continue the Indebtedness, increase
or decrease it, or from time to time create new Indebtedness after
all or any prior Indebtedness has been satisfied, and
notwithstanding the death, incapacity, cessation of business,
dissolution or bankruptcy of Debtor or any one or more of them, or
any other event or proceeding affecting Debtor or any one or more
of them.
(b)
Until all Indebtedness shall have been paid in full and Bank shall
have no obligation to extend credit to any Debtor, the power of
sale and all other rights, powers and remedies granted to Bank
hereunder shall continue to exist and may be exercised by Bank at
the time specified hereunder irrespective of the fact that the
Indebtedness or any part thereof may have become barred by any
statute of limitations, or that the personal liability of Debtor or
any one or more of them may have ceased. Pledgor waives the benefit
of any statute of limitations as applied to this
Agreement.
12.
COSTS. To the extent permitted by law, all reasonable advances,
charges, costs and expenses, including reasonable attorneys' fees,
actually paid by Bank to third-parties in exercising any right,
power or remedy conferred by this Agreement or in the enforcement
thereof, and including the charges and expenses of Bank's custody
unit or of any Securities Intermediary, shall become a part of the
Indebtedness secured hereunder and shall be paid to Bank by Debtor
and Pledgor immediately and without demand, with interest thereon
at an annual rate equal to the highest rate of interest of any
Indebtedness secured by this Agreement (or, if there is no such
interest rate, at the maximum interest rate permitted by law for
interest on judgments). Such costs and attorneys' fees shall
include the allocated cost of in-house counsel to the extent
permitted by law
13.
NOTICES. Unless otherwise provided or agreed to herein or required
by law, notice and communications provided for in this Agreement
shall be in writing and shall be mailed, telecopied or delivered to
Pledgor to the address for notices set forth for Pledgor below or
across from its signature below or at such other address or
facsimile number as shall be designated by Pledgor in a written
notice to Bank at the address for notices set forth for Bank below
or across from Bank’s signature below (each a “Written
Notice”). In addition, any such Written Notice to Pledgor may
be telecopied to Pledgor at the facsimile number for notices
designated by Pledgor in a written notice to Bank at the address
for notices specified above. If Pledgor’s address is not
entered below and Pledgor has not otherwise designated such address
or designated a facsimile number to Bank in writing as provided
above, then the address and/or facsimile number for Pledgor in
Bank’s records shall be deemed the address or facsimile for
notices to Pledgor. Notices and other communications sent by (a)
first class mail shall be deemed delivered on the earlier of actual
receipt or on the fourth business day after deposit in the U.S.
mail, postage prepaid, (b) overnight courier shall be deemed
delivered on the next business day after deposit with the overnight
courier, (c) facsimile shall be deemed delivered when transmitted
and (d) any other method, shall be deemed delivered when delivered.
To the extent that oral notification is provided for or agreed to
herein, such oral notification may be made by telephone to any of
the number(s) set forth on the signature page for Pledgor; provided
that any oral notification in person or at any other telephone
number shall constitute notification hereunder.
In lieu
of a Written Notice, notices and/or communications from Bank to
Pledgor may, to the extent permitted by law, be delivered
electronically (i) by transmitting the communication to the
electronic address provided by Pledgor or to such other electronic
address as Pledgor may specify from time to time in writing, or
(ii) by posting the communication on a website and sending Pledgor
a notice to Pledgor’s postal address or electronic address
telling Pledgor that the communication has been posted, its
location, and providing instructions on how to view it (any such
notice, an “Electronic Notice”).
Electronic Notices shall be effective when the communication, or a
notice advising of its posting to a website, is sent to
Pledgor’s electronic address.
14. INDEMNITY. Pledgor shall indemnify, hold harmless and defend
Bank and its directors, officers, agents and employees, from and
against any and all claims, actions, obligations, liabilities and
expenses, including reasonable defense costs, investigative fees
and costs, and reasonable legal fees and damages arising from their
execution of or performance under this Agreement or any control
agreement executed by Bank in connection with the Collateral,
except to the extent that such claim, action, obligation, liability
or expense is determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such indemnified person. This
indemnification shall survive the termination of this
Agreement.
15.
MISCELLANEOUS.
(a) This Agreement may
only be amended by a writing signed by the parties hereto; which,
to the extent expressly agreed to by Bank in its discretion, may
include being amended by an Electronic Record signed by the parties
hereto using Electronic Signatures pursuant to the terms of this
Agreement. Any waiver, express or implied, of any provision hereof
and any delay or failure by Bank to enforce any provision shall not
preclude Bank from enforcing any such provision
thereafter.
(b)
Pledgor hereby irrevocably authorizes Bank to file one or more
financing statements describing all or part of the Collateral in
any filing office or jurisdiction as Bank may determine in its sole
discretion, and continuation statements, or amendments thereto,
relative to all or part of the Collateral as authorized by
applicable law. Such financing statements, continuation statements
and amendments will contain any other information required by the
UCC for the sufficiency or filing office acceptance of any
financing statement, continuation statement or amendment, including
whether Pledgor is an organization, the type of organization and
any organizational identification number issued to Pledgor. Pledgor
agrees to furnish any such information to Bank promptly upon
request. Pledgor also ratifies its authorization for Bank to have
filed any initial financing statement or amendments thereto filed
prior to the date hereof.
(c)
From time to time, Pledgor and Debtor shall, at the request of
Bank, execute such other agreements, documents or instruments or
take any other actions in connection with this Agreement as Bank
may reasonably deem necessary to evidence or perfect the security
interests granted herein, to maintain the first priority of the
security interests, or to effectuate the rights granted to Bank
herein, but their failure to do so shall not limit or affect any
security interest or any other rights of Bank in and to the
Collateral. Pledgor will execute and deliver to Bank any stock
powers, instructions to any securities intermediary, issuer or
transfer agent, proxies, or any other documents of transfer that
Bank requests in order to perfect, obtain control or otherwise
protect Bank's security interest in the Collateral or to effect
Bank's rights under this Agreement. Such powers or documents may be
executed in blank or completed prior to execution, as requested by
Bank.
(d)
Governing Law.
Except to the extent that any law of the United States may apply,
this Agreement shall be governed and interpreted according to the
laws of Alabama (the “Governing Law State”), without
regard to any choice of law, rules or principles to the contrary.
Nothing in this paragraph shall be construed to limit or otherwise
affect any rights or remedies of Bank under federal
law.
(e)
Acknowledgement Regarding
Any Supported QFCs. To the extent that this Agreement and
any document executed in connection with this Agreement
(collectively, “Loan
Documents”) provide support, through a guarantee or
otherwise, for any Swap Contract or any other agreement or
instrument that is a QFC (such support, “QFC Credit Support”, and
each such QFC, a “Supported QFC”), the
parties acknowledge and agree as follows with respect to the
resolution power of the Federal Deposit Insurance Corporation under
the Federal Deposit Insurance Act and Title II of the Dodd-Frank
Wall Street Reform and Consumer Protection Act (together with the
regulations promulgated thereunder, the “U.S. Special Resolution
Regimes”) in respect of such Supported QFC and QFC
Credit Support (with the provisions below applicable
notwithstanding that the Loan Documents and any Supported QFC may
in fact be stated to be governed by the laws of the Governing Law
State and/or of the United States or any other state of the United
States):
(i) In
the event a Covered Entity that is party to a Supported QFC (each,
a “Covered
Party”) becomes subject to a proceeding under a U.S.
Special Resolution Regime, the transfer of such Supported QFC and
the benefit of such QFC Credit Support (and any interest and
obligation in or under such Supported QFC and such QFC Credit
Support, and any rights in property securing such Supported QFC or
such QFC Credit Support) from such Covered Party will be effective
to the same extent as the transfer would be effective under the
U.S. Special Resolution Regime if the Supported QFC and such QFC
Credit Support (and any such interest, obligation and rights in
property) were governed by the laws of the United States or a state
of the United States. In the event a Covered Party or a BHC Act
Affiliate of a Covered Party becomes subject to a proceeding under
a U.S. Special Resolution Regime, Default Rights under the Loan
Documents that might otherwise apply to such Supported QFC or any
QFC Credit Support that may be exercised against such Covered Party
are permitted to be exercised to no greater extent than such
Default Rights could be exercised under the U.S. Special Resolution
Regime if the Supported QFC and the Loan Documents were governed by
the laws of the United States or a state of the United
States.
(ii) As
used in this paragraph, the following terms have the following
meanings:
“BHC Act Affiliate” of a
party means an “affiliate” (as such term is defined
under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of
such party.
“Covered Entity” means any
of the following: (i) a “covered entity” as that term
is defined in, and interpreted in accordance with, 12 C.F.R.
§ 252.82(b); (ii) a “covered bank” as that
term is defined in, and interpreted in accordance with, 12 C.F.R.
§ 47.3(b); or (iii) a “covered FSI” as that
term is defined in, and interpreted in accordance with, 12 C.F.R.
§ 382.2(b).
“Default Right” has the
meaning assigned to that term in, and shall be interpreted in
accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as
applicable.
“QFC” has the meaning
assigned to the term “qualified financial contract” in,
and shall be interpreted in accordance with, 12 U.S.C.
5390(c)(8)(D).
“Swap Contract” means (a)
any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps
or options, bond or bond price or bond index swaps or options or
forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other
similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether
or not any such transaction is governed by or subject to any master
agreement, and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any
other master agreement (any such master agreement, together with
any related schedules, a “Master Agreement”),
including any such obligations or liabilities under any Master
Agreement.
16. FINAL
AGREEMENT. BY SIGNING THIS
DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS DOCUMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER HEREOF, (B) THIS DOCUMENT SUPERSEDES ANY
COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN OUTLINE OF TERMS
AND CONDITIONS RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH
COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN OUTLINE OF TERMS
AND CONDITIONS EXPRESSLY PROVIDES TO THE CONTRARY, (C) THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (D) THIS
DOCUMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF
THE PARTIES.
17.
Electronic Records and
Signatures. This Agreement and any document, amendment,
approval, consent, information, notice, certificate, request,
statement, disclosure or authorization related to this Agreement
(each a “Communication”),
including Communications required to be in writing, may, if agreed
by Bank, be in the form of an Electronic Record and may be executed
using Electronic Signatures, including, without limitation,
facsimile and/or .pdf. Pledgor agrees that any Electronic Signature
(including, without limitation, facsimile or .pdf) on or associated
with any Communication shall be valid and binding on Pledgor to the
same extent as a manual, original signature, and that any
Communication entered into by Electronic Signature, will constitute
the legal, valid and binding obligation of Pledgor enforceable
against Pledgor in accordance with the terms thereof to the same
extent as if a manually executed original signature was delivered
to Bank. Any Communication may be executed in as many counterparts
as necessary or convenient, including both paper and electronic
counterparts, but all such counterparts are one and the same
Communication. For the avoidance of doubt, the authorization under
this paragraph may include, without limitation, use or acceptance
by Bank of a manually signed paper Communication which has been
converted into electronic form (such as scanned into PDF format),
or an electronically signed Communication converted into another
format, for transmission, delivery and/or retention. Bank may, at
its option, create one or more copies of any Communication in the
form of an imaged Electronic Record (“Electronic Copy”), which
shall be deemed created in the ordinary course of Bank’s
business, and destroy the original paper document. All
Communications in the form of an Electronic Record, including an
Electronic Copy, shall be considered an original for all purposes,
and shall have the same legal effect, validity and enforceability
as a paper record. Notwithstanding anything contained herein to the
contrary, Bank is under no obligation to accept an Electronic
Signature in any form or in any format unless expressly agreed to
by Bank pursuant to procedures approved by it; provided, further,
without limiting the foregoing, (a) to the extent Bank has agreed
to accept such Electronic Signature, Bank shall be entitled to rely
on any such Electronic Signature purportedly given by or on behalf
of any Pledgor without further verification and (b) upon the
request of the Bank any Electronic Signature shall be promptly
followed by a manually executed, original counterpart. For purposes
hereof, “Electronic
Record” and “Electronic Signature”
shall have the meanings assigned to them, respectively, by 15 USC
§7006, as it may be amended from time to time.
[SIGNATURES
ON FOLLOWING PAGE]
The
parties executed this Agreement as of June 25, 2020, intending to
create an instrument executed under seal.
Bank:
Bank of America, N.A.
By: /s/
J.
Brooks Emory
J.
Brooks Emory IV, VP, Senior Relationship Manager
Address:
NC1-001-05-13
One
Independence Center
101
North Tryon Street
Charlotte,
NC 28255-0001
Pledgor:
Lakeland Industries, Inc.
By: /s/
Allen
Dillard
(Seal)
Allen
Dillard, Chief Financial Officer
Pledgor’s
Chief Executive Office:
202
Pride Lane SW
Decatur, AL
35603
Attn:
Allen Dillard
aedillard@lakeland.com
|
Pledgor’s
type of organization: Corporation
Pledgor’s
state of incorporation or organization (if Pledgor is a
corporation, limited partnership, limited liability company or
other registered entity):
Delaware
|
Pledgor’s
organizational identification number if any, assigned by the state
of incorporation or organization (If no organizational
identification number has been assigned enter
“None”): 2089758
|
|
|
|
Exhibit A to Pledge Agreement
Description of Collateral
1.
All of
Pledgor’s equity ownership of ArtProm, LLC, which ownership
is not evidenced by a certificate.
2.
32,500 shares of
common stock of Indian & Pan-Pacific Sales Limited, evidenced
in whole or in part by certificate #4.
3.
65 shares of common
stock of Industrias Lakeland S.A. de C.V., evidenced in whole or in
part by certificate #1.
4.
34 shares of common
stock of Industrias Lakeland S.A. de C.V., evidenced in whole or in
part by certificate #2.
5.
1 share of common
stock of Industrias Lakeland S.A. de C.V., evidenced in whole or in
part by certificate #3.
6.
All of
Pledgor’s equity ownership of Lakeland (Beijing) Safety
Products Co., Ltd., which ownership is not evidenced by a
certificate.
7.
6,500 shares of
common stock of Lakeland (Hong Kong) Trading Co., Limited,
evidenced in whole or in part by certificate #2.
8.
All of
Pledgor’s equity ownership of Lakeland (Vietnam) Industries
Company Limited, which ownership is not evidenced by a
certificate.
9.
All of
Pledgor’s equity ownership of Lakeland Argentina S.R.L.,
which ownership is not evidenced by a certificate.
10.
162,24,866 shares
of common stock of Lakeland Gloves and Safety Apparel Private
Limited, evidenced in whole or in part by certificate
#14.
11.
467,100 shares of
common stock of Lakeland Gloves and Safety Apparel Private Limited,
evidenced in whole or in part by certificate #23.
12.
311,400 shares of
common stock of Lakeland Gloves and Safety Apparel Private Limited,
evidenced in whole or in part by certificate #24.
13.
327,210 shares of
common stock of Lakeland Gloves and Safety Apparel Private Limited,
evidenced in whole or in part by certificate #26.
14.
176,190 shares of
common stock of Lakeland Gloves and Safety Apparel Private Limited,
evidenced in whole or in part by certificate #27.
15.
All of
Pledgor’s equity ownership of Lakeland Industries Chile
Limitado, which ownership is not evidenced by a
certificate.
16.
65 shares of common
stock of Lakeland Industries Europe Limited, evidenced in whole or
in part by certificate #3.
17.
65 shares of common
stock of Lakeland Protective Wear Inc., evidenced in whole or in
part by certificate #C1.
18.
35 shares of common
stock of Lakeland Protective Wear Inc., evidenced in whole or in
part by certificate #C2.
19.
All of
Pledgor’s equity ownership of RussIndProtection, Ltd., which
ownership is not evidenced by a certificate.
20.
All of
Pledgor’s equity ownership of SpecProtect LLC, which
ownership is not evidenced by a certificate.
21.
1 share of
Debtor’s equity ownership of Migliara, S.A., evidenced in
whole or in part by certificate #1.
22.
All of
Pledgor’s equity ownership of WeiFang Lakeland Safety
Products Co Ltd, which ownership is not evidenced by a
certificate.
23.
All of
Pledgor’s equity ownership of Weifang Meiyang Protective
Products Co., Ltd, which ownership is not evidenced by a
certificate.
24.
100 shares of
common stock of Lakeland Industries Australis Pty Limited,
evidenced in whole or in part by certificate #1.
25.
All present and
future income, proceeds (including identifiable cash proceeds),
earnings, increases, and substitutions from or for the Collateral
of every kind and nature, including without limitation all
payments, interest, profits, distributions, benefits, rights,
options, warrants, dividends, stock dividends, stock splits, stock
rights, regulatory dividends, subscriptions, monies, claims for
money due and to become due, proceeds of any insurance on the
Collateral, shares of stock of different par value or no par value
issued in substitution or exchange for shares included in the
Collateral, and all other property Pledgor is entitled to receive
on account of such Collateral, including accounts, documents,
instruments, chattel paper, and general intangibles.
Exhibit 10.4
This
instrument prepared by and after
recordation
should be returned to:
Austin
A. Averitt, Esq.
Butler
Snow LLP
One
Federal Place, Suite 1000
1819
Fifth Avenue North
Birmingham,
Alabama 35203
(205)
297-2225
NON-ENCUMBRANCE AGREEMENT
THIS NON-ENCUMBRANCE AGREEMENT (the
“Agreement”) is
delivered and effective as of June 25, 2020, by LAKELAND INDUSTRIES, INC., a Delaware
corporation (the “Borrower”), for the benefit
of BANK OF AMERICA, N.A.
(together with its successors or assigns, the “Bank”).
WHEREAS, pursuant to that certain Loan
Agreement dated as of June 12, 2020, (as may be amended, the
“Loan
Agreement”; together with this Agreement and all other
documents, agreements and instruments executed and delivered in
connection therewith, collectively, the “Loan Documents”;
capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed in the Loan Agreement), Bank has
agreed to make available to Borrower a line of credit in the
maximum principal amount of up to Twelve Million Five Hundred
Thousand and No/100 Dollars ($12,500,000.00) (as amended, extended,
modified, renewed, restated or refinanced, collectively, the
“Loan”);
WHEREAS, as a condition of the Loan,
Bank requires that Borrower execute and deliver this
Agreement.
NOW, THEREFORE, in consideration of the
Loan and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, Borrower agrees as
follows:
1. No Transfer or Encumbrance of the Land.
Borrower is the owner in fee simple of the real estate described on
Exhibit A and all
improvements thereon (as may be amended, collectively, the
“Land”).
Borrower acknowledges that Bank has examined and relied on the
creditworthiness of Borrower in agreeing to make the Loan, and that
Bank will continue to rely on Borrower’s ownership of the
Land as a means of maintaining the value of the Land and
Borrower’s ability to pay the Loan. Borrower acknowledges
that Bank has a valid interest in maintaining the value of the
Land. Borrower shall not, without the prior written consent of
Bank, which consent shall be determined in Bank’s sole and
absolute discretion, sell, convey, alien, assign, mortgage,
encumber, pledge or otherwise transfer the Land or any part
thereof, or permit the Land or any part thereof to be sold,
conveyed, aliened, assigned, mortgaged, encumbered, pledged or
otherwise transferred. The foregoing prohibitions shall apply to
any and all acts or omissions so described, without regard to
whether such acts or omissions may occur voluntarily or involuntary
or by operation of law or otherwise.
2. Insurance. Borrower shall keep, or cause
to be kept, the Land insured against loss or damage by fire,
extended coverage perils, vandalism, malicious mischief, and any
such other hazards, casualties, or other contingencies as more
particularly set out in the Loan Documents.
3. Taxes and Assessments. Borrower will pay
all taxes and assessments against or affecting the Land as the same
shall become due and payable, and, if Borrower fails to do so, Bank
may pay them, together with all costs and penalties thereon, at
Borrower’s expense. Notwithstanding the foregoing, Borrower
may in good faith by appropriate proceedings contest the validity
of such taxes and assessments and, pending such contest, Borrower
shall not be deemed in default hereunder due to such nonpayment if
(i) prior to delinquency of the asserted tax or assessment,
Borrower furnishes Bank an indemnity bond, and (ii) Borrower
promptly pays any amount adjudged by a court of competent
jurisdiction to be due, with all costs, penalties and interest
thereon, before such judgment becomes final.
4. Waste, Demolition, Alteration, Replacement or
Repair of Land. Borrower shall cause the Land and every part
thereof to be maintained, preserved, kept safe and in good repair,
and in good working condition. Borrower shall not commit or permit
waste thereon. Borrower shall not remove, demolish or alter the
design or structural character of the Land or the Land now or
hereafter erected on the Land without the express prior written
consent of Bank. Borrower shall comply with all laws and
regulations of any governmental authority with reference to the
Land and the manner and use of the same, and shall from time to
time make all necessary and proper repairs, renewals, additions and
restorations thereto so that the value and efficient use thereof
shall be fully preserved and maintained. Borrower will discharge
all claims for labor performed and material furnished therefor, and
will not suffer any lien of mechanics or materialmen to attach to
any part of the Land. Borrower agrees not to remove any of the
fixtures included in the Land without the express prior written
consent of Bank and unless the same is immediately replaced with
like property of at least equal value and utility.
5. Access. Bank and other persons
authorized by Bank shall have access to and the right to enter and
inspect the Land at all reasonable times, and upon reasonable
notice to Borrower, including monthly inspections if deemed
necessary by Bank. In the event Bank finds that Borrower is not
maintaining the Land as referenced herein, Bank shall notify
Borrower in writing of the needed repairs and Borrower shall have
twenty (20) business days to make satisfactory arrangements to
bring the Land back to good condition. If after such time,
satisfactory arrangements have not been made to bring the Land back
to good condition as determined by the reasonable discretion of
Bank, Bank shall have the right to make the repairs required at the
expense of Borrower as previously enunciated in this Agreement, or
shall have the right to declare the Loan to be at once due and
payable.
6. Hold Harmless. Borrower will defend, at
its own cost and expense, and hold Bank harmless from, any
proceeding or claim affecting the Land. All costs and expenses
incurred by Borrower in protecting its interest hereunder,
including all court costs and reasonable attorneys’ fees,
shall be borne by Borrower.
7. Notices by Governmental Authority, Fire and
Casualty Losses, Etc. Borrower shall timely comply with and
promptly furnish to Bank true and complete copies of any official
notice or claim by any governmental authority pertaining to the
Land. Borrower shall promptly notify Bank of any fire or other
casualty or any notice or taking of eminent domain action or
proceeding affecting the Land.
8. Recording and Filing. This Agreement and
all applicable Loan Documents and all amendments, supplements and
extensions thereto and substitutions therefor shall be recorded,
filed, rerecorded and refiled in such manner and in such places as
Bank shall reasonably request, and Borrower will pay all such
recording, filing, rerecording and refiling fees, title insurance
premiums, and other charges.
9. Termination. If (A) Borrower shall pay
and satisfy in full (i) the Loan and any and all other sums payable
under the Loan Agreement and the Loan Documents and any and all
extensions and renewals of the same (including future advances) and
there shall be no additional commitment or other obligation of Bank
to fund any additional moneys or other obligations thereunder; and
(ii) all sums becoming due and payable by Borrower under the terms
of this Agreement and the Loan Documents, including but not limited
to advances made by Bank pursuant to the terms and conditions of
this Agreement; (B) have kept and performed each and every
obligation, covenant, duty, condition and agreement herein imposed
on or agreed to by Borrower; and (C) pay and satisfy all
obligations and all other liabilities of any kind under the Loan
Documents; then this Agreement shall become null and void and Bank
in such case shall, upon the request of Borrower and at
Borrower’s expense, deliver to Borrower proper instruments
acknowledging termination of this Agreement; otherwise, this
Agreement shall remain in full force and effect.
10. Notice and Addresses for Notices. All
notices, requests, demands and other communications provided for
hereunder shall be in writing and made in accordance with the terms
of the Loan Agreement.
11. Controlling
Law. Except to the
extent that any law of the United States may apply, this Agreement
shall be governed and interpreted according to the laws of Alabama,
without regard to any choice of law, rules or principles to the
contrary. Nothing in this paragraph shall be construed to limit or
otherwise affect any rights or remedies of the Bank under federal
law.
12. Venue
and Jurisdiction. The
Borrower agrees that any action or suit against the Bank arising
out of or relating to this Agreement shall be filed in federal
court or state court located in the State of Alabama. The Borrower
agrees that the Bank shall not be deemed to have waived its rights
to enforce this section by filing an action or suit against the
Borrower or any Obligor in a venue outside of the State of Alabama.
If the Bank does commence an action or suit arising out of or
relating to this Agreement, the Borrower agrees that the case may
be filed in federal court or state court in the State of Alabama.
The Bank reserves the right to commence an action or suit in any
other jurisdiction where the Borrower has any presence. The
Borrower consents to personal jurisdiction and venue in such forum
selected by the Bank and waives any right to contest jurisdiction
and venue and the convenience of any such forum. The provisions of
this section are material inducements to the Bank’s
acceptance of this Agreement.
13. Jury
Trial Waiver.
BORROWER HEREBY WAIVES TRIAL BY
JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM, WHETHER IN
CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY
RELATED TO THIS AGREEMENT OR THE LOAN
DOCUMENTS.
IN WITNESS WHEREOF, the undersigned have
hereunto set its signature and the seal of Borrower effective as of
the date set forth above.
LAKELAND INDUSTRIES, INC., a Delaware
corporation
Allen
Dillard
Its:
Chief Financial
Officer
EXHIBIT A
LEGAL DESCRIPTION
Parcel
I:
A
portion of Unit A-7 of Certificate to Subdivide No. 1055-84 as
approved by the Decatur City Planning Commission and as recorded in
the Morgan County Probate Office in Book 1129, at Page 468, and
more particularly described as beginning at a railroad spike at the
Northwest corner of Section 8, Township 6 South Range 4 West,
Decatur, Morgan County, Alabama and run thence S
89°25’16” E (Alabama State Coordinate System-Grid
Bearing) along the North boundary of Section 8 a distance of 50.00
feet to the East right of way margin of Central Parkway; thence S
0°39’35” W along the East right of way margin of
Central Parkway a distance of 123.03 feet to the North right of way
margin of Pride Street; thence S 89°47’51” E along
the North right of way margin of Pride Street and the North
property line of the tract being subdivided a distance of 741.56
feet to the true point of beginning of the parcel herein described;
thence continue S 89°47’51” E a distance of 535.64
feet to the Westerly right of way margin of the CSX Railroad;
thence S 8°06’34” E along the Westerly right of
way margin of the CSX Railroad a distance of 180.90 feet; thence N
89°47’51” W a distance of 759.17 feet to the
Easterly right of way margin of Valley Avenue; thence N
12°16’59” W along the Easterly right of way margin
of Valley Avenue a distance of 35.85 feet; thence S
89°47’51” E a distance of 205.13 feet; thence N
0°12’09” E a distance of 144.00 feet to the true
point of beginning, lying in the NE1/4 of the NW1/4 and the NW1/4
of the NW1/4 of Section 8, Township 6 South, Range 4 West, Decatur,
Morgan County, Alabama.
Parcel
II:
A
portion of Unit A-7 of Certificate to Subdivide No. 1055-84 as
approved by the Decatur City Planning Commission and as recorded in
the Morgan County Probate Office in Book 1129, at Page 468, and
more particularly described as beginning at a railroad spike at the
Northwest corner of Section 8, Township 6 South, Range 4 West,
Decatur, Morgan County, Alabama and run thence S
89°25’16” E (Alabama State Coordinate System-Grid
Bearing) along the North boundary of said Section 8 a distance of
50.00 feet to an iron pin on the East right of way margin of
Central Parkway; thence S 00°39’35” W along the
East right of way margin of Central Parkway a distance of 123.03
feet to an iron pin on the North right of way margin of Pride
Street; thence S 89°47’51” E along the North right
of way margin of Pride Street a distance of 539.76 feet to an iron
pin and the true point of beginning of the parcel herein described;
thence S 89°47’51” E a distance of 201.80 feet;
thence S 00°12’09” W a distance of 144.00 feet;
thence N 89°47’51” W a distance of 205.13 feet to
the Easterly right of way margin of Valley Avenue; thence N
12°16’59” W along the Easterly right of way margin
of Valley Avenue a distance of 46.96 feet to a point on the
cul-de-sac right of way of Pride Street; thence Easterly, then
Northeasterly, then Northwesterly direction along the Pride Street
cul-de-sac right of way, along a curve to the left, having a radius
of 50.00 feet a distance of 170.73 feet (central angle
195°38’14”) to the true point of beginning, lying
in the NW1/4 of the NW1/4 of Section 8, Township 6 South, Range 4
West, Decatur, Morgan County, Alabama.
Parcel
III:
A
portion of Unit A of Certificate to Subdivide No. 900-81 as
approved by the Decatur City Planning Commission and as recorded in
Morgan County Probate Office in Book 1058, at Page 792, and more
specifically described as beginning at a railroad spike at the
southwest corner of Section 5, Township 6 South, Range 4 West,
Decatur, Morgan County, Alabama, and run thence No
00°28’39”E (Alabama State Coordinate System Grid
Bearing) along the west boundary of said Section 5 and also along
the centerline of Central Parkway a distance of 151.65 feet to a
railroad spike; thence S 89°47’51” E a distance of
50.00 feet to an iron pin on the east right of way margin of
Central Parkway; thence continue S 89°47’51” E a
distance of 390.73 feet to an iron pin and the true point of
beginning of the tract herein described; thence from the true point
of beginning continue S 89°47’51”E a distance of
844.58 feet to an iron pin on the westerly right of way margin of
Seaboard System Railroad; thence S 08°06’34” E
along the westerly right of way margin of Seaboard System Railroad
a distance of 277.92 feet to an iron pin; thence N
89°47’51 W a distance of 823.86 feet to an iron pin;
thence N 12°16’59” W a distance of 281.66 feet to
the true point of beginning, lying and being within the SW1/4 of
the SW1/4 of Section 5 and the NW1/4 of the NW1/4 of Section 8,
Township 6 South, Range 4 West; Decatur, Morgan County,
Alabama.
Exhibit
99.1
|
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202 Pride Lane SW
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Decatur, AL 35603
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|
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(256) 350-3873 - www.lakeland.com
|
Lakeland Industries Announces New Credit Facility with Bank of
America
DECATUR,
AL – July 1, 2020 -- Lakeland Industries, Inc. (NASDAQ: LAKE)
(the “Company” or “Lakeland”), a leading
global manufacturer of protective clothing for industry, healthcare
and to first responders on the federal, state and local levels,
today announced that it has established a new credit facility with
Bank of America. The new facility consists of a senior secured
$12.5 million revolving credit facility, which includes a $5
million letter of credit sub-facility and an option to convert up
to $5 million of the revolving credit facility into a term loan
facility. The facility also includes an accordion feature under
which the Company may request from time to time an increase in the
revolving commitment of up to $5 million (for a total commitment of
up to $17.5 million). The facility will mature on June 25, 2025.
Terms of the new facility are more completely discussed in the
Company’s Form 8-K filed with the Securities and Exchange
Commission.
Allen
E. Dillard, Chief Financial Officer of Lakeland Industries, stated,
“We look forward to our new banking relationship with Bank of
America. While Lakeland’s financial condition has
substantially improved over the past five years as evidenced by our
net cash position increasing to $23.3 million at April 30, 2020 as
compared with net debt of $4.3 million at April 30, 2015, we have
aligned the size of our new credit facility to reflect our current
capital requirements while incorporating expansion flexibility. At
the same time, we will receive improved pricing, decreased
administration, and will have access to Bank of America’s
global platform for cash management. This facility and its enhanced
features reflect our efforts to optimize all aspects of our
business and financial operations aimed at better supporting our
continued worldwide growth.”
"Bank of America is pleased to work with Lakeland Industries as
they execute on their growth plan,” said Brooks Emory, Senior
Relationship Manager with Global Commercial Banking at Bank of
America. “We remain committed to helping our clients through
all stages of the business cycle and look forward to serving
Lakeland Industries as they continue to grow their company
worldwide."
About Lakeland Industries, Inc.:
We
manufacture and sell a comprehensive line of industrial protective
clothing and accessories for the industrial and public protective
clothing market. Our products are sold globally by our in-house
sales teams, our customer service group, and authorized independent
sales representatives to a network of over 1,600 global safety and
industrial supply distributors. Our authorized distributors supply
end users, such as integrated oil, chemical/petrochemical,
automobile, steel, glass, construction, smelting, cleanroom,
janitorial, pharmaceutical, and high technology electronics
manufacturers, as well as scientific, medical laboratories and the
utilities industry. In addition, we supply federal, state and local
governmental agencies and departments, such as fire and law
enforcement, airport crash rescue units, the Department of Defense,
the Department of Homeland Security and the Centers for Disease
Control. Internationally, we sell to a mixture of end users
directly, and to industrial distributors depending on the
particular country and market. Sales are made to more than 50
countries, the majority of which were into the United States,
China, the European Economic Community ("EEC"), Canada, Chile,
Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India,
Uruguay and Southeast Asia.
For
more information concerning Lakeland, please visit the Company
online at www.lakeland.com.
Contacts:
|
Lakeland
Industries, Inc.
|
Darrow
Associates
|
|
256-445-4000
|
512-551-9296
|
|
Allen
Dillard
|
Jordan
Darrow
|
|
aedillard@lakeland.com
|
jdarrow@darrowir.com
|
“Safe
Harbor” Statement under the Private Securities Litigation
Reform Act of 1995: Forward-looking statements involve risks,
uncertainties and assumptions as described from time to time in
Press Releases and Forms 8-K, registration statements, quarterly
and annual reports and other reports and filings filed with the
Securities and Exchange Commission or made by management. All
statements, other than statements of historical facts, which
address Lakeland’s expectations of sources or uses for
capital or which express the Company’s expectation for the
future with respect to financial performance or operating
strategies can be identified as forward-looking statements. As a
result, there can be no assurance that Lakeland’s future
results will not be materially different from those described
herein as “believed,” “projected,”
“planned,” “intended,”
“anticipated,” “estimated” or
“expected,” or other words which reflect the current
view of the Company with respect to future events. We caution
readers that these forward-looking statements speak only as of the
date hereof. The Company hereby expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any
such statements to reflect any change in the Company’s
expectations or any change in events conditions or circumstances on
which such statement is based.
# # #
